UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 November, 2021
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, 4th Floor Zip Code C1107CPG – 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: November 25, 2021 | By: /s/ | Marcos I. Gradin | |
Name: | Marcos I. Gradin | ||
Title: | Chief Financial Officer |
Loma Negra Compañía Industrial | ||
Argentina Sociedad Anónima | ||
Consolidated condensed interim financial | ||
statements as of September 30, 2021 and for | ||
the nine and three-month periods ended | ||
September 30, 2021 and 2020 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30,
2021 AND 2020
CONTENTS
Unaudited consolidated condensed interim statement of profit or loss and other comprehensive income
Unaudited consolidated condensed interim statement of financial position
Unaudited consolidated condensed interim statement of changes in equity
Unaudited consolidated condensed interim statement of cash flows
Notes to the unaudited consolidated condensed interim financial statements:
1 Legal information
2 Basis of preparation
3 Critical accounting judgments and key sources used for estimating uncertainty
4 Sales revenues
5 Cost of sales
6 Selling and administrative expenses
7 Other net gains and losses
8 Tax on bank accounts debits and credits
9 Financial results, net
10 Income tax expense
11 Earnings per share
12 Property, plant and equipment
13 Inventories
14 Related party transactions and balances
15 Other receivables
16 Right of use of assets and lease liabilities
17 Trade accounts receivable
18 Investments
19 Capital stock and other capital related accounts
20 Accumulated other comprehensive income
21 Borrowings
22 Accounts payable
23 Provisions
24 Tax liabilities
25 Cash and cash equivalents
26 Financial instruments
27 Non-cash transactions
28 Segment information
29 Compromises
30 Sale of interest in Yguazu Cementos S.A. - Discontinued operations
31 Argentine economic context
32 Ferrosur Roca S.A. concession
33 Effects of COVID-19 on the Group
34 Officially stamped books
35 Subsequent events
Information Report
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Nine months | Three months | ||||||||||||||||||
Notas | 09.30.2021 | 09.30.2020 | 09.30.2021 | 09.30.2020 | |||||||||||||||
Net revenues | 4 | 49,370,037 | 38,841,706 | 17,800,477 | 16,399,493 | ||||||||||||||
Cost of sales | 5 | (34,294,264 | ) | (28,156,561 | ) | (13,213,251 | ) | (11,809,731 | ) | ||||||||||
Gross profit | 15,075,773 | 10,685,145 | 4,587,226 | 4,589,762 | |||||||||||||||
Share of loss of associates | 14 | - | (553,024 | ) | - | (553,024 | ) | ||||||||||||
Selling and administrative expenses | 6 | (4,014,214 | ) | (3,301,727 | ) | (1,360,900 | ) | (1,262,385 | ) | ||||||||||
Impairment of property, plant and equipment | 12 | (141,380 | ) | (1,296,928 | ) | (141,380 | ) | (1,296,928 | ) | ||||||||||
Other gains and losses | 7 | 178,797 | 87,837 | 34,657 | 8,456 | ||||||||||||||
Tax on bank accounts debits and credits | 8 | (498,341 | ) | (492,440 | ) | (173,579 | ) | (202,596 | ) | ||||||||||
FINANCIAL RESULTS, NET | |||||||||||||||||||
Exchange rate differences | 9 | (104,600 | ) | 1,897,580 | (341,391 | ) | 3,131,105 | ||||||||||||
Gain on net monetary position | 1,621,905 | 487,993 | 342,109 | 162,931 | |||||||||||||||
Financial income | 9 | 89,169 | 102,526 | 20,665 | 164,610 | ||||||||||||||
Financial expenses | 9 | (1,438,109 | ) | (1,873,948 | ) | (343,377 | ) | (407,935 | ) | ||||||||||
Profit before tax | 10,769,000 | 5,743,014 | 2,624,030 | 4,333,996 | |||||||||||||||
INCOME TAX EXPENSE | |||||||||||||||||||
Current | 10 | (4,611,898 | ) | (1,791,615 | ) | (1,047,346 | ) | (1,471,438 | ) | ||||||||||
Deferred | 10 | (2,937,165 | ) | 562,402 | (87,146 | ) | 560,123 | ||||||||||||
NET PROFIT (LOSS) FOR THE PERIOD | 3,219,937 | 4,513,801 | 1,489,538 | 3,422,681 | |||||||||||||||
DISCONTINING OPERATIONS | |||||||||||||||||||
Net profit for the period from discontinued operations | 30 | - | 7,024,025 | - | 6,410,616 | ||||||||||||||
NET PROFIT (LOSS) FOR THE PERIOD | 3,219,937 | 11,537,826 | 1,489,538 | 9,833,297 | |||||||||||||||
OTHER COMPREHENSIVE INCOME | |||||||||||||||||||
Other comprehensive loss that may be reclassified to profit or loss in subsequent periods: | |||||||||||||||||||
Exchange differences on translation of foreign operations | - | (392,262 | ) | - | (242,847 | ) | |||||||||||||
TOTAL OTHER COMPREHENSIVE LOSS | - | (392,262 | ) | - | (242,847 | ) | |||||||||||||
TOTAL COMPREHENSIVE INCOME | 3,219,937 | 11,145,564 | 1,489,538 | 9,590,450 | |||||||||||||||
Net profit (loss) for the period attributable to: | |||||||||||||||||||
Owners of the Company | 3,322,268 | 11,429,593 | 1,363,867 | 9,812,637 | |||||||||||||||
Non-controlling interests | (102,331 | ) | 108,233 | 125,671 | 20,660 | ||||||||||||||
NET PROFIT (LOSS) FOR THE PERIOD | 3,219,937 | 11,537,826 | 1,489,538 | 9,833,297 | |||||||||||||||
Total comprehensive income attributable to: | |||||||||||||||||||
Owners of the Company | 3,322,268 | 11,229,535 | 1,518,183 | 9,688,782 | |||||||||||||||
Non-controlling interests | (102,331 | ) | (83,971 | ) | (28,645 | ) | (98,332 | ) | |||||||||||
TOTAL COMPREHENSIVE INCOME | 3,219,937 | 11,145,564 | 1,489,538 | 9,590,450 | |||||||||||||||
Earnings per share (basic and diluted): | |||||||||||||||||||
From continued operations | 11 | 5.6000 | 7.9704 | 2.3081 | 5.7824 | ||||||||||||||
From discontinued operations | 11 | 5.6000 | 19.1763 | 2.3081 | 16.4634 |
The accompanying notes are an integral part of these consolidated condensed interim financial statements.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
1
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS OF
SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Notes | 09.30.2021 | 12.31.2020 | |||||||||
ASSETS | |||||||||||
Non-current assets | |||||||||||
Property, plant and equipment | 12 | 72,496,872 | 73,350,644 | ||||||||
Right of use of assets | 16 | 304,035 | 612,768 | ||||||||
Intangible assets | 213,679 | 263,416 | |||||||||
Investments | 18 | 4,767 | 4,767 | ||||||||
Goodwill | 47,548 | 47,548 | |||||||||
Inventories | 13 | 2,694,126 | 2,953,024 | ||||||||
Other receivables | 15 | 765,835 | 658,515 | ||||||||
Total non-current assets | 76,526,862 | 77,890,682 | |||||||||
Current assets | |||||||||||
Inventories | 13 | 7,727,151 | 7,521,431 | ||||||||
Other receivables | 15 | 1,217,197 | 1,667,037 | ||||||||
Trade accounts receivable | 17 | 4,132,992 | 4,094,206 | ||||||||
Investments | 18 | 3,886,753 | 5,627,495 | ||||||||
Cash and banks | 402,516 | 365,165 | |||||||||
Total current assets | 17,366,609 | 19,275,334 | |||||||||
Total assets | 93,893,471 | 97,166,016 |
The accompanying notes are an integral part of these consolidated condensed interim financial statements.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
2
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS OF
SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Notes | 09.30.2021 | 12.31.2020 | |||||||||
SHAREHOLDERS’ EQUITY AND LIABILITIES | |||||||||||
Capital stock and other capital related accounts | 19 | 19,113,223 | 20,610,728 | ||||||||
Reserves | 41,183,876 | 25,637,747 | |||||||||
Retained earnings | 3,322,268 | 15,546,129 | |||||||||
Equity attributable to the owners of the Company | 63,619,367 | 61,794,604 | |||||||||
Non-controlling interests | 269,118 | 371,449 | |||||||||
Total shareholders’ equity | 63,888,485 | 62,166,053 | |||||||||
LIABILITIES | |||||||||||
Non-current liabilities | |||||||||||
Borrowings | 21 | 479,038 | 2,560,543 | ||||||||
Accounts payable | 22 | - | 140,292 | ||||||||
Provisions | 23 | 570,423 | 667,623 | ||||||||
Salaries and social security payables | 68,549 | 52,410 | |||||||||
Lease liabilities | 16 | 234,163 | 534,690 | ||||||||
Other liabilities | 77,881 | 153,080 | |||||||||
Deferred tax liabilities | 10 | 12,902,368 | 9,965,203 | ||||||||
Total non-current liabilities | 14,332,422 | 14,073,841 | |||||||||
Current liabilities | |||||||||||
Borrowings | 21 | 3,480,298 | 6,260,698 | ||||||||
Accounts payable | 22 | 6,344,928 | 7,386,162 | ||||||||
Advances from customers | 798,050 | 1,002,425 | |||||||||
Salaries and social security payables | 1,873,034 | 1,947,427 | |||||||||
Tax liabilities | 24 | 2,933,037 | 3,949,947 | ||||||||
Lease liabilities | 16 | 86,388 | 192,293 | ||||||||
Other liabilities | 156,829 | 187,170 | |||||||||
Total current liabilities | 15,672,564 | 20,926,122 | |||||||||
Total liabilities | 30,004,986 | 34,999,963 | |||||||||
Total shareholders’ equity and liabilities | 93,893,471 | 97,166,016 |
The accompanying notes are an integral part of these consolidated condensed interim financial statements.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
3
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS OF SEPTEMBER 30, 2021
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Owners contributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital | Capital corresponding to treasury shares | Capital Adjustments | Capital adjustments of own shares | Share premium | Share premium for treasury shares | Merger premium | Cost of treasury shares | Legal reserve | Environmental reserve | Optional reserve | Retained earnings | Equity attributable to owners of the Company | Non-controlling interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||
Balances as of January 1, 2021 | 59,603 | - | 6,521,433 | - | 11,883,113 | - | 2,146,579 | - | 1,316,207 | 10,274 | 24,311,266 | 15,546,129 | 61,794,604 | 371,449 | 62,166,053 | |||||||||||||||||||||||||||||||||||||||||||||
Resolved by Ordinary General | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Meeting dated April 20, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Optional reserve | 15,546,129 | (15,546,129 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury shares (Note 19) | (610 | ) | 610 | (66,732 | ) | 66,732 | (1,135,839 | ) | 1,135,839 | - | (1,497,505 | ) | (1,497,505 | ) | (1,497,505 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Income for the period | 3,322,268 | 3,322,268 | (102,331 | ) | 3,219,937 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of September 30, 2021 | 58,993 | 610 | 6,454,701 | 66,732 | 10,747,274 | 1,135,839 | 2,146,579 | (1,497,505 | ) | 1,316,207 | 10,274 | 39,857,395 | 3,322,268 | 63,619,367 | 269,118 | 63,888,485 |
The accompanying notes are an integral part of these consolidated condensed interim financial statements.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
4
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS OF SEPTEMBER 30, 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Owners contributions | | Accumulated other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital | Capital Adjustments | Share premium | Merger premium | Legal reserve | Environmental reserve | Optional reserve | Future dividends reserve | Exchange differences on translation of foreign operations gains / (losses) | Retained earnings | Equity attributable to owners of the Company | Non-controlling interests | Total | ||||||||||||||||||||||||||||||||||||||||
Balances as of January 1, 2020 | 59,603 | 6,521,433 | 11,883,113 | 2,146,579 | 1,078,109 | 10,274 | 20,963,895 | 86,409 | 615,706 | 7,158,369 | 50,523,490 | 4,159,328 | 54,682,818 | |||||||||||||||||||||||||||||||||||||||
Resolved by Ordinary General | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Meeting dated April 16, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
- Legal reserve | 238,098 | (238,098 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
