IRSA Propiedades Comerciales S.A.
 
Unaudited Condensed Interim Consolidated Financial Statements for the three-month period ended September 30, 2019, presented comparatively
 
 
 
 
 
 
 
 
 
 
 
 
Legal Information
 
 
Denomination: IRSA PROPIEDADES COMERCIALES S.A.
 
Fiscal year N°: 130, beginning July 1, 2019.
 
Legal address: Moreno 877, 22nd floor, City of Buenos Aires, Argentina.
 
Main business: Real estate investment and development.
 
Date of registration with the Public Registry of Commerce of the By-laws: August 29, 1889.
 
Date of registration of last amendment: approved by the ordinary and extraordinary general shareholders’ meeting held on October 29, 2018, registered with the Supervisory Board of Companies on January 8, 2019, under N° 456 of Book 93, Vol. - Corporations.
 
Expiration of company charter: August 28, 2087.
 
Registration number with the Supervisory Board of Companies: 801,047.
 
Capital stock: 126,014,050 common shares.
 
Subscribed, issued and paid up (in thousands of Ps.): 126,014.
 
Direct Majority Shareholder: IRSA Inversiones y Representaciones Sociedad Anónima (IRSA).
 
Majority Shareholder of the Group: Inversiones Financieras del Sur S.A.
 
Legal Address: Bolívar 108, 1st floor, City of Buenos Aires, Argentina.
 
Main business: Real estate investment.
 
Direct and indirect ownership interest: 103,787,456 common shares.
 
Voting stock (direct and indirect equity interest): 82.36%.
 
 
Type of shares
CAPITAL STRUCTURE
Outstanding shares
Shares authorized for public offering
Subscribed, issued and paid-in
(in thousands of Ps.)
Registered, common shares with a nominal value of Ps. 1 each, 1 vote per share
126,014,050
126,014,050
126,014
 
 
 
 
 
 
 
 
 
 
1
IRSA Propiedades Comerciales S.A.
 
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of September 30, 2019 and June 30, 2019
 (All amounts in thousands of Argentine Pesos, except for shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
 
Note
09.30.19
 
06.30.19
ASSETS
 
 
 
 
Non-current assets
 
 
 
 
Investment properties
8
74,525,247
 
67,885,009
Property, plant and equipment
9
359,426
 
373,937
Trading properties
10
145,597
 
139,562
Intangible assets
11
432,747
 
456,614
Rights of use assets
12
245,885
 
 -
Investments in associates and joint ventures
7
2,179,353
 
1,808,036
Deferred income tax assets
19
76,316
 
80,989
Income tax and minimum presumed income tax credits
 
4,352
 
10,174
Trade and other receivables
14
2,294,157
 
548,510
Investments in financial assets
13
586,745
 
506,373
Total non-current assets
 
80,849,825
 
71,809,204
Current Assets
 
 
 
 
Trading properties
10
1,109
 
1,249
Inventories
 
30,651
 
32,548
Income tax and minimum presumed income tax credits
 
80,898
 
71,713
Trade and other receivables
14
8,363,034
 
7,668,623
Derivative financial instruments
13
18,352
 
6,315
Investments in financial assets
13
5,218,547
 
6,833,646
Cash and cash equivalents
13
4,537,678
 
4,725,114
Total current assets
 
18,250,269
 
19,339,208
TOTAL ASSETS
 
99,100,094
 
91,148,412
SHAREHOLDERS’ EQUITY
 
 
 
 
Total capital and reserves attributable to equity holders of the parent
 
45,253,566
 
43,251,010
Non-controlling interest
 
2,708,046
 
2,451,193
TOTAL SHAREHOLDERS’ EQUITY
 
47,961,612
 
45,702,203
LIABILITIES
 
 
 
 
Non-current liabilities
 
 
 
 
Trade and other payables
16
1,059,537
 
967,772
Borrowings
17
22,105,941
 
25,062,159
Leases liabilities
12
239,221
 
 -
Income tax and minimum presumed income tax liabilities
 
6,436
 
 -
Deferred income tax liabilities
19
15,260,216
 
14,787,404
Provisions
18
53,402
 
49,377
Derivative financial instruments
13
22,328
 
15,534
Total non-current liabilities
 
38,747,081
 
40,882,246
Current liabilities
 
 
 
 
Trade and other payables
16
2,430,502
 
2,829,368
Income tax liabilities
 
9,259
 
16,834
Payroll and social security liabilities
 
117,289
 
244,708
Borrowings
17
9,738,162
 
1,417,273
Leases liabilities
12
24,128
 
 -
Derivative financial instruments
13
31,253
 
15,250
Provisions
18
40,808
 
40,530
Total current liabilities
 
12,391,401
 
4,563,963
TOTAL LIABILITIES
 
51,138,482
 
45,446,209
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
99,100,094
 
91,148,412
 
 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
2
IRSA Propiedades Comerciales S.A.
 
Unaudited Condensed Interim Consolidated Statements of Comprehensive Income
     for the three-month periods ended September 30, 2019 and 2018
(All amounts in thousands of Argentine Pesos, except for shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
 
Note
09.30.19
 
09.30.18
Income from sales, rentals and services
20
2,035,818
 
2,141,979
Income from expenses and collective promotion fund
20
668,175
 
763,132
Operating costs
21
(876,517)
 
(996,066)
Gross profit
 
1,827,476
 
1,909,045
Net gain from fair value adjustments of investment properties
8
6,277,516
 
7,160,778
General and administrative expenses
21
(266,704)
 
(252,196)
Selling expenses
21
(120,727)
 
(183,619)
Other operating results, net
22
(7,773)
 
8,888
Profit from operations
 
7,709,788
 
8,642,896
Share of profit of associates and joint ventures
7
360,922
 
566,276
Profit from operations before financing and taxation
 
8,070,710
 
9,209,172
Finance income
23
53,276
 
57,211
Finance cost
23
(704,469)
 
(739,259)
Other financial results
23
(4,675,253)
 
(4,375,013)
Inflation adjustment
23
(5,965)
 
(160,280)
Financial results, net
 
(5,332,411)
 
(5,217,341)
Profit before income tax
 
2,738,299
 
3,991,831
Income tax expense
19
(478,890)
 
(502,674)
Profit for the period
 
2,259,409
 
3,489,157
Total comprehensive income for the period
 
2,259,409
 
3,489,157
 
 
 
 
 
Attributable to:
 
 
 
 
Equity holders of the parent
 
2,002,556
 
2,804,641
Non-controlling interest
 
256,853
 
684,516
 
 
 
 
 
Profit per share attributable to equity holders of the parent for the period:
 
 
 
 
Basic
 
15.89
 
22.26
Diluted
 
15.89
 
22.26
 
 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
 
 
 
 
3
IRSA Propiedades Comerciales S.A.
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the three-month periods ended September 30, 2019 and 2018
(All amounts in thousands of Argentine Pesos, except for shares and per share data and as otherwise indicated)
Free translation from de original prepared in Spanish for publication in Argentina
 
 
 
Share capital
Inflation adjustment of share capital
Share premium
Legal reserve
Special reserve CNV 609/12 (1)
Other reserves
Retained earnings
Subtotal
Non-controlling interest
Total shareholder’s equity
Balance as of June 30, 2019
126,014
2,642,744
7,605,806
105,142
7,268,613
58,546,435
(33,043,744)
43,251,010
2,451,193
45,702,203
Comprehensive income for the period - Profit
 -
 -
 -
 -
 -
 -
2,002,556
2,002,556
256,853
2,259,409
Balance as of September 30, 2019
126,014
2,642,744
7,605,806
105,142
7,268,613
58,546,435
(31,041,188)
45,253,566
2,708,046
47,961,612
 
 
 
 
Reserve for future dividends
Special reserve
Changes in non-controlling interest
Total other reserves
Balance as of June 30, 2018
25,480,757
33,162,125
(96,447)
58,546,435
Balance as of September 30, 2019
25,480,757
33,162,125
(96,447)
58,546,435
 
 
 
