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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 May, 2019

 

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 THREE-MONTH PERIOD ENDED MARCH 31, 2019 AND 2018

 

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 three-month period ended March 31, 2019 and 2018 (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, 2018, 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 three-month period ended March 31, 2019 and 2018.

 

 

 

 

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: May 23, 2019

 

  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  

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (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 three-month period ended March 31, 2019 and 2018

 

R.C.S. Luxembourg B 174.140

 

4, rue de la Grève

L-1643, Luxembourg

 

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (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

March 31,

 
      2019   2018 
   Notes  Unaudited   Unaudited 
Continuing operations             
Revenue  4   360,550    390,884 
Cost of services  5   (248,744)   (241,102)
Gross profit      111,806    149,782 
Selling, general and administrative expenses  6   (38,527)   (44,033)
Other operating income  7   4,340    5,078 
Other operating expense      (791)   (1,231)
Operating income      76,828    109,596 
Share of (loss) / income in associates      (414)   130 
Income before financial results and income tax      76,414    109,726 
Financial income  8   15,798    13,887 
Financial loss  8   (65,302)   (85,788)
Inflation adjustment  8   (8,230)   - 
Income before income tax expense      18,680    37,825 
Income tax expense  9   5,731    (11,518)
Income for the period      24,411    26,307 
Attributable to:             
Owners of the parent      30,441    26,495 
Non-controlling interest      (6,030)   (188)
       24,411    26,307 
              
Earnings per share attributable to the owners of the parent             
Weighted average number of ordinary shares (thousands)      160,022    155,260 
              
Basic and diluted earnings per share      0.19    0.17 

 

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, 2018.

 

 - 1 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (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

March 31,

 
   2019   2018 
   Unaudited   Unaudited 
Income for the period   24,411    26,307 
           
Items that will not be reclassified subsequently to profit or loss:          
Remeasurement of defined benefit obligation   (237)   9 
           
Items that may be subsequently reclassified to profit or loss:          
Share of other comprehensive income from associates   76    115 
Currency translation adjustment   (26,517)   (24,257)
Other comprehensive loss for the period, net of income tax   (26,678)   (24,133)
Total comprehensive (loss) / income for the period   (2,267)   2,174 
Attributable to:          
Owners of the parent   13,560    5,872 
Non-controlling interest   (15,827)   (3,698)
    (2,267)   2,174 

 

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, 2018.

 

 - 2 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED cONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

 

   Notes 

At March 31, 2019

Unaudited

  

At December 31, 2018

Audited

 
            
ASSETS             
Non-current assets             
Intangible assets, net  10   2,904,795    2,933,542 
Property, plant and equipment, net      71,330    74,299 
Right-of-use asset      10,585    - 
Investments in associates      10,946    10,886 
Other financial assets at fair value through profit or loss      3,309    3,372 
Other financial assets at amortized cost      2,379    2,339 
Deferred tax assets      152,494    153,486 
Other receivables      136,316    133,193 
Trade receivables      1,323    1,419 
       3,293,477    3,312,536 
Current assets             
Inventories      9,197    9,769 
Other financial assets at fair value through profit or loss      39,347    38,007 
Other financial assets at amortized cost      14,703    42,972 
Other receivables      71,263    66,531 
Current tax assets      3,264    13,701 
Trade receivables      118,581    116,897 
Cash and cash equivalents  11   255,047    244,865 
       511,402    532,742 
Total assets      3,804,879    3,845,278 
              
EQUITY  14          
Share capital      160,022    160,022 
Share premium      180,486    180,486 
Free distributable reserve      385,055    385,055 
Non-distributable reserve      1,351,883    1,351,883 
Currency translation adjustment      (395,537)   (378,803)
Legal reserves      176    176 
Other reserves      (1,324,878)   (1,324,731)
Retained earnings      424,597    394,156 
Total attributable to owners of the parent      781,804    768,244 
Non-controlling interests      431,318    454,453 
Total equity      1,213,122    1,222,697 
              
LIABILITIES             
Non-current liabilities             
Borrowings  12   1,016,077    1,027,751 
Deferred tax liabilities      231,422    271,175 
Other liabilities  13   885,928    871,596 
Lease liabilities      9,025    - 
Trade payables      1,290    1,508 
       2,143,742    2,172,030 
Current liabilities             
Borrowings  12   121,248    98,907 
Other liabilities  13   206,919    225,448 
Lease liabilities      3,194    - 
Current tax liabilities      20,936    11,555 
Trade payables      95,718    114,641 
       448,015    450,551 
Total liabilities      2,591,757    2,622,581 
Total equity and liabilities      3,804,879    3,845,278 

 

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, 2018.

 

 - 3 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (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 January 1, 2019   160,022    180,486    385,055    1,351,883    176    (378,803)   (1,324,731)   394,156    768,244    454,453    1,222,697 
Income / (loss) for the period   -    -    -    -    -    -    -    30,441    30,441    (6,030)   24,411 
Other comprehensive loss for the period   -    -    -    -    -    (16,734)   (147)   -    (16,881)   (9,797)   (26,678)
Changes of non-controlling interests (Note 14)   -    -    -    -    -    -    -    -    -    (7,308)   (7,308)
Balance at March 31, 2019   160,022    180,486    385,055    1,351,883    176    (395,537)   (1,324,878)   424,597    781,804    431,318    1,213,122 
                                                        
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)   -    -    -    -    -    -    -    2,356    2,356    542    2,898 
Adjusted balance at January 1, 2018   1,500,000    -    385,055    -    2    (217,300)   (1,344,008)   140,390    464,139    335,901    800,040 
Shareholders contributions (Note 14)   -    -    -    -    -    -    -    -    -    43,703    43,703 
Income / (loss) for the period   -    -    -    -    -    -    -    26,495    26,495    (188)   26,307 
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 for the period   -    -    -    -    -    (20,628)   5    -    (20,623)   (3,510)   (24,133)
Changes of non-controlling interests (Note 14)   -    -    -    -    -    -    (2,658)   -    (2,658)   (22,516)   (25,174)
Balance at March 31, 2018   160,022    180,486    385,055    1,351,883    2    (237,928)   (1,346,661)   166,885    659,744    353,390    1,013,134 

 

(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, 2018.

