6-K 1 irsa1q21.htm PRIMARY DOCUMENT irsa1q21
 
 
 
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Financial Statements as of September 30, 2020 and for the three-month period ended as of that date, presented comparatively
 
 
 
 
 
 
 
 
1
 
 
Legal information
 
 
Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
 
Fiscal year N°: 78, beginning on July 1st, 2019.
 
Legal address: 108 Bolívar St., 1st 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: October 29, 2018.
 
Expiration of the Company’s by-laws: April 5, 2043.
 
Registration number with the Superintendence: 213,036.
 
Capital: 578,676,460 shares.
 
Common Stock subscribed, issued and paid up nominal value (in millions of Ps.): 579.
 
Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
(Cresud S.A.C.I.F. y A.).
 
Legal Address: 877 Moreno St., 23rd. 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: 359,102,219 common shares.
 
Percentage of votes of the Parent Company (direct and indirect interest) on the shareholders’ equity: 62.34% (1).
 
 

 
CAPITAL STATUS
 
Type of stock
 
Shares authorized for Public Offering (2)
 
 
Subscribed, issued and paid up nominal value
(in millions of Pesos)
 
Common stock with a face value of Ps. 1 per share and entitled to 1 vote each
  578,676,460 
  579 
 
(1) For computation purposes, treasury shares have been subtracted.
(2) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
 
 
 
2
 
Index
 
Glossary  ...
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 
9
Note 4 – Acquisitions and disposals 
9
Note 5 – Financial risk management and fair value estimates 
10
Note 6 – Segment information 
10
Note 7 – Investments in associates and joint ventures 
13
Note 8 – Investment properties 
15
Note 9 – Property, plant and equipment 
16
Note 10 – Trading properties 
16
Note 11 – Intangible assets 
16
Note 12 – Right-of-use assets 
17
Note 13 – Financial instruments by category 
17
Note 14 – Trade and other receivables 
18
Note 15 – Cash flow information 
20
Note 16 – Trade and other payables 
21
Note 17 – Borrowings 
22
Note 18 – Provisions 
22
Note 19 – Taxes 
23
Note 20 – Revenues 
23
Note 21 – Expenses by nature 
25
Note 22 – Cost of goods sold and services provided 
25
Note 23 – Other operating results, net 
26
Note 24 – Financial results, net 
26
Note 25 – Related party transactions 
27
Note 26 – CNV General Resolution N° 622 
29
Note 27 – Foreign currency assets and liabilities 
29
Note 28 – Groups of assets and liabilities held for sale 
30
Note 29 – Results from discontinued operations 
30
Note 30 – Other significant events of the period 
31
Note 31 – Subsequent Events 
31
 
3
 
 
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.
BCRA
 
Central Bank of the Argentine Republic
BHSA
 
Banco Hipotecario S.A.
Cellcom
 
Cellcom Israel Ltd.
Clal
 
Clal Holdings Insurance Enterprises Ltd.
CNV
 
Securities Exchange Commission
CODM
 
Chief operating decision maker
CPF
 
Collective Promotion Funds
Condor
 
Condor Hospitality Trust Inc.
Cresud
 
Cresud S.A.C.I.F. y A.
DIC
 
Discount Investment Corporation Ltd.
Eclsa
 
E-Comerce Latina S.A.
Efanur
 
Efanur S.A.
Financial Statements
 
Unaudited Condensed Interim Consolidated Financial Statements
Gav-Yam
 
Gav-Yam, Bayside Land Corporation Ltd
Annual Financial Statements
 
Consolidated Financial Statements as of June 30, 2019
HASAU
 
Hoteles Argentinos S.A.U.
IAS
 
International Accounting Standards
IASB
IBC
 
International Accounting Standards Board
Israel Broadband Company
IDBT
 
IDB Tourism (2009) Ltd
IDBD
 
IDB Development Corporation Ltd.
IFISA
 
Inversiones Financieras del Sur S.A.
ISPRO
 
Ispro the Israel Properties Rental Corp. Ltd.
IFRS
 
International Financial Reporting Standards
IRSA, The Company”, “Us”, “We”
 
IRSA Inversiones y Representaciones Sociedad Anónima
IRSA CP
 
IRSA Propiedades Comerciales S.A.
Israir
 
Israir Airlines & Tourism Ltd.
LRSA
Mehadrin
 
La Rural S.A.
Mehadrin Ltd.
Metropolitan
 
Metropolitan 885 Third Avenue Leasehold LLC
MPIT
 
Minimum presumed income tax
NCN
 
Non-convertible notes
New Lipstick
 
New Lipstick LLC
NFSA
 
Nuevas Fronteras S.A.
NIS
 
New Israeli Shekel
PBC
 
Property & Building Corporation Ltd.
PBEL
 
PBEL Real Estate LTD
Quality
 
Quality Invest S.A.
Shufersal
 
Shufersal Ltd.
Tarshop
 
Tarshop S.A.
TGLT
 
TGLT S.A
Tyrus
 
Tyrus S.A.
 
 
4
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of September 30, 2020 and June 30, 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Note
  09.30.2020 
  06.30.2020 
ASSETS
 
    
    
Non-current assets
 
    
    
Investment properties
8
  166,478 
  244,966 
Property, plant and equipment
9
  2,338 
  40,618 
Trading properties
10, 22
  1,328 
  5,228 
Intangible assets
11
  1,186 
  29,911 
Right-of-use assets
12
  621 
  21,379 
Investments in associates and joint ventures
7
  12,718 
  80,089 
Deferred income tax assets
19
  148 
  681 
Income tax and MPIT credit
 
  26 
  27 
Restricted assets
13
  - 
  2,014 
Trade and other receivables
14
  1,881 
  24,898 
Investments in financial assets
13
  506 
  3,782 
Derivative financial instruments
13
  - 
  153 
Total non-current assets
 
  187,230 
  453,746 
Current assets
 
    
    
Trading properties
10, 22
  218 
  2,493 
Inventories
22
  65 
  5,041 
Restricted assets
13
  8 
  6,684 
Income tax and MPIT credit
 
