PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
(PAMPA ENERGY INC.)
Building #4
C1425DSR
Buenos Aires
Argentina
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___
registrant in connection with Rule 12g3-2(b): 82- .)
UNAUDITED CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2014 AND FOR THE NINE AND THREE
MONTH PERIODS THEN ENDED
PRESENTED WITH COMPARATIVE FIGURES
GLOSSARY OF TERMS
The following are not technical definitions, but they are helpful for the reader’s understanding of some terms used in the notes to the unaudited consolidated condensed interim financial statements of the Company.
Terms | Definitions | |||
AFIP | Federal Administration of Public Revenue | |||
AESEBA | AESEBA S.A. | |||
BLL | Bodega Loma La Lata S.A. | |||
CAMMESA | Compañía Administradora del Mercado Eléctrico Mayorista S.A. | |||
CC | Combined Cycle | |||
CIESA | Compañía de Inversiones de Energía S.A. | |||
Citelec | Compañía Inversora en Transmisión Eléctrica Citelec S.A. | |||
CPB | Central Piedra Buena S.A. | |||
CPCCN | Code of Civil and Commercial Procedure of the Nation | |||
CTG | Central Térmica Güemes S.A. | |||
CTLL | Central Térmica Loma La Lata S.A. | |||
CTP | Central Térmica Piquirenda | |||
CSJN | Supreme Court of Justice of the Nation | |||
CYCSA | Comunicación y Consumos S.A. | |||
DESA | Desarrollos Energéticos S.A. | |||
DRF | Debt Repayment Flow | |||
EASA | Electricidad Argentina S.A. | |||
EDEN | Empresa Distribuidora de Energía Norte S.A. | |||
Edenor | Empresa Distribuidora y Comercializadora Norte S.A. | |||
EGSSA | Emdersa Generación Salta S.A. | |||
ENDISA | Energía Distribuida S.A. | |||
ENRE | National Regulatory Authority of Electricity | |||
ES | Secretary of Energy | |||
FOCEDE | Fund works of consolidation and expansion of electrical distribution | |||
FOTAE | Works Administration Trust Transport for Electricity Supply |
1
GLOSSARY OF TERMS: (Continuation)
Terms | Definitions | |||
FONINVEMEM | Fund for Investments required to increase the electric power supply in the WEM | |||
Foundation | Pampa Energía Foundation committed to education | |||
GE | General Electric | |||
HA | Historical Availability | |||
HIDISA | Hidroeléctrica Diamante S.A. | |||
HINISA | Hidroeléctrica Los Nihuiles S.A. | |||
IEASA | IEASA S.A. | |||
IFRIC | International Financial Reporting Interpretations Committee | |||
IGMP | Minimum Notional Income Tax | |||
INDISA | Inversora Diamante S.A. | |||
INNISA | Inversora Nihuiles S.A. | |||
IPB | Inversora Piedra Buena S.A. | |||
LVFVD | Sales Liquidations with Maturity Date to be Defined | |||
MAT | WEM’s Forward Market | |||
MMC | Cost Monitoring Mechanism | |||
MAN Engines | MAN B & W Diesel model 18V32/40PGI | |||
IAS | International Accounting Standards | |||
IFRS | International Financial Reporting Standards | |||
Orígenes Retiro | Orígenes Seguros de Retiro S.A. | |||
RA | Recorded Availability | |||
PACOSA | Pampa Comercializadora S.A. | |||
PEPASA | Petrolera Pampa S.A. | |||
PEPCA | PEPCA S.A | |||
PISA | Pampa Inversiones S.A. | |||
Powerco | Powerco S.A. | |||
PP | Pampa Participaciones S.A. |
2
GLOSSARY OF TERMS: (Continuation)
Terms | Definitions | |||
PP II | Pampa Participaciones II S.A. | |||
PUREE | Rational Use of Electricity Programme | |||
Salaverri, Dellatorre, Burgio & Wetzler | Salaverri, Dellatorre, Burgio y Wetzler Malbran Abogados Sociedad Civil | |||
ST | Secretary of Labor | |||
The Company / Group | Pampa Energía S.A. and its subsidiaries | |||
TG | Gas Turbine | |||
TGS | Transportadora de Gas del Sur S.A. | |||
TA | Target Availability | |||
TV | Vapor Turbine | |||
Transba | Empresa de Transporte de Energía Eléctrica por Distribución Troncal de la Provincia de Buenos Aires Transba S.A. | |||
Transelec | Transelec Argentina S.A. | |||
Transener | Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. | |||
UMA | Undertaken Minimum Availability | |||
UTE Senillosa | Petrolera Pampa S.A. – Rovella Carranza – Gas y Petróleo de Neuquén, Unión Transitoria de Empresas Senillosa | |||
VCP | Short-term securities | |||
WEM | Wholesale Electricity Market |
3
UNAUDITED CONSOLIDATEDCONDENSED INTERIM STATEMENT
OF FINANCIAL POSITION
As of September 30, 2014
presented with comparative figures
(In Argentine Pesos (“$”) – unless otherwise stated)
Note |
| 09.30.2014 | 12.31.2013 | ||
ASSETS |
|
| |||
NON CURRENT ASSETS |
|
| |||
Investments in joint ventures | 8 |
| 200,202,547 |
| 188,644,285 |
Investments in associates | 9 |
| 134,455,266 |
| 134,774,654 |
Property, plant and equipment | 10 |
| 8,415,678,642 |
| 6,902,661,359 |
Intangible assets | 11 |
| 879,749,652 |
| 901,846,313 |
Biological assets |
|
| 1,904,685 |
| 1,935,296 |
Financial assets at fair value through profit and loss | 12 |
| 857,538,175 |
| 432,729,855 |
Deferred tax assets | 13 |
| 39,621,865 | 63,214,262 | |
Trade and other receivables | 14 |
| 401,363,214 | 366,685,679 | |
Total non current assets |
|
| 10,930,514,046 | 8,992,491,703 | |
|
|
|
| ||
CURRENT ASSETS |
|
|
|
| |
Biological assets |
|
| 147,145 | 564,431 | |
Inventories |
|
| 168,700,067 | 114,615,289 | |
Financial assets at fair value through profit and loss | 12 |
| 1,454,336,076 | 844,259,368 | |
Trade and other receivables | 14 |
| 2,593,707,268 | 2,256,967,076 | |
Cash and cash equivalents |
|
| 250,465,232 | 341,668,865 | |
Total current assets |
|
| 4,467,355,788 | 3,558,075,029 | |
Assets classified as held for sale |
|
| 11,987,500 | 11,987,500 | |
Total assets |
|
| 15,409,857,334 | 12,562,554,232 |
4
UNAUDITED CONSOLIDATEDCONDENSED INTERIM STATEMENT
OF FINANCIAL POSITION
(Continuation)
Note |
| 09.30.2014 | 12.31.2013 | ||
SHAREHOLDERS´ EQUITY |
|
|
| ||
Share capital |
|
| 1,314,310,895 | 1,314,310,895 | |
Additional paid-in capital |
|
| 342,105,475 | 263,489,911 | |
Legal reserve |
|
| 14,304,190 | - | |
Voluntary reserve |
|
| 271,779,611 | - | |
Reserve for directors’ options |
|
| 266,060,067 | 259,351,053 | |
Retained earnings |
|
| 15,182,431 | 286,083,801 | |
Other comprehensive loss |
|
| (24,385,321) | (24,385,321) | |
Equity attributable to owners of the company |
|
| 2,199,357,348 | 2,098,850,339 | |
Non-controlling interest |
|
| 256,890,126 | 775,971,764 | |
Total equity |
|
| 2,456,247,474 | 2,874,822,103 | |
|
| ||||
LIABILITIES |
|
| |||
NON CURRENT LIABILITIES |
|
| |||
Trade and other payables | 16 |
| 1,746,338,739 | 1,295,851,077 | |
Borrowings | 17 |
| 3,836,661,403 | 2,924,530,436 | |
Deferred revenues |
|
| 96,333,031 | 33,665,717 | |
Salaries and social security payable |
|
| 31,521,949 | 25,959,305 | |
Defined benefit plans |
|
| 140,826,975 | 136,521,808 | |
Deferred tax liabilities | 13 |
| 364,183,540 | 416,561,631 | |
Taxes payable |
|
| 191,141,688 | 150,095,508 | |
Provisions | 18 |
| 122,366,250 | 91,464,804 | |
Total non current liabilities |
|
| 6,529,373,575 | 5,074,650,286 | |
| |||||
CURRENT LIABILITIES |
| ||||
Trade and other payables | 16 |
| 5,027,537,842 | 3,098,555,391 | |
Borrowings | 17 |
| 517,274,987 | 753,571,799 | |
Deferred revenues |
|
| 763,684 | - | |
Salaries and social security payable |
|
| 623,460,178 | 501,445,076 | |
Defined benefit plans |
|
| 27,903,090 | 8,552,119 | |
Taxes payable |
|
| 211,587,636 | 239,718,270 | |
Derivative financial instruments |
|
| 3,685,000 | - | |
Provisions |
|
| 12,023,868 | 11,239,188 | |
Total current liabilities | 18 |
| 6,424,236,285 | 4,613,081,843 | |
Total liabilities |
|
| 12,953,609,860 | 9,687,732,129 | |
Total liabilities and equity |
|
| 15,409,857,334 | 12,562,554,232 |
The accompanying notes are an integral part of these condensed interim financial statements.
5
UNAUDITED CONSOLIDATED CONDENSED INTERIM
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the nine and three month periods ended September 30, 2014
presented with comparative figures
(In Argentine Pesos (“$”) – unless otherwise stated)
|
|
| Nine months to |
| Three months to | ||||
| Note |
| 09.30.2014 | 09.30.2013 |
| 09.30.2014 | 09.30.2013 | ||
|
|
|
|
|
|
|
| ||
Sales | 19 |
| 4,542,655,355 | 3,958,729,869 |
| 1,621,298,406 | 1,427,665,241 | ||
Cost of sales | 20 |
| (4,384,760,412) | (4,163,973,850) |
| (1,573,156,921) | (1,452,161,763) | ||
Gross profit (loss) |
|
| 157,894,943 | (205,243,981) |
| 48,141,485 | (24,496,522) | ||
|
|
|
|
|
|
|
| ||
Selling expenses | 21 |
| (506,274,060) | (449,912,580) |
| (210,028,718) | (159,457,056) | ||
Administrative expenses | 22 |
| (591,814,841) | (383,067,094) |
| (187,129,154) | (120,087,507) | ||
Other operating income | 23 |
| 171,079,185 | 280,171,680 |
| 56,284,756 | 116,961,295 | ||
Other operating expenses | 23 |
| (249,937,847) | (142,571,679) |
| (98,656,112) | (61,672,274) | ||
Recovery of impairment of property, plant and equipment | 5 |
| 88,406,704 | - |
| 88,406,704 | - | ||
Share of profit (loss) of joint ventures | 8 |
| 7,791,702 | (10,380,821) |
| 10,500,236 | 2,837,303 | ||
Share of (loss) profit of associates | 9 |
| (319,388) | 1,455,140 |
| 1,656,369 | (2,701,701) | ||
Operating loss before Resolution ES No. 250/13 and ES Note No. 6852/13 and 4012/14 |
|
| (923,173,602) | (909,549,335) |
| (290,824,434) | (248,616,462) | ||
Higher Costs Recognition - Resolution ES No. 250/13 and ES Note No. 6852/13 and 4012/14 | 2 |
| 735,534,348 | 2,212,623,330 |
| - | - | ||
Operating (loss) income |
|
| (187,639,254) | 1,303,073,995 |
| (290,824,434) | (248,616,462) | ||
|
|
|
|
|
|
|
| ||
Financial income | 24 |
| 252,256,165 | 283,714,761 |
| 54,760,011 | 43,247,964 | ||
Financial cost | 24 |
| (841,697,251) | (598,045,361) |
| (283,204,165) | (323,266,245) | ||
Other financial results | 24 |
| 226,110,330 | (244,623,427) |
| 431,532,124 | (3,661,536) | ||
Financial results, net |
|
| (363,330,756) | (558,954,027) |
| 203,087,970 | (283,679,817) | ||
(Loss) Profit before income tax |
| (550,970,010) | 744,119,968 |
| (87,736,464) | (532,296,279) | |||
|
|
|
|
|
|
|
| ||
Income tax |
|
| (31,513,878) | 121,828,827 |
| (99,539,616) | 157,316,348 | ||
(Loss) Profit for the period from continuing operations |
|
| (582,483,888) | 865,948,795 |
| (187,276,080) | (374,979,931) | ||
Discontinued operations |
|
| - | (126,858,329) |
| - | (6,808,524) | ||
Total (loss) profit of the period |
|
| (582,483,888) | 739,090,466 |
| (187,276,080) | (381,788,455) |
6
UNAUDITED CONSOLIDATED CONDENSED INTERIM
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Continuation)
| Nine months to |
| Three months to | ||||||
Note |
| 09.30.2014 | 09.30.2013 |
| 09.30.2014 | 09.30.2013 | |||
Total (loss) profit of the period attributable to: |
|
|
|
|
|
| |||
Owners of the company |
|
| 15,182,431 | 384,642,489 |
| 95,597,116 | (160,610,005) | ||
Non - controlling interest |
|
| (597,666,319) | 354,447,977 |
| (282,873,196) | (221,178,450) | ||
|
|
| (582,483,888) | 739,090,466 |
| (187,276,080) | (381,788,455) | ||
|
|
|
|
|
|
| |||
Total profit (loss) of the period attributable to owners of the company: |
|
|
|
| |||||
Continuing operations |
|
| 15,182,431 | 470,340,934 |
| 95,597,116 |
| (157,380,417) | |
Discontinued operations |
|
| - | (85,698,445) |
| - |
| (3,229,588) | |
|
|
| 15,182,431 |
| 384,642,489 |
| 95,597,116 |
| (160,610,005) |
|
|
|
| ||||||
Earing (Loss) per share attributable to the equity holders of the company during the period |
|
|
|
|
| ||||
|
|
|
|
|
| ||||
Basic earning per share from continuing operations | 25 |
| 0.0116 |
| 0.3579 |
|
|
| |
Diluted earing per share from continuing operations | 25 |
| 0.0151 |
| 0.3579 |
|
|
| |
Basic and diluted loss per share from discontinued operations | 25 |
| - |
| (0.0652) |
|
The accompanying notes are an integral part of these condensed interim financial statements.
7
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
For the nine month period ended September 30, 2014
presented with comparative figures
(In Argentine Pesos (“$”) – unless otherwise stated)
| Attributable to owners | ||||||||||||||||||
Equity holders of the company |
| Retained earnings |
| Non-controlling interest | Total equity | ||||||||||||||
Share capital | Additional paid-in capital |
| Legal reserve | Voluntary reserve | Reserve for directors’ options | Other comprehensive (loss) income | Retained earnings (Accumulated losses) | Subtotal | |||||||||||
Balance as of December 31, 2012 | 1,314,310,895 |
| 1,018,352,216 |
| - |
| - |
| 250,405,701 |
| (10,753,372) |
| (771,796,574) |
| 1,800,518,866 |
| 529,796,278 |
| 2,330,315,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Reserve for directors’ options | - |
| - |
| - |
| - |
| 6,709,014 |
| - |
| - |
| 6,709,014 |
| - |
| 6,709,014 |
Accumulated losses absorptions - Shareholders’ meeting 04.26.2013 | - |
| (771,796,574) |
| - |
| - |
| - |
| - |
| 771,796,574 |
| - |
| - |
| - |
Dividends attributables to non-controlling interest | - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (15,467,679) |
| (15,467,679) |
Sale of subsidiaries | - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (63,481,292) |
| (63,481,292) |
|
|
|
|
|
|
|
|
|
| - | |||||||||
Profit for the nine-month period | - |
| - |
| - |
| - |
| - |
| - |
| 384,642,489 |
| 384,642,489 |
| 354,447,977 |
| 739,090,466 |
Comprehensive profit for the nine-month period | - | - | - | - | - | - | 384,642,489 | 384,642,489 | 354,447,977 | 739,090,466 | |||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance as of September 30, 2013 | 1,314,310,895 |
| 246,555,642 |
| - |
| - |
| 257,114,715 |
| (10,753,372) |
| 384,642,489 |
| 2,191,870,369 |
| 805,295,284 |
| 2,997,165,653 |
Reserve for directors’ options | - |
| - |
| - |
| - |
| 2,236,338 |
| - |
| - |
| 2,236,338 | - | 2,236,338 | ||
Sale of subsidiaries | - |
| - |
| - |
| - |
| - |
| - |
| - |
| - | (8,646,382) | (8,646,382) | ||
Sale of interest in subsidiaries | - |
| 7,698,689 |
| - |
| - |
| - |
| - |
| - |
| 7,698,689 | 20,941,588 | 28,640,277 | ||
Merging of subsidiaries | - |
| 9,235,580 |
| - |
| - |
| - |
| - |
| - |
| 9,235,580 | (9,251,951) | (16,371) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Loss for the complementary three-month period | - |
| - |
| - |
| - |
| - |
| - |
| (98,558,688) |
| (98,558,688) | (25,746,458) | (124,305,146) | ||
Other comprehensive loss for the complementary three-month period | - |
| - |
| - |
| - |
| - |
| (13,631,949) |
| - |
| (13,631,949) | (6,620,317) | (20,252,266) | ||
Comprehensive loss for the complementary three-month period | - | - | - | - | - | (13,631,949) | (98,558,688) | (112,190,637) | (32,366,775) | (144,557,412) | |||||||||
Balance as of December 31, 2013 | 1,314,310,895 | 263,489,911 | - | - | 259,351,053 | (24,385,321) | 286,083,801 | 2,098,850,339 | 775,971,764 | 2,874,822,103 |
8
UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
(Continuation)
Attributable to owners | |||||||||||||||||||
Equity holders of the company | Retained earnings | Non-controlling interest | Total equity | ||||||||||||||||
Share capital | Additional paid-in capital | Legal reserve | Voluntary reserve | Reserve for directors’ options | Other comprehensive (loss) income | Retained earnings (Accumulated losses) | Subtotal | ||||||||||||
Balance as of December 31, 2013 | 1,314,310,895 | 263,489,911 | - | - | 259,351,053 | (24,385,321) | 286,083,801 |
| 2,098,850,339 |
| 775,971,764 | 2,874,822,103 | |||||||
| - | - | - | - | - | - | - |
| - |
| - | ||||||||
Reserve for directors’ options | - |
| - |
| - |
| - |
| 6,709,014 |
| - |
| - |
| 6,709,014 |
| - |
| 6,709,014 |
Sale of interest in subsidiaries | - |
| 66,020,707 |
| - |
| - |
| - |
| - |
| - |
| 66,020,707 |
| 7,369,298 |
| 73,390,005 |
Change in interest in subsidiaries | - |
| 12,594,857 |
| - |
| - |
| - |
| - |
| - |
| 12,594,857 |
| 86,752,644 |
| 99,347,501 |
Dividends attributables to non-controlling interest | - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (15,537,261) |
| (15,537,261) |
Legal reserve constitution - | - |
| - |
| 14,304,190 |
| - |
| - |
| - |
| (14,304,190) |
| - |
| - |
| - |
Voluntary reserve constitution - Shareholders’ meeting 04.30.2014 | - |
| - |
| - |
| 271,779,611 |
| - |
| - |
| (271,779,611) |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Profit (Loss) for the nine-month period | - |
| - |
| - |
| - |
| - |
| - |
| 15,182,431 |
| 15,182,431 |
| (597,666,319) |
| (582,483,888) |
Comprehensive profit (loss) for the nine-month period | - | - | - | - | - | - | 15,182,431 | 15,182,431 | (597,666,319) | (582,483,888) | |||||||||
- |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| ||
Balance as of September 30, 2014 | 1,314,310,895 |
| 342,105,475 |
| 14,304,190 |
| 271,779,611 |
| 266,060,067 |
| (24,385,321) |
| 15,182,431 |
| 2,199,357,348 |
| 256,890,126 |
| 2,456,247,474 |
The accompanying notes are an integral part of these condensed interim financial statements.
