6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of November, 2018

Commission File Number: 001-12102

 

 

YPF Sociedad Anónima

(Exact name of registrant as specified in its charter)

 

 

Macacha Güemes 515

C1106BKK Buenos Aires, Argentina

(Address of principal executive office)

 

 

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  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐            No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐            No  ☒

 

 

 


Table of Contents

LOGO

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2018

AND COMPARATIVE INFORMATION (UNAUDITED)


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

CONTENT

 

Note

 

Description

   Page  
  Glossary of terms      1  
  Legal Information      2  
  Condensed interim consolidated statements of financial position      3  
  Condensed interim consolidated statements of comprehensive income      4  
  Condensed interim consolidated statements of changes in shareholders’ equity      5  
  Condensed interim consolidated statements of cash flow      7  
  Notes to the condensed interim consolidated financial statements:   

1

  General information, structure and organization of the business of the Group      8  

2

  Basis of preparation of the condensed interim consolidated financial statements      9  

3

  Seasonality of operations      14  

4

  Acquisitions and dispositions      15  

5

  Financial risk management      16  

6

  Segment information      17  

7

  Financial instruments by category      19  

8

  Intangible assets      20  

9

  Property, plant and equipment      20  

10

  Investments in associates and joint ventures      22  

11

  Inventories      26  

12

  Other receivables      26  

13

  Trade receivables      26  

14

  Cash and cash equivalents      26  

15

  Provisions      27  

16

  Income Tax      28  

17

  Loans      29  

18

  Other liabilities      32  

19

  Accounts payable      32  

20

  Revenues      32  

21

  Costs      34  

22

  Expenses by nature      35  

23

  Other net operating results      36  

24

  Net financial results      36  

25

  Investments in joint operations      36  

26

  Shareholders’ equity      37  

27

  Earnings per share      37  

28

  Issues related to Maxus Entities      37  

29

  Contingent assets and liabilities      38  

30

  Contractual commitments      39  

31

  Main regulations and others      40  

32

  Balances and transactions with related parties      47  

33

  Employee benefit plans and similar obligations      49  

34

  Assets and liabilities in currencies other than the Peso      50  

35

  Subsequent events      51  


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

GLOSSARY OF TERMS

 

Term

  

Definition

ADR    American Depositary Receipt
ADS    American Depositary Share
AESA    Subsidiary A-Evangelista S.A.
AFIP    Argentine Tax Authority
Annual consolidated financial statements    Consolidated financial statements as of December 31, 2017
Associate    Company over which YPF has significant influence as provided for in IAS 28
BO    Official Gazette of the Argentine Republic
BONAR    Argentine public bonds
CAMMESA    Compañía Administradora del Mercado Mayorista Eléctrico S.A.
CDS    Associate Central Dock Sud S.A
CGU    Cash-Generating Units
CIMSA    Subsidiary Compañía de Inversiones Mineras S.A.
CNDC    Argentine Antitrust Authority
CNV    Argentine Securities Commission
CSJN    Argentine Supreme Court
Condensed interim consolidated financial statements    Condensed interim consolidated financial statements as of September 30, 2018
DOP    Deliver or pay
EBITDA    Earnings before Interest, Tax, Depreciation and Amortization
Eleran    Subsidiary Eleran Inversiones 2011 S.A.U.
ENARGAS    Argentine National Gas Regulatory Authority
ENARSA    Energía Argentina S.A.
FACPCE    Argentine Federation of Professional Councils in Economic Sciences
FOB    Free on Board
Group    YPF and its subsidiaries
IAS    International Accounting Standard
IASB    International Accounting Standards Board
IFRS    International Financial Reporting Standard
IDS    Associate Inversora Dock Sud S.A.
INDEC    National Institute of Statistics and Census
IVA    Value Added Tax
Joint venture    Company jointly owned by YPF as provided for in IFRS 11
JO    Joint operation
LGS    Argentine General Corporations Law No. 19,550 (T.O. 1984), as amended
LPG    Liquefied Petroleum Gas
MEGA    Joint venture Compañía Mega S.A.
Metroenergía    Subsidiary Metroenergía S.A.
Metrogas    Subsidiary Metrogas S.A.
MINEM    Ministry of Energy and Mining
MMBtu    Million British thermal units
NO    Negotiable Obligations
Oiltanking    Associate Oiltanking Ebytem S.A.
Oldelval    Associate Oleoductos del Valle S.A.
OPESSA    Subsidiary Operadora de Estaciones de Servicios S.A.
OTA    Associate Oleoducto Trasandino (Argentina) S.A.
OTC    Associate Oleoducto Trasandino (Chile) S.A.
PEN    National Executive Power
Peso    Argentine Peso
Profertil    Joint Venture Profertil S.A.
Refinor    Joint Venture Refinería del Norte S.A.
SEC    U.S. Securities and Exchange Commission
SGE    Government Secretariat of Energy
Subsidiary    Company controlled by YPF in accordance with the provisions of IFRS 10
Termap    Associate Terminales Marítimas Patagónicas S.A.
TSEP    Access point to the Transportation System
US$    U.S. dollar
US$/Bbl    U.S. dollar per barrel
Y-GEN I    Joint venture Y-GEN Eléctrica S.A.U.
Y-GEN II    Joint venture Y-GEN Eléctrica II S.A.U.
YPF Brasil    Subsidiary YPF Brasil Comércio Derivado de Petróleo Ltda.
YPF Chile    Subsidiary YPF Chile S.A.
YPF EE    Joint Venture YPF Energía Eléctrica S.A.
YPF Gas    Associate YPF Gas S.A.
YPF Holdings    Subsidiary YPF Holdings, Inc.
YPF International    Subsidiary YPF International S.A.
YPF or the Company    YPF Sociedad Anónima
YTEC    Subsidiary YPF Tecnología S.A.
WEM    Wholesale Electricity Market
WPI    Wholesale price index

 

 

1


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

LEGAL INFORMATION

Legal address

Macacha Güemes 515 – Ciudad Autónoma de Buenos Aires, Argentina

Fiscal year number 42

Beginning on January 1, 2018

Principal business of the Company

The Company’s purpose shall be to perform, on its own, through third parties or in association with third parties, the exploration, development and production of oil, natural gas and other minerals and refining, marketing and distribution of oil and petroleum products and direct and indirect petroleum derivatives, including petrochemicals, chemicals, including those derived from hydrocarbons, and non-fossil fuels, biofuels and their components, as well as production of electric power from hydrocarbons, through which it may manufacture, use, purchase, sell, exchange, import or export them. It shall also be the Company’s purpose to render, directly, through a subsidiary or in association with third parties, telecommunications services in all forms and modalities authorized by the legislation in force after applying for the relevant licenses as required by the regulatory framework, as well as the production, industrialization, processing, commercialization, conditioning, transportation and stockpiling of grains and products derived from grains, as well as any other activity complementary to its industrial and commercial business or any activity which may be necessary to attain its objective. In order to fulfill these objectives, the Company may set up, become associated with or have an interest in any public or private entity domiciled in Argentina or abroad, within the limits set forth in the Bylaws.

Filing with the Public Registry

Bylaws filed on February 5, 1991 under No. 404, Book 108, Volume “A”, Sociedades Anónimas, with the Public Registry of Buenos Aires City, in charge of the Argentine Registrar of Companies (Inspección General de Justicia); and Bylaws in substitution of previous Bylaws, filed on June 15, 1993, under No. 5109, Book 113, Volume “A”, Sociedades Anónimas, with the above mentioned Registry.

Duration of the Company

Through June 15, 2093.

Last amendment to the Bylaws

April 29, 2016 registered with the Argentine Registrar of Companies (Inspección General de Justicia) on December 21, 2016 under No. 25,244, Book 82 of Corporations.

Capital structure

393,312,793 shares of common stock, Pesos 10 par value and 1 vote per share.

Subscribed, paid-in and authorized for stock exchange listing (in Pesos)

3,933,127,930

 

MIGUEL ANGEL GUTIERREZ

President

 

 

2


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017 (UNAUDITED)

(Amounts expressed in millions of Pesos)

   LOGO

 

     Notes      September 30,
2018
    December 31,
2017
 

ASSETS

       

Noncurrent Assets

       

Intangible assets

     8        21,385       9,976  

Property, plant and equipment

     9        755,903       354,443  

Investments in associates and joint ventures

     10        26,602       6,045  

Assets held for disposal

     4        —         8,823  

Deferred income tax assets, net

     16        1,920       588  

Other receivables

     12        4,849       1,335  

Trade receivables

     13        33,398       2,210  
     

 

 

   

 

 

 

Total noncurrent assets

        844,057       383,420  
     

 

 

   

 

 

 

Current Assets

       

Inventories

     11        63,483       27,149  

Contract assets

     20        458       142  

Other receivables

     12        20,405       12,684  

Trade receivables

     13        67,748       40,649  

Investment in financial assets

     7        14,462       12,936  

Cash and cash equivalents

     14        57,915       28,738  
     

 

 

   

 

 

 

Total current assets

        224,471       122,298  
     

 

 

   

 

 

 

TOTAL ASSETS

        1,068,528       505,718  
     

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY

       

Shareholders’ contributions

        10,430       10,402  

Reserves, other comprehensive income and retained earnings

        352,247       141,893  
     

 

 

   

 

 

 

Shareholders’ equity attributable to shareholders of the parent company

        362,677       152,295  
     

 

 

   

 

 

 

Non-controlling interest

        (324     238  
     

 

 

   

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

        362,353       152,533  
     

 

 

   

 

 

 

LIABILITIES

       

Noncurrent Liabilities

       

Provisions

     15        119,226       54,734  

Liabilities associated with assets held for disposal

     4        —         4,193  

Deferred income tax liabilities, net

     16        95,000       37,645  

Contract liabilities

     20        2,371       1,470  

Taxes payable

        2,765       220  

Loans

     17        294,947       151,727  

Other liabilities

     18        579       277  

Accounts payable

     19        214       185  
     

 

 

   

 

 

 

Total noncurrent liabilities

        515,102       250,451  
     

 

 

   

 

 

 

Current Liabilities

       

Provisions

     15        4,021       2,442  

Income tax liability

        376       191  

Contract liabilities

     20        3,529       1,460  

Taxes payable

        11,670       6,879  

Salaries and social security

        4,612       4,132  

Loans

     17        79,855       39,336  

Other liabilities

     18        783       2,383  

Accounts payable

     19        86,227       45,911  
     

 

 

   

 

 

 

Total current liabilities

        191,073       102,734  
     

 

 

   

 

 

 

TOTAL LIABILITIES

        706,175       353,185  
     

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

        1,068,528       505,718  
     

 

 

   

 

 

 

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

MIGUEL ANGEL GUTIERREZ

President                    

 

3


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE-MONTH AND THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

(Amounts expressed in millions of Pesos, except per share information, expressed in Pesos)

   LOGO

 

            For the nine-month
period ended September

30,
    For the three-month
period ended
September 30,
 
     Notes      2018     2017     2018     2017  

Revenues

     20        290,045       183,199       121,188       66,034  

Costs

     21        (241,397     (151,581     (95,993     (56,108
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        48,648       31,618       25,195       9,926  
     

 

 

   

 

 

   

 

 

   

 

 

 

Selling expenses

     22        (18,184     (12,780     (7,113     (4,684

Administrative expenses

     22        (8,974     (5,965     (3,669     (2,174

Exploration expenses

     22        (1,869     (1,760     (1,082     (334

Other net operating results

     23        12,164       (86     (646     316  
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

        31,785       11,027       12,685       3,050  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income from equity interests in associates and joint ventures

     10        (2,498     546       (1,573     432  

Financial income

     24        101,005       8,963       46,980       4,350  

Financial loss

     24        (55,750     (18,865     (22,501     (7,297

Other financial results

     24        3,157       1,224       988       491  
     

 

 

   

 

 

   

 

 

   

 

 

 

Net financial results

     24        48,412       (8,678     25,467       (2,456
     

 

 

   

 

 

   

 

 

   

 

 

 

Net profit before income tax

        77,699       2,895       36,579       1,026  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

     16        (56,998     (2,185     (23,372     (780
     

 

 

   

 

 

   

 

 

   

 

 

 

Net profit for the period

        20,701       710       13,207       246  
     

 

 

   

 

 

   

 

 

   

 

 

 

Net profit for the period attributable to:

           

- Shareholders of the parent company

        21,263       330       13,203       93  

- Non-controlling interest

        (562     380       4       153  

Earnings per share attributable to shareholders of the parent company basic and diluted

     27        54.05       0.84       33.50       0.24  

Other comprehensive income

                               

Translation differences from investments in subsidiaries, associates and joint ventures(1)

        (17,900     (502     (8,365     (239

Translation differences from YPF (2)

        205,717       12,086       114,950       5,873  

Exchange differences reversed to profit for the period (3)

        1,572       —         —         —    
     

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income for the period (4)

        189,389       11,584       106,585       5,634  
     

 

 

   

 

 

   

 

 

   

 

 

 
           
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

        210,090       12,294       119,792       5,880  
     

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Will be reversed to net profit at the moment of the sale of the investment or full or partial reimbursement of the capital.

