UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2020
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 THREE-MONTH PERIOD ENDED MARCH 31, 2020 AND 2019
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 three-month period ended March 31, 2020 and 2019 (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, 2019, 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 three-month period ended March, 2020 and 2019. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Corporación América Airports S.A. | ||||
By: | /s/ Andres Zenarruza | |||
Name: | Andres Zenarruza | |||
Title: | Head of Legal | |||
By: | /s/ Raúl Guillermo Francos | |||
Name: | Raúl Guillermo Francos | |||
Title: | Chief Financial Officer |
Date: May 22, 2020
Exhibit 99.1
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
Corporación América Airports S.A.
CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
For the three-month period ended March 31, 2020 and 2019
R.C.S. Luxembourg B 174.140
4, rue de la Grève
L-1643, Luxembourg
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME
For the three-month period ended March 31, | ||||||||||||
2020 | 2019 | |||||||||||
Notes | Unaudited | Unaudited | ||||||||||
Revenue | 4 | 302,829 | 360,550 | |||||||||
Cost of services | 5 | (235,978 | ) | (248,744 | ) | |||||||
Gross profit | 66,851 | 111,806 | ||||||||||
Selling, general and administrative expenses | 6 | (34,346 | ) | (38,527 | ) | |||||||
Impairment loss | 10 | (4,490 | ) | - | ||||||||
Other operating income | 7 | 3,656 | 4,340 | |||||||||
Other operating expense | (418 | ) | (791 | ) | ||||||||
Operating income | 31,253 | 76,828 | ||||||||||
Share of loss in associates | (866 | ) | (414 | ) | ||||||||
Income before financial results and income tax | 30,387 | 76,414 | ||||||||||
Financial income | 8 | 8,575 | 15,798 | |||||||||
Financial loss | 8 | (53,985 | ) | (65,302 | ) | |||||||
Inflation adjustment | 8 | (1,944 | ) | (8,230 | ) | |||||||
(Loss) / Income before income tax expense | (16,967 | ) | 18,680 | |||||||||
Income tax | 9 | (9,194 | ) | 5,731 | ||||||||
(Loss) / Income for the period | (26,161 | ) | 24,411 | |||||||||
Attributable to: | ||||||||||||
Owners of the parent | (15,055 | ) | 30,441 | |||||||||
Non-controlling interest | (11,106 | ) | (6,030 | ) | ||||||||
(26,161 | ) | 24,411 | ||||||||||
Earnings per share attributable to the owners of the parent | ||||||||||||
Weighted average number of ordinary shares (thousands) | 160,022 | 160,022 | ||||||||||
Basic and diluted earnings per share | (0.09 | ) | 0.19 |
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, 2019.
-1-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the three-month period ended March 31, | ||||||||
2020 | 2019 | |||||||
Unaudited | Unaudited | |||||||
(Loss) / Income for the period | (26,161 | ) | 24,411 | |||||
Items that will not be reclassified subsequently to profit or loss: | ||||||||
Remeasurement of defined benefit obligation | 319 | (237 | ) | |||||
Items that may be subsequently reclassified to profit or loss: | ||||||||
Share of other comprehensive (loss) / income from associates | (264 | ) | 76 | |||||
Currency translation adjustment | (29,247 | ) | (26,517 | ) | ||||
Other comprehensive loss for the period, net of income tax | (29,192 | ) | (26,678 | ) | ||||
Total comprehensive loss for the period | (55,353 | ) | (2,267 | ) | ||||
Attributable to: | ||||||||
Owners of the parent | (30,384 | ) | 13,560 | |||||
Non-controlling interest | (24,969 | ) | (15,827 | ) | ||||
(55,353 | ) | (2,267 | ) |
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, 2019.
-2-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
CONDENSED cONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
Notes |
At March 31, 2020
Unaudited |
At December 31, 2019
Audited |
||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Intangible assets, net | 10 | 2,721,128 | 3,002,121 | |||||||||
Property, plant and equipment, net | 77,536 | 79,612 | ||||||||||
Right-of-use asset | 7,512 | 8,380 | ||||||||||
Investments in associates | 9,347 | 9,929 | ||||||||||
Other financial assets at fair value through profit or loss | 3,227 | 3,309 | ||||||||||
Other financial assets at amortized cost | 2,532 | 2,494 | ||||||||||
Deferred tax assets | 116,272 | 147,475 | ||||||||||
Other receivables | 117,711 | 119,954 | ||||||||||
Trade receivables | 1,206 | 1,326 | ||||||||||
3,056,471 | 3,374,600 | |||||||||||
Current assets | ||||||||||||
Inventories | 10,257 | 11,302 | ||||||||||
Other financial assets at fair value through profit or loss | 14,772 | 17,341 | ||||||||||
Other financial assets at amortized cost | 83,728 | 66,413 | ||||||||||
Other receivables | 100,102 | 101,676 | ||||||||||
Current tax assets | 2,714 | 10,311 | ||||||||||
Derivative financial instruments | 1,000 | 27 | ||||||||||
Trade receivables | 80,322 | 104,877 | ||||||||||
Cash and cash equivalents | 11 | 172,495 | 195,696 | |||||||||
465,390 | 507,643 | |||||||||||
Total assets | 3,521,861 | 3,882,243 | ||||||||||
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 | (407,579 | ) | (392,101 | ) | ||||||||
Legal reserves | 176 | 176 | ||||||||||
Other reserves | (1,324,694 | ) | (1,324,887 | ) | ||||||||
Retained earnings | 388,200 | 403,255 | ||||||||||
Total attributable to owners of the parent | 733,549 | 763,889 | ||||||||||
Non-controlling interests | 409,771 | 434,725 | ||||||||||
Total equity | 1,143,320 | 1,198,614 | ||||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Borrowings | 12 | 942,230 | 1,033,221 | |||||||||
Deferred tax liabilities | 218,357 | 233,115 | ||||||||||
Other liabilities | 13 | 679,925 | 848,410 | |||||||||
Lease liabilities | 5,566 | 5,783 | ||||||||||
Trade payables | 550 | 798 | ||||||||||
1,846,628 | 2,121,327 | |||||||||||
Current liabilities | ||||||||||||
Borrowings | 12 | 218,883 | 175,123 | |||||||||
Other liabilities | 13 | 181,740 | 230,122 | |||||||||
Lease liabilities | 2,360 | 3,144 | ||||||||||
Current tax liabilities | 3,041 | 5,156 | ||||||||||
Trade payables | 125,889 | 148,757 | ||||||||||
531,913 | 562,302 | |||||||||||
Total liabilities | 2,378,541 | 2,683,629 | ||||||||||
Total equity and liabilities | 3,521,861 | 3,882,243 |
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, 2019.
-3-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (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, 2020 | 160,022 | 180,486 | 385,055 | 1,351,883 | 176 | (392,101 | ) | (1,324,887 | ) | 403,255 | 763,889 | 434,725 | 1,198,614 | |||||||||||||||||||||||||||||||
Loss for the period | - | - | - | - | - | - | - | (15,055 | ) | (15,055 | ) | (11,106 | ) | (26,161 | ) | |||||||||||||||||||||||||||||
Other comprehensive loss for the period | - | - | - | - | - | (15,478 | ) | 149 | - | (15,329 | ) | (13,863 | ) | (29,192 | ) | |||||||||||||||||||||||||||||
Changes of non-controlling interests | - | - | - | - | - | - | 44 | - | 44 | 15 | 59 | |||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 160,022 | 180,486 | 385,055 | 1,351,883 | 176 | (407,579 | ) | (1,324,694 | ) | 388,200 | 733,549 | 409,771 | 1,143,320 | |||||||||||||||||||||||||||||||
Balance at January 1, 2019 | 160,022 | 180,486 | 385,055 | 1,351,883 | 176 | (378,803 | ) | (1,324,731 | ) | 394,156 | 768,244 | 454,453 | 1,222,697 | |||||||||||||||||||||||||||||||
Income/ (Loss) for the period | - | - | - | - | - | - | - | 30,441 | 30,441 | (6,030 | ) | 24,411 | ||||||||||||||||||||||||||||||||
Other comprehensive loss for the period | - | - | - | - | - | (16,734 | ) | (147 | ) | - | (16,881 | ) | (9,797 | ) | (26,678 | ) | ||||||||||||||||||||||||||||
Changes of non-controlling interests (2) | - | - | - | - | - | - | - | - | - | (7,308 | ) | (7,308 | ) | |||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 160,022 | 180,486 | 385,055 | 1,351,883 | 176 | (395,537 | ) | (1,324,878 | ) | 424,597 | 781,804 | 431,318 | 1,213,122 |
(1) Retained Earnings calculated according to Luxembourg Law are disclosed in Note 15.
(2) Correspond to dividends approved for non-controlling interest.
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, 2019.
