Global accounting and audit firm KPMG has completed a review of Avianca Holdings S.A. (NYSE: AVH) (BVC:PFAVH) financial statements and notes as of June 30, 2019. A statement and letter to shareholders was prepared, and the letter was entered into the public record via a 6-K filing with the US Securities and Exchange Commission (SEC).
The letter is reproduced in its entirety below. KPMG concludes that it encountered no evidence to believe that the statements are out of compliance with IAS 34 interim financial reporting standards. On the other hand, the letter reminds readers that a material uncertainty exists that may cast significant doubt on the airline’s ability to continue as a going concern.
To the Shareholders
Avianca Holdings S.A.:
We have reviewed the accompanying June 30, 2019 condensed consolidated interim financial information of Avianca Holdings S.A. and subsidiaries (“the Group”), which comprises:
- the condensed consolidated statement of financial position as of June 30, 2019;
- the condensed consolidated statement of comprehensive income for the three-month and six-month periods ended June 30, 2019 and 2018;
- the condensed consolidated statements of changes in equity for the six-month period ended June 30, 2019 and 2018;
- the condensed consolidated statements of cash flows for the six-month period ended June 30, 2019 and 2018; and
- notes to the interim financial information.
Management is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34, ‘Interim Financial Reporting’. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying June 30, 2019 condensed consolidated interim financial information is not prepared, in all material respects, in accordance with IAS 34, ‘Interim Financial Reporting’.
Material Uncertainty Related to Going Concern
We draw attention to notes 2 (f), 14 and 26 of the condensed consolidated interim financial information, which indicate that Group has breached with certain obligations in financing of airplanes and other loans, whereby on consolidated statement of financial position as of June 30, 2019, long-term debt by US$2,484 million was reclassified to short-term, accumulating a total current obligations of US $ 3,825 million. The Group´s ability to meet these obligations will depend on whether they can renegotiate the terms and conditions with lenders and obtain new sources of financing to meet the short-term obligations. These circumstances indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our review report is not modified in respect of this matter.
August 14, 2019