COVID-19

The Ontario Province has declared multiple stay-at-home orders, intermittent lockdowns and re-openings to help contain the spread of the new variants of the COVID-19. Additionally, the Government and employers have continued to recommend working-from-home when possible. The developments on COVID-19 related restrictions in 2021 for the Province are:

• Apr 8: Ontario Province entered in stay-at-home-order.
• Jun 2: stay-at-home order ended, since then, the region entered in a Reopening Plan based on vaccination rates & key public health care indicators. Provincial Gov. announced that remote learning will continue for the remainder of the school year.
• Jun 11: Step 1, focused on resuming outdoor activities with smaller crowds (up to 10 people).
• Jun 30: Step 2, with 70% of adults with 1st dose and 20% fully vaccinated. Further expands outdoor activities and limited indoor services (non-essential retail to 25% capacity).
• Jul 16: Step 3 (70-80% with 1st dose and 25% fully) expands access to indoor settings.
• Dec 19: additional health & safety measures in response to Omicron variant spread, 50% capacity in indoor settings and social gathering limits to 10 people indoors and 25 outdoors.

In January 2022, the Province announced a timeline for the gradual removal of these restrictions in February and March 2022.

The pandemic-related restrictions and resulting economic contraction continue to have an impact on demand for highway travel in the GTA. 407 ETR maintained strong liquidity with cash & cash equivalents as of December 31^st, 2021 at CAD307mn and CAD800mn in undrawn credit facilities.

In 2021, traffic in the Texan Managed Lanes (MLs) was impacted by mobility restrictions until March 10^th, when Texas fully reopened, along with adverse weather conditions, including winter storms in February (all three concessions were closed for 7 days) and heavy rain during May (which was 60% more than the average of May 2020), and surges in COVID-19 cases  during the summer as well as in December (Omicron variant).

Currently, there is no major COVID-19 related policy that directly relates to mobility. As of December 31^st, 2021, in Dallas-Fort Worth fully vaccination rate ranges at 55% – 66% (accounting for all residents including children).

There has been a sustained recovery since the reopening, with traffic showing slowdowns as COVID-19 cases registered spikes in Texas in August and December, the later due to the Omicron variant. Nevertheless, traffic has shown a solid recovery. NTE 35W traffic was above pre-pandemic levels (2019) in 2021 (+9.0%) while NTE performed in line with 2019 (-0.8%). LBJ kept improving but still below (-23.8% vs. 2019). All MLs posted solid avg. revenue per transaction NTE 35W +15.6%, NTE +13.4% & LBJ +4.6%.

In 2021, traffic increased by +32.7%, already reaching the same traffic levels of 2019 (pre-COVID-19), following a strong recovery since 2Q given the full reopening in Texas since mid-March, partially offset by the severe weather conditions in February and May and the impact of surges in COVID-19 cases during the summer and in December. Since 2Q, NTE registered the same or more monthly mandatory mode events than in February 2020 (pre-COVID-19). Additionally, the midday traffic volumes and PM peaks at NTE are already higher than pre-COVID levels.

In 2021, traffic increased by +23.0%, on the back of a steady recovery since 2Q given the full reopening in Texas in mid-March, partially offset by the severe weather conditions in February and May, and the impact of surges in COVID-19 cases during the summer and in December.

In 2021, NTE 35W traffic increased by +26.8% reaching traffic figures above pre-COVID-19 levels given the positive effects of ramp-up and heavy vehicles resilience along with the solid recovery since 2Q given the full reopening in Texas since mid-March, partially offset by the severe weather conditions in February and May and the impact of surges in COVID-19 cases during the summer and in December.

• Development, design, construction & operation of Seg. 3C, including the construction of 2 managed lanes in each direction and the reconstruction of existing general-purpose lanes.
• Flexible Pricing Framework: freedom to set toll rates under a soft cap & 2x-5x heavy vehicles multiplier (3x avg)
• Length:6.7miles northbound extension of NTE 35W 3A & 3B (operating since 2018)
• Concession term: 2061
• Opening to traffic expected by end of 2023
• Operation & Maintenance and toll collection: exclusive right and obligation to operate, maintain, repair and collect tolls. Tolls collected by North Texas Tollway Authority are in line with tolling agreement with TxDOT. TxDOT assumes collection risk.

