Pampa Energy Inc 6-K, filed Aug 20, 2021
Pampa Energy Inc. (PAM)
About this 6-K
Pampa Energy Inc filed this 6-K on August 20, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN
ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2021
(Commission File No. 001-34429),
PAMPA ENERGIA S.A.
(PAMPA ENERGY INC.)
Argentina
(Jurisdiction of incorporation or organization)
Maipú 1
C1084ABA
City of Buenos Aires
Argentina
(Address of principal executive offices)
(Indicate by check
mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F ___X___ Form 40-F ______
(Indicate
by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.)
Yes ______ No ___X___
(If "Yes"
is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- .)
This Form 6-K for Pampa Energía S.A. (“Pampa” or the “Company”) contains:
Exhibit 1: UNAUDITED CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 19, 2021
| Pampa Energía S.A. | ||
| By: |
/s/ Gustavo Mariani |
|
|
Name: Gustavo Mariani Title: Chief Executive Officer |
||
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will a ctually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
Free translation from the original prepared in Spanish for publication in Argentina
UNAUDITED CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2021
AND FOR THE SIX AND THREE-MONTH PERIODS THEN ENDED
PRESENTED IN COMPARATIVE FORMAT
Free translation from the original prepared in Spanish for publication in Argentina |
REVIEW REPORT ON THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
To the President and Directors of
Pampa Energía S.A.
Legal address: Maipú, 1
Autonomous City of Buenos Aires
Tax Code No.: 30-52655265-9
Introduction
We have reviewed the accompanying consolidated condensed interim financial statements of Pampa Energía S.A. (hereinafter called “the Company”) and its subsidiaries, including the consolidated condensed interim statement of financial position at June 30, 2021, the consolidated condensed interim statement of comprehensive income for the six and three-month periods ended June 30, 2021, the consolidated condensed interim statements of changes in equity and of cash flows for the six-month period then ended, and the selected explanatory notes.
The balances and other information for the fiscal year 2020 and its interim periods is an integral part of the Financial Statements mentioned above; therefore, they must be considered in connection with those Financial Statements.
Board's responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of the financial statements in accordance with International Financial Reporting Standards, adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE, for its acronym in Spanish) as professional accounting standards and included by the National Securities Commission (CNV, for its acronym in Spanish) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the consolidated condensed interim financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 “Interim Financial Information” (IAS 34).
Scope of our review
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the consolidated condensed interim Financial Statements and of analytical and other review procedures. This review is substantially less in scope than an audit examination conducted in accordance with international standards on auditing and consequently it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the financial position, the consolidated comprehensive income, or the consolidated cash flows of the Company.
Free translation from the original prepared in Spanish for publication in Argentina |
Conclusion
On the basis of our review, nothing has come to our attention that make us think that the consolidated condensed interim Financial Statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with IAS 34.
Report on compliance with current regulations
In accordance with current regulations, we report, in connection with Pampa Energía S.A., that:
a) the consolidated condensed interim financial statements of Pampa Energía S.A. are recorded to the “Inventory and Balance Sheet” book, and complies in what is a matter of our competence, with the provisions of the General Companies Law and in the pertinent resolutions of the National Securities Commission;
b) the individual condensed interim financial statements of Pampa Energía S.A. arise from accounting records kept in their formal aspects in accordance with legal regulations,
c) we have read the Summary of Activity (“Reseña Informativa”), on which, as regards those matters that are within our competence, we have no observations to make;
d) as of June 30, 2021, the debt accrued by Pampa Energía S.A. in favor of the Argentine Integrated Social Security System according to the Company's accounting records amounted to $ 207.9 millions, none of which was claimable at that date;
Autonomous City of Buenos Aires, August 10, 2021.
PRICE WATERHOUSE & CO. S.R.L.
|
(Partner) |
Carlos Martín Barbafina
| 2 |
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GLOSSARY OF TERMS
The following are not technical definitions, but they are helpful for the reader’s understanding of some terms used in the notes to the unaudited consolidated condensed interim financial statements of the Company.
| Terms | Definitions |
| ADR | American Depositary Receipt |
| BCRA | Central Bank of the Argentine Republic |
| BO | Official Gazette |
| CAMMESA | Compañía Administradora del Mercado Eléctrico Mayorista S.A. |
| CB | Corporate Bonds |
| CIESA | Compañía de inversiones de energía S.A. |
| Citelec | Compañía Inversora en Transmisión Eléctrica Citelec S.A. |
| CNV | Comisión Nacional de Valores – Argentine Securities Commission |
| CTB | Central Térmica Barragán S.A |
| CTEB | Central Térmica Ensenada Barragán |
| DNU | Decree of necessity and urgency |
| Ecuador TLC | Ecuador TLC S.A. |
| Edenor | Empresa Distribuidora y Comercializadora Norte S.A. |
| ENARGAS | National Regulator of Gas |
| ENRE | National Regulatory Authority of Electricity |
| Greenwind | Greenwind S.A. |
| HIDISA | Hidroeléctrica Diamante S.A. |
| HINISA | Hidroeléctrica Los Nihuiles S.A. |
| IASB | International Accounting Standards Board |
| IEASA | Integración Energética Argentina S.A. |
| MATER | Renewable Energy Term Market |
| MLC | Foreign Exchange Market |
| MW | Megaewatt |
| NIC | International Accounting Standards |
| NIIF | International Financial Reporting Standards |
| NYSE | New York Stock Exchange |
| OCP | Oleductos de Crudo Pesados Ltd |
| 1 |
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GLOSSARY OF TERMS: (Continuation)
| Terms | Definitions |
| PACOSA | Pampa Comercializadora S.A. |
| PEB | Pampa Energía Bolivia S.A. |
| PEN | National Executive Branch |
| PISA | Pampa Inversiones S.A. |
| Refinor | Refinería del Norte S.A. |
| RTI | Tariff Structure Review |
| RTT | Transitional Tariff Regime |
| SACDE | Sociedad Argentina de Construcción y Desarrollo Estratégico |
| SE | Secretary of Energy |
| SEC | Security and Exchange Comission |
| SEE | Secretary of Electrical Energy |
| SGE | Secretary of Government of Energy |
| TGS | Transportadora de Gas del Sur S.A. |
| TSM | Termoeléctrica José de San Martín S.A. |
| TMB | Termoeléctrica Manuel Belgrano S.A. |
| The Company / Pampa | Pampa Energía S.A. |
| The Group | Pampa Energía S.A. and its subsidiaries |
| Transba | Empresa de Transporte de Energía Eléctrica por Distribución Troncal de la Provincia de Buenos Aires Transba S.A. |
| Transener | Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. |
| US$ | U.S. dollar |
| 2 |
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UNAUDITED CONSOLIDATED CONDENSED INTERIM
STATEMENT OF
COMPREHENSIVE INCOME
For the six and three-month periods ended June 30, 2021
presented in comparative format (see Note 5.1)
(In millions of Argentine Pesos (“$”))
| Six-month | Three-month | ||||||||
| Note | 06.30.2021 | 06.30.2020 | 06.30.2021 | 06.30.2020 | |||||
| Revenue | 8 | 61,211 | 32,154 | 32,576 | 14,118 | ||||
| Cost of sales | 9 | (35,343) | (20,309) | (18,990) | (9,148) | ||||
| Gross profit | 25,868 | 11,845 | 13,586 | 4,970 | |||||
| Selling expenses | 10.1 | (1,083) | (1,000) | (541) | (401) | ||||
| Administrative expenses | 10.2 | (4,043) | (3,174) | (2,027) | (1,638) | ||||
| Exploration expenses | 10.3 | (44) | (9) | (37) | (5) | ||||
| Other operating income | 10.4 | 4,846 | 1,261 | 3,870 | 552 | ||||
| Other operating expenses | 10.4 | (3,831) | (1,276) | (781) | (818) | ||||
| Impairment of property, plant and equipment, intangible assets and inventories | (172) | (4,316) | (172) | - | |||||
| Impairment of financial assets | (196) | 12 | (93) | 81 | |||||
| Share of profit from associates and joint ventures | 5.2.2 | 3,101 | 3,158 | 875 | 1,089 | ||||
| Operating income | 24,446 | 6,501 | 14,680 | 3,830 | |||||
| Finance income | 10.5 | 337 | 295 | 172 | 153 | ||||
| Finance costs | 10.5 | (7,841) | (5,348) | (3,855) | (2,705) | ||||
| Other financial results | 10.5 | 2,931 | 1,760 | 4,992 | 2,169 | ||||
| Financial results, net | (4,573) | (3,293) | 1,309 | (383) | |||||
| Profit before income tax | 19,873 | 3,208 | 15,989 | 3,447 | |||||
| Income tax | 10.6 | (6,106) | (1,399) | (5,391) | (1,838) | ||||
| Profit of the period from continuing operations | 13,767 | 1,809 | 10,598 | 1,609 | |||||
| Loss of the period from discontinued operations | 5.1 | (7,129) | (1,748) | (7,654) | (2,491) | ||||
| Profit (loss) of the period | 6,638 | 61 | 2,944 | (882) | |||||
| Other comprehensive income (loss) | |||||||||
| Items that will not be reclassified to profit or loss | |||||||||
| Exchange differences on translation | 15,155 | 14,049 | 4,899 | 7,614 | |||||
| Items that may be reclassified to profit or loss | |||||||||
| Exchange differences on translation | 3,665 | (685) | 2,500 | (747) | |||||
| Other comprehensive income of the period from continuing operations | 18,820 | 13,364 | 7,399 | 6,867 | |||||
| Other comprehensive income of the year from discontinued operations | 5.1 | 11,375 | 8,642 | 6,940 | 3,920 | ||||
| Other comprehensive income of the period | 30,195 | 22,006 | 14,339 | 10,787 | |||||
| Total comprehensive income of the period | 36,833 | 22,067 | 17,283 | 9,905 | |||||
| 3 |
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UNAUDITED CONSOLIDATED CONDENSED INTERIM
STATEMENT OF COMPREHENSIVE INCOME (Continuation)
For the six and three-month periods ended June 30, 2021
presented in comparative format (see Note 5.1)
(In millions of Argentine Pesos (“$”))
| Six-month | Three-month | ||||||||
| Note | 06.30.2021 | 06.30.2020 | 06.30.2021 | 06.30.2020 | |||||
| Total income of the period attributable to: | |||||||||
| Owners of the company | 9,773 | 995 | 6,621 | 220 | |||||
| Non - controlling interest | (3,135) | (934) | (3,677) | (1,102) | |||||
| 6,638 | 61 | 2,944 | (882) | ||||||
| Total income of the period attributable to owners of the Company: | |||||||||
| Continuing operations | 13,499 | 1,942 | 10,349 | 1,582 | |||||
| Discontinued operations | (3,726) | (947) | (3,728) | (1,362) | |||||
| 9,773 | 995 | 6,621 | 220 | ||||||
| Total comprehensive income of the period attributable to: | |||||||||
| Owners of the Company | 32,793 | 19,021 | 17,476 | 9,226 | |||||
| Non - controlling interest | 4,040 | 3,046 | (193) | 679 | |||||
| 36,833 | 22,067 | 17,283 | 9,905 | ||||||
| Total comprehensive income (loss) of the period attributable to owners of the Company: | |||||||||
| Continuing operations | 32,263 | 11,326 | 17,733 | 6,668 | |||||
| Discontinued operations | 530 | 7,695 | (257) | 2,558 | |||||
| 32,793 | 19,021 | 17,476 | 9,226 | ||||||
| Earnings (losses) per share attributable to the equity holders of the Company during the period | |||||||||
| Basic and diluted earnings per share from continuing operations | 13.2 | 9.45 | 1.21 | ||||||
| Basic and diluted losses per share from discontinued operations | 13.2 | (2.61) | (0.59) | ||||||
| Total basic and diluted earnings per share | 13.2 | 6.84 | 0.62 | ||||||
The accompanying notes are an integral part of these unaudited consolidated condensed interim financial statements.
| 4 |
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UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
As of June 30, 2021
presented in comparative format
(In millions of Argentine Pesos (“$”))
| Note | 06.30.2021 | 12.31.2020 | |||
| ASSETS | |||||
| NON-CURRENT ASSETS | |||||
| Property, plant and equipment | 11.1 | 153,639 | 135,445 | ||
| Intangible assets | 11.2 | 4,075 | 3,455 | ||
| Right-of-use assets | 1,595 | 867 | |||
| Deferred tax assets | 11.3 | 7,146 | 9,082 | ||
| Investments in joint ventures and associates | 5.2.2 | 61,544 | 46,229 | ||
| Financial assets at amortized cost | 12.1 | 9,598 | 8,428 | ||
| Financial assets at fair value through profit and loss | 12.2 | 3,811 | 942 | ||
| Other assets | 61 | 57 | |||
| Trade and other receivables | 12.3 | 3,249 | 3,631 | ||
| Total non-current assets | 244,718 | 208,136 | |||
| CURRENT ASSETS | |||||
| Inventories | 11.4 | 14,894 | 9,766 | ||
| Financial assets at amortized cost | 12.1 | - | 2,062 | ||
| Financial assets at fair value through profit and loss | 12.2 | 32,324 | 27,382 | ||
| Derivative financial instruments | 1 | 1 | |||
| Trade and other receivables | 12.3 | 45,275 | 28,678 | ||
| Cash and cash equivalents | 12.4 | 11,946 | 11,900 | ||
| Total current assets | 104,440 | 79,789 | |||
| Assets classified as held for sale | 5.1 | - | 123,603 | ||
| Total assets | 349,158 | 411,528 |
| 5 |
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UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (Continuation)
As of June 30, 2021
presented in comparative format
(In millions of Argentine Pesos (“$”))
| Note | 06.30.2021 | 12.31.2020 | |||
| SHAREHOLDERS´ EQUITY | |||||
| Share capital | 13 | 1,394 | 1,451 | ||
| Share capital adjustment | 7,310 | 7,605 | |||
| Share premium | 19,950 | 19,950 | |||
| Treasury shares | 4 | 4 | |||
| Treasury shares adjustment | 22 | 24 | |||
| Treasury shares cost | (624) | (235) | |||
| Legal reserve | 5,203 | 3,703 | |||
| Voluntary reserve | 55,133 | 60,899 | |||
| Other reserves | (676) | (759) | |||
| Other comprehensive income | 42,246 | 29,430 | |||
| Retained earnings | 19,977 | (1,825) | |||
| Equity attributable to owners of the company | 149,939 | 120,247 | |||
| Non-controlling interest | 743 | 28,631 | |||
| Total equity | 150,682 | 148,878 | |||
| LIABILITIES | |||||
| NON-CURRENT LIABILITIES | |||||
| Investments in joint ventures and associates | 5.2.2 | 416 | 161 | ||
| Provisions | 11.5 | 13,428 | 9,326 | ||
| Income tax | 11.6 | 15,750 | 11,004 | ||
| Taxes payables | 138 | 128 | |||
| Deferred tax liabilities | 11.3 | - | 93 | ||
| Defined benefit plans | 1,944 | 1,460 | |||
| Borrowings | 12.5 | 130,932 | 115,428 | ||
| Trade and other payables | 12.6 | 1,593 | 1,418 | ||
| Total non-current liabilities | 164,201 | 139,018 | |||
| CURRENT LIABILITIES | |||||
| Provisions | 11.5 | 363 | 1,379 | ||
| Income tax | 11.6 | 49 | 897 | ||
| Taxes payables | 4,295 | 3,030 | |||
| Defined benefit plans | 298 | 298 | |||
| Salaries and social security payable | 1,372 | 1,935 | |||
| Derivative financial instruments | 27 | 40 | |||
| Borrowings | 12.5 | 13,094 | 20,377 | ||
| Trade and other payables | 12.6 | 14,777 | 9,778 | ||
| Total current liabilities | 34,275 | 37,734 | |||
| Liabilities associated to assets classified as held for sale | 5.1 | - | 85,898 | ||
| Total liabilities | 198,476 | 262,650 | |||
| Total liabilities and equity | 349,158 | 411,528 |
The accompanying notes are an integral part of these unaudited consolidated condensed interim financial statements.
