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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 August, 2019

 

Commission File Number: 001-38354

 

 

 

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.

 

 

 

   

 

 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

 

Our subsidiary in Argentina, Aeropuertos Argentina 2000 S.A. (“AA2000”), files quarterly financial statements (both on a consolidated and individual basis) in accordance with the accounting framework established by the Comision Nacional de Valores (“CNV”) and other periodic reports and notices in Spanish with the CNV in Argentina because certain of its debt securities are subject to the public offering regime in Argentina. All such reports and notices are available at the website of the CNV (http://www.cnv.gob.ar). AA2000 also files quarterly consolidated and individual financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”) in English to the Luxembourg Stock Exchange on which these debt securities are listed and to the trustee under the indenture governing these debt securities. We are furnishing the information under cover of this Form 6-K to make this information available to the holders of our common shares.

 

This Form 6-K contains a free translation into English of the stand-alone consolidated interim financial statements for the six months ended June 30, 2019 of AA2000 (the “AA2000 Consolidated Financial Statements”) as well as the stand-alone condensed individual interim financial statements for the six months ended June 30, 2019 of AA2000 (the “AA2000 Individual Financial Statements” and jointly with the AA2000 Consolidated Financial Statements, the “AA2000 Financial Statements”) that have been made publicly available in Argentina in Spanish. The AA2000 Financial Statements, have been prepared in accordance with the accounting framework established by the CNV, which is based on the application of the International Financial Reporting Standards (“IFRS”). We have determined that, as of July 1, 2018, the Argentine economy qualifies as a hyperinflationary economy according to the guidelines of the International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS 29”), since the total cumulative inflation in Argentina in the 36 months prior to July 1, 2018, as measured by the wholesale price index published by the INDEC, exceeded 100%. Accordingly, IAS 29 guidance is applicable to our financial statements for periods ending after July 1, 2018. These AA2000 Financial Statements are presented in Argentine pesos and were audited in accordance with International Standards on Auditing as approved by the International Auditing and Assurance Standards Board (IAASB).

 

There are certain differences between the AA2000 Consolidated Financial Statements and the consolidating information for the Argentine segment included in the consolidated financial statements of Corporación América Airports S.A. (“CAAP”), such as AA2000’s own transition date to IFRS and its reporting currency, among others.

 

As a result, the AA2000 Financial Statements contained in this Form 6-K are for informational purposes only and not comparable to the financial information included in the Argentine segment in the consolidated financial statements of CAAP to be included in our annual report on Form 20-F and that will consolidate the results of operations and financial condition of all our subsidiaries. Furthermore, neither the AA2000 Consolidated Financial Statements nor the AA2000 Individual Financial Statements should be construed as any indication of how our Argentina segment information will be presented in the consolidated financial statements of CAAP.

  

   

 

 

Exhibits

 

Exhibit No.   Description  
     
99.1   Free translation into English of AA2000 Condensed Consolidated Interim Financial Statements for the six months ended June 30, 2019.
     
99.2   Free translation into English of AA2000 Condensed Individual Interim Financial Statements for the six months ended June 30, 2019.

 

   

 

 

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: August 12, 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

 

Aeropuertos Argentina 2000 S.A.

 

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

 

   

 

 

Aeropuertos Argentina 2000 S.A.

 

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

 

Index

 

Consolidated Statements of Comprehensive Income 2
Consolidated Statements of Financial Position 3
Consolidated Statements of Changes in Equity 4
Consolidated Statements of Cash Flows 5
Notes to the Condensed Consolidated Interim Financial Statements 6
Summary of Information requested by Resolution N° 368/01 Of the National Securities Commission 27
Review Report  
Report of the Supervisory Committee  

 

$ = Argentine Peso

US$ = US Dollar

 

   

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

 

Legal address: Honduras 5663 - Autonomous City of Buenos Aires
Principal activity: Exploitation, administration and operation of airports

 

Condensed Consolidated Interim Financial Statements

For the six-month period of the

Fiscal Year N° 22 commenced January 1, 2019

 

DATE OF REGISTRATION WITH THE PUBLIC REGISTRY OF COMMERCE:

 

Of the By-laws:   February 18, 1998
Of the last modification of the By-laws:   October 11, 2016
Registration number with the Public Registry:   1645890
Expiration date of the company:   February 17, 2053
Parent Company:   Corporación América S.A.
Legal address:  

Honduras 5673 -

 

    Autonomous City of Buenos Aires
Principal activity:   Investments and financing
Participation of the Parent Company in common stock and total votes:    45.90%

 

CAPITAL STOCK (Note 13)

 

   Subscribed   Paid-in 
   $ 
Issued          
79,105,489 Class “A” common shares of AR$ 1 par value and 1 vote each   79,105,489    79,105,489 
79,105,489 Class “B” common shares of AR$ 1 par value and 1 vote each   79,105,489    79,105,489 
61,526,492 Class “C” common shares of AR$ 1 par value and 1 vote each   61,526,492    61,526,492 
38,779,829 Class “D” common shares of AR$ 1 par value and 1 vote each   38,779,829    38,779,829 
629,252,640 Preferred shares of AR$ 1 par value with no voting rights   629,252,640    629,252,640 
    887,769,939    887,769,939 

 

 1 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Consolidated Statement of Comprehensive Income

For the three and six month periods ended at June 30, 2019 and 2018

 

      Three months at   Six months at 
      06.30.19   06.30.18   06.30.19   06.30.18 
   Note  $ 
Continuous Operations                       
Revenue  4   7,032,157,699    6,823,891,397    14,825,276,573    13,735,330,368 
CINIIF 12 - paragraph 14 Credit  5   3,780,152,245    2,383,572,763    6,296,936,191    3,775,757,571 
Cost of service  10   (4,546,097,980)   (3,724,422,247)   (9,025,930,505)   (7,575,313,405)
CINIIF 12 - paragraph 14 Debit      (3,777,504,000)   (2,381,789,507)   (6,292,337,439)   (3,771,659,472)
Gross Profit      2,488,707,964    3,101,252,406    5,803,944,820    6,164,115,062 
Distribution and selling expenses  10   (437,019,299)   (464,654,802)   (934,727,587)   (895,841,509)
Administrative expenses  10   (238,905,997)   (493,490,152)   (548,090,139)   (851,334,241)
Other income and expenses, net  4   160,045,540    165,840,132    352,654,143    324,071,059 
Operating profit      1,972,828,208    2,308,947,584    4,673,781,238    4,741,010,371 
       -                
Finance Income  4   (281,624,753)   1,399,861,710    219,074,970    1,347,108,315 
Finance Costs  4   1,615,216,217    (5,038,351,895)   716,945,635    (5,122,493,107)
Result from exposure to changes in the purchasing power of the currency      (255,742,232)   95,641,618    (706,499,575)   (374,953,063)
Income / (Loss) before income tax      3,050,677,440    (1,233,900,983)   4,903,302,268    590,672,516 
Income tax  4   (218,282,356)   178,123,895    317,293,316    (534,889,590)
Income / (Loss) for the period for continuous operations      2,832,395,084    (1,055,777,088)   5,220,595,584    55,782,926 
Net Income / (Loss) for the period      2,832,395,084    (1,055,777,088)   5,220,595,584    55,782,926 
Other comprehensive income      -    -         - 
Comprehensive Income / (Loss) for the period      2,832,395,084    (1,055,777,088)   5,220,595,584    55,782,926 
            -           
Income attributable to:                       
Shareholders      2,837,053,007    (1,060,080,787)   5,224,781,184    54,895,399 
Non - Controlling Interest      (4,657,923)   4,303,699    (4,185,600)   887,527 
                        

Earnings per share basic and diluted attributable to shareholders of the Company during the period (shown in $ per share ) from continuous operations

      10.8396    (4.1029)   19.9610    0.1779 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements and should be read together with the Consolidated Accounting Statements audited for the year ended at December 31, 2018.

 

 2 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Consolidated Statement of Financial Position

At June 30, 2019 and December 31, 2018

 

      06.30.19   12.31.18 
   Note  $ 
Assets           
Non- Current Assets             
Property, plant and equipment      65,158,514    69,985,186 
Intangible Assets  5   47,865,029,368    43,601,776,781 
Rights of use      156,672,872    - 
Deferred Income tax assets      651,692    782,411 
Other receivables  4   4,815,088,955    4,957,551,738 
Total Non-Current Assets      52,902,601,401    48,630,096,116 
Current Assets             
Other receivables  4   1,625,923,536    1,290,599,946 
Trade receivables, net  4   2,875,638,998    2,851,986,766 
Other Assets      10,729,193    9,089,486 
Investments      -    228,309,558 
Cash and cash equivalents  4   2,608,334,417    4,829,299,863 
Total Current Assets      7,120,626,144    9,209,285,619 
Total Assets      60,023,227,545    57,839,381,735 
Shareholders’ Equity and Liabilities             
Equity attributable to Shareholders:             
Common shares      258,517,299    258,517,299 
Preferred shares      629,252,640    629,252,640 
Share Premium      137,280,595    137,280,595 
Capital adjustment      8,942,194,399    8,942,194,399 
Legal and facultative reserve      10,584,440,436    10,584,440,436 
Retained earnings      12,498,775,960    7,273,994,776 
Subtotal      33,050,461,329    27,825,680,145 
Non-Controlling Interest      14,856,307    19,041,907 
Total Shareholders’ Equity      33,065,317,636    27,844,722,051 
Liabilities             
Non-Current Liabilities             
Provisions and other charges  9   155,322,227    163,599,135 
Borrowings  6   14,361,485,491    16,651,145,303 
Deferred income tax liabilities      4,701,499,475    6,320,624,680 
Lease liabilities      35,384,898    - 
Accounts payable and others  4   69,273,348    107,709,527 
Total Non- Current Liabilities      19,322,965,439    23,243,078,645 
Current Liabilities             
Provisions and other charges  9   478,484,504    494,115,201 
Borrowings  6   2,452,948,173    2,060,679,380 
Income tax, net of prepayments      262,353,325    9,847,650 
Lease liabilities      115,642,762    - 
Accounts payable and others  4   4,010,168,411    3,788,872,381 
Fee payable to the Argentine National Government      315,347,295    398,066,426 
Total Current Liabilities      7,634,944,470    6,751,581,038 
Total Liabilities      26,957,909,909    29,994,659,683 
Total Shareholders’ Equity and Liabilities      60,023,227,545    57,839,381,735 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements and should be read together with the Consolidated Accounting Statements audited for the year ended at December 31, 2018.

 

 3 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Consolidated Statement of Changes in Equity

At June 30, 2019 and 2018

 

   Attributable to equity shareholders of the Company 
  

Capital Stock

Common

Shares

  

Capital Stock

Preferred

Shares

   Share Premium  

 

Adjustment of

capital

  

Legal

Reserve

  

Facultative

Reserve

  

Retained

Earnings

   Total  

Non-

Controlling

Interest

  

Total

Shareholders’

Equity

 
   $ 
Balance at 01.01. 19   258,517,299    629,252,640    137,280,595    8,942,194,399    385,254,042    10,199,186,394    7,273,994,776    27,825,680,145    19,041,907    27,844,722,052 
Net Income for the period   -    -    -    -    -    -    5,224,781,184    5,224,781,184    (4,185,600)   5,220,595,584 
Balance at 06.30.19   258,517,299    629,252,640    137,280,595    8,942,194,399    385,254,042    10,199,186,394    12,498,775,960    33,050,461,329    14,856,307    33,065,317,636 
                                                   
                                                   
Balance at 01.01. 18   258,517,299    616,914,353    137,280,595    8,933,626,394    381,154,769    5,675,535,839    10,471,883,956    26,474,913,205    17,086,130    26,491,999,335 
Adjustment IFRS 9   -    -    -    -    -    -    97,689,358    97,689,358    -    97,689,358 
Balance at 01.01.18 restated   258,517,299    616,914,353    137,280,595    8,933,626,394    381,154,769    5,675,535,839    10,569,573,314    26,572,602,563    17,086,130    26,589,688,693 
Resolutions of the Shareholders' Meeting of April 9, 2018 (Note 15):   -    -    -    -    -    -    -    -    -    - 
Capitalization of dividends corresponding to preferred shares   -    12,338,287    -    8,568,004    -    -    (20,906,291)   -    -    - 
Legal and Facultative Reserve   -    -    -    -    4,099,273    4,523,650,556    (4,527,749,829)   -    -    - 
Net Income for the period   -    -    -    -    -    -    54,895,399    54,895,399    887,527    55,782,926 
Balance at 06.30.18   258,517,299    629,252,640    137,280,595    8,942,194,398    385,254,042    10,199,186,395    6,075,812,593    26,627,497,962    17,973,657    26,645,471,619 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements and should be read together with the Consolidated Accounting Statements audited for the year ended at December 31, 2018. 

 

 4 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Consolidated Statements of Cash Flow

For the six month periods ended at June 30, 2019 and 2018

 

      06.30.19   06.30.18 
   Note  $ 
Cash Flows from operating activities             
Net income for the period      5,220,595,584    55,782,926 
Adjustment for:             
Amortization of intangible assets  5 / 10   2,033,683,604    1,397,142,023 
Depreciation of property , plant and equipment  10   4,941,382    5,454,091 
Amortization right of use  10   60,782,179    - 
Specific allocation of accrued and unpaid income  7   315,347,295    329,661,366 
Income Tax  4   (317,293,316)   534,889,590 
Bad debts provision  8 / 10   159,231,890    21,401,800 
Accrued and unpaid borrowing interest costs  6   661,194,920    558,112,176 
Accrued deferred revenues and additional consideration  9   (205,022,542)   (147,014,214)
Accrued and unpaid Exchange differences      (1.214.863.569)   3,843,683,254 
Litigations provision  9   2.302.468    8,424,858 
Inflation Adjustment      209.965.234    (492,987,486)
Changes in operating assets and liabilities:             
Changes in trade receivables      (704,905,552)   67,693,123 
Changes in other receivables      (1,336,508,846)   678,597,225 
Changes in other assets      (1,639,707)   (7,267,679)
Changes in accounts payable and others      896,081,693    (868,997,628)
Changes in liabilities for current income tax      (822,369,768)   (154,193,733)
Changes in provisions and other charges      264,517,731    92,159,882 
Changes in fee payable to the Argentine National Government      (325,205,217)   (260,729,552)
Increase of intangible assets      (6,295,648,462)   (3,751,337,272)
Income tax paid      (429,664,722)   (601,821,292)
Net cash (used in)/ provided by operating activities      (1,824,477,721)   1,308,653,458 
Cash Flow for investing activities             
Collection of investments      221,811,371    - 
Addition of property, plant and equipment      (114,710)   (90,765)
Net Cash Flow generated by / (used in) investing activities      221,696,661    (90,765)
Cash Flow from financing activities             
New Borrowings  6   138,501,906    - 
Payment of leases      (62,389,979)   - 
Borrowings paid- principal  6   (622,041,476)   (54,166,430)
Borrowings paid- interests  6   (627,045,703)   (469,768,937)
Dividends paid  9   -    (151,348,169)
Net Cash Flow used in financing activities      (1,172,975,252)   (675,283,536)
              
Net (Decrease) / Increase in cash and cash equivalents      (2,775,756,312)   633,279,157 
Changes in cash and cash equivalents             
Cash and cash equivalents at the beginning of the period (*)      4,829,299,863    4,192,379,330 
Net (Decrease) / Increase in cash and cash equivalents      (2,775,756,312)   633,279,157 
Inflation adjustment      760,434,641    (539,734,144)
Foreign Exchange differences      (205,643,775)   705,202,917 
Cash and cash equivalents at the end of the period      2,608,334,417    4,991,127,260 
Transactions that do not represent changes in cash and cash equivalents:             
Acquisition of intangible assets through liabilities for finance leases  6   1,287,729    24,420,299 
Dividends on preferred shares  14   60,321,152    9,800,729 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements and should be read together with the Consolidated Accounting Statements audited for the year ended at December 31, 2018.

