semester of eight highways, seven of which one in Peru. Urban mobility Invepar s plans, subway system in the city of most recent achievements is

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1 in the first semester of 2012, the Group is already responsible for eight highways, seven of which in Brazil and one in Peru. Urban mobility is also part of Invepar s plans, through the subway system in the city of Rio de Janeiro. One of the most recent achievements is in the airport sector, through the concession of the Guarulhos International Airport is in são paulo Annual Report

2 Our growth was only possible due to the structuring and the implementation of our planning model and our management development plan. The successful consolidation of several companies and the development of new opportunities can be attributed to the participation, commitment and support of our employees and shareholders. During 2011, we experienced an extensive internal restructuring, aligning and standardizing our procedures, integrating teams, recruiting talent and encouraging entrepreneurship. Gustavo Rocha, Chief Executive Officer

3 2011 Annual Report

4 04 Letter from the President 06 Profile 18 - Corporate governance 24 - Human resources 32 - Social responsibility 40 - Economic performance Introduction Welcome to Invepar s 2011 Annual Report. Here you will have access to information regarding the Group s performance in the period from January 1 to December 31, Nonetheless, as this is a dynamic group of companies undergoing a phase of unbridled expansion, relevant facts that occurred in the first four months of 2012, such as last February s successful bid to manage and operate Guarulhos International Airport in São Paulo, have also been included. In addition to the main results for the 2011 fiscal year, the report takes a transparent approach to some of the challenges faced, lessons learned and future projects of the Group. Further details about the role and performance of each company comprising the Group at the close of the 2011 fiscal year can be found in the chapter on Subsidiary Companies. Information is also given about the recent changes in the corporate governance structure, the alignment of the human resources management process and the major highlights of the economic performance. The Social Balance Sheet data, based on the Ibase, as well as the principal socioenvironmental responsibility projects, are dealt with in a specific chapter. Unlike the reports in previous years, when matters were dealt with in separate publications, namely an annual report, a social balance sheet report

5 54 Subsidiary companies 56 LAMSA 84 CBN MetrôRio trains undergoing a check-up at the company s maintenance center. 66 CLN 73 CART 88 CART 96 CRA 77 MetrôRio (containing information about Invepar s Institute) and a third financial statements report, this year the option was to publish the data in a fully integrated, concise and straightforward report. The Group s financial statements were audited by the external consultants Ernst & Young Terco and are available on a pen drive distributed with the 2011 Annual Report. They are also available on the Group s web site at in the Investor Relations section. Group whose mission is to develop and operate transport infrastructure, providing excellent services while achieving results that exceed the expectations of society in general, customers and shareholders. Enjoy it! You are invited to peruse the pages of this 2011 Annual Report as a user of one of the modals managed by Invepar, so as to learn more about the principal achievements and challenges of the

6 4 INVEPAR GROUP Letter from the President In 2011, Invepar readied itself for expansion Planning, training and entrepreneurship. The year 2011 was marked by our ability to develop well-structured projects. The growth trajectory of the Group that began in 2009 was further consolidated during Invepar was founded in the year 2000, and during the first eight years of its existence it had only two subsidiaries: LAMSA (Linhas Amarelas) and CLN (Concessionária Litoral Norte). Over the three-year period from 2009 to 2011 we added an additional five companies to our Group: CART (Concessionária Auto Raposo Tavares), MetrôRio, Bahia Norte, CRT (Concessionária Rio-Teresópolis) and CRA (Concessionária Rota do Atlântico). CRA was created in June 2011 to manage almost 45 km of the Suape/Expressway Highway and Logistics Complex in the state of Pernambuco. The success in the bid to operate CRA showed the Group s entrepreneurial capabilities and exemplifies the proactive and leading player role that we are seeking to play in the transport infrastructure industry in Latin America. We were involved in the preliminary technical studies for the project, so as to verify its feasibility prior to the commencement of the bidding process through a PMI, local acronym for Manifest Interest Procedure. A PMI is a legal instrument that allows the government and the private sector to work together to model and prepare projects of public interest. Another important fact that took place in 2011 was the start of operations of Concessionária Bahia Norte, which operates the highways of the BA-093 System connecting several municipalities in the metropolitan region of Salvador, in addition to being one of the major corridors in which products and services circulate and are distributed in the region. We were only able to grow due to the implementation of a structured planning model and our management development plan.