(2)

Will not be reversed to net profit.

(3)

Corresponds to reversal to net profit for the period, for the partial disposal of the investment in YPF EE. See Note 4.

(4)

Entirely assigned to the parent company’s shareholders.

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

MIGUEL ANGEL GUTIERREZ

President                    

 

4


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

(Amounts expressed in millions of Pesos)

   LOGO

 

    For the nine-month period ended September 30, 2018        
    Shareholders’ contributions        
    Subscribed
capital
    Adjustment to
contributions
    Treasury
shares
    Adjustment
to treasury
shares
    Share-based
benefit plans
    Acquisition cost
of treasury
shares
    Share trading
premium
    Issuance
premiums
    Total        

Balance at the beginning of the fiscal year

    3,924       6,085       9       16       36       (91     (217     640       10,402    

Modification to the balance at the beginning of the fiscal year(5)

    —         —         —         —         —         —         —         —         —      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Balance at the beginning of the fiscal year modified

    3,924       6,085       9       16       36       (91     (217     640       10,402    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Accrual of share-based benefit plans(4)

    —         —         —         —         206       —         —         —         206    

Repurchase of treasury shares

    (3     (4     3       4       —         (120     —         —         (120  

Settlement of share-based benefit plans (3)

    2       3       (2     (3     (229     236       (65     —         (58  

As decided by the Shareholders’ Meeting on April 27, 2018(2)

    —         —         —         —         —         —         —         —         —      

Other comprehensive income

    —         —         —         —         —         —         —         —         —      

Net profit

    —         —         —         —         —         —         —         —         —      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Balance at the end of the period

    3,923       6,084       10       17       13       25       (282     640       10,430    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
    For the nine-month period ended September 30, 2018  
    Reserves                 Equity attributable to        
    Legal     Future
dividends
    Investments     Purchase of
treasury
shares
    Initial IFRS
adjustment
    Other
comprehensive
income
    Retained
earnings
    Shareholders
of the parent
company
    Non-controlling
interest
    Total
shareholders’
equity
 

Balance at the beginning of the fiscal year

    2,007       —         —         100       —         127,446       12,340       152,295       238       152,533  

Modification to the balance at the beginning of the fiscal year(5)

    —         —         —         —         —         —         (298     (298     —         (298
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the beginning of the fiscal year modified

    2,007       —         —         100       —         127,446       12,042       151,997       238       152,235  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accrual of share-based benefit plans(4)

    —         —         —         —         —         —         —         206       —         206  

Repurchase of treasury shares

    —         —         —         —         —         —         —         (120     —         (120

Settlement of share-based benefit plans (3)

    —         —         —         —         —         —         —         (58     —         (58

As decided by the Shareholders’ Meeting on April 27, 2018(2)

    —         1,200       11,020       120       —         —         (12,340     —         —         —    

Other comprehensive income

    —         —         —         —         —         189,389       —         189,389       —         189,389  

Net income

    —         —         —         —         —         —         21,263       21,263       (562     20,701  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the end of the period

    2,007       1,200       11.020       220       —         316,835 (1)       20,965       362,677       (324     362,353  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Includes 338,108 corresponding to the effect of the translation of the financial statements of YPF and (21,273) corresponding to the effect of the translation of the financial statements of investments in subsidiaries, associates and joint ventures with functional currencies other than the U.S. dollar, as detailed in Note 2.b.1. to the annual consolidated financial statements.

(2)

See Note 26.

(3)

Net of employees’ income tax withholdings related to the share-based benefit plans.

(4)

See Note 33.

(5)

Corresponds to the change in the accounting policy described in Note 2.b.

MIGUEL ANGEL GUTIERREZ

President

 

5


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED) (Cont.)

(Amounts expressed in millions of Pesos)

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    For the nine-month period ended September 30, 2017        
    Shareholders’ contributions        
    Subscribed
capital
    Adjustment to
contributions
    Treasury
shares
    Adjustment
to treasury
shares
    Share-based
benefit plans
    Acquisition cost
of treasury
shares
    Share trading
premium
    Issuance
premiums
    Total        

Balance at the beginning of the fiscal year

    3,923       6,085       10       16       61       (152     (180     640       10,403    

Accrual of share-based benefit plans(4)

    —         —         —         —         116       —         —         —         116    

Repurchase of treasury shares

    (3     (4     3       4       —         (100     —         —         (100  

Settlement of share-based benefit plans (3)

    4       4       (4     (4     (185     158       (36     —         (63  

As decided by the Shareholders’ Meeting on April 28, 2017(2)

    —         —         —         —         —         —         —         —         —      

As decided by the Board of Directors on June 8, 2017 and July 9,2017(2)

    —         —         —         —         —         —         —         —         —      

Other comprehensive income

    —         —         —         —         —         —         —         —         —      

Net profit

    —         —         —         —         —         —         —         —         —      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Balance at the end of the period

    3,924       6,085       9       16       (8     (94     (216     640       10,356    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   
    For the nine-month period ended September 30, 2017  
    Reserves                 Equity attributable to        
    Legal     Future
dividends
    Investments     Purchase
of treasury
shares
    Initial IFRS
adjustment
    Other
comprehensive
income
    Retained
earnings
    Shareholders
of the parent
company
    Non-controlling
interest
    Total
shareholders’
equity
 

Balance at the beginning of the fiscal year

    2,007       5       24,904       490       3,648       105,529       (28,231     118,755       (94     118,661  

Accrual of share-based benefit plans(4)

    —         —         —         —         —         —         —         116       —         116  

Repurchase of treasury shares

    —         —         —         —         —         —         —         (100     —         (100

Settlement of share-based benefit plans(3)

    —         —         —         —         —         —         —         (63     —         (63

As decided by the Shareholders’ Meeting on April 28, 2017(2)

    —         711       (24,904     (390     (3,648     —         28,231       —         —         —    

As decided by the Board of Directors on June 8, 2017 and July 9, 2017(2)

    —         —         —         —         —         —         —         —         —         —    

Other comprehensive income

    —         —         —         —         —         11,584       —         11,584       —         11,584  

Net profit

    —         —         —         —         —         —         330       330       380       710  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the end of the period

    2,007       716       —         100       —         117,113 (1)       330       130,622       286       130,908  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Includes 121,420 corresponding to the effect of the translation of the financial statements of YPF and (4,307) corresponding to the effect of the translation of the financial statements of investments in subsidiaries, associates and joint ventures with functional currencies other than the U.S. dollar, as detailed in Note 2.b.1. to the annual consolidated financial statements.

(2)

See Note 25 to the annual consolidated financial statements.

(3)

Net of employees’ income tax withholding related to the share-based benefit plans.

(4)

See Note 33.

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

MIGUEL ANGEL GUTIERREZ

President

 

6


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

(Amounts expressed in millions of Pesos)

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     For the nine-month period
ended September 30,
 
     2018     2017  

Operating activities

    

Net profit

     20,701       710  

Adjustments to reconcile net profit to cash flows provided by operating activities:

    

Income from equity interest in associates and joint ventures

     2,498       (546

Depreciation of property, plant and equipment

     64,654       37,454  

Amortization of intangible assets

     1,011       605  

Retirement of property, plant and equipment and intangible assets and consumption of materials

     5,749       3,218  

Charge on income tax

     56,998       2,185  

Net increase in provisions

     5,977       2,316  

Exchange differences, interest and other (1)

     (47,988     7,249  

Share-based benefit plan

     206       116  

Accrued insurance

     (270     —    

Result of companies’ revaluation

     (11,980     —    

Changes in assets and liabilities:

    

Trade receivables

     (25,948     (7,827

Other receivables

     (4,304     2,131  

Inventories

     (4,172     (1,148

Accounts payable

     16,440       2,587  

Taxes payables

     4,447       2,196  

Salaries and social security

     340       293  

Other liabilities

     (1,222     (480

Decrease in provisions included in liabilities due to payment/use

     (1,777     (981

Contract assets

     (316     (183

Contract liabilities

     825       1,723  

Dividends received

     474       328  

Proceeds from collection of lost profit insurance

     476       —    

Income tax payments

     (1,573     (761
  

 

 

   

 

 

 

Net cash flows of operating activities

     81,246       51,185  
  

 

 

   

 

 

 

Investing activities:(2)

    

Acquisition of property, plant and equipment and intangible assets

     (57,325     (43,951

Contributions and acquisitions of interests in associates and joint ventures

     (284     (429

Proceeds from sales of financial assets

     6,402       2,404  

Interests received from financial assets

     293       511  
  

 

 

   

 

 

 

Net cash flows of investing activities

     (50,914     (41,465
  

 

 

   

 

 

 

Financing activities:(2)

    

Payments of loans

     (32,795     (24,877

Payments of interest

     (18,611     (13,525

Proceeds from loans

     28,677       33,403  

Repurchase of treasury shares

     (120     (100
  

 

 

   

 

 

 

Net cash flows of financing activities

     (22,849     (5,099
  

 

 

   

 

 

 

Translation differences of cash and cash equivalents

     21,694       503  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     29,177       5,124  
  

 

 

   

 

 

 

Cash and cash equivalents at the beginning of the fiscal year

     28,738       10,757  

Cash and cash equivalents at the end of period

     57,915       15,881  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     29,177       5,124  
  

 

 

   

 

 

 

 

(1)

Does not include exchange differences generated by cash and cash equivalents, which are disclosed separately in this statement.

(2)

The main investing and financing transactions that have not affected cash and cash equivalents correspond to:

 

     For the nine-month period
ended September 30,
 
     2018      2017  

Acquisition of property, plant and equipment and concession extension easements not paid

     9,928        4,673  

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

MIGUEL ANGEL GUTIERREZ

President

 

7


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

1.

GENERAL INFORMATION, STRUCTURE AND ORGANIZATION OF THE BUSINESS OF THE GROUP

General information

YPF Sociedad Anónima is a sociedad anónima (stock corporation) incorporated under the laws of the Argentine Republic, with a registered office at Macacha Güemes 515, in the City of Buenos Aires.

YPF and its subsidiaries form the leading energy group in Argentina, which operates a fully integrated oil and gas chain with leading market positions across the domestic Upstream and Downstream segments.

Structure and organization of the economic group

The following chart shows the organizational structure, including the main companies of the Group, as of September 30, 2018:

 

LOGO

 

(1)

Held directly and indirectly.