| 6 |
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UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
For the six-month period ended June 30, 2021
presented in comparative format
(In millions of Argentine Pesos (“$”))
| Attributable to owners | |||||||||||||||||||||||||||
| Equity holders of the company | Retained earnings | ||||||||||||||||||||||||||
| Share capital | Share capital adjustment | Share premium | Treasury shares | Treasury shares adjustment | Treasury shares cost | Legal reserve | Voluntary reserve | Other reserves (1) | Other comprehensive income / (loss) | Retained earnings (Accumulated losses) | Subtotal | Non-controlling interest | Total equity | ||||||||||||||
| Balance as of December 31, 2019 | 1,677 | 9,826 | 19,570 | 71 | 27 | (2,527) | 1,753 | 17,727 | (771) | 15,668 | 51,844 | 114,865 | 29,397 | 144,262 | |||||||||||||
| Constitution of legal and voluntary reserve | - | - | - | - | - | - | 1,950 | 49,894 | - | - | (51,844) | - | - | - | |||||||||||||
| Capital reduction | - | - | - | (152) | - | 4,800 | - | (4,648) | - | - | - | - | - | - | |||||||||||||
| Stock compensation plans | 1 | 3 | (12) | (1) | (3) | 46 | - | - | (4) | - | - | 30 | - | 30 | |||||||||||||
| Acquisition of own shares | (125) | - | 392 | 125 | - | (3,614) | - | - | - | - | - | (3,222) | (492) | (3,714) | |||||||||||||
| Dividends provided for pay | - | - | - | - | - | - | - | - | - | - | - | - | (519) | (519) | |||||||||||||
| Profit for the six-month period | - | - | - | - | - | - | - | - | - | - | 995 | 995 | (934) | 61 | |||||||||||||
| Other comprehensive income for the six-month period | - | - | - | - | - | - | - | - | - | 6,345 | 11,681 | 18,026 | 3,980 | 22,006 | |||||||||||||
| Balance as of June 30, 2020 | 1,553 | 9,829 | 19,950 | 43 | 24 | (1,295) | 3,703 | 62,973 | (775) | 22,013 | 12,676 | 130,694 | 31,432 | 162,126 | |||||||||||||
| Constitution of legal and voluntary reserve | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||
| Capital reduction | - | - | - | (141) | (2,224) | 4,439 | - | (2,074) | - | - | - | - | (1,546) | (1,546) | |||||||||||||
| Stock compensation plans | - | - | - | - | - | (1) | - | - | 16 | - | - | 15 | - | 15 | |||||||||||||
| Acquisition of own shares | (102) | (2,224) | - | 102 | 2,224 | (3,378) | - | - | - | - | - | (3,378) | - | (3,378) | |||||||||||||
| Dividends provided for pay | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||
| Loss for the complementary six-month period | - | - | - | - | - | - | - | - | - | - | (32,442) | (32,442) | (7,587) | (40,029) | |||||||||||||
| Other comprehensive income for the complementary six-month period | - | - | - | - | - | - | - | - | - | 7,417 | 17,941 | 25,358 | 6,332 | 31,690 | |||||||||||||
| Balance as of December 31, 2020 | 1,451 | 7,605 | 19,950 | 4 | 24 | (235) | 3,703 | 60,899 | (759) | 29,430 | (1,825) | 120,247 | 28,631 | 148,878 | |||||||||||||
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UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (Continuation)
For the six-month period ended June 30, 2021
presented in comparative format
(In millions of Argentine Pesos (“$”))
| Attributable to owners | |||||||||||||||||||||||||||
| Equity holders of the company | Retained earnings | ||||||||||||||||||||||||||
| Share capital | Share capital adjustment | Share premium | Treasury shares | Treasury shares adjustment | Treasury shares cost | Legal reserve | Voluntary reserve | Other reserves (1) | Other comprehensive income / (loss) | Retained earnings (Accumulated losses) | Subtotal | Non-controlling interest | Total equity | ||||||||||||||
| Balance as of December 31, 2020 | 1,451 | 7,605 | 19,950 | 4 | 24 | (235) | 3,703 | 60,899 | (759) | 29,430 | (1,825) | 120,247 | 28,631 | 148,878 | |||||||||||||
| Constitution of legal and voluntary reserve | - | - | - | - | - | - | 1,500 | (3,325) | - | - | 1,825 | - | - | - | |||||||||||||
| Capital reduction | - | - | - | (57) | (297) | 2,795 | - | (2,441) | - | - | - | - | - | - | |||||||||||||
| Acquisition of own shares | (57) | (297) | - | 57 | 297 | (3,209) | - | - | - | - | - | (3,209) | - | (3,209) | |||||||||||||
| Stock compensation plans | - | 2 | - | - | (2) | 25 | - | - | 83 | - | - | 108 | - | 108 | |||||||||||||
| Sale of subsidiary | - | - | - | - | - | - | - | - | - | - | - | - | (31,928) | (31,928) | |||||||||||||
| Profit (Loss) for the six-month period | - | - | - | - | - | - | - | - | - | - | 9,773 | 9,773 | (3,135) | 6,638 | |||||||||||||
| Other comprehensive income for the six-month period | - | - | - | - | - | - | - | - | - | 12,816 | 10,204 | 23,020 | 7,175 | 30,195 | |||||||||||||
| Balance as of June 30, 2021 | 1,394 | 7,310 | 19,950 | 4 | 22 | (624) | 5,203 | 55,133 | (676) | 42,246 | 19,977 | 149,939 | 743 | 150,682 | |||||||||||||
The accompanying notes are an integral part of these unaudited consolidated condensed interim financial statements
| 8 |
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UNAUDITED CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS
For the six-month period ended June 30, 2021
presented in comparative format (see Note 5.1)
(In millions of Argentine Pesos (“$”))
| Note | 06.30.2021 | 06.30.2020 | |||
| Cash flows from operating activities: | |||||
| Profit of the period from continuing operations | 13,767 | 1,809 | |||
| Adjustments to reconcile net profit to cash flows generated by operating activities: | 14.1 | 17,315 | 12,052 | ||
| Changes in operating assets and liabilities | 14.2 | (8,936) | (684) | ||
| Net cash generated by operating activities from discontinued operations | 5.1 | 11,051 | 7,276 | ||
| Net cash generated by operating activities | 33,197 | 20,453 | |||
| Cash flows from investing activities: | |||||
| Payment for property, plant and equipment | (6,551) | (5,954) | |||
| Payment for intangible assets | (359) | - | |||
| Payment for public securities and shares, net | (2,720) | 5,290 | |||
| Recovery of investment funds, net | 3,136 | 14,435 | |||
| Payments for capital integration in associates | (954) | (190) | |||
| Collections for sales of shares in companies and property, plant and equipment | 4,805 | 38 | |||
| Dividends received | 13 | 189 | |||
| (Pay) Colletionfrom loans, net | - | 342 | |||
| Net cash used in investing activities from discontinued operations | 5.1 | (7,300) | (844) | ||
| Net cash (used in) generated by investing activities | (9,930) | 13,306 | |||
| Cash flows from financing activities: | |||||
| Proceeds from borrowings | 3,504 | 8,146 | |||
| Payment of borrowings | (11,396) | (10,421) | |||
| Payment of borrowings interests | (7,340) | (6,093) | |||
| Payment for acquisition of own shares | (3,209) | (3,714) | |||
| Repurchase and redemption of corporate bonds | - | (3,978) | |||
| Payments of dividends from subsidiaries to third parties | - | (437) | |||
| Payments of leases | (123) | (170) | |||
| Net cash used in financing activities from discontinued operations | 5.1 | (701) | (1,727) | ||
| Net cash used in financing activities | (19,265) | (18,394) | |||
| Increase (Decrease) in cash and cash equivalents | 4,002 | 15,365 | |||
| Cash and cash equivalents at the begining of the year | 12.4 | 11,900 | 13,496 | ||
| Cash and cash equivalents at the begining of the year reclasified to assets classified as held for sale | 4,362 | - | |||
| Exchange difference generated by cash and cash equivalents | 239 | 290 | |||
| Cash and cash equivalents at the end of the period reclasified to assets classified as held for sale | (8,557) | - | |||
| Increase in cash and cash equivalents | 4,002 | 15,365 | |||
| Cash and cash equivalents at the end of the period | 12.4 | 11,946 | 29,151 |
The accompanying notes are an integral part of these unaudited condensed interim financial statements
| 9 |
Free translation from the original prepared in Spanish for publication in Argentina
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NOTES TO THE UNAUDITED CONSOLIDATED
CONDENSED INTERIM
FINANCIAL STATEMENTS
For the six-month period ended June 30, 2021
presented in comparative format
(In millions of Argentine Pesos (“$”))
NOTE 1: GENERAL INFORMATION
1.1 General information of the Company
The Company is a fully integrated power company in Argentina which directly and through its subsidiaries, participates in the electric energy and gas value chains.
In the generation segment, the Company, directly and through its subsidiaries and joint ventures, has a 4,955 MW installed capacity, which represents approximately 12% of Argentina’s installed capacity, being one of the fourth largest independent generator in the country. Additionally, the Company is currently undergoing a process to expand its capacity by 295 MW.
In the oil and gas segment, the Company is one of the leading oil and natural gas producers in Argentina, with operations in 13 production areas and 5 exploratory areas and a production level of 7.0 million m3/day of natural gas and 4.4 thousand barrels of oil equivalent per day for oil during the six-month period ended June 30, 2021. Its main natural gas production blocks are located in the Provinces of Neuquén and Río Negro.
In the petrochemical segment the operations are based in the Argentine Republic, where the Company operates three high-complexity plants that produce styrene, synthetic rubber and polystyrene, with a local market share between 89% and 100%.
Finally, through its holding and others segment, the Company participates in the electricity and gas transportation businesses. In the transmission business, the Company jointly controls Citelec, which has a controlling interest in Transener, a company engaged in the operation and maintenance of a 21,104 km high-voltage electricity transmission network in Argentina with an 85% share in the Argentine electricity transmission market. In the gas transportation business, the Company jointly controls CIESA, which has a controlling interest in TGS, a company holding a concession for the transportation of natural gas with 9,231 km of gas pipelines in the center, west and south of Argentina, and which is also engaged in the processing and sale of natural gas liquids through the Cerri Complex, located in Bahía Blanca, in the Province of Buenos Aires. Besides, the Company owns a 28.5% direct interest in Refinor, which has a refinery with an installed capacity of 25.8 kb of oil per day and 93 gas stations. Additionally, the segment includes advisory services provided to related companies.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 1: (Continuation)
1.2 Economic context in which the Company operates
The Company operates in a complex economic context, which volatility was deepened by the outbreak of the COVID-19 locally and internationally.
In 2021, as a result of the new increase in infection levels, the governments of different countries in the world, including the Argentine Government, temporarily reimplemented some measures, such as restrictions on movement of the population.
As regards measures directly affecting the generation sector’s economic and financial situation, it is worth highlighting that SE Resolution No. 440/21, passed in the second quarter, provided for a 29% increase in spot remuneration values (see Note 2.1 for details), which update had been suspended as from March 2020.
Besides, during the second quarter certain social conflicts and wage protest demonstrations mostly during the month of April, prevented the freedom of movement on routes in the Province of Neuquén during the month of April 2021and, even though no significant impact has been verified on the production by the Company’s assets in this basin during the protest roadblocks, they have affected the ordinary execution of the works committed by the Company under the GasAr Plan, and hindering the timely and proper compliance with the agreed investment plan necessary to achieve committed gas production. The Company has sent the respective Force Majeure communications to the SE, CAMMESA and the Gas Distribution Companies with which it has executed gas supply agreements for the volumes awarded under the GasAr Plan.
It is impossible to foresee how measures will continue evolving and their impact on the economy in general and the Company in particular, or to which extent the Company’s business and the results of its operations will be affected in the future.
The Company’s Management permanently monitors the evolution of the variables affecting its business to define its course of action and identify potential impacts on its assets and financial position.
The Company’s Consolidated Condensed Interim Financial Statements should be read in the light of these circumstances.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: REGULATORY FRAMEWORK
| 2.1 | Generation |
| 2.1.1 | Fuel supply for thermal power plants |
As from the application of the GasAr Plan, an operating assignment scheme was established for firm transportation and gas contracts entered into by generators. Under this assignment, agents should waive all claims regarding the application of SE Resolution No. 354/20, which established a new dispatch order for generation units based on the fuel supplied for their operation in accordance with a centralized dispatch scheme. The Company executed this assignment with CAMMESA, setting certain guidelines for the calculation of fuel costs to support their Energía Plus contracts.
| 2.1.2 | Seasonal Programming |
SE Resolution No. 24/21, published in the BO on January 15, 2021, approved the seasonal programming for the November 2020-April 2021 period. Seasonal prices remained unchanged until the month of April 2021, with reference prices being those in effect since 2019. In turn, the stabilized price set by SSEE Provision No. 75/18 for transmission in the extra high voltage system and the distributor-based main distribution price have remained unchanged.
As from April 2021, pursuant to SE Resolution No. 131/21 (amended by SE Resolutions No. 154/21 and 204/21), the reference price for power for the Distributor’s Large Users peak demand increases by 89% (except for public health and education organizations and agencies), reducing the gap with the actual cost and, consequently, subsidies. The remaining prices for electricity applicable to the end demand have not been modified.
On May 11, 2021, SE Resolution No. 408/21 was published, which approved the final winter seasonal reprogramming for the May 2021 – November 2021 period, keeping unchanged the reference prices current as of April 30, 2021, and the stabilized price for the high-voltage and main distribution electricity transmission service established by SSEE Provision No. 75/18.
2.1.3 Remuneration scheme for the spot market
On May 19, 2021, SE Resolution No. 440/21 provided for a 29% increase in spot generation remuneration values, and repealed the automatic adjustment mechanism established by SE Resolution No. 31/20. This increase will be applicable as from the economic transaction for February 2021, provided the generator waives/dismisses all administrative/judicial claims filed on account of the failure to apply the automatic adjustment formula provided for by SE Resolution No. 31/20 within 30 days as from its publication. If such requirement is not met within this term, the remuneration adjustment will be applicable as from the month in which the generator submits its waiver/dismissal, and the remuneration established by SE Resolution No. 31/20 for that generator will be applicable until then. The waiver includes the obligation to withdraw any claim brought by the generating agent’s shareholders on account of the failure to apply the automatic adjustment mechanism provided for by SE Resolution No. 31/20, whether in Argentina or abroad.
The Company and its subsidiaries filed the waiver/dismissal within the previously indicated 30-day period. The impact of the application of this resolution in the months of February and March generated a $ 555.6 million increase in revenue from sales as of June 30, 2021.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: (Continuation)
2.1.4 Restructuring of Federal Government’s assets in the energy sector
The Federal Government has modified the policy adopted by the previous administration regarding the restructuring of assets in the energy sector, and has abrogated DNU No. 882/17, which provided for the sale of CTEB, CT Brigadier López, CT Manuel Belgrano II, IEASA’s stake in CITELEC, the Federal Government’s stake in Central Dique; CTG, Central Puerto, CT Patagónicas, TRANSPA, Dioxitek, and the Federal Government’s rights in TMB, TSM, Termoeléctrica Vuelta de Obligado and Termoeléctrica Guillermo Brown. In the opinion of the Company’s Management, this abrogation would not affect the rights acquired by the Company under CTEB’s goodwill transfer process.
Additionally, it provided for the transfer to IEASA of TMB and TSM’s shares held by the Federal Government. Earnings received by IEASA must be invested in energy infrastructure projects.
Finally, it granted to IEASA the exploratory permits for the MLO_115 and MLO_116 offshore areas and provided for the issuance of National Treasury guarantees as collateral for the contract for the acquisition of natural gas entered into with Bolivia.
2.1.5 MATER dispatch priority
SE Resolution No. 551/21 published on June 16, 2021 modified the dispatch priority maintenance system established by Resolution No. 281/17. Overall, it replaces the granting of a security for the maintenance of the dispatch priority by the payment of a quarterly installment of US$ 500/MW until commissioning within the declared term or a maximum term of 24 months as from the priority assignment.
Additionally, it allows projects with an assigned dispatch priority but not yet commissioned to continue their execution keeping the dispatch priority, or such priority may be waived, thus releasing the transmission capacity.
