ASUR 3Q13 Passenger Traffic Up 10.66% YOY

MEXICO CITY, Oct. 21, 2013 /PRNewswire/ -- Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE: ASR; BMV: ASUR), (ASUR) the first privatized airport group in Mexico and operator of Cancun Airport and eight other airports in southeast Mexico, as well as a 50% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Munoz Marin International Airport in San Juan, Puerto Rico, today announced results for the three and nine-month periods ended September 30, 2013.

3Q13 Highlights¹:

• EBITDA² increased by 16.44% to Ps.805.52 million
• Total passenger traffic was up 10.66%
• Total revenues increased by 7.19%, as increases of 8.81% in aeronautical revenues and 15.72% in non-aeronautical revenues more than offset the 22.47% decline in construction services revenues
• Commercial revenues per passenger increased by 5.06% to Ps.71.25
• Operating profit increased by 18.49%
• EBITDA margin rose to 61.50% from 56.61% in 3Q12.

1.    Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with International Financial Reporting Standards (IFRS) and represent comparisons between the three- and nine-month periods ended September 30, 2013, and the equivalent three- and nine-month periods ended September 30, 2012.  Results are expressed in nominal pesos. Tables state figures in thousands of pesos, unless otherwise noted. Passenger figures exclude transit and general aviation passengers. 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 = Ps.13.1747

2.    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 of our performance 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.

Passenger Traffic

For the third quarter of 2013, total passenger traffic increased year-over-year by 10.66%. Domestic passenger traffic rose by 9.41% while international passenger traffic increased by 12.02%.

The 9.41% growth in domestic passenger traffic was driven by increases at Cancun, Veracruz, Merida, Villahermosa, Minatitlan and Oaxaca. The 12.01% growth in international passenger traffic resulted mainly from an increase of 12.55% in international traffic at the Cancun airport.

Passenger traffic for the first nine months of 2013 increased by 9.69%, reflecting increases of 8.66% in domestic passenger traffic and 10.50% in international passenger traffic.

Note:   Passenger figures exclude transit and general aviation passengers.

Note:   Passenger figures exclude transit and general aviation passengers.

Note:   Passenger figures exclude transit and general aviation passengers.

Consolidated Results for 3Q13

In July 2012, the Puerto Rico Ports Authority granted Aerostar, ASUR's joint venture with Highstar Capital IV and its affiliated funds, a 40-year concession to operate the Luis Munoz Marin International Airport of Puerto Rico ("SJU") under the United States FAA's Airport Privatization Pilot Program. On February 27, 2013, the transaction was consummated and Aerostar began operating the SJU Airport. During 1Q13, our Cancun airport subsidiary made a US$118.00 million capital contribution to Aerostar corresponding to its 50% equity contribution. ASUR accounts for its ownership stake in Aerostar through the equity method, in accordance with IFRS. In addition, ASUR made a US$100.00 million subordinated shareholder loan to Aerostar.

Total revenues for 3Q13 increased year-over-year by 7.19% to Ps.1,309.83 million. This was mainly due to increases of:

• 8.81% in revenues from aeronautical services, principally as a result of the 10.66% increase in passenger traffic; and
• 15.72% in revenues from non-aeronautical services, reflecting the 15.95% increase in commercial revenues detailed below.

These increases more than offset the 22.47% decline in revenues from construction services that resulted from lower capital expenditures and other investments in concessioned assets during the period.

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, and parking lot fees.

Commercial revenues increased by 15.95% year-over-year during 3Q13, principally due to the 10.66% increase in total passenger traffic.

There were increases in revenues from the following activities:

• 23.74% in duty-free stores;
• 14.53% in retail operations;
• 10.95% in food and beverage;
• 23.90% in advertising;
• 11.25% in car rental revenues;
• 13.61% in other revenue;
• 25.09% in ground transportation;
• 10.78% in banking and currency exchange services;
• 18.81% in teleservices; and
• 0.53% in parking lot fees.

Note: For purposes of this table, approximately 48,900 and 40,300 transit and general aviation passengers are included in 3Q12 and 3Q13, respectively.

(1)  Revenues from direct commercial operations represent ASUR's operation of convenience stores in airports and the direct sale of advertising space.

Construction revenues and expenses. ASUR is required by IFRIC 12 to include in its income statement an income line reflecting the income from construction or improvements to concessioned assets made during the period. During 3Q13, ASUR recognized Ps.112.90 million in revenues from "Construction Services", a 22.47% year-on-year decline, because of lower levels of capital improvements to its concessioned assets. 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 Expenses have been included in ASUR's income statement as a result of the application of IFRIC 12, the decrease in Construction Revenues in 3Q13 did not result in a proportionate decrease in the EBITDA Margin, which is equal to EBITDA divided by total revenues.

