CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF MARCH 31, 2018 AND FOR THE
THREE-MONTH PERIOD ENDED MARCH 31, 2018
PRESENTED IN COMPARATIVE FORM
(Stated in thousands of pesos)
CONDENSED INTERIM FINANCIAL STATEMENTS |
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Legal Information | 1 |
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Condensed Interim Statement of Financial Position | 2 |
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Condensed Interim Statement of Comprehensive Income | 4 |
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Condensed Interim Statement of Changes in Equity | 5 |
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Condensed Interim Statement of Cash Flows | 6 |
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Notes to the Condensed Interim Financial Statements: |
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1 | | General information | 8 |
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2 | | Regulatory framework | 8 |
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3 | | Basis of preparation | 9 |
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4 | | Accounting policies | 9 |
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5 | | Financial risk management | 11 |
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6 | | Critical accounting estimates and judgments | 13 |
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7 | | Contingencies and lawsuits | 14 |
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8 | | Property, plant and equipment | 15 |
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9 | | Other receivables | 17 |
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10 | | Trade receivables | 17 |
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11 | | Financial assets at fair value through profit or loss | 18 |
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12 | | Financial assets at amortized cost | 18 |
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13 | | Cash and cash equivalents | 18 |
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14 | | Share capital and additional paid-in capital | 18 |
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15 | | Allocation of profits | 19 |
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16 | | The Company’s Share-based Compensation Plan | 19 |
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17 | | Trade payables | 19 |
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18 | | Other payables | 20 |
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19 | | Borrowings | 20 |
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20 | | Salaries and social security taxes payable | 21 |
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21 | | Income tax and tax on minimum presumed income / Deferred tax | 21 |
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22 | | Tax liabilities | 22 |
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23 | | Provisions | 23 |
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24 | | Revenue from sales | 23 |
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25 | | Expenses by nature | 24 |
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26 | | Other operating expense, net | 25 |
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27 | | Net financial expense | 25 |
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28 | | Basic and diluted earnings per share | 26 |
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29 | | Related-party transactions | 26 |
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30 | | Events after the reporting period | 28 |
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Report on review of Condensed Interim Financial Statements |
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Supervisory Committee’s Report |
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CONDENSED INTERIM FINANCIAL STATEMENTS
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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 Condensed Interim Financial Statements.
Terms |
| Definitions |
BNA |
| Bank of the Argentine Nation |
CAMMESA |
| Compañía Administradora del Mercado Mayorista Eléctrico (the company in charge of the regulation and operation of the wholesale electricity market) |
IFRIC |
| International Financial Reporting Interpretations Committee |
CNV |
| National Securities Commission |
CPD |
| Company’s own distribution costs |
CTLL |
| Central Térmica Loma de la Lata S.A. |
EASA |
| Electricidad Argentina S.A. |
Edenor S.A |
| Empresa Distribuidora y Comercializadora Norte S.A. |
Edesur S.A |
| Empresa Distribuidora Sur S.A. |
ENRE |
| National Regulatory Authority for the Distribution of Electricity |
FOCEDE |
| Fund for Electric Power Distribution Expansion and Consolidation Works |
ICBC |
| Industrial and Commercial Bank of China |
IAS |
| International Accounting Standards |
IASB |
| Accounting Standards Board |
IEASA |
| IEASA S.A. |
MINEM |
| Energy and Mining Ministry |
OSV |
| Orígenes Seguros de Vida S.A. |
PEN |
| Federal Government |
PESA |
| Pampa Energía S.A. |
PYSSA |
| Préstamos y Servicios S.A. |
RTI |
| Tariff Structure Review |
SACME |
| S.A. Centro de Movimiento de Energía |
SEGBA |
| Servicios Eléctricos del Gran Buenos Aires S.A. |
VAD |
| Distribution Added Value |
CONDENSED INTERIM 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:August3, 2087
Registration number with the “Inspección General de Justicia” (the Argentine governmental regulatory agency of corporations):1,559,940
Parent company:EASA – See Note 43 to the Financial Statements as of December 31, 2017
Legal address:1 Maipú Street, City of Buenos Aires
Main business of the parent company: Investment in Edenor S.A.’s Class “A” shares and rendering of technical advisory, management, sales, technology transfer and other services related to the distribution of electricity.
Interest held by the parent company in capital stock and votes:51.44%
CAPITAL STRUCTURE
AS OF MARCH 31, 2018
(amounts stated in pesos)
Class of shares | Subscribed and paid-in | |
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 7,521,927 and 7,794,168 treasury shares as of March 31, 2018 and December 31, 2017, respectively.
(2) Relates to the Employee Stock Ownership Program Class C shares that have not been transferred.
1
CONDENSED INTERIM FINANCIAL STATEMENTS |
Edenor S.A.
Condensed Interim Statement of Financial Position
as of March 31, 2018 presented in comparative form
(Stated in thousands of pesos)
| Note |
| 03.31.18 | 12.31.17 | |
ASSETS |
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Non-current assets |
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Property, plant and equipment | 8 |
| 15,611,256 | 14,812,021 | |
Interest in joint ventures |
| 424 | 424 | ||
Deferred tax asset | 21 |
| 1,388,838 | 1,187,021 | |
Other receivables | 9 |
| 41,101 | 42,447 | |
Total non-current assets |
| 17,041,619 | 16,041,913 | ||
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Current assets |
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Inventories |
| 485,577 | 391,904 | ||
Other receivables | 9 |
| 93,397 | 200,617 | |
Trade receivables | 10 |
| 8,096,647 | 5,678,857 | |
Financial assets at fair value through profit or loss | 11 |
| 4,420,114 | 2,897,258 | |
Financial assets at amortized cost | 12 |
| 405,494 | 11,498 | |
Cash and cash equivalents | 13 |
| 144,983 | 82,860 | |
Total current assets |
| 13,646,212 | 9,262,994 | ||
TOTAL ASSETS |
| 30,687,831 | 25,304,907 |
2
CONDENSED INTERIM FINANCIAL STATEMENTS |
Edenor S.A.
