Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 (6-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 6-K 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2022

 

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (EDENOR)

 

(DISTRIBUTION AND MARKETING COMPANY OF THE NORTH )

(Translation of Registrant's Name Into English)

 

Argentina

(Jurisdiction of incorporation or organization)

Av. del Libertador 6363,

12th Floor,

City of Buenos Aires (A1428ARG),

Tel: [phone]

(Address of principal executive offices)

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F  X     Form 40-F        

 

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes          No  X  

 

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             .) 

 

 

 

 

 

 

 

 

 

 

CONDENSED INTERIM FINANCIAL STATEMENTS

 

 

 

AS OF MARCH 31, 2022 AND FOR THE

THREE-MONTH PERIOD ENDED MARCH 31, 2022

PRESENTED IN COMPARATIVE FORM

(Stated in millions of constant pesos – Note 3)

 

 

CONDENSED INTERIM FINANCIAL STATEMENTS

 

Legal Information		2
Condensed Interim Statement of Comprehensive Income (Loss)		3
Condensed Interim Statement of Financial Position		4
Condensed Interim Statement of Changes in Equity		6
Condensed Interim Statement of Cash Flows		7
Notes to the Condensed Interim Financial Statements:
1 |	General information	9
2 |	Regulatory framework	10
3 |	Basis of preparation	11
4 |	Accounting policies	12
5 |	Financial risk management	13
6 |	Critical accounting estimates and judgments	15
7 |	Contingencies and lawsuits	15
8 |	Revenue from sales and energy purchases	16
9 |	Expenses by nature	18
10 |	Other operating income (expense), net	19
11 |	Net finance costs	19
12 |	Basic and diluted loss per share	20
13 |	Property, plant and equipment	21
14 |	Right-of-use asset	23
15 |	Inventories	23
16 |	Other receivables	23
17 |	Trade receivables	24
18 |	Financial assets at amortized cost	24
19 |	Financial assets at fair value through profit or loss	25
20 |	Cash and cash equivalents	25
21 |	Share capital and additional paid-in capital	25
22 |	Allocation of profits	25
23 |	Trade payables	26
24 |	Other payables	26
25 |	Borrowings	27
26 |	Salaries and social security taxes payable	27
27 |	Income tax and deferred tax	28
28 |	Tax liabilities	29
29 |	Provisions	29
30 |	Related-party transactions	29
31 |	Shareholders’ Meeting	30
32 |	Termination of agreement on real estate asset	31
33 |	Debt restructuring	31
34 |	Change of control	33
35 |	Events after the reporting period	34
Report on review of Condensed Interim Financial Statements

 

CONDENSED INTERIM FINANCIAL STATEMENTS

Glossary of Terms

 

The following definitions, which are not technical ones, will help readers understand some of the terms used in the text of the notes to the Company’s Condensed Interim Financial Statements.

 

Terms	Definitions
ADS	American Depositary Shares
BCRA	Central Bank of Argentina
BNA	Banco de la Nación Argentina
CABA	City of Buenos Aires
CAMMESA	Compañía Administradora del Mercado Mayorista Eléctrico S.A. (the company in charge of the regulation and operation of the wholesale electricity market)
CNV	National Securities Commission
CPD	Company’s Own Distribution Cost
DNU	Executive Order issued on the grounds of Necessity and Urgency
edenor	Empresa Distribuidora y Comercializadora Norte S.A.
ENRE	National Regulatory Authority for the Distribution of Electricity
FACPCE	Argentine Federation of Professional Councils in Economic Sciences
FIDUS	FIDUS Sociedad de Garantías Recíprocas
GUDI	Large Users of the Distribution Company
GWh	Gigawatt hour
IAS	International Accounting Standards
IASB	International Accounting Standards Board
IFRIC	International Financial Reporting Interpretations Committee
IFRS	International Financial Reporting Standards
ISRE	International Standard on Review Engagements
MEM	Wholesale Electricity Market
MULC	Single Free Foreign Exchange Market
OSV	Orígenes Seguros de Vida S.A.
PBA	Province of Buenos Aires
PEN	Federal Executive Power
RDSA	Ribera Desarrollos S.A.
RECPAM	Gain (Loss) on exposure to the changes in the purchasing power of the currency
REM	Market Expectations Survey
RTI	Tariff Structure Review
SACME	S.A. Centro de Movimiento de Energía
SACDE	Sociedad Argentina de Construcción y Desarrollo Estratégico S.A.
SE	Energy Secretariat

1

CONDENSED INTERIM FINANCIAL STATEMENTS

Legal Information

Corporate name: Empresa Distribuidora y Comercializadora Norte S.A.

Legal address: 6363 Av. del Libertador Ave., City of Buenos Aires

Main business: Distribution and sale of electricity in the area and under the terms of the Concession Agreement by which this public service is regulated

Date of registration with the Public Registry of Commerce:

·

of the Articles of Incorporation: August 3, 1992

·

of the last amendment to the By-laws: May 28, 2007

 

Term of the Corporation: August 3, 2087

 

Registration number with the “Inspección General de Justicia” (the Argentine governmental regulatory agency of corporations): 1,559,940

 

Parent company: Empresa de Energía del Cono Sur S.A.

 

Legal address: 1252 Maipú Ave., 12^th Floor - CABA

 

Main business of the parent company: Investment in edenor‘s Class “A” shares

 

Interest held by the parent company in capital stock and votes: 51%

 

CAPITAL STRUCTURE

AS OF MARCH 31, 2022

(amounts stated in pesos)

 

 

Class of shares		Subscribed and paid-in (See Note 21)
Common, book-entry shares, face value 1 and 1 vote per share
Class A		462,292,111
Class B (1)		442,210,385
Class C (2)		1,952,604
		906,455,100

 

(1)

Includes 31,134,420 and 31,380,871 treasury shares as of March 31, 2022 and December 31, 2021, respectively.

(2)

Relates to the Employee Stock Ownership Program Class C shares that have not been transferred.

2

CONDENSED INTERIM FINANCIAL STATEMENTS

 

edenor

Condensed Interim Statement of Comprehensive Income (Loss)

for the three-month period ended March 31, 2022

presented in comparative form

(Stated in millions of constant pesos – Note 3)

 

	Note		03.31.22		03.31.21
Revenue	8		30,401		32,607
Energy purchases	8		(17,979)		(19,771)
Subtotal			12,422		12,836
Transmission and distribution expenses	9		(7,892)		(8,072)
Gross margin			4,530		4,764
Selling expenses	9		(3,534)		(3,789)
Administrative expenses	9		(2,404)		(2,051)
Other operating income	10		1,123		853
Other operating expense	10		(1,255)		(1,162)
Operating profit			(1,540)		(1,385)
Financial income	11		8		21
Financial costs	11		(8,318)		(6,868)
Other financial costs	11		(1,536)		117
Net financial costs			(9,846)		(6,730)
Monetary gain (RECPAM)			11,782		8,402
Profit before taxes			396		287
Income tax	27		(3,214)		(1,305)
Loss for the period			(2,818)		(1,018)
Comprehensive loss for the period attributable to:
Owners of the parent			(2,818)		(1,018)
Comprehensive loss for the period			(2,818)		(1,018)
Basic and diluted loss per share:
Loss per share (argentine pesos per share)	12		(3.22)		(1.16)

 

The accompanying notes are an integral part of the Condensed Interim Financial Statements.

