| GROUP STRUCTURE | 5.1 Business combinations 5.1.1 Acquisition of PPSL’s
Capital stock On May 13, 2016, Petrobras Internacional
Braspetro B.V. (“Petrobras Holland”), a subsidiary of Petróleo Brasileiro S.A. (“Petrobras Brazil”)
and the Company executed a share purchase agreement for the acquisition by the Company of the whole capital stock of PPSL, which
holds 67.1933% of the capital stock and voting rights in Petrobras (respectively, the “Share Purchase Agreement” and
the “Transaction”) for an amount of U$S 80 million. On July 27, 2016, the Transaction
was closed upon the meeting of all applicable conditions precedent, the Transaction’s final price, was set at U$S 900 million. The following operations were completed
after the closing of the Transaction:
(i) On October 14, 2016, YPF acquired from Petrobras 33.33% of all rights
and obligations in the concession over the Río Neuquén area for an amount of U$S 72 million and the 80% interest in the
concession over the Aguada de la Arena area for an amount of U$S 68 million.
(ii) On October 27, 2016, an affiliate of Petrobras Brasil acquired from
Petrobras 33.6% of the rights and obligations in the concession over the Río Neuquén area for an amount of U$S 72 million
and 100% of the rights and obligations pursuant to the Operating Agreement entered into by Petrobras, Bolivia Branch and YPF Bolivia,
regarding the Colpa and Caranda areas in Bolivia for a negative value of U$S 20 million.
(iii) The Company increased its direct and indirect interest in Petrobras
to 90.4% as a result of the consummation of mandatory tender offer and voluntary public offer for the exchange of Petrobras’
shares (the offers), on November 22 and 23, 2016.
(iv) In March 2017 and as a result of the Company's adherence to the regularization
regime (moratorium), in relation to certain liabilities identified (see detail in Note 10.4), which established benefits of releasing
tax fines and reducing compensatory interests, a payment obligation to Petrobras Brasil of $ 171 million, was generated as a contingent
consideration in accordance with the Purchase Agreement and was paid on April 18, 2017. 5.1.2 Sale of participations 5.1.2.1. Sale and swap of
indirect interest in TGS On July 27, 2016, the Company sold
its 25.5% indirect interest in TGS (through PEPCA, owner of a 10% equity interest in CIESA and through other subsidiaries rightholders
as the only beneficiary of the trust that owns 40% equity interest in CIESA, the “interest in TGS”) to Grupo Inversor
Petroquímica S.L. (members of the GIP Group, headed by the Sielecki family), WST S.A. and PCT L.L.C. (members of the Werthein
group) (jointly, the “Purchasers”). The economic impact of the transaction reached to a gain of $ 1,015 million. On January 11, 2017, the CNDC approved
the acquisition by the Company of 40% of CIESA’s capital stock, an interest that had been acquired by the Company through
CIESA’s financial debt swap executed on July, 2012 and 100% of PEPCA shares acquired on March, 2011. On January 17, 2017, the exchange
whereby the Purchasers transferred to PHA their capacity as beneficiaries and trustees of the trust holding 40% of CIESA's capital
stock and voting rights, and the Company and PHA transferred to the Purchasers shares representing 40% of CIESA’s capital
stock and voting rights, was perfected; the Group thus keeping a 10% direct interest in CIESA's capital stock and voting rights.
