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Section 1: 6-K (FORM 6-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20546

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November, 2018

 

Commission File Number: 333-221916

 

 

 

Corporación América Airports S.A.

(Name of Registrant)

 

4, rue de la Grêve
L-1643, Luxembourg
Tel: +35226258274
Fax: +35226259776

(Address of Principal Executive Office)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

  

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR
THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 AND 2017

 

This report of foreign private issuer on Form 6-K (this “Form 6-K”) is being filed by Corporación América Airports S.A. (“CAAP” or the “Company”) with the Securities and Exchange Commission (the “SEC”). The Company is filing this report on Form 6-K for the purpose of filing a copy of the Company’s unaudited condensed consolidated interim financial statements for the nine-month period ended September 30, 2018 and 2017 (the “Consolidated Financial Statements”) as Exhibit 99.1. The Consolidated Financial Statements are presented in U.S. Dollars and prepared in accordance with IAS 34, “Interim Financial Reporting”. These Consolidated Financial Statements, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRS”) of the International Accounting Standard Board (“IASB”) and the interpretations of the International Financial Reporting Interpretation Committee (“IFRIC”).

 

 

 

 

Exhibit Index

 

Exhibit No. Description
99.1 CAAP Unaudited Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 27, 2018

 

  Corporación America Airports S.A.  
     
  By: /s/ Andres Zenarruza  
  Name: Andres Zenarruza  
  Title: Legal Manager  
     
  By:  /s/ Raúl Guillermo Francos  
  Name: Raúl Guillermo Francos  
  Title: Chief Financial Officer  

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

  

Corporación América Airports S.A.

 

CONDENSED CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

 

For the nine-month period ended September 30, 2018 and 2017

 

R.C.S. Luxembourg B 174.140

 

4, rue de la Grêve

L-1643, Luxembourg

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME

 

      For the three-month period
ended September 30,
   For the nine-month period
ended September 30,
 
      2018   2017   2018   2017 
   Notes  Unaudited   Unaudited   Unaudited   Unaudited 
Continuing operations                       
Revenue  4   347,961    421,112    947,238    1,158,534 
Cost of services  5   (227,762)   (272,108)   (630,067)   (749,819)
Gross profit      120,199    149,004    317,171    408,715 
Selling, general and administrative expenses  6   (36,718)   (49,174)   (108,078)   (140,074)
Other operating income  7   4,369    4,844    10,547    14,263 
Other operating expense      (827)   (634)   (1,739)   (3,477)
Operating income      87,023    104,040    217,901    279,427 
Share of income / (loss) in associates      596    (5,493)   676    (5,821)
Income before financial results and income tax      87,619    98,547    218,577    273,606 
Financial income  8   15,778    8,804    57,158    53,054 
Financial loss  8   (114,236)   (66,277)   (310,766)   (214,260)
Inflation adjustment  8   (10,000)   -    (21,446)   - 
(Loss) / income before income tax expense      (20,839)   41,074    (56,477)   112,400 
Income tax expense  9   (800)   (19,337)   5,658    (39,833)
(Loss) / income for the period      (21,639)   21,737    (50,819)   72,567 
Attributable to:                       
Owners of the parent      (15,177)   19,021    (26,699)   67,090 
Non-controlling interest      (6,462)   2,716    (24,120)   5,477 
       (21,639)   21,737    (50,819)   72,567 
                        
Earnings per share attributable to the owners of the parent                       
Weighted average number of ordinary shares (thousands)      160,022    148,118    158,452    148,118 
                        
Basic and diluted earnings per share      (0.09)   0.13    (0.17)   0.45 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2017.

 

 - 1 - 

 

   

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 

   For the three-month period
ended September 30,
   For the nine-month period
ended September 30,
 
   2018   2017   2018   2017 
   Unaudited   Unaudited   Unaudited   Unaudited 
(Loss) / income for the period   (21,639)   21,737    (50,819)   72,567 
                     
Items that will not be reclassified subsequently to profit or loss:                    
Remeasurement of defined benefit obligation   128    -    336    303 
                     
Items that may be subsequently reclassified to profit or loss:                    
Share of other comprehensive (loss) / income from associates   (569)   120    (781)   214 
Currency translation adjustment   (123,286)   (7,664)   (334,867)   (2,717)
Other comprehensive loss for the period, net of income tax   (123,727)   (7,544)   (335,312)   (2,200)
Total comprehensive (loss) / income for the period   (145,366)   14,193    (386,131)   70,367 
Attributable to:                    
Owners of the parent   (93,519)   11,212    (239,818)   56,567 
Non-controlling interest   (51,847)   2,981    (146,313)   13,800 
    (145,366)   14,193    (386,131)   70,367 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2017.

 

 - 2 - 

 

  

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

CONDENSED cONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

 

   Notes 

At September 30, 2018

Unaudited

   At December 31, 2017
Audited
 
            
ASSETS             
Non-current assets             
  Intangible assets, net  10   2,682,203    2,818,354 
  Property, plant and equipment, net      73,262    74,483 
  Investments in associates      17,976    13,435 
  Other financial assets at amortized cost      2,300    2,500 
  Deferred tax assets      134,902    135,327 
  Other receivables      112,411    173,393 
  Trade receivables      3,555    4,244 
       3,026,609    3,221,736 
Current assets             
  Inventories      9,974    8,564 
  Other financial assets at fair value through profit or loss      25,512    16,214 
  Other financial assets at amortized cost      32,708    23,582 
  Other receivables      65,622    183,062 
  Current tax assets      17,402    4,621 
  Trade receivables      116,084    121,834 
  Cash and cash equivalents  11   267,854    221,601 
       535,156    579,478 
Total assets      3,561,765    3,801,214 
              
EQUITY  14          
  Share capital      160,022    1,500,000 
  Share premium      180,486    - 
  Free distributable reserve      385,055    385,055 
  Non-distributable reserve      1,351,883    - 
  Currency translation adjustment      (430,628)   (217,300)
  Legal reserves      176    2 
  Other reserves      (1,324,856)   (1,344,008)
  Retained earnings      320,246    138,034 
Total attributable to owners of the parent      642,384    461,783 
  Non-controlling interests      404,109    335,359 
Total equity      1,046,493    797,142 
              
LIABILITIES             
Non-current liabilities             
  Borrowings  12   1,045,786    1,113,655 
  Deferred tax liabilities      220,914    148,301 
  Other liabilities  13   825,964    1,006,792 
  Non-current tax liabilities      32    - 
  Trade payables      1,989    3,302 
       2,094,685    2,272,050 
Current liabilities             
  Borrowings  12   106,779    372,790 
  Other liabilities  13   210,931    209,486 
  Current tax liabilities      12,930    21,934 
  Trade payables      89,947    127,812 
       420,587    732,022 
Total liabilities      2,515,272    3,004,072 
Total equity and liabilities      3,561,765    3,801,214 

  

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2017. 

 

 - 3 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY 

 

           Attributable to owners of the parent         
   Share
Capital
   Share
premium
   Free
Distributable
Reserves
   Non-
Distributable
Reserves
   Legal
Reserves
   Currency
Translation
Adjustment
   Other
Reserves
   Retained
Earnings  (1)
   Total   Non-
controlling
interests
   Total 
Balance at December 31, 2017   1,500,000    -    385,055    -    2    (217,300)   (1,344,008)   138,034    461,783    335,359    797,142 
Adjustment on adoption of IFRS 9 (net of tax) (Note 2.2 (a))   -    -    -    -    -    -    -    2,356    2,356    542    2,898 
Adjustment on initial application of IAS 29 (Note 2.1)   -    -    -    -    -    -    -    206,729    206,729    187,299    394,028 
Adjusted balance at January 1, 2018   1,500,000    -    385,055    -    2    (217,300)   (1,344,008)   347,119    670,868    523,200    1,194,068 
Shareholders contributions (Note 14)   -    -    -    -    -    -    -    -    -    43,703    43,703 
Loss for the period   -    -    -    -    -    -    -    (26,699)   (26,699)   (24,120)   (50,819)
Transfer to legal reserve   -    -    -    -    174    -    -    (174)   -    -    - 
Reverse stock split (Note 14)   (1,351,883)   -    -    1,351,883    -    -    -    -    -    -    - 
Initial Public Offering (Note 14)   11,905    180,486    -    -    -    -    -    -    192,391    -    192,391 
Other comprehensive (loss) / income for the period   -    -    -    -    -    (213,328)   209    -    (213,119)   (122,193)   (335,312)
Changes of non-controlling interests (Note 14)   -    -    -    -    -    -    18,943    -    18,943    (16,481)   2,462 
Balance at September 30, 2018   160,022    180,486    385,055    1,351,883    176    (430,628)   (1,324,856)   320,246    642,384    404,109    1,046,493 
                                                        
Balance at January 1, 2017   20    -    1,907,328    -    2    (188,721)   (1,344,022)   74,543    449,150    354,174    803,324 
Shareholders contributions (Note 14)   -    -    6,100    -    -    -    -    -    6,100    -    6,100 
Refund of cash contributions (Note 14)   -    -    (16,130)   -    -    -    -    -    (16,130)   -    (16,130)
Income for the period   -    -    -    -    -    -    -    67,090    67,090    5,477    72,567 
Other comprehensive (loss) / income for the period   -    -    -    -    -    (10,678)   155    -    (10,523)   8,323    (2,200)
Conversion   1,499,980    -    (1,499,980)   -    -    -    -    -    -    -    - 
Changes of non-controlling interests (Note 14)   -    -    -    -    -    -    -    -    -    (24,247)   (24,247)
Balance at September 30, 2017   1,500,000    -    397,318    -    2    (199,399)   (1,343,867)   141,633    495,687    343,727    839,414 

 

(1) Retained Earnings calculated according to Luxembourg Law are disclosed in Note 15.

