Corporacion America Airports(CAAP) - 2022 Q2 - Quarterly Report

Company Information Company Overview Aeropuertos Argentina 2000 S.A. (AA2000) was established in 1998, primarily focusing on the development, management, and operation of Argentine airports, holding a concession for 35 airports - The company was founded in 1998, primarily engaged in airport development, management, and operation[3] - The company holds a concession for 35 airports within the Argentine National Airport System "Group A"[3][20] - The parent company is Corporación América S.A., holding a 45.90% stake[4] Capital Stock As of the reporting period, the company's total issued and paid-in capital is ARS 258,517,299, comprising four classes of common shares, each with a par value of ARS 1 and one voting right Capital Stock Composition (ARS) | Stock Class | Subscribed Capital (ARS) | Paid-in Capital (ARS) | | :--- | :--- | :--- | | Class "A" Common Stock | 79,105,489 | 79,105,489 | | Class "B" Common Stock | 79,105,489 | 79,105,489 | | Class "C" Common Stock | 61,526,492 | 61,526,492 | | Class "D" Common Stock | 38,779,829 | 38,779,829 | | Total | 258,517,299 | 258,517,299 | Condensed Consolidated Interim Financial Statements Consolidated Statements of Comprehensive Income For the six months ended June 30, 2022, the company achieved a net income of ARS 20.11 billion, a significant improvement from the prior year's loss, with operating profit also turning positive Consolidated Statements of Comprehensive Income Key Data (Six-Month Period, ARS) | Indicator | June 30, 2022 (ARS) | June 30, 2021 (ARS) | | :--- | :--- | :--- | | Revenue | 37,129,730,621 | 19,655,664,834 | | Construction Revenue (IFRIC 12) | 4,550,517,966 | 4,573,353,716 | | Cost of Sales | (23,659,375,420) | (18,275,302,068) | | Construction Costs (IFRIC 12) | (4,539,223,655) | (4,565,145,632) | | Gross Profit for the Period | 13,481,649,512 | 1,388,570,850 | | Operating Profit | 11,738,243,158 | (1,791,980,237) | | Net Income for the Period | 20,111,014,796 | (2,361,433,588) | | Earnings Per Share (Basic and Diluted) | 77.79370 | (9.9876) | Consolidated Statements of Financial Position As of June 30, 2022, total assets slightly increased to ARS 226.36 billion, with intangible assets remaining the largest non-current component, while equity slightly decreased and total liabilities increased Consolidated Statements of Financial Position Key Data (ARS) | Indicator | June 30, 2022 (ARS) | December 31, 2021 (ARS) | | :--- | :--- | :--- | | Assets | | | | Total Non-Current Assets | 191,865,038,896 | 194,050,153,351 | | Total Current Assets | 34,491,368,986 | 32,222,454,691 | | Total Assets | 226,356,407,882 | 226,272,608,042 | | Shareholders' Equity and Liabilities | | | | Total Shareholders' Equity | 89,131,907,520 | 91,574,730,181 | | Total Non-Current Liabilities | 104,021,136,104 | 95,580,586,711 | | Total Current Liabilities | 33,203,364,258 | 39,117,291,150 | | Total Liabilities | 137,224,500,362 | 134,697,877,861 | | Total Shareholders' Equity and Liabilities | 226,356,407,882 | 226,272,608,042 | - Intangible assets represent the largest portion of non-current assets, totaling ARS 184,119,205,754 as of June 30, 2022[12] - Investments within current assets increased from ARS 1,831,821,546 on December 31, 2021, to ARS 6,638,724,850 on June 30, 2022[12] Consolidated Statements of Changes in Equity As of June 30, 2022, total shareholders' equity decreased to ARS 89.13 billion from ARS 91.57 billion on January 1, 2022, primarily due to preferred share redemption and capital adjustments despite positive net income Consolidated Statements of Changes in Equity Key Data (ARS) | Indicator | June 30, 2022 (ARS) | January 1, 2022 (ARS) | June 30, 2021 (ARS) | | :--- | :--- | :--- | :--- | | Common Stock Capital | 258,517,299 | 258,517,299 | 258,517,299 | | Preferred Stock Capital | - | 910,978,514 | 910,978,514 | | Share Premium | 137,280,595 | 137,280,595 | 137,280,595 | | Capital Adjustments | 13,843,007,838 | 34,547,453,786 | 34,556,298,629 | | Legal and Voluntary Reserves | 70,283,024,902 | 70,881,816,983 | 70,899,302,744 | | Retained Earnings | 4,608,342,132 | (15,502,655,403) | (17,864,554,034) | | Total Equity Attributable to Shareholders | 89,130,172,766 | 91,573,012,688 | 89,208,818,716 | | Non-Controlling Interests | 1,734,754 | 1,717,493 | 1,512,615 | | Total Shareholders' Equity | 89,131,907,520 | 91,574,730,181 | 89,210,331,331 | - The shareholders' meeting on March 10, 2022, resolved to redeem preferred shares, resulting in zero preferred stock capital and a significant reduction in capital adjustments[14] - Net income for the period, totaling ARS 20,110,997,535, positively impacted retained earnings[14] Consolidated Statements of Cash Flows For the six months ended June 30, 2022, operating activities resulted in a cash outflow of ARS 8.95 billion, investing activities a cash outflow of ARS 5.37 billion, and financing activities a cash inflow of ARS 11.65 billion, mainly from new financial debt Consolidated Statements of Cash Flows Key Data (Six-Month Period, ARS) | Indicator | June 30, 2022 (ARS) | June 30, 2021 (ARS) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (8,948,756,475) | 2,128,734,977 | | Net Cash Flow from Investing Activities | (5,365,368,789) | 367,210,641 | | Net Cash Flow from Financing Activities | 11,653,778,819 | (6,542,621,065) | | Decrease in Cash and Cash Equivalents | (2,660,346,445) | (4,046,675,447) | | Cash and Cash Equivalents at End of Period | 19,901,329,925 | 6,653,995,650 | - Operating cash flow shifted from positive to negative year-over-year, primarily influenced by income tax adjustments, bad debt provisions, inflation adjustments, and changes in fees payable to the Argentine National Government[17] - Financing cash flow significantly turned positive, mainly