The Exchange was approved by ENARGAS on December 29, 2016. The Purchasers and the Company’s direct and indirect interests
in TGS remain unaltered as a result of the Exchange. 5.1.2.2 Sale of interest in Greenwind With the purpose of incorporating into
the project a strategic partner contributing part of the investments necessary for the development of the Mario Cebreiro Wind Farm,
on March 10, 2017, CTLL and PP entered into an agreement with Valdatana Servicios y Gestiones S.L.U., an entity which later changed
its name to Viento Solutions S.L. for the sale of 50% of Greenwind’s capital stock and rights for a total amount of U$S 11.2 million. As a result of the transaction, the Company
has deconsolidated Greenwind's assets and liabilities and presents its interest in the joint venture based on the equity method
of accounting. 5.1.2.3 Sale of interest in Oldelval On November 2, 2018, the Company entered
into an agreement with ExxonMobil Exploration Argentina S.R.L. for the sale of 21% of Oldelval’s capital stock and rights,
maintaining the remaining 2.1% interest. Subsequently, on November 27, 2018, the
transaction was closed upon the meeting of the applicable precendent conditions, the purchase price paid by the purchaser amounted
to U$S 36.4 million. As a result of the transaction, the
Comany has recongnised a $ 1.052 million gain, before taxes, stated in terms of the measuring unit current as of December 31,
2018. 5.1.3 Corporate reorganization The corporate reorganizations mentioned
below are carried out in order to obtain important benefits for the Company and all its corporate group, as it will allow for enhanced
operating efficiency; an optimized use of available resources; the leveraging of technical, administrative and financial structures;
and the implementation of converging policies, strategies and goals. Furthermore, the high complementarity between the participating
companies will be leveraged, thus reducing costs resulting from the duplication and overlapping of operating and administrative
structures. This reorganization was perfected
by means of a merger through absorption process, under the terms of tax neutrality pursuant to articles
77 and following of the Income Tax Law, 5.1.3.1 2016 Reorganization On August 10, 2016, the Company
and Petrobras’ Board of Directors resolved to instruct both managements to initiate all necessary tasks and procedures to
merge Pampa Energía, as absorbing company, with Petrobras, as absorbed company. Furthermore, it was considered appropriate
to incorporate as absorbed companies under such merger, two Petrobras’ subsidiaries: PEISA (95% through a direct interest
and 5% through an indirect interest) and Albares (100% direct interest). The merger was effective as of November
1, 2016, date on which the transfer to the absorbing company of all the rights and obligations, assets and liabilities of Petrobras,
PEISA and Albares became effective, all of which subject to the corresponding corporate approvals under the applicable law and
the registration with the Registry of Commerce of the merger and the dissolution without liquidation of the absorbed companies. On December 23, 2016, the Board
of Directors of Pampa Energía, as absorbing company and Petrobras Argentina, PEISA and Albares, as absorbed companies, approved
the CPF, which was authorized by the CNV on January 13, 2017. On February 16, 2017, the Extraordinary General Meetings of Shareholders
approved the merger in agreement with the terms of the CPF. On April 19, 2017, the final merger agreement was entered into. Pursuant to the provisions of Chapter
X of the CNV provisions, the Company has filed a merger authorization proceeding before this entity and obtained from the CNV its
authorization to publish the merger prospectus. On May 2, 2018, the Public Registry
registered the merger. On May 21, 2018, the exchange of Petrobras shares for those of the Company was effected (for the remaining
10.6% minority interest). As a result, 193,745,611 shares of Petrobras were exchanged for 101,771,793 shares of the Company, with
2,775 shares remaining as treasury shares since they were fractional or decimal shares which were paid in cash. As of December
31, 2018, in accordance with current regulations, the Company proceeded to sell those shares. There was no exchange ratio for PEISA
and Albares’s shares, as Petrobras holds 100% of the capital stock of these companies. 5.1.3.2 2017 Reorganization On September 22, 2017, the Company’s
