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

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20546

 

FORM 6-K

 

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November, 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): ¨

  

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): ¨

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2019 AND 2018

 

This report of foreign private issuer on Form 6-K (this “Form 6-K”) is being filed by Corporación América Airports S.A. (“CAAP” or the “Company”) with the Securities and Exchange Commission. The Company is filing this report on Form 6-K for the purpose of filing a copy of the Company’s unaudited condensed consolidated interim financial statements for the nine-month period ended September 30, 2019 and 2018 (the “Consolidated Financial Statements”) as Exhibit 99.1. The Consolidated Financial Statements are presented in U.S. Dollars and prepared in accordance with IAS 34, “Interim Financial Reporting”. These Consolidated Financial Statements, should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2018, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) of the International Accounting Standards Board (“IASB”) and the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

 

 

 

 

 

Exhibit Index

 

Exhibit No. Description
99.1 CAAP Unaudited Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018.

 

 

 

 

 

 SIGNATURES

 

 

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

 

 

Date: November 22, 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

 

 

 

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

 

Corporación América Airports S.A.

 

 

CONDENSED CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

 

 

For the nine-month period ended September 30, 2019 and 2018

 

 

R.C.S. Luxembourg B 174.140

 

4, rue de la Grève

L-1643, Luxembourg

 

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME

 

      For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
      2019   2018   2019   2018 
   Notes  Unaudited   Unaudited   Unaudited   Unaudited 
Continuing operations                       
Revenue  4   417,095    347,961    1,129,238    947,238 
Cost of services  5   (302,753)   (227,762)   (809,013)   (630,067)
Gross profit      114,342    120,199    320,225    317,171 
Selling, general and administrative expenses  6   (55,635)   (36,718)   (127,273)   (108,078)
Other operating income  7   3,814    4,369    11,461    10,547 
Other operating expense      (759)   (827)   (1,624)   (1,739)
Operating income      61,762    87,023    202,789    217,901 
Share of (loss) / income in associates      (159)   596    (863)   676 
Income before financial results and income tax      61,603    87,619    201,926    218,577 
Financial income  8   8,108    15,778    33,092    57,158 
Financial loss  8   (113,199)   (114,236)   (192,833)   (310,766)
Inflation adjustment  8   (6,340)   (10,000)   (19,903)   (21,446)
(Loss) / Income before income tax expense      (49,828)   (20,839)   22,282    (56,477)
Income tax  9   17,373    (800)   10,241    5,658 
(Loss) / Income for the period      (32,455)   (21,639)   32,523    (50,819)
Attributable to:                       
Owners of the parent      (24,566)   (15,177)   42,833    (26,699)
Non-controlling interest      (7,889)   (6,462)   (10,310)   (24,120)
       (32,455)   (21,639)   32,523    (50,819)
                        
Earnings per share attributable to the owners of the parent                       
Weighted average number of ordinary shares (thousands)      160,022    160,022    160,022    158,452 
                        
Basic and diluted earnings per share      (0.15)   (0.09)   0.27    (0.17)

 

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

 

- 1 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 

   For the three-month period ended
September 30,
   For the nine-month period ended
September 30,
 
   2019   2018   2019   2018 
   Unaudited   Unaudited   Unaudited   Unaudited 
(Loss) / Income for the period   (32,455)   (21,639)   32,523    (50,819)
                     
Items that will not be reclassified subsequently to profit or loss:                    
Remeasurement of defined benefit obligation   (16)   128    (437)   336 
                     
Items that may be subsequently reclassified to profit or loss:                    
Share of other comprehensive loss from associates   (1,348)   (569)   (113)   (781)
Currency translation adjustment   (141,871)   (123,286)   (67,707)   (334,867)
Other comprehensive loss for the period, net of income tax   (143,235)   (123,727)   (68,257)   (335,312)
Total comprehensive loss for the period   (175,690)   (145,366)   (35,734)   (386,131)
Attributable to:                    
Owners of the parent   (117,497)   (93,519)   3,518    (239,818)
Non-controlling interest   (58,193)   (51,847)   (39,252)   (146,313)
    (175,690)   (145,366)   (35,734)   (386,131)

 

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

 

- 2 -

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED cONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

 

    Notes   At September 30, 2019
Unaudited
    At December 31, 2018
Audited
 
ASSETS                    
Non-current assets                    
Intangible assets, net   10     2,885,079       2,933,542  
Property, plant and equipment, net         73,942       74,299  
Right-of-use asset         8,579       -  
Investments in associates         12,898       10,886  
Other financial assets at fair value through profit or loss         3,207       3,372  
Other financial assets at amortized cost         2,455       2,339  
Deferred tax assets         142,497       153,486  
Other receivables         118,339       133,193  
Trade receivables         1,319       1,419  
          3,248,315       3,312,536  
Current assets                    
Inventories         9,002       9,769  
Other financial assets at fair value through profit or loss         31,950       38,007  
Other financial assets at amortized cost         10,327       42,972  
Other receivables         95,621       66,531  
Current tax assets         11,875       13,701  
Derivative financial instruments         308       -  
Trade receivables         115,199       116,897  
Cash and cash equivalents   11     257,612       244,865  
          531,894       532,742  
Total assets         3,780,209       3,845,278  
                     
EQUITY   14                
Share capital         160,022       160,022  
Share premium         180,486       180,486  
Free distributable reserve         385,055       385,055  
Non-distributable reserve         1,351,883       1,351,883  
Currency translation adjustment         (417,914 )     (378,803 )
Legal reserves         176       176  
Other reserves         (1,324,951 )     (1,324,731 )
Retained earnings         436,989       394,156  
Total attributable to owners of the parent         771,746       768,244  
Non-controlling interests         422,571       454,453  
Total equity         1,194,317       1,222,697  
                     
LIABILITIES                    
Non-current liabilities                    
Borrowings   12     1,051,587       1,027,751  
Deferred tax liabilities         206,940       271,175  
Other liabilities   13     798,896       871,596  
Lease liabilities         5,769       -  
Trade payables         949       1,508  
          2,064,141       2,172,030  
Current liabilities                    
Borrowings   12     158,580       98,907  
Other liabilities   13     227,310       225,448  
Lease liabilities         3,765       -  
Current tax liabilities         4,932       11,555  
Trade payables         127,164       114,641  
          521,751       450,551  
Total liabilities         2,585,892       2,622,581  
Total equity and liabilities         3,780,209       3,845,278  
                     

 

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

 

- 3 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 

   Attributable to owners of the parent         
   Share
Capital
   Share
premium
   Free
Distributable
Reserves
   Non-
Distributable
Reserves
   Legal
Reserves
   Currency
Translation
Adjustment
   Other
Reserves
   Retained
Earnings (1)
   Total   Non-
controlling
interests
   Total 
Balance at January 1, 2019   160,022    180,486    385,055    1,351,883    176    (378,803)   (1,324,731)   394,156    768,244    454,453    1,222,697 
Shareholders contributions (Note 14)   -    -    -    -    -    -    -    -    -    27,506    27,506 
Income / (Loss) for the period   -    -    -    -    -    -    -    42,833    42,833    (10,310)   32,523 
Other comprehensive loss for the period   -    -    -    -    -    (39,111)   (204)   -    (39,315)   (28,942)   (68,257)
Changes of non-controlling interests (Note 14)   -    -    -    -    -    -    (16)   -    (16)   (20,136)   (20,152)
Balance at September 30, 2019   160,022    180,486    385,055    1,351,883    176    (417,914)   (1,324,951)   436,989    771,746    422,571    1,194,317 
                                                        