 

 5 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 1 - COMPANY ACTIVITIES

 

Aeropuertos Argentina 2000 S.A. (“AA2000” or the “Company”) was incorporated in 1998, after the consortium of companies won the national and international bid for the concession rights for the use, management and operation of the “A” Group of the Argentine National Airport System. “A” Group includes 33 airports, which operate in Argentina (the “Concession”)

 

The Concession was granted pursuant to the concession agreement the Company entered into with the Argentine National Government on February 9, 1998, as subsequently amended and supplemented by the memorandum of agreement we entered into with the Argentine National Government on April 3, 2007 (the “Memorandum of Agreement”). We refer to the concession agreement as amended and supplemented by the Memorandum of Agreement as the “Concession Agreement”.

 

The Concession is for an initial period of 30 years through February 13, 2028. The Company may extend the term of the Concession for an additional period of up to 10 years. The Company has made a formal request to the National Airports Regulatory Organization (Organismo Regulador Del Sistema Nacional de Aeropuertos) (the “ORSNA”) to extend the term of the Concession for the additional 10-year period ending February 13, 2038. We can provide no assurance that the Argentine National Government will grant our request or on what conditions.

 

In addition, under the terms of the Concession Agreement, the Argentine National Government has the right to buyout our Concession as of February 13, 2018, and if such right is exercised, it is required to pay the Company a compensation.

 

As from July 24, 2012 The Company has become responsible for the management of the operation of Termas de Rio Hondo airport. On March 21, 2013, the National Executive Branch through Decree N° 303/2013, ratified the incorporation of the airport to the National Airport System, its inclusion into the “A” Group at December 31, 2018 is still pending.

 

Likewise, and in order to be able to continue with the policies related to the expansion of the aviation market, the National State issued Decree No. 1092/17 on December 22, 2017 by which it incorporated the Palomar Airport, located in the Province of Buenos Aires. Aires, to the National Airport System.

 

In order to incorporate the said Airport into "Group A", on December 27, 2017 the National Government issued Decree No. 1107/17.

 

As a result, as of such date, the Company is responsible for the exploitation, administration and operation of Palomar Airport under the terms set forth in the Concession Contract approved by Decree No. 163/97 and the Adjustment Agreement Act. of the Concession Contract approved by Decree No. 1799/07.

 

The current note to the condensed consolidated interim financial statements does not reflect all the information requested in the annual financial statements as there are no significate differences. It should be read together with the accounting statements audited for the year ended at December 31, 2018.

 

 6 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - BASIS FOR CONSOLIDATION

 

The consolidated financial statements include the assets, liabilities and results of the following subsidiaries (hereafter the Group):

 

Subsidiaries (1) 

Number of

common shares

  

Participation in

capital and

possible votes

  

Book entry

value at

06.30.19

  

Net

Shareholders

‘equity at

closing

  

Income for the

period

 
           $ 
Servicios y Tecnología Aeroportuarios S.A. (2)   14,398,848    99.30%   47,633,930    47,968,317    2,184,355 
Cargo & Logistics SA.   5,566,259    98.63%   982,304    995,947    (994,150)
Paoletti América S.A.   6,000    50.00%   15,527    31,051    (3,478)
Texelrío S.A. (3)   84,000    70.00%   61,220,474    75,707,178    (9,757,733)
Villalonga Furlong S.A (4)   123,700    1.46%   47,342    3,242,537    (22,249)

 

(1)Companies based in Argentina.
(2)Includes adjustments under IFRS for the preparation and presentation of the corresponding financial statements.
(3)Shareholders Equity includes 4,000,000 of preferred shares of AR$1 par value
(4)The Company directly and indirectly owns 98.42% of the capital stock and votes of this entity.

 

The accounting policies of the subsidiaries have been modified, where necessary, to ensure consistent application with the Group accounting policies.

 

AA2000 holds 99.3% of the shares of Servicios y Tecnología Aeroportuarios S.A. (Sertear), which purpose is to manage and develop activities related to duty-free zones, import and export operations, exploit and manage airport-related services, provide transportation services (both passenger and cargo), and warehouse usage services.

 

AA2000 owns 98.63% of the capital stock of Cargo y Logística S.A., holder of 98.42% of the shares of Villalonga Furlong S.A. Villalonga Furlong S.A. is the holder of Class “B” shares of Empresa de Cargas Aéreas del Atlántico Sud S.A., under liquidation, representing 45% of its capital stock. The remaining 55% of the capital stock, (the Class “A” shares) are owned by the Argentine National Government - Ministry of Defense. Empresa de Cargas Aéreas del Atlántico Sud S.A. (which, as of the date of these consolidated financial statements, is under liquid proceedings as a result of the application of the provisions of Section 94 subsection 2 of Commercial Law 19550) was the concessionaire of the exploitation and provision of international air cargo storage, stowage and warehouse services until June 30, 2009. As from that date the services in charge of Empresa de Cargas Aéreas del Atlántico Sud S.A. are performed by AA2000 in accordance with the Bidding Terms and Conditions of the AA2000 concession agreement.

 

The Company holds 50% of the capital stock and votes of Paoletti América S.A. Pursuant to shareholder agreements, AA2000 is in charge of the administration of Paoletti America S.A, and also appoints the Chairman of the Board of Directors, who, in accordance with the corporate by-laws, has a double vote in case of a tie voting. Therefore, the Company has consolidated the assets, liabilities and results of Paoletti América S.A.

 

In addition, the Company holds 70% of the capital and votes of Texelrio S.A. whose corporate purpose is, among others, to develop, operate and manage all types of services related to park and airport maintenance.

 

 7 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES

 

The Condensed Consolidated Interim Financial Statements are presented in Argentine Pesos, except when it specifically indicates otherwise. These statements were approved by the Board of Directors of the Company on August 7, 2019.

 

The National Security Commission (CNV) through Technical Resolutions N° 562/09 and 576/10 has established the application of Technical Resolutions N° 29 and 43 of the Argentine Federation of Professional Council in Economic Sciences which adopts the application of IFRS (International Financial Reporting Standards) issued by the IASB (International Accounting Standards Board), for those entities under the public offering regime Law N° 17.811, whether due to capital stock or corporate bonds or because they have requested authorization to list for trading on stock exchanges.

 

Application of those standards is mandatory for the Company as from the fiscal year beginning on January 1 2012. Therefore, the transition date, as established in the IFRS 1 “First Time Adoption of the IFRS” was January 1, 2011.

 

The Condensed Consolidated Interim Financial Statements of AA2000 have been prepared in accordance with IFRS and IFRIC (International Financial Reporting Interpretations Committee).

 

These accounting policies have been consistently applied to all the years presented unless otherwise stated.

 

1) Comparative Information

 

The information included in these financial statements was extracted from the Condensed Consolidated Interim Financial Statements of AA2000 as of June 30, 2018 and the Consolidated Financial Statements at December 31, 2018, timely approved by the Company’s Board and Shareholders and restated at the closing currency at June 30, 2019, based on the application of IAS 19 (see Note 3.6)

 

2) Controlled

 

The Company controls an entity when the group is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The subsidiaries are consolidated as from the date control is transferred to the Company. They are deconsolidated from the date that control ceases. (See Note 2).

 

Inter-company transactions, balances and unrealized gains or transactions between Group companies are eliminated. Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group’s accounting policies.

 

3) Segment Information

 

The Company is managed as a single unit, considering all airports as a whole. It does not evaluate the performance of the airports on a standalone basis. Therefore, for the purposes of segment information, there is only one business segment.

 

 8 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES (Contd.)

 

3) Segment Information (Contd.)

 

The Argentine National Government granted the Company the concession of the “A” Group airports of the National Airports System under the basis of “cross-subsidies”: i.e., the income and funds generated by some of the airports should subsidize the liabilities and investments of the remaining airports, in order for all airports to be compliant with international standards as explained below.

 

All airports must comply with measures of operative efficiency that are independent from the revenues and funds they generate. All works performed must follow international standards established by the respective agencies (IATA, OACI, etc.).

 

Revenues of AA2000 comprise non-aeronautical revenues and aeronautical revenues; the latter being the tariffs determined by the ORSNA and regulated on the basis of the review of the Financial Projection of Income and Expenses in order to verify and preserve the "equilibrium" of the variables on which it was originally based.

 

The investment decisions are assessed and made with the ORSNA based on the master plans of the airports considering the needs of each airport based on expected passenger flow and air traffic, in the framework of the standards previously mentioned.

 

4) Accounting policies

 

The collection policies adopted for these interim financial statements are consistent with those used in the Consolidated Financial Statements as of December 31, 2018.

 

5) Changes in accounting policies and disclosures

 

New accounting standards and interpretations issued by the IASB that are effective at January 1, 2019 and have been adopted by the Group

 

IFRS 16 “Leases”

 

In January 2016, the IASB issued IFRS 16 "Leases", which establishes new principles for the recognition, measurement, presentation and presentation of lease contracts, highlighting the elimination of the operational and financial classification established by IAS 17 and the adoption, in its replacement of a treatment similar to that provided to financiers under said rule, for all lease agreements.

 

These contracts must be disclosed as leased assets (assets with a right to use) or within fixed assets at the present value of the lease payments. If the Company makes periodic payments, it must additionally recognize a financial liability that represents the obligation to make future payments for the lease. IFRS 16 does not require the lessee to recognize assets and liabilities in the case of short-term leases or leases of low-value assets.

 

The Company has revised its lease agreements in force as of January 1, 2019 and has recorded an initial "Right of Use" asset for the initial application of IFRS 16 for a total of $217,455,051 and a liability for "Lease liabilities" for $217,455,051.

 

 9 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES (Contd.)

 

5) Changes in accounting policies and disclosures (Contd.)

 

New accounting standards and interpretations issued by the IASB that are effective at January 1, 2019 and have been adopted by the Group (Contd.)

 

At the date of issuance of these financial statements there are no other standards, changes or interpretations issued by the IASB and IFRIC that are not yet effective and are expected to have a significant effect on the Company.

 

There were no other additional changes in the Group's accounting policies based on the effective application standards as of January 1, 2019 described above.

 

6) Estimates

 

The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise its judgment in the process of applying the Group accounting policies.

 

In the preparation of these Financial Statements the significant areas of judgement by management in the application of the Company’s accounting policies and the main areas of assumptions and estimates are consistently as those applied in the Financial Statements for the year ended December 31, 2018.

 

The figures included in the financial statements were measured using its functional currency, that is, the currency of the primary economic environment in which the Company operates. The functional currency of the Company is the Argentine peso, which is coincident with the presentation currency of the financial statements.

 

7) Foreign currency translation

 

Functional and presentation currency

 

IAS 29 "Financial information in hyperinflationary economies" requires that the financial statements of an entity whose functional currency is that of a hyperinflationary economy be expressed in terms of the current unit of measurement at the reporting date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. For this, in general terms, inflation produced from the date of acquisition or from the revaluation date, as applicable, must be computed in the non-monetary items.

 

These requirements also correspond to the comparative information of these Individual Separate financial statements.

 

 10 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation

 

Functional and presentation currency (Contd.)

 

In order to conclude on whether an economy is categorized as hyperinflationary under 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 exceed 100%. Taking into account that the accumulated inflation rate of the last three years exceeds 100% and the rest of the indicators do not contradict the conclusion that Argentina should be considered as a hyperinflationary economy for accounting purposes, the Company Management understands that there is sufficient evidence to conclude that Argentina is a hyperinflationary economy under the terms of IAS 29, as of July 1, 2018. It is for this reason that, in accordance with the IAS 29, these Consolidated Financial Statements are restated reflecting the effects of inflation in accordance with the provisions of the standard.

 

In turn, Law No. 27,468 (BO 04/12/2018) amended Article 10 of Law No. 23,928 and its amendments, establishing that the repeal of all legal norms or regulations that establish or authorize indexation by prices, monetary update, variation of costs or any other form of repowering of debts, taxes, prices or rates of goods, works or services, does not include financial statements, in respect of which the provisions of the article 62 in fine of the General Law of Companies No. 19,550 (TO 1984) and its amendments will be applied. Also, the aforementioned legal body ordered the repeal of Decree No. 1269/2002 of July 16, 2002 and its amendments and delegated to the National Executive Power (PEN), through its controlling entities, to establish the date from the which the provisions cited in relation to the financial statements presented will have effect. Therefore, through its General Resolution 777/2018 (BO 28/12/2018), the National Securities Commission (CNV) established that issuers subject to its control should apply to the annual financial statements, for interim and special periods, that close as of December 31, 2018 inclusive, the method of restating financial statements in a homogeneous currency as established by IAS 29.

 

In accordance with IAS 29, the financial statements of an entity reporting in the currency of a hyperinflationary economy must be reported in terms of the unit of measurement in effect at the date of the financial statements. All amounts in the statement of financial position that are not indicated in terms of the current unit of measurement as of the date of the financial statements should be updated by applying a general price index. All the components of the income statement should be indicated in terms of the unit of measure updated as of the date of the financial statements, applying the change in the general price index that has occurred since the date on which the income and expenses were originally recognized. in the financial statements.

 

The adjustment for inflation in the initial balances was calculated considering the indexes established by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) based on the price indexes published by the National Institute of Statistics and Censuses (INDEC). The semiannual coefficient for the period ended June 30, 2019 was 1.2240; also, the inter annual coefficient for the period ended June 30, 2019 was 1.5575.

 

Inflation adjustment

 

In an inflationary period, any entity that maintains an excess of monetary assets over monetary liabilities will lose purchasing power, and any entity that maintains an excess of monetary liabilities over monetary assets will gain purchasing power, provided that such items are not subject to a mechanism of adjustment.

 

 11 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation

 

Inflation adjustment (Contd.)

 

Briefly, the re-expression mechanism of IAS 29 establishes that monetary assets and liabilities will not be restated since they are already expressed in the current unit of measurement at the end of the reporting period. Assets and liabilities subject to adjustments based on specific agreements will be adjusted in accordance with such agreements.

 

The non-monetary items measured at their current values at the end of the reporting period, such as the net realization value or others, do not need to be re-expressed. The remaining non-monetary assets and liabilities will be re-expressed by a general price index. The loss or gain from the net monetary position will be included in the comprehensive net result of the reporting period, revealing this information in a separate line item.