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2017.

 

 - 4 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

      For the nine-month period ended
September 30,
 
   Notes 

2018

Unaudited

  

2017

Unaudited

 
Cash flows from operating activities             
(Loss) / Income for the period      (50,819)   72,567 
Adjustments for:             
Amortization and depreciation      118,700    105,727 
Deferred income tax  9   (32,733)   (27,508)
Income tax accrued  9   27,075    67,341 
Share of income or loss in associates      (676)   5,821 
Loss on disposals of property, plant and equipment      311    2,217 
Unpaid concession fees      37,446    39,598 
Changes in liability for Brazil concessions      69,042    66,308 
Interest expense      68,704    92,060 
Other financial results, net      (14,998)   (30,658)
Net foreign exchange      124,600    31,518 
Other accruals      3,195    5,932 
Inflation adjustment      19,629    - 
Acquisition of Intangible assets      (123,175)   (176,815)
Income tax paid      (33,931)   (90,598)
Changes in working capital  17   (88,737)   (97,997)
Net cash provided by operating activities      123,633    65,513 
              
Cash flows from investing activities             
Cash contribution in associates      (2,981)   - 
Acquisition of other financial assets      (41,150)   - 
Disposals of other financial assets      25,773    15,000 
Purchase of property, plant and equipment      (7,245)   (6,657)
Acquisition of Intangible assets      (250)   (82)
Loans with related parties      136    (17,338)
Proceeds from fixed assets disposals      49    - 
"Piana di Castello" land advance  15   (3,583)   - 
Other      (465)   (7)
Net cash used in investing activities      (29,716)   (9,084)
              

Cash flows from financing activities

             
Proceeds from cash contributions  14   43,703    6,100 
Refund of cash contributions  14   -    (16,130)
Additional acquisitions in subsidiaries  14   (40,731)   - 
Disposal of subsidiaries  14   56,638    - 
Proceeds from borrowings      194,575    401,994 
Initial Public Offering  14   195,601    - 
Initial Public Offering expenses paid      (5,495)   - 
Release of guarantee deposits      92,913    - 
Release of restricted cash      -    30,873 
Loans paid  12   (483,845)   (230,980)
Interest paid  12   (44,648)   (79,823)
Dividends paid      (14,794)   (20,944)
Net cash (used in) / provided by financing activities      (6,083)   91,090 
              
Increase in cash and cash equivalents      87,834    147,519 
              

Movements in cash and cash equivalents

             
At the beginning of the period      221,601    182,116 
Exchange rate loss and inflation adjustment on cash and cash equivalents      (41,581)   (7,823)
Increase in cash and cash equivalents      87,834    147,519 
At the end of the period  11   267,854    321,812 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2017.

                     

 

 - 5 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

1 General information and company conversion
2 Basis of presentation and accounting policies
3 Segment information
4 Revenue
5 Cost of services
6 Selling, general and administrative expenses
7 Other operating income
8 Financial results, net
9 Income tax expense
10 Intangible assets, net
11 Cash and cash equivalents
12 Borrowings
13 Other liabilities
14 Equity
15 Contingencies, commitments and restrictions on the distribution of profits
16 Related party balances and transactions
17 Cash flow disclosures
18 Fair value measurement of financial instruments
19

Subsequent events

  

 - 6 - 

 

  

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

1        General information and company conversion

 

General Information

 

Corporación América Airports S.A. (the “Company” or “CAAP”) is a holding company primarily engaged through its operating subsidiaries in the acquisition, development and operation of airport concessions. The Company and its operating subsidiaries are collectively referred to hereinafter as the “Group”.

 

The Company was formed as a private limited liability company under the laws of the Grand Duchy of Luxembourg on December 14, 2012. The Company is ultimately controlled by Southern Cone Foundation (“SCF”), a foundation, organized under the laws of the Principality of Liechtenstein. The address of its registered office is in Vaduz.

 

The Group currently has operations in Argentina, Brazil, Uruguay, Armenia, Italy, Ecuador and Perú.

 

A list of the principal Group’s subsidiaries is included in Note 2 of the Consolidated Financial Statements as of December 31, 2017.

 

Company conversion

 

The Company was converted on September 14, 2017, from a Luxembourg Limited Liability Company named A.C.I. Airports International S.à r.l. (“ACI”) into a Luxembourg Corporation and changed its name to Corporación América Airports S.A. (the “Conversion”). In conjunction with the Conversion, all of the Company’s outstanding equity interests were converted into one billion five hundred million (1,500,000,000) shares of common stock which were held by ACI Airports S.à r.l. (controlling shareholder). In connection with the Conversion, Corporación América Airports S.A. has continued to hold all assets of ACI and has assumed all of its liabilities and obligations.

 

The main adjustment of the Conversion principally gave effect to the recognition of the share capital of Corporación América Airports S.A. for a total nominal value of USD 1,500 million (USD 1 per share) and the elimination of the shares of A.C.I. Airports International S.à. r.l. for a total amount of USD 20 thousands and of the Free distributable reserves for a total amount of USD 1,499.9 million.

 

A detailed explanation of movements of share capital that have occurred in 2018, including reverse stock and Initial Public Offering, are included in Note 14.

 

These condensed consolidated interim financial statements have been approved for issuance by the Company on November 23, 2018.

 

2         Basis of presentation and accounting policies

 

The principal accounting policies applied in the preparation of these Condensed Consolidated Interim Financial Statements are consistent with the Consolidated Financial Statements ended at December 31, 2017. These policies have been consistently applied to all the years presented, unless otherwise stated.

 

2.1 Basis of presentation

 

These Condensed Consolidated Interim Financial Statements have been prepared in accordance with IAS 34, “Interim Financial Reporting”. The accounting policies used in the preparation of these Condensed Consolidated Interim Financial Statements are consistent with those used in the audited Consolidated Financial Statements for the year ended December 31, 2017, except for changes explained in Note 2.2 and for the application of IAS 29 “Financial Reporting in Hyperinflationary Economies” for the subsidiaries and associates with Argentinian pesos as functional currency together with related translation procedures included in IAS 21 for those entities. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2017, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) of the International Accounting Standards Board (IASB) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

 

 - 7 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

2        Basis of presentation and accounting policies (Cont.)

 

2.1 Basis of presentation (Cont.)

 

Elimination of all material intercompany transactions and balances between the Company and the other companies and their respective subsidiaries have been made.

 

The preparation of Condensed Consolidated Interim Financial Statements in conformity with IFRS requires management to make certain accounting estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the reporting dates, and the reported amounts of revenues and expenses during the reporting years. Actual results may differ from these estimates.

 

In the preparation of these Condensed Consolidated Interim Financial Statements, the significant areas of judgment by management in the application of the Group’s accounting policies and the main areas of assumptions and estimates are consistently as those applied in the Consolidated Financial Statements for the year ended December 31, 2017.

 

Assets and liabilities are classified as current if settlement is expected within 12 months.

 

Argentine hyperinflationary economy

 

IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of entities whose functional currency is that of a hyperinflationary economy to be adjusted for the effects of changes in a suitable general price index and to be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. Accordingly, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be computed in the non-monetary items.

 

In order to conclude on whether an economy is categorized as hyperinflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of a cumulative inflation rate in three years that approximates or exceeds 100%. Considering that the inflation in Argentina has exceed the 100% three-year cumulative inflation rate in July 2018, and that the rest of the indicators do not contradict the conclusion that Argentina should be considered a hyperinflationary economy for accounting purposes, the Group understands that there is sufficient evidence to conclude that Argentina is a hyperinflationary economy under the terms of IAS 29 as from July 1, 2018, and, accordingly, it has applied IAS 29 as from that date in the financial reporting of its subsidiaries and associates with the Argentine peso as functional currency.

