Grupo Aeroportuario del Pacifico Announces Results for the Second Quarter of 2021

GUADALAJARA, Mexico, July 29, 2021 (GLOBE NEWSWIRE) -- Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) reported its consolidated results for the second quarter ended June 30, 2021 (2Q21) (at the end of this report, tables are presented of passenger traffic and consolidated results for 2021 compared to 2019, in order to illustrate the recovery of our financial results and their trend). Figures are unaudited and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

COVID-19 Impact

During the first half of the year (1H21), passenger traffic increased 37.8% compared to 1H20 and decreased 23.4% as compared to 1H19, demonstrating a better-than-expected recovery, despite continuing restrictions on international travel. The United States Government expanded the requirement for negative COVID-19 testing for all air passengers entering the United States beginning January 26, 2021. Additionally, as of January 7, 2021, there were similar testing requirements for air passengers traveling to Canada, and subsequently, the Canadian Government suspended flights with Mexico and the Caribbean until July 5, 2021, directly affecting the recovery of passenger traffic levels at our Puerto Vallarta, Montego Bay and Kingston airports.

Company measures during 2Q21:

• The Company continued supporting airlines and commercial clients. For commercial contracts, the Company granted discounts on guaranteed minimum rent amounts in accordance with the percentage decrease in passenger traffic at each airport as compared to 2Q19, while maintaining our percentage of participation in revenues. With regards our support to the airlines, the Company continued its incentive program in accordance with the reactivation of routes and frequencies that were held prior to the pandemic.
  

• The control measures for our cost of services were maintained throughout some expense line items and primarily at our airports that have experienced a slower recovery. However, as a result of the increase in passenger traffic during 2Q21, we have freed certain restrictions particularly on personnel, maintenance, security, and cleaning services, among others.
  

Impact of COVID-19 on the Company’s Financial Position:

During 2Q21, results were significantly better as compared to 2Q20, with an increase in revenues in 2Q21 of 345.4% and an increase in cost of services of 8.5%, the Company generated positive EBITDA of Ps. 2,797.1 million.

In 2Q21, operating activities continued generating positive cash flow. The Company reported a financial position of cash and cash equivalents as of June 30, 2021, of Ps. 15,503.0 million (1.6% lower than the 2Q20 balance). During 2Q21, the Company issued long-term bond certificates (Certificados Bursátiles) for Ps. 4,500.0 million. The proceeds were used to pay off the Ps. 1,000.0 million debt contracted for working capital in 2Q20 with Scotiabank, the Ps. 1,500.0 million maturity payment for the “GAP16” certificate (which was paid on July 2, 2021), and the remainder will be used for committed investments at our Mexican airports. Additionally, cash flow from operating activities was used to pay off the Ps. 1,000.0 million debt contracted for working capital in May 2020 with BBVA. Additionally, a payment of Ps. 3.8230950615 per share outstanding was made as a capital reduction and Ps. 872.9 million in share repurchases were made during 2Q21.

In 2Q21, the Company performed an assessment of the portfolio risk of our airlines and commercial clients in terms of liquidity. As a result, during this quarter it was not necessary to recognize the reserve provision for expected credit losses due to growth and recovery of our main airlines and commercial clients.

During 2Q21, the Company continued evaluating the possible adverse impacts of the pandemic on its financial condition and operating results. The Company also reviewed key indicators and impairment tests of significant long-term assets, expected credit losses and recovery of assets due to deferred taxes. In this evaluation, the Company reviewed financial results for the short, medium, and long term, concluding that a significant deterioration of the Company’s assets is not expected. As such, the Company does not foresee a business interruption or closing operations at any of its airports. However, the Company cannot ensure that the negative effect of the pandemic will continue decreasing in the coming quarter, nor can it ensure that local and global economic conditions will improve. The Company can also not predict the availability of financing, or what general credit conditions will be.