 

The following is a summary of the methodology used for the preparation of these Condensed Consolidated Interim Financial Statements:

 

-Non-monetary assets and liabilities: non-monetary assets and liabilities (Property, plant and equipment, Intangible assets, Rights of use, Deferred profits and Additional allowances) updated by the adjustment coefficients corresponding to June 30, 2019 at the date of acquisition or origin of each of them, as applicable. The income tax derived has been calculated based on the restated value of these assets and liabilities;

 

-Monetary assets and liabilities, and monetary position result: monetary assets and liabilities, including balances in foreign currency, by their nature, are presented in terms of purchasing power as of June 30, 2019. The financial result generated by the net monetary position reflects the loss or gain that is obtained by maintaining an active or passive net monetary position in an inflationary period, respectively and is exposed in the line of "Result from exposure to changes in the purchasing power of the currency" (RECPAM) in the Statement of Comprehensive Income;

 

-Equity: the net equity accounts are expressed in constant currency as of June 30, 2019, applying the corresponding adjustment coefficients at their dates of contribution or origin;

 

-Results: the items of the Individual Financial Statements have been restated based on the date on which they accrued or were incurred, with the exception of those associated with non-monetary items (depreciation and amortization expenses), which are presented as a function of the update of the non-monetary items to which they are associated, expressed in constant currency as of June 30, 2019, through the application of the relevant conversion factors.

 

The comparative figures have been adjusted for inflation following the same procedure explained in the preceding points.

 

 12 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation

 

Inflation adjustment (Contd.)

 

In the initial application of the adjustment for inflation, the equity accounts were restated as follows:

 

-The capital was restated from the date of subscription or from the date of the last adjustment for accounting inflation, whichever happened later. The resulting amount was incorporated into the "Capital adjustment" account

 

-The other result reserves were not restated in the initial application

 

With respect to the evolution notes of non-monetary items for the year, the balance at the beginning includes the adjustment for inflation derived from expressing the initial balance to the currency of current purchasing power.

 

Transactions and balances

 

Transactions in foreign currency are translated into the functional currency using the exchange rates prevailing at the transaction dates (or valuation where items are re-measured).

 

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end of the assets and liabilities denominated in foreign currency are recognized in the statement of comprehensive income.

 

Foreign exchange gains and losses are shown in “Finance Income” and/or “Finance Expense” of the comprehensive statement of income.

 

Exchange rates used are the following: buying rate for monetary assets and selling rate for monetary liabilities, applicable at year-end according to Banco Nación, and at the foreign currency exchange rate applicable at the transaction date.

 

8) Contingencies

 

The Company has contingent liabilities for legal claims related to the normal course of business. It is not expected that any significant liabilities other than those provisioned will arise from contingent liabilities.

 

9) Income tax and Deferred tax - Tax revalue - Tax inflation adjustment

 

The income tax gain in 2019 was $317 million, including a current tax charge of $1,301 million that was mostly reversed by a deferred tax gain. On May 29, 2019, the Company adhered to the tax revaluation Law No. 27,430, fiscal period 2017, generating a deferred tax gain of $2,537 million, as well as a higher current tax of $633 million.

 

 13 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - ACCOUNTING POLICIES (Contd.)

 

9) Income tax and Deferred tax - Tax revalue - Tax inflation adjustment (Contd.)

 

In order to determine the net taxable income at the end of the current period, the inflation adjustment determined in accordance with articles No. 95 to No. 98 of the income tax law, for $406 million was incorporated into the tax result. because the Company expects that, as of December 31, 2019, the variation of the General Level Consumer Price Index (CPI) will exceed 30%. Likewise, the income tax law allows the deferral of the charge generated by the adjustment for tax inflation in three consecutive years, as a result, $152 million was recognized in the current tax liability and $254 million as a liability for deferred tax.

 

 14 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 4 - BREAKDOWN OF CERTAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION     06.30.19   12.31.18 
   Note  $ 
Other non-current receivables             
Tax credits      1,230,936    923,197 
Trust for Strengthening  7   4,813,858,019    4,956,628,541 
       4,815,088,955    4,957,551,738 
Other current receivables             
Expenses to be recovered      39,099,560    26,606,498 
Guarantees granted  6   5,520,910    6,757,853 
Related parties  7   2,090,912    7,856,637 
Tax credits      1,389,421,255    1,209,504,120 
Prepaid Insurance      8,793,075    34,223,731 
Others      180,997,824    5,651,107 
       1,625,923,536    1,290,599,946 
Trade receivables, net             
Trade receivables      3,244,240,326    3,146,245,358 
Related parties  7   39,619,986    57,276,288 
Checks-postdated checks      25,269,623    41,734,505 
Provision for bad debts  8   (433,490,937)   (393,269,385)
       2,875,638,998    2,851,986,766 
              
Cash and cash equivalents             
Cash and funds in custody      75,062,144    87,480,353 
Banks      2,511,083,240    3,588,909,866 
Checks not yet deposited      22,189,033    30,066,317 
Time deposits      -    1,122,843,327 
       2,608,334,417    4,829,299,863 

 

 15 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 4 – BREAKDOWN OF CERTAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Contd.)

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Contd.)

 

      06.30.19   12.31.18 
   Note  $ 
Accounts payable and other non-current             
Tax liabilities      69,273,348    107,709,527 
       69,273,348    107,709,527 
Accounts payable and other current             
Obligations payable      116,245,046    50,826,802 
Suppliers      2,858,434,227    2,292,060,485 
Foreign suppliers      68,769,148    87,423,253 
Related Parties  7   59,630,607    172,834,859 
Salaries and social security liabilities      753,680,673    1,005,362,532 
Other fiscal liabilities      153,408,710    180,364,450 
       4,010,168,411    3,788,872,381 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

   Three months at   Six months at 
   06.30.19   06.30.18   06.30.19   06.30.18 
   $ 
Revenues                    
Aeronautical revenues   4,224,256,266    3,811,601,104    9,192,301,800    7,932,016,898 
Non-Aeronautical revenues   2,807,901,433    3,012,290,293    5,632,974,773    5,803,313,470 
    7,032,157,699    6,823,891,397    14,825,276,573    13,735,330,368 

 

As of June 30, 2019 and 2018, "over the time" income from contracts with customers for the six month periods was $12,674,015,871 and $11,456,264,877, respectively.

 

Other net incomes and expenses                
Trust for Strengthening   174,340,476    168,588,731    367,543,929    340,133,543 
Other   (14,294,936)   (2,748,599)   (14,889,786)   (16,062,484)
    160,045,540    165,840,132    352,654,143    324,071,059 
                     
Finance Income                    
Interest   399,228,104    328,997,990    787,963,884    357,035,885 
Foreign Exchange differences   (680,852,857)   1,070,863,720    (568,888,914)   990,072,430 
    (281,624,753)   1,399,861,710    219,074,970    1,347,108,315 

 

 16 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 4 - BREAKDOWN OF CERTAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Contd.)

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Contd.)

 

   Three months at   Six months at 
   06.30.19   06.30.18   06.30.19   06.30.18 
   $ 
Finance Expenses                    
Interest   (380,509,532)   (334,450,002)   (734,985,185)   (589,059,200)
Foreign Exchange differences   1,995,725,749    (4,703,901,893)   1,451,930,820    (4,533,433,907)
    1,615,216,217    (5,038,351,895)   716,945,635    (5,122,493,107)
    1,333,591,464    (3,638,490,185)   936,020,605    (3,775,384,792)
                     
Income Tax                    
Current   (340,359,911)   525,534,964    (1,301,179,920)   (46,348,077)
Deferred   122,077,555    (347,411,069)   1,618,473,236    (488,541,513)
    (218,282,356)   178,123,895    317,293,316    (534,889,590)

 

NOTE 5 - INTANGIBLE ASSETS

 

      2019   2018 
   Note  $ 
Original Values             
Balance at January 1      61,014,332,447    53,067,079,121 
Acquisition of the period      6,296,936,191    3,775,757,571 
Balance at June 30      67,311,268,638    56,842,836,692 
              
Accumulated Amortization             
Balance at January 1      (17,412,555,666)   (13,975,782,706)
Amortization of the period  10   (2,033,683,604)   (1,397,142,023)
Balance at June 30      (19,446,239,270)   (15,372,924,729)
Total net balance at June 30      47,865,029,368    41,469,911,963 

 

NOTE 6 - BORROWINGS

 

   06.30.19   12.31.18 
   $ 
Non-current          
Bank borrowings   94,555,148    - 
Negotiable Obligations   14,331,262,500    16,728,130,475 
Finance lease liabilities   6,883,860    19,698,251 
Cost of issuance of Negotiable Obligations   (71,216,017)   (96,683,423)
Total Non- Current   14,361,485,491    16,651,145,303 
Current          
Bank borrowings   32,934,629    - 
Negotiable Obligations   2,397,951,537    2,001,262,206 
Finance lease liabilities   32,612,528    59,417,174 
Cost of issuance of Negotiable Obligations   (10,550,521)   - 
Total Current   2,452,948,173    2,060,679,380 
Total   16,814,433,664    18,711,824,683 

 

 17 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 6 - BORROWINGS (Contd.)

 

Breakdown of borrowings:

 

   2019   2018 
   $ 
Balance at January 1   18,711,824,683    13,646,802,698 
New borrowings   139,789,635    24,420,299 
Borrowings paid   (1,249,087,179)   (523,935,367)
Accrued interest   661,194,920    558,112,176 
Foreign Exchange differences   (1,442,554,919)   4,548,886,171 
Inflation adjustment   (6,733,476)   (34,466,066)
Net Balance at June 30   16,814,433,664    18,219,819,911 

 

On February 6, 2017, the Company issued negotiable obligations for US$400,000,000 with maturity on February 1, 2027, with an interest rate of 6.875% and an issue price of 99.888% par value. Payment of principal will have a quarterly amortization in 32 quarters, identical and consecutive, payable from May 1, 2019.

 

These negotiable obligations are guaranteed by a Trust under the Argentine Law, by which the Company has transferred and assigned use fees of international and regional airports and the Concession Indemnification Rights. This guarantee has been approved by the ORSNA on January 17, 2017, through Resolution Nº 1/2017, that resolved to “authorize the Concession (…) a collateral assignment of up to US$ 400,000,000 (…)”.

 

According to the Offering Memorandum of Negotiable Obligations, dated January 19, 2017 and later modified on January 23, 2017 the Company will use the proceeds of the offering notes in compliance with Article 36 of the Negotiable Obligations Law to (i) refinance the liabilities of the Company including (a) the total payment of negotiable obligations issued on December 22, 2010; and (b) negotiable obligations Class “A” and Class “C”, issued by the Company in Argentina on April 21, 2010, plus accrued and unpaid interest to the date of redemption and the applicable prepayment premiums as long as they have not been redeemed before issue date and maturity with the Company’s funds and (ii) the remainder will be applied to finance infrastructure works in the airports of Group A of the Company.

 

On January 23, 2017, the negotiable obligations issued in April 2010 were redeemed in full with the Company’s own funds, so the amount equivalent to the mentioned redemption will be aimed at infrastructure works in the airports of the Company belonging to Group “A” of the National System of Airports.

 

At June 30, 2019 the reasonable value of negotiable obligations issued in February 2017 is of $16,310,733,451. Such method of valuation is classified according to IFRS 13 as hierarchy of reasonable value Level 2 (quotation prices (not adjusted) in active markets for identical assets or liabilities).

 

 18 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 7 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES

 

Balances with other related companies at June 30, 2019 and December 31, 2018 are as follows:

 

   06.30.19   12.31.18 
   $ 
Trade receivables net- Current          
Other related companies   39,619,986    57,276,288 
    39,619,986    57,276,288 
Other current receivables          
Other related companies   2,090,912    7,856,637 
    2,090,912    7,856,637 
           
Accounts payable and other- Current          
Other related companies   59,630,607    172,834,859 
    59,630,607    172,834,859 
           
Provisions and other charges          
Other related companies   426,249    521,749 
    426,249    521,749 

 

During the six month periods ended June 30, 2019 and 2018 the Company has charged to the cost $98,699,202 and $54,883,151 respectively with Proden SA for management control services, financial assistance, internal audit, out sourcing of systems and technology and rental and maintenance of offices.

 

During the six month periods ended June 30, 2019 and 2018 the Company has charged at cost $28,951,660 and $20,371,782, respectively with Servicios Integrales América for out sourcing of systems and technology.

 

During the six month periods ended June 30, 2019 and 2018, the Company has charged with Helport S.A. to intangible assets $189,774,478 and $421,244,752 respectively and at cost $64,636,524 and $87,364,676 respectively.

 

During the period ended June 30, 2018, the Company has allocated intangible assets for $8,304,641 corresponding to Mendoza's work carried out by Jose Cartellone - Helport - UTE.

 

During the period ended at June 30, 2019 $151,348,169 of dividends have been paid to the shareholders according to their shareholding.

 

At June 30, 2019 and December 31, 2018 the Company owed the Argentine National Government $315,347,295 and $398,066,426 respectively, corresponding to the specific allocation of revenues of each year (see Note 10) and has recorded a receivable for $4,813,858,019 and $4,956,628,541 respectively corresponding to the Trust for Strengthening to fund the infrastructure works of AA2000.

 

Furthermore, short-term compensation to key management was $68,105,481 and $37,783,853 for the six month periods ended at June 30, 2019 and 2018 respectively.

 

19

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 7 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Contd.)

 

In connection with foreign exchange transactions related to the technical and administrative assistance agreements with Corporación América Sudamericana and Ogden Corporation, on November 23, 2012 The Company was notified of a foreign exchange summon initiated by the Banco Central de la República Argentina (Central Bank of the República Argentina or BCRA) regarding compliance with the existing legislation. On February 4, 2013, AA2000 presented defense procedures to the BCRA rejecting the allegations of such entity. In July 2016, sentence was passed favorable to the Company, non-appealable at the time of presentation of these financial statements.

 

In June 2016, the Company received a determination from the Federal Administration of Public Revenue (AFIP) was objecting the abovementioned items corresponding to the fiscal years 2009 to 2012 resulting in a claim for unpaid income tax based on considering those foreign exchange transactions as undocumented payments. On August 3, 2016, the Company appealed the mentioned determinations to the Argentine Tax Court.

 

Although the Company considers it has solid arguments to demonstrate the authenticity of the management and administrative services provided by Corporación América Sudamericana S.A., it decided to enter the Extraordinary Tax Law to regularize tax obligations established by Law Nº 27.260. According to the Law, benefits of adhesion consist in the suspension of ongoing tax actions, extinction of the criminal tax action, remission of fines and other penalties non executable at the time of adhesion and reduction of interest. The corresponding debt for this item is registered in commercial accounts payable and others, current and non-current.

 

Corporación America S.A. is the direct owner of 45,90% of the common shares of the Company, and an indirect owner through Corporación America Sudamericana S.A of 29,75% of the common shares of the Company, therefore is the immediate controlling entity of the Company.

 

Corporación America S.A is controlled by Cedicor S.A, which is the owner of the 95,37% of its capital stock. Cedicor S.A is 100% controlled by American International Airports LLC and at the same time it is controlled a 100% by Corporación America Airport S.A.

 

The ultimate beneficiary of the Company is Southern Cone Foundation. Its purpose is to manage its assets through decisions adopted by its independent Board of Directors. The potential beneficiaries are members of the Eurnekian family and religious, charitable and educational institutions.

 

NOTE 8 - BAD DEBT PROVISIONS

 

   2019   2018 
   $ 
Initial balance at January 1   393,269,384    279,722,671 
IFRIC 9 adjustments   -    (130,252,477)
Balance at January 1- Restated   393,269,384    149,470,194 
Increases (*)   199,731,820    21,401,800 
Applications   (75,891,052)   (22,685,438)
Inflation adjustment   (83,619,215)   148,186,556 
Final Balance at June 30   433,490,937    296,373,112 

 

(*) As of June 30, 2019 and 2018 includes $159,231,890 and $21,401,800 respectively in Distribution and Commercialization Expenses (Note 10) and $40,499,930 in Exchange Difference (Note 4).

