The accompanying notes are an integral part of the Financial
Statements.
The accompanying notes are an integral part of the Financial
Statements.
The accompanying
notes are an integral part of the Financial Statements.
The accompanying notes are an integral part of the Financial
Statements.
| Note | 1 |
General information |
Empresa Distribuidora y Comercializadora
Norte S.A. (hereinafter “edenor” or “the Company”) is a corporation (sociedad anónima) organized
under the laws of Argentina, with legal address at 6363 Av. Del Libertador Ave - City of Buenos Aires, Argentine Republic, whose shares
are traded on the Buenos Aires Stock Exchange and the New York Stock Exchange (NYSE).
The corporate purpose of edenor
is to engage in the distribution and sale of electricity within the concession area. Furthermore, among other activities, the Company
may subscribe or acquire shares of other electricity distribution companies, subject to the approval of the regulatory agency, assign
the use of the network to provide electricity transmission or other voice, data and image transmission services, and render advisory,
training, maintenance, consulting, and management services and know-how related to the distribution of electricity both in Argentina and
abroad. These activities may be conducted directly by edenor or through subsidiaries or related companies. In addition, the Company
may act as trustee of trusts created under Argentine laws.
History and development of
the Company
edenor was organized on
July 21, 1992 by Executive Order No. 714/92 in connection with the privatization and concession process of the distribution and sale of
electric power carried out by SEGBA.
By means of an International
Public Bidding, the PEN awarded 51% of the Company’s capital stock, represented by the Class "A" shares, to the bid made
by EASA, the parent company of edenor at that time. The award as well as the transfer contract were approved on August 24, 1992
by Executive Order No. 1,507/92 of the PEN.
On September 1, 1992, EASA took
over the operations of edenor.
As a consequence of the share
purchase and sale agreement entered into on December 28, 2020 between Pampa Energía S.A. and Empresa de Energía del Cono
Sur S.A., all the Class A shares, representing 51% of the Company’s share capital and votes were transferred to the latter. That
transaction was authorized by means of ENRE Resolution No. 207/2021 dated June 24, 2021. Therefore, Empresa de Energía del Cono
Sur S.A. is the parent company of edenor (Note 39).
The Company’s economic
and financial situation
In the last few fiscal years,
the Company recorded negative working capital and operating losses. This situation is due mainly to the suspension of the electricity
rate adjustment since February 2019, in spite of the constant increase of the operating costs and the investments necessary, both for
the operation of the network and for maintaining the quality of the service, in an inflationary context in which the Argentine economy
has been since mid-2018.
Additionally, this situation
was exacerbated by the effects of the COVID-19 pandemic, which has had a severe social, economic and financial impact. Most of the world’s
countries implemented exceptional actions, which had an immediate effect on their economies, as rapidly evidenced by the falls recorded
in production and activity indicators. The governments’ immediate response to these consequences was the implementation of tax aids
to sustain their citizens’ income and thereby reduce the risk of a breakdown in the chain of payments, with the aim of avoiding
an economic and financial crisis.
2021 FINANCIAL STATEMENTS NOTES |
With regard to the Company, in
2021 and the first months of the year 2022, the values of the electricity rate schedules suffered changes that, except for the provisions
of ENRE Resolutions No. 107/2021 and 76/2022 dated April 30, 2021 and February 25, 2022 respectively (Note 2.b.), implied only the passing
through of the seasonal prices not an improvement of revenues from the Company’s CPD, which are still insufficient to cover the
economic and financial needs of the Distribution Company in a context of growing annual inflation, with the rate surpassing 50%. Nevertheless,
and in spite of the aforementioned context with constant increases in operating costs, the investments necessary, both for the operation
of the network and for maintaining and even improving the quality of the service, have been made.
Although in the current year
the economic activity has shown a recovery after the effect caused by the COVID-19 pandemic throughout 2020, the country’s macroeconomic
situation with the increase in the rate of inflation, the widening of the gap between the official dollar exchange rate and the dollar
exchange rate quoted in the informal market, and the consequences of the agreement with the International Monetary Fund make it difficult
to envisage a clear-cut trend of the economy in the short term.
This complex and vulnerable economic
context is aggravated by the currency restrictions imposed by the BCRA pursuant to which the BCRA’s prior authorization is required
for certain transactions, such as the Company’s transactions associated with the payment of imports of goods that are necessary
for the provision of the service, and the payments to service the financial debt. These currency restrictions, or those to be implemented
in the future, could affect the Company’s ability to access the MULC in order to acquire the foreign currency necessary to face
its operating and financial obligations.
As a consequence of the described
context, the Company witnessed an even greater deterioration of the economic and financial equation due to the rate freeze, the impossibility
of taking legal action to enforce payment of debts for electricity consumed but not paid, and the increase in costs on the Company’s
operating structure and supplies. Therefore, it became necessary to partially postpone payments to CAMMESA for energy purchased in the
MEM as from the maturities taking place in March 2020 (Note 2.c), payment obligations which have been partially regularized, but as of
December 31, 2021 accumulate a past due principal balance of $ 26,259, plus interest and charges for $ 23,880.
Despite the previously detailed
situation, it is worth pointing out that, in general terms, the quality of the electricity distribution service has been significantly
improved, both in duration and frequency of power cuts. In view of the continuous increase of the costs associated with the provision
of the service, as well as the need for additional investments to meet the demand, the Company is analyzing different measures aimed at
mitigating the negative effects of this situation on its financial structure, minimizing the impact on the sources of employment, the
execution of the investment plan, and the carrying out of the essential operation, maintenance and improvement-related works that are
necessary to maintain the provision of the public service, object of the concession, in a satisfactory manner in terms of quality and
safety.
Due to that which has been previously
described, the Board of Directors understand that a material uncertainty exists that may cast significant doubt about edenor’s
ability to continue as a going concern, which may result in the Company’s being obliged to defer certain payment obligations or
unable to meet expectations for salary increases or the increases recorded in third-party costs.
2021 FINANCIAL STATEMENTS NOTES |
Nevertheless, these financial
statements have been prepared assuming that the Company will continue to operate as a going concern and do not include the adjustments
or reclassifications that might result from the outcome of these uncertainties, inasmuch as this Distribution Company has historically
been provided with transitional solutions that have made it possible to partially restore the economic and financial equation and ensure
the operation of the distribution networks.
| Note | 2 |
Regulatory framework |
The term of the concession is
95 years, which may be extended for an additional maximum period of 10 years. The term of the concession is divided into management periods.
At the end of each management period, the Class “A” shares representing 51% of edenor‘s share capital, currently
held by Empresa de Energía del Cono Sur S.A., must be offered for sale through a public bidding. If the latter makes the highest
bid, it will continue to hold the Class “A” shares, and no further disbursements will be necessary. On the contrary, if Empresa
de Energía del Cono Sur S.A. is not the highest bidder, then the bidder who makes the highest bid shall pay Empresa de Energía
del Cono Sur S.A. the amount of the bid in accordance with the conditions of the public bidding. The proceeds from the sale of the Class
“A” shares will be delivered to Empresa de Energía del Cono Sur S.A. after deducting any amounts receivable to which
the Grantor of the concession may be entitled.
The Company has the exclusive
right to render electric power distribution and sales services within the concession area to all the customers who are not authorized
to obtain their power supply from the MEM, thus being obliged to supply all the electric power that may be required in due time and in
accordance with the established quality levels. In addition, the Company must allow free access to its facilities to any MEM agents whenever
required, under the terms of the Concession. No specific fee must be paid by the Company under the Concession Agreement during the term
of the concession.
The Company is subject to the
terms and conditions of its Concession Agreement and the provisions of the Regulatory Framework comprised of Federal Laws Nos. 14,772,
15,336 and 24,065, Executive Order No. 714/92 of the PEN, resolutions and regulatory and supplementary regulations issued by the authorities
responsible for this matter, with the Company being responsible for the provision of the public service of electricity distribution and
sale with a satisfactory quality level, complying for such purpose with the requirements set forth in both the aforementioned agreement
and the Regulatory Framework.
Failure to comply with the established
guidelines will result in the application of penalties, based on the economic damage suffered by the customer when the service is provided
in an unsatisfactory manner, the amounts of which will be determined in accordance with the methodology stipulated in the above-mentioned
agreement. The ENRE is the authority in charge of controlling strict compliance with the pre-established guidelines.
| b) | Electricity rate situation |
On March 5, 2021, by means of
Resolution No. 53/2021, the ENRE called a Public Hearing to make known and listen to opinions on the distribution companies’ Transitional
Tariff System, with such Public Hearing being held in the framework of the Tariff Structure Review (RTI) Process and prior to defining
the electricity rates to be applied by the referred to concession holders. On March 30, edenor made a presentation at the Public
Hearing to discuss the transitional tariff adjustment of the Distribution, including revenue requirements and a new tariff structure proposal
to cover the public service expenses and investment needs.
2021 FINANCIAL STATEMENTS NOTES |
Furthermore, on March 31, 2021,
by means of Resolution No. 78/2021, the ENRE approved the values of the Company’s electricity rate schedule, effective from the
billing relating to the reading of meters subsequent to 12:00 AM on April 1, 2021, based on the MEM’s winter seasonal programming.
It must be pointed out that such rate increase affected only GUDI customers and reflected the increase of the seasonal price passed through
to rates without affecting revenues from CPD.
Moreover, on April 30, 2021,
by means of Resolution No. 107/2021, and in the framework of the transitional tariff system, the ENRE authorized the application of a
new electricity rate schedule, effective as from May 1, 2021, with a 9% increase, implying a CPD adjustment of 20.9%. In view of the fact
that such increase does not cover the increase requested by edenor, on June 15, 2021, an administrative appeal (recurso de alzada)
was filed against such Resolution.
On May 11, 2021, by means of
Resolution No. 408/2021, the SE approved the Definitive Winter Seasonal Programming for the MEM submitted by CAMMESA, relating to the
May 1-October 31, 2021 period.
On August 10, 2021, by means
of Resolutions Nos. 262 and 265/2021, the ENRE approved an increase for large users whose power consumption is equal to or greater than
300 kW, effective from the billing relating to the reading of meters subsequent to 12:00 AM on August 1, 2021. Both resolutions were appealed
to the Energy Secretariat by edenor because the values of the electricity rate schedule in effect provided for by the ENRE did
not take into consideration the ex-post adjustments, the recognition of taxes and fees, the pass-through differences arising from non-transferred
increases in the seasonal price, or the pending adjustments of CPD. Moreover, neither the transitional system to supplement the required
revenue, as provided for by Executive Order No. 1020/2021, nor the differences resulting from a lower than expected demand, requested
by edenor, have been established. Both appeals are in process at the closing date of these financial statements.
Moreover, ENRE Resolution No.
323/2021 dated September 27, 2021, set the definitive annual control fee for 2021 that is to be paid by the MEM’s generation, transmission
and distribution agents, and provided that final payment thereof would become due during the month of October 2021.
Furthermore, on October 28, 2021,
by means of Resolution No. 1029/2021, the SE approved the Definitive Summer Seasonal Programming for the MEM submitted by CAMMESA, relating
to the November 1, 2021-April 30, 2022 period. Furthermore, the Power Reference Prices (PRP) and the Stabilized Price of Energy (SPE)
set by SE Resolution No. 748/2021 dated August 3, 2021 are to be applied to the aforementioned period. The Unsubsidized PRP and SPE are
set in order for distribution companies to include in the bills the related subsidy amount as a separate item.
In line with the preceding paragraph,
on November 19, 2021, by means of ENRE Resolution No. 487/2021, distribution companies were instructed to determine as from November 1,
2021 the related subsidy amount, which should be clearly identified as “Subsidy from the Federal Government” in the part of
the bill that contains the information addressed to the user.
Additionally, by means of Resolution
No. 491/2021, the ENRE approved the Injection Rates for User-Generators of the concession areas of distribution companies, effective from
August 1, 2021.
2021 FINANCIAL STATEMENTS NOTES |
On January 25, 2022, by means
of Resolution No. 25/2022, the ENRE calls a Public Hearing to be held on February 17 to make known and listen to opinions on the following:
| - | the treatment for the determination
of Power reference prices and the Stabilized Price of Energy in the MEM; |
| - | the distribution companies’
proposals aimed at obtaining a transitional adjustment of rates, with such public hearing being held within the RTI renegotiation process
and prior to defining the electricity rates to be applied by concession holders. |
Additionally, on February 3,
2022, by means of Resolution No. 41/2022, the ENRE approves the values of the Company’s electricity rate schedules effective from
the billing relating to the reading of meters subsequent to 12:00 AM on February 1, 2022, applying to the aforementioned period the Power
Reference Prices (PRP) and the Stabilized Price of Energy (SPE) set by SE Resolution No. 40/2022, not implying the same adjustments of
the CPD.
Finally, and within the framework
of the transition tariff regime, on February 25, 2022, the ENRE, through Resolution No. 76/2022, applied the new tariff schedules effective
as of March 1, 2022, which incorporate the new seasonal prices defined by Resolution SE No. 105/2022 of the Secretary of Energy, which
establishes an average increase for Carriers of 20% and an increase in CPD of 8% for edenor.
| c) | Debt for the purchase of energy
in the MEM |
The main consequence of the lack
of revenue described in the preceding note has been edenor’s impossibility of complying, in due time and in proper form,
with payments to CAMMESA for energy purchases in the MEM. Argentina’s National Congress, recognizing this situation, approved in
the FY2021 National Government Budget the offsetting of such debts through the “Special system for the settlement of debts”
with CAMMESA provided for by section 87 of Law No. 27,591.
In this regard, by means of Executive
Order No. 990/20, the 2021 Budget Law was partially approved. In its section 87, the law provides for a system for the settlement of debts
with CAMMESA and/or the MEM accumulated by Electricity Distribution Companies as of September 30, 2020, whether on account of the consumption
of energy, power, interest and/or penalties, in accordance with the conditions to be set out by the application authority, which may provide
for credits equivalent to up to five times the monthly average bill or to sixty-six percent of the existing debt, whereas the remaining
debt is to be paid in up to sixty monthly installments, with a grace period of up to six months, and at the rate in effect in the MEM,
reduced by fifty percent.
Consequently, by means of Resolution
No. 40/2021, the Energy Secretariat established the “Special System for the Regularization of Payment Obligations” of Electricity
Distribution Companies that are agents of the MEM for the debts held with CAMMESA and/or the MEM whether on account of the consumption
of energy, power, interest and/or penalties, accumulated as of September 30, 2020. It also established a “Special System of Credits”
for those Electricity Distribution Companies that are agents of the MEM and have no debts with CAMMESA and/or the MEM or whose debts are
regarded as being within reasonable values vis-à-vis their levels of transactions as of September 30, 2020.
2021 FINANCIAL STATEMENTS NOTES |
Subsequently, the Secretariat
determined that it was suitable to establish as indicators for purposes of calculating the credits to be recognized, the maintenance of
the electricity rate schedules throughout the year 2020, the policies implemented by each Distribution Company that is an agent of the
MEM aimed at benefiting the demand, the effect of the application of the provisions of Executive Order No. 311 dated March 24, 2020, as
amended and supplemented, as well as the investment commitments on energy efficiency, technology applied to the provision of the service
and/or energy infrastructure works that imply an improvement in the quality of the service provided to users. Therefore, it issued Resolution
No. 371/2021, which supplements Resolution No. 40/2021.
Finally, on February 22, 2022,
by means of Executive Order No. 88/2022, the Executive Power extended until December 31, 2022 the implementation of the “Special
System for the Regularization of Payment Obligations” provided for in section 87 of Law No. 27,591.
| d) | Supplementary resolutions |
1.
Suspension of issuance of Debit Notes and Supplementary
Statements: on February 18, 2021, by means of ENRE
Resolution No. 37/2021, the Company was instructed both to suspend, on an immediate and temporary basis, the issuance of Debit Notes and
Supplementary Statements (bills) in the terms of section 5 sub-section d) captions I, II and III of the Electric Power Supply Regulations
(i.e. those issued when energy values have not been recorded or have been under-measured; those issued when events suggesting metering
irregularities or the appropriation of energy by the user prove to be true; or those issued when direct connections are verified), and
to refrain from suspending electricity supplies due to non-payment of the amounts arising from the recovery sought on the basis of such
regulation, regardless of whether the users have made the pertinent claim, until the ENRE issues the regulations. Furthermore, the Company
is instructed to submit a report on the number of bills for Non-recorded or under or over-recorded consumption, issued from March 1, 2020.
2.
System for the issuance of statements:
on March 9, 2021, by means of ENRE Resolution No. 58/2021, distribution companies were instructed to issue the electric power public service
statements (bills) solely with the amounts relating to the consumption of the billing period and to inform of the debts that have originated
in or increased during the periods of the Preventive and Mandatory Social Isolation (“ASPO”) and the Preventive and Mandatory
Social Distancing (“DISPO”) health measures. The Company has begun to implement the aforementioned resolution as from September
2021. Furthermore, the Company was instructed to refrain from seeking collection of the consumption accumulated from the ASPO until February
28, 2021, with no guidelines on the payment of such amounts by users having been established -by such regulatory authority- to date.
3.
Reopening of Commercial Offices:
by means of Notes NO-2021-84330919-APN-ENRE#MEC and NO-2021-84786820-APN-ENRE#MEC notified on September 9, 2021, the ENRE instructed the
Company to reopen the commercial offices after having been closed as per the ENRE’s instruction in the framework of the Preventive
and Mandatory Social Isolation (ASPO) and the Preventive and Mandatory Social Distancing (DISPO) provided for by the Federal Government.
4.
Electric Service Statement – Service Disconnection
and/or Cancellation of the registered user’s name:
the ENRE issued the procedure for how the Company must demand payment of a debt at the time of disconnecting the service or cancelling
the registered user’s name. The procedure was notified to the Company on September 13, 2021 by means of Note NO-2021-82569889-APN-ENRE#MEC.
Against such procedure, the Company has filed an appeal to the ENRE, which is currently in process.
2021 FINANCIAL STATEMENTS NOTES |
On December 16, 2020, the “Agreement
on the Development of the Preventive and Corrective Maintenance Work Plan for the Electricity Distribution Network of the Buenos Aires
Metropolitan Area”, was signed with the Federal Government and the province of Buenos Aires, to guarantee the electricity supply
to vulnerable neighborhoods of the Buenos Aires Metropolitan Area.
The debt for the electricity
supplied in the October 2017 – July 2020 period to low-income areas and shantytowns in edenor’s concession area amounted
to $ 2,126. Furthermore, it is necessary to consider an amount that will be equivalent to the total consumption of vulnerable neighborhoods
between August and December 2020.
All these amounts will be applied
to the Work Plan in order that the necessary investment and preventive and corrective maintenance works can be carried out in the networks
in charge of distribution companies and related to vulnerable neighborhoods and other areas of the concession area, with the aim of improving
the service therein provided and meeting the contingencies and any peak demand that often occurs in the summer. The Company may use the
funds only after the ENRE has certified compliance with both the degree of completion of the works included in the referred to plan and
the related financial milestones.
On January 14, 2021, the Company
received a first disbursement for $ 1,500, which was placed into low-risk money market funds, which accrued holding results throughout
the fiscal year. As of December 31, 2021, negotiations are underway between the Company and the ENRE concerning the other disbursements
stipulated in the agreement, which total an additional $1,000 relating to the second and third disbursements, plus a fourth disbursement
in accordance with that which the ENRE will validate and inform about the vulnerable neighborhoods’ total consumption between August
and December 2020.