Total operating costs and expenses for 3Q13 declined by 3.39% year-over-year. This was primarily due to the following declines:

• 22.47% in construction costs, reflecting lower levels of capital improvements made to concessioned assets during the period;
• 0.50% in cost of services, principally reflecting fees in connection with ASUR's participation in bidding projects in Brazil that were incurred in 3Q12 but not in 3Q13; and
• 5.80% in administrative expenses, principally due to professional fees and travel expenses during 3Q12 related to the SJU privatization project.

These declines were partially offset by the following increases:

• 16.34% in the technical assistance fee paid to ITA, reflecting the increase in EBITDA for the quarter (a factor in the calculation of the fee);
• 9.77% in concession fees paid to the Mexican government, mainly due to an increase in regulated revenues (a factor in the calculation of the fee); and
• 4.47% in depreciation and amortization, resulting mainly from capitalized investments.

Excluding the expenses and reimbursements in connection with the SJU privatization project and reimbursements, cost of services would have increased 3.71%.

Operating margin for the quarter increased to 53.44% from 48.34% in 3Q13 reflecting the 7.19% increase in revenues and 3.39% decline in expenses during the period.

Comprehensive Financing Gain (Loss) for 3Q13 was a Ps.2.29 million gain, compared to a Ps.6.69 million loss in 3Q12, principally due to a lower foreign exchange loss in 3Q13 resulting from US dollar-denominated debt.

During 3Q13, ASUR reported a foreign exchange loss of Ps.10.36 million which principally resulted from the 1.13% depreciation of the Mexican peso against the U.S. dollar during the period which resulted in a loss because of ASUR's  foreign currency net liability position.  ASUR's foreign currency net liability position increased in 3Q13 as compared to 3Q12 because of its incurrence in March 2013 of $215.0 million in US dollar-denominated debt in a loan from BBVA Bancomer and Merrill Lynch (US$107.5 million incurred with each bank).

Interest income increased by Ps.8.76 million year-on-year reflecting higher income from short-term investments resulting from the increase in cash balance during the period. Interest expense increased by Ps.8.40 million reflecting the higher loan balance.

Income (loss) from Equity Investment in Joint Venture. During 3Q13 our equity in the income of Aerostar, our joint venture with Highstar Capital IV and its affiliated funds, was a net gain of Ps.0.33 million. In addition, ASUR recorded a Ps.16.62 million gain in stockholders' equity resulting from the translation effect of Aerostar's financial statements (which are denominated in U.S. dollars), in connection with the valuation of the capital stock derived from the depreciation of the peso against the U.S. dollar.

From February 28, 2013 to September 30, 2013 our equity in the income of Aerostar was a net loss of Ps.94.92 million, principally due to Ps.113.8 million in one-off costs resulting from expenses incurred during the more than two years in which ASUR was involved in the bidding process for the privatization of the SJU airport, including market research, preparation of bidding documentation, obtaining the Part 139 Certificate from the FAA, advisory, legal, consulting, and debt financing fees, as well as all other costs incurred until the first day of operations under Aerostar's management.  These costs more than offset an operating income of Ps.18.88 million generated between February 28, 2013 until September 30, 2013.  In addition, ASUR recorded a Ps.46.62 million gain in stockholders' equity resulting from the translation effect of Aerostar's financial statements (which are denominated in U.S. dollars), in connection with the valuation of the capital stock derived from the depreciation of the peso against the U.S. dollar.

During 3Q13 total passenger traffic at the SJU airport was 2,107,097. From February 28, 2013 to September 30, 2013, total passenger traffic at SJU airport was 5,036,239.

Income Taxes. Following the changes in Mexican tax law that took effect on January 1, 2008, which established a new flat rate business tax ("Impuesto Empresarial a Tasa Unica" or "IETU") and eliminated the asset tax, the Company evaluates and reviews  its deferred assets and liabilities position as applied by Mexican tax laws.

Income taxes for 3Q13 increased by Ps.16.72 million, or 9.56% year-over-year, principally due to the following factors:

• A Ps.1.50 million increase in IETU resulting from a higher taxable base;
• An Ps.18.98 million increase in the provision for income taxes, reflecting the increase in taxable income;
• A Ps.1.30 million decline in deferred income taxes resulting from the recognition of the effects of inflation in the residual value of assets; and
• A Ps.2.49 million decrease in deferred IETU principally due to the increase in the taxable base.

