IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Consolidated Financial Statements as of September 30, 2021 and for the three-month period ended as of that date, presented comparatively
Legal information
Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
Fiscal year N°: 79, beginning on July 1st, 2021.
Legal address: 261 Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina.
Company activity: Real estate investment and development.
Date of registration of the by-laws in the Public Registry of Commerce: June 23, 1943.
Date of registration of last amendment of the by-laws in the Public Registry of Commerce: General Ordinary and Extraordinary Shareholders’ Meeting held on December 12, 2019 and registered in the Superintendence on October 13,2020 with the number 9896, Book 1200 Volume – of Joint Stock Companies.
Expiration of the Company’s by-laws: April 5, 2043.
Registration number with the Superintendence: 213,036.
Capital: 658,707,201 shares.
Common Stock subscribed, issued and paid up nominal value (in millions of ARS): 659.
Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
(Cresud S.A.C.I.F. y A.).
Legal Address: 261 Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina.
Main activity: Real estate, agricultural, commercial and financial activities.
Direct and indirect interest of the Parent Company on the capital stock: 408,746,837 common shares.
Percentage of votes of the Parent Company (direct and indirect interest) on the shareholders’ equity: 62.22% (1).
Type of stock | CAPITAL STATUS | |
Shares authorized for Public Offering (2) | Subscribed, issued and paid up nominal value (in millions of Pesos) | |
Common stock with a face value of ARS 1 per share and entitled to 1 vote each | 658,707,201 | 659 |
(1) For computation purposes, treasury shares have been subtracted.
(2) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
Index
1 | ||
Unaudited Condensed Interim Consolidated Statements of Financial Position | 2 | |
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income | 3 | |
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity | 4 | |
Unaudited Condensed Interim Consolidated Statements of Cash Flows | 6 | |
Notes to the Unaudited Condensed Interim Consolidated Financial Statements: | ||
Note 1 – The Group’s business and general information | 7 | |
Note 2 – Summary of significant accounting policies | 7 | |
Note 3 – Seasonal effects on operations | 8 | |
Note 4 – Acquisitions and disposals | 8 | |
Note 5 – Financial risk management and fair value estimates | 10 | |
Note 6 – Segment information | 10 | |
Note 7 – Investments in associates and joint ventures | 12 | |
Note 8 – Investment properties | 13 | |
Note 9 – Property, plant and equipment | 15 | |
Note 10 – Trading properties | 15 | |
Note 11 – Intangible assets | 16 | |
Note 12 – Right-of-use assets | 16 | |
Note 13 – Financial instruments by category | 17 | |
Note 14 – Trade and other receivables | 19 | |
Note 15 – Cash flow information | 19 | |
Note 16 – Trade and other payables | 20 | |
Note 17 – Borrowings | 20 | |
Note 18 – Provisions | 21 | |
Note 19 – Taxes | 21 | |
Note 20 – Revenues | 22 | |
Note 21 – Expenses by nature | 22 | |
Note 22 – Cost of goods sold and services provided | 23 | |
Note 23 – Other operating results, net | 23 | |
Note 24 – Financial results, net | 23 | |
Note 25 – Related party transactions | 24 | |
Note 26 – CNV General Resolution N° 622 | 26 | |
Note 27 – Foreign currency assets and liabilities | 26 | |
Note 28 – Results from discontinued operations | 27 | |
Note 29 – Other significant events of the period | 27 | |
Note 30 – Subsequent Events | 29 |
Glossary
The following are not technical definitions, but help the reader to understand certain terms used in the wording of the notes to the Group´s Financial Statements.
Terms | Definitions | |
BACS | Banco de Crédito y Securitización S.A. | |
BHSA | Banco Hipotecario S.A. | |
Clal | Clal Holdings Insurance Enterprises Ltd. | |
CNV | Securities Exchange Commission | |
CPF | Collective Promotion Funds | |
Condor | Condor Hospitality Trust Inc. | |
Cresud | Cresud S.A.C.I.F. y A. | |
DIC | Discount Investment Corporation Ltd. | |
Efanur | Efanur S.A. | |
Financial Statements | Unaudited Condensed Interim Consolidated Financial Statements | |
Annual Financial Statements | Consolidated Financial Statements as of June 30, 2019 | |
HASAU | Hoteles Argentinos S.A.U. | |
IAS | International Accounting Standards | |
IASB | International Accounting Standards Board | |
IDBD | IDB Development Corporation Ltd. | |
IFRS | International Financial Reporting Standards | |
IRSA, The Company”, “Us”, “We” | IRSA Inversiones y Representaciones Sociedad Anónima | |
IRSA CP | IRSA Propiedades Comerciales S.A. | |
MPIT | Minimum presumed income tax | |
NCN | Non-convertible notes | |
New Lipstick | New Lipstick LLC | |
NIS | New Israeli Shekel | |
Quality | Quality Invest S.A. | |
Shufersal | Shufersal Ltd. | |
TGLT | TGLT S.A. | |
Tyrus | Tyrus S.A. |
1
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of September 30, 2021 and June 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.2021 | 06.30.2021 | |
ASSETS | |||
Non-current assets | |||
Investment properties | 8 | 193,895 | 200,154 |
Property, plant and equipment | 9 | 4,521 | 4,531 |
Trading properties | 10, 22 | 1,803 | 1,797 |
Intangible assets | 11 | 2,480 | 2,623 |
Right-of-use assets | 12 | 871 | 886 |
Investments in associates and joint ventures | 7 | 13,616 | 13,294 |
Deferred income tax assets | 19 | 560 | 487 |
Income tax and MPIT credit | 28 | 33 | |
Trade and other receivables | 14 | 3,339 | 3,111 |
Investments in financial assets | 13 | 683 | 1,331 |
Total non-current assets | 221,796 | 228,247 | |
Current assets | |||
Trading properties | 10, 22 | 125 | 125 |
Inventories | 22 | 76 | 79 |
Income tax and MPIT credit | 153 | 180 | |
Trade and other receivables | 14 | 9,302 | 9,262 |
Investments in financial assets | 13 | 3,499 | 3,460 |
Cash and cash equivalents | 13 | 2,153 | 2,110 |
Total current assets | 15,308 | 15,216 | |
TOTAL ASSETS | 237,104 | 243,463 | |
SHAREHOLDERS’ EQUITY | |||
Shareholders' equity attributable to equity holders of the parent (according to corresponding statement) | 66,801 | 67,572 | |
Non-controlling interest | 22,423 | 22,831 | |
TOTAL SHAREHOLDERS’ EQUITY | 89,224 | 90,403 | |
LIABILITIES | |||
Non-current liabilities | |||
Borrowings | 17 | 51,226 | 51,061 |
Lease liabilities | 830 | 932 | |
Deferred income tax liabilities | 19 | 71,311 | 75,130 |
Trade and other payables | 16 | 1,702 | 1,516 |
Income tax and MPIT liabilities | 1,367 | - | |
Provisions | 18 | 101 | 125 |
Derivative financial instruments | 13 | 4 | 10 |
Salaries and social security liabilities | 88 | 94 | |
Total non-current liabilities | 126,629 | 128,868 | |
Current liabilities | |||
Trade and other payables | 16 | 5,752 | 5,577 |
Borrowings | 17 | 13,856 | 16,839 |
Lease liabilities | 114 | 59 | |
Provisions | 18 | 147 | 161 |
Salaries and social security liabilities | 400 | 476 | |
Income tax and MPIT liabilities | 941 | 1,028 | |
Derivative financial instruments | 13 | 41 | 52 |
Total current liabilities | 21,251 | 24,192 | |
TOTAL LIABILITIES | 147,880 | 153,060 | |
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 237,104 | 243,463 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
2
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
for the three-month period ended September 30, 2021 and 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Three months | |||
Note | 09.30.2021 | 09.30.2020 | |
Revenues | 20 | 4,382 | 2,453 |
Costs | 21, 22 | (1,754) | (1,673) |
Gross profit | 2,628 | 780 | |
Net (loss) / gain from fair value adjustment of investment properties | 8 | (6,494) | 36,728 |
General and administrative expenses | 21 | (737) | (982) |
Selling expenses | 21 | (338) | (686) |
Other operating results, net | 23 | 252 | 16 |
(Loss) / profit from operations | (4,689) | 35,856 | |
Share of (loss) / profit of associates and joint ventures | 7 | (155) | 225 |
(Loss) / income before financial results and income tax | (4,844) | 36,081 | |
Finance income | 24 | 62 | 86 |
Finance costs | 24 | (2,004) | (2,429) |
Other financial results | 24 | 2,966 | 952 |
Inflation adjustment | 24 | 340 | (89) |
Financial results, net | 1,364 | (1,480) | |
(Loss) / profit before income tax | (3,480) | 34,601 | |
Income tax | 19 | 2,466 | (12,133) |
(Loss) / profit for the period from continuing operations | (1,014) | 22,468 | |
Loss for the period from discontinued operations | 28 | - | (9,752) |
(Loss) / profit for the period | (1,014) | 12,716 | |
Other comprehensive income: | |||
Items that may be reclassified subsequently to profit or loss: | |||
Currency translation adjustment | (164) | (720) | |
Other comprehensive (loss) / income for the period from continuing operations | (164) | (720) | |
Other comprehensive income for the period from discontinued operations | - | (12,503) | |
Total other comprehensive loss for the period | (164) | (13,223) | |
Total comprehensive loss for the period | (1,178) | (507) | |
Total comprehensive (loss) / income from continuing operations | (1,178) | 21,748 | |
Total comprehensive income from discontinued operations | - | (22,255) | |
Total comprehensive loss for the period | (1,178) | (507) | |
(Loss) / profit for the period attributable to: | |||
Equity holders of the parent | (600) | 10,086 | |
Non-controlling interest | (414) | 2,630 | |
Profit / (loss) from continuing operations attributable to: | |||
Equity holders of the parent | (600) | 17,788 | |
Non-controlling interest | (414) | 4,680 | |
Total comprehensive (Loss) / income attributable to: | |||
Equity holders of the parent | (762) | 4,443 | |
Non-controlling interest | (416) | (4,950) | |
Total comprehensive (Loss) / income from continuing operations attributable to: | |||
Equity holders of the parent | (762) | 18,257 | |
Non-controlling interest | (416) | 3,491 | |
(Loss) / profit per share attributable to equity holders of the parent: (i) | |||
Basic | (0.91) | 17.53 | |
Diluted | (0.91) | 17.48 | |
(Loss) / profit per share from continuing operations attributable to equity holders of the parent: (i) | |||
Basic | (0.91) | 30.92 | |
Diluted | (0.91) | 30.83 |
(i) The loss/profit per share have been calculated using 656,700,315 shares at 09.30.21 and 575,377,891 at 09.30.20. If 656,700,315 shares had been used for the calculation, the result per share would be ARS 15.36 for 09.30.20. See note 17 to the Annual Financial Statements.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
3
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Attributable to equity holders of the parent | |||||||||||||
Share capital | Treasury shares | Inflation adjustment of share capital and treasury shares (i) | Warrants (iii) | Share premium | Additional paid-in capital from treasury shares | Legal reserve | Special reserve Resolution CNV 609/12 (ii) | Other reserves (iv) | Accumulated deficit | Subtotal | Non-controlling interest | Total Shareholders’ equity | |
Balance as of July 1, 2021 | 657 | 2 | 22,596 | 1,944 | 26,347 | 162 | 1,752 | 15,432 | 29,827 | (31,147) | 67,572 | 22,831 | 90,403 |
Loss for the period | - | - | - | - | - | - | - | - | - | (600) | (600) | (414) | (1,014) |
Other comprehensive loss for the period | - | - | - | - | - | - | - | - | (162) | - | (162) | (2) | (164) |
Total (loss) and other comprehensive (loss) for the period | - | - | - | - | - | - | - | - | (162) | (600) | (762) | (416) | (1,178) |
Warrants exercise (iii) | - | - | - | (1) | 3 | - | - | - | - | - | 2 | - | 2 |
Capitalisation of irrevocable contributions | - | - | - | - | - | - | - | - | - | - | - | 8 | 8 |
Other changes in equity | - | - | - | - | - | - | - | - | (9) | - | (9) | - | (9) |
Changes in non-controlling interest | - | - | - | - | - | - | - | - | (2) | - | (2) | - | (2) |
Balance as of September 30, 2021 | 657 | 2 | 22,596 | 1,943 | 26,350 | 162 | 1,752 | 15,432 | 29,654 | (31,747) | 66,801 | 22,423 | 89,224 |
(i) Includes ARS 1 of Inflation adjustment of treasury shares. See Note 17 to the Annual Financial Statements.
(ii) Related to CNV General Resolution N° 609/12.
(iii) Between September 17,2021 and September 25,2021, 30,741 warrants were exercised so the equivalent in shares was issued.
(iv) Group´s other reserves for the period ended September 30, 2021 are comprised as follows:
Cost of treasury stock | Changes in non-controlling interest | Reserve for share-based payments | Reserve for future dividends | Currency translation adjustment reserve | Hedging instruments | Special reserve | Reserve for defined contribution plans | Revaluation surplus | Total Other reserves | |
Balance as of July 1, 2021 | (279) | (9,204) | 315 | 2,778 | 707 | (705) | 34,435 | 139 | 1,641 | 29,827 |
Other comprehensive loss for the period | - | - | - | - | (162) | - | - | - | - | (162) |
Total comprehensive loss for the period | - | - | - | - | (162) | - | - | - | - | (162) |
Changes in non-controlling interest | - | (2) | - | - | - | - | ��- | - | - | (2) |
Other changes in equity | - | - | - | - | (9) | - | - | - | - | (9) |
Balance as of September 30, 2021 | (279) | (9,206) | 315 | 2,778 | 536 | (705) | 34,435 | 139 | 1,641 | 29,654 |
There are no cumulative unpaid dividends on preferred shares.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
4
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Attributable to equity holders of the parent | ||||||||||||
Share capital | Treasury shares | Inflation adjustment of share capital and treasury shares (i) | Share premium | Additional paid-in capital from treasury shares | Legal reserve | Special reserve Resolution CNV 609/12 (ii) | Other reserves (iii) | Retained earnings | Subtotal | Non-controlling interest | Total Shareholders’ equity | |
Balance as of July 1, 2020 | 575 | 2 | 22,586 | 23,866 | 156 | 796 | 15,436 | 9,674 | 20,679 | 93,770 | 107,559 | 201,329 |
Profit for the period | - | - | - | - | - | - | - | - | 10,086 | 10,086 | 2,630 | 12,716 |
Other comprehensive loss for the period | - | - | - | - | - | - | - | (5,643) | - | (5,643) | (7,580) | (13,223) |
Total profit and other comprehensive loss for the period | - | - | - | - | - | - | - | (5,643) | 10,086 | 4,443 | (4,950) | (507) |
Capitalisation of irrevocable contributions | - | - | - | - | - | - | - | - | - | - | 6 | 6 |
Dividend distribution | - | - | - | - | - | - | - | - | - | - | (30) | (30) |
Other changes in equity | - | - | - | - | - | - | - | 9,035 | - | 9,035 | (66,852) | (57,817) |
Reserve for share-based payments | - | - | - | - | 3 | - | - | (3) | - | - | - | - |
Changes in non-controlling interest | - | - | - | - | - | - | - | 53 | - | 53 | (108) | (55) |
Balance as of September 30, 2020 | 575 | 2 | 22,586 | 23,866 | 159 | 796 | 15,436 | 13,116 | 30,765 | 107,301 | 35,625 | 142,926 |
(i) Includes ARS 1 of Inflation adjustment of treasury shares. See Note 16 to the Annual Financial Statements.
(ii) Related to CNV General Resolution N° 609/12.
(iii) Group’s other reserves for the period ended September 30, 2020 are comprised as follows:
Cost of treasury stock | Changes in non-controlling interest | Reserve for share-based payments | Reserve for future dividends | Currency translation adjustment reserve | Hedging instruments | Reserve for defined contribution plans | Special reserve | Other reserves from subsidiaries | Revaluation surplus | Total Other reserves | |
Balance as of July 1, 2020 | (282) | (8,650) | 323 | 2,778 | (1,195) | (601) | (643) | 17,062 | 175 | 707 | 9,674 |
Other comprehensive loss for the period | - | - | - | - | (5,300) | (119) | (224) | - | - | - | (5,643) |
Total comprehensive loss for the period | - | - | - | - | (5,300) | (119) | (224) | - | - | - | (5,643) |
Reserve for share-based payments | 2 | - | (5) | - | - | - | - | - | - | - | (3) |
Changes in non-controlling interest | - | 53 | - | - | - | - | - | - | - | - | 53 |
Other changes in equity | - | (79) | - | - | 7,675 | 328 | 1,195 | - | (175) | 91 | 9,035 |
Balance as of September 30, 2020 | (280) | (8,676) | 318 | 2,778 | 1,180 | (392) | 328 | 17,062 | - | 798 | 13,116 |
There are no cumulative unpaid dividends on preferred shares.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
5
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the three-month period ended September 30, 2021 and 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.2021 | 09.30.2020 | |
Operating activities: | |||
Net cash generated from continuing operating activities before income tax paid | 15 | 1,659 | 1,735 |
Income tax and MPIT paid | (6) | (5) | |
Net cash generated from continuing operating activities | 1,653 | 1,730 | |
Net cash generated from discontinued operating activities | - | 3,395 | |
Net cash generated from operating activities | 1,653 | 5,125 | |
Investing activities: | |||
Contributions and issuance of capital in associates and joint ventures | (29) | (12) | |
Acquisition and improvements of investment properties | (370) | (1,096) | |
Proceeds from sales of investment properties | 238 | 14,643 | |
Acquisitions and improvements of property, plant and equipment | (97) | (69) | |
Acquisitions of intangible assets | (8) | (9) | |
Acquisitions of investments in financial assets | (896) | (9,424) | |
Proceeds from disposal of investments in financial assets | 767 | 10,383 | |
Interest received from financial assets | 189 | 239 | |
Dividends received from financial assets | 1 | - | |
Net cash (used in) / generated from continuing investing activities | (205) | 14,655 | |
Net cash generated from discontinued investing activities | - | 48,532 | |
Net cash (used in) / generated from investing activities | (205) | 63,187 | |
Financing activities: | |||
Borrowings and issuance of non-convertible notes | 2,853 | 5,285 | |
Payment of borrowings and non-convertible notes | (709) | (30,508) | |
Collections of short-term loans, net | (201) | 7,412 | |
Interests paid | (2,801) | (4,001) | |
Repurchase of non-convertible notes | (177) | (101) | |
Acquisition of non-controlling interest in subsidiaries | - | (81) | |
Proceeds from warrants exercise | 2 | - | |
Sale of own non-convertible notes | - | 800 | |
Net proceeds from derivate financial instrument | (15) | (343) | |
Net cash used in continuing financing activities | (1,048) | (21,537) | |
Net cash used in discontinued financing activities | - | (19,850) | |
Net cash used in financing activities | (1,048) | (41,387) | |
Net increase / (decrease) in cash and cash equivalents from continuing activities | 400 | (5,152) | |
Net increase in cash and cash equivalents from discontinued activities | - | 32,077 | |
Net increase in cash and cash equivalents | 400 | 26,925 | |
Cash and cash equivalents at beginning of period | 2,110 | 148,318 | |
Deconsolidation of subsidiaries | - | (158,820) | |
Foreign exchange gain and inflation adjustment on cash and changes in fair value of cash equivalents | (357) | (9,719) | |
Cash and cash equivalents at end of period | 13 | 2,153 | 6,704 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
6
IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(Amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
1.
The Group’s business and general information
These Financial Statements have been approved for issuance by the Board of Directors, on November 8, 2021.
IRSA was founded in 1943, and it is engaged in a diversified range of real estate activities in Argentina since 1991. IRSA and its subsidiaries are collectively referred to hereinafter as “the Group”. Cresud is our direct parent company and Consultores Asset Management S.A. is our ultimate parent company.
As stated in Note 1 to the consolidated financial statements as of June 30, 2021, on September 25, 2020 the Court decreed the insolvency and liquidation of IDBD and appointed a trustee for its shares along with a custodian over DIC and Clal shares. After this decision, the Board of Directors of IDBD was removed from its functions, therefore, the Group lost control as of that date, consequently, the results of such company as of September 30,2020 are included in discontinued operations.
2.
Summary of significant accounting policies
2.1.
Basis of preparation
These financial statements have been prepared in accordance with IAS 34 “Interim financial reporting” and should therefore be read in conjunction with the Group's annual Consolidated Financial Statements as of June 30, 2021 prepared in accordance with IFRS. Also, these financial statements include additional information required by Law No. 19,550 and / or regulations of the CNV. Such information is included in the notes to these financial statements, as accepted by IFRS.
These financial statements for the interim periods of three months ended September 30, 2021 and 2020 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
In order to conclude on whether an economy is categorized as highly inflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that approximates or exceed 100%. Accumulated inflation in Argentina in three years is over 100%. For that reason, in accordance with IAS 29, Argentina must be considered a country with a highly inflationary economy starting July 1, 2018.
In relation to the inflation index to be used and in accordance with FACPCE Resolution No. 539/18, it is determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of the Consumer Price Index (CPI) of the Autonomous City of Buenos Aires for the months of November and December 2015, because during those two months there were no national IPIM measurements. Then, from January 2017, the National Consumer Price Index (National CPI) is considered. The table below presents the index for the period ended September 30, 2021, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
As of September 30, 2021 (accumulated three months) | |
Price variation | 9% |
7
IRSA Inversiones y Representaciones Sociedad Anónima
As a consequence of the aforementioned, these financial statements as of September 30, 2021 were restated in accordance with IAS 29.
