form6k.htm
Exhibit
99.1
Central
Puerto S.A.
Consolidated
financial statements for the year ended
December
31, 2018, together with the independent auditor´s
report
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Registered office:
Av. Edison 2701 - Ciudad Autónoma de Buenos Aires -
República Argentina
FISCAL
YEAR N° 27 BEGINNING JANUARY 1, 2018 FINANCIAL
STATEMENTS
FOR
THE YEAR ENDED DECEMBER 31, 2018
CUIT (Argentine
taxpayer identification number): 33-65030549-9. Date of
registration with the Public Registry of Commerce:
–
Of the articles of
incorporation: March 13, 1992.
–
Of the last
amendment to by-laws: April 28, 2017.
Registration number
with the IGJ (Argentine regulatory agency of business
associations): 1.855, Book 110, Volume A of
Corporations.
Expiration date of
the articles of incorporation: March 13, 2091.
The Company is not
enrolled in the Statutory Optional System for the Mandatory
Acquisition of Public Offerings.
CAPITAL
STRUCTURE
(stated in
pesos)
Class
of shares
|
Subscribed,
paid-in, issued and registered
(Note
22)
|
|
|
1,514,022,256
common, outstanding book-entry shares, with face value of 1 each
and entitled to one vote per share.
|
1,514,022,256
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
CONSOLIDATED
STATEMENT OF INCOME
for
the year ended December 31, 2018
|
Notes
|
2018
|
|
2017
|
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
Revenues
|
5
|
14,265,370
|
|
9,638,568
|
Cost of
sales
|
Exhibit
F
|
(6,486,698)
|
|
(5,199,149)
|
Gross
income
|
|
7,778,672
|
|
4,439,419
|
|
|
|
|
|
Administrative and
selling expenses
|
Exhibit
H
|
(1,389,336)
|
|
(1,056,257)
|
Other operating
income
|
6.1
|
13,222,842
|
|
930,062
|
Other operating
expenses
|
6.2
|
(132,881)
|
|
(140,138)
|
CVO receivables
update
|
|
11,017,014
|
|
-
|
Operating
income
|
|
30,496,311
|
|
4,173,086
|
|
|
|
|
|
RECPAM - Income
(loss) for exposure to change in purchasing power of
currency
|
3
|
(4,036,196)
|
|
(151,904)
|
Finance
income
|
6.3
|
2,280,193
|
|
1,558,816
|
Finance
expenses
|
6.4
|
(6,300,881)
|
|
(1,200,654)
|
Share of the profit
of associates
|
3 & Exhibit
C
|
1,074,185
|
|
1,173,004
|
Income
before income tax from continuing operations
|
|
23,513,612
|
|
5,552,348
|
|
|
|
|
|
Income tax for the
year
|
7
|
(6,604,351)
|
|
(1,081,177)
|
Net
income for the year from continuing operations
|
|
16,909,261
|
|
4,471,171
|
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
|
Income after tax
for the year from discontinued operations
|
18
|
276,177
|
|
791,274
|
Net
income for the year
|
|
17,185,438
|
|
5,262,445
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
– Equity holders of
the parent
|
|
17,519,598
|
|
5,291,355
|
– Non-controlling
interests
|
|
(334,160)
|
|
(28,910)
|
|
|
17,185,438
|
|
5,262,445
|
|
|
|
|
|
Basic and diluted
earnings per share (ARS)
|
8
|
11.64
|
|
3.52
|
|
|
|
|
|
Basic and diluted
earnings per share from continuing operations (ARS)
|
8
|
11.46
|
|
2.99
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
for
the year ended December 31, 2018
|
Notes
|
2018
|
|
2017
|
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
Net
income for the year
|
|
17,185,438
|
|
5,262,445
|
|
|
|
|
|
Other
comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income to be reclassified to income in subsequent
periods
|
|
|
|
|
|
|
|
|
|
Loss on financial
assets at fair value through other comprehensive
income
|
6.5
|
(346,628)
|
|
(768,395)
|
Income tax related
to loss on financial assets at fair value through other
comprehensive income
|
7
|
138,629
|
|
268,938
|
Other
comprehensive income (loss) to be reclassified to income in
subsequent periods
|
|
(207,999)
|
|
(499,457)
|
|
|
|
|
|
Other
comprehensive income (loss) not to be reclassified to income in
subsequent periods
|
|
|
|
|
|
|
|
|
|
Remeasurement of
losses from long-term employee benefits
|
11.3
|
20,551
|
|
(25,661)
|
Income tax related
to remeasurement of losses from long-term employee
benefits
|
7
|
(6,165)
|
|
4,233
|
Other
comprehensive income (loss) not to be reclassified to income in
subsequent periods
|
|
14,386
|
|
(21,428)
|
Other
comprehensive income for the year
|
|
(193,613)
|
|
(520,885)
|
Total
comprehensive income for the year
|
|
16,991,825
|
|
4,741,560
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
– Equity holders of
the parent
|
|
17,325,985
|
|
4,770,470
|
– Non-controlling
interests
|
|
(334,160)
|
|
(28,910)
|
|
|
16,991,825
|
|
4,741,560
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
as
at December 31, 2018
|
|
2018
|
|
2017
|
|
Notes
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
Assets
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Property, plant and
equipment
|
Exhibit
A
|
22,567,418
|
|
17,451,669
|
Intangible
assets
|
12 & Exhibit
B
|
2,235,230
|
|
1,988,603
|
Investment in
associates
|
3 & Exhibit
C
|
1,998,336
|
|
1,830,138
|
Trade and other
receivables
|
10.1
|
16,671,608
|
|
3,842,054
|
Other non-financial
assets
|
11.1
|
222,955
|
|
18,782
|
Deferred tax
asset
|
|
-
|
|
2,996
|
Inventories
|
9
|
74,687
|
|
71,187
|
|
|
43,770,234
|
|
25,205,429
|
Current
assets
|
|
|
|
|
Inventories
|
9
|
220,896
|
|
194,640
|
Other non-financial
assets
|
11.1
|
495,130
|
|
695,313
|
Trade and other
receivables
|
10.1
|
10,579,028
|
|
5,733,942
|
Other financial
assets
|
Exhibit
D
|
1,964,630
|
|
1,639,941
|
Cash and cash
equivalents
|
13
|
229,948
|
|
130,863
|
|
|
13,489,632
|
|
8,394,699
|
Assets held for
sale
|
18
|
-
|
|
748,866
|
|
|
|
|
|
Total
assets
|
|
57,259,866
|
|
34,348,994
|
|
|
|
|
|
Equity
and liabilities
|
|
|
|
|
Equity
|
|
|
|
|
Capital
stock
|
|
1,514,022
|
|
1,514,022
|
Adjustment to
capital stock
|
|
11,442,144
|
|
11,442,144
|
Legal
reserve
|
|
383,393
|
|
162,480
|
Voluntary
reserve
|
|
4,406,281
|
|
1,019,873
|
Retained
earnings
|
|
14,715,337
|
|
2,206,313
|
Accumulated other
comprehensive income
|
|
-
|
|
207,999
|
Equity
attributable to holders of the parent
|
|
32,461,177
|
|
16,552,831
|
Non-controlling
interests
|
|
467,677
|
|
478,704
|
Total
equity
|
|
32,928,854
|
|
17,031,535
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Other non-financial
liabilities
|
11.2
|
1,958,883
|
|
692,009
|
Other loans and
borrowings
|
10.3
|
5,204,030
|
|
2,183,278
|
Borrowings from
CAMMESA
|
10.4
|
1,004,304
|
|
1,558,485
|
Compensation and
employee benefits liabilities
|
11.3
|
148,470
|
|
166,983
|
Deferred income tax
liabilities
|
7
|
4,793,384
|
|
3,847,033
|
|
|
13,109,071
|
|
8,447,788
|
Current
liabilities
|
|
|
|
|
Trade and other
payables
|
10.2
|
1,729,909
|
|
1,501,885
|
Other non-financial
liabilities
|
11.2
|
1,660,944
|
|
973,971
|
Borrowings from
CAMMESA
|
10.4
|
1,812,910
|
|
2,588,283
|
Other loans and
borrowings
|
10.3
|
672,668
|
|
746,503
|
Compensation and
employee benefits liabilities
|
11.3
|
391,168
|
|
477,136
|
Income tax
payable
|
|
4,416,843
|
|
1,619,402
|
Provisions
|
Exhibit
E
|
537,499
|
|
610,476
|
|
|
11,221,941
|
|
8,517,656
|
Liabilities
directly associated with the assets held for sale
|
18
|
-
|
|
352,015
|
|
|
11,221,941
|
|
8,869,671
|
Total
liabilities
|
|
24,331,012
|
|
17,317,459
|
Total
equity and liabilities
|
|
57,259,866
|
|
34,348,994
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
CENTRAL
PUERTO S.A.
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
for
the year ended December 31, 2018
|
Attributable
to holders of the parent
|
|
|
|
|
|
Capital
stock
|
|
Noncapitalized
contribution
|
|
Retained
earnings
|
|
|
|
|
|
|
|
|
|
|
|
Face
value
|
|
Adjustment
to capital stock
|
|
Merger
premium
|
|
Legal
and
other reserves
|
|
Voluntary
reserve
|
|
Unappropriated
retained earnings
|
|
Other
accumulated comprehensive income (loss)
|
|
Total
|
|
Non-controlling
interests
|
|
Total
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of January 1, 2018
|
1,514,022
|
|
11,442,144
|
|
-
|
|
162,480
|
|
1,019,873
|
|
2,206,313
|
|
207,999
|
|
16,552,831
|
|
478,704
|
|
17,031,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions from
non-controlling interests
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
309,764
|
|
309,764
|
Share-based
payments
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13,369
|
|
13,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
17,519,598
|
|
-
|
|
17,519,598
|
|
(334,160)
|
|
17,185,438
|
Other comprehensive
income for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
14,386
|
|
(207,999)
|
|
(193,613)
|
|
-
|
|
(193,613)
|
Total comprehensive
income for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
17,533,984
|
|
(207,999)
|
|
17,325,985
|
|
(334,160)
|
|
16,991,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in legal
reserve
|
-
|
|
-
|
|
-
|
|
220,913
|
|
-
|
|
(220,913)
|
|
-
|
|
-
|
|
-
|
|
-
|
Increase in
voluntary reserve
|
-
|
|
-
|
|
-
|
|
-
|
|
3,386,408
|
|
(3,386,408)
|
|
-
|
|
-
|
|
-
|
|
-
|
Dividends in
cash
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,417,639)
|
|
-
|
|
(1,417,639)
|
|
-
|
|
(1,417,639)
|
As
of December 31, 2018 (1)
|
1,514,022
|
|
11,442,144
|
|
-
|
|
383,393
|
|
4,406,281
|
|
14,715,337
|
|
-
|
|
32,461,177
|
|
467,677
|
|
32,928,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of January 1, 2017
|
1,514,022
|
|
11,954,365
|
|
1,240,608
|
|
980,579
|
|
1,286,285
|
|
(4,019,693)
|
|
707,456
|
|
13,663,622
|
|
12,407
|
|
13,676,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss absorption
according to RG CNV n° 777/2018, subject to Annual
General Meeting’s approval
|
-
|
|
(512,221)
|
|
(1,240,608)
|
|
(980,579)
|
|
(1,286,285)
|
|
4,019,693
|
|
-
|
|
-
|
|
-
|
|
-
|
Modified
balances as of January 1, 2017
|
1,514,022
|
|
11,442,144
|
|
-
|
|
-
|
|
-
|
|
-
|
|
707,456
|
|
13,663,622
|
|
12,407
|
|
13,676,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions from
non-controlling interests
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
7,710
|
|
-
|
|
7,710
|
|
490,052
|
|
497,762
|
Share-based
payments
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,155
|
|
5,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,291,355
|
|
-
|
|
5,291,355
|
|
(28,910)
|
|
5,262,445
|
Other comprehensive
income for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(21,428)
|
|
(499,457)
|
|
(520,885)
|
|
-
|
|
(520,885)
|
Total comprehensive
income for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,269,927
|
|
(499,457)
|
|
4,770,470
|
|
(28,910)
|
|
4,741,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in legal
reserve
|
-
|
|
-
|
|
-
|
|
162,480
|
|
-
|
|
(162,480)
|
|
-
|
|
-
|
|
-
|
|
-
|
Increase in
voluntary reserve
|
-
|
|
-
|
|
-
|
|
-
|
|
3,074,975
|
|
(3,074,975)
|
|
-
|
|
-
|
|
-
|
|
-
|
Dividends in
cash
|
-
|
|
-
|
|
-
|
|
-
|
|
(2,055,102)
|
|
166,131
|
|
-
|
|
(1,888,971)
|
|
-
|
|
(1,888,971)
|
As
of December 31, 2017 (1)
|
1,514,022
|
|
11,442,144
|
|
-
|
|
162,480
|
|
1,019,873
|
|
2,206,313
|
|
207,999
|
|
16,552,831
|
|
478,704
|
|
17,031,535
|
(1) A subsidiary
holds 8,851,848 common shares.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
CONSOLIDATED
STATEMENT OF CASH FLOWS
for
the year ended December 31, 2018
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Operating
activities
|
|
|
|
Income for the year
before income tax from continuing operations
|
23,513,612
|
|
5,552,348
|
Income for the year
before income tax from discontinued operations
|
328,814
|
|
1,181,290
|
Income for the year
before income tax
|
23,842,426
|
|
6,733,638
|
|
|
|
|
Adjustments
to reconcile income for the year before income tax to net cash
flows:
|
|
|
|
Depreciation of
property, plant and equipment
|
1,142,555
|
|
1,202,111
|
Loss (gain) on
replacement/disposal of property, plant and equipment
|
104,378
|
|
1,351
|
Amortization of
intangible assets
|
349,674
|
|
413,037
|
CVO receivables
update
|
(11,017,014)
|
|
-
|
Interest earned
from customers
|
(1,623,309)
|
|
(437,583)
|
Finance
income
|
(2,280,193)
|
|
(1,558,816)
|
Finance
expenses
|
6,300,881
|
|
1,200,654
|
Share of the profit
of associates
|
(1,074,185)
|
|
(1,173,004)
|
Share-based
payments
|
13,369
|
|
5,155
|
Movements in
provisions, impairment of material and spare parts and long-term
employee benefit plan expense
|
(2,457)
|
|
155,781
|
Foreign exchange
difference for trade receivables
|
(11,403,596)
|
|
(116,699)
|
Income from the
sale of La Plata plant
|
(229,054)
|
|
-
|
RECPAM - Income
(loss) for exposure to change in purchasing power of
currency
|
(3,186,389)
|
|
(766,906)
|
|
|
|
|
Working
capital adjustments:
|
|
|
|
Increase in trade
and other receivables
|
5,187,097
|
|
(555,575)
|
(Increase) Decrease
in other non-financial assets and inventories
|
(30,750)
|
|
(343,515)
|
Increase in trade
and other payables, other non-financial liabilities and liabilities
from employee benefits
|
1,808,271
|
|
(54,486)
|
|
7,901,704
|
|
4,705,143
|
Interest received
from customers
|
44,358
|
|
119,293
|
Income tax and
minimum presumed income tax paid
|
(4,240,036)
|
|
(1,161,769)
|
Net
cash flows provided by operating activities
|
3,706,026
|
|
3,662,667
|
|
|
|
|
Investing
activities
|
|
|
|
Purchase of
property, plant and equipment
|
(6,958,953)
|
|
(5,734,812)
|
Cash flows
generated from the sale of the La Plata plant
|
625,905
|
|
-
|
Dividends
received
|
970,084
|
|
59,470
|
Interest received
from financial assets
|
-
|
|
-
|
Sale of
available-for-sale financial assets, net
|
292,639
|
|
2,394,118
|
(Purchase) Sale of
investments in associates
|
-
|
|
(9)
|
Net
cash flows used in investing activities
|
(5,070,325)
|
|
(3,281,233)
|
|
|
|
|
Financing
activities
|
|
|
|
Short-term loans
received (paid), net
|
(23,139)
|
|
(1,089,069)
|
Long-term loans
received
|
4,374,978
|
|
2,840,834
|
Long-term loans
paid
|
(2,095,109)
|
|
(1,654,794)
|
Borrowings received
from CAMMESA
|
-
|
|
1,023,563
|
Interest
paid
|
(461,443)
|
|
(71,113)
|
Dividends
paid
|
(1,417,639)
|
|
(1,888,971)
|
Contributions from
non-controlling interests
|
309,764
|
|
497,762
|
Net
cash flows (used in) provided by financing activities
|
687,412
|
|
(341,788)
|
|
|
|
|
(Decrease)
Increase in cash and cash equivalents
|
(676,887)
|
|
39,646
|
Exchange difference
and other financial results
|
1,331,368
|
|
66,978
|
RECPAM generated by
cash and cash equivalents
|
(555,396)
|
|
(31,056)
|
Cash and cash
equivalents as of January 1
|
130,863
|
|
55,295
|
Cash
and cash equivalents as of December 31
|
229,948
|
|
130,863
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Corporate
information and main business
Central Puerto S.A.
(hereinafter the “Company”, ”we”,
“us” or “CEPU”) and the companies that make
up the business group (hereinafter the “Group”) form an
integrated group of companies pertaining to the energy sector. The
Group is mainly engaged in electric power generation and
commercialization.
CEPU was
incorporated pursuant to Executive Order No. 122/92. We were formed
in connection with privatization process involving Servicios
Eléctricos del Gran Buenos Aires S.A. (“SEGBA”) in
which SEGBA’s electricity generation, transportation,
distribution and sales activities were privatized.
On April 1, 1992,
Central Puerto S.A., the consortium-awardee, took possession over
SEGBA’s Nuevo Puerto and Puerto Nuevo plants, and we began
operations.
Our shares are
listed on the BCBA (“Buenos Aires Stock Exchange”),
and, since February 2, 2018, they are listed on the NYSE
(“New York Stock Exchange”), both under the symbol
“CEPU”.
In order to carry
out its electric energy generation activity the Group owns the
following assets:
–
Our Puerto complex
is composed of two facilities, Central Nuevo Puerto (“Nuevo
Puerto”) and Central Puerto Nuevo (“Puerto
Nuevo”), located in the port of the City of Buenos Aires. Our
Puerto complex’s facilities include steam turbines plants and
a Combined Cycle plant and has a current installed capacity of
1,714 MW.
–
Our Luján de
Cuyo plant is located in Luján de Cuyo, Province of Mendoza
and has an installed capacity of 509 MW and a steam generating
capacity of 150 tons per hour. (See Note 19.7).
–
The Group also owns
the concession right of the Piedra del Águila hydroelectric
power plant located at the edge of Limay river in Neuquén
province. Piedra del Águila has four 360 MW generating
units.
–
The Group is
engaged in the management and operations of the thermal plants
José de San Martín and Manuel Belgrano through its equity
investees Termoeléctrica José de San Martín S.A.
(“TJSM”) and Termoeléctrica General Belgrano S.A.
(“TMB”). Those entities operate the two thermal
generation plants with an installed capacity of 865 MW and 873 MW,
respectively. Additionally, through its subsidiary Central Vuelta
de Obligado S.A. (“CVO”) the Group is engaged in the
operation of the thermal plant Central Vuelta de Obligado, with an
installed capacity of 816 MW.
The Group is also
engaged in the natural gas distribution public sector service in
the Cuyo and Centro regions in Argentina, through its equity
investees belonging to ECOGAS Group (See note 3.2).
Through its
subsidiary Proener S.A., the Group sells and transports any type of
fuels both in the country and abroad. Moreover, on July 19, 2018,
the National Gas Regulation Entity (Enargas) filed the Company with
the Registry of Traders and Trade Agreements of
Enargas.
Moreover, as of the
incorporation of CP Renovables S.A. (“CPR”) and its
subsidiaries, Vientos La Genoveva S.A.U. and Vientos La
Genoveva II S.A.U. the Group takes part on the development and
performance of energy projects based on the use of renewable energy
sources.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
During August and
September 2018, the wind farms belonging to CP La Castellana S.A.U.
and CP Achiras S.A.U. (CPR subsidiaries) were
commissioned, respectively, with a capacity of 99 MW and 48 MW,
respectively.
The issuance of
Group’s consolidated financial statements of the year ended
December 31, 2018 was approved by the Company’s Board of
Directors on March 11, 2019.
1.1.
Overview
of Argentine Electricity Market
Transactions among
different participants in the electricity industry take place
through the wholesale electricity market (“WEM”) which
is a market in which generators, distributors and certain large
users of electricity buy and sell electricity at prices determined
by supply and demand (“Term market”) and also, where
prices are established on an hourly basis based on the economic
production cost, represented by the short term marginal cost
measured at the system’s load center (“Spot
market”). CAMMESA (Compañía Administradora del
Mercado Mayorista Eléctrico Sociedad Anónima) is a
quasi-government organization that was established to administer
the WEM and functions as a clearing house for the different market
participants operating in the WEM. Its main functions include the
operation of the WEM and dispatch of generation and price
calculation in the Spot market, the real-time operation of the
electricity system and the administration of the commercial
transactions in the electricity market.
Following
Argentina’s economic crisis in 2001 and 2002 the costs of
generators were increasing as a result of the devaluation of the
Argentine peso and increasing fuel prices. As a result of the
freeze in end user tariffs combined with the higher generation
costs, CAMMESA began experiencing deficits as it was not able to
collect from the end users (via distributors) the full price of
electricity it owed to the generators. Given this structural
deficit, CAMMESA passed a series of regulations to keep the
electrical system operating despite the structural
deficit.
1.2.
Amendments
to WEM regulations
a)
Resolution
SE No. 406/03 and other regulations related to WEM
generators’ receivables
Resolution 406/03
issued in September 2003 enforced priority payments of
generator’s balances. Under the priority payment plan,
generators only collected the variable generation costs declared
and the payments for power capacity and the remaining payments on
these plants were delayed as there were not sufficient funds as a
result of the structural deficit. Resolution 406/03 established
that the resulting monthly obligations to generators for the unpaid
balance were to be considered payments without a fixed due date, or
“LVFVD receivables” using the Spanish acronym. Although
these obligations did not have a specified due date, the Resolution
provided that they would earn interest at an equivalent rate to the
one received by CAMMESA on its own cash investments, hereafter
“the CAMMESA rate”.
As a result of this
regulation, a portion of the invoices issued by Company’s
plants were not paid in full beginning in 2004.
Between 2004 and
2007, the Argentine government issued a series of resolutions aimed
at increasing thermal generation capacity while at the same time
providing a mechanism for generators to collect their LVFVD
receivables. These resolutions created funds called the
“FONINVEMEM” which were administered by trusts
(“the FONINVEMEM trust”) and made investments in two
thermal generation plants within Argentina. All WEM creditor agents
with LVFVD (including the Company) were invited to state formally
their decision to participate in forming the FONINVEMEM. The
Company, as most LVFVD generators, stated its decision to
participate in the creation of the FONINVEMEM with the
abovementioned receivables.
Under these
Resolutions, the FONINVEMEM trusts are the owner of the plants
during the first ten years of operations.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The FONINVEMEM
agreements established that the receivables mentioned above will be
paid by CAMMESA in 120 equal, consecutive monthly installments
commencing on the commercial operation date of the plants. The
LVFVD receivables were converted to US dollar to protect the
generators from deterioration in the Argentine peso and began
earning interest at LIBOR plus a spread as stipulated in the
agreement (as opposed to the CAMMESA rate). After the initial ten
years of the plants’ operations, ownership of the plants will
be allocated to the generators and the government in accordance
with a ratio between the total cost of the plants and the amount of
each generator LVFVD. However, the allocation of ownership
interests in the plants between and among the generators and the
government was not stated in the agreements and has not been
communicated to the Company.
The Company
participated with LVFVD accrued over the 2004 - 2007 period in the
FONINVEMEM trusts to construct the thermal generation plants named
Thermal Jose de San Martin and Thermal Manuel Belgrano, which
became operational in early 2010. At that time, CAMMESA informed
the Company of the payment plan, including the amount of accrued
interest at the CAMMESA rate which was added to the principal to be
repaid in monthly installments over a ten-year period. Upon receipt
of the payment schedule, the Company recognized accrued interest
(related to the CAMMESA rate). The Company also began recognizing
LIBOR interest income based on the contractual rate provided in the
Resolution and the conversion of the receivables into US dollar.
Since achieving commercial operations in 2010, CAMMESA have made
all scheduled contractual principal and interest payments in
accordance with the installment plan.