(2)

See Note 4.

 

8


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

1. GENERAL INFORMATION, STRUCTURE AND ORGANIZATION OF THE BUSINESS OF THE GROUP (Cont.)

 

Organization of the business

As of September 30, 2018, the Group carries out its transactions and operations in accordance with the following structure:

 

   

Upstream;

 

   

Gas and Power;

 

   

Downstream;

 

   

Central administration and others, which covers the remaining activities not included in the previous categories.

Activities covered by each business segment are detailed in Note 6.

Almost all operations, properties and clients are located in Argentina. However, the Group also has activities in exploratory and production areas in Chile and Bolivia. The Group also sells lubricants and derivatives in Brazil and diesel, jet oil, lubricants and derivatives in Chile.

 

2.

BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

2.a) Basis of preparation

The condensed interim consolidated financial statements of YPF for the nine-month period ended September 30, 2018, are presented in accordance with the financial information framework established by the CNV, which is based on the application of IFRS. The IFRS were adopted by CVN Rules (N.T. 2013), with the sole exception of IAS 29 “Financial Reporting in Hyperinflationary Economies”, which cannot be applied since Decree No. 664/03 issued by the PEN prohibits its dependent control agencies from receiving information restated by inflation. Even though the application of IAS 29 does not directly affect YPF as its functional currency is the US Dollar, as mentioned in paragraph b) of this Note, it does affect the Company’s investments in its subsidiaries, associates and joint ventures whose functional currency is the Peso.

In particular, these condensed interim consolidated financial statements are presented in accordance with the application of the guidelines of the IAS 34 “Interim Financial Reporting”. Therefore, they should be read in conjunction with the annual consolidated financial statements of the Group as of December 31, 2017.

Furthermore, some additional information required by the LGS and/or regulations of the CNV was included. This information is contained in the Notes to these condensed interim consolidated financial statements only to comply with regulatory requirements.

These condensed interim consolidated financial statements were approved by the Board of Directors’ meeting and authorized to be issued on November 9, 2018.

These condensed interim consolidated financial statements corresponding to the nine-month period ended on September 30, 2018 are unaudited. The Company´s Management believes they have included all necessary adjustments to reasonably present the results of each period on a basis consistent with the audited annual consolidated financial statements, taking into account the observations made above regarding the application of IAS 29. Profit for the nine-month period ended on September 30, 2018 does not necessarily reflect the proportion of the Group’s full-year profit.

 

9


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

2. BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

 

Financial information of subsidiaries, associates and joint ventures in hyperinflationary economies

Under IAS 29 “Financial Reporting in Hyperinflationary Economies” the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy shall be stated in terms of the measuring unit current at the end of the reporting period. The rule sets forth quantitative and qualitative factors to be contemplated in order to determine whether or not an economy is hyperinflationary. In recent years, inflation in Argentina has been high, with an accumulated inflation rate exceeding 100% over the last three years. In addition, certain recent qualitative and quantitative factors, such as the devaluation of the Peso, lead to the conclusion that the restatement by inflation of annual or interim financial statements corresponding to annual or interim periods ending after July 1, 2018, should be applied. However, subsidiaries, associates and joint ventures with the Peso as functional currency have not restated their interim financial statements since, as of the closing date of this period, Decree No. 664/03 is in force.

Under IAS 29, and once such standard is adopted by CNV’s rules, the restatement should be resumed based on the last date on which subsidiaries, associates and joint ventures with the Peso as functional currency restated their financial statements to reflect the effects of inflation. To this effect, in general terms, the inflation rate over non-monetary assets and liabilities will be computed from the date of acquisition or addition to such entities’ assets and liabilities, or otherwise from the asset revaluation date, as applicable. The recognition of the restatement by inflation of financial statements is mainly expected to increase non-monetary items up to their recoverable value, with the consequent effect on the deferred tax. Regarding results for the period, in addition to the restatement of income, costs, expenditures and other items, as well as the determination of the financial costs and actual exchange rate differences, the net monetary position should be included in a separate item in the income statement.

As of the date of issuance of these condensed interim consolidated financial statements, the Company’s Management is in the process of analyzing and calculating the quantitative effects of the application of IAS 29 on the financial information of subsidiaries, associates and joint ventures that have the Peso as functional currency. In accordance with the aforementioned, it is estimated that the application of IAS 29 would generate an increase in the shareholder’s equity and in the comprehensive income for the period, and that such application would not have a material effect on the net result for the period in accordance with the Information available as of the date of issuance of these condensed interim consolidated financial statements. This issue must be taken into account by users of these condensed interim consolidated financial statements.

2.b) Significant Accounting Policies

The most significant accounting policies are described in Note 2.b to the annual consolidated financial statements.

The accounting policies adopted in the preparation of these condensed interim consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements, except for the valuation policy for income tax detailed in Note 16. Additionally, the description set forth in the previous section with respect to IAS 29 must also be taken into consideration.

Also, in compliance with the entry into force of IFRS 15 and the changes in IFRS 9 (as revised in 2014), effective as of January 1, 2018, the Group modified the accounting policy for the disclosure of revenue from ordinary activities arising from contracts with customers as well as the accounting policy applied to the impairment and provision for doubtful trade receivables and other doubtful receivables and contract assets, both described below in this Note.

Functional and reporting currency

As mentioned in Note 2.b.1. to the annual consolidated financial statements, YPF has defined the U.S. dollar as its functional currency. Additionally, according to CNV Resolution No. 562, YPF must present its financial statements in Pesos.

 

10


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

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2. BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

 

Adoption of new standards and interpretations effective as of January 1, 2018

The Group, through the adoption of the CNV’s financial information framework, as mentioned in the previous paragraphs (which is based on the application of IFRS), adopts all new and revised standards and interpretations, issued by the IASB, relevant to its operations which are of mandatory and effective application as of September 30, 2018, as specified in Note 2.b.25 to the annual consolidated financial statements. The aforementioned new and revised standards and interpretations that affected these condensed interim consolidated financial statements are described below:

 

   

IFRS 15 – Revenue from ordinary activities arising from contracts entered into with customers

This standard presents a detailed five-step model to explain the revenues from contracts with customers. It is mainly based on the principle that the entity has to recognize the revenues to represent the transfer of goods or services promised to customers in an amount that reflects the consideration that the entity expects to receive in exchange for the goods or services at the time a performance obligation is satisfied. An asset is transferred when (or as) the customer obtains control over that asset, with control defined as the ability to direct the use of and obtain substantially all of the remaining benefits from the asset.

It has also introduced more prescriptive indications:

 

   

If the contract (or a combination of contracts) contains more than one promised good or service, when and how the goods and services should be delivered.

 

   

If the transaction price distributed to each performance obligation should be recognized as income over the course of a period of time or at a certain point in time. Under IFRS 15, an entity recognizes revenue when an obligation is performed, namely, when the control of the goods and services which has a particular obligation is transferred to the customer. The new model does not include separate guidelines for the “sale of goods” and the “provision of services”. Instead, it requires that entities evaluate whether the revenue should be recognized over a period of time or at a given point in time, regardless of whether said revenue includes “the sale of goods” or “the provision of services”.

 

   

Where the transaction price contains an estimation of variable payments, how the amount and the time will affect the recognition of revenue. The concept of estimation of variable consideration is broad. A transaction price is considered variable on account of discounts, refunds, credits, price concessions, incentives, performance bonuses, penalties and contingency agreements. The new model introduces a major condition for a variable consideration to be recognized as revenue: only until it is highly improbable that a significant change in the accumulated revenue amount will occur, once the uncertainty associated with the variable consideration has been resolved.

 

   

When the incurred costs to execute a contract and the costs to perform it may be recognized as an asset.

Within this regulatory framework, contracts with customers were analyzed, the main ones being:

 

   

Contracts for the sale of fuel in consignment;

 

   

Contracts for the direct sale of fuel;

 

   

Contracts for the sale of natural gas;

 

   

Contracts and agreements for the sale of other refined products;

 

   

Construction contracts.

In the first four types of contracts, related to the sale of goods, income is recognized when the control of the goods is transferred to the customer. Even in the case of consignment contracts, income is not recognized until the good is sold to the intermediary’s customer. It is emphasized that in these contracts there are no performance obligations that are separate or different from the delivery of goods.

 

11


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

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2. BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

 

In the case of the construction contracts, income is recognized considering the estimated final margin for each project that arises from technical studies on sales and the estimated total costs of each of them, as well as their physical progress. In this type of contract, performance obligations are satisfied over time.

The Group has adopted the full retrospective method for the implementation of this standard, which has not affected the accounting policies related to the recognition of revenues from contracts with customers, as explained in Note 2.b.11 to the annual consolidated financial statements, and therefore the initial retained earnings have not been affected either.

The Group has adopted the standard’s terminology, identifying “Contract Assets” and “Contract Liabilities”. Thus, certain reclassifications have been made in the statements of financial position in the comparative amounts for the fiscal year ended December 31, 2017, as shown below:

 

     Amounts as of December 31,
2017
     Reclassifications IFRS 15     Amounts restated as of
December 31, 2017
 
     Noncurrent      Current      Noncurrent     Current     Noncurrent      Current  

Assets

               

Inventories

     —          27,291        —         (142     —          27,149  

Contract Assets

     —          —          —         142       —          142  

Liabilities

               

Accounts Payable

     1,655        47,371        (1,470     (1,460     185        45,911  

Contract Liabilities

     —          —          1,470       1,460       1,470        1,460  

Additionally, IFRS 15 introduces requirements aimed at providing new disaggregation of information to be disclosed. Based on the revenue analysis carried out by the Company’s Management, Note 20 has been broken down by (i) type of good or service; (ii) sales channels, and (iii) target market, according to the reported business segments.

 

   

IFRS 9 – Financial Instruments

The criteria and requirements defined by the standard may be divided into three groups:

Classification and measurement of financial assets and liabilities

The Group adopted IFRS 9 as of the transition date in accordance with the regulations in force in 2013, which dealt with everything related to the classification and measurement of financial assets and liabilities. With respect to the application of IFRS 9 (as revised in 2014), based on the Company’s analysis of the Group’s financial assets and liabilities as of September 30, 2018 and December 31, 2017, and on the prevailing facts and circumstances on the respective dates, its application did not have any impact on the accounting treatments described in the Notes 2.b.2 and 2.b.14 to the annual consolidated financial statements regarding the issues mentioned in this paragraph.

Hedge Accounting:

The general hedge accounting requirements of IFRS 9 maintain the three types of hedge accounting mechanisms included in IAS 39. However, the eligible types of hedge accounting transactions are now much more flexible, especially by expanding the types of instruments that are classified as hedging instruments and the types of risk components of non-financial elements ideal for hedge accounting.

Additionally, the effectiveness test has been reviewed and replaced by the principle of “economic relationship”. A retrospective evaluation is no longer required to measure the effectiveness of coverage. Some disclosure requirements, regarding the entity’s risk management activities have been added.

The entry into force of this standard related to hedge accounting has not had any impact because the Group has not carried out these types of transactions as of the end of this period or in the fiscal year ended December 31, 2017.

 

12


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

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2. BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

 

Impairment methodology

The impairment model provided under IFRS 9 reflects expected credit losses, as opposed to credit losses incurred under IAS 39. Within the scope of impairment under IFRS 9, it is no longer necessary for a credit event to occur before credit losses are recognized. In contrast, an entity always records both the expected credit losses and their changes. The amount of expected credit losses must be updated on the issuance date of each financial statement in order to reflect any changes in credit risk since initial recognition.

