Good morning. My name is Josh and I will be your conference operator. At this time I would like to welcome everyone to the GAP Fourth Quarter 2015 Earnings Conference Call. [Operator Instructions]. I'll now turn the call over to Maria Barona of i-advize Corporate Communications. Please go ahead.

Hello and welcome to Grupo Aeroportuario del Pacifico's fourth quarter conference call. Today from the Company we have Mr. Fernando Bosque, Chief Executive Officer; Mr. Saul Villarreal, Chief Financial Officer; as well as Ms. Paulina Sanchez, Investor Relations Manager. Please be advised that forward-looking statements made during this conference call, they do not account for future economic circumstances, industry conditions, the Company's future performance or financial results. As such statements made are based on several assumptions and factors that could change causing actual results to materially differ from the current expectations. For a complete note on forward-looking statements please refer to the quarterly report issued last Thursday. At this point I'd like to turn the call over to Mr. Bosque for his opening remarks. Please begin sir.

Good morning and thank you all for joining with us in GAP. We appreciate your participation today. GAP is certainly glad to have this opportunity to address the market in this call and discuss a very exciting quarter's and full-year results. Let me begin with a general traffic review and mention just some of the traffic highlights for the fourth quarter period. GAP experienced an increase of 1.27 million in the number of total passengers in the Mexican airport, mainly driven by the higher traffic in Los Cabos, Guadalajara, Tijuana and Puerto Vallarta in that order which jointly represent 86% of the increase. In terms of domestic passenger traffic, the figure increased by 706,000 passengers while the international passenger traffic grow by 511,000, representing an overall increase of around 28% compared to the same period of the previous year. The Montego Bay airport also contributes 857,000 passenger to GAP network of airport in the fourth quarter period. It is worth mentioning that during the quarter many new routes opened benefiting GAP's network. These include three new services from Guadalajara, three new services from Hermosillo and in Tijuana there were three new routes and in our Mexican liaison market we have four new services in Puerto Vallarta and two new services in Los Cabos airport. And in Montego Bay, our newest addition, three new routes were opened during the quarter. These new routes represent more than 170,000 seats during the quarter in our network. Let me move to the individual development of the airports. In Guadalajara, during the fourth quarter, there were more than 385,000 seats added to the airport network. These represent an increase of 13% over the previous year. It is important to mention that the airport benefit from a healthy balance between the domestic market growth and the…

Thank you, Fernando. Good morning everyone. I will briefly review the financial highlights for the fourth quarter of 2015. Aeronautical revenues increased by MXN126 million or 54% quarter over quarter mainly due to the increases in total passenger traffic and by the increase in passenger charges for 2015 as well as the integration of the Montego Bay Airport which contribute with revenues of MXN226 million. In terms of non-aeronautical revenues, this increased MXN166 million or 53%, during fourth quarter 2015. This increase was mainly driven by business operated by third parties such duty free stores, car rental, time share developers, food and beverage among others. Montego Bay airport contributes with MXN82 million and Mexican Airports contribute MXN61 million, while revenues from business operated at related company increased MXN39 million mainly in Mexican airports. It is important to mention that for the full year 2015 Company revenues as a result of the acquisition of DCA and Montego Bay Airport, GAP financial statement for full fiscal year 2015 include this acquisition starting April 1st 2015. If you recall, cumulative result for the six and nine months reflected DCA's results for the interim period for January 1, 2015 through June 30 and September 30 respectively in order to allow investor to assess the full results and impact of the DCA acquisition for each entire 2015 interim period. This presentation was useful for the market because under the terms of the sales purchase agreement DCA's operating results for January 1, 2015, were attributable to GAP. However, under IFRS DCA's results should only be consolidated into the Company's results starting April 1, 2015 and thus we have accordingly reflected the consolidation of DCA in our full-year 2015 results. However, in order to understand the magnitude and relevance of this transaction we also informed in our…

[Operator Instructions]. And we have our first question coming from Pablo Barroso from Credit Suisse.

I have a couple of questions. The first one will be, can you give us more color regarding Jamaica? We saw a margin contraction which came at roughly 43%. Should we expect this margin levels going forward?

Jamaica has a different kind of concession agreement that include a composition of concession fee that have three different level, a portion of this concession fee is fixed amount. Second tier is an amount per traffic unit, per passenger or 100 kilos cargo and third tier is related to the over revenue when you compare to the figure that was included in the concession agreement that mean that we will pay 45% over revenue. So in during 2015 the third tier of this concession fee was only partially in the operation. And so for 2015 the margin was higher than we will be see for 2016 and beyond that. And so that has an effect to the entire Company producing this 1 to 2 points of the margin, EBITDA margin.

Yes. Just to continue with Fernando's idea, the EBITDA margin of Montego Bay Jamaica will be normalized at level of 50% per year, so you will see in future years a 50% of EBITDA margin, right?

