6-K

METROGAS S.A.

Dated: August 14, 2014

/s/ Marcelo Adrián Nuñez

Marcelo Adrián Nuñez

Title: CEO

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 June 30, 2014

MetroGas Inc.

(Translation of registrant’s name into English)

MetroGAS S.A.

Gregorio Araoz de Lamadrid 1360

(1267) Buenos Aires, Argentina

(Address of principal executive offices)

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

Form 20-F x Form 40-F ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: Yes ¨ No x

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

SIGNATURE

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

METROGAS S.A.

CONDENSED INTERIM CONSOLIDATED FINANCIAL

STATEMENTS AS OF JUNE 30, 2014 AND COMPARATIVES

TABLE OF CONTENTS


LEGAL INFORMATION			1
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION			2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME			3
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY			4
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS			5
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION			6
2. ECONOMIC AND FINANCIAL POSITION AND REGULATORY FRAMEWORK			6
3. BASIS FOR PRESENTATION OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS			9
4. ACCOUNTING POLICIES			9
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS			10
6. FINANCIAL RISK MANAGEMENT			10
7. FINANCIAL INSTRUMENTS			10
8. INTERESTS IN SUBSIDIARIES			11
9. SEGMENT REPORTING			12
10. PROPERTIES, PLANT AND EQUIPMENT			13
11. INVESTMENT PROPERTIES			14
12. TRADE RECEIVABLES			15
13. OTHER RECEIVABLES			16
14. CASH AND CASH EQUIVALENTS			18
15. SHAREHOLDERS’ EQUITY AND ISSUED CAPITAL			18
16. OTHER TAXES PAYABLES			19
17. FINANCIAL DEBT			20
18. REORGANIZATION LIABILITIES			21
19. PROVISIONS			22
20. TRADE PAYABLES			22
21. SALARIES AND SOCIAL SECURITY			23
22. OTHER ACCOUNTS PAYABLE			23
23. REVENUES			23
24. EXPENSES BY NATURE			24
25. OTHER INCOME AND EXPENSES			25
26. NET FINANCE RESULTS			25
27. INCOME TAX AND MINIMUM PRESUMED INCOME TAX			26
28. NET RESULT PER SHARE			28
29. BALANCES AND TRANSACTIONS WITH RELATED PARTIES			28
INFORMATIVE SUMMARY OF ACTIVITY			33
INDEPENDENT AUDITORS’ REPORT

METROGAS S.A.

CONDENSED INTERIM FINANCIAL CONSOLIDATED STATEMENTS AS OF JUNE 30, 2014 AND COMPARATIVES

LEGAL INFORMATION

Legal Address: Gregorio Aráoz de Lamadrid 1360, Ciudad Autónoma de Buenos Aires, Argentina.

Fiscal Year: No. 23 (commenced on January 1° 2014).

Condensed Consolidated Interim Financial Statements as of June 30, 2014 and comparatives.

Company’s Principal Business: provision of natural gas distribution services

Registration with the Public Registry of Commerce: December 1, 1992

Expiry Date of the Articles of Incorporation: December 1, 2091

Last Amendment of the By-Laws: April 30, 2013

Parent Company: YPF S.A.

Legal Address of the controlling company: Macacha Güemes 515, Ciudad Autónoma de Buenos Aires, Argentina.

Principal Business of the controlling company: study, exploration and exploitation of liquid and/or gaseous hydrocarbons and other minerals, as well as the industrialization, transportation and marketing of these products and their byproducts, also including petrochemical products, and non-fossil fuels and chemicals, biofuels and their components, electric power generation based on hydrocarbons, telecommunication services, as well as production and industrialization, processing, marketing, conditioning services, grain transportation and storage and their byproducts.

Percentage of votes held by parent company: 70%

Composition in Common Stock as of 06.30.14:


Classes of Shares	Subscribed, Registered and Paid-in *(thousands of Ps.)*
Outstanding
Common certified shares of Ps. 1 par value and 1 vote each:
Class “A”		290,277
Class “B”		221,977
Class “C”		56,917

Capital Stock as of 06.30.14		569,171

METROGAS S.A.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2014 AND DECEMBER 31, 2013 (Stated in thousands of pesos)


	Notes		06.30.14			12.31.13
Assets
Non current Assets
Properties, plant and equipment		10		1,875,249			1,849,603
Deferred tax assets		27		1,112			1,107
Other investment				1,040			909
Investment properties		11		2,486			5,339
Other receivables		13		11,960			3,633

Total Non current assets				1,891,847			1,860,591

Current assets
Trade receivables		12		738,729			339,257
Other receivables		13		50,414			28,558
Cash and cash equivalents		14		148,549			116,592

Total Current assets				937,692			484,407

Total assets				2,829,539			2,344,998

Shareholders’ Equity
Issued capital		15		569,171			569,171
Adjustment to issued capital				—			684,769
Legal reserve				—			45,376
Unappropriated retained losses				(481,142	)		(878,082	)

Equity attributable to the owners				88,029			421,234

Non-controlling interest				2,054			2,883

Total Shareholders’ Equity		15		90,083			424,117

Liabilities
Non current Liabilities
Financial debt		17		1,244,062			952,726
Deferred tax liabilities		27		220,911			224,739
Reorganization liabilities		18		17,214			17,040
Other taxes payable		16		7,324			7,898
Provisions		19		73,052			58,304

Total Non current Liabilities				1,562,563			1,260,707

Current Liabilities
Trade payable		20		823,141			461,589
Salaries and social security		21		69,745			61,010
Income tax and minimum presumed income tax (“MPIT”) liability				22,022			32,269
Other taxes payable		16		134,982			94,157
Financial debt		17		97,408			398
Other accounts payable		22		29,595			10,751

Total Current Liabilities				1,176,893			660,174

Total Liabilities				2,739,456			1,920,881

Total Liabilities and Shareholders’ Equity				2,829,539			2,344,998

The accompanying notes 1 to 29 are an integral part of and should be read together with these statements.

David Tezanos Gonzalez

Chairperson

METROGAS S.A.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX AND THREE MONTHS PERIOD ENDED JUNE 30, 2014 AND 2013

(Stated in thousands of pesos)


			For the six months period ended						For the three months period ended
	Notes		06.30.14			06.30.13			06.30.14			06.30.13
Revenues		23		1,371,166			849,575			916,829			478,116
Operating costs		24		(1,053,515	)		(643,058	)		(662,151	)		(362,801	)

Gross profit				317,651			206,517			254,678			115,315

Administration expenses		24		(148,456	)		(98,821	)		(82,971	)		(55,455	)
Selling expenses		24		(144,920	)		(120,499	)		(86,534	)		(64,788	)
Other income and expenses		25		(6	)		(1,003	)		7,864			(231	)

Operating income (loss)				24,269			(13,806	)		93,037			(5,159	)

Finance income		26		8,914			6,200			3,592			3,385
Finance cost		26		(344,342	)		(125,112	)		(77,790	)		(68,147	)

Net financial results				(335,428	)		(118,912	)		(74,198	)		(64,762	)

Debt restructuring result				—			757,470			—			—

Result before income tax				(311,159	)		624,752			18,839			(69,921	)

Income tax and minimum presumed income tax		27		(22,875	)		(227,105	)		(9,849	)		20,968

Net result for the period				(334,034	)		397,647			8,990			(48,953	)

Other comprehensive result				—			—			—			—

Net and comprehensive result for the period				(334,034	)		397,647			8,990			(48,953	)

Net and comprehensive result for the period attributable to controlling interest				(333,205	)		397,726			7,578			(48,525	)
Net and comprehensive result for the period attributable to non-controlling interest				(829	)		(79	)		1,412			(428	)

Net and comprehensive result for the period				(334,034	)		397,647			8,990			(48,953	)

Net result per share
Basic and diluted		28		(0.59	)		0.70			0.01			(0.09	)

The accompanying notes 1 to 29 are an integral part of and should be read together with these statements.

David Tezanos Gonzalez

Chairperson

METROGAS S.A.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY

FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2014 AND 2013 (Stated in thousands of pesos)


	Issued capital		Adjustment to issued capital			Legal reserve			Unappropriated retained earnings			Attributable to the owners of the parent			Attributable to Non-controlling interest			Total Shareholders’ Equity
Balance as of December 31, 2012		569,171		684,769			45,376			(1,133,018	)		166,298			989			167,287

Net and comprehensive result for the six months period ended June 30, 2013		—		—			—			397,726			397,726			(79	)		397,647

Balance as of June 30, 2013		569,171		684,769			45,376			(735,292	)		564,024			910			564,934

Net and comprehensive result for the six months period ended December 31, 2013		—		—			—			(142,790	)		(142,790	)		1,973			(140,817	)

Balance as of December 31, 2013		569,171		684,769			45,376			(878,082	)		421,234			2,883			424,117

Mandatory capital stock reduction, as decided by the General Shareholders’ Meeting of April 28, 2014		—		(684,769	)		(45,376	)		730,145			—			—			—
Net and comprehensive result for the six months period ended June 30, 2014		—		—			—			(333,205	)		(333,205	)		(829	)		(334,034	)

Balance as of June 30, 2014		569,171		—			—			(481,142	)		88,029			2,054			90,083

The accompanying notes 1 to 29 are an integral part of and should be read together with these statements.

David Tezanos Gonzalez

Chairperson

METROGAS S.A.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2014 AND 2013

(Stated in thousands of pesos).