Additionally, in
2010 the Company approved a new agreement with the former
Secretariat of Energy (Central Vuelta Obligado, the “CVO
agreement”). This agreement established, among other
agreements, a framework to determine a mechanism to settle unpaid
trade receivables as per Resolution 406/03 accrued over the 2008 -
2011 period by the generators (“CVO receivables”) and
for that purpose, enabling the construction of a thermal combined
cycle plant named Central Vuelta de Obligado. The CVO agreement
established that the CVO receivables will be paid by CAMMESA in 120
equal and consecutive monthly installments. For the determination
of the novation of CVO credits, the following mechanism was
applied: the cumulative LVFVD (sale settlements with due date to be
defined) were converted to USD at the exchange rate established in
the agreement (ARS 3.97 per USD for the cumulative LVFVD until the
execution date of the CVO Agreement and the closing exchange rate
corresponding to each month for the LVFVD subsequently
accumulated), the LIBOR rate was applied plus a 5%
margin.
As from March 20,
2018, CAMMESA granted the commercial operations as a combined cycle
of Central Vuelta de Obligado thermal power plant (the
“Commercial Approval”). The financial impact of the
Commercial Approval is described in Note 10.1.
On March 6, 2019,
CAMMESA issued the final document on the economic transactions for
the month of January 2019 and included the sale settlement
corresponding to the January 2019 installment of this transaction
in it, remaining the issuance of the documents related to previous
accrued installments.
Under the
agreements mentioned in the previous paragraphs, generators created
three companies, Termoeléctrica José de San Martín
S.A., Termoeléctrica Manuel Belgrano S.A. and Central Vuelta
de Obligado S.A., each of which is in charge of managing the
purchase of equipment, construction, operation and maintenance of
each of the new thermal power plants.
b)
Resolution
No. 95/2013, Resolution No. 529/2014, Resolution No. 482/2015 and
Resolution No. 22/2016
On March 26, 2013,
the former Secretariat of Energy released Resolution No. 95/2013
(“Resolution 95”), which affects the remuneration of
generators whose sales prices had been frozen since 2003. This new
regulation, which modified the current regulatory framework for the
electricity industry, is applicable to generators with certain
exceptions. It defined a new compensation system based on
compensating for fixed costs, non-fuel variable costs and an
additional remuneration. Resolution 95 converted the Argentine
electric market towards an “average cost” compensation
scheme. Resolution 95 applied to all Company’s plants,
excluding La Plata plant, which also sells energy in excess of
YPF’s demand on the Spot market pursuant to the framework in
place prior to Resolution 95.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
In addition,
Resolution 95 addressed LVFVD receivables not already included in
any one of the FONINVEMEM trusts.
Thermal units must
achieve an availability target which varies by technology in order
to receive full fixed cost revenues. The availability of all
Company’s plants exceeds this market average. As a result of
Resolution 95, revenues to Company’s thermal units increased,
but the impact on hydroelectric plant Piedra del Águila is
dependent on hydrology. The new Resolution also established that
all fuels, except coal, are to be provided by CAMMESA.
The resolution also
established that part of the additional remuneration shall be not
collected in cash rather it is implemented through LVFDV and will
be directed to a “New Infrastructure Projects in the Energy
Sector” which need to be approved by the former Secretariat
of the Energy.
Finally, Resolution
95 suspended the inclusion of new contracts in the Term market as
well as their extension or renewal. Notwithstanding the foregoing,
contracts in force as at the effective date of Resolution 95 will
continue being managed by CAMMESA upon their termination. As from
such termination, large users should acquire their supplies
directly from CAMMESA.
On May 23, 2014,
the Official Gazzette published Resolution No. 529/2014 issued by
the former Secretariat of Energy (“Resolution 529”)
which retroactively updated the prices of Resolution 95 to February
1, 2014, changed target availability and added a remuneration for
non-recurrence maintenance. This remuneration is implemented
through LVFDV and is aimed to cover the expenses that the generator
incurs when performing major maintenances in its
units.
On July 17, 2015,
the Secretariat of Electric Energy set forth Resolution No.
482/2015 (“Resolution 482”) which retroactively updated
the prices of Resolution 529 to February 1, 2015, and created a new
trust called “Recursos para las inversiones del FONINVEMEM
2015-2018” in order to invest in new generation plants.
Company’s plants would receive compensation under this
program.
Finally, on March
30, 2016, through Resolution No. 22/2016 (“Resolution
22”), the values set by Resolution 482 were updated to become
effective as from the transactions of February 2016.
c)
Resolution
No. 19/2017
On January 27,
2017, the Secretariat of Electric Energy (“SEE”) issued
Resolution SEE No. 19/17 (published in the Official Gazette on
February 2, 2017) (Resolution 19), which replaced Resolution 95, as
amended. This resolution changes electric energy generators
remuneration methodology for transactions operated since February
1, 2017.
Resolution 19
substantially amended the tariff scheme applicable, which was
previously governed by Resolution 22. Among its most significant
provisions, such resolution established: (a) that generation
companies would receive a remuneration of electric power generated
and available capacity, (b) gradual increases in tariffs effective
as of February, May and November 2017, (c) that the new tariffs
would be denominated in U.S. dollars, instead of Argentine pesos,
thus protecting generation companies from potential fluctuations in
the value of the Argentine peso and (d) 100% of the energy sales
are collected in cash by generators, eliminating the creation of
additional LVFVD receivables.
Pursuant to this
resolution, the Secretariat of Electric Energy established that
electricity generators, co- generators and self-generators acting
as agents in the WEM and which operate conventional thermal power
plants, may make guaranteed availability offers (ofertas de
disponibilidad garantizada) in the WEM. Pursuant to these offers,
these generation companies may commit specific capacity and power
output of the generation, provided that such capacity and energy
had not been committed under other power purchase agreements. The
offers must be accepted by CAMMESA (acting on behalf of the
electricity demanding agents of the WEM), who will be the purchaser
of the power under the guaranteed availability agreements
(compromisos de disponibilidad garantizada). The term of the
guaranteed availability agreements is 3 years, and their general
terms and conditions are established in Resolution 19.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Resolution 19 also
establishes that WEM agents that operate hydroelectric power plants
shall be remunerated for the energy and capacity of their
generation units in accordance with the values set forth in such
resolution.
d)
SGE
(Secretaría de Gobierno de Energía) Resolution No.
70/2018
On November 6,
2018, Resolution no. 70/2018 of the SGE was published, which
resolution replaces Article 8 of Resolution issued by former SE no.
95/2013. The new article allows MEM Generators, Autogenerators and
Cogenerators to obtain their own fuel. This does not alter the
commitments assumed by Generation Agents within the context of MEM
supply agreements with CAMMESA. It is established that generation
costs with their own fuel will be valued according to the
recognition mechanism of Average Variable Costs (“CVP”)
recognized by CAMMESA. The Resolution also establishes that
regarding those Generators not purchasing their own fuel, CAMMESA
will continue the commercial management and the fuel
supply.
e)
Subsequent
Event: Resolution of the Secretariat of Renewable Resources and
Electricity Market no. 1/2019
On March 1, 2019
Resolution no. 1/2019 (“Resolution 1”) of the
Secretariat of Renewable Resources and Electricity Market was
published in the Official Gazette by virtue of which Resolution 19
was abolished. It establishes the new remuneration values of
energy, power and associated services for the affected generators,
as well as their application methodology. Its validity commences on
the date of its publication in the Official Gazette.
According to
Resolution 1, the approved remuneration system will be of
transitional application and until the following are defined and
gradually implemented: regulatory mechanisms aimed at reaching an
autonomous, competitive and sustainable operation that allows for
freedom of contract between supply and demand; and a technical,
economical and operative functioning for the integration of
different generation technologies so as to guarantee a reliable and
cost effective system.
The following are
the main changes introduced by Resolution 1 in connection with
Resolution 19: Energy Sale:
–
The price of energy
generated by thermal power stations is reduced. Therefore, the
price for energy generated with natural gas is of 4 USD/MWh and 7
USD/MWh for energy generated with liquid fuel.
–
The price for
energy generated from non-conventional energy sources (renewable
energies) is fixed at 28 USD/MWh.
Power
Sale:
–
DIGO price
(established by Resolution 19) goes from 7,000 USD/MW-month during
the twelve months of the year to 7,000 USD/MW-month the six months
of higher seasonal demand for electrical energy (December, January,
February, June, July and August) and to 5,500 USD/MW-month the
remaining months of the year (March, April, May, September, October
and November).
–
Some minimum values
of offered availability are changed. Its compliance is subject to
the foregoing prices, in accordance with the following
chart:
Technology
|
|
Resolution
19
|
|
Resolution
1
|
|
|
|
|
|
Big CC P > 150
MW
|
|
3050
|
|
3050
|
Small CC P ≤
150 MW
|
|
3400
|
|
3400
|
Big ST P > 100
MW
|
|
4350
|
|
4350
|
Small ST P ≤
100 MW
|
|
5700
|
|
5200
|
Big GT P > 50
MW
|
|
3550
|
|
3550
|
Small GT P ≤
50 MW
|
|
4600
|
|
4600
|
Internal Combustion
Engines
|
|
5700
|
|
5200
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
–
A weighting factor
is fixed for the foregoing prices, between 1 and 0.7, depending on
the use factor of the twelve months previous to each month of the
transaction.
CPSA is making a
detailed analysis of the scope, application and impact of
Resolution 1 on the operations of the Company. To date, the energy
purchase agreements entered into by the Group with CAMMESA are not
affected by the provisions of Resolution 1.
2.
Basis
of preparation of the consolidated financial
statements
2.1.
Applied
Professional Accounting Standards
The Group prepares
its consolidated financial statements in accordance with the
regulations in force of the Argentine Securities Commission
(Comisión Nacional de
Valores- “CNV”, for its Spanish initials), which
regulations provide that the entities issuing shares/corporate
bonds, with certain exceptions, must prepare their financial
statements by applying Technical Resolution no. 26 (as amended) of
the Argentine Federation of Professional Councils in Economic
Sciences (Federación Argentina de Consejos Profesionales de Ciencias Económicas -
“FACPCE”, for its Spanish initials), which sets forth
the adoption of International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting
Standards Board (“IASB”);while other entities may use
the IFRS for SMEs instead of the Argentine Professional Accounting
Standards (“NCPA”, for its Spanish
initials).
2.2.
Basis
of preparation
The consolidated
financial statements of the Group for the year ended December 31,
2018 have been prepared in accordance with IFRS as issued by the
IASB.
In preparing these
consolidated financial statements, the Group and its subsidiaries
applied the significant accounting policies, estimates and
assumptions described in notes 2.3 and 2.4.
The Group’s
consolidated financial statements are presented in Argentine pesos,
which is the Group’s functional currency, and all values have
been rounded to the nearest thousand (ARS 000), except when
otherwise indicated.
2.2.1.
Basis
of consolidation
The consolidated
financial statements as of December 31, 2018 and 2017 and for each
of the years ended December 31, 2018 and 2017, include the
financial statements of the Group formed by the parent company and
its subsidiaries: Central Vuelta de Obligado S.A., Proener S.A.U.
and CP Renovables S.A. and its subsidiaries.
Control is achieved
when the investor is exposed or entitled to variable returns
arising from its ownership interest in the investee, and has the
ability to affect such returns through its power over the investee.
Specifically, the investor controls an investee, if and only if it
has:
–
Power over the
investee (i.e. the investor has rights that entitle it to direct
the relevant activities of the investee).
–
Exposure or right
to variable returns arising from its ownership interest in the
investee.
–
Ability to exercise
its power over the investee to significantly affect its
returns.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Consolidation of a
subsidiary begins when the parent company obtains control over the
subsidiary and ends when the parent company loses control over the
subsidiary. The assets, liabilities, income and expenses of a
subsidiary acquired or sold during the fiscal year are included in
the consolidated financial statements from the date on which the
parent company acquired control of the subsidiary to the date on
which the parent company ceased to control the
subsidiary.
The result for the
fiscal year and each component of the other comprehensive income
(loss) are assigned to the owners of the parent company and
non-controlling interests, even if the results of the
non-controlling interests give rise to a debit balance. If
necessary, appropriate adjustments are made to the
subsidiaries’ financial statements so that their accounting
policies are in accordance with the Group’s accounting
policies. All assets and liabilities, equity, income, expenses and
cash flows within the Group that relate to transactions among the
members of the Group are completely eliminated in the consolidation
process.
A change in
ownership interest in a subsidiary, without loss of control, is
accounted for as an equity transaction. If the Group loses control
of a subsidiary, it cancels the carrying amount of the assets
(including goodwill) and related liabilities, non-controlling
interests and other equity components, while recognizing the profit
or loss resulting from the transaction in the relevant income
statement. Any retained residual interest is recognized at its fair
value.
The financial
statements as at December 31, 2018, including the figures for the
previous period (this fact not affecting the decisions taken on the
financial information for such periods) were restated to consider
the changes in the general purchasing power of the functional
currency of the Company (Argentine peso) pursuant to IAS 29 and
General Resolution no. 777/2018 of the Argentine Securities
Commission. Consequently, the financial statements are stated in
the current measurement unit at the end of the reported
period.
In accordance with
IAS 29, the restatement of the financial statements is necessary
when the functional currency of an entity is the currency of a
hyperinflationary economy. To define a hyperinflationary state, the
IAS 29 provides a series of non-exclusive guidelines that consist
on (i) analyzing the behavior of the population, prices, interest
rates and wages before the evolution of price indexes and the loss
of the currency’s purchasing power, and (ii) as a
quantitative characteristic, which is the most considered condition
in practice, verifying if the three-year cumulative inflation rate
approaches or exceeds 100%.
Even if in the
recent years there was an important increase in the general level
of prices, the three-year cumulative inflation was below 100%.
However, due to macroeconomic factors, the triennial inflation was
above that figure in 2018. Moreover, the goals of the Argentine
government and other available projections show that this trend
will not be reverted in the short term.
So as to evaluate
the mentioned quantitative condition and to restate the financial
statements, the Argentine Securities Commission established that
the series of indexes to be used in the IAS 29 application is the
one established by the Argentine Federation of Professional
Councils in Economic Sciences.
Regard being had to
the mentioned index, the inflation was of 47.64% and 24.79% in the
periods ended December 31, 2018 and 2017,
respectively.
As at January 1,
2017, the Board of Directors of the Company adopted, subject to the
Annual General Meeting’s approval, the option stated in RG
no. 777/18 of the CNV and absorbed the unappropriated retained
earnings resulting from the inflation-adjustment, following the
absorption order established in Section 11, Chapter III, Title IV
“REGULAR INFORMATION PROCEDURE” of the CNV Regulations
(N.T. 2013), affecting to that purpose the balances of the accounts
Voluntary Reserve, Special Reserve RG CNV 609, Special Reserve Res
IGJ 7/05, Legal Reserve, Premiums and the balance of the account
Adjustment to Capital Stock in the amount necessary for such
purpose. The effect of such change is stated in the statement of
changes in equity.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
As mentioned in the
previous paragraph, the Board of Directors of the Company decided,
subject to the Annual General Meeting’s approval, to reduce
the total Legal Reserve. According to Section 70 of the Business
Entities Act no. 19550 (“LGS”) profits will not be
distributed until it is restored. Therefore, the
Shareholders’ Meeting approving these financial statements
will have to solve the restoration of the mentioned reserve,
notwithstanding the creation of the Legal Reserve under its
responsibility according to the mentioned paragraph of the
LGS.
The following is a
summary of the effects of the IAS 29 application:
Restatement
of the Balance Sheet
(i)
The monetary items
(those with a fixed face value in local currency) are not restated
since they are stated in the current measurement unit at the
closing date of the reported period. In an inflationary period,
keeping monetary assets causes the loss of purchasing power, and
keeping monetary liabilities causes gain in purchasing power as
long as those items are not tied to an adjustment mechanism
compensating those effects. The monetary loss or gain is included
in the income (loss) for the reported period.
(ii)
The assets and
liabilities subject to changes established in specific agreements
are adjusted in accordance with those
agreements.
(iii)
Non-monetary items
measured at their current values at the end of the reported period
are not restated to be included in the balance sheet; however, the
adjustment process must be completed to determine the income (loss)
produced for having those non-monetary items in the terms of a
uniform measurement unit.
As at December 31,
2018 and 2017, the Company counted with the following items
measured with the current value method: the share kept in foreign
currency of the items Trade and other receivables, Cash and cash
equivalents, Loans and borrowings that accrue interest, and Trade
and other payables.
(iv)
Non-monetary items
at historical cost or at current value of a date previous to the
closing of the reported period are restated at rates reflecting the
variation occurred at the general level of prices from the
acquisition or revaluation date until the closing date; then the
amounts restated for those assets are compared with the
corresponding recoverable values. Charges to the income (loss) for
the period due to property, plant and equipment depreciation and
intangible assets amortization, as well as other non- monetary
assets consumption are determined in accordance with the new
restated amounts.
As at December 31,
2018 and 2017, the items subject to this restatement process were
the following:
–
Monetary items at
current values for a date previous to the closing of the period:
certain machines, equipment, turbogroups and auxiliary equipment of
the Property, Plant and Equipment item, which were measured at the
date of the Transition to IFRS (January 1, 2011) at their fair
value as at that date.
–
Non-monetary items
at historical cost: the remaining items Property, Plant and
Equipment, Intangible assets, Investment in associates,
Inventories, Assets held for sale, and Deferred income tax
liabilities.
(v)
When borrowing
costs in non-monetary assets are active in accordance with IAS 23,
the share of those cost compensating the creditor for the effects
of inflation is not capitalized.
The Company
proceeded to the activation of borrowing costs as stated in Note
2.3.6.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
(vi)
The restatement of
the non-monetary assets in the terms of a current measurement unit
at the end of the reported period without an equivalent adjustment
for tax purposes leads to a temporary taxable difference and to the
recognition of a deferred-tax liability whose balancing entry is
recognized in the income (loss) for the period. For the next
closing of the period, the deferred-tax items are restated for
inflation to determine the item on income (loss) for such
period.
In Note 7 the
effects of this process are detailed.
Restatement
of the statement of income (loss) and other comprehensive
income
(i)
The expenses and
income are restated as from the date of accountable entry,
including interest and currency exchange differences, except for
those items not reflecting or including in their determination the
consumption of assets measured in currency of purchasing power
previous to the consumption entry, which are restated taking into
account the origin date of the asset related to the item (for
example, depreciation, devaluation and other consumptions of assets
valued at historical cost); and except for income (loss) emerging
from comparing two measurements expressed in currency of purchasing
power of different dates. For such purpose, it is necessary to
identify the compared amounts, separately restate them and compare
them again, but with amounts already restated.
(ii)
The income (loss)
for exposure to change in purchasing power of currency (RECPAM),
originated by the keeping of monetary assets and liabilities, is
shown in a separate item of the income (loss) for the
period.
Restatement
of the Statement of Changes in Equity
(i)
At the transition
date (January 1, 2016), the Company applied the following
standards:
(a)
The components of
equity, except for retained earnings, the Special Reserve
Resolution IGJ 7/05, the special reserve due to the initial
application of IFRS (Special Reserve RG CNV 609) and unappropriated
retained earnings were restated as from the dates in which they
were contributed or as from the moment they arose from any other
means.
(b)
The retained
earnings, the Special reserve Resolution 7/05 and the Special
Reserve RG CNV 609 were kept at their face value (non-restated
legal amount) at the transition date.
(c)
The restated
unappropriated retained earnings were determined by the difference
between the net assets restated at the transition date and the
remaining components of initial equity expressed as stated in
previous sections.
(ii)
After restatement
at the transition date stated in (i) precedent, all equity
components are restated applying the general price index from the
commencement of the period, and each variation of those components
is restated from the contribution date or as from the moment they
arose from other means.
Restatement
of the Statement of Cash Flows
IAS 29 sets forth
that all the items of this section shall be restated in terms of
the current measurement unit at the closing date of the reported
period.
The monetary result
generated by cash and equivalents to cash are stated in the
Statement of Cash Flows separately from the cash flows resulting
from operation, investment and financing activities as a specific
item of the conciliation between the existence of cash and cash
equivalents at the beginning and at the end of the
period.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Effects
of the adoption of IAS 29 on comparative balances
The effects of
adopting IAS 29 on Equity at January 1, 2017 and December 31, 2017
and on the results for the 2017 period are the
following:
|
01-01-2017
|
|
12-31-2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Equity according to
consolidated financial statements approved on March 12, 2018
|
5,154,016
|
|
7,361,000
|
Increase due to
capital stock and premiums adjustment
|
12,153,414
|
|
10,400,585
|
Retained earnings
decrease
|
(3,637,091)
|
|
(919,719)
|
Non-controlling
interests increase
|
5,690
|
|
189,669
|
Equity
after the adoption of IAS 29
|
13,676,029
|
|
17,031,535
|
|
|
|
|
|
|
|
12-31-2017
|
|
|
|
ARS
000
|
|
|
|
|
Net income for the
year according to consolidated financial statements approved on
March 12, 2018
|
|
|
3,493,999
|
RECPAM
|
|
|
(151,904)
|
Restatement of
income statement items (including income tax)
|
|
|
1,920,350
|
Net
income after the adoption of IAS 29
|
|
|
5,262,445
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
2.3. Summary
of significant accounting policies
The following are
the significant accounting policies applied by the Group in
preparing its consolidated financial statements.
2.3.1.
Classification
of items as current and non-current
The Group
classifies assets and liabilities in the consolidated statement of
financial position as current and non-current. An entity shall
classify an asset as current when:
–
it expects to
realize the asset, or intends to sell or consume it, in its normal
operating cycle;
–
it holds the asset
primarily for the purpose of trading;
–
it expects to
realize the asset within twelve months after the reporting period;
or
–
the asset is cash
or a cash equivalent unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period.
All other assets
are classified as non-current.
An entity shall
classify a liability as current when:
–
it is expected to
be settled in normal operating cycle;
–
It is held
primarily for the purpose of trading;
–
it is due to be
settled within twelve months after the reporting period;
or
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
–
there is no
unconditional right to defer the settlement of the liability for at
least twelve months after the reporting period.
All other
liabilities are classified as non-current.
Deferred tax assets
and liabilities are classified as non-current assets and
liabilities, in all cases.
2.3.2.
Fair
value measurement
The Group measures
certain financial instruments at their fair value at each reporting
date. In addition, the fair value of financial instruments measured
at amortized cost is disclosed in note 10.6.
Fair value is the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the
presumption that the transaction to sell the asset or transfer the
liability takes place either:
–
in the principal
market for the asset or liability, or
–
in the absence of a
principal market, in the most advantageous market for the asset or
liability.
The principal or
the most advantageous market must be accessible to the Group. The
fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value
measurement of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using
the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best
use.
The Group uses
valuation techniques that are appropriate in the circumstances and
for which sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and minimizing the
use of unobservable inputs.
All assets and
liabilities for which fair value is measured or disclosed in the
consolidated financial statements are categorized within the fair
value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a
whole:
–
Level 1 input data:
quoted (unadjusted) prices in active markets for identical assets
or liabilities.
–
Level 2 input data:
valuation techniques with input data other than the quoted prices
included in Level 1, but which are observable for assets or
liabilities, either directly or indirectly.
–
Level 3 input data:
valuation techniques for which input data are not observable for
assets or liabilities.
2.3.3.
Transactions
and balances in foreign currency
Transactions in
foreign currencies are recorded by the Group at the related
functional currency rates prevailing at the date of the
transaction.
Monetary assets and
liabilities denominated in foreign currencies are translated at the
functional currency spot rate of exchange ruling at the reporting
period-end.
All differences are
taken to consolidated statement of income under other operating
income or expenses, or under finance income or expenses, depending
on the nature of assets or liabilities generating those
differences.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Non-monetary items
that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates as at the dates of the
initial transactions. Non-monetary items measured by their fair
value in foreign currency are converted using exchange rates at the
date in which such fair value is determined.
2.3.4.
Revenue
recognition
2.3.4.1.
Revenue
from ordinary activities
IFRS 15 presents a
five-step detailed model to explain revenue from contracts with
customers. Its fundamental principal lies on the fact that an
entity has to recognize revenue to represent the transference of
goods or services promised to the customers, in an amount
reflecting the consideration the entity expects to receive in
exchange for those goods or services at the moment of executing the
performance obligation. An asset is transferred when (or while) the
client gets control over such asset, defined as the ability to
direct the use and substantially obtain all the remaining benefits
of the asset. IFRS 15 requires the analysis of the
following:
–
If the contract (or
the combination of contracts) contains more than one promised good
or service, when and how such goods or services should be
granted.
–
If the price of the
transaction distributed to each performance obligation should be
recognized as revenue throughout time or at a specific moment.
According to IFRS 15, an entity recognizes revenue when the
performance obligation is satisfied, i.e. every time control over
those goods and services is transferred to the customer. The new
model does not include separate guidelines for the “sale of
goods” and the “rendering of services”; instead,
it requires that entities should evaluate whether revenue should be
recognized throughout time or at a specific moment, regardless of
the fact that it includes “the sale of goods” or
“the rendering of services”.