Balance at December 31, 2017   1,500,000    -    385,055    -    2    (217,300)   (1,344,008)   138,034    461,783    335,359    797,142 
Adjustment on adoption of IFRS 9 (net of tax)   -    -    -    -    -    -    -    2,356    2,356    542    2,898 
Adjustment on initial application of IAS 29 (Note 2.1)   -    -    -    -    -    -    -    206,729    206,729    187,299    394,028 
Adjusted balance at January 1, 2018   1,500,000    -    385,055    -    2    (217,300)   (1,344,008)   347,119    670,868    523,200    1,194,068 
Shareholders contributions (Note 14)   -    -    -    -    -    -    -    -    -    43,703    43,703 
Loss for the period   -    -    -    -    -    -    -    (26,699)   (26,699)   (24,120)   (50,819)
Transfer to legal reserve   -    -    -    -    174    -    -    (174)   -    -    - 
Reverse stock split (Note 1)   (1,351,883)   -    -    1,351,883    -    -    -    -    -    -    - 
Initial Public Offering (Note 1)   11,905    180,486    -    -    -    -    -    -    192,391    -    192,391 
Other comprehensive (loss) / income for the period   -    -    -    -    -    (213,328)   209    -    (213,119)   (122,193)   (335,312)
Changes of non-controlling interests (Note 14)   -    -    -    -    -    -    18,943    -    18,943    (16,481)   2,462 
Balance at September 30, 2018   160,022    180,486    385,055    1,351,883    176    (430,628)   (1,324,856)   320,246    642,384    404,109    1,046,493 

 

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

 

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

 

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Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

        For the nine-month period ended
September 30,
 
    Notes   2019
Unaudited
    2018
Unaudited
 
Cash flows from operating activities                    
Income / (loss) for the period         32,523       (50,819 )
Adjustments for:                    
Amortization and depreciation         130,067       118,700  
Deferred income tax   9     (46,698 )     (32,733 )
Income tax accrued   9     36,457       27,075  
Share of (loss) / income in associates         863       (676 )
Loss on disposals of property, plant and equipment         7       311  
Unpaid concession fees         40,035       37,446  
Low value, short term and variable lease payments         (2,142 )     -  
Changes in liability for concessions         62,623       69,042  
Interest expense         66,860       68,704  
Other financial results, net         (22,909 )     (14,998 )
Net foreign exchange         53,276       124,600  
Leases financial cost         383       -  
Other accruals         19,752       3,195  
Inflation adjustment         30,170       19,629  
Acquisition of Intangible assets         (250,557 )     (123,175 )
Income tax paid         (36,233 )     (33,931 )
Changes in working capital   17     (163,973 )     (88,737 )
Net cash (used in) / provided by operating activities         (49,496 )     123,633  
                     
Cash flows from investing activities                    
Cash contribution in associates         (3,052 )     (2,981 )
Acquisition of other financial assets         (24,275 )     (41,150 )
Disposals of other financial assets         62,178       25,773  
Purchase of Property, plant and equipment         (10,191 )     (7,245 )
Acquisition of Intangible assets         (620 )     (250 )
Loans with related parties         3,832       136  
Proceeds from fixed assets disposals         -       49  
“Piana di Castello” land advance         -       (3,583 )
Other         (388 )     (465 )
Net cash provided by / (used in) investing activities         27,484       (29,716 )
                     
Cash flows from financing activities                    
Proceeds from cash contributions         27,506       43,703  
Additional acquisitions in subsidiaries   14     -       (40,731 )
Disposal of subsidiaries   14     -       56,638  
Proceeds from borrowings   12     165,762       194,575  
Initial Public Offering   14     -       195,601  
Initial Public Offering expenses paid         -       (5,495 )
Release of guarantee deposits         -       92,913  
Leases payments         (3,540 )     -  
Loans paid   12     (53,931 )     (483,845 )
Interest paid   12     (51,887 )     (44,648 )
Dividends paid         (11,376 )     (14,794 )
Net cash provided by / (used in) financing activities         72,534       (6,083 )
                     
Increase in cash and cash equivalents         50,522       87,834  
                     
Movements in cash and cash equivalents                    
At the beginning of the period         244,865       221,601  
Exchange rate loss and inflation adjustment on cash and cash equivalents         (37,775 )     (41,581 )
Increase in cash and cash equivalents         50,522       87,834  
At the end of the period   11     257,612       267,854  

 

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

 

- 5 -

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

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

 

- 6 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

1        General information

 

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

 

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

 

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

 

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

 

Reverse Stock Split

 

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

 

Initial Public Offering

 

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

 

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

 

Significant events of the period

 

CAAP’s Argentine subsidiaries are operating in an economical context where main variables have recently experienced a strong volatility as a consequence of political and economic uncertainties, both in national and international environments.

 

In the local Argentine market, specifically, since the interruption of external voluntary financing, the country risk has increased reflecting this in a progressive loss of the Argentine financial assets value, including debt – at different levels – and shares. At the same time, the Argentine peso has experienced a strong value decrease, reflecting a projected inflation of around 60% in 2019.

 

In this situation, the national government has implemented certain economic measures such as restrictions in the exchange market and the postponement in the payment of certain public debt instruments, among others.

 

- 7 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

1       General information (Cont.)

 

Significant events of the period (Cont.)

 

Under these circumstances, the presidential elections and the uncertainties in the new guidelines of the economic program, all Argentine financial assets have lost value again, and the shares of the Company are not the exception. In fact, between August 1 and November 1, 2019, the Buenos Aires Stock Exchange S&P Merval Index experienced a 52% decline measured in freely available dollars, while the Company’s shares at the New York Stock Exchange (“NYSE”) declined in a 47%. These movements show a correlation between the performances of the Company’s shares and the Merval, due to the significance of the Argentine subsidiaries in CAAP´s business.

 

Considering this situation, the Company continues to assess the evolution of the above-mentioned variables in order to identify the unforeseen potential impacts that could affect the Company´s business and performance.

 

These condensed consolidated interim financial statements have been approved for issuance by the Company on November 22, 2019.

 

2         Basis of presentation and accounting policies

 

The principal accounting policies applied in the preparation of these Condensed Consolidated Interim Financial Statements are consistent with the Consolidated Financial Statements ended at December 31, 2018. These policies have been consistently applied to all the years presented, unless otherwise stated.

 

2.1 Basis of presentation

 

These Condensed Consolidated Interim Financial Statements have been prepared in accordance with IAS 34, “Interim Financial Reporting”. The accounting policies used in the preparation of these Condensed Consolidated Interim Financial Statements are consistent with those used in the audited Consolidated Financial Statements for the year ended December 31, 2018, except for changes explained in Note 2.2. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2018, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) of the International Accounting Standards Board (IASB) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

 

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

 

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

 

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

 

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

 

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

 

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

 

- 8 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2         Basis of presentation and accounting policies (Cont.)

 

2.1 Basis of presentation (Cont.)

 

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

 

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

 

The estimated price index as of September 30, 2019 was 253.50 (184.25 as of December 31, 2018) and the conversion factor derived from the indexes for the period ended September 30, 2019, was 1.38.