At the date of issuance of these
financial statements, the Company has used a total of $ 1,794.1 (which at the purchasing power of the currency at December 31, 2021 amounts
to $ 2,059.8), $ 294.1 of which has not yet been credited, relating to the reports on progress of the works performed.
| f) | Agreement on the Regularization
of Obligations |
On
May 10, 2019, edenor, Edesur S.A. and the National Energy Secretariat entered into the Agreement on the Regularization of Obligations
for the Transfer of Concession Holders to the Local Jurisdictions, whereby, prior to the transfer of the respective concessions to the
jurisdictions of the PBA and the CABA, respectively, (i) the existing debts and credits are mutually offset; (ii) a term and modality
of payment of the fines payable to users and the Government are agreed-upon, in three and five years, respectively; (iii) settlement of
the fines payable to the Government is allowed to be made through investments in specific works to improve the service; and (iv) it is
agreed that any legal actions against the Federal Government for damages caused by the freeze on rates
since 2017 will be abandoned.
On January 19, 2021, the
Federal Government, the PBA and the CABA entered into a new Agreement according
to which the Federal Government retains the capacity as grantor of the concession in connection with the concession agreements
(Executive Order No. 292/2021 and SE Resolution No. 16/2021).
On September
21, 2021, the National Ministry of Economy issued ME Resolution No. 590/2021 declaring the Agreement contrary to the public interest,
thus paving the way for the filing of a legal action to declare it null and void. It also provided for the suspension of the administrative
procedures relating to the fulfilment of the obligations arising from such Agreement.
2021 FINANCIAL STATEMENTS NOTES |
Notwithstanding the above, at
the date of issuance of these financial statements, the Company has not been served notice of the filing of any legal action in order
for the Agreement or the acts resulting therefrom to be declared null and void. The administrative act in question has not provided for
the suspension of the legal effects of said Agreement, which is, therefore, in full force and effect. Against this resolution the Company
has filed an appeal (recurso jerárquico) to the Office of the Head of the Cabinet of Ministers (higher administrative authority)
and a motion for clarification with the Ministry of Economy, which was granted and answered by ME Resolution No. 656/2021, notified on
October 20, 2021, whereby said Ministry confirms that such Agreement has not been suspended.
The ENRE is empowered to control
the quality levels of the technical product and service, the commercial service and the compliance with public safety regulations, as
provided for in the Concession Agreement. If the Distribution Company fails to comply with the obligations assumed, the ENRE may apply
the penalties stipulated in the aforementioned Agreement.
As of December 31, 2021 and 2020,
the Company has recognized in its financial statements the penalties accrued, whether imposed or not yet issued by the ENRE, relating
to the control periods elapsed as of those dates, following the criteria and estimates available, which may differ from the actual ones.
Furthermore, ENRE Resolution
No. 63/17 has set out the control procedures, the service quality assessment methodologies, and the penalty system, applicable as from
February 1, 2017, for the 2017–2021 period.
In accordance with the provisions
of Sub-Appendix XVI to the referred to Resolution, the Company is required to submit in a term of sixty calendar days the calculation
of global indicators, interruptions for which force majeure had been alleged, the calculation of individual indicators, and will determine
the related discounts, crediting the amounts thereof within ten business days. In turn, the ENRE will examine the information submitted
by the Company, and in the event that the crediting of such discounts were not verified will impose a fine, payable to the Federal Government,
equivalent to twice the value that should have been recorded.
In this regard, the ENRE has
implemented an automatic penalty mechanism in order that the discounts on account of deviations from the established limits may be credited
to customers within a term of sixty days as from the end of the controlled six-month period.
The penalty system provides that
penalties are updated in accordance with the variation of the Distributor’s CPD or by the energy tariff average price, as the case
may be. Subsequently, in different resolutions related to commercial penalties and penalties relating to the safety on streets and public
spaces, the Regulatory Authority provided for the application of increases and adjustments, applying for such purpose a criterion different
from the one applied by the Company.
By means of Resolution No. 15/2021,
the ENRE approved the new methodology for crediting and distributing the penalties payable to all the Active Users and the modality of
crediting penalties to the Solidarity Account for Users in Vulnerable Situations, as well as the manner in which edenor must produce
that information and send it to the ENRE.
The effects of the resolutions
detailed in this note have been quantified by the Company and recognized as of December 31, 2021 and 2020, which does not imply the Company’s
consent to the applied criteria.
Finally, with the approval of
the new tariff schedules established by ENRE Resolution No. 76/2022 (Note 2.b.), the amounts of the penalties valued in average kWh must
be updated as of March 1, 2022 according to the prices established by the aforementioned Resolution.
2021 FINANCIAL STATEMENTS NOTES |
| h) | Restriction on the transfer
of the Company’s common shares |
The by-laws provide that Class
“A” shareholders may transfer their shares only with the prior approval of the ENRE. The ENRE must communicate its decision
within ninety days upon submission of the request for such approval, otherwise the transfer will be deemed approved.
Furthermore, Caja de Valores
S.A. (the Public Register Office), which keeps the Share Register of the shares, is entitled (as stated in the by-laws) to reject such
entries which, at its criterion, do not comply with the rules for the transfer of common shares included in (i) the Business Organizations
Law, (ii) the Concession Agreement and (iii) the By-laws.
In addition, the Class “A”
shares will be pledged during the entire term of the concession as collateral to secure the performance of the obligations assumed under
the Concession Agreement.
In connection with the issuance
of Corporate Notes, during the term thereof, Empresa de Energía del Cono Sur S.A. is required to be the beneficial owner and owner
of record of not less than 51% of the Company’s issued, voting and outstanding shares, otherwise the maturity of principal of the
corporate notes could be accelerated.
| Note | 3 |
Basis of preparation |
The financial statements for
the year ended December 31, 2021 have been prepared in accordance with IFRS issued by the IASB and IFRIC interpretations, which have been
adopted and incorporated by the CNV.
These financial statements were
approved for issue by the Company’s Board of Directors on March 9, 2022.
Comparative information
The balances as of December 31,
2020, disclosed in these financial statements for comparative purposes, arise as a result of restating the financial statements as of
that date to the purchasing power of the currency at December 31, 2021. This, as a consequence of the restatement of the financial information
described hereunder. Furthermore, certain amounts of the financial statements presented on a comparative basis have been reclassified
in order to maintain consistency of presentation with the amounts of the reporting year.
In particular, the figures presented
in the statement of cash flows as of December 31, 2020 and 2019 have been revised. Based on their nature, certain amounts that were previously
disclosed as financial assets at fair value through profit or loss were reclassified to cash equivalents. The impact of these changes
is considered non-material and is as follows:
2021 FINANCIAL STATEMENTS NOTES |
|
|
|
12.31.20 Published |
|
Adjustments |
|
12.31.20 |
Cash flows from investing activities |
|
|
|
|
|
|
|
(Purchase) Collection net of Mutual funds and government bonds |
|
3,898 |
|
(7,895) |
|
(3,997) |
Net cash flows used in investing activities |
|
|
(10,892) |
|
(7,895) |
|
(18,787) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of year |
|
|
845 |
|
5,727 |
|
6,572 |
Financial results in cash and cash equivalents |
|
|
(546) |
|
1,932 |
|
1,386 |
Result from exposure to inflation |
|
|
309 |
|
236 |
|
545 |
Increase in cash and cash equivalents |
|
|
5,974 |
|
(7,895) |
|
(1,921) |
Cash and cash equivalents at the end of the year |
|
|
6,582 |
|
|
|
6,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.19 Published |
|
Adjustments |
|
12.31.19 |
Cash flows from investing activities |
|
|
|
|
|
|
|
(Purchase) Collection net of Mutual funds and government bonds |
|
5,194 |
|
6,058 |
|
11,252 |
Net cash flows used in investing activities |
|
|
(10,591) |
|
6,058 |
|
(4,533) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of year |
|
|
88 |
|
(22) |
|
66 |
Financial results in cash and cash equivalents |
|
|
902 |
|
(614) |
|
288 |
Result from exposure to inflation |
|
|
(5) |
|
308 |
|
303 |
Increase in cash and cash equivalents |
|
|
(143) |
|
6,058 |
|
5,915 |
Cash and cash equivalents at the end of the year |
|
|
842 |
|
|
|
6,572 |
Restatement of financial information
The financial statements as of
December 31, 2021, including the figures relating to the previous year, have been stated in terms of the measuring unit current at December
31, 2021, in accordance with IAS 29 “Financial reporting in hyperinflationary economies”. As a result thereof, the financial
statements are stated in terms of the measuring unit current at the end of the reporting year.
The inflation rate applied for
the fiscal year commenced January 1, 2021 and ended December 31, 2021, based on that indicated in the preceding paragraph, was 50.9%.
According to IAS 29, the restatement
of financial statements is necessary when the functional currency of an entity is that of a hyperinflationary economy. To define a state
of hyperinflation, IAS 29 provides a set of guidelines, including but not limited to the following, which consist of (i) analyzing the
behavior of population, prices, interest rates and wages faced with the development of price indexes and the loss of the currency’s
purchasing power, and (ii) as a quantitative feature, which, in practice, is the mostly considered condition, verifying whether the cumulative
inflation rate over three years approaches or exceeds 100%.
In accordance with IAS 29, the
Argentine economy should be regarded as highly inflationary as from July 1, 2018. The standard states that the adjustment will be resumed
from the date on which it was last made, February 2003. Moreover, on July 24, 2018, the FACPCE issued a communication confirming that
which has been previously mentioned. Additionally, it should be taken into account that on December 4, 2018 the Official Gazette
published Law No. 27,468 pursuant to which the provisions of Executive Order No. 664/2003 of the PEN, which did not allow for the filing
of inflation-adjusted financial statements, are no longer in effect. This regulation states that the provisions of section 62 of Business
Organizations Law No. 19,550 -preparation of financial statements to reflect the effects of inflation- will continue to apply, thus reinstating
the adjustment for inflation. On December 28, 2018, the CNV, reaffirming the provisions of Law No. 27,468, published Resolution No. 777/18
stating that issuing companies shall apply the restatement method of financial statements to reflect the effects of inflation in conformity
with IAS 29.
In order to not only assess the
aforementioned quantitative condition but also restate the financial statements, the CNV has stated that the series of indexes to be used
for the application of IAS 29 is that determined by the FACPCE. That series of indexes combines the CPI published by the INDEC from January
2017 (base month: December 2016) with the WPI published by the INDEC through that date, computing for the months of November and December
2015 -in respect of which there is no available information from the INDEC on the development of the WPI-, the variation recorded in the
CPI of the City of Buenos Aires.
Taking into consideration the
above-mentioned index, in the fiscal years ended December 31, 2021, 2020, 2019, 2018 and 2017, the inflation rate amounted to 50.9%, 36.13%,
53.77%, 47.66% and 24.79%, respectively.
2021 FINANCIAL STATEMENTS NOTES |
The effects of the application
of IAS 29 are summarized below:
Restatement of the Statement
of Financial Position
| (i) | Monetary items (those with a
fixed nominal value in local currency) are not restated inasmuch as they are already expressed in terms of the measuring unit current
at the closing date of the reporting year. |
| (ii) | Non-monetary items carried at
historical cost or at the current value of a date prior to the end of the reporting year are restated using coefficients that reflect
the variation recorded in the general level of prices from the date of acquisition or revaluation to the closing date of the reporting
year. Depreciation charges of property, plant and equipment and amortization charges of intangible assets recognized in profit or loss
for the year, as well as any other consumption of non-monetary assets will be determined on the basis of the new restated amounts. |
| (iii) | The restatement of non-monetary
assets in terms of the measuring unit current at the end of the reporting year without an equivalent adjustment for tax purposes, gives
rise to a taxable temporary difference and to the recognition of a deferred tax liability, whose contra-account is recognized. |
Restatement of the Statement
of Profit or Loss and Other Comprehensive Income
| (i) | Income and expenses are restated
from the date when they were recorded, except for those profit or loss items that reflect or include in their determination the consumption
of assets carried at the purchasing power of the currency as of a date prior to the recording of the consumption, which are restated based
on the date when the asset to which the item is related originated (for example, depreciation, impairment and other consumptions of assets
valued at historical cost). |
| (ii) | The net gain from the maintenance
of monetary assets and liabilities is presented in a line item separately from the profit or loss for the year, called RECPAM. |
Restatement of the Statement
of Changes in Equity
| (i) | The components of equity, except
for reserved earnings and unappropriated retained earnings, have been restated from the dates on which they were contributed, or on which
they were otherwise set up. |
| (ii) | The restated unappropriated retained
earnings were determined by the difference between net assets restated at the date of transition and the other components of opening equity
expressed as indicated in the preceding headings. |
| (iii) | After the restatement at the
date indicated in (i) above, all components of equity are restated by applying the general price index from the beginning of the year,
and each variation of those components is restated from the date of contribution or the date on which it otherwise arose. |
Restatement of the Statement
of Cash Flows
IAS 29 requires all the items
of this Statement to be restated in terms of the measuring unit current at the closing date of the reporting year.
The monetary gain or loss generated
by cash and cash equivalents is presented in the statement of cash flows separately from cash flows from operating, investing and financing
activities, as a specific item of the reconciliation between cash and cash equivalents at the beginning and end of the year.
2021 FINANCIAL STATEMENTS NOTES |
|
Note | 4 |
Accounting policies |
The main accounting policies
used in the preparation of these financial statements are detailed below.
| Note | 4.1 |
New accounting standards, amendments
and interpretations issued by the IASB, that are
effective as of December 31, 2021 and have been adopted by the Company |
The
Company has first applied the following standards and/or amendments as
from 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).
- Amendments to IFRS 16 “Leases”,
in connection with rent concessions in the framework of the COVID-19 pandemic (amended in April 2021).
There are no new IFRS or IFRIC
applicable as from this fiscal year that have a material impact on the Company’s financial statements.
New
accounting standards, amendments and interpretations issued by the IASB that are not yet effective and have not been early
adopted by the Company
- IFRS 17 “Insurance
contracts”, issued in May 2017 and amended in June 2020 and December 2021. It replaces IFRS 4, introduced as an interim standard
in 2004, which allowed entities to account for insurance contracts using their local accounting requirements, resulting in multiple application
approaches. IFRS 17 sets the principles for the recognition, measurement, presentation, and disclosure of insurance contracts, and applies
to annual periods beginning as from January 1, 2023, allowing for its early adoption for entities already applying IFRS 9 and IFRS 15.
The Company estimates that the application thereof will impact neither the Company’s results of operations nor its financial position.
- IAS 1 “Presentation
of financial statements”, amended in January 2020 and February 2021. It incorporates amendments to the classification of liabilities
as current or non-current. It also incorporates the requirement that an entity disclose its material accounting policies rather than its
significant accounting policies. It explains how a company can identify a material accounting policy. The amendments apply to annual periods
beginning as from January 1, 2023, with early adoption permitted. The application thereof will impact neither the Company’s results
of operations nor its financial position.
- IAS 16 “Property,
plant and equipment”, amended in May 2020. It incorporates amendments to the recognition of inventories, sales and costs of items
produced while bringing an item of property, plant and equipment to the location and condition necessary for its intended use. The amendments
apply to annual periods beginning as from January 1, 2022, with early adoption permitted. The Company is currently analyzing the impact
of the application of the amendments on the Company’s results of operations or its financial position.
- Annual improvements to IFRS
– 2018-2020 Cycle: the amendments were issued in May 2020 and apply to annual periods beginning as from January 1, 2022. The Company
estimates that the application thereof will impact neither the Company’s results of operations nor its financial position.
- IFRS 3 “Business combinations”,
amended in May 2020. It incorporates references to the definitions of assets and liabilities in the new Conceptual Framework and clarifications
on contingent assets and liabilities that are incurred separately from those assumed in a business combination. It applies to business
combinations as from January 1, 2022, with early adoption permitted.
- IAS 37 “Provisions,
contingent liabilities and contingent assets”, amended in May 2020. It clarifies the scope of the concept of cost of fulfilling
an onerous contract. The amendments apply to annual periods beginning as from January 1, 2022, with early adoption permitted. The Company
estimates that the application thereof will impact neither the Company’s results of operations nor its financial position.
2021 FINANCIAL STATEMENTS NOTES |
- IAS 8 “Accounting
policies, changes in accounting estimates and errors”, amended in February 2021. It replaces the definition of accounting estimates.
Under the new definition, accounting estimates are monetary amounts in the financial statements that are subject to measurement uncertainty.
The amendments apply to annual periods beginning as from January 1, 2023. The Company estimates that the application thereof will impact
neither the Company’s results of operations nor its financial position.
- IAS 12 “Income tax”,
amended in May 2021. It clarifies how an entity accounts for deferred tax on transactions such as leases and decommissioning obligations.
The amendments apply to annual periods beginning as from January 1, 2023.
| Note | 4.2 |
Property, plant and equipment |
Property, plant and equipment,
except for works in progress, is valued at acquisition cost restated to reflect the effects of inflation, net of accumulated depreciation
and recognized impairment losses. Depreciation has been calculated by applying the straight-line method over the remaining useful life
of the assets, which was determined on the basis of engineering studies.
Subsequent costs (major maintenance
and reconstruction costs) are either included in the value of the assets or recognized as a separate asset, only if it is probable that
the future benefits associated with the assets will flow to the Company, being it possible as well that the costs of the assets may be
measured reliably and the investment will improve the condition of the asset beyond its original state. The other maintenance and repair
expenses are recognized in profit or loss in the year in which they are incurred.
In accordance with the Concession
Agreement, the Company may not pledge the assets used in the provision of the public service nor grant any other security interest thereon
in favor of third parties, without prejudice to the Company’s right to freely dispose of those assets which in the future may become
inadequate or unnecessary for such purpose. This prohibition does not apply in the case of security interests granted over an asset at
the time of its acquisition and/or construction as collateral for payment of the purchase and/or installation price.
The residual value and the remaining
useful lives of the assets are reviewed and adjusted, if appropriate, at the end of each fiscal year (reporting period).
Land is not depreciated.
Facilities in service: between
30 and 50 years.
Furniture, tools and equipment:
between 5 and 20 years.
Construction in process is valued
based on the degree of completion and is recorded at cost restated to reflect the effects of inflation less any impairment loss, if applicable.
Cost includes expenses attributable to the construction, when they are part of the cost incurred for the purposes of acquisition, construction
or production of property, plant and equipment that necessarily takes a substantial period of time to get ready for its intended use.
These assets begin to be depreciated when they are in economic conditions of use.
Gains and losses on the sale
of property, plant and equipment are calculated by comparing the price collected with the carrying amount of the asset and are recognized
within Other operating expense or Other operating income in the Statement of Comprehensive Income (Loss).
2021 FINANCIAL STATEMENTS NOTES |
The Company considers three alternative
probability-weighted scenarios and analyzes the recoverability of its long-lived assets as described in Critical accounting estimates
and judgments.
The valuation of property, plant
and equipment, taken as a whole, does not exceed its recoverable value, which is measured as the higher of value in use and fair value
less costs to sell at the end of the year (Note 6.c).
| Note | 4.3 |
Interests in joint ventures |
The main conceptual definitions
are as follow:
| i. | A joint arrangement takes place
among two or more parties when they have joint control: joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. |
| ii. | A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Such parties are called
joint venturers. |
| iii. | A joint operation is a joint
arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities,
relating to the arrangement. These parties are called joint operators. |
The Company accounts for its
investment in joint ventures in accordance with the equity method. Under this method, the interest is initially recognized at cost and
subsequently adjusted by recognizing the Company’s share in the profit or loss obtained by the joint venture, after acquisition
date. The Company recognizes in profit or loss its share of the joint venture’s profit or loss and in other comprehensive income
its share of the joint venture’s other comprehensive income.