Net income for 3Q13 increased by 24.89% to Ps.510.87 million from Ps.409.06 million in 3Q12. Earnings per common share for the quarter were Ps. 1.7029, or earnings per ADS (EPADS) of US$1.2925 (one ADS represents ten series B common shares). This compares with earnings per share of Ps. 1.3636, or EPADS of US$1.0350, for the same period last year.

Note:  U.S. dollar figures are calculated at the exchange rate of US$1 = Ps.13.1747

Consolidated Results for the Nine-Month Period ended September 30, 2013

Total revenues for 9M13 increased year-over-year by 4.87% to Ps.3,967.7 million, mainly due to the following increases:

• 7.87% in revenues from aeronautical services as a result of the 9.69% increase in passenger traffic during the period;
• 10.64% in revenues from non-aeronautical services, principally as a result of the 10.44% increase in commercial revenues detailed below.

These increases were partially offset by a 28.53% decline in construction services in connection with lower capital investments during the period.

Commercial revenues for 9M12 rose by 10.44% year-over-year, principally as a result of revenue increases in the following areas:

• 12.43% in duty-free stores;
• 8.39% in retail operations;
• 11.72% in food and beverage;
• 13.96% in advertising;
• 11.78% in other income;
• 7.06% in car rentals;
• 18.09% in ground transportation services;
• 8.70% in banking and currency exchange services; 
• 4.30% in parking lot fees; and
• 23.19% in teleservices;

*     For purposes of this table, approximately 151,800 and 129,000 transit and general aviation passengers are included for 9M12 and 9M13, respectively.

 (1)    Revenues from direct commercial operations represent ASUR's operation of convenience stores in airports and the direct sale of advertising space.

Total operating costs and expenses for 9M12 declined by 3.87% year-on-year. This was primarily due to the following declines:

• 28.53% in construction costs, reflecting lower committed improvements made to concessioned assets during the period; and
• 1.76% in administrative expenses, principally reflecting professional fees and travel expenses in connection with SJU airport in 9M12.

These declines were more than offset the following increases:

• 1.01% in cost of services, principally reflecting higher maintenance and security costs, as well as costs incurred in the preparation of the master development plan. These increases were partially offset by the reimbursement to ASUR of fees previously paid to third parties in connection with ASUR's participation in the SJU privatization project, including travel expenses;  
• 11.78% in technical assistance costs, reflecting the corresponding increase in EBITDA during the period;
• 8.69% in concession fees, mainly due to the increase in regulated revenues (a factor in the calculation of the fee); and
• 4.15% in depreciation and amortization resulting mainly from capitalized investments.

Excluding accumulated expenses and reimbursements in connection with the SJU privatization project, cost of services would have declined by 3.38%.   

Operating margin increased to 55.84% in 9M13, from 51.82% in 9M12.  This was mainly the result of the 4.87% increase in revenues and the 3.87% decline in operating expenses for the period.

Comprehensive Financing Gain (Loss) for 9M13 was a Ps.16.59 million loss, compared to a Ps.11.31 million gain in 9M12, principally driven by a Ps.54.60 million foreign exchange loss in 9M13 resulting from the impact of the 1.61% depreciation of the Mexican peso against the U.S. dollar during the period on ASUR's foreign currency net liability position. 

Interest income increased by Ps.31.63 million year-on-year reflecting higher income from short-term investments resulting from the increase in cash balance during the period. Interest expense increased by Ps.27.16 million reflecting the higher loan balance.

Net income for 9M13 increased by 17.14% to Ps.1,651.98 million. Earnings per common share for the nine-months were Ps.5.5066, or earnings per ADS (EPADS) of US$4.1797 (one ADS represents ten series B common shares).  This compares with Ps.4.7009, or EPADS of US$3.5681, for 9M12.

Note:    U.S. dollar figures are calculated at the exchange rate of US$1 = Ps.13.1747.

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 regulated revenues for 9M13 were Ps.2,560.08 million, resulting in an annual average tariff per workload unit of Ps.155.67. ASUR's regulated revenues accounted for approximately 64.52% of total income for the period.

The Mexican Ministry of Communications and Transportation reviews compliance with the maximum rates on an annual basis at the close of each year.

Balance Sheet

On September 30, 2013, airport concessions represented 69.10% of the Company's total assets, with current assets representing 17.12% and other assets representing 13.78%.

Cash and cash equivalents on September 30, 2013, were Ps.2,396.65 million, a 5.79% increase from the Ps.2,265.43 million in cash and cash equivalents recorded on December 31, 2012.

Shareholders' equity at the close of 9M13 was Ps.16,969.60 million and total liabilities were Ps.5,621.95 million, representing 75.11% and 24.88% of total assets, respectively. Deferred liabilities represented 32.05% of the Company's total liabilities. 

