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
March
, 2019
EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR)
(DISTRIBUTION AND MARKETING COMPANY OF THE NORTH )
(Translation of Registrant's Name Into English)
Argentina
(Jurisdiction of incorporation or organization)
Av. del Libertador 6363,
12th Floor,
City of Buenos Aires (A1428ARG),
Tel: 54-11-4346-5000
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F
X
Form 40-F
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes
No
X
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
.)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2018, 2017 AND 2016
PRESENTED IN COMPARATIVE FORM
(Stated in thousands of pesos in measuring unit current – Note 3)
2018 FINANCIAL STATEMENTS
|
Legal Information
|
1
|
Statement of Financial Position
|
2
|
Statement of Comprehensive Income
|
4
|
Statement of Changes in Equity
|
5
|
Statement of Cash Flows
|
6
|
|
|
Notes to the Financial Statements:
|
|
1 |
|
General information
|
8
|
2 |
|
Regulatory framework
|
9
|
3 |
|
Basis of preparation
|
14
|
4 |
|
Accounting policies
|
16
|
5 |
|
Financial risk management
|
2
9
|
6 |
|
Critical accounting estimates and judgments
|
3
6
|
7 |
|
Interest in joint venture
|
3
9
|
8 |
|
Contingent liabilities
|
39
|
9 |
|
Property, plant and equipment
|
43
|
10 |
|
Financial instruments
|
45
|
11 |
|
Other receivables
|
47
|
12 |
|
Trade receivables
|
48
|
13 |
|
Financial assets at fair value through profit or loss
|
49
|
14 |
|
Financial assets at
amortized cost
|
49
|
15 |
|
Inventories
|
49
|
16 |
|
Cash and cash equivalents
|
49
|
17 |
|
Share capital and additional paid-in capital
|
50
|
18 |
|
Allocation of profits
|
51
|
19 |
|
Trade payables
|
51
|
20 |
|
Other payables
|
52
|
21 |
|
Deferred revenue
|
52
|
22 |
|
Borrowings
|
52
|
23 |
|
Salaries and social security taxes payable
|
55
|
24 |
|
Benefit plans
|
56
|
25 |
|
The Company’s Share-based Compensation Plan
|
58
|
26 |
|
Income tax
|
58
|
27 |
|
Tax liabilities
|
61
|
28 |
|
Leases
|
62
|
29 |
|
Provisions
|
63
|
30 |
|
Revenue from sales
|
63
|
31 |
|
Expenses by nature
|
63
|
32 |
|
Other operating expense, net
|
65
|
33 |
|
Net financial expense
|
65
|
34 |
|
Basic and diluted earnings per share
|
66
|
35 |
|
Related-party transactions
|
66
|
36 |
|
Safekeeping of documentation
|
68
|
37 |
|
Termination of agreement on real estate asset
|
69
|
38 |
|
Ordinary and Extraordinary Shareholders’ Meeting
|
70
|
|
|
|
|
|
|
Independent Auditors’ Report
|
|
Supervisory Committee’s Report
|
|
|
|
2018 FINANCIAL STATEMENTS
|
Glossary of Terms
The following definitions, which are not technical ones, will help readers understand some of the terms used in the text of the notes to
the Company’s Financial Statements.
|
|
Terms
|
Definitions
|
ADS
|
American Depositary Shares
|
ANSES
|
Administración Nacional de la Seguridad Social
|
BNA
|
Bank of the Argentine Nation
|
BCRA
|
Central Bank of Argentina
|
CABA
|
Ciudad Autónoma de Buenos Aires
|
|
Compañía Administradora del Mercado Mayorista Eléctrico
|
CAMMESA
|
(the company in charge of the regulation and operation of the wholesale electricity market)
|
CNV
|
National Securities Commission
|
CPCCN
|
Federal Code of Civil and Comercial Procedure of Argentina
|
CPD
|
Company’s own distribution costs
|
CTLL
|
Central Térmica Loma de la Lata S.A.
|
CSJN
|
Supreme Court of Justice of Argentina
|
EASA
|
Electricidad Argentina S.A.
|
edenor
|
Empresa Distribuidora y Comercializadora Norte S.A.
|
Edesur S.A
|
Empresa Distribuidora Sur S.A.
|
ENRE
|
National Regulatory Authority for the Distribution of Electricity
|
FNEE
|
National Electrical Energy Fund
|
FACPCE
|
Argentine Federation of Professional Councils in Economic Sciences
|
FOCEDE
|
Fund for Electric Power Distribution Expansion and Consolidation Works
|
FOTAE
|
Trust for the Management of Electric Power Transmission Works
|
ICBC
|
Industrial and Commercial Bank of China
|
IAS
|
International Accounting Standards
|
IASB
|
Accounting Standards Board
|
IEASA
|
Argentine Energy Integration S.A.
|
IFRIC
|
International Financial Reporting Interpretations Committee
|
IFRS
|
International Financial Reporting Standards
|
INDEC
|
National Institute of Statistics and Census
|
IPC
|
Consumer Price Index
|
IPIM
|
Domestic Wholesale Price Index
|
ITCRM
|
Multilateral real exchange rate index
|
MEM
|
Wholesale Electricity Market
|
MINEM
|
Energy and Mining Ministry
|
NYSE
|
New York Stock Exchange
|
OSV
|
Orígenes Seguros de Vida S.A.
|
PEN
|
Federal Government
|
PESA
|
Pampa Energía S.A.
|
RECPAM
|
Gain on net monetary position
|
RDSA
|
Ribera Desarrollos S.A.
|
RTI
|
Tariff Structure Review
|
SACME
|
S.A. Centro de Movimiento de Energía
|
SEE
|
Electric Energy Secretariat
|
SEGBA
|
Servicios Eléctricos del Gran Buenos Aires S.A.
|
VAD
|
Distribution Added Value
|
2018 FINANCIAL STATEMENTS
|
Legal Information
Corporate name:
Empresa Distribuidora y Comercializadora Norte S.A.
Legal address:
6363 Del Libertador Ave., City of Buenos Aires
Main business:
Distribution and sale of electricity in the area and under the terms of the Concession Agreement by which this public service is regulated.
Date of registration with the Public Registry of Commerce
:
-
of the Articles of Incorporation: August 3, 1992
-
of the last amendment to the By-laws: May 28, 2007
Term of the Corporation
:
August
3, 2087
Registration number with the “Inspección General de Justicia” (the Argentine governmental regulatory agency of corporations)
:
1,559,940
Parent company:
PESA
Legal address:
1 Maipú Street, CABA
Main business of the parent company:
Study, exploration and exploitation of hydrocarbon wells, development of mining activities, industrialization, transport and sale of hydrocarbons and their by-products, and the generation, transmission and distribution of electricity. Investment in undertakings and in companies of any nature on its own account or on behalf of third parties or associates of third parties in Argentina or abroad.
Interest held by the parent company in capital stock and votes:
51.76%
CAPITAL STRUCTURE
AS OF DECEMBER 31, 2018
(amounts stated in pesos)
|
|
|
Subscribed and
|
Class of shares
|
paid-in
|
|
(See Note 17)
|
Common, book-entry shares, face value 1 and 1
|
|
vote per share
|
|
Class A
|
462,292,111
|
Class B (1)
|
442,210,385
|
Class C (2)
|
1,952,604
|
|
906,455,100
|
(1)
Includes 23,385,028 and 7,794,168 treasury shares as of December 31, 2018 and 2017, respectively.
(2)
Relates to the Employee Stock Ownership Program Class C shares that have not been transferred.
1
2018 FINANCIAL
STATEMENTS
|
edenor
Statement of Financial Position
as
of December 31, 2018 and 2017
(Stated in
thousands of pesos in measuring unit current – Note 3)
|
|
|
|
|
|
|
Note
|
|
12.31.18
|
|
12.31.17
|
ASSETS
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
9
|
|
62,474,843
|
|
57,060,187
|
Interest in joint
ventures
|
7
|
|
8,844
|
|
10,693
|
Other receivables
|
11
|
|
800,741
|
|
62,676
|
Total non-current
assets
|
|
|
63,284,428
|
|
57,133,556
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Inventories
|
15
|
|
1,259,799
|
|
649,580
|
Other receivables
|
11
|
|
242,117
|
|
296,219
|
Trade receivables
|
12
|
|
7,587,906
|
|
8,385,237
|
Financial assets at fair value
through profit or loss
|
13
|
|
3,381,550
|
|
4,278,008
|
Financial assets at amortized
cost
|
14
|
|
1,208,770
|
|
16,978
|
Cash and cash
equivalents
|
16
|
|
27,608
|
|
122,349
|
Total current
assets
|
|
|
13,707,750
|
|
13,748,371
|
TOTAL
ASSETS
|
|
|
76,992,178
|
|
70,881,927
|
2
2018 FINANCIAL
STATEMENTS
|
edenor
Statement of Financial Position
as
of December 31, 2018 and 2017
(continued)
(Stated in
thousands of pesos in measuring unit current – Note 3)
|
|
|
|
|
|
|
Note
|
|
12.31.18
|
|
12.31.17
|
EQUITY
|
|
|
|
|
|
Share capital and reserve
attributable to the owners
|
|
|
|
|
|
of the
Company
|
|
|
|
|
|
Share capital
|
17
|
|
883,342
|
|
898,661
|
Adjustment to share
capital
|
17
|
|
17,065,577
|
|
17,224,397
|
Additional paid-in
capital
|
17
|
|
240,621
|
|
229,921
|
Treasury stock
|
17
|
|
23,113
|
|
7,794
|
Adjustment to treasury
stock
|
17
|
|
225,551
|
|
66,731
|
Cost treasury stock
|
|
|
(1,068,784)
|
|
-
|
Legal reserve
|
|
|
152,766
|
|
152,766
|
Opcional reserve
|
|
|
367,058
|
|
367,058
|
Other comprehensive
loss
|
|
|
(136,877)
|
|
(132,930)
|
Accumulated losses
|
|
|
13,216,605
|
|
8,979,321
|
TOTAL
EQUITY
|
|
|
30,968,972
|
|
27,793,719
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Trade payables
|
19
|
|
286,217
|
|
355,706
|
Other payables
|
20
|
|
7,624,145
|
|
8,909,968
|
Borrowings
|
22
|
|
7,192,467
|
|
6,189,294
|
Deferred revenue
|
21
|
|
275,437
|
|
287,384
|
Salaries and social security
payable
|
23
|
|
162,737
|
|
176,679
|
Benefit plans
|
24
|
|
385,098
|
|
477,765
|
Tax payable
|
26
|
|
8,048,308
|
|
7,290,150
|
Provisions
|
29
|
|
1,070,150
|
|
883,119
|
Total non-current
liabilities
|
|
|
25,044,559
|
|
24,570,065
|
Current
liabilities
|
|
|
|
|
|
Trade payables
|
19
|
|
14,608,977
|
|
13,577,520
|
Other payables
|
20
|
|
1,922,039
|
|
546,915
|
Borrowings
|
22
|
|
1,077,453
|
|
105,139
|
Derivative financial
instruments
|
|
|
1,035
|
|
291
|
Deferred revenue
|
21
|
|
5,346
|
|
4,961
|
Salaries and social security
payable
|
23
|
|
1,742,626
|
|
1,801,492
|
Benefit plans
|
24
|
|
32,365
|
|
46,375
|
Tax payable
|
26
|
|
617,326
|
|
689,091
|
Tax liabilities
|
27
|
|
784,045
|
|
1,555,501
|
Provisions
|
29
|
|
187,435
|
|
190,858
|
Total current
liabilities
|
|
|
20,978,647
|
|
18,518,143
|
TOTAL
LIABILITIES
|
|
|
46,023,206
|
|
43,088,208
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
|
|
76,992,178
|
|
70,881,927
|
The
accompanying notes are an integral part of the
Financial Statements
.
3
2018 FINANCIAL
STATEMENTS
|
edenor
Statement of Comprehensive Income
for
the years ended December 31, 2018, 2017 and 2016
(Stated in
thousands of pesos in measuring unit current – Note 3)
|
|
|
|
|
|
|
|
|
Note
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
|
|
|
|
|
|
|
|
Revenue
|
30
|
|
55,953,649
|
|
39,602,868
|
|
25,826,759
|
Electric power
purchases
|
|
|
(31,875,655)
|
|
(20,820,281)
|
|
(11,989,634)
|
Subtotal
|
|
|
24,077,994
|
|
18,782,587
|
|
13,837,125
|
Transmission and distribution
expenses
|
31
|
|
(10,912,722)
|
|
(9,247,065)
|
|
(13,263,857)
|
Gross
gain
|
|
|
13,165,272
|
|
9,535,522
|
|
573,268
|
Selling expenses
|
31
|
|
(5,032,681)
|
|
(3,567,838)
|
|
(3,379,261)
|
Administrative
expenses
|
31
|
|
(2,872,127)
|
|
(2,504,506)
|
|
(2,288,037)
|
Other operating expense,
net
|
32
|
|
(1,320,810)
|
|
(1,102,692)
|
|
(913,015)
|
Gain from interest in joint
ventures
|
|
|
1,602
|
|
10,052
|
|
6
|
Operating profit (loss)
before income from provisional
|
|
|
|
|
|
|
|
remedies, higer costs
recognition and SE Resolution N°
|
|
|
|
|
|
|
|
32/15
|
|
|
3,941,256
|
|
2,370,538
|
|
(6,007,039)
|
|
|
|
|
|
|
|
|
Recognition of income – provisional
remedies – MINEM Note
|
|
|
|
|
|
|
|
2016-04484723
|
|
|
-
|
|
-
|
|
2,074,170
|
Income recognition on account of the
RTI - SEE Resolution
|
|
|
|
|
|
|
|
N° 32/15
|
|
|
-
|
|
-
|
|
958,289
|
Higher cost recognition – SEE
Resolution N° 250/13 and
|
|
|
|
|
|
|
|
subsequent Notes
|
|
|
-
|
|
-
|
|
185,436
|
Operating profit
(loss)
|
|
|
3,941,256
|
|
2,370,538
|
|
(2,789,144)
|
Financial income
|
33
|
|
671,783
|
|
453,804
|
|
384,593
|
Financial expenses
|
33
|
|
(4,976,719)
|
|
(2,570,256)
|
|
(2,589,227)
|
Other financial
results
|
33
|
|
(1,965,320)
|
|
(168,468)
|
|
(87,303)
|
Net financial
expense
|
|
|
(6,270,256)
|
|
(2,284,920)
|
|
(2,291,937)
|
Gain on net monetary
position
|
|
|
8,503,862
|
|
5,505,073
|
|
5,469,122
|
Profit before
taxes
|
|
|
6,174,862
|
|
5,590,691
|
|
388,041
|
|
|
|
|
|
|
|
|
Income tax
|
26
|
|
(1,877,396)
|
|
(510,056)
|
|
(147,270)
|
Profit for the
year
|
|
|
4,297,466
|
|
5,080,635
|
|
240,771
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
Items that will not be
reclassified to profit or loss
|
|
|
|
|
|
|
|
Results related to benefit
plans
|
24
|
|
(5,638)
|
|
22,219
|
|
14,404
|
Tax effect of actuarial results on
benefit plans
|
|
|
1,691
|
|
(7,216)
|
|
(5,041)
|
Result from exposure to
inlfation
|
|
|
(42,904)
|
|
(29,392)
|
|
(15,951)
|
Total other comprehensive
results
|
|
|
(46,851)
|
|
(14,389)
|
|
(6,588)
|
|
|
|
|
|
|
|
|
Comprehensive income for the
year attributable to:
|
|
|
|
|
|
|
|
Owners of the parent
|
|
|
4,250,615
|
|
5,066,246
|
|
234,183
|
Comprehensive profit for the
year
|
|
|
4,250,615
|
|
5,066,246
|
|
234,183
|
|
|
|
|
|
|
|
|
Basic and diluted earnings
profit per share:
|
|
|
|
|
|
|
|
Basic and diluted earnings profit
per share
|
34
|
|
4.83
|
|
5.66
|
|
0.27
|
The
accompanying notes are an integral part of the
Financial Statements
.
4
2018 FINANCIAL
STATEMENTS
|
edenor
Statement of
Changes in Equity
for
the years ended December 31, 2018, 2017 and 2016
(Stated in thousands of pesos in measuring unit current –
Note 3)
|
Share
capital
|
|
Adjustment
to
share capital
|
|
Treasury
stock
|
|
Adjust- ment to treasury stock
|
|
Additional
paid-in
capital
|
|
Cost treasury
stock
|
|
Legal reserve
|
|
Opcional reserve
|
|
Other reserve
|
|
Other
comprehesive
loss
|
|
Accumulated
income
|
|
Total
equity
|
Balance at December 31,
2015
|
897,043
|
|
17,220,537
|
|
9,412
|
|
70,591
|
|
183,604
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(157,296)
|
|
4,177,739
|
|
22,401,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary and Extraordinary
Shareholders' Meeting held on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04.28.2016
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
152,766
|
|
367,058
|
|
-
|
|
-
|
|
(519,824)
|
|
-
|
Other reserve constitution -
Share-bases compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan (Note 25)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
32,833
|
|
-
|
|
-
|
|
32,833
|
Profit for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
240,771
|
|
240,771
|
Other comprehensive results for the
year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9,363
|
|
-
|
|
9,363
|
Balance at December 31,
2016
|
897,043
|
|
17,220,537
|
|
9,412
|
|
70,591
|
|
183,604
|
|
-
|
|
152,766
|
|
367,058
|
|
32,833
|
|
(147,933)
|
|
3,898,686
|
|
22,684,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserve constitution -
Share-bases compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13,484
|
|
-
|
|
-
|
|
13,484
|
Other reserve constitution -
Share-bases compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan
|
1,618
|
|
3,860
|
|
(1,618)
|
|
(3,860)
|
|
46,317
|
|
-
|
|
-
|
|
-
|
|
(46,317)
|
|
-
|
|
-
|
|
-
|
Profit for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,080,635
|
|
5,080,635
|
Other comprehensive results for the
year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
15,003
|
|
-
|
|
15,003
|
Balance at December 31,
2017
|
898,661
|
|
17,224,397
|
|
7,794
|
|
66,731
|
|
229,921
|
|
-
|
|
152,766
|
|
367,058
|
|
-
|
|
(132,930)
|
|
8,979,321
|
|
27,793,719
|
Change of accounting standard (Note
6) - Adjustment by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
model of expected losses IFRS
9
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(60,182)
|
|
(60,182)
|
Balance at December 31, 2017
restated
|
898,661
|
|
17,224,397
|
|
7,794
|
|
66,731
|
|
229,921
|
|
-
|
|
152,766
|
|
367,058
|
|
-
|
|
(132,930)
|
|
8,919,139
|
|
27,733,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserve constitution -
Share-bases compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan (Note 25)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
10,700
|
|
-
|
|
-
|
|
10,700
|
Payment of Other reserve
constitution - Share-bases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation plan (Note
25)
|
272
|
|
299
|
|
(272)
|
|
(299)
|
|
10,700
|
|
-
|
|
-
|
|
-
|
|
(10,700)
|
|
-
|
|
-
|
|
-
|
Acquisition of own shares (Note
17)
|
(15,591)
|
|
(159,119)
|
|
15,591
|
|
159,119
|
|
-
|
|
(1,068,784)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,068,784)
|
Other comprehensive results for the
year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3,947)
|
|
-
|
|
(3,947)
|
Profit for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4,297,466
|
|
4,297,466
|
Balance at December 31,
2018
|
883,342
|
|
17,065,577
|
|
23,113
|
|
225,551
|
|
240,621
|
|
(1,068,784)
|
|
152,766
|
|
367,058
|
|
-
|
|
(136,877)
|
|
13,216,605
|
|
30,968,972
|
The accompanying notes are an integral part of the
Financial Statements
.
|
|
|
Vease nuestro informe de
fecha
|
9 de agosto de 2017
|
PRICE WATERHOUSE & CO.
S.R.L.
|
|
|
(Socio)
|
|
DANIEL
ABELOVICH
|
C.P.C.E.C.A.B.A. Tº 1 Fº
17
|
RICARDO
TORRES
|
5
2018 FINANCIAL
STATEMENTS
|
edenor
Statement of
Cash Flows
for
the years ended December 31, 2018, 2017 and 2016
(Stated in thousands of pesos in measuring unit current –
Note 3)
|
|
|
|
|
|
|
|
Note
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Cash flows from operating
activities
|
|
|
|
|
|
|
Profit for the year
|
|
4,297,466
|
|
5,080,635
|
|
240,771
|
|
|
|
|
|
|
|
Adjustments to reconcile net
(loss) profit to net cash flows from
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
Depreciation of property, plants and
equipments
|
31
|
2,561,499
|
|
2,148,089
|
|
2,147,241
|
Loss on disposals of property,
plants and equipments
|
32
|
134,455
|
|
49,824
|
|
244,456
|
Net accrued interest
|
33
|
4,296,427
|
|
2,113,569
|
|
2,198,026
|
Exchange difference
|
33
|
3,130,769
|
|
564,056
|
|
911,819
|
Income tax
|
26
|
1,877,396
|
|
510,056
|
|
147,270
|
Allowance for the impairment of
trade and other receivables, net of recovery
|
31
|
977,503
|
|
391,615
|
|
433,371
|
Adjustment to present value of
receivables
|
33
|
327
|
|
431
|
|
(5,749)
|
Provision for
contingencies
|
32
|
724,097
|
|
542,364
|
|
301,808
|
Changes in fair value of financial
assets
|
33
|
(703,123)
|
|
(437,577)
|
|
(891,773)
|
Accrual of benefit
plans
|
24
|
112,208
|
|
169,454
|
|
194,232
|
Gain from interest in joint
ventures
|
|
(1,602)
|
|
(10,052)
|
|
(6)
|
Higher cost recognition – SEE
Resolution 250/13 and subsequent Notes
|
|
-
|
|
-
|
|
(185,436)
|
Income recognition on account of the
RTI - SE Resolution 32/15
|
|
-
|
|
-
|
|
(958,289)
|
Recognition of income – provisional
remedies – MINEM Note 2016-
|
|
|
|
|
|
|
04484723
|
|
-
|
|
-
|
|
(2,074,170)
|
Contractual resolution of real
estate asset
|
|
(500,803)
|
|
-
|
|
-
|
Net gain from the repurchase of
Corporate Bonds
|
37
|
(4,539)
|
|
-
|
|
(90)
|
Income from non-reimbursable
customer contributions
|
33
|
(5,574)
|
|
(4,372)
|
|
(1,520)
|
Other reserve constitution - Share
bases compensation plan
|
32
|
10,700
|
|
11,469
|
|
32,833
|
Gain on net monetary
position
|
|
(9,057,510)
|
|
(5,526,378)
|
|
(5,761,337)
|
|
|
|
|
|
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
|
Increase in trade
receivables
|
|
(2,131,406)
|
|
(2,623,696)
|
|
(5,503,081)
|
Decrease in other
receivables
|
|
833,953
|
|
28,093
|
|
1,967,981
|
Increase in
inventories
|
|
(819,875)
|
|
(530,114)
|
|
(283,022)
|
Increase in deferred
revenue
|
|
88,368
|
|
-
|
|
86,859
|
Increase in trade
payables
|
|
1,796,518
|
|
5,003,116
|
|
5,146,159
|
Increase in salaries and social
security payable
|
|
565,657
|
|
314,806
|
|
579,828
|
Decrease in benefit
plans
|
|
(55,354)
|
|
(56,573)
|
|
(57,013)
|
(Decrease) Increase in tax
liabilities
|
|
(515,651)
|
|
(366,667)
|
|
1,832,418
|
Increase in other
payables
|
|
3,220,527
|
|
438,201
|
|
4,327,303
|
Decrease in
provisions
|
29
|
(325,247)
|
|
(58,934)
|
|
(95,930)
|
Payment of Tax
payable
|
|
(886,154)
|
|
(390,763)
|
|
-
|
Net cash flows generated by
operating activities
|
|
9,621,032
|
|
7,360,652
|
|
4,974,959
|
6
2018 FINANCIAL
STATEMENTS
|
edenor
Statement of
Cash Flows
for
the years ended December 31, 2018, 2017 and 2016
(continued)
(Stated in thousands of pesos in measuring unit current –
Note 3)
|
|
|
|
|
|
|
|
|
Note
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
Payment of property, plants and
equipments
|
|
|
(8,269,359)
|
|
(7,897,106)
|
|
(4,232,239)
|
Net collection of Financial
assets
|
|
|
(2,344,945)
|
|
(1,013,532)
|
|
27,103
|
Redemtion net of money market
funds
|
|
|
2,312,229
|
|
348,233
|
|
109,182
|
Mutuum granted to third
parties
|
|
|
(114,889)
|
|
-
|
|
-
|
Collection of receivables from sale
of subsidiaries
|
|
|
88,529
|
|
53,622
|
|
23,974
|
Net cash flows used in
investing activities
|
|
|
(8,328,435)
|
|
(8,508,783)
|
|
(4,071,980)
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
Proceeds from
borrowings
|
22
|
|
-
|
|
1,285,946
|
|
-
|
Payment of interests
|
22
|
|
(652,667)
|
|
(418,494)
|
|
(516,799)
|
Payment of redemption on corporate
notes
|
|
|
-
|
|
-
|
|
(420,778)
|
Repurchase of corporate
notes
|
22
|
|
(375,520)
|
|
-
|
|
(9,818)
|
Acquisition of own
shares
|
17
|
|
(1,068,784)
|
|
-
|
|
-
|
Net cash flows (used in)
generated by financing activities
|
|
|
(2,096,971)
|
|
867,452
|
|
(947,395)
|
|
|
|
|
|
|
|
|
Decrease in cash and cash
equivalents
|
|
|
(804,374)
|
|
(280,679)
|
|
(44,416)
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the
beginning of year
|
16
|
|
122,349
|
|
381,785
|
|
237,619
|
Exchange differences in cash and
cash equivalents
|
|
|
155,985
|
|
(62)
|
|
(8,967)
|
Result from exposure to
inlfation
|
|
|
553,648
|
|
21,305
|
|
292,215
|
Decrease in cash and cash
equivalents
|
|
|
(804,374)
|
|
(280,679)
|
|
(44,416)
|
Cash and cash equivalents at
the end of the year
|
16
|
|
27,608
|
|
122,349
|
|
476,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flows
information
|
|
|
|
|
|
|
|
Non-cash
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of property, plant and
equipment through increased trade
|
|
|
(677,207)
|
|
(585,692)
|
|
(379,146)
|
payables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease of property, plant and
equipment through increased other
|
|
|
439,300
|
|
-
|
|
-
|
receivables
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of the
Financial Statements
.