9
UNAUDITED CONSOLIDATED CONDESED INTERIM
STATEMENT OF CASH FLOWS
For the nine month period ended September 30, 2014
presented with comparative figures
(In Argentine Pesos (“$”) – unless otherwise stated)
| Note |
| 09.30.2014 | 09.30.2013 | |
Cash flows from operating activities: |
|
|
| ||
Total (loss) profit for the period |
|
| (582,483,888) | 739,090,466 | |
Adjustments to reconcile net (loss) profit to cash flows provided by operating activities: |
|
|
|
| |
Income tax and minimum notional income tax |
|
| 31,513,878 | (121,828,827) | |
Accrued interest |
|
| 581,979,893 | 337,186,536 | |
Depreciations and amortizations | 20, 21 and 22 |
| 333,680,548 | 277,796,993 | |
Reserve for directors’ options | 22 |
| 6,709,014 | 6,709,014 | |
Recovery of impairment of property, plant and equipment | 5 |
| (88,406,704) | - | |
Constitution of accruals, net | 16,218,382 | 37,349,606 | |||
Constitution of provisions, net | 78,337,032 | 23,002,280 | |||
Share of profit of joint ventures and associates | 8 and 9 |
| (7,472,314) | 8,925,681 | |
Accrual of defined benefit plans | 20, 21 and 22 |
| 37,754,594 | 25,376,089 | |
Net foreing currency exchange difference | 24 |
| 696,349,211 | 431,210,404 | |
Results for discounted value measurement | 24 |
| (3,164,192) | 104,195,310 | |
Changes in the fair value of financial instruments | 24 |
| (869,125,623) | (222,096,070) | |
Result from repurchase of corporate bonds | 24 |
| (47,122,571) | (68,638,668) | |
Results from property, plant and equipment sale and decreases | 23 |
| (3,417,308) | 6,626,462 | |
Consumption of materials |
| 5,988,756 | 13,390,496 | ||
Recovery of other operative expenses |
| - | (13,002,444) | ||
Revenue recognition from CAMMESA finance |
| (13,051,870) | (13,051,856) | ||
Higher Costs Recognition - ES Resolution No. 250/13 and ES Notes No. 6852/13 and 4012/14 | 2 |
| (735,534,348) | (2,212,623,330) | |
Dividends income earned | 23 |
| (2,777,280) | (6,876,038) | |
Recognition of March Agreement |
| - | (85,177,042) | ||
Recovery of sales tax | 30 |
| (41,110,708) | - | |
Other finance results |
| 9,361,726 | 1,735,986 | ||
Other operating costs for contract termination |
| 11,366,548 | - | ||
Other |
| (309,164) | (6,071,453) | ||
Discontinued operations |
| - | 205,834,164 | ||
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
| ||
Increase in trade receivables and other receivables |
| (477,393,688) | (383,087,656) | ||
Increase in inventories |
| (54,171,229) | (16,969,761) | ||
Decreace (Increase) in biological assets |
| 417,286 | (702,312) | ||
Increase in trade and other payables |
| 336,552,379 | 68,346,546 | ||
Increase in deferred income |
| 63,430,998 | - | ||
Increase (Decrease) in salaries and social security payable |
| 127,561,284 | 19,236,024 | ||
Decrease in defined benefit plans |
| (14,098,457) | (11,416,656) | ||
(Decrease) Increase in taxes payable |
| (24,593,728) | 20,267,230 | ||
Decrease in provisions |
| (46,630,177) | (19,107,640) | ||
Funds obteinedfrom PUREE - ES Resolution No. 1037/07 |
| 352,204,712 | 338,122,760 | ||
Income tax paid |
| (659,705) | (3,576,496) | ||
Dividends paid to third parties in subsidiaries |
| (2,800,000) | (2,872,481) | ||
Seized funds | 30 |
| (2,350,335) | - | |
Subtotal before CAMMESA financing |
|
| (327,247,048) | (522,696,683) | |
Net increase from funds obtained - CAMMESA financing |
|
| 2,297,474,133 | 1,587,655,440 | |
Net cash generated by operating activities |
|
| 1,970,227,085 | 1,064,958,757 |
10
UNAUDITED CONSOLIDATED CONDESED INTERIM
STATEMENT OF CASH FLOWS(Continuation)
Proceeds from financial assets |
|
| 09.30.2014 | 09.30.2013 | |
Cash flows from investing activities: |
|
|
| ||
Purchases of property, plant and equipment acquisition |
|
| (1,581,604,526) | (800,844,367) | |
Purchases of financial assets at fair value |
|
| (1,000,479,804) | (140,313,152) | |
Purcahses of derivative financial instruments |
|
| (4,625,000) | - | |
Proceeds from property, plant and equipment sale |
|
| 2,280,944 | 230,547 | |
Proceeds from financial assets at fair value sale |
|
| 1,044,294,096 | 114,198,981 | |
Proceeds from financial assets' amortization |
|
| 2,885,082 | 127,498,224 | |
Proceeds from financial assets' interest |
|
| 369,178 | 1,353,623 | |
Proceeds from dividends |
|
| 2,777,280 | 12,996,407 | |
Proceeds from loans |
|
| 2,976,412 | 4,394,045 | |
Recovery(Subscription) of investment funds, net |
|
| (326,779,573) | (401,899,695) | |
Capital contribution in joint ventures |
|
| - | (205,386) | |
Recovery of advances to suppliers of property, plant and equipment |
|
| 274,360 | - | |
Discontinued operations |
|
| - | (105,301,000) | |
Net cash used in investing activities |
|
| (1,857,631,551) |
| (1,187,891,773) |
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
| |
Proceeds from borrowings |
|
| 913,274,408 | 578,043,980 | |
Payment of borrowings |
|
| (925,322,491) | (261,041,561) | |
Payment of borrowings' interests |
|
| (394,380,915) | (127,605,339) | |
Proceeds from sale of interest in subsidiaries |
|
| 68,856,035 | - | |
Capital contributions received from third parties in subsidirias |
|
| 98,997,500 | - | |
Paymentfor repurchase of financial debt |
|
| - | (52,839,985) | |
Discontinued operations |
|
| - | 25,388,000 | |
Net cash (used) generated by financing activities |
|
| (238,575,463) | 161,945,095 | |
|
|
|
|
| |
(Decrease) Increase in cash and cash equivalent |
|
| (125,979,929) |
| 39,012,079 |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the year |
|
| 341,668,865 |
| 156,647,003 |
Cash and cash equivalents at the beginning of the year included in assets classified as held for sale |
|
| - |
| 11,154,000 |
Foreing currency exchange difference generated by cash and cash equivalents |
|
| 34,776,296 |
| 31,945,870 |
(Decrease) Increase in cash and cash equivalents |
|
| (125,979,929) |
| 39,012,079 |
Cash and cash equivalents at the end of the period |
|
| 250,465,232 |
| 238,758,952 |
|
|
|
|
| |
Cash and cash equivalents at the end of the period in the statement of financial position |
|
| 250,465,232 | 219,813,952 | |
Cash and cash equivalents at the end of the period included in assets classified as held for sale |
|
| - | 18,945,000 | |
Cash and cash equivalents at the end of the period |
|
| 250,465,232 |
| 238,758,952 |
11
UNAUDITED CONSOLIDATED CONDESED INTERIM
STATEMENT OF CASH FLOWS(Continuation)
| 09.30.2014 | 09.30.2013 | |||
Non-cash significant transactions: |
|
|
|
|
|
Acquisition of property, plant and equipment through an increase in trade payables |
|
| (162,880,535) |
| (42,378,057) |
Borrowing costs capitalized in property, plant and equipment |
|
| (7,188,166) | (23,874,770) | |
Decrease in PUREE related liability (Res. ES No. 250/13 and Notes ES No. 6852/13 and 4012/14) |
|
| (168,425,807) | (1,394,304,728) | |
Decrease in financial assets at fair value from repurchase of Corporate Notes |
|
| 91,637,990 | 165,085,442 | |
Decrease in CAMMESA trade payable (Res. ES No. 250/13 and Notes ES No. 6852/13 and 4012/14) |
|
| (1,038,046,931) | - | |
Attachment of financial assets at fair value |
|
| (13,349,394) | - | |
Increase in financial assets at fair value from subsidiary sale |
|
| - | (333,994,287) |
The accompanying notes are an integral part of these condensed interim financial statements.
12
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 1: GENERAL INFORMATION
The Company is an integrated electricity company which, through its subsidiaries and joint ventures, is engaged in of the electricity generation, transmission and distribution in Argentina.
In the generation business, the Company has an installed capacity of approximately 2,217 MW, which accounts for approximately 7.1% of the installed capacity in Argentina.
In the transmission business, the Company joint-controls Citelec, which is the controlling company of Transener, that performs the operation and maintenance of the high-tension transmission network in Argentina which covers 12,214 km of lines of its own, as well as 6,159 km of high-tension lines belonging to Transba in the province of Buenos Aires. Both companies together carry 90% of the electricity in Argentina.
In the distribution business, the Company, through Edenor, distributes electricity among over 2.8 million customers throughout the northern region of Buenos Aires City, the north and northwest of Greater Buenos Aires.
In other sectors, the Company conducts financial investment operations, oil and gas exploration and exploitation, and it keeps investments in other companies that have complementary activities.
NOTE 2: REGULATORY FRAMEWORK
The main regulatory provisions affecting the electricity market and the activities of the company have been detailed in the financial statements for the year ended December 31, 2013, with the exception of the changes stated below.
2.1 Generation
The future development of the power generation activity could force the Government to modify adopted measures or introduce additional regulations. The impacts generated by the whole set of measures adopted as at the date of these financial statements the National Government on the Company and its subsidiaries’ financial, economic and cash position as at September 30, 2014 have been calculated based on the assessments and estimates made by the Company management as of the date of preparation of these unaudited consolidated condensed financial statements and should be interpreted considering these circumstances.
13
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
2.1.1 ES Res. No. 529/14 – Update of the remuneration scheme implemented by ES Res. No. 95/13
ES Res. No.529/14 dated May 23, 2014, which replaced exhibits I, II and III of ES Res. No. 95/13, provided for a retroactive updating —as from the economic transactions for the month of February, 2014— of the remuneration values contemplated in mentioned exhibits and modified fixed costs’ remuneration settlement as follows and that affect subsidiaries’ generation units:
i. Fixed Costs Remuneration:
Technology and scale | $/MW-HRP |
TG units with power (P) > 50 Mw | 50.00 |
TV units with power (P) < 100 Mw | 83.20 |
TV units with power (P) > 100 Mw | 59.40 |
HI units with power (P) < 120 Mw | 76.50 |
HI units with power (P) between 120 Mw and 300 Mw | 29.80 |
HI units with power (P) > 300 Mw | 21.30 |
The method for calculating the fixed costs remuneration to the generating agents comprised within the above-described scheme and having conventional thermal generation equipment (TG, TV and CC) will be variable based on the RA, the TA, the HA, and the time of the year.
A base percentage is defined, which is applied to the Fixed Costs Remuneration in accordance with the following values:
TV | June-August and December-February periods | March-May and September-November periods |
RA > 90% | 110% | 100% |
80% < RA ≤ 90% | 105% | 100% |
70% < RA ≤ 80% | 85% | 85% |
RA ≤ 70% | 70% | 70% |
TG | ||
RA > 90% | 110% | 100% |
80% < RA ≤ 90% | 105% | 100% |
70% < RA ≤ 80% | 85% | 85% |
RA ≤ 70% | 70% | 70% |
14
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
50% of the percentage difference between the generator's RA and HA will be added to or subtracted from the base rate; that is, for each percentage point variation in the generator’s RA as compared with its HA, half a percentage point will be applied to the Fixed Costs remuneration. The maximum and minimum values are those set forth for each period (maximum 110% and minimum 70%, as applicable).
For availability control purposes, the criteria set forth in ES Note No. 2053/13 will remain in force. HA values for each thermal group will be determined based on its availability recorded during the 2010-2013 period. At the end of each year, the result will be added to the base until reaching 5 rolling years.
ii. Variable Costs Remuneration:
Classification | Operating with: | |
Natural Gas | Liquid Fuels | |
$/MWh | ||
TG units with power (P) > 50 Mw | 26.80 | 46.90 |
TV units with power (P) < 100 Mw | 26.80 | 46.90 |
TV units with power (P) > 100 Mw | 26.80 | 46.90 |
Hydroelectric Units | $/MW-HRP |
HI units with power (P) < 120 Mw | 21.30 |
HI units with power (P) between 120 Mw and 300 Mw | 21.30 |
HI units with power (P) > 300 Mw | 21.30 |
iii. Additional Remuneration:
| Allocation | |
Generator $/MWh | Trust $/MWh | |
TG units with power (P) > 50 Mw | 9.40 | 6.20 |
TV units with power (P) < 100 Mw | 10.90 | 4.70 |
TV units with power (P) > 100 Mw | 9.40 | 6.20 |
HI units with power (P) < 120 Mw | 76.50 | 13.50 |
HI units with power (P) between 120 Mw and 300 Mw | 54.00 | 36.00 |
HI units with power (P) > 300 Mw | 54.00 | 36.00 |
iv. Maintenance Remuneration:
Besides the previously stated remuneration items, ES Res. No. 529/14 incorporates a new concept of “Remuneration for Non-Recurring Maintenance Works” (“Maintenance Remuneration”) applicable as from the economic transaction corresponding to February 2014 and calculated monthly based on the Total Generated Energy. Such remuneration will be implemented through LVFVDs and will be destined exclusively to the financing of major maintenance works, subject to the ES approval.
15
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
Technology and scale | Maintenance Remuneration ($/MWh) |
TG units with power (P) > 50 Mw | 24 |
TV units with power (P) < 100 Mw | 24 |
TV units with power (P) > 100 Mw | 24 |
Moreover, and in furtherance of the objective sought by ES Res. No. 95/13 of optimizing and minimizing costs in the supply of fuel to the WEM plants, it set forth the extension of the provisions of Section 8 of ES Res. No. 95/13 to generating, co-generating and self-generating agents the energy and power of which have been committed under ES Res. No. 1193/05 (FONINVEMEM), ES Res. No. 220/07 (WEM Supply Agreements) and ES Res. No. 1836/07, as well as to any other kind of energy supply agreement subject to a differential remuneration system, except for agreements under the Energy Plus Service passed by ES Res. No. 1281/06. Thus, among other effects, as these generators’ supply agreements terminate, the supply of such fuel will become centralized in CAMMESA, and the generator will not be entitled to renew such agreements.
It should be pointed out that for transaction purposes and to provide for the coverage of the agreements now subject to the provisions of Section 8 of ES Res. No. 95/13, the availability of the generating unit will be considered independently of fuel.
On July 14 and August 7, 2014, CTLL and CTG, respectively, applied for approval by the ES of maintenance works to be executed on the LDLATG02 unit in the case of CTLL and in the GUEMTV11 unit in the case of CTG, for an estimated amount of US$ 11.8 million and $ 7.2 million plus VAT in the case of CTLL and of US$ 10.3 million plus VAT and associated nationalization costs in the case of CTG, to be financed with resources resulting from the Maintenance Remuneration.
2.1.2 Receivables from MEM generators
As of September 30, 2014 and December 31, 2013 the Company and its generation subsidiaries have a consolidated receivable from CAMMESA which, with accrued interest and without considering adjustments for present value, amount to a total $ 668.3 and Ps 491.7 million, respectively, and are made up as follows:
a. LVFVDs allocated to FONINVEMEM for $ 61.3 and $ 69 million;
b. LVFVDs allocated to certain “MEM Supply Commitment Agreements Res. No. 724/08” amounting to $ 273.3 and 262.6 million;
c. LVFDVs allocated to the “Agreement 2008 – 2011” for $ 56.3 and 66.3 million;
d. LVFVDs accrued during fiscal year 2012 in the amount of $ 39.7 million respectively, which will remain wholly depreciated until the provisions of ES Res. No. 95/13 are implemented and their recoverable value may be assessed.
16
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
e. LVFVDs accrued during fiscal year 2013 for $18.6 million and accounts of undertaken contributions to the Trust pursuant to Res. No. 95/13 in the amount of $ 93.4 and $ 35.5 million respectively, which have not been recognized as income during this fiscal year due to the uncertainty of their collection. This is so because the ES has not yet implemented this trust since the passing of ES Res. No. 95/13 and, therefore, there is no reasonable certainty that the Company will recover this receivable.
f. LVFVDs for Maintenance Remuneration in the amount of $ 64.6 million, which have not been recognized as income due to the uncertainty of their collection, as the major maintenance works to be financed with the LVFVDs to be issued by CAMMESA are subject to approval by the ES.
g. LVFVDs for Maintenance Remuneration in the amount of $ 61.1 million for the early cancellation of the financing granted to conduct the major maintenance works itemized in Note 17.1.3.
2.1.3 New Generation Project. 2014 Thermal Generation Availability Increase Agreement
Recently, the National Government has submitted to generators a proposal for an agreement to the execution of a new thermal generation availability increase, through the application of LVFVDs and the generators own resources (the “2014 Agreement”). On September 5, 2014, the subsidiaries CTLL, CTG, CPB, HIDISA, HINISA and EGSSA (currently undergoing a merger process with CTG) (the “Generators”) entered into that agreement.
Conditional upon the meeting of certain conditions, the 2014 Agreement provided for an increase in CTLL’s Plant installed capacity by incorporating 115 MW of power with the installation of two engine generators and one high-efficiency gas turbine (generating 15 MW and 100 MW respectively) with an investment estimated at $ 750 million (the “Project”).
This Project will be financed as follows: i) with LVFVDs issued pursuant to ES Resolution No. 406/03 and not committed under other agreements; ii) with receivables from the Additional Remuneration to the Trust issued or to be issued until December 31, 2015 pursuant to ES Resolution No. 95/13 and amending ES Resolution No. 529/14 (jointly, the “Receivables”); and iii) with CTLL’s own funds.
In order to guarantee that funds equivalent to the Receivables are allocated to the Project’s execution, those funds will be transferred to a fund to be created by CAMMESA at the direction of the ES.
The ES will instruct CAMMESA to include the remuneration to be acknowledged for this new generation within the WEM’s economic transactions. In this sense, the remuneration for power equivalent to the percentage representing the amount of the Receivables to be allocated to the project by Generators over the total funds destined to the Project will be remunerated pursuant to ES Resolution No. 95/13. In turn, the remuneration for power equivalent to the percentage representing CTLL’s own contributions (additional to the Receivables) over the whole funds allotted to the Project, will be remunerated through a WEM Supply Commitment Agreement pursuant to ES Resolution No. 220/07.
The execution of the Project is conditional upon obtaining the guarantees necessary to support the provision of foreign equipment, materials and services requested by the contractors, as well as the entering into of the financing agreement required for the execution of the works and of the above-mentioned WEM Supply Agreement.
On October 27, 2014, the Generators and the ES entered into a Supplementary Agreement setting forth the specific conditions applicable to the execution of the Project. The most important aspects of the agreement are indicated below:
17
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
· The execution of a WEM Supply Agreement pursuant to ES Resolution No. 220/07 between CTLL and CAMMESA for the commercialization of part of the power of the new TG.
· The inclusion of the LVFVDs undertaken by Generators in CTLL’s CC closing project and in CTP’s project pending of payment as at the date hereof (hereinafter, the “Outstanding LVFVDs”) as CTLL’s own capital in order to determine the power committed under the above-described WEM Supply Agreement.
· The execution of a loan agreement with CAMMESA allowing for the financing of the Project’s works. The loan will be cancelled, at CTLL’s option, through a cash payment or the offsetting of receivables.
· The granting of the guarantees necessary for the issuance of the letters of credit required by the Project’s offshore contractors.
· The extension of CTLL’s Addendum to the Supply Agreement until the termination, in the year 2021, of the WEM Supply Agreement pursuant to ES Resolution No. 220/07 opportunely entered into with CAMMESA, which allows CTLL to sell up to 100% of the additional power resulting from the conversion of the plant into the CC system.
· Enter into an Addendum to CTP’s WEM Supply Agreement aiming to exclude the second stage of the project, which included this plant within the framework of the 2008-2011 Agreement.
· The suspension of all brought legal actions seeking the collection of the Outstanding LVFVDs. Once they are wholly cancelled, these legal actions will be waived.
Once these conditions precedent have been met, the subsidiaries will reestimate the recoverable value and/or the recognition of Receivables allocated to the Project.
2.2 Transmission
On February 14, 2014, Transener entered into Addendum III with CAMMESA, which stipulated as follows: i) the granting to Transener of a new loan in the amount of $ 785.8 million corresponding to receivables acknowledged by the ES and the ENRE on account of cost variations for the December, 2010- December, 2012 period; and ii) the assignment as collateral of the receivables recognized on account of higher costs as at December 31, 2012 pursuant to the Renewal Agreement and the Agreement in order to pay off the amounts collectable for the application of the new agreed extensions.
Furthermore, on September 2, 2014, Transener and Transba executed with CAMMESA the Mutual Contracts for the implementation of the 2013 and 2014 Renewal Agreements (the “New Mutual Contracts”), which stipulated as follows: i) that the Mutual Contracts, together with their Addendums I, II and III timely executed with CAMMESA, would be deemed duly performed; the granting to Transener and Transba of a new loan in the amount of $ 622.2 million and $ 240.7 million corresponding to receivables acknowledged by the ES and the ENRE on account of cost variations for the January 2013-May 2014 period; and iii) the assignment as collateral of the receivables recognized on account of higher costs as at May 31, 2014 pursuant to the Renewal Agreement in order to pay off the amounts collectable for the application of the executed New Mutual Contracts.
18
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
As of September 30, 2014, the results generated by the recognition of costs by the ES and the ENRE up to the amounts collected through Mutual Contracts have been accounted for in Transener and Transba’s unaudited condensed interim financial statements. Consequently, Transener has recorded revenues from sales amounting to $ 426.3 million and $ 94.7 million, as well as accrued interest for $ 151.4 million and $ 76.4 million for the nine month period ended September 30, 2014 and 2013, respectively. Likewise, Transba has disclosed revenues from sales amounting to $ 144.6 million and $ 77.5 million, and interest income amounting to $ 52.2 million and $ 49.9 million for the same periods, respectively. Liabilities for all disbursements received have been cancelled through the cession of receivables on recognize for higher costs pursuant to the Agreement and the Renewal Agreement.
2.3 Distribution
Penalties – Specific situations
Based on the provisions of ENRE Res. No. 1/14, the final amount of the compensation payable to Customers amounted to $ 84.6 million. As of September 30, 2014, part of that amount has already been credited to Customers.
Furthermore, in May 2014, Edenor and the ENRE entered into a payment agreement pursuant to which it was agreed that the penalties under litigation for a total of $ 8.7 million, plus interest for $4 million, would be paid in 12 monthly installments, maturing as from June 1, 2014. As of the date of issuance of these condensed interim financial statements, Edenor has already paid the first three installments.
PUREE – MMC
On June 24, 2014, the ES issued ES Note No. 4012/14 which, among other issues, extended the effects of ES Res. No. 250/13 and ES Note No. 6852/13 until March 31, 2014. In this regard, as of September 30, 2014, Edenor recorded $ 735.5 million and $ 108.2 million in the “Higher costs recognition - ES Res. No. 250/13 and ES Notes No. 6852/13 and 4012/14” and the “Financial income – Financial interest” line items of the Condensed Interim Statement of Comprehensive (Loss) Income, respectively.
Additionally, the aforementioned Note instructed CAMMESA to apply ES Res. No. 250/13 using for calculation purposes relating to March 31, 2014 the information provided by the ENRE in its Note No. 112,606 dated June 6, 2014. Therefore, Edenor has offset the remaining MMC original amounts (Receivable) subject to the issuance of LVFVD for $ 362.7 million against the trade payable Edenor has with CAMMESA for electricity purchases. In that regard, ENRE Note No. 112,606 recalculates MMC and PUREE values fully complying with the provisions of ES Res. No. 250/13.
Moreover, ES Note No. 4012/14 not only states that this measure is temporary and exceptional in nature but also establishes that the signing of an integral and instrumental agreement, or equivalent alternative, will be promoted in order to address the regulatory, economic, financial, quality-related and sustainability aspects of the public service, object of the concession, as well as the extension of the transitional period of the concession agreement until December 31, 2016.
19
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 2:(Continuation)
The impact of ES Res. No. 250/13 and ES Notes No. 6852/13 and 4012/14 on the Statement of financial position is summarized below:
| 2013 |
| 2014 |
|
| ||||
| ES Res No. 250/13 |
| ES Nota No. 6852/13 |
| Subtotal |
| ES Nota No. 4012/14 |
| Total |
Other credits |
|
|
|
|
|
|
|
| |
Cost Monitoring Mechanism | 2,254,951,435 |
| 723,629,643 |
| 2,978,581,078 |
| 735,534,348 |
| 3,714,115,426 |
Net interest CMM - PUREE | 172,938,704 |
| 24,569,902 |
| 197,508,606 |
| 108,217,852 |
| 305,726,458 |
Other payables - PUREE | (1,387,036,693) |
| (274,067,026) |
| (1,661,103,719) |
| (168,425,807) |
| (1,829,529,526) |
Trade payables - CAMMESA | (678,132,908) |
| (474,132,519) |
| (1,152,265,427) |
| (1,038,046,931) |
| (2,190,312,358) |
LVFVD to be issued | 362,720,538 |
| - |
| 362,720,538 |
| (362,720,538) |
| - |
Additionally, Edenor challenged and rejected debit notes for a cumulative total of $ 583.5 million relating to late payment charges, because in its opinion the delay in the payment of the amounts receivable is not attributable to Edenor.
