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ASUR 3Q18 Passenger Traffic Increased 6.7% YoY in Mexico, 3.8% in San Juan, Puerto Rico and 7.3% in Colombia

MEXICO CITY, Oct. 22, 2018 /PRNewswire/ -- Grupo Aeroportuario del Sureste, S.A.B. de C.V.  (NYSE: ASR; BMV: ASUR) (ASUR), a leading international airport group with operations in Mexico, the U.S. and Colombia, today announced results for the three-and nine-month periods ended September 30, 2018.

3Q18 Highlights1

  • Passenger traffic in Mexico rose 6.7% YoY, reflecting increases of 10.5% and 2.8% in domestic and international traffic, respectively. Cancun Airport was the main traffic driver.
  • Traffic in Puerto Rico (Aerostar) increased 3.8%, as a 5.3% increase in domestic traffic more than offset the 5.9% decline in international traffic. The recovery in total passenger traffic reflects the impact of Hurricane Maria, which hit the island on September 21, 2017.
  • Traffic in Colombia (Airplan) increased 7.3% YoY, reflecting increases of 6.4% in domestic traffic and 12.4% in international traffic.
  • Consolidated commercial revenues per passenger reached Ps.92.5.
  • Consolidated EBITDA rose 18.9% YoY, reaching Ps.2,278.3 million.
  • Cash position at the end of the quarter reached Ps.4,569.1 million. Net Debt to LTM EBITDA stood at 1.22x, reflecting the consolidation of Aerostar and Airplan.

 

Table 1:  Financial & Operational Highlights 1




Third Quarter

% Var


2017

2018

Financial Highlights




Total Revenue

3,230,104

3,682,047

14.0

Mexico

2,606,720

2,585,641

(0.8)

San Juan

623,384

692,466

11.08

Colombia

0

403,940

n/a

Commercial Revenues per PAX

99.5

92.5

(7.1)

Mexico

100.5

108.1

7.6

San Juan

96

108.0

12.66

Colombia

0

35.0

n/a

EBITDA

1,916,603

2,278,320

18.9

Net Income

1,145,613

1,006,574

(12.1)

Majority Net Income

1,100,695

988,054

(10.2)

Earnings per Share (in pesos)

3.6690

3.2935

(10.2)

Earnings per ADS (in US$)

1.9596

1.7591

(10.2)

Capex

313,395

363,379

15.9

Cash & Cash Equivalents

7,678,970

4,569,129

(40.5)

Net Debt

7,033,478

11,006,740

56.5

Net Debt/ LTM EBITDA

1.03

1.22

18.0

Operational Highlights




Passenger Traffic




Mexico

7,783,057

8,303,559

6.7

San Juan

2,144,760

2,226,595

3.8

Colombia

2,610,921

2,800,730

7.3


1 Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with International Financial Reporting Standards (IFRS), including application of IFRS 9 and 15 that came into force in 2018, and represent comparisons between the three- and nine-month periods ended September 30, 2018, and the equivalent three- and nine-month periods ended September 30, 2017.  On May 26, 2017, ASUR increased its share ownership in Aerostar to 60% from its prior 50% ownership. Accordingly, starting June 1, 2017, ASUR began to fully consolidate Aerostar results on a line by line basis, while until then, results were accounted for by the equity method. Furthermore, starting October 19, 2017, ASUR began to consolidate results of Airplan in Colombia. All figures in this report are expressed in Mexican pesos, unless otherwise noted. Tables state figures in thousands of pesos, unless otherwise noted. Passenger figures for Mexico and Colombia exclude transit and general aviation passengers, unless otherwise noted. Commercial revenues include revenues from non-permanent ground transportation and parking lots. All U.S. dollar figures are calculated at the exchange rate of US$1.00 = Mexican Ps. 18.7231 (source:Diario Oficial de la Federacion de Mexico) while Colombian peso figures are calculated at the exchange rate of COL$ 158.6100 = Ps. 1.00 Mexican pesos (source:Investing). Definitions for EBITDA, Adjusted EBITDA Margin, Majority Net Income can be found on page 17 of this report. 

 

3Q18 Earnings Call

Date & Time: Tuesday, October 23, 2018 at 10:00 AM US ET; 9:00 AM CT

Dial-in: 1-800-263-0877 (US & Canada); 1-646-828-8143 (International & Mexico). Access Code: 9374174.

Replay: Tuesday, October 23, 2018 at 1:00 PM US ET, ending at 11:59 PM US ET on October 30, 2018. Dial-in number: 1-844-512-2921 (US & Canada) 1-412-317-6671 (International & Mexico); Access Code 9374174.

Passenger Traffic

ASUR's total passenger traffic in 3Q18 increased 6.3% YoY to 13.3 million passengers, reflecting increases of 6.7% in traffic in Mexico, 3.8% in Puerto Rico and 7.3% in Colombia. 

The 6.7% YoY growth in passenger traffic in Mexico reflects increases of 10.5% and 2.8% in domestic and international traffic, respectively. Cancun was the main driver behind traffic growth, with increases of 10.6% and 2.8% in domestic and international traffic, respectively, with the majority of ASUR's other Mexican airports also contributing to higher traffic.

Traffic in Puerto Rico increased 3.8% YoY, recovering following the impact of Hurricane Maria, which hit the island in September 2017. Domestic traffic increased 5.3% YoY, more than offsetting a decline of 5.9% in international traffic.

Colombia reported a 7.3% YoY increase in total traffic driven by increases of 12.4% and 6.4% in international and domestic traffic, respectively.

Tables with detailed passenger traffic information for each airport can be found on page 19 of this report.

Table 2: Passenger Traffic Summary


Third Quarter

% Chg.


Nine-Months

% Chg.


2017

2018


2017

2018

Total México

7,783,057

8,303,559

6.7


23,530,519

25,158,418

6.9

- Cancun

5,909,015

6,251,306

5.8


17,996,106

19,189,289

6.6

- 8 Others Airports

1,874,042

2,052,253

9.5


5,534,413

5,969,129

7.9

Domestic Traffic

3,929,206

4,342,594

10.5


10,641,806

11,725,081

10.2

- Cancun

2,254,689

2,493,382

10.6


5,839,906

6,525,887

11.7

- 8 Others Airports

1,674,517

1,849,212

10.4


4,801,900

5,199,194

8.3

International traffic

3,853,851

3,960,965

2.8


12,888,713

13,433,337

4.2

- Cancun

3,654,326

3,757,924

2.8


12,156,200

12,663,402

4.2

- 8 Others Airports

199,525

203,041

1.8


732,513

769,935

5.1

Total San Juan, Puerto Rico1

2,144,760

2,226,595

3.8


6,865,311

6,362,573

(7.3)

Domestic Traffic

1,858,789

1,957,414

5.3


6,005,732

5,672,204

(5.6)

International traffic

285,971

269,181

(5.9)


859,579

690,369

(19.7)

Total Colombia2

2,610,921

2,800,730

7.3


7,727,462

7,681,418

(0.6)

Domestic Traffic

2,248,484

2,393,455

6.4


6,709,903

6,516,614

(2.9)

International traffic

362,437

407,275

12.4


1,017,559

1,164,804

14.5

Total traffic

12,538,738

13,330,884

6.3


38,123,292

39,202,409

2.8

Domestic Traffic

8,036,479

8,693,463

8.2


23,357,441

23,913,899

2.4

International traffic

4,502,259

4,637,421

3.0


14,765,851

15,288,510

3.5


Note: Passenger figures for Mexico and Colombia exclude transit and general aviation passengers, while Puerto Rico includes transit passengers and general aviation.


1 On May 26, 2017, ASUR increased its ownership stake in Aerostar, operator of LMM Airport in Puerto Rico from 50% to 60%. ASUR began fully consolidating line by line Aerostar's operations starting June 1, 2017. For comparison purposes, this table includes traffic figures for LMM Airport for 3Q18 and 3Q17.


2 On October 19, 2017, ASUR began to consolidate Airplan's operations (Colombia). For comparison purposes, this table includes traffic figures for Airplan for 3Q17 and 3Q18.