7
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 1 |
General
information
History and development of the Company
edenor
was
organized on July 21, 1992 by Executive Order No. 714/92 in connection with the
privatization and concession process of the distribution and sale of electric
power carried out by SEGBA.
By
means of an International Public Bidding, the PEN awarded 51% of the Company’s
capital stock, represented by the Class "A" shares, to the bid
made by EASA, the parent company of
edenor
at that time. The award as well as the transfer contract were approved on August
24, 1992 by Executive Order No. 1,507/92 of the PEN.
On
September 1, 1992, EASA took over the operations of
edenor
The corporate purpose of
edenor
is to engage
in the distribution and sale of electricity within the concession area.
Furthermore, among other activities, the Company may subscribe or acquire shares
of other electricity distribution companies, subject to the approval of the
regulatory agency, assign the use of the network to provide electricity
transmission or other voice, data and image transmission services, and render
advisory, training, maintenance, consulting, and management services and
know-how related to the distribution of electricity both in Argentina and
abroad. These activities may be conducted directly by
edenor
or through
subsidiaries or related companies. In addition, the Company may act as trustee
of trusts created under Argentine laws.
The Company’s economic and financial
situation
One of the main milestone events in 2017 was the return to
the regulatory framework, thanks to which the RTI and the new electricity rate
schedules, which have been almost entirely implemented since February 2018, have
materialized.
In
that context, the Company’s Board of Directors is optimistic that the effects
caused by the application of the aforementioned RTI will make it possible to
gradually restore the Company’s economic and financial position; being confident
that the new electricity rates will result in the Company’s operating once again
under a regulatory framework with clear and precise rules, which will make it
possible to not only cover the operation costs, afford the investment plans and
meet debt interest payments, but also deal with the impact of the different
variables that affect the Company’s business.
As
of December 31, 2018, the Company’s comprehensive income amounts to a profit of
$ 4.2 billion, whereas the working capital totals $ 7.3 billion– deficit-, which
includes the amount owed to CAMMESA for $ 11.9 billion
(principal
plus interest accrued as of December 31, 2018).
The Company’s equity and negative working capital reflects
the deteriorated financial and cash position the Company still has as a
consequence of the Federal Government’s delay in the compliance with certain
obligations under the Adjustment Agreement, which are contingent on specific
negotiations and regulatory changes to be applied by the different governmental
bodies. Additionally, the increase in operating costs during the fiscal year, as
a consequence of the country’s macroeconomic context, made the Company intensify
its efforts to be able to absorb them and comply with the execution of the
investment plan and the carrying out of the essential operation and maintenance
works necessary to maintain the provision of the public service, object of the
concession, in a satisfactory manner in terms of quality and safety.
8
2018 FINANCIAL
STATEMENTS
NOTES
|
The issues pending resolution
at the date
of issuance of these financial statements
are, among
others, the following:
i)
the treatment to be given to the funds received from the
Federal Government through the loans for consumption (mutuums) agreements
entered into with CAMMESA for the fulfillment of the Extraordinary Investment
Plan, granted to cover the insufficiency of the FOCEDE’s funds;
ii)
the
conditions for the settlement of the balance outstanding with CAMMESA at the
date of issuance of SEE Resolution No. 32/15;
iii)
the treatment
to be given to the Penalties and Discounts determined by the ENRE under the
terms of the Adjustment Agreement not complied with by the Federal Government,
whose payment/crediting is pending.
In
this regard, the Company and the Governmental Secretariat of Energy are
negotiating the signing of an agreement for the regularization of the previously
mentioned pending issues. All that within the framework of the transfer of
Concession Holders to the jurisdiction of the Province and the City of Buenos
Aires described in Note 2.h.
Note 2 |
Regulatory
framework
a)
General
The ENRE is empowered to control the quality levels of the
technical product and service, the commercial service and the compliance with
public safety regulations, as provided for in the Concession Agreement. If the
Distribution Company fails to comply with the obligations assumed, the ENRE may
apply the penalties stipulated in the aforementioned Agreement.
b)
Concession
The term of the concession is 95 years, which
may be extended for an additional maximum period of 10
years. The term of the concession is divided into management periods: a first
period of 15 years and subsequent periods of 10 years each. At the end of each
management period, the Class “A” shares representing 51% of the share capital of
edenor
,
currently held by PESA, must be offered for sale through a public bidding. If
PESA makes the highest bid, it will continue to hold the Class “A” shares, and
no further disbursements will be necessary. On the contrary, if PESA is not the
highest bidder, then the bidder who makes the highest bid shall pay PESA the
amount of the bid in accordance with the conditions of the public bidding.
The proceeds from the sale of the Class “A” shares will be delivered to PESA
after deducting any amounts receivable to which the Grantor of the concession
may be entitled. The first management period ended at the conclusion of the
tariff period commenced on February 1, 2017.
The Company has the exclusive right to render electric
power distribution and sales services within the concession area to all the
customers who are not authorized to obtain their power supply from the MEM, thus
being obliged to supply all the electric power that may be required in due time
and in accordance with the established quality levels. In addition, the Company
must allow free access to its facilities to any MEM agents whenever required,
under the terms of the Concession.
No
specific fee must be paid by the Company under the Concession Agreement during
the term of the concession.
On
January 6, 2002, the PEN enacted Law No. 25,561 whereby adjustment clauses in
dollars, as well as any other indexation mechanisms stipulated in the contracts
entered into by the Federal Public Administration, including those related to
public utilities, were declared null and void as from such date. The resulting
prices and rates were converted into Argentine pesos at a rate of 1 peso per US
dollar.
9
2018 FINANCIAL
STATEMENTS
NOTES
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In
this context, the Company is subject to compliance with the terms of its
Concession Agreement and the provisions of the regulatory framework comprised of
National Laws Nos. 14,772, 15,336 and 24,065, Resolutions and Regulatory and
supplementary standards issued by the different entities with authority over the
matter. Thus, the Company is responsible for the provision of the public service
of electricity distribution and sale with a satisfactory quality level,
complying for such purpose with the requirements set forth in the aforementioned
concession agreement and regulatory framework.
Failure to comply with the established guidelines will
result in the application of fines, based on the economic damage suffered by the
customer when the service is provided in an unsatisfactory manner, the amounts
of which will be determined in accordance with the methodology stipulated in the
above-mentioned agreement. The ENRE is the authority in charge of controlling
strict compliance with the pre-established guidelines.
c)
Electricity rate situation
On
January 31, 2017, the ENRE issued Resolution No. 63/17, pursuant to which it
determined the definitive Electricity Rate Schedules, the review of costs, the
required quality levels, and all the other rights and obligations that are to be
applied and complied with by the Company as from February 1, 2017.
The aforementioned Resolution stated that the ENRE, as
instructed by the MINEM, were to limit the increase in the VAD resulting from
the RTI process and applicable as from February 1, 2017, to a maximum of 42%
vis-á-vis the VAD in effect at the date of issuance of the aforementioned
resolution, with the remaining value of the new VAD being applied in two stages,
the first of them in November 2017 and the second and last one in February
2018.
Furthermore, on November 30, 2017, by means of Resolution
No. 603/17, the ENRE approved the CPD values, applicable as from December 1,
2017, and retroactively to consumption recorded in the months of August through
November 2017. That amount totaled $ 753.9 million and was billed in two
installments, December 2017 and January 2018. Additionally, the Electricity Rate
Schedule’s values, applicable as from December 1, 2017, were
approved.
On
January 31, 2018, the ENRE issued Resolution No. 33/18, whereby it approves the
CPD values relating to the July 2017-December 2017 period, which were in the
order of 11.99%, the values of the 48 monthly installment to be applied in
accordance with the provisions of ENRE Resolution No. 329/17 which were deferred
in the year 2017, and the electricity rate schedule to be applied to consumption
recorded as from February 1, 2018. Additionally, it is informed that the average
electricity rate value amounts to $2.4627/kwh.
Furthermore, on July 31, 2018, the ENRE issued Resolution
No. 208/18, whereby it approves, as from August 1, 2018, the CPD relating to the
January-June 2018 period, to be applied 7.93% as of August 1, 2018, and 6.51% in
six (6) consecutive monthly installments as of February 1, 2019. The CPD
amounted to 15.85%. Moreover, the above-mentioned resolution sets the system of
caps for the social tariff as well as the values that the Company shall apply to
determine and credit discount amounts onto the power bills of the consumers
affected by deficiencies in the quality of the technical product and/or the
quality of the technical and commercial service as from the first control day of
the September 2018-February 2019 six-month period. Additionally, it is informed
that the average electricity rate value amounts to $2.9871/kWh.
Finally, according to section 4 of SE Resolution No.
366/18, passed on December 27, 2018, SE Resolution 1091/17 was repealed, thus
eliminating the energy-savings discount for the residential tariff charged to
customers framed or not under the social tariff as from January 1, 2019. With
regard to the social tariff discounts, they will be assumed by the Governments
of the Province of Buenos Aires and the City of Buenos Aires in accordance with
the provisions of the 2019 Federal Budget Law.
10
2018 FINANCIAL
STATEMENTS
NOTES
|
d)
Framework
agreement
On
January 10, 1994, the Company, together with Edesur S.A., the Federal Government
and the Government of the Province of Buenos Aires entered into the so-called
Framework Agreement, whose purpose was to establish the guidelines under which
the Company was to supply electricity to low-income areas and shantytowns. In
October 2003, the so-called New Framework Agreement was signed with the aim of
setting the bases and general guidelines based on which the Federal and the
Provincial Governments’ economic contribution for the electricity supplied by
the two Distribution Companies to the different shantytowns would take place and
be coordinated. After successive extensions of the agreement’s term, the latest
extension was in effect until September 30, 2017.
At
the date of these financial statements, the Company is negotiating with the
Federal Government the signing of a new extension for the period elapsed from
October 1, 2017 through December 31, 2018, and the payment of the electricity
supplied during such period; therefore, no revenue for this concept has been
recognized.
Additionally, and as a consequence of the transfer of
jurisdiction over the public service of electricity distribution from the
Federal Government to the Province of Buenos Aires and to the City of Buenos
Aires provided for by Law 27,467, the Company will be required, when the
transfer takes place, to undertake a review, with the new Grantors of the
Concession, of the treatment to be given to low-income areas and shantytowns’
consumption of electricity as from January 1, 2019. In this framework, the
Government of the Province of Buenos Aires enacted Law No. 15,078 on General
Budget, which establishes that the aforementioned consumption shall be borne by
the referred to province’s Municipalities and approved by the regulatory
entities or local authorities having jurisdiction in each area.
e)
Penalties
The ENRE is empowered to control the quality levels of the
technical product and service, the commercial service and the compliance with
public safety regulations, as provided for in the Concession Agreement. If the
Distribution Company fails to comply with the obligations assumed, the ENRE may
apply the penalties stipulated in the aforementioned Agreement.
As
of December 31, 2018 and 2017, the Company has recognized in its financial
statements the penalties accrued, whether imposed or not yet issued by the ENRE,
relating to the control periods elapsed as of those dates.
Furthermore, ENRE Resolution No. 63/17, Note 2.c).III, has
set out the control procedures, the service quality assessment methodologies,
and the penalty system, applicable as from February 1, 2017, for the 2017 – 2021
period.
Additionally, by means of Note No. 125,248 dated March 29,
2017, the ENRE sets the new penalty determination and adjustment mechanisms in
relation to the control procedures, the service quality assessment
methodologies, and the penalty system applicable as from February 1, 2017 for
the 2017 – 2021 period set by ENRE Resolution No. 63/17, providing for the
following:
i)
Penalty values shall be determined on the basis of the kWh
value, the average electricity rate, the cost of energy not supplied or other
economic parameter at the value in effect at the first day of the control period
or the value in effect at the date of the penalizable event for penalties
arising from specific events.
ii)
For all the events that occurred during the transition
period (the period between the signing of the Adjustment Agreement and the
effective date of the RTI) for which a penalty has not been imposed, penalties
shall be adjusted by the IPC used by the BCRA to produce the ITCRM for the month
prior to the end of the control period or that for the month prior to the date
of occurrence of the penalizable event for penalties arising from specific
events, until the date on which the penalty is imposed. This mechanism is also
applicable to the concepts penalized after April 15, 2016 (ENRE Note No.
120,151) and until the effective date of the RTI. This adjustment will be part
of the penalty principal amount.
11
2018 FINANCIAL
STATEMENTS
NOTES
|
iii)
Unpaid
penalties will accrue interest at the BNA lending rate for thirty-day discount
transactions from the date of the resolution to the date of actual payment, as
interest on late payment. In the case of penalties relating to Customer service,
the calculated amount shall be increased by 50%.
iv)
Penalties
subsequent to February 1, 2017 will be valued at the Kwh value or the cost of
energy not supplied of the first day of the control period or of the day on
which the penalty is imposed for penalties arising from specific events. Those
concepts will not be adjusted by the IPC, applying the interest on late payment
established in iii) above. Moreover, an additional fine equivalent to twice the
amount of the penalty will be determined if payment is not made in due time and
proper form.
In
the ENRE’s opinion many of the penalties imposed in kWh must be valued at the
date of occurrence of the penalizable event; these modifications have been
quantified and recognized as of December 31, 2018.
In
accordance with the provisions of Sub-Appendix XVI to ENRE Resolution No. 63/17,
the Company is required to submit in a term of 60 calendar days the calculation
of global indicators, interruptions for which force majeure had been alleged,
the calculation of individual indicators, and will determine the related
discounts, crediting the amounts thereof within 10 business days. In turn, the
ENRE will examine the information submitted by the Company, and in the event
that the crediting of such discounts were not verified will impose a fine,
payable to the Federal Government, equivalent to twice the value that should
have been recorded. At the date of these financial statements, the Company has
complied with the provisions of the aforementioned Resolution in relation to the
six-month period ended August 31, 2018.
Furthermore, in different resolutions concerning penalties relating to the
Quality of the Commercial and Technical Service, the Regulatory Entity has
provided for the application of increases and adjustments, applying for such
purpose a criterion different from the one applied by the Company. In this
regard, the ENRE implemented an automatic penalty mechanism in order that the
discounts on account of deviations from the established limits may be credited
to customers within a term of 60 days as from the end of the six-month control
period.
In
fiscal year 2018, the ENRE regulated and/or issued new penalty procedures, to
wit:
ü
ENRE Resolution No. 118/18: It regulated the Compensation
for extraordinary service provision interruptions.
ü
ENRE Resolution No. 170/18: It regulated the Penalty
System for Deviations from the Investment Plan, a procedure whereby real
investments are assessed by comparison with the annual investment plan submitted
by the Company, and the investment plan carried out for the 5-year rate period
is assessed as against the Five-year period plan proposed in the RTI.
ü
ENRE Resolution No. 198/18: New Supplementary Penalty
System of Technical Service Quality, which penalizes deviations ºfrom quality
parameters at feeder level.
ü
ENRE Resolution N° 91/18: Through the filing of charges,
the ENRE informs
edenor
about the
penalty system to be applied for failure to comply with meter-reading and
billing time periods.
The effects of these resolutions were quantified by the
Company and recognized as of December 31, 2018.
12
2018 FINANCIAL
STATEMENTS
NOTES
|
f)
Restriction on the transfer of the Company’s common
shares
The by-laws provide that Class “A” shareholders may transfer their shares only
with the prior approval of the ENRE. The ENRE must communicate its decision
within 90 days upon submission of the request for such approval, otherwise the
transfer will be deemed approved.
Furthermore, Caja de Valores S.A. (the Public Register Office), which keeps the
Share Register of the shares, is entitled (as stated in the by-laws) to reject
such entries which, at its criterion, do not comply with the rules for the
transfer of common shares included in (i) the Business Organizations Law, (ii)
the Concession Agreement and (iii) the By-laws.
In addition, the Class “A” shares will be pledged during the entire term of the
concession as collateral to secure the performance of the obligations assumed
under the Concession Agreement.
Other restrictions:
·
In connection with the issuance of Corporate Notes, during
the term thereof, PESA is required to be the beneficial owner and owner of
record of not less than 51% of the Company’s issued, voting and outstanding
shares.
·
In connection with the Adjustment Agreement signed with
the Grantor of the Concession and ratified by Executive Order No. 1,957/06,
Section 10 stipulates that from the signing of the agreement through the end of
the Transition Period, the majority shareholders may not modify their ownership
interest nor sell their shares.
g)
Law on
electricity dependent patients
On
May 17, 2017, Law No. 27,351 was passed, which guarantees the permanent and free
of charge supply of electricity to those individuals who qualify as dependent on
power for reasons of health and require medical equipment necessary to avoid
risks in their lives or health. The law states that the account holder of the
service or someone who lives with him/her (a cohabitant) that is registered as
“Electricity dependent for reasons of health” will be exempt from the payment of
any and all connection fees and will benefit from a special free of charge
tariff treatment in the electric power supply service under national
jurisdiction, which consists in the recognition of the entire amount of the
power bill.
According to Executive Order No. 740 of the PEN, dated
September 20, 2017, the MINEM will be the Authority of Application of Law No.
27,351, whereas the Ministry of Health will be responsible for determining the
conditions necessary to be met for registration with the “Registry of
Electricity Dependent for Reasons of Health” and will issue the clarifying and
supplementary regulations for the application thereof.
On
September 25, 2017, the National Ministry of Health issued Resolution No.
1,538-E/17, which creates the Registry of Electricity Dependent for Reasons of
Health (RECS), within the orbit of the National Ministry of Health, operating
under the authority of the Undersecretariat for the Management of Health Care
Services.
At
the date of issuance of these financial statements no further regulations have
been issued concerning the Resolution mentioned in the preceding
paragraph.
13
2018 FINANCIAL
STATEMENTS
NOTES
|
h)
Change of
Jurisdiction
By Law No. 27467, 2019 Federal budget of expenditures and
resources, the Executive Power is instructed to promote such actions that may be
necessary in order for electricity distribution companies
edenor
and Edesur S.A. to become subject to the jurisdiction of the Province of Buenos
Aires and the City of Buenos Aires as from January 1, 2019.
Upon completion of the aforementioned process, the
ENRE will continue to exercise its functions and powers over all those issues
that are
unrelated
to the public service of electricity
distribution.
In this regard, on February 28, 2019, the Federal
Government, the Province of Buenos Aires and the City of Buenos Aires entered
into an agreement for the transfer of the public service of electricity
distribution, duly awarded to
edenor
under a concession by the Federal Government, to the jurisdiction of the
Province of Buenos Aires and the City of Buenos Aires. It is worth pointing out
that the Company has not been a party to such agreement, and, at the date of
issuance of these financial statements is analyzing the scope and effects
therefrom.
Note 3 |
Basis of
preparation
The financial statements for the year ended December 31,
2018 have been prepared in accordance with IFRS issued by the IASB and IFRIC
interpretations, incorporated by the CNV.
These financial statements were approved for issue by the
Company’s Board of Directors on March 8, 2019.
Comparative information
The balances as of December 31, 2017, disclosed in these
financial statements for comparative purposes, arise as a result of the
restatement of the financial statements to reflect the effects of inflation as
of December 31, 2018. This, as a consequence of the Restatement of the financial
information described hereunder.
Restatement of financial information
The financial statements as of December 31, 2018,
including the prior year’s figures, have been restated to reflect the changes in
the general purchasing power of the Company’s functional currency (the Argentine
peso), in conformity with the provisions of both IAS 29 “Financial reporting in
hyperinflationary economies” and General Resolution No. 77718 of the National
Securities Commission. As a result thereof, the financial statements are stated
in terms of the measuring unit current at the end of the reporting
period.
According to IAS 29, the restatement of financial
statements is necessary when the functional currency of an entity is that of a
hyperinflationary economy. To define a state of hyperinflation, IAS 29 provides
a series of guidelines, including but not limited to the following, which
consist of (i) analyzing the behavior of population, prices, interest rates and
wages faced with the development of price indexes and the loss of the currency’s
purchasing power, and (ii) as a quantitative feature, which, in practice, is the
mostly considered condition, verifying whether the cumulative inflation rate
over three years approaches or exceeds 100%.
Although in recent years the general level of prices
experienced a significant growth, the cumulative inflation rate over three years
in Argentina had remained below 100%. However, due to different macroeconomic
factors, triennial inflation in 2018 surpassed that percentage, while the
federal government’s targets and other available projections indicate that this
trend will not reverse in the short term.