 

 - 4 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

      For the three-month period ended March 31, 
   Notes 

2019

Unaudited

  

2018

Unaudited

 
Cash flows from operating activities             
Income for the period      24,411    26,307 
Adjustments for:             
Amortization and depreciation      45,519    34,224 
Deferred income tax  9   (33,504)   (13,700)
Income tax accrued  9   27,773    25,218 
Share of income / (loss) in associates      414    (130)
Loss on disposals of property, plant and equipment      17    - 
Unpaid concession fees      22,817    22,337 
Low value, short term and variable lease payments      (591)   - 
Changes in liability for Brazil concessions      26,729    21,577 
Interest expense      22,380    25,925 
Other financial results, net      (9,914)   2,292 
Net foreign exchange      10,276    22,425 
Leases financial cost      141    - 
Other accruals      2,561    3,689 
Inflation adjustment      11,978    - 
Acquisition of Intangible assets      (60,103)   (44,170)
Income tax paid      (9,361)   (14,242)
Changes in working capital  17   (84,166)   (82,401)
Net cash (used in) / provided by operating activities      (2,623)   29,351 
              
Cash flows from investing activities             
Cash contribution in associates      (398)   (13)
Acquisition of other financial assets      (3,586)   (5,816)
Disposals of other financial assets      30,072    23,590 
Purchase of Property, plant and equipment      (2,295)   (1,749)
Acquisition of Intangible assets      (250)   (16)
Loans with related parties      (961)   - 
Advance payments of Property, plant and equipment      (1,033)   - 
Other      105    80 
Net cash provided by investing activities      21,654    16,076 
              

Cash flows from financing activities

             
Proceeds from cash contributions      -    43,703 
Additional acquisitions in subsidiaries  14   -    (16,513)
Proceeds from borrowings      10,315    173,680 
Initial Public Offering      -    195,601 
Initial Public Offering expenses paid      -    (4,253)
Release of guarantee deposits      -    92,913 
Leases payments      (1,225)   - 
Loans paid  12   (3,231)   (452,686)
Interest paid  12   (10,843)   (17,332)
Dividends paid      -    (2,632)
Net cash (used in) / provided by financing activities      (4,984)   12,481 
              
Increase in cash and cash equivalents      14,047    57,908 

 

Movements in cash and cash equivalents

             
At the beginning of the period      244,865    221,601 
Exchange rate (loss) / income and inflation adjustment on cash and cash equivalents      (3,865)   (3,760)
Increase in cash and cash equivalents      14,047    57,908 
At the end of the period  11   255,047    275,749 

 

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, 2018.

 

 - 5 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (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, reverse stock split and initial public offering
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 three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

1General 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 Peru.

 

A list of the principal Group’s subsidiaries is included in Note 2 of the Consolidated Financial Statements as of December 31, 2018.

 

Reverse Stock Split

 

On January 19, 2018, the Shareholder approved a 1-to-10.12709504 reverse stock split of its common shares, consequently decreasing the outstanding common shares from 1,500,000,000 common shares to 148,117,500 common shares (the “Reverse Stock Split”). The nominal value of USD 1.00 of each common share did not change as a result of the Reverse Stock Split. It implied a reduction of share capital of USD 1,351,883 and an increase in Non-Distributable Reserves. In accordance with the provisions of the amended and restated articles of association of the Company, the non-distributable reserve may be distributed to its shareholders, from time to time, on a pro rata basis.

 

Initial Public Offering

 

On February 2, 2018, CAAP submitted the final prospectus to the U.S. Securities and Exchange Commission as an initial public offering of common shares of Corporación América Airports S.A. which was declared effective by such commission. The offering was of 11,904,762 common shares with a nominal value of USD 1 and the Shareholder offered 16,666,667 common shares which were fully subscribed. As a consequence of the Initial Public Offering, the share capital of CAAP has increased to 160,022,262 shares. The initial public offering price per common share was USD 17.00. As a result, CAAP had proceeds of USD 195,601 net of underwriting discounts and commissions but before other issuing expenses.

 

On February 5, 2018, the Executive Committee; in accordance with (i) the provisions of the articles of associations of the Company, and (ii) the resolutions taken by the Company´s board of directors which determined and confirmed the creation and composition of the Executive Committee and also the powers delegated to it with respect of the Initial Public Offering; resolved to approve the issuance of the new shares, acknowledged having received sufficient evidence showing that the subscription price of the new shares had been paid, and the amendment of the articles of associations in respect of the new share capital of USD 160,022,262.

 

These condensed consolidated interim financial statements have been approved for issuance by the Company on May 21, 2019.

 

 - 7 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2Basis 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, 2018. 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, 2018, except for changes explained in Note 2.2. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2018, 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).

 

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, 2018.

 

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

 

Application of IAS 29 in financial reporting of Argentine subsidiaries and associates

 

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 estimated price index as of March 31, 2019 was 204.34 (184.25 as of December 31, 2018) and the conversion factor derived from the indexes for the period ended March 31, 2019, was 1.11.

 

Comparative amounts are the figures presented as current year amounts in the relevant prior year consolidated financial statements, according to IAS 21, considering that were translated into the currency of a non- hyperinflationary economy.

 

 - 8 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2Basis of presentation and accounting policies (Cont.)

 

2.1 Basis of presentation (Cont.)

 

Application of IAS 29 in financial reporting of Argentine subsidiaries and associates (Cont.)

 

The ongoing application of the re-translation of comparative amounts to closing exchanges rates under IAS 21 and the inflation adjustments required by IAS 29 will lead to a difference because the rate at which the hyper-inflationary currency depreciates against a stable currency is rarely equal to the rate of inflation.

The inflation adjustment and the translation of comparative amounts in the current period is included in Other comprehensive (loss) / income for the period line.

 

This re-translation changes every prior reported quarterly consolidated statement of income in U.S. dollars, as a result, the impact of quarterly inflation adjustments and quarterly translation adjustments vary the results of operation quarter to quarter until year end.

There were no changes in valuation techniques during the period, except for changes explained in Note 2.2, and there were no changes in risk management policies since the end of the year ended December 31, 2018.

 

2.2 Changes in the accounting polices

 

The group has applied the following standard for the first time for their quarter reporting period commencing January 1, 2019:

 

IFRS 16, “Leases”

 

The group has adopted IFRS 16 retrospectively from January 1, 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening balance sheet on January 1, 2019.

 

(a) Adjustments recognized on adoption of IFRS 16

 

On adoption of IFRS 16, the group recognized lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 5.2%.

 

For leases previously classified as finance leases the entity recognized the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.