- Optional reserve | 6,920,271 | (6,920,271 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Resolved by Ordinary General Shareholders’ Meeting dated September 30, 2020: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend distribution | (3,572,900 | ) | (86,409 | ) | (3,659,309 | ) | (3,659,309 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | (200,060 | ) | (200,060 | ) | (192,202 | ) | (392,262 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Reclassification of exchange differences on translation of foreign operations gains / (losses) (Note 30) | (415,646 | ) | (415,646 | ) | (415,646 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Derecognition of non-controlling interest due to sale of subsidiary (Note 30) | (4,191,287 | ) | (4,191,287 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash contribution to Ferrosur Roca S.A. | 553,024 | 553,024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income for the period | 11,429,593 | 11,429,593 | 108,233 | 11,537,826 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balances as of September 30, 2020 | 59,603 | 6,521,433 | 11,883,113 | 2,146,579 | 1,316,207 | 10,274 | 24,311,266 | - | - | 11,429,593 | 57,678,068 | 437,096 | 58,115,164 |
The accompanying notes are an integral part of these consolidated condensed interim financial statements.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
5
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS AS OF SEPTEMBER
30, 2021 AND 2020 (All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
09.30.2021 | 09.30.2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net profit for the period from continuing operations | 3,219,937 | 4,513,801 | ||||||
Net profit for the period from discontinued operations | - | 7,024,025 | ||||||
Net profit for the period | 3,219,937 | 11,537,826 | ||||||
Adjustments to reconcile net profit to net cash generated by operating activities | ||||||||
Income tax expense | 7,549,063 | 3,306,978 | ||||||
Depreciation and amortization | 3,920,232 | 4,242,028 | ||||||
Provisions | (18,486 | ) | (57,639 | ) | ||||
Interest expense | (549,509 | ) | (3,626,250 | ) | ||||
Exchange rate differences | 526,110 | 1,425,664 | ||||||
Share of loss of associates | - | 553,024 | ||||||
Income on disposal of property, plant and equipment | (101,924 | ) | 59,505 | |||||
Income from the operation of Yguazu Cementos S.A. (Note 30) | - | (9,101,790 | ) | |||||
Impairment of property, plant and equipment | 141,380 | 1,296,928 | ||||||
Allowance for contributions paid to the Trust Fund to Strengthen the Inter-urban Railroad System | 57,504 | 164,260 | ||||||
Changes in operating assets and liabilities | ||||||||
Inventories | 319,810 | 1,031,973 | ||||||
Other receivables | (423,733 | ) | 115,958 | |||||
Trade accounts receivable | (1,227,192 | ) | (346,087 | ) | ||||
Advances from customers | (56,738 | ) | 521,906 | |||||
Accounts payable | 1,323,123 | 926,070 | ||||||
Salaries and social security payables | 502,063 | 9,899 | ||||||
Provisions | (73,057 | ) | (56,756 | ) | ||||
Tax liabilities | 269,601 | (157,871 | ) | |||||
Other liabilities | (100,272 | ) | (35,700 | ) | ||||
Gain on net monetary position | (1,621,905 | ) | (487,993 | ) | ||||
Income tax paid | (4,743,865 | ) | (1,210,234 | ) | ||||
Net cash generated by operating activities | 8,912,142 | 10,111,699 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Proceeds from the operation of Yguazu Cementos S.A. (Note 30) | 372,672 | 11,427,931 | ||||||
Proceeds from disposal of property, plant and equipment | 114,496 | 54,485 | ||||||
Payments to acquire property, plant and equipment | (4,343,056 | ) | (10,976,377 | ) | ||||
Payments to acquire intangibles assets | (20,067 | ) | (6,335 | ) | ||||
Payments to acquire investments | (2,028,713 | ) | - | |||||
Contributions to F.F.F.S.F.I. | (65,933 | ) | (76,421 | ) | ||||
Net cash (used in) generated by investing activities | (5,970,601 | ) | 423,283 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from borrowings | 1,009,991 | 17,319,127 | ||||||
Interest paid | (446,515 | ) | (3,874,496 | ) | ||||
Lease liabilities | (125,378 | ) | (148,823 | ) | ||||
Repayment of borrowings | (4,629,706 | ) | (23,325,057 | ) | ||||
Purchase of treasury shares | (1,497,505 | ) | - | |||||
Net cash used in financing activities | (5,689,113 | ) | (10,029,249 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (2,747,572 | ) | 505,733 | |||||
Cash and cash equivalents at the beginning of the period | 5,992,660 | 2,431,753 | ||||||
Effect of restating in constant currency of cash and cash equivalents | (141,234 | ) | (151,927 | ) | ||||
Effects of the exchange rate differences on cash and cash equivalents in foreign currency | (623,972 | ) | 4,306,862 | |||||
Cash and cash equivalents at the end of the period | 2,479,882 | 7,092,421 |
The accompanying notes are an integral part of these consolidated condensed interim financial statements.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
6
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
1. LEGAL INFORMATION
Legal address:
Boulevard Cecilia Grierson 355, 4th Floor, City of Buenos Aires, Argentina.
Fiscal year number:
Fiscal year number 97, beginning January 1, 2021.
Principal business of the Company:
The Company and its subsidiaries, mentioned below, are referred to in these consolidated condensed interim financial statements as the “Group”.
The main activity of the Group is the manufacturing and selling of cement and its derivatives, as well as the exploration of mineral resources that are used in the production process. Currently, the Group has 8 cement factories in Argentina, in the provinces of Buenos Aires, Neuquén, San Juan and Catamarca. The Company also has 10 concrete plants.
The Group, through its subsidiary Cofesur S.A.U., has a controlling interest in Ferrosur Roca S.A., a company integrated by the National State with a 16% stake, Cofesur S.A.U. 80% and 4% that the latter gave to the workers in trust. This company operates 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 of the Bidding Terms and Conditions and the Concession Agreement. On June 28, 2021, through Resolution No. 211 of the Ministry of Transportation, said request was rejected, so the railway concession will expire in its original term, that is, on March 10, 2023. However, the Group understands that, at the end of its concession, the controlled company will continue to provide the rail freight transport services that it currently provides, although it will do so as a freight operator under the terms established in Resolution No. 211, the Law N ° 27,132 and Decree N ° 1027 dated November 7, 2018, for which it must readjust various operational issues, once it hands over control of the railway infrastructure linked to its current concession. It is the Group's understanding that the intention of the National State is to prioritize the continuity of the current operators for each of the existing services and businesses, thus guaranteeing the best use of the experience they have acquired. As of the date of issuance of these condensed consolidated interim financial statements, the regulations on which the rail operators' scheme will operate as of March 2023, the date of completion, are still pending definition by the National State, as well as the negotiations to implement the operator contracts with the different parties involved. In this context, the Group is evaluating the possible business scenarios, also considering that its intention is to continue providing services as an operator of the railway network. Note 31 includes additional information on this matter.
The Group 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.
Finally, on August 21, 2020, the Company sold its stake in Yguazu Cementos S.A., a company based in the Republic of Paraguay dedicated to the manufacture and sale of cement. The information related to the sale of the participation and its main effects are described in Note 30.
Date of registration in the Argentine General Inspection of Justice (IGJ):
- | Registration of the bylaws: August 5th, 1926, under No 38, Book 46. |
- | Last amendment registered to the bylaws: July 13th, 2021, under No. 10,675 Book 103 of Companies by shares. |
- | Correlative Number of Registration with the IGJ: 1,914,357. |
- | Tax identification number [CUIT]: 30-50053085-1. |
- | Date of expiration: July 3, 2116. |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Parent company:
InterCement Trading e Inversiones Argentina S.L. with 51.0437% of the Company’s capital stock 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. Some of these shares are treasury shares as described in Note 19.
2. BASIS OF PREPARATION
2.1 Basis of preparation
The accompanying consolidated condensed interim statement of financial position as of September 30, 2021, the consolidated condensed interim statement of profit or loss and other comprehensive income, consolidated condensed interim statement of changes in equity and of cash flows for the nine and three month periods ended September 30, 2021 and 2020 and the notes to the consolidated condensed interim 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)].
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 Group’s consolidated financial statements for the fiscal years ended December 31, 2020 and 2019 issued on March 10, 2021. In the opinion of the Group’s Management, these unaudited consolidated condensed interim 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, 2020 presented in these unaudited consolidated condensed interim financial statements arises from our audited consolidated financial statements for the fiscal year ended December 31, 2020, 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, 2020.
The results of operations for the nine-month periods ended September 30, 2021 and 2020 do not necessarily reflect the results for the full years. The Company believes that the disclosures are appropriate and adequate to consider that the information presented is not misleading.
As a consequence of the pandemic caused by the COVID-19 virus, which has caused global economic disruption, the Group has implemented active prevention programs in its different locations and contingent plans to minimize the risk related to the pandemic and continue with its operations; being the main measures and effects described in Note 33 to these interim consolidated financial statements. The Group's Management has considered the impact of COVID-19, and the current conditions of the economy and the market, for the preparation of the interim financial information, concluding that there are no changes in judgments and significant estimates disclosed in the consolidated financial statements as of December 31, 2020. Note 1 includes comments related to the effects on these consolidated condensed interim financial statements derived from the definition of the term for completion of the current Ferrosur Roca S.A. concession.
Due to the sale of the shareholding in Yguazu Cementos SA, described in Note 30, the results of the aforementioned business are presented as discontinued operations in accordance with the provisions of IFRS 5 "Non-current assets held for sale and discontinued operations". Consequently, all amounts related to discontinued operations within each item of the consolidated statement of comprehensive income are reclassified as discontinued operations. The cash flows from discontinued operations and earnings per share disclosed separately in Note 30, as well as additional information related to the operation carried out.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
These consolidated condensed interim financial statements were approved for issue by the Board of Directors on November 11, 2021, the date when the interim financial statements were available for issuance.