	06.30.14			06.30.13
Cash Flows generated by operating activities
Net result for the period		(334,034	)		397,647
Adjustments to reconcile net results to cash flows provided by operating activities
Income tax		22,875			227,105
Income from sales of investment properties		(8,067	)		—
Depreciation of properties, plant and equipment and investment properties		42,671			39,692
Net book value of disposals of properties, plant and equipment		632			4,885
Charge on provisions		18,665			9,657
Debt restructuring result (2)		—			(770,360	)
Net financial results		334,546			118,013
Changes in assets and liabilities
Trade receivables		(399,424	)		(132,543	)
Other receivables		(24,861	)		(47,492	)
Trade payable		361,552			255,416
Salaries and social security		8,735			(2,264	)
Income tax and MPIT liability		(4,702	)		(12,329	)
Other taxes payable		24,432			16,403
Provisions		—			(5	)
Other accounts payable		18,844			398
Income tax and minimum presumed income tax paid in the period		(16,434	)		(933	)

Net cash flows generated by operating activities		45,430			103,290

Cash flows used in investing activities
Increase in properties, plant and equipment		(72,372	)		(70,579	)
Proceeds from sales of investment properties		5,548			—

Net cash flows used in investing activities		(66,824	)		(70,579	)

Cash flows generated by (used in) financing activities
Proceeds from loans		90,000			—
Payments of interests		(37,887	)		(3,109	)

Net cash flows generated by (used in) financing activities		52,113			(3,109	)

Net increase in cash and cash equivalents		30,719			29,602

Cash and cash equivalents at the beginning of year		116,592			153,208
Exchange differences on cash and cash equivalents		1,238			(1,604	)
Cash and cash equivalents at the end of the period (1)		148,549			181,206

Net increase in cash and cash equivalents		30,719			29,602

(1)	As of June 30, 2014 and 2013, funds collected and pending to be deposited for Trust Funds, Resolution I-2621/2013 and Trust Fund Decree No. 2407 amount to Ps. 126,403 thousand and Ps. 50,789 thousand, respectively.

(2)	Exclude debt restructuring expenses for Ps. 12,890 thousand.

The main transactions that do not generate cash movements are described in Note 17.

The accompanying notes 1 to 29 are an integral part of and should be read together with these statements.

David Tezanos Gonzalez

Chairperson

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

1.	GENERAL INFORMATION

MetroGAS S.A. (“MetroGAS” or the “Company”) is a sociedad anónima organized under the laws of the Republic of Argentina. The registered office and principal place of business is located at Gregorio Aráoz de Lamadrid 1360 – Ciudad Autónoma de Buenos Aires.

The Company was formed in 1992 and on December 1, 1992 it was registered as a corporation pursuant the laws of the Republic of Argentina under number 11,670, Book 112, Volume A of Sociedades Anónimas. The term of duration of the Company expires on December 1, 2091 and its principal business is the provision of natural gas distribution services.

On November 2, 1994, the Argentine Securities Commission (“CNV”), pursuant to Resolution No. 10,706, authorized to public offering all the Company’s outstanding shares that at such date composed the capital stock. American Depositary Shares (“ADSs”) were issued in the United States and were registered with the Securities and Exchange Commission (“SEC”). The Shares of the Company are listed on Buenos Aires Stock Exchange (“BCBA”) and its ADSs on the New York Stock Exchange (“NYSE”), respectively. On June 17, 2010, the NYSE informed that MetroGAS ADSs had been suspended from trading as a result of the Company’s filing for reorganization proceeding. At the time of issuance of these financial statements the NYSE keeps the suspension of MetroGAS’ADSs trading.

MetroGAS’ controlling shareholder is Gas Argentino S.A. (“Gas Argentino”) whose principal business is the investment. As of June 30, 2014, the controlling shareholder of Gas Argentino S.A. is YPF S.A. (“YPF”) through its subsidiary YPF Inversora Energética S.A (“YIESA”).

MetroGAS controls MetroEnergía S.A. (“MetroEnergía”) a sociedad anónima formed under the laws of Argentina, whose principal business is the sale of natural gas and/or transport on its own behalf or on account of third parties in Argentina.

2.	ECONOMIC AND FINANCIAL POSITION AND REGULATORY FRAMEWORK

The changes in the economic conditions of the country and the amendments introduced by the Public Emergency Law towards the end of 2001, have impacted the economic and financial position of the Company affected by the suspension of the original regime of tariffs adjustment, added to the increase in the operating costs to maintain the quality of service.

The Company is under a renegotiation process of certain terms of the License with the Argentine Government in order to oppose the negative impact produced by the mentioned circumstances.

In this context, as of June 30, 2014, the Company registered cumulative losses amounting to Ps. 481,142 thousand and consolidated negative working capital to Ps. 239,201 thousand.

In Note 2 of the consolidated financial statements as of December 31, 2013 the aspects related to the economic and financial situation and regulatory framework are described.

There follow are described the significant developments occurred during the six months period ended June 30, 2014.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

2.1

Tariff Renegotiation

On March 26, 2014, within the process of renegotiation of utilities contracts pursuant to Law No. 25561 and supplementary rules, the Company signed a Provisional Agreement with the Unit for the Renegotiation and Analysis of Utility Contracts (“UNIREN”) whereby a provisional tariff regime was agreed in order to obtain additional funds to those resulting from the enforcement of ENARGAS Resolution No. I/2407 dated December 27, 2012, that established the collection of a fixed amount per invoice depending on the customers’ category, which should be transferred to a trust fund especially created for the execution of works. The amounts the Company collects pursuant to the mentioned Resolution have been considered payments on account in relation with the adjustments as set forth by Temporary Agreement approved by Decree No. 234 dated March 26, 2009.

The Provisional Agreement, ratified by Decree No. 445/2014 dated April 1, 2014 and published in the Official Gazette on April 7, 2014, establishes a provisional tariff regime as from April 1, 2014, consisting in readjust prices and tariffs considering the guidelines necessary to maintain the continuity of service and also sets forth common criteria applicable to all distribution licensees, in accordance with tariff regulations in force, and including changes in the gas price at the transmission system entry point.

The Provisional Agreement also contemplates the inclusion of pass through to tariffs resulting from changes in tax rules, except for the income tax, in accordance with a currently pending resolution. It also includes clauses related to costs oversight tariff revision based on operation and investment cost structure, and price indexes representative of such costs, which under certain premises triggers a revision procedure through which ENARGAS would assess the actual scale of variations in the licensee’s operating and investment costs, and thereby determine whether a distribution tariff adjustment is applicable.

The Provisional Agreement also provides that, from the execution date to December 21, 2015 (the date on which Law No. 25561 expires), UNIREN on behalf of the Grantor and the licensee shall reach a consensus with respect to the methodology, terms and timeline for the signing of the “Acta Acuerdo de Renegociación Contractual Integral” (the Comprehensive Contract Renegotiation Memorandum of Understanding).

On March 27, 2014, the National Government announced the reallocation of subsidies and on March 31, 2014 the Energy Secretariat (“ES”) issued ES Resolution No. 226/14 pursuant to which new natural gas prices and a plan to encourage responsible use of the natural gas were established.

Within this framework, new natural gas prices are established for Residential customers and for small general service customers for each of the production basins and user categories. These new prices will be applied by a mechanism of comparing consumption of same two-month/month period of current and previous year. Furthermore, a three-stage price revision is established to take effect on April 1, 2014, June 1, 2014 and August 1, 2014. For those customers that reduce their consumption over 20%, basin prices as of March 31, 2014 as per ES Resolution No. 1417/2008 will remain the same. Customers whose reduction in consumption is between 5% and 20% will have a special and lower basin natural gas price compared to the price applied to those customers not able to reduce consumption or whose reduction is below 5%.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

Through Note ENRG/SD No. 03097 dated April 7, 2014, ENARGAS notified Resolution No. I/2851, from the same date, wherein new tariff charts are approved and are stated to take effect on April 1, 2014, June 1, 2014 and August 1, 2014. Such charts display changes in the final tariff of residential and full general service customers. These include changes in the gas price at the transmission system entry point, as a result of the application of the new prices per basin established by the aforementioned ES Resolution No. 226/14, the transportation tariff as a consequence of the new tariff chart effective for gas transportation companies that reflect the terms of their 2008 signed provisional agreements establish, and MetroGAS’ distribution margin after the signing of the Provisional Agreement.

In accordance with the price scheme established by the Energy Secretariat through ES Resolution No. 226/14, three tariff levels are established for each period, which are to be applied to customers according to their consumption in a month/two-month period in relation to the same period of the previous year.

Customers that register a decrease in consumption of over 20% will continue with the same tariff level as that in effect until March 31, 2014. Customers that achieve a reduction between 5% and 20% will be charged a tariff approximately 50% lower in relation with the actual price variation, which will be applied to customers unable to reduce their consumption or whose reduction is below 5%.

Furthermore, ENARGAS establishes that tariff charts applicable until March 31, 2014 shall still be applied to essential users (health care, public education religious institutions, etc.); and consumers eligible pursuant to Notes MPFIPyS N° 10/2009 from the Ministry of Federal Planning, Public Investment and Services dated August 13, 2009. Under that mechanism, the Licensee will also have different prices for the gas distribution service according to the customers’ consumption.

Through Note ENRG/SD No. 05747 dated May 13, 2014, ENARGAS notified on Resolution No. I/2904 from same date, whereby the methodology for the determination of user’s category based gas supply as from of April 1^st, 2014 is approved.

Considering the aforementioned, the real impact will depend on a variable beyond the Company’s control, which is the reduction in consumption customers may have, which also will not only depend on their individual actions aimed at reducing the use of gas, but also on the effects of weather factors among others on the compared periods.

However, based on the Company´s estimates, the effect of the tariff increases would enable MetroGAS to continue operating as a going concern.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

3.	BASIS FOR PRESENTATION OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements have been issued in accordance with the Technical Resolution (“TR”) No. 26 and 29 of the Argentine Federation of Professional Councils in Economic Sciences (“FACPCE “) which adopt the IFRS issued by the International Accounting Standards Board (“IASB”) for entities included in the public offer regime of Law No. 17,811 due to their capital stock or to their notes, or those that have applied to be included in said regime.

In accordance with Title IV of the Informative Periodic Regime, Chapter I, Informative Regime, Section I, General Dispositions, Article 1, point b.1) of CNV rules, the Company has opted for presenting its condensed interim separated financial statements in condensed foreseen in the International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”.

