0001157523-19-001897.txt : 20190820 0001157523-19-001897.hdr.sgml : 20190820 20190820164122 ACCESSION NUMBER: 0001157523-19-001897 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190820 FILED AS OF DATE: 20190820 DATE AS OF CHANGE: 20190820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Loma Negra Compania Industrial Argentina Sociedad Anonima CENTRAL INDEX KEY: 0001711375 STANDARD INDUSTRIAL CLASSIFICATION: CEMENT, HYDRAULIC [3241] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38262 FILM NUMBER: 191040190 BUSINESS ADDRESS: STREET 1: RECONQUISTA 1088, 7TH FLOOR CITY: BUENOS AIRES STATE: C1 ZIP: C1003ABQ BUSINESS PHONE: 54 114-319-3000 MAIL ADDRESS: STREET 1: RECONQUISTA 1088, 7TH FLOOR CITY: BUENOS AIRES STATE: C1 ZIP: C1003ABQ 6-K 1 a52081675.htm LOMA NEGRA CORPORATION 6-K


UNITED STATES
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
 
For the month of August, 2019
 
Commission File Number: 001-38262
_______________
 
LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
(Exact Name of Registrant as Specified in its Charter)
 
LOMA NEGRA CORPORATION
(Translation of Registrant’s name into English)
_______________
 
Cecilia Grierson 355, 3th Floor
Zip Code 1107 – Capital Federal
Republic of Argentina
(Address of principal executive offices)
_______________
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F  ☒    Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐


Table of Contents
 
Item
 
                                                      Description
1
 
Loma Negra Relevant Event

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Loma Negra Compañía Industrial Argentina Sociedad Anónima
 
 
 
 
Date: August 20, 2019
 
By: /s/
Marcos I. Gradin
 
 
Name:
Marcos I. Gradin
 
 
Title:
Chief Financial Officer



 
Loma Negra Compañía Industrial Argentina
Sociedad Anónima

Condensed Interim Financial Statements as of June 30, 2019
and for the six and three month periods
ended June 30, 2019 and 2018


Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).


Loma Negra Compañía Industrial Argentina
Sociedad Anónima

Condensed Interim Consolidated Financial Statements
as of June 30, 2019 and for the six and
three month periods ended June 30, 2019 and 2018


Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018

CONTENTS

Unaudited condensed interim consolidated comprehensive income statement
Unaudited condensed interim consolidated balance sheet
Unaudited condensed interim consolidated statement of changes in shareholders’ equity
Unaudited condensed interim consolidated statement of cash flows
Notes to the unaudited condensed interim consolidated financial statements:
1 Legal information
2 Basis of preparation
3 Critical accounting opinions and key sources used for estimating uncertainty
4 Net revenues
5 Cost of sales
6 Selling and administrative expenses
7 Other net income and expenses
8 Tax on bank debits and credits
9 Financial income/(loss)
10 Income tax
11 Earnings per share
12 Property, plant and equipment
13 Inventories
14 Balances and transactions with related parties
15 Other receivables
16 Right to use assets and liabilities for leases
17 Trade accounts receivable
18 Investments
19 Capital stock and other related accounts
20 Accumulated other comprehensive income
21 Loans
22 Accounts payable
23 Provisions
24 Tax liabilities
25 Cash and cash equivalents
26 Financial instruments
27 Nonmonetary transactions
28 Segment reporting
29 Security granted to controlled companies
30 Commitments

Information Report

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED COMPREHENSIVE INCOME STATEMENT AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

         
Six months
   
Three months
 
   
Notes
     
06.30.2019
     
06.30.2018
     
06.30.2019
     
06.30.2018
 
                                       
Net revenues
   
4
     
15,614,798
     
15,494,761
     
7,470,141
     
7,636,575
 
Cost of sales
   
5
     
(11,349,271
)
   
(11,654,303
)
   
(5,553,097
)
   
(5,621,706
)
                                         
Gross income
           
4,265,527
     
3,840,458
     
1,917,044
     
2,014,869
 
                                         
Selling and administrative expenses
   
6
     
(1,171,550
)
   
(1,182,344
)
   
(486,007
)
   
(579,380
)
Other net income and expenses
   
7
     
(14,323
)
   
(6,102
)
   
(12,025
)
   
(12,483
)
                                         
Tax on bank debits and credits
   
8
     
(161,946
)
   
(162,162
)
   
(40,397
)
   
(50,218
)
                                         
NET FINANCIAL INCOME/(LOSS)
                                       
Exchange difference
   
9
     
113,709
     
(744,357
)
   
289,883
     
(669,116
)
Income/(loss) for monetary position
           
571,737
     
61,629
     
349,345
     
(89,075
)
Financial income
   
9
     
9,893
     
1,636
     
-
     
2,438
 
Financial expenses
   
9
     
(578,802
)
   
(352,565
)
   
(375,485
)
   
(198,129
)
                                         
Income/(loss) before income tax
           
3,034,245
     
1,456,193
     
1,642,358
     
418,906
 
                                         
INCOME TAX
                                       
Current
   
10
     
(709,445
)
   
(345,065
)
   
(334,721
)
   
258
 
Deferred
   
10
     
(56,400
)
   
(143,986
)
   
(207,918
)
   
(243,326
)
                                         
NET INCOME FOR THE PERIOD
           
2,268,400
     
967,142
     
1,099,719
     
175,838
 
                                         
OTHER COMPREHENSIVE INCOME
                                       
Items to be reclassified through profit and loss:
                                       
Due to exchange differences
           
(279,858
)
   
557,484
     
(269,473
)
   
546,425
 
                                         
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)
           
(279,858
)
   
557,484
     
(269,473
)
   
546,425
 
                                         
TOTAL COMPREHENSIVE INCOME/(LOSS)
           
1,988,542
     
1,524,626
     
830,246
     
722,263
 
                                         
Net income from:
                                       
  Owners of the parent company
           
2,175,353
     
904,964
     
1,065,085
     
170,321
 
  Non-controlling interests
           
93,047
     
62,178
     
34,634
     
5,517
 
NET INCOME FOR THE PERIOD
           
2,268,400
     
967,142
     
1,099,719
     
175,838
 
                                         
Comprehensive income from:
                                       
  Owners of the parent company
           
2,032,621
     
1,189,290
     
927,651
     
449,007
 
  Non-controlling interests
           
(44,079
)
   
335,336
     
(97,405
)
   
273,256
 
TOTAL COMPREHENSIVE INCOME/(LOSS)
           
1,988,542
     
1,524,626
     
830,246
     
722,263
 
Earnings per share (basic and diluted, in Argentine Pesos)
   
11
     
3.6498
     
1.5183
     
1.7870
     
0.2858
 

The notes are an integral part of these condensed interim consolidated financial statements

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
1

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2019, COMPARATIVE WITH
DECEMBER 31, 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

   
Notes
     
06.30.2019
     
12.31.2018
 
ASSETS
                     
Non-current assets
                     
Property, plant, and equipment
   
12
     
31,453,365
     
26,779,621
 
Right of use assets
   
16
     
332,545
     
-
 
Intangible assets
           
272,409
     
267,497
 
Investments
   
18
     
2,034
     
2,034
 
Goodwill
           
20,291
     
20,291
 
Inventories
   
13
     
801,137
     
829,007
 
Other receivables
   
15
     
839,220
     
1,153,341
 
Trade  receivable
   
17
     
3,559
     
4,957
 
Total non-current assets
           
33,724,560
     
29,056,748
 
                         
Current assets
                       
Inventories
   
13
     
5,385,775
     
4,624,201
 
Other receivables
   
15
     
584,953
     
469,164
 
Trade  receivable
   
17
     
2,624,473
     
2,527,201
 
Investments
   
18
     
88,844
     
2,564,563
 
Cash and cash in banks
           
1,080,684
     
987,449
 
Total current assets
           
9,764,729
     
11,172,578
 
Total assets
           
43,489,289
     
40,229,326
 

The notes are an integral part of these condensed interim consolidated financial statements.
 
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
2

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2019, COMPARATIVE WITH
DECEMBER 31, 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
   
Notes
     
06.30.2019
     
12.31.2018
 
SHAREHOLDERS’ EQUITY AND LIABILITIES
                     
Capital stock and other capital related accounts
   
19
     
8,795,668
     
8,795,668
 
Reserves
           
9,447,725
     
2,791,227
 
Retained earnings
           
2,175,353
     
6,656,498
 
Accumulated other comprehensive income
   
20
     
193,256
     
335,988
 
Shareholders’ equity attributable to owners of the parent company
           
20,612,002
     
18,579,381
 
                         
Non-controlling interests
           
1,638,469
     
1,682,548
 
                         
Total shareholders’ equity
           
22,250,471
     
20,261,929
 
                         
LIABILITIES
                       
Non-current liabilities
                       
Loans
   
21
     
3,557,738
     
3,191,530
 
Accounts payable
   
22
     
1,037,469
     
473,904
 
Provisions
   
23
     
346,373
     
358,199
 
Lease payables
   
16
     
257,227
     
-
 
Other payables
           
38,852
     
9,670
 
Deferred tax liabilities
   
10
     
3,953,680
     
3,899,935
 
                         
Total non-current liabilities
           
9,191,339
     
7,933,238
 
                         
Current liabilities
                       
Loans
   
21
     
4,578,497
     
4,107,066
 
Accounts payable
   
22
     
5,826,818
     
5,940,575
 
Customer advances
           
147,756
     
206,443
 
Payroll and social security contributions
           
694,255
     
775,939
 
Tax liabilities
   
24
     
672,171
     
954,206
 
Lease liabilities
   
16
     
62,886
     
-
 
Other payables
           
65,096
     
49,930
 
                         
Total current liabilities
           
12,047,479
     
12,034,159
 
                         
Total liabilities
           
21,238,818
     
19,967,397
 
                         
Total shareholders’ equity and liabilities
           
43,489,289
     
40,229,326
 

The notes are an integral part of these condensed interim consolidated financial statements.
 