7 Annual Report The successful consolidation of several companies and the development of new opportunities can be attributed to the participation, commitment and support of our employees and shareholders. During 2011, we experienced an extensive internal restructuring, aligning and standardizing our procedures, integrating teams, recruiting talent and encouraging entrepreneurship. The work undertaken since 2009, cleared the way for our important achievements in early 2012, when we overcame three immense challenges: internationalization, participation and success in the first public tender of airport concessions, as well as our successful bid for the Transolímpico Express Corridor. Winning the bid for Guarulhos International Airport in February 2012, was the result of a prior in-depth study that began almost two years ago, involving over one hundred internal and external employees, specialists in Brazil and from other countries. Planning went into every step and our bid strategy was successful. In addition to being the largest airport in Latin America, Guarulhos Airport is a consolidated project with strong, stable cash flow. In addition, it opens the door to exploring countless growth possibilities in the years ahead. Our alliance with ACSA (Airports Company South Africa) was the result of extensive negotiations that began in We listened to several potential partners and opted for an operating group in tune with the long-term objectives of our shareholders. ACSA is a globally recognized operator that brings management excellence to nine airports in South Africa, and is a member of the consortium responsible for operating Mumbai Airport in India. In March 2012, Invepar took over Concessionária V.P.R. Brasil Participações S.A., which holds 100% of the equity of Lamsac (Linea Amarilla S.A.C.). The company was created to build, maintain and operate Via Parque Rímac, located in the metropolitan region of Lima, and considered Peru s most important urban infrastructure project. As a further example of the importance of the implementation of our structured planning model between 2009 and 2011 occured in April 2012, when we were successful in the bid to implement and operate the Transolímpico Express Corridor, through our participation in the Rio Olímpico Consortium. The Consortium led by Invepar also comprises of CCR and Odebrecht Transport participation. We started preparing for this bid in 2009, through studies drawn up within the PMI. The Transolímpico Express Corridor will directly connect the Olympic Centers of Barra da Tijuca and Deodoro, linking Rio de Janeiro s west and north sides. Lastly, we cannot forget the importance of our commitment to society. We are signatories to the UN Global Compact and are heavily involved in the socioenvironmental initiatives developed and supported through Invepar s Institute. In 2011, we began to reposition the Institute, with the strategic aim of increasingly integrating sustainability into our daily activities. Our 2011 Annual Report includes information about this period of growth, reflected in the 22.2% increase in the Group s operating revenues in comparison with 2010 s fiscal year. Enjoy your reading. Gustavo Rocha, Chief Executive Officer Although our primary focus is the Brazilian market, our strategic planning has defined the search for investment opportunities in the countries of Latin America that enjoy macroeconomic and regulatory stability. The opportunity arose in Peru, and that was how we took our first steps towards internationalization.

8 6 INVEPAR GROUP Profile Overview of the Group s businesses

9 Annual Report Highway BA-099, managed by CLN, connects the town of Lauro de Freitas to the border between the states of Bahia and Sergipe. Invepar (Investimentos e Participações em Infraestrutura S.A.) is a transport infrastructure group created in Its operations are focused on four sectors: highways, urban mobility, airports and ports. It commenced its activities in 2000, with two concessions, reaching seven by the end of 2011, five of these in the last three years. In the first quarter of 2012, three new businesses were incorporated, for a total of ten companies. Eight of these involve highway concessions; one, a subway system; and the last, an airport.

