EARNINGS RELEASE 2Q18

Transcription

1 EARNINGS RELEASE

2 CADU REPORTS A 18.4% AND 10.1% ANNUAL GROWTH RATES IN NET INCOME AND EBITDA DURING Cancun, Quintana Roo, Mexico, July 24, Corpovael, S.A.B. de C.V. (BMV: CADUA), a leading homebuilder in the development of affordable entry-level, middle-income, and middle-income residential homes in Mexico, announced today its results for the second quarter The figures presented in this report are expressed in nominal Mexican pesos (MXN), are preliminary and non-audited, prepared in accordance with IFRS and current interpretations, and may include minor differences due to rounding. HIGHLIGHTS (OPERATIONAL AND FINANCIAL) Consolidated Revenue increased 12.5%, from MXN 1,206 million in 2Q17 to MXN 1,357 million EBITDA reached MXN 329 million, up 10.1% compared to the MXN 298 million in 2Q17. EBITDA Margin stood at 24.2% CADU recorded an 18.4% increase in Net Income during, rising from MXN 199 million in 2Q17 to MXN 235 million this quarter. Net Margin went from 16.5% in 2Q17 to 17.3% in, increasing by 0.8 pp. During, CADU generated a positive Free Cash Flow to Firm (FCFF) of MXN 33 million. YTD, an MXN 109 million FCFF has been recorded, vs. MXN 63 million in the same period last year At the end of, the participation of the middle-income residential segment in the sales mix was 24.8%, up 12.3 percentage points vs. 12.5% in the same period last year During, the average sale price per home sold increased 25.8% YoY, from MXN 367 thousand in 2Q17 to MXN 462 thousand this quarter The proportion of homes sold with subsidies was 33.1% at the end of, decreasing 5.0 pp. when compared to the 38.1% in 2Q17 2 / 19

3 *Considering 342,022,974 outstanding shares in and 2Q17 KEY INDICATORS (MXN million) Indicator 2Q17 % 1H17 1H18 % Homes sold (units) 3,072 2,493 (18.8%) 4,692 3,844 (18.1%) Average Sale Price (thousands) % % Home sold revenue 1,128 1, % 1,690 1, % Commercial land plot sales (8.9%) (16.3%) Residential land plot sales (100.0%) Construction Services % % Total Revenue 1,206 1, % 1,823 2, % Operating Income % % EBITDA % % EBITDA Margin (%) (0.6 pp) (0.6 pp) Net Income % % Net Margin (%) pp pp FCFF (88.2%) % Interest Coverage 4.6x 4.3x 1.7x Total Debt / EBITDA LTM 2.5x 2.6x 0.1x Net Debt / EBITDA LTM 1.6x 1.9x 0.3x Leverage (Total Liabilities/Equity) 0.9x 1.0x 0.1x EPS* (MXN) % % BALANCE SHEET INDICATORS (MXN million) FINANCIAL INDICATORS Indicator 2Q17 Indicator LTM 2Q17 LTM Cash and Cash ROE Equivalents Accounts Receivable ROA Inventory 4,874 6,170 EBITDA (MXN million) 888 1,089 Other Assets Net Income (MXN million) Total Assets 6,734 8,226 EPS Bank Debt 1,642 2,107 Local Notes Total Debt 2,187 2,834 Other Liabilities 964 1,268 Total Liabilities 3,151 4,101 Stockholders Equity 3,583 4,125 Working Capital Cycle (days) / 19