-4-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
For the three-month period ended
March 31, |
||||||||||||
Notes |
2020
Unaudited |
2019
Unaudited |
||||||||||
Cash flows from operating activities | ||||||||||||
(Loss) / Income for the period | (26,161 | ) | 24,411 | |||||||||
Adjustments for: | ||||||||||||
Amortization and depreciation | 55,499 | 45,519 | ||||||||||
Deferred income tax | 9 | (4,554 | ) | (33,504 | ) | |||||||
Income tax accrued | 9 | 13,748 | 27,773 | |||||||||
Share of loss in associates | 866 | 414 | ||||||||||
Impairment loss | 10 | 4,490 | - | |||||||||
Loss on disposals of property, plant and equipment | - | 17 | ||||||||||
Unpaid concession fees | 24,976 | 22,817 | ||||||||||
Low value, short term and variable lease payments | (673 | ) | (591 | ) | ||||||||
Changes in liability for concessions | 15,951 | 26,729 | ||||||||||
Interest expense | 22,897 | 22,380 | ||||||||||
Other financial results, net | (2,551 | ) | (9,773 | ) | ||||||||
Net foreign exchange | 9,007 | 10,276 | ||||||||||
Other accruals | (2,806 | ) | 2,561 | |||||||||
Inflation adjustment | 4,874 | 11,978 | ||||||||||
Acquisition of Intangible assets | (48,031 | ) | (60,103 | ) | ||||||||
Income tax paid | (4,803 | ) | (9,361 | ) | ||||||||
Changes in working capital | 17 | (58,801 | ) | (84,166 | ) | |||||||
Net cash provided by / (used in) operating activities | 3,928 | (2,623 | ) | |||||||||
Cash flows from investing activities | ||||||||||||
Cash contribution in associates | (548 | ) | (398 | ) | ||||||||
Acquisition of other financial assets | (21,309 | ) | (3,586 | ) | ||||||||
Disposals of other financial assets | 6,322 | 30,072 | ||||||||||
Purchase of Property, plant and equipment | (2,505 | ) | (2,295 | ) | ||||||||
Acquisition of Intangible assets | (81 | ) | (250 | ) | ||||||||
Loans with related parties | - | (961 | ) | |||||||||
Advance payments of Property, plant and equipment | - | (1,033 | ) | |||||||||
Other | (683 | ) | 105 | |||||||||
Net cash (used in) / provided by investing activities | (18,804 | ) | 21,654 | |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from borrowings | 12 | 36,233 | 10,315 | |||||||||
Guarantee deposits | (1,503 | ) | - | |||||||||
Leases payments | (1,035 | ) | (1,225 | ) | ||||||||
Loans paid | 12 | (21,284 | ) | (3,231 | ) | |||||||
Interest paid | 12 | (14,962 | ) | (10,843 | ) | |||||||
Net cash used in financing activities | (2,551 | ) | (4,984 | ) | ||||||||
(Decrease) / Increase in cash and cash equivalents | (17,427 | ) | 14,047 | |||||||||
Movements in cash and cash equivalents | ||||||||||||
At the beginning of the period | 195,696 | 244,865 | ||||||||||
Effects of exchange rate changes and inflation adjustment on cash and cash equivalents | (5,774 | ) | (3,865 | ) | ||||||||
(Decrease) / Increase in cash and cash equivalents | (17,427 | ) | 14,047 | |||||||||
At the end of the period | 11 | 172,495 | 255,047 |
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, 2019.
-5-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1 | General information and significant event of the period | |
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 three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
1 General information and significant event of the period
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, 2019.
These condensed consolidated interim financial statements have been approved for issuance by the Company on May 19, 2020.
Significant event of the period
In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic. The nature of COVID-19 led to worldwide shutdowns and halting of commercial and interpersonal activity and several governments around the world, including Latin American governments, rapidly implemented drastic measures to contain the spread, including but not limited the closing of borders and prohibition of travel to and from certain parts of the world for a time period. Specifically, the governments and transportation authorities in the majority of the CAAP’s countries of operations have issued flight restrictions.
The recent COVID-19 virus outbreak has generated a disruption in the global economy, and in particular, the aviation industry resulting in drastic reductions in passenger traffic. The current health crisis is having and will likely continue to have, a negative impact on passenger traffic levels and air traffic operations.
Depending on how the situation evolves, governments may impose tougher measures including the extension of the travel bans for longer periods. In addition, concerns about the Coronavirus are negatively impacting travel demand (and therefore the Company’s business) generally.
In this context, CAAP has formed a crisis committee composed of the Company’s CEO and operating CEOs of each subsidiary to assess its operations, including potential reductions in operating costs while maintaining quality and safety standards. The Company is also in conversations with the relevant regulatory agencies and aviation and transportation authorities in each of its countries of operations to review mitigation measures, as it navigates this unprecedented environment. CAAP has also further enhanced safety and hygiene protocols across its airports to protect the well-being of passengers and personnel.
The Company has developed a four-pronged strategy and implemented a number of actions aiming to mitigate the negative impact of the COVID-19 virus, as follows:
§ | Employees and passengers: The Company has further enhanced safety and hygiene protocols across its airports to protect the well-being of passengers and operating personnel. For essential staff working on premises, health gear was provided and additional sanitizing policies established. The Company has also established remote working when possible. |
-7-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
1 General information and significant event of the period (Cont.)
Significant event of the period (Cont.)
§ | Cost controls and cash preservation measures: CAAP has introduced reductions in operating costs by: |
- | Reducing personnel expenses including salary reductions, suspension of salary increases and freezing new hiring, mandatory use of pending vacations and/or advancing vacations to employees when possible, placing operating employees on furlough in certain geographies. |
- | Reducing maintenance and other operating expenses while maintaining the quality and safety standards, required to support the minimum level of operations. |
As a result of these combined measures, the Company expects a sharp decrease of total cash operating costs and expenses excluding concession fees under this crisis scenario.
The Company is also aggressively managing working capital by negotiating with its suppliers the extension of payment terms and reducing its capex program.
§ | Negotiations with regulatory bodies and government support: The Company has started discussions with regulatory agencies to renegotiate concession fees payments to align to the current environment. The Company has also requested deferral of tax payments in its main markets. |
§ | Re-equilibrium of the concession agreements: Under the concession contracts framework, the amounts and mechanisms for compensation will be negotiated with authorities and may include a reduction in the concession fee amount and/or mandatory capex, increasing tariffs, extending the tenor of the concession or a combination thereof. CAAP is in the initial stages of this process, which requires going through administrative regulatory channels. |
§ | Financial position and liquidity: As cash preservation is a critical focus, the Company is taking the following measures: |
- | Cancelling all non-mandatory capital investments and deferred non-priority projects. |
- | Implementing a set of cost control measures to reduce operating expenses and negotiate payment terms with the suppliers to limit additional cash outflows. |
- | Obtaining a deferral of principal and interest payments of debt and obtaining additional funding. |
Please refer to Note 19 for the implementation of mitigation initiatives focused on preserving financial position.
For the purpose of facing credit risk, the Company has suitably controlled credit risk through its constant monitoring of accounts receivable, anticipating mitigation initiatives to protect said receivables. Provision for bad debts currently deems to be adequate in connection with the amounts of the existing receivables. The Company considers too early to reflect any additional expected credit losses as of March 31, 2020, and will monitor very strictly the situation in the next months.
These condensed consolidated interim financial statements for the three-month period ended March 31, 2020 reflect the impact of these events and current market conditions, depending on the duration of the COVID-19 crisis and continued negative impact on economic activity, the Company may experience further negative results and liquidity restraints.
As a result of the above and considering that the COVID-19 pandemic is complex and rapidly evolving, the full extent to which the Coronavirus will impact the Company’s business, results of operations, financial position and liquidity is unknown. The Company continues to assess the evolution of COVID-19 virus outbreak in order to identify the unforeseen potential effects that could alter its business and performance.
-8-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
2 Basis of presentation and accounting policies
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, 2019. These policies have been consistently applied to all the years presented, unless otherwise stated. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2019, 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 consistent with those applied in the Consolidated Financial Statements for the year ended December 31, 2019. Nevertheless, judgments, assumptions and estimations in the light of current circumstances as described in Note 1, have been revised.
Assets and liabilities are classified as current if settlement is expected within 12 months.
There were no changes in valuation techniques during the period and there were no changes in risk management policies since the end of the year ended December 31, 2019, except of changes in liquidity and credit risks regarding COVID-19 outbreak, see Note 1.
Application of IAS 29 in financial reporting of Argentine subsidiaries and associates
IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of entities whose functional currency is that of a hyperinflationary economy to be adjusted for the effects of changes in a suitable general price index and to be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. Accordingly, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be computed in the non-monetary items.
In order to conclude on whether an economy is categorized as hyperinflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of a cumulative inflation rate in three years that approximates or exceeds 100%. Considering that the inflation in Argentina has exceed the 100% three-year cumulative inflation rate in July 2018, and that the rest of the indicators do not contradict the conclusion that Argentina should be considered a hyperinflationary economy for accounting purposes, the Group understands that there is sufficient evidence to conclude that Argentina is a hyperinflationary economy under the terms of IAS 29 as from July 1, 2018, and, accordingly, it has applied IAS 29 as from that date in the financial reporting of its subsidiaries and associates with the Argentine peso as functional currency.
The estimated price index as of March 31, 2020 was 303.35 (283.44 as of December 31, 2019) and the conversion factor derived from the indexes for the period ended March 31, 2020, was 1.07.
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.
-9-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
2 Basis of presentation and accounting policies (Cont.)
Basis of presentation (Cont.)
Application of IAS 29 in financial reporting of Argentine subsidiaries and associates (Cont.)
The ongoing application of the re-translation of comparative amounts to closing exchanges rates under IAS 21 and the inflation adjustments required by IAS 29 will lead to a difference because the rate at which the hyper-inflationary currency depreciates against a stable currency is rarely equal to the rate of inflation.
The inflation adjustment and the translation of comparative amounts in the current period is included in Other comprehensive loss 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.
New and amended standards adopted by the group
A number of new or amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
-10-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (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.W and 4 included in our audited Consolidated Financial Statements for the year ended December 31, 2019 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, inflation adjustment, 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.
In addition, the CODM considers each reportable segment’s Adjusted EBITDA before Construction Services margin as a relevant performance measure.
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, inflation adjustment, 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.
