Thank you for standing by, welcome to the Atlas Arteria 2022 results presentation conference call. 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 will need to press the star key followed by the 1 on your telephone keypad. I would now like to hand the conference over to Mr. Graeme Bevans, CEO. Please go ahead.
Thank you, operator. Good morning, everyone. Thank you for joining Atlas Arteria's 2022 full year results call. I'm joined by our CFO David Collins, our investor relations team. Today, David and I will take you through the presentation we have lodged with the ASX this morning. Our formal presentation should take around 40 minutes, following which we will open the call to questions. Starting with the key highlights on slide 6. 2022 was a significant and transformative year for Atlas Arteria. Based on the company's strong performance and momentum, I am delighted to be able to reaffirm distribution guidance of AUD 0.20 per security for the second half. This will translate to a record distribution of AUD 0.40 per security for the year.
We have also reaffirmed guidance of AUD 0.40 per security for 2023, which is underpinned in part by the strong toll increases that you can see on the slide. In September, we announced the acquisition of a majority interest in Chicago Skyway. This landmark acquisition has transformed Atlas Arteria into a stronger, larger, and more diverse business. We continue to expand APRR's footprint in France with tolling commencing on the A79 in November. Last month we signed an investment plan with the French State, under which we will deliver capital improvements to the APRR and AREA networks. Traffic benefited from a continued increase in mobility, improved operating conditions, and the contribution of Chicago Skyway and the A79. Including the contribution of the new roads, traffic volumes were 7.8% above 2021.
In all, a year of strong execution across our organic growth priorities, as well as the successful delivery of a significant acquisition. This relentless focus on unlocking value across our businesses is indeed translating into security holder value. In 2022, we delivered a total security holder return of almost 9% versus the ASX 200, which went slightly backwards. Importantly, since internalization was voted on in 2018, we've outperformed the index with a very credible total security return of 42%. Moving now to the financial results on slide 7. All our businesses outperformed 2021 levels led by APRR and ADELAC. We expanded the contributors to our traffic and earnings with the addition of the A79 and the Chicago Skyway. Overall, weighted average tolling revenue increased by 9% versus 2021, while weighted average EBITDA increased by 10.3%.
Today, we are reaffirming the second half distribution guidance of AUD 0.20. That brings the 2022 total distribution guidance to a record AUD 0.40 per security. Following the Skyway equity raise, we obviously have more securities on issue. As we announced at the time, we intend to support the second half distribution by utilizing excess cash on the balance sheet. We're also pleased to guide to AUD 0.40 per security for 2023, which will reflect the contributions of APRR, Warnow Tunnel and Chicago Skyway. It will also include proceeds from refinancing activities at Chicago Skyway, as we flagged at the time of acquisition. This is a short-term strategy to support distributions, not a change to our usual approach of funding distributions from operating business cash flows. We believe that AUD 0.40 is a sustainable target for distributions going forward. Moving to slide nine.
In September 2022, Atlas Arteria announced it would acquire the majority interest in the Chicago Skyway. In October, we completed a $3.1 billion equity raising to fund this acquisition, and in December we achieved financial close. Skyway was a rare and compelling opportunity that we were uniquely placed to access, in which we will add value to our business both financially and strategically. The Skyway's long concession life and highly attractive toll regime are key value drivers on this road. In addition, we've been able to leverage our detailed knowledge of Skyway based on our historic ownership of the business and our long-standing relationship with Ontario Teachers. We've included information in the pack today on Skyway's current and historic performance, including supplementary information in the appendix. Slide 10 talks to the focus of our activities since we assumed majority ownership in December 2022.
The board and management team have spent time in Chicago, and we've established good working relationships at all levels of the business. We've done a lot of listening and learning and started leveraging our capabilities as a global operator across multiple areas of the Skyway business. Looking to the rest of the year, we have a number of priorities to progress with the Skyway management team and our partner, Ontario Teachers. One important area in which we are co-developing plans is our approach to maintenance. A more proactive lifecycle maintenance approach will improve asset condition and reduce overall maintenance requirements over time. In the short term, that will mean that the cost of maintenance will increase above the $11 million U.S. historical average. In 2023, we're guiding to maintenance CapEx of $19 million U.S. dollars. In addition, we're working towards key upcoming debt refinancing activities.
