Company Quick10K Filing
Edenor
20-F 2019-12-31 Filed 2020-04-27
20-F 2018-12-31 Filed 2019-04-30
20-F 2017-12-31 Filed 2018-04-27
20-F 2016-12-31 Filed 2017-04-28
20-F 2015-12-31 Filed 2016-04-28
20-F 2014-12-31 Filed 2015-05-12
20-F 2013-12-31 Filed 2014-04-28
20-F 2012-12-31 Filed 2013-04-30
20-F 2011-12-31 Filed 2012-04-26
20-F 2010-12-31 Filed 2011-06-14
20-F 2009-12-31 Filed 2010-06-08

EDN 20F Annual Report

Part I
Item 1. Identity of Directors, Senior Management and Advisors
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16 H. Mine Safety Disclosures
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
Note 1 | General Information
Note 2 | Regulatory Framework
Note 3 | Basis of Preparation
Note 4 | Accounting Policies
Note 4.1 | New Accounting Standards, Amendments and Interpretations Issued By The Iasb, Effective As of December 31, 2019 and Adopted By The Company
Note 4.1.1 | Impacts of Adoption
Note 4.2 | Property, Plant and Equipment
Note 4.3 | Interests in Joint Ventures
Note 4.4 | Revenue Recognition
Note 4.5 | Effects of The Changes in Foreign Currency Exchange Rates
Note 4.6 | Trade and Other Receivables
Note 4.7 | Inventories
Note 4.8 | Financial Assets
Note 4.8.1 | Classification
Note 4.8.2 | Recognition and Measurement
Note 4.8.3 | Impairment of Financial Assets
Note 4.8.4 | Offsetting of Financial Instruments
Note 4.9 | Derivative Financial Instruments
Note 4.10 | Cash and Cash Equivalents
Note 4.11 | Equity
Note 4.12 | Trade and Other Payables
Note 4.13 | Borrowings
Note 4.14 | Deferred Revenue
Note 4.15 | Employee Benefits
Note 4.16 | Income Tax
Note 4.17 | Leases
Note 4.18 | Provisions and Contingencies
Note 4.19 | Balances with Related Parties
Note 5 | Financial Risk Management
Note 5.1 | Financial Risk Factors
Note 5.2 | Concentration Risk Factors
Note 5.3 | Capital Risk Management
Note 5.4 | Regulatory Risk Factors
Note 5.5 | Fair Value Estimate
Note 6 | Critical Accounting Estimates and Judgments
Note 7 | Interest in Joint Venture
Note 8 | Contingencies and Lawsuits
Note 8.1 | Civil and Commercial Proceedings - Consumer Claims
Note 8.2 | Civil and Commercial Proceedings for The Determination of A Claim - Judicial Annulment Enre Resolution 32/11
Note 8.3 | Civil and Commercial Proceedings for The Determination of A Claim - Regulatory Liability Claim Against The Federal Government
Note 9 | Property, Plant and Equipment
Note 10 | Financial Instruments
Note 10.1 | Financial Instruments By Category
Note 10.2 | Credit Quality of Financial Assets
Note 11 | Right - of - Use Asset
Note 12 | Other Receivables
Note 13 | Trade Receivables
Note 14 | Financial Assets At Fair Value Through Profit or Loss
Note 15 | Financial Assets At Amortized Cost
Note 16 | Inventories
Note 17 | Cash and Cash Equivalents
Note 18 | Share Capital and Additional Paid - in Capital
Note 19 | Allocation of Profits
Note 20 | Share - Based Compensation Plan
Note 21 | Acquisition of The Company's Own Shares
Note 22 | Trade Payables
Note 23 | Other Payables
Note 24 | Deferred Revenue
Note 25 | Borrowings
Note 26 | Salaries and Social Security Taxes Payable
Note 27 | Benefit Plans
Note 28 | Income Tax / Deferred Tax
Note 29 | Tax Liabilities
Note 30 | Provisions
Note 31 | Revenue From Sales
Note 32 | Expenses By Nature
Note 33 | Other Operating Expense, Net
Note 34 | Net Finance Costs
Note 35 | Basic and Diluted Earnings per Share
Note 36 | Related - Party Transactions
Note 37 | Safekeeping of Documentation
Note 38 | Ordinary and Extraordinary Shareholders' Meeting
Note 39 | Termination of Agreement on Real Estate Asset
Note 40 | Financial Statements Translation Into English Language
EX-2.D exhibit_2d.htm
EX-12.1 exhibit12_1.htm
EX-12.2 exhibit12_2.htm
EX-13.1 exhibit13_1.htm

Edenor Earnings 2019-12-31

Balance SheetIncome StatementCash Flow

20-F 1 ednform20f_2019.htm EDNFORM20F_2019 ednform20f_2019.htm - Generated by SEC Publisher for SEC Filing

 

aAs filed with the Securities and Exchange Commission on April 27, 2020

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019 Commission File Number: 001-33422

Empresa Distribuidora y Comercializadora Norte S.A.
(Exact name of Registrant as specified in its charter)

Distribution and Marketing Company of the North S.A.

Argentine Republic

(Translation of Registrant’s name into English)

(Jurisdiction of incorporation or organization)

Avenida Del Libertador 6363

Ciudad de Buenos Aires, C1428ARG

Buenos Aires, Argentina
(Address of principal executive offices)

Leandro Montero

Tel.: +54 11 4346 5510 / Fax: +54 11 4346 5325 Avenida Del Libertador 6363 (C1428ARG)
Buenos Aires, Argentina

Chief Financial Officer

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol

Name of each exchange on which registered

 

EDN

 

 

EDN

New York Stock Exchange, Inc.*

 

 

New York Stock Exchange, Inc.

