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Revenues (4Q23 vs. 4Q22)

• Aeronautical services revenues decreased by Ps. 223.3 million, or 4.7%.

• Non-aeronautical services revenues increased by Ps. 239.8 million, or 17.4%.

• Revenues from improvements to concession assets increased by Ps. 1,109.5 million, or 58.0%.

• Total revenues increased by Ps. 1,126.0 million, or 14.1%.
  
  

• The change in aeronautical services revenues was primarily due to the following factors:
  
  

  1. Revenues at our Mexican airports decreased by Ps. 207.0 million, or 5.1%, compared to 4Q22, mainly due to the 10.7% appreciation of the peso versus the U.S. dollar, compared to 4Q22, which went from an average exchange rate of Ps. 19.6969 in 4Q22 to Ps. 17.5814 in 4Q23, affecting the international tariffs, in addition to the discounts granted in the passenger fees during November and December of 2023.

  2. Revenues from Jamaican airports decreased by Ps. 16.3 million, or 4.7%, compared to 4Q22. This was mainly due to the 10.7% appreciation of the peso versus the U.S. dollar, compared to 4Q22, which represented a decrease in revenues in pesos. Revenues in U.S. dollars increased by USD$3.0 million or 9.2%. Passenger traffic increased by 6.0%.

• The change in non-aeronautical services revenues was primarily driven by the following factors:

  1. Revenues at our Mexican airports increased by Ps. 220.0 million, or 19.2%, compared to 4Q22. Revenues from businesses operated by third parties increased by Ps. 133.6 million, or 18.2%, mainly due to the opening of new commercial spaces, and the renegotiation of contract conditions that matured during 4Q23. The business lines that grew the most were food and beverage, retail, car rentals, other commercial revenues, and leasing of space, all of which increased by Ps. 139.7 million, or 27.4%, offset by a decrease in revenues from duty-free stores by Ps. 8.3 million, combined, given that these contracts are in U.S. dollars and the peso appreciated by 10.7%. Revenues from businesses operated directly by us increased by Ps. 86.5 million, or 27.5%.

  2. Revenues from the Jamaican airports increased by Ps. 19.8 million, or 12.5%, compared to 4Q22. The business line that grew the most was duty-free stores, leasing of space, financial services, and other commercial revenues, which increased by Ps. 16.3 million, or 15.3%. Revenues in U.S. dollars increased by US$ 3.3 million, or 28.7%, offset by an appreciation of the peso by 10.7% against the U.S. dollar compared to 4Q22.

• Revenues from improvements to concession assets ¹
  Revenues from improvements to concession assets (IFRIC-12) increased by Ps. 1,109.5 million, or 58.0%, compared to 4Q22. The change was composed of:

  1. Improvements to concession assets at the Company’s Mexican airports, which increased by Ps. 1,001.9 million, or 54.0%, due to increased investments under the Master Development Program for the 2020-2024 period.

  2. Improvements to concession assets at the Company’s Jamaican airports, which increased Ps. 107.6 million, or 180.8%.
     

Total operating costs increased by Ps. 1,325.4 million, or 30.5%, compared to 4Q22, mainly due to the increase from costs of improvements to concession assets (IFRIC-12) by Ps. 1,109.5 million, an increase of Ps. 99.2 million, or 19.8%, in concession taxes, Ps. 88.7 million, or 14.8%, increase in depreciation and amortization, and an increase in the cost of services of Ps. 49.6 million, or 4.3% (excluding the cost of improvements to concession assets (IFRIC-12), operating costs increased Ps. 215.9 million, or 8.9%).

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¹ Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12). However, this recognition does not have a cash impact or impact on the Company’s operating results. Amounts included as a result of the recognition of IFRIC 12 are related to construction of infrastructure in each quarter to which the Company has committed. This is in accordance with the Company’s Master Development Programs in Mexico and Capital Development Programs in Jamaica. All margins and ratios calculated using “Total Revenues” include revenues from improvements to concession assets (IFRIC 12), and, consequently, such margins and ratios may not be comparable to other ratios and margins, such as EBITDA margin, operating margin or other similar ratios that are calculated based on those results of the Company that do have a cash impact.