On October 9, 2014, the ES issued Note SE No. 486/14 which extends the effects of Resolution SE No. 250/13 until August 31, 2014, as detailed in Note 40 to the condensed interim financial statements.
Temporary insufficiency of the revenue deriving from the FOCEDE
Due to the fact that the funds of the FOCEDE are insufficient to cover the estimated disbursements of the Investment Plan, Edenor has requested to the respective authorities that it be provided with financing assistance. This has been called Extraordinary Investment Plan.
Consequently, on September 26, 2014, the ES issued Resolution ES No. 65/2014, which establishes that the insufficiency of the revenue deriving from the FOCEDE will be covered by a Loan (Mutuum) to be entered into by and between EDENOR and CAMMESA, with credit in favor of the Stabilization Fund. The methodology and terms for the reimbursement of the loan will be duly determined by the ES, considering the application of an interest rate equivalent to the average yield obtained by the Entity Responsible for the Dispatch on the financial investments of such Fund. The implementation of the Mutuum is detailed in Note 36 to these condensed interim financial statements.
NOTE 3: BASIS OF PRESENTATION
These interim condensed consolidated financial statements for the nine and three month periods ended on September 30, 2014 and 2013 have been prepared in accordance with the provisions of IAS 34 "Interim Financial Reporting".
This unaudited consolidated condensed interim financial information should be read in conjunction with the consolidated financial statements of the Company as of December 31, 2013, which have been prepared in accordance with IFRS. These unaudited consolidated condensed interim financial statements are expressed in Argentine pesos. They have been prepared under the historical cost convention, modified by the measurement of financial assets at fair value.
20
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 3:(Continuation)
These unaudited consolidated condensed interim financial statements for the nine and three month periods ended September 30, 2014 and 2013 have not been audited. The Company’s management estimates they include all the necessary adjustments to present fairly the results of operations for each period. The income for the nine and three month periods ended September 30, 2014 and 2013, does not necessarily reflect in proportion the Company’s results for the complete year.
These unaudited consolidated condensed interim financial statements have been approved for their issuance by the Company’s Board of Directors on November 10, 2014.
Comparative information
Balances as of December 31, 2013 and for the nine and three month periods ended on September 30, 2013, included in these unaudited consolidated condensed interim financial statements for comparative purposes, are derived from the financial statements at those dates. Certain reclassifications have been made to those financial statements to keep the consistency in the presentation with the amounts of the current period.
NOTE 4:ACCOUNTING POLICIES
The accounting policies applied in these consolidated condensed interim financial statements are consistent with those used in the financial statements for the last fiscal year prepared under IFRSs, which ended on December 31, 2013, except for the changes described below.
4.1 Derivative Financial Instruments
Derivatives are initially recognized at their fair value on the derivative contract’s effective date. After their initial recognition, they are re-measured at their fair value.
The method used to recognize the resulting profit or loss depends on whether the derivative has been designated as a hedging instrument, and, if so, on the nature of the item being hedged. The Company has not designated any derivative as a hedging instrument; therefore, changes in their value are disclosed in “Changes in the fair value of financial instruments”, under “Other financial results”. However, the Company partially hedges its exchange rate risk through the execution of forward contracts denominated in U.S. dollars.
The fair value of derivative financial instruments traded in active markets is disclosed based on their quoted market prices. The fair value of financial instruments that are not traded in active markets is determined using different valuation techniques. The Company uses its critical judgment to select the most appropriate methods and to determine assumptions which are based mainly on the market conditions prevailing at the closing date of each period.
In order to cover for foreign-currency exchange rate fluctuations, as of September 30, 2014, the Company and Edenor keep a U.S. dollar purchasing position amounting to US$ 85.4 million at a contracted average exchange rate of $ 9.61, with maturities between October, 2014 and April, 2015.
21
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 4:(Continuation)
These contracts are guaranteed. The guarantees are disclosed under “other current receivables”, net of the result of the secured contracts. As of September 30, 2014, the economic impact of these operations resulted in net income in the amount of $ 0.3 million, which is disclosed under “other financial results” of the unaudited consolidated condensed interim Statement of comprehensive income.
4.2 Variable Compensation to Certain Officers
PEPASA has granted its Corporate Directors an Annual Variable Compensation (the "EBDA Compensation") for the performance of technical and administrative duties amounting to 7% of the EBDA (EBITDA less paid income tax, less total net financial costs, less interest on its own capital, considering an annual 10% dollar-denominated rate) accrued for each fiscal year in concordance the corresponding financial statements approved by the applicable PEPASA’s General Ordinary Shareholders Meeting.
PEPASA recognizes a provision (liability) and an expense for this EBDA Compensation based on the previously mentioned formula.
4.3 Share-based Payments to Certain Officers
PEPASA has granted to certain officers a compensation for services (payable in cash) based on the share value appreciation.
This compensation is recorded pursuant to the guidelines set forth in IFRS 2 - “Share-based Payments”. The fair value of the services received is measured through the appreciation of the share as from its initial public offering and includes both its intrinsic value (the share quotation value as at the closing date) and its value over time (the right to participate in future quotation increases until the date this right is actually exercised). The Black-Scholes financial valuation model was used to make this estimate, and the enforceability of the remuneration was taken into consideration.
The fair value of the amount payable for the compensation plan is accrued and acknowledged as an expense, with the resulting increase in liabilities, during the period in which employees have an unconditional right to payment. Liabilities are revalued on each balance date and at the settlement date. Any change in the fair value of liabilities is disclosed in profit or loss.
Note 33 to these Condensed Interim Financial Statements details the compensation conditions, the enforceability terms and the main variables taken into consideration in the valuation model.
4.4 New mandatory provisions, modifications and interpretations for fiscal years beginning January 1, 2013 and not early applied
The following provision applies to the Company as from this fiscal year, and has not had a significant impact on its financial position and operating results.
- IAS 36 (reviewed in 2013) - “Impairment of Assets” was issued in May, 2013, and modifies the disclosure requirements applicable to the recoverable value of impaired assets, if such value is based on their fair value less costs of disposal.
22
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 4:(Continuation)
- IFRIC 21 - "Levies" was issued in May, 2013, and provides guidance on when to recognize a liability for a levy imposed by the Government; it applies both to levies accounted for in accordance with IAS 37 - "Provisions, Contingent Liabilities and Contingent Assets", and those where the timing and amount of the levy is certain.
4.5 New mandatory provisions, modifications and interpretations not effective and not early applied
- IFRS 15, “Revenue from Contracts with Customers", was issued in May 2014 and applies to any annual reporting period beginning on or after January 1, 2017. This standard specifies how and when revenues should be recognized, and identifies the additional information the Company should disclose in its financial statements. The standard provides a single, principles based five-step model which will be applied to all contracts with customers. The Company is currently analyzing its effects; however, it estimates that its application will not have a significant impact on the Company’s operating results or financial position.
- IFRS 9 – “Financial Instruments”: This modification, which was issued in July 2014, covers all the phases of the IASB project to replace IAS 39 - “Financial Instruments: Recognition and Measurement”. These phases are the classification and measurement of instruments, impairment and hedging. This version adds a new impairment model based on expected losses and some minor modifications to the classification and measurement of financial assets. This new provision supersedes all previous versions of IFRS 9 and is effective for periods starting as from January 1, 2018. As at the transition date, the Company has adopted the first phase of IFRS 9.
4.6 Revenues recognition
Revenues from the electricity market
During this period, CTLL and CTG have not recognized the Maintenance Remuneration as income —which is to be allocated exclusively to the financing of major maintenance works— as income since the condition that it is probable that the economic benefits associated with the transaction will flow to the entity is not met, as the major maintenance works to be financed with the LVFVDs to be issued by CAMMESA are subject to approval by the ES and, therefore, there is no reasonable certainty that CTLL and CTG will collect the generated receivable.
NOTE 5: CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of these consolidated condensed interim financial statements requires the Company’s Management to make future estimates and assessments, to apply critical judgment and to establish assumptions affecting the application of accounting policies and the amounts of disclosed assets and liabilities, and income and expenses.
Mentioned estimates and judgments are evaluated on a continuous basis and are based on past experiences and other reasonable factors under the existing circumstances. Actual future results might differ from the estimates and evaluations made at the date of preparation of these unaudited consolidated condensed interim financial statements.
In the preparation of these unaudited consolidated condensed interim financial statements, management judgements on applying the Company’s accounting policies and sources of information used for the respective estimates are the same as those applied in the Consolidated Financial Statements for the year ended December 31, 2013, except as mentioned in Note 31 and as mentioned below:
23
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 5:(Continuation)
(a) Reversal of Property, Plant and Equipment Impairment in CPB
Long-lived assets are reviewed for impairment at the lowest level for which there are separately identifiable cash flows (cash generating units, or CGU).
Most of the Company’s main subsidiaries are CGUs, as they only have one main power generation plant (generation segment), power transmission network (transmission segment) or concession area for the distribution of electricity (distribution segment). Consequently, each subsidiary in these segments represents the lowest level of asset disaggregation generating independent cash flows. Assets subject to depreciation are reviewed for impairment when facts or circumstances show that their book value may be unrecoverable.
In order to evaluate if there is evidence of any event or circumstance which may affect a CGU, both external and internal sources of information are examined. Specific facts and circumstances are analyzed, such as the discount rate used in the projections of the future cash flows of each CGU and the business situation in view of economic and market factors, such as the cost of inventories; the regulatory framework for the energy industry (mainly the recognition of expected prices and expense offsetting mechanisms); projected capital investments, and the evolution of the energy demand.
An impairment loss is recognized when the book value of the asset exceeds its recoverable value. The recoverable amount is the higher of the asset’s value in use and its fair value less costs to sell. Any impairment loss will be allocated (to reduce the book value of the CGU's assets) as follows:
(a) firstly, to reduce the book value of goodwill assigned to the CGU, if any, and
(b) then, to the other assets of the unit (or group of units), prorated according to the book value of each asset in the unit (or group of units), provided the book value of the asset is not reduced below the higher of its fair value less costs to sell, its value in use, or zero.
(c) any impairment loss which may not be allocated to the specific asset will be proportionately distributed among the remaining assets making up the CGU.
The value in use of each CGU is estimated based on the present value of the future net cash flows they will generate. Company’s management uses cash flow projections approved by the Board of Directors that covers 5-year period extrapolated into a term consistent with the assets’ remaining useful life taking into consideration the appropriate discount rates. In order to calculate the fair value less the costs to sell, the Company management uses the estimated value of the future cash flows that a market player could generate from the applicable CGU less the costs necessary to perform the sale of the corresponding CGU.
24
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 5:(Continuation)
When estimating future cash flows, Company’s management is required to make critical judgments. Actual cash flows and values may significantly differ from the expected future cash flows and their related values obtained through discount techniques.
As from January 2012, CAMMESA, at the direction of the ES, cancelled the remuneration adjustments provided for by the “2008 – 2011 Agreement” in November, 2010. Furthermore, in the case of CPB, another change in the regulatory framework prevented the Company from continuing operating in the fuel oil purchase business, an activity which allowed it to obtain a margin on the fuel it acquired for generation purposes. Both measures have had a negative effect on the company’s generation of funds, which were insufficient to meet growing operating costs. The deterioration of CPB’s economic and financial situation, evidenced by operating losses, negative cash flows and a working capital deficit, resulted in a decrease in the plant’s reliability since it lacked the sufficient resources to continue bringing about the improvements necessary to keep the operating levels met during fiscal year 2011.
Therefore, as at September 30, 2012, CPB recorded on impairment losses amounting to $ 108.3 million for its Property, Plant and Equipment —which, net of the effect of the income tax, amounted to $ 70.4 million— as a result of the assessment of their recoverable value.
Impairment loss charges have been distributed on a pro rata basis in order to reduce the book value of the assets making up the CGU, taking into consideration the book value of each of the unit’s assets. After recognizing the impairment loss, the asset’s depreciation charges have been adjusted during the following fiscal years to systematically distribute its reviewed book value less any possible residual value through its remaining useful life.
Previously impaired non-financial assets are reviewed for a possible reversal of the impairment every time financial information is presented.
With the implementation of ES Resolution No. 95/13 and its amendment ES Resolution No. N° 529/14 —which defined a new remuneration scheme for the industry as from February 2013 and the later update of remunerative values effective as from February 2014, respectively— and the granting of financing by CAMMESA under advantageous conditions to CPB, which will allow to afford the cost of the capital investments necessary to recover the company’s plant operating capacity (Note 17.1.3), projections by CPB’s projections regarding the recoverability of its Property, Plant and Equipment and its deferred tax assets have been updated.
In view of this situation, CPB’s management has revealed its discounted cash flows considering a revenue increase exceeding by 10% cost increases as from the year 2017 (on account of the recognition of cost mismatches in respect to past income) and that tariff increases will be granted to offset future cost increases.
The remaining assumptions are detailed below:
i. Actual discount rate: 9.9%.
ii. Growth rate: 0%.
25
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 5:(Continuation)
iii. Plant’s availability factor: 86% on average, considering the execution of major maintenance works in the generating units.
iv. The collection of the maximum remuneration provided for fixed costs based on the provisions of item iii.
v. The fulfilment of the capital investments necessary to recover the plant’s operating capacity under normal availability conditions will take place during the next two years and will receive CAMMESA’s permanent financing, which will be repaid under the conditions detailed in Note 17.1.3.
In the light of the above conclusions, CPB CGU’s value in use determined based on the present value of future net cash flows was $ 274.4 higher than its book value. Therefore, CPB has wholly recovered the above-mentioned impairment losses which, net of accumulated depreciation, amounted to $ 88.4 million (recognized under “Recovery of Impairment of Property, Plant and Equipment” in the Statement of Comprehensive Income) and, net of the effect of the income tax, amounted to $ 57.5 million. The affected Property, Plant and Equipment items are lands, buildings, machines and generation equipment.
NOTE 6: FINANCIAL RISK MANAGEMENT
The Company’s activities are subject to several financial risks: market risk (including the exchange rate risk, the interest rate risk and the price risk), credit risk and liquidity risk.
No significant changes have arisen in risk management policies since the last year.
NOTE 7: INVESTMENTS IN SUBSIDIARIES
(a) Subsidiaries information
Unless otherwise indicated, the capital stock of the subsidiaries consists of common shares, each granting the right to one vote. The country of the registered office is also the principal place where the subsidiary develops its activities.
26
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 7:(Continuation)
|
|
|
|
| 09.30.2014 | 12.31.2013 | ||
|
| Country | Main activity | % Participation | % Participation | |||
BLL |
| Argentina |
| Winemaking | 100.00% | 100.00% | ||
CTG |
| Argentina |
| Generation | 90.42% | 90.42% | ||
CTLL |
| Argentina |
| Generation | 100.00% | 100.00% | ||
IEASA |
| Argentina |
| Investment | 100.00% | 100.00% | ||
INDISA |
| Argentina |
| Investment | 91.60% | 91.60% | ||
INNISA |
| Argentina |
| Investment | 90.27% | 90.27% | ||
IPB |
| Argentina |
| Investment | 100.00% | 100.00% | ||
PACOSA |
| Argentina |
| Distributor | 100.00% | 100.00% | ||
PEPASA(1) |
| Argentina |
| Oil | 49.79% | 100.00% | ||
PEPCA |
| Argentina |
| Investment | 100.00% | 100.00% | ||
Powerco(2) |
| Uruguay |
| Distributor | - | 100.00% | ||
PISA |
| Argentina |
| Investment | 100.00% | 100.00% | ||
PP |
| Argentina |
| Investment | 100.00% | 100.00% | ||
PP II |
| Argentina |
| Investment | 100.00% | 100.00% | ||
Transelec |
| Argentina |
| Investment | 100.00% | 100.00% |
(1)On November 6, 2013, the Board of Directors resolved to assign its preemptive rights on PEPASA’s capital stock increase to all the Company’s shareholders registered with Caja de Valores S.A. On January 8, 2014, PEPASA shareholders subscribed 17.8 million new shares in the exercise of their preemptive rights and 41.9 million new shares in the exercise of their accretion rights. The Company holdings were thus reduced to 49.99%. During the month of September, the Company sold 255,135 PEPASA shares, thus reducing its interest in this Company to 49.79%. However, the necessary conditions to keep PEPASA’s control are met.
(2)On March 7, 2014, CTLL’s Board of Directors resolved to approve the drafting and execution of the Prior Merger Commitment, whereby Powerco's merger into CTLL was agreed. Finally, on April 28, 2014, the Meeting of Shareholders approved the merger into CTLL of all Powerco’s assets and liabilities and June 3, 2014, the Definitive Merger Agreement was signed.
NOTE 8: INVESTMENTS IN JOINT VENTURES
| Note |
| 09.30.2014 | 09.30.2013 | |
At the beginning of the year |
|
| 188,644,285 | 192,315,761 | |
Capital increase | 27.h |
| - | 1,198,434 | |
Other increases |
|
| 3,766,560 | - | |
Share of profit (loss) |
|
| 7,791,702 | (10,380,821) | |
Al the end of the period |
|
| 200,202,547 | 183,133,374 |
The Company has a co-controlling interest in Citelec, Transener’s controlling company.
The percentage share is 50%. The stock capital is made up of common shares, each granting the right to one vote. It is registered in Argentina, which is also the principal place where it develops its activities.
27
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 8:(Continuation)
For the valuation, its Financial Statements as of September 30, 2014 have been used, which disclose the following items: Capital Stock in the amount of $ 553,342,861, profit for the period in the amount of $ 11,022,658 and Shareholders’ Equity in the amount of $ 459,774,069.
The following chart includes a reconciliation of the equity method value and the book value of the Company’s interest in it:
|
|
| 09.30.2014 | 09.30.2013 | |
Equity method |
|
| 137,954,534 | 120,901,923 | |
Adjustments(1) |
|
| 62,248,013 | 62,231,451 | |
Total investments in joint ventures |
|
| 200,202,547 | 183,133,374 |
(1) Includes adjustments for repurchase of corporate bonds and depreciation of property, plant and equipment.
NOTE 9: INVESTMENTS IN ASSOCIATES
|
| 09.30.2014 | 09.30.2013 | |
At the beginning of the year |
| 134,774,654 | 132,546,155 | |
Share of (loss) profit |
| (319,388) | 1,455,140 | |
At the end of the period |
| 134,455,266 | 134,001,295 |
The Company holds an interest in only one associated company. Through PEPCA, the Company has a 10% interest in CIESA, a company holding 51% ofTGS’s capital stock.TGS is the most important gas transportation company in the country, and it operates the biggest pipeline system in Latin America. In turn, it is the leading company in the production and marketing of natural gas liquids both for the domestic and the export market. It also provides comprehensive solutions in the natural gas area and, since 1998, TGS has also landed in the telecommunications area through its subsidiary Telcosur S.A.
The capital stock of the associated company is made up of common shares, each granting the right to one vote. The associated company is registered in Argentina, which is also the principal place where it develops its activities.
For the valuation of its interest in the associate, the financial statements as of September 30, 2014 have been used, which disclose the following items: Capital Stock in the amount of $ 638,819,000, losses for the period in the amount of $ 10,159,000 and Shareholders’ Equity in the amount of $ 1,261,082,000.
The following chart includes a reconciliation of the method equity value and the book value of the Company’s interest in them:
|
| 09.30.2014 | 09.30.2013 | |
Equity method |
| 99,635,770 |
| 99,181,799 |
Adjustments (1) |
| 34,819,496 |
| 34,819,496 |
Total investments in associates |
| 134,455,266 | 134,001,295 |
(1)Includes the increased value of investments in associated companies.