Class B Common Shares

 

American Depositary Shares, or ADSs, evidenced by American Depositary Receipts, each representing 20 Class B Common Shares

 

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

___

Securities registered or to be registered pursuant to Section 12(g) of the Act: None   

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: N/A

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 462,292,111 Class A Common Shares, 442,210,385 Class B Common Shares and 1,952,604 Class C Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically, every

Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer

¨

Accelerated Filer

x

Non-Accelerated Filer

¨

Emerging Growth Company

¨


 
 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ¨
International Financial Reporting Standards as issued by the International Accounting Standards Board
x Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x


 
 

 

  PART I   
Item 1.  Identity of Directors, Senior Management and Advisors  2 
Item 2.  Offer Statistics and Expected Timetable  2 
Item 3.  Key Information  2 
Item 4.  Information on the Company  40 
Item 4A.  Unresolved Staff Comments  82 
Item 5.  Operating and Financial Review and Prospects  82 
Item 6.  Directors, Senior Management and Employees  124 
Item 7.  Major Shareholders and Related Party Transactions  134 
Item 8.  Financial Information  139 
Item 9.  The Offer and Listing  145 
Item 10.  Additional Information  151 
Item 11.  Quantitative and Qualitative Disclosures about Market Risk  176 
Item 12.  Description of Securities Other than Equity Securities  178 
 
  PART II   
Item 13.  Defaults, Dividend Arrearages and Delinquencies  179 
Item 14.  Material Modifications to the Rights of Security Holders and Use of Proceeds  179 
Item 15.  Controls and Procedures  179 
Item 16A. Audit Committee Financial Expert  180 
Item 16B. Code of Ethics  180 
Item 16C. Principal Accountant Fees and Services  181 
Item 16D. Exemptions from the Listing Standards for Audit Committees  181 
Item 16E.  Purchases of Equity Securities by the Issuer and Affiliated Purchasers  182 
Item 16F.  Change in Registrant’s Certifying Accountant  182 
Item 16G. Corporate Governance  183 
Item 16H. Mine Safety Disclosures  188 
 
  PART III   
Item 17.  Financial Statements  189 
Item 18.  Financial Statements  189 
Item 19.  Exhibits  189 
 
Index to Financial Statements  F-1 

 
 

PART I

Item 1.        Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2.         Offer Statistics and Expected Timetable

Not applicable.

Item 3.         Key Information

In this annual report, except as otherwise specified, references to “we”, “us”, “our” and “the Company” are references to (i) Empresa Distribuidora y Comercializadora Norte S.A., or “Edenor”, on a standalone basis prior to March 1, 2011, (ii) Edenor, Empresa Distribuidora Eléctrica Regional S.A. (“Emdersa”) and Aeseba S.A. (“Aeseba”), between March 1, 2011 and March 31, 2013, (iii) Edenor and Emdersa, between March 1, 2011 and September 30, 2013, and (iv) Edenor on a standalone basis, from October 1, 2013 through the date of filing of this annual report. References to Edenor, Emdersa and/or Aeseba on a standalone basis are made by naming each company as the case may be. For more information, see “Item 4Information on the CompanyHistory and Development of the Company.”

FORWARD‑LOOKING STATEMENTS

This annual report includes forward‑looking statements, principally under the captions “Item 3. Key Information - Risk Factors”, “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects”. We have based these forward‑looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Forward‑looking statements may also be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future” or similar expressions. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ materially from those expressed or implied in our forward‑looking statements, including, among other things:

·

the treatment of tariff update according to Integral Tariff Revision (“RTI”);

·

uncertainties related to future Government interventions or legal actions;

·

general political, economic, social, demographic and business conditions in the Republic of Argentina, or “Argentina” and particularly in the geographic market we serve;

·

the evolution of energy losses and the impact of fines and penalties and uncollectable debt;

·

the impact of regulatory reform and changes in the regulatory environment in which we operate;

·

electricity shortages;

·

potential disruption or interruption of our service;

·

the revocation or amendment of our concession by the granting authority;

·

our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms;

·

fluctuations in exchange rates, including a depreciation of the Peso;

·

the effects of a pandemic or epidemic and any subsequent mandatory regulatory restrictions or containment measures;

·

the impact of high rates of inflation on our costs;

·

renegotiation of public debt; and,

·

additional matters identified in “Risk factors”.

                                                 

Forward‑looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward‑looking statements after we file this annual report because of new information, future events or other factors. In light of these limitations, undue reliance should not be placed on forward‑looking statements contained in this annual report.

2


 
 

SELECTED FINANCIAL DATA

The following table presents our selected financial data for each of the years in the four-year period ended December 31, 2019. The selected statement of comprehensive income (loss) and statement of cash flow data for the years ended December 31, 2019, 2018 and 2017 and the selected statement of financial position as of December 31, 2019 and 2018, have been prepared in accordance with IFRS as issued by the IASB and have been derived from our Financial Statements included elsewhere in this annual report. In addition, the selected statement of comprehensive income (loss) and statement of cash flow data for the year ended December 31, 2016 and the selected statement of financial position as of December 31, 2017 and 2016, have been derived from our historical financial statements (not included herein), restated in constant currency as of December 31, 2019. The summary financial data as of and for the year ended December 31, 2015 has not been presented as it cannot be provided on a restated basis without unreasonable effort or expense.

Our Financial Statements have been restated to reflect the changes in the general purchasing power of the Company’s functional currency (the Argentine peso), in conformity with the provisions of both IAS 29 “Financial reporting in hyperinflationary economies” and General Resolution No. 777-18 of the Argentine Securities Commission (Comisión Nacional de Valores or “CNV”). As a result, thereof, the Financial Statements are stated in terms of the measuring unit current at the end of the reporting period.

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 series of guidelines, including but not limited to (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 most weighted condition, verifying whether the cumulative inflation rate over three years approaches or exceeds 100%.

The cumulative inflation rate over the last three years in Argentina exceeded 100%. Moreover, due to certain macroeconomic factors, the projected inflation for the three-year period ending in 2020 surpasses 100% and the Argentine Government’s targets and other available projections indicate that this trend will not be reversed in the short-term.