4 Message from the CEO Dear investors: I am pleased to discuss our Second Quarter Results, as we continued to move forward with the implementation of our Business Plan. The middle-income residential segment is playing an increasingly role as, in this period, it accounted for 24.8% of the homes sold revenue while the remaining 75.2% came from the affordable entry-level segment. As we have previously mentioned, we expect to achieve a 30.0% participation of the middle-income residential segment towards year-end. Additionally, our average sale price continues to increase; it stood at MXN 462 thousand during the quarter, 25.8% higher than the MXN 367 thousand recorded in 2Q17. Consequently, the Company s profitability maintained its upward trend, as net income and EBITDA increased 18.4% and 10.1% this quarter, respectively, versus the same period of Last April, we held our Ordinary General Shareholders Meeting, approving an MXN 257 million cash dividend payment. The first installment of this payment, i.e. MXN 128 million was already paid in May 2018 and the remaining 50% will be settled over the third quarter of the year. On the Company s liquidity side, at the end of this second quarter, the cash and cash equivalents balance amounted to MXN 783 million and FCFF was positive again, attaining an MXN 33 million generation, thus bringing the accumulated FCFF as of June 30, 2018 to MXN 109 million. With these results in hand, we are on track to meet the announced Guidance early this year and expect to accomplish all the objectives set for Pedro Vaca Elguero, Chairman of the Board and CEO 4 / 19

5 OPERATING RESULTS CONSOLIDATED REVENUE Total Revenue (MXN million) 2Q17 $ % 1H17 1H18 $ % Homes sold 1,128 1, % 1,690 1, % Commercial land sales (4) (8.9%) (7) (16.3%) Residential land sales (35) (100.0%) Construction services % % Total 1,206 1, % 1,823 2, % 2Q17 3% 3% 12.5% 3% 12% 94% 85% MXN 1,206 million MXN 1,357 million Homes sold Residential land plot sales Commercial land plot sales Construction services Homes sold Residential land plot sales Commercial land plot sales Construction services The Company s consolidated revenue amounted to MXN 1,357 million in, a 12.5% increase versus the MXN 1,206 million recorded in 2Q17 as a higher volume of homes sold in the middleincome residential segment was recorded, on the one hand, and the increase in construction services revenue, on the other. Most of quarter s revenue derived from homes sold, totaling MXN 1,152 million (85% of consolidated revenue), while the remaining 15% was originated from both land plot sales and construction services, for MXN 38 million and MXN 167 million, respectively. 5 / 19

6 Homes Sold Revenue Homes Sold Revenue (MXN million) 2Q17 $ % 1H17 1H18 $ % Affordable Entry-Level Homes Cancun (98) (27.1%) (144) (27.5%) Playa del Carmen (94) 19.5% (85) (12.5%) Guadalajara % (8) (3.9%) Mexico Valley % % Aguascalientes % % Ciudad Juarez % % Total Affordable Entry-Level (122) (12.3%) 1,493 1,305 (187) (12.6%) Middle-Income Residential Homes Cancun % % Mexico Valley % % Total Middle-Income Residential Homes % % TOTAL 1,128 1, % 1,690 1, % The revenue mix by housing segment was as follows: 2Q17 12% 2.1% 25% 88% 75% Affordable Entry-Level MXN 1,128 million Midle-Income Residential Affordable Entry-Level MXN 1,152 million Middle-Income Residential NOTE: Affordable entry-level homes are those that are in the price range under MXN 500 thousand, and middle-income residential homes are those within an MXN 500 thousand to MXN 2.5 million range. In, homes sold revenue increased 2.1% vs. the same period last year, amounting to MXN 1,152 million; of which 25% came from the middle-income residential segment (versus 12% recorded in 2Q17) representing an increase of 13 pp. This performance was boosted by the dynamic home titling activity at our middle-income residential developments, located in Cancun and Mexico Valley. Average Sale Price Average Sale Price (MXN thousands) 367 2Q % / 19

