UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 6‑K
_______________
_______________
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
Securities Exchange Act of 1934
For the month of August, 2019
Commission File Number: 001-38262
_______________
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
(Exact Name of Registrant as Specified in its Charter)
(Exact Name of Registrant as Specified in its Charter)
LOMA NEGRA CORPORATION
(Translation of Registrant’s name into English)
(Translation of Registrant’s name into English)
_______________
Cecilia Grierson 355, 3th Floor Zip Code 1107 – Capital Federal Republic of Argentina |
(Address of principal executive offices) |
_______________
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Form 20-F ☒ 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): ☐
Table of Contents
Item | Description | |
1 | Loma Negra Relevant Event |
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.
Loma Negra Compañía Industrial Argentina Sociedad Anónima | |||
Date: August 20, 2019 | By: /s/ | Marcos I. Gradin | |
Name: | Marcos I. Gradin | ||
Title: | Chief Financial Officer |
Loma Negra Compañía Industrial Argentina
Sociedad Anónima
Condensed Interim Financial Statements as of June 30, 2019
and for the six and three month periods
ended June 30, 2019 and 2018
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
Loma Negra Compañía Industrial Argentina
Sociedad Anónima
Condensed Interim Consolidated Financial Statements
as of June 30, 2019 and for the six and
three month periods ended June 30, 2019 and 2018
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
CONTENTS
Unaudited condensed interim consolidated comprehensive income statement
Unaudited condensed interim consolidated balance sheet
Unaudited condensed interim consolidated statement of changes in shareholders’ equity
Unaudited condensed interim consolidated statement of cash flows
Notes to the unaudited condensed interim consolidated financial statements:
1 Legal information
2 Basis of preparation
3 Critical accounting opinions and key sources used for estimating uncertainty
4 Net revenues
5 Cost of sales
6 Selling and administrative expenses
7 Other net income and expenses
8 Tax on bank debits and credits
9 Financial income/(loss)
10 Income tax
11 Earnings per share
12 Property, plant and equipment
13 Inventories
14 Balances and transactions with related parties
15 Other receivables
16 Right to use assets and liabilities for leases
17 Trade accounts receivable
18 Investments
19 Capital stock and other related accounts
20 Accumulated other comprehensive income
21 Loans
22 Accounts payable
23 Provisions
24 Tax liabilities
25 Cash and cash equivalents
26 Financial instruments
27 Nonmonetary transactions
28 Segment reporting
29 Security granted to controlled companies
30 Commitments
Information Report
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED COMPREHENSIVE INCOME STATEMENT AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Six months | Three months | |||||||||||||||||||
Notes | 06.30.2019 | 06.30.2018 | 06.30.2019 | 06.30.2018 | ||||||||||||||||
Net revenues | 4 | 15,614,798 | 15,494,761 | 7,470,141 | 7,636,575 | |||||||||||||||
Cost of sales | 5 | (11,349,271 | ) | (11,654,303 | ) | (5,553,097 | ) | (5,621,706 | ) | |||||||||||
Gross income | 4,265,527 | 3,840,458 | 1,917,044 | 2,014,869 | ||||||||||||||||
Selling and administrative expenses | 6 | (1,171,550 | ) | (1,182,344 | ) | (486,007 | ) | (579,380 | ) | |||||||||||
Other net income and expenses | 7 | (14,323 | ) | (6,102 | ) | (12,025 | ) | (12,483 | ) | |||||||||||
Tax on bank debits and credits | 8 | (161,946 | ) | (162,162 | ) | (40,397 | ) | (50,218 | ) | |||||||||||
NET FINANCIAL INCOME/(LOSS) | ||||||||||||||||||||
Exchange difference | 9 | 113,709 | (744,357 | ) | 289,883 | (669,116 | ) | |||||||||||||
Income/(loss) for monetary position | 571,737 | 61,629 | 349,345 | (89,075 | ) | |||||||||||||||
Financial income | 9 | 9,893 | 1,636 | - | 2,438 | |||||||||||||||
Financial expenses | 9 | (578,802 | ) | (352,565 | ) | (375,485 | ) | (198,129 | ) | |||||||||||
Income/(loss) before income tax | 3,034,245 | 1,456,193 | 1,642,358 | 418,906 | ||||||||||||||||
INCOME TAX | ||||||||||||||||||||
Current | 10 | (709,445 | ) | (345,065 | ) | (334,721 | ) | 258 | ||||||||||||
Deferred | 10 | (56,400 | ) | (143,986 | ) | (207,918 | ) | (243,326 | ) | |||||||||||
NET INCOME FOR THE PERIOD | 2,268,400 | 967,142 | 1,099,719 | 175,838 | ||||||||||||||||
OTHER COMPREHENSIVE INCOME | ||||||||||||||||||||
Items to be reclassified through profit and loss: | ||||||||||||||||||||
Due to exchange differences | (279,858 | ) | 557,484 | (269,473 | ) | 546,425 | ||||||||||||||
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) | (279,858 | ) | 557,484 | (269,473 | ) | 546,425 | ||||||||||||||
TOTAL COMPREHENSIVE INCOME/(LOSS) | 1,988,542 | 1,524,626 | 830,246 | 722,263 | ||||||||||||||||
Net income from: | ||||||||||||||||||||
Owners of the parent company | 2,175,353 | 904,964 | 1,065,085 | 170,321 | ||||||||||||||||
Non-controlling interests | 93,047 | 62,178 | 34,634 | 5,517 | ||||||||||||||||
NET INCOME FOR THE PERIOD | 2,268,400 | 967,142 | 1,099,719 | 175,838 | ||||||||||||||||
Comprehensive income from: | ||||||||||||||||||||
Owners of the parent company | 2,032,621 | 1,189,290 | 927,651 | 449,007 | ||||||||||||||||
Non-controlling interests | (44,079 | ) | 335,336 | (97,405 | ) | 273,256 | ||||||||||||||
TOTAL COMPREHENSIVE INCOME/(LOSS) | 1,988,542 | 1,524,626 | 830,246 | 722,263 | ||||||||||||||||
Earnings per share (basic and diluted, in Argentine Pesos) | 11 | 3.6498 | 1.5183 | 1.7870 | 0.2858 |
The notes are an integral part of these condensed interim consolidated financial statements
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
1
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2019, COMPARATIVE WITH
DECEMBER 31, 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Notes | 06.30.2019 | 12.31.2018 | ||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant, and equipment | 12 | 31,453,365 | 26,779,621 | |||||||||
Right of use assets | 16 | 332,545 | - | |||||||||
Intangible assets | 272,409 | 267,497 | ||||||||||
Investments | 18 | 2,034 | 2,034 | |||||||||
Goodwill | 20,291 | 20,291 | ||||||||||
Inventories | 13 | 801,137 | 829,007 | |||||||||
Other receivables | 15 | 839,220 | 1,153,341 | |||||||||
Trade receivable | 17 | 3,559 | 4,957 | |||||||||
Total non-current assets | 33,724,560 | 29,056,748 | ||||||||||
Current assets | ||||||||||||
Inventories | 13 | 5,385,775 | 4,624,201 | |||||||||
Other receivables | 15 | 584,953 | 469,164 | |||||||||
Trade receivable | 17 | 2,624,473 | 2,527,201 | |||||||||
Investments | 18 | 88,844 | 2,564,563 | |||||||||
Cash and cash in banks | 1,080,684 | 987,449 | ||||||||||
Total current assets | 9,764,729 | 11,172,578 | ||||||||||
Total assets | 43,489,289 | 40,229,326 |
The notes are an integral part of these condensed interim consolidated financial statements.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
2
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2019, COMPARATIVE WITH
DECEMBER 31, 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Notes | 06.30.2019 | 12.31.2018 | ||||||||||
SHAREHOLDERS’ EQUITY AND LIABILITIES | ||||||||||||
Capital stock and other capital related accounts | 19 | 8,795,668 | 8,795,668 | |||||||||
Reserves | 9,447,725 | 2,791,227 | ||||||||||
Retained earnings | 2,175,353 | 6,656,498 | ||||||||||
Accumulated other comprehensive income | 20 | 193,256 | 335,988 | |||||||||
Shareholders’ equity attributable to owners of the parent company | 20,612,002 | 18,579,381 | ||||||||||
Non-controlling interests | 1,638,469 | 1,682,548 | ||||||||||
Total shareholders’ equity | 22,250,471 | 20,261,929 | ||||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Loans | 21 | 3,557,738 | 3,191,530 | |||||||||
Accounts payable | 22 | 1,037,469 | 473,904 | |||||||||
Provisions | 23 | 346,373 | 358,199 | |||||||||
Lease payables | 16 | 257,227 | - | |||||||||
Other payables | 38,852 | 9,670 | ||||||||||
Deferred tax liabilities | 10 | 3,953,680 | 3,899,935 | |||||||||
Total non-current liabilities | 9,191,339 | 7,933,238 | ||||||||||
Current liabilities | ||||||||||||
Loans | 21 | 4,578,497 | 4,107,066 | |||||||||
Accounts payable | 22 | 5,826,818 | 5,940,575 | |||||||||
Customer advances | 147,756 | 206,443 | ||||||||||
Payroll and social security contributions | 694,255 | 775,939 | ||||||||||
Tax liabilities | 24 | 672,171 | 954,206 | |||||||||