The Company, as owner of the PEPE IV Wind Farm project, located in Las Armas, Province of Buenos Aires, notified its decision to waive the timely granted dispatch priority, and recovered the security it had provided. As a result, CAMMESA notified that the already initiated execution of the security was determined to be moot as it had no further claim against the Company; therefore, as of June 30, 2021, the amount of US$ 12.5 million provided for to such effect was recovered and recognized in earnings, under the item “Other operating income” of the Consolidated Condensed Interim Statement of Comprehensive Income.
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Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: (Continuation)
| 2.2 | Natural Gas Market |
| 2.2.1 | Argentine Natural Gas Production Promotion Plan (“GasAr Plan”) |
On March 9, 2021 Resolution No. 169/21 was published in the BO, which awarded natural gas volumes offered under the GasAr Plan, Round II Tender. In this sense, the Company was awarded a volume of 0.70 million m3/day, 0.90 million m3/day and 1 million m3/day for the months of June, July and August-September 2021, respectively, and 0.86 million m3/day to meet the winter peak demand for the years 2022 through 2024, at a price of US$ 4.68 MMbtu.
With this tender, Pampa’s injection commitment increases to 9 million m3 per day for the 2021-2024 winter periods which, compared to 2020, represents a 15% year-on-year production increase and a 28% increase in the winter period, the months with the largest gas supply needs in the country.
| 2.2.2 | Natural Gas Export Procedure |
On April 27, 2021, pursuant to SE Resolution No. 360/21, a new procedure was regulated for the authorization of natural gas exports that contemplates the firm condition and the preferential order for GasAr Plan’s awardees and abrogates the previous procedure established by SGE Resolution No. 417/19 and SHC Provision No. 284/19. Furthermore, prior to the granting of each permit, the enforcement authority will perform a comprehensive and systemic analysis safeguarding the supply to the Argentine domestic market since, once authorized on a firm basis, it may not be further reviewed.
| 2.3 | Gas transportation |
TGS’s tariff situation
The public hearing called by ENARGAS to discuss the RTT pursuant to the provisions of Executive Order No. 1,020/20 took place on March 16, 2021. In this respect, TGS, without waiving the whole of its percentage share, alternatively submitted in the hearing its tariff increase proposal, assessed at 58.6% as from April 1, 2021. This increase was assessed based on the financial needs to meet operating and financial costs, capital expenditures and taxes, which were calculated taking into consideration the evolution of the inflation rate over a 12-month period as from its beginning. The requested increase only contemplates the funds necessary to meet its obligations as licensee.
Additionally, TGS denied and dismissed the arguments raised in the public hearing, which considered that the current natural gas transportation tariff is not fair or reasonable given the alleged existence of serious flaws in the administrative acts resulting from the proceedings for the last Comprehensive Tariff Regime established for TGS.
On April 28, 2021, ENARGAS submitted to TGS the 2021 Transitional Agreement pursuant to Executive Order No. 1,020/20, which: (i) does not grant a transitory tariff update, keeping unchanged the tariff schemes approved by ENARGAS in April 2019; (ii) provides that, as from May 2021 and until the Final Renegotiation Agreement enters into effect, ENARGAS will recalculate the transportation tariffs effective at the time, with validity as from April 1, 2022.; (iii) does not establish a mandatory investment plan; and (iv) establishes the prohibition to distribute dividends, early cancel financial and commercial debts taken on with shareholders, acquire other companies, or grant loans.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: (Continuation)
On April 30, 2021 and through a note sent to this body, TGS expressed that, given the context in which it develops its activities and the proposed terms and conditions, it is not feasible for TGS to enter into the 2021 Transitional Agreement Project.
Later, on June 2, 2021, ENARGAS issued Resolution No. 149/21 approving an RTT for TGS effective as from that date and under the same terms of the project timely submitted on April 28, 2021.
In July 2021, TGS filed motions for reconsideration, subsidiarity filing a hierarchical appeal, before the PEN, the National Ministry of Economy and ENARGAS according to the respective jurisdictions of each of these bodies in the passing of the regulations associated with Resolution No. 149/21, requesting the declaration of nullity of the RTT and the reinstatement of the RTI.
The challenges are based on: (i) the illegality of Executive Order No. 1,020/20, as it does not observe the delegation lines provided for by Act No. 27,541 and, as a DNU, does not meet the requirements established by the National Constitution; (ii) the extension of the emergency period beyond that established by the Congress; (iii) the fact that the renegotiation is not made pursuant to Act No. 24,076; (iv) the disregard for the principle of fair and reasonable tariffs, and the rights acquired by TGS under the License, the Contractual Adjustment Memorandum of Understanding and the RTI; and (v) the suspension of the RTI for reasons of public interest, which merits the recognition of the compensations provided for by both the Administrative Procedures Act and the License Basic Rules.
In turn, the restrictions on the management and administration of TGS have been challenged for lacking legal justification, as the emergency declared by Act No. 27,541 only empowered the PEN to renegotiate the RTI, but not the License. The challenges and the motion for reinstatement of the RTI have been filed notwithstanding TGS’s right to the payment of the compensations it is entitled to on account of the breach of the RTI as from April 2019.
As of the date of issuance of these Consolidated Condensed Interim Financial Statements, TGS has not received an answer to the filed motions, and is evaluating other measures to take to continue safeguarding its rights and thus attain a fair and reasonable tariff for the natural gas transportation segment.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: (Continuation)
| 2.4 | Transmission |
Transener and Transba’s tariff situation
On January 19, 2021, pursuant to Resolution No. 17/21 the ENRE launched the proceeding for the transitory adjustment of tariffs of the transmission public utility aiming to establish a RTT until reaching a Final Renegotiation Agreement, and summoning Transportation Companies. In this sense, a request for the information necessary to begin this process was received, and Transener has complied with this requirement, prioritizing the operating costs and capital expenditures required to maintain service quality.
On March 3, 2021, pursuant to Resolutions No. 54/21 and 55/21, the ENRE convened a Public Hearing for March 29, 2021 to provide information and gather feedback on the RTT for Transener and Transba, respectively, within the RTI Process and prior to the definition of tariffs.
On April 14, 2021 the Public Hearing Closing Report was published in the BO. As of the date of issuance of these Consolidated Condensed Interim Financial Statements, the negotiations with the ENRE to reach a Renegotiation Transitional Agreement for the RTI continue under way.
Besides, on July 3, 2018 the ENRE informed of the launching of the proceeding for the determination of the remuneration to Independent Transmission Companies in the exploitation stage: TIBA (Transba), the Fourth Line (Transener), YACYLEC and LITSA. In this respect, on October 8, 2018, information on costs, investments and tariff claims corresponding to the Fourth Line and TIBA were submitted to the ENRE. As of the date of issuance of these Consolidated Condensed Interim Financial Statements., the ENRE has not issued a resolution with the results of the analysis of the requested information.
| 2.5 | Regulations on access to the MLC |
The main regulations on MLC inflows and outflows issued by the BCRA in the six-month period ended June 30, 2021 are summarized below:
The need for BCRA’s prior authorization to access the MLC is extended until December 31, 2021 inclusive in the following cases: (i) the cancellation of principal of foreign financial debts with foreign affiliates, and (ii) payments for the import of goods or the cancellation of principal of debts arising from the import of goods.
The BCRA extended the obligation to submit a refinancing plan for certain debts and principal maturities scheduled until December 31, 2021, maintaining the following criteria: (i) access to the MLC for up to 40% of the principal amount, within the original term; and (ii) the refinancing of the principal balance, through new foreign indebtedness with an average life of 2 years. Debts with principal maturities for amounts up to US$ 2,000,000 are exempted from the obligation to submit such indebtedness plan, and will have access to the MLC.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: (Continuation)
BCRA Communication “A” 7196 established, among other modifications, a series of measures aiming to make regulations more flexible so as to facilitate the exchange or financing of private-sector liabilities abroad that have been entered and settled through the MLC and concerted as from January 7, 2021, such as: (i) the extension of the term before the maturity date to access the MLC for the cancellation of principal and interest of foreign financial debts or debt securities publicly registered in the country and denominated in foreign currency; and (ii) the possibility to accumulate funds originating from the collection of goods and services exports in foreign and/or domestic accounts destined to guarantee the payment of maturities of debts concerted as from January 2021, among others. Furthermore, the BCRA created a Registry of Foreign Exchange Information of Exporters and Importers of Goods as a requirement to access the MLC as from May 1, 2021 for forex outflow transactions, including swaps and arbitrations. This requirement will not apply in case of access to the MLC for the cancellation of financing denominated in foreign currency granted by local financial entities. Obliged subjects should enroll in this registry by March 31 each year and report any change in the recorded information within 15 business days of its occurrence. The Company has been declared an obliged subject by the BCRA, and has already enrolled in this registry.
On April 8, 2021, the BCRA regulated the Investment Promotion Regime for Exports created by DNU No. 234/21 which, among other issues, establishes the possibility to apply foreign exchange collections to projects under such regime for certain transactions, as long as the requirements set forth by the provision are met.
Additionally, on July 10, 2021 the BCRA, pursuant to Communication “A” 7327, adopted new restrictions to access the MLC, including the following additional requirements effective as from July 12, 2021: (i) the filing of a new affidavit stating that no exchange of securities for other foreign assets has been made within 90 calendar days prior to the access to the MLC, and the commitment not to make them within 90 calendar days after such access; and (ii) if the customer is a legal entity, the filing of an additional affidavit stating: (a) details of the individuals or legal entities exercising a direct control relationship over the customer, according to BCRA’s regulations on Large Exposures to Credit Risk; and (b) that on the day that access to the MLC is requested and in the previous 90 calendar days, no local-currency funds or other liquid domestic assets have been delivered to any individual or legal entity exercising a direct control relationship over it, except for those directly associated with regular transactions for the acquisition of goods and/or services. The requirement stated in item (ii) (b) will be deemed duly met if the customer submits an affidavit regarding transactions with securities of each of these individuals or legal entities pursuant to the current exchange regulations in force.
More information on Argentina’s foreign exchange regulations can be found at the Central Bank’s website: www.bcra.gov.ar.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 2: (Continuation)
| 2.6 | Tax regulations |
2.6.1 Income tax rate
On June 16, 2021, Act No. 27,630 was published in the BO, which modified the income tax rate effective for fiscal years starting as from January 1, 2021 inclusive. This modification provides for the application of a tiered rate scheme and, if applicable, a fixed tax according to the accumulated net taxable income tier: (i) for accumulated net income of up to $ 5 million, it establishes a 25% rate; (ii) for accumulated net income between $ 5 and $ 50 million, it establishes a fixed tax of $1.25 million plus a 30% rate over the surplus of $ 5 million; and (iii) for accumulated net income above $ 50 million, it establishes a fixed tax of $ 14.75 million plus a 35% rate over the surplus of $50 million. The accumulated net income amount will be adjusted yearly, as from January 1, 2022, taking into consideration the annual CPI variation published by the INDEC.
The impacts of this change on the current and deferred tax have been recorded in these Consolidated Condensed Interim Financial Statements considering the effective rate expected to be applicable on the probable date of reversal of such deferred assets and liabilities.
2.6.2 Dividend tax
Pursuant to the provisions of Act No. 27,430, dividends from earnings accrued during fiscal years beginning as from January 1, 2020 would be subject to a 13% withholding. However, after the modifications introduced by Acts No. 27,541 and 27,630, the 7% withholding rate remains in effect as from December 31, 2019, with no modifications for future fiscal years.
NOTE 3: BASIS OF PREPARATION
The Argentine Securities and Exchange Commission (CNV), under Title IV: “Periodic Reporting System”- Chapter III: “Provisions applicable to the form of presentation and valuation of financial statements” - Section 1 of its Rules, has provided for the application of Technical Resolution No. 26 (TR 26) of the Argentine Federation of Professional Councils in Economic Sciences (FACPCE), as amended, which adopts International Financing Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) for certain entities covered by the public offering regime set forth by Act No. 17811, whether on account of their capital stock or corporate bonds, or because they have requested an authorization to be covered by such regime.
These Condensed Interim Financial Statements for the six-month period ended June 30, 2021 have been prepared pursuant to the provisions of IAS 34, “Interim Financial Information”, are expressed in million pesos and were approved for their issuance by the Company’s Board of Directors on August 10, 2021.
The information included in the consolidated condensed interim financial statements is recorded in US dollars, which is the Company’s functional currency and, in accordance with CNV requirements, is presented in pesos, the legal currency in Argentina.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 3: (Continuation)
This condensed interim financial information had been prepared under the historical cost convention, modified by the measurement of financial assets at fair value through profit or loss. These financial statements do not include all the information that would be required for complete annual financial statements and, therefore, they should be read together with the annual financial statements as of December 31, 2020, which have been prepared under IFRS.
These consolidated condensed interim financial statements for the six-month period ended June 30, 2021 have not been audited. The Company’s management estimates they include all the necessary adjustments to state fairly the results of operations for each period. The results for the six-month period ended June 30, 2021, does not necessarily reflect in proportion the Company’s results for the complete year.
The accounting policies have been consistently applied to all entities within the Group.
Comparative information
The information as of December 31, 2020 and for the six-month period ended June 30, 2020, disclosed for comparative purposes arises from the consolidated financial statements as of that date and the figures, with the exception of:
| (i) | The results corresponding to the electricity distribution segment have been disclosed under “Discontinued operations” in the Consolidated Statement of Comprehensive Income on account on occasion of the sale of the 51% interest in Edenor (see Note 5.1). |
| (ii) | Commercial interest figures have been reclassified from financial income to the other operating income to maintain consistency with this period’s figures in accordance with the change of policy detailed in Note 4 to the Consolidated Financial Statements as of December 31, 2020. |
| (iii) | The presentation in the consolidated statement of comprehensive income of the losses from the impairment of financial assets (including the reversal of losses or profits from the value impairment, if applicable), made pursuant to IAS 1, has been calculated in accordance with the policy described in Note 4 to the Consolidated Financial Statements as of December 31, 2020. |
Additionally, certain non-significant reclassifications have been made to those financial statements´ figures to keep the consistency in the presentation with the figures of the current period.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 4: ACCOUNTING POLICIES
The accounting policies applied in these consolidated condensed interim financial statements are consistent with those used in the consolidated financial statements for the last fiscal year, which ended on December 31, 2020.
New accounting standards, amendments and interpretations issued by the IASB adopted by the Company
The Company has applied the following standards and / or amendments for the first time as of January 1, 2021:
- Amendments to IFRS 9 – “Financial Instruments”, IAS 39 – “Financial instruments: Presentation”, IFRS 7 – “Financial Instruments: Disclosures”, IFRS 4 – “Insurance Contracts” and IFRS 16 – “Leases” (amended in August 2020).
The application of the detailed standards and amendments did not have any impact on the results of the operations or the financial position of the Company.
NOTE 5: GROUP STRUCTURE
| 5.1 | Sale of controlling stake in Edenor |
On June 24, 2021, ENRE Resolution No. 207/21 was published in the BO, which authorized the Company to transfer all Class A common shares, representing 51% of the capital stock and votes of Edenor, to Cono Sur S.A.
On June 30, 2021, the transaction was closed after the meeting of the precedent conditions it was subject to. The Company transferred all of its Edenor’s Class A shares, as approved by the Company’s General Ordinary and Extraordinary Shareholders’ Meeting held on February 17, 2021, and there was a change in the controlling shareholder. Moreover, the Company collected the amount of US$ 50 million, whereas, pursuant to the share purchase agreement entered into on December 28, 2020, the third milestone of the cash purchase price, in the amount of US$ 40 million and with one-year financing as from the closing date at a nominal annual fixed interest rate of 10%, is pending collection.
The transaction did not include the transfer of Class B shares and, therefore, the Company keeps a 4.1% stake in Edenor’s capital stock and voting rights, which has been classified under financial assets at fair value through profit and loss in the Consolidated Condensed Interim Statement of Financial Position.
The results for the six-month periods ended June 30, 2021 and 2020 corresponding to the divestment of the stake in Edenor have been disclosed under "Discontinued operations" of the Consolidated Condensed Interim Statement of Comprehensive Income. As of December 31, 2020, all Edenor’s assets and liabilities have been classified as held for sale.