-11-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
3 Segment information
Argentina | Brazil | Uruguay | Armenia | Ecuador | Italy | Perú | ||||||||||||||||||||||||||||||||||||||||||||||
For the three-month period ended March 31, 2020
(Unaudited) |
Airports | Others | Airports | Others | Airports | Others | Airports | Airports | Airports | Airports |
Intrasegment
Adjustments |
Unallocated | Total | |||||||||||||||||||||||||||||||||||||||
Revenue | 177,242 | 52 | 23,960 | - | 29,484 | 4,241 | 23,288 | 24,736 | 21,493 | - | (3,014 | ) | 1,347 | 302,829 | ||||||||||||||||||||||||||||||||||||||
Cost of services | (141,707 | ) | (9 | ) | (20,634 | ) | - | (14,575 | ) | (2,982 | ) | (16,067 | ) | (16,521 | ) | (22,536 | ) | - | 2,360 | (3,307 | ) | (235,978 | ) | |||||||||||||||||||||||||||||
Gross profit / (loss) | 35,535 | 43 | 3,326 | - | 14,909 | 1,259 | 7,221 | 8,215 | (1,043 | ) | - | (654 | ) | (1,960 | ) | 66,851 | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | (14,715 | ) | (65 | ) | (3,998 | ) | (25 | ) | (3,773 | ) | (376 | ) | (2,748 | ) | (3,818 | ) | (2,989 | ) | - | 654 | (2,493 | ) | (34,346 | ) | ||||||||||||||||||||||||||||
Impairment loss | - | - | (4,490 | ) | - | - | - | - | - | - | - | - | - | (4,490 | ) | |||||||||||||||||||||||||||||||||||||
Other operating income | 3,518 | - | 28 | - | 56 | - | 49 | 5 | - | - | - | - | 3,656 | |||||||||||||||||||||||||||||||||||||||
Other operating expenses | (148 | ) | - | (28 | ) | - | (20 | ) | - | (187 | ) | (6 | ) | (29 | ) | - | - | - | (418 | ) | ||||||||||||||||||||||||||||||||
Operating income / (loss) | 24,190 | (22 | ) | (5,162 | ) | (25 | ) | 11,172 | 883 | 4,335 | 4,396 | (4,061 | ) | - | - | (4,453 | ) | 31,253 | ||||||||||||||||||||||||||||||||||
Share of loss in associates | - | - | - | - | - | - | - | - | - | (866 | ) | - | - | (866 | ) | |||||||||||||||||||||||||||||||||||||
Amortization and depreciation | 33,257 | - | 2,648 | - | 2,854 | 272 | 3,772 | 1,197 | 2,968 | - | - | 3,524 | 50,492 | |||||||||||||||||||||||||||||||||||||||
Adjusted Ebitda | 57,447 | (22 | ) | (2,514 | ) | (25 | ) | 14,026 | 1,155 | 8,107 | 5,593 | (1,093 | ) | (866 | ) | - | (929 | ) | 80,879 | |||||||||||||||||||||||||||||||||
Construction services revenue | (37,486 | ) | - | - | - | (2,368 | ) | - | (1,187 | ) | (2,610 | ) | (2,619 | ) | - | - | - | (46,270 | ) | |||||||||||||||||||||||||||||||||
Construction services cost | 37,430 | - | - | - | 2,368 | - | 1,152 | 2,610 | 2,166 | - | - | - | 45,726 | |||||||||||||||||||||||||||||||||||||||
Adjusted Ebitda excluding Construction Services | 57,391 | (22 | ) | (2,514 | ) | (25 | ) | 14,026 | 1,155 | 8,072 | 5,593 | (1,546 | ) | (866 | ) | - | (929 | ) | 80,335 | |||||||||||||||||||||||||||||||||
Construction services revenue | 37,486 | - | - | - | 2,368 | - | 1,187 | 2,610 | 2,619 | - | - | - | 46,270 | |||||||||||||||||||||||||||||||||||||||
Construction services cost | (37,430 | ) | - | - | - | (2,368 | ) | - | (1,152 | ) | (2,610 | ) | (2,166 | ) | - | - | - | (45,726 | ) | |||||||||||||||||||||||||||||||||
Adjusted Ebitda | 57,447 | (22 | ) | (2,514 | ) | (25 | ) | 14,026 | 1,155 | 8,107 | 5,593 | (1,093 | ) | (866 | ) | - | (929 | ) | 80,879 | |||||||||||||||||||||||||||||||||
Financial income | 8,575 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Financial loss | (53,985 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Inflation adjustment | (1,944 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization and depreciation | (50,492 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loss before income tax expense | (16,967 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | (9,194 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the period | (26,161 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2020 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current assets | 132,969 | 112 | 32,356 | 60 | 30,023 | 4,715 | 59,125 | 26,093 | 57,530 | - | (65,563 | ) | 187,970 | 465,390 | ||||||||||||||||||||||||||||||||||||||
Non-current assets | 1,236,691 | 23 | 850,432 | 106 | 151,838 | 6,834 | 158,580 | 63,831 | 240,513 | 7,494 | (768 | ) | 340,897 | 3,056,471 | ||||||||||||||||||||||||||||||||||||||
Capital Expenditure | 37,485 | - | 1,903 | - | 3,490 | 681 | 1,459 | 2,695 | 2,925 | - | - | - | 50,638 | |||||||||||||||||||||||||||||||||||||||
Current liabilities | 235,421 | 27 | 102,929 | - | 23,505 | 3,338 | 25,198 | 21,993 | 111,956 | - | (65,563 | ) | 73,109 | 531,913 | ||||||||||||||||||||||||||||||||||||||
Non-current liabilities | 487,388 | - | 846,301 | - | 51,344 | 3,362 | 54,567 | 17,301 | 58,107 | - | (768 | ) | 329,026 | 1,846,628 |
-12-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
3 Segment information (Cont.)
Argentina | Brazil | Uruguay | Armenia | Ecuador | Italy | Perú | ||||||||||||||||||||||||||||||||||||||||||||||
For the three-month period ended March 31, 2019
(Unaudited) |
Airports | Others | Airports | Others | Airports | Others | Airports | Airports | Airports | Airports |
Intrasegment
Adjustments |
Unallocated | Total | |||||||||||||||||||||||||||||||||||||||
Revenue | 220,342 | 48 | 29,669 | - | 32,254 | 4,088 | 25,256 | 23,697 | 26,816 | - | (3,149 | ) | 1,529 | 360,550 | ||||||||||||||||||||||||||||||||||||||
Cost of services | (150,632 | ) | (4 | ) | (24,548 | ) | - | (14,614 | ) | (3,152 | ) | (16,441 | ) | (14,054 | ) | (24,204 | ) | - | 2,436 | (3,531 | ) | (248,744 | ) | |||||||||||||||||||||||||||||
Gross profit / (loss) | 69,710 | 44 | 5,121 | - | 17,640 | 936 | 8,815 | 9,643 | 2,612 | - | (713 | ) | (2,002 | ) | 111,806 | |||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | (17,153 | ) | (50 | ) | (4,852 | ) | (19 | ) | (3,459 | ) | (347 | ) | (2,820 | ) | (4,585 | ) | (3,441 | ) | - | 713 | (2,514 | ) | (38,527 | ) | ||||||||||||||||||||||||||||
Other operating income | 4,121 | - | 207 | - | 23 | - | - | 6 | - | - | (17 | ) | - | 4,340 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | (85 | ) | - | (525 | ) | - | (33 | ) | - | (158 | ) | (6 | ) | - | - | 16 | - | (791 | ) | |||||||||||||||||||||||||||||||||
Operating income / (loss) | 56,593 | (6 | ) | (49 | ) | (19 | ) | 14,171 | 589 | 5,837 | 5,058 | (829 | ) | - | (1 | ) | (4,516 | ) | 76,828 | |||||||||||||||||||||||||||||||||
Share of loss in associates | - | - | - | - | - | - | - | - | - | (414 | ) | - | - | (414 | ) | |||||||||||||||||||||||||||||||||||||
Amortization and depreciation | 21,860 | - | 3,108 | - | 3,781 | 237 | 3,171 | 1,127 | 3,024 | - | - | 4,204 | 40,512 | |||||||||||||||||||||||||||||||||||||||
Adjusted Ebitda | 78,453 | (6 | ) | 3,059 | (19 | ) | 17,952 | 826 | 9,008 | 6,185 | 2,195 | (414 | ) | (1 | ) | (312 | ) | 116,926 | ||||||||||||||||||||||||||||||||||
Construction services revenue | (55,889 | ) | - | - | - | (653 | ) | - | (2,389 | ) | - | (1,793 | ) | - | - | (60,724 | ) | |||||||||||||||||||||||||||||||||||
Construction services cost | 55,849 | - | - | - | 633 | - | 2,320 | - | 1,166 | - | - | - | 59,968 | |||||||||||||||||||||||||||||||||||||||
Adjusted Ebitda excluding Construction Services | 78,413 | (6 | ) | 3,059 | (19 | ) | 17,932 | 826 | 8,939 | 6,185 | 1,568 | (414 | ) | (1 | ) | (312 | ) | 116,170 | ||||||||||||||||||||||||||||||||||
Construction services revenue | 55,889 | - | - | - | 653 | - | 2,389 | - | 1,793 | - | - | - | 60,724 | |||||||||||||||||||||||||||||||||||||||
Construction services cost | (55,849 | ) | - | - | - | (633 | ) | - | (2,320 | ) | - | (1,166 | ) | - | - | - | (59,968 | ) | ||||||||||||||||||||||||||||||||||
Adjusted Ebitda | 78,453 | (6 | ) | 3,059 | (19 | ) | 17,952 | 826 | 9,008 | 6,185 | 2,195 | (414 | ) | (1 | ) | (312 | ) | 116,926 | ||||||||||||||||||||||||||||||||||
Financial income | 15,798 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Financial loss | (65,302 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Inflation adjustment | (8,230 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization and depreciation | (40,512 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income tax expense | 18,680 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax | 5,731 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Income for the period | 24,411 | |||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 (Audited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current assets | 149,064 | 139 | 47,726 | 140 | 16,691 | 4,222 | 57,323 | 50,629 | 55,249 | - | (59,393 | ) | 185,853 | 507,643 | ||||||||||||||||||||||||||||||||||||||
Non-current assets | 1,235,497 | 22 | 1,106,996 | 104 | 151,717 | 6,425 | 169,130 | 63,914 | 245,541 | 8,059 | (768 | ) | 387,963 | 3,374,600 | ||||||||||||||||||||||||||||||||||||||
Capital Expenditure | 308,301 | - | 5,347 | - | 7,040 | 2,332 | 13,270 | 18,198 | 17,905 | - | (33 | ) | 13 | 372,373 | ||||||||||||||||||||||||||||||||||||||
Current liabilities | 220,849 | 29 | 129,875 | 2 | 21,080 | 2,740 | 27,853 | 49,616 | 105,873 | - | (59,393 | ) | 63,778 | 562,302 | ||||||||||||||||||||||||||||||||||||||
Non-current liabilities | 516,344 | - | 1,080,283 | - | 48,018 | 3,644 | 54,009 | 17,839 | 60,650 | - | (768 | ) | 341,308 | 2,121,327 |
-13-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
4 Revenue
For the three-month period ended March 31, | ||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Aeronautical revenue | 154,663 | 184,988 | ||||||
Non-aeronautical revenue | ||||||||
Commercial revenue | 101,553 | 114,341 | ||||||
Construction service revenue | 46,270 | 60,724 | ||||||
Other revenue | 343 | 497 | ||||||
302,829 | 360,550 | |||||||
Timing of revenue recognition | ||||||||
Over time | 249,361 | 297,562 | ||||||
At a point in time | 8,291 | 8,426 | ||||||
Revenues outside the scope of IFRS 15 | 45,177 | 54,562 | ||||||
Revenue | 302,829 | 360,550 |
5 Cost of services
For the three-month period ended March 31, | ||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Amortization and depreciation (***) | (48,065 | ) | (37,647 | ) | ||||
Construction services cost | (45,726 | ) | (59,968 | ) | ||||
Salaries and social security contributions | (45,675 | ) | (45,900 | ) | ||||
Concession fees (**) | (37,455 | ) | (42,408 | ) | ||||
Maintenance expenses | (28,687 | ) | (28,953 | ) | ||||
Services and fees | (14,420 | ) | (15,629 | ) | ||||
Cost of fuel | (7,354 | ) | (7,742 | ) | ||||
Taxes (*) | (3,811 | ) | (4,408 | ) | ||||
Office expenses | (2,559 | ) | (3,042 | ) | ||||
Provision for maintenance costs | (322 | ) | (926 | ) | ||||
Others | (1,904 | ) | (2,121 | ) | ||||
(235,978 | ) | (248,744 | ) |
(*) Mainly includes tax from turnover and municipal taxes.