7 Average Sale Price (MXN thousands) Q16 1Q17 2Q17 3Q17 4Q17 1Q18 The average sale price was MXN 462 thousand at the end of, up 25.8% when compared to the MXN 367 thousand recorded in 2Q17. In, the average sale price decreased quarter-on-quarter, due to the higher participation of the affordable entry-level segment in the sales mix compared to last quarter. The following table shows the average sale prices by housing segment: Average Sale Price by Product (MXN thousands) Housing Product 2Q17 $ % 1H17 1H18 $ % Affordable Entry-Level % % Middle-Income Residential 1,923 2, % 1,956 2, % Total % % Homes Sold with Subsidies Homes and Subsidies (Units) CADU TOTAL 2Q17 $ % 1H17 1H18 $ % With Subsidy 1, (345) (29.5%) 1,517 1,078 (439) (28.9%) Without Subsidy 1,902 1,668 (234) (12.3%) 3,175 2,766 (409) (12.9%) Total 3,072 2,493 (579) (18.8%) 4,692 3,844 (848) (18.1%) In, the proportion of homes sold with subsidies decreased 5.0 pp., from 38.1% in 2Q17 to 33.1% this quarter. Similarly, the volume of homes sold this quarter was 2,493 units, i.e., 579 less than the 3,072 homes sold in 2Q17 as the Company decided to prioritize profitability over volume. Number of homes sold with and without a subsidy (%) 61.9% 5.0 pp. 66.9% 38.1% 33.1% 2Q17 With Subsidy Without Subsidy 7 / 19

8 FINANCIAL PERFORMANCE Income Statement Cost of Sales Revenue and Cost of Sales Breakdown (MXN million) 2Q17 % % 1H17 % 1H18 % Homes sold revenue 1, % 1, % 1, % 1, % Land plot sales revenue % % % % Construction services % % % % Total revenue 1, % 1, % 1, % 2, % Cost of homes sold % % 1, % 1, % Cost of land plots % % % % Cost of construction services % % % % Total Cost of Sales % % 1, % 1, % cost of sales totaled MXN 939 million (69.2% of consolidated revenue), compared to MXN 831 million (68.9% of consolidated revenue) in 2Q17. The cost-to-revenue ratio registered a slight increase of 0.3 pp., derived from the higher participation of construction services in total revenue, which have a lower profit margin. On the other hand, the higher participation of the middle-income residential segment in the revenue mix led to a 2.3 pp. decrease in the cost-to-revenue ratio of homes sold, from 68.9% in 2Q17 to 66.6% at quarter-end. Gross Income Gross Income (MXN million) 11.6% Q17 Gross Income rose from MXN 375 million in 2Q17 to MXN 418 million in, an annual increase of 11.6%. 8 / 19

9 SG&A SG&A / Revenue (%) 1.2 pp. 8.7% 9.9% 2Q17 In, Selling, General, and Administrative Expenses (SG&A) amounted to MXN 134 million (9.9% of consolidated revenue), compared to MXN 104 million (8.7% of consolidated revenue) in 2Q17, an increase of 1.2 percentage points. EBITDA EBITDA (MXN million) 10.1% Q17 EBITDA reached MXN 329 million in, up 10.1% when compared to the MXN 298 million recorded in 2Q17. EBITDA Margin stood at 24.2%. EBITDA Integration (MXN million) Concept 2Q17 $ % 1H17 1H18 $ % EAT % % (+) Current income tax (19) (25.6%) (27) (24.9%) EBT % % (+) Capitalized CFR % % (+) Non-Capitalized interest 8 7 (2) (19.1%) % (-) Interest income % % (+) Depreciation % % EBITDA % % EBITDA Margin 24.8% 24.2% - (0.6 pp) 24.1% 23.5% - (0.6 pp) 9 / 19

10 Operating Income Operating Income (MXN million) 5.2% Q17 Operating income increased from MXN 270 million in 2Q17 to MXN 284 this quarter, an annual increase of 5.2%. Income Tax In, income tax provision was MXN 55 million, versus MXN 74 million recorded in 2Q17. Net Income Net Income (MXN million) 18.4% Q17 During, net income totaled MXN 235 million, up 18.4% vs. the MXN 199 million in 2Q17, mostly driven by the higher volume of units sold in the middle-income residential segment. net margin was 17.3%, 0.8 percentage points higher than the 16.5% in 2Q17. Net Income and EPS (MXN million) Consolidated Net Income Controlling Interest Earnings Per Share* (MXN) 2Q17 $ % 1H17 1H18 $ % % % % % % % *Figures in Mexican pesos. Considering 342,022,974 outstanding shares in and 2Q17 Earnings Per Share (EPS) was MXN 0.65, an increase of 17.8% when compared to the MXN 0.55 recorded in 2Q17. Adding the MXN 0.30 EPS registered in 1Q18, 1H18 EPS reached MXN / 19

