Aena Sme S.A Unsp/Adr

Without further ado, I will pass the floor to Mauricio Lucena, Chairman and Chief Executive Officer of AENA. Thank you.

Hello, everybody. This is Mauricio Lucena speaking. I will start with slide four. Before that, thank you. very much for following our presentation. If we move to slide four, this slide as you can see summarizes the evolution of the activity and the most relevant economic and financial trends. I will start within this slide passenger traffic. As you can see, AENA group passenger traffic increased to 117.3 million, which represents almost 82% of the traffic in the same period of 2019. And if we divide this figure into geographies, The Spanish network traffic was equivalent to 82%, exactly 82% of 2019. London Luton Airport was equivalent to almost 66%. And finally, AENA Brazil, the airports of the northeast of Brazil... showed an increase of the traffic that was equivalent to 98% of 2019. You know that last June we updated our 2022 traffic forecast for the Spanish network, which we consider will be something between 75% and 85% of the 2019 traffic. The mentioned review was based both on the one hand, the capacity that the airlines are scheduling and deploying in the summer season, which, as you know, ends at the end of October. And on the other hand, the review was based on the existing current, and I would say, roaring demand. You know that at present the demand of airline tickets is, let's say, very hot and nobody expected at the beginning of the year that at present we would have this level of demand, but this is one of the two reasons why we reviewed and increased our forecast for the current year. On the other hand, total consolidated revenue nearly doubled to more than 1.7 billion euros. Both the regulated and non-regulated businesses benefited from the strong traffic recovery, as is natural. And this traffic recovery in June was 89.2% of the traffic in June 2019. And I have only a preliminary intuition, but I would say that our impression, our current impression is that in July, in proportional terms, in relative terms, we will be in this, more or less in this figure. So in other words, probably the traffic recovery Now, if we consider not only June, July, but also May, probably we'll stabilize in the short term at least around 90%, which is, I repeat, a figure that at the beginning of 2019 we could not expect. Nobody in the sector was expecting. But, of course, it's very good news and promising. I would also like to stress that AENA has demonstrated that not only we still have the most competitive costs in the industry, regardless of some increases in our OPEX, which we will detail in the following slides. But we still, as I said, remain very clearly as the most competitive airport operator in terms of costs. But at the same time, we have incorporated, and I would like to underline this, a very strong resilience. This has been included in the way we subcontract. We have included lessons that we extracted from the very strong and very sad experience of the pandemic. But now we can see that in the Spanish airports, we are not facing individual problems. And the problems with the operations and with the airlines that we are facing are not a responsibility of AENA. So we are, let's say, affected by other airports' problems. But thank you. thanks to this resilience that we have incorporated in our contracts, we are very happy to be able to accommodate this very, very strong increase in the air traffic. On top of that, apart from this recovery of the traffic, which again is around... around 90% compared to 2019, the commercial activity is enjoying even a more positive trend. We have, everybody again has been surprised by the more than proportional recovery of the commercial activity. In the second quarter of 2022, the company recouped the total commercial revenue excluding revenues any accounting adjustment of the same period of 2019. I will come back to this. And this means that the total variable and fixed rents were 4.5% higher compared to 2019, which is really an impressive figure. All in all, our EBITDA for the period stood at noteworthy 631.3 million euros. This figure includes almost 47 million euros from the consolidation of Luton and almost 40 million euros from Brazil. So the consolidated EBITDA margin closed in June at 36.7%. The EBITDA of the first half of 2022 is impacted on the, let's say, not very welcome side of the OPEX. It's impacted by several factors, being, as you know, the most relevant, the increase in the cost of electricity, which compared... with 2021, no, excuse me, compared with 2019 represents an increase of 200%. In other words, three times the cost we incurred in the first half of 2019. This is, of course, an issue. I think it's a universal issue. But the good news, and again I would like to highlight this point you know that AENA's strategy in the mid term continues to be to maintain our commitment on developing renewable energy sources and you can be sure that we will achieve that we will become self-sufficient by 2026 which is not that far because we are now in the mid So, in 2026, we will be self-sufficient from the energy point of view, and you know that we will achieve this through the development of photovoltaic power plants in the Spanish network. Additional factors that have negatively affected the EBITDA of the first half of 2022 are the accounting adjustment of minus 172 million euros. due to the application of the seventh final provision, DF7, and this on the good side, and the partial reversal of the impairments in the group assets for a net amount of 27.4 million euros. In other words, if we exclude these two effects, meaning the DF7 and the reversal, the partial reversal of the impairments, the EBITDA for the period would amount to roughly 776 million euros, which is, I would say, a relevant figure. Consolidated net profit came to 163 point million euros and moving to the last graph of the slide in the bottom right hand corner. The operating cash flow ended with an increase above 1 billion euros... up to 786 million euros... compared to minus 220 million euros in 2021. The consolidated net debt EBITDA ratio closed at 5.2 times... This is, again, a relevant figure because we will, I can assure you that we will continue decreasing this ratio, but at the present time, both AENA SME and London Luton Airport are now, again, in full compliance with the financial ratios committed in our banking facilities, which is, I would say, of course, very good news. To end up my presentation, I would like to single out two very positive trends that I introduced a moment ago that we are seeing in the commercial activity. On the one hand, the underlying sales are now reaching levels above 2019. On the other hand, the new commercial contracts that we have awarded since November 2021, both in the food and beverage and specialty shops branches, are to deliver max in excess of 2019s already next year, in 2023. So this means that the expectations for our business are very good. Another example is that in specialty shops, concretely, we have completed 130 tenders that will render max in 2023 8% higher than they did in 2019. In food and beverage, we have completed 29 tenders that will deliver max again in 2023, higher, in this case, 10% higher than those in 2019. Thank you, and I will intervene again in the Q&A session. Thank you. Thank you.