28
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 10: PROPERTY, PLANT AND EQUIPMENT
|
|
| Original Values |
|
| ||||||||||
Type of good |
| At the beginning |
| Increases |
| Decreases |
| Recovery of impairment |
| Discontinued operations |
| Transfers |
| At the end | |
|
|
|
| ||||||||||||
|
|
|
| ||||||||||||
Land |
| 15,077,235 | - | (10,294) | 9,501,305 | - | - | 24,568,246 | |||||||
Buildings |
| 310,958,995 | - | (2,386,174) | 29,995,108 | - | 17,166,741 | 355,734,670 | |||||||
Generation equipment and machinery |
| 2,180,490,926 | 3,789,154 | (3,432,128) | 108,099,213 | - | 14,497,724 | 2,303,444,889 | |||||||
Work and compulsory work performed |
| 7,533,912 | - | - | - | - | - | 7,533,912 | |||||||
High, medium and low voltage lines |
| 2,169,736,111 | - | (1,017,115) | - | - | 172,067,784 | 2,340,786,780 | |||||||
Substations |
| 991,708,824 | - | (4,434,394) | - | - | 63,213,570 | 1,050,488,000 | |||||||
Transforming chamber and platforms |
| 533,023,918 | - | (493,825) | - | - | 52,516,429 | 585,046,522 | |||||||
Meters |
| 603,539,430 | - | - | - | - | 79,356,272 | 682,895,702 | |||||||
Wells |
| 157,775,670 | 199,074,043 | - | - | - | - | 356,849,713 | |||||||
Casks |
| 89,571 | - | - | - | - | - | 89,571 | |||||||
Mineral property |
| 89,271,854 | 200,878,044 | - | - | - | - | 290,149,898 | |||||||
Gas plant |
| 1,386,447 | 1,391,769 | - | - | - | - | 2,778,216 | |||||||
Vehicles |
| 54,045,172 | 2,136,412 | (133,395) | - | - | 46,400,585 | 102,448,774 | |||||||
Furniture and fixtures and software equipment |
| 144,931,936 | 2,202,870 | (681,567) | - | - | 9,043,585 | 155,496,824 | |||||||
Communication equipments |
| 57,364,775 | 236,549 | (4,678) | - | - | (1,778,756) | 55,817,890 | |||||||
Materials and spare parts |
| 130,924,625 | 110,499,904 | (5,988,756) | - | - | 1,313,613 | 236,749,386 | |||||||
Tools |
| 17,358,250 | 319,958 | (13,439) | - | - | 9,727,126 | 27,391,895 | |||||||
Work in progress |
| 1,113,048,266 | 1,211,366,229 | - | - | - | (441,324,234) | 1,883,090,261 | |||||||
Advances to suppliers |
| 38,250,710 | 20,819,329 | (5,497,845) | - | - | (22,200,439) | 31,371,755 | |||||||
|
|
|
|
| - | - | - |
| |||||||
Total at 09.30.2014 |
| 8,616,516,627 | 1,752,714,261 | (24,093,610) | 147,595,626 | - | - | 10,492,732,904 | |||||||
Total at 09.30.2013 |
| 7,615,754,745 | 867,769,208 | (34,115,416) | - | (76,676,708) | - | 8,372,731,829 |
29
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 10: (Continuation)
|
|
| Depreciation | Net book values | |||||||||||||
Type of good |
| At the beginning |
| Decreases |
| Recovery of impairment |
| Discontinued operations |
| For the period |
| At the end |
| At the end |
| At 12.31.13 | |
|
|
|
|
| |||||||||||||
|
|
|
|
| |||||||||||||
Land |
| - | - | - | - | - | - | 24,568,246 | 15,077,235 | ||||||||
Buildings |
| (56,040,715) | 940,168 | (11,143,260) | - | (9,035,584) | (75,279,391) | 280,455,279 | 254,918,280 | ||||||||
Generation equipment and machinery |
| (345,777,704) | 775,031 | (48,045,662) | - | (77,600,640) | (470,648,975) | 1,832,795,914 | 1,834,713,222 | ||||||||
Work and compulsory work performed |
| (3,195,615) | - | - | - | (311,362) | (3,506,977) | 4,026,935 | 4,338,297 | ||||||||
High, medium and low voltage lines |
| (567,883,689) | 750,393 | - | - | (69,780,285) | (636,913,581) | 1,703,873,199 | 1,601,852,422 | ||||||||
Substations |
| (213,781,588) | 4,371,729 | - | - | (28,102,471) | (237,512,330) | 812,975,670 | 777,927,236 | ||||||||
Transforming chamber and platforms |
| (127,811,951) | 237,821 | - | - | (16,518,556) | (144,092,686) | 440,953,836 | 405,211,967 | ||||||||
Meters |
| (189,641,038) | - | - | - | (28,558,744) | (218,199,782) | 464,695,920 | 413,898,392 | ||||||||
Wells |
| (65,542,981) | - | - | - | (38,718,016) | (104,260,997) | 252,588,716 | 92,232,689 | ||||||||
Casks |
| (19,214) | - | - | - | (13,434) | (32,648) | 56,923 | 70,357 | ||||||||
Mineral property |
| (18,282,785) | - | - | - | (10,848,499) | (29,131,284) | 261,018,614 | 70,989,069 | ||||||||
Gas plant |
| (495,504) | - | - | - | (65,978) | (561,482) | 2,216,734 | 890,943 | ||||||||
Vehicles |
| (21,487,130) | 131,852 | - | - | (11,471,286) | (32,826,564) | 69,622,210 | 32,557,621 | ||||||||
Furniture and fixtures and software equipment |
| (65,091,861) | 320,811 | - | - | (16,352,634) | (81,123,684) | 74,373,140 | 79,840,496 | ||||||||
Communication equipments |
| (28,605,285) | 2,028 | - | - | (2,529,687) | (31,132,944) | 24,684,946 | 28,759,490 | ||||||||
Materials and spare parts |
| - | - | - | - | - | - | 236,749,386 | 130,924,625 | ||||||||
Tools |
| (8,956,741) | 13,371 | - | - | (1,543,168) | (10,486,538) | 16,905,357 | 8,401,509 | ||||||||
Work in progress |
| (1,241,467) | - | - | - | (102,932) | (1,344,399) | 1,881,745,862 | 1,111,806,799 | ||||||||
Advances to suppliers |
| - | - | - | - | - | - | 31,371,755 | 38,250,710 | ||||||||
|
| - | - | - | - | - |
| - | |||||||||
Total at 09.30.2014 |
| (1,713,855,268) | 7,543,204 | (59,188,922) | - | (311,553,276) | (2,077,054,262) | 8,415,678,642 |
| ||||||||
Total at 09.30.2013 |
| (1,598,889,470) | 9,641,691 | - | 42,419,895 | (254,630,796) | (1,801,458,680) | 6,566,383,530 |
| ||||||||
Total at 12.31.2013 |
|
|
|
|
|
|
| 6,902,661,359 |
30
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 11:INTANGIBLE ASSETS
|
| Original Values | ||||
Type of good |
| At the beginning |
| Discontinued operations |
| At the end |
|
|
| ||||
|
|
| ||||
Concession contract |
| 950,767,632 | - | 950,767,632 | ||
Goodwill | 231,167,689 | - | 231,167,689 | |||
Rights over arbitration proceedings | 108,754,000 | - | 108,754,000 | |||
Intangibles identifiable in acquisitions of distribution's segment companies | 8,834,040 | - | 8,834,040 | |||
Total at 09.30.2014 | 1,299,523,361 | - | 1,299,523,361 | |||
Total at 09.30.2013 | 2,708,909,872 | (1,179,928,859) | 1,528,981,013 |
|
| Amortizations | ||||||
Type of good | At the beginning |
| Discontinued operations |
| For the period |
| At the end | |
|
|
| ||||||
|
|
| ||||||
Concession contract | (167,719,709) | - | (20,440,278) | (188,159,987) | ||||
Goodwill | (225,540,319) | - | - | (225,540,319) | ||||
Rights over arbitration proceedings | - | - | - | - | ||||
Intangibles identifiable in acquisitions of distribution's segment companies | (4,417,020) | - | (1,656,383) | (6,073,403) | ||||
Total at 09.30.2014 | (397,677,048) | - | (22,096,661) | (419,773,709) | ||||
Total at 09.30.2013 | (900,398,688) | 313,784,117 | (23,135,586) | (609,750,157) |
Net book values | ||||
Type of good |
| At the end |
| At 12.31.13 |
|
| |||
| ||||
Concession contract | 762,607,645 |
| 783,047,923 | |
Goodwill | 5,627,370 | 5,627,370 | ||
Rights over arbitration proceedings | 108,754,000 | 108,754,000 | ||
Intangibles identifiable in acquisitions of distribution's segment companies | 2,760,637 | 4,417,020 | ||
Total at 09.30.2014 | 879,749,652 | |||
Total at 09.30.2013 | 926,745,099 |
| ||
Total at 12.31.2013 | 901,846,313 |
31
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 12:Financial assets at fair value through profit and loss
Non current | 09.30.2014 | 12.31.2013 | ||
|
|
| ||
Shares |
| 70,630 | 70,630 | |
Trusts | 857,467,545 | 431,466,036 | ||
Government securities |
| - | 1,193,189 | |
Total non current |
| 857,538,175 |
| 432,729,855 |
|
|
|
| |
Current |
|
|
| |
|
|
| ||
Government securities |
| 429,604,365 | 169,975,247 | |
Government bonds trust |
| - | 99,523,343 | |
Corporate securities |
| 413,744 | 331,969 | |
Shares |
| 79,142,482 | 84,129,331 | |
Investment funds |
| 945,175,485 |
| 490,299,478 |
Total current |
| 1,454,336,076 |
| 844,259,368 |
NOTE 13: ASSETS AND DEFERRED TAX LIABILITIES
The composition of the assets and deferred tax liabilities is as follows:
|
| 09.30.2014 | 12.31.2013 | |
Tax loss-carryforwards |
| 114,617,262 | 136,235,830 | |
Trade and other receivables |
| 67,770,517 | 43,379,702 | |
Financial assets at fair value through profit and loss |
| 4,200,429 | 1,314,135 | |
Trade and other payables |
| 256,418,099 | 224,077,730 | |
Salaries and social security payable |
| 22,194,929 | 4,320,300 | |
Defined benefit plans | 59,055,523 | 50,775,875 | ||
Taxes payable | 30,992,549 | 37,289,313 | ||
Provisions | 46,593,058 | 35,350,925 | ||
Other | 151,532 | 253,084 | ||
Deferred tax asset |
| 601,993,898 | 532,996,894 | |
|
| |||
|
| |||
Property, plant and equipment |
| (595,039,331) | (577,908,963) | |
Intangible assets |
| (238,505,126) | (243,991,000) | |
Financial assets at fair value through profit and loss |
| (16,042,709) | (2,465,940) | |
Trade and other receivables |
| (51,376,415) | (33,379,506) | |
Borrowings |
| (25,331,696) | (24,179,723) | |
Other | (260,296) | (4,419,131) | ||
Deferred tax liabilities | (926,555,573) | (886,344,263) |
32
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 13: (Continuation)
Deferred tax assets and liabilities are offset in the following cases: a) when there is a legally enforceable right to offset tax assets and liabilities; and b) when deferred income tax charges are associated with the same fiscal authority. The following amounts, determined after their adequate offset, are disclosed in the consolidated statement of financial position:
|
| 09.30.2014 | 12.31.2013 | |
Deferred tax asset |
| 39,621,865 |
| 63,214,262 |
Deferred tax liabilities |
| (364,183,540) |
| (416,561,631) |
Net deferred tax liabilities |
| (324,561,675) |
| (353,347,369) |
NOTE 14:Trade and Other receivables
Non Current | Note |
| 09.30.2014 | 12.31.2013 | |
|
| ||||
Res. No. 406/03 Inc c) CAMMESA consolidated receivables | 2 |
| 380,062,376 | 387,240,276 | |
Present value discount |
| (260,359,786) | (261,165,570) | ||
Trade receivables, net |
| 119,702,590 | 126,074,706 | ||
|
| ||||
Tax credits: |
| ||||
- Value added tax |
| 5,792,855 | 6,084,746 | ||
- Sales tax |
| 14,282,533 | 15,387,487 | ||
- Income tax and minimum notional income tax |
| 261,487,679 | 216,167,849 | ||
- Tax on banking transactions |
| 13,161,508 | 8,291,150 | ||
- Allowance for tax credits |
| (98,111,365) | (76,740,000) | ||
Financial credit |
| 74,554,834 | 60,994,014 | ||
Other |
| 10,492,580 | 10,425,727 | ||
Other receivables, net |
| 281,660,624 | 240,610,973 | ||
|
|
|
| ||
Total Non Current |
| 401,363,214 | 366,685,679 | ||
|
| ||||
Current |
| ||||
|
|
|
|
| |
Receivables from energy distribution |
| 946,813,784 | 851,839,227 | ||
Receivables from MAT |
| 34,421,773 | 89,504,046 | ||
CAMMESA |
| 958,829,981 | 695,822,404 | ||
Res. No. 406/03 Inc. c) consolidated receivables | 2 |
| 10,865,308 | 10,690,018 | |
Receivables from oil and liquid sales |
| 83,397,789 | 32,208,724 | ||
Debtors in litigation |
| 31,457,619 | 22,866,130 | ||
Remuneration nonrecurring maintenance | 2 |
| 61,091,333 | - | |
Receivables from administrative services |
| 1,622,789 | 5,595,372 | ||
Related parties | 27.i |
| 8,525,617 | 4,122,835 | |
Other |
| 9,270,357 | 4,723,877 | ||
Allowance for doubtful accounts |
| (87,669,383) | (77,200,000) | ||
Trade receivables, net |
| 2,058,626,967 | 1,640,172,633 |
33
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 14:(Continuation)
| Note |
| 09.30.2014 | 12.31.2013 | |
Tax credits: |
|
|
|
| |
- Value added tax |
| 187,409,885 | 120,715,415 | ||
- Sales tax |
| 6,509,766 | 1,911,051 | ||
- Income tax and minimum notional income tax |
| 4,680,394 | 3,500,902 | ||
- Withholding of social security contributions |
| 3,415,951 | 546,967 | ||
- Other tax credits |
| 418,388 | 175,358 | ||
- Allowance for tax credits |
| (443,955) | (759,083) | ||
Advances to suppliers |
| 33,246,520 | 30,931,348 | ||
Advances to employees |
| 2,451,789 | 5,294,118 | ||
Related parties | 27.i |
| 9,718,136 | 645,830 | |
Prepaid expenses |
| 29,594,005 | 32,079,352 | ||
Other receivables from non-electricity activities |
| 42,025,876 | 52,238,292 | ||
Financial credit |
| 4,509,879 | 3,055,146 | ||
Guarantee deposits |
| 106,219,957 | 3,777,060 | ||
Judicial deposits |
| 10,413,415 | 1,785,559 | ||
Trades with FOCEDE Res. No. 347/12 |
| 65,176,661 | - | ||
Receivable from MMC | - | 362,720,538 | |||
Receivables from the sale of financial instruments | 32,614,043 | 20,448,750 | |||
Attachment of bank accounts | 30 | 15,699,729 | - | ||
Compensation receivable | 5,070,000 | - | |||
Other |
| 12,731,574 | 14,307,730 | ||
Allowance for other receivables |
| (36,381,712) | (36,579,890) | ||
Other receivables, net |
| 535,080,301 | 616,794,443 | ||
|
|
|
| ||
Total Current |
| 2,593,707,268 | 2,256,967,076 |
The evolution of the allowance for the impairment of receivables is as follow:
|
| 09.30.2014 | 09.30.2013 | ||
At the beginning |
| 77,200,000 | 66,610,422 | ||
Allowance for impairment |
| 15,612,782 | 23,558,817 | ||
Decreases |
| (4,778,841) | (616,436) | ||
Reversal of unused amounts |
| (364,558) | (12,408) | ||
Decreases for discontinued operations |
| - | (22,540,861) | ||
At the end of the period |
| 87,669,383 | 66,999,534 |
The evolution of the allowance for the impairment of other receivables is as follow:
|
| 09.30.2014 | 09.30.2013 | ||
At the beginning |
| 114,078,973 | 89,772,963 | ||
Allowance for impairment |
| 27,742,162 | 14,201,549 | ||
Decreases |
| (5,045,286) | (380,770) | ||
Reversal of unused amounts |
| (1,838,817) | (515,649) | ||
At the end of the period |
| 134,937,032 | 103,078,093 |
34
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 15: DISCONTINUED OPERATIONS, ASSETS CLASSIFIED AS HELD FOR SALE AND LIABILITIES ASSOCIATED
Sale of AESEBA/EDEN’s assets
The Trust has purchased Edenor Corporate Notes due in 2017 and 2022 indicated in the respective trust agreement for USD 10 million and USD 68 million of nominal value, respectively. On March 27, 2014, these Corporate Notes were written off.
Due to the repurchases of Edenor’s own debt made by the Trust, at September 30, 2014, Edenor recorded a gain of $ 44.4 million, which has been included in the “Other financial expense” line item of the Statement of Comprehensive Income (Loss).
Additionally, on April 5, 2014, the Trust was terminated and liquidated.
NOTE 16: TRADE AND OTHER PAYABLES
Non Current |
| 09.30.2014 | 12.31.2013 | ||
|
| ||||
Suppliers |
| 454,996 | 792,827 | ||
Customer contributions |
| 113,554,464 | 113,778,441 | ||
Funding contributions for substations |
| 51,700,000 | 51,700,000 | ||
Customer guarantees |
| 58,995,870 | 54,524,300 | ||
Accounts payable |
| 224,705,330 | 220,795,568 | ||
|
| ||||
PUREE(1) |
| 292,381,627 | 108,602,722 | ||
Fines and bonuses |
| 977,880,399 | 836,115,014 | ||
Guarantees executed | 168,493,701 | 130,337,773 | |||
Compensation agreements | 33,918,103 | - | |||
Liability with FOTAE | 48,959,579 | - | |||
Other liabilities |
| 1,521,633,409 | 1,075,055,509 | ||
|
|
|
| ||
Total Non Current |
| 1,746,338,739 | 1,295,851,077 |
(1)As of September 30, 2014 and December 31, 2013, net of $ 1,829.5 million and $ 1,661.1 million, respectively, offset in accordance with the provisions of ES Res. No. 250/13 and ES Notes No. 6852/13 and 4012/14.
35
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 16:(Continuation)
Current | Note |
| 09.30.2014 | 12.31.2013 | |
|
| ||||
Suppliers |
| 1,549,443,308 | 952,612,056 | ||
CAMMESA(1) |
| 3,006,108,358 | 1,781,544,021 | ||
Customer contributions |
| 146,096,073 | 176,799,558 | ||
Funding contributions substations |
| 17,730,966 | 12,351,787 | ||
Fees and royalties |
| 2,444,829 | 6,127,968 | ||
Customer advances |
| 1,495,732 | 1,591,329 | ||
Customer guarantees |
| 1,465,592 | 1,233,637 | ||
Related parties | 27.i |
| 351,652 | 1,091,129 | |
Accounts payable |
| 4,725,136,510 | 2,933,351,485 | ||
|
| ||||
|
| ||||
ENRE Fines and bonuses |
| 77,334,003 | 87,658,055 | ||
CAMMESA Mutuum |
| 162,000,000 | - | ||
Dividends payable |
| 15,537,260 | 7,596,000 | ||
Advances for work to be executed |
| 11,418,239 | - | ||
Liability with FOCEDE | 3,665,503 | 4,236,917 | |||
Liability with FOTAE |
| - | 48,959,579 | ||
Compensation agreements |
| 27,686,610 | 8,903,811 | ||
Other |
| 4,759,717 | 7,849,544 | ||
Other liabilities |
| 302,401,332 | 165,203,906 | ||
|
| ||||
Total Current |
| 5,027,537,842 | 3,098,555,391 |
(1)As of September 30, 2014 and December 31, 2013, net of $ 2,190.3 million and $ 1,152.3 million, respectively, offset in accordance with the provisions of ES Res. No. 250/13 and ES Notes No. 6852/13 and 4012/14.
NOTE 17: BORROWINGS
Non Current | Note | 09.30.2014 | 12.31.2013 | ||
Financial loans |
| 41,827,771 |
| 99,971,154 | |
Corporate bonds |
| 3,345,945,969 |
| 2,429,837,625 | |
Related parties | 27.i |
| 448,887,663 |
| 394,721,657 |
| 3,836,661,403 | 2,924,530,436 | |||
| |||||
Current |
| ||||
| |||||
Bank overdrafts |
| 93,687,361 | 41,890,272 | ||
VCP |
| 191,843,760 | 142,811,893 | ||
Financial loans |
| 101,026,021 | 160,235,733 | ||
Corporate bonds |
| 125,506,833 | 377,125,713 | ||
Related parties | 27.i |
| 5,211,012 | 31,508,188 | |
| 517,274,987 | 753,571,799 |
The main variations in the Group's financial structure during the nine month period ended September 30, 2014 and until the date of issuance of these unaudited consolidated condensed interim financial statements are described below:
36
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 17: (Continuation)
17.1 Generation
17.1.1 CTG
Corporate Bonds
Under the Simple Corporate Bonds Program (that is, corporate bonds non-convertible into shares) for up to US$ 50 million (or its equivalent value in other currencies) dated February 14, 2014, on March 6, 2014, CTG issued Class 5 Corporate Bonds for a face value of $ 60.1 million accruing interest at the Private Badlar rate plus a 500 basic points spread. Principal will be amortized in two equal consecutive installments due on June 6, 2016 and September 6, 2016, and interest will be payable on a quarterly basis.
Class 5 Corporate Bonds have been subscribed in kind through the delivery of Class 3 and Class 4 Corporate Bonds for $ 1.8 million and $ 19.1 million, respectively (an amount equivalent to US$ 2.5 million). The outstanding balance of Class 3 Corporate Bonds was wholly cancelled on March 6. After the issuance of Class 5 Corporate Bonds, outstanding Class 4 Corporate Bonds, net of CTG’s portfolio holdings, amount to US$ 7 million.
After cancelling the principal and interest of Class 3 Corporate Bonds and discounting Class 4 Corporate Bonds presented for the swap, the net inflow amounted approximately $ 1.4 million, that were allocated to the prepayment of bank loans.
Bank Loans
As regards the syndicated loan taken out with Banco Hipotecario S.A., Industrial and Commercial Bank of China S.A., Santander Rio S.A. y Citibank N.A., on July 23, 2014, CTG has:
(i) paid accrued interest in the amount of Ps 7.1 million and the outstanding from the first amortization installment for Ps 4.6 million in accordance with the defined payment schedules; and
(ii) partially prepaid the loan for an amount equivalent to $ 18 million —out of which $ 14 million were applied to the cancellation of principal installments of the variable tranche and $ 4 million to the cancellation of principal installments of the fix tranche in chronological order based on their maturity dates.
After this prepayment, the remaining principal balance of the syndicated loan amounts to $ 54.7 million, and the next maturity of principal will operate in June 2015.
37
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 17: (Continuation)
17.1.2 CTLL
Corporate Bonds
Bond holders meeting of 2015 corporate bonds
At the CTLL’s Extraordinary Meeting of Corporate Bondholders maturing in 2015, which was held on September 4, 2014, the modification to the issuance terms and conditions for the following corporate bonds was unanimously agreed:
- Amortization: the Corporate Bonds balance of US$ 188 million (US$ 163.9 million net of portfolio holdings) will be amortized in five installments pursuant to the following scheme: (a) a first installment maturing on March 8, 2015 for an amount equivalent to 12.5% of the principal; (b) a second, third and fourth installment maturing on December 7, 2015, 2016 and 2017, respectively, for amounts equivalent to 12.5% of each installment’s outstanding principal; and (c) a fifth and last installment maturing on December 7, 2018 for an amount equivalent to 50% of the principal (the “2018 Corporate Bonds”).
- Interest payment dates: they were modified so that they would mostly match with the principal payment dates indicated above pursuant to the following scheme: (i) September 8, 2014; (ii) March 8, 2015; (iii) December 7, 2015; (iv) for the years 2016, 2017 and 2018, interest will be paid on June 7 and December 7.
- Guarantees Package: it was modified so that the fiduciary assignment of the rights to collect payments and/or claim compensations from the sale of electricity (energy and/or power) comprised within the additional capacity generated by the Project, be limited to the amount corresponding to the next amortization installment pursuant to the provisions of the first subsection.
- Early redemption at the issuer’s option: any redemption of Corporate Bonds by the Issuer will be applied to principal installments based on their maturity chronological order. Additionally, should CTLL opt for an early redemption until December 7, 2015, it will have to pay an additional amount equivalent to 25% of the interest rate multiplied by the amount of the outstanding principal being redeemed. As from that date, this additional amount will be reduced to 10%. Notwithstanding the foregoing, should CTLL decide to redeem its corporate bonds for an amount of up to US$ 22.4 million at the reference exchange rate in force two business days before the redemption at any time before the corporate bonds' maturity date, no additional amount will be paid.
- Limitations on the incurrence of indebtedness: two new cases of Allowed Indebtedness have been added: the “Regulatory Indebtedness” (any indebtedness in favor of CAMMESA or any Governmental entity regulating the electricity market in Argentina), and letters of credit, banker’s acceptances, letters of guarantee or other similar instruments granted upon CTLL’s request to any financial entity in support of any business commitment it undertakes.
38
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 17: (Continuation)
Early Redemption of 2018 Corporate Bonds
On September 26, 2014 and October 10, 2014, CTLL has partially redeemed Corporate Bonds for a face value of US$ 43.6 million and US$ 21.8 million respectively aiming to regain a more efficient financing structure. For the first redemption, CTLL has paid the amount of $ 369.4 million as principal and interest, and the amount of $ 5,8 million as additional payment for the early redemption (equivalent to US$ 43.8 million and US$ 0.7 million, respectively, at a $ 8.4272 reference exchange rate). For the second redemption, the payments amounted to $ 186.3 million as principal and interest, and $ 5.3 million as additional early redemption payment (equivalent to US$ 22 million and US$ 0.6 million, respectively, at a $ 8.4643 reference exchange rate).
