Thank you for standing by, and welcome to the Atlas Arteria 2021 results presentation. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you'll need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Graeme Bevans. Please go ahead.
Thank you, Rachel, and good morning everyone. I would like to thank you all for joining Atlas Arteria's 2021 full-year results call. I'm joined today in this call by Nadine Lennie, our CFO. In our presentation today, I'll outline the key highlights of the 2021 year, and then Nadine will provide an outline of the key financial outcomes and analysis for the year. I will then provide an overview of the outlook for our businesses, our strategy, future opportunities, and our key priorities, following which we will open to you for questions. Internalization. We've been fully focused on restructuring our businesses to optimize their ability to deliver value to our security holders. In 2021, we successfully restructured Warnow, and we continue to work towards a mutually beneficial restructuring of Dulles Greenway.
We continue to pursue growth through new projects in France through APRR, with the full transfer of RCEA formalized this week and bids being actively pursued under the 2018 infrastructure agenda. At APRR, while the 2021 year commenced with lockdowns and the French ski resorts closed for what otherwise would have been a good ski season, the year evolved into one in which traffic in the second half was the highest ever, supporting record-breaking profitability. Moving to slide five. Our very strong traffic performance resulted in an overall increase of 18.6% over 2020 numbers. We've now received our first two distributions from Warnow, totaling EUR 5.8 million, and these now flow through to our security holders as part of our overall distribution.
I'm delighted to be able to provide distribution guidance of AUD 0.205 per share for the second half, giving a record AUD 0.36 per security for the year. In terms of sustainability, we've established performance targets across our four priorities. The construction of RCEA is well advanced, with completion expected towards the end of the year, and full transfer of the business to APRR expected to close in the second quarter. We've achieved a rate case outcome for Dulles Greenway in the first half, which gave toll increases for 2021 and 2022 of over 10%. On slide six, you can see the financial overview of the business relative to 2020 and 2019. Strong performance in traffic, led by APRR over the European summer, extended well into the autumn, driven by high demand for domestic and intra-European holidays.
EBITDA increased by 21.5% relative to 2020 and was close to that of 2019. On slide seven, you can see the growth in distributions continue strongly. The second-half distribution guidance provided today for AUD 0.205 per security results in a record AUD 0.365 per security distribution for the 2021 year. This demonstrates the resilience of our businesses as communities continue to adapt and learn to live with COVID-19. Moving to slide eight. Following the easing of COVID restrictions in France in May, we saw a record traffic performance at APRR in the second half of the year. The very solid performance in HV traffic at APRR shows the importance of trans-European trade to our network. You can see in the middle graph the effect of Spanish trade by weight on our HV traffic and the close correlation.
This is showcased well in our case study in our annual report that I encourage you to read. In the final paragraph, you can see the accumulation of household saving increases. Historically, personal vehicle traffic has been very closely correlated to increases in household income. Moving forward over the next few years, with this accumulation of savings, we anticipate expenditure exceeding incomes for the next few years as people are keen to spend part of these accumulated savings on holidays, and particularly in domestic regions. The start of the 2022 year has been very strong, with ski resorts open to holidaymakers, with very high occupancy in those resorts and strong traffic on the network. On slide nine, we provide an update on the RCEA project, which yesterday signed a contract for the transfer of the remaining interest to APRR as planned.
The project will be funded utilizing balance sheet capacity within APRR and has a 48-year concession contract. The road serves traffic moving in an east to west direction and carries significant heavy traffic, which represented 40% of traffic on the road prior to the commencement of the upgrade. Construction is proceeding well and expected to be complete in Q4 this year. As with APRR, tolls will have a similar inflation-linked escalation mechanism, which will Nadine will talk to in detail a little later. Moving to slide 10. Warnow was more affected by COVID-19 in 2021 than in 2020. Traffic recovered well in the third quarter to near pre-pandemic levels. It continues to be below 2019 levels due to fewer roadworks on competing routes, along with COVID-19 related restrictions.
