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 newly opened international routes. In the case of Puerto Vallarta, growth during the fourth quarter was mainly driven by domestic traffic which grow 15% while the international market experienced an 8% increase.

Los Cabos Airport, this airport contribute the largest amount of additional passengers to the network during the fourth quarter. Let's not forget that during last quarter of 2014, Hurricane Odile impacted this destination, producing a decline in the number of clients that lasted for almost half a year.

Tijuana is where traffic figures look extremely positive. The airport has an overall growth of 27% during this quarter partly driven by the strong U.S. dollar which has transformed Tijuana in an economic and efficient way to travel to Southern California.

This is because of the cheaper fares going to Tijuana compared to the flying in into American airport. And finally in Montego Bay, this airport continue with solid growth numbers reaching 857,000 passengers transport during this quarter, a 2% growth compared to last year. The most important contributor to this growth were the low cost U.S.

carriers and the European charter companies as they take advantage of the numerous all-inclusive hotel inventory of the region. For the full-year results let me begin by saying that 2015 was one of the most momentum years in the Company's story. Internally there were numerous activities that mark this year as such externally.

However, three factor gave us great momentum to continue to make worth the strive towards reaching our goal for the year. These were first the impact of the fuel cost on the lines which prompts reduced great expertise and clearly fueled strong air demand through the Mexican airport.

The domestic airlines received a huge windfall from these which benefit GAP's network of airports by nearly doubling our guidance expectation in January 2015 going from the 5% in guidance growth to real 12% passenger growth in 2015. Two was the peso-dollar exchange rate which worked in our favor when it came to our U.S. dollar denominated revenue.

Approximately 25% of our total revenue are in U.S. dollar including Montego Bay as well as some of the commercial revenue which is negotiated in dollars. The exchange rate as shown raised the value of wage remittances by workers abroad which reached record level in Mexico in 2015 fueling overall consumption in the country.

And third was the over-saturation of the Mexico City International Airport, a situation that diverts passenger traffic to and from other airports. GAP is the largest airport operator in Mexico in terms of passenger traffic. Our growth levels have outperformed those from the Mexican economy.

This is mainly due to the strong momentum the aviation industry going through. Furthermore, 2015 was also a year in which we saw Mexico continues to grow as a tourism and business destination.

Traffic which I will discuss in detail in a bit, was strictly impacted in a positive way, as two reason to areas such as Los Cabos, Puerto Vallarta and La Paz continuing to expand. Business travel and consumer travel was also on the rise with all of the foreign investment we're seeing to central Mexico.

We're very encouraged by all this activity and are consistently looking at new ways to prepare for further growth and to maximize not only the passenger experience but our aeronautical and non-aeronautical profitability as well.

In April 2015 GAP made its first international investment with the acquisition 100% of the shares of the Spanish company Desarrollo De Concesiones Aeroportuarias for $181 million. As you know the share has 74.5% stake in MBJ Airport Limited which operates Montego Bay Airport in Jamaica.

We believe that this was a logical choice for integration into GAP given the experience and the exposure we have in the traditional sector. I personally used to manage this airport in the past, so I'm very familiar with this market.

And during 2015 the Montego Bay Airport had tended over 3.7 million passengers, up over 4% from 2014, confirming that this was the right location and the right timing for GAP to enter this market. So we were very satisfied with that transaction.

Just recently, in December 9th and after several years in the making we inaugurate the operation of the new cross-border bridge at Tijuana International Airport between the San Diego County in the United States and Tijuana, Mexico.

For those of you not familiar with it, the cross-border bridge is one of a kind structural that facilitate transfer between the U.S. and Mexico for travelers holding a boarding pass to all flights departing from or arriving Tijuana, thus reducing connection and waiting times.

Additionally, the bridge would take advantage Tijuana's level of air service because it's the second best connected airport in Mexico as it currently serves more than 30 destination. The bridge target 45% of Tijuana passengers that are currently border crossers.

There is a potential of 22 million people in Southern California that could benefit from the bridge. During the first 50 days of operation, nearly 130,000 passengers used the bridge, an average rate of passenger usage of 15% over total traffic passengers. It is important to mention that the number between passenger crossing from Mexico to the U.S.

and vice versa has been very balanced. In the middle term more than 1.4 million passengers from the U.S. are expected to use the bridge to travel to Mexico. We're very confident that it can attract long-distance flight operation primarily from the Asian market.

We expect to bring to our airport additional demand from Mexico, California and Asia and increase traffic by 1 million more passengers in the coming years. In addition to all of the activity during this quarter, new clients announces for the beginning of 2016 that are already in process.

Thus for the first quarter of 2016 we can expect to see new client in both the domestic and international markets. For example on the domestic side Volaris announced plan to fly from Monterrey to Guanajuato and from Toluca to Los Cabos. TAR will reconnect a GAP airport with Cuernavaca as it will reopen a new route to Valhalla.