North Carolina lifted all restrictions, including the mask mandate in most circumstances, on May 14th. North Carolina experienced in September the highest number of new COVID-19 cases since February however, as the cases subsided in October, traffic returned quickly.

In 2021, traffic increased by +45.8% as the state has been easing mobility restrictions throughout the period. The traffic reached pre-COVID-19 levels by the end of June.

Ferrovial acquired an additional 5.704% in I-66, increasing its stake to 55.704%. The value of the transaction accounts to EUR162mn, along with EUR36mn as part of its commitment of additional equity injections until the completion of construction corresponding to that 5.704%. The acquisition of control of the concession company implies the recognition of a positive fair value adjustment before deferred taxes for Ferrovial of EUR1,117mn, as the previously acquired 50% stake has to be valued at fair value. Additionally, by taking control of the concession company, the complete project debt is integrated into Ferrovial’s consolidated balance sheet, that reaches EUR1,511mn as of December 31^st, 2021.

Ferrovial, through its subsidiary Cintra, acquired 24.86% of the shares of the Indian listed company IRB Infrastructure Developers Ltd for EUR369mn. The deal has been completed (On Dec. 29^th) after a preferential share issue by IRB Infrastructure Developers, following the approval by IRB’s Shareholders’ Meeting and after obtaining the pertinent statutory approvals. IRB is a leading player in the Indian market, where it manages 23 projects and around 2,000 kilometers of toll roads. As a result, Ferrovial is now a significant minority shareholder with representation on the company’s Board of Directors. Cintra will support the company’s development and share its extensive international experience in managing toll roads and analyzing new investment opportunities. IRB will continue to be managed by its majority shareholder, Virendra D. Mhaiskar (his family and holding company).

On February 12^th, 2022, Fitch Ratings upgraded the International Long-Term Issuer Default Rating on IRB Infrastructure Developers Limited’s to ‘BB+’ from ‘BB’, and removed the rating from Rating Watch Positive. The Outlook is Stable. The upgrade of the rating on IRB reflects improvement in its financial profile after the equity injection made by Ferrovial and GIC.

El 12 de febrero, Fitch Ratings elevó la calificación crediticia de IRB Infrastructure Developers Limited a ‘BB+’ desde ‘BB’ y eliminó la calificación de Rating Watch Positive. La perspectiva es estable. El incremento del rating de IRB refleja la mejora de su perfil financiero tras la inyección de capital realizada por Ferrovial y GIC.

Ferrovial’s portfolio includes a number of toll roads which are, mainly, availability projects located in countries with low government bond yields (Spain, Portugal and Ireland) and long duration. Among the availability projects with no traffic risk or equivalent to availability projects held by Ferrovial are: A-66, Algarve (until sale completion), M3, M8 and Toowoomba.

• Spain: traffic in 2021 was impacted by the restrictive measures adopted by local governments to face the pandemic. However, since late April, traffic improved as Catalonia and Andalusia lifted their regional lockdowns. Traffic was also positively impacted by the preference for domestic destinations during summer holidays and a strong vaccination rate, resulting in lower COVID-19 cases. Autema’s traffic was more impacted than Ausol by the Omicron variant as the Catalonian government imposed some mobility restrictions in December. When compared to 2019, pre-pandemic levels, traffic in Autema was -18.1%, while traffic in Ausol I and Ausol II was -17.6% and -20.1%, respectively.
• Portugal: on January 15^th, 2021, a new lockdown was approved that was in place for the entire 1Q. Since the end of March, mobility restrictions started to ease, with the State of Emergency lifted on April 30^th and traffic recovering since then. Since August, traffic recovery was steeper as all the mobility measures were lifted and vaccination pace was extremely fast. In Azores, the regional government has been applying selective lockdowns depending on the virus evolution of each municipality. At the end of December, traffic was impacted by compulsory work-from home imposed by the Government given the expansion of the Omicron variant. In 2021, traffic decreased -15.2% in Algarve and +0.8% in Azores, when compared to 2019.
• Ireland: On December 24^th, 2020, the government approved the maximum level of restrictions, which was in place for the entire 1Q. During 2Q, there was a steady process of reopening, which translated in improving traffic trends. In November, traffic volumes were close to 2019 levels. In December, traffic was not materially affected by the Omicron variant as major restrictions were not implemented. In 2021, M4 was down -11.3% and -10.5% in M3, when compared to 2019.