The Company will continue to monitor the pandemic’s adverse effects on the results of operations, including the monitoring of key indicators, impairment tests, projections, budgets, fair values, future cash flow related to the recovery of significant financial and non-financial assets, as well as possible contingencies. The Company will continue informing the market in a timely manner regarding future material updates on airport operations and the measures adopted for preserving liquidity and ensuring business continuity.

Summary of Results 2Q21 vs. 2Q20 (and 2Q19 for purposes of illustrating the recovery trend):

• The sum of aeronautical and non-aeronautical services revenues increased by Ps. 3,051.2 million, or 345.4% (Ps. 399.7 million, or 11.3%, as compared to 2Q19). Total revenues increased by Ps. 3,410.7 million, or 229.7% (Ps. 1,238.3 million, or 33.9%, as compared to 2Q19).
  
  
• Cost of services increased by Ps. 52.1 million, or 8.1% (as compared to 2Q19, cost of services decreased Ps. 9.7 million, or 1.4%).
  
  
• Income from operations increased by Ps. 2,655.4 million, or 720.3% (Ps. 287.7 million, or 14.4%, as compared to 2Q19).
  
  
• EBITDA increased by Ps. 2,660.6 million, or 1,948.8% (Ps. 372.2 million, or 15.3%, as compared to 2Q19), going from Ps. 136.5 million in 2Q20 to Ps. 2,797.1 million in 2Q21. EBITDA margin (excluding the effects of IFRIC 12) increased from 15.6% in 2Q20 to 71.2% in 2Q21 (EBITDA margin (excluding the effects of IFRIC 12) was 68.8% in 2Q19).
  
  
• Net comprehensive income increased Ps. 2,247.0 million, or 237.5% (Ps. 228.7 million, or 18.8%, as compared to 2Q19), from a loss of Ps. 946.0 million in 2Q20 to an income of Ps. 1,300.9 million in 2Q21.
  

Passenger Traffic

During 2Q21, total passengers at the Company’s 14 airports increased by 9,373.9 thousand passengers, an increase of 562.6%, compared to 2Q20 (as compared to 2Q19, total passengers decreased by 1,169.3 thousand, or 9.6%).

During 2Q21, the following new routes were opened:

National:

^{Note: Frequencies can vary without prior notice.}

International:

^{Note: Frequencies can vary without prior notice.}

Consolidated Results for the Second Quarter of 2021 (in thousands of pesos):

<sup>- Net (loss) income and comprehensive (loss) income per share for 2Q21 were calculated based on 520,024,505 shares outstanding as of June 30, 2021, and for 2Q20 were calculated based on 525,525,547 shares outstanding as of June 30, 2020. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 19.9060 per U.S. dollar (the noon buying rate on June 30, 2021, as published by the U.S. Federal Reserve Board).
- For purposes of the consolidation of the Montego Bay and Kingston airports, the average three-month exchange rate of Ps. 20.0503 per U.S. dollar for the three months ended June 30, 2021, was used.</sup>

Revenues (2Q21 vs. 2Q20)

• Aeronautical services revenues increased by Ps. 2,471.7 million, or 447.9%.
• Non-aeronautical services revenues increased by Ps. 579.5 million, or 174.7%.
• Revenues from improvements to concession assets increased by Ps. 359.4 million, or 59.8%.
• Total revenues increased by Ps. 3,410.7 million, or 229.7%.

• The change in aeronautical services revenues was composed primarily of the following factors:
  
  
  
  1. Revenues at the Company’s Mexican airports increased by Ps. 2,201.1 million or 481.6% compared to 2Q20, mainly as a result of the 526.5% increase in passenger traffic. As international passenger traffic accelerates and business passenger traffic recovers, the Company expects to be closer to recovering pre-pandemic revenue levels.
     
     
  2. Revenues from the Montego Bay airport increased by Ps. 197.5 million, or 393.3%, compared to 2Q20. This was mainly due to the 3,832.9% increase in passenger traffic. The passenger traffic increase was partially offset by the 14.2% appreciation of the peso versus the U.S. dollar during 2Q21, which went from an average exchange rate of Ps. 23.3631 in 2Q20 to Ps. 20.0503 in 2Q21.
     