14
2018 FINANCIAL
STATEMENTS
NOTES
|
Therefore, according to IAS 29, the Argentine economy
should be regarded as highly inflationary as from July 1, 2018. The standard
states that the adjustment will be resumed from the date on which it was last
made, February 2003. Moreover, on July 24, 2018, the FACPCE issued a
communication confirming that which has been previously mentioned. Additionally,
it should be taken into account that on December 4, 2018 the
Official Gazette
published
Law 27,468 pursuant to which the provisions of Executive Order No. 664/03 of the
PEN, which did not allow for the filing of inflation-adjusted financial
statements, are no longer in effect. This law states that the provisions of
section 62 of Business Organizations Law 19,550 -preparation of financial
statements to reflect the effects of inflation- will continue to apply, thus
reinstating the adjustment for inflation. On December 28, the CNV, reaffirming
the provisions of Law 27,468, published Resolution No. 777/18 stating that
issuing companies shall apply the restatement method of financial statements to
reflect the effects of inflation in conformity with IAS 29.
In
order to not only assess the aforementioned quantitative condition but also
restate the financial statements, the CNV has stated that the series of indexes
to be used for the application of IAS 29 is that determined by the FACPCE. That
series of indexes combines the IPC published by the INDEC from January 2017
(base month: December 2016) with the IPIM published by the INDEC through that
date, computing for the months of November and December 2015 -in respect of
which there is no available information from the INDEC on the development of the
IPIM-, the variation recorded in the IPC of the City of Buenos Aires.
Taking into consideration the above-mentioned index, in
the fiscal years ended December 2018 and 2017, the inflation rate amounted to
47.66% and 24.79%, respectively.
The effects of the application of IAS 29 are summarized
below:
Restatement of the statement of financial
position
(i)
Monetary items (those with a fixed nominal value in local
currency) are not restated in as much as they are already expressed in terms of
the measuring unit current at the closing date of the reporting
period.
(ii)
Non-monetary items carried at historical cost or at the
current value of a date prior to the end of the reporting period are restated
using coefficients that reflect the variation recorded in the general level of
prices from the date of acquisition or revaluation to the closing date of the
reporting period. Depreciation charges of property, plant and equipment and
amortization charges of intangible assets recognized in profit or loss for the
period, as well as any other consumption of non-monetary assets will be
determined on the basis of the new restated amounts.
(iii)
The restatement of non-monetary assets in terms of the
measuring unit current at the end of the reporting period without an equivalent
adjustment for tax purposes, gives rise to a taxable temporary difference and to
the recognition of a deferred tax liability, deferred tax liability is
recognized for the temporary difference generated bythe restatement of the
accounting bases of asset without any restatement of their tax bases the debit
entry of this deffered tax liability is a monetary loss.
Restatement of the statement of profit or loss and other
comprehensive income
(i)
Income and expenses are restated from the date when they
were recorded, except for those profit or loss items that reflect or include in
their determination the consumption of assets carried at the purchasing power of
the currency as of a date prior to the recording of the consumption, which are
restated based on the date when the asset to which the item is related
originated (for example, depreciation, impairment and other consumptions of
assets valued at historical cost).
(ii)
The net gain from the maintenance of monetary assets and
liabilities is presented in a line item separately from the profit or loss for
the year.
15
2018 FINANCIAL
STATEMENTS
NOTES
|
Restatement of the statement of changes in
equity
(i)
The components of equity, except for reserved earnings and
unappropriated retained earnings, have been restated from the dates on which
they were contributed, or on which they otherwise arose.
(ii)
The restated unappropriated retained earnings were
determined by the difference between net assets restated at the date of
transition and the other components of opening equity expressed as indicated in
the preceding headings.
(iii)
After the restatement at the date of transition indicated
in (i) above, all components of equity are restated by applying the general
price index from the beginning of the period, and each variation of those
components is restated from the date of contribution or the date on which it
otherwise arose.
Restatement of the statement of cash flows
IAS 29 requires that all the items of this statement be
restated in terms of the measuring unit current at the closing date of the
reporting period.
The monetary gain or loss generated by cash and cash
equivalents is presented in the statement of cash flows separately from cash
flows from operating, investing and financing activities, as a specific item of
the reconciliation between cash and cash equivalents at the beginning and end of
the period.
Note 4 |
Accounting
policies
The main accounting policies used in the preparation of
these financial statements are detailed below.
Note 4.1 |
New accounting standards, amendments and interpretations
issued by the IASB
The Company has applied the following standards and/or
amendments for the first time as from January 1, 2018:
-
IFRS 15 "Revenue from contracts with customers" (issued in May 2014 and amended
in September 2015)
-
IFRS 9 “Financial instruments” (amended in July 2014)
-
IFRS 2 “Share-based payments” (amended in June 2016)
-
IFRIC 22 “Foreign currency transactions and Advanced consideration” (issued in
December 2016)
-
Annual improvements to IFRSs – 2014-2016 Cycle (issued in December 2016)
In
the respective accounting policies detail the main issues related to the initial
application of IFRS 9 and IFRS 15. The application of the other standards,
amendments and interpretations generated no impact on either the Company’s
results of operations and financial position, or the accounting policies
applicable as from January 1, 2018.
16
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 4.1.1 |
Impacts of adoption of rules not yet
effectives
-
IFRS 16 “Leases”: On January 13, 2016, the IASB published IFRS 16, which
replaces the current guidance in IAS 17. The standard defines a lease as a
contract, or part of a contract, that conveys the right to use an asset (the
underlying asset) for a period of time in exchange for consideration. The
standard requires the recognition of a lease liability that reflects future
lease payments and a ‘right-of-use asset’ for almost all lease contracts. This
is a significant change compared to IAS 17 under which lessees were required to
make a distinction between a finance lease (reported on the balance sheet) and
an operating lease (off balance sheet). IFRS 16 contains an optional exemption
for certain short-term leases and leases of low-value assets; however, this
exemption can only be applied by lessees. IFRS 16 is effective for annual
reporting periods beginning on or after January 1, 2019. The impact of the
application of the aforementioned standard estimated by the Company is not
significant.
-
IFRS 17 “Insurance Contracts”, issued in May 2017. It replaces IFRS 4 - an
interim standard issued in 2004 that allowed entities to account for insurance
contracts using their local accounting requirements, resulting in multiple
application approaches. IFRS 17 establishes the principles for the recognition,
measurement, presentation, and disclosure of insurance contracts, and applies to
annual periods beginning on or after January 1, 2021, with early adoption
permitted if entities also apply IFRS 9 and IFRS 15. The Company is currently
analyzing the impact of the application of IFRS 17; nevertheless, it estimates
that the application thereof will have no impact on the Company’s results of
operations or its financial position.
-
IFRIC 23 “Uncertainty over income tax treatments”, issued in June 2017. It
clarifies the application of IAS 12 where there is uncertainty over income tax
treatments. In accordance with the interpretation, an entity is required to
reflect the impact of the uncertain tax treatment using the method that best
predicts the resolution of the uncertainty, using either the most likely amount
method or the expected value method. Additionally, the entity is required to
assume that the tax authority will examine the uncertain treatments and have
full knowledge of all the related relevant information when assessing the tax
treatment over income tax. The interpretation is effective for annual periods
beginning on or after January 1, 2019, although early adoption is permitted. The
Company estimates that the application of IFRIC 23 will have no impact on the
Company’s results of operations or its financial position.
17
2018 FINANCIAL
STATEMENTS
NOTES
|
-
IAS 28 “Investments in associates and joint ventures”, amended in October 2017.
It clarifies that IFRS 9 applies to other financial instruments in an associate
or joint venture to which the equity method is not applied. The standard is
effective for annual periods beginning on or after January 1, 2019, although
early adoption is permitted. The Company estimates that its application will
have no impact on the Company’s results of operations or its financial
position.
-
IAS 19 “Employee benefits”, amended in February 2018. It introduces changes to
the measurement of past service cost and net interest in the case of
post-employment defined benefit plans that have suffered amendments,
curtailments or settlements. It applies to amendments, curtailments or
settlements as from January 1, 2019.
The Company is currently assessing the impact of these new
standards and amendments.
Note 4.2 |
Property, plant and equipment
Additions have been valued at acquisition cost restated to
reflect the effects of inflation, net of the related accumulated depreciation.
Depreciation has been calculated by applying the straight-line method over the
remaining useful life of the assets, which was determined on the basis of
engineering studies.
Subsequent costs (major maintenance and reconstruction
costs) are either included in the value of the assets or recognized as a
separate asset, only if it is probable that the future benefits associated with
the assets will flow to the Company, being it possible as well that the costs of
the assets may be measured reliably and the investment will improve the
condition of the asset beyond its original state. The other maintenance and
repair expenses are recognized in profit or loss in the year in which they are
incurred.
In
accordance with the Concession Agreement, the Company may not pledge the assets
used in the provision of the public service nor grant any other security
interest thereon in favor of third parties, without prejudice to the Company’s
right to freely dispose of those assets which in the future may become
inadequate or unnecessary for such purpose. This prohibition does not apply in
the case of security interests granted over an asset at the time of its
acquisition and/or construction as collateral for payment of the purchase and/or
installation price.
The residual value and the remaining useful lives of the
assets are reviewed and adjusted, if appropriate, at the end of each fiscal year
(reporting period).
Land is not depreciated.
Facilities in service: between 30 and 50 years
Furniture, tools and equipment: between 5 and 20
years
Construction in process is valued based on the degree of
completion and is recorded at cost restated to reflect the effects of inflation
less any impairment loss, if applicable. Cost includes expenses attributable to
the construction, when they are part of the cost incurred for the purposes of
acquisition, construction or production of property, plant and equipment that
require considerable time until they are in condition to be used. These assets
begin to be depreciated when they are in economic condition to be
used.
Gains and losses on the sale of Property, plant and
equipment are calculated by comparing the price collected with the carrying
amount of the asset, and are recognized within Other operating expense or Other
operating income in the Statement of Comprehensive Income.
The valuation of property, plant and equipment, taken as a
whole, does not exceed its recoverable value, which is measured as the higher of
value in use and fair value less costs to sell at the end of the year.
At
the date of issuance of these financial statements there are no indicators of a
potential impairment (Note 6.c).
18
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 4.3 |
Interests in joint ventures
The main conceptual definitions are as follow:
i.
A joint arrangement takes place among two or more parties
when they have joint control: joint control is the contractually agreed sharing
of control of an arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties sharing
control.
ii.
A joint venture is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the net assets of the
arrangement. Such parties are called joint venturers.
iii.
A joint operation is a joint arrangement whereby the
parties that have joint control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrangement. These parties
are called joint operators.
The Company accounts for its investment in joint ventures
in accordance with the equity method. Under this method, the interest is
initially recognized at cost and subsequently adjusted by recognizing the
Company’s share in the profit or loss obtained by the joint venture, after
acquisition date. The Company recognizes in profit or loss its share of the
joint venture’s profit or loss and in other comprehensive income its share of
the joint venture’s other comprehensive income.
When the Company carries out transactions in the joint
ventures, the unrealized gains and losses are eliminated in accordance with the
percentage interest held by the Company in the jointly controlled
entity.
The joint ventures’ accounting policies have been modified
and adapted, if applicable, to ensure consistency with the policies adopted by
the Company.
Furthermore, taking into account that the interests in
joint ventures are not regarded as significant balances, the disclosures
required under IFRS 12 have not been made.
Note 4.4 |
Revenue recognition
a.
Revenue from sales
Revenue is measured at the fair value of the consideration
collected or to be collected, taking into account the estimated amount of any
discount, thus determining the net amounts.
Revenue from the electricity supplied by the Company to
low-income areas and shantytowns is recognized to the extent that a renewal of
the Framework Agreement is formalized for the period in which the service was
rendered. At the date of issuance of these financial statements, the Company’s
Board of Directors is negotiating with the Federal and Provincial Governments
the signing of the respective agreements (Note 2.d).
Revenue from operations is recognized on an accrual basis
and derives mainly from electricity distribution. Such revenue includes both the
electricity supplied, whether billed or unbilled at the end of each year, which
has been valued on the basis of applicable tariffs.
The Company also recognizes revenue from other concepts
included in distribution services, such as new connections, reconnections,
rights of use on poles, transportation of electricity to other distribution
companies, etc.
19
2018 FINANCIAL
STATEMENTS
NOTES
|
The aforementioned revenue from operations was recognized
when all of the following conditions were met:
1.
the entity
transferred to the buyer the significant risks and rewards;
2.
the amount of
revenue was measured reliably;
3.
it is
probable that the economic benefits associated with the transaction will flow to
the entity;
4.
the costs
incurred or to be incurred, in respect of the transaction, were measured
reliably.
b.
Interest income
Interest income is recognized by applying the effective
interest rate method. Interest income is recorded in the accounting on a time
basis by reference to the principal amount outstanding and the applicable
effective rate.
Interest income is recognized when it is probable that the
economic benefits associated with the transaction will flow to the Company and
the amount of the transaction can be measured reliably.
Note 4.5 |
Effects of the changes in foreign currency exchange
rates
a.
Functional and presentation currency
The information included in the financial statements is
measured using the Company’s functional currency, which is the currency of the
main economic environment in which the entity operates. The financial statements
are measured in pesos (legal currency in Argentina), restated to reflect the
effects of inflation (Note 3), which is also the presentation
currency.
b.
Transactions and balances
Foreign currency denominated transactions and balances are
translated into the functional and presentation currency using the rates of
exchange prevailing at the date of the transactions or revaluation,
respectively. The gains and losses generated by foreign currency exchange
differences resulting from each transaction and from the translation of monetary
items valued in foreign currency at the end of the year are recognized in the
Statement of Income.
The foreign currency exchange rates used are the bid price
for monetary assets, the offer price for monetary liabilities, and the specific
exchange rate for foreign currency denominated transactions.
Note 4.6 |
Trade and other receivables
a.
Trade
receivables
The receivables arising from services billed to customers
but not collected as well as those arising from services rendered but unbilled
at the closing date of each year are recognized at fair value and subsequently
measured at amortized cost using the effective interest rate method.
The receivables from electricity supplied to low-income
areas and shantytowns are recognized, also in line with revenue, when the
Framework Agreement has been renewed for the period in which the service was
provided.
20
2018 FINANCIAL STATEMENTS
NOTES
|
b.
Other receivables
The financial assets included in other receivables are initially recognized at fair value (generally the original billing/settlement amount) and subsequently measured at amortized cost, using the effective interest rate method, and when significant, adjusted by the time value of money. The Company records impairment allowances when there is objective evidence that the Company will not be able to collect all the amounts owed to it in accordance with the original terms of the receivables.
The rest of other receivables are initially recognized at the amount paid.
Note 4.7 |
Inventories
Inventories are valued at the lower of acquisition cost restated to reflect the effects of inflation and net realizable value.
They are valued based on the purchase price, import duties (if applicable), and other taxes (that are not subsequently recovered by tax authorities), and other costs directly attributable to the acquisition of those assets.
Cost is determined by applying the weighted average price (WAP) method.
The Company has classified inventories into current and non-current depending on whether they will be used for maintenance or capital expenditures and on the period in which they are expected to be used. The non-current portion of inventories is disclosed in the “Property, plant and equipment” account.
The valuation of inventories, taken as a whole, does not exceed their recoverable value at the end of each year.
Note 4.8 |
Financial assets
Note 4.8.1 |
Classification
The Company classifies financial assets into the following categories: those measured at amortized cost and those subsequently measured at fair value. This classification depends on whether the financial asset is an investment in a debt or an equity instrument. In order for a financial asset to be measured at amortized cost, the two conditions described below must be met. All other financial assets are measured at fair value. IFRS 9 requires that all investments in equity instruments be measured at fair value.
21
2018 FINANCIAL
STATEMENTS
NOTES
|
a.
Financial assets at amortized cost
Financial assets are measured at amortized cost if the
following conditions are met:
i.
the objective of the Company’s business model is to hold
the assets to collect the contractual cash flows; and
ii.
the contractual terms give rise, on specified dates, to
cash flows that are solely payments of principal and interest on principal.
b.
Financial assets at fair value
If
any of the above-detailed conditions is not met, financial assets are measured
at fair value through profit or loss.
All investments in equity instruments are measured at fair
value. For those investments that are not held for trading, the Company may
irrevocably elect at the time of their initial recognition to present the
changes in the fair value in other comprehensive income. The Company’s decision
was to recognize the changes in fair value in profit or loss.
Note 4.8.2 |
Recognition and measurement
The regular way purchase or sale of financial assets is
recognized on the trade date, i.e. the date on which the Company agrees to
acquire or sell the asset. Financial assets are derecognized when the rights to
receive the cash flows from the investments have expired or been transferred and
the Company has transferred substantially all the risks and rewards of the
ownership of the assets.
Financial assets are initially recognized at fair value
plus, in the case of financial assets not measured at fair value through profit
or loss, transaction costs that are directly attributable to the acquisition
thereof.
The gains or losses generated by investments in debt
instruments that are subsequently measured at fair value and are not part of a
hedging transaction are recognized in profit or loss. Those generated by
investments in debt instruments that are subsequently measured at amortized cost
and are not part of a hedging transaction are recognized in profit or loss when
the financial asset is derecognized or impaired and by means of the amortization
process using the effective interest rate method.
The Company subsequently measures all the investments in
equity instruments at fair value. When it elects to present the changes in fair
value in other comprehensive income, such changes cannot be reclassified to
profit or loss. Dividends arising from these investments are recognized in
profit or loss to the extent that they represent a return on the investment.
The Company reclassifies financial assets if and only if
its business model to manage financial assets is changed.
The expected losses, according to the calculated
coefficients, are detailed in Note 6.a.
22
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 4.8.3 |
Impairment of financial assets
At
the end of each annual reporting period, the Company assesses whether there is
objective evidence that the value of a financial asset or group of financial
assets measured at amortized cost is impaired. The value of a financial asset or
group of financial assets is impaired, and impairment losses are incurred only
if there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (a “loss event”), and
that loss event (or events) has an impact on the estimated future cash flows of
the financial asset or group of financial assets that can be reliably
measured.
Impairment tests may include evidence that the debtors or
group of debtors are undergoing significant financial difficulties, have
defaulted on interest or principal payments or made them after they had come
due, the probability that they will enter bankruptcy or other financial
reorganization, and when observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in payment terms or
in the economic conditions that correlate with defaults.
In
the case of financial assets measured at amortized cost, the amount of the
impairment loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future
credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The asset’s carrying amount is reduced and the
amount of the impairment loss is recognized in the Statement of Income.
Although cash, cash equivalents and financial assets
measured at amortized cost are also subject to the impairment requirements of
IFRS 9, the identified impairment loss is not material.
Note 4.8.4 |
Offsetting of financial instruments
Financial assets and liabilities are offset, and the net
amount reported in the Statement of Financial Position, when there is a legally
enforceable right to offset the recognized amounts, and there is an intention to
settle on a net basis, or realize the asset and settle the liability
simultaneously.
Note 4.9 |
Derivative financial instruments
Derivative financial instruments are initially recognized
at fair value on the date on which the respective contract is signed.
Subsequently to the initial recognition, they are remeasured at their fair
value. The method for recognizing the resulting loss or gain depends on whether
the derivative has been designated as a hedging instrument and, if that is the
case, on the nature of the item being hedged. As of December 31, 2018 and 2017,
the economic impact of these transactions is recorded in the Other financial
expense account of the Statement of Comprehensive Income.
During fiscal year 2018, the Company has not entered into
futures contracts to buy US dollars.
As
of December 31, 2017, the economic impact of the transactions carried out in
that fiscal year resulted in a loss of $ 21.1 million, which is recorded in the
Other financial expense account of the Statement of Comprehensive
Income.
23
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 4.10 |
Cash and cash
equivalents
Cash and cash equivalents include cash on hand, deposits
held at call with banks and other short-term highly liquid investments with
original maturities of three months or less from their acquisition date, with
significant low risk of change in value.
i.
Cash and banks in local currency: at nominal
value.
ii.
Cash and banks in foreign currency: at the exchange rates
in effect at the end of the
year.
iii.
Money market funds, which have been valued at the
prevailing market price at the end of the
year. Those
that do not qualify as cash equivalents are disclosed in the Financial assets at
fair value through profit or loss account.
Note 4.11 |
Equity
Changes in this account have been accounted for in
accordance with the corresponding legal or statutory regulations and the
decisions adopted by the shareholders’ meetings.
a.
Share capital
Share capital represents issued capital, which is
comprised of the contributions committed and/or made by the shareholders,
represented by shares, including outstanding shares at nominal value, restated
to reflect the effects of inflation as indicated in Note 3.
b.
Treasury stock
The Treasury stock account represents the nominal value of
the Company’s own shares acquired by the Company, restated to reflect the
effects of inflation as indicated in Note 3.
c.
Other comprehensive income
Represents recognition, at the end of the
year, of the
actuarial losses associated with the Company’s employee benefit plans, restated
to reflect the effects of inflation as indicated in Note 3.
d.
Retained earnings
Retained earnings are comprised of profits or accumulated
losses with no specific appropriation. When positive, they may be distributed,
if so decided by the Shareholders’ Meeting, to the extent that they are not
subject to legal restrictions. Retained earnings are comprised of previous year
results that have not been distributed, amounts transferred from other
comprehensive income and prior year adjustments due to the application of
accounting standards, restated to reflect the effects of inflation as indicated
in Note 3.
Note 4.12 |
Trade and
other payables
a.
Trade payables
Trade payables are payment obligations with suppliers for
the purchase of goods and services in the ordinary course of business. Trade
payables are classified as current liabilities if payments fall due within one
year or in a shorter period of time. Otherwise, they are classified as
non-current liabilities.
Trade payables are initially recognized at fair value and
subsequently measured at amortized cost using the effective interest rate
method.
b.
Customer deposits
24
2018 FINANCIAL
STATEMENTS
NOTES
|
Customer deposits are initially recognized at the amount
received and subsequently measured at amortized cost using the effective
interest rate method.
In
accordance with the Concession Agreement, the Company is allowed to receive
customer deposits in the following cases:
i.
When the power supply is requested and the customer is
unable to provide evidence of his legal ownership of the premises;
ii.
When service has been suspended more than once in one-year
period;
iii.
When the power supply is reconnected and the Company is
able to verify the illegal use of the service (fraud).
iv.
When the customer is undergoing liquidated bankruptcy or
reorganization proceedings.
The
Company has decided not to request customer deposits from residential tariff
customers.
Customer deposits may be either paid in cash or through
the customer’s bill and accrue monthly interest at a specific rate of BNA for
each customer category.
When
the conditions for which the Company is allowed to receive customer deposits no
longer exist, the customer’s account is credited for the principal amount plus
any interest accrued thereon, after deducting, if appropriate, any amounts
receivable which the Company has with the customer.
c.
Customer
contributions
Refundable
: The Company
receives assets or facilities (or the cash necessary to acquire or build them)
from certain customers for services to be provided, based on individual
agreements and the provisions of ENRE Resolution No. 215/12. These contributions
are initially recognized as trade payables at fair value with a contra-account
in Property, plant and equipment, and subsequently measured at amortized cost
using the effective interest rate method.
d.
Other payables
The rest of the financial liabilities recorded in Other
Payables, including the loans for consumption (mutuums) with CAMMESA, the
Payment agreement with the ENRE and the advances for the execution of works, are
initially recognized at fair value and subsequently measured at amortized
cost.
The recorded liabilities for the debts with the FOTAE, the
penalties accrued, whether imposed or not yet issued by the ENRE (Note 2.e)),
and other provisions are the best estimate of the settlement value of the
present obligation in the framework of IAS 37 provisions at the date of these
financial statements.
