Corporacion America Airports(CAAP) - 2023 Q2 - Quarterly Report

Condensed Consolidated Interim Financial Statements Consolidated Statements of Comprehensive Income For the six months ended June 30, 2023, net income decreased to $28,245 million from $43,907 million in 2022, primarily due to income tax and finance income changes, with EPS at $109.2589 Consolidated Statement of Comprehensive Income (Six Months Ended June 30) | Description | 2023 (Millions of $) | 2022 (Millions of $) | Change (%) | | :--- | :--- | :--- | :--- | | Sales income | 100,229 | 81,063 | +23.6% | | Gross profit | 42,215 | 29,434 | +43.4% | | Operating profit | 34,389 | 25,628 | +34.2% | | Income before income tax | 35,559 | 39,430 | -9.8% | | Net Income for the period | 28,245 | 43,907 | -35.7% | | Income attributable to Shareholders | 28,273 | 43,907 | -35.6% | Earnings Per Share (from continuous operations) | Period | EPS ($ per share) | | :--- | :--- | | Six months ended 06.30.2023 | 109.2589 | | Six months ended 06.30.2022 | 169.8416 | Consolidated Statements of Financial Position As of June 30, 2023, total assets increased to $496,241 million, while total liabilities decreased to $255,118 million, leading to a 13.3% rise in shareholders' equity to $241,123 million Consolidated Statement of Financial Position | Description | June 30, 2023 (Millions of $) | Dec 31, 2022 (Millions of $) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 435,952 | 431,075 | +1.1% | | Total Current Assets | 60,289 | 57,058 | +5.7% | | Total Assets | 496,241 | 488,133 | +1.7% | | Total Non-Current Liabilities | 208,623 | 215,247 | -3.1% | | Total Current Liabilities | 46,495 | 60,077 | -22.6% | | Total Liabilities | 255,118 | 275,324 | -7.3% | | Total Shareholders' Equity | 241,123 | 212,809 | +13.3% | Consolidated Statements of Changes in Equity Shareholders' equity increased from $212,809 million to $241,123 million by June 30, 2023, primarily driven by net income of $28,245 million and reallocation of retained earnings Changes in Equity (Six Months Ended June 30, 2023) | Description | Amount (Millions of $) | | :--- | :--- | | Balance at Jan 1, 2023 | 212,809 | | Constitution of reserves | 0 | | Compensation plan | 69 | | Net Income for the period | 28,245 | | Balance at June 30, 2023 | 241,123 | Consolidated Statements of Cash Flow Operating activities generated $11,800 million in cash, while investing and financing activities used $4,354 million and $12,450 million respectively, resulting in a net cash decrease of $5,004 million and an ending balance of $39,402 million Consolidated Statement of Cash Flows (Six Months Ended June 30) | Description | 2023 (Millions of $) | 2022 (Millions of $) | | :--- | :--- | :--- | | Net cash Flow generated by operating activities | 11,800 | 7,245 | | Net Cash Flow applied to investing activities | (4,354) | (11,714) | | Net Cash Flow applied to financing activities | (12,450) | (1,339) | | Net decrease in cash and cash equivalents | (5,004) | (5,808) | | Cash and cash equivalents at the beginning | 39,077 | 48,391 | | Cash and cash equivalents at the end | 39,402 | 43,450 | Notes to the Condensed Consolidated Interim Financial Statements This section provides detailed explanations of accounting policies, airport concession activities, IFRS and hyperinflationary accounting, revenue and cost breakdowns, financial debt, related party transactions, capital structure, and subsequent events NOTE 1 – COMPANY ACTIVITIES The company operates 35 airports in Argentina under a concession agreement extended to February 13, 2038, with financial projections pending international passenger traffic recovery to 2019 levels - The company operates 35 airports in Argentina under a concession agreement[24][48] - The concession agreement was extended by 10 years, with the new completion date being February 13, 2038[25][26] - A review of the financial projections for 2019-2023 is pending, contingent on the recovery of international passenger traffic to pre-pandemic levels[28] NOTE 3 – ACCOUNTING POLICIES Financial statements adhere to IAS 34 and IAS 29 for hyperinflationary economies, with Argentina's cumulative three-year inflation exceeding 100%, and a 53% six-month inflation rate as of June 30, 2023 - The company applies IAS 29 for financial reporting in hyperinflationary economies, as Argentina's cumulative three-year inflation rate exceeds 100%[67][81] - As of June 30, 2023, the inflation for the six-month period was 53% and the year-on-year inflation was 118%[84] - The company is managed as a single business segment, considering all airports as a whole, due to the 'cross-subsidies' basis of the concession[77][39] NOTE 4 - SALES INCOME Total sales income increased to $100,229 million for the six months ended June 30, 2023, driven by significant growth in aeronautical income to $54,779 million and a smaller rise in non-aeronautical