3

CONDENSED INTERIM FINANCIAL STATEMENTS

 

edenor

Condensed Interim Statement of Financial Position

as of March 31, 2022 presented in comparative form

(Stated in millions of constant pesos – Note 3)

 

	Note		03.31.22		12.31.21
ASSETS
Non-current assets
Property, plant and equipment	13		226,715		226,827
Interest in joint ventures			14		16
Right-of-use asset	14		510		494
Other receivables	16		4		9
Total non-current assets			227,243		227,346
Current assets
Inventories	15		3,034		3,994
Other receivables	16		2,951		2,476
Trade receivables	17		19,200		20,390
Financial assets at amortized cost	18		165		282
Financial assets at fair value through profit or loss	19		15,915		17,938
Cash and cash equivalents	20		5,456		3,683
Total current assets			46,721		48,763
TOTAL ASSETS			273,964		276,109

4

CONDENSED INTERIM FINANCIAL STATEMENTS

edenor

Condensed Interim Statement of Financial Position

as of March 31, 2022 presented in comparative form (continued)

(Stated in millions of constant pesos – Note 3)

 

	Note		03.31.22		12.31.21
EQUITY
Share capital and reserve attributable to the owners of the Company
Share capital	21		875		875
Adjustment to share capital	21		64,437		64,437
Treasury stock	21		31		31
Adjustment to treasury stock	21		1,384		1,384
Additional paid-in capital	21		889		889
Cost treasury stock			(5,349)		(5,349)
Legal reserve			4,521		4,521
Voluntary reserve			43,779		43,779
Other comprehensive loss			(231)		(231)
Accumulated losses			(27,598)		(24,780)
TOTAL EQUITY			82,738		85,556
LIABILITIES
Non-current liabilities
Trade payables	23		704		767
Other payables	24		10,348		10,975
Deferred revenue			1,676		1,959
Salaries and social security payable	26		482		463
Benefit plans			1,171		1,157
Deferred tax liability	27		59,015		57,396
Income tax payable	27		1,595		-
Provisions	29		4,511		4,622
Total non-current liabilities			79,502		77,339
Current liabilities
Trade payables	23		89,132		88,439
Other payables	24		4,842		4,617
Borrowings	25		11,334		11,914
Deferred revenue			44		51
Salaries and social security payable	26		3,928		5,244
Benefit plans			131		152
Income tax payable	27		1,086		1,456
Tax liabilities	28		622		718
Provisions	29		605		623
Total current liabilities			111,724		113,214
TOTAL LIABILITIES			191,226		190,553
TOTAL LIABILITIES AND EQUITY			273,964		276,109

 

The accompanying notes are an integral part of the Condensed Interim Financial Statements.

5

CONDENSED INTERIM FINANCIAL STATEMENTS

 

edenor

Condensed Interim Statement of Changes in Equity

for the three-month period ended March 31, 2022

presented in comparative form

(Stated in millions of constant pesos – Note 3)

 

	Share capital		Adjustment to share capital		Treasury stock		Adjustment to treasury stock		Additional paid-in capital		Cost treasury stock		Legal reserve		Voluntary reserve		Other reserve		Other comprehen- sive loss		Accumulated (losses) profits		Total equity
Balance at December 31, 2020	875		64,427		31		1,394		882		(5,349)		4,521		74,782		-		(382)		(31,003)		110,178
Loss for the three-month period	-		-		-		-		-		-		-		-		-		-		(1,018)		(1,018)
Balance at March 31, 2021	875		64,427		31		1,394		882		(5,349)		4,521		74,782		-		(382)		(32,021)		109,160
Ordinary and Extraordinary Shareholders’ Meeting held on April 27, 2021	-		-		-		-		-		-		-		(31,003)		-		-		31,003		-
Other Reserve Constitution - Share-bases compensation plan	-		-		-		-		-		-		-		-		7		-		-		7
Payment of Other Reserve Constitution - Share-based compensation plan	-		10		-		(10)		7		-		-		-		(7)		-		-		-
Other comprehensive results	-		-		-		-		-		-		-		-		-		151		-		151
Loss for the nine-month period	-		-		-		-		-		-		-		-		-		-		(23,762)		(23,762)
Balance at December 31, 2021	875		64,437		31		1,384		889		(5,349)		4,521		43,779		-		(231)		(24,780)		85,556
Loss for the three-month period	-		-		-		-		-		-		-		-		-		-		(2,818)		(2,818)
Balance at March 31, 2022	875		64,437		31		1,384		889		(5,349)		4,521		43,779		-		(231)		(27,598)		82,738

 

The accompanying notes are an integral part of the Condensed Interim Financial Statements.

6

CONDENSED INTERIM FINANCIAL STATEMENTS

edenor

Condensed Interim Statement of Cash Flows

for the three-month period ended March 31, 2022

presented in comparative form

(Stated in millions of constant pesos – Note 3)

 

	Note		03.31.22		03.31.21
Cash flows from operating activities
Loss for the period			(2,818)		(1,018)
Adjustments to reconcile net (loss) profit to net cash flows from operating activities:
Depreciation of property, plants and equipments	13		2,722		2,643
Depreciation of right-of-use assets	14		147		181
Loss on disposals of property, plants and equipments	13		74		58
Net accrued interest	11		8,304		6,843
Income from customer surcharges	10		(450)		(631)
Exchange difference	11		59		924
Income tax	27		3,214		1,305
Allowance for the impairment of trade and other receivables, net of recovery	9		392		1,035
Adjustment to present value of receivables	11		45		38
Provision for contingencies	29		824		616
Changes in fair value of financial assets	11		869		(494)
Accrual of benefit plans	9		265		333
Recovery of provision for credit RDSA	11		-		(674)
Net gain from the cancelattion of Corporate Notes	11		-		(2)
Income from non-reimbursable customer contributions	10		(12)		(15)
Other financial results			563		92
Monetary gain (RECPAM)			(11,782)		(8,402)
Changes in operating assets and liabilities:
Increase in trade receivables			(1,505)		(1,641)
(Increase) Decrease in other receivables			(233)		1,202
Increase in inventories			(45)		(199)
Increase in financial assets at amortized cost			-		(499)
Increase in deferred revenue			1		-
Increase in trade payables			4,941		4,036
Increase in salaries and social security payable			(502)		(517)
Decrease in benefit plans			(90)		(22)
Decrease in tax liabilities			(166)		(1,536)
Increase in other payables			672		2,672
Decrease in provisions	29		(199)		(64)
Net cash flows generated by operating activities			5,290		6,264