 
Share capital
Inflation adjustment of share capital
Share premium
Legal reserve
Special reserve CNV 609/12 (1)
Other reserves
Retained earnings
Subtotal
Non-controlling interest
Total shareholder’s equity
Balance as of June 30, 2018
126,014
2,642,744
7,605,806
105,142
7,268,613
6,014,137
40,612,639
64,375,095
2,525,745
66,900,840
Adjustment previous periods (IFRS 9)(2)
 -
 -
 -
 -
 -
 -
(32,409)
(32,409)
 -
(32,409)
Balance as of June 30, 2018 - Adjusted
126,014
2,642,744
7,605,806
105,142
7,268,613
6,014,137
40,580,230
64,342,686
2,525,745
66,868,431
Comprehensive income for the period - Profit
 -
 -
 -
 -
 -
 -
2,804,641
2,804,641
684,516
3,489,157
Balance as of September 30, 2018
126,014
2,642,744
7,605,806
105,142
7,268,613
6,014,137
43,384,871
67,147,327
3,210,261
70,357,588
 
 
 
Reserve for future dividends
Special reserve
Changes in non-controlling interest
Total other reserves
Balance as of June 30, 2018
 -
6,067,331
(53,194)
6,014,137
Balance as of September 30, 2018
 -
6,067,331
(53,194)
6,014,137
 
 
(1)
Corresponds to General Resolution 609/12 of National Securities Commission (“CNV”). Furthermore includes the effect for the standard change in investment properties as of June 1, 2011.
(2)
See Note 2.2.
 
  The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
4
IRSA Propiedades Comerciales S.A.
 
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the three-month periods ended September 30, 2019 and 2018
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from de original prepared in Spanish for publication in Argentina
 
 
 
 
 
 
 
Note
09.30.19
 
09.30.18
Operating activities:
 
 
 
 
Cash generated from operations
15
1,501,114
 
(354,443)
Income tax paid
 
(19,064)
 
(52,314)
Net cash generated by/ (used in) operating activities
 
1,482,050
 
(406,757)
 
 
 
 
 
Investing activities:
 
 
 
 
Capital contributions in associates and joint ventures
 
(12,074)
 
(13,361)
Acquisition of investment properties
 
(330,960)
 
(630,971)
Acquisition of property, plant and equipment
 
(20,117)
 
(14,082)
Advance payments
 
(252,588)
 
(95,325)
Acquisition of intangible assets
 
(2,926)
 
(33,198)
Acquisitions of investments in financial assets
 
(4,770,552)
 
(6,351,035)
Proceeds from investments in financial assets
 
5,600,219
 
8,324,340
Loans granted, net
 
(467,025)
 
12,721
Loans granted to related parties
 
(1,733,770)
 
 -
Collection of loans granted to related parties
 
116,334
 
 -
Collection of financial assets interests
 
133,347
 
148,080
Dividends received
 
24,737
 
 -
Net cash (used in)/ generated by investing activities
 
(1,715,375)
 
1,347,169
 
 
 
 
 
Financing activities:
 
 
 
 
Repurchase of non-convertible notes
 
(3,000)
 
 -
Borrowings obtained
 
5,703,456
 
 -
Payment of borrowings
 
(5,834,158)
 
 -
Payments of financial leasing
 
 -
 
(3,796)
Payment of derivative financial instruments
 
(49,732)
 
(321,719)
Pay of leases liabilities
 
(10,765)
 
 -
Proceeds from derivative financial instruments
 
228,518
 
731,313
Payment of interest
 
(1,019,463)
 
(1,121,400)
Dividends paid
 
 -
 
(58,945)
Short-term loans, net
 
714,153
 
 -
Net cash used in financing activities
 
(270,991)
 
(774,547)
Net (decrease)/ increase in cash and cash equivalents
 
(504,316)
 
165,865
Cash and cash equivalents at beginning of period
13
4,725,114
 
7,855,209
Foreign exchange gain on cash and fair value result or cash equivalents
 
331,553
 
824,214
Inflation adjustment
 
(14,673)
 
(88)
Cash and cash equivalents at end of the period
13
4,537,678
 
8,845,200
 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
 
 
 
 
5
IRSA Propiedades Comerciales S.A.
 
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(All amounts in thousands of Argentine Pesos, except for shares and per share data and as otherwise indicated)
Free translation from de original prepared in Spanish for publication in Argentina
 
1.
Group’s business and general information
 
IRSA PROPIEDADES COMERCIALES S.A. (“IRSA Propiedades Comerciales” or “the Company”) is an Argentine real estate company mainly engaged in holding, leasing, managing, developing, operating and acquiring shopping malls and office buildings and holds a predominant position within the Argentine market. IRSA Propiedades Comerciales was incorporated in 1889 under the name Sociedad Anonima Mercado de Abasto Proveedores (SAMAP) and until 1984 operated the main fresh product market in the Autonomous City of Buenos Aires. SAMAP’s core asset was the historical building of Mercado de Abasto, which served as site of the market from 1889 until 1984, when a sizable part of its operations was interrupted.
 
Since the Company was acquired by IRSA Inversiones y Representaciones Sociedad Anónima (hereinafter, IRSA) in 1994, it has grown through a series of acquisitions and development projects that resulted in a corporate reorganization pursuant to which the company was renamed Alto Palermo S.A. which was subrequentily changed to our current denomination
 
As of the end of these unaudited condensed interim consolidated financial statements (hereinafter, financial statements), the Company operates 332,150 square meters (sqm) in 14 shopping malls, 115,378  sqm in 8 premium offices and an extensive land reserve for future commercial developments; operates and holds a majority interest in a portfolio of 14 shopping malls in Argentina, six of which are located in the Autonomous City of Buenos Aires (Abasto Shopping, Alcorta Shopping, Alto Palermo, Patio Bullrich, Dot Baires Shopping and Distrito Arcos), two in Buenos Aires province (Alto Avellaneda and Soleil Premium Outlet) and the rest are situated in different provinces (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera in the City of Córdoba, Alto Comahue in the City of Neuquén and La Ribera Shopping in the City of Santa Fe). The Company also owns the historic building where the Patio Olmos Shopping Mall is located, operated by a third party.
 
The Company’s shares are traded on the Buenos Aires Stock Exchange (MERVAL: IRCP) and in United States of America on the NASDAQ (NASDAQ: IRCP).
 
IRSA Propiedades Comerciales and its subsidiaries are hereinafter referred to jointly as "the Group". See Notes 2.3 and 6 for further description of the Group’s companies and segments. Our main shareholder and parent company is IRSA and Inversiones Financieras del Sur S.A. is our ultimate parent company.
 
These financial statements have been approved by the Board of Directors to be issued on November 5, 2019.
 
2.       
    Summary of significant accounting policies
 
2.1.        
Basis of preparation
 
The National Securities Commission (CNV), in Title IV "Periodic Information Regime" - Chapter III "Rules relating to the presentation and valuation of financial statements" - Article 1, of its standards, has established the application of the Technical Resolution No. 26 (RT 26) of the FACPCE and its amendments, which adopt IFRS, issued by the IASB, for certain companies included in the public offering regime of Law No. 26,831, either because of its stock or its non-convertible notes, or that have requested authorization to be included in the aforementioned regime.
 
For the preparation of these financial statements, the Group has made use of the option provided by IAS 34, and has prepared them in condensed form. Therefore, these financial statements do not include all the information required in a complete set of annual financial statements and, consequently, their reading is recommended together with the annual financial statements as of June 30, 2019.
 
The management of the Group has prepared these financial statements in accordance with the accounting principles established by the CNV, which are based on the application of IFRS, in particular of IAS 34.
 
Additionally, the information required by the CNV indicated in article 1, Chapter III, Title IV of General Resolution N° 622/13 has been included. This information is included in a note to these financial statements.
 
 
 
 
 
 
 
 
6
IRSA Propiedades Comerciales S.A.
 
 
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 high inflation 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 is approximate or exceed 100%. Accumulated inflation in Argentina in three years is over 100%. It is for this reason that, in accordance with IAS 29, Argentina must be considered a country with high inflation economy starting July 1, 2018.
 