According to IAS 29, the Argentine economy should be regarded as hyperinflationary as from July 1, 2018. Pursuant to IAS 29, the adjustment will be resumed from the date on which it was last made which is February 2003. Additionally, on December 4, 2018 Law No. 27,468 was enacted and repealed the provisions of Executive Order No. 664/03, which did not allow for the filing of inflation-adjusted financial statements. This law states that the provisions of Section 62 of Law No. 19,550 the (“Argentine Corporations Law”) regarding the preparation of financial statements to reflect the effects of inflation will continue to apply, consequently reinstating adjustment for inflation.

Taking into consideration the above-mentioned index, in the fiscal years ended December 2019, 2018, 2017 and 2016, the inflation rate amounted to 53.77%, 47.7%, 24.8% and 40.9%, respectively.

Our Financial Statements are included in this annual report beginning on page F-1

In this annual report, except as otherwise specified, references to “U.S.$” and “Dollars” are to U.S. Dollars, and references to “Ps.”, “AR$” and “Pesos” are to Argentine Pesos. Solely for the convenience of the reader, we have converted certain amounts included in “Item 3. Key Information” and elsewhere in this annual report from Pesos into Dollars using, for the information provided as of December 31, 2019, the seller exchange rate reported by the Banco de la Nación Argentina (“Banco Nación”), as of December 31, 2019. which was Ps.59.89 to U.S.$1.00 unless otherwise indicated. These conversions should not be considered representations that any such amounts have been, could have been or could be converted into U.S. Dollars at that or at any other exchange rate. On April 24, 2020, the exchange rate was Ps. 66.43, to U.S.$1.00. As a result of fluctuations in the Dollar Peso exchange rate, the exchange rate at such date may not be indicative of current or future exchange rates. See “—Risk Factors—Factors Relating to Argentina—Fluctuations in the value of the Peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations”. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos. For more information regarding historical exchange rates, see “Item 3.Key Information—Exchange Rates.”

 

3


 
 

Statement of comprehensive income (loss)

 

 

2019

 

2019

 

2018

 

2017

 

2016

 

 

 US$

 

 Ps.

 

 Ps.

 

 Ps.

 

 Ps.

Revenue   (1)

 

   1,501.8

 

   89,943.8

 

   86,039.9

 

60,897.3

 

  39,713.8

Electric power purchases

 

   (952.4)

 

   (57,041.8)

 

   (49,015.2)

 

  (32,015.3)

 

   (18,436.5)

Subtotal

 

  549.4

 

32,902.0

 

37,024.7

 

  28,882.0

 

   21,277.3

Transmission and distribution expenses

 

  (269.6)

 

   (16,146.6)

 

   (16,780.5)

 

  (14,219.2)

 

   (20,395.8)

Gross margin

 

  279.8

 

16,755.4

 

20,244.2

 

  14,662.8

 

   881.5

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

   (122.7)

 

  (7,351.0)

 

  (7,813.9)

 

(5,486.3)

 

  (5,196.3)

Administrative expenses

 

  (64.1)

 

  (3,837.2)

 

  (4,341.3)

 

(3,851.2)

 

  (3,518.3)

Other operating expense, net

 

  (32.9)

 

  (1,970.4)

 

  (2,031.0)

 

(1,695.6)

 

  (1,403.9)

Gain from interest in joint ventures

 

  -

 

   1.4

 

   2.5

 

  15.5

 

   -

Operating profit (loss) before income from provisional remedies higher costs recognition and SE Resolution 32/15

 

60.1

 

   3,598.2

 

   6,060.5

 

  3,645.2

 

   (9,237.0)

Recognition of income – provisional remedies – MEyM Note 2016-04484723

 

  -

 

   -

 

   -

 

  -

 

3,189.5

Income recognition on account of the RTI - SE Resolution No. 32/15

 

  -

 

   -

 

   -

 

  -

 

1,473.6

Higher costs recognition - SE Resolution No. 250/13 and subsequents Notes

 

  -

 

   -

 

   -

 

  -

 

285.1

Operating profit (loss)

 

60.1

 

   3,598.2

 

   6,060.5

 

  3,645.2

 

   (4,288.8)

 

 

 

 

 

 

 

 

 

 

 

Agreement on the Regularization of Obligations

 

  285.4

 

17,094.8

 

  -

 

  -

 

   -

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

  20.2

 

  1,209.0

 

  1,033.0

 

   697.8

 

591.4

Finance costs

 

   (112.9)

 

  (6,762.4)

 

  (7,652.7)

 

(3,952.3)

 

  (3,981.5)

Other finance costs

 

  (58.8)

 

  (3,523.3)

 

  (3,022.1)

 

(259.1)

 

  (134.2)

Net finance costs

 

  (151.5)

 

   (9,076.7)

 

   (9,641.8)

 

  (3,513.6)

 

   (3,524.3)

 

 

 

 

 

 

 

 

 

 

 

Monetary gain

 

   186.9

 

   11,191.8

 

   13,076.4

 

   8,465.2

 

8,409.9

 

 

 

 

 

 

 

 

 

 

 

Profit before taxes

 

  380.9

 

22,808.1

 

   9,495.1

 

  8,596.8

 

   596.8

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

   (178.2)

 

   (10,673.8)

 

  (2,886.9)

 

(784.3)

 

  (226.5)

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

  202.7

 

12,134.3

 

   6,608.2

 

  7,812.5

 

   370.3

 

 

 

 

 

 

 

 

 

 

 

Profit for the year attributable to:

 

 

 

 

 

 

 

 

 

 

Owners of the Company

 

   202.7

 

   12,134.3

 

  6,608.2

 

   7,812.5

 

370.3

Profit for the year

 

  202.7

 

12,134.3

 

   6,608.2

 

  7,812.5

 

   370.3

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

Items that will not be reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

Results related to benefit plans

 

(0.1)

 

   (7.3)

 

   (8.7)

 

  34.2

 

   22.1

Tax effect of actuarial results on benefit plans

 

  -

 

   2.2

 

   2.6

 

   (11.1)

 

   (7.8)