 

20

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 9 - PROVISIONS AND OTHER CHARGES

 

   Note   At January 1
2019
   Increases   Decreases   Inflation
Adjustment
   Accruals   At June 30
2019
   Total Non
Current
   Total
Current
 
Litigations        81,492,945    2,302,468    (7,867,117)   (14,925,640)   -    61,002,656    2,664,856    58,337,800 
Related Parties   7    521,749    -    -    (95,500)   -    426,249    -    426,249 
Deferred Income        172,966,322    219,904,182    -    -    (185,384,474)   207,486,030    31,488,529    175,997,501 
Trust for works- Portfolio of Projects 2012/2014        183,486,209    1,088,720,014    (1,096,050,254)   (35,980,353)   -    140,175,616    -    140,175,616 
Guarantees Received        59,241,286    72,321,408    (55,177,794)   (6,266,849)   -    70,118,051    -    70,118,051 
Upfront fees from Concessionaires        160,005,825    14,230,372    -    -    (19,638,068)   154,598,129    121,168,842    33,429,287 
Total of provisions and others liabilities        657,714,336    1,397,478,444    (1,159,095,165)   (57,268,342)   (205,022,542)   633,806,731    155,322,227    478,484,504 
                                     
   Note   At January 1
2018
   Increases   Decreases   Inflation
Adjustment
   Accruals   At June 30
2018
   Total Non
Current
   Total
Current
 
Litigations        105,375,315    8,424,858    (20,204,531)   (14,800,343)   -    78,795,299    2,268,692    76,526,607 
Related Parties        770,338    -    -    (106,447)   -    663,891    -    663,891 
Deferred Income        197,730,357    78,581,412    -    -    (122,707,751)   153,604,018    40,665,447    112,938,571 
Trust for works- Portfolio of Projects 2012/2014        135,569,000    810,008,074    (792,012,012)   (18,901,073)   -    134,663,989    -    134,663,989 
Guarantees Received        56,214,128    14,245,285    (3,420,944)   (8,252,062)   -    58,786,407    -    58,786,407 
Upfront fees from Concessionaires        199,666,434    4,962,598    -    -    (24,306,463)   180,322,569    140,017,420    40,305,149 
Dividends to be paid   7    442,776,548    -    (151,348,169)   (138,012,762)   -    153,415,617    -    153,415,617 
Total of provisions and others liabilities        1,138,102,120    916,222,227    (966,985,656)   (180,072,687)   (147,014,214)   760,251,790    182,951,559    577,300,231 

 

21

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 10 - COSTS OF SALES, ADMINISTRATIVE, DISTRIBUTION, AND SELLING EXPENSES

 

Item  Cost of sales   Distribution and
selling expenses
   Administrative
expenses
   Total 
   $             
Six month period ended at 06.30.19                    
Specific allocation of revenues   2,205,263,573    -    -    2,205,263,573 
Airport services and maintenance   1,920,776,816    -    3,948,461    1,924,725,277 
Amortization of intangible assets   1,980,232,412    1,509,401    51,941,791    2,033,683,604 
Depreciation of property, plant and equipment   4,941,382    -    -    4,941,382 
Salaries and social security contributions   1,981,211,732    27,567,350    211,851,830    2,220,630,912 
Fees for services   117,955,686    8,593,941    51,208,389    177,758,016 
Public utilities and contributions   326,560,358    1,782,866    1,262,397    329,605,621 
Taxes   76,573,419    714,273,829    129,692,821    920,540,069 
Office expenses   310,073,752    5,325,243    81,286,612    396,685,607 
Insurance   32,672,367    8,273    830,877    33,511,517 
Advertising expenses   -    16,431,894    -    16,431,894 
Bad debts charges   -    159,231,890    -    159,231,890 
Board of Directors and Supervisory Committee fees   -    -    13,435,532    13,435,532 
Amortization right of use   60,782,179    -    -    60,782,179 
Other   8,886,829    2,900    2,631,429    11,521,158 
Total at 06.30.19   9,025,930,505    934,727,587    548,090,139    10,508,748,231 
                     
Six month period ended at 06.30.18                    
Specific allocation of revenues   2,040,801,261    -    -    2,040,801,261 
Airport Services and maintenance   1,912,340,773    11,060,852    24,109,409    1,947,511,034 
Amortization of intangible assets   1,380,286,945    2,623,782    14,231,296    1,397,142,023 
Depreciation of property, plant and equipment   5,454,091    -    -    5,454,091 
Salaries and social security contributions   1,778,860,145    65,152,562    267,759,988    2,111,772,695 
Fees for services   48,695,366    10,120,587    40,360,726    99,176,679 
Public utilities and contributions   302,838,331    2,270,330    2,158,193    307,266,854 
Taxes   54,560,127    707,452,231    143,607,766    905,620,124 
Office expenses   11,363,463    6,308,449    339,075,811    356,747,723 
Insurance   33,159,509    -    2,146,588    35,306,097 
Advertising expenses   -    69,325,058    -    69,325,058 
Bad debts charges   -    21,401,800    -    21,401,800 
Board of Directors and Supervisory Committee fees   -    -    13,972,594    13,972,594 
Other   6,953,394    125,858    3,911,870    10,991,122 
Total at 06.30.18   7,575,313,405    895,841,509    851,334,241    9,322,489,155 

 

22

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 11 - FOREIGN CURRENCY ASSETS AND LIABILITIES

 

Item  Foreign currency type and
amount at 06.30.19
   Foreign
exchange
rates
   Amount in local
currency at
06.30.19
   Amount in local
currency at
12.31.18
 
           $
ASSSETS                    
CURRENT ASSETS                    
Cash and cash equivalents  US$39,562,604    42.2630    1,672,034,338    3,612,012,649 
Trade receivables  US$58,921,179    42.2630    2,490,185,784    2,280,542,540 
Investments  US$-         -    228,309,558 
Total current assets             4,162,220,122    6,120,864,747 
Total assets             4,162,220,122    6,120,864,747 
                     
LIABILITIES                    
CURRENT LIABILITIES                    
Commercial accounts payable and others  US$7,008,335    42.4630    297,594,924    446,804,987 
    Euros 3,538,149    48.3229    170,973,637    105,405,007 
Borrowings  US$55,679,249    42.4630    2,364,307,961    2,384,400,273 
Lease liabilities  US$2,723,377    42.4630    115,642,762    - 
Total current liabilities            2,948,519,284    2,936,610,267 
                    
NON-CURRENT LIABILITIES                    
Borrowings  US$339,726,766    42.4630    14,425,817,648    20,180,299,269 
Lease liabilities  US$833,311    42.4630    35,384,898    - 
Total non- current liabilities             14,461,202,546    20,180,299,269 
Total liabilities             17,409,721,830    23,116,909,536 
Net liability position             13,247,501,708    16,996,044,789 

 

NOTE 12 - OTHER RESTRICTED ASSETS

 

Other than what is mentioned in Note 1 and 6, other receivables in current assets at June 30, 2019 and December 31,2018 include $5,520,910 and $6,757,853 corresponding to guarantees granted to third parties in connection with lease agreements.

 

NOTE 13 - CAPITAL STOCK

 

At June 30, 2019 capital stock is as follows:

 

   Par Value 
   $ 
Paid-in and subscribed   887,769,939 
Registered with the Public Registry of Commerce   887,769,939 

 

The Company’s capital stock is comprised of 258,517,299 common shares of $1 par value and one vote each and 629,252,640 preferred non-voting shares of $1 par value. Preferred shares will have voting rights on the following matters: i) partial or total capital reimbursement; ii) during the period benefits of preferred shareholders are granted but not received; iii) the appointment of a full and an alternate director and a full and an alternate syndic; and iv) in the remaining cases established by Corporate Law No. 19550.

 

23

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 13 - CAPITAL STOCK (Contd.)

 

Furthermore, according to the requirements of General Resolution 629 issued by the CNV, the books and accounting records of the Company are located in the fiscal and social address located in Honduras 5673, Autonomous City of de Buenos Aires. In addition, AA2000 has certain supporting accounting and operating documentation in the warehouses of Bank S.A. in the Province of Buenos Aires, Garín (Ruta Panamericana km. 37,5), Pacheco (Ruta Panamericana km. 31,5), Munro (Av Fleming 2190) and Avellaneda (General Rivadavia 401).

 

NOTE 14 - CAPITAL STOCK AND SHARE PREMIUM

 

The ordinary and special general meeting of classes A, B, C and D and special preferred shares held on July 25, 2019 resolved to distribute a dividend to the preferred shares for an amount of $118,276,769. In virtue of the fact that the AA2000 financial statements were prepared in accordance with the applicable accounting standards described in Note 2 and General Resolution 777/2018 of the National Securities Commission, which ordered the application to the financial statements that close as of December 31, 2018 the method of restatement of financial statements in homogeneous currency, the dividend of preferred shares was computed taking into account the adjusted value of said shares.

 

Likewise, the preferential dividend accrued for the six-month period ended June 30, 2019 is $60,321,152 and will be recorded at the time of its approval by the Shareholders' Meeting.

 

NOTE 15 - RESOLUTIONS OF SHAREHOLDERS’ ORDINARY AND SPECIAL MEETINGS OF CLASS A, B, C AND D SPECIAL OF PREFERRED SHARES OF AEROPUERTOS ARGENTINA 2000 S.A. HELD ON APRIL 9, 2018 AND JULY 25, 2019

 

The general ordinary and special meeting of class A, B, C and D and special of preferred shares held on April 9, 2018 decides among other issues:

 

-That the income of the year ended at December 31, 2017 has the following destination:

 

(i)$2,419,272 for the constitution of the legal reserve;
(ii)$12,338,287 to the distribution of dividends corresponding to the preferred shares subscribed by the Argentine National Government according to the resolutions of the general extraordinary meeting of the Company´s Shareholders held on March 6, 2008 and clause 14 and attachment VII of The Memorandum of Understanding for the Restatement of the Concession Agreement, payable in preferred shares;
(iii)the remaining of $2,669,727,436 to the facultative reserve for compliance of works for future plans.

 

-issue 12,338,287 preferred shares of $1 par value under the same terms of the preferred shares issued in favor of the Argentine National Government as per class A, B and C Shareholders General Extraordinary and Special Meeting held on March 6, 2008;

 

-increase the capital stock from $875,431,652 to $887,769,939, i.e., in the amount of $12,338,287, through the issuance of 12,338,287 preferred shares of $ 1 par value, with no vote;

 

24

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 15 - RESOLUTIONS OF SHAREHOLDERS’ ORDINARY AND SPECIAL MEETINGS OF CLASS A, B, C AND D SPECIAL OF PREFERRED SHARES OF AEROPUERTOS ARGENTINA 2000 S.A. HELD ON APRIL 9, 2018 AND JULY 25, 2019

 

-that the preferred shares are subscribed fully by the Argentine National Government;

 

-delegate in the Board of Directors the registry in the Shareholders’ Registry of the capital stock increase decided.

 

On the other hand, the ordinary general assembly, special of classes A, B, C and D and special of preferred shares, convened for April 15, 2019, which was adjourned for April 30, 2019 decided not to address the Agenda item referred to the destination of the result of the year 2018, for which purpose a new assembly was convened for June 13, 2019, which was adjourned for July 11 and then for July 25, 2019. In the assembly held on July 25, 2019, the following was resolved:

 

- That the result of the year ended December 31, 2018 has the following destination:

 

(i)$62,651,480 for the constitution of the legal reserve;
(ii)$118,276,769 to the distribution of dividends corresponding to the preferred shares held by the national State, payable in 118,276,769 preferred shares of a peso ($1) par value each;
(iii)the sum of US $50,000,000 (US dollars fifty million), or its equivalent in pesos (which at the date of the meeting amounts to $2,143,500,000) to the distribution of cash dividends among shareholders of classes A, B, C and D shares, in accordance with their respective holdings;
and
(iv)the remainder, that is, $4,949,288,026 for the constitution of an optional reserve for the execution of future works plans.

 

-issue 118,276,769 preferred shares of one-peso par value each and with identical conditions of issuance of preferred shares issued in favor of the national State at the extraordinary and special general meeting of shareholders classes A, B and C dated March 6 of 2008;

 

-increase the share capital from $887,769,939 to $1,006,046,708, that is, in the amount of $118,276,769, by issuing 118,276,769 preferred shares of $ 1 (one peso) par value each, without voting rights;

 

-that the preferred shares are fully subscribed by the national State;

 

-delegate to the board of directors the entry in the shareholders’ registry of the capital increase resolved.

 

NOTE 16 - EARNINGS PER SHARE

 

The Shareholders’ General Extraordinary Meeting held on March 6, 2008, approved by the ORSNA on April 25, 2008, earnings per share is calculated as net income for the year less accrued preferred shares dividends for the year, divided by the number of common shares.

 

25

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2019 presented in comparative format (Contd.)

 

NOTE 16 - EARNINGS PER SHARE (Contd.)

 

   06.30.2019   06.30.2018 
Income for the year, net accrued dividends   5,160,274,432    45,982,197 
Amount of ordinary shares   258,517,299    258,517,299 
Earnings per shares   19.9610    0.1779 

 

NOTE 17 - FINANCIAL RISK MANAGEMENT

 

The Company is exposed by its activities to several financial risks: market risk (including risk of exchange rate, risk of fair value due to interest rate and price risk), credit risk and liquidity risk.

 

These Condensed Consolidated Interim Financial Statements do not include all the information on financial risk management requested in the annual financial statements, thus they should be read together with the Consolidated Financial Statements audited at December 31, 2018.

 

There have been no changes in the risk management policies since the last yearly closing.

 

26

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

Presentation base

 

The information contained in this Summary has been prepared in accordance with Resolution No. 368/01 of the National Securities Commission ("CNV") and should be read in conjunction with the Condensed Consolidated Interim Financial Statements as of June 30, 2018 presented in comparative form, prepared in accordance with IFRS standards.

 

In compliance with the provisions of the CNV regulations, the values corresponding to the interim periods of 2019 and 2018 of this informative review are expressed in constant currency as of June 30, 2019, in accordance with International Accounting Standard N ° 29 “Financial information in hyperinflationary economies”. For more information, see Note 3.7 to the Consolidated Condensed Interim Financial Statements as of June 30, 2019.

 

1. General considerations

 

International Financial Reporting Standards (IFRS)

 

The National Securities Commission ("CNV"), through General Resolutions No. 562/09 and 576/10, has established the application of Technical Resolutions No. 26 and 29 of the Argentine Federation of Professional Councils of Economic Sciences, which they adopt IFRS (IFRS), issued by the International Accounting Standards Board (IASB), for entities included in the public offering regime of Law No. 17,811, either for their capital or for their negotiable obligations, or who have requested authorization to be included in the aforementioned regime.

 

The application of such standards is mandatory for the Company as of the fiscal year beginning on January 1, 2012.

 

·Seasonality

 

The Company's revenues are highly influenced by the seasonality of air traffic in Argentina. The traffic of planes and passengers and, consequently, the income of the Company are higher during the summer and winter months (December - February and July - August), basically because they are holiday periods.