  105 
  331 
Group of assets held for sale
28
  - 
  44,868 
Trade and other receivables
14
  4,998 
  39,986 
Investments in financial assets
13
  3,378 
  20,922 
Financial assets held for sale
13
  - 
  3,636 
Derivative financial instruments
13
  16 
  227 
Cash and cash equivalents
13
  4,397 
  97,276 
Total current assets
 
  13,185 
  221,464 
TOTAL ASSETS
 
  200,415 
  675,210 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity attributable to equity holders of the parent (according to corresponding statement)
 
  70,375 
  61,500 
Non-controlling interest
 
  23,364 
  70,544 
TOTAL SHAREHOLDERS’ EQUITY
 
  93,739 
  132,044 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Borrowings
17
  31,967 
  320,616 
Lease liabilities
 
  586 
  14,400 
Deferred income tax liabilities
19
  42,121 
  47,408 
Trade and other payables
16
  1,745 
  2,335 
Provisions
18
  145 
  3,297 
Employee benefits
 
  - 
  481 
Derivative financial instruments
13
  29 
  59 
Salaries and social security liabilities
 
  33 
  210 
Total non-current liabilities
 
  76,626 
  388,806 
Current liabilities
 
    
    
Trade and other payables
16
  5,007 
  31,943 
Borrowings
17
  24,471 
  84,338 
Lease liabilities
 
  139 
  5,242 
Provisions
18
  108 
  2,627 
Group of liabilities held for sale
28
  - 
  23,912 
Salaries and social security liabilities
 
  235 
  4,419 
Income tax and MPIT liabilities
 
  30 
  673 
Derivative financial instruments
13
  60 
  1,206 
Total current liabilities
 
  30,050 
  154,360 
TOTAL LIABILITIES
 
  106,676 
  543,166 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  200,415 
  675,210 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
                                          .

 
 
5
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Three month
 
 
Note
  09.30.2020 
  09.30.2019 
Revenues
20
  1,609 
  4,487 
Costs
21, 22
  (1,097)
  (1,682)
Gross profit
 
  512 
  2,805 
Net gain from fair value adjustment of investment properties
8
  24,089 
  12,349 
General and administrative expenses
21
  (644)
  (661)
Selling expenses
21
  (450)
  (295)
Other operating results, net
23
  (18)
  (56)
Profit from operations
 
  23,489 
  14,142 
Share of profit of associates and joint ventures
7
  147 
  737 
Profit before financial results and income tax
 
  23,636 
  14,879 
Finance income
24
  56 
  83 
Finance costs
24
  (1,593)
  (1,782)
Other financial results
24
  624 
  (9,152)
Inflation adjustment
 
  (29)
  (393)
Financial results, net
 
  (942)
  (11,244)
Profit before income tax
 
  22,694 
  3,635 
Income tax expense
19
  (7,958)
  (2,505)
Profit for the period from continuing operations
 
  14,736 
  1,130 
(Loss) / profit for the period from discontinued operations
29
  (6,396)
  13,887 
Profit for the period
 
  8,340 
  15,017 
Other comprehensive income:
 
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
Currency translation adjustment
 
  (5,833)
  71 
Other reserves
 
  1,954 
  1,730 
Items that may not be reclassified subsequently to profit or loss, net of income tax:
 
  - 
  - 
Actuarial profit from defined contribution plans
 
  - 
  (11)
Other comprehensive (loss) / income for the period from continuing operations
 
  (3,879)
  1,790 
Other comprehensive (loss) / income for the period from discontinued operations
 
  (4,794)
  14,057 
Total other comprehensive (loss) / income for the period
 
  (8,673)
  15,847 
Total comprehensive (loss) / income for the period
 
  (333)
  30,864 
 
    
    
Total comprehensive income from continuing operations
 
  10,857 
  2,920 
Total comprehensive (loss) / income from discontinued operations
 
  (11,190)
  27,944 
Total comprehensive (loss) / income for the period
 
  (333)
  30,864 
 
    
    
Profit for the period attributable to:
 
    
    
Equity holders of the parent
 
  6,615 
  4,509 
Non-controlling interest
 
  1,725 
  10,508 
 
    
    
Profit from continuing operations attributable to:
 
    
    
Equity holders of the parent
 
  11,679 
  247 
Non-controlling interest
 
  3,057 
  883 
 
    
    
Total comprehensive income / (loss) attributable to:
 
    
    
Equity holders of the parent
 
  2,914 
  3,568 
Non-controlling interest
 
  (3,247)
  27,296 
 
    
    
Total comprehensive income / (loss) from continuing operations attributable to:
 
    
    
Equity holders of the parent
 
  15,034 
  2,062 
Non-controlling interest
 
  (4,177)
  858 
 
    
    
Profit per share attributable to equity holders of the parent:
 
    
    
Basic
 
  11.50 
  7.84 
Diluted
 
  11.42 
  7.84 
 
    
    
Profit per share from continuing operations attributable to equity holders of the parent:
 
    
    
Basic
 
  20.31 
  0.43 
Diluted
 
  20.17 
  0.43 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
 
                                          .
 
 
6
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated 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
 
 
 
Attributable to equity holders of the parent
 
 
 
 
 
 
 
 
 
Share capital
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (1)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Legal reserve
 
 
Special reserve Resolution CNV 609/12 (2)
 
 
Other reserves (3)
 
 
Retained earnings
 
 
Subtotal
 
 
Non-controlling interest
 
 
Total Shareholders’ equity
 
Balance as of July 1, 2020
  575 
  4 
  14,613 
  15,653 
  102 
  522 
  10,124 
  6,345 
  13,562 
  61,500 
  70,544 
  132,044 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  6,615 
  6,615 
  1,725 
  8,340 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,701)
  - 
  (3,701)
  (4,972)
  (8,673)
Total profit and other comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,701)
  6,615 
  2,914 
  (3,247)
  (333)
Capitalisation of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  4 
  4 
Dividend distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (20)
  (20)
Other changes in equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  5,926 
  - 
  5,926 
  (43,846)
  (37,920)
Reserve for share-based payments
  - 
  - 
  - 
  - 
  2 
  - 
  - 
  (2)
  - 
  - 
  - 
  - 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  35 
  - 
  35 
  (71)
  (36)
Balance as of September 30, 2020
  575 
  4 
  14,613 
  15,653 
  104 
  522 
  10,124 
  8,603 
  20,177 
  70,375 
  23,364 
  93,739 
 