due to ARS 27,838,880,775 in new financial debt[17] Notes to the Condensed Consolidated Interim Financial Statements Note 1 – Company Activities AA2000 holds a concession for 35 airports, extended to February 13, 2038, with some commitments deferred due to COVID-19, and the government retaining the right to repurchase the concession - The company holds concession rights for 35 airports, with the concession period extended until February 13, 2038[20][21][23] - In September 2021, ORSNA approved the deferral of certain engineering funds and preferred share redemption commitments to December 2022, and financial forecast adjustments to June 2023, in response to COVID-19 impacts[24] - The Argentine National Government retains the right to repurchase the concession after February 13, 2018, with compensation payable to the company[25] Note 2 – Basis for Consolidation Consolidated financial statements include AA2000 and its subsidiaries, based on the company's control over entities, with intercompany transactions and balances eliminated for consistency Major Subsidiaries and Shareholding Percentages (ARS) | Subsidiary Name | Capital Participation and Potential Voting Rights | Book Value June 30, 2022 (ARS) | Period Income (ARS) | | :--- | :--- | :--- | :--- | | Servicios y Tecnología Aeroportuarios S.A. | 99.30% | 247,118,550 | 14,254,496 | | Cargo & Logistics SA. | 98.63% | 1,531,495 | (2,307,335) | | Paoletti América S.A. | 50.00% | 15,526 | (5,594) | | Texelrío S.A. | 70.00% | - | - | | Villalonga Furlong S.A | 1.45% | 55,812 | (46,226) | - AA2000 holds a 99.3% stake in Servicios y Tecnología Aeroportuarios S.A., which primarily engages in duty-free zones, import/export, and airport-related services[31] - AA2000 holds a 98.63% stake in Cargo y Logística S.A., which in turn holds a 98.42% stake in Villalonga Furlong S.A[32] Note 3 – Accounting Policies These condensed consolidated interim financial statements are presented in Argentine Pesos, comply with IFRS and IAS 34, and are restated under IAS 29 due to Argentina's hyperinflationary economy - Financial statements are presented in Argentine Pesos and comply with International Financial Reporting Standards (IFRS) and International Accounting Standard 34 (IAS 34)[35][38] - Argentina has been classified as a hyperinflationary economy since July 1, 2018, thus financial statements are restated under IAS 29 to reflect inflation's impact[56][57] - The company is managed as a single business unit, with all airports considered as a whole, and no separate performance evaluation for individual airports, resulting in only one business segment[43] Comparative Information Comparative information in these financial statements is derived from prior interim and annual consolidated financial statements, restated under IAS 29 to June 30, 2022, constant currency - Comparative information has been restated under IAS 29 to the constant currency of June 30, 2022[40] Controlled Entities The company consolidates entities over which it has control, defined by power and variable returns, with intergroup transactions and unrealized gains/losses eliminated - The company consolidates entities when it has control over them[40] - Intergroup transactions, balances, and unrealized gains and losses are eliminated[41] Segment Information The company manages all airports as a single business unit, with airport revenue comprising non-aeronautical and aeronautical income, the latter determined by ORSNA's financial projections - The company is managed as a single business unit, with all airports considered as a whole, constituting only one business segment[43] - Airport revenue includes non-aeronautical and aeronautical income, with aeronautical revenue rates determined by ORSNA based on financial forecast reviews[46] Accounting Policy Changes and Estimates No changes occurred in the group's accounting policies as of January 1, 2022, and management's judgments and estimates align with the 2021 annual financial statements - No changes occurred in the group's accounting policies as of January 1, 2022[49] - Management's judgments and estimates in preparing the financial statements are consistent with the 2021 annual financial statements[51] Foreign Currency and Hyperinflationary Economies The company's functional and presentation currency is the Argentine Peso, with financial statements restated under IAS 29 due to Argentina's hyperinflationary economy, and inflation adjustments recognized in comprehensive income - The company's functional and presentation currency is the Argentine Peso[53] - Argentina has been classified as a hyperinflationary economy since July 1, 2018, requiring financial statements to be restated under IAS 29[56] - Non-monetary assets and liabilities are updated using adjustment factors from their acquisition or inception dates, while monetary assets and liabilities are not restated; inflation adjustment gains or losses are presented as "Impact of changes in the purchasing power of money" in the statement of comprehensive income[64][66] Contingencies The company has legal claims and contingent liabilities related to normal operations, with no expectation of significant additional liabilities beyond existing provisions - The company has legal claims and contingent liabilities related to normal operations, with no expectation of significant additional liabilities[74] Income Tax and Deferred Tax For the six months ended June 30, 2022, income tax revenue was ARS 2.05 billion, with the company including inflation adjustments in its taxable net results and submitting a statement to AFIP - For the six months ended June 30, 2022, income tax revenue was ARS 2.05 billion[74] - The company included an inflation adjustment of ARS 22.47 billion in its taxable net results and submitted a statement to AFIP to assert its