 

27

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

1. General considerations (Contd.)

 

The main works carried out during the semester ended at June 30, 2019 are detailed below:

 

Ezeiza International Airport:

 

Works in execution:

-New Control Tower. (Project and supervision of AA2000);
-Beacon ring and main electrical substation;
-Improved Lighting in Access to Waste Area;
-Building of Departures - Hall B. The metallic structure of the building and the Zeppelin, Roof and Curtain Wall, glass and BHS, as well as the Civil Works and installations are in execution;
-The work of Functional Reorganization of the GF in Terminal A is being executed;
-Multilevel parking;
-Start of the work of the Road System - Stage 1;
-New Running Parallel to Header

 

Jorge Newbery Airport:

 

Works in execution:

-External works - sidewalks - landscaping - coastal filling and underground parking - Stage 1 is over;
-Demolition Terminal C (Necessary to be able to execute the first Stage of the New North Platform);
-New beacon substations and control systems;
-Platform and Perimeter Path Lighting.

 

Works Completed:

- Expansion of Southern and Industrial Platforms

 

Comodoro Rivadavia Airport:

 

The work of the New Passenger Terminal of 7560 m2 and New Parking is finished

 

Comodoro Rivadavia Airport: (Contd.):

 

The following works are being executed:

-Rehabilitation of track, taxi and platform;
-New Beaconing.

 

Córdoba Airport:

 

The work of the airport entrance station is finished.

 

28

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

1.General considerations (Contd.)

 

Córdoba Airport (Contd.):

 

Works in execution:

-Expansion of the parking lot;
-Rehabilitation of runway 18-36 and track marking.

 

Iguazú Airport:

 

The following works are finished:

-Track resurfacing and rehabilitation filming, in the final stage;
-Track Beacon and New vertical signage posters in movement area;
-Expansion of the commercial platform.

 

The following works are in execution:

-Remodeling and expansion of the passenger terminal;
-New Parking;

 

Bariloche Airport:

 

The refurbishment work of the terminal planned to end in the next winter season is underway.

 

Tucumán Airport:

 

A project is being developed for the new Tucumán terminal.

 

San Fernando Airport:

 

Works in execution:

-New Control Tower;
-RACA demolition;
-Work on Sewer and Storm Infrastructure Stage 1.

 

San Juan Airport:

 

The track renovation work was finished.

 

The execution of the remodeling work of the passenger terminal progresses.

 

Salta Airport:

 

Work is underway to expand the Shipping and Control Areas.

 

29

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

1. General considerations (Contd.)

 

La Rioja Airport:

 

The work of the New Passenger Terminal is in execution.

 

Mar del Plata Airport:

 

The work of the Passenger Terminal Refunctioning is in execution.

 

Esquel Airport:

 

The comprehensive remodeling of the passenger terminal is in execution.

 

El Palomar Airport:

 

The new terminal is contracted in Hangars 1 and 2 - Stage 1 (in stand by).

 

Jujuy Airport:

 

Works in execution:

-Complete remodeling of the passenger terminal.
-New Parking and Roads.
-New Control Tower.
-Expansion of the Commercial Platform.

 

Master Plans:

 

The Master Plans of the Airports are in execution according to the schedule agreed with the ORSNA.

 

30

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

2. Equity structure

 

In order to appreciate the evolution of the Company's activities, the comparative consolidated equity structure of the financial statements as of June 30, 2019, 2018, 2017, 2016 and 2015 respectively, is presented.

 

   06.30.19   06.30.18   06.30.17(*)   06.30.16(*)   06.30.15(*) 
   Thousands $ 
Current asset   7,120,626    8,401,711    4,360,582    1,633,975    913,750 
Non-current assets   52,902,601    46,175,284    10,589,533    7,110,983    5,770,155 
Total Assets   60,023,227    54,576,995    14,950,115    8,744,958    6,683,905 
                          
Current liabilities   7,634,944    4,637,162    2,934,464    2,314,020    1,606,889 
Non-current liabilities   19,322,965    23,294,361    6,899,581    2,686,269    2,172,748 
Total Liabilities   26,957,909    27,931,523    9,834,045    5,000,289    3,779,637 
Net equity attributable to majority shareholders   33,050,461    26,627,498    5,106,627    3,737,614    2,899,168 
Non-controlling interest   14,857    17,974    9,443    7,055    5,100 
Equity   33,065,318    26,645,472    5,116,070    3,744,669    2,904,268 
Total   60,023,227    54,576,995    14,950,115    8,744,958    6,683,905 

 

(*)Amounts not restated per inflation as per General Resolution 777/2018.

 

31

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

3. Results structure

 

The following is a summary of the evolution of the consolidated statements of comprehensive income for the six month periods ended at June 30, 2019, 2018, 2017, 2016 and 2015.

 

   06.30.19   06.30.18   06.30.17(*)   06.30.16(*)   06.30.15(*) 
   Thousands $ 
Gross Profit   5,803,945    6,164,115    2,755,585    2,247,637    1,175,622 
Administrative and distribution and marketing expenses   (1,482,818)   (1,747,176)   (718,342)   (570,669)   (332,437)
Other net income and expenses   352,654    324,071    141,509    113,176    63,697 
Operating profit   4,673,781    4,741,010    2,178,752    1,790,144    906,882 
Income and financial costs   936,021    (3,775,385)   (314,712)   (532,804)   (250,643)
Result by exposure to changes in the acquisition power of currency   (706,499)   (374,952)   -    -    - 
Result of investments accounted for using the equity method   -    -    -    -    (98)
Income before tax   4,903,303    590,673    1,864,040    1,257,340    656,141 
Income tax   317,293    (534,890)   (501,784)   (434,203)   (215,330)
Result of the period   5,220,596    55,783    1,362,256    823,137    440,811 
Other comprehensive incomes   -    -    -    -    - 
Comprehensive income for the period   5,220,596    55,783    1,362,256    823,137    440,811 
Result attributable to majority shareholders   5,224,782    54,895    1,361,145    821,223    438,994 
Non-controlling interest   (4,186)   888    1,111    1,914    1,817 

 

(*) Amounts not restated per inflation as per General Resolution 777/2018.

 

32

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

4. Cash flow structure

 

   06.30.19   06.30.18   06.30.17(*)   06.30.16(*)   06.30.15(*) 
Cash Flows (used in) / generated by operating activities   (1,824,478)   1,308,653    (448,742)   843,070    201,646 
Cash Flow  generated by / (used in) investing activities   221,697    (91)   (2,346)   (1,552)   (712)
Cash Flow (used in) / generated by financing activities   (1,172,975)   (675,283)   2,969,653    (598,962)   (272,038)
Net Cash Flow (used in) / generated by the period   (2,775,756)   633,279    2,518,565    242,556    (71,104)

 

(*) Amounts not restated per inflation as per General Resolution 777/2018.

 

5. Analysis of operations for the six month periods ended at June 30, 2019 and 2018

 

Results of operations

 

· Income

 

The following table shows the composition of consolidated revenues for the six month periods ended at June 30, 2019 and 2018:

 

 

Revenues  06.30.19   %
revenues
   06.30.18   %
revenues
 
   Thousands $       Thousands $     
Aeronautical revenues   9,192,302    62.00%   7,932,017    57.75%
Non-aeronautical revenues   5,632,975    38.00%   5,803,313    42.25%
Total   14,825,277    100.00%   13,735,330    100.00%

 

33

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

5. Analysis of operations in the six month periods ended at June 30, 2019 and 2018 (Contd.)

 

The following table shows the composition of the aeronautical revenues for the six month periods ended at June 30, 2019 and 2018:

 

Aeronautical revenues  06.30.19   %
revenues
   06.30.18   %
revenues
 
   Thousands $       Thousands $     
Landing fee   848,100    9.23%   716,068    9.03%
Parking fee   331,789    3.61%   290,305    3.66%
Air station use rate   8,012,413    87.16%   6,925,644    87.31%
Total   9,192,302    100.00%   7,932,017    100.00%

 

Costs of sale

 

The cost of sales had the following variation:

 

   Thousands $ 
Costs of sales for the period ended at 06.30.19   9,025,931 
Costs of sales for the period ended at 06.30.18   7,575,313 
Variation   1,450,618 

 

Administrative Expenses

 

The administrative expenses had the following variation:

 

   Thousands $ 
Administrative expenses for the period ended at 06.30.19   548,090 
Administrative expenses for the year ended at 06.30.18   851,334 
Variation   (303,244)

 

Distribution and marketing expenses

 

The distribution and marketing expenses had the following variation:

   Thousands $ 
Distribution and commercial expenses for the period ended at 06.30.19   934.728 
Distribution and commercial expenses for the period ended at 06.30.18   895.842 
Variation   38.886 

 

34

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

5. Analysis of operations in the six month periods ended at June 30, 2019 and 2018 (Contd.)

 

Income and financial costs

 

Net financial income and costs totaled an income of $936,020 thousand during the six-month period ended at June 30, 2019 with respect to thousands of $3,775,385 loss during the same period of the previous year.

 

The variation is mainly due to losses arising from exposure to foreign currency.

 

Other incomes and expenditures

 

The other net income and expense item recorded an income of approximately $352,654 thousand during the six-month period ended at June 30, 2019 with respect to an income of $324,071 thousand in the same period of the previous year.

 

Liquidity and Capital Resources

 

Capitalization

 

The total capitalization of the Company as of June 30, 2019 amounted to $49,879,752 thousand composed of thousands of $16,814,434 of borrowings and a net equity worth of $33,065,318 thousand, while the total capitalization of the Company at June 30, 2018 amounted to thousands of $44,865,292 comprised of thousands of $18,219,820 of borrowings and a net equity worth of thousands of $26,645,472.

 

The debt as a percentage of total capitalization amounted to approximately 33.71% as of June 30, 2019 and 40.61% as of June 30, 2018.

 

Financing

 

See in detail Note 6 to these Condensed Consolidated Financial Statements.

 

6. Index

 

The information refers to the periods ended at June 30, 2019, 2018, 2017, 2016 and 2015:

 

   06.30.19   06.30.18   06.30.17(*)   06.30.16(*)   06.30.15(*) 
Liquidity (*)   0.95    1.85    1.52    0.72    0.58 
Solvency (**)   1.24    0.96    0.53    0.76    0.79 
Immobilization of capital   0.88    0.85    0.71    0.81    0.86 
Cost effectiveness   0.16    0.002    0.27    0.22    0.15 

 

(*) Amounts not restated per inflation as per General Resolution 777/2018.

(**) Current liabilities and non-current liabilities do not include deferred profits.

 

35

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

7. Statistical data

 

The information detailed below is based on extra-budgetary statistics compiled by the Company. Number of passengers (in thousands) for the six month periods ended at June 30, 2019, 2018, 2017, 2016 and 2015:

 

Airport  06.30.19   06.30.18   06.30.17   06.30.16   06.30.15 
   In thousands 
Aeroparque   6,231    6,616    6,460    5,351    5,174 
Ezeiza   5,765    5,189    4,884    4,884    4,281 
Córdoba   1,810    1,683    1,356    1,034    894 
Mendoza   1,165    929    841    697    619 
El Palomar   760    173    -    -    - 
Bariloche   741    615    520    476    413 
Iguazú   739    445    449    387    390 
Salta   668    480    516    424    397 
Tucumán   471    454    285    311    275 
C. Rivadavia   328    309    283    262    255 
Total   18,678    16,893    15,594    13,826    12,698 
Overall total   20,119    18,378    16,898    14,831    13,675 
Variation   9.5%   8.8%   13.9%   8.5%   5.1%

 

36

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

7. Statistical data (Contd.)

 

Amount of movement of aircraft for the six month periods ended at June 30, 2019, 2018, 2017, 2016 and 2015 of the ten airports that represent more than 80% of the total movements of the airport system:

 

Airport  06.30.19   06.30.18   06.30.17   06.30.16   6.30.15 
Aeroparque   56,928    65,177    64,357    56,438    59,110 
Ezeiza   41,770    36,236    32,406    34,791    31,507 
San Fernando   20,579    20,541    17,956    18,779    19,860 
Córdoba   16,360    16,581    13,573    10,953    10,072 
Mendoza   11,349    9,846    9,247    8,166    7,364 
Salta   6,754    5,249    6,950    4,835    5,997 
Iguazú   6,191    4,182    4,080    3,919    3,846 
Bariloche   6,131    5,893    5,330    4,644    4,324 
El Palomar   5,596    1,797    -    -    - 
C. Rivadavia   5,010    4,916    4,083    4,004    4,154 
Total   176,668    170,418    157,982    146,529    146,234 
Overall total   212,475    208,590    192,687    178,107    179,504 
                          
Variation   1.9%   8.3%   8.2%   -0.8%   -3.7%

 

37

 

 

Aeropuertos Argentina 2000 S.A.

Condensed Consolidated Interim Financial Statements

At June 30, 2019 presented in comparative format

Summary of Information required by Resolution N ° 368/01

of the National Securities Commission

 

Perspectives for 2019

 

In the first semester of this year the passenger traffic of the company has had a very good evolution reaching 20.1 million, of which 12.7 million were domestic passengers and 7.4 million were international passengers, with growth of 19.22% in domestic and a fall of 4.07% in international compared to the previous year. In total, passenger traffic grew 8.88% compared to the first semester of the previous year.

 

This evolution is part of the National Government's plans to favor the increase in passenger traffic with significant improvement in air connectivity throughout the country, consolidating the recovery of foreign tourists, reaching record level in the six-month period.

 

The outstanding evolution of passengers was also accompanied by a significant growth in investments in infrastructure works both on runways and terminals at airports in the interior of the country and also in the metropolitan area of Buenos Aires. During the first quarter of this year, the Company presented investments to ORSNA for $5,618 million. To this amount it must be added the payments to the trusts of specific allocation for works for $1,295 million.

 

It should be noted that, after the jump in the exchange rate that occurred in June 2018, international traffic began to decline, while domestic traffic accelerated the growth that had been evident in the first months of the year. The prospects for the evolution of domestic passenger traffic are positive due to the opening of new routes and the start of operations of several low-cost companies.

 

38

 

 

“Free translation from the original in Spanish for publication in Argentina” 

 

REPORT ON REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

To the Shareholders, Chairman and Directors of

Aeropuertos Argentina 2000 S.A.

Legal address: Honduras 5663

Autonomous City of Buenos Aires

Tax Code: 30-69617058-0

 

Introduction

 

We have reviewed the accompanying condensed consolidated interim financial statements of Aeropuertos Argentina 2000 S.A. and its subsidiaries ("the Company"), including the consolidated statement of financial position as at June 30, 2019, the consolidated statement of comprehensive income for six and three months period ended June 30, 2019 and the consolidated statements of changes in shareholders' equity and of cash flows for the six-month period then ended and the selected explanatory notes.

 

The balances and other information for the year 2018 and for the interim periods are an integral part of these financial statements and, therefore, they should be considered in relation to those financial statements.

 

Board Responsibility

 

The Company's Board of Directors is responsible for the preparation and presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS), adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and added by the National Securities Commission (CNV) to its regulations, as approved by the International Accounting Standard Board (IASB). Therefore, they are responsible for the preparation and presentation of the condensed consolidated interim financial statements mentioned in the first paragraph in accordance with International Accounting Standard No. 34 "Interim Financial Reporting" (IAS 34).