Lease liabilities | 16 | 62,886 | - | |||||||||
Other payables | 65,096 | 49,930 | ||||||||||
Total current liabilities | 12,047,479 | 12,034,159 | ||||||||||
Total liabilities | 21,238,818 | 19,967,397 | ||||||||||
Total shareholders’ equity and liabilities | 43,489,289 | 40,229,326 |
The notes are an integral part of these condensed interim consolidated financial statements.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
3
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS OF JUNE 30, 2019
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Owners contributions | Other comprehensive income | ||||||||||||||||||||||||||
Capital | Capital adjustments | Share premium | Merger premium | Legal reserve | Environmental reserve | Optional reserve | Future dividends reserve | Exchange income/(loss) | Accumulated income/(loss) | Shareholders’ equity attributable to owners of the parent company | Non-controlling interests | Total | |||||||||||||||
Balances as of January 1, 2019 | 59,603 | 2,748,867 | 5,071,141 | 916,057 | 127,260 | 4,384 | 2,622,708 | 36,875 | 335,988 | 6,656,498 | 18,579,381 | 1,682,548 | 20,261,929 | ||||||||||||||
Resolved by Ordinary General Shareholders’ Meeting dated April 25, 2019: | |||||||||||||||||||||||||||
- Legal reserve | 332,825 | (332,825 | ) | - | - | ||||||||||||||||||||||
- Optional reserve | 6,323,673 | (6,323,673 | ) | ||||||||||||||||||||||||
Other comprehensive income | (142,732 | ) | (142,732 | ) | (137,126 | ) | (279,858 | ) | |||||||||||||||||||
Income/(loss) for the period | 2,175,353 | 2,175,353 | 93,047 | 2,268,400 | |||||||||||||||||||||||
Balances as of June 30, 2019 | 59,603 | 2,748,867 | 5,071,141 | 916,057 | 460,085 | 4,384 | 8,946,381 | 36,875 | 193,256 | 2,175,353 | 20,612,002 | 1,638,469 | 22,250,471 |
The notes are an integral part of these condensed interim consolidated financial statements.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
4
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS OF JUNE 30, 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Owners contributions | Other comprehensive income | ||||||||||||||||||||||||||||
Capital | Capital adjustments | Share premium | Other capital adjustments | Merger premium | Legal reserve | Environmental reserve | Optional reserve | Future dividends reserve | Exchange income/(loss) | Accumulated income/(loss) | Shareholders’ equity attributable to owners of the parent company | Non-controlling interests | Total | ||||||||||||||||
Balances as of January 1, 2018 | 59,603 | 2,748,867 | 6,048,613 | (977,472 | ) | 916,057 | 126,270 | 4,384 | - | 36,875 | 41,507 | 7,077,068 | 16,081,772 | 1,215,158 | 17,296,931 | ||||||||||||||
Resolved by Ordinary General Shareholders’ Meeting dated April 25, 2018: | |||||||||||||||||||||||||||||
- Legal reserve | 990 | (990 | ) | - | - | ||||||||||||||||||||||||
- Optional reserve | 2,622,708 | (2,622,708 | ) | - | - | ||||||||||||||||||||||||
Absorption of Other capital adjustments | (977,472 | ) | 977,472 | - | - | ||||||||||||||||||||||||
Other comprehensive income | 284,326 | 284,326 | 273,158 | 557,484 | |||||||||||||||||||||||||
Income/(loss) for the period | 904,964 | 904,964 | 62,178 | 967,142 | |||||||||||||||||||||||||
Balances as of June 30, 2018 | 59,603 | 2,748,867 | 5,071,141 | - | 916,057 | 127,260 | 4,384 | 2,622,708 | 36,875 | 325,833 | 5,358,334 | 17,271,062 | 1,550,494 | 18,821,557 |
The notes are an integral part of these condensed interim consolidated financial statements.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
5
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
06.30.2019 | 06.30.2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income for the period | 2,268,400 | 967,142 | ||||||
Adjustments to calculate cash flows from operating activities | ||||||||
Income tax recognized in results | 765,845 | 489,051 | ||||||
Depreciation and amortizations | 1,188,473 | 1,132,741 | ||||||
Provisions | 73,409 | 53,380 | ||||||
Interest | 194,471 | 241,467 | ||||||
Exchange difference | (196,496 | ) | 338,156 | |||||
Income from the sale of property, plant and equipment | (74 | ) | - | |||||
Other | 2,768 | (1,381 | ) | |||||
Changes in operating assets and liabilities | ||||||||
Inventories | (753,691 | ) | (1,008,132 | ) | ||||
Other receivables | (11,979 | ) | (190,530 | ) | ||||
Trade receivable | (531,238 | ) | (520,652 | ) | ||||
Customer advances | (31,990 | ) | (104,614 | ) | ||||
Accounts payable | (141,663 | ) | (509,858 | ) | ||||
Lease liabilities | (32,671 | ) | - | |||||
Payroll and social security contributions | 62,086 | (180,623 | ) | |||||
Provisions | (83,401 | ) | (40,505 | ) | ||||
Tax liabilities | (291,674 | ) | (1,151 | ) | ||||
Other payables | 201,011 | (32,297 | ) | |||||
Effect of remeasurement in homogeneous currency | (571,737 | ) | (198,201 | ) | ||||
Income tax paid | (513,235 | ) | (689.776 | ) | ||||
Net cash flows generated from/(applied to) operations | 1.596.614 | (255,783 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Income from the sale of property, plant, and equipment | 8,417 | 5,952 | ||||||
Acquisition of property, plant and equipment | (4,712,961 | ) | (2,229,545 | ) | ||||
Acquisition of intangible assets | (19,570 | ) | (5.520 | ) | ||||
Contributions to the F.F.F.S.F.I Trust | (23,393 | ) | (31.659 | ) | ||||
Net cash flows used in investing activities | (4.747.507 | ) | (2,260,772 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
New loans | 3,053,020 | 694.944 | ||||||
Interest paid | (671,843 | ) | (505.266 | ) | ||||
Repayment of loans | (1,421,785 | ) | (1.477.583 | ) | ||||
Net cash flows generated from/(applied to) financing activities | 959.392 | (1,287,905 | ) | |||||
Net changes in cash and cash equivalents | (2.191.501 | ) | (3,804,460 | ) | ||||
Cash and cash equivalents at the beginning of the year | 3,552,012 | 5,746,494 | ||||||
Effect of remeasurementt in homogeneous currency of cash and equivalents | (64,095 | ) | (42,399 | ) | ||||
Effects of exchange differences on cash and cash equivalents held in foreign currency | (126,888 | ) | 620,447 | |||||
Cash and cash equivalents at the closing of the period | 1,169,528 | 2,520,082 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
6
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
1. LEGAL INFORMATION
Registered office:
Boulevard Cecilia Grierson 355– 4th. Floor, Ciudad Autónoma de Buenos Aires, Argentina.
Fiscal year:
Fiscal year No. 95, beginning January 1, 2019.
Business of the Company:
The main business of the Company is the manufacturing and marketing of cement and its by-products, and also exploration of the mineral resources used in the production process.
The Company owns 9 factories in Argentina, in the provinces of Buenos Aires, Neuquén, San Juan and Catamarca. The Company also owns 21 concrete production plants.
In addition, the Company, through its subsidiary Cofesur S.A.U., has a controlling interest in Ferrosur Roca S.A., a company operating the rail freight network of the Roca Railroad under a concession granted by the Argentine government in 1993 for a period of 30 years, which allows access from several of Loma Negra’s cement production plants to the rail network. On March 8, 2018 and with the due approval of its majority shareholder (Cofesur S.A.U.), Ferrosur Roca S.A. requested the Enforcement Authority an extension of the concession for an additional term of 10 years, pursuant to the provisions in the Bidding Terms and Conditions and the Concession Agreement.
The Company also has a controlling interest in Recycomb S.A.U., a company engaged in the treatment and recycling of industrial waste intended to be used as fuel or raw material, and a controlling interest in Yguazú Cementos S.A., a company organized in Paraguay engaged in the manufacture and marketing of cement.
Date of registration with the Argentine Public Registry of Commerce and the Supervisory Board of Companies [IGJ]:
- | Of the bylaws: August 5, 1926 under No 38, on Page 46 |
- | Last amendment recorded: August 29, 2017, under No 17,557, on Book 85 of Joint-stock companies |
- | No. of Registration with the Supervisory Board of Companies [IGJ]: 1,914,357. |
- | Taxpayer's ID Number [CUIT]: 30-50053085-1 |
- | Date of expiration: July 3, 2116. |
Parent company:
Cauê Austria Holding GmbH with 51.0437% of the Company’s shares and votes.
Capital structure:
The subscribed for and paid in capital amounts to $59,602,649, represented by 596,026,490 book-entry common shares with a nominal value of $ 0.10 each, and each entitling to one vote.