CTLL has financed these redemptions with current account overdrafts in the amount of $ 128 million, sales of portfolio Corporate Bonds for $ 198.1 million, and the remaining, through cash, cash equivalents and financial assets at fair value.
Issuance of Class 1, 2, 3 and 4 Corporate Bonds
Under the Simple Corporate Bonds Program (that is, corporate bonds non-convertible into shares) for up to US$ 350 million (or its equivalent value in other currencies), on October 30, 2014 CTLL issued the following Corporate Bonds:
- CTLL resolved to cancel the tender of Class 1 Corporate Bonds.
- Class 2: for a face value of $ 96.4 million accruing interest at the Private Badlar rate plus a 400 basic points spread. The principal will be fully repaid at maturity on April 30, 2016, and interest will be repaid on a quarterly basis.
- Class 3: for a face value of $ 50.8 million accruing interest at the Private Badlar rate plus a 500 basic points spread. The principal will be amortized in three installments maturing on April 30, 2017 (33.34%), July 30, 2017 (33.33%) and October 30, 2017 (33.33%), and interest will be repaid on a quarterly basis.
- Class 4: for a face value of US$ 29.9 million at a $ 8.4917 exchange rate and a 6.25% annual nominal fixed rate. Principal will be amortized in whole on October 30, 2020. Interest accruing on the principal outstanding as at October 31, 2016 will be compounded quarterly. Interest accruing on the principal outstanding between November 1, 2016 and the maturity date will be paid on a quarterly basis.
39
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 17: (Continuation)
On November 7, 2014, CTLL partially redeemed 2018 Corporate Bonds with a face value of US$ 39.2 million with funds resulting from the offering of new Corporate Bonds. CTLL paid the amount of $ 338.7 million (equivalent to US$ 40 million at a $ 8,5087 reference exchange rate) as principal and interest, as well as the amount of $ 9.6 million (equivalent to US$ 1.1 million at a $ 8,5087 reference exchange rate) as early redemption additional payment.
As at the issuance hereof, the face value of outstanding 2018 Corporate Bonds amounts to US$ 59.3 million.
Syndicated Loan
On November 4, 2014, in line with CTLL’s financial strategy of improving its financing cost and structure, CTLL’s Board of Directors approved a new indebtedness consisting of a syndicated loan in the amount of up to $ 450 million (the “Syndicated Loan”) with certain domestic financial entities (the “Banks”) seeking to refinance existing financial liabilities. The loan’s main terms and conditions are described below:
- Amortization: eight installments representing 11% of the indebtedness each, and a last installment for the remaining 12%, all of them payable on a quarterly and consecutive basis, the fist one maturing twelve months as from the loan’s disbursement date
- Compensatory Interest: at the adjusted Private Badlar rate plus a 575 basic points spread, payable on a quarterly basis;
- Guarantees:
i) CTLL will issue sight bills to each of the Banks to guarantee the outstanding principal and interest in accordance in the proportion of their share in the loan;
ii) The Company will act as joint and several obligor and main debtor of each and all payment obligations taken on by CTLL with the Banks, and will provide surety for all bills;
- Subordination: the agreement contemplates the subordination of certain debts CTLL holds with PISA to the indebtedness to be taken with the Banks.
As at the issuance of these Condensed Interim Financial Statements, CTLL and the Banks are finalizing certain terms and conditions of the loan agreement seeking its prompt execution and the resulting fund disbursement to CTLL. It should be pointed out that there is no binding disbursement commitment by the Banks pursuant to the Syndicated Loan.
40
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTA 17: (Continuation)
17.1.3 CPB
Cammesa Financing II
On April 9, 2014, CAMMESA notified CPB of the authorization granted by the ES to apply the LVFVDs corresponding to January 2008-June 2011 period, including accrued interest, to the cancellation of the loan perfected through the Mutual Contract and Credit Assignment Agreement entered into between CAMMESA and CPB on January 8, 2013, which was destined to financing maintenance works performed in 2013 over BBLATV29 and BBLATV30 and in auxiliary equipment conducted in 2013.
In order to formalize such offset, on April 15, 2014 CPB assigned the LVFVDs for this financing, including interest accrued as at the offset date and until the concurrence of those receivables with the outstanding debt as of the same date.
On April 24, 2014, the compensation of the mentioned financing was performed in the amount of $ 39.5 million of principal and $ 11.3 million of accrued interest (VAT included) with the issuance of the commercial documents by CAMMESA.
As a result of this compensation, CPB recognized income before taxes in the amount $ 35.3 million resulting from the revaluation of the affected LVFVDs, which were disclosed under "Other Financial Results" of the Statement of Comprehensive Income (Loss).
Financing of Major Maintenance Works
During the month of April, 2014, the Loan and Receivables Assignment Agreement was entered into between CPB and CAMMESA to finance the 2015-2016 Maintenance Plan for an estimated total amount of US$ 82.6 million plus VAT and nationalization costs. The final amount of the financing will be determined based on the actual disbursements made by CAMMESA.
The financing will have a twelve-month grace period as from the month following the last partial advance by CAMMESA, or 24 months after the execution of the loan, whichever occurs earlier, and this term may be extended for up to six months in case a delay in the execution of maintenance works is verified.
The financing will be repaid in 48 monthly, equal and consecutive installments, with the application of the mean yield obtained by CAMMESA from its financial placements with the WEM.
The Maintenance Remuneration provided for by ES Res. No. 529/14 will be destined to the early cancellation of the granted financing.
Should the Maintenance Remuneration be insufficient to cancel the amount of each installment and provided CPB meets the UMA, the balance payment obligation will be limited to 50% of the DRF. In case is not met, CPB will have to pay the whole applicable installment on the stipulated maturity date.
41
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 17: (Continuation)
The UMA will range from 80% to 83% depending on the month, and will be calculated as an average of the last three rolling months, taking into consideration both units and provided the major maintenance works for each unit have been performed.
The DRF will be calculated based on the operating results plus Property, Plant and Equipment depreciations, net of:
(i) The Additional Remuneration committed to the Trust pursuant to Res. No. 95/13;
(ii) The Remuneration pursuant to the Winter Plan Loan Agreement (ES Note No. 6157/10);
(iii) Investments in Property, Plant and Equipment;
(iv) Taxes not included in operating results;
(v) Uncollected Delta receivables with CAMMESA;
(vi) The Maintenance Remuneration.
In accordance with what has been previously stated, if at each installment’s maturity date the funds asigned to its cancellation are insufficient to fully cancel it, the uncancelled balance will be distributed pro rata among the remaining installments, provided the UMA has been met. If this situation occurs in the last installment, it will be successively deferred until its full cancellation.
In order to guarantee the granted financing, CPB has assigned to CAMMESA 100% of its current and future receivables, whether accrued or to be accrued, in connection with the operations conducted and to be conducted with the WEM, excluding those which had already been assigned to third parties or included in contracts entered into pursuant to the 2008-2011 Agreement, as well as those included in the assignment as collateral provided for in the loan agreement under ES Note No. 6157/10 and in the assignment as collateral set forth in the loan agreement entered into by the parties on January 8, 2013, until the financing limit.
The major maintenance execution dates included in the Maintenance Plan have been defined for the September-December 2015 periods in Unit 29 and for March-June 2016 in Unit 30. The work plan seeks to generate the purchase orders for the spare parts having a longer delivery term so as not to compromise the execution of maintenance works.
As at September 30, 2014, CPB has provided for the following:
i) the orders for the turbine, generator, turbo-coupler, feeding water pump, batteries, medium-voltage engines and other spare parts,
ii) the boiler maintenance service and materials supply agreement,
iii) quotes for the control system, protections and power upgrade and overhaul services and materials, and spare parts for the feeding water pumps and other equipment.
As at the issuance of its condensed interim financial statements, CPB has received partial advances from CAMMESA amounting to $ 78.3 million.
On October 29, 2014, CAMMESA offset partial advances against accrued Receivables for Maintenance Remuneration in the amount of $ 28 million.
42
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 17: (Continuation)
17.2 Holding and others
17.3.1 PEPASA
VCPs Global Programme
As of March 27, 2014, PEPASA has cancelled Series 5 and 6 VCPs for a face value of $ 77.8 million and US$ 4.3 million equivalent $ 34.7 million, respectively.
On April 28, 2014, PEPASA perfected the issuance of Series 8 VCPs with a face value of $ 122.95 million, accruing interest at a Private Badlar Rate plus a 3.95% spread and maturing 12 calendar months as from their issuance date. Interest will be payable on a quarterly basis.
As of September 30, 2014, outstanding Series 7 y 8 VCPs amounted to $ 197.1 million, including principal and interest.
Resources gathered through the issuance of these VCPs may be destined to investments in physical assets, the payment of working capital and/ or the refinancing of liabilities.
On October 3, 2014, PEPASA perfected the issuance of Series 9 VCPs with a face value of $ 76.45 million, accruing interest at a Private Badlar Rate plus a 3.95% spread and maturing 12 calendar months as from their issuance date. Interest will be payable on a quarterly basis.
Furthermore, PEPASA has cancelled Series 7 VCPs for a face value of $ 65.4 million, $ 16.3 million of which were exchanged under the above-mentioned subscription.
Corporate Bonds Programme
Under the Simple Corporate Bonds Program (that is, corporate bonds non-convertible into shares) for up to US$ 100 million (or its equivalent value in other currencies) dated March 19, 2013, on June 6, 2014, PEPASA issued Class 2 Corporate Bonds for a face value of $ 525.4 million accruing interest at the Private Badlar rate and finally maturing on June 6, 2017. They were issued in order to perform productive investments computable under Section 35.k of the Insurance Activity General Regulations. Interest will be payable on a quarterly basis.
Funds collected through the issuance of these bonds will be destined to investments in physical assets and/ or to the payment of working capital.
43
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 18: PROVISIONS
Non current | ||||||
For contingencies | For decomissioning of wells | Total | ||||
At the beginning of the year |
| 89,703,658 | 1,761,146 |
| 91,464,804 | |
Increases | 34,911,637 | 677,226 |
| 35,588,863 | ||
Reclassifications |
| (4,510,478) | - |
| (4,510,478) | |
Reversal of unused amounts |
| (172,808) | - |
| (172,808) | |
Decreases |
| (4,131) | - |
| (4,131) | |
At the end of the period |
| 119,927,878 | 2,438,372 | 122,366,250 | ||
Current | ||||||
For contingencies | ||||||
At the beginning of the year | 11,239,188 | |||||
Increases | 42,900,249 | |||||
Reclassifications | 4,510,478 | |||||
Decreases | (46,626,047) | |||||
At the end of the period | 12,023,868 |
NOTE 19: SALES
| Nine months to | ||
| 09.30.2014 | 09.30.2013 | |
| |||
Sales of energy to the SPOT Market | 605,427,808 | 503,482,298 | |
Energy sales Resolution No. 220/07 | 585,830,538 | 175,200,661 | |
Sales of energy to MAT | 84,530,786 | 392,864,125 | |
Energy plus sales | 274,329,749 | 185,971,823 | |
Other sales | 15,160,357 | 14,110,683 | |
Generation subtotal | 1,565,279,238 | 1,271,629,590 | |
| |||
Energy sales | 2,703,446,320 | 2,532,764,661 | |
Right of use of posts | 41,328,222 | 32,306,132 | |
Connection and reconnection charges | 3,428,542 | 3,419,932 | |
Distribution subtotal | 2,748,203,084 | 2,568,490,725 | |
| |||
Gas sales | 178,925,641 | 87,009,146 | |
Oil and liquid sales | 15,393,198 | 12,910,382 | |
Administrative services sales | 24,371,554 | 14,178,631 | |
Other sales | 753,001 | - | |
Holding and others subtotal | 219,443,394 | 114,098,159 | |
|
|
| |
Intersegment sales | 9,729,639 | 4,511,395 | |
| |||
Total sales | 4,542,655,355 | 3,958,729,869 |
44
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 20: COST OF SALE
| Nine months to | ||
| 09.30.2014 | 09.30.2013 | |
Inventories at the beginning of the year | 114,615,289 | 103,330,353 | |
|
| ||
Plus: Charges for the period |
|
| |
Purchases of inventories and of energy from the distribution segment | 1,468,667,674 | 1,557,266,339 | |
|
| ||
Salaries | 1,103,286,991 | 639,310,992 | |
Social benefits | 36,239,124 | 27,000,863 | |
Other socialcharges | 14,459,136 | 8,983,438 | |
Accrual of defined benefit plans | 30,286,594 | 19,156,907 | |
Fees and compensations for services | 563,954,239 | 497,439,629 | |
Property, plant and equipment depreciations | 286,252,776 | 236,461,389 | |
Intangible assets amortization | 22,096,661 | 22,096,662 | |
Depreciation of biological assets | 30,611 | 30,611 | |
Gas consumption | 103,462,460 | 122,492,314 | |
Purchase of energy | 198,412,574 | 441,699,553 | |
Fuel consumption | - | 31,668,616 | |
Transport of energy | 21,098,033 | 18,061,908 | |
Material consumption | 192,881,298 | 110,914,605 | |
Penalties | 183,119,822 | 194,455,068 | |
Maintenance | 46,764,516 | 85,964,026 | |
Royalties and fees | 43,365,575 | 30,463,344 | |
Gas production | 22,088,341 | 7,124,801 | |
Rental and insurance | 42,094,363 | 38,509,193 | |
Surveillance and security | 24,169,590 | 15,998,124 | |
Taxes, rates and contributions | 9,844,999 | 12,755,777 | |
Communications | 9,006,309 | 5,877,847 | |
Other | 17,263,504 | 14,219,296 | |
Subtotal | 2,970,177,516 | 2,580,684,963 | |
|
|
| |
Less: Inventories at the end of the period | (168,700,067) | (77,307,805) | |
Total cost of sales | 4,384,760,412 | 4,163,973,850 |
45
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 21:SELLING EXPENSES
Nine months to | |||
| 09.30.2014 | 09.30.2013 | |
Salaries | 177,443,345 | 132,872,320 | |
Social benefits charges | 842,041 | 851,181 | |
Other social benefits | 77,420 | 99,899 | |
Accrual of defined benefit plans | 3,634,379 | 2,929,825 | |
Fees and compensations for services | 189,371,999 | 138,399,657 | |
Compensation agreements | 18,408,533 | - | |
Property, plant and equipment depreciations | 12,337,069 | 6,696,091 | |
Taxes, rates and contributions | 46,580,051 | 64,874,684 | |
Communications | 29,648,303 | 23,506,077 | |
Penalties | 11,330,000 | 41,020,000 | |
Doubtful accounts | 15,878,972 | 37,778,107 | |
Surveillance and security | 191,995 | 435,987 | |
Other | 529,953 | 448,752 | |
Total selling expenses | 506,274,060 | 449,912,580 |
NOTE 22: ADMINISTRATIVE EXPENSES
Nine months to | |||
| 09.30.2014 | 09.30.2013 | |
Salaries | 245,477,840 | 158,736,391 | |
Social charges | 16,276,022 | 12,977,014 | |
Other social benefits | 7,380,661 | 5,573,085 | |
Accrual of defined benefit plans | 3,833,621 | 3,289,357 | |
Fees and compensations for services | 156,693,271 | 96,664,283 | |
Compensation agreements | 27,096,633 | - | |
Directors and Sindycs’ fees | 14,336,403 | 13,319,660 | |
Reserve for directors’ options | 6,709,014 | 6,709,014 | |
Property, plant and equipment depreciations | 12,963,431 | 11,473,316 | |
Intangible assets amortization | - | 1,038,924 | |
Material and spare parts consumption | 8,123,378 | 4,928,753 | |
Maintenance | 2,210,414 | 1,128,225 | |
Transport and per diem | 4,774,787 | 2,391,254 | |
Rental and insurance | 38,431,631 | 24,722,273 | |
Surveillance and security | 11,645,201 | 8,320,380 | |
Taxes, rates and contributions | 12,850,721 | 17,694,451 | |
Communications | 5,634,269 | 4,020,970 | |
Advertising and promotion | 7,475,714 | 3,929,253 | |
Other | 9,901,830 | 6,150,491 | |
Total administrative expenses | 591,814,841 | 383,067,094 |
46
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 23: OTHER OPERATING INCOME AND EXPENSES
Note | Nine months to | ||||
Other operating income | 09.30.2014 | 09.30.2013 | |||
Insurance recovery | 6,358,656 | 123,644,657 | |||
Recovery of expenses | 13,909,309 | 9,557,182 | |||
Recovery of allowances for receivables | 2,191,127 | 4,788,355 | |||
Recovery of other operating costs | - | 13,002,444 | |||
Recognition of March Agreement | - | 85,177,042 | |||
Surplus Gas Injection Compensation Res. No. 1/13 | 62,196,600 | 11,822,404 | |||
Recovery of sales tax | 37,943,970 | - | |||
Commissions on municipal tax collection | 8,042,806 | 4,841,129 | |||
Dividend income | 2,777,280 | 6,876,038 | |||
Billing work to third parties | 16,556,729 | 14,145,584 | |||
Client severance | 5,070,000 | - | |||
Profit of property, plant and equipment sale | 5,596,699 | 234,140 | |||
Recovery of allowance for tax credits | 274,224 | 63,111 | |||
Other |
|
| 10,161,785 | 6,019,594 | |
Total other operating income |
|
| 171,079,185 | 280,171,680 | |
|
|
| |||
Other operating loss |
|
| |||
Allowances for contingencies |
|
| (78,509,840) | (23,002,280) | |
Voluntary retirements - bonus |
|
| (21,926,954) | (13,162,082) | |
Decreaeses in property, plant and equipment | (2,179,391) | (6,860,602) | |||
Indemnities | (5,893,731) | (3,702,557) | |||
Allowances for financial instrument receivables | - | (1,188,984) | |||
Allowances for doubtful tax credits | (2,804,761) | (3,233,981) | |||
Net expense for technical functions |
|
| (11,970,228) | (11,278,599) | |
Tax on bank transactions |
|
| (77,610,196) | (62,461,658) | |
Third parties costworks | (12,805,073) | (6,261,054) | |||
Other operating costs for contract termination | 37 | (11,366,548) | - | ||
Donations and contributions |
|
| (3,946,026) | (2,901,674) | |
Other |
|
| (20,925,099) | (8,518,208) | |
Total other operating loss |
|
| (249,937,847) | (142,571,679) |
47
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 24: FINANCIAL RESULTS
Nine months to | ||||
Finance income |
| 09.30.2014 | 09.30.2013 | |
Comercial interest |
| 88,011,913 | 74,742,214 | |
Financial interest | 164,244,252 | 208,972,547 | ||
Other interest |
| - | - | |
Total finance income |
| 252,256,165 | 283,714,761 | |
|
|
|
| |
Finance cost |
|
|
| |
Comercial interest |
| (338,736,340) | (242,885,774) | |
Fiscal interest |
| (36,998,688) | (40,695,872) | |
Financial interest |
| (439,361,856) | (298,901,316) | |
Other interest |
| (318,013) | (151,548) | |
Taxes and bank commissions |
| (16,132,583) | (13,393,687) | |
Other finance costs |
| (10,149,771) | (2,017,164) | |
Total finance cost |
| (841,697,251) | (598,045,361) | |
|
|
|
| |
Other finance results |
|
|
|
|
Net foreing currency exchange difference |
| (696,349,211) | (431,210,404) | |
Result from repurchase of corporate bonds |
| 47,122,571 | 68,638,668 | |
Changes in the fair value of financial instruments |
| 869,125,623 | 222,096,070 | |
Discounted value measurement |
| 3,164,192 | (104,195,310) | |
Recovery of fiscal interest |
| 3,166,739 | - | |
Other finance results |
| (119,584) | 47,549 | |
Total other finance results |
| 226,110,330 | (244,623,427) | |
|
| |||
Other finance results, net |
| (363,330,756) | (558,954,027) |
NOTE 25: EARNING (LOSS) PER SHARE
a) Basic
Basic earnings (loss) per share are calculated by dividing the result attributable to the Company’s equity interest holders by the weighted average of outstanding common shares during the period.
b) Diluted
Diluted earnings (loss) per share are calculated by adjusting the weighted average of outstanding common shares to reflect the conversion of all dilutive potential common shares. The Company has a kind of dilutive potential common shares, which consist on share purchase options.
Potential common shares will be deemed dilutive only when their conversion into common shares may reduce the earnings per share or increase losses per share of the continuing business. Potential common shares will be deemed anti-dilutive when their conversion into common shares may result in an increase in the earnings per share or a decrease in the losses per share of the continuing operations.
48
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 25:(Continuation)
The calculation of diluted earnings (loss) per share does not entail a conversion, the exercise or another issuance of shares which may have an anti-dilutive effect on the losses per share, or where the option exercise price is higher than the average price of ordinary shares during the period, no dilutive effect is recorded, being the diluted earning (loss) per share equal to the basic. Therefore, the basic and diluted results per share are the same for continuing operations during the nine month period ended September 30, 2013, and for discontinued operations during the nine month period ended September 30, 2013.
09.30.2014 | 09.30.2013 | |||
Earnings attributable to the equity holders of the company from continuing operations | 15,182,431 | 470,340,934 | ||
Weighted average amount of outstanding shares | 1,314,310,895 | 1,314,310,895 | ||
Basic earning per share from continuing operations | 0.0116 | 0.3579 | ||
|
|
| ||
|
| 09.30.2014 | ||
Earnings attributable to the equity holders of the company from continuing operations | 15,182,431 | |||
Charge for reserve for directors’ options | 6,709,014 | |||
Basic adjusted earning per share from continuing operations | 21,891,445 | |||
|
|
| ||
Weighted average amount of outstanding shares | 1,314,310,895 | |||
Adjustments for stock options | 134,207,977 | |||
Weighted average amount of outstanding shares for diluted profit per share | 1,448,518,872 |
| ||
Diluted earnings per share from continued operations |
| 0.0151 |
|
|
|
|
| ||
30.09.2013 | ||||
Loss attributable to the equity holders of the Company for discontinued operations | (85,698,445) | |||
Weighted average amount of outstanding shares | 1,314,310,895 | |||
Basic and diluted loss per share from discontinued operations | (0.0652) |
49
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26: SEGMENT INFORMATION
The Company is engaged on the electricity sector, with a participation in the electricity generation, transmission and distribution segments through different legal entities. Accordingly, the following business segments have been identified by means of its subsidiaries and based on the nature, customers and risks involved:
Generation, conformed by direct and indirect equity interest in CPB, CTG, CTLL, HINISA, HIDISA, Powerco, PACOSA and investments in shares in other companies related to the electricity generation sector.