In terms of the international market we're also expecting to benefit there from the following new services, Valhalla-Los Angeles by Interjet, Gothenburg-Montego Bay by Thomas Cook and Lulea, Sweden to Montego Bay by Thomson Airways. In terms of the individual development of airports I wish to highlight some of the developments.

Starting with Guadalajara, 2015 was a record year in terms of passenger traffic in the history of the airport. A total of 15 new routes were opened during the year. Today the airport also has the highest connectivity of history with a total of 21 domestic routes and 25 international routes served.

Moving onto Puerto Vallarta, this airport complete its full year of consecutive growth during 2015. Both the domestic and international markets grow at a double-digit pace through the year specifically on the domestic side where the airport benefited from the new regional service to Guanajuato, Durango and San Luis Potosi.

Likewise, the international market benefited from two new routes. In the Bajio area, Aguascalientes and Guanajuato experienced total growth of 17% and 22% respectively during this year, the highest amount of passengers transported at both airports.

The Guanajuato Airport had a highest growth among the top 20 airports in Mexico and the Aguascalientes airport completed seventh year of continued growth. As you probably know, there is very high industrial and manufacturing activity in this area fueled by investments from major global and domestic companies.

As such this has certainly an increase in demand for fly to business and leisure destination. As for Los Cabos, today there are 113,000 rooms in the destination with 43,000 rooms scheduled to open during 2016 and 2017.

The average occupancy rate rose by 8% during 2015 to reach 71% which makes us very bullish on Los Cabos and the continued growth of this airport. For Tijuana Airport 2015 was the best year in terms of passenger traffic, surpassing the previous record of 4.7 million passenger of 2007.

Most of the 2015 new seats were added during the second half of the year with many of the airlines preparing to be well-positioned before the cross-border bridge facility opening. Finally at our Montego Bay Airport there was significant growth levels in both passengers and load factor during 2015.

The airport had an overall load factor of 83% during 2015 mainly due to the efficiency of airlines operation and the constant growth of low-cost carrier. Now, in terms of the commercial highlights, car parking continued to be the most important commercial revenue driver of our Mexican airport.

As a consequence of the new pricing structure we put into place in Guadalajara, we were able to take advantage of rising passenger traffic and transform that into double-digit growth in terms of operation. As a result parking revenue grew significantly at this airport during the second half of 2015 after flat growth in previous quarter.

Encouraged by this performance we expect to launch new car park marketing campaigns and customize first in the Guanajuato airport as well during the end of the first quarter of 2016.

And at a very competitive search among some of the largest advertising companies operating in the Caribbean, GAP awarded the operation of Montego Bay advertising to a third-party operator. Advertising continued to be an in-house operation at our Mexican airport.

However, we're exploring other options such as the possibility to create synergies with global level media companies to increase our sales with international brands.

Aeromarket which you may know as our own brand for [indiscernible] and gift shops recorded its highest sales as ever, totally MXN81 million during as we reached 18 stores compared to the 13 stores in 2014. Half of this amount was generated by our major tourism airport, [indiscernible] and Los Cabos.

During 2016 we expect to initiate additional store operation in Los Mochis, Morelia, Mexicali. In terms of the VIP lounges, during 2015 we saw approximately 250,000 passengers with a total of seven VIP lounges. For 2016 we expect to open three additional lounges thereby making GAP's the largest VIP lounge network in Mexico.

It is important to mention with the Montego Bay consolidation our commercial revenue mix as well as our passenger traffic composition has changed.

Now our main commercial revenue comes from the duty free lines while the second is car parking, in other hand international passenger traffic rising from 35% to 42% which represent a good opportunity for us to increase the commercial revenue per passenger due to the profile of these passengers.

Moving on to the CapEx project, I would like to highlight that during 2015 at the Mexican airport we contracted and began project that's set to conclude during this year and 2017 such as the expansion of Terminal 2 in the Guadalajara airport as well as expansion of the terminal building and jetways in the Hermosillo airport.

In the Tijuana airport we will complete our renovation of the runway and next year aim to conclude a terminal ramp expansion. For this year in the Guadalajara Airport we also will include various upgrade. This include the repositionings of the external roadways as well as the expansion of the baggage checking system.

Furthermore, there will be upgrades in the cargo, runway and platforms. For 2017 most of the work will focus on the rehabilitation of roadways.

In the Tijuana Airport we will expanding and upgrading the terminal outside as well as renovating the entire site of airport with six boarding gates and in the remote area, enlarging and reopening the waiting and baggage claim areas.

Additionally there will be expansion to the commercial areas such as the remote platform area to include four new positions that will be used inside the new waiting areas that are part of the terminal that is being rebuilt. The rest of the airport would also experience more minor upgrades and improvement.

With all these projects we will finish in 2016 with a higher investment program in the history of the Company reaching nearly almost MXN2.2 billion. In terms of Montego Bay CapEx during the fourth quarter of 2015 GAP renegotiate the main project for 2016 and 2018 with the Jamaican authority.