     
  3. Revenues from the Kingston airport increased by Ps. 73.0 million, or 163.5% compared to 2Q20, mainly due to a 751.5% increase in passenger traffic. The appreciation of the peso versus the dollar partially offset the increase in passenger traffic.
     
     
• The change in non-aeronautical services revenues was composed primarily of the following factors:
  
  
  
  1. Revenues from the Company’s Mexican airports increased by Ps. 511.2 million, or 204.5%, compared to 2Q20. Revenues from businesses operated by third parties increased by Ps. 368.3 million. This was mainly due to an increase in revenues from food and beverage, duty-free stores, car rentals, retail, and time shares, which jointly increased by Ps. 318.1 million, or 239.6%. Revenues from businesses operated directly by the Company increased by Ps. 128.1 million, or 176.6%, while the recovery of costs increased by Ps. 14.7 million, or 62.0%.
     
     
  2. Revenues from the Montego Bay airport increased by Ps. 57.8 million, or 99.6%, compared to 2Q20. Revenues in U.S. dollars increased by US$ 3.3 million, or 132.6%. However, the 14.2% appreciation of the peso versus the dollar partially offset the revenue increase in 2Q21.
     
     
  3. Revenues from the Kingston airport declined by Ps. 10.6 million, or 44.7%, compared to 2Q20. Revenues in U.S. dollars decreased by US$ 0.7 million, or 68.7%.

^{Figures expressed in thousands of Mexican pesos.}

• Revenues from improvements to concession assets¹
  Revenues from improvements to concession assets (IFRIC-12) increased by Ps. 359.4 million, or 59.8%, compared to 2Q20, mainly in:
  
  
  
  1. The Company’s Mexican airports, which increased by Ps. 401.3 million, or 74.6%, as a result of the increase in committed investments in the Master Development Program for the 2020-2024 period.
     
     
  2. Improvements to concession assets at the Montego Bay airport decreased Ps. 41.8 million, or 66.0%. During 2Q21, no investments in improvements to concession assets were made at the Kingston airport.

________________________
^{[1] 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. 755.3 million, or 40.7%, compared to 2Q20, mainly due to a Ps. 359.4 million, or 59.8%, increase in the cost of improvements to the concession assets (IFRIC-12), a Ps. 335.8 million, or 324.4%, increase in concession taxes and technical assistance fees, and a Ps. 52.1 million, or 8.1% increase in cost of services (excluding the cost of improvements to concession assets, operating costs increased Ps. 395.8 million, or 31.6%). Total operating costs increase was composed primarily of the following factors:

Mexican Airports:

• Operating costs increased by Ps. 726.2 million, or 50.2%, compared to 2Q20, primarily due to a Ps. 401.3 million, or 74.6%, increase in the cost of improvements to the concession assets (IFRIC-12) (excluding this cost, operating costs increased by Ps. 324.9 million or 35.8%), a Ps. 261.6 million, or 593.6%, increase in technical assistance fees and concession taxes, a Ps. 45.2 million, or 9.1%, increase in cost of services and a Ps. 20.3 million, or 5.6%, increase in depreciation and amortization.
  

The change in the cost of services during 2Q21 was mainly due to:

• Employee costs increased Ps. 53.2 million, or 28.5%, compared to 2Q20, mainly due to the recognition of labor provisions in accordance with the reform to the Labor Law in Mexico and the hiring of additional personnel as required for airport operations.
• Safety, security, and insurance costs increased Ps. 21.9 million, or 32.8%, compared to 2Q20, mainly due to an increase in the number of security staff as compared to 2Q20 when the partial closure of some operating areas reduced the need for personnel.
• Maintenance costs increased by Ps. 12.7 million, or 16.7%, compared to 2Q20.
• Other operating expenses decreased by Ps. 49.5 million or 44.0%, compared to 2Q20, mainly due to a Ps. 67.5 million decrease in the allowance for credit losses and the cost of sanitation supplies, purchase of supplies and donations to the medical sector for the prevention of COVID-19. This decrease was partially offset by a Ps. 18.0 million increase in the cost of sales in VIP lounges and convenience stores, FBO services and travel expenses.