We continued to see gradual recovery in traffic over 2021, with off-peak trips recovering in line with overall mobility recovery trends shown on the slide. As schools in Virginia returned to in-class learning, the Omicron variant broke out, leading employers to continue to operate on a work-from-home basis. The new governor, who was appointed in January, is moving rapidly towards the removal of mask mandates. We expect that when implemented, they will see further levels of return to work and consequent recovery in traffic. We have had significant winter snowstorms in January, which have impacted traffic in the current quarter. Our sustainability achievements outlined on slide 12 for 2021 revolved around the establishment of performance targets across our four key sustainability priorities. Safety of our employees and customers is our first priority.
We took a number of actions this year, including redesign of our maintenance area at Dulles Greenway to eliminate the need for trucks reversing to load salt and chemicals for snow clearing. At Warnow, we improved signage to modify dangerous customer behavior. On the environmental side, we continue to roll out electric vehicle charging stations. We've achieved 58% coverage of our service areas along the APRR and AREA networks and expect to roll out to all service areas by the end of 2022. On the community side, the Run the Greenway event attracted the maximum 1,200 allowable participants due to COVID restrictions, and we expect this year's to be even bigger based on the demand we had, but were unable to accommodate. The event raised more than $150,000 for local charities and provided significant positive press coverage for the Greenway.
In governance, we've achieved our 40% gender targets across the Board, senior management, and corporate employees. External rating agencies have rated performance as solid, as you can see, and we continue to focus on further developing our performance in ESG. Moving to slide 13. Our focus in 2022 is to continue our efforts across our four key priorities, including focus on increasing safety with measurable lost time injury frequency targets. Establishment of targets aligned with a 1.5-degree warming scenario, including working through establishing detailed TCFD measures across our businesses. Maintaining commitment to our 40% gender balance while looking at other areas of diversity. Establishing a baseline customer satisfaction score across our businesses during 2022. With that, I would like to now hand over to Nadine to present our financial performance for the year.
Thanks, Graeme. Well, it was another year of unprecedented movement restrictions, but despite that, I'm very pleased to report Atlas Arteria's strong results today and also that we remain very well positioned from a balance sheet perspective. Let's talk about the balance sheet and cash. At 31st December, we had the equivalent of around AUD 134 million on the corporate balance sheet. We still have the policy of holding at least two years cash cover for our corporate costs. Now, that may change at some point, but it remains the current policy. If we take this into consideration, what that means for where we are now, we still have something in sort of the level, I suppose around AUD 60 million available for growth.
Now, there's no intention to keep cash on the balance sheet that cannot be used to create value for shareholders. In terms of growth, we also have no holding company debt, so there's further capacity here if such a facility is required. As I've said before, in terms of any new debt, it would need to be on terms that retains debt funding capacity at APRR. Look, it is a balance for us between maintaining this balance sheet strength, capacity for growth, and also providing an appropriate yield. As Graeme mentioned, today we're providing guidance for our final distribution of AUD 0.205 per security, which would lead to a record AUD 0.36 per security distribution for our full 2021 year.
We undertook, of course, a capital restructure at Warnow Tunnel in March, and we've now received two distributions from this business, reflecting the performance for half one, and just recently half two. This is all in line with our strategy to generate sustainable operating cash flows from each of our businesses. What we've done over the past two years is pay to our shareholders the net distributions we have received from APRR and then more recently, Warnow Tunnel, net of our corporate costs. At the moment, it's anticipated that this will continue pending stability in the traffic numbers, but the team, of course, will advise if there's any change to this policy going forward. Let's now talk about how we derive our distributions, which is part of our cash flow waterfall on slide 16. Stepping you through these numbers for the second half performance.
The consolidated APRR profit for the first half of 2021 was EUR 409 million. Starting on the left-hand side, Atlas Arteria's pro forma share of this was EUR 127 million. Our share of APRR's company net profit after tax, which of course drives the size of the distributions, was EUR 105 million. The difference between the 105 and the 127 from a consolidated perspective is consolidation and IFRS adjustments. If you then remove the financing costs associated with the debt facility of Eiffarie and then less taxes and administration costs, you're left with the EUR 97.8 million, which Atlas Arteria received in September. If you convert this to Aussie dollars, you get the AUD 157 million in distributions.