Condensed Interim Statement of Financial Position
as of March 31, 2018 presented in comparative form (continued)
(Stated in thousands of pesos)
| Note |
| 03.31.18 | 12.31.17 | |
EQUITY |
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Share capital and reserve attributable to the owners of the Company |
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Share capital | 14 |
| 898,933 | 898,661 | |
Adjustment to share capital | 14 |
| 399,794 | 399,495 | |
Additional paid-in capital | 14 |
| 39,294 | 31,565 | |
Treasury stock | 14 |
| 7,522 | 7,794 | |
Adjustment to treasury stock | 14 |
| 8,269 | 8,568 | |
Legal reserve |
| 73,275 | 73,275 | ||
Opcional reserve |
| 176,061 | 176,061 | ||
Other comprehensive loss |
| (28,097) | (28,097) | ||
Accumulated profit |
| 884,179 | (506,458) | ||
TOTAL EQUITY |
| 2,459,230 | 1,060,864 | ||
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LIABILITIES |
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Non-current liabilities |
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Trade payables | 17 |
| 253,105 | 240,900 | |
Other payables | 18 |
| 6,395,980 | 6,034,228 | |
Borrowings | 19 |
| 4,526,167 | 4,191,666 | |
Deferred revenue |
| 264,801 | 194,629 | ||
Salaries and social security payable | 20 |
| 126,565 | 119,655 | |
Benefit plans |
| 336,549 | 323,564 | ||
Income tax liabilities | 21 |
| 791,705 | - | |
Provisions | 23 |
| 701,306 | 598,087 | |
Total non-current liabilities |
| 13,396,178 | 11,702,729 | ||
Current liabilities |
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Trade payables | 17 |
| 11,089,098 | 9,195,303 | |
Other payables | 18 |
| 519,151 | 370,395 | |
Borrowings | 19 |
| 169,716 | 71,205 | |
Derivative financial instruments |
| - | 197 | ||
Deferred revenue |
| 4,468 | 3,360 | ||
Salaries and social security payable | 20 |
| 931,817 | 1,220,051 | |
Benefit plans |
| 31,407 | 31,407 | ||
Income tax payable, net | 21 |
| 409,123 | 466,683 | |
Tax liabilities | 22 |
| 1,531,021 | 1,053,455 | |
Provisions | 23 |
| 146,622 | 129,258 | |
Total current liabilities |
| 14,832,423 | 12,541,314 | ||
TOTAL LIABILITIES |
| 28,228,601 | 24,244,043 | ||
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TOTAL LIABILITIES AND EQUITY |
| 30,687,831 | 25,304,907 |
The accompanying notes are an integral part of the Condensed Interim Financial Statements.
3
CONDENSED INTERIM FINANCIAL STATEMENTS |
Edenor S.A.
Condensed Interim Statement of Comprehensive Income
for thethree-monthperiod ended March 31, 2018
presented in comparative form
(Stated in thousands of pesos)
Note | 03.31.18 |
| 03.31.17 | ||
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Revenue | 24 | 11,011,358 | 5,366,635 | ||
Electric power purchases | (5,525,295) | (2,533,581) | |||
Subtotal | 5,486,063 | 2,833,054 | |||
Transmission and distribution expenses | 25 | (1,559,121) | (1,047,849) | ||
Gross gain | 3,926,942 | 1,785,205 | |||
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Selling expenses | 25 | (718,147) | (498,629) | ||
Administrative expenses | 25 | (411,472) | (329,381) | ||
Other operating expense, net | 26 | (207,630) | (140,559) | ||
Operating profit | 2,589,693 | 816,636 | |||
Financial income | 27 | 91,835 | 59,444 | ||
Financial expenses | 27 | (485,884) | (348,486) | ||
Other financial results | 27 | (136,390) | 128,898 | ||
Net financial expense | (530,439) | (160,144) | |||
Profit before taxes | 2,059,254 | 656,492 | |||
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Income tax | 21 | (608,436) | (235,109) | ||
Profit for the period | 1,450,818 | 421,383 | |||
Basic and diluted earnings profit per share: | |||||
Basic and diluted earnings profit per share | 28 | 1.61 | 0.47 |
The accompanying notes are an integral part of the Condensed Interim Financial Statements.
4
CONDENSED INTERIM FINANCIAL STATEMENTS
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Edenor S.A.
Condensed Interim Statement ofChanges in Equity
for the three-month period ended March 31, 2018
presented in comparative form
(Stated in thousands of pesos)
Share capital | Adjustment to share capital | Treasury stock | Adjust- ment to treasury stock | Additional paid-in capital | Legal reserve | Opcional reserve | Other reserve | Other comprehesive | Accumulated income (deficit) | Total | |||||||||||
Balance at December 31, 2016 | 897,043 | 397,716 | 9,412 | 10,347 | 3,452 | 73,275 | 176,061 | 20,346 | (37,172) | (1,188,648) | 361,832 | ||||||||||
Ordinary and Extraordinary Shareholders’ Meeting held on 04.28.2016 | - | - | - | - | - | - | - | 21,973 | - | - | 21,973 | ||||||||||
Payment of Other reserve constitution - Share-bases compensation plan | 1,618 | 1,779 | (1,618) | (1,779) | 42,319 | - | - | (42,319) | - | - | - | ||||||||||
Profit for the three-month period | - | 421,383 | 421,383 | ||||||||||||||||||
Balance at March 31, 2017 | 898,661 | 399,495 | 7,794 | 8,568 | 45,771 | 73,275 | 176,061 | - | (37,172) | (767,265) | 805,188 | ||||||||||
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Payment of Other reserve constitution - Share-bases compensation plan | - | - | - | - | (14,206) | - | - | - | - | - | (14,206) | ||||||||||
Profit for the nine-month period | - | - | - | - | - | - | - | - | - | 260,807 | 260,807 | ||||||||||
Other comprehensive results for the year | - | - | - | - | - | - | - | - | 9,075 | - | 9,075 | ||||||||||
Balance at December 31, 2017 | 898,661 | 399,495 | 7,794 | 8,568 | 31,565 | 73,275 | 176,061 | - | (28,097) | (506,458) | 1,060,864 | ||||||||||
Increase of Other reserve constitution - Share-bases compensation plan (Note 16) | - | - | - | - | - | - | - | 7,729 | - | - | 7,729 | ||||||||||
Payment of Other reserve constitution - Share-bases compensation plan (Note 16) | 272 | 299 | (272) | (299) | 7,729 | - | - | (7,729) | - | - | - | ||||||||||
Adjustment model of expected losses NIIF 9 - Change of accounting standard (Note 6) | - | - | - | - | - | - | - | - | - | (60,181) | (60,181) | ||||||||||
Profit for the three-month period | - | - | - | - | - | - | - | - | - | 1,450,818 | 1,450,818 | ||||||||||
Balance at March 31, 2018 | 898,933 | 399,794 | 7,522 | 8,269 | 39,294 | 73,275 | 176,061 | - | (28,097) | 884,179 | 2,459,230 |
The accompanying notes are an integral part of the Condensed Interim Financial Statements.
5
CONDENSED INTERIM FINANCIAL STATEMENTS |
Edenor S.A.