(**) Includes depreciation for fixed concession assets fee of USD 4,872 as of March 31, 2020 (USD 5,007 as of March 31, 2019).
(***) Includes amortization of leases of USD 655 as of March 31, 2020 (USD 687 as of March 31, 2019).
6 Selling, general and administrative expenses
For the three-month period ended March 31, | ||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Taxes (*) | (9,077 | ) | (9,954 | ) | ||||
Services and fees | (8,197 | ) | (9,287 | ) | ||||
Salaries and social security contributions | (6,506 | ) | (7,898 | ) | ||||
Bad debts | (2,965 | ) | (4,295 | ) | ||||
Amortization and depreciation (**) | (2,427 | ) | (2,865 | ) | ||||
Maintenance expenses | (1,021 | ) | (352 | ) | ||||
Office expenses | (759 | ) | (924 | ) | ||||
Insurance | (478 | ) | (386 | ) | ||||
Advertising | (239 | ) | (251 | ) | ||||
Charter service | (134 | ) | (207 | ) | ||||
Bad debts recovery | 80 | 121 | ||||||
Other | (2,623 | ) | (2,229 | ) | ||||
(34,346 | ) | (38,527 | ) |
(*) Mainly includes tax from taxes over banks transactions and tax on revenue.
(**) Includes amortization of leases of USD 153 as of March 31, 2020 (USD 164 as of March 31, 2019).
-14-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
7 Other operating income
For the three-month period ended March 31, | ||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Government grant (*) | 3,439 | 4,049 | ||||||
Other | 217 | 291 | ||||||
3,656 | 4,340 |
(*) 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 March 31, | ||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Interest income | 3,263 | 9,031 | ||||||
Foreign exchange income | 2,186 | 4,807 | ||||||
Other financial income | 3,126 | 1,960 | ||||||
Financial income | 8,575 | 15,798 | ||||||
Interest expense | (22,897 | ) | (22,380 | ) | ||||
Foreign exchange expenses | (11,193 | ) | (15,083 | ) | ||||
Changes in liability for concessions | (15,951 | ) | (26,729 | ) | ||||
Other financial loss | (3,944 | ) | (1,110 | ) | ||||
Financial loss | (53,985 | ) | (65,302 | ) | ||||
Inflation adjustment | (1,944 | ) | (8,230 | ) | ||||
Inflation adjustment | (1,944 | ) | (8,230 | ) | ||||
Net financial results | (47,354 | ) | (57,734 | ) |
9 Income tax
For the three -month period ended March 31, |
||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Current income tax | (13,748 | ) | (27,773 | ) | ||||
Deferred income tax | 4,554 | 33,504 | ||||||
(9,194 | ) | 5,731 |
As of March 29, 2019, AA2000 exercised an option of the asset revaluation for tax purpose included in Law No. 27.430 of Argentina, generating a deferred tax gain of ARS 1,615 million (approximately USD 37,256), as well as a higher current tax of ARS 517 million (approximately USD 11,922).
In order to determine the net taxable income of AA2000 at the end of this period, 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 409 million (approximately USD 6,344), due to the fact that the estimated price index variation for fiscal year 2020 will exceed 15%. Likewise, the income tax law allows the deferral of the charge generated by the tax inflation adjustment in six consecutive years, as a result, ARS 79 million (approximately USD 1,225) was recognized in current tax liabilities and ARS 330 million (approximately USD 5,119) as deferred tax liabilities.
-15-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (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, 2020 | 4,057,431 | 55,506 | 21,326 | 4,134,263 | ||||||||||||
Acquisitions | 48,052 | - | 81 | 48,133 | ||||||||||||
Impairment loss | (4,490 | ) | - | - | (4,490 | ) | ||||||||||
Disposals | (31 | ) | - | - | (31 | ) | ||||||||||
Transfer | (220 | ) | - | 220 | - | |||||||||||
Transfer to property, plant and equipment | (4 | ) | - | - | (4 | ) | ||||||||||
Translation differences and inflation adjustment | (309,368 | ) | (11,419 | ) | (997 | ) | (321,784 | ) | ||||||||
3,791,370 | 44,087 | 20,630 | 3,856,087 | |||||||||||||
Depreciation | ||||||||||||||||
Accumulated at January 1, 2020 | 1,114,090 | - | 18,052 | 1,132,142 | ||||||||||||
Depreciation of the period | 51,849 | - | 294 | 52,143 | ||||||||||||
Disposals | (31 | ) | - | - | (31 | ) | ||||||||||
Translation differences and inflation adjustment | (48,754 | ) | - | (541 | ) | (49,296 | ) | |||||||||
1,117,154 | - | 17,805 | 1,134,959 | |||||||||||||
At March 31, 2020 | 2,674,216 | 44,087 | 2,825 | 2,721,128 | ||||||||||||
Cost | ||||||||||||||||
Balances at January 1, 2019 | 3,841,853 | 56,501 | 15,170 | 3,913,524 | ||||||||||||
Acquisitions | 60,086 | - | 250 | 60,336 | ||||||||||||
Transfer | (334 | ) | - | 334 | - | |||||||||||
Transfer from property plant and equipment | 1,705 | - | - | 1,705 | ||||||||||||
Translation differences and inflation adjustment | (69,140 | ) | (102 | ) | (287 | ) | (69,529 | ) | ||||||||
3,834,170 | 56,399 | 15,467 | 3,906,036 | |||||||||||||
Depreciation | ||||||||||||||||
Accumulated at January 1, 2019 | 967,909 | - | 12,073 | 979,982 | ||||||||||||
Depreciation of the period | 41,773 | - | 347 | 42,120 | ||||||||||||
Translation differences and inflation adjustment | (20,611 | ) | - | (250 | ) | (20,861 | ) | |||||||||
989,071 | - | 12,170 | 1,001,241 | |||||||||||||
At March 31, 2019 | 2,845,099 | 56,399 | 3,297 | 2,904,795 |
During March 2020, the Company identified impairment indicators in its cash generating units across all of its business operational segments due to drastic measures undertaken by governments, as flight restrictions and the closing of borders, to contain COVID-19 spread (see Note 1).
Therefore, the company performed an impairment test based on cash flow projections covering the remaining concession periods (value in use), based on key assumptions estimated with historical information and management judgment. The key assumptions used in determining the recoverable amount are number of passenger, fees, future operating expenses and discount rate.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each cash-generating units (CGUs) of a subsidiary or group of subsidiaries that are expected to benefit from such business combination.
As of March 31, 2020, the recoverable amount of the each defined CGU exceeds its carrying amount, except from Aeroporto de São Gonçalo do Amarante S.A. (“ICASGA”).
ICASGA performed an impairment test based on cash flow projections covering the remaining concession period of 21 years (value in use), based on key assumptions estimated with historical information and management judgment. The key assumptions were: number of passengers, fees, future operating expenses and discount rate.
The carrying value of the assets impaired was as follows:
Net assets before
impairment |
Impairment |
Net assets after
impairment |
||||||||||
ICASGA | 67,905 | (4,490 | ) | 63,415 |
-16-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
10 Intangible assets, net (Cont.)
The discount rate used was the weighted average cost of capital (WACC) which is considered to be a good indicator of capital cost. WACC was determined considering the risk of investing in equity, in airport sector and country.
The nominal discount rate used was 8.76% calculated from a Rolling WACC method considering the effects of debt over the capital and re-leverage of Beta.