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
3

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS OF JUNE 30, 2019
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
   
Owners contributions
                 
Other
comprehensive
income
                 
   
Capital
 
Capital adjustments
 
Share premium
 
Merger premium
 
Legal reserve
 
Environmental reserve
 
Optional reserve
 
Future dividends reserve
 
Exchange income/(loss)
 
Accumulated income/(loss)
 
Shareholders’
equity
attributable to
owners of the
parent company
 
Non-controlling interests
 
Total
 
Balances as of January 1, 2019
 
59,603
 
2,748,867
 
5,071,141
 
916,057
 
127,260
 
4,384
 
2,622,708
 
36,875
 
335,988
 
6,656,498
 
18,579,381
 
1,682,548
 
20,261,929
 
                                                       
Resolved by Ordinary General Shareholders’ Meeting dated April 25, 2019:
                                                     
- Legal reserve
                 
332,825
                 
(332,825
)
-
     
-
 
- Optional reserve
                         
6,323,673
         
(6,323,673
)
           
Other comprehensive income
                                 
(142,732
)
   
(142,732
)
(137,126
)
(279,858
)
Income/(loss) for the period
                                     
2,175,353
 
2,175,353
 
93,047
 
2,268,400
 
Balances as of June 30, 2019
 
59,603
 
2,748,867
 
5,071,141
 
916,057
 
460,085
 
4,384
 
8,946,381
 
36,875
 
193,256
 
2,175,353
 
20,612,002
 
1,638,469
 
22,250,471
 

The notes are an integral part of these condensed interim consolidated financial statements.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
4

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS OF JUNE 30, 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

   
Owners contributions
                 
Other comprehensive income
                 
   
Capital
 
Capital adjustments
 
Share
premium
 
Other
capital adjustments
 
Merger premium
 
Legal reserve
 
Environmental reserve
 
Optional reserve
 
Future dividends reserve
 
Exchange income/(loss)
 
Accumulated income/(loss)
 
Shareholders’ equity
attributable to owners of the parent
company
 
Non-controlling interests
 
Total
 
Balances as of January 1, 2018
 
59,603
 
2,748,867
 
6,048,613
 
(977,472
)
916,057
 
126,270
 
4,384
 
-
 
36,875
 
41,507
 
7,077,068
 
16,081,772
 
1,215,158
 
17,296,931
 
                                                           
Resolved by Ordinary General Shareholders’ Meeting dated April 25, 2018:
                                                         
- Legal reserve
                     
990
                 
(990
)
-
     
-
 
- Optional reserve
                             
2,622,708
         
(2,622,708
)
-
     
-
 
Absorption of Other capital adjustments
         
(977,472
)
977,472
                             
-
     
-
 
Other comprehensive income
                                     
284,326
     
284,326
 
273,158
 
557,484
 
Income/(loss) for the period
                                         
904,964
 
904,964
 
62,178
 
967,142
 
Balances as of June 30, 2018
 
59,603
 
2,748,867
 
5,071,141
 
-
 
916,057
 
127,260
 
4,384
 
2,622,708
 
36,875
 
325,833
 
5,358,334
 
17,271,062
 
1,550,494
 
18,821,557
 

The notes are an integral part of these condensed interim consolidated financial statements.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
5

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

      06.30.2019       06.30.2018  
CASH FLOWS FROM OPERATING ACTIVITIES
               
Net income for the period
   
2,268,400
     
967,142
 
Adjustments to calculate cash flows from operating activities
               
Income tax recognized in results
   
765,845
     
489,051
 
Depreciation and amortizations
   
1,188,473
     
1,132,741
 
Provisions
   
73,409
     
53,380
 
Interest
   
194,471
     
241,467
 
Exchange difference
   
(196,496
)
   
338,156
 
Income from the sale of property, plant and equipment
   
(74
)
   
-
 
Other
   
2,768
     
(1,381
)
Changes in operating assets and liabilities
               
Inventories
   
(753,691
)
   
(1,008,132
)
Other receivables
   
(11,979
)
   
(190,530
)
Trade receivable
   
(531,238
)
   
(520,652
)
Customer advances
   
(31,990
)
   
(104,614
)
Accounts payable
   
(141,663
)
   
(509,858
)
Lease liabilities
   
(32,671
)
   
-
 
Payroll and social security contributions
   
62,086
     
(180,623
)
Provisions
   
(83,401
)
   
(40,505
)
Tax liabilities
   
(291,674
)
   
(1,151
)
Other payables
   
201,011
     
(32,297
)
Effect of remeasurement in homogeneous currency
   
(571,737
)
   
(198,201
)
Income tax paid
   
(513,235
)
   
(689.776
)
Net cash flows generated from/(applied to) operations
   
1.596.614
     
(255,783
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Income from the sale of property, plant, and equipment
   
8,417
     
5,952
 
Acquisition of property, plant and equipment
   
(4,712,961
)
   
(2,229,545
)
Acquisition of intangible assets
   
(19,570
)
   
(5.520
)
Contributions to the F.F.F.S.F.I Trust
   
(23,393
)
   
(31.659
)
Net cash flows used in investing activities
   
(4.747.507
)
   
(2,260,772
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
New loans
   
3,053,020
     
694.944
 
Interest paid
   
(671,843
)
   
(505.266
)
Repayment of loans
   
(1,421,785
)
   
(1.477.583
)
Net cash flows generated from/(applied to) financing activities
   
959.392
     
(1,287,905
)
 
Net changes in cash and cash equivalents
   
(2.191.501
)
   
(3,804,460
)
Cash and cash equivalents at the beginning of the year
   
3,552,012
     
5,746,494
 
Effect of remeasurementt in homogeneous currency of cash and equivalents
   
(64,095
)
   
(42,399
)
Effects of exchange differences on cash and cash equivalents held in foreign currency
   
(126,888
)
   
620,447
 
                 
Cash and cash equivalents at the closing of the period
   
1,169,528
     
2,520,082
 

The notes are an integral part of these condensed interim consolidated financial statements.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
6

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
1.            LEGAL INFORMATION
 
Registered office:

Boulevard Cecilia Grierson 355– 4th. Floor, Ciudad Autónoma de Buenos Aires, Argentina.


Fiscal year:

Fiscal year No. 95, beginning January 1, 2019.

Business of the Company:

The main business of the Company is the manufacturing and marketing of cement and its by-products, and also exploration of the mineral resources used in the production process.

The Company owns 9 factories in Argentina, in the provinces of Buenos Aires, Neuquén, San Juan and Catamarca. The Company also owns 21 concrete production plants.

In addition, the Company, through its subsidiary Cofesur S.A.U., has a controlling interest in Ferrosur Roca S.A., a company operating the rail freight network of the Roca Railroad under a concession granted by the Argentine government in 1993 for a period of 30 years, which allows access from several of Loma Negra’s cement production plants to the rail network. On March 8, 2018 and with the due approval of its majority shareholder (Cofesur S.A.U.), Ferrosur Roca S.A. requested the Enforcement Authority an extension of the concession for an additional term of 10 years, pursuant to the provisions in the Bidding Terms and Conditions and the Concession Agreement.

The Company also has a controlling interest in Recycomb S.A.U., a company engaged in the treatment and recycling of industrial waste intended to be used as fuel or raw material, and a controlling interest in Yguazú Cementos S.A., a company organized in Paraguay engaged in the manufacture and marketing of cement.

Date of registration with the Argentine Public Registry of Commerce and the Supervisory Board of Companies [IGJ]:

-
Of the bylaws: August 5, 1926 under No 38, on Page 46
-
Last amendment recorded: August 29, 2017, under No 17,557, on Book 85 of Joint-stock companies
-
No. of Registration with the Supervisory Board of Companies [IGJ]: 1,914,357.
-
Taxpayer's ID Number [CUIT]: 30-50053085-1
-
Date of expiration: July 3, 2116.


Parent company:

Cauê Austria Holding GmbH with 51.0437% of the Company’s shares and votes.

Capital structure:
 
The subscribed for and paid in capital amounts to $59,602,649, represented by 596,026,490 book-entry common shares with a nominal value of $ 0.10 each, and each entitling to one vote.
 