I will skip slides 5, 6, 7, and 8, if that's okay. And I will try to focus on... particularly on the commercial revenue information and the operating costs element of the P&L that clearly are those that might be more complicated to understand. Rest assured that every quarter we are trying our best to provide more information in a very transparent way, hopefully helping you to navigate through the accounting vagaries. To start with, we have this slide number 9, which is the usual one, the one that was It is a sort of legacy from previous years. And this is the headline commercial revenue figure, excluding the real estate revenues. So the headline here is the revenues are flat in the first half of 2022. vis-a-vis first half of 2021, which makes no sense at all, as I'm sure you agree. And this is because there are accounting adjustments affecting this figure. So we move on to the next slide, slide number 10, which I'm sure you are familiar with it since we started to disclose this information in 2021. What we are doing here is to split the total revenue figure between what we can call the underlying proper business activity and the accounting adjustments. You will notice that the total revenues are higher than those in the previous slide. This is because... This is the whole picture. This is taking into account all the non-regulated activities, including the real estate business. So what you can see here is that the underlying, the proper business activity is growing by 159.5% year on year. And this makes more sense. The main driver for that is the fixed and variable rent element. Those revenues that we are generating annually every day that are supported by either the underlying sales they spend per passenger through the shops and the outlets run by others, as well as our own businesses, the businesses we run internally, such as car parks, rent-a-cars, well, sorry, rent-a-cars is not the case, VIP lounges, things like that. So both businesses are contemplated here. And then we have a marked revenue element that for some people reading the papers this morning, this element was surprisingly low. Well, actually, this is the DS7 in action. So, they are surprisingly low for two reasons. First of all, because the DS7 is... haircutting our ability to pass masks onto the tenants and secondly because the more the underlying businesses is doing the less the masks are required so this shouldn't be a surprise really this is just those masks that will be collected will be built and collected in the first weeks of 2023 Because they are properly supported by the DF7 provisions. Then we have the adjustment that you can see is 172 million euros. This adjustment means nothing in terms of what tells nothing about the business performance these days. Probably years ago, this would have been taken to P&L a long while ago. So, all in all, I believe this is providing a very good picture of the commercial performance. But then we move on to the slide number 11, which is giving us even more color. As the chairman said minutes before, What you can see here is that in the second quarter in particular, the fixed and variable rents invoiced and collected, let's say day by day or month by month, overall are 4.5% above the same figures in 2019. which is, in my view, very telling of how good the performance of the commercial activities these days is. There are a number of drivers for that. There is no one single reason for this, Clearly, as the chairman also indicated, we have the UK passengers now being considered, obviously, subject to duty-free sales. You have some of our own businesses making, let's say, performing really well because of particular circumstances, like they rent a car, or the activities, but there is also a propensity to spend these days that clearly is higher than before. We don't know whether this is part of a psychological or sociological behavior, but it is what it is. And just to wrap up, although we haven't included this information in the presentation pack because we didn't want to obviously confuse people with different elements. But if you add to this fixed and variable rent element, if you add the max for this period, in the second quarter of 2022, the total revenues, all included, are at level with the same figures for the 2019 second quarter as well. So in summary, with less number of passengers, we are doing better in terms of commercial revenues. Obviously, I will be more than happy to answer any question about it, but I think this is sufficiently granular information to help you understand the underlying trends. Then we can take a look at the operating expenses. This slide is simplistic. You have all the detail in the management report if you want to take a look at the breakdown of what we call here other line by line. And indeed, I'm happy to answer questions later on. But what you can see here is that in summary, We have the pressure of the electricity, the energy costs, which is clearly, I would say, a whopping impact. But the rest of the cost lines are more or less in line with the 2019 figures. And someone could say, this is bad news. Why on earth? This is similar to the 2019 operating cost bill. And I would say this is good news. This is simply that the business is deploying in full the capacity available, opening terminals and spaces, getting the resources ready, unlike others, and being able to accommodate the growth that we see is coming. And obviously... As the chairman also indicated, there is a level of uncertainty about the last quarter of the year and beyond. But subject to that, we are ready to accommodate what hopefully will be a very healthy growth over the coming months. So we can discuss that later. I'm sure operating costs is one of the key points of focus for everybody here. But let me say, this is good news. And no one can be misled if the 2019 figures are coming back, unless that individual never listened to me. And it was very clear. The margins of 2019 are not going to be back. That doesn't mean our margins will be back. Best in class. It will take some time to come back. But forget about the 62% that you may have in your mind from 2019 because the business is changing. And believe me, it's changing for everybody. That doesn't mean that we are not a very good and very positive and very promising business generating cash flows at levels that I would say are really, really attractive. I wouldn't go any further. Of course, I would be more than happy to answer any questions you might have. Thank you.