In addition, Law No. 27,468 (published in the Official Gazette on December 4, 2018), amended Section 10 of Law No. 23,928, as amended, and established that the derogation of all the laws or regulations imposing or authorizing price indexation, monetary restatement, cost variation or any other method for strengthening debts, taxes, prices or rates of goods, works or services, does not extend to financial statements, as to which the provisions of Section 62 in fine of the General Companies Law No. 19,550 (1984 revision), as amended, shall continue to apply. Moreover, the referred law repealed Decree No. 1269/2002 dated July 16, 2002, as amended, and delegated to the Argentine Executive Branch the power to establish, through its controlling agencies, the effective date of the referred provisions in connection with the financial statements filed with it. Therefore, under General Resolution 777/2018 (published in the Official Gazette on December 28, 2018) the Argentine Securities Commission (CNV) ordered that issuers subject to its supervision shall apply the inflation adjustment to reflect the financial statements in terms of the current measuring unit set forth in IAS 29 in their financial statements closed on or after December 31, 2018 .
 
Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a high inflationary economy should be reported in terms of the measuring unit current as of the date of the financial statements. All the amounts included in the statement of financial position which are not stated in terms of the measuring unit current as of the date of the financial statements should be restated applying the general price index. All items in the statement of income should be stated in terms of the measuring unit current as of the date of the financial statements, applying the changes in the general price index occurred from the date on which the revenues and expenses were originally recognized in the financial statements.
 
Adjustment for inflation in the initial balances has been calculated considering the indexes reported by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) based on the price indexes published by the Argentine Institute of Statistics and Census (INDEC).
 
The principal inflation adjustment procedures are the following:
 
- Monetary assets and liabilities that are recorded in the currency current as of the balance sheet’s closing date are not restated because they are already stated in terms of the currency unit current as of the date of the financial statements.
- Non-monetary assets and liabilities are recorded at cost as of the balance sheet date, and equity components are restated applying the relevant adjustment ratios.
- All items in the statement of income are restated applying the relevant conversion factors.
- The effect of inflation in the Company’s net monetary position is included in the statement of income under Financial results, net, in the item “Inflation adjustment”.
- Comparative figures have been adjusted for inflation following the procedure explained in the previous paragraphs.
 
Upon initially applying inflation adjustment, the equity accounts were restated as follows:
- Capital was restated as from the date of subscription or the date of the most recent inflation adjustment for accounting purposes, whichever is later.
The resulting amount was included in the “Capital adjustment” account.
- Other comprehensive income / (loss) was restated as from each accounting allocation.
- The other reserves in the statement of income were not restated as of the initial application date, i.e., June 30, 2016.
 
As a consequence of the aforementioned, these financial statements as of September 30, 2019 were restated in accordance with IAS 29.
 
 
 
 
 
 
 
 
7
IRSA Propiedades Comerciales S.A.
  
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 information are described in Note 2 to the Annual Cosolidated Financial Statements from June 30, 2019 and implementing the IFRS 16: leases, from July 1, 2019..
 
IFRS 16: Leases
 
The standard establishes the criteria for recognition and valuation of leases for lessees and lessors. The changes incorporated mainly impact the tenant's accounting. IFRS 16 provides that the lessee recognize an asset for the right of use and a liability at present value with respect to those contracts that meet the definition of lease agreements according to IFRS 16. In accordance with the standard, a lease agreement is one that provides the right to control the use of an identified asset for a specific period. In order for a company to have control over the use of an identified asset: a) it must have the right to obtain substantially all the economic benefits of the identified asset and b) it must have the right to direct the use of the identified asset.
 
The standard allows an entity to exclude the short-term contracts (under 12 months) and those in which the underlying asset has low value.
 
The application of IFRS 16 will generate an increase in assets and liabilities and a decrease in operating costs. Furthermore, amortizations and financial results generated by the update of the lease liabilities will be increased.
 
2.3.        Comparability of information
 
The amounts as of June 30, 2019 and September 30, 2018, which are disclosed for comparative purposes, arise from the financial statements at said dates restated in accordance with IAS 29. Certain figures have been reclassified for comparison purposes in these Financial Statements.
 
2.4.        Use of estimates
 
The preparation of Financial Statements at a certain date requires the Group’s 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 applied by the Group in the preparation of the Annual Consolidated Financial Statements of the information are described in Note 3 as of June 30, 2019.
 
3.
Seasonal effects on operations
 
The operations of the Group’s shopping mall are subject to seasonal effects, which affect the level of sales recorded by tenants. During summer time (January and February), the tenants of shopping mall experience the lowest sales levels in comparison with the winter holidays (July) and during the period of Christmas’ Seasons (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 mall sales. Sale discounts at the end of each season also impact the business. As a consequence, a higher level of revenues is generally expected in shopping mall operations during the second half of the year.
 
4.
Acquisitions and disposals
 
There were no relevant acquisitions and disposals for the three-month period ended September 30, 2019. Significant acquisitions and disposals for the fiscal year ended June 30, 2019 are detailed in Note 4 to the Annual Financial Statements.
 
 
 
 
 
 
 
 
 
8
IRSA Propiedades Comerciales S.A.
     
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 Consolidated Financial Statements as of June 30, 2019. There have been no changes in risk management or risk management policies applied by the Group since year-end.
 
Since June 30, 2019 as of the date of this Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities of the Group except for that the indicated in Note 28. Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Group’s financial instruments.
 
6.
Segment reporting
 
The following is a summary analysis of the Group's business segments, corresponding to the periods ended September 30, 2019 and 2018. Additionally, a reconciliation between results of operations corresponding to segment information and the results of operations as per the statements of comprehensive income; and total assets by segment and total assets according to the statement of financial position. The information by segments has been prepared and classified according to the businesses in which the Group carries out its activities, which are described in Note 6 of the Annual Consolidated Financial Statements as of June 30, 2019.
 
 
 
 
 
 
 
 
 
 
9
IRSA Propiedades Comerciales S.A.
 
 
 
09.30.19
 
Shopping Malls
 
Offices
 
Sales and developments
 
Others
 
Total segmet reporting
 
Adjustment for expenses and collective promotion funds
 
Adjustment for share in profit/ (loss) of joint ventures
 
Total as per statement of comprehensive income
 
 
 
 
 
 
 
 
Revenues
1,524,581
 
502,329
 
1,717
 
25,784
 
2,054,411
 
668,175
 
(18,593)
 
2,703,993
Operating costs
(132,094)
 
(22,862)
 
(8,411)
 
(23,394)
 
(186,761)
 
(697,722)
 
7,966
 
(876,517)
Gross profit/ (loss)
1,392,487
 
479,467
 
(6,694)
 
2,390
 
1,867,650
 
(29,547)
 
(10,627)
 
1,827,476
Net gain from fair value changes in investment properties
440,333
 
4,838,732
 
1,319,147
 
81,065
 
6,679,277
 
 -
 
(401,761)
 
6,277,516
General and administrative expenses
(186,791)
 
(37,516)
 
(17,716)
 
(25,174)
 
(267,197)
 
 -
 
493
 
(266,704)
Selling expenses
(103,171)
 
(18,691)
 
(5,053)
 
(1,240)
 
(128,155)
 
 -
 
7,428
 
(120,727)
Other operating results, net
(29,824)
 
582
 
(1,410)
 
(5,664)
 
(36,316)
 
29,547
 
(1,004)
 
(7,773)
Profit/ (Loss) from operations
1,513,034
 
5,262,574
 
1,288,274
 
51,377
 
8,115,259
 
 -
 
(405,471)
 
7,709,788
Share in profit of associates and joint ventures
 -
 
 -
 
 -
 
64,188
 
64,188
 
 -
 
296,734
 
360,922
Profit/ (Loss) before financing and taxation
1,513,034
 
5,262,574
 
1,288,274
 
115,565
 
8,179,447
 
 -
 
(108,737)
 
8,070,710
Investment properties
40,198,764
 
28,920,237
 
7,746,916
 
248,073
 
77,113,990
 
 -
 
(2,588,743)
 
74,525,247
Property, plant and equipment
191,287
 
197,438
 
 -
 
 -
 
388,725
 
 -
 
(29,299)
 
359,426
Trading properties
 -
 
 -
 
146,706
 
 -
 
146,706
 
 -
 
 -
 
146,706
Goodwill
8,277
 
24,466
 
 -
 
70,975
 
103,718
 
 -
 
(32,743)
 
70,975
Right to receive units under (barter transactions)
 -
 
 -
 
101,568
 
 -
 
101,568
 
 -
 
 -
 
101,568
Inventories
31,330
 
 -
 
 -
 
 -
 
31,330
 
 -
 
(679)
 