2.            BASIS OF PREPARATION
 
2.1 Basis of preparation
 
The accompanying condensed interim consolidated balance sheet as of June 30, 2019, the condensed interim consolidated comprehensive income statement, condensed interim consolidated statement of changes in shareholders’ equity and of cash flows for the six month periods ended June 30, 2019 and 2018 and the notes to the condensed interim consolidated financial statements (hereinafter, the “Interim financial statements”) are unaudited and have been prepared as interim financial information. These interim financial statements are prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, pursuant to the provisions in Technical Resolution No. 26 (as amended) issued by the Argentine Federation of Professional Councils of Economic Sciences [FACPCE] and the Regulations issued by the Argentine Securities Commission [“Comisión Nacional de Valores” (CNV)].
 
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
7

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

Consequently, not all of the disclosures required in accordance with International Financial Reporting Standards (IFRS) for annual financial statements are included herein, hence, these interim financial statements shall be read in conjunction with the Company’s consolidated financial statements for the fiscal years ended December 31, 2018 and 2017 issued on March 7, 2019. In the opinion of Management, these unaudited condensed interim consolidated financial statements include all normal recurring adjustments, which are necessary for a fair representation of financial results for the interim periods presented.
 
The financial information as of December 31, 2018 presented in these unaudited condensed interim consolidated financial statements arise from our audited consolidated financial statements for the year ended December 31, 2018 restated in closing currency of the reported period, following the guidelines in IAS 29. Such guidelines have been described in Note 2.2 to our consolidated financial statements as of December 31, 2018.
 
The results of operations for the six month periods ended June 30, 2019 and 2018 do not necessarily reflect the results for the full years. The Company believes that the disclosures are adequate and sufficient to consider that the information presented is not misleading.
 
These condensed interim consolidated financial statements were approved for issue by the Board of Directors on August 8, 2019, the date when the condensed interim financial statements were available for issuance.

2.2 Basis of consolidation
 
These interim financial statements include the unaudited condensed interim consolidated financial position, results of operations and cash flows of the Company and its consolidated subsidiaries. The basis of consolidation and the subsidiaries are the same as for the Company’s audited consolidated financial statements for the year ended December 31, 2018, issued on March 7, 2019.
 
The consolidated information disclosed in these condensed interim financial statements include the following subsidiaries:


  Main activity  
Country
 
% of direct and indirect ownership as of
 
             
06.30.2019
     
12.31.2018
     
06.30.2018
 
Controlled:
                               
                                 
Cofesur S.A.U.
 
Investment
 
Argentina
   
100.00
     
100.00
     
100.00
 
                                 
Ferrosur Roca S.A. (1)
 
Rail freight transportation
 
Argentina
   
80.00
     
80.00
     
80.00
 
                                 
Recycomb S.A.U.
 
Waste recycling
 
Argentina
   
100.00
     
100.00
     
100.00
 
                                 
Yguazú Cementos S.A.
 
Marketing and manufacture of construction materials
 
Paraguay
   
51.00
     
51.00
     
51.00
 

(1)    Directly controlled by Cofesur S.A.U.

Below is a summary of the financial information for subsidiaries with material non-controlling ownership interests. The summarized information does not include intragroup deletions due to consolidation.

a)Yguazú Cementos S.A.
     
06.30.2019
     
12.31.2018
 
Current assets (1)
   
1,539,112
     
1,564,732
 
Non-current assets
   
4,395,699
     
5,040,895
 
Current liabilities (2)
   
690,660
     
919,173
 
Non-current liabilities (2)
   
2,197,245
     
2,621,854
 
Shareholders’ equity attributable to owners of the parent company
   
1,553,973
     
1,562,997
 
Non-controlling interests
   
1,492,934
     
1,501,603
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
8

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

(1)
Includes 602,217 and 698,834 of cash and cash equivalents as of June 30, 2019 and December 31, 2018, respectively.
(2)
Includes the financial loans described in Note 21.

     
06.30.2019
     
06.30.2018
 
Six month period
               
Net revenues from sales
   
1,461,471
     
1,192,977
 
Financial income/(loss)
   
(116,308
)
   
(120,881
)
Depreciations
   
(229,033
)
   
(184,700
)
Income tax
   
(23,777
)
   
(10,195
)
Net income
   
262,165
     
145,948
 

     
06.30.2019
     
06.30.2018
 
Six month period
               
Net cash flows from operating activities
   
391,952
     
202,605
 
Net cash flows used in investment activities
   
(13,307
)
   
(22,226
)
Net cash flows applied to financing activities
   
(417,532
)
   
(111,080
)

The figures presented for Yguazú Cementos S.A. arise from the information provided by that company converted into Argentine Pesos and adjusted to conform to the Company's accounting policies and in compliance with IFRS.

b)Ferrosur Roca S.A.

     
06.30.2019
     
12.31.2018
 
                 
Current assets
   
872,621
     
866,521
 
Non-current assets
   
2,126,581
     
2,213,164
 
Current liabilities
   
2,065,145
     
1,976,422
 
Non-current liabilities
   
206,377
     
148,295
 
Shareholders’ equity attributable to owners of the parent company
   
582,144
     
729,052
 
Non-controlling interests
   
145,536
     
182,263
 
                 
     
06.30.2019
     
06.30.2018
 
Six month period
               
Net revenues from sales
   
1,478,990
     
1,542,271
 
Financial income/(loss)
   
(101,206
)
   
(24,904
)
Depreciations
   
(245,033
)
   
(219,119
)
Income tax
   
24,239
     
143,798
 
Net loss for the period
   
(177,047
)
   
(46,677
)
                 
     
06.30.2019
     
06.30.2018
 
Six month period
               
Net cash flows generated from (applied to) operations
   
233,403
     
(135,648
)
Net cash flows applied to investing activities
   
(131,712
)
   
(211,754
)
Net cash flows (applied to) generated from financing activities
   
(80,338
)
   
368,752
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
9

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

2.3 Accounting policies

These condensed interim consolidated financial statements have been prepared using the same accounting policies and criteria used in the preparation of the audited consolidated financial statements for the fiscal year ended December 31, 2018, except for the adoption of new standards and interpretations effective as of January 1, 2019.

2.3.1 Application of new and revised International Financial Reporting Standards (IFRS)

 Adoption of new and revised IFRS          

The Company has adopted all of the new and revised standards and interpretations issued by the IASB that are relevant to its operations and that are mandatorily effective as of June 30, 2019 as described in note 2.2 to the Company's annual consolidated financial statements as of December 31, 2018. 

The Group has not opted for early adoption of any other standard, interpretation or amendment that has been issued but is not yet in force.

New standards

New standards and interpretations issued during the six month period ended June 30, 2019 and the standards and interpretations issued but not mandatory as of that date are described in Note 2.2 to the consolidated financial statements as of December 31, 2018. Note 16 contains a description of the impact of the application of IFRS 16 to these consolidated condensed interim financial statements.

2.3.2 Ferrocarril Roca Management Trust

The interest in the Ferrocarril Roca Management Trust is valued at cost value, taking into account the value of contributions made, net of trust expenses, plus the financial income/(loss) accrued until the closing of the fiscal year/period. The following unconsolidated information is for the entity not controlled by Ferrosur Roca S.A.

As of June 30, 2019 and December 31, 2018, Ferrosur Roca S.A. owns 100% of the following (unconsolidated) assets and liabilities:

     
06.30.2019
     
12.31.2018
 
                 
Current assets
   
96,940
     
68,531
 
Current liabilities
   
74
     
90
 
Non-current liabilities
   
43
     
-
 
Shareholders’ equity
   
96,823
     
68,440
 
 
3.            CRITICAL ACCOUNTING OPINIONS AND KEY SOURCES USED FOR ESTIMATING UNCERTAINTY

When applying the Group's accounting policies, the Management of the Company is required to make assessments, estimates and assumptions regarding the carrying amounts of assets and liabilities. The estimates and related assumptions are based on past experience and other factors that are considered relevant. Actual results may differ from these estimates.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
10

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

The unaudited condensed interim consolidated financial statements reflect all adjustments which are, in the opinion of the Management, necessary to make a fair statement of the results for the interim periods presented.
 
There are no significant changes to the critical judgements used by the Management in applying accounting policies to the critical judgements disclosed in the annual consolidated financial statements for the year ended December 31, 2018.
 
As a consequence of the activities in which the Company is engaged, the transactions of the Company do not have a significant cyclical or seasonal character. Nevertheless, during the second half of the year, historically the volume of sales in Argentina has showed a slight increase.
 