 

The inflation adjustment was calculated by means of conversion factor derived from the Argentine price indexes published by the National Institute of Statistics (“INDEC”).

 

The referred indexes are largely based on the Internal Wholesale Price Index (“Índice de Precios Internos al por Mayor” – IPIM) for periods up to December 31, 2016 and the Consumer Price Index (“Índice de Precios al Consumo” - IPC) thereafter.

 

The conversion factor derived from the indexes for the three-month period ended September 30, 2018, was 1.14 while for the nine-month period was 1.32.

 

 - 8 - 

 

  

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

2        Basis of presentation and accounting policies (Cont.)

 

2.1 Basis of presentation

 

A summary of the methodology used to prepare the financial reporting of the Argentinian subsidiaries and associates adjusted for the effects of hyperinflation is described below:

 

Non-monetary items 

The restated cost of non-monetary items (basically intangible assets) is determined by applying to its historical cost the change in a general price index from the date of acquisition to the end of the reporting period. 

 

Monetary items

Monetary items (such as cash and cash equivalents, trade receivables and payables) do not need to be restated because they are already expressed in terms of the monetary unit current at the end of the reporting period.

 

Gain or loss on net monetary position

In a period of inflation, if the Company has an excess of monetary assets over monetary liabilities loses purchasing power while if it has an excess of monetary liabilities over monetary assets gains purchasing power to the extent the assets and liabilities are not linked to a price level. This gain or loss on the net monetary position may be derived as the difference resulting from the restatement of non-monetary assets, owners’ equity and items in the statement of comprehensive income and the adjustment of index linked assets and liabilities.

The gain or loss on the net monetary position is included in Inflation adjustment in profit or loss.

Exchange rate gains and losses derived from the net monetary position are presented in real (inflation-adjusted) terms.

 

Equity

The components of owners’ equity are adjusted by applying a general price index from the dates the components were contributed to the end of the reporting period. 

 

Statement of comprehensive income

All items in the statement of comprehensive income are expressed in terms of the measuring unit current at the end of the reporting period. Therefore all amounts need to be restated by applying the change in the general price index from the dates when the items of income and expenses were initially recorded in the financial statements.

 

All figures, according to IAS 21, have been translated at closing rates after the restatement for changes in the above-mentioned indexes.

 

This translation changes every prior reported quarterly statement of income in U.S. dollars as each quarterly amount is readjusted under IAS 29 for inflation per above and reconverted at different exchange rates for each quarterly reported period under IAS 21. As a result the impact of quarterly inflationary adjustments and quarterly translation adjustments vary the results of operation quarter to quarter until year end.

 

Comparative amounts are the figures presented as current year amounts in the relevant prior year financial statements, according to IAS 21, considering that were translated into the currency of a non- hyperinflationary economy. Therefore, the adjustment of the restated amounts of net assets as of prior period to reflect the cumulative inflation is included as an initial balance adjustment within retained earnings.

Regarding all movements for the period for non-monetary items is the same methodology including an initial balance adjustment to reflect the inflation and conversion as of prior period and then the inflation adjustment and the translation of the current period is included in Other comprehensive (loss) / income for the period line.

 

There were no changes in valuation techniques during the period, except for changes explained above and in Note 2.2, and there were no changes in risk management policies since the end of the year ended December 31, 2017.

 

 - 9 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

2        Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices

 

The group has applied the following standards and amendments for the first time for their quarter reporting period commencing January 1, 2018:

 

IFRS 9, “Financial Instruments”

 

The group has adopted IFRS 9 as issued in July 2014, which resulted in changes in accounting policies and adjustments to the amounts recognized in the Consolidated Financial Statements for the year ended 31 December 2017.

 

This standard replaces the previously issued versions and establishes new requirements for hedge accounting and a new model of impairment for financial assets, effective from January 1, 2018.

 

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses, as is the case under IAS 39.

 

The accounting policies were changed to comply with IFRS 9 as issued by the IASB in July 2014.

 

IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities; derecognition of financial instruments; impairment of financial assets and hedge accounting. IFRS 9 also significantly amends other standards dealing with financial instruments such as IFRS 7 Financial Instruments: Disclosures.

As permitted by the transitional provisions of IFRS 9, the Group has elected not to restate comparative figures.

 

(a) Impact of adopting IFRS 9

 

The total impact on the Group’s retained earnings due to measurement of financial instruments as of January 1, 2018 is as follows:

 

   Retained Earnings   Non- controlling
interests
 
Opening balance - IAS 39   138,034    335,359 
Decrease in provision for trade receivables   3,142    723 
Decrease in deferred tax assets relating to impairment provisions   (786)   (181)
Adjustment to retained earnings from adoption of IFRS 9   2,356    542 
Opening balance – IFRS 9   140,390    335,901 

 

(b) Classification and measurement of financial instruments

 

On January 1, 2018, the Group’s management has assessed which business models apply to the financial assets held by the group at the date of initial application of IFRS 9 (January 1, 2018) and has classified its financial instruments into the appropriate IFRS 9 categories.

 

 - 10 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

2        Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

Reclassifications of financial instruments on adoption of IFRS 9

 

On the date of initial application, January 1, 2018, the financial instruments of the group were as follows, with any reclassifications noted:

 

   Measurement category  Carrying amount     
   Original (IAS 39)  New (IFRS 9)  Original   New   Difference 
Assets as per the statement of financial position                     
Other financial assets  AC*  AC*   26,082    26,082    - 
Other financial assets  FVPL**  FVPL**   16,214    16,214    - 
Other receivables  AC*  AC*   293,578    293,578    - 
Trade receivables  AC*  AC*   126,078    129,943    3,865 
Cash and cash equivalents  AC*  AC*   221,601    221,601    - 
Liabilities as per the statement of financial position                     
Borrowings  AC*  AC*   1,486,445    1,486,445    - 
Trade payables and other liabilities  AC*  AC*   1,198,562    1,198,562    - 

 

*AC = financial instruments measured at amortized cost
**FVPL = financial instruments measured at fair value through profit or loss

 

(c) IFRS 9 Financial Instruments – Accounting policies applied from January 1, 2018

 

From January 1, 2018, the Company classifies its financial assets in the following measurement categories:

 

(i)Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method.

 

(ii)Fair value through other comprehensive income (“FVOCI”): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss.

 

(iii)Fair value through profit or loss (“FVPL”): Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in profit or loss and presented net within other gains/(losses) in the period in which it arises.

 

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.

 

 - 11 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

2        Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

IFRS 15, “Revenue from contracts with customers”

 

IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.

 

Revenue is recognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The Company´s management has determined that the adoption of this standard did not have a significant impact on the Company´s financial condition or results of operations.

 

Effective January 1, 2018, the Group adopted this standard using the modified retrospective adoption approach. There was no impact on the condensed consolidated interim financial statements and no cumulative effect adjustment was recognized.

 

There were no other changes on accounting policies and accounting methods. The standards that are mandatory effective on or after January 1, 2018 were applied by the group.

 

New and amended standards not yet adopted for CAAP.

 

Certain new accounting standards and interpretations have been published that are not mandatory for September 30, 2018 reporting periods and have not been early adopted by the group. The group’s assessment of the impact of these new standards and interpretations is set out below.

 

IFRS 16, “Leases”

 

In January 2016, the IASB issued IFRS 16, "Leases", which will result in almost all leases being recognized on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. IFRS 16 must be applied on annual periods beginning on or after January 1, 2019. The Company's management is currently assessing the potential impact that the application of this standard may have on the Company's financial condition or results of operations.

 

Other standards and interpretations non-significant for the Company’s financial statements:

- Amendment to IFRS 2 - Classification and Measurement of Share-based Payment Transactions -Annual Improvements to IFRS 2014-2016 cycle.

- IFRIC 22 - Foreign Currency Transactions and Advance Consideration.

- IFRIC 23 - Uncertainty over Income Tax Treatments.

 

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

 

 - 12 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

3        Segment information

 

Operating segments are components of an enterprise where separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Group’s chief operating decision maker is its Board of Directors. The Group’s operating segments are managed separately because each operating segment represents a strategic business unit providing airport and non-airport services (“others”) to clients in different countries. The Group’s reportable operating segments are the seven countries in which the Group currently operates, which are Argentina, Brazil, Uruguay, Armenia, Ecuador, Italy and Peru.

 

Within each reportable segment, the Group develops and operates airport concessions (“Airports”) and provides other services not directly related to airport concessions (“Others”).

 

Assets, liabilities and results of sub-holding and/or holding companies are not allocated and are reported within the “Unallocated” column. This column also includes head office and group services.

 

The elimination of any intersegment revenues and other significant intercompany operations are included in the “Intersegment Adjustments” column.