Total other comprehensive results

 

(0.1)

 

  (5.1)

 

  (6.1)

 

23.1

 

  14.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income for the year attributable to:

 

 

 

 

 

 

 

 

 

 

Owners of the parent

 

   202.5

 

   12,129.2

 

  6,602.1

 

   7,835.6

 

384.6

Comprehensive profit for the year

 

  202.5

 

12,129.2

 

   6,602.1

 

  7,835.6

 

   384.6

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings profit per share:

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

0.2

 

13.8

 

   7.4

 

8.7

 

  0.4

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings profit per ADS (2):

 

 

 

 

 

 

 

 

 

 

Earnings per ADS from continuing operations

 

4.6

 

  276.7

 

  148.3

 

   174.5

 

  8.6

 

Columns Ps. in millions of pesos stated in terms of the measuring unit current as of December 31, 2019, except for amounts per share and number of shares or as otherwise indicated

 

(1)      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.

(2)      Each ADS represents 20 Class B common shares.

 

 

 

4


 
 

Statement of financial position

 

 

2019

 

2019

 

2018

 

2017

 

2016

 

 

 US$

 

 Ps.

 

 Ps.

 

 Ps.

 

 Ps.

ASSETS

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

1,691.4

 

  101,298.4

 

  96,067.6

 

87,741.4

 

  78,260.9

Interest in joint ventures

 

  0.2

 

  11.2

 

   13.6

 

  16.5

 

  1.2

Right-of-use asset

 

  4.4

 

   260.9

 

  -

 

  -

 

   -

Other receivables

 

  0.4

 

  26.0

 

1,231.3

 

  96.4

 

143.1

Financial assets at fair value through profit or loss

 

   -

 

  -

 

  -

 

  -

 

125.9

Total non-current assets

 

  1,696.4

 

   101,596.5

 

   97,312.5

 

 87,854.3

 

   78,531.1

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

Inventories

 

   32.2

 

   1,926.9

 

1,937.2

 

   998.9

 

1,232.8

Other receivables

 

  4.8

 

   289.7

 

369.7

 

   450.4

 

508.1

Trade receivables

 

208.0

 

12,460.1

 

  11,667.9

 

12,894.0

 

  11,053.7

Financial assets at fair value through profit or loss

 

   46.6

 

   2,789.8

 

5,199.8

 

   6,578.3

 

5,649.8

Financial assets at amortized cost

 

   -

 

  -

 

1,858.7

 

  26.0

 

  4.3

Cash and cash equivalents

 

  6.8

 

   409.6

 

   42.5

 

   188.1

 

732.6

Total current assets

 

   298.4

 

  17,876.1

 

   21,075.8

 

  21,135.7

 

   19,181.3

TOTAL ASSETS

 

  1,994.8

 

   119,472.6

 

   118,388.3

 

   108,990.0

 

   97,712.4

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

Share capital and reserve attributable to the owners of the Company

 

 

 

 

 

 

 

 

 

 

Share capital

 

   14.6

 

   875.1

 

883.3

 

   898.7

 

897.0

Adjustment to share capital

 

442.6

 

26,509.4

 

  26,716.7

 

26,969.2

 

  26,962.4

Treasury stock

 

  0.5

 

  31.4

 

   23.1

 

7.9

 

   14.5

Adjustment to treasury stock

 

  9.5

 

   566.5

 

359.3

 

   106.8

 

108.5

Additional paid-in capital

 

  6.2

 

   370.0

 

370.0

 

   353.6

 

282.3

Cost treasury stock

 

   (37.4)

 

   (2,242.6)

 

(1,643.5)

 

  -

 

   -

Legal reserve

 

   21.5

 

   1,289.1

 

234.9

 

   234.9

 

234.9

Voluntary reserve

 

331.2

 

19,833.4

 

564.4

 

   564.4

 

564.4

Other reserve

 

   -

 

  -

 

  -

 

  -

 

   50.5

Other comprehensive loss

 

  (3.6)

 

   (215.6)

 

(210.5)

 

(204.4)

 

(227.5)

Retained earnings

 

202.6

 

12,134.1

 

  20,323.2

 

13,807.5

 

5,995.0

TOTAL EQUITY

 

   987.7

 

  59,150.8

 

   47,620.9

 

  42,738.6

 

   34,882.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

Trade payables

 

  6.2

 

   369.6

 

440.1

 

   547.0

 

660.0

Other payables

 

   67.1

 

   4,019.6

 

  11,723.6

 

13,700.9

 

  14,460.3

Borrowings

 

136.9

 

   8,197.4

 

  11,059.9

 

   9,517.3

 

7,847.7

Deferred revenue

 

  4.5

 

   270.1

 

423.5

 

   441.9

 

566.7

Salaries and social security payable

 

  4.0

 

   240.6

 

250.2

 

   271.7

 

267.2

Benefit plans

 

  8.7

 

   523.9

 

592.2

 

   734.7

 

754.0

Deferred tax liability

 

334.9

 

20,055.0

 

  12,375.9

 

11,210.1

 

  11,591.5

Tax liabilities

 

   -

 

  -

 

  -

 

  -

 

  1.9

Provisions

 

   34.4

 

   2,062.6

 

1,645.6

 

   1,358.0

 

967.2

Total non-current liabilities

 

   596.7

 

  35,738.8

 

   38,511.0

 

  37,781.6

 

   37,116.5

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Trade payables

 

212.1

 

12,700.8

 

  22,464.2

 

20,878.0

 

  17,943.1

Other payables (1)

 

   59.9

 

   3,596.7

 

2,955.6

 

   840.8

 

381.9

Borrowings

 

   27.7

 

   1,659.2

 

1,656.8

 

   161.7

 

152.1

Derivative financial instruments

 

  3.4

 

   205.2

 

  1.6

 

0.4

 

   -

Deferred revenue

 

  0.1

 

5.3

 

  8.2

 

7.6

 

  2.2

Salaries and social security payable

 

   40.2

 

   2,407.1

 