Condensed Interim Statement ofCash Flows
for the three-month period ended March 31, 2018
presented in comparative form
(Stated in thousands of pesos)
Note | 03.31.18 |
| 03.31.17 | ||
Cash flows from operating activities | |||||
Profit for the period | 1,450,818 | 421,383 | |||
Adjustments to reconcile net (loss) profit to net cash flows from operating activities: | |||||
Depreciation of property, plants and equipments | 8 & 25 | 128,319 | 97,474 | ||
Loss on disposals of property, plants and equipments | 26 | 832 | 2,693 | ||
Net accrued interest | 27 | 394,043 | 288,281 | ||
Exchange difference | 27 | 262,427 | (73,945) | ||
Income tax | 21 | 608,436 | 235,109 | ||
Allowance for the impairment of trade and other receivables, net of recovery | 25 | 179,451 | 50,373 | ||
Adjustment to present value of receivables | 27 | 70 | 74 | ||
Provision for contingencies | 26 | 131,306 | 66,270 | ||
Changes in fair value of financial assets | 27 | (138,496) | (58,250) | ||
Accrual of benefit plans | 37,571 | 25,170 | |||
Income from non-reimbursable customer contributions | 26 | (932) | (191) | ||
Other reserve constitution - Share bases compensation plan | 16 | 7,729 | 21,973 | ||
Changes in operating assets and liabilities: | |||||
Increase in trade receivables | (2,532,862) | (699,073) | |||
Increase (Decrease) in other receivables | (7,224) | 10,029 | |||
Increase (Decrease) in inventories | (93,673) | 23,816 | |||
Increase in deferred revenue | 72,212 | - | |||
Increase in trade payables | 1,751,728 | 143,519 | |||
Decrease in salaries and social security payable | (281,324) | (179,333) | |||
Decrease in benefit plans | (24,585) | (7,682) | |||
Increase (Decrease) in tax liabilities | 451,183 | (246,316) | |||
Increase in other payables | 331,663 | 31,504 | |||
Decrease in provisions | 25 | (10,723) | (12,947) | ||
Payment of Tax payable | (28,992) | - | |||
Net cash flows generated by operating activities | 2,688,977 | 139,931 |
6
CONDENSED INTERIM FINANCIAL STATEMENTS |
Edenor S.A.
Condensed Interim Statement ofCash Flows
for the three-month period ended March 31, 2018
presented in comparative form (continued)
(Stated in thousands of pesos)
Note | 03.31.18 | 03.31.17 | |||
Cash flows from investing activities | |||||
Payment of property, plants and equipments | (999,196) | (742,941) | |||
Collection of Financial assets | 531,260 | 390,322 | |||
Payments of Financial assets | (1,393,406) | (546,518) | |||
(Subscription) Redemtion net of money market funds | (771,015) | 570,845 | |||
Collection of receivables from sale of subsidiaries | 2,578 | 1,606 | |||
Net cash flows used in investing activities | (2,629,779) | (326,686) | |||
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Increase (Decrease) in cash and cash equivalents | 59,198 | (186,755) | |||
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Cash and cash equivalents at the beginning of year | 13 | 82,860 | 258,562 | ||
Exchange differences in cash and cash equivalents | 2,925 | (3,147) | |||
Increase (Decrease) in cash and cash equivalents | 59,198 | (186,755) | |||
Cash and cash equivalents at the end of the period | 13 | 144,983 | 68,660 | ||
Supplemental cash flows information | |||||
Non-cash activities | |||||
Financial costs capitalized in property, plants and equipments | 8 & 25 | (101,443) | (65,077) | ||
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Acquisitions of property, plant and equipment through increased trade payables | (224,404) | (158,112) |
The accompanying notes are an integral part of the Condensed Interim Financial Statements.
7
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 1 | General information
History and development of the Company
Edenor S.A. 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 S.A. 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 S.A.
The corporate purpose of Edenor S.A. 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 S.A. or through subsidiaries or related companies. In addition, the Company may act as trustee of trusts created under Argentine laws.
Note 2 | Regulatory framework
At the date of issuance of these condensed interim financial statements, the changes with respect to the situation reported by the Company as of December 31, 2017 are the following:
a) Electricity rate situation
On January 31, 2018, the ENRE issued Resolution No. 33/18, whereby it approves the CPD values, the values of the monthly installment to be applied in accordance with the provisions of ENRE Resolution No. 329/17, and the values of the Company’s electricity rate schedule applicable to consumption recorded as from February 1, 2018. Additionally, it is informed that the average electricity rate value amounts to $2.4627/kwh.
At the date of issuance of these condensed interim financial statements, the amount accrued for the monthly installment to be applied in accordance with the provisions of ENRE Resolution No. 33/18, amounts to $ 302.3 million, which is included in the “Revenue from sales – Sales of electricity” line item.
b) Framework Agreement
Due to the fact that at the date of these condensed interim financial statements the approvals by the Federal Government and the Government of the Province of Buenos Aires of a new Addendum to the Framework Agreement, which should have gone into effect on October 1, 2017, are still in process, no revenue for this concept which as of March 31, 2018, accumulates a total of $ 93.5 million, has been recognized.
8
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
c) Penalties
Due to the occurrence of an extraordinary situation that affected the provision of the service, covered by item 3.3 of Sub-appendix 4 to the Concession Agreement (more than 70,000 daily consumers affected for given periods of time), on April 23, 2018, the ENRE issued Resolution No. 118 pursuant to which the Company is instructed to calculate and pay a compensation to small-demand residential customers (residential Tariff 1 Consumers) for each interruption higher than or equal to 20 hours suffered during said periods. The impacts of these compensation amounts were quantified by the Company in $ 87 millions and recognized as of March 31, 2018.
At the date of issuance of these condensed interim financial statements, the Company is analyzing the possibility of challenging the aforementioned resolution to consider that the resolution in it does not conform for the applicable regulations.
Note 3 | Basis of preparation
These condensed interim financial statements for the three-month periodended March 31, 2018 have been prepared in accordance withIFRS issued by the IASB and IFRIC interpretations, incorporated by the CNV.
This condensed interim financial information must be read together with the Company’s Financial Statements as of December 31, 2017, which have been prepared in accordance withIFRS. These condensed interim financial statements are stated in thousands of Argentine pesos, unless specifically indicated otherwise. They have been prepared under the historical cost convention, as modified by the measurement of financial assets at fair value through profit or loss.
The condensed interim financial statements for the three-month periodended March 31, 2018 have not been audited; they have been reviewed by the Independent Accountant in accordance with ISRE 2,410, whose scope is substantially less than that of an audit performed in accordance with IFRS. The Company’s Management estimates that they include all the necessary adjustments to fairly present the results of operations for eachperiod. The result of operations for the three-month period endedMarch 31, 2018does not necessarily reflect the Company’s results in proportion to the full fiscal year.
Thesecondensed interimfinancial statements were approved for issue by the Company’s Board of Directors on May 10, 2018.
Comparative information
The balances as of December 31, 2017 and for the three-month period ended March 31, 2017, disclosed in these condensed interim financial statements for comparative purposes, arise from the financial statements as of those dates.
Note 4 | Accounting policies
The accounting policies adopted for these condensed interim financial statements are consistent with those used in the preparation of the financial statements for the last financial year, which ended on December 31, 2017, except for those mentioned below.
There are no new IFRS or IFRIC applicable as from this period that have a material impact on the Company’s condensed interim financial statements.
These condensed interim financial statements must be read together with the audited Financial Statements as of December 31, 2017 prepared under IFRS.