Transmission, conformed by indirect equity interest through Citelec in Transener and its subsidiaries. For the purposes of presenting segment information the indirect equity interest has been consolidated proportionally.
Distribution, conformed by indirect equity interest in EASA and Edenor. As of December 31, 2013 the Company has deconsolidated AESEBA, classifying their results as discontinued operations.
Holding and others, conformed by financial investment operations, holding activities, oil and gas exploitation, and other businesses.
The Company manages its segments to the net income level of reporting.
50
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Consolidated statement of operation information at September 30, 2014 |
| Generation | Transmission | Distribution(1) | Holding and others | Eliminations | Consolidated | |||||
Sales |
| 1,565,279,238 |
| 488,495,143 |
| 2,748,203,084 |
| 219,443,394 |
| - |
| 5,021,420,859 |
Intersegment sales |
| - |
| 1,079,707 |
| - |
| 59,635,836 |
| (49,906,197) |
| 10,809,346 |
Cost of sales |
| (838,202,576) |
| (360,005,021) |
| (3,466,044,374) |
| (125,697,322) |
| 45,183,860 |
| (4,744,765,433) |
Gross profit (loss) | 727,076,662 |
| 129,569,829 |
| (717,841,290) |
| 153,381,908 |
| (4,722,337) |
| 287,464,772 | |
|
|
|
|
|
|
|
|
|
|
| ||
Selling expenses |
| (13,447,868) |
| - |
| (461,728,229) |
| (31,097,963) |
| - |
| (506,274,060) |
Administrative expenses |
| (137,078,347) |
| (64,301,525) |
| (340,681,648) |
| (118,440,254) |
| 4,446,554 |
| (656,055,220) |
Other operating income |
| 63,878,791 |
| 2,535,482 |
| 32,429,821 |
| 74,770,574 |
| - |
| 173,614,668 |
Other operating expenses |
| (61,374,527) |
| (13,469,928) |
| (163,412,759) |
| (25,135,951) |
| - |
| (263,393,165) |
Recovery of impairment of property, plant and equipment |
| 88,406,704 |
| - |
| - |
| - |
| - |
| 88,406,704 |
Share profit of joint ventures |
| - |
| - |
| 7,111 |
| - |
| - |
| 7,111 |
Share loss of associates |
| - |
| - |
| - |
| (319,388) |
| - |
| (319,388) |
Operating profit (loss) before Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 |
| 667,461,415 |
| 54,333,858 |
| (1,651,226,994) |
| 53,158,926 |
| (275,783) |
| (876,548,578) |
Higher Costs Recognition - Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 |
| - |
| - |
| 735,534,348 |
| - |
| - |
| 735,534,348 |
Operating profit (loss) | 667,461,415 |
| 54,333,858 |
| (915,692,646) |
| 53,158,926 |
| (275,783) |
| (141,014,230) | |
|
|
|
|
|
|
|
|
|
|
| ||
Finance income |
| 101,311,975 |
| 165,346,798 |
| 182,073,941 |
| 17,500,063 |
| (48,629,814) |
| 417,602,963 |
Finance cost |
| (199,073,673) |
| (44,333,958) |
| (558,381,313) |
| (133,139,910) |
| 48,905,597 |
| (886,023,257) |
Other finance results |
| (244,679,750) |
| (130,488,841) |
| (508,353,217) |
| 979,143,297 |
| - |
| 95,621,489 |
Financial results, net |
| (342,441,448) |
| (9,476,001) |
| (884,660,589) |
| 863,503,450 |
| 275,783 |
| (372,798,805) |
Profit (Loss) before income tax | 325,019,967 |
| 44,857,857 |
| (1,800,353,235) |
| 916,662,376 |
| - |
| (513,813,035) | |
|
|
|
|
|
|
|
|
|
|
| ||
Income tax |
| (36,126,889) |
| (25,397,254) |
| 74,307,000 |
| (69,693,990) |
| - |
| (56,911,133) |
Profit (Loss) for the year from continuing operations | 288,893,078 |
| 19,460,603 |
| (1,726,046,235) |
| 846,968,386 |
| - |
| (570,724,168) | |
|
|
|
|
|
|
|
|
|
|
| ||
Adjustment non-controlling interest in joint ventures |
| - |
| (11,759,720) |
| - |
| - |
| - |
| (11,759,720) |
Total profit (loss) of the year | 288,893,078 |
| 7,700,883 |
| (1,726,046,235) |
| 846,968,386 |
| - |
| (582,483,888) | |
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and amortization (2) |
| 99,633,049 |
| 32,316,273 |
| 183,540,076 |
| 50,507,423 |
| - |
| 365,996,821 |
51
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Consolidated statement of income at September 30, 2014 |
| Generation | Transmission | Distribution (1) | Holding and others | Eliminations | Consolidated | |||||
Total profit (loss) attributable to: |
| |||||||||||
Owners of the Company |
| 275,825,156 |
| 7,700,883 |
| (1,045,008,757) |
| 776,665,149 |
| - |
| 15,182,431 |
Non - controlling interest |
| 13,067,922 |
| - |
| (681,037,478) |
| 70,303,237 |
| - |
| (597,666,319) |
| ||||||||||||
Consolidated statement of financial position as of September 30,2014 | ||||||||||||
Assets | 4,267,544,907 |
| 1,165,355,494 |
| 7,344,208,040 |
| 4,318,106,950 |
| (675,888,318) |
| 16,419,327,073 | |
Liabilities | 2,993,210,358 |
| 869,719,250 |
| 8,506,323,158 |
| 2,129,945,704 |
| (675,888,318) |
| 13,823,310,152 | |
|
|
|
|
|
|
|
|
|
|
| ||
Additional consolidated information as of September 30, 2014 | ||||||||||||
Increases in property, plant and equipment |
| 143,929,317 |
| 108,370,673 |
| 1,038,957,238 |
| 569,827,706 |
| - |
| 1,861,084,934 |
(1) Includes financial results generated by financial debt issued by EASA for Ps. 217.7 million and other consolidation adjustments. | ||||||||||||
(2)Includes amortizations and depreciation of fixed assets, intangible assets and biological assets (recognized in cost of sales, administrative expenses and selling expenses) and charge for reserve for Director´s options (recognized in administrative expenses). |
52
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Consolidated statement of operation information at September 30, 2013 |
| Generation | Transmission | Distribution (1) | Holding and others | Eliminations | Consolidated | |||||
Sales |
| 1,271,629,590 |
| 272,977,553 |
| 2,568,490,725 |
| 114,098,159 |
| - |
| 4,227,196,027 |
Intersegment sales |
| 2,002,563 |
| 1,326,832 |
| - |
| 28,867,940 |
| (26,359,108) |
| 5,838,227 |
Cost of sales |
| (1,121,565,684) |
| (260,394,822) |
| (2,987,532,450) |
| (70,952,791) |
| 16,077,075 |
| (4,424,368,672) |
Gross profit (loss) |
| 152,066,469 |
| 13,909,563 |
| (419,041,725) |
| 72,013,308 |
| (10,282,033) |
| (191,334,418) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
| (44,093,772) |
| - |
| (401,367,959) |
| (4,450,849) |
| - |
| (449,912,580) |
Administrative expenses |
| (101,740,976) |
| (60,638,879) |
| (228,601,991) |
| (60,962,209) |
| 8,279,470 |
| (443,664,585) |
Other operating income |
| 226,461,029 |
| 982,761 |
| 27,863,459 |
| 25,845,390 |
| - |
| 281,152,639 |
Other operating expenses |
| (31,005,293) |
| (10,665) |
| (105,703,633) |
| (5,852,088) |
| - |
| (142,571,679) |
Share profit of joint ventures |
| - |
| - |
| 3,902 |
| - |
| - |
| 3,902 |
Share profit of associates |
| - |
| - |
| - |
| 1,455,140 |
| - |
| 1,455,140 |
Operating profit (loss) before Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 |
| 201,687,457 |
| (45,757,220) |
| (1,126,847,947) |
| 28,048,692 |
| (2,002,563) |
| (944,871,581) |
Higher Costs Recognition - Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 |
| - |
| - |
| 2,212,623,330 |
| - |
| - |
| 2,212,623,330 |
Operating profit (loss) |
| 201,687,457 |
| (45,757,220) |
| 1,085,775,383 |
| 28,048,692 |
| (2,002,563) |
| 1,267,751,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
| 48,167,722 |
| 116,451,935 |
| 243,384,011 |
| 3,868,326 |
| (11,705,298) |
| 400,166,696 |
Finance cost |
| (165,021,680) |
| (34,952,106) |
| (410,033,195) |
| (34,659,915) |
| 11,677,751 |
| (632,989,145) |
Other finance results |
| (253,327,288) |
| (59,744,615) |
| (232,725,771) |
| 241,429,632 |
| - |
| (304,368,042) |
Financial results, net |
| (370,181,246) |
| 21,755,214 |
| (399,374,955) |
| 210,638,043 |
| (27,547) |
| (537,190,491) |
(Loss) Profit before income tax |
| (168,493,789) |
| (24,002,006) |
| 686,400,428 |
| 238,686,735 |
| (2,030,110) |
| 730,561,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax |
| 70,021,525 |
| 7,561,019 |
| 63,875,915 |
| (12,068,615) |
| - |
| 129,389,844 |
(Loss) Profit for the year from continuing operations |
| (98,472,264) |
| (16,440,987) |
| 750,276,343 |
| 226,618,120 |
| (2,030,110) |
| 859,951,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
| - |
| - |
| (128,888,439) |
| - |
| 2,030,110 |
| (126,858,329) |
Adjustment non-controlling interest in joint ventures |
| - |
| 5,997,693 |
| - |
| - |
| - |
| 5,997,693 |
Total (loss) profit of the year |
| (98,472,264) |
| (10,443,294) |
| 621,387,904 |
| 226,618,120 |
| - |
| 739,090,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (2) |
| 74,395,411 |
| 31,351,324 |
| 168,041,664 |
| 35,359,918 |
| - |
| 309,148,317 |
53
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Consolidated statement of income at September 30, 2013 |
| Generation | Transmission | Distribution (1) | Holding and others | Eliminations | Consolidated | |||||
Total (loss) profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company |
| (99,396,333) |
| (10,443,294) |
| 267,863,996 |
| 226,618,120 |
| - |
| 384,642,489 |
Non - controlling interest |
| 924,069 |
| - |
| 353,523,908 |
| - |
| - |
| 354,447,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of financial position as of December 31,2013 | ||||||||||||
Assets | 3,714,900,214 | 963,993,871 | 6,971,553,493 | 2,183,787,385 | (455,870,761) | 13,378,364,202 | ||||||
Liabilities | 2,713,844,869 | 687,818,246 | 6,434,706,032 | 995,033,986 | (455,870,761) | 10,375,532,372 | ||||||
Additional consolidated information as of September 30, 2013 | ||||||||||||
Increases of property, plant and equipment |
| 46,172,778 | 38,142,635 | 694,848,299 | 126,748,131 | - | 905,911,843 | |||||
(1) Includes financial results generated by financial debt issued by EASA for Ps. 130.3 million and other consolidation adjustments. | ||||||||||||
(2)Includes amortizations and depreciation of fixed assets and intangible assets (recognized in cost of sales, administrative expenses and selling expenses) and charge for reserve for Director´s options (recognized in administrative expenses). |
54
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Accounting criteria used by the subsidiaries for the measuring of results, assets and liabilities of the segments are consistent with those used in the consolidated financial statements. Transactions between different segments are conducted under market conditions. Assets and liabilities are assigned based on the segment’s activity.
The segment called “Electricity transmission”, which corresponds to the Company’s indirect interest in Citelec and its subsidiaries, has been included as a reportable segment since it is considered as such in the reports received by the Executive Director. Since the stake in such companies constitutes an interest in a joint venture, it is not consolidated and it is valued according to the equity method of accounting in the consolidated statement of Income and Financial position.
In this sense, the reconciliation between the segment information and the consolidated statement of Income is presented below:
Consolidated statement of income at September 30, 2014 | Segment information | Results from interest in joint ventures | Consolidated comprehensive total income | |||
Sales | 5,021,420,859 | (488,495,143) | 4,532,925,716 | |||
Intersegment sales | 10,809,346 | (1,079,707) | 9,729,639 | |||
Cost of sales | (4,744,765,433) | 360,005,021 | (4,384,760,412) | |||
Gross profit (loss) | 287,464,772 | (129,569,829) | 157,894,943 | |||
Selling expenses | (506,274,060) | - | (506,274,060) | |||
Administrative expenses | (656,055,220) | 64,240,379 | (591,814,841) | |||
Other operating income | 173,614,668 | (2,535,483) | 171,079,185 | |||
Other operating expenses | (263,393,165) | 13,455,318 | (249,937,847) | |||
Recovery of impairment of property, plant and equipment | 88,406,704 | - | 88,406,704 | |||
Share profit of joint ventures | 7,111 | 7,784,591 | 7,791,702 | |||
Share loss of associates | (319,388) | - | (319,388) | |||
Operating loss before Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 | (876,548,578) | (46,625,024) | (923,173,602) | |||
Higher Costs Recognition - Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 | 735,534,348 | - | 735,534,348 | |||
Operating loss | (141,014,230) | (46,625,024) | (187,639,254) | |||
Finance income | 417,602,963 | (165,346,798) | 252,256,165 | |||
Finance cost | (886,023,257) | 44,326,006 | (841,697,251) | |||
Other finance results | 95,621,489 | 130,488,841 | 226,110,330 | |||
Finance results, net | (372,798,805) | 9,468,049 | (363,330,756) | |||
Loss before income tax | (513,813,035) | (37,156,975) | (550,970,010) | |||
Income tax | (56,911,133) | 25,397,255 | (31,513,878) | |||
Loss for the period from continuing operations | (570,724,168) | (11,759,720) | (582,483,888) | |||
Adjustment non-controlling interest in Joint Ventures | (11,759,720) | 11,759,720 | - | |||
Loss for the period | (582,483,888) | - | (582,483,888) | |||
Depreciation and amortization | 365,996,821 | (32,316,273) | 333,680,548 |
55
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Additional consolidated information as of September 30, 2014 | Segment information |
| Assets and liabilities from interest in joint ventures |
| Consolidated Statements of financial position | |
Assets | 16,419,327,073 | (1,009,469,739) | 15,409,857,334 | |||
Liabilities | 13,823,310,152 | (869,700,292) | 12,953,609,860 | |||
Additional consolidated information as of September 30, 2014 | Segment information | Assets and liabilities from interest in joint ventures | Note 10 | |||
Property, plant and equipment increases | 1,861,084,934 | (108,370,673) | 1,752,714,261 |
Consolidated statement of income at September 30, 2013 |
| Segment information | Results from interest in joint ventures | Consolidated comprehensive total income | ||
Sales |
| 4,227,196,027 |
| (272,977,553) |
| 3,954,218,474 |
Intersegment sales |
| 5,838,227 |
| (1,326,832) |
| 4,511,395 |
Cost of sales |
| (4,424,368,672) |
| 260,394,822 |
| (4,163,973,850) |
Gross loss |
| (191,334,418) |
| (13,909,563) |
| (205,243,981) |
|
|
|
|
|
|
|
Selling expenses |
| (449,912,580) |
| - |
| (449,912,580) |
Administrative expenses |
| (443,664,585) |
| 60,597,491 |
| (383,067,094) |
Other operating income |
| 281,152,639 |
| (980,959) |
| 280,171,680 |
Other operating expenses |
| (142,571,679) |
| - |
| (142,571,679) |
Share profit (loss) of joint ventures |
| 3,902 |
| (10,384,723) |
| (10,380,821) |
Share profit of associates |
| 1,455,140 |
| - |
| 1,455,140 |
Operating (loss) profit before Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 |
| (944,871,581) |
| 35,322,246 |
| (909,549,335) |
Higher Costs Recognition - Resolution ES No. 250/13 and Notes ES No. 6852/13 and 4012/14 |
| 2,212,623,330 |
| - |
| 2,212,623,330 |
Operating profit |
| 1,267,751,749 |
| 35,322,246 |
| 1,303,073,995 |
|
|
|
|
|
|
|
Finance income |
| 400,166,696 |
| (116,451,935) |
| 283,714,761 |
Finance cost |
| (632,989,145) |
| 34,943,784 |
| (598,045,361) |
Other finance results |
| (304,368,042) |
| 59,744,615 |
| (244,623,427) |
Finance results, net |
| (537,190,491) |
| (21,763,536) |
| (558,954,027) |
Profit before income tax |
| 730,561,258 |
| 13,558,710 |
| 744,119,968 |
|
|
|
|
|
|
|
Income tax |
| 129,389,844 |
| (7,561,017) |
| 121,828,827 |
Profit for the period from continuing operations |
| 859,951,102 |
| 5,997,693 |
| 865,948,795 |
|
|
|
|
|
|
|
Discontinued operations |
| (126,858,329) |
| - |
| (126,858,329) |
Adjustment non-controlling interest in Joint Ventures |
| 5,997,693 |
| (5,997,693) |
| - |
Profit for the period |
| 739,090,466 |
| - |
| 739,090,466 |
|
|
|
|
|
|
|
Depreciation and amortization |
| 309,148,317 |
| (31,351,324) |
| 277,796,993 |
56
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 26:(Continuation)
Additional consolidated information as of December 31, 2013 |
| Segment information |
| Assets and liabilities from interest in joint ventures |
| Consolidated Statements of financial position |
Assets |
| 13,378,364,202 | (815,809,970) | 12,562,554,232 | ||
Liabilities |
| 10,375,532,372 | (687,800,243) | 9,687,732,129 | ||
|
| |||||
Additional consolidated information as of September 30, 2013 | Segment information | Assets and liabilities from interest in joint ventures | Note 10 | |||
Property, plant and equipment increases | 905,911,843 | (38,142,635) | 867,769,208 |
NOTE 27: RELATED PARTIES´ TRANSACTIONS
a) Sales of goods and services
Nine months to | ||||
09.30.2014 | 09.30.2013 | |||
Joint ventures |
| |||
Transener | 9,729,639 | 4,511,395 | ||
|
| |||
Other related parties |
|
| ||
TGS | 10,270,037 | - | ||
CYCSA | 896,616 | 796,992 | ||
Grupo Dolphin | 41,382 | - | ||
20,937,674 | 5,308,387 |
Correspond to gas sale, advisory services in technical assistance for the operation, maintenance and management of the transport system of high-voltage electricity.
b) Purchases of goods and services
Nine months to | ||||
09.30.2014 | 09.30.2013 | |||
Joint ventures |
|
| ||
Transener | (1,079,707) | (1,326,832) | ||
|
|
| ||
Other related parties |
|
|
| |
SACME | (13,900,844) | (10,527,568) | ||
|
| (14,980,551) | (11,854,400) |
Correspond to maintenance, and operation and monitoring system for transmitting electricity.
c) Fees for services
Nine months to | ||||
|
| 09.30.2014 | 09.30.2013 | |
Other related parties |
|
|
| |
Salaverri, Dellatorre, Burgio & Wetzler |
| (228,727) | (340,000) | |
|
| (228,727) | (340,000) |
Correspond to fees for legal advice.
57
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 27:(Continuation)
d) Other operating income
Nine months to | ||||
09.30.2014 | 09.30.2013 | |||
Other related parties |
| |||
CYCSA | 4,955,936 |
| 3,420,919 | |
PYSA | 2,100 |
| - | |
4,958,036 | 3,420,919 |
Correspond to royalties for the use of the distribution network.
e) Other operating expenses
Nine months to | ||||
09.30.2014 | 09.30.2013 | |||
Other related parties |
| |||
Foundation | (3,370,000) |
| (2,600,000) | |
(3,370,000) | (2,600,000) |
Correspond to donations.
f) Financial cost
Nine months to | ||||
09.30.2014 | 09.30.2013 | |||
Other related parties |
| |||
PYSSA | (68,944) | (72,965) | ||
TGS | (10,538,341) | (6,958,921) | ||
(10,607,285) | (7,031,886) |
Correspond mainly to interest on loans received.
g) Capital Suscription
Nine months to | ||||
09.30.2014 | 09.30.2013 | |||
Joint ventures |
| |||
Citelec | - | (1,198,434) | ||
- | (1,198,434) |
58
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 27:(Continuation)
h) Balances with related parties:
As of September 30, 2014 |
| Trade receivables | Other receivables | Accounts payable | Borrowings | |||||
| Current | Current | Current | Current |
| Non Current | ||||
Joint ventures |
|
|
| |||||||
Transener |
| 4,332,739 | - | 163,093 |
| - |
| - | ||
Other related parties |
|
|
|
|
|
|
|
|
| |
CYCSA |
| 482,180 |
| 5,374,086 |
| - |
| - | - | |
Directors |
| - |
| 4,344,050 |
| - |
| - | - | |
Origenes Retiro |
| - |
| - |
| - |
| 5,211,012 | 186,763,100 | |
TGS |
| 3,710,698 |
| - |
| 188,559 |
| - | 262,124,563 | |
|
| 8,525,617 |
| 9,718,136 |
| 351,652 |
| 5,211,012 |
| 448,887,663 |
As of December 31, 2013 |
| Trade receivables | Other receivables | Accounts payable | Borrowings | |||||
| Current | Current | Current | Current | Non Current | |||||
Joint ventures |
|
|
| |||||||
Transener |
| 3,881,745 | - | 102,355 | - | - | ||||
Other related parties |
| |||||||||
CYCSA |
| 241,090 | 645,830 | - | - | - | ||||
Orígenes Retiro |
| - | - | - | 31,508,188 | 200,000,000 | ||||
TGS |
| - | - | 988,774 | - | 194,721,657 | ||||
|
| 4,122,835 | 645,830 | 1,091,129 | 31,508,188 | 394,721,657 |
59
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 28: ASSETS AND LIABILITIES IN FOREIGN CURRENCY
Type | Amount in foreign currency | Exchange rate (1) | Total | Total | |||||
ASSETS | |||||||||
NON CURRENT ASSETS |
|
|
|
|
|
| |||
|
|
|
|
|
| ||||
Other receivables |
|
|
|
|
| ||||
Third parties | U$S | 417,465 |
| 8.330 |
| 3,477,484 |
| 2,666,524 | |
Total non current assets |
|
|
| 3,477,484 |
| 2,666,524 | |||
|
|
| |||||||
CURRENT ASSETS |
|
|
| ||||||
|
|
|
|
|
| ||||
Financial assets at fair value through profit and loss | U$S | 21,214,200 |
| 8.330 |
| 176,714,283 |
| 312,031,682 | |
Trade and other receivables |
|
|
|
|
|
| |||
Third parties | U$S | 11,773,465 |
| 8.330 |
| 98,072,947 |
| 30,237,124 | |
EUR | 3,553 |
| 10.510 |
| 37,341 |
| 461,648 | ||
U$ | - |
| - |
| - |
| 856 | ||
Cash and cash equivalents | U$S | 10,197,248 |
| 8.330 |
| 84,943,071 |
| 116,186,826 | |
EUR | 15,466 |
| 10.510 |
| 162,551 |
| 171,244 | ||
U$ | 510,118 |
| 0.337 |
| 172,022 |
| 99,484 | ||
Total current assets |
|
|
| 360,102,215 |
| 459,188,864 | |||
Total assets |
|
|
| 363,579,699 |
| 461,855,388 | |||
|
| ||||||||
|
| ||||||||
LIABILITIES |
|
| |||||||
|
| ||||||||
NON CURRENT LIABILITIES |
|
|
|
|
|
| |||
|
|
|
|
|
| ||||
Trade and other payables |
|
|
|
| |||||
Third parties | U$S | 19,987,390 |
| 8.430 |
| 168,493,701 |
| 130,337,773 | |
Borrowings |
|
|
|
|
| ||||
Third parties | U$S | 321,808,520 |
| 8.430 |
| 2,712,845,831 |
| 2,391,796,162 | |
Related parties | U$S | 31,279,781 | 8.380 |
| 262,124,563 | 194,721,657 | |||
Total non current liabilities |
| 3,143,464,095 | 2,716,855,592 |
60
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 28:(Continuation)
Type | Amount in foreign currency | Exchange rate (1) | Total | Total | |||||
CURRENT LIABILITIES |
|
| |||||||
|
| ||||||||
Trade and other payables |
|
| |||||||
Third parties | U$S | 30,549,235 | 8.430 | 257,530,054 | 188,961,031 | ||||
EUR | 271,046 | 10.657 | 2,888,595 | 3,540,978 | |||||
£ | 88,180 | 13.676 | 1,205,962 | 871,851 | |||||
CHF | 30,321 | 8.833 | 267,969 | 223,076 | |||||
NOK | 68,200 | 1.317 | 89,817 | 73,588 | |||||
SEK | 347,080 | 1.174 | 407,531 | - | |||||
U$ | 23,302 | 0.337 | 7,858 | 19,349 | |||||
Borrowings |
|
|
| ||||||
Related parties | U$S | 14,188,768 | 8.430 | 119,611,313 | 368,466,024 | ||||
Salaries and social security payable |
|
|
| ||||||
Third parties | U$ | 724,026 | 0.337 | 244,156 | 238,171 | ||||
|
| ||||||||
Total current liabilities | 382,253,255 | 562,394,068 | |||||||
Total liabilities | 3,525,717,350 | 3,279,249,660 | |||||||
| |||||||||
(1) The exchange rates used correspond to September 30, 2014 released by the National Bank for U.S. dollars (U$S), euro (EUR), sterling pounds (£) swiss francs (CHF), norwegian kroner (NOK) and uruguayan pesos (U$). For balances with related parties, the exchange rate used is the average. | |||||||||
NOTE 29: FINANCIAL INSTRUMENTS
The following chart shows the Company’s financial assets and liabilities measured at fair value and classified according to their hierarchy as of September 30, 2014 and December 31, 2013.