This increase in total operating costs was primarily due to the following factors:

Mexican airports:

• Operating costs increased by Ps. 1,137.7 million, or 30.8%, compared to 4Q22, primarily due to a Ps. 1,101.9 million, or 54.2%, increase in the cost of improvements to the concession assets (IFRIC-12), a Ps. 95.6 million, or 20.4%, increase in depreciation and amortization, and Ps. 66.8 million, or 7.2%, increase in the cost of services. This increase was offset by a combined Ps. 8.5 million, or 1.9%, decrease in technical assistance fees and concession taxes, (excluding the cost of improvements to the concession assets, operating costs increased by Ps. 135.7 million, or 7.4%).
  

The change in the cost of services during 4Q23 was mainly due to:

• Employee costs increased Ps. 75.8 million, or 23.6%, compared to 4Q22, mainly due to the hiring of 362 additional personnel during 2023, mainly for the operation of business lines operated directly by us, as well as the adjustments in salaries and changes in Labor Law.

• Cost of business operated directly by us increased by Ps. 20.5 million or 41.2%, compared to 4Q22, derived from increased operations and income in VIP lounges and convenience stores.

• Safety, security, and insurance costs increased Ps. 15.4 million, or 12.4%, compared to 4Q22, mainly due to an increase in the number of security staff, minimum wages and changes in Labor Law, and the opening of additional operational areas.

• These increases were offset by the decrease in maintenance cost by Ps. 48.5 million, or 19.4%.

Jamaican Airports:

• Operating costs increased by Ps. 187.7 million, or 28.3%, compared to 4Q22, mainly due to a Ps. 107.6 million, or 180.8% increase in the cost of improvements to concession assets (IFRIC-12), increase in concession taxes by Ps. 103.5 million, or 41.6%, offset by a decrease in the cost of services by Ps. 17.2 million, or 7.7%, and a decrease in the depreciation and amortization by Ps. 6.8 million, or 5.3%.
  

Operating income margin went from 45.6% in 4Q22 to 37.8% in 4Q23. Excluding the effects of IFRIC-12, the operating income margin went from 60.0% in 4Q22 to 56.6% in 4Q23. Income from operations decreased by Ps. 199.4 million, or 5.5%, compared to 4Q22.

EBITDA margin went from 53.1% in 4Q22 to 45.4% in 4Q23. Excluding the effects of IFRIC-12, EBITDA margin went from 69.8% in 4Q22 to 67.8% in 4Q23. The nominal value of EBITDA decreased by Ps. 110.7 million, or 2.6%, compared to 4Q22.

Financial result decreased by Ps. 99.7 million, or 13.3%, from a net expense of Ps. 750.1 million in 4Q22 to a net expense of Ps. 650.4 million in 4Q23. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from an expense of Ps. 260.6 million in 4Q22 to an expense of Ps. 154.5 million in 4Q23. This generated a foreign exchange gain of Ps. 106.1 million. This was mainly due to the appreciation of the peso. The currency translation effect income increased to Ps. 96.5 million, compared to 4Q22.
  

• Interest expenses increased by Ps. 50.3 million, or 6.7%, compared to 4Q22, mainly due to higher debt as a result of the issuance of long-term debt securities and the drawdown of credit lines.
  

• Interest income increased by Ps. 43.9 million, or 14.2%, compared to 4Q22, mainly due to an increase in the reference interest rates.
  

In 4Q23, comprehensive income increased by Ps. 296.6 million, or 17.9%, compared to 4Q22. Mainly due to the decrease in the income before taxes by Ps. 526.1 million, and the decrease in the financial result of Ps. 99.7 million, this was offset by the decrease in revenues in dollars due to the appreciation of the peso by 10.7%, the decrease in income from the currency translation effect in Ps. 96.5 million, among others.

During 4Q23, net income increased by Ps. 426.4 million, or 23.3%, compared to 4Q22. Taxes for the period decreased by Ps. 526.1 million, income taxes decreased by Ps. 390.1 million and the benefit for deferred taxes increased by Ps. 136.0 million, mainly due to an increase in the inflation rate, from 1.4% in 4Q22 to 1.7% in 4Q23 and the application of tax losses of Ps. 28.1 million.