2.2.
Significant accounting policies
The accounting policies applied in the presentation of these Financial Statements are consistent with those applied in the preparation of the Annual Financial Statements, as described in Note 2 to those Financial Statements.
2.3.
Comparability of information
Balance items as of June 30, 2021 and September 30, 2020 presented in these Unaudited Condensed Interim Consolidated Financial Statements for comparative purposes arise from the financial statements as of and for such periods restated according to IAS 29 (See note 2.1). Certain items from prior periods have been reclassified for consistency purposes.
See Note 29 for information on the context in which the Group operates.
2.4.
Use of estimates
The preparation of Financial Statements at a certain date requires Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements. In the preparation of these financial statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same as the ones applied by the Group in the preparation of the Annual Financial Statements described in Note 3 to those Financial Statements.
3.
Seasonal effects on operations
The operations of the Group’s shopping malls are subject to seasonal effects, which affect the level of sales recorded by lessees. During summer time in Argentina (January and February), the lessees of shopping malls experience the lowest sales levels in comparison with the winter holidays (July) and Christmas and year-end holidays celebrated in December, when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping malls sales. Sale discounts at the end of each season also affect the business. As a consequence, for shopping mall operations, a higher level of business activity is expected in the period from July through December, compared to the period from January through June.
4.
Acquisitions and disposals
Significant acquisitions and disposals for the three-month period ended September 30, 2021 are detailed below. Significant acquisitions and disposals for the fiscal year ended June 30, 2021, are detailed in Note 4 to the Annual Financial Statements.
A.
Sale of real estate parcels in Hudson
On August 2, 2021, our subsidiary IRSA CP signed the bill for the sale of several parcels of the property called Casonas located in Hudson, Berazategui district. The price of the transaction was USD 0.6.
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B.
Sale of Mariano Acosta Plot
On August 9, 2021, the sales ticket for Mariano Acosta Plot was signed for a total amount of USD 0.7. With the signing of the ticket, the amount of USD 0.5 was received and the remaining balance of USD 0.2 at the signing of the deed.
C.
Sale of Merlo Plot
On August 9, 2021, the sales ticket for Merlo Plot was signed for a total amount of USD 0.7. With the signing of the ticket, the amount of USD 0.5 was received and the remaining balance of USD 0.2 at the signing of the deed.
D.
Sale of portfolio Hotels - Condor Agreement
On September 22, 2021, Condor Hospitality Trust S.A. (“Condor”) has signed a sale agreement for its portfolio of 15 hotels in the United States with B9 Cowboy Mezz A LLC, an affiliate of Blackstone Real Estate Partners.
In this context, Condor announced a Liquidation and Dissolution Plan with the intention of distributing certain net proceeds from the sale of the hotel portfolio to shareholders in one or more instalments.
The sale agreement and the implementation of the Liquidation Plan are subject to the approval of the Condor Shareholders' Meeting.
As of the date of these financial statement presentation, the Company owns, directly and indirectly, 3,191,213 ordinary shares representing 21.7% of the capital stock.
E.
IRSA – IRSA CP Merger Proposal
On September 30, 2021, IRSA & IRSA CP Boards of Directors approved the prior merger agreement between both companies and the corresponding special financial statements as of June 30, 2021, initiating the corporate reorganization process under the terms of art. 82 et seq. of the General Law of Companies. The merger process has particular characteristics given that they are two companies included in the public offering regime, reason why, not only apply the current provisions of the General Law of Companies but also the procedures established regarding reorganization of companies of the regulations of the “Comisión Nacional de Valores” (National Securities Commission) and the markets, both national and foreign, where their shares are listed.
The Merger is carried out in order to streamline the technical, administrative, operational and economic resources of both Companies, standing out among others: (a) the operation and maintenance of a single transactional information system and centralization of the entire accounting registration process; (b) presentation of a single financial statement to the different control agencies with the consequent cost savings in accounting and advisory fees, tariffs and other related expenses; (c) simplification of the accounting information reporting and consolidation process, as a consequence of the reduction that the merger would imply for the corporate structure as a whole; (d) removal of the IRSA CP public offering listing on BYMA and NASDAQ with the associated costs that this represents; (e) cost reduction for legal fees and tax filings; (f) increase in the percentage of the capital stock that is listed in the different markets, increasing the liquidity of the listed shares; (g) tax efficiencies and (h) preventively avoid the potential overlap of activities between the Companies.
The merger is subject to the approval of the shareholders' meeting of both companies whose call will be made once they have the administrative approval of the United States Securities and Exchange Commission, an entity to which they are subject since both companies list their shares in markets that operate in said jurisdiction.
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IRSA Inversiones y Representaciones Sociedad Anónima
Once the merger by absorption between IRSA as the absorbing company and IRSA CP as the absorbed company has been approved, the effective date will be July 1, 2021, date from which the transfer to the absorbing company of all the assets of the absorbed company will take effect, thereby incorporating all its rights and obligations, assets, and liabilities into the equity of the absorbing company, all subject to the required corporate approvals.
Likewise, and within the framework of the reorganization process, the Board of Directors has approved the exchange ratio, which has been established at 1.40 IRSA shares for each IRSA CP share, which is equivalent to 0.56 IRSA GDS for each ADS of IRSA CP.
The exchange of IRSA CP shares for IRSA shares will be carried out once the entire administrative process has been completed and once the registration has been made in the “Inspección General de Justicia” (General Inspection of Justice), a process that may take several months.
5.
Financial risk management and fair value estimates
These Financial Statements do not include all the information and disclosures on financial risk management; therefore, they should be read along with Note 5 to the Annual Financial Statements. There have been no changes in risk management or risk management policies applied by the Group since year-end.
From June 30, 2021 and up to the date of issuance of these Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities (either measured at fair value or amortized cost) except for what is mentioned in Note 30 in relation to COVID-19.
6.
Segment information
Segment information was prepared and classified according to the business in which the Group operates, they were descripted in Note 6 to the Annual Financial Statements.
Below is a summary of the Group’s operating segments and a reconciliation between the operating income according to segment information and the operating income of the Statements of Income and Other Comprehensive Income of the Group for the periods ended September 30, 2021 and 2020:
Three Months ended September 30, 2021 | |||||
Total | Joint ventures (1) | Expensesand collectivepromotion funds | Elimination of inter-segment transactions and non-reportable assets / liabilities (2) | Total as per statement of income / statement of financial position | |
Revenues | 3,430 | (24) | 985 | (9) | 4,382 |
Costs | (745) | 16 | (1,025) | - | (1,754) |
Gross profit / (loss) | 2,685 | (8) | (40) | (9) | 2,628 |
Net gain from fair value adjustment of investment properties | (6,609) | 115 | - | - | (6,494) |
General and administrative expenses | (752) | 2 | - | 13 | (737) |
Selling expenses | (337) | (1) | - | - | (338) |
Other operating results, net | 239 | 1 | 16 | (4) | 252 |
(Loss) / profit from operations | (4,774) | 109 | (24) | - | (4,689) |
Share of profit of associates and joint ventures | (80) | (75) | - | - | (155) |
Segment (loss) / profit | (4,854) | 34 | (24) | - | (4,844) |
Reportable assets | 217,894 | (1,588) | - | 20,798 | 237,104 |
Reportable liabilities | - | - | - | (147,880) | (147,880) |
Net reportable assets | 217,894 | (1,588) | - | (127,082) | 89,224 |
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Three Months ended September 30, 2020 | |||||
Total | Joint ventures (1) | Expensesand collectivepromotion funds | Elimination of inter-segment transactions and non-reportable assets / liabilities (2) | Total as per statement of income / statement of financial position | |
Revenues | 1,857 | (12) | 617 | (9) | 2,453 |
Costs | (993) | 21 | (701) | - | (1,673) |
Gross profit / (loss) | 864 | 9 | (84) | (9) | 780 |
Net gain from fair value adjustment of investment properties | 38,004 | (1,276) | - | - | 36,728 |
General and administrative expenses | (997) | 1 | - | 14 | (982) |
Selling expenses | (687) | 1 | - | - | (686) |
Other operating results, net | (26) | 2 | 45 | (5) | 16 |
Profit / (loss) from operations | 37,158 | (1,263) | (39) | - | 35,856 |
Share of profit of associates and joint ventures | (720) | 945 | - | - | 225 |
Segment profit / (loss) | 36,438 | (318) | (39) | - | 36,081 |
Reportable assets | 282,110 | (1,454) | - | 24,918 | 305,574 |
Reportable liabilities | - | - | - | (162,650) | (162,650) |
Net reportable assets | 282,110 | (1,454) | - | (137,732) | 142,924 |
(1) Represents the equity value of joint ventures that were proportionately consolidated for segment information.
(2) Includes deferred income tax assets, income tax and MPIT credits, trade and other receivables, investment in financial assets, cash and cash equivalents and intangible assets except for rights to receive future units under barter agreements, net of investments in associates with negative equity which are included in provisions in the amount of ARS 8 and ARS 26 as of September 30, 2021 and 2020 respectively.
Below is a summarized analysis of the segments from the Group’s Operations Center in Argentina for the periods ended September 30, 2021 and 2020:
Three Months ended September 30, 2021 | ||||||||
Operations Center in Argentina | ||||||||
Shopping Malls | Offices | Sales and developments | Hotels | International | Corporate | Others | Total | |
Revenues | 2,225 | 716 | - | 473 | 2 | - | 14 | 3,430 |
Costs | (274) | (48) | (31) | (296) | (7) | - | (89) | (745) |
Gross profit / (loss) | 1,951 | 668 | (31) | 177 | (5) | - | (75) | 2,685 |
Net (loss) / gain from fair value adjustment of investment properties (i) | (3,698) | (1,833) | (1,244) | - | 3 | - | 163 | (6,609) |
General and administrative expenses | (312) | (87) | (78) | (113) | (12) | (115) | (35) | (752) |
Selling expenses | (208) | (47) | (36) | (44) | - | - | (2) | (337) |
Other operating results, net | 26 | 19 | 185 | (3) | 4 | - | 8 | 239 |
(Loss) / profit from operations | (2,241) | (1,280) | (1,204) | 17 | (10) | (115) | 59 | (4,774) |
Share of profit of associates and joint ventures | - | - | - | - | 328 | - | (408) | (80) |
Segment (loss) / profit | (2,241) | (1,280) | (1,204) | 17 | 318 | (115) | (349) | (4,854) |
Investment properties and trading properties | 56,144 | 82,436 | 59,670 | - | 109 | - | 2,483 | 200,842 |
Investment in associates and joint ventures | - | - | - | - | 2,871 | - | 7,235 | 10,106 |
Other operating assets | 369 | 1,494 | 2,129 | 2,796 | - | 9 | 149 | 6,946 |
Operating assets | 56,513 | 83,930 | 61,799 | 2,796 | 2,980 | 9 | 9,867 | 217,894 |
(i) For the three-month period ended September 30, 2021, the net loss from fair value adjustment of investment properties was ARS 6,494. The net impact of the values in pesos of our properties was mainly a consequence of the change in macroeconomic conditions:
(a) loss of ARS 3,185.6 as a consequence of the variation in the projected income growth rate increase in the projected inflation rate and the conversion to dollars of the projected cash flow in pesos according to the exchange rate estimates used in the cash flow from shopping malls;
(b) positive impact of ARS 1,525.5 resulting from the conversion into pesos of the value of the shopping malls in dollars based on the exchange rate at the end of the period;
(c) an increase of 30 basis points in the discount rate, mainly due to an increase in the country-risk rate component of the WACC discount rate used to discount the cash flow, which led to a decrease in the value of the shopping malls of ARS 1,280.1.
(d) Additionally, due to the impact of the inflation adjustment, ARS 4,717.0 were reclassified for shopping malls from “Net gain from fair value adjustment” to “Inflation Adjustment” in the Statement of Income and Other Comprehensive Income.
(e) The value of our office buildings and other rental properties measured in real terms decreased by 2.4% during the three-month period ended as of September 30, 2021, due to the implicit exchange rate.
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Three Months ended September 30, 2020 | ||||||||
Operations Center in Argentina | ||||||||
Shopping Malls | Offices | Sales and developments | Hotels | International | Corporate | Others | Total | |
Revenues | 560 | 825 | 59 | 9 | 401 | - | 3 | 1,857 |
Costs | (204) | (69) | (148) | (197) | (337) | - | (38) | (993) |
Gross profit / (loss) | 356 | 756 | (89) | (188) | 64 | - | (35) | 864 |
Net gain from fair value adjustment of investment properties | 1,796 | 19,992 | 15,393 | - | 3 | - | 820 | 38,004 |
General and administrative expenses | (500) | (133) | (101) | (87) | (26) | (120) | (30) | (997) |
Selling expenses | (111) | (56) | (465) | (29) | (24) | - | (2) | (687) |
Other operating results, net | (28) | 2 | (9) | 12 | - | - | (3) | (26) |
Profit / (loss) from operations | 1,513 | 20,561 | 14,729 | (292) | 17 | (120) | 750 | 37,158 |
Share of profit of associates and joint ventures | - | - | (12) | - | (589) | - | (119) | (720) |
Segment profit / (loss) | 1,513 | 20,561 | 14,717 | (292) | (572) | (120) | 631 | 36,438 |
Investment properties and trading properties | 82,524 | 109,819 | 66,933 | - | 157 | - | 3,027 | 262,460 |
Investment in associates and joint ventures | - | - | 861 | - | 2,716 | - | 10,905 | 14,482 |
Other operating assetsInvestment | 431 | 360 | 1,233 | 2,979 | - | 9 | 156 | 5,168 |
Operating assets | 82,955 | 110,179 | 69,027 | 2,979 | 2,873 | 9 | 14,088 | 282,110 |
7.
Investments in associates and joint ventures
Changes in the Group’s investments in associates and joint ventures for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
September 30, 2021 | June 30, 2021 | |
Beginning of the period / year | 13,287 | 122,084 |
Increase of equity interest and capital contributions | 604 | 46 |
Decrease of interest in associate (iv) | - | (47,919) |
Deconsolidation (i) | - | (52,940) |
Share of profit | (155) | (3,317) |
Impairment (iii) | (2) | (684) |
Currency translation adjustment | (131) | (3,911) |
Other comprehensive income | - | (59) |
Others | 5 | (13) |
End of the period / year (ii) | 13,608 | 13,287 |
(i)
Corresponds to the deconsolidation of IDBD. See Note 4.G to the consolidated Financial Statements as of June 30, 2021.
(ii)
As of September 30, 2021 and June 30, 2021 includes ARS (8) and ARS (7), reflecting interests in companies with negative equity, which were disclosed in “Provisions” (Note 18).
(iii)
Corresponds to the investment in TGLT S.A.
(iv)
Corresponds to the sale of the remaining equity interest in Shufersal in July 2020.
% ownership interest | Value of Group's interest in equity | Group's interest in comprehensive income / (loss) | ||||
Name of the entity | September 30, 2021 | June 30, 2021 | September 30, 2021 | June 30, 2021 | September 30, 2021 | September 30, 2020 |
Associates | ||||||
New Lipstick | 49.96% | 49.96% | 226 | 238 | (4) | (503) |
BHSA | 29.91% | 29.91% | 5,499 | 5,859 | (359) | (91) |
Condor | 21.70% | 18.89% | 2,564 | 1,770 | 331 | (84) |
Quality | 50.00% | 50.00% | 3,154 | 3,199 | (72) | 948 |
La Rural SA | 50.00% | 50.00% | 178 | 185 | (6) | 24 |
TGLT | 27.82% | 27.82% | 1,001 | 1,024 | (23) | (59) |
Other joint ventures | N/A | N/A | 986 | 1,012 | (153) | (2,910) |
Total associates and joint ventures | 13,608 | 13,287 | (286) | (2,675) |
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Below is additional information about the Group’s investments in associates and joint ventures:
Latest financial statement issued | ||||||
Name of the entity | Place of business / Country of incorporation | Main activity | Common shares 1 vote | Share capital (nominal value) | Profit / (loss) for the period | Shareholders’ equity |
Associates | ||||||
New Lipstick | U.S. | Real estate | N/A | - | (*) (0) | (*) (41) |
BHSA | Argentina | Financial | 448,689,072 | (**) 1,500 | (**) (685) | (**) 18,145 |
Condor | EE.UU. | Hotel | 3,191,214 | (*) 232 | (*) (125) | (*) 119 |
Quality | Argentina | Real estate | 406,316,259 | 406 | (144) | 6,206 |
La Rural SA | Argentina | Organization of events | 714,498 | 1 | (2) | 101 |
TGLT | Argentina | Real estate | 257,320,997 | 925 | (82) | 4,635 |
(*)
Amounts in millions of US Dollars under USGAAP. Condor’s year-end falls on December 31, so the Group estimates their interest with a three-month lag, including material adjustments, if any.
(**)
Information as of September 30, 2021 according to IFRS.
Puerto Retiro (joint venture):
There have been no changes to what was informed in Note 8 to the Annual Financial Statements.
8.
Investment properties
Changes in the Group’s investment properties for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Three Months ended September 30, 2021 | Year ended June 30, 2021 | ||||
Rental properties | Undeveloped parcels of land | Properties under development | Total | Total | |
Fair value at the beginning of the period / year | 137,155 | 59,212 | 3,787 | 200,154 | 373,502 |
Additions | 224 | 3 | 260 | 487 | 1,133 |
Capitalized leasing costs | 5 | - | - | 5 | 24 |
Amortization of capitalized leasing costs (i) | (5) | - | - | (5) | (14) |
Transfers | - | - | - | - | (579) |
Deconsolidation | - | - | - | - | (128,458) |
Disposals | (12) | (233) | - | (245) | (23,415) |
Currency translation adjustment | (5) | - | (2) | (7) | (13,518) |
Net (loss) from fair value adjustment | (5,233) | (1,244) | (17) | (6,494) | (8,521) |
Fair value at the end of the period / year | 132,129 | 57,738 | 4,028 | 193,895 | 200,154 |
(i)
Amortization charges of capitalized leasing costs were included in “Costs” in the Statements of Income (Note 21).
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IRSA Inversiones y Representaciones Sociedad Anónima
The following amounts have been recognized in the Statements of Income:
09.30.2021 | 09.30.2020 | |
Rental and services income | 3,909 | 1,989 |
Direct operating expenses | (1,417) | (996) |
Development reimbursements / (expenses) | (32) | (26) |
Net realized gain from fair value adjustment of investment properties (i) (ii) | 122 | 8,163 |
Net unrealized gain from fair value adjustment of investment properties | (6,616) | 28,565 |
(i)
As of September 30, 2021 includes ARS 18 for the sale of Casona Hudson, ARS 55 for the sale of Merlo Plot and ARS 49 for the sale of Mariano Acosta Plot. As of September 30, 2020 includes ARS 2,732 for the sale of Boston Tower and ARS 5,431 for the sale of Bouchard 710.
(ii)
As of September 30, 2021, (ARS 99) corresponds to the realized result from fair value adjustment for the period ((ARS 68) for the sale of Casona Hudson, (ARS 15) for the sale of Merlo Plot and (ARS 16) for the sale of Mariano Acosta Plot) and ARS 221 for realized result from fair value adjustment made in previous years (ARS 86 for the sale of Casona Hudson, ARS 70 for the sale of Merlo Plot and ARS 65 for the sale of Mariano Acosta Plot). As of September 30, 2020 ARS 285 corresponds to net realized fair value adjustment on investment properties for the period (ARS 797 for the sale of Boston Tower and (ARS 512) for the sale of Bouchard 710) and ARS 7,878 corresponds to the realized fair value adjustment made in previous years (ARS 1,935 for the sale of Boston Tower and ARS 5,943 for the sale of Bouchard 710).
Valuation techniques are described in Note 9 to the Annual Financial Statements. There were no changes to such techniques. The Group has reassessed the assumptions September 30, 2021, considering the market conditions existing at that date due to the pandemic described in Note 29, incorporating the effect of the variation in the exchange rate in other assets denominated in US Dollars.
Costa Urbana –former Solares de Santa María– Costanera Sur, Buenos Aires City (IRSA)
The Company owns an important property of more than 70 hectares, which was acquired in 1997, facing the Río de la Plata on the Costanera Sur, south of Puerto Madero, 10 minutes from downtown Buenos Aires, originally called “Solares de Santa María” which was renamed “Costa Urbana”. The Company intends to create a mixed-use development including residential complexes, offices, stores, hotels, sports clubs and service areas (schools, supermarkets and parking spaces).
After some unsuccessful approval attempts with the City of Buenos Aires Government and its Legislature, and after new negotiations carried out in recent years, the Company has signed a new agreement with the Executive Power of the City of Buenos Aires under the “Urban Agreement” modality framed within Decree No. 475 published on December 30, 2020, by means of which it approved the regulation of article 10.9. “Urban Agreements” of Law No. 6099 (text consolidated by Law No. 6347). According to article 10.9 of the Urban Code, these agreements are contracts entered into between the owner of a land/property and the Executive Power, which imply a regulatory change that must be approved by the City of Buenos Aires Legislature. Under this modality, a new urbanization project was proposed, in which more than 67% of the property’s surface is destined for public use, maintaining the original Total Occupancy Factor (“FOT 1”) that implies a capacity to develop more than 895,000 sqm. The Bill was raised for treatment in the first reading on the Legislature premises and it was approved without abstentions on August 19, 2021 by 36 votes out of a total of 55. As part of the approval process, the non-binding Public Hearing was held from October 15, 2021 to November 8, 2021 and is pending the treatment in second reading for final legislative approval.