10 8 INVEPAR GROUP Profile Throughout its 12-year existence, and more importantly, in the last three years a period notable for acquisitions, mergers and victorious bids Invepar became a benchmark in the sector, transforming into one of the largest private transport infrastructure operators in Brazil. Its the market leader in the number of passengers transported on subway concessions in Brazil, and its the fifth largest in the number of kilometers of highway concessions, with a 6.5% share of the Brazilian market. MetrôRio also reported higher demand for its services, transporting 180 million passengers during the year, setting a record since operations began at the end of the 1970s. The daily average also rose, with 639,620 passengers using this system of transportation. The business expansion experienced in Brazil is likely to continue over the years ahead, in line with the positive domestic economic scenario. All the highways under Invepar s management carried a total of 130 million paying vehicles in 2011, 38 million more than the previous year. The Group s operations in Brazil* Pernambuco CRA Highway concession 50% Invepar Subject Access to the Port of Suape Extension 45 km Concession period 2010 to 2035 Bahia CLN Highway concession 91.5% Invepar Subject BA-099 (Estrada do Coco Linha Verde) ( Coconut Highway Green Line) Extension 217 km Concession period 2000 to 2035 CBN Highway concession 50% Invepar Subject BA-093 System (Via Parafuso, including BA-512 and BA-524 highways) Extension km Concession period 2010 to 2035 Rio de Janeiro LAMSA Highway concession 100% Invepar Subject Express urban corridor between Barra da Tijuca and Linha Vermelha ( Red Line ) Extension 20 km Concession period 1998 to 2037

11 Annual Report CRA CLN CBN Cart LAMSA CRT MetrôRio CRT Highway concession 24.9% Invepar Subject BR-116/RJ (Rio- Teresópolis) Highway Extension km Concession period 1996 to 2021 MetrôRio Concession 100% Invepar Subject Lines 1 and 2 Extension Line 1: 16 km (19 stations); Line 2: 30.2 km (26 stations) Concession period 2009 (acquisition) to 2038 São Paulo CART Concession 100% Invepar Subject SP-225, SP-327 and SP-270 Highways (Western part of the state of São Paulo) Extension 444 km Concession period 2009 to 2039 *As this refers to facts that took place in 2011, the period covered by the scope of this report, it was decided not to include in this year s report the geographical locations of Invepar s three new projects in 2012: Guarulhos International Airport, the Transolímpico Express Corridor, in Rio de Janeiro, and the new concession acquired in Lima, Peru.

12 10 INVEPAR GROUP Profile Invepar and the Brazilian context In 2011, the Group s performance achieved a level that exceeded expectations. This is due primarily to the fact that Invepar is working to anticipate and meet demand, as well as making the most of the opportunities in the Brazilian market. Brazil s growth necessarily depends on investments in better transportation infrastructure conditions (check out the principal results of this expansion process in the table on pages 12 and 13). Invepar s solid expansion is proof that the Group is in a position to capitalize on this favorable moment in which the Brazilian economy finds itself. Besides higher production and consumption, the promising prospects for the future also include higher foreign currency earnings arising from the large-scale domestic and international events to take place in Brazil over the next few years. These include the FIFA World Cup Finals in 2014 and the Olympic Games in In the past, Brazil experienced a reduction in infrastructure investment, as a result of the contraction in government expenditures in this sector, coupled with economic instability. This scenario is now behind us, and heavy investment in infrastructure is now high on Brazil s development agenda. According to the Brazilian Economics Institute of the Getulio Vargas Foundation (Ibre/FGV), for almost three decades infrastructure spending has been a paltry 2% of GDP, a tiny fraction when compared to the figures for China and India, for example, which spend 6% and 7% of their respective GDPs. One of Brazil s major challenges in this decade is to reduce the infrastructure bottlenecks it is experiencing. Brazilian highways currently account for 60% of total freight transported around the country and play a fundamental role in domestic logistics. Corporate Structure Previ Banco do Brasil Employees Pension Fund, Latin America s largest pension fund. Shareholders OAS One of the five largest heavy construction groups in Brazil, with a presence in 18 countries spanning the Americas, the Caribbean and Africa. Funcef Federal Savings Bank Employees Foundation, the thirdlargest pension fund in Brazil and one of the largest in Latin America. Petros Petrobras Social Insurance Foundation, the second-largest pension fund in Brazil and pioneer in the local supplementary pension market.