The balances of ENRE Penalties and Discounts are adjusted
in accordance with the regulatory framework applicable thereto and are based on
the Company’s estimate of the outcome of the renegotiation process described in
Note 2, whereas the balances of the loans for consumption (mutuums) are adjusted
by a rate equivalent to the monthly average yield obtained by CAMMESA from its
short-term investments.
25
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 4.13 |
Borrowings
Borrowings are initially recognized at fair value, net of
direct costs incurred in the transaction. Subsequently, they are measured at
amortized cost; any difference between the funds obtained (net of
direct costs incurred in the transaction) and the amount
to be paid at maturity is recognized in profit or loss during the term of the
borrowings using the effective interest rate method.
26
2018 FINANCIAL STATEMENTS
NOTES
|
Note 4.14 |
Deferred revenue
Non-refundable customer contributions
: The Company receives assets or facilities (or the cash necessary to acquire or build them) from certain customers for services to be provided, based on individual agreements. In accordance with IFRIC 18, the assets received are recognized by the Company as Property, plant and equipment with a contra-account in deferred revenue, the accrual of which depends on the nature of the identifiable services, in accordance with the following:
·
customer connection to the network: revenue is accrued until such connection is completed;
·
continuous provision of the electric power supply service: throughout the shorter of the useful life of the asset and the term for the provision of the service.
Note 4.15 |
Employee benefits
·
Benefit plans
The Company operates various benefit plans. Usually, benefit plans establish the amount of the benefit the employee will receive at the time of retirement, generally based on one or more factors such as age, years of service and salary.
The liability recognized in the Statement of Financial Position in respect of benefit plans is the present value of the benefit plan obligation at the closing date of the year, together with the adjustments for past service costs and actuarial gains or losses. The benefit plan obligation is calculated annually by independent actuaries in accordance with the projected unit credit method. The present value of the benefit plan obligation is determined by discounting the estimated future cash outflows using actuarial assumptions about demographic and financial variables that affect the determination of the amount of such benefits. The benefit plans are not funded.
The group’s accounting policy for benefit plans is as follow:
a.
Past service costs are recognized immediately in profit or loss, unless the changes to the benefit plan are conditional on the employees’ remaining in service for a specified period of time (the vesting period). In this case, past service costs are amortized on a straight-line basis over the vesting period.
b.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in other comprehensive income in the period in which they arise.
·
The Company’s Share-based Compensation Plan
The Company has share-based compensation plans under which it receives services from some employees in exchange for the Company’s shares. The fair value of the employee services received is recognized as an operating expense in the “Salaries and social security taxes” line item. The total amount of the referred to expense is determined by reference to the fair value of the shares granted.
When the employees provide the services before the shares are granted, the fair value at the grant date is estimated in order to recognize the respective result.
27
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 4.16 |
Income tax
The income tax is recognized in profit or loss, other
comprehensive income or in equity depending on the items from which it
originates.
The deferred tax is recognized, in accordance with the
liability method, on the temporary differences arising between the tax base of
assets and liabilities and their carrying amounts in the statement of financial
position. However, no deferred tax liability is recognized if such difference
arises from the initial recognition of goodwill, or from the initial recognition
of an asset or liability other than in a business combination, which at the time
of the transaction affected neither the accounting nor the taxable profit.
The deferred tax is determined using the tax rate that is
in effect at the date of the financial statements and is expected to apply when
the deferred tax assets are realized or the deferred tax liabilities are
settled.
Deferred tax assets and liabilities are offset if the
Company has a legally enforceable right to offset recognized amounts and when
deferred tax assets and liabilities relate to income tax levied by the same tax
authority on the same taxable entity. Deferred tax assets and liabilities are
stated at their undiscounted value.
Deferred tax assets are recognized only to the extent that
it is probable that future taxable profits will be available against which the
temporary differences can be utilized.
Note 4.17 |
Leases
The leases in which a significant portion of the risks and
rewards of ownership is retained by the assignor are classified as operating. At
present, the Company only has leases contracts that are classified as
operating.
a.
Lessee
The payments with respect to operating leases are
recognized as operating expenses in the Statement of Comprehensive Income on a
straight-line basis throughout the term of the assignment.
b.
Lessor
The leases in which the Company does not transfer
substantially all the risks and rewards of the ownership of the asset are
classified as operating leases.
The collections with respect to operating leases are
recognized as income in the Statement of Comprehensive Income on a straight-line
basis throughout the term of the assignment.
Note 4.18 |
Provisions
and contingencies
Provisions have been recognized in those cases in which
the Company is faced with a present obligation, whether legal or constructive,
that has arisen as a result of a past event, whose settlement is expected to
result in an outflow of resources, and the amount thereof can be estimated
reliably.
The amount recognized as provisions is the best estimate
of the expenditure required to settle the present obligation, at the end of the
reporting year, taking into account the corresponding risks and uncertainties.
When a provision is measured using the estimated cash flow to settle the present
obligation, the carrying amount represents the present value of such cash flow.
This present value is obtained by applying a pre-tax discount rate that reflects
market conditions, the time value of money and the specific risks of the
obligation.
28
2018 FINANCIAL STATEMENTS
NOTES
|
The provisions included in liabilities have been recorded to face contingent situations that could result in future payment obligations. To estimate the amount of provisions and the likelihood of an outflow of resources, the opinion of the Company’s legal advisors has been taken into account.
Note 4.19 |
Balances with related parties
Receivables and payables with related parties are initially recognized at fair value and subsequently measured at amortized cost in accordance with the terms agreed upon by the parties involved.
Note 5 |
Financial risk management
Note 5.1 |
Financial risk factors
The Company’s activities and the market in which it operates expose the Company to a series of financial risks: market risk (including currency risk, cash flows interest rate risk, fair value interest rate risk and price risk), credit risk and liquidity risk.
The management of the financial risk is part of the Company’s overall policies, which focus on the unpredictability of the financial markets and seek to minimize potential adverse effects on its financial performance. Financial risks are the risks derived from the financial instruments to which the Company is exposed during or at the end of each year. The Company uses derivative instruments to hedge exposure to certain risks whenever it deems appropriate in accordance with its internal risk management policy.
Risk management is controlled by the Finance and Control Department, which identifies, evaluates and hedges financial risks. Risk management policies and systems are periodically reviewed so that they can reflect the changes in the market’s conditions and the Company’s activities.
This section includes a description of the main risks and uncertainties that could have a material adverse effect on the Company’s strategy, performance, results of operations and financial position.
a.
Market risks
i.
Currency risk
Currency risk is the risk of fluctuation in the fair value or future cash flows of a financial instrument due to changes in foreign currency exchange rates. The Company’s exposure to currency risk relates to the collection of its revenue in pesos, in conformity with regulated electricity rates that are not indexed in relation to the US dollar, whereas a significant portion of its existing financial liabilities is denominated in US dollars. Therefore, the Company is exposed to the risk of a loss resulting from a devaluation of the peso. The Company may hedge its currency risk trying to enter into currency futures. At the date of issuance of these financial statements, the Company has not hedged its exposure to the US dollar.
If the Company continued to be unable to effectively hedge all or a significant part of its exposure to currency risk, any devaluation of the peso could significantly increase its debt service burden, which, in turn, could have a substantial adverse effect on its financial and cash position (including its ability to repay its Corporate Notes) and the results of its operations. The exchange rates used as of December 31, 2018 and 2017 are $ 37.70 and $ 18.65 per USD, respectively.
29
2018 FINANCIAL
STATEMENTS
NOTES
|
As
of December 31, 2018 and 2017, the Company’s balances in
foreign currency are as follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount in
|
|
|
|
|
|
|
|
|
|
foreign
|
|
Exchange
|
|
Total
|
|
Total
|
|
Currency
|
|
currency
|
|
rate (1)
|
|
12.31.18
|
|
12.31.17
|
ASSETS
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Other receivables
|
USD
|
|
20,416
|
|
37.500
|
|
765,600
|
|
-
|
TOTAL NON-CURRENT
ASSETS
|
|
|
20,416
|
|
|
|
765,600
|
|
-
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Other receivables
|
USD
|
|
3,989
|
|
37.500
|
|
149,588
|
|
-
|
Financial assets at fair value
through profit or
|
|
|
|
|
|
|
|
|
|
loss
|
USD
|
|
87,621
|
|
37.500
|
|
3,285,788
|
|
1,829,881
|
Cash and cash
equivalents
|
USD
|
|
250
|
|
37.500
|
|
9,375
|
|
6,519
|
|
EUR
|
|
-
|
|
42.840
|
|
-
|
|
394
|
TOTAL CURRENT
ASSETS
|
|
|
91,860
|
|
|
|
3,444,751
|
|
1,836,794
|
TOTAL
ASSETS
|
|
|
112,276
|
|
|
|
4,210,351
|
|
1,836,794
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Borrowings
|
USD
|
|
190,782
|
|
37.700
|
|
7,192,467
|
|
6,189,294
|
TOTAL NON-CURRENT
LIABILITIES
|
|
|
190,782
|
|
|
|
7,192,467
|
|
6,189,294
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Trade payables
|
USD
|
|
17,519
|
|
37.700
|
|
660,459
|
|
386,504
|
|
EUR
|
|
93
|
|
43.163
|
|
4,014
|
|
9,248
|
|
CHF
|
|
5
|
|
38.312
|
|
-
|
|
15,454
|
|
NOK
|
|
68
|
|
4.346
|
|
296
|
|
230
|
Borrowings
|
USD
|
|
28,580
|
|
37.700
|
|
1,077,453
|
|
105,139
|
TOTAL CURRENT
LIABILITIES
|
|
|
46,265
|
|
|
|
1,742,222
|
|
516,575
|
TOTAL
LIABILITIES
|
|
|
237,047
|
|
|
|
8,934,689
|
|
6,705,869
|
(1)
The exchange
rates used are the BNA exchange rates in effect as of December 31, 2018 for US
Dollars (USD), Euros (EUR), Swiss Francs (CHF) and Norwegian Krones (NOK).
The table below shows the Company’s exposure to currency
risk resulting from the financial assets and liabilities denominated in a
currency other than the Company’s functional currency.
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Net position
Assets/(Liabilities)
|
|
|
|
US dollar
|
(4,720,028)
|
|
(4,844,537)
|
Euro
|
(4,014)
|
|
(8,854)
|
Norwegian krone
|
(296)
|
|
(230)
|
Swiss franc
|
-
|
|
(15,454)
|
Total
|
(4,724,338)
|
|
(4,869,075)
|
The Company estimates that a 10% devaluation of the
Argentine peso with respect to each foreign currency, with all the other
variables remaining constant, would give rise to the following decrease in the
profit for the year:
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Net position
Assets/(Liabilities)
|
|
|
|
US dollar
|
(472,003)
|
|
(484,454)
|
Euro
|
(401)
|
|
(886)
|
Norwegian krone
|
(30)
|
|
(24)
|
Swiss franc
|
-
|
|
(1,546)
|
Decrease in the results of
operations for
|
|
|
|
the year
|
(472,434)
|
|
(486,910)
|
30
2018 FINANCIAL
STATEMENTS
NOTES
|
ii.
Price risk
The Company’s investments in listed equity instruments are
susceptible to market price risk arising from the uncertainties concerning the
future value of these instruments. Due to the low significance of the
investments in equity instruments in relation to the net asset/liability
position, the Company is not significantly exposed to the referred to
instruments price risk.
Furthermore, the Company is not exposed to commodity price
risk.
iii.
Interest rate risk
Interest rate risk is the risk of fluctuation in the fair
value or cash flows of an instrument due to changes in market interest rates.
The Company’s exposure to interest rate risk is related mainly to the long-term
debt obligations.
Indebtedness at floating rates exposes the Company to
interest rate risk on its cash flows. Indebtedness at fixed rates exposes the
Company to interest rate risk on the fair value of its liabilities. As of
December 31, 2018 and 2017 -except for a loan applied for by the Company and
granted by ICBC Bank as from October 2017 for a three-year term at a six-month
Libor rate plus an initial 2.75% spread, which will be adjusted semi-annually by
a quarter-point-, 100% of the loans were obtained at fixed interest rates. The
Company’s policy is to keep the largest percentage of its indebtedness in
instruments that accrue interest at fixed rates.
The Company analyzes its exposure to interest rate risk in
a dynamic manner. Several scenarios are simulated taking into account the
positions with respect to refinancing, renewal of current positions, alternative
financing and hedging. Based on these scenarios, the Company calculates the
impact on profit or loss of a specific change in interest rates. In each
simulation, the same interest rate fluctuation is used for all the currencies.
Scenarios are only simulated for liabilities that represent the most relevant
interest-bearing positions.
The table below shows the breakdown of the Company’s loans
according to interest rate and the currency in which they are denominated:
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Fixed
rate:
|
|
|
|
US dollar
|
6,359,798
|
|
4,904,361
|
Subtotal loans at fixed
rates
|
6,359,798
|
|
4,904,361
|
Floating
rate:
|
|
|
|
US dollar
|
1,910,122
|
|
1,390,072
|
Subtotal loans at floating
rates
|
1,910,122
|
|
1,390,072
|
Total
loans
|
8,269,920
|
|
6,294,433
|
31
2018 FINANCIAL
STATEMENTS
NOTES
|
Based on the simulations performed, a 1% increase in
floating interest rates, with all the other variables remaining constant, would
give rise to the following decrease in the profit for the year:
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Floating
rate:
|
|
|
|
US dollar
|
(4,241)
|
|
(3,098)
|
Decrease in the results of
operations
|
|
|
|
for the
year
|
(4,241)
|
|
(3,098)
|
Based on the simulations performed, a 1% decrease in
floating interest rates, with all the other variables remaining constant, would
give rise to the following increase in the profit for the year:
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Floating
rate:
|
|
|
|
US dollar
|
4,241
|
|
3,098
|
Decrease in the results of
operations
|
|
|
|
for the
year
|
4,241
|
|
3,098
|
b.
Credit
risk
Credit risk is the risk of a financial loss as a
consequence of a counterparty’s failure to comply with the obligations assumed
in a financial instrument or commercial contract. The Company’s exposure to
credit risk results from its operating (particularly from its commercial
receivables) and financial activities, including deposits in financial entities
and other instruments.
Credit risk arises from cash and cash equivalents,
deposits with banks and financial entities and derivative financial instruments,
as well as from credit exposure to customers, included in outstanding balances
of accounts receivable and committed transactions.
With regard to banks and financial entities, only those
with high credit quality are accepted.
With regard to debtors, if no independent credit risk
ratings are available, the Finance Department evaluates the debtors’ credit
quality, past experience and other factors.
Individual credit limits are established in accordance
with the limits set by the Company’s CEO, on the basis of the internal or
external ratings approved by the Finance and Control Department.
The Company has different procedures in place to reduce
energy losses and allow for the collection of the balances owed by its
customers. The Commercial Department periodically monitors compliance with the
above-mentioned procedures.
One of the significant items of delinquent balances is
that related to the receivable amounts with Municipalities, in respect of which
the Company either applies different offsetting mechanisms against municipal
taxes it collects in the name and to the order of those government bodies, or
implements debt refinancing plans, with the aim of reducing them.
At
each year-end, the Company analyzes whether the recording of an impairment is
necessary. As of December 31, 2018 and 2017, delinquent trade receivables
totaled approximately $ 2 billion and $ 1.5 billion, respectively. As of
December 31, 2018 and 2017, the financial statements included allowances for $
901.3 million and $ 677.5 million, respectively.
32
2018 FINANCIAL
STATEMENTS
NOTES
|
The inability to collect the accounts receivable in the
future could have an adverse effect on the Company’s results of operations and
its financial position, which, in turn, could have an adverse effect on the
Company’s ability to repay loans, including payment of the Corporate Notes.
The balances of the bills for electricity consumption of
small-demand (T1), medium-demand (T2) and large-demand (T3) customers that
remain unpaid 7 working days after the bills’ first due dates are considered
delinquent trade receivables. Additionally, the amounts related to the Framework
Agreement are not considered within delinquent balances.
The Company’s maximum exposure to credit risk is based on
the book value of each financial asset in the financial statements, after
deducting the corresponding allowances.
c.
Liquidity
risk
The Company monitors the risk of a deficit in cash flows
on a periodical basis. The Finance Department supervises the updated projections
of the Company’s liquidity requirements in order to ensure that there is enough
cash to meet its operational needs, permanently maintaining sufficient margin
for undrawn credit lines so that the Company does not fail to comply with the
indebtedness limits or covenants, if applicable, of any line of credit. Such
projections give consideration to the Company’s debt financing plans, compliance
with covenants, with internal balance sheet financial ratios objectives and, if
applicable, with external regulations and legal requirements, such as,
restrictions on the use of foreign currency.
Cash surpluses held by the Company and the balances in
excess of the amounts required to manage working capital are invested in Money
Market Funds and/or time deposits that accrue interest, currency deposits and
securities, choosing instruments with appropriate maturities or sufficient
liquidity to provide sufficient margin as determined in the aforementioned
projections. As of December 31, 2018 and 2017, the Company’s current financial
assets at fair value amount to $ 3.4 billion and $ 4.3 billion, respectively,
which are expected to generate immediate cash inflows to manage the liquidity
risk.
The table below includes an analysis of the Company’s
non-derivative financial liabilities, which have been classified into maturity
groupings based on the remaining period between the closing date of the fiscal
year and the contractual maturity date. Derivative financial liabilities are
included in the analysis if their contractual maturities are essential for an
understanding of the timing of the cash flows. The amounts disclosed in the
table are the contractual undiscounted cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From 3
|
|
|
|
|
|
|
|
|
|
|
|
Less than
3
|
|
months to
1
|
|
From 1 to
2
|
|
From 2 to
5
|
|
More than
5
|
|
|
|
No
deadline
|
|
months
|
|
year
|
|
years
|
|
years
|
|
years
|
|
Total
|
As of December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
12,407,373
|
|
9,110,948
|
|
2,732,779
|
|
82,491
|
|
99,953
|
|
-
|
|
24,433,544
|
Borrowings
|
-
|
|
-
|
|
684,469
|
|
684,469
|
|
7,676,569
|
|
-
|
|
9,045,507
|
Total
|
12,407,373
|
|
9,110,948
|
|
3,417,248
|
|
766,960
|
|
7,776,522
|
|
-
|
|
33,479,051
|
|
As of December 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
8,950,249
|
|
5,877,338
|
|
8,195,465
|
|
135,840
|
|
179,584
|
|
-
|
|
23,338,476
|
Borrowings
|
-
|
|
-
|
|
499,945
|
|
499,945
|
|
6,107,012
|
|
-
|
|
7,106,902
|
Total
|
8,950,249
|
|
5,877,338
|
|
8,695,410
|
|
635,785
|
|
6,286,596
|
|
-
|
|
30,445,378
|
33
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 5.2 |
Concentration risk factors
a.
Related to
customers
The Company’s receivables derive primarily from the sale
of electricity.
No
single customer accounted for more than 10% of sales for the years ended
December 31, 2018 and 2017. The collectibility of trade receivables balances
related to the Framework Agreement, which amount to $ 10.4 million
and $ 231
million as of December 31, 2018 and 2017, respectively, as disclosed in Note
2.d), is subject to compliance with the terms of such agreement.
b.
Related to employees who are union members
As
of December 31, 2018, the Company’s employees are members of unions, Sindicato
de Luz y Fuerza de Capital Federal (Electric Light and Power Labor Union Federal
Capital) and Asociación del Personal Superior de Empresas de Energía
(Association of Supervisory Personnel of Energy Companies). These employees
labor cost depends on negotiations between the Company and the unions; a
sensitive change in employment conditions generates a significant impact on the
Company’s labor costs.
In November 2018, the Company reached an agreement
with the Sindicato de Luz y Fuerza on a total salary increase to be implemented
in 5 tranches, beginning in November 2018 and ending in October 2019. Each
increase will be calculated on the basis of the previous month salary and paid
to the personnel represented by the union and providing services at the time of
each payment. The agreed-upon increases are as follow:
·
10%, applicable as from December 2018.
·
8%, applicable as from February 2019.
·
5%, applicable as from April 2019.
·
5%, applicable as from July 2019.
·
5%, applicable as from October 2019.
Additionally, it was agreed that the values of the
Attendance Bonus, payable to those who have maintained perfect attendance for a
full quarter, or have a maximum of 2 absences over the period, would be adjusted
as from November 2018.
At
present, the Company continues negotiating with the Asociación del Personal
Superior de Empresas de Energía (APSEE), but no agreement has been reached as of
to date.
34
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 5.3 |
Capital risk management
The Company’s objectives when managing capital are to
safeguard its ability to continue as a going concern and to maintain an optimal
capital structure to reduce the cost of capital.
Consistent with others in the industry, the Company
monitors its capital on the basis of the gearing ratio. This ratio is calculated
as net debt divided by total capital. Net debt is calculated as total
liabilities (current and non-current) less cash and cash equivalents. Total
capital is calculated as equity attributable to the owners as shown in the
statement of financial position plus net debt.
As of
December 31, 2018 and 2017, gearing ratios were as follow:
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Total liabilities
|
46,023,206
|
|
43,088,208
|
Less: cash and cash
equivalents
|
(3,409,158)
|
|
(4,400,357)
|
Net debt
|
42,614,048
|
|
38,687,851
|
Total Equity
|
30,968,972
|
|
27,793,719
|
Total capital attributable to
owners
|
73,583,020
|
|
66,481,570
|
Gearing
ratio
|
57.91%
|
|
58.19%
|
Note 5.4 |
Regulatory risk factors
Pursuant to caption C of Section 37 of the Concession
Agreement, the Grantor of the Concession may, without prejudice to other rights
to which he is entitled thereunder, foreclose on the collateral granted by the
Company when the cumulative value of the penalties imposed to the Company in the
previous one-year period exceeds 20% of its annual billing, net of taxes and
rates.
The Company’s Management evaluates the development of this
indicator on an annual basis. At the date of issuance of these financial
statements, there are no events of non-compliance by the Company that could lead
to that situation.
Note 5.5 |
Fair value estimate
The Company classifies the measurements of financial
instruments at fair value using a fair value hierarchy that reflects the
relevance of the variables used to carry out such measurements. The fair value
hierarchy has the following levels:
·
Level
1
: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
·
Level
2
: inputs other than quoted prices included in level 1 that
are observable for the asset or liability, either directly (i.e. prices) or
indirectly (i.e. derived from the prices).
·
Level 3
: inputs for
the asset or liability that are not based on observable market data (i.e.
unobservable inputs).