The accounting valuation as of September 30, 2021 does not reflect any of these potential changes, valuing the land with the same methodology and assumptions as in previous years.
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9.
Property, plant and equipment
Changes in the Group’s property, plant and equipment for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Three Months ended September 30, 2021 | Year ended June 30, 2021 | ||||
Buildings and facilities | Machinery and equipment | Others | Total | Total | |
Costs | 7,733 | 2,746 | 632 | 11,111 | 229,607 |
Accumulated depreciation | (3,562) | (2,560) | (458) | (6,580) | (167,677) |
Net book amount at the beginning of the period / year | 4,171 | 186 | 174 | 4,531 | 61,930 |
Additions | 22 | 20 | 55 | 97 | 1,810 |
Disposals | - | - | - | - | (99) |
Deconsolidation | - | - | - | - | (52,444) |
Reclassification to assets assets held for sale | - | - | - | - | (31) |
Currency translation adjustment | - | - | - | - | (4,191) |
Transfers | - | - | - | - | 1,081 |
Depreciation charges (i) | (77) | (21) | (9) | (107) | (3,525) |
Balances at the end of the period / year | 4,116 | 185 | 220 | 4,521 | 4,531 |
Costs | 7,755 | 2,766 | 687 | 11,208 | 11,111 |
Accumulated depreciation | (3,639) | (2,581) | (467) | (6,687) | (6,580) |
Net book amount at the end of the period / year | 4,116 | 185 | 220 | 4,521 | 4,531 |
(i)
As of September 30, 2021, depreciation charges of property, plant and equipment were recognized as follows: ARS 75 in "Costs" and ARS 32 in "General and administrative expenses", respectively in the Statement of Income (Note 21).
10.
Trading properties
Changes in the Group’s trading properties for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Three Months ended September 30, 2021 | Year ended June 30, 2021 | ||||
Completed properties | Properties under development | Undeveloped sites | Total | Total | |
Beginning of the period / year | 132 | 877 | 913 | 1,922 | 11,773 |
Additions | - | 44 | 1 | 45 | 880 |
Deconsolidation | - | - | - | - | (8,404) |
Currency translation adjustment | - | (39) | - | (39) | (758) |
Disposals | - | - | - | - | (1,569) |
End of the period / year | 132 | 882 | 914 | 1,928 | 1,922 |
Non-current | 1,803 | 1,797 | |||
Current | 125 | 125 | |||
Total | 1,928 | 1,922 |
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IRSA Inversiones y Representaciones Sociedad Anónima
11.
Intangible assets
Changes in the Group’s intangible assets for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Three Months ended September 30, 2021 | Year ended June 30, 2021 | ||||
Goodwill | Information systems and software | Contracts and others | Total | Total | |
Costs | 148 | 862 | 2,588 | 3,598 | 115,495 |
Accumulated amortization | - | (638) | (337) | (975) | (69,890) |
Net book amount at the beginning of the period / year | 148 | 224 | 2,251 | 2,623 | 45,605 |
Additions | - | 7 | 1 | 8 | 2,377 |
Disposals | - | - | (123) | (123) | (121) |
Impairment | - | - | - | - | (44) |
Deconsolidation | - | - | - | - | (39,939) |
Currency translation adjustment | - | - | - | - | (2,702) |
Amortization charges (i) | - | (28) | - | (28) | (2,553) |
Balances at the end of the period / year | 148 | 203 | 2,129 | 2,480 | 2,623 |
Costs | 148 | 869 | 2,466 | 3,483 | 3,598 |
Accumulated amortization | - | (666) | (337) | (1,003) | (975) |
Net book amount at the end of the period / year | 148 | 203 | 2,129 | 2,480 | 2,623 |
(i)
As of September 30, 2021, amortization charges were recognized in the amount of ARS 9 in "Costs" and ARS 19 in "General and administrative expenses", in the Statement of Income (Note 21).
12.
Right-of-use assets
The Group’s right-of-use assets as of September 30, 2021 and June 30, 2021 are the following:
September 30, 2021 | June 30, 2021 | |
Real Estate | 14 | 12 |
Machinery and equipment | 4 | 4 |
Others | 853 | 870 |
Total Right-of-use assets | 871 | 886 |
Non-current | 871 | 886 |
Total | 871 | 886 |
The depreciation charge of the right-of use-assets is detailed below:
September 30, 2021 | September 30, 2020 | |
Real Estate | 12 | 1,412 |
Telecommunications | - | 323 |
Others | 2 | 297 |
Total depreciation of right-of-use assets (i) | 14 | 2,032 |
(i)
As of September 30, 2021, amortization charges were recognized in the amount of ARS 11 in "Costs" and ARS 3 in "General and administrative expenses", in the Statement of Income (Note 21). Includes ARS 1,996 charged to the result of discontinued operations as of September 30, 2020
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13.
Financial instruments by category
This note presents the financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line in the Consolidated Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. For further information related to fair value hierarchy refer to Note 13 to the Annual Financial Statements. Financial assets and financial liabilities as of September 30, 2021 are the following:
Financial assets at amortized cost | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | |||
Level 1 | Level 2 | Level 3 | |||||
September 30, 2021 | |||||||
Assets as per Statement of Financial Position | |||||||
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) | 8,332 | - | - | - | 8,332 | 5,277 | 13,609 |
Investments in financial assets: | |||||||
- Public companies’ securities | - | 327 | - | - | 327 | - | 327 |
- Bonds | - | 2,957 | - | - | 2,957 | - | 2,957 |
- Investments in financial assets with quotation | 11 | 833 | - | 54 | 898 | - | 898 |
Cash and cash equivalents: | |||||||
- Cash at bank and on hand | 1,311 | - | - | - | 1,311 | - | 1,311 |
- Short-term investments | - | 842 | - | - | 842 | - | 842 |
Total assets | 9,654 | 4,959 | - | 54 | 14,667 | 5,277 | 19,944 |
Financial liabilities at amortized cost | Financial liabilities at fair value through profit or loss | Subtotal financial liabilities | Non-financial liabilities | Total | |||
Level 1 | Level 2 | Level 3 | |||||
September 30, 2021 | |||||||
Liabilities as per Statement of Financial Position | |||||||
Trade and other payables | 3,062 | - | - | - | 3,062 | 4,392 | 7,454 |
Borrowings (excluding finance leases) | 65,082 | - | - | - | 65,082 | - | 65,082 |
Derivative financial instruments: | |||||||
- Swaps | - | - | 45 | - | 45 | - | 45 |
Total liabilities | 68,144 | - | 45 | - | 68,189 | 4,392 | 72,581 |
Financial assets and financial liabilities as of June 30, 2021 were as follows:
Financial assets at amortized cost | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | |||
Level 1 | Level 2 | Level 3 | |||||
June 30, 2021 | |||||||
Assets as per Statements of Financial Position | |||||||
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) | 7,902 | - | - | - | 7,902 | 5,401 | 13,303 |
Investments in financial assets: | |||||||
- Public companies’ securities | - | 1,067 | - | - | 1,067 | - | 1,067 |
- Bonds | - | 2,963 | - | - | 2,963 | - | 2,963 |
- Investments in financial assets with quotation | 11 | 698 | - | 52 | 761 | - | 761 |
Cash and cash equivalents: | |||||||
- Cash at bank and on hand | 1,232 | - | - | - | 1,232 | - | 1,232 |
- Short term investments | - | 878 | - | - | 878 | - | 878 |
Total assets | 9,145 | 5,606 | - | 52 | 14,803 | 5,401 | 20,204 |
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IRSA Inversiones y Representaciones Sociedad Anónima
Financial liabilities at amortized cost | Financial liabilities at fair value through profit or loss | Subtotal financial liabilities | Non-financial liabilities | Total | |||
Level 1 | Level 2 | Level 3 | |||||
June 30, 2021 | |||||||
Liabilities as per Statement of Financial Position | |||||||
Trade and other payables | 3,152 | - | - | - | 3,152 | 3,941 | 7,093 |
Borrowings (excluding finance leases) | 67,900 | - | - | - | 67,900 | - | 67,900 |
Derivative financial instruments: | |||||||
- Swaps | - | - | 62 | - | 62 | - | 62 |
Total liabilities | 71,052 | - | 62 | - | 71,114 | 3,941 | 75,055 |
The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value, except for borrowings (Note 17). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant. Fair values are based on discounted cash flows (Level 3).
The valuation models used by the Group for the measurement of Level 2 and Level 3 instruments are no different from those used as of June 30, 2021.
As of September 30, 2021, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group, except as mentioned in Note 29.
The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments. Details of such models are presented in the following table. When no quoted prices are available in an active market, fair values (particularly with derivatives) are based on recognized valuation methods.
Description | Pricing model / method | Parameters | Fair value hierarchy | Range |
Condor´s Promissory note | Theoretical price | Price of the underlying (Market price) and volatility of the share (historical) and market interest rate (Libor Curve). | Level 3 | Price of the underlying 6 to 8. Volatility of the share 57% to 77%. Market interest rate 1.15% to 1.75% |
Derivative financial instruments – Swaps | Theoretical price | Underlying asset price and volatility | Level 2 and 3 | - |
The following table presents the changes in Level 3 instruments as of September 30, 2021 and June 30, 2021:
Investments in financial assets - Others | Total as of September 30, 2021 | Total as of June 30, 2021 | |
Balances at beginning of the period / year | 52 | 52 | 5,355 |
Currency translation adjustment | (2) | (2) | (5) |
Deconsolidation | - | - | (5,308) |
Gain for the period / year (i) | 4 | 4 | 10 |
Balances at the end of the period / year | 54 | 54 | 52 |
(i)
Included within “Financial results, net” in the Statements of Income.
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IRSA Inversiones y Representaciones Sociedad Anónima
14.
Trade and other receivables
Group’s trade and other receivables as of September 30, 2021 and June 30, 2021 are as follows:
September 30, 2021 | June 30, 2021 | |
Sale, leases and services receivables | 5,434 | 5,019 |
Less: Allowance for doubtful accounts | (968) | (930) |
Total trade receivables | 4,466 | 4,089 |
Prepaid expenses | 703 | 880 |
Borrowings, deposits and others | 3,817 | 4,010 |
Advances to suppliers | 952 | 1,038 |
Tax receivables | 1,606 | 1,274 |
Others | 1,097 | 1,082 |
Total other receivables | 8,175 | 8,284 |
Total trade and other receivables | 12,641 | 12,373 |
Non-current | 3,339 | 3,111 |
Current | 9,302 | 9,262 |
Total | 12,641 | 12,373 |
Movements on the Group’s allowance for doubtful accounts were as follows:
September 30, 2021 | June 30, 2021 | |
Beginning of the period / year | 930 | 6,131 |
Additions | 146 | 825 |
Recovery | (34) | (250) |
Currency translation adjustment | 9 | (302) |
Deconsolidation | - | (5,074) |
Receivables written off during the period/year as uncollectable | - | (31) |
Inflation adjustment | (83) | (369) |
End of the period / year | 968 | 930 |
The creation and release of the allowance for doubtful accounts have been included in “Selling expenses” in the Statement of Income (Note 21).
15.
Cash flow and cash equivalent information
Following is a detailed description of cash flows generated by the Group’s operations for the three-month period ended September 30, 2021 and 2020:
Note | Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
(Loss) / profit for the period | (1,014) | 12,716 | |
Profit for the period from discontinued operations | - | 9,752 | |
Adjustments for: | |||
Income tax | 19 | (2,466) | 12,133 |
Amortization and depreciation | 21 | 149 | 186 |
Net gain / (loss) from fair value adjustment of investment properties | 6,494 | (36,728) | |
Financial results, net | (1,611) | (135) | |
Provisions and allowances | 124 | 108 | |
Share of (profit) / loss of associates and joint ventures | 7 | 155 | (225) |
Changes in operating assets and liabilities: | |||
Decrease in inventories | 4 | 8 | |
(Increase) / decrease in trading properties | (14) | 390 | |
Decrease in restricted assets | - | 1,764 | |
Decrease / (increase) in trade and other receivables | 19 | (980) | |
(Decrease) / increase in trade and other payables | (52) | 2,874 | |
Decrease in salaries and social security liabilities | (86) | (111) | |
Decrease in provisions | (43) | (17) | |
Net cash generated by continuing operating activities before income tax paid | 1,659 | 1,735 | |
Net cash generated by discontinued operating activities before income tax paid | - | 3,667 | |
Net cash generated by operating activities before income tax paid | 1,659 | 5,402 |
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IRSA Inversiones y Representaciones Sociedad Anónima
The following table presents a detail of significant non-cash transactions occurred in the three-month period ended September 30, 2021 and 2020:
Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
Increase in rights of use through increased lease liabilities | - | 37 |
Increase of trade and other receivables through a decrease of associates and joint ventures | - | 17 |
Decrease of interest in associates and joint ventures | - | 47,236 |
Increase of investment properties through an increase of borrowings | - | 124 |
Increase of trading properties through an increase of trade and other payables | - | 18 |
Distribution of dividends in shares | 575 | - |
Increase in investment properties through an increase in borrowings | 117 | - |
16.
Trade and other payables
Group’s trade and other payables as of September 30, 2021 and June 30, 2021 were as follows:
September 30, 2021 | June 30, 2021 | |
Trade payables | 998 | 1,125 |
Advances from sales, leases and services | 3,356 | 3,293 |
Accrued invoices | 979 | 939 |
Total trade payables | 5,333 | 5,357 |
Taxes payable | 1,119 | 746 |
Other payables | 1,002 | 990 |
Total other payables | 2,121 | 1,736 |
Total trade and other payables | 7,454 | 7,093 |
Non-current | 1,702 | 1,516 |
Current | 5,752 | 5,577 |
Total | 7,454 | 7,093 |
17.
Borrowings
The breakdown of the Group’s borrowings as of September 30, 2021 and June 30, 2021 was as follows:
Total as of September 30, 2021 | Total as of June 30, 2021 | Fair value as of September 30, 2021 | Fair value as of June 30, 2021 | |
NCN | 55,473 | 56,700 | 53,715 | 53,306 |
Bank loans | 2,687 | 3,405 | 2,687 | 3,419 |
Bank overdrafts | 4,993 | 5,775 | 4,993 | 5,770 |
Other borrowings | 1,595 | 1,511 | 1,595 | 1,511 |
AABE Debt | 281 | 282 | 281 | 282 |
Loans with non-controlling interests | 53 | 227 | 53 | 227 |
Total borrowings | 65,082 | 67,900 | 63,324 | 64,515 |
Non-current | 51,226 | 51,061 | ||
Current | 13,856 | 16,839 | ||
Total | 65,082 | 67,900 |
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IRSA Inversiones y Representaciones Sociedad Anónima
Issuance of IRSA Non-convertible Notes
On August 26, 2021, the Company issued USD 58.1 Non-convertible Notes in the local market through the following instruments:
●
Series XIII: denominated in dollars and payable in pesos at the applicable exchange rate for USD 58.1 million at a fixed rate of 3.9%, with semi-annual payments. The principal payment will be in three installments, counted from the date of issuance: the first for 25% of the nominal value on August 26, 2023; the second for 25% on February 26, 2024, and the third for 50% of the nominal value on August 26, 2024. The price of issuance was 100.0% of the nominal value.
The funds have been used to refinance short-term liabilities.
18.
Provisions
The table below shows the movements in the Group's provisions categorized by type:
Three Months ended September 30, 2021 | Year ended June 30, 2021 | |||
Legal claims (i) | Investments in associates and joint ventures (ii) | Total | Total | |
Beginning of period / year | 279 | 7 | 286 | 9,033 |
Additions | 25 | - | 25 | 11 |
Share of loss of associates | - | 1 | 1 | - |
Deconsolidation | - | - | - | (7,754) |
Recovery | (12) | - | (12) | (57) |
Used during the period / year | (29) | - | (29) | (141) |
Inflation adjustment | (23) | - | (23) | (125) |
Currency translation adjustment | - | - | - | (681) |
End of period / year | 240 | 8 | 248 | 286 |
Non-current | 101 | 125 | ||
Current | 147 | 161 | ||
Total | 248 | 286 |
(i)
Additions and recovery are included in "Other operating results, net".
(ii)
Corresponds to investments in Puerto Retiro, company that has negative equity. The increase and recovery are included in "Share of profit of associates and joint ventures ".
There were no significant changes to the processes mentioned in Note 18 to the Annual Financial Statements.
19.
Taxes
The details of the Group’s income tax, is as follows:
September 30, 2021 | September 30, 2020 | |
Current income tax (i) | (1,426) | (8) |
Deferred income tax | 3,892 | (12,125) |
Income tax from continuing operations | 2,466 | (12,133) |
(i)
If the merger with IRSA CP is approved by the General Shareholders' Meeting, the income tax liability from the absorbed company will be offset with the unrecognized tax loss carryforwards which amounts to ARS 12,869.
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IRSA Inversiones y Representaciones Sociedad Anónima
Below is a reconciliation between income tax recognized and the amount which would result from applying the prevailing tax rate on profit before income tax for the three-month period ended September 30, 2021 and 2020:
Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
Profit from continuing operations at tax rate applicable in the respective countries | 1,218 | (10,380) |
Permanent differences: | ||
Share of profit of associates and joint ventures | 54 | (67) |
Unrecognized tax loss carryforwards | 463 | (3,682) |
Inflation adjustment permanent difference | 2,471 | 680 |
Tax rate differential | (12) | 2,494 |
Non-taxable profit, non-deductible expenses and others | (279) | 338 |
Tax inflation adjustment | (1,449) | (1,516) |
Income tax from continuing operations | 2,466 | (12,133) |
The gross movement in the deferred income tax account is as follows:
September 30, 2021 | June 30, 2021 | |
Beginning of period / year | (74,643) | (71,245) |
Currency translation adjustment | - | 1,836 |
Deconsolidation | - | 17,150 |
Assets held for sale | - | 42 |
Revaluation surplus reserve | - | (91) |
Deferred income tax charge | 3,892 | (22,335) |
End of period / year | (70,751) | (74,643) |
Deferred income tax assets | 560 | 487 |
Deferred income tax liabilities | (71,311) | (75,130) |
Deferred income tax liabilities, net | (70,751) | (74,643) |
20.
Revenues
Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
Rental and services income | 3,909 | 1,989 |
Sales of trading properties and developments | - | 455 |
Revenue from hotels operation and tourism services | 473 | 9 |
Total Group’s revenues | 4,382 | 2,453 |
21.
Expenses by nature
The Group discloses expenses in the statements of income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosures regarding expenses by nature and their relationship to the function within the Group.
Costs | General and administrative expenses | Selling expenses | Total as of September 30, 2021 | Total as of September 30, 2020 | |
Cost of sale of goods and services | 39 | - | - | 39 | 448 |
Salaries, social security costs and other personnel expenses | 643 | 310 | 20 | 973 | 848 |
Depreciation and amortization | 95 | 54 | - | 149 | 186 |
Fees and payments for services | 52 | 106 | 15 | 173 | 311 |
Maintenance, security, cleaning, repairs and others | 530 | 61 | 1 | 592 | 440 |
Advertising and other selling expenses | 175 | - | 11 | 186 | 37 |
Taxes, rates and contributions | 165 | 21 | 176 | 362 | 477 |
Director´s fees | - | 142 | - | 142 | 435 |
Leases and service charges | 40 | 10 | 1 | 51 | 59 |
Allowance for doubtful accounts, net | - | - | 111 | 111 | 69 |
Other expenses | 15 | 33 | 3 | 51 | 31 |
Total as of September 30, 2021 | 1,754 | 737 | 338 | 2,829 | - |
Total as of September 30, 2020 | 1,673 | 982 | 686 | - | 3,341 |
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IRSA Inversiones y Representaciones Sociedad Anónima
22.
Cost of goods sold and services provided
Total as of September 30, 2021 | Total as of September 30, 2020 | |
Inventories at the beginning of the period | 2,001 | 19,458 |
Purchases and expenses | 1,794 | 11,742 |
Currency translation adjustment | (37) | 12,597 |
Disposals | - | (962) |
Deconsolidation | - | (5,149) |
Inventories at the end of the period | (2,004) | (2,456) |
Total costs | 1,754 | 35,230 |
The following table presents the composition of the Group’s inventories as of September 30, 2021 and June 30, 2021:
Total as of September 30, 2021 | Total as of June 30, 2021 | |
Real estate | 1,928 | 1,922 |
Others | 76 | 79 |
Total inventories at the end of the period (*) | 2,004 | 2,001 |
(*) Inventories include trading properties and inventories.
23.
Other operating results, net
Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
Donations | (16) | (28) |
Lawsuits and other contingencies | (13) | (39) |
Operating interest expense | 66 | 64 |
Others | 215 | 19 |
Total other operating results, net | 252 | 16 |
24.
Financial results, net
Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
Finance income: | ||
- Interest income | 62 | 27 |
- Dividend income | - | 18 |
- Other finance income | - | 41 |
Total finance income | 62 | 86 |
Finance costs: | ||
- Interest expenses | (1,863) | (2,265) |
- Loss on debt swap | - | (7) |
- Other finance costs | (141) | (299) |
Subtotal finance costs | (2,004) | (2,571) |
Capitalized finance costs | - | 142 |
Total finance costs | (2,004) | (2,429) |
Other financial results: | ||
- Fair value gain of financial assets and liabilities at fair value through profit or loss, net | 124 | 1,220 |
- Exchange differences, net | 2,842 | (13) |
- (Loss) / gain from repurchase of negotiable obligations | (1) | 31 |
- Gain / (loss) from derivative financial instruments, net | 3 | (286) |
- Other financial results | (2) | - |
Total other financial results | 2,966 | 952 |
- Inflation adjustment | 340 | (89) |
Total financial results, net | 1,364 | (1,480) |
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IRSA Inversiones y Representaciones Sociedad Anónima
25.