From a head office perspective, we also received AUD 4.2 million from Warnow Tunnel, that's Aussie dollars, which included management fees and our first distribution. We paid our corporate costs and investment cash flows, which gets us to the AUD 149.2 million net operating cash flow. We had AUD 133.2 million cash on the balance sheet at 30 th June. If we add the net operating cash flow inflow to this balance, with the distribution we paid out in October, we closed 31st December with the cash balance, as I mentioned before, of the EUR 134 million. APRR is clearly the most significant contributor to our performance. If we now turn to slide 17, I'll just touch on that.
APRR consolidated net profit for the year was 49% above 2020 and 7% above 2019, which of course was pre-pandemic. I'll just step through some of the drivers of this performance. You can see that revenue increased with the uplift in traffic. It is worth highlighting that the comparative period is a little unusual, and we highlighted this too at our half year presentation. You would expect with toll increases that revenue would increase by more than the traffic increase. Light vehicle traffic was heavily impacted by the restrictions in 2020 and with the significant comparative recovery in the light vehicle traffic across 2021, as Graham talked about, the toll mix has changed. Average tolls went from 10.8 cents per vehicle kilometer traveled in 2020 down to 10.3 in 2021.
The other item that affects the comparison with both the revenue and cost line item is the Fulli business. The net impact is small, but overall there was an increase to both revenue and cost by around EUR 26 million each. The Fulli business, just as a reminder, owns service stations along the network. Other operating expenses also increased as a result of variable expenses with the higher traffic, full period impact to the advisory management fee, and employee profit sharing costs associated with that higher profit number. The profitability and margins have also seen the benefit of the reduction in both the CET, which is an operating tax, and the corporate tax rate.
The decrease in interest costs was a result of lower debt balances as opposed to the debt costs themselves, with average rates remaining relatively consistent actually over the past two years. Just to note, we have provided more detail than we have historically in the annual results re the composition of the various line items that you'll see on this slide as part of our investor reference pack, which was also released to the ASX this morning. If you move to slide 18, you can see the CapEx performance for the year. Look, all I really want to point out on this slide is the CapEx for the next two years, so that's this 2022 and 2023, is expected to be between EUR 650 million-EUR 700 million combined. That is consistent with what we have been talking about with the market previously.
Post 2023, this is expected to then revert back again to that average of EUR 200 million-EUR 250 million per annum again as we have previously disclosed. No new information there. Rounding out the performance of APRR and looking at the financial position, let's move to slide 19. APRR remains A- rated by S&P and Fitch. As I mentioned last year, there was a net EUR 400 million reduction in net debt across APRR and Eiffarie, and with the continued reductions in net debt, there's obviously a growing capacity for debt within that structure. The other item, just to note, since December, 90% of the Eiffarie debt due to be repaid in 2026 has been rolled over for another year with the amortization profile that you can see there on that chart.
This means that 800 million odd euro that was due to be repaid in 2026 has now been extended and we've got the EUR 606 million due to be repaid or refinanced now in 2027. Turning now to slide 20, and we'll touch on the results of Warnow Tunnel. Now, unfortunately, there were strict lockdowns for the majority of the first half of the year and they did affect the traffic performance. The effects of this on revenue though, were partially offset by the 2% increase in weighted average tolls. You can see that revenue is actually relatively stable year-on-year.
Importantly, following our capital restructure at Warnow Tunnel completed in March, we received a distribution of EUR two and a half million in August, and we have since received a further EUR 3.3 million, which has been paid to us in February. Moving now on to slide 21 and the Dulles Greenway. Traffic continued to improve over the year and as a result, we saw the EBITDA being 21% higher than 2020. If we exclude construction costs under IFRIC 12, then you can see that operating revenue increased by 16%, which was 3% greater than the increase in traffic, and that reflected the 5.3% increase that we received in off-peak tolls, which was implemented in May.