Total bank debt at September 30, 2013 was Ps.2,847.33 million, including Ps.7.50 million in accrued interest and commissions. During August and September of 2010, our Cancun airport subsidiary entered into two three-year credit agreements of Ps.350.00 million and Ps.570.00 million with two banks. The terms of the agreements include a floating interest rate equal to the Tasa de Interes Interbancaria de Equilibrio (TIIE) plus 1.5% and quarterly principal payments. In addition, in September of 2011, our Veracruz airport subsidiary entered into a three-year credit agreement of Ps.50.00 million. The terms include a floating interest rate equal to TIIE plus 0.75% and quarterly principal payments.

During 3Q13, ASUR made aggregate principal payments of Ps.98.10 million in connection with the Ps.350.00 million, Ps.570.00 million and Ps.50.00 million three-year credit agreements.

In the fourth quarter of 2011, our Cancun airport subsidiary obtained authorization for two new bank loans from Banamex and BBVA Bancomer of US$300.00 million and Ps.1,500.00 million, respectively.

On February 15, 2013, our Cancun airport subsidiary executed an agreement for bank loans of US$107.50 million from each of BBVA Bancomer and Merrill Lynch, for a total of U.S.$215.00 million. The loans have a five-year term, amortize in four semi-annual payments of 2.5% of the aggregate amount of the loans beginning on February 15, 2016 and a final payment of the aggregate principal amount of the loans outstanding on the maturity date, February 15, 2018. The loans are denominated in U.S. dollars and charge interest at a rate equal to three-month LIBOR plus 1.99%.  Proceeds from the loans were used to finance ASUR's capital contribution and subordinated shareholder loan to Aerostar. These loans are guaranteed by Grupo Aeroportuario del Sureste, S.A.B. de C.V.  In connection with these loans, BBVA Bancomer's authorization for bank loans as described above was drawn down by US$107.50 million during 1Q13.

While the BBVA Bancomer and Merrill Lynch facility is outstanding, ASUR and its subsidiaries are not permitted to make any fundamental change to its corporate structure, or create any liens upon any of its property or sell any assets that exceed more than 10% of ASUR's consolidated total assets.

Additionally, the credit facility requires that ASUR and its subsidiaries maintain a consolidated leverage ratio equal to or less than 3.50:1.00 and a consolidated interest coverage ratio equal to or less than 3.00:1.00 as of the last day of each fiscal quarter. If ASUR fails to comply with these covenants, this facility restricts its ability to pay dividends to its shareholders. Additionally, failure to comply with these covenants would result in all amounts owed under the facility to become due and payable immediately. As of the date of this report, ASUR was in compliance with those covenants.

ASUR's Cancun airport subsidiary and its joint venture partner Highstar Capital IV and its affiliated funds pledged their share ownership in Aerostar as collateral for US$350.00 million in senior secured notes issued by, and a $60.00 million credit facility obtained by, Aerostar that has not been drawn down yet

Capital Expenditures

During 3Q13, ASUR made investments of Ps.130.25 million as part of ASUR's ongoing plan to modernize its airports pursuant to its master development plans. During 9M13 capital expenditures totaled Ps.323.52 million.

IFRS Adoption

In compliance with regulations established by the Mexican National Banking and Securities Commission (CNBV), as of January 1, 2012 the Company has adopted International Financial Reporting Standards (IFRS) as the accounting standards to prepare its financial statements.

Furthermore, and in compliance with INIF 19 "Changes derived from the adoption of IFRS," the most significant accumulated changes in net shareholders' equity as of January 1, 2011 are included in the table below:

         See page 23 for notes on IFRS transition effects.

See page 23 for notes on IFRS transition effects.

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 Merril Lynch, Citi Investment Research, Credit Suisse, Grupo Bursatil Mexicano, Grupo Financiero Interacciones, Grupo Financiero Monex, HSBC, Intercam Casa de Bolsa, Itau BBA, INVEX, JP Morgan, Morgan Stanley, Morningstar, Santander Investment, Scotia Capital, UBS Casa de Bolsa, 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.

About ASUR:
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) is a Mexican airport operator with concessions to operate, maintain and develop the airports of Cancun, Merida, Cozumel, Villahermosa, Oaxaca, Veracruz, Huatulco, Tapachula and Minatitlan in the southeast of Mexico, as well as a 50% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Munoz Marin International Airport of Puerto Rico. The Company is listed both on the NYSE in the U.S., where it trades under the symbol ASR, and on the Mexican Bolsa, where it trades under the symbol ASUR. One ADS represents ten (10) series B shares.

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.

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