2. BASIS OF PREPARATION
2.1 Basis of preparation
The accompanying condensed interim consolidated balance sheet as of June 30, 2019, the condensed interim consolidated comprehensive income statement, condensed interim consolidated statement of changes in shareholders’ equity and of cash flows for the six month periods ended June 30, 2019 and 2018 and the notes to the condensed interim consolidated financial statements (hereinafter, the “Interim financial statements”) are unaudited and have been prepared as interim financial information. These interim financial statements are prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, pursuant to the provisions in Technical Resolution No. 26 (as amended) issued by the Argentine Federation of Professional Councils of Economic Sciences [FACPCE] and the Regulations issued by the Argentine Securities Commission [“Comisión Nacional de Valores” (CNV)].
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
7
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Consequently, not all of the disclosures required in accordance with International Financial Reporting Standards (IFRS) for annual financial statements are included herein, hence, these interim financial statements shall be read in conjunction with the Company’s consolidated financial statements for the fiscal years ended December 31, 2018 and 2017 issued on March 7, 2019. In the opinion of Management, these unaudited condensed interim consolidated financial statements include all normal recurring adjustments, which are necessary for a fair representation of financial results for the interim periods presented.
The financial information as of December 31, 2018 presented in these unaudited condensed interim consolidated financial statements arise from our audited consolidated financial statements for the year ended December 31, 2018 restated in closing currency of the reported period, following the guidelines in IAS 29. Such guidelines have been described in Note 2.2 to our consolidated financial statements as of December 31, 2018.
The results of operations for the six month periods ended June 30, 2019 and 2018 do not necessarily reflect the results for the full years. The Company believes that the disclosures are adequate and sufficient to consider that the information presented is not misleading.
These condensed interim consolidated financial statements were approved for issue by the Board of Directors on August 8, 2019, the date when the condensed interim financial statements were available for issuance.
2.2 Basis of consolidation
These interim financial statements include the unaudited condensed interim consolidated financial position, results of operations and cash flows of the Company and its consolidated subsidiaries. The basis of consolidation and the subsidiaries are the same as for the Company’s audited consolidated financial statements for the year ended December 31, 2018, issued on March 7, 2019.
The consolidated information disclosed in these condensed interim financial statements include the following subsidiaries:
Main activity | Country | % of direct and indirect ownership as of | ||||||||||||||
06.30.2019 | 12.31.2018 | 06.30.2018 | ||||||||||||||
Controlled: | ||||||||||||||||
Cofesur S.A.U. | Investment | Argentina | 100.00 | 100.00 | 100.00 | |||||||||||
Ferrosur Roca S.A. (1) | Rail freight transportation | Argentina | 80.00 | 80.00 | 80.00 | |||||||||||
Recycomb S.A.U. | Waste recycling | Argentina | 100.00 | 100.00 | 100.00 | |||||||||||
Yguazú Cementos S.A. | Marketing and manufacture of construction materials | Paraguay | 51.00 | 51.00 | 51.00 |
(1) Directly controlled by Cofesur S.A.U.
Below is a summary of the financial information for subsidiaries with material non-controlling ownership interests. The summarized information does not include intragroup deletions due to consolidation.
a)Yguazú Cementos S.A.
06.30.2019 | 12.31.2018 | |||||||
Current assets (1) | 1,539,112 | 1,564,732 | ||||||
Non-current assets | 4,395,699 | 5,040,895 | ||||||
Current liabilities (2) | 690,660 | 919,173 | ||||||
Non-current liabilities (2) | 2,197,245 | 2,621,854 | ||||||
Shareholders’ equity attributable to owners of the parent company | 1,553,973 | 1,562,997 | ||||||
Non-controlling interests | 1,492,934 | 1,501,603 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
8
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
(1) | Includes 602,217 and 698,834 of cash and cash equivalents as of June 30, 2019 and December 31, 2018, respectively. |
(2) | Includes the financial loans described in Note 21. |
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Net revenues from sales | 1,461,471 | 1,192,977 | ||||||
Financial income/(loss) | (116,308 | ) | (120,881 | ) | ||||
Depreciations | (229,033 | ) | (184,700 | ) | ||||
Income tax | (23,777 | ) | (10,195 | ) | ||||
Net income | 262,165 | 145,948 |
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Net cash flows from operating activities | 391,952 | 202,605 | ||||||
Net cash flows used in investment activities | (13,307 | ) | (22,226 | ) | ||||
Net cash flows applied to financing activities | (417,532 | ) | (111,080 | ) |
The figures presented for Yguazú Cementos S.A. arise from the information provided by that company converted into Argentine Pesos and adjusted to conform to the Company's accounting policies and in compliance with IFRS.
b)Ferrosur Roca S.A.
06.30.2019 | 12.31.2018 | |||||||
Current assets | 872,621 | 866,521 | ||||||
Non-current assets | 2,126,581 | 2,213,164 | ||||||
Current liabilities | 2,065,145 | 1,976,422 | ||||||
Non-current liabilities | 206,377 | 148,295 | ||||||
Shareholders’ equity attributable to owners of the parent company | 582,144 | 729,052 | ||||||
Non-controlling interests | 145,536 | 182,263 | ||||||
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Net revenues from sales | 1,478,990 | 1,542,271 | ||||||
Financial income/(loss) | (101,206 | ) | (24,904 | ) | ||||
Depreciations | (245,033 | ) | (219,119 | ) | ||||
Income tax | 24,239 | 143,798 | ||||||
Net loss for the period | (177,047 | ) | (46,677 | ) | ||||
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Net cash flows generated from (applied to) operations | 233,403 | (135,648 | ) | |||||
Net cash flows applied to investing activities | (131,712 | ) | (211,754 | ) | ||||
Net cash flows (applied to) generated from financing activities | (80,338 | ) | 368,752 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
2.3 Accounting policies
These condensed interim consolidated financial statements have been prepared using the same accounting policies and criteria used in the preparation of the audited consolidated financial statements for the fiscal year ended December 31, 2018, except for the adoption of new standards and interpretations effective as of January 1, 2019.
2.3.1 Application of new and revised International Financial Reporting Standards (IFRS)
● | Adoption of new and revised IFRS |
The Company has adopted all of the new and revised standards and interpretations issued by the IASB that are relevant to its operations and that are mandatorily effective as of June 30, 2019 as described in note 2.2 to the Company's annual consolidated financial statements as of December 31, 2018.
The Group has not opted for early adoption of any other standard, interpretation or amendment that has been issued but is not yet in force.
● | New standards |
New standards and interpretations issued during the six month period ended June 30, 2019 and the standards and interpretations issued but not mandatory as of that date are described in Note 2.2 to the consolidated financial statements as of December 31, 2018. Note 16 contains a description of the impact of the application of IFRS 16 to these consolidated condensed interim financial statements.
2.3.2 Ferrocarril Roca Management Trust
The interest in the Ferrocarril Roca Management Trust is valued at cost value, taking into account the value of contributions made, net of trust expenses, plus the financial income/(loss) accrued until the closing of the fiscal year/period. The following unconsolidated information is for the entity not controlled by Ferrosur Roca S.A.
As of June 30, 2019 and December 31, 2018, Ferrosur Roca S.A. owns 100% of the following (unconsolidated) assets and liabilities:
06.30.2019 | 12.31.2018 | |||||||
Current assets | 96,940 | 68,531 | ||||||
Current liabilities | 74 | 90 | ||||||
Non-current liabilities | 43 | - | ||||||
Shareholders’ equity | 96,823 | 68,440 |
3. CRITICAL ACCOUNTING OPINIONS AND KEY SOURCES USED FOR ESTIMATING UNCERTAINTY
When applying the Group's accounting policies, the Management of the Company is required to make assessments, estimates and assumptions regarding the carrying amounts of assets and liabilities. The estimates and related assumptions are based on past experience and other factors that are considered relevant. Actual results may differ from these estimates.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
The unaudited condensed interim consolidated financial statements reflect all adjustments which are, in the opinion of the Management, necessary to make a fair statement of the results for the interim periods presented.
There are no significant changes to the critical judgements used by the Management in applying accounting policies to the critical judgements disclosed in the annual consolidated financial statements for the year ended December 31, 2018.
As a consequence of the activities in which the Company is engaged, the transactions of the Company do not have a significant cyclical or seasonal character. Nevertheless, during the second half of the year, historically the volume of sales in Argentina has showed a slight increase.