Yes.

Okay. Just a follow-up, on the first three quarters of 2015 we saw EBITDA margins like 60% or 62%, so 2015 we should expect a margin 50% roughly?

Yes, for 2016 we expect that will be in the range of 50% for Jamaica only.

My second question, in terms of CapEx, you have postponed some of it from 2015 to 2016. Could you give some more color on how much will be the 2016 total CapEx?

Yes. Well, as you saw in our guidance we released in January, the CapEx for this year will be MXN2.7 billion. This comprise of MXN2.2 billion of CapEx 2016 in Mexico. And additionally this is MXN250 million for Montego Bay Airport. And additionally we have remaining of CapEx from 2015 that we will conclude in the first quarter of 2016 but it's part of the P&B [ph] of 2015.

Our next question comes from [indiscernible] from Santander.

It's actually Pedro Balcao here from Santander. I have two questions if I may. The first one is relative to traffic, we have started the year with traffic growth in January above 16%, however you have a full-year guidance of just 7%. So my question is if you expect a strong deceleration in traffic growth during the year or actually there could be upsides for your guidance? My second question is actually about costs and EBITDA margin at the Mexican operations. Costs at the Mexican operations, they increased by 21% year on year in the fourth quarter implying a slight EBITDA margin for the Mexican operations. I consider that a little bit surprising taking into account that the traffic grew 21%. So my question is really if there is some one-offs in this cost performance and what level of EBITDA margin for the Mexican operations should we expect going forward?

Okay, let me answer the question of the traffic. Saul will answer the question of EBITDA. The traffic that we expected for 2016, the last comment in the guidance is related to how was also the evolution of the traffic during 2015. As you remember, during the first and the second quarter of 2015 the traffic growth was very low. In January and February was in the range of 2% as you could be remember. So when you compare -- and there are some of airports which have negative figures, Tijuana last year was negative, Cabos was negative. So what happen when you compare this figure, January 2016 to the previous year, that is the enormous difference between some of these airport. However, when we will move to the second quarter to the third and more importantly to the last quarter of 2016 you have to convert to the performance of the quarter of 2015. As you remember the last quarter that is part of the conference today was very impressive. The increase during the last quarter 2015 was huge. So when you will compare for the 2016 will be lower. So taking the corresponds, taking how is the projection that we have for the entire year, our expectation in the guidance was below the figure that you are looking in January. The expectation of the 7% plus/less 1% mean that could be with the information with the market observation that we have now is could be going less importance increase alone of the year. So it's not pessimistic. Remember that we're now in a volatile market. There are a lot of changes and we don't know how will be really the last quarter of the year with all these changes. Okay. Saul, could you explain how is the EBITDA margin in Mexican network?

Well, the EBITDA margin in our network in Mexico will be around 71% of margin. However, due to the integration of Montego Airport and due to the EBITDA margin of this it's around 50%, the EBITDA margin that we will expect for this 2016 will be around 67%. The effect of the fourth quarter 2015, that was reduced the EBITDA margin from 72% in previous year to 67% or 68% in this fourth quarter 2015 is due to the adjustment that we had to recognize in Montego Bay airport Of, that Fernando's point before, of the concession tax is due to the adjustment that we have to pay in Montego Bay and we have to recognize this adjustment. In the previous quarters we had an EBITDA margin above 60%. However, at the end of the year, for this quarter mainly in Montego Bay was around 50% that will be normalized in future years. You could consider the EBITDA margin for this airport around 50%.

Our next question comes from Pablo Zaldivar from GBM.

Could you give us a little bit more insight under expectations on the Tijuana traffic driven by the cross-border bridge roughly how many additional passengers do you expect to receive from the opening of this bridge throughout the year?

Of course now we have a new instrument to develop traffic between the areas of Mexico and South California but also to Asia, I have mentioned in my conference, so of course is an instrument that we have to develop by marketing that we're now in the process. If we're only looking how is the volume of present that is currently using other airports in the area, in South California, we expect in the short term to bring in the range of 0.5 million passengers first two years of operation that is without to do important investment in marketing campaign in order to develop traffic. However, San Diego County area is very interested to bring a visitor from Mexico, foreign visitor to this area and now we're in the process to develop this campaign jointly between Mexico authorities of tourism that they want to bring also visitor from the South California, San Diego County and others to different Mexico destination and also with the tourism authorities of San Diego County they are looking to bring visitor from Mexico destination. And Tijuana Airport is the link to get these two purpose, to move visitor from each of these two areas. So that is a new thing that could be bring easily another 0.5 million passengers, that is something that we have to develop during 2016. And that will require more time is the connectivity from Asia. The Pacific side of South California is well connected from Los Angeles and San Francisco, but in the area of San Diego the limit there are only one connection to Tokyo, Narita. So our opportunity is to bring Asian traffic from Korea, China and Japan using Tijuana as the point of entrance for South California and of course for Mexico. That will require at least two years, three years to have the first successful fly. I think that will bring another easily 300,000 to 0.5 million passengers more, but insist that will require more time. So the instrument is there, the opportunity to continue our development of the terminal, now we're involved in the construction and expansion of the docks to provide more capacity, more docks and more position for -- in ramp for planes is to prepare for this important increase in the volume of traffic. The evolution of that will depend on also how is it going to meet both sides and also the marketing campaign that we're preparing.