 

Scope of review

 

Our review was limited to the application of the procedures established in the International Standard on Review Engagements 2410, 'Review of interim financial information performed by the independent auditor of the entity', which was adopted as review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE, as approved by the International Auditing and Assurance Standard Board (IAASB). A review of interim financial information consists of making inquiries to the company personnel responsible for the preparation of the information included in the condensed consolidated interim financial statements and in the performance of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Auditing Standards, and consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated statement of financial position, the consolidated statements of comprehensive income and cash flows of the Company.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements mentioned in the first paragraph, have not been prepared, in all material respects, in accordance with International Accounting Standard (IAS) No. 34.

 

  

 

 

Report on the compliance with current regulations

 

In accordance with current regulations, in connection with Aeropuertos Argentina 2000 S.A., we report that:

 

a)the condensed consolidated interim financial statements of Aeropuertos Argentina 2000 S.A. are in process of being transcribed into the “Inventory and Balance Sheet” book;

 

b)the separate condensed individual interim financial statements of Aeropuertos Argentina 2000 S.A. stem from accounting records kept, in all formal aspects in conformity with legal regulations;

 

c)we have read the summary of information, about which, insofar as concerns our area of competence, we have no significant observations to make;

 

d)as ofJune 30, 2019, Aeropuertos Argentina 2000’s accrued debt with the Argentine Social Security System, which stems from the accounting records, amounted to $113.713.627, which was not yet due at that date.

 

Autonomous City of Buenos Aires, August 7, 2019.

 

PRICE WATERHOUSE & CO. S.R.L.  
by (Partner)  
Miguel A. Urus  

 

  

 

 

SURVEILLANCE COMMITTEE REPORT

 

To the shareholders of

AEROPUERTOS ARGENTINA 2000 S.A.

 

In accordance with the requirements of the article 294 of Law 19,550 and the article 63 subsection b) of the BYMA Regulations (Argentine Stock and Market), we have reviewed the accompanying condensed consolidated interim financial statements of Aeropuertos Argentina 2000 S.A. and its subsidiaries, which includes the consolidated statement of financial position as of June 30, 2019, the consolidated statements of comprehensive income for the six and three months periods ended June 30, 2019, and the consolidated statements of changes in shareholders' equity and of cash flows for the six-month period ended June 30, 2019, the explanatory notes and the additional information required by the article 63 subsection a), paragraph 6 of the BYMA Regulations.

 

The company's board of directors is responsible for the preparation and presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS), adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and added by the National Securities Commission (CNV) to its regulations, as approved by the International Accounting Standard Board (IASB). Therefore, it is responsible for the preparation and presentation of the condensed consolidated interim financial statements mentioned in the first paragraph, in accordance with International Accounting Standard No. 34 "Interim Financial Reporting" (IAS 34).

 

Our review was conducted in accordance with the supervisory existing standards. These standards require the verification of the consistency of the revised documents with the information on the corporate decisions established in the minutes and the adequacy of those decisions to the law and the by-laws regarding its formal and documentary aspects. In order to carry out our professional work, we have taken into account the report on review of the external auditor, Miguel A. Urus (partner of Price Waterhouse & Co. SRL), dated August 7, 2019, who states that it has been issued in accordance with the International Standard on Review Engagements NIER 2410 "Review of interim financial information performed by the independent auditor of the entity”, which was adopted as review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE.

 

This review is substantially less in scope than an audit conducted in accordance with International Auditing Standards, and consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an opinion on the consolidated statement of financial position, the consolidated statements of comprehensive income and cash flows of the company.

 

We have not carried out any management control and, therefore, we have not evaluated the criteria and business decisions of administration, financing, marketing or production, since these issues are the sole responsibility of the board of directors.

 

Based on our review, with the scope described above, we hereby inform that

 

a)       the condensed consolidated interim financial statements of Aeropuertos Argentina 2000 S.A. as of June 30, 2019 consider all significant events and circumstances that are known to us, and nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements mentioned in the first paragraph of this report, have not been prepared, in all material respects, in accordance with International Accounting Standard No 34. (IAS 34); and

 

b)       the condensed consolidated interim financial statements of Aeropuertos Argentina 2000 S.A. as of June 30, 2019 have not been established in the Inventory and Balance Book, and they arise from the accounting records taken in their formal aspects in accordance with legal regulations.

 

  

 

 

In exercise of our legal supervision duties, during the period at issue, we performed the procedures set forth in Article 294 of Law 19,550 that we consider necessary in accordance with the circumstances, and in this respect, we have no observations to make.

 

Autonomous City of Buenos Aires, August 7th 2019.

 

     
  Patricio A. Martin  
  By Surveillance Committee  

 

  

 

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

 

Exhibit 99.2

 

Aeropuertos Argentina 2000 S.A.

 

Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format

  

 

 

 

Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format

 

Index

 

Individual Statements of Comprehensive Income 2
Individual Statements of Financial Position 3
Individual Statements of Changes in Equity 4
Individual Statements of Cash Flows 5
Notes to the Condensed Individual Interim Financial Statements 6
Additional information required by Art. 12, chapter III, title IV of the National Securities Commission 27
Review Report  
Report of the Supervisory Committee  

 

$ = Argentine Peso

US$ = US Dollar

  

 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

 

Legal address: Honduras 5663 - Autonomous City of Buenos Aires
Principal activity: Exploitation, administration and operation of airports

 

Condensed Individual Interim Financial Statements

For the six-month period of the

Fiscal Year N° 22 commenced January 1, 2019

 

DATE OF REGISTRATION WITH THE PUBLIC REGISTRY OF COMMERCE:

 

Of the By-laws: February 18, 1998
Of the last modification of the By-laws: October 11, 2016
Registration number with the Public Registry: 1645890
Expiration date of the company: February 17, 2053
Parent Company: Corporación América S.A.
Legal address: Honduras 5673 -
  Autonomous City of Buenos Aires
Principal activity: Investments and financing
Participation of the Parent Company  
in common stock and total votes: 45.90%

 

CAPITAL STOCK (Note 13)
   Subscribed   Paid-in 
   $ 
Issued          
79,105,489 Class “A” common shares of AR$ 1 par value and 1 vote each   79,105,489    79,105,489 
79,105,489 Class “B” common shares of AR$ 1 par value and 1 vote each   79,105,489    79,105,489 
61,526,492 Class “C” common shares of AR$ 1 par value and 1 vote each   61,526,492    61,526,492 
38,779,829 Class “D” common shares of AR$ 1 par value and 1 vote each   38,779,829    38,779,829 
629,252,640 Preferred shares of AR$ 1 par value with no voting rights   629,252,640    629,252,640 
    887,769,939    887,769,9391,652 

  

 1 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Statement of Comprehensive Income

For the three and six month periods ended at June 30, 2019 and 2018

 

      Three months at   Six months at 
      06.30.19   06.30.18   06.30.19   06.30.18 
   Note  $ 
Continuous Operations                       
Revenue  3   7,025,965,396    6,799,176,483    14,816,227,764    13,695,596,911 
CINIIF 12 - paragraph 14 Credit  5   3,780,152,245    2,383,572,763    6,296,936,191    3,775,757,571 
Cost of service  10   (4,542,441,965)   (3,722,218,451)   (9,038,527,206)   (7,565,619,695)
CINIIF 12 - paragraph 14 Debit      (3,777,504,000)   (2,381,789,507)   (6,292,337,439)   (3,771,659,472)
Gross Profit      2,486,171,676    3,078,741,288    5,782,299,310    6,134,075,315 
Distribution and selling expenses  10   (428,797,654)   (440,555,111)   (912,565,606)   (865,057,312)
Administrative expenses  10   (234,840,844)   (485,643,109)   (539,487,743)   (838,857,824)
Other income and expenses, net  3   160,044,240    165,728,479    352,517,503    327,175,584 
Operating profit      1,982,577,418    2,318,271,547    4,682,763,464    4,757,335,763 
                        
Finance Income  3   (278,194,720)   1,368,103,273    207,700,685    1,310,411,938 
Finance Costs  3   1,615,587,935    (5,037,035,436)   718,891,208    (5,119,752,321)
Result from exposure to changes in the purchasing power of the currency      (250,520,417)   99,817,513    (693,455,257)   (368,466,518)
Result of investments accounted for using the equity method  4   (8,041,036)   4,465,898    (8,593,255)   400,790 
Income before Income Tax      3,061,409,180    (1,246,377,205)   4,907,306,845    579,929,652 
Income Tax  3   (224,356,172)   186,296,418    317,474,339    (525,034,253)
Income for the period for continuous operations      2,837,053,008    (1,060,080,787)   5,224,781,184    54,895,399 
Net Income for the period      2,837,053,008    (1,060,080,787)   5,224,781,184    54,895,399 
Other comprehensive income      -    -    -    - 
Comprehensive Income for the period      2,837,053,008    (1,060,080,787)   5,224,781,184    54,895,399 
                        
Earnings/ (Losses)  per share basic and diluted attributable to shareholders of the Company during the period (shown in $ per share) from continuous operations      10.8577    (4.1169)   19.9772    0.1744 

 

The accompanying notes are an integral part of these Condensed Individual Interim Financial Statements and should be read together with the Individual Accounting Statements audited for the year ended at December 31, 2018.

  

 2 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Statement of Financial Position

At June 30, 2019 and December 31, 2018

 

      06.30.19   12.31.18 
   Note  $ 
Assets             
Non current Assets             
Investments accounted for by the equity method  4   109,936,159    118,529,414 
Intangible Assets  5   47,865,029,368    43,601,776,781 
Rights of use      156,672,872    - 
Other receivables)  3   4,813,858,019    4,956,628,541 
Total Non-current Assets      52,945,496,418    48,676,934,736 
Current Assets             
Investments      -    228,309,558 
Other receivables  3   1,607,735,584    1,261,989,160 
Trade receivables, net  3   2,861,311,684    2,841,194,498 
Cash and cash equivalents  3   2,529,845,766    4,744,601,507 
Total Current Assets      6,998,893,034    9,076,094,723 
Total Assets      59,944,389,452    57,753,029,459 
              
Shareholders’ Equity and Liabilities             
Equity attributable to Shareholders:             
Common shares      258,517,299    258,517,299 
Preferred shares      629,252,640    629,252,640 
Share Premium      137,280,595    137,280,595 
Adjustment of capital      8,942,194,399    8,942,194,399 
Legal and facultative reserve      10,584,440,436    10,584,440,436 
Retained earnings      12,498,775,960    7,273,994,776 
Total Shareholder’s’ Equity      33,050,461,329    27,825,680,145 
              
Liabilities             
Non- Current Liabilities             
Provisions and other charges  9   152,657,371    160,469,493 
Borrowings  6   14,361,485,491    16,651,145,303 
Deferred income tax liabilities      4,692,046,463    6,308,879,481 
Lease liabilities      35,384,898    - 
Accounts payable and others  3   69,089,347    107,469,769 
Total Non-current Liabilities      19,310,663,570    23,227,964,046 
Current Liabilities             
Provisions and other charges  9   474,294,605    489,525,786 
Borrowings  6   2,452,948,173    2,060,679,380 
Income tax, net of prepayments      262,343,286    - 
Lease liabilities      115,642,762    - 
Accounts payable and others  3   3,962,688,432    3,751,113,676 
Fee payable to the Argentine National Government  7   315,347,295    398,066,426 
Total Current Liabilities      7,583,264,553    6,699,385,268 
Total Liabilities      26,893,928,123    29,927,349,314 
Total Shareholders’ Equity and Liabilities      59,944,389,452    57,753,029,459 

 

The accompanying notes are an integral part of these Condensed Individual Interim Financial Statements and should be read together with the Individual Accounting Statements audited for the year ended at December 31, 2018.

  

 3 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Individual Statements of Changes in Equity

At June 30, 2019 and 2018

 

   Capital Stock
Common
Shares
   Capital Stock
Preferred
Shares
   Share Premium   Adjustment of
capital
   Legal Reserve   Facultative
Reserve
   Retained
Earnings
   Total 
Balance at 01.01. 19   258,517,299    629,252,640    137,280,595    8,942,194,399    385,254,042    10,199,186,394    7,273,994,776    27,825,680,145 
Net Income for the period   -    -    -    -    -    -    5,224,781,184    5,224,781,184 
Balance at 06.30.19   258,517,299    629,252,640    137,280,595    8,942,194,399    385,254,042    10,199,186,394    12,498,775,960    33,050,461,329 
                                         
                                         
Balance at 01.01. 18   258,517,299    616,914,353    137,280,595    8,933,626,394    381,154,769    5,675,535,839    10,471,883,956    26,474,913,205 
Adjustment IFRS 9   -    -    -    -    -    -    97,689,358    97,689,358 
Balance at 01.01.18 restated   258,517,299    616,914,353    137,280,595    8,933,626,394    381,154,769    5,675,535,839    10,569,573,314    26,572,602,563 
Resolutions of the Shareholders' Meeting of April 9, 2018 (Note 15):   -    -    -    -    -    -    -    - 
Capitalization of dividends corresponding to preferred shares   -    12,338,287    -    8,568,004    -    -    (20,906,291)   - 
Legal and facultative reserve   -    -    -    -    4,099,273    4,523,650,556    (4,527,749,829)   - 
Net Income for the period   -    -    -    -    -    -    54,895,399    54,895,399 
Balance at 06.30.18   258,517,299    629,252,640    137,280,595    8,942,194,398    385,254,042    10,199,186,395    6,075,812,593    26,627,497,962 

 

The accompanying notes are an integral part of these Condensed Individual Interim Financial Statements and should be read together with the Individual Accounting Statements audited for the year ended at December 31, 2018.

 

 4 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Statement of Cash Flows

At June 30, 2019 and 2018

 

      06.30.19   06.30.18 
   Notes  $ 
Cash Flows from operating activities             
Net Income for the period      5,224,781,184    54,895,399 
Adjustments for:             
Amortization of intangible assets  5 / 10   2,033,683,604    1,397,142,023 
Depreciation right of use  10   60,782,179    - 
Specific allocation of accrued and unpaid income  7   315,347,295    329,661,366 
Income Tax  3   (317,474,339)   525,034,253 
Income of investments accounted for by the equity method  4   8,593,255    (400,790)
Bad debts provision  8 / 10   151,262,366    20,391,732 
Paid borrowing interests costs  6   661,194,920    558,112,177 
Accrued deferred revenues and additional considerations  9   (205,022,542)   (147,014,214)
Accrued exchange differences      (1,205,112,893)   3,887,055,824 
Provision for litigation  9   1,979,235    4,997,238 
Adjustment effect for inflation      208,137216    (913,146,131)
Changes in operating assets and liabilities:             
Changes in trade receivables      (691,425,589)   428,631,676 
Changes in other receivables      (1,858,419,273)   1,082,923,447 
Changes in accounts payable and others      879,461,022    (1,163,783,614)
Changes in liabilities for current income tax      (292,988,500)   (165,090,527)
Changes in provisions and other charges      265,132,422    31,882,634 
Changes in fee payable to the Argentine National Government      (325,205,217)   (260,729,552)
Changes in intangible assets      (6,295,648,462)   (3,751,337,272)
Income tax paid      (429,664,722)   (601,821,292)
Net Cash(applied to)/ provided by operating activities      (1,810,606,839)   1,317,404,377 
              
Cash flow from investment activities             
Collection of other current investments      221,811,371    - 
Net cash flow generated in financing activities      221,811,371    - 
              
Cash Flow from financing activities             
New borrowings  6   138,501,906    - 
Payment of leases      (62,389,979)   - 
Borrowings paid- principal  6   (622,041,476)   (54,166,430)
Borrowings paid- interests  6   (627,045,703)   (469,768,937)
Dividends paid  9   -    (151,348,169)
Net Cash Flow used in financing activities      (1,172,975,252)   (675,283,536)
              
Net (Decrease) / Increase in cash and cash equivalents      (2,761,770,720)   642,120,842 
              
Changes in cash and cash equivalents             
Cash and cash equivalents at the beginning of the period      4,744,601,507    4,120,662,968 
Net (Decrease) / Increase in cash and cash equivalents      (2,761,770,720)   642,120,841 
Effect of inflation generated by cash and cash equivalents      762,409,430    (527,145,044)
Foreign Exchange differences      (215,394,451)   661,830,347 
Cash and cash equivalents at the end of the period      2,529,845,766    4,897,469,112 
Transactions that do not represent changes in cash and cash equivalents:             
Acquisition of intangible assets through liabilities for finance leases  6   1,287,729    24,420,299 
Dividends on preferred shares  14   60,321,152    9,800,729 

 

The accompanying notes are an integral part of these Condensed Individual Interim Financial Statements and should be read together with the Individual Accounting Statements audited for the year ended at December 31, 2018.