 

   Lease liabilities 
Operating lease commitments as at December 31, 2018   14,167 
Discounted using lessee’s incremental borrowing rate   (2,204)
Operating lease commitments discounted at the date of initial application   11,963 
Add: finance lease liabilities recognized as at December 31, 2018   1,715 
(Less): short-term leases recognized on a straight-line basis as expense   (59)
(Less): low-value leases recognized on a straight-line basis as expense   (70)
Lease liability recognized as at January 1, 2019   13,549 
Of which are:     
Current lease liabilities   4,942 
Non-current lease liabilities   8,607 
    13,549 

 

 - 9 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

Right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet as at December 31, 2018. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

 

The recognized right-of-use assets as at January 1, 2019 relate to the following types of assets:

 

  

At January 1,

2019

 
Right-of-use asset     
Land, building and improvements   10,103 
Plant and production equipment   1,224 
Vehicles, furniture and fixtures   519 
    11,846 

 

The change in accounting policy affected the following items in the balance sheet on January 1, 2019:

- right-of-use assets – increase by USD 11,846

- prepayments – decrease by USD 12

- borrowings – decrease by USD 1,715

- lease liabilities – increase by USD 13,549

 

There was no impact on retained earnings on January 1, 2019.

 

(b) Practical expedients applied

 

In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:

- reliance on previous assessments on whether leases are onerous

- the accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019 as short-term leases

- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

- the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

 

(c) The group’s leasing activities and how these are accounted for

 

The group as a lessee

 

The group acts as a lessee renting various offices, equipment and cars.

 

Until the 2018 financial year, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.

 

From January 1, 2019, leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

 

 - 10 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- fixed payments (including in-substance fixed payments), less any lease incentives receivable

- variable lease payment that are based on an index or a rate

- amounts expected to be payable by the lessee under residual value guarantees

- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

- payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

 

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

 

Right-of-use assets are measured at cost comprising the following:

- the amount of the initial measurement of lease liability

- any lease payments made at or before the commencement date less any lease incentives received

- any initial direct costs, and

- restoration costs.

 

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

 

The group as a lessor

 

The group acts as a lessor regarding leases and sub-concession of spaces with third parties at its airports facilities.

 

The Group’s accounting policy under IFRS 16 has not changed from the comparative period. As a lessor the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset, and classified as an operating lease if it does not.

 

Other standards and amendments

 

Several other amendments and interpretations apply for the first time in 2019 but do not have an impact on the interim condensed consolidated financial statements of 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 March 31, 2019 reporting periods and have not been early adopted by the group. The group’s management is currently evaluating the potential impact of the new standards and interpretations that are set out below.

 

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

- IFRS 17 – Insurance contracts

- Amendments to IAS 1 and 8 – Definition of Material. These amendments must be applied prospectively for annual periods beginning on or after January 1, 2020.

- Amendments to IFRS 3 – Definition of a Business. Entities are required to apply the amendments to transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020.

- Amendments to references to the conceptual framework in IFRS standards (issued in March 2018). These amendments must be applied as from January 1, 2020.

 

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.

 

 - 11 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3Segment 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.V and 4 included in our audited Consolidated Financial Statements for the year ended December 31, 2018 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 has 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.

 

 - 12 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3Segment information (Cont.)

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Peru             
For the three-month period ended March 31, 2019 (Unaudited)  Airports   Others   Airports   Other   Airports   Others   Airports   Airports   Airports   Airports  

Intrasegment

Adjustments

   Unallocated   Total 
Revenue   220,342    48    29,669    -    32,254    4,088    25,256    23,697    26,816    -    (3,149)   1,529    360,550 
Cost of services   (150,632)   (4)   (24,548)   -    (14,614)   (3,152)   (16,441)   (14,054)   (24,204)   -    2,436    (3,531)   (248,744)
Gross profit   69,710    44    5,121    -    17,640    936    8,815    9,643    2,612    -    (713)   (2,002)   111,806 
Selling, general and administrative expenses   (17,153)   (50)   (4,852)   (19)   (3,459)   (347)   (2,820)   (4,585)   (3,441)    -    713    (2,514)   (38,527)
Other operating income   4,121    -    207    -    23    -    -    6    -    -    (17)   -    4,340 
Other operating expenses   (85)   -    (525)   -    (33)   -    (158)   (6)   -    -    16    -    (791)
Operating income / (loss)   56,593    (6)   (49)   (19)   14,171    589    5,837    5,058    (829)   -    (1)   (4,516)   76,828 
Share of loss in associates   -    -    -    -    -    -    -    -    -    (414)   -    -    (414)
Amortization and depreciation   21,860    -    3,108    -    3,781    237    3,171    1,127    3,024    -    -    4,204    40,512 
Adjusted Ebitda   78,453    (6)   3,059    (19)   17,952    826    9,008    6,185    2,195    (414)   (1)   (312)   116,926 
Construction services revenue   (55,889)   -    -    -    (653)   -    (2,389)   -    (1,793)   -     -    -    (60,724)
Construction services cost   55,849    -    -    -    633    -    2,320    -    1,166    -    -    -    59,968 
Adjusted Ebitda excluding Construction Services   78,413    (6)   3,059    (19)   17,932    826    8,939    6,185    1,568    (414)   (1)   (312)   116,170 
Construction services revenue   55,889    -    -    -    653    -    2,389    -    1,793    -    -    -    60,724 
Construction services cost   (55,849)   -    -    -    (633)   -    (2,320)   -    (1,166)   -    -    -    (59,968)
Adjusted Ebitda   78,453    (6)   3,059    (19)   17,952    826    9,008    6,185    2,195    (414)   (1)   (312)   116,926 
Financial income                                                               15,798 
Financial loss                                                               (65,302)
Inflation adjustment                                                               (8,230)
Amortization and depreciation                                                               (40,512)
Income before income tax expense                                                               18,680 
Income tax expense                                                               5,731 
Income for the period                                                               24,411 
                                                                  
March 31, 2019 (Unaudited)                                                                 
Current assets   199,420    219    50,694    97    38,853    4,772    50,396    19,778    43,543    -    (75,981)   179,611    511,402 
Non-current assets   1,059,513    22    1,210,896    -    147,459    5,413    167,957    51,922    240,526    8,751    (600)   401,618    3,293,477 
Capital Expenditure   55,892    -    1,298    -    590    315    1,524    82    2,964    -    (34)   -    62,631 
Current liabilities   163,116    28    110,422    -    26,771    3,216    20,930    36,556    84,090    -    (75,806)   78,692    448,015 
Non-current liabilities   459,807    -    1,136,521    -    53,728    2,274    75,262    2,424    67,942    -    (774)   346,558    2,143,742 

 

 - 13 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3Segment information (Cont.)

