ASR

Business Context and Reporting Period

Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)

Filing Type: Form 6-K (Report of Foreign Private Issuer)

Reporting Period: Fourth Quarter (4Q) and Full Year (FY) ended December 31, 2015.

Business Overview: ASUR is the first privatized airport group in Mexico, operating nine airports in southeast Mexico (including Cancún) and holding a 50% joint venture stake in Aerostar Airport Holdings, LLC, which operates the Luis Muñoz Marín International Airport in San Juan, Puerto Rico.

Key Financial Metrics

Fourth Quarter 2015 (4Q15)

• Total Revenues: Ps. 2,905.16 million (Increase of 72.37% YoY).
• EBITDA: Ps. 1,126.19 million (Increase of 23.69% YoY).
• Net Income: Ps. 730.83 million (Increase of 42.40% YoY).
• Earnings Per Share (EPS): Ps. 2.4361 (Increase of 42.40% YoY).
• Passenger Traffic: 6.33 million total passengers (Increase of 9.73% YoY).
• Commercial Revenue Per Passenger: Ps. 88.70 (Increase of 16.27% YoY).
• Operating Margin: 34.66% (Decreased from 47.23% in 4Q14 due to accounting treatment of construction revenues).
• Adjusted EBITDA Margin: 70.71% (Excluding IFRIC 12 construction effects).

Full Year 2015 (FY15)

• Total Revenues: Ps. 8,994.60 million (Increase of 52.99% YoY).
• EBITDA: Ps. 4,541.89 million (Increase of 25.63% YoY).
• Net Income: Ps. 2,913.74 million (Increase of 27.59% YoY).
• Earnings Per Share (EPS): Ps. 9.7125 (Increase of 27.59% YoY).
• Passenger Traffic: 26.14 million total passengers (Increase of 12.88% YoY).
• Operating Margin: 45.28% (Decreased from 53.77% in FY14).
• Adjusted EBITDA Margin: 70.81% (Excluding IFRIC 12 construction effects).

Liquidity and Balance Sheet (as of Dec 31, 2015)

• Cash and Cash Equivalents: Ps. 2,084.16 million (Decrease of 27.01% from Dec 31, 2014).
• Total Bank Debt: Ps. 3,718.02 million (includes Ps. 9.55 million accrued interest).
• Shareholders' Equity: Ps. 20,408.05 million.
• Capital Expenditures (FY15): Ps. 2,906.57 million.

Material Changes vs. Prior Period

• Revenue Composition: The significant revenue increase (72.37% in 4Q15) was driven by a 279.88% surge in construction services revenues due to higher capital expenditures recognized under IFRIC 12. Excluding construction, revenues grew 18.86% in 4Q15.
• Passenger Growth: Domestic traffic grew 10.06% in 4Q15, while international traffic grew 9.43%, led by a 10.46% increase at Cancún Airport.
• Commercial Performance: Commercial revenues increased 27.61% in 4Q15, with notable growth in car rentals (44.65%), retail (35.50%), and food & beverage (22.44%).
• Cost Structure: Total operating costs rose 113.41% in 4Q15, primarily due to a 279.88% increase in construction costs. Excluding construction costs, operating expenses rose only 7.67%.
• Foreign Exchange: ASUR reported a foreign exchange loss of Ps. 17.3 million in 4Q15 due to a 2.03% depreciation of the Mexican peso, a significant improvement from the Ps. 126.96 million loss in 4Q14.

Outlook, Risks, and Unusual Items

Management Commentary and Strategic Initiatives

• Terminal Expansion: Inaugurated the expansion of Terminal 3 at Cancún International Airport on December 18, 2015.
• Solar Energy: Signed an agreement with SunPower Corp. for 36 megawatts of solar energy to serve operations in Mexico.
• Joint Venture: The San Juan (SJU) airport joint venture (Aerostar) saw passenger traffic increase 6.79% in 4Q15. ASUR recorded a net loss of Ps. 13.43 million from its equity in Aerostar for the quarter.

Risks and Contingencies

• Regulatory Risk: ASUR's aeronautical revenues are regulated by the Mexican Ministry of Communications and Transportation, which sets maximum rates per traffic unit. Compliance is reviewed annually.
• Currency Risk: The company has foreign currency net liabilities (primarily USD-denominated debt). Depreciation of the Mexican peso results in foreign exchange losses, though this was mitigated in 4Q15 compared to the prior year.
• Accounting Treatment (IFRIC 12): The filing highlights that reported margins (EBITDA and Operating) are distorted by the inclusion of construction revenues and costs. Management emphasizes "Adjusted" margins (excluding IFRIC 12 effects) as a better indicator of operational performance.

Investor Verification Checklist

• Adjusted Margins: Verify the "Adjusted EBITDA Margin" (70.71% in 4Q15) rather than the reported EBITDA margin (38.77%) to assess true operational efficiency, as the latter is skewed by non-cash construction accounting.
• Cash Flow vs. Net Income: Confirm that the decrease in cash and cash equivalents (27.01%) aligns with the high capital expenditure program (Ps. 2.9 billion in FY15) and does not indicate liquidity stress.
• Debt Service: Review the terms of the US$215 million Cancún subsidiary debt (LIBOR + 1.85%, maturing 2022) to assess interest rate exposure and amortization schedules starting in 2018.
• Passenger Mix: Analyze the sustainability of the 9.73% passenger growth, specifically the reliance on Cancún Airport for international traffic growth.
• Construction Capex: Validate the magnitude of the 279.88% increase in construction revenues to ensure it reflects genuine capital investment rather than accounting anomalies.