bam ppp ·

1 02/06/2014

BAM PPP

9th December 2013

02/06/2014 2 << MAIN MENU < PREVIOUS

Overview

BAM PPP By Richard Fielder, Chief Executive


Active in the PFI/PPP marketplace since the mid-1990s

BAM PPP was formed in January 2006, to optimise the utilisation of knowhow and experience available within the Group

BAM PPP employs 100 people based in 6 offices

Active in all of BAM’s European markets

Portfolio of 35 concessions (mainly availabilty based)

Significant active and imminent bid programmes

In-house bid management, operations and maintenance, legal and financial teams

JV with PGGM

BAM PPP works closely with BAM sister companies to provide integrated whole life approach to projects: VALUE FOR MONEY

BAM PPP overview

0 1 I I N T R O D U C T I O N T O B A M P P P


Access to pipeline of European PPP projects

Short term construction revenues and profit

Short, medium and long term investment returns

Medium and long term maintenance revenues and profit

Multi disciplinarily and whole life projects

Market dominated by large European Contractors

Benefits PPP to Royal BAM Group



portfolio of concessions Markets and Portfolio of Concessions

BAM PPP Portfolio: 31 Projects under BAM PPP management : 35

Retained

19 PGGM 12

DIF 4

Our Offices 6

Kill

Bunnik

Frankfurt Brussels

Glasgow

Solihull


BAM PPP Concessions


Ireland; 5

UK; 14 Netherlands

; 7

Germany; 4

Belgium; 4

Switzerland; 1

BAM PPP Current Portfolio by Country

Current Portfolio = 35

Roads; 10

Rail; 2

Education; 11

Justice; 8

Health; 2 Other; 2

BAM PPP Current Portfolio by Sector

C

Current Portfolio = 35


BAM PPP Active Bids


118

68

10

57

53,5

0

Active Bids by Country December 2013 : Equity €m

Netherlands Belgium UK

Ireland Germany Switzerland

106

44 32

43

7,5

71

3

Active Bids by Sector December 2013 : Equity €m

Roads Rail Education Health

Marine Justice General


BAM PPP Imminent Bids


168

9

66

31 20

Imminent Bids by Country December 2013 : Equity €m

Netherlands Belgium UK

Ireland Germany Switzerland

75

0

51

23 52

15

74

Imminent Bids by Sector December 2013: Equity €m

Roads Rail Education Health

Justice General Marine


In May 2011 BAM PPP formed a market leading innovative joint venture with the Dutch pension fund administrator PGGM

The JV combines the capabilities of a proven developer of PPP concessions with the skills of a major long term investor

The initial target value of the joint venture is €390m, of which €150 million for existing projects and €240 million for new projects

Existing project mostly based on 80:20 financial split, new projects initially on 50:50 financial split

Stable platform enabling low cost recycling of investments

Provides BAM long term position

PGGM a passive partner

BAM PPP / PGGM Joint Venture



DBFM(O) BAM PPP

By Patrick Snippe, Finance Director

02/06/2014 11 < PREVIOUS

Characteristics DBFM(O)

Benefits DBFM(O)

Timescales & Structures

Roles & Responsibilities

Financial model

External funding

Content

0 1 | I N T R O D U C T I O N


Long term partnerships (usually 25 – 30 years)

Output oriented (paid for to the extent available)

Private finance (bank debt and equity)

Risk transfer




best value = EMVI


build design

finance

operations (25 year)

maintenance (25 year)

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Cooperation between (semi-) governmental body and a single purpose company (SPC) Long term partnerships (25-30 years) For one specific project Fully integrated, including Financing Project financing (and not corporate financing): cash flow driven, non–recourse, business case driven by DSCR, time value of money

Availability based payment mechanism Incentive to perform: 'no service, no fee‘ Strict risk allocation




To minimise exposure for Royal BAM Group This is achieved by using:

A SPV (non recourse financing)

Liability caps for EPC & MTC (including guarantees)

Risk Management / Due Diligence

Experts in Finance & Legal




Benefits DBFM(O)


01. Turnover Design & Construction

02. Turnover Long Term Maintenance &

Operation

03. Equity

Distributions

What’s in it for us?


Contracting Authority

Risk allocation

Government budget / balance

Innovation drive

Value for money

(best price/performance ratio)

Focus on core tasks of government

Efficiency

BAM

Strategic agenda 2013-2015

Growth / profit

Diversification

Unite strengths of BAM companies

Minimise groups’ exposure

Benefits DBFM(O)



PRE-QUALIFICATION

Timescales

FINANCIAL CLOSE EXPIRY SERVICE AVAILABILITY DATE

BAM PPP (TENDER) BAM PPP (CONSTRUCTION) BAM PPP (OPERATIONS)

D&B PARTNER

O&M PARTNER

CRUCIAL TRANSITIONS


Tender teams

Tender teams


Typical cash flow profile

CAPEX

Gross Availability Payment

Availability certificate

Hand Back certificate

Completion certificate

Commencement certificate



Typical funding structure

End Date

Availability Date

Completion Date Financial Close

One-off Completion Payment Debt Free Tail

Construction Period

Share Capital (pinpoint equity)

Construction Bridge Loan

Operational Period

Equity Bridge Loan Shareholder Loan

Project Loan



Contracting Authority

Lender(s) Shareholder(s) Equity documents Credit documents

Interface contract

Soft FM

Soft FM contract

• Common Terms Agreement • Facility agreement(s) • Inter-creditor agreement • Security documents • Hedging documents • Direct agreements

• Shareholders’ agreement • Subordinated debt

subscription agreement

DBFM(O)

SPC

D&B contract MTC contract

Shareholder(s) EPC Contractor

Subcontractors Subcontractors Subcontractors

Shareholder(s) MTC Contractor

SPC management Management

Agreement

Users / stakeholders

Typical contractual structure

BAM PPP PGGM

BAM PPP PGGM Infrastructure Coöperatie U.A.