(1) Includes Ps. 1 of Inflation adjustment of treasury shares. See Note 16 to the Annual Financial Statements.
(2) Related to CNV General Resolution N° 609/12.
(3) 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
 
 
Special reserve
 
 
Reserve for defined contribution plans
 
 
Other reserves from subsidiaries
 
 
Revaluation surplus
 
 
Total Other reserves
 
Balance as of July 1, 2020
  (185)
  (5,673)
  212 
  1,822 
  (784)
  (394)
  11,190 
  (422)
  115 
  464 
  6,345 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,476)
  (78)
  - 
  (147)
  - 
  - 
  (3,701)
Total comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,476)
  (78)
  - 
  (147)
  - 
  - 
  (3,701)
Reserve for share-based payments
  1 
  - 
  (3)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2)
Changes in non-controlling interest
  - 
  35 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  35 
Other changes in equity
  - 
  (52)
  - 
  - 
  5,034 
  215 
  - 
  784 
  (115)
  60 
  5,926 
Balance as of September 30, 2020
  (184)
  (5,690)
  209 
  1,822 
  774 
  (257)
  11,190 
  215 
  - 
  524 
  8,603 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
                                            .
 
 
7
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2019
(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 (1)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Legal reserve
 
 
Special reserve Resolution CNV 609/12 (2)
 
 
Other reserves (3)
 
 
Retained earnings
 
 
Subtotal
 
 
Non-controlling interest
 
 
Total Shareholders’ equity
 
Balance as of July 1, 2019
  575 
  4 
  14,613 
  15,653 
  85 
  522 
  10,121 
  73,258 
  (65,479)
  49,352 
  82,692 
  132,044 
Adjustments previous periods (IFRS 9 and 15)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (1,248)
  (1,248)
  (926)
  (2,174)
Balance as of July 1, 2018 (recast)
  575 
  4 
  14,613 
  15,653 
  85 
  522 
  10,121 
  73,258 
  (66,727)
  48,104 
  81,766 
  129,870 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  4,509 
  4,509 
  10,508 
  15,017 
Other comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (941)
  - 
  (941)
  16,788 
  15,847 
Total profit / (loss) and other comprehensive income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (941)
  4,509 
  3,568 
  27,296 
  30,864 
Capitalisation of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  11 
  11 
Dividend distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (18)
  (18)
Decrease due to loss of control
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  25 
  25 
  (46,419)
  (46,394)
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (185)
  - 
  (185)
  (74)
  (259)
Balance as of September 30, 2019
  575 
  4 
  14,613 
  15,653 
  85 
  522 
  10,121 
  72,132 
  (62,193)
  51,512 
  62,562 
  114,074 
 
(1) Includes Ps. 1 of Inflation adjustment of treasury shares. See Note 16 to the Annual Financial Statements.
(2) Related to CNV General Resolution N° 609/12.
(3) Group’s other reserves for the period ended September 30, 2019 are comprised as follows:
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements
 
 
 
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, 2019
  (176)
  (5,678)
  223 
  1,821 
  282 
  (10)
  76,906 
  (334)
  112 
  112 
  73,258 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (866)
  - 
  - 
  - 
  (75)
  - 
  (941)
Total comprehensive loss for the period
  - 
  - 
  - 
  - 
  (866)
  - 
  - 
  - 
  (75)
  - 
  (941)
Share-based compensation
  3 
  - 
  (3)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Changes in non-controlling interest
  - 
  (185)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (185)
Balance as of September 30, 2019
  (173)
  (5,863)
  220 
  1,821 
  (584)
  (10)
  76,906 
  (334)
  37 
  112 
  72,132 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
 
                                        .
 
 
8
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Note
  09.30.2020 
  09.30.2019 
Operating activities:
 
    
    
Net cash generated from continuing operating activities before income tax paid
15
  1,138 
  2,926 
Income tax and MPIT paid
 
  (3)
  (197)
Net cash generated from continuing operating activities
 
  1,135 
  2,729 
Net cash generated from discontinued operating activities
 
  2,227 
  7,738 
Net cash generated from operating activities
 
  3,362 
  10,467 
Investing activities:
 
    
    
Acquisition of interest in associates and joint ventures
 
  - 
  (5)
Contributions and issuance of capital in associates and joint ventures
 
  (8)
  (112)
Acquisition and improvements of investment properties
 
  (719)
  (824)
Proceeds from sales of investment properties
 
  9,604 
  - 
Acquisitions and improvements of property, plant and equipment
 
  (45)
  (40)
Acquisitions of intangible assets
 
  (6)
  (7)
Net increase of restricted deposits
 
  - 
  (226)
Dividends collected from associates and joint ventures
 
  - 
  26 
Proceeds from loans granted
 
  - 
  45 
Acquisitions of investments in financial assets
 
  (6,181)
  (11,245)
Proceeds from disposal of investments in financial assets
 
  6,809 
  14,811 
Interest received from financial assets
 
  157 
  202 
Dividends received from financial assets
 
  - 
  4 
Loans granted
 
  - 
  (639)
Net cash generated from continuing investing activities
 
  9,611 
  1,990 
Net cash generated from discontinued investing activities
 
  31,830 
  1,500 
Net cash generated from investing activities
 
  41,441 
  3,490 
Financing activities:
 
    
    
Borrowings and issuance of non-convertible notes
 
  3,466 
  16,293 
Payment of borrowings and non-convertible notes
 
  (20,009)
  (17,730)
Collections of short term loans, net
 
  4,861 
  1,686 
Interests paid
 
  (2,624)
  (2,203)
Repurchase of non-convertible notes
 
  (66)
  (1,972)
Acquisition of non-controlling interest in subsidiaries
 
  (53)
  (246)
Sale of own non-convertible notes
 
  525 
  - 
Net proceeds from derivate financial instrument
 
  (225)
  258 
Net cash (used in) / generated from continuing financing activities
 
  (14,125)
  (3,914)
Net cash generated from /(used in) discontinued financing activities
 