35
2018 FINANCIAL
STATEMENTS
NOTES
|
The table below shows the Company’s financial assets and
liabilities measured at fair value as of December 31, 2018 and 2017:
|
|
|
|
|
|
|
|
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
TOTAL
|
|
At December 31,
2018
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Financial assets at fair
value through
|
|
|
|
|
|
|
|
profit or
loss:
|
|
|
|
|
|
|
|
Government bonds
|
3,285,799
|
|
-
|
|
-
|
|
3,285,799
|
Money market funds
|
95,751
|
|
-
|
|
-
|
|
95,751
|
Total
assets
|
3,381,550
|
|
-
|
|
-
|
|
3,381,550
|
|
Liabilities
|
|
|
|
|
|
|
|
Derivative financial
instruments
|
-
|
|
1,035
|
|
-
|
|
1,035
|
Total
liabilities
|
-
|
|
1,035
|
|
-
|
|
1,035
|
|
|
At December 31,
2017
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Financial assets at fair
value through
|
|
|
|
|
|
|
|
profit or
loss:
|
|
|
|
|
|
|
|
Government bonds
|
1,829,888
|
|
-
|
|
-
|
|
1,829,888
|
Money market funds
|
2,448,120
|
|
-
|
|
-
|
|
2,448,120
|
Total
assets
|
4,278,008
|
|
-
|
|
-
|
|
4,278,008
|
|
Liabilities
|
|
|
|
|
|
|
|
Derivative financial
instruments
|
-
|
|
291
|
|
-
|
|
291
|
Total
liabilities
|
-
|
|
291
|
|
-
|
|
291
|
The value of the financial instruments negotiated in
active markets is based on the market quoted prices on the date of the statement
of financial position. A market is considered active when the quoted prices are
regularly available through a stock exchange, broker, sector-specific
institution or regulatory body, and those prices reflect regular and current
market transactions between parties that act in conditions of mutual
independence. The market quotation price used for the financial assets held by
the Company is the current offer price. These instruments are included in level
1.
The fair value of financial instruments that are not
negotiated in active markets is determined using valuation techniques. These
valuation techniques maximize the use of market observable information, when
available, and rely as little as possible on specific estimates of the Company.
If all significant variables to establish the fair value of a financial
instrument can be observed, the instrument is included in level 2. These
derivative financial instruments arise from the variation between the market
prices at year-end or sale thereof and the time of negotiation. The market value
used is obtained from the “Transactions with securities” report issued by Banco
Mariva.
When one or more relevant variables used to determine the
fair value cannot be observed in the market, the financial instrument is
included in level 3. There are no financial instruments that are to be included
in level 3.
36
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 6 |
Critical
accounting estimates and judgments
The preparation of the financial statements requires the
Company’s Management to make estimates and assessments concerning the future,
exercise critical judgments and make assumptions that affect the application of
the accounting policies and the reported amounts of assets and liabilities and
revenues and expenses.
These estimates and judgments are permanently evaluated
and are based upon past experience and other factors that are reasonable under
the existing circumstances. Future actual results may differ from the estimates
and assessments made at the date of preparation of these financial statements.
The estimates that have a significant risk of causing
adjustments to the amounts of assets and liabilities during the next fiscal year
are detailed below:
a.
Impairment of
financial assets
The allowance for the impairment of accounts receivable is
assessed based on the delinquent balance, which comprises all such debt arising
from the bills for electricity consumption of small-demand (T1), medium-demand
(T2), and large-demand (T3) customers that remain unpaid 7 working days after
their first due dates. The Company’s Management records an allowance applying to
the delinquent balances of each customer category an uncollectibility rate that
is determined according to each customer category based on the historical
comparison of collections made.
Additionally, and faced with temporary and/or exceptional
situations, the Company’s Management may redefine the amount of the allowance,
specifying and supporting the criteria used in all the cases.
As
from January 1, 2018, the Company has applied the amended IFRS 9 retrospectively
with the allowed practical resources, without restating the comparative
periods.
The Company has performed a review of the financial assets
it currently measures and classifies at fair value through profit or loss or at
amortized cost and has concluded that they meet the conditions to maintain their
classification; consequently, the initial adoption has not affected the
classification and measurement of the Company’s financial assets.
Furthermore, with regard to the new hedge accounting
model, the Company has not elected to designate any hedge relationship at the
date of the initial adoption of the amended IFRS 9 and, consequently, has
generated no impact on the Company’s results of operations or its financial
position.
Finally, with regard to the change in the methodology for
calculating the impairment of financial assets based on expected credit losses,
the Company has applied the simplified approach of IFRS 9 for trade receivables
and other receivables with similar risk characteristics. In order to measure the
expected credit losses, receivables are grouped by customer segment, and on the
basis of the shared credit risk characteristics and the number of days past the
payment due date. The expected loss as of January 1, 2018 was determined based
on the following coefficients calculated for the number of days past the payment
due date:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of days
|
|
0-30
|
|
30-60
|
|
60-90
|
|
90-120
|
|
120-150
|
|
+150
|
Loss expected
porcentage
|
8%
|
|
12%
|
|
19%
|
|
26%
|
|
59%
|
|
69%
|
37
2018 FINANCIAL
STATEMENTS
NOTES
|
For such purpose, the adjustments determined as of
December 31, 2017 are as follow:
|
|
Amount of the
provisions for impairment of the trade
|
|
receivables at
12.31.2017 by IAS 39
|
(458,853)
|
|
Adjustment of expected
losses NIIF 9
|
(82,041)
|
Amount of the
provisions for impairment of the trade
|
|
receivables at
12.31.2017 by NIIF 9
|
(540,894)
|
The adjustment determined as a result of the application
of this new standard, net of its tax effect, amounts to $ 60.2 million, which is
disclosed within the “Unappropriated Retained Earnings” line item.
b.
Revenue recognition
Revenue is recognized on an accrual basis upon delivery to
customers, which includes the estimated amount of unbilled distribution of
electricity at the end of each year. The accounting policy for the recognition
of estimated revenue is considered critical because it depends on the amount of
electricity effectively delivered to customers, which is valued on the basis of
applicable tariffs. Unbilled revenue is classified as current trade
receivables.
c.
Impairment of long-lived assets
Long-lived assets are tested for impairment at the lowest
disaggregation level at which independent cash flows can be identified (cash
generating units, or CGU).
The Company analyzes the recoverability of its long-lived
assets on a periodical basis or when events or changes in circumstances indicate
that the recoverable amount of assets, which is measured as the higher of value
in use and fair value less costs to sell at the end of the year, may be
impaired.
At
the date of issuance of these financial statements there are no indicators of a
potential impairment.
d.
Current and deferred income tax
A
degree of judgment is required to determine the income tax provision inasmuch as
the Company’s Management has to evaluate, on an ongoing basis, the positions
taken in tax returns in respect of situations in which the applicable tax
regulation is subject to interpretation and, whenever necessary, make provisions
based on the amount expected to be paid to the tax authorities. When the final
tax outcome of these matters differs from the amounts initially recognized, such
differences will impact on both the income tax and the deferred tax provisions
in the fiscal year in which such determination is made.
There are many transactions and calculations for which the
ultimate tax determination is uncertain. The Company recognizes liabilities for
eventual tax claims based on estimates of whether additional taxes will be due
in the future.
Deferred tax assets are reviewed at each reporting date
and reduced in accordance with the probability that the sufficient taxable base
will be available to allow for the total or partial recovery of these assets.
Deferred tax assets and liabilities are not discounted. The realization of
deferred tax assets depends on the generation of future taxable income in the
periods in which these temporary differences become deductible. To make this
assessment, the Company’s Management takes into consideration the scheduled
reversal of deferred tax liabilities, the projected future taxable income, the
prevailing rates to be applied in each period, and tax planning
strategies.
38
2018 FINANCIAL
STATEMENTS
NOTES
|
e.
Benefit plans
The liability recognized by the Company is the best
estimate of the present value of the cash flows representing the benefit plan
obligation at the closing date of the year together with the adjustments for
past service costs and actuarial losses. Cash flows are discounted using a rate
that contemplates actuarial ns about demographic and financial conditions that
affect the determination of benefit plans. Such estimate is based on actuarial
calculations made by independent professionals in accordance with the projected
unit credit method.
f.
ENRE penalties and discounts
The Company considers its applicable accounting policy for
the recognition of ENRE penalties and discounts critical because it depends on
penalizable events that are valued on the basis of the Management´s best
estimate of the expenditure required to settle the present obligation at the
date of these financial statements. The balances of ENRE penalties and discounts
are adjusted in accordance with the regulatory framework applicable thereto and
have been estimated based on that which has been described in Note
2.e).
g.
Contingencies and provisions for lawsuits
The Company is a party to several complaints, lawsuits and
other legal proceedings, including customer claims, in which a third party is
seeking payment for alleged damages, reimbursement for losses or compensation.
The Company’s potential liability with respect to such claims, lawsuits and
legal proceedings may not be accurately estimated. The Company’s Management,
with the assistance of its legal advisors (attorneys), periodically analyzes the
status of each significant matter and evaluates the Company’s potential
financial exposure. If the loss deriving from a complaint or legal
proceeding is considered probable and the amount can be reasonably estimated, a
provision is recorded.
Provisions for contingent losses represent a reasonable
estimate of the losses that will be incurred, based on the information available
to Management at the date of the financial statements preparation, taking into
account the Company’s litigation and settlement strategies. These estimates are
mainly made with the help of legal advisors. However, if the Management’s
estimates proved wrong, the current provisions could be inadequate and result in
a charge to profits that could have a significant effect on the statements of
financial position, comprehensive income, changes in equity and cash
flows.
Note 7 |
Interest in
joint venture
|
|
|
|
|
Percentage interest
held
|
|
|
Equity attributable to the
owners
|
in capital stock and
votes
|
|
|
12.31.18
|
12.31.17
|
SACME
|
50.00%
|
|
8,844
|
10,693
|
Note 8 |
Contingent
liabilities
The Company has contingent liabilities and is a party to
lawsuits that arise from the ordinary course of business. Based on the opinion
of its in-house and external legal advisors, the Company’s Management estimates
that the outcome of the current contingencies and lawsuits will not result in
amounts that either exceed those of the recorded provisions or could be
significant with respect to the Company’s financial position or the results of
its operations.
Furthermore, it is worth mentioning that there exist
contingent obligations and labor, civil and commercial complaints filed against
the Company related to legal actions for individual non-significant amounts,
which as of December 31, 2018 total $ 1.3 billion, for which a provision has
been recorded.
39
2018 FINANCIAL
STATEMENTS
NOTES
|
We detail below the nature of the significant judicial
proceedings in relation to which, as of December 31, 2018, the Company believes,
based on the opinion of its in-house and external legal advisors, there exist
grounds for them not to be deemed probable:
Note 8.1 |
Civil and commercial proceedings – Consumer
claims
-
By
means of the action filed by
Consumidores
Financieros Asociación Civil para su Defensa, the following is claimed from the
Company:
Ø
Reimbursement of the Value Added Tax (VAT) percentage paid
on the illegally “widened” taxable basis due to the incorporation of the FNEE.
Distribution companies, the defendants, had not paid this tax when CAMMESA
invoiced them the electricity purchased for distribution purposes
.
Ø
Reimbursement of part of the administrative surcharge on
“second due date”, in those cases in which payment was made within the time
period authorized for such second deadline (14 days) but without distinguishing
the effective day of payment
.
Ø
Application of the “borrowing rate” in case of customer
delay in complying with payment obligation, in accordance with the provisions of
Law No. 26,361
.
On April 22, 2010, the Company answered the complaint and
filed a motion to dismiss for lack of standing (“
excepción de falta de legitimación
”), requesting, at such opportunity, that a summons be
served upon the Federal Government, the AFIP and the ENRE as third-party
defendants. Notice of this was served upon the plaintiff. Although the
plaintiff’s opposition to the requested summons had not yet been resolved, the
proceedings were brought to trial, in response to which
edenor
filed a motion for reversal with a supplementary appeal. The Court hearing the
case granted the motion filed by
edenor
and ordered that the Federal Government, the AFIP and the ENRE be summoned as
third-party defendants, which has already taken place. These proceedings have
been joined to those mentioned below. Without prejudice thereto, in the
framework of the record of the proceedings, the case has been brought to trial.
By means of the action filed by
Asociación de
Defensa de derechos de clientes y consumidores (ADDUC) it is
requested
that the Company be ordered by the Court to
reduce or mitigate the default or late payment interest rates charged to
customers who pay their bills after the first due date, inasmuch as they violate
section 31 of Law 24,240, ordering both the non application of pacts or accords
that stipulate the interest rates that are being applied to the users of
electricity –their unconstitutional nature– as well as the reimbursement of
interest amounts illegally collected from the customers of the service from
August 15, 2008 through the date on which the defendant complies with the order
to reduce interest. It is also requested that the VAT and any other taxes
charged on the portion of the surcharge illegally collected be
reimbursed.
On November 11, 2011, the Company answered the complaint
and filed a motion to dismiss for both lack of standing to sue (“
excepción de falta de legitimación activa
”) and the fact that the claims at issue were being
litigated in another lawsuit (“
excepción de litispendencia
”), currently in process, requesting as well that a
summons be served upon the ENRE as a third-party defendant. Notice of these
pleadings was served upon the plaintiff. Prior to rendering a decision on the
motion to dismiss, the Court ordered that the Court in Contentious and
Administrative Federal Matters No. 2 – Clerk’s Office No. 3 provide it with the
proceedings “Consumidores Financieros Asociación Civil vs Edesur S.A. and Other
defendants, for breach of contract”. On April 8, 2014, the Court in Civil and
Commercial Federal Matters No. 9 – Clerk’s Office No. 17 admitted the motion to
dismiss due to the fact that the claims at issue were being litigated in another
lawsuit (“
excepción de litispendencia
”), and ordered that the proceedings be sent to Federal
Court No. 2 – Clerk’s Office No. 3 to be dealt with thereat, thus joining them
to the case entitled “consumidores financieros vs Edesur S.A. and other
defendants, for breach of contract”. Apart from the fact that the proceedings
have been received in the Court that currently hears the case, which continues
in process, no significant events have occurred. As indicated in caption a)
above, due to the joining of those proceedings to those herein described, these
proceedings have been brought to trial.
40
2018 FINANCIAL
STATEMENTS
NOTES
|
We
detail below the nature of the significant judicial proceedings instituted by
the Company as of December 31, 2018, in relation to which an inflow of economic
benefits into the Company is deemed probable.
Note 8.2 |
Civil and
Commercial Proceedings for the Determination of a Claim – Judicial Annulment
ENRE Resolution 32/11
- The Company seeks to obtain
t
he judicial annulment of the ENRE’s Resolution that
provided the following
:
Ø
That the Company be fined in the amount of $ 750 thousand
due to its failure to comply with the obligations arising from Section 25,
sub-sections a, f and g, of the Concession Agreement and Section 27 of Law No.
24,065
.
Ø
That the Company be fined in the amount of $ 375 thousand
due to its failure to comply with the obligations arising from Section 25 of the
Concession Agreement and ENRE Resolution No. 905/99
.
Ø
That the Company be ordered to pay customers as
compensation for the power cuts suffered the following amounts: $ 180 to each
small-demand residential customer (T1R) who suffered power cuts that lasted more
than 12 continuous hours, $ 350 to those who suffered power cuts that lasted
more than 24 continuous hours, and $ 450 to those who suffered power cuts that
lasted more than 48 continuous hours. The resolution stated that such
compensation did not include damages to customer facilities and/or appliances,
which were to be dealt with in accordance with a specific procedure
.
On July 8, 2011, the Company requested that notice of the
action be served upon the ENRE, which has effectively taken place. The
proceedings are “awaiting resolution” since the date on which the ENRE answered
the notice served. Furthermore, on October 28, 2011, the Company filed an appeal
(“
Recurso de Queja por apelación
denegada
”) to the CSJN requesting that the appeal
dismissed concerning the provisional relief sought and not granted be sustained.
On April 24, 2013, the Company was notified of Division I’s decision dated March
21, 2013, pursuant to which the appeal filed by
edenor
was declared formally inadmissible. On May 3, 2013, the Company filed an
ordinary appeal (“
Recurso Ordinario de Apelación
”) to the CSJN. Additionally, on May 13, 2013, an
extraordinary appeal (“
Recurso Extraordinario Federal
”) was also filed to the same Court. On November 7, 2014,
it was notified to the Company that Division I had rejected the ordinary appeal
but partially granted the extraordinary appeal, considering for the granting
thereof the federal nature of the regulations being challenged and rejecting it
in relation to the arbitrariness raised by
edenor
.
Therefore, and within the procedural term granted for such purpose, the Company
filed an appeal requesting that the extraordinary appeal dismissed be sustained
(“
Recurso de Queja por Rec. Extraordinario
Denegado
”). As of the date of this report, no decision
has yet been issued on this regard. However, the course of these proceedings is
currently suspended due to the fact that an “Agreement of parties” has been
entered into with the ENRE.
At the closing date of the year ended December 31, 2018,
the Company made a provision for principal and interest accrued for an amount of
$ 57.3 million within the Other non-current liabilities
account.
41
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 8.3 |
Civil and
Commercial Proceedings for the Determination of a Claim – Regulatory Liability
Claim against the Federal Government
On June 28, 2013, the Company instituted these proceedings
for the recognizance of a claim and the related leave to proceed in forma
pauperis, both pending in the Federal Court of Original Jurisdiction in
Contentious and Administrative Federal
Matters No.
11 – Clerk’s Office No. 22, whose purpose is to sue for breach of contract due
to the Federal Government’s failure to perform in accordance with the terms of
the “Agreement on the Renegotiation of the Concession Agreement”
(“
Acta Acuerdo de Renegociación del Contrato de
Concesion
” – the
“Adjustment Agreement”) entered into with the Company in 2006, and for damages
caused as a result of such breach.
On November 22, 2013, the Company amended the complaint so
as to extend it and claim more damages as a consequence of the Federal
Government’s omission to perform the obligations under the aforementioned
“Adjustment Agreement”. On February 3, 2015, the Court hearing the case ordered
that notice of the complaint be served to be answered within the time limit
prescribed by law, which was answered by the Federal Government in due time and
in proper manner. Subsequently,
edenor
reported as new event, under the terms of Section 365 of the CPCCN, the issuance
by the SEE of Resolution No. 32/15. After notice was served, the Court rejected
the treatment thereof as an “event”, holding the Company liable for costs. The
Company filed an appeal, which was admitted “with a postponed effect” (i.e. the
Appellate Court will grant or reject the appeal when deciding on the granting or
rejection of the appeal against final judgment). On October 16, 2015, the
Attorney General’s Office requested to borrow the records for a term of 20 days,
which were returned on December 1, 2015, in order to control the work done by
the state’s attorneys. On December 4, 2015, the Company requested the suspension
of the procedural time-limits under the terms of section 157 of the CPCCN, in
accordance with the provisions of SEE Resolution No. 32/15, notice of which has
been served upon the defendant. On February 16, 2016, the Company reiterated the
request due to the revocation of SEE Resolution No. 32/15. At the date of
issuance of this report, and by “agreement of the parties”, the procedural
time-limits continue to be suspended.
Regarding the motion to litigate in forma pauperis that
was filed on July 2, 2013, the discovery period has ended and the period for the
parties to put forward their arguments on the merits of the evidence produced
has begun. At the date of issuance of these financial statements, the procedural
time-limits in this incidental motion, as those in the main proceedings,
continue to be suspended.
42
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 9 |
Property,
plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools,
Furniture,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
vehicles,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meters
and
|
|
equipment,
|
|
|
|
|
|
|
|
|
|
|
|
|
High,
medium
|
|
Transformer
|
|
communications
|
|
|
|
|
|
|
|
|
Lands and
|
|
|
|
and low
|
|
chambers
and
|
|
and advances
to
|
|
Construction
|
|
Supplies
and
|
|
|
|
|
buildings
|
|
Substations
|
|
voltage
lines
|
|
platforms
|
|
suppliers
|
|
in
process
|
|
spare
parts
|
|
Total
|
At
12.31.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
1,376,244
|
|
13,471,386
|
|
36,429,475
|
|
15,047,060
|
|
2,506,343
|
|
8,717,184
|
|
90,712
|
|
77,638,404
|
Accumulated
depreciation
|
|
(205,458)
|
|
(3,571,659)
|
|
(11,249,849)
|
|
(4,638,799)
|
|
(912,452)
|
|
-
|
|
-
|
|
(20,578,217)
|
Net
amount
|
|
1,170,786
|
|
9,899,727
|
|
25,179,626
|
|
10,408,261
|
|
1,593,891
|
|
8,717,184
|
|
90,712
|
|
57,060,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
18,746
|
|
113,838
|
|
380,528
|
|
51,465
|
|
516,244
|
|
7,339,357
|
|
129,731
|
|
8,549,909
|
Disposals
|
|
(36)
|
|
(2,211)
|
|
(94,785)
|
|
(35,870)
|
|
(440,852)
|
|
-
|
|
-
|
|
(573,754)
|
Transfers
|
|
89,250
|
|
187,522
|
|
1,595,057
|
|
710,388
|
|
89,483
|
|
(2,646,562)
|
|
(25,138)
|
|
-
|
Depreciation for the
period
|
|
(73,129)
|
|
(403,667)
|
|
(1,171,411)
|
|
(546,048)
|
|
(367,244)
|
|
-
|
|
-
|
|
(2,561,499)
|
Net amount
12.31.17
|
|
1,205,617
|
|
9,795,209
|
|
25,889,015
|
|
10,588,196
|
|
1,391,522
|
|
13,409,979
|
|
195,305
|
|
62,474,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
12.31.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
1,449,399
|
|
13,769,111
|
|
38,060,451
|
|
15,749,070
|
|
2,656,570
|
|
13,409,979
|
|
195,305
|
|
85,289,885
|
Accumulated
depreciation
|
|
(243,782)
|
|
(3,973,902)
|
|
(12,171,436)
|
|
(5,160,874)
|
|
(1,265,048)
|
|
-
|
|
-
|
|
(22,815,042)
|
Net
amount
|
|
1,205,617
|
|
9,795,209
|
|
25,889,015
|
|
10,588,196
|
|
1,391,522
|
|
13,409,979
|
|
195,305
|
|
62,474,843
|
·
During the year ended December 31, 2018, the Company
capitalized as direct own costs $ 1 billion.
|
|
|
|
|
Vease nuestro informe de
fecha
|
|
|
9 de agosto de
2017
|
|
|
PRICE WATERHOUSE & CO.
S.R.L.
|
|
|
|
(Socio)
|
DANIEL
ABELOVICH
|
|
C.P.C.E.C.A.B.A. Tº 1 Fº
17
|
43
2018 FINANCIAL
STATEMENTS
NOTES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tools,
Furniture,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
vehicles,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meters
and
|
|
equipment,
|
|
|
|
|
|
|
|
|
|
|
|
|
High,
medium
|
|
Transformer
|
|
communications
|
|
|
|
|
|
|
|
|
Lands and
|
|
|
|
and low
|
|
chambers
and
|
|
and advances
to
|
|
Construction
|
|
Supplies
and
|
|
|
|
|
buildings
|
|
Substations
|
|
voltage
lines
|
|
platforms
|
|
suppliers
|
|
in
process
|
|
spare
parts
|
|
Total
|
At
12.31.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
1,276,109
|
|
12,466,805
|
|
33,712,884
|
|
13,924,981
|
|
2,398,833
|
|
5,839,187
|
|
56,036
|
|
69,674,835
|
Accumulated
depreciation
|
|
(178,241)
|
|
(3,214,869)
|
|
(10,386,483)
|
|
(4,157,929)
|
|
(842,545)
|
|
-
|
|
-
|
|
(18,780,067)
|
Net
amount
|
|
1,097,868
|
|
9,251,936
|
|
23,326,401
|
|
9,767,052
|
|
1,556,288
|
|
5,839,187
|
|
56,036
|
|
50,894,768
|
Additions
|
|
122,804
|
|
680,868
|
|
1,456,818
|
|
467,268
|
|
566,753
|
|
5,103,253
|
|
85,034
|
|
8,482,798
|
Disposals
|
|
(765)
|
|
(7)
|
|
(35,030)
|
|
(9,618)
|
|
(4,404)
|
|
-
|
|
-
|
|
(49,824)
|
Transfers
|
|
50,983
|
|
323,723
|
|
1,357,461
|
|
664,134
|
|
(240,153)
|
|
(2,225,256)
|
|
(50,358)
|
|
(119,466)
|
Depreciation for the
period
|
|
(100,104)
|
|
(356,793)
|
|
(926,024)
|
|
(480,575)
|
|
(284,593)
|
|
-
|
|
-
|
|
(2,148,089)
|
Net amount
12.31.17
|
|
1,170,786
|
|
9,899,727
|
|
25,179,626
|
|
10,408,261
|
|
1,593,891
|
|
8,717,184
|
|
90,712
|
|
57,060,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
12.31.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
1,376,244
|
|
13,471,386
|
|
36,429,475
|
|
15,047,060
|
|
2,506,343
|
|
8,717,184
|
|
90,712
|
|
77,638,404
|
Accumulated
depreciation
|
|
(205,458)
|
|
(3,571,659)
|
|
(11,249,849)
|
|
(4,638,799)
|
|
(912,452)
|
|
-
|
|
-
|
|
(20,578,217)
|
Net
amount
|
|
1,170,786
|
|
9,899,727
|
|
25,179,626
|
|
10,408,261
|
|
1,593,891
|
|
8,717,184
|
|
90,712
|
|
57,060,187
|
·
During the year ended December 31, 2017, the Company
capitalized as direct own costs $ 869.7 million.
|
|
|
|
|
Vease nuestro informe de
fecha
|
|
|
9 de agosto de
2017
|
|
|
PRICE WATERHOUSE & CO.