Montego Bay Airport:

• Operating costs decreased by Ps. 25.7 million, or 8.3%, compared to 2Q20, mainly due to a Ps. 41.8 million, or 66.0%, decrease in cost of improvements to the concession assets (IFRIC-12), a Ps. 15.1 million, or 11.0%, decrease in depreciation and amortization and the 14.2% appreciation of the Mexican peso against the U.S. dollar. However, this decrease was partially offset by an increase in concession taxes of Ps. 25.5 million, or 161.1%. Operating costs in U.S. dollars declined by US$ 0.3 million.
  

Kingston Airport:

• Operating costs increased by Ps. 54.8 million, or 55.2%, compared to 2Q20, mainly due to a Ps. 48.7 million, or 111.6% increase in concession taxes, and a Ps. 6.2 million, or 11.7% increase in the cost of services. Operating costs in U.S. dollars increased by US$ 3.1 million.
  

Operating margin for 2Q21 went from a negative margin of 24.8% in 2Q20 to a positive margin of 46.7% in 2Q21. Excluding the effects of IFRIC-12, operating margin went from a negative margin of 41.7% to a positive margin of 58.1% in 2Q21. Operating income increased Ps. 2,655.4 million, or 720.3%, compared to 2Q20.

EBITDA margin went from 9.2% in 2Q20 to 57.1% in 2Q21. Excluding the effects of IFRIC-12, EBITDA margin went from 15.6% in 2Q20 to 71.2% in 2Q21. The nominal value of EBITDA was Ps. 2,797.1 million in 2Q21, compared to Ps. 136.5 million in 2Q20.

Financial cost increased by Ps. 95.1 million, from a net expense of Ps. 311.1 million in 2Q20 to a net expense of Ps. 406.2 million in 2Q21. This increase was mainly the result of:

• Foreign exchange rate fluctuations, which went from an expense of Ps. 49.3 million in 2Q20 to an expense of Ps. 102.1 million in 2Q21. This generated an increase in the foreign exchange loss of Ps. 52.7 million. The currency translation effect increased Ps. 80.7 million, compared to 2Q20.
  
  
• An increase in interest expenses of Ps. 53.6 million, or 15.0%, compared to 2Q20, mainly due to higher debt as a result of the issuance of long-term bonds and bank loans disbursed during 2020.
  
  
• Interest income increased by Ps. 11.3 million, or 11.7%, compared to 2Q20, mainly due to an increase in the average balance of cash and cash equivalents during 2Q21 as compared to 2Q20.
  

In 2Q21, comprehensive income increased by Ps. 2,247.0 million, or 237.5%, compared to 2Q20. This increase was mainly due to the Ps. 2,560.4 million increase in profit before taxes derived from the significant increase in passenger traffic, as well as the Ps. 311.2 million increase in the cash flow hedge reserve. This increase was partially offset by an increase in income taxes of Ps. 554.2 million.

During 2Q21, net income increased by Ps. 2,006.2 million, or 344.6%, compared to 2Q20. Income taxes increased by Ps. 633.7 million and were partially offset by a Ps.79.6 million increase in the benefit for deferred taxes, mainly due to a higher inflation rate, that went from deflation of 0.62% in 2Q20 to inflation of 1.01% in 2Q21.

Consolidated Results for the First Six Months of 2021 (in thousands of pesos):

<sup>- Net income and comprehensive income per share for 1H21 were calculated based on 520,024,505 shares outstanding and for 1H20 were calculated based on 525,525,547 shares outstanding. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 19.9060 per U.S. dollar (the noon buying rate on June 30, 2021, as published by the U.S. Federal Reserve Board).
- For purposes of the consolidation of the Montego Bay and Kingston airports, the average exchange rate of Ps. 19.8027 per U.S. dollar for the six months ended June 30, 2021, was used.</sup>

Revenues (1H21 vs. 1H20)

• Aeronautical services revenues increased by Ps. 1,420.7 million, or 38.7%.
• Non-aeronautical services revenues increased by Ps. 193.7 million, or 14.3%.
• Revenues from improvements to concession assets increased by Ps. 465.5 million, or 32.7%.
• Total revenues increased by Ps. 2,079.8 million, or 32.2%.