As of the date of issuance of these Condensed Interim Financial Statements, the approval by the ENRE necessary for the closing of the sale of the Company’s 51% stake in Edenor is still pending.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
The statement of comprehensive income associated with the discontinued operations is disclosed below:
| Distribution of energy | ||||
| 06.30.2021 | 06.30.2020 | |||
| Revenue | 47,148 | 39,695 | ||
| Cost of sales | (38,054) | (33,817) | ||
| Gross profit | 9,094 | 5,878 | ||
| Selling expenses | (3,482) | (2,642) | ||
| Administrative expenses | (2,532) | (1,891) | ||
| Other operating income | 2,053 | 597 | ||
| Other operating expenses | (1,672) | (765) | ||
| Impairment of property, plant and equipment | 1,572 | - | ||
| Impairment of financial assets | (1,057) | (1,905) | ||
| Share of profit from associates and joint ventures | - | (1) | ||
| Operating income | 3,976 | (729) | ||
| Gain on monetary position, net | 11,474 | 3,261 | ||
| Finance income | 22 | 550 | ||
| Finance costs | (10,194) | (2,944) | ||
| Other financial results | 784 | (1,328) | ||
| Financial results, net | 2,086 | (461) | ||
| Income before income tax | 6,062 | (1,190) | ||
| Income tax | (13,191) | (558) | ||
| Loss of the period from discontinued operations | (7,129) | (1,748) | ||
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
| Distribution of energy | ||||
| 06.30.2021 | 06.30.2020 | |||
| Other comprehensive income (loss) | ||||
| Items that will not be reclassified to profit or loss | ||||
| Exchange differences on translation | 8,484 | 10,095 | ||
| Items that may be reclassified to profit or loss | ||||
| Exchange differences on translation | 2,891 | (1,453) | ||
| Other comprehensive income of the period from discontinued operations | 11,375 | 8,642 | ||
| Total comprehensive income of the period from discontinued operations | 4,246 | 6,894 | ||
| Total loss of the period from discontinued operations attributable to: | ||||
| Owners of the company | (3,726) | (947) | ||
| Non - controlling interest | (3,403) | (801) | ||
| (7,129) | (1,748) | |||
| Total comprehensive income of the period from discontinued operations attributable to: | ||||
| Owners of the company | 530 | 7,695 | ||
| Non - controlling interest | 3,716 | (801) | ||
| 4,246 | 6,894 | |||
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
The consolidated statement of cash flows related to discontinued operations as of June 30, 2021 and 2020 is presented below:
| 06.30.2021 | 06.30.2020 | ||
| Net cash generated by operating activities | 11,051 | 7,276 | |
| Net cash used in investing activities from discontinued operations | (7,300) | (844) | |
| Net cash used in financing activities | (701) | (1,727) | |
| Increase in cash and cash equivalents from discontinued operations | 3,050 | 4,705 | |
| Cash and cash equivalents at the begining of the year | 4,362 | 466 | |
| Effect of devaluation and inflation on cash and cash equivalents | 1,145 | (78) | |
| Increase in cash and cash equivalents | 3,050 | 4,705 | |
| Cash and cash equivalents at the end of the period | 8,557 | 5,093 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
As of December 31, 2020, the assets and liabilities that comprise the assets held for sale and associated liabilities are:
| 12.31.2020 | ||
| ASSETS | ||
| NON-CURRENT ASSETS | ||
| Property, plant and equipment | 99,721 | |
| Right-of-use assets | 280 | |
| Investments in joint ventures and associates | 11 | |
| Financial assets at amortized cost | 239 | |
| Trade and other receivables | 42 | |
| Total non-current assets | 100,293 | |
| Inventories | 1,873 | |
| Financial assets at amortized cost | 78 | |
| Financial assets at fair value through profit and loss | 2,222 | |
| Trade and other receivables | 14,775 | |
| Cash and cash equivalents | 4,362 | |
| Total current assets | 23,310 | |
| Assets classified as held for sale | 123,603 | |
| LIABILITIES | ||
| NON-CURRENT LIABILITIES | ||
| Provisions | 2,431 | |
| Deferred revenue | 1,471 | |
| Deferred tax liabilities | 23,709 | |
| Defined benefit plans | 749 | |
| Salaries and social security payable | 303 | |
| Borrowings | 8,261 | |
| Trade and other payables | 6,806 | |
| Total non-current liabilities | 43,730 | |
| CURRENT LIABILITIES | ||
| Provisions | 358 | |
| Deferred revenue | 37 | |
| Taxes payables | 1,793 | |
| Defined benefit plans | 84 | |
| Salaries and social security payable | 3,734 | |
| Derivative financial instruments | 1 | |
| Borrowings | 143 | |
| Trade and other payables | 36,018 | |
| Total current liabilities | 42,168 | |
| Liabilities associated to assets classified as held for sale | 85,898 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
| 5.2 | Interest in subsidiaries, associates and joint ventures |
| 5.2.1 | Subsidiaries information |
Unless otherwise indicated, the capital stock of the subsidiaries consists of common shares, each granting the right to one vote. The country of the registered office is also the principal place where the subsidiary develops its activities.
| 06.30.2021 | 12.31.2020 | |||||||
| Company | Country | Main activity | Direct and indirect participation % | Direct and indirect participation % | ||||
| Generación Argentina S.A.U | Argentina | Generation | 100.00% | 100.00% | ||||
| Edenor (1) | Argentina | Distribution of energy | - | 57.12% | ||||
| Enecor S.A. | Argentina | Transportation of electricity | 70.00% | 70.00% | ||||
| HIDISA | Argentina | Generation | 61.00% | 61.00% | ||||
| HINISA | Argentina | Generation | 52.04% | 52.04% | ||||
| PACOSA | Argentina | Trader | 100.00% | 100.00% | ||||
| PEB | Bolivia | Investment | 100.00% | 100.00% | ||||
| EcuadorTLC | Ecuador | Oil | 100.00% | 100.00% | ||||
| Energía Operaciones ENOPSA S.A. | Ecuador | Oil | 100.00% | 100.00% | ||||
| Trenerec S.A. | Ecuador | Oil | 100.00% | 100.00% | ||||
| PE Energía Ecuador LTD | Gran Cayman | Investment | 100.00% | 100.00% | ||||
| EISA | Uruguay | Investment | 100.00% | 100.00% | ||||
| PISA | Uruguay | Investment | 100.00% | 100.00% | ||||
| TGU | Uruguay | Gas transportation | 51.00% | 51.00% | ||||
| Corod | Venezuela | Oil | 100.00% | 100.00% | ||||
| Petrolera San Carlos S.A. | Venezuela | Oil | 100.00% | 100.00% |
| (1) | Corresponds to effective interest considering treasury shares in Edenor’s effect. As of December 31, 2020, this stake in Edenor is disclosed under assets classified as held for sale (See Note 5.1). |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
| 5.2.2 | Associates and joint ventures information |
The following table presents the main activity and information from the financial statements used for valuation and percentages of participation in associates and joint ventures:
| Information about the issuer | ||||||||||||
| Main activity | Date | Share capital | Profit (loss) of the period | Equity | Direct and indirect participation % | |||||||
| Associates | ||||||||||||
| Refinor | Refinery | 03.31.2021 | 92 | 74 | 5,813 | 28.50% | ||||||
| OCP | Investment | 06.30.2021 | 9,615 | 420 | 12,769 | 15.91% | ||||||
| TGS (1) | Transport of gas | 06.30.2021 | 756 | 7,725 | 90,413 | 3.185% | ||||||
| Joint ventures | ||||||||||||
| CIESA (1) | Investment | 06.30.2021 | 639 | 3,929 | 46,180 | 50% | ||||||
| Citelec (2) | Investment | 06.30.2021 | 556 | (721) | 17,300 | 50% | ||||||
| CTB | Generation | 06.30.2021 | 8,558 | 2,938 | 37,232 | 50% | ||||||
| Greenwind | Generation | 06.30.2021 | 5 | (440) | (1,067) | 50% | ||||||
(1) The Company holds a 3.185% directan and indirect interest in TGS and a 50% interest in CIESA, a company that holds a 51% interest in the share capital of TGS. therefore, the Company has an indirect participation of 25.50% in TGS
As of June 30, 2021 the quotation of TGS´s ordinary shares and ADR published on the Buenos Aires Stock Exchange and the NYSE was $ 156.65 and U$S 4.63 per share, respectively, granting to Pampa (direct and indirect) ownership an approximate stake market value of $ 36.041 million.
(2) Through a 50% interest, the company jointly controls Citelec, company that controls Transener with 52.65% of the shares and votes. As a result, the Company has an indirect participation of 26.33% in Transener.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
The details of the balances of investments in associates and joint ventures is as follows:
| 06.30.2021 | 12.31.2020 | |||
| Disclosed in non-current assets | ||||
| Associates | ||||
| Refinor | 2,076 | 1,626 | ||
| OCP | 1,140 | 195 | ||
| TGS | 3,968 | 2,076 | ||
| Other | 1 | - | ||
| Total associates | 7,185 | 3,897 | ||
| Joint ventures | ||||
| CIESA | 27,093 | 20,138 | ||
| Citelec | 8,650 | 7,195 | ||
| CTB | 18,616 | 14,999 | ||
| Total joint ventures | 54,359 | 42,332 | ||
| Total associates and joint ventures | 61,544 | 46,229 | ||
| Disclosed in non-current liabilities | ||||
| Joint ventures | ||||
| Greenwind (1) | (416) | (161) | ||
| Total joint ventures | (416) | (161) |
| (1) | It receives financial assistance from the partners. |
The following table shows the breakdown of the result from investments in associates and joint ventures:
| 06.30.2021 | 06.30.2020 | |||
| Associates | ||||
| Refinor | 17 | (105) | ||
| OCP | 67 | (300) | ||
| TGS | 243 | 105 | ||
| Total associates | 327 | (300) | ||
| Joint ventures | ||||
| CIESA | 1,887 | 1,503 | ||
| CTB | 1,469 | 1,295 | ||
| Citelec | (360) | 566 | ||
| Greenwind | (222) | 94 | ||
| Total joint ventures | 2,774 | 3,458 | ||
| Total associates and joint ventures | 3,101 | 3,158 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 5: (Continuation)
The evolution of investments in associates and joint ventures is as follows:
| 06.30.2021 | 06.30.2020 | |||
| At the beginning of the year | 46,068 | 30,373 | ||
| Dividend reversal | 1,645 | - | ||
| Dividends | (1,025) | (1,274) | ||
| Increases (1) | 954 | 190 | ||
| Share of profit | 3,101 | 3,158 | ||
| Exchange differences on translation | 10,385 | 4,671 | ||
| At the end of the period | 61,128 | 37,118 |
| (1) | Corresponding to the acquisition of 100,000 shares and 2,149,608 ADRs of TGS at an acquisition cost of US$ 10.7 million and 635,380 ADRs at an acquisition cost of US$ 3 million during the six-month periods ended June 30, 2021 and 2020, respectively. |
| 5.2.3 | Investment in CTB |
Financial Trust Agreement
On April 13, 2021, the ninth amendment to the Enarsa-Barragán Trust Agreement was entered into among CTB, in its capacity as trustor, BICE Fideicomisos S.A., in its capacity as trustee, and CAMMESA, in its capacity as assigned debtor, in order to include the new payment schedule effective as from the partial early redemption of the VRDs issued under the Enarsa-Barragán Financial Trust for a total amount of US$ 130 million executed on October 16, 2020.
As of the date of issuance of these Consolidated Condensed Interim Financial Statements, the total outstanding VRDs (amortization installments plus deferred interest, pursuant to the definition of these terms in the Trust Agreement) amount to US$ 93.7 million.
Issuance of Corporate Bonds
On June 4, 2021, CTB issued: (i) Class 1 Corporate Bonds for a total amount of US$ 27.3 million, accruing interest at an annual fixed rate of 4% and maturing on June 4, 2023; and (ii) Class 2 Corporate Bonds for a total amount of 37,504,954 units of purchasing power (“UVAs”), adjustable by the Reference Stabilization Coefficient (CER), equivalent to $2,928 million, accruing interest at a fixed 4% rate and maturing on June 4, 2024. Class 1 and Class 2 Corporate Bonds are secured by a personal guarantee subject to a condition precedent and subsequent granted by YPF and Pampa.
As of the date of issuance of these Consolidated Condensed Interim Financial Statements, CTB is in compliance with all the covenants under the CBs, which are the customary ones for this kind of issuances.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTA 5: (Continuación)
Syndicated loan
As of June 30, 2021, CTB repaid at maturity the first installment of the syndicated loan in the amount of US$ 29.2 million. As of the date hereof, CTB has paid an additional amount of US$ 4 million.
Closing to combined cycle project
CTB is moving forward with the execution of the works associated with the closing to combined cycle commitment to increase the installed capacity from 567 MW to 847 MW, with a total investment estimated at US$ 212 million.
It is worth highlighting that the Argentine Government’s measures to contain the spread of COVID-19 have affected the works execution progress, delaying the originally planned term for commissioning and generating several instances of review in the schedule and the scope of the tasks necessary to complete the works, with the resulting increase in associated costs. The term and cost of the works may be affected again in the future as a result of the measures that may be imposed regarding the evolution of the country’s health situation.
Impairment in the value of non-financial assets
In the second quarter of 2021, the remuneration scheme for the energy sold in the spot market was modified by SE Resolution No. 440/21 published on May 19, 2021 (see Note 2.1), which impacted on the future income to be collected by CTB after the termination, in the year 2022, of the supply agreement with CAMMESA remunerating the units that are part of the open cycle. Additionally, the progress of works for CTB’s closing to combined cycle was affected, in 2020 and 2021, by the measures implemented to contain the spread of COVID-19, delaying the scheduled term for commissioning and increasing the costs associated with the completion of the project.
In view of these indications, CTB updated, as of June 30, 2021, the estimation of the recoverable amount determined as of December 31, 2020.
The projections used by CTB in the calculation of the recoverable amount as of June 30, 2021 take into consideration 2 scenarios that weigh: i) the entry into effect of the new supply agreement with CAMMESA for the closed cycle; ii) the price restructuring for the spot energy, which is adjusted for inflation on an annual basis; iii) the regularization of the financing term granted to CAMMESA in 2022/2023, after reaching an average term of 100 days; and iv) a 10.3% WACC rate after taxes.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTA 5: (Continuación)
As of June 30, 2021, CTB has not recorded impairment losses as a result of the performed assessment of recoverability.
| 5.2.4 | Investment in OCP |
Contingent liabilities
The constitutional protection proceeding brought against OCP by several organizations and natural persons alleging the infringement of several constitutional rights upon the occurrence of the Force Majeure event in 2020 was denied in the second instance by Orellana’s Provincial Court of Justice. As of the date of issuance of these Consolidated Condensed Interim Financial Statements, the plaintiffs have filed a constitutional protection proceeding, which has been admitted to be heard by the Constitutional Court.
| 5.2.5 | Investment in Citelec |
Service outage in the Argentine Electricity Grid (“SADI”)
The total outage in the SADI service, which took place on June 16, 2019, had an impact in 2020 on the amount of both penalties, which were increased, and awards, which were reduced, pursuant to the Additional Service Quality and Penalties Regime established by Resolutions No. 552/16 and No. 580/16.
As a result of this event, Transener set up a provision in the amount of $ 6.6 million plus interest. On May 14, 2021, the ENRE, pursuant to Resolution No. 121/21, imposed a penalty on Transener for the previously described event, which does not significantly differ from the provision held by Transener under liabilities.
Moreover, the ENRE filed new charges against Transener on account of its liability for alleged breaches in this event. Transener rejected the charges alleging the illegality and irrationality of the filing of a new summary proceeding after the termination of the proceeding that imposed the applicable penalties. If this proceeding is resolved unfavorably for Transener, any penalty or other monetary fine may have an adverse impact on its results. As of the date of issuance of these Consolidated Condensed Interim Financial Statements, there is uncertainty on the possible imposition of a penalty and its amount.