  

 5 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 1 - COMPANY ACTIVITIES

 

Aeropuertos Argentina 2000 S.A. (“AA2000” or the “Company”) was incorporated in 1998, after the consortium of companies won the national and international bid for the concession rights for the use, management and operation of the “A” Group of the Argentine National Airport System. “A” Group includes 33 airports that operate in Argentina (the “Concession”)

 

The Concession was granted pursuant to the concession agreement the Company entered into with the Argentine National Government on February 9, 1998, as subsequently amended and supplemented by the memorandum of agreement we entered into with the Argentine National Government on April 3, 2007 (the “Memorandum of Agreement”). We refer to the concession agreement as amended and supplemented by the Memorandum of Agreement as the “Concession Agreement”.

 

The Concession is for an initial period of 30 years through February 13, 2028. The Company may extend the term of the Concession for an additional period of up to 10 years. The Company has made a formal request to the National Airports Regulatory Organization (Organismo Regulador Del Sistema Nacional de Aeropuertos) (the “ORSNA”) to extend the term of the Concession for the additional 10-year period ending February 13, 2038. We can provide no assurance that the Argentine National Government will grant our request or on what conditions.

 

In addition, under the terms of the Concession Agreement, the Argentine National Government has the right to buyout our Concession as of February 13, 2018, and if such right is exercised, it is required to pay the Company a compensation.

 

As from July 24, 2012 The Company has become responsible for the management of the operation of Termas de Rio Hondo airport. On March 21, 2013, the National Executive Branch through Decree N° 303/2013, ratified the incorporation of the airport to the National Airport System, its inclusion into the “A” Group at December 31, 2018 is still pending.

 

Likewise, and in order to be able to continue with the policies related to the expansion of the aviation market, the National State issued Decree No. 1092/17 on December 22, 2017 by which it incorporated the Palomar Airport, located in the Province of Buenos Aires. Aires, to the National Airport System.

 

In order to incorporate the said Airport into "Group A", on December 27, 2017 the National Government issued Decree No. 1107/17.

 

As a result, as of such date, the Company is responsible for the exploitation, administration and operation of Palomar Airport under the terms set forth in the Concession Contract approved by Decree No. 163/97 and the Adjustment Agreement Act. of the Concession Contract approved by Decree No. 1799/07.

 

The current note to the Condensed Individual Interim Financial Statements does not reflect all the information requested in the annual financial statements, as there are no significate differences. It should be read together with the individual accounting statements audited for the year ended at December 31, 2018.

 

 6 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES

 

The Condensed Individual Interim Financial Statements are presented in Argentine Pesos, except when specifically indicates otherwise. These statements were approved by the Board of Directors of the Company on August 7, 2019.

 

The National Security Commission (CNV) through Technical Resolutions N° 562/09 and 576/10 has established the application of Technical Resolutions N° 29 and 43 of the Argentine Federation of Professional Council in Economic Sciences which adopts the application of IFRS (International Financial Reporting Standards) issued by the IASB (International Accounting Standards Board), for those entities under the public offering regime Law N° 17.811, whether due to capital stock or corporate bonds or because they have requested authorization to list for trading on stock exchanges.

 

Application of those standards is mandatory for the Company as from the fiscal year beginning on January 1 2012. Therefore, the transition date, as established in the IFRS 1 “First Time Adoption of the IFRS” was January 1, 2011.

 

These Condensed Individual Interim Financial Statements of AA2000 have been prepared in accordance with the IFRS and IFRIC Interpretations (IFRIC) and International Accounting Standards (IAS) issued by the International Standards Committee. of Accounting (IASC, for its acronym in English, predecessor of the IASB).

 

These accounting policies have been consistently applied to all the years presented. unless otherwise stated.

 

1) Comparative Information

 

The information included in these financial statements has been extracted from the Condensed Individual Interim Financial Statements of AA2000 as of June 30, 2018 and the Individual Financial Statements as of December 31, 2018, approved in a timely manner by the Board of Directors and by the Company's Shareholders, and restated to the closing currency of June 30, 2019, depending on the application of NIIC 19 (see Note 2.7).

 

2) Controlled Companies

 

Controlled Companies are all the entities where the Company has the power to control operating and financial policies, generally with a controlling share over 50%. At the moment of determining if the Company controls an entity the existence and the impact of potential voting rights that could be exercised or converted are taken into account. The controlled companies are consolidated as from the date the control is transferred and excluded from the date such control ceases.

 

The accounting policies of subsidiaries have been modified, where necessary, to ensure the uniformity with the Company policies.

 

At June 30, 2019 AA2000 has participation in the following controlled companies (hereafter the Group):

 

 7 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES (Contd.)

 

2) Controlled Companies (Contd.)

 

Controlled (1)  Number of
common shares
   Participation in
capital and possible
votes
   Book entry
value at 06.30.19
   Net
Shareholders
‘equity at
closing
   Income for the
year
 
           $ 
Servicios y Tecnología Aeroportuarios S.A. (2)   14,398,848    99.30%   47,633,930    47,968,317    2,184,355 
Cargo & Logistics S.A.   5,566,259    98.63%   982,304    995,947    (994,150)
Paoletti America S.A.   6,000    50.00%   15,527    31,051    (3,478)
Texelrío S.A. (3)   84,000    70.00%   61,220,474    75,707,178    (9,757,733)
Villalonga Furlong S.A. (4)   123,700    1.46%   47,342    3,242,537    (22,249)

 

(1)Companies based in the Argentine Republic.
(2)Includes adjustments under IFRS for the elaboration and presentation of these financial statements.
(3)The Net Shareholders Equity includes 4,000,000 of preferred shares of AR $1 par value
(4)Owner of 98.42% of the capital stock and votes in a direct and indirect way.

 

3) Accounting policies

 

The collection policies adopted for these interim financial statements are consistent with those used in the Individual Separate Financial Statements as of December 31, 2018.

 

4) Segment Information

 

The Company is managed as a single unit, considering all airports as a whole. It does not evaluate the performance of the airports on a standalone basis. Therefore, for the purposes of segment information, there is only one business segment.

 

The Argentine National Government granted the Company the concession of the “A” Group airports of the National Airports System under the basis of “cross-subsidies”: i.e., the income and funds generated by some of the airports should subsidize the liabilities and investments of the remaining airports, in order for all airports to be compliant with international standards as explained below.

 

All airports must comply with measures of operative efficiency which are independent from the revenues and funds they generate. All works performed must follow international standards established by the respective agencies (IATA, OACI, etc.).

 

Revenues of AA2000 comprise non-aeronautical revenues and aeronautical revenues; the latter being the tariffs determined by the ORSNA and regulated on the basis of the review of the Financial Projection of Income and Expenses in order to verify and preserve the "equilibrium" of the variables on which it was originally based.

 

The investment decisions are assessed and made with the ORSNA based on the master plans of the airports considering the needs of each airport on the basis of expected passenger flow and air traffic, in the framework of the standards previously mentioned.

 

 8 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES (Contd.)

 

5) Changes in accounting policies and disclosures

 

New accounting standards and interpretations issued by the IASB that are effective at January 1, 2019 and have been adopted by the Company

 

IFRS 16 “Leases”

 

In January 2016, the IASB issued IFRS 16 "Leases", which establishes new principles for the recognition, measurement, presentation and presentation of lease contracts, highlighting the elimination of the operational and financial classification established by IAS 17 and the adoption, in its replacement of a treatment similar to that provided to financiers under said rule, for all lease agreements. These contracts must be disclosed as leased assets (assets with a right to use) or within fixed assets at the present value of the lease payments. If the Company makes periodic payments, it must additionally recognize a financial liability that represents the obligation to make future payments for the lease. IFRS 16 does not require the lessee to recognize assets and liabilities in the case of short-term leases or leases of low-value assets.

 

The Company has revised its lease agreements in force as of January 1, 2019 and has recorded an initial "Right of Use" asset for the initial application of IFRS 16 for a total of $217,455,051 and a liability for "Lease liabilities" for $271,455,051.

 

At the date of issuance of these financial statements there are no other standards, changes or interpretations issued by the IASB and IFRIC that are not yet effective and are expected to have a significant effect on the Company.

 

There were no other additional changes in the Group's accounting policies based on the effective application standards as of January 1, 2019 described above.

 

6) Estimates

 

The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise its judgment in the process of applying the Group accounting policies.

 

In the preparation of these Financial Statements the significant areas of judgement by management in the application of the Company’s accounting policies and the main areas of assumptions and estimates are consistently as those applied in the Financial Statements for the year ended December 31, 2018.

 

 9 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation

 

Functional and presentation currency

 

The figures included in the financial statements were measured using its functional currency, that is, the currency of the primary economic environment in which the Company operates. The functional currency of the Company is the Argentine peso, which is coincident with the presentation currency of the financial statements.

 

IAS 29 "Financial information in hyperinflationary economies" requires that the financial statements of an entity whose functional currency is that of a hyperinflationary economy be expressed in terms of the current unit of measurement at the reporting date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. For this, in general terms, inflation produced from the date of acquisition or from the revaluation date, as applicable, must be computed in the non-monetary items. These requirements also correspond to the comparative information of these Individual Separate financial statements.

 

In order to conclude on whether an economy is categorized as hyperinflationary under 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 exceed 100%. Taking into account that the accumulated inflation rate of the last three years exceeds 100% and the rest of the indicators do not contradict the conclusion that Argentina should be considered as a hyperinflationary economy for accounting purposes, the Company Management understands that there is sufficient evidence to conclude that Argentina is a hyperinflationary economy under the terms of IAS 29, as of July 1, 2018. It is for this reason that, in accordance with the IAS 29, these Consolidated Financial Statements are restated reflecting the effects of inflation in accordance with the provisions of the standard.

 

In turn, Law No. 27,468 (BO 04/12/2018) amended Article 10 of Law No. 23,928 and its amendments, establishing that the repeal of all legal norms or regulations that establish or authorize indexation by prices, monetary update, variation of costs or any other form of repowering of debts, taxes, prices or rates of goods, works or services, does not include financial statements, in respect of which the provisions of the article 62 in fine of the General Law of Companies No. 19,550 (TO 1984) and its amendments will be applied. Also, the aforementioned legal body ordered the repeal of Decree No. 1269/2002 of July 16, 2002 and its amendments and delegated to the National Executive Power (PEN), through its controlling entities, to establish the date from the which the provisions cited in relation to the financial statements presented will have effect. Therefore, through its General Resolution 777/2018 (BO 28/12/2018), the National Securities Commission (CNV) established that issuers subject to its control should apply to the annual financial statements, for interim and special periods, that close as of December 31, 2018 inclusive, the method of restating financial statements in a homogeneous currency as established by IAS 29.

 

In accordance with IAS 29, the financial statements of an entity reporting in the currency of a hyperinflationary economy must be reported in terms of the unit of measurement in effect at the date of the financial statements. All amounts in the statement of financial position that are not indicated in

 

 10 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation (Contd.)

 

Functional and presentation currency (Contd.)

 

terms of the current unit of measurement as of the date of the financial statements should be updated by applying a general price index. All the components of the income statement should be indicated in terms of the unit of measure updated as of the date of the financial statements, applying the change in the general price index that has occurred since the date on which the income and expenses were originally recognized. in the financial statements.

 

The adjustment for inflation in the initial balances was calculated considering the indexes established by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) based on the price indexes published by the National Institute of Statistics and Censuses (INDEC). The semiannual coefficient for the period ended June 30, 2019 was 1.2240; also, the inter annual coefficient for the period ended June 30, 2019 was 1.5575.

 

Inflation adjustment

 

In an inflationary period, any entity that maintains an excess of monetary assets over monetary liabilities will lose purchasing power, and any entity that maintains an excess of monetary liabilities over monetary assets will gain purchasing power, provided that such items are not subject to a mechanism of adjustment.

 

Briefly, the re-expression mechanism of IAS 29 establishes that monetary assets and liabilities will not be restated since they are already expressed in the current unit of measurement at the end of the reporting period. Assets and liabilities subject to adjustments based on specific agreements will be adjusted in accordance with such agreements.

 

The non-monetary items measured at their current values at the end of the reporting period, such as the net realization value or others, do not need to be re-expressed. The remaining non-monetary assets and liabilities will be re-expressed by a general price index. The loss or gain from the net monetary position will be included in the comprehensive net result of the reporting period, revealing this information in a separate line item.

 

The following is a summary of the methodology used for the preparation of these Condensed Individual Interim Financial Statements:

 

-Non-monetary assets and liabilities: non-monetary assets and liabilities (Property, plant and equipment, Intangible assets, Right of use, Deferred profits and Additional allowances) updated by the adjustment coefficients corresponding to June 30, 2019 at the date of acquisition or origin of each of them, as applicable. The income tax derived has been calculated based on the restated value of these assets and liabilities;

 

 11 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation (Contd.)

 

Inflation adjustment (Contd.)

 

-Monetary assets and liabilities, and monetary position result: monetary assets and liabilities, including balances in foreign currency, by their nature, are presented in terms of purchasing power as of June 30, 2019. The financial result generated by the net monetary position reflects the loss or gain that is obtained by maintaining an active or passive net monetary position in an inflationary period, respectively and is exposed in the line of "Result from exposure to changes in the purchasing power of the currency" (RECPAM) in the Statement of Comprehensive Income;

 

-Equity: the net equity accounts are expressed in constant currency as of June 30, 2019, applying the corresponding adjustment coefficients at their dates of contribution or origin;

 

-Results: the items of the Individual Financial Statements have been restated based on the date on which they accrued or were incurred, with the exception of those associated with non-monetary items (depreciation and amortization expenses), which are presented as a function of the update of the non-monetary items to which they are associated, expressed in constant currency as of June 30, 2019, through the application of the relevant conversion factors.

 

The comparative figures have been adjusted for inflation following the same procedure explained in the preceding points.

 

In the initial application of the adjustment for inflation, the equity accounts were restated as follows:

 

-The capital was restated from the date of subscription or from the date of the last adjustment for accounting inflation, whichever happened later. The resulting amount was incorporated into the "Capital adjustment" account

 

-The other result reserves were not restated in the initial application

 

With respect to the evolution notes of non-monetary items for the year, the balance at the beginning includes the adjustment for inflation derived from expressing the initial balance to the currency of current purchasing power.