When the Company carries out
transactions in the joint ventures, the unrealized gains and losses are eliminated in accordance with the percentage interest held by
the Company in the jointly controlled entity.
The joint ventures’ accounting
policies have been modified and adapted, if applicable, to ensure consistency with the policies adopted by the Company.
Furthermore, taking into account
that the interests in joint ventures are not regarded as significant balances, the disclosures required under IFRS 12 have not been made.
| Note | 4.4 |
Revenue recognition |
Revenue is measured at the fair
value of the consideration collected or to be collected, taking into account the estimated amount of any discount, thus determining the
net amounts.
Revenue from the electricity
supplied by the Company to low-income areas and shantytowns is recognized to the extent that a renewal of the Framework Agreement is formalized
for the period in which the service was rendered. At the date of issuance of these financial statements, the Company is negotiating the
extensions of the Framework Agreement with the Federal and the Provincial Governments, as the case may be (Note 2.e).
2021 FINANCIAL STATEMENTS NOTES |
Revenue from operations is recognized
on an accrual basis and derives mainly from electricity distribution. Such revenue includes electricity supplied, whether billed or unbilled,
at the end of each year, which has been valued on the basis of applicable tariffs.
The Company also recognizes revenue
from other concepts included in distribution services, such as new connections, reconnections, rights of use on poles, transportation
of electricity to other distribution companies, inasmuch as the services are provided on the basis of the price established in each contract.
Revenue is not adjusted for the effect of the financing components as sales’ payments are not deferred over time, which is consistent
with market practice.
The aforementioned revenue from
operations was recognized when all of the following conditions were met:
| 1. | The Entity transferred to the
buyer the significant risks and rewards; |
| 2. | The amount of revenue was measured
reliably; |
| 3. | It is probable that the economic
benefits associated with the transaction will flow to the Entity; |
| 4. | The costs incurred or to be incurred,
in respect of the transaction, were measured reliably. |
Interest income is recognized
by applying the effective interest rate method. Interest income is recorded in the accounting on a time basis by reference to the principal
amount outstanding and the applicable effective rate.
Interest income is recognized
when it is probable that the economic benefits associated with the transaction will flow to the Entity and the amount of the transaction
can be measured reliably.
| Note | 4.5 |
Effects of the changes in foreign currency exchange rates |
a.
Functional and presentation currency
The information included in the
financial statements is measured using the Company’s functional currency, which is the currency of the main economic environment
in which the Entity operates. The financial statements are measured in pesos (legal currency in Argentina), restated to reflect the effects
of inflation as indicated in Note 3, which is also the presentation currency.
b.
Transactions and balances
Foreign currency denominated
transactions and balances are translated into the functional and presentation currency using the rates of exchange prevailing at the date
of the transactions or revaluation, respectively. The gains and losses generated by foreign currency exchange differences resulting from
each transaction and from the translation of monetary items valued in foreign currency at the end of the year are recognized in the Statement
of Profit or Loss.
The foreign currency exchange
rates used are the selling rate for monetary assets and liabilities, and the specific exchange rate for foreign currency denominated transactions.
2021 FINANCIAL STATEMENTS NOTES |
| Note | 4.5 |
Trade and other receivables |
The receivables arising from
services billed to customers but not collected as well as those arising from services rendered but unbilled at the closing date of each
year are recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.
The receivables from electricity
supplied to low-income areas and shantytowns are recognized, along with revenue, when the Framework Agreement has been renewed for the
period in which the service was provided and the Federal or the Provincial Government assumes responsibility for the payment of consumption.
Other receivables are initially
recognized at fair value (generally the original billing/settlement amount) and subsequently measured at amortized cost, using the effective
interest rate method, and when significant, adjusted by the time value of money. The Company records impairment allowances when there
is objective evidence that it will not be able to collect all the amounts owed to it in accordance with the original terms of the receivables.
In the case of the subsidies
received from the Government, they are recognized at the time of of execution of the defined work plans.
Inventories are valued at the
lower of acquisition cost restated to reflect the effects of inflation and net realizable value.
They are valued based on the
purchase price, import duties (if applicable), and other taxes (that are not subsequently recovered), and other costs directly attributable
to the acquisition of those assets.
Cost is determined by applying
the weighted average price (WAP) method.
The Company has classified inventories
into current and non-current depending on whether they will be used for maintenance or capital expenditures and on the period in which
they are expected to be used. The non-current portion of inventories is disclosed in the “Property, plant and equipment” account.
The valuation of inventories,
taken as a whole, does not exceed their recoverable value at the end of each year.
| Note | 4.8 |
Financial assets |
| Note | 4.8.1
|
Classification |
The Company classifies financial
assets into the following categories: those measured at amortized cost and those subsequently measured at fair value. This classification
depends on whether the financial asset is an investment in a debt or an equity instrument. In order for a financial asset to be measured
at amortized cost, the two conditions described in the following paragraph must be met. All other financial assets are measured at fair
value. IFRS 9 requires that all investments in equity instruments be measured at fair value.
2021 FINANCIAL STATEMENTS NOTES |
a.
Financial assets at amortized cost
Financial assets are measured
at amortized cost if the following conditions are met:
| i. | The objective of the Company’s
business model is to hold the assets to collect the contractual cash flows; and |
| ii. | The contractual terms give rise,
on specified dates, to cash flows that are solely payments of principal and interest on principal. |
b.
Financial assets at fair value
If any of the above-detailed
conditions is not met, financial assets are measured at fair value through profit or loss.
All investments in equity instruments
are measured at fair value. For those investments that are not held for trading, the Company may irrevocably elect at the time of their
initial recognition to present the changes in fair value in other comprehensive income. The Company’s decision was to recognize
the changes in fair value in profit or loss.
| Note | 4.8.2
|
Recognition and measurement |
The regular way purchase or sale
of financial assets is recognized on the trade date, i.e. the date on which the Company agrees to acquire or sell the asset. Financial
assets are derecognized when the rights to receive the cash flows from the investments have expired or been transferred and the Company
has transferred substantially all the risks and rewards of the ownership of the assets.
Financial assets are initially
recognized at fair value plus transaction costs that are directly attributable to the acquisition thereof, in the case that they are not
measured at fair value through profit or loss.
The gains or losses generated
by investments in debt instruments that are subsequently measured at fair value and are not part of a hedging transaction are recognized
in profit or loss. Those generated by investments in debt instruments that are subsequently measured at amortized cost and are not part
of a hedging transaction are recognized in profit or loss when the financial asset is derecognized or impaired and by means of the amortization
process using the effective interest rate method.
The Company subsequently measures
all the investments in equity instruments at fair value. When it elects to present the changes in fair value in other comprehensive income,
such changes cannot be reclassified to profit or loss. Dividends arising from these investments are recognized in profit or loss to the
extent that they represent a return on the investment.
The Company reclassifies financial
assets if and only if its business model to manage financial assets is changed.
The expected losses, in accordance
with calculated coefficients, are detailed in Note 6.a).
| Note | 4.8.3
|
Impairment of financial
assets |
At the end of each annual reporting
period, the Company assesses whether there is objective evidence that the value of a financial asset or group of financial assets measured
at amortized cost is impaired. The value of a financial asset or group of financial assets is impaired, and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the
asset (a “loss event”), and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably measured.
2021 FINANCIAL STATEMENTS NOTES |
Impairment tests may include
evidence that the debtors or group of debtors are undergoing significant financial difficulties, have defaulted on interest or principal
payments or made them after they had come due, the probability that they will enter bankruptcy or other financial reorganization, and
when observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in payment terms
or in the economic conditions that correlate with defaults.
In the case of financial assets
measured at amortized cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the impairment loss is
recognized in the Statement of Profit or Loss.
While cash, cash equivalents
and financial assets measured at amortized cost are also subject to the impairment requirements of IFRS 9, the identified impairment loss
is immaterial.
| Note | 4.8.4
|
Offsetting of financial
instruments |
Financial assets and liabilities
are offset, and the net amount reported in the Statement of Financial Position, when there is a legally enforceable right to offset the
recognized amounts, and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
| Note | 4.9 |
Derivative financial instruments |
Derivative financial instruments
are initially recognized at fair value on the date on which the relevant contract is signed. Subsequently to the initial recognition,
they are remeasured at their fair value. The method for recognizing the resulting loss or gain depends on whether the derivative has been
designated as a hedging instrument and, if that is the case, on the nature of the item being hedged. As of December 31, 2020, the economic
impact of these transactions, which resulted in a loss of $ 116.7, is recorded in the “Other financial results” account of
the Statement of Comprehensive Income (Loss).
| Note | 4.10 |
Cash and cash equivalents |
Cash and cash equivalents include
cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months
or less from their acquisition date, with significant low risk of change in value.
| i. | Cash and banks in local currency:
at nominal value. |
| ii. | Cash and banks in foreign currency:
at the exchange rate in effect at the end of the year. |
| iii. | Money market funds, which have
been valued at the prevailing market price at the end of the year. Those that do not qualify as cash equivalents are disclosed in the
Financial assets at fair value through profit or loss account. |
Changes in this account have
been accounted for in accordance with the relevant legal or statutory regulations and the decisions adopted by the shareholders’
meetings.
a.
Share capital
Share capital represents issued
capital, which is comprised of the contributions committed and/or made by the shareholders, represented by shares, including outstanding
shares at nominal value, restated to reflect the effects of inflation as indicated in Note 3.
2021 FINANCIAL STATEMENTS NOTES |
b.
Treasury stock
The Treasury stock account represents
the nominal value of the Company’s own shares acquired by the Company, restated to reflect the effects of inflation as indicated
in Note 3.
c.
Other comprehensive income (loss)
Represents recognition, at the
end of the year, of the actuarial gain (loss) associated with the Company’s employee benefit plans, restated to reflect the effects
of inflation as indicated in Note 3.
d.
Retained earnings
Retained earnings are comprised
of profits or accumulated losses with no specific appropriation. When positive, they may be distributed, if so decided by the Shareholders’
Meeting, to the extent that they are not subject to legal restrictions. Retained earnings, where applicable, are comprised of the amounts
transferred from other comprehensive income and prior year adjustments due to the application of accounting standards, restated to reflect
the effects of inflation as indicated in Note 3.
CNV General Resolution No. 593/11
provided that Shareholders in the Meetings at which they should decide upon the approval of financial statements in which the Retained
earnings account has a positive balance, must adopt an express resolution as to the allocation of such balance, whether to dividend distribution,
capitalization, setting up of reserves or a combination of these. The Company Shareholders’ Meetings have complied with the above-mentioned
requirement.
| Note | 4.12 |
Trade and other payables |
Trade payables are payment obligations
with suppliers for the purchase of goods and services in the ordinary course of business. Trade payables are classified as current liabilities
if payments fall due within one year or in a shorter period of time. Otherwise, they are classified as non-current liabilities.
Trade payables are initially
recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.
Customer deposits are initially
recognized at the amount received and subsequently measured at amortized cost using the effective interest rate method.
In accordance with the Concession
Agreement, the Company is allowed to receive customer deposits in the following cases:
| i. | When the power supply is requested
and the customer is unable to provide evidence of his legal ownership of the premises; |
| ii. | When service has been suspended
more than once in one-year period; |
| iii. | When the power supply is reconnected
and the Company is able to verify the illegal use of the service (fraud). |
| iv. | When the customer is undergoing
liquidated bankruptcy or reorganization proceedings. |
The Company has decided
not to request customer deposits from residential tariff customers.
2021 FINANCIAL STATEMENTS NOTES |
Customer deposits may be paid
either in cash or through the customer’s bill and accrue monthly interest at a specific rate of BNA for each customer category.
When the conditions for which
the Company is allowed to receive customer deposits no longer exist, the customer’s account is credited with the principal amount
plus any interest accrued thereon, after deducting, if appropriate, any amount owed by the customer to the Company.
Refundable: The Company
receives assets or facilities (or the cash necessary to acquire or build them) from certain customers for services to be provided, based
on individual agreements and the provisions of ENRE Resolution No. 215/12. These contributions are initially recognized as trade payables
at fair value with a contra-account in property, plant and equipment, and subsequently measured at amortized cost using the effective
interest rate method.
The financial liabilities recorded
in Other Payables, the Payment agreement with the ENRE, and the advances for the execution of works, are initially recognized at fair
value and subsequently measured at amortized cost.
The recorded liabilities for
penalties accrued, whether imposed or not yet issued by the ENRE (Note 2.g), and other provisions are the best estimate of the settlement
value of the present obligation in the framework of IAS 37 provisions at the closing date of these financial statements.
The balances of ENRE Penalties
and Discounts are updated in accordance with the regulatory framework applicable thereto and on the basis of the Company’s estimate
of the outcome of the renegotiation process described in Note 2.g.
Borrowings are initially recognized
at fair value, less direct costs incurred in the transaction. Subsequently, they are measured at amortized cost; any difference between
the funds obtained (net of direct costs incurred in the transaction) and the amount to be paid at maturity is recognized in profit or
loss during the term of the borrowings using the effective interest rate method.
| Note | 4.14 |
Deferred revenue |
Non-refundable customer contributions:
The Company receives assets or facilities (or the cash necessary to acquire or build them) from certain customers for services to be provided,
based on individual agreements. The assets received are recognized by the Company as property, plant and equipment with a contra-account
in deferred revenue, the accrual of which depends on the nature of the identifiable services, in accordance with the following:
| · | Customer connection to the network:
revenue is accrued until such connection is completed; |
| · | Continuous provision of the electric
power supply service: throughout the shorter of the useful life of the asset and the term for the provision of the service. |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 4.15 |
Employee benefits |
The Company operates several
benefit plans. Usually, benefit plans establish the amount of the benefit the employee will receive at the time of retirement, generally
based on one or more factors such as age, years of service and salary.
The liability recognized in the
Statement of Financial Position in respect of benefit plans is the present value of the benefit plan obligation at the closing date of
the year, together with the adjustments for past service costs and actuarial gains or losses. The benefit plan obligation is calculated
annually by independent actuaries in accordance with the projected unit credit method. The present value of the benefit plan obligation
is determined by discounting the estimated future cash outflows using actuarial assumptions about demographic and financial variables
that affect the determination of the amount of such benefits. The benefit plans are not funded.
The Company’s accounting
policy for benefit plans is as follow:
| a. | Service costs are immediately recorded in profit
or loss, unless the changes to the benefit plan are conditional on the employees’ remaining in service for a specified period of
time (the vesting period). In this case, past service costs are amortized on a straight-line basis over the vesting period. |
| b. | Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are recognized in “Other comprehensive income” in the year in which they
arise. |
| · | The Company’s Share-based Compensation
Plan |
The Company has share-based compensation
plans under which it receives services from some employees in exchange for the Company’s shares. The fair value of the services
received is recognized as an operating expense in the “Salaries and social security taxes” line item. The total amount of
the referred to expense is determined by reference to the fair value of the shares granted.
When the employees provide the
services before the shares are granted, the fair value at the grant date is estimated in order to recognize the respective result.
The income tax is recognized
in profit or loss, other comprehensive income or in equity depending on the items from which it originates.
The Company determines the income
tax payable by applying the effective 35% rate, resulting from the application of the tax scale in effect, to the estimated taxable profit.
By means of Law No. 27,630, a
change was introduced in the corporate income tax rate, applicable to fiscal years beginning from January 1, 2021. The tax will be determined
according to the following scale:
Accumulated net taxable income |
Amount to be paid $ |
Plus
% |
On the amount exceeding $ |
From more than $ |
To $ |
$ 0 |
$ 5 |
$ 0 |
25% |
$ 0 |
$ 5 |
$ 50 |
$ 1.25 |
30% |
$ 5 |
$ 50 |
onwards |
$ 14.75 |
35% |
$ 50 |
The amounts of the detailed scale will be
adjusted annually, beginning January 1, 2022, taking into consideration the annual variation of the Consumer Price Index (CPI) provided
by the National Institute of Statistics and Census (INDEC).
2021 FINANCIAL STATEMENTS NOTES |
Additionally, the deferred tax
is recognized, in accordance with the liability method, on the temporary differences arising between the tax base of assets and liabilities
and their carrying amounts in the Statement of Financial Position. However, no deferred tax liability is recognized if such difference
arises from the initial recognition of goodwill, or from the initial recognition of an asset or liability other than in a business combination,
which at the time of the transaction affected neither the accounting nor the taxable profit.
The deferred tax is determined
using the effective rate resulting from the application of the tax scale in effect at the closing date of the financial statements and
which is expected to apply when the deferred tax assets are realized or the deferred tax liabilities are settled.
Deferred tax assets and liabilities
are offset if the Company has a legally enforceable right to offset recognized amounts and when deferred tax assets and liabilities relate
to income tax levied by the same tax authority on the same taxable entity. Deferred tax assets and liabilities are stated at their undiscounted
nominal value.
Moreover, in accordance with
the provisions of Law No. 27,430, the Company has applied the tax inflation adjustment set forth in Title VI of the Income Tax Law, effective
for fiscal years beginning as from January 1, 2018, albeit with a limited scope of application for certain accounts.
The tax inflation adjustment
for the first, second and third fiscal year was applicable as from its effective date in 2018, if the CPI cumulative variation, calculated
from the beginning to the end of each year, exceeded fifty-five percent (55%), thirty percent (30%) and fifteen percent (15%) for fiscal
years 2018, 2019 and 2020, respectively. Although as of December 31, 2018, the CPI cumulative variation did not exceed the 55% threshold
for the application of the tax inflation adjustment in that first fiscal year, as of December 31, 2020 and 2019, the CPI cumulative variations
for the 12 months of each year had amounted to 36.13% and 53.77%, respectively, which exceeded the 15% and 30% thresholds fixed for the
third and second transition years of the tax inflation adjustment, and, therefore, the Company recognized the effect of the tax inflation
adjustment in the calculation of the current and deferred income tax provision in those fiscal years.
As from fiscal years ended in
December 2021, fourth fiscal year since the implementation of the tax inflation adjustment, the threshold for its application is that
the cumulative variation of the aforementioned index for the thirty-six months prior to the closing date of the relevant fiscal year be
greater than 100%. Furthermore, as from the fiscal year under analysis said adjustment is no longer applied with deferrals (over six fiscal
years) but rather computed in full in the tax balance sheet for the period in which the adjustment is calculated. In accordance with the
described criterion, the Company recognized the effect of the tax inflation adjustment in the calculation of the current income tax provision
for fiscal year 2021.
A right-of-use asset and a lease
liability are recognized for lease contracts from the date on which the leased asset is available for use, at the present value of the
payments to be made over the term of the contract, using the discount rate implicit in the lease contract, if it can be determined, or
the Company’s incremental borrowing rate.
Subsequent to their initial measurement,
leases will be measured at cost less accumulated depreciation, impairment losses, and any adjustment resulting from a new measurement
of the lease liability.
2021 FINANCIAL STATEMENTS NOTES |
| Note | 4.18 |
Provisions and contingencies |
Provisions have been recognized
in those cases in which the Company is faced with a present obligation, whether legal or constructive, that has arisen as a result of
a past event, whose settlement is expected to result in an outflow of resources, and the amount thereof can be estimated reliably.