These condensed interim consolidated financial statements are presented in thousands of pesos, except where expressly stated otherwise.

These condensed interim consolidated financial statements should be read together with the Company’s annual financial statements as of December 31, 2013 and comparatives.

The consolidated statement of profit and loss and other comprehensive income and the consolidated statement of cashflow for the six-month period finished on June 30, 2013, submitted for comparison purposes, include certain reclassifications in order to state them on a uniform basis with the statements as at December 31, 2013 and the current period.

These condensed interim consolidated financial statements have been approved by the Board of Directors for issuance on August 6, 2014.

The condensed interim consolidated financial statements for the six months periods ended June 30, 2014 and 2013 have not been audited. In the Company’s opinion these financial statements reflect all the adjustments necessary to be presented on a basis consistent with the annual consolidated financial statements.

4.	ACCOUNTING POLICIES

The accounting policies adopted for these condensed interim consolidated financial statements are consistent with the ones applied in the financial statements for the fiscal year ended on December 31, 2013 which are detailed in Note 4 to those financial statements.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

5.	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Preparation of consolidated financial statements as of a specified date requires that the Company makes estimates and judgments that affect the amount of recorded assets and liabilities and of contingent assets and liabilities disclosed at such date, as well as expenses and revenues for the period. The Direction of the Company makes estimates in order to be able to calculate at a specified time, for instance, the allowance for doubtful accounts, depreciation, recoverable value of assets, income tax charges and provision for contingencies. Actual future results may differ from the estimates and assessments made at the date of preparation of these condensed interim consolidated financial statements.

For the preparation of these condensed interim consolidated financial statements, the key judgments made by the Company when applying its accounting policies and the sources of information used for the respective estimates are consistent with those that were applied in the consolidated financial statements for the fiscal year ended on December 31, 2013, which are detailed in Note 5 to those financial statements.

6.	FINANCIAL RISK MANAGEMENT

The business of the Company exposes the Company to various financial risks: market risk, credit risk and liquidity risk. No significant changes have occurred during the six-month period ended on June 30, 2014 in relation to financial risk factors and management policies with respect thereto, which are detailed in Note 6 to the consolidated financial statements as of December 31, 2013.

7.	FINANCIAL INSTRUMENTS

The tables below show the amounts carried for financial assets and financial liabilities by category of financial instrument, and a reconciliation with the line shown in the statement of financial position, as it may correspond.


	06.30.14
	Financial assets carried at amortised cost		Financial assets at fair value through profit or loss		Total financial assets
Trade receivables		738,729		—		738,729
Other receivables		62,374		—		62,374
Cash and cash equivalents		98,811		49,738		148,549

Total		899,914		49,738		949,652


	Financial liabilities carried at amortised cost		Financial liabilities at fair value		Total financial liabilities
Reorganization liabilities		17,214		—		17,214
Trade payable		823,141		—		823,141
Other accounts payable		29,595		—		29,595
Financial debt		1,341,470		—		1,341,470

Total		2,211,420		—		2,211,420

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)


	12.31.13
	Financial assets carried at amortised cost		Financial assets at fair value through profit or loss		Total financial assets
Trade receivables		339,257		—		339,257
Other receivables		32,191		—		32,191
Cash and cash equivalents		62,976		53,616		116,592

Total		434,424		53,616		488,040


	Financial liabilities carried at amortised cost		Financial liabilities at fair value		Total financial liabilities
Reorganization liabilities		17,040		—		17,040
Trade payable		461,589		—		461,589
Other accounts payable		10,751		—		10,751
Financial debt		953,124		—		953,124

Total		1,442,504		—		1,442,504

8.	INTERESTS IN SUBSIDIARIES

The table below shows the Company’s consolidated controlling interest:


Directly controlled company	Percentage of capital stock and voting rights held
	06.30.14			12.31.13
MetroENERGÍA		95	%		95	%

Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policies adopted by the Company.

MetroENERGÍA’s corporate purpose is to carry out purchase and sales transactions and/or transportation services of natural gas for its own account, on behalf of or in association with third parties.

We have used the latest financial statements available at the end of every period or fiscal year of the Company.

The shareholders representing the Non-controlling interest decided at the General Ordinary Shareholders’ Meeting, dated March 26, 2014, to maintain their commitment by means of which they have renounced for the collection of dividends for as long as the financial debt of MetroGAS S.A. arising as a result of the restructuring and/or refinancing of the outstanding debt is cancelled, pursuant to which the dividends approved to Ps. 57,341 thousand shall be paid in full to the major shareholder, MetroGAS.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

9.	SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting prepared by the Chief Operating Decision Maker, for the purpose of resource allocation and performance assessment of the segment.

The primarily segments operated by the Company relate to the provision of the service of distribution of gas and, through MetroENERGÍA, of commercialization and/or transportation of natural gas for its own account, on behalf of or, in association with third parties.


	06.30.14
	MetroGAS Distribution			MetroENERGIA Trading			Eliminations			Total
Revenues		766,486			612,605			(7,925	)		1,371,166
Operating income (loss)		665			65,193			(41,589	)		24,269
Income on investments in companies		41,589			—			(41,589	)		—
Finance income		4,252			4,662			—			8,914
Finance cost		(337,213	)		(7,129	)		—			(344,342	)
Result before income tax		(332,296	)		62,726			(41,589	)		(311,159	)
Income tax and minimum presumed income tax		(909	)		(21,966	)		—			(22,875	)
Total net and comprehensive result for the period		(333,205	)		40,760			(41,589	)		(334,034	)
Total assets		2,610,130			324,026			(104,617	)		2,829,539
Total liabilities		2,522,101			282,955			(65,600	)		2,739,456
Depreciation of PP&E and investment properties		(42,671	)		—			—			(42,671	)
Increase in PP&E		72,372			—			—			72,372
Investments in subsidiaries		39,017			—			(39,017	)		—

	06.30.13
	MetroGAS Distribution			MetroENERGIA Trading			Eliminations			Total
Revenues		562,710			294,423			(7,558	)		849,575
Operating income (loss)		(24,844	)		29,011			(17,973	)		(13,806	)
Income on investments in companies		17,973			—			(17,973	)		—
Finance income		3,934			2,266			—			6,200
Finance cost		(121,364	)		(3,748	)		—			(125,112	)
Result before income tax		615,196			27,529			(17,973	)		624,752
Income tax and minimum presumed income tax		(217,470	)		(9,635	)		—			(227,105	)
Total net and comprehensive result for the period		397,726			17,894			(17,973	)		397,647
Total assets		2,370,299			144,540			(66,999	)		2,447,840
Total liabilities		1,806,275			126,335			(49,704	)		1,882,906
Depreciation of PP&E and investment properties		(39,692	)		—			—			(39,692	)
Increase in PP&E		70,579			—			—			70,579
Investments in subsidiaries		17,295			—			(17,295	)		—

The accounting policies for these reporting segments are the same ones followed by the Company and detailed in Note 4 to the consolidated financial statements as of December 31, 2013.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

10.

PROPERTIES, PLANT AND EQUIPMENT


MAIN ACCOUNT	ORIGINAL VALUE															DEPRECIATION									NET BOOK VALUE 06-30-14			NET BOOK VALUE 12-31-13
MAIN ACCOUNT	AT BEGINNING OF YEAR			INCREASES			TRANSFERS			RETIREMENTS			AT END OF PERIOD			ACCUMULATED AT BEGINNING OF YEAR		RETIREMENTS			INCREASES		ACCUMULATED AT END OF PERIOD		NET BOOK VALUE 06-30-14			NET BOOK VALUE 12-31-13
Land		15,654			—			—			—			15,654			—		—			—		—		15,654			15,654
Building and civil constructions		71,833			—			1,332			(1,165	)		72,000			27,559		(1,165	)		707		27,101		44,899			44,274
High pressure mains		296,067			—			24,549			—			320,616			199,800		—			2,379		202,179		118,437			96,267
Medium and low pressure mains		1,910,404			—			35,133			—			1,945,537			645,791		—			21,892		667,683		1,277,854			1,264,613
Pressure regulating stations		82,456			—			171			—			82,627			44,216		—			1,380		45,596		37,031			38,240
Consumption measurement installations		360,055			—			7,650			(1,606	)		366,099			188,599		(952	)		6,935		194,582		171,517			171,456
Other technical installations		55,189			—			2,290			—			57,479			48,231		—			400		48,631		8,848			6,958
Machinery, equipment and tools		30,797			—			1,603			—			32,400			27,374		—			346		27,720		4,680			3,423
Computer and telecommunications equipment		226,673			—			9,639			(7	)		236,305			180,926		(2	)		7,433		188,357		47,948			45,747
Vehicles		13,215			—			—			—			13,215			10,309		—			465		10,774		2,441			2,906
Furniture and fixtures		5,476			—			—			—			5,476			5,464		—			1		5,465		11			12
Materials		41,582			14,441			(10,086	)		(3,580	)		42,357			—		—			—		—		42,357			41,582
Gas in pipelines		214			—			—			—			214			—		—			—		—		214			214
Work in progress		77,276			57,931			(73,596	)		—			61,611			—		—			—		—		61,611			77,276
Distribution network extensions constructed by third parties		67,454			—			1,315			—			68,769			17,575		—			683		18,258		50,511			49,879

Subtotal		3,254,345			72,372			—			(6,358	)		3,320,359			1,395,844		(2,119	)		42,621		1,436,346		1,884,013			1,858,501

Allowance for obsolescence of materials		(3,183	)		(1,793	)		—			3,589			(1,387	)		—		—			—		—		(1,387	)		(3,183	)
Allowance for disposal of properties, plant and equipment		(5,715	)		(1,680	)		—			18			(7,377	)		—		—			—		—		(7,377	)		(5,715	)

Total as of June 30, 2014		3,245,447			68,899			—			(2,751	)		3,311,595			1,395,844		(2,119	)		42,621		1,436,346		1,875,249

Total as of December 31, 2013		3,103,668			159,227			—			(17,448	)		3,245,447			1,322,738		(7,862	)		80,968		1,395,844					1,849,603

As mentioned in Note 2.8.1 to the consolidated financial statements as of December 31, 2013, according to the license, a substantial portion of the Properties, plant and equipment are defined as “Essential Assets” and there are certain restrictions over them described in the mentioned note.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

11.