2.2 Basis of consolidation
These interim financial statements include the unaudited consolidated condensed interim statement of 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, 2020, issued on March 10, 2021.
On August 21, 2020, the Group sold its stake in Yguazu Cementos S.A., losing its control. For this reason, the information for the nine-month periods ended September 30, 2021, related to said company is presented as discontinued operations (Note 30).
The consolidated information disclosed in these condensed interim financial statements include the following subsidiaries:
Main business | Country | % of direct and indirect ownership as of | ||||||
09.30.21 | 12.31.20 | 09.30.20 | ||||||
Subsidiary name: | ||||||||
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 | |||
(1) Directly controlled by Cofesur S.A.U. |
Below is a summary of the financial information of Ferrosur Roca S.A., a subsidiary with material non-controlling interests.
09.30.2021 | 12.31.2020 | |||||
Current assets | 1,331,760 | 1,330,867 | ||||
Non-current assets | 1,799,815 | 2,175,287 | ||||
Current liabilities | 1,403,839 | 1,204,075 | ||||
Non-current liabilities | 382,149 | 444,832 | ||||
Equity attributable to the owners of the company | 1,076,469 | 1,485,798 | ||||
Non-controlling interests | 269,118 | 371,449 |
09.30.2021 | 09.30.2020 | |||||
Nine-month period | ||||||
Sales revenues | 4,010,614 | 3,615,903 | ||||
Financial results, net | (24,970 | ) | 508,209 | |||
Depreciations | (715,612 | ) | (912,849 | ) | ||
Income tax | 65,134 | 145,279 | ||||
Loss for the period (*) | (511,661 | ) | (1,183,926 | ) | ||
(*) The net loss as of September 30, 2021 includes a gain of 10,972 from eliminations of intragroup transactions. | ||||||
09.30.2021 | 09.30.2020 | |||||
Nine-month period | ||||||
Net cash generated by operating activities | 150,216 | 191,691 | ||||
Net cash (used in) generated by investing activities | (364,643 | ) | 849,603 | |||
Net cash generated (used in) by financing activities | 246,923 | (912,842 | ) | |||
Financial and holding results generated by cash | (12,823 | ) | (18,657 | ) |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
9
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
2.3 Accounting policies
These consolidated condensed interim financial statements have been prepared using the same accounting policies and criteria used in the preparation of the audited consolidated financial statements for the year ended December 31, 2020, except for the adoption of new standards and interpretations effective as of January 1, 2021, if any.
2.3.1 Application of new and revised International Financial Reporting Standards (IFRS)
• | Adoption of new and revised IFRS |
The Group has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board (“IASB”) that are relevant to its operations and that are mandatorily effective as of September 30, 2021, as described in Note 2.2 to the Group's annual consolidated financial statements as of December 31, 2020.
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 nine-month period ended September 30, 2021 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, 2020.
3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES USED FOR ESTIMATING UNCERTAINTY
In the application of the Group´s accounting policies, the Group´s management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates.
In the ordinary course of its business, the Group selects tax criteria and accounting positions based on a reasonable interpretation of current regulations, also taking into account the opinion of its tax and legal advisors together with the evidence available up to the date of issue of these financial statements. However, there may be situations in which the assessment that a third party could make of them and the eventual realization of damage to the Group is uncertain. For such cases, the Group has evaluated the issues considering their significance in relation to the financial statements and has not made a provision as it is not required by current accounting standards.
Underlying estimates and assumptions are continuously reviewed. Changes in estimates are accounted for prospectively.
The unaudited consolidated condensed interim financial statements reflect all adjustments which are, in the opinion of 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 Management in applying accounting policies to the critical judgements disclosed in the annual consolidated financial statements for the year ended December 31, 2020, including those derived from the definition of the completion period of the current Ferrosur Roca S.A. concession mentioned in Notes 1 and 31.
As a consequence of the activities in which the Group is engaged, its transactions do not have a significant cyclical or seasonal character. Nevertheless, during the second half of the year, the volume of sales in Argentina has historically showed a slight increase.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
4. REVENUES
09.30.2021 | 09.30.2020 | ||||||
Nine-month period | |||||||
Sales of goods | 67,684,855 | 52,161,590 | |||||
Domestic market | 67,638,041 | 52,120,692 | |||||
External customers | 46,814 | 40,898 | |||||
Services rendered | 2,394,237 | 2,163,983 | |||||
(-) Bonus / Discounts | (20,709,055 | ) | (15,483,867 | ) | |||
Total | 49,370,037 | 38,841,706 |
5. COST OF SALES
09.30.2021 | 09.30.2020 | ||||||||||||||
Nine-month period | |||||||||||||||
Inventories at the beginning of the year | 10,474,455 | 11,820,589 | |||||||||||||
Finished products | 645,133 | 842,003 | |||||||||||||
Products in progress | 1,232,569 | 2,629,141 | |||||||||||||
Raw materials, materials, fuel and spare parts | 8,596,753 | 8,349,445 | |||||||||||||
Purchases and production expenses for the period | 34,241,086 | 26,920,262 | |||||||||||||
Inventories at the end of the period | (10,421,277 | ) | (10,584,290 | ) | |||||||||||
Finished products | (585,619 | ) | (514,897 | ) | |||||||||||
Products in progress | (1,772,120 | ) | (1,695,359 | ) | |||||||||||
Raw materials, materials, fuel and spare parts | (8,063,538 | ) | (8,374,034 | ) | |||||||||||
Cost of sales | 34,294,264 | 28,156,561 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
The detail of production expenses is as follows:
09.30.2021 | 09.30.2020 | ||||||
Nine-month period | |||||||
Fees and service fees | 669,804 | 586,038 | |||||
Salaries, wages and social security contributions | 5,368,042 | 4,757,548 | |||||
Transport and travelling expenses | 235,030 | 184,895 | |||||
Data processing | 14,860 | 13,149 | |||||
Taxes, contributions and commissions | 686,183 | 545,377 | |||||
Depreciation and amortizations | 3,829,798 | 3,847,345 | |||||
Preservation and maintenance costs | 3,379,697 | 2,619,571 | |||||
Communications | 32,318 | 37,119 | |||||
Leases | 34,666 | 27,234 | |||||
Employee benefits | 143,854 | 105,203 | |||||
Water, natural gas and energy services | 5,726 | 8,614 | |||||
Freight | 3,585,049 | 2,214,712 | |||||
Fuel | 4,655,288 | 3,267,448 | |||||
Insurance | 110,554 | 96,340 | |||||
Packaging | 1,423,547 | 1,358,856 | |||||
Electrical power | 3,434,826 | 2,657,237 | |||||
Contractors | 2,527,003 | 1,845,040 | |||||
Tolls | 12,531 | 144,541 | |||||
Canon (concession fee) | 28,155 | 36,885 | |||||
Security | 164,006 | 205,228 | |||||
Others | 446,156 | 388,036 | |||||
Total | 30,787,093 | 24,946,416 |
6. SELLING AND ADMINISTRATIVE EXPENSES
09.30.2021 | 09.30.2020 | ||||||
Nine-month period | |||||||
Managers and directors compensation and fees | 326,462 | 261,863 | |||||
Fees and compensation for services | 260,722 | 333,461 | |||||
Salaries, wages and social security contributions | 957,526 | 791,280 | |||||
Transport and travelling expenses | 18,656 | 19,210 | |||||
Data processing | 103,073 | 69,472 | |||||
Advertising expenses | 153,071 | 52,559 | |||||
Taxes, contributions and commissions | 1,066,860 | 805,499 | |||||
Depreciation and amortizations | 271,817 | 305,822 | |||||
Preservation and maintenance costs | 8,617 | 12,111 | |||||
Communications | 28,911 | 33,237 | |||||
Leases | 17,819 | 15,101 | |||||
Employee benefits | 27,402 | 24,068 | |||||
Water, natural gas and energy services | 2,605 | 4,714 | |||||
Freight | 604,574 | 427,639 | |||||
Insurance | 83,158 | 74,795 | |||||
Allowance for doubtful accounts | 6,319 | 7,520 | |||||
Security | 9,009 | 8,208 | |||||
Others | 67,613 | 55,168 | |||||
Total | 4,014,214 | 3,301,727 | |||||
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
7. OTHER GAINS AND LOSSES
09.30.2021 | 09.30.2020 | ||||||
Nine-month period | |||||||
Gain (loss) on disposal of property, plant and equipment | 101,924 | (59,505 | ) | ||||
Donations | (26,742 | ) | (24,877 | ) | |||
Technical assistance services provided | 5,211 | 6,986 | |||||
Substitute responsible tax | - | (39,930 | ) | ||||
Gain on tax credit acquired | 62,078 | - | |||||
Contingencies | (54,521 | ) | (37,248 | ) | |||
Leases | 96,307 | 136,041 | |||||
Collection of sinester´s insurance | - | 76,502 | |||||
Miscellaneous | (5,460 | ) | 29,868 | ||||
Total | 178,797 | 87,837 |
8. TAX ON BANK ACCOUNTS DEBITS AND CREDITS
The general tax rate on bank debits and credits is 0.6% for the amounts debited and credited in the bank accounts of the Group. For the amounts debited and credited, 33% of both items may be taken as payment on account of other taxes. The 67% of the tax paid is included in this line item in the statement of profit or loss and other comprehensive income.
Pursuant to Law No. 27,432, the Argentine Executive Branch may set forth that the percentage of the tax mentioned that is not computable as payment on account of income tax should be progressively written down by up to 20% per year as from January 1, 2018. It can be established that in 2022 the tax set forth in Law No. 25,413, as subsequently amended, shall be fully computed as payment on account of income tax. On May 7, 2018, Decree 409/2018 was published in the Official Gazette; it established that taxpayers within the scope of the general twelve per thousand tax may apply 33% of the amounts credited and debited in the respective bank accounts to partial payment of income tax.
9. FINANCIAL RESULTS, NET
09.30.2021 | 09.30.2020 | ||||||
Nine-month period | |||||||
Exchange rate differences | |||||||
Profit from operations with titles and securities (Note 30) | - | 4,293,423 | |||||
Foreign exchange gains | 583,611 | - | |||||
Foreign exchange losses | (688,211 | ) | (2,395,843 | ) | |||
Total | (104,600 | ) | 1,897,580 | ||||
Financial income | |||||||
Unwinding of discounts on provisions and liabilities | 89,169 | 102,526 | |||||
Total | 89,169 | 102,526 | |||||
Financial expenses | |||||||
Interest from short-term investments | (789,965 | ) | (110,018 | ) | |||
Interest on borrowings | (271,978 | ) | (996,535 | ) | |||
Interest on leases | (34,806 | ) | (56,511 | ) | |||
Tax interest | (49,362 | ) | (63,234 | ) | |||
Unwinding of discounts on receivables | (21,229 | ) | (199,171 | ) | |||
Others | (270,769 | ) | (448,479 | ) | |||
Total | (1,438,109 | ) | (1,873,948 | ) |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
13
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
10. INCOME TAX EXPENSE
Income tax expense is recognized on the basis of the actual profit for 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.