 

7

CONDENSED INTERIM FINANCIAL STATEMENTS

 

edenor

Condensed Interim Statement of Cash Flows

for the three-month period ended March 31, 2022

presented in comparative form (continued)

(Stated in millions of constant pesos – Note 3)

 

	Note		03.31.22		03.31.21
Cash flows from investing activities
Payment of property, plants and equipments			(2,300)		(2,905)
Purchase net of Mutual funds and government bonds			(1,307)		(387)
Mutuum charges granted to third parties			-		5
Collection of receivables from sale of subsidiaries			-		12
Net cash flows used in investing activities			(3,607)		(3,275)
Cash flows from financing activities
Payment of lease liability			(188)		(163)
Cancelattion of Corporate Notes			-		(14)
Net cash flows used in financing activities			(188)		(177)
Increase in cash and cash equivalents			1,495		2,812
Cash and cash equivalents at the beginning of the year	20		3,683		7,642
Exchange differences in cash and cash equivalents			279		247
Result from exposure to inflation			(1)		(2)
Increase in cash and cash equivalents			1,495		2,812
Cash and cash equivalents at the end of the period	20		5,456		10,699
Supplemental cash flows information
Non-cash activities
Adquisition of advances to suppliers, property, plant and equipment through increased trade payables			(384)		(1,015)
Adquisition of advances to suppliers, right-of-use assets through increased trade payables			(163)		(99)

 

The accompanying notes are an integral part of the Condensed Interim Financial Statements.

8

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

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.

 

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 in the last two years, which 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.

 

With regard to the Company, in 2021 and the first months of 2022, the values of the electricity rate schedules suffered changes that, except for the provisions of ENRE Resolutions Nos. 107/2021 and 76/2022 dated April 30, 2021 and February 25, 2022, respectively, 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 inflation, with the annual 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 some recovery after the effect caused by the COVID-19 pandemic, 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.

9

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

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; payment obligations which have been partially regularized, but as of March 31, 2022 accumulate a past due principal balance of $ 32,184, plus interest and charges for $ 31,002.

 

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 reliability.

 

Due to that which has been previously described, the Board of Directors believes there is material uncertainty that may cast significant doubt upon 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.

 

Nevertheless, these condensed interim 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

 

At the date of issuance of these condensed interim financial statements, there exist the following changes with respect to the situation reported by the Company in the Financial Statements as of December 31, 2021:

 

a)

Electricity rate situation

 

On April 18, 2022, by means of SE Resolutions Nos. 235 and 236/2022, the PEN called a Public Hearing to be held on May 11 and 12, 2022, respectively, to consider the following issues:

 

-

the treatment of the new seasonal reference prices of the Seasonal Price of Electricity (PEST), applicable as from June 1, 2022; and

10

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

-

the treatment of the implementation of the segmentation system for the granting of Federal Government subsidies on energy prices to natural gas and electricity consumers, for the 2022-2023 biennium.

 

Neither of the above-mentioned items represent an improvement in the Company’s revenues from the CPD; they will only imply the transfer of prices to and/or elimination of subsidies on the amounts to be billed to Consumers.

 

Moreover, on May 10, 2022, by means of Resolution No. 146/2022, the ENRE approves 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 May 1, 2022.

 

b)

Framework Agreement

 

By virtue of the Agreement described in Note 2.e) to the Financial Statements as of December 31, 2021, the Company received a first disbursement for $ 1,500, which was specifically used for complying with the Preventive and Corrective Maintenance Work Plan for the Electricity Distribution Network. The Company used the funds only after the ENRE certified compliance with both the degree of completion of the works included in the referred to plan and the related financial milestones.

 

As of March 31, 2022, 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 condensed interim financial statements, the Company has used a total of $ 2,218, of which $ 718 is pending crediting, relating to the reports on progress of the works performed. The income recognized in fiscal year 2022, which relates to reports on progress of the works performed with the Company’s own funds, amounts to $ 423.8 (which at the purchasing power of the currency at March 31, 2022 amounts to $ 459).

 

 

Note

3 |    Basis of preparation

 

These condensed interim financial statements for the three-month period ended March 31, 2022:

 

i)

have been prepared in accordance with the provisions of IAS 34 “Interim Financial Reporting”, incorporated by the CNV;

ii)

have not been audited; they have been reviewed by the Independent Accountant in accordance with ISRE 2410, whose scope is substantially less than that of an audit performed in accordance with applicable auditing standards. The Company’s Management estimates that they include all the necessary adjustments to fairly present the results of operations for each period. The results of operations for the three-month period ended March 31, 2022 and its comparative period as of March 31, 2021 do not necessarily reflect the Company’s results in proportion to the full fiscal year. They were approved for issue by the Company’s Board of Directors on May 12, 2022;

iii)

are measured in pesos (the legal currency in Argentina) restated in accordance with that mentioned in this Note, which is also the presentation currency;

iv)

must be read together with the audited Financial Statements as of December 31, 2021 prepared under IFRS.

11

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Comparative information

 

The balances as of December 31 and March 31, 2021, as the case may be, disclosed in these condensed interim financial statements for comparative purposes, arise as a result of restating the annual Financial Statements and the Condensed Interim Financial Statements as of those dates, respectively, to the purchasing power of the currency at March 31, 2022, as a consequence of the restatement of financial information described hereunder. Furthermore, certain amounts of the financial statements presented in comparative form have been reclassified in order to maintain consistency of presentation with the amounts of the current periods.

 

Restatement of financial information

 

The condensed interim financial statements, including the figures relating to the previous year/period, have been stated in terms of the measuring unit current at March 31, 2022, in accordance with IAS 29 “Financial reporting in hyperinflationary economies”, using the indexes published by the FACPCE. The inflation rate applied for the January 1, 2022 - March 31, 2022 period was 16.1%.

 

 

Note

4 |    Accounting policies

 

The accounting policies adopted for these condensed interim financial statements are consistent with those used in the Financial Statements for the last financial year, which ended on December 31, 2021.

 

Accounting standards, amendments and interpretations issued by the IASB in the last few years that are effective as of March 31, 2022 and have been adopted by the Company:

 

- 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.

 

- Annual improvements to IFRS – 2018-2020 Cycle: Amendments to IFRS 1 (translation differences in subsidiaries); IFRS 9 (derecognition of financial liabilities); IFRS 16 (illustrative example of leasehold improvements); and IAS 41 (cash flows in the fair value of biological assets).