- Net income and comprehensive income per share for 2023 and 2022 were calculated based on 505,277,464 shares outstanding as of December 31, 2023, and December 31, 2022, respectively. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 16.8998 per U.S. dollar (the noon buying rate on December 29, 2023, as published by the U.S. Federal Reserve Board).
- For purposes of the consolidation of the airports in Jamaica, the average twelve-month exchange rate of Ps. 17.7665 per U.S. dollar for the nine months ended December 31, 2023, was used.

Revenues (2023 vs. 2022)

• Aeronautical services revenues increased by Ps. 1,930.7 million, or 11.1%.

• Non-aeronautical services revenues increased by Ps. 968.2 million, or 18.6%.

• Revenues from improvements to concession assets increased by Ps. 2,944.9 million, or 60.8%.

• Total revenues increased by Ps. 5,843.8 million, or 21.3%.

• The change in aeronautical services revenues was composed primarily of the following factors:
  
  

  1. Revenues at our Mexican airports increased by Ps. 1,768.9 million, or 12.0%, compared to 2022, mainly due to the 11.3% increase in passenger traffic.

  2. Revenues from Jamaican airports increased by Ps. 161.8 million, or 6.8%, compared to 2022. This was mainly due to the 17.6% increase in passenger traffic but offset by the appreciation of the peso against the U.S. dollar compared to 2022 of 11.7%, which went from an average exchange rate of Ps. 20.1254 in 2022 to Ps. 17.7665 in 2023, which represented a decrease in revenues in pesos.
     

• The change in non-aeronautical services revenues was composed primarily of the following factors :
  
  

  1. Revenues at our Mexican airports increased by Ps. 860.8 million, or 20.1%, compared to 2022. Revenues from businesses operated directly by us increased by Ps. 419.4 million, or 32.3%. Revenues from businesses operated by third parties increased by Ps. 434.5 million, or 15.4%. This was mainly due to the recovery of passenger traffic, the opening of new commercial spaces, and the renegotiation of existing contracts that matured in 2023. The business lines that increased the most were food and beverage, retail, leasing of space, and car rentals, which jointly increased by Ps. 390.3 million, or 19.4%. Commercial revenues in U.S. dollars represent 24% of non-aeronautical revenues, therefore the appreciation of the peso during 2023 affected that revenue by approximately 3.2%. The recovery of costs increased by Ps. 6.9 million, or 4.1%.
     

  2. Revenues from the Jamaican airports increased by Ps. 107.4 million, or 11.8%, compared to 2022. The business lines that increased the most were duty-free stores, retail, food and beverage, advertising, parking lots, and leasing of space, which jointly increased by Ps. 103.4 million, or 14.2%. These revenues were offset by a decrease in ground transportation by Ps. 1.2 million. Revenues in U.S. dollars increased by US$12.1 million, or 26.8%.
     

• Revenues from improvements to concession assets²
  Revenues from improvements to concession assets (IFRIC-12) increased by Ps. 2,944.9 million, or 60.8%, compared to 2022. The change was composed primarily of:

  1. The Company’s Mexican airports, which increased by Ps. 2,822.7 million, or 59.8%, due to increased investments under the Master Development Program for the 2020-2024 period.

  2. Improvements to concession assets at the Company’s Jamaican airports, which increased Ps. 122.3 million, or 94.3%.
     

² Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12), but this recognition does not have a cash impact or an impact on the Company’s operating results. Amounts included as a result of the recognition of IFRIC 12 are related to construction of infrastructure in each quarter to which the Company has committed in accordance with the Company’s Master Development Programs in Mexico and Capital Development Program in Jamaica. All margins and ratios calculated using “Total Revenues” include revenues from improvements to concession assets (IFRIC 12), and, consequently, such margins and ratios may not be comparable to other ratios and margins, such as EBITDA margin, operating margin or other similar ratios that are calculated based on those results of the Company that do have a cash impact.

Total operating costs increased by Ps. 4,519.2 million, or 33.3%, compared to 2022, mainly due to a Ps. 2,244.9 million, or 60.8% increase in the cost of improvements to the concession assets (IFRIC-12), a combined Ps. 732.4 million, or 32.6%, increase in concession taxes and technical assistance fees, a Ps. 599.0 million, or 15.8%, increase in cost of services, and a Ps. 232.4 million, or 10.0%, increase in depreciation and amortization (excluding the cost of improvements to concession assets, operating costs increased Ps. 1,574.3 million, or 18.1%).