Board of Directors informed that the companies which would take part in the merger would be the Company, as absorbing company,
and BLL, CTG, CTLL, EG3 Red, INDISA, INNISA, IPB, PP II and PEPASA, as absorbed companies. The merger became effective on October
1, 2017, date as from which the transfer of the absorbed companies’ equity to the absorbing company became effective and,
therefore, all their rights and obligations, assets and liabilities will become incorporated into the absorbing company’s
equity, all of which subject to the corresponding corporate approvals under the applicable law and the registration with the Public
Registry of Commerce of the merger and the dissolution without liquidation of the absorbed companies. On December 21, 2017, the Board of Directors
of Pampa Energía, as absorbing company and BLL, CTG, CTLL, EG3 Red, INDISA, INNISA, IPB, PP II and PEPASA, as absorbed companies,
approved the CPF, and on April 27, 2018, the Extraordinary General Meetings of Shareholders approved the merger in agreement with
the terms of the CPF. On June 1,
2018, the final merger agreement was entered into between Pampa and the absorbed companies and was filed for registration before
the applicable controlling authorities. On July 20, 2018 the CNV’s authorization on merger publication was obtained and on
August 2, 2018, the Public Registry registered the merger. On August 15, 2018, the exchange of PEPASA, CTG INNISA and INDISA shares
for 144.322.083 of the Company was effected, with 1,880 shares remaining as treasury shares since they were fractional or decimal
shares which were paid in cash. As of December 31, 2018, in accordance with current regulations, the Company proceeded to sell
those shares. There was no exchange ratio for the remaining companies, as Pampa direct and indirect held 100% of the capital stock
of these companies. 5.1.3.3
Merger of Subsidiaries The merger's effective date detailed
below 5.1.3.3.1. CTLL, EASA and IEA.SA On December 7 and 22, 2016, the
Board of Directors of CTLL, EASA and IEA.SA resolved to initiate all necessary tasks and procedures for the merger through absorption
among CTLL, as absorbing company, and EASA and IEA.SA, as absorbed companies. In analyzing this reorganization,
EASA’s management concluded that, in order for the process to be viable, it was necessary to capitalize the debt EASA held
with holders of Series A and B Discount Corporate Bonds issued on July 19, 2006 and maturing in 2021. On March 27, 2017 EASA’s
Extraordinary General Meeting of Shareholders resolved to capitalize such CBs, which was accepted by PISA in its capacity as sole
holder. On January
18, 2018, the shareholders’ meetings of the intervening companies approved the merger and on February 19, 2018, the merger
final agreement was entered into. On July 16, 2018, the Public Registry registered the merger. 5.1.3.3.2 PACOSA and WEBSA On December 7, 2016, the Boards
of Directors of PACOSA and WEBSA resolved to begin all necessary tasks and procedures for the merger through absorption between
PACOSA, as absorbing company, and WEBSA as absorbed company. On March 7, 2017, the shareholders’
meetings of the intervening companies approved the merger, and on May 30, 2017 the merger final agreement was entered into. On
March 5, 2018, the Public Registry registered the merger. 5.2. Discontinued operations As of December 31, 2017 assets and liabilities
subject to the transactions detailed below have been classified as held for sale, and the results for affected operations have
been disclosed under “Discontinued Operations” in the consolidated Statement of comprehensive income. 5.2.1. Sale of PELSA shares and certain
oil areas On January 16, 2018, the Company agreed
to sell to Vista Oil & Gas S.A.B. de C.V. (“Vista”) its direct 58.88% interest in PELSA and its direct interests
in the Entre Lomas, Bajada del Palo, Agua Amarga and Medanito-Jagüel de los Machos blocks, in line with the Company's strategy
to focus its investments and human resources both on the expansion of its power generation installed capacity and on the exploration
and production of natural gas, placing a special focus on the development and exploitation of unconventional gas reserves, as well
as to continue investing on the development of its utility concessions. On April 4, 2018, upon the meeting of all