As the calculation of the impairment applied to the intangible assets has as one of its main variables the discount rate, ICASGA carried out a sensitivity analysis showing the impact that it would have on the result if different rates were used. The result of this analysis is shown in the table below:
As of March 31, 2020:
Estimated rate
(Minus 1,0%) |
Nominal Rate
(8.76%) |
Estimated rate
(Plus 1,0%) |
||||||||||
Impairment value | (3,095 | ) | 4,490 | 11,074 | ||||||||
Effect | (7,585 | ) | 6,584 |
The number of passengers is the other main assumption for impairment test, for current impairment test. In the current impairment test it was assumed a compound annual growth rate of 4,87% between 2021 and 2039. The result of this sensitivity analysis is shown in the table below:
As of March 31, 2020:
Estimated rate
(Minus 1,0%) |
Passenger’s CAGR
(4,87%) |
Estimated Rate
(Plus 1,0%) |
||||||||||
Impairment value | 14,067 | 4,490 | (5,705 | ) | ||||||||
Effect | 9,577 | (10,195 | ) |
The Company additionally tested the value of the goodwill for impairment, resulting in no impairment charges to be recognized
-17-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
11 Cash and cash equivalents
At March 31,
2020 (Unaudited) |
At December 31,
2019 (Audited) |
|||||||
Cash to be deposited | 1,893 | 2,320 | ||||||
Cash at banks | 156,650 | 116,413 | ||||||
Time deposits | 3,468 | 35,502 | ||||||
Other cash equivalents | 10,484 | 41,461 | ||||||
172,495 | 195,696 |
The Group operates with investment grade - financial institutions.
For the purposes of cash flow interim statement, cash and cash equivalents include the following:
For the three -month period ended March 31, | ||||||||
2020
(Unaudited) |
2019
(Unaudited) |
|||||||
Cash and cash equivalents | 172,495 | 255,047 | ||||||
172,495 | 255,047 |
12 Borrowings
At March 31,
2020 (Unaudited) |
At December 31,
2019 (Audited) |
|||||||
Non-current | ||||||||
Bank and financial borrowings (**) | 394,191 | 472,226 | ||||||
Notes (*) | 548,039 | 560,995 | ||||||
942,230 | 1,033,221 | |||||||
Current | ||||||||
Bank and financial borrowings (**) | 143,552 | 103,056 | ||||||
Notes (*) | 75,331 | 72,067 | ||||||
218,883 | 175,123 | |||||||
Total Borrowings | 1,161,113 | 1,208,344 |
Changes in borrowings during the period is as follows:
For the three -month period ended
March 31, |
||||||||
2020
(Unaudited) |
2019
(Unaudited) |
|||||||
Balances at the beginning of the period | 1,208,344 | 1,126,658 | ||||||
Adjustment on adoption of IFRS 16 | - | (1,715 | ) | |||||
Adjusted balances at the beginning of the period | 1,208,344 | 1,124,943 | ||||||
Loans obtained | 36,233 | 10,315 | ||||||
Loans paid | (21,284 | ) | (3,231 | ) | ||||
Interest paid | (14,962 | ) | (10,843 | ) | ||||
Accrued interest for the period | 21,738 | 21,346 | ||||||
Translation differences and inflation adjustment | (68,956 | ) | (5,205 | ) | ||||
Balances at the end of the period | 1,161,113 | 1,137,325 |
The maturity of borrowings is as follows:
1 year or
less |
1 - 2
years |
2 – 5
years |
Over 5
years |
Total | ||||||||||||||||
At March 31, 2020 (1) | 278,085 | 228,427 | 504,192 | 527,408 | 1,538,112 | |||||||||||||||
At December 31, 2019 (1) | 247,209 | 237,298 | 547,257 | 617,208 | 1,648,972 | |||||||||||||||
(1) The amounts disclosed in the table are undiscounted cash flows of principal and estimated interest. Variable interest rate cash flows have been estimated using variable interest rates applicable at the end of the reporting period.
- 18 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (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. See notes update in Note 19. |
- | In 2015, ACI Airport Sudamérica S.A.U. issued 6.875% senior secured guaranteed notes, for USD 200 million due in 2032. The principal balance will be repaid in 34 installments, May 29 and November 29 of each year, commencing on May 29, 2016 while accrued interest will be repaid commencing on November 29, 2015. The main covenants on these bonds are limitations on take additional indebtedness, make payments of dividends and other payments that are specifically restricted, selling assets as well as requiring compliance with certain financial ratios. The holders of these notes benefit from a guarantee and a security package including the pledge of the shares in Puerta del Sur S.A. and Cerealsur S.A., and certain accounts of Cerealsur and ACI Airport Sudamérica. As of March 31, 2020 and December 31, 2019 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. See notes update in Note 19. |
- | 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. See notes update in Note 19. |
- 19 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
12 Borrowings (Cont.)
(**) As of March 31, 2020 significant bank and financial borrowings include the following:
Company | Lender | Currency | Maturity | Interest Rate |
Outstanding
(In millions of USD) |
Capitalization(2) | ||||||||||
Inframerica | BNDES | R$ | September 2032 | Variable | TJLP(1) plus spread | 6.7 | A | |||||||||
Concessionaria do | BNDES | R$ | June 2032 | Variable | T.R. plus spread plus IPCA | 1.7 | ||||||||||
Aeroporto Sao Goncalo | BNDES | R$ | September 2032 | Variable | T.R. plus spread plus IPCA | 4.5 | ||||||||||
do Amarante S.A. | BNDES | R$ | September 2022 | Fixed | 2.50% | 1.1 | ||||||||||
BNDES | R$ | July 2032 | Variable | T.R. plus spread plus IPCA | 2.1 | |||||||||||
Inframerica | BNDES | R$ | December 2033 | Variable | TJLP(1) plus spread | 209.0 | A | |||||||||
Concessionaria do | Bradesco | R$ | July 2022 | Variable | TJLP(1) plus spread | 0.1 | D | |||||||||
Aeroporto
de
Brasilia S.A. |
Votorantim | USD | June 2020 | Variable | CDI plus spread | 4.5 | C | |||||||||
Terminal Aeroportuaria de | Banco Guayaquil SA | USD | December 2024 | Variable | T.R.E.(3) plus spread | 9.5 | D | |||||||||
Guayaquil S.A | Banco Bolivariano CA | USD | November 2024 | Variable | T.R.E.(3) plus spread | 8.6 | D | |||||||||
Terminal de Cargas de | Santander Uruguay | USD | June 2020 | Fixed | 4.25% | 0.1 | D | |||||||||
Uruguay S.A. | Santander Uruguay | USD | April 2023 | Fixed | 4.40% | 1.6 | D | |||||||||
Scotiabank Uruguay | USD | October 2024 | Fixed | 4.30% | 2.0 | D | ||||||||||
MPS Servicio capital | Euro | June 2022 | Variable | Euribor 6 month plus spread | 5.1 | B | ||||||||||
Banco
de Innovación de
Infraestructuras y Desarrollo |
Euro | September 2027 | Variable | Euribor 6 month plus spread | 23.6 | D | ||||||||||
BPM | Euro | October 2020 | Fixed | 0.13% | 1.6 | D | ||||||||||
Unicredit | Euro | September 2020 | Fixed | 0.15% | 6.6 | D | ||||||||||
Unicredit | Euro | October 2020 | Fixed | 0.15% | 2.7 | D | ||||||||||
BNL | Euro | November 2020 | Fixed | 0.15% | 2.7 | D | ||||||||||
Toscana Aeroporti S.p.a. | BNL | Euro | December 2020 | Fixed | 0.15% | 2.7 | D | |||||||||
CREDEM | Euro | October 2020 | Fixed | 0.60% | 5.5 | 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 | ||||||||||
MPS Servicio capital | Euro | September 2020 | Fixed | 0.15% | 11.0 | D | ||||||||||
Banca Intesa San Paolo | Euro | February 2021 | Fixed | 0.15% | 6.6 | D | ||||||||||
Banca Intesa San Paolo | Euro | March 2021 | Fixed | 0.20% | 5.5 | D | ||||||||||
Armenia International Airports C.J.S.C. |
Credit Suisse AG |
USD | December 2022 | Variable | Libor 6 month plus spread | 37.0 | B | |||||||||
Euro | December 2022 | Variable | Euribor 6 month plus spread | 37.5 | ||||||||||||
Aeropuerto de Neuquén S.A. | Banco Macro | USD | August 2021 | Variable | Libor plus spread | 2.5 | A | |||||||||
Aeropuertos
Argentina
2000 S.A. |
Banco
de la Provincia
de Buenos Aires |
USD | June 2023 | Fixed | 7% | 2.5 | D | |||||||||
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 | Fixed | 9.75% | 84.3 | A | ||||||||||
Citibank N.A. | USD | August 2023 | Variable | Libor plus spread | 34.6 | A | ||||||||||