Review of Consolidated Results

In May 2017, ASUR increased its share ownership in Aerostar, operator of LMM Airport in Puerto Rico, to 60% from its prior 50% ownership. Accordingly, until May 31, 2017, ASUR's ownership in Aerostar was accounted for by the equity method, while starting June 1, 2017, ASUR began to fully consolidate Aerostar results on a line by line basis. In addition, on October 19, 2017, ASUR acquired a 92.42% ownership stake in Airplan, which operates six airports in Colombia, and starting on that date, ASUR began to fully consolidate Airplan's operations on a line by line basis. On May 25, 2018, ASUR acquired a 7.58% ownership stake in Airplan, bringing its total share ownership in Airplan to 100.0%.

Table 3: Summary of Consolidated Results









Third Quarter

% Chg.


Nine-Months

% Chg.


2017

2018


2017

2018

Total Revenues

3,230,104

3,682,047

14.0


8,642,149

11,486,011

32.9

Aeronautical Services

1,732,467

2,251,115

29.9


4,587,720

6,715,133

46.4

Non-Aeronautical Services

1,088,079

1,340,615

23.2


3,110,280

4,160,293

33.8

Total Revenues Excluding Construction Revenues

2,820,546

3,591,730

27.3


7,698,000

10,875,426

41.3

Construction Revenues 5

409,558

90,317

(77.9)


944,149

610,585

(35.3)

Total Operating Costs & Expenses

1,574,494

2,025,512

28.6


3,740,868

5,834,738

56.0

Operating Profit

1,655,610

1,656,535

0.1


4,901,281

5,651,273

15.3

Operating Margin

51.26%

44.99%

(627 bps)


56.7%

49.2%

(751 bps)

Adjusted Operating Margin 1

58.70%

46.12%

(1258 bps)


63.7%

52.0%

(1171 bps)

EBITDA

1,916,603

2,278,320

18.9


5,475,755

7,093,833

29.5

EBITDA Margin

59.34%

61.88%

254 bps


63.4%

61.8%

(160 bps)

Adjusted EBITDA Margin 2

67.95%

63.43%

(452 bps)


71.1%

65.2%

(590 bps)

Net Income

1,145,613

1,006,574

(12.1)


3,636,319

3,572,062

(1.8)

Majority Net Income

1,100,695

988,054

(10.2)


3,571,974

3,529,012

(1.2)

Earnings per Share

3.6690

3.2935

(10.2)


11.9066

11.7634

(1.2)

Earnings per ADS in US$

1.9596

1.7591

(10.2)


6.3593

6.2828

(1.2)









Total Commercial Revenues per Passenger 3

99.5

92.5

(7.1)


105.8

97.3

(8.0)

Commercial Revenues

992,211

1,241,918

25.2


2,824,359

3,840,862

36.0

Commercial Revenues from Direct Operations per Passenger 4

19.3

17.4

(9.9)


18.9

18.1

(4.4)

Commercial Revenues Excl. Direct Operations per Passenger

80.2

75.1

(6.4)


86.9

79.2

(8.8)


1 Adjusted Operating Margin excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets in Mexico, and is equal to operating profit divided by total revenues excluding construction services revenues.


2 Adjusted EBITDA Margin excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets in Mexico, and is calculated by dividing EBITDA by total revenues excluding construction services revenues.


3 Passenger figures include transit and general aviation passengers for Mexico, Puerto Rico and Colombia.


4 Represents ASUR's operations in convenience stores.


5 Construction revenues for Airplan in 3Q18 include the actual construction revenues which are equal to construction costs of Ps.63.1 million plus an estimated revenue decline derived from the valuation of the intangible asset at its present value (guaranteed revenues from the concession) of Ps.80.9 million according to IFRIC 12.

Consolidated Revenues

Consolidated Revenues for 3Q18 rose 14.0% YoY to Ps.3,682.0 million, mainly as a result of the following increases:

  • 29.9% in revenues from aeronautical services to Ps.2,251.1 million. Mexico contributed with Ps.1,495.9 million in revenues from aeronautical services in 3Q18, while Puerto Rico and Colombia contributed with Ps.433.8 million and Ps.321.3 million, respectively; and
  • 23.2% in revenues from non-aeronautical services to Ps.1,340.6 million, principally reflecting the 25.2% increase in commercial revenues. Mexico contributed with Ps.997.4 million in commercial revenues, while Puerto Rico and Colombia contributed with Ps.242.8 million and Ps.100.5 million, respectively.

This was partially offset by a 77.9% decline in revenues from construction services in Mexico, Puerto Rico and Colombia as a result of lower capital expenditures and other investments in concessioned assets during the period.

Excluding revenues from construction services, which are deducted as costs under IFRS accounting standards, total revenues would have increased 27.3% YoY to Ps.3,591.7 million. Total revenues in Puerto Rico and Colombia in 3Q17 represented 18.8% and 11.7%, respectively, of ASUR's consolidated revenues excluding revenues from construction services.

Commercial Revenues in 3Q18 increased 25.2% YoY, mainly reflecting the 6.3% increase in total passenger traffic, along with the contribution of Ps.100.5 million in Colombia in 3Q18. Commercial revenues in Mexico rose 14.5%, mainly driven by increases in Duty Free, Food and Beverages, Retail and Car Rentals, among others, mainly reflecting the opening of Terminal 4 at Cancun Airport during 4Q17. Likewise, Puerto Rico reported an YoY increase of 17.0%, or Ps.34.9 million in commercial revenues.

Commercial Revenues per Passenger declined to Ps.92.5 in 3Q18, from Ps.99.5 in 3Q17. Note that ASUR began to consolidate Aerostar's results (Puerto Rico) starting June 1, 2017 and Airplan (Colombia) beginning October 19, 2017. As a result, this decline in commercial revenues per passenger reflects the comparison of 3Q18 figures against operations in Puerto Rico for 3Q17, while Colombia is only included for 3Q18. Mexico contributed with commercial revenues per passenger of Ps.108.1 in 3Q18, Puerto Rico with Ps.108.0 and Colombia with Ps.35.0. During the period, and on a stand-alone basis, commercial revenues per passenger increased 7.6% in Mexico, 12.7% in Puerto Rico and 20.0% in Colombia.  

Consolidated Operating Costs and Expenses

Consolidated Operating Costs and Expenses, including construction costs, for 3Q18 increased by 28.6% YoY, or Ps.451.0 million, to Ps.2,025.5 million. Excluding construction costs, operating costs and expenses increased 59.2% to Ps.1,854.2 million, mainly impacted by the following increases:

  • 15.9% in operating costs and expenses excluding construction costs, or Ps.125.1 million, in Mexico principally reflecting increases in professional fees, higher cost of sales from the opening of stores directly operated by ASUR in Terminal 4 of Cancun Airport, as well as higher security, energy and maintenance expenses in connection of the new terminal space;
  • 32.1%, or Ps.120.6 million, in Puerto Rico, principally reflecting higher maintenance and energy costs as well as higher insurance costs in connection with Hurricane Maria. Costs also reflect higher depreciation and amortization from the recognition of the intangible asset resulting from the valuation of Aerostar under IFRS 3, which impacted amortization expenses by Ps.42.7 million; and
  • A Ps.443.6 million contribution from Colombia in 3Q18, which was acquired on October 19, 2017. This was mainly due to Ps.139.8 million in cost of services, Ps.1.6 million in technical assistance costs, concession costs of Ps.79.9 million, as well as amortization of the concession of Ps.222.4 million (includes Ps.23.9 million from the recognition of the intangible asset resulting from the valuation of Airplan under IFRS 3, and Ps.133.9 million in initial amortization of complementary works).

Cost of Services increased 36.0%, mainly due to the increase in expenses of Ps.42.5 million in Puerto Rico reflecting higher energy, insurance and maintenance costs. Colombia contributed with Ps.139.8 million in expenses, from the consolidation of operations, mainly composed of energy, professional fees, security and maintenance expenses. Mexico contributed with a Ps.65.7 million increase in cost of services, reflecting higher maintenance expenses resulting from the opening of Terminal 4 in Cancun airport, along with higher cost of sales from convenience stores directly operated by ASUR. Higher energy, security, and maintenance expenses also contributed to the increase in cost of services.

Construction Costs declined 58.2% YoY to Ps.171.3 million, mainly due to lower levels of capital improvements made to the concessioned assets during the period. Mexico contributed with decline in construction costs of 77.5%, or Ps.317.2 million, more than offsetting the inclusion of Ps.63.1 million from Colombia, and a 15.9 million increase in Puerto Rico.

G&A Expenses, which reflect administrative expenses in Mexico, increased 13.3% YoY.