Related party transactions
The following is a summary of the balances with related parties as of September 30, 2021 and June 30, 2021:
Item | September 30, 2021 | June 30, 2021 |
Trade and other receivables | 2,639 | 3,258 |
Investments in financial assets | 1,596 | 1,721 |
Borrowings | (983) | (986) |
Trade and other payables | (652) | (499) |
Total | 2,600 | 3,494 |
Related party | September 30, 2021 | June 30, 2021 | Description of transaction | Item |
New Lipstick LLC | 24 | 25 | Reimbursement of expenses receivable | Trade and other receivable |
Condor | - | 601 | Public companies securities | Trade and other receivable |
312 | 313 | Loans granted | Trade and other receivable | |
6 | 5 | Others | Trade and other receivable | |
50 | 52 | Others | Investment in financial assets | |
Lipstick Management LLC | (167) | (175) | Loans obtained | Borrowings |
Metropolitan 885 Third Av. LLC | (489) | (516) | Loans obtained | Borrowings |
La Rural S.A. | 73 | 80 | Loans granted | Trade and other receivable |
204 | 223 | Dividends | Trade and other receivable | |
(3) | (14) | Leases and/or rights of use payable | Trade and other payables | |
Other associates and joint ventures | - | 2 | Reimbursement of expenses receivable | Trade and other receivable |
(38) | (39) | Loans obtained | Borrowings | |
14 | 7 | Leases and/or rights of use receivable | Trade and other receivable | |
(2) | (2) | Unpaid contributions | Trade and other payables | |
7 | 7 | Reimbursement of expenses receivable | Trade and other receivable | |
(97) | (115) | NCN | Borrowings | |
(24) | (80) | Others | Trade and other payables | |
12 | 26 | Others | Trade and other receivable | |
1 | 1 | Share based payments | Trade and other payables | |
(2) | (7) | Lease liabilities | Trade and other payables | |
9 | 8 | Loans granted | Trade and other receivable | |
Total associates and joint ventures | (110) | 402 | ||
Cresud | 38 | 14 | Reimbursement of expenses receivable | Trade and other receivable |
(159) | (97) | Corporate services payable | Trade and other payables | |
1,546 | 1,669 | NCN | Investment in financial assets | |
(227) | (157) | Others | Trade and other payables | |
(3) | (3) | Share based payments | Trade and other payables | |
Total parent company | 1,195 | 1,426 | ||
Futuros y Opciones S.A. | - | (104) | Loans obtained | Borrowings |
3 | 3 | Others | Trade and other receivable | |
Helmir S.A. | (33) | (35) | NCN | Borrowings |
Total subsidiaries of parent company | (30) | (136) | ||
Directors | (230) | (138) | Fees for services received | Trade and other payables |
5 | 5 | Advances | Trade and other receivable | |
Finkelstein | (159) | - | Loans obtained | Borrowings |
Yad Levim LTD | 1,681 | 1,758 | Loans granted | Trade and other receivable |
Others (1) | (1) | (1) | Legal Services | Trade and other payables |
- | (2) | Loans obtained | Borrowings | |
237 | 160 | Others | Trade and other receivable | |
(2) | (1) | Management Fee | Trade and other payables | |
14 | 21 | Reimbursement of expenses receivable | Trade and other receivable | |
Total directors and others | 1,545 | 1,802 | ||
Total at the end of the period / year | 2,600 | 3,494 |
(1)
Includes CAMSA, Estudio Zang, Bergel & Viñes, Austral Gold, Fundación IRSA, Hamonet S.A., CAM Communication LP, Gary Gladstein and Fundación Museo de los Niños.
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IRSA Inversiones y Representaciones Sociedad Anónima
The following is a summary of the results with related parties for the three-month periods ended September 30, 2021 and 2020:
Related party | Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | Description of transaction |
BACS | 20 | 43 | Leases and/or rights of use |
BHN Vida S.A | 6 | - | Leases and/or rights of use |
BHN Seguros Generales S.A. | 6 | - | Financial operations |
Helmir | 1 | - | Financial operations |
Other associates and joint ventures | (8) | 14 | Leases and/or rights of use |
- | (14) | Corporate services | |
Total associates and joint ventures | 25 | 43 | |
Cresud | (43) | 6 | Leases and/or rights of use |
(212) | (311) | Corporate services | |
(2) | 456 | Financial operations | |
Total parent company | (257) | 151 | |
Directors | (140) | (785) | Fees and remunerations |
Senior Management | (24) | - | Fees and remunerations |
14 | - | Financial operations | |
(5) | - | Legal services | |
- | (30) | Fees and remuneration | |
Total others | (155) | (815) | |
Total at the end of the period | (387) | (621) |
(1)
Includes Isaac Elsztain e Hijos, CAMSA. Hamonet S.A., Ramat Hanassi, Estudio Zang, Bergel y Viñes, Austral Gold, La Rural, New Lipstick, Condor, TGLT and Fundación IRSA.
The following is a summary of the transactions with related parties for the three-month periods ended September 30, 2021 and 2020:
Related party | Three Months ended September 30, 2021 | Three Months ended September 30, 2020 |
Quality | 27 | 12 |
Condor | 577 | - |
Total capital contributions | 604 | 12 |
We Are Appa (former Pareto) | - | 81 |
Total other transactions | - | 81 |
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IRSA Inversiones y Representaciones Sociedad Anónima
26.
CNV General Resolution N° 622
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622, below there is a detail of the notes to the Unaudited Condensed Interim Consolidated Financial Statements that disclose the information required by the Resolution in Exhibits.
Exhibit A - Property, plant and equipment | Note 8 Investment properties and Note 9 Property, plant and equipment |
Exhibit B - Intangible assets | Note 11 Intangible assets |
Exhibit C - Investment in associates | Note 7 Investments in associates and joint ventures |
Exhibit D - Other investments | Note 13 Financial instruments by category |
Exhibit E – Provisions | Note 18 Provisions |
Exhibit F - Cost of sales and services provided | Note 22 Cost of goods sold and services provided |
Exhibit G - Foreign currency assets and liabilities | Note 27 Foreign currency assets and liabilities |
27.
Foreign currency assets and liabilities
Book amounts of foreign currency assets and liabilities are as follows:
Item / Currency (1) | Amount (2) | Peso exchange rate (3) | Total as of 09.30.2021 | Total as of 06.30.2021 |
Assets | ||||
Trade and other receivables | ||||
US Dollar | 35 | 98.540 | 3,433 | 3,552 |
Euros | 0 | 113.883 | 26 | 26 |
Receivables with related parties: | ||||
US Dollar | 20 | 98.740 | 2,018 | 2,100 |
Total trade and other receivables | 5,477 | 5,678 | ||
Investments in financial assets | ||||
US Dollar | 8 | 98.540 | 770 | 738 |
Pounds | 1 | 132.625 | 82 | 109 |
Nuevo Israel Shekel | 20 | 30.590 | 618 | 667 |
Investments with related parties: | ||||
US Dollar | 23 | 98.740 | 2,282 | 2,450 |
Total investments in financial assets | 3,752 | 3,964 | ||
Cash and cash equivalents | ||||
US Dollar | 10 | 98.540 | 1,012 | 1,152 |
Euros | 0 | 113.883 | 1 | 1 |
Total cash and cash equivalents | 1,013 | 1,153 | ||
Total Assets | 10,242 | 10,795 | ||
Liabilities | ||||
Trade and other payables | ||||
US Dollar | 11 | 98.740 | 1,111 | 1,321 |
Euros | 0 | 114.361 | 14 | 35 |
Payables to related parties: | ||||
US Dollar | 0 | 98.740 | 7 | 58 |
Total Trade and other payables | 1,132 | 1,414 | ||
Borrowings | ||||
US Dollar | 539 | 98.740 | 53,242 | 54,744 |
Borrowings with related parties | ||||
US Dollar | 15 | 98.740 | 1,500 | 1,590 |
Total Borrowings | 54,742 | 56,334 | ||
Derivative financial instruments | ||||
US Dollar | 0 | 98.740 | 45 | 63 |
Total derivative financial instruments | 45 | 63 | ||
Lease liabilities | ||||
US Dollar | 8 | 98.740 | 824 | 855 |
Lease liabilities with related parties | ||||
US Dollar | 0 | 98.740 | 2 | 7 |
Total lease liabilities | 826 | 862 | ||
Total Liabilities | 56,745 | 58,673 |
(1) Considering foreign currencies those that differ from each Group’s subsidiaries functional currency at each period/year-end.
(2) Stated in millions of each foreign currency.
(3) Exchange rates as of September 30, 2021 according to Banco de la Nación Argentina.
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IRSA Inversiones y Representaciones Sociedad Anónima
28.
Results from discontinued operations
The results of the discontinued operations include the IDBD / DIC operations which were deconsolidated in the comparative period (see Note 4.G to the Annual Financial Statements).
Three Months ended September 30, 2021 | Three Months ended September 30, 2020 | |
Revenues | - | 41,357 |
Costs | - | (33,557) |
Gross profit | - | 7,800 |
Net gain from fair value adjustment of investment properties | - | (30) |
General and administrative expenses | - | (4,760) |
Selling expenses | - | (4,535) |
Other operating results, net | - | 1,548 |
Profit from operations | - | 23 |
Share of profit of associates and joint ventures | - | 786 |
Profit before financial results and income tax | - | 809 |
Finance income | - | 574 |
Finance cost | - | (7,541) |
Other financial results | - | 498 |
Financial results, net | - | (6,469) |
Profit before income tax | - | (5,660) |
Income tax | - | 302 |
Loss from operations that are discontinued | - | (5,358) |
Loss for loss of control | - | (4,394) |
Loss from discontinued operations | - | (9,752) |
Loss for the period from discontinued operations attributable to: | ||
Equity holders of the parent | - | (7,702) |
Non-controlling interest | - | (2,050) |
Loss per share from discontinued operations attributable to equity holders of the parent: | ||
Basic | - | (13.39) |
Diluted | - | (13.39) |
29.
Other relevant events of the period
Economic context in which the Group operates
The Group operates in a complex context both due to macroeconomic conditions, whose main variables have recently experienced strong volatility, as well as regulatory, social, and political conditions, both nationally and internationally.
The results from operations may be affected by fluctuations in the inflation and the exchange rate of the Argentine peso against other currencies, mainly the dollar, changes in interest rates which have an impact on the cost of capital, changes in government policies, capital controls and other political or economic events both locally and internationally.
In December 2019, a new strain of coronavirus (SARS-COV-2), which caused severe acute respiratory syndrome (COVID-19) appeared in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response, countries have taken extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, closing businesses deemed non-essential, instructing residents to practice social distancing, implementing lockdowns, among other measures. The ongoing pandemic and these extraordinary government measures are affecting global economic activity, resulting in significant volatility in global financial markets.
27
IRSA Inversiones y Representaciones Sociedad Anónima
On March 3, 2020, the first case of COVID-19 was registered in the country and as of today, more than 5,290,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentinian Government implemented a series of health measures of social, preventive and mandatory lockdown at the national level with the closure of non-essential activities, including shopping malls, as well as the suspension of flights and border closures, for much of the year 2020. Since October 2020, a large part of the activities started to become more flexible, in line with a decrease in infections, although between April 16 and June 11, 2021, because of the sustained increase in the cases registered, the National Government established restrictions on night activity and the closure of shopping malls in Buenos Aires Metropolitan Area. Due to the flexibility that has occurred in the economic activities since the beginning of this fiscal year and as of the date of issuance of these financial statements, 100% of the shopping malls are operational.
At the local environment, the following circumstances were observed:
●
In August 2021, the Monthly Economic Activity Estimator (“EMAE” in Spanish) reported by the National Institute of Statistics and Censuses (“INDEC” in Spanish), registered a variation of 12.8% compared to the same month of 2020, and 1.1% compared to the previous month.
●
The annual retail inflation reached 52.47% in the last 12 months. The survey on market expectations prepared by the Argentine Central Bank in September 2021, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 48.2% i.a. for December 2021 and 46.0% for December 2022. Analysts participating in the REM forecast a rebound in economic activity in 2021, reaching an economic growth of 7.6%.
●
In the period from September 2020 to September 2021, the Argentine peso depreciated 29.6% against the US dollar according to the wholesale average exchange rate of Banco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of September 30, 2021, there is an exchange gap of approximately 78.9% between the official price of the dollar and its price in parallel markets, which impacts the level of activity in the economy and affects the level of reserves of the Argentine Central Bank. Additionally, these exchange restrictions, or those that may be dictated in the future, could affect the Group's ability to access the Single Free Exchange Market (“MULC” in Spanish) to acquire the necessary currencies to meet its financial obligations.
COVID-19 PANDEMIC
As described above, the COVID-19 pandemic has adversely impacted both the global economy and the Argentine economy and the Group's business, mainly in Shopping Malls and Hotels segments. Since the beginning of fiscal year 2022, and until the date of presentation of the financial statements, the Company's shopping malls are fully operational, as well as the office buildings, despite the remote work modality that some tenants continue to apply. Regarding hotels, although they have been operating since December 2020, the sector continues working with certain restrictions on air flows and the influx of international tourism.
The final extent of the Coronavirus outbreak and its impact on the country's economy is still uncertain. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Group’s ability to meet its financial commitments for the next twelve months.
The Group is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.
28
IRSA Inversiones y Representaciones Sociedad Anónima
30.
Subsequent events
IRSA Shareholders’ Meeting
On October 21, 2021, the Ordinary Shareholders’ Meeting approved among others:
Partially write off the special reserve in the amount of ARS 30,693 which, restated for inflation at the time of the shareholders’ meeting, amounts to the sum of ARS 33,543, and use it for the total absorption of the negative result for the fiscal year ended June 30, 2021.
Sale of Catalinas Tower building
On November 2, 2021, our subsidiary, IRSA CP, completed the sale of three medium-height floors of the “261 Della Paolera” tower located in the Catalinas district of the Autonomous City of Buenos Aires for a total area of approximately 3,582 square meters and 36 parking lots located in the building.
The transaction price was approximately ARS 3,197, which as of the date of issuance of these financial statements were paid in full.
29
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
To the Shareholders, President and Directors of
IRSA Inversiones y Representaciones Sociedad Anónima
Legal address: Carlos Della Paolera 261 - 9th floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52532274-9
Introduction
We have reviewed the accompanying unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima and its subsidiaries (“the Company”), which comprise the unaudited condensed interim consolidated statement of financial position at September 30, 2021, the unaudited condensed interim consolidated statements of income and other comprehensive income for the three-month period ended September 30, 2021, the unaudited condense interim consolidated statements of changes in shareholders’ equity and of cash flows for the three-month period then ended, and selected explanatory notes.
The balances and other information for the fiscal year ended on June 30, 2021 and its interim periods are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.
Management’s responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim consolidated financial statements in accordance with International Financial Reporting Standards, adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and included by the National Securities Commission (CNV) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the unaudited condensed interim consolidated financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 Interim Financial Information (IAS 34).
Scope of our review
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim consolidated financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing 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 on the consolidated statement of financial position and the consolidated statements of income and other comprehensive income and of cash flows of the Company.
30
Conclusion
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim consolidated financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34 Interim financial reporting.
Report on compliance with current regulations
In accordance with current regulations, we report, in connection with IRSA Inversiones y Representaciones Sociedad Anónima, that:
a)
the unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima have not been transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
b)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal aspects in accordance with legal requirements except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the General Journal Book of the accounting entries corresponding to the month of September 2021;
c)
we have read the Business Summary (“Reseña Informativa”), on which we have no observations to make regarding matters that are within our competence;
d)
at September 30, 2021 the debt of IRSA Inversiones y Representaciones Sociedad Anónima accrued in favor of the Argentine Integrated Social Security System, as shown by the Company’s accounting records, amounted to ARS 124,333.53, which was not due at that date.
Autonomous City of Buenos Aires, November 8, 2021
PRICE WATERHOUSE & CO. S.R.L. (Partner) | ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner) | |
C.P.C.E.C.A.B.A. V° 1 F° 17 | C.P.C.E.C.A.B.A. V° 1 F° 30 | |
Walter ZablockyPublic Accountant (UNLP) C.P.C.E.C.A.B.A. V. 340 F. 156 | Noemí I. Cohn Public Accountant (UBA) C.P.C.E. C.A.B.A. V. 126 F. 135 |
31
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Financial Statements as of September 30, 2021 and for the three-month period ended as of that date, presented comparatively
32
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Financial Position
as of September 30, 2021 and June 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.2021 | 06.30.2021 | |
ASSETS | |||
Non-current assets | |||
Investment properties | 7 | 41,226 | 42,221 |
Property, plant and equipment | 8 | 33 | 33 |
Trading properties | 9 | 650 | 650 |
Intangible assets | 10 | 1,004 | 1,004 |
Rights of use assets | 9 | 10 | |
Investments in subsidiaries, associates and joint ventures | 6 | 75,941 | 76,840 |
Trade and other receivables | 12 | 1,104 | 1,278 |
Total non-current assets | 119,967 | 122,036 | |
Current assets | |||
Trading properties | 9 | 121 | 121 |
Inventories | 1 | 1 | |
Trade and other receivables | 12 | 1,139 | 1,024 |
Income tax and MPIT credit | 7 | 6 | |
Investments in financial assets | 11 | 259 | 267 |
Cash and cash equivalents | 11 | 595 | 589 |
Total current assets | 2,122 | 2,008 | |
TOTAL ASSETS | 122,089 | 124,044 | |
SHAREHOLDERS’ EQUITY | |||
Shareholders' equity (according to corresponding statements) | 67,089 | 67,860 | |
TOTAL SHAREHOLDERS’ EQUITY | 67,089 | 67,860 | |
LIABILITIES | |||
Non-current liabilities | |||
Trade and other payables | 13 | 49 | 5 |
Borrowings | 14 | 23,050 | 17,592 |
Deferred income tax liabilities | 15 | 19,746 | 21,125 |
Provisions | 16 | 6 | 29 |
Lease liabilities | 5 | 6 | |
Total non-current liabilities | 42,856 | 38,757 | |
Current liabilities | |||
Trade and other payables | 13 | 682 | 783 |
Salaries and social security liabilities | 2 | 2 | |
Borrowings | 14 | 11,420 | 16,599 |
Provisions | 16 | 35 | 38 |
Lease liabilities | 5 | 5 | |
Total current liabilities | 12,144 | 17,427 | |
TOTAL LIABILITIES | 55,000 | 56,184 | |
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 122,089 | 124,044 |
The accompanying notes are an integral part of these Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
33
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Income and Other Comprehensive Income
for the three-month period ended September 30, 2021 and 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.2021 | 09.30.2020 | |
Revenues | 17 | 41 | 1,106 |
Costs | 18 | (51) | (873) |
(Loss) / gross profit | (10) | 233 | |
Net gain from fair value adjustment of investment properties | 7 | (847) | 11,096 |
General and administrative expenses | 18 | (166) | (164) |
Selling expenses | 18 | (30) | (18) |
Other operating results, net | 19 | 211 | (6) |
(Loss) / profit from operations | (842) | 11,141 | |
Share of profit of subsidiaries, associates and joint ventures | 6 | (1,598) | 9,476 |
(Loss) / profit before financial results and income tax | (2,440) | 20,617 | |
Finance income | 20 | 8 | 16 |
Finance costs | 20 | (718) | (1,336) |
Other financial results | 20 | 1,339 | (265) |
Inflation adjustment | 20 | (172) | (516) |
Financial results, net | 457 | (2,101) | |
(Loss) / profit before income tax | (1,983) | 18,516 | |
Income tax | 15 | 1,379 | (5,727) |
(Loss) / profit for the period | (604) | 12,789 | |
Other comprehensive income: | |||
Items that may be reclassified subsequently to profit or loss: | |||
Share of other comprehensive loss of subsidiaries, associates and joint ventures | - | (344) | |
Currency translation adjustment of subsidiaries, associates and joint ventures | (162) | (5,299) | |
Total other comprehensive loss for the period (i) | 6 | (162) | (5,643) |
Total comprehensive (loss)/ profit for the period | (766) | 7,146 | |
(Loss) / profit per share for the period (ii) | |||
Basic | (0.92) | 22.24 | |
Diluted | (0.92) | 22.16 |
(i)
Components of other comprehensive income have no impact on income tax.
(ii)
The loss/profit per share have been calculated using 656,700,315 shares at 09.30.21 and 575,377,891 at 09.30.20. If 656,700,315 shares had been used for the calculation, the result per share would be ARS 19.47 for 09.30.20. See Note 17 to the Annual Financial Statements.