4. NET REVENUES
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Sale of products | 15,741,301 | 15,276,343 | ||||||
Domestic market | 15,730,637 | 15,268,030 | ||||||
External market | 10,664 | 8,313 | ||||||
Services rendered | 875,597 | 929,555 | ||||||
(-) Bonuses / Discounts | (1,002,100 | ) | (711,137 | ) | ||||
Total | 15,614,798 | 15,494,761 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
5. COST OF SALES
06.30.2019 | 06.30.2018 | |||||||||||||||
Six month period | ||||||||||||||||
Inventories at the beginning of the year | 5,453,208 | 4,688,853 | ||||||||||||||
Finished products | 474,229 | 252,531 | ||||||||||||||
Products in progress | 1,317,948 | 1,125,145 | ||||||||||||||
Raw materials, materials, fuels and inventory in transit | 3,661,031 | 3,311,177 | ||||||||||||||
Exchange difference | 57,910 | (148,371 | ) | |||||||||||||
Production purchases and expenses of the period | 12,025,065 | 12,975,291 | ||||||||||||||
Inventories at the end of the period | (6,186,912 | ) | (5,861,470 | ) | ||||||||||||
Finished products | (421,574 | ) | (345,619 | ) | ||||||||||||
Products in progress | (1,733,317 | ) | (1,900,835 | ) | ||||||||||||
Raw materials, materials, fuels and inventory in transit | (4,032,021 | ) | (3,615,016 | ) | ||||||||||||
Cost of sales | 11,349,271 | 11,654,303 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
The breakdown of production expenses is as follows:
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Fees and service fees | 201,453 | 201,449 | ||||||
Salaries, wages and social security contributions | 2,073,959 | 2,092,869 | ||||||
Personnel transport and travel expenses | 80,704 | 88,109 | ||||||
Data processing | 9,133 | 7,332 | ||||||
Taxes, contributions and commissions | 201,940 | 194,907 | ||||||
Depreciation and amortizations | 1,156,825 | 1,142,742 | ||||||
Preservation and maintenance | 1,106,843 | 1,238,055 | ||||||
Communications | 10,904 | 9,956 | ||||||
Rent | 29,292 | 27,806 | ||||||
Personnel benefits | 46,815 | 45,013 | ||||||
Electricity, gas and water services | 3,961 | 3,124 | ||||||
Freight | 888,873 | 1,146,085 | ||||||
Fuels | 1,984,903 | 2,003,816 | ||||||
Insurance | 32,659 | 24,761 | ||||||
Packaging | 415,066 | 398,389 | ||||||
Electricity | 1,145,970 | 1,191,447 | ||||||
Contractors | 866,664 | 917,258 | ||||||
Tolls | 1,665 | 2,903 | ||||||
Royalties | 10,552 | 12,240 | ||||||
Surveillance | 64,012 | 74,978 | ||||||
Other | 139,609 | 124,756 | ||||||
Total | 10,471,802 | 10,947,995 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
6. SELLING AND ADMINISTRATIVE EXPENSES
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Managers, directors and statutory auditors’ fees | 110,435 | 66,824 | ||||||
Fees and service fees | 97,092 | 86,139 | ||||||
Salaries, wages and social security contributions | 362,851 | 357,691 | ||||||
Personnel transport and travel expenses | 14,885 | 16,932 | ||||||
Data processing | 18,449 | 19,467 | ||||||
Advertising expenses | 27,777 | 21,899 | ||||||
Taxes, contributions and commissions | 296,912 | 324,086 | ||||||
Depreciation and amortizations | 50,899 | 46,516 | ||||||
Preservation and maintenance | 5,016 | 5,542 | ||||||
Communications | 12,190 | 9,096 | ||||||
Rent | 8,420 | 24,723 | ||||||
Personnel benefits | 17,050 | 18,451 | ||||||
Electricity, gas and water services | 1,794 | 1,603 | ||||||
Freight | 101,644 | 135,199 | ||||||
Insurance | 21,453 | 15,988 | ||||||
Allowance for bad debts | 2,143 | 1,908 | ||||||
Surveillance | 2,618 | 2,493 | ||||||
Other | 19,922 | 27,787 | ||||||
Total | 1,171,550 | 1,182,344 |
7. OTHER NET INCOME AND EXPENSES
06.30.2019 | 06.30.2018 | |||||||
Six month period | ||||||||
Income from the sale of property, plant and equipment | 74 | - | ||||||
Donations | (9,844 | ) | (12,596 | ) | ||||
Technical assistance services | 2,145 | 3,012 | ||||||
Income from assignment of tax credits | 3,405 | - | ||||||
Substitute taxpayer tax | (8,155 | ) | (7,237 | ) | ||||
Contingencies | (21,554 | ) | (8,377 | ) | ||||
Rent | 19,148 | 20,431 | ||||||
Miscellaneous | 458 | (1,335 | ) | |||||
Total | (14,323 | ) | (6,102 | ) |
8. TAX ON BANK DEBITS AND CREDITS
The general tax rate for bank debits and credits is 0.6% for amounts credited or debited to or from the Company's bank accounts. For credited and debited amounts, 33% of both items may be used as payment of account of other taxes. 67% on credits and debits is included in this line of the comprehensive income statement.
Under Argentine Law No. 27,432, the Argentine Executive may provide that the percentage of the aforesaid tax that is not computable as payment on account of income tax be progressively reduced by up to an annual twenty percent (20%) as from January 1, 2018, with an option to establish that, in 2022, the tax provided for under Argentine Law No. 25,413, as amended, be fully considered as payment on account of income tax. On May 7, 2018 Decree 409/2018 published in the Official Gazette established that taxpayers subject to the general rate of twelve per thousand may use the 33% on debits and credits to the related bank accounts on account of income tax payable.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
9. FINANCIAL INCOME/(LOSS)
Six month period | 06.30.2019 | 06.30.2018 | ||||||
From exchange differences | ||||||||
Income from exchange differences | 216,526 | 461,265 | ||||||
Expenses for exchange differences | (102,817 | ) | (1,205,622 | ) | ||||
Total | 113,709 | (744,357 | ) | |||||
Financial income | ||||||||
Updates | 9,893 | 1,636 | ||||||
Total | 9,893 | 1,636 | ||||||
Financial expenses | ||||||||
Interest expenses | (408,249 | ) | (229,530 | ) | ||||
Tax interest | (48,611 | ) | (8,824 | ) | ||||
Interest from temporary investments | (30,529 | ) | (36,433 | ) | ||||
Updates | (17,441 | ) | (25,983 | ) | ||||
Interest from loans to related parties | - | (6,580 | ) | |||||
Other | (73,972 | ) | (45,215 | ) | ||||
Total | (578,802 | ) | (352,565 | ) |
10. INCOME TAX
Income tax expense is recognized on the basis of the income/(loss) accrued in the period and the statutory rate expected at year-end.
This criterion does not significantly differ from the criterion established in IAS 34, which requires income tax expense to be recognized in each interim period based on the best estimate of the effective tax rate expected as of year-end.
The reconciliation of income tax expense for the six month periods ended June 30, 2019 and 2018 and that which would result from applying the statutory rate in force on the net income before income tax for the condensed interim comprehensive income statement for each period is as follows:
06.30.2019 | 06.30.2018 | |||||||
Incomebefore income tax | 3,034,245 | 1,456,193 | ||||||
Statutory rate (*) | 30 | % | 30 | % | ||||
Income tax at statutory rate | (910,274 | ) | (436,858 | ) | ||||
Adjustments for calculation of the effective income tax: | ||||||||
Effect of different rates of foreign subsidiaries (*) | 57,188 | 31,229 | ||||||
Effect of tax revaluation | 292,278 | - | ||||||
Effect of change in deferred tax rate | 94,627 | (5,487 | ) | |||||
remeasurement in homogeneous currency | (306,053 | ) | (76,865 | ) | ||||
Other permanent differences | 6,389 | (1,070 | ) | |||||
Total income tax | (765,845 | ) | (489,051 | ) | ||||
INCOME TAX | ||||||||
Current | (709,445 | ) | (345,065 | ) | ||||
Deferred | (56,400 | ) | (143,986 | ) | ||||
Total | (765,845 | ) | (489,051 | ) |
(*) The statutory rate in force for this period in Argentina is 30 % while in Paraguay the statutory rate is 10 %.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Likewise, the breakdown of deferred income as of June 30, 2019 and December 31, 2018 is as follows:
06.30.2019 | 12.31.2018 | |||||||
Assets | ||||||||
Tax losses | 181,437 | 166,881 | ||||||
Provisions | 30,111 | 19,195 | ||||||
Other receivables | 63,656 | - | ||||||
Trade accounts receivable | - | 1,151 | ||||||
Other | 16,553 | 7,111 | ||||||
Total assets | 291,757 | 194,338 | ||||||
Liabilities | ||||||||
Investments | (5,384 | ) | (3,568 | ) | ||||
Property, plant, and equipment | (3,794,927 | ) | (3,694,835 | ) | ||||
Other receivables | - | (26,145 | ) | |||||
Inventories | (426,227 | ) | (348,222 | ) | ||||
Other | (18,899 | ) | (21,503 | ) | ||||
Total liabilities | (4,245,437 | ) | (4,094,273 | ) | ||||
Total deferred liabilities | (3,953,680 | ) | (3,899,935 | ) |
The Argentine Tax Reform Law No. 27,430, as amended by Law No. 27,468, set certain guidelines in connection with the inflation adjustment for tax purposes for fiscal years commencing on or after January 1, 2018, namely: (a) the adjustment will be applicable to any fiscal year in which the changes in the CPI surpass 100% over the thirty six months prior to the fiscal year for which tax is being assessed; (b) during the first, second and third fiscal year following adoption, the adjustment will be applied provided the changes in the CPI, calculated from the beginning through the end of each of such fiscal years, are higher than 55%, 30% and 15% for the first, second and third year of adoption, respectively; and (c) one third of the inflation adjustment for tax purposes, whether positive or negative, as the case may be, for the first, second and third fiscal year commencing on or after January 1, 2018, to be calculated upon the occurrence of the assumptions in paragraphs (a) and (b) above, will be carried in that fiscal year, while the remaining two thirds will be equally distributed in the two immediately following periods.