The amount recognized as provisions
is the best estimate of the expenditure required to settle the present obligation at the end of the reporting year, taking into account
the corresponding risks and uncertainties. When a provision is measured using the estimated cash flow to settle the present obligation,
the carrying amount represents the present value of such cash flow. This present value is obtained by applying a pre-tax discount rate
that reflects market conditions, the time value of money and the specific risks of the obligation.
The provisions included in liabilities
have been recorded to face contingent situations that could result in future payment obligations. To estimate the amount of provisions
and the likelihood of an outflow of resources, the opinion of the Company’s legal advisors has been taken into account.
| Note | 4.19 |
Balances with related parties |
Receivables and payables with
related parties are recognized at amortized cost in accordance with the terms agreed upon by the parties involved.
| Note | 5 |
Financial risk management |
Note 5.1 | Financial
risk factors
The Company’s activities
and the market in which it operates expose the Company to a number of financial risks: market risk (including currency risk, cash flows
interest rate risk, fair value interest rate risk and price risk), credit risk and liquidity risk.
The management of the financial
risk is part of the Company’s overall policies, which focus on the unpredictability of the financial markets and seek to minimize
potential adverse effects on its financial performance. Financial risks are the risks derived from the financial instruments to which
the Company is exposed during or at the end of each year. The Company uses derivative instruments to hedge exposure to certain risks whenever
it deems appropriate in accordance with its internal risk management policy.
Risk management is controlled
by the Finance and Control Department, which identifies, evaluates and hedges financial risks. Risk management policies and systems are
periodically reviewed so that they can reflect the changes in the market’s conditions and the Company’s activities.
This section includes a description
of the main risks and uncertainties that could have a material adverse effect on the Company’s strategy, performance, results of
operations and financial position.
Currency risk is the risk of
fluctuation in the fair value or future cash flows of a financial instrument due to changes in foreign currency exchange rates. The Company’s
exposure to currency risk relates to the collection of its revenue in pesos, in conformity with regulated electricity rates that are not
indexed in relation to the US dollar, whereas a significant portion of its existing financial liabilities is denominated in US dollars.
Therefore, the Company is exposed to the risk of a loss resulting from a devaluation of the peso. The Company may hedge its currency risk
by trying to enter into currency futures. At the date of issuance of these financial statements, the Company has not hedged its exposure
to the US dollar.
2021 FINANCIAL STATEMENTS NOTES |
If the Company continued to be
unable to effectively hedge all or a significant part of its exposure to currency risk, any devaluation of the peso could significantly
increase its debt service burden, which, in turn, could have a substantial adverse effect on its financial and cash position (including
its ability to repay its Corporate Notes) and the results of its operations. The exchange rates used as of December 31, 2021 and 2020
are $ 102.72 and $ 84.15 per USD 1, respectively.
As of December 31, 2021
and 2020, the Company’s balances in foreign currency are as follow:
|
|
Currency |
|
Amount in foreign currency |
|
Exchange rate (1) |
|
Total
12.31.21 |
|
Total
12.31.20 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
Other receivables |
|
USD |
|
1 |
|
102.720 |
|
103 |
|
762 |
|
|
JPY |
|
- |
|
0.893 |
|
- |
|
68 |
Financial assets at fair value through profit or loss |
|
USD |
|
46 |
|
102.720 |
|
4,725 |
|
- |
Cash and cash equivalents |
|
USD |
|
12 |
|
102.720 |
|
1,233 |
|
2,159 |
TOTAL CURRENT ASSETS |
|
|
|
|
|
|
|
6,061 |
|
2,989 |
TOTAL ASSETS |
|
|
|
|
|
|
|
6,061 |
|
2,989 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
USD |
|
- |
|
102.720 |
|
- |
|
12,465 |
TOTAL NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
- |
|
12,465 |
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
USD |
|
12 |
|
102.720 |
|
1,233 |
|
1,451 |
Borrowings |
|
USD |
|
100 |
|
102.720 |
|
10,262 |
|
216 |
Other payables |
|
USD |
|
10 |
|
102.720 |
|
1,027 |
|
1,142 |
TOTAL CURRENT LIABILITIES |
|
|
|
|
|
|
|
12,522 |
|
2,809 |
TOTAL LIABILITIES |
|
|
|
|
|
|
|
12,522 |
|
15,274 |
| (1) | The exchange rates used are the
BNA exchange rates in effect as of December 31, 2021 for US Dollars (USD) and Japanese Yens (JPY). |
The table below shows the Company’s
exposure to currency risk resulting from the financial assets and liabilities denominated in a currency other than the Company’s
functional currency.
|
|
12.31.21 |
|
12.31.20 |
Net position |
|
|
|
|
US dollar |
|
(6,461) |
|
(12,353) |
Japanese Yen |
|
- |
|
68 |
Total |
|
(6,461) |
|
(12,285) |
The Company estimates that a
10% devaluation of the Argentine peso with respect to each foreign currency, with all other variables held constant, would give rise to
the following decrease in the loss for the year:
|
|
12.31.21 |
|
12.31.20 |
Net position |
|
|
|
|
US dollar |
|
(646) |
|
(1,235) |
Japanese Yen |
|
- |
|
7 |
Decrease in the results of operations for the year |
|
(646) |
|
(1,228) |
2021 FINANCIAL STATEMENTS NOTES |
The Company’s investments
in listed equity instruments are susceptible to market price risk arising from the uncertainties concerning the future value of these
instruments. Due to the low significance of the investments in equity instruments in relation to the net asset/liability position, the
Company is not significantly exposed to the referred to instruments price risk.
Furthermore, the Company is not
exposed to commodity price risk.
It is the risk of fluctuation
in the fair value or cash flows of an instrument due to changes in market interest rates. The Company’s exposure to interest rate
risk is related mainly to the long-term debt obligations.
Indebtedness at floating rates
exposes the Company to interest rate risk on its cash flows. Indebtedness at fixed rates exposes the Company to interest rate risk on
the fair value of its liabilities. As of December 31, 2021 and 2020, 100% of the loans were obtained at fixed interest rates. The Company’s
policy is to keep the largest percentage of its indebtedness in instruments that accrue interest at fixed rates.
The Company analyzes its exposure
to interest rate risk in a dynamic manner. Several scenarios are simulated taking into account the positions with respect to refinancing,
renewal of current positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit
or loss of a specific change in interest rates. In each simulation, the same interest rate fluctuation is used for all the currencies.
Scenarios are only simulated for liabilities that represent the most relevant interest-bearing positions.
It is the risk of a financial
loss as a consequence of a counterparty’s failure to comply with the obligations assumed in a financial instrument or commercial
contract. The Company’s exposure to credit risk results from its operating (particularly from its commercial receivables) and financial
activities, including deposits in financial entities and other instruments.
Credit risk arises from cash
and cash equivalents, deposits with banks and financial entities and derivative financial instruments, as well as from credit exposure
to customers, including outstanding balances of accounts receivable and committed transactions.
With regard to banks and financial
entities, only those with high credit quality are accepted.
With regard to debtors, if there
are no independent credit risk ratings, the Finance Department evaluates the debtors’ credit quality, past experience and other
factors.
Individual credit limits are
set in accordance with the limits set by the Company’s CEO, on the basis of the internal or external ratings approved by the Finance
and Control Department.
The Company has different procedures
in place to reduce energy losses and allow for the collection of the balances owed by its customers. The Operations and Customer Service
Departments periodically monitor compliance with the above-mentioned procedures.
One of the significant items
of delinquent balances is that related to the receivable amounts with Municipalities, in respect of which the Company applies different
offsetting mechanisms against municipal taxes it collects in the name and to the order of those government bodies and debt refinancing
plans, with the aim of reducing its exposure.
2021 FINANCIAL STATEMENTS NOTES |
At each year-end, the Company
analyzes whether the recording of an impairment is necessary. As of December 31, 2021 and 2020, delinquent trade receivables totaled approximately
$ 10,409.5 and $ 12,504.4, respectively. As of December 31, 2021 and 2020, the financial statements included allowances for $ 6,006.3
and $ 6,947.9, respectively.
The inability to collect the
amounts receivable in the future could have an adverse effect on the Company’s results of operations and its financial position,
which, in turn, could have an adverse effect on the Company’s ability to repay loans, including payment of the Corporate Notes.
The balances of the bills for
electricity consumption of small-demand (T1), medium-demand (T2) and large-demand (T3) customer categories that remain unpaid seven working
days after the bills’ first due dates are considered delinquent trade receivables. Additionally, the amounts included in the Framework
Agreement are not considered within delinquent balances of the electricity supplied to low-income areas and shantytowns.
The Company’s maximum exposure
to credit risk is based on the book value of each financial asset in the financial statements, after deducting the corresponding allowances.
The Company monitors the risk
of a deficit in cash flows on a periodical basis. The Finance Department supervises the updated projections of the Company’s liquidity
requirements in order to ensure that there is enough cash to meet its operating needs, permanently maintaining sufficient margin for undrawn
credit lines so that the Company does not fail to comply with the indebtedness limits or covenants, if applicable, of any line of credit.
Such projections give consideration to the Company’s debt financing plans, compliance with covenants, with internal balance sheet
financial ratios objectives and, if applicable, with external regulations and legal requirements, such as, restrictions on the use of
foreign currency.
Cash surpluses held by the Company
and the balances in excess of the amounts required to manage working capital are invested in mutual funds and/or time deposits that accrue
interest, currency deposits and securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient
margin as determined in the aforementioned projections. As of December 31, 2021 and 2020, the Company’s current financial assets
at fair value amount to $ 15,450.8 and $ 3,352.3, respectively, which are expected to generate immediate cash inflows to manage the liquidity
risk.
The table below includes an analysis
of the Company’s non-derivative financial liabilities, which have been classified into maturity groupings based on the remaining
period between the closing date of the fiscal year and the contractual maturity date. Derivative financial liabilities are included in
the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed
in the table are the contractual undiscounted cash flows.
|
|
No deadline |
|
Less than 3 months |
|
From 3 months to 1 year |
|
From 1 to 2 years |
|
From 2 to 5 years |
|
Total |
As of December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and other liabilities |
|
52,926 |
|
26,963 |
|
7,192 |
|
311 |
|
12,519 |
|
99,911 |
Borrowings |
|
- |
|
- |
|
10,262 |
|
- |
|
- |
|
10,262 |
Total |
|
52,926 |
|
26,963 |
|
17,454 |
|
311 |
|
12,519 |
|
110,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and other liabilities |
|
27,414 |
|
30,038 |
|
5,829 |
|
302 |
|
13,362 |
|
76,945 |
Borrowings |
|
- |
|
- |
|
216 |
|
12,465 |
|
- |
|
12,681 |
Total |
|
27,414 |
|
30,038 |
|
6,045 |
|
12,767 |
|
13,362 |
|
89,626 |
2021 FINANCIAL STATEMENTS NOTES |
Note 5.2 | Concentration
risk factors
a.
Related to customers
The Company’s receivables
derive primarily from the sale of electricity.
No single customer accounted
for more than 10% of sales for the years ended December 31, 2021 and 2020.
b.
Related to employees who are union members
As of December 31, 2021, the
Company’s employees are members of unions, Sindicato de Luz y Fuerza de Capital Federal (Electric Light and Power Labor Union of
the Federal Capital) and Asociación del Personal Superior de Empresas de Energía (Association of Supervisory Personnel of
Energy Companies). These employees labor cost depends on negotiations between the Company and the unions; a sensitive change in employment
conditions generates a significant impact on the Company’s labor costs.
The collective bargaining agreements
entered into in 2020 were in effect until March 2021. Subsequently, in April 2021 a new agreement was signed, and revised in October 2021,
which will be in effect until March 2022. At the date of issuance of the financial statements, there is no certainty concerning future
collective bargaining agreements.
Note 5.3 | Capital
risk management
The Company’s objectives
when managing capital are to safeguard its ability to continue operating as a going concern and to maintain an optimal capital structure
to reduce the cost of capital.
Consistent with others in the
industry, the Company monitors its capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital.
Net debt is calculated as total liabilities (current and non-current) less cash and cash equivalents. Total capital is calculated as equity
as shown in the Statement of Financial Position plus net debt.
The gearing ratios at December 31, 2021
and 2020 were as follow:
|
|
12.31.21 |
|
12.31.20 |
Total liabilities |
|
164,129 |
|
129,608 |
Less: Cash and cash equivalents and Financial assets at fair value through profit or loss |
|
(18,623) |
|
(9,934) |
Net debt |
|
145,506 |
|
119,674 |
Total Equity |
|
73,694 |
|
94,902 |
Total capital attributable to owners |
|
219,200 |
|
214,576 |
Gearing ratio |
|
66.38% |
|
55.77% |
Note 5.4 | Regulatory
risk factors
Pursuant to caption C of Section
37 of the Concession Agreement, the Grantor of the Concession may, without prejudice to other rights to which the Grantor is entitled
thereunder, foreclose on the collateral granted by the Company when the cumulative value of the penalties imposed to the Company in the
previous one-year period exceeds 20% of its annual billing, net of taxes and fees.
2021 FINANCIAL STATEMENTS NOTES |
The Company’s Management
evaluates the development of this indicator on an annual basis. At the date of issuance of these financial statements, there are no events
of non-compliance by the Company that could lead to that situation.
Note 5.5 | Fair
value estimate
The Company classifies the measurements
of financial instruments at fair value using a fair value hierarchy that reflects the relevance of the variables used to carry out such
measurements. The fair value hierarchy has the following levels:
· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
· Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly
(i.e. prices) or indirectly (i.e. derived from the prices).
· Level 3: inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
The table below shows the Company’s
financial assets and liabilities measured at fair value as of December 31, 2021 and 2020:
|
|
LEVEL 1 |
|
|
|
At December 31, 2021 |
|
|
Assets |
|
|
Financial assets at fair value through profit or loss: |
|
|
Government bonds |
|
8,872 |
Mutual funds |
|
6,579 |
Cash and cash equivalents: |
|
|
Mutual funds |
|
1,349 |
Total assets |
|
16,800 |
|
|
|
|
|
|
At December 31, 2020 |
|
|
Assets |
|
|
Financial assets at fair value through profit or loss: |
|
|
Government bonds |
|
3,352 |
Cash and cash equivalents |
|
|
Mutual funds |
|
4,110 |
Total assets |
|
7,462 |
The value of the financial instruments
traded in active markets is based on the quoted market prices at the Statement of Financial Position date. A market is regarded as active
if quoted prices are regularly available from a stock exchange, broker, sector-specific institution or regulatory agency, and those prices
represent current and regularly occurring market transactions on an arms’ length basis. The quoted market price used for financial
assets held by the Company is the current bid price. These instruments are included in level 1.
The fair value of financial instruments
that are not traded in active markets is determined by using valuation techniques. These valuation techniques maximize the use of observable
market data, where it is available, and rely as little as possible on specific estimates of the Company. If all the significant variables
to establish the fair value of a financial instrument are observable, the instrument is included in level 2. There are no financial instruments
that are to be included in level 2.
If one or more of the significant
variables used to determine fair value are not observable in the market, the financial instrument is included in level 3. There are no
financial instruments that are to be included in level 3.
2021 FINANCIAL STATEMENTS NOTES |
| Note | 6 |
Critical accounting estimates and judgments |
The preparation of the financial
statements requires the Company’s Management to make estimates and assessments concerning the future, exercise critical judgments
and make assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities and revenues
and expenses.
These estimates and judgments
are continually evaluated and are based upon past experience and other factors that are reasonable under the existing circumstances. Future
actual results may differ from the estimates and assessments made at the date of preparation of these financial statements.
The estimates that have a significant
risk of causing adjustments to the amounts of assets and liabilities during the next fiscal year are detailed below:
| a. | Impairment
of financial assets |
The allowance for the impairment
of accounts receivable is assessed based on the delinquent balance, which comprises all such debt arising from the bills for electricity
consumption of small-demand (T1), medium-demand (T2), and large-demand (T3) customer categories that remain unpaid seven working days
after their first due dates. The Company’s Management records an allowance by applying to the delinquent balances of each customer
category an uncollectibility rate that is determined according to each customer category, based on the historical comparison of collections
made.
Additionally, and faced with
temporary and/or exceptional situations, the Company’s Management may redefine the amount of the allowance, specifying and supporting
the criteria used in all the cases.
The Company has performed a review
of the financial assets it currently measures and classifies at fair value through profit or loss or at amortized cost and has concluded
that they meet the conditions to maintain their classification; consequently, the initial adoption affected neither the classification
nor the measurement of the Company’s financial assets.
Revenue is recognized on an accrual
basis upon delivery to customers, which includes the estimated amount of unbilled distribution of electricity at the end of each year.
The accounting policy for the recognition of estimated revenue is considered critical because it depends on the amount of electricity
effectively delivered to customers, which is valued on the basis of applicable tariffs. Unbilled revenue is classified as current trade
receivables.
| c. | Impairment
of long-lived assets |
The Company analyzes the recoverability
of its long-lived assets on a periodical basis or when events or changes in circumstances indicate that the recoverable amount of the
long-lived assets, which is measured as the higher of value in use and fair value less costs to sell at the end of the year, may be impaired.
As from the enactment by the
PEN of the new measures, mentioned in Notes 1 and 2.b., the projections made by the Company concerning the recoverability of its property,
plant and equipment have been updated.
The value in use is determined
on the basis of projected and discounted cash flows, using discount rates that reflect the time value of money and the specific risks
of the assets under consideration.
2021 FINANCIAL STATEMENTS NOTES |
Cash flows are prepared based
on estimates concerning the future performance of certain variables that are sensitive to the determination of the recoverable amount,
among which the following can be noted: (i) nature, timing, and modality of the electricity rate increases; (ii) demand for electricity
projections; (iii) development of the costs to be incurred; (iv) investment needs in line with the service quality levels required by
the regulatory authority, and (v) macroeconomic variables, such as growth rates, inflation rates and foreign currency exchange rates,
among others. The other variables have low impact on the calculation and have been estimated by the Company using the best available information.
The Company has made its projections
under the assumption that in the next few years it will obtain the delayed electricity rates adjustments to which it is entitled in accordance
with the applicable regulations, using as a basis a Discount rate (WACC) in dollars of 13.72%, translating it into Argentine pesos for
the discount in each of the scenarios presented.
However, the Company is not in
a position to ensure that the future performance of the assumptions used for making its projections will be in line with that which the
control authorities will define, therefore, they could differ significantly from the estimates and assessments made at the date of preparation
of these financial statements.
In order to consider the estimation
risk included in the projections of the aforementioned variables, the Company has taken into consideration three alternative probability-weighted
scenarios, which are detailed below:
| a) | Scenario No. 1: The Company forecasts
that the CPD increases will be transferred to tariffs as from January 2023. Furthermore, from February 2023 the CPD adjustments for each
period would be transferred to tariffs. Probability of occurrence assigned: 30%. |
| b) | Scenario No. 2: In January 2023,
the Company forecasts that a percentage lower than that resulting from the CPD increases set by the RTI and which had not been applied,
will be transferred to tariffs. Furthermore, from February 2023 the CPD adjustments for each period would be transferred to tariffs. Probability
of occurrence assigned: 60%. |
| c) | Scenario No. 3: In January 2023,
the Company forecasts that 50% of the CPD increases set by the RTI and which had not been applied, will be transferred to tariffs. Furthermore,
from August 2023 the CPD adjustments for each period would be transferred to tariffs. Probability of occurrence assigned: 10%. |
The Company has assigned to these
three scenarios the previously detailed probability of occurrence percentages based mainly on experience and giving consideration to the
current economic and financial situation.