rights regarding this adjustment[75][76][77] Note 4 – Breakdown of Certain Items of Financial Position and Comprehensive Income This note details specific balance sheet and comprehensive income items, including receivables, investments, cash, payables, and the composition of aeronautical and non-aeronautical revenue, highlighting significant changes in trade receivables and investments Financial Position Items Breakdown (ARS) | Item | June 30, 2022 (ARS) | December 31, 2021 (ARS) | | :--- | :--- | :--- | | Other Non-Current Receivables | 7,106,862,898 | 8,305,627,397 | | Other Current Receivables | 1,873,829,607 | 2,546,845,998 | | Net Trade Receivables | 6,077,484,604 | 5,679,129,855 | | Investments | 6,638,724,850 | 1,831,821,546 | | Cash and Cash Equivalents | 19,901,329,925 | 22,164,657,292 | | Accounts Payable and Other Non-Current Liabilities | 244,668,076 | 1,064,644,930 | | Accounts Payable and Other Current Liabilities | 8,532,461,987 | 11,438,029,448 | Comprehensive Income Items Breakdown (Six-Month Period, ARS) | Item | June 30, 2022 (ARS) | June 30, 2021 (ARS) | | :--- | :--- | :--- | | Aeronautical Revenue | 18,300,885,380 | 5,483,011,754 | | Non-Aeronautical Revenue | 18,828,845,241 | 14,172,653,080 | | Total Revenue | 37,129,730,621 | 19,655,664,834 | | Other Net Income and Expenses | 850,522,715 | (872,094,574) | | Financial Income | 2,332,653,065 | 947,813,483 | | Financial Costs | 1,925,417,172 | 3,506,715,054 | | Income Tax | 2,050,466,571 | (4,412,627,306) | - Net trade receivables increased from ARS 5,679,129,855 on December 31, 2021, to ARS 6,077,484,604 on June 30, 2022[79] - Investments significantly increased from ARS 1,831,821,546 on December 31, 2021, to ARS 6,638,724,850 on June 30, 2022[79] Note 5 – Intangible Assets As of June 30, 2022, the company's net intangible assets totaled ARS 184.12 billion, with ARS 4.55 billion in additions and ARS 5.31 billion in amortization during the period Intangible Assets Movement (ARS) | Indicator | June 30, 2022 (ARS) | June 30, 2021 (ARS) | | :--- | :--- | :--- | | Balance at January 1 (Original Value) | 289,040,072,237 | 281,633,841,916 | | Additions for the Period | 4,550,517,966 | 4,573,353,716 | | Balance at June 30 (Original Value) | 293,590,590,203 | 286,207,195,632 | | Accumulated Amortization at January 1 | (104,158,099,164) | (94,322,470,545) | | Amortization for the Period | (5,313,285,285) | (4,834,018,728) | | Accumulated Amortization at June 30 | (109,471,384,449) | (99,156,489,273) | | Net Balance at June 30 | 184,119,205,754 | 187,050,706,359 | Note 6 – Financial Debts As of June 30, 2022, total financial debt increased to ARS 93.17 billion, driven by ARS 27.84 billion in new debt and ARS 16.00 billion in repayments, utilizing various financing methods including transferable debt and syndicated loans Financial Debts Breakdown (ARS) | Debt Type | June 30, 2022 (ARS) | December 31, 2021 (ARS) | | :--- | :--- | :--- | | Non-Current Liabilities | | | | Bank Loans | 3,682,509,849 | 7,629,181,122 | | Transferable Debts | 78,376,983,934 | 64,752,214,080 | | Debt Issuance Costs | (1,266,392,934) | (1,835,081,457) | | Total Non-Current Liabilities | 80,793,100,849 | 70,546,313,745 | | Current Liabilities | | | | Bank Loans | 5,198,188,207 | 7,883,266,213 | | Transferable Debts | 7,405,088,310 | 8,926,097,858 | | Debt Issuance Costs | (228,204,162) | (305,690,861) | | Total Current Liabilities | 12,375,072,355 | 16,503,673,210 | | Total Financial Debts | 93,168,173,204 | 87,049,986,955 | Financial Debts Movement (ARS) | Movement Item | June 30, 2022 (ARS) | June 30, 2021 (ARS) | | :--- | :--- | :--- | | Balance at January 1 | 87,049,986,955 | 91,254,368,637 | | New Financial Debts | 27,838,880,775 | 3,990,539,608 | | Financial Debts Repaid | (16,001,245,361) | (10,276,195,147) | | Accrued Interest | 3,964,043,876 | 4,495,887,268 | | Foreign Exchange Differences | (10,300,936,026) | (8,234,924,192) | | Inflation Adjustment | 617,442,985 | (761,077,892) | | Net Balance at June 30 | 93,168,173,204 | 80,468,598,282 | - The company issued USD 400 million in transferable debt in 2017, maturing in 2027, with an interest rate of 6.875%[88] - The company established a global program for transferable debt issuance totaling USD 1.5 billion in 2020, with multiple series issued including 2020 Series I, 2021 Series I, Class 2, Class 3, Class 4, Class 5, and Class 6[90][91][93][95][96][99][100][101][103] - The company also secured financing through syndicated loans, Banco Macro loans, City Bank loans, and Eurobank loans, with some loans refinanced and extended[104][109][116][125][139][141][142] Note 7 – Balances and Transactions with Related Parties This note discloses related party balances and transactions, showing increased trade and other receivables from related parties, decreased payables, and significant government-related payables and trust fund receivables Related Party Balances (ARS) | Item | June 30, 2022 (ARS) | December 31, 2021 (ARS) | | :--- | :--- | :--- | | Trade Receivables | 311,339,864 | 244,795,132 | | Other Receivables | 236,898,519 | 117,317,774 | | Accounts Payable and Others | 34,790,913 | 272,734,783 | | Shareholders – Dividends | 279,504,684 | 311,865,221 | | Shareholders – Debt to National Government | 9,647,388,424 | - | - As of June 30, 2022, the company owed the Argentine National Government ARS 4,485,256,216 for specific revenue allocation fees and recorded ARS 7,106,862,898 in trust receivables for infrastructure projects[149] - As of June 30, 2022, the National Government also owed the company ARS 9,647,388,424 as debt for the redemption of preferred shares[149] - Short-term compensation for key management personnel was ARS 90,846,880 in H1 2022, compared to ARS 93,221,338 in H1 2021[150] Note 8 – Bad Debt Provisions As of June 30, 2022, bad debt