The accompanying notes are an integral part of these Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
34
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Share capital | Treasury shares | Inflation adjustment of Share Capital and Treasury Shares (1) | Share premium | Additional Paid-in capital from Treasury Shares | Warrants | Legal reserve | CNV 609/12 Resolution reserve | Other reserves (2) | Accumulated deficit | Total Shareholders’ equity | |
Balance as of June 30, 2021 | 657 | 2 | 22,596 | 26,347 | 162 | 1,944 | 1,752 | 15,437 | 32,506 | (33,543) | 67,860 |
Loss for the period | - | - | - | - | - | - | - | - | - | (604) | (604) |
Other comprehensive loss for the period | - | - | - | - | - | - | - | - | (162) | - | (162) |
Exercise warrants (3) | - | - | - | 3 | - | (1) | - | - | - | - | 2 |
Changes in non-controlling interest | - | - | - | - | - | - | - | - | 2 | - | 2 |
Other changes in subsidiaries` equity | - | - | - | - | - | - | - | - | (9) | - | (9) |
Balance as of September 30, 2021 | 657 | 2 | 22,596 | 26,350 | 162 | 1,943 | 1,752 | 15,437 | 32,337 | (34,147) | 67,089 |
(1) Includes ARS 1 of inflation adjustment of treasury shares. See Note 16 of Consolidated Financial Statements as of June 30, 2021.
(2) Between September 17,2021 and September 25, 2021, 30,741 warrants were exercised so the equivalent in shares was issued.
(3) The composition of Other reserves of the Company as of September 30, 2021 is as follows:
Cost of Treasury shares | Changes in non-controlling interest | Reserve for share-based payments | Reserve for future dividends | Currency translation adjustment reserve | Special reserve | Other reserves of subsidiaries | Total Other reserves | |
Balance as of June 30, 2021 | (279) | (6,525) | 315 | 2,777 | 707 | 34,435 | 1,076 | 32,506 |
Other comprehensive loss for the period | - | - | - | - | (162) | - | - | (162) |
Changes in non-controlling interest | - | 2 | - | - | - | - | - | 2 |
Other changes in subsidiaries` equity | - | - | - | - | (9) | - | - | (9) |
Balance as of September 30, 2021 | (279) | (6,523) | 315 | 2,777 | 536 | 34,435 | 1,076 | 32,337 |
There are no cumulative unpaid dividends on preferred.
The accompanying notes are an integral part of these Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
35
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Share capital | Treasury shares | Inflation adjustment of Share Capital and Treasury Shares (1) | Share premium | Additional Paid-in capital from Treasury Shares | Warrants | Legal reserve | CNV 609/12 Resolution reserve | Other reserves (2) | Retained earnings | Total Shareholders’ equity | |
Balance as of June 30, 2020 | 575 | 2 | 22,586 | 23,866 | 156 | - | 796 | 15,436 | 11,486 | 17,016 | 91,919 |
Profit for the period | - | - | - | - | - | - | - | - | - | 12,789 | 12,789 |
Other comprehensive loss for the period | - | - | - | - | - | - | - | - | (5,643) | - | (5,643) |
Reserve for share-based payments | - | - | - | - | 3 | - | - | - | (3) | - | - |
Changes in non-controlling interest | - | - | - | - | - | - | - | - | 53 | - | 53 |
Other changes in subsidiaries` equity | - | - | - | - | - | - | - | - | 9,035 | - | 9,035 |
Balance as of September 30, 2020 | 575 | 2 | 22,586 | 23,866 | 159 | - | 796 | 15,436 | 14,928 | 29,805 | 108,153 |
(1) Includes ARS 1 of inflation adjustment of treasury shares. See Note 16 of Consolidated Financial Statements as of June 30, 2020.
(2) The composition of Other reserves of the Company as of September 30, 2020 is as follows:
Cost of Treasury shares | Changes in non-controlling interest | Reserve for share-based payments | Reserve for future dividends | Currency translation adjustment reserve | Special reserve | Other reserves of subsidiaries | Total Other reserves | |
Balance as of June 30, 2020 | (281) | (6,841) | 320 | 2,777 | (1,194) | 17,063 | (358) | 11,486 |
Other comprehensive loss for the period | - | - | - | - | (5,299) | - | (344) | (5,643) |
Reserve for share-based payments | 2 | - | (5) | - | - | - | - | (3) |
Dividend distribution in shares | - | 53 | - | - | - | - | - | 53 |
Changes in non-controlling interest | - | (79) | - | - | 7,675 | - | 1,439 | 9,035 |
Balance as of September 30, 2020 | (279) | (6,867) | 315 | 2,777 | 1,182 | 17,063 | 737 | 14,928 |
There are no cumulative unpaid dividends on preferred shares.
The accompanying notes are an integral part of these financial statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
36
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Cash Flows
for the three-month period ended September 30, 2021 and 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.2021 | 09.30.2020 | |
Operating activities | |||
(Loss) / profit for the period | (604) | 12,789 | |
Adjustments: | |||
Income tax | 15 | (1,379) | 5,727 |
Amortization and depreciation | 18 | 2 | 3 |
Gain from disposal of trading properties | - | (242) | |
Financial results, net | (497) | 6,982 | |
Increase in trading properties | 9 | - | (23) |
Net gain from fair value adjustment of investment properties | 7 | 847 | (11,096) |
Share of profit of subsidiaries, associates and joint ventures | 6 | 1,598 | (9,476) |
Fair value adjustment of investments in financial assets | - | (6) | |
Provisions and allowances | (4) | 6 | |
Changes in operating assets and liabilities: | |||
Decrease in salaries and social security liabilities | - | (5) | |
Increase in trade and other receivables | 102 | 313 | |
(Decrease) / increase in trade and other payables | (88) | 933 | |
Net cash flow (used in)/ generated by operating activities | (23) | 5,905 | |
Investing activities | |||
Capital contributions to subsidiaries, associates and joint ventures | 6 | (5) | (15) |
Acquisition of property, plant and equipment | 8 | (1) | (24) |
Acquisition of intangible assets | 10 | - | (2) |
Increase of investments in financial assets | (77) | (944) | |
Proceeds from sale of investment properties | 148 | 1,360 | |
Proceeds from sale of investments in financial assets | 153 | - | |
Proceeds from borrowings granted to subsidiaries, associates and joint ventures | - | 5 | |
Net cash flow generated from investing activities | 218 | 380 | |
Financing activities | |||
Short-term loans obtained, net | 312 | 1,047 | |
Payment of borrowings | (351) | (340) | |
Interests paid | (986) | (1,564) | |
Loans obtained from subsidiaries, associates and joint ventures | 90 | - | |
Payment of loans from subsidiaries, associates and joint ventures | (1,842) | (32) | |
Payment of NCN | (80) | (12,658) | |
Issuance of NCN | 2,853 | 3,696 | |
Repurchase of NCN | (177) | - | |
Payments liabilities for lease | (1) | - | |
Payments from derivative financial instruments | - | (30) | |
Proceeds from warrants exercise | 2 | - | |
Net cash flow used in financing activities | (180) | (9,881) | |
Increase/ (decrease) in cash and cash equivalents, net | 15 | (3,596) | |
Cash and cash equivalents at the beginning of the period | 11 | 589 | 3,617 |
Foreign exchange gain of cash and changes in fair value of cash equivalents | (9) | - | |
Cash and cash equivalents at the end of the period | 11 | 595 | 21 |
Additional information | |||
Currency translation adjustment | (162) | (5,299) | |
Other comprehensive gain / (loss) of subsidiaries | - | (344) | |
Changes in non-controlling interest | 2 | 53 | |
Other changes in subsidiaries` equity | (9) | 9,035 | |
Increase in borrowings through an increase in trading properties | - | 142 | |
Issuance of NCN | 2,911 | 557 | |
Decrease in loans obtained from subsidiaries, associates and joint ventures through an increase in investments in subsidiaries | 198 | - | |
Decrease in dividends receivable through an increase in Investments in associates and joint ventures | 136 | - | |
Increase in loans with subsidiaries through an increase in investments in subsidiaries | 535 | - |
The accompanying notes are an integral part of these Financial Statements.
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima | |||
By: | /s/ Saúl Zang | ||
Name Saúl Zang | |||
Title Vicepresident I |
37
IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Separate Financial Statements
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
1.
General information and company’s business
IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA” or “The Company”) was founded in 1943, it is primarily engaged in managing real estate holdings in Argentina since 1991.
IRSA is a corporation incorporated and domiciled in Argentina. The registered office is Carlos Della Paolera 261, 9th. Floor, Buenos Aires, Argentina.
The Company owns, manages and develops, directly and indirectly through its subsidiaries, a portfolio of office and other rental properties in Buenos Aires. In addition, IRSA through its subsidiaries, associates and joint ventures manages and develops shopping malls and branded hotels across Argentina, and also office properties in the United States and in numerous markets and industry sectors in Israel, such as real estate, supermarkets, insurance, telecommunications, etc.
See Note 4.E to the Unaudited Condensed Interim Consolidated Financial Statements.
These Unaudited Condensed Interim Separate Financial Statements have been approved for issue by the Board of Directors on November 8, 2021.
2.
Basis of preparation of the Unaudited Condensed Interim Separate Financial Statements
2.1.
Basis of preparation
These financial statements have been prepared in accordance with IAS 34 “Interim financial reporting” and should therefore be read in conjunction with the Group's annual Consolidated Financial Statements as of June 30, 2021 prepared in accordance with IFRS. Also, these financial statements include additional information required by Law No. 19,550 and / or regulations of the CNV. Such information is included in the notes to these financial statements, as accepted by IFRS.
These financial statements for the interim periods of three month ended September 30, 2021 and 2020 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
In order to conclude on whether an economy is categorized as highly inflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that approximates or exceed 100%. Accumulated inflation in Argentina in three years is over 100%. For that reason, in accordance with IAS 29, Argentina must be considered a country with a highly inflationary economy starting July 1, 2018.
In relation to the inflation index to be used and in accordance with FACPCE Resolution No. 539/18, it is determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of the Consumer Price Index (CPI) of the Autonomous City of Buenos Aires for the months of November and December 2015, because during those two months there were no national IPIM measurements. Then, from January 2017, the National Consumer Price Index (National CPI) is considered. The table below presents the index for the period ended September 30, 2021, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18
Price variation | Quarter ended September 30, 2021 |
9% |
As a consequence of the aforementioned, these Unaudited Consolidated Financial Statements as of September 30, 2021 were restated in accordance with IAS 29.
2.2. Significant accounting policies
The accounting policies adopted in the preparation of these Unaudited Condensed Interim Separate Financial Statements are consistent with those applied in the Annual Financial Statements as of June 30, 2021. The main accounting policies are described in Note 2 of those Annual Financial Statements.
2.3.
Comparability of information
The amounts as of June 30, 2021 and September 30, 2020, which are disclosed for comparative purposes, arise from the financial statements at said dates restated in accordance with IAS 29 (note 2.1).
2.4.
Use of estimates
The preparation of Financial Statements at a certain date requires Management to make estimates and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these Unaudited Condensed Interim Separate Financial Statements. In the preparation of these Unaudited Condensed Interim Separate Financial Statements, the main significant judgments made by Management in applying the Company’s accounting policies and the major sources of uncertainty were the same that the Company used in the preparation of the Separate Financial Statements for the fiscal year ended June 30, 2021, described in Note 3 to those financial statements.
3.
Seasonal effects on operations
See Note 3 to the Unaudited Condensed Interim Consolidated Financial Statements.
4.
Acquisitions and disposals
Significant acquisitions and disposals of the Company and/or its subsidiaries for the three-month period ended September 30, 2021 are detailed in Note 4 to the Unaudited Condensed Interim Consolidated Financial Statements.
5.
Financial risk management and fair value estimates
These Unaudited Condensed Interim Financial Statements do not include all the information and disclosures of the risk management, so they should be read together with the Annual Separate Financial Statements as of June 30, 2021. There has been no changes in the risk management or risk management policies applied by the Company since the end of the annual fiscal year. See notes to the Unaudited Condensed Interim Consolidated Financial Statements. Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Company’s financial instruments.
6.
Information about the main subsidiaries, associates and joint ventures
The Company conducts its business through several operating and holding subsidiaries, associates and joint ventures. Its main subsidiaries include IRSA CP, Tyrus and Efanur. The main associates include BHSA.
The Company indirectly participated, until September 25, 2020, through Tyrus, in IDB Development Ltd. (“IDBD”) and Discount Investment Company Ltd (“DIC”), since on that date the insolvency and liquidation of IDBD was decreed generating the loss of control of both companies.
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IRSA Inversiones y Representaciones Sociedad Anónima
Detailed below is the evolution of investments in subsidiaries, associates and joint ventures of the Company, for the three-month period ended September 30, 2021 and for the year ended June 30, 2021:
09.30.2021 | 06.30.2021 | |
Beginning of period / year | 76,840 | 108,762 |
Share of profit | (1,598) | (25,940) |
Other comprehensive loss | (162) | (5,334) |
Devaluation | - | (43) |
Capital contributions (Note 21) | 141 | 3,893 |
Changes in non-controlling interest | 2 | 404 |
Dividends | - | (11,128) |
Acquisition/ sale of interest | 727 | (2,359) |
Other changes in subsidiaries’ equity | (9) | 8,585 |
End of the period / year | 75,941 | 76,840 |
Name of the entity | % ownership interest | Company´s interest in equity | Company’s interest in comprehensive income | |||
Subsidiaries | 09.30.2021 | 06.30.2021 | 09.30.2021 | 06.30.2021 | 09.30.2021 | 06.30.2021 |
IRSA CP | 79.92% | 78.07% | 60,995 | 61,725 | (2,517) | 14,222 |
Tyrus | 100.00% | 100.00% | 3,790 | 4,019 | 272 | (10,309) |
Efanur | 100.00% | 100.00% | 3,141 | 2,959 | 181 | (168) |
Ritelco S.A. | 100.00% | 100.00% | 920 | 990 | (69) | 60 |
Inversora Bolívar S.A. | 96.87% | 96.57% | 957 | 1,005 | (58) | (18) |
ECLSA | 98.93% | 99.08% | 2,073 | 1,922 | 597 | 245 |
Palermo Invest S.A. | 97.35% | 97.34% | 985 | 1,032 | (59) | (21) |
NFSA | 76.34% | 76.34% | 468 | 501 | (32) | (77) |
Llao Llao Resort S.A. | 50.00% | 50.00% | 514 | 549 | (35) | (9) |
HASAU | 100.00% | 100.00% | 287 | 303 | (16) | (28) |
Liveck S.A. | 9.30% | 9.30% | 77 | 79 | (2) | (1) |
Associates | ||||||
BHSA (1) (2) | 4.93% | 4.93% | 872 | 931 | (58) | (15) |
Manibil S.A. (3) | 0.00% | 0.00% | - | - | - | (12) |
BACS (2) | 37.72% | 37.72% | 512 | 526 | (14) | 2 |
Joint ventures | ||||||
IRSA - Galerías Pacífico S.A. - U.T. | 50.00% | 50.00% | 288 | 233 | 54 | (45) |
Cyrsa S.A. | 50.00% | 50.00% | 62 | 66 | (4) | 7 |
Total subsidiaries, associates and joint ventures | 75,941 | 76,840 | (1,760) | 3,833 |
Name of the entity | Location of business / Country of incorporation | Main activity | Common shares 1 vote | Latest financial statements issued | ||
Subsidiaries | Share capital (nominal value) | Profit / (loss) for the period | Shareholders’ equity | |||
IRSA CP | Argentina | Real estate | 432,545,580 | 54,123 | (1,709) | 77,598 |
Tyrus | Uruguay | Investment | 21,317,148,247 | 21,317 | 87 | 3,595 |
Efanur | Uruguay | Investment | 461,751,428 | 462 | 333 | 3,141 |
Ritelco S.A. | Uruguay | Investment | 453,321,177 | 453 | (70) | 921 |
Inversora Bolívar S.A. | Argentina | Investment | 1,461,147,188 | 1,513 | (60) | 991 |
ECLSA | Argentina | Investment | 1,710,302,484 | 1,729 | 67 | 1,551 |
Palermo Invest S.A. | Argentina | Investment | 1,125,397,085 | 1,156 | (61) | 994 |
NFSA | Argentina | Hotel | 38,068,999 | 50 | (47) | 833 |
Llao Llao Resort S.A. | Argentina | Hotel | 73,580,206 | 147 | (70) | 1,027 |
HASAU | Argentina | Hotel | 603,978,099 | 604 | (16) | 303 |
Liveck S.A. | Uruguay | Investment | 38,600,337 | 415 | 1 | 443 |
Associates | ||||||
BHSA (1) (2) | Argentina | Financial | 73,939,835 | 1,500 | (1,181) | 17,699 |
BACS (2) | Argentina | Financial | 33,125,751 | 88 | (38) | 1,358 |
Joint ventures | ||||||
IRSA - Galer��as Pacífico S.A. - U.T. | Argentina | Hotel | 500,000 | 1 | 107 | 577 |
Cyrsa S.A. | Argentina | Real estate | 8,748,270 | 17 | (8) | 123 |
(1)
Considered significant. See Notes 7 to 8 to the Annual Consolidated Financial Statements.
(2)
Information as of September 30, 2021 according to BCRA's standards. For the purpose of the valuation of the investments in the Company, figures as of September 30, 2021 have been considered, with the necessary IFRS adjustments. Share market price of Banco Hipotecario S.A as of September 30, 2021 amounts to ARS 9.58. See Note 8 to the Consolidated Financial Statements as of June 30, 2021.
(3)
As mentioned in note 4G. to the Consolidated Financial Statements, the Company, on December 22, 2020, sold 217,332,873 shares, that represents the 49% of the capital stock of Manibil SA. The operation was completed in February 2021, so the Company leaves the character of shareholder of that Company from that moment.
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7.
Investment properties
Period ended September 30, 2021 | Year ended June 30, 2021 | |||
Rental properties | Undeveloped parcels of land | Total | Total | |
Fair value at the beginning of the period / year | 6,137 | 36,084 | 42,221 | 39,291 |
Additions | - | - | - | 5 |
Disposals | - | (148) | (148) | (29) |
Net gain from fair value adjustment | (119) | (728) | (847) | 2,954 |
Fair value at the end of the period / year | 6,018 | 35,208 | 41,226 | 42,221 |
The following amounts have been recognized in the Statements of Comprehensive Income:
| 09.30.2021 | 09.30.2020 |
Sale, rental and services´ income (Note 17) | 41 | 18 |
Rental and services´ costs (Note18) | (31) | 4 |
Cost of sales and developments (Note18) | (13) | 16 |
Net unrealized gain from fair value adjustment of investment properties | (816) | 11,096 |
Net realized loss from fair value adjustment on investment properties | (31) | - |
Valuation techniques are described in Note 9 to the Consolidated Financial Statements as of June 30, 2021. There were no changes to the valuation techniques.
8.
Property, plant and equipment
Changes in the Company’s property, plant and equipment for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Period ended September 30, 2021 | Year ended June 30, 2021 | |||||
Buildings and facilities | Furniture and fixtures | Machinery and equipment | Vehicles | Total | Total | |
Costs | 306 | 109 | 294 | 7 | 716 | 691 |
Accumulated depreciation | (300) | (85) | (291) | (7) | (683) | (664) |
Net book amount at the beginning of the period / year | 6 | 24 | 3 | - | 33 | 27 |
Additions | - | - | 1 | - | 1 | 25 |
Depreciation (Note 18) | - | - | (1) | - | �� (1) | (19) |
Balances at the end of the period / year | 6 | 24 | 3 | - | 33 | 33 |
Costs | 306 | 109 | 295 | 7 | 717 | 716 |
Accumulated depreciation | (300) | (85) | (292) | (7) | (684) | (683) |
Net book amount at the end of the period / year | 6 | 24 | 3 | - | 33 | 33 |
9.
Trading properties
Changes in the Company’s trading properties for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Period ended September 30, 2021 | Year ended June 30, 2021 | |||
Completed properties | Undevelopedproperties | Total | Total | |
Beginning of the period / year | 120 | 651 | 771 | 2,337 |
Additions | - | - | - | 949 |
Capitalized finance costs | - | - | - | 512 |
Disposals (Note 18) | - | - | - | (3,027) |
End of the period / year | 120 | 651 | 771 | 771 |
Non-current | 650 | 650 | ||
Current | 121 | 121 | ||
Total | 771 | 771 |
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10.
Intangible assets
Changes in Company’s intangible assets for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
Period ended September 30, 2021 | Year ended June 30, 2021 | |||
Computer software | Future units to be received from barters | Total | Total | |
Costs | 60 | 985 | 1,045 | 148 |
Accumulated amortization | (41) | - | (41) | (30) |
Net book amount at the beginning of the period / year | 19 | 985 | 1,004 | 118 |
Additions | - | - | - | 897 |
Amortization (Note 19) | - | - | - | (11) |
Balances at the end of the period / year | 19 | 985 | 1,004 | 1,004 |
Costs | 60 | 985 | 1,045 | 1,045 |
Accumulated amortization | (41) | - | (41) | (41) |
Net book amount at the end of the period / year | 19 | 985 | 1,004 | 1,004 |
11.
Financial instruments by category
This note presents financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line item in the Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. For further information, related to fair value hierarchy see Note 13 to the Consolidated Financial Statements as of June 30, 2021.