4.            NET REVENUES
 
     
06.30.2019
     
06.30.2018
 
Six month period
               
Sale of products
   
15,741,301
     
15,276,343
 
Domestic market
   
15,730,637
     
15,268,030
 
External market
   
10,664
     
8,313
 
                 
Services rendered
   
875,597
     
929,555
 
                 
(-) Bonuses / Discounts
   
(1,002,100
)
   
(711,137
)
Total
   
15,614,798
     
15,494,761
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
11

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
5.            COST OF SALES
 
    06.30.2019
    06.30.2018
 
Six month period
                           
Inventories at the beginning of the year
         
5,453,208
           
4,688,853
 
Finished products
   
474,229
             
252,531
         
Products in progress
   
1,317,948
             
1,125,145
         
Raw materials, materials, fuels and inventory in transit
   
3,661,031
             
3,311,177
         
                                 
Exchange difference
           
57,910
             
(148,371
)
                                 
Production purchases and expenses of the period
           
12,025,065
             
12,975,291
 
                                 
Inventories at the end of the period
           
(6,186,912
)
           
(5,861,470
)
Finished products
   
(421,574
)
           
(345,619
)
       
Products in progress
   
(1,733,317
)
           
(1,900,835
)
       
Raw materials, materials, fuels and inventory in transit
   
(4,032,021
)
           
(3,615,016
)
       
                                 
Cost of sales
           
11,349,271
             
11,654,303
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
12

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

The breakdown of production expenses is as follows:

     
06.30.2019
     
06.30.2018
 
Six month period
               
Fees and service fees
   
201,453
     
201,449
 
Salaries, wages and social security contributions
   
2,073,959
     
2,092,869
 
Personnel transport and travel expenses
   
80,704
     
88,109
 
Data processing
   
9,133
     
7,332
 
Taxes, contributions and commissions
   
201,940
     
194,907
 
Depreciation and amortizations
   
1,156,825
     
1,142,742
 
Preservation and maintenance
   
1,106,843
     
1,238,055
 
Communications
   
10,904
     
9,956
 
Rent
   
29,292
     
27,806
 
Personnel benefits
   
46,815
     
45,013
 
Electricity, gas and water services
   
3,961
     
3,124
 
Freight
   
888,873
     
1,146,085
 
Fuels
   
1,984,903
     
2,003,816
 
Insurance
   
32,659
     
24,761
 
Packaging
   
415,066
     
398,389
 
Electricity
   
1,145,970
     
1,191,447
 
Contractors
   
866,664
     
917,258
 
Tolls
   
1,665
     
2,903
 
Royalties
   
10,552
     
12,240
 
Surveillance
   
64,012
     
74,978
 
Other
   
139,609
     
124,756
 
Total
   
10,471,802
     
10,947,995
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
13

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
6.            SELLING AND ADMINISTRATIVE EXPENSES

     
06.30.2019
     
06.30.2018
 
Six month period
               
Managers, directors and statutory auditors’ fees
   
110,435
     
66,824
 
Fees and service fees
   
97,092
     
86,139
 
Salaries, wages and social security contributions
   
362,851
     
357,691
 
Personnel transport and travel expenses
   
14,885
     
16,932
 
Data processing
   
18,449
     
19,467
 
Advertising expenses
   
27,777
     
21,899
 
Taxes, contributions and commissions
   
296,912
     
324,086
 
Depreciation and amortizations
   
50,899
     
46,516
 
Preservation and maintenance
   
5,016
     
5,542
 
Communications
   
12,190
     
9,096
 
Rent
   
8,420
     
24,723
 
Personnel benefits
   
17,050
     
18,451
 
Electricity, gas and water services
   
1,794
     
1,603
 
Freight
   
101,644
     
135,199
 
Insurance
   
21,453
     
15,988
 
Allowance for bad debts
   
2,143
     
1,908
 
Surveillance
   
2,618
     
2,493
 
Other
   
19,922
     
27,787
 
Total
   
1,171,550
     
1,182,344
 
 
7.            OTHER NET INCOME AND EXPENSES
 
     
06.30.2019
     
06.30.2018
 
Six month period
               
Income from the sale of property, plant and equipment
   
74
     
-
 
Donations
   
(9,844
)
   
(12,596
)
Technical assistance services
   
2,145
     
3,012
 
Income from assignment of tax credits
   
3,405
     
-
 
Substitute taxpayer tax
   
(8,155
)
   
(7,237
)
Contingencies
   
(21,554
)
   
(8,377
)
Rent
   
19,148
     
20,431
 
Miscellaneous
   
458
     
(1,335
)
Total
   
(14,323
)
   
(6,102
)

8.            TAX ON BANK DEBITS AND CREDITS

The general tax rate for bank debits and credits is 0.6% for amounts credited or debited to or from the Company's bank accounts. For credited and debited amounts, 33% of both items may be used as payment of account of other taxes. 67% on credits and debits is included in this line of the comprehensive income statement.
 
Under Argentine Law No. 27,432, the Argentine Executive may provide that the percentage of the aforesaid tax that is not computable as payment on account of income tax be progressively reduced by up to an annual twenty percent (20%) as from January 1, 2018, with an option to establish that, in 2022, the tax provided for under Argentine Law No. 25,413, as amended, be fully considered as payment on account of income tax. On May 7, 2018 Decree 409/2018 published in the Official Gazette established that taxpayers subject to the general rate of twelve per thousand may use the 33% on debits and credits to the related bank accounts on account of income tax payable.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
14

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
9.            FINANCIAL INCOME/(LOSS)
 
Six month period
   
06.30.2019
     
06.30.2018
 
From exchange differences
               
Income from exchange differences
   
216,526
     
461,265
 
Expenses for exchange differences
   
(102,817
)
   
(1,205,622
)
Total
   
113,709
     
(744,357
)
Financial income
               
Updates
   
9,893
     
1,636
 
Total
   
9,893
     
1,636
 
Financial expenses
               
Interest expenses
   
(408,249
)
   
(229,530
)
Tax interest
   
(48,611
)
   
(8,824
)
Interest from temporary investments
   
(30,529
)
   
(36,433
)
Updates
   
(17,441
)
   
(25,983
)
Interest from loans to related parties
   
-
     
(6,580
)
Other
   
(73,972
)
   
(45,215
)
Total
   
(578,802
)
   
(352,565
)
 
10.            INCOME TAX

Income tax expense is recognized on the basis of the income/(loss) accrued in the period and the statutory rate expected at year-end.

This criterion does not significantly differ from the criterion established in IAS 34, which requires income tax expense to be recognized in each interim period based on the best estimate of the effective tax rate expected as of year-end.

The reconciliation of income tax expense for the six month periods ended June 30, 2019 and 2018 and that which would result from applying the statutory rate in force on the net income before income tax for the condensed interim comprehensive income statement for each period is as follows:

     
06.30.2019
     
06.30.2018
 
                 
Incomebefore income tax
   
3,034,245
     
1,456,193
 
Statutory rate (*)
   
30
%
   
30
%
Income tax at statutory rate
   
(910,274
)
   
(436,858
)
Adjustments for calculation of the effective income tax:
               
Effect of different rates of foreign subsidiaries (*)
   
57,188
     
31,229
 
Effect of tax revaluation
   
292,278
     
-
 
Effect of change in deferred tax rate
   
94,627
     
(5,487
)
remeasurement in homogeneous currency
   
(306,053
)
   
(76,865
)
Other permanent differences
   
6,389
     
(1,070
)
Total income tax
   
(765,845
)
   
(489,051
)
                 
INCOME TAX
               
Current
   
(709,445
)
   
(345,065
)
Deferred
   
(56,400
)
   
(143,986
)
Total
   
(765,845
)
   
(489,051
)

(*) The statutory rate in force for this period in Argentina is 30 % while in Paraguay the statutory rate is 10 %.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
15

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

Likewise, the breakdown of deferred income as of June 30, 2019 and December 31, 2018 is as follows:

     
06.30.2019
     
12.31.2018
 
Assets
               
Tax losses
   
181,437
     
166,881
 
Provisions
   
30,111
     
19,195
 
Other receivables
   
63,656
     
-
 
Trade accounts receivable
   
-
     
1,151
 
Other
   
16,553
     
7,111
 
Total assets
   
291,757
     
194,338
 
                 
                 
                 
                 
Liabilities
               
Investments
   
(5,384
)
   
(3,568
)
Property, plant, and equipment
   
(3,794,927
)
   
(3,694,835
)
Other receivables
   
-
     
(26,145
)
Inventories
   
(426,227
)
   
(348,222
)
Other
   
(18,899
)
   
(21,503
)
Total liabilities
   
(4,245,437
)
   
(4,094,273
)
Total deferred liabilities
   
(3,953,680
)
   
(3,899,935
)

The Argentine Tax Reform Law No. 27,430, as amended by Law No. 27,468, set certain guidelines in connection with the inflation adjustment for tax purposes for fiscal years commencing on or after January 1, 2018, namely: (a) the adjustment will be applicable to any fiscal year in which the changes in the CPI surpass 100% over the thirty six months prior to the fiscal year for which tax is being assessed; (b) during the first, second and third fiscal year following adoption, the adjustment will be applied provided the changes in the CPI, calculated from the beginning through the end of each of such fiscal years, are higher than 55%, 30% and 15% for the first, second and third year of adoption, respectively; and (c) one third of the inflation adjustment for tax purposes, whether positive or negative, as the case may be, for the first, second and third fiscal year commencing on or after January 1, 2018, to be calculated upon the occurrence of the assumptions in paragraphs (a) and (b) above, will be carried in that fiscal year, while the remaining two thirds will be equally distributed in the two immediately following periods.

