Mexico

ROADIS manages two major toll roads in Mexico, which have been fully operational since opening to traffic in 2012.

In 2019 ROADIS and the Secretariat of Communications and Transportation (SCT) signed an agreement to build and operate the extension to the Monterrey-Saltillo highway, the Santa Catarina Viaduct.

163

Km of highway managed

16.410

vehicles per day in 2019

6

% Traffic increase

Projects

For ROADIS, 2019 has undoubtedly been characterised by the SCT's approval of the Santa Catarina Viaduct

CAMS: Saltillo – Monterrey

Concession responsible for the construction, operation and maintenance of a highway in Northern Mexico (between Monterrey and Saltillo). The concession has been fully operational since November 2011; with the first section opened in October 2009.

It is a high-capacity route that improves the connectivity between these two cities in the north of the country: Saltillo, capital of the state of Coahuila de Zaragoza; and Monterrey, the most populous city and capital of the state of Nuevo León. Therefore, this highway represents a competitive route for the more than five million inhabitants who live in the metropolitan areas of these cities, which include some of the most important industrial areas in the country.

In 2019, the contract was amended with the approval of the construction and operation of the Santa Catarina Viaduct and a 60-year extension to the road concession.

COPEXA: Perote-Banderilla-Xalapa

The concession is responsible for the construction, management, operation and maintenance of two toll stretches in Southern Mexico (Perote-Banderilla and Libramiento de Xalapa ).

Part of the project started operating in July 2012; and it became fully operational on 31 December that same year. It is the most modern and safest road in the state of Veracruz. With four lanes, it was designed with the aim of speeding up traffic and reducing travel times and costs between Mexico City and Veracruz .

For ROADIS, 2019 has undoubtedly been characterised by the SCT's approval of the Santa Catarina Viaduct, a 7.9 km extension of the Monterrey-Saltillo Highway that will link our asset in North-Eastern Mexico with the centre of the second largest city in the country: Monterrey. The project involves a total managed investment exceeding MXN 7 billion and the consolidation of the company's commitment to Mexico. Similarly, the work has consolidated ROADIS's relationship with the Mexican government in its first year of mandate.

We have also had excellent news on our asset performance: both CAMS and COPEXA have improved their income, for the fourth year running, at double-digit growth. Once again, they have exceeded the EBITDA margins that we set ourselves as a target at the beginning of the year, demonstrating significant operational maturity.

We have set ourselves a major challenge for 2020: to build the Santa Catarina Viaduct properly and on time. A project for which a strong local company has been hired to complete the work. A large group of Mexican advisers and supervisors has also been selected to ensure absolute compliance.
In December 2019, a CAMS app was launched, connected to Waze, which offers information of all types to users: from fees to incidents or weather. It includes a panic button for road emergencies. A major launch and communication campaign is planned in 2020.
El 2019 marked the first of six years of President López Obrador (AMLO)'s government.

There were mixed economic results. Fundamental macroeconomic data was maintained and there were no changes in tax rules, with specific emphasis on maintaining strong fiscal discipline. Annual inflation was 2.83% (below the maximum objective of 3%); the peso/dollar exchange rate was in the range of 18.50-19.50 pesos; and Direct Foreign Investment grew by 4.2%.

Public debt did not increase significantly and primary surplus targets were met. The new Trade Treaty with the United States and Canada (TMEC) was also ratified. A pragmatic and cautious relationship has been maintained with the United States, avoiding any direct confrontation.

However, GDP declined by -0.14%, the first fall in a decade. Strategic activities such as oil production and the construction sector declined by -7.4% and -12%, respectively. The decline in GDP has impacted public finances, requiring cuts to public spending and greater austerity measures.

Despite initial uncertainty in the private sector (cancellation of the New International Airport in Mexico City or renegotiation of gas supply contracts). The Executive has been open to private initiatives, as demonstrated by the Government of Mexico signing the National Infrastructure Agreement with the private sector for around 43 billion dollars. These actions allow for further negotiation by ROADIS, in addition to the Santa Catarina Viaduct.

The road sector has continued along the trend of lower public investment, and increased private holdings. During President López Obrador's first year, the priority was the construction of rural roads to connect isolated villages in the south-east of Mexico.