provisions significantly decreased to ARS 1.73 billion from ARS 6.37 billion at year-end, primarily due to recoveries, foreign exchange differences, and inflation adjustments Bad Debt Provisions Movement (ARS) | Movement Item | 2022 (ARS) | 2021 (ARS) | | :--- | :--- | :--- | | Initial Balance at January 1 | 6,368,227,254 | 7,237,269,810 | | Recoveries / Additions | (1,044,865,444) | 153,491,594 | | Foreign Exchange Differences | (1,492,274,651) | 671,617,465 | | Utilized | (368,771,952) | (3,669,867) | | Inflation Adjustment | (1,736,814,894) | (1,546,562,807) | | Final Balance at June 30 | 1,725,500,313 | 6,512,146,195 | Note 9 – Provisions and Other Charges As of June 30, 2022, total provisions and other liabilities amounted to ARS 15.72 billion, reflecting new debt provisions related to government preferred share redemption and adjustments to litigation, deferred income, and project trusts Provisions and Other Liabilities Movement (2022, ARS) | Item | Balance at Jan 1 (ARS) | Increase / (Recovery) (ARS) | Decrease (ARS) | Inflation Adjustment (ARS) | Accrued (ARS) | Exchange Rate Differences (ARS) | Balance at Jun 30 (ARS) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Litigation | 962,440,606 | 56,786,231 | (74,423,665) | (260,387,780) | - | 122,353,020 | 806,768,412 | | Deferred Income | 2,460,500,566 | 185,622,910 | - | (275,006,506) | (560,393,511) | 104,043,610 | 1,914,767,069 | | Project Trust | 2,963,097,145 | 662,027,979 | (1,392,101,170) | (798,723,932) | 419,970,360 | - | 1,854,270,382 | | Guarantees Received | 213,871,658 | 61,050,999 | (30,255,371) | (67,198,051) | - | 24,426,732 | 201,895,967 | | Concessionaire Prepaid Expenses | 341,824,901 | 44,422,275 | - | - | (57,147,543) | - | 329,099,633 | | Dividends Payable | 311,865,221 | - | - | (88,493,426) | - | 56,132,889 | 279,504,684 | | Debt to National Government | - | 22,557,693,991 | (12,266,924,550) | (4,596,484,222) | 3,953,103,205 | - | 9,647,388,424 | | Others | 768,399,775 | 26,361,855 | (44,964,909) | (220,170,715) | 18,046,142 | 140,458,784 | 688,130,932 | | Total | 8,021,999,872 | 23,593,966,240 | (13,808,669,665) | (6,306,464,632) | 3,773,578,653 | 447,415,035 | 15,721,825,503 | - Under "Debt to National Government", ARS 22,557,693,991 was added due to preferred share redemption, and ARS 12,266,924,550 was paid[156] Note 10 – Costs of Sales, Administrative, Distribution, and Selling Expenses For the six months ended June 30, 2022, total costs of sales, administrative, distribution, and selling expenses increased to ARS 26.25 billion, with specific revenue allocation, salaries, and intangible asset amortization as key components Costs of Sales, Administrative, Distribution, and Selling Expenses Breakdown (Six-Month Period, ARS) | Item | Cost of Sales (ARS) | Distribution and Selling Expenses (ARS) | Administrative Expenses (ARS) | Total (ARS) | | :--- | :--- | :--- | :--- | :--- | | June 30, 2022 | | | | | | Specific Revenue Allocation | 5,497,390,144 | - | - | 5,497,390,144 | | Airport Services and Maintenance | 4,504,464,267 | - | 19,398,644 | 4,523,862,911 | | Amortization of Intangible Assets | 5,277,855,259 | 1,093,714 | 34,336,312 | 5,313,285,285 | | Salaries and Social Security Contributions | 6,396,548,690 | 57,196,970 | 774,850,888 | 7,228,596,548 | | Bad Debt Expense | - | (1,044,865,444) | - | (1,044,865,444) | | Total | 23,659,375,420 | 1,119,375,604 | 1,474,553,465 | 26,253,304,489 | | June 30, 2021 | | | | | | Specific Revenue Allocation | 2,908,711,967 | - | - | 2,908,711,967 | | Airport Services and Maintenance | 3,949,087,358 | - | 1,338,801 | 3,950,426,159 | | Amortization of Intangible Assets | 4,786,155,476 | 1,260,547 | 46,602,705 | 4,834,018,728 | | Salaries and Social Security Contributions | 5,028,203,043 | 43,909,916 | 495,413,836 | 5,567,526,795 | | Bad Debt Expense | - | 153,491,594 | - | 153,491,594 | | Total | 18,275,302,068 | 1,276,827,623 | 1,031,628,890 | 20,583,758,581 | - Specific revenue allocation costs significantly increased in H1 2022, from ARS 2,908,711,967 in the prior year to ARS 5,497,390,144[158] - Bad debt expense shifted from an expense of ARS 153,491,594 in H1 2021 to a recovery of ARS 1,044,865,444 in H1 2022[158] Note 11 – Foreign Currency Assets and Liabilities As of June 30, 2022, the company's net foreign currency liability position increased to ARS 78.67 billion, with USD being the primary currency exposure across various asset and liability categories Foreign Currency Assets and Liabilities Breakdown (ARS) | Item | Currency Type | June 30, 2022 (ARS) | December 31, 2021 (ARS) | | :--- | :--- | :--- | :--- | | Assets | | | | | Total Current Assets | | 19,435,177,469 | 22,840,917,807 | | Of which: Net Trade Receivables | US$ | 3,079,960,277 | 3,141,425,708 | | Of which: Cash and Cash Equivalents | US$ | 16,355,217,192 | 19,699,492,099 | | Liabilities | | | | | Total Current Liabilities | | 16,637,012,838 | 22,034,408,898 | | Total Non-Current Liabilities | | 81,468,003,885 | 69,242,887,256 | | Total Liabilities | | 98,105,016,723 | 91,277,296,154 | | Net Liability Position | | 78,669,839,254 | 68,436,378,347 | - The US dollar constitutes the primary component of the company's foreign currency assets and liabilities[162] - As of June 30, 2022, the buy exchange rate for USD to ARS was 125.0300, and the sell exchange rate was 125.2300[73][162] Note 12 – Other Restricted Assets As of June 30, 2022, other current restricted assets include ARS 1.25 million in third-party lease guarantees and ARS 599.50 million in cash and cash equivalents specifically for transferable debt repayment - Other current assets include ARS 1,254,587 in third-party lease guarantees[163] - Cash and cash equivalents include ARS 599,499,180 in bank account balances specifically designated for the repayment of 2021 Series and Class