In this regard, Law No. 27,260, promulgated on June 16, 2021, incorporated modifications on the corporate income tax rate, establishing a tiered structure of the applicable rates based on the level of accumulated taxable net income for each company, which can be 25%, 30% and 35%; maintaining the tax of 7% on the distribution of dividends.
The main accounting impact of the new regulations is the measurement of deferred income tax assets and liabilities, since these must be recognized by applying the tax rate that will apply to the Company on the dates on which the differences between the accounting values and the tax will be reversed or used. For this reason, the Group has considered its tax projections to establish the estimate rate that will apply in each year, in order to determine the value of temporary items and tax losses based on the estimated term of reversion and consumption.
The reconciliation of income tax expense for the nine-month periods ended September 30, 2021 and 2020 and that which would result from applying the statutory rate in force on the net profit before income tax expense that arises from the condensed interim statement of profit or loss and other comprehensive income for each period is as follows:
09.30.2021 | 09.30.2020 | ||||||
Profit before income tax expense from continued operations | 10,769,000 | 5,743,014 | |||||
Profit before income tax expense from discontinued operations | - | 9,101,790 | |||||
Total profit before income tax expense | 10,769,000 | 14,844,804 | |||||
Statutory income tax rate | 35 | % | 30 | % | |||
Income tax at statutory rate | (3,769,150 | ) | (4,453,441 | ) | |||
Adjustments for calculation of the effective income tax: | |||||||
Effects of disposal of shareholding of Yguazu Cementos S.A. | - | 676,571 | |||||
Non-recognized loss carryforwards in subsidiaries | (38,696 | ) | (52,091 | ) | |||
Effects of the fiscal revaluation and adjustment to reflect inflation for accounting and tax purposes | (231,034 | ) | 579,953 | ||||
Change in tax rate | (3,500,700 | ) | (122,507 | ) | |||
Other non-taxable income or non-deductible expense, net | (9,483 | ) | 64,537 | ||||
Total income tax expense | (7,549,063 | ) | (3,306,978 | ) |
INCOME TAX | |||||||
Current | (4,611,898 | ) | (3,860,004 | ) | |||
Deferred | (2,937,165 | ) | 553,026 | ||||
Total | (7,549,063 | ) | (3,306,978 | ) |
Income tax included in the statement of comprehensive income | (7,549,063 | ) | (1,229,213 | ) | |||
Income tax from discontinued operations | - | (2,077,765 | ) |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
14
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Likewise, the breakdown of deferred income as of September 30, 2021 and December 31, 2020 is as follows:
09.30.2021 | 12.31.2020 | ||||||
Deferred tax assets | |||||||
Loss carryforward from subsidiary | 250,148 | 196,171 | |||||
Leases | 5,756 | 33,806 | |||||
Provisions | 65,466 | 74,069 | |||||
Other receivables | 47,762 | 40,144 | |||||
Salaries and social security payables | 22,255 | 13,102 | |||||
Other liabilities | 45,994 | 31,046 | |||||
Trade accounts receivable | 13,438 | 23,427 | |||||
Others | 596 | 8,561 | |||||
Total deferred tax assets | 451,415 | 420,326 | |||||
Deferred tax liabilities | |||||||
Investments | (4,177 | ) | (32,025 | ) | |||
Property, plant and equipment | (10,784,456 | ) | (7,332,643 | ) | |||
Inventories | (1,051,671 | ) | (1,036,246 | ) | |||
Taxes payable (adjustment to reflect inflation for tax purposes) | (1,510,891 | ) | (1,980,168 | ) | |||
Others | (2,588 | ) | (4,447 | ) | |||
Total deferred tax liabilities | (13,353,783 | ) | (10,385,529 | ) | |||
Total net deferred tax liabilities | (12,902,368 | ) | (9,965,203 | ) |
11. EARNINGS PER SHARE
Basic and diluted earnings per share
The earnings and the weighted average number of common shares used in the calculation of basic and diluted earnings per share are as follows:
Nine months | Three months | |||||||||||||||
09.30.2021 | 09.30.2020 | 09.30.2021 | 09.30.2020 | |||||||||||||
Profit attributable to the owners of the parent company used in the calculation of earnings per share - basic and diluted | ||||||||||||||||
- From continued operations | 3,322,268 | 4,750,584 | 1,363,867 | 3,446,477 | ||||||||||||
- From continued and discontinued operations | 3,322,268 | 11,429,593 | 1,363,867 | 9,812,637 | ||||||||||||
Weighted average number of common shares for purposes of basic and diluted earnings per share (in thousands) | 593,259 | 596,026 | 590,895 | 596,026 | ||||||||||||
Basic and diluted earnings per share (in pesos) | ||||||||||||||||
- From continued operations | 5.6000 | 7.9704 | 2.3081 | 5.7824 | ||||||||||||
- From continued and discontinued operations | 5.6000 | 19.1763 | 2.3081 | 16.4634 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
12. PROPERTY, PLANT AND EQUIPMENT
09.30.2021 | 12.31.2020 | ||||||
Cost | 170,396,227 | 167,388,295 | |||||
Accumulated depreciation | (97,899,355 | ) | (94,037,651 | ) | |||
Total | 72,496,872 | 73,350,644 | |||||
Land | 930,319 | 930,319 | |||||
Plant and buildings | 12,555,601 | 13,263,508 | |||||
Machinery, equipment and spare parts | 35,760,699 | 17,341,646 | |||||
Transport and load vehicles | 1,418,228 | 1,734,692 | |||||
Furniture and fixtures | 56,166 | 70,766 | |||||
Quarries | 4,815,753 | 5,202,109 | |||||
Tools | 64,769 | 73,792 | |||||
Construction in progress | 16,895,337 | 34,733,812 | |||||
Total | 72,496,872 | 73,350,644 |
During the nine-month period ended on September 30, 2021, the construction of the new cement plant L´Amalí II, in the City of Olavarría, Province of Buenos Aires, continues with the construction works, under stringent health protocols established by the Provincial Government and the Group. In the first half of the year, the start-up of the crushing department was completed and the new primary crusher is in full operation. During the third quarter of this fiscal year, the oven and flour mill were inaugurated, which are already in full operation. As of September 30, 2021, the amount invested in such plant totaled 33,242,041.
12.1 Borrowing costs
The Group has taken several borrowings and has used instruments to pay accounts payable in foreign currency in order to fund a part of the investment mentioned above. IAS 23 sets forth that borrowing costs or other liabilities that are directly attributable to the acquisition, construction or production of an eligible asset that requires a substantial period before being ready for use, are capitalized as part of the cost of said asset, except for the portion of these costs that compensate the creditor for the effects of inflation, always provided that they may result in future economic benefits for the Group and may be measured on a reliable basis. All other borrowing costs are accounted for as expenses in the period in which they are incurred. Borrowing costs include interest, foreign exchange losses and other costs incurred by the Group in connection with the execution of the respective borrowing agreements.
Due to the fact that the aforementioned indebtedness of the Group is mostly in foreign currency , it evaluates at each closing date whether the exchange gain or loss arising from such debts attributable to the construction of such asset constitutes an adjustment of the interest costs of those borrowings that should be capitalized together with those interests.. Based on the foregoing, the Group has not capitalized interest and foreign exchange losses during the nine-month period ended September 30, 2021.
12.2 Impairment of property, plant and equipment
At the end of the reporting period, the Group evaluates the book amounts of its tangible and intangible assets in order to determine if there are hints indicative of an impairment loss in these assets.
The Group calculates the recoverable amount for each cash generating unit. It is clarified that the recoverable value is the highest between fair value minus cost of sales and value in use. In order to estimate value in use, the estimated future cash flows are discounted from present value by application of a discount rate before Income tax that reflects market appreciations at the end of the year with respect to the time-value of money considering the risks that are specific to the asset.
The Group has considered many factors when reviewing impairment indicators, such as market capitalization, participation in each of the segments in which it operates, unused installed capacity, industry trends, among other factors. Although the impairment test will be carried out in December 2021, as of September 30, 2021, considering the start-up of the new L´Amalí plant, which has innovative technology that implies greater efficiency in operating costs compared to other facilities, and also taking into account other micro and macroeconomic factors, the Group's Management has carried out a detailed analysis of the use of its facilities considering the reallocation of production volumes derived from the operation of the new plant mentioned.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
16
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
As a result of the previously described scenario, the Group determined that certain facilities belonging to its cement plant called Sierras Bayas will not be used in the near future, since their volumes will be reallocated to the new plant, considering the volumes currently produced and sold. Therefore, the Group recognized a loss due to impairment of property, plant and equipment that amounted to 141,380 in the consolidated statement of condensed interim comprehensive income.
As of September 30, 2020, considering the particular impacts of the COVID-19 pandemic and the uncertainty of the Argentine economic situation, among other micro and macroeconomic factors, the Group has estimated a decrease in demand for rail logistics services provided and demand for stone from the aggregates cash-generating unit. As a result of the previously described scenario, the Group carried out an impairment test as of September 30, 2020 for the different cash-generating units, mentioned in Note 28, determining that the book value of the railway and aggregate cash-generating units exceed the value in use of the assets involved. As a result, the Group recognized a loss due to impairment of property, plant and equipment that amounted to 1,296,928 in the consolidated condensed statement of comprehensive income.
13. INVENTORIES
09.30.2021 | 12.31.2020 | ||||||
Non-current | |||||||
Spare parts | 2,824,555 | 3,056,464 | |||||
Allowance for obsolete inventories | (130,429 | ) | (103,440 | ) | |||
Total | 2,694,126 | 2,953,024 | |||||
Current | |||||||
Finished products | 585,619 | 645,133 | |||||
Production in progress | 1,772,120 | 1,232,569 | |||||
Raw materials, materials and spare parts | 4,605,997 | 4,806,899 | |||||
Fuels | 763,415 | 836,830 | |||||
Total | 7,727,151 | 7,521,431 |
14. RELATED PARTY TRANSACTIONS AND BALANCES
The outstanding balances between the Group and related parties as of September 30, 2021 and December 31, 2020 are as follows:
09.30.2021 | 12.31.2020 | ||||||
Related companies: | |||||||
InterCement Brasil S.A. | |||||||
Accounts payable | (97,483 | ) | (120,671 | ) | |||
InterCement Trading e Inversiones S.A. | |||||||
Other receivables | 255,856 | 291,179 | |||||
Accounts payable | (21,348 | ) | (26,371 | ) | |||
Intercement Participações S.A. | |||||||
Other receivables | 137,894 | 63,047 | |||||
Accounts payable | (219,022 | ) | (245,399 | ) |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
17
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Summary of balances as of September 30, 2021 and December 31, 2020 is as follows:
09.30.2021 | 12.31.2020 | ||||||
Other receivables | 393,750 | 354,226 | |||||
Accounts payable | (337,853 | ) | (392,441 | ) | |||
The transactions between the Group and related parties for the periods ended September 30, 2021 and 2020 are detailed as follows:
09.30.2021 | 09.30.2020 | ||||||
InterCement Brasil S.A. – Purchases of goods and services | - | (179 | ) | ||||
InterCement Trading e Inversiones S.A. – Sales of services | 3,586 | 76,275 | |||||
InterCement Portugal S.A. – Services received | - | (313,526 | ) | ||||
InterCement Participações S.A. – Sales of services | 91,477 | - | |||||
InterCement Participações S.A. – Services received | (478,474 | ) | (112,248 | ) | |||
The amount recognized in the consolidated statement of profit or loss and other comprehensive income related to key management salaries, wages and fees amounted to 253,370 and 276,849 for the nine-month periods ended September 30, 2021 and 2020, respectively. Additionally, a loss has been accrued under the long-term incentive program for a total of 27,278 and 10,018 during the nine-month periods ended September 30, 2021 and 2020, respectively.