Financial assets at amortized cost (i) | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | |
Level 1 | |||||
September 30, 2021 | |||||
Assets as per Statement of Financial Position | |||||
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 12) | 691 | - | 691 | 1,562 | 2,253 |
Investments in financial assets: | |||||
- Mutual funds (ii) | - | 11 | 11 | - | 11 |
- Bonds | - | 248 | 248 | - | 248 |
Cash and cash equivalents: | |||||
- Cash at bank and on hand | 244 | - | 244 | - | 244 |
- Short- term investments | - | 351 | 351 | - | 351 |
Total | 935 | 610 | 1,545 | 1,562 | 3,107 |
Financial liabilities at amortized cost (i) | Non-financial liabilities | Subtotal financial liabilities | |
September 30, 2021 | |||
Liabilities as per Statement of Financial Position | |||
Trade and other payables (Note 13) | 675 | 56 | 731 |
Borrowings (Note 14) | 34,470 | - | 34,470 |
Total | 35,145 | 56 | 35,201 |
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Financial assets at amortized cost (i) | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | |
Level 1 | |||||
June 30, 2021 | |||||
Assets as per Statement of Financial Position | |||||
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 12) | 1,090 | - | 1,090 | 1,221 | 2,311 |
Investments in financial assets: | |||||
- Mutual funds (ii) | - | 11 | 11 | - | 11 |
- Bonds | - | 256 | 256 | - | 256 |
Cash and cash equivalents: | |||||
- Cash at bank and on hand | 97 | - | 97 | - | 97 |
- Short-term investments | - | 492 | 492 | - | 492 |
Total | 1,187 | 759 | 1,946 | 1,221 | 3,167 |
Financial liabilities at amortized cost (i) | Non-financial liabilities | Total | |
June 30, 2021 | |||
Liabilities as per Statement of Financial Position | |||
Trade and other payables (Note 13) | 745 | 43 | 788 |
Borrowings (Note 14) | 34,191 | - | 34,191 |
Total | 34,936 | 43 | 34,979 |
(i)
The fair value of financial assets and liabilities at amortized cost does not differ significantly from their book value, except for borrowings (Note 14). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant.
(ii)
See description of reprofiling of public debt instruments in Note 33 to the consolidated annual financial statements.
As of September 30, 2021, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Company.
12. Trade and other receivables
Company’s trade and other receivables, as of September 30, 2021 and June 30, 2021 are comprised as follows:
September 30, 2021 | June 30, 2021 | |
Sales, leases and services receivables | 352 | 394 |
Less: Allowance for doubtful accounts | (10) | (10) |
Total trade receivables | 342 | 384 |
Borrowings granted, deposits and others | 314 | 533 |
Advance payments | 226 | 236 |
Tax credits | 1,120 | 780 |
Prepaid expenses | 177 | 199 |
Long-term incentive plan | 15 | 17 |
Dividends | - | 141 |
Others | 49 | 12 |
Total other receivables | 1,901 | 1,918 |
Total trade and other receivables | 2,243 | 2,302 |
Non-current | 1,104 | 1,278 |
Current | 1,139 | 1,024 |
Total | 2,243 | 2,302 |
Movements on the Company’s allowance for doubtful accounts are as follows:
September 30, 2021 | June 30, 2021 | |
Beginning of period /year | 10 | 17 |
Additions | - | 4 |
Disposals / Recoveries | - | (4) |
Inflation adjustment | - | (7) |
End of the period / year | 10 | 10 |
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IRSA Inversiones y Representaciones Sociedad Anónima
The creation and release of the allowance for doubtful accounts have been included in “Selling expenses” in the Statements of Income (Note 18). Amounts charged to the allowance for doubtful accounts are generally written off, when there is no expectation of recovery.
13.
Trade and other payables
September 30, 2021 | June 30, 2021 | |
Customers´ advances | 42 | 30 |
Trade payables | 247 | 375 |
Accrued invoices | 352 | 326 |
Tenant deposits | 1 | 1 |
Total trade payables | 642 | 732 |
Director´s fees | 44 | 21 |
Long-term incentive plan | 13 | 14 |
Tax amnesty plans | 1 | 1 |
Other tax payables | 12 | 11 |
Other | 19 | 9 |
Total other payables | 89 | 56 |
Total trade and other payables | 731 | 788 |
Non-current | 49 | 5 |
Current | 682 | 783 |
Total | 731 | 788 |
14. Borrowings
Company’s borrowings as of September 30, 2021 and June 30, 2021 are comprised as follows:
Book value as of 09.30.2021 | Book value as of 06.30.2021 | Fair value as of 09.30.2021 | Fair value as of 06.30.2021 | |
NCN | 19,563 | 17,863 | 18,964 | 17,340 |
Bank loans | 638 | 957 | 638 | 957 |
Related parties (Note 21) | 14,014 | 15,366 | 13,744 | 15,182 |
Bank overdrafts | 255 | 5 | 255 | 5 |
Total borrowings | 34,470 | 34,191 | 33,601 | 33,484 |
Non-current | 23,050 | 17,592 | ||
Current | 11,420 | 16,599 | ||
Total | 34,470 | 34,191 |
See Note 17 to the Unaudited Condensed Interim Consolidated Financial Statements.
15. Currents and deferred income tax
09.30.2021 | 09.30.2020 | |
Deferred income tax | 1,379 | (5,727) |
Income tax | 1,379 | (5,727) |
Below is a reconciliation between income tax recognized and the amount which would arise from applying the prevailing tax rate on profit before income tax for the three-month periods ended September 30, 2021 and 2020:
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09.30.2021 | 09.30.2020 | |
Net income at tax rate (i) | 694 | (5,555) |
Permanent differences: | ||
Share of profit of subsidiaries, associates and joint ventures | (559) | 2,843 |
Income tax rate differential | - | 656 |
Difference between provision and tax return | - | 87 |
Tax loss carryfowards´ allowance | 506 | (3,618) |
Inflation adjustment for tax purposes | (725) | (967) |
Inflation adjustment | 1,436 | 967 |
Non deductible expenses and others | 27 | (140) |
Income tax | 1,379 | (5,727) |
(1) Income tax rate in effect in Argentina as of September 30, 2021 and 2020 was 35 % and 30 %, respectively.
The gross movement on the deferred income tax account is the following:
09.30.2021 | 06.30.2021 | |
Beginning of the period / year | (21,125) | (12,194) |
Income tax charge | 1,379 | (8,931) |
End of the period / year | (19,746) | (21,125) |
As of September 30, 2021, the Company recognized tax loss carry forward prescribed as follows:
Fecha | Total |
2023 | 1,272 |
2024 | 2,334 |
2025 | 7,739 |
2026 | 1,509 |
2027 | 15 |
Total tax losses | 12,869 |
16. Provisions
The table below presents the changes in the Company's provisions as of September 30, 2021 and June 30, 2021 were as follows:
Period ended September 30, 2021 | Year ended June 30, 2021 | ||
Investments in subsidiaries, associates and joint ventures (i) | Total | Total | |
Beginning of period / year | 67 | 67 | 459 |
Additions | 8 | 8 | 29 |
Decreases | (12) | (12) | (23) |
Utilizations | (17) | (17) | (29) |
Share of loss | - | - | (330) |
Inflation adjustment | (5) | (5) | (39) |
End of period / year | 41 | 41 | 67 |
Non current | 6 | 29 | |
Current | 35 | 38 | |
Total | 41 | 67 |
(i)
Additions and decreases are included in "Other operating results, net” (Note 19).
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IRSA Inversiones y Representaciones Sociedad Anónima
17. Revenues
09.30.2021 | 09.30.2020 | |
Sale of trading properties | - | 1,088 |
Rental income, averaging of scheduled rental escalation and expense reimbursements | 41 | 18 |
Sales, rental and services´ income | 41 | 1,106 |
18. Expenses by nature
The Company discloses expenses in the Statements of Income and Other Comprehensive Income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosure regarding expenses by nature and their relationship to the function within the Company.
Costs (i) | General and administrative expenses | Selling expenses | 09.30.2021 | 09.30.2020 | |
Cost of sales of trading properties (Note 9) | - | - | - | - | 846 |
Salaries, social security costs and other personnel expenses | 2 | 84 | - | 86 | 67 |
Taxes, rates and contributions | 8 | - | 24 | 32 | 21 |
Fees and payments for services | 3 | 22 | 3 | 28 | 26 |
Director´s fees (Note 21) | - | 35 | - | 35 | 38 |
Maintenance, security, cleaning, repairs and others | 36 | 11 | - | 47 | 24 |
Traveling, transportation and stationery expenses | - | 4 | - | 4 | 6 |
Leases and services’ charges | 2 | 8 | - | 10 | 11 |
Advertising and other selling expenses | - | - | 3 | 3 | - |
Bank charges | - | - | - | - | 7 |
Amortization and depreciation | - | 2 | - | 2 | 3 |
Allowance for doubtful accounts (charge and recovery, net) (Note 12) | - | - | - | - | 6 |
Total expenses by nature as of 09.30.2021 | 51 | 166 | 30 | 247 | - |
Total expenses by nature as of 09.30.2020 | 873 | 164 | 18 | - | 1,055 |
(i)
For the three-month period ended September 30, 2021, includes ARS 31 of rental and services costs and ARS 20 of costs of sales and developments, of which ARS 7 corresponds to investment properties and ARS 13 to trading properties. For the three-month period ended September 30, 2020, includes ARS 4 which correspond to rental and services costs;ARS 869 to costs of sales and developments, of which ARS 16 corresponds to investment properties and ARS 853 to trading properties.
19. Other operating results, net
09.30.2021 | 09.30.2020 | |
Lawsuits and other contingencies (i) | 3 | - |
Donations | (10) | (9) |
Operating interest expense | 3 | 4 |
Others | 215 | (1) |
Total other operating results, net | 211 | (6) |
(i)
Includes legal costs and expenses.
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20. Financial results, net
09.30.2021 | 09.30.2020 | |
Interest income | 8 | 16 |
Total finance income | 8 | 16 |
Interest expense | (695) | (1,394) |
Other finance costs | (23) | (84) |
Subtotal finance costs | (718) | (1,478) |
Capitalized finance costs | - | 142 |
Total finance costs | (718) | (1,336) |
Net exchange difference | 1,170 | (191) |
Net gain/ loss from changes in fair value of financial assets | 172 | (61) |
Loss from derivative financial instruments, net | - | (13) |
Other financial results | (3) | - |
Total other financial results | 1,339 | (265) |
Inflation adjustment | (172) | (516) |
Total financial results, net | 457 | (2,101) |
21. Related party transactions
Item | 09.30.2021 | 06.30.2021 |
Rights of use assets | 9 | 10 |
Trade and other receivables | 539 | 914 |
Investments in financial assests | 248 | 257 |
Trade and other payables | (382) | (374) |
Borrowings | (14,014) | (15,366) |
Lease liabilities | (10) | (11) |
Total | (13,610) | (14,570) |
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IRSA Inversiones y Representaciones Sociedad Anónima
Related parties | 09.30.2021 | 06.30.2021 | Operation description | Item |
Cresud | (1) | (1) | Long-term incentive plan payable | Trade and other payables |
(736) | (781) | Non-Convertible Notes | Borrowings | |
(103) | (56) | Corporate services payable | Trade and other payables | |
(6) | (12) | Reimbursement of expenses payable | Trade and other payables | |
- | 8 | Leases receivable | Trade and other receivables | |
(2) | (2) | Management fee | Trade and other payables | |
Total parent company | (848) | (844) | ||
IRSA CP | 118 | 155 | Reimbursement of expenses receivable | Trade and other receivables |
(3) | (11) | Leases receivable | Trade and other payables | |
(7,284) | (4,646) | Non-Convertible Notes | Borrowings | |
(4,126) | (8,577) | Loans received | Borrowings | |
9 | 10 | Rights of use | Rights of use assets | |
(62) | (55) | Corporate services payable | Trade and other payables | |
248 | 257 | Non-Convertible Notes | Investments in financial assests | |
(12) | (13) | Non-Convertible Notes | Trade and other payables | |
(18) | (7) | Reimbursement of expenses payable | Trade and other payables | |
- | (2) | Leases payable | Trade and other payables | |
(10) | (11) | Lease liabilities | Lease liabilities | |
Tyrus | 309 | 527 | Borrowings granted | Trade and other receivables |
4 | 4 | Reimbursement of expenses receivable | Trade and other receivables | |
ECLSA | (535) | - | Other liabilities | Borrowings |
- | 117 | Dividends receivable | Trade and other receivables | |
Panamerican Mall S.A. | 1 | 1 | Long-term incentive plan receivable | Trade and other receivables |
Efanur | (141) | (149) | Loans received | Borrowings |
Torodur S.A. | (696) | (735) | Non-Convertible Notes | Borrowings |
Ritelco S.A. | (34) | (43) | Loans received | Borrowings |
Ritelco S.A. | 3 | 3 | Reimbursement of expenses receivable | Trade and other receivables |
NFSA | (28) | (28) | Loans received | Borrowings |
NFSA | 12 | 9 | Hotel services receivable | Trade and other receivables |
Fibesa S.A. | 13 | 14 | Long-term incentive plan receivable | Trade and other receivables |
Fibesa S.A. | (61) | (61) | Loans received | Borrowings |
Real Estate Investment Group VII LP | (34) | (39) | Loans received | Borrowings |
Palermo Invest S.A. | - | 13 | Dividends receivable | Trade and other receivables |
Palermo Invest S.A. | 2 | 1 | Contributions to integrate | Trade and other receivables |
HASAU | 4 | 4 | Hotel services receivable | Trade and other receivables |
HASAU | 30 | - | Contributions to integrate | Trade and other receivables |
Llao Llao Resorts S.A. | 2 | 3 | Hotel services receivable | Trade and other receivables |
New Lipstick | 23 | 27 | Reimbursement of expenses receivable | Trade and other receivables |
Lipstick Management LLC | (114) | (120) | Loans received | Borrowings |
Cyrsa S.A. | (38) | (39) | Loans received | Borrowings |
Inversora Bolívar S.A. | - | 11 | Dividends receivable | Trade and other receivables |
Liveck S.A. | 1 | 1 | Borrowings granted | Trade and other receivables |
Banco Hipotecario S.A | (1) | (1) | Leases and rights of use payable | Trade and other payables |
TGLT S.A. | - | (52) | Other liabilities | Trade and other payables |
UTE IRSA – Galerías Pacífico S.A. | (90) | - | Borrowings obtained | Borrowings |
(130) | (142) | Hotel services payables | Trade and other payables | |
Emprendimiento Recoleta S.A | 1 | 1 | Long-term incentive plan receivable | Trade and other receivables |
Other subsidiaries, associates and joint ventures (1) | 1 | 1 | Reimbursement of expenses receivable | Trade and other receivables |
Total subsidiaries, associates and joint ventures | (12,636) | (13,572) | ||
Directors | (44) | (20) | Fees | Trade and other payables |
5 | 5 | Borrowings granted | Trade and other receivables | |
Total Directors | (39) | (15) | ||
Consultores Asset Management S.A. | 8 | 7 | Reimbursement of expenses receivable | Trade and other receivables |
BHN Vida S.A. | (56) | (59) | Non-Convertible Notes | Borrowings |
BHN Seguros S.A. | (41) | (56) | Non-Convertible Notes | Borrowings |
Austral Gold Argentina S.A. | 1 | - | Reimbursement of expenses receivable | Trade and other receivables |
Futuros y Opciones S.A. | - | (33) | Surety | Borrowings |
1 | 1 | Other credits | Trade and other receivables | |
Other subsidiaries, associates and joint ventures (2) | - | 1 | Reimbursement of expenses receivable | Trade and other receivables |
Total others | (87) | (139) | ||
Total | (13,610) | (14,570) |
(1)
It includes Inversora Bolívar S.A., Cyrsa S.A., BACS, Palermo Invest S.A., y Liveck S.A...
(2)
It includes Austral Gold Argentina S.A., Hamonet S.A., e Isaac Elsztain e Hijos S.C.A.
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IRSA Inversiones y Representaciones Sociedad Anónima
The following is a summary of the results with related parties for the three-month period ended September 30, 2021 and 2020:
Related parties | 30.09.2021 | 30.09.2020 | Operation description |
Cresud | 1 | 3 | Leases and/or rights of use |
35 | - | Financial operations | |
(53) | (47) | Corporate services | |
Total parent company | (17) | (44) | |
IRSA CP | 82 | (707) | Financial operations |
(13) | (6) | Corporate services | |
(3) | (3) | Leases and/or rights of use | |
(1) | - | Fees | |
Fibesa | - | 1 | Financial operations |
ECLSA | - | 8 | Financial operations |
Ritelco | 2 | - | Financial operations |
Efanur | 8 | (2) | Financial operations |
Nuevas Fronteras S.A. | 4 | (2) | Financial operations |
Tyrus | (19) | 5 | Financial operations |
Cyrsa | - | - | Financial operations |
Lipstick Management | 5 | (2) | Financial operations |
Torodur | 22 | (35) | Financial operations |
Other subsidiaries, associates and joint ventures (1) | - | 5 | Fees |
- | 2 | Financial operations | |
Total subsidiaries, associates and joint ventures | 87 | (736) | |
Directores | (35) | (38) | Fees |
Senior Management | (5) | (3) | Fees |
Total Directors and Senior Managment | (40) | (41) | |
Fundación IRSA | (8) | - | Fees |
Estudio Zang, Bergel & Viñes | (2) | (5) | Financial operations |
BHN Vida S.A. | 2 | 2 | Financial operations |
BHN Seguros | 2 | - | Financial operations |
Other subsidiaries, associates and joint ventures (2) | 1 | - | Financial operations |
Total others | (5) | (3) | |
Total at the end of the period | 25 | (824) |
(1)
It includes Inversora Bolívar S.A., Cyrsa S.A., BACS, Palermo Invest S.A., y Liveck S.A...
(2)
It includes Austral Gold Argentina S.A., Hamonet S.A., e Isaac Elsztain e Hijos S.C.A.
The following is a summary of the transactions with related parties without impact in results for the three-month period ended September 30, 2021 and 2020:
Related parties | 30.09.2021 | 30.09.2020 | Operation description |
Tyrus | (4) | (11) | Contributions granted |
Ibosa | (10) | - | Dividend capitalization |
Palermo Invest S.A. | (13) | - | Dividend capitalization |
ECLSA | (114) | - | Dividend capitalization |
Liveck S.A. | - | (5) | Contributions granted |
Total contributions to subsidiaries | (141) | (16) |
48
IRSA Inversiones y Representaciones Sociedad Anónima
22. Foreign currency assets and liabilities
Book amounts of foreign currency assets and liabilities are as follows:
Item (1) | Amount (2) | Foreign exchange rate (3) | Total as of 09.30.2021 | Total as of 06.30.2021 |
Assets | ||||
Trade and other receivables | ||||
US Dollar | 3.15 | 98.54 | 310 | 308 |
Euros | 0.15 | 113.88 | 17 | 15 |
Receivables with related parties | ||||
US Dollar | 3.30 | 98.74 | 326 | 563 |
Total Trade and other receivables | 653 | 886 | ||
Investments in financial assets | ||||
US Dollar | 0.10 | 98.54 | 10 | 11 |
Investments in financial assets with related parties | ||||
US Dollar | 2.62 | 98.74 | 259 | 257 |
Total Investments in financial assets | 269 | 268 | ||
Cash and cash equivalents | ||||
US Dollar | 0.88 | 98.54 | 87 | 94 |
Total Cash and cash equivalents | 87 | 94 | ||
Total Assets | 1,009 | 1,248 | ||
Liabilities | ||||
Trade and other payables | ||||
US Dollar | 1.40 | 98.74 | 138 | 139 |
Euros | 0.11 | 114.36 | 13 | 14 |
Payables with related parties | ||||
US Dollar | 0.08 | 98.74 | 8 | 57 |
Total Trade and other payables | 159 | 210 | ||
Lease liabilities | ||||
US Dollar | 0.09 | 98.74 | 9 | 11 |
Total Lease liabilities | 9 | 11 | ||
Borrowings | ||||
US Dollar | 160.40 | 98.74 | 15,838 | 14,030 |
Borrowings with related parties | ||||
US Dollar | 90.15 | 98.74 | 8,901 | 5,758 |
Total Borrowings | 24,739 | 19,788 | ||
Total Liabilities | 24,907 | 20,009 |
(1)
Considering foreign currencies those that differ from Group’s functional currency at each period / year.
(2)
Expressed in millions of foreign currency.
(3)
Exchange rate as of September 30, 2021 according to Banco de la Nación Argentina records.
23.
CNV General Resolution N° 622/13
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622/13, below is a detail of the notes to the Unaudited Condensed Interim Separate Financial Statements that disclose the information required by the Resolution in Exhibits.
Exhibit A - Property, plant and equipment | Note 7 Investment properties and Note 8 Property, plant and equipment |
Exhibit B - Intangible assets | Note 10 Intangible assets |
Exhibit C - Equity investments | Note 6 Information about the main subsidiaries, associates and joint ventures |
Exhibit D - Other investments | Note 11 Financial instruments by category |
Exhibit E - Provisions | Note 12 Trade and other receivables and Note 16 Provisions |
Exhibit F - Cost of sales and services provided | Note 9 Trading properties and Note 18 Expenses by nature |
Exhibit G - Foreign currency assets and liabilities | Note 22 Foreign currency assets and liabilities |
49
IRSA Inversiones y Representaciones Sociedad Anónima
24.
CNV General Resolution N° 629/14 – Storage of documentation
On August 14, 2014, the CNV issued General Resolution N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Company has entrusted the storage of certain non-sensitive and old information to the following provider:
Storage of documentation responsible | Location | |
Iron Mountain Argentina S.A. | Av. Amancio Alcorta 2482, Autonomous City of Buenos Aires | |
Pedro de Mendoza 2143, Autonomous City of Buenos Aires | ||
Saraza 6135, Autonomous City of Buenos Aires | ||
Azara 1245, Autonomous City of Buenos Aires | ||
Polígono industrial Spegazzini, Autopista Ezeiza Km 45, Cañuelas, Province of Buenos Aires | ||
Cañada de Gómez 3825, Autonomous City of Buenos Aires |
It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of Section I, Chapter V, Title II of the CNV RULES (2013 as amended) are available at the registered office.