–
When the price
includes an estimation element of variable payments, how that will
affect the amount and the time to recognize such revenue. The
concept of variable payment estimation is broad. A transaction
price is considered as variable due to discounts, reimbursement,
credits, price concessions, incentives, performance bonus,
penalties and contingency agreements. The new model introduces a
big condition for a variable consideration to be considered as
revenue: only as long as it is very unlikely for a significant
change to occur in the cumulative revenue amount, when the
uncertainties inherent to the variable payment estimation are
solved.
–
When the incurred
cost to close an agreement and the costs to comply with it can be
recognized as an asset.
The Company has a
sole relevant revenue source, which consists on the
commercialization of energy produced in the spot market under the
scheme established by Resolution 19/2017 of the Secretariat of
Electric Power (“SEE”, for its Spanish acronym),
CAMMESA being its main customer.
The Company
recognizes its sales revenue in accordance with the availability of
its machines’ effective power, the power and steam supplied;
and as balancing entry, a sales receivable is recognized, which
represents the Company’s unconditional right to consideration
owed by the customer. Billing for the service is monthly made by
CAMMESA in accordance with the guidelines established by SEE; and
compensation is usually received in a maximum term of 90 days.
Therefore, no implicit financing components are recognized. The
satisfaction of the performance obligation is done throughout time
since the customer simultaneously receives and consumes the
benefits given by the performance of the entity as the entity does
it.
Revenues from
energy, power and steam sales are calculated at the prices
established in the respective contracts or at the prices prevailing
in the electricity market, according to the regulations in force.
These include revenues from the sale of steam, energy and power
supplied and not billed until the closing date of the reported
period, valued at the prices defined in the contracts or in the
respective regulations.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Additionally, the
Group recognizes the sales from contracts regarding the supplied
energy and the prices established in such contracts, and as
balancing entry it recognizes a sale credit. Such credit represents
the unconditional right the Company has to receive the
consideration owed by the customer. Billing for the service is
monthly made by CAMMESA in the case of the contracts of the wind
farms La Castellana and Achiras and for the Energía plus
contract in accordance with the guidelines established by SEE; and
compensation is received in a maximum term of 90 days. Therefore,
no implicit financing components are recognized. For the rest of
the clients, billing is also monthly and done by the Company; and
compensation is received in a maximum term of 90 days. Therefore,
no implicit financing components are recognized. The satisfaction
of the performance obligation is done throughout time since the
customer simultaneously receives and consumes the benefits given by
the performance of the entity as the entity does it.
The Group
recognizes revenues from resale and distribution of gas and
revenues for the monthly management of the thermal power plant CVO
in accordance with the monthly fees established in the respective
contracts and as balancing entry, it recognizes a sale credit. Such
credit represents the unconditional right the Company has to
receive the consideration owed by the customer. Billing for the
service is also monthly made by the Company and compensation is
generally received in a maximum term of 90 days. Therefore, no
implicit financing components are recognized.
The detail of
revenues from ordinary activities of the Group is included in Note
5 to these consolidated financial statements.
2.3.4.2. Other
income Interest
For all financial
assets and liabilities measured at amortized cost and interest
bearing financial assets classified as available for sale, interest
income or expense is recorded using the effective interest rate
method, which is the rate that exactly discounts the estimated
future cash payments or receipts through the expected life of the
financial instrument or a shorter period, where appropriate, to the
net carrying amount of the financial asset or liability. In
general, interest income and expense are included in finance income
and expenses in the consolidated statement of income, respectively,
unless they derive from operating items (such as trade and other
receivables or trade and other payables); in that case, they are
booked under other operating income and expenses, as the case may
be.
Current
income tax and minimum presumed income tax
Current income tax
assets and liabilities for the year are measured at the amount
expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute those amounts are those
that are enacted or substantively enacted, at the end of the
reporting period. The statutory tax rate for the Group for the
fiscal year 2017 is 30%.
Current income tax
relating to items recognized directly in equity is recognized in
equity and not in the consolidated statement of
income.
Management
periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are
subject to interpretation and establishes provisions where
appropriate.
Minimum presumed
income tax is supplementary to income tax since while the latter is
levied on taxable income for the reporting period, minimum presumed
income tax is a minimum levy determined by applying the current 1%
rate to the potential income of certain productive assets.
Therefore, the Group’s tax obligation shall be the higher of
these two taxes. However, should minimum presumed income tax exceed
current income tax owed in a given tax year, such excess may be
carried forward as payment on account of any income tax in excess
of the minimum presumed income tax that could occur in any of the
ten subsequent tax years.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Minimum presumed
income tax credit is measured at non-discounted nominal value, as
it is similar to a deferred income tax asset.
The carrying amount
of minimum presumed income tax is reviewed at each reporting period
date and reduced against income or loss for the period under income
tax charge to the extent that its use as payment on account of
income tax in future fiscal years is no longer probable. Minimum
presumed income tax credit not recognized as credit or previously
derecognized is reviewed as of each reporting period-end and it is
recognized as an asset against income or loss for the period under
income tax expenses to the extent that it is likely to be used as
payment on account of income tax payable in future
years.
On July 22, 2016,
Law No. 27,260 was published, which, among other aspects, repealed
the minimum presumed income tax for fiscal years beginning on or
after January 1, 2019.
Deferred
income tax
Deferred income tax
is provided using the liability method on temporary differences at
the end of the reporting period between the tax bases of assets and
liabilities and their related carrying amounts.
Deferred income tax
liabilities are recognized for all taxable temporary differences,
except:
–
where the deferred
income tax liability arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or
loss;
–
in respect of
taxable temporary differences associated with investments in
subsidiaries and associates, where the timing of the reversal of
the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable
future.
Deferred income tax
assets are recognized for all deductible temporary differences and
tax carry forwards losses, to the extent that it is probable that
taxable profit will be available against which the deductible
temporary differences, and/or the tax losses carry forward can be
utilized, except:
–
where the deferred
income tax asset arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss;
–
in respect of
deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, deferred
income tax assets are recognized only to the extent that it is
probable that the deductible temporary differences will reverse in
the foreseeable future and taxable profit will be available against
which those differences can be utilized.
The carrying amount
of deferred income tax assets is reviewed at each reporting period
date and reduced against income or loss for the period or other
comprehensive income, as the case may be, to the extent that it is
no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred income tax asset to be
utilized (recovered). Unrecognized deferred income tax assets are
reassessed at each reporting period date and are recognized with a
charge to income or other comprehensive income for the period, as
the case may be, to the extent that it has become probable that
future taxable profits will allow the deferred income tax asset not
previously recognized to be recovered.
Deferred income tax
assets and liabilities are measured at undiscounted nominal value
at the tax rates that are expected to apply in the year when the
asset is realized or the liability is settled, based on tax rates
and tax laws that have been enacted or substantively enacted at the
reporting period date.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Deferred income tax
relating to items recognized outside profit or loss is recognized
outside profit or loss. Deferred income tax items are recognized in
correlation to the underlying transactions either in other
comprehensive income or directly in equity.
Deferred income tax
assets and deferred income tax liabilities are offset if a legally
enforceable right exists to set off current income tax assets and
liabilities and the deferred income taxes relate to the same
taxable entity and the same taxation authority.
Other
taxes related to sales and to bank account
transactions
Revenues from
recurring activities, expenses incurred and assets are recognized
excluding the amount of sales tax, as in the case of value-added
tax or turnover tax, or the tax on bank account transactions,
except:
–
where the tax
incurred on a sale or on a purchase of assets or services is not
recoverable from the taxation authority, in which case the sales
tax is recognized as part of the cost of acquisition of the asset
or as part of the expense item as the case may
be;
–
receivables and
payables are stated including value-added tax.
The charge for the
tax on bank account transactions is presented in the administrative
and selling expenses line within the consolidated statement of
income.
The net amount of
the tax related to sales and to bank account transactions
recoverable from, or payable to, the taxation authority is included
as a non-financial asset or liability, as the case may
be.
2.3.6.
Property,
plant and equipment
Property, plant and
equipment are measured at the acquisition cost restated according
to Note 2.2.2, net of the cumulative depreciation and/or the
cumulative losses due to impairment, if any. This cost includes the
cost of replacing components of property, plant and equipment and
the cost for borrowings related to long-term construction projects,
as long as the requirements for their recognition as assets are
fulfilled.
When significant
parts of property, plant and equipment are required to be replaced
at intervals, the Group derecognizes the replaced part and
recognizes the new part with its own associated useful life and
depreciation. Likewise, when a major maintenance is performed, its
cost is recognized as a replacement if the conditions for the
recognition thereof as an asset are met. All other regular repair
and maintenance costs are recognized in the consolidated statement
of income as incurred.
Electric power
facilities and materials and spare parts related to the Puerto
Combined Cycle plant are depreciated on a unit-of-production
basis.
Electric power
facilities related to the Luján de Cuyo plant are depreciated
on a straight-line basis over the total useful lives
estimated.
Electric power
facilities and auxiliary equipment of Piedra del Águila
hydroelectric power plant are depreciated on a straight-line basis
over the remaining life of the concession agreement of the
mentioned power plant.
The depreciation of
the remaining property, plant and equipment is calculated on a
straight-line basis over the total estimated useful lives of the
assets as follows:
–
Buildings: 5 to 50
years.
–
Lands are not
depreciated.
–
Material and spare
parts: based on the useful life of related machinery and equipment
to be replaced.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
–
Furniture, fixtures
and equipment: 5 to 10 years.
–
Turbines and
Construction in progress: they are not depreciated until they are
not in conditions of being used.
An item of
property, plant and equipment and any significant part initially
recognized is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the
asset) is included in the consolidated statement of income when the
asset is derecognized.
The residual
values, useful lives and methods of depreciation are reviewed at
each reporting period end and adjusted prospectively, if
appropriate.
During periods
ended December 31, 2018 and 2017, the Group capitalized interest in
their wind farm projects La Castellana and Achiras for an amount of
138,064 and 10.739, respectively. The rate used to capitalize
interest corresponds to the effective rate of specific loans used
to finance the projects, net of the share compensating the creditor
for the effects of inflation.
Intangible assets
acquired separately are measured on initial recognition at
acquisition cost restated according to Note 2.2.2. Following
initial recognition, intangible assets are carried at cost less
accumulated amortization (if they are considered as having finite
useful lives) and accumulated impairment losses, if
any.
The useful lives of
intangible assets are assessed as either finite or indefinite. The
useful lives of the intangible assets recognized by the Group are
finite.
Intangible assets
with finite useful lives are amortized over their useful economic
lives. The amortization period and the amortization method for an
intangible asset with a finite useful life are reviewed at least at
the end of each reporting period. Changes in the expected useful
life or the expected pattern of consumption of the asset is
accounted for by changing the amortization period or method, as
appropriate, and are treated prospectively as changes in accounting
estimates. The amortization expense on intangible assets with
finite lives is recognized in the consolidated statement of income
in the expense category consistent with the function of the
intangible assets.
During this period,
the Group finished the construction of wind farms La Castellana and
Achiras, whereby it was agreed to construct high and medium tension
lines and the electrical substation to connect the wind farms to
the Argentine Interconnection System (“SADI”), a part
of which were given to the companies transporting the energy in
accordance with the respective contracts; therefore, such companies
are in charge of the maintenance of such transferred installations.
Consequently, the Group transferred 596,301 from property, plant
and equipment to intangible assets.
The Group’s
intangible assets are described in note 12.
2.3.8.
Impairment
of property, plant and equipment and intangible
asset
The Group assesses
at each reporting period-end whether there is an indication that an
individual component or a group of property, plant and equipment
and/or intangible assets with finite useful lives may be impaired.
If any indication exists, the Group estimates the asset’s
recoverable amount. An asset’s recoverable amount is the
higher of the fair value less costs to sell that asset, and its
value-in-use. That amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets; in
which case, the cash flows of the group of assets that form part of
the cash-generating unit (“CGU”) to which they belong
are taken.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Where the carrying
amount of an individual asset or CGU exceeds its recoverable
amount, the individual asset or CGU, as the case may be, is
considered impaired and is written down to its recoverable
amount.
In assessing value
in use of an individual asset or CGU, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the individual asset or
CGU, as the case may be.
In determining fair
value less costs to sell, recent market transactions are taken into
account, if available. If no such transactions can be identified,
an appropriate valuation model is used. These calculations are
verified by valuation multiples, quoted values for similar assets
on active markets and other available fair value indicators, if
any.
The Group bases its
impairment calculation on detailed budgets and forecast
calculations which are prepared separately for each of the
Group’s CGU to which the individual assets are allocated.
These detailed budgets and forecast calculations generally cover a
five-year period. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after the fifth
year. Budgets and calculations related to Complejo
Hidroeléctrico Piedra del Águila are limited to the term
of the concession contract.
Impairment losses
of continuing operations are recognized in the consolidated
statement of income in those expense categories consistent with the
function of the impaired asset generally in the cost of sales or
other operating expenses.
In addition, for
the assets for which an impairment loss had been booked, as of each
reporting period-end, an assessment is made whether there is any
indication that previously recognized impairment losses may no
longer exist or may have decreased.
During the periods
ended December 31, 2018 and 2017, the Group did not identify
triggering events of impairment.
Should there be
such triggering event, the Group makes an estimate of the
recoverable amount of the individual asset or of the cash
generating unit, as the case may be.
A previously
recognized impairment loss is reversed only if there has been a
change in the assumptions used to determine the individual assets
or CGU’s recoverable amount since the last impairment loss
was recognized. The reversal is limited so that the carrying amount
of the asset or CGU does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of
the related depreciation or amortization, had no impairment loss
been recognized for the asset or CGU in prior periods. Such
reversal is recognized in the statement of income in the same line
in which the related impairment charge was previously recognized
(generally under the cost of sales or other operating expenses),
unless the asset is carried at a revalued amount, in which case,
the reversal is treated as a revaluation increase.
2.3.9.
Financial
instruments. Presentation, recognition and
measurement
A financial
instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of
another entity.
2.3.9.1. Financial
assets Classification
According to IFRS 9
“Financial instruments”, the Group classifies its
financial assets in three categories:
–
Financial assets at
amortized cost
A financial asset
is measured at amortized cost if both of the following conditions
are met: (i) the asset is held within a business model whose
objective is to hold assets in order to collect contractual cash
flows; and (ii) the contractual terms of the financial asset give
rise on specified dates to solely payments of principal and
interest.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Additionally, and
for those assets complying with the above-mentioned conditions,
IFRS 9 provides for the option of determining, at initial
recognition, an asset measured at fair value if doing so would
eliminate or significantly reduce a measurement or recognition
inconsistency, which would appear if the assets or liabilities
valuation or the recognition of their profits or losses are made on
different grounds. The Group has not classified a financial asset
at fair value using this option.
At the closing of
these consolidated financial statements, the financial assets at
amortized cost of the Group include certain cash elements and cash
equivalents and trade and other receivables.
–
Financial assets at
fair value through other comprehensive income
Financial assets
are measured at fair value through other comprehensive income if
they are held in a business model whose objective is achieved by
both collecting contractual cash flows and selling financial
assets.
At the closing of
these consolidated financial statements, the Group has not
financial assets at fair value through other comprehensive
income.
–
Financial assets at
fair value through profit or loss
Any financial
assets at fair value through profit or loss belong to a residual
category that includes the financial assets that are not held in
one of the two business models mentioned, including those kept to
negotiate and those classified at fair value at initial
recognition.
At the closing of
these consolidated financial statements, the financial assets of
the Group at fair value through profit or loss include mutual funds
accounted under other financial assets.
Recognition
and measurement
The purchase and
sale of financial assets are recognized at the date on which the
Group commits to purchase or sale the asset.
Financial assets
valued at amortized cost are initially recognized at their fair
value plus cost of transaction. These assets accrue interest
according to the effective interest rate method.
Financial assets
valued at fair value through profit or loss and other comprehensive
income are initially recognized at fair value, and transaction
costs are recognized as expenses in the comprehensive income
statement. Subsequently, they are valued at fair value. Changes in
fair value and income from the sale of financial assets at fair
value through profit or loss and other comprehensive income are
recorded in Finance Income or Finance Expenses and Other
comprehensive income, respectively, in the consolidated statement
of income and comprehensive income, respectively.
In general, the
Group uses the transaction price to determine the fair value of a
financial instrument at the initial recognition. In the rest of the
cases, the Group only records revenue or loss at initial
recognition if the fair value of the instrument is evidenced with
other comparable and visible transactions of the market for the
same instrument or if it is based on a valuation technique that
only includes visible market data. Revenue or loss not recognized
at the initial recognition of a financial asset is later recognized
as long as they derive from a change in factors (including time) in
which the market participants consider establishing the
price.
The profit or loss
of debt instruments are measured at amortized cost and are not
determined in a hedge relationship. They are recognized in profit
or loss when the financial assets are removed or when impairment is
recognized; and during the amortization process using the effective
interest rate method. The Group only reclassifies all investments
in debt instruments when it changes the business model used to
manage those assets.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Derecognition
of financial assets
A financial asset
(or, where applicable, a part of a financial asset or part of a
group of similar financial assets) is derecognized; that is to say,
it is deleted from the statement of financial position,
when:
–
the contractual
rights to receive cash flows from the asset have
expired;
–
the contractual
rights to receive cash flows from the asset have been transferred
or an obligation has been assumed to pay the received cash flows in
full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) all the
risks and rewards of the asset have been transferred substantially,
or (b) all the risks and rewards of the asset have neither been
transferred nor retained substantially, but control of the asset
has been transferred.
When the
contractual rights to receive cash flows from an asset have been
transferred or a pass-through arrangement has been entered into,
but all of the risks and rewards of the asset have neither
transferred nor retained substantially and no control of it has
been transferred, such asset shall continue to be recognized to the
extent of the Group’s continuing involvement in it. In this
case, the Group shall also recognize the associated liability. The
transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Group has
retained.
Impairment
of financial assets
IFRS 9 establishes
an “expected credit loss” model (“ECL”).
This requires the application of considerable judgment with regard
to how changes in economic factors affect ECL, which is determined
over a weighted average base. ECL results from the difference
between contractual cash flows and cash flows at current value that
the Group expects to receive.
The impairment
model set forth by IFRS 9 is applicable to the financial assets
measured at amortized value or at fair value through changes in
other comprehensive income, except for the investment in equity
securities and assets from the contracts recognized under IFRS
15.
Pursuant to IFRS 9,
loss allowances are measured using one of the following
bases:
–
The 12-month ECL:
these are expected credit losses that result from those default
events on the financial instrument that are possible within 12
months after the reporting date; and
–
Full lifetime
expected credit losses: these are expected credit losses that
result from all possible default events over the life of the
financial instrument.
Regard being had to
the clients with which the Group operates and on the base of the
foregoing criteria, the Group did not identify expected credit
losses.
With regard to
financial placements and according to the placement policies in
force, the Group monitors the credit rate and the credit risk of
these instruments. Pursuant to the analysis, the Group did not
identify the need to record impairment of these types of
instruments.
2.3.9.2. Financial
liabilities
Initial
recognition and subsequent measurement
Financial
liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and
borrowings, or as derivatives designated as hedging instruments in
an effective hedge ratio, as appropriate.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Financial
liabilities are initially recognized at their fair value, net of
the incurred transaction costs. Since the Group has no financial
assets whose characteristics require the fair value accounting,
according to IFRS, after the initial recognition, the financial
assets are valued at amortized cost. Any difference between the
amount received as financing (net of transaction costs) and the
reimbursement value is recognized in comprehensive income
throughout the life of the debt financial instrument using the
method of effective interest rate.
At the closing of
these consolidated financial statements, the financial liabilities
classified as loans and borrowings of the Group include Trade and
other payables, overdrafts in bank accounts, Borrowings from
CAMMESA and Loans and borrowings that accrue interest.
Derecognition
of financial liabilities
A financial
liability is derecognized when the obligation under the liability
is discharged or cancelled or expires.
When an existing
financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognized as
finance income or costs in the statement of income, as the case may
be.
2.3.9.3. Offsetting
financial assets and financial liabilities
Financial assets
and financial liabilities are offset, and the net amount presented
in the statement of financial position if, and only if, there is a
currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize
the assets and settle the liabilities simultaneously.
2.3.9.4. Financial
assets and liabilities with related parties
Assets and
liabilities with related parties are recognized initially at fair
value plus directly attributable transaction costs. As long as
credits and debts with related parties do not derive from
arms-length transactions, any difference arising at the initial
recognition between such fair value and the consideration given or
received in return shall be considered as an equity transaction
(capital contribution or payment of dividends, which will depend on
whether it is positive or negative).
Following initial
recognition, these receivables and payables are measured at their
amortized cost through the EIR method. The EIR amortization is
included in finance income or costs or other operating income or
expenses in the statement of income, depending on the nature of the
liability giving rise to it.
2.3.9.5. Derivative
financial instruments and hedge accounting
Initial
recognition and subsequent measurement
The derivative
financial instruments used by the Group are initially recognized
through their fair values at the date on which the contract is
entered into, and they are subsequently measured again at their
fair value. The derivative financial instruments are accounted as
financial assets when their fair value is positive and as financial
liabilities when their fair value is negative.
The method to
recognize the loss or income from the change in fair value depends
on whether the derivative was determined as a hedge instrument; in
such case, on the nature of the item it is covering. The Company
can determine certain derivative as:
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
At the beginning of
the transaction, the Group records the relationship between the
hedge instruments and items covered, as well as its objectives for
risk management and the strategy to make different hedge
operations. It also records its assessment, both at the beginning
and on a continuous base, on whether the derivatives used in the
hedge transactions are highly effective to compensate changes in
fair value or in the cash flows of the items covered.
Fair
value hedge
Changes in fair
value of derivatives determined and classified as fair value hedge
are recorded in the statement of comprehensive income together with
any change in the fair value of the covered asset or liability
attributable to the covered risk.
Cash
flow hedge
The effective part
of changes in fair value of the derivatives determined and
classified as cash flow hedge are recognized in Other comprehensive
income. The loss or income related to the non-effective part is
immediately recognized in the statement of comprehensive income
within the Finance Expenses or Finance Income,
respectively.
The cumulative
amounts in Other comprehensive income are recorded in the statement
of comprehensive income in the periods in which the item covered
affects the comprehensive income. In the case of interest rates
hedge, this means the amounts recognized in equity are reclassified
as net finance income as interest is accrued on associated
debts.
As at December 31,
2018, the Group has no hedging derivative instruments.
Swap contracts of
interest rate are measured at their current value at the closing of
each period or fiscal year and are stated as assets or liabilities
depending on the rights and obligations emerging from the
respective contracts. Swap contracts were classified as efficient
hedge of cash flows risk. Changes in the accounting measure of swap
contracts are recognized in equity in the account Other
comprehensive income. These changes recognized in equity are
reclassified at the loss or income for the period or fiscal year in
which the interest of variable rate loans object of the hedge is
recognized in the statement of comprehensive income.
If the hedge
instrument expires or is sold, it is expired or executed without a
replacement or successive renewal (as part of the hedging
strategy), or if its appointment as hedge is revoked, or if the
hedge no longer complies with the requirements to apply hedge
accountability, any cumulative revenue or loss previously
recognized in the other comprehensive income will stay separate in
equity until the expected transaction takes place. If in the future
transaction it is not expected to have the amount included in the
cash flow hedge reserve, it must be immediately reclassified to the
consolidated comprehensive income.
Inventories are
valued at the lower of acquisition cost and net realizable value.
In the estimation of recoverable values, the purpose of the asset
to be measured and the movements of items of slow or scarce
rotation are taken into account. Inventories balance is not higher
than its net realizable value at the corresponding
dates.
2.3.11.
Cash
and cash equivalents
Cash is deemed to
include both cash fund and freely-available bank deposits on
demand. Short-term deposits are deemed to include short-term
investments with significant liquidity and free availability that,
subject to no previous notice or material cost, may be easily
converted into a specific cash amount that is known with a high
degree of certainty upon the acquisition, are subject to an
insignificant risk of changes in value, maturing up to three months
after the date of the related acquisitions, and whose main purpose
is not investment or any other similar purpose, but settling
short-term commitments.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
For the purpose of
the consolidated statement of financial position and the
consolidated statement of cash flows, cash and cash equivalents
comprise cash at banks and on hand and short-term investments
meeting the abovementioned conditions.
Provisions are
recognized when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Where the Group expects some or all of a
provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognized as a separate asset but
only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the statement of income
under the item that better reflects the nature of the provision net
of any reimbursement to the extent that the latter is virtually
certain.
If the effect of
the time value of money is material, provisions are discounted
using a current pre-tax market rate that reflects, where
appropriate, the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time
is recognized as a finance cost in the statement of
income.