  (13,019)
  (31,325)
Net cash generated from financing activities
 
  (27,144)
  (35,239)
Net (decrease) / increase in cash and cash equivalents from continuing activities
 
  (3,379)
  805 
Net (decrease) / increase in cash and cash equivalents from discontinued activities
 
  21,038 
  (22,087)
Net (decrease) / increase in cash and cash equivalents
 
  17,659 
  (21,282)
Cash and cash equivalents at beginning of period
 
  97,276 
  93,059 
Cash and cash equivalents reclassified as held-for-sale
 
  - 
  36 
Deconsolidation of subsidiaries
 
  (104,164)
  - 
 
    
    
Foreign exchange gain and inflation adjustment on cash and changes in fair value of cash equivalents
 
  (6,374)
  13,875 
Cash and cash equivalents at end of period
13
  4,397 
  85,688 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
 
 
 
9
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 17, 2020.
 
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 IFIS Limited is our ultimate parent company.
 
The Group has established two Operations Centers, Argentina and Israel, to manage its global business, mainly through the following companies, as explained below, the Group has lost control of the Israel Operations Center and it has been deconsolidated as of September 30, 2020:
 
  (*) See note 4. to the Annual Financial Statements for more information about the changes within the Operations Center in Israel.
 
Operations Center in Israel
 
As stated in Note 1. to the consolidated financial statements as of June 30, 2020, 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. For comparability purposes, the results of the Israel Operations Center for the three-month periods ended September 30 have been reclassified to 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, 2020 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, 2020 and 2019 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.
 
 
10
 
 
 
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, 2020, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
 
 
 
As of September 30, 2020 (accumulated three months)
 
Price variation
  8%
 
As a consequence of the aforementioned, these financial statements as of September 30, 2020 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, 2020 and September 30, 2019 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 regarding the loss of control in IDBD See note 1. to these Financial Statements.
 
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, except for those mentioned in Note 30.
 
 
11
 
 
3.
Seasonal effects on operations
 
Operations Center in Argentina
 
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 ranging between July and December, compared to the period between January and June.
 
4.
Acquisitions and disposals
 
Significant acquisitions and disposals for the three-month period ended September 30, 2020 are detailed below. Significant acquisitions and disposals for the fiscal year ended June 30, 2020, are detailed in Note 4 to the Annual Financial Statements.
 
A.
Sale of floors from Boston Tower
 
On July 15, 2020, IRSA CP entered into a preliminary sale agreement (with delivery of possession) with respect to a medium-height floor from Boston tower located at Della Paolera 265, Catalinas district, City of Buenos Aires, covering a total area of approximately 1,063 sq. meters and 5 parking lots located in the building. The price of the transaction was Ps. 477.7 (US$ 6.7), which has been paid in full.
 
On August 26, 2020, IRSA CP executed a preliminary sale agreement (with delivery of possession) with respect to 5 floors from Boston tower located at Della Paolera 265, Catalinas district, City of Buenos Aires, covering a total area of approximately 6,235 sq. meters and 25 parking lots located in the building. The price of the transaction was Ps. 2,562 million (US$ 34.7 million), which has been paid in full.
 
B.
Bouchard sale
 
On July 30, 2020, IRSA CP sold the entire “Bouchard 710” building, located in the Plaza Roma district of the City of Buenos Aires. The tower has a gross leasable area of 15,014 sq. meters divided into 12 floors for office use and 116 parking lots. The price of the transaction was approximately Ps. 6,300 million (US$ 87 million), which has been paid in full.
 
C.
Lipstick Building, New York, United States
 
On August 7, 2020, Metropolitan signed an agreement with the owner of the Ground Lease in which it terminated the relationship, leaving the administration of the building. Accordingly, at June 30, 2020, the Group derecognized Metropolitan's liabilities associated with the ground lease, as well as all the assets and liabilities associated with the building and the administration of the building; and made an agreement with the owner of the Ground Lease that states that Metropolitan is completely released from responsibilities, except for (i) claims for liabilities prior to June 1, 2020 from people who have performed work or provided services in the Building or to Metropolitan and (ii) claims from people who have had an accident on the property dated after August 7, 2020.
 
D.
Condor Merger Agreement
 
On July 19, 2019, Condor entered into a merger agreement with Nextponint Hospitality Trust. In accordance with the contractual terms, each Condor common share, with a par value of USD 0.01 per share, was canceled prior to the merger and became the right to receive a cash amount equivalent to USD 11.10 per share. ordinary action. Additionally, in accordance with the terms and conditions of the merger agreement, each Class E convertible share was automatically canceled and became the right to receive a cash amount equivalent to USD 10.00 per share.
 
 
12
 
 
The closing of the transaction, which had been scheduled for March 23, 2020, did not occur.
 
On October 14, 2020, Condor entered into an agreement with Nextponint Hospitality Trust and some of its affiliates ("NHT Parties") to resolve any and all claims between them related to the aforementioned merger agreement.
 
Under the agreement with NHT, the Parties will make three payments to Condor in three installments, with the last payment maturing on December 30, 2020 and for a total of USD 7.0 million.
 
As of the date of presentation of these financial statements, the Company has 2,245,100 ordinary shares and 325,752 Series E shares of Condor.
 
E.
Loss of control of IDBD
 
As described in Note 1. to these financial statements, at the end of September 2020, the Group has lost control of IDBD, deconsolidating the related assets and liabilities and reclassifying the operations from this operations center to discontinued operations.
 