And just going back really quick to the Montego Bay, you say that the EBITDA margin should normalize around 50%, is it fair to assume that the fees charged by the government in terms of total revenue will be of roughly 25%?

Yes, for the concession tax that we pay in Montego Bay to the government is a fixed fee of $2.70 per workload unit. And additionally, in the concession agreement we have a base-case scenario of revenues. This base-case scenario has projections of future revenues. So if we exit this projections of revenues, we will have to pay to the authority the 45% of this excess of the revenue. So in 2015 we had to recognize some part of this effect, for 2016 and therefore we will have to pay to the authority around 23%, 25% over revenues for these two composition of calculations. So an easy way to make projections of this concession tax is to consider from 23% to 25% over the revenues. So with this effect we will have in future years an average of EBITDA margin of 50%. That will be normalized because one time that the important increase in the taxes, in the airports that was implemented in April 2015, that was the reason because it was triggered the additional concession fee. That is a real situation and was considered during the due diligence, during the time that was before the acquisition of this asset. So it's not new for us, it's something that was considered before.

And lastly on the Grupo Mexico dispute, I believe that Grupo Mexico appealed to the decision. What do you expect from this, any changes or maybe a delay on the time they will take to sell the shares or any other type of impact?

The situation was explained in my presentation. There are two different things, one is how is the Supreme Court resolution that lastly -- that was communicated at Tribunal Superior is the bylaws particular [indiscernible] clear limit of 10% and the way that you are above this 10%, you have to divest, you have to resell using the mechanism that there are in the bylaws and also in the regulation for Mexican users. And the mechanism is open to the sales in the market. So the question that I suppose this Grupo Mexico is saying is they are asking to explain how will be the timetable to do this sale and how will be the mechanism to do but they cannot appeal over the resolution taken in the Supreme Court. The resolution is there, it speaks and they know that they have to resell the excess of the 10%. The question of how and when is the question that are now under discussion, not by us, is a question that they are involved only Grupo Mexico with the Tribunal.

Our next question comes from Miguel Escobedo from Noriega and Escobedo.

My question is regarding the lawsuit in Grupo Mexico who stopped the payment of dividends a couple of years ago and the money is still owed [indiscernible]. When exactly it will be released, have you any idea?

Effectively there are some pending questions. One time that was resolved in favor of the bylaws of the Company. Some of the claim of the suit opened by Grupo Mexico will be lawsuit because it's clear that they have not the right to opened lawsuits because they are below the 20% of the shares that they have the right to oppose to their agreement taken by the extraordinary assembly in 2012. So now we're with our lawyers looking at all the resolution that was challenges by the Grupo Mexico against the resolution of the assembly. They will be loses. And one of that is that was related to the retention of the payment of the equity reduction that was in September 2012. I believe that that will be shortly the resolution in favor to all the shareholders and will be possible to distribute in the institution that retain the money that is [indiscernible] to distribute this money in favor of all the shareholders, that way the owner of these shares in the time of the distribution.

But we don't have updates yet on when that resolution will come out?

You know Miguel that it's very difficult to know how is the time that resolution could be take effect, but I am confident that will be very shortly.

[Operator Instructions]. Our next question comes from [indiscernible] from Citigroup.

I guess firstly could you refresh our memories as to how much insurance reimbursement you might have received for Los Cabos and how much of that was included in EBITDA and when?

Yes. Well, as you remember the Hurricane Odile impact in 2014, so in the last quarter of 2014 we received around MXN200 million that was in the EBITDA of 2014. For this 2015, for the full year, we closed the damage indemnization from the insurance company, so we received in total from the insurance company MXN270 million. Therefore we recovered around 90% of the damage that we paid, that it was around MXN300 million by the total. So in the EBITDA margin in this 2015 we have around MXN10 million of revenue just that. In other hand we had a recovery in insurance from an insurance company of around MXN25 million regarding directors and officers policy from some lawsuit that we had regarding the Grupo Mexico legal proceeding. So the only benefit we had in the EBITDA for this year is around MXN35 million from the insurance companies.

And then I guess could you also give us some more color on the latest Mexico-U.S. adjustment to the bilateral agreement and might you be able to specify any routes that you are waiting to add once your agreement does go through and have you considered this adjustment in your 2016 traffic guidance?