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Peru             
For the three-month period ended March 31, 2018 (Unaudited)  Airports   Others   Airports   Others   Airports   Others   Airports   Airports   Airports   Airports  

Intrasegment

Adjustments

   Unallocated   Total 
Revenue   248,276    16    32,049    -    32,154    4,466    21,677    21,526    31,708    -    (2,427)   1,439    390,884 
Cost of services   (144,834)   (32)   (28,325)   -    (13,531)   (3,269)   (12,865)   (12,173)   (24,818)   -    2,427    (3,682)   (241,102)
Gross profit   103,442    (16)   3,724    -    18,623    1,197    8,812    9,353    6,890    -    -    (2,243)   149,782 
Selling, general and administrative expenses   (22,049)   (58)   (3,745)   -    (3,729)   (355)   (2,596)   (4,274)   (3,280)   -    -    (3,947)   (44,033)
Other operating income   5,021    -    -    -    16    11    28    2    -    -    -    -    5,078 
Other operating expenses   (304)   -    (140)   -    (28)   -    (127)   (7)   -    -    -    (625)   (1,231)
Operating income / (loss)   86,110    (74)   (161)   -    14,882    853    6,117    5,074    3,610    -    -    (6,815)   109,596 
Share of income in associates   -    -    -    -    -    -    -    -    -    130    -    -    130 
Amortization and depreciation   6,974    -    4,361    -    3,400    189    2,983    1,860    2,960    -    -    4,354    27,081 
Adjusted Ebitda   93,084    (74)   4,200    -    18,282    1,042    9,100    6,934    6,570    130    -    (2,461)   136,807 
Construction services revenue   (44,518)   -    -    -    (137)   -    (432)   -    (1,529)   -    -    -    (46,616)
Construction services cost   44,450    -    -    -    133    -    419    -    1,160    -    -    -    46,162 
Adjusted Ebitda excluding Construction Services   93,016    (74)   4,200    -    18,278    1,042    9,087    6,934    6,201    130    -    (2,461)   136,353 
Construction services revenue   44,518    -    -    -    137    -    432    -    1,529    -    -    -    46,616 
Construction services cost   (44,450)   -    -    -    (133)   -    (419)   -    (1,160)   -    -    -    (46,162)
Adjusted Ebitda   93,084    (74)   4,200    -    18,282    1,042    9,100    6,934    6,570    130    -    (2,461)   136,807 
Financial income                                                               13,887 
Financial loss                                                               (85,788)
Amortization and depreciation                                                               (27,081)
Income before income tax expense                                                               37,825 
Income tax expense                                                               (11,518)
Income for the period                                                               26,307 
                                                                  
December 31, 2018 (Audited)                                                                 
Current assets   202,187    251    45,042    116    21,925    3,660    51,264    44,145    51,192    -    (60,077)   173,037    532,742 
Non-current assets   1,061,352    23    1,224,475    -    149,418    5,396    168,465    46,009    239,489    8,640    (600)   409,869    3,312,536 
Capital Expenditure   176,525    -    8,264    -    1,832    1,552    8,026    2,127    21,142    -    -    64    219,532 
Current liabilities   150,971    36    106,907    -    22,874    2,341    25,525    45,130    89,414    -    (59,909)   67,262    450,551 
Non-current liabilities   504,934    -    1,121,409    -    52,904    2,450    74,457    2,098    65,552    -    (768)   348,994    2,172,030 

 

 - 14 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

4Revenue

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Aeronautical revenue   184,988    204,802 
Non-aeronautical revenue          
Commercial revenue   114,341    137,210 
Construction service revenue   60,724    46,616 
Other revenue   497    2,256 
    360,550    390,884 
           
Timing of revenue recognition          
Over time   297,562    318,274 
At a point in time   8,426    7,181 
Revenues outside the scope of IFRS 15   54,562    65,429 
Revenue   360,550    390,884 

 

5Cost of services

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Construction services cost   (59,968)   (46,162)
Salaries and social security contributions   (45,900)   (51,538)
Concession fees (**)   (42,408)   (48,907)
Amortization and depreciation   (37,647)   (25,020)
Maintenance expenses   (28,953)   (36,506)
Services and fees   (15,629)   (13,624)
Cost of fuel   (7,742)   (6,855)
Taxes (*)   (4,408)   (4,628)
Office expenses   (3,042)   (4,206)
Provision for maintenance costs   (926)   (1,111)
Others   (2,121)   (2,545)
    (248,744)   (241,102)

 

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

(**) Includes depreciation for Brazil concession assets of USD 5,007 as of March 31, 2019 (USD 7,143 as of March 31, 2018). It also includes amortization of leases of USD 687 as of March 31, 2019.

 

6Selling, general and administrative expenses

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Taxes (*)   (9,954)   (14,319)
Services and fees   (9,287)   (10,468)
Salaries and social security contributions   (7,898)   (9,404)
Bad debts   (4,295)   (937)
Amortization and depreciation (**)   (2,865)   (2,061)
Office expenses   (924)   (2,321)
Insurance   (386)   (474)
Maintenance expenses   (352)   (1,077)
Advertising   (251)   (497)
Charter service   (207)   (207)
Bad debts recovery   121    - 
Other   (2,229)   (2,268)
    (38,527)   (44,033)

 

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

(**) Includes amortization of leases of USD 164 as of March 31, 2019.

 

 - 15 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

7Other operating income

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Government grant (*)   4,049    5,021 
Other   291    57 
    4,340    5,078 

 

(*) 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.

 

8Financial results, net

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
         
Interest income   9,031    2,668 
Foreign exchange income   4,807    10,220 
Other financial income   1,960    999 
Financial income   15,798    13,887 
           
Interest expense   (22,380)   (25,925)
Foreign exchange expenses   (15,083)   (32,645)
Leases financial cost   (141)   - 
Changes in liability for Brazil concessions   (26,729)   (21,577)
Other financial loss   (969)   (5,641)
Financial loss   (65,302)   (85,788)
           
Inflation adjustment   (8,230)   - 
Inflation adjustment   (8,230)   - 
Net financial results   (57,734)   (71,901)

 

9Income tax expense

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Current income tax   (27,773)   (25,218)
Deferred income tax   33,504    13,700 
    5,731    (11,518)

 

As of March 29, 2019, AA2000 exercised an option of the asset revaluation for tax purpose included in Law No. 27.430 of Argentina, generating a deferred tax gain of ARS 1,615 million (approximately USD 37,256), as well as a higher current tax of ARS 517 million (approximately USD 11,922).