 

The information regarding the Company’s reportable operating segments is consistent with the information presented in Notes 2.U and 4 included in our audited Consolidated Financial Statements for the year ended December 31, 2017 and should be read in conjunction with them.

 

The performance of each reportable segment is measured by its adjusted EBITDA, defined, with respect to each segment, as net income before financial income, financial loss, income tax expense, depreciation and amortization for such segment. The Adjusted EBITDA for the Brazil segment does not exclude the amortization of the intangible asset related to the fee payable to the Brazilian government for the operation of the Brazilian airport concessions.

 

Effective April 1, 2018, the CODM revised the current segment reporting to also include another metric of performance. In addition, the CODM considers each reportable segment’s Adjusted EBITDA before Construction Services margin as a relevant performance measure. Prior periods information have been revised to conform to the current period presentation.

 

Adjusted EBITDA excluding Construction Services is defined, with respect to each segment, as net income before construction services revenue, financial income, construction services cost, financial loss, income tax expense, depreciation and amortization for such segment. The Adjusted EBITDA excluding construction services revenue and construction services cost for the Brazil segment does not exclude the amortization of the intangible asset related to the fee payable to the Brazilian government for the operation of the Brazilian airport concessions. 

 

 - 13 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

3        Segment information (Cont.)

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Perú         

For the three-month period ended

September 30, 2018 (Unaudited)

  Airports   Others   Airports   Others   Airports   Others   Airports   Airports   Airports   Airports   Intrasegment
Adjustments
   Unallocated   Total 
Revenue   182,578    57    29,718    -    24,990    4,161    37,558    23,746    46,688    -    (3,084)   1,549    347,961 
Cost of services   (121,012)   (3)   (24,665)   -    (12,978)   (3,116)   (20,647)   (13,765)   (30,322)   -    2,360    (3,614)   (227,762)
Gross profit   61,566    54    5,053    -    12,012    1,045    16,911    9,981    16,366    -    (724)   (2,065)   120,199 
Selling, general and administrative expenses   (16,523)   (59)   (3,017)   (14)   (2,806)   (238)   (3,633)   (4,678)   (3,453)   -    726    (3,023)   (36,718)
Other operating income   3,530    -    755    -    16    8    44    16    -    -    -    -    4,369 
Other operating expenses   (550)   -    (63)   -    (110)   -    (98)   (6)   -    -    -    -    (827)
Operating income   48,023    (5)   2,728    (14)   9,112    815    13,224    5,313    12,913    -    2    (5,088)   87,023 
Share of income/ (loss) in associates   -    -    -    -    -    -    -    -    -    537    -    59    596 
Amortization and depreciation   16,570    -    3,548    -    3,227    230    3,007    1,112    2,911    -    -    4,285    34,890 
Adjusted Ebitda   64,593    (5)   6,276    (14)   12,339    1,045    16,231    6,425    15,824    537    2    (744)   122,509 
Construction services revenue   (38,811)   -    -    -    (122)   -    (2,261)   -    (4,409)   -    -    -    (45,603)
Construction services cost   38,782    -    -    -    119    -    2,195    -    4,096    -    -    -    45,192 
Adjusted Ebitda excluding Construction Services   64,564    (5)   6,276    (14)   12,336    1,045    16,165    6,425    15,511    537    2    (744)   122,098 
Construction services revenue   38,811    -    -    -    122    -    2,261    -    4,409    -    -    -    45,603 
Construction services cost   (38,782)   -    -    -    (119)   -    (2,195)   -    (4,096)   -    -    -    (45,192)
Adjusted Ebitda   64,593    (5)   6,276    (14)   12,339    1,045    16,231    6,425    15,824    537    2    (744)   122,509 
Financial income                                                               15,778 
Financial loss                                                               (114,236)
Inflation adjustment                                                               (10,000)
Amortization and depreciation                                                               (34,890)
Loss before income tax expense                                                               (20,839)
Income tax expense                                                               (800)
Loss for the period                                                               (21,639)
For the three-month period ended September 30, 2017 (Unaudited)                                                                 
Revenue   262,189    104    33,511    -    24,268    3,947    28,484    22,520    48,640    -    (4,048)   1,497    421,112 
Cost of services   (173,277)   (32)   (30,270)   -    (12,315)   (2,861)   (13,750)   (13,323)   (26,692)   -    4,048    (3,636)   (272,108)
Gross profit   88,912    72    3,241    -    11,953    1,086    14,734    9,197    21,948    -    -    (2,139)   149,004 
Selling, general and administrative expenses   (23,244)   (54)   (4,151)   -    (2,965)   (335)   (2,632)   (3,989)   (9,388)   -    -    (2,416)   (49,174)
Other operating income   4,750    -    -    -    14    -    55    1    -    -    -    24    4,844 
Other operating expenses   67    -    (16)   -    (47)   (349)   (117)   (7)   -    -    -    (165)   (634)
Operating income   70,485    18    (926)   -    8,955    402    12,040    5,202    12,560    -    -    (4,696)   104,040 
Share of income/ (loss) in associates   -    -    -    -    -    -    -    -    (15)   (5,517)   -    39    (5,493)
Amortization and depreciation   8,059    -    4,500    -    3,013    143    2,939    1,846    2,478    -    -    4,373    27,351 
Adjusted Ebitda   78,544    18    3,574    -    11,968    545    14,979    7,048    15,023    (5,517)   -    (284)   125,898 
Construction services revenue   (69,481)   -    -    -    (565)   -    (28)   -    (2,636)   -    -    -    (72,710)
Construction services cost   69,437    -    -    -    549    -    27    -    2,346    -    -    -    72,359 
Adjusted Ebitda excluding Construction Services   78,500    18    3,574    -    11,952    545    14,978    7,048    14,733    (5,517)   -    (284)   125,547 
Construction services revenue   69,481    -    -    -    565    -    28    -    2,636    -    -    -    72,710 
Construction services cost   (69,437)   -    -    -    (549)   -    (27)   -    (2,346)   -    -    -    (72,359)
Adjusted Ebitda   78,544    18    3,574    -    11,968    545    14,979    7,048    15,023    (5,517)   -    (284)   125,898 
Financial income                                                               8,804 
Financial loss                                                               (66,277)
Amortization and depreciation                                                               (27,351)
Income before income tax expense                                                               41,074 
Income tax expense                                                               (19,337)
Income for the period                                                               21,737 

  

 - 14 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

3        Segment information (Cont.)

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Perú         
For the nine-month period ended
September 30, 2018 (Unaudited)
  Airports   Others   Airports   Other   Airports   Others   Airports   Airports   Airports   Airports   Intrasegment
Adjustments
   Unallocated   Total 
Revenue   490,219    154    92,086    -    81,486    13,085    87,320    67,328    120,396    -    (9,290)   4,454    947,238 
Cost of services   (322,395)   (11)   (80,212)   -    (39,856)   (9,827)   (49,391)   (38,831)   (85,850)   -    7,245    (10,939)   (630,067)
Gross profit   167,824    143    11,874    -    41,630    3,258    37,929    28,497    34,546    -    (2,045)   (6,485)   317,171 
Selling, general and administrative expenses   (43,646)   (155)   (11,363)   (14)   (9,726)   (939)   (9,144)   (13,215)   (10,265)   -    2,048    (11,659)   (108,078)
Other operating income   9,537    -    762    -    78    49    89    32    -    -    -    -    10,547 
Other operating expenses   (842)   -    (273)   -    (189)   (30)   (384)   (21)   -    -    -    -    (1,739)
Operating income   132,873    (12)   1,000    (14)   31,793    2,338    28,490    15,293    24,281    -    3    (18,144)   217,901 
Share of income/ (loss) in associates   -    -    -    -    -    -    -    -    43    (75)   -    708    676 
Amortization and depreciation   40,622    -    12,058    -    9,837    615    8,963    4,836    8,797    -    -    12,947    98,675 
Adjusted Ebitda   173,495    (12)   13,058    (14)   41,630    2,953    37,453    20,129    33,121    (75)   3    (4,489)   317,252 
Construction services revenue   (102,137)   -    -    -    (463)   -    (4,485)   -    (11,121)   -    -    -    (118,206)
Construction services cost   102,035    -    -    -    450    -    4,354    -    10,012    -    -    -    116,851 
Adjusted Ebitda excluding Construction Services   173,393    (12)   13,058    (14)   41,617    2,953    37,322    20,129    32,012    (75)   3    (4,489)   315,897 
Construction services revenue   102,137    -    -    -    463    -    4,485    -    11,121    -    -    -    118,206 
Construction services cost   (102,035)   -    -    -    (450)   -    (4,354)   -    (10,012)   -    -    -    (116,851)
Adjusted Ebitda   173,495    (12)   13,058    (14)   41,630    2,953    37,453    20,129    33,121    (75)   3    (4,489)   317,252 
Financial income                                                               57,158 
Financial loss                                                               (310,766)
Inflation adjustment                                                               (21,446)
Amortization and depreciation                                                               (98,675)
Loss before income tax expense                                                               (56,477)
Income tax expense                                                               5,658 
Loss for the period                                                               (50,819)
                                                                  