This increase in total operating costs was composed primarily of the following factors:

Mexican Airports:

• Operating costs increased by Ps. 3,897.1 million, or 34.9%, compared to 2022, primarily due to a Ps. 2,822.7 million, or 59.8%, increase in the cost of improvements to the concession assets (IFRIC-12), a Ps. 637.1 million, or 21.3%, increase in cost of services, a combined Ps. 240.6 million, or 13.3%, increase in depreciation and amortization, a Ps. 202.3 million, or 12.2%, increase in technical assistance fees and concession taxes (excluding the cost of improvements to the concession assets, operating costs increased by Ps. 1,074.4 million or 16.7%).
  

The change in the cost of services during 2023 was mainly due to:

• Employee costs increased Ps. 355.6 million, or 30.6%, compared to 2022, mainly due to the hiring of additional personnel as well as the adjustments in salaries and changes in Labor Law.

• Safety, security, and insurance costs increased Ps. 101.4 million, or 23.9%, compared to 2022, mainly due to an increase in the number of security staff, an increase in minimum wages, changes in Labor Law, and the opening of additional operational areas.

• The cost of business operated directly by us increased by Ps. 83.7 million or 51.7%, compared to 2022, derived from increased operations and income in VIP lounges and convenience stores.

• Utilities increased by Ps. 46.1 million, or 16.1%, compared to 2022.

Jamaican Airports:

• Operating costs increased by Ps. 622.1 million, or 25.9%, compared to 2022, mainly due to a Ps. 530.0 million, or 53.6%, increase in concession taxes, a Ps. 122.2 million or 94.3%, increase in cost of improvements to concession assets (IFRIC-12), offset by the decrease in cost of services by Ps. 38.1 million, or 4.8%, and the depreciation and amortization by Ps. 8.2 million, or 1.6%, mainly due to the appreciation of the peso by 10.7%, which represented a decrease in the cost of pesos.
  

Operating margin went from 50.5% in 2022 to 45.6% in 2023. Excluding the effects of IFRIC-12, the operating margin went from 61.3% in 2022 to 59.5% in 2023. Operating income increased by Ps. 1,324.5 million, or 9.6%, compared to 2022.

EBITDA margin went from 58.9% in 2022 to 53.2% in 2023. Excluding the effects of IFRIC-12, EBITDA margin went from 71.6% in 2022 to 69.5% in 2023. The nominal value of EBITDA increased Ps. 1,556.9 million, or 9.7%, compared to 2022.

Financial cost increased by Ps. 838.5 million, or 54.5%, from a net expense of Ps. 1,538.5 million in 2022 to a net expense of Ps. 2,377.0 million in 2023. This change was mainly the result of:

• Foreign exchange rate fluctuation, which went from an income of Ps. 81.4 million in 2022 to a loss of Ps. 340.7 million in 2023. This generated an increase in the foreign exchange loss of Ps. 422.1 million, due to the peso appreciation. The currency translation effect expense increased Ps. 405.4 million, compared to 2022.
  

• Interest expenses increased by Ps. 994.6 million, or 40.5%, compared to 2022, mainly due to the increase in debt due to the issuance of bond certificates and the contracting of bank loans in 2023, as well as the substantial increase in interest rates.
  

• Interest income increased by Ps. 567.0 million, or 67.9%, compared to 2022, mainly due to an increase in the reference interest rates.
  

In 2023, comprehensive income decreased by Ps. 96.9 million, or 1.1%, compared to 2022. Income before taxes increased by Ps. 486.0 million, mainly due to the increase in traffic and the commercial strategy. However, net and comprehensive income decreased mainly due to the decrease of the effect of foreign currency translation in Ps. 405.4 million, and a decrease in cash flow hedges for Ps. 170.9 million.

During 2023, net income increased by Ps. 504.1 million, or 5.5%, compared to 2022. Taxes for the period decreased by Ps. 18.1 million, due to a decrease of income taxes by Ps. 233.0 million, and the benefit for deferred taxes decreased by Ps. 214.8 million, mainly due to the inflation rate, from 7.8% in 2022 to 4.7% in 2023.

