Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Reporting Period: Six months ended June 30, 2010 (1H10)
Filing Date: August 2, 2010
Business Overview: ASUR is the first privatized airport group in Mexico, operating Cancún Airport and eight other airports in southeast Mexico. The filing primarily addresses the restatement of financial results due to the adoption of INIF 17 ("Service Concession Contracts"), a new Mexican Financial Reporting Standard effective in 2010.
Key Financial Metrics (Restated)
| Metric | 1H 2010 (Restated) | 1H 2009 | Change |
|---|---|---|---|
| Total Revenues | Ps. 2,087.07 million | Ps. 1,663.07 million | +25.50% |
| Operating Profit | Ps. 1,052.27 million | Ps. 770.72 million | +36.53% |
| Operating Margin | 50.42% | 46.34% | +4.08 pts |
| EBITDA | Ps. 1,230.80 million | Ps. 1,086.66 million | +13.26% |
| Net Income | Ps. 775.13 million | Ps. 467.17 million | +65.92% |
| Earnings Per Share (Ps.) | 2.5838 | 1.5572 | +65.92% |
| Cash and Equivalents | Ps. 590.69 million | Ps. 973.32 million | -39.31% |
| Total Assets | Ps. 17,262.56 million | N/A | N/A |
| Total Liabilities | Ps. 2,954.43 million | N/A | N/A |
| Stockholders' Equity | Ps. 14,308.13 million | N/A | N/A |
Note: All figures in Mexican Pesos (Ps.) unless otherwise noted. Exchange rate used: US$1 = Ps. 12.8441.
Material Changes vs. Prior Period
- Accounting Standard Adoption (INIF 17): The primary driver of financial changes is the adoption of INIF 17. This resulted in:
- Recognition of Ps. 217.67 million in new "Construction Services" revenue and an equal amount in "Cost of Construction Services."
- A Ps. 132.00 million decrease in depreciation and amortization due to reclassifying fixed assets as intangible "Airport Concessions" and extending amortization periods.
- A net increase in Net Income of Ps. 102.58 million solely due to accounting adjustments.
- Reclassification of Ps. 692.97 million from fixed assets to "Airport Concessions, net."
- Operational Growth:
- Passenger traffic increased 8.83% year-over-year.
- Aeronautical revenues rose 13.28%.
- Non-aeronautical (commercial) revenues increased 10.78%, driven by growth in food and beverage (+14.74%), car rentals (+17.16%), and banking services (+68.88%).
- Expense Increases: Administrative expenses surged 45.43% due to employee reassignments to corporate functions and higher professional fees. Cost of services rose 4.88% due to energy costs and equipment leases.
- Liquidity: Cash balances declined 39.31% due to a Ps. 750.00 million cash dividend paid in Q2 2010 and Ps. 309.09 million in principal loan payments.
Guidance, Outlook, and Risks
- Regulatory Environment: ASUR's revenues are subject to tariff regulation by the Mexican Ministry of Communications and Transportation, which sets maximum rates per traffic unit. Regulated revenues accounted for 63.80% of total income in 1H10.
- Future Accounting Standards: ASUR notes that all Mexican issuers must adopt International Financial Reporting Standards (IFRS) no later than fiscal years beginning January 1, 2012. The company believes other recent NIF/INIF changes will not significantly impact financials.
- Capital Expenditures: The company invested Ps. 217.67 million in 1H10 for airport modernization under master development plans.
- Debt and Hedging: Total bank debt was Ps. 187.60 million. ASUR has hedged 100% of interest rate exposure on its Ps. 750 million credit agreement, fixing rates between 6.21% and 6.37% for three years.
- Forward-Looking Statements: The filing includes standard disclaimers that future expectations are subject to risks and actual results may differ.
Investor Verification Checklist
- INIF 17 Impact: Verify the sustainability of the Ps. 102.58 million net income increase attributed to accounting changes versus organic operational growth.
- EBITDA Margin Compression: Note that while Net Income rose 65.92%, EBITDA margin decreased from 65.34% to 58.97% due to the inclusion of construction costs in the new accounting standard.
- Liquidity Position: Assess the impact of the Ps. 750 million dividend on future cash flow availability for capital expenditures or debt service.
- Regulatory Tariffs: Monitor the annual review of maximum rates by the Mexican Ministry of Communications and Transportation, as this caps revenue potential.
- IFRS Transition: Track the company's preparation for the mandatory transition to IFRS by 2012.