INVESTMENT PROPERTIES


	ORIGINAL VALUE							DEPRECIATION												NET BOOK VALUE 06-30-14		NET BOOK VALUE 12-31-13
MAIN ACCOUNT	AT BEGINNING OF YEAR		DECREASE OF PERIOD			AT END OF PERIOD		ACCUMULATED AT BEGINNING OF YEAR		DECREASE OF PERIOD			ANNUAL RATE			INCREASES		ACCUMULATED AT END OF PERIOD		NET BOOK VALUE 06-30-14		NET BOOK VALUE 12-31-13
Land		1,847		(1,118	)		729		—		—			—			—		—		729		1,847
Building		5,971		(2,922	)		3,049		2,479		(1,237	)		2.00	%		50		1,292		1,757		3,492

Total as of June 30, 2014		7,818		(4,040	)		3,778		2,479		(1,237	)					50		1,292		2,486

Total as of December 31, 2013		7,818					7,818		2,359		—						120		2,479				5,339

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

12.

TRADE RECEIVABLES


	06.30.14			12.31.13
Current
Trade receivables		325,505			231,514
Unbilled revenues		400,365			110,877
Related parties		23,185			1,366
Tax on banking transactions to be recovered		8,177			9,875
Allowance for doubtful accounts		(18,503	)		(14,375	)

Total Current		738,729			339,257

The aging analysis of the trade receivables is as follows:


	06.30.14			12.31.13
-Past due
under 3 months		65,178			37,476
from 3 to 6 months		17,457			5,620
from 6 to 9 months		10,883			6,107
from 9 to 12 months		4,446			2,051
from 1 to 2 years		4,108			5,056
more than 2 years		12,588			8,935

Subtotal		114,660			65,245

-Becoming due
under 3 months		636,351			280,980
from 3 to 6 months		2,167			2,469
from 6 to 9 months		2,150			2,469
from 9 to 12 months		1,904			2,469

Subtotal		642,572			288,387

Allowance for doubtful accounts		(18,503	)		(14,375	)

Total		738,729			339,257

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

The carrying amount of the Company’s trade receivables is denominated in the following currencies:


	06.30.14		12.31.13
Pesos		539,213		225,010
US Dollars (US$)		199,516		114,247

Total		738,729		339,257

The roll forward of the allowance for doubtful accounts is as follow:


	06.30.14			12.31.13
Balance at beginning of year		14,375			15,447
Revaluation of foreign currency		4,156			—
Increases / recoveries (*)		(48	)		6,148
Decreases		20			(7,220	)

Balance at end of period / year		18,503			14,375

(*)	Charged to Doubtfull account expenses (see Note 24. Expenses by nature)

13.

OTHER RECEIVABLES


	06.30.14		12.31.13
Non current:
Related parties		4,943		3,631
Social security and tax credits		2,742		—
Advances and anticipated purchases of gas		4,202		—
Expenses paid in advance		73		2

Subtotal non current		11,960		3,633

Current:
Advances to employees		139		233
Insurance paid in advance		431		196
Expenses paid in advance		4,613		1,035
Trust Fund Decree No. 2407		2,601		17,098
Social security and tax credits		255		200
Expenses recoverable		3,123		793
Related parties		672		615
Advances to suppliers		2,563		2,911
Advances and anticipated purchases of gas		27,076		—
Miscellaneous		8,941		5,477

Subtotal current		50,414		28,558

Total		62,374		32,191

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

The aging analysis of the other receivables is as follows:


	06.30.14		12.31.13
-Past due
under 3 months		2,967		4,661
from 3 to 6 months		330		134
from 6 to 9 months		125		156
from 9 to 12 months		101		171
from 1 to 2 years		445		415
more than 2 years		683		479

Subtotal		4,651		6,016

-Without due		22		22

-Becoming due
under 3 months		38,087		21,690
from 3 to 6 months		4,668		478
from 6 to 9 months		2,914		266
from 9 to 12 months		72		86
from 1 to 2 years		4,275		2
more than 2 years		7,685		3,631

Subtotal		57,701		26,153

Total		62,374		32,191

The carrying amount of the Company’s other receivables is denominated in the following currencies:


	06.30.14		12.31.13
Pesos		16,891		28,035
US$		45,456		4,156
Pound sterling		27		—

Total		62,374		32,191

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

14.

CASH AND CASH EQUIVALENTS

In order to be considered for the consolidated statements of cash flows, cash and cash equivalents is as follows:


	06.30.14		12.31.13
Cash and banks		98,811		62,976
Mutual funds		49,738		53,616

Total		148,549		116,592

The carrying amount of the Company’s cash and cash equivalents is denominated in the following currencies:


	06.30.14		12.31.13
Pesos		146,693		115,078
US$		1,751		1,431
Pound sterling		55		43
Euros		33		27
Reales		17		13

Total		148,549		116,592

As of June 30, 2014 and December 31, 2013, fund collected and pending to be deposit for Trust Funds, Resolution I-2621/2013 and Trust Fund Decree No. 2407amount to Ps. 126,403 thousand and Ps. 77,273 thousand, respectively.

15.

SHAREHOLDERS’ EQUITY AND ISSUED CAPITAL

As of June 30, 2014, the capital stock of MetroGas amounts to Ps. 569,171 thousand, which is fully subscribed, registered and paid-in and it is composed of the following classes of shares:


Classes of shares	Subscribed, registered and paid in (thousands of Ps.)
Outstanding:
Common certified shares, of Ps. 1 par value and 1 vote each:
Class “A”		290,277
Class “B”		221,977
Class “C”		56,917

Capital Stock at 06.30.14		569,171

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

MetroGAS’ shareholders decided at the Shareholders meeting held on the 28th of April of 2014 to proceed to a mandatory reduction of the company’s issued capital. Therefore, negative retained earnings corresponding to the business year ended on December 31, 2013 were partially affected against the Legal reserve for Ps.45,376 thousand and against Adjustments to issued capital for the sum of Ps. 684,769 thousand, keeping a negative balance of Ps.147,937 thousand in Unappropriated retained earnings as of such date, which added to the negative result for the six months period ended on June 30, 2014 amounting to Ps. 333,205 thousand, yielded a total amount of Ps.481,142 thousand as of June 30, 2014 for Unappropriated retained earnings.

Notwithstanding the actions taken to revert the situation as of December 31, 2013 where the company is affected by the provisions of Clause 206 of the Law 19.550 (Corporations Law), should the negative results persist during 2014 the company will need to take additional measures to reestablish equity balance.

16.

OTHER TAXES PAYABLES


	06.30.14		12.31.13
Non current:
Others taxes		7,324		7,898

Total non current		7,324		7,898

Current:
Value added tax		43,384		21,569
GCABA study, revision and inspection of works in public space levy		34,663		28,973
GNC Tax		4,631		4,954
Turnover tax		16,465		6,365
Provincial and municipal taxes		31,822		29,140
Hydric infraestructure rate		2,841		1,515
Others taxes		1,176		1,641

Total current		134,982		94,157

Total		142,306		102,055

The carrying amount of the Company’s other taxes payables are denominated in pesos.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

17.

FINANCIAL DEBT


	06.30.14		12.31.13
Non current:
Negotiable Obligations		1,216,151		931,351
Negotiable Obligations related parties		27,911		21,375

Total Non current		1,244,062		952,726

Current:
Negotiable Obligations Interest to be paid		552		398
Related parties		96,856		—

Total Current		97,408		398

Total		1,341,470		953,124

The table below shows the changes occurred in the balance of financial debt as of June 30, 2014:


	06.30.14
Balance at beginning of year		953,124
Proceeds from YPF loan		90,000
Notes of Late Verification		25
Accrued interest at effective interest rate - Notes (1)		92,375
Accrued interest on YPF loan		6,856
Exchange loss		236,977
Interest payment		(37,887	)

Balance at end of period		1,341,470

(1)	Includes accrued interest on notes issued to YPF.

Negotiable Obligations

Information related with negotiable obligations (“Notes”) is detailed in Note 17 to the consolidated financial statements as of December 31, 2013.

No event of default has occurred as of June 30, 2014. During the present period the Company has complied with the terms and covenants established under the Offering Circular.

On January 29, 2014, MetroGAS issued:

•

Notes of Capitalization

•

Additional Series A-L December 2013: U$S 3,516,500

•

Additional Series A-U December 2013: U$S 371,456

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

On April 28, 2014, the Board of Directors of MetroGAS decided by a majority of votes to pay in cash interest for up to U$S 4,750,000, capitalize the remaining amount of the portion subject to capitalization of interest due and payable on June 30, 2014 and issue Additional Negotiable Obligations for said capitalization.

On July 17, 2014, MetroGAS issued:

•

Notes of Capitalization

•

Additional Series A-L June 2014: U$S 3,516,500

•

Additional Series A-U June 2014: U$S 371,044

Having the limit date (June 30^th, 2014) been reached, and given the fact that no triggering events occurred, Class B Notes were cancelled and the company does not owe anything in relation to them.

Related parties

On December 12, 2013, the Board of Directors of MetroGAS unanimously approved an agreement that contemplated the opening of a credit facility with YPF. YPF’s credit facility proposal has a BADLAR cost plus an annual 6% spread. YPF makes available to MetroGAS a “Non-Committed” credit facility for up to Ps. 180,000,000 for a period of 180 days as from the date of the proposal. MetroGAS may require such drawdowns as it may deem advisable according to its needs up to the maximum amount of the credit facility and for the above mentioned period, and may make partial or total advance payments without penalty. Finally, an annual 10% default interest will be applied in the event of default. As of June 30, 2014 the Company has made use Ps. 90,000 thousand of this facility.