Consolidated Technical Assistance increased 13.5% YoY, mainly reflecting EBITDA growth in Mexico excluding extraordinary items, a factor in the calculation of the fee.

Concession Fees increased 119.6% YoY, principally reflecting higher fees paid to the Mexican government, mainly due to an increase in regulated revenues in Mexico, a factor in the calculation of the fee. Concession fees for 3Q18 also reflect an increase in Puerto Rico and the consolidation of Colombia.

Depreciation and Amortization increased 124.8%, or Ps.300.9 million, principally due to: i) a Ps.48.5 million increase in Puerto Rico derived from the recognition of the concession resulting from the valuation of the investment in Aerostar under IFRS 3 which impacted amortization by Ps.42.7 million, and ii) a Ps.222.4 million in depreciation in Colombia (includes Ps.23.9 million from recognition of the  amortization of the intangible asset resulting from the valuation of the investment in Airplan under IFRS 3, Ps.133.9 million in initial amortization of complementary works undertaken and Ps.64.6 million in amortization of committed works due to the increase in the accumulated amortization rate in the period).

Consolidated Operating Profit and EBITDA

In 3Q18, ASUR reported a Consolidated Operating Profit of Ps.1,656.5 million and Operating Margin of 45.0%. This was mainly the result of increases of 29.9%, or Ps.518.6 million, in aeronautical revenues, and 25.2%, or Ps.249.7 million in commercial revenues. For 3Q18, Puerto Rico reported an operating profit of Ps.180.3 million and Colombia reported an operating loss of Ps.102.8 million.

Adjusted Operating Margin, which excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets in Mexico, Colombia, and Puerto Rico, is calculated as operating profit divided by total revenues less construction services revenues; and was 46.1% in 3Q18 compared with 58.7% in 3Q17.

EBITDA increased 18.9%, or Ps.361.7 million, to Ps.2,278.3 million in 3Q18. Puerto Rico reported a decline in EBITDA of 5.7% to Ps.329.7 million, while Colombia contributed with Ps.200.6 million in EBITDA. Mexican operations reported an 11.5% YoY increase in EBITDA. During 3Q18, ASUR recognized Ps.90.3 million in Construction Revenues, a year-on-year decline of 77.9%, due to lower capital expenditures and investments in concessioned assets. As a result, 3Q18 EBITDA Margin was 61.9% compared to 59.3% in 3Q17.

Adjusted EBITDA Margin, which excludes the effect of IFRIC 12 with respect to the construction of or improvements to concessioned assets in Mexico, Puerto Rico, and Colombia was 63.4% in 3Q18 compared to 68.0% in 3Q17.

Consolidated Comprehensive Financing Gain (Loss)

Table 4: Consolidated Comprehensive Financing Gain (Loss)








Third Quarter

% Chg.


Nine-Months

% Chg.


2017

2018


2017

2018

Interest Income

54,102

58,148

7.5


163,953

209,010

27.5

Interest Expense

(206,164)

(298,931)

45.0


(318,884)

(914,861)

186.9

Foreign Exchange Gain (Loss), Net

49,226

(39,492)

n/a


50,524

33,095

(34.5)

Total

(102,836)

(280,275)

172.5


(104,407)

(672,756)

544.4














In 3Q18, ASUR reported a Ps.280.3 million Consolidated Comprehensive Financing Loss, compared to a Ps.102.8 million loss in 3Q17.

Interest expense rose by Ps.92.8 million during the period, mainly reflecting a higher debt balance resulting from the consolidation Airplan (Colombia), as well as interest generated by the loans incurred in Mexico in October 2017, and to a lesser extent from higher interest expenses in Puerto Rico. Interest income increased by Ps.4.0 million, as a result of a higher cash balance and the increase in interest rates.

In 3Q18, ASUR reported a foreign exchange loss of Ps.39.5 million, resulting from the 3.8% quarterly average depreciation of the Mexican peso against the U.S. dollar on ASUR's foreign currency net asset position. This compared to a Ps.49.2 million foreign exchange gain in 3Q17 resulting from the 1.8% quarterly average Mexican peso appreciation during that period.

Income Taxes

Income Taxes for 3Q18 declined by Ps.37.5 million year-over-year, principally due to the following factors:

  • A Ps.22.1 million decrease in the provision for income taxes, resulting from a lower taxable income base in Mexico due to a change in the tax amortization rate on those concessioned assets, along with a deferred income tax gain in Colombia starting October 19, 2017, derived from changes in tax legislation according to Decree 2235 published on December 27, 2017.
  • A Ps.15.4 million decline in deferred income taxes, mainly reflecting a deferred income tax gain in Colombia of Ps.76.5 million, derived from changes in tax legislation according to Decree 2235 published on December 27, 2017, partially offset by a lower taxable income base in Mexico resulting from a change in the tax amortization rate on the concessioned assets.

Majority Net Income

Majority Net Income for 3Q18 decreased by 10.2% to Ps.988.0 million, down from Ps.1,100.7 million in 3Q17. Earnings per common share for the quarter were Ps.3.2935 and earnings per ADS (EPADS) were US$1.7591 (one ADS represents ten series B common shares). This compares with earnings per share of Ps.3.6690 and EPADS of US$1.9596 for the same period last year.

Consolidated Financial Position

On September 30, 2018, airport concessions represented 88.5% of the Company's total assets, with current assets representing 10.5% and other assets representing 0.9%.

As of September 30, 2018, ASUR had cash and cash equivalents of Ps.4,569.1 million, a 2.3% decrease from Ps.4,677.4 million at December 31, 2017. Puerto Rico contributed with Ps.534.9 million in cash and cash equivalents in 3Q18 and Colombia with Ps.126.9 million.

As of September 30, 2018, the valuation of ASUR's investment in Aerostar in accordance with IFRS 3 "Business Combinations" resulted in the following effects in the Balance Sheet: i) the recognition of a net intangible asset of Ps.5,876.1 million, ii) goodwill of Ps.887.2 (net of an impairment of Ps.4,719.1 million), iii) deferred taxes of Ps.587.6 million, and iv) a minority interest of Ps.5,316.7 million within the stockholders 'equity.

Furthermore, the valuation of ASUR's investment in Airplan in accordance with IFRS 3 "Business Combinations" resulted in the following effects in the Balance Sheet as of September 30, 2018: i) the recognition of a net intangible asset of Ps.1,364.2 million, ii) goodwill of Ps.1,504.9, iii) deferred taxes of Ps.257.0 million, and iv) Ps.610.4 million from the recognition at bank loans at fair value.

On May 25, 2018, ASUR acquired 7.58% of the share ownership of Airplan bringing its ownership stake in the company to 100%. This transaction resulted in the recognition of Shareholders' Equity in excess of the Ps.46.3 million paid for the acquisition of this additional 7.58% stake in Airplan.

Stockholders' equity at the close of 3Q18 was Ps.34,698.0 million and total liabilities were Ps.20,393.3 million, representing 63.0% and 37.0% of total assets, respectively. Deferred liabilities represented 15.1% of ASUR's total liabilities.

Total Debt at quarter-end decreased to Ps.15,575.9 million, from Ps.17,644.0 million on December 31, 2017, principally reflecting the consolidation of debt in Puerto Rico and Colombia as shown on Tables 5 and 6, as well as the Ps.4,000 million loan at Cancun Airport. A total of Ps.8,438.5 million, or 54.2% of ASUR's total debt, is denominated in U.S. dollars, Ps.4,184.8 million, or 26.9%, in Mexican pesos, and Ps.2,009.6 million, or 19.0%, of the total is denominated in Colombian pesos.

Net Debt to LTM EBITDA stood at 1.2x at the close of 3Q18, while the Interest Coverage ratio was 9.7x as of September 30, 2018. This compares with Net Debt to LTM EBITDA and Interest Coverage Ratios of 1.4x and 6.7x as of March 31, 2018, respectively.