income Sales Income Breakdown (Six Months Ended June 30) | Income Type | 2023 (Millions of $) | 2022 (Millions of $) | Change (%) | | :--- | :--- | :--- | :--- | | Aeronautical income | 54,779 | 39,955 | +37.1% | | Non-aeronautical income | 45,450 | 41,108 | +10.6% | | Total Sales Income | 100,229 | 81,063 | +23.6% | NOTE 8 - FINANCIAL DEBTS Total financial debt decreased to $178,643 million as of June 30, 2023, primarily comprising Negotiable Obligations and bank borrowings, with a fair value of $180,616 million Breakdown of Financial Debt | Debt Category | June 30, 2023 (Millions of $) | Dec 31, 2022 (Millions of $) | | :--- | :--- | :--- | | Non-current Financial Debts | 162,396 | 175,894 | | Current Financial Debts | 16,247 | 18,454 | | Total Financial Debts | 178,643 | 194,348 | - The majority of the debt consists of Negotiable Obligations, primarily denominated in U.S. Dollars[129][110] - The fair value of the financial debt as of June 30, 2023, was $180,616 million, classified as Level 2 in the fair value hierarchy[215] NOTE 10 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES The company conducts significant related party transactions for services, with Corporación América S.A. as the direct controlling entity and the Southern Cone Foundation as the ultimate beneficiary - Corporación América S.A. is the direct controlling entity, owning 45.90% of the company's common shares[144] - The ultimate beneficiary is the Southern Cone Foundation, whose potential beneficiaries include the Eurnekian family and various institutions[159] - As of June 30, 2023, the company granted a loan of US$14.5 million to a related party, Compañía General de Combustibles S.A[7] NOTE 14 - CAPITAL STOCK As of June 30, 2023, capital stock is $258,517,299 comprising 258,517,299 common shares, following a March 2022 capital reduction from preferred share redemption - The capital stock consists of 258,517,299 common shares with a par value of $1 each[188][163] - On March 10, 2022, the company redeemed all outstanding preferred shares, resulting in a capital reduction from $1,169.5 million to $258.5 million[150][190] NOTE 19 - EVENTS SUBSEQUENT TO THE END OF THE YEAR Subsequent events include the July 2023 issuance of US$25 million Class X Negotiable Obligations and the Argentine government's introduction of a 'PAIS Tax' on foreign currency purchases for imports, currently under impact analysis - On July 5, 2023, the company issued Class X Negotiable Obligations for US$25 million, maturing in 2025[198] - On July 24, 2023, the Argentine government introduced a 'PAIS Tax' on foreign currency purchases for imports, with rates of 7.5% or 25% depending on the item. The company is assessing the impact[173] Summary of Information requested by Resolution No. 368/01 of the National Securities Commission This section provides a management overview of performance, financial structure, and operational statistics, noting seasonal air traffic, strong passenger recovery in H1 2023, and expected continued growth with ongoing infrastructure investments - The company's revenues are highly seasonal, with traffic being higher during summer (Dec-Feb) and winter (Jul-Aug) holiday periods[179] Passenger Traffic (Thousands) | Period (Six months ended June 30) | 2023 | 2022 | 2019 | | :--- | :--- | :--- | :--- | | Overall total | 19,817 | 14,275 | 20,531 | | YoY Variation | 38.8% | 231.4% (vs 2021) | N/A | - For 2023, management expects continued recovery in international passenger volume and sustained growth in the domestic segment, alongside ongoing execution of investment programs to modernize airport infrastructure[280][300] Review Report of the Condensed Consolidated Interim Financial Statements The independent auditor, Price Waterhouse & Co. S.R.L., concluded that the condensed consolidated interim financial statements for June 30, 2023, were prepared in all material respects according to IAS 34 - The auditor's review concluded that the financial statements are prepared, in all material respects, in accordance with International Accounting Standard 34 'Interim Financial Reporting'[239] - The review was conducted in accordance with the International Standard for Review Engagements NIER 2410, which is narrower in scope than a full audit[247] Report of the Supervisory Committee The Supervisory Committee reviewed the condensed consolidated interim financial statements as of June 30, 2023, confirming their adherence to legal regulations and making no further observations - The Supervisory Committee performed its legal supervision duties and had no observations to make regarding the financial statements[252] - The committee confirmed that the financial statements arise from accounting records kept in accordance with legal regulations, with the exception that they are pending transcription into the 'Inventories and Balance Sheets' book[288]