13 Annual Report The industry segment in which the Group operates shows tremendous growth potential. At the beginning of 2012, the Brazilian government revealed its interest in implementing plans for a feasibility study for transferring to the private sector the management of a further 9,000 km of federal highways. According to information from the ABCR (The Brazilian Association of Highway Concessionaires), 15,381 km of highways in nine states are already under private sector management representing 7% of Brazil s paved highway network 214,249 km in extent. Private sector-managed highways have produced good results in studies carried out by entities within the sector. In a survey held in 2011 by the National Transport Confederation (CNT), 89.6% of the highway network in the hands of the private sector was considered excellent or good, while 33.8% of the highways under federal and state public management had the same classification. The study covered 92,747 km of highways. The creation of committees to advise the board of directors is in tune with the best practices in corporate governance Linha Amarela S.A. CBN Bahia Norte Subsidiary companies CLN Bahia Norte Concessionária Litoral Norte Concessionária Rio-Teresópolis Suape Road and Logistics Complex, in Pernambuco Concessionária Auto Raposo Tavares

14 12 INVEPAR GROUP Profile According to the study Sustainable Brazil Socioeconomic Impacts of the 2014 FIFA World Cup Finals compiled by the consultancy firm Ernst & Young, in partnership with the FGV (Fundação Getulio Vargas), direct investments in Brazil needs to rise fivefold, if the event is to be a success, injecting a total of R$ billion into the Brazilian economy. The study also predicts the creation of 3.6 million jobs a year and R$ 63.5 billion in income for the population, which will inevitably impact the domestic consumer market. However, the same study says that if Brazil is to take advantage of this opportunity, heavy investment is required in infrastructure, by both the government and the private sector. KEY FIGURES... The expansion process of Invepar was also reflected in the organization s performance. The highlighted figures refer to fiscal year R$905 mi * was the net revenue of Invepar in 2011, 22% higher than in the previous year. R$338 mi * in Ebitda in 2011, 13% higher than in mi was the approximate number of people benefited from the projects supported by Invepar s Institute last year.

15 Annual Report 4,262 people are employed by the Group, more 833 professionals (25%) than in 2010 MetrôRio train driver arrives at a station of Line mi paying vehicles used the highways managed by the Group, 41% more than the 92 million recorded in mi passengers were transported on MetrôRio during 2011, a record since operations began in the 1970s. 990 km is the total length of the stretches of highways managed by the concessions comprising the Group. R$74 mi in net contributions to society and investment in social, cultural and environmental projects. *The net revenues and Ebitda shown are net of the impacts of the IFRS. In the case of Ebitda, the amount of R$ 6.5 million is included as provisions for maintenance.

16 14 INVEPAR GROUP Profile New home In order to facilitate the internal restructuring and strengthen the sense of unity among the different companies, Invepar moved its head offices to a new address in This enabled it to bring all corporate office employees under one roof and to work in the constant search for greater integration and synergy among the staff and to standardize procedures among the companies. The new administrative headquarters are located in downtown Rio de Janeiro. The company s core business is to manage and operate transport infrastructure concessions. The expansion of the business is supported by pillars such as best corporate governance practices, with the hallmark of respect for the Group s values: people and teamwork; honesty; socioenvironmental responsibility; entrepreneurship; commitment; respect and innovation. The Group and its subsidiary companies, except for CRT and CBN, are signatories to the principles of the Global Compact, an initiative sponsored by the United Nations Organization for the purpose of mobilizing companies worldwide to adopt sound practices in the fields of human rights, labor law, the environment and anti-corruption reporting. Under the CLN concession, the BA-099 highway is a symbol of high standards of quality, comfort and safety.