Financial loans
In the month of July, 2021, Transener signed a loan agreement with Banco de la Nación Argentina in the amount of $ 1,000 million, for a term of three years and at a BADLAR rate +8%, with the principal being amortized in monthly consecutive installments using the German system, and which will be destined to working capital. In this respect, it is worth highlighting that, according to what has been timely requested by the bank, while the loan remains outstanding, Transener’s Board of Directors has committed not to make any proposal to the Shareholders’ Meeting regarding the release of Transener’s reserves for their distribution as dividends to shareholders or, in case there are negative results affecting reserves and while the loan remains outstanding, not to propose the distribution of earnings until reserves have been replenished up to current levels.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 6: RISKS
6.1 Critical accounting estimates and judgments
The preparation of these unaudited consolidated condensed interim financial statements requires the Company’s Management to make future estimates and assessments, to apply critical judgment and to establish assumptions affecting the application of accounting policies and the amounts of disclosed assets and liabilities, and income and expenses.
Mentioned estimates and judgments are evaluated on a continuous basis and are based on past experiences and other reasonable factors under the existing circumstances. Actual future results might differ from the estimates and evaluations made at the date of preparation of these unaudited condensed interim financial statements.
In the preparation of these unaudited condensed interim financial statements, management judgements on applying the Company’s accounting policies and sources of information used for the respective estimates are the same as those applied in the Financial Statements for the year ended December 31, 2020 , except for the following information:
6.1.1 Impairment in the value of non-financial assets
The Company regularly monitors the existence of events or changes in circumstances which may indicate that its non-financial assets’ book value may not be recoverable, or the possible reversal of losses from the impairment of non-financial assets.
In the Power Generation segment, revenues from the energy sold in the spot market were modified by SE Resolution No. 440/21, which provided for a 29% increase in the remuneration applicable as from February 1, 2021 for generators, as the Company and its subsidiaries, meeting the established requirements, and repealed the application of the automatic adjustment mechanism established by SE Resolution No. 31/20 (see Note 2.1.3).
It is worth highlighting that the most significant share of revenues in the Power Generation segment comes from energy remunerated under a differential scheme (that is, supply agreements with large users in the MATER, Energía Plus or supply agreements entered into with CAMMESA), which have not been affected by the previously mentioned regulations.
In view of the above-mentioned indications, the Company has updated, as of June 30, 2021, its estimates on the recoverable amount of the CGUs making up the Power Generation segment assessed as of December 31, 2020.
The methodology used in the estimation of the recoverable amount consisted of calculating the value in use of each CGU based on the present value of future net cash flows expected to be derived from the CGU, discounted with a rate reflecting the weighted average cost of the capital employed.
Cash flows were prepared based on estimates on the future behavior of certain variables that are sensitive in the determination of the value in use, including the following: (i) reference prices for energy sold in the spot market; (ii) projections of availability and dispatch by the power plants; (iii) costs evolution; and (iv) macroeconomic variables, such as inflation and exchange rates, etc.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 6: (Continuation)
The projections used in the calculation of the recoverable amount of the CGUs of the Power Generation segment as of June 30, 2021 take into consideration 2 scenarios that weigh: i) the annual price update, ranging between 80% and 100% compared to the annual inflation; ii) the regularization of the financing term granted to CAMMESA in 2022/2023, after reaching an average term of 100 days; and iii) a 10.3% WACC rate after taxes.
Actual values may substantially differ from projections, mainly on account of: i) the timeliness and magnitude of the increases in the prices of energy, and/or ii) the date of regularization of the financing term granted to CAMMESA. Even though this variation has been taken into consideration when weighing the scenarios, the Company estimates that any sensitivity analysis that considers changes in any of the estimates taken individually may lead to distorting conclusions, generating an adverse effect on the Company’s results.
As of June 30, 2021, the value of the assets in the Power Generation segment does not exceed its recoverable amount, with the exception of the Diamante hydroelectric power plant, which assessment of recoverability resulted in the recognition of impairment losses in the amount of $ 172 million (US$ 1.8 million).
6.2 Financial risk management
The Company’s activities are subject to several financial risks: market risk (including the exchange rate risk, the interest rate risk and price risk), credit risk and liquidity risk.
No significant changes have arisen in risk management policies since last year.
It should be noted that the Company operates in an economic context which main variables have recently suffered significant volatility as a result of political and economic events both domestically and internationally, as described in Note 1.2.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 7: SEGMENT INFORMATION
The Company is an integrated energy company in Argentina, which mainly participates in the electricity and oil and gas value chains.
Through its own activities, subsidiaries and share holdings in joint ventures and associates, and based on the business nature, customer portfolio and risks involved, the following business segments were identified:
Electricity Generation, mainly consisting of the Company’s direct and indirect interests in HINISA, HIDISA, Greenwind, CTB, TMB, TJSM and through its own electricity generation activities through Central Térmica Güemes, Piedra Buena, Piquirenda, Loma de la Lata, Genelba, EcoEnergía, Pilar, I. White, the Pichi Picún Leufú hydroelectric complex and the wind power park Pampa Energía II and III.
Electricity Distribution, consisting of the Company’s direct interest in Edenor. As of June 30, 2021 and 2020, the Company has classified the results corresponding to the divestment mentioned in Note 5.1 as discontinued operations
Oil and Gas, mainly consisting of the Company’s own interests in oil and gas areas and through its direct interest in PACOSA and indirectly in OCP.
Petrochemicals, comprising the Company’s own styrenics operations and the catalytic reformer plant operations conducted in Argentine plants.
Holding and Other Business, principally consisting of interests in joint businesses CITELEC and CIESA and their respective subsidiaries, which hold the concession over the high voltage electricity transmission nationwide and over gas transportation in the South of the country, respectively, interests in the associate Refinor, holding activities and financial investment transactions.
The Company manages its operating segment based on its individual net results in U.S. dollars.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 7: (Continuation)
| in million of US$ | in million of $ | |||||||||||||||
| Consolidated profit and loss information for the six-month period ended June 30, 2021 | Generation | Distribution of energy |
Oil and gas | Petrochemicals | Holding and others | Eliminations | Consolidated | Consolidated | ||||||||
| Revenue | 328 | - | 126 | 202 | 11 | - | 667 | 61,211 | ||||||||
| Intersegment revenue | - | - | 60 | - | - | (60) | - | - | ||||||||
| Cost of sales | (171) | - | (115) | (160) | - | 60 | (386) | (35,343) | ||||||||
| Gross profit | 157 | - | 71 | 42 | 11 | - | 281 | 25,868 | ||||||||
| Selling expenses | (1) | - | (5) | (6) | - | - | (12) | (1,083) | ||||||||
| Administrative expenses | (13) | - | (20) | (2) | (9) | - | (44) | (4,043) | ||||||||
| Exploration expenses | - | - | - | - | - | - | - | (44) | ||||||||
| Other operating income | 26 | - | 23 | - | 1 | - | 50 | 4,846 | ||||||||
| Other operating expenses | (2) | - | (20) | (2) | (18) | - | (42) | (3,831) | ||||||||
| Impairment of property, plant and equipment, intangible assets and inventories | (2) | - | - | - | - | - | (2) | (172) | ||||||||
| Impairment of financial assets | - | - | (1) | - | (1) | - | (2) | (196) | ||||||||
| Share of profit from associates and joint ventures | 14 | - | 2 | - | 18 | - | 34 | 3,101 | ||||||||
| Operating income (loss) | 179 | - | 50 | 32 | 2 | - | 263 | 24,446 | ||||||||
| Finance income | 1 | - | 2 | - | - | - | 3 | 337 | ||||||||
| Finance costs | (22) | - | (62) | (1) | (1) | - | (86) | (7,841) | ||||||||
| Other financial results | 13 | - | (3) | (3) | 22 | - | 29 | 2,931 | ||||||||
| Financial results, net | (8) | - | (63) | (4) | 21 | - | (54) | (4,573) | ||||||||
| Profit (loss) before income tax | 171 | - | (13) | 28 | 23 | - | 209 | 19,873 | ||||||||
| Income tax | (55) | - | 10 | (10) | (9) | - | (64) | (6,106) | ||||||||
| Profit (loss) for the period from continuing operations | 116 | - | (3) | 18 | 14 | - | 145 | 13,767 | ||||||||
| Loss for the period from discontinued operations | - | (75) | - | - | - | - | (75) | (7,129) | ||||||||
| Profit (loss) for the period | 116 | (75) | (3) | 18 | 14 | - | 70 | 6,638 | ||||||||
| Depreciation and amortization | 43 | - | 46 | 2 | - | - | 91 | 8,324 | ||||||||
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 7: (Continuation)
| in million of US$ | in million of $ | |||||||||||||||
| Consolidated profit and loss information for the six-month period ended June 30, 2021 | Generation | Distribution of energy |
Oil and gas | Petrochemicals | Holding and others | Eliminations | Consolidated | Consolidated | ||||||||
| Total profit (loss) attributable to: | ||||||||||||||||
| Owners of the company | 113 | (39) | (3) | 18 | 14 | - | 103 | 9,773 | ||||||||
| Non - controlling interest | 3 | (36) | - | - | - | - | (33) | (3,135) | ||||||||
| Consolidated statement of financial position as of June 30, 2021 | ||||||||||||||||
| Assets | 1,725 | - | 1,048 | 160 | 810 | (96) | 3,647 | 349,158 | ||||||||
| Liabilities | 519 | - | 1,289 | 157 | 205 | (96) | 2,074 | 198,476 | ||||||||
| Additional consolidated information as of June 30, 2021 | ||||||||||||||||
| Increases in property, plant and equipment, intangibles assets and right-of-use assets | 4 | - | 84 | 4 | 5 | - | 97 | 8,887 | ||||||||
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 7: (Continuation)
| in million of US$ | in million of $ | |||||||||||||||
| Consolidated profit and loss information for the six-month period ended June 30, 2020 | Generation | Distribution of energy |
Oil and gas | Petrochemicals | Holding and others | Eliminations | Consolidated | Consolidated | ||||||||
| Revenue | 249 | - | 123 | 113 | 11 | - | 496 | 32,154 | ||||||||
| Intersegment revenue | - | - | 20 | - | - | (20) | - | - | ||||||||
| Cost of sales | (113) | - | (122) | (103) | - | 20 | (318) | (20,309) | ||||||||
| Gross profit | 136 | - | 21 | 10 | 11 | - | 178 | 11,845 | ||||||||
| Selling expenses | (2) | - | (10) | (4) | - | - | (16) | (1,000) | ||||||||
| Administrative expenses | (15) | - | (22) | (2) | (10) | - | (49) | (3,174) | ||||||||
| Exploration expenses | - | - | - | - | - | - | - | (9) | ||||||||
| Other operating income | 14 | - | 1 | - | 5 | - | 20 | 1,261 | ||||||||
| Other operating expenses | (3) | - | (8) | (4) | (4) | - | (19) | (1,276) | ||||||||
| Impairment of property, plant and equipment, intangible assets and inventories | (56) | - | - | (11) | - | - | (67) | (4,316) | ||||||||
| Impairment of financial assets | - | - | - | 1 | (1) | - | - | 12 | ||||||||
| Share of profit (loss) from joint ventures and associates | 20 | - | (4) | - | 30 | - | 46 | 3,158 | ||||||||
| Operating income | 94 | - | (22) | (10) | 31 | - | 93 | 6,501 | ||||||||
| Finance income | 2 | - | 3 | - | - | (1) | 4 | 295 | ||||||||
| Finance costs | (28) | - | (53) | (1) | (1) | 1 | (82) | (5,348) | ||||||||
| Other financial results | 1 | - | 12 | 4 | 11 | - | 28 | 1,760 | ||||||||
| Financial results, net | (25) | - | (38) | 3 | 10 | - | (50) | (3,293) | ||||||||
| Profit (loss) before income tax | 69 | - | (60) | (7) | 41 | - | 43 | 3,208 | ||||||||
| Income tax | (18) | - | 14 | 2 | (12) | - | (14) | (1,399) | ||||||||
| Profit (loss) for the period from continuing operations | 51 | - | (46) | (5) | 29 | - | 29 | 1,809 | ||||||||
| Profit for the period from discontinued operations | - | (24) | - | - | - | - | (24) | (1,748) | ||||||||
| Profit (loss) for the period | 51 | (24) | (46) | (5) | 29 | - | 5 | 61 | ||||||||
| Depreciation and amortization | 45 | 41 | 54 | 1 | - | - | 141 | 9,194 | ||||||||
| 36 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 7: (Continuation)
| in million of US$ | in million of $ | |||||||||||||||
| Consolidated profit and loss information for the six-month period ended June 30, 2020 | Generation | Distribution of energy |
Oil and gas | Petrochemicals | Holding and others | Eliminations | Consolidated | Consolidated | ||||||||
| Total profit attributable to: | ||||||||||||||||
| Owners of the company | 53 | (13) | (46) | (5) | 29 | - | 18 | 995 | ||||||||
| Non - controlling interest | (2) | (11) | - | - | - | - | (13) | (934) | ||||||||
| Consolidated statement of financial position as of December 31,2020 | ||||||||||||||||
| Assets | 1,556 | 1,478 | 1,139 | 94 | 1,189 | (83) | 5,373 | 411,528 | ||||||||
| Liabilities | 610 | 1,062 | 1,234 | 107 | 144 | (84) | 3,073 | 262,650 | ||||||||
| Additional consolidated information as of June 30, 2020 | ||||||||||||||||
| Increases in property, plant and equipment | 39 | 57 | 34 | - | - | - | 130 | 8,667 | ||||||||
The accounting criteria used by the different subsidiaries for measuring the segments’ results, assets and liabilities are consistent with those used in the financial statements. Assets and liabilities are assigned based on the segment’s activity.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 8: REVENUE
| 06.30.2021 | 06.30.2020 | |||
| Energy sales to the Spot Market | 7,243 | 6,685 | ||
| Energy sales by supply contracts | 17,519 | 8,488 | ||
| Fuel self-supply | 5,128 | 995 | ||
| Other sales | 234 | 80 | ||
| Generation sales subtotal | 30,124 | 16,248 | ||
| Oil, gas and liquid sales | 11,248 | 7,618 | ||
| Other sales | 378 | 374 | ||
| Oil and gas sales subtotal | 11,626 | 7,992 | ||
| Petrochemicals products | 18,442 | 7,177 | ||
| Petrochemicals sales subtotal | 18,442 | 7,177 | ||
| Technical assistance services and administartion sales | 1,001 | 721 | ||
| Other | 18 | 16 | ||
| Holding and others subtotal | 1,019 | 737 | ||
| Total revenue | 61,211 | 32,154 | ||
| 38 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 9: COST OF SALES
| 06.30.2021 | 06.30.2020 | |||
| Inventories at the beginning of the year | 9,766 | 9,175 | ||
| Plus: Charges for the period | ||||
| Purchases of inventories, energy and gas | 17,039 | 4,511 | ||
| Salaries and social security charges | 2,356 | 1,588 | ||
| Benefits to employees | 492 | 334 | ||
| Accrual of defined benefit plans | 214 | 118 | ||
| Works contracts, fees and compensation for services | 2,358 | 1,831 | ||
| Depreciation of property, plant and equipment | 7,942 | 6,038 | ||
| Intangible assets amortization | 46 | 166 | ||
| Right-of-use assets amortization | 101 | 42 | ||
| Transport of energy | 265 | 141 | ||
| Transportation and freights | 963 | 570 | ||
| Consumption of materials | 892 | 522 | ||
| Penalties | 59 | 17 | ||
| Maintenance | 2,337 | 733 | ||
| Canons and royalties | 2,552 | 1,301 | ||
| Environmental control | 155 | 165 | ||
| Rental and insurance | 1,130 | 716 | ||
| Surveillance and security | 106 | 190 | ||
| Taxes, rates and contributions | 171 | 98 | ||
| Other | 124 | (41) | ||
| Subtotal | 39,302 | 19,040 | ||
| Exchange differences on translation | 1,169 | 1,312 | ||
| Less: Inventories at the end of the period | (14,894) | (9,218) | ||
| Total cost of sales | 35,343 | 20,309 |
| 39 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 10: OTHER ITEMS OF THE STATEMENT OF COMPREHENSIVE INCOME
| 10.1 | SELLING EXPENSES |
| 06.30.2021 | 06.30.2020 | ||||
| Salaries and social security charges | 129 | 102 | |||
| Benefits to employees | 11 | 10 | |||
| Fees and compensation for services | 141 | 78 | |||
| Compensation agreements | 49 | 35 | |||
| Depreciation of property, plant and equipment | 2 | 1 | |||
| Taxes, rates and contributions | 443 | 266 | |||
| Transport | 280 | 478 | |||
| Other | 28 | 30 | |||
| Total selling expenses | 1,083 | 1,000 |
| 10.2 | ADMINISTRATIVE EXPENSES |
| 06.30.2021 | 06.30.2020 | ||||
| Salaries and social security charges | 1,261 | 951 | |||
| Benefits to employees | 185 | 150 | |||
| Accrual of defined benefit plans | 346 | 255 | |||
| Fees and compensation for services | 1,240 | 889 | |||
| Compensation agreements | 157 | 65 | |||
| Directors' and Syndicates' fees | 294 | 358 | |||
| Depreciation of property, plant and equipment | 233 | 167 | |||
| Consumption of materials | 15 | 13 | |||
| Maintenance | 53 | 65 | |||
| Transport and per diem | 18 | 28 | |||
| Rental and insurance | 33 | 26 | |||
| Surveillance and security | 16 | 21 | |||
| Taxes, rates and contributions | 71 | 74 | |||
| Communications | 49 | 45 | |||
| Other | 72 | 67 | |||
| Total administrative expenses | 4,043 | 3,174 |
| 40 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 10: (Continuation)
| 10.3 | EXPLORATION EXPENSES |
| 06.30.2021 | 06.30.2020 | ||||
| Geological and geophysical expenses | 12 | 9 | |||
| Decrease in unproductive wells | 32 | - | |||
| Total exploration expenses | 44 | 9 |
| 10.4 | OTHER OPERATING INCOME AND EXPENSES |
| 06.30.2021 | 06.30.2020 | ||||
| Other operating income | |||||
| Insurrance recovery | 41 | 31 | |||
| Services to third parties | 74 | 71 | |||
| Profit for property, plant and equipment sale | 70 | - | |||
| Dividends received | 13 | 69 | |||
| Reversal of contingencies | 1,197 | 70 | |||
| Commercial interests | 1,329 | 948 | |||
| Argentine Natural Gas Production Promotion Plan | 1,856 | - | |||
| Other | 266 | 72 | |||
| Total other operating income | 4,846 | 1,261 | |||
| Other operating expenses | |||||
| Provision for contingencies | (1,373) | (163) | |||
| Provision asset retirement obligation | (1,317) | - | |||
| Decrease in property, plant and equipment | - | (58) | |||
| Allowance for tax credits | - | (4) | |||
| Tax on bank transactions | (475) | (371) | |||
| Donations and contributions | (79) | (102) | |||
| Institutional promotion | (119) | (81) | |||
| Other | (468) | (497) | |||
| Total other operating expenses | (3,831) | (1,276) |
| 41 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 10: (Continuation)
| 10.5 | FINANCIAL RESULTS |
| Note | 06.30.2021 | 06.30.2020 | ||
| Finance income | ||||
| Financial interest | 21 | 20 | ||
| Other interest | 316 | 275 | ||
| Total finance income | 337 | 295 | ||
| Finance cost | ||||
| Financial interest (1) | (7,165) | (4,951) | ||
| Commercial interest | (17) | (19) | ||
| Fiscal interest | (212) | (80) | ||
| Other interest | (145) | (82) | ||
| Other financial expenses | (302) | (216) | ||
| Total financial expenses | (7,841) | (5,348) | ||
| Other financial results | ||||
| Foreign currency exchange difference, net | 1,189 | 358 | ||
| Changes in the fair value of financial instruments | 1,571 | (642) | ||
| Gains (losses) from present value measurement | 176 | 10 | ||
| Results for the repurchase of corporate bonds | - | 2,050 | ||
| Other financial results | (5) | (16) | ||
| Total other financial results | 2,931 | 1,760 | ||
| Total financial results, net | (4,573) | (3,293) |
(1) Net of $ 633 million capitalized in property, plant and equipment for the six-month period ended June 30, 2020.