At each interim period-end, entities should consider whether the criteria set out in the Income Tax Law that trigger the inflation adjustment for tax purposes are expected to be met at fiscal year-end and, if so, should account for the income tax liability for the interim period (both current and deferred) in a manner that reflects the effects of the adoption of such adjustment, pursuant to the terms of the law. In this respect, management believes that, as of the date of approval of these interim financial statements, the assumptions that would trigger the adoption of the inflation adjustment for tax purposes in fiscal year 2019 will not occur. Such interpretation is based on the fact that, in applying the transition rules set out by law to determine whether the inflation adjustment for tax purposes should be applied or not in fiscal year 2019, entities should estimate whether, at that fiscal year-end, the cumulative real inflation rate for the two-year period to date will reach 85% (the arithmetic addition of 55% and 30%, that is, the percentages referred to in the law for the first and second effective years of the reform), and, in addition, whether the inflation rate for 2019 will surpass 30%. Management is currently monitoring the cumulative and projected real inflation levels for fiscal years 2018 and 2019, and will apply the inflation adjustment for tax purposes when the percentages set out by law are reached. Management's interpretation is substantiated by the fact that the Income Tax Law itself lays the ground for assessing the effects of inflation on a cumulative basis, in that it provides that the inflation adjustment should be applied when inflation surpasses 100% over a three-year period.
 
Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
16

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

11.            EARNINGS PER SHARE

Basic and diluted earnings per share

The earnings and weighted average number of common shares used in the calculation of basic and diluted earnings per share are as follows:

   
Six months
   
Three months
 
     
06.30.2019
     
06.30.2018
     
06.30.2019
     
06.30.2018
 
Net profit attributable to owners of the parent used in the calculation of basic and diluted earnings per share
   
2,175,353
     
904,964
     
1,065,085
     
170,321
 
                                 
Weighted average number of common shares for the purposes of basic and diluted earnings per share (in thousands of shares)
   
596,026
     
596,026
     
596,026
     
596,026
 
                                 
Basic and diluted earnings per share in Argentine Pesos
   
3.6498
     
1.5183
     
1.7870
     
0.2858
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
17

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

12.            PROPERTY, PLANT AND EQUIPMENT

     
06.30.2019
     
12.31.2018
 
                 
Cost
   
69,824,277
     
64,167,122
 
Accumulated depreciation
   
(38,370,912
)
   
(37,387,501
)
Total
   
31,453,365
     
26,779,621
 
                 
Land
   
398,737
     
400,350
 
Buildings
   
6,138,409
     
6,272,949
 
Machinery and equipment
   
11,644,349
     
12,100,896
 
Transport and freight vehicles
   
1,380,529
     
1,487,752
 
Furniture and fixtures
   
44,021
     
49,646
 
Quarries
   
2,465,039
     
2,401,434
 
Tools
   
30,451
     
33,136
 
Works in progress
   
9,351,830
     
4,033,458
 
Total
   
31,453,365
     
26,779,621
 

The Group acquired assets amounting to 6,266,507 during the six month period ended June 30, 2019. The most significant increases during the period ended June 30, 2019 were due to the progress of the L’Amali construction work.
 
13.            INVENTORIES

     
06.30.2019
     
12.31.2018
 
Non-current
               
Spare parts
   
829,397
     
864,305
 
Allowance for obsolete inventories
   
(28,260
)
   
(35,298
)
Total
   
801,137
     
829,007
 
                 
Current
               
Finished products
   
421,574
     
474,229
 
Products in progress
   
1,733,317
     
1,317,948
 
Raw materials, materials and spare parts
   
2,566,357
     
2,282,702
 
Fuels
   
664,527
     
549,322
 
Total
   
5,385,775
     
4,624,201
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
18

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

14.            BALANCES AND TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries have been eliminated and are not disclosed in this note.

The outstanding balances between the Group and other related parties as of June 30, 2019 and December 31, 2018 are as follows:

     
06.30.2019
     
12.31.2018
 
Other related parties:
               
InterCement Brasil S.A.
               
  Accounts payable
   
(40,910
)
   
(86,566
)
InterCement Trading e Inversiones S.A.
               
  Other receivables
   
32,600
     
5,130
 
  Accounts payable
   
(8,997
)
   
(9,819
)
InterCement Portugal S.A.
               
  Accounts payable
   
(126,886
)
   
(231,782
)
Cauê Austria Holding GmbH
               
  Other receivables
   
13,492
     
5,994
 

The total balances with other related parties by item as of June 30, 2019 and December 31, 2018 is as follows:

     
06.30.2019
     
12.31.2018
 
                 
Other receivables
   
46,092
     
11,124
 
Accounts payable
   
(176,793
)
   
(328,167
)

The amounts outstanding as of June 30, 2019 are unsecured and will be settled in cash.

The breakdown of transactions between the Group and related parties during the periods ended June 30, 2019 and 2018, respectively, is as follows:

     
06.30.2019
     
06.30.2018
 
                 
InterCement Brasil S.A. – purchase of goods and services
   
(18,609
)
   
(17,053
)
InterCement Trading e Inversiones S.A. - purchase of goods and services
   
-
     
(65,669
)
InterCement Trading e Inversiones S.A. – sale of services
   
29,476
         
InterCement Portugal S.A.– services received
   
(135,633
)
   
(137,488
)
InterCement Portugal S.A. – services rendered
   
-
     
28,491
 

The amount charged for fixed and variable compensation of key personnel amounts to 87,871 and 63,922 for the six month periods ended June 30, 2019 and 2018, respectively. On January 24, 2018, the Board of Directors of the Company approved an incentive program for certain hierarchical personnel calculated based on the value of the shares. As of the date of closing of these condensed interim consolidated financial statements that program has been implemented.

No expense has been recognized in the current period or in prior periods for bad or doubtful accounts related to the amounts owed by related parties.
 
15.            OTHER RECEIVABLES
 
     
06.30.2019
     
12.31.2018
 
Non-current
               
Advance to suppliers
   
642,825
     
914,991
 
Tax credits
   
48,122
     
106,038
 
Contributions to the trust “Fondo Fiduciario para el Fortalecimiento del Sistema Ferroviario Interurbano” (F.F.F.S.F.I.)
   
96,823
     
68,440
 
Expenses paid in advance
   
46,604
     
58,014
 
Security deposits
   
4,846
     
5,858
 
Total
   
839,220
     
1,153,341
 
                 
Current
               
Tax credits
   
266,749
     
159,168
 
Receivables from related parties (Note 14)
   
46,092
     
11,124
 
Expenses paid in advance
   
109,616
     
93,161
 
Security deposits
   
1,300
     
6,019
 
Reimbursement receivable
   
14,976
     
23,422
 
Advances to suppliers
   
13,254
     
31,429
 
Personnel loans
   
12,937
     
10,001
 
Balance receivable from ADSs program
   
84,940
     
94,157
 
Receivables from sale of property, plant and equipment
   
21,571
     
29,367
 
Miscellaneous
   
13,518
     
11,316
 
Total
   
584,953
     
469,164
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
19

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

16.            RIGHT OF USE ASSETS AND LIABILITIES FOR LEASES

On January 13, 2016, the International Accounting Standards Board (IASB) published IFRS 16, a new standard on leases to replace IAS 17, IFRIC 4, SIC-15 and SIC-27, effective for fiscal years beginning on or after January 1, 2019.

Said IFRS introduces that most lease agreements (and sub-lease agreements) are recognized in the accounting of the lease under a single model eliminating the distinction between operating and financial leases, and requires recognizing an asset for the right to use the leased asset and a liability reflecting the obligation to make future payments for the lease. There are no significant changes for the accounting of the lessor in relation to IAS 17.

The Company applied IFRS 16 using the modified retrospective method pursuant to paragraphs C5(b) and C8(b)(ii) as of the date of initial application. Under this method, IFRS 16 is retroactively adopted with the accumulated effect of the initial application recognized as of the date of initial application and the comparative information is not amended.

The Company has executed lease agreements, mainly for offices and land.

As from the application of IFRS 16, the Company has adopted an accounting method for recognition and measurement of all leases.

For leases previously classified as operating leases, the Company has recognized assets for the right to use and liabilities for leases, except for agreements for a term of less than twelve months (short term leases), for those associated to the exploitation of natural resources and for those where the underlying asset has low value. Assets and liabilities are initially measured on the basis of current value. Assets for the right to use have been recognized for an amount equivalent to liabilities for leases. Lease liabilities have been measured at current value of lease payments not paid yet, using the incremental rate for loans of the Company (the lessee) to the date of initial application.

Summary of the new accounting policies

Assets for right of use

The Company recognizes an asset for the right to use at the beginning of each lease (date when the asset is available for use). The assets for the right to use is measured at cost, net of accumulated depreciation and impairments, and adjusted for any remeasurement of liabilities and to recognize changes in the purchasing power of the currency. The cost of assets for the right to use includes the amount of liabilities for lease recognized, initial direct costs incurred and payments made before the date of commencement of the lease, minus any incentives received. Unless the Company is certain that it will acquire the asset at the end of the lease, assets for the right to use are depreciated in a lineal manner throughout the term of the estimated useful life and the period of the lease, whichever is shorter. Assets for the right to use are subject to impairment.