11 Financial Position Cash and Cash Equivalents Cash and Cash Equivalents (MXN million) 1, jun-16 sep-16 dec-16 mar-17 jun-17 sep-17 dec-17 mar-18 jun-18 As of June 30, 2018, cash and cash equivalents balance amounted to MXN 783 million, comprised of MXN 614 million in available cash and MXN 169 million in the guarantee fund of our local notes CADU15. The quarter-on-quarter decrease of MXN 378 million in cash and cash equivalents is mainly attributed to the deployment of resources for the development of our housing projects. This balance bounced back to the normalized level of previous quarters, after increasing in March 2018 with the MXN 500 million issuance of our local notes CADU18. CADU's cash funds are primarily invested in high-quality, short-term, debt securities. Accounts Receivable (A/R) Accounts Receivable Integration (MXN million) 2Q17 $ % Homes sold receivables % Other % Total Clients % Accounts Receivable (days) 2Q17 days % Homes sold receivable % Other (21.6%) Total Clients % As of June 30, 2018, accounts receivable totaled MXN 540 million (41-day turnover), compared to MXN 416 million in 2Q17 (39-day turnover). 11 / 19

12 Working Capital Cycle (WCC) Working Capital Cycle (days) Receivables (days) Inventory (days) Suppliers (days) Clients' advance payments (days) 2Q17 1Q WCC At quarter-end, the Working Capital Cycle (WCC) was 653 days versus 647 days in 2Q17, i.e. an increase of 6 days. This variation is mainly due to the investments made for the development of our vertical housing projects in the middle-income residential segment, which involve longer payback periods than horizontal developments. Inventory Inventory Integration (MXN million) 2Q17 % Land Bank 1,746 2, % Work in Progress 3,030 3, % Capitalized Interest % Total 4,874 6, % At the end of, inventory balance reached MXN 6,170 million, increasing MXN 1,296 million (+26.6% YoY), from the MXN 4,874 million in 2Q17; reflecting our investments for the development of middle-income residential projects and purchase of land plots. As of June 30, 2018, the land bank (recorded at acquisition cost) totaled MXN 2,134 million. The value of work in progress rose from MXN 3,030 million in 2Q17 to MXN 3,842 million this quarter, thus increasing 26.8%. Debt As of June 30, 2018, Total Debt increased 29.6% YoY, from MXN 2,187 million in 2Q17 to MXN 2,834 million. 12 / 19

13 Bank Loans (MXN million) 2Q17 $ % Bridge loans 1,285 1, % Working capital % Financial leases 1 0 (0.7) (66.7%) Total 1,642 2, % CADU s bank liabilities are at adequate levels, despite the 28.3% annual increase, from MXN 1,642 million in 2Q17 to MXN 2,107 million this quarter, as Company s assets, mainly work in progress, have also increased. Working capital loans increased by MXN 257 million (+72.3% YoY), while bridge loans for construction activities, went from MXN 1,285 million in 2Q17 to MXN 1,493 million in, recording a 16.2% annual increase. It is important to emphasize that the increase in the Company s indebtedness is primarily due to the larger scale of our housing projects under development. Debt Securities Local Notes (MXN million) Concept 2Q17 $ % CADU (150) (100.0%) CADU (158) (40.0%) CADU Total % Total Debt* 2,187 2, % *100% of the Company s debt is denominated in Mexican pesos as of June 30, 2018 At quarter-end, the Company s debt securities balance increased 33.4% YoY, totaling MXN 727 million, following the MXN 500 million issuance of Local Notes CADU 18 (with a 5-year term and interest rate of TIIE percentage points) during the last quarter. As of June 30, 2018, CADU s credit rating granted by HR Ratings and Verum was HR A- and A- /M, respectively. Regarding the Company s Notes, for CADU15, Fitch Ratings and HR Ratings assigned credit rates of A (mex) and HR A, respectively; while for CADU18, Verum and HR Ratings assigned rates of A-/M and HR A-, respectively. Leverage and Interest Coverage Ratios (times) Concept 2Q17 Gross Debt to EBITDA Net Debt to EBITDA Total Liabilities / Equity EBITDA / Interest Paid Gross Debt / EBITDA ratio slightly increased to 2.6x at the end of, from 2.5x in 2Q17. Likewise, Net Debt / EBITDA expanded to 1.9 times at quarter-end, from 1.6 times in 2Q17. Finally, as of June 30, 2018, interest coverage ratio (EBITDA / Interest Paid), was 4.3 times, decreasing 0.3x compared to 4.6 times in 2Q / 19

