annual report 2017

New tunnel on highway BR-116, São Paulo

ARTERIS

Litoral Sul toll road strecht, Paraná;

OVERVIEW

Arteris, controlled by a joint venture between Brookfield and the Spanish Group Abertis, is the largest company in the Brazilian highway concession industry in terms of kilometers managed, with over 3,700 km in operation. Through its ten concessions, Arteris manages highways located in the states of São Paulo, Minas Gerais, Rio de Janeiro, Santa Catarina and Paraná, which comprise the country’s most important economic and industrial axes. The company is responsible for operating five federal concessions: Fernão Dias, Régis Bittencourt, Litoral Sul, Planalto Sul and Fluminense. It also holds five state concessions: Autovias, Centrovias, Intervias, Vianorte and ViaPaulista, which operate in rural São Paulo.

OPERATIONS

Arteris recorded gross revenues of BRL 4.7 billion in 2017, an increase of 8.8% as compared to last year. The result was mainly driven by the expansion of 12.3% in toll revenue, which reached BRL 2.9 billion in the period, an increase that coupled tariff revisions with new investments. Another factor that contributed to the improved revenue was the gradual recovery of the economy, with a consequent increase in traffic volume on the highway concessions. In 2017, Arteris recorded traffic of 670.7 million equivalent vehicles – an increase of 3% year-over-year.

The company’s adjusted EBITDA reached BRL 1.8 billion, with a margin of 66% and an increase of 14% compared to the previous year. Arteris also reached BRL 246.9 million in consolidated net profit, an increase of 243.2% over 2016.

In both cases, the values disregard the effects of the sale of its share in the STP company (owner of the Sem Parar electronic billing system) in 2016.

In the same period, financial expenses totaled BRL 273 million, a reduction of 38% resulting from lower average debt and an interest rate reduction.

Arteris won a new concession in 2017, increasing the highway portfolio under management by about 400 km. It is a total stretch of 720 km along Rodovia dos Calçados (318 kilometers of which were already managed by the company through the Autovias concessionaire and the other 403 km were under direct management from the State Government of São Paulo), which cuts through important cities in rural São Paulo and is now managed by ViaPaulista.

INVESTMENTS

Arteris investments in 2017 reached a record volume of BRL 2.2 billion, distributed among modernization, expansion and maintenance of the 3,700 kilometers of highways it manages through its ten concessionaires, an increase of 15.8% with respect to 2016.

The most emblematic investment made, due to its size and complexity, was the delivery of the second lane of Serra do Cafezal, on the Régis Bittencourt highway. The new stretch, which reflects an investment of BRL 1.3 billion and includes four tunnels and 39 bridges and overpasses, improved traffic conditions on an important logistics corridor for the country, linking São Paulo to the Southern region of the country.

The duplication of lanes on BR-101/RJ (Autopista Fluminense) deserves to be noted; it already includes 121.6 km of stretches cleared for traffic. On the highways of São Paulo, in turn, duplications of 20 km of SP-147 (Intervias) and another 9.5 km on SP-345 (Autovias) were delivered. The company has also registered important advances in the construction of the Contorno Viário of Florianópolis, in Santa Catarina (Autopista Litoral Sul).

The results achieved reflect the efforts of Arteris and its employees in the constant search for operational and financial efficiency, amidst the return of confidence in the industry and in the macroeconomic indicators. An important recognition of the company’s financial strength was given in 2017 with the successful issuance of BRL 1.6 billion in debentures classified with an AA- rating by Fitch.

Road clover, São Paulo.

OUTLOOK

The Arteris mission is to promote long-term investments in Brazilian infrastructure. In this sense, the resources applied in 2018 should reach new records of up to BRL 2.5 billion in construction work. In addition, the company undertook the commitment to invest over BRL 5 billion over three decades in Rodovia dos Calçados (Via Paulista).

The company is confident that the investments made in 2017 and the new ones to be made in 2018 will bring not only more safety for the users of its highways, but will also contribute to improving traffic, which should be benefited from the economic recovery too. Arteris continues to attentively monitor opportunities to expand its portfolio of highways under administration.

Duplication of lanes on highway BR-116, São Paulo.

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