Moving to slide 11 and some comments on the recently signed investment plan. The EUR 410 million capital investment plan will support the French government's environmental agenda and deliver long-awaited motorway upgrades, particularly to the A6. The largest individual capital component on the plan is the redevelopment of a 17-kilometer stretch of the A6, which connects the APRR network to the outer Paris ring road. This plan will also deliver customer service improvements, including the conversion of the majority of the AREA network entry points to free flow tolling. This could be a precursor to the more widespread application of free flow tolling across the network. The government has approved a number of compensation measures, including supplemental toll increases for APRR and AREA.
This is the fourth investment plan of its kind, it extends our track record of successful collaboration with the French government. Moving to slide 12 and an update on the Dulles Greenway business. Legislation is currently being considered by the Virginia General Assembly, which would authorize VDOT to negotiate a new concession agreement for the Dulles Greenway. The legislation is included in the governor's budget bill, which is presently being debated, We expect the outcome to be known shortly. If successful, there are a number of activities which need to be progressed in order for us to effect a restructure of the Greenway's business model. Should the legislation not pass at this time, Dulles Greenway will advance a rate case application in 2023 for increased tolls. A decision would be possible in mid to late 2024.
Moving to slide 13, which demonstrates the current inflationary impact benefits Atlas Arteria. Toll prices at APRR, ADELAC, and Warnow Tunnel are all directly linked to inflation. As a result of decade-long high inflation levels in France and Germany, tolls were increased by almost 5% at APRR and over 6% at Warnow Tunnel in recent months. At Skyway, the tolling regime selects whichever macroeconomic indicator is higher on a 2-year look back basis. This means we have strong visibility over the 2023 and 2024 increase at the time of the Skyway acquisition. In 2023, tolls increased for light vehicles by 11.9% once we've taken into account the rounding benefit in the mechanism which takes it to the nearest 10 cents. This reflects 2021 GDP levels. In 2024, we have an estimated increase of around 9% also based on GDP levels.
While we have seen early indications of certain inflationary impacts on our cost line, for example, wage increases, we expect to be net beneficiaries of the current inflationary environment. Let's change gears and talk about operational progress made through 2022. At APRR, we saw another very strong result. Traffic across the APRR group was 8.2% higher than the same period in 2021. This was mostly driven by higher light vehicle traffic of 9.4%, linked to strong holiday traffic over both the winter and summer periods. Heavy vehicle traffic increased by 2.4% relative to 2021. The outlook for French household consumption and real GDP is expected to be flat in 2023, with forecast growth over the following four years.
As you can see on the chart, light vehicle traffic levels have been closely correlated with household consumption over the past 20 years. Heavy vehicle traffic is expected to continue to grow with international trade, although this was lower through the second half of 2022. Moving to the A79. This road is part of a key west, east-west transversal link from Royan in the Atlantic coast to the Rhine Valley and beyond towards Germany, Switzerland and Italy. This concession is the first in France to be commissioned with free flow tolling technology from the outset. This expansion has vastly improved the safety conditions on the road, creating two lanes in each direction while delivering significant time savings for motorists. The A79 is priced according to environmental criteria. Electric cars will, for example, pay EUR 3.20 per trip, as opposed to EUR 4 for a conventional car.
As expected, in the first eight weeks after tolling, we saw significant use of the road by heavy vehicles, which made up just over 40% of all traffic and 73% of toll revenue. Moving to Warnow Tunnel on slide 17. Traffic was up by 3.4% on 2021, which was subject to COVID-19 related restrictions. However, there were some other impacts during 2022, including the introduction of the German government's discounted public transport ticket initiative. During the fourth quarter, the Warnow Tunnel benefited from the roadworks on the competing route, which increased the travel time savings offered by the tunnel. Moving to slide 18 for a snapshot of traffic performance on the Chicago Skyway. Although we only incorporated the contribution of the Skyway into our accounts from December, we've included historic data here for comparative purposes.