 

 - 16 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

10Intangible assets, net

 

  

Concession Assets

   Goodwill  

Patent,

Intellectual

property rights

and others

   Total 
                 
Cost                    
Balances at January 1, 2019   3,841,853    56,501    15,170    3,913,524 
Acquisitions   60,086    -    250    60,336 
Transfer   (334)   -    334    - 
Transfer from property plant and equipment   1,705    -    -    1,705 
Translation differences and inflation adjustment   (69,140)   (102)   (287)   (69,529)
    3,834,170    56,399    15,467    3,906,036 
Depreciation                    
Accumulated at January 1, 2019   967,909    -    12,073    979,982 
Depreciation of the period   41,773    -    347    42,120 
Translation differences and inflation adjustment   (20,611)   -    (250)   (20,861)
    989,071    -    12,170    1,001,241 
At March 31, 2019   2,845,099    56,399    3,297    2,904,795 
                     
Cost                    
Balances at January 1, 2018   3,312,006    57,049    14,867    3,383,922 
Acquisitions   48,092    -    16    48,108 
Translation differences   (42,983)   124    362    (42,497)
    3,317,115    57,173    15,245    3,389,533 
Depreciation                    
Accumulated at January 1, 2018   553,767    313    11,488    565,568 
Depreciation of the period   31,639    -    319    31,958 
Translation differences   (6,003)   (23)   337    (5,689)
    579,403    290    12,144    591,837 
At March 31, 2018   2,737,712    56,883    3,101    2,797,696 

 

 - 17 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

11Cash and cash equivalents

 

  

At March 31,

2019

(Unaudited)

  

At December 31,

2018

(Audited)

 
Cash to be deposited   2,150    3,488 
Cash at Banks   208,202    181,972 
Time deposits   23,605    31,879 
Other cash equivalents   21,090    27,526 
    255,047    244,865 

 

The Group operates with investment grade - financial institutions.

 

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

 

  

At March 31,

2019

(Unaudited)

  

At March 31,

2018

(Unaudited)

 
Cash and cash equivalents   255,047    275,750 
Bank overdraft   -    (1)
    255,047    275,749 

 

12Borrowings

 

  

At March 31,

2019

(Unaudited)

  

At December 31,

2018

(Audited)

 
Non-current          
Bank and financial borrowings (**)   407,040    405,944 
Notes (*)   609,037    621,380 
Others   -    427 
    1,016,077    1,027,751 
Current          
Bank and financial borrowings (**)   47,584    40,063 
Notes (*)   73,662    57,556 
Others   2    1,288 
    121,248    98,907 
Total Borrowings   1,137,325    1,126,658 

 

Changes in borrowings during the period is as follows:

 

  

For the three-month period

ended March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Balances at the beginning of the period   1,126,658    1,486,445 
Adjustment on adoption of IFRS 16   (1,715)   - 
Adjusted balances at the beginning of the period   1,124,943    1,486,445 
Loans obtained   10,315    174,289 
Loans paid   (3,231)   (452,686)
Interest paid   (10,843)   (17,332)
Accrued interest for the period   21,346    28,462 
Translation differences and inflation adjustment   (5,205)   6,034 
Balances at the end of the period   1,137,325    1,225,212 

 

The maturity of borrowings is as follows:

   1 year or less  

1 - 2

years

  

2 – 5

years

  

Over 5

years

   Total 
At March 31, 2019 (1)   177,418    170,332    469,460    820,029    1,637,239 
At December 31, 2018 (1)   172,920    170,630    472,042    836,697    1,652,289 

 

(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.

 

 - 18 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12Borrowings (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. 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 March 30, 2019 and December 31, 2018 they were guaranteed with a stand by letter of credit of Corporación América S.A. with Bank of América. These notes are fully and unconditionally guaranteed by Cerealsur S.A.

 

-In 2014 Corporación América Italia S.p.A. issued 6.25% secured notes for €50 million due 2019. These notes are secured by a pledge of the shares of Dicasa Spain SLU (pre-conversion) or Dicasa S.A.U. (post conversion), and the shares representing Corporación America Italia S.p.A. holding in Toscana Aeroporti S.p.A., a pledge of certain intercompany loan receivable and the economic first ranking pledge in respect of all the shares representing 100% of the share capital of Corporación América Italia S.p.A. held by Dicasa S.A.U. Main covenants on these bonds require compliance with certain financial ratios as well as restrictions on payment of dividends and limitations on certain lines of assets or increases in additional financial indebtedness. This secured notes were cancelled on January 2018.

 

-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.

 

-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.

 

 - 19 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12Borrowings (Cont.)

 

(**) As of March 31, 2019 significant bank and financial borrowings include the following:

 

Company   Lender   Currency   Maturity   Interest Rate  

Outstanding

(In millions

of USD)

  Capitalization(2)
Inframérica Concessionaria do Aeroporto Sao Goncalo do Amarante S.A.   BNDES   R$   September 2032   Variable   TJLP(1) plus spread   8.5   A
  BNDES   R$   June 2032   Variable   T.R. plus spread plus IPCA   2.1  
  BNDES   R$   September 2032   Variable   T.R. plus spread plus IPCA   5.5  
  BNDES   R$   September 2022   Fixed   2.50%   2.0  
  BNDES   R$   July 2032   Variable   T.R. plus spread plus IPCA   2.6  
Inframérica Concessionaria do Aeroporto de Brasilia S.A.   BNDES   R$   December 2033   Variable   TJLP(1) plus spread   279.7   A
  Bradesco   R$   July 2022   Variable   TJLP(1) plus spread   0.2   D
  Bradesco   R$   July 2022   Variable   Selic plus spread   0.1   D
Terminal Aeroportuaria de Guayaquil S.A   Banco Guayaquil SA   USD   October 2019   Variable   6.58%   0.9   D
  Banco Guayaquil SA   USD   November 2019   Variable   7.76%   0.6   D
  Banco Bolivariano CA   USD   November 2019   Variable   7.65%   2.1   D
Terminal de Cargas de Uruguay S.A.   Santander Uruguay   USD   June 2020   Fixed   4.25%   0.6   D
  Santander Uruguay   USD   April 2023   Fixed   4.40%   2.1   D
Toscana Aeroporti S.p.a.   MPS Servicio capital   Euro   June 2022   Variable   Euribor 6 month plus spread   7.1   B
  Banco de Innovación de Infraestructuras y Desarrollo   Euro   September 2027   Variable   Euribor 6 month plus spread   27.4   D
  BPM   Euro   November 2019   Fixed   0.06%   2.3   D
  Unicredit   Euro   September 2020   Fixed   0.15%   5.6   D
  Unicredit   Euro   November 2019   Fixed   0.10%-0.15%   5.6   D
  MPS Servicio capital   Euro   September 2020   Fixed   0.15%   1.1   D
  BNL   Euro   July 2019   Variable   Euribor 3 month plus spread   2.8   D
  BPM   Euro   June 2022   Variable   Euribor 3 month plus spread   0.4   D
  BPM   Euro   June 2023   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   44.8   B
    Euro   June 2022   Variable   Euribor 6 month plus spread   46.5  
Aeropuerto de Neuquén S.A.   Banco Macro   USD   August 2021   Variable   Libor plus spread   3.5   D
Total                       454.6    

 

 - 20 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12Borrowings (Cont.)