30,651
Investments in associates and joint ventures
 -
 
 -
 
 -
 
154,153
 
154,153
 
 -
 
2,025,050
 
2,179,203
Operating assets
40,429,658
 
29,142,141
 
7,995,190
 
473,201
 
78,040,190
 
 -
 
(626,414)
 
77,413,776
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
09.30.18
 
Shopping Malls
 
Offices
 
Sales and developments
 
Others
 
Total segmet reporting
 
Adjustment for expenses and collective promotion funds
 
Adjustment for share in profit/ (loss) of joint ventures
 
Total as per statement of comprehensive income
 
 
 
 
 
 
 
 
Revenues
1,785,800
 
326,820
 
23,126
 
25,558
 
2,161,304
 
763,132
 
(19,325)
 
2,905,111
Operating costs
(164,756)
 
(22,224)
 
(9,041)
 
(31,779)
 
(227,800)
 
(777,759)
 
9,493
 
(996,066)
Gross profit/ (loss)
1,621,044
 
304,596
 
14,085
 
(6,221)
 
1,933,504
 
(14,627)
 
(9,832)
 
1,909,045
Net gain from fair value changes in investment properties
(3,168,342)
 
10,335,718
 
1,217,168
 
(8,099)
 
8,376,445
 
 -
 
(1,215,667)
 
7,160,778
General and administrative expenses
(190,682)
 
(33,207)
 
(17,012)
 
(14,423)
 
(255,324)
 
 -
 
3,128
 
(252,196)
Selling expenses
(157,552)
 
(20,285)
 
(2,407)
 
(4,785)
 
(185,029)
 
 -
 
1,410
 
(183,619)
Other operating results, net
(16,020)
 
(1,514)
 
(3,791)
 
14,440
 
(6,885)
 
14,627
 
1,146
 
8,888
(Loss)/ Profit from operations
(1,911,552)
 
10,585,308
 
1,208,043
 
(19,088)
 
9,862,711
 
 -
 
(1,219,815)
 
8,642,896
Share in profit of associates and joint ventures
 -
 
 -
 
 -
 
(3,706)
 
(3,706)
 
 -
 
569,982
 
566,276
(Loss)/ Profit before Financing and Taxation
(1,911,552)
 
10,585,308
 
1,208,043
 
(22,794)
 
9,859,005
 
 -
 
(649,833)
 
9,209,172
Investment properties
67,532,554
 
32,637,200
 
5,696,760
 
284,093
 
106,150,607
 
 -
 
(3,563,781)
 
102,586,826
Property, plant and equipment
175,336
 
183,533
 
 -
 
 -
 
358,869
 
 -
 
(692)
 
358,177
Trading properties
 -
 
 -
 
240,522
 
 -
 
240,522
 
 -
 
 -
 
240,522
Goodwill
6,247
 
15,440
 
 -
 
30,334
 
52,021
 
 -
 
(21,687)
 
30,334
Right to receive units under (barter transactions)
 -
 
 -
 
102,354
 
 -
 
102,354
 
 -
 
 -
 
102,354
Inventories
40,562
 
 -
 
 -
 
 -
 
40,562
 
 -
 
(1,000)
 
39,562
Investments in associates and joint ventures
 -
 
 -
 
 -
 
321,051
 
321,051
 
 -
 
2,828,913
 
3,149,964
Operating assets
67,754,699
 
32,836,173
 
6,039,636
 
635,478
 
107,265,986
 
 -
 
(758,247)
 
106,507,739
 
  
10
IRSA Propiedades Comerciales S.A.
 
7.
Investments in associates and joint ventures
 
The table below lists information about the Group’s investments in associates
 
 
Name of the entity
 
% of ownership interest held by non-controlling interests
 
Value of Company’s interest in equity
 
Company’s interest in comprehensive income
 
09.30.19
 
06.30.19
 
09.30.19
 
06.30.19
 
09.30.19
 
09.30.18
Joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Quality Invest S.A.
 
50.00%
 
50.00%
 
1,776,414
 
1,471,684
 
292,657
 
458,475
Nuevo Puerto Santa Fe S.A.
 
50.00%
 
50.00%
 
248,636
 
244,559
 
4,077
 
111,507
La Rural S.A.(2)
 
50.00%
 
50.00%
 
138,678
 
79,676
 
59,002
 
36,141
Associates
 
 
 
 
 
 
 
 
 
 
 
 
Tarshop S.A.(2)
 
 -
 
 -
 
 -
 
 -
 
 -
 
(38,598)
Otra asociadas (3)
 
 
 
 
 
15,475
 
11,862
 
5,186
 
(1,249)
Total interests in associates and joint ventures (4)
 
 
 
 
 
2,179,203
 
1,807,781
 
360,922
 
566,276
 
 
Name of the entity
 
Place of business / Country of incorporation
 
Main activity
 
Common shares
 
Last financial statements issued
 
 
 
 
Share capital (nominal value)
 
Income for the period
 
Equity
Joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Quality Invest S.A.
 
Argentina
 
Real estate
 
163,039,244
 
326,078
 
585,314
 
3,503,896
Nuevo Puerto Santa Fe S.A. (1)
 
Argentina
 
Real estate
 
138,750
 
27,750
 
8,153
 
480,719
La Rural S.A. (2)
 
Argentina
 
Event organization and others
 
714,498
 
1,430
 
21,576
 
52,754
 
 
(1)
Nominal value per share Ps. 100.
(2)
Correspond to profit for the three-month period ended at September 30, 2019 and 2018, respectively.
(3)
Represents other individually non-significant associates.
(4)
Includes Ps. 150 as of September 30, 2019 and Ps. 255 as of June 30, 2019, in relation to the equity interest in Avenida Compras disclosed under (Note 18).
.
 
 
Changes in the Group’s investments in associates and joint ventures for the period ended September 30, 2019 and for the year ended June 30, 2019 were as follows:
 
 
 
09.30.19
 
06.30.19
Beginning of the period/ year
 
1,807,781
 
2,728,210
Adjustment previous period (i)
 
 -
 
(32,409)
Share of profit/ (loss)
 
360,922
 
(455,049)
Dividends distributed
 
 -
 
(350,694)
Sale of interest of subsidiaries
 
 -
 
(139,467)
Irrevocable contributions (Note 24)
 
12,074
 
57,190
Capital contributions
 
(1,574)
 
 -
End of the period/ year (4)
 
2,179,203
 
1,807,781
 
(i)
See Note 2.2 to the Annual Financial Statements as of June 30, 2019.
 
 
 
 
 
 
 
11
IRSA Propiedades Comerciales S.A.
 
8.
Investment properties
 
Changes in the Group’s investment properties for the three-month period ended September 30, 2019 and for the year ended June 30, 2019 were as follows:
 
 
Shopping Malls
 
Office and Other rental properties
 
Undeveloped parcels of land
 
Properties under development
 
Others
 
09.30.19
 
06.30.19
Fair value at beginning of the period / year
38,402,434
 
21,937,179
 
6,427,769
 
951,470
 
166,157
 
67,885,009
 
94,888,896
Additions
180,328
 
2,014
 
 -
 
174,171
 
851
 
357,364
 
1,960,801
Capitalization of financial costs
 -
 
 -
 
 -
 
269
 
 -
 
269
 
75,841
Capitalized lease costs
5,139
 
2,880
 
 -
 
 -
 
 -
 
8,019
 
12,328
Depreciation of capitalized lease costs (i)
(1,172)
 
(1,758)
 
 -
 
 -
 
 -
 
(2,930)
 
(10,014)
Transfers
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
60,832
Net gain from fair value adjustment on investment properties (ii)
353,832
 
4,498,950
 
1,319,147
 
24,522
 
81,065
 
6,277,516
 
(29,103,675)
Fair value at end of the period / year
38,940,561
 
26,439,265
 
7,746,916
 
1,150,432
 
248,073
 
74,525,247
 
67,885,009
 
 
(i)
As of September 30, 2019 the depreciation charge was included in “Costs” in the amount of Ps 2,930, in the Statement of Comprehensive Income (Note 21).
(ii)
For the three-month period ended September 30,2019, the net gain from fair valua adjustment on shopping malls was Ps. 353.8 millons.
The net impact of the values in Argentine pesos of our properties was mainly a consequence of the change in macroeconomic conditions:
a)    
Net gain of Ps. 13,608.6 millons as a result of an increase in the projected inflation rate plus GDP, with the consequent increase in the cash flow of shopping malls revenues;
b)
Net loss of Ps. 16,708.1 millions due to the conversion to dollars of the projected cash flow in Argentine pesos according to the exchange rate estimates used in the cash flow;
c)
an increase of 72 basis points in the discount rate, mainly due to a rise in the country risk component of the WACC discount rate used to discount the flow of funds, which generated a decrease in the value of the shopping malls of Ps. 2,244.0 millions.
d)
Net gain of Ps. 9,999.4 millons as a result of the conversion to Argentine pesos of the value of the shopping malls in dollars based on the exchange rate at the end of the period (Argentine peso depreciation of 35.8% compared to the dollar);
e)
Additionally, for the impact of the inflation adjustment the Group reclassified Ps. 7,532.7 millions to Inflation adjustment.
f)
The value of our office buildings and other rental properties measured in real terms increased by 20.5% during the three-month period as of September 30, 2019, due to a devaluation of the Argentinepeso exceeding the inflation rate of the period.
 