 

- 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.

 

- 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.

 

There are no new IFRS or IFRIC applicable as from this period that have a material impact on the Company’s condensed interim financial statements.

12

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

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.

 

Additionally, the difficulty in obtaining financing in international or national markets could affect some of the Company’s business variables, such as interest rates, foreign currency exchange rates and the access to sources of financing.

 

With regard to the Company’s risk management policies, there have been no significant changes since the last fiscal year end.

 

a.

Market risks

 

i.

Currency risk

 

As of March 31, 2022 and December 31, 2021, the Company’s balances in foreign currency are as follow:

		Currency		Amount in foreign currency		Exchange rate (1)		Total 03.31.22		Total 12.31.20
ASSETS
CURRENT ASSETS
Other receivables		USD		6		111.010		666		120
Financial assets at fair value through profit or loss		USD		82		111.010		9,103		5,486
Cash and cash equivalents		USD		12		111.010		1,332		1,431
TOTAL CURRENT ASSETS								11,101		7,037
TOTAL ASSETS								11,101		7,037
LIABILITIES
CURRENT LIABILITIES
Trade payables		USD		5		111.010		555		1,431
		EUR		1		123.121		123		-
Borrowings		USD		102		111.010		11,334		11,914
Other payables		USD		10		111.010		1,110		1,192
TOTAL CURRENT LIABILITIES								13,122		14,537
TOTAL LIABILITIES								13,122		14,537

 

(1)

The exchange rates used are the BNA exchange rates in effect as of March 31, 2022 for US Dollars (USD) and Euros (EUR).

 

 

ii.

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 for carrying out such measurements. The fair value hierarchy has the following levels:

13

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

· 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 March 31, 2022 and December 31, 2021:

 

		LEVEL 1
At March 31, 2022
Assets
Other receivables
Government bonds		602
Financial assets at fair value through profit or loss:
Government bonds		12,102
Mutual funds		3,813
Cash and cash equivalents:
Mutual funds		3,838
Total assets		20,355
At December 31, 2021
Assets
Financial assets at fair value through profit or loss:
Government bonds		10,300
Mutual funds		7,638
Cash and cash equivalents
Mutual funds		1,566
Total assets		19,504

 

 

iii.

Interest rate risk

 

Interest rate risk 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 mainly related to its 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 March 31, 2022 and December 31, 2021 all 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.

14

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

6 |    Critical accounting estimates and judgments

 

The preparation of the condensed interim financial statements requires the Company’s Management to make estimates and assessments concerning the future, exercise critical judgment 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 permanently 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 condensed interim financial statements.

 

In the preparation of these condensed interim financial statements, there were no changes in either the critical judgments made by the Company when applying its accounting policies or the sources of estimation uncertainty used with respect to those applied in the Financial Statements for the year ended December 31, 2021.

 

Note

7 |    Contingencies and lawsuits

 

As of March 31, 2022, the provision for contingencies has been recorded to face situations existing at the end of each period that may result in a loss for the Company if one or more future events occurred or failed to occur.

 

At the date of issuance of these condensed interim financial statements, there are no significant changes with respect to the situation reported by the Company in the Financial Statements as of December 31, 2021, except for the following:

 

-

AFIP’s Income Tax claim, Undocumented outflows and VAT

 

On February 18, 2022, the Company was served notice of the initiation of a new verification process in respect of the same suppliers in question, with a request for additional information on transactions performed from January 2019 to the present. It was answered within the legal timeframe and in proper form on March 8, 2022.

In the Company’s opinion, strong and sufficient arguments exist to make its position prevail at the judicial stage. Therefore, no liabilities whatsoever have been recorded for this concept as of March 31, 2022.

 

Nevertheless, the Company is currently assessing different scenarios with the aim of defending itself against the tax claims, among them, adhering to easy payment term or debt regularization plans existing at the time the decision is made by Management.

15

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

8 |    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 accrued. 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.

16

CONDENSED INTERIM 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 reflects the costs of transmission 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%.

 

 

		03.31.22				03.31.21
		GWh		$		GWh		$
Sales of electricity
Small demand segment: Residential use and public lighting (T1)		3,040		17,084		2,873		20,042
Medium demand segment: Commercial and industrial (T2)		391		3,112		373		3,876
Large demand segment (T3)		936		8,536		880		7,179
Other: (Shantytowns/Wheeling system)		1,103		1,466		1,085		1,304
Subtotal - Sales of electricity		5,470		30,198		5,211		32,401
Other services
Right of use of poles				185				187
Connection and reconnection charges				18				19
Subtotal - Other services				203				206
Total - Revenue				30,401				32,607

 

		03.31.22				03.31.21
		GWh		$		GWh		$
Energy purchases (1)		6,351		(17,979)		6,256		(19,771)

 

 

(1)

As of March 31, 2022 and 2021, includes technical and non-technical energy losses for 881 GWh and 1,045 GWh, respectively.

17

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

9 |    Expenses by nature

 

The detail of expenses by nature is as follows:

 

Expenses by nature at 03.31.22
Description		Transmission and distribution expenses		Selling expenses		Administrative expenses		Total
Salaries and social security taxes		3,100		471		871		4,442
Pension plans		185		28		52		265
Communications expenses		49		147		-		196
Allowance for the impairment of trade and other receivables		-		392		-		392
Supplies consumption		554		-		55		609
Leases and insurance		1		-		165		166
Security service		173		20		14		207
Fees and remuneration for services		1,167		798		840		2,805
Public relations and marketing		-		200		-		200
Advertising and sponsorship		-		103		-		103
Depreciation of property, plants and equipments		2,141		319		262		2,722
Depreciation of right-of-use asset		15		29		103		147
Directors and Supervisory Committee members’ fees		-		-		11		11
ENRE penalties		507		575		-		1,082
Taxes and charges		-		452		24		476
Other		-		-		7		7
At 03.31.22		7,892		3,534		2,404		13,830

The expenses included in the chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of March 31, 2022 for $ 605.4.

 

Expenses by nature at 03.31.21
Description		Transmission and distribution expenses		Selling expenses		Administrative expenses		Total
Salaries and social security taxes		3,211		506		733		4,450
Pension plans		240		38		55		333
Communications expenses		70		171		-		241
Allowance for the impairment of trade and other receivables		-		1,035		-		1,035
Supplies consumption		495		-		61		556
Leases and insurance		-		1		157		158
Security service		144		10		18		172
Fees and remuneration for services		1,423		865		590		2,878
Public relations and marketing		-		5		-		5
Advertising and sponsorship		-		2		-		2
Depreciation of property, plants and equipments		2,079		310		254		2,643
Depreciation of right-of-use asset		18		36		127		181
Directors and Supervisory Committee members’ fees		-		-		13		13
ENRE penalties (2)		392		351		-		743
Taxes and charges		-		459		24		483
Other		-		-		19		19
At 03.31.21		8,072		3,789		2,051		13,912

 

The expenses included in the chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of March 31, 2021 for $ 610.2.