At each interim period-end, entities should consider whether the criteria set out in the Income Tax Law that trigger the inflation adjustment for tax purposes are expected to be met at fiscal year-end and, if so, should account for the income tax liability for the interim period (both current and deferred) in a manner that reflects the effects of the adoption of such adjustment, pursuant to the terms of the law. In this respect, management believes that, as of the date of approval of these interim financial statements, the assumptions that would trigger the adoption of the inflation adjustment for tax purposes in fiscal year 2019 will not occur. Such interpretation is based on the fact that, in applying the transition rules set out by law to determine whether the inflation adjustment for tax purposes should be applied or not in fiscal year 2019, entities should estimate whether, at that fiscal year-end, the cumulative real inflation rate for the two-year period to date will reach 85% (the arithmetic addition of 55% and 30%, that is, the percentages referred to in the law for the first and second effective years of the reform), and, in addition, whether the inflation rate for 2019 will surpass 30%. Management is currently monitoring the cumulative and projected real inflation levels for fiscal years 2018 and 2019, and will apply the inflation adjustment for tax purposes when the percentages set out by law are reached. Management's interpretation is substantiated by the fact that the Income Tax Law itself lays the ground for assessing the effects of inflation on a cumulative basis, in that it provides that the inflation adjustment should be applied when inflation surpasses 100% over a three-year period.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
11. EARNINGS PER SHARE
Basic and diluted earnings per share
The earnings and weighted average number of common shares used in the calculation of basic and diluted earnings per share are as follows:
Six months | Three months | |||||||||||||||
06.30.2019 | 06.30.2018 | 06.30.2019 | 06.30.2018 | |||||||||||||
Net profit attributable to owners of the parent used in the calculation of basic and diluted earnings per share | 2,175,353 | 904,964 | 1,065,085 | 170,321 | ||||||||||||
Weighted average number of common shares for the purposes of basic and diluted earnings per share (in thousands of shares) | 596,026 | 596,026 | 596,026 | 596,026 | ||||||||||||
Basic and diluted earnings per share in Argentine Pesos | 3.6498 | 1.5183 | 1.7870 | 0.2858 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
12. PROPERTY, PLANT AND EQUIPMENT
06.30.2019 | 12.31.2018 | |||||||
Cost | 69,824,277 | 64,167,122 | ||||||
Accumulated depreciation | (38,370,912 | ) | (37,387,501 | ) | ||||
Total | 31,453,365 | 26,779,621 | ||||||
Land | 398,737 | 400,350 | ||||||
Buildings | 6,138,409 | 6,272,949 | ||||||
Machinery and equipment | 11,644,349 | 12,100,896 | ||||||
Transport and freight vehicles | 1,380,529 | 1,487,752 | ||||||
Furniture and fixtures | 44,021 | 49,646 | ||||||
Quarries | 2,465,039 | 2,401,434 | ||||||
Tools | 30,451 | 33,136 | ||||||
Works in progress | 9,351,830 | 4,033,458 | ||||||
Total | 31,453,365 | 26,779,621 |
The Group acquired assets amounting to 6,266,507 during the six month period ended June 30, 2019. The most significant increases during the period ended June 30, 2019 were due to the progress of the L’Amali construction work.
13. INVENTORIES
06.30.2019 | 12.31.2018 | |||||||
Non-current | ||||||||
Spare parts | 829,397 | 864,305 | ||||||
Allowance for obsolete inventories | (28,260 | ) | (35,298 | ) | ||||
Total | 801,137 | 829,007 | ||||||
Current | ||||||||
Finished products | 421,574 | 474,229 | ||||||
Products in progress | 1,733,317 | 1,317,948 | ||||||
Raw materials, materials and spare parts | 2,566,357 | 2,282,702 | ||||||
Fuels | 664,527 | 549,322 | ||||||
Total | 5,385,775 | 4,624,201 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
14. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Balances and transactions between the Company and its subsidiaries have been eliminated and are not disclosed in this note.
The outstanding balances between the Group and other related parties as of June 30, 2019 and December 31, 2018 are as follows:
06.30.2019 | 12.31.2018 | |||||||
Other related parties: | ||||||||
InterCement Brasil S.A. | ||||||||
Accounts payable | (40,910 | ) | (86,566 | ) | ||||
InterCement Trading e Inversiones S.A. | ||||||||
Other receivables | 32,600 | 5,130 | ||||||
Accounts payable | (8,997 | ) | (9,819 | ) | ||||
InterCement Portugal S.A. | ||||||||
Accounts payable | (126,886 | ) | (231,782 | ) | ||||
Cauê Austria Holding GmbH | ||||||||
Other receivables | 13,492 | 5,994 |
The total balances with other related parties by item as of June 30, 2019 and December 31, 2018 is as follows:
06.30.2019 | 12.31.2018 | |||||||
Other receivables | 46,092 | 11,124 | ||||||
Accounts payable | (176,793 | ) | (328,167 | ) |
The amounts outstanding as of June 30, 2019 are unsecured and will be settled in cash.
The breakdown of transactions between the Group and related parties during the periods ended June 30, 2019 and 2018, respectively, is as follows:
06.30.2019 | 06.30.2018 | |||||||
InterCement Brasil S.A. – purchase of goods and services | (18,609 | ) | (17,053 | ) | ||||
InterCement Trading e Inversiones S.A. - purchase of goods and services | - | (65,669 | ) | |||||
InterCement Trading e Inversiones S.A. – sale of services | 29,476 | |||||||
InterCement Portugal S.A.– services received | (135,633 | ) | (137,488 | ) | ||||
InterCement Portugal S.A. – services rendered | - | 28,491 |
The amount charged for fixed and variable compensation of key personnel amounts to 87,871 and 63,922 for the six month periods ended June 30, 2019 and 2018, respectively. On January 24, 2018, the Board of Directors of the Company approved an incentive program for certain hierarchical personnel calculated based on the value of the shares. As of the date of closing of these condensed interim consolidated financial statements that program has been implemented.
No expense has been recognized in the current period or in prior periods for bad or doubtful accounts related to the amounts owed by related parties.
15. OTHER RECEIVABLES
06.30.2019 | 12.31.2018 | |||||||
Non-current | ||||||||
Advance to suppliers | 642,825 | 914,991 | ||||||
Tax credits | 48,122 | 106,038 | ||||||
Contributions to the trust “Fondo Fiduciario para el Fortalecimiento del Sistema Ferroviario Interurbano” (F.F.F.S.F.I.) | 96,823 | 68,440 | ||||||
Expenses paid in advance | 46,604 | 58,014 | ||||||
Security deposits | 4,846 | 5,858 | ||||||
Total | 839,220 | 1,153,341 | ||||||
Current | ||||||||
Tax credits | 266,749 | 159,168 | ||||||
Receivables from related parties (Note 14) | 46,092 | 11,124 | ||||||
Expenses paid in advance | 109,616 | 93,161 | ||||||
Security deposits | 1,300 | 6,019 | ||||||
Reimbursement receivable | 14,976 | 23,422 | ||||||
Advances to suppliers | 13,254 | 31,429 | ||||||
Personnel loans | 12,937 | 10,001 | ||||||
Balance receivable from ADSs program | 84,940 | 94,157 | ||||||
Receivables from sale of property, plant and equipment | 21,571 | 29,367 | ||||||
Miscellaneous | 13,518 | 11,316 | ||||||
Total | 584,953 | 469,164 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
16. RIGHT OF USE ASSETS AND LIABILITIES FOR LEASES
On January 13, 2016, the International Accounting Standards Board (IASB) published IFRS 16, a new standard on leases to replace IAS 17, IFRIC 4, SIC-15 and SIC-27, effective for fiscal years beginning on or after January 1, 2019.
Said IFRS introduces that most lease agreements (and sub-lease agreements) are recognized in the accounting of the lease under a single model eliminating the distinction between operating and financial leases, and requires recognizing an asset for the right to use the leased asset and a liability reflecting the obligation to make future payments for the lease. There are no significant changes for the accounting of the lessor in relation to IAS 17.
The Company applied IFRS 16 using the modified retrospective method pursuant to paragraphs C5(b) and C8(b)(ii) as of the date of initial application. Under this method, IFRS 16 is retroactively adopted with the accumulated effect of the initial application recognized as of the date of initial application and the comparative information is not amended.
The Company has executed lease agreements, mainly for offices and land.
As from the application of IFRS 16, the Company has adopted an accounting method for recognition and measurement of all leases.
For leases previously classified as operating leases, the Company has recognized assets for the right to use and liabilities for leases, except for agreements for a term of less than twelve months (short term leases), for those associated to the exploitation of natural resources and for those where the underlying asset has low value. Assets and liabilities are initially measured on the basis of current value. Assets for the right to use have been recognized for an amount equivalent to liabilities for leases. Lease liabilities have been measured at current value of lease payments not paid yet, using the incremental rate for loans of the Company (the lessee) to the date of initial application.
Summary of the new accounting policies
Assets for right of use
The Company recognizes an asset for the right to use at the beginning of each lease (date when the asset is available for use). The assets for the right to use is measured at cost, net of accumulated depreciation and impairments, and adjusted for any remeasurement of liabilities and to recognize changes in the purchasing power of the currency. The cost of assets for the right to use includes the amount of liabilities for lease recognized, initial direct costs incurred and payments made before the date of commencement of the lease, minus any incentives received. Unless the Company is certain that it will acquire the asset at the end of the lease, assets for the right to use are depreciated in a lineal manner throughout the term of the estimated useful life and the period of the lease, whichever is shorter. Assets for the right to use are subject to impairment.