IV transferable debts[163] Note 13 – Capital Stock As of June 30, 2022, the company's paid-in and subscribed capital is ARS 258,517,299, consisting of 258,517,299 common shares, following a resolution to redeem all preferred shares and reduce capital Capital Stock Composition (ARS) | Item | Par Value (ARS) | | :--- | :--- | | Paid-in and Subscribed | 258,517,299 | | Registered in Public Commercial Registry | 1,169,495,813 | - The company's capital stock consists of 258,517,299 common shares with a par value of ARS 1 each[165] - On March 10, 2022, the company resolved to redeem all issued preferred shares, reducing capital from ARS 1,169,495,813 to ARS 258,517,299, with this capital reduction currently being registered[166] Note 14 – Dividends by Preferred Shares On February 25, 2022, the board resolved to redeem all issued preferred shares for a total of ARS 17.23 billion, including nominal value and cumulative dividends, with payments scheduled in installments - On February 25, 2022, the Board of Directors resolved to redeem all 910,978,514 issued preferred shares[168] - The total redemption value is ARS 17,225,719,240, including nominal value, cumulative dividends for 2020, 2021, and pro-rata for 2022, all adjusted for inflation[168] - Redemption payments will be made in installments: ARS 11,100,000,000 after the capital reduction process is completed, and the remaining balance by December 31, 2024, with interest at 2% per annum plus inflation adjustment[168] Note 15 – Resolutions of Shareholders' Meetings Shareholders' meetings in 2021 and 2022 resolved to carry forward negative earnings and confirmed preferred share dividends were not paid due to lack of realized profits, with all preferred shares subsequently redeemed - The shareholders' meeting on April 20, 2021, resolved to carry forward the negative earnings of ARS 7,589,111,384 for the 2020 fiscal year to the next fiscal year[173] - The April 20, 2021, shareholders' meeting confirmed preferred share dividends of ARS 237,821,433 were due but not paid due to the company lacking realized and liquid profits[174] - The shareholders' meeting on April 28, 2022, resolved to carry forward the negative earnings of ARS 2,548,150 for the 2021 fiscal year and confirmed all preferred shares had been redeemed, thus no further dividends would be paid[176] Note 16 – Earnings Per Share Earnings per share are calculated based on net income less accrued preferred share dividends, divided by common shares, showing a significant improvement to ARS 77.79 per share as of June 30, 2022 Earnings Per Share Calculation (ARS) | Indicator | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Net Income for the Period, less Accrued Dividends | 20,111,014,796 | (2,581,965,307) | | Number of Common Shares | 258,517,299 | 258,517,299 | | Earnings Per Share | 77.7937 | (9.9876) | Note 17 – Financial Risk Management The company faces market, credit, and liquidity risks, and this interim report should be read with the 2021 audited consolidated financial statements for comprehensive risk management information - The company faces market risks (including exchange rate risk, interest rate fair value risk, and price risk), credit risk, and liquidity risk[179] - This condensed consolidated interim financial statement should be read in conjunction with the audited consolidated financial statements for December 31, 2021, for complete financial risk management information[180] Note 18 – Impact of COVID-19 on Operations The COVID-19 pandemic significantly impacted operations, but with restrictions lifted and borders reopened in late 2021, international and domestic travel is recovering, expected to positively affect operating performance in 2022 - The COVID-19 pandemic led to significant negative impacts on company operations due to Argentine government measures such as border closures, mandatory quarantines, and flight suspensions[181][182] - International and domestic travel has been steadily recovering since the lifting of restrictions and border reopenings in late 2021[184] - This recovery trend is expected to consolidate throughout the remainder of 2022, leading to higher passenger traffic and a positive impact on operating results[184] Note 19 – Assignment of Credit to Trusts for NAS Strengthening The company is authorized to assign receivables from Aerolineas Argentina S.A. to the National Airport System Strengthening Trust to offset certain payables, complying with trust agreements and notified to relevant parties - Aerolineas Argentina S.A. proposed to repay its debt as of March 31, 2020, in 72 equal monthly installments and agreed to assign these amounts to the NAS Strengthening Trust[186] - The company obtained ORSNA authorization to offset certain payables for the period from November 2020 to October 2021 by assigning receivables to the Trust[189] - The assignment of credit has been notified to Banco de la Nacion Argentina and Aerolineas Argentinas S.A[190] Note 20 – Events Subsequent to the End of the Year Post-period, the company continued financing activities, including new transferable debt issuance, syndicated loans, and early loan repayments, aiming to strengthen cash positions and fulfill commitments - On July 8, 2022, the company issued USD 20 million in transferable debt, maturing on July 8, 2025, with a 0% interest rate[192] - On July 14, 2022, the company early repaid ARS 2,180,516,527 of a syndicated loan[193] - On July 25, 2022, the company signed a USD 10 million loan agreement with Industrial and Commercial Bank of China Dubai Branch, and on July 29, canceled a USD 1.1 million loan with Eurobank[193][196] - On August 8, 2022, the Board approved the issuance of new Class 8 and Class 9 transferable debts for a maximum of USD 60 million, currently in the bidding and issuance process[196] - On