Annual Report 2018 SOCIEDAD MATRIZ SAAM S.A. 2 2018 ANNUAL REPORT Index 3 Contents Contents Introduction 04 Key Figures 06 2018 Corporate Milestones 08 Letter from the Chairman 10 Board of Directors 14 Management 18 SAAM’s Hallmark 20 History 28 Activities and Businesses 30 Annual The Industry 32 Financial Performance Trends 34 Report Towage Division 36 Port Terminals Division 48 Logistics Division 70 2018 Investment and Growth 80 Sustainability 88 Our People 92 Occupational Health and Safety 99 Training and Development 102 Ethics at the Core of our Management 104 Environment and Community 105 Corporate Information 110 Company Incorporation 112 Shareholders 115 Directors' Committee 122 Material or Essential Events 128 Main Properties 130 Final Structure 134 Consolidated Financial Statements as of 190 December 31, 2018 Statement of Responsibility 390 4 5 Contents Company INTRODUCTION Information Name: Sociedad Matriz SAAM S.A. Chilean Tax ID: 76.196.718-5 Legal Address: Av. Avenida Apoquindo 4800, Torre II, piso 18, Las Condes, Santiago. Type of Entity: Publicly traded corporation. SVS Registration Number: 1091 Ticker: SMSAAM Corporate Purpose: Acquiring and selling shares in public listed companies, shares or voting rights in other companies, bonds, debentures, commercial paper and other tangible securities; managing, transferring and benefiting from them, gaining from their sale; financing related companies; and providing services and advice. Shareholder Registry: Stock Exchanges: DCV Registros S.A. Santiago Exchange Huérfanos 770 piso 22, Santiago, Chile. Valparaíso Stock Exchange Telephone: (56-2) 2393-9003 Chilean Electronic Stock Exchange E-mail: [email protected] Independent Auditors: Investor Relations: PricewaterhouseCoopers Consultores Contact: Paula Raventós Auditores SpA (PwC) E-mail: [email protected] Address: Avenida Apoquindo 4800, Torre Contact Information: II, piso 18, Las Condes, Santiago. Headquarters: Telephone: (56 2) 2731 8213 Avenida Apoquindo 4800, Torre II, piso 18, E-mail: [email protected] Las Condes, Santiago. Website: www.saam.com Telephone: +56 2 2731 8215 Fax: +56 2 2731 8250 Terminal Portuario Guayaquil, Ecuador 6 2018 ANNUAL REPORT Introduction 7 Contents Key Figures 2018 EBITDA(1) OPERATING IN US$ 146 MILLION 13 COUNTRIES IN THE AMERICAS REVENUE(1) TOTAL TOWAGE MANEUVERS (2) US$ 516 MILLION 107 THOUSAND NET INCOME(1) MILLION TEUS US$ 49.6 3.4 TRANSFERRED (2) MILLION PP&E(1) MILLION TONS (2) US$ 711 39.4 TRANSFERRED MILLION EBITDA 28% MARGIN(1) 7,772 EMPLOYEES (2) (1) Includes SM SAAM consolidated fi gures (2) Includes full volume of subsidiaries and associates 8 2018 ANNUAL REPORT Introduction 9 Contents 2018 Corporate Milestones The year 2018 contained several important milestones: Implemented a New Achieved record cargo Modernized Florida Operating Model. transfers at our port terminals International Terminal, in Guayaquil, Caldera, San doubling its cargo Antonio and Corral. receiving capacity. Florida International Terminal (FIT) Signed a Memorandum of Understanding with AutoMobile International Terminal to develop a Awarded the first regional Ro-Ro Terminal at the contract and closed a twelve- Port of Mobile, U.S.A. year agreement in Canada for the Towage Division. Signed a Memorandum with AutoMobile International Terminal Acquired the remaining 50% interest in Transaereo. Commissioned new reefer Reduced the rate of container yard and loading occupational accidents by 71% equipment at Puerto Caldera. over the past six years. Included in the Dow Jones Sustainability Index for Puerto Caldera the third consecutive year and for the first time in the Integrated Latin American Market Sustainability Strengthened the SAAM Index (DJSI MILA). SMIT Towage fleet in Brazil and Canada with four new azimuth tugs. Towage Canadá Aerosan 10 2018 ANNUAL REPORT Introduction 11 Contents Dear Shareholders: when faced with a demanding and 310,151 TEUs, respectively. situation where the effects of It is my pleasure to present consolidation among shipping San Antonio Terminal the SM SAAM Annual Report, companies are still being felt. Internacional (STI) in Chile which describes the company’s Terminals outside Chile performed surpassed one million TEUs performance in 2018. Last year we exceptionally well. They achieved transferred for the seventh Óscar implemented a series of initiatives higher volumes and in some consecutive year by reaching 1.2 Hasbún M. to streamline our structure and cases beat their transfer records. million, which is 9% more than in Chairman costs in order to improve returns They also introduced important 2017. It also diversified its portfolio and, at the same time, we took infrastructure initiatives to by servicing car carriers and bulk major steps to strengthen our improve their