 

(**) As of December 31, 2018 significant bank and financial borrowings include the following:

 

Company   Lender   Currency   Maturity   Interest Rate  

Outstanding

(In millions

of USD)

  Capitalization(2)
Inframérica Concessionaria do Aeroporto Sao Goncalo do Amarante S.A.   BNDES   R$   September 2032   Variable   TJLP(1) plus spread   8.5   A
  BNDES   R$   June 2032   Variable   T.R.plus spread plus IPCA   2.1    
  BNDES   R$   September 2032   Variable   T.R. plus spread plus IPCA   5.4    
  BNDES   R$   September 2022   Fixed   2.50%   2.1    
  BNDES   R$   July 2032   Variable   T.R. plus spread plus IPCA   2.5    
Inframérica Concessionaria do Aeroporto de Brasilia S.A.   BNDES   R$   December 2033   Variable   TJLP(1) plus spread   278.5   A
  Bradesco   R$   July 2022   Variable   TJLP(1) plus spread   0.2   D
  Bradesco   R$   July 2022   Variable   Selic plus spread   0.1   D
Terminal Aeroportuaria de Guayaquil S.A   Banco Guayaquil SA   USD   October 2019   Variable   6.58%   1.2   D
  Banco Guayaquil SA   USD   November 2019   Variable   7.45%   0.8   D
  Banco Bolivariano CA   USD   November 2019   Variable   7.30%   2.8   D
Terminal de Cargas de Uruguay S.A.   Santander Uruguay   USD   June 2020   Fixed   4.25%   0.7   D
  Santander Uruguay   USD   April 2023   Fixed   4.40%   2.2   D
Toscana Aeroporti S.p.a.   MPS Servicio capital   Euro   June 2022   Variable   Euribor 6 month plus spread   7.1   B
  Banco de Innovación de Infraestructuras y Desarrollo   Euro   September 2027   Variable   Euribor 6 month plus spread   29.6   D
  BPM   Euro   April 2019   Fixed   0.04%   2.3   D
  Unicredit   Euro   March 2019   Fixed   0.05%   5.7   D
  BNL   Euro   July 2019   Variable   Euribor 3 month plus spread   2.9   D
  BPM   Euro   June 2022   Variable   Euribor 3 month plus spread   0.4   D
  BPM   Euro   June 2023   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   44.6   B
    Euro   June 2022   Variable   Euribor 6 month plus spread   45.8    
Total                       446.0    

 

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

IPCA: corresponds to the Brazilian Consumer Price Index

(2) A - Secured/guaranteed

B – Secured/unguaranteed

C – Unsecured/guaranteed

D - Unsecured/unguaranteed

R$ - Brazilian Reales

 

 - 21 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12Borrowings (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.

 

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

 

In 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 92.9 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.

 

In March, 2018, ICAB repaid the outstanding amount of R$ 274.4 million (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$ 48.0 million (USD 14.5 million). The loan under the Citibank Credit Agreement matured on March 14, 2018. Such loan was unsecured. The obligations under the Citibank Credit Agreement were absolutely and unconditionally guaranteed by ACI Airports S.à.r.l.

 

 - 22 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12Borrowings (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$ 300.0 million (USD 90.7 million), which matured 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$ 300.0 million (USD 90.7 million). 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 Inframérica. 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 R$ 348 million (approximately USD 106.6) with the proceeds of the loan given by the BNDES.

 

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

 

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$ 32.0 million (USD 9.7 million). Obligations under the Banco Pine Credit Agreement were 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. On December 17, 2018, ICAB loan was cancelled.

 

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 March 31, 2019 Armenia International Airports C.J.S.C. pledged cash held in bank accounts for USD 26.6 million (USD 25.5 million at December 31, 2018) and all intangible assets and property and equipment for a total of USD 164.0 million (USD 166.6 million at December 31, 2018).

 

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. 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. This guaranteed was released on February 2018 when the loan was repaid.

 

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.

 

As of March 31, 2019 and December 31, 2018, the Group was in compliance with all of its borrowing covenants.

 

 - 23 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

13Other liabilities

 

  

At March 31,

2019

(Unaudited)

  

At December

31, 2018

(Audited)

 
Non-current          
Concession fee payable (*)   808,735    791,474 
Advances from customers   22,561    24,763 
Provisions for legal claims (****)   7,829    7,966 
Provision for maintenance costs (**)   21,363    21,685 
Other taxes payable   3,810    4,430 
Employee benefit obligation (***)   8,213    8,038 
Salary payable   555    496 
Other liabilities with related parties (Note 16)   1,776    1,785 
Other payables   11,086    10,959 
    885,928    871,596 
           
Current          
Concession fee payable (*)   97,918    116,480 
Other taxes payable   21,390    24,411 
Salary payable   35,089    39,565 
Other liabilities with related parties (Note 16)   347    926 
Advances from customers   5,652    6,030 
Provision for maintenance costs (**)   7,863    7,412 
Expenses provisions   1,006    2,030 
Provision for legal claims (****)   1,495    1,717 
Other payables   36,159    26,877 
    206,919    225,448 

 

Maturity of the other liabilities is as follows:

 

   1 year or less   1 - 2 years   2 - 5 years   Over 5 years   Total 
At March 31, 2019   206,410    95,615    279,324    2,059,130    2,640,479 
At December 31, 2018   224,468    87,901    268,503    2,091,094    2,671,966 

 

(*) 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 three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Balances at the beginning of the period   907,954    971,043 
Financial result   26,729    21,577 
Concession fees   37,401    41,765 
Payments   (58,468)   (61,312)
Translation differences and inflation adjustment   (6,963)   (5,620)
Balances at the end of the period   906,653    967,453 

 

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

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Balances at the beginning of the period   29,097    31,703 
Accrual of the period   1,126    1,209 
Use of the provision   (443)   (846)
Translation differences and inflation adjustment   (554)   828 
Balances at the end of the period   29,226    32,894 

 

 

 - 24 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

13Other liabilities (Cont.)

 

(***) Changes in the period of the provision for employee benefits is as follows:

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Balances at the beginning of the period   8,038    9,068 
Actuarial gain/loss (in other comprehensive income)   313    (9)
Interest for services   35    84 
Service cost   73    74 
Amounts paid in the period   (119)   (130)
Translation differences and inflation adjustment   (127)   215 
Balances at the end of the period   8,213    9,302 

 

(****) Changes in the period of the provision for legal claims is as follows:

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Balances at the beginning of the period   9,682    8,925 
Accrual of the period   145    409 
Use of the provision   (167)   95 
Translation differences and inflation adjustment   (336)   (137)
Balances at the end of the period   9,324    9,292 

 

14Equity

 

a) Share capital

 

The movements of shares capital for the period is as follows:

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
At the beginning of the period   160,022    1,500,000 
Reverse stock split (Note 1)   -    (1,351,883)
Initial Public Offering (Note 1)   -    11,905 
At the end of the period   160,022    160,022 

 

b) Share premium

 

As of March 31, 2019 and 2018 includes the differences between the nominal value of USD 1 per common share and the initial public offering price of USD 17 deducted from the underwriting discounts and commissions and other expenses directly related to the offering.