Operating costs increased marginally, and that was a result of higher traffic numbers, higher maintenance costs, and some cost expense for the Leesburg Bypass project. These were primarily offset by significantly lower property taxes. Importantly, liquidity within this business remains strong. With $220 million of cash available in the business across the restricted and unrestricted reserves, we had $79 million locked up within the business, which could have been distributed, but for the failure to meet lock-up tests. I will just highlight that of this, around $18 million was used just recently, actually, for bond payments. This is a cash flow timing issue, so these payments need to be made at the start of the year. There is opportunity for cash balances to be replenished over the course of 2022. The Atlas Arteria income statement is provided on slide 22.
I'll just touch on our performance, which has significantly improved compared with 2020. You can see the primary driver of this was the performance of APRR, which I've talked about, and that comes through the share of net profits from associates. Our performance for 2021 also followed the impairments that were made to the Dulles Greenway business in 2020. You may also be interested, the 20% reduction in business operations expenses reflects the finalization of capital projects at the Greenway in 2020. There's no IFRIC 12 construction costs coming through there. The reduction in finance costs reflects the removal of the holding company facility with Atlas Arteria, and also the appreciation of the Aussie dollar to the US dollar, which has reduced the interest costs coming through there from the Greenway. Corporate costs, consistent with the guidance we provided in August last year.
We are expecting corporate costs to be at that kind of mid-30 millions type level for this year. That really reflects the full impact of the insurance costs. It was only around nine months of that last year. The uplift in capability, which is now covered across a full 12-month period. The final outcome on these though will, you know, obviously depend on strategic outcomes and investment expenditure during the year. In terms of the notable items, you can see there that there's an expense of AUD 15.4 million. This expense is a result of the removal of the fair value adjustments that were allocated to the legacy debt. We talked all about this in our half-year results.
This is non-cash, and of course the real value as a result of the capital restructure is a substantial increase in the unrealized value of the business, which we get from bringing forward those cash flows and the lower gearing. I'll just finish now on slide 23 and touch on how our business is placed in terms of the current economic environment, I suppose, that we're in. Essentially, this environment is ideal for us. We have movement restrictions which are easing. People are traveling, living with COVID. Our toll prices are highly correlated to inflation, so higher inflation, higher toll prices. The significant majority of debt across the businesses is fixed with long average duration. Touching on a couple of things in the slide, you can see the two CPI charts that are there.
Inflation rates in France and Germany have now reached the highest levels that we've seen over the last 10 years. Each of APRR and AREA have their toll prices explicitly linked to inflation via their concession agreements. Warnow Tunnel, of course, also has toll indexation outlined in its concession agreement. Dulles Greenway now operates under a regulated arrangement. Just to give you some context, if you think of US CPI around, say, the 2.5% level, off-peak tolls this year are increasing by 5%. If you say 20% of trips are in the peak, 80% in the off-peak, which is broadly what we saw last year, this would translate to a 4% average increase in tolls against that 2.5% level.
In terms of interest rates, there's limited exposure to increases in interest rates, but any from the floating portions or refinancings, et cetera, you can see where EURIBOR rates are at versus the inflationary outcomes that I've just touched on. As I said, really for us at the moment, an ideal economic environment. I'll now hand back to Graeme, who will talk through our growth priorities and outlook.
Thanks, Nadine. Turning now to slide 25. Our strategy is focused on reducing our legacy complexity, maximizing operational efficiencies in our existing businesses to improve margins. Applying a disciplined capital management approach to underpin distributions, lengthening our average concession life, and diversifying and managing our risks. Since the internalization of management, a disciplined and consistent execution of our strategy has significantly decreased head office management costs relative to the fees formerly paid to Macquarie. It has seen us increase our stake in APRR to 31%, enhancing our governance rights and access to cash flows. We restructured the shareholders agreement at APRR to remove value-destroying poison pills, and yesterday signed the agreements for the 100% ownership of RCEA by APRR, which will be a strong addition to the portfolio. We are currently bidding for the A41, a new concession feeding into Geneva being tendered by the French government.