Both light and heavy vehicle traffic were positively impacted for part of 2022 by roadworks along the adjacent competing route on the Frank Borman Expressway. In addition, the steady increase in office-based work in Chicago also positively impacted traffic. Heavy vehicle traffic was supported by strong industrial production growth. Looking forward, industrial production is expected to contract marginally in 2023, in conjunction with broader short term economic headwinds. The outlook is then positive between 2024 and 2027. In 2023, roadworks on the adjoining Indiana Toll Road are expected to negatively impact Skyway traffic. This was flagged at the time of the acquisition. As you can see on slide 19, we continue to see gradual improvement in traffic at Dulles Greenway.
Traffic over 2022 was 6.6% higher than 2021, but 30.8% below 2019, driven by the slow return to the office in the greater Washington area. Traffic in peak periods, which has been the slowest to recover, is showing a steady positive trend. As a reminder, peak period traffic pays a multiplier on the Dulles Greenway and therefore drives higher revenue outcomes on this road. Since the commencement of the pandemic in 2020, traffic on the adjoining Dulles Toll Road has quite closely mirrored the performance of the Dulles Greenway. DTR also supports significant commuter traffic and current traffic levels are substantially below 2019. Conversely, we believe that weekday traffic via the alternate Route 7 and 28 is more or less back to 2019 levels.
These roads typically serve a different mix of customers to the Greenway, who travel to and from different sets of origin and destinations. This is a good thing for the Greenway, as the more congestion on the free alternate route, the more significant the time savings offered by the Greenway. Turning to environmental, social, and governance matters on slide 20. During 2022, we continued to make good progress across our sustainability priorities. Full details will be provided in our second sustainability report, which will be released in April. Safety remains a top priority. As we've explained before, the accident which occurred at APRR in April, which we have previously spoken about, resulted in 1 fatality and 1 serious injury of an employee who has since recovered and returned to work. We're very focused on supporting the employees and their families as well as implementing changes following this tragedy.
APRR recorded an LTIFR of 3.67, a result above its target to keep LTIFR at or below 3. This miss was driven by an increase in accidents in the busy summer and Christmas periods. No lost time injuries were recorded across the rest of the business. In 2023, the focus will be on working with the Chicago Skyway team to help them develop their approach to sustainability. In parallel, we will continue to implement our policies and programs across the rest of the business. This year, we've made good progress to address the recommendations set out in the Task Force on Climate-related Financial Disclosures. This will be a multi-year exercise. During the year, the business focused on identifying and analyzing climate-related risks and opportunities.
We also formalized the structures necessary to embed oversight within the business. We're very focused on achieving our Scope 1 and 2 greenhouse gas emission reduction targets. During 2022, we assessed Scope 3 emissions in our wholly owned businesses and at our corporate offices. I will now hand over to David, who will take you through the financial performance for 2022.
Thank you, Graeme, Good morning, everyone. I'm very pleased to report Atlas Arteria's 2022 results today. The Atlas Arteria income statement is provided on slide 23. Our financial performance has significantly improved compared to 2021. The primary driver is the continued strong performance of APRR, which you can see come through in the share of net profits of equity account investments and the improved performance at Dulles Greenway. I would also call out the 17% increase in toll revenue, which was predominantly driven by higher traffic and increased toll rates at Dulles Greenway, as well as a weakening of the Australian dollar against the US dollar. The 645% increase in other income, which reflects the increase of interest income on cash deposits.