 

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

 

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

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

 

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

 

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

 

2.2 Changes in the accounting polices

 

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

 

IFRS 16, “Leases”

 

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

 

(a) Adjustments recognized on adoption of IFRS 16

 

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

 

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

 

- 9 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2         Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

IFRS 16, “Leases” (Cont.)

 

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

 

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

 

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

 

   At January 1,
2019
 
Right-of-use asset     
Land, building and improvements   10,103 
Plant and production equipment   1,224 
Vehicles, furniture and fixtures   519 
    11,846 

 

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

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

- prepayments – decrease by USD 12

- borrowings – decrease by USD 1,715

- lease liabilities – increase by USD 13,549

 

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

 

(b) Practical expedients applied

 

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

- reliance on previous assessments on whether leases are onerous

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

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

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

 

- 10 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2         Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

IFRS 16, “Leases” (Cont.)

 

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

 

The group as a lessee

 

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

 

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

 

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

 

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

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

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

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

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

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

 

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

 

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

- the amount of the initial measurement of lease liability

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

- any initial direct costs, and

- restoration costs.

 

Payments associated with short-term leases, leases of low-value assets and variable leases that do not depend on an index or rate are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

 

The group as a lessor

 

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

 

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

 

Derivative financial instruments and market risk management

 

As of May 29, 2019, CAAP’s subsidiary in Brazil entered into a currency swap in order to manage the exchange rate exposure generated by loan future payables in U.S. dollars.

 

- 11 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

2         Basis of presentation and accounting policies (Cont.)

 

2.2 Changes in the accounting polices (Cont.)

 

Derivative financial instruments and market risk management (Cont.)

 

This financial instrument was not entered into for speculative purposes, but neither was formally designated and therefore did not qualify as hedging instrument for accounting purposes and as a result changes in its fair value is recognized in profit or loss within other financial income or loss.

 

§Derivative financial instruments accounting policies

 

Derivatives are initially recognized at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.

 

Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognized immediately in profit or loss and are included in “Other financial income/loss” line.

 

Derivatives are classified as ‘held for trading’ for accounting purposes and are accounted for at fair value through profit or loss. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.

 

Derivative financial instruments are classified within Level 2 of the fair value hierarchy.

 

§Foreign exchange risk management

 

The Group operates in a number of countries throughout the world and consequently is exposed to foreign exchange rate risk. In addition, the Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. In order to manage foreign exchange risk, the Group has added to its strategy the use of derivative financial instruments together with its previous policy of minimizing net positions of assets and liabilities denominated in foreign currencies.

 

CAAP’s subsidiaries may use derivative contracts in order to cover its exposure to foreign exchange rate risk derived from their financial operations.

 

Other standards and amendments

 

Several other amendments and interpretations apply for the first time in 2019 but do not have an impact on the interim condensed consolidated financial statements of the Group.

 

New and amended standards not yet adopted for CAAP.

 

Certain new accounting standards and interpretations have been published that are not mandatory for September 30, 2019 reporting periods and have not been early adopted by the group. The group’s management is currently evaluating the potential impact of the new standards and interpretations that are set out below.

 

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

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

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

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

 

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

 

- 12 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3        Segment information

 

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

 

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

 

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

 

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

 

The information regarding the Company’s reportable operating segments is consistent with the information presented in Notes 2.V and 4 included in our audited Consolidated Financial Statements for the year ended December 31, 2018 and should be read in conjunction with them.

 

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

 

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

 

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

 

- 13 -

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3        Segment information

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Perú         
   Airports   Others   Airports   Others   Airports   Others   Airports   Airports   Airports   Airports   Intrasegment
Adjustments
   Unallocated   Total 
For the three-month period ended September 30, 2019 (Unaudited)                                                                 
Revenue   244,759    53    28,435    -    25,579    4,050    41,893    31,254    42,620    -    (3,040)   1,492    417,095 
Cost of services   (189,844)   (5)   (23,431)   -    (13,021)   (3,091)   (23,908)   (21,467)   (26,676)   -    2,220    (3,530)   (302,753)
Gross profit / (loss)   54,915    48    5,004    -    12,558    959    17,985    9,787    15,944    -    (820)   (2,038)   114,342 
Selling, general and administrative expenses   (35,525)   (64)   (3,371)   (17)   (2,702)   (319)   (3,039)   (4,268)   (3,945)   -    820    (3,205)   (55,635)
Other operating income   3,640    -    113    -    17    -    37    7    -    -    -    -    3,814 
Other operating expenses   (139)   -    (232)   -    (68)   (22)   (290)   (8)   -    -    -    -    (759)
Operating income / (loss)   22,891    (16)   1,514    (17)   9,805    618    14,693    5,518    11,999    -    -    (5,243)   61,762 
Share of income / (loss) in associates   -    -    -    -    -    -    -    -    -    (159)   -    -    (159)
Amortization and depreciation   20,712    -    2,937    -    2,782    253    3,546    1,181    3,108    -    -    3,745    38,264 
Adjusted Ebitda   43,603    (16)   4,451    (17)   12,587    871    18,239    6,699    15,107    (159)   -    (1,498)   99,867 
Construction services revenue   (95,211)   -    -    -    (1,649)   -    (2,720)   (7,254)   (1,415)   -         -    (108,249)
Construction services cost   95,158    -    -    -    1,601    -    2,641    7,254    1,335    -         -    107,989 
Adjusted Ebitda excluding Construction Services   43,550    (16)   4,451    (17)   12,539    871    18,160    6,699    15,027    (159)   -    (1,498)   99,607 
Construction services revenue   95,211    -    -    -    1,649    -    2,720    7,254    1,415    -    -    -    108,249 
Construction services cost   (95,158)   -    -    -    (1,601)   -    (2,641)   (7,254)   (1,335)   -    -    -    (107,989)
Adjusted Ebitda   43,603    (16)   4,451    (17)   12,587    871    18,239    6,699    15,107    (159)   -    (1,498)   99,867 
Financial income                                                               8,108 
Financial loss                                                               (113,199)
Inflation adjustment                                                               (6,340)
Amortization and depreciation                                                               (38,264)
Loss before income tax expense                                                               (49,828)
Income tax                                                               17,373 
Loss for the period                                                               (32,455)
                                                                  