Our discussions with the government on a new management contract focused on carbon reduction has progressed well and has been submitted to the ART, and this is in the order of EUR 400 million. The ART, as those who will be aware of our history, reviews these agreements that are made with government and provides feedback. You'll recall the 2018 package; there were some adjustments to that package at the final outcome. They'll do that review over the next few months, and in the second quarter, we'll get the outcome of that review. Post the election, we would sort of expect that agreement to be implemented.
As we've previously said, a further package of works that would require a concession extension to fund will not resume consideration until post the French elections later in the year. We've restructured Warnow Tunnel so that for the first time, we're receiving distributions. We continue to gain support for the restructuring of Dulles Greenway with the support recently from Northern Virginia Transportation Alliance, key lobby group for transport in Northern Virginia, the Loudoun Chamber of Commerce, the Northern Virginia Chamber of Commerce, various realtors associations, and the Premium Distributors of Virginia. We are looking forward to active engagement with the new Republican administration in Virginia. The recently appointed Secretary of Transportation, who has been on the Commonwealth Transportation Board since 2018, is familiar with the Greenway and the current situation.
We have already had a meeting with him and his team to open the lines of communication, and we are advantaged by the fact that the commissioner remains the same as the previous administration, and one of the assistant secretaries as well. The dialogue hopefully can continue on to get resolution. The implementation of our strategy since internalization has materially increased the value of both APRR and Warnow and our cash flow from them, and in doing so, significantly improved the value of Atlas Arteria. We continue to seek opportunities where we can see an ability for ALX to add value to businesses. Moving to 2026, we have a highly experienced team and culture with a proven track record of executing complex multi-party transactions to unlock value. We have strong growth potential within and external to the current businesses.
We have the balance sheet and strong cash flow from which to build our business in an inflationary environment. As Nadine explained, we're positively leveraged to both higher inflation and interest rates. In Europe on slide 27, we've developed a strong relationship with Eiffage, our partner in APRR, to pursue opportunities in France utilizing the significant balance sheet capacity APRR has to fund such projects. We're in active dialogue with the government on meeting its road infrastructure needs and associated ESG objectives. APRR is recognized as a leader in implementation of ESG policies and initiatives in France. Strong traffic and financial performance positions APRR extremely well for future growth while we continue to explore opportunities where we can utilize our expertise to add value for our security holders.
Moving to the U.S., we continue to focus on a return to work that will prepare Dulles Greenway to provide a strong option to alternate routes during peak commute times. We've engaged in detail with the previous administration on how we could assist in providing a corridor-wide solution to enhance the efficiency of the Northern Virginia road network. We're keen to work with the incoming administration in delivering that. As part of such a solution, we would then seek to establish an appropriate gearing level that would provide sustainable distribution flow to our security holders, as we've done with Warnow.
As I outlined previously today, we've received increasing support from the community for implementation of such a solution and are focused on delivering successfully a mutually beneficial outcome. Moving to slide 29. At Atlas Arteria, we are focused on opportunities to create sustainable cash flows while lengthening our average concession life.
Sustainability is being embedded throughout all levels of the business to ensure we can succeed in the long term. At APRR, we focus on providing high levels of service to our customers and working with government to improve the network to achieve their road development and environmental objectives. The completion and commencement of tolling at RCEA later this year is an exciting new addition to APRR's business. The government has also recently announced a trial for implementing free-flow tolling on parts of the AREA network for entry to our road network. Full implementation would be a significant capital program. In Virginia, we are focused on customer safety improvements and customer payment options while continuing to be actively engaged with the community.
At Dulles Greenway, we're focused on continuing to build our relationship within the community and achieving support for restructuring the tolling arrangements of the business to the mutual benefit of our customers, the Northern Virginia road network, and our security holders. We're excited about the opportunities to continue to optimize and grow our business, extending our average concession life while delivering accretive value with strong distributions to our security holders. In conclusion, before passing to questions, I'd like to take the time to thank our team for the fantastic work they've done over the past year to lead to this result. Most importantly, I'd like to take the opportunity to thank Nadine for the massive effort she's put into establishing from scratch the financial, risk, ESG, traffic, forecasting, and investor relations systems that have allowed us to establish ALX as a strong, independent business.