18.

REORGANIZATION LIABILITIES


	06.30.14		12.31.13
Taxes payable		16,222		16,262
Trade payables		655		181
Salaries and social security		337		597

Total		17,214		17,040

The carrying amount of the Company’s reorganization liabilities are denominated in pesos.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

19.

PROVISIONS

Provisions

Civil, labor and
other claims

Tax claims and
other fines

Regulatory claims
and interpretation
disagreements

Total

Balance at 12.31.13

37,877

9,027

11,400

58,304

Increases (recoveries) of the period (*)

10,224

5,016

—

15,240

Decreases of the period

(492

)

—

(492

)

Balance at 06.30.14

47,609

14,043

11,400

73,052

(*)	Charge to other income and expenses (see Note 25).

20.

TRADE PAYABLES


	06.30.14		12.31.13
Gas and transportation creditors		379,751		187,097
Other purchases and services creditors		71,718		77,117
Trust Fund Decree No. 2407		2,200		—
Trust Funds		124,203		77,147
Related parties		245,269		120,102
Resolution I-2621/2013		—		126

Total		823,141		461,589

The carrying amount of the Company’s trade payables are denominated in the following currencies:


	06.30.14		12.31.13
Pesos		669,713		388,536
U$S		153,314		72,963
Euros		100		90
Pound sterling		14		—

Total		823,141		461,589

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

21.

SALARIES AND SOCIAL SECURITY


	06.30.14		12.31.13
Salaries		4,838		6,429
Social security		15,480		13,514
Related parties		3,965		5,249
Vacation provision		35,991		22,855
Bonus provision		9,064		12,819
Others		407		144

Total		69,745		61,010

The carrying amount of the Company’s salaries and social security are denominated in pesos.

22.

OTHER ACCOUNTS PAYABLE


	06.30.14		12.31.13
Payables for works on behalf of third parties		27,319		8,475
ENARGAS’ Fines		2,276		2,276

Total		29,595		10,751

The carrying amount of the Company’s other accounts payable is denominated in pesos.

23.

REVENUES


	For the six months period ended				For the three months period ended
	06.30.14		06.30.13		06.30.14		06.30.13
Gas sales		659,529		388,780		511,550		238,635
MetroENERGÍA’s gas sales and transportation		600,486		287,775		353,355		155,806
Transportation and distribution services		91,608		87,908		47,454		37,716
Other sales		7,424		10,782		1,844		6,120
Natural gas liquids processing		—		67,682		—		36,322
MetroENERGÍA’s other revenues		12,119		6,648		2,626		3,517

Total		1,371,166		849,575		916,829		478,116

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

24.

EXPENSES BY NATURE


	For the six months period ended
	06.30.14											06.30.13
	OPERATING COSTS			ADMINISTRATION EXPENSES		SELLING EXPENSES			TOTAL			TOTAL
Payroll and other employees benefits		66,499			60,039		44,839			171,377			129,283
Social security contributions		14,421			9,923		9,892			34,236			25,694
Cost of natural gas		765,098			—		—			765,098			359,179
Transportation of natural gas and processed natural gas		112,437			—		—			112,437			104,071
Directors’ and members of Supervisory committee fees		—			876		—			876			702
Fees for professional services		102			4,303		157			4,562			3,488
Sundry materials		2,824			—		—			2,824			4,350
Fees for sundry services		11,899			8,320		22,262			42,481			32,128
Post and telephone		217			1,592		15,432			17,241			13,497
Leases		47			959		1,234			2,240			1,729
Transportation and freight charges		—			1,901		—			1,901			1,261
Office materials		582			658		99			1,339			1,238
Travelling expenses		231			202		112			545			537
Insurance premium		—			4,215		1			4,216			3,636
Fixed assets maintenance		25,700			22,502		234			48,436			36,559
PP&E and Investment properties depreciation		34,533			8,138		—			42,671			39,692
Taxes, rates and contributions		17,266			24,482		42,164			83,912			90,712
Publicity		—			—		1,729			1,729			822
Doubtful accounts		—			—		(48	)		(48	)		2,932
Bank expenses and commissions		—			214		6,152			6,366			5,807
Others expenses		1,659			132		661			2,452			5,061
Total as of June 30, 2014		1,053,515			148,456		144,920			1,346,891
Total as of June 30, 2013		643,058			98,821		120,499						862,378

	For the three months period ended
	06.30.14											06.30.13
	OPERATING COSTS			ADMINISTRATION EXPENSES		SELLING EXPENSES			TOTAL			TOTAL
Payroll and other employees benefits		35,505			33,716		24,501			93,722			73,491
Social security contributions		7,948			5,770		5,533			19,251			14,306
Cost of natural gas		511,937			—		—			511,937			213,918
Transportation of natural gas and processed natural gas		61,403			—		—			61,403			52,361
Directors’ and members of Supervisory committee fees		—			426		—			426			367
Fees for professional services		21			2,390		77			2,488			2,053
Sundry materials		(3,082	)		—		—			(3,082	)		2,112
Fees for sundry services		6,654			4,361		12,116			23,131			17,979
Post and telephone		129			886		8,303			9,318			7,504
Leases		19			484		639			1,142			950
Transportation and freight charges		—			1,043		—			1,043			688
Office materials		417			339		45			801			864
Travelling expenses		125			116		59			300			304
Insurance premium		—			2,149		1			2,150			1,768
Fixed assets maintenance		13,531			13,500		117			27,148			20,439
PP&E and Investment properties depreciation		17,349			4,284		—			21,633			19,952
Taxes, rates and contributions		9,118			13,341		29,862			52,321			47,550
Publicity		—			—		1,483			1,483			647
Doubtful accounts		—			—		329			329			2
Bank expenses and commissions		—			82		3,312			3,394			3,109
Others expenses		1,077			84		157			1,318			2,680
Total as of June 30, 2014		662,151			82,971		86,534			831,656
Total as of June 30, 2013		362,801			55,455		64,788						483,044

The expenses included in the above table are net of the Company’s own expenses capitalized in properties, plant and equipment for Ps. 6,482 thousand at June 30, 2014 and for Ps. 6,306 thousand at June 30, 2013.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

25.

OTHER INCOME AND EXPENSES


	For the six months period ended						For the three months period ended
	06.30.14			06.30.13			06.30.14		06.30.13
Leases		810			—			405		—
Result from sales of Investment Properties		8,067			—			8,067		—
Publicity		507			562			207		62
Other income		4,520			1,169			2,616		917
Revenues from rendering services to Controlling Company		1,330			—			715		—
Increases in provisions for contingencies		(15,240)			(2,734)			(4,146)		(1,210)
		(6	)		(1,003	)		7,864		(231	)

26.

NET FINANCE RESULTS


Finance income
	For the six months period ended				For the three months period ended
	06.30.14		06.30.13		06.30.14			06.30.13
Financial assets at fair value		7,676		6,200		3,566			3,385
Other holding results		—		—		(83	)		—
Exchange difference on cash and cash equivalents		1,238		—		109			—

		8,914		6,200		3,592			3,385

Finance costs


	For the six months period ended				For the three months period ended
	06.30.14		06.30.13		06.30.14		06.30.13
Exchange difference on financial debt		236,977		66,487		20,380		36,333
Exchange difference on cash and cash equivalents		—		1,604		—		(84	)
Accrued interest on notes		92,375		49,997		52,041		27,561
Accrued interest on YPF loan		6,856		—		1,277		—
Others		8,134		7,024		4,092		4,337
		344,342		125,112		77,790		68,147

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

27.

INCOME TAX AND MINIMUM PRESUMED INCOME TAX

The following table shows the changes and breakdown of deferred income tax assets and liabilities:

MetroGAS

Deferred income tax assets


								Total deferred tax
	Trade receivables		Provisions		Others			assets
Balances at 12.31.13		81,298		21,235		(59	)		102,474
Movements of the period		9,041		5,162		97			14,300

Balances at 06.30.14		90,339		26,397		38			116,774

Deferred income tax liabilities


	Properties, plant and equipment			Financial debt			Others			Total deferred tax liabilities			Total net deferred tax liabilities
Balances at 12.31.13		(225,430	)		(101,389	)		(394	)		(327,213	)		(224,739	)
Movements of the period		5,520			(16,354	)		362			(10,472	)		3,828

Balances at 06.30.14		(219,910	)		(117,743	)		(32	)		(337,685	)		(220,911	)

MetroENERGÍA

Deferred income tax assets

Deferred tax assets


	Trade receivables			Others			Total
Balances at 12.31.13		1,645			(538	)		1,107
Movements of the period		(60	)		65			5

Balances at 06.30.14		1,585			(473	)		1,112

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

Below is the reconciliation between the income tax charged to results and the amount resulting from the application of the corresponding tax rate to the accounting result before income tax:


	For the six months period ended						For the three months period ended
	06.30.14			06.30.13			06.30.14			06.30.13
Income tax expense on pre tax income		108,906			(218,663	)		(6,593	)		24,473
Tax effect due to:
Non deductible expenses and non taxable income		4,127			(1,188	)		4,231			(3	)
Tax loss carry forwards not recognized		(131,171	)		—			(3,731	)		—
Minimum presumed income tax not recognized		(4,737	)		(7,254	)		(3,756	)		(3,502	)

Total income tax charged to results		(22,875	)		(227,105	)		(9,849	)		20,968

Below is the reconciliation between the tax charged to results and the income tax determined for fiscal purposes:


	For the six months period ended						For the three months period ended
	06.30.14			06.30.13			06.30.14			06.30.13
Income tax determined for fiscal purposes MetroGAS		131,171			(129,186	)		3,731			28,975
Income tax determined for fiscal purposes MetroENERGÍA		(21,971	)		(9,787	)		(13,762	)		(5,780	)
Temporary differences		3,833			(80,878	)		7,669			1,275
Minimum presumed income tax not recognized		(4,737	)		(7,254	)		(3,756	)		(3,502	)
Tax loss carry forwards not recognized		(131,171	)		—			(3,731	)		—

Total income tax charged to results		(22,875	)		(227,105	)		(9,849	)		20,968

The remaining tax losses carry-forward as of June 30, 2014 amounted to Ps. 198,461 thousand and were not recognized in the financial statements at the end of the period. That tax loss carry-forward could be offset against future results expiring Ps. 67,290 thousand in 2017 and Ps. 131,171 thousand in 2019.