Typical cash flow structure

Construction Operations

SPC

EPC Price

Milestone Payments

Lender(s)

Authority

EPC Contractor MTC Contractor

Shareholder(s)

Soft FM Contractor

Soft FM fee*

Senior debt service: • Senior debt interest • Senior debt repayment

Equity service: • Shareholder loan interest • Shareholder loan repayment • Dividend

Equity injection

MTC fee*

Senior debt service Equity service

Debt draw downs

* = minus deductions

SPC management Management

Fee Availability Payments*



Roles BAM PPP

Tenders:

Tender management

Legal and financial expertise

DBFM(O) expertise

Projects:

Project management (SPC level)

Sponsor / investor of equity

Asset management



Roles & Responsibilities – BAM PPP

Finance (project finance & equity)

Legal

Insurance

Focal point for Client

Tender strategy (process)

Establish & management of Project Company

Dialogue with EPC & MTC

Play client role internally



Financial model

(NPV of) Availability payments

Input costs

Construction

Maintenance (and operations)

Life Cycle Costs

Finance

Debt - interest

Equity - dividend



Payment Mechanism

Availability payment = gross Availability payment - penalties

Availability penalties

E.g. Non availability one lane: €25.000 to €50.000 per 15 minutes

Performance penalties:

E.g. Not de-icing the outside area of a building within 1 hour: €10.000 + €1.000 per hour



Optimal Net Present Value

Contracting Authority:

Ceiling price / target price

Milestone payment(s)

Discount Factor

Base rates

Project duration

BAM

Input costs right

No frontloading

Optimisation of Life Cycle Costs

Project IRR (ratio Loan/Equity)



Project partners

Contract structure

Due diligence (Legal, technical, insurance, finance)

Robustness of financing

Scenario’s:

Base case ratio’s, Lock-up ratio’s (No payment for equity) and Default ratio’s (Entry rights banks)

External funding / Lenders view

0 3 | P R O J E C T F I N A N C I E R I N G


Balance between: Optimal input costs

Construction

Maintenance and operations

Life cycle costs

Optimal funding

Resulting in:

Best NPV of availability payments

PPP challenge



Current affairs BAM PPP


Increasing competition in the market, threatening PQ (ballots) and bidding strike rates

Continuing appetite from BAM Co’s to bid PPP projects supported by BAM’s Strategic Agenda

External finance available; Increased security package requirements

Exit strategy/divestments on track

Cash flow vs profit

Directors’ valuation

PPP 2013/2014

S M C 2 0 1 3 I B U S I N E S S R E V I E W I Q F 3 2 0 1 3


Bidding results BAM PPP

40%

60%

Bidding process 2005 - 2013

Won Lost

83%

17%

Prequalification process 2005 - 2013

Bidding Not prequalified


Strategic agenda 2013-2015 Operational improvement

Targeted growth initiatives services

multi-disciplinary projects

international niche markets

Solid financial strategy

Royal BAM Group support


Banking Market Long term bank debt availability is increasing

Many of the banks active in the market remain keen to support BAM

Alternative sources of debt continue to be developed Institutional investors have differing structures with or without short term bank

debt, with or without rating requirement, fixed rate or hedged, etc.

EIB bond enhancement programme ongoing but not yet established

EIB support through structured finance continuing

Security requirements are becoming more demanding In particular level of LC required to underpin EPC/CJV. Importance of BAM’s

capital ratio

External Financing

S M C 2 0 1 3 I B U S I N E S S R E V I E W I Q F 3 2 0 1 3


BAM PPP divestment program

(Road) N33, NL (J) High Court, NL (E) Irish Schools 3, Ire (Road)N11/N7, Ire

(J)Dendermonde Prison, Bel (J)Beveren Prison, Bel (Road) A9, Ger

(Road)A59, NL (Road)A12 Motorway, NL (E)Somerset BSF, UK (E)Bromsgrove Schools, UK (E)Solihull Schools, UK (E)West Dunbartonshire Schools, UK (Road)A8 Motorway, Ger (J)Burgdorf Prison, Swit

(E)Camden BSF, UK (J)Bremervoerde Prison, Ger (Rail)Liefkenshoek Rail Tunnel, Bel (J)Schiphol Justice Centre, NL

(Road)M1 Dundalk Bypass, Ire (Road)M7/M8 Portlaoise, Ire (Road)N25 Waterford Bypass, Ire

(E)Bristol Schools, UK (E)Crawley Schools, UK (E)Dalkeith Schools, UK (E)East Renfrewshire Schools, UK

(E)Peacehaven Schools, UK (J)Derby Police HQ, UK (J)Cheshire Police HQ, UK (H)Wharfedale Hospital, UK (H)East Ayrshire Hospital, UK (Road)N31, NL (Rail)HSL Infraspeed, NL (G)Ghent Student Accomodation, Bel (G)Potsdam Parliament Building, Ger

Old Existing New


Profit vs Cash flow

Profit & Loss

Turnover

Project results

Bid management

Operational management

Central support

Asset management

Others

Profit before tax

Tax and minority interest

Net profit

Cash flow

From projects

From CTC

From asset management

Cash flow from/to parent

≠

≠

≈


Directors’ Valuation Reported


Access to pipeline of European PPP projects

Short term construction revenues and profit

Short, medium and long term investment returns

Medium and long term maintenance revenues and profit

Multi disciplinarily and whole life projects

Market dominated by large European Contractors

Benefits to Royal BAM Group


Thank you

39 02/06/2014

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