–
Provision for
lawsuits and claims
In the ordinary
course of business, the Group is exposed to claims of different
natures (e.g., commercial, labor, tax, social security, foreign
exchange or customs claims) and other contingent situations derived
from the interpretation of current legislation, which result in a
loss, the materialization of which depends on whether one more
events occur or not. In assessing these situations, Management uses
its own judgment and advice of its legal counsel, both internal and
external, as well as the evidence available as of the related
dates. If the assessment of the contingency reveals the likelihood
of the materialization of a loss and the amount can be reliably
estimated, a provision for lawsuits and claims is recorded as of
the end of the reporting period.
2.3.13.
Contingent
liabilities
A contingent
liability is: (i) a possible obligation that arises from past
events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly
within the control of the entity; or (ii) a present obligation that
arises from past events but is not recognized because: (a) it is
not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or (2) the
amount of the obligation cannot be measured with sufficient
reliability.
A contingent
liability is not recognized in financial statements; it is reported
in notes, unless the possibility of an outflow of resources to
settle such liability is remote. For each type of contingent
liability as of the relevant reporting period-end dates, the Group
shall disclose (i) a brief description of the nature of the
obligation and, if possible, (ii) an estimate of its financial
impact; (iii) an indication of the uncertainties about the amount
or timing of those outflows; and (iv) the possibility of obtaining
potential reimbursements.
2.3.14.
Contingent
assets
A contingent asset
is a possible asset that arises from past events and whose
existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly
within the control of the Group.
A contingent asset
is not recognized in financial statements; it is reported in notes
only where an inflow of economic benefits is probable. For each
type of contingent asset as of the relevant reporting period-end
dates, the Group shall disclose (i) a brief description of the
nature thereof and, if possible, (ii) an estimate of its financial
impact.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
2.3.15.
Employee
benefits
Employee short-term
benefits:
The Group
recognizes short-term benefits to employees, such as salary,
vacation pay, bonuses, among others, on an accrued basis and
includes the benefits arising from collective bargaining
agreements.
Post-employment
employee long-term benefits:
The Group grants
benefits to all trade-union employees when obtaining the ordinary
retirement benefit under the Argentine Integrated Pension Fund
System, based on multiples of the relevant employees’
salaries.
The amount
recognized as a liability for such benefits includes the present
value of the liability at the end of the reporting period, and it
is determined through actuarial valuations using the projected unit
credit method.
Actuarial gains and
losses are fully recognized in other comprehensive income in the
period when they occur and immediately allocated to unappropriated
retained earnings (accumulated losses), and not reclassified to
income in subsequent periods.
The Group
recognizes the net amount of the following amounts as expense or
income in the statement of income for the reporting year: (a) the
cost of service for the current period; (b) the cost of interest;
(c) the past service cost, and (d) the effect of any curtailment or
settlement.
Other long-term
employee benefits:
The Group grants
seniority-based benefits to all trade-union employees when reaching
a specific seniority, based on their normal salaries.
The amount
recognized as liabilities for other long-term benefits to employees
is the present value of the liability at the end of the reporting
period. The Group recognizes the net amount of the following
amounts as expense or income: (a) the cost of service for the
current period; (b) the cost of interest; (c) actuarial income and
loss, which shall be recognized immediately and in full; (d) the
past service cost, which shall be recognized immediately and in
full; and (e) the effect of any curtailment or
settlement.
2.3.16.
Share-based
payments
The cost of
share-based payments transactions that are settled with equity
instruments of one of our subsidiaries is determined by the fair
value at the date when the grant is made using an appropriate
valuation model.
This cost is
recognized in the consolidated financial statements under employee
benefits expense, together with a corresponding total increase in
non-controlling interest.
During the years
ended December 31, 2018 and 2017 the expense booked in the
consolidated financial statements under employee benefits expense
amounts to 13,369 and 5,155, respectively.
2.3.17.
Investment
in associates
The Group’s
investments in associates are accounted for using the equity
method. An associate is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee, but is neither control nor joint control.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
According to the
equity method, investments in associates are originally booked in
the statement of financial position at cost, plus (less) the
changes in the Group’s ownership interests in the
associates’ net assets subsequent to the acquisition date. If
any, goodwill relating to the associate is included in the carrying
amount of the investment and is neither amortized nor individually
tested for impairment. If the cost of the investments is lower than
the proportional share as of the date of acquisition on the fair
value of the associate’s assets and liabilities, a gain is
recognized in the period in which the investment was
acquired.
The statement of
income reflects the share of the results of operations of the
associates adjusted on the basis of the fair values estimated as of
the date on which the investment was incorporated. When there has
been a change recognized directly in the equity of the associates,
the Group recognizes its share of any changes and includes them,
when applicable, in the statement of changes in
equity.
The Group’s
share of profit of an associate is shown in a single line on the
main body of the consolidated statement of income. This share of
profit includes income or loss after taxes of the
associates.
The financial
information of the associates is prepared for the same reporting
period as the Group. When necessary, adjustments are made to bring
the accounting policies of the associates in line with those of the
Group.
After application
of the equity method, the Group determines whether it is necessary
to recognize impairment losses on its investment in its associates.
At each reporting date, the Group determines whether there is
objective evidence that the value of investment in the associates
has been impaired. If such was the case, the Group calculates the
amount of impairment as the difference between the recoverable
amount of the investment in the associates and its carrying value,
and recognizes the loss as “Share of losses of an
associate” in the statement of income.
Upon loss of
significant influence over the associate, the Group measures and
recognizes any retained investment at its fair value. If such was
the case, any difference between the carrying amounts of the
investment in the associate and the fair value on any retained
investment, as well as the disposal proceeds, are recognized in the
statement of income.
The information
related to associates is included in note 3 and Exhibit
C.
2.3.18.
Information
on operating segments
For management
purposes, the Group is organized in three different business units
to carry out its activities, as follows:
–
Electric power
generation: through its own assets the Group is engaged in the
production of electric power and its sale. This business unit does
not include La Plata plant operations due to the sale of such
facility (See note 19.8).
–
Natural gas
transport and distribution: through its equity investees companies
Distribuidora de Gas del Centro S.A. and Distribuidora de Gas
Cuyana S.A. the Group is engaged in the natural gas distribution
public sector service in the Cuyo and Centro regions of Argentina
and it is also engaged in the natural gas transport sector service
through its equity investee Company Transportadora de Gas del
Mecrosur S.A.
–
Management and
operations of thermal plants: through its equity investees
Termoeléctrica José de San Martín S.A. and
Termoeléctrica Manuel Belgrano S.A. and its subsidiary Central
Vuelta de Obligado S.A. the Group is engaged in the management and
operations of these thermal plants.
The Group has two
reporting segments: production of electric power and natural gas
transport and distribution. Management and operations activities
are included in others, because the information is not
material.
The financial
performance of segments is evaluated based on net income and
measured consistently with the net income disclosed in the
financial statements (note 4).
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
2.3.19.
Non-current
assets held for sale and discontinued
operations
The Group
classifies non-current assets and disposal groups as held for sale
if their carrying amounts will be recovered principally through a
sale transaction or its distribution to the shareholders rather
than through continuing use. Such assets are measured at the lower
of their carrying amount and fair value less costs to sell. Costs
to sell are the incremental costs directly attributable to the
disposal of an asset (disposal group), excluding finance costs and
income tax expense.
The criteria for
held for sale classification is regarded as met only when the sale
is highly probable and the asset or disposal group is available for
immediate sale in its present condition. Actions required to
complete the sale should indicate that it is unlikely that
significant changes to the sale will be made or that the decision
to sale will be withdrawn. Management must be committed to the plan
to sell the asset and the sale expected to be completed within one
year from the date of the classification.
Property, plant and
equipment and intangible assets are not depreciated or amortized
once classified as held for sale.
Assets and
liabilities classified as held for sale are presented separately as
current items in the consolidated statement of financial
position.
A disposal group
qualifies as discontinued operation if:
–
It is a component
of the Group that represents a cash generating unit or a group of
cash generating units,
–
it is classified as
held for sale or as for distribution to equity holders, or it has
already been disposed for distribution to the shareholders,
and;
–
it represents a
separate major line of business or geographical area of operations
or it is a subsidiary acquired exclusively with a view to
resale.
Discontinued
operations are excluded from the results of continuing operations
and are presented as a single amount as income or loss after tax
from discontinued operations in the consolidated statement of
income.
Additional
disclosures are provided in note 18. All other notes to the
consolidated financial statements include amounts for continuing
operations, unless indicated otherwise.
2.3.20.
Business
combinations
Business
combinations are accounted using the acquisition method when the
Group takes effective control of the acquired company.
The Group will
recognize in its financial statements the acquired identifiable
assets, the assumed liabilities, any non-controlling interest and,
if any, goodwill according to IFRS 3.
The acquisition
cost is measured as the addition of the transferred consideration,
measured at fair value on that date, and the amount of any
non-controlling interest in the acquiree. The Group will measure
the non- controlling interest in the acquiree at fair value or at
the proportional interest in the identifiable net assets of the
acquiree.
If the business
combination is made in stages, the Group will measure again its
previous holding at fair value at the acquisition date and will
recognize income or loss in the consolidated statement of
comprehensive income.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Goodwill is
measured at cost, as excess of the transferred consideration
regarding the acquired identifiable assets and the net assumed
liabilities of the Group. If this consideration is lower than the
fair value of the identifiable assets and of the assumed
liabilities, the difference is recognized in the consolidated
statement of comprehensive income.
2.4.
Significant
accounting estimates and assumptions
The preparation of
the Group’s financial statements requires management to make
significant estimates and assumptions that affect the recorded
amounts of revenues, expenses, assets and liabilities, and the
disclosure of contingent liabilities, at the end of the reporting
period. In this sense, the uncertainties related to the estimates
and assumptions adopted could give rise in the future to final
results that could differ from those estimates and require
significant adjustments to the amounts of the assets and
liabilities affected.
The key assumptions
concerning the future and other key sources of estimation
uncertainty at the end of the reporting period, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its accounting assumptions and
significant estimates on parameters available when the financial
statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market
changes or circumstances arising beyond the control of the Group.
Such changes are reflected in the assumptions when they
occur.
The terms for collection and the valuation of accumulated amounts
related to receivables under Resolution 95 and receivables under
Resolution 406 (from 2008 and thereafter).
Collection of the
principal and interest on these receivables is subject to various
business risks and uncertainties including, but not limited to, the
completion and operation of power plants which are expected to
generate cash for payments of these receivables, regulatory changes
that could impact the timing and amount of collections, and
economic conditions in Argentina. The Group accrues interest on
these receivables once the recognition criteria have been met. The
Group’s collection estimates are based on assumptions that it
believes to be reasonable, but are inherently uncertain. These
assumptions are reviewed at the end of each reporting period.
Actual future cash flows could differ from these
estimates.
Recoverability of property, plant and equipment and intangible
assets:
At each closing
date of the reported period, the Group evaluates if there is any
sign that the property, plant and equipment and/or intangible
assets with finite useful lives may have their value impaired.
Impairment exists when the book value of assets related to the Cash
Generating Unit (CGU) exceeds its recoverable value, which is the
higher between its fair value loss costs of sale of such asset and
value in use. The value in use is calculated through the estimation
of future cash flows discounted at their present value through a
discount rate that reflects the current assessments of the market
over the temporal value of money and the specific risks of each
CGU. Projection calculations cover a five-year period. The
recoverable value is sensitive to the used discount rate, as well
as the estimated inflows and the growth rate.
The probability of occurrence and the amount of liabilities related
to lawsuits and claims:
The Group based its
estimates on the opinions of its legal counsel available when the
consolidated financial statements were prepared. Existing
circumstances and assumptions, however, may change due to changes
in circumstances arising beyond the control of the
Group.
Long-term employee benefit plan
The plan costs are
determined by actuarial valuations. Actuarial valuations involve
several assumptions that might differ from the results that will
actually occur in the future.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
These assumptions
include the assessment of the discount rate, future salary
increases and mortality rates. Due to the complexity of the
valuation, the underlying assumptions and its long-term nature, the
benefit obligations are sensitive to changes in these assumptions.
These assumptions are reviewed at the end of each reporting
period.
2.5.
Changes
in accounting policies
New
standards and interpretations adopted
As from the fiscal
year beginning January 1, 2018, the Group has applied for the first
time certain new and/or amended standards and interpretations as
issued by the IASB.
Below is a brief
description of the new and/or amended standards and interpretations
adopted by the Group and their impact on these consolidated
financial statements.
IFRS
15 - Revenue from contracts with customers
In May 2014, IASB
issued IFRS 15 “Revenue from contracts with customers”,
which establishes the new model for recognizing revenue from
contracts with customers, except for those contracts that are under
the scope of other standards. Such standard revokes the current
guidelines for revenue recognition included in IAS 18
“Revenue”, IAS 11 “Construction Contracts”
and related interpretations when this standard becomes
effective.
IFRS 15 structures
a five steps model to measure revenues from contracts with
customers, as follows: Step 1: Identify the contract with a
customer.
Step 2: Identify
the performance obligations in the contract. Step 3: Determine the
transaction price.
Step 4: Allocate
the transaction price to each performance obligation.
Step 5: Recognize
revenue when (or while) a performance obligation is
satisfied.
Under IFRS 15,
revenue is recognized when it reflects the consideration to which
the company expects to be entitled in exchange for goods or
services to a customer.
The standard
requires the entity to judge taking into account the relevant
factors and circumstances applied to contracts with customers. The
standard also specifies the measurement of cost increase due to a
contract and the cost directly related to the performance of a
contract.
Pursuant to IFRS
15, among others, a system on the allocation of the transaction
price to each performance obligation is established. According to
such standard, the Company shall recognize revenue when a
performance obligation is satisfied, i.e. every time
“control” over those goods and services is transferred
to the customer.
The Company has a
sole significant revenue source, which consists on the
commercialization of energy produced in the spot market under the
schedule established in Resolution 19/2017 of the Secretariat of
Electric Power, CAMMESA being its main customer.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
At the closing of
each month, the Company recognizes its sales revenue in accordance
with the availability of its machines’ effective power and
the power supplied; as balancing entry, a sales credit is
recognized, which represents the Company’s unconditional
right to consideration owed by the customer.
Billing for the
service is monthly made by CAMMESA in accordance with the
guidelines established by SEE; and compensation is usually received
in a maximum term of 90 days. Therefore, no implicit financing
components are recognized. The satisfaction of the performance
obligation is done throughout time.
After the analysis,
the management of the Company adopted the modified retrospective
method of paragraph C3 (b) of the mentioned regulation. Moreover,
it concluded that the previous revenue recognition practices are
consistent with the requirements of IFRS 15.
IFRS
9 - Financial Instruments
IFRS 9 replaces IAS
39 “Financial Instruments: Recognition and Measurement”
for the annual periods beginning January 1, 2018, and it includes
the three aspects of financial statements measurement:
classification and measurement; impairment and
hedging.
Pursuant to the
analysis made, the Company did not register any adjustment on
unappropriated retained earnings as at January 1, 2018. Therefore,
the application of IFRS 9 did not mean that the Company had to make
amendments to the disclosures made on December 31, 2017 regarding
the statements of financial position, changes in equity,
comprehensive income and cash flow.
The Company used
the exception that allows it not to restate the comparative
information for previous periods regarding classification and
measurement changes (impairment included). As a result, the Company
did not apply IFRS 9 requirements to the comparative period
presented. For this reason, the comparative information for the
period ended December 31, 2017 was not modified.
a)
Classification
and measurement of financial assets and
liabilities
IFRS 9 maintains,
to great extent, the existing requirement of IAS 39 for the
classification of financial liabilities. However, it has a new
classification approach for financial assets based in two concepts:
the contractual cash flow characteristics of the financial asset
and the new business model of the company.
The following table
shows a comparison between the applied measurement criteria for
financial assets according to IAS 39 and the criteria applied as
from the IFRS adoption.
Financial
instrument
|
|
Classification
under IAS 39
|
|
New
classification under IFRS 9
|
|
|
|
|
|
Cash and cash
equivalents
|
|
Loans and
receivables
|
|
Financial assets at
amortized cost
|
|
|
|
|
|
Mutual
funds
|
|
Financial assets at
fair value through profit a loss
|
|
Financial assets at
fair value through profit a loss
|
|
|
|
|
|
Trade and other
receivables
|
|
Loans and
receivables
|
|
Financial assets at
amortized cost
|
The Group describes
its accounting policy regarding financial instrument in Note 2.3.9.
This change did not have an impact on the Company.
IAS 39 requirements
for implicit derivatives in main contracts that are financial
liabilities or that are outside the scope of IFRS 9 (for example,
leasing contracts) are kept, i.e. they must be bifurcated if they
are not “closely related”.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
b)
Impairment
of financial assets and liabilities
IFRS 9 replaces IAS
39 “incurred loss” model by the “expected credit
losses” (“ECL”) model. This shall require
considerable judgment regarding how economic factors affect ECL,
which shall be determined on a weighted average basis. ECL derives
from the difference between the contractual cash flows and the cash
flows at current value that the Group expects to
receive.
The new impairment
model shall be applied to financial assets measured at amortized
cost or at fair value through other comprehensive income, except
for investments on equity instruments and contracts under the scope
of IFRS 15.
Under IFFRS 9, loss
allowances shall be measured using the following
bases:
–
12-month ECL: these
are expected credit losses that result from default events on a
financial instrument that are possible within the 12 month after
the reporting date; and
–
Lifetime ECL: these
are expected credit losses that result from all possible default
events over the expected life of a financial
instrument.
Due to the nature
of the Group’s customers and their bad debt history, the
Company did not identify that the change of approach in the
impairment method under IFRS 9 results in the recognition of an
adjustment to balances as at January 1, 2018.
In the case of
financial placement and in accordance with placement policies in
force, the Company monitors credit rating and credit risk of these
instruments. Pursuant to the analysis made, the Company did not
identify that it is necessary to make an adjustment to the balances
of such instruments as at January 1, 2018.
IFRIC
22 - Foreign Currency Transactions and Advance
Consideration
This interpretation
clarifies the “transaction date” for the purpose of
determining the exchange rate to use on initial recognition of a
related asset, expense or income, when an entity has received or
paid in advance in foreign currency. It applies to transactions in
foreign currency when an entity recognizes a non-monetary assets or
liability derived from the reception or payment in advance before
initial recognition of a related asset, expense or
income.
So as to determine
the exchange rate to use on initial recognition of an asset,
expense or income, the transaction date is the date on which a
non-monetary asset or liability derived from reception or payment
in advance is recognized.
It is effective for
periods beginning on January 1, 2018.
This standard had
no impact on the consolidated financial statements of the Group
because the Company already applied the criteria established by
this interpretation.
Annual
improvements of period 2015-2017 (issued in December
2017)
These improvements
include:
–
IFRS 3 Business
combinations
Amendments make it
clear that when an entity obtains control of a business that is a
joint operation, it applies the requirements for a business
combination reached in stages, including the new measurement of
interest previously held in the assets and liabilities of a joint
operation at fair value. When doing so, the acquirer remeasures the
previous total interest in the joint operation.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
An entity will
apply those amendments to business combinations for which the
acquisition date is at or after the commencement of the first
annual report period starting on or after January 1, 2019, with the
anticipated application being permitted. These amendments will be
applied in the business combinations of the Group.
The amendments make
it clear that the income tax consequences of dividends are more
directly linked to past transactions or events that generated
distributable income to owners. Therefore, an entity recognizes the
consequences of the income tax on revenue dividends, other
comprehensive income or equity according to the place in which the
entity originally recognized those past transactions or
events.
An entity will
apply those amendments to the annual periods starting on or after
January 1, 2019, with the anticipated application being permitted.
When an entity applies those amendments for the first time, it will
apply them to the income tax of the dividends recognized in or
after the commencement of the comparative period. Since the current
practice of the Group is aligned with these amendments, the Group
does not expect any affect on its consolidated
statements.
The amendments make
it clear that any borrowing originally taken for the development of
a qualifying asset is considered by the entity as a general
borrowing, when all activities were completed in order to have such
asset ready for its intended use or sale.
An entity will
apply those amendments to any borrowing costs incurred on or after
commencement of the annual report filing period in which the entity
applies such amendments for the first time. These amendments apply
to periods beginning on or after January 1, 2019. Advanced filing
is allowed. Since the current practices of the Group are aligned
with these amendments, the Group does not expect any affect on its
consolidated statements.
2.6.
IFRS
issued but not yet effective
The following new
and/or amended standards and interpretations have been issued but
were not effective as of the date of issuance of these consolidated
financial statements of the Group. In this sense, only the new
and/or amended standards and interpretations that the Group expects
to be applicable in the future are indicated. In general, the Group
intends to adopt these standards, as applicable, when they become
effective.
IFRS
16 Leases
In January 2016,
the IASB issued the final version of IFRS 16 and it replaces IAS 17
Leases, IFRIC 4 Determining whether an arrangement contains a
lease, SIC-15 Operating leases-incentives and SIC-27 Evaluating the
substance of transactions involving the legal form of a lease. IFRS
16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to
account for all leases under a single on-balance sheet model
similar to the accounting for finance leases under IAS 17. The
standard includes two recognition exemptions leases of
“low-value” assets (e.g., personal computers) and
short-term leases (i.e., leases with a lease term of 12 months or
less). At the commencement date of a lease, a lessee will recognize
a liability to make lease payments (i.e., the lease liability) and
an asset representing the right to use the underlying asset during
the lease term (i.e., the right to-use asset). Lessees will be
required to separately recognize the interest expense on the lease
liability and the depreciation expense on the right- of-use
asset.
Lessor accounting
under IFRS 16 is substantially unchanged from today’s
accounting under IAS 17. Lessors will continue to classify all
leases using the same classification principle as in IAS 17 and
distinguish between two types of leases: operating and finance
leases. IFRS 16 also requires lessees and lessors to make more
extensive disclosures than under IAS 17. IFRS 16 is effective for
annual periods beginning on or after January 1, 2019. Early
adoption is permitted, but not before the entity applies IFRS 15. A
lessee can choose to apply the standard using either a full
retrospective or modifies retrospective approach.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Transition
to NIIF 16
The Group plans to
adopt IFRS 16 retroactively for each previous period filed. The
Group will apply this standard to contracts previously identified
as Lease Contracts which apply IAS 17 and IFRIC 4. Therefore, the
Group will not apply this standard to any contract that has not
been previously identified as a Lease Contract which applies IAS 17
and IFRIC 4.
The Group will
apply any exemption set forth in this standard for lease contracts
whose term ends within 12 months as from the standard initial
application date, and for lease contracts with an underlying asset
of low value.
Having analyzed it,
the management of the Group concluded that adopting IFRS 16 will
not have significative effects on the Company’s financial
statements.
IFRIC
Interpretation 23 - Uncertainty over Income Tax
Treatments
In June 2017, the
IASB issued IFRIC Interpretation 23 - Uncertainty over Income Tax
Treatments. The Interpretation clarifies application of recognition
and measurement requirements in IAS 12 Income Taxes when there is
uncertainty over income tax treatments. The Interpretation
specifically addresses the following: (a) whether an entity
considers uncertain tax treatments separately, (b) the assumptions
an entity makes about the examination of tax treatments by taxation
authorities, (c) how an entity determines taxable profit (tax
loss), tax bases, unused tax losses, unused tax credits and tax
rates and (d) how an entity considers changes in facts and
circumstances. IFRIC 23 is effective for annual periods beginning
on or after January 1, 2019. Early adoption is
permitted.
The Group has not
yet determined what impact, if any, the adoption of the new
interpretation will have on its consolidated financial
statements.
3.
Investment
in associates
The book value of
investment in associates as of December 31, 2018 and 2017 amounts
to:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Termoeléctrica
José de San Martin S.A.
|
55,492
|
|
37,903
|
Termoeléctrica
Manuel Belgrano S.A.
|
49,138
|
|
42,439
|
ECOGAS Group (Note
3.2)
|
1,826,888
|
|
1,361,025
|
Transportadora de
Gas del Mercosur S.A.
|
66,679
|
|
388,575
|
Others
|
139
|
|
196
|
|
1,998,336
|
|
1,830,138
|
The share of the
profit of associates for the years ended December 31, 2018 and 2017
amounts to:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Termoeléctrica
José de San Martin S.A.
|
35,912
|
|
32,804
|
Termoeléctrica
Manuel Belgrano S.A.
|
29,225
|
|
34,782
|
ECOGAS Group (Note
3.2)
|
1,011,224
|
|
726,719
|
Transportadora de
Gas del Mercosur S.A.
|
(2,626)
|
|
378,411
|
Others
|
450
|
|
288
|
|
1,074,185
|
|
1,173,004
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
As of December 31,
2018 and 2017, the Group has a 30.8752% interest in TJSM and
30.9464% interest in TMB, which are engaged in managing the
purchase of equipment, and building, operating and maintaining the
power plants. TJSM and TMB are private, unlisted
companies.