On February 5, 2014 there was a widely known accident in Iron Mountain’s warehouse. Such company is a supplier of the Company and Company’s documentation was being kept in the mentioned warehouse. Based on the internal review carried out by the Company, duly reported to the CNV on February 12, 2014, the information kept at the Iron Mountain premises that were on fire do not appear to be sensitive or capable of affecting normal operations.
25.
Economic context in which the Company operates
See Note 29 to the Unaudited Condensed Interim Consolidated Financial Statements.
26.
Subsequent events
See Note 30 to the Unaudited Condensed Interim Consolidated Financial Statements.
50
Free translation from the original prepared in Spanish for publication in Argentina
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM SEPARATE FINANCIAL STATEMENTS
To the Shareholders, President and Directors of
IRSA Inversiones y Representaciones Sociedad Anónima
Legal address: Carlos Della Paolera 261 - 9th floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52532274-9
Introduction
We have reviewed the accompanying unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima (“the Company”), including the unaudited condensed interim separate statement of financial position at September 30, 2021, the unaudited condensed interim separate statements of income and other comprehensive income for the three-month period ended September 30, 2021 and the unaudited condense interim separate statements of changes in shareholders’ equity and of cash flows for the three-month period then ended, and selected explanatory notes.
The balances and other information for the fiscal year ended on June 30, 2021 and its interim periods are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.
Management’s responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim separate financial statements in accordance with International Financial Reporting Standards, adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and included by the National Securities Commission (CNV) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the unaudited condensed interim separate financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 Interim Financial Information (IAS 34).
51
Free translation from the original prepared in Spanish for publication in Argentina
Scope of our review
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim separate financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing 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 on the separate statements of financial position, and the separate statements of income and other comprehensive income and of cash flows of the Company.
Conclusion
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim separate financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34 Interim Financial Reporting.
Report on compliance with current regulations
In accordance with current regulations, we report, in connection with IRSA Inversiones y Representaciones Sociedad Anónima, that:
a) the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima have not been transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
b) the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal aspects in accordance with legal requirements except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the General Journal Book of the accounting entries corresponding to the month of September 2021;
52
Free translation from the original prepared in Spanish for publication in Argentina
c) at September 30, 2021 the debt of IRSA Inversiones y Representaciones Sociedad Anónima accrued in favor of the Argentine Integrated Social Security System, as shown by the Company’s accounting records, amounted to ARS 124,333.53, which was not due at that date.
Autonomous City of Buenos Aires, November 8, 2021
PRICE WATERHOUSE & CO. S.R.L. (Partner) | ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner) | |
C.P.C.E.C.A.B.A. V° 1 F° 17 | C.P.C.E.C.A.B.A. V° 1 F° 30 | |
Walter Zablocky Public Accountant (UNLP) C.P.C.E.C.A.B.A. V. 340 F. 156 | Noemí I. Cohn Public Accountant (UBA) C.P.C.E. C.A.B.A. V. 116 F. 135 |
53
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
I. Brief comment on the Company’s activities during the period, including references to significant events occurred after the end of the period.
Economic context in which the Group operates
The Group operates in a complex context both due to macroeconomic conditions, whose main variables have recently experienced strong volatility, as well as regulatory, social, and political conditions, both nationally and internationally.
The results from operations may be affected by fluctuations in the inflation and the exchange rate of the Argentine peso against other currencies, mainly the dollar, changes in interest rates which have an impact on the cost of capital, changes in government policies, capital controls and other political or economic events both locally and internationally.
In December 2019, a new strain of coronavirus (SARS-COV-2), which caused severe acute respiratory syndrome (COVID-19) appeared in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response, countries have taken extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, closing businesses deemed non-essential, instructing residents to practice social distancing, implementing lockdowns, among other measures. The ongoing pandemic and these extraordinary government measures are affecting global economic activity, resulting in significant volatility in global financial markets.
On March 3, 2020, the first case of COVID-19 was registered in the country and as of today, more than 5,290,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentinian Government implemented a series of health measures of social, preventive and mandatory lockdown at the national level with the closure of non-essential activities, including shopping malls, as well as the suspension of flights and border closures, for much of the year 2020. Since October 2020, a large part of the activities started to become more flexible, in line with a decrease in infections, although between April 16 and June 11, 2021, because of the sustained increase in the cases registered, the National Government established restrictions on night activity and the closure of shopping malls in Buenos Aires Metropolitan Area. Due to the flexibility that has occurred in the economic activities since the beginning of this fiscal year and as of the date of issuance of these financial statements, 100% of the shopping malls are operational.
At the local environment, the following circumstances were observed:
●
In August 2021, the Monthly Economic Activity Estimator (“EMAE” in Spanish) reported by the National Institute of Statistics and Censuses (“INDEC” in Spanish), registered a variation of 12.8% compared to the same month of 2020, and 1.1% compared to the previous month.
●
The annual retail inflation reached 52.47% in the last 12 months. The survey on market expectations prepared by the Argentine Central Bank in September 2021, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 48.2% i.a. for December 2021 and 46.0% for December 2022. Analysts participating in the REM forecast a rebound in economic activity in 2021, reaching an economic growth of 7.6%.
●
In the period from September 2020 to September 2021, the Argentine peso depreciated 29.6% against the US dollar according to the wholesale average exchange rate of Banco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of September 30, 2021, there is an exchange gap of approximately 78.9% between the official price of the dollar and its price in parallel markets, which impacts the level of activity in the economy and affects the level of reserves of the Argentine Central Bank. Additionally, these exchange restrictions, or those that may be dictated in the future, could affect the Group's ability to access the Single Free Exchange Market (“MULC” in Spanish) to acquire the necessary currencies to meet its financial obligations.
1
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
COVID-19 pandemic
As described above, the COVID-19 pandemic has adversely impacted both the global economy and the Argentine economy and the Group's business, mainly in Shopping Malls and Hotels segments. Since the beginning of fiscal year 2022, and until the date of presentation of the financial statements, the Company's shopping malls are fully operational, as well as the office buildings, despite the remote work modality that some tenants continue to apply. Regarding hotels, although they have been operating since December 2020, the sector continues working with certain restrictions on air flows and the influx of international tourism.
The final extent of the Coronavirus outbreak and its impact on the country's economy is still uncertain. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Group’s ability to meet its financial commitments for the next twelve months.
The Group is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.
2
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
Consolidated Results
(in millions of ARS) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Revenues | 4,382 | 2,453 | 78.6% | 6,841 | (35.9)% |
Result from fair value adjustment of investment properties | (6,494) | 36,728 | (117.7)% | 18,829 | (134.5)% |
Result from operations | (4,689) | 35,856 | (113.1)% | 21,562 | (121.7)% |
Depreciation and amortization | 149 | 186 | (19.9)% | 181 | (17.9)% |
EBITDA (1) | (4,540) | 36,042 | (112.6)% | 21,744 | (120.9)% |
Adjusted EBITDA (1) | 2,076 | 7,477 | (72.2)% | 2,915 | (28.8)% |
Result for the period | (1,014) | 12,716 | (108.0)% | 22,897 | (104.4)% |
Attributable to equity holders of the parent | (600) | 10,086 | (105.9)% | 6,875 | (108.7)% |
Attributable to non-controlling interest | (414) | 2,630 | (115.7)% | 16,022 | (102.6)% |
(1)
See Point XIX: EBITDA Reconciliation
Group’s income increased by 78.6% during the first quarter of fiscal year 2022 compared to the same quarter of fiscal year 2021 mainly due to the impact of COVID-19 pandemic in the Shopping Malls and Hotels segments that straightly affected operations during previous fiscal year, while adjusted EBITDA decreased by 72.2% mainly explained by Sales and Developments segment whose adjusted EBITDA reached ARS 7,710 million during the first quarter of previous fiscal year due to Bouchard 710 and Boston Tower’s office sales. Compared with the first quarter of fiscal year 2020, that was not affected by the COVID-19 pandemic, the decrease in EBITDA is 28.8%. Rental segments Adjusted EBITDA reached ARS 2,152 million, ARS 1,506 million from the Shopping Malls segment ARS 567 million from the Offices segment and ARS 79 million from Hotels Segment.
Net result for the first quarter of fiscal year 2022 registered a loss of ARS 1,014 million compared to a gain of ARS 12,716 million during the same quarter of previous fiscal year mainly explained by a loss due to changes in the fair value of investment properties.
II. Shopping Malls (through our subsidiary IRSA Propiedades Comerciales S.A.)
Our portfolio’s leasable area totaled 335,641 sqm of GLA (excluding certain spaces occupied by hypermarkets, which are not our tenants). Real tenants’ sales of our shopping centers reached ARS 34,205 million in the first quarter of fiscal year 2022, 322% higher than in IQ21 affected by the closure of operations and 10.7% below the first quarter of FY20, not affected by the pandemic. Portfolio’s occupancy reached 89.6%, mainly due to the exit of Falabella in Mendoza Plaza Shopping. Excluding the effect of the remaining vacancy from large stores, occupancy would have been 94.3%.
Shopping Malls’ Operating Indicators
IQ 22 | IVQ 21 | IIIQ 21 | IIQ 21 | IQ 21 | |
Gross leasable area (sqm) | 335,641 | 334,826 | 335,893 | 333,460 | 333,345 |
Tenants’ sales (3 months cumulative in current currency) | 34,205 | 16,913 | 28,263 | 29,804 | 8,105 |
Occupancy | 89.6% | 89.9% | 89.5% | 88.3% | 92.8% |
Shopping Malls’ Financial Indicators
(in millions of ARS) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Revenues from sales, leases, and services | 2.225 | 560 | 297.3% | 3.179 | (30.0)% |
Net result from fair value adjustment on investment properties | (3.698) | 1.796 | (305.9)% | 916 | (503.7)% |
Result from operations | (2.241) | 1.513 | (248.1)% | 3.174 | (170.6)% |
Depreciation and amortization | 49 | 64 | (23.4)% | 57 | (14.0)% |
EBITDA (1) | (2.192) | 1.577 | (239.0)% | 3.231 | (167.8)% |
Adjusted EBITDA (1) | 1.506 | (219) | - | 2.315 | (34.9)% |
(1)
See Point XIX: EBITDA Reconciliation
3
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
Income from this segment increased by 297.3% during the first quarter of fiscal year 2022 when compared with the same period of previous fiscal year, mainly explained by the closure of operations due to COVID-19 from March 20 to October 14, 2020. As of the date of presentation of the financial statements, all the Company's shopping malls are operational.
Adjusted EBITDA for the first quarter of fiscal year 2022 reached ARS 1,506 million, a 34.9% below that the first quarter of fiscal year 2020, not affected by the pandemic.
Operating data of our shopping malls
Date of acquisition | Location | Gross Leasable Area (sqm)(1) | Stores | Occupancy (2) | IRSA CP Interest (3) | |
Alto Palermo | Dec-97 | City of Buenos Aires | 20,071 | 133 | 99.7% | 100% |
Abasto Shopping(4) | Nov-99 | City of Buenos Aires | 36,797 | 159 | 95.8% | 100% |
Alto Avellaneda | Dec-97 | Province of Buenos Aires | 40,286 | 125 | 68.2% | 100% |
Alcorta Shopping | Jun-97 | City of Buenos Aires | 15,812 | 112 | 99.4% | 100% |
Patio Bullrich | Oct-98 | City of Buenos Aires | 11,396 | 89 | 87.4% | 100% |
Dot Baires Shopping | May-09 | City of Buenos Aires | 47,366 | 164 | 83.1% | 80% |
Soleil | Jul-10 | Province of Buenos Aires | 15,925 | 78 | 93.5% | 100% |
Distrito Arcos | Dec-14 | City of Buenos Aires | 14,335 | 65 | 100.0% | 90.0% |
Alto Noa Shopping | Mar-95 | Salta | 19,388 | 84 | 97.5% | 100% |
Alto Rosario Shopping | Nov-04 | Santa Fe | 33,731 | 138 | 94.8% | 100% |
Mendoza Plaza Shopping | Dec-94 | Mendoza | 42,947 | 131 | 85.7% | 100% |
Córdoba Shopping | Dec-06 | Córdoba | 15,360 | 105 | 97.6% | 100% |
La Ribera Shopping | Aug-11 | Santa Fe | 10,530 | 70 | 97.3% | 50% |
Alto Comahue | Mar-15 | Neuquén | 11,697 | 94 | 92.2% | 99.95% |
Patio Olmos(5) | Sep-07 | Córdoba | - | |||
Total | 335,641 | 1,547 | 89.6% |
(1) Corresponds to gross leasable area in each property. Excludes common areas and parking spaces.
(2) Calculated dividing occupied square meters by leasable area as of the last day of the fiscal period.
(3) Company’s effective interest in each of its business units.
(4) Excludes Museo de los Niños (3,732 square meters in Abasto).
(5) IRSA CP owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party.
Tenant Retail Sales in real terms as of September 30, 2021, compared to the same quarter of fiscal years 2021 and 2020 (1)
(ARS million) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Alto Palermo | 4,033 | 199 | 1,926.6% | 4,752 | (15.1)% |
Abasto Shopping | 3,998 | 147 | 2,619.7% | 4,926 | (18.8)% |
Alto Avellaneda | 2,983 | 144 | 1,971.5% | 4,314 | (30.9)% |
Alcorta Shopping | 3,016 | 27 | 11,070.4% | 2,693 | 12.0% |
Patio Bullrich | 1,450 | 263 | 451.3% | 1,819 | (20.3)% |
Dot Baires Shopping | 2,609 | 130 | 1,906.9% | 3,644 | (28.4)% |
Soleil | 2,222 | 288 | 671.5% | 2,099 | 5.9% |
Distrito Arcos | 2,595 | 783 | 231.4% | 2,274 | 14.1% |
Alto Noa Shopping | 1,677 | 1,023 | 63.9% | 1,674 | 0.2% |
Alto Rosario Shopping | 4,218 | 1,927 | 118.9% | 3,826 | 10.2% |
Mendoza Plaza Shopping | 2,417 | 1,921 | 25.8% | 3,006 | (19.6)% |
Córdoba Shopping | 1,380 | 793 | 74.0% | 1,177 | 17.2% |
La Ribera Shopping(1) | 591 | 222 | 166.2% | 872 | (32.2)% |
Alto Comahue | 1,016 | 238 | 326.9% | 1,218 | (16.6)% |
Total sales | 34,205 | 8,105 | 322.0% | 38,294 | (10.7)% |
(1) Through our joint venture Nuevo Puerto Santa Fe S.A.
4
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
Cumulative tenants’ sales per type of business in real terms compared to the same quarter of fiscal years 2021 and 2020(1)
(ARS million) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Department Store | - | 580 | -100.0% | 2,025 | (100.0)% |
Clothes and footwear | 20,326 | 4,023 | 405.2% | 20,698 | (1.8)% |
Entertainment | 755 | - | - | 1,597 | (52.7)% |
Home and decoration | 987 | 243 | 306.2% | 752 | 31.3% |
Home Appliances | 3,264 | 663 | 392.3% | 4,674 | (30.2)% |
Restaurants | 5,133 | 1,410 | 264.0% | 4,788 | 7.2% |
Miscellaneous | 576 | 113 | 409.7% | 451 | 27.7% |
Services | 3,164 | 1,073 | 194.9% | 3,309 | (4.4)% |
Total | 34,205 | 8,105 | 322.0% | 38,294 | (10.7)% |
(1)
Includes sales from stands and excludes spaces used for special exhibitions.
Revenues from cumulative leases as of September 30, 2021, compared to the same quarter of fiscal years 2021 and 2020
(ARS million) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Base rent (1) | 715 | 99 | 622.2% | 1,594 | (55.1)% |
Percentage rent (1) | 1,107 | 96 | 1,053.1% | 761 | 45.5% |
Total rent | 1,822 | 195 | 834.1% | 2,355 | (22.6)% |
Non-traditional advertising | 44 | 50 | (12.0)% | 85 | (48.2)% |
Revenues from admission rights | 198 | 223 | (11.2)% | 401 | (50.6)% |
Fees | 35 | 38 | (7.9)% | 44 | (20.5)% |
Parking | 62 | 5 | 1,140.0% | 186 | (66.7)% |
Commissions | 54 | 44 | 22.7% | 85 | (36.5)% |
Other | 10 | 5 | 100.0% | 23 | (56.5)% |
Subtotal(2) | 2,225 | 560 | 297.3% | 3,179 | (30.0)% |
Expenses and Collective Promotion Fund | 963 | 540 | 78.3% | 1,287 | (25.2)% |
Total | 3,188 | 1,100 | 189.8% | 4,466 | (28.6)% |
(1)
Includes Revenues from stands for ARS 107.3 million cumulative as of September 2021
(2)
Includes ARS 2.7 million from Patio Olmos.
III. Offices
According to Cushman & Wakefield, the quarter closed with a stable vacancy of 14.3%, in the Buenos Aires City premium market, due to the gradual occupation of workspaces thanks to advances in vaccination and end of the winter period, while prices show a decline averaging USD 25.1 / m2.
Offices’ Operating Indicators
IQ 22 | IVQ 21 | IIIQ 21 | IIQ 21 | IQ 21 | |
Gross Leasable area | 113,451 | 113,291 | 114,475 | 114,475 | 93,144 |
Total Occupancy | 72.4% | 74.7% | 76.3% | 75.6% | 83.7% |
Class A+ & A Occupancy | 78.9% | 80.1% | 81.2% | 79.5% | 91.6% |
Class B Occupancy | 41.1% | 48.5% | 52.4% | 56.7% | 53.6% |
Rent USD/sqm | 25.1 | 25.7 | 25.4 | 25.7 | 26.0 |
The gross leasable area during the first quarter of fiscal year 2022 was 113,451 m2, in line with the previous quarter. Portfolio average A+ & A reached 78.9%, and average rental price reached USD 25.1 per sqm.
5
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
Offices’ Financial Indicators
(in ARS million) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Revenues from sales, leases and services | 716 | 825 | (13.2)% | 1,063 | (32.6)% |
Net result from fair value adjustment on investment properties, PP&E e inventories | (1,833) | 19,992 | (109.2)% | 10,437 | (117.6)% |
Profit from operations | (1,280) | 20,561 | (106.2)% | 11,303 | (111.3)% |
Depreciation and amortization | 14 | 23 | (39.1)% | 11 | 27.3% |
EBITDA(1) | (1,266) | 20,584 | (106.2)% | 11,314 | (111.2)% |
Adjusted EBITDA (1) | 567 | 592 | (4.2)% | 877 | (35.3)% |
(1)
See Point XIX: EBITDA Reconciliation
During the first quarter of fiscal year 2022, revenues from the offices segment decreased by 13.2% and Adjusted EBITDA decreased 4.2% compared to the previous fiscal year, mainly explained by the lower occupancy and sale of part of the portfolio, although compensated by the incorporation of “261 Della Paolera”. Adjusted EBITDA margin was 79.1%, 7.3 bps higher than the previous year.
Below is information on our office segment and other rental properties:
Offices & Others | Date of Acquisition | Gross Leasable Area (sqm)(1) | Occupancy (2) | IRSA CP’s Actual Interest | 3M 22 - Rental revenues (ARS thousand) (6) |
AAA & A Offices | |||||
Republica Building | Dec-14 | 19,885 | 60.9% | 100% | 94,443 |
Boston Tower (6) | Dec-14 | 311 | |||
Intercontinental Plaza (3) | Dec-14 | 2,979 | 100.0% | 100% | 56,813 |
Dot Building | Nov-06 | 11,242 | 84.9% | 80% | 63,353 |
Zetta | May-19 | 32,173 | 81.1% | 80% | 206,243 |
261 Della Paolera – Catalinas (5) | Dec-20 | 27,690 | 84.6% | 100% | 241,202 |
Total AAA & A Offices | 93,969 | 78.9% | 662,365 | ||
B Offices | |||||
Suipacha 652/64 | Dec-14 | 11,465 | 17.3% | 100% | 12,713 |
Philips | Jun-17 | 8,017 | 75.1% | 100% | 32,953 |
Total B Buildings | 19,482 | 41.1% | 100% | 45,666 | |
Subtotal Offices | 113,451 | 72.4% | 708,031 | ||
Other rental properties (4) | 7,698 | ||||
Total Offices and Others | 715,729 |
(1) Corresponds to the total gross leasable area of each property as of September 30, 2021. Excludes common areas and parking lots.
(2) Calculated by dividing occupied square meters by gross leasable area as of September 30, 2021.
(3) We own 13.2% of the building that has 22,535 square meters of gross leasable area.
(4) Includes all those properties that are not buildings intended for rent, but that are partially or fully rented (Philips Deposit, Anchorena 665, San Martin Plot and Santa María del Plata).
(5) Includes 824 square meters of gross leasable area of the basement.
(6) The office buildings were sold during the fiscal year.
IV. Hotels
After the restrictions imposed in 2020 due to the pandemic, which kept the sector without operations for approximately 9 months, the activity begins to show signs of recovery thanks to domestic tourism and the government's incentives to promote it in a context where certain restrictions still apply in air flows and the arrival of international tourism.
The Group's hotels located in the City of Buenos Aires operate with low occupancy levels, while the Llao Llao resort, in the city of Bariloche, shows a growing demand for domestic tourism and operational indicators similar to those observed before the pandemic.