Lease liabilities
Liabilities for leases are measured at current value of future lease payments to be made throughout the lease period. Lease payments include fixed payments minus any incentives to be received, variable payments depending on an index or rate and values expected to be paid as security of residual value. Payments also include the value of the exercise of any option to purchase the underlying asset leased and any penalties for termination of the lease, provided it is reasonably possible that the Company will exercise such options. Variable payments not depending on an index or rate are recognized in the results of the period when the condition they are subject to takes place.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Significant judgments to determine the lease period
The Company determines the periods of leases as the period during which the lease cannot be cancelled, together with any period covered by an option to extend or terminate the lease, provided the Company is reasonably certain that it will exercise such option.
The Company applies judgment in determining whether it will renew its leases, taking into consideration all relevant factors creating an economic incentive for the Company to exercise such options.
Amounts recognized in the financial statements
The effects of the application of IFRS 16 as of January 1, 2019 (date of initial application) and its progress as of June 30, 2019 are as follows:
06.30.2019 | ||||
Leaseliabilities: | ||||
As of January 1, 2019 | 363,063 | |||
updates | 17,395 | |||
Exchange difference | (27,674 | ) | ||
Payments | (32,671 | ) | ||
As of June 30, 2019 | 320,113 |
Right of use assets: | ||||
As of January 1, 2019 | 363,063 | |||
Depreciations | (30,518 | ) | ||
As of June 30, 2019 | 332,545 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
17. TRADE RECEIVABLE
06.30.2019 | 12.31.2018 | |||||||
Non-current | ||||||||
Regular debtors | 9,311 | 10,966 | ||||||
Allowance for bad debts | (5,752 | ) | (6,009 | ) | ||||
Total | 3,559 | 4,957 | ||||||
Current | ||||||||
Regular debtors | 2,484,513 | 2,361,205 | ||||||
Loan with U.E.P.F.P. - Ferrosur Roca S.A. | 137,082 | 162,852 | ||||||
Accounts receivable in litigation | 21,493 | 24,225 | ||||||
Notes receivable | 387 | 221 | ||||||
Foreign customers | 3,667 | 3,978 | ||||||
Subtotal | 2,647,142 | 2,552,481 | ||||||
Allowance for bad debts | (22,669 | ) | (25,280 | ) | ||||
Total | 2,624,473 | 2,527,201 |
18. INVESTMENTS
Non-current | 06.30.2019 | 12.31.2018 | ||||||
Investments in other companies | ||||||||
- Cementos del Plata S.A. | 2,034 | 2,034 | ||||||
Total | 2,034 | 2,034 | ||||||
Current | ||||||||
Short-term investments: | ||||||||
- Mutual investment fund in pesos | - | 364,474 | ||||||
- Certificate of deposit in pesos | - | 1,029,254 | ||||||
- Investments in foreign currency | 88,844 | 1,169,286 | ||||||
- Miscellaneous | - | 1,549 | ||||||
Total | 88,844 | 2,564,563 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
19. CAPITAL STOCK AND OTHER CAPITAL RELATED ACCOUNTS
06.30.2019 | 12.31.2018 | |||||||
Capital | 59,603 | 59,603 | ||||||
Capital adjustment | 2,748,867 | 2,748,867 | ||||||
Share premium | 5,071,141 | 5,071,141 | ||||||
Merger premium | 916,057 | 916,057 | ||||||
Total | 8,795,668 | 8,795,668 |
The breakdown of issued, paid-in and registered capital is as follows:
Common shares with a nominal value of $0.10 each, | ||||||||
each entitling to 1 vote, fully paid-in (in thousands) | 596,026 | 596,026 |
20. ACCUMULATED OTHER COMPREHENSIVE INCOME
06.30.2019 | 12.31.2018 | |||||||
Exchange differences for transactions in foreign currency | ||||||||
Balances at the beginning of the year | 335,988 | 41,507 | ||||||
Difference due to conversion of transactions in foreign currency | (142,732 | ) | 294,481 | |||||
Balances at closing | 193,256 | 335,988 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
21. LOANS
21.1 Breakdown of loans
06.30.2019 | 12.31.2018 | |||||||
Company | Ref. | Rate | Last Maturity | Amount | Amount | |||
Loans in foreign currency - USD | ||||||||
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | (1) | 6 Months Libor + 4.25% | Mar-21 | 111,264 | - | ||
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | (1) | 6 Months Libor + 4.25% | Apr– 21 | 129,636 | - | ||
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | (1) | 6 Months Libor + 4.25% | May- 21 | 357,199 | - | ||
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | (1) | 6 Months Libor + 4.25% | Jun- 21 | 85,401 | - | ||
Banco Latinoamericano de Comercio Exterior S.A. | Ferrosur Roca S.A. | 3 Months Libor + 1.95% | Aug-19 | 641,799 | 697,024 | |||
Industrial and Commercial Bank of China (Dubai) | Loma Negra C.I.A.S.A. | (2) | 3 Months Libor + 5% | Nov -20 | 1,107,811 | 1,809,963 | ||
Industrial and Commercial Bank of China (Dubai) | Loma Negra C.I.A.S.A. | (2) | 3 Months Libor + 5.5% | Jun-20 | 425,344 | 461,139 | ||
Loans in foreign currency – Euro | ||||||||
Banco Itaú S.A. | Loma Negra C.I.A.S.A | (1) | 4% | Apr-21 | 65,175 | - | ||
Banco Itaú S.A. | Loma Negra C.I.A.S.A | (1) | 4% | May-21 | 15,554 | - | ||
Banco Itaú S.A. | Loma Negra C.I.A.S.A | (1) | 4% | Jun- 21 | 82,626 | - | ||
Total loans in foreign currency | 3,021,809 | 2,968,126 | ||||||
Loans in local currency | ||||||||
Banco Continental S.A.E.C.A. | Yguazú Cementos S.A. | 8.5% | Aug-25 | 1,599,345 | 1,889,802 | |||
Sumaeris Bank S.A.E.C.A. | Yguazú Cementos S.A. | 9.0% | Aug-25 | 1,051,578 | 1,242,282 | |||
Banco Itaú Paraguay S.A. | Yguazú Cementos S.A. | - | - | - | 90,876 | |||
Banco Provincia de Buenos Aires | Loma Negra C.I.A.S.A. | - | - | - | 22,029 | |||
Banco Provincia de Buenos Aires | Loma Negra C.I.A.S.A. | - | - | - | 45,179 | |||
Banco Provincia de Buenos Aires | Loma Negra C.I.A.S.A. | BADLAR + 2% | Jul-19 | 798 | 6,848 | |||
HSBC Bank Argentina S.A. | Loma Negra C.I.A.S.A. | - | - | - | 193,235 | |||
HSBC Bank Argentina S.A. | Ferrosur Roca S.A. | - | - | - | 193,235 | |||
Advances in checking account | Loma Negra C.I.A.S.A. | 63.20% | Jul-19 | 1,486,226 | 6,356 | |||
Advances in checking account | Recycomb S.A.U.U. | - | - | - | 7,908 | |||
Advances in checking account | Ferrosur Roca S.A. | 63.30% | Jul-19 | 976,479 | 632,720 | |||
Total loans in local currency | 5,114,426 | 4,330,470 | ||||||
Total | 8,136,235 | 7,298,596 |
(1) During this period, Loma Negra executed various agreements in US Dollars with the Industrial and Commercial Bank of China and various agreements in Euros with Banco Itaú. Such loans shall be repaid in March, April, May and June, 2021.
(2) In May, the Company extended the maturity dates of the loan agreements entered into with the Industrial and Commercial Bank of China for USD 10,000,000 and USD 26,000,000.