The Group estimated the impairment of its financial assets and contract assets based on the simplified model, by preparing a matrix per category and dividing the assets into groups based on the type of customer: i) related parties, ii) public sector and iii) private sector. These groups were subsequently divided into sub-groups based on special characteristics indicative of the repayment capacity, such as i) payment arrears, ii) existence of guarantees, iii) existence of a judicial proceeding already initiated or in process of initiation for collection purposes, among others. Once each Group was defined, an expected bad-debt rate was assigned based on historical default rates adjusted to future economic conditions.

Thus, the accounting policy related to the impairment of financial assets described in Note 2.b.2 to the annual consolidated financial statements was replaced. Under that policy the impairment of a financial asset was recorded only when there was an objective evidence of the impairment of the asset, based on the difference between the book value of the asset and the current value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.

In compliance with the exception provided under IFRS 9, the Group has retroactively applied the changes in the standard, without restating the comparative amounts. Therefore, the difference between the previous accounting amounts and the new initial amounts resulting from the initial application of the standard were recognized as an adjustment in the “Retained Earnings” as of January 1, 2018. The information disclosed for 2017 reflects the requirements set forth in IAS 39, and not those of IFRS 9 in relation to impairment of financial assets. The implementation of the impairment method introduced by the standard generated a loss of 425 with the consequent effect on the deferred tax of 127. The net effect shown in the statement of changes in shareholders’ equity was of 298, which was not significant for the financial position and/or performance of the Group.

 

   

IFRS 16 – Leases

On January 1, 2019 the Group will adopt IFRS 16. The Group has started a project for its implementation with the purpose of covering the assessment process, the development of accounting policies and the impacts on the key performance indicators and key financial metrics, among others.

In the transition process, the Group intends to use the modified retrospective approach allowed by IFRS 16 as of January 1, 2019 without restating the comparative figures.

IFRS 16 introduces a revised definition of a lease. As the Group does not intend to use the practical exemption introduced by the standard, it will assess all existing contracts under the new definition.

Even though the impacts assessment of IFRS 16 are still ongoing, the adoption of the standard will increase the recognized assets and liabilities, and, also, will impose additional disclosure requirements. Moreover, the Group expects changes both in the presentation and the time of recognition of the charges in the statements of comprehensive income, since the operating lease expense currently reported under IAS 17 will be substituted by the depreciation of the right-of-use asset and the interest on the lease liability.

2.c) Accounting Estimates and Judgments

The preparation of financial statements at a certain date requires Management to make estimates and assessments affecting the amount of assets and liabilities recorded, contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual future results might differ from the estimates and assessments made as of the date of preparation of these condensed interim consolidated financial statements.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

2. BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

 

In preparing these condensed interim consolidated financial statements, significant estimates and judgments were made by Management in applying the Group’s accounting policies and the main sources of uncertainty were consistent with those applied by the Group in the preparation of the annual consolidated financial statements, which are disclosed in Notes 2.b and 2.c to the annual consolidated financial statements.

Provisions for impairment of property, plant and equipment and intangible assets

As explained in Notes 2.b.8 and 2.b.9 to the annual consolidated financial statements, as a general criterion, the method employed to estimate the recoverable value of property, plant and equipment and intangible assets mainly consists of calculating the value in use, based on the expected future cash flows derived from the use of those assets, discounted at a rate that reflects the weighted average cost of the capital used.

Regarding interim periods, IAS 34 provides that an entity is bound to review the impairment test. Where an entity has previously recognized impairment losses, a review of the detailed estimates as of the period end is required if the indicators giving rise to such losses persist. In this respect, the entity is required to check if significant indicators of impairment or reversal exists since the last fiscal year end and to establish the need to carry out or not such detailed test.

The Company has assessed changes in relevant factors with mixed effects, mainly arising from changes in foreign and domestic factors affecting the country (the rise in brent crude oil price, new scenarios of supply and demand as well as gas prices in Argentina, new export withholdings, potential reductions in costs in U.S. dollars due to the devaluation that took place in the last months and its impact on operating costs, investments and reserves, the situation regarding the process of implementation of the market conditions related to import parity due to the aforementioned events both for fuel and crude oil prices, the increase in country risk and its effect on the country’s borrowing cost, among others) and it has concluded that given the volatility of the variables involved and the present uncertainty, it may not be asserted with reasonable assurance that those potential changes are indicators that will affect the long-term cash flows projections on which the fair value in the CGUs of the Upstream segment as of the closing of this period.

2.d) Comparative information

Amounts and other information corresponding to the year ended on December 31, 2017 and to the nine-month period ended on September 30, 2017 are an integral part of these condensed interim consolidated financial statements and are intended to be read only in relation to these financial statements.

Additionally, certain amounts in the statement of financial position have been reclassified due to the accounting policy changes mentioned in paragraph b) of this Note.

3. SEASONALITY OF OPERATIONS

Historically, the Group’s results have been subject to seasonal fluctuations throughout the year, particularly as a result of the increase in natural gas sales during the winter. After the devaluation of the Peso in 2002, and as a consequence of the natural gas price freeze imposed by the Argentine government, the use of natural gas has been diversified, generating an increase in demand throughout the entire year. However, the recent adjustment in gas prices, which also affects the residential market where the demand has shown certain susceptibility to the price of gas, may lead the Group to seasonal fluctuations in its sales volumes and prices, which might adversely affect the level of production and sale of natural gas.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

4. ACQUISITIONS AND DISPOSITIONS

 

 

   

Agreement for YPF EE’s capitalization

On March 20, 2018 GE EFS Power Investments B.V., a subsidiary of EFS Global Energy B.V (both companies indirectly controlled by GE Energy Financial Services, Inc.; jointly “GE”), subscribed YPF EE shares representing 24.99% of its capital stock. Since then, GE EFS Power Investments and YPF jointly control YPF EE, undertaking to contribute as follows:

 

   

Subscription price of US$ 275 million:

 

   

US$ 135 million on the closing date of the transaction; and

 

   

US$ 140 million 12 months after the closing date of the transaction.

 

   

Contingent price of up to the maximum sum of US$ 35 million subject to the evolution of the electric market prices (33.33% as of 24 months from the closing date of the transaction and 16.67% each subsequent year).

In this way, the capital structure of YPF EE after the issuance of shares is as follows:

 

Shareholder

   Number of
Shares
     Participation in
the capital stock
    Class of Shares

YPF

     2,723,826,879        72.69218   A

OPESSA

     86,476,112        2.30783   A
  

 

 

    

 

 

   

 

Group

     2,810,302,991        75.00001   A

GE

     936,767,364        24.99999   B
  

 

 

    

 

 

   

 

Total

     3,747,070,355        100.00000  

As a result of this process, the Group reflected the investment in YPF EE in its annual consolidated financial statements as assets and liabilities held for disposal in separate lines from the rest of the assets and liabilities, given that as of that date they had met all the requirements for this classification. (See Note 2.b.24 and Note 3 to the annual consolidated financial statements).

The following table shows the main assets and liabilities held for disposal as of December 31, 2017:

 

   

Group of assets held for disposal:

 

     December 31,
2017
 

Property, plant and equipment

     4,982  

Investments in associates and joint ventures

     2,117  

Inventories

     1  

Other receivables

     914  

Trade receivables

     713  

Investments in financial assets

     78  

Cash and cash equivalents

     61  
  

 

 

 

Subtotal

     8,866  
  

 

 

 

Eliminations

     (43
  

 

 

 

Total

     8,823  
  

 

 

 

 

   

Liabilities associated to the group of assets held for disposal:

 

     December 31,
2017
 

Provisions

     96  

Deferred tax liabilities

     282  

Remuneration and social security charges

     47  

Other liabilities

     1  

Loans

     4,072  

Accounts payable

     938  
  

 

 

 

Subtotal

     5,436  
  

 

 

 

Eliminations

     (1,243
  

 

 

 

Total

     4,193  
  

 

 

 

 

15


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

4. ACQUISITIONS AND DISPOSITIONS (Cont.)

 

As a result of the implementation of IFRS 10 and the aforementioned capitalization process of YPF EE, the Group recorded a gain of 11,980 (11,879 through YPF and 101 through OPESSA) included in the item “Other net operating results”, which includes a gain of 13,552 (13,451 through YPF and 101 through OPESSA) due to the dilution of its interest in YPF EE with the consequent loss of control over it and the subsequent revaluation of its residual interest (3,438 y 10,114, respectively) and a loss of 1,572 (fully corresponding to YPF) for the reversal to net profit for the period of the balance accrued from the investment translation in this Company.

In order to determine the fair value of the investment in YPF EE, the Group has considered all the elements available as of the date of these financial statements, including the best estimation of the occurrence of the contingent payments provided in the operation. However, for the measurement of this fair value the Group has a term of one year to evaluate all the facts and circumstances existing as of the transaction date that might modify such measurement.

Regarding the participation held after the aforementioned transaction, the Group has followed the guidelines of IFRS 10 “Consolidated financial statements” and has concluded that from the entry of GE in YPF EE, GE and YPF jointly control YPF EE. Consequently, the Group applied IFRS 11 “Joint Arrangements” defining such company as a joint venture, and measured it according to the equity method under the IAS 28 “Investments in associates and joint ventures”.

Some of the main evaluated assumptions are described below:

 

  (i)

Any decisions about the relevant activities of YPF EE thereof are to be taken jointly, there being no power of one shareholder over the other in relation to such activities, regardless of the different percentages of equity interests held in YPF EE by each of them. Although the Group owns a 75.00001% stake in YPF EE, according to the shareholders’ agreement, the following is required for decision-making purposes regarding the relevant activities: the approval of at least one Director appointed by each class of shares at the meeting of the Board of Directors and the approval of each class of shares for the adoption of such decisions at the Shareholders’ meeting;

 

  (ii)

No shareholder has any power, as defined in IFRS 10, to the detriment of any other, independently of the number of Directors or personnel (key or not) appointed by each class of shares, in the management of the Company for its own benefit or to unilaterally modify the variable investment returns or ultimately, to unilaterally direct any of the decisions associated with the relevant activities.

5. FINANCIAL RISK MANAGEMENT

The Group’s activities are exposed to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group maintains an organizational structure and systems that allow for the identification, measurement and adoption of the necessary actions in order to minimize the risks to which it is exposed. Likewise, see Notes17 and 31, paragraphs c) and d) to these condensed interim consolidated financial statements.

There have been no significant changes in the risk management or risk management policies applied by the Group since the last fiscal year end. See Note 4 to the annual consolidated financial statements.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

6. SEGMENT INFORMATION

 

The different segments in which the Group is organized take into consideration the different activities from which the Group obtains income and incurs expenses. The organizational structure is based on the way in which the highest decision-making authority analyzes the main financial and operating magnitudes for making decisions about resource allocation and performance assessment also considering the Group’s business strategy.

 

   

Upstream

The Upstream segment carries out all activities relating to the exploration, development and production of oil and natural gas.

Revenue is generated from (i) the sale of produced oil to the Downstream segment and, marginally, from its sale to third parties; and (ii) the sale of produced gas to the Gas and Power segment.

 

   

Gas and Power

The Gas and Power segment generates its revenue from the development of activities relating to: (i) the natural gas commercialization to third parties and the Downstream segment, (ii) the commercial and technical operation of LNG regasification terminals in Bahía Blanca and Escobar, by hiring two regasification vessels, and (iii) the natural gas distribution. Additionally, for the nine-month period ended September 30, 2017, it included the generation of conventional and renewable electricity.

In addition to the proceeds derived from the sale of natural gas to third parties and the intersegment, which is then recognized as a “purchase” to the Upstream segment, and including Stimulus Plans for Natural Gas production in force (see Note 30 to the annual consolidated financial statements), Gas and Power accrues a fee in its favor with the Upstream segment to carry out such commercialization.

 

   

Downstream

The Downstream segment develops activities relating to: (i) oil refining and petrochemical production, (ii) commercialization of refined and petrochemical products obtained from such processes, and (iii) logistics related to the transportation of oil and gas to refineries and the transportation and distribution of refined and petrochemical products to be marketed in the different sales channels.