Banco Macro | USD | July 2020 | Fixed | 6% | 10.1 | D | ||||||||||
Consorcio
Aeropuertos
Internacionales S.A. |
Santander Uruguay | USD | April 2022 | Fixed | 5.1% | 1.7 | B | |||||||||
Banco Itaú | USD | April 2025 | Variable | Libor plus spread | 1.7 | |||||||||||
Total | 537.7 |
- 20 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
12 Borrowings (Cont.)
(**) As of December 31, 2019 significant bank and financial borrowings include the following:
Company | Lender | Currency | Maturity | Interest Rate |
Outstanding
(In millions of USD) |
Capitalization(2) | ||||||||||
Inframerica Concessionaria do Aeroporto Sao Goncalo do Amarante S.A. | BNDES | R$ | September 2032 | Variable | TJLP(1) plus spread | 8.6 | A | |||||||||
BNDES | R$ | June 2032 | Variable | T.R. plus spread plus IPCA | 2.1 | |||||||||||
BNDES | R$ | September 2032 | Variable | T.R. plus spread plus IPCA | 5.6 | |||||||||||
BNDES | R$ | September 2022 | Fixed | 2.50% | 1.5 | |||||||||||
BNDES | R$ | July 2032 | Variable | T.R. plus spread plus IPCA | 2.6 | |||||||||||
Inframerica | BNDES | R$ | December 2033 | Variable | TJLP(1) plus spread | 270.5 | A | |||||||||
Concessionaria do | Bradesco | R$ | July 2022 | Variable | TJLP(1) plus spread | 0.1 | D | |||||||||
Aeroporto de Brasilia S.A. | Votorantim | USD | June 2020 | Variable | CDI plus spread | 9.0 | C | |||||||||
Terminal Aeroportuaria de Guayaquil S.A | Banco Guayaquil SA | USD | December 2024 | Variable | T.R.E.(3) plus spread | 10.1 | D | |||||||||
Banco Bolivariano CA | USD | November 2024 | Variable | T.R.E.(3) plus spread | 9.1 | D | ||||||||||
Terminal de Cargas de Uruguay S.A. | Santander Uruguay | USD | June 2020 | Fixed | 4.25% | 0.2 | D | |||||||||
Santander Uruguay | USD | April 2023 | Fixed | 4.40% | 1.7 | D | ||||||||||
Scotiabank Uruguay | USD | October 2024 | Fixed | 4.30% | 2.0 | D | ||||||||||
Toscana Aeroporti S.p.a. | MPS Servicio capital | Euro | June 2022 | Variable | Euribor 6 month plus spread | 5.2 | B | |||||||||
Banco de Innovación de Infraestructuras y Desarrollo | Euro | September 2027 | Variable | Euribor 6 month plus spread | 26.0 | D | ||||||||||
BPM | Euro | October 2020 | Fixed | 0.13% | 1.7 | D | ||||||||||
Unicredit | Euro | September 2020 | Fixed | 0.15% | 8.4 | D | ||||||||||
Unicredit | Euro | October 2020 | Fixed | 0.15% | 1.1 | D | ||||||||||
BNL | Euro | November 2020 | Fixed | 0.15% | 2.8 | D | ||||||||||
BNL | Euro | December 2020 | Fixed | 0.15% | 2.8 | D | ||||||||||
CREDEM | Euro | October 2020 | Fixed | 0.60% | 5.8 | 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 Airports C.J.S.C. | Credit Suisse AG | USD | December 2022 | Variable | Libor 6 month plus spread | 36.1 | B | |||||||||
Euro | December 2022 | Variable | Euribor 6 month plus spread | 37.6 | ||||||||||||
Aeropuerto de Neuquén S.A. | Banco Macro | USD | August 2021 | Variable | Libor plus spread | 2.8 | A | |||||||||
Aeropuertos Argentina 2000 S.A. | Banco de la Provincia de Buenos Aires | USD | June 2023 | Fixed | 7% | 2.6 | D | |||||||||
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 | Fixed | 9.75% | 84.1 | A | ||||||||||
Citibank N.A. | USD | August 2023 | Variable | Libor plus spread | 34.5 | A | ||||||||||
Total | 575.3 |
(1) TJLP - Taxa de Juros de Longo Prazo (Brazilian Long term interest rate)
IPCA: corresponds to the Brazilian Consumer Price index)
(2) A - Secured/guaranteed
B – Secured/unguaranteed
C – Unsecured/guaranteed
D - Unsecured/unguaranteed
R$ - Brazilian Reales
(3) T.R.E - Tasa Referencial Ecuador (Ecuadorian reference interest rate)
- 21 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (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 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.
- 22 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
12 Borrowings (Cont.)
On December 15, 2015 Armenia International Airports C.J.S.C. entered into a senior secured dual-currency facility agreement with Credit Suisse AG (and other banks) for a principal amount up to USD 160 million, which is secured by: (a) the collateral assignment of all present and future rights arising from the Armenian Concession Agreement and other related agreement, a pledge over all present and future cash collateral bank accounts, a pledge over certain movable and immoveable assets related to the Zvartnots Airport and the pledge of Armenia International Airports C.J.S.C. shares.
According to the loan agreement Armenia International Airports C.J.S.C. has restrictions to distribution of dividends, has to maintain the following ratios at a certain level: debt to EBITDA, Debt service coverage and adjusted debt service coverage ratio. According to this agreement, the analysis of the accomplished of these ratios must be made as of June 30 and December 31.
As of March 31, 2020 Armenia International Airports C.J.S.C. pledged cash held in bank accounts for USD 45.3 million (USD 40.3 million at December 31, 2019) and all intangible assets and property and equipment for a total of USD 157.1 million (USD 167.6 million at December 31, 2019).
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.
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.
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.
During March 2020, CAISA received the first disbursements of the planned financing with Banco Santander S.A. and Banco Itaú Uruguay S.A. for construction works at Punta del Este airport for a total amount of USD 3.3 million divided equally among both financial institutions. Disbursements up to USD 16 million will be made according to the level of progress of works up to 80%. The principal amounts under these credit facilities shall be repaid in five annually, equal and regular installments, the first one being payed as of 30 April, 2021, and are secured by the assignment of certain revenues. The main covenants require compliance with certain financial ratios as well as certain restrictions.
As of March 31, 2020 and December 31,
2019, the Group was in compliance with all of its borrowing covenants.
- 23 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
13 Other liabilities
At March 31,
2020 (Unaudited) |
At December 31,
2019 (Audited) |
|||||||
Non-current | ||||||||
Concession fee payable (*) | 614,200 | 777,093 | ||||||
Advances from customers | 16,415 | 21,437 | ||||||
Provisions for legal claims (****) | 4,718 | 5,319 | ||||||
Provision for maintenance costs (**) | 21,097 | 20,034 | ||||||
Other taxes payable | 1,887 | 2,548 | ||||||
Employee benefit obligation (***) | 7,473 | 8,079 | ||||||
Salary payable | 448 | 488 | ||||||
Other liabilities with related parties (Note 16) | 1,398 | 1,726 | ||||||
Other payables | 12,289 | 11,686 | ||||||
679,925 | 848,410 | |||||||
Current | ||||||||
Concession fee payable (*) | 84,876 | 120,578 | ||||||
Other taxes payable | 21,048 | 22,956 | ||||||
Salary payable | 35,521 | 37,976 | ||||||
Other liabilities with related parties (Note 16) | 5,631 | 5,812 | ||||||
Advances from customers | 3,672 | 4,848 | ||||||
Provision for maintenance costs (**) | 5,339 | 8,887 | ||||||
Expenses provisions | 1,258 | 1,934 | ||||||
Provision for legal claims (****) | 1,002 | 1,159 | ||||||
Other payables | 23,393 | 25,972 | ||||||
181,740 | 230,122 |
Maturity of the other liabilities is as follows:
1 year or
less |
1 - 2 years | 2 - 5 years | Over 5 years | Total | ||||||||||||||||
At March 31, 2020 | 189,152 | 72,164 | 216,413 | 1,472,178 | 1,949,907 | |||||||||||||||
At December 31, 2019 | 230,181 | 90,917 | 275,982 | 1,867,441 | 2,464,521 |
(*) The most significant amounts included in the concession fee payable are generated by the concession agreement between The Brazilian National Civil Aviation Agency – ANAC and Inframérica Concessionária do Aeroporto de Brasilia S.A. and Inframérica Concessionária do Aeroportode São Gonçalo do Amarante S.A.
Changes in the period of the concession fee payable is as follows:
For the three -month period ended
March 31, |
||||||||
2020
(Unaudited) |
2019
(Unaudited) |
|||||||
Balances at the beginning of the period | 897,671 | 907,954 | ||||||
Financial result | 15,951 | 26,729 | ||||||
Concession fees | 32,583 | 37,401 | ||||||
Payments | (54,206 | ) | (58,468 | ) | ||||
Translation differences and inflation adjustment | (192,923 | ) | (6,963 | ) | ||||
Balances at the end of the period | 699,076 | 906,653 |
- 24 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
13 Other liabilities (Cont.)
(**) Changes in the period of the provision for maintenance costs is as follows:
For the three -month period ended
March 31, |
||||||||
2020
(Unaudited) |
2019
(Unaudited) |
|||||||
Balances at the beginning of the period | 28,921 | 29,097 | ||||||
Accrual of the period | 526 | 1,126 | ||||||
Use of the provision | (2,308 | ) | (443 | ) | ||||
Translation differences and inflation adjustment | (703 | ) | (554 | ) | ||||
Balances at the end of the period | 26,436 | 29,226 |
(***) Changes in the period of the provision for employee benefits is as follows:
For the three -month period ended
March 31, |
||||||||
2020
(Unaudited) |
2019
(Unaudited) |
|||||||
Balances at the beginning of the period | 8,079 | 8,038 | ||||||
Actuarial gain/loss (in other comprehensive income) | (421 | ) | 313 | |||||
Interest for services | 25 | 35 | ||||||
Service cost | 78 | 73 | ||||||
Amounts paid in the period | (131 | ) | (119 | ) | ||||
Translation differences and inflation adjustment | (157 | ) | (127 | ) | ||||
Balances at the end of the period | 7,473 | 8,213 |
(****) Changes in the period of the provision for legal claims is as follows:
For the three -month period ended
March 31, |
||||||||
2020
(Unaudited) |
2019
(Unaudited) |
|||||||
Balances at the beginning of the period | 6,478 | 9,682 | ||||||
Accrual of the period | 629 | 145 | ||||||
Use of the provision | (585 | ) | (167 | ) | ||||
Translation differences and inflation adjustment | (802 | ) | (336 | ) | ||||
Balances at the end of the period | 5,720 | 9,324 |
14 Equity
a) Other comprehensive income
The movements of the reserve of other comprehensive income for the period of the owners of the Company is as follows:
Currency
translation adjustments |
Remeasurement
of defined benefit obligations (*) |
Share of other
comprehensive income from associates |
Income Tax
effect (*) |
Transfer from
shareholders equity – currency translation differences |
Total | |||||||||||||||||||
Balances at January 1, 2020 | (414,777 | ) | 198 | (40,726 | ) | (63 | ) | 63,402 | (391,966 | ) | ||||||||||||||
Other comprehensive income / (loss) for the period | (15,214 | ) | 196 | (264 | ) | (47 | ) | - | (15,329 | ) | ||||||||||||||
For the period ended March 31, 2020 | (429,991 | ) | 394 | (40,990 | ) | (110 | ) | 63,402 | (407,295 | ) | ||||||||||||||
Balances at January 1, 2019 | (401,444 | ) | 330 | (40,761 | ) | (99 | ) | 63,402 | (378,572 | ) | ||||||||||||||
Other comprehensive (loss) / income for the period | (16,810 | ) | (193 | ) | 76 | 46 | - | (16,881 | ) | |||||||||||||||
For the period ended March 31, 2019 | (418,254 | ) | 137 | (40,685 | ) | (53 | ) | 63,402 | (395,453 | ) |
(*) Income tax relating to OCI amounts to Remeasurement of defined benefit obligations. The movement was recognized as other comprehensive income of other reserves.