This is due to rising interest rates as well as interest earned on the shareholder loans with CCPI, which is related to Chicago Skyway for the month of December. Finally, corporate costs increased over the period in line with expectations. Corporate costs do not include the $2.3 million of IFM engagement costs or $2.5 million of transaction costs associated with the Chicago Skyway transaction. We expect corporate costs to be between $34 million and $36 million for 2023. This corporate cost range does not consider transaction or growth project costs. As Graeme has discussed, we also acquired a majority interest in the Chicago Skyway in December. As with APRR, the Skyway has been included in the share of net profits of equity accounted investments line. For 2022, the Skyway has only been included for the month of December.
We have also included a number of notable items in relation to the Skyway transaction, as well as costs associated with IFM engagement. Overall, we are very pleased with the outcome for the year. We turn to our cash flow waterfall on slide 24, which outlines how we derive our distributions. The consolidated APRR profit for the first half was EUR 535 million. Starting on the left-hand side, Atlas Arteria's pro forma share of this was EUR 167 million. Our share of the APRR company net profit after tax, which drives the size of distributions, was EUR 135 million. The difference between the EUR 167 million and the EUR 135 million are consolidation and IFRS adjustments.
If you account for the release of some surplus cash withheld at APRR in the last period, the math taxes and administration costs, you are left with the EUR 134 million, which Atlas Arteria received in September. If you convert this, you get AUD 199 million in distributions. We also received AUD 7.9 million from Warnow Tunnel in the period. In addition, we received interest income from capital raise proceeds and AUD 4.8 million from closing out the legacy LIBOR interest rate caps. We also paid our corporate costs, capital project costs, and investment cash flows. This gets us to the AUD 211 million net corporate cash flow.
We had close to AUD 132 million cash on the balance sheet at June 30, plus the AUD 211 million of corporate cash flows during the period. We can see the impact of the Chicago transaction on our cash flow. We received around AUD 3 billion of cash from the equity raising, which is net of equity raising costs. We drew down around AUD 3 billion to pay for the Chicago Skyway acquisition and transaction costs. We also paid out our first half distribution in October. This meant we closed on December 31 with a cash balance equivalent to around AUD 172 million, as you can see on the slide. Let's turn to slide 25 to look at APRR, the most significant contributor to our performance.
APRR consolidated net profit for the period was around 13% above last year and around 21% above 2019, which of course, was pre-pandemic. I will step through some of the drivers of this performance. Firstly, revenue increased with the uplift in traffic and toll increases. The recovery in light vehicles traffic resulted in a more normalized toll mix. However, the weighted average toll price increased versus 2021 due to the toll increases. Secondly, we saw the revenue and cost contribution rise from the Fulli business, which is growing. As a reminder, the Fulli business operates service stations along the network. Thirdly, other operating expenses increased as a result of higher operational taxes associated with the higher traffic and earnings.
Lastly, interest costs increased as a result of higher debt balances with a slightly higher average cost of debt. It was increased during the year to support the acquisition of the interest in the A79. This represents project costs during construction. We have also included in the table the bridge from APRR consolidated NPAT to the APRR company NPAT. As we just saw on the cash flow waterfall, the company NPAT drives the distribution paid from APRR. The APRR net consolidated adjustments consists of intercompany loan arrangements, which expire at the end of 2023, IFRS accounting differences, and lastly, the six-month lagging effect of profit from AREA. The increase in the consolidation adjustments during the period reflects the IFRS accounting differences for the period. Under the APRR standalone accounts, which are calculated under French GAAP accounting standards, the provision has increased compared to 2021, reflecting cost inflation.
For more information on the composition of the various cost items and tax line items for APRR, please refer to our investor reference pack, which was also released to the ASX this morning. If you move to slide 26, we can see the CapEx program for APRR. Following the approval of the investment plan, CapEx guidance has been updated to reflect the additional projects agreed under the new plan. CapEx for 2023 until 2027 is expected to be between EUR 350 million-EUR 400 million per annum. Post this, CapEx is expected to revert back to the average of around EUR 250 million per annum. APRR has significant balance sheet capacity to fund both current and future CapEx projects, which I will discuss further on the next slide 27. APRR is rated A by Fitch Ratings and A-minus by S&P.