For the three-month period ended September 30, 2018 (Unaudited)                                                                 
Revenue   182,578    57    29,718    -    24,990    4,161    37,558    23,746    46,688    -    (3,084)   1,549    347,961 
Cost of services   (121,012)   (3)   (24,665)   -    (12,978)   (3,116)   (20,647)   (13,765)   (30,322)   -    2,360    (3,614)   (227,762)
Gross profit / (loss)   61,566    54    5,053    -    12,012    1,045    16,911    9,981    16,366    -    (724)   (2,065)   120,199 
Selling, general and administrative expenses   (16,523)   (59)   (3,017)   (14)   (2,806)   (238)   (3,633)   (4,678)   (3,453)   -    726    (3,023)   (36,718)
Other operating income   3,530    -    755    -    16    8    44    16    -    -    -    -    4,369 
Other operating expenses   (550)   -    (63)   -    (110)   -    (98)   (6)   -    -    -    -    (827)
Operating income / (loss)   48,023    (5)   2,728    (14)   9,112    815    13,224    5,313    12,913    -    2    (5,088)   87,023 
Share of income / (loss) in associates   -    -    -    -    -    -    -    -    -    537    -    59    596 
Amortization and depreciation   16,570    -    3,548    -    3,227    230    3,007    1,112    2,911    -    -    4,285    34,890 
Adjusted Ebitda   64,593    (5)   6,276    (14)   12,339    1,045    16,231    6,425    15,824    537    2    (744)   122,509 
Construction services revenue   (38,811)   -    -    -    (122)   -    (2,261)   -    (4,409)   -    -    -    (45,603)
Construction services cost   38,782    -    -    -    119    -    2,195    -    4,096    -    -    -    45,192 
Adjusted Ebitda excluding Construction Services   64,564    (5)   6,276    (14)   12,336    1,045    16,165    6,425    15,511    537    2    (744)   122,098 
Construction services revenue   38,811    -    -    -    122    -    2,261    -    4,409    -    -    -    45,603 
Construction services cost   (38,782)   -    -    -    (119)   -    (2,195)   -    (4,096)   -    -    -    (45,192)
Adjusted Ebitda   64,593    (5)   6,276    (14)   12,339    1,045    16,231    6,425    15,824    537    2    (744)   122,509 
Financial income                                                               15,778 
Financial loss                                                               (114,236)
Inflation adjustment                                                               (10,000)
Amortization and depreciation                                                               (34,890)
Loss before income tax expense                                                               (20,839)
Income tax                                                               (800)
Loss for the period                                                               (21,639)

 

- 14 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3        Segment information (Cont.)

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Peru         
   Airports   Others   Airports   Others   Airports   Others   Airports   Airports   Airports   Airports   Intrasegment
Adjustments
   Unallocated   Total 
For the nine-month period ended September 30, 2019 (Unaudited)                                                                 
Revenue   664,339    155    86,532    -    82,227    12,589    99,877    79,829    108,507    -    (9,342)   4,525    1,129,238 
Cost of services   (495,525)   (14)   (72,324)   -    (40,041)   (9,745)   (61,145)   (50,893)   (75,755)   -    7,024    (10,595)   (809,013)
Gross profit / (loss)   168,814    141    14,208    -    42,186    2,844    38,732    28,936    32,752    -    (2,318)   (6,070)   320,225 
Selling, general and administrative expenses   (64,797)   (227)   (12,570)   (84)   (9,653)   (953)   (8,825)   (13,011)   (10,810)   -    2,318    (8,661)   (127,273)
Other operating income   10,896    -    405    -    77    -    85    15    -    -    (17)   -    11,461 
Other operating expenses   (518)   -    (323)   -    (168)   (22)   (583)   (26)   -    -    16    -    (1,624)
Operating income / (loss)   114,395    (86)   1,720    (84)   32,442    1,869    29,409    15,914    21,942    -    (1)   (14,731)   202,789 
Share of income / (loss) in associates   -    -    -    -    -    -    -    -    35    (898)   -    -    (863)
Amortization and depreciation   61,829    -    8,885    -    9,326    741    9,963    3,462    9,223    -    -    11,697    115,126 
Adjusted Ebitda   176,224    (86)   10,605    (84)   41,768    2,610    39,372    19,376    31,200    (898)   (1)   (3,034)   317,052 
Construction services revenue   (223,235)   -    -    -    (2,496)   -    (9,253)   (8,609)   (5,391)   -    -    -    (248,984)
Construction services cost   223,091    -    -    -    2,423    -    8,985    8,609    4,265    -    -    -    247,373 
Adjusted Ebitda excluding Construction Services   176,080    (86)   10,605    (84)   41,695    2,610    39,104    19,376    30,074    (898)   (1)   (3,034)   315,441 
Construction services revenue   223,235    -    -    -    2,496    -    9,253    8,609    5,391    -    -    -    248,984 
Construction services cost   (223,091)   -    -    -    (2,423)   -    (8,985)   (8,609)   (4,265)   -    -    -    (247,373)
Adjusted Ebitda   176,224    (86)   10,605    (84)   41,768    2,610    39,372    19,376    31,200    (898)   (1)   (3,034)   317,052 
Financial income                                                               33,092 
Financial loss                                                               (192,833)
Inflation adjustment                                                               (19,903)
Amortization and depreciation                                                               (115,126)
Income before income tax expense                                                               22,282 
Income tax                                                               10,241 
Income for the period                                                               32,523 
                                                                  
September 30, 2019 (Unaudited)                                                                 
Current assets   200,095    108    41,506    223    27,358    5,463    56,372    31,838    64,976    -    (108,975)   212,930    531,894 
Non-current assets   1,110,163    21    1,119,016    41    150,434    4,987    173,227    58,522    233,525    10,822    (768)   388,325    3,248,315 
Capital Expenditure   223,236    -    3,047    41    7,637    514    10,730    10,556    10,547    -    (33)   13    266,288 
Current liabilities   218,148    21    120,643    1    23,331    3,002    23,191    44,998    110,983    -    (108,975)   86,408    521,751 
Non-current liabilities   516,588    -    1,025,854    -    53,200    1,874    64,936    2,706    59,676    -    (768)   340,075    2,064,141 

 

- 15 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

3        Segment information (Cont.)

 

   Argentina   Brazil   Uruguay   Armenia   Ecuador   Italy   Perú         
   Airports   Others   Airports   Other   Airports   Others   Airports   Airports   Airports   Airports   Intrasegment
Adjustments
   Unallocated   Total 
For the nine-month period ended September 30, 2018 (Unaudited)                                                                 
Revenue   490,219    154    92,086    -    81,486    13,085    87,320    67,328    120,396    -    (9,290)   4,454    947,238 
Cost of services   (322,395)   (11)   (80,212)   -    (39,856)   (9,827)   (49,391)   (38,831)   (85,850)   -    7,245    (10,939)   (630,067)
Gross profit   167,824    143    11,874    -    41,630    3,258    37,929    28,497    34,546    -    (2,045)   (6,485)   317,171 
Selling, general and administrative expenses   (43,646)   (155)   (11,363)   (14)   (9,726)   (939)   (9,144)   (13,215)   (10,265)   -    2,048    (11,659)   (108,078)
Other operating income   9,537    -    762    -    78    49    89    32    -    -    -    -    10,547 
Other operating expenses   (842)   -    (273)   -    (189)   (30)   (384)   (21)   -    -    -    -    (1,739)
Operating income   132,873    (12)   1,000    (14)   31,793    2,338    28,490    15,293    24,281    -    3    (18,144)   217,901 
Share of income/ (loss) in associates   -    -    -    -    -    -    -    -    43    (75)   -    708    676 
Amortization and depreciation   40,622    -    12,058    -    9,837    615    8,963    4,836    8,797    -    -    12,947    98,675 
Adjusted Ebitda   173,495    (12)   13,058    (14)   41,630    2,953    37,453    20,129    33,121    (75)   3    (4,489)   317,252 
Construction services revenue   (102,137)   -    -    -    (463)   -    (4,485)   -    (11,121)   -    -    -    (118,206)
Construction services cost   102,035    -    -    -    450    -    4,354    -    10,012    -    -    -    116,851 
Adjusted Ebitda excluding Construction Services   173,393    (12)   13,058    (14)   41,617    2,953    37,322    20,129    32,012    (75)   3    (4,489)   315,897 
Construction services revenue   102,137    -    -    -    463    -    4,485    -    11,121    -    -    -    118,206 
Construction services cost   (102,035)   -    -    -    (450)   -    (4,354)   -    (10,012)   -    -    -    (116,851)
Adjusted Ebitda   173,495    (12)   13,058    (14)   41,630    2,953    37,453    20,129    33,121    (75)   3    (4,489)   317,252 
Financial income                                                               57,158 
Financial loss                                                               (310,766)
Inflation adjustment                                                               (21,446)
Amortization and depreciation                                                               (98,675)
Loss before income tax expense                                                               (56,477)
Income tax expense                                                               5,658 
Loss for the period                                                               (50,819)
                                                                  