On the other hand, during this period the Group Meeting has approved the implementation of two new incentive programs in shares of the Company, one of them subject to the total return of the shareholders (Total Shareholder Return -TSR-), with the the purpose of attracting and retaining certain hierarchical employees of exceptional competence and strategic for the Group who meet certain eligibility criteria, seeking to align the long-term interests of the Group and its shareholders. As of the date of issuance of these condensed consolidated interim financial statements, the new incentive program has not been implemented.
The Group did not recognize any expense in the current period, or in previous ones, regarding bad or doubtful accounts related to amounts owed by related parties.
The outstanding amounts as of September 30, 2021 are not secured and will be settled in cash. No guarantees have been granted or received on the outstanding balances.
Taking into account the statutory conditions and the concession contract, Cofesur S.A.U. During the nine-month period ended September 30, 2020, it was integrated in favor of Ferrosur Roca S.A. 100% of a capital contribution of 1,813,536, but only 80% of the issued shares were subscribed in their favor, the rest of the shares having been issued in favor of the holders of Class “A” and Class “B” shares, resulting in a loss for the Group of 553,024, disclosed in the statement of comprehensive income, in the income line participation in companies.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
18
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
15. OTHER RECEIVABLES
09.30.2021 | 12.31.2020 | ||||||
Non-current | |||||||
Advances to suppliers | 600,588 | 425,003 | |||||
Credit for sale of interest in Yguazu Cementos S.A. | - | 57,594 | |||||
Tax credits | 71,378 | 52,487 | |||||
Contributions to the Trust Fund to Strengthen the Inter-urban Railroad System (F.F.F.S.F.I.) | 163,565 | 180,489 | |||||
Prepaid expenses | 93,358 | 111,869 | |||||
Guarantee deposits | 511 | 1,871 | |||||
Others | - | 9,691 | |||||
Subtotal | 929,400 | 839,004 | |||||
Allowance for doubtful receivables | (163,565 | ) | (180,489 | ) | |||
Total | 765,835 | 658,515 | |||||
09.30.2021 | 12.31.2020 | ||||||
Current | |||||||
Turnover tax credits | 89,165 | 158,325 | |||||
Other tax credits | 10,780 | 1 | |||||
Credit for sale of interest in Yguazu Cementos S.A. | 345,508 | 748,719 | |||||
Related parties’ receivables (Note 14) | 393,750 | 354,226 | |||||
Prepaid expenses | 161,028 | 248,967 | |||||
Guarantee deposits | 856 | 252 | |||||
Reimbursements receivable | 29,622 | 43,532 | |||||
Advances to suppliers | 51,123 | 31,818 | |||||
Salaries advances and loans to employees | 16,462 | 1,674 | |||||
Receivables from sales of property, plant and equipment | 32,078 | 38,325 | |||||
Miscellaneous | 86,825 | 41,198 | |||||
Total | 1,217,197 | 1,667,037 |
16. RIGHT OF USE OF ASSETS AND LEASE LIABILITIES
The Group has entered into lease agreements primarily for the lease of offices and premises. The evolution of the right of use of assets and lease liabilities as of September 30, 2021 and December 31, 2020 is as follows:
09.30.2021 | 12.31.2020 | ||||||
Lease liabilities: | |||||||
At the beginning of the period / year | 726,983 | 823,846 | |||||
Additions | 44,610 | 6,375 | |||||
Interest accrued in the period / year | 34,806 | 68,476 | |||||
Foreign exchange gain (loss) | (85,647 | ) | 29,766 | ||||
Decrease | (274,823 | ) | - | ||||
Payments | (125,378 | ) | (201,480 | ) | |||
At the end of the period / year | 320,551 | 726,983 |
Right of use assets: | |||||||
At the beginning of the period / year | 612,768 | 760,643 | |||||
Additions | 44,610 | 6,375 | |||||
Depreciations | (98,704 | ) | (154,250 | ) | |||
Decrease | (254,639 | ) | - | ||||
At the end of the period / year | 304,035 | 612,768 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
19
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
17. TRADE ACCOUNTS RECEIVABLE
09.30.2021 | 12.31.2020 | ||||||
Accounts receivable | 4,119,833 | 3,995,197 | |||||
Accounts receivable in litigation | 62,701 | 77,752 | |||||
Notes receivable | 9,920 | 22,949 | |||||
Foreign customers | 9,271 | 91,390 | |||||
Subtotal | 4,201,725 | 4,187,288 | |||||
Allowance for doubtful accounts | (68,733 | ) | (93,082 | ) | |||
Total | 4,132,992 | 4,094,206 |
18. INVESTMENTS
09.30.2021 | 12.31.2020 | ||||||
Non-current | |||||||
Investments in other companies | |||||||
- Cementos del Plata S.A. | 4,767 | 4,767 | |||||
Total | 4,767 | 4,767 | |||||
Current | |||||||
Short-term investments | |||||||
- Mutual funds in pesos | 2,077,366 | 3,241,376 | |||||
- Fix-term deposits in pesos | - | 2,386,119 | |||||
- Public securities in pesos | 1,809,387 | - | |||||
Total | 3,886,753 | 5,627,495 | |||||
19. CAPITAL STOCK AND OTHER CAPITAL RELATED ACCOUNTS
09.30.2021 | 12.31.2020 | ||||||
Capital | 59,603 | 59,603 | |||||
Adjustment to capital | 6,521,433 | 6,521,433 | |||||
Cost of treasury stock | (1,497,505 | ) | - | ||||
Share premium | 11,883,113 | 11,883,113 | |||||
Merger premium | 2,146,579 | 2,146,579 | |||||
Total | 19,113,223 | 20,610,728 |
The issued, paid-in and registered capital, consists of: | |||||||
Common stock with a face value of $ 0.1 per share and entitled to 1 vote each, fully paid-in (in thousand) | 596,026 | 596,026 |
Acquisition of treasury stock
On February 12, 2021, the Board of Directors of the Company approved a plan for the acquisition of treasury stock, for a period of 90 days and a maximum amount of 750 million. Acquisitions will be carried out in accordance with the market opportunities, dates, prices and quantities established by the Company’s Management.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
20
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
The purpose of the approved repurchase plan is to efficiently dispose of a portion of the Company’s liquidity, which may result in a greater return of value to the shareholders considering the current attractive value of the share.
On June 18, 2021, the plan to acquire treasury stocks was finalized, having reached the maximum amount to be invested is stipulated of up to 750 million.
On July 2, 2021, the Group's Board of Directors approved a new plan for the acquisition of treasury stocks, for a period of 60 days, for a maximum amount of 975 million or the lowest amount resulting from the acquisition to reach 10% of the capital stock. Treasury stock may not, on the whole, exceed the limit of 10% of the capital stock in accordance with Article 64 of the Capital Market Law. Such acquisition shall be made with realized and liquid profits, since the Company has the necessary liquidity to carry out the approved acquisition of treasury stock without affecting its solvency.
On September 3, 2021, the second plan to acquire treasury stocks was finalized, having reached a total amount of 563.8 million.
On September 24, 2021, the Group's Board of Directors approved a third plan for the acquisition of treasury stocks, for a period of 60 days, for a maximum amount of 700 million or the lowest amount resulting from the acquisition to reach 10% of the capital stock. Treasury stock may not, on the whole, exceed the limit of 10% of the capital stock in accordance with Article 64 of the Capital Market Law. Such acquisition shall be made with realized and liquid profits, since the Company has the necessary liquidity to carry out the approved acquisition of treasury stock without affecting its solvency.
Until the date of issuance of these financial statements, the Company acquired 7,578,394 treasury shares for a total value of 1,918,565 (1,642,150 shares worth 465,874 correspond to the new plan still in execution).