• The change in aeronautical services revenues was composed of the following factors:
  
  
  
  1. Revenues at the Company’s Mexican airports increased by Ps. 1,529.8 million or 51.3% compared to 1H20, mainly as a result of the 44.9% increase in passenger traffic and the increase in the maximum tariffs applicable for 2021 as a result of the Extraordinary Review Process of our Master Development Program.
     
     
  2. Revenues from the Montego Bay airport decreased by Ps. 123.6 million, or 24.4%, compared to 1H20. This was mainly due to the 16.4% decrease in passenger traffic and the 6.6% appreciation of the peso versus the U.S. dollar during 1H21, which went from an average exchange rate of Ps. 21.6091 in 1H20 to Ps. 20.1847 in 1H21.
     
     
  3. Revenues from the Kingston airport increased by Ps. 14.4 million, or 7.8% compared to 1H20, mainly due to an increase in tariffs beginning in April 2020 and partially offset by a 20.4% decrease in passenger traffic and the 6.6% appreciation of the peso versus the dollar.
     
     
• The change in non-aeronautical services revenues was composed primarily of the following factors:
  
  
  
  1. Revenues from the Company’s Mexican airports increased by Ps. 218.6 million, or 20.3%, compared to 1H20. Revenues from businesses operated by third parties increased by Ps. 193.3 million, or 27.9%. This was mainly due to an increase in revenues from duty-free stores, food and beverage, time shares, retail, car rentals and other commercial revenues, which jointly increased by Ps. 176.7 million, or 32.3%. Revenues from businesses operated directly by the Company increased by Ps. 27.6 million, or 9.0%. This increase was primarily due to a Ps. 67.1 million increase in revenue from parking and was partially offset by a Ps. 49.7 million decrease in combined revenues from publicity and VIP lounges. The recovery of costs decreased by Ps. 2.4 million, or 3.3%.
     
     
  2. Revenues from the Montego Bay airport decreased by Ps. 10.6 million, or 5.2%, compared to 1H20. Revenues in U.S. dollars increased by US$ 0.2 million, or 1.5%. However, the 6.6% appreciation of the peso versus the dollar offset the revenue increase.
     
     
  3. Revenues from the Kingston airport declined by Ps. 14.2 million, or 18.8%, compared to 1H20. Revenues in U.S. dollars decreased by US$ 0.5 million, or 13.1%. The 6.6% appreciation of the peso versus the dollar further contributed to the decrease.
     

^{Figures expressed in thousands of Mexican pesos.}

• Revenues from improvements to concession assets²
  Revenues from improvements to concession assets (IFRIC-12) increased by Ps. 465.5 million, or 32.7%, compared to 1H20, mainly in:
  
  
  
  1. The Company’s Mexican airports, which increased by Ps. 503.6 million, or 37.4%, as a result of the increase in committed investments in the Master Development Program for the 2020-2024 period.
     
     
  2. Improvements to concession assets at the Montego Bay airport decreased Ps. 38.1 million, or 48.0%. During 1H21, no investments in improvements to concession assets were made at the Kingston airport.