14 As of June 30, 2018, the weighted average cost of debt was 11.23% (TIIE pp. / not considering commissions). It is important to note that 100% of our debt is subscribed at floating rate. Regarding the Company s debt covenants of the Local Notes with ticker symbols CADU15 and CADU18, CADU is currently in full compliance. These covenants are listed below: That the Company s LTM Consolidated Revenue does not show a decrease equal or greater than 30% compared to the Consolidated Revenue recorded in the same period last year o LTM Consolidated Revenue increased 22.6% when compared to the same period last year That the Company s Total Liabilities / Shareholders Equity ratio does not exceed the 3.0 times mark o As of June 30, 2018, Total Liabilities / Shareholders Equity ratio stood at 1.0x That the Company s Net Debt / LTM EBITDA ratio will not be greater than 3.0 times o As of June 30, 2018, Net Debt / LTM EBITDA ratio was 1.9x That the Company s Interest Coverage ratio (LTM EBITDA divided by interest paid over the last twelve months) will not be less than 2.5 times o As of June 30, 2018, Interest Coverage ratio stood at 4.3x Current Year Debt Maturity Profile as of June 30, 2018 (MXN million) Up to 1 year Up to 2 years Up to 3 years Up to 4 years Up to 5 years Bank Loans ,107 CADU CADU Total , ,834 % Total 16.6% 5.9% 21.6% 40.9% 11.0% 4.0% 100.0% Regarding the Company s debt maturity profile, 16.6% of the total debt matures in 2H18, 5.9% in 1H19, 21.6% in two years, 40.9% in three years, 11.0% in four years and 4.0% in five years. The Company does not have any debt contracted in foreign currency. Stockholders Equity Stockholders' Equity (MXN million) Total 3, % 4,125 jun-17 jun / 19

15 As of June 30, 2018, the Stockholders Equity amounted to MXN 4,125 million. At quarter-end, the Company s capital structure was comprised of 49.9% liabilities and 50.1% equity, while at the end of the 2Q17, it was 46.8% liabilities and 53.2% equity. The leverage ratio (Total Liabilities / Stockholders Equity) in slightly increased when compared to 2Q17, reaching 1.0 times. In the Ordinary General Shareholders Meeting, held on April 24, 2018, a cash dividend payment for a total amount of MXN 256,517,231 was approved, equivalent to MXN 0.75 per share. The first payment for the amount MXN 128,258,615, equivalent to MXN per share, was made on May 15, 2018, and the second payment for an amount of MXN 128,258,615, equivalent to MXN per share, will be properly settled before September 30, As of June 30, 2018, Stockholders Equity was MXN 542 million higher than that recorded in 2Q17. At quarter-end, the Return on Equity (ROE) stood at 19.4%, increasing 3.2 percentage points when compared to the 16.2% in 2Q17. Cash Flow Cash Variations Cash Flow Integration (MXN million) Concept 2Q17 % 1H17 1H18 % Earnings before taxes (EBT) % % Investment activities (9) (10) 17.5% (14) (13) (5.0%) Financing activities % % Cash flow before taxes % % Cash flow generated from operating activities (19) (302) >100.0% (381) (377) (0.9%) Net cash flow from operating activities (92.6%) % Net cash flow from investment activities % (16.1%) Net cash flow from financing activities (322) (411) 27.9% (23) (92) >100.0% Δ Cash and cash equivalents (40) (378) >100.0% (65.1%) Cash and equivalents beginning of period 819 1, % % Cash and equivalents end of period % % Free Cash Flow to Firm (88.2%) % During, the Company generated a positive Free Cash Flow of MXN 33 million. Consequently, YTD FCF reached MXN 109 million, compared to the MXN 63 million in the same period Accumulated Free Cash Flow as of June 30, 2018 (MXN million) % 109 Accumulated jun-17 FLEFAccumulated jun / 19