9
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 4.1 | New accounting standards, amendments and interpretationsissued by the IASB
IAS 19 “Employee benefits”: It introduces amendments to post-employment defined benefit plans in the case of a plan amendment, curtailment or settlement. The net defined benefit liability (asset) is remeasured using the current fair value of plan assets and current actuarial assumptions (including current market interest rates and other current market prices), that reflect: a) the benefits offered under the plan and the plan assets before the plan amendment, curtailment or settlement; and b) the benefits offered under the plan and the plan assets after the plan amendment, curtailment or settlement. The current period service cost for the period subsequent to the plan amendment, curtailment or settlement is calculated using the actuarial assumptions used to remeasure the defined benefit liability (asset) (rather than the actuarial assumptions determined at the beginning). The net interest after the plan amendment, curtailment or settlement is determined using the net defined benefit liability (asset) and the discount rate used to remeasure the liability (asset). The standard applies to plan amendments, curtailments or settlements that occur as from January 1, 2019, with earlier adoption permitted. The Company is currently analyzing the impact of the adoption of IAS 19; nevertheless, it is estimated that the application thereof will have no significant impact on the Company’s results of operations or its financial position.
Note 4.2 | 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 the period/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, along with revenue, when the Framework Agreement has been renewed for the period in which the service was provided.
The amounts thus determined are net of an allowance for the impairment of receivables. The future expected loss impairment rate is determined per customer category, based on the historical comparison of collections made and delinquent balances of each customer group, and applied to the total of the Company’s receivables. This change from the criterion used in the Financial Statements as of December 31, 2017, relates to the implementation of IFRS 9 as from January 1, 2018; see impact in Note 6.
Any debt arising from the bills for electricity consumption that remain unpaid 7 working days after their first due dates for small-demand (T1), medium-demand (T2) and large-demand (T3) customers is considered a delinquent balance.
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.
10
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
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.
There have been no significant changes in risk management policies since the last fiscal year end.
a. Market risks
i. Currency risk
As of March 31, 2018 and December 31, 2017, the Company’s balances in foreign currency are as follow:
Currency | Amount in foreign currency | Exchange rate (1) | Total | Total | ||||||
ASSETS |
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CURRENT ASSETS |
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Other receivables | USD | 1,406 | 20.049 | 28,189 | - | |||||
Financial assets at fair value through profit or loss | USD | 93,062 | 20.049 | 1,865,800 | 1,239,277 | |||||
Cash and cash equivalents | USD | 89 | 20.049 | 1,784 | 4,415 | |||||
EUR | 12 | 24.666 | 296 | 267 | ||||||
TOTAL CURRENT ASSETS | 94,569 | 1,896,069 | 1,243,959 | |||||||
TOTAL ASSETS | 94,569 |
| 1,896,069 | 1,243,959 | ||||||
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LIABILITIES |
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NON-CURRENT LIABILITIES |
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Borrowings | USD | 224,635 | 20.149 | 4,526,167 | 4,191,666 | |||||
TOTAL NON-CURRENT LIABILITIES | 224,635 |
| 4,526,167 | 4,191,666 | ||||||
CURRENT LIABILITIES |
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Trade payables | USD | 10,241 | 18.649 | 206,351 | 261,758 | |||||
EUR | 83 | 22.450 | 2,063 | 6,263 | ||||||
CHF | 25 | 19.168 | 527 | 10,466 | ||||||
NOK | 68 | 2.290 | 176 | 156 | ||||||
Borrowings | USD | 8,423 | 18.649 | 169,716 | 71,205 | |||||
TOTAL CURRENT LIABILITIES | 18,840 | 378,833 | 349,848 | |||||||
TOTAL LIABILITIES | 243,475 |
| 4,905,000 | 4,541,514 |
(1) The exchange rates used are the BNA exchange rates in effect as of March 31, 2018 for US Dollars (USD), Euros (EUR), Swiss Francs (CHF) and Norwegian Krones (NOK).
11
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
ii. 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).
The table below shows the Company’s financial assets measured at fair value as of March 31, 2018 and December 31, 2017:
LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | |||||
At Marzo 31, 2018 | ||||||||
Assets | ||||||||
Financial assets at fair value through profit or loss: | ||||||||
Government bonds | 1,866,218 | - | - | 1,866,218 | ||||
Money market funds | 2,553,896 | - | - | 2,553,896 | ||||
Total assets | 4,420,114 | - | - | 4,420,114 | ||||
Derivative financial instruments | - | - | - | - | ||||
At December 31, 2017 | ||||||||
Assets | ||||||||
Government bonds | 1,239,282 | - | - | 1,239,282 | ||||
Money market funds | 1,657,976 | - | - | 1,657,976 | ||||
Total assets | 2,897,258 | - | - | 2,897,258 | ||||
Liabilities | ||||||||
Derivative financial instruments | - | 197 | - | 197 | ||||
Total liabilities | - | 197 | - | 197 |
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 arises mainly from its 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 March 31, 2018 and December 31, 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.
12
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
In this regard, on April 12, 2018, the Company entered into a coverage operation with Citibank London, with the aim of fix the financial cost subject to variable rate of interest amounts that the Company must pay during the period October 2018 to October 2020, corresponding to the loan taken from the ICBC Bank (Note 22 to the Financial Statements as of December 31, 2017).
Note 6 | Critical accounting estimates and judgments
The preparation of thecondensed interimfinancial 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 condensed interim financial statements.
In the preparation of these condensed interim financial statements, there were no changes in either the critical judgments made by the Company when applying its accounting policies or the information sources of estimation uncertainty with respect to those applied in the Financial Statements for the year ended December 31, 2017, except for the following:
Allowances for the impairment of receivables:
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 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:
13
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
For such purpose, the adjustments determined as of December 31, 2017 are as follow:
|
| Number of days | ||||||||
|
| 0 -30 |
| 30-60 |
| 60-90 |
| 90-120 |
| 120-150 |
Loss expected porcentage |
| 8% |
| 12% |
| 19% |
| 26% |
| 59% |
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.
Trade receivables are derecognized when there is no reasonable expectation of their recovery. Any debt arising from the bills for electricity consumption that remain unpaid 7 working days after their first due dates for small-demand (T1), medium-demand (T2) and large-demand (T3) customers is regarded by the Company as a delinquent balance.
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.
Note 7 | Contingencies and lawsuits
At the date of issuance of these condensed interim financial statements, there are no significant changes with respect to the situation reported by the Company in the Financial Statements as of December 31, 2017.