It obtains its income from the marketing mentioned in item (ii) above, which is developed through the Retail, Industry, Agro, LPG, Chemicals and Lubricants and Specialties businesses.

It incurs all expenses related to the aforementioned activities, including the purchase of oil from the Upstream segment and third parties and the natural gas to be consumed in the refinery and petrochemical industrial complexes from the Gas and Power segment.

 

   

Central Administration and Others

It covers other activities, not falling into the aforementioned categories, mainly corporate administrative expenses and assets and construction activities.

Sales between business segments were made at internal transfer prices established by the Group, which generally seek to approximate domestic market prices.

Operating profit and assets for each segment have been determined after consolidation adjustments.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

6. SEGMENT INFORMATION (Cont.)

 

 

     Upstream     Gas and Power     Downstream      Central
Administration
and Others
    Consolidation
Adjustments(1)
    Total  

For the nine-month period ended September 30, 2018

             

Revenues from sales

     1,038       66,778       220,688        4,825       (3,284     290,045  

Revenues from intersegment

     147,440       5,691       1,142        7,567       (161,840     —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Revenues

     148,478       72,469       221,830        12,392       (165,124     290,045  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit / (loss)

     17,231       16,020  (3)       3,462        (4,125     (803     31,785  

Income from equity interests in associates and joint ventures

     —         (2,830     332        —         —         (2,498

Depreciation of property, plant and equipment

     54,935  (2)       194       8,137        1,388       —         64,654  

Acquisition of property, plant and equipment

     51,679       1,017       7,588        1,160       —         61,444  

Assets

     532,413       106,252       343,644        96,701       (10,482     1,068,528  

For the nine-month period ended September 30, 2017

             

Revenues from sales

     473       43,772       138,942        1,903       (1,891     183,199  

Revenues from intersegment

     83,845       2,900       694        5,165       (92,604     —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Revenues

     84,318       46,672       139,636        7,068       (94,495     183,199  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating profit / (loss)

     375       3,064       10,661        (2,814     (259     11,027  

Income from equity interests in associates and joint ventures

     —         353       193        —         —         546  

Depreciation of property, plant and equipment

     31,497  (2)       197       5,027        733       —         37,454  

Acquisition of property, plant and equipment

     31,852       2,605       5,648        777       —         40,882  

As of December 31, 2017

             

Assets

     251,525       45,395       158,800        53,934       (3,936     505,718  

 

(1)

Corresponds to the elimination among segments of the YPF Group.

(2)

Includes depreciation of charges for impairment of property, plant and equipment.

(3)

Includes the result for revaluation of the interest in YPF EE. See Note 4.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

  

 

7. FINANCIAL INSTRUMENTS BY CATEGORY

Fair value measurements

Fair value measurements are described in Note 6 to the annual consolidated financial statements

The tables below show the Group’s financial assets measured at fair value as of September 30, 2018 and December 31, 2017, and their allocation to their fair value hierarchies:

 

     As of September 30, 2018  

Financial assets

   Level 1      Level 2      Level 3      Total  

Investments in financial assets:

           

- Public securities

     14,462        —          —          14,462  
  

 

 

    

 

 

    

 

 

    

 

 

 
     14,462        —          —          14,462  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents:

           

- Mutual funds

     8,735        —          —          8,735  
  

 

 

    

 

 

    

 

 

    

 

 

 
     8,735        —          —          8,735  
  

 

 

    

 

 

    

 

 

    

 

 

 
  

 

 

    

 

 

    

 

 

    

 

 

 
     23,197        —          —          23,197  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     As of December 31, 2017  

Financial assets

   Level 1      Level 2      Level 3      Total  

Investments in financial assets:

           

- Public securities

     12,936        —          —          12,936  
  

 

 

    

 

 

    

 

 

    

 

 

 
     12,936        —          —          12,936  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents:

     19,051        —          —          19,051  
  

 

 

    

 

 

    

 

 

    

 

 

 

- Mutual funds

     19,051        —          —          19,051  
  

 

 

    

 

 

    

 

 

    

 

 

 
  

 

 

    

 

 

    

 

 

    

 

 

 
     31,987        —          —          31,987  
  

 

 

    

 

 

    

 

 

    

 

 

 

The Group has no financial liabilities measured at fair value.

Fair value estimates

From December 31, 2017 until September 30, 2018, there have been no significant changes in the commercial or economic circumstances affecting the fair value of the Group’s assets and financial liabilities, whether measured at fair value or amortized cost, except as mentioned in Note 31.c.

Furthermore, during the nine-month period ended September 30, 2018, there were no transfers between the different hierarchies used to determine the fair value of the Group’s financial instruments.

Fair value of financial assets and financial liabilities measured at amortized cost

The estimated fair value of loans, considering unadjusted listed prices (Level 1) for Negotiable Obligations and interest rates offered to the Group (Level 3) in connection with the remaining financial loans amounted to 346,366 and 200,264 as of September 30, 2018 and December 31, 2017, respectively.

The fair value of other receivables, trade receivables, cash and cash equivalents, accounts payable and other liabilities do not differ significantly from their book value.

 

19


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

  

 

8. INTANGIBLE ASSETS

Changes in the Group’s intangible assets for the nine-month period ended September 30, 2018 and the year ended December 31, 2017 are as follows:

 

     Service
concession
     Exploration
rights
     Other
intangibles
     Total  

Cost

     11,749        3,093        5,494        20,336  

Accumulated amortization

     7,235        149        4,838        12,222  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances as of December 31, 2016

     4,514        2,944        656        8,114  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost

           

Increases

     947        8        198        1,153  

Translation effect

     2,141        513        953        3,607  

Decreases and reclassifications

     (13      (149      185        23  

Accumulated amortization

           

Increases

     615        —          223        838  

Translation effect

     1,330        —          885        2,215  

Decreases and reclassifications

     —          (149      17        (132

Cost

     14,824        3,465        6,830        25,119  

Accumulated amortization

     9,180        —          5,963        15,143  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances as of December 31, 2017

     5,644        3,465        867        9,976  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost

           

Increases

     898        1        390        1,289  

Translation effect

     18,493        4,042        7,866        30,401  

Decreases and reclassifications

     (2      (192      (66      (260

Accumulated amortization

           

Increases

     780        —          231        1,011  

Translation effect

     11,593        —          7,417        19,010  

Decreases and reclassifications

     —          —          —          —    

Cost

     34,213        7,316        15,020        56,549  

Accumulated amortization

     21,553        —          13,611        35,164  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances as of September 30, 2018

     12,660        7,316        1,409        21,385  
  

 

 

    

 

 

    

 

 

    

 

 

 

9. PROPERTY, PLANT AND EQUIPMENT

 

     September 30, 2018      December 31, 2017  

Net book value of property, plant and equipment

     804,744        382,630  

Provision for obsolescence of materials and equipment

     (3,634      (1,652

Provision for impairment of property, plant and equipment

     (45,207      (26,535
  

 

 

    

 

 

 
     755,903        354,443  
  

 

 

    

 

 

 

 

20


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

9. PROPERTY, PLANT AND EQUIPMENT (Cont.)

 

Changes in Group’s property, plant and equipment for the nine-month period ended September 30, 2018 and the year ended December 31, 2017 are as follows:

 

     Land
and
buildings
    Mining
property,
wells and
related
equipment
    Refinery
equipment
and
petrochemical
plants
    Transportation
equipment
    Materials
and
equipment
in
warehouse
    Drilling
and
work in
progress
    Exploratory
drilling in
progress
    Furniture,
fixtures and
installations
    Selling
equipment
    Infrastructure
for natural
gas
distribution
    Electric
power
generation
facilities
    Other property     Total  

Cost

     18,429       625,628       112,560       5,551       14,239       52,673       1,978       8,089       14,346       3,191       1,762       9,965       868,411  

Accumulated depreciation

     7,497       432,002       54,735       3,285       —         —         —         6,401       9,119       1,301       1,394       6,998       522,732  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of December 31, 2016

     10,932       193,626       57,825       2,266       14,239       52,673       1,978       1,688       5,227       1,890       368       2,967       345,679  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost

                          

Increases

     49       (4,370     103       66       7,394       47,453       2,207       20       —         —         —         174       53,096  

Translation effect

     3,028       113,481       19,728       1,032       2,101       8,568       373       1,466       2,744       —         —         1,651       154,172  

Decreases and reclassifications

     (112     40,614       2,284       965       (7,741     (49,165     (1,687     879       1,698       215       (1,762 ) (4)      188       (13,624

Accumulated depreciation

                          

Increases

     437       54,980       5,395       602       —         —         —         717       854       80       87       315       63,467  

Translation effect

     1,303       81,108       9,983       609       —         —         —         1,196       1,684       —         —         1,151       97,034  

Decreases and reclassifications

     13       (1,756     (953     16       —         —         —         372       (1     —         (1,481 ) (4)      (18     (3,808

Cost

     21,394       775,353       134,675       7,614       15,993       59,529       2,871       10,454       18,788       3,406       —         11,978       1,062,055  

Accumulated depreciation

     9,250       566,334       69,160       4,512       —         —         —         8,686       11,656       1,381       —         8,446       679,425  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of December 31, 2017

     12,144       209,019  (1)       65,515       3,102       15,993       59,529       2,871       1,768       7,132       2,025       —         3,532       382,630  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost

                          

Increases

     16       1,512       4       9       11,982       43,933       3,775       48       —         —         —         165       61,444  (3)  

Translation effect

     24,739       962,847       164,979       8,791       18,294       71,910       4,841       13,128       23,869       —         —         13,615       1,307,013  

Decreases and reclassifications

     318       29,977       2,467       209       (10,402     (32,448     (1,047     1,883       1,583       201       —         639       (6,620

Accumulated depreciation

                          

Increases

     454       64,561       6,306       560       —         —         —         1,078       1,073       65       —         396       74,493  (3)  

Translation effect

     11,123       726,698       87,666       5,525       —         —         —         10,924       14,757       —         —         9,661       866,354  

Decreases and reclassifications

     —         (1,024     (25     (22     —         —         —         (4     (11     (18     —         (20     (1,124

Cost

     46,467       1,769,689       302,125       16,623       35,867       142,924       10,440       25,513       44,240       3,607       —         26,397       2,423,892  

Accumulated depreciation

     20,827       1,356,569       163,107       10,575       —         —         —         20,684       27,475       1,428       —         18,483       1,619,148  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of September 30, 2018

     25,640       413,120  (1)       139,018       6,048       35,867       142,924       10,440  (2)       4,829       16,765       2,179       —         7,914       804,744  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Includes 19,321 and 10,003 of mineral property as of September 30, 2018 and December 31, 2017, respectively.

(2)

As of September 30, 2018, there are 51 exploratory wells in progress. During the nine-month period ended on such date, 26 wells were drilled, 7 wells were charged to exploratory expenses and 3 well was transferred to properties with proven reserves in the mining property, wells and related equipment account.

(3)

Includes 1,470 and 1,092 of cost and accumulated amortization, respectively, corresponding to additions for the acquisition of a participation in various areas.

(4)

Includes 6,772 and 1,790 of cost and accumulated amortization, respectively, corresponding to the reclassification of assets of YPF EE as held for disposal.

 

21


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

9. PROPERTY, PLANT AND EQUIPMENT (Cont.)

 

The Group capitalizes the financial cost as part of the cost of the assets. For the nine-month period ended September 30, 2018 and 2017, the rate of capitalization was 10.39% and 11.84%, respectively, and the amount capitalized was 483 and 543, respectively, for the period mentioned above.