July 8, 2022, the company paid ARS 5,070,000,000 to the National Government for the redemption of preferred shares[198] Summary of Information Required by Resolution N° 368/01 of the National Securities Commission General Considerations This summary, prepared under CNV Resolution N° 368/01, is inflation-adjusted under IAS 29, highlighting the seasonal nature of airport revenue and ongoing construction and renovation projects across multiple concession airports - This summary information has been inflation-adjusted under IAS 29 and is presented in constant currency as of June 30, 2022[202] - The company's revenue is affected by the seasonality of Argentine air traffic, with higher passenger volumes and revenue during summer and winter months (December-February and July-August)[205] - In H1 2022, the company undertook engineering projects at various concession airports, including Ezeiza International Airport, Jorge Newbery Airport, Posadas Airport, Santa Rosa Airport, Comodoro Rivadavia Airport, Córdoba Airport, Iguazú Airport, Bariloche Airport, San Juan Airport, La Rioja Airport, Esquel Airport, and Jujuy Airport, with some projects resuming or in progress after pandemic-related halts[207][208][209][210][211][213][214][215][216][217][218] IFRS Application and Seasonality The company has mandatorily applied IFRS since the fiscal year beginning January 1, 2012, with revenue exhibiting significant seasonality, peaking in summer and winter months - The company has mandatorily applied IFRS since the fiscal year beginning January 1, 2012[204] - Company revenue is subject to air traffic seasonality, with higher revenue during summer and winter months (December-February and July-August)[205] Airport Projects and Works In H1 2022, the company advanced construction and renovation projects at various airports, including new control towers, runway works, and terminal expansions at Ezeiza, Jorge Newbery, and other key locations - Ezeiza International Airport is undergoing projects including a new control tower, beacon ring, and main substation, with some projects resuming after pandemic-related halts[208] - Jorge Newbery Airport is undertaking external works, sidewalks, landscaping, coastal landfill, and underground parking, with adjustments to international departure/arrival areas completed[209] - Posadas Airport has completed runway, taxiway, and platform rehabilitation, along with a new high-intensity beacon system[211] - Santa Rosa Airport has initiated runway, taxiway, and platform rehabilitation, a new beacon system, and passenger terminal renovation and expansion[211] Equity Structure As of June 30, 2022, total assets were ARS 226.36 billion, total liabilities ARS 137.22 billion, and net equity attributable to majority shareholders ARS 89.13 billion, reflecting an increase in assets and liabilities but a slight decrease in equity year-over-year Consolidated Equity Structure (ARS thousands) | Indicator | June 30, 2022 | June 30, 2021 | June 30, 2020 | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Current Assets | 34,491,369 | 17,295,175 | 20,869,835 | 24,936,834 | 29,423,265 | | Non-Current Assets | 191,865,039 | 196,866,533 | 204,049,955 | 185,267,897 | 161,708,454 | | Total Assets | 226,356,408 | 214,161,708 | 224,919,790 | 210,204,731 | 191,131,719 | | Current Liabilities | 33,203,364 | 45,931,355 | 34,680,317 | 26,738,005 | 16,239,603 | | Non-Current Liabilities | 104,021,136 | 79,020,023 | 85,965,071 | 67,670,117 | 81,578,171 | | Total Liabilities | 137,224,500 | 124,951,378 | 120,645,388 | 94,408,122 | 97,817,774 | | Net Equity Attributable to Majority Shareholders | 89,130,173 | 89,208,818 | 104,195,588 | 115,744,580 | 93,251,001 | | Non-Controlling Interests | 1,735 | 1,512 | 78,814 | 52,029 | 62,944 | | Total Net Equity | 89,131,908 | 89,210,330 | 104,274,402 | 115,796,609 | 93,313,945 | - Current assets reached ARS 34,491,369 thousand on June 30, 2022, a significant increase from ARS 17,295,175 thousand in the prior year period[221] - Non-current liabilities increased from ARS 79,020,023 thousand on June 30, 2021, to ARS 104,021,136 thousand on June 30, 2022[221] Results Structure For the six months ended June 30, 2022, gross profit was ARS 13.48 billion and operating profit ARS 11.74 billion, both significantly improved from the prior year, with net profit reaching ARS 20.11 billion, reversing previous losses Consolidated Statements of Comprehensive Income Summary (Six-Month Period, ARS thousands) | Indicator | June 30, 2022 | June 30, 2021 | June 30, 2020 | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | 13,481,650 | 1,388,571 | 1,442,861 | 20,325,743 | 21,587,078 | | Administrative, Distribution, and Marketing Expenses | (2,593,929) | (2,308,456) | (3,682,261) | (5,192,913) | (6,118,709) | | Other Net Income and Expenses | 850,523 | (872,095) | 725,034 | 1,235,014 | 1,134,914 | | Operating Profit | 11,738,244 | (1,791,980) | (1,514,366) | 16,367,844 | 16,603,283 | | Financial Income and Costs | 4,258,070 | 4,454,528 | (5,765,083) | 3,277,998 | (13,221,613) | | Impact of Changes in Purchasing Power of Money | 2,066,593 | (611,355) | (887,790) | (2,474,201) | (1,313,102) | | Income Before Tax | 18,060,548 | 2,051,193 | (8,167,239) | 17,171,641 | 2,068,568 | | Income Tax | 2,050,467 | (4,412,627) | 5,953,736 | 1,111,180 | (1,873,216) | | Net Profit for the Period | 20,111,015 | (2,361,434) | (2,213,503) | 18,282,821 | 195,352 | - Gross profit significantly increased from ARS 1,388,571 thousand on June 30, 2021, to ARS 13,481,650 thousand on June 30, 2022[224] - Operating profit shifted from a negative ARS 1,791,980 thousand on June 30, 2021, to a positive ARS 11,738,244 thousand on June 30, 2022[224] Cash Flow Structure For the six months ended June 30, 2022, operating activities resulted in a cash outflow of ARS 8.95 