The following table details the net assets disposed:
 
 
  09.30.2020 
ASSETS
    
Investment properties
  84,251 
Property, plant and equipment
  34,396 
Trading properties
  5,512 
Intangible assets
  26,194 
Right-of-use assets
  18,530 
Investments in associates and joint ventures
  34,721 
Deferred income tax assets
  407 
Income tax credit
  305 
Restricted assets
  6,021 
Trade and other receivables
  50,669 
Investments in financial assets
  22,680 
Derivative financial instruments
  264 
Inventories
  3,377 
Group of assets held for sale
  39,441 
Cash and cash equivalents
  104,164 
TOTAL ASSETS
  430,932 
Borrowings
  305,070 
Lease liabilities
  16,984 
Deferred income tax liabilities
  11,655 
Trade and other payables
  22,782 
Income tax liabilities
  427 
Provisions
  5,085 
Employee benefits
  447 
Derivative financial instruments
  447 
Salaries and social security liabilities
  3,173 
Group of liabilities held for sale
  20,646 
TOTAL LIABILITIES
  386,716 
TOTAL NET ASSETS
  44,216 
Non-controlling interest
  (43,846)
Result for loss of control
  370 
Recycling of currency translation adjustment and other reserves
  (3,252)
Total result for loss of control (*)
  (2,882)
 
(*) Included within discontinued operations
 
 
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.
 
 
13
 
 
From June 30, 2020 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. Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Group’s financial instruments, except as mentioned in Note 30.
 
 
6.
Segment information
 
As explained in Note 6 to the Annual Financial Statements, the Group reports its financial performance separately in two Operations Centers. As described in Note 1, the Group lost control of IDBD and has reclassified its results to discontinued operations. Segment information for the period ended September 30, 2019 has been recast for the purposes of comparability with the present period.
 
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, 2020 and 2019:
 
 
 
Three Month ended September 30, 2020
 
 
 
Operations Center in Argentina
 
 
Operations Center in Israel
 
 
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
  1,218 
  - 
  1,218 
  (8)
  405 
  (6)
  1,609 
Costs
  (651)
  - 
  (651)
  14 
  (460)
  - 
  (1,097)
Gross profit / (loss)
  567 
  - 
  567 
  6 
  (55)
  (6)
  512 
Net gain from fair value adjustment of investment properties
  24,926 
  - 
  24,926 
  (837)
  - 
  - 
  24,089 
General and administrative expenses
  (649)
  (5)
  (654)
  1 
  - 
  9 
  (644)
Selling expenses
  (451)
  - 
  (451)
  1 
  - 
  - 
  (450)
Impairment of associates and joint ventures
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Other operating results, net
  (25)
  - 
  (25)
  1 
  9 
  (3)
  (18)
Profit / (loss) from operations
  24,368 
  (5)
  24,363 
  (828)
  (46)
  - 
  23,489 
Share of (loss) / profit of associates and joint ventures
  (472)
  - 
  (472)
  619 
  - 
  - 
  147 
Segment profit / (loss)
  23,896 
  (5)
  23,891 
  (209)
  (46)
  - 
  23,636 
Reportable assets
  185,020 
  1,399 
  186,419 
  (954)
  - 
  14,950 
  200,415 
Reportable liabilities
  - 
  (2,355)
  (2,355)
  - 
  - 
  (104,321)
  (106,676)
Net reportable assets
  185,020 
  (956)
  184,064 
  (954)
  - 
  (89,371)
  93,739 
 
 
 
Three Monts ended September 30, 2019
 
 
 
Operations Center in Argentina
 
 
Operations Center in Israel
 
 
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
  3,609 
  - 
  3,609 
  (25)
  910 
  (7)
  4,487 
Costs
  (740)
  - 
  (740)
  11 
  (953)
  - 
  (1,682)
Gross profit / (loss)
  2,869 
  - 
  2,869 
  (14)
  (43)
  (7)
  2,805 
Net gain from fair value adjustment of investment properties
  12,897 
  - 
  12,897 
  (548)
  - 
  - 
  12,349 
General and administrative expenses
  (651)
  (28)
  (679)
  8 
  - 
  10 
  (661)
Selling expenses
  (300)
  - 
  (300)
  5 
  - 
  - 
  (295)
Other operating results, net
  (65)
  - 
  (65)
  - 
  12 
  (3)
  (56)
Profit / (loss) from operations
  14,750 
  (28)
  14,722 
  (549)
  (31)
  - 
  14,142 
Share of profit of associates and joint ventures
  324 
  - 
  324 
  413 
  - 
  - 
  737 
Segment profit / (loss)
  15,074 
  (28)
  15,046 
  (136)
  (31)
  - 
  14,879 
Reportable assets
  132,844 
  542,703 
  675,547 
  (771)
  - 
  33,893 
  708,669 
Reportable liabilities
  - 
  (480,535)
  (480,535)
  - 
  - 
  (114,060)
  (594,595)
Net reportable assets
  132,844 
  62,168 
  195,012 
  (771)
  - 
  (80,167)
  114,074 
 
(1) Represents the equity value of joint ventures that were proportionately consolidated for segment information.
 
 
14
 
 
(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 Ps. 8,482 and Ps. 6,051 as of September 30, 2020 and 2019 respectively.
 
Below is a summarized analysis of the segments from the Group’s Operations Center in Argentina for the periods ended September 30, 2020 and 2019:
 
 
Three Month ended September 30, 2020
 
 
Operations Center in Argentina
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  367 
  541 
  39 
  6 
  263 
  - 
  2 
  1,218 
Costs
  (134)
  (45)
  (97)
  (129)
  (221)
  - 
  (25)
  (651)
Gross profit / (loss)
  233 
  496 
  (58)
  (123)
  42 
  - 
  (23)
  567 
Net gain from fair value adjustment of investment properties
  1,178 
  13,112 
  10,096 
  - 
  2 
  - 
  538 
  24,926 
General and administrative expenses
  (328)
  (87)
  (66)
  (57)
  (17)
  (74)
  (20)
  (649)
Selling expenses
  (73)
  (37)
  (305)
  (19)
  (16)
  - 
  (1)
  (451)
Other operating results, net
  (24)
  (1)
  (6)
  8 
  - 
  - 
  (2)
  (25)
Profit / (loss) from operations
  986 
  13,483 
  9,661 
  (191)
  11 
  (74)
  492 
  24,368 
Share of loss of associates and joint ventures
  - 
  - 
  (8)
  - 
  (386)
  - 
  (78)
  (472)
Segment profit / (loss)
  986 
  13,483 
  9,653 
  (191)
  (375)
  (74)
  414 
  23,896 
 