From a personal perspective, I'd like to thank her for guiding me in the needs of the public markets. We wish Nadine all the very best in her new challenge. With that, I'd like to hand back to the operator for questions.
Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. To cancel your request, please press star then two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Rob Gillies from MS. Please go ahead.
Good morning. Apologies if I'm asking a stupid question. I had to dial into your call a bit late due to some other company commitments. I guess my first question is in relation to the RCEA. I guess will we be able to get some data on tolling and traffic forecasts? Will that have its own kind of non-recourse debt once it's up and running?
Thanks, Rob. From the perspective of the debt, the debt will be on balance sheet for APRR. Within the APRR group, it will just be normal corporate funding which funds that. As to the data, as we explained, the tolling mechanism and increase mechanism is very similar to APRR from an escalation perspective. At the time of opening, we will announce the tolling arrangements in terms of tolls on each class of vehicle. That will not be announced until we get to opening.
Okay, cool. Thank you. Then for the potential opportunity, I'm gonna butcher the pronunciation of Ferney-Machilly or something. I guess just googling it, I'm getting that it's maybe a 16.5 km road, not a tunnel, maybe EUR 400 million-type size project. Is that broadly correct?
Yes. It's not a massive project, but in the context of being in our network, it's a feeder road, a little like ADELAC of commuter traffic into Geneva. It's not an overly complex road. We haven't given any guidance on the cost, but you won't be too far wrong.
Yeah. Okay. Thank you. I guess, that's a separate opportunity to the potential free flow investment. I believe a Farge overnight kind of suggested that was about EUR 400 million as well. That would be, and I'm again gonna butcher the pronunciation, but that would be an ADELAC kind of deal. Is that right?
The initial trial on APRR of entry, so in other words, not going through a toll booth to collect, be registered, you will have free-flow entry to the road network at trial sites within AREA. That's a precursor to the opening up of free-flow tolling across France. In total when we get to total free-flow tolling, that's a major capital injection. A major capital program would be required to deliver that, is a better way of describing that.
Thank you. The next question is from Ian Myles from Macquarie. Please go ahead.
Hey, guys. I wanna ask a sort of dumber question. The consolidation adjustment of EUR 64 million, that's probably a little bit larger than expected. Is that gonna stay at that level or does it go back towards EUR 40 million? This is for how your dividend flows out of APRR into your company.
Thanks, Ian. I'll perhaps take that one. You can see that, and we've outlined this in our investor reference pack, that as you've highlighted, the consolidation adjustments are slightly higher for the 2021 year. Now, we do have that permanent difference that we've talked about previously as a result of the loan structure that was put in place between the entities within APRR, and that creates around AUD 100 million per annum permanent difference. That, we expect to come off by the end of 2023. In addition, this time, because of the consolidation of AREA, and we've seen the performance consolidated for this year, which was higher than the distribution that we received from that business from last year, just in terms of the performance results. You are seeing an increase of about AUD 13 million as a result, primarily of that difference.
Now, obviously, as you see, performance equates to year on year. You see performance much more stabilized, then that difference will reduce.
Okay. It should go back towards that AUD 100 million mark.
Well, it depends on what happens with.
Yeah
With performance.
No, I appreciate those timing differences otherwise.
Yeah. Yeah.
On the MAF fee of EUR 8 million in... Oh, sorry, EUR 6.3 million in your 1H 2021. That's quite significantly larger, and I was just sort of wondering what's the reason for the higher amount. I gather it's like 5% of dividends, but it just doesn't quite work that number.
That particular number, Ian, was cash that was withheld within MAF, just as some specific over-reserving, thinking about some tax arrangements. You will see that released when you look at our cash flows for this half.
It's been released, so that MAF fee in 2H 2021 won't be as material as that.