December 31, 2018 (Audited)                                                                 
Current assets   202,187    251    45,042    116    21,925    3,660    51,264    44,145    51,192    -    (60,077)   173,037    532,742 
Non-current assets   1,061,352    23    1,224,475    -    149,418    5,396    168,465    46,009    239,489    8,640    (600)   409,869    3,312,536 
Capital Expenditure   176,525    -    8,264    -    1,832    1,552    8,026    2,127    21,142    -    -    64    219,532 
Current liabilities   150,971    36    106,907    -    22,874    2,341    25,525    45,130    89,414    -    (59,909)   67,262    450,551 
Non-current liabilities   504,934    -    1,121,409    -    52,904    2,450    74,457    2,098    65,552    -    (768)   348,994    2,172,030 

 

- 16 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

4        Revenue

 

  

For the three-month period ended

September 30,

  

For the nine-month period ended

September 30,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

  

2019

(Unaudited)

  

2018

(Unaudited)

 
Aeronautical revenue   184,813    177,061    530,025    485,330 
Non-aeronautical revenue                    
  Commercial revenue   123,294    124,707    348,513    340,194 
  Construction service revenue   108,249    45,603    248,984    118,206 
  Other revenue   739    590    1,716    3,508 
    417,095    347,961    1,129,238    947,238 
Timing of revenue recognition                
Over time   345,703    284,944    932,984    800,511 
At a point in time   15,492    13,894    35,271    30,342 
Revenues outside the scope of IFRS 15   55,900    49,123    160,983    116,385 
Revenue   417,095    347,961    1,129,238    947,238 

 

5        Cost of services

 

  

For the three-month period ended

September 30,

  

For the nine-month period ended

September 30,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

  

2019

(Unaudited)

  

2018

(Unaudited)

 
Construction services cost   (107,989)   (45,192)   (247,373)   (116,851)
Salaries and social security contributions   (45,846)   (43,051)   (137,089)   (127,746)
Concession fees (**)   (41,419)   (41,504)   (118,725)   (115,765)
Amortization and depreciation (***)   (36,054)   (32,703)   (107,735)   (92,273)
Maintenance expenses   (29,832)   (27,463)   (86,075)   (79,959)
Services and fees   (16,903)   (15,967)   (47,771)   (40,563)
Cost of fuel   (13,945)   (12,503)   (31,988)   (27,747)
Taxes (*)   (4,044)   (4,331)   (12,485)   (12,603)
Office expenses   (3,996)   (2,030)   (10,189)   (7,516)
Provision for maintenance costs   (293)   (950)   (1,442)   (1,845)
Others   (2,432)   (2,068)   (8,141)   (7,199)
    (302,753)   (227,762)   (809,013)   (630,067)

 

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

(**) Includes depreciation for fixed concession assets fee of USD 14,941 as of September 30, 2019 (USD 20,025 as of September 30, 2018).

(***) Includes amortization of leases of USD 1,934 as of September 30, 2019.

  

6        Selling, general and administrative expenses

 

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

2019

(Unaudited)

  

2018

(Unaudited)

  

2019

(Unaudited)

  

2018

(Unaudited)

 
Taxes (*)   (9,528)   (9,994)   (27,831)   (28,347)
Services and fees   (9,833)   (10,015)   (27,791)   (29,113)
Salaries and social security contributions   (7,054)   (7,135)   (21,153)   (21,861)
Bad debts   (22,189)   (3,396)   (28,629)   (4,988)
Amortization and depreciation (**)   (2,210)   (2,187)   (7,391)   (6,402)
Office expenses   (837)   (2,416)   (3,295)   (5,912)
Insurance   (386)   (381)   (1,271)   (1,595)
Maintenance expenses   (480)   (687)   (1,180)   (1,866)
Advertising   (1,110)   (728)   (1,734)   (2,073)
Charter service   (207)   (207)   (622)   (622)
Bad debts recovery   168    2,637    566    2,637 
Other   (1,969)   (2,209)   (6,942)   (7,936)
    (55,635)   (36,718)   (127,273)   (108,078)

 

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

(**) Includes amortization of leases of USD 486 as of September 30, 2019.

 

- 17 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

7       Other operating income

 

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

2019

(Unaudited)

  

2018

(Unaudited)

  

2019

(Unaudited)

  

2018

(Unaudited)

 
Government grant (*)   3,682    3,530    10,848    9,536 
Other   132    839    613    1,011 
    3,814    4,369    11,461    10,547 

 

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

 

8        Financial results, net

 

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

2019

(Unaudited)

  

2018

(Unaudited)

  

2019

(Unaudited)

  

2018

(Unaudited)

 
Interest income   4,972    7,344    22,197    15,741 
Foreign exchange income   2,677    7,943    7,328    39,105 
Other financial income (*)   459    491    3,567    2,312 
Financial income   8,108    15,778    33,092    57,158 
                     
Interest expense   (23,584)   (21,015)   (66,860)   (68,704)
Foreign exchange expenses   (73,340)   (72,320)   (60,604)   (163,705)
Leases financial cost   (119)   -    (383)   - 
Changes in liability for concessions   (15,756)   (18,678)   (62,623)   (69,042)
Other financial loss   (400)   (2,223)   (2,363)   (9,315)
Financial loss   (113,199)   (114,236)   (192,833)   (310,766)
                     
Inflation adjustment   (6,340)   (10,000)   (19,903)   (21,446)
Inflation adjustment   (6,340)   (10,000)   (19,903)   (21,446)
Net financial results   (111,431)   (108,458)   (179,644)   (275,054)

 

(*) Includes derivative financial instruments fair value gains for a total amount of USD 323 as of September 30, 2019.

 

9        Income tax

 

   For the three-month period ended
September 30,
  

For the nine-month period ended

September 30,

 
  

2019

(Unaudited)

  

2018

(Unaudited)

  

2019

(Unaudited)

  

2018

(Unaudited)

 
Current income tax   3,427    (12,057)   (36,457)   (27,075)
Deferred income tax   13,946    11,257    46,698    32,733 
    17,373    (800)   10,241    5,658 

 

As of March 29, 2019, AA2000 exercised an option of the asset revaluation for tax purpose included in Law No. 27.430 of Argentina, generating a deferred tax gain of ARS 3,891 million (approximately USD 67,564), as well as a higher current tax of ARS 637 million (approximately USD 11,061).

 

In order to determine the net taxable income at the end of this period AA2000 expects price index variation will exceed 30% as of December 31, 2019, and therefore, the tax inflation adjustment determined in accordance with articles No. 95 to No. 98 of the income tax law has been incorporated into the tax results for a total amount of ARS 1,125 million (approximately USD 19,535). Likewise, the income tax law allows the deferral of the charge generated by the tax inflation adjustment in three consecutive years, as a result, ARS 422 million (approximately USD 7,328) was recognized in current tax liabilities and ARS 703 million (approximately USD 12,207) as deferred tax liabilities.