14
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 8 | Property, plant and equipment
| Lands and buildings | Substations | High, medium and low voltage lines | Meters and Transformer chambers and platforms | Tools, Furniture, vehicles, equipment, communications and advances to suppliers | Construction in process | Supplies and spare parts | Total | ||||||||
Cost | 300,914 | 2,512,243 | 7,080,373 | 2,866,259 | 1,447,112 | 5,008,770 | 55,448 | 19,271,119 | ||||||||
Accumulated depreciation | (72,168) | (674,135) | (2,266,848) | (991,967) | (453,980) | - | - | (4,459,098) | ||||||||
Net amount 12.31.17 | 228,746 | 1,838,108 | 4,813,525 | 1,874,292 | 993,132 | 5,008,770 | 55,448 | 14,812,021 | ||||||||
Additions | - | - | - | - | 54,917 | 861,444 | 12,025 | 928,386 | ||||||||
Disposals | - | - | - | (1,051) | 219 | - | - | (832) | ||||||||
Transfers | 88,300 | 26,659 | 389,940 | 51,281 | (32,189) | (520,298) | (3,693) | - | ||||||||
Depreciation for the period | (6,489) | (16,841) | (44,256) | (23,126) | (37,607) | - | - | (128,319) | ||||||||
Net amount 03.31.18 | 310,557 | 1,847,926 | 5,159,209 | 1,901,396 | 978,472 | 5,349,916 | 63,780 | 15,611,256 | ||||||||
Cost | 389,214 | 2,538,902 | 7,470,313 | 2,916,315 | 1,468,453 | 5,349,916 | 63,780 | 20,196,893 | ||||||||
Accumulated depreciation | (78,657) | (690,976) | (2,311,104) | (1,014,919) | (489,981) | - | - | (4,585,637) | ||||||||
Net amount 03.31.18 | 310,557 | 1,847,926 | 5,159,209 | 1,901,396 | 978,472 | 5,349,916 | 63,780 | 15,611,256 |
· During the period ended March 31, 2018, direct costs capitalized amounted to $ 171.1 million.
· Financial costs capitalized for the period ended March 31, 2018 amounted to $ 101.4 million.
15
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
| Lands and buildings | Substations | High, medium and low voltage lines | Meters and Transformer chambers and platforms | Tools, Furniture, vehicles, equipment, communications and advances to suppliers | Construction in process | Supplies and spare parts | Total | ||||||||
Cost | 235,709 | 2,048,014 | 6,024,954 | 2,523,084 | 1,265,502 | 3,040,451 | 162,088 | 15,299,802 | ||||||||
Accumulated depreciation | (69,097) | (617,062) | (2,119,167) | (907,145) | (390,341) | - | - | (4,102,812) | ||||||||
Net amount 12.31.16 | 166,612 | 1,430,952 | 3,905,787 | 1,615,939 | 875,161 | 3,040,451 | 162,088 | 11,196,990 | ||||||||
Additions | - | - | - | - | 33,795 | 726,366 | 213 | 760,374 | ||||||||
Disposals | (145) | - | (1,878) | (670) | - | - | - | (2,693) | ||||||||
Transfers | 12,714 | 49,485 | 250,995 | 56,145 | (22,191) | (347,148) | - | - | ||||||||
Depreciation for the period | (3,956) | (13,518) | (37,890) | (20,172) | (21,938) | - | - | (97,474) | ||||||||
Net amount 03.31.17 | 175,225 | 1,466,919 | 4,117,014 | 1,651,242 | 864,827 | 3,419,669 | 162,301 | 11,857,197 | ||||||||
Cost | 248,141 | 2,097,499 | 6,265,111 | 2,578,435 | 1,276,490 | 3,419,669 | 162,301 | 16,047,646 | ||||||||
Accumulated depreciation | (72,916) | (630,580) | (2,148,097) | (927,193) | (411,663) | - | - | (4,190,449) | ||||||||
Net amount 03.31.17 | 175,225 | 1,466,919 | 4,117,014 | 1,651,242 | 864,827 | 3,419,669 | 162,301 | 11,857,197 |
· During the period ended March 31, 2017, direct costs capitalized amounted to $ 74.3 million.
· Financial costs capitalized for the period ended March 31, 2017 amounted to $ 65.1 million.
16
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 9 | Other receivables
Note | 03.31.18 | 12.31.17 | |||
Non-current: | |||||
- | - | ||||
Financial credit | 35,865 | 37,019 | |||
Related parties | 29.d | 5,236 | 5,428 | ||
Total Non-current | 41,101 | 42,447 | |||
Current: | |||||
Prepaid expenses | 16,089 | 4,986 | |||
Advances to suppliers | 9,512 | 6,631 | |||
Advances to personnel | 1,492 | 2,230 | |||
Security deposits | 10,824 | 10,327 | |||
Financial credit | 11,621 | 11,621 | |||
Receivables from electric activities | 103,686 | 114,561 | |||
Related parties | 29.d | 1,652 | 1,093 | ||
Guarantee deposits on derivative financial instruments | - | 60,049 | |||
Judicial deposits | 20,074 | 16,115 | |||
Other | 35 | 6 | |||
Allowance for the impairment of other receivables | (81,588) | (27,002) | |||
Total Current | 93,397 | 200,617 |
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:
03.31.18 | 03.31.17 | ||||
Balance at beginning of the period | 27,002 | 34,699 | |||
Increase | 54,586 | - | |||
Recovery | - | (12,980) | |||
Balance at end of the period | 81,588 | 21,719 |
Note 10 | Trade receivables
03.31.18 | 12.31.17 | ||||
Current: | |||||
Sales of electricity - Billed | 4,692,401 | 2,931,339 | |||
Sales of electricity – Unbilled | 3,806,537 | 2,982,677 | |||
Framework Agreement | 156,412 | 156,412 | |||
Fee payable for the expansion of the transportation and others | 22,966 | 22,994 | |||
Receivables in litigation | 52,306 | 44,288 | |||
Allowance for the impairment of trade receivables | (633,975) | (458,853) | |||
Total Current | 8,096,647 | 5,678,857 |
The carrying amount of the Company’s trade receivables approximates their fair value.
17
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
The roll forward for the impairment of financial asset is as follows:
03.31.18 | 03.31.17 | ||||
Balance at beginning of the period | 458,853 | 259,682 | |||
Increase | 206,907 | 63,353 | |||
Decrease | (31,785) | (6,918) | |||
Balance at end of the period | 633,975 | 316,117 |
(1) As of March 31, 2018, includes the impairment of financial assets for $ 82 million due to the application, of IFRS 9 as from January 1, 2018 (Note 6).
Note 11 | Financial assets at fair value through profit or loss
03.31.18 | 12.31.17 | ||||
Current | |||||
Government bonds | 1,866,218 | 1,239,282 | |||
Money market funds | 2,553,896 | 1,657,976 | |||
Total current | 4,420,114 | 2,897,258 |
Note 12 | Financial assets at amortized cost
03.31.18 | 12.31.17 | ||||
Current | |||||
Government bonds | - | 11,498 | |||
Time deposits | 405,494 | - | |||
Total Current | 405,494 | 11,498 |
Note 13 | Cash and cash equivalents
03.31.18 | 12.31.17 | 03.31.17 | ||||
Cash and banks | 144,983 | 82,860 | 43,032 | |||
Money market funds | - | - | 25,628 | |||
Total cash and cash equivalents | 144,983 | 82,860 | 68,660 |
Note 14 | Share capital and additional paid-in capital
Share capital | Additional paid-in capital | Total | ||||
Balance at December 31, 2016 | 1,314,518 | 3,452 | 1,317,970 | |||
Balance at December 31, 2017 | 1,314,518 | 31,565 | 1,346,083 | |||
Payment of Other reserve constitution - Share-bases compensation plan (Note 16) | - | 7,729 | 7,729 | |||
Balance at March 31, 2018 | 1,314,518 | 39,294 | 1,353,812 |
18
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
As of March 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.
