In February 2006, a consortium comprising Macquarie Infrastructure Group (MIG), Macquarie European Infrastructure Fund (MEIF) and Eiffage acquired 81.5% of APRR via a holding company Eiffarie SAS (Eiffarie). MIG had a 25.0% stake in Eiffarie and therefore an effective stake in APRR of 20.4%. MIG’s stake in Eiffarie was assumed by MQA in February 2010, as part of the MIG demerger.
In June 2010, Eiffarie reached agreement to acquire a further 13.7% of APRR from minority holders. This gave Eiffarie a 95.2% holding in APRR, allowing it to consolidate for tax purposes and to launch a compulsory acquisition of the remaining shares. This was completed in December 2012 and APRR was delisted from NYSE Euronext Paris. MQA did not take up its full pro-rata entitlement, and accordingly its stake in Eiffarie (and APRR) reduced to 19.44%.
In July 2014, MQA acquired an additional 0.71% indirect interest in APRR, increasing MQA’s indirect interest from 19.44% to 20.14%.
In October 2017, MQA acquired an additional 4.86% indirect interest in APRR, increasing MQA’s indirect interest from 20.14% to 25.00%.
The network is currently 2,323 kilometre1 in length, inclusive of 12 kilometres to be constructed. The road is mostly 2x2 lane motorway, with some of the network 2x3 lanes. There is potential to widen many of the roads if capacity is reached.
Tolls are charged on a per kilometre basis with cash, credit and ETC toll collection facilities available throughout the network.
1 Note the APRR network length of 2,323 kilometres includes ADELAC’s 20 kilometres. APRR holds a 49.9% interest in ADELAC.
There are five tolling categories on the APRR, AREA and ADELAC Concessions, as outlined in the below table.
|Class||Height (metres)||Number of axles||Maximum weight||Predominant vehicle type|
||>2 and <3
||Single-unit Heavy Vehicles
||Multi-unit Heavy Vehicles
Under the concession contracts, tolls are permitted to increase annually on 1 February by a minimum of 70% x French CPI for the APRR Concession and AREA Concession. Where French CPI is negative, the minimum toll increase is 0%.
In addition, supplemental toll increases have historically been negotiated and agreed with the French State in exchange for the implementation of additional capital expenditure plans or as compensation. Refer below and to the factsheet for details of agreed future toll escalation.
In 1994 the French State set up a system of multi-year management contracts (Contrats de Plan), under which companies holding motorway concessions can implement additional capital expenditure in return for improved toll escalation rates for the term of the contract. Typically these contracts run for a five-year period.
In January 2014, APRR entered into new management contracts covering the 2014-2018 period in relation to the APRR Concession and the AREA Concession. The two contracts provide for ongoing capital expenditure with annual tariff increases applicable from 2014-2018, of 85% of French CPI (an increase from 70% x French CPI as provided under the concession contract) plus supplemental toll increases of 0.37% for the APRR Concession and 0.41% for the AREA Concession.
Stimulus Package & Concession Contract Amendments
In August 2015, a stimulus package and concession contract amendments for French motorway companies including the APRR and AREA Concessions, were agreed and formalised with the French State.
The amendments for the APRR and AREA Concessions include the following significant measures:
- ~€720m of capex (Stimulus Package) in exchange for 2 years and 1 month of concession extension (APRR Concession) to 31 January 2035 and 3 years and 9 months of concession extension (AREA Concession) to 30 September 2036
- Compensation for the 2013 land tax increase via supplemental toll increases of +0.81% in 2016, +0.22% (APRR Concession) / +0.21% (AREA Concession) in 2017 and +0.76% in 2018
- Compensation for the 2015 toll freeze via supplemental toll increases of +0.25% for the APRR Concession and +0.26% for the AREA Concession over 2019-2023
- Other targeted measures to enhance stability of the concession contracts include:
- Improvement of protection against future adverse changes to motorway-specific taxes
- Revenue caps may apply in the event of future material outperformance
- APRR Group to contribute an annual infrastructure payment of ~€15.8m (indexed) to French Transport Financing Agency (AFITF) and to invest ~€50m into a green transportation fund – initiatives implemented across the French motorway companies
Maurice Lemaire Tunnel
In January 2016, the Tunnel Maurice Lemaire (TML) concession was merged into the APRR Concession. As a consequence, the APRR Concession maturity was extended by 10 months to 30 November 2035.
TML is an 11 kilometre road and tunnel between Sainte-Marie-aux-Mines (Haut-Rhin, Alsace) and Saint-Dié (Vosges, Lorraine) in eastern France. Prior to this amendment the TML Concession had a concession expiry of 2068.
In January 2017, an In-Principle Agreement was negotiated with the French State which includes a €222 million investment plan consisting of 15 projects, anticipated to be partly financed by local authorities (approximately €24 million).
The In-Principle Agreement remains subject to regulatory review and final contract with details to be confirmed once finalised.
APRR Group, comprising APRR, Eiffarie and Financiere Eiffarie (FE), is the tax consolidated group in France. APRR generates taxable income which are offset by Eiffarie deductions.
APRR Group is expected to benefit from a progressive reduction in French corporate income tax rate from 33.3% to 25.0% by 2022 (per the Finance Law for 2018). Including the additional social surcharge of +3.3%, APRR’s applicable tax rate will reduce from 34.4% to 25.8% over this period.
Further, the 3.0% tax on dividend distributions between French entities has been repealed for distributions paid out as from 1 January 2018. This will affect any dividends paid out from FE going forward. This follows the removal of a 3.0% tax on dividend distributions previously payable between French and non-French entities from 1 January 2017.
Dividends paid out of APRR are subject to conventional French accounting restrictions and can only be paid from current period profit, distributable reserves, retained earnings and share premium.
APRR has consistently generated cash flows in excess of net profit per annum. This excess cash has historically been used to fund capital expenditure and debt reduction.
APRR’s capital works program is primarily focused on maintenance and expansion of the existing network.
Capital expenditure typically comprises three types:
- Maintenance capital expenditure (e.g. road surfacing)
- Growth capital expenditure under the concession contract (e.g. specific road widenings to ease congestion)
- Growth capital expenditure under agreed management contracts or other agreements with the French State (such as the Stimulus Package). This expenditure has historically been agreed in exchange for supplemental toll increases and/or concession extensions.