As of September 30, 2014 |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Assets |
| |||||||
Financial assets at fair value through profit and losss |
| |||||||
Corporate securities |
| 413,744 |
| - |
| - | 413,744 | |
Government securities |
| 428,153,553 |
| 1,450,812 |
| - | 429,604,365 | |
Shares |
| 79,142,482 |
| - |
| 70,630 | 79,213,112 | |
Trust |
| - |
| 857,467,545 |
| - | 857,467,545 | |
Investment funds |
| 945,175,485 |
| - |
| - | 945,175,485 | |
Cash and cash equivalents |
|
|
|
|
|
|
| |
Investment funds |
| 50,464,268 |
| - |
| - | 50,464,268 | |
Other receivables |
|
|
|
|
|
|
| |
Mutual funds as collateral |
| 86,802,971 |
| - |
| - | 86,802,971 | |
Attachment of bank accounts |
| 13,349,394 |
| - |
| - | 13,349,394 | |
Total assets |
| 1,603,501,897 | 858,918,357 | 70,630 | 2,462,490,884 | |||
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Derivative financial instruments |
| 3,685,000 |
| - |
| - |
| 3,685,000 |
Total liabilities |
| 3,685,000 | - | - | 3,685,000 |
61
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 29: (Continuation)
As of December 31, 2013 |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Assets |
| |||||||
Financial assets at fair value through profit and losss |
|
|
|
|
|
|
|
|
Corporate securities |
| 331,969 |
| - |
| - |
| 331,969 |
Government securities |
| 167,488,795 |
| 3,679,641 |
| - |
| 171,168,436 |
Government bonds trust AESEBA |
| 99,523,343 |
| - |
| - |
| 99,523,343 |
Shares |
| 84,129,331 |
| - |
| 70,630 |
| 84,199,961 |
Trust |
| - |
| 431,466,036 |
| - |
| 431,466,036 |
Investment funds |
| 490,299,478 |
| - |
| - |
| 490,299,478 |
Cash and cash equivalents |
|
|
|
| ||||
Investment funds |
| 219,887,350 |
| - |
| - |
| 219,887,350 |
Total assets |
| 1,061,660,266 |
| 435,145,677 |
| 70,630 |
| 1,496,876,573 |
The techniques used for the measurement of assets at fair value with changes in profits/ losses, classified as Level 2, are detailed below:
- Public debt securities:atthe present value of contractual cash flows, applying a discount rate derived from other similar debt securities’ observable market prices.
- Trusts: it was determined based on the fair value measurement of the underlying, which amounts to 40% of CIESA’s shares. To determine this value, a measurement of the fair value of CIESA’s main assets and liabilities was performed. CIESA’s main asset is its stake in TGS, which has been measured at the value of this company’s American Depositary Receipt. CIESA’s main liability is its financial debt, which has been measured at its book value, which does not significantly differ from its market value.
- Derivative Financial Instruments: calculated from variations between market prices at the closing date of the period or their sale date, and the amount at the time of perfection.
NOTE 30:CONTINGENCIES
As at the issuance date of these condensed interim consolidated financial statements, there are no significant changes regarding the situation disclosed by the Company as at December 31, 2013 with the exception of the following:
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 30: (Continuation)
30.1 CTG
Legal proceeding with DESA
On April 15, 2014, in view of the course of the litigation during the period, CTG’s management decided to put an end to the proceeding by executing a settlement agreement with DESA whereby CTG undertakes to pay the amount of $ 15 million plus VAT to DESA and the amount of $ 3.7 million plus VAT to the intervening Law Office.
Account blocking
On July 24, 2014, the Municipality of General Güemes brought a tax execution proceeding against CTG alleging the lack of payment of the “Activities Assesment” for the June 2011-April 2014 period and was granted the blocking of CTG’s banking accounts in the amount of $ 10.8 million for principal and $ 5.4 million for legal accessory expenses.
The Activities Assessment, or Health, Security, Hygiene and Environment Assessment, is an assessment levied on the commercial, industrial and service activity of the Municipal Tax Code which CTG has historically disregarded since the activities it conducts are not subject to the application of municipal taxes as the company is under the scope of the ENRE and the Municipality of General Güemes does not render any service which should be remunerated through an assessment.
Therefore, the Municipality of General Güemes and CTG have reached several agreements whereby CTG committed to make a monthly contribution and the Municipality of General Güemes waived its right to bring claims seeking the payment of municipal assessments. The last agreement reached between the parties under such conditions, dated May 5, 2011, provided for a $ 100,000 monthly contribution.
On August 25, 2014, CTG filed a motion to dismiss for lack of jurisdiction of the province and defective title due to the non-existence of the debt. It further filed a plea requesting the substitution of the interim injunction relief.
On October 27, 2014, the parties, without this implying an admission of facts or rights, reached the following agreement:
(i) a monthly fee of $ 185,000 for the October-December 2014 period as assistance for activities promoting the development of the community and services requested by CTG to the Municipality of General Güemes;
(ii) a monthly amount of $ 200,000 as from January 2015 and until December 31, 2015;
(iii) as from January 1, 2016, the amount of the monthly assistance will reach $ 260,000;
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 30: (Continuation)
In this way, the parties resolved to terminate the tax execution proceeding. To such effect, and without this implying the admissibility of the Activities Assessment claimed by the Municipality of General Güemes, the Company undertook the following commitment:
(i) to pay the amount of $ 1,100,000 in consideration of the lifting of the injunctive orders once the tax execution proceeding has been waived;
(ii) to pay the amount of $ 1,100,000 in 14 monthly, equal and consecutive installments of $ 78,571.43 each as from November 10, 2014;
(iii) to deliver a vehicle owned by CTG free from all and any liens;
(iv) to pay the Municipality of General Güemes’ attorneys fees in the amount of $ 440,000 through the issuance of an immediate payment check for $ 220,000 and the remaining amount in 10 monthly installments in the amount of $ 22,000;
As at September 30, 2014, CTG has disclosed the effects of this agreement in the Condensed Interim Financial Statements. As at the issuance hereof, this blocking amounts to $ 15.7 million ($ 2.4 million in an account held with Banco Galicia and $ 13.3 million in mutual funds held with Banco de Valores).
On October 31. 2014, the intervening Court ordered the lifting of CTG bank accounts’ blocking. In this sense, on November 3, 2014, Banco de Valores lifted the blocking of the mutual funds, Banco Galicia’s account still being blocked as at the issuance of these Condensed Interim Financial Statements.
Termination of the reorganization proceeding
On September 24, 2014, CTG was served notice of a judicial order passed on June 30, 2014 and its explanatory order passed in September declaring the termination of the reorganization proceeding pursuant to Section 59 of Bankruptcy Act No. 24,522 and its amending provisions. Within this context, the judge ordered the lifting of the general restraint over goods, the termination of the statutory auditors’ duties and the fixing of their professional fees in the amount of $ 1.6 million plus VAT. Statutory auditors have expressed their consent to this order, which is thus deemed final and conclusive. CTG has filed an appeal to challenge the high fees declared.
30.2 CTLL
Legal action for breach of the joint venture formed by Isolux Corsan Argentina SA and Tecna Estudios y Proyectos de Ingeniería S.A. (collectively "the Contractor")
As regards CTLL’s legal dispute with the Contractor, in March 2014 hearings of witnesses and expert witnesses were held in the City of Montevideo. On May 30, 2014, the parties filed their closing briefs. The Arbitration Court has requested an extension to issue its final award, which has been granted until January 31, 2015.
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 30: (Continuation)
Sales Tax
CTLL has filed a note to the Province of Neuquén’s Revenue Department in order to inform it that CTLL considers that the electric power generation activity conducted in that province should be covered by the provisions of Section 12 of Act No. 15,336, which provides that electricity generation, transformation and transmission works and installations within the national jurisdiction and the energy generated or transported by them should not be levied with taxes or contributions, nor be subject to domestic provisions restricting or hindering its free production and circulation. Pursuant to this Section, revenues resulting from the generation of electric power are exempted from the provincial sales tax.
CTLL’s position was finally sustained by a final and conclusive decision by the Prosecutor’s Office of the Province of Neuquén on April 9, 2014, where the Prosecutor, in answer to Docket No. 5823-007042/14, “S/Central Térmica Loma de la Lata S/ISIB s/Generación de Energía Eléctrica y solicitud de certificado de exención”, held as follows: “[…] that pursuant to the provisions enacted by the National Government in this area as a proper means to attain the sought federal objectives, the Company should not pay the Sales Tax.”
In line with the decision of the Prosecutor’s Office of the Province of Neuquén, in the month of May the Revenue Department of that province issued a Non-Tax Deduction and/or Collection Certificate to CTLL effective until December 31 of this year.
As at September 30, 2014, based on the decisions adopted by those entities, CTLL has decided to reverse the provision recorded as of December 31, 2013 in the amount of $ 41.1 million, with an offsetting entry under “Other operating income” in the Statement of Comprehensive Income for $ 37.9 million as sales tax and under “Other financial results” in the amount of $ 3.2 million as compensatory interest.
30. 3 PESA and subsidiaries
Income tax – Inflation adjustment
HINISA and HIDISA have assessed the income tax for fiscal year 2013, which resulted in a $ 9.3 million and $ 0.9 million tax, respectively, taking into consideration the application of the inflation adjustment mechanisms set forth in Title VI of the Income Tax Act, the update of Property, plant en equipment amortizations (Sections 83, 84 and 89), a cost restatement on account of the disposal of shares and mutual funds quotas (Sections 58, 61 and 89), and the update of intangible assets amortizations (Sections 81.c, 84 and 89, and Section 128 of its regulatory decree), to such effect the domestic wholesale price index (IPIM) published by the National Institute of Statistics and Censuses based on the similarity with the parameters put forward in re “Candy S.A.” heard by the National Supreme Court of Justice, which on July 3, 2009 ruled for the application of the inflation adjustment mechanism. If the inflation adjustment mechanisms weren’t applied, the tax assessed for fiscal year 2013 for HINISA and HIDISA would amount to $ 14.1 million and $ 12.3 million, respectively.
As of September 30, 2014 and until this issue is finally and conclusively solved, HINISA and HIDISA will hold a provision for the additional income tax liabilities assessable for fiscal years 2012 and 2013 in case the inflation adjustment has not been deducted. This provision amounts to $ 34.2 million and $ 25.2 million respectively, including compensatory interest.
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NOTE 30:(Continuation)
Minimum Notional Income Tax
During the month of May 2014, the Company and its subsidiaries CTLL and HINISA filed a declaratory relief pursuant to Section No. 322 of the Federal Code of Civil and Commercial Procedure against AFIP – DGI in order to obtain assurance as to the application of the minimum notional income tax for that fiscal year related to the decision by the Supreme Court in re “Hermitage” passed on June 15, 2010.
As at September 30 of this fiscal year, the Company held a provision for the minimum notional income tax for fiscal periods 2010-2014 amounting to $ 175.3, including compensatory interest.
30.4 Edenor
30.4.1 Change of the interest rate applicable to historical lawsuit amounts
By Minutes 2601 of the Federal Court of Appeals in Labor Matters, dated May 21, 2014, it was established that the lending rate of Banco Nación Argentina used for the granting of loans, which at present stands at 18.6% p.a., would be replaced by the nominal rate for personal loans of Banco Nación Argentina, currently at 36% p.a. This change applies to all amounts of lawsuits pending judgment within the jurisdiction of the City of Buenos Aires. The effect of this change in the applicable rate generated a loss of $ 31.6 million, which was recorded in the “Other operating expense, net” line item of the Condensed Interim Statement of Comprehensive (Loss) Income as of September 30, 2014.
30.4.2Legal action brought by the Company (“EDENOR S.A. VS ENRE RES. No. 336/12”)
i) Purpose: By this action, Edenor challenges ENRE’s Res. pursuant to which Edenor is ordered to:
- Determine the customers affected by the power cuts occurred as a consequence of failures between October 29 and November 14, 2012;
- Determine the discounts to be recognized to each of the customers identified in accordance with the preceding caption;
- Credit such discounts on account of the final discounts that will result from the evaluation of the Technical Service Quality relating to the six-month control period;
- Pay a compensation to each small-demand residential customer (T1R) who has been affected by the power cuts occurred during the aforementioned period, the amount of which will depend on the electricity outage duration, provided, however, that such power cut lasted more than 12 continuous hours.
ii) Amount: not specified in the complaint.
iii) Procedural stage of the proceedings: This Res. has been contested by Edenor through a direct appeal (“Recurso Directo”), which is pending in the Court of Appeals in Contentious and Administrative Federal Matters - Division IV. Notice of the legal bases of the aforementioned appeal, which was filed on February 4, 2014, has not yet been served upon the ENRE.
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 30:(Continuation)
30.4.3Legal action brought by Edenor (“EDENOR S.A. VS FEDERAL GOVERNMENT –MPFIPyS PROCEEDING FOR THE DETERMINATION OF A CLAIM AND MOTION TO LITIGATE IN FORMA PAUPERIS”)
On June 28, 2013, Edenor 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.
i) Purpose: To sue for breach of contract due to the Federal Government’s failure to perform in accordance with the terms of the “Memorandum of Understanding concerning the Renegotiation of the Concession Agreement” (“Acta Acuerdo de Renegociación del Contrato de Concesion” – Adjustment Agreement) entered into with Edenor in 2006,and for damages caused as a result of such breach.
ii) Procedural stage of the proceedings: On November 22, 2013, Edenor 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”. As of the date of this report, notice of the complaint has not yet been served upon the defendant. On February 3, 2014, Edenor applied for the immediate granting of a provisional remedy in order to maintain an efficient and safe service, requesting that until judgment is passed on the merits of the case, the Federal Government be compelled to provide Edenor with economic assistance, whether by means of a temporary rate adjustment or through government grants. It was ordered that notice of said presentation be served upon the Federal Government – MPFIPyS.
On May 27, 2014, the court hearing the case rejected the provisional remedy sought by the Company. Within the procedural term granted for such purpose, Edenor filed an appeal, which was allowed. Therefore, the proceedings have been sent to Division V of the Court in Contentious and Administrative Federal Matters to be dealt with and resolved.
30.4.4Legal action brought by ASOCIACIÓN DE DEFENSA DE DERECHOS DE USUARIOS Y CONSUMIDORES – ADDUC
i) Purpose: that Edenor be ordered 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 No. 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 users 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 value added tax (VAT) and any other taxes charged on the portion of the surcharge illegally collected be reimbursed.
ii) Amount: undetermined
iii) Procedural stage of the proceedings: On November 11, 2011, Edenor 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 and Other defendants, for breach of contract”. As of the date of issuance of these condensed interim financial statements, the Court has not received the requested file. 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 and other defendants, for breach of contract”.
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NOTE 30: (Continuation)
30.3.5 Legal action brought by the National Ombudsman
i) Purpose: presentation against the Res.s by which the new electricity rate schedule went into effect as from October 1, 2008 and the application of the PUREE.
ii) Amount: undetermined
iii) Procedural stage of the proceedings: on December 7, 2009, Edenor filed an appeal (“Queja por Recurso denegado”) to the Federal Supreme Court concerning the precautionary measure granted to the plaintiff, which is currently being analyzed by the Supreme Court. The file was joined to “CARBONEL SILVIA CRISTINA vs FEDERAL GOVERNMENT – MINISTRY OF PLANNING – ENERGY SECRETARIAT RESOLUTION 1196/08 1170/08, ACTION FOR THE PROTECTION OF A RIGHT GUARANTEED BY THE CONSTITUTION (AMPARO) LAW 16,986”, and treated as an Action for the protection of rights. On August 20, 2013, the Court in Contentious and Administrative Federal Matters No. 10 – Clerk’s Office No. 20 rejected the aforementioned action. This decision, which was appealed by the plaintiff, was confirmed in all its terms by Division IV of the Court of Appeals in Contentious and Administrative Federal Matters on May 20, 2014. The National Ombudsman filed an extraordinary appeal (“Recurso Extraordinario Federal”) that was declared inadmissible by the Appellate Court. Therefore, the National Ombudsman filed an appeal to the Federal Supreme Court. In view of the above, and at Edenor’s request, on September 29, 2014, the Court of Original Jurisdiction formally declared that the once granted precautionary measure was no longer in force, thus allowing Edenor to issue the corresponding demand for payment notices and proceed in each case in accordance with the Electric Power Supply Regulations of the Concession Agreement.
However, by Note No. 114039 dated October 11, 2014, the Regulatory Agency instructed the Company to abstain from cutting the power supply for unpaid balances until information is provided on the number of affected users and the magnitude of the amount owed by them so that the Regulatory Agency can evaluate such information and issue a precise instruction.
iv) Conclusion: no provision has been recorded for these claims in these condensed interim financial statements as Edenor, based on both that which has been previously mentioned and the opinion of its legal advisors, believes that there exist solid arguments to support its position. It is estimated that this legal action will be terminated in 2014.
NOTE 31: ECONOMIC AND FINANCIAL SITUATION OF GENERATION D, TRANSMISSION AND ISTRIBUTION SEGMENTS
31.1 Generation
CPB
During the two last fiscal years ended December 31, 2013 and 2012, CPB has recorded net and operating losses, which have significantly affected its working capital and liquidity levels. This situation is mainly due to the continuous imbalance between income and operating costs CPB has been experiencing since late 2011, which has resulted in a shortage of resources —especially those destined to the plant’s maintenance— that has affected the availability of generating units.
As of December 31, 2013, CPB had a $ 42.2 million deficit in equity; therefore, it met one of the grounds for dissolution (corporate stock loss) set forth by Section 94.5 of Companies Act No. 19,550.
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NOTE 31:(Continuation)
On March 5, 2014, CPB’s Board of Directors resolved to call an Extraordinary General Meeting of Shareholders scheduled for May 30, 2014 to evaluate different alternatives and courses of action in view of the verification of the ground for dissolution aiming to moderate or minimize the negative impact of CPB’s situation and to be able to continue operating as an on-going business.
During April, CPB has managed to successfully renegotiate the cancellation modality for the financing granted by CAMMESA under ES Res. No. 146/02 for the amount of $ 50.8 million, which allowed it to alleviate its tight financial situation.
On May 23, 2014 ES Res. No. 529/14, which updated the provisions governing the WEM’s generating, co-generating and self-generating agents, was published in the Official Bulletin. This new remuneration scheme has had a positive impact on CPB's assets and financial position, allowing it to overcome the capital stock loss the Company was undergoing.
On May 30, 2014, CPB’s Extraordinary General Meeting of Shareholders was held. At the Meeting, ES Res. No. 529/14’s estimated impact on the period’s results was analyzed, and an improvement in CPB’s assets and financial situation and the resulting equity restructuring was confirmed.
Regarding the need to urgently gather financing so that CPB may afford the capital investments necessary to fully recover the plant’s operating capacity and thus guarantee future constant cash flows, during the month of April a new financing agreement was entered into with CAMMESA for the amount of US$ 82.6 million, plus VAT and nationalization costs, to execute the Company’s 2015-2016
Even though the remuneration scheme update has had a positive impact on CPB’s reformulation of the economic equation, which has allowed it to cover for increases in staff costs and minimum maintenance works which are necessary under normal operating conditions, the loan financial burden may exceed operating results and adversely affect CPB’s economic equation, even if its cancellation is conditional upon the company’s capacity to generate surplus funds.
HIDISA and HINISA
During the nine-month period ended September 30, 2014, HIDISA and HINISA have recorded negative gross and operating results. This situation is mainly attributable to the negative impact ES Resolution No. 95/13 has had on both companies’ remuneration as from the month of November 2013.
As HINISA has been expressing in several presentations to CAMMESA and the ES, it is imperative that the initial classification of the plants (Nihuil I, Nihuil II and Nihuil III) made by CAMMESA be modified by categorizing each of them as small-scale plants (with an installed power lower than 120 MW) in view of the technical and operating conditions they have as compared with other higher-scale hydroelectric power plants.