During the years
ended December 31, 2018 and 2017, the Company received cash
dividends from TMB and TJSM for 54,824 and 59,143,
respectively.
3.2.
Investments
in gas distribution
The Group holds
ownership interests of 44.10% in Inversora de Gas Cuyana S.A.
(“IGCU”, the controlling company of Distribuidora de
Gas Cuyana S.A. “DGCU”), of 44.10% in Inversora de Gas
del Centro S.A. (“IGCE”, the controlling company of
Distribuidora de Gas del Centro S.A. “DGCE”) and 17.20%
in DGCE. Consequently, the Group holds, both directly and
indirectly, a 22.49% interest in DGCU and 39.69% of the capital
stock of DGCE, which are engaged in the distribution of natural
gas. The Group does not control such companies.
IGCE is a private,
unlisted company. Its only significant asset is a 51% equity
interest in DGCE, a company engaged in the distribution of natural
gas in the provinces of Cordoba, La Rioja and Catamarca,
Argentine.
IGCU is a private
unlisted company. Its only significant asset is a 51% equity
interest in DGCU, a company engaged in the distribution of natural
gas in the provinces of Mendoza, San Juan and San
Luis.
On March 2, 2018
and on February 23, 2018 the Group received dividends of 198,121
and 183,115, respectively, from IGCE and DGCE. On April 16, 2018
the Group received dividends of 164,122 from IGCU.
On February 23,
2018, our Board of Directors approved the sale process of up to
27,597,032 DGCE shares, which represent 17,20% of its capital
stock, through a potential initial public offering of DGCE in the
Argentine Republic. On March 14, 2018, the Company authorized the
offer of up to 10,075,952 shares of DGCE, subject to market
conditions. As of the date of these consolidated financial
statements, the Company, and certain potential selling
shareholders, continue to evaluate this strategy.
3.2.1.
IGCE
and IGCU merger
On March 28, 2018,
a preliminary merger agreement of IGCE, IGCU and the companies
Magna Inversiones S.A. (“Magna”) and RPBC Gas S.A.
(“RPBC”) was approved. IGCE will act as the acquiring
company and IGCU, RPBC and Magna will act as absorbed companies.
The merger is subject to authorization by the national gas
regulatory entity (“ENARGAS”). On July 23, 2018, the
general meeting of shareholders of the companies participating in
the merger approved the merger, subject to the approval by the
ENARGAS.
ENARGAS made a
decision on January 11, 2019 by means of which it rejects the
merging companies’ terms. On January 25, 2019, companies IGCE
and IGCU filed an appeal before the Secretary of Energy Management
to review ENARGAS’ decision.
Since the
Company’s investment in these entities was made through the
equity method, the aforementioned merger will not have any
equitable effect for the Group.
3.3.
Transportadora
de Gas del Mercosur S.A.
The Group has a 20%
interest in Transportadora de Gas del Mercosur S.A.
(“TGM”). This Company has a gas pipeline that covers
the area from Aldea Brasilera (in the Province of Entre Ríos)
to Paso de los Libres (in the Province of Corrientes). In 2009, TGM
terminated its contract with YPF, which was its only client to
date, on
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
the grounds of
consecutive non-compliances. On December 22, 2017, YPF agreed to
pay TGM USD 114,000,000 as full and final settlement to cover all
the complaints TGM claims against YPF. TGM is a private unlisted
company.
On April 16, 2018
the Group received dividends of 310,759 from TGM.
The following
provides summarized information of the operating segments for the
years ended December 31, 2018 and 2017:
2018
|
|
Electric
Power Generation
|
|
Natural
Gas Transport and Distribution (1) (2)
|
|
Others
(1)
|
|
Adjustments
and
Eliminations
|
|
Total
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
13,810,655
|
|
17,100,845
|
|
1,103,248
|
|
(17,749,378)
|
|
14,265,370
|
Cost of
sales
|
|
(6,162,940)
|
|
(11,352,227)
|
|
(663,141)
|
|
11,691,610
|
|
(6,486,698)
|
Administrative and
selling expenses
|
|
(1,389,336)
|
|
(2,024,080)
|
|
-
|
|
2,024,080
|
|
(1,389,336)
|
Other operating
income
|
|
13,207,713
|
|
230,284
|
|
15,129
|
|
(230,284)
|
|
13,222,842
|
Other operating
expenses
|
|
(131,462)
|
|
(56,002)
|
|
(1,419)
|
|
56,002
|
|
(132,881)
|
CVO receivables
update
|
|
11,017,014
|
|
-
|
|
-
|
|
-
|
|
11,017,014
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
30,351,644
|
|
3,898,820
|
|
453,817
|
|
(4,207,970)
|
|
30,496,311
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses)
income
|
|
(13,827,779)
|
|
(1,148,373)
|
|
(145,543)
|
|
1,534,645
|
|
(13,587,050)
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
segment
|
|
16,523,865
|
|
2,750,447
|
|
308,274
|
|
(2,673,325)
|
|
16,909,261
|
Share
in the net income for the segment
|
|
16,523,865
|
|
255,135
|
|
130,261
|
|
-
|
|
16,909,261
|
2017
|
|
Electric
Power Generation
|
|
Natural
Gas Transport and Distribution (1)
|
|
Others
(1)
|
|
Adjustments
and
Eliminations
|
|
Total
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
9,638,568
|
|
10,580,854
|
|
741,233
|
|
(11,322,087)
|
|
9,638,568
|
Cost of
sales
|
|
(5,199,149)
|
|
(7,461,082)
|
|
(475,503)
|
|
7,936,585
|
|
(5,199,149)
|
Administrative and
selling expenses
|
|
(1,056,257)
|
|
(1,712,522)
|
|
-
|
|
1,712,522
|
|
(1,056,257)
|
Other operating
income
|
|
1,014,615
|
|
3,438,303
|
|
-
|
|
(3,438,303)
|
|
1,014,615
|
Other operating
expenses
|
|
(140,138)
|
|
(47,418)
|
|
-
|
|
47,418
|
|
(140,138)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
4,257,639
|
|
4,798,135
|
|
265,730
|
|
(5,063,865)
|
|
4,257,639
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses)
income
|
|
(959,184)
|
|
(571,733)
|
|
(52,204)
|
|
1,796,653
|
|
213,532
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the
segment
|
|
3,298,455
|
|
4,226,402
|
|
213,526
|
|
(3,267,212)
|
|
4,471,171
|
Share
in the net income for the segment
|
|
3,298,455
|
|
1,105,130
|
|
67,586
|
|
-
|
|
4,471,171
|
(1)
Includes
information from associates.
(2)
Includes income
(expenses) related to resale of gas transport and distribution
capacity.
Major
customers
During the years
ended December 31, 2018 and 2017 revenues from CAMMESA amounted to
13,267,217 or 93% and 9,134,802 or 95%, respectively, arising from
sales in the electric power generation segment.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Revenues from
Resolution 19, SGE Resolution 70/2018,
Resolution 95/2013
and amendments
|
12,667,903
|
|
9,134,802
|
Sales under
contracts
|
896,802
|
|
273,285
|
Steam
sales
|
245,950
|
|
230,481
|
Resale of gas
transport and distribution capacity
|
193,889
|
|
-
|
Revenues from CVO
thermal plant management
|
260,826
|
|
-
|
|
14,265,370
|
|
9,638,568
|
6.
Other
income and expenses
6.1. Other
operating income
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Interest earned
from customers
|
1,623,309
(1)
|
|
437,583
(1)
|
Foreign exchange
difference, net
|
11,403,596
(2)
|
|
116,699
(2)
|
Recovery of
insurance
|
181,475
|
|
369,273
|
Others
|
14,462
|
|
6,507
|
|
13,222,842
|
|
930,062
|
(1)
Includes 34,393 and
34,771 related to receivables under FONINVEMEM I and II Agreements
for the year ended December 31, 2018 and 2017, respectively. It
also includes 1,110,232 related to CVO receivables for the year
ended December 31, 2018.
(2)
Includes 662,469
and 170,048 related to receivables under FONINVEMEM I and II
Agreements for the year ended December 31, 2018 and 2017,
respectively. It also includes 10,119,628 related to CVO
receivables for the year ended December 31,
2018.
6.2. Other
operating expenses
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Charge related to
the provision for lawsuits and claims
|
(89,031)
|
|
(102,204)
|
Material and spare
parts impairment (Exhibit E)
|
(37,895)
|
|
(34,401)
|
Others
|
(5,955)
|
|
(3,533)
|
|
(132,881)
|
|
(140,138)
|
6.3. Finance
income
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Interest
earned
|
51,702
|
|
238,331
|
Net income on
financial assets at fair value through profit or loss
|
510,748
|
|
111,514
|
Foreign exchange
differences
|
1,331,368
|
|
66,978
|
Net income on
disposal of financial assets at fair value through other
comprehensive income (1)
|
386,375
|
|
1,141,993
|
|
2,280,193
|
|
1,558,816
|
(1) Net of 36,094
and 90,359 corresponding to turnover tax for the years ended
December 31, 2018 and 2017.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
6.4. Finance
expenses
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Interest on loans
and borrowings from CAMMESA
|
(1,478,601)
|
|
(1,110,955)
|
Foreign exchange
differences
|
(4,763,772)
|
|
(80,654)
|
Bank commissions
for loans and others
|
(58,508)
|
|
(9,045)
|
|
(6,300,881)
|
|
(1,200,654)
|
6.5. Movements
from financial assets at fair value through other comprehensive
income
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Financial
assets at fair value through other comprehensive
income
|
|
|
|
Gains for the
year
|
64,178
|
|
450,989
|
Reclassification
adjustments to income
|
(410,806)
|
|
(1,219,384)
|
Loss
for financial assets at fair value through other comprehensive
income
|
(346,628)
|
|
(768,395)
|
The major
components of income tax during the years ended December 31, 2018
and 2017, are the following:
Consolidated
statements of income and comprehensive income
Consolidated
statement of income
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Current
income tax
|
|
|
|
Income tax charge
for the year
|
(5,516,802)
|
|
(1,909,971)
|
Adjustment related
to current income tax for the prior year
|
(5,285)
|
|
48,767
|
|
|
|
|
Deferred
income tax
|
|
|
|
Related to the net
variation in temporary differences
|
(1,082,264)
|
|
780,027
|
Income
tax
|
(6,604,351)
|
|
(1,081,177)
|
Consolidated
statement of comprehensive income
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Income
tax for the year related to items charged or credited directly to
other comprehensive income
|
|
|
|
Deferred income
tax
|
132,464
|
|
273,171
|
Income
tax charged to other comprehensive income
|
132,464
|
|
273,171
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The reconciliation
between income tax in the consolidated statement of income and the
accounting income multiplied by the statutory income tax rate for
the years ended December 31, 2018 and 2017, is as
follows:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Income before
income tax from continuing operations
|
23,513,612
|
|
7,600,715
|
Income before
income tax from discontinued operations
|
328,814
|
|
1,106,158
|
Income
before income tax
|
23,842,426
|
|
8,706,873
|
|
|
|
|
At statutory income
tax rate of 30%
|
(7,152,727)
|
|
-
|
At statutory income
tax rate of 35%
|
-
|
|
(3,047,405)
|
Share of the profit
of associates
|
(15,155)
|
|
(133,885)
|
Adjustment related
to current income tax for the prior year
|
(5,285)
|
|
48,067
|
Effect related to
statutory income tax rate change (1)
|
183,572
|
|
1,198,380
|
Effect related to
the discount of income tax payable
|
729,679
|
|
84,553
|
RECPAM - Income
(loss) for exposure to change in purchasing power of
currency
|
(393,693)
|
|
345,697
|
Others
|
(3,379)
|
|
33,400
|
|
(6,656,988)
|
|
(1,471,193)
|
Income tax
attributable to continuing operations
|
(6,604,351)
|
|
(1,081,177)
|
Income tax
attributable to discontinued operations
|
(52,637)
|
|
(390,016)
|
|
(6,656,988)
|
|
(1,471,193)
|
(1)
Effect of applying
the changes in the statutory income tax rate established by Law
27,430 as described in Note 20 to the deferred assets and
liabilities, according to its expected term of realization and
settlement, respectively.
Deferred
income tax
Deferred income tax
relates to the following:
|
Consolidated
statement
of
financial position
|
|
Consolidated
statement of income from continuing operations and statement of
other comprehensive income
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
Provisions and
others
|
68,468
|
|
66,184
|
|
14,498
|
|
9,194
|
Provision for plant
dismantling
|
-
|
|
58,039
|
|
(58,039)
|
|
(22,702)
|
Trade
receivables
|
647
|
|
(9,164)
|
|
9,819
|
|
(438)
|
Other financial
assets
|
(146,022)
|
|
(54,963)
|
|
(88,128)
|
|
295,296
|
Employee benefit
liability
|
43,461
|
|
47,579
|
|
(4,118)
|
|
(10,270)
|
Receivables and
other non-financial liabilities
|
-
|
|
9,164
|
|
-
|
|
1,509
|
Investments in
associates
|
(417,578)
|
|
(294,665)
|
|
(122,913)
|
|
(207,993)
|
Property, plant and
equipment - Material & spare parts
|
(3,053,013)
|
|
(2,615,851)
|
|
(596,665)
|
|
(65,528)
|
Intangible
assets
|
(401,970)
|
|
(472,714)
|
|
70,744
|
|
445,342
|
Deferred tax
income
|
(1,821,242)
|
|
(628,207)
|
|
(1,193,708)
|
|
591,595
|
Tax loss
carry-forward
|
933,865
|
|
47,565
|
|
886,246
|
|
-
|
Deferred
income tax (expense) income
|
|
|
|
|
(1,082,264)
|
|
1,036,005
|
Deferred
income tax liabilities, net
|
(4,793,384)
|
|
(3,847,033)
|
|
|
|
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
As of December 31,
2018, the Group holds tax loss carry-forward in its subsidiaries
for 3,822,923 that can be utilized against future taxable profit
from such entities as described below:
|
Expiration
year
|
|
|
|
2022
|
|
2023
|
|
Total
|
|
|
|
|
|
|
CP
Achiras
|
39,092
|
|
1,092,909
|
|
1,132,001
|
CP La
Castellana
|
89,727
|
|
2,389,449
|
|
2,479,176
|
Vientos La Genoveva
II S.A.U.
|
-
|
|
199,553
|
|
199,553
|
Vientos La Genoveva
I S.A.U.
|
-
|
|
6,935
|
|
6,935
|
CPR Energy
Solutions S.A.U.
|
-
|
|
5,258
|
|
5,258
|
|
128,819
|
|
3,694,104
|
|
3,822,923
|
Deferred
income tax liability, net, disclosed in the consolidated statement
of financial position
|
Consolidated
statement
of
financial position
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Deferred
income tax asset
|
|
|
|
Continuing
operations
|
1,046,441
|
|
228,531
|
Discontinued
operations
|
-
|
|
60,568
|
|
|
|
|
Deferred
income tax liability
|
|
|
|
Continuing
operations
|
(5,839,825)
|
|
(4,075,564)
|
Discontinued
operations
|
-
|
|
(212,607)
|
Deferred
income tax liability, net
|
(4,793,384)
|
|
(3,999,072)
|
Reconciliation
of deferred income tax liabilities, net
|
Consolidated
statement
of
financial position
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Amount
at beginning of year
|
(3,847,033)
|
|
(4,869,114)
|
Deferred income tax
recognized in profit or loss and in other comprehensive income
during the year - continuing operations
|
(1,082,264)
|
|
1,036,005
|
Discontinued
operations
|
152,040
|
|
(13,924)
|
Reclassification
related to current income tax for the prior year
|
(16,125)
|
|
-
|
Amount
at end of year
|
(4,793,384)
|
|
(3,847,033)
|
Earnings per share
amounts are calculated by dividing net income for the year
attributable to equity holders of the parent by the weighted
average number of ordinary shares during the year, net number of
treasury shares.
There are no
transactions or items generating an effect of
dilution.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The following
reflects information on income and the number of shares used in the
earnings per share computations:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Income
attributable to equity holders of the parent
|
|
|
|
Continuing
operations
|
17,243,421
|
|
4,500,081
|
Discontinued
operations
|
276,177
|
|
791,274
|
|
17,519,598
|
|
5,291,355
|
|
|
|
|
Weighted average
number of ordinary shares
|
1,505,170,408
|
|
1,505,170,408
|
There have been no
transactions involving ordinary shares or potential ordinary shares
between the reporting date and the date of issuance of these
consolidated financial statements that may produce a dilution
effect.
To calculate the
earnings per share for discontinued operations (note 18), the
weighted average number of shares for both the basic and diluted
earnings per share is as per the table above. The following
provides the income amount used:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Income attributable
to equity holders of the parent from discontinued
operations
|
276,177
|
|
791,274
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Non-current:
|
|
|
|
Materials and spare
parts
|
166,763
|
|
151,182
|
Provision for
impairment in value - Exhibit E
|
(92,076)
|
|
(79,995)
|
|
74,687
|
|
71,187
|
Current:
|
|
|
|
Materials and spare
parts
|
211,645
|
|
180,947
|
Fuel
oil
|
7,461
|
|
11,016
|
Diesel
oil
|
1,790
|
|
2,677
|
|
220,896
|
|
194,640
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
10.
Financial
assets and liabilities
10.1. Trade
and other receivables
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Non-current:
|
|
|
|
Trade receivables -
CAMMESA
|
16,671,565
|
|
3,826,847
|
Guarantee
deposits
|
43
|
|
63
|
Receivables from
associates
|
-
|
|
15,144
|
|
16,671,608
|
|
3,842,054
|
|
|
|
|
Current:
|
|
|
|
Trade receivables -
CAMMESA
|
10,304,925
|
|
5,353,427
|
Trade receivables -
YPF SA and YPF Energía Eléctrica SA
|
75,857
|
|
201,826
|
Recovery of
insurance
|
-
|
|
31,437
|
Trade receivables -
Large users
|
87,997
|
|
61,146
|
Receivables from
associates and other related parties
|
861
|
|
10,729
|
Other
receivables
|
113,091
|
|
77,962
|
|
10,582,731
|
|
5,736,527
|
Allowance for
doubtful accounts - Exhibit E
|
(3,703)
|
|
(2,585)
|
|
10,579,028
|
|
5,733,942
|
For the terms and
conditions of receivables from related parties, refer to Note
16.
Trade receivables
from CAMMESA accrue interest, once they become due. The Group
accrues interest on receivables from CAMMESA according to the
nature of the receivables, as follows:
FONINVEMEN I and II: The Company accrues
interests according to the explicit rate agreed in the
corresponding agreements for the passage of time.
CVO receivables: The Company accrues interests
since the Commercial Approval date and according to the rate agreed
in the CVO agreement, as described in Note 1.2.a).
LVFVD: The Company recognizes interest on
the LVFVDs when CAMMESA determines the amount of interest and
notifies the Company through a billing document.
Trade receivables
related to YPF and large users accrue interest as stipulated in
each individual agreement. The average collection term is generally
from 30 to 90 days.
FONINVEMEM I and II: The receivables under FONINVEMEM I
and II Agreements are included under “Trade receivables -
CAMMESA”. Such receivables are being collected in 120 equal,
consecutive monthly installments beginning in February and January
2010, when Thermal Jose de San Martin and Thermal Manuel Belgrano
plants, commenced operations, respectively. Since those dates,
CAMMESA has made all payments of principal and interest in
accordance with the above-mentioned contractual
agreements.
During the years
ended December 31, 2018 and 2017 collections of these receivables
amounted to 654,070 and 573,107, respectively.
The FONINVEMEM I
and II receivables are denominated in US dollars and accrue
interest at LIBOR plus 1% and 2%, respectively.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
As of December 31,
2018 and 2017 the FONINVEMEN I and II receivables amounted 758,455
and 1,205,752, respectively, which corresponds to USD 20 million
and USD 44 million, respectively.
CVO
receivables
Receivables under
CVO agreement are disclosed under “Trade receivables -
CAMMESA”.
As described in
note 1.2.a), in 2010 the Company approved the “CVO
agreement” and as from March 20, 2018, CAMMESA granted the
“Commercial Approval”.
As a consequence of
the Commercial Approval and in accordance with the CVO agreement,
the Company shall collect the CVO receivables converted in US
dollars in 120 equal and consecutive installments. The onetime
estimated income (before income tax) in relation to the interest
and the effect of the adjustment of the CVO receivables to US
dollars as of March 20, 2018 reaches approximately Ps. 11,017
million and such amount was recognized in the consolidated income
statement for the year ended December 31, 2018 under “CVO
receivables update”. The exchange difference and interests
accrued since the Commercial Approved until December 31, 2018
amounted to approximately Ps. 10,120 million and Ps. 1,110 million,
respectively, and they are disclosed under “Other operating
income” in the consolidated income statement for the year
ended December 31, 2018.
CVO Credits are
expressed in USD and they accrue LIBOR interest at a 5%
rate.
After recognizing
the update described in the previous paragraph, as at December 31,
2018, CVO Credits amount to 20,235,400, approximately USD 535
million.
The information on
the Group’s objectives and credit risk management policies is
included in Note 17.
The breakdown by
due date of trade and other receivables due as of the related dates
is as follows:
|
|
|
|
|
Past
due
|
|
Total
|
|
To
due
|
|
90
days
|
|
90-180
days
|
|
180-270
days
|
|
270-360
days
|
|
More
than 360 days
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12-31-2018
|
27,250,636
|
|
27,221,302
|
|
2,054
|
|
21,506
|
|
1,104
|
|
101
|
|
4,569
|
10.2. Trade
and other payables
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Current:
|
|
|
|
Trade
payables
|
1,702,295
|
|
1,485,474
|
Insurance
payable
|
3,031
|
|
2,858
|
Payables to
associates
|
24,583
|
|
13,553
|
|
1,729,909
|
|
1,501,885
|
Trade payables are
non-interest bearing and are normally settled on 60-day
terms.
The information on
the Group’s objectives and financial risk management policies
is included in Note 17.
For the terms and
conditions of payables to related parties, refer to Note
16.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
10.3.
Other
loans and borrowings
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Non-current
|
|
|
|
|
|
|
|
IFC and IIC
loan
|
5,186,970
|
|
-
|
Derivative
financial liabilities not designated as hedging instrument -
Interest rate swap
|
17,060
|
|
-
|
Borrowings from
Banco de Galicia y Buenos Aires S.A.
|
-
|
|
2,183,278
|
|
5,204,030
|
|
2,183,278
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Current
|
|
|
|
|
|
|
|
IFC and IIC
loan
|
448,689
|
|
-
|
Borrowings from
Banco de Galicia y Buenos Aires S.A.
|
215,584
|
|
746,158
|
Bank
overdrafts
|
8,395
|
|
345
|
|
672,668
|
|
746,503
|
10.3.1.
Loans
from the IIC-IFC Facility
On October 20, 2017
and January 17, 2018, CP La Castellana S.A.U. and CP Achiras S.A.U.
(both of which are subsidiaries of CPR), respectively, agreed on
the structuring of a series of loan agreements in favor of CP La
Castellana S.A.U. and CP Achiras S.A.U., for a total amount of USD
100,050,000 and USD 50,700,000, respectively, with: (i)
International Finance Corporation (IFC) on its own behalf, as
Eligible Hedge Provider and as an implementation entity of the
Intercreditor Agreement Managed Program; (ii) Inter-American
Investment Corporation (“IIC”), as lender on its
behalf, acting as agent for the Inter-American Development Bank
(“IDB”) and on behalf of IDB as administrator of the
Canadian Climate Fund for the Private Sector in the Americas
(“C2F”, and together with IIC and IDB, “Group
IDB”, and together with IFC, “Senior
Creditors”).
As of the date of
these financial statements, the loans disbursements have been fully
received by the Group.
In accordance with
the terms of the agreement subscribed by CP La Castellana, USD 5
million accrue an interest rate equal to LIBOR plus 3.5%, and the
rest at LIBOR plus 5.25% and the loan is amortizable quarterly in
52 equal and consecutive installments as from February 15,
2019.
In accordance with
the terms of the agreement subscribed by CP Achiras, USD 40.7
million accrue an interest rate equal to LIBOR plus 5.25%, and the
rest at LIBOR plus 4% and the loan is amortizable quarterly in 52
equal and consecutive installments as from May 15,
2019.