 
The following amounts have been recognized in the statements of comprehensive income:
 
 
09.30.19
 
06.30.19
Revenues from rental and services (Note 20)
2,035,818
 
2,139,596
Expenses and collective promotion fund (Note 20)
668,175
 
763,132
Rental and services costs (Note 21)
(865,478)
 
(955,247)
Net unrealized gain from fair value adjustment on investment properties
6,277,516
 
7,160,778
 
 
Valuation techniques are described in Note 9 to the Financial Statements as of June 30, 2019. There were no changes to the valuation techniques. The Group has reassessed the assumptions at the end of the period, incorporating the effect of the changes in macroeconomics conditions.
 
9.
Property, plant and equipment
 
Changes in the Group’s property, plant and equipment for the three-month period ended September 30, 2019 and for the year ended June 30, 2019 were as follows:
 
 
Other buildings and facilities
 
Furniture and fixtures
 
 Machinery and equipment
 
 Vehicles
 
Others
 
09.30.19
 
06.30.19
Costs
367,652
 
206,004
 
1,126,366
 
15,407
 
654
 
1,716,083
 
1,625,659
Accumulated depreciation
(194,481)
 
(134,059)
 
(998,769)
 
(14,837)
 
 -
 
(1,342,146)
 
(1,271,574)
Net book amount at beginning of the period / year
173,171
 
71,945
 
127,597
 
570
 
654
 
373,937
 
354,085
Additions
 -
 
5,557
 
14,560
 
 -
 
 -
 
20,117
 
75,443
Disposals
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(1,436)
Transfers
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
15,957
Transfers by IFRS 16 (Note 12)
 -
 
 -
 
(16,814)
 
 -
 
 -
 
(16,814)
 
 -
Depreciation charges (ii)
(3,262)
 
(2,783)
 
(11,069)
 
(404)
 
 -
 
(17,518)
 
(70,572)
Net gain from fair value adjustment
 -
 
(58)
 
(238)
 
 -
 
 -
 
(296)
 
460
Net book amount at end of the period / year
169,909
 
74,661
 
114,036
 
166
 
654
 
359,426
 
373,937
Costs
367,652
 
211,503
 
1,123,874
 
15,407
 
654
 
1,719,090
 
1,716,083
Accumulated depreciation
(197,743)
 
(136,842)
 
(1,009,838)
 
(15,241)
 
 -
 
(1,359,664)
 
(1,342,146)
Net book amount at end of the period / year
169,909
 
74,661
 
114,036
 
166
 
654
 
359,426
 
373,937
 
(i)
On September 30, 2019 depreciation charges were included in “Costs” in the amount of Ps. 6,172, in “General and administrative expenses” in the amount of Ps. 11,205 and in “Selling expenses“ in the amount of Ps. 141 in the Statement of Comprehensive Income (Note 21).
 
 
 
12
IRSA Propiedades Comerciales S.A.
 
10.
Trading properties
 
Changes in in the Group’s trading properties for the three-month period ended September 30, 2019 and for the year ended June 30, 2019 were as follows:
 
 
 
Completed properties
 
Undeveloped sites
 
09.30.19
 
06.30.19
Net book amount at beginning of the period / year
1,872
 
138,939
 
140,811
 
241,162
Additions
 -
 
5,895
 
5,895
 
12,580
Disposals
 -
 
 -
 
 -
 
(988)
Transfers
 -
 
 -
 
 -
 
(75,879)
Impairment
 -
 
 -
 
 -
 
(36,064)
Net book amount at end of the period / year
1,872
 
144,834
 
146,706
 
140,811
Non - current
 
 
 
 
145,597
 
139,562
Current
 
 
 
 
1,109
 
1,249
Total
 
 
 
 
146,706
 
140,811
 
 
11.
Intangible assets
 
Changes in the Group’s intangible assets for the three-month period ended September 30, 2019 and for the year ended June 30, 2019 were as follows:
 
 
 
Goodwill
 
Software
 
Rights of use (ii)
 
Right to receive units (Barters) (iii)
 
Others
 
09.30.19
 
06.30.19
Costs
70,975
 
330,616
 
214,632
 
101,568
 
49,711
 
767,502
 
767,246
Accumulated depreciation
 -
 
(112,925)
 
(148,252)
 
 -
 
(49,711)
 
(310,888)
 
(238,514)
Net book amount at beginning of the period / year
70,975
 
217,691
 
66,380
 
101,568
 
 -
 
456,614
 
528,732
Additions
 -
 
2,926
 
 -
 
 -
 
 -
 
2,926
 
146,348
Transfers
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(910)
Amortization charge (i)
 -
 
(25,854)
 
(939)
 
 -
 
 -
 
(26,793)
 
(72,374)
Impairment (iv)
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(145,182)
Net book amount at end of the period / year
70,975
 
194,763
 
65,441
 
101,568
 
 -
 
432,747
 
456,614
Costs
70,975
 
333,542
 
214,632
 
101,568
 
49,711
 
770,428
 
767,502
Accumulated depreciation
 -
 
(138,779)
 
(149,191)
 
 -
 
(49,711)
 
(337,681)
 
(310,888)
Net book amount at end of the period / year
70,975
 
194,763
 
65,441
 
101,568
 
 -
 
432,747
 
456,614
 
(i) On September 30, 2019 depreciation charges were included in “Costs” in the amount of Ps. 16,210, in “General and administrative expenses” in the amount of Ps. 10,356 and in “Selling expenses“ in the amount of Ps. 227 in the Statement of Comprehensive Income (Note 21).
(ii) Corresponds to Distrito Arcos.
(iii) Corresponds to in kind receivables representing the right to receive residential apartments in the future under barter transactions.
(iv) Corresponds to impaired goodwill of La Arena S.A..
 
12.
 Rights of use assets and leases liabilities
 
 
 
09.30.19
Convention center
 
122,181
Stadium DirecTV Arena
 
102,398
Machinery and equipment
 
15,064
Shopping malls
 
6,242
Total rights of use assets
 
245,885
Non-current
 
245,885
Total
 
245,885
 
 
 
 
 
 
 
 
09.30.19
Convention center
 
111,997
Stadium DirecTV Arena
 
128,813
Machinery and equipment
 
16,906
Shopping malls
 
5,633
Total leases liabilities
 
263,349
Non-current
 
239,221
Current
 
24,128
Total
 
263,349
 
 
 
 
 
 
 
 
09.30.19
Convention center
 
(2,089)
Stadium DirecTV Arena
 
(1,021)
Machinery and equipment
 
(1,750)
Shopping malls
 
(87)
Total amortizations (i)
 
(4,947)
 
(i)    As of September 30, 2019 the depreciation charge was included in “Costs”, in the Statement of Comprehensive Income (Note 21).
 
 
 
13
IRSA Propiedades Comerciales S.A.
 
13.
Financial instruments by category
 
The present note shows 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 see Note 13 to the financial statements as of June 30, 2019.
 