| 42 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 10: (Continuation)
| 10.6 | INCOME TAX AND MINIMUM NOTIONAL INCOME TAX |
The breakdown of income tax charge is:
| 06.30.2021 | 06.30.2020 | ||||
| Current tax | 53 | 1,911 | |||
| Deferred tax | 6,035 | (372) | |||
| Difference in the estimate of previous fiscal year income tax and the income tax statement | 18 | (140) | |||
| Total loss income tax | 6,106 | 1,399 |
Below is a reconciliation between income tax expense and the amount resulting from application of the tax rate on the income before taxes:
| 06.30.2021 | 06.30.2020 | ||||
| Profit before income tax | 19,873 | 3,208 | |||
| Current tax rate | 35% | 30% | |||
| Result at the tax rate | 6,956 | 962 | |||
| Share of profit of associates and joint ventures | (1,073) | (952) | |||
| Non-taxable results | - | (809) | |||
| Effects of exchange differences and other results associated with the valuation of the currency, net | 4,343 | 2,830 | |||
| Adjustment of valuation of property, plant and equipment and intangible assets | (11,564) | (2,669) | |||
| Effect of tax rate change in deferred tax | (547) | 845 | |||
| Adjustment effect for tax inflation | 7,760 | 1,571 | |||
| Difference in the estimate of previous fiscal year income tax and the income tax statement | 83 | (523) | |||
| Non-deductible cost | 147 | - | |||
| Other | 1 | 144 | |||
| Total loss (income) tax | 6,106 | 1,399 |
| 43 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: NON-FINANCIAL ASSETS AND LIABILITIES
| 11.1 | PROPERTY, PLANT AND EQUIPMENT |
| Original values | |||||||||||||||
| Type of good | At the beginning | Increases (1) | Impairment | Transfers | Decreases | Traslation effect | At the end | ||||||||
| Land | 1,108 | - | - | - | - | 152 | 1,260 | ||||||||
| Buildings | 11,546 | - | - | 23 | - | 1,589 | 13,158 | ||||||||
| Equipment and machinery | 114,597 | 416 | - | 2,832 | - | 15,957 | 133,802 | ||||||||
| Wells | 64,301 | 94 | - | 2,980 | (32) | 8,961 | 76,304 | ||||||||
| Mining property | 21,267 | - | - | - | - | 2,924 | 24,191 | ||||||||
| Vehicles | 450 | 28 | - | - | (5) | 57 | 530 | ||||||||
| Furniture and fixtures and software equipment | 4,400 | 20 | - | 134 | (26) | 600 | 5,128 | ||||||||
| Communication equipments | 104 | - | - | - | (1) | 14 | 117 | ||||||||
| Materials and spare parts | 2,572 | 655 | - | (783) | - | 558 | 3,002 | ||||||||
| Petrochemical industrial complex | 1,433 | - | - | 137 | - | 199 | 1,769 | ||||||||
| Work in progress | 11,095 | 5,189 | - | (4,710) | - | 1,301 | 12,875 | ||||||||
| Advances to suppliers | 1,343 | 1,422 | - | (613) | - | 218 | 2,370 | ||||||||
| Other goods | 210 | - | - | - | - | 29 | 239 | ||||||||
| Total at 06.30.2021 | 234,426 | 7,824 | - | - | (64) | 32,559 | 274,745 | ||||||||
| Total at 06.30.2020 | 313,337 | 8,667 | (5,550) | - | (341) | 49,685 | 365,798 | ||||||||
(1) Net of $ 633 million capitalized in property, plant and equipment for the six-month period ended June 30, 2020. There are no capitalized financial costs in the six-month period ended June 30, 2021.
| 44 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: (Continuation)
| Depreciation | Net book values | ||||||||||||||||
| Type of good | At the beginning | Decreases | Impairment | For the period (1) | Traslation effect | At the end | At the end | At 12.31.2020 | |||||||||
| Land | - | - | - | - | - | - | 1,260 | 1,108 | |||||||||
| Buildings | (5,103) | - | - | (331) | (716) | (6,150) | 7,008 | 6,443 | |||||||||
| Equipment and machinery | (36,672) | - | - | (4,233) | (5,247) | (46,152) | 87,650 | 77,925 | |||||||||
| Wells | (38,705) | - | - | (2,698) | (5,441) | (46,844) | 29,460 | 25,596 | |||||||||
| Mining property | (13,522) | - | - | (580) | (1,887) | (15,989) | 8,202 | 7,745 | |||||||||
| Vehicles | (346) | 5 | - | (32) | (45) | (418) | 112 | 104 | |||||||||
| Furniture and fixtures and software equipment | (3,718) | 25 | - | (164) | (510) | (4,367) | 761 | 682 | |||||||||
| Communication equipments | (61) | 1 | - | (6) | (9) | (75) | 42 | 43 | |||||||||
| Materials and spare parts | (87) | - | - | (10) | (13) | (110) | 2,892 | 2,485 | |||||||||
| Petrochemical industrial complex | (690) | - | - | (118) | (100) | (908) | 861 | 743 | |||||||||
| Work in progress | - | - | - | - | - | - | 12,875 | 11,095 | |||||||||
| Advances to suppliers | - | - | - | - | - | - | 2,370 | 1,343 | |||||||||
| Other goods | (77) | - | - | (5) | (11) | (93) | 146 | 133 | |||||||||
| Total at 06.30.2021 | (98,981) | 31 | - | (8,177) | (13,979) | (121,106) | 153,639 | ||||||||||
| Total at 06.30.2020 | (103,281) | 223 | 2,326 | (8,942) | (17,015) | (126,689) | 239,109 | ||||||||||
| Total at 12.31.2020 | 135,445 | ||||||||||||||||
| (1) | Includes $ 2.736 million corresponding to discontinued operations for the six-month period for June 30, 2020. |
| 45 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: (Continuation)
| 11.2 | INTANGIBLE ASSETS |
| Original values | ||||||||||
| Type of good | At the beginning | Increase | Impairment (1) | |||||||
| Traslate Effect | At the end | |||||||||
| Concession agreements | 1,608 | - | (1,589) | 221 | 240 | |||||
| Goodwill | 2,912 | - | - | 401 | 3,313 | |||||
| Intangibles identified in acquisitions of companies | 587 | - | - | 81 | 668 | |||||
| Other | - | 359 | - | 6 | 365 | |||||
| Total at 06.30.2021 | 5,107 | 359 | (1,589) | 709 | 4,586 | |||||
| Total at 06.30.2020 | 18,619 | - | (2,784) | 2,783 | 18,618 | |||||
| Depreciation | ||||||||||
| Type of good | At the beginning | |||||||||
| Impairment (1) | For the year (2) | Traslate Effect | At the end | |||||||
| Concession agreements | (1,407) | 1,417 | (28) | (195) | (213) | |||||
| Intangibles identified in acquisitions of companies | (245) | - | (18) | (35) | (298) | |||||
| Total at 06.30.2021 | (1,652) | 1,417 | (46) | (230) | (511) | |||||
| Total at 06.30.2020 | (9,551) | 2,398 | (210) | (1,443) | (8,806) | |||||
| Net book values | ||||||||||
| Type of good | At the end | At 12.31.2020 | ||||||||
| Concession agreements | 27 | 201 | ||||||||
| Goodwill | 3,313 | 2,912 | ||||||||
| Intangibles identified in acquisitions of companies | 370 | 342 | ||||||||
| Other | 365 | - | ||||||||
| Total at 06.30.2021 | 4,075 | |||||||||
| Total at 06.30.2020 | 9,812 | |||||||||
| Total at 12.31.2020 | 3,455 | |||||||||
| (1) | As of June 30, 2020, and considering the assumptions detailed in Note 6.1.1, the assessment of recoverability for the Diamante hydroelectric power plant in the Power Generation segment, with income generated in the spot market, resulted in the recognition of impairment losses for $ 172 million. |
| (2) | Includes $ 44 million corresponding to discontinued operations for the six-month period for June 30, 2020. |
| 46 |
Free translation from the original prepared in Spanish for publication in Argentina
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: (Continuation)
| 11.3 | DEFERRED TAX ASSETS AND LIABILITIES AND INCOME TAX |
The composition of the deferred tax assets and liabilities is as follows:
| 06.30.2021 | 12.31.2020 | |||
| Tax loss carryforwards | 4,363 | 10,609 | ||
| Property, plant and equipment | 2,863 | - | ||
| Intangible assets | 5 | 260 | ||
| Financial assets at fair value through profit and loss | 4 | - | ||
| Trade and other receivables | 607 | 519 | ||
| Cash and cash equivalents | - | 2 | ||
| Provisions | 4,309 | 2,373 | ||
| Salaries and social security payable | 31 | 270 | ||
| Defined benefit plans | 761 | 442 | ||
| Trade and other payables | 388 | 217 | ||
| Adjustment for tax inflation | - | 288 | ||
| Other | - | 109 | ||
| Deferred tax asset | 13,331 | 15,089 | ||
| Property, plant and equipment | (19) | (1,291) | ||
| Intangible assets | (1,260) | (917) | ||
| Other assets | (22) | - | ||
| Investments in companies | (1,011) | (2,155) | ||
| Inventory | (900) | (478) | ||
| Financial assets at fair value through profit and loss | (672) | (340) | ||
| Trade and other receivables | (1,841) | (559) | ||
| Taxes payables | (322) | (229) | ||
| Adjustment for tax inflation | (138) | (131) | ||
| Deferred tax liabilities | (6,185) | (6,100) | ||
| Deferred tax asset, net | 7,146 | 8,989 |
Deferred tax assets and liabilities are offset in the following cases: a) when there is a legally enforceable right to offset tax assets and liabilities; and b) when deferred income tax charges are associated with the same fiscal authority. The following amounts, determined after their adequate offset, are disclosed in the statement of financial position:
| 06.30.2021 | 12.31.2020 | |||
| Deferred tax asset | 7,146 | 9,082 | ||
| Deferred tax liabilities | - | (93) | ||
| Deferred tax liabilities, net | 7,146 | 8,989 |
| 47 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: (Continuation)
| 11.4 | INVENTORIES |
| 06.30.2021 | 12.31.2020 | ||||
| Current | |||||
| Materials and spare parts | 7,871 | 6,656 | |||
| Advances to suppliers | 473 | 261 | |||
| In process and finished products | 6,550 | 2,849 | |||
| Total | 14,894 | 9,766 |
| 11.5 | PROVISIONS |
| 06.30.2021 | 12.31.2020 | |||
| Non-Current | ||||
| Provisions for contingencies | 9,967 | 7,608 | ||
| Asset retirement obligation and dismantling of wind turbines | 1,947 | 1,621 | ||
| Environmental remediation | 1,456 | 67 | ||
| Other provisions | 58 | 30 | ||
| Total Non-Current | 13,428 | 9,326 | ||
| Current | ||||
| Provisions for contingencies | - | 1,052 | ||
| Asset retirement obligation and dismantling of wind turbines | 202 | 177 | ||
| Environmental remediation | 160 | 149 | ||
| Other provisions | 1 | 1 | ||
| Total Current | 363 | 1,379 |
| 48 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: (Continuation)
The evolution of provisions is shown below:
| 06.30.2021 | ||||||
| Contingencies | Asset retirement obligation and dismantling of wind turbines | Environmental remediation | ||||
| At the beginning of the year | 8,660 | 1,798 | 216 | |||
| Increases | 1,375 | 97 | 1,326 | |||
| Decreases | (32) | - | (4) | |||
| Exchange differences on translation | 1,161 | 254 | 78 | |||
| Reversal of unused amounts | (1,197) | - | - | |||
| At the end of the period | 9,967 | 2,149 | 1,616 | |||
Provision for contingencies
As of the date of issuance of these Consolidated Condensed Interim Financial Statements, the Company has recorded provisions at the best estimate of the disbursements necessary to meet the claims associated with the progress of the procedural stages of the following proceedings:
| (i) | On April 30, 2021, Petrobras Operaciones S.A. (“POSA”) filed its claim memorial in the international arbitration proceeding brought by POSA against the Company for alleged breaches to the Agreement for the transfer of the 33.6% interest in the “Río Neuquén” Concession. |
| (ii) | On April 29, 2021, the Company submitted its claim memorial and Petrobras International Braspetro B.V. (“PIB BV”) filed its counter-memorial in the international arbitration proceeding brought by the Company against PIB BV, and the counterclaim filed by the latter. On July 7, 2021, the Company submitted its answer to the counterclaim, whereas PIB BV filed its answer to the complaint. |
Provision for environmental remediation expenses
The Province of La Pampa has submitted a claim to the Company regarding the abandonment of certain wells and the execution of certain tasks associated with the relinquishment of the Jagüel de los Machos and Medanito blocks (which took place in 2015 and 2016, respectively).