applicable conditions precedent, the transaction was closed. The price paid by Vista, considering the agreed adjustments regarding
interests in PELSA, amounted to U$S 389 million. This transaction generated a profit comprehensive income net of taxes
in the amount of $ 1,115 million, as follows:
12.31.2018
Sale price 10,197
Book value of assets sold and costs associated with the transaction (8,553)
Result for sale 1,644
Interests (1) 133
Income tax (818)
Included in results 959
Other comprehensive income (loss)
Reclasification from exchange differences on translation 223
Income tax (67)
Included in Other comprehensive income 156
Total comprehensive income 1,115 (1) Are
exposed in "Financial income" of the consolidated statement of comprehensive income related to discontinued operations 5.2.2. Sale of assets in the Refining and
Distribution segment On December 7, 2017, the Company executed
with Trafigura Ventures B.V and Trafigura Argentina S.A. an agreement for the sale of certain assets in the Company’s refining
and distribution segment based on the conviction that the oil refining and distribution business calls for a larger scale to attain
sustainability. The closing of the transaction, which is subject to the meeting of certain conditions precedent. The assets subject-matter of the transaction
are as follows: (i) the Ricardo Eliçabe refinery; (ii) the Avellaneda lubricants plant; (iii) the Caleta Paula reception and
dispatch plant; and (iv) the network of gas stations currently operated under Petrobras branding. The Dock Sud storage facility is excluded
from the sale, as well as the Company's investment in Refinería del Norte S.A. Pursuant
to the foregoing, as of December 31, 2017, assets and liabilities subject to this transaction have been it involved the recognition of an impairment of Intangible assets and
Property, plant and equipment in the amount of $ On May 9, 2018, upon the meeting
of all applicable precedent conditions the transaction was subject to, the closing of the sale to Trafigura was carried out, including
the transfer of all the Company’s contracts, permits and licenses key for the ordinary conduction of the business, together
with the transfer of 1,034 employees related to the assets subject-matter of the sale, of which 67 employees work on the Company’s
corporate segment. After applying the adjustments stipulated
in the assets purchase and sale agreement, the transaction price amounted to U$S 124.5 million, and was paid by Trafigura
on May 9, 2018, with the exception of U$S 9 million which were previously paid as down payment upon the execution of the agreement,
and U$S13.5 million which have been deposited in an escrow account and which will be released in line with the transfer of the
network’s gas stations to the “Puma Energy” brand. Furthermore, after the closing of
the transaction, Trafigura paid to Pampa U$S 56 million for the purchase of crude oil. As of December 31, 2018, the closing
of the transaction did not generate additional profits or losses, according to the following detail:
12.31.2018
Sale price 1,044
Book value of assets sold and costs associated with the transaction (1,044)
Result for sale -
Income tax -
Total result - It should be highlighted that, as of December
31, 2018, the Company considers that under IFRS it has transferred control over the whole assets since, pursuant to the participation
agreements entered into with Trafigura, it has not retained the power to redirect their use or substantially derive other benefits.
However, as of the issuance of these financial statements the transfer of ownership and the assignment of agreements associated
with the assets mentioned in subsections (i) and (iii) have been perfected, whereas the process for the legal transfer and actual
assignment of the agreements associated with the assets described in subsections (ii) and (iv) has started with the rebranding
of gas stations to the “Puma Energy” brand, owned by Trafigura, a process which is expected to end in 2019. Upon completing the above-mentioned asset
transaction, Trafigura and the Company executed several contractual agreements whereby, for the May 9, 2018 to November 9, 2018
period, the Dock Sud Terminal provided reception, storage and dispatch services for light fuels and base lubricants owned by Trafigura. The Company continued executing agreements
with other high level companies, to align the Dock Sud plant’s activity as a terminal providing logistics services to third