Financial assets and financial liabilities as of September 30, 2019 are as follows:
 
 
Financial assets at amortized cost (i)
 
Financial assets at fair value through profit or loss
Subtotal financial assets
Non-financial assets
Total
 September 30, 2019
 
 
 Level 1
 Level 2
 Level 3
 
 
 
 Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 Trade and other receivables (excluding allowance for doubtful accounts) (Note 14)
5,054,122
 
 -
 -
 -
5,054,122
5,928,758
10,982,880
 Investments in financial assets:
 
 
 
 
 
 
 
 
 - Investment in equity public companies’s securities
 -
 
129,538
 -
 -
129,538
 -
129,538
 - Mutual funds
 -
 
204,458
575,481
 -
779,939
 -
779,939
 - Bonds
 -
 
4,247,045
 -
648,770
4,895,815
 -
4,895,815
 Derivative financial instruments
 
 
 
 
 
 
 
 
 - Futures contracts
 -
 
 -
18,352
 -
18,352
 -
18,352
 Cash and cash equivalents:
 
 
 
 
 
 
 
 
 - Cash at banks and on hand
2,500,216
 
 -
 -
 -
2,500,216
 -
2,500,216
 - Short- term investments
 -
 
2,037,462
 -
 -
2,037,462
 -
2,037,462
Total
7,554,338
 
6,618,503
593,833
648,770
15,415,444
5,928,758
21,344,202
 
 
 
Financial liabilities at amortized cost (i)
 
Financial liabilities at fair value through profit or loss
 
Subtotal financial liabilities
 
Non-financial liabilities
 
Total
 
 
 
Level 2
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 16)
1,184,243
 
 -
 
1,184,243
 
2,305,796
 
3,490,039
Derivative financial instruments
 
 
 
 
 
 
 
 
 
 - Futures contracts
 -
 
6,450
 
6,450
 
-
 
6,450
 - Swaps of interest rate (ii)
 -
 
47,131
 
47,131
 
 -
 
47,131
Borrowings (Note 17)
31,844,103
 
 -
 
31,844,103
 
 -
 
31,844,103
Total
33,028,346
 
53,581
 
33,081,927
 
2,305,796
 
35,387,723
 
Group´s financial assets and financial liabilities as of June 30, 2019 were as follows:
 
 
Financial assets at amortized cost (i)
 
Financial assets at fair value through profit or loss
Subtotal financial assets
Non-financial assets
Total
June 30, 2018
 
 
Level 1
Level 2
Level 3
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
Trade and other receivables (excluding allowance for doubtful accounts) (Note 14)
2,861,871
 
 -
 -
 -
2,861,871
5,656,388
8,518,259
Investments in financial assets:
 
 
 
 
 
 
 
 
- Investment in equity public companies’s securities
 -
 
440,189
 -
 -
440,189
 -
440,189
- Mutual funds
 -
 
1,634,594
490,720
 -
2,125,314
 -
2,125,314
- Bonds
 -
 
4,013,984
 -
760,532
4,774,516
 -
4,774,516
Derivative financial instruments
 
 
 
 
 
 
 
 
- Futures contracts
 -
 
 -
6,315
 -
6,315
 -
6,315
Cash and cash equivalents:
 
 
 
 
 
 
 
 
- Cash at banks and on hand
3,416,608
 
 -
 -
 -
3,416,608
 -
3,416,608
- Short- term investments
 -
 
1,308,506
 -
 -
1,308,506
 -
1,308,506
Total
6,278,479
 
7,397,273
497,035
760,532
14,933,319
5,656,388
20,589,707
 
 
 
 
 
14
IRSA Propiedades Comerciales S.A.
 
 
Financial liabilities at amortized cost (i)
 
Financial liabilities at fair value through profit or loss
 
Subtotal financial liabilities
 
Non-financial liabilities
 
Total
 
 
 
Level 2
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 16)
1,081,088
 
 -
 
1,081,088
 
2,716,052
 
3,797,140
Derivative financial instruments
 
 
 
 
 
 
 
 
 
 - Bonds
 -
 
451
 
451
 
 -
 
451
 - Swaps of interest rate (ii)
 -
 
30,333
 
30,333
 
 -
 
30,333
Borrowings (excluding finance leases liabilities) (Note 17)
26,462,323
 
 -
 
26,462,323
 
 -
 
26,462,323
Total
27,543,411
 
30,784
 
27,574,195
 
2,716,052
 
30,290,247
 
(i)
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).
(ii)
The maturity date is February 16, 2023 and it is associated with the loan obtained through its subsidiary, Panameriacan Mall S.A, with the purpose of paying for the work that is being carried out at the Polo Dot.
 
 
The valuation models used by the Group for the measurement at different levels of hierarchy are no different from those used as of June 30, 2019.
 
The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from the following table. When no quoted prices in an active market are available, fair values (particularly with derivatives) are based on recognized valuation methods.
 
Description
 
Pricing model
 
Parameters
 
 
Fair value hierarchy
 
Range
 
Foreign-currency contracts
 
Present value method - Theoretical price
 
Money market curve; Interest curve
 
 
Level 2
 
-
 
 
 
Foreign exchange curve
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arcos del Gourmet S.A. purchase option
 
Discounted cash flow
 
Projected revenues and discount rate
 
 
Level 3
 
Projected income: USD 0.3MM - USD 0.9MM Discount rate 12% - 13%
 
 
 
 
 
 
 
 
 
 
Non-Convertible Notes - TGLT
 
Black & Scholes Black & Scholes
 
Price and volatility of the subjacent
 
 
Level 3
 
Price: Ps. 3.5 - Ps.5.5 Volatility of the subjacent: 60% - 80% Market interest rate: 20% - 23%
 
 
 
 
 Market Interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Swaps of interest rate
 
Discounted cash flow
 
Interest rate futures
 
 
Level 2
 
-
 
Arcos del Gourmet S.A.’s stock option is a Level 3 financial instrument, with a fair value of zero at the end of the three-months period as of 31 March, 2018, and at the year ended as of 30 June, 2018.
 
As of September 30, 2019, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group, that is indicated in Note 28
 
14.          Trade and other receivables
 
The following table shows the amounts of Group's trade and other receivables as of September 30, 2019 and June 30, 2019:
 
09.30.19
 
06.30.19
Lease and services receivables
1,273,640
 
1,105,993
Post-dated checks
547,737
 
696,536
Averaging of scheduled rent escalation
652,223
 
600,072
Debtors under legal proceedings
272,275
 
255,803
Property sales receivables
42,315
 
33,871
Consumer financing receivables
16,441
 
18,501
Less: allowance for doubtful accounts
(325,524)
 
(300,940)
Total trade receivables
2,479,107
 
2,409,836
Advance payments
450,950
 
475,245
Prepayments
163,071
 
184,219
Guarantee deposit
1,654
 
1,445
Loans
541,070
 
53,997
Other tax receivables
159,109
 
137,721
Expenses to be recovered
17,541
 
15,655
Others (*)
158,212
 
164,879
Less: allowance for doubtful accounts
(165)
 
(186)
Total other receivables
1,491,442
 
1,032,975
Related parties (Note 24)
6,686,642
 
4,774,322
Total current trade and other receivables
10,657,191
 
8,217,133
Non-current
2,294,157
 
548,510
Current
8,363,034
 
7,668,623
Total
10,657,191
 
8,217,133
 
 (*) Includes Ps. 139,480 and Ps. 144,616 as of September 30, 2019 and June 30, 2019, respectively, consistent with the assumption of debt with the State Assets Administration Agency (AABE). (Note 17)
 
 
 
 
15
IRSA Propiedades Comerciales S.A.
 
Movements on the Group’s allowance for doubtful accounts and other receivables are as follows:
 
 
09.30.19
 
06.30.19
Beginning of the period/ year
301,126
 
352,019
Additions (i)
43,093
 
96,025
Unused amounts reversed (i)
(15,831)
 
(41,052)
Used during the period
 -
 
(6,463)
Inflation adjustment
(2,699)
 
(99,403)
End of the period/ year
325,689
 
301,126
 
(i)
As of September 30, 2019, additions and unused amount reversed charged were charged to “Selling expenses”, in the amount of Ps 27,262 in the Statement of Comprehensive 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 periods ended September 30, 2019 and 2018:
 
 
Note
09.30.19
 
09.30.18
Net income for the period
 
2,259,409
 
3,489,157
Adjustments:
 
 
 