Total debt outstanding currently sits at EUR 9.7 billion at 31 December, including EUR 1.1 billion at APRR. Liquidity also remains strong at EUR 3.5 billion, including EUR 1.5 billion of cash and a EUR 2 billion undrawn revolving credit facility. APRR has significant balance sheet capacity, with net debt to EBITDA sitting at 3.4x versus the default covenant of 7x. APRR has EUR 1.4 billion of debt to mature in 2023, of which EUR 0.5 billion relates to fixed coupon bonds. There are EUR 0.8 billion of short-term commercial paper maturing, noting that APRR has one and a half billion euros of cash, hence providing a natural hedge.
It is also worth highlighting that APRR will pay EUR 40 million of scheduled amortization at Afari, which will impact distributions paid to Atlas Arteria. Finally, 88% of debt at APRR is fixed, which provides protection in a rising interest rate environment. Turning now to Warnow Tunnel on slide 28. Traffic continued its post-COVID recovery. We finished the year up on 2021 but below 2019 levels, a year where roadworks on competing routes elevated traffic. Warnow also benefited from rising inflation during the period. Tolls increased by an average of 6.4% on November 1, 2022. With 75% of debt currently fixed, Warnow Tunnel is well-positioned to benefit in the current high inflation environment.
Warnow Tunnel paid a distribution of EUR 3.4 million in February 2023 to Atlas Arteria, which will contribute to the second half distribution to security holders. Turning to the Chicago Skyway on slide 29. I note we are showing on the slide the performance of the Skyway on a 100% basis for the full 2022 and 2021 year. As previously flagged, the Skyway only contributed to Atlas Arteria's performance for the month of December. However, we have included the full periods to allow for comparison. The higher percentage increase in operating revenue for the period compared to the increase in traffic was driven by higher heavy vehicle traffic, which pays a higher toll than light vehicles. Capital expenditure was in line with the prior period.
As discussed earlier, CapEx guidance for 2023 is expected to be around $19 million, which includes investments in modernization and automation. You can also see no taxes were paid by Chicago Skyway during 2022 and 2021. This is because Skyway was in a tax loss position. We have included further information in the appendix on the relevant US taxes for the Skyway. Overall, Chicago Skyway performance for 2022 was ahead of 2021. Turning to slide 30 to look at the Chicago Skyway financial position. Chicago Skyway has a robust credit profile and is currently rated BBB+ by S&P. As at 31 December, the Skyway had $1.4 billion in total debt, of which 87% is fixed.
The Skyway's debt service coverage ratio sits at 1.82 times. Above Atlas Arteria's target range of 1.4-1.6 times. There remains significant headroom above the investment-grade credit metrics. As we previously discussed, capital releases from Chicago Skyway as part of the upcoming refinancing process will be used to smooth distributions in the short term. Moving to Dulles Greenway on slide 31. Traffic was 6.6% higher than last year, with operating revenue 12.6% higher. This was driven by the 5% increase in off-peak tolls from January, as well as a greater proportion of peak traffic. Customers traveling at these times pay a higher toll than off-peak users. Importantly, liquidity within the business remains strong, with $208 million of cash available in the business across restricted and unrestricted reserves at 31 December.
At the end of last year, we had $63 million in cash locked up within the business, which could have been distributed but for failure to meet the lockup tests. Of this, around $11.7 million was used in February 2023 for bond payments. Moving to capital management on slide 32. We are focused on three key principles. Firstly, sustainable distributions funded from operating business cash flows. Secondly, appropriate gearing across our portfolio. Thirdly, funding to support growth objectives. In terms of distributions, APRR continues to be the main contributor, with strong traffic performance driving distributions. Warnow Tunnel is also contributing to distributions, with Chicago Skyway to begin contributing in 2023. All of APRR, Skyway and Warnow Tunnel support investment-grade capital structures, with APRR upgraded to an A rating by Fitch during the year.