Table 5: Consolidated Debt Indicators


March 31,
2018

June 30,
2018

September 30,
2018

Leverage




Total Debt/ LTM EBITDA (Times) 1

2.0

1.9

1.7

Total Net Debt/ LTM EBITDA (Times) 2

1.4

1.5

1.2

Interest Coverage Ratio 3

6.7

7.6

9.7

Total Debt

17,013,615

16,596,415

15,575,869

Short-term Debt

449,618

573,726

295,206

Long-term Debt

16,563,997

16,022,689

15,280,663

Cash & Cash Equivalents

5,725,346

3,688,908

4,569,129

Total Net Debt 4

11,288,269

12,907,507

11,006,740

1 The Total Debt to EBITDA Ratio is calculated as ASUR's interest-bearing liabilities divided by its EBITDA.

2 The Total Net Debt to EBITDA Ratio is calculated as ASUR's interest-bearing liabilities minus Cash & Cash Equivalents, divided by its EBITDA.

3 The Interest Coverage Ratio is calculated as ASUR's EBIT divided by its interest expenses.

4 The Total Net Debt is calculated as Total Debt minus Cash & Cash Equivalents.

 

 

Table 6: Consolidated Debt Profile (in millions)


Airport

Payment of
principal

Currency

Interest
Rate

Amortization Schedule 


2018

2019

2020

2021
/23

2024
/35

Total

 5 Yr-Syndicated Credit
Facility

 Cancun

 To the
expiration 

 $Usd

Libor +
1.5250%

-

-

-

-

36.3

36.3

 5 Yr-Syndicated Credit
acility

 Cancun

 To the
expiration 

 $Usd

Libor +
1.4500%

-

-

-

-

36.3

36.3

 5 Yr-Syndicated Credit
Facility

 Cancun

 To the
expiration 

 $PMx

 Tiie +
1.25%

-

-

-

2,000.0

-

2,000.0

 7 Yr-Syndicated Credit
Facility

 Cancun

 Semi-Annual
Amort.

 $PMx

 Tiie +
1.25%

-

-

20.0

1,860.0

120.0

2,000.0

 22 Yr-Senior Note
2035

 San Juan

 Semi-Annual
Amort.

 $Usd

5.75%

-

5.2

5.3

17.1

162.9

190.5

 20 Yr-Senior Note
2035

 San Juan

 Semi-Annual
Amort.

 $Usd

6.75%

5.1

5.2

5.3

18.3

153.8

187.7

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

1,875.0

9,000.0

12,000.0

44,250.0

81,000.0

148,125.0

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

1,275.0

6,120.0

8,160.0

30,090.0

55,080.0

100,725.0

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

1,125.0

5,400.0

7,200.0

26,550.0

48,600.0

88,875.0

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

462.5

2,220.0

2,960.0

10,915.0

19,980.0

36,537.5

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

462.5

2,220.0

2,960.0

10,915.0

19,980.0

36,537.5

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

100.0

480.0

640.0

2,360.0

4,320.0

7,900.0

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

100.0

480.0

640.0

2,360.0

4,320.0

7,900.0

 10 Yr-Syndicated
Credit Facility

 Colombia

 Qtly. Amort.

 $Pcol

DTF1 + 4

100.0

480.0

640.0

2,360.0

4,320.0

7,900.0

1 DTF is an average 90-day rate with which the credits in Colombia are subscribed

2 IBR is a rate that banks offer for short-term bank loans

Capex

During 3Q18, ASUR made capital investments of Ps.1,369.8 million. Of this, Ps.329.6 million relate to the Company's plan to modernize its Mexican airports pursuant to its master development plans, mainly for the construction of Cancun's Terminal 4, currently in operation. Furthermore, during 3Q18, Aerostar invested Ps.646.0 million at LMM Airport in Puerto Rico and Airplan invested a total of Ps.394.2 million in Colombia.

Review of Mexico Operations

Table 7: Mexico Revenues & Commercial Revenues Per Passenger




Third Quarter

% Chg.


Nine-Months

% Chg.


2017

2018


2017

2018

Total Passenger

7,825

8,333

6.5


23,664

25,263

6.8









Total Revenues

2,606,720

2,585,641

(0.8)


7,796,657

7,762,541

(0.4)

Aeronautical Services

1,316,489

1,495,944

13.6


4,021,915

4,483,133

11.5

Non-Aeronautical Services

880,673

997,370

13.3


2,830,593

3,154,213

11.4

Construction Revenues

409,558

92,327

(77.5)


944,149

125,195

(86.7)

Total Revenues Excluding Construction Revenues

2,197,162

2,493,314

13.5


6,852,508

7,637,346

11.5









Total Commercial Revenues

786,531

900,884

14.5


2,547,209

2,843,468

11.6

Commercial Revenues from Direct Operations

144,495

183,285

26.8


439,797

568,518

29.3

Commercial Revenues Excluding Direct Operations

642,036

717,599

11.8


2,107,412

2,274,950

7.9









Total Commercial Revenues per Passenger

100.5

108.1

7.6


107.6

112.6

4.6

Commercial Revenues from Direct Operations per Passenger 1

18.5

22.0

19.1


18.6

22.5

21.1

Commercial Revenues Excl. Direct Operations per Passenger

82.1

86.1

5.0


89.1

90.1

1.1

Note: For purposes of this table, approximately 42.1 and 29.0 thousand transit and general aviation passengers are included in 3Q17 and 3Q18, respectively, and 133.8 and 105.0 thousand transit and general aviation passengers are included in 9M17 and 9M18.


1 Represents ASUR's operation of convenience stores in airports as well as advertising since September 2017.

Mexico Revenues

Mexico Revenues for 3Q18 declined 0.8% YoY to Ps.2,585.6 million. Excluding construction, revenues rose 13.5% YoY, reflecting the following increases:

  • 13.6% in revenues from aeronautical services, mainly due to the 6.7% increase in passenger traffic; and
  • 13.3% in revenues from non-aeronautical services, principally reflecting the 14.5% growth in commercial revenues.

Commercial Revenues rose 14.5% YoY, mainly due to the 6.5% increase in total passenger traffic (including transit and general aviation passengers) and reported increases across all categories as shown on Table 8.

Commercial Revenues per Passenger, were up 7.6% to Ps.108.1 in 3Q18 from Ps.100.5 in 3Q17.

ASUR classifies commercial revenues as those derived from the following activities: duty-free stores, car rentals, retail operations, banking and currency exchange services, advertising, teleservices, non-permanent ground transportation, food and beverage operations and parking lot fees.

As shown in Table 9, during the last 12 months, ASUR opened 83 new commercial spaces reflecting the opening of its new Terminal 4 at Cancun Airport and added seven commercial spaces at its other eight airports. More details of these openings can be found on page 20 of this report.

Table 8: Mexico Commercial Revenue Performance



Table 9: Mexico Summary Retail and Other Commercial
Space Opened since September 30,2017

Business Line

YoY Chg


Type of Commercial Space 1

# Of
Spaces
Opened

3Q18

9M18


Other Revenue

21.2%

16.5%


Cancun

76

Car Rental Revenues

19.6%

12.9%


Retail

28

Ground Transportation

18.6%

9.3%


Car Rental

20

Parking Lot Fees

18.4%

13.6%


Transportation

4

Retail Operations

16.1%

16.1%


Food and Beverage

18

Duty Free

12.6%

10.9%


Other Revenue

3

Food and Beverage Operations

10.6%

9.5%


Banking and Currency Exchange Services

2

Banking and Currency Exchange Services

9.4%

3.2%


Duty free

1

Advertising Revenues

9.4%

(14.4%)


8 Other Airports

7

Teleservices

(19.8%)

(3.6%)


Retail

4

Total Commercial Revenues

14.6%

11.6%


Bank and Foreign

1





Car Rental

1





Other Revenue

1





Mexico

83





1 Only includes new stores opened during the period
and excludes remodelings or contract renewals.

 

Mexico Operating Costs and Expenses

Table 10: Mexico Operating Costs & Expenses









Third Quarter

% Chg.


Nine-Months

% Chg.


2017

2018


2017

2018

Cost of Services

417,576

483,261

15.7


1,145,691

1,328,522

16.0

Administrative

49,832

56,436

13.3


158,526

173,738

9.6

Technical Assistance

82,489

92,038

11.6


263,083

289,607

10.1

Concession Fees

100,097

113,389

13.3


308,901

344,895

11.7

Depreciation and Amortization

139,248

169,226

21.5


417,192

506,298

21.4

Operating Costs and Expenses Excluding Construction
Costs

789,242

914,350

15.9


2,293,393

2,643,060

15.2

Construction Costs

409,558

92,327

(77.5)


944,149

125,195

(86.7)

Total Operating Costs & Expenses

1,198,800

1,006,677

(16.0)


3,237,542

2,768,255

(14.5)

Total Mexico Operating Costs and Expenses for 3Q18 declined 16.0% YoY. This includes construction costs, which fell 77.5%, reflecting lower levels of capital improvements made to concessioned assets during the period. Excluding construction costs, operating costs and expenses increased 15.9% to Ps.914.4 million.