 
Income tax expense
19
478,890
 
502,674
Amortization and depreciation
21
52,188
 
41,534
Net gain from fair value adjustment on investment properties
 
(6,277,516)
 
(7,160,778)
Gain from disposal of trading properties
 
 -
 
(2,199)
Averaging of schedule rent escalation
20
(112,040)
 
(33,912)
Directors’ fees
 
68,058
 
71,398
Financial results, net
 
5,877,624
 
4,763,136
Provisions and allowances
 
42,848
 
88,997
Share of profit of associates and joint ventures
7
(360,922)
 
(566,276)
Foreign unrealized exchange gain on cash and fair value result of cash equivalents
 
(331,553)
 
(824,214)
Changes in operating assets and liabilities
 
 
 
 
Decrease/ (Increase) of Inventories
 
1,897
 
(2,165)
Decrease/ (Increase) in trade and other receivables
 
358,054
 
(607,209)
(Decrease)/ Increase in trade and other payables
 
(421,808)
 
39,269
Decrease in payroll and social security liabilities
 
(127,419)
 
(151,603)
Uses of provisions
18
(701)
 
(2,252)
Increase in trading properties
 
(5,895)
 
 -
Net cash generated by/ (used in) operating activities before income tax paid
 
1,501,114
 
(354,443)
 
 
 
09.30.19
 
09.30.18
Non-cash transactions
 
 
 
 
Decrease in intangible assets trought an increase in trading properties
 
 -
 
130
Increase property plant and equipment trought a decrease in investment properties
 
 -
 
14.570
Increase in trade receivables trought a decrease in trading properties
 
 -
 
2.383
Increase trade and other receivables trought a decrease in investment in financial assets
 
389.119
 
 -
Decrease in investment in associates and joint ventures trought a decrease in equity
 
 -
 
29.989
Increase in investment properties trought an increase in borrowings
 
269
 
 -
Increase in investment properties trought an increase in trade and other payables
 
34.423
 
2.975
Increase in rights of use assets trought a decrease in propesties plant and equipment
 
16.814
 
 -
 
 
16.          
Trade and other payables
 
The following table shows the amounts of Group's trade and other payables as of September 30, 2019 and June 30, 2019:
 
 
09.30.19
 
06.30.19
Admission rights
1,003,515
 
1,132,377
Rent and service payments received in advance
871,674
 
864,330
Accrued invoices
314,450
 
340,761
Trade payables
280,342
 
171,840
Tenant deposits
89,081
 
86,115
Payments received in advance
75,847
 
54,103
Other income to be accrued
61,559
 
61,912
Total trade payables
2,696,468
 
2,711,438
Others
213,694
 
141,935
Tax payable
172,285
 
282,466
Tax amnesty plans
120,916
 
320,864
Dividends
125
 
141
Total other payables
507,020
 
745,406
Related parties (Note 24)
286,551
 
340,296
Total trade and other payables
3,490,039
 
3,797,140
Non-current
1,059,537
 
967,772
Current
2,430,502
 
2,829,368
Total
3,490,039
 
3,797,140
 
 
 
16
IRSA Propiedades Comerciales S.A.
 
 
17.          Borrowings
 
The following table shows the Group's borrowings as of September 30, 2019 and June 30, 2019:
 
 
 
Book Value at 09.30.19
 
Book Value at 06.30.19
 
Fair Value at 09.30.19
 
Fair Value at 06.30.19
Non-Convertible notes
 
28,577,289
 
24,063,984
 
21,631,156
 
23,951,036
Bank loans
 
2,123,915
 
1,931,888
 
2,028,663
 
1,755,539
Bank overdrafts
 
911,206
 
247,754
 
911,206
 
247,754
AABE Debts
 
139,480
 
144,616
 
139,480
 
144,616
Loans with non-controlling interests
 
92,213
 
74,081
 
92,213
 
74,081
Finance leases
 
 -
 
17,109
 
 -
 
17,109
Total borrowings
 
31,844,103
 
26,479,432
 
24,802,718
 
26,190,135
Non-current
 
22,105,941
 
25,062,159
 
 
 
 
Current
 
9,738,162
 
1,417,273
 
 
 
 
Total
 
31,844,103
 
26,479,432
 
 
 
 
 
 
18.          Provisions
 
The following table shows the movements in the Group's provisions at September 30, 2019 and June 30, 2019 categorized by type of provision:
 
 
Labor, legal and other claims
 
Investments in associates (*)
 
09.30.19
 
06.30.19
Balances at the beginning of the period / year
89,652
 
255
 
89,907
 
98,182
Inflation adjustment
(10,477)
 
 -
 
(10,477)
 
(39,642)
Increases (i)
22,242
 
 -
 
22,242
 
68,425
Recovery (i)
(6,656)
 
 -
 
(6,656)
 
(17,091)
Used during the period
(701)
 
 -
 
(701)
 
(19,858)
Increases (*)
 -
 
(105)
 
(105)
 
(109)
Balances at the end of the period / year
94,060
 
150
 
94,210
 
89,907
Non-current
 
 
 
 
53,402
 
49,377
Current
 
 
 
 
40,808
 
40,530
Total
 
 
 
 
94,210
 
89,907
 
 
 (*) Corresponds to investments in associates with negative equity.
 (i)
Additions and unused amount reversed charged were charged to “Other operating results, net”, in the Statement of Comprehensive Income (Note 22).
 
19.          Current and deferred income tax
 
The details of the Group’s income tax expense are as follows:
 
 
09.30.19
 
09.30.18
Current income tax
(1,405)
 
(20,678)
Deferred income tax
(477,485)
 
(481,996)
Income tax - gain
(478,890)
 
(502,674)
 
Changes in the deferred tax account are as follows:
 
 
09.30.19
 
06.30.19
Beginning of the period / year
(14,706,415)
 
(19,953,564)
Income tax
(477,485)
 
5,247,149
End of the period / year
(15,183,900)
 
(14,706,415)
 
 
 
 
 
17
IRSA Propiedades Comerciales S.A.
 
Below there is a reconciliation between the income tax recognized and that which would result from applying the prevailing tax rate to the profit before income tax:
 
 
09.30.19
 
09.30.18
Profit for period before income tax at the prevailing tax rate
(821,490)
 
(1,197,549)
Tax effects of:
 
 
 
Rate change
844,511
 
847,371
Result by rate transparency
109,297
 
 -
Share of profit of associates and joint ventures
108,277
 
169,883
Non-taxable / non-deductible items
(48,769)
 
(26,184)
Inflation adjustment
(206,130)
 
(296,135)
Tax inflation adjustment
(466,338)
 
 -
Others
1,752
 
(60)
Income tax gain
(478,890)
 
(502,674)
 
 
20.
Revenue
 
 
09.30.19
 
09.30.18
Base rent
1,202,209
 
1,309,038
Contingent rent
362,896
 
347,305
Admission rights
190,754
 
230,516
Parking fees
88,702
 
114,565
Others
14,764
 
34,180
Commissions
41,041
 
44,625
Property management fees
23,412
 
25,455
Averaging of scheduled rent escalation
112,040
 
33,912
Total revenues from rentals and services
2,035,818
 
2,139,596
Sale of trading properties
 -
 
2,383
Total revenues from sale of properties
 -
 
2,383
Total revenues from sales, rentals and services
2,035,818
 
2,141,979
Expenses and collective promotion fund
668,175
 
763,132
Total revenues from expenses and collective promotion funds
668,175
 
763,132
Total revenues
2,703,993
 
2,905,111
 
 
21.           Expenses by nature
 
The Group disclosed 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 disclosure regarding expenses by nature and their relationship to the function within the Group.
 