20. ACCUMULATED OTHER COMPREHENSIVE INCOME
09.30.2021 | 09.30.2020 | ||||||
Accrual for translation of foreign operations | |||||||
Balance at the beginning of the year | - | 615.706 | |||||
Exchange differences on translating foreign operations | - | (200.060 | ) | ||||
Reclassification of exchange differences on translation of foreign operations gains / (losses) | - | (415.646 | ) | ||||
Balance at the end of the period | - | - |
21. BORROWINGS
21.1 Composition of borrowings
09.30.2021 | 12.31.2020 | |||||
Company | Interest rate | Maturity date | Amount | Amount | ||
Borrowings in foreign currency – USD | ||||||
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | - | - | 298,256 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | - | - | 349,992 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | - | - | 972,016 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | - | - | 233,626 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Jul-21 | - | 57,533 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Aug-21 | - | 1,220,560 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Sep-21 | - | 193,529 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Oct-21 | 336,620 | 397,288 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Nov-21 | 431,725 | 509,547 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Dec-21 | 304,945 | 359,905 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A. | 6 Month-Libor + 4.25% | Jan-22 | 87,241 | 102,965 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A | 6 Month-Libor + 4.25% | Feb-22 | 45,676 | 53,908 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A | 6 Month Libor + 7,375% | Jan-22 | 690,666 | 821,905 | |
Industrial and Commercial Bank of China | Loma Negra C.I.A.S.A | 6 Month Libor + 7,375% | Jan-22 | 625,950 | 744,892 | |
Industrial and Commercial Bank of China (Dubai) | Loma Negra C.I.A.S.A. | 3-Month Libor + 7,5% | Nov-23 | 771,805 | 898,978 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
21
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Borrowings in foreign currency – EUR | ||||||
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | - | - | 191,111 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | - | - | 45,593 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | - | - | 242,249 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | Jul-21 | - | 614,798 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | Aug-21 | - | 54,359 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | Sep-21 | - | 2,584 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | Oct-21 | 172,227 | 412,496 | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | Nov-21 | 146,426 | - | |
Banco Itaú S.A. | Loma Negra C.I.A.S.A. | 4% | Dec-21 | 58,024 | - | |
Total borrowings in foreign currency | 3,671,305 | 8,778,090 |
09.30.2021 | 12.31.2020 | |||||
Company | Interest rate | Maturity date | Amount | Amount | ||
Borrowings in local currency | ||||||
Overdrafts | Loma Negra C.I.A.S.A. | 45% | Oct-21 | 11,635 | 24,200 | |
Overdrafts | Ferrosur Roca S.A. | 35% | Oct-21 | 276,396 | 18,951 | |
Total borrowings in local currency | 288,031 | 43,151 | ||||
Total | 3,959,336 | 8,821,241 |
Summary of borrowings by Company: | 09.30.2021 | 12.31.2020 | |
Loma Negra C.I.A.S.A. | 3,682,940 | 8,802,290 | |
Ferrosur Roca S.A. | 276,396 | 18,951 | |
Total | 3,959,336 | 8,821,241 |
21.3 Movements of borrowings
The movements of borrowings for the six-month period ended September 30, 2021 are as disclosed below:
Balances as of January 1, 2021 | 8,821,241 | ||
New borrowings | 1,009,991 | ||
Interest accrued | 271,978 | ||
Effect of exchange rate differences | (1,067,653 | ) | |
Interest payments | (446,515 | ) | |
Principal payments | (4,629,706 | ) | |
Balances as of September 30, 2021 | 3,959,336 |
As of Septembre 30, 2021, the long-term borrowings have the following maturity schedule:
Fiscal year | |
2022 | 95,739 |
2023 | 383,299 |
Total | 479,038 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
22
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
22. ACCOUNTS PAYABLE
09.30.2021 | 12.31.2020 | ||||||
Non-current | |||||||
Accounts payable for investments in property, plant and equipment | - | 140,292 | |||||
Total | - | 140,292 | |||||
Current | |||||||
Suppliers | 3,609,298 | 4,385,882 | |||||
Related parties (Note 14) | 337,853 | 392,441 | |||||
Accounts payable for investments in property, plant and equipment and intangible assets | 545,031 | 1,453,644 | |||||
Expenses accrual | 1,852,746 | 1,154,195 | |||||
Total | 6,344,928 | 7,386,162 |
23. PROVISIONS
09.30.2021 | 12.31.2020 | ||||||
Labor and social security | 109,923 | 137,062 | |||||
Environmental restoration | 349,662 | 397,309 | |||||
Civil and others | 110,838 | 133,252 | |||||
Total | 570,423 | 667,623 |
Changes in the provisions were as follows:
Labor and social security | Environmental restoration | Civil and others | Total | ||||||||||||
Balances as of January 1, 2021 | 137,062 | 397,309 | 133,252 | 667,623 | |||||||||||
Increases (*) | 620 | (26,181 | ) | (8,133 | ) | (33,694 | ) | ||||||||
Uses (**) | (27,759 | ) | (21,466 | ) | (14,281 | ) | (63,506 | ) | |||||||
Balances as of September 30, 2021 | 109,923 | 349,662 | 110,838 | 570,423 |
(*) Includes the effect of the inflation adjustment.
(**) Includes the application of provisions to their specific purposes.
24. TAX LIABILITIES
09.30.2021 | 12.31.2020 | ||||||
Income tax | 1,980,047 | 3,101,987 | |||||
Value added tax | 677,692 | 558,395 | |||||
Turnover tax | 143,331 | 139,470 | |||||
Other taxes, withholdings and perceptions | 131,967 | 150,095 | |||||
Total | 2,933,037 | 3,949,947 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
23
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
25. CASH AND CASH EQUIVALENTS
For purposes of the consolidated condensed interim statement of cash flows, cash and cash equivalents include cash, banks accounts and short-term investments with high liquidity (with maturities of less than 90 days from the date of acquisition). Cash and cash equivalents at the end of each reporting period/year as shown in the consolidated condensed interim statement of cash flows can be reconciled to the related items in the consolidated condensed interim statement of financial position as follows:
09.30.2021 | 12.31.2020 | ||||||
Cash and banks | 402,516 | 365,165 | |||||
Short-term investments (Note 18) | 2,077,366 | 5,627,495 | |||||
Cash and cash equivalents | 2,479,882 | 5,992,660 | |||||
26. FINANCIAL INSTRUMENTS
26.1 Net debt to equity ratio
The net debt to equity ratio of the reported period/fiscal year is as follows:
09.30.2021 | 12.31.2020 | ||||||
Debt (i) | 3,959,336 | 8,821,241 | |||||
Cash and cash equivalents | 4,289,269 | 5,992,660 | |||||
Net debt | (329,933 | ) | 2,828,581 | ||||
Equity (ii) | 63,888,485 | 62,166,053 | |||||
Net debt to equity ratio | (0,01 | ) | 0,05 |
(i) Debt is defined as current and non-current borrowings. |
(ii) Shareholders’ equity includes all the non-controlling interests, which are managed as capital. |
26.2 Categories of financial instruments
09.30.2021 | 12.31.2020 | ||||||
Financial assets At amortized cost: | |||||||
Cash and banks | 402,516 | 365,165 | |||||
Investments | 1,809,387 | 2,472,981 | |||||
Accounts receivable | 5,022,141 | 5,332,021 | |||||
At fair value through profit and loss: | |||||||
Investments | 2,077,366 | 3,236,538 | |||||
Financial liabilities | |||||||
Amortized cost | 15,734,146 | 23,364,712 |
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 in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
24
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
These consolidated condensed interim financial statements do not include all the information and disclosures on financial risks, therefore, they should be read in conjunction with the Group´s consolidated financial statements for the fiscal years ended December 31, 2020 and 2019 issued on March 10, 2021.
26.4 Fair value measurement
Fair value measurement is described in Note 33.8 to the annual consolidated financial statements.
From December 31, 2020 through September 30, 2021, 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 Group's financial instruments during the nine-month period ended September 30, 2021.
The carrying amounts of financial assets and liabilities recognized at amortized cost, included in the consolidated financial statements as of September 30, 2021 and December 31, 2020, 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 Group’s Management considers that the liquidity risk exposure is low since the Group 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 company consolidated at the end of the reporting period/year are as follows:
09.30.2021 | 12.31.2020 | |||||
Liabilities | ||||||
United States Dollars | 3,907,629 | 9,118,321 | ||||
Euro | 1,048,418 | 677,052 | ||||
Real | 46 | 56 | ||||
Assets | ||||||
United States Dollars | 952,800 | 1,396,390 | ||||
Euro | 89,605 | 29,131 | ||||
Real | 4 | 5 |
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 the Euro exchange rate. The sensitivity rate is that used when reporting to the top executive level and represents the management’s assessment of a possible reasonable change in exchange rates. The sensitivity analysis only includes outstanding foreign-currency monetary items and adjusts traslation of such items on the end of the period tems considering a reasonably possible 25% increase in the exchange rate.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
Effect of US Dollars | Effect of Euro | ||||||
Loss for the period | 738,707 | 239,703 | |||||
Decrease in of shareholder's Equity | 738,707 | 239,703 |
27. NON-CASH TRANSACTIONS
Below is a detail of the transactions that did not involve cash flow movements during the nine-month periods ended September 30, 2021 and 2020, respectively:
09.30.2021 | 09.30.2020 | ||||||
- Acquisitions of property, plant and equipment financed with trade payables | 111,049 | 38,017 | |||||
- Right of use of assets | 44,610 | - |
28. SEGMENT INFORMATION
The Group has adopted IFRS 8 – “Operating Segments”, that require operating segments to be identified on the basis of internal reports regarding components of the Group that are regularly reviewed by the Executive Committee, chief operating decision maker, in order to allocate resources to the segments and to assess their performance. This analysis is based on monthly information concerning historical figures of the identified segments. The information reviewed by the main decision maker basically consists in the historical details corresponding to each month accumulated until the end of the reporting period. It is for this reason that they differ from the inflation-adjusted figures as described in Note 2.2.
For the purposes of managing its business both financially and operatively, the Group has classified the continuing operations of its businesses as follows:
i) | Cement, masonry cement and lime: 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 in order to obtain the cement, masonry cement and lime. |
ii) | Concrete: this segment includes the results generated 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. |
iii) | Aggregates: this segment includes the results generated from the production and sale of granitic aggregates. |
iv) | Railroad: this segment includes the results generated from the provision of the railroad transportation service. |
v) | Others: this segment includes the results of the industrial waste treatment and recycling business to produce materials for use as fuel. |
In the classification of activities by segments and in the information presented below, the “Cement - Paraguay” segment has been excluded since said operation has been discontinued as of August 21, 2020 due to the sale of the shareholding in said company (Note 30).
09.30.2021 | 09.30.2020 | ||||||
Sales revenue | |||||||
Cement, masonry cement and lime | 39,029,082 | 21,432,666 | |||||
Concrete | 3,147,454 | 916,591 | |||||
Railroad | 3,572,379 | 2,167,036 | |||||
Aggregates | 603,544 | 201,978 | |||||
Others | 245,658 | 114,429 | |||||
Inter-segment eliminations | (2,997,100 | ) | (1,355,826 | ) | |||
Subtotal | 43,601,017 | 23,476,874 | |||||
Reconciliation - Effect from restatement in constant currency | 5,769,020 | 15,364,832 | |||||
Total | 49,370,037 | 38,841,706 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
26
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
09.30.2021 | 09.30.2020 | ||||||
Cost of sales | |||||||
Cement, masonry cement and lime | 23,081,006 | 12,830,511 | |||||
Concrete | 3,322,028 | 1,259,907 | |||||
Railroad | 3,350,397 | 2,101,210 | |||||
Aggregates | 573,662 | 278,142 | |||||
Others | 156,782 | 78,304 | |||||
Inter-segment eliminations | (2,997,100 | ) | (1,355,826 | ) | |||
Subtotal | 27,486,775 | 15,192,248 | |||||
Reconciliation - Effect from restatement in constant currency | 6,807,489 | 12,964,313 | |||||
Total | 34,294,264 | 28,156,561 |
09.30.2021 | 09.30.2020 | ||||||
Selling, administrative expenses and other gains and losses | |||||||
Cement, masonry cement and lime | 2,841,184 | 1,605,745 | |||||
Concrete | 49,412 | 537 | |||||
Railroad | 228,072 | 120,215 | |||||
Aggregates | 7,247 | (2,499 | ) | ||||
Others | 88,374 | 50,382 | |||||
Subtotal | 3,214,289 | 1,774,380 | |||||
Reconciliation - Effect from restatement in constant currency | 621,128 | 1,439,510 | |||||
Total | 3,835,417 | 3,213,890 |
09.30.2021 | 09.30.2020 | ||||||
Depreciation and amortization | |||||||
Cement, masonry cement and lime | 885,359 | 569,712 | |||||
Concrete | 47,098 | 167,607 | |||||
Railroad | 215,301 | 177,677 | |||||
Aggregates | 21,870 | 16,313 | |||||
Others | 3,816 | 3,312 | |||||
Subtotal | 1,173,444 | 934,621 | |||||
Reconciliation - Effect from restatement in constant currency | 2,648,084 | 3,193,479 | |||||
Total | 3,821,528 | 4,128,100 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
09.30.2021 | 09.30.2020 | ||||||
Sales revenue less cost of sales, selling, administrative expenses and other gains and losses | |||||||
Cement, masonry cement and lime | 13,106,892 | 6,996,410 | |||||
Concrete | (223,986 | ) | (343,853 | ) | |||
Railroad | (6,090 | ) | (54,389 | ) | |||
Aggregates | 22,635 | (73,665 | ) | ||||
Others | 502 | (14,257 | ) | ||||
Subtotal | 12,899,953 | 6,510,246 | |||||
Reconciliation - Effect from restatement in constant currency | (1,659,597 | ) | 961,009 | ||||
Total | 11,240,356 | 7,471,255 | |||||
Reconciling items: | |||||||
Tax on bank accounts debits and credits | (498,341 | ) | (492,440 | ) | |||
Share of loss of associates | - | (553,024 | ) | ||||
Impairment of assets - Cement | (141,380 | ) | - | ||||
Impairment of assets - Railroad | - | (1,074,364 | ) | ||||
Impairment of assets - Aggregates | - | (222,564 | ) | ||||
Financial results, net | 168,365 | 614,151 | |||||
Income tax | (7,549,063 | ) | (1,229,213 | ) | |||
Income from discontinued operations | - | 7,024,025 | |||||
Net profit for the year | 3,219,937 | 11,537,826 |
In relation to the segregation of the results by geographic segment, the Group carries out 100% of its activities and operations in Argentina.