billion, investing activities a cash outflow of ARS 5.37 billion, and financing activities a cash inflow of ARS 11.65 billion, leading to a net decrease of ARS 2.66 billion in cash and cash equivalents Consolidated Statements of Cash Flows Summary (Six-Month Period, ARS thousands) | Indicator | June 30, 2022 | June 30, 2021 | June 30, 2020 | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash Flow from Operating Activities | (8,948,756) | 2,128,735 | 4,536,768 | (6,389,425) | 4,582,977 | | Cash Flow from Investing Activities | (5,365,369) | 367,211 | 184,807 | 776,394 | (318) | | Cash Flow from Financing Activities | 11,653,779 | (6,542,621) | (4,773,754) | (4,107,823) | (2,364,881) | | Net Change in Cash and Cash Equivalents for the Period | (2,660,346) | (4,046,675) | (52,179) | (9,720,854) | 2,217,778 | - Cash flow from operating activities shifted from an inflow of ARS 2,128,735 thousand in the prior year period to an outflow of ARS 8,948,756 thousand in H1 2022[226] - Cash flow from financing activities shifted from an outflow of ARS 6,542,621 thousand in the prior year period to an inflow of ARS 11,653,779 thousand in H1 2022[226] Analysis of Operations for Six-Month Periods Ended June 30, 2022 and 2021 This section analyzes the company's operational performance for H1 2022 and 2021, showing significant total revenue growth driven by aeronautical recovery, increased costs, and improved net financial and other income/expenses - Total revenue in H1 2022 reached ARS 37,129,731 thousand, an 88.9% increase compared to ARS 19,655,665 thousand in H1 2021[228] - Aeronautical revenue's share of total revenue increased from 27.90% in H1 2021 to 49.29% in H1 2022, with non-aeronautical revenue's share decreasing accordingly[228] - In H1 2022, cost of sales increased by ARS 5,384,073 thousand, administrative expenses increased by ARS 442,924 thousand, and distribution and marketing expenses decreased by ARS 157,452 thousand[229][231][232] - Net financial income and costs shifted from an income of ARS 4,454,529 thousand in H1 2021 to an income of ARS 4,258,070 thousand in H1 2022, primarily impacted by foreign exchange exposure losses[233][234] - Other net income and expenses shifted from a loss of ARS 872,095 thousand in H1 2021 to an income of ARS 850,523 thousand in H1 2022[235] Revenue Analysis In H1 2022, total revenue reached ARS 37.13 billion, an 88.9% increase year-over-year, with aeronautical revenue significantly rising to 49.29% of total, primarily from airport usage fees Consolidated Revenue Composition (Six-Month Period, ARS thousands) | Revenue Type | June 30, 2022 | % Revenue | June 30, 2021 | % Revenue | | :--- | :--- | :--- | :--- | :--- | | Aeronautical Revenue | 18,300,885 | 49.29% | 5,483,012 | 27.90% | | Non-Aeronautical Revenue | 18,828,846 | 50.71% | 14,172,653 | 72.10% | | Total | 37,129,731 | 100.00% | 19,655,665 | 100.00% | Aeronautical Revenue Composition (Six-Month Period, ARS thousands) | Aeronautical Revenue Type | June 30, 2022 | % Revenue | June 30, 2021 | % Revenue | | :--- | :--- | :--- | :--- | :--- | | Landing Fees | 1,611,237 | 8.80% | 837,915 | 15.28% | | Parking Fees | 626,139 | 3.42% | 480,783 | 8.77% | | Airport Usage Fees | 16,063,509 | 87.77% | 4,164,314 | 75.95% | | Total | 18,300,885 | 100.00% | 5,483,012 | 100.00% | - Airport usage fees are the main component of aeronautical revenue, accounting for 87.77% of aeronautical revenue in H1 2022[228] Cost of Sales Analysis In H1 2022, cost of sales increased by ARS 5.38 billion to ARS 23.66 billion compared to the prior year period Cost of Sales Movement (ARS thousands) | Item | Amount | | :--- | :--- | | Cost of Sales for the Period Ended June 30, 2022 | 23,659,375 | | Cost of Sales for the Period Ended June 30, 2021 | 18,275,302 | | Change | 5,384,073 | Administrative Expenses Analysis In H1 2022, administrative expenses increased by ARS 442.92 million to ARS 1.47 billion compared to the prior year period Administrative Expenses Movement (ARS thousands) | Item | Amount | | :--- | :--- | | Administrative Expenses for the Period Ended June 30, 2022 | 1,474,553 | | Administrative Expenses for the Period Ended June 30, 2021 | 1,031,629 | | Change | 442,924 | Distribution and Marketing Expenses Analysis In H1 2022, distribution and marketing expenses decreased by ARS 157.45 million to ARS 1.12 billion compared to the prior year period Distribution and Marketing Expenses Movement (ARS thousands) | Item | Amount | | :--- | :--- | | Distribution and Marketing Expenses for the Period Ended June 30, 2022 | 1,119,376 | | Distribution and Marketing Expenses for the Period Ended June 30, 2021 | 1,276,828 | | Change | (157,452) | Income and Financial Costs Analysis In H1 2022, net financial income and costs resulted in a profit of ARS 4.26 billion, a decrease from the prior year's ARS 4.45 billion income, primarily due to foreign exchange exposure losses - In H1 2022, net financial income and costs resulted in a profit of ARS 4,258,070 thousand, a decrease from the prior year's income of ARS 4,454,529 thousand[233] - The change is primarily attributable to losses from foreign exchange exposure[234] Other Incomes and Expenditures Analysis In H1 2022, other net income and expenses recorded a gain of ARS 850.52 million, a significant improvement from the prior year's ARS 872.10 million loss - In H1 2022, other net income and expenses recorded an income of ARS 850,523 thousand, a significant improvement from the prior year's loss of ARS 872,095 thousand[235] Liquidity and Capital Resources As of June 30, 2022, the group's total capitalization was ARS 182.30 billion, with financial debt accounting for 51.11%, an increase in the debt-to-capitalization ratio year-over-year - As of June 30, 2022, the group's total capitalization was ARS 182,300,081 thousand, comprising