    
    
    
    
    
    
    
    
Investment properties and trading properties
  54,124 
  72,026 
  43,899 
  - 
  103 
  - 
  1,986 
  172,138 
Investment in associates and joint ventures
  - 
  - 
  565 
  - 
  1,781 
  - 
  7,152 
  9,498 
Other operating assets
  282 
  236 
  809 
  1,954 
  - 
  - 
  103 
  3,384 
Operating assets
  54,406 
  72,262 
  45,273 
  1,954 
  1,884 
  - 
  9,241 
  185,020 
 
(i) For the three-month period ended September 30, 2020, the net gain from fair value adjustment of investment properties was Ps. 2,565. The net impact of the values in pesos of our properties was mainly a consequence of the change in macroeconomic conditions:
(a) gain of Ps.19,713.7 as a consequence of an increase in the projected inflation rate plus GDP, with the resulting increase in the cash flows from shopping malls revenues;
(b) loss of Ps.22,963.3 due to the conversion to dollars of the projected cash flow in 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 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 Ps.2,244.
(d) positive impact of Ps.14,539.7 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;
(e) Additionally, due to the impact of the inflation adjustment, Ps. 12,160.3 were reclassified for shopping malls from “Net gain from fair value adjustment” to “Inflation Adjustment” in the Statement of Income and Other Comprehensive Income.
 
The value of our office buildings and other rental properties measured in real terms increased by 11.9% during the three-month period ended as of September 30, 2020, due to a devaluation of the peso which exceeded the period's inflation rate.
 
 
 
Three Monts ended September 30, 2019
 
 
 
Operations Center in Argentina
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  2,085 
  697 
  83 
  701 
  3 
  - 
  40 
  3,609 
Costs
  (180)
  (37)
  (56)
  (429)
  (4)
  - 
  (34)
  (740)
Gross profit / (loss)
  1,905 
  660 
  27 
  272 
  (1)
  - 
  6 
  2,869 
Net gain from fair value adjustment of investment properties
  601 
  6,845 
  5,153 
  - 
  - 
  - 
  298 
  12,897 
General and administrative expenses
  (257)
  (56)
  (66)
  (107)
  (41)
  (88)
  (36)
  (651)
Selling expenses
  (140)
  (29)
  (53)
  (77)
  - 
  - 
  (1)
  (300)
Other operating results, net
  (27)
  (7)
  (16)
  (4)
  (1)
  - 
  (10)
  (65)
Profit / (loss) from operations
  2,082 
  7,413 
  5,045 
  84 
  (43)
  (88)
  257 
  14,750 
Share of profit / (loss) of associates and joint ventures
  - 
  - 
  1 
  - 
  (228)
  - 
  551 
  324 
Segment profit / (loss)
  2,082 
  7,413 
  5,046 
  84 
  (271)
  (88)
  808 
  15,074 
 
    
    
    
    
    
    
    
    
Investment properties and trading properties
  54,965 
  40,896 
  35,580 
  - 
  116 
  - 
  1,443 
  133,000 
Investment in associates and joint ventures
  - 
  - 
  574 
  - 
  (9,619)
  - 
  5,817 
  (3,228)
Other operating assetsInvestment
  314 
  74 
  198 
  2,155 
  234 
  - 
  97 
  3,072 
Operating assets
  55,279 
  40,970 
  36,352 
  2,155 
  (9,269)
  - 
  7,357 
  132,844 
 
Below is a summarized analysis of the segments from the Group’s Operations Center in Israel for the periods ended September 30, 2020 and 2019:
 
 
15
 
 
 
 
 
Three Month ended September 30, 2020
 
 
 
Operations Center in Israel
 
 
 
Real Estate
 
 
Supermarkets
 
 
Telecommunications
 
 
Insurance
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Costs
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Gross profit
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Net gain from fair value adjustment of investment properties
  - 
  - 
  - 
  - 
  - 
  - 
  - 
General and administrative expenses
  - 
  - 
  - 
  - 
  (5)
  - 
  (5)
Selling expenses
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Impairment of associates and joint ventures
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Other operating results, net
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Profit from operations
  - 
  - 
  - 
  - 
  (5)
  - 
  (5)
Share of profit of associates and joint ventures
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Segment profit
  - 
  - 
  - 
  - 
  (5)
  - 
  (5)
 
    
    
    
    
    
    
    
Operating assets
  - 
  - 
  - 
  - 
  1,399 
  - 
  1,399 
Operating liabilities
  - 
  - 
  - 
  - 
  (2,355)
  - 
  (2,355)
Operating assets (liabilities), net
  - 
  - 
  - 
  - 
  (956)
  - 
  (956)
 
 
 
 
Three Monts ended September 30, 2019
 
 
 
Operations Center in Israel
 
 
 
Real Estate
 
 
Supermarkets
 
 
Telecommunications
 
 
Insurance
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Costs
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Gross profit
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Net gain from fair value adjustment of investment properties
  - 
  - 
  - 
  - 
  - 
  - 
  - 
General and administrative expenses
  - 
  - 
  - 
  - 
  (28)
  - 
  (28)
Selling expenses
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Other operating results, net
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Profit from operations
  - 
  - 
  - 
  - 
  (28)
  - 
  (28)
Share of profit of associates and joint ventures
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Segment profit
  - 
  - 
  - 
  - 
  (28)
  - 
  (28)
 
    
    
    
    
    
    
    
Operating assets
  204,587 
  34,536 
  159,317 
  20,065 
  74,195 
  50,003 
  542,703 
Operating liabilities
  (165,817)
  - 
  (127,182)
  - 
  (27,718)
  (159,818)
  (480,535)
Operating assets (liabilities), net
  38,770 
  34,536 
  32,135 
  20,065 
  46,477 
  (109,815)
  62,168 
 