September 30, 2018 (Unaudited)                                                                 
Current assets   180,174    180    41,118    123    33,827    4,727    54,327    33,093    70,584    -    (99,212)   216,215    535,156 
Non-current assets   803,870    19    1,181,915    -    151,339    5,452    168,684    49,153    235,701    14,486    (1,637)   417, 627    3,026,609 
Capital Expenditure   101,708    -    5,809    -    1,303    1,168    5,760    2,048    13,393    -    -    64    131,253 
Current liabilities   104,146    21    107,650    -    24,987    3,899    24,008    37,665    104,703    -    (99,044)   112,552    420,587 
Non-current liabilities   464,010    -    1,065,050    -    58,644    2,637    84,872    3,254    66,108    -    (1,805)   351,915    2,094,685 

 

 - 15 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

3        Segment information (Cont.) 

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Perú         
For the nine-month period ended
September 30, 2017 (Unaudited)
  Airports   Others   Airports   Airports   Others   Airports   Airports   Airports   Airports   Intrasegment 
Adjustments
   Unallocated   Total 
Revenue   729,707    319    96,096    76,918    11,618    67,024    64,468    116,635         (8,234)   3,983    1,158,534 
Cost of services   (464,991)   (100)   (88,913)   (36,519)   (8,882)   (35,408)   (38,146)   (74,352)        8,234    (10,742)   (749,819)
Gross profit   264,716    219    7,183    40,399    2,736    31,616    26,322    42,283    -    -    (6,759)   408,715 
Selling, general and administrative expenses   (69,224)   (163)   (10,240)   (8,702)   (957)   (8,188)   (11,933)   (23,706)   -    -    (6,961)   (140,074)
Other operating income   14,008    -    -    58    -    83    4    -    -    -    110    14,263 
Other operating expenses   (179)   (4)   (2,217)   (120)   (332)   (412)   (19)   -    -    -    (194)   (3,477)
Operating income   209,321    52    (5,274)   31,635    1,447    23,099    14,374    18,577    -    -    (13,804)   279,427 
Share of income/ (loss) in associates   -    -    -    -    -    -    -    39    (5,907)   -    47    (5,821)
Amortization and depreciation   24,356    -    13,097    9,313    446    8,594    5,523    7,165    -    -    12,641    81,135 
Adjusted Ebitda   233,677    52    7,823    40,948    1,893    31,693    19,897    25,781    (5,907)   -    (1,116)   354,741 
Construction services revenue   (161,575)   -    -    (1,773)   -    (108)   -    (8,891)   -    -    -    (172,347)
Construction services cost   161,434    -     -    1,722     -    105     -    8,004     -     -    -    171,265 
Adjusted Ebitda excluding Construction Services   233,536    52    7,823    40,897    1,893    31,690    19,897    24,894    (5,907)   -    (1,116)   353,659 
Construction services revenue   161,575    -    -    1,773    -    108    -    8,891    -    -    -    172,347 
Construction services cost   (161,434)   -    -    (1,722)   -    (105)   -    (8,004)   -    -    -    (171,265)
Adjusted Ebitda   233,677    52    7,823    40,948    1,893    31,693    19,897    25,781    (5,907)   -    (1,116)   354,741 
Financial income                                                          53,054 
Financial loss                                                          (214,260)
Inflation adjustment                                                          - 
Amortization and depreciation                                                          (81,135)
Income before income tax expense                                                          112,400 
Income tax expense                                                          (39,833)
Income for the period                                                          72,567 
                                                             
December 31, 2017 (Audited)                                                            
Current assets   200,982    425    66,631    24,697    2,887    38,110    42,760    62,144    -    (74,280)   215,122    579,478 
Non-current assets   709,689    7    1,432,833    159,880    5,121    173,087    51,941    236,893    11,790    (1,093)   441,588    3,221,736 
Capital Expenditure   231,998    41    13,589    6,327    852    5,778    934    20,013    -    -    24    279,556 
Current liabilities   151,794    64    262,624    23,536    3,755    22,741    42,929    89,057    -    (73,004)   208,526    732,022 
Non-current liabilities   412,242    -    1,271,776    64,050    1,175    95,159    6,571    73,762    -    (2,369)   349,684    2,272,050 

  

 - 16 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

4        Revenue

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

  

2018

(Unaudited)

  

2017

(Unaudited)

 
Aeronautical revenue   177,061    205,093    485,330    575,123 
Non-aeronautical revenue                    
  Commercial revenue   124,707    142,857    340,194    409,738 
  Construction service revenue   45,603    72,710    118,206    172,347 
  Other revenue   590    452    3,508    1,326 
    347,961    421,112    947,238    1,158,534 

 

5        Cost of services

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

  

2018

(Unaudited)

  

2017

(Unaudited)

 
Construction services cost   (45,192)   (72,359)   (116,851)   (171,265)
Salaries and social security contributions   (43,051)   (53,587)   (127,746)   (157,261)
Concession fees (**)   (41,504)   (50,153)   (115,765)   (144,902)
Amortization and depreciation   (32,703)   (25,367)   (92,273)   (75,487)
Maintenance expenses   (27,463)   (36,448)   (79,959)   (106,304)
Services and fees   (15,967)   (12,146)   (40,563)   (38,594)
Cost of fuel   (12,503)   (8,156)   (27,747)   (19,182)
Taxes (*)   (4,331)   (4,856)   (12,603)   (14,067)
Office expenses   (2,030)   (5,560)   (7,516)   (12,999)
Provision for maintenance cost   (950)   (307)   (1,845)   (1,313)
Others   (2,068)   (3,169)   (7,199)   (8,445)
    (227,762)   (272,108)   (630,067)   (749,819)

 

(*) Mainly includes tax from turnover and municipal taxes.

(**) Includes depreciation for Brazil concession assets of USD 20,025 as of September 30, 2018 (USD 24,591 as of September 30, 2017).

 

6        Selling, general and administrative expenses

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

  

2018

(Unaudited)

  

2017

(Unaudited)

 
Services and fees   (10,015)   (17,062)   (29,113)   (43,007)
Taxes (*)   (9,994)   (12,661)   (28,347)   (40,474)
Salaries and social security contributions   (7,135)   (9,107)   (21,861)   (26,124)
Office expenses   (2,416)   (2,689)   (5,912)   (8,539)
Amortization and depreciation   (2,187)   (1,984)   (6,402)   (5,648)
Advertising   (728)   (660)   (2,073)   (2,101)
Maintenance expenses   (687)   (742)   (1,866)   (2,285)
Insurance   (381)   (510)   (1,595)   (1,390)
Charter service   (207)   (202)   (622)   (605)
Bad debts recovery   2,637    18    2,637    257 
Bad debts   (3,396)   (1,983)   (4,988)   (4,029)
Other   (2,209)   (1,592)   (7,936)   (6,129)
    (36,718)   (49,174)   (108,078)   (140,074)

  

(*) Mainly includes tax from taxes over banks transactions and tax on revenue.

 

 - 17 - 

 

  

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

7       Other operating income

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

  

2018

(Unaudited)

  

2017

(Unaudited)

 
Government grant (*)   3,530    4,749    9,536    14,007 
Other   839    95    1,011    256 
    4,369    4,844    10,547    14,263 

 

(*) Corresponds to government grant for the development of airport infrastructure in Group A (operated by AA2000) of the National Airport System. There are no unfulfilled conditions or other contingencies attaching to these grants. The group did not benefit directly from any other forms of government assistance.