After having carried out the
analysis of recoverability of long-lived assets, as of the date of these financial statements, the Company has recorded no impairment
of property, plant and equipment.
As of December 31, 2020, the
Company recorded an impairment of property, plant and equipment for $ 17,396 million ($26,248 at the purchasing power of the currency
at December 31, 2021).
2021 FINANCIAL STATEMENTS NOTES |
Sensitivity analysis:
The main factors that could result
in impairment charges or recoveries in future periods are: i) a difference in the nature, timing, and modality of the electricity rate
increases and/or recognition of cost adjustments, ii) a distortion in the nature, timing, and modality of the settlement of the debt with
CAMMESA and/or in the application of the system for the settlement of debts with the MEM. These factors have been taken into account in
the aforementioned weight of scenarios. Due to the uncertainty inherent in these assumptions, the Company estimates that any sensitivity
analysis that considers changes in any of them taken individually could lead to significant changes in the determination of the recoverable
amount.
| d. | Current
and deferred income tax |
A degree of judgment is required
to determine the income tax provision inasmuch as the Company’s Management has to evaluate, on an ongoing basis, the positions taken
in tax returns in respect of situations in which the applicable tax regulation is subject to interpretation and, whenever necessary, make
provisions based on the amount expected to be paid to the tax authorities. When the final tax outcome of these matters differs from the
amounts initially recognized, such differences will impact both the income tax and the deferred tax provisions in the fiscal year in which
such determination is made.
There are many transactions and
calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for eventual tax claims based on
estimates of whether additional taxes will be due in the future.
Deferred tax assets are reviewed
at each reporting date and reduced in accordance with the probability that the sufficient taxable base will be available to allow for
the total or partial recovery of these assets. Deferred tax assets and liabilities are not discounted. The realization of deferred tax
assets depends on the generation of future taxable income in the periods in which these temporary differences become deductible. To make
this assessment, the Company’s Management takes into consideration the scheduled reversal of deferred tax liabilities, the projected
future taxable income, the prevailing rates to be applied in each period, and tax planning strategies.
The liability recognized by the
Company is the best estimate of the present value of the cash flows representing the benefit plan obligation at the closing date of the
year together with the adjustments for past service costs and actuarial losses. Cash flows are discounted using a rate that contemplates
actuarial assumptions about demographic and financial conditions that affect the determination of benefit plans. Such estimate is based
on actuarial calculations made by independent professionals in accordance with the projected unit credit method.
| f. | ENRE
penalties and discounts |
The Company considers its applicable
accounting policy for the recognition of ENRE penalties and discounts critical because it depends on penalizable events that are valued
on the basis of the Management´s best estimate of the expenditure required to settle the present obligation at the date of these
financial statements. The balances of ENRE penalties and discounts are adjusted in accordance with the regulatory framework applicable
thereto and have been estimated based on that which has been described in Note 2.g).
2021 FINANCIAL STATEMENTS NOTES |
| g. | Contingencies
and provisions for lawsuits |
The Company is a party to several
complaints, lawsuits and other legal proceedings, including customer claims, in which a third party is seeking payment for alleged damages,
reimbursement for losses or compensation. The Company’s potential liability with respect to such claims, lawsuits and legal proceedings
may not be accurately estimated. The Company’s Management, with the assistance of its legal advisors, periodically analyzes the
status of each significant matter and evaluates the Company’s potential financial exposure. If the loss deriving from a complaint
or legal proceeding is considered probable and the amount can be reasonably estimated, a provision is recorded.
Provisions for contingent losses
represent a reasonable estimate of the losses that will be incurred, based on the information available to Management at the date of the
financial statements preparation, taking into account the Company’s litigation and settlement strategies. These estimates are mainly
made by the Company’s Management. However, if the Management’s estimates proved wrong, the current provisions could be inadequate
and result in a charge to profits that could have a material effect on the Statements of Financial Position, Comprehensive Income (Loss),
Changes in Equity and Cash Flows.
| Note | 7 |
Interest in joint ventures |
Percentage interest held |
|
|
Equity attributable to the owners |
in capital stock and votes |
|
|
12.31.21 |
12.31.20 |
SACME |
50.00% |
|
14 |
17 |
| Note | 8 |
Contingencies and lawsuits |
The Company has contingent liabilities
and is a party to lawsuits that arise from the ordinary course of business. The Company’s Management estimates that the outcome
of the current contingencies and lawsuits will not result in amounts that either exceed those of the recorded provisions or could be significant
with respect to the Company’s financial position or the results of its operations.
Furthermore, it is worth mentioning
that there exist contingent obligations and labor, civil and commercial complaints filed against the Company related to legal actions
for individual non-significant amounts, which as of December 31, 2021 total $ 4,518, for which a provision has been recorded.
We detail below the nature of
the significant judicial processes in relation to which, as of December 31, 2021, the Company believes, based on the opinion of its in-house
and external legal advisors, there exist grounds for them not to be deemed probable.
- Federal Administration of
Public Revenues (“AFIP”) – Difference in contribution rate to the Single Social Security System (“SUSS”)
(executive order 814/2001) for the 12/2011- 11/2019 fiscal periods
On July 6, 2021, the Company
filed an appeal to the Federal Social Security Court of Appeals against AFIP Resolution No. 1740/2021 that dismissed the presentation
made by edenor in relation to the assessment of a debt in connection with contributions to Argentina’s Integrated Social
Security System, relating to the January 2017-June 2019 period, for differences detected due to the use of the rate set forth in Section
2 Sub-section B) 2001 (17%), when the applicable rate, according to the AFIP, is that mentioned in Section 2 Sub-section A) (21%), of
Executive Order No. 814.
2021 FINANCIAL STATEMENTS NOTES |
Additionally, on April 8, 2021,
the Company was notified by the AFIP of a new resolution pursuant to which a debt had been assessed for the same concept, relating to
the July 2019-November 2019 period. The resolution was challenged by the Company on September 23, 2021.
This new notification follows
the one received on July 12, 2018 relating to the December 2011-December 2016 period, and has been appealed to the Federal Social Security
Court of Appeals.
The Company’s Management
believes that the application of the 17% rate is correct. In this regard, in accordance with the analysis performed, it is reasonable
that “minority government-owned corporations (sociedades anónimas con simple participación estatal) governed
by Law No. 19,550” be understood to mean all those corporations (sociedades anónimas) in which the government has
a minority stake, whatever the reason why such stake has been acquired. Therefore, included therein are the shareholdings that the National
Social Security Administration (“ANSES”) has in certain corporations, among which the Company is included.
The Company filed appeals to
the Federal Social Security Court of Appeals, on July 6, 2021 and September 13, 2021, against the first two resolutions, relating to the
01/2017-06/2019 and 11/2011-12/2016 periods, respectively, as the administrative remedies available in relation thereto have been exhausted.
Under such conditions and in
connection with the aforementioned AFIP’s assessment, in the Company’s opinion, there exist sufficient and solid arguments
to make its position prevail at the judicial stage. Consequently, no liabilities whatsoever have been recorded by the Company for this
matter as of December 31, 2021.
- National Regulatory Authority
for the Distribution of Electricity, Proceeding for the Determination of a Claim” (case file No. 16/2020)
On May 4, 2021, the Company was
served notice of a complaint filed by the ENRE in connection with edenor‘s compliance with captions 9.2.1 and 9.2.2 of the
“Agreement on the Renegotiation of the Concession Agreement” for differences arising from the date of payment of certain penalties
included therein.
At the date of issuance of these
financial statements, the Company has answered the complaint, with the case being currently in process.
The Company believes that it
has sufficient authority under the Agreement on the Renegotiation of the Concession Agreement to support the payment made under such conditions
and considers it to be in compliance with the law, to have an extinguishing effect and to have implied no damage to the users. In this
regard, the Company believe that there exist sufficient and solid arguments to make its position prevail at the judicial stage; therefore,
no liabilities whatsoever for this concept have been recorded as of December 31, 2021.
2021 FINANCIAL STATEMENTS NOTES |
| - | AFIP’s Income Tax claim,
Undocumented outflows and VAT |
On July 2, 2020, and at
the request of the Court hearing a criminal case, the AFIP initiated the sua sponte assessment process of tax debt for possible
apocryphal invoices issued by the suppliers in question, as they are considered to be “usinas mixtas” (companies used
as real and fake invoice plants).
In this regard, on May
17, 2021 the AFIP notified the Company of three resolutions, whereby the tax authorities resolved:
i)
To object to the Company’s transactions with two
suppliers, and thereby to the related tax credit for the January 2017-December 2018 monthly tax periods;
ii)
That the Company would have deducted from its tax balance
sheets for the 2017 and 2018 tax periods unfounded expenses and/or costs related to the transactions presumably carried out with the suppliers
in question;
iii)
To object to the transactions with both suppliers and
the destination of the funds earmarked for the settlement thereof;
| iv) | To initiate investigative proceedings
for the 2017 and 2018 periods in respect of: |
On July 6, 2021, the Company
answered the notice, with respect to the income tax, undocumented outflows and value added tax concepts for the 2017 and 2018 tax periods,
answering to the charges and filing a motion for nullity on the AFIP’s tax claim, stating the legal foundations and submitting the
relevant documentary evidence.
Additionally, in response
to the Tax Authorities’ subsequent orders aimed at obtaining further evidence, the duly submitted information was supplemented with
more details, in the two presentations dated September 23 and October 14, 2021.
On November 17, 2021, the
Company was served notice of three resolutions from the AFIP with the respective sua sponte assessments of the three taxes previously
mentioned.
The Company believes that the
assessments issued by the AFIP are groundless; therefore, on December 10, 2021 an Appeal was filed to the Federal Tax Court against the
three rulings. This appeal stays the execution of payment.
In the Company’s opinion,
there exist sufficient and solid arguments to make its position prevail at the judicial stage. Consequently, no liabilities whatsoever
have been recorded by the Company for this matter as of December 31, 2021.
2021 FINANCIAL STATEMENTS NOTES |
| Note | 9 |
Revenue from sales and energy purchases |
We provide below a brief
description of the main services provided by the Company:
Sales of electricity
Small demand segment: Residential use and public lighting (T1) |
Relates to the highest demand average recorded over 15 consecutive minutes that is less than 10 kilowatts. In turn, this segment is subdivided into different residential categories based on consumption. This segment also includes a category for public lighting. Users are categorized by the Company according to their consumption. |
Medium demand segment: Commercial and industrial customers (T2) |
Relates to the highest demand average recorded over 15 consecutive minutes that is equal to or greater than 10 Kilowatts but less than 50 Kilowatts. The Company agrees with the user the supply capacity. |
Large demand segment (T3) |
Relates to the highest demand average recorded over 15 consecutive minutes that is greater than 50 Kilowatts. In turn, this segment is subdivided into categories according to the supply voltage -low, medium or high-, from voltages of up to 1 Kilovolt to voltages greater than 66 Kilovolts. |
Other: (Shantytowns/
Wheeling system) |
Revenue is recognized to the extent that a renewal of the Framework Agreement has been formalized for the period in which the service was rendered. In the case of the service related to the Wheeling system, revenue is recognized when the Company allows third parties (generators and large users) to access to the available transmission capacity within its distribution system upon payment of a wheeling fee. |
Other services
Right of use of poles |
Revenue is recognized to the extent that the rental value of the right of use of the poles used by the Company’s electricity network has been agreed upon for the benefit of third parties. |
Connection and reconnection charges |
Relate to revenue accrued for the carrying out of the electricity supply connection of new customers or the reconnection of already existing users. |
2021 FINANCIAL STATEMENTS NOTES |
Energy purchases
Energy purchase |
The Company bills its users the cost of its purchases of energy, which includes charges for purchases of energy and power. The Company purchases electric power at seasonal prices approved by the ENRE. The price of the Company’s electric power represents transmission costs and other regulatory charges. |
Energy
losses |
Energy losses are equivalent to the difference between energy purchased and energy sold. These losses can be classified into technical and non-technical losses. Technical losses represent the energy lost during transmission and distribution within the network as a consequence of the natural heating of the conductors and transformers that carry electricity from power generation plants to users. Non-technical losses represent the remainder of the Company’s energy losses and are mainly due to the illegal use of its services or the theft of energy. Energy losses require that the Company purchase additional energy in order to meet the demand and its Concession Agreement allows it to recover from its users the cost of these purchases up to a loss factor specified in its concession for each rate category. The current loss factor recognized in the tariff by virtue of its concession amounts to approximately 9.1%. |
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
|
|
GWh |
|
$ |
|
GWh |
|
$ |
|
GWh |
|
$ |
Sales of electricity |
|
|
|
|
|
|
|
|
|
|
|
|
Small demand segment: Residential use and public lighting (T1) |
|
12,373 |
|
66,852 |
|
11,600 |
|
86,541 |
|
10,768 |
|
109,511 |
Medium demand segment: Commercial and industrial (T2) |
|
1,447 |
|
12,150 |
|
1,341 |
|
15,909 |
|
1,549 |
|
24,104 |
Large demand segment (T3) |
|
3,492 |
|
28,531 |
|
3,210 |
|
29,921 |
|
3,503 |
|
48,203 |
Other: (Shantytowns/Wheeling system)
|
|
4,398 |
|
5,192 |
|
4,028 |
|
4,695 |
|
4,154 |
|
2,159 |
Subtotal - Sales of electricity |
|
21,710 |
|
112,725 |
|
20,179 |
|
137,066 |
|
19,974 |
|
183,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other services |
|
|
|
|
|
|
|
|
|
|
|
|
Right of use of poles |
|
|
|
702 |
|
|
|
635 |
|
|
|
582 |
Connection and reconnection charges |
|
|
73 |
|
|
|
81 |
|
|
|
180 |
Subtotal - Other services |
|
|
|
775 |
|
|
|
716 |
|
|
|
762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total - Revenue |
|
|
|
113,500 |
|
|
|
137,782 |
|
|
|
184,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
|
|
GWh |
|
$ |
|
GWh |
|
$ |
|
GWh |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy purchases (1) |
|
26,373 |
|
(69,800) |
|
25,124 |
|
(87,408) |
|
24,960 |
|
(117,160) |
| (1) | As of December 31, 2021, 2020
and 2019, includes technical and non-technical energy losses for 4,663 GWh, 4,945 GWh and 4,986 GWh, respectively. |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 10 |
Expenses by nature |
The breakdown of expenses by
nature is as follows:
Expenses by nature at 12.31.21 |
Description |
|
Transmission and distribution expenses |
|
Selling expenses |
|
Administrative expenses |
|
Total |
Salaries and social security taxes |
|
11,292 |
|
1,797 |
|
2,553 |
|
15,642 |
Pension plans |
|
545 |
|
87 |
|
123 |
|
755 |
Communications expenses |
|
260 |
|
577 |
|
- |
|
837 |
Allowance for the impairment of trade and other receivables |
|
- |
|
1,962 |
|
- |
|
1,962 |
Supplies consumption |
|
2,264 |
|
- |
|
212 |
|
2,476 |
Leases and insurance |
|
- |
|
- |
|
511 |
|
511 |
Security service |
|
507 |
|
43 |
|
116 |
|
666 |
Fees and remuneration for services |
|
5,832 |
|
3,105 |
|
2,588 |
|
11,525 |
Public relations and marketing |
|
- |
|
116 |
|
- |
|
116 |
Advertising and sponsorship |
|
- |
|
60 |
|
- |
|
60 |
Reimbursements to personnel |
|
- |
|
- |
|
1 |
|
1 |
Depreciation of property, plant and equipment |
7,159 |
|
1,067 |
|
875 |
|
9,101 |
Depreciation of right-of-use asset |
46 |
|
92 |
|
320 |
|
458 |
Directors and Supervisory Committee
members’ fees |
- |
|
- |
|
35 |
|
35 |
ENRE penalties (1) |
|
1,207 |
|
838 |
|
- |
|
2,045 |
Taxes and charges |
|
- |
|
1,751 |
|
85 |
|
1,836 |
Other |
|
- |
|
- |
|
28 |
|
28 |
At 12.31.21 |
|
29,112 |
|
11,495 |
|
7,447 |
|
48,054 |
| (1) | Includes recovery of technical
service quality-related penalties for $ 344.3. |
The expenses included in the
chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of December 31, 2021 for $ 2,300.4.
Expenses by nature at 12.31.20 |
Description |
|
Transmission and distribution expenses |
|
Selling expenses |
|
Administrative expenses |
|
Total |
Salaries and social security taxes |
|
11,703 |
|
1,942 |
|
3,428 |
|
17,073 |
Pension plans |
|
493 |
|
82 |
|
145 |
|
720 |
Communications expenses |
|
329 |
|
670 |
|
1 |
|
1,000 |
Allowance for the impairment of trade and other receivables |
|
- |
|
6,311 |
|
- |
|
6,311 |
Supplies consumption |
|
2,834 |
|
- |
|
223 |
|
3,057 |
Leases and insurance |
|
1 |
|
1 |
|
475 |
|
477 |
Security service |
|
462 |
|
49 |
|
52 |
|
563 |
Fees and remuneration for services |
|
5,885 |
|
3,275 |
|
2,320 |
|
11,480 |
Public relations and marketing |
|
- |
|
29 |
|
- |
|
29 |
Advertising and sponsorship |
|
- |
|
15 |
|
- |
|
15 |
Reimbursements to personnel |
|
- |
|
- |
|
1 |
|
1 |
Depreciation of property, plant and equipment |
7,720 |
|
1,148 |
|
944 |
|
9,812 |
Depreciation of right-of-use asset |
|
48 |
|
97 |
|
333 |
|
478 |
Directors and Supervisory Committee
members’ fees |
- |
|
- |
|
43 |
|
43 |
ENRE penalties (2) |
|
499 |
|
550 |
|
- |
|
1,049 |
Taxes and charges |
|
- |
|
2,193 |
|
96 |
|
2,289 |
Other |
|
- |
|
- |
|
14 |
|
14 |
At 12.31.20 |
|
29,974 |
|
16,362 |
|
8,075 |
|
54,411 |
| (2) | Includes recovery of technical
service quality-related penalties for $ 1,057.4. |
The expenses included in the
chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of December 31, 2020 for $ 2,785.3.