parties. Results associated with the Dock Sud Terminal are disclosed under Continuing operations in the Refining and Distribution
segment (see Note 23). The consolidated statement
of comprehensive income related to discontinued operations is presented below: As of December 31, 2018:
Oil and gas Refining y distribution Eliminations Total
Revenue 2,481 15,900 (3,388) 14,993
Cost of sales (1,233) (13,606) 3,419 (11,420)
Gross profit 1,248 2,294 31 3,573
Selling expenses (72) (1,243) - (1,315)
Administrative expenses (46) (152) - (198)
Exploration expenses (4) - - (4)
Other operating income 54 211 - 265
Other operating expenses (231) (378) - (609)
Result from the sale of shareholdings in companies and property, plant and equipment 1,644 - - 1,644
Operating income 2,593 732 31 3,356
Gain (Loss) on monetary position 255 80 (47) 288
Financial income 148 27 - 175
Financial expenses (20) (10) - (30)
Other financial results (135) 824 - 689
Financial results, net 248 921 (47) 1,122
Income (loss) before income tax 2,841 1,653 (16) 4,478
-
Income tax (973) (486) - (1,459)
Profit (loss) of the year from discontinued operations 1,868 1,167 (16) 3,019
Other comprehensive income (loss)
Income tax (67) - - (67)
Reclasification from exchange differences on translation 223 223
Exchange differences on translation 156 - - 156
Other comprehensive income of the year from discontinued operations 312 - - 312
Total comprehensive income (loss) of the year from discontinued operations 2,180 1,167 (16) 3,331
Oil and gas Refining y distribution Eliminations Total
Total income (loss) of the year from discontinued operations attributable to:
Owners of the company 1,778 1,167 (16) 2,929
Non - controlling interest 90 - - 90
1,868 1,167 (16) 3,019
Total comprehensive income (loss) of the year from discontinued operations attributable to:
Owners of the company 2,026 1,167 (16) 3,177
Non - controlling interest 154 - - 154
2,180 1,167 (16) 3,331 As of December 31, 2017:
Oil and gas Refining y distribution Eliminations Total
Revenue 9,755 27,439 (11,177) 26,017
Cost of sales (9,468) (23,313) 11,211 (21,570)
Gross profit 287 4,126 34 4,447
Selling expenses (298) (3,192) - (3,490)
Administrative expenses (208) (703) - (911)
Exploration expenses (31) - - (31)
Other operating income 604 365 - 969
Other operating expenses (294) (484) - (778)
Impairment of property, plant and equipment - (1,040) - (1,040)
Operating income (loss) 60 (928) 34 (834)
Financial income 36 25 - 61
Financial expenses - (27) - (27)
Other financial results (375) (20) - (395)
Financial results, net (339) (22) - (361)
Income before income tax (279) (950) 34 (1,195)
Income tax (1,049) 351 - (698)
Profit (Loss) of the year from discontinued operations (1,328) (599) 34 (1,893)
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans (11) 26 - 15
Income tax 67 (9) - 58
Items that may be reclassified to profit or loss
Exchange differences on translation (606) - - (606)
Other comprehensive (loss) income of the year from discontinued
operations (550) 17 - (533)
Total comprehensive (loss) income of the year
from discontinued operations (1,878) (582) 34 (2,426)
Oil and gas Refining y distribution Eliminations Total
Total (loss) income of the year from discontinued operations
attributable to:
Owners of the company (1,503) (599) 34 (2,068)
Non - controlling interest 175 - - 175
(1,328) (599) 34 (1,893)
Total comprehensive (loss) income of the year from discontinued operations attributable
to:
Owners of the company (1,804) (582) 34 (2,352)
Non - controlling interest (74) - - (74)
(1,878) (582) 34 (2,426) As of December 31, 2016:
Oil and gas Refining y distribution Eliminations Total
Revenue 5,159 13,759 (5,926) 12,992
Cost of sales (4,077) (12,547) 6,157 (10,467)
Gross profit 1,082 1,212 231 2,525
Selling expenses (132) (1,590) - (1,722)
Administrative expenses (53) (48) - (101)
Exploration expenses (86) - - (86)
Other operating income 494 964 (792) 666
Other operating expenses (1,378) (206) 792 (792)
Operating income (loss) (73) 332 231 490
Financial income 80 13 - 93
Financial expenses (21) (19) - (40)
Other financial results (90) (84) - (174)
Financial results, net (31) (90) - (121)
(Loss) Income before income tax (104) 242 231 369
Income tax (50) (84) (83) (217)
(Loss) Profit of the year from discontinued operations (154) 158 148 152
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans (150) 29 - (121)