It certainly isn't anticipated to be as material, but obviously it depends on what is happening within those particular entities. You can see the step up in cash that was reserved in MAF as a result of the policy to keep two years' worth of cash on that entity's balance sheet, consistent with what we're doing at Atlas Arteria. If there are particular things going on, be it looking at anything in particular with APRR, looking at some tax reserving arrangements, then you might see just some variability, I suppose, in that particular line item.
In Eiffarie, is there any move to early refinance the loan before it starts amortizing next year?
What usually happens with these loans, they are structured to encourage early repayment. While we've had extensions from most lenders under the terms of the agreements, the heavy amortization is there as an incentive to refinance before that amortization hits. You would expect that it will be renegotiated or refinanced prior to the heavy amortization kicking in. Markets allow.
Thank you. As a courtesy, please limit yourself to one or two questions before rejoining the queue to allow time for all questioners. Your next question is from Anderson Chow from Jarden. Please go ahead.
Good morning, everyone. I have a few questions on the use of your very healthy corporate balance sheet. Is there sort of a timetable that the management has given itself in terms of when you will consider the surplus cash could be probably potentially paid out as dividend or is there sort of a timetable that you're looking at?
I think there are two elements to the cash on balance sheet. The first is the additional holding we have which relates to the uncertainty of COVID, hence us holding two times operating expenses at all levels in the balance sheet and the pyramid of companies. That's the first point. The second point is that there is a relatively small amount of cash in a per share security basis, AUD 0.05-AUD 0.06. We have been holding that cash on the basis that we are pursuing the opportunity at Dulles Greenway and other opportunities may arise where we can deploy that cash. We do not currently have significant borrowings. We have no borrowings at the head co level.
In restructuring Dulles Greenway, there will be a capital injection which will come from borrowings within the broader group. Redistributing that capital and then having to go to the market to raise capital to solve an issue we have line of sight on doesn't, to our mind, make sense from a security holder perspective.
I see. Assuming if we gear up the corporate level balance sheet, what would be a comfortable level that you think? What sort of investment power do you think we could have for kind of new investment opportunities?
The principle we've always said to security holders since internalization is that we wish to maintain an investment-grade rating across all our borrowings. Currently at Dulles Greenway, we don't have that. We have, obviously, a very strong rating at APRR, and on a shadow basis, we sort of meet that objective at Warnow. Using S&P metrics, you'd be able to figure that out.
Okay. Yeah. Okay. Thank you.
Thank you. The next question comes from Owen Birrell from RBC. Please go ahead.
Hi, guys. Just a quick question. You sort of referred to, you know, line of sight over Dulles Greenway, and, you know, the potential for the restructuring there. Just wondering if you can give us a quick update on, I guess, the progress to date, and, you know, I guess, where do we go from here?
I think we're gradually taking forward steps. The change of administration from Democrat to Republican set back the program a little in the context that we're dealing with a totally new secretary and new administration. In that context, the issue is we need to bring the incoming administration up to speed on what the business is all about, what the proposals are and how they come into play. That said, as I mentioned in my speech, there are advantages in the context of some continuing people in senior roles in the administration, both within the commissioner remaining at VDOT and the secretary's office having a continuing assistant commissioner.
The incoming secretary, not unreasonably, wants to get his feet under the desk and understand what's going on. The chairman of the respective House and Senate transport committees have said that they are writing to the secretary seeking his involvement to create a dialogue between his office, VDOT, Loudoun County, and ourselves to determine an appropriate path forward. There are positive signs, but we've got a way to go before we've got the legislation enabling this and go about execution.
I was gonna say, is the next, I guess the next timing of a, you know, potential, I guess announcement on this is pretty much this time next year, is it? So we've got another 12 months of, I guess, discussions before we-
It depends on how important it's seen. We have a further election in 2022. If the Republicans want to achieve something to be able to go to the electorate with, they may need to do it earlier. Because of the implementation time, you know, the legislation has to be passed then the implementation has to happen. We'll have to wait and see how that evolves. There are various sessions that happen during the year if the governor wished to push something through that may provide an earlier opportunity. I think, you know, we'd be saying that it's more likely to be the 2022 session. 2023 session, I should say, of the legislature that would pass enabling legislation.