 

8        Financial results, net

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

  

2018

(Unaudited)

  

2017

(Unaudited)

 
                 
Interest income   7,344    1,795    15,741    30,658 
Foreign exchange income   7,943    6,784    39,105    22,171 
Other   491    225    2,312    225 
Financial income   15,778    8,804    57,158    53,054 
                     
Interest expense   (21,015)   (25,788)   (68,704)   (92,060)
Foreign exchange expenses   (72,320)   (17,987)   (163,705)   (53,689)
Changes in liability for Brazil concessions   (18,678)   (22,175)   (69,042)   (66,308)
Other   (2,223)   (327)   (9,315)   (2,203)
Financial loss   (114,236)   (66,277)   (310,766)   (214,260)
                     
Inflation adjustment   (10,000)   -    (21,446)   - 
Inflation adjustment   (10,000)   -    (21,446)   - 
Net financial results   (108,458)   (57,473)   (275,054)   (161,206)

 

9        Income tax expense

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

  

2018

(Unaudited)

  

2017

(Unaudited)

 
Current income tax   (12,057)   (28,185)   (27,075)   (67,341)
Deferred income tax   11,257    8,848    32,733    27,508 
    (800)   (19,337)   5,658    (39,833)

 

 - 18 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

10        Intangible assets, net

 

   Concession Assets   Goodwill   Patent,
intellectual
property rights
and others
   Total 
                 
Cost                    
Balances at January 1, 2018   3,312,006    57,049    14,867    3,383,922 
Adjustment on initial application of IAS 29   824,061    -    -    824,061 
Adjusted balances at January 1, 2018   4,136,067    57,049    14,867    4,207,983 
Acquisitions   123,758    -    250    124,008 
Transfer   (85)   -    85    - 
Transfer to property plant and equipment   (5)   -    -    (5)
Translation differences and inflation adjustment   (865,031)   (499)   (850)   (866,380)
    3,394,704    56,550    14,352    3,465,606 
Depreciation                    
Accumulated at January 1, 2018   553,767    313    11,488    565,568 
Adjustment on initial application of IAS 29   296,524    -    -    296,524 
Adjusted balances at January 1, 2018   850,291    313    11,488    862,092 
Depreciation of the period   110,891    -    983    111,874 
Translation differences and inflation adjustment   (189,749)   (313)   (501)   (190,563)
    771,433    -    11,970    783,403 
At September 30, 2018   2,623,271    56,550    2,382    2,682,203 
                     
Cost                    
Balances at January 1, 2017   3,334,564    56,013    15,162    3,405,739 
Acquisitions   182,876    -    82    182,958 
Disposals   (2,217)   -    -    (2,217)
Transfer   397    ​-    (397)   - 
Increase   252    ​-    -​    252 
Translation differences   37,620    548    3,004    41,172 
    3,553,492    56,561    17,851    3,627,904 
Depreciation                    
Accumulated at January 1, 2017   569,090    306    11,156    580,552 
Depreciation of the period   99,522    45    227    99,794 
Translation differences   1,582    (28)   1,283    2,837 
    670,194    323    12,666    683,183 
At September 30, 2017   2,883,298    56,238    5,185    2,944,721 

 

 - 19 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 


11       Cash and cash equivalents

 

  

At September 30,

2018

(Unaudited)

  

At December 31,

2017

(Audited)

 
Cash to be deposited   2,068    1,483 
Cash at Banks   237,591    189,283 
Time deposits   23,161    29,003 
Other cash equivalents   5,034    1,832 
    267,854    221,601 

 

The Group operates with investment grade - financial institutions.

 

For the purposes of cash flow interim statement, cash and cash equivalents include the following:

 

  

At September 30,

2018

(Unaudited)

  

At September 30,
2017

(Unaudited)

 
Cash and cash equivalents   267,854    321,812 
    267,854    321,812 

 

12        Borrowings

 

  

At September 30,

2018

(Unaudited)

  

At December 31,
2017

(Audited)

 
Non-current          
Bank and financial borrowings (**)   405,941    453,428 
Notes (*)   638,752    658,109 
Loans with related parties (Note 16)   500    - 
Others   593    2,118 
    1,045,786    1,113,655 
Current          
Bank and financial borrowings (**)   53,715    311,902 
Notes (*)   51,560    24,306 
Loans with related parties (Note 16)   -    34,651 
Others   1,504    1,931 
    106,779    372,790 
Total Borrowings   1,152,565    1,486,445 

 

Changes in borrowings during the period is as follows:

 

   For the nine-month period ended
September 30,
 
  

2018

(Unaudited)

  

2017

(Unaudited)

 
Balances at the beginning of the period   1,486,445    1,107,241 
Loans obtained   195,028    401,994 
Loans paid   (483,845)   (230,980)
Interest paid   (44,648)   (79,823)
Accrued interest for the period   67,188    94,678 
Translation differences and inflation adjustment   (67,603)   37,021 
At the end of the period   1,152,565    1,330,131 

 

The maturity of borrowings is as follows:

 

   1 year or less   1 - 2
years
   2 – 5
years
   Over 5
years
   Total 
At September 30, 2018 (1)   163,770    140,207    482,176    881,096    1,667,249 
At December 31, 2017 (1)   422,746    230,464    523,855    803,436    1,980,501 

 

(1)The amounts disclosed in the table are undiscounted cash flows of principal and estimated interest. Variable interest rate cash flows have been estimated using variable interest rates applicable at the end of the reporting period.

 

 - 20 - 

 

  

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

12        Borrowings (Cont.)

 

(*) Notes include the following:

 

-In 2007 Puerta del Sur S.A. issued 7.75% secured guaranteed notes for USD 87 million, due 2021. The principal balance of the Puerta del Sur Notes, together with accrued interest, will be repaid in 22 total installments, with individual installments occurring on April 29 and October 29 of each year beginning in 2011 and ending in 2021. The main covenants on these bonds are limitations on liens and encumbrances and compliance with certain financial ratios. Puerta del Sur may be limited to declare, make or pay any dividends unless the debt coverage service ratio exceeds 1.7x and the indebtedness ratio is less than 3.0. As of September 30, 2018 and December 31, 2017 Puerta del Sur S.A. was in compliance with all of its covenants. Puerta del Sur Notes are secured by a trust to which Puerta del Sur has transferred the following sums: (a) the sum of funds which Puerta del Sur has or has rights to for services offered in administration, construction, and maintenance of Carrasco Airport; (b) the sum of funds received from the duty-free store in Carrasco Airport; (c) the sum of funds received as a result of the permitted operation of the cargo terminal in Carrasco Airport; and (d) the sum of funds Puerta del Sur has received or will have right to receive from the government or from a third party successor as a result of a management agreement, or as a consequence of the redemption, termination, mutual dissolution and/or resolution of the management agreement for whatever reason, this trust is only use in case of non-compliance with the Notes obligations.

 

-In 2015, ACI Airport Sudamérica S.A.U. issued 6.875% senior secured guaranteed notes, for USD 200 million due in 2032. The principal balance will be repaid in 34 installments, May 29 and November 29 of each year, commencing on May 29, 2016 while accrued interest will be repaid commencing on November 29, 2015. The main covenants on these bonds are limitations on take additional indebtedness, make payments of dividends and other payments that are specifically restricted, selling assets as well as requiring compliance with certain financial ratios. The holders of these notes benefit from a guarantee and a security package including the pledge of the shares in Puerta del Sur S.A. and Cerealsur S.A., and certain accounts of Cerealsur and ACI Airport Sudamérica. As of September 30, 2018 and December 31, 2017 they were guaranteed with a stand by letter of credit of CAAP with Bank of América. These notes are fully and unconditionally guaranteed by Cerealsur S.A. As of September 30, 2018 and December 31, 2017, ACI Airport Sudamérica S.A.U. was in compliance with all of its covenants.

 

-On January 8, 2018, Corporación América Italia S.p.A. (“CAI”) issued € 60.0 million (USD 71.8 million) aggregate principal amount of 4.556% secured notes due 2024 (the “Italian Notes”). The proceeds of the Italian Notes were used to refinance and replace the 6.250% secured notes due 2019 issued by CAI in December 2014. Interest on the Italian Notes is payable annually in arrears on June 30 of each year. The Italian Notes will mature on December 31, 2024. The main covenants on these bonds are limitations on take additional indebtedness, make payments of dividends and other payments that are specifically restricted, selling assets as well as requiring compliance with certain financial ratios.

The Italian Notes are secured by an economic first ranking pledge in respect of all the shares representing 100% of the share capital of CAI, 100% of the share capital of Dicasa Spain S.A.U. and the shares representing CAI’s holding in Toscana Aeroporti S.p.A. As of September 30, 2018, CAI was in compliance with all of its covenants.

 

-Notes issued in April and December 2010 by AA2000, totalling USD 328 million maturing in 2020. Annual Interest rates on these notes are 10% and 10.75% respectively. As long as these notes are outstanding AA2000 is required to comply with certain commitments, such as certain limitations to liens on its assets, mergers, spin-offs, sale of assets, new debts, distribution of dividends and payment to its shareholders. On March 13, 2017 AA2000 early redeemed in full the notes issued in December 2010 for a principal amount of USD 157.5 million, recognizing a loss of approximately USD 13 million on the extinguishment that was included in interest expenses in financial loss. As a result of the renegotiation of its borrowings, the restrictions on distribution of dividends has significantly eased.

 

-On February 6, 2017, AA2000 issued 6.875% senior secured notes for a nominal amount of USD 400 million due 2027. The principal will be amortized in 32 equal quarterly installments as from May 1, 2019. The main covenants of these bonds require compliance with certain financial ratios as well as restriction to incur in additional debt and limitations on the payments of dividends if any default or unmatured default has occurred. As of September 30, 2018 AA2000 was in compliance with all of its covenants.