Statement of Financial Position

Total assets as of December 31, 2023, increased by Ps. 6,939.5 million compared to December 31, 2022, primarily due to the following items: (i) a Ps. 8,736.8 million increase in net improvements to concession assets, (ii) a Ps. 630.9 million increase in other current assets, (iii) a Ps. 527.6 million increase in deferred income taxes. This increase was partially offset by a decrease of (i) Ps. 2,316.3 million in cash and cash equivalents (ii) a Ps. 889.7 million decrease in airport concessions, and (iii) a Ps. 117.1 million decrease in account receivables, among others.

Total liabilities as of December 31, 2023, increased by Ps. 5,822.9 million compared to December 31, 2022. This increase was primarily due to the following items: (i) issuance of Ps. 4,798.0 million (net) in long-term debt securities, and (ii) Ps. 1,424.4 million in bank loans. This increase was partially offset by a decrease of (i) Ps. 153.6 million in deferred taxes and (ii) Ps. 102.5 million in accounts payable, among others.

Recent events

• During the Board of Directors meeting held on February 26, 2024, it was approved to include in the agenda of the Extraordinary General Shareholders' Meeting, to be held in April 2024, a capital reduction of Ps. 13.86 per outstanding share. In case of approval by the Shareholders’ Meeting, the payment of the capital reduction must be made within 12 months after said approval.
  
  

• As part of our business plan, our Company is always on the lookout for new investment opportunities. Currently, we are participating in the bidding process for the Howard Hamilton International Airport located in Providenciales, Turks & Caicos Island. Out of the 13 companies that participated in the bidding process, only 5 obtained prequalification, and we are one of them. Therefore, we have been selected to begin the bidding process at the end of March 2024. The concession term for the selected bidder will be 30 years.
  
  In 2022, the airport served 1.4 million passengers, out of which 90% were international and 10% were domestic passengers. The airport generated an EBITDA of USD$50.0 million during the year. The total CAPEX investment is approximately USD$300.0 million, which is primarily for the expansion and renovation of the terminal building, runway expansion, and construction of taxiways.

Company Description

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) operates 12 airports throughout Mexico’s Pacific region, including the major cities of Guadalajara and Tijuana, the four tourist destinations of Puerto Vallarta, Los Cabos, La Paz and Manzanillo, and six other mid-sized cities: Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis. In February 2006, GAP’s shares were listed on the New York Stock Exchange under the ticker symbol “PAC” and on the Mexican Stock Exchange under the ticker symbol “GAP”. In April 2015, GAP acquired 100% of Desarrollo de Concesiones Aeroportuarias, S.L., which owns a majority stake in MBJ Airports Limited, a company operating Sangster International Airport in Montego Bay, Jamaica. In October 2018, GAP entered into a concession agreement for the operation of Norman Manley International Airport in Kingston, Jamaica, and took control of the operation in October 2019.

In accordance with Section 806 of the Sarbanes-Oxley Act of 2002 and Article 42 of the “Ley del Mercado de Valores”, GAP has implemented a “whistleblower” program, which allows complainants to anonymously and confidentially report suspected activities that involve criminal conduct or violations. The telephone number in Mexico, facilitated by a third party responsible for collecting these complaints, is 800 04 ETICA (38422) or WhatsApp +52 55 6538 5504. The website is www.lineadedenunciagap.com or by email at denuncia@lineadedenunciagap.com. GAP’s Audit Committee will be notified of all complaints for immediate investigation.

As a part of the adoption of IFRS, the effects of inflation on common stock recognized under Mexican Financial Reporting Standards (MFRS) through December 31, 2007, were reclassified as retained earnings because accumulated inflation recognized under MFRS is not considered hyperinflationary according to IFRS. For Mexican legal and tax purposes, Grupo Aeroportuario del Pacífico, S.A.B. de C.V., as an individual entity, will continue preparing separate financial information under MFRS. Therefore, for any transaction between the Company and its shareholders related to stockholders’ equity, the Company must take into consideration the accounting balances prepared under MFRS as an individual entity and determine the tax impact under tax laws applicable in Mexico, which requires the use of MFRS. For purposes of reporting to stock exchanges, the consolidated financial statements will continue to be prepared in accordance with IFRS, as issued by the IASB.