2,677.0

 

   2,765.1

 

2,924.7

Benefit plans

 

  0.9

 

  51.1

 

   49.8

 

  71.3

 

   94.6

Income tax payable

 

   32.9

 

   1,969.5

 

949.4

 

   1,059.5

 

439.9

Tax liabilities

 

   29.6

 

   1,774.3

 

1,205.6

 

   2,391.9

 

3,526.3

Provisions

 

  3.6

 

   213.8

 

288.2

 

   293.5

 

249.1

Total current liabilities

 

   410.4

 

  24,583.0

 

   32,256.4

 

  28,469.8

 

   25,713.9

TOTAL LIABILITIES

 

  1,007.1

 

  60,321.8

 

   70,767.4

 

  66,251.4

 

   62,830.4

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

  1,994.8

 

   119,472.6

 

   118,388.3

 

   108,990.0

 

   97,712.4

 

Columns Ps. in millions of pesos stated in terms of the measuring unit current as of December 31, 2019, except for amounts per share and number of shares or as otherwise indicated

 

5


 
 

Statement of Cash flows

 

   

2019

 

2019

 

2018

 

2017

 

2016

   

 US$

 

 Ps.

 

 Ps.

 

 Ps.

 

 Ps.

Cash flows from operating activities

                   

Profit for the year

 

  202.7

 

  12,134.3

 

  6,608.2

 

  7,812.5

 

  370.3

Adjustments to reconcile net (loss) profit to net cash flows from operating activities:

                   

Depreciation of property, plant and equipment

 

77.1

 

4,624.8

 

  3,938.8

 

  3,303.1

 

  3,301.7

Depreciation of right-of-use assets

 

   2.7

 

164.1

 

-

 

   -

 

-

Loss on disposals of property, plant and equipment

 

   1.1

 

   63.6

 

  206.8

 

76.6

 

  375.9

Net accrued interest

 

92.5

 

5,538.0

 

  6,606.6

 

  3,250.0

 

  3,379.9

Exchange differences

 

69.6

 

4,168.2

 

  4,814.2

 

  867.3

 

  1,402.1

Income tax

 

  178.2

 

  10,673.8

 

  2,886.9

 

  784.3

 

  226.5

Allowance for the impairment of trade and other receivables, net of recovery

 

22.6

 

1,354.4

 

  1,503.1

 

  602.2

 

  666.4

Adjustment to present value of receivables

 

   1.3

 

   76.7

 

   0.5

 

   0.7

 

(8.8)

Provision for contingencies

 

22.8

 

1,367.2

 

  1,113.4

 

  834.0

 

  464.1

Changes in fair value of financial assets

 

(4.7)

 

(281.0)

 

  (1,147.9)

 

  (672.9)

 

   (1,371.3)

Accrual of benefit plans

 

   4.4

 

262.1

 

  172.5

 

  260.6

 

  298.7

Net gain from the repurchase of Corporate Notes

 

(7.6)

 

(456.9)

 

   (7.0)

 

   -

 

(0.1)

Gain from interest in joint ventures

 

-

 

  (1.4)

 

   (2.5)

 

(15.5)

 

-

Income from non-reimbursable customer contributions

 

(0.1)

 

  (6.6)

 

   (8.6)

 

   (6.7)

 

(2.3)

Termination of agreement on real estate asset

 

(2.0)

 

(120.6)

 

  (770.1)

 

   -

 

-

Other financial results

 

   2.5

 

146.9

 

-

 

   -

 

-

Other reserve constitution - Share bases compensation plan

 

-

 

  -

 

16.5

 

17.6

 

50.5

Agreement on the Regularization of Obligations

 

   (285.4)

 

  (17,094.8)

 

-

 

   -

   

Higher costs recognition - SEE Resolution 250/13 and subsequents Notes

 

-

 

  -

 

-

 

   -

 

   (285.1)

Income recognition on account of the RTI - SEE Resolution 32/15

 

-

 

  -

 

-

 

   -

 

   (1,473.6)

Recognition of income – provisional remedies – MINEM Note 2016-04484723

 

-

 

  -

 

-

 

   -

 

   (3,189.5)

Contractual resolution of real estate asset

 

-

 

  -

 

-

 

   -

 

-

Monetary gain (RECPAM)

 

   (186.9)

 

  (11,191.8)

 

   (13,076.4)

 

  (8,465.2)

 

   (8,409.9)

Changes in operating assets and liabilities:

                   

Increase in trade receivables

 

  (63.4)

 

(3,795.0)

 

  (3,277.5)

 

  (4,034.5)

 

   (8,462.1)

Decrease in other receivables

 

14.4

 

860.6

 

  1,285.0

 

43.2

 

  3,026.2

Increase in inventories

 

(8.4)

 

(504.5)

 

  (1,260.7)

 

  (815.2)

 

   (435.2)

Increase in deferred revenue

 

-

 

  -

 

  135.9

 

   -

 

  133.6

Increase in trade payables

 

63.0

 

3,775.2

 

  2,762.5

 

  7,515.0

 

  7,463.9

Increase in salaries and social security payable

 

15.0

 

899.8

 

  867.2

 

  484.1

 

  891.6

Decrease in benefit plans

 

(0.7)

 

   (44.7)

 

(85.1)

 

(87.0)

 

  (87.7)

Increase (Decrease) in tax liabilities

 

16.4

 

984.8

 

  (792.9)

 

  (563.8)

 

  2,817.7

Increase in other payables

 

  (12.0)

 

(717.0)

 

  4,599.1

 

  673.8

 

  6,654.1

Decrease in provisions

 

(1.6)

 

   (98.1)

 

  (500.1)

 

(90.6)

 

   (147.5)

Payment of Tax payable

 

  (43.8)

 

(2,623.9)

 

  (1,362.6)

 

  (600.9)

 

-

Net cash flows provided by operating activities

 

169.7

 

   10,158.2

 

15,225.8

 

11,172.7

 

7,650.1

 

6


 
 

Statement of Cash flows (continued)

   

2019

 

2019

 

2018

 

2017

 

2016

   

 US$

 

 Ps.