Set forth below is the evolution of the provision for obsolescence of materials and equipment for the nine-month period ended September 30, 2018 and 2017:

 

     For the nine-month period
ended September 30,
 
     2018      2017  

Balance at beginning of year

     1,652        1,380  

Increase charged to expenses

     5        6  

Amounts incurred due to utilization

     (12      (6

Transfers and other movements

     5        65  

Translation differences

     1,984        133  
  

 

 

    

 

 

 

Balance at end of period

     3,634        1,518  
  

 

 

    

 

 

 

Set forth below is the evolution of the provision for impairment of property, plant and equipment for nine-month period ended on September 30, 2018 and 2017:

 

     For the nine-month period
ended September 30,
 
     2018      2017  

Balance at beginning of year

     26,535        36,285  

Depreciation(1)

     (8,747      (6,535

Translation differences

     27,419        2,857  
  

 

 

    

 

 

 

Balance at end of period

     45,207        32,607  
  

 

 

    

 

 

 

 

(1)

Included in “Depreciation of property, plant and equipment” in Note 22.

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

The following table shows the value of the investments in associates and joint ventures at an aggregate level, as of September 30, 2018 and December 31, 2017:

 

     September 30,
2018
     December 31,
2017
 

Amount of investments in associates

     1,798        911  

Amount of investments in joint ventures

     24,816        5,146  

Provision for impairment of investments in associates and joint ventures

     (12      (12
  

 

 

    

 

 

 
     26,602        6,045  
  

 

 

    

 

 

 

 

22


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (Cont.)

 

The main movements during the nine-month period ended September 30, 2018 and 2017, which affected the value of the aforementioned investments, correspond to:

 

     For the nine-month period
ended September 30,
 
     2018      2017  

Balance at the beginning of year

     6,045        5,488  

Acquisitions and contributions

     284        448  

Income on investments in associates and joint ventures

     (2,498      546  

Conversion differences

     5,960        295  

Distributed dividends

     (474      (328

Interest maintained in YPF EE (1)

     17,285        —    

Reduced capital in associates

     —          (2
  

 

 

    

 

 

 

Balance at the end of period

     26,602        6,447  
  

 

 

    

 

 

 

 

(1)

Corresponds to the fair value of the interest maintained in the investment in YPF EE following the loss of control. See Note 4.

The following table shows the principal amounts of the results of the investments in associates and joint ventures of the Group, calculated according to the equity value therein, for the nine-month period ended September 30, 2018 and 2017. The Group has adjusted, if applicable, the values reported by these companies to adapt them to the accounting criteria used by the Group for the valuation equity method in the aforementioned dates:

 

     Associates      Joint ventures  
     For the nine-month period
ended September 30,
     For the nine-month period
ended September 30,
 
     2018      2017      2018     2017  

Net profit / (loss)

     502        285        (3,000     261  

Other comprehensive income

     238        23        5,722       272  
  

 

 

    

 

 

    

 

 

   

 

 

 

Comprehensive income for the period

     740        308        2,722       533  
  

 

 

    

 

 

    

 

 

   

 

 

 

The Group does not have investments in subsidiaries with significant non-controlling interests. Likewise, the Group does not have investments in associates and joint ventures that are significant, with the exception of the investment in YPF EE.

The assets and liabilities as of September 30, 2018 of YPF EE as well as the results of YPF EE from the date of loss of control by YPF are detailed below:

 

     September 30,
2018
 

Noncurrent assets

     25,078  

Current assets

     15,259  
  

 

 

 

Total assets

     40,337  
  

 

 

 

Noncurrent liabilities

     20,013  

Current liabilities

     9,905  
  

 

 

 

Total liabilities

     29,918  
  

 

 

 

Total shareholders’ equity

     10,419  
  

 

 

 

 

     Results as from
loss of control
date
 

Revenues

     3,932  

Costs

     (1,028
  

 

 

 

Gross profit

     2,904  
  

 

 

 

Operating profit

     2,648  

Income from equity interest in associates and joint ventures

     369  

Net financial results

     (9,328
  

 

 

 

Net profit / (loss) before income tax

     (6,311
  

 

 

 

Income tax

     1,955  
  

 

 

 

Net profit / (loss)

     (4.356
  

 

 

 

 

23


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (Cont.)

 

The following table shows information of the subsidiaries:

 

           

Information of the issuer

 
     Description of the Securities                Last Financial Statements Available        

Name and Issuer

   Class      Face
Value
     Amount     

Main Business

  

Registered Address

   Date      Capital
stock
     Net profit
(loss)
    Equity     Holding in
Capital Stock
 

Subsidiaries:(7)

                           

YPF International S.A.(6)

     Common      Bs. 100        66,897      Investment    La Plata Street 19, Santa Cruz de la Sierra, República de Bolivia      09-30-18        15        (1     35       100.00

YPF Holdings Inc.(6)

     Common      US$  0.01        810,614      Investment and finance    10333 Richmond Avenue I, Suite 1050, TX, U.S.A.      09-30-18        33,353        (415     (8,837     100.00

Operadora de Estaciones de Servicios S.A.

     Common      $ 1        163,701,747      Commercial management of YPF’s gas stations    Macacha Güemes 515, Buenos Aires, Argentina      09-30-18        164        764       961       99.99

A-Evangelista S.A.

     Common      $ 1        307,095,088      Engineering and construction services    Macacha Güemes 515, Buenos Aires, Argentina      09-30-18        307        (656     269       100.00

Metrogas S.A.

     Common      $ 1        398,419,700      Providing the public service of natural gas distribution    Gregorio Aráoz de Lamadrid 1360, Buenos Aires, Argentina.      09-30-18        569        (2,415     6,570       70.00

YPF Chile S.A.(6)

     Common      —   —          50,968,649      Lubricants and aviation fuels trading and hydrocarbons research and exploration    Villarica 322; Módulo B1, Qilicura, Santiago      09-30-18        1,879        (33     3,018       100.00

YPF Tecnología S.A.

     Common      $ 1        234,291,000      Investigation, development, production and marketing of technologies, knowledge, goods and services    Macacha Güemes 515, Buenos Aires, Argentina      09-30-18        459        143       834       51.00

Compañía de Inversiones Mineras S.A.

     Common      $ 1        236,474,420      Exploration, exploitation, processing, management, storage and transport of all types of minerals; assembly, construction and operation of facilities and structures and processing of products related to mining    Macacha Güemes 515, Buenos Aires, Argentina      09-30-18        236        7       189       100.00

Bajo del Toro II S.R.L.

    
Membership
interests
 
 
   $ 1        1,270,815,165      Exploration, discovery, exploitation, purchase, production, storage, transport, import, export and marketing of all types of liquid or gaseous hydrocarbons and carrying out all acts that are not prohibited by law, including, but not limited to the execution of money loans as lender and/or borrower    Macacha Güemes 515, Buenos Aires, Argentina      09-30-18        1,271        817       2,158       100.00

 

24


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (Cont.)

 

The following table shows the investments in associates and joint ventures:

 

     09-30-2018      12-31-2017  
                         

Information of the issuer

       
     Description of the Securities                              Last Financial Statements Available               

Name and Issuer

   Class      Face
Value
     Amount      Book value
(2)
     Cost (1)     

Main Business

  

Registered Address

   Date      Capital
stock
     Net profit
(loss)
    Equity      Holding in
Capital Stock
    Book Value (2)  

Joint ventures:

                                    

YPF Energía Eléctrica S.A. (5)

     Common      $ 1        1,879,916,921        13,955        1,085      Exploration, mining and marketing of hydrocarbons and generation, transport and marketing of electric energy    Macacha Güemes 515, Buenos Aires, Argentina      06-30-18        3,747        591       11,053        75.00     —   (8)  

Compañía Mega S.A.(6) (5)

     Common      $ 1        244,246,140        3,874        —        Separation, fractionation and transportation of natural gas liquids    San Martín 344, P. 10º, Buenos Aires, Argentina      06-30-18        643        473       6,268        38.00     1,725  

Profertil S.A.(6)

     Common      $ 1        391,291,320        6,442        —        Production and marketing of fertilizers    Alicia Moreau de Justo 740, P. 3, Buenos Aires, Argentina      06-30-18        783        (730     865        50.00     2,862  

Refinería del Norte S.A.

     Common      $ 1        45,803,655        359        —        Refining    Maipú 1, P. 2º, Buenos Aires, Argentina      06-30-18        92        60       1,142        50.00     483  
           

 

 

    

 

 

                       

 

 

 
              24,630        1,085                           5,070  
           

 

 

    

 

 

                       

 

 

 

Associates:

                                    

Oleoductos del Valle S.A.

     Common      $ 10        4,072,749        386        —        Oil transportation by pipeline    Florida 1, P. 10º, Buenos Aires, Argentina      09-30-18        110        561       1,044        37.00     242  

Terminales Marítimas Patagónicas S.A.

     Common      $ 10        476,034        162        —        Oil storage and shipment    Av. Leandro N. Alem 1180, P. 11º, Buenos Aires, Argentina      06-30-18        14        169       480        33.15     103  

Oiltanking Ebytem S.A.(6)

     Common      $ 10        351,167        469        —        Hydrocarbon transportation and storage    Terminal Marítima Puerto Rosales – Province of Buenos Aires, Argentina.      09-30-18        12        227       971        30.00     211  

Gasoducto del Pacífico (Argentina) S.A.

     Preferred      $ 1        15,579,578        25        —        Gas transportation by pipeline    San Martín 323, P.13°, Buenos Aires, Argentina      12-31-17        156        116       445        10.00     44  

Central Dock Sud S.A.

     Common      $ 0.01        11,869,095,145        446        280      Electric power generation and bulk marketing    Pasaje Ingeniero Butty 220, P.16°, Buenos Aires, Argentina      09-30-18        1,231        1,932       4,330        10.25 %(4)      —   (8)  

Oleoducto Trasandino (Argentina) S.A.

     Preferred      $ 1        12,135,167        46        —        Oil transportation by pipeline    Macacha Güemes 515, P.3º, Buenos Aires, Argentina      06-30-18        34        44       169        36.00     41  

YPF Gas S.A.

     Common      $ 1        59,821,434        231        —        Gas fractionation, bottling, distribution and transport for industrial and/or residential use    Macacha Güemes 515, P.3º, Buenos Aires, Argentina      06-30-18        176        54       872        33.99     235  

Other companies:

                                    

Other (3)

     —        —   —          —          219        200      —      —        —          —          —         —          —         111  
           

 

 

    

 

 

                       

 

 

 
              1,984        480                           987  
           

 

 

    

 

 

                       

 

 

 
              26,614        1,565                           6,057  
           

 

 

    

 

 

                       

 

 

 

 

(1)

Corresponds to cost and contributions, net of dividends collected and capital reductions.

(2)

Corresponds to holding in shareholders’ equity plus adjustments in order to conform to YPF accounting principles.

(3)

Includes Gasoducto del Pacífico (Cayman) Ltd., A&C Pipeline Holding Company, Poligás Luján S.A.C.I., Oleoducto Transandino (Chile) S.A., Bizoy S.A., Civeny S.A., Bioceres S.A. and Petrofaro S.A.

(4)

Additionally, the Group has a 22.49% indirect holding in the capital stock through YPF EE.

(5)

As stipulated by shareholders’ agreement, joint control is held in this company by shareholders.

(6)

The U.S. dollar has been defined as the functional currency of this company.

(7)

Additionally, consolidates Compañía Minera de Argentina S.A., YPF Services USA Corp., YPF Europe B.V., YPF Brasil Comércio Derivado de Petróleo Ltda, Wokler Investment S.A., YPF Colombia S.A.S., Miwen S.A., Eleran Inversiones 2011 S.A.U., Lestery S.A., Energía Andina S.A and Bajo del Toro I S.R.L.