S.R.L.
|
|
|
|
(Socio)
|
DANIEL
ABELOVICH
|
|
C.P.C.E.C.A.B.A. Tº 1 Fº
17
|
44
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 10 |
Financial
instruments
Nota 10.1 |
Financial instruments by category
|
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
Financial
|
|
assets at
fair
|
|
|
|
|
|
assets at
|
|
value
through
|
|
Non-financial
|
|
|
|
amortized
cost
|
|
profit or
loss
|
|
assets
|
|
Total
|
As of December 31,
2018
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Trade receivables
|
7,587,906
|
|
-
|
|
-
|
|
7,587,906
|
Other receivables
|
954,407
|
|
-
|
|
88,451
|
|
1,042,858
|
Cash and cash
equivalents
|
|
|
|
|
|
|
|
Cash and Banks
|
27,608
|
|
-
|
|
-
|
|
27,608
|
Financial assets at fair
value through profit or
|
|
|
|
|
|
|
|
loss:
|
|
|
|
|
|
|
|
Government bonds
|
-
|
|
3,285,799
|
|
-
|
|
3,285,799
|
Derivative financial
instruments
|
-
|
|
-
|
|
-
|
|
-
|
Money market funds
|
-
|
|
95,751
|
|
-
|
|
95,751
|
Financial assets at
amortized cost:
|
|
|
|
|
|
|
|
Time deposits
|
1,208,770
|
|
-
|
|
-
|
|
1,208,770
|
Total
|
9,778,691
|
|
3,381,550
|
|
88,451
|
|
13,248,692
|
|
|
As of December 31,
2017
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Trade receivables
|
8,385,237
|
|
-
|
|
-
|
|
8,385,237
|
Other receivables
|
249,780
|
|
88,667
|
|
20,448
|
|
358,895
|
Cash and cash
equivalents
|
|
|
-
|
|
-
|
|
|
Cash and Banks
|
120,053
|
|
-
|
|
-
|
|
120,053
|
Checks to be
deposited
|
2,296
|
|
-
|
|
-
|
|
2,296
|
Money market funds
|
|
|
|
|
|
|
|
Financial assets at fair
value through profit or
|
|
|
|
|
|
|
|
loss:
|
|
|
|
|
|
|
|
Government bonds
|
-
|
|
1,829,888
|
|
-
|
|
1,829,888
|
Derivative financial
instruments
|
-
|
|
2,448,120
|
|
-
|
|
2,448,120
|
Financial assets at fair
value
|
|
|
|
|
|
|
|
Government bonds
|
16,978
|
|
-
|
|
-
|
|
16,978
|
Total
|
8,774,344
|
|
4,366,675
|
|
20,448
|
|
13,161,467
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
Financial
|
|
liabilities at
fair
|
|
|
|
|
|
liabilities
at
|
|
value
through
|
|
Non-financial
|
|
|
|
amortized
cost
|
|
profit or
loss
|
|
liabilities
|
|
Total
|
As of December 31,
2018
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Trade payables
|
14,895,194
|
|
-
|
|
-
|
|
14,895,194
|
Other payables
|
317,439
|
|
-
|
|
9,228,745
|
|
9,546,184
|
Borrowings
|
8,269,920
|
|
-
|
|
-
|
|
8,269,920
|
Total
|
23,482,553
|
|
-
|
|
9,228,745
|
|
32,711,298
|
As of December 31,
2017
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Trade payables
|
13,933,226
|
|
-
|
|
-
|
|
13,933,226
|
Other payables
|
490,188
|
|
-
|
|
8,966,695
|
|
9,456,883
|
Borrowings
|
6,294,433
|
|
-
|
|
-
|
|
6,294,433
|
Total
|
20,717,847
|
|
-
|
|
8,966,695
|
|
29,684,542
|
Financial instruments categories have been determined
based on IFRS 9
.
45
2018 FINANCIAL STATEMENTS
NOTES
|
The income, expenses, gains and losses resulting from each category of financial instruments are as follow:
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
at fair value
|
|
|
|
Financial assets
|
|
through profit or
|
|
|
|
at amortized cost
|
|
loss
|
|
Total
|
As of December 31, 2018
|
|
|
|
|
|
Interest income
|
671,783
|
|
-
|
|
671,783
|
Exchange differences
|
2,365,593
|
|
-
|
|
2,365,593
|
Bank fees and expenses
|
(8,509)
|
|
-
|
|
(8,509)
|
Changes in fair value of financial assets
|
-
|
|
746,532
|
|
746,532
|
Adjustment to present value
|
(327)
|
|
-
|
|
(327)
|
Total
|
3,028,540
|
|
746,532
|
|
3,775,072
|
|
|
|
|
|
|
As of December 31, 2017
|
|
|
|
|
|
Interest income
|
453,804
|
|
-
|
|
453,804
|
Exchange differences
|
229,100
|
|
-
|
|
229,100
|
Bank fees and expenses
|
(2,883)
|
|
-
|
|
(2,883)
|
Changes in fair value of financial assets
|
-
|
|
474,896
|
|
474,896
|
Adjustment to present value
|
(431)
|
|
-
|
|
(431)
|
Total
|
679,590
|
|
474,896
|
|
1,154,486
|
|
|
|
|
|
|
As of December 31, 2016
|
|
|
|
|
|
Interest income
|
362,558
|
|
-
|
|
362,558
|
Exchange differences
|
178,191
|
|
5,830
|
|
184,021
|
Bank fees and expenses
|
(5,928)
|
|
-
|
|
(5,928)
|
Changes in fair value of financial assets
|
-
|
|
781,486
|
|
781,486
|
Adjustment to present value
|
(485)
|
|
5,799
|
|
5,314
|
Total
|
534,336
|
|
793,115
|
|
1,327,451
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
Financial
|
|
liabilities at fair
|
|
|
|
liabilities at
|
|
value through
|
|
|
|
amortized cost
|
|
profit or loss
|
|
Total
|
As of December 31, 2018
|
|
|
|
|
|
Interest expense
|
(4,968,210)
|
|
-
|
|
(4,968,210)
|
Other financial results
|
(86,098)
|
|
-
|
|
(86,098)
|
Exchange differences
|
(5,496,362)
|
|
-
|
|
(5,496,362)
|
Total
|
(10,550,670)
|
|
-
|
|
(10,550,670)
|
|
|
|
|
|
|
As of December 31, 2017
|
|
|
|
|
|
Interest expense
|
(2,567,373)
|
|
-
|
|
(2,567,373)
|
Other financial results
|
(78,877)
|
|
-
|
|
(78,877)
|
Exchange differences
|
(793,157)
|
|
-
|
|
(793,157)
|
Total
|
(3,439,407)
|
|
-
|
|
(3,439,407)
|
|
|
|
|
|
|
As of December 31, 2016
|
|
|
|
|
|
Interest expense
|
(2,656,550)
|
|
-
|
|
(2,656,550)
|
Other financial results
|
(67,780)
|
|
-
|
|
(67,780)
|
Bank fees and expenses
|
77
|
|
-
|
|
77
|
Exchange differences
|
(953,730)
|
|
-
|
|
(953,730)
|
Total
|
(3,677,983)
|
|
-
|
|
(3,677,983)
|
46
2018 FINANCIAL
STATEMENTS
NOTES
|
Nota 10.2 |
Credit quality of financial assets
The credit quality of financial assets that are neither
past due nor impaired may be assessed based on external credit ratings or
historical information:
|
|
12.31.18
|
|
12.31.17
|
Customers with no external credit rating:
|
|
|
|
|
Group 1 (i)
|
|
6,438,500
|
|
7,487,484
|
Group 2 (ii)
|
|
480,237
|
|
339,740
|
Group 3 (iii)
|
|
669,169
|
|
558,013
|
Total trade receivables
|
|
7,587,906
|
|
8,385,237
|
(i)
Relates to customers with debt to become due.
(ii)
Relates to customers with past due debt from 0 to 3
months.
(iii)
Relates to customers with past due debt from 3 to 12
months.
At
the Statement of Financial Position date, the maximum exposure to credit risk is
the carrying amount of these financial assets.
Note 11 |
Other
receivables
|
Note
|
|
12.31.18
|
|
12.31.17
|
Non-current:
|
|
|
|
|
|
|
|
|
-
|
|
-
|
Financial credit
|
|
|
30,484
|
|
54,661
|
Related parties
|
35.d
|
|
4,662
|
|
8,015
|
Advances to suppliers
|
37
|
|
765,595
|
|
-
|
Total Non-current
|
|
|
800,741
|
|
62,676
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
Prepaid expenses
|
|
|
5,312
|
|
7,362
|
Advances to suppliers
|
|
|
81,440
|
|
9,791
|
Advances to personnel
|
|
|
1,700
|
|
3,293
|
Security deposits
|
|
|
16,695
|
|
15,249
|
Financial credit
|
|
|
58,425
|
|
17,159
|
Receivables from electric activities
|
|
|
98,390
|
|
169,157
|
Related parties
|
35.d
|
|
1,946
|
|
1,614
|
Guarantee deposits on derivative
financial
instruments
|
|
|
-
|
|
88,667
|
Judicial deposits
|
|
|
30,482
|
|
23,795
|
Credit with SBS Bank Company
|
|
|
25,000
|
|
-
|
Other
|
|
|
24
|
|
2
|
Allowance for the impairment of other
receivables
|
|
|
(77,297)
|
|
(39,870)
|
Total Current
|
|
|
242,117
|
|
296,219
|
The carrying amount of the Company’s other financial
receivables approximates their fair value.
The other non-current receivables are measured at
amortized cost, which does not differ significantly from their fair
value.
The roll
forward of the allowance for the impairment of other receivables is as
follows:
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Balance at beginning of year
|
|
39,870
|
|
51,236
|
|
32,712
|
Increase
|
|
61,467
|
|
-
|
|
18,524
|
Result from exposure to inlfation
|
|
(24,040)
|
|
-
|
|
-
|
Recovery
|
|
-
|
|
(11,366)
|
|
-
|
Balance at end of the period
|
|
77,297
|
|
39,870
|
|
51,236
|
47
2018 FINANCIAL
STATEMENTS
NOTES
|
The aging analysis of these other receivables is as
follows:
|
|
12.31.18
|
|
12.31.17
|
Without expiry date
|
|
48,358
|
|
39,526
|
Past due
|
|
34,854
|
|
129,288
|
Up to 3 months
|
|
130,564
|
|
110,759
|
From 3 to 6 months
|
|
20,415
|
|
8,418
|
From 6 to 9 months
|
|
4,881
|
|
4,198
|
From 9 to 12 months
|
|
3,045
|
|
4,030
|
More than 12 months
|
|
800,741
|
|
62,676
|
Total other receivables
|
|
1,042,858
|
|
358,895
|
At
the Statement of Financial Position date, the maximum exposure to credit risk is
the carrying amount of each class of other receivables.
The
carrying amount of the Company’s other receivables is denominated in Argentine
pesos.
Note 12 |
Trade
receivables
|
|
12.31.18
|
|
12.31.17
|
Current:
|
|
|
|
|
Sales of electricity - Billed
|
|
4,622,701
|
|
4,359,990
|
Sales of electricity – Unbilled
|
|
3,735,956
|
|
4,404,135
|
Framework Agreement
|
|
10,377
|
|
230,953
|
Fee payable for the expansion of the transportation
and others
|
|
22,969
|
|
33,952
|
Receivables in litigation
|
|
97,158
|
|
33,736
|
Allowance for the impairment of trade
receivables
|
|
(901,255)
|
|
(677,529)
|
Total Current
|
|
7,587,906
|
|
8,385,237
|
The
carrying amount of the Company’s trade receivables approximates their fair
value.
The
roll forward of the allowance for the impairment of trade receivables is as
follows:
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Balance at beginning of year
|
|
677,529
|
|
383,439
|
|
146,238
|
Change of accounting standard (Note 6) - Adjustment
by model of expected losses IFRS 9
|
|
82,041
|
|
-
|
|
-
|
Balance at beginning of year restated
|
|
759,570
|
|
383,439
|
|
146,238
|
Increase
|
|
916,036
|
|
391,615
|
|
388,339
|
Decrease
|
|
(307,137)
|
|
(64,348)
|
|
(56,062)
|
Result from exposure to inlfation
|
|
(467,214)
|
|
(33,177)
|
|
(95,076)
|
Balance at end of the period
|
|
901,255
|
|
677,529
|
|
383,439
|
The aging analysis of these trade receivables is as
follows:
|
|
12.31.18
|
|
12.31.17
|
Not due
|
|
10,377
|
|
230,953
|
Past due
|
|
1,149,406
|
|
897,752
|
Up to 3 months
|
|
6,428,123
|
|
7,256,532
|
Total other receivables
|
|
7,587,906
|
|
8,385,237
|
At
the Statement of Financial Position date, the maximum exposure to credit risk is
the carrying amount of each class of trade receivables.
The
carrying amount of the Company’s trade receivables is denominated in Argentine
pesos.
48
2018 FINANCIAL STATEMENTS
NOTES
|
Sensitivity analysis of the allowance for impairment of trade receivables:
-
5% increase in the uncollectibility rate estimate
|
|
|
12.31.18
|
Contingencies
|
|
|
946,318
|
change
|
|
|
45,063
|
-
5% decrease in the uncollectibility rate estimate
|
|
|
12.31.18
|
Contingencies
|
|
|
856,192
|
change
|
|
|
(45,063)
|
Note 13 |
Financial assets at fair value through profit or loss
|
|
|
12.31.18
|
|
12.31.17
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
Government bonds
|
|
|
3,285,799
|
|
1,829,888
|
Money market funds
|
|
|
95,751
|
|
2,448,120
|
Total current
|
|
|
3,381,550
|
|
4,278,008
|
Note 14 |
Financial assets at amortized cost
|
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
|
Current
|
|
|
|
|
|
Government bonds
|
|
|
-
|
|
16,978
|
Time deposits
|
|
|
1,208,770
|
|
-
|
Total Current
|
|
|
1,208,770
|
|
16,978
|
Note 15 |
Inventories
|
|
12.31.18
|
|
12.31.17
|
Current
|
|
|
|
|
Supplies and spare-parts
|
|
1,252,292
|
|
589,339
|
Advance to suppliers
|
|
7,507
|
|
60,241
|
Total inventories
|
|
1,259,799
|
|
649,580
|
Note 16 |
Cash and cash equivalents
|
|
12.31.18
|
|
12.31.17
|
Cash and banks
|
|
27,608
|
|
122,349
|
Total cash and cash equivalents
|
|
27,608
|
|
122,349
|
49
2018 FINANCIAL STATEMENTS
NOTES
|
Note 17 |
Share capital and additional paid-in capital
|
|
Share capital
|
|
Additional paid-in capital
|
|
Total
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
18,197,583
|
|
183,604
|
|
18,381,187
|
Payment of Other reserve constitution - Share-bases compensation plan (Note 25)
|
|
-
|
|
46,317
|
|
46,317
|
Balance at December 31, 2017
|
|
18,197,583
|
|
229,921
|
|
18,427,504
|
|
|
|
|
|
|
|
Payment of Other reserve constitution - Share-bases compensation plan (Note 25)
|
|
-
|
|
10,700
|
|
10,700
|
Balance at December 31, 2018
|
|
18,197,583
|
|
240,621
|
|
18,438,204
|
As of December 31, 2018, the Company’s share capital amounts to 906,455,100 shares, divided into 462,292,111 common, book-entry Class A shares with a par value of one peso each and the right to one vote per share; 442,210,385 common, book-entry Class B shares with a par value of one peso each and the right to one vote per share; and 1,952,604 common, book-entry Class C shares with a par value of one peso each and the right to one vote per share.
No changes have occurred in the Company’s Share Capital structure in the last three fiscal years.
Listing of the Company’s shares
The Company’s shares are listed on the Buenos Aires Stock Exchange and are part of the Merval Index.
Furthermore, with the SEC’s prior approval, the Company’s ADSs, each representing 20 common shares of the Company, began to be traded on the NYSE as from April 24, 2007.
The listing of ADSs on the NYSE is part of the Company’s strategic plan to increase both its liquidity and the volume of its shares.
Acquisition of the Company’s own shares
The Company’s Board of Directors, at its meeting of December 4, 2018, approved the acquisition of the Company’s own shares in accordance with both section 64 of Law 26,831 and the regulations of the National Securities Commission (CNV), under the following main terms and conditions:
§
Maximum amount to be invested
: up to $ 800,000,000;
§
The treasury stock may not exceed, as a whole, the limit of 10% of share capital;
§
Price to be paid for the shares
: up to a maximum of USD 30 per ADR in the New York Stock Exchange, or the equivalent amount in pesos at USD 1.5 per share in Bolsas y Mercados Argentinos S.A.;
§
The acquisitions will be made with realized and liquid profits;
§
The shares may be acquired for a term of 120 calendar days to commence on December 5, 2018.
50
2018 FINANCIAL
STATEMENTS
NOTES
|
In
this framework, on December 31, 2018, the Company acquired 15,590,860 Class B
own shares of 1 peso nominal value, for $858.7 million in cash ($1.1 billion in
constant currency), with the actual distribution of $ 858.7 million.
As
of December 31, 2018, the Company’s treasury shares amount to 23,385,028, and
are disclosed as “treasury stock”.
Moreover, a total of 1,618,332,269 shares were awarded to
executive directors and managers as additional remuneration for special
processes developed during fiscal year 2016. (Note 25).
Furthermore, and subsequent to the closing date of these
financial statements, the Company has acquired, in successive market
transactions, 5,570,480 Class B own shares of 1 peso nominal value for a total
of $ 289.6 million.
Note 18 |
Allocation of
profits
Clause 7.4 of the Adjustment Agreement provided that
during the Transition period the Company could not distribute dividends without
the Regulatory Entity’s prior authorization. This transition period ended on
January 31, 2017 with the implementation of the RTI, ENRE Resolution No. 63/17.
Therefore, in the Company’s opinion there exists no regulatory restriction on
the distribution of dividends.
If
the Company’s Level of Indebtedness were higher than 3, the negative covenants
included in the Corporate Notes program, which establish, among other issues,
the Company’s impossibility to make certain payments, such as dividends, would
apply.
Note 19 |
Trade
payables
|
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
|
Customer guarantees
|
|
|
140,968
|
|
148,349
|
Customer contributions
|
|
|
112,324
|
|
118,095
|
Funding contributions - substations
|
|
|
32,925
|
|
89,262
|
Total Non-current
|
|
|
286,217
|
|
355,706
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
Payables for purchase of electricity - CAMMESA
|
|
|
4,080,310
|
|
4,499,302
|
Provision for unbilled electricity purchases -
CAMMESA
|
|
|
7,828,458
|
|
6,715,431
|
Suppliers
|
|
|
2,426,016
|
|
1,995,697
|
Advance to customer
|
|
|
196,485
|
|
220,111
|
Customer contributions
|
|
|
15,288
|
|
27,706
|
Discounts to customers
|
|
|
37,372
|
|
55,182
|
Funding contributions - substations
|
|
|
17,215
|
|
12,380
|
Related parties
|
35.d
|
|
7,833
|
|
51,711
|
Total Current
|
|
|
14,608,977
|
|
13,577,520
|
The fair values of non-current customer contributions as
of December 31, 2018 and 2017 amount to $ 107.7 million and $ 141.3 million,
respectively. The fair values are determined based on estimated cash flows
discounted at a representative market rate for this type of transactions. The
applicable fair value category is Level 3 category.
The carrying amount of the rest of the financial
liabilities included in the Company’s trade payables approximates their fair
value.
51
2018 FINANCIAL
STATEMENTS
NOTES
|
|
Note
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
|
Loans (mutuum) with CAMMESA
|
|
|
2,282,176
|
|
2,783,474
|
ENRE penalties and discounts
|
|
|
5,097,402
|
|
5,737,612
|
Liability with FOTAE
|
|
|
207,371
|
|
280,813
|
Payment
agreements with ENRE
|
|
|
37,196
|
|
108,069
|
Total Non-current
|
|
|
7,624,145
|
|
8,909,968
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
ENRE penalties and discounts
|
|
|
1,835,590
|
|
425,563
|
Related parties
|
35.d
|
|
7,571
|
|
7,756
|
Advances for works to be performed
|
|
|
13,577
|
|
20,046
|
Payment agreements with ENRE
|
|
|
65,301
|
|
93,550
|
Total Current
|
|
|
1,922,039
|
|
546,915
|
The carrying
amount of the Company’s other financial payables approximates their fair
value.
Note 21 |
Deferred
revenue
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
Nonrefundable customer contributions
|
|
275,437
|
|
287,384
|
Total Non-current
|
|
275,437
|
|
287,384
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.18
|
|
12.31.17
|
Current
|
|
|
|
|
Nonrefundable customer contributions
|
|
5,346
|
|
4,961
|
Total Current
|
|
5,346
|
|
4,961
|
Note 22 |
Borrowings
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
Corporate notes (1)
|
|
6,249,967
|
|
4,812,465
|
Borrowing
|
|
942,500
|
|
1,376,829
|
Total non-current
|
|
7,192,467
|
|
6,189,294
|
|
|
|
|
|
Current
|
|
|
|
|
Interest from corporate notes
|
|
110,019
|
|
91,896
|
Borrowing
|
|
967,434
|
|
13,243
|
Total current
|
|
1,077,453
|
|
105,139
|
(1)
Net of debt issuance, repurchase and redemption
expenses.
On
October 11, 2017, the Company was granted a 36-month term loan by the Industrial
and Commercial Bank of China Dubai (ICBC) Branch, for an amount of USD 50
million. The proceeds of the loan will be used to finance the Company’s
investment plan and working capital. Furthermore, it must be pointed out that
such loan constitutes an “Allowed Indebtedness” within the limits stipulated in
the Corporate Notes due 2022.
52
2018 FINANCIAL
STATEMENTS
NOTES
|
The fair values of the Company’s non-current borrowings
(Corporate Notes) as of December 31, 2018 and 2017 amount approximately to $ 6.5
billion and $ 5.3 billion, respectively. Such values were determined on the
basis of the estimated market price of the Company’s Corporate Notes at the end
of each year. The applicable fair value category is Level 1 category.