 

 Ps.

 

 Ps.

 

 Ps.

Cash flows from investing activities

                   

Payment of property, plant and equipment

 

   (156.5)

 

(9,370.0)

 

   (13,147.3)

 

   (12,143.4)

 

   (6,507.9)

Net collection (payment) of financial assets

 

27.2

 

1,630.7

 

  (3,605.8)

 

  (1,558.5)

 

41.7

Redemtion net of money market funds

 

42.2

 

2,527.7

 

  3,555.5

 

  535.5

 

  167.9

Mutuum charges granted to third parties

 

   2.4

 

144.3

 

-

 

   -

 

-

Mutuum payments granted to third parties

 

(1.7)

 

   (99.0)

 

  (176.7)

 

   -

 

-

Collection of receivables from sale of subsidiaries

   0.2

 

   10.3

 

  136.1

 

82.5

 

36.9

Net cash flows used in investing activities

 

(86.2)

 

  (5,156.0)

 

(13,238.2)

 

(13,083.9)

 

(6,261.4)

                     
   

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

                   

Payment of borrowings

 

  (26.6)

 

(1,593.0)

 

-

 

   -

 

-

Payment of financial lease liability

 

(3.6)

 

(213.4)

 

-

 

   -

 

-

Proceeds from borrowings

 

-

 

  -

 

-

 

  1,977.4

 

-

Repayment of principal on loans

 

-

 

  -

 

-

 

   -

 

-

Payment of interests from borrowings

 

  (18.9)

 

(1,134.8)

 

  (1,003.6)

 

  (643.5)

 

   (794.7)

Repurchase of corporate notes

 

  (25.6)

 

(1,531.0)

 

  (577.4)

 

   -

 

  (15.1)

Payment of redemption on corporate notes

 

-

 

  -

 

-

 

   -

 

   (647.0)

Acquisition of own shares

 

  (10.0)

 

(599.3)

 

  (1,643.5)

 

   -

 

-

Net cash flows (used in) generated by financing activities

 

(84.7)

 

  (5,071.5)

 

(3,224.5)

 

   1,333.9

 

(1,456.8)

                     

Decrease in cash and cash equivalents

 

   (1.2)

 

  (69.3)

 

(1,236.9)

 

(577.3)

 

(68.1)

                     

Cash and cash equivalents at the beginning of year

 

   0.7

 

   42.5

 

  188.1

 

  732.6

 

  365.4

Exchange differences in cash and cash equivalents

 

   7.3

 

438.6

 

  240.0

 

   (0.1)

 

  (13.8)

Result from exposure to inflation

 

-

 

  (2.2)

 

  851.3

 

32.9

 

  449.1

Decrease in cash and cash equivalents

 

(1.2)

 

   (69.3)

 

  (1,236.9)

 

  (577.3)

 

  (68.1)

Cash and cash equivalents at the end of the year

 

   6.8

 

  409.6

 

   42.5

 

   188.1

 

732.6

                     
                     

Supplemental cash flows information

                   

Non-cash activities

                   
                     

Agreement on the Regularization of Obligations

     

  17,094.8

 

-

 

   -

 

-

                     

Adquisition of advances to suppliers, property, plant and equipment through increased trade payables

     

(549.2)

 

  (1,041.3)

 

  (900.6)

 

-

                     

Adquisition of advances to suppliers, right-of-use assets through increased trade payables

     

(425.1)

 

-

 

   -

 

-

                     

Derecognition of property, plant and equipment through other receivables

     

  -

 

  675.5

 

   -

 

-

Columns Ps. in millions of pesos stated in terms of the measuring unit current as of December 31, 2019, except for amounts per share and number of shares or as otherwise indicated
 

 

 

Year ended December 31,

 

 

 

 

2019

 

2018

 

2017

 

2016

Operating data

 

 

 

 

 

 

 

 

Energy sales (in GWh): 

 

19,447

 

21,172

 

21,584

 

22,253

     Residential

 

8,372

 

8,948

 

9,143

 

9,709

     Small commercial

 

1,692

 

1,810

 

1,850

 

1,819

     Medium commercial

 

1,549

 

1,668

 

1,745

 

1,821

     Industrial

 

3,503

 

3,646

 

3,687

 

3,677

     Wheeling system(1)

 

3,569

 

3,823

 

3,968

 

4,013

     Public lighting

 

713

 

724

 

709

 

704

     Shantytowns

 

48

 

553

 

483

 

511

Customers (in thousands) (2)

 

3,119

 

3,040

 

2,950

 

2,866

Energy losses (%)

 

19.9%

 

18.2%

 

17.1%

 

17.0%

MWh sold per employee

 

4,071

 

4,301

 

4,507

 

4,743

Customers per employee

 

653

 

618

 

616

 

611

 

(1)       Wheeling system charges represent our tariffs for large users, which consist of a fixed charge for recognized technical losses and a charge for our distribution margins but exclude charges for electric power purchases, which are undertaken directly between generators and large users.

(2)       We define a user as one meter. We may supply more than one consumer through a single meter. In particular, because we measure our energy sales to each shantytown collectively using a single meter, each shantytown is counted as a single user.

 

 

7


 
 

EXCHANGE RATES

In 2019, the Argentine Peso experienced a rapid depreciation against major foreign currencies, particularly against the U.S. dollar. According to the exchange rate information published by the Banco de la Nación Argentina, the Argentine Peso depreciated by 58.9% against the U.S. dollar during the year ended December 31, 2019 (compared to 102.2%, 17.4% and 21.9% in the years ended December 31, 2018, 2017 and 2016, respectively).