2021 FINANCIAL STATEMENTS NOTES |
Expenses by nature at 12.31.19 |
Description |
|
Transmission and distribution expenses |
|
Selling expenses |
|
Administrative expenses |
|
Total |
Salaries and social security taxes |
|
13,076 |
|
2,149 |
|
2,745 |
|
17,970 |
Pension plans |
|
392 |
|
65 |
|
81 |
|
538 |
Communications expenses |
|
170 |
|
760 |
|
35 |
|
965 |
Allowance for the impairment of trade and other receivables |
|
- |
|
2,782 |
|
- |
|
2,782 |
Supplies consumption |
|
3,319 |
|
- |
|
235 |
|
3,554 |
Leases and insurance |
|
- |
|
- |
|
465 |
|
465 |
Security service |
|
487 |
|
88 |
|
190 |
|
765 |
Fees and remuneration for services |
|
5,253 |
|
3,323 |
|
2,800 |
|
11,376 |
Public relations and marketing |
|
- |
|
84 |
|
- |
|
84 |
Advertising and sponsorship |
|
- |
|
44 |
|
- |
|
44 |
Reimbursements to personnel |
|
- |
|
- |
|
2 |
|
2 |
Depreciation of property, plant and equipment |
7,472 |
|
1,114 |
|
913 |
|
9,499 |
Depreciation of right-of-use asset |
|
33 |
|
68 |
|
235 |
|
336 |
Directors and Supervisory Committee
members’ fees |
- |
|
- |
|
45 |
|
45 |
ENRE penalties |
|
2,962 |
|
2,725 |
|
- |
|
5,687 |
Taxes and charges |
|
- |
|
1,897 |
|
103 |
|
2,000 |
Other |
|
- |
|
- |
|
32 |
|
32 |
At 12.31.19 |
|
33,164 |
|
15,099 |
|
7,881 |
|
56,144 |
The expenses included in the
chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of December 31, 2019 for $ 2,313.8.
| Note | 11 |
Other operating income (expense) |
|
Note |
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
Other operating income |
|
|
|
|
|
|
|
Income from customer surcharges |
|
|
1,936 |
|
2,339 |
|
2,364 |
Commissions on municipal taxes collection |
|
|
359 |
|
338 |
|
264 |
Fines to suppliers |
|
|
118 |
|
- |
|
41 |
Services provided to third parties |
|
|
248 |
|
363 |
|
370 |
Related parties |
35.a |
|
- |
|
65 |
|
41 |
Recovery of provision for contingences |
34 |
|
- |
|
313 |
|
- |
Income from non-reimbursable customer
contributions |
|
|
47 |
|
40 |
|
14 |
Expense recovery |
|
|
31 |
|
107 |
|
336 |
Construction plan Framework agreement |
2.e |
|
2,060 |
|
- |
|
- |
Other |
|
|
43 |
|
70 |
|
137 |
Total other operating income |
|
|
4,842 |
|
3,635 |
|
3,567 |
|
|
|
|
|
|
|
|
Other operating expense |
|
|
|
|
|
|
|
Gratifications for services |
|
|
(863) |
|
(77) |
|
(395) |
Cost for services provided to third parties |
|
|
(112) |
|
(145) |
|
(199) |
Severance paid |
|
|
(37) |
|
(37) |
|
(44) |
Debit and Credit Tax |
|
|
(1,068) |
|
(1,235) |
|
(1,628) |
Provision for contingencies |
34 |
|
(2,351) |
|
(1,343) |
|
(2,808) |
Disposals of property, plant and equipment |
|
(249) |
|
(227) |
|
(130) |
Refund of fines to suppliers |
|
|
- |
|
(195) |
|
- |
Other |
|
|
(207) |
|
(140) |
|
(45) |
Total other operating expense |
|
|
(4,887) |
|
(3,399) |
|
(5,249) |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 12 |
Net financial costs |
|
Note |
|
12.31.21 |
|
12.31.20 |
|
|
12.31.19 |
Financial income |
|
|
|
|
|
|
|
|
Financial interest |
|
|
65 |
|
38 |
|
|
113 |
Other interest |
35.a |
|
- |
|
45 |
|
|
5 |
Total financial income |
|
|
65 |
|
83 |
|
|
118 |
|
|
|
|
|
|
|
|
|
Financial costs |
|
|
|
|
|
|
|
|
Commercial interest |
|
|
(22,232) |
|
(9,031) |
|
|
(6,139) |
Interest and other |
|
|
(4,688) |
|
(4,783) |
|
|
(7,704) |
Fiscal interest |
|
|
(4) |
|
(165) |
|
|
(11) |
Bank fees and expenses |
|
|
(37) |
|
(17) |
|
|
(35) |
Total financial costs |
|
|
(26,961) |
|
(13,996) |
|
|
(13,889) |
|
|
|
|
|
|
|
|
|
Other financial results |
|
|
|
|
|
|
|
|
Changes in fair value of financial assets |
|
|
3,967 |
|
1,492 |
|
|
578 |
Net gain from the cancelattion of
Corporate Notes |
|
|
3 |
|
626 |
|
|
939 |
Exchange differences |
|
|
(1,602) |
|
(4,458) |
|
|
(8,561) |
Adjustment to present value of receivables |
|
|
(150) |
|
(195) |
|
|
(157) |
Recovery of provision for credit RDSA |
38 |
|
580 |
|
- |
|
|
- |
Other financial costs (*) |
|
|
(1,057) |
|
(317) |
|
|
(35) |
Total other financial results |
|
|
1,741 |
|
(2,852) |
|
|
(7,236) |
Total net financial costs |
|
|
(25,155) |
|
(16,765) |
|
|
(21,007) |
(*) As of December 31, 2021, includes $ 911
relating to EDELCOS S.A.’s technical assistance (Note 35).
| Note | 13 |
Basic and diluted (loss) income per share |
Basic
The basic (loss) income per share
is calculated by dividing the loss attributable to the holders of the Company’s equity instruments by the weighted average number
of common shares outstanding as of December 31, 2021, 2020 and 2019, excluding common shares purchased by the Company and held as treasury
shares.
The basic (loss) income per share
coincides with the diluted (loss) income per share, inasmuch as the Company has issued neither preferred shares nor Corporate Notes convertible
into common shares.
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
(Loss) Income for the year attributable to the owners of the Company |
|
(21,344) |
|
(26,704) |
|
24,913 |
Weighted average number of common shares outstanding |
|
875 |
|
875 |
|
875 |
Basic and diluted (loss) income per share – in pesos |
|
(24.39) |
|
(30.52) |
|
28.47 |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 14 |
Property, plant and equipment |
|
|
Lands and buildings |
|
Substations |
|
High, medium and low voltage lines |
|
Meters and Transformer chambers and platforms |
|
Tools, Furniture, vehicles, equipment, communications and advances to suppliers |
|
Construction in process |
|
Supplies and spare parts |
|
Total |
At 12.31.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
5,498 |
|
47,483 |
|
120,974 |
|
52,866 |
|
9,461 |
|
42,313 |
|
485 |
|
279,080 |
Accumulated depreciation |
|
(1,079) |
|
(15,890) |
|
(46,771) |
|
(20,668) |
|
(6,194) |
|
- |
|
- |
|
(90,602) |
Net amount |
|
4,419 |
|
31,593 |
|
74,203 |
|
32,198 |
|
3,267 |
|
42,313 |
|
485 |
|
188,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
51 |
|
316 |
|
229 |
|
452 |
|
1,488 |
|
12,277 |
|
1,433 |
|
16,246 |
Disposals |
|
(6) |
|
- |
|
(32) |
|
(210) |
|
(1) |
|
- |
|
- |
|
(249) |
Transfers |
|
135 |
|
3,180 |
|
5,929 |
|
2,165 |
|
1,001 |
|
(10,972) |
|
(1,438) |
|
- |
Depreciation for the year |
|
(129) |
|
(1,731) |
|
(4,197) |
|
(2,122) |
|
(922) |
|
- |
|
- |
|
(9,101) |
Net amount 12.31.21 |
|
4,470 |
|
33,358 |
|
76,132 |
|
32,483 |
|
4,833 |
|
43,618 |
|
480 |
|
195,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 12.31.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
5,679 |
|
50,979 |
|
126,941 |
|
55,163 |
|
11,929 |
|
43,618 |
|
480 |
|
294,789 |
Accumulated depreciation |
|
(1,209) |
|
(17,621) |
|
(50,809) |
|
(22,680) |
|
(7,096) |
|
- |
|
- |
|
(99,415) |
Net amount |
|
4,470 |
|
33,358 |
|
76,132 |
|
32,483 |
|
4,833 |
|
43,618 |
|
480 |
|
195,374 |
·
During the year ended December 31, 2021, the Company capitalized
as direct own costs $ 2,300.4.
2021 FINANCIAL STATEMENTS NOTES |
|
|
Lands and buildings |
|
Substations |
|
High, medium and low voltage lines |
|
Meters and Transformer chambers and platforms |
|
Tools, Furniture, vehicles, equipment, communications and advances to suppliers |
|
Construction in process |
|
Supplies and spare parts |
|
Total |
At 12.31.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
4,913 |
|
45,261 |
|
128,855 |
|
54,901 |
|
8,216 |
|
46,427 |
|
499 |
|
289,072 |
Accumulated depreciation |
|
(940) |
|
(14,094) |
|
(42,379) |
|
(18,397) |
|
(5,201) |
|
- |
|
- |
|
(81,011) |
Net amount |
|
3,973 |
|
31,167 |
|
86,476 |
|
36,504 |
|
3,015 |
|
46,427 |
|
499 |
|
208,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
62 |
|
1,918 |
|
217 |
|
442 |
|
1,092 |
|
12,842 |
|
131 |
|
16,704 |
Disposals |
|
- |
|
(3) |
|
(78) |
|
(146) |
|
- |
|
- |
|
- |
|
(227) |
Transfers |
|
524 |
|
6,318 |
|
6,259 |
|
3,848 |
|
152 |
|
(16,956) |
|
(145) |
|
- |
Depreciation for the year |
|
(140) |
|
(1,799) |
|
(4,556) |
|
(2,325) |
|
(992) |
|
- |
|
- |
|
(9,812) |
Impairment |
|
- |
|
(6,008) |
|
(14,115) |
|
(6,125) |
|
- |
|
- |
|
- |
|
(26,248) |
Net amount 12.31.20 |
|
4,419 |
|
31,593 |
|
74,203 |
|
32,198 |
|
3,267 |
|
42,313 |
|
485 |
|
188,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 12.31.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
5,498 |
|
47,483 |
|
120,974 |
|
52,866 |
|
9,461 |
|
42,313 |
|
485 |
|
279,080 |
Accumulated depreciation |
|
(1,079) |
|
(15,890) |
|
(46,771) |
|
(20,668) |
|
(6,194) |
|
- |
|
- |
|
(90,602) |
Net amount |
|
4,419 |
|
31,593 |
|
74,203 |
|
32,198 |
|
3,267 |
|
42,313 |
|
485 |
|
188,478 |
| · | During the year ended December 31, 2020, the Company capitalized
as direct own costs $ 2,785.3. |
| · | Includes
$ 2,197.7 in additions, related to a 500/220 Kw - 800 MVA transformer bank in General Rodriguez transformer station (section 8, item 8.2
of the agreement entered into by the Company, the BICE bank and CAMMESA on April 24, 2014); with a contra-account in Deferred revenue. |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 15 |
Financial instruments |
Note 15.1 | Financial
instruments by category
|
|
Financial assets at amortized cost |
|
Financial assets at fair value through profit or loss |
|
Non-financial assets |
|
Total |
As of December 31, 2021 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Trade receivables |
|
17,563 |
|
- |
|
- |
|
17,563 |
Other receivables |
|
2,117 |
|
- |
|
23 |
|
2,140 |
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Cash and Banks |
|
1,518 |
|
- |
|
- |
|
1,518 |
Time deposits |
|
305 |
|
- |
|
- |
|
305 |
Mutual funds |
|
- |
|
1,349 |
|
- |
|
1,349 |
Financial assets at fair value through profit or loss: |
|
|
|
|
|
|
|
|
Government bonds |
|
- |
|
8,872 |
|
- |
|
8,872 |
Mutual funds |
|
- |
|
6,579 |
|
- |
|
6,579 |
Financial assets at amortized cost: |
|
|
|
|
|
|
|
|
Government bonds |
|
243 |
|
- |
|
- |
|
243 |
Total |
|
21,746 |
|
16,800 |
|
23 |
|
38,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Trade receivables |
|
21,352 |
|
- |
|
- |
|
21,352 |
Other receivables |
|
592 |
|
- |
|
492 |
|
1,084 |
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Cash and Banks |
|
2,472 |
|
- |
|
- |
|
2,472 |
Mutual funds |
|
- |
|
4,110 |
|
- |
|
4,110 |
Financial assets at fair value through profit or loss: |
|
|
|
|
|
|
|
|
Government bonds |
|
- |
|
3,352 |
|
- |
|
3,352 |
Financial assets at fair value |
|
|
|
|
|
|
|
|
Government bonds |
|
478 |
|
- |
|
- |
|
478 |
Total |
|
24,894 |
|
7,462 |
|
492 |
|
32,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortized cost |
|
Total |
|
|
|
|
As of December 31, 2021 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Trade payables |
|
76,837 |
|
76,837 |
|
|
|
|
Other payables |
|
13,429 |
|
13,429 |
|
|
|
|
Borrowings |
|
10,262 |
|
10,262 |
|
|
|
|
Total |
|
100,528 |
|
100,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Trade payables |
|
50,606 |
|
50,606 |
|
|
|
|
Other payables |
|
14,009 |
|
14,009 |
|
|
|
|
Borrowings |
|
12,681 |
|
12,681 |
|
|
|
|
Total |
|
77,296 |
|
77,296 |
|
|
|
|
Financial instruments categories
have been determined based on IFRS 9.
2021 FINANCIAL STATEMENTS NOTES |
The income, expenses, gains and
losses resulting from each category of financial instruments are as follow:
|
|
Financial assets at amortized cost |
|
Financial assets at fair value through profit or loss |
|
Total |
As of December 31, 2021 |
|
|
|
|
|
|
Interest income |
|
65 |
|
- |
|
65 |
Exchange differences |
|
456 |
|
492 |
|
948 |
Changes in fair value of financial assets |
|
- |
|
3,967 |
|
3,967 |
Net gain from the cancelattion of Corporate Notes |
|
3 |
|
- |
|
3 |
Other |
|
580 |
|
- |
|
580 |
Total |
|
1,104 |
|
4,459 |
|
5,563 |
|
|
|
|
|
|
|
As of December 31, 2020 |
|
|
|
|
|
|
Interest income |
|
83 |
|
- |
|
83 |
Exchange differences |
|
860 |
|
874 |
|
1,734 |
Changes in fair value of financial assets |
|
- |
|
1,492 |
|
1,492 |
Net gain from the cancelattion of Corporate Notes |
|
626 |
|
- |
|
626 |
Total |
|
1,569 |
|
2,366 |
|
3,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortized cost |
|
Total |
|
|
As of December 31, 2021 |
|
|
|
|
|
|
Interest expense |
|
(26,920) |
|
(26,920) |
|
|
Exchange differences |
|
(2,550) |
|
(2,550) |
|
|
Other financial results |
|
(1,057) |
|
(1,057) |
|
|
Total |
|
(30,527) |
|
(30,527) |
|
|
|
|
|
|
|
|
|
As of December 31, 2020 |
|
|
|
|
|
|
Interest expense |
|
(13,814) |
|
#REF! |
|
|
Exchange differences |
|
(6,192) |
|
(6,192) |
|
|
Other financial results |
|
(317) |
|
(317) |
|
|
Total |
|
(20,323) |
|
#REF! |
|
|
Note 15.2 | Credit
quality of financial assets
The credit quality of financial
assets that are neither past due nor impaired may be assessed based on external credit ratings or historical information:
|
|
12.31.21 |
|
12.31.20 |
Customers with no external credit rating: |
|
|
|
|
Group 1 (i) |
|
12,828 |
|
15,748 |
Group 2 (ii) |
|
1,660 |
|
1,304 |
Group 3 (iii) |
|
3,075 |
|
4,300 |
Total trade receivables |
|
17,563 |
|
21,352 |
(i)
Relates to customers with debt to become due.
(ii)
Relates to customers with past due debt from 0 to 3 months.
(iii)
Relates to customers with past due debt from 3 to 12 months.
At the Statement of Financial
Position date, the maximum exposure to credit risk is the carrying amount of these financial assets.
2021 FINANCIAL STATEMENTS NOTES |
| Note | 16 |
Right-of-use asset |
The Company leases commercial
offices, two warehouses, the headquarters building (comprised of administrative, commercial and technical offices), the Energy Handling
and Transformer Center (two buildings and a plot of land located within the perimeter of Puerto Nuevo and Nuevo Puerto Power Generation
Plant) and Las Heras Substation. The Company’s lease contracts have cancelable terms and lease periods of 2 to 3 years.
The leases recognized as right-of-use
assets in accordance with IFRS 16 are disclosed below:
|
12.31.21 |
|
12.31.20 |
Right of uses asset by leases |
425 |
|
344 |
The development of right-of-use assets is as follows:
|
12.31.21 |
|
12.31.20 |
Balance at beginning of year |
344 |
|
357 |
Additions |
539 |
|
465 |
Depreciation for the year |
(458) |
|
(478) |
Balance at end of the year |
425 |
|
344 |
|
|
12.31.21 |
|
12.31.20 |
|
|
|
|
|
Supplies and spare-parts |
|
3,441 |
|
2,772 |
Advance to suppliers |
|
- |
|
51 |
Total inventories |
|
3,441 |
|
2,823 |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 18 |
Other receivables |
|
Note |
|
12.31.21 |
|
12.31.20 |
Non-current: |
|
|
|
|
|
Credit for Real estate asset |
38 |
|
- |
|
3,325 |
Financial credit |
|
|
5 |
|
21 |
Related parties |
35.d |
|
2 |
|
5 |
Allowance for the impairment of other receivables |
|
|
- |
|
(3,208) |
Total non-current |
|
|
7 |
|
143 |
|
|
|
|
|
|
Current: |
|
|
|
|
|
Credit for Real estate asset |
38 |
|
31 |
|
55 |
Construction plan Framework agreement |
2.e |
|
294 |
|
- |
Judicial deposits |
|
|
85 |
|
116 |
Security deposits |
|
|
64 |
|
58 |
Prepaid expenses |
|
|
208 |
|
64 |
Advances to personnel |
|
|
24 |
|
3 |
Financial credit |
|
|
14 |
|
27 |
Advances to suppliers |
|
|
9 |
|
110 |
Tax credits |
|
|
1,364 |
|
492 |
Related parties |
35.d |
|
1 |
|
28 |
Debtors for complementary activities |
|
|
63 |
|
103 |
Other |
5 |
|
1 |
Allowance for the impairment of other receivables |
|
|
(29) |
|
(116) |
Total current |
|
|
2,133 |
|
941 |
The value of the Company’s
other financial receivables approximates their fair value.
The non-current other receivables
are measured at amortized cost, which does not differ significantly from their fair value.
The roll forward of the allowance for the impairment
of other receivables is as follows:
|
|
|
12.31.21 |
|
12.31.20 |
Balance at beginning of year |
|
|
3,324 |
|
4,501 |
Increase |
|
|
3 |
|
140 |
Decrease |
|
|
(1,771) |
|
- |
Result from exposure to inflation |
|
|
(939) |
|
(1,192) |
Recovery |
|
|
(588) |
|
(125) |
Balance at end of the year |
|
|
29 |
|
3,324 |
The aging analysis of these other
receivables is as follows:
|
|
|
12.31.21 |
|
12.31.20 |
Without expiry date |
|
|
151 |
|
202 |
Past due |
|
|
341 |
|
98 |
Up to 3 months |
|
|
610 |
|
125 |
From 3 to 6 months |
|
|
355 |
|
478 |
From 6 to 9 months |
|
|
338 |
|
17 |
From 9 to 12 months |
|
|
338 |
|
21 |
More than 12 months |
|
|
7 |
|
143 |
Total other receivables |
|
|
2,140 |
|
1,084 |
At the Statement of Financial
Position date, the maximum exposure to credit risk is the carrying amount of each class of other receivables.
The carrying amount of the
Company’s other receivables is denominated in Argentine pesos.