Other related
agreements and documents, such as the Guarantee and Sponsor Support
Agreement (the “Guarantee Agreement” by which CPSA
completely, unconditionally and irrevocably guarantees, as the main
debtor, all payment obligations undertaken by CP La Castellana and
CP Achiras until the projects reach the commercial operations date)
hedging agreements, guarantee trusts, a mortgage, guarantee
agreements on shares, guarantee agreements on wind turbines, direct
agreements and promissory notes have been signed.
Pursuant to the
Guarantee and Sponsor Support Agreement, among other customary
covenants for this type of facilities, we committed, until each
project completion date, to maintain (i) a leverage ratio of (a)
until (and including) December 31, 2018, not more than 4.00:1.00;
and (b) thereafter, not more than 3.5:1.00; and (ii) an interest
coverage ratio of not less than 2.00:1.00. In addition, our
subsidiary, CPR, and we, upon certain conditions, agreed to make
certain equity contributions to CP La Castellana and CP
Achiras.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
As of December 31,
2018, the Group has met the requirements described in (i) and (ii)
above.
We also agreed to
maintain, unless otherwise consented to in writing by each senior
lender, ownership and control of the CP La Castellana and CP
Achiras as follows: (i) until each project completion date, (a) we
shall maintain (x) directly or indirectly, at least seventy percent
(70%) beneficial ownership of CP La Castellana and CP Achiras; and
(y) control of the CP La Castellana and CP Achiras; and (b) CP
Renovables shall maintain (x) directly, ninety-five percent (95%)
beneficial ownership of CP La Castellana and CP Achiras; and (y)
control of CP La Castellana and CP Achiras. In addition, (ii) after
each project completion date, (a) we shall maintain (x) directly or
indirectly, at least fifty and one tenth percent (50.1%) beneficial
ownership of each of CP La Castellana, CP Achiras and CP
Renovables; and (y) control of each of CP La Castellana, CP Achiras
and CP Renovables; and (b) CP Renovables shall maintain control of
CP La Castellana and CP Achiras. As of December 31, 2018, the Group
has met such obligations.
Under the
subscribed trust guarantee agreement, as at December 31, 2018,
there are commercial liabilities with specific assignment for the
amount of 404,424.
10.3.2.
Loans
from Banco de Galicia y Buenos Aires S.A. to CP La Castellana and
CP Achiras S.A.U.
On October 26, 2017
and October 30, 2017, CP La Castellana and CP Achiras S.A.U.
(“CP Achiras”) entered into loans with Banco de Galicia
y Buenos Aires S.A. in the amount of 330,000 and 175,000,
respectively (the “Castellana and Achiras Loans”). The
Castellana and Achiras Loans accrue interest at an interest rate
equal to BADLAR private banks plus a 3.10% margin and shall mature
on the dates that are two years from the execution and
disbursement. The proceeds from these loans were used to finance
the Achiras Project and the La Castellana Project. We have fully,
unconditionally and irrevocably guaranteed, as primary obligor, all
payment obligations assumed and/or to be assumed by CP La
Castellana and CP Achiras under these loans and any other ancillary
document related to them.
During 2018 CP La
Castellana and CP Achiras have partially prepaid the outstanding
principal of these loans in the amount of 248,196 and 120,026,
respectively.
Loans
for wind turbines acquisition
On November 10,
2017, December 21, 2017 and December 22, 2017, CP La Castellana and
CP Achiras entered into three short-term bridge loans from Banco
Galicia y Buenos Aires S.A for a total amount of USD 50.5 million
and USD 27 million, respectively, for the acquisition of wind
turbines. These loans accrued interest at a 3.6% annual
rate.
As of December 31,
2017, CP La Castellan had entered into the loan described in note
14.3.1, which in their Framework Agreement established the
long-term refinancing of the loans taken by this Company from Banco
Galicia y Buenos Aires S.A for the acquisition of wind turbines. As
a consequence, as at December 31, 2017, the aforementioned loans
were classified as non-current liabilities as the Group had the
possibility to refinance them in a period longer than one-year as
from such date.
In addition, on
January 15, 2018, CP Achiras entered into a short-term loan from
Banco Galicia y Buenos Aires S.A. for a total amount of USD 7.0
million for the acquisition of wind turbines. This loan accrued
interest at a 3.1% annual rate.
On January 9, 2018
and April 9 and 10, 2018, CP La Castellana and CP Achiras,
respectively, completely cancelled the loans obtained with the
funds received from the loans described in the note
10.3.1.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
10.3.3.
Medium
Term Note Program
The Regular General
Shareholders’ Meeting held on November 20, 2014, approved a
Medium Term Note Program for a maximum amount outstanding at any
time of up to USD 1,000,000,000 (or its equivalent in other
currencies) to be issued in short, medium, long-term negotiable
obligations convertible into shares, in the terms of the Law No.
23.576 (negotiable obligations law) (“The program”). In
addition, the Board of Directors was empowered to determine and
establish the conditions of the Program and of the notes to be
issued under such Program which were not expressly determined by
the Shareholders’ Meeting. The CNV authorized the Program on
September 9, 2015.
The information on
the Group’s objectives and financial risk management policies
is included in Note 17.
10.4.
Borrowings from CAMMESA
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Non-current:
|
|
|
|
CAMMESA
loans
|
1,004,304
|
|
1,558,485
|
|
|
|
|
Current:
|
|
|
|
CAMMESA
loans
|
742,575
|
|
1,403,269
|
CAMMESA
prepayments
|
1,070,335
|
|
1,185,014
|
|
1,812,910
|
|
2,588,283
|
On October 23,
2002, former Secretariat of Energy issued Resolution No. 146/2002
(“Resolution 146”), which specifies a funding mechanism
for the generators based upon the performance of major maintenance
to their existing facilities.
Under Resolution
146, the Group entered into several loan agreements with
CAMMESA.
Such loans accrue
interest at a rate equivalent to the one received by CAMMESA on its
own cash investments and shall be repaid in 48 monthly installments
beginning on the completion date of the relevant major maintenance.
The Group has the option to repay the loans, through cash or net
settlement of receivables from CAMMESA related with remuneration
for non-recurring maintenance created by Resolution 529,
Article 2.
The table below
summarizes the maturity of the Group’s borrowings from
CAMMESA:
|
|
To
due
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
2,817,214
|
|
1,812,910
|
|
405,904
|
|
303,544
|
|
294,856
|
During the years
ended December 31, 2017, the Group received loans from CAMMESA
amounting to 693,257.
During the year
ended December 31, 2015, the Group received prepayments from
CAMMESA amounting to 1,185,014 for purchasing a gas turbine with
capacity of 373 MW. The mentioned acquisition was previously
approved by CAMMESA. These prepayments accrue interest at an
equivalent rate to the one received by CAMMESA on its own cash
investments and the repayment schedule has not yet been established
as of the date of these consolidated financial
statements.
The information on
the Group’s objectives and financial risk management policies
is included in Note 17.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
10.5.
Changes
in liabilities arising from financing
activities
|
|
01-01-2018
|
|
Payments
|
|
Non-cash
transactions
|
|
Disbursements
|
|
Other
|
|
12-31-2018
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and
borrowings
|
|
2,183,278
|
|
(965,441)
|
|
(1,549,381)
|
|
3,939,600
|
|
1,595,974
|
|
5,204,030
|
Borrowings from
CAMMESA
|
|
1,558,485
|
|
-
|
|
(502,927)
|
|
-
|
|
(51,254)
|
|
1,004,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and
borrowings
|
|
746,503
|
|
(1,129,668)
|
|
(568,593)
|
|
435,478
|
|
1,188,948
|
|
672,668
|
Borrowings from
CAMMESA
|
|
2,588,283
|
|
-
|
|
(1,292,223)
|
|
-
|
|
516,850
|
|
1,812,910
|
|
|
01-01-2017
|
|
Payments
|
|
Non-cash
transactions
|
|
Disbursements
|
|
Other
|
|
12-31-2017
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and
borrowings
|
|
-
|
|
-
|
|
(62,440)
|
|
2,122,845
|
|
122,873
|
|
2,183,278
|
Borrowings from
CAMMESA
|
|
2,367,279
|
|
-
|
|
(898,276)
|
|
1,023,563
|
|
(934,081)
|
|
1,558,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and
borrowings
|
|
2,382,748
|
|
(2,319,705)
|
|
(161,466)
|
|
717,989
|
|
126,937
|
|
746,503
|
Borrowings from
CAMMESA
|
|
1,930,482
|
|
-
|
|
(1,154,596)
|
|
-
|
|
1,812,397
|
|
2,588,283
|
The “Non-cash
transactions” column includes: i) the effect to cancel
borrowings from CAMMESA under Resolution 146 with trade receivables
from CAMMESA related with remuneration from non-recurring
maintenance and ii) the income (loss) for exposure to change in
purchasing power of currency (RECPAM), which amounted to 2,861,799
and 1,444,422 as of December 31, 2018 and 2017, respectively. The
“Other” column includes the effect of reclassification
of non-current portion to current due to the passage of time, the
foreign exchange movement and the effect of accrued but not yet
paid interest. The group classifies interest paid as cash flows
from financing activities.
10.6. Quantitative
and qualitative information on fair values
Information
on the fair value of financial assets and liabilities by
category
The following
tables is a comparison by category of the carrying amounts and the
relevant fair values of financial assets and
liabilities.
|
Carrying
amount
|
|
Fair
value
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
Financial
assets
|
|
|
|
|
|
|
|
Trade and other
receivables
|
27,250,636
|
|
9,575,996
|
|
27,250,636
|
|
9,575,996
|
Other financial
assets
|
1,964,630
|
|
1,639,941
|
|
1,964,630
|
|
1,639,941
|
Cash and cash
equivalents
|
229,948
|
|
130,863
|
|
229,948
|
|
130,863
|
Total
|
29,445,214
|
|
11,346,800
|
|
29,445,214
|
|
11,346,800
|
|
Carrying
amount
|
|
Fair
value
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
Financial
liabilities
|
|
|
|
|
|
|
|
Borrowings from
CAMMESA
|
2,817,214
|
|
4,146,768
|
|
2,817,214
|
|
4,146,768
|
Other loans and
borrowings
|
5,876,698
|
|
2,929,781
|
|
5,876,698
|
|
2,929,781
|
Total
|
8,693,912
|
|
7,076,549
|
|
8,693,912
|
|
7,076,549
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Valuation
techniques
The fair value
reported in connection with the abovementioned financial assets and
liabilities is the amount at which the instrument could be
exchanged in a current transaction between willing parties, other
than in a forced or liquidation sale. The following methods and
assumptions were used to estimate the fair values:
Management assessed
that the fair values of current trade receivables and current loans
and borrowings approximate their carrying amounts largely due to
the short-term maturities of these instruments.
The Group measures
long-terms receivables at fixed and variable rates based on
discounted cash flows. The valuation requires that the Group adopt
certain assumptions such as interest rates, specific risk factors
of each transaction and the creditworthiness of the
customer.
Fair value of
quoted debt securities, mutual funds and corporate bonds is based
on price quotations at the end of each reporting
period.
The fair value of
the foreign currency forward contracts is calculated based on
appropriate valuation techniques that use market observable
data.
Fair
value hierarchy
The following
tables provides, by level within the fair value measurement
hierarchy, the Company’s financial assets, that were measured
at fair value on recurring basis as of December 31, 2018, and
2017:
|
|
Fair
value measurement using:
|
2018
|
|
Total
|
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
Assets
measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets at
fair value through profit or loss:
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
1,964,630
|
|
1,964,630
|
|
-
|
|
-
|
Total
financial assets measured at fair value
|
|
1,964,630
|
|
1,964,630
|
|
-
|
|
-
|
|
|
Fair
value measurement using:
|
2017
|
|
Total
|
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
Assets
measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets at
fair value through profit or loss:
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
821,113
|
|
821,113
|
|
-
|
|
-
|
Argentine Central
Bank bills
|
|
597,330
|
|
597,330
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Financial assets at
fair value through other comprehensive income:
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
221,498
|
|
221,498
|
|
-
|
|
-
|
Total
financial assets measured at fair value
|
|
1,639,941
|
|
1,639,941
|
|
-
|
|
-
|
There were no
transfers between Level 1 hierarchies and there were not
significant variations in Level 3 assets values.
The information on
the Group’s objectives and financial risk management policies
is included in Note 17, of these financial statements.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
11.
Non-financial
assets and liabilities
11.1. Other
non-financial assets
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Non-current:
|
|
|
|
Tax
credits
|
218,636
|
|
12,126
|
Prepayments to
vendors
|
4,319
|
|
6,656
|
|
222,955
|
|
18,782
|
Current:
|
|
|
|
Upfront payments of
inventories purchases
|
56,745
|
|
61,415
|
Prepayment
insurance
|
188,823
|
|
128,855
|
Tax
credits
|
234,609
|
|
495,389
|
Other
|
14,953
|
|
9,654
|
|
495,130
|
|
695,313
|
11.2. Other
non-financial liabilities
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Non-current:
|
|
|
|
VAT
payable
|
1,879,420
|
|
662,505
|
Tax on bank account
transactions payable
|
79,463
|
|
29,504
|
|
1,958,883
|
|
692,009
|
Current:
|
|
|
|
VAT
payable
|
1,324,577
|
|
840,110
|
Turnover tax
payable
|
6,380
|
|
9,353
|
Income tax
withholdings payable
|
36,028
|
|
38,849
|
Concession fees and
royalties
|
27,410
|
|
25,250
|
Tax on bank account
transactions payable
|
72,996
|
|
58,404
|
Others
|
193,553
|
|
2,005
|
|
1,660,944
|
|
973,971
|
11.3. Compensation
and employee benefits liabilities
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Non-current:
|
|
|
|
Employee long-term
benefits
|
148,470
|
|
166,983
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The following
tables summarize the components of net benefit expense recognized
in the consolidated statement of income as long-term employee
benefit plans and the changes in the long-term employee benefit
liabilities recognized in the consolidated statement of financial
position.
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Benefit
plan expenses
|
|
|
|
Cost of
interest
|
22,258
|
|
33,883
|
Cost of service for
the current year
|
9,565
|
|
10,275
|
Past service
cost
|
(3,624)
|
|
5,336
|
Expense
recognized during the year
|
28,199
|
|
49,494
|
|
|
|
|
Defined
benefit obligation at beginning of year
|
166,983
|
|
129,493
|
Cost of
interest
|
22,258
|
|
30,793
|
Cost of service for
the current year
|
9,564
|
|
9,358
|
Past service
cost
|
(3,624)
|
|
4,852
|
Actuarial (gains)
losses
|
(20,551)
|
|
25,661
|
Benefits
paid
|
(26,160)
|
|
(25,755)
|
Discontinued
operations
|
-
|
|
(7,419)
|
Defined
benefit obligation at end of year
|
148,470
|
|
166,983
|
The main key
assumptions used to determine the obligations as of year-end are as
follows:
Main
key assumptions used
|
|
2018
|
|
2017
|
|
|
|
|
|
Discount
rate
|
|
5.50%
|
|
5.50%
|
|
|
|
|
|
Increase in the
real annual salary
|
|
2.00%
|
|
2.00%
|
|
|
|
|
|
Turn over of
participants
|
|
0.73%
|
|
0.73%
|
A one percentage
point change in the discount rate applied would have the following
effect:
|
Increase
|
|
Decrease
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Effect on the
benefit obligation as of the 2018 year-end
|
(10,563)
|
|
13,193
|
Effect on the
benefit obligation as of the 2017 year-end
|
(13,016)
|
|
14,928
|
A one percentage
point change in the annual salary assumed would have the following
effect:
|
Increase
|
|
Decrease
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Effect on the
benefit obligation as of the 2018 year-end
|
12,170
|
|
(11,205)
|
Effect on the
benefit obligation as of the 2017 year-end
|
13,635
|
|
(12,120)
|
As of December 31,
2018, and 2017, the Group had no assets in connection with employee
benefit plans.
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
Current:
|
|
|
|
Vacation and
statutory bonus
|
150,947
|
|
175,988
|
Contributions
payable
|
63,825
|
|
73,990
|
Bonus
accrual
|
173,278
|
|
213,227
|
Other
|
3,118
|
|
13,931
|
|
391,168
|
|
477,136
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Concession
right of Piedra del Águila hydroelectric power
plant
Includes the
amounts paid as consideration for rights relating to the concession
of Piedra del Águila hydroelectric power plant awarded by the
Argentine government for a 30-year term, until December 29, 2023.
The Group amortizes such intangible asset based on straight-line
basis over the remaining life of the concession
agreement.
For a concession
arrangement to fall within the scope of IFRIC 12, usage of the
infrastructure must be controlled by the concession grantor. This
requirement is met when the following two conditions are
met:
–
the grantor
controls or regulates what services the operator must provide with
the infrastructure, to whom it must provide them, and at what
price; and
–
the grantor
controls the infrastructure, i.e., retains the right to take back
the infrastructure at the end of the
concession.
Upon Resolution 95
passed by Argentine government our concession right of Piedra del
Águila hydroelectric power plant met both conditions
above.
The main features
of the concession contract are as follows:
Control and regulation of prices by concession
grantor: Pricing schedule approved by grantor;
Remuneration paid by:
CAMMESA;
Grant or guarantee from concession
grantor: None;
Residual value: Infrastructure returned
to grantor for no consideration at end of concession;
Concession end date: December 29,
2023;
IFRIC 12 accounting model: Intangible
asset.
Fees and royalties: the Intergovernmental Basin
Authority is entitled to a fee of 2.5% of the plant’s
revenues, and the provinces of Rio Negro and Neuquén are
entitled to royalties of 12% of such revenues. For the years ended
December 31, 2018 and 2017, the fees and royalties amounted 214,333
and 203,007, respectively and they were shown in operating expenses
in the consolidated statement of income.
Contractual capital
investment obligations and obligations relating to maintenance
expenditure on infrastructure under concession are
nominal.
Transmission
lines of wind farms Achiras and La Castellana
As mentioned in
Note 2.3.7, the Group finished the construction of wind farms La
Castellana and Achiras, whereby it was agreed to construct high and
medium tension lines and the electrical substation to connect the
wind farms to SADI, a part of which were given to the companies
transporting the energy in accordance with the respective
contracts; therefore, such companies are in charge of the
maintenance of such transferred installations. Consequently, the
Group recognized intangible assets for an amount of 596,301, which
were transferred from property, plant and equipment to intangible
assets.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
13.
Cash
and short-term deposits
For the purpose of
the consolidated statement of financial position and the
consolidated statement of cash flow, cash and short-term deposits
comprise the following items:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Cash at banks and
on hand
|
229,948
|
|
130,863
|
Bank balances
accrue interest at variable rates based on the bank deposits daily
rates. Short-term deposits are made for varying periods of between
one day and three months, depending on the immediate cash
requirements of the Group, and earn interest at the respective
fixed short-term deposit rates.
14.
Equity
reserves and dividends paid
On April 28, 2017,
the Shareholders’ Meeting of the Company approved the
increase of the legal reserve in the amount of 88,182 and the
allocation of the remaining unallocated results as of December 31,
2016 to increase the voluntary reserve by 1,668,869 in order to
improve the solvency of the Company.
On August 15, 2017,
the Shareholders’ Meeting of the Company approved the
distribution of dividends in cash amounting to ARS 0.85 per share
which were paid on August 30, 2017.
On April 27, 2018,
the Shareholders’ Meeting of the Company approved the
increase of the legal reserve in the amount of 220,913 and approved
the distribution of dividends in cash amounting to ARS 0.70 per
share, which were paid on May 11, 2018, allocating the remaining
unallocated results as of December 31, 2017 to increase the
voluntary reserve by 3,386,408 in order to improve the solvency of
the Company.
As described in
Note 2.2.2, the Company absorbed all cumulative negative
unappropriated retaining earnings existing as at January 1, 2017
which were a consequence of the inflation adjustment. Such negative
results were absorbed with the balances of the accounts Voluntary
Reserve, Special Reserve RG CNV 609, Special Reserve Resolution IGJ
7/05, Legal Reserve, Premiums, and with part of the balance of the
account Adjustment to Capital Stock.
15.
Provisions
and contingent liabilities
The evolution of
provisions included in liabilities is disclosed in Exhibit
E.
15.1. Tax
adjustment for inflation Income tax return for fiscal year
2014
In February 2015
CPSA, for itself and as the successor company of
Hidroeléctrica Piedra del Águila (HPDA) (the merged
company) filed income tax returns for the nine-month period ended
September 30, 2014, applying the adjustment for inflation mechanism
established by the Argentine Income Tax Law.
In addition, the
Company filed its income tax return for the three-month period
ended December 31, 2014, applying the same adjustment for inflation
mechanism established by the Argentine Income Tax Law.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
As of the date of
issue of these consolidated financial statements, we do not expect
that the Argentine Tax Authorities, or ultimately, the Supreme
Court will approve our filed income tax return. Accordingly, as of
December 31, 2018 and 2017, the Company keeps recorded a provision
for 495,390 and 551,418, respectively, which had been recognized
during the year ended December 31, 2014.
Action
for recovery - Income tax refund for fiscal period
2010
In December 2014,
the Company, as merging company and continuing company of HPDA,
raised a recourse action before fiscal authorities regarding the
income tax for the fiscal period 2010 that amounted to 67,383 at
historical values (349,524 adjusted for inflation), which was
incorrectly entered by HPDA. This recourse action seeks to recover
the income tax entered by HPDA in accordance with the lack of
application of the inflation- adjustment mechanism established by
the Law on Income Tax.
In December 2015,
the three-month term stated by Law no. 11 683 elapsed, the Company
brought a contentious-administrative claim before the National
Court to ask for its right to recourse for an amount of 67,612 at
historical values (350,712 adjusted for inflation).
In October 2018,
the Company was served notice of the judgment issued by the Federal
Contentious- Administrative Court No. 5, which granted the right to
recourse. The judgment ordered tax authorities to return the amount
of 67,612 (at historical values) to the Company plus the interest
stated in the BCRA Communication 14290 and ordered that legal cost
must be borne by the defendant. The tax administration appealed the
judgment passed by the court and the file is currently under
analysis by the Administrative Court of Appeals for the City of
Buenos Aires. Given the fact that, as of the fiscal year closing,
collection is not virtually certain, the Company maintains the
accounting treatment not to recognize a credit for such
item.
Action
for recovery - income tax refund for fiscal years 2009, 2011 and
2012
In December 2015,
the Company filed a petition with the Argentine Tax Authorities for
the recovery of income tax for the fiscal year 2009, in the amount
of approximately 119,117 which had been incorrectly paid by the
Company in excess of our income tax liability. By filling such
action, we seek to recover the excess income tax paid by CPSA due
to the failure to apply the adjustment for inflation set forth in
the Argentine Income Tax Law.
On April 22, 2016,
after the three-month term required by Law No. 11,683 expired, the
Company filed an action for recovery for the amount claimed with
the Argentinean Tax Court.
In December 2017,
the Company filed a petition with the Argentine Tax Authorities for
the recovery of 242,371 paid in excess by the Company for payment
of Income Tax for 2011 fiscal period, according to the
Company’s estimates. The purpose of such action is to recover
the income tax paid by CPSA due to the failure to apply the
adjustment for inflation set forth in the Argentine Income Tax
Law.
In December 2018,
the Company, as merging company and continuing company of HPDA,
filed a petition with the Argentine Tax Authorities for the
recovery of 387,953 paid in excess by the Company and HPDA for
payment of Income Tax for 2012 fiscal period, due to the failure to
apply the adjustment for inflation set forth in the Argentine
Income Tax Law.
As of the date of
issuance of these consolidated financial statements, we do not
expect that the Argentine Tax Authorities, or ultimately, the
Supreme Court will approve our request for recovery of income tax
we previously paid. Consequently, no receivable was recognized in
relation to this matter.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
16.
Information
on related parties
The following table
provides the transactions performed and the accounts payable
to/receivable from related parties as of December 31, 2018 and
2017:
|
|
|
Income
|
|
Expenses
|
|
Receivables
|
|
Payables
|
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
Associates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termoeléctrica
José de San Martín S.A.
|
12-31-2018
|
|
222
|
|
-
|
|
837
|
|
-
|
|
12-31-2017
|
|
266
|
|
-
|
|
28
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Distribuidora de
Gas Cuyana S.A.
|
12-31-2018
|
|
-
|
|
235,319
|
|
-
|
|
24,583
|
|
12-31-2017
|
|
-
|
|
69,088
|
|
-
|
|
10,706
|
|
|
|
|
|
|
|
|
|
|
Energía
Sudamericana S.A.
|
12-31-2018
|
|
-
|
|
-
|
|
-
|
|
-
|
|
12-31-2017
|
|
-
|
|
-
|
|
384
|
|
2,847
|
|
|
|
|
|
|
|
|
|
|
Transportadora de
Gas del Mercosur S.A.
|
12-31-2018
|
|
7,647
|
|
-
|
|
24
|
|
-
|
|
12-31-2017
|
|
4,828
|
|
-
|
|
25,461
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Related
companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMPE
Asociados S.A.
|
12-31-2018
|
|
178
|
|
159,895
|
|
-
|
|
-
|
|
12-31-2017
|
|
202
|
|
142,259
|
|
-
|
|
-
|
Total
|
12-31-2018
|
|
8,047
|
|
395,214
|
|
861
|
|
24,583
|
|
12-31-2017
|
|
5,296
|
|
211,347
|
|
25,873
|
|
13,553
|
Terms
and conditions of transactions with related parties
Balances at the
related reporting period-ends are unsecured and interest free.