Income tax 46 (11) - 35
Items that may be reclassified to profit or loss
Exchange differences on translation 221 - - 221
Other comprehensive income of the year from discontinued operations 117 18 - 135
Total comprehensive (loss) income of the year
from discontinued operations (37) 176 148 287
Oil and gas Refining y distribution Eliminations Total
Total (loss) income of the year from discontinued operations
attributable to:
Owners of the company (133) 158 148 173
Non - controlling interest (21) - - (21)
(154) 158 148 152
Total comprehensive (loss) income of the year from discontinued operations attributable
to:
Owners of the company (2) 176 148 322
Non - controlling interest (35) - - (35)
(37) 176 148 287 The consolidated statement of cash
flows related to discontinued operations is presented below:
12.31.2018 12.31.2017 12.31.2016
Net cash (used in) generated by operating activities (1,726) 3,291 2,902
Net cash used in investing activities - (1,897) (1,238)
Net cash generated by (used in) financing activities 1,565 (1,168) (1,726)
(Decrease) increase in cash and cash equivalents from discontinued operations (161) 226 (62)
Cash and cash equivalents at the beginning of the year 238 142 275
Loss on net monetary position generated by cash and cash equivalents (77) (130) (60)
(Decrease) increase in cash and cash equivalents (161) 226 (73)
Cash and cash equivalents at the end of the year - 238 142 As of December 31, 2017, the assets
and liabilities that comprise the assets held for sale and associated liabilities are:
As of December 31, 2017 Oil and gas Refining y distribution Total
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11,139 1,652 12,791
Intangible assets 459 154 613
Financial assets at amortized cost 52 - 52
Trade and other receivables 9 - 9
Total non-current assets 11,659 1,806 13,465
CURRENT ASSETS
Inventories 226 2,894 3,120
Financial assets at fair value through profit and loss 1,005 - 1,005
Trade and other receivables 629 - 629
Cash and cash equivalents 238 - 238
Total current assets 2,098 2,894 4,992
Total assets classified as held for sale 13,757 4,700 18,457
LIABILITIES
NON-CURRENT LIABILITIES
Defined benefit plans 143 86 229
Deferred tax liabilities 837 - 837
Provisions 1,361 77 1,438
Total non-current liabilities 2,341 163 2,504
CURRENT LIABILITIES
Trade and other payables 576 - 576
Salaries and social security payable 69 - 69
Defined benefit plans 3 9 12
Income tax and minimum notional income tax provision 38 - 38
Taxes payables 173 - 173
Provisions 75 52 127
Total current liabilities 934 61 995
Liabilities associated to assets classified 3,275 224 3,499
5.3. Interest in subsidiaries, associates and joint ventures 5.3.1
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.
12.31.2018 12.31.2017
Company Country Main activity Direct and indirect participation % Direct and indirect participation %
Corod Venezuela Oil 100.00% 100.00%
CPB Argentina Generation 100.00% 100.00%
CPB Energía S.A. Argentina Generation 100.00% 100.00%
Ecuador TLC S.A. Ecuador Oil 100.00% 100.00%
Edenor (2) Argentina Distribution of energy 52.18% 51.54%
Enecor S.A. Argentina Transportation of electricity 69.99% 69.99%
HIDISA Argentina Generation 61.00% 61.00%
HINISA Argentina Generation 52.04% 52.04%
PACOSA Argentina Distributor 100.00% 100.00%
PBI Bolivia Investment 100.00% 100.00%
PELSA (1) Argentina Oil - 58.88%
Petrobras Energía Colombia Gran Cayman Colombia Oil 100.00% 100.00%
Petrobras Energía Ecuador Gran Cayman Investment 100.00% 100.00%
Petrobras Energía Operaciones Ecuador Ecuador Oil 100.00% 100.00%
Petrolera San Carlos S.A. Venezuela Oil 100.00% 100.00%
PHA Spain Investment 100.00% 100.00%
PISA Uruguay Investment 100.00% 100.00%
PP Argentina Investment 100.00% 100.00%
PPSL Spain Investment 100.00% 100.00%
TGU Uruguay Gas transportation 100.00% 100.00%
Transelec Argentina Investment 100.00% 100.00%
Trenerec Energía Bolivia Bolivia Investment 100.00% -
Trenerec Ecuador Investment 100.00% - (1) (2) 5.3.1.1 Summarised financial information for each subsidiary
that has significant non-controlling interest Non-controlling interests in subsidiaries
are not significant for the Company, except for Edenor with 51.76% equity interest and PELSA with 58.88% equity interest, whose
sale was perfected on April 4, 2018 (Note 5.2.1). Edenor The subsidiary is registered in
Argentina, which is also the place where it develops its activities.