Understood. Thanks.
Thank you. The next question is from Mollie Urquhart from Barrenjoey. Please go ahead.
Hi, Graeme and Nadine. Just a quick one on any smaller works or maintenance contracts around the APRR network that could potentially give you guys some tolling benefit or concessions. Note that anything that would contribute to an extension is probably after the election. Is there anything shorter term that we could be aware of?
Yes. As we said, in the call earlier, there's a roughly EUR 400 million package, which has been sent from the ministry to the regulator for review. The regulator then reviews that package and determines its appropriateness from its perspective as the regulator, and it then comes back to the administration for implementation. That involves work such as extending our road into the ring road in Paris. It's extending the A6 right into the Paris ring road, which is a road if you've driven into Paris, you're sort of on this great motorway, and all of a sudden you hit potholes everywhere.
The government want that resolved, and there are a number of other issues that we're working on from an environmental point of view, including parking for park and ride facilities, truck parking, secure truck parking areas, and a whole range of other things that are in this package. Historically, these management agreements have been compensated for increases over and above the formulaic increases on a per annum basis. In 2023, those previous increases expire, and you can expect that the compensation for this package of work, the EUR 400-odd million, will be compensated in a similar way to previous management agreements.
Brilliant. Thank you.
Thank you. The next question is from Harry Saunders from E&P. Please go ahead.
Morning. Just one from me. Just wondering if you can give a comment on the sustainability of the distribution, you know, given the proportionate EBITDA was broadly in line, but the distribution saw, you know, a large increase on PCP and, you know, against expectations.
Effectively the current position that we have stated to the market is having stopped providing guidance as many did with the oncoming of COVID was what we've said is that we will distribute the free cash that's generated within the business. As you can see, we did that in the first half, and we've repeated that in the second half. If we choose to change that, we'll obviously advise the market when that decision's made.
Great. Thanks.
Thank you. The next question is a follow-up from Rob Gillies from MS. Please go ahead.
Good day again. Thank you for letting me back in. With my ESG hat on, I wanted to ask a little bit more about the targets that you have on slide 13, and whether those greenhouse gas reduction targets apply like on a portfolio level or at every single asset, I guess, because you actually have control over a couple of assets, but they're relatively small in the portfolio. I just wondered if you could clarify that please.
I'll take that one, Rob. Those targets for the environment are across the entire portfolio. They have been established very much in line with what APRR are thinking of doing, and we're working very closely with Eiffage around the whole sustainability agenda, I suppose, for APRR. At the same time, we're working with each of Warnow and the Dulles Greenway, as well as head office, to have a look at not only how we meet those from a portfolio perspective, but also how we minimize our GHG emissions on an ongoing basis.
Okay. Cool. Thank you, Nadine.
Thank you. The next question is a follow-up from Ian Myles from Macquarie. Please go ahead.
Graeme, I noticed in the remuneration report, you've got two new objectives for APRR concession extension and the Dulles Greenway. Just interested in what this sort of target is for concession extension of the group, what you're trying to achieve or what the board's trying to achieve there.
As you're well aware, Ian, our Achilles heel is the short nature of our concession arrangement at APRR. We're obviously looking at how do we achieve extension in our average concession life across the portfolio, obviously at APRR, but as well at our other businesses and through anything else we might look at. The context is to create logical, commercially sensible concession extension on average across the portfolio.
Okay. One final thing on the A41. Has the process moved from an RFQ to an RFP now, or is it still an RFQ?
It's an RFP, as I understand.
Okay. It's progressed one step.
Yes.
Cool. Thank you.
It's gone beyond the initial expression of interest and now into preparing bids.
Thank you. There are no further questions at this time. I'll now hand back to Graeme for closing remarks.
Well, thank you very much everyone for joining us today. We really appreciate your support. We're thrilled to be able to announce positive news as our markets are driving their way out of COVID through learning to live with it as it's been very clearly demonstrated in France. We look forward to continuing onwards and upwards. Thank you, operator.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.