There have been no guarantees provided or received for any related
party receivables or payables.
For the years ended
December 31, 2018 and 2017, the Group has not recorded any
impairment of receivables relating to amounts owed by related
parties. This assessment is undertaken at the end of each reporting
period by examining the financial position of the related party and
the market in which the related party operates.
17.
Financial
risk management objectives and policies
Interest rate
variations affect the value of assets and liabilities accruing a
fixed interest rate, as well as the flow of financial assets and
liabilities with floating interest rates.
As mentioned in
note 10.3, short–term bank loans accrue interest at a fixed
interest rate. The Group uses no derivate financial instruments to
cover this risk.
Under IAS 29,
keeping monetary assets causes loss of purchasing power, as long as
there is no adjustment mechanism that compensates for such loss of
purchasing power. This loss is included in the fiscal year income
(loss) under item RECPAM. On the contrary, keeping monetary
liabilities causes gain of purchasing power, also included under
item RECPAM.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The company’s
risk management policy was designed for the purposes of reducing
the effect the loss of purchasing power may have. Net monetary
positions during most of fiscal years 2018 and 2017 appeared as
assets; hence, the Company seeks to mitigate the risk by
implementing adjustment mechanisms through interest and exchange
differences. In consequence, during 2018 and 2017, item RECPAM
showed net loss caused by monetary accounts inflation.
Interest rate sensitivity
The following table
shows the sensitivity of income before income tax for the year
ended December 31, 2018, to a reasonably possible change in
interest rates over the portion of loans and CAMMESA borrowings
bearing interest at a variable interest rate, with all other
variables held constant:
Increase
in percentage
|
|
Effect
on income before income tax (Loss)
|
|
|
ARS
000
|
|
|
|
5%
|
|
(141,280)
|
Foreign currency
risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign
exchange rates.
The Company is
exposed to the foreign currency risk at an ARS/USD ratio, mainly
due to its operating activities, the investment projects defined by
the Company and the debt related to the bank loan mentioned in note
10.3.1. The Company does not use derivative financial instruments
to hedge such risk.
However, as of
December 31, 2018, the Company carries receivables, cash and cash
equivalents in foreign currency for USD 570,726 thousands, which
exceed the liabilities carried in foreign currency for
approximately USD 167,902 thousands.
Foreign currency sensitivity
The following table
shows the sensitivity to a reasonably possible change in the US
dollar exchange rate, with all other variables held constant, of
income before income tax as of December 31, 2018 (due to changes in
the fair value of monetary assets and liabilities).
Change
in
USD rate
|
|
Effect
on income before income tax (Gain)
|
|
|
ARS
000
|
|
|
|
10%
|
|
973,442
|
The Company’s
revenues depend on the electric power price in the spot market and
the production cost paid by CAMMESA. The Company has no power to
set prices in the market where it operates.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Credit
risk
Credit risk is the
risk that a counterparty will not meet its obligations under a
financial instrument or customer contract, leading to a financial
loss. The Company is exposed to credit risk from its operating
activities (primarily for trade receivables) and from its financing
activities, including holdings of government
securities.
–
Trade and other
receivables
The Finance
Department is in charge of managing customer credit risk subject to
policies, procedures and controls relating to the Group’s
credit risk management. Customer receivables are regularly
monitored. Although the Group has received no guarantees, it is
entitled to request interruption of electric power flow if
customers fail to comply with their credit obligations. In regards
to credit concentration, see Note 10.1. The need to book impairment
is analyzed at the end of each reporting period on an individual
basis for major clients. The allowance recorded as of December 31,
2018, is deemed sufficient to cover the potential impairment in the
value of trade receivables.
–
Cash and cash
equivalents
Credit risk from
balances with banks and financial institutions is managed by the
Group’s treasury department in accordance with corporate
policy. Investments of surplus funds are made only with approved
counterparties; in this case, the risk is limited because
high-credit-rating banks are involved.
–
Public and
corporate securities
This risk is
managed by the Company’s finance management according to
corporate policies, whereby these types of investments may only be
made in first-class companies and in instruments issued by the
federal or provincial governments.
Liquidity
risk
The Group manages
its liquidity to guarantee the funds required to support its
business strategy. Short-term financing needs related to seasonal
increases in working capital are covered through short-and
medium-term bank credit lines.
The table below
summarizes the maturity profile of the Company’s financial
liabilities.
|
Less
than 3 months
|
|
3
to 12 months
|
|
1
to 5
years
|
|
Total
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
As
of December 31, 2017
|
|
|
|
|
|
|
|
CAMMESA borrowings
and other loans and borrowings
|
8,395
|
|
1,822,759
|
|
6,862,758
|
|
8,693,912
|
Trade and other
payables
|
1,729,909
|
|
-
|
|
-
|
|
1,729,909
|
|
1,738,304
|
|
1,822,759
|
|
6,862,758
|
|
10,423,821
|
As
of December 31, 2016
|
|
|
|
|
|
|
|
CAMMESA borrowings
and other loans and borrowings
|
345
|
|
3,948,515
|
|
3,127,689
|
|
7,076,549
|
Trade and other
payables
|
1,499,027
|
|
2,858
|
|
-
|
|
1,501,885
|
|
1,499,372
|
|
3,951,373
|
|
3,127,689
|
|
8,578,434
|
Granted
and received guarantees
The Group has
posted a bank bond to cover the obligations undertaken under the
Concession Agreement of Complejo Hidroeléctrica Piedra del
Águila for 4,366.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
On October 16,
2006, the Group entered into two pledge agreements with the
Secretariat of Energy to guarantee our performance obligations in
favor of the FONINVEMEM trusts under certain construction
management and operation management agreements and provided as
collateral: (a) 100% of our shares in TJSM and TMB, and (b) 50% of
the rights conferred by our LVFVD receivables for the duration of
the construction management agreement and the operation management
agreement.
Likewise, the Group
entered into various guarantee agreements to provide performance
assurance of its obligations arising from the agreements described
in notes 1.2.a), 10.3.1, 10.3.3, 10.4 and 19.6.
18.
Discontinued
operations
As mentioned in
note 22.8, on December 20, 2017 YPF Energía Eléctrica
S.A. (“YPF EE”) accepted our offer to sell the La Plata
plant. On February 8, 2018, the plant was transferred to YPF EE
effective as of January 5, 2018. Consequently, as of December 31,
2017 the La Plata plant was classified as a disposal group held for
sale and its respective results as a discontinued operation. The
results of La Plata plant for the years ended December 31, 2018 and
2017 are presented below:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Revenues
|
17,151
|
|
3,596,450
|
Cost of
sales
|
(23,874)
|
|
(2,324,579)
|
Gross
(loss) income
|
(6,723)
|
|
1,271,871
|
|
|
|
|
Administrative and
selling expenses
|
-
|
|
(13,948)
|
Other operating
income
|
469,600
|
|
-
|
Other operating
expenses
|
-
|
|
(18,146)
|
Operating
income
|
462,877
|
|
1,239,777
|
|
|
|
|
RECPAM - Income
(loss) for exposure to change in purchasing power of
currency
|
(134,063)
|
|
(57,942)
|
Finance
expense
|
-
|
|
(545)
|
Income
before tax from discontinued operations
|
328,814
|
|
1,181,290
|
Income tax for the
year
|
(52,637)
|
|
(390,016)
|
Income
for the year from discontinued operations
|
276,177
|
|
791,274
|
The assets and
liabilities of La Plata plant classified as held for sale as of
December 31, 2017 are, as follows:
|
2017
|
|
ARS
000
|
|
|
Assets
|
|
Property, plant and
equipment
|
710,343
|
Inventories
|
38,523
|
Assets
held for sale
|
748,866
|
|
|
Liabilities
|
|
Deferred income tax
liabilities
|
(152,039)
|
Compensation and
employee benefits liabilities
|
(6,513)
|
Provisions
|
(193,463)
|
Labilities
associated with assets held for sale
|
(352,015)
|
Net
assets held for sale
|
396,851
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The net cash flows
of La Plata plant operation are, as follows:
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Operating
activities
|
(6,723)
|
|
1,212,104
|
Earnings per
share:
|
2018
|
|
2017
|
|
|
|
|
– Basic and diluted
income per share from discontinued operations
|
ARS
0.18
|
|
ARS
0.53
|
19.1.
Maintenance
and service contracts
The Group entered
into long-term service agreements executed with leading global
companies in the construction and maintenance of thermal generation
plants, such as (i) General Electric, which is in charge of the
maintenance of the Puerto Combined Cycle plant, the La Plata
plant’s gas turbine, and part of the Mendoza based units, and
(ii) Siemens, which is in charge of the maintenance of the combined
cycle unit based in Mendoza site.
Under long-term
service agreements, suppliers provide materials, spare parts, labor
and on-site engineering guidance in connection with scheduled
maintenance activities, in accordance with the applicable technical
recommendations.
19.2.
Agreement
for supplying electricity and steam to YPF
As from January
1999 and for a 20-year term, our Luján de Cuyo plant supplies
150 tons per hour of steam to YPF’s refinery in Luján de
Cuyo under a steam supply agreement. Under this agreement YPF
supplies the Luján de Cuyo plant with the fuel and water
needed for operation of the plant.
On February 8,
2018, we signed an agreement to extend our steam supply agreement
with YPF at our Luján de Cuyo plant for a period of up to 24
months from January 1, 2019 under the same terms as our existing
steam supply agreement.
19.3.
Acquisition
of Siemens gas turbine
On December 18,
2014, the Company acquired from Siemens a gas turbine for electric
power generation composed by a turbine and a generator with 286 MW
output power, and the proper ancillary equipment and maintenance
and assistance services.
19.4.
Acquisition
of General Electric gas turbine
On March 13th,
2015, the Company acquired a gas turbine from General Electric and
hired their specialized technical support services. The unit is a
gas turbine with 373 MW output power.
As of December 31,
2018, the Company received cash advances from CAMMESA amounting to
1,185,014 for partially funding the mentioned
acquisition.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
19.5.
Acquisition
of two Siemens gas turbines
On May 27th, 2016,
the Company acquired from Siemens two gas turbines for electric
power generation composed by a turbine and a generator with 298 MW
output power, and the proper ancillary equipment and maintenance
and assistance services. This equipment will be used in the
cogeneration project called “Terminal 6 San Lorenzo”,
which is described in Note 19.7.
19.6.
Awarding
of Renewable Energy Projects
In October 2016,
the Company and its subsidiary CPR were awarded of a wind project
called “La Castellana” with a capacity of 99
MW.
In January 2017, CP
La Castellana S.A.U. entered into a power purchase agreement with
CAMMESA for La Castellana project for a 20-year term as from
the launch of the commercial operations.
In November 2016,
the Company and its subsidiary CPR were awarded of a wind project
called “Achiras” with a capacity of 48 MW.
In May 2017, CP
Achiras S.A.U. entered into a power purchase agreement with CAMMESA
for Achiras project for a 20-year term as from the launch of the
commercial operations.
In November 2017,
the Company was awarded a project of wind power generation called
“La Genoveva I” with an installed capacity of 86.6 MW.
The Company participated on the tender by virtue of its call option
on 100% of the shares of Vientos La Genoveva S.A., a special
purpose vehicle, through which the aforementioned project will be
developed. In this context, the Company assigned the exercise of
the call option to its subsidiary CPR and on March 23, 2018, CPR
acquired 100% of the shares of Vientos La Genoveva S.A. (currently,
Vientos La Genoveva S.A.U.).
In addition, on
January 2018 and May 2018, CAMMESA assigned to the Group the
priority on power dispatch for the projects “La Castellana
II”, “Achiras II” and “La Genoveva
II”, with an installed capacity of 15.75 MW,
79.80 MW and 41.8
MW, respectively.
Consequently, CPR
exercised the call option on the special purpose vehicle through
which La Genoveva II project will be developed, and on June 28,
2018 acquired 100% of the shares of Vientos La Genoveva II S.A.
(currently, Vientos La Genoveva II S.A.U.).
On August 6, 2018,
CPR transferred to the Company its total shareholding at Vientos La
Genoveva S.A.U. (3,740,500 non-endorsable registered common shares
at Ps. 1 each) and at Vientos La Genoveva II S.A.U. (5,578,543
non-endorsable registered common shares at Ps. 1 each), including
all the political and economical rights inherent in
them.
On December 28,
2018, a decision was made at the Special Shareholders’
Meeting of CPR Energy Solutions S.A.U. (”CPRES”),
an special purposes vehicle, subsidiary of CPR, which developed
projects La Castellana II and Achiras II; the decision made implied
a spin off, by means of which CPRES’s equity would be divided
and wind farm project La Castellana II was part of its equity,
while 79.8-MW wind farm Project Achiras II was divided from it into
two parts: (i) a part consisting on 57-MW wind farm Manque;
therefore, a new company named CP MANQUE S.A.U. (“CPM”)
was incorporated for this wind farm, and (ii) another part
consisting on 22.8-MW wind farm called Los Olivos; therefore, a new
company named CP LOS OLIVOS S.A.U. (“CPLO”) was
incorporated for this wind farm (hereinafter, the
“spinning-off companies”.) As resolved at the
Shareholders’ Meeting, the spin off was effective in legal
and tax terms as at February 1, 2019, on which date, the spinning-
off companies were incorporated with the equity that was divided
from CPRES. As from such date, the spinning-off companies commenced
their independent activities and all operating, accounting, and tax
effects were triggered.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
On August 17, 2018,
CPSA acquired from Ledesma Renovables S.A., a 12-MW photovoltaic
power generation project (extensible in additional 6 MW), located
at Santa María, Province of Catamarca.
Acquisition
and operation of wind turbines
The Group has
entered into agreements with Nordex Windpower S.A. for the
operation and maintenance of Achiras and La Castellana wind farms
for a 10-year term.
Moreover, the Group
has entered into agreements with Vestas Argentina S.A. for the
supply, transport, setup, assembly, commissioning and tests of wind
turbines for La Genoveva I, La Genoveva II, La Castellana II,
Manque and Los Olivos wind farms. The Group also entered into
contracts with Vestas Argentina S.A. for the operation and
maintenance of the wind farms for a 5-year term.
Additionally, the
Group has also entered into agreements with Constructora
Sudamericana S.A. for the execution of the civil works and the
medium voltage grid in such wind farms. Also, the Group has entered
into agreements with Ventus Energía Renovables S.A. for
supervision and inspection tasks on the works in such wind
farms.
19.7.
Awarding
of co-generation projects
On September 25,
2017, the Company was awarded through Resolution SEE 820/2017 with
two co-generation projects called “Terminal 6 San
Lorenzo” with a capacity of 330 MW and Luján de Cuyo
(within our Luján de Cuyo plant) with a capacity of 93
MW.
On December 15,
2017, we executed a new steam supply contract with YPF for a
15-year term that will begin when the new co-generation unit at our
Luján de Cuyo plant begins operations.
Also, on December
27, 2017, we entered into a final steam supply agreement with T6
Industrial S.A. for the new co-generation unit at our Terminal 6
San Lorenzo plant for a 15 year-term.
On January 4, 2018,
the Company entered into power purchase agreements with CAMMESA for
each of the mentioned projects for a 15-year term as from the
launch of commercial operations.
19.8.
Sale
of the La Plata plant
On December 20,
2017, YPF EE, an YPF S.A. subsidiary, accepted our offer to sell
the La Plata plant, for a total sum of USD 31.5 million, subject to
closing customary conditions. On February 8, 2018, after the
conditions were met, the plant was transferred to YPF EE effective
as of January 5, 2018. Consequently, the Company has booked an
income, before income tax, from discontinued operations for
469,600, due to the sale of the mentioned plant.
19.9.
Purchase
of natural gas for generation
As accepted under
Regulation SGE No. 70/2018 described in Note 1.d), the Company
reinstated its activities towards purchasing natural gas as from
late November 2018, in order to supply its generation stations. As
from December 2018, all natural gas used by the Company was
purchased to producers and distributors directly, as well as the
transported associated to those consumptions. The Company’s
main natural gas providers are YPF, Tecpetrol, Total,
Metroenergía and Pluspetrol, among others.
19.10.
Subsequent
event: Thermal Station Brigadier López
award
In the context of
two local and foreign public tenders for goodwill transfer called
by Integración Energética Argentina S.A.
(“IEASA”), on February 27, 2019, IEASA informed the
Company that it was awarded with the goodwill transfer composed of
the production units that are part of Central Termoeléctrica
Brigadier López and
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Central
Termoeléctrica Ensenada de Barragán, which includes the
production unit that is part of Thermal Station Brigadier
López (the “Station”) and of the premises on which
the Station is located, including: a) production unit for the
Station, which includes, personal property, recordable personal
property, facilities, machines, tools, spare parts, and other
assets used for the Station operation and use; b) IEASA’s
contractual position in executed contracts (described hereinbelow);
c) permits and authorizations in effect related to the Station
operation; and d) CPSA’s responsibility of being in charge of
the transferred employees.
The Station’s
current installed power is 280 MW (open-cycle operation.). Closing
cycle works are at an advanced stage and will make the Station
power rise to 420 MW.
Contractual
position of the executed contracts will be transferred to CPSA on
April 1, 2019, (the “Effective Date”.) The following
contracts are included: a) turbogas supplying contract with CAMMESA
for the supply of electric power (mixed-cycle operation), whose
expected termination date is August 30, 2022; b) turbosteam
supplying contract with CAMMESA for the supply of electric power,
whose term is of ten years as from commencement of commercial
operations, which took place in April 2012; c) financial trust
contract signed by IEASA as trustor for the purpose of financing
the Station’s open-cycle work, d) gas distribution contracts,
e) Station’s maintenance contract, f) spare parts sale
contract, g) insurance contract, and h) other
contracts.
As regards the
trust contract, CPSA will act as trustor as from the Effective
Date. Based on the residual value projection informed by IEASA, the
estimated balance of the financial debt at the Effective Date will
be of USD 161 million (estimated technical
value).
In addition, on the
Effective Date, CPSA will have to reacquire the trust debt
securities whose value is equivalent to the difference between: (i)
the debt securities residual value as of the Effective Date, and
(ii) the cash offer made by CPSA.
The total amount
offered by CPSA at the public tender was USD 165,432,500; this
amount included USD 155,332,500 in cash, and USD 10,100,000 to
be paid as LVFVD.
On December 29,
2017, decree No.1112/2017 was issued, by which the Tax Reform Law
No. 27430 (“Tax Reform Law”) enacted by the Argentine
Congress on December 27, 2017, was passed. The Tax Reform Law was
published in the Official Gazette the same date it was enacted. The
most relevant aspects of this reform are the
following:
a)
Reduction
of the corporate income tax rate and additional tax on the
distribution of dividends
Through the fiscal
year ended December 31, 2017, the corporate income tax rate remains
at 35% and will be reduced to 30% during the two following fiscal
years beginning on or after January 1st, 2018, and to 25% for the
fiscal years beginning on January 1st, 2020. This reduction
affected the measurement of deferred tax assets and liabilities as
at December 31, 2017, as indicated in note 7.
The reduction of
the corporate income tax rate is supplemented by the application of
a tax on the dividend distributions made to local natural persons
and foreign beneficiaries, which the Company should withhold and
pay over the tax authorities as a single and final payment when
dividends are distributed. This additional tax will be of 7% or 13%
rate, depending on whether dividends were distributed for a period
when the Company was subject to 30% or 25% rate, respectively. For
this purpose, it is considered, without admitting evidence to the
contrary, that the dividends which are distributed are related, in
the first place, to older accumulated earnings.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
Pursuant to law No.
25,053, when dividends are paid exceeding accumulated taxable
income as of the year- end immediately preceding the payment date,
there is an obligation to withhold, as a single and final payment,
35% on such excess for income tax purpose. This withholding will no
longer be applicable for dividends attributable to income accrued
during the fiscal years beginning on or after January 1st,
2018.
Section 19 of the
Income Tax Law incorporates in the treatment of NOL deduction the
possibility of them being used considering the changes in the
domestic wholesale price index published by INDEC (Argentine
Statistics and Census Institute), for the period between the
closing month of the fiscal year when the payment is
made.
d)
Adjustment
for inflation
To determine the
amount of taxable net profits for fiscal years commencing as from
January 1, 2018, the inflation adjustment calculated on the basis
of the provisions set forth in Sections 95 to 98 of the income tax
law will have to be added to or deducted from the fiscal
year’s tax result. This adjustment will only be applicable if
the variance percentage of the consumers price index
(“IPC”) given by the Argentine Statistics Bureau
(“INDEC”), based on the charts prepared by AFIP for
that purposes falls into one of the following scenarios (a) the
percentage totaled during the 36 months prior to fiscal year
closing is higher than 100%, or (b) for the first, second, and
third fiscal year as from January 1, 2018, the index variance
estimated from the commencement to the closing of the fiscal year
is higher than 55% (fifty-five per cent), 30% (thirty per cent,)
and 15% (fifteen per cent) for the first, second, and third fiscal
year respectively.
If the condition
for the adjustment for inflation does not take place, an adjustment
is allowed for certain assets as it is mentioned in the following
paragraph.
e)
Update
of the acquisitions and investments made during the fiscal periods
beginning on January
1st, 2018
For the
acquisitions or investments made during the fiscal periods
beginning on January 1st, 2018, the following updates shall apply,
based on the change percentage in the domestic wholesale price
index provided by INDEC, according to the tables prepared by the
AFIP for such purpose:
(1)
When transferring
depreciable personal property, buildings which cannot be used as an
inventory, intangible assets, shares, contributions or equity
interests in companies (including contributions to mutual funds),
the tax cost basis considered for determining the gross profit will
be updated by the aforementioned index, as from the date of the
acquisition or investment until the date of the transfer, and will
be decreased, if appropriate, by the applicable depreciations
calculated from the updated value.
(2)
The depreciations
deductible related to buildings and other constructions on real
estate property assigned to activities or as investments, different
from inventories, and the depreciations related to assets assigned
to the generation of taxable income, will be calculated applying
the aforementioned index to the ordinary depreciation charge,
referred to the date of the acquisition or construction indicated
in the tables prepared by the AFIP.
Law No. 27,430
establishes the option of reappraising for tax purposes, for one
time, some assets owned by the tax-payer by the end of the first
fiscal year ended after December 29, 2017, the date on which the
law came into force, as long as the following conditions are met:
(i) the assets are located, placed or economically used within the
country, and generate taxable income, (ii) the assets are not
subject to accelerated depreciation or have been completely
depreciated, and (iii) the assets were not disclosed pursuant to
Law No. 27,260.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
The performance of
the option entails the payment of a special tax regarding all the
reappraised assets pursuant to the proportional rates established
for each asset, which will be applied over the difference between
the residual reappraised tax value and the residual original tax
value, calculated pursuant to the rules set forth by the Income Tax
Law. The determined tax is not deductible from the income tax and
the profit from the reappraisal is exempt from the income tax. In
addition, the reappraisal amount, net of the respective
depreciations, is not computed in the tax base of the minimum
presumed income tax.
The reappraisal is
carried out by applying a reappraisal factor which stems from a
table contained in Law No. 27,430, as from the year the
assets were recorded. From the resulting value, the depreciations
which may have been proper in accordance to the income tax law for
the elapsed useful life of the assets, including the year of the
option, are subtracted. In case of real estate property which is
not considered as an inventory and depreciable personal property,
the estimate may be done by an independent appraiser, as long as it
does not exceed 50% of the amount which would result from the
application of the appraisal factor. The reappraised assets will
continue to be updated for tax purposes based on the change
percentage in the domestic wholesale price index provided by INDEC,
according to the tables prepared by the AFIP for such purpose.
Thus, the depreciation to be deducted from the income tax will
consist of: (i) the depreciation rate determined based on the
original value, method and the asset’s useful life duly
adopted to determine the income tax, plus (ii) the depreciation
rate which corresponds to the amount of the reappraisal with the
above-mentioned subsequent update. Should a reappraised asset be
transferred during any of the two fiscal years immediately
following the fiscal year taken as basis for the reappraisal, the
computable cost will be subject to a penalty, which will consist in
a 60% reduction of the updated residual amount, if the transfer
were made in the first of those fiscal years, or in a 30%
reduction, if it were made in the second of such fiscal
years.