In 2016 alone we will invest more than MXN250 million in the extension of building, the side pavement, taxiway overlay, airfield lighting upgrade and equipment replacement. Just recently a master development program conclude to identify the needs of works to adapt the facility to the expected growth.

The plans will be presented and adapted by the authorities. Thus the new government must approve it as well as the use of the funds from the airport improvement funds collected from the tickets. We finally have some resolution to give to you regarding the situation with Grupo Mexico which has been lingering for a few years now.

On February 18, 2016, GAP announced the press release that Supreme Court of Mexico City had confirmed the validity of the Company's bylaw [indiscernible] regarding the Grupo Mexico and Infraestructura y Transportes Mexico were in violation of the Company bylaws and ordered the sales of GAP Series B shares held in excess of 10% of the Company capital stock as stipulated in Article 12 and regulation requires.

Finally it instructed that this sale be conduct through a public offer. Therefore the Supreme Court resolution is un-appealable and the Company reaffirmed that will continue to diligently pursue the conclusion of this legal proceeding and additionally will follow the pending resolution related to this subject matter.

Thank you so much for your attention. And I will now turn the call over to Saul for the financial part of the presentation..

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 fourth quarter report a condensed version of this income statement representing that figures as if the acquisition has taken place beginning on January 1, 2015.

Going back to the consolidated operating cost for the quarter, this increased MXN371 million or 56% compared to fourth quarter 2014 mainly due to the consolidation of the Montego Bay Airport which had operating expenses of MXN260 million in the fourth quarter 2015.

While operating expenses in our Mexican airports increased MXN111 million or 17% compared to fourth quarter 2015 mainly due to the cost of services which increased MXN64 million in fourth quarter 2015.

As a result the EBITDA was MXN1.3 billion in fourth quarter 2015 which increased 45% compared to fourth quarter 2014 or MXN412 million mainly due to our consolidation of the Montego Bay contributing with MXN127 million in the adjustment in the recognition of gain from the determination of fair value of DCA and MBJ acquisition of MXN28 million.

It is a one-time other income, it is not a cash flow revenue. Our EBITDA margin excluding the effects of IFRIC 12 was 68% for this quarter. The financial income experienced a net gain of MXN44 million in fourth quarter 2015.

This amount is comprised mainly by the cancellation of MXN101 million in foreign exchange rate loss represents in third quarter 2015 prior to the conclusion of determination of fair value of DCA and MBJ acquisition.

The integration of this effect with the exchange loss of MXN60 million in fourth quarter 2015 result in an EBITDA change gain of MXN84 million. Moreover the Company had the following financial expenses.

The financial interest expense related to Montego Bay Airport debt which were MXN12 million; interest expense paid on loans for capital investments in Mexico of MXN27 million and interest expense for the loan for the acquisition of DCA for MXN7 million.

Financing interest totaled expenses of MXN56 million were partially offset by the increase in interest income of MXN60 million. Comprehensive income in fourth quarter 2015 increased by MXN339 million or 55% compared to fourth quarter 2014.

This was mainly due to the increase of MXN208 million in the Mexican airports; MXN28 million as a result of the adjustment in gain for the fair value determination of the acquisition of DCA and MBJ; MXN21 million contribute the Montego Bay Airport and MXN70 million in currency translation effect in other comprehensive income.

Income taxes increased MXN140 million in fourth quarter 2015 as compared to fourth quarter 2014. Tax expenses for the Montego Bay Airport were MXN22 million while the Mexican airports experienced a current tax increase of MXN66 million and a deferred tax expense of MXN51 million.

In other hand in terms of annual figures I would like to highlight that our aeronautical revenues increased by MXN1.5 billion or 28% mainly due to the increase in revenues from the Mexican airports in non-aeronautical revenues increased by MXN51 million or 28% as a result of the increase in business operated by third parties and business lines operated directly.

With all these increases in our revenues, the Company reached an increase in the EBITDA of 42%, representing an EBITDA margin of 72.2%. This margin includes the bargain price effects derived from the valuation of DCA and MBJ acquisition of MXN189 million. Without this effect the EBITDA margin will be 70%.

Just to conclude the financial part of the presentation I want to say that GAP continues to present a solid investment that has clear financial strengths versus its peers. This includes a solid capital structure and high cash flow generation, revenue as well as geographic diversification.

Evidenced by its as many businesses in regional coverage we have what we believe to be an optimum passenger traffic mix, mixing our segment of passengers in the tourist businesses and consumer segment and also have ongoing growth in commercial activities.

GAP consistently records double-digit growth in EBITDA, not just in 2015 but throughout our history with a strong fundamental growth with well-defined capital expenditures that aim to provide the operation while remaining profitable.

Before we proceed to the question-and-answer session we would like to invite you personally to GAP Day 2016 which will take place in New York City on March 7th. Please contact us or our Investor Relations agency for additional information. With that let's move on to the questions..

[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..