16 Recent Developments On April 24 th, 2018, CADU held its Ordinary General Shareholders Meeting, in which the most relevant resolutions were: i) the approval of a cash dividend payment for MXN 256,517,231, equivalent to MXN 0.75 per share; and, ii) the ratification of all members of the Company s Board of Directors. On April 24 th, 2018, Fitch Ratings reaffirmed its A (mex) rating on the issuance of the partially secured Local Notes (CEBUREs Certificados Bursatiles) with ticker symbol CADU15. Analyst Coverage Given that Corpovael, S.A.B. de C.V. ("CADU") has issued securities under the regulations of the Mexican Exchange Internal Bylaws, it informs that the financial institutions that provide analyst coverage over CADU s stock are: Actinver Casa de Bolsa, BBVA Bancomer and Punto CB. For more information, please visit About CADU Corpovael, S.A.B. de C.V. CADU (BMV: CADUA) is a leading homebuilder in the development of affordable entry-level, middle-income, and middle-income residential homes in Mexico. CADU has more than a decade of experience in the housing sector where it has developed a successful business model by seeking sustained, high profitability. Its competitive advantage is based on an efficient and vertically integrated structure (developing activities of land acquisition, urbanization, building, and commercialization) in markets that have been identified as having a solid demand for housing. It primarily operates in Quintana Roo, Mexico Valley, and Jalisco. Forward-looking statements Information presented by the Company may contain forward-looking statements about future events and/or financial results. The reader should understand that the results obtained may differ from the projections contained in this document, as past results in no way offer any guarantee of future performance. For this reason, the Company assumes no responsibility for any indirect factors or elements beyond its control that might occur inside Mexico or abroad and which might affect the outcome of these projections. Conference Call 16 / 19

17 Financial Statements Corpovael, S.A.B de C.V. and Subsidiaries Consolidated Statement of Financial Position As of June 30, 2018 and 2017 (MXN thousands) Jun-30 Jun % Assets Current Assets: Cash and cash equivalents $631,792 $614,076 (2.8%) "CADU15" reserve fund 147, , % Accounts receivable (Net) 415, , % Other accounts receivable (Net) 215, , % Inventory 4,873,721 6,169, % Other Current Assets Others 346, , % Non-current Assets: Property, plant and equipment (Net) 77,588 75,813 (2.3%) Other non-current assets 25,829 57, % Total Assets $6,733,904 $8,226, % Liabilities and Stockholders Equity Current Liabilities Bank loans 381, , % Debt Securities 308, ,036 (48.7%) Accounts payable 370, ,711 (13.6%) Taxes payable 2,914 4, % Other current liabilities 89, , % Non-current Liabilities Bank loans 1,261,195 1,626, % Debt Securities 236, , % Deferred taxes 502, , % Total Liabilities $3,151,318 $4,101, % Stockholders Equity Capital stock 171, ,011 - Retained earnings 3,377,557 3,880, % Controlling interest 3,548,568 4,051, % Non-controlling interest 34,018 72, % Total Stockholders Equity 3,582,586 4,124, % Total Liabilities and Stockholders Equity $6,733,904 $8,226, % 17 / 19