As of the date of
the issuance of these financial statements, the Board of Directors
is analyzing the financial effects of the tax reappraisal and it
has not yet decided whether they will make use of the option
established in Law No. 27,430.
The use of the
option of the tax reappraisal implies waiving (i) carrying any
legal or out-of-court procedure to claim, with tax purposes, the
application of any nature of updating procedures as at the date of
the first fiscal year ended after the date on which Law 27,430 came
into force and (ii) waiving the actions and rights invoked in
procedures already carried in respect of fiscal periods previously
ended. In addition, the calculation of the depreciation of the
reappraisal amount or its integration as a tax basis when
determining the income tax will imply, due to the fiscal year on
which such calculation is made, waiver to any update
claim.
g)
Advanced
reimbursement of the technical credit balance of the value added
tax
Law No. 27,430
establishes in the Value Added Tax Law a mechanism by which it is
possible to require the reimbursement of the tax credits originated
in the definite purchase, building, manufacturing, preparation or
import of fixed assets (with the exception of vehicles) subject to
depreciation in the income tax, which after six consecutive fiscal
years, as from the year in which its consideration as tax credit
was applicable, constitute the technical credit balance. If after
60 fiscal years as from the fiscal year immediately following the
one where the reimbursement was made, the tax-payer had not
generated an excess of tax debit over tax credits for a similar
amount, the tax-payer must reimburse the not-applied excess plus
the respective interest. These dispositions will apply to the
accumulated balance originated in the charges whose right to
consideration as tax credit is originated as from January 1st,
2018.
h)
Employers’
contributions
A progressive
increase of the employers’ contributions rate of 17%
effective for those employers’ contributions accrued as from
February 1st, 2018 is established. The increase schedule
establishes that the rate will reach 17.50% in 2018, 18% in 2019,
18.50% in 2020 and 19% in 2021. As from January 1st, 2022, the
employers’ contributions accrued will be finally settle at
19.50%.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
In addition, from
the tax basis on which it is proper to apply the rates indicated
before, a non-taxable minimum will be deducted which will also be
progressive and which will begin in 2018 with ARS 2,400 to finally
reach ARS 12,000 as from January 1st, 2022. This non-taxable
minimum will be updated as from January 2019 based on the domestic
wholesale price index provided by INDEC.
21.
Restrictions
on income distribution
Pursuant to the
General Legal Entities Law and the Bylaws, 5% of the profits made
during the fiscal year must be assigned to the statutory reserve
until such reserve reaches 20% of the Company’s Capital
Stock.
By January 1, 2015
the Company’s Capital Stock was 199,742, represented by
199,742,158 ordinary, book- entry shares with a nominal value of 1
Argentine peso and granting 1 vote each.
On March 11, 2016,
and within the context of the merger of CPSA with Hidroneuquen
S.A., Operating S.A. and SADESA, the Shareholders’ Special
Meeting established the Stock Capital reduction by 10,489 by
cancelling 10,489,376 ordinary, book-entry shares with a nominal
value of 1 Argentine peso and granting 1 vote each.
On December 16,
2016, the Shareholders’ Special Meeting established the
Capital Stock increase by distributing dividends in shares by
1,324,769, by issuing 1,324,769,474 ordinary, book-entry shares
with a nominal value of 1 Argentine peso and granting 1 vote
each.
At December 31,
2018, the Capital Stock is 1,514,022, represented by 1,514,022,256
ordinary, book-entry shares with a nominal value of 1 Argentine
peso and granting 1 vote each, fully registered, paid-in and issued
(8,851,848 are treasury shares).
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
A
1
of 2
CENTRAL
PUERTO S.A.
PROPERTY,
PLANT AND EQUIPMENT
AS
OF DECEMBER 31, 2018
|
|
Cost
|
|
|
At
the beginning
|
|
Additions
|
|
Transfers
|
|
Disposals
|
|
At
the end
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
Lands and
buildings
|
|
1,907,294
|
|
6,487
|
|
827,701
|
|
-
|
|
2,741,482
|
Electric power
facilities
|
|
21,395,820
|
|
813,810
|
|
630,401
|
|
(155,202)
|
|
22,684,829
|
Wind
turbines
|
|
-
|
|
-
|
|
3,519,848
|
|
-
|
|
3,519,848
|
Gas turbines
(1)
|
|
5,688,004
|
|
191,953
|
|
(568,017)
|
|
-
|
|
5,311,940
|
Construction
progress (2)
|
|
4,252,242
|
|
5,924,697
|
|
(5,006,234)
(3)
|
|
(49,988)
|
|
5,120,717
|
Other
|
|
1,537,533
|
|
22,036
|
|
-
|
|
(9,923)
|
|
1,549,646
|
Total
|
|
34,780,893
|
|
6,958,983
|
|
(596,301)
|
|
(215,113)
|
|
40,928,462
|
|
|
Depreciation
|
|
|
At
the beginning
|
|
Charges
|
|
Disposals
|
|
At
the end
|
|
Net
book value
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
Lands and
buildings
|
|
451,152
|
|
39,640
|
|
-
|
|
490,792
|
|
2,250,690
|
Electric power
facilities
|
|
15,569,606
|
|
975,169
|
|
(102,606)
|
|
16,442,169
|
|
6,242,660
|
Wind
turbines
|
|
-
|
|
78,001
|
|
-
|
|
78,001
|
|
3,441,847
|
Gas turbines
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,311,940
|
Construction
progress
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,120,717
|
Other
|
|
1,308,466
|
|
49,745
|
|
(8,129)
|
|
1,350,082
|
|
199,564
|
Total
|
|
17,329,224
|
|
1,142,555
|
|
(110,735)
|
|
18,361,044
|
|
22,567,418
|
(1)
As of December 31,
2018, the Company held gas turbines, one of which was transferred
to construction in progress because it will be used for new
generation capacity in the project called “Terminal 6 San
Lorenzo” while the other turbines can be used for other
projects, in future bidding processes that may be called by the
Argentine government.
(2)
The Group has
capitalized borrowing costs for a total amount of 138,064 during
the year ended December 31, 2018.
(3)
Includes 596,301
transferred to intangible assets related to transmission lines that
were transferred to electric energy transport companies. See Note
2.3.7.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
A
2
of 2
CENTRAL
PUERTO S.A.
PROPERTY,
PLANT AND EQUIPMENT
AS
OF DECEMBER 31, 2017
|
|
Cost
|
|
|
|
|
At
the beginning
|
|
Additions
|
|
Transfers
|
|
Disposals
|
|
At
the end
|
|
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lands and
buildings
|
|
1,918,978
|
|
4,552
|
|
(16,236)
|
|
-
|
|
1,907,294
|
|
|
Electric power
facilities
|
|
23,310,921
|
|
354,830
|
|
(2,269,931)
|
|
-
|
|
21,395,820
|
|
|
Gas turbines
(1)
|
|
1,817,315
|
|
1,356,837
|
|
2,513,852 (2)
|
|
-
|
|
5,688,004
|
|
|
Construction
progress
(3)
|
|
289,497
|
|
3,982,113
|
|
(19,368) (2)
|
|
-
|
|
4,252,242
|
|
|
Other
|
|
1,581,618
|
|
36,480
|
|
(77,309)
|
|
(3,256)
|
|
1,537,533
|
|
|
Total
|
|
28,918,329
|
|
5,734,812
|
|
131,008
|
|
(3,256)
|
|
34,780,893
|
|
|
|
|
Depreciation
|
|
|
|
|
At
the beginning
|
|
Charges
|
|
Transfers
|
|
Disposals
|
|
At
the end
|
|
Net
book value
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lands and
buildings
|
|
442,201
|
|
20,486
|
|
(11,535)
|
|
-
|
|
451,152
|
|
1,456,142
|
Electric power
facilities
|
|
16,091,252
|
|
1,128,691
|
|
(1,650,337)
|
|
-
|
|
15,569,606
|
|
5,826,214
|
Gas turbines
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,688,004
|
Construction
progress
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4,252,242
|
Other
|
|
1,285,559
|
|
52,930
|
|
(28,117)
|
|
(1,906)
|
|
1,308,466
|
|
229,067
|
Total
|
|
17,819,012
|
|
1,202,107
|
|
(1,689,989)
|
|
(1,906)
|
|
17,329,224
|
|
17,451,669
|
(1)
As of December 31,
2017, the Company held gas turbines, one of which was transferred
to construction in progress because it will be used for new
generation capacity in the project called “Terminal 6 San
Lorenzo” while the other turbines can be used for other
projects, in future bidding processes that may be called by the
Argentine government.
(2)
Transferred from
Other non-financial assets.
(3)
The Group has
capitalized borrowing costs for a total amount of 10,739 during the
year ended December 31, 2017.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
B
CENTRAL
PUERTO S.A.
INTANGIBLE
ASSETS
AS
OF DECEMBER 31, 2018 AND 2017
|
|
2018
|
|
2017
|
|
|
Cost
|
|
Amortization
|
|
|
|
|
|
|
At
the beginning
|
|
Transfers
|
|
At
the end
|
|
At
the beginning
|
|
%
|
|
Charges
|
|
At
the end
|
|
Net
book value
|
|
Net
book value
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concession
right
|
|
7,904,747
|
|
-
|
|
7,904,747
|
|
5,927,282
|
|
3.3
|
|
329,578
|
|
6,256,860
|
|
1,647,887
|
|
1,977,465
|
Transmission lines
for Achiras and La Castellana wind farms
|
|
-
|
|
596,301
(1)
|
|
596,301
|
|
-
|
|
5.0
|
|
20,096
|
|
20,096
|
|
576,205
|
|
-
|
Other
|
|
712,025
|
|
-
|
|
712,025
|
|
700,887
|
|
|
|
-
|
|
700,887
|
|
11,138
|
|
11,138
|
Total
2018
|
|
8,616,772
|
|
596,301
|
|
9,213,073
|
|
6,628,169
|
|
|
|
349,674
|
|
6,977,843
|
|
2,235,230
|
|
|
Total
2017
|
|
8,616,772
|
|
-
|
|
8,616,772
|
|
6,215,132
|
|
|
|
413,037
|
|
6,628,169
|
|
|
|
1,988,603
|
(1) Transferred
from property, plant and equipment. See Note 2.3.7.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
C
CENTRAL
PUERTO S.A.
EQUITY
INTERESTS IN ASSOCIATES AS OF DECEMBER 31, 2018 AND
2017
|
|
2018
|
|
2017
|
Name
and characteristics of securities and issuers
|
|
Class
|
|
Face
value
|
|
Quantity
|
|
Cost
|
|
Listed
Price
|
|
Value
obtained by the equity method
|
|
Share
in the profit of associates
|
|
Book
value
|
|
Book
value
|
|
|
|
|
|
|
|
|
|
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT
IN ASSOCIATES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sociedades
Art.33 - Ley N° 19.550 y sociedades vinculadas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termoeléctrica
José de San Martín S.A.
|
|
1 vote
|
|
1
|
|
154,378
|
|
8.439
|
|
None
|
|
55,492
|
|
35,912
|
|
55,492
|
|
37,903
|
Termoeléctrica
Manuel Belgrano S.A.
|
|
1 vote
|
|
1
|
|
154,734
|
|
8.439
|
|
None
|
|
49,138
|
|
29,225
|
|
49,138
|
|
42,439
|
ECOGAS Group - IGCU
& IGCE (1) (2)
|
|
1 vote
|
|
10
|
|
(a)
|
|
(a)
|
|
None
|
|
1,826,888
|
|
1,011,224
|
|
1,826,888
|
|
1,361,025
|
Transportadora de
Gas del Mercosur S.A.
|
|
1 vote
|
|
-
|
|
8,702,400
|
|
-
|
|
None
|
|
66,679
|
|
(2,626)
|
|
66,679
|
|
388,575
|
Other
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
118
|
|
450
|
|
139
|
|
196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,074,185
|
|
1,998,336
|
|
1,830,138
|
(1)
Includes direct
participation of 17,20% in DGCE.
a)
2,646,529 IGCU
shares and 2,999,329 DGCE shares.
b)
40,509 for IGCU and
133,467 for IGCE.
|
|
Last
available financial information
|
Name
and characteristics
of
securities and issuers
|
|
Date
|
|
Capital
stock
|
|
Income
(loss)
|
|
Equity
|
|
Equity
interest
|
|
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termoeléctrica
José de San Martín S.A.
|
|
12/31/2018
|
|
500
|
|
148,713
|
|
179,728
|
|
30.88%
|
Termoeléctrica
Manuel Belgrano S.A.
|
|
12/31/2018
|
|
500
|
|
94,436
|
|
158,783
|
|
30.95%
|
ECOGAS
Group:
|
|
|
|
|
|
|
|
|
|
|
IGCU &
IGCE
|
|
12/31/2018
|
|
(c)
|
|
1,585,052
|
|
5,388,201
|
|
44.10%
|
Distribuidora de
Gas del Centro S.A.
|
|
12/31/2018
|
|
160,457
|
|
1,495,279
|
|
2,163,936
|
|
17.20%
|
Transportadora de
Gas del Mercosur S.A.
|
|
12/31/2018
|
|
43,512
|
|
(13,128)
|
|
333,394
|
|
20.00%
|
c)
60,012 for IGCU and
68,012 for IGCE.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
D
CENTRAL
PUERTO S.A.
INVESTMENTS
AS
OF DECEMBER 31, 2018 AND 2017
|
|
2018
|
|
2017
|
Name
and characteristics of securities
|
|
Currency
|
|
Cost
value
|
|
Book
value
|
|
Book
value
|
|
|
|
|
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
assets at fair value through other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
ARS
|
|
|
|
-
|
|
221,498
|
|
|
|
|
|
|
-
|
|
221,498
|
Financial
assets at fair value through profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argentina Central
Bank bills
|
|
ARS
|
|
|
|
-
|
|
597,330
|
Mutual
funds
|
|
ARS
|
|
|
|
1,964,630
|
|
821,113
|
|
|
|
|
|
|
1,964,630
|
|
1,418,443
|
|
|
|
|
|
|
1,964,630
|
|
1,639,941
|
ARS: Argentine
Peso
USD: US
Dollar
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
E
CENTRAL
PUERTO S.A.
ALLOWANCES
AND PROVISIONS AS OF DECEMBER 31, 2018 AND 2017
|
|
2018
|
|
2017
|
Item
|
|
At
beginning
|
|
Increases
|
|
Transfers
|
|
Decreases
|
|
At
end
|
|
At
end
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
79,995
|
|
37,895
|
|
-
|
|
(25,814)
(2)
|
|
92,076
|
|
79,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for
doubtful accounts - Trade receivables
|
|
2,585
|
|
2,204
|
|
-
|
|
(1,086)
(2)
|
|
3,703
|
|
2,585
|
Total
2018
|
|
82,580
|
|
40,099
|
|
-
|
|
(26,900)
|
|
95,779
|
|
|
Total
2017
|
|
60,126
|
|
34,401
|
|
-
|
|
(11,947) (2)
|
|
|
|
82,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
lawsuits and claims
|
|
610,476
|
|
106,263
|
|
-
|
|
(179,240)
(2)
|
|
537,499
|
|
610,476
|
Total
2018
|
|
610,476
|
|
106,263
|
|
-
|
|
(179,240)
|
|
537,499
|
|
|
Total
2017
|
|
859,893
|
|
102,204
|
|
(193,463) (1)
|
|
(158,158) (2)
|
|
|
|
610,476
|
(1)
Transferred to
Liabilities associated with the assets held for sale (Note
18).
(2)
Income (loss) for
exposure to change in purchasing power of currency for the
year.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
F
CENTRAL
PUERTO S.A.
COST
OF SALES
AS
OF DECEMBER 31, 2018 AND 2017
|
2018
|
|
2017
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
Inventories at
beginning of each year
|
265,827
|
|
218,028
|
|
|
|
|
Purchases and
operating expenses for each year:
|
|
|
|
Purchases
|
2,194,756
|
|
560,058
|
Operating expenses
(Exhibit H)
|
4,321,698
|
|
4,686,890
|
|
6,516,454
|
|
5,246,948
|
|
|
|
|
Inventories at the
end of each year
|
(295,583)
|
|
(265,827)
|
Total
|
6,486,698
|
|
5,199,149
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
G
CENTRAL
PUERTO S.A.
FINANCIAL
ASSETS AND LIABILITIES IN FOREIGN CURRENCY AS OF DECEMBER 31, 2018
AND 2017
|
|
2018
|
|
2017
|
Account
|
|
Currency
and amount
(in
thousands)
|
|
Effective
exchange rate (1)
|
|
Book
value
|
|
Currency
and amount
(in
thousands)
|
|
Book
value
|
|
|
|
|
|
|
|
ARS
000
|
|
|
|
|
ARS
000
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
|
USD
|
421,112
|
|
37.8080
(2)
|
|
15,921,517
|
|
USD
|
24,648
|
|
675,025
|
|
|
|
|
|
|
|
15,921,517
|
|
|
|
|
675,025
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
USD
|
4,720
|
|
37.5000
|
|
177,000
|
|
USD
|
4,313
|
|
118,119
|
|
|
EUR
|
1
|
|
42.8400
|
|
43
|
|
EUR
|
1
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
|
USD
|
138,051
|
|
37.8080
|
|
5,219,427
|
|
USD
|
9,609
|
|
263,159
|
|
|
USD
|
3,381
|
|
37.5000
(2)
|
|
126,788
|
|
USD
|
19,932
|
|
545,871
|
|
|
|
|
|
|
|
5,523,258
|
|
|
|
|
927,181
|
|
|
|
|
|
|
|
21,444,775
|
|
|
|
|
1,602,206
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and
borrowings
|
|
USD
|
140,581
|
|
37.7000
|
|
5,299,904
|
|
USD
|
50,690
|
|
1,395,720
|
|
|
|
|
|
|
|
5,299,904
|
|
|
|
|
1,395,720
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and
borrowings
|
|
USD
|
12,124
|
|
37.7000
|
|
457,075
|
|
USD
|
27,099
|
|
746,155
|
Trade and other
payables
|
|
USD
|
14,686
|
|
37.7000
|
|
553,662
|
|
USD
|
31,243
|
|
860,258
|
|
|
EUR
|
465
|
|
43.1627
|
|
20,071
|
|
EUR
|
136
|
|
4,508
|
|
|
|
|
|
|
|
1,030,808
|
|
|
|
|
1,610,921
|
|
|
|
|
|
|
|
6,330,712
|
|
|
|
|
3,006,641
|
USD: US
dollar.
EUR:
Euro.
(1)
At the exchange
rate prevailing as of December 31, 2018 as per the Argentine
National Bank.
(2)
At the exchange
rate according to Communication “A” 3500 (wholesale)
prevailing as of December 31, 2018 as per the Argentine Central
Bank.
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
CENTRAL
PUERTO S.A.
EXHIBIT
H
1
of 2
INFORMATION
REQUIRED BY LAW 19,550, ART. 64, PARAGRAPH I, SUBSECTION b) AS OF
DECEMBER 31, 2018 AND 2017
|
|
2018
|
Accounts
|
|
Operating
expenses
|
|
Administrative
and
selling
expenses
|
|
Total
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
Compensation to
employees
|
|
1,370,994
|
|
550,542
|
|
1,921,536
|
Other long-term
employee benefits
|
|
28,092
|
|
4,534
|
|
32,626
|
Depreciation of
property, plant and equipment
|
|
1,142,555
|
|
-
|
|
1,142,555
|
Amortization of
intangible assets
|
|
349,674
|
|
-
|
|
349,674
|
Purchase of energy
and power
|
|
44,148
|
|
1,392
|
|
45,540
|
Fees and
compensation for services
|
|
247,799
|
|
342,908
|
|
590,707
|
Maintenance
expenses
|
|
481,021
|
|
154,788
|
|
635,809
|
Consumption of
materials and spare parts
|
|
161,289
|
|
245
|
|
161,534
|
Insurance
|
|
241,474
|
|
3,511
|
|
244,985
|
Levies and
royalties
|
|
223,076
|
|
-
|
|
223,076
|
Taxes and
assessments
|
|
20,449
|
|
48,452
|
|
68,901
|
Tax on bank account
transactions
|
|
2,475
|
|
256,327
|
|
258,802
|
Others
|
|
8,652
|
|
26,637
|
|
35,289
|
Total
|
|
4,321,698
|
|
1,389,336
|
|
5,711,034
|
English translation of the consolidated financial statements
originally filed in Spanish with the Argentine Securities
Commission (“CNV”).
In case of discrepancy, the consolidated financial statements filed
with the CNV prevail over this translation
|
EXHIBIT
H
2
of 2
CENTRAL
PUERTO S.A.
INFORMATION
REQUIRED BY LAW 19,550, ART. 64, PARAGRAPH I, SUBSECTION b) AS OF
DECEMBER 31, 2018 AND 2017
|
|
2017
|
Accounts
|
|
Operating
expenses
|
|
Administrative
and selling expenses
|
|
Total
|
|
|
ARS
000
|
|
ARS
000
|
|
ARS
000
|
|
|
|
|
|
|
|
Compensation to
employees
|
|
1,436,661
|
|
529,718
|
|
1,966,379
|
Other long-term
employee benefits
|
|
42,655
|
|
6,839
|
|
49,494
|
Depreciation of
property, plant and equipment
|
|
1,201,928
|
|
179
|
|
1,202,107
|
Amortization of
intangible assets
|
|
329,579
|
|
-
|
|
329,579
|
Purchase of energy
and power
|
|
126,458
|
|
-
|
|
126,458
|
Fees and
compensation for services
|
|
314,593
|
|
272,915
|
|
587,508
|
Maintenance
expenses
|
|
599,708
|
|
41,831
|
|
641,539
|
Consumption of
materials and spare parts
|
|
184,575
|
|
-
|
|
184,575
|
Insurance
|
|
228,411
|
|
3,092
|
|
231,503
|
Levies and
royalties
|
|
212,799
|
|
-
|
|
212,799
|
Taxes and
assessments
|
|
6,102
|
|
48,719
|
|
54,821
|
Tax on bank account
transactions
|
|
-
|
|
137,445
|
|
137,445
|
Others
|
|
3,421
|
|
15,519
|
|
18,940
|
Total
|
|
4,686,890
|
|
1,056,257
|
|
5,743,147
|
IT
H
1
of 2
English translation of the original report issued in Spanish for
publication in Argentina
INDEPENDENT
AUDITORS’ REPORT
To the Directors
of
CENTRAL
PUERTO S.A.:
Introduction
1. We have audited the
accompanying consolidated financial statements of Central Puerto
S.A. and its subsidiaries, which comprise the consolidated
statement of financial position as of December 31, 2018, the
consolidated statements of income, comprehensive income, changes in
equity and cash flows for the year then ended, a summary of
significant accounting policies and other explanatory
information.
Responsibility
of the Company’s Board of Directors on financial
statements
2. The board of
Directors is responsible for the preparation and fair presentation
of the Company’s financial statements mentioned in paragraph
1 in accordance with the International Financial Reporting
Standards (IFRS), adopted by the Argentine Federation of
Professional Councils in Economic Sciences (FACPCE) as professional
accounting standards and incorporated by the Argentine Securities
Regulator (CNV) in its regulations, as approved by the
International Accounting Standards Board (IASB). The Board of
Directors is also responsible for the internal control it
determines necessary to enable the preparation of financial
statements that are free from material misstatements, whether due
to errors or irregularities.
Auditor’s
responsibility
3. Our responsibility
is to express an opinion on the financial statements mentioned in
paragraph 1 based on our audit. We conducted our audit in
accordance with the International Standards on Auditing issued by
the International Auditing and Assurance Standards Board (IAASB)
adopted in Argentina with the validity established by the FACPCE.
Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material
misstatement.
An audit involves
performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the
assessments of the risks of material misstatement of the financial
statements, whether due to errors or irregularities. In making
those risk assessments, the auditor considers the Company’s
internal control relevant to the preparation and fair presentation
of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of the accounting estimates made by the Company’s Management,
as well as evaluating the overall presentation of the financial
statements.
We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
4. In our opinion, the
financial statements referred to in paragraph 1 present fairly, in
all material respects, the financial position of Central Puerto
S.A. and its subsidiaries as of December 31, 2018 and the results
of its operations and its cash flows for the year then ended, in
accordance with the International Financial Reporting
Standards.
City of Buenos
Aires, March 11, 2019
PISTRELLI, HENRY
MARTIN Y ASOCIADOS S.R.L. C.P.C.E.C.A.B.A. T° 1 –
F° 13
GERMÁN E.
CANTALUPI
Partner
Certified Public
Accountant (U.B.A.)
C.P.C.E.C.A.B.A.
T° 248 – F° 60