2021 FINANCIAL STATEMENTS NOTES |
| Note | 19 |
Trade receivables |
|
|
|
12.31.21 |
|
12.31.20 |
Current: |
|
|
|
|
|
Sales of electricity – Billed |
|
|
15,037 |
|
18,565 |
Framework Agreement (1) |
|
|
- |
|
14 |
Receivables in litigation |
|
|
253 |
|
452 |
Allowance for the impairment of trade receivables |
|
|
(6,006) |
|
(6,948) |
Subtotal |
|
|
9,284 |
|
12,083 |
|
|
|
|
|
|
Sales of electricity – Unbilled |
|
|
7,894 |
|
8,769 |
PBA & CABA government credit |
|
|
383 |
|
497 |
Fee payable for the expansion of the transportation and others |
|
|
2 |
|
3 |
Total current |
|
|
17,563 |
|
21,352 |
| (1) | As of
December 31, 2020, the Province of Buenos Aires and the Federal Government have a debt with the Company for the consumption of electricity
by low-income areas and shantytowns. The indicated amount does not include interest and no revenue for this concept has been recognized
by the Company. |
The value of the Company’s
trade receivables approximates their fair value.
2021 FINANCIAL STATEMENTS NOTES |
The roll forward of the allowance for the impairment
of trade receivables is as follows:
|
|
|
12.31.21 |
|
12.31.20 |
Balance at beginning of the year |
|
|
6,948 |
|
3,176 |
Increase |
|
|
1,967 |
|
6,296 |
Decrease |
|
|
(211) |
|
(928) |
Result from exposure to inflation |
|
|
(2,698) |
|
(1,596) |
Balance at end of the year |
|
|
6,006 |
|
6,948 |
The aging analysis
of these trade receivables is as follows:
|
|
|
12.31.21 |
|
12.31.20 |
Not due |
|
|
- |
|
14 |
Past due |
|
|
4,735 |
|
5,604 |
Up to 3 months |
|
|
12,828 |
|
15,734 |
Total trade receivables |
|
|
17,563 |
|
21,352 |
At the Statement of Financial
Position date, the maximum exposure to credit risk is the carrying amount of each class of trade receivables.
The carrying amount of the
Company’s trade receivables is denominated in Argentine pesos.
Sensitivity analysis of
the allowance for impairment of trade receivables:
- 5% increase in the uncollectibility rate estimate |
|
|
|
|
|
|
12.31.21 |
Allowance |
|
|
6,306 |
Variation |
|
|
300 |
|
|
|
|
|
- 5% decrease in the uncollectibility rate estimate |
|
|
|
|
|
|
12.31.21 |
Allowance |
|
|
5,705 |
Variation |
|
|
(301) |
| Note | 20 |
Financial assets at amortized cost |
|
|
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
|
Government bonds |
|
|
- |
|
361 |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Government bonds |
|
|
243 |
|
117 |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 21 |
Financial assets at fair value through profit or loss |
|
|
|
12.31.21 |
|
12.31.20 |
|
|
|
|
|
|
|
|
|
|
|
|
Government bonds |
|
|
8,872 |
|
3,352 |
Mutual funds |
|
|
6,579 |
|
- |
Total Financial assets at fair value through profit or loss |
|
|
15,451 |
|
3,352 |
| Note | 22 |
Cash and cash equivalents |
|
|
12.31.21 |
|
12.31.20 |
Cash and banks |
|
1,518 |
|
2,472 |
Time deposits |
|
305 |
|
- |
Mutual funds |
|
1,349 |
|
4,110 |
Total cash and cash equivalents |
|
3,172 |
|
6,582 |
| Note | 23 |
Share capital and additional paid-in capital |
|
|
Share capital |
|
Additional paid-in capital |
|
Total |
Balance at December 31, 2019 and 2020 |
|
57,475 |
|
760 |
|
58,235 |
|
|
|
|
|
|
|
Payment of Other reserve constitution - Share-bases compensation plan |
|
- |
|
6 |
|
6 |
Balance at December 31, 2021 |
|
57,475 |
|
766 |
|
58,241 |
As of December 31, 2021, the
Company’s share capital amounts to 906,455,100 shares, divided into 462,292,111 common, book-entry Class A shares with a par value
of one peso each and the right to one vote per share; 442,210,385 common, book-entry Class B shares with a par value of one peso each
and the right to one vote per share; and 1,952,604 common, book-entry Class C shares with a par value of one peso each and the right to
one vote per share.
Listing of the Company’s shares
The Company’s shares are
listed on the Buenos Aires Stock Exchange, forming part of the Merval Index, as well as on the NYSE, where each ADS represents 20 common
shares.
| Note | 24 |
Allocation of profits |
The restrictions on the distribution
of dividends by the Company are those provided for by the Business Organizations Law and the negative covenants established by the Corporate
Notes program. As of December 31, 2021, the Company complies with the indebtedness ratio established in such program.
If the Company’s Debt Ratio
were higher than 3, the negative covenants included in the Corporate Notes program, which establish, among other issues, the Company’s
impossibility to make certain payments, such as dividends, would apply.
2021 FINANCIAL STATEMENTS NOTES |
Additionally, in accordance with
Title IV, Chapter III, section 3.11.c of the CNV, the amounts subject to distribution will be restricted to the amount equivalent to the
acquisition cost of the Company’s own shares.
| Note | 25 |
The Company’s Share-based Compensation Plan |
In 2016, the Company’s
Board of Directors proposed that the treasury shares be used for the implementation of a long-term incentive plan in favor of executive
directors, managers or other personnel holding key positions in the Company in an employment relationship with the latter and those who
in the future are invited to participate, in accordance with the provisions of section 67 of Law No. 26,831 on Capital Markets. The plan
was ratified and approved by the Ordinary and Extraordinary Shareholders’ Meeting held on April 18, 2017.
On April 15, 2021, 246,451 treasury
shares were awarded, as part of the Share-based Compensation Plan, to executive directors, managers and other personnel holding key executive
positions in the Company.
The fair value of the previously
referred to shares at the award date, amounted to $ 162.3 and has been recorded in the Salaries and social security taxes line item, with
a contra account in Equity. The amount recorded in Equity is net of the tax effect.
|
|
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
|
Customer guarantees |
|
|
367 |
|
414 |
Customer contributions |
|
|
293 |
|
372 |
Total non-current |
|
|
660 |
|
786 |
|
|
|
|
|
|
Current |
|
|
|
|
|
Payables for purchase of electricity - CAMMESA |
|
|
57,618 |
|
32,265 |
Provision for unbilled electricity purchases - CAMMESA |
|
|
9,480 |
|
10,025 |
Suppliers |
|
|
8,542 |
|
6,880 |
Advance to customer |
|
|
468 |
|
602 |
Customer contributions |
|
|
32 |
|
48 |
Discounts to customers |
|
|
37 |
|
- |
Total current |
|
|
76,177 |
|
49,820 |
The fair values of non-current
customer contributions as of December 31, 2021 and 2020 amount to $ 46.4 and $ 64.6, respectively. The fair values are determined based
on estimated discounted cash flows in accordance with a representative market rate for this type of transactions. The applicable fair
value category is Level 3.
The value of the rest of the
financial liabilities included in the Company’s trade payables approximates their fair value.
2021 FINANCIAL STATEMENTS NOTES |
|
Note |
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
|
ENRE penalties and discounts |
|
|
9,373 |
|
9,391 |
Financial Lease Liability (1) |
|
|
79 |
|
92 |
Total Non-current |
|
|
9,452 |
|
9,483 |
|
|
|
|
|
|
Current |
|
|
|
|
|
ENRE penalties and discounts |
|
|
3,554 |
|
4,265 |
Related parties |
35.d |
|
138 |
|
22 |
Advances for works to be performed |
|
|
13 |
|
20 |
Financial Lease Liability (1) |
|
|
268 |
|
217 |
Other |
|
|
4 |
|
2 |
Total Current |
|
|
3,977 |
|
4,526 |
The value of the Company’s
other financial payables approximates their fair value.
| (1) | The development of the finance
lease liability is as follows: |
|
12.31.21 |
|
12.31.20 |
Balance at beginning of year |
309 |
|
301 |
Increase |
451 |
|
258 |
Payments |
(526) |
|
(382) |
Exchange difference |
89 |
|
96 |
Interest |
128 |
|
86 |
Result from exposure to inlfation |
(104) |
|
(50) |
Balance at end of the year |
347 |
|
309 |
As of December 31, 2021, future
minimum payments with respect to finance leases are those detailed below:
|
|
12.31.21 |
|
12.31.20 |
2021 |
|
- |
|
297 |
2022 |
|
380 |
|
74 |
2023 |
|
116 |
|
27 |
2024 |
|
6 |
|
- |
Total future minimum lease payments |
|
502 |
|
398 |
The Company has entered into
contracts with certain cable television companies granting them the right to use the network poles. As of December 31, 2021 and 2020,
future minimum collections with respect to operating assignments of use are those detailed below:
|
|
12.31.21 |
|
12.31.20 |
2021 |
|
- |
|
715 |
2022 |
|
727 |
|
712 |
2023 |
|
700 |
|
705 |
2024 |
|
2 |
|
- |
Total future minimum lease collections |
|
1,429 |
|
2,132 |
2021 FINANCIAL STATEMENTS NOTES |
| Note | 28 |
Deferred revenue |
|
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
Nonrefundable customer contributions |
|
1,687 |
|
2,220 |
|
|
|
|
|
|
|
|
|
|
|
|
12.31.21 |
|
12.31.20 |
Current |
|
|
|
|
Nonrefundable customer contributions |
|
44 |
|
55 |
|
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
Corporate notes (1) |
|
- |
|
12,465 |
|
|
|
|
|
Current |
|
|
|
|
Corporate notes (1) |
|
10,067 |
|
- |
Interest from corporate notes |
|
195 |
|
216 |
Total current |
|
10,262 |
|
216 |
| (1) | Net of debt issuance, repurchase
and redemption expenses. |
The fair values of the Company’s
non-current borrowings as of December 31, 2021 and 2020 amount approximately to $ 8,982.5 and $ 10,228.5, respectively. Such values were
determined on the basis of the estimated market price of the Company’s Corporate Notes at the end of each year. The applicable fair
value category is Level 1.
The Company’s borrowings
are denominated in the following currencies:
|
|
12.31.21 |
|
12.31.20 |
US dollars |
|
10,262 |
|
12,681 |
The maturities of the Company’s
borrowings and their exposure to interest rates are as follow:
|
|
12.31.21 |
|
12.31.20 |
Fixed rate |
|
|
|
|
Less than 1 year |
|
10,262 |
|
216 |
From 1 to 2 years |
|
- |
|
12,465 |
Total fixed rate |
|
10,262 |
|
12,681 |
2021 FINANCIAL STATEMENTS NOTES |
The roll forward of the Company’s
borrowings during the year was as follows:
|
|
12.31.21 |
|
12.31.20 |
Balance at beginning of the year |
|
12,681 |
|
20,246 |
Payment of borrowings' interests |
|
(895) |
|
(1,385) |
Paid from repurchase of Corporate Notes |
|
(17) |
|
(5,731) |
Payment of borrowings |
|
- |
|
(1,132) |
Gain from repurchase of Corporate Notes |
|
(3) |
|
(626) |
Exchange diference and interest accrued |
|
2,769 |
|
6,113 |
Result from exposure to inlfation |
|
(4,273) |
|
(4,804) |
Balance at the end of year |
|
10,262 |
|
12,681 |
Corporate Notes programs
The Company has a Corporate
Notes program, the relevant information of which is detailed below:
Debt issued in United
States dollars
|
|
|
|
|
|
|
|
USD |
$ |
Corporate Notes |
|
Class |
|
Rate |
|
Year of Maturity |
|
Debt structure at 12.31.20 |
|
Debt repurchase |
|
Debt structure at 12.31.21 |
|
At 12.31.21 |
Fixed Rate Par Note |
|
9 |
|
9.75 |
|
2022 |
|
98 |
|
- |
|
98 |
|
10,067 |
Total |
|
|
|
|
|
|
|
98 |
|
- |
|
98 |
|
10,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USD |
$ |
Corporate Notes |
|
Class |
|
Rate |
|
Year of Maturity |
|
Debt structure at 12.31.19 |
|
Debt repurchase |
|
Debt structure at 12.31.20 |
|
At 12.31.20 |
Fixed Rate Par Note |
|
9 |
|
9.75 |
|
2022 |
|
137 |
|
(39) |
|
98 |
|
12,465 |
Total |
|
|
|
|
|
|
|
137 |
|
(39) |
|
98 |
|
12,465 |
The main covenants are
those detailed below:
The terms and conditions
of the Corporate Notes include a number of negative covenants that limit the Company’s actions with regard to, among others, the
following:
| - | Encumbrance or authorization
to encumber its property or assets; |
| - | Incurrence of indebtedness, in
certain specified cases; |
| - | Sale of the Company’s assets
related to its main business; |
| - | Carrying out of transactions
with shareholders or related companies; |
| - | Making certain payments (including,
among others, dividends, purchases of edenor’s common shares or payments on subordinated debt). |
| ii. | Suspension of Covenants: |
Certain negative covenants
stipulated in the terms and conditions of the Corporate Notes will be suspended or adapted if:
2021 FINANCIAL STATEMENTS NOTES |
| - | The Company’s long-term
debt rating is raised to Investment Grade, or the Company’s Debt Ratio is equal to or lower than 3. |
| - | If the Company subsequently losses
its Investment Grade rating or its Debt Ratio is higher than 3, as applicable, the suspended negative covenants will be once again in
effect. |
At the date of issuance
of these financial statements, the previously mentioned ratios have been complied with.
Furthermore, on January 28, 2021,
the Company paid Class 9 Corporate Notes for a total of USD 224,000 nominal value, equivalent to $ 23, received as collection of receivables.
At the date of these financial statements, the Corporate Notes that remain outstanding amount to USD 98.1 million nominal value.
Additionally, on July 16, 2021,
within the framework of the change of control of the Company (Note 39), and as provided for in article 10.3 of the class 9 Corporate Notes
prospectus, which provides that each holder of these instruments will be entitled to require that the Company repurchase all or any part
thereof by submitting an Offer due to Change of Control, the Company’s Board of Directors approved and informed the markets of the
launching of the consent solicitation for consents of the holders of Corporate Notes due 2022.
In this regard, on July 30, 2021,
the Company, given the majority support of the holders, obtained approval of the consent solicitation issued on July 16. Thus, edenor
maintains the financial terms set forth in the respective Corporate Notes.
| Note | 30 |
Salaries and social security taxes payable |
| a. | Salaries and social security
taxes payable |
|
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
Early retirements payable |
|
- |
|
37 |
Seniority-based bonus |
|
398 |
|
421 |
Total non-current |
|
398 |
|
458 |
|
|
|
|
|
Current |
|
|
|
|
Salaries payable and provisions |
|
4,159 |
|
5,181 |
Social security payable |
|
332 |
|
415 |
Early retirements payable |
|
24 |
|
39 |
Total current |
|
4,515 |
|
5,635 |
The value of the Company’s
salaries and social security taxes payable approximates their fair value.
| b. | Salaries and social security
taxes charged to profit or loss |
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
Salaries |
|
11,262 |
|
12,293 |
|
12,939 |
Social security taxes |
|
4,380 |
|
4,780 |
|
5,031 |
Total salaries and social security taxes |
|
15,642 |
|
17,073 |
|
17,970 |
2021 FINANCIAL STATEMENTS NOTES |
Early retirements payable correspond
to individual optional agreements. After employees reach a specific age, the Company may offer them this option. The related accrued liability
represents future payment obligations, which, as of December 31, 2021 and 2020, amount to $ 23.8 and $ 80.1, respectively.
The seniority-based bonus included
in collective bargaining agreements in effect consists of a bonus to be granted to personnel with a certain amount of years of service.
As of December 31, 2021 and 2020, the related liabilities amount to $ 404.5 and $ 421.1, respectively.
As of December 31, 2021 and 2020,
the number of employees amounts to 4,668 and 4,776, respectively.
The defined benefit plans granted
to Company employees consist of a bonus for all the employees who have the necessary years of service and have made the required contributions
to retire under ordinary retirement plans.
The amounts and conditions vary
depending on the collective bargaining agreement and for non-unionized personnel.
|
12.31.21 |
|
12.31.20 |
Non-current |
997 |
|
1,130 |
Current |
131 |
|
127 |
Total Benefit plans |
1,128 |
|
1,257 |
The breakdown of the benefit
plan obligations as of December 31, 2021 and 2020 is as follows:
|
12.31.21 |
|
12.31.20 |
Benefit payment obligations at beginning of year |
1,257 |
|
1,181 |
Current service cost |
66 |
|
243 |
Interest cost |
689 |
|
477 |
Actuarial losses |
(200) |
|
(164) |
Result from exposure to inflation for the year |
(613) |
|
(459) |
Benefits paid to participating employees |
(71) |
|
(21) |
Benefit payment obligations at end of year |
1,128 |
|
1,257 |
As of December 31, 2021 and 2020,
the Company does not have any assets related to post-retirement benefit plans.
The breakdown of the charge recognized
in the Statement of Comprehensive Income (Loss) is as follows:
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
Cost |
66 |
|
243 |
|
226 |
Interest |
689 |
|
477 |
|
312 |
Actuarial results - Other comprehensive results |
(200) |
|
(164) |
|
15 |
|
555 |
|
556 |
|
553 |
2021 FINANCIAL STATEMENTS NOTES |
The actuarial assumptions used
are based on market interest rates for Argentine government bonds, past experience, and the Company Management’s best estimate of
future economic conditions. Changes in these assumptions may affect the future cost of benefits and obligations. The main assumptions
used are as follow:
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
Discount rate |
5% |
|
5% |
|
5% |
Salary increase |
1% |
|
1% |
|
1% |
Inflation |
57% |
|
50% |
|
31% |
Sensitivity analysis:
|
|
|
12.31.21 |
Discount Rate: 4% |
|
|
|
Obligation |
|
|
1,234 |
Variation |
|
|
106 |
|
|
|
9% |
|
|
|
|
Discount Rate: 6% |
|
|
|
Obligation |
|
|
1,038 |
Variation |
|
|
(90) |
|
|
|
(8%) |
|
|
|
|
Salary Increase : 0% |
|
|
|
Obligation |
|
|
1,034 |
Variation |
|
|
(94) |
|
|
|
(8%) |
|
|
|
|
Salary Increase: 2% |
|
|
|
Obligation |
|
|
1,237 |
Variation |
|
|
109 |
|
|
|
9% |
The expected payments of benefits
are as follow:
|
|
In 2022 |
|
In 2023 |
|
In 2024 |
|
In 2025 |
|
In 2026 |
|
Between 2027 to 2031 |
At December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Benefit payment obligations |
|
131 |
|
23 |
|
25 |
|
26 |
|
5 |
|
22 |
Estimates based on actuarial
techniques imply the use of statistical tools, such as the so-called demographic tables used in the actuarial valuation of the Company’s
active personnel.
In order to determine the mortality
of the Company’s active personnel, the “1971 Group Annuity Mortality” table has been used. In general, a mortality table
shows for each age group the probability that a person in any such age group will die before reaching a predetermined age. Male and female
mortality tables are elaborated separately inasmuch as men and women’s mortality rates are substantially different.
In order to estimate total and
permanent disability due to any cause, 80% of the “1985 Pension Disability Study” table has been used.
In order to estimate the probability
that the Company’s active personnel will leave the Company or stay therein, the “ESA 77” table has been used.
Liabilities related to the above-mentioned
benefits have been determined taking into consideration all the rights accrued by the beneficiaries of the plans through the closing date
of the year ended December 31, 2021.