- 25 - |
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
15 Contingencies, commitments and restrictions on the distribution of profits
a. Contingencies
CAAP and its subsidiaries are, from time to time, subject to various claims, lawsuits and other legal proceedings, including customer claims, in which third parties are seeking payment for alleged damages, reimbursement for losses or indemnity. Some of these claims, lawsuits and other legal proceedings are subject to substantial uncertainties. Accordingly, the potential liability with respect to such claims, lawsuits and other legal proceedings cannot be estimated with certainty. Management, with the assistance of legal counsel, periodically reviews the status of each significant matter and assesses potential financial exposure. If a potential loss from a claim, lawsuit or proceeding is considered probable and the amount can be reasonably estimated, a provision is recorded. Accruals for loss contingencies reflect a reasonable estimate of the losses to be incurred based on information available to management as of the date of preparation of the financial statements, and take into consideration the Group’s litigation and settlement strategies.
The Company believes that the aggregate provisions recorded for losses in these financial statements, are adequate based upon currently available information.
Brazil legal proceedings - Tax Proceedings
On September, 2014, ICAB started a lawsuit that discusses the collection of Property and Urban Territorial Tax (“IPTU”) by the Federal District. On October, 2014, the Judge granted a provisional decision, suspending the tax collection. On April, 2015, a favorable sentence was handed down to the ICAB, dismissing the collection as unfounded. On March, 2017, the State Court confirmed that sentence, based on previous decisions from the Supreme Court. After that, the Supreme Court had a new trial on a different case, where the taxpayers lost. That led the State Court to hold a new trial. On April, 2018, the decision was slightly changed. The court still said ICAB did not have to pay IPTU, but it was stated that stores that had contracts with ICAB that were not connected with the airport or airline services did have to pay IPTU. Both parts appealed again from that decision, so it was sent to the Supreme Court. The decision in regards to these appeals is now pending.
Based on a different interpretation of this latest decision, the Federal District started a new lawsuit, demanding the payment of R$ 5 million of IPTU. On March of 2020, ICAB presented a defense stating that this tax could not be imposed by Local Government over an airport that belongs to the Federal Government, what is endorsed by decision still valid on the lawsuit previously mentioned. Up to now, the judge has not decided the case. Many airports in Brazil are facing the same discussion.
There are no other lawsuits or legal proceedings different from the ones included in the Consolidated Financial Statements for the year ended December 31, 2019.
b. Commitments
Re-bidding of Natal Airport Concession
On March 5, 2020, CAAP announced that its subsidiary Inframérica Concessionária do Aeroporto de São Gonçalo do Amarante S.A. (“ICASGA”) filed a request to the Agência Nacional de Aviação Civil (“ANAC”) to commence the re-bidding process of the International Airport of São Gonçalo do Amarante (“Natal Airport”), pursuant to Law No. 13,448 of July 5, 2017, and ANAC Resolution No. 533 of November 7, 2019. This process will have several stages, at the present time, ANAC is processing its preliminary analysis and should take a position on the matter in the coming months.
If the request is approved, the operation of Natal Airport will be transferred to a different operator after a new bidding process, and an indemnification payment will be made to ICASGA, to be determined by authorities, which will be primarily based on non-amortized capital expenditure investments. In the interim, ICASGA will maintain all airport operations, with the same safety and service quality, as well as commercial and employment contracts. The re-bidding request is limited to the Natal Airport concession.
-26-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
15 Contingencies, commitments and restrictions on the distribution of profits (Cont.)
b. Commitments (Cont.)
Re-bidding of Natal Airport Concession (Cont.)
Several factors drove the Company’s decision to seek return of this concession. Passenger traffic has been negatively impacted by the adverse economic conditions in Brazil over the past years, particularly affecting tourism activity in the country, which resulted in lower than expected passenger traffic. At Natal Airport in particular, total passenger traffic reached 2.3 million in 2019, compared to the 4.3 million expected as per the feasibility study. In addition, as the Natal Airport concession occurred in 2011 and was the first airport concession in Brazil, passenger tariffs lag those of all other privatized airports in the country under the same tariff scheme, which as of December 2019 are in average 35% higher than Natal Airport tariffs and air navigation tariffs charged in other airports are 301% higher than in Natal Airport. This situation has required CAAP to make capital contributions to sustain this concession and thus allow ICASGA to remain in compliance with all of its financial obligations to the Brazilian Government and financial institutions.
As it is still only a request with the intention of re-bidding, which will go through several stages as previously mentioned, at this moment there is no accounting impact of this operation in ICASGA nor CAAP financial figures, the measurement and the accounting will be carried out according to the terms of the addendum or contract, if signed.
Council of State judgement – Toscana Aeroporti S.p.A. (“TA”) expansion plan
On February 13, 2020, the Council of State issued a judgement rejecting the appeal lodged by, inter alia, Italy's Ministry of the Environment and Protection of the Land and Sea, Italy's Ministry of Cultural Heritage and Activities, Italian Civil Aviation Authority (“ENAC”), Municipality of Florence, Region of Tuscany, Metropolitan City of Florence and TA on the decision of the Regional Administrative Court of Tuscany No. 723 of 2019.
TA, in full compliance with the judgement, has already taken steps to satisfy the conditions and to coordinate the actions to be taken, together with the competent entities — and first and foremost the ENAC — to move ahead with the project, noting that the work done was carried out according to the opinions and instructions provided by the competent ministries and the competent Environmental Compatibility Assessment (“VIA”) Commission, by virtue of the positive opinions obtained from the Italian VIA Commission, Italy's Ministry of the Environment and Protection of the Land and Sea, Italy's Ministry of Cultural Heritage and Activities and Italy's Ministry for Infrastructure and Transport.
In this context, on February 20, 2020, the Board of Director of TA acknowledged and examined the content of the judgement of the Council of State and resolve to approve the renewal of the VIA procedure and the implementation of further procedures that prove necessary in relation to the development of Florence airport’s Master Plan according to the terms emerged in the Council of State judgement and also taking into account the letter received on that date from the ENAC where it requires that the analysis, study and design activities be launched, thereby confirming its interest in the construction of the new runway.
-27-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
15 Contingencies, commitments and restrictions on the distribution of profits (Cont.)
b. Commitments (Cont.)
The AAP Concession Agreement
On February 6, 2020, Banco de Crédito del Perú (“BCP”) issued guarantees in favor of AAP for equipment acquisitions for the concession for a total amount of USD 220 thousands.
Brazilian airports concession fee
On March 18, 2020, the Brazilian Government has issued an interim order (Medida Provisória nº 925) to help companies and has postponed concession fees payments, that should be executed in May and June 2020, to December 2020.
There are no new commitments or significant changes related to the concession agreements in the current period from the ones included in the Consolidated Financial Statements for the year ended December 31, 2019, except for the abovementioned.
c. Restrictions to the distribution of profits and payment of dividends
As of March 31, 2020 and December 31, 2019, equity as defined under Luxembourg laws and regulations consisted of:
At
March 31,
|
At
December 31,
|
|||||||
Share capital | 160,022 | 160,022 | ||||||
Share premium | 180,486 | 180,486 | ||||||
Legal reserve | 176 | 176 | ||||||
Free distributable reserves | 385,055 | 385,055 | ||||||
Non-distributable reserves | 1,351,883 | 1,351,883 | ||||||
Retained earnings | (77,019 | ) | (78,497 | ) | ||||
Total equity in accordance with Luxembourg law | 2,000,603 | 1,999,125 |
At least 5% of the Company’s net income per year, as calculated in accordance with Luxembourg law and regulations, must be allocated to the creation of a legal reserve equivalent to 10% of the Company’s share capital. Dividends may not be paid out of the legal reserve.
The Company may pay dividends to the extent, among other conditions, that it has distributable retained earnings calculated in accordance with Luxembourg laws and regulations.
-28-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
16 Related party balances and transactions
Corporación América Airports S.A. is controlled by ACI Airports S.à r.l., which is controlled by ACI Holding S.à r.l., which is controlled by Corporación America International S.à r.l., Luxembourg’s companies.
Corporación América International S.à r.l. is controlled by Liska Investments Corporation, a company incorporated under the laws of the British Virgin Islands.
Liska Investments Corporation is controlled by Southern Cone Foundation (CAAP`s ultimate parent company), a foundation created under the laws of Liechtenstein, having its corporate domicile in Vaduz. The foundation's purpose is to manage its assets through the decisions adopted by its independent board of directors. The potential beneficiaries of this foundation are members of the Eurnekian family and religious, charitable and educational institutions.
Transactions and balances with “Associates” are those carried out with entities over which CAAP exerts significant influence in accordance with IFRS, but does not have control. Transactions and balances with related parties, which are not associates and are not consolidated are disclosed as “Other related parties”.
The Group receives services from related parties, such as internal audit, management control, financial assistance, technology outsourcing services and construction services.
Summary of balances with related parties are:
At
March 31,
|
At
December 31,
|
|||||||
Year-end balances | ||||||||
(a) Arising from sales / purchases of goods / other | ||||||||
Trade receivables with associates | 1,490 | 1,555 | ||||||
Trade receivables with other related parties | 652 | 687 | ||||||
Other receivables with associates | 658 | 658 | ||||||
Other receivables with other related parties | 8,633 | 8,611 | ||||||
Other financial assets with associates | 2,532 | 2,494 | ||||||
Other financial assets with other related parties | 14,664 | 14,573 | ||||||
Trade payables to other related parties | (2,867 | ) | (3,017 | ) | ||||
25,762 | 25,561 | |||||||
(b) Other liabilities | ||||||||
Other liabilities to other related parties | (7,029 | ) | (7,538 | ) | ||||
(7,029 | ) | (7,538 | ) | |||||
(c) Other balances | ||||||||
Cash and cash equivalents in other related parties | 14,460 | 15,312 | ||||||
14,460 | 15,312 |
For the three-month period ended March 31, |
||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Transactions | ||||||||
Aeronautical/Commercial revenue | 1,353 | 1,439 | ||||||
Fees | (1,673 | ) | (1,760 | ) | ||||
Interest accruals | 179 | 348 | ||||||
Acquisition of goods and services | (3,906 | ) | (5,082 | ) | ||||
Others | (1,178 | ) | 565 |
The group leases buildings to other related parties which are recognized under the scope of IFRS 16 and accounted in Lease liabilities line for an amount of USD 1,557 as of March 31,2020. Additionally, the group has variable equipment leases with other related parties that are excluded from the lease liability according to IFRS 16. Transactions related to those leasing’s are included in Acquisition of goods and services line for an amount of USD 1,522 (USD 1,589 as of March 31,2019).