The following table sets forth the high, low, average and period-end exchange rates for the periods indicated, expressed in Pesos per U.S. Dollar and not adjusted for inflation. When preparing our financial statements, we utilize the selling exchange rates for U.S. Dollars quoted by the Banco Nación to translate our U.S. Dollar denominated assets and liabilities into Pesos. There can be no assurance that the Peso will not depreciate or appreciate in the future. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos. For more inform regarding depreciation see “—Risk Factors—Factors Relating to Argentina—Fluctuations in the value of the Peso could adversely affect the Argentine economy and, which could, in turn adversely affect our results of operations.”

 

 

Low

 

High

 

Average

 

Period End

 

 

(Pesos per U.S. Dollar)

 

Year ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

13.20

 

 

16.03

 

 

14.99

(1)

 

15.89

 

2017

 

15.19

 

 

19.20

 

 

16.73

(1)

 

18.65

 

2018

 

18.41

 

 

41.25

 

 

29.26

(1)

 

37.70

 

2019

 

36.90

 

 

60.40

 

 

47.82

 

 

59.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month

 

 

 

 

 

 

 

 

 

 

 

 

November-19

 

59.50

(2)

 

59.95

(2)

 

59.73

 

 

59.94

 

December-19

 

59.82

(2)

 

59.99

(2)

 

59.88

 

 

59.89

 

January-20

 

59.82

(2)

 

60.35

(2)

 

59.99

 

 

60.35

 

February-20

 

60.47

(2)

 

62.21

(2)

 

61.37

 

 

62.21

 

March-20

 

62.31

(2)

 

64.47

(2)

 

63.39

 

 

64.47

 

April-20  (3)

 

64.53

(2)

 

66.43

(2)

 

65.43

   

66.43

 

_____________________

 

 

 

 

 

 

 

 

 

 

 

 

Source: Banco Nación

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)         Represents the average of the exchange rates on the last day of each month during the period.

(2)         Average of the lowest and highest daily rates in the month.

(3)         Represents the corresponding exchange rates from April 1 through April 24, 2020.

 

RISK FACTORS

Risks Related to Argentina

Overview

We are a stock corporation (sociedad anónima) incorporated under the laws of the Republic of Argentina and all of our revenues are earned in Argentina and all of our operations, facilities, and users are located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic, regulatory, political and financial conditions prevailing in Argentina, including growth rates, inflation rates, currency exchange rates, taxes, interest rates, and other local, regional and international events and conditions that may affect Argentina in any manner. For example, a slowdown in economic growth or economic recession could lead to a decreased demand for electricity in our concession area or a decline in the purchasing power of our users, which, in turn, could lead to a decrease in collection rates from our users or increased energy losses due to illegal use of our service. Actions of the Argentine Government concerning the economy, including measures with respect to inflation, interest rates, price controls (including tariffs and other compensation of public services), foreign exchange controls and taxes, have had and may in the future have a material adverse effect on private sector entities, including us. Our activity is highly regulated and subject to uncertainties due to politic and economic factors, changes in legislation, termination and modification of contractual rights, control of prices and currency fluctuations, among others.

 

We cannot assure that the Argentine Government will not adopt other policies that could adversely affect the Argentine economy or our business, financial condition or results of operations. In addition, we cannot assure you that future economic, regulatory, social and political developments in Argentina will not impair our business, financial condition or results of operations, or cause the market value of our ADSs and Class B common shares to decline.

8


 
 

A global or regional financial crisis and unfavorable credit and market conditions may negatively affect our liquidity, users, business, and results of operations

The effects of a global or regional financial crisis and related turmoil in the global financial system may have a negative impact on our business, ability to access credit and the international capital markets, financial condition and results of operations, which is likely to be more severe on an emerging market economy, such as Argentina. (See “Argentina’s ability to obtain financing from international markets could be limited, which may impair its ability to implement reforms and foster economic growth and, consequently, affect our business, results of our operations and prospects growth. The Argentine Government may not be able to renegotiate its debt with their private creditors and/or with the IMF, thus affecting its capacity to obtain financing and credit and to plan and implement public policies and reforms that impulse the economic growth” below). This was the case in 2008, when the global economic crisis led to a sudden economic decline in Argentina in 2009, accompanied by inflationary pressures, depreciation of the Peso and a drop in consumer and investor confidence.

 

The effects of an economic crisis on our users and on us cannot be predicted. Weak global and local economic conditions could lead to reduced demand or lower prices for energy, hydrocarbons and related oil products and petrochemicals, which could have a negative effect on our revenues. Economic factors such as unemployment, inflation and the unavailability of credit could also have a material adverse effect on the demand for energy and, therefore, on our business, financial condition and results of operations. The financial and economic situation in Argentina or in other countries in Latin America, such as Brazil, may also have a negative impact on us and third parties with whom we do, or may do, business.

The Argentine economy remains vulnerable and any significant decline may adversely affect our business, results of operations, and financial condition

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency depreciation. Sustainable economic growth in Argentina depends on a variety of factors including the international demand for Argentine exports, the stability and competitiveness of the Peso against foreign currencies, confidence among consumers and foreign and domestic investors and a stable rate of inflation, national employment levels and the circumstances of Argentina’s regional trade partners. The Argentine economy has been volatile since 2011. For example, Argentina’s economy grew in 2017, but contracted in 2018. The Argentine economy remains vulnerable, as reflected by the following economic conditions:

·

according to the revised calculation of 2004 Gross Domestic Product (“GDP”) published by the Instituto Nacional de Estadística y Censos (National Statistics and Census Institute or “INDEC”) on June 29, 2016, which forms the basis for the real GDP calculation for every year after 2004, and recent data published by the INDEC in 2020, for the year ended December 31, 2019, Argentina’s real GDP decreased by 1.7% compared to the same period in 2018. Argentina’s performance has depended on a significant extent to high commodity prices which, despite having favorable long-term trends, are volatile in the short-term and beyond the control of the Argentine Government and the private sector;

·

the International Monetary Fund (“IMF”) in its World Economic Outlook projected in October 2019 a 3.1% contraction in Argentina’s economy for 2019 due to the loss of trust and the hardening in the conditions required to access credit and a 6.0% contraction for 2020 due to the effects of COVID19. For more information see “Item 3. Key Information—Risk Factors— Developments relating to the novel coronavirus may have a material adverse impact on our business operations, financial condition or results of operations.” and “Item 4. Information on the Company—Recent Developments in Argentina – Measures Designed to Address the COVID-19 Outbreak.”