06.30.2019 | 12.31.2018 | |||||||
Total of loans by company: | ||||||||
Loma Negra C.I.A.S.A. | 3,867,034 | 2,544,749 | ||||||
Ferrosur Roca S.A. | 1,618,278 | 1,522,979 | ||||||
Recycomb S.A.U. | - | 7,908 | ||||||
Yguazú Cementos S.A. | 2,650,923 | 3,222,960 | ||||||
Total | 8,136,235 | 7,298,596 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
21.2 Loan transactions
The breakdown of loan transactions for the six month period ended June 30, 2019 is as follows:
Balances as of January 1, 2019 | 7,298,596 | |||
New loans and financing | 3,053,020 | |||
Interest accrued | 417,202 | |||
Exchange difference | (273,756 | ) | ||
Effects of exchange differences | (265,199 | ) | ||
Interest payments | (671,843 | ) | ||
Principal payments | (1,421,785 | ) | ||
Balances as of June 30, 2019 | 8,136,235 |
As of June 30, 2019, the maturity schedule for long-term items is as follows:
Fiscal year | ||||
2020 | 749,380 | |||
2021 | 1,232,271 | |||
2022 | 394,022 | |||
2023 onwards | 1,182,065 | |||
Total | 3,557,738 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
22. ACCOUNTS PAYABLE
06.30.2019 | 12.31.2018 | |||||||
Non-current | ||||||||
Accounts payable for investments in property, plant and equipment | 1,037,469 | 142,591 | ||||||
Provisions for expenses | - | 331,313 | ||||||
Total | 1,037,469 | 473,904 | ||||||
Current | ||||||||
Suppliers | 2,132,813 | 2,533,745 | ||||||
Related parties (Note 14) | 176,793 | 328,167 | ||||||
Accounts payable for investments in property, plant and equipment and intangible assets | 2,749,566 | 2,032,384 | ||||||
Provisions for expenses | 767,646 | 1,046,279 | ||||||
Total | 5,826,818 | 5,940,575 |
23. PROVISIONS
06.30.2019 | 12.31.2018 | |||||||
Non-current | ||||||||
Labor and social security | 83,371 | 58,519 | ||||||
Environmental | 194,571 | 227,820 | ||||||
Civil and others | 68,431 | 71,860 | ||||||
Total | 346,373 | 358,199 |
The activity of provisions items were as follows:
Labor and social security | Environmental | Civil and others | Total | |||||||||||||
Balances as of January 1, 2019 | 58,519 | 227,820 | 71,860 | 358,199 | ||||||||||||
Increases | 41,568 | 17,345 | 14,032 | 72,944 | ||||||||||||
Decreases (*) | (16,716 | ) | (50,594 | ) | (17,461 | ) | (84,771 | ) | ||||||||
Balances as of June 30, 2019 | 83,371 | 194,571 | 68,431 | 346,373 |
(*) Includes provisions for specific purposes and the effect of the inflation adjustment.
24. TAX LIABILITIES
06.30.2019 | 12.31.2018 | |||||||
Income tax | 223,009 | 450,721 | ||||||
Value added tax | 107,781 | 115,471 | ||||||
Gross revenues | 53,004 | 57,645 | ||||||
Other taxes, withholdings and collections | 288,377 | 330,369 | ||||||
Total | 672,171 | 954,206 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
25. CASH AND CASH EQUIVALENTS
For the purposes of the condensed interim consolidated statement of cash flows, cash and cash equivalents include cash, bank accounts and short-term high liquidity investments (with maturities less than 90 days from the date of acquisition). Cash and cash equivalents at the end of each reporting fiscal period/year as shown in the condensed interim consolidated statement of cash flows may be reconciled with the related items in the condensed interim consolidated balance sheet as follows:
06.30.2019 | 12.31.2018 | |||||||
Cash and banks | 1,080,684 | 987,449 | ||||||
Short-term investments (Note 18) | 88,844 | 2,564,563 | ||||||
Cash and cash equivalents | 1,169,528 | 3,552,012 |
26. FINANCIAL INSTRUMENTS
26.1 Debt to equity ratio
The net debt to equity ratio of the reporting period/year is as follows:
06.30.2019 | 12.31.2018 | |||||||
Debt (i) | 8,136,235 | 7,298,596 | ||||||
Cash and cash equivalents | 1,169,527 | 3,552,012 | ||||||
Net debt | 6,966,708 | 3,746,584 | ||||||
Shareholders’ equity (ii) | 22,250,471 | 20,261,929 | ||||||
Net debt to equity ratio and shareholders’ equity | 0.31 | 0.18 |
(i) Debt is defined as long and short-term loans.
(ii) Shareholders’ equity includes all the Group's reserves and capital managed as capital.
26.2 Categories of financial instruments
06.30.2019 | 12.31.2018 | |||||||
Financial assets | ||||||||
At amortized cost: | ||||||||
Cash and banks | 1,080,684 | 987,449 | ||||||
Investments | 88,844 | 2,200,089 | ||||||
Accounts receivable | 2,815,275 | 2,713,421 | ||||||
At fair value through income: | ||||||||
Investments | - | 364,474 |
Financial liabilities | ||||||||
Amortized cost | 16,791,008 | 15,502,821 |
26.3 Financial risks
The Group´s activities are exposed to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk considering the current inflation rates), credit risk and liquidity risk. The Group maintains an organizational structure and systems that allow the identification, measurement and control of the risks to which it is exposed.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
These condensed interim consolidated financial statements do not include all the information and disclosures on financial risks, therefore, they should be read in conjunction with the Company´s consolidated financial statements for the fiscal years ended December 31, 2018 and 2017 issued on March 7, 2019.
26.4 Fair value measurement
Fair value measurement is described in Note 32.9 to the annual consolidated financial statements.
From December 31, 2018 through June 30, 2019, there have been no significant changes in the industry’s economic activity affecting the fair value of the Group´s financial assets and liabilities, either measured at fair value or amortized cost. In addition, there were no transfers among the different levels of fair value hierarchy to assess the fair value of the Company's financial instruments during the six month period ended June 30, 2019.
The carrying amounts of financial assets and liabilities recognized at amortized cost, included in the consolidated financial statements as of June 30, 2019 and December 31, 2018, approximate to their fair values. Borrowings are measured at amortized cost considering the effective interest rate method, which approximate to their fair value given their cancellation period.
The Management of the Company considers that the liquidity risk exposure is low since the Company has been generating cash flows from its operating activities, supported on profits, and has access to loans and financial resources, as explained in Note 21.
26.5 Exchange risk management
The Group carries out transactions in foreign currency and is hence exposed to exchange rate fluctuations. Exposures in the exchange rate are managed within approved policy parameters using foreign exchange contracts.
The carrying amounts of monetary assets and liabilities stated in currencies other than the functional currency of each consolidated company at the end of the reporting period/year are as follows:
06.30.2019 | 12.31.2018 | |||||||
Liabilities | ||||||||
United States Dollars | 5,101,936 | 4,672,482 | ||||||
Euro | 1,227,296 | 425,398 | ||||||
Real | 29 | 30 | ||||||
Assets | ||||||||
United States Dollars | 297,075 | 1,377,210 | ||||||
Euro | 12,134 | 1,335 | ||||||
Real | 110 | 109 |
Foreign currency sensitivity analysis
The Group is mainly exposed to the US Dollar and Euro.
The following table shows the sensitivity of the Group to an increase in the US Dollar and Euro exchange rates. The sensitivity rate is the one used when the exchange risk is reported internally to key management personnel and represents Management’s assessment of a possible reasonable change in exchange rates. The sensitivity analysis only includes outstanding foreign-currency monetary items and adjusts its conversion as of the end of the period/year considering a 25% increase in the exchange rate considering all the items of controlled companies in the calculation.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Effect of US Dollars | Effect of the Euro | |||||||
06.30.2019 | 06.30.2019 | |||||||
Income | 1,201,215 | 303,790 | ||||||
Shareholder's Equity | 1,201,215 | 303,790 |
27. NONMONETARY TRANSACTIONS
Below is a list of transactions that did not involve cash flows in the six month periods ended June 30, 2019 and 2018, respectively:
06.30.2019 | 06.30.2018 | |||||||
- Financed acquisitions of Property, plant and equipment | 1,269,762 | 61,786 |
28. OPERATING SEGMENTS
The Company has adopted IFRS 8 - Operating Segments, which requires operating segments to be identified on the basis of internal reports regarding components of the Company that are regularly reviewed by the Executive Committee, the chief operating decision maker, in order to allocate resources and evaluate their performance. Said analysis is based on monthly information on historical figures of the segments identified. The information reviewed by the chief operating decision maker mainly consists of the historical information of each month, accumulated until the closing of the fiscal period under analysis, and therefore defers from the inflation-adjusted figures as stated in Note 2.2.
For the purposes of managing its business both financially and operatively, the Company has classified its businesses segments as follows:
i) Cement, masonry cement and lime - Argentina: this segment includes the results from the cement, masonry cement and lime business in Argentina, and comprises the procurement of raw materials from quarries, the manufacturing process of clinker/quicklime and their subsequent grinding with certain additions intended to obtain the cement, masonry cement and lime.
ii) Cement - Paraguay: this segment includes the results from the cement business in Paraguay, and comprises the procurement of raw materials from quarries, the manufacturing process of clinker and subsequent grinding with certain aggregates intended to obtain the cement.
iii) Concrete: this segment includes the results from the production and sale of ready-mix concrete. It also includes the delivery of the product at the worksite and, depending on the circumstances, the pumping of concrete up to the place of destination.
iv) Aggregates: this segment includes the results from the aggregates business, from the procurement of the raw materials to subsequent grinding.
v) Railroad: this segment includes the results from the provision of the railroad transportation service.
vi) Others: this segment includes the results of the business of treatment and recycling of industrial waste for its use as fuel.