i. Summary statement of financial position
12.31.2018 12.31.2017
Non Current
Total non current assets 63,284 57,134
Borrowings 7,192 6,189
Other non current liabilities 17,853 18,381
Total non current liabities 25,045 24,570
Current
Cash and cash equivalents 28 122
Other current assets 13,680 13,626
Total current assets 13,708 13,748
Borrowings 1,077 105
Other current liabilities 19,901 18,413
Total current liabilities 20,978 18,518
Total equity 30,969 27,794
Non-controlling interest 14,938 13,470
i. Summary statement of comprehensive income (loss)
12.31.2018 12.31.2017 12.31.2016
Revenue 55,954 39,603 25,827
Depreciation (2,561) (2,148) (2,147)
Interest income 672 454 385
Interest expense (4,968) (2,567) (2,589)
Profit for the year before tax 6,175 5,591 388
Income tax (1,877) (510) (147)
Profit for the year 4,298 5,081 241
Other comprehensive loss (47) (14) (7)
Total comprehensive profit of the year 4,251 5,067 234
Income of the year attributable to non-controlling interest 2,073 2,462 117
Other comprehensive income of the year attributable to non-controlling interest (22) (7) (3)
Comprehensive income of the year attributable to non-controlling interest 2,051 2,455 114
i. Summary statement of cash flow
12.31.2018 12.31.2017 12.31.2016
Net cash generated by operating activities 9,621 7,361 4,975
Net cash used in investing activities (8,328) (8,509) (4,072)
Net cash used in (geneted by) financing activities (2,097) 867 (947)
Decrease in cash and cash equivalents (804) (281) (44)
Cash and cash equivalents at the begining of the year 122 382 238
Exchange differences in cash and cash equivalents 156 - (9)
Result from exposure to inlfation 554 21 292
Cash and cash equivalents at the end of the year 28 122 477
5.3.2 Investments in associates and joint ventures The following table presents the
main activity and information from the financial statements used for valuation and percentages of participation in associates
and joint ventures:
Information about the issuer
Main activity Date Share capital Profit (loss) of the year/period Equity Direct and indirect participation %
Associates
Refinor Refinery 09.30.2018 92 (113) 968 28.50%
Joint ventures
CIESA (1) Investment 12.31.2018 639 5,871 16,748 50%
Citelec (2) Investment 12.31.2018 556 1,531 7,481 50%
Greenwind Generation 12.31.2018 5 (824) (408) 50% (1) therefore, the Company has an indirect participation of 25.50% in TGS. (2) The details
of the balances of investments in associates and joint ventures is as follows:
12.31.2018 12.31.2017
Disclosed in non-current assets
Associates
Refinor 960 1,094
Oldelval - 379
OCP 1,305 -
Other 10 1
2,275 1,474
Joint ventures
CIESA 9,755 7,606
Citelec 3,303 2,534
Greenwind - 261
13,058 10,401
15,333 11,875
Disclosed in non-current liabilities
Greenwind (1) 153 -
153 -
(1) The Company provides financial assistance to this company. The following tables show the breakdown of the result from
investments in associates and joint ventures:
12.31.2018 12.31.2017 12.31.2016
Associates
Oldelval 116 41 7
Refinor (138) (113) (4)
OCP 1,305 - -
Other 1 (3) -
1,284 (75) 3
Joint ventures
CIESA 2,793 949 191
Citelec 801 1,012 92
Greenwind (414) (73) -
3,180 1,888 283
4,464 1,813 286 The evolution of investments in associates and joint ventures
is as follows:
Note 12.31.2018 12.31.2017 12.31.2016
At the beginning of the year 11,875 9,608 2,136
Reclassifications (1) - 457 -