No customer has contributed 10% or more of the Group´s revenue for the nine-month periods ended September 30, 2021 and 2020, respectively.
29. COMMITMENTS
The Group’s commitments are described in Note 36 to the annual consolidated financial statements for the fiscal year ended December 31, 2020.
Likewise, the Group has agreed not to operate in the territory of Paraguay for five years from August 2020 and to provide certain assistance in the transition to the new direction in control of Yguazu Cementos for a period of 36 months.
Finally, during this period, the Group has signed a product sales contract by means of which it has agreed to supply concrete for a third party to carry out the development of a residential project in the province of Buenos Aires. The contract establishes that the Group will collect a portion of said concrete sales in kind, receiving three functional units of said real estate development once it is completed, for which the respective purchase-sale tickets have been signed. Additionally, the contract signed includes several rights and obligations for the parties in order to ensure the main mandate of the contract, which is the purchase and sale of concrete.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
30. SALE ON INTEREST IN YGUAZU CEMENTOS S.A. – DISCONTINUED OPERATIONS
On August 21, 2020, Loma Negra C.I.A.S.A. (the “Company”) sold its total stake in the Paraguayan company Yguazu Cementos S.A. (“Yguazu”), which represented 51.0017% of the capital stock of Yguazu. The sale was made to the local shareholder of Yguazu. For further information regarding this transaction, refer to Note 42 of the financial statements issued as of December 31, 2020.
As of the date of issuance of these financial statements, the Group has collected 97% of the total amount agreed for the operation, with the remaining balance to be collected in equal monthly installments, the last being collected in January 2022. Since the amount of the transaction has been established in foreign currency and that it has been made available abroad, during the nine-month period ended September 30, 2020, the Group has carried out various transactions with Argentine titles and securities denominated in US dollars purchased in the US market and sold in the Argentine market. This generated a gain that has been classified within financial results as “Gains from operations with securities and securities” (Note 9).
Due to the operation described above, the Group classified the results associated with the operation of Yguazu Cementos S.A. as a discontinued operation, which represented the entire operating segment of cement in Paraguay until August 21, 2020. With these results classified as discontinued operations, the cement segment in Paraguay is no longer presented in the segment note.
The results generated by the operation of Yguazu Cementos S.A. for the period ended September 30, 2020 are presented below:
09.30.2020 | |||
Revenues | 4,066,911 | ||
Cost of sales and selling and administrative expenses | (3,063,395 | ) | |
Financial results, net | (218,570 | ) | |
Reclassification of exchange differences on translation of foreign operations | 415,646 | ||
Gain on disposal of shareholding of Yguazú Cementos S.A. | 7,901,198 | ||
Profit before tax | 9,101,790 | ||
Income tax expense | (2,077,765 | ) | |
Income from discontinued operations | 7,024,025 | ||
Net profit from discontinued operations for the period attributable to: | |||
Owners of the Company | 6,679,009 | ||
Non-controlling interests | 345,016 | ||
Earnings per share from discontinued operations (basic and diluted) attributable to: | |||
Owners of the Company (in pesos) | 11.2059 | ||
Non-controlling interests (in pesos) | 0.5789 |
The summarized information of the cash flow statement generated by the operation of Yguazu Cementos S.A. for the period ended September 30, 2020, it is presented below:
09.30.2020 | |||
Net cash generated by operating activities | 1,147,146 | ||
Net cash used in investing activities | (187,943 | ) | |
Net cash used in financing activities | (3,524,241 | ) | |
Effects of exchange rate variation on cash and cash equivalents in foreign currency | (21,368 | ) | |
Net decrease in cash and cash equivalents from discontinued operations | (2,586,406 | ) |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
31. FERROSUR ROCA S.A. CONCESSION
On March 11, 1993, Ferrosur Roca S.A. obtained the concession of the General Roca National Freight Railway Network except by the Altamirano-Miramar corridor and the urban sections, through the approval of the concession contract formalized by National Executive Branch Decree No. 2681/92, after the presentation made through a national and international tender and formalized to that effect.
Ferrosur Roca S.A. is indirectly controlled by the Company, through Cofesur S.A.U. which owns 80% of the interest, 16% of which belongs to the National State and the remaining 4% belongs to the workers of Ferrosur Roca S.A. through a trust created for this purpose.
The term of the concession is 30 years, which expires in March 2023, and provides an extension of an additional 10 years. The area of influence is concentrated in the center and south of the province of Buenos Aires, the north of the province of Río Negro and Neuquén. It has access to the ports of Buenos Aires, Dock Sud, La Plata, Quequén and Bahía Blanca.
Ferrosur Roca S.A. has requested the above-mentioned extension in due time on March 8, 2018 and in line with the bidding terms and conditions and the concession agreement.
The concession contract that grants the operation of the aforementioned freight railway network has been renegotiated as a consequence of the process of renegotiation of the obligations originated in the Public Administration contracts from 2002 to 2005, including the preparation of an Act Agreement, ratified by the National Government in 2008, which contemplates the terms and conditions that were considered reasonable and convenient to adapt the Concession Contract, continuing in force all those stipulations of the Bidding Terms and Conditions of the aforementioned Contract that were not modified by the terms contained in the Minutes, and indicating that the Ministry of Federal Planning, Public Investment and Services has the power to carry out the interpretations, clarifications and modifications that are necessary to make to the Concession Contract duly signed, according to the changes determined by the aforementioned Minutes of Agreement.
Taking into account the request for an extension made in a timely manner, the Secretary of Transportation Management replied on March 20, 2019, informing that the readjustment of the concession contract will be substantiated within the orbit of the Special Contract Renegotiation Commission (“CERC”) created for this purpose and that said processing will include the analysis of the extension of the concession term up to a maximum of 10 years in order to enable the implementation of the “open access” modality.
On May 13, 2020, Ferrosur Roca S.A. sent a note to the Minister of Transportation stating that the request for an extension of the concession, duly submitted, is subject to the renegotiation and readjustment of the concession contract, in order to mitigate the consequences that seriously affect the business of said company and upset the balance of the concession contract.
In addition, on March 29, 2021, through Resolution No. 219/2021, the National Transportation Regulation Commission (“CNRT”) approved the Regulations of the National Registry of Railroad Operators and granted such capacity to Ferrosur Roca S.A. and the other current railway concessionaires. Pursuant to such Resolution, once the “open access” scheme is in force, any registered railroad operator will be allowed to provide railroad services regardless of who holds the ownership or possession of the facilities of the loading point or destination. On June 28, 2021 the Ministry of Transportation published in Official Gazette the Resolution No. 211 which rejected the request of extension of concession for all railways. Therefore, the railway concession operated by the Company will expire in its original term, that is, on March 10, 2023. Based on this, the objective of the National State is that the national railway network is based on a mixed modality, which works through a system of public and private freight operators and the National State managing the infrastructure and controlling the corresponding investment, thus allowing any registered rail operator to provide rail services regardless of who owns or owns the facilities of the point. of cargo or destination.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
However, the Group understands that, upon termination of its concession, it will continue to provide the rail freight transport services that it currently provides, although it will do so as a freight operator under the terms established in Resolution No. 211, the Law No. 27,132 and Decree No. 1027 dated November 7, 2018, for which it must readjust various operational issues, once it hands over control of the railway infrastructure linked to its current concession. It is the understanding of the Group's Management that the intention of the National State is to prioritize the continuity of the current operators for each of the existing services and businesses, thus guaranteeing the best use of the experience they have acquired.
As of the date of issuance of these condensed consolidated financial statements, a diverse series of regulations are still pending definition by the National State on which the scheme of railway operators will operate as of March 2023, the date of completion of the current concession held by Ferrosur Roca SA, together with the negotiations to implement the operator contracts with the different parties involved. In this context, the Group is evaluating the possible business scenarios, also considering that its intention is to continue providing services as operator of the railway network.
The Group has revalued all the accounting estimates affected by the definition of the term for completion of the current concession, not foreseeing significant associated effects to date. The Group will continue to monitor the new regulations that are issued, as well as the progress of the ongoing negotiations with the National State and will record any related effect as soon as it is possible to estimate it.
32. THE ARGENTINE ECONOMIC CONTEXT
The central issues of the macroeconomic scenario in Argentina are as follows:
- | The economic activity in 2019 showed a fall that was subsequently sustained and increased due to the effect of the COVID-19 pandemic occurred in 2020. |
- | The fall in activity and the consequent reduction in revenues has also produced a major tax imbalance. |
- | This imbalance has been particularly driven by the issuance of money to finance the expansion of public spending allocated to subsidies to alleviate the effects of the COVID-19 pandemic. |
- | The fall in the international reserves of the Central Bank of Argentina (“BCRA”), accompanied by an increase in its monetary liabilities, has led to a tightening of the foreign exchange regulations that imposed restrictions on the accumulation and use of foreign currency and on foreign payments, which in turn created a significant gap between the official exchange rate and that of freer foreign exchange markets. |
- | The agreement reached in August 2020 with foreign private creditors for the exchange of notes for USD 63,500 million with maturities between 2029 and 2046 has been regarded as a positive aspect that made it possible to extend the first interest and principal payments until 2024 and represents savings of about USD 38 billion over the next 10 years. |
- | The national consumer price index published by INDEC accumulated 36.1% in the year 2020 and 37% for the first nine months of fiscal year 2021. This increase occurs in an inflation scenario repressed by the prevailing recession, and due to a framework of uncertainty. |
33. | EFFECTS OF COVID-19 ON THE GROUP |
On March 11, 2020, the outbreak of a novel coronavirus (COVID-19) was declared a pandemic by the World Health Organization (WHO). In this regard, on March 19, 2020, the Argentine Executive Branch passed Executive Decree No. 297/2020, mandating social distancing in Argentina to prevent the effects of the pandemic.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 AND 2020
(All amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
In compliance with such decree, the Group: (i) temporarily suspended the production and dispatch of cement, concrete and aggregates until such time as the necessary conditions to resume activities are in place; (ii) temporarily suspended the construction project of the second line of L´Amalí plant, in the City of Olavarría, until such time as the necessary conditions to resume activities are in place; (iii) implemented teleworking practices among its back office staff; and (iv) has created a Crisis Management Committee tasked with monitoring and assessing the adoption of measures to mitigate the effects of this crisis.