Cost of Services rose 15.7%, mainly due to higher maintenance, energy and security expenses. Higher cost of sales from convenience stores directly operated by ASUR, including those opened at Terminal 4 at Cancun Airport, and professional fees in connection with several projects also contributed to the increase in cost of services. 

Administrative expenses increased by 13.3% YoY, principally as a result of higher travel expenses, fees to third parties and salaries.

The 11.6% increase in the Technical Assistance fee paid to ITA reflects EBITDA growth in Mexico, excluding extraordinary items in the quarter, a factor in the calculation of the fee.

Concession Fees, which include fees paid to the Mexican government, rose 13.3%, mainly due to an increase in regulated revenues, a factor in the calculation of the fee.

Depreciation and Amortization increased 21.5% YoY, reflecting the recognition of higher investments at year-end 2017.

Mexico Consolidated Comprehensive Financing Gain (Loss)

Table 11: Mexico Comprehensive Financing Gain (Loss)



Third Quarter

% Chg.


Nine-Months

%Chg.



2017

2018


2017

2018


Interest Income

64,522

70,836

9.8


180,087

251,529

39.7


Interest Expense

(93,113)

(114,677)

23.2


(169,689)

(351,684)

107.3


Foreign Exchange Gain (Loss), Net

49,226

(39,479)

n/a


50,524

32,906

(34.9)


Total

20,635

(83,320)

n/a


60,922

(67,249)

n/a


In 3Q18, ASUR's Mexico operations reported an Ps.83.3 million Comprehensive Financing Loss, compared to a Ps.20.6 million gain in 3Q17. This was mainly due to Ps.39.5 million foreign exchange loss reported in the quarter, resulting from the 3.8% quarterly average Mexican peso appreciation against the U.S. dollar on ASUR's foreign currency net asset position, compared with a Ps.49.2 million foreign exchange gain in 3Q17, resulting from the 1.8% quarterly average Mexican peso appreciation during that period. The 23.2% increase in interest expenses to Ps.114.7 million in 3Q18, from 93.1 million in 3Q17 also contributed to the comprehensive financial loss.

This was partially offset by the 9.8% YoY increase in interest income to Ps.70.8 million in 3Q18, reflecting a higher cash balance and higher interest rates.

Mexico Operating Profit and EBITDA



Table 12: Mexico Operating Profit & EBITDA









Third Quarter

% Chg.


Nine-Months

% Chg.


2017

2018


2017

2018

Total Revenue

2,606,720

2,585,641

(0.8)


7,796,657

7,762,541

(0.4)

Total Revenues Excluding Construction Revenues

2,197,162

2,493,314

13.5


6,852,508

7,637,346

11.5

Operating Profit

1,407,920

1,578,964

12.1


4,559,115

4,994,286

9.5

Operating Margin

54.01%

61.07%

706 bps


58.5%

64.3%

586 bps

Adjusted Operating Margin 1

64.08%

63.33%

(75 bps)


66.5%

65.4%

(114 bps)

Net Profit 3

1,100,696

1,072,267

(2.6)


3,363,112

3,525,768

4.8

EBITDA

1,567,176

1,748,064

11.5


4,996,339

5,500,592

10.1

EBITDA Margin

60.1%

67.6%

749 bps


64.1%

70.9%

678 bps

Adjusted EBITDA Margin 2

71.3%

70.1%

(122 bps)


72.9%

72.0%

(89 bps)


1 Adjusted Operating Margin excludes the effect of IFRIC 12 with respect to the construction of or improvements to concessioned assets and is equal to operating profit divided by total revenues excluding construction services revenues.


2 Adjusted EBITDA Margin excludes the effect of IFRIC 12 with respect to the construction of or improvements to concessioned assets and is calculated by dividing EBITDA by total revenues excluding construction services revenues.


3 Net Income for 3Q18 includes a gain of Ps.112.4 million from the participation in the results of subsidiaries recognized under the equity method.  Aerostar in Puerto Rico contributed with a Ps.115.5 million gain and Airplan in Colombia with a Ps.3.1 million loss

Mexico reported an Operating Profit of Ps.1,579.0 million in 3Q18, up 12.1%, mainly reflecting increases of 13.6% in aeronautical revenues and 14.5% in commercial revenues derived from the 6.5% growth in passenger traffic. Operating Margin was 61.1% in 3Q18 compared with 54.0% in 3Q17.

Adjusted Operating Margin in 3Q18, which excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets and is calculated as operating profit divided by total revenues excluding construction services revenues, was 63.3%, compared to 64.1% in 3Q17.

EBITDA increased 11.5% to Ps.1,748.1 million from Ps.1,567.2 million in 3Q17, as a result of higher operating leverage. EBITDA Margin expanded to 67.6% from 60.1% in 3Q17.

During 3Q18, ASUR's operations in Mexico recognized Ps.92.3 million in "Construction Revenues," a year-on-year decline of 77.5%, due to lower capital expenditures and investments in concessioned assets. Adjusted EBITDA Margin, which excludes the effect of IFRIC 12 with respect to the construction of/or improvements to concessioned assets, decreased by 122 bps to 70.1%.

Mexico Tariff Regulation

The Mexican Ministry of Communications and Transportation regulates the majority of ASUR's activities by setting maximum rates, which represent the maximum possible revenues allowed per traffic unit at each airport.

ASUR's accumulated regulated revenues at its Mexican operations as of September 30, 2018 totaled Ps.4,573.5 million, with an average tariff per workload unit of Ps.178.26 (December 2016 pesos), accounting for approximately 61.6% of total Mexico income (excluding construction income) for the period.

The Mexican Ministry of Communications and Transportation reviews compliance with maximum rate regulations at the close of each year.

In August 2018, our subsidiary Aeropuerto de Cancun, S.A. de C.V., was notified of an Opinion of Probable Liability issued by the head of the Investigative Branch of the Federal Economic Competition Commission ("COFECE"), for alleged monopolistic practices at Cancun International Airport regarding on-site ground transportation. This notification serves to subpoena Aeropuerto de Cancun, S.A. de C.V. to appear in the administrative proceedings to be held in the form of hearings before COFECE. In October, Aeropuerto de Cancún, S.A. de C.V. replied in a timely manner with respect to the aforementioned Opinion of Probable Liability and expects to exhaust all legal remedies in the defense of its interests. Given the stage of the procedure, it is not possible at this time to estimate the potential penalty, if any, that COFECE could impose.

Review of Puerto Rico Operations

In May 2017, ASUR increased its share ownership in Aerostar to 60% from its prior 50% ownership. Accordingly, consolidated results as presented in this report reflect line by line consolidation of Aerostar results starting in June 1, 2017, while prior to that, Aerostar's results were accounted for by the equity method.

The following discussion compares the standalone results of Aerostar for the three-month period ended September 30, 2018 (in which Aerostar was consolidated with ASUR) against the three-month period ended September 30, 2017.

As of September 30, 2018, the valuation of ASUR's investment in Aerostar in accordance with IFRS 3 "Business Combinations" resulted in the following effects in the Balance Sheet: i) the recognition of a net intangible asset of Ps.5,876.1 million, ii) goodwill of Ps.887.2 (net of an impairment of Ps.4,719.1 million), iii) deferred taxes of Ps.587.6 million, and iv) a minority interest of Ps.5,316.7 million within stockholders 'equity.

Table 13: Puerto Rico Revenues & Commercial Revenues Per Passenger

(in thousands of Mexican pesos)


Third Quarter

% Chg.


2017

2018

Total Passengers

2,145

2,227

3.8





Total Revenues

623,384

692,466

11.1

Aeronautical Services

415,979

433,814

4.3

Non-Aeronautical Services

207,405

242,769

17.1

Construction Services

-

15,883

n/a

Total Revenues Excluding Construction Services

623,384

676,583

8.5





Total Commercial Revenues

205,680

240,567

17.0

Commercial Revenues from Direct Operations 2

47,757

50,183

5.1

Commercial Revenues Excluding Direct Operations

157,923

190,384

20.6

Total Commercial Revenues per Passenger

95.90

108.0

12.7

Commercial Revenues from Direct Operations per Passenger 2

22.3

22.5

1.2

Commercial Revenues Excl. Direct Operations per Passenger

73.6

85.5

16.1


Note: Figures in pesos at an average exchange rate of Ps.18.9523.