·

continued increases in public expenditures have resulted and could continue to result in fiscal deficit and affect economic growth;

·

inflation remains high and may continue at those levels in the future;

·

investment as a percentage of GDP remains low to sustain the growth rate of the past decades;

·

protests or strikes may adversely affect the stability of the political, social and economic environment and may negatively impact the global financial market’s confidence in the Argentine economy;

·

energy or natural gas supply may not be sufficient to supply increased industrial activity (thereby limiting industrial development) and consumption;

·

unemployment and informal employment remain high; and

 

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the Argentine Government’s economic expectations may not be met and the process of restoring the confidence in the Argentine economy may take longer than anticipated.

 

As in the recent past, Argentina’s economy may be adversely affected if political and social pressures inhibit the implementation by the Argentine Government of policies designed to control inflation, generate growth and enhance consumer and investor confidence, or if policies implemented by the Argentine Government that are designed to achieve these goals are not successful. These events could materially affect our financial condition and results of operations, or cause the market value of our ADSs and our Class B common shares to decline.

In the last years, the Argentine Peso experienced a rapid depreciation against the U.S. dollar and other major foreign currencies. According to the exchange rate information published by the Banco de la Nación Argentina, the Argentine Peso depreciated by 58.9% against the U.S. dollar during the year ended December 31, 2019 (compared to 102.2%, 17.4% and 21.9% in the years ended December 31, 2018, 2017 and 2016, respectively).

Through 2019, the Peso’s depreciation continued, and in September 2019, as a result of the economic instability and the significant depreciation that followed the primary elections, as described below, the Argentine Government and the Central Bank of the Republic of Argentina (Banco Central de la República Argentina, the “Central Bank” or “BCRA”) adopted a series of measures reinstating foreign exchange controls, which apply with respect to access to the foreign exchange market by residents for savings and investment purposes abroad, the payment of external financial debts, the payment of dividends in foreign currency abroad, payments of goods and services in foreign currencies, payments of imports of goods and services, and the obligation to repatriate and settle for pesos the proceeds from exports of goods and services, among others. Other financial transactions such as derivatives and securities related operations, were also covered by the new foreign exchange regime. Following the change in government, the new administration extended the validity of such measures, which were originally in effect until December 31, 2019, and established further restrictions by means of the recently enacted Law No. 27,541 on Social Solidarity and Productive Reactivation in the Framework of the Public Emergency (Ley de Solidaridad Social y Reactivación Productiva en el Marco de la Emergencia Pública, or the “Productive Reactivation Law”), regulated by Executive Orders Nos. 58 and 99/19, including a new tax on certain transactions involving the purchase of foreign currency by both Argentine individuals and entities. Although the official exchange rate has stabilized since the adoption of the foreign exchange controls, we cannot assure you that the official exchange rate will not fluctuate significantly in the future. There can be no assurances regarding future modifications to exchange controls. Exchange controls could adversely affect our financial condition or results of operations and our ability to meet our foreign currency obligations and execute our financing plans.

The success of these measures is subject to uncertainty and any further depreciation of the Argentine Peso or our inability to acquire foreign currency could have a material adverse effect on our financial condition and results of operations. We cannot predict the effectiveness of these measures. We cannot predict whether, and to what extent, the value of the Argentine Peso may depreciate or appreciate against the U.S. dollar or other foreign currencies, and how these uncertainties will affect electricity consumption. Furthermore, no assurance can be given that, in the future, no additional currency or foreign exchange restrictions or controls will be imposed. Existing and future measures may negatively affect Argentina’s international competitiveness, discouraging foreign investments and lending by foreign investors or increasing foreign capital outflow which could have an adverse effect on economic activity in Argentina, and which in turn could adversely affect our business and results of operations. We cannot predict how these conditions will affect the consumption of services provided by Edenor or our ability to meet our liabilities denominated in currencies other than the Argentine Peso. Any restrictions on transferring funds abroad imposed by the government could undermine our ability to pay dividends on our ADSs or make payments (of principal or interest) under our outstanding indebtedness in U.S. dollars, as well as to comply with any other obligation denominated in foreign currency.

We cannot assure that a decline in economic growth, an increase in economic instability or the expansion of economic policies and measures taken or that may be adopted in the future by the Argentine Government to control inflation or address other macroeconomic developments that affect private sector entities such as us, all developments over which we have no control, would not have an adverse effect on our business, financial condition or results of operations or would not have a negative impact on the market value of our ADSs and Class B common shares.

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Economic and political developments in Argentina, and future policies of the Argentine Government may affect the economy as well as the operations of the energy distribution industry, including Edenor

The Argentine Government has historically exercised significant influence over the economy, and our Company has operated in a highly regulated environment. The Argentine Government may promulgate numerous, far-reaching regulations affecting the economy and electricity companies in particular.

Between December 2015 and December 2019, the Macri administration implemented several significant economic policy reforms towards the de-regulation of the economy and reordering the main economic variables. Those policies included, among others: (i) declaration of a state of emergency for the electricity system and reforms thereto; (ii) reforms affecting the transport and distribution of natural gas; (iii) reforms concerning the INDEC; (iv) reforms affecting foreign exchange and foreign trade; (v) modification of Argentina’s debt policy; (vi) the correction of monetary imbalances; (vii) reform of the pension framework; (viii) a tax reform (the “Tax Reform”); and (ix) the implementation of a fiscal consensus (Pacto Fiscal). Nevertheless, the high inflation rates and the Peso’s depreciation forced the Argentine Government to reinstate the foreign exchange controls.

On August 11, 2019, mandatory primary elections were held in Argentina. As a consequence of the results of primary elections in Argentina, which indicated that President Macri would not be reelected and could be replaced by the opposition candidate Alberto Fern