(8)

The investments that YPF holds in CDS, IDS, YGEN and YGEN II through its subsidiary YPF EE were reclassified to Assets held for disposal as of December 31, 2017.

 

25


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

11. INVENTORIES

 

 

 

     September 30, 2018     December 31, 2017  

Refined products

     38,729       16,260  

Crude oil and natural gas

     20,007       8,474  

Products in process

     1,026       640  

Raw materials, packaging materials and others

     3,721       1,775  
  

 

 

   

 

 

 
     63,483  (1)       27,149  (1)  
  

 

 

   

 

 

 

 

(1)

As of September 30, 2018 and December 31, 2017, the cost of inventories does not exceed their net realizable value.

 

12.

OTHER RECEIVABLES

 

     September 30, 2018      December 31, 2017  
     Noncurrent      Current      Noncurrent      Current  

Trade

     165        2,280        74        2,892  

Tax credit and export rebates

     2,861        2,273        360        3,131  

Loans to third parties and balances with related parties (1)

     392        4,150        185        1,116  

Collateral deposits

     1        558        1        315  

Prepaid expenses

     309        1,722        180        934  

Advances and loans to employees

     19        545        17        412  

Advances to suppliers and custom agents (2)

     1        4,274        2        1,700  

Receivables with partners in JO

     1,643        3,553        743        1,165  

Insurance receivables

     —          —          —          206  

Miscellaneous

     25        1,100        31        870  
  

 

 

    

 

 

    

 

 

    

 

 

 
     5,416        20,455        1,593        12,741  

Provision for other doubtful receivables

     (567      (50      (258      (57
  

 

 

    

 

 

    

 

 

    

 

 

 
     4,849        20,405        1,335        12,684  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

See Note 32 for information about related parties.

(2)

Includes, among others, advances to customs agents for the payment of taxes and import rights related to the imports of fuels and goods.

 

13.

TRADE RECEIVABLES

 

     September 30, 2018      December 31, 2017  
     Noncurrent      Current      Noncurrent      Current  

Accounts receivable and related parties(1)(2)

     33,398        70,628        2,210        41,972  

Provision for doubtful trade receivables

     —          (2,880      —          (1,323
  

 

 

    

 

 

    

 

 

    

 

 

 
     33,398        67,748        2,210        40,649  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

See Note 32 for information about related parties.

(2)

See Note 20 for information about contract trade receivables.

Changes in the provision for doubtful trade receivables

 

   
     For the nine-month period ended
September 30,
 
     2018      2017  

Balance at beginning of the fiscal year

     1,323        1,084  
  

 

 

    

 

 

 

Modification of balance at beginning of the fiscal year (1)

     425        —    
  

 

 

    

 

 

 

Balance at beginning of the fiscal year

     1,748        1,084  
  

 

 

    

 

 

 

Increases charged to expenses

     336        97  

Decreases charged to income

     —          (120

Amounts incurred due to utilization

     —          (2

Other movements

     (24      117  

Translation differences

     820        63  
  

 

 

    

 

 

 

Balance at end of period

     2,880        1,239  
  

 

 

    

 

 

 

 

(1)

Corresponds to the change in the accounting policy described in detail in Note 2.b.

 

14.

CASH AND CASH EQUIVALENTS

 

     September 30, 2018      December 31, 2017  

Cash and banks

     9,215        9,672  

Short-term investments

     39,965        15  

Financial assets at fair value through profit or loss (1)

     8,735        19,051  
  

 

 

    

 

 

 
     57,915        28,738  
  

 

 

    

 

 

 

 

(1)

See Note 7.

 

26


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

15. PROVISIONS

 

Changes in the Group’s provisions for the nine-month period ended September 30, 2018 and for the fiscal year ended December 31, 2017 are as follows:

 

     Provision for pending lawsuits and
contingencies
    Provision for environmental
liabilities
    Provision for hydrocarbon wells
abandonment obligations
    Total  
     Noncurrent     Current     Noncurrent     Current     Noncurrent     Current     Noncurrent     Current  

Amount as of December 31, 2016

     9,205       569       530       868       37,623       557       47,358       1,994  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increases charged to expenses

     2,394       83       1,483       —         2,946       —         6,823       83  

Decreases charged to income

     (1,570     (410     (6     —         8       2       (1,568     (408

Amounts incurred due to payments/utilization

     (25     (187     —         (661     —         (515     (25     (1,363

Net exchange and translation differences

     1,483       75       —         —         6,874       121       8,357       196  

Reclassifications and other movements

     180  (1)       558       (811     811       (5,580 ) (2)      571  (2)       (6,211     1,940  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amount as of December 31, 2017

     11,667       688       1,196       1,018       41,871       736       54,734       2,442  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increases charged to expenses

     2,478       111       706       —         2,598       —         5,782       111  

Decreases charged to income

     (63     (143     —         —         (51     —         (114     (143

Amounts incurred due to payments/utilization

     (44     (106     —         (629     —         (998     (44     (1,733

Exchange and translation differences, net

     8,138       548       704       38       51,891       887       60,733       1,473  

Reclassifications and other movements

     104       (98     (966     966       (1,003     1,003       (1,865     1,871  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amount as of September 30, 2018

     22,280       1,000       1,640       1,393       95,306       1,628       119,226       4,021  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Includes (2,098) corresponding to resolutions for contractual claims that were reclassified as Other liabilities (See Note 14.a.2 to the annual consolidated financial statements); and 2,932 of reclassifications of Other liabilities (see Note 27 to the annual consolidated financial statements)

(2)

Includes (4,913) corresponding to the annual recalculation of costs for abandonment of hydrocarbon wells for the years ended December 31, 2017 and (96) corresponding to liabilities reclassified as Liabilities associated to assets held for disposal as of December 31, 2017.

Provisions for lawsuits, claims and environmental liabilities are described in Note 14 to the annual consolidated financial statements. The news of the nine-month period ended on September 30, 2018, which do not have a significant impact, are described below:

 

   

Claims under the scope of the CNDC

Regarding the claim of the Users and Consumers Association, the extraordinary appeal filed by the Company against the ruling of the Court has been sustained and the court file has been submitted to the CSJN.

 

   

Claims arising from restrictions in the natural gas market

On June 21, 2018, Transportadora de Gas del Norte S.A. (“TGN”) filed for a withdrawal to the waiver it obtained in respect of payment of Court fees and costs, based on the improvement in its financial situation during 2018, and paid the Court fees. The Court requested TGN to express the taxable basis on which payment of the Court fees was assessed and ordered to notify YPF of this waiver. As of the date of issuance of these condensed interim consolidated financial statements, the Court has not yet ruled on withdrawal of the waiver of its benefit to proceed without Court fees and costs.

 

27


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

16. INCOME TAX

According to IAS 34, income tax expense is recognized in each interim period based on the best estimate of the effective income tax rate expected as of year-end. Amounts calculated for income tax expense for the nine-month period ended September 30, 2018 may need to be adjusted in the subsequent period if, based on new factors of judgment, the estimate of the effective expected income tax rate changes.

The calculation of the income tax expense accrued for the nine-month period ended September 30, 2018 and 2017 is as follows:

 

     For the nine-month period ended
September 30,
 
     2018      2017  

Current income tax

     (713      (540

Deferred income tax

     (56,285      (1,645
  

 

 

    

 

 

 
     (56,998      (2,185
  

 

 

    

 

 

 

The reconciliation between the charge to income for income tax for the nine-month period ended September 30, 2018 and 2017 and the one that would result from applying the prevailing tax rate on net profit before income tax arising from the consolidated statements of comprehensive income for each year is as follows:

 

     For the nine-month period ended
September 30,
 
     2018     2017  

Net profit before income tax

     77,699       2,895  

Statutory tax rate

     30     35
  

 

 

   

 

 

 

Statutory tax rate applied to net profit before income tax

     (23,310     (1,013

Effect of the measurement of property, plant and equipment and intangible assets in their functional currency

     (120,149     (7,015

Exchange differences

     80,885       6,225  

Effect of the measurement of inventories in their functional currency

     (9,900     (743

Income from equity interest in associates and joint ventures

     (749     191  

Effect of tax rate change

     12,729       —    

Result of companies’ revaluation

     3,594       —    

Miscellaneous

     (98     170  
  

 

 

   

 

 

 

Income tax

     (56,998     (2,185
  

 

 

   

 

 

 

Breakdown of deferred tax as of September 30, 2018 and December 31, 2017 is as follows:

 

     September 30, 2018     December 31, 2017  

Deferred tax assets

    

Provisions and other non-deductible liabilities

     3,154       1,861  

Tax losses carryforward

     36,948       6,484  

Miscellaneous

     236       99  
  

 

 

   

 

 

 

Total deferred tax assets

     40,338       8,444  
  

 

 

   

 

 

 

Deferred tax liabilities

    

Property, plant and equipment

     (126,454     (43,931

Miscellaneous

     (6,964     (1,570
  

 

 

   

 

 

 

Total deferred tax liabilities

     (133,418     (45,501
  

 

 

   

 

 

 

Total deferred tax, net

     (93,080 ) (1)      (37,057
  

 

 

   

 

 

 

 

(1)

Includes 127 as a result of the implementation of the impairment method in the calculation of the impairment of financial assets pursuant to IFRS 9, having an impact in “Retained earnings”. See Note 2.b.

As of September 30, 2018 and December 31, 2017 there are no significant deferred tax assets which are not recognized.

As of September 30, 2018 and December 31, 2017, the Group has classified as deferred tax assets for 1,920 and 588, respectively, and as deferred tax liability 95,000 and 37,645, respectively, all of which arise from the net deferred tax balances of each of the separate companies included in these condensed interim consolidated financial statements.

As of September 30, 2018 and December 31, 2017, the transactions that generate entries to “Other comprehensive income”, did not create temporary differences for income tax.

 

28


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

17. LOANS

 

     Interest rate (1)      Maturity      September 30, 2018     December 31, 2017  
     Noncurrent     Current     Noncurrent     Current  
              

Pesos:

              

Negotiable obligations

     16.50% - 46.78%        2018-2024        26.118 (6)       8,401 (6)       29,640 (6)       5,753 (6)  

Financial loans(3)

     26.44% - 39.71%        2018-2020        80       785       728       2,794  

Account overdraft

   —   —          —          —         —         —         10  
        

 

 

   

 

 

   

 

 

   

 

 

 
           26.198       9,186       30,368       8,557  
        

 

 

   

 

 

   

 

 

   

 

 

 

Currencies other than the Peso:

              

Negotiable obligations(2)(4)(5)

     3.50% - 10.00%        2018-2047        240,232       29,727       114,686       15,075  

Export pre-financing

     2.00% - 5.25%        2018-2019        —         20,791       383       6,521  

Imports financing

     3.58% - 4.93%        2018-2020        1,059       14,526       —         4,595  

Loans(5)

     1.80% - 6.22%        2018-2024        27,458       5,625       6,290       4,588  
        

 

 

   

 

 

   

 

 

   

 

 

 
           268,749       70,669       121,359       30,779  
        

 

 

   

 

 

   

 

 

   

 

 

 
           294,947       79,855       151,727       39,336  
        

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Annual interest rate in force as of September 30, 2018.

(2)

Disclosed net of 449 and 309 corresponding to YPF’s own negotiable obligations repurchased through open market transactions, as of September 30, 2018 and December 31, 2017, respectively.

(3)

Includes loans granted by Banco Nación Argentina. As of September 30, 2018, it includes 500, which accrues interest at a BADLAR variable rate plus a spread of 3.5 percentage points. As of December 31, 2017, it includes 2,500, 1,500 of which accrues interest at a BADLAR variable rate plus a spread of 3.5 percentage points and 1,000 of which accrues interest at a fixed rate of 20 percentage points. See Note 32.