We remain focused on strategies to deliver sustainable cash flows from Dulles Greenway, including reinstating an investment-grade capital structure as part of the overall project we are working on there. At 31 December, we had the equivalent of around AUD 172 million on the corporate balance sheet. We are reverting back to holding one year cash flow for our corporate cash flows, and we use that cash to support our second half distribution. We have capacity to reinstate covenant light holding company debt. As we have said before, if we were to raise new debt at the head co level, it would be on appropriate terms and for the right opportunity, such as the Dulles Greenway restructure. I'll now hand back to Graeme, who will go through our outlook.
Thank you, David. Moving to our clear focus for the next year. This is in transitioning Chicago Skyway to an Atlas Arteria business and continuing to execute on our organic growth opportunities as they become available. In France, we will continue our dialogue with the French government on achieving their road development and environmental objectives in exchange for toll increases and/or concession extensions. In Virginia, it will depend on the results of the legislative process. We will either move to negotiate a new concession agreement with VDOT, or we will be filing a rate case application as soon as possible. Before we close, I'd like to take a minute to reflect on Atlas Arteria's journey. In the short time since the agreement to internalize management in May 2018, we've demonstrated our capability to create value for security holders.
We've restructured and increased our stake in APRR to 31%, recapitalized Warnow Tunnel to deliver cash to security holders, expanded our capabilities across the business, notably in the areas of traffic forecasting and data. In 2022, the appropriate corporate infrastructure and balance sheet in place, we expanded the platform with the acquisition of Chicago Skyway. In doing so, we've transformed Atlas Arteria into a stronger, larger, more diverse business that can support long-term sustainable distributions for our security holders. I would invite you to read our annual report, also published today, for a more detailed summary of our strategic progress. I'd like to leave you with a reminder of what investors are buying when they invest in our company. Inflation-linked earnings, which are reflecting more than decade-high inflation rates, a sustainable long-term distribution flow, strong organic growth potential, and the balance sheet to facilitate that growth.
Finally, a highly experienced team with a proven track record of executing complex transactions to deliver value. As we've discussed, this combination of skills and strategy has resulted in returns for investors since internalization of 42%. In conclusion, I'd like to thank the team at Atlas Arteria for their very hard work over this transformative period for the business and our security holders for your support in achieving this. With that, I'd like to hand back to the operator, which we will open for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. We would appreciate it if you could keep to one question at a time and rejoin the queue for any follow-up questions. Your first question comes from Owen Birrell from RBC. Please go ahead.
Good morning, guys. sorry, can you hear me?
Yes, Anthony Moulder.
Excellent. Excellent. Okay. I guess my first question is just on APR and these ongoing investment plans that you continue to successfully achieve. I would have thought that a lot of these smaller investment packages could have been rolled up into a larger parcel of works in return for a longer dated concession extension. Are you sort of shooting too many of your bullets upfront, or is this all part of a longer dated strategy to achieve a longer dated concession extension?
Look, Owen, it's very much a political and negotiating process. The French State's key agenda item at this point in time is pension reform. They did not want to go through the legislature while they are trying to achieve pension reform with a concession extension. You will have noticed that we obviously did not have an investment package. I think that's highly indicative of the very strong relationship we've created with the ministry and with the government. We're basically succeeding beyond our peers, I think that's a really good outcome. Until the pension reform is resolved, I wouldn't expect there to be a concession extension.
As I've said previously, we have a significant pipeline of opportunities which we have worked up with the ministry, with local government and so forth, and they're fully aware of what we're capable of doing and delivering. The other thing that the minister is focused on is what happens at the end of the concession period. That also is a key focus of the minister at this point in time. With the SANEF concession expiring in 2030, that really needs to be dealt within this current administration.
I might just follow on.
Yep.
Line of, I guess investment opportunities within APRR. Can we expect these sorts of investment programs, I guess, rolling on a 12 monthly?
Pardon me, Owen. This is the operator. For follow-up questions, could you please rejoin the queue?
It was just a follow-on question from that.
It's a follow on. It's fine.
Okay.