Increase for subsidiaries acquisition - - 7,254
Dividends 17 (706) -
Other decreases 13.1 (434) (3) (68)
Share of profit 4,464 1,813 286
Other comprehensive loss (19) -
At the end of the year 15,180 11,875 9,608 (1)
Corresponds to the deconsolidation for sale of the interest in Greenwind. 5.3.3 Investment in CIESA-TGS TGS’s Arbitral claim On May 8, 2015, the Secretariat of the
International Court of Arbitration of the International Chamber of Commerce notified TGS regarding the request for arbitration
initiated by PAE and Pan American Sur SA (the "claimants") related to the execution of three natural gas processing contracts
(for the February 2006 and February 2016 period) between the claimants and TGS that according to the demand, the claimants allege
breach of contracts, that would have resulted in a lower allocation of the products obtained. Between April 4 and September 29, 2017,
the parties presented their arguments and the Arbitration Testing Hearing took place. The claimed amount reach U$S 306 million
as of March 15, 2017 plus interest accrued until the date of actual payment. Finally, on December 15, 2017, the Claimants and TGS
submitted their Final Conclusions Memorials. On May 28, 2018, the International Court
of Arbitration of the International Chamber of Commerce issued the final award by which it partially acknowledged the claim and
ruled that the Company must pay damages to the claimants in the amount of U$S 19 million, plus interest accrued as from May 8,
2015 until the date of actual payment. This payment was made on June 14, 2018 for an amount of $ 553 million (equivalent to U$S
21.3 million). Issuance of Corporate Bonds On May 2, 2018, under the Short-
and Medium-Term Corporate Bonds Program for a maximum amount of U$S 700 million approved by the CNV, TGS issued Class
2 corporate bonds for U$S 500 million at an annual 6.75% rate. Collected funds will be destined by TGS to: (i) the repurchase
of Class 1 corporate bonds, (ii) the redemption of Class 1 corporate bonds; and (iii) capital expenditures. Acquisition of own shares in TGS In view of the fact that the TGS’
share price does not reflect either the value or the economic reality its assets currently or potentially have, this being detrimental
to the interests of its shareholders, and taking into consideration TGS’ strong cash position and fund availability, on May
9, 2018, TGS’ Board of Directors approved the repurchase of own shares in the market, in Argentine pesos, for a maximum amount
of $ 1,700 million (in terms of the constitution date). Later, on September 6, 2018, TGS’
Board of Directors approved a program for the repurchase of own shares for a maximum amount of up to $ 1,800 million (in terms
of the constitution date) and for a term of 180 calendar days, which terminated on March 5, 2019. The acquisition was made
with net realized income, as shown in TGS’ Financial Statements for year ended December 31, 2018. As of December 31, 2018, TGS holds
13,600,780 own shares in its portfolio, which represent 1.71% of its total capital stock. Their market acquisition cost amounted
to $ 1,421 million which, in accordance with the provisions of Title IV, Chapter III, article 3.11.c of the Rules, restricts
the amount of the retained earnings that TGS may distribute. Vaca Muerta Project The project consists in the construction
of a gas collector pipeline that will allow to transport natural gas extracted by natur |