 
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, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Beginning of the period / year
  80,073 
  38,519 
Adjustment previous periods (IFRS 9 and IAS 28)
  - 
  (2,130)
Increase of equity interest in associates and joint ventures
  - 
  3,598 
Capital contributions
  8 
  2,909 
Capital reduction
  - 
  (114)
Decrease of interest in associate (iv)
  (30,980)
  - 
Deconsolidation (iii)
  (34,721)
  31,409 
Share of profit
  662 
  9,330 
Currency translation adjustment
  (2,417)
  57 
Dividends (i)
  - 
  (1,959)
Other comprehensive loss
  (333)
  (1,340)
Reclassification to held-for-sale
  - 
  (2,228)
Others
  409 
  (1)
Incorporation by business combination
  - 
  2,023 
End of the period / year (ii)
  12,701 
  80,073 
 
 
 
16
 
 
 
(i) Note 25.
(ii) As of September 30, 2020 and June 30, 2020 includes Ps. (17) and Ps. (16), reflecting interests in companies with negative equity, which were disclosed in “Provisions” (Note 18).
(iii) The amount as of September 30, 2020 corresponds to the effect of the deconsolidation of IDBD and DIC (See note 4.E).
Regarding the amount as of June 30, 2020, it corresponds to the effect of the deconsolidation of Gav-Yam (See Note 4 to the consolidated Financial Statements as of June 30, 2020)
(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, 2020
 
 
June 30, 2020
 
 
September 30, 2020
 
 
June 30, 2020
 
 
September 30, 2020
 
 
September 30, 2019
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
  49.96%
  49.96%
  173 
  503 
  (330)
  (2,141)
BHSA
  29.91%
  29.91%
  4,327 
  4,385 
  (60)
  477 
Condor
  18.89%
  18.89%
  1,548 
  1,594 
  (55)
  (17)
PBEL
  N/A 
  45.40%
  - 
  - 
  - 
  - 
Shufersal
  N/A 
  26.02%
  - 
  30,263 
  17 
  - 
Mehadrin
  N/A 
  45.41%
  - 
  - 
  - 
  - 
Gav-Yam
  N/A 
  N/A 
  - 
  29,365 
  28 
  - 
Quality
  50.00%
  50.00%
  2,892 
  2,262 
  622 
  400 
La Rural SA
  50.00%
  50.00%
  235 
  219 
  16 
  81 
TGLT
  30.50%
  N/A 
  2,166 
  2,217 
  (39)
  - 
Other joint ventures
  N/A 
  N/A 
  1,360 
  9,265 
  (1,954)
  19 
Total associates and joint ventures
    
    
  12,701 
  80,073 
  (1,755)
  (1,181)
 
Below is additional information about the Group’s investments in associates and joint ventures:
 



   
 
Latest financial statements 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 
  - 
  (*) (9) 
  (*) (31) 
BHSA
Argentina
Financial
  448,689,072 
  (***) 1,500 
  (***) (194) 
  (***) 14,001 
Condor
EE.UU.
Hotel
  2,245,100 
  (*) 232 
  (*) (10) 
  (*) 76 
PBEL
India
Real estate
  N/A 
  (**) (2) 
  (**) - 
  (**) (2) 
Shufersal
Israel
Retail
  N/A 
  (**) 1,399 
  (**) 80 
  (**) 1,930 
Mehadrin
Israel
Agropecuaria
  N/A 
  N/A 
  N/A 
  N/A 
Gav-Yam
Israel
Inmobiliaria
  N/A 
  (**) 1,356 
  (**) 68 
  (**) 3,526 
Quality
Argentina
Real estate
  163,039,244 
  406 
  1,243 
  5,717 
La Rural SA
Argentina
Organization of events
  714,498 
  1 
  224 
  327 
TGLT (1)
Argentina
Real estate
  279,502,813 
  925 
  (477)
  6,295 
Other joint ventures
 
 
  N/A 
  N/A 
  N/A 
  N/A 
 
(*) 
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.
(**) 
Amounts in millions of NIS.
(***) 
Information as of September 30, 2020 according to BCRA's standards.
(1)
Additionally, 21,600,000 preferred class A shares and 24,948,798 preferred class B shares were subscribed, subject to conversion. As of the date of issuance of these financial statements, these preferred shares have not yet been converted.
 
Puerto Retiro (joint venture):
 
There have been no changes to what was informed in Note 8 to the Annual Financial Statements.
 
 
17
 
 
8.
Investment properties
 
Changes in the Group’s investment properties for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Three Month ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Rental properties
 
 
Undeveloped parcels of land
 
 
Properties under development
 
 
Total
 
 
Total
 
Fair value at the beginning of the period / year
  207,434 
  33,966 
  3,566 
  244,966 
  359,057 
Adjustments previous periods
  - 
  - 
  - 
  - 
  459 
Additions
  146 
  - 
  - 
  146 
  5,790 
Incorporation by business combination
  - 
  - 
  - 
  - 
  263 
Capitalized finance costs
  - 
  - 
  - 
  - 
  87 
Capitalized leasing costs
  16 
  1 
  - 
  17 
  21 
Amortization of capitalized leasing costs (i)
  (3)
  - 
  - 
  (3)
  (16)
Reclassification to assets held for sale
  - 
  - 
  - 
  - 
  (26,085)
Deconsolidation
  (82,116)
  (854)
  (1,281)
  (84,251)
  (169,600)
Disposals
  (9,607)
  - 
  - 
  (9,607)
  (16,312)
Currency translation adjustment
  (8,628)
  (89)
  (142)
  (8,859)
  57,570 
Net (loss)/ gain from fair value adjustment
  13,909 
  9,326 
  834 
  24,069 
  33,732 
Fair value at the end of the period / year
  121,151 
  42,350 
  2,977 
  166,478 
  244,966 
 
(i)
Amortization charges of capitalized leasing costs were included in “Costs” in the Statements of Income (Note 21).
 
The following amounts have been recognized in the Statements of Income:
 
 
  09.30.2020 
  09.30.2020 
Rental and services income
  1,304 
  3,704 
Direct operating expenses
  (653)
  1,195 
Development reimbursements / (expenses)
  (17)
  (23)
Net realized gain from fair value adjustment of investment properties
  187 
  - 
Net unrealized gain from fair value adjustment of investment properties
  23,902 
  12,349 
 
    
    
 
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, 2020, considering the market conditions existing at that date due to the pandemic described in Note 30, incorporating the effect of the variation in the exchange rate in other assets denominated in US Dollars.
 