Remunerations received by the Group’s key staff amounted to approximately 1.53% of total remunerations accrued at March 31, 2020 (1.73% as of March 31, 2019).
-29-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
17 Cash flow disclosures
The most significant non-cash transactions are detailed below:
For the three -month period ended March 31, |
||||||||
2020 (Unaudited) |
2019 (Unaudited) |
|||||||
Intangible assets acquisition with an increase in Other liabilities / Borrowings / Lease liabilities | (21 | ) | (17 | ) | ||||
Right-of-use asset initial recognition with an increase in Lease liabilities | - | (11,904 | ) | |||||
Dividends not paid | - | (7,308 | ) | |||||
Borrowings cost capitalization | - | - | ||||||
Dividends on preferred shares | - | (74 | ) |
18 Fair value measurement of financial instruments
According to the classification included in Note 3 B of the Consolidated Financial Statements as of December 31, 2019, the Company categorizes its financial instruments as assets and liabilities at amortized cost and fair value through profit or loss.
For the majority of instruments at amortized cost, the fair values are not materially different to their carrying amounts, since the interest receivable/payable is either close to current market rates or the instruments are short-term in nature. Significant differences were identified for the following instruments at March 31, 2020:
Fair value | Carrying amount | |||||||
Trust funds | 109,599 | 93,562 | ||||||
Long-term borrowings | 926,574 | 942,230 |
19 Subsequent events
Implementation of mitigation initiatives focused on preserving financial position due to COVID-19
Brazil indebtedness
ICASGA and ICAB standstill with BNDES
In March 2020, BNDES made available a program for joining a Standstill, which is the suspension of payments of principal and interest for 6 months of the contracts signed with BNDES. The amount relative of standstill must be capitalized and will be paid in the remaining period of the financing contracts. BSB and ASGA applied for this program and obtained the approval on April 14, 2020.
Loan with Banco Votorantim S.A.
In April 2020, ICAB succeed in the negotiation with Banco Votorantim S.A. to extend financing having due dates in April, May and June to September 2020. However, as the financial market situation presents more risk, interest rate of CDI+ 2,0% per year has changed to CDI + 4,3% per year. This loan is secured by a guarantee letter issued by CAAP.
-30-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
19 Subsequent events (Cont.)
Aeropuertos Argentina 2000 S.A. (“AA2000”) indebtedness
On April 21, 2020, AA2000 announced the commencement of an offer (the “Exchange Offer”) to exchange any and all of its outstanding 6.875% Senior Secured Notes due 2027 in the original aggregate principal amount of USD 400 million (the “Existing Notes”) for newly issued 6.875% Cash/9.375% PIK Class I Series 2020 Additional Senior Secured Notes due 2027 (the “Series 2020 Additional Notes”) and solicitation of consents to certain proposed amendments to the indenture governing the Existing Notes.
On May 4, 2020, AA2000 announced the results of its previously announced Exchange Offer. On May 1, 2020 (the “Early Participation Deadline”), USD 341 million aggregate original principal amount of Existing Notes, representing approximately 85.23% of the total original principal amount of the Existing Notes, had been validly tendered for exchange and not validly withdrawn, as confirmed by the Information Agent for the Exchange Offer.
The Exchange Offer and Consent Solicitation has expired on May 18, 2020 (the “Expiration Deadline”). AA2000 currently expects the settlement date to be May 20, 2020.
The Exchange Offer and Consent Solicitation are conditioned on: (a) the non-occurrence of an event or events or the likely non-occurrence of an event or events that would or might reasonably be expected to prohibit, restrict or delay the consummation of the Exchange Offer or materially impair the contemplated benefits to AA2000 of the Exchange Offer, (b) the lenders to the 2019 Credit Facilities (as defined below) executing and delivering amendments to the 2019 Credit Facilities to provide for the effective deferral of payments of principal due thereunder on August 19, 2020 and November 19, 2020 (the “2019 Credit Facilities Amendment Condition”), (c) obtaining the approval of the ORSNA with respect to the collateral assignment of revenue under the Existing Notes to extend to the Series 2020 Additional Notes in equal terms (the “ORSNA Approval Condition”) and (d) the tender by, and the receipt of the Consents from, Eligible Holders representing at least 80% of the aggregate principal amount of the Existing Notes outstanding. Subject to applicable law, AA2000 reserves the right to waive any and all conditions to the Exchange Offer, except for the 2019 Credit Facilities Amendment Condition. The (d) condition was satisfied on May 1, 2020.
The ORSNA Approval Condition was satisfied on April 24, 2020. On such date, ORSNA issued Resolution No. 21/2020 pursuant to which the collateral assignment of revenue under the Existing Notes was extended to the Series 2020 Additional Notes in equal terms.
The 2019 Credit Facilities Amendment Condition was satisfied on April 29, 2020. On such date, AA2000 entered into a framework agreement (“Framework Agreement”) with the branch of Citibank established in the Republic of Argentina (“Citibank Argentina”), Industrial and Commercial Bank of China (Argentina) S.A. (“ICBC”), Banco Galicia, Buenos Aires S.A.U. (“Banco Galicia”) and Banco Santander Río S.A. (“Banco Santander”), in order to, among other things, effectively defer principal payments due under: (a) the onshore credit facility agreement, dated August 9, 2019, by and among AA2000, as borrower, Banco Galicia, ICBC and Banco Santander, as lenders, Citibank N.A. (“Citibank”), as administrative agent and Citibank Argentina, as local collateral agent, local disbursement agent and local paying agent, for an aggregate principal amount of USD 85 million and (b) the offshore credit facility agreement, dated August 9, 2019, by and among AA2000, as borrower, Citibank acting through its international banking facility, as lender, Citibank, as administrative agent and Citibank Argentina as local collateral agent and local custodian agent for an aggregate principal amount of USD 35 million (collectively, the “2019 Credit Facilities”). The Framework Agreement effectively defers payments of principal due by AA2000 under the 2019 Credit Facilities on August 19, 2020 and November 19, 2020, each of which amounts to USD 13.3 million. Such deferred amounts will be effectively payable by AA2000 in quarterly installments beginning in September 2021 and ending in June 2022.
-31-
Corporación América Airports S.A. Condensed Consolidated Interim Financial Statements for the three-month period ended March 31, 2020 and 2019 (amounts in thousands of U.S. dollars except share data or as otherwise indicated).
19 Subsequent events (Cont.)
ACI Airport Sudamérica, S.A. announces exchange offer and consent solicitation for its 6.875% Senior Secured Guaranteed Notes due 2032
On April 24, 2020, ACI Airport Sudamérica S.A. announced the commencement of an offer (the “Exchange Offer”) to repurchase and exchange any and all of its outstanding 6.875% Senior Secured Guaranteed Notes due 2032 in the original aggregate principal amount of USD 200 million (the “Existing Notes”) for newly issued 6.875% Cash/7.875% PIK Senior Secured Guaranteed Notes due 2032 (the “New Notes”) and solicitation of consents to certain proposed amendments to the indenture governing the Existing Notes and certain waivers.
On May 14, 2020, ACI Airport Sudamérica S.A. announced the results of its previously announced Exchange Offer. On May 14, 2020 (the “Early Participation Deadline”), USD 184 million aggregate original principal amount of Existing Notes, representing approximately 92.15% of the total original principal amount of the Existing Notes, had been validly tendered for exchange and not validly withdrawn, as confirmed by the Information Agent for the Exchange Offer.
The Exchange Offer and Consent Solicitation will expire on May 21, 2020 (the “Expiration Deadline”), unless extended. ACI Airport Sudamérica S.A. currently expects the settlement date to be May 26, 2020.
Puerta del Sur S.A. (“PDS”) Notes
On April 24, 2020, Puerta del Sur S.A. signed a modification with more than 75% of the total principal amount of its 2007 notes to postpone April and October 2020 installments to year 2022. Interests continue to be paid semi-annually, including in 2020, at the same rate. The payment of a compensation of 1% on the amount of the extended installments was agreed and will be paid in May 2020. The agreement is conditioned on the acceptance of at least 75% of the exchange offer of ACI Airport Sudamérica. In the case this does not materialize, PDS will pay the June 2020 installment plus the interest due at that time, and must comply with the conditions of the original agreement ending in October 2021. It was also agreed that if the condition for the modification of the agreement occurs, some covenants will be modified.
Flight restrictions
Governments and transportation authorities in many of CAAP’s countries of operations have issued flight restrictions and continue to implement measures to contain Covid-19 spread.
On April 25, 2020, the Argentine National Administration of Civil Aviation (“ANAC”), issued Resolution N°144/2020, where it establishes that the airlines that operate passenger air transport services from, to or within the Argentine territory, may reschedule their regular operations, request authorizations to non-regular operations and commercialize air tickets with a start date of operations from September 1, 2020.
Italian airports concession fee
On April 23, 2020, the Ente Nazionale per l'Aviazione Civile (“ENAC”), to encourage the recovery of air transport and in agreement with the Ministry of Infrastructure and Transport, ordered the suspension of the payment of airports concession fees, due in July. For 2020, the payment will be commensurate with the traffic actually recorded during the year and must be made payed in January 31, 2021.
There are no other subsequent events that could significantly affect the Company´s financial position as of March 31, 2020.
-32-