financial debt of ARS 93,168,173 thousand and net equity of ARS 89,131,908 thousand[236] - The debt-to-total capitalization ratio was approximately 51.11% on June 30, 2022, an increase from 47.42% on June 30, 2021[238] Financial Ratios As of June 30, 2022, the company's current ratio was 1.085, solvency ratio 0.664, capital immobilization ratio 0.848, and cost-efficiency ratio 0.223, showing improved liquidity and profitability year-over-year Key Financial Ratios | Indicator | June 30, 2022 | June 30, 2021 | June 30, 2020 | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Liquidity () | 1.085 | 0.389 | 0.617 | 0.950 | 1.850 | | Solvency () | 0.664 | 0.732 | 0.878 | 1.240 | 0.960 | | Capital Immobilization | 0.848 | 0.919 | 0.907 | 0.880 | 0.850 | | Cost-Efficiency | 0.223 | (0.026) | (0.021) | 0.171 | 0.002 | - The liquidity ratio significantly increased from 0.389 on June 30, 2021, to 1.085 on June 30, 2022, indicating a notable improvement in liquidity[240] - The cost-efficiency ratio shifted from a negative 0.026 on June 30, 2021, to a positive 0.223 on June 30, 2022, demonstrating enhanced profitability[240] Statistical Data For the six months ended June 30, 2022, total passenger traffic across the company's airport system reached 14.28 million, a 231.4% increase year-over-year, with aircraft movements totaling 168,679, reflecting strong aviation recovery Passenger Traffic (thousands of passengers) | Airport | June 30, 2022 | June 30, 2021 | June 30, 2020 | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Aeroparque | 5,714 | 820 | 2,292 | 6,231 | 6,616 | | Ezeiza | 3,098 | 1,840 | 2,878 | 6,112 | 5,189 | | Córdoba | 963 | 234 | 697 | 1,810 | 1,683 | | Bariloche | 890 | 377 | 433 | 741 | 615 | | Mendoza | 754 | 220 | 431 | 1,165 | 929 | | Salta | 565 | 169 | 325 | 668 | 480 | | Iguazú | 513 | 101 | 352 | 739 | 445 | | Tucumán | 320 | 104 | 178 | 471 | 454 | | Jujuy | 213 | 66 | 81 | 195 | 202 | | C. Rivadavia | 191 | 63 | 123 | 328 | 309 | | Total (Top Ten Airports) | 13,221 | 3,994 | 7,790 | 18,460 | 16,922 | | Total (All Airports) | 14,275 | 4,308 | 8,802 | 20,531 | 18,378 | | Change | 231.4% | (51.1)% | (57.1)% | 11.7% | 8.8% | Aircraft Movements (movements) | Airport | June 30, 2022 | June 30, 2021 | June 30, 2020 | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Aeroparque | 46,777 | 10,057 | 22,100 | 56,928 | 65,177 | | San Fernando | 29,456 | 21,653 | 11,749 | 20,579 | 20,541 | | Ezeiza | 22,189 | 19,416 | 22,245 | 41,770 | 36,236 | | Córdoba | 9,841 | 3,790 | 6,638 | 16,360 | 16,581 | | Mendoza | 7,299 | 3,000 | 4,622 | 11,349 | 9,846 | | Bariloche | 6,838 | 3,951 | 3,435 | 6,131 | 5,893 | | Salta | 5,480 | 2,298 | 3,280 | 6,754 | 5,249 | | Iguazú | 4,092 | 1,282 | 3,359 | 6,191 | 4,182 | | Mar del Plata | 3,156 | 1,949 | 2,180 | 4,605 | 5,314 | | Tucumán | 2,794 | 1,441 | 1,682 | 4,530 | 4,920 | | C. Rivadavia | 2,756 | 2,292 | 2,657 | 5,010 | 4,916 | | Total (Top Ten Airports) | 140,678 | 71,129 | 83,947 | 180,207 | 178,855 | | Total (All Airports) | 168,679 | 89,233 | 101,679 | 212,475 | 208,590 | | Change | 89.0% | (12.2)% | (52.1)% | 1.9% | 8.3% | - In H1 2022, total passenger traffic increased by 231.4% year-over-year, with Aeroparque Airport recording the highest passenger volume at 5,714 thousand[241] - In H1 2022, aircraft movements increased by 89.0% year-over-year, with Aeroparque Airport recording the highest number of movements at 46,777[243] Outlook for 2022 The company anticipates continued recovery in international and domestic passenger traffic for the remainder of 2022, driven by high vaccination rates and eased travel restrictions, while maintaining strict cost control and financial measures - In H1 2022, international passenger traffic recovered to nearly 70% of 2019 levels, and domestic traffic recovered to 83%[245] - Passenger traffic is expected to continue consolidating its recovery trend for the remainder of 2022, primarily due to high vaccination rates, border reopenings, and eased travel restrictions[246] - The company will continue to strictly control operating costs to manage passenger volume recovery and implement financial measures to strengthen its cash position and fulfill commitments[247] Review Reports Report on Review of Condensed Consolidated Interim Financial Statements Price Waterhouse & Co. S.R.L. reviewed AA2000's condensed consolidated interim financial statements for June 30, 2022, finding no material non-compliance with IAS 34, though noting the statements are not yet recorded in the 'Inventory and Balance Sheet' - The scope of the review is less than an audit, therefore no audit opinion is expressed[253] - Based on the review, no material non-compliance with International Accounting Standard 34 was identified[256] - The financial statements have not yet been recorded in the "Inventory and Balance Sheet"[257] - As of June 30, 2022, the company's accrued and unpaid debt to the Argentine Integrated Social Security System was ARS 403,271,282[257] Surveillance Committee Report The Surveillance Committee reviewed AA2000's interim financial statements for June 30, 2022, confirming compliance with legal provisions and consideration of all known material events, while noting the statements are not yet recorded in the 'Inventory and Balance Sheet' - The Surveillance Committee reviewed the financial statements in accordance with legal requirements and referenced the external auditor's report[261][263] - The Surveillance Committee did not perform management control, as management's business decisions are the sole responsibility of the Board of Directors[265] - The Surveillance Committee confirmed that the financial statements consider all known material events and circumstances and comply with legal provisions, but are not yet recorded in the "Inventory and Balance Sheet"[266]