________________________
[1] 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. 511.9 million, or 11.4%, compared to 1H20, mainly due to a Ps. 465.5 million, or 32.7%, increase in the cost of improvements to the concession assets (IFRIC-12) and a Ps. 61.9 million, or 8.3%, increase in concession taxes and technical assistance fees. This increase was partially offset by a Ps. 31.8 million, or 2.3% decrease in cost of services (excluding the cost of improvements to concession assets, operating costs increased Ps. 46.5 million, or 1.5%). Operating costs was composed primarily of the following factors:

Mexican Airports:

• Operating costs increased by Ps. 715.4 million, or 20.7%, compared to 1H20, primarily due to a Ps. 503.6 million, or 37.4%, increase in the cost of improvements to the concession assets (IFRIC-12), a Ps. 170.2 million, or 33.1%, increase in technical assistance fees and concession taxes as a result of the increase in revenues, a Ps. 35.4 million, or 4.9%, increase in depreciation and amortization and a Ps. 13.0 million, or 1.3%, increase in the cost of services.
  

The cost of services during 1H21 was mainly comprised of the following:

• Employee costs increased Ps. 58.5 million, or 15.5%, compared to 1H20, mainly due to the recognition of labor provisions in accordance with the reform to the Labor Law in Mexico and the hiring of additional personnel as required for airport operations.
• Safety, security, and insurance costs increased Ps. 23.4 million, or 15.3%, compared to 1H20.
• Other operating expenses decreased by Ps. 69.5 million or 30.2%, compared to 1H20, mainly due to a Ps. 72.1 million, or 91.4%, decrease in the allowance for credit losses, professional fees, publicity, sanitation supplies, and the decrease in the purchase of supplies and donations to the medical sector for the prevention of COVID-19.
  

Montego Bay Airport:

• Operating costs decreased by Ps. 177.7 million, or 24.6% compared to 1H20, mainly due to a Ps. 108.9 million, or 60.8%, decrease in concession taxes, a Ps. 17.7 million, or 8.7%, decrease in the cost of services, a Ps. 38.1 million, or 48.0%, decrease in the cost of improvements to concession assets (IFRIC-12), and a Ps. 10.1 million, or 4.0%, decrease in depreciation and amortization. Operating costs in U.S. dollars declined by US$ 9.2 million.
  

Kingston Airport:

• Operating costs decreased by Ps. 25.7 million, or 8.5% compared to 1H20, mainly due to a Ps. 26.9 million, or 19.1%, decrease in the cost of services. Operating costs in U.S. dollars decreased by US$ 1.3 million.
  

Operating margin went from 30.6% in 1H20 to 41.5% in 1H21. Excluding the effects of IFRIC-12, operating margin went from 39.3% to 53.3% in 1H21. Operating income increased Ps. 1,567.9 million, or 79.5%, compared to 1H20. EBITDA margin increased 750 basis points from 45.9% in 1H20 to 53.4% in 1H21. Excluding the effects of IFRIC-12, EBITDA margin increased 970 basis points from 58.9% in 1H20 to 68.6% in 1H21. The nominal value of EBITDA was Ps. 4,554.3 million in 1H21 compared to Ps. 2,960.5 million in 1H20, an increase of 53.8%. Financial cost increased by Ps. 159.3 million, from a net expense of Ps. 326.2 million in 1H20 to a net expense of Ps. 485.5 million in 1H21. This increase was mainly the result of:

• Foreign exchange rate fluctuations went from an income of Ps. 187.1 million in 1H20 to an income of Ps. 117.5 million in 1H21. This generated a decrease in the foreign exchange gain of Ps. 69.6 million. Currency translation effect income also decreased by Ps. 1,436.4 million as compared to 1H20, due to the fact that the exchange rate for 1H20 closed at Ps. 22.9715 and for 1H21 it closed at Ps. 19.8027, an appreciation by the peso of 13.8%.
  
  
• An increase in interest expense of Ps. 92.3 million, or 13.1%, compared to 1H20, mainly due to higher debt as a result of the issuance of long-term bonds issued during 2021.
  
  
• Interest income increased by Ps. 2.6 million, or 1.4%, compared to 1H20, mainly due to an increase in the average balance of cash and cash equivalents during 1H21.
  

In 1H21, comprehensive income increased Ps. 399.0 million, or 18.0% compared to 1H20. This increase was mainly due to the Ps. 1,408.6 million increase in profit before taxes and the Ps. 588.1 million increase in the cash flow hedge reserve. This increase was partially offset by a Ps. 1,436.4 million decrease in currency translation effect.