18

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

10 |    Other operating income (expense), net

 

	Note		03.31.22		03.31.21
Other operating income
Income from customer surcharges			450		631
Commissions on municipal taxes collection			104		102
Fines to suppliers			14		13
Services provided to third parties			69		54
Related parties	30.a		-		2
Income from non-reimbursable customer contributions			12		15
Expense recovery			9		-
Construction plan Framework agreement	2.b		459		-
Other			6		36
Total other operating income			1,123		853
Other operating expense
Gratifications for services			(33)		(95)
Cost for services provided to third parties			(19)		(14)
Severance paid			(11)		(10)
Debit and Credit Tax			(284)		(315)
Provision for contingencies	29		(824)		(616)
Disposals of property, plant and equipment			(74)		(58)
Other			(10)		(54)
Total other operating expense			(1,255)		(1,162)

 

 

Note

11 | Net financial costs

 

	Note		03.31.22		03.31.21
Financial income
Financial interest			8		21
Total financial income			8		21
Financial costs
Commercial interest			(7,055)		(5,275)
Interest and other			(1,256)		(1,588)
Fiscal interest			(1)		(1)
Bank fees and expenses			(6)		(4)
Total financial costs			(8,318)		(6,868)
Other financial results
Changes in fair value of financial assets			(869)		494
Net gain from the cancelattion of Corporate Notes			-		2
Exchange differences			(59)		(924)
Adjustment to present value of receivables			(45)		(38)
Recovery of provision for credit RDSA	32		-		674
Other financial costs (*)			(563)		(91)
Total other financial costs			(1,536)		117
Total net financial costs			(9,846)		(6,730)

 

(*) As of March 31, 2022, relates to EDELCOS S.A. technical assistance.

19

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

12 | Basic and diluted loss per share

 

Basic

 

The basic loss 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 March 31, 2022 and 2021, excluding common shares purchased by the Company and held as treasury shares.

 

The basic loss per share coincides with the diluted loss per share, inasmuch as there exist neither preferred shares nor Corporate Notes convertible into common shares.

 

		03.31.22		03.31.21
Loss for the period attributable to the owners of the Company		(2,818)		(1,018)
Weighted average number of common shares outstanding		875		875
Basic and diluted loss per share – in pesos		(3.22)		(1.16)

20

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

13 | 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 12.31.21
Cost		6,592		59,184		147,377		64,040		13,851		50,639		560		342,243
Accumulated depreciation		(1,404)		(20,457)		(58,987)		(26,330)		(8,238)		-		-		(115,416)
Net amount		5,188		38,727		88,390		37,710		5,613		50,639		560		226,827
Additions		16		-		4		94		94		2,476		-		2,684
Disposals		-		-		(61)		(13)		-		-		-		(74)
Transfers		17		5		2,376		570		598		(4,028)		462		-
Depreciation for the period		(34)		(510)		(1,248)		(624)		(306)		-		-		(2,722)
Net amount 03.31.22		5,187		38,222		89,461		37,737		5,999		49,087		1,022		226,715
At 03.31.22
Cost		6,625		59,189		149,657		64,683		14,543		49,087		1,022		344,806
Accumulated depreciation		(1,438)		(20,967)		(60,196)		(26,946)		(8,544)		-		-		(118,091)
Net amount		5,187		38,222		89,461		37,737		5,999		49,087		1,022		226,715

 

·

During the period ended March 31, 2022, the Company capitalized as direct own costs $ 605.4.

21

CONDENSED INTERIM 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 12.31.20
Cost		6,386		55,124		140,446		61,374		10,986		49,123		566		324,005
Accumulated depreciation		(1,253)		(18,448)		(54,299)		(23,995)		(7,192)		-		-		(105,187)
Net amount		5,133		36,676		86,147		37,379		3,794		49,123		566		218,818
Additions		7		-		3		163		380		3,153		214		3,920
Disposals		-		-		(11)		(45)		(2)		-		-		(58)
Transfers		-		901		1,446		926		(220)		(2,918)		(135)		-
Depreciation for the period		(39)		(503)		(1,233)		(630)		(238)		-		-		(2,643)
Net amount 03.31.21		5,101		37,074		86,352		37,793		3,714		49,358		645		220,037
At 03.31.21
Cost		6,393		56,023		141,827		62,393		11,139		49,358		645		327,778
Accumulated depreciation		(1,292)		(18,949)		(55,475)		(24,600)		(7,425)		-		-		(107,741)
Net amount		5,101		37,074		86,352		37,793		3,714		49,358		645		220,037

 

·

During the period ended March 31, 2021, the Company capitalized as direct own costs $ 610.2.

22

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

14 | Right-of-use asset

 

The leases recognized as right-of-use assets in accordance with IFRS 16 are disclosed below:

 

	03.31.22		12.31.21
Right of uses asset by leases	510		494

 

 

The development of right-of-use assets is as follows:

 

	03.31.22		03.31.21
Balance at beginning of year	494		492
Additions	163		99
Depreciation for the period	(147)		(181)
Balance at end of the period	510		410

 

 

Note	15 | Inventories

 

		03.31.22		12.31.21
Supplies and spare-parts		3,033		3,994
Advance to suppliers		1		-
Total inventories		3,034		3,994

 

Note

16 | Other receivables

 

	Note		03.31.22		12.31.21
Non-current:
Financial credit			2		7
Related parties	30.d		2		2
Total non-current			4		9
Current:
Credit for Real estate asset	32		31		36
Construction plan Framework agreement	2.b		718		341
Government bonds (*)			602		-
Judicial deposits			88		99
Security deposits			67		75
Prepaid expenses			143		241
Advances to personnel			1		28
Financial credit			14		16
Advances to suppliers			136		10
Tax credits			1,084		1,585
Related parties	30.d		1		1
Debtors for complementary activities			90		73
Other			6		5
Allowance for the impairment of other receivables			(30)		(34)
Total current			2,951		2,476

 

(*) Relates to 2030 Global Bonds of the Argentine Republic (GD30) for 9,130,000 NV assigned to Global Valores S.A. according to the offer of assignment of securities dated February 7, 2022. The Company retains the risks and rewards of the aforementioned bonds and may make use of them, at its own request, in a term of 15 days.

23

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

The value of the Company’s other financial receivables approximates their fair value.