 

- 18 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

10        Intangible assets, net

 

   Concession
Assets
   Goodwill   Patent,
intellectual
property rights
and others
   Total 
Cost                    
Balances at January 1, 2019   3,841,853    56,501    15,170    3,913,524 
Acquisitions   251,071    -    620    251,691 
Concession rights due to concession extension   4,406    -    -    4,406 
Transfer   (399)   -    399    - 
Transfer from property, plant and equipment   935    -    -    935 
Translation differences and inflation adjustment   (236,827)   (267)   (877)   (237,971)
    3,861,039    56,234    15,312    3,932,585 
Depreciation                    
Accumulated at January 1, 2019   967,909    -    12,073    979,982 
Depreciation of the period   119,242    -    1,104    120,346 
Translation differences and inflation adjustment   (52,131)   -    (691)   (52,822)
    1,035,020    -    12,486    1,047,506 
At September 30, 2019   2,826,019    56,234    2,826    2,885,079 
                     
Cost                    
Balances at January 1, 2018   3,312,006    57,049    14,867    3,383,922 
Adjustment on initial application of IAS 29   824,061    -    -    824,061 
Adjusted balances at January 1, 2018   4,136,067    57,049    14,867    4,207,983 
Acquisitions   123,758    -    250    124,008 
Transfer   (85)   -    85    - 
Transfer to property plant and equipment   (5)   -    -    (5)
Translation differences and inflation adjustment   (865,031)   (499)   (850)   (866,380)
    3,394,704    56,550    14,352    3,465,606 
Depreciation                    
Accumulated at January 1, 2018   553,767    313    11,488    565,568 
Adjustment on initial application of IAS 29   296,524    -    -    296,524 
Adjusted balances at January 1, 2018   850,291    313    11,488    862,092 
Depreciation of the period   110,891    -    983    111,874 
Translation differences and inflation adjustment   (189,749)   (313)   (501)   (190,563)
    771,433    -    11,970    783,403 
At September 30, 2018   2,623,271    56,550    2,382    2,682,203 

 

- 19 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 


11       Cash and cash equivalents

 

  

At September 30,

2019

(Unaudited)

  

At December 31,

2018

(Audited)

 
Cash to be deposited   2,036    3,488 
Cash at banks   204,154    181,972 
Time deposits   18,518    31,879 
Other cash equivalents   32,904    27,526 
    257,612    244,865 

 

The Group operates with investment grade - financial institutions.

 

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

 

  

At September 30,

2019

(Unaudited)

  

At September 30,

2018

(Unaudited)

 
Cash and cash equivalents   257,612    267,854 
    257,612    267,854 

 

12        Borrowings

 

  

At September 30,

2019

(Unaudited)

  

At December 31,

2018

(Audited)

 
Non-current          
Bank and financial borrowings (**)   474,323    405,944 
Notes (*)   577,264    621,380 
Others   -    427 
    1,051,587    1,027,751 
Current          
Bank and financial borrowings (**)   85,131    40,063 
Notes (*)   73,449    57,556 
Others   -    1,288 
    158,580    98,907 
Total Borrowings   1,210,167    1,126,658 

 

Changes in borrowings during the period is as follows:

 

   For the nine-month period ended
September 30,
 
  

2019

(Unaudited)

  

2018

(Unaudited)

 
Balances at the beginning of the period   1,126,658    1,486,445 
Adjustment on adoption of IFRS 16   (1,715)   - 
Adjusted balances at the beginning of the period   1,124,943    1,486,445 
Loans obtained   165,762    195,028 
Loans paid   (53,931)   (483,845)
Interest paid   (51,887)   (44,648)
Accrued interest for the period   64,457    67,188 
Translation differences and inflation adjustment   (39,177)   (67,603)
Balances at the end of the period   1,210,167    1,152,565 

 

The maturity of borrowings is as follows:

 

   1 year or
less
   1 - 2
years
   2 – 5
years
   Over 5
years
   Total 
At September 30, 2019 (1)   224,336    230,893    491,144    713,808    1,660,181 
At December 31, 2018 (1)   172,920    170,630    472,042    836,697    1,652,289 

 

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

 

- 20 -

 

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12        Borrowings (Cont.)

 

(*) Notes include the following:

 

-In 2007 Puerta del Sur S.A. issued 7.75% secured guaranteed notes for USD 87 million, due 2021. The principal balance of the Puerta del Sur Notes, together with accrued interest, will be repaid in 22 total installments, with individual installments occurring on April 29 and October 29 of each year beginning in 2011 and ending in 2021. The main covenants on these bonds are limitations on liens and encumbrances and compliance with certain financial ratios. Puerta del Sur may be limited to declare, make or pay any dividends unless the debt coverage service ratio exceeds 1.7x and the indebtedness ratio is less than 3.0. Puerta del Sur Notes are secured by a trust to which Puerta del Sur has transferred the following sums: (a) the sum of funds which Puerta del Sur has or has rights to for services offered in administration, construction, and maintenance of Carrasco Airport; (b) the sum of funds received from the duty-free store in Carrasco Airport; (c) the sum of funds received as a result of the permitted operation of the cargo terminal in Carrasco Airport; and (d) the sum of funds Puerta del Sur has received or will have right to receive from the government or from a third party successor as a result of a management agreement, or as a consequence of the redemption, termination, mutual dissolution and/or resolution of the management agreement for whatever reason, this trust is only use in case of non-compliance with the Notes obligations.
-In 2015, ACI Airport Sudamérica S.A.U. issued 6.875% senior secured guaranteed notes, for USD 200 million due in 2032. The principal balance will be repaid in 34 installments, May 29 and November 29 of each year, commencing on May 29, 2016 while accrued interest will be repaid commencing on November 29, 2015. The main covenants on these bonds are limitations on take additional indebtedness, make payments of dividends and other payments that are specifically restricted, selling assets as well as requiring compliance with certain financial ratios. The holders of these notes benefit from a guarantee and a security package including the pledge of the shares in Puerta del Sur S.A. and Cerealsur S.A., and certain accounts of Cerealsur and ACI Airport Sudamérica. As of September 30, 2019 and December 31, 2018 they were guaranteed with a stand by letter of credit of Corporación América S.A. with Bank of América. These notes are fully and unconditionally guaranteed by Cerealsur S.A.
-In 2014 Corporación América Italia S.p.A. issued 6.25% secured notes for €50 million due 2019. These notes are secured by a pledge of the shares of Dicasa Spain S.L.U. (pre-conversion) or Dicasa S.A.U. (post-conversion), and the shares representing Corporación America Italia S.p.A. holding in Toscana Aeroporti S.p.A., a pledge of certain intercompany loan receivable and the economic first ranking pledge in respect of all the shares representing 100% of the share capital of Corporación América Italia S.p.A. held by Dicasa S.A.U. Main covenants on these bonds require compliance with certain financial ratios as well as restrictions on payment of dividends and limitations on certain lines of assets or increases in additional financial indebtedness. This secured notes were cancelled on January 2018.
-On January 8, 2018, Corporación América Italia S.p.A. (“CAI”) issued € 60.0 million (USD 71.8 million) aggregate principal amount of 4.556% secured notes due 2024 (the “Italian Notes”). The proceeds of the Italian Notes were used to refinance and replace the 6.250% secured notes due 2019 issued by CAI in December 2014. Interest on the Italian Notes is payable annually in arrears on June 30 of each year. The Italian Notes will mature on December 31, 2024. The main covenants on these bonds are limitations to take additional indebtedness, make payments of dividends and other payments that are specifically restricted, selling assets as well as requiring compliance with certain financial ratios.
 The Italian Notes are secured by an economic first ranking pledge in respect of all the shares representing 100% of the share capital of CAI, 100% of the share capital of Dicasa Spain S.A.U. and the shares representing CAI’s holding in Toscana Aeroporti S.p.A.
-On February 6, 2017, AA2000 issued 6.875% senior secured notes for a nominal amount of USD 400 million due 2027. The principal will be amortized in 32 equal quarterly installments as from May 1, 2019. The main covenants of these bonds require compliance with certain financial ratios as well as restriction to incur in additional debt and limitations on the payments of dividends if any default or unmatured default has occurred.