During 1H21, net income increased Ps. 1,235.7 million, or 100.8% compared to 1H20. Income taxes increased by Ps. 172.9 million, or 41.0%, as a result of a Ps. 332.1 million increase in current income taxes and were partially offset by a Ps. 159.2 million increase in the benefit for deferred taxes, mainly due to a higher inflation rate, that went from 0.6% in 1H20 to 3.4% in 1H21.

Statement of Financial Position

Total assets as of June 30, 2021, increased by Ps. 1,435.0 million as compared to June 30, 2020, primarily due to the following items: (i) improvements to concession assets of Ps. 1,026.5 million; (ii) machinery, equipment and leasehold improvements and advances to suppliers of Ps. 729.7 million; (iii) trade accounts receivable of Ps. 494.4 million and (iv) other current assets of Ps. 394.3 million. This was partially offset by a Ps. 1,022.6 million decrease in the value of concession assets (due to the valuation of the Jamaica concessions in U.S. dollars and the appreciation of the peso), among others.

Total liabilities as of June 30, 2021, increased by Ps. 2,063.7 million compared to June 30, 2020. This increase was primarily due to the following items: (i) issuance of Ps. 4,500.0 million in long-term bonds and (ii) concession taxes of Ps. 190.8 million. This was partially offset by decreases of: (i) Ps. 2,000.0 million in bank loans, (ii) Ps. 590.2 million in derivative financial instruments and (iii) Ps. 227.1 million in deferred taxes, among others.

Recent Events

On July 2, 2021, the Ps. 1,500.0 million maturity payment was made on “GAP16” debt securities with the proceeds obtained from the issuance on May 7, 2021.

From March 1^st, 2021, and as of the date of this report, the Company has repurchased 8,721,192 shares at an average price of Ps. 217.00 per share, for a total of Ps. 1,892.4 million.

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 the 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 may involve criminal conduct or violations. The telephone number in Mexico, facilitated by a third party that is in charge of collecting these complaints, is 01 800 563 00 47. The web site is www.lineadedenuncia.com/gap. GAP’s Audit Committee will be notified of all complaints for immediate investigation.

Exhibit A: Operating results by airport (in thousands of pesos):

Exhibit A: Operating results by airport (in thousands of pesos): (continued)

^{(1) Others include the operating results of the Aguascalientes, La Paz, Los Mochis, Manzanillo, Mexicali, Morelia, and Kingston airports.}

Exhibit B: Consolidated statement of financial position as of June 30 (in thousands of pesos):

^{The non-controlling interest corresponds to the 25.5% stake held in the Montego Bay airport by Vantage Airport Group Limited (“Vantage”).}

Exhibit C: Consolidated statement of cash flows (in thousands of pesos):  

Exhibit D: Consolidated statements of profit or loss and other comprehensive income (in thousands of pesos):

^{The non-controlling interest corresponds to the 25.5% stake held in the Montego Bay airport by Vantage Airport Group Limited (“Vantage”).}

Exhibit E: Consolidated stockholders’ equity (in thousands of pesos):

^{For presentation purposes, the 25.5% stake in Desarrollo de Concesiones Aeroportuarias, S.L. (“DCA”) held by Vantage appears in the Stockholders’ Equity of the Company as a non-controlling interest.}

As a part of the adoption of IFRS, the effects of inflation on common stock recognized pursuant to 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 being prepared in accordance with IFRS, as issued by the IASB.

Exhibit F: Other operating data:

^{WLU = Workload units represent passenger traffic plus cargo units (1 cargo unit = 100 kilograms of cargo).}

Passenger Traffic and Consolidated Results for 2Q21 and 1H21 compared to the same periods of 2019:

The Company took control of the operation of the Kingston airport on October 10, 2019, consequently no figures are available for comparison purposes from January to June 2019.

Consolidated Results and Other Data for 2Q21 and 1H21 compared with 2019 (in thousands of pesos):