 

The other non-current 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:

 

			03.31.22		03.31.21
Balance at beginning of year			34		3,859
Increase			9		2
Decrease			-		(2,681)
Result from exposure to inlfation			(4)		(389)
Recovery			(9)		(674)
Balance at end of the period			30		117

 

 

Note

17 | Trade receivables

 

			03.31.22		03.31.21
Sales of electricity – Billed			15,461		17,457
Receivables in litigation			228		294
Allowance for the impairment of trade receivables			(6,369)		(6,973)
Subtotal			9,320		10,778
Sales of electricity – Unbilled			9,380		9,165
PBA & CABA government credit			498		445
Fee payable for the expansion of the transportation and others			2		2
Total Trade receivables			19,200		20,390

 

 

The value of the Company’s trade receivables approximates their fair value.

 

The roll forward of the allowance for the impairment of trade receivables is as follows:

 

			03.31.22		03.31.21
Balance at beginning of the year			6,973		8,067
Increase			392		1,035
Decrease			(11)		(106)
Result from exposure to inlfation			(985)		(988)
Balance at end of the period			6,369		8,008

 

Note

18 | Financial assets at amortized cost

 

			03.31.22		12.31.21
Government bonds			165		282

24

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

19 | Financial assets at fair value through profit or loss

 

			03.31.22		12.31.21
Government bonds			12,102		10,300
Mutual funds			3,813		7,638
Total Financial assets at fair value through profit or loss			15,915		17,938

 

 

Note

20 | Cash and cash equivalents

 

		03.31.22		12.31.21		03.31.21
Cash and banks		1,618		1,762		2,551
Time deposits		-		355		-
Mutual funds		3,838		1,566		8,148
Total cash and cash equivalents		5,456		3,683		10,699

 

 

Note

21 | Share capital and additional paid-in capital

 

		Share capital		Additional paid-in capital		Total
Balance at December 31, 2020		66,727		882		67,609
Payment of Other reserve constitution - Share-bases compensation plan		-		7		7
Balance at December 31, 2021 and March 31, 2022		66,727		889		67,616

 

As of March 31, 2022, 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.

 

Note

22 | 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.

 

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.

 

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.

25

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

23 | Trade payables

 

			03.31.22		12.31.21
Non-current
Customer guarantees			406		426
Customer contributions			298		341
Total non-current			704		767
Current
Payables for purchase of electricity - CAMMESA			69,176		66,892
Provision for unbilled electricity purchases - CAMMESA			12,761		11,006
Suppliers			6,628		9,917
Advance to customer			533		543
Customer contributions			33		38
Discounts to customers			1		43
Total current			89,132		88,439

 

 

The fair values of non-current customer contributions as of March 31, 2022 and December 31, 2021 amount to $ 36 and $ 53.9, 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.

 

Note

24 | Other payables

 

	Note		03.31.22		12.31.21
Non-current
ENRE penalties and discounts			10,255		10,883
Financial Lease Liability(1)			93		92
Total Non-current			10,348		10,975
Current
ENRE penalties and discounts			4,401		4,127
Related parties	30.d		129		160
Advances for works to be performed			13		15
Financial Lease Liability (1)			295		311
Other			4		4
Total Current			4,842		4,617

 

The value of the Company’s other financial payables approximates their fair value.

 

(1)

The development of the financial lease liability is as follows:

 

	03.31.22		03.31.21
Balance at beginning of year	403		625
Increase	146		89
Payments	(188)		(292)
Exchange difference	40		85
Interest	43		92
Result from exposure to inflation	(56)		(115)
Balance at end of the period	388		484

26

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

25 | Borrowings

 

		03.31.22		12.31.21
Corporate notes (1)		10,881		11,688
Interest from corporate notes		453		226
Total Borrowings		11,334		11,914

 

(1)

Net of debt issuance, repurchase and redemption expenses.

 

The fair values of the Company’s borrowings as of March 31, 2022 and December 31, 2021 amount approximately to $ 9,993.5 and $ 10,428.4 respectively. Such values were determined on the basis of the estimated market price of the Company’s Corporate Notes at the end of each period. The applicable fair value category is Level 1.

 

On April 12, 2022, the Company launched an exchange offer of the existing Class No. 9 Corporate Notes issued by the Company maturing on October 25, 2022, for New Class N I Corporate Notes due in 2025, to be issued for a nominal value of up to USD 120,000,000 (Note 33).

 

 

Note

26 | Salaries and social security taxes payable

 

		03.31.22		12.31.21
Non-current
Seniority-based bonus		482		463
Current
Salaries payable and provisions		2,923		4,619
Social security payable		981		597
Early retirements payable		24		28
Total current		3,928		5,244

 

The value of the Company’s salaries and social security taxes payable approximates their fair value.

27

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

27 | Income tax and deferred tax

 

The breakdown of deferred tax assets and liabilities is as follows:

 

	03.31.22		12.31.21
Deferred tax assets
Trade receivables and other receivables	2,361		2,592
Trade payables and other payables	1,519		1,394
Salaries and social security payable	620		618
Benefit plans	18		21
Tax liabilities	25		29
Provisions	1,825		1,876
Deferred tax asset	6,368		6,530
Deferred tax liabilities
Property, plants and equipments	(61,489)		(59,190)
Financial assets at fair value through profit or loss	(514)		(443)
Borrowings	(1)		(2)
Adjustment effect on tax inflation	(3,379)		(4,291)
Deferred tax liability	(65,383)		(63,926)
Net deferred tax liability	(59,015)		(57,396)

 

 

The breakdown of the income tax expense for the period includes two effects: (i) the current tax for the period payable in accordance with the tax legislation applicable to the Company; and (ii) the effect of applying the deferred tax method on the temporary differences arising from the valuation of assets and liabilities in accordance with tax and accounting criteria.

 

The breakdown of the income tax expense is as follows:

 

		03.31.22		03.31.21
Deferred tax		(1,619)		(1,528)
Change in the income tax rate		-		1,113
Current tax		(1,595)		(890)
Income tax expense		(3,214)		(1,305)
		03.31.22		03.31.21
Profit for the period before taxes		396		287
Applicable tax rate		35%		30%
Result for the period at the tax rate		(139)		(86)
Loss on net monetary position		1,021		(456)
Adjustment effect on tax inflation		(4,081)		(1,861)
Income tax expense		(15)		(15)
Change in the income tax rate		-		1,113
Income tax expense		(3,214)		(1,305)

28

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

The breakdown of the income tax payable is as follows:

		03.31.22		12.31.21
Non-current
Tax payable 2022		1,595		-
Total non-current		1,595		-
Current
Tax payable 2021		2,042		2,371
Tax withholdings		(956)		(915)
Total current		1,086		1,456

 

Note

28 | Tax liabilities

 

		03.31.22		12.31.21
Non-current
Provincial, municipal and federal contributions and taxes		150		152
Tax withholdings		232		264
SUSS withholdings		21		32
Municipal taxes		219		270
Total Tax liabilities		622		718

 

 

Note

29 | Provisions

 

		Non-current liabilities		Current liabilities
		Contingencies
At 12.31.21		4,622		623
Increases		554		270
Decreases		-		(199)
Result from exposure to inflation for the period		(665)		(89)
At 03.31.22		4,511		605
At 12.31.20		4,259		627
Increases		557		59
Decreases		-		(64)
Result from exposure to inflation for the period		(499)		(74)
At 03.31.21		4,317		548

 

 

Note

30 | Related-party transactions

 

The following transactions were carried out with related parties:

 

a.