Lease liabilities

Liabilities for leases are measured at current value of future lease payments to be made throughout the lease period. Lease payments include fixed payments minus any incentives to be received, variable payments depending on an index or rate and values expected to be paid as security of residual value. Payments also include the value of the exercise of any option to purchase the underlying asset leased and any penalties for termination of the lease, provided it is reasonably possible that the Company will exercise such options. Variable payments not depending on an index or rate are recognized in the results of the period when the condition they are subject to takes place.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
20

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

Significant judgments to determine the lease period

The Company determines the periods of leases as the period during which the lease cannot be cancelled, together with any period covered by an option to extend or terminate the lease, provided the Company is reasonably certain that it will exercise such option.

The Company applies judgment in determining whether it will renew its leases, taking into consideration all relevant factors creating an economic incentive for the Company to exercise such options.

Amounts recognized in the financial statements

The effects of the application of IFRS 16 as of January 1, 2019 (date of initial application) and its progress as of June 30, 2019 are as follows:

     
06.30.2019
 
Leaseliabilities:
       
As of January 1, 2019
   
363,063
 
updates
   
17,395
 
Exchange difference
   
(27,674
)
Payments
   
(32,671
)
As of June 30, 2019
   
320,113
 

Right of use assets:
     
As of January 1, 2019
   
363,063
 
Depreciations
   
(30,518
)
As of June 30, 2019
   
332,545
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
21

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

17.            TRADE RECEIVABLE

     
06.30.2019
     
12.31.2018
 
Non-current
               
Regular debtors
   
9,311
     
10,966
 
Allowance for bad debts
   
(5,752
)
   
(6,009
)
Total
   
3,559
     
4,957
 
                 
Current
               
Regular debtors
   
2,484,513
     
2,361,205
 
Loan with U.E.P.F.P. - Ferrosur Roca S.A.
   
137,082
     
162,852
 
Accounts receivable in litigation
   
21,493
     
24,225
 
Notes receivable
   
387
     
221
 
Foreign customers
   
3,667
     
3,978
 
Subtotal
   
2,647,142
     
2,552,481
 
Allowance for bad debts
   
(22,669
)
   
(25,280
)
Total
   
2,624,473
     
2,527,201
 

18.            INVESTMENTS
 
Non-current
   
06.30.2019
     
12.31.2018
 
Investments in other companies
               
   - Cementos del Plata S.A.
   
2,034
     
2,034
 
Total
   
2,034
     
2,034
 
                 
Current
               
Short-term investments:
               
- Mutual investment fund in pesos
   
-
     
364,474
 
- Certificate of deposit in pesos
   
-
     
1,029,254
 
- Investments in foreign currency
   
88,844
     
1,169,286
 
- Miscellaneous
   
-
     
1,549
 
Total
   
88,844
     
2,564,563
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
22

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

19.            CAPITAL STOCK AND OTHER CAPITAL RELATED ACCOUNTS
 
     
06.30.2019
     
12.31.2018
 
                 
Capital
   
59,603
     
59,603
 
Capital adjustment
   
2,748,867
     
2,748,867
 
Share premium
   
5,071,141
     
5,071,141
 
Merger premium
   
916,057
     
916,057
 
Total
   
8,795,668
     
8,795,668
 

The breakdown of issued, paid-in and registered capital is as follows:

Common shares with a nominal value of $0.10 each,
           
each entitling to 1 vote, fully paid-in (in thousands)
   
596,026
     
596,026
 

20.            ACCUMULATED OTHER COMPREHENSIVE INCOME
 
     
06.30.2019
     
12.31.2018
 
                 
Exchange differences for transactions in foreign currency
               
Balances at the beginning of the year
   
335,988
     
41,507
 
Difference due to conversion of transactions in foreign currency
   
(142,732
)
   
294,481
 
Balances at closing
   
193,256
     
335,988
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
23

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

21.            LOANS
 
21.1 Breakdown of loans
 
  06.30.2019       12.31.2018
  Company Ref. Rate
Last
Maturity
  Amount   Amount
Loans in foreign currency - USD
               
Industrial and Commercial Bank of China
Loma Negra C.I.A.S.A.
(1)
6 Months Libor + 4.25%
Mar-21
 
111,264
 
-
Industrial and Commercial Bank of China
Loma Negra C.I.A.S.A.
(1)
6 Months Libor + 4.25%
Apr– 21
 
129,636
 
-
Industrial and Commercial Bank of China
Loma Negra C.I.A.S.A.
(1)
6 Months Libor + 4.25%
May-  21
 
357,199
 
-
Industrial and Commercial Bank of China
Loma Negra C.I.A.S.A.
(1)
6 Months Libor + 4.25%
Jun- 21
 
85,401
 
-
Banco Latinoamericano de Comercio Exterior S.A.
Ferrosur Roca S.A.
 
3 Months Libor + 1.95%
Aug-19
 
641,799
 
697,024
Industrial and Commercial Bank of China (Dubai)
Loma Negra C.I.A.S.A.
(2)
3 Months Libor + 5%
Nov -20
 
1,107,811
 
1,809,963
Industrial and Commercial Bank of China (Dubai)
Loma Negra C.I.A.S.A.
(2)
3 Months Libor + 5.5%
Jun-20
 
425,344
 
461,139
Loans in foreign currency – Euro
               
Banco Itaú S.A.
Loma Negra C.I.A.S.A
(1)
4%
Apr-21
 
65,175
 
-
Banco Itaú S.A.
Loma Negra C.I.A.S.A
(1)
4%
May-21
 
15,554
 
-
Banco Itaú S.A.
Loma Negra C.I.A.S.A
(1)
4%
Jun- 21
 
82,626
 
-
Total loans in foreign currency
         
3,021,809
 
2,968,126
                 
Loans in local currency
               
Banco Continental S.A.E.C.A.
Yguazú Cementos S.A.
 
8.5%
Aug-25
 
1,599,345
 
1,889,802
Sumaeris Bank S.A.E.C.A.
Yguazú Cementos S.A.
 
9.0%
Aug-25
 
1,051,578
 
1,242,282
Banco Itaú Paraguay S.A.
Yguazú Cementos S.A.
 
-
-
 
-
 
90,876
Banco Provincia de Buenos Aires
Loma Negra C.I.A.S.A.
 
-
-
 
-
 
22,029
Banco Provincia de Buenos Aires
Loma Negra C.I.A.S.A.
 
-
-
 
-
 
45,179
Banco Provincia de Buenos Aires
Loma Negra C.I.A.S.A.
 
BADLAR + 2%
Jul-19
 
798
 
6,848
HSBC Bank Argentina S.A.
Loma Negra C.I.A.S.A.
 
-
-
 
-
 
193,235
HSBC Bank Argentina S.A.
Ferrosur Roca S.A.
 
-
-
 
-
 
193,235
Advances in checking account
Loma Negra C.I.A.S.A.
 
63.20%
Jul-19
 
1,486,226
 
6,356
Advances in checking account
Recycomb S.A.U.U.
 
-
-
 
-
 
7,908
Advances in checking account
Ferrosur Roca S.A.
 
63.30%
Jul-19
 
976,479
 
632,720
Total loans in local currency
         
5,114,426
 
4,330,470
Total
         
8,136,235
 
7,298,596

(1) During this period, Loma Negra executed various agreements in US Dollars with the Industrial and Commercial Bank of China and various agreements in Euros with Banco Itaú. Such loans shall be repaid in March, April, May and June, 2021.

(2) In May, the Company extended the maturity dates of the loan agreements entered into with the Industrial and Commercial Bank of China for USD 10,000,000 and USD 26,000,000.

     
06.30.2019
     
12.31.2018
 
Total of loans by company:
               
Loma Negra C.I.A.S.A.
   
3,867,034
     
2,544,749
 
Ferrosur Roca S.A.
   
1,618,278
     
1,522,979
 
Recycomb S.A.U.
   
-
     
7,908
 
Yguazú Cementos S.A.
   