2 Represents ASUR's operation of convenience stores in LMM Airport.

Puerto Rico Revenues

Total Puerto Rico Revenues for 3Q18 increased 11.1% YoY to Ps.692.5 million, mainly due to the following increases:

  • 17.1% in revenues from non-aeronautical services, principally reflecting the 17.0% increase in commercial revenues; and
  • 4.3% in revenues from aeronautical services.

Commercial Revenues per Passenger rose to Ps.108.0 from Ps.95.9 in 3Q17.

Five commercial spaces were opened at LMM Airport over the last 12 months, as shown on Table 15. More details of these openings can be found on page 21 of this report.

ASUR classifies commercial revenues as those derived from the following activities: duty-free stores, car rentals, retail operations, advertising, non-permanent ground transportation, food and beverage operations and parking lot fees.

Table 14: San Juan Airport Commercial Revenue
Performance

Table 15: San Juan Airport Summary Retail and Other
Commercial Space Opened since September 30, 2017

Business Line

YoY Chg


Type of Commercial Space 1

# of
Spaces
Opened

3Q18


Ground Transportation

173.8%


Food and Beverage

3

Advertising Revenues

49.1%


Other Revenue

2

Car Rental Revenues

31.1%


Total Commercial Spaces

5

Parking Lot Fees

24.9%



Other Revenue

11.1%




Duty Free

4.5%




Retail Operations

3.8%




Food and Beverage Operations          

1.5%




Total Commercial Revenues

17.0%







1 Only includes new stores opened during the period and
excludes remodelings or contract renewals.

Puerto Rico Operating Costs and Expenses

Table 16: Puerto Rico Operating Costs and Expenses



(in thousands of Mexican pesos)





Third Quarter

% Chg.


2017

2018

Cost of Services

271,456

313,962

15.7

Concession Fees

2,500

32,028

1,181.3

Depreciation and Amortization

101,737

150,253

47.7

Total Operating Costs & Expenses Excluding
Construction Costs

375,693

496,243

32.1

Construction Costs

-

15,883

n/a

Total Operating Costs & Expenses

375,693

512,126

36.3

Note: Figures in pesos at an average exchange rate of Ps.18.9523.




Total Operating Costs and Expenses at LMM Airport in 3Q18, including construction costs, rose 36.3% YoY to Ps.512.1 million.

Cost of Services increased 15.7% YoY, mainly due to the recognition of extraordinary insurance costs resulting from Hurricane Maria, as well as higher energy and maintenance expenses. In accordance with the application of IFRIC 12, Aerostar recognizes on a monthly basis the provision for maintenance of those concession assets that will be replaced before the end of the concession. The monthly amount is Ps.18.4 million.

Concession Fees paid to the Puerto Rican government increased YoY by Ps.29.5 million. In 2017, the concession fee was a fixed payment of US$2.5 million, reported within intangible assets (Concession), while in 2018, the concession fee is 5% of revenues for the period. In addition, starting in 2018, the concession fee line item also includes the municipal tax, which increased 10% to Ps.2.7 million from Ps.2.5 million in the prior period.

Depreciation and Amortization rose 47.7%, mainly impacted by the recognition of the amortization from the valuation of the investment in Aerostar under IFRS 3, which impacted amortization by Ps.42.7 million.

During 3Q18, Aerostar reported Construction Costs in Puerto Rico of Ps.15.9 million, reflecting the capital investments in the concessioned assets during the period.

Excluding construction costs, operating costs and expenses increased 32.1% to Ps.496.2 million.

Puerto Rico Comprehensive Financing Gain (Loss)

Table 17: Puerto Rico Comprehensive Financing Gain

(in thousands of Mexican pesos)


Third Quarter

% Chg.


2017

2018

Interest Income

18

3,809

21,061.1

Interest Expense

(123,490)

(127,533)

3.3

Total

(123,472)

(123,724)

0.2

Note: Figures in pesos at an average exchange rate of Ps.18.9523.





During 3Q18, LMM Airport reported a Ps.123.7 million Comprehensive Financing Loss, compared with a Ps.123.5 million loss in 3Q17.

On February 22, 2013, and as part of the financing of the Concession Agreement, Aerostar entered into a subordinated term loan with Cancun Airport in the amount of US$100 million at an annual interest rate of LIBOR plus 2.10%, payable each July 1 and January 1, and with no fixed maturity date. As of September 30, 2018, the remaining balance was US$63.4 million.

On March 22, 2013, Aerostar carried out a private bond placement for a total of US$350 million to finance a portion of the Concession Agreement payment to the Puerto Rican Ports Authority and certain other costs and expenditures associated with it.

On June 24, 2015, Aerostar carried out a private bond placement for a total of US$50 million. In December 2015, Aerostar also contracted a line of revolving credit, which, as of September 30, 2018, had not been utilized.

All long-term debt is collateralized by Aerostar's total assets.

Puerto Rico Operating Profit and EBITDA


Table 18: San Juan Airport Operating Profit & EBITDA





(in thousands of Mexican pesos)





Third Quarter

% Chg.


2017

2018


Total Revenues

623,384

692,466

11.1


Total Revenues Excluding Construction Services Revenues

623,384

676,583

8.5


Operating Profit

247,691

180,340

(27.2)


Operating Margin

39.7%

26.0%

(1369 bps)


Adjusted Operating Margin 1

39.7%

26.7%

(1308 bps)


Net Income

112,295

46,300

(58.8)


EBITDA

349,428

329,682

(5.7)


EBITDA Margin

56.1%

47.6%

(844 bps)


Adjusted EBITDA Margin 2

56.1%

48.7%

(733 bps)

Note: Figures in pesos at an average exchange rate of Ps.18.9523.


1 Adjusted Operating Margin excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets and is equal to operating profit divided by total revenues excluding construction services revenues.


2 Adjusted EBITDA Margin excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets and is calculated by dividing EBITDA by total revenues excluding construction services revenues.

Operating Profit at Puerto Rico in 3Q18 declined 27.2% YoY to Ps.180.3 million, with Operating Margin down to 26.0% from 39.7% in 3Q17, principally due to the amortization resulting from the valuation of Aerostar under IFRS3, which impacted amortization by Ps.42.7 million as explained above.

EBITDA declined 5.7% to Ps.329.7 million from Ps.349.4 million in 3Q17, and EBITDA Margin declined to 47.6% in 3Q18 from 56.1% in 3Q17. Adjusted EBITDA Margin in 3Q18 was 48.7% compared with 56.1% in 3Q17.

Puerto Rico Capital Expenditures

During 3Q18, Aerostar invested Ps.645.9 million to modernize LMM Airport, mainly for the construction of the Federal Inspection Station and in equipment for LMM's operations. This compares with investments of Ps.58.8 million in 3Q17.

Puerto Rico Tariff Regulation

The Airport Use Agreement signed by Aerostar, the airlines serving LMM Airport and the Puerto Rico Ports Authority governs the relationship between Aerostar and the principal airlines serving LMM Airport. The agreement entitles Aerostar to an annual contribution from the airlines of US$62 million during the first five years of the term. From year six onwards, the total annual contribution for the prior year increases in accordance with an adjusted consumer price index factor based on the U.S. non-core consumer price index. The annual fee is divided between the airlines that operate at LMM Airport in accordance with the regulations and structure defined under the Airport Use Agreement to establish the contribution of each airline for each particular year.

Review of Colombia Operations

On October 19, 2017, ASUR acquired a 92.42% ownership stake in Airplan, which operates six airports in Colombia. Therefore, ASUR began to consolidate Airplan's results on a line by line basis as of that date.

The following discussion compares Airplan's independent results for the started July 1 and ended September 30, 2018 (in which Airplan was consolidated with ASUR) against the period starting July 1 and ended September 30, 2017 (in which Airplan was not consolidated with ASUR). 

The valuation of ASUR's investment in Airplan in accordance with IFRS 3 "Business Combinations" resulted in the following effects on the Balance Sheet as of September 30, 2018: i) the recognition of a net intangible asset of Ps.1,364.2 million, ii) goodwill of Ps.1,504.9, iii) deferred taxes of Ps.257.0 million, and iv) Ps.610.4 million from the recognition of bank loans at fair value.