In addition, the tax credit on minimum presumed income tax not recognized in the financial statements as of June 30, 2014 amounted to Ps. 133,981 thousand, expiring between the years 2014 and 2024.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

28.

NET RESULT PER SHARE

The following table shows the net results and the number of shares that have been used to calculate the net basic result per share:


	For the six months period ended
	06.30.14			06.30.13
Net and comprehensive result for the period		(333,205	)		397,726
attributable to controlling interest
Average of common shares outstanding		569,171			569,171

Net basic and diluted result per share		(0.59	)		0.70


	For the three months period ended
	06.30.14			06.30.13
Net and comprehensive result for the period		7,578			(48,525	)
attributable to controlling interest
Average of common shares outstanding		569,171			569,171

Net basic and diluted result per share		0.01			(0.09	)

29.

BALANCES AND TRANSACTIONS WITH RELATED PARTIES

MetroGAS carries out operations and transactions with related parties according to general market conditions, wich are part of the normal operation of the company, with respect to their purposes and conditions.

In turn, there are agreements for the rendering of Professional Services from MetroGAS to Gas Argentino in relation to administrative, accounting, tax, finance and legal issues as well as any other issue related to the ordinary operation of Gas Argentino, the value of which has been set pursuant to reasonable market standards for services of this nature.

The information related to changes in the Company’s control is detailed in Note 2.1 to the consolidated financial statements as at December 31, 2013.

The information described in the following charts shows the balances with related companies as of June 30, 2014 and December 31, 2013, as well as operations with these companies for the six and three months periods ended on June 30, 2014 and 2013.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

The transactions shown below have been made with related parties:


	For the six months period ended
	06.30.14										06.30.13
	Gas & transportation sales		Gas purchases		Finance costs		Other net income		Salaries and others employee benefits		Gas & transportation sales		Gas purchases		Fees for professional services		Salaries and others employee benefits
Controlling company
Gas Argentino		—		—		—		1,330		—		—		—		—		—
Related parties:
Apache Energía Argentina S.R.L.		—		4,199		—		—		—		—		—		—		—
Central Dock Sud S.A.		8,240		—		—		—		—		4,354		—		—		—
YPF S.A.		8		128,039		6,856		—		—		11		57,583		663		—
Operadora de Estaciones de Servicios S.A.		425		—		—		—		—		645		—		—		—
Astra Evangelista S.A.		24		—		—		—		—		17		—		—		—
ENARSA		—		23,172		—		—		—		—		—		—		—
Profertil S.A.		41,648		—		—		—		—
Key directors and management:		—		—		—		—		10,162		—		—		—		11,156

		50,345		155,410		6,856		1,330		10,162		5,027		57,583		663		11,156

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)


	For the three months period ended
	06.30.14										06.30.13
	Gas & transportation sales		Gas purchases		Finance costs		Other net income		Salaries and others employee benefits		Gas & transportation sales		Gas purchases		Fees for professional services		Salaries and others employee benefits
Controlling company
Gas Argentino		—		—		—		715		—		—		—		—		—
Related parties:
Apache Energía Argentina S.R.L.		—		3,737		—		—		—		—		—		—		—
Central Dock Sud S.A.		5,188		—		—		—		—		1,440		—		—		—
YPF S.A.		4		95,171		1,277		—		—		7		46,199		352		—
Operadora de Estaciones de Servicios S.A.		161		—		—		—		—		345		—		—		—
Astra Evangelista S.A.		13		—		—		—		—		11		—		—		—
ENARSA		—		22,404		—		—		—		—		—		—		—
Profertil S.A.		27,912		—		—		—		—
Key directors and management:		—		—		—		—		5,614		—		—		—		6,376

		33,278		121,312		1,277		715		5,614		1,803		46,199		352		6,376

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

The balances shown below are outstanding with related parties:


	06.30.14
	Trade receivables			Other receivables				Trade payable		Financial debt				Salaries and social security
	Current			Current		Non current		Current		Corrientes		Non current		Current
Controlling company
Gas Argentino		—			672		4,943		—		—		—		—
Related parties:
Apache Energía Argentina S.R.L.		—			—		—		6,551		—		—		—
Central Dock Sud S.A.		6,387			—		—		—		—		—		—
Operadora de Estaciones de Servicios S.A.		38			—		—		—		—		—		—
YPF S.A.		(4	)		—		—		201,937		96,856		27,911		—
Astra Evangelista S.A.		—			—		—		36,781		—		—		—
ENARSA		—			—		—		—		—		—		—
Profertil S.A.		16,764			—		—		—		—		—		—
Key directors and management:		—			—		—		—		—		—		3,965

		23,185			672		4,943		245,269		96,856		27,911		3,965



	Trade receivables			Other receivables				Trade payable		Financial debt		Salaries and social security
	Current			Current		Non current		Current		Non current		Current
Controlling company
Gas Argentino		—			615		3,631		—		—		—
Related parties:
Apache Energía Argentina S.R.L.		—			—		—		—		—		—
Central Dock Sud S.A.		1,090			—		—		—		—		—
Operadora de Estaciones de Servicios S.A.		263			—		—		—		—		—
YPF S.A.		(2	)		—		—		104,864		21,375		—
Astra Evangelista S.A.		15			—		—		—		—		—
ENARSA		—			—		—		15,238		—		—
Key directors and management:		—			—		—		—		—		5,249

		1,366			615		3,631		120,102		21,375		5,249

Outstanding amounts have not been guaranteed and will be paid in cash. No guarantees have been given or received. No expenses have been recognized in the current or former periods with respect to uncollectible or doubtful accounts in relation to amounts owed by related parties.

Additionally, in the ordinary course of business, and considering that the Licensee operates the gas distribution service within the south and east area of the Great Buenos Aires, including the City of Buenos Aires, the Company’s customer/supplier portfolio includes entities of the private as well as of the national, provincial and municipal sectors.

Also, as mentioned in Note 2.5.1 to the consolidated financial statements as of December 31, 2013 and pursuant to Resolution I-2621/2013 of ENARGAS, MetroGAS currently bills on behalf and for the account of ENARSA the injected volumes in relation to CNG as from June 2013. The net balance of this operation as of June 30, 2014 is shown in Note 20.

METROGAS S.A.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED AS OF JUNE 30, 2014 AND COMPARATIVE INFORMATION

(amounts in thousands of pesos, except where expressly stated otherwise)

Furthermore, as explained in Note 2.6 to the consolidated financial statements as of December 31, 2013, MetroGAS must invoice, collect and settle three specific charges, with different appropriations, which is done for the order and account of Nación Fideicomisos S.A. Balances of this operation are stated in Note 20.

Finally, as described in Note 2.4.2 to the consolidated financial statements as of December 31, 2013, MetroGAS signed with ENARGAS on November 21, 2012 Minutes of Agreement that establish a fixed amount per bill, separated by customer category, which has to be considered as advanced payment for future tariff adjustments provided for in the Temporary Agreement approved by Decree No. 234/09. ENARGAS executed the agreement through Resolution No. 2,407/12 published on November 29, 2012. The Minutes state that amounts thus collected shall be deposited in a specifically dedicated trust fund used for the execution of infrastructure, connections, re-boosting, extensions and/or technological adjustment of gas distribution systems. Therefore, on December 12, 2012 a trust agreement was signed by MetroGAS and Nación Fideicomisos S.A. Balances for these operations are shown in Notes 13 and 20.

David Tezanos Gonzalez

Chairperson

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Argentine Economic Context and its impact on the Company

Note 2 to the consolidated financial statements as of December 31, 2013, include a detailed description of the economic and regulatory context and of the impact of Emergency Law and regulations thereunder on the Company.

These circumstances have been taken into account by the Management of the Company when making any significant accounting estimates included in these consolidated financial statements, which include estimates for the recoverable value of non-current assets. For this purpose, the Company prepares from time to time an economic and financial forecast on the basis of alternative scenarios based on macroeconomic, financial, market and regulatory assumptions. See Note 5.

General

Company’s sales have been highly influenced by weather conditions prevailing in Argentina. Natural gas demand, and consequently sales, are considerably higher during winter months (from May to September) due to the gas volumes sold and the rates mix affecting sales revenues and gross margin.

On account of regulatory changes (see Note 2.4.3 to the consolidated financial statements as of December 31, 2013), on April 20, 2005 the Board of Directors of MetroGAS resolved to create MetroENERGÍA, a corporation whose equity is owned 95% by MetroGAS and whose corporate purpose is to engage, on its own account and on behalf of or in association with third parties, in the sale and purchase and/or transportation of natural gas.

Analysis of transactions for the six months period ended June 30, 2014 and 2013

The sales of the Company for the six months period ended June 30, 2014 increased by 61.4%, and operating costs rose by 63.8% as compared with the same period in previous fiscal year, as a result of which gross profit increased by Ps. 111,134 thousand, to Ps. 317,651 thousand during the period ended on June 30, 2014, as compared with Ps. 206,517 thousand shown for the same period in the preceding fiscal year.