According to the Statistics Annex of the Federal Executive's First Government Report, the road network infrastructure transports 96% of passengers nationwide and 56% of freight volume. The inventory of the National Road Network as of December 2018 is presented in the same report:

	2016	2017	2018
Federal trunk road	50,814	50,864	51,198
Toll highways	10,133	10,274	10,614
Concessions	5,934	6,046	6,267
CAPUFE Network	4,198	4,228	4,348
Free	40,681	40,590	40,583
Feeder roads	95,855	120,414	133,698
Rural roads	177,657	157,348	154,409
Improved gaps	69,462	69,367	68,654
Total	393,788	397,993	407,959

Faced with a scenario of economic complexity and budget restrictions, in July 2019 the SCT and the Ministry of Finance announced the division of five road concessions (including the Santa Catarina Viaduct) for an investment of MXN 20 billion (~ 942 million euros*).

In November 2019, the Government of Mexico and the Business Coordination Council (leading group of chambers of commerce) presented the National Infrastructure Investment Agreement. This agreement includes an initial package of 147 projects, with a private investment of around MXN 859.022 billion (~ 40.443 billion euros).

In terms of roads, 42 projects were defined for the 2020 to 2024 period with the following distribution: 2020, 15 projects for MXN 38.255 billion (~ 1.801 billion euros); 2021-2022, 9 projects for MXN 24.957 billion (~ 1.175 billion euros); 2023-2024, 18 projects for MXN 36.917 billion (~ 1.738 billion euros).

Also, in November the Federal Congress approved the SCT budget for 2020. The total was MXN 54.374 billion (~ 2.560 billion euros), a figure which is -18.3% lower compared to 2019, and -35.7% lower compared to 2018.

In terms of road infrastructure, MXN 5.165 billion (~ 243 million euros) was budgeted for the construction and modernization of 146.8 kilometres of the federal network.

For rural road infrastructure, MXN 8.235 billion (~388 million euros) were assigned for the construction and modernization of 20 kilometres; conservation and reconstruction of 4,390 kilometres; and technical studies for 1,800 kilometres.

A total of MXN 15.414 billion (~ 726 million euros) will be allocated for the conservation and maintenance of the national road network.

To modernise trunk roads through construction and modernization works, the SCT has 16 projects under construction with a public-private investment of MXN 13.283 billion (~ 625 million euros).

Regarding the vehicle capacity data on the main toll roads, it is noted that the highest growth rate is recorded on concession roads. The drop in capacity recorded in 2018 was reversed in 2019.

*Exchange rate at end of 2019

How does ROADIS create value in the communities?

CAMS and COPEXAour two toll highways in Mexico, have contributed to the development of the communities in which they operate through the creation of a significant number of direct and indirect jobs in the region. In addition, these two highways provide their users with a wide variety of services, always ensuring their comfort, safety and the quality of the road. The free services provided on the highway include: roadside assistance in case of accident, towing service, a 24/7 emergency service and SOS phones located at strategic points along the highways.

CAMS has a policy to hire staff who live near the highway so that employees do not need to commute long distances.

COPEXA has a policy to hire staff who live near the highway so that employees are not financially affected by needing to travel very long distances to work.

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Recognition and certifications

received by the SBU

ISO 45001

certification obtained Employee safety is critical for ROADIS. For this reason, in 2019 we set ourselves the goal of implementing the processes required by ISO 45001 in terms of Health and Safety both at CAMS and COPEXA. Finally, following a major effort by the CAMS team, we went one step further and obtained the certification scheduled for 2020 one year early. In 2020 we have set the challenge to obtain it for COPEXA.

Associations

to which the SBU belongs

GRI Club GRI brings together the main players in the real estate, retail and infrastructure sectors worldwide

AMEXCAP Mexican Venture Capital and Private Equity Association

AMCIV Asociación Mexicana de Concesionarios de Infraestructura Vial, which brings together the main highway concession holders in Mexico.

Mexico

ROADIS manages two major toll roads in Mexico, which have been fully operational since opening to traffic in 2012.

163

16.410

6

Projects

How does ROADIS create value in the communities?

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