 

- 21 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12        Borrowings (Cont.)

 

(**) As of September 30, 2019 significant bank and financial borrowings include the following:

 

                    Outstanding      
Company   Lender   Currency   Maturity   Interest Rate   (In millions
of USD)
    Capitalization(2)
Inframérica   BNDES   R$   September 2032   Variable   TJLP(1) plus spread     8.2      
Concessionaria do   BNDES   R$   June 2032   Variable   T.R.plus spread plus IPCA     2.0      
Aeroporto Sao Goncalo do   BNDES   R$   September 2032   Variable   T.R. plus spread plus IPCA     5.3     A
Amarante S.A.   BNDES   R$   September 2022   Fixed   2.50%     1.6      
    BNDES   R$   July 2032   Variable   T.R. plus spread plus IPCA     2.5      
Inframérica   BNDES   R$   December 2033   Variable   TJLP(1) plus spread     261.9     A
Concessionaria do   Bradesco   R$   July 2022   Variable   TJLP(1) plus spread     0.1     D
Aeroporto de Brasilia   Bradesco   R$   July 2022   Variable   Selic plus spread     0.1     D
S.A.   Votorantim   USD   June 2020   Variable   CDI plus spread     9.0     C
Terminal de Cargas de   Santander Uruguay   USD   June 2020   Fixed   4.25%     0.3     D
Uruguay S.A.   Santander Uruguay   USD   April 2023   Fixed   4.40%     1.8     D
Toscana Aeroporti S.p.a.   MPS Servicio capital   Euro   June 2022   Variable   Euribor 6 month plus spread     6.0     B
    Banco de Innovación de Infraestructuras y Desarrollo   Euro   September 2027   Variable   Euribor 6 month plus spread     25.2     D
    BPM   Euro   October 2020   Fixed   0.13%     1.6     D
    Unicredit   Euro   September 2020   Fixed   0.15%     8.2     D
    Unicredit   Euro   November 2019   Fixed   0.15%     5.4     D
    Unicredit   Euro   October 2020   Fixed   0.15%     1.1     D
    BNL   Euro   November 2020   Fixed   0.15%     2.7     D
    MPS Servicio capital   Euro    September 2020   Fixed   0.15%     1.1     D
    BNL   Euro   December 2020   Fixed   0.15%     2.7     D
    CREDEM   Euro   October 2020   Fixed   0.60%     5.4     D
    BPM   Euro   June 2022   Variable   Euribor 3 month plus spread     0.3     D
    BPM   Euro   June 2023   Variable   Euribor 3 month plus spread     0.4     D
Armenia International   Credit Suisse AG   USD   December 2022   Variable   Libor 6 month plus spread     41.0     B
Airports C.J.S.C.       Euro   December 2022   Variable   Euribor 6 month plus spread     41.4      
Aeropuerto de Neuquén S.A.   Banco Macro   USD   August 2021   Variable   Libor plus spread     3.2     A

Aeropuertos Argentina 2000 S.A.

 

  Banco de la Provincia de Buenos Aires   USD   June 2023   Fixed   7%     2.8     D
  Citibank N.A.   USD   August 2023   Fixed   9.75%     83.8     A
  Industrial and Commercial Bank of China (Argentina) S.A., Banco Galicia and Buenos Aires S.A.U. and Banco Santander Río S.A.   USD   August 2023   Variable   Libor plus spread     34.4     A
Total                         559.5      

 

- 22 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12        Borrowings (Cont.)

 

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

 

                    Outstanding     Capitalization(2)
Company   Lender   Currency   Maturity   Interest Rate     (In millions of USD)      
Inframérica Concessionaria do   BNDES   R$   September 2032   Variable   TJLP(1) plus spread     8.5      
Aeroporto Sao Goncalo do   BNDES   R$   June 2032   Variable   T.R.plus spread plus IPCA     2.1      
Amarante S.A.   BNDES   R$   September 2032   Variable   T.R. plus spread plus IPCA     5.4     A
    BNDES   R$   September 2022   Fixed   2.50%     2.1      
    BNDES   R$   July 2032   Variable   T.R. plus spread plus IPCA     2.5      
Inframérica Concessionaria do   BNDES   R$   December 2033   Variable   TJLP(1) plus spread     278.5     A
Aeroporto de Brasilia S.A.   Bradesco   R$   July 2022   Variable   TJLP(1) plus spread     0.2     D
    Bradesco   R$   July 2022   Variable   Selic plus spread     0.1     D
Terminal Aeroportuaria de   Banco Guayaquil SA   USD   October 2019   Variable   6.58%     1.2     D
Guayaquil S.A   Banco Guayaquil SA   USD   November 2019   Variable   7.45%     0.8     D
    Banco Bolivariano CA   USD   November 2019   Variable   7.30%     2.8     D
Terminal de Cargas de Uruguay   Santander Uruguay   USD   June 2020   Fixed   4.25%     0.7     D
S.A.   Santander Uruguay   USD   April 2023   Fixed   4.40%     2.2     D
Toscana Aeroporti S.p.a.   MPS Servicio capital   Euro   June 2022   Variable   Euribor 6 month plus spread     7.1     B
    Banco de Innovación de Infraestructuras y Desarrollo   Euro   September 2027   Variable   Euribor 6 month plus spread     29.6     D
    BPM   Euro   April 2019   Fixed   0.04%     2.3     D
    Unicredit   Euro   March 2019   Fixed   0.05%     5.7     D
    BNL   Euro   July 2019   Variable   Euribor 3 month plus spread     2.9     D
    BPM   Euro   June 2022   Variable   Euribor 3 month plus spread     0.4     D
    BPM   Euro   June 2023   Variable   Euribor 3 month plus spread     0.5     D
Armenia International Airports   Credit Suisse AG    USD   December 2022   Variable   Libor 6 month plus spread     44.6     B
C.J.S.C.     Euro   December 2022   Variable   Euribor 6 month plus spread     45.8    
Total                         446.0      

 

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

IPCA: corresponds to the Brazilian Consumer Price Index

(2) A - Secured/guaranteed

B – Secured/unguaranteed

C – Unsecured/guaranteed

D – Unsecured/unguaranteed

R$ - Brazilian Real

 

- 23 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12        Borrowings (Cont.)