Administrative expenses increased by 50.2%, from Ps. 98,821 thousand during the six months period ended on June 30, 2013, as compared with Ps. 148,456 thousand shown for the current period, and selling expenses increased by 20.3%, from Ps. 120,499 thousand, during for the six months period ended June 30, 2013, to Ps. 144,920 thousand shown for the same period of the present fiscal year.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Consequently, during the six months period ended June 30, 2014 an operating income of Ps. 24,269 thousand was recorded, as compared to an operating loss of Ps. 13,806 thousand for the same period in previous fiscal year.

During the six months period ended June 30, 2014 net financial results was a loss of Ps. 335,428 thousand, as compared with a loss of Ps. 118,912 thousand sustained in the same period in previous fiscal year.

Also, during the six months period ended on June 30, 2013 the Company registered a gain from reorganization debt amounting to Ps. 757,470 thousand (see Note 17 to the consolidated financial statements as at December 31, 2013).

Consequently, the Company’s net loss for the six months period ended June 30, 2014 amounted to Ps. 334,034 thousand, as compared to a net gain of Ps. 397,647 thousand for the same period in previous fiscal year.

Results of Operations and Financial Condition

Sales

Total consolidated sales increased by 61.4% during the six months period ended June 30, 2014, and amounted to Ps. 1,371,166 thousand, as compared with Ps. 849,575 thousand shown for the same period in previous fiscal year.

The increase in sales for the six months period ended on June 30, 2014, was mainly due to increase in MetroGAS sales to residential customers and increased in MetroENERGÍA sales, partially offset by lower processing natural gas sales.

MetroGAS gas sales to residential customers increased by 77.3%, from Ps. 339,845 thousand to Ps. 602,607 thousand for the six months period ended on June 30, 2013 and 2014, respectively, mainly due to an increase in tariffs for the six months period ended June 30, 2014, as compared to the same period in the previous fiscal year, according to The Provisional Agreement described in Note 2.1 of these condensed consolidated interim financial statements. The volumes delivered to this customer category in the six months period ended on June 30, 2014 continue with the same level as compared with the same period in previous fiscal year.

MetroGAS gas sales to industrial and commercial customers and governmental entities increased by 16.3%, to Ps. 56,922 thousand during the six months period ended on June 30, 2014 from Ps. 48,935 thousand during the same period in previous fiscal year, mainly on account of the tariff increases previously mentioned and at a lesser extent of an increase by 1,4% in volumes delivered.

Sales of transportation and distribution services to power stations increased by 19.6%, from Ps. 40,175 thousand during the six months period ended on June 30, 2013, to Ps. 48,032 thousand for the same period of the present fiscal year, mainly on account of an increase in average prices of sale, and partially offset by a decrease of a 17.9% in volumes delivered.

On the other hand, sales of transportation and distribution services to industrial and commercial customers and governmental entities decreased by 12.5%, from Ps. 30,252 thousand during the six months period ended on June 30, 2013 to Ps. 26,471 thousand for the same period in the present fiscal year, mainly due to the penalties included in the six months period ended on June 30, 2013 of Ps. 4,594 and, to a lesser extent on account of the 1.1%decrease in delivered volumes.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

As from July 2013, MetroGAS discontinued the processing of natural gas to obtain hydrocarbons at the General Cerri plant. Subsequently, for the period August-December 2013, an agreement was reached with Transportadora Gas del Sur (“TGS”) to assign those hydrocarbons at the head of the TGS gas pipeline in Exchange of a monthly rate.

MetroENERGÍA gas sales during the six months period ended on June 30, 2014 amounted to Ps. 612,605 thousand increasing by 108.1% as compared of the same period in previous fiscal year amounted to Ps. 294,423 thousand. This increase was mainly due to an increase in average prices.

The table below shows the consolidated sales of the Company by type of service and customer categories for the six months periods ended on June 30, 2014 and 2013, in thousands of pesos:


	For the six months period ended June 30, 2014		% of Sales		For the six months period ended June 30, 2013		% of Sales
MetroGAS
Gas sales:
Residential		602,607		44.0		339,845		40.0
Industrial, Commercial and Governmental		56,922		4.2		48,935		5.8

Subtotal		659,529		48.2		388,780		45.8
Transportation and Distribution Services
Power Plants		48,032		3.5		40,175		4.7
Industrial, Commercial and Governmental		26,471		1.9		30,252		3.5
Compressed Natural Gas		17,105		1.2		17,481		2.0

Subtotal		91,608		6.6		87,908		10.2
Processed Natural Gas		—		—		67,682		8.0
Other Gas Sales and Transportation and Distribution Services		7,424		0.5		10,782		1.3
MetroENERGÍA
Gas and transportation sales		600,486		43.8		287,775		33.9
Other income		12,119		0.9		6,648		0.8

Total of Sales		1,371,166		100.0		849,575		100.0

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

The table below presents the volumes of sales of natural gas and transportation and distribution services by MetroGAS by customer category for the six months periods ended on June 30, 2014 and 2013, in millions of cubic meters:


	For the six months period ended June 30, 2014		% of Volumes of gas delivered		For the six months period ended June 30, 2013		% of Volumes of gas delivered
Gas sales:
Residential		880.6		25.7		880.9		23.4
Industrial, Commercial and Governmental		202.6		5.9		199.9		5.3

Subtotal		1,083.2		31.6		1,080.8		28.7
Transportation and Distribution Services
Power Plants		1,477.3		43.2		1,800.0		47.7
Industrial, Commercial and Governmental		387.4		11.3		391.8		10.4
Compressed Natural Gas		254.8		7.4		253.7		6.7

Subtotal		2,119.5		61.9		2,445.5		64.8
Processed Natural Gas		—		—		70.1		1.9
Other Gas Sales and Transportation and Distribution Services		223.7		6.5		174.3		4.6

Total delivered volume by MetroGAS		3,426.4		100.0		3,770.7		100.0

Total gas and transportation delivered volume by MetroENERGÍA		467.0		100.0		500.0		100.0

Operating Costs

Operating costs increased by 63.8% amounting to Ps. 1,053,515 thousand during the six months period ended on June 30, 2014, respect to Ps. 643,058 thousand registered during the same period in previous fiscal year. This variation was mainly due to increase in gas purchase costs and in payroll and social contributions, sundry materials and fixed assets maintenance and repair, and properties, plant and equipment depreciation.

The costs of natural gas purchases increased by 113.0%, from Ps. 359,179 thousand for the six months period ended on June 30, 2013 to Ps. 765,098 thousand during the same period in present fiscal year, mainly as a result of increased in average price gas purchased by MetroGAS and MetroENERGÍA. During the six months period ended on June 30, 2014 1,237 million cubic meters were purchased by MetroGAS, and 467 million cubic meters by MetroENERGÍA, which as a whole represent a 0.45% decrease with respect to gas volumes purchased in the same period in previous fiscal year.

Gas transportation costs increased by 8.0% during the six months period ended on June 30, 2014 as compared with the same period in previous fiscal year as a consequence of the tariff increases for gas transportation established by the ES Resolution No. 226/14.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

The table below shows the operating costs and expenses of the Company by type of expenses for the periods ended on June 30, 2014 and 2013, in thousands of pesos.


	For the six months period ended June 30, 2014		% of Total Operating Costs		For the six months period ended June 30, 2013		% of Total Operating Costs
Cost of natural gas		765,098		72.6		359,179		55.9
Transportation of natural gas		112,437		10.7		104,071		16.2
Depreciation of PP&E		34,533		3.3		33,118		5.2
Payroll and social contributions		80,920		7.7		55,390		8.6
Fixed assets maintenance		25,700		2.4		23,956		3.7
Fees for sundry services		11,899		1.1		15,020		2.3
Taxes, rates and contributions		17,266		1.6		42,137		6.6
Sundry materials		2,824		0.3		4,350		0.7
Other operating expenses		2,838		0.3		5,837		0.8

Total		1,053,515		100.0		643,058		100.0

Administrative Expenses

Administrative expenses increased by 50.2%, from Ps. 98,821 thousand for the six months period ended on June 30, 2013 to Ps. 148,456 thousand for the current period. This increase was mainly due to the increase in payroll and social contributions, in fixed assets maintenance, in taxes, rates and contributions and commissions, in fees for sundry services, and in depreciation of PP&E and investment properties.

Selling Expenses

Selling expenses increased by 20.3%, from Ps. 120,499 thousand for the six months period ended on June 30, 2013 to Ps. 144,920 thousand for the same period in present fiscal year. This increase was mainly due to the increase in taxes, rates and contributions, in fees for sundry services, in payroll and social contributions, and in post and telecommunication expenses, partially offset by the decrease in doubtful account charge.

Other income and expenses

Other income and expenses amounted to a loss of Ps. 1,003 thousand for the six months period ended June 30, 2013, and a loss of Ps.6 thousand in the same period in present fiscal year, mainly due to increase of provisions in the current period, partially offset by the result from sales of investment properties.

Net Financial Results

During the six months period ended on June 30, 2014 net financial results was a loss of Ps. 355,428 thousand, as compared to a Ps. 118,912 thousand loss for the same period in previous fiscal year. The variation in financial results was mainly due to the loss of the exchange difference on financial debt due to the increase in the variation of the exchange rate in the present period compared to the same period of the previous fiscal year and at a lesser extent, to an increase in accrued financial interest from the financial debt.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Income Tax

During the six months period ended on June 30, 2014 the Company accrued loss of Ps. 22,875 thousand, as compared to a loss of Ps. 227,105 thousand shown for the same period in previous fiscal year. This change is attributable mainly to the tax increase due to the gain from reorganization debt restructuring registered in the previous year.

Net Cash Flows from Operating Activities

Net cash flows from operating activities for the six months period ended on June 30, 2014 amounted to Ps. 45,430 thousand, as compared with Ps. 103,290 thousand for the same period in previous fiscal year. This change was mainly due to increase in funds used by working capital during the current period with respect to the same period in previous fiscal year, partially offset by an increase in cash flows from operating results.