2,650,923
     
3,222,960
 
Total
   
8,136,235
     
7,298,596
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
24

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

21.2 Loan transactions

The breakdown of loan transactions for the six month period ended June 30, 2019 is as follows:

       
Balances as of January 1, 2019
   
7,298,596
 
New loans and financing
   
3,053,020
 
Interest accrued
   
417,202
 
Exchange difference
   
(273,756
)
Effects of exchange differences
   
(265,199
)
Interest payments
   
(671,843
)
Principal payments
   
(1,421,785
)
Balances as of June 30, 2019
   
8,136,235
 

As of June 30, 2019, the maturity schedule for long-term items is as follows:

Fiscal year
     
2020
   
749,380
 
2021
   
1,232,271
 
2022
   
394,022
 
2023 onwards
   
1,182,065
 
Total
   
3,557,738
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
25

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

 22.            ACCOUNTS PAYABLE

     
06.30.2019
     
12.31.2018
 
Non-current
               
Accounts payable for investments in property, plant and equipment
   
1,037,469
     
142,591
 
Provisions for expenses
   
-
     
331,313
 
Total
   
1,037,469
     
473,904
 
                 
                 
Current
               
Suppliers
   
2,132,813
     
2,533,745
 
Related parties (Note 14)
   
176,793
     
328,167
 
Accounts payable for investments in property, plant and equipment and intangible assets
   
2,749,566
     
2,032,384
 
Provisions for expenses
   
767,646
     
1,046,279
 
Total
   
5,826,818
     
5,940,575
 

 23.            PROVISIONS
 
     
06.30.2019
     
12.31.2018
 
Non-current
               
Labor and social security
   
83,371
     
58,519
 
Environmental
   
194,571
     
227,820
 
Civil and others
   
68,431
     
71,860
 
Total
   
346,373
     
358,199
 

The activity of provisions items were as follows:

   
Labor and social security
   
Environmental
   
Civil and others
   
Total
 
                         
Balances as of January 1, 2019
   
58,519
     
227,820
     
71,860
     
358,199
 
Increases
   
41,568
     
17,345
     
14,032
     
72,944
 
Decreases (*)
   
(16,716
)
   
(50,594
)
   
(17,461
)
   
(84,771
)
Balances as of June 30, 2019
   
83,371
     
194,571
     
68,431
     
346,373
 

(*) Includes provisions for specific purposes and the effect of the inflation adjustment.
 
24.            TAX LIABILITIES
 
     
06.30.2019
     
12.31.2018
 
Income tax
   
223,009
     
450,721
 
Value added tax
   
107,781
     
115,471
 
Gross revenues
   
53,004
     
57,645
 
Other taxes, withholdings and collections
   
288,377
     
330,369
 
Total
   
672,171
     
954,206
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
26

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
25.            CASH AND CASH EQUIVALENTS

For the purposes of the condensed interim consolidated statement of cash flows, cash and cash equivalents include cash, bank accounts and short-term high liquidity investments (with maturities less than 90 days from the date of acquisition). Cash and cash equivalents at the end of each reporting fiscal period/year as shown in the condensed interim consolidated statement of cash flows may be reconciled with the related items in the condensed interim consolidated balance sheet as follows:

     
06.30.2019
     
12.31.2018
 
                 
Cash and banks
   
1,080,684
     
987,449
 
Short-term investments (Note 18)
   
88,844
     
2,564,563
 
Cash and cash equivalents
   
1,169,528
     
3,552,012
 
 
26.            FINANCIAL INSTRUMENTS

26.1 Debt to equity ratio
 
The net debt to equity ratio of the reporting period/year is as follows:

     
06.30.2019
     
12.31.2018
 
                 
Debt (i)
   
8,136,235
     
7,298,596
 
Cash and cash equivalents
   
1,169,527
     
3,552,012
 
Net debt
   
6,966,708
     
3,746,584
 
Shareholders’ equity (ii)
   
22,250,471
     
20,261,929
 
Net debt to equity ratio and shareholders’ equity
   
0.31
     
0.18
 

(i) Debt is defined as long and short-term loans.
(ii) Shareholders’ equity includes all the Group's reserves and capital managed as capital.

26.2 Categories of financial instruments

     
06.30.2019
     
12.31.2018
 
Financial assets
               
At amortized cost:                
Cash and banks
   
1,080,684
     
987,449
 
Investments
   
88,844
     
2,200,089
 
Accounts receivable
   
2,815,275
     
2,713,421
 
At fair value through income:
               
Investments
   
-
     
364,474
 

Financial liabilities
               
Amortized cost
   
16,791,008
     
15,502,821
 

26.3 Financial risks

The Group´s activities are exposed to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk considering the current inflation rates), credit risk and liquidity risk. The Group maintains an organizational structure and systems that allow the identification, measurement and control of the risks to which it is exposed.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
27

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

These condensed interim consolidated financial statements do not include all the information and disclosures on financial risks, therefore, they should be read in conjunction with the Company´s consolidated financial statements for the fiscal years ended December 31, 2018 and 2017 issued on March 7, 2019.

26.4 Fair value measurement

Fair value measurement is described in Note 32.9 to the annual consolidated financial statements.

From December 31, 2018 through June 30, 2019, there have been no significant changes in the industry’s economic activity affecting the fair value of the Group´s financial assets and liabilities, either measured at fair value or amortized cost. In addition, there were no transfers among the different levels of fair value hierarchy to assess the fair value of the Company's financial instruments during the six month period ended June 30, 2019.

The carrying amounts of financial assets and liabilities recognized at amortized cost, included in the consolidated financial statements as of June 30, 2019 and December 31, 2018, approximate to their fair values. Borrowings are measured at amortized cost considering the effective interest rate method, which approximate to their fair value given their cancellation period.

The Management of the Company considers that the liquidity risk exposure is low since the Company has been generating cash flows from its operating activities, supported on profits, and has access to loans and financial resources, as explained in Note 21.

26.5 Exchange risk management

The Group carries out transactions in foreign currency and is hence exposed to exchange rate fluctuations. Exposures in the exchange rate are managed within approved policy parameters using foreign exchange contracts.

The carrying amounts of monetary assets and liabilities stated in currencies other than the functional currency of each consolidated company at the end of the reporting period/year are as follows:

     
06.30.2019
     
12.31.2018
 
Liabilities
               
United States Dollars
   
5,101,936
     
4,672,482
 
Euro
   
1,227,296
     
425,398
 
Real
   
29
     
30
 
                 
Assets
               
United States Dollars
   
297,075
     
1,377,210
 
Euro
   
12,134
     
1,335
 
Real
   
110
     
109
 

Foreign currency sensitivity analysis

The Group is mainly exposed to the US Dollar and Euro.

The following table shows the sensitivity of the Group to an increase in the US Dollar and Euro exchange rates. The sensitivity rate is the one used when the exchange risk is reported internally to key management personnel and represents Management’s assessment of a possible reasonable change in exchange rates. The sensitivity analysis only includes outstanding foreign-currency monetary items and adjusts its conversion as of the end of the period/year considering a 25% increase in the exchange rate considering all the items of controlled companies in the calculation.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
28

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

   
Effect of US Dollars
   
Effect of the Euro
 
             
     
06.30.2019
     
06.30.2019
 
Income
   
1,201,215
     
303,790
 
Shareholder's Equity
   
1,201,215
     
303,790
 

 





27.            NONMONETARY TRANSACTIONS

Below is a list of transactions that did not involve cash flows in the six month periods ended June 30, 2019 and 2018, respectively:

     
06.30.2019
     
06.30.2018
 
                 
- Financed acquisitions of Property, plant and equipment
   
1,269,762
     
61,786
 

28.            OPERATING SEGMENTS

The Company has adopted IFRS 8 - Operating Segments, which requires operating segments to be identified on the basis of internal reports regarding components of the Company that are regularly reviewed by the Executive Committee, the chief operating decision maker, in order to allocate resources and evaluate their performance. Said analysis is based on monthly information on historical figures of the segments identified. The information reviewed by the chief operating decision maker mainly consists of the historical information of each month, accumulated until the closing of the fiscal period under analysis, and therefore defers from the inflation-adjusted figures as stated in Note 2.2.

For the purposes of managing its business both financially and operatively, the Company has classified its businesses segments as follows:

i)  Cement, masonry cement and lime - Argentina: this segment includes the results from the cement, masonry cement and lime business in Argentina, and comprises the procurement of raw materials from quarries, the manufacturing process of clinker/quicklime and their subsequent grinding with certain additions intended to obtain the cement, masonry cement and lime.
 
ii) Cement - Paraguay: this segment includes the results from the cement business in Paraguay, and comprises the procurement of raw materials from quarries, the manufacturing process of clinker and subsequent grinding with certain aggregates intended to obtain the cement.
 
iii) Concrete: this segment includes the results from the production and sale of ready-mix concrete. It also includes the delivery of the product at the worksite and, depending on the circumstances, the pumping of concrete up to the place of destination.
 
iv) Aggregates:  this segment includes the results from the aggregates business, from the procurement of the raw materials to subsequent grinding.
 
v) Railroad: this segment includes the results from the provision of the railroad transportation service.
 
vi) Others:  this segment includes the results of the business of treatment and recycling of industrial waste for its use as fuel.
 