Note 15 | Distribution of profits
The restrictions on the distribution of dividends by the Company are those provided for by the Business Organizations Law and the negative covenants established by the Corporate Notes program. As of March 31, 2018, the Company complies with the indebtedness ratio established in such program.
Note 16 | The Company’s Share-based Compensation Plan
As indicated in the Financial Statements as of December 31, 2017, the Company has decided to use the available treasury shares for the implementation of share-based compensation plans for its senior management against the achievement of the strategic objectives set annually.
At the date of issuance of these condensed interim financial statements, the Company awarded a total of 272,241 shares to executive directors and managers as additional remuneration for their performance in special processes developed during the 2018 period.
The fair value of the previously referred to shares at the award date, amounted to $ 11.1 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 17 | Trade payables
Note | 03.31.18 | 12.31.17 | |||
Non-current | |||||
Customer guarantees | 107,479 | 100,469 | |||
Customer contributions | 85,174 | 79,979 | |||
Funding contributions - substations | 60,452 | 60,452 | |||
Total Non-current | 253,105 | 240,900 | |||
Current | |||||
Payables for purchase of electricity - CAMMESA | 4,599,481 | 3,047,128 | |||
Provision for unbilled electricity purchases - CAMMESA | 5,001,881 | 4,547,990 | |||
Suppliers | 1,306,417 | 1,351,575 | |||
Advance to customer | 119,040 | 149,069 | |||
Customer contributions | 15,808 | 18,764 | |||
Discounts to customers | 4,871 | 8,384 | |||
Funding contributions - substations | 37,372 | 37,372 | |||
Related parties | 29.d | 4,228 | 35,021 | ||
Total Current | 11,089,098 | 9,195,303 |
The fair values of non-current customer contributions as of March 31, 2018 and December 31, 2017 amount to $ 92.6 million and $ 89.6 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.
19
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 18 | Other payables
Note | 03.31.18 | 12.31.17 | |||
Non-current | |||||
Loans (mutuum) with CAMMESA | 1,956,236 | 1,885,093 | |||
ENRE penalties and discounts | 4,180,334 | 3,885,767 | |||
Liability with FOTAE | 194,419 | 190,179 | |||
Payment agreements with ENRE | 64,991 | 73,189 | |||
Total Non-current | 6,395,980 | 6,034,228 | |||
Current | |||||
ENRE penalties and discounts | 438,530 | 288,210 | |||
Related parties | 29.d | 1,956 | 5,253 | ||
Advances for works to be performed | 13,576 | 13,576 | |||
Payment agreements with ENRE | 65,089 | 63,356 | |||
Total Current | 519,151 | 370,395 |
The carrying amount of the Company’s other financial payables approximates their fair value.
Note 19 | Borrowings
03.31.18 | 12.31.17 | |||
Non-current | ||||
Corporate notes (1) | 3,528,407 | 3,259,216 | ||
Borrowing | 997,760 | 932,450 | ||
Total non-current | 4,526,167 | 4,191,666 | ||
Current | ||||
Interest from corporate notes | 149,259 | 62,236 | ||
Interest from borrowing | 20,457 | 8,969 | ||
Total current | 169,716 | 71,205 |
(1) Net of debt repurchase/redemption and issuance expenses.
The fair values of the Company’s non-current borrowingsas of March 31, 2018 and December 31, 2017 amount approximately to $ 4,528.2 million and $ 4,122.9 million, respectively. Such values were calculated on the basis of the estimated market price of the Company’s Corporate Notes at the end of the eachperiod. The applicable fair value category is Level 1 category.
The carrying amount of the rest of the financial liabilities included in the Company’s trade payables approximates their fair value.
20
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 20 | Salaries and social security taxes payable
03.31.18 | 12.31.17 | |||
Non-current | ||||
Early retirements payable | 2,436 | 3,359 | ||
Seniority-based bonus | 124,129 | 116,296 | ||
Total non-current | 126,565 | 119,655 | ||
Current | ||||
Salaries payable and provisions | 687,066 | 1,064,106 | ||
Social security payable | 240,236 | 151,137 | ||
Early retirements payable | 4,515 | 4,808 | ||
Total current | 931,817 | 1,220,051 |
The carrying amount of the Company’s salaries and social security taxes payable approximates their fair value.
Note 21 | Income tax and tax on minimum presumed income / Deferred tax
At the date of issuance of these condensed interim financial statements, there are no significant changes with respect to the situation reported by the Company as of December 31, 2017, except for the following:
03.31.18 | 12.31.17 | |||
Non-Current | ||||
Income tax payable 2018 (1) | 791,705 | - | ||
Total non-current | 791,705 | - | ||
Current | ||||
Income tax payable 2017 | 618,293 | 618,293 | ||
Income tax payable | 618,293 | 618,293 | ||
Tax withholdings | (209,170) | (151,610) | ||
Total current | 409,123 | 466,683 |
(1) As of March 31, 2018, includes $ 3.3 million related to income tax on the transfer of shares (Note 16).
21
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
The detail of deferred tax assets and liabilities is as follows:
03.31.18 | 12.31.17 | ||
Deferred tax assets | |||
Inventories | 4,462 | 4,390 | |
Trade receivables and other receivables | 181,489 | 110,041 | |
Trade payables and other payables | 1,291,546 | 1,182,315 | |
Salaries and social security payable | 37,757 | 34,615 | |
Benefit plans | 93,560 | 90,313 | |
Tax liabilities | 12,048 | 12,357 | |
Provisions | 243,445 | 208,804 | |
Deferred tax asset | 1,864,307 | 1,642,835 | |
Deferred tax liabilities | |||
Property, plants and equipments | (442,116) | (439,068) | |
Financial assets at fair value through profit or loss | (28,140) | (11,278) | |
Borrowings | (5,213) | (5,468) | |
Deferred tax liability | (475,469) | (455,814) | |
Net deferred tax assets | 1,388,838 | 1,187,021 |
The detail of the income tax expense is as follows:
|
| 03.31.18 |
| 03.31.17 |
Deferred tax | 201,817 | 70,413 | ||
Current tax | (810,253) | (305,522) | ||
Income tax expense |
| (608,436) |
| (235,109) |
|
|
|
| |
|
|
|
| |
03.31.18 |
| 03.31.17 | ||
Profit for the period before taxes |
| 2,059,254 |
| 656,492 |
Applicable tax rate |
| 30% |
| 35% |
Loss for the year at the tax rate | (617,776) |
| (229,772) | |
|
| |||
Non-taxable income | - | (5,337) | ||
Change in the income tax rate (1) | 9,340 | - | ||
Income tax expense | (608,436) | (235,109) |
(1) Refers to the change in the income tax rate in accordance with Law No. 27,430 enacted on December 29, 2017.