 

 - 21 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

12        Borrowings (Cont.)

 

(**) As of September 30, 2018 significant bank and financial borrowings include the following:

  

                    Outstanding      
Company   Lender   Currency   Maturity   Interest Rate   (In millions
of USD)
    Capitalization(3)
Inframérica Concessionaria do Aeroporto Sao Goncalo do Amarante S.A.           BNDES   Brazilian Reales   September 2032   Variable   TJLP (1) plus spread     8.1     A
  BNDES   Brazilian Reales   June 2032   Variable   T.R.plus spread plus IPCA     2.0      
  BNDES   Brazilian Reales   September 2032   Variable   T.R. plus spread plus IPCA     5.0      
  BNDES   Brazilian Reales   September 2022   Fixed   2.5%     2.2      
  BNDES   Brazilian Reales   July 2032   Variable   T.R. plus spread plus IPCA     2.3      
Inframérica Concessionaria do Aeroporto de Brasilia S.A.         BNDES   Brazilian Reales   December 2033   Variable   TJLP (1) plus spread     265.9     A
  Bradesco   Brazilian Reales   July 2022   Variable   TJLP (1) plus spread     0.2     D
  Bradesco   Brazilian Reales   July 2022   Variable   Selic plus spread     0.1     D
  Pine   Brazilian Reales   December 2018   Variable   CDI plus spread     4.0     C
Terminal Aeroportuaria de Guayaquil S.A.     Banco Guayaquil SA   USD   2019   Variable   5.87%-6.71%     2.5     D
  Banco Bolivariano CA   USD   2019   Variable   7.06%     3.5     D
Terminal de Cargas de Uruguay S.A.     Santander Uruguay   USD   June 2020   Fixed   4.25%     0.8     D
  Santander Uruguay   USD   April 2023   Fixed   4.4%     2.3     D
Toscana Aeroporti S.p.A.   MPS Servicio capital   Euro   June 2022   Variable   Euribor 6 month plus spread     8.1     B
  Banco de Innovación de Infraestructuras y Desarrollo   Euro   September 2027   Variable   Euribor 6 month plus spread     29.9     D
  MPS Servicio capital   Euro   November 2018   Fixed   0.05%     1.7     D
  MPS Servicio capital   Euro   November 2018   Fixed   0.04%     2.3     D
  BPM   Euro   November 2018   Fixed   0.04%     2.3     D
  Unicredit   Euro   November 2018   Fixed   0.05%     5.8     D
  CRF   Euro   November 2018   Fixed   0.05%     5.8     D
  BNL   Euro   July 2018   Variable   Euribor 3 month plus spread     2.9     D
  BPM   Euro   June 2022   Variable   Euribor 3 month plus spread     0.5     D
  BPM   Euro   June 2023   Variable   Euribor 3 month plus spread     0.6     D
Armenia International Airports C.J.S.C.     Credit Suisse AG   USD   June 2022   Variable   Libor 6 month plus spread     48.4     B
      Euro   June 2022   Variable   Euribor 6 month plus spread     52.5      
Aeropuerto de Bahía Blanca S.A.   Banco de la Nación Argentina   Argentine peso   March  2019   Variable   BADLAR (2) plus spread     -     A
Total                         459.7      

 

 - 22 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

12        Borrowings (Cont.)

 

(**) As of December 31, 2017 significant bank and financial borrowings include the following:

 

                    Outstanding      
Company   Lender   Currency   Maturity   Interest Rate   (In millions
of USD)
    Capitalization(3)
Inframérica Concessionaria do Aeroporto Sao Goncalo do Amarante S.A.   BNDES   Brazilian Reales   September 2032   Variable   TJLP (1) plus spread     98.6     A
  BNDES   Brazilian Reales   June 2032   Variable   T.R. plus spread  plus IPCA     2.2      
  BNDES   Brazilian Reales   September 2032   Variable   T.R. plus spread  plus IPCA     5.8      
  BNDES   Brazilian Reales   September 2022   Fixed   2.5%     3.2      
  BNDES   Brazilian Reales   July 2032   Variable   T.R. plus spread  plus IPCA     1.5      
  BNDES   Brazilian Reales   July 2032   Variable   T.R. plus spread  plus IPCA     1.2      
Inframérica Concessionaria do Aeroporto de Brasilia S.A.   BNDES   Brazilian Reales   December 2028   Variable   TJLP (1) plus spread     218.4     A
  CAIXA   Brazilian Reales   December 2028   Variable   TJLP (1) plus spread     72.8     A
  CAIXA   Brazilian Reales   December 2017   Variable   IPCA     5.7     A
  CAIXA   Brazilian Reales   December 2023   Fixed   6%     4.8     A
  Bradesco   Brazilian Reales   July 2022   Variable   TJLP (1) plus spread     0.3     D
  Bradesco   Brazilian Reales   July 2022   Variable   Selic plus spread     0.1     D
  Santander   Brazilian Reales   June 2018   Variable   CDI plus spread     90.9     A
  Citibank   Brazilian Reales   March 2018   Fixed   9%     14.6     C
  Pine   Brazilian Reales   January 2018   Variable   CDI plus spread     9.7     C
Terminal Aeroportuaria de Guayaquil S.A.     Banco Guayaquil SA   USD   2019   Variable   6.86%-6.92%     4.1     D
  Banco Bolivariano CA   USD   2019   Variable   6.92%     5.6     D
Terminal de Cargas de Uruguay S.A.   Santander Uruguay   USD   June 2020   Fixed   4.25%     1.1     D
Toscana Aeroporti S.p.A.   MPS Servicio capital   Euro   June 2022   Variable   Euribor 6 month plus spread     9.3     B
  Banco de Innovación de Infraestructuras y Desarrollo   Euro   September 2027   Variable   Euribor 6 month plus spread     34.4     D
  Credem   Euro   November 2018   Variable   Euribor 3 month plus spread     6.0     D
  BPM   Euro   June 2022   Variable   Euribor 3 month plus spread     0.5     D
Armenia International Airports C.J.S.C.     Credit Suisse AG     USD   June 2022   Variable   Libor 6 month plus spread     57.1     B
  Euro   June 2022   Variable   Euribor 6 month plus spread     51.2      
Corporación América Airports S.A.     Goldman Sachs   USD   March 2019   Variable   7.63%     50.1     D
  Julius Bär   USD   December 2019    Fixed   2.40%     15.0     B
Aeropuertos Argentina 2000 S.A.   Banco Ciudad   Argentine peso   September 2018     Fixed   27.86%     1.0     D
Aeropuerto de Bahía Blanca S.A.   Banco de la Nación Argentina   Argentine peso   March  2019   Variable   BADLAR (2) plus spread     0.1     A
Total                         765.3      

 

(1)TJLP - Taxa de Juros de Longo Prazo (Brazilian Long term interest rate)

IPCA: corresponds to the Brazilian consumer Price index

 

(2)BADLAR – Buenos Aires Deposits of Large Amount Rate

 

(3)A - Secured/guaranteed

B – Secured/unguaranteed

C – Unsecured/guaranteed

D - Unsecured/unguaranteed

 

 - 23 - 

 

  

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

12        Borrowings (Cont.)

 

The Credit Facility Agreement between Inframérica Concessionária do Aeroporto de São Gonçalo do Amarante S.A. (“ICASGA”) and the Banco Nacional do Desenvolvimento Economico e Social (“BNDES”) pursuant to which BNDES provided a loan to Inframérica Concessionária do Aeroporto de São Gonçalo do Amarante S.A in November 2012, in an aggregate principal amount of R$ 329.3 million (USD 139.5 million) to finance the construction of the Natal Airport (issued in nine tranches with varying interest rates and maturity dates), is secured by the pledge of the shares of Inframérica Concessionária do Aeroporto de São Gonçalo do Amarante S.A, together with any dividends and distributions in connection therewith, as well as the fiduciary assignment of rights arising from the Natal Airport concession agreement and certain letters of guarantees issued by indirect shareholders and affiliates of Inframérica Concessionária do Aeroporto de São Gonçalo do Amarante S.A. for an amount of USD 6.1 million which was released during 2018. It also establishes a required pre-authorization by BNDES on payments of Inframérica Concessionária do Aeroporto de São Gonçalo do Amarante S.A dividends if exceeding 25% of net profits.

 

Further, Inframérica Concessionária do Aeroporto de Brasilia (“ICAB”) also entered into credit facility arrangements with BNDES and Caixa Economica Federal (“Caixa”) for an aggregate principal amount of R$ 841 million (USD 356.4 million) in February 2014, which are secured by the pledge of Inframérica Concessionária do Aeroporto de Brasilia and Inframérica Participaçoes S.A. shares, the fiduciary assignment of rights arising from the Brasilia airport concession agreement and letters of guarantee issued by indirect shareholders and affiliates of Inframérica Concessionária do Aeroporto de Brasilia. It also establishes under certain circumstances a required pre-authorization by BNDES and Caixa on payments of Inframérica Concessionária do Aeroporto de Brasilia dividends if exceeding 25% of net profits and compliance of certain financial ratios.