The Company has challenged the different administrative acts passed by the provincial authorities (including the governor’s executive order) and is addressing claims for the Jagüel de los Machos block in the judicial jurisdiction. Even though the province answered the complaint in the month of March, the Company has started negotiations to resolve the dispute, agreeing on the suspension of procedural time limits.
| 49 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 11: (Continuation)
As of the date of issuance of these Consolidated Condensed Interim Financial Statements, regarding these claims and based on the progress of the ongoing negotiations, the Company has recorded provisions for the estimate of the remediation work costs to be incurred in these blocks.
| 06.30.2020 | ||||||
| Contingencies | Asset retirement obligation and dismantling of wind turbines | For environmental remediation | ||||
| At the beginning of the year | 8,379 | 1,327 | 139 | |||
| Increases | 438 | 68 | 32 | |||
| Decreases | (42) | - | (5) | |||
| Exchange differences on translation | 990 | 239 | 23 | |||
| Reversal of unused amounts | (183) | - | - | |||
| Gain on monetary position, net | 5 | - | - | |||
| At the end of the period | 9,587 | 1,634 | 189 | |||
| 11.6 | INCOME TAX |
| 06.30.2021 | 12.31.2020 | ||||
| Non-current | |||||
| Income tax | 15,750 | 11,004 | |||
| Total non-current | 15,750 | 11,004 | |||
| Current | |||||
| Income tax, net of witholdings and advances | 49 | 897 | |||
| Total current | 49 | 897 |
NOTE 12: FINANCIAL ASSETS AND LIABILITIES
| 12.1 | FINANCIAL ASSETS AT AMORTIZED COST |
| 06.30.2021 | 12.31.2020 | ||||
| Non-current | |||||
| Term deposit | 9,598 | 8,428 | |||
| Total non-current | 9,598 | 8,428 | |||
| Current | |||||
| Public securities (1) | - | 2,062 | |||
| Total current | - | 2,062 |
| (1) | Public securities were received pursuant to the mechanism set forth by Resolution SGE No. 54/19 for the settlement of receivables under the Natural Gas Surplus Injection Promotion Programs. |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
| 12.2 | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS |
| 06.30.2021 | 12.31.2020 | ||||
| Non-current | |||||
| Shares | 3,811 | 942 | |||
| Total non-current | 3,811 | 942 | |||
| Current | |||||
| Government securities | 22,261 | 17,223 | |||
| Shares | 4,924 | 2,442 | |||
| Investment funds | 5,139 | 7,717 | |||
| Total current | 32,324 | 27,382 |
| 12.3 | TRADE AND OTHER RECEIVABLES |
| Note | 06.30.2021 | 12.31.2020 | |||
| Non-Current | |||||
| Other | 5 | 4 | |||
| Trade receivables, net | 5 | 4 | |||
| Non-Current | |||||
| Related parties | 16 | 2,493 | 2,413 | ||
| Tax credits | 714 | 453 | |||
| Prepaid expenses | 23 | 38 | |||
| Allowance for tax credits | (5) | (5) | |||
| Other | 19 | 728 | |||
| Other receivables, net | 3,244 | 3,627 | |||
| Total non-current | 3,249 | 3,631 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
| Note | 06.30.2021 | 12.31.2020 | |||
| Current | |||||
| Receivables from MAT | 1,339 | 1,242 | |||
| CAMMESA | 18,362 | 14,941 | |||
| Receivables from oil and gas sales | 6,784 | 1,974 | |||
| Receivables from petrochemistry sales | 4,734 | 3,303 | |||
| Related parties | 16 | 440 | 298 | ||
| Other | 387 | 329 | |||
| Allowance for doubtful accounts | (1,165) | (1,352) | |||
| Trade receivables, net | 30,881 | 20,735 | |||
| Current | |||||
| Related parties | 16 | 3,181 | 3,474 | ||
| Tax credits | 380 | 405 | |||
| Receivables for non-electrical activities | 348 | 449 | |||
| Prepaid expenses | 1,393 | 304 | |||
| Financial credit | 1,634 | 926 | |||
| Guarantee deposits | 261 | 221 | |||
| Contractual penalty to collect | 187 | 284 | |||
| Insurance to recover | 358 | 520 | |||
| Expenses to be recovered | 827 | 720 | |||
| Credits for the sale of subsidiary | 3,829 | - | |||
| Argentine Natural Gas Production Promotion Plan | 1,697 | - | |||
| Other | 318 | 649 | |||
| Allowance for other receivables | (19) | (9) | |||
| Other receivables, net | 14,394 | 7,943 | |||
| Total current | 45,275 | 28,678 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
The movements in the allowance for the impairment of trade receivables are as follows:
| Note | 06.30.2021 | 06.30.2020 | |||
| At the beginning | 4.1 | 1,352 | 2,000 | ||
| Allowance for impairment | 92 | 1,956 | |||
| Utilizations | - | (317) | |||
| Reversal of unused amounts | (333) | (74) | |||
| Exchange differences on translation | 54 | 56 | |||
| Gain on monetary position, net | - | (16) | |||
| At the end of the period | 1,165 | 3,605 |
| (1) | Includes $ 1,925 million corresponding to discontinued operations for the six-month period for June 30, 2020. |
The movements in the allowance for the impairment of other receivables are as follows:
| Note | 06.30.2021 | 06.30.2020 | |||
| At the beginning | 4.1 | 14 | 310 | ||
| Allowance for impairment | 11 | 90 | |||
| Reversal of unused amounts | (2) | (75) | |||
| Exchange differences on translation | 1 | 44 | |||
| Other comprehensive income (loss) | - | 1 | |||
| At the end of the period | 24 | 370 |
| (1) | Including $ 45 million corresponding to discontinued operations for the six-month period ended June 30, 2020. |
| 12.4 | CASH AND CASH EQUIVALENTS |
| 06.30.2021 | 12.31.2020 | ||||
| Cash | 15 | 13 | |||
| Banks | 10,086 | 5,869 | |||
| Investment funds | 1,845 | 6,018 | |||
| Total | 11,946 | 11,900 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
| 12.5 | BORROWINGS |
| 06.30.2021 | 12.31.2020 | ||||
| Non-Current | |||||
| Financial borrowings | 6,559 | 6,285 | |||
| Corporate bonds | 124,373 | 109,143 | |||
| Total Non-Current | 130,932 | 115,428 | |||
| Current | |||||
| Bank overdrafts | - | 3,059 | |||
| Financial borrowings | 2,819 | 7,436 | |||
| Corporate bonds | 10,275 | 9,882 | |||
| Total Current | 13,094 | 20,377 | |||
| Total | 144,026 | 135,805 |
As of June 30, 2021 and December 31, 2020 the fair value of the Company’s CBs amount approximately to $ 127,220 million and $ 110,193 million, respectively. Such values were calculated on the basis of the determined market price of the Company’s CBs at the end of each period (fair value level 1).
The carrying amounts of short-term borrowings approximate their fair value due to their short-term maturity.
The remaining long-term borrowings were measured at amortized cost, which does not differ significantly from its fair value.
As of the issuance of these financial statements, the Company is in compliance with the covenants provided for in their loans contracts.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
The evolution of the consolidated loans over the six-month periods ended June 30, 2021 and 2020 are disclosed below.
| Note | 06.30.2021 | 06.30.2020 | |||
| At the beginning | 135,805 | 116,603 | |||
| Proceeds from borrowings | 3,504 | 8,146 | |||
| Payment of borrowings | (11,396) | (11,232) | |||
| Accrued interest | 7,157 | 5,478 | |||
| Payment of borrowings' interests | (7,340) | (6,694) | |||
| Net foreign currency exchange difference | (1,635) | 123 | |||
| Results for the repurchase of corporate bonds | - | (2,094) | |||
| Costs capitalized in property, plant and equipment | 11.1 | - | 633 | ||
| Cancellation through dividend compensation | - | (840) | |||
| Gain on monetary position, net | - | 183 | |||
| Repurchase and redemption of corporate bonds | - | (4,144) | |||
| Other comprehensive loss | 17,931 | 16,609 | |||
| At the end of the period | 144,026 | 122,771 |
Loans and other financial transactions
During the six-month period ended June 30, 2021, the Company canceled short-term financing with local financial entities, net of borrowings, for $ 9,336 million. Additionally, the Company repaid at maturity the principal installment for the credit facility sponsored by FINNVERA in the amount of US$ 3.9 million.
During the six-month period ended June 30, 2021, the Company has received disbursements in the amount of US$ 26.6 million under the credit facilities taken out with BNP.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
| 12.6 | TRADE AND OTHER PAYABLES |
| 06.30.2021 | 12.31.2020 | ||||
| Non-Current | |||||
| Compensation agreements | 638 | 561 | |||
| Lease liability | 950 | 852 | |||
| Other | 5 | 5 | |||
| Other payables | 1,593 | 1,418 | |||
| Total non-current | 1,593 | 1,418 | |||
| Note | 06.30.2021 | 12.31.2020 | |||
| Current | |||||
| Suppliers | 12,997 | 7,775 | |||
| Customer advances | 337 | 184 | |||
| Related parties | 16 | 510 | 420 | ||
| Other | - | 25 | |||
| Trade payables | 13,844 | 8,404 | |||
| Compensation agreements | 198 | 86 | |||
| Lease liability | 596 | 150 | |||
| Advances received for sales of subsidiary | - | 1,044 | |||
| Other | 139 | 94 | |||
| Other payables | 933 | 1,374 | |||
| Total current | 14,777 | 9,778 |
Due to the short-term nature of the payables and other payables, their carrying amount is considered to be the same as their fair value. For most other non-current liabilities, fair values are not significantly different from their book values either.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
| 12.7 | FAIR VALUE OF FINANCIAL INSTRUMENTS |
The following table shows the Company’s financial assets and liabilities measured at fair value as of June 30, 2021 and December 31, 2020:
| As of June 30, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | ||||||||
| Financial assets at fair value through profit and losss |
||||||||
| Government securities | 22,261 | - | - | 22,261 | ||||
| Investment funds | 5,139 | - | - | 5,139 | ||||
| Shares | 6,417 | - | 2,318 | 8,735 | ||||
| Cash and cash equivalents | ||||||||
| Investment funds | 1,845 | - | - | 1,845 | ||||
| Derivative financial instruments | - | 1 | - | 1 | ||||
| Other receivables | - | 253 | - | 253 | ||||
| Total assets | 35,662 | 254 | 2,318 | 38,234 | ||||
| Liabilities | ||||||||
| Derivative financial instruments | - | 27 | - | 27 | ||||
| Total liabilities | - | 27 | - | 27 | ||||
| As of December 31, 2020 | Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | ||||||||
| Financial assets at fair value through profit and losss |
||||||||
| Government securities | 17,223 | - | - | 17,223 | ||||
| Investment funds | 7,717 | - | - | 7,717 | ||||
| Shares | 2,442 | - | 942 | 3,384 | ||||
| Cash and cash equivalents | ||||||||
| Investment funds | 6,018 | - | - | 6,018 | ||||
| Derivative financial instruments | - | 1 | - | 1 | ||||
| Other receivables | - | 214 | - | 214 | ||||
| Assets classified as held for sale (1) | 5,148 | - | - | 5,148 | ||||
| Total assets | 38,548 | 215 | 942 | 39,705 | ||||
| Liabilities | ||||||||
| Derivative financial instruments | - | 40 | - | 40 | ||||
| Total liabilities | - | 40 | - | 40 |
| (1) | Corresponding to the net assets and liabilities held for sale on account of the divestment of Edenor’s stake. |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 12: (Continuation)
The techniques used for the measurement of assets at fair value with changes in income, classified as Level 2 and 3, are detailed below:
- Derivative Financial Instruments: calculated from variations between market prices at the closing date of the period, and the amount at the time of the contract.
- Shares: it was determined using the income-based approach through the “Indirect Cash Flow” method, that is, the net present value of expected future cash flows, mainly through the collection of dividends taking into consideration the 4.04% and 4.55% equity interest, both direct and indirect, in TSM and TMB, respectively, resulting from the Federal Government’s restructuring of assets in the energy sector detailed in Note 2.1.4 and a 13.3% discount rate. The used projections were prepared based on estimates on the future behavior of certain sensitive variables, including: (i) the dividend distribution policy; (ii) reference prices for energy sold in the spot market; (iii) projections of the availability and dispatch of power plants; (iv) the evolution of structural costs and expenses; (v) macroeconomic variables such as inflation and exchange rates, etc. As of June 30, 2021, the Company recognized profits as a result of changes in the fair value of financial instruments classified as level 3 in the amount of $ 1,247 million (US$ 13 million), under the item “Other financial results” of the Consolidated Condensed Interim Statement of Comprehensive Income and other comprehensive income in the amount of $ 129 million. Actual values may substantially differ from projections, mainly on account of: i) the timeliness and magnitude of the distribution of dividends, ii) the timeliness and magnitude of energy price updates, and/or iii) the evolution of costs. The Company estimates that any sensitivity analysis that considers changes in any of the estimates taken individually may lead to distorting conclusions, generating an adverse effect on the Company’s results.
NOTE 13: EQUITY COMPONENTS
| 13.1 | Share Capital |
As of june 30, 2021, the capital stock amounts to $ 1,399 million, including $ 4 million of treasury shares.
13.1.1 Acquisition of the Company’s own shares
On March 1, 2021, the Company’s Board of Directors approved Program 9 for a maximum amount of US$ 30 million, under which shares could be acquired up to a maximum price of US$ 16 per ADR and $ 92.16 per common share. The above-mentioned Program 9 terminated on July 1, 2021.
On July 6, 2021, the Board of Directors approved Program 10 for a maximum amount of US$ 30 million and an initial term of 120 calendar days, under which shares could be acquired up to a maximum price of US$ 15.5 per ADR and $ 110 per common share.
During the six-month period ended June 30, 2021, the Company directly and indirectly acquired 2.6 million own ADRs for a value of US$ 35.6 million. After June 30, 2021, the Company directly and indirectly acquired 0.1 million own shares for a value of US$ 1.9 million.
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 13: (Continuation)
13.1.2 Capital stock reduction
On April 29, 2021, the Company’s General Ordinary and Extraordinary Shareholders’ Meeting resolved to reduce its capital stock through the cancellation of 57 million shares, which is pending registration with the Public Registry.
| 13.2 | Earning per share |
Basic earnings per share are calculated by dividing the result attributable to the Company’s equity interest holders by the weighted average of outstanding common shares during the year. Diluted earnings per share are calculated by adjusting the weighted average of outstanding common shares to reflect the conversion of all dilutive potential common shares.
Potential common shares will be deemed dilutive only when their conversion into common shares may reduce the earnings per share or increase losses per share of the continuing business. Potential common shares will be deemed anti-dilutive when their conversion into common shares may result in an increase in the earnings per share or a decrease in the losses per share of the continuing operations.