The Company’s borrowings are denominated in the following
currencies:
|
|
12.31.18
|
|
12.31.17
|
US dollars
|
|
8,269,920
|
|
6,294,433
|
|
|
8,269,920
|
|
6,294,433
|
The maturities of the Company’s borrowings and its
exposure to interest rate are as follow:
|
|
12.31.18
|
|
12.31.17
|
Fixed rate
|
|
|
|
|
Less than 1 year
|
|
110,019
|
|
91,896
|
From 2 to 5 years
|
|
6,249,967
|
|
4,812,465
|
Total Fixed rate
|
|
6,359,986
|
|
4,904,361
|
|
|
|
|
|
Variable rate
|
|
|
|
|
Less than 1 year
|
|
967,434
|
|
13,244
|
From 1 to 2 years
|
|
942,500
|
|
688,414
|
From 2 to 5 years
|
|
-
|
|
688,414
|
Total Variable rate
|
|
1,909,934
|
|
1,390,072
|
|
|
8,269,920
|
|
6,294,433
|
The roll forward of the Company’s borrowings during the
year was as follows:
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Balance at beginnig of the year
|
|
6,294,433
|
|
5,202,452
|
|
6,224,330
|
Proceeds from borrowings
|
|
-
|
|
1,285,946
|
|
-
|
Payment of borrowings' interests
|
|
(652,667)
|
|
(418,494)
|
|
(529,227)
|
Repurchase of Corporate Notes by the
trust
|
|
-
|
|
-
|
|
(9,683)
|
Paid from repurchase of Corporate Notes
|
|
(375,520)
|
|
-
|
|
(441,462)
|
Gain from repurchase of Corporate Notes
|
|
(4,539)
|
|
-
|
|
(84)
|
Exchange diference and interest accrued
|
|
6,134,425
|
|
1,252,327
|
|
1,604,325
|
Result from exposure to inlfation
|
|
(3,126,212)
|
|
(1,027,798)
|
|
(1,645,747)
|
Balance at the end of period
|
|
8,269,920
|
|
6,294,433
|
|
5,202,452
|
53
2018 FINANCIAL
STATEMENTS
NOTES
|
Corporate Notes
programs
The
Company is included in a Corporate Notes program, the relevant information of
which is detailed below:
Debt
issued in United States dollars
|
|
|
|
|
|
|
|
Million of USD
|
Million of $
|
Corporate Notes
|
|
Class
|
|
Rate
|
|
Year of Maturity
|
|
Debt structure at 12.31.17
|
|
Debt repurchase
|
|
Debt structure at 12.31.18
|
|
At 12.31.18
|
Fixed Rate Par Note
|
|
9
|
|
9.75
|
|
2022
|
|
171.87
|
|
(10.22)
|
|
161.65
|
|
6,249.78
|
Total
|
|
|
|
|
|
|
|
171.87
|
|
(10.22)
|
|
161.65
|
|
6,249.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million of USD
|
Million of $
|
Corporate Notes
|
|
Class
|
|
Rate
|
|
Year of Maturity
|
|
Debt structure at 12.31.16
|
|
Debt repurchase
|
|
Debt structure at 12.31.17
|
|
At 12.31.17
|
Fixed Rate Par Note
|
|
9
|
|
9.75
|
|
2022
|
|
171.87
|
|
-
|
|
171.87
|
|
3,259.22
|
Total
|
|
|
|
|
|
|
|
171.87
|
|
-
|
|
171.87
|
|
3,259.22
|
The
main covenants are the following:
i.
Negative Covenants
The
terms and conditions of the Corporate Notes include a number of negative
covenants that limit the Company’s actions with regard to, among others, the
following:
- encumbrance or authorization to encumber its property or
assets;
- incurrence of indebtedness, in certain specified
cases;
- sale of the Company’s assets related to its main
business;
- carrying out of transactions with shareholders or
related companies;
- making certain payments (including, among others,
dividends, purchases of
edenor
’s common shares or payments on subordinated
debt).
ii.
Suspension of Covenants:
Certain negative covenants stipulated in the terms and
conditions of the Corporate Notes will be suspended or adapted if:
- the Company’s long-term debt rating is raised to
Investment Grade, or the Company’s Level of Indebtedness is equal to or lower
than 3.
- If the Company subsequently losses its Investment Grade
rating or its Level of Indebtedness is higher than 3, as applicable, the
suspended negative covenants will be once again in effect.
At
the date of issuance of these financial statements, the previously mentioned
ratios have been complied with.
In
fiscal year 2018, the Company repurchased at market prices, in successive
transactions,
“Fixed Rate Class 9 Par
Corporate
Notes” due 2022, for an amount of USD 10.2 million nominal value.
54
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 23 |
Salaries and
social security taxes payable
a.
Salaries and social security taxes payable
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
Early retirements payable
|
|
14,884
|
|
4,960
|
Seniority-based bonus
|
|
147,853
|
|
171,719
|
Total non-current
|
|
162,737
|
|
176,679
|
|
|
|
|
|
Current
|
|
|
|
|
Salaries payable and provisions
|
|
1,581,241
|
|
1,571,228
|
Social security payable
|
|
151,137
|
|
223,165
|
Early retirements payable
|
|
10,248
|
|
7,099
|
Total current
|
|
1,742,626
|
|
1,801,492
|
The carrying amount of the Company’s salaries and social
security taxes payable approximates their fair value.
b.
Salaries and
social security taxes charged to profit or loss
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Salaries
|
|
4,336,533
|
|
4,897,440
|
|
5,006,596
|
Social security taxes
|
|
1,686,430
|
|
1,904,559
|
|
1,947,009
|
Total salaries and social security
taxes
|
|
6,022,963
|
|
6,801,999
|
|
6,953,605
|
Early retirements payable correspond to individual
optional agreements. After employees reach a specific age, the Company may offer
them this option. The related accrued liability represents future payment
obligations which as of December 31, 2018 and 2017 amount to $
10.2 million
and $ 7.1 million (current) and
$ 14.9
million
and $ 5 million (non-current),
respectively.
The seniority-based bonus included in collective
bargaining agreements in effect consists of a bonus to be granted to personnel
with a certain amount of years of service. As of December 31,
2018 and 2017,
the related liabilities amount to $
147.8 million
and $ 171.7 million, respectively.
As of December 31, 2018 and 2017, the number of employees
amounts
to
4,878 and 4,789, respectively.
55
2018 FINANCIAL
STATEMENTS
NOTES
|
The defined benefit plans granted to Company employees
consist of a bonus for all the employees who have the necessary years of service
and have made the required contributions to retire under ordinary retirement
plans.
The amounts and conditions vary in accordance with the
collective bargaining agreement and for non-unionized personnel.
|
12.31.18
|
|
12.31.17
|
Non-current
|
385,098
|
|
477,765
|
Current
|
32,365
|
|
46,375
|
Total Benefit plans
|
417,463
|
|
524,140
|
The detail of the benefit plan obligations as of December
31, 2018 and 2017 is as follows:
|
12.31.18
|
|
12.31.17
|
Benefit payment obligations at
beginning
|
524,140
|
|
442,170
|
Current service cost
|
32,904
|
|
42,500
|
Interest cost
|
79,304
|
|
126,954
|
Actuarial losses
|
5,638
|
|
(22,219)
|
Result from exposure to inflation for the
year
|
(169,169)
|
|
(8,692)
|
Benefits paid to participating
employees
|
(55,354)
|
|
(56,573)
|
Benefit payment obligations at period
end
|
417,463
|
|
524,140
|
As of December 31, 2018 and 2017, the Company does not
have any assets related to post-retirement benefit plans.
The detail of the charge recognized in the Statement of
Comprehensive Income is as follows:
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Cost
|
32,904
|
|
42,500
|
|
46,320
|
Interest
|
79,304
|
|
126,954
|
|
163,431
|
Actuarial results - Other comprehensive
loss
|
5,638
|
|
(22,219)
|
|
(15,555)
|
|
117,846
|
|
147,235
|
|
194,196
|
The actuarial assumptions used are based on market
interest rates for Argentine government bonds, past experience, and the Company
Management’s best estimate of future economic conditions. Changes in these
assumptions may affect the future cost of benefits and obligations. The main
assumptions used are as follow:
|
12.31.18
|
|
12.31.17
|
Discount rate
|
5%
|
|
5%
|
Salary increase
|
1%
|
|
1%
|
Inflation
|
31%
|
|
18%
|
56
2018 FINANCIAL
STATEMENTS
NOTES
|
Sensitivity analysis
:
|
|
|
12.31.2018
|
Discount Rate: 4%
|
|
|
|
Obligation
|
|
|
459,651
|
Variation
|
|
|
42,188
|
|
|
|
10%
|
|
|
|
|
Discount Rate: 6%
|
|
|
|
Obligation
|
|
|
381,587
|
Variation
|
|
|
(35,876)
|
|
|
|
(9%)
|
|
|
|
|
Salary Increase : 0%
|
|
|
|
Obligation
|
|
|
379,992
|
Variation
|
|
|
(37,471)
|
|
|
|
(9%)
|
|
|
|
|
Salary Increase: 2%
|
|
|
|
Obligation
|
|
|
460,939
|
Variation
|
|
|
43,476
|
|
|
|
10%
|
The expected payments of benefits are as
follow
:
|
In 2019
|
|
In 2020
|
|
In 2021
|
|
In 2022
|
|
In 2023
|
|
Between 2022 to 2028
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
Benefit payment obligations
|
32,365
|
|
6,221
|
|
6,207
|
|
6,450
|
|
2,059
|
|
11,128
|
Estimates based on actuarial techniques imply the use of
statistical tools, such as the so-called demographic tables used in the
actuarial valuation of the Company’s active personnel.
In order to determine the mortality of the Company’s
active personnel, the “1971 Group Annuity Mortality” table has been used. In
general, a mortality table shows for each age group the probability that a
person in any such age group will die before reaching a predetermined age. Male
and female mortality tables are elaborated separately inasmuch as men and
women’s mortality rates are substantially different.
In order to estimate total and permanent disability due to
any cause, 80% of the “1985 Pension Disability Study” table has been
used.
In order to estimate the probability that the Company’s
active personnel will leave the Company or stay therein, the “ESA 77” table has
been used.
Liabilities related to the above-mentioned benefits have
been determined considering all the rights accrued by the beneficiaries of the
plans through the closing date of the year ended December 31, 2018.
These benefits do not apply to key management
personnel.
57
2018 FINANCIAL STATEMENTS
NOTES
|
Note 25 |
The Company’s Share-based Compensation Plan
In 2016, the Company’s Board of Directors proposed that the treasury shares be used for the implementation of a long-term incentive plan in favor of executive directors, managers or other personnel holding key executive positions in the Company in an employment relationship with the latter and those who in the future are invited to participate, in accordance with the provisions of section 67 of Law No. 26,831 on Capital Markets. The plan was ratified and approved by the ordinary and extraordinary shareholders’ meeting held on April 18, 2017.
At the date of issuance of these financial statements, the Company awarded a total of 1,618,332 shares to executive directors and managers as additional remuneration for their performance in special processes developed during fiscal years 2016 and 2017.
The fair value of the previously referred to shares at the award date, amounted to $ 49.4 million and has been recorded in the Salaries and social security taxes line item, with a contra account in Equity. The amount recorded in Equity is net of the tax effect.
Note 26 |
Income tax
The analysis of deferred tax assets and liabilities is as follows:
|
12.31.17
|
|
Result from exposure to inflation
|
|
Charged to profit and loss
|
|
Charged to other comprenhensive income
|
|
12.31.18
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
Inventories
|
13,454
|
|
(9,064)
|
|
(4,390)
|
|
-
|
|
-
|
Trade receivables and other receivables
|
481,066
|
|
(371,025)
|
|
335,061
|
|
-
|
|
445,102
|
Trade payables and other payables
|
424,670
|
|
757,645
|
|
772,447
|
|
-
|
|
1,954,762
|
Salaries and social security taxes payable
|
(95,813)
|
|
130,428
|
|
14,824
|
|
-
|
|
49,439
|
Benefit plans
|
219,113
|
|
(128,800)
|
|
13,980
|
|
1,691
|
|
105,984
|
Tax liabilities
|
55,897
|
|
(43,540)
|
|
3,274
|
|
-
|
|
15,631
|
Provisions
|
(546,274)
|
|
755,078
|
|
137,055
|
|
-
|
|
345,859
|
Deferred tax asset
|
605,906
|
|
1,036,929
|
|
1,272,251
|
|
1,691
|
|
2,916,777
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
(7,466,457)
|
|
903151.1937
|
|
(4,184,856)
|
|
-
|
|
(10,748,162)
|
Financial assets at fair value through profit or loss
|
(386,145)
|
|
374,867
|
|
(201,199)
|
|
-
|
|
(212,477)
|
Borrowings
|
(43,454)
|
|
37,986
|
|
1,022
|
|
-
|
|
(4,446)
|
Deferred tax liability
|
(7,896,056)
|
|
1,316,004
|
|
(4,385,033)
|
|
-
|
|
(10,965,085)
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax (liabilities) assets
|
(7,290,150)
|
|
2,352,933
|
|
(3,112,782)
|
|
1,691
|
|
(8,048,308)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.16
|
|
Result from exposure to inflation
|
|
Charged to profit and loss
|
|
Charged to other comprenhensive income
|
|
12.31.17
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
Tax loss carryforward
|
6,160
|
|
(1,988)
|
|
49,620
|
|
-
|
|
53,792
|
Inventories
|
7,520
|
|
(2,427)
|
|
8,361
|
|
-
|
|
13,454
|
Trade receivables and other receivables
|
204,972
|
|
(66,156)
|
|
342,250
|
|
-
|
|
481,066
|
Trade payables and other payables
|
1,659,011
|
|
(535,455)
|
|
(698,886)
|
|
-
|
|
424,670
|
Salaries and social security taxes payable
|
36,176
|
|
(11,676)
|
|
(120,313)
|
|
-
|
|
(95,813)
|
Benefit plans
|
154,759
|
|
(49,949)
|
|
121,519
|
|
(7,216)
|
|
219,113
|
Tax liabilities
|
23,232
|
|
(7,498)
|
|
40,163
|
|
-
|
|
55,897
|
Provisions
|
221,846
|
|
(71,602)
|
|
(696,518)
|
|
-
|
|
(546,274)
|
Deferred tax asset
|
2,313,676
|
|
(746,751)
|
|
(953,803)
|
|
(7,216)
|
|
605,906
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
(9,779,890)
|
|
3,027,954
|
|
(714,521)
|
|
-
|
|
(7,466,457)
|
Financial assets at fair value through profit or loss
|
(59,581)
|
|
19,230
|
|
(345,794)
|
|
-
|
|
(386,145)
|
Borrowings
|
(12,424)
|
|
4,010
|
|
(35,040)
|
|
-
|
|
(43,454)
|
Deferred tax liability
|
(9,851,895)
|
|
3,051,194
|
|
(1,095,355)
|
|
-
|
|
(7,896,056)
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax (liabilities) assets
|
(7,538,219)
|
|
2,304,443
|
|
(2,049,158)
|
|
(7,216)
|
|
(7,290,150)
|
58
2018 FINANCIAL
STATEMENTS
NOTES
|
|
12.31.18
|
|
12.31.17
|
Deferred tax assets:
|
|
|
|
To be recover in less than 12 moths
|
2,310,153
|
|
669,450
|
To be recover in more than 12 moths
|
606,624
|
|
1,756,314
|
Deferred tax asset
|
2,916,777
|
|
2,425,764
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
To be recover in less than 12 moths
|
(1,966,173)
|
|
(2,740,288)
|
To be recover in more than 12 moths
|
(8,998,912)
|
|
(6,975,626)
|
Deferred tax liability
|
(10,965,085)
|
|
(9,715,914)
|
|
|
|
|
Net deferred tax assets
(liabilities)
|
(8,048,308)
|
|
(7,290,150)
|
The detail of the income tax expense for the year includes
two effects: (i) the current tax for the year payable in accordance with the tax
legislation applicable to the Company; (ii) the effect of applying the deferred
tax method which recognizes the effect of the temporary differences arising from
the valuation of assets and liabilities for accounting and tax
purposes.
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Deferred tax
|
|
(759,849)
|
|
255,285
|
|
342,403
|
Current tax
|
|
(1,114,384)
|
|
(760,641)
|
|
(484,887)
|
Difference between provision and tax
return
|
|
(3,163)
|
|
(4,700)
|
|
(4,786)
|
Income tax expense
|
|
(1,877,396)
|
|
(510,056)
|
|
(147,270)
|
Tax Reform in Argentina
On
December 29, 2017, the PEN enacted Law No. 27,430 – Income Tax. This Law has
introduced several amendments to the treatment of income tax, whose key
components are the following:
Income tax rate:
The Income
tax rate for Argentine companies will be gradually reduced from 35% to 30% for
fiscal years beginning as from January 1, 2018 until December 31, 2019 and to
25% for fiscal years beginning on or after January 1, 2020.
Dividend withholding tax:
A tax is
introduced on dividends or profits distributed, among others, by Argentine
companies or permanent establishments to: individuals, undivided estates or
foreign beneficiaries, with the following considerations: (i) dividends deriving
from profits generated during fiscal years beginning as from January 1, 2018
until December 31, 2019 will be subject to a withholding of 7%; and (ii)
dividends arising from profits obtained in fiscal years beginning on or after
January 1, 2020 will be subject to a 13% withholding.
The dividends arising from benefits obtained until the
fiscal year prior to that beginning as from January 1, 2018 will continue to be
subject, for all the beneficiaries thereof, to the 35% withholding on the amount
exceeding the non-taxable distributable cumulative income (transition period of
the equalization tax).
Optional tax revaluation:
The law
establishes that the Companies will have the option of carrying out a
revaluation for tax purposes of the assets located in the country that generate
taxable income. The special tax on the amount of the revaluation depends on the
asset, amounting to 8% for real property not regarded as inventories, to 15% for
real property regarded as inventories, and to 10 % for personal property and all
other assets. If the option is exercised for a certain asset, all the other
assets of the same category must be revalued. The tax result arising from the
revaluation is not subject to income tax, and the special tax on the amount of
the revaluation will not be deductible from such tax. The Company is currently
analyzing the impacts of the aforementioned option.
59
2018 FINANCIAL
STATEMENTS
NOTES
|
Adjustment of deductions:
Acquisitions
or investments made in fiscal years beginning on or after January 1, 2018 will
be adjusted on the basis of the IPIM’s percentage variations published by the
INDEC. This situation will increase the deductible amortization and its tax
deductible cost in case of sale.
60
2018 FINANCIAL
STATEMENTS
NOTES
|
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Profit for the year before taxes
|
|
6,174,862
|
|
5,590,691
|
|
388,041
|
Applicable tax rate
|
|
30%
|
|
35%
|
|
35%
|
Loss for the year at the tax rate
|
|
(1,852,459)
|
|
(1,956,742)
|
|
(135,814)
|
Gain (Loss) from interest in joint
ventures
|
|
560
|
|
(6)
|
|
(3)
|
Non-taxable income
|
|
220,769
|
|
115,661
|
|
138,040
|
Other
|
|
(1,007,010)
|
|
902,631
|
|
(144,707)
|
Difference between provision and tax
return
|
|
(3,163)
|
|
(4,700)
|
|
(4,786)
|
Change in the income tax rate (1)
|
|
763,907
|
|
433,100
|
|
-
|
Income tax expense
|
|
(1,877,396)
|
|
(510,056)
|
|
(147,270)
|
(1)
Refers to
the effect of applying to deferred tax assets and liabilities the changes in
income tax rates in accordance with the previously detailed tax reform on the
basis of the year in which they are expected to be realized/settled.
The income
tax payable, net of withholdings is detailed below.
|
|
12.31.18
|
|
12.31.17
|
Current
|
|
|
|
|
Tax payable 2017
|
|
1,114,384
|
|
760,641
|
Total Tax payable
|
|
1,114,384
|
|
760,641
|
Tax withholdings
|
|
(497,058)
|
|
(71,550)
|
Total current
|
|
617,326
|
|
689,091
|
Note 27 |
Tax
liabilities
|
|
12.31.18
|
|
12.31.17
|
Non-current
|
|
|
|
|
Current
|
|
|
|
|
Provincial, municipal and federal contributions and
taxes
|
|
130,445
|
|
587,723
|
VAT payable
|
|
412,547
|
|
728,173
|
Tax withholdings
|
|
127,121
|
|
131,091
|
SUSS withholdings
|
|
7,435
|
|
5,190
|
Municipal taxes
|
|
106,117
|
|
101,082
|
Tax regularization plan
|
|
380
|
|
2,242
|
Total Current
|
|
784,045
|
|
1,555,501
|
61
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 28 |
Leases
·
Lessee
The features that these leases have in common are that
payments (installments) are established as fixed amounts; there are neither
purchase option clauses nor renewal term clauses (except for the lease contract
of the Energy Handling and Transformer Center that has an automatic renewal
clause for the term thereof); and there are prohibitions such as: transferring
or sub-leasing the building, changing its use and/or making any kind of
modifications thereto. All operating leases contracts have cancelable terms and
assignment periods of 2 to 13 years.
Among them the following can be mentioned: commercial
offices, two warehouses, the headquarters building (comprised of administration,
commercial and technical offices), the Energy Handling and Transformer Center
(two buildings and a plot of land located within the perimeter of Central Nuevo
Puerto and Puerto Nuevo) and Las Heras substation.
As of December 31, 2018 and 2017, future minimum payments
with respect to operating assignments of use are as follow:
|
|
12.31.18
|
|
12.31.17
|
2018
|
|
-
|
|
124,503
|
2019
|
|
155,454
|
|
124,626
|
2020
|
|
138,048
|
|
52,194
|
2021
|
|
102,515
|
|
4,597
|
Total future minimum lease
payments
|
|
396,017
|
|
305,920
|
Total expenses for operating assignments of use for the
years ended December 31, 2018, 2017 nad 2016 are as follow:
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Total lease expenses
|
|
125,157
|
|
126,098
|
|
126,193
|
|
|
|
·
Lessor
The Company has entered into operating leases contracts
with certain cable television companies granting them the right to use the poles
of the Company’s network. Most of these contracts include automatic renewal
clauses.
