At the end of 2018, operating income from Saba’s assets under management stood at 223 million euros (+5%), while EBITDA totalled 106 million euros (+6%), with a margin of 48%, which has grown in recent years and is the highest in the sector worldwide. The new companies incorporated into Saba’s scope as a result of the expansion operation finalized in December 2018 have not had an impact on the consolidated income statement for this year.

Saba’s principals magnitudes reflect, on the one hand, this stable business performance and, on the other hand, the efforts made by the organization as a whole to increase the operational efficiency of the business, to implement initiatives that allow the company to become a leader in the sector —putting special emphasis on new support systems, new technologies and energy efficiency, as well as new formulas and commercial initiatives— and to actively manage contracts, focusing on growth.

Saba invested €250 million in 2018, of which €232 million, 93% of the total, was for expansion.

As in previous years, Saba continues with its expense optimization and management measures. The adaptation of sales channels, with special emphasis in the digital area, and products to meet current needs, is an indication of a line of work aimed at continuous improvement that should translate into greater profitability. The traditional policies of selective growth, based on profitability criteria and economic and legal certainty, as well as actions aimed at efficiently managing operations and technological innovation continue to be Saba’s principal lines of action.

The financial structure of the Group seeks to limit the risks arising from uncertainty in financial markets, trying to minimize potential adverse effects on financial profitability. Throughout 2018, the company continued to work in order to have the tools and flexibility needed to continue with its objective of growth and diversification. In this regard, the Group constantly assesses its financial structure and, in the same way, must be in a position to improve it at all times, depending on the market situation and its evolution.

Saba recorded a lower net financial result in 2018, due to a lower level of debt and thanks to the process undertaken in 2017 of improving its existing financing of its car parks in Europe (Club Deal) and Chile, which basically translated into better price conditions, expanding its borrowing capacity in the case of Chile, in addition to improving future cash provisions, among other aspects. Moreover, and in line with this improvement in the conditions of the company’s financial structure, in 2017 the company expanded its interest rate hedging.

Saba’s total assets as of 31 December 2018 came to €1,491 billion. The company’s consolidated equity as of 31 December 2018 amounted to €408 million, while gross financial debt (countable financial debt without derivative liability) stood at €731 million with its net financial debt at €633 million. With regard to the distribution of debt, long-term debt represented more than 70% at year end 2018, while it will mature on average in 2021.

In order to minimize exposure to interest rate risks, Saba maintains a high percentage of debt at a fixed rate or at a rate fixed by hedging, approximately 70%. Therefore, it is estimated that any possible changes in interest rates would not have a significant impact on the company’s accounts.

The Group has established a risk management policy based on a methodology of identifying, analysing and evaluating the various business risks. Risk is understood as an event that could negatively impact on the fulfillment of the company’s strategic objectives. The combination of all risks is categorized according to different previously defined types, establishing in turn a degree of prioritization, management mechanisms and action plans aimed at reducing the various risks to an acceptable level.

Below are the main business risks which have been identified:

Maturity of the contracts: Risks derived from the age of the concessions and contracts in the portfolio and the degree to which they can be substituted for new business opportunities that ensure growth.

Technological innovation: Development of proactive technological innovation in the medium and long term, aligned with the strategy and taking into account the requirements of all the Group’s departments.

Mobility ecosystem: Identification and execution of the Group’s role in the current mobility ecosystem. Changes in the Administration and the urban policy in cities (new urban areas, restriction of traffic in central areas, etc.) as well as changes in the mobility and travel habits of people (new alternative transport services, electric cars or carsharing, among others).

Competition: Work to ensure the sustainability of the business taking into account the existing substitute products of competitors. Definition, identification and alignment of the company’s products and value proposition with the needs of customers in all countries, ensuring the desired quality levels.

Degree of adequacy of the state and safety of facilities, accompanied by the deployment of remote management of the car parks, which requires constant monitoring.

The Group’s policy is to cover all significant exposure to risks as long as there are appropriate instruments and the cost of such protection is reasonable for the risks covered. Financial risk management is controlled by the Group’s Financial Board who takes the appropriate decisions with the prior authorization of Saba’s Chief Executive Officer and Board of Directors.

Below are the main financial risks which have been identified:

Exchange rate risk. The Group operates internationally and owns assets the United Kingdom and Chile. Therefore it is exposed to an exchange rate risk for operations in pounds sterling and Chilean pesos. This exchange rate risk arises from future commercial transactions, recognized assets and liabilities and net investments in operations abroad.

In this regard, a 10% variation in the euro/Chilean peso and/or euro/pound sterling exchange rate as of financial year-end closing on 31 December 2018 would produce a minimal impact on the profit assets of the Group. Saba uses derivative financial instruments to manage fluctuations in exchange rates.

Interest rate risk. The interest rate risk to which the Company may be exposed arises from external financing. External financing issued at variable rates exposes the Group to interest rate risk of cash flows, while non-fixed interest rate financing expose the company to interest rate risks on fair value. Saba uses derivative financial instruments to manage fluctuations in interest rates, exchanging debt at variable interest for debt at a fixed rate, thus maintaining a balance between debt at variable and fixed rates.

Credit risk. In relation to banks and financial institutions, the company only works with financial institutions with proven creditworthiness. This creditworthiness is reviewed periodically.

In relation to commercial debtors, the Group assesses the creditworthiness of the client, taking into account its financial position, past experience and other factors. Individual credit limits are established based on internal ratings.

Below are the main business risks which have been identified:

Liquidity risk. Saba carries out the prudent management of liquidity risk, ensuring that there is sufficient cash and liquid assets, as well as enough funds to ensure fulfilment of its payment obligations.

Inflationary risk. Most of the car park concessions generate income whose rates vary directly according to inflation. Therefore, a scenario of increased inflation would lead to an increase in the valuation of these projects. In this regard, in relation to Royal Decree 55/2017 of 3 February which implements Law 2/2015 of 30 March on the de-indexation of the Spanish economy, it is estimated that the aforementioned Royal Decree will not have a significant impact on the rates applicable to Spanish concessions operated by the Group given that, in general, the aforementioned Royal Decree does not apply to existing concession contracts.

On 31 July 2018, CriteriaCaixa acquired 49% of Saba Infraestructuras from Torreal, KKR and ProA, going on to control 99% of the company’s share capital. CriteriaCaixa has been a shareholder in Saba since 2011, when Abertis Infraestructuras split its car park and logistics park businesses, and since then it has continued to support the company along its growth trajectory.

After some additional purchases of shares in December 2018, CriteriaCaixa (through CriteriaMovilidad) now owns a 99.5% stake in Saba Infraestructuras as of 31 December 2018, with minority shareholders holding 0.5% of the share capital. The number of minority shareholders, between owners and co-owners, is around 1,800.

The company has a Shareholder Office which boasts a number of tools. These allow not only maintaining regular contact with shareholders but providing them with relevant Saba information, especially in relation to activities, results or developments that may be of interest. The Shareholder Office responded to nearly 610 queries in 2018, managed with a clear focus on service quality. Half of these queries were regarding the purchase and sale of shares and 43% were requests for information regarding the various General Shareholders Meetings.