Operate.
No problem.
repeat it, Owen.
Just, you talked about a pipeline of opportunities. Can we expect these sorts of investment programs to continue roughly on a rolling 12-month basis?
I don't know what the timing is. It really comes down, as I said, the major focus of the government in 2023 at this point in time, as you probably noticed in French newspapers, is pension reform. That's the major objective that Macron has. Everything will come second to that until that's resolved.
That's right. Thank you.
Thank you. Your next question comes from Rob Koh from MS. Please go ahead.
Good morning. Congratulations on the result. Can I just ask a question about the multi, party transaction platform that you have? I like the way you've expressed that. I guess there's media speculation about a potential sale of EastLink. I'm just wondering if you could, comment on, whether that would be attractive to your portfolio and what you would see as bringing to such a deal if that was, a priority for you.
Thanks for the question, Rob Koh. My understanding is that that process is happening as we speak. We have, as everyone's aware, undertaken a huge transformative transaction in 2022 with the acquisition of Chicago Skyway. Our focus over the coming year has to be on bedding that down, doing the operational changes we wish to achieve. We will not be participating in the EastLink process.
Many thanks.
Thank you. Your next question comes from Ian Myles from Macquarie. Please go ahead.
Hi, guys. Very simple questions to save me doing the math. You talk about a target DSCR of $1.4 billion-$1.6 billion times for Skyway. Just wondering how much debt capacity that actually gives you in the Skyway borrowing profile.
Sure. Ian, hi. It's David. What I would do is I would point to our equity raising materials where we provided a view, which was US $230 million as a comfortable level, a conservative view of additional gearing capacity that's available. I wouldn't put an update or a specific number other than referring you to that, Ian. We do have in the IRP the cash flows for Skyway, which will give you a pretty good view of what would be achievable within that target range of 1.4 to 1.6.
Okay. Well, that's great. I'll ask the other question.
Thank you. Once again, if you wish to ask question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Anthony Chow from Jarden . Please go ahead.
Thanks for taking my question. Just a quick one on the current traffic trends for APRR in January and February. If you could give us any color, how it's tracking and also the mix of traffic between light vehicle and heavy traffic. Thanks.
Yeah, look, obviously, we will do our next traffic release at the end of the quarter. I think all we can say is traffic's relatively flat to prior year. I think beyond that, not prepared to answer that. We'll provide full details in our traffic release in April.
Thanks.
Thank you. You have a follow-up question from Ian Myles from Macquarie. Please go ahead.
Okay, guys, sorry how that was. Okay, Dulles Greenway, do you just wanna give us an update where this legislation in the process 'cause it's all been passed to, passed by indefinitely and what the other process is? I guess, if it doesn't get through the legislation, this SEC process is new relative to the past, and they want the you're sort of focusing on there and the issues which may arise because I think there's something about a 3% sort of, like, quantified what the impact to the material impact is.
It's a pretty complex question.
Sorry.
I'll give it to answer as best as I can. The with relation to the legislation, the governor has incorporated into his budget bill, a mirror of the legislation which passed the House of Assembly and also passed the Transport Committee in the Senate, but was passed over by the Finance Committee of the Senate. The expectation is that that process will work through. The session is meant to finish on the 28th of February. We'll see whether the budget gets passed during that period. The budget does not go to committee. The budget is dealt with on the floor, and we believe there's sufficient support on the floor that we will be able to get it through.
There will be negotiations between the parties, at the both Senate and the House level, with senior members of both Senate and the House. We'll see where it goes. It's not over until the budget legislation is finalized, or until the governor removes the amendment to the budget to exclude the Greenway legislation which given his strong support for the legislation, I think is unlikely. We have put on notice the regulators, as in the SEC, or we will be doing today, that we would intend to file a rate case. We'll also be doing a press release to that effect.