     
06.30.2019
    06.30.2018  
Net revenues from sales
             
Cement, masonry and lime – Argentina
   
10,624,602
     
6,902,632
 
Cement – Paraguay
   
1,343,475
     
715,073
 
Concrete
   
2,199,827
     
1,497,011
 
Railroad
   
1,364,604
     
925,518
 
Aggregates
   
259,340
     
136,890
 
Other
   
66,229
     
52,867
 
Eliminations between segments
   
(1,463,496
)
   
(939,255
)
Total
   
14,394,581
     
9,290,736
 
Reconciliation - Effect of restatement in homogeneous currency
   
1,220,217
     
6,204,025
 
Total
   
15,614,798
     
15,494,761
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
29

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

Cost of sales
   
06.30.2019
     
06.30.2018
 
Cement, masonry and lime – Argentina
   
6,909,074
     
4,609,933
 
Cement – Paraguay
   
937,262
     
520,904
 
Concrete
   
2,042,867
     
1,420,074
 
Railroad
   
1,193,242
     
879,895
 
Aggregates
   
275,939
     
138,436
 
Other
   
40,705
     
29,317
 
Eliminations between segments
   
(1,463,496
)
   
(939,255
)
Total
   
9,935,593
     
6,659,304
 
Reconciliation - Effect of restatement in homogeneous currency
   
1,413,678
     
4,994,999
 
Total
   
11,349,271
     
11,654,303
 

Selling, administrative expenses and other expenses
   
06.30.2019
     
06.30.2018
 
Cement, masonry and lime – Argentina
   
834,220
     
526,575
 
Cement – Paraguay
   
38,123
     
29,339
 
Concrete
   
69,383
     
50,563
 
Railroad
   
98,348
     
68,436
 
Aggregates
   
3,501
     
2,645
 
Other
   
24,582
     
18,200
 
Total
   
1,068,157
     
695,758
 
Reconciliation - Effect of restatement in homogeneous currency
   
117,716
     
492,688
 
Total
   
1,185,873
     
1,188,446
 

Depreciation and amortizations
   
06.30.2019
     
06.30.2018
 
Cement, masonry and lime – Argentina
   
352,936
     
191,233
 
Cement – Paraguay
   
211,072
     
110,633
 
Concrete
   
26,811
     
15,523
 
Railroad
   
83,686
     
60,202
 
Aggregates
   
9,119
     
4,830
 
Other
   
1,573
     
1,310
 
Total
   
685,197
     
383,731
 
Reconciliation - Effect of remeasurement in homogeneous currency
   
503,276
     
749,010
 
Total
   
1,188,473
     
1,132,741
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
30

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)

Net revenues from sales minus cost of sales, selling and administrative expenses, and other income and expenses
   
06.30.2019
     
06.30.2018
 
Cement, masonry and lime – Argentina
   
2,881,308
     
1,766,124
 
Cement – Paraguay
   
368,090
     
164,830
 
Concrete
   
87,578
     
26,374
 
Railroad
   
73,015
     
(22,813
)
Aggregates
   
(20,100
)
   
(4,191
)
Other
   
940
     
5,350
 
Total
   
3,390,831
     
1,935,674
 
Reconciliation - Effect of remeasurement in homogeneous currency
   
(311,177
)
   
716,340
 
Total
   
3,079,654
     
2,652,014
 
Reconciling items:
               
  Tax on bank debits and credits
   
(161,946
)
   
(162,162
)
  Net financial income/(loss)
   
116,537
     
(1,033,657
)
  Income tax
   
(765,845
)
   
(489,053
)
Net income
   
2,268,400
     
967,142
 
                 

Geographical information
   
06.30.2019
     
12.31.2018
 
Non-current assets
               
Argentina
   
29,328,861
     
24,015,853
 
Paraguay
   
4,395,699
     
5,040,895
 

For these purposes, non-current assets do not include deferred tax assets.

No single customer contributed 10% or more of the Group´s income for the six month periods ended June 30, 2019 and 2018, respectively.
 
29.            SECURITY GRANTED TO CONTROLLED COMPANIES

Ferrosur Roca S.A. took a new 365 days loan for USD 15,000,000 with Banco Latinoamericano de Comercio Exterior S.A. "BLADEX" at a 3 month LIBOR + 1.95% interest rate with quarterly interest payments. Loma Negra granted security and surety in favor of BLADEX for up to the amount of the loan plus interest and expenses, and also signed the promissory notes issued by Ferrosur Roca S.A. in favor of that entity. As of June 30, 2019, Ferrosur Roca owes 641,799 under that loan

Furthermore, Loma Negra granted security for the lines of advances in checking account taken by Ferrosur Roca S.A. as part of the usual course of its activity. As of June 30, 2019, Ferrosur Roca S.A. owes 976,481 for such advances.
 
30.            COMMITMENTS

Commitments are described in Note 35 to the annual consolidated financial statements for the fiscal year ended December 31, 2018.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
31

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
INFORMATION REPORT
 
1. ACTIVITIES OF THE COMPANY
 
During the current period Loma Negra C.I.A.S.A. and its controlled companies dispatched 2,977,753 tons of cement and lime, and their net sales amounted to 15,614,798. Dispatches overall were 11% below those for the same period of the prior year.
 
Gross income amounted to 4,265,527 and the total comprehensive income for the six month period was 1,988,542. Said income accounts for a 30% increase compared to the comprehensive income for the same period of the prior year.
 
2. EQUITY STRUCTURE, COMPARATIVE
 
     
06.30.2019
     
06.30.2018
 
 Current assets
   
9,764,729
     
10,928,939
 
 Non-current assets
   
33,724,560
     
25,842,827
 
 Total assets
   
43,489,289
     
36,771,766
 
                 
 Current liabilities
   
9,191,339
     
9,627,552
 
 Non-current liabilities
   
12,047,479
     
8,322,658
 
 Total liabilities
   
21,238,818
     
17,950,210
 
                 
 Non-controlling interests
   
1,638,469
     
1,550,493
 
 Shareholders’ equity attributable to owners of the parent company
   
20,612,002
     
17,271,064
 
 Total shareholders’ equity
   
22,250,471
     
18,821,557
 

3. STRUCTURE OF RESULTS, COMPARATIVE
 
     
06.30.2019
     
06.30.2018
 
Gross income
   
4,265,527
     
3,840,458
 
Selling and administrative expenses
   
(1,171,550
)
   
(1,182,344
)
Other net income and expenses
   
(14,323
)
   
(6,102
)
Tax on bank debits and credits
   
(161,946
)
   
(162,162
)
Net financial income/(loss)
   
116,537
     
(1,033,657
)
Income before income tax
   
3,034,245
     
1,456,193
 
Income tax
   
(765,845
)
   
(489,051
)
Net income for the period
   
2,268,400
     
967,142
 
                 
Net income for the period attributable to:
               
Owners of the parent company
   
2,175,353
     
904,964
 
Non-controlling interests
   
93,047
     
62,178
 
                 
Other comprehensive income
               
Due to exchange differences
   
(279,858
)
   
557,484
 
Total other comprehensive income for the period
   
(279,858
)
   
557,484
 
Total comprehensive income for the period
   
1,988,542
     
1,524,626
 

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
32

LOMA NEGRA COMPAÑÍA INDUSTRIAL ARGENTINA SOCIEDAD ANÓNIMA
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2019 AND 2018
(All amounts are stated in thousands of Argentine Pesos - $ - unless otherwise stated)
 
4. COMPARATIVE CASH FLOWS STRUCTURE
 
     
06.30.2019
     
06.30.2018
 
Net cash flows generated from/(applied to) operating activities
   
1,596,614
     
(255,783
)
Funds applied to investing activities
   
(4,747,507
)
   
(2,260,772
)
Funds generated from/(applied to) financing activities
   
959,392
     
(1,287,905
)
Total funds applied during the period
   
(2,191,501
)
   
(3,804,460
)

5. STATISTICAL DATA (In tons)
 
     
06.30.2019
     
06.30.2018
 
Production volume (*)
   
2,968,210
     
3,299,096
 
                 
Sales volume (*)
               
   Argentina
   
2,699,820
     
3,066,042
 
   Paraguay
   
275,121
     
265,775
 
   Abroad
   
2,812
     
2,812
 
Total
   
2,977,753
     
3,334,629
 

(*) Information not examined or covered by the Review Report.
 
6. INDEXES
 
     
06.30.2019
     
06.30.2018
 
Liquidity
   
0.75
     
1.14
 
Creditworthiness
   
1.05
     
1.05
 
Fixed capital
   
0.78
     
0.70
 

7. FUTURE PROSPECTS (*)
 
During 2Q-2019, the Argentine economy started to show certain signs of stabilization. Not only did the strong rebound displayed by tradable sectors, in particular, agriculture and livestock and agribusiness, contribute significantly to the slight recovery in economic activity, but it also helped revert the external sector's imbalance, favoring FX stability.
 
Given its high correlation with the local economy, the construction industry and, hence, the cement industry, were still affected by the recessionary phase of the business cycle, which commenced during 2Q-2018. However, recent measurements have indicated year-on-year growth in some months.
 
Argentineans' purchasing power is expected to improve as inflation continues to decline, with the ensuing positive impact on the demand for bagged cement. On the other hand, the demand for cement dispatched in bulk will be tied to the completion of existing works underway, and the commencement of new works, both by the public and private sector.
 
Also during 2Q, the Company completed the reconversion of the Barker plant into a grinding line and distribution center, in an attempt to achieve efficiency and productivity gains. The Company also continued executing its capacity expansion project at L´Amalí plant, expected to be operational in 2Q-2020.

 
(*) Information not examined or covered by the Review Report.

Free translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).
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