2021 FINANCIAL STATEMENTS NOTES |
These benefits do not apply to
key management personnel.
| Note | 32 |
Income tax and deferred tax |
The breakdown of deferred tax assets and liabilities
is as follows:
|
12.31.20 |
|
Result from exposure to inflation |
|
Charged to Profit and loss |
|
Charged to Other comprenhen- sive income |
|
12.31.21 |
Deferred tax assets |
|
|
|
|
|
|
|
|
|
Tax loss carryforward |
374 |
|
(126) |
|
(248) |
|
- |
|
- |
Trade receivables and other receivables |
2,038 |
|
(687) |
|
882 |
|
- |
|
2,233 |
Trade payables and other payables |
1,022 |
|
(345) |
|
524 |
|
- |
|
1,201 |
Salaries and social security taxes payable |
385 |
|
(130) |
|
277 |
|
- |
|
532 |
Benefit plans |
116 |
|
(39) |
|
11 |
|
(70) |
|
18 |
Tax liabilities |
29 |
|
(10) |
|
6 |
|
- |
|
25 |
Provisions |
1,234 |
|
(416) |
|
798 |
|
- |
|
1,616 |
Deferred tax asset |
5,198 |
|
(1,753) |
|
2,250 |
|
(70) |
|
5,625 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
(35,283) |
|
11,899 |
|
(27,600) |
|
- |
|
(50,984) |
Financial assets at fair value through profit or loss |
(450) |
|
152 |
|
(84) |
|
- |
|
(382) |
Borrowings |
(3) |
|
1 |
|
1 |
|
- |
|
(1) |
Tax inflation adjustment |
(5,236) |
|
1,766 |
|
(226) |
|
- |
|
(3,696) |
Deferred tax liability |
(40,972) |
|
13,818 |
|
(27,909) |
|
- |
|
(55,063) |
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability |
(35,774) |
|
12,065 |
|
(25,659) |
|
(70) |
|
(49,438) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.19 |
|
Result from exposure to inflation |
|
Charged to Profit and loss |
|
Charged to Other comprenhen- sive income |
|
12.31.20 |
Deferred tax assets |
|
|
|
|
|
|
|
|
|
Tax loss carryforward |
- |
|
- |
|
374 |
|
- |
|
374 |
Trade receivables and other receivables |
1,137 |
|
(302) |
|
1,203 |
|
- |
|
2,038 |
Trade payables and other payables |
1,236 |
|
(327) |
|
113 |
|
- |
|
1,022 |
Salaries and social security taxes payable |
232 |
|
(60) |
|
213 |
|
- |
|
385 |
Benefit plans |
222 |
|
(59) |
|
2 |
|
(49) |
|
116 |
Tax liabilities |
38 |
|
(11) |
|
2 |
|
- |
|
29 |
Provisions |
1,382 |
|
(367) |
|
219 |
|
- |
|
1,234 |
Deferred tax asset |
4,247 |
|
(1,126) |
|
2,126 |
|
(49) |
|
5,198 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
(40,347) |
|
10,710 |
|
(5,646) |
|
- |
|
(35,283) |
Financial assets at fair value through profit or loss |
(427) |
|
113 |
|
(136) |
|
- |
|
(450) |
Borrowings |
(8) |
|
3 |
|
2 |
|
- |
|
(3) |
Tax inflation adjustment |
(4,658) |
|
1,237 |
|
(1,815) |
|
- |
|
(5,236) |
Deferred tax liability |
(45,440) |
|
12,063 |
|
(7,595) |
|
- |
|
(40,972) |
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability |
(41,193) |
|
10,937 |
|
(5,469) |
|
(49) |
|
(35,774) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.21 |
|
12.31.20 |
|
|
|
|
|
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
To be recover in more than 12 months |
5,625 |
|
5,198 |
|
|
|
|
|
|
Deferred tax asset |
5,625 |
|
5,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
To be recover in more than 12 months |
(55,063) |
|
(40,972) |
|
|
|
|
|
|
Deferred tax liability |
(55,063) |
|
(40,972) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability |
(49,438) |
|
(35,774) |
|
|
|
|
|
|
2021 FINANCIAL STATEMENTS NOTES |
The breakdown of the income tax
expense for the year includes two effects: (i) the current tax for the year payable in accordance with the tax legislation applicable
to the Company; (ii) the effect of applying the deferred tax method which recognizes the effect of the temporary differences arising from
the valuation of assets and liabilities for accounting and tax purposes.
The breakdown of the income tax expense is as follows:
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
Deferred tax |
|
(6,345) |
|
4,184 |
|
(17,052) |
Change in the income tax rate |
|
(7,473) |
|
1,284 |
|
1,273 |
Current tax |
|
(2,042) |
|
- |
|
(5,964) |
Difference between provision and tax return |
|
224 |
|
(92) |
|
(181) |
Income tax expense |
|
(15,636) |
|
5,376 |
|
(21,924) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
(Loss) Income for the year before taxes |
|
(5,708) |
|
(32,080) |
|
46,847 |
Applicable tax rate |
|
35% |
|
30% |
|
30% |
Result for the year at the tax rate |
|
1,998 |
|
9,624 |
|
(14,054) |
Loss on net monetary position |
|
(3,359) |
|
(2,020) |
|
(3,943) |
Adjustment effect on tax inflation |
|
(6,972) |
|
(3,357) |
|
(5,761) |
Non-taxable income |
|
(54) |
|
(63) |
|
742 |
Difference between provision and tax return |
|
224 |
|
(92) |
|
(181) |
Change in the income tax rate |
|
(7,473) |
|
1,284 |
|
1,273 |
Income tax expense |
|
(15,636) |
|
5,376 |
|
(21,924) |
The income tax payable, net of withholdings
is detailed below.
|
|
12.31.21 |
|
12.31.20 |
Current |
|
|
|
|
Provision of income tax payable |
|
2,042 |
|
- |
Tax withholdings |
|
(788) |
|
- |
Total current |
|
1,254 |
|
- |
|
|
12.31.21 |
|
12.31.20 |
Non-current |
|
|
|
|
Current |
|
|
|
|
Provincial, municipal and federal contributions and taxes |
|
131 |
|
692 |
VAT payable |
|
- |
|
1,389 |
Tax withholdings |
|
228 |
|
258 |
SUSS withholdings |
27 |
|
16 |
Municipal taxes |
|
233 |
|
350 |
Total current |
|
619 |
|
2,705 |
2021 FINANCIAL STATEMENTS NOTES |
|
|
Non-current liabilities |
|
Current liabilities |
|
|
Contingencies |
At 12.31.20 |
|
3,668 |
|
540 |
|
|
|
|
|
Increases |
|
1,832 |
|
519 |
Decreases |
|
- |
|
(301) |
Result from exposure to inflation for the year |
|
(1,519) |
|
(221) |
At 12.31.21 |
|
3,981 |
|
537 |
|
|
|
|
|
At 12.31.19 |
|
4,237 |
|
439 |
Increases |
|
1,097 |
|
246 |
Decreases |
|
(158) |
|
(18) |
Recovery |
|
(313) |
|
- |
Result from exposure to inflation for the year |
|
(1,195) |
|
(127) |
At 12.31.20 |
|
3,668 |
|
540 |
| Note | 35 |
Related-party transactions |
The following transactions were carried out with related parties:
Company |
|
Concept |
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
PESA |
|
Impact study |
|
- |
|
5 |
|
- |
SACDE |
|
Reimbursement expenses |
|
- |
|
60 |
|
41 |
FIDUS SGR |
|
SGR contribution revenue |
|
|
|
45 |
|
5 |
|
|
|
|
- |
|
110 |
|
46 |
Company |
|
Concept |
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
|
|
|
|
|
|
|
|
|
EDELCOS S.A. |
|
Technical advisory services on financial matters |
|
(911) |
|
- |
|
- |
PESA |
|
Technical advisory services on financial matters |
|
- |
|
(311) |
|
(279) |
SACME |
|
Operation and oversight of the electric power transmission system |
|
(317) |
|
(154) |
|
(170) |
OSV |
|
Hiring life insurance for staff |
|
- |
|
(41) |
|
(41) |
SB&WM Abogados |
|
Legal fees |
|
- |
|
(20) |
|
- |
FIDUS |
|
Legal fees |
|
- |
|
(6) |
|
(2) |
ABELOVICH, POLANO & ASOC. |
|
Legal fees |
|
- |
|
(2) |
|
(3) |
|
|
|
|
(1,228) |
|
(534) |
|
(495) |
| c. | Key Management personnel’s remuneration |
|
|
12.31.21 |
|
12.31.20 |
|
12.31.19 |
|
|
|
|
|
|
|
Salaries |
|
1,518 |
|
486 |
|
605 |
2021 FINANCIAL STATEMENTS NOTES |
The balances with related parties are as follow:
| d. | Receivables and payables |
|
|
12.31.21 |
|
12.31.20 |
Other receivables - Non current |
|
|
|
|
SACME |
|
2 |
|
5 |
|
|
|
|
|
|
|
|
|
|
Other receivables - Current |
|
|
|
|
FIDUS SGR |
|
- |
|
26 |
SACME |
|
1 |
|
2 |
|
|
1 |
|
28 |
|
|
|
|
|
|
|
|
|
|
Other payables |
|
|
|
|
Andina PLC |
|
(119) |
|
- |
SACME |
|
(19) |
|
(22) |
|
|
(138) |
|
(22) |
(*) Balances held and transactions carried
out as of December 31, 2020 and 2019, respectively, with the companies that comprised the Company’s former controlling economic
group (Pampa Energía S.A.) are disclosed for comparative purposes.
The other receivables with related
parties are not secured and do not accrue interest. No allowances have been recorded for these concepts in any of the periods covered
by these financial statements.
According to IAS 24, paragraphs
25 and 26, the Company applies the exemption from the disclosure requirement of transactions with related parties when the counterpart
is a governmental agency that has control, joint control or significant influence.
The agreements with related parties
that were in effect throughout fiscal year 2021 are detailed below:
Agreement with SACME
In the framework of the regulation
of the Argentine electric power sector established by Law No. 24,065 and SEE Resolution No. 61/92, and after the awarding of the CABA
and the Greater Buenos Aires distribution areas to edenor and Edesur S.A., the bidding terms and conditions of the privatization
provided that both companies were to organize in equal parts SACME to operate the electric power supervision and control center of the
transmission and sub-transmission system that feeds the market areas transferred to those companies.
The purpose of this company is
to manage, supervise and control the operation of both the electric power generation, transmission and sub-transmission system in the
CABA and the Buenos Aires metropolitan area and the interconnections with the Argentine Interconnection System, to represent Distribution
Companies in the operational management before CAMMESA, and, in general, to carry out the necessary actions for the proper development
of its activities.
The operating costs borne by
the Company in fiscal year 2021 amounted to $ 317.
2021 FINANCIAL STATEMENTS NOTES |
Agreement with EDELCOS S.A.
The agreement comprises the provision
to the Company of technical advisory services especially on financial topics. It expires in December 2026, but may be extended if so agreed
by the parties. In consideration of these services, the Company pays EDELCOS S.A. either an annual amount of $ 1,766 or the amount equivalent
to 1.75% of the annual gross billing, whichever results in the higher amount, plus the related value added tax. Any of the parties may
terminate the agreement at any time by giving 60 days’ notice, without having to comply with any further obligations or paying any
indemnification to the other party.
As of December 31, 2021, the
Company recorded charges for EDELCOS S.A. technical advisory services for a total of $ 911 relating to the services rendered in the second
half of 2021.
Fidus Sociedad de Garantía Recíproca
The Company’s Board of
Directors, at its meeting of December 4, 2018, approved the making of a contribution of funds to Fidus SGR for a sum of $ 25, in the capacity
as protector partner and with the scope set forth in Law No. 24,467.
Furthermore, on December 21,
2020, the contribution made as protector partner was refunded to the Company.
| Note | 36 |
Keeping of documentation |
On August 14, 2014, the CNV issued
General Resolution No. 629 which introduced changes to its regulations concerning the keeping and preservation of corporate and accounting
books and commercial documentation. In this regard, it is informed that for keeping purposes the Company has sent its workpapers and non-sensitive
information, whose periods for retention have not expired, to the warehouses of the firm Iron Mountain Argentina S.A., located at:
-
1245 Azara St. – CABA
| - | 2163 Don Pedro de Mendoza Av. – CABA |
-
2482 Amancio Alcorta Av. – CABA
-
Tucumán St. on the corner of El Zonda, Carlos Spegazzini
City, Ezeiza, Province of Buenos Aires
The detail of the documentation
stored outside the Company’s offices for keeping purposes, as well as the documentation referred to in Section 5 sub-section a.3)
of Part I of Chapter V of Title II of the Regulations (Technical Rule No. 2,013, as amended) is available at the Company’s registered
office.
| Note | 37 |
Shareholders’ Meetings |
The Company Ordinary Shareholders’
Meeting held on April 27, 2021 resolved, among other issues, the following:
| - | To approve edenor’s
Annual Report and Financial Statements as of December 31, 2020; |
| - | To allocate the $ 17,698 loss
for the year ended December 31, 2020 (at the purchasing power of the currency at December 31, 2021 amounts to $ 26,704) to the partial
absorption of the Discretionary reserve, under the terms of section 70, 3rd paragraph, of Business Organizations Law No. 19,550; |
| - | To approve the actions taken
by the Directors and Supervisory Committee members, together with their respective remunerations; |
| - | To appoint the authorities and
the external auditors for the current fiscal year; |
2021 FINANCIAL STATEMENTS NOTES |
Furthermore, on August 10, 2021
an Ordinary Shareholders’ Meeting was held, at which the following issues, among others, were dealt with:
| - | Consideration of the actions
taken by the Directors and Supervisory Committee members that resigned their positions as from June 30, 2021, and their respective remunerations; |
| - | Consideration of the appointment
of Directors and Supervisory Committee members as from June 30, 2021. |
Finally, and in relation to what
was discussed by the Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2020, in which it was decided to approve
the modification of Articles No. 13, 19, 23, 25 and 33 and an ordered text of the Bylaws, ad-referendum of its approval by the ENRE, dated
February 23, 2022 through Resolution No. 62/2022, the Regulatory Entity gave its approval.
| Note | 38 |
Termination of agreement on real estate asset |
With regard to the real estate
asset to be constructed, acquired by the Company in November 2015, the subsequent termination of the agreement due to RDSA’s default
in August 2018 and the respective legal actions brought by the Company against the seller and the insurance company, and with respect
to the settlement agreement dated September 30, 2019 that the Company entered into with Aseguradores de Cauciones S.A., the following
recent events stand out:
| - | With regard to the USD 1 million
receivable resulting from the agreement with Aseguradora de Cauciones S.A., the Company has received to date the payment of USD 720,000.
The remaining balance for USD 280,000 will be collected in accordance with a new payment schedule to be agreed upon between the Company
and the insurance company. At the date of these financial statements, such payment schedule is being negotiated. |
| - | With regard to RDSA reorganization
proceedings, the Company has filed ancillary proceedings for review of the amount declared inadmissible, relating to the contractually
agreed-upon penalty clause. The ancillary proceedings for review have been rejected by the Court, decision which the Company has appealed
to the Court of Appeals in Commercial Matters, where it is pending resolution. Due to the pandemic declared by the WHO on March 11, 2020
and the mandatory and preventive social isolation ordered by DNU 297/2020, and the subsequent extensions thereof, the originally set procedural
time limits have been extended, with the exclusivity period in order for the reorganization debtor to propose one or more reorganization
plans and obtain the consent required by law for the confirmation of the eventual agreement being currently underway. |
Finally, as a result of the assessment
of different alternatives aimed at the recovery of the referred to claim, on January 18, 2021, the Company’s Board of Directors
accepted the “Offer for the Assignment of the Claim in Litigation” made by Creaurban S.A., whereby edenor assigns and
transfers the claim, under the terms of section 1,614 and subsequent sections of the Civil and Commercial Code.
By
virtue of the assignment, Creaurban S.A. will assume the consequences and results deriving from the Reorganization proceedings,
the Claim in Litigation and/or any other action or arrangement deriving from the claim to collect the
Claim in Litigation; whereas the Company agrees to immediately give Creaurban S.A., with no deductions
whatsoever, any amount or assets received on account of the referred to claim.
The
assignment of the claim was agreed for a value of: (i) $ 400 million, which was paid by Creaurban S.A. on January 27, 2021; plus
(ii) an additional contingent price determined in meters that will be of 30% of the square meters to which the holder of the claim
would be entitled if an Internal Rate of Return of at least 15% per annum after taxes were applied to the New Tower Project, after
having deducted the New Tower’s development and construction costs and the commitments of the trust and the repayment of the
mortgage loan with Banco Patagonia S.A. To be valid, the assignment was subject to the acceptance by Banco Comafi S.A. of an
offer under similar terms, condition which was met on January 19, 2021,
with the offer of assignment thus becoming accepted by edenor.
2021 FINANCIAL STATEMENTS NOTES |
As of December 31, 2021, a gain
has been recognized on recovery of allowance for $ 580, which is disclosed in Other financial results, resulting from edenor’s
acceptance of the aforementioned offer.
| Note | 39 |
Change of control |
On December 28, 2020, Pampa Energía
S.A., the holder of 100% of edenor’s Class A shares, representing 51% of edenor‘s share capital, entered into
a share purchase and sale agreement, as the seller, with Empresa de Energía del Cono Sur S.A.
By virtue of such agreement,
Pampa Energía S.A. agreed, subject to certain conditions precedent such as the approval of both its shareholders’ meeting
and the ENRE, to sell control of edenor by transferring all the Class A Shares and votes in edenor.
In this regard, on February 17,
2021, the Shareholders’ meeting of Pampa Energía approved the referred to transaction.
On June 23, 2021, by means of
Resolution No. 207/2021, the ENRE authorized Pampa Energía S.A. to transfer all the Class A shares, representing 51% of the Company’s
share capital and votes, to Empresa de Energía del Cono Sur S.A. in accordance with the share purchase and sale agreement entered
into on December 28, 2020.
The transfer of all the Class
A shares, representing 51% of the Company’s share capital and votes owned by Pampa Energía S.A., in favor of Empresa de Energía
del Cono Sur S.A. was completed shortly afterwards on June 30, 2021.
Within this context, after the
aforementioned transfer, the Class A Directors tendered resignation; therefore, to fill the vacancies, the Company’s Supervisory
Committee appointed Messrs. Neil A. Bleasdale (Chairman), Esteban Macek (Vice-Chairman); Nicolás Mallo Huergo, Eduardo Vila, Edgardo
Volosin, Federico Zin and Mariano C. Lucero as Directors and Messrs. Hugo Quevedo, Mariano C. Libarona, Daniel O. Seppacuercia, Diego
Hernán Pino, Sebastián Álvarez and María Teresa Grieco as Alternate Directors.
Finally, as required by the regulations
in effect and within the time periods set forth therein, Empresa de Energía del Cono Sur S.A. will announce the launching of a
mandatory Public Tender Offer to all the holders of Class B and Class C common shares issued by the Company, including the holders of
ADS in respect of the underlying Class B common shares, in accordance with the provisions of General Resolution No. 779/2018 of the National
Securities Commission.
| Note | 40 |
Events after the reporting year |
The following are the events that
occurred subsequent to December 31, 2021:
| - | Public Hearing – ENRE Resolution
No. 25/2022, see Note 2.b; |
| - | Seasonal prices - ENRE Resolution
No. 41/2022, see Note 2.b; |
| - | Special system for the settlement
of debts – Executive Order No. 88/2022, see Note 2.c. |
| - | Amendment to the By-laws –
ENRE Resolution No. 62/2022, see Note 37. |
| - | Transition tariff – ENRE
Resolution No. 76/2022, see Note 2 paragraphs b and g. |