Income

 

Company		Concept		03.31.22		03.31.21
PESA (*)		Impact study		-		2

29

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

 

 

b.

Expense

 

Company		Concept		03.31.22		03.31.21
EDELCOS S.A.		Technical advisory services on financial matters		(563)		-
PESA (*)		Technical advisory services on financial matters		-		(92)
SACME		Operation and oversight of the electric power transmission system		(54)		(31)
OSV (*)		Hiring life insurance for staff		-		(9)
SB&WM Abogados (*)		Legal fees		-		(8)
Estudio Cuneo Libarona Abogados		Legal fees		(1)		-
				(618)		(140)

 

c.

Key Management personnel’s remuneration

 

		03.31.22		03.31.21
Salaries		296		323

 

The balances with related parties are as follow:

 

d.

Receivables and payables

 

		03.31.22		12.31.21
Other receivables - Non current
SACME		2		2
Other receivables - Current
SACME		1		1

 

		03.31.22		12.31.21
Other payables
Andina PLC		(119)		(138)
SACME		(10)		(22)
		(129)		(160)

(*) Balances held and transactions carried out as of March 31, 2022, with the companies that comprised the Company’s former controlling economic group (Pampa Energía S.A.) are disclosed for comparative purposes.

 

Note

31 |    Ordinary and Extraordinary Shareholders’ Meeting

 

The Company’s Annual General Meeting held on April 6, 2022 resolved, among other issues, the following:

 

-

To approve edenor’s Annual Report and Financial Statements as of December 31, 2021;

-

To allocate the $ 21,344 loss for the year ended December 31, 2021 (which at the purchasing power of the currency at March 31, 2022 amounts to $ 24,780) to the Unappropriated Retained Earnings account, 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;

-

To consider the updating of the Global Issuance Program of non-convertible into shares, simple Corporate Notes for up to USD 750,000,000 (Note 33).

30

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

32 |    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 March 31, 2019 that the Company entered into with Aseguradora de Cauciones S.A., at the date of issuance of these condensed interim financial statements there are no significant changes with respect to the situation reported by the Company in the Financial Statements as of December 31, 2021, except for the following:

 

With regard to the USD 1 million receivable resulting from the agreement with Aseguradora de Cauciones S.A., as of to date the Company received a payment of USD 870,000. The remaining balance of USD 130,000 will be collected in July 2022, along with an additional interest amount of USD 9,777 as agreed upon between the Company and the insurance company.

 

Note

33 |    Debt restructuring

 

On April 6, 2022, the Annual General Meeting approved the updating of the Global Simple Corporate Notes Issuance Program for a Maximum Amount outstanding at any time of up to USD 750,000,000 (or its equivalent in any other currency).

In this regard, the Company’s Board of Directors, at its meeting of April 6, 2022, approved the launching of a consent solicitation to restructure the financial debt by exchanging the Company’s Class No. 9 Corporate Notes due October 25, 2022 for New Corporate Notes.

Consequently, on April 12, 2022, the Company launched its offer to exchange the Class No. 9 Corporate Notes issued by the Company maturing on October 25, 2022 at a fixed nominal annual interest rate of 9.75% for a nominal value outstanding of USD 98,057,000 for New Class N I Corporate Notes, denominated and payable in United States dollars, at a fixed nominal annual interest rate of 9.75%, due in 2025, to be issued for a nominal value of up to USD 120,000,000, in the framework of the Global Simple Corporate Notes Issuance Program.

The New Corporate Notes comply with the “Guidelines for the issuance of social, green and sustainable securities in Argentina” included in Appendix III to Chapter I, Title VI of the CNV’s Regulations and in the BYMA’s Guide to Social, Green and Sustainable Bonds for the purpose of having them listed on BYMA’s Social, Green and Sustainable Bonds Panel.

The principal on the corporate notes will be repaid in a lump sum on May 12, 2025. Furthermore, they will accrue interest at a fixed nominal annual rate of 9.75%, payable semi-annually in arrears on May 12 and November 12 of each year, commencing on November 12, 2022.

The New Corporate Notes are issued in accordance with the New Corporate Notes Indenture, which contains a number of negative covenants that limit edenor’s ability to, among other things:

- create or permit liens on its property or assets;

- incur indebtedness;

- sell its assets;

- carry out transactions with affiliates or shareholders;

31

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

- make certain payments (including, but not limited to, dividends, purchases of edenor’s common shares or payments on subordinated debt); and

- enter into merger transactions, unless they meet certain criteria.

 

Many of the negative covenants set forth in the New Corporate Notes Indenture will be suspended if (i) edenor attains an Investment Grade rating on its long term debt, or; (ii) the leverage ratio is equal to or lower than 3.0. If edenor subsequently loses its investment grade rating or its leverage ratio is greater than 3.0, as applicable, the suspended negative covenants will again be applicable. The suspended negative covenants will not, however, be of any effect with regard to the actions of edenor taken during the suspension of the covenants.

Finally, on May 12, 2022 the Company approved the issuance and placement under the exchange offer, as set forth in the Supplement to the Exchange Offer Memorandum dated April 12, 2022. The Corporate Notes will be subscribed in accordance with the Tender Orders received, based on the following options:

Option A

·

Tender Orders of Existing Corporate Notes submitted under Option A at or prior to the Early Tender Date (April 28, 2022, extended until May 9, 2022 on April 29, 2022) will receive USD 1,050 principal amount of New Corporate Notes for each USD 1,000 principal amount of Existing Corporate Notes validly tendered and accepted for exchange.

Option B

Tender Orders of Existing Corporate Notes submitted under Option B will receive a portion of the Cash Consideration, plus the applicable New Corporate Notes Consideration.

The Cash Consideration represents an aggregate amount equivalent to the lesser of: (i) 30% of the principal amount of the Existing Corporate Notes that are validly tendered and accepted for exchange in the Offer; and (ii) the principal amount of the Existing Corporate Notes accepted for exchange under Option B.