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
(in ARS million) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Revenues | 473 | 9 | 5,155.6% | 1.069 | (55.8)% |
Profit from operations | 17 | (292) | - | 128 | (86.7)% |
Depreciation and amortization | 62 | 72 | (13.9)% | 67 | (7.5)% |
EBITDA | 79 | (220) | - | 195 | (59.5)% |
During the first quarter of fiscal year 2022, Hotels segment recorded a decrease in revenues of 55.8% compared with the same quarter of fiscal year 2020 while the segment’s EBITDA reached ARS 79 million, a 59.5% decrease when compared to the same period of fiscal year 2020.
The following chart shows certain information regarding our luxury hotels:
Hotels | Date of Acquisition | IRSA’s Interest | Number of rooms | Occupancy |
Intercontinental (1) | 11/01/1997 | 76,34% | 313 | 11.7% |
Sheraton Libertador (2) | 03/01/1998 | 100,00% | 200 | 9.6% |
Llao Llao (3) | 06/01/1997 | 50,00% | 205 | 46.4% |
Total | - | - | 718 | 21.0% |
(1)
Through Nuevas Fronteras S.A. (Subsidiary of IRSA).
(2)
Through Hoteles Argentinos S.A.U.
(3)
Through Llao Llao Resorts S.A.
Hotels’ operating and financial indicators.
IQ 22 | IVQ 21 | IIIQ 21 | IIQ 21 | IQ 21 | |
Average Occupancy | 21.0% | 12,1% | 28.2% | 8.0% | 0.6% |
Average Rate per Room (USD/night) | 243 | 151 | 230 | 175 | 95 |
V. Sales and Developments
(in ARS million) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Revenues | - | 59 | (100.0)% | 127 | (100.0)% |
Net result from fair value adjustment on investment properties | (1,244) | 15,393 | (108.1)% | 7,856 | (115.8)% |
Result from operations | (1,204) | 14,729 | (108.2)% | 7,692 | (115.7)% |
Depreciation and amortization | 2 | 6 | (66.7)% | 18 | (88.9)% |
Net result from fair value adjustment on investment properties | 122 | 8,163 | (98.5)% | - | - |
Barter Agreement results | - | - | - | - | - |
EBITDA (1) | (1,202) | 14,735 | (108.2)% | 7,710 | (115.6)% |
Adjusted EBITDA (1) | 164 | 7,505 | (97.8)% | (146) | - |
(1)
See Point XIX: EBITDA Reconciliation
Revenues from the “Sales and Development” segment decreased 100% during the first quarter of fiscal year 2022 compared to previous fiscal year. Adjusted EBITDA of Sales and Developments was ARS 164 million during the period compared to ARS 7,505 million in the same quarter of last year, mainly due to the impact of the realized fair value of the sales of Bouchard 710 and Torre Boston in the latter.
VI. CAPEX (through our subsidiary IRSA Propiedades Comerciales S.A.)
Alto Palermo Expansion
We keep working on the expansion of Alto Palermo shopping mall, the shopping mall with the highest sales per square meter in our portfolio, that will add a gross leasable area of approximately 3,900 square meters and will consist in moving the food court to a third level by using the area of an adjacent building acquired in 2015. Work progress as of September 30, 2021, was 95.7% and construction works are expected to be finished by January 2022.
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
VII. International
Investment in Condor Hospitality Inc.
On September 22, 2021, Condor Hospitality Trust S.A. (“Condor”) has signed a sale agreement for its portfolio of 15 hotels in the United States with B9 Cowboy Mezz A LLC, an affiliate of Blackstone Real Estate Partners. This agreement is subject to the approval of the Condor Shareholders' Meeting.
In this context, Condor announced a Liquidation and Dissolution Plan with the intention of distributing certain net proceeds from the sale of the hotel portfolio to shareholders in one or more instalments.
The sale agreement and the implementation of the Liquidation Plan are subject to the approval of the Condor Shareholders' Meeting.
As of the date of these financial statement presentation, the Company owns, directly and indirectly, 3,191,213 ordinary shares representing 21.7% of the capital stock
VIII. Corporate
(in millions of ARS) | IQ 22 | IQ 21 | YoY Var | IQ 20 | YoY Var |
Revenues | - | - | - | - | - |
Result from operations | (115) | (120) | (4.2)% | (176) | (34.7)% |
Depreciation and amortization | 3 | 2 | 50.0% | 2 | 50.0% |
EBITDA | (112) | (118) | (5.1)% | (174) | (35.6)% |
IX. Financial Operations and Others
Interest in Banco Hipotecario S.A. (“BHSA”)
BHSA is a leading bank in the mortgage lending industry, in which IRSA held an equity interest of 29.91% as of September 30, 2021. During the first quarter of fiscal year 2021, the investment in Banco Hipotecario generated an ARS 360 million loss compared to a ARS 88 million loss during the same period of 2021. For further information, visit http://www.cnv.gob.ar or http://www.hipotecario.com.ar.
X. EBITDA by Segment (ARS million)
IQ 22 | Shopping Malls | Offices | Sales and Developments | Hotels | International | Corporate | Others | Total |
Result from operations | (2,241) | (1,280) | (1,204) | 17 | (10) | (115) | 59 | (4,774) |
Depreciation and amortization | 49 | 14 | 2 | 62 | - | 3 | 20 | 150 |
EBITDA | (2,192) | (1,266) | (1,202) | 79 | (10) | (112) | 79 | (4,624) |
IQ 21 | Shopping Malls | Offices | Sales and Developments | Hotels | International | Corporate | Others | Total |
Result from operations | 1,513 | 20,561 | 14,729 | (292) | 17 | (120) | 750 | 37,158 |
Depreciation and amortization | 64 | 23 | 6 | 72 | - | 2 | 19 | 186 |
EBITDA | 1,577 | 20,584 | 14,735 | (220) | 17 | (118) | 769 | 37,344 |
EBITDA Var | (239.0)% | (106.2)% | (108.2)% | - | (158.8)% | (5.1)% | (89.7)% | (112.4)% |
IQ 20 | Shopping Malls | Offices | Sales and Developments | Hotels | International | Corporate | Others | Total |
Result from operations | 3,174 | 11,303 | 7,692 | 128 | (66) | (134) | 392 | 22,489 |
Depreciation and amortization | 56 | 11 | 18 | 67 | 2 | 2 | 15 | 171 |
EBITDA | 3,230 | 11,314 | 7,710 | 195 | (64) | (132) | 407 | 22,660 |
EBITDA Var | (167.9)% | (111.2)% | (115.6)% | (59.5)% | (84.4)% | (15.2)% | (80.6)% | (120.4)% |
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
XI. Reconciliation with Consolidated Statements of Income (ARS million)
Below is an explanation of the reconciliation of the company’s profit by segment with its Consolidated Statements of Income. The difference lies in the presence of joint ventures included in the segment but not in the Statements of Income.
Total as per segment | Joint ventures* | Expenses and CPF | Elimination of inter-segment transactions | Total as per Statements of Income | |
Revenues | 3,430 | (24) | 985 | (9) | 4,382 |
Costs | (745) | 16 | (1,025) | - | (1,754) |
Gross result | 2,685 | (8) | (40) | (9) | 2,628 |
Result from sales of investment properties | (6,609) | 115 | - | - | (6,494) |
General and administrative expenses | (752) | 2 | - | 13 | (737) |
Selling expenses | (337) | (1) | - | - | 8338) |
Other operating results, net | 239 | 1 | 16 | (4) | 252 |
Result from operations | (4,774) | 109 | (24) | - | (4,689) |
Share of loss of associates and joint ventures | (80) | (75) | - | - | (155) |
Result before financial results and income tax | (4,854) | 34 | (24) | - | (4,844) |
*Includes Puerto Retiro, CYRSA, Nuevo Puerto Santa Fe and Quality (San Martín plot).
XII. Financial Debt and Other Indebtedness
The following table describes our total indebtedness as of September 30, 2021:
Description | Currency | Amount (USD MM) (1) | Interest Rate | Maturity |
Bank overdrafts | ARS | 3.2 | Floating | < 360 days |
Series VII NCN | USD | 33.7 | 4.0% | Jan-22 |
Series X NCN | ARS | 7.1 | Floating | Mar-22 |
Series V NCN | USD | 9.2 | 9.0% | May-22 |
Series IX NCN | USD | 80.7 | 10.0% | Mar-23 |
Series I NCN | USD | 3.1 | 10.0% | Mar-23 |
Series VIII NCN | USD | 31.8 | 10.0% | Nov-23 |
Series XI NCN | USD | 15.8 | 5.0% | Mar-24 |
Series XII NCN | ARS | 48.3 | Floating | Mar-24 |
Series XIII NCN | USD | 58.2 | 3.9% | Aug-24 |
Loan with IRSA CP (3) | USD | 41.4 | - | Mar-22 |
Other debt | USD | 5.9 | - | Feb-22 |
IRSA’s Total Debt | USD | 338.3 | ||
Cash & Cash Equivalents + Investments | USD | 6.8 | ||
IRSA’s Net Debt | USD | 331.6 | ||
Bank loans and overdrafts | ARS | 51.7 | - | < 360 days |
PAMSA loan | USD | 16.2 | Fixed | Feb-23 |
IRSA CP NCN Class II | USD | 358.5 | 8.75% | Mar-23 |
IRSA CP’s Total Debt | USD | 426.4 | ||
Cash & Cash Equivalents + Investments (2) | USD | 126.0 | ||
Intercompany Credit | USD | 41.4 | ||
IRSA CP’s Net Debt | USD | 259.0 |
(1)
Principal amount in USD (million) at an exchange rate of ARS 98.74/USD, without considering accrued interest or eliminations of balances with subsidiaries.
(2)
Includes Cash and cash equivalents, Investments in Current Financial Assets and related companies notes holding.
(3)
Includes amounts taken by IRSA and subsidiaries.
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
XIII. Material and Subsequent Events
August 2021: Note’s issuance
On August 26, 2021, the company issued in the local market a total amount of USD 58.1 million through the following Notes:
●
Series XIII: denominated in dollars and payable in pesos at the applicable exchange rate for USD 58.1 million at a fixed rate of 3.9%, with semi-annual payments. The principal payment will be in three installments, counted from the date of issuance: the first for 25% of the nominal value on August 26, 2023; the second for 25% on February 26, 2024, and the third for 50% of the nominal value on August 26, 2024. The price of issuance was 100.0% of the nominal value.
The funds will be used to refinance short-term liabilities.
September 2021: Warrants exercise
Between September 17 and 25, 2021, certain warrants holders have exercised their right to acquire additional shares and 30,741 ordinary shares of the Company were registered, with a nominal value of VN ARS 1. As a result of the exercise, USD 13,280.11 has collected the Company.
After the exercise of these warrants, the number of shares and the capital stock of the Company goes from 658,676,460 to 658,707,201, and the new number of outstanding warrants goes from 80,000,000 to 79,969,259.
September 2021: Merger Proposal
On September 30, 2021, IRSA & IRSA Propiedades Comerciales Boards of Directors approved the prior merger agreement between both companies and the corresponding special financial statements as of June 30, 2021, initiating the corporate reorganization process under the terms of art. 82 et seq. of the General Law of Companies. The merger process has particular characteristics given that they are two companies included in the public offering regime, reason why, not only apply the current provisions of the General Law of Companies but also the procedures established regarding reorganization of companies of the Regulations of the “Comisión Nacional de Valores” (National Securities Commission) and the markets, both national and foreign, where their shares are listed.
The Merger is carried out in order to streamline the technical, administrative, operational and economic resources of both Companies, standing out among others: (a) the operation and maintenance of a single transactional information system and centralization of the entire accounting registration process; (b) presentation of a single financial statement to the different control agencies with the consequent cost savings in accounting and advisory fees, tariffs and other related expenses; (c) simplification of the accounting information reporting and consolidation process,as a consequence of the reduction that the merger would imply for the corporate structure as a whole; (d) removal of the IRSA PC public offering listing on BYMA and NASDAQ with the associated costs that this represents; (e) cost reduction for legal fees and tax filings; (f) increase in the percentage of the capital stock that is listed in the different markets, increasing the liquidity of the listed shares; (g) tax efficiencies and (h) preventively avoid the potential overlap of activities between the Companies.
The merger is subject to the approval of the shareholders' meeting of both companies whose call will be made once they have the administrative approval of the United States Securities and Exchange Commission, an entity to which they are subject since both companies list their shares in markets that operate in said jurisdiction.
Once the merger by absorption between IRSA as the absorbing company and IRSA CP as the absorbed company has been approved, the effective date will be July 1, 2021, date from which the transfer to the absorbing company of all the assets of the absorbed company will take effect, thereby incorporating all its rights and obligations, assets, and liabilities into the equity of the absorbing company, all subject to the required corporate approvals.
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
Likewise, and within the framework of the reorganization process, the Board of Directors has approved the exchange ratio, which has been established at 1.40 IRSA shares for each IRSA PC share, which is equivalent to 0.56 IRSA GDS for each ADS of IRSA PC.
The exchange of IRSA PC shares for IRSA shares will be carried out once the entire administrative process has been completed and once the registration has been made in the “Inspección General de Justicia” (General Inspection of Justice), a process that may take several months.
October 2021: General Ordinary Shareholders’ Meeting
At the General Ordinary and Extraordinary Shareholders’ Meeting held on October21, 2021, the following matters, inter alia, were resolved:
●
To partially write off the special reserve in the amount of ARS 30,693,399,903 which, adjusted for inflation, amounts to the sum of ARS 33,542,594,551, and use it for the total absorption of the negative result for the fiscal year 2021
●
Designation of board members.
●
Compensations to the Board of Directors for the fiscal year ended June 30, 2021.
XIV. Summarized Comparative Consolidated Balance Sheet
(in ARS million) | 09.30.2021 | 09.30.2020 | 09.30.2019 |
Non-current assets | 221,796 | 285,472 | 738,472 |
Current assets | 15,308 | 20,103 | 342,046 |
Total assets | 237,104 | 305,575 | 1,080,518 |
Capital and reserves attributable to the equity holders of the parent | 66,801 | 107,302 | 78,541 |
Non-controlling interest | 22,423 | 35,623 | 95,390 |
Total shareholders’ equity | 89,224 | 142,925 | 173,931 |
Non-current liabilities | 126,629 | 116,833 | 694,829 |
Current liabilities | 21,251 | 45,817 | 211,758 |
Total liabilities | 147,880 | 162,650 | 906,587 |
Total liabilities and shareholders’ equity | 237,104 | 305,575 | 1,080,518 |
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
XV. Summarized Comparative Consolidated Income Statement
(in ARS million) | 09.30.2021 | 09.30.2020 | 09.30.2021 |
Profit from operations | (4,689) | 35,856 | 21,562 |
Share of profit of associates and joint ventures | (155) | 225 | 1,124 |
(Loss) / Profit from operations before financing and taxation | (4,844) | 36,081 | 22,686 |
Financial income | 62 | 86 | 127 |
Financial cost | (2,004) | (2,429) | (2,717) |
Other financial results | 2,966 | 952 | (13,955) |
Inflation adjustment | 340 | (89) | (599) |
Financial results, net | 1,364 | (1,480) | (17,144) |
Results before income tax | (3,480) | 34,601 | 5,542 |
Income tax | 2,466 | (12,133) | (3,819) |
Results of the period from continued operations | (1,014) | 22,468 | 1,723 |
Profit from discontinued operations after taxes | 0 | (9,752) | 21,174 |
Result of the period | (1,014) | 12,716 | 22,897 |
Other comprehensive (loss) / income for the period | (164) | (13,223) | 24,162 |
Total comprehensive result for the period | (1,178) | (507) | 47,059 |
Attributable to: | |||
Equity holders of the parent | (762) | 4,443 | 5,440 |
Non-controlling interest | (416) | (4,950) | 41,619 |
XVI. Summary Comparative Consolidated Cash Flow
(in ARS million) | 09.30.2021 | 09.30.2020 | 09.30.2019 |
Net cash generated from operating activities | 1,653 | 5,125 | 15,959 |
Net cash generated from investing activities | (205) | 63,187 | 5,321 |
Net cash used in financing activities | (1,048) | (41,387) | (53,729) |
Net increase in cash and cash equivalents | 400 | 26,925 | (32,449) |
Cash and cash equivalents at beginning of year | 2,110 | 148,318 | 141,888 |
Cash and cash equivalents reclassified to available for sale | - | - | 55 |
Subsidiaries deconsolidation | - | (158,820) | - |
Foreign exchange gain on cash and changes in fair value of cash equivalents | (357) | (9,719) | 21,155 |
Cash and cash equivalents at period-end | 2,153 | 6,704 | 130,649 |
XVII. Comparative Ratios
(in ARS million) | 09.30.2021 | 09.30.2020 | ||||
Liquidity | ||||||
CURRENT ASSETS | 15,308 | 0.72 | 20,103 | 0.44 | 342,046 | 1.62 |
CURRENT LIABILITIES | 21,251 | 45,817 | 211,758 | |||
Indebtedness | ||||||
TOTAL LIABILITIES | 147,880 | 2.21 | 162,650 | 1.52 | 906,587 | 11.54 |
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 66,801 | 107,302 | 78,541 | |||
Solvency | ||||||
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 66,801 | 0.45 | 107,302 | 0.66 | 78,541 | 0.09 |
TOTAL LIABILITIES | 147,880 | 162,650 | 906,587 | |||
Capital Assets | ||||||
NON-CURRENT ASSETS | 221,796 | 0.94 | 285,472 | 0.93 | 738,472 | 0.68 |
TOTAL ASSETS | 237,104 | 305,575 | 1,080,518 |
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
XVIII. EBITDA Reconciliation
In this summary report we present EBITDA and Adjusted EBITDA. We define EBITDA as profit for the period excluding: (i) interest income, (ii) interest expense, (iii) income tax expense, and (iv) depreciation and amortization. We define Adjusted EBITDA as EBITDA minus (i) total financial results, net excluding interest expense, net (mainly foreign exchange differences, net gains/losses from derivative financial instruments; gains/losses of financial assets and liabilities at fair value through profit or loss; and other financial results, net) and minus (ii) share of profit of associates and joint ventures and minus (iii) net profit from fair value adjustment of investment properties, not realized.
EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. We present EBITDA and adjusted EBITDA because we believe they provide investors supplemental measures of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses EBITDA and Adjusted EBITDA from time to time, among other measures, for internal planning and performance measurement purposes. EBITDA and Adjusted EBITDA should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. EBITDA and Adjusted EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit from operations to EBITDA and Adjusted EBITDA for the periods indicated:
2021 | 2020 | 2019 | |
Profit for the period | (1,014) | 12,716 | 22,897 |
Result from discontinued operations | - | 9,752 | (21,174) |
Interest income | (62) | (27) | (127) |
Interest expense | 1,863 | 2,265 | 2,533 |
Income tax | (2,466) | 12,133 | 3,819 |
Depreciation and amortization | 149 | 186 | 181 |
EBITDA (unaudited) | (1,530) | 37,025 | 8,130 |
Net gain from fair value adjustment of investment properties | 6,494 | (36,728) | (18,829) |
Realized net gain from fair value adjustment of investment properties | 122 | 8,163 | - |
Share of profit of associates and joint ventures | 155 | (225) | (1,124) |
Dividends earned | - | (18) | - |
Foreign exchange differences net | (2,842) | 13 | 13,614 |
Result from derivative financial instruments | (3) | 286 | (343) |
Fair value gains of financial assets and liabilities at fair value through profit or loss | (124) | (1,220) | 695 |
Inflation adjustment | (340) | 89 | 599 |
Other financial costs/income | 144 | 92 | 173 |
Adjusted EBITDA (unaudited) | 2,076 | 7,477 | 2,915 |
Adjusted EBITDA Margin (unaudited)(1) | 47.38% | 304.81% | 42.61% |
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by revenue from sales, rents and services.
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of September 30, 2021
XIX. Brief comment on prospects for the Fiscal Year
We are optimistic about the recovery of the shopping center business during fiscal year 2022. Activity indicators, such as tenants’ sales and visiting public, evolve favorably and we continue working on occupying the area that was made available because of the pandemic. Likewise, we will continue to position the company's Marketplace to complement physical in-store sales with online sales, offering our customers different purchase and delivery alternatives.
The office segment continues to evolve in line with new hybrid work trends. Although we have evidenced a slight reduction in rental values along with an increase in vacancies, our current portfolio, after a "flight to quality" process, brings together the differential characteristics to offer the services level required by the most demanding corporations. We will work during the fiscal year on the full occupancy of the building "261 Della Paolera", inaugurated in December 2020, as well as the rest of the vacant surface of the portfolio.
Regarding hotels segment, after the restrictions imposed in 2020 due to the pandemic, which kept the sector without operations for approximately 9 months, the activity is beginning to show signs of recovery from domestic tourism and government incentives to promote it. The sector awaits the resumption of air flows and the arrival of international tourism in order to recover its income levels prior to the pandemic.
In 2022 we will continue working in 2022 to reduce and make the structure costs more efficient and to consolidate the best real estate portfolio in Argentina.
The Company's Board of Directors approved during the quarter a corporate reorganization process consisting of a merger by absorption within the framework of the Companies Law No. 19,550 and the Income Tax Law No. 20,628, in which the Company would absorb IRSA PC, which would be dissolved without being liquidated. The process is pending approval by the Shareholders' Meeting which will be carried out in the coming months.
The Company remains committed to preserve the health and well-being of its customers, employees, tenants, and the entire population, constantly re-evaluating its decisions in accordance with the evolution of events, the regulations that are issued and the guidelines of the competent authorities.
Saúl Zang
First Vice-Chairman
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