 

  

For the three-month

period ended

March 31,

 
Share premium   190,476 
Underwriting discounts and expenses   (9,990)
Net share premium   180,486 

 

 - 25 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

14Equity (Cont.)

 

c) Other comprehensive income

 

The movements of the reserve of other comprehensive income for the period of the owners of the Company is as follows:

 

  

Currency

translation

adjustments

  

Remeasurement

of defined benefit

obligations (*)

  

Share of other

comprehensive

income from

associates

  

Income

Tax effect

(*)

  

Transfer

from

shareholders

equity –

currency

translation

differences

   Total 
                         
Balances at January 1, 2019   (401,444)   330    (40,761)   (99)   63,402    (378,572)
Other comprehensive income / (loss) for the period   (16,810)   (193)   76    46    -    (16,881)
For the period ended March 31, 2019   (418,254)   137    (40,685)   (53)   63,402    (395,453)
                               
Balances at January 1, 2018   (241,091)   123    (39,611)   (57)   63,402    (217,234)
Other comprehensive income (loss) for the period   (20,743)   6    115    (1)   -    (20,623)
For the period ended March 31, 2018   (261,834)   129    (39,496)   (58)   63,402    (237,857)

 

(*) Income tax relating to OCI amounts to Remeasurement of defined benefit obligations. The movement was recognized as other comprehensive income of other reserves.

 

d) Non- controlling interest

 

  

For the three-month period ended

March 31,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
At the beginning of the period   454,453    335,359 
Adjustment on adoption of IFRS 9 (net of tax)   -    542 
Adjusted balance at the beginning of the period   454,453    335,901 
Shareholder contributions (*)   -    43,703 
Loss for the period   (6,030)   (188)
Other comprehensive (loss)/income          
Currency translation   (9,707)   (3,514)
Remeasurement of defined benefit obligations   (119)   5 
Reserve for income tax   29    (1)
    (9,797)   (3,510)
Changes in non-controlling interest          
Changes in the participations –acquisitions (**)   -    (14,039)
Dividends approved   (7,308)   (8,477)
    (7,308)   (22,516)
Non-controlling interest at the end of the period   431,318    353,390 

 

(*) Corresponds to contributions made by the non-controlling interest in Inframerica Concessionária do Aeroporto de Brasilia S.A.

(**) On February 19, 2018, CAI purchased an additional 4.568% (850,235 shares) of the share capital of Toscana Aeroporti S.p.A from Fondazione Pisa, for a purchase price of € 15.80 per share, paying a total amount of € 13,434 (approximately USD 16,513). As a result of the acquisition, CAI holds approximately 55.698% of Toscana Aeroporti’s share capital.

 - 26 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

15Contingencies, commitments and restrictions on the distribution of profits

 

a. Contingencies

 

CAAP and its subsidiaries are, from time to time, subject to various claims, lawsuits and other legal proceedings, including customer claims, in which third parties are seeking payment for alleged damages, reimbursement for losses or indemnity. Some of these claims, lawsuits and other legal proceedings are subject to substantial uncertainties. Accordingly, the potential liability with respect to such claims, lawsuits and other legal proceedings cannot be estimated with certainty. Management, with the assistance of legal counsel, periodically reviews the status of each significant matter and assesses potential financial exposure. If a potential loss from a claim, lawsuit or proceeding is considered probable and the amount can be reasonably estimated, a provision is recorded. Accruals for loss contingencies reflect a reasonable estimate of the losses to be incurred based on information available to management as of the date of preparation of the financial statements, and take into consideration the Group’s litigation and settlement strategies.

 

The Company believes that the aggregate provisions recorded for losses in these financial statements, are adequate based upon currently available information.

 

There are no other lawsuits or legal proceedings different from the ones included in the Consolidated Financial Statements for the year ended December 31, 2018.

 

b. Commitments

 

Argentine Concession Agreement

 

AA2000 has set up a surety bond as guarantee for concession contract fulfilment. During March of every year, the amount of the surety bond is adjusted considering the variation of the U.S. dollar and the International Aerospace Use Rate. As of March 31, 2019, this guarantee amounts to AR$ 1,124.9 million (AR$ 528.9 million as of December 31, 2018).

 

Toscana Aeroporti S.p.A. expansion plan

 

On January 26, 2019, Toscana Aeroporti presented the expansion plan for the Pisa Airport terminal and the related flight infrastructures included in the 2018-2028 Master Plan, i.e., the program of works regarding the whole infrastructure system within the Pisa Airport, including the secondary runway and the aprons, as well as the project for creating an aircraft maintenance hub.

 

On February 6, 2019, a favorable opinion was obtained regarding the compliance of the works performed in connection with the urban planning. Upon this opinion, the administrative procedure (Conference of Services) related to the Master Plan 2014-2029 of the Florence airport, which calls for the construction of a new 2,400-meter runway and a new terminal, was closed. Pursuant to the regulations governing this administrative procedure, as well as ENAC’s regulations concerning the environmental and urban compatibility procedures relating to airport development plans, the Italian Ministry of Infrastructures and Transport will then issue the formal closure of the administrative procedure. Once this administrative procedure is closed, ENAC will have to issue its formal approval of the development plan concerning the Florence Airport.

 

Refer to Note 19 for subsequent events related to Toscana Aeroporti commitments.

 

International Airport C/C Carlos A. Curbelo (Laguna del Sauce) – Punta del Este extension

 

On March 28, 2019, Resolution 1351/2019 was issued by the Ministry of Defense, which approved the amendment of the Punta del Este Concession Agreement, extending its term to March 31, 2033. This extension is subject to the execution of the Amendment to the Punta del Este Concession Agreement.

There are no new commitments or significant changes related to the concession agreements in the current period from the ones included in the Consolidated Financial Statements for the year ended December 31, 2018, except for the abovementioned.

 

 - 27 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

15Contingencies, commitments and restrictions on the distribution of profits (Cont.)