18 Corpovael, S.A.B de C.V. and Subsidiaries Statement of Consolidated Comprehensive Income (MXN thousands) 2Q17 %/Rev. %/Rev. % 1H17 %/Rev. 1H18 %/Rev. % Revenue: Homes sold $1,127, % $1,151, % 2.1% $1,690, % $1,796, % 6.3% Land plot sales 41, % 37, % (9.0%) 80, % 37, % (52.8%) Construction services 36, % 167, % 359.0% 52, % 228, % 332.6% 1,205, % 1,356, % 12.5% 1,823, % 2,062, % 13.1% Costs and expenses: Cost of sales (831,049) 68.9% (938,712) 69.2% 13.0% (1,237,767) 67.9% (1,424,520) 69.1% 15.1% Gross income 374, % 417, % 11.6% 585, % 637, % 8.9% General expenses (104,359) 8.7% (133,641) 9.9% 28.1% (192,384) 10.6% (218,099) 10.6% 13.4% Operating income 270, % 284, % 5.2% 393, % 419, % 6.7% Financial income 11,364 13, % 19,347 19, % Financial expenses (8,460) (6,847) (19.1%) (14,046) (14,383) 2.4% 2,904 6,268 (115.8%) 5,301 4,972 (6.2%) Earnings before taxes 273, % 290, % 6.4% 398, % 424, % 6.5% Income taxes: Current (74,489) 6.2% (55,436) 4.1% (25.6%) (109,555) 6.0% (82,278) 4.0% (24.9%) Deferred (74,489) (55,436) (25.6%) (109,555) (82,278) (24.9%) Net and Comprehensive Consolidated Income $198, % $235, % 18.4% $288, % $342, % 18.4% Controlling interests 188, , % 277, , % Non-controlling interests 10,288 13, % 11,009 18, % Net and Comprehensive Consolidated Income 198, % 235, % 18.4% 288, % 342, % 18.4% Net Income (Loss) per Share* % % *Considering 342,022,974 outstanding shares in and 2Q / 19

19 Corpovael, S.A.B de C.V. and Subsidiaries Statement of Consolidated Cash Flow (MXN thousands) 2Q17 1H17 1H18 Operating Activities Earnings before taxes 273, , , ,468 Items Related to Investment Activities Depreciation and Amortization 2,534 2,744 5,152 5,867 Interest income (11,364) (13,115) (19,347) (19,355) Capitalized interest recognized in cost of sales 25,695 41,527 40,285 59,602 Cash Flow from Earnings Before Taxes 290, , , ,582 Cash Flows from or used in Operating Activities Decrease (increase) in accounts receivable (40,377) (106,503) 108,381 (74,090) Decrease (increase) in inventory (15,685) (450,511) (344,989) (635,849) Decrease (increase) in other accounts receivable and other current assets 6,265 44,094 (116,947) 199,458 Increase (decrease) in accounts payable (10,756) (24,016) (42,325) (98,924) Increase (decrease) in other liabilities 175, , , ,549 Income taxes paid or reimbursed (133,960) 84,296 (182,862) 107,475 Net Cash Flows from or used in Operating Activities 270,622 20,110 43,988 93,201 Investment activities Share repurchase Investment in property, plant and equipment (3,123) Interest received 11,364 13,115 19,347 19,355 Net Cash Flows from or used in Investment Activities 11,364 13,115 19,347 16,232 Financing activities Bank loans 542, ,969 1,170,526 1,602,076 Debt certificates - (40,000) - (40,000) Amortization of bank loans (686,248) (575,146) (968,114) (1,035,315) Amortization of debt certificates Dividends paid (112,867) (128,259) (112,868) (128,259) Increase (decreased) in Capital Interest paid (67,432) (79,750) (103,613) (147,556) Other items 2,637 (297,984) (8,613) (343,257) Net Cash Flows from or used in Financing Activities (321,533) (411,170) (22,682) (92,311) Increase (decrease) in Cash and Cash Equivalents (39,547) (377,945) 40,654 (17,122) Cash and Cash Equivalents at Beginning of the Period 818,839 1,161, , ,091 Cash and Cash Equivalents at End of the Period 779, , , ,214 Note on Financial Statements: in addition to the contents of this report, for better analysis we recommend referring to the details noted on financial statements found at 19 / 19