On May 25, 2018, ASUR acquired 7.58% of the share ownership of Airplan, bringing its ownership stake in the company to 100%. This transaction resulted in the recognition of Shareholders' Equity in excess of the Ps.46.3 million paid for the acquisition of this additional stake in Airplan.

Table 19: Airplan, Colombia Revenues & Commercial Revenues Per Passenger                                         

In thousands of Mexican pesos





Third Quarter        

% Chg


2017

2018


Not Consolidated

Consolidated

Total Passenger

2,687

2,872

6.9





Total Revenues

625,669

403,940

(35.4)

Aeronautical Services

276,541

321,357

16.2

Non-Aeronautical Services

78,358

100,476

28.2

Construction Revenues 1

270,770

(17,893)

n/a

Total Revenues Excluding Construction Revenues

354,899

421,833

18.9

Total Commercial Revenues

78,347

100,467

28.2

Total Commercial Revenues per Passenger

29.2

35.0

20.0


Note: Figures in pesos at an average exchange rate of Ps.156.2203.

Note: For purpose of this table, approximately 76.0 and 71.4 thousand transit and general aviation passengers are included in 3Q17 and 3Q18.

1Construction revenues for Airplan in 3Q18 include the actual construction revenues which are equal to construction costs of Ps.63.1 million plus an estimated revenue decline from valuation of the intangible asset at its present value (guaranteed revenues from the concession), of Ps. 80.9 million according to IFRIC 12.

Colombia Revenues

Total Colombia Revenues for 3Q18 fell 35.4% YoY to Ps.403.9 million. Excluding construction services revenues, which fell as a result of lower committed investments during the period and the impact from the valuation of the concession at present value, revenues rose 18.9% mainly reflecting the following increases:

  • 16.2% in revenues from aeronautical services.
  • 28.2% in revenues from non-aeronautical services, mainly due to the 28.2% increase in commercial revenues.

Commercial Revenues per Passenger increased 20.0%, principally benefitting from fixed commercial revenues.

As shown on Table 21, during the last twelve months, 40 new commercial spaces were opened in Colombia. More details of these openings can be found on page 21 of this report.

ASUR classifies commercial revenues as those derived from the following activities: duty-free stores, car rentals, retail operations, advertising, non-permanent ground transportation, food and beverage operations and parking lot fees.

Table 20: Airplan, Colombia Commercial
Revenue Performance



Table 21: Colombia Summary Retail and Other
Commercial Space Opened since September 30, 2017

Business Line

YoY Chg


Type of Commercial Space 1

# of
Spaces
Opened

3Q18


Retail Operations

139.5%


Food and Beverage

7

Teleservices

126.8%


Retail

5

Car Rental Revenues

83.2%


Car Rental

2

Banking and Currency Exchange Services

64.0%


Banking and Currency Exchange Services

3

Other Revenue

30.7%


Teleservices

1

Parking Lot Fees

13.8%


Other Revenue

22

Advertising Revenues

11.5%


Total Commercial Spaces

40

Food and Beverage Operations

9.7%




Ground Transportation

(5.9%)




Duty Free

(100.0%)




Total Commercial Revenues

28.2%







1 Only includes new stores opened during the period and
excludes remodelings or contract renewals.

Colombia Costs and Expenses

Table 22: Colombia Operating Costs and Expenses

(in thousands of Mexican pesos)


Third Quarter

% Chg.


2017
Non-Consolidated

2018
Consolidated

Cost of Services

104,420

139,774

33.9

Technical Assistance

1,532

1,598

4.3

Concession Fees

67,431

79,887

18.5

Depreciation and Amortization

117,620

222,375

89.1

Operating Costs and Expenses Excluding Construction Costs

291,003

443,634

52.4

Construction Costs

279,408

63,075

(77.4)

Total Operating Costs & Expenses

570,411

506,709

(11.2)

Note: Figures in pesos at an average exchange rate of Ps.156.2203.




Total Operating Costs and Expenses in Colombia declined 11.2% YoY in 3Q18 to Ps.506.7 million.

Cost of Services increased 33.9% YoY, mainly due to higher expenses in connection with professional fees, security expenses, energy and maintenance costs.

Construction Costs declined 77.4% YoY to Ps.63.1 million, reflecting lower investments in complementary works to concessioned assets during the period.

Concession Fees, which include fees paid to the Colombian government, increased 18.5% YoY, mainly reflecting higher regulated and non-regulated revenues during the period.

Depreciation and Amortization increased 89.1% due to the Ps.222.4 million increase in amortization of the concession (includes recognition of Ps.23.9 million from the amortization of the concession resulting from the valuation of the investment under IFRS 3, Ps.133.9 million for initial amortization of complementary works, and Ps.64.6 million in amortization of mandatory works as a result of the increase in the accumulated amortization).

Colombia Comprehensive Financing Gain /(Loss)

Table 23: Colombia Comprehensive Financing Gain / (Loss)

(in thousands of Mexican pesos)


Third Quarter

% Chg.


2017
Non-Consolidated

2018
Consolidated

Interest Income

790

1,760

122.8

Interest Expense

(46,223)

(74,978)

62.2

Foreign Exchange Gain (Loss), Net

(36)

(13)

(63.9)

Total

(45,469)

(73,231)

61.1

Note: Figures in pesos at an average exchange rate of Ps.156.2203.




During 3Q18, Airplan reported a Ps.73.2 million Comprehensive Financing Loss, compared with a Ps.45.5 million loss in 3Q17.

On June 1, 2015, Airplan entered into a Ps.3,468.7 million, 12-Year Syndicated Loan Facility with eight banks with a 3-year grace period. Airplan also has a Ps.130.0 million, one-year Treasury Loan from two banks.

Colombia Operating Profit and EBITDA

Table 24: Colombia Operating Profit & EBITDA

(in thousands of Mexican pesos)


Third Quarter

% Chg.


2017
Non-Consolidated

2018
Consolidated

Total Revenue

625,669

403,940

(35.4)

Total Revenues Excluding Construction Revenues

354,899

421,833

18.9

Operating Profit

55,258

(102,769)

n/a

Operating Margin

8.8%

(25.4%)

(3427 bps)

Adjusted Operating Margin 1

15.6%

(24.4%)

(3993 bps)

Net Income

7,168

(111,993)

n/a

EBITDA

181,516

200,574

10.5

EBITDA Margin

29.0%

49.7%

2064 bps

Adjusted EBITDA Margin 2

51.1%

47.5%

-360 bps

Note: Figures in pesos at an average exchange rate of Ps.156.2203.








1 Adjusted Operating Margin excludes the effect of IFRIC 12 with respect to the construction or improvements to
concessioned assets and is equal to operating profit divided by total revenues excluding construction services revenues.


2 Adjusted EBITDA Margin excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned
assets and is calculated by dividing EBITDA by total revenues excluding construction services revenues.

During 3Q18, ASUR reported an Operating Loss of Ps.102.8 million compared to an operating profit of Ps.55.3 million in 3Q17. Operating Margin was negative 25.4% in 3Q18 and positive 8.8% in 3Q17. Adjusted Operating Margin, which excludes the impact of IFRIC 12 with respect to construction or improvements to concessioned assets, was negative 24.4% in 3Q18 compared with positive 15.6% in the same quarter of 2017.

EBITDA increased 10.5% to Ps.200.6 million from Ps.181.5 million in 3Q17. EBITDA Margin increased to 49.7% in 3Q18, from 29.0% in 3Q17, while Adjusted EBITDA Margin, which excludes the impact of IFRIC 12 with respect to construction or improvements to concessioned assets, declined 360 basis points to 47.5 % in 3Q18.

Colombia Capex

During 3Q18, Airplan invested Ps.394.2 million to modernize its airports in Colombia, including: i) the expansion of the domestic and international passenger terminal, ii) the expansion of the international platform, and iii) progress in the construction of the cargo terminal at Rionegro airport.