 

c. Restrictions to the distribution of profits and payment of dividends

 

As of March 31, 2019 and December 31, 2018, equity as defined under Luxembourg laws and regulations consisted of:

 

  

At March 31,

2019

(Unaudited)

  

At December

31, 2018

(Audited)

 
Share capital   160,022    160,022 
Share premium   180,486    180,486 
Legal reserve   176    176 
Free distributable reserves   385,055    385,055 
Non-distributable reserves   1,351,883    1,351,883 
Retained earnings   (73,012)   (72,231)
Total equity in accordance with Luxembourg law   2,004,610    2,005,391 

 

At least 5% of the Company’s net income per year, as calculated in accordance with Luxembourg law and

regulations, must be allocated to the creation of a legal reserve equivalent to 10% of the Company’s share capital. Dividends may not be paid out of the legal reserve.

 

The Company may pay dividends to the extent, among other conditions, that it has distributable retained earnings calculated in accordance with Luxembourg laws and regulations.

 

16Related party balances and transactions

 

Corporación América Airports S.A. is controlled by ACI Airports S.à.r.l., which is controlled by ACI Holding S.à.r.l., which is controlled by Corporación America International S.à.r.l. (previously denominated America Corporation International S.à.r.l.), Luxembourg’s companies.

 

Corporacion America International S.à.r.l. is controlled by Liska Investments Corporation, a company incorporated under the laws of the British Virgin Islands.

 

Liska Investments Corporation is controlled by Southern Cone Foundation (CAAP`s ultimate parent company), a foundation created under the laws of Liechtenstein, having its corporate domicile in Vaduz. The foundation's purpose is to manage its assets through the decisions adopted by its independent board of directors. The potential beneficiaries of this foundation are members of the Eurnekian family and religious, charitable and educational institutions.

 

Transactions and balances with “Associates” are those carried out with entities over which CAAP exerts significant influence in accordance with IFRS, but does not have control. Transactions and balances with related parties, which are not associates and are not consolidated are disclosed as “Other related parties”.

 

The Group receives services from related parties, such as internal audit, management control, financial assistance, technology outsourcing services and construction services. The Group has also significant assets and liabilities arise from financial agreements with related parties.

 - 28 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

16Related party balances and transactions (Cont.)

 

Summary of balances with related parties are:

 

  

At March 31,

2019

  

At December 31,

2018

 
Year-end balances          
           
(a) Arising from sales / purchases of goods / other          
Trade receivables with associates   1,246    1,189 
Trade receivables with other related parties   1,352    1,799 
Other receivables with associates   714    856 
Other receivables with other related parties   9,127    8,755 
Other financial assets with associates   4,633    5,858 
Other financial assets with other related parties   17,142    14,794 
Trade payables to other related parties   (3,158)   (4,281)
    31,056    28,970 
(b) Other liabilities          
Other liabilities to other related parties   (2,123)   (2,711)
    (2,123)   (2,711)
(c) Other balances          
Cash and cash equivalents in other related parties   5,467    9,986 
    5,467    9,986 

 

  

For the three-month period ended

March 31,

 
   2019   2018 
Transactions        
Commercial revenue   1,439    1,657 
Fees   (1,760)   217 
Interest accruals   348    (528)
Acquisition of goods and services   (5,082)   (3,421)
Others   565    (127)

 

The group leases buildings to other related parties which are recognized under the scope of IFRS 16 and accounted as of January 1, 2019 in Lease liabilities line. Additionally, the group has variable equipment leases with other related parties that are excluded from the lease liability according to IFRS 16. Transactions related to those leasing’s are included in Acquisition of goods and services line for an amount of USD 1,589.

 

Remunerations received by the Group’s key staff amounted to approximately 1.73% of total remunerations accrued at March 31, 2019 (2.64% as of March 31, 2018).

 

17Cash flow disclosures

 

  

For the three-month period ended

March 31,

 
Changes in working capital 

2019

(Unaudited)

  

2018

(Unaudited)

 
Other receivables and credits   (26,358)   16,207 
Inventories   545    611 
Other liabilities   (58,353)   (99,219)
    (84,166)   (82,401)

 

 - 29 - 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

17Cash flow disclosures (Cont.)

 

The most significant non-cash transactions are detailed below:

 

   For the three-month period ended March 31, 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Intangible assets acquisition with an increase in Other liabilities / Borrowings   (17)   (517)
Right-of-use asset initial recognition with an increase in Lease liabilities   (11,904)   - 
Dividends not paid   (7,308)   (6,232)
Borrowings cost capitalization   -    (3,405)
Dividends on preferred shares   (74)   (160)

 

18Fair value measurement of financial instruments

 

According to the classification included in Note 3 B of the Consolidated Financial Statements as of December 31, 2018, the Company categorizes its financial instruments as assets and liabilities at amortized cost and fair value through profit or loss.

 

For the majority of instruments at amortized cost, the fair values are not materially different to their carrying amounts, since the interest receivable/payable is either close to current market rates or the instruments are short-term in nature. Significant differences were identified for the following instruments at March 31, 2019:

 

   Fair value   Carrying amount 
Trust funds   97,053    101,655 
Long-term borrowings   990,748    1,016,077 

 

19Subsequent events

 

Aeropuertos Andinos del Perú S.A. loan

 

On April 10, 2019, Aeropuertos Andinos del Perú S.A. (“AAP”) entered into a loan agreement as borrower with VolcomCapital Deuda Perú II Fondo de Inversión (administered and managed by VolcomCapital Administradora General de Fondos S.A.) (“Volcom”) in the amount of USD 10,5 million. Andino Investment Holdings S.A.A. and CAAP as shareholders of AAP were established as joint and several guarantors of AAP for the obligations that could be generated by virtue of the loan agreement. For this purpose, CAAP issued an irrevocable first demand guarantee letter in the amount of USD 5,25 million in favour of Volcom.

 

On April 16, 2019, AAP repaid loans provided by CAAP for a total amount of USD 4.6 million with the proceeds of the loan given by Volcom.

 

Aeropuertos Andinos del Perú S.A. guarantees

 

On April 12, 2019, CAAP issued guarantees in favour of AAP for concession contract fulfilment and works to be performed with two standby letters of credit of CAAP with Citibank for a total amount of USD 2,25 and USD 0,5 respectively.

 

Toscana Aeroporti S.p.A. expansion plan

 

On April 16, 2019, the decree ratifying the successful completion of the 2014-2029 Master Plan procedure for Florence's Amerigo Vespucci Airport, which involves the construction of a new 2,400-metre runway and a new terminal, was signed by the Italian Ministry of Infrastructure and Transport.

 

The decree marks the conclusion of the authorization procedure for the project, which had begun in 2015, following the favourable Environmental Impact Assessment awarded on December 28, 2017, and the end of the Conference of Services on February 6, 2019.

 

19Subsequent events (Cont.)

 

The Ministry will submit its decision to Italian Civil Aviation Authority (ENAC) for the ensuing formalities.

 

There are no other subsequent events that significantly affect the Company´s financial position as of March 31, 2019.

 

 - 30 - 

 

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