 

On December 2017, ICAB and ICASGA entered into amendments and extension agreements with BNDES with respect to their loans.

 

On March 2018, ICASGA concluded its renegotiation with BNDES. The terms of the renegotiation include the early repayment of a large part of the debt and rescheduling of current maturities.

 

On March 14, 2018 BNDES has approved an amendment and extension of the loan agreements with ICAB that involves extending the final maturity and the interest-only payment terms of such loans for two years, and providing an interest capitalization period for 50% of the interest due for two years. In addition, such agreements increased the size of the credit facility commitments by R$ 300 million (USD 77.8 million).

 

In connection with such amendments and extension agreements, ACI Airports S.à.r.l. and CAAP have agreed not to create any encumbrances on their shares of Inframerica, and not to sell, acquire, merge or spin-off assets or undertake any other action that results or that may result in a change in the current corporate structure of Inframerica or any change of control in Inframerica, without the prior consent of BNDES. ACI Airports S.à.r.l. has agreed not to undertake any change of control in CAAP without the prior consent of BNDES. In addition, ACI Airports S.à.r.l. has agreed to maintain a minimum credit rating of at least B- (the “Minimum Rating”) or a stand-alone rating (without including the sovereign rating) of at least BB+. The amendment and extension agreements also require additional security equivalent to the amount of twenty-four months of debt service for at least a two-year period (in the form of a bank guaranty, letter of credit, guaranty insurance or other acceptable modalities of guarantee), if the Minimum Rating is not maintained for any annual testing period.

 

On March, 2018, ICAB repaid the outstanding amount of USD 83 million with CAIXA.

 

On December 14, 2017, ICAB entered into a banking letter of credit with Banco Citibank S.A. (the “Citibank Credit Agreement”) in the aggregate principal amount of R$ 48 million (USD 12.5 million). The loan under the Citibank Credit Agreement matured and was paid in March 2018. Such loan was unsecured. The obligations under the Citibank Credit Agreement were absolutely and unconditionally guaranteed by ACI Airports S.à r.l.

 

On December 19, 2017, ICAB entered into a short-term banking letter of credit with Banco Pine S.A. (the “Banco Pine Credit Agreement”) in the aggregate principal amount of R$ 32 million (USD 8.3 million). Obligations under the Banco Pine Credit Agreement are absolutely and unconditionally guaranteed by CAAP. The loan under the “Banco Pine Credit Agreement” matured on January 2018; at that date, ICAB made an amendment to the loan maturity from January to December 2018.

 

 - 24 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

12        Borrowings (Cont.)

 

On December 20, 2017, under the terms of the Banco Santander Bridge Loan Facility, ICAB issued a promissory note in the aggregate principal amount of R$ 300 million (USD 77.8 million), which matures on June 18, 2018. Loans under the Banco Santander Bridge Loan Facility were fully secured by (i) a cash deposit made by CAAP under a time deposit pledge agreement entered on December 19, 2017 between CAAP and Banco Santander, in the amount of R$ 300 million (USD 77.8 million) which was included in Guarantee deposit. Such loans mature in 180 days as of the closing date thereunder; and (ii) a fiduciary assignment of ICAB’s account at Banco Santander where the funds from BNDES financings should be deposited. The Banco Santander Bridge Loan Facility was also guaranteed by Inframerica. The loans under the Banco Santander Bridge Loan Facility mature in 180 days.

 

On March 14, 2018, ICAB has repaid the credit facilities provided by Banco Santander Bridge and the Citibank for a total amount of USD 106.6 million (approximately R$ 348) with the proceeds of the loan given by the BNDES.

 

As a result of this operation, the guarantee deposit held by CAAP has been released (approximately USD 92.9 million).

 

On December 15, 2015 Armenia International Airports C.J.S.C. entered into a senior secured dual-currency facility agreement with Credit Suisse AG (and other banks) for a principal amount up to USD 160 million, which is secured by: (a) the collateral assignment of all present and future rights arising from the Armenian Concession Agreement and other related agreement, a pledge over all present and future cash collateral bank accounts, a pledge over certain movable and immoveable assets related to the Zvartnots Airport and the pledge of Armenia International Airports C.J.S.C. shares.

 

According to the loan agreement Armenia International Airports C.J.S.C. has restrictions to distribution of dividends, has to maintain the following ratios at a certain level: debt to EBITDA, Debt service coverage and adjusted debt service coverage ratio. According to this agreement, the analysis of the accomplished of these ratios must be made as of June 30 and December 31. As of June 30, 2018, Armenia International Airports C.J.S.C. was in compliance with all of its covenants.

 

As of September 30, 2018 Armenia International Airports C.J.S.C. pledged cash held in bank accounts for USD 35.4 million (USD 25.4 million at December 31, 2017) and all intangible assets and property and equipment for a total of USD 167.9 million (USD 170.6 million at December 31, 2017).

 

Toscana Aeroporti S.p.A, pursuant to the loan agreement with Banco de Innovación de Infraestructuras y Desarrollo/MPS Servicio capital is required to comply with certain financial ratios. As of September 30, 2018, Toscana Aeroporti S.p.A was in compliance with all of its covenants. Cash and cash equivalents of the Consolidated Statement of Financial Position includes € 1 million, to secure the abovementioned loan.

 

On December, 2017 CAAP entered into the Julius Baer Credit Agreement, pursuant to which Julius Baer & Co. Ltd. provided a loan in the aggregate principal amount of USD 15 million. Loan under the Julius Baer Credit Agreement was secured by cash collateral provided by a company controlled by the Group of the Shareholder and mature 24 months from the closing date thereunder.

 

On December 20, 2017, CAAP entered into the GS Credit Agreement, pursuant to which Goldman Sachs Bank USA provided a loan to the Company in the aggregate principal amount of USD 50.0 million.

 

On February 2018, CAAP fully repaid the Julius Baer Credit Agreement and the GS Credit Agreement, the cash collateral with Julius Baer was released when the loan was repaid.

 

 - 25 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2018 and 2017 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

13        Other liabilities  

 

  

At September 30,
2018

(Unaudited)

  

At December 31,
2017

(Audited)

 
Non-current          
Concession fee payable (*)   750,380    916,203 
Advances from customers   22,496    31,909 
Provision for maintenance costs (**)   21,240    22,207 
Employee benefit obligation (***)   8,249    9,068 
Provisions for legal claims (****)   7,381    5,798 
Other taxes payable   4,407    8,531 
Other liabilities with related parties (Note 16)   1,470    1,816 
Salary payable   842    916 
Other payables   9,499    10,344 
    825,964    1,006,792 
           
Current          
Concession fee payable (*)   107,174    54,840 
Other taxes payable   32,002    32,840 
Salary payable   31,916    41,753 
Provision for maintenance costs (**)   9,629    9,496 
Other liabilities with related parties (Note 16)   5,177    33,132 
Advances from customers   5,916    6,124 
Provision for legal claims (****)   1,910    3,127 
Expenses provisions   552    4,569 
Other payables   16,655    23,605 
    210,931    209,486 

 

Maturity of the other liabilities is as follows:

 

   1 year or less   1 - 2 years  

 

2 - 5 years

   Over 5 years   Total 
At September 30, 2018   132,548    79,815    252,673    2,078,743    2,543,779 
At December 31, 2017   188,192    94,590    306,318    2,520,425    3,109,525 

 

(*) The most significant amounts included in the concession fee payable are generated by the concession agreement between The Brazilian National Civil Aviation Agency – ANAC and Inframerica Concessionária do Aeroporto de Brasilia S.A. and Inframerica Concessionária do Aeroportode São Gonçalo do Amarante S.A.

 

Changes in the period of the concession fee payable is as follows:

 

  

For the nine-month period ended

September 30,

 
  

2018

(Unaudited)

  

2017

(Unaudited)

 
Balances at the beginning of the period   971,043    1,173,346 
Financial result   69,042    66,308 
Others   -    252 
Concession fees   95,740    120,311 
Payments   (104,177)   (122,530)
Translation differences and inflation adjustment   (174,094)   33,139 
Balances at the end of the period   857,554    1,270,826 

 

(**) Changes in the period of the provision for maintenance costs is as follows:

 

  

For the nine-month period ended

September 30,

 
  

2018

(Unaudited)

  

2017

(Unaudited)

 
Balances at the beginning of the period   31,703    26,826 
Accrual of the period   2,476    1,313 
Use of the provision   (2,260)