Colombia Tariff Regulation

Functions of the Special Administrative Unit of Civil Aeronautics include establishing and collecting fees, tariffs and rights for the provision of aeronautical and airport services or those that are generated by the concessions, authorizations, licenses or any other type of income or property. As a result, Resolution 04530, issued on September 21, 2007, establishes the tariffs for the rights and the rates conceded to the concessionaire of the following airports: José María Córdova of Rionegro, Enrique Olaya Herrera of Medellín, Los Garzones of Montería, El Caraño of Quibdó, Antonio Roldán Betancourt de Carapa, and Las Brujas of Corozal. This resolution also established the methodology to update and the mechanisms to collect such fees, tariffs, and rights.

Airplan's regulated revenues for 3Q18 amounted to Ps.321.4 million.

Definitions

Concession Services Agreements (IFRIC 12 interpretation). In Mexico and Puerto Rico, ASUR is required by IFRIC 12 to include in its income statement an income line, "Construction Revenues," reflecting the revenue from construction or improvements to concessioned assets made during the relevant period. The same amount is recognized under the expense line "Construction Costs," because ASUR hires third parties to provide construction services. Because equal amounts of Construction Revenues and Construction Costs have been included in ASUR's income statement as a result of the application of IFRIC 12, the amount of Construction Revenues does not have an impact on EBITDA, but it does have an impact on EBITDA Margin. In Colombia, "Construction Revenues" include the recognition of the revenue to which the concessionaire is entitled for carrying out the infrastructure works in the development of the concession, while "Construction Costs" represents the actual costs incurred in the execution of such additions or improvements to the concessioned assets. 

Majority Net Income reflects ASUR's equity interests in each of its subsidiaries and therefore excludes the 40% interest in Aerostar that is owned by other shareholders. Other than Aerostar, ASUR owns (directly or indirectly) 100% of its subsidiaries.

EBITDA means net income before provision for taxes, deferred taxes, profit sharing, non-ordinary items, participation in the results of associates, comprehensive financing cost and depreciation and amortization. EBITDA should not be considered as an alternative to net income, as an indicator of our operating performance or as an alternative to cash flow as an indicator of liquidity. Our management believes that EBITDA provides a useful measure that is widely used by investors and analysts to evaluate our performance and compare it with other companies. EBITDA is not defined under U.S. GAAP or IFRS and may be calculated differently by different companies.

Adjusted EBITDA Margin is calculated by dividing EBITDA by total revenues excluding construction services revenues for Mexico, Puerto Rico and Colombia and excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets. ASUR is required by IFRIC 12 to include in its income statement an income line reflecting the revenue from construction or improvements to concessioned assets made during the relevant period. The same amount is recognized under the expense line "Construction Costs," because ASUR hires third parties to provide construction services. In Mexico and Puerto Rico, because equal amounts of Construction Revenues and Construction Costs have been included in ASUR's income statement as a result of the application of IFRIC 12, the amount of Construction Revenues does not have an impact on EBITDA, but it does have an impact on EBITDA Margin, as the increase in revenues that relates to Construction Revenues does not result in a corresponding increase in EBITDA. In Colombia, construction revenues do have an impact on EBITDA, as construction revenues include a reasonable margin over the actual cost of construction. Like EBITDA Margin, Adjusted EBITDA Margin should not be considered as an indicator of our operating performance or as an alternative to cash flow as an indicator of liquidity and is not defined under U.S. GAAP or IFRS and may be calculated differently by different companies.

About ASUR
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) is a leading international airport operator with a portfolio of concessions to operate, maintain, and develop 16 airports in the Americas. This comprises nine airports in southeast Mexico, including Cancun Airport, the most important tourist destination in Mexico, the Caribbean, and Latin America, and six airports in northern Colombia, including José María Córdova International Airport (Rionegro), the second busiest airport in Colombia. ASUR is also a 60% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Muñoz Marín International Airport serving the capital of Puerto Rico, San Juan. San Juan's Airport is the island's primary gateway for international and mainland-US destinations and was the first and currently the only major airport in the US to have successfully completed a public–private partnership under the FAA Pilot Program. Headquartered in Mexico, ASUR is listed both on the Mexican Bolsa, where it trades under the symbol ASUR, and on the NYSE in the U.S., where it trades under the symbol ASR. One ADS represents ten (10) series B shares. ASUR is one of the top four emerging market companies in the transportation and transportation infrastructure sector included in the Dow Jones Sustainability Emerging Markets Index (DJSI EM). For more information, visit www.asur.com.mx

Analyst Coverage
In accordance with Mexican Stock Exchange Internal Rules Article 4.033.01, ASUR informs that the stock is covered by the following broker-dealers: Actinver Casa de Bolsa, Barclays, BBVA Bancomer, BofA Merrill Lynch, BX+, Citi Investment Research, Credit Suisse, Goldman Sachs, Grupo Bursatil Mexicano, Grupo Financiero Interacciones, Grupo Financiero Monex, HSBC, Intercam Casa de Bolsa, Insight Investment Research, Itau BBA Securities, INVEX, JP Morgan, Morgan Stanley, Morningstar, Nau Securities, Punto Casa de Bolsa, Santander Investment, Scotia Capital, UBS Casa de Bolsa and Vector.

Please note that any opinions, estimates or forecasts regarding the performance of ASUR issued by these analysts reflect their own views, and therefore do not represent the opinions, estimates or forecasts of ASUR or its management. Although ASUR may refer to or distribute such statements, this does not imply that ASUR agrees with or endorses any information, conclusions or recommendations included therein.

Some of the statements contained in this press release discuss future expectations or state other forward-looking information. Those statements are subject to risks identified in this press release and in ASUR's filings with the SEC. Actual developments could differ significantly from those contemplated in these forward-looking statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Our forward-looking statements speak only as of the date they are made and, except as may be required by applicable law, we do not have an obligation to update or revise them, whether as a result of new information, future or otherwise.

- SELECTED OPERATING TABLES & FINANCIAL STATEMENTS FOLLOW –

 

...

Passenger Traffic Breakdown by Airport










Mexico Passenger Traffic 1










Third Quarter         

% Chg


Nine - Months

% Chg



2017

2018


2017

2018

Domestic Traffic

3,929,206

4,342,594

10.5


10,641,806

11,725,081

10.2

CUN

Cancun

2,254,689

2,493,382

10.6


5,839,906

6,525,887

11.7

CZM

Cozumel

43,356

50,933

17.5


98,664

123,926

25.6

HUX

Huatulco

171,582

184,182

7.3


481,415

512,051

6.4

MID

Merida

480,906

571,059

18.7


1,417,209

1,625,425

14.7

MTT

Minatitlan

50,149

50,126

(0.0)


150,493

144,693

(3.9)

OAX

Oaxaca

214,433

218,120

1.7


567,122

618,995

9.1

TAP

Tapachula

63,519

80,991

27.5


205,911

226,050

9.8

VER

Veracruz

346,098

379,428

9.6


963,283

1,060,565

10.1

VSA

Villahermosa

304,474

314,373

3.3


917,803

887,489

(3.3)

International Traffic

3,853,851

3,960,965

2.8


12,888,713

13,433,337

4.2

CUN

Cancun

3,654,326

3,757,924

2.8


12,156,200

12,663,402

4.2

CZM

Cozumel

80,753

87,049

7.8


328,791

328,763

(0.0)

HUX

Huatulco

4,843

6,491

34.0


102,878

108,559

5.5

MID

Mérida

53,961

53,348

(1.1)


146,650

167,846

14.5

MTT

Minatitlan

1,826

2,176

19.2


5,267

5,533

5.1

OAX

Oaxaca

23,493

25,681

9.3


56,221

73,221

30.2

TAP

Tapachula

3,713

3,801

2.4


10,824

12,096

11.8

VER

Veracruz

19,955

18,865

(5.5)


52,134

50,607

(2.9)

VSA

Villahermosa

10,981

5,630

(48.7)


29,748

23,310

(21.6)

Total Traffic México

7,783,057

8,303,559

6.7


23,530,519

25,158,418

6.9

CUN

Cancun

5,909,015

6,251,306

5.8


17,996,106

19,189,289

6.6

CZM

Cozumel

124,109

137,982

11.2


427,455

452,689

5.9

HUX

Huatulco

176,425

190,673

8.1


584,293

620,610

6.2

MID

Merida

534,867

624,407

16.7


1,563,859

1,793,271

14.7

MTT

Minatitlan

51,975

52,302

0.6


155,760

150,226

(3.6)

OAX

Oaxaca

237,926

243,801

2.5


623,343

692,216

11.0

TAP

Tapachula