It's Fernando. Asking the question of the agreement between U.S. and Mexico, we're not including any kind of extra traffic to our guidance for the traffic 2016. One that is because the agreement, the bilateral agreement at this time and we're at the end of February, it's not in force; and secondly because the most important impact will take time for the freedom that will be mainly the expectation that we have in our Group, that will require case by case approval. So, for 2016 we're did not include any kind of an extra traffic for that.

And have you layered in any U.S. presidential election assumptions into your guidance or is that just something like one-off that you wouldn't have taken?

No, no there are no changes.

No.

And then if I could just ask one last one and I'll jump back in the queue. I guess you kind of talked on this earlier, but would you take [indiscernible] on defiance on the Supreme Court ruling. And I guess you don't see any possibility of the court taking action against them as like holding them in contempt of court and you seem to think that it's more like procedural, they want to know, they want more color around how the order, like the timing and how they should liquidate their excess shares?

As I mentioned when Mr. Miguel Escobedo asked me about that, is there are not clear information about if when. And how is it clear, in our bylaws it's saying, that it's under -- it's saying only that open market procedures to the sale, to divest the extra. It is around 3 million, 4 million shares. We're not considering this as a risk for the Company because they are waiting, they know perfectly that they have to sell this 34 million shares. And the last two, three times that was initiated by Grupo Mexico the process to divest, that was after June last year was not effect to the market. They divest in the range of more than 20 million shares without effect negatively to the market. So I think as they are taking time to be sure how will be the structure, the procedures and the time that they have to do the -- complete the divest, but however during the -- looking how is the volatility of the market, also they are trying to buy time.

Our next question comes from Renata Stuhlberger from Goldman Sachs.

I just have a couple of ones. My first one is just if you could give us a timeline and next steps for negotiations with the Jamaican authorities this year. And also my second question will be regarding the recovery value $4.5 million for the Santiago airport. Do you also have any details on how those -- how would this be recovered throughout 2016 and 2017, will be a onetime payment or divided into several tranches? That's it from me.

I will answer the first question. Truly we need to touch -- again to repeat the second question. The negotiation is really in Jamaica, as you know last week was the election was changed the political party that will be manage the country during the next four, five years. So at the end of 2015 was prepared a master plan for the airport in order to identify how will they need to do investment or to transform the airport to provide more quality and some of the questions that were raised by the government at this time. Now, the presentation was at the end of January to the authorities, but the authorities give some ideas, some questions and now [indiscernible] we have a different government. So during the next -- I have to wait some weeks to know exactly who will be the Minister of Transport and Tourism that will be more involved in the strategy for the airport because Montego Bay Airport is the main point of entrance for the tourism, it's critical, it's 80% of the tourists which are arriving from Montego Bay. So it's very important for the new government to know. The one thing that we will present then, the new government, the conclusion of the master plan we will agree with them how will be the main investment of the main works that we have to initiate and answer to agree with them the use of the airport improvement fee, the additional amount that is collected from passengers, $5 per passenger that is arriving to this airport and is -- that amount begin in April 2015 is only, to be only used to expand the airport. So the new master plan will be execute using these funds, but with a new government we have to agree with them exactly how is the priorities and how will be exactly if they are asking to do some kind of changes in this master plan. Renata, could you please formulate the second question?

My second question was related to the Santiago airport recovery value of $4.5 million to be recovered in 2016 and 2017, do you have any idea yet on how would this be paid, would it be a onetime tranche or divided into several ones?

I don't understand exactly what is this amount. This you are saying $4 million, $5 million to recover from what airport?

From Santiago Chile airport you mean?

You are talking Santiago de Chile concession?

Yes, that's what I'm talking about.

Okay, Saul is 100% in GAP in this Company.

So just since we made the acquisition of this year we knew that we had some asset in Santiago Chile. However, the concession to operate this airport conclude in last September. Therefore we're expecting to receive around $5 million. That was at the beginning. Nowadays we have to make some adjustment and we will be expecting to receive probably in this year around $2.5 million from -- as a remaining value from Santiago Chile and for 2017 we will receive probably around $2 million additionally to this payment. So at the end we will recover $4.5 million, but it will be total revenue for the Company. If it doesn't -- it won't be for the income statement. So it will be only for the cash flow.

During the due diligence for the acquisition of this year it was considered under a portion of the amount that was in the balance sheet of Santiago de Chile airport will be distributed to the shareholders one time that the concession will be ended. And I think that we will recover practically all this amount in two tranches because the Company have to wait until one year more after the closing of the concession to end all the responsibilities about that.

[Operator Instructions]. And at this time we're showing no further questions in the queue. I would like to turn the call back over to Mr. Fernando Bosque for closing remarks.

Once again we appreciate your attention today. Please contact us with any further questions or concerns you might have and have a good day.

Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.