José A. Labarra

International expansion and continuous growth are key objectives in our strategic plan, built around 4 pillars: maximizing the value of our assets, increasing our size by pursuing targeted investments, adapting our organizational structure and fortifying business processes. Looking back at our activity in 2017, we can say that we are satisfied with the results.

This year, ROADIS managed to close its first two acquisitions, through which we increased our stake in three of our assets in India and landed in Portugal with the purchase of two new assets. Besides enlarging the size of our portfolio and entering a new market, ROADIS also managed to consolidate its organizational structure by creating new business areas and departments and implementing the necessary procedures and policies to strengthen all areas.

2017 was a year full of achievements for ROADIS, but there were some difficulties too. In June, ROADIS reached an agreement with all parties involved to return the concession of its only highway in the United States (a section of the I-69) to the grantor, thereby settling any potential disputes. This loss was caused by legacy issues outside of ROADIS’ control, but nevertheless, it was a difficult situation for the company in the USA. However, as responsible investors, we managed to solve this issue in a constructive way and learnt a great deal in the process.

In December of 2017, within EMEA, ROADIS reached an agreement to acquire stakes in 2 major highways in Portugal, Auto Estradas do Atlântico (AEA) and Auto Estradas do Litoral Oeste (AELO). This acquisition, an important step within our growth strategy, marks ROADIS´ entry into Portugal, increases our exposure to developed markets and further diversifies our concessions portfolio.

The Asia SBU has a very strong position in India as the largest European manager of toll road concessions in the country. To maintain our status in the country, we remain committed to growth, as part of which in 2017 we reached an agreement with a fund managed by Morgan Stanley to increase our stakes in three of our assets from 25% to 50%. In addition, we participated in the bidding for the privatization of the first bundle under the NHAI’s TOT (Toll-Operate-Transfer) program. Despite not being awarded this bid, we learnt valuable lessons that we can apply to projects that will take place next year. We also began a strategic partnership with the National Investment and Infrastructure Fund (NIIF). This year, all our assets in India have had positive results, with great performance and significant growth in terms of traffic.

The South America SBU manages 2 highways in Brazil, BR-324 and BR-116, two major highways that cross the state of Bahia. In 2017, our team in South America achieved substantial goals, such as the construction of a new bridge crossing the Paraguaçu river and a significant tariff increase for the second year in a row. The Brazilian economy is currently showing signs of recovery, therefore we will continue to seek new investment opportunities to consolidate our position in the road management sector.

SBU North America operates in two very important markets for our company: Mexico and the United States. In Mexico, ROADIS manages the Saltillo-Monterrey and Perote-Banderilla-Xalapa highways, which continue to offer magnificent results in terms of traffic growth and revenues. Currently, we are one of the main international players in the sector in Mexico and we expect to maintain this position and continue growing with new investment opportunities. Within the same SBU, the United States is also a strategic market for ROADIS, which is why we have a team located in different states working on identifying new business opportunities, with the aim of generating our own proprietary portfolio of projects.

In addition to being a year of growth in terms of investment and acquisitions, 2017 was a very important year for ROADIS regarding our commitment to corporate responsibility. Both at a corporate and SBU level, ROADIS has a clear social responsibility strategy focused on 5 aspects: team, innovation, safety, environment and the communities in which we operate.

This year, we at ROADIS have achieved our goal of consolidating the structure of our team and strengthening the company´s human capital by expanding key corporate functions. We have created the Center of Excellence (COE) and the Investments Management team, two areas that have played a crucial in the development and good functioning of the company. We have also implemented new policies and procedures that have strengthened all areas of corporate governance, auditing, control and decision-making. As for our team, we have had many changes and new hires that have been very positive for our strategy.

Finally, I want to express my gratitude to the fantastic team of employees, partners and collaborators, without whom we wouldn’t have been able to reach all the achievements of 2017. I’d also like to thank our shareholder PSP Investments for their ongoing support.

The challenge now is to identify and prioritize those opportunities that best fit our strategic plan and keep us on the path to growth. We will continue working to make 2018 another successful year for ROADIS.