 

Transactions and balances

 

Transactions in foreign currency are translated into the functional currency using the exchange rates prevailing at the transaction dates (or valuation where items are re-measured).

 

Foreign exchange gains and losses and losses resulting from the settlement of such transactions and from the translation at year-end of the assets and liabilities denominated in foreign currency are recognized in the statement of comprehensive income.

 

 12 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 2 - ACCOUNTING POLICIES (Contd.)

 

7) Foreign currency translation (Contd.)

 

Transactions and balances (Contd.)

 

Foreign exchange gains and losses are shown in “Finance Income” and/or “Finance Expense” of the comprehensive statement of income.

 

Exchange rates used are the following: buying rate for monetary assets and selling rate for monetary liabilities, applicable at year-end according to Banco Nación, and at the foreign currency exchange rate applicable at the transaction date.

 

8) Contingencies

 

The Company has contingent liabilities for legal claims related to the normal course of business. It is not expected that any significant liabilities other than those provisioned will arise from contingent liabilities.

 

9) Income tax and Deferred tax - Tax revalue - Tax inflation adjustment

 

The income tax gain in 2019 was $317million, including a current tax charge of $1,299 million that was mostly reversed by a deferred tax gain. On May 29, 2019, the Company adhered to the tax revaluation Law No. 27,430, fiscal period 2017, generating a deferred tax gain of $2,537 million, as well as a higher current tax of $633 million.

 

In order to determine the net taxable income at the end of the current period, the inflation adjustment determined in accordance with articles No. 95 to No. 98 of the income tax law, for $406 million was incorporated into the tax result. because the Company expects that, as of December 31, 2019, the variation of the General Level Consumer Price Index (CPI) will exceed 30%. Likewise, the income tax law allows the deferral of the charge generated by the adjustment for tax inflation in three consecutive years, as a result, $152 million was recognized in the current tax liability and $254 million as a liability for deferred tax.

 

 13 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - BREAKDOWN OF CERTAIN ITEMS OF THE INDIVIDUAL STATEMENT OF FINANCIAL POSITION AND THE INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME

 

INDIVIDUAL STATEMENT OF FINANCIAL POSITION     06.30.19   12.31.18 
   Note  $ 
Other non-current receivables             
Trust for Strengthening  7   4,813,858,019    4,956,628,541 
       4,813,858,019    4,956,628,541 
              
Other current receivables             
Expenses to be recovered      36,973,871    26,530,052 
Guarantees granted  12   5,520,910    6,757,853 
Related parties  7   2,886,194    8,830,099 
Tax credits      1,373,813,738    1,184,453,748 
Prepaid Insurance      8,793,075    34,223,731 
Other      179,747,796    1,193,677 
       1,607,735,584    1,261,989,160 
              
Trade receivables, net             
Trade receivables      3,209,257,517    3,117,246,661 
Related parties  7   43,603,314    64,294,559 
Checks - postdated checks      25,269,623    41,734,506 
Provision for bad debts  8   (416,818,770)   (382,081,228)
       2,861,311,684    2,841,194,498 
Cash and cash equivalents             
Cash and funds in custody      6,911,201    13,015,429 
Banks      2,500,803,440    3,578,784,260 
Checks not yet deposited      22,131,125    29,958,491 
Time deposits      -    1,122,843,327 
       2,529,845,766    4,744,601,507 
              
Accounts payable and other-current             
Obligations payable      116,245,045    50,826,801 
Suppliers      2,788,629,170    2,199,331,710 
Foreign suppliers      68,769,148    87,423,253 
Related parties  7   111,893,683    255,725,200 
Salaries and social security liabilities      732,415,312    986,823,566 
Other fiscal liabilities      144,736,074    170,983,146 
       3,962,688,432    3,751,113,676 

 

 14 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 3 - BREAKDOWN OF CERTAIN ITEMS OF THE INDIVIDUAL STATEMENT OF FINANCIAL POSITION AND THE INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME (Contd.)

 

INDIVIDUAL STATEMENT OF FINANCIAL POSITION (Contd.)  06.30.19   12.31.18 
   Note  $ 
Accounts payable and other – non current             
Tax liabilities     69,089,347    107,469,769 
       69,089,347    107,469,769 

 

INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME

 

   Three months at   Six months at 
   06.30.19   06.30.18   06.30.19   06.30.18 
   $ 
Revenues                    
Aeronautical revenues   4,224,256,266    3,811,601,104    9,192,301,800    7,932,016,898 
Non-aeronautical revenues   2,801,709,130    2,987,575,379    5,623,925,964    5,763,580,013 
    7,025,965,396    6,799,176,483    14,816,227,764    13,695,596,911 

 

As of June 30, 2019 and 2018, "over the time" income from contracts with customers for the six month periods was $12,664,967,062 and $11.416,531,420, respectively.

 

Other net incomes and expenses                    
Trust for Strengthening   174,340,476    168,588,731    367,543,929    340,133,543 
Other   (14,296,236)   (2,860,252)   (15,026,426)   (12,957,959)
    160,044,240    165,728,479    352,517,503    327,175,584 
                     
Finance Income                    
Interest   399,207,454    328,659,174    787,922,459    356,604,320 
Foreign Exchange differences   (677,402,174)   1,039,444,099    (580,221,774)   953,807,618 
    (278,194,720)   1,368,103,273    207,700,685    1,310,411,938 
Finance Expenses   $ 
Interest   (380,137,813)   (333,133,544)   (733,039,612)   (586,318,414)
Foreign Exchange differences   1,995,725,748    (4,703,901,892)   1,451,930,820    (4,533,433,907)
    1,615,587,935    (5,037,035,436)   718,891,208    (5,119,752,321)
    1,337,393,215    (3,668,932,163)   926,591,893    (3,809,340,383)
                     
Income Tax                    
Current   (343,971,123)   536,421,132    (1,299,358,680)   (34,547,712)
Deferred   119,614,951    (350,124,714)   1,616,833,019    (490,486,541)
    (224,356,172)   186,296,418    317,474,339    (525,034,253)

 

 15 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 4 - INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

 

   2019   2018 
   $ 
Balance at January 1   118,529,414    122,807,711 
Income from investments accounted for by the equity method   (8,593,255)   400,790 
Balance at June 30   109,936,159    123,208,501 

 

NOTE 5 - INTANGIBLE ASSETS

 

      2019   2018 
   Note  $ 
Original values             
Balance at January 1      61,014,332,447    53,067,079,121 
Acquisitions of the period      6,296,936,191    3,775,757,571 
Balance at June 30      67,311,268,638    56,842,836,692 
              
Accumulated Amortization:             
Balance at January 1      (17,412,555,666)   (13,975,782,706)
Amortization of the period  10   (2,033,683,604)   (1,397,142,023)
Balance at June 30      (19,446,239,270)   (15,372,924,729)
Total net balance at June 30      47,865,029,368    41,469,911,963 

 

NOTE 6 - BORROWINGS

 

Breakdown of borrowings

 

   06.30.19   12.31.18 
   $ 
Non-current          
Bank borrowings   94,555,148    - 
Negotiable Obligations   14,331,262,500    16,728,130,475 
Finance lease liabilities   6,883,860    19,698,251 
Cost of issuance of Negotiable Obligations   (71,216,017)   (96,683,423)
Total Non- Current   14,361,485,491    16,651,145,303 
           
Current          
Bank borrowings   32,934,629    - 
Negotiable Obligations   2,397,951,537    2,001,262,206 
Finance lease liabilities   32,612,528    59,417,174 
Cost of issuance of Negotiable Obligations   (10,550,521)   - 
Total Current   2,452,948,173    2,060,679,380 
Total   16,814,433,664    18,711,824,683 

 

 16 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 6 - BORROWINGS (Contd.)

 

Breakdown of borrowings:

 

   2019   2018 
   $ 
Balance at January 1   18,711,824,683    13,646,802,698 
New borrowings   139,789,635    24,420,299 
Borrowings paid   (1,249,087,179)   (523,935,367)
Accrued interest   661,194,920    558,112,176 
Foreign Exchange differences   (1,442,554,919)   4,548,886,171 
Inflation adjustment   (6,733,476)   (34,466,066)
Net Balance at June 30   16,814,433,664    18,219,819,911 

 

On February 6, 2017, the Company issued negotiable obligations for US$400,000,000 with maturity on February 1, 2027, with an interest rate of 6.875% and an issue price of 99.888% par value. Payment of principal will have a quarterly amortization in 32 quarters, identical and consecutive, payable from May 1, 2019.

 

These negotiable obligations are guaranteed by a Trust under the Argentine Law, by which the Company has transferred and assigned use fees of international and regional airports and the Concession Indemnification Rights. This guarantee has been approved by the ORSNA on January 17, 2017, through Resolution Nº 1/2017, that resolved to “authorize the Concession (…) a collateral assignment of up to US$ 400,000,000 (…)”.

 

According to the Offering Memorandum of Negotiable Obligations, dated January 19, 2017 and later modified on January 23, 2017 the Company will use the proceeds of the offering notes in compliance with Article 36 of the Negotiable Obligations Law to (i) refinance the liabilities of the Company including (a) the total payment of negotiable obligations issued on December 22, 2010; and (b) negotiable obligations Class “A” and Class “C”, issued by the Company in Argentina on April 21, 2010, plus accrued and unpaid interest to the date of redemption and the applicable prepayment premiums as long as they have not been redeemed before issue date and maturity with the Company’s funds and (ii) the remainder will be applied to finance infrastructure works in the airports of Group A of the Company. On January 23, 2017, the negotiable obligations issued in April 2010 were redeemed in full with the Company’s own funds, so the amount equivalent to the mentioned redemption will be aimed at infrastructure works in the airports of the Company belonging to Group “A” of the National System of Airports.

 

At June 30, 2019 the reasonable value of negotiable obligations issued in February 2017 is of $16,310,733,451. Such method of valuation is classified according to IFRS 13 as hierarchy of reasonable value Level 2 (quotation prices (not adjusted) in active markets for identical assets or liabilities).

 

 17 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 7 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES

 

Balances with other related companies at June 30, 2019 and December 31, 2018 are as follows:

 

   06.30.19   12.31.18 
   $ 
Trade receivables net- Current          
Servicios y Tecnología Aeroportuarios S.A.   3,983,328    7,018,271 
Other related companies   39,619,986    57,276,288 
    43,603,314    64,294,559 
Other current receivables          
Cargo & Logistics S.A.   795,282    973,462 
Other related companies   2,090,912    7,856,637 
    2,886,194    8,830,099 
Accounts payable and other- Current          
Servicios y Tecnología Aeroportuarios S.A.   9,658,317    38,310,061 
Texelrío S.A.   42,604,759    44,580,280 
Other related companies   59,630,607    172,834,859 
    111,893,683    255,725,200 
Provisions and other charges          
Villalonga Furlong S.A.   790,845    1,623,879 
Other related companies   426,249    521,749 
    1,217,094    2,145,628 

 

During the six month periods ended at June 30, 2019 and 2018, the Company has charged the cost $184,927,070 and $200,573,091 respectively for maintenance done with Texelrío S.A.

 

During the six month periods ended June 30, 2019 and 2018 the Company has charged to the cost $98,699,202 and $54,883,151 respectively with Proden SA for management control services, financial assistance, internal audit, out sourcing of systems and technology and rental and maintenance of offices.

 

During the six month periods ended June 30, 2019 and 2018 the Company has charged at cost $28,951,660 and $20,371,782, respectively with Servicios Integrales América for out sourcing of systems and technology.

 

During the six month periods ended June 30, 2019 and 2018, the Company has charged with Helport S.A. to intangible assets $189,774,478 and $421,244,752 respectively and at cost $64,636,524 and $87,364,676 respectively.

 

During the period ended June 30, 2018, the Company has allocated intangible assets for $8,304,641 corresponding to Mendoza's work carried out by Jose Cartellone - Helport - UTE.

 

During the period ended at June 30, 2019 $151,348,169 of dividends have been paid to the shareholders according to their shareholding.

 

 18 

 

  

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 7 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Contd.)

 

At June 30, 2019 and December 31, 2018 the Company owed the Argentine National Government $315,347,295 and $398,066,426 respectively, corresponding to the specific allocation of revenues of each year (see Note 10) and has recorded a receivable for $4,813,858,019 and $4,956,628,541 respectively corresponding to the Trust for Strengthening to fund the infrastructure works of AA2000.

 

Furthermore, short-term compensation to key management was $68,105,481 and $37,783,853 for the six month periods ended at June 30, 2019 and 2018 respectively.

 

In connection with foreign exchange transactions related to the technical and administrative assistance agreements with Corporación América Sudamericana and Ogden Corporation, on November 23, 2012 The Company was notified of a foreign exchange summon initiated by the Banco Central de la República Argentina (Central Bank of the Argentine Republic or BCRA) regarding compliance with the existing legislation. On February 4, 2013, AA2000 presented defense procedures to the BCRA rejecting the allegations of such entity. In July 2016, sentence was passed favorable to the Company, non-appealable at the time of presentation of these financial statements.

 

In June 2016, the Company received a determination from the Federal Administration of Public Revenue (AFIP) was objecting the abovementioned items corresponding to the fiscal years 2009 to 2012 resulting in a claim for unpaid income tax based on considering those foreign exchange transactions as undocumented payments. On August 3, 2016, the Company appealed the mentioned determinations to the Argentine Tax Court.

 

Although the Company considers it has solid arguments to demonstrate the authenticity of the management and administrative services provided by Corporación América Sudamericana S.A., it decided to enter the Extraordinary Tax Law to regularize tax obligations established by Law Nº 27.260. According to the Law, benefits of adhesion consist in the suspension of ongoing tax actions, extinction of the criminal tax action, remission of fines and other penalties non executable at the time of adhesion and reduction of interest. The corresponding debt for this item is registered in commercial accounts payable and others, current and non-current.

 

Corporación America S.A. is the direct owner of 45.90% of the common shares of the Company, and an indirect owner through Corporación America Sudamericana S.A of 29.75% of the common shares of the Company, therefore is the immediate controlling entity of the Company.

 

Corporación America S.A is controlled by Cedicor S.A, which is the owner of the 95.37% of its capital stock. Cedicor S.A is 100% controlled by American International Airports LLC and at the same time it is controlled a 100% by Corporación America Airport S.A.

 

The ultimate beneficiary of the Company is Southern Cone Foundation. Its purpose is to manage its assets through decisions adopted by its independent Board of Directors. The potential beneficiaries are members of the Eurnekian family and religious, charitable and educational institutions.

 

 19 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)

 

NOTE 8 - BAD DEBT PROVISIONS

 

   2019   2018 
   $ 
Initial balance at January 1   382,081,228    273,277,256 
IFRIC 9 adjustments   -    (130,252,477)
Balance at January 1 - Restated   382,081,228    143,024,779 
Increases (*)   191,762,296    20,391,732 
Usage   (75,891,052)   (21,756,363)
Inflation adjustment   (81,133,702)   141,660,148 
Final Balance at June 30   416,818,770    283,320,296 

 

(*) As of June 30, 2019 and 2018 includes $151,262,366 and $20,391,732 respectively in Distribution and Commercialization Expenses (Note 10) and $40,499,930 in Exchange Difference (Note 3).

  

 20 

 

 

Aeropuertos Argentina 2000 S.A.

Registration number with the Superintendency of Corporations: 1645890

Notes to the Condensed Individual Interim Financial Statements

At June 30, 2019 presented in comparative format (Contd.)