Accordingly, effective since April 6, 2020, the Group has resumed the production and dispatch of cement, concrete and aggregates. On the other hand, the Company has secured a permit to continue with the construction works of the second line of L´Amalí plant, under stringent health protocols established by the Provincial Government and the Group.
As a consequence of the second wave of COVID-19 infections that Argentina has been experiencing since March 2021, and as cases continue to increase, in accordance with Decrees No. 235 and No. 241/2021, the Executive Branch reinstated a limited number of restrictions on certain commercial operations and movement of people (such as the restriction of group tourist trips, closing of shopping centers, restrictions on the operation of stores between 7:00 p.m. and 6:00 a.m. 00:00 and 6:00 the next day) in the most affected areas (including the City of Buenos Aires and its surroundings), initially until April 30, 2021 and then extended until June 6, 2021. The second quarter of this fiscal year was the worst in number of infections, registering the highest monthly record of cases since the start of the pandemic.
Subsequently, and during the third quarter of this year, the number of infections has decreased significantly and steadily. Taking into account said decrease in contagions in all the jurisdictions of the country in the month of September, through Decree No. 678/2021, the National Government announced the relaxation of certain restrictions, increasing the capacity for certain activities, the end of the use of masks in open spaces, maintaining the allowed distance and the gradual opening of the borders until allowing the entry of all foreigners as of November 2021, among others.
Concerning the railroad business operated through the subsidiary Ferrosur Roca S.A., in the first quarter of this year the effect of COVID-19 has occasionally hindered the operation due to simultaneous cases in the Operations Control Center (CCO). During the second quarter, a record of positive cases was recorded, but after the closing of these financial statements, a significant decline in the contagion curve is noted, returning to the levels of the last quarter of 2020.
34. OFFICIALLY STAMPED BOOKS
As of date of these interim financial statements, for administrative purposes, consolidated financial statements were not yet transcribed in the relevant certified books.
35. SUBSEQUENT EVENTS
Acquisition of Treasury Stock
After the end of this period, the treasury stock buy-back program has continued to be carried out as mentioned in Note 19.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
32
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
OVERVIEW OF THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2021 AND 2020 (All
amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
INFORMATION REPORT
1. ACTIVITIES OF THE COMPANY
During the current period Loma Negra C.I.A.S.A. and its subsidiaries dispatched 4,447,063 tons of cement and lime, and their net sales amounted to 49,370,037. Dispatches overall were 26% higher from those for the same period of the prior year.
Gross income amounted to 15,075,773 and the total comprehensive income for the nine-month period was 3,219,937. Said income accounts for a 71% decrease compared to the comprehensive income for the same period of the prior year.
On February 12, 2021, the Board of Directors of the Company approved a plan for the acquisition of treasury stock for a period of 90 days and a maximum amount of 750 million. On June 18, 2021, this plan was finalized, having reached the maximum amount to be invested is stipulated of up to 750 million.
On July 2, 2021, the Board of Directors of the Company approved a new plan for the acquisition of treasury stock for a period of 60 days and a maximum amount of 975 million. On September 3, 2021, this plan was finalized, having reached a purchase amount of 563.8 million.
Likewise, at its meeting on September 24, 2021, the Board of Directors of the Company resolved to approve a third plan to purchase treasury stocks for a period of 60 days and for a maximum amount of 700 million.
The purpose of the repurchase is to efficiently dispose of a portion of the Company’s liquidity, which may result in a greater return of value to the shareholders considering the current attractive value of the share.
Until the date of issuance of these interim financial statements, the Company acquired 7,578,394 treasury shares for a total value of 1,918,565 through the three repurchase plans implemented (1,642,150 shares worth 465,874 correspond to the new plan still in execution).
As of September 30, 2021, considering the start-up of the new L´Amalí plant, which has innovative technology that implies greater efficiency in operating costs compared to other facilities, and also taking into account other micro and macroeconomic factors, the Group's Management has carried out a detailed analysis of the use of its facilities considering the reallocation of production volumes derived from the operation of the new plant mentioned.
As a result of the previously described scenario, the Group determined that certain facilities belonging to its cement plant called Sierras Bayas will not be used in the near future, since their volumes will be reallocated to the new plant, considering the volumes currently produced and sold. Therefore, the Group recognized a loss due to impairment of property, plant and equipment that amounted to 141,380 in the consolidated statement of condensed interim comprehensive income.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
33
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
OVERVIEW OF THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2021 AND 2020 (All
amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
2. EQUITY STRUCTURE, COMPARATIVE (*)
09.30.2021 | 09.30.2020 | 09.30.2019 | 09.30.2018 | ||||||||||||
Current assets | 17,366,609 | 20,472,376 | 17,902,573 | 24,138,369 | |||||||||||
Non-current assets | 76,526,862 | 76,972,581 | 83,358,186 | 58,275,724 | |||||||||||
Total assets | 93,893,471 | 97,444,957 | 101,260,759 | 82,414,093 | |||||||||||
Current liabilities | 15,672,564 | 24,564,058 | 30,252,119 | 23,439,141 | |||||||||||
Non-current liabilities | 14,332,422 | 14,765,737 | 17,723,161 | 13,500,477 | |||||||||||
Total liabilities | 30,004,986 | 39,329,795 | 47,975,280 | 36,939,618 | |||||||||||
Non-controlling interests | 269,118 | 437,094 | 4,361,485 | 4,531,368 | |||||||||||
Shareholders’ equity attributable to owners of the company | 63,619,367 | 57,678,068 | 48,923,993 | 40,943,107 | |||||||||||
Total shareholders’ equity | 63,888,485 | 58,115,162 | 53,285,478 | 45,474,475 |
3. STRUCTURE OF RESULTS, COMPARATIVE (*)
09.30.2021 | 09.30.2020 | 09.30.2019 | 09.30.2018 | ||||||||||||
Gross income | 15,075,773 | 10,685,145 | 13,373,783 | 12,342,934 | |||||||||||
Selling and administrative expenses | (4,014,214 | ) | (3,301,727 | ) | (3,852,865 | ) | (3,994,679 | ) | |||||||
Share of loss of associates | - | (553,024 | ) | - | - | ||||||||||
Other gains and losses | 178,797 | 87,837 | 25,928 | 15,386 | |||||||||||
Impairment of property, plant and equipment | (141,380 | ) | (1,296,928 | ) | - | - | |||||||||
Tax on bank accounts debits and credits | (498,341 | ) | (492,440 | ) | (566,914 | ) | (568,225 | ) | |||||||
Financial results, net | 168,365 | 614,151 | (2,573,399 | ) | (4,943,754 | ) | |||||||||
Profit before tax | 10,769,000 | 5,743,014 | 6,406,533 | 2,851,662 | |||||||||||
Income tax | (7,549,063 | ) | (1,229,213 | ) | (1,979,584 | ) | (1,588,619 | ) | |||||||
Net profit for the period from continued operation | 3,219,937 | 4,513,801 | 4,426,949 | 1,263,043 | |||||||||||
Net profit for the period from discontinued operations | - | 7,024,025 | 1,014,368 | 702,935 | |||||||||||
Net profit for the period | 3,219,937 | 11,537,826 | 5,441,317 | 1,965,978 | |||||||||||
Net profit for the period attributable to: | |||||||||||||||
Owners of the company | 3,322,268 | 11,429,593 | 5,201,235 | 1,740,704 | |||||||||||
Non-controlling interests | (102,331 | ) | 108,233 | 240,082 | 225,274 | ||||||||||
Other comprehensive income | |||||||||||||||
Due to exchange differences | - | (392,262 | ) | 364,748 | 2,976,911 | ||||||||||
Total other comprehensive income for the period | - | (392,262 | ) | 364,748 | 2,976,911 | ||||||||||
Total comprehensive income for the period | 3,219,937 | 11,145,564 | 5,806,065 | 4,942,889 |
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
OVERVIEW OF THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2021 AND 2020 (All
amounts are expressed in thousands of Argentine pesos - $ - except otherwise indicated)
4. COMPARATIVE CASH FLOWS STRUCTURE (*)
09.30.2021 | 09.30.2020 | 09.30.2019 | 09.30.2018 | ||||||||||||
Net cash flows generated by operating activities | 8,912,142 | 10,111,699 | 9,197,732 | 4,575,114 | |||||||||||
Funds (used in) / generated by investing activities | (5,970,601 | ) | 423,283 | (17,585,687 | ) | (6,392,432 | ) | ||||||||
Funds (used in) / generated by financing activities | (5,689,113 | ) | (10,029,249 | ) | 3,330,985 | (3,245,268 | ) | ||||||||
Total funds (used in) / generated by during the period | (2,747,572 | ) | 505,733 | (5,056,970 | ) | (5,062,586 | ) |
5. STATISTICAL DATA (*) (In tons)
09.30.2021 | 09.30.2020 | 09.30.2019 | 09.30.2018 | ||||||||||||
Production volume (**) | 4,361,753 | 3,477,652 | 4,178,886 | 4,651,993 | |||||||||||
Sales volume (**) | |||||||||||||||
Argentina | 4,441,434 | 3,535,834 | 4,189,574 | 4,676,113 | |||||||||||
Abroad | 5,629 | 4,767 | 2,812 | 3,615 | |||||||||||
Total | 4,447,063 | 3,540,601 | 4,192,386 | 4,679,728 |
6. INDEXES
09.30.2021 | 09.30.2020 | 09.30.2019 | 09.30.2018 | ||||||||||||
Liquidity | 1.11 | 0.83 | 0.59 | 1.03 | |||||||||||
Solvency | 2.13 | 1.48 | 1.11 | 1.23 | |||||||||||
Capital immobilization | 0.82 | 0.79 | 0.82 | 0.71 |
7. FUTURE PROSPECTS (**)
Forecasts for the Argentine economy show a GDP interannual growth for 2021 of about 8.3%, which will be a partial recovery after the sharp fall in 2020. We observe that the construction sector shows a stronger recovery during the year, being subject to the macroeconomic challenges of the country’s economic situation.
(*) The information presented for comparative purposes has been modified to give retroactive effect to the deconsolidation of the Yguazu Cementos S.A. operation. discontinued as of August 21, 2020.
(**) Information not examined or covered by the Review Report.
Free translation in English of the original consolidated financial statements filed in Spanish with the Argentine National Securities Commission (“CNV”). In case of discrepancy, the consolidated financial statements filed with the CNV prevail over this free translation.
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