 

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

 

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

 

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

 

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

 

On March 14, 2018 BNDES has approved an amendment and extension of the loan agreements with ICAB that involves extending the final maturity and the interest-only payment terms of such loans for two years, and providing an interest capitalization period for 50% of the interest due for two years. In addition, such agreements increased the size of the credit facility commitments by R$ 300 million (USD 92.9 million).

 

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

 

In March, 2018, ICAB repaid the outstanding amount of R$ 274.4 million (USD 83 million) with CAIXA.

 

On December 14, 2017, ICAB entered into a banking letter of credit with Banco Citibank S.A. (the “Citibank Credit Agreement”) in the aggregate principal amount of R$ 48.0 million (USD 14.5 million). The loan under the Citibank Credit Agreement matured on March 14, 2018. Such loan was unsecured. The obligations under the Citibank Credit Agreement were absolutely and unconditionally guaranteed by ACI Airports S.à.r.l.

 

On December 20, 2017, under the terms of the Banco Santander Bridge Loan Facility, ICAB issued a promissory note in the aggregate principal amount of R$ 300.0 million (USD 90.7 million), which matured on June 18, 2018. Loans under the Banco Santander Bridge Loan Facility were fully secured by (i) a cash deposit made by CAAP under a time deposit pledge agreement entered on December 19, 2017 between CAAP and Banco Santander, in the amount of R$ 300.0 million (USD 90.7 million). Such loans mature in 180 days as of the closing date thereunder; and (ii) a fiduciary assignment of ICAB’s account at Banco Santander where the funds from BNDES financings should be deposited. The Banco Santander Bridge Loan Facility was also guaranteed by Inframérica. The loans under the Banco Santander Bridge Loan Facility mature in 180 days.

 

- 24 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12       Borrowings (Cont.)

 

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

 

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

 

On December 19, 2017, ICAB entered into a short-term banking letter of credit with Banco Pine S.A. (the “Banco Pine Credit Agreement”) in the aggregate principal amount of R$ 32.0 million (USD 9.7 million). Obligations under the Banco Pine Credit Agreement were absolutely and unconditionally guaranteed by CAAP. The loan under the “Banco Pine Credit Agreement” matured on January 2018; at that date, ICAB made an amendment to the loan maturity from January to December 2018. On December 17, 2018, ICAB loan was cancelled.

 

On June 5, 2019, ICAB entered into a loan with Banco Votorantim S.A. - Bahamas Branch for an amount of USD 8.9 million due in June 2020. This loan is secured with a guarantee signed by Banco Votorantim S.A. Brazil with ICAB (“Contrato de Prestação de Garantia”). This guarantee agreement, dated June 14, 2019, is secured by a guarantee letter issued by CAAP for a total amount of USD 8.9 million or its equivalent in Brazilian Real which shall not be lower than R$ 36 million plus interest. Future payments of the loan are protected from the exposure to U.S. dollars exchange rate fluctuation with a cash flow swap derivative with Banco Votorantim S.A. from Brazil that denominates future payments in Brazilian Real for a total amount of R$ 36 million.

 

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

 

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

 

As of September 30, 2019 Armenia International Airports C.J.S.C. pledged cash held in bank accounts for USD 42.8 million (USD 25.5 million at December 31, 2018) and all intangible assets and property and equipment for a total of USD 170.1 million (USD 166.6 million at December 31, 2018).

 

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

 

On December, 2017 CAAP entered into the Julius Baer Credit Agreement, pursuant to which Julius Baer & Co. Ltd. provided a loan in the aggregate principal amount of USD 15 million. Loan under the Julius Baer Credit Agreement was secured by cash collateral provided by a company controlled by the Group of the Shareholder and mature 24 months from the closing date thereunder. This guaranteed was released on February 2018 when the loan was repaid.

 

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

 

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

 

Aeropuerto de Neuquén S.A. (“ANSA”) loan with Banco Macro is secured with a guarantee letter of Corporación América S.A. In addition, ANSA entered into an assignment of collection rights agreement in favour of Banco Macro.

 

- 25 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

12       Borrowings (Cont.)

 

On August 9, 2019, AA2000 entered into two credit facility agreements: (a) the “onshore” credit facility agreement for a principal amount of USD 85 million and (b) the “offshore” credit facility agreement for a principal amount of USD 35 million. The creditors were Citibank N.A., Industrial and Commercial Bank of China (Argentina) S.A., Banco Galicia and Buenos Aires S.A.U. and Banco Santander Río S.A. (jointly, the “Lenders”).

 

The term for the credit facility agreements shall be of thirty-six months as from the borrowing date. The principal amount under the credit facility agreements shall be repaid in nine quarterly equal and regular installments, the first one being payed as from 12 months of the borrowing date, and it shall bear interests: (i) regarding the onshore credit facility agreement, at a fixed annual nominal rate of 9.75%; (ii) regarding the offshore credit facility agreement, at a variable rate equivalent to (a) the LIBOR rate plus (b) an applicable interest rate of an annual nominal 5,500% plus (c) the applicable withholding tax.

 

To secure its obligations under the two credit facility agreements, pursuant to the Argentine Collateral Trust Agreement dated August 9, 2019 (under Argentine law), AA2000 has transferred and assigned to the collateral trustee, acting on behalf of the Trust, for the benefit of the Lenders, acting as the beneficiaries, all: (a) rights, title and interest in, to and under each payment of the cargo airport charges payable by the user of such services in connection with all proceeds derived from export and import services carried out by Terminal de Cargas Argentina (a business unit of AA2000); and (b) any residual amount that AA2000 could be entitled to receive pursuant to article 11.4 of the collateral trust agreement dated January 17, 2017, entered into AA2000 and Citibank, in respect of the rights to receive payment in the event of a termination, expropriation or redemption of the concession agreement entered by and between the National Government and AA2000 on February 9, 1998 and approved by Decree No. 163/1998; including the right to receive and withhold all the payments pursuant to them and any other produced by them, assigned in trust to secure the Existing Notes issued by AA2000.

 

As of September 30, 2019 and December 31, 2018, the Group was in compliance with all of its borrowing covenants.

 

- 26 -

 

 

Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the nine-month period ended September 30, 2019 and 2018 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).

 

13        Other liabilities  

 

  

At September
30, 2019

(Unaudited)

  

At December
31, 2018

(Audited)

 
Non-current          
Concession fee payable (*)   727,149    791,474 
Advances from customers   21,923    24,763 
Provisions for legal claims (****)   5,557    7,966 
Provision for maintenance costs (**)   19,647    21,685 
Other taxes payable   2,769    4,430 
Employee benefit obligation (***)   8,177    8,038 
Salary payable   515    496 
Other liabilities with related parties (Note 16)   1,679    1,785 
Other payables   11,480    10,959 
    798,896    871,596 
           
Current          
Concession fee payable (*)   113,286    116,480 
Other taxes payable   21,383    24,411 
Salary payable   35,677    39,565 
Other liabilities with related parties (Note 16)   645    926 
Advances from customers   8,040    6,030 
Provision for maintenance costs (**)   8,564    7,412 
Expenses provisions   1,171    2,030 
Provision for legal claims (****)   1,028    1,717 
Other payables   37,516    26,877 
    227,310    225,448 

 

Maturity of the other liabilities is as follows:

 

   1 year or
less
   1 - 2 years   2 - 5 years   Over 5 years   Total 
At September 30, 2019   231,512    86,759    267,128    1,840,245    2,425,644 
At December 31, 2018    224,468    87,901    268,503