17 Annual Report MISSION, VISION AND VALUES MISSION To provide and operate excellent transport infrastructure services and generate results that exceed the expectations of society, customers and shareholders. VISION To be the leader and international reference in the transport infrastructure segment. VALUES Our operations are based on best corporate governance practices and we value: - People and teamwork - Honesty - Socioenvironmental Responsibility - Entrepreneurship - Commitment - Respect - Innovation History The first concessions of the Group were LAMSA (Linha Amarela S.A), in Rio de Janeiro, and CLN (Concessionária Litoral Norte), in the state of Bahia, both in At the end of 2011, the Group s portfolio already consisted of five other companies in the highway concession and subway system transport segments: CART (Concessionária Auto Raposo Tavares), in São Paulo; MetrôRio, in Rio de Janeiro; CBN (Concessionária Bahia Norte), in Bahia; CRT (Concessionária Rio-Teresópolis), in Rio de Janeiro; and CRA (Concessionária Rota do Atlântico), in the state of Pernambuco. In early 2012, the Invepar Group enjoyed three significant victories. In February, it attained its strategic goal of entering the airport industry by winning the bid to manage and operate Guarulhos International Airport, in São Paulo, the largest in Brazil. According to Infraero the government company responsible for airport management in Brazil there were 270,600 takeoffs and landings at Guarulhos airport between January and December 2011, totaling 30 million passengers. Of these, 18.6 million on domestic flights and 11.3 million on international flights. The Invepar-ACSA consortium that won the bid holds 51% of the equity of the SPE (Specific Purpose Entity): 90% of whose shares belong to Invepar, and the other 10% to the South African company ACSA (Airport Company South Africa). Infraero holds 49% of the SPE. Another achievement involved the first step towards internationalization, with the takeover of the concessionaire that will operate Via Parque Rímac, in Lima, Peru. Finally the Group was victorious in the bid to implement and operate the Transolímpico Express Corridor in Rio de Janeiro.

18 16 INVEPAR GROUP Profile Time Line Invepar is created from the association between OAS and Previ. - the LAMSA (Linha Amarela) and CLN (Concessionária Litoral Norte) concessions commence. - Invepar developed its strategic plan. - the shareholders sign an investment agreement in order to equalize their equity interest in the long term of the company the Invepar Odebrecht consortium, through CRA (Concessionária Rota do Atlântico) in Pernambuco, wins the bid to manage the Suape/Expressway Road and Logistics Complex. BA-093 Highway System: the CBN concession was a milestone for the Invepar Group in 2011.

19 Annual Report CART (Concessionária Auto Raposo Tavares), which manages the 444 kilometer-long Raposo Tavares Corridor, is incorporated. - two new concessionaires join the Group: CBN (Concessionária Bahia Norte) and CRT (Concessionária Rio-Teresópolis). - Invepar acquires the MetrôRio operation. - petros and Funcef become shareholders and increase the investment capacity of the company the consortium led by Invepar wins the privatization bid for Guarulhos International Airport, in February. - Invepar announces the merger of V.P.R. Brasil Participações, acquires Lamsac (Linea Amarilla S.A.C.) and takes responsibility for building, maintaining and operating the Via Parque Rímac, the largest roads project in the Lima Metropolitan Region of Peru. - the Rio Olímpico Consortium, of which Invepar is a part, wins the bid to implement and operate the Transolímpico Express Corridor in Rio de Janeiro.

20 18 INVEPAR GROUP Corporate governance transparency and control are a priority

21 Annual Report The sharp growth experienced by Invepar, mainly starting in 2008, has gone hand-in-hand with a process for strengthening the Group s corporate governance. The purpose is to implement strict control criteria by standardizing procedures across the Group companies, while adopting best governance practices so as to reduce the risk of fraud, abuse of power and conflicts of interest in any sphere within the organization. Invepar executives discuss the process for strengthening the Group s corporate governance.

22 20 INVEPAR GROUP Corporate governance Code of Ethics and Conduct The Code of Ethics and Conduct of Invepar was designed and approved by the Executive Board and by the Board of Directors in 2011 and will be implemented across all subsidiary companies during The aim of the document is to set the appropriate standards of conduct and protect Invepar s reputation. Thus, it determines fair and responsible relationship standards with all strategic stakeholders: shareholders, employees, customers, trade unions, partners, service providers, government and society in general. Advisory committees In line with good corporate governance practices, the Group has created four committees to advise the Board of Directors. The committees are responsible for analyzing certain issues regarding the respective areas of skills and operations and for making recommendations to the Board of Directors. They are: the Audit Committee; the Human Resources and Governance Committee; the Works and Services Management Committee; and the Finance and Investments Committee (see the information about the committees in the box below). An Ethics Committee was created to oversee the implementation and ensure that the Code of Ethics and Conduct is applied. It applies to all components of the Group: directors, committee members, executive board members, executives of subsidiary companies, employees and interns. Role of the committees Finance and Investment Committee Its role is to assist the Board of Directors in analyzing and monitoring the Group s investments. It submits analyses of the Brazilian and global economic scenario, as well as their potential effects on the organization s finances; it examines, discusses and formulates recommendations to the Board of Directors regarding the economic and financial decisions proposed by the Executive Board; and it monitors the implementation of the financial and investment polices approved by the Board of Directors. Works and Service Management Committee Its role is to assist the Board of Directors in analyzing and monitoring the work programs contemplated in the concession agreements of all companies comprising the Group, in addition to formulating recommendations referring to outsourcing the works proposed by the Executive Board and by the subsidiary companies. Human Resources and Governance Committee Its purpose is to advise the Board of Directors on matters such as: defining the company s goals and coordinating the