The sum of the Pro-rata Cash Consideration that will be payable to Eligible Holders whose Existing Corporate Notes are accepted for exchange under Option B will be equivalent to the Cash Consideration divided by the principal amount of Existing Corporate Notes accepted under Option B multiplied by 1,000.

·

The Early (at or prior to the Early Tender Date) New Corporate Notes Consideration for each Eligible Holder whose Existing Corporate Notes have been accepted for exchange under Option B will be equal to 1.04 times the difference between USD 1,000 and the Pro-rata Cash Consideration received by each Eligible Holder whose Existing Corporate Notes have been accepted for exchange under Option B.

Payment of Accrued Interest

In addition to the Exchange Consideration, the Eligible Holders whose Existing Corporate Notes have been accepted for exchange in the Exchange Offer will also receive Payment of Accrued Interest equal to all accrued and unpaid interest from the last interest payment date to, but not including, the Settlement Date, to be paid in cash on the Settlement Date.

32

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

The offer to exchange Class No. 9 Corporate Notes issued by the Company due October 25, 2022 for New Class N I Corporate Notes resulted in 73.25% acceptance, equivalent to US$ 71,816,000; accordingly, a total of USD 52,706,268, relating to: i) Tender Offers submitted under Option A for USD 43,783,950, and ii) Tender Offers submitted under Option B for USD 30,470,118, has been restructured. Furthermore, the Pro-rata Cash Consideration received by each Eligible Holder has amounted to USD 21,547,800.

 

Additionally, interest paid in cash from the last payment date up to and including the Settlement Date has amounted to a total of USD 329,573.

Based on the Tender Offers received, the Company’s Corporate Note debt structure would be as follows:

Corporate Notes	Class	Debt structure as of March 31, 2022 (*)	Debt structure after the exchange (*)
Fixed rate par notes - Due 2022	9	98,057,000	26,231,000
Fixed rate par notes - Due 2025	N I	-	52,706,268
Total		98,057,000	78,937,268

 

(*) In US dollars (US$).

 

Note

34 |    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.

 

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.

 

As required by the regulations in effect and within the time periods set forth therein, Empresa de Energía del Cono Sur S.A. announced the launching of a mandatory Public Tender Offer addressed 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.

 

During the term of the Offer, no shares were tendered by Class B (including ADS) and Class C Shareholders; therefore, the offeror announced the completion of the tender offer.

Consequently, at the date of issuance of these condensed interim financial statements, edenor is a subsidiary company of Empresa de Energía del Cono Sur S.A.

33

CONDENSED INTERIM FINANCIAL STATEMENTS

NOTES

Note

35 |    Events after the reporting period

 

The following are the events that occurred subsequent to March 31, 2022:

 

·

Public Hearing – SE Resolutions Nos. 235 and 236/2022, see Note 2.a;

·

Approval of values of the electricity rate schedule – ENRE Resolution No. 146/2022, see Note 2.a;

·

Debt restructuring, see Note 33.

 

 

 

NEIL BLEASDALE

Chairman

 

34

 

 

Free translation from the original in Spanish for publication in Argentina

REPORT ON CONDENSED INTERIM FINANCIAL STATEMENTS’ REVIEW

 

To the Shareholders, President and Directors

Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.)

Legal address: Avenida del Libertador 6363

Autonomous City of Buenos Aires

Tax Code No. 30-65511620-2

 

Introduction

We have reviewed the condensed interim financial statements of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.) (hereinafter “Edenor S.A.” or “the Company”) including the condensed interim statement of financial position as of March 31, 2022, the related condensed interim statement of comprehensive income for the three months period ended March 31, 2022, the related condensed interim statements of changes in equity and cash flows for the three months period then ended and the complementary selected notes.

The balances and other information related to fiscal year 2021 and its interim periods, are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.

 

Board of Directors’ responsibility

The Board of Directors of the Company is responsible for the preparation and presentation of these financial statements, under International Financial Reporting Standards (IFRS) adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE), as the applicable accounting framework and incorporated by the National Securities Commission (CNV) to its standards, as they were approved by the International Accounting Standards Board (IASB), and, therefore, it is responsible for the preparation and presentation of the condensed interim financial statements mentioned in the first paragraph in accordance with IAS 34 “Interim financial information”.

Price Waterhouse & Co. S.R.L., Bouchard 557, piso 8°, C1106ABG - Ciudad de Buenos Aires

T: +(54.11) 4850.0000, F: +(54.11) 4850.1800, www.pwc.com/ar

35

 

 

Auditors’ responsibility

Our review was limited to the application of the procedures established in International Standard on Review Engagements 2410 “Review of interim financial information performed by the independent auditor of the entity”, which was adopted as review standard in Argentina through Technical Pronouncement No. 33 of the FACPCE as was approved by International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists in making inquiries of Company staff responsible for the preparation of the information included in the condensed interim financial statements and the application of analytical procedures and other review procedures. This review is substantially less in scope than an audit in accordance of International Standards on Auditing, consequently, this review does not allow us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, we do not express any opinion on the financial position, comprehensive income and cash flows of the Company.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial statements mentioned in the first paragraph of this report are not prepared, in all material respects, in accordance with IAS 34.

 

Emphasis of matter paragraph

Without qualifying our conclusion, we draw the attention to the situation explained in Note 1 in relation to the economic and financial situation of Edenor S.A. The Company’s current economic and financial situation raises substantial doubt about its ability to continue as a going concern.

36

 

 

Reports on compliance with regulations in force

In accordance with current regulations, we report that, in connection with Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.):

a) except for its lack of transcription to the book “Inventories and Balances”, the condensed interim financial statements of Edenor S.A. comply, in what is within our competence, with the provisions of the General Companies Law and in the relevant resolutions of the National Securities Commission;

b) the condensed interim financial statements of Edenor S.A. arise from accounting records kept in their formal aspects in accordance with legal regulations, except for their lack of transcription to the Inventory and Balance Book, and the Daily Book (transcription to the Inventories and Balance CD ROM Book from January to March);

c) we have read the summary of activity on which, as regards those matters that are within our competence, we have no observations to make;

d) at March 31, 2022 the liabilities of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (Edenor S.A.) accrued in favor of the Argentine Integrated Social Security System, according to the Company’s accounting records, amounted to ARS$ 802,996,418, none of which was claimable at that date.

Autonomous City of Buenos Aires, May 12th, 2022

 

PRICE WATERHOUSE & CO. S.R.L.   (Socio)

C.P.C.E.C.A.B.A  T°1 – F°17

Dr. Raúl Leonardo Viglione Contador Público (UCA) C.P.C.E.C.A.B.A. T° 196  F° 169

 

 

37

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Empresa Distribuidora y Comercializadora Norte S.A.
	By:	/s/ Germán Ranftl
		Germán Ranftl
		Chief Financial Officer

 

 

Date: May 13, 2022