 
18
 
 
 
9.
Property, plant and equipment
 
Changes in the Group’s property, plant and equipment for the three-month period ended September 30, 2020 and for the year ended June 30, 2019 were as follows:
 
 
 
Three Month ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Agricultural establishments
 
 
Buildings and facilities
 
 
Machinery and equipment
 
 
Communication networks
 
 
Others
 
 
Total
 
 
Total
 
Costs
  10,226 
  13,003 
  4,826 
  108,657 
  13,880 
  150,592 
  125,505 
Accumulated depreciation
  (5,540)
  (7,455)
  (4,068)
  (85,927)
  (6,984)
  (109,974)
  (91,158)
Net book amount at the beginning of the period / year
  4,686 
  5,548 
  758 
  22,730 
  6,896 
  40,618 
  34,347 
Additions
  40 
  64 
  3 
  416 
  533 
  1,056 
  6,107 
Disposals
  - 
  (19)
  (1)
  (40)
  - 
  (60)
  (3,558)
Incorporation by business combination
  - 
  - 
  - 
  - 
  - 
  - 
  6,576 
Impairment / recovery
  (4,373)
  (3,071)
  (570)
  (20,300)
  (6,082)
  (34,396)
  (1,141)
Reclassification to assets assets held for sale
  - 
  (20)
  - 
  - 
  - 
  (20)
  (295)
Currency translation adjustment
  (333)
  (249)
  (44)
  (1,636)
  (487)
  (2,749)
  6,266 
Transfers
  - 
  - 
  - 
  - 
  - 
  - 
  (280)
Depreciation charges (i)
  (20)
  (169)
  (14)
  (1,170)
  (738)
  (2,111)
  (7,404)
Balances at the end of the period / year
  - 
  2,084 
  132 
  - 
  122 
  2,338 
  40,618 
Costs
  5,167 
  9,264 
  4,088 
  80,895 
  8,118 
  107,532 
  150,592 
Accumulated depreciation
  (5,167)
  (7,180)
  (3,956)
  (80,895)
  (7,996)
  (105,194)
  (109,974)
Net book amount at the end of the period / year
  - 
  2,084 
  132 
  - 
  122 
  2,338 
  40,618 
 
(i) As of September 30, 2020, depreciation charges of property, plant and equipment were recognized as follows: Ps. 65 in "Costs" and Ps. 4 in "General and administrative expenses", respectively in the Statement of Income (Note 21). On the other hand, Ps 2.042 has been charged to the result of discontinued operations.
 
 
10.
Trading properties
 
Changes in the Group’s trading properties for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Three Month ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Completed properties
 
 
Properties under development
 
 
Undeveloped sites
 
 
Total
 
 
Total
 
Beginning of the period / year
  2,180 
  892 
  4,649 
  7,721 
  8,999 
Adjustment previous periods
  - 
  - 
  - 
  - 
  - 
Additions
  - 
  112 
  278 
  390 
  2,486 
Desconsolidation
  (1,526)
  (102)
  (3,884)
  (5,512)
  (167)
Capitalized financial costs
  - 
  - 
  - 
  - 
  13 
Currency translation adjustment
  (140)
  (14)
  (268)
  (422)
  943 
Transfers
  139 
  (139)
  - 
  - 
  231 
Capitalized finance costs
  - 
  - 
  - 
  - 
  - 
Disposals
  (557)
  (74)
  - 
  (631)
  (4,784)
End of the period / year
  96 
  675 
  775 
  1,546 
  7,721 
Non-current
    
    
    
  1,328 
  5,228 
Current
    
    
    
  218 
  2,493 
Total
    
    
    
  1,546 
  7,721 
 
 
 
19
 
 
 
11.
Intangible assets
 
Changes in the Group’s intangible assets for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Three Month ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Goodwill
 
 
Trademarks
 
 
Licenses
 
 
Customer relations
 
 
Information systems and software
 
 
Contracts and others
 
 
Total
 
 
Total
 
Costs
  6,075 
  9,066 
  12,153 
  25,548 
  8,520 
  14,386 
  75,748 
  62,905 
Accumulated amortization
  - 
  (854)
  (9,548)
  (22,883)
  (3,974)
  (8,578)
  (45,837)
  (35,342)
Net book amount at the beginning of the period / year
  6,075 
  8,212 
  2,605 
  2,665 
  4,546 
  5,808 
  29,911 
  27,563 
Additions
  - 
  - 
  - 
  20 
  284 
  634 
  938 
  4,853 
Disposals
  - 
  - 
  - 
  - 
  (79)
  - 
  (79)
  (235)
Impairment
  (5,859)
  (7,607)
  (2,360)
  (2,251)
  (3,514)
  (4,603)
  (26,194)
  (3,532)
Transfers to trading properties
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Assets incorporated by business combination
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  61 
Currency translation adjustment
  (91)
  (585)
  (186)
  (196)
  (329)
  (388)
  (1,775)
  6,217 
Amortization charges (i)
  - 
  (20)
  (59)
  (238)
  (742)
  (556)
  (1,615)
  (5,016)
Balances at the end of the period / year
  125 
  - 
  - 
  - 
  166 
  895 
  1,186 
  29,911 
Costs
  125 
  814 
  8,929 
  22,395 
  4,338 
  9,478 
  46,079 
  75,748 
Accumulated amortization
  - 
  (814)
  (8,929)
  (22,395)
  (4,172)
  (8,583)
  (44,893)
  (45,837)
Net book amount at the end of the period / year
  125 
  - 
  - 
  - 
  166 
  895 
  1,186 
  29,911 
 
(ii) As of September 30, 2020, amortization charges were recognized in the amount of Ps. 2 in "Costs" and Ps. 27 in "General and administrative expenses", in the Statement of Income (Note 21). On the other hand, Ps 1.586 has been charged to the result of discontinued operations.
 
 
12.
Right-of-use assets
 
The Group’s right-of-use assets as of September 30, 2020 and June 30, 2020 are the following:
 
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Real Estate
  8 
  4,431 
Telecommunications
  - 
  