Note 22 | Tax liabilities
03.31.18 | 12.31.17 | |||
Current | ||||
Provincial, municipal and federal contributions and taxes | 493,271 | 398,032 | ||
VAT payable | 880,064 | 493,151 | ||
Tax withholdings | 80,805 | 88,781 | ||
SUSS withholdings | 3,134 | 3,515 | ||
Municipal taxes | 72,513 | 68,457 | ||
Tax regularization plan | 1,234 | 1,519 | ||
Total Current | 1,531,021 | 1,053,455 |
22
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 23 | Provisions
Non-current liabilities | Current liabilities | |||
Contingencies | ||||
At 12.31.17 | 598,087 | 129,258 | ||
Increases | 103,227 | 28,079 | ||
Decreases | (8) | (10,715) | ||
At 03.31.18 | 701,306 | 146,622 | ||
At 12.31.16 | 341,357 | 87,912 | ||
Increases | 36,472 | 29,798 | ||
Decreases | (4) | (12,943) | ||
At 03.31.17 | 377,825 | 104,767 |
Note 24 | Revenue from sales
03.31.18 |
| 03.31.17 | ||
Sales of electricity (1) | 10,963,575 | 5,332,301 | ||
Right of use on poles | 35,385 | 28,135 | ||
Connection charges | 8,559 | 5,725 | ||
Reconnection charges | 3,839 | 474 | ||
Total Revenue from sales | 11,011,358 | 5,366,635 |
(1) As of March 31, 2018, the amount accrued for the monthly installment to be applied in accordance with the provisions of ENRE Resolution No. 33/18 amounts to $ 302.3 million.
23
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 25 | 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 | 748,260 | 136,301 | 151,054 | 1,035,615 | ||||
Pension plans | 27,146 | 4,945 | 5,480 | 37,571 | ||||
Communications expenses | 8,183 | 49,023 | 3,897 | 61,103 | ||||
Allowance for the impairment of trade and other receivables | - | 179,451 | - | 179,451 | ||||
Supplies consumption | 95,366 | - | 13,925 | 109,291 | ||||
Leases and insurance | 108 | - | 33,617 | 33,725 | ||||
Security service | 11,500 | 47 | 33,179 | 44,726 | ||||
Fees and remuneration for services | 253,816 | 184,910 | 145,840 | 584,566 | ||||
Public relations and marketing | - | - | 2,207 | 2,207 | ||||
Advertising and sponsorship | - | - | 1,137 | 1,137 | ||||
Reimbursements to personnel | 16 | 9 | 73 | 98 | ||||
Depreciation of property, plants and equipments | 102,224 | 14,584 | 11,511 | 128,319 | ||||
Directors and Supervisory Committee members’ fees | - | - | 4,260 | 4,260 | ||||
ENRE penalties | 312,408 | 62,790 | - | 375,198 | ||||
Taxes and charges | - | 86,034 | 3,989 | 90,023 | ||||
Other | 94 | 53 | 1,303 | 1,450 | ||||
At 03.31.18 | 1,559,121 | 718,147 | 411,472 | 2,688,740 |
The expenses included in the chart above are net of the Company’s own expenses capitalized in Property, plant and equipment as of March 31, 2018 for $ 171.1 million.
Description | Transmission and distribution expenses | Selling expenses | Administrative expenses | Total | ||||
Salaries and social security taxes | 768,857 | 131,174 | 141,479 | 1,041,510 | ||||
Pension plans | 18,581 | 3,170 | 3,419 | 25,170 | ||||
Communications expenses | 5,509 | 41,418 | 3,074 | 50,001 | ||||
Allowance for the impairment of trade and other receivables | - | 50,373 | - | 50,373 | ||||
Supplies consumption | 49,689 | - | 10,718 | 60,407 | ||||
Leases and insurance | 104 | - | 24,665 | 24,769 | ||||
Security service | 17,632 | 184 | 19,135 | 36,951 | ||||
Fees and remuneration for services | 148,835 | 114,796 | 108,377 | 372,008 | ||||
Public relations and marketing | - | - | 3,766 | 3,766 | ||||
Advertising and sponsorship | - | - | 1,940 | 1,940 | ||||
Reimbursements to personnel | 6 | 5 | 149 | 160 | ||||
Depreciation of property, plants and equipments | 80,226 | 12,674 | 4,574 | 97,474 | ||||
Directors and Supervisory Committee members’ fees | - | - | 2,920 | 2,920 | ||||
ENRE penalties | (41,683) | 90,054 | - | 48,371 | ||||
Taxes and charges | - | 54,761 | 4,568 | 59,329 | ||||
Other | 93 | 20 | 597 | 710 | ||||
At 03.31.17 | 1,047,849 | 498,629 | 329,381 | 1,875,859 |
(1) Transmission and distribution expenses include recovery for $ 413.7 million net of the charge for the period for $ 462.1 million.
The expenses included in the chart above are net of the Company’s own expenses capitalized in Property, plant and equipment as of March 31, 2017 for $ 74.3 million.
24
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 26 | Other operating expense, net
Note | 03.31.18 | 03.31.17 | |||
Other operating income | |||||
Services provided to third parties | 18,214 | 12,962 | |||
Commissions on municipal taxes collection | 12,439 | 9,261 | |||
Related parties | 29.a | 9,202 | 685 | ||
Income from non-reimbursable customer contributions | 932 | 191 | |||
Others | 10,812 | 279 | |||
Total other operating income | 51,599 | 23,378 | |||
Other operating expense | |||||
Gratifications for services | (13,217) | (12,029) | |||
Cost for services provided to third parties | (7,179) | (3,656) | |||
Severance paid | (2,469) | (3,556) | |||
Debit and Credit Tax | (103,444) | (66,241) | |||
Provision for contingencies | (131,306) | (66,270) | |||
Disposals of property, plant and equipment | (832) | (2,693) | |||
Other | (782) | (9,492) | |||
Total other operating expense | (259,229) | (163,937) | |||
Other operating expense, net | (207,630) | (140,559) | |||
Note 27 | Net financial expense
03.31.18 |
| 03.31.17 | ||
Financial income |
| |||
Commercial interest | 51,194 | 29,750 | ||
Financial interest | 40,641 | 29,694 | ||
Total financial income | 91,835 | 59,444 | ||
|
|
| ||
Financial expenses |
|
| ||
Interest and other (1) | (156,975) | (112,146) | ||
Fiscal interest | (1,127) | (1,089) | ||
Commercial interest | (327,776) | (234,490) | ||
Bank fees and expenses | (6) | (761) | ||
Total financial expenses | (485,884) | (348,486) | ||
|
|
| ||
Other financial results | ||||
Exchange differences | (262,427) | 73,945 | ||
Adjustment to present value of receivables | (70) | (74) | ||
Changes in fair value of financial assets (2) | 138,496 | 64,828 | ||
Other financial expense | (12,389) | (9,801) | ||
Total other financial expense | (136,390) | 128,898 | ||
Total net financial expense | (530,439) | (160,144) |
(1) Net of interest capitalized as of March 31, 2018 and 2017 for $ 101.4 million and $ 65.1 million, respectively.