23 Annual Report Governance structure The Board of Directors of Invepar comprises eight members, two of whom represent shareholders, and their respective substitutes. The board normally meets once a month, but special meetings may be convened whenever necessary. The strategic role of the Board of Directors is to establish the overall guidelines for the company s business, according to the terms of reference conferred on it by Law 6.404/76 and the company s bylaws. The Invepar Group also has a four-member Fiscal Council, one representative for each shareholder, as well as independent auditors who verify the consistency and integrity of its operations. The Corporate Governance area is responsible for dealing with the demands of the Executive Board, which are then forwarded for the shareholders, board of directors and fiscal council to make a decision. It also organizes and keeps on file the corresponding information and records the decisions taken, in addition to following up on the progress of the pertinent subject matters with advisory committees of the Board of Directors. In 2011 the Invepar Group began using the Governance Portal, an innovative tool whose role is to store and centralize through a single channel and with enhanced security all information and documents of relevance to those who are part of the decision-making process. The Executive Management of Invepar comprises the Chief Executive and Investor Relations Officer; the Executive Vice President for Finance and Administration; the Executive Vice President for Highway Concessions; and the Management and Human Resources Officer. processes for evaluating the Executive Board of Invepar and its subsidiaries; coordinating the executive selection process; defining the incentive process, such as variable performance-linked compensation, for example; and recommending the adoption of best corporate governance and management practices. Audit Committee Its remit includes providing support for the Board of Directors in matters involving the evaluation of business risks and internal control mechanisms, in addition to supervising the adaptation and independence of the internal audit department. The Group uses a corporate governance portal, which stores and centralizes relevant information and documents

24 22 INVEPAR GROUP Corporate governance Invepar s Management in 2011 Executive Board Gustavo Nunes da Silva Rocha Chief Executive and Investor Relations Officer Marcos Bastos Rocha Executive Vice President, Finance and Administration Damião Carlos Moreno Tavares Executive Vice President, Highway Concessions Marcus Roger Meireles Martins da Costa Management and Human Resources Officer Fiscal Council* Marcelo Almeida de Souza President Josedir Barreto dos Santos Adilson de Freitas Alternate Roosevelt Rui dos Santos Álvaro Carlos da Silva Alternate Paulo Roberto Fogaça dos Santos Rubens Rodrigues dos Santos Alternate Board of Directors* Ricardo Carvalho Giambroni Chairman Maria Tereza de Souza Silva Alternate Antônio Bráulio de Carvalho Vice President Luiz Eduardo Silva Lyra Magalhães Fábio Hori Yonamine Alternate Alexandre Louzada Tourinho Carlos Eduardo Paes Barreto Neto Alternate Carlos Eduardo Leal Neri Paulina de Menezes Berwanger Alternate Manuela Cristina Lemos Marçal Paola Rocha Ferreira Alternate Carlos Fernando Costa Luiz Antonio dos Santos Alternate Paulo César Campos Roberto Yoshio Miura Alternate * As there were changes among members during 2011, this list shows the members of the Board of Directors, the Fiscal Council and the Executive Board at December 31, Shareholder structure Invepar Investimentos e Participações em Infraestrutura S.A. ( Invepar or company ) was incorporated in 2000 as a publicly traded company whose business purpose is to invest in other companies, especially in the transport infrastructure sector. Invepar s shares are not currently traded on the stock exchange. The shareholder structure of Invepar is as follows: 24.44% 25.56% 25.00% 25.00%