Net Cash Flows from Investing Activities

Net cash flows from investment activities for the six months period ended on June 30, 2014 amounted to Ps. 66,824 thousand, as compared with Ps. 70,579 thousand for the same period in previous fiscal year. This variation was mainly due to an increase in PP&E during the present period compared to the same period of the previous fiscal year, partially offset by the proceeds from sales of investment properties.

Net Cash Flows from Financing Activities

Net cash flows generated from financing activities amounted to Ps. 52,113 thousand for the six months period ended on June 30, 2014 mainly due to the credit facility agreement with YPF entered in the present period, partially offset by the interest payments on financial debt, compared to Ps. 3,109 thousand used in the same period of the previous fiscal year corresponding to the partial payment of interests from the restructuring of debt under the reorganization proceeding.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Liquidity and Capital Resources

Financing

As of June 30, 2014, the financial debt accounted for by Company amounted to Ps. 1,341,470 thousand. Also, nominal debt amounted to U$S 194,329 thousand and Ps. 96,856 thousand.

In compliance with the arrangement made with creditors under the reorganization proceedings, on January 11, 2013 MetroGAS proceeded to exchange the existing Notes held by financial creditors and any allowed or provisionally admitted claims held by non-financial creditors, for the New Notes (see Note 17 to the consolidated financial statements).

Comparative Structure of Condensed Interim Consolidated Statement of financial position⁽¹⁾

Condensed Interim Consolidated Statement of financial positions as of June 30, 2014 and 2013.


	06.30.14		06.30.13
	Thousands of Ps.
Non current Assets		1,891,847		1,810,120
Current assets		937,692		637,720

Total assets		2,829,539		2,447,840

Non current Liabilities		1,562,563		1,144,746
Current Liabilities		1,176,893		738,160

Total Liabilities		2,739,456		1,882,906
Non-controlling interest		2,054		910
Equity attributable to the owners		88,029		564,024

Total Liabilities and Shareholders’ Equity		2,829,539		2,447,840

⁽¹⁾	Information covered by the Independent auditors report.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Comparative Condensed Interim Consolidated Structure of Profit and loss and other comprehensive income⁽¹⁾

Condensed Interim Consolidated Statements of Profit and Loss and Other Comprehensive Income for the six months periods ended on June 30, 2014 and 2013.


	06.30.14			06.30.13
	Thousands of Ps.
Revenues		1,371,166			849,575
Operating costs		(1,053,515	)		(643,058	)

Gross profit		317,651			206,517
Administration expenses		(148,456	)		(98,821	)
Selling expenses		(144,920	)		(120,499	)
Other income and expenses		(6	)		(1,003	)

Operating income (loss)		24,269			(13,806	)
Finance income		8,914			6,200
Finance cost		(344,342	)		(125,112	)

Net financial results		(335,428	)		(118,912	)
Debt restructuring result		—			757,470

Result before income tax		(311,159	)		624,752

Income tax and MPIT		(22,875	)		(227,105	)

Net result for the period		(334,034	)		397,647

Other comprehensive result		—			—

Net and comprehensive result for the period		(334,034	)		397,647

⁽¹⁾	Information covered by the Independent auditors report.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Comparative Statistical Data

The information shown below makes reference to the six months periods ended on June 30, 2014 and 2013.


	06.30.14			06.30.13
	Volumes
	In millions of cubic meters
Gas purchased by MetroGAS		1,237.0			1,326.5
Gas contracted by third parties		2,569.7			2,858,9

		3,806.7			4,185.4
Volume of gas withheld:
- Transportation		(230.7	)		(257.6	)
- Loss in distribution		(149.6	)		(153.5	)
- Transportation and processing of natural gas		—			(3.6	)

Volume of gas delivered by MetroGAS		3,426.4			3,770.7

Volume of gas purchased and delivered by MetroENERGÍA		467.0			385.2

Comparative Indices ⁽¹⁾

The information below makes reference to the periods ended on June 30, 2014 and 2013.


	06.30.14	06.30.13
Liquidity	0.80	0.86
Solvency	0.03	0.30
Inmobilization	0.67	0.74

⁽¹⁾	Information covered by the Independent auditors report.

METROGAS S.A.

INFORMATIVE SUMMARY OF ACTIVITY

RESOLUTION No. 368/01 OF THE ARGENTINE SECURITIES COMMISSION

Additional Information

Changes in MetroGAS Shares and ADS Prices:


		Share Price on the Buenos Aires Stock Exchange (1)		ADSs Price on the New York Stock Exchange (1) and (2)
		$		U$S
March	2010		0.75		2.17
March	2011		1.04		—	(2)
March	2012		0.70		—
January	2013		0.87		—
February	2013		0.67		—
March	2013		0.70		—
April	2013		0.76		—
May	2013		0.88		—
June	2013		0.71		—
January	2014		1.26		—
February	2014		1.33		—
March	2014		1.74		—
April	2014		2.05		—
May	2014		3.50		—
June	2014		3.74		—

(1)	Prices on the last business day of each month (except for (2)).

(2)	On June 17, 2010, the NYSE announced the immediate suspension of MetroGAS ADSs from listing on such exchange due the Company’s announcement of its voluntary petition for reorganization proceedings on such date.

Perspectives

MetroGAS intends to focus its efforts on ensuring the continuity of its business, maintaining gas supply quality and reliability, complying with basic License rules and finally, on the basis of the outcome of the License agreement renegotiation, MetroGAS will define its new strategy towards the future and in relation to matters such as business planning, business policy and an the development of an investment plan.

Autonomous City of Buenos Aires, August 6, 2014

David Tezanos Gonzalez

Chairperson

LOGO

English translation of the report originally issued in Spanish, except for the omission of certain disclosures related to formal legal requirements for reporting in Argentina and the addition of the last paragraph.

Deloitte & Co. S.A.

Florida 234, 5th floor

C1005AAF

Ciudad Autónoma

de Buenos Aires

Argentina

Phone.: (+54-11) 4320-2700

Fax: (+54-11) 4325-8081/4326-7340

www.deloitte.com/ar

Independent Auditors’ Report

(Review of condensed interim consolidated financial statements)

To the President and Directors of

METROGAS SOCIEDAD ANÓNIMA

Gregorio Aráoz de Lamadrid 1360

Buenos Aires, Argentina

1.	Identification of the condensed interim consolidated financial statements subject to review

We have reviewed the accompanying condensed interim consolidated financial statements of METROGAS SOCIEDAD ANÓNIMA (an Argentine corporation, hereinafter mentioned as “METROGAS S.A.” or the “Company”) which comprise the consolidated statement of financial position as of June 30, 2014, and the related consolidated statements of profit and loss and other comprehensive income, changes in shareholders’ equity and cash flows for the six-month period then ended and the supplemental information included in their Notes 1 to 29.

The figures and other information corresponding to the fiscal year finished on December 31, 2013 and for the six-month period ended June 30, 2013, after giving consideration of what is mentioned in Note 3 to the accompanying condensed interim consolidated financial statements, are an integral part of the condensed interim consolidated financial statements mentioned above and are intended to be read only in relation to the figures and other information of the current interim period.

2.	Company’s Board of Directors responsibility for the condensed interim consolidated financial statements

The Company’s Board of Directors is responsible for the preparation and fair presentation of the accompanying condensed interim consolidated financial statements of the Company in accordance with International Financial Reporting Standards (“IFRS”) adopted by the Argentine Federation of Professional Councils in Economic Sciences (“FACPCE”) as accounting standards, as they were approved by the International Accounting Standards Board (“IASB”), and incorporated by the Argentine Securities Commission (“CNV”) to its regulation, and, therefore, is responsible for the preparation and presentation of the accompanying condensed interim consolidated financial statements, in accordance with the International Accounting Standard 34 “Interim Financial Reporting”. Moreover, the Company’s Board of Directors is responsible of an internal control system as it determines necessary to enable the preparation of financial statements that are free from material misstatements.

Deloitte & Co. S.A. Registro de Soc. Com. CPCECABA - T°₁ Folio ₃

3.	Auditor’s responsibility

Our responsibility is to report on these accompanying condensed interim consolidated financial statements based on our review. We have conducted our review in accordance with the International Standard on Review Engagements (“ISRE”) adopted by the FACPCE through the Technical Resolution N° 33, as they were issued by the International Auditing and Assurance Standards Board (“IAASB”) of the International Federation of Accountants (“IFAC”). These standards require that we comply with ethical requirements.

A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

4.	Conclusion

Based on our review, we are in a position to report that nothing has come to our attention that causes us to believe that the accompanying condensed interim consolidated financial statements of METROGAS S.A. corresponding to the six-month period ended June 30, 2014 are not presented, in all of its significant matters, in accordance with International Accounting Standard 34.

5.	Additional explanatory paragraphs

Without modifying our previous conclusion, we emphasize that as mentioned in more detail in Note 5.1 to the consolidated financial statements of METROGAS S.A. as of December 31, 2013, the Company has prepared projections with the aim of determining the recoverable value of properties, plant and equipment, based on assumptions made related to the expected final outcome of the tariff renegotiation process. The cash flows and actual future results may differ from the estimates and assessments made by the Management as of the date of preparation of those financial statements. In this regard, we are not in a position to estimate whether the assumptions used by the Management to prepare its projections will materialize in the future and, therefore, if the recoverable values of properties, plant and equipment will exceed the respective net book values.

6.	English translation of statutory condensed interim consolidated financial statements

This report and the condensed interim consolidated financial statements referred to in section 1 have been translated into English for the convenience of English-speaking readers. The accompanying condensed interim consolidated financial statements are the English translation of those originally issued by METROGAS SOCIEDAD ANÓNIMA in Spanish and presented in accordance with International Accounting Standard 34.

Buenos Aires, Argentina

August 6, 2014

Deloitte & Co. S.A.

Fernando G. del Pozo

Partner

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally consolidated and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.