It's very clear to all members of both Senate and the House that absent the legislation, there will be a significant rate rise application lodged. I think that's the update on where we're at. As to the process, the SEC legislation was amended, the HCA Act, in a prior session of Parliament. As you explained, there is a 3% effect as part of that legislation. Increases can only be granted for a year, not for multiple years. We will be working through that process, and that will give an outcome. If that outcome were to result in a value detriment to the company, the company has available to it recourse through the Supreme Court of Virginia under what's called taking legislation that is acquisition of property without due compensation.
That's an extreme point, but we do have various courses of action available to us depending on the outcome.
Okay. That's great.
Thank you. You have a follow-up question from Rob Koh from MS. Please go ahead.
Thanks for having me on again. I just wanted to get some thoughts from you on your debt capacity. You mentioned you have an option for covenant relief, holding company debt. Have you got any thoughts on? Or how should we think about debt sizing for that? Or is there a target credit rating? Yeah, just any thoughts you could share.
Yeah, look, obviously we have, at APRR, a very high rating. That does give us some capacity to maintain an overall triple B rating, which is sort of where we target. Our key purpose for that, which we've been identifying for the last three reports, is the context of restructuring Dulles Greenway. As we anticipate that occurring, there is good capacity within the our gearing levels to be able to accommodate that at a whole code level on a covenant life basis.
Yeah. Great. Sounds good. Thanks so much.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. You have a follow-up question from Anthony Chow from Jarden Australia. Please go ahead.
Oh, thanks for the follow-on question. Just a small question on APRR again. For the Fulli business outlook in 2023, given sort of the traffic is kinda normalized or slowing down a little bit, is there a risk that the operating costs in 2023 may rise at a faster pace than revenue growth?
Thanks for the question, Anthony Chow. Fully is a service offering that we've provided to lower the cost of fuel on our network, is the predominant focus of that business. Obviously from a ratio calculation perspective, it will have negative effects on gross margins. It's pretty easy to back it out and look at how that affects us. Strategically, what it's giving us is a lot less activity of people leaving the network to refuel and rejoining the network. Where there's alternate routes, where you can take a low fuel cost approach, and we're spacing the Fully franchises at distances such that people always have a Fully option that we can end up with a better outcome for our customers.
We think it's a great initiative. We are getting very solid and positive feedback from our customers. Equally with heavy vehicle operators, they are appreciative where they're refueling en route to be able to refuel at competitive prices at our outlets, which encourages them to use our network versus the competing network if there was an alternative option. That's really the focus of it. It's been successful in pushing down the relative cost in other service areas along our networks, and relative to the rest of the country.
We sort of see it as being a key leading customer service opportunity and really it behooves us to do the calculations with and without fully so you can really see how the business is going on a core infrastructure basis.
Okay. Got it. Thank you.
Thank you. Your next question comes from Reinhardt Van der Walt from Bank of America. Please go ahead.
Good morning, folks. Thanks for taking our questions. I've got a just a quick one on Dulles Greenway traffic. We've obviously been looking pretty closely at office occupancy in that part of the world, which has been lagging a little bit. Can you maybe just give us a couple of comments on where that's at and your outlook for recovery on that road?
Yeah, look, the traffic has been disappointing in its rebound. What we are seeing is a more permanent work from home regime. There's sort of some move still by employers to get employees back to work in offices more regularly. But the office utilization rate in the Greater Washington area lags the rest of major metropolitan areas across the U.S. In that context, we see it as being a situation that's going to take quite some time to fully recover. We've, we've very much flattened our curves of growth over the next few years to, in our forecasting as to how long it's going to take to get back to pre-pandemic traffic levels.
Got it. Thanks a lot.
Thank you. There are no further questions at this time. I will now hand back to Mr. Bevans for closing remarks.
Thank you, everyone, for participating in the call today. It's always great to meet with you all in this forum and get the questions from the analysts. If you have any further questions, please reach out to the investor relations team. We'll be more than pleased to assist you. With many investors and analysts, we'll have the opportunity to meet you in person over the coming days. Thank you for your time.
That does conclude our conference for today. Thank Thank you for participating. You may now disconnect.