(4)

Includes 2,883 and 1,528 as of September 30, 2018 and December 31, 2017, respectively, of nominal value of negotiable obligations that will be canceled in pesos at the applicable exchange rate in accordance with the terms of the series issued.

(5)

Includes 492 corresponding to financial loans and negotiable obligations secured by cash flows as of December 31, 2017.

(6)

Includes 15,850 as of September 30, 2018 and December 31, 2017, of nominal value of NO that will be canceled in dollars at the applicable exchange rate according to the conditions of the issued series.

The breakdown of the Group’s loans as of the nine-month period ended on September 30, 2018 and 2017 is as follows:

 

     For the nine-month period ended
September 30,
 
     2018      2017  

Amount at beginning of the fiscal year

     191,063        154,345  

Proceeds from loans

     28,677        33,403  

Payments of loans

     (32,795      (24,877

Payments of interest

     (18,611      (13,525

Accrued interest(1)

     18,776        13,153  

Net exchange differences and translation

     187,692        10,236  

Reclassifications and other movements

     —          (73
  

 

 

    

 

 

 

Amount at the end of the period

     374,802        172,662  
  

 

 

    

 

 

 

 

(1)

Includes capitalized financial costs. See Note 9.

 

29


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

17. LOANS (Cont.)

Details regarding the Negotiable Obligations of the Group are as follows:

 

                                    September 30, 2018     December 31, 2017  

Month

  Year   Principal value     Ref.   Class   Interest rate(3)     Principal Maturity   Noncurrent     Current     Noncurrent     Current  

YPF

                     

  1998   US$ 15     (1) (6)   —     Fixed     10.00   2028     610       25       276       5  

December and March

  2012/3   $ 2,828     (2) (4) (6) (7)   Class XIII   BADLAR plus 4.75%     42.42   2018     —         1,432       —         1,427  

April

  2013   $ 2,250     (2) (4) (6) (7)   Class XVII   BADLAR plus
2.25%
    39.97   2020     1,125       1,280       2,250       96  

June

  2013   $ 1,265     (2) (4) (6)   Class XX   BADLAR plus
2.25%
    44.47   2020     633       653       1,265       12  

July

  2013   US$ 92     (2) (5) (6)   Class XXII   Fixed     3.50   2020     499       505       451       230  

October

  2013   US$ 150     (2) (6)   Class XXIV   —       —       —       —         —         —         498  

December, April, February and December

  2013/4/5   US$ 862     (2) (6)   Class XXVI   Fixed     8.88   2018     —         11,640       —         8,422  

April, February and October

  2014/5/6   US$ 1,522     (2) (4) (6)   Class XXVIII   Fixed     8.75   2024     62,637       2,695       28,311       599  

March

  2014   $ 500     (2) (6) (7)   Class XXIX   BADLAR     40.94   2020     200       159       350       158  

September

  2014   $ 1,000     (2) (6) (7)   Class XXXIV   BADLAR plus 0.1%     43.78   2024     833       175       1,000       54  

September

  2014   $ 750     (2) (4) (6)   Class XXXV   BADLAR plus 3.5%     46.47   2019     —         504       500       298  

February

  2015   $ 950     (2) (6) (7)   Class XXXVI   BADLAR plus 4.74%     39.91   2020     950       54       950       92  

April

  2015   $ 935     (2) (4) (6)   Class XXXVIII   BADLAR plus
4.75%
    36.58   2020     312       421       626       362  

April

  2015   US$ 1,500     (2) (6)   Class XXXIX   Fixed     8.50   2025     61,355       913       27,731       1,002  

September

  2015   $ 1,900     (2) (6) (7)   Class XLI   BADLAR     42.78   2020     633       644       1,267       736  

September and December

  2015   $ 1,697     (2) (4) (6)   Class XLII   BADLAR plus 4%     46.78   2020     1.697       15       1,697       110  

October

  2015   $ 2,000     (2) (6) (7)   Class XLIII   BADLAR     32.78   2023     2.000       293       2,000       80  

December

  2015   $ 1,400     (2) (6)   Class XLIV   BADLAR plus 4.75%     45.95   2018     —         1,437       —         1,422  

March

  2016   $ 1,350     (2) (4) (6)   Class XLVI   BADLAR plus 6%     46.28   2021     1,350       46       1,350       114  

March

  2016   US$ 1,000     (2) (6)   Class XLVII   Fixed     8.50   2021     41,150       78       18,599       430  

April

  2016   US$ 46     (2) (5) (6)   Class XLVIII   Fixed     8.25   2020     1,885       32       852       14  

April

  2016   $ 535     (2) (6)   Class XLlX   BADLAR plus 6%     43.32   2020     535       48       535       31  

July

  2016   $ 11,248     (2) (6) (8)   Class L   BADLAR plus 4%     36.75   2020     11,248       940       11,248       651  

September

  2016     CHF 300     (2) (6)   Class Ll   Fixed     3.75   2019     —         12,623       5,731       54  

May

  2017   $ 4,602     (2) (6) (8)   Clase LlI   Fixed     16.50   2022     4,602       300       4,602       110  

July and December

  2017   US$ 1,000     (2) (6)   Clase LlII   Fixed     6.95   2027     41,612       589       18,889       445  

December

  2017   US$ 750     (2) (6)   Clase LlV   Fixed     7.04   2047     30,484       627       13,846       44  

Metrogas

                     

January

  2013   US$ 177       Series A-L   —       —       —       —         —         —         3,076  

January

  2013   US$ 18       Series A-U   —       —       —       —         —         —         256  
               

 

 

   

 

 

   

 

 

   

 

 

 
                  266,350       38,128       144,326       20,828  
               

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Corresponds to the 1997 M.T.N. Program for US$ 1,000 million.

(2)

Corresponds to the 2008 M.T.N. Program for US$ 10,000 million.

(3)

Interest rate as of September 30, 2018.

(4)

The ANSES and/or the “Fondo Argentino de Hidrocarburos” have participated in the primary subscription of these negotiable obligations, which may at the discretion of the respective holders, be subsequently traded on the securities market where these negotiable obligations are authorized to be traded.

(5)

The payment currency of these Negotiable Obligations is the Peso at the exchange rate applicable under the terms of the series issued.

(6)

As of the date of issuance of these financial statements, the Group has fully complied with the use of proceeds disclosed in the corresponding pricing supplements.

(7)

Negotiable obligations classified as productive investments computable as such for the purposes of section 35.8.1, paragraph K of the General Regulations applicable to Insurance Activities issued by the Argentine Insurance Supervisory Bureau.

(8)

The payment currency of this issue is the U.S. dollar at the exchange rate applicable in accordance with the conditions of the relevant issued series.

 

30


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

17.

LOANS (Cont.)

Repurchase and cancellation of negotiable obligations

On September 18, 2018, the Company repurchased and canceled USD 176 million of nominal value corresponding to Class XXVI Negotiable Obligations maturing in December 2018.

Metrogas Loans

On February 8, 2018, Metrogas entered into an unsecured loan with (i) Industrial and Commercial Bank of China Limited—Dubai Branch and (ii) Itaú Unibanco—New York Branch (“financial creditors”), for the amount of US$ 250 million for a term of 36 months and payable in 9 quarterly installments as from month 12 from the disbursement date (the “Loan”).

The Loan includes (i) an interest payable on a quarterly basis at a LIBOR rate plus an annual nominal margin of (a) 3.00% for the first 12 months; (b) 3.50% from month 13 to month 18; (c) 3.75% from month 19 to month 24; and (d) 4.00% from month 25 to maturity.

On February 27, 2018, Metrogas used the funds, mainly, to redeem all NO at a redemption price equal to 100% of the capital amount of the NO to redeem, plus interest accrued and due, and all other amounts pending to the redemption date.

According to the terms and conditions of the loan, Metrogas must meet a series of financial commitments generally set forth for this type of transactions, including certain restrictions which, among others, and in general terms, are listed below:

 

  a)

Indebtedness: Metrogas (or its subsidiaries) will not allow to incur, assume or secure any debt, except in indebtedness cases due to refinancing to keep its current financial debt or when the indebtedness is not above U$S 50 million, among others.

 

  b)

Restricted payments: Metrogas may not make any restricted payments, considering, among others, the payment of dividends, except the PEN has given final approval of the License Renegotiation Agreement. In turn, during the fiscal year ended on December 31, 2018, the amount to pay due to dividends may not exceed 10% of the net result for this year, and 60% for the following years; and also the Debt/EBITDA indicator shall not be higher than twice the EBITDA.

 

  c)

Financial indicators: Metrogas shall keep an Interest Hedge indicator, this being EBITDA/finance interest indicator higher than 3.00; the Debt/EBITDA indicator may not be higher than 3.00 until June 30, 2018, and higher than 2.50 from that date until the contract maturity date; Metrogas’ shareholders’ equity at each quarterly closing until September 30, 2018 may not be lower than 8,000, from that date until September 30, 2019 it may not be lower than 9,200, from that date until September 30, 2020, it may not be lower than 10,120 and, from that date until the end of the contract, it may not be lower than 11,132.

Under the original terms and conditions of the Loan Agreement, some of the financial indicators of paragraph c) were not achieved as of June 30, 2018 and September 30, 2018, which might have accelerated the maturity dates of the financial assets.

Notwithstanding the above, on June 30, 2018 and September 30, 2018, the financial creditors formally provided a waiver in respect of Metrogas’ compliance with said financial indicators.

Due to YPF’s commitments, the Company has analyzed Metrogas’ aforementioned situation and has determined that it has no impact on its obligations.

 

31


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2018 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Pesos, except for shares and per share amounts expressed in Pesos, or as otherwise indicated)

   LOGO

 

18. OTHER LIABILITIES

 

     September 30, 2018      December 31, 2017  
     Noncurrent      Current      Noncurrent      Current  

Extension of concessions

     380        547        179        342  

Liabilities for contractual claims(1)

     173        41        90        2,008  

Miscellaneous

     26        195        8        33  
  

 

 

    

 

 

    

 

 

    

 

 

 
     579        783        277        2,383  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

See Note 14 to the annual consolidated financial statements.

19. ACCOUNTS PAYABLE

 

     September 30, 2018      December 31, 2017  
     Noncurrent      Current      Noncurrent      Current  

Trade and related parties (1)

     191        83,895        168        44,520  

Guarantee deposits

     23        496        17        441  

Payables with partners of JO and consortia

     —          494        —          122  

Customer advances

     —          102        —          —    

Miscellaneous

     —          1,240        —          828  
  

 

 

    

 

 

    

 

 

    

 

 

 
     214        86,227        185        45,911  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

See Note 32 for information about related parties.

20. REVENUES

 

     For the nine-month period
ended September 30,
 
     2018      2017  

Sales of goods and services

     288,565        175,610  

Government incentives (1)

     11,070        14,126  

Turnover tax

     (9,590      (6,537
  

 

 

    

 

 

 
     290,045        183,199  
  

 

 

    

 

 

 

 

(1)

See Note 32.

The Group’s transactions and the main revenues are described in Note 6. The Group’s revenues are derived from contracts with customers, except for Government incentives.

The nature and effect of the initial implementation of IFRS 15 on the Group’s condensed interim consolidated financial statements are described in Note 2.b.

 

   

Breakdown of revenues

 

   

Type of good or service

 

     For the nine-month period ended September 30, 2018  
     Upstream      Downstream      Gas and
Energy
     Corporation
and others
     Total  

Gas oil

     —          88,105        —          —          88,105  

Gasolines

     —          64,260        —          —          64,260  

Natural Gas(1)

     38        569        56,661        —          57,268  

Crude Oil

     —          1,857        —          —          1,857  

Jet fuel

     —          15,791        —          —          15,791  

Lubricants and by-products

     —          6,162