This new remuneration scheme implemented pursuant to ES Resolution No. 95/13, even taking into consideration the adjustment set forth by ES Resolution No. 529/14, would not allow HIDISA and HINISA to generate sufficient income during the following months to cover for their operating costs or afford the minimum maintenance costs necessary to guarantee normal operating conditions.
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NOTE 31:(Continuation)
31.2 Transmission
The execution of the Renewal Agreement constitutes a remarkable milestone towards the consolidation of Transener’s economic and financial equation. Nevertheless, the delay in obtaining a tariff chart resulting from a RTI creates uncertainty on Transener’s capacity to generate the income necessary to honor its liabilities in the short term.Additionally, delays by CAMMESA in the payment of the current monthly remuneration for the electric power transmission service and the Fourth Line Royalty still persist.
Considering all the above, it is still difficult to forecast the evolution of the the tariff situation and their possible impact on Transener business and cash flows. Transener has prepared its consolidated financial statements using the accounting principles applicable to an on-going business. Consequently, these statements do not include the effects of any applicable adjustment or reclassification in case these situations are not resolved favorably to the continuity of Transelec’s operations and, thus, this company is forced to realize its assets and discharge its liabilities, including contingent ones, under conditions that are not in its ordinary course of business.
31.3 Distribution
In fiscal years 2012 and 2011, Edenor recorded negative operating and net results, and both its liquidity level and working capital, even in fiscal year 2013, were severely affected. This situation is due mainly to both the continuous increase of its operating costs that are necessary to maintain the level of the service, and the delay in obtaining rate increases and/or recognition of its MMC, as stipulated in Section 4 of the Adjustment Agreement, including the review procedure in the event of deviations exceeding 5%.
In spite of the above-mentioned situation, it is worth mentioning that, in general terms, the quality of the distribution service has been maintained and the constant year-on-year increase in the demand for electricity that has accompanied the economic growth and the standard of living of the last years has also been satisfied. Due to both the continuous increase recorded in the costs associated with the provision of the service and the need for additional investments to meet the increased demand, Edenor has adopted a series of measures aimed at mitigating the negative effects of this situation on its financial structure, without affecting the sources of employment, the execution of the investment plan or the carrying out of the essential operation and maintenance works that are necessary to maintain the provision of the public service in a satisfactory manner in terms of quality and safety.
Edenor has made a series of presentations before control agencies, regulatory authorities and courts in order to jointly instrument the necessary mechanisms to contribute to an efficient and safe provision of the distribution service, the maintenance of the level of investments and the compliance with the increased demand.
Furthermore, on February 3, 2014, the Company applied for the immediate granting of a provisional remedy in order to maintain an efficient and safe service, requesting that until judgment is passed on the merits of the case, the Federal Government be compelled to provide Edenor with economic assistance, whether by means of a temporary rate adjustment or through government grants.
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NOTE 31:(Continuation)
Although the partial recognition of higher costs (as stipulated in Section 4.2 of the Adjustment Agreement) for the period May 2007 through March 2014, implemented by SE Resolution No. 250/13 and SE Notes No. 6852/13 and 4012/14, represented a significant step towards the recovery of Edenor’s economic and financial situation, the effects thereof do not allow for the absorption of neither operating nor investment costs or for the payment of financial services. The constant increase in the operating costs that are necessary to maintain the level of the service, and the delay in obtaining genuine rate increases will continue to deteriorate Edenor’s operating results, demonstrating that this recognition is insufficient to restore the balance that the economic and financial equation of the public service, object of the concession, requires; so much so that the operating and net results for the year ended December 31, 2013 were also negative prior to computing the effects of SE Resolution No. 250/13.
In effect, the operating and net results for the nine-month period ended September 30, 2014 were also negative, resulting in negative equity. Therefore, should this situation continue to remain by the end of the current fiscal year, Edenor wil be subject to complying with the provisions of Section 94 sub-section 5 of Argentine Business Organizations Law No. 19,550, which provide for the dissolution of companies in the event of loss of capital stock.
On October 9, 2014, by SE Note No. 486/14, the SE extended the effects of SE Resolution No. 250/13 and SE Notes No. 6852/13 and 4012/14 until August 31, 2014, which will allow Edenor to temporarily reverse its situation of negative equity. However, considering the projected results of operations for the last quarter of 2014, Edenor’s equity will once again be negative at the closing date of the fiscal year if new extensions of SE Resolution No. 250/13 are not obtained before December 31, 2014.
As a consequence of that which has been previously described, Edenor permanently has a working capital deficit, inasmuch as it is not in condition to have access to other sources of financing, which resulted in the need to cancel only partially the obligations with CAMMESA for energy purchases or to incur debt for specific purposes. In that regard, and as a consequence of Resolution No. 836/2014 issued by the SL that established the application of a gradual increase of 26.5% as from May 1, 2014, together with other benefits, for Company employees represented by the Electric Light and Power Labor Union of the City of Buenos Aires applicable also to those contractors whose employees are included in the collective bargaining agreements of the aforementioned union, Edenor obtained financing from CAMMESA in order to be able to comply with the provisions of such Resolution, which has nevertheless been contested by Edenor before the administrative authorities. Furthermore, by means of Resolution No. 65/14, Edenor entered into a Loan for Consumption (Mutuum) and assignment of secured receivables agreement for $500 million with CAMMESA in order to obtain financing to cover the Extraordinary Investment Plan due to the temporary insufficiency of the revenue deriving from Resolution No. 347/12 (FOCEDE).
In spite of that which has been previously mentioned, Edenor Board of Directors continues analyzing different scenarios and possibilities to mitigate or reduce the negative impact of Edenor’s situation on its operating cash flows and thereby present the shareholders with diverse courses of action. Nevertheless, the improvement of revenues so as to balance the economic and financial equation of the concession continues to be the most relevant aspect.
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NOTE 31:(Continuation)
However, the outcome of the overall electricity rate review is uncertain as to both its timing and final form. Therefore, the uncertainties of the previous fiscal years in this regard continued during the nine-month period ended September 30, 2014; thus, if in the future: (i) the new electricity rate schedules are not issued by the ENRE; (ii) Edenor is not granted other recognition or any other mechanism to compensate for cost increases, in addition to the revenue it obtains from the application of Resolution No. 347/12, the funds derived from the PUREE, or the recognition of MMC values and the offsetting mechanism established by SE Resolution No. 250/13 and SE NotesNo. 6852/13, 4012/14 and 486/14, and/or; (iii) Edenor does not obtain from the Federal Government other mechanism that provides it with financing for cost increases or recognition thereof in addition to those previously mentioned, it is likely that Edenor will have insufficient liquidity and will therefore be obliged to continue implementing, and even deepening, measures similar to those applied until now in order to preserve cash and enhance its liquidity.
Given the fact that the realization of the necessary measures to revert the manifested negative trend depends, among other factors, on the occurrence of certain events that are not under Edenor’s control, such as the requested electricity rate increases and/or the granting of new financing, the Board of Directors has raised substantial doubt about Edenor’s ability to continue as a going concern in the term of the next fiscal year, being obliged to defer certain payment obligations, as previously mentioned, or unable to meet expectations for salary increases or the increases recorded in third-party costs.
Nevertheless, these condensed interim financial statements have been prepared in accordance with the accounting principles applicable to a going concern, assuming that Edenor will continue to operate normally. Therefore, they do not include the effects of the adjustments or reclassifications that might result from the outcome of this uncertainty.
Although the subsidiary Edenor represents approximately 52% of the Group's assets and approximately 60% of the Group’s revenue, the Company considers that this substantial doubt regarding its controlled company Edenor does not affect its capacity to continue operating in the ordinary course of business, mainly due to the following reasons: i) There are no cross-default clauses in Edenor or the Company’s indebtedness agreements in case of breach of the commitments arising from such agreements by the former; ii) The Company is not a guarantor of any indebtedness incurred by Edenor; iii) The Company does not depend financially on Edenor, since this subsidiary has not paid dividends or granted significant loans to it as from its acquisition date on 2007; iv) There are and there have been no significant balances or transactions between the Company and Edenor; v) The Company is not contractually obliged to render financial assistance to Edenor; vi) Since it is a public utility licensee, Edenor has certain specific characteristics established in the Concession Agreement.
The Company has made its projections in order to assess the recoverable value of its non-current assets (including those recognized at the time of acquisition) corresponding to Edenor, in the understanding that it will be granted a tariff increase according to the circumstances.
NOTE 32: HYDROCARBON DEVELOPMENT AND EXPLOITATION PROJECTS
Major developments in investment projects of PEPASA during this period and until the date of issuance of these interim condensed financial statements are described below.
Investment Agreements with Petrobras for “El Mangrullo” Area
For the purpose of maintaining objective production during the third quarter were completed and began producing two new wells within each agreement with Petrobras.
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NOTE 32:(Continuation)
Investment Agreement with Rovella and GyP for the “Senillosa” Area
After completing all investment commitments, G&P, as the Area licensee, is currently conducting all necessary proceedings before the provincial authorities to divide the Area surface as follows:
i) Lot under evaluation until July 14, 2016,
ii) Exploitation lot to be brought on to production,
iii) Reversal of the remaining surface to the Provincial Government.
Furthermore, the Senillosa joint venture has begun construction and mounting works for a gas conditioning plant and a gas pipeline which will be connected with the transportation system to bring the wells on to production, which is scheduled for the end of this year.
Investment Agreement with YPF for the “Rincón del Mangrullo” Area
As of September 30, 2014, 16 wells have been drilled during the first phase of the investment agreed between PEPASA and YPF, out of which 10 have been finished and are already in production. Investments made by PEPASA under this item amount to US$ 59.7 million, out of which US$ 32.8 million have been cancelled as at that date.
Furthermore, by the end of September 2014, the production covered by the agreement reached approximately 400,000 m3/day, which is commercialized pursuant to new gas supply agreements entered into with different clients at a price of 5.3 US$/MMBTU.
NOTE 33: COMPENSATION AGREEMENTS
Company Value Sharing (the “Company-Value Compensation”)
On November 6, 2013, PEPASA’s Extraordinary General Meeting of Shareholders resolved to approve a variable and contingent compensation to certain officers equivalent to 7% of the capital stock after the Company’s capital stock increase, valued based on the difference between the share’s market value at the time of exercising the right and a given value of US$ 0.1735 per share at the exact moment of the capital increase.
On January 13, 2014, the capital stock increase was carried out and the rights granted to Officers to receive the Company-Value Compensation became effective.
The variable remuneration may be required by officers as follows:
1) 25% as from June 2015
2) 7.14% as from December 2015
3) 32.15% as from June 2016
4) 35.71% as from June 2017
The give right may be monetized at any time from the date of effective enforcement until November 15, 2020 (by 5%) and 11 January 2021 (for the remaining 2%) over 7% of the share capital calculated according as detailed in the first paragraph of the note.
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 33:(Continuation)
The fair value of the Option has been measured according to the Black-Scholes valuation model. The main variables considered in such model are the following:
1) 55.9% volatility based on the volatility of the shares of other comparable companies;
2) 2.6% risk-free U.S. dollars interest rate;
As of September 30, 2014, PEPASA has recognized this compensation in profit or loss (with an credit under “Other Liabilities”) in the amount of $ 45.2 million, taking into consideration a share market value of $ 18.35.
NOTE 34: TRANSACTIONS WITH NON-CONTROLLING INTERESTS
Sale of a non-controlling interest in EDENOR
During this period, PISA has sold, through different market transactions, all its Edenor’s ADRs share (973.190 ADRs equivalent to 19.5 million shares), which represented about 2% of the Company’s equity interest. For these operations, the Company has recorded Ps 61.7 million as additional paid-in capital.
NOTE 35:WORKING CAPITAL DEFICIT
As of September 30, 2014 the working capital of the company was negative, amounting to $1,956.9 million. This deficit has been generated in the Distribution segment, mainly through its indirect subsidiary Edenor, as a result of its current economic and financial situation, which is detailed in Note 31. This deficit has been partially offset with the remaining segments, which have a positive working capital.
NOTE 36: LOAN AND ASSIGMENT OF SECURED RECEIVABLES
Related to employees who are union members
On May 28 and October 16, 2014, the ST issued ST Resolutions No. 836/14 and 1928/14 whereby the following is established:
- A salary increase, until April 30, 2015, for Edenor employees who are represented by the Electric Light and Power Labor Union of the City of Buenos Aires -LyF- and the Association of Supervisory Personnel of Energy Companies -APSEE- of 15% from May 1, 2014 and of a cumulative 10% from July 1, 2014.
- An increase, from May 1, 2014, of the percentage relating to employee seniority, which will amount to 2.12% of the basic salary, per year of seniority.
- A 10% to 18% increase, from May 1, 2014, of the percentage relating to the non-calendar week modality of work.
The aforementioned Resolution applies also to the contractors whose employees are included in the collective bargaining agreements of the above-mentioned union/association.
In order to solve the higher wage costs, Edenor obtained financing through a CAMMESA and assignment of secured receibvables.
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 36:(Continuation)
On June 24, 2014, by Note No. 4012/14, the SE instructed CAMMESA to enter into a Loan and assignment of secured receivables agreement with Edenor in order to provide the latter with the necessary financing to cover the higher salary costs. The aforementioned agreement was entered into on July 10, 2014.
The reimbursement of the funds will be guaranteed by Edenor with the assignment of the excess future Sale Settlements with Maturity Dates to be Determined (LVFVD) to be issued, as a result of the application of SE Resolution No. 250/13, as described in Note 2.
At the date of issuance of these condensed interim financial statements, Edenor does not have any excess LVFVD.
As of September 30, 2014, the debt under this financing amounts to $ 162 million and has been disclosed in the Other current payables account.
Extraordinary Investment Plan
On September 26, 2014, the ES, by Resolution No. 65/14, instructed CAMMESA to enter into a Loan and assignment of secured receivables agreement with Edenor for a total of $ 500 million in order to provide the latter with financing to cover the Extraordinary Investment Plan as a consequence of the temporary insufficiency of the revenue deriving from Resolution No. 347/12. The aforementioned agreement was entered into on September 30, 2014. Subsequent to the closing date and as of the date of issuance of these condensed interim financial statements, the Company has received from CAMMESA disbursements for $ 200 million.
As from the end of the grace period that the SE will estipulate along with the methodology and terms for the reimbursement of the financing, Edenor will assign and transfer in favor of CAMMESA, as security for the performance of the obligations assumed and the repayment of the financing granted, the amounts receivable which the Company may have with the WEM up to the actual amount of the financing.
At the date of issuance of these condensed interim financial statements, Edenor does not have any amount receivable with the WEM.
NOTE 37: NEW AGREEMENT WITH GE FOR THE MAINTENANCE OF TG-LMS 100
During the month of August 2014, CTG entered into a new maintenance agreement with GE for its LMS 100 unit effective as from July 1, 2014.This new agreement covers, among others, the following provisions:
i) Gas turbine: Periodical inspections and maintenance resulting from the early deterioration and breaking of parts, with no cap. Collateral damage on affected parts for up to US$ 1 million a year.
ii) Turbine package: Annual inspections with out maintenance and repairs in case of part breakdown for up to US$ 800,000 a year.
As distinguished from the previous contract, which was based on the maintenance and exchange of set components (for example, at 25,000 and 50,000 hours of operation for certain components), this new agreement consists of periodical inspections and part repairs or exchanges, which will be programmed and executed based on their condition in order to guarantee the proper functioning and availability of the unit and to decrease the risk associated with long outages. The new agreement will be effective until the unit reaches 100,000 accumulated hours of operation.
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 37:(Continuation)
The cost of the contract amounts to US$ 554 for each hour of operation of the turbine and contemplates annual adjustments based on labor costs and industrial raw materials indexes in the United States.
Additionally, the new agreement also includes:
i) the availability at the plant of a replacement Spare Supercore during the first 4 years of life of the contract, at no cost for CTG.
ii) the total repair of the Supercore owned by CTG at the termination of the contract;
iii) the total repair of the Power Turbine replaced due to breakage during the month of June 2013, which will remain the property of CTG.
Furthermore, the maintenance contracts entered into with GE have been early terminated, thus extinguishing any pending performance between the parties. Therefore, CTG has recorded on loss in the amount of $ 11.4 million resulting from the write-off of the receivables associated with these contracts, which are disclosed under “Other operating expenses” in the Statement of Comprehensive Income.
NOTE 38: OPPORTUNITIES ALLOCATION AGREEMENT
On September 28, 2014, the Opportunities Allocation Agreement —whereby officers undertook to offer the participation in any investment opportunity to the Company on a preferential basis during the stipulated term and under certain conditions detailed in the financial statements for the year ended December 31, 2013— was terminated. All obligations taken on pursuant to this Agreement have been met.
Furthermore, as from the stated date all Company shares’ purchase options granted to Officers may be actually exercised.
NOTE 39: DOCUMENTATION KEEPING
On August 14, 2014, the National Securities Commission issued General Resolution No. 629, which introduces modifications to the provisions applicable to the keeping and conservation of corporate and accounting books and commercial documentation. To such effect, the Company and its subsidiaries Edenor, CTG, CTLL, EASA and PEPASA have sent non-sensitive work papers and information corresponding to the periods not covered by the statute of limitations for their keeping in the Iron Mountain Argentina S.A.’s data warehouses located at the following addresses:
- Azara 1245 –C.A.B.A.
- Don Pedro de Mendoza 2163 –C.A.B.A.
- Amancio Alcorta 2482 C.A.B.A.
- San Miguel de Tucumán 601, Carlos Spegazzini, Municipality of Ezeiza, Province of Buenos Aires.
On February 5, 2014, Iron Mountain S.A.’s warehouse located at Azara 1245 suffered a publicly known accident. As at the issuance hereof, the Company has not been notified whether the documentation sent has been actually affected by the accident or of its current condition.
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NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM |
NOTE 39:(Continuation)
However, according to an internal study conducted by the Company and timely reported to the National Securities Commission on February 12, 2014, approximately 15% of the documentation which the Company, CTG, CTLL, EASA and PEPASA have deposited with Iron Mountain S.A. may be located at the warehouse where the incident took place. On February 18, 2014, Edenor informed the National Securities Commission that the accident may have affected between 20% and 30% of all the documentation sent to Iron Mountain S.A. for its custody.
A list of the documentation delivered for keeping, as well as the documentation provided for in Section 5.a.3) Article I, Chapter V, Title II of the PROVISIONS (2013 regulatory provisions and amending rules), is available at the Company headquarters.
NOTE 40: EVENTS AFTER THE REPORTING PERIOD
Recognition of MMC
On October 9, 2014, the SE issued SE Note No. 486/14 which, among other issues, extends the effects of SE Resolution No. 250/13 through August 2014 and instructs CAMMESA to proceed to its application (See Note 2).
The aforementioned Note instructs CAMMESA to apply SE Resolution No. 250/13 using for calculation purposes relating to August 31, 2014 the information provided by the ENRE in its Note No. 113,984 dated October 2, 2014.
As of September 30, 2014, due to the fact that the aforementioned note was issued after the closing date of the reporting period, the Company has not recognized the scope thereof, whose effects would have resulted in Edenor’s Equity and Loss for the period amounting to $ 602.5 million and $ 573.8 million, respectively.
Had Note 486/14 been applied, the impact on Edenor’s Statement of Financial Position as of September 30, 2014 would have been the following:
| Note SE No. 486/14 |
Other credits |
|
Cost Monitoring Mechanism | 833,661,000 |
Net interest CMM - PUREE | 36,231,000 |
Other payables - PUREE | (187,665,000) |
Trade payables - CAMMESA | (682,227,000) |
LVFVD to be issued | - |
NOTE 41: FINANCIAL STATEMENTS TRANSLATION INTO ENGLISH LANGUAGE
These financial statements are the English translation of those originally prepared by the Company in Spanish and presented in accordance with accounting principles generally accepted in Argentina. The effects of the differences between the accounting principles generally accepted in Argentina and the accounting principles generally accepted in the countries in which the financial statements are to be used have not been quantified. Accordingly, the accompanying financial statements are not intended to present the financial position, statements of comprehensive income, changes in equity or cash flows in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.
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Free translation from the original in Spanish for publication in Argentina
REPORT ON CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS´REVIEW
To the Shareholders, President and Directors
Pampa Energía S.A.
Legal address: Ortiz de Ocampo 3302, Building 4
Autonomous City of Buenos Aires
Tax Code No.30-52655265-9
Introduction
We have reviewed the consolidated condensed interim financial statements of Pampa Energía S. A. and its subsidiaries (hereinafter “PESA” or “the Company”) which includes the consolidated condensed interim statement of financial position as of September 30, 2014, the consolidated condensed interim statement of comprehensive income for the nine and three-month periods ended September 30, 2014, and the consolidated condensed interim statements of changes in equity and cash flows for the nine-month period then ended and explanatory selected notes.
The amounts and other information related to fiscal year 2013 and its interim periods, are an integral part of the financial statements previously mentioned and therefore should be considered in relation to those financial statements.
Directors´ responsibility
Company´s Board of Directors is responsible for the 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) to their regulations, as they were approved by the International Accounting Standards Board (IASB), and, therefore, it’s responsible for the preparation and presentation of the consolidated condensed interim financial statements mentioned in the first paragraph in accordance with IAS 34 “Interim Financial Information”. Our responsibility is to express a conclusion based on the review we have performed with the scope detailed in the paragraph “Scope of our review”.
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 of review in Argentina through Technical Pronouncement No. 33 of the FACPCE as was approved by International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists in making inquiries to Company´ staff responsible for the preparation of the information included in the consolidated condensed interim financial statements and the performance of analytical procedures and other review procedures.This review is substantially less in scope than an audit performed in accordance with International Auditing Standards; consequently, a 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 an audit opinion on the consolidated financial position, consolidated comprehensive income and consolidated cash flows of the Company.
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Conclusion
Based on our review, nothing has come to our attention that would cause us to believe that the consolidated 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 consolidated condensed interim financial statements of PESA are pending of being transcribed into the “Inventory and Balance Sheet” book and comply, except for the aforementioned, as regards to those matters that are within our competence, with the provisions of the Corporations Law and pertinent resolutions of the CNV;
b) the separate condensed interim financial statements of PESA, except for what was mentioned in a), derive from accounting records carried in all formal respects in accordance with legal regulations;
c) we have read the summary of activities, on which, as regards those matters that are within our competence, we have no observations to make;
d) as of September 30, 2014 there were no liabilities accrued in favor of the Argentine Integrated Social Security System according to the Company’s accounting records.
Autonomous City of Buenos Aires, November 10, 2014
PRICE WATERHOUSE & CO. S.R.L.
(Partner) |
Andrés Suarez
|
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SIGNATURE
Pampa Energía S.A. | ||
By: | /s/ Ricardo Torres | |
Name: Ricardo Torres Title: Chief Executive Officer |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will a ctually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.