The calculation of diluted earnings per share does not entail a conversion, the exercise or another issuance of shares which may have an anti-dilutive effect on the losses per share, or where the option exercise price is higher than the average price of ordinary shares during the period, no dilutive effect is recorded, being the diluted earning per share equal to the basic. As of June 30, 2021 and 2020, the Company does not hold any significant potential dilutive shares, therefore there are no differences with the basic earnings per share.
| 06.30.2021 | 06.30.2020 | |||
| Earning for continuing operations attributable to the equity holders of the Company | 13,499 | 1,942 | ||
| Weighted average amount of outstanding shares | 1,428 | 1,606 | ||
| Basic and diluted earnings per share from continued operations | 9.45 | 1.21 | ||
| Loss for discontinued operations attributable to the equity holders of the Company | (3,726) | (947) | ||
| Weighted average amount of outstanding shares | 1,428 | 1,606 | ||
| Basic and diluted loss per share from discontinued operations |
(2.61) | (0.59) | ||
| Earning attributable to the equity holders of the Company | 9,773 | 995 | ||
| Weighted average amount of outstanding shares | 1,428 | 1,606 | ||
| Basic and diluted earnings per share | 6.84 | 0.62 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 14: STATEMENT OF CASH FLOWS’ COMPLEMENTARY INFORMATION
| 14.1 | ADJUSTMENTS TO RECONCILE NET PROFIT TO CASH FLOWS GENERATED BY OPERATING ACTIVITIES |
| Note | 06.30.2021 | 06.30.2020 | |||
| Income tax | 10.6 | 6,106 | 1,399 | ||
| Accrued interest | 5,880 | 3,895 | |||
| Depreciations and amortizations | 9, 10.1 and 10.2 | 8,324 | 6,414 | ||
| Share of profit from joint ventures and associates | 5.2.2 | (3,101) | (3,158) | ||
| Results from property, plant and equipment sale and decreases | 10.3 and 10.4 | (38) | 58 | ||
| Impairment of property, plant and equipment, intangible assets and inventories | 11.1.1 | 172 | 4,316 | ||
| Result from measurement at present value | 10.5 | (176) | (10) | ||
| Changes in the fair value of financial instruments | (1,111) | 983 | |||
| Net exchange differences | 10.5 | (1,189) | (358) | ||
| Results for the repurchase of corporate bonds | 10.5 | - | (2,050) | ||
| Constitution of allowances, net | 196 | (8) | |||
| Provision of provisions, net | 10.4 | 176 | 93 | ||
| Provisión para remediación ambiental | 10.4 | 1,317 | - | ||
| Accrual of defined benefit plans | 9, 10.1 and 10.2 | 560 | 373 | ||
| Dividends received | 10.4 | (13) | (69) | ||
| Compensation agreements | 10.1 and 10.2 | 206 | 100 | ||
| Other | 6 | 74 | |||
| Total adjustments to reconcile net profit to cash flows generated by operating activities | 17,315 | 12,052 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 14: (Continuation)
| 14.2 | CHANGES IN OPERATING ASSETS AND LIABILITIES |
| 06.30.2021 | 06.30.2020 | ||||
| (Increase) Decrease in trade receivables and other receivables | (7,266) | 3,440 | |||
| (Increase) Decrease in inventories | (3,960) | 342 | |||
| Increase (Decrease) in trade payables and other payables | 3,075 | (2,509) | |||
| Decrease in salaries and social security payable | (552) | (404) | |||
| Decrease in defined benefit plans | (76) | (49) | |||
| Increase (Decrease) in tax payables | 1,018 | (1,538) | |||
| (Decrease) Increase in provisions | (24) | 66 | |||
| Income tax and minimum notional income tax paid | (810) | (171) | |||
| Proceeds (Payments) from derivative financial instruments, net | (341) | 139 | |||
| Total changes in operating assets and liabilities | (8,936) | (684) | |||
| 14.3 | SIGNIFICANT NON-CASH TRANSACTIONS |
| 06.30.2021 | 06.30.2020 | ||||
| Significant non-cash transactions from continuing operations : | |||||
| Acquisition of property, plant and equipment through an increase in trade payables | (1,839) | (404) | |||
| Borrowing costs capitalized in property, plant and equipment | - | (633) | |||
| Receivables from sales of companies pending collection | 3,829 | - | |||
| Increase in interests in associates through a decrease in other loans | (1,645) | - | |||
| Decrease in interests in associates through a decrease in other payables | (704) | (88) | |||
| Dividends pending collection | 1,025 | - | |||
| Compensation of loans through the assignment of dividends | - | 840 |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 15: CONTINGENT LIABILITIES AND ASSETS
The main events taking place in the six-month period ended June 30, 2021 regarding contingent liabilities reported in the consolidated financial statements as of December 31, 2020 are detailed below:
Environmental claims
| - | In the case file brought by Fundación SurfRider for alleged signs of environmental affectation in the City of Mar del Plata, the Court sustained the motion for dismissal of the request for submittal of evidence before trial filed by the plaintiff, and ordered the cancellation of the preliminary mediation instance and the service of notice of the complaint to the Company and other defendant companies. |
| - | In the proceeding initiated by a neighbor of the Province of Salta seeking environmental protection and restoration for alleged damages caused by the development of hydrocarbon activities in a lot owned by him, the Court of Justice of Salta declared that the First-Instance Administrative Litigation Court has jurisdiction over the claim. |
Civil and commercial claims
| - | In the proceeding brought by the “Consumidores Financieros Asociación Civil Para Su Defensa” Association seeking redress for the depreciation of Petrobras Brasil’s share price as a result of the “lava jato operation” and the so-called “Petrolao”, the Company (a co-defendant) was served notice of the upholding of the motion made by the Chamber of Appeals in Commercial Matters and filed a presentation in this respect. |
The main changes for the six-month period ended June 30, 2021 regarding contingent assets reported in the Consolidated Financial Statements as of December 31, 2020 are detailed below:
Administrative claims
| - | In the administrative litigation complaint brought by Central Térmica Loma la Lata S.A. (currently Pampa) against the Federal Government regarding the renewal and recognition of costs associated with natural gas supply agreements and, subsidiarily, requesting the redress of the damages sustained on account of the contractual breach during the January-March 2016 period, the evidentiary stage has been closed. In the complaint for the April 2016 through October 2018 period, the evidentiary period started. |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 15: (Continuation)
In the proceeding whereby the Company filed a declaratory judgment action against the Province of Neuquén upon the determination of the expiration of the Veta Escondida block’s concession term, the rendering of judgment was requested and the Supreme Court of Justice of the Republic of Argentina has set a preliminary hearing, which was carried out. Currently, the case has been referred to the National Attorney General.
| - | On March 31, 2021, the Company submitted a Preliminary Administrative Claim against the National Ministry of Economy to claim the owed amount, plus the applicable interest, assumed by the Federal Government during the term of validity of PEN Executive Order No. 1,053/18 on account of the exchange difference between the price of the gas purchased by gas distributors and that recognized in their final tariffs during the April 2018 - March 2019 period. |
Civil and commercial claims
| - | As of the date of issuance of these Consolidated Condensed Interim Financial Statements, the first stages of the international arbitration proceeding brought by Ecuador TLC, in its capacity as assignee of the Ecuadorian company Petromanabí S.A., against the Republic of Ecuador, have already begun. |
| - | Ecuador TLC has brought an arbitration claim against Petroecuador before the arbitration and mediation center of the Chamber of Commerce of Quito as a result of certain breaches to the transportation agreement entered into on December 31, 2008. |
| - | The Company has instituted an international arbitration proceeding against High Luck Group Limited - Argentina branch as a result of certain breaches to the Participation Assignment Agreement and the Joint Operation Agreement for the Chirete Block entered into on April 1, 2015. |
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTA 16: RELATED PARTIES´ TRANSACTIONS
| 16.1 | Balances with related parties: |
| As of June 30, 2021 | Trade receivables | Other receivables | Trade payables | |||||
| Current | Non Current | Current | Current | |||||
| Associates and joint ventures | ||||||||
| CTB | 31 | - | - | - | ||||
| Greenwind | 33 | - | - | 354 | ||||
| OCP | - | - | 2,614 | - | ||||
| Refinor | 75 | - | - | 18 | ||||
| TGS | 298 | 2,493 | 509 | - | ||||
| Other related parties | ||||||||
| SACDE | 3 | - | 4 | 138 | ||||
| Other | - | - | 54 | - | ||||
| 440 | 2,493 | 3,181 | 510 | |||||
| As of December 31, 2020 | Trade receivables | Other receivables | Trade payables | |||||
| Current | Non Current | Current | Current | |||||
| Associates and joint ventures | ||||||||
| CTB | 15 | - | - | - | ||||
| Greenwind | 20 | - | - | 383 | ||||
| OCP | - | - | 2,993 | - | ||||
| Refinor | 147 | - | 1 | 15 | ||||
| SACME | - | - | - | 21 | ||||
| TGS | 115 | 2,413 | 430 | - | ||||
| Transener | - | - | - | 1 | ||||
| Other related parties | ||||||||
| SACDE | 1 | - | 3 | - | ||||
| Other | - | - | 47 | - | ||||
| 298 | 2,413 | 3,474 | 420 | |||||
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Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 16: (Continuation)
| 16.2 | Operations with related parties: |
Operations for the six-month period |
Sales of goods and services (1) |
Purchases of goods and services (2) | Fees for services (3) | Other operating expenses and income (4) | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||
| Associates and joint ventures | ||||||||||||||||
| CTB | 74 | 52 | - | - | - | - | - | - | ||||||||
| Greenwind | 29 | 23 | - | - | - | - | - | - | ||||||||
| Refinor | 351 | 396 | (134) | (180) | - | - | (14) | (5) | ||||||||
| TGS | 1,715 | 710 | (1,542) | (497) | - | - | - | - | ||||||||
| Transener | - | - | (13) | (4) | - | - | - | - | ||||||||
| Other related parties | ||||||||||||||||
| Fundación | - | - | - | - | - | - | (73) | (44) | ||||||||
| SACDE | - | - | - | - | - | - | 6 | 38 | ||||||||
| Salaverri, Dellatorre, Burgio & Wetzler | - | - | - | - | (86) | (23) | - | - | ||||||||
| 2,169 | 1,181 | (1,689) | (681) | (86) | (23) | (81) | (11) | |||||||||
| (1) Corresponds mainly to advisory services provided in the field of technical assistance and sales of gas and refined products. | ||||||||||||||||
| (2) Imputed cost of sales. Correspond mainly to natural gas transportation services, purchases of refined products and other services. | ||||||||||||||||
| (3) Disclosed within administrative expenses. | ||||||||||||||||
| (4) Corresponds mainly to donations. | ||||||||||||||||
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Free translation from the original prepared in Spanish for publication in Argentina
|
Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 16: (Continuation)
Operations for the six-month period |
Finance income (1) | Finance expenses (2) | Dividends received | Payment of dividends | ||||||||||||
| 2020 | 2020 | 2020 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||
| Associates and joint ventures | ||||||||||||||||
| Citelec | - | - | - | (22) | - | 856 | - | - | ||||||||
| Greenwind | - | 9 | - | - | - | - | - | - | ||||||||
| OCP | 55 | 39 | - | - | 1,025 | 120 | - | - | ||||||||
| TGS | 119 | 97 | - | - | - | - | - | - | ||||||||
| Other related parties | ||||||||||||||||
| EMESA | - | - | - | - | - | - | - | (519) | ||||||||
| Oldelval | - | - | - | - | 13 | 9 | - | - | ||||||||
| SACDE | - | 1 | - | - | - | - | - | - | ||||||||
| TSM | - | - | - | - | - | 32 | - | - | ||||||||
| TMB | - | - | - | - | - | 28 | - | - | ||||||||
| Other | - | 1 | - | - | - | - | - | - | ||||||||
| 174 | 147 | - | (22) | 1,038 | 1,045 | - | (519) | |||||||||
| (1) Corresponds mainly to financial leases and accrued interest on loans granted. | ||||||||||||||||
| (2) Corresponds to accrued interest on loans received. | ||||||||||||||||
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Free translation from the original prepared in Spanish for publication in Argentina
|
Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTE 17: ASSETS AND LIABILITIES IN CURRENCIES OTHER THAN PESOS
| Type | Amount in currencies other than pesos | Exchange rate (1) | Total 06.30.2021 |
Total 12.31.2020 | |||||
| ASSETS | |||||||||
| NON-CURRENT ASSETS | |||||||||
| Financial assets at amortized cost | US$ | 100.3 | 95.72 | 9,598 | 8,428 | ||||
| Other receivables | US$ | 26.1 | 95.72 | 2,503 | 3,131 | ||||
| Total non-current assets | 12,101 | 11,559 | |||||||
| CURRENT ASSETS | |||||||||
| Financial assets at fair value through profit and loss | US$ | 260.5 | 95.72 | 24,931 | 16,928 | ||||
| Financial assets at amortized cost | US$ | - | - | - | 2,062 | ||||
| Trade and other receivables | US$ | 236.3 | 95.72 | 22,617 | 14,966 | ||||
| EUR | - | - | - | 456 | |||||
| Cash and cash equivalents | US$ | 103.0 | 95.72 | 9,859 | 5,714 | ||||
| U$ | 3.7 | 2.20 | 8 | 9 | |||||
| Total current assets | 57,415 | 40,135 | |||||||
| Assets classified as held for sale | US$ | - | - | - | 1,968 | ||||
| EUR | - | - | - | 5 | |||||
| CHF | - | - | - | 3 | |||||
| JPY | - | - | - | 45 | |||||
| - | 2,021 | ||||||||
| Total assets | 69,516 | 53,715 | |||||||
| LIABILITIES | |||||||||
| NON-CURRENT LIABILITIES | |||||||||
| Provisions | US$ | 133.1 | 95.72 | 12,741 | 8,694 | ||||
| Borrowings | US$ | 1,367.9 | 95.72 | 130,932 | 115,428 | ||||
| Trade and other payables | US$ | 16.7 | 95.72 | 1,593 | 1,418 | ||||
| Total non-current liabilities | 145,266 | 125,540 | |||||||
| CURRENT LIABILITIES | |||||||||
| Provisions | US$ | 3.4 | 95.72 | 325 | 1,342 | ||||
| Taxes payables | US$ | 15.8 | 95.72 | 1,508 | 1,307 | ||||
| Salaries and social security payable | US$ | 0.1 | 95.72 | 9 | 7 | ||||
| US$ | 0.3 | 95.72 | 27 | 40 | |||||
| Borrowings | US$ | 68.3 | 95.72 | 6,541 | 4,028 | ||||
| Trade and other payables | US$ | 96.8 | 95.72 | 9,267 | 4,775 | ||||
| EUR | 1.3 | 113.57 | 152 | 635 | |||||
| Total current liabilities | 17,829 | 12,134 | |||||||
| Liabilities associated to assets classified as held for sale | US$ | - | - | - | 10,056 | ||||
| EUR | - | - | - | 28 | |||||
| - | 10,084 | ||||||||
| Total liabilities | 163,095 | 147,758 | |||||||
| Net Position Liability | (93,579) | (94,043) |
(1) Exchange rate in force at June 30, 2021 according to the National Bank of Argentine for U.S. dollars (US$), euros (EUR), Swiss francs (CHF), Uruguayos pesos (U$) and yen (JPY).
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Free translation from the original prepared in Spanish for publication in Argentina
|
Notes to the unaudited consolidated condensed interim financial statements (continuation) For the six-month period ended June 30, 2021, presented in comparative format (In millions of Argentine Pesos (“$”)) |
NOTA 18: INCIDENT AT CENTRAL TÉRMICA GENELBA
On May 31, 2021 an incident occurred in the GEBATG03 (TG21) unit, which makes up Central Térmica Genelba’s Genelba Plus combined cycle, and damage was caused to the unit’s turbine. As a result of the incident, the combined-cycle generation capacity was reduced by approximately 50% (280 MW).
Jointly with the turbine’s manufacturer (SIEMENS), the Company performed the necessary works to dismantle and repair the failure, which were completed in July 2021.
Moreover, the Company is making all necessary filings before the insurance companies to collect the compensatory damages for the failure and minimize losses associated with the breach of availability commitments.
NOTE 19: DOCUMENTATION SAFEKEEPING
On August 14, 2014, the National Securities Commission issued General Resolution No. 629, which introduced modifications to the provisions applicable to the keeping and conservation of corporate and accounting books and commercial documentation. To such effect, the Company and its subsidiary Edenor, have sent non-sensitive work papers and information corresponding to the periods not covered by the statute of limitations for their keeping in the Administración de Archivos S.A (AdeA)’s data warehouse located at Ruta 36, km 34.5, Florencio Varela, Provincia de Buenos Aires and in the Iron Mountain Argentina S.A.’s data warehouses located at the following addresses:
| - | Azara 1245 –C.A.B.A. |
| - | Don Pedro de Mendoza 2163 –C.A.B.A. |
| - | Amancio Alcorta 2482 C.A.B.A. |
| - | San Miguel de Tucumán 601, Carlos Spegazzini, Municipality of Ezeiza, Province of Buenos Aires. |
A list of the documentation delivered for storage, as well as the documentation provided for in Article 5.a.3) Section I, Chapter V, Title II of the PROVISIONS (2013 regulatory provisions and amending rules), is available at the Company headquarters.
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