(2) Includes changes in the fair value of financial assets on cash equivalents as of March 31, 2017 for $6.6 million, respectively.
25
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 28 | Basic and diluted earnings per share
Basic
The basic earnings per share is 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 March 31, 2018 and 2017, excluding common shares purchased by the Company and held as treasury shares.
The basic earnings per share coincides with the diluted earnings per share, inasmuch as the Company has issued neither preferred shares nor corporate notes convertible into common shares.
03.31.18 | 03.31.17 | |||
Profit for the period attributable to the owners of the Company | 1,450,818 | 421,383 | ||
Weighted average number of common shares outstanding | 898,664 | 897,115 | ||
Basic and diluted profit earnings per share – in pesos | 1.61 | 0.47 |
Note 29 | Related-party transactions
· The following transactions were carried out with related parties:
a. Income
Company | Concept | 03.31.18 | 03.31.17 | |||
Pampa | Service assemblies | 8,227 | 685 | |||
Computer services assistance | 975 | - | ||||
9,202 | 685 |
b. Expense
Company | Concept | 03.31.18 | 03.31.17 | |||
| ||||||
EASA D67 | Technical advisory services on financial matters | (12,389) | (9,801) | |||
SACME | Operation and oversight of the electric power transmission system | (15,980) | (13,021) | |||
Salaverri, Dellatorre, Burgio y Wetzler Malbran | Legal fees | - | (101) | |||
OSV | Hiring life insurance for staff | (3,401) | (3,333) | |||
Abelovich, Polano & Asoc. | Legal fees | (162) | - | |||
| (31,932) | (26,256) |
26
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
c. Key Management personnel’s remuneration
|
| |||
03.31.18 | 03.31.17 | |||
Salaries |
| 72,276 | 45,051 | |
| 72,276 | 45,051 |
· The balances with related parties are as follow:
d. Receivables and payables
| 03.31.18 | 12.31.17 | ||
Other receivables - Non current | ||||
SACME | 5,236 | 5,428 | ||
| 5,236 | 5,428 | ||
Other receivables - Current | ||||
SACME | 766 | 766 | ||
PESA | 886 | 327 | ||
1,652 | 1,093 |
Trade payables |
| |||
OSV |
| - | (54) | |
EASA (see note 43 to Financial Statement at December 31,2017) |
| (4,198) | (34,967) | |
PYSSA |
| (30) | - | |
| (4,228) | (35,021) | ||
| ||||
Other payables | ||||
SACME | (1,956) | (5,253) | ||
(1,956) | (5,253) |
27
CONDENSED INTERIM FINANCIAL STATEMENTS NOTES |
Note 30 |Events after the reporting period
a) 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.A.’s Annual Report and Financial Statements of 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;
b) Agreement with Related Parties
On April 26, 2018, the Company entered into a works agreement with Sociedad Argentina Construcción y Desarrollo Estratégico S.A. (“SACDE”), for the removal and/or moving of medium and low-voltage electrical facilities, owned by the Company, located on the path of the Pte. Perón Highway (Extension of Camino del Buen Ayre) that will be built by SACDE. In accordance with its concession agreement, the Company is obliged to carry out this type of removals at the expense of the party requesting them.
RICARDO TORRES |
Chairman |
28
Free translation from the original in Spanish for publication in Argentina
REPORT OF CONDENSED INTERIM FINANCIAL STATEMENTS´REVIEW
To the Shareholders, President and Directors
Empresa Distribuidora y Comercializadora Norte
Sociedad Anónima (Edenor S.A.)
Legal address: Avenida del Libertador 6363
Autonomous City of Buenos Aires
Tax Code No. 30-65511620-2
Introduction
We have reviewed the condensed interim financial statements of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.) (hereinafter “Edenor S.A.” or “the Company”) which includes the condensed interim statement of financialposition as of March 31, 2018, the related condensed interim statement of comprehensive income for the three months periods ended March 31, 2018, the related condensed interim statements of changes in equity and cash flows for the six months period then ended with the complementary selected notes.
The amounts and other information related to fiscal year 2017 and its interim periods, are part of the financial statements mention above and therefore should be considered in relation to those financial statements.
Directors´ responsibility
Company´s Board of Directors is responsible of preparation and presentation of the financial statements, in accordance with the International Financial Reporting Standards (IFRS) adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) ,as the applicable accounting framework and incorporated by the National Securities Commission (CNV), as they were approved by the International Accounting Standards Board (IASB), and, therefore, it’s responsible for the preparation and issuance of the condensed interim financial statements mentioned infirst paragraph in accordance with IAS 34 “Interim financial information”.
Scope of our review
Our review was limited to the application of the procedures established in International Standard on Review Engagements 2410 “Review of interim financial information performed by the independent auditor of the entity”, which was adopted as standard review in Argentina through Technical Pronouncement No. 33 of the Argentine Federation of Professional Councils in Economic Sciences as was approved by International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists in making inquiries of Company staff responsible for the preparation of the information included in the financial statements and the application of analytical procedures and other review procedures. This review is substantially less in scope than an audit in accordance of International Auditing Standards, consequently, this review does not allow us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, we do not express any opinion on the financial position, comprehensive income and cash flows of the Company.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial statements mentioned in the first paragraph of this report, are not prepared in all material respects, in accordance with IAS 34.
Report of compliance with regulations in force
In compliance with regulations in force, we report that:
a) the condensed interim financial statements of the Company, are pending transcription into the “Inventory and Balance Sheet” book and, insofar as concerns our field of competence, except as mentioned above, are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
b) the condensed interim financial statements of the company arise from accounting records kept in all formal respects in conformity with legal regulations;
c) we have read the summary of activity, and additional information to the notes of condensed interim financial statements required by article 68 of the Buenos Aires Stock Exchange Regulations and article 12 °, Chapter III, Title IV of the regulations of the National Securities Commission on which, as regards those matters that are within our competence, we have no observations to make;
d) atMarch 31, 2018 the liabilities accrued in favor of the Argentine Integrated Social Security System according to the Company’s accounting records amounted to $196,113,401, which were not yet due at that date.
Autonomous City of Buenos Aires, May 10, 2018
PRICE WATERHOUSE & CO. S.R.L.
(Partner) |
C.P.C.E.C.A.B.A. Tº 1 Fº 17 |
Dr. R. Sergio Cravero Public Accountant (UCA) C.P.C.E. City of Buenos Aires T° 265 F°92 |
Empresa Distribuidora y Comercializadora Norte S.A. | ||
By: | /s/ Leandro Montero | |
Leandro Montero | ||
Chief Financial Officer |