 
Costs (ii)
 
General and administrative expenses
 
Selling expenses
 
09.30.19
 
09.30.18
Salaries, social security costs and other personnel administrative expenses (i)
305,007
 
101,205
 
11,818
 
418,030
 
468,290
Maintenance, security, cleaning, repairs and other
296,593
 
24,630
 
338
 
321,561
 
381,118
Taxes, rates and contributions
93,165
 
297
 
68,311
 
161,773
 
191,372
Advertising and other selling expenses
111,104
 
 -
 
6,816
 
117,920
 
100,683
Directors' fees
 -
 
75,596
 
 -
 
75,596
 
71,398
Fees and payments for services
7,130
 
28,455
 
4,511
 
40,096
 
44,383
Amortization and depreciation
30,259
 
21,561
 
368
 
52,188
 
41,534
Allowance for doubtful accounts (additions and unused amounts reversed) (Note 14)
 -
 
 -
 
27,262
 
27,262
 
73,249
Leases and expenses
26,147
 
6,378
 
553
 
33,078
 
35,182
Traveling, transportation and stationery
5,294
 
4,001
 
748
 
10,043
 
13,524
Bank expenses
1,463
 
4,338
 
 -
 
5,801
 
6,854
Other expenses
355
 
243
 
2
 
600
 
4,110
Cost of sale of properties
 -
 
 -
 
 -
 
 -
 
184
Total 09.30.19
876,517
 
266,704
 
120,727
 
1,263,948
 
 -
Total 09.30.18
996,066
 
252,196
 
183,619
 
 -
 
1,431,881
 
(1)
For the three-month period ended September 30, 2019, includes Ps. 380,554 of Salaries, Bonuses and Social Security and Ps. 37,476 of other concepts. For the three-month period ended September 30, 2018, includes Ps. 450,903 of Salaries, Bonuses and Social Security and Ps. 17,387 of other concepts.
(2)
For the three-month period ended September 30, 2019, includes Ps. 865,478 of Rental and services costs; Ps. 9,528 of Cost of sales and developments and Ps. 1,511 of other consumer financing costs. For the three-month period ended September 30, 2018, includes Ps. 955,247 of Rental and services costs; Ps. 9,041 of Cost of sales and developments and Ps. 31,778 of other consumer financing costs.
 
 
18
IRSA Propiedades Comerciales S.A.
 
22.           Other operating results, net
 
 
09.30.19
 
09.30.18
Interest generated by operating credits
29,986
 
46,628
Management fees
2,548
 
4,491
Others
(1,772)
 
14,308
Lawsuits (Note 18)
(15,586)
 
(15,748)
Donations
(17,169)
 
(40,791)
Loss from sale of associates and joint ventures
(5,780)
 
 -
Total other operating results, net
(7,773)
 
8,888
 
 
23.           Financial results, net
 
 
 
09.30.19
 
09.30.18
- Interest income
53,276
 
57,211
Finance income
53,276
 
57,211
- Interest expense
(648,138)
 
(685,435)
- Others financial costs
(56,600)
 
(53,824)
Subtotal finance costs
(704,738)
 
(739,259)
Less: Capitalized finance costs
269
 
 -
Finance costs
(704,469)
 
(739,259)
Foreing exchange, net
(4,589,492)
 
(6,960,495)
- Fair value gains of financial assets at fair value through profit or loss
(254,619)
 
2,231,799
- Gain from derivative financial instruments
164,614
 
353,683
- Gain from repurchase of non-convertible notes
4,244
 
 -
Other financial results
(4,675,253)
 
(4,375,013)
 - Inflation adjustment
(5,965)
 
(160,280)
Total financial results, net
(5,332,411)
 
(5,217,341)
 
 
 
 
 
 
 
19
IRSA Propiedades Comerciales S.A.
 
24.          Related parties transactions
 
The following is a summary of the balances with related parties:
 
Item
 
09.30.19
 
06.30.19
Trade and other receivables
 
6,686,642
 
4,774,322
Investments in financial assets
 
3,800,143
 
3,095,528
Trade and other payables
 
(286,551)
 
(340,296)
Total
 
10,200,234
 
7,529,554
 
 
 
Related parties
 
09.30.19
 
06.30.19
 
Description of transaction
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA)
 
4,503,405
 
4,259,131
 
Advances
 
 
2,668,253
 
1,817,970
 
 Non-convertible notes
 
 
1,462,125
 
 -
 
 Loans granted
 
 
115,180
 
95,567
 
 Other credits
 
 
71,147
 
63,642
 
 Corporate services
 
 
12,448
 
14,008
 
 Equity incentive plan
 
 
2,341
 
729
 
 Leases and/or rights to use space
 
 
758
 
 -
 
 Commissions
 
 
4
 
 -
 
 Lease collections
 
 
(1,536)
 
(462)
 
 Reimbursement of expenses to pay
 
 
(14,609)
 
(16,439)
 
 Equity incentive plan to pay
 
 
 -
 
(147)
 
 Lease collections to pay
 
 
 -
 
5,361
 
 Reimbursement of expenses
Total direct parent company
 
8,819,516
 
6,239,360
 
 
Cresud S.A.CI.F. y A.
 
1,131,890
 
1,277,558
 
 Non-convertible notes
 
 
(2,546)
 
(2,865)
 
 Equity incentive plan
 
 
(27,288)
 
(30,244)
 
 Reimbursement of expenses to pay
 
 
(130,510)
 
(97,265)
 
 Corporate services to pay
Total direct parent company of IRSA
 
971,546
 
1,147,184
 
 
La Rural S.A.
 
231,706
 
287,225
 
 Dividends
 
 
26,911
 
30,323
 
 Leases and/or rights to use space
 
 
59,259
 
 -
 
 Other credits
 
 
(845)
 
(3,117)
 
 Reimbursement of expenses to pay
Other associates and joint ventures
 
4,007
 
481
 
 Reimbursement of expenses
 
 
1,307
 
5,740
 
 Leases and/or rights to use space
 
 
309
 
2
 
 Management fee
 
 
 -
 
(435)
 
 Leases and/or rights to use space to pay
Total associates and joint ventures of IRSA Propiedades Comerciales
 
322,654
 
320,219
 
 
Directors
 
(12)
 
(14)
 
 Reimbursement of expenses to pay
 
 
(68,058)
 
(149,485)
 
 Fees
Total Directors
 
(68,070)
 
(149,499)
 
 
IRSA International LLC
 
182,637
 
 -
 
 Loans granted
 
 
(20,400)
 
(22,956)
 
 Others receivables
Exportaciones Agroindustriales Argentinas S.A.
 
(18,925)
 
(13,017)
 
 Others receivables
Others
 
6,962
 
7,013
 
 Reimbursement of expenses
 
 
5,292
 
4,203
 
 Leases and/or rights to use space
 
 
630
 
656
 
 Other credits
 
 
(31)
 
(1,927)
 
 Leases and/or rights to use space to pay
 
 
214
 
241
 
 Reimbursement of expenses
 
 
(49)
 
(27)
 
 Reimbursement of expenses to pay
 
 
(1,742)
 
(1,896)
 
 Legal services
Total others
 
154,588
 
(27,710)
 
 
Total at the end of the period/ year
 
10,200,234
 
7,529,554
 
 
 
 
 
 
20
IRSA Propiedades Comerciales S.A.
 
The following is a summary of the results with related parties:
 
 
Related parties
 
09.30.19
 
09.30.18
 
Description of transaction
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA)
 
13,659
 
17,063
 
Corporate services
 
 
205,910
 
323,369
 
Financial operations
 
 
115
 
68
 
Commissions
 
 
(869)
 
1,569
 
Leases and/or rights to use space
Total direct parent company
 
218,815
 
342,069
 
 
Cresud S.A.CI.F. y A.
 
69,621
 
139,534
 
Financial operations
 
 
1,705
 
740
 
Leases and/or rights to use space
 
 
(84,279)
 
(89,279)
 
Corporate services
Total direct parent company of IRSA
 
(12,953)
 
50,995
 
 
Tarshop S.A.
 
 -
 
9,219
 
Leases and/or rights to use space
 
 
 -
 
573
 
Commissions
La Rural S.A.
 
 -
 
13,476
 
Leases and/or rights to use space
Others associates and joint ventures
 
2,724
 
308
 
Financial operations
 
 
2,075
 
(304)
 
Leases and/or rights to use space
 
 
43
 
4,490
 
Fees
Total associates and joint ventures of IRSA Propiedades Comerciales
 
4,842
 
27,762
 
 
Directors
 
(75,591)
 
(66,242)
 
Fees
Senior Management
 
(10,477)
 
(7,724)
 
Fees
Total Directors
 
(86,068)
 
(73,966)
 
 
IRSA International LLC
 
44,272
 
 -
 
Leases and/or rights to use space
Banco de Crédito y Securitación
 
10,958
 
9,977