06.30.2019 | 06.30.2018 | |||||||
Net revenues from sales | ||||||||
Cement, masonry and lime – Argentina | 10,624,602 | 6,902,632 | ||||||
Cement – Paraguay | 1,343,475 | 715,073 | ||||||
Concrete | 2,199,827 | 1,497,011 | ||||||
Railroad | 1,364,604 | 925,518 | ||||||
Aggregates | 259,340 | 136,890 | ||||||
Other | 66,229 | 52,867 | ||||||
Eliminations between segments | (1,463,496 | ) | (939,255 | ) | ||||
Total | 14,394,581 | 9,290,736 | ||||||
Reconciliation - Effect of restatement in homogeneous currency | 1,220,217 | 6,204,025 | ||||||
Total | 15,614,798 | 15,494,761 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Cost of sales | 06.30.2019 | 06.30.2018 | ||||||
Cement, masonry and lime – Argentina | 6,909,074 | 4,609,933 | ||||||
Cement – Paraguay | 937,262 | 520,904 | ||||||
Concrete | 2,042,867 | 1,420,074 | ||||||
Railroad | 1,193,242 | 879,895 | ||||||
Aggregates | 275,939 | 138,436 | ||||||
Other | 40,705 | 29,317 | ||||||
Eliminations between segments | (1,463,496 | ) | (939,255 | ) | ||||
Total | 9,935,593 | 6,659,304 | ||||||
Reconciliation - Effect of restatement in homogeneous currency | 1,413,678 | 4,994,999 | ||||||
Total | 11,349,271 | 11,654,303 |
Selling, administrative expenses and other expenses | 06.30.2019 | 06.30.2018 | ||||||
Cement, masonry and lime – Argentina | 834,220 | 526,575 | ||||||
Cement – Paraguay | 38,123 | 29,339 | ||||||
Concrete | 69,383 | 50,563 | ||||||
Railroad | 98,348 | 68,436 | ||||||
Aggregates | 3,501 | 2,645 | ||||||
Other | 24,582 | 18,200 | ||||||
Total | 1,068,157 | 695,758 | ||||||
Reconciliation - Effect of restatement in homogeneous currency | 117,716 | 492,688 | ||||||
Total | 1,185,873 | 1,188,446 |
Depreciation and amortizations | 06.30.2019 | 06.30.2018 | ||||||
Cement, masonry and lime – Argentina | 352,936 | 191,233 | ||||||
Cement – Paraguay | 211,072 | 110,633 | ||||||
Concrete | 26,811 | 15,523 | ||||||
Railroad | 83,686 | 60,202 | ||||||
Aggregates | 9,119 | 4,830 | ||||||
Other | 1,573 | 1,310 | ||||||
Total | 685,197 | 383,731 | ||||||
Reconciliation - Effect of remeasurement in homogeneous currency | 503,276 | 749,010 | ||||||
Total | 1,188,473 | 1,132,741 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
Net revenues from sales minus cost of sales, selling and administrative expenses, and other income and expenses | 06.30.2019 | 06.30.2018 | ||||||
Cement, masonry and lime – Argentina | 2,881,308 | 1,766,124 | ||||||
Cement – Paraguay | 368,090 | 164,830 | ||||||
Concrete | 87,578 | 26,374 | ||||||
Railroad | 73,015 | (22,813 | ) | |||||
Aggregates | (20,100 | ) | (4,191 | ) | ||||
Other | 940 | 5,350 | ||||||
Total | 3,390,831 | 1,935,674 | ||||||
Reconciliation - Effect of remeasurement in homogeneous currency | (311,177 | ) | 716,340 | |||||
Total | 3,079,654 | 2,652,014 | ||||||
Reconciling items: | ||||||||
Tax on bank debits and credits | (161,946 | ) | (162,162 | ) | ||||
Net financial income/(loss) | 116,537 | (1,033,657 | ) | |||||
Income tax | (765,845 | ) | (489,053 | ) | ||||
Net income | 2,268,400 | 967,142 | ||||||
Geographical information | 06.30.2019 | 12.31.2018 | ||||||
Non-current assets | ||||||||
Argentina | 29,328,861 | 24,015,853 | ||||||
Paraguay | 4,395,699 | 5,040,895 |
For these purposes, non-current assets do not include deferred tax assets.
No single customer contributed 10% or more of the Group´s income for the six month periods ended June 30, 2019 and 2018, respectively.
29. SECURITY GRANTED TO CONTROLLED COMPANIES
Ferrosur Roca S.A. took a new 365 days loan for USD 15,000,000 with Banco Latinoamericano de Comercio Exterior S.A. "BLADEX" at a 3 month LIBOR + 1.95% interest rate with quarterly interest payments. Loma Negra granted security and surety in favor of BLADEX for up to the amount of the loan plus interest and expenses, and also signed the promissory notes issued by Ferrosur Roca S.A. in favor of that entity. As of June 30, 2019, Ferrosur Roca owes 641,799 under that loan
Furthermore, Loma Negra granted security for the lines of advances in checking account taken by Ferrosur Roca S.A. as part of the usual course of its activity. As of June 30, 2019, Ferrosur Roca S.A. owes 976,481 for such advances.
30. COMMITMENTS
Commitments are described in Note 35 to the annual consolidated financial statements for the fiscal year ended December 31, 2018.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
INFORMATION REPORT
1. ACTIVITIES OF THE COMPANY
During the current period Loma Negra C.I.A.S.A. and its controlled companies dispatched 2,977,753 tons of cement and lime, and their net sales amounted to 15,614,798. Dispatches overall were 11% below those for the same period of the prior year.
Gross income amounted to 4,265,527 and the total comprehensive income for the six month period was 1,988,542. Said income accounts for a 30% increase compared to the comprehensive income for the same period of the prior year.
2. EQUITY STRUCTURE, COMPARATIVE
06.30.2019 | 06.30.2018 | |||||||
Current assets | 9,764,729 | 10,928,939 | ||||||
Non-current assets | 33,724,560 | 25,842,827 | ||||||
Total assets | 43,489,289 | 36,771,766 | ||||||
Current liabilities | 9,191,339 | 9,627,552 | ||||||
Non-current liabilities | 12,047,479 | 8,322,658 | ||||||
Total liabilities | 21,238,818 | 17,950,210 | ||||||
Non-controlling interests | 1,638,469 | 1,550,493 | ||||||
Shareholders’ equity attributable to owners of the parent company | 20,612,002 | 17,271,064 | ||||||
Total shareholders’ equity | 22,250,471 | 18,821,557 |
3. STRUCTURE OF RESULTS, COMPARATIVE
06.30.2019 | 06.30.2018 | |||||||
Gross income | 4,265,527 | 3,840,458 | ||||||
Selling and administrative expenses | (1,171,550 | ) | (1,182,344 | ) | ||||
Other net income and expenses | (14,323 | ) | (6,102 | ) | ||||
Tax on bank debits and credits | (161,946 | ) | (162,162 | ) | ||||
Net financial income/(loss) | 116,537 | (1,033,657 | ) | |||||
Income before income tax | 3,034,245 | 1,456,193 | ||||||
Income tax | (765,845 | ) | (489,051 | ) | ||||
Net income for the period | 2,268,400 | 967,142 | ||||||
Net income for the period attributable to: | ||||||||
Owners of the parent company | 2,175,353 | 904,964 | ||||||
Non-controlling interests | 93,047 | 62,178 | ||||||
Other comprehensive income | ||||||||
Due to exchange differences | (279,858 | ) | 557,484 | |||||
Total other comprehensive income for the period | (279,858 | ) | 557,484 | |||||
Total comprehensive income for the period | 1,988,542 | 1,524,626 |
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
32
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
4. COMPARATIVE CASH FLOWS STRUCTURE
06.30.2019 | 06.30.2018 | |||||||
Net cash flows generated from/(applied to) operating activities | 1,596,614 | (255,783 | ) | |||||
Funds applied to investing activities | (4,747,507 | ) | (2,260,772 | ) | ||||
Funds generated from/(applied to) financing activities | 959,392 | (1,287,905 | ) | |||||
Total funds applied during the period | (2,191,501 | ) | (3,804,460 | ) |
5. STATISTICAL DATA (In tons)
06.30.2019 | 06.30.2018 | |||||||
Production volume (*) | 2,968,210 | 3,299,096 | ||||||
Sales volume (*) | ||||||||
Argentina | 2,699,820 | 3,066,042 | ||||||
Paraguay | 275,121 | 265,775 | ||||||
Abroad | 2,812 | 2,812 | ||||||
Total | 2,977,753 | 3,334,629 |
(*) Information not examined or covered by the Review Report.
6. INDEXES
06.30.2019 | 06.30.2018 | |||||||
Liquidity | 0.75 | 1.14 | ||||||
Creditworthiness | 1.05 | 1.05 | ||||||
Fixed capital | 0.78 | 0.70 |
7. FUTURE PROSPECTS (*)
During 2Q-2019, the Argentine economy started to show certain signs of stabilization. Not only did the strong rebound displayed by tradable sectors, in particular, agriculture and livestock and agribusiness, contribute significantly to the slight recovery in economic activity, but it also helped revert the external sector's imbalance, favoring FX stability.
Given its high correlation with the local economy, the construction industry and, hence, the cement industry, were still affected by the recessionary phase of the business cycle, which commenced during 2Q-2018. However, recent measurements have indicated year-on-year growth in some months.
Argentineans' purchasing power is expected to improve as inflation continues to decline, with the ensuing positive impact on the demand for bagged cement. On the other hand, the demand for cement dispatched in bulk will be tied to the completion of existing works underway, and the commencement of new works, both by the public and private sector.
Also during 2Q, the Company completed the reconversion of the Barker plant into a grinding line and distribution center, in an attempt to achieve efficiency and productivity gains. The Company also continued executing its capacity expansion project at L´Amalí plant, expected to be operational in 2Q-2020.
(*) Information not examined or covered by the Review Report.
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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