As of December 31, 2018 and 2017, future minimum
collections with respect to operating leases are as follow:
|
|
12.31.18
|
|
12.31.17
|
2018
|
|
-
|
|
202,143
|
2019
|
|
173,619
|
|
193,812
|
Total future minimum lease
collections
|
|
173,619
|
|
395,955
|
Total income from operating leases for the years ended
December 31, 2018, 2017 and 2016 is as follows
:
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Total lease income
|
|
190,370
|
|
212,265
|
|
199,431
|
62
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 29 |
Provisions
|
|
Non-current liabilities
|
|
Current liabilities
|
|
|
Contingencies
|
At 12.31.16
|
|
504,038
|
|
129,808
|
|
|
|
|
|
Increases
|
|
411,975
|
|
130,389
|
Decreases
|
|
(4)
|
|
(58,930)
|
Result from exposure to inflation for the
year
|
|
(32,890)
|
|
(10,409)
|
At 12.31.17
|
|
883,119
|
|
190,858
|
Increases
|
|
472,067
|
|
252,030
|
Decreases
|
|
(85,662)
|
|
(239,585)
|
Result from exposure to inflation for the
year
|
|
(199,374)
|
|
(15,868)
|
At 12.31.18
|
|
1,070,150
|
|
187,435
|
Note 30 |
Revenue from
sales
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Sales of electricity
|
|
55,689,651
|
|
39,329,729
|
|
25,576,978
|
Right of use on poles
|
|
190,370
|
|
212,265
|
|
213,449
|
Connection charges
|
|
51,105
|
|
49,369
|
|
30,893
|
Reconnection charges
|
|
22,523
|
|
11,505
|
|
5,439
|
Total Revenue from sales
|
|
55,953,649
|
|
39,602,868
|
|
25,826,759
|
Note 31 |
Expenses by
nature
The detail of expenses by nature is as follows:
Description
|
|
Transmission and distribution expenses
|
|
Selling
expenses
|
|
Administrative expenses
|
|
Total
|
Salaries and social security taxes
|
|
4,331,442
|
|
777,014
|
|
914,507
|
|
6,022,963
|
Pension plans
|
|
80,695
|
|
14,476
|
|
17,037
|
|
112,208
|
Communications expenses
|
|
81,110
|
|
269,674
|
|
16,017
|
|
366,801
|
Allowance for the impairment of trade and other
receivables
|
|
-
|
|
977,503
|
|
-
|
|
977,503
|
Supplies consumption
|
|
790,392
|
|
-
|
|
122,623
|
|
913,015
|
Leases and insurance
|
|
530
|
|
-
|
|
180,218
|
|
180,748
|
Security service
|
|
136,656
|
|
2,027
|
|
128,699
|
|
267,382
|
Fees and remuneration for services
|
|
1,411,812
|
|
1,040,164
|
|
1,007,152
|
|
3,459,128
|
Public relations and marketing
|
|
-
|
|
-
|
|
32,246
|
|
32,246
|
Advertising and sponsorship
|
|
-
|
|
-
|
|
16,612
|
|
16,612
|
Reimbursements to personnel
|
|
60
|
|
68
|
|
498
|
|
626
|
Depreciation of property, plants
and
equipments
|
|
2,014,887
|
|
300,255
|
|
246,357
|
|
2,561,499
|
Directors and Supervisory Committee
members’
fees
|
|
-
|
|
-
|
|
21,893
|
|
21,893
|
ENRE penalties (1)
|
|
2,064,330
|
|
1,052,135
|
|
-
|
|
3,116,465
|
Taxes and charges
|
|
-
|
|
598,908
|
|
162,549
|
|
761,457
|
Other
|
|
808
|
|
457
|
|
5,719
|
|
6,984
|
At 12.31.18
|
|
10,912,722
|
|
5,032,681
|
|
2,872,127
|
|
18,817,530
|
The expenses included in the chart above are net of the
Company’s own expenses capitalized in Property, plant and equipment as of
December 31, 2018 for $ 1 billion.
63
2018 FINANCIAL
STATEMENTS
NOTES
|
Description
|
|
Transmission and distribution expenses
|
|
Selling
expenses
|
|
Administrative expenses
|
|
Total
|
Salaries and social security taxes
|
|
4,997,823
|
|
886,976
|
|
917,200
|
|
6,801,999
|
Pension plans
|
|
124,507
|
|
22,097
|
|
22,850
|
|
169,454
|
Communications expenses
|
|
55,281
|
|
289,371
|
|
22,804
|
|
367,456
|
Allowance for the impairment of trade and other
receivables
|
|
-
|
|
391,615
|
|
-
|
|
391,615
|
Supplies consumption
|
|
687,199
|
|
-
|
|
109,780
|
|
796,979
|
Leases and insurance
|
|
653
|
|
-
|
|
182,024
|
|
182,677
|
Security service
|
|
130,263
|
|
1,797
|
|
141,231
|
|
273,291
|
Fees and remuneration for services
|
|
1,081,974
|
|
876,612
|
|
820,225
|
|
2,778,811
|
Public relations and marketing
|
|
-
|
|
-
|
|
56,659
|
|
56,659
|
Advertising and sponsorship
|
|
-
|
|
-
|
|
29,187
|
|
29,187
|
Reimbursements to personnel
|
|
89
|
|
55
|
|
827
|
|
971
|
Depreciation of property, plants and
equipments
|
|
1,740,231
|
|
275,125
|
|
132,733
|
|
2,148,089
|
Directors and Supervisory Committee
members’ fees
|
|
-
|
|
-
|
|
21,429
|
|
21,429
|
ENRE penalties
|
|
428,049
|
|
428,663
|
|
-
|
|
856,712
|
Taxes and charges
|
|
-
|
|
395,263
|
|
32,011
|
|
427,274
|
Other
|
|
996
|
|
264
|
|
15,546
|
|
16,806
|
At 12.31.17
|
|
9,247,065
|
|
3,567,838
|
|
2,504,506
|
|
15,319,409
|
(1)
Transmission
and distribution expenses include recovery for $ 719.8 million net of the charge
for the year for $ 1.6 billion.
The expenses included in the chart above are net of the
Company’s own expenses capitalized in Property, plant and equipment as of
December 31, 2017 for $ 869.7 million.
Description
|
|
Transmission and distribution expenses
|
|
Selling
expenses
|
|
Administrative expenses
|
|
Total
|
Salaries and social security taxes
|
|
5,104,795
|
|
861,097
|
|
987,713
|
|
6,953,605
|
Pension plans
|
|
142,590
|
|
24,053
|
|
27,589
|
|
194,232
|
Communications expenses
|
|
49,817
|
|
251,381
|
|
20,318
|
|
321,516
|
Allowance for the impairment of trade and other
receivables
|
|
-
|
|
433,371
|
|
-
|
|
433,371
|
Supplies consumption
|
|
513,318
|
|
-
|
|
64,249
|
|
577,567
|
Leases and insurance
|
|
870
|
|
-
|
|
173,973
|
|
174,843
|
Security service
|
|
134,404
|
|
22,855
|
|
85,461
|
|
242,720
|
Fees and remuneration for services
|
|
897,754
|
|
923,607
|
|
771,520
|
|
2,592,881
|
Public relations and marketing
|
|
-
|
|
-
|
|
-
|
|
-
|
Advertising and sponsorship
|
|
-
|
|
-
|
|
-
|
|
-
|
Reimbursements to personnel
|
|
1,821
|
|
343
|
|
1,520
|
|
3,684
|
Depreciation of property, plants and
equipments
|
|
1,739,293
|
|
301,301
|
|
106,647
|
|
2,147,241
|
Directors and Supervisory Committee
members’ fees
|
|
-
|
|
-
|
|
11,937
|
|
11,937
|
ENRE penalties
|
|
4,677,844
|
|
367,907
|
|
-
|
|
5,045,751
|
Taxes and charges
|
|
-
|
|
193,081
|
|
27,088
|
|
220,169
|
Other
|
|
1,351
|
|
265
|
|
10,022
|
|
11,638
|
At 12.31.16
|
|
13,263,857
|
|
3,379,261
|
|
2,288,037
|
|
18,931,155
|
The expenses included in the chart above are net of the
Company’s own expenses capitalized in Property, plant and equipment as of
December 31, 2017 for $ 602 million.
64
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 32 |
Other
operating expense, net
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Other operating income
|
|
|
|
|
|
|
Services provided to third parties
|
|
74,522
|
|
89,303
|
|
120,580
|
Commissions on municipal taxes
collection
|
|
77,088
|
|
51,358
|
|
42,131
|
Related parties
|
35
|
44,303
|
|
4,263
|
|
921
|
Income from non-reimbursable customer
contributions
|
|
5,574
|
|
4,372
|
|
1,520
|
Fines
to suppliers (1)
|
|
76,914
|
|
7,811
|
|
-
|
Others
|
|
43,355
|
|
705
|
|
6,995
|
Total other operating income
|
|
321,756
|
|
157,812
|
|
172,147
|
|
|
|
|
|
|
|
Other operating expense
|
|
|
|
|
|
|
Gratifications for services
|
|
(74,266)
|
|
(80,802)
|
|
(69,678)
|
Cost
for services provided to third parties
|
|
(52,429)
|
|
(65,238)
|
|
(98,328)
|
Severance paid
|
|
(16,645)
|
|
(28,353)
|
|
(31,243)
|
Donatios and contributions
|
|
(6)
|
|
-
|
|
-
|
Debit
and Credit Tax
|
|
(594,750)
|
|
(479,525)
|
|
(306,892)
|
Other
expenses - FOCEDE
|
|
|
|
|
|
(31,223)
|
Provision for contingencies
|
|
(724,097)
|
|
(542,364)
|
|
(301,808)
|
Disposals of property, plant and equipment
|
|
(134,455)
|
|
(49,824)
|
|
(244,456)
|
Other
|
|
(45,918)
|
|
(14,398)
|
|
(1,534)
|
Total other operating expense
|
|
(1,642,566)
|
|
(1,260,504)
|
|
(1,085,162)
|
Other operating expense, net
|
|
(1,320,810)
|
|
(1,102,692)
|
|
(913,015)
|
(1)
Relates to fines applied to Suppliers for failing to
comply with agreed-upon contractual conditions.
Note 33 |
Net financial
expense
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Financial income
|
|
|
|
|
|
|
Commercial interest
|
|
273,457
|
|
177,655
|
|
262,536
|
Financial interest
|
|
398,326
|
|
276,149
|
|
122,057
|
Total financial income
|
|
671,783
|
|
453,804
|
|
384,593
|
|
|
|
|
|
|
|
Financial expenses
|
|
|
|
|
|
|
Interest and other
|
|
(1,987,092)
|
|
(819,377)
|
|
(535,721)
|
Fiscal interest
|
|
(22,752)
|
|
(31,153)
|
|
(18,762)
|
Commercial interest
|
|
(2,958,366)
|
|
(1,716,843)
|
|
(2,028,136)
|
Bank fees and expenses
|
|
(8,509)
|
|
(2,883)
|
|
(6,608)
|
Total financial expenses
|
|
(4,976,719)
|
|
(2,570,256)
|
|
(2,589,227)
|
|
|
|
|
|
|
|
Other financial results
|
|
|
|
|
|
|
Exchange differences
|
|
(3,130,769)
|
|
(564,056)
|
|
(911,819)
|
Adjustment to present value of
receivables
|
|
(327)
|
|
(431)
|
|
5,749
|
Changes in fair value of financial assets
(1)
|
|
746,532
|
|
474,896
|
|
891,773
|
Net gain from the repurchase of
Corporate
Notes
|
|
4,539
|
|
-
|
|
90
|
Contractual resolution of real estate asset (Note
37)
|
|
500,803
|
|
-
|
|
-
|
Other financial expense
|
|
(86,098)
|
|
(78,877)
|
|
(73,096)
|
Total other financial expense
|
|
(1,965,320)
|
|
(168,468)
|
|
(87,303)
|
Total net financial expense
|
|
(6,270,256)
|
|
(2,284,920)
|
|
(2,291,937)
|
(1)
Includes
changes in the fair value of financial assets on cash equivalents as of December
31, 2018, 2017 and 2016 for $ 43.4 million, $ 37.3 million and $ 39.6 million,
respectively.
65
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 34 |
Basic and
diluted earnings per share
Basic
The basic earnings per share are calculated by dividing
the profit attributable to the holders of the Company’s equity instruments by
the weighted average number of common shares outstanding as of December 31, 2018
and 2017, excluding common shares purchased by the Company and held as treasury
shares.
The basic earnings per share coincide with the diluted
earnings per share, inasmuch as the Company has issued neither preferred shares
nor Corporate Notes convertible into common shares.
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Profit
(Loss) for the year attributable to the owners of the Company
|
|
4,297,466
|
|
5,080,635
|
|
240,771
|
Weighted average number of common shares
outstanding
|
|
890,492
|
|
898,280
|
|
897,043
|
Basic
and diluted profit (loss) earnings per share – in
pesos
|
|
4.83
|
|
5.66
|
|
0.27
|
Note 35 |
Related-party
transactions
·
The following transactions were carried out with related
parties:
a.
Income
Company
|
|
Concept
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
|
|
|
|
|
|
|
|
|
CYCSA
|
|
Other income
|
|
-
|
|
-
|
|
17,686
|
PESA
|
|
Impact study
|
|
149
|
|
-
|
|
-
|
|
|
Electrical assembly service
|
|
11,161
|
|
4,263
|
|
-
|
SACDE
|
|
Reimbursement expenses
|
|
32,993
|
|
-
|
|
-
|
Transener
|
|
Reimbursement expenses
|
|
|
|
-
|
|
369
|
Transba
|
|
Reimbursement expenses
|
|
-
|
|
-
|
|
553
|
|
|
|
|
44,303
|
|
4,263
|
|
18,608
|
b.
Expense
Company
|
|
Concept
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
|
|
|
|
|
|
|
|
|
PESA
|
|
Technical advisory services on financial
matters
|
|
(86,098)
|
|
(60,944)
|
|
(67,642)
|
SACME
|
|
Operation and oversight of the electric power
transmission system
|
|
(81,698)
|
|
(68,960)
|
|
(65,298)
|
Salaverri, Dellatorre, Burgio y Wetzler
Malbran
|
|
Legal fees
|
|
-
|
|
(876)
|
|
(6,365)
|
PYSSA
|
|
Financial and granting of loan services to
customers
|
|
-
|
|
-
|
|
(39)
|
OSV
|
|
Hiring life insurance for staff
|
|
(19,521)
|
|
(18,965)
|
|
(11,474)
|
ABELOVICH, POLANO & ASOC.
|
|
Legal fees
|
|
(1,310)
|
|
(712)
|
|
-
|
|
|
|
|
(188,627)
|
|
(150,457)
|
|
(149,891)
|
c.
Key Management personnel’s remuneration
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Salaries
|
|
194,040
|
|
250,646
|
|
229,206
|
|
|
194,040
|
|
250,646
|
|
229,206
|
66
2018 FINANCIAL
STATEMENTS
NOTES
|
·
The balances with related parties are as
follow:
d.
Receivables and payables
|
|
12.31.18
|
|
12.31.17
|
|
12.31.16
|
Other receivables - Non
current
|
|
|
|
|
|
|
SACME
|
|
4,662
|
|
8,015
|
|
|
|
|
4,662
|
|
8,015
|
|
-
|
|
|
|
|
|
|
|
Other receivables - Current
|
|
|
|
|
|
|
SACME
|
|
766
|
|
1131
|
|
|
PESA
|
|
1,180
|
|
483
|
|
|
|
|
1,946
|
|
1,614
|
|
-
|
The other receivables with related parties are not secured
and do not accrue interest. No allowances have been recorded for these concepts
in any of the periods covered by these financial statements.
According to IAS 24, paragraphs 25 and 26, the Company
applies the exemption from the disclosure requirement of transactions with
related parties when the counterpart is a governmental agency that has control,
joint control or significant influence. As of December 31, 2018, the ANSES holds
Corporate Notes of the Company due in 2022 for $ 752 million (USD 20 million
nominal value).
The agreements with related parties that were in effect
throughout fiscal year 2018 are detailed below:
(a)
Agreement
with
SACME
In
the framework of the regulation of the Argentine electric power sector
established by Law No. 24,065 and SEE Resolution No. 61/92, and after the
awarding of the distribution areas of the city and metropolitan area of Buenos
Aires to
edenor
and Edesur
S.A., the bidding terms and conditions of the privatization provided that both
companies were required to organize SACME to operate the electric power
supervision and control center of the transmission and sub-transmission system
that feeds the market areas transferred to those companies. For such purpose, on
September 18, 1992 SACME was organized by
edenor
and Edesur
S.A.
The purpose of this company is to manage, supervise and
control the operation of both the electric power generation, transmission and
sub-transmission system in the City of Buenos Aires and the Buenos Aires
metropolitan area and the interconnections with the Argentine Interconnection
System, to represent Distribution Companies in the operational management before
CAMMESA, and, in general, to carry out the necessary actions for the proper
development of its activities.
The share capital of SACME is divided into 12,000 common,
registered non-endorsable shares, of which 6,000 Class I shares are owned by
edenor
and 6,000
Class II shares are owned by Edesur S.A.
The operating costs borne by the Company during fiscal
year 2018 amounted to $ 81.6 million.
(b) Agreement with EASA
The agreement stipulates the provision to the Company of
technical advisory services on financial matters for a term of five years to
commence as from September 19, 2015. The term of the agreement will be extended
if so agreed by the parties. In consideration of these services, the Company
pays PESA an annual amount of USD 2.5 million. Any of the parties may
terminate the agreement at any time by giving 60 days’ notice, without having to
comply with any further obligations or paying any indemnification to the other
party.
Due to the merger process of EASA and its parent IEASA
with and into CTLL, and, in turn, of CTLL with and into PESA, the amount
stipulated in the agreement in consideration of the services will be paid to the
acquiring and surviving company/companies of EASA.
67
2018 FINANCIAL
STATEMENTS
NOTES
|
(c) Orígenes Seguros de
Vida
In
the framework of the process for the taking out of the mandatory life insurance
for its personnel, the Company invited different insurance companies to submit
their proposals. After having been analyzed, the one submitted by OSV was
selected as the best proposal. This transaction was approved by the Company’s
Board of Directors at the Board meeting held on March 7, 2018, with the Auditing
Committee’s prior favorable opinion.
The operating costs borne by the Company in fiscal year
2018 amounted to $ 19.5 million.
(d) Fidus Sociedad de Garantía
Recíproca
The Company’s Board of Directors, at its meeting of
December 4, 2018, approved the making of a contribution of funds to Fidus SGR
for a sum of $ 25.0 million, in the capacity as protector partner and with the
scope set forth in Law No. 24,467. In this manner, the Company expects to
strengthen the relationship with its suppliers by giving them the possibility of
facilitating an improvement in financing conditions.
(e) SACDE
Throughout 2018, due to the agreement entered into by and
between the Federal Government and SACDE for the construction of the Presidente
Perón highway’s extension, the Company received from SACDE requests for moving
certain facilities owned by the Company located in some specific places of the
referred to highway’s path. As stipulated in edenor’s Concession Agreement, the
entire cost of the removals in question is to be borne by the requesting party;
therefore, the Projects and Permits Area of the Company’s Operations Department
prepared the respective works budgets in accordance with the Price List in
effect, with the related percentages for contingencies and edenor’s fee for the
Project, works oversight and associated electric operations, in addition to the
estimated time period for the completion of the works. Given that SACDE is a
related party under the terms of the Law on Capital Markets, the aforementioned
works contracts were approved by the Board of Directors at the Board meetings
held on April 25, 2018 and January 30, 2019.
The ultimate controlling company of
edenor
is
PESA.
Note 36 |
Safekeeping of documentation
On
August 14, 2014, the CNV issued General Resolution No. 629 which introduced
changes to its regulations concerning the safekeeping and preservation of
corporate books, accounting books and commercial documentation. In this regard,
it is informed that for safekeeping purposes the Company has sent its workpapers
and non-sensitive information, whose periods for retention have not expired, to
the warehouses of the firm Iron Mountain Argentina S.A., located at
:
-
1245 Azara St. – City of Buenos Aires
-
2163 Don Pedro de Mendoza Av. – City of Buenos
Aires
-
2482 Amancio Alcorta Av. – City of Buenos
Aires
-
Tucumán St. on the corner of El Zonda, Carlos Spegazzini
City, Ezeiza, Province of Buenos Aires
The detail of the documentation stored outside the
Company’s offices for safekeeping purposes, as well as the documentation
referred to in Section 5 sub-section a.3) of Caption I of Chapter V of Title II
of the Regulations (Technical Rule No. 2,013, as amended) is available at the
Company’s registered office.
68
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 37 |
Termination
of agreement on real estate asset
With the aim of concentrating in one single building the
Company’s centralized functions, and reducing rental costs and the risk of
future increases, in November 2015, the Company acquired from RDSA (the
“seller”) a real estate asset to be constructed, for a total amount of USD 46
million -equivalent to $ 439.3 million at the exchange rate in effect at the
time of entering into the purchase and sale agreement. To guarantee payment of
liquidated damages in case of termination on account of the seller’s default,
the Company received a surety bond issued by Aseguradores de Cauciones S.A.
Compañía de Seguros for up to the maximum amount of USD 46 million, plus the
private banks’ Badlar rate in dollars + 2%.
The real property had to be delivered by the seller to the
Company on June 1, 2018, which the seller failed to comply. Therefore, the
Company declared the seller in default, notifying the insurance company that
issued the surety bond of such situation, and collected USD 502.8 thousand in
fines accrued during the term of the purchase and sale agreement and duly
deposited as bond by the seller for failing to meet the construction project
milestones agreed upon in the agreement, amount which was recorded in the Other
operating expense, net line item of the Statement of Comprehensive
Income.
On
August 27, 2018, upon expiration of the legal time periods set forth in the
agreement, the Company notified RDSA of the termination of the agreement on
account of its default, demanding payment of the liquidated damages: refunding
of the purchase price, plus 15% interest in dollars from the purchase price
payment date until the day of default, less the delay penalty amounts indicated
in the preceding paragraph.
Furthermore, on September 3, 2018, the Company filed a
claim against the bond with the insurance company, and subsequently provided the
additional documentation and information that had been required.
Due to RDSA’s failure to reimburse the purchase price plus
interest, in November 2018, the Company initiated an arbitration process against
RDSA before the Arbitral Tribunal of the Buenos Aires Stock Exchange in order
for RDSA to be ordered to pay the liquidated damages stipulated in the purchase
and sale agreement, which, as of December 31, 2018 amounts to $ 3 billion. As of
to date, said process is in process
.
Additionally, the Company initiated the process aimed at
collecting the surety bond that guaranteed RDSA’ obligation, which under the
terms of the insurance policy results in a claim for USD 50.3 million, covering
more than 60% of the amount claimed to RDSA.
In
the opinion of our legal advisors, the Company’s right to collect the credit is
based on extremely solid arguments; therefore, the award in the aforementioned
arbitration process against RDSA as well as the outcome of the lawsuit that
could eventually be filed against Aseguradora de Cauciones if it fails to comply
with the payment of the above-mentioned surety bond, should be favorable to the
Company.
However, taking into consideration that on February 1,
2019 RDSA filed a voluntary petition for reorganization proceedings, and that on
February 28, 2019 the
Official
Gazette
published Resolution No. 207/2019 of the National
Insurance Superintendency forbidding Aseguradora de Cauciones from entering into
new contracts and maintaining the prohibition to dispose of property until the
latter’s deficitary situation is rectified, the Company has recorded an
allowance to partially cover the amount of the receivable, considering the
possibility of its recovery, not because of the quality of its right, about
which there is no doubt, but rather because of the financial position of its
debtors, RDSA and Aseguradora de Cauciones. Accordingly, the balance of the
recorded receivable as of December 31, 2018, net of allowances, amounts to $
765.6 million (Note 11).
69
2018 FINANCIAL
STATEMENTS
NOTES
|
Note 38 |
Ordinary and Extraordinary Shareholders’
Meeting
The Company Ordinary and Extraordinary Shareholders’
Meeting held on April 26, 2018 resolved, among other issues, the
following:
-
To
approve
edenor’s
Annual
Report and Financial Statements as of December 31, 2017;
-
To
allocate the profit for the year ended December 31, 2017 to the absorption of
accumulated losses;
-
To
approve the actions taken by the Directors and Supervisory Committee members,
together with their respective remunerations;
-
To
appoint the authorities and the external auditors for the current fiscal
year;
70
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.
|
Empresa Distribuidora y Comercializadora Norte S.A.
|
|
|
|
|
|
|
|
By:
|
/s/ Leandro Montero
|
|
Leandro Montero
|
|
Chief Financial Officer
|
Date:
March
21, 2019
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