Key Highlights

• The group's TEILD cost was reported as EUR 126.7 million in 2025, and the tax applies to APRR and AREA but not to A79 or ADELAC.

• A separate temporary supplemental tax, previously expected to end in 2026, would be extended at a lower take.

• It also holds 66.67% of the Chicago Skyway, 100% of the economic interest in Virginia's Dulles Greenway and 100% of Germany's Warnow Tunnel.

• In its quarterly update on 21 October 2026, the company reported that proportional toll Revenue fell 0.4% year on year excluding currency effects.

How is Atlas Arteria (ASX:ALX) coping with a proposed rise in French transport taxes, now that its largest Shareholder holds a controlling stake? The short answer is that the toll-road owner is operating steadily, but the outcome of the French 2027 Budget Bill is the main unknown for the distributions investors have come to expect.

Why the French tax debate matters

Atlas Arteria told the market on 30 September 2026 that the French government's draft 2027 Budget Bill proposes changes to transport infrastructure taxes. In that announcement, the long-distance transport infrastructure tax (TEILD) rate could rise from 4.6% to as high as 12.2%. The group's TEILD cost was reported as EUR 126.7 million in 2025, and the tax applies to APRR and AREA but not to A79 or ADELAC.

A separate temporary supplemental tax, previously expected to end in 2026, would be extended at a lower take. The bill is still a draft and will be debated over coming months, so final rates may differ. Atlas Arteria has said it will update investors once the legislation is settled, and APRR is reportedly pursuing legal recourse.

What Atlas Arteria does

Atlas Arteria owns interests in toll roads rather than operating a diversified business. It also holds 66.67% of the Chicago Skyway, 100% of the economic interest in Virginia's Dulles Greenway and 100% of Germany's Warnow Tunnel.

Revenue comes from tolls, which depend on traffic volumes and scheduled Tariff increases. Heavy-vehicle traffic follows freight activity, while light-vehicle traffic tracks consumer travel, employment and fuel costs. Because most Assets are overseas, the Australian-dollar value of Earnings also moves with euro and US dollar exchange rates.

The September 2026 quarter

In its quarterly update on 21 October 2026, the company reported that proportional toll revenue fell 0.4% year on year excluding currency effects. Reported revenue, which includes currency translation, fell 8.9%.

Traffic and toll revenue by road, were:

• APRR: traffic down 3.5%, toll revenue down 1.7%.

• A79: traffic up 0.7%, toll revenue up 3.4%.

• Chicago Skyway: traffic up 6.4%, toll revenue up 9.6%.

• Dulles Greenway: traffic up 3.7%, toll revenue up 3.9%.

• Warnow Tunnel: traffic up 2.2%, toll revenue up 4.2%.

High fuel prices were cited as weighing on French light-vehicle traffic, while roadworks elsewhere appeared to divert vehicles onto the US and German roads. Scheduled increases are due at the Warnow Tunnel from November 2026 and the Chicago Skyway from January 2027.

Half-year results and distributions

For the six months to 30 June 2026, announced on 27 August 2026, Atlas Arteria reported a statutory net loss after tax of A$73.3 million, against a profit of A$73.3 million a year earlier. The company attributed the loss to costs linked to extinguishing the Chicago Skyway Put Option held by OTPP and to the IFM Takeover offer. Underlying net profit after tax was A$94.3 million, up 29%.

Proportional toll revenue was A$917.5 million, down 3.9% as reported but up 0.6% excluding currency movements. Proportional EBITDA was A$702.6 million, with a Margin of 76.6%. Operating free Cash Flow was A$277.1 million, or 19.1 cents per security.

An H1 distribution of 20.0 cents per security was set for payment in October 2026. The company reaffirmed 2026 distribution guidance of 40.0 cents per security, noting that this is expected to sit above its usual range of 90% to 110% of free cash flow because of the temporary supplemental tax, takeover-related costs, change-of-control costs and the put option settlement. Guidance for 2027 is due with full-year results in February 2027. That points to a distribution that is not fully covered by free cash flow this year, which is worth weighing alongside the tax debate.

Ownership and governance changes

IFM's takeover offer closed on 7 July 2026, leaving an IFM Subsidiary with 67.43% of voting power. Following the close, Debbie Goodin stepped down as Chair, John Wigglesworth became Interim Chair and the board began searching for a permanent independent Chair. A controlling holder can bring stability to strategy and funding, though it may also reduce the free float and influence how future Capital decisions are made.

Sector conditions and competitive position

Toll roads are valued for contractual or regulated tariff mechanisms and for networks that are hard to replicate. APRR, the biggest contributor, operates under a concession framework, which gives some visibility but also leaves it exposed to political decisions, as the tax proposal shows. Dulles Greenway competes with congested free routes, and its Demand is sensitive to commuting patterns and federal government activity in the Washington area.

Leverage is a feature of the sector. At 30 June 2026, APRR Group net Debt was EUR 7,019.5 million on a 100% basis, and the Chicago Skyway and Dulles Greenway carried net debt of US$1,560.5 million and US$911.1 million respectively. Corporate cash fell to A$137.5 million from A$216.3 million, partly because a new corporate debt Facility funded the US$100 million put option settlement.

Risks and what to watch

The key risks and upcoming developments include:

• the passage of the French budget, including final TEILD rates and any legal challenge;

• fuel prices and economic conditions affecting French traffic;

• currency movements, which have been a drag on reported revenue;

• refinancing and Leverage across the concessions;

• appointment of a permanent Chair and any strategic direction set by IFM;

• 2027 distribution guidance in February 2027.