capacity. freight vessels. position in the markets where we do business. The goal of these The towage service faced heavy Iquique Terminal Internacional (ITI) changes was to build a more competition. However, we recorded a 32% historic increase modern, competitive organization continue to enjoy an important in Bolivian cargo in transit, and lay a strong foundation for market position. In particular, we which reached 459,000 tons and the future. won our first regional contract and formed part of their total transfers incorporated four new tugs, giving of 2.3 million tons. Portuaria On the domestic front, we finished us a fleet of 153 vessels operating Corral, a terminal in southern what I referred to a year ago: in 10 countries in the Americas by Chile that serves the forestry We reviewed our structure and the end of 2018. industry, exceeded 1.1 million tons LETTER our business divisions and we transferred. simplified them, in order to create We have made significant a more robust central corporate progress in consolidating a new Milestones achieved by the office and generate synergies in operating model, and our financial Port Terminals Division are also FROM operational processes that use performance for 2018 reflects this included in projects. For example, the company’s assets. As a result, achievement. The year closed in October we completed a project we are consolidating a more with net income of US$49.6 to modernize Florida International THE flexible, modern management million, which is equivalent to an Terminal (FIT), which doubled model with a lighter structure and increase of 91% over net income its cargo receiving capacity standardized processes within a for the previous year, excluding with an investment of US$5 CHAIRMAN new operating model. This has led extraordinary gains and non- million. Another US$5 million was to greater productivity, optimized recurring costs such as the sale invested to upgrade equipment. costs and improved control over of our interest in Tramarsa in our assets. 2017, dividends from TPA and the Puerto Caldera (Costa Rica) also costs of implementing the new opened a new reefer container The business division that has operating model in 2018. yard in October, and added new most clearly demonstrated these loading equipment with the results is logistics. It undertook Port terminals achieved aim of continuing to improve its a major restructuring, and was significant growth in throughput, efficiency. With an investment consequently able to intensify with particularly strong of around US$ 9.5 million, these businesses where we have performances from Terminal improvements are expected to competitive advantages. Portuario Guayaquil (TPG, increase output by 30%. Ecuador) and Puerto Caldera Port services achieved good (Costa Rica). Both finished the Meanwhile, AutoMobile performance in 2018, even year with record transfers: 825,170 International Terminal—a joint 12 ANNUAL REPORT 2018 Introduction 13 Contents venture of SAAM Puertos S.A. and which involved investing US$10 remaining interest in our joint export terminal using three tugs in and professionalism drive us Terminal Zárate S.A.—signed a million in infrastructure as part venture in Brazil, Mexico, Panama the port in Prince Rupert, Canada. as a company and enable us to memorandum of understanding in of the New International Terminal and Canada. This transaction provide excellent services to every April to develop a Ro-Ro terminal 2020 project. We also acquired is valued at US$201 million and We will make progress on the customer, strengthening our with capacity for up to 210,000 the remaining 50% interest must be approved by regulatory Puerto de Caldera expansion leadership and contributing to the vehicles per year at the port of in Transaereo. This company authorities. It will enable us project, submitted to Costa development of our country, the Mobile, in the state of Alabama, provides a wide range of airport to move forward towards our Rican authorities in December Americas and all its inhabitants. USA. This agreement calls for services at airports in Bogotá, vision of becoming a significant, 2018. During the year, we will My thanks go to them, which I operations to start at the end of Medellín, San Andrés, Barranquilla, active participant in further collaborate on a technical working also extend to our shareholders, 2019 and continue for up to 30 Cartagena and Pereira. consolidation within this industry. group to conclude the proposal, customers, strategic partners and years. which is linked to extending the contractors for their trust in us. With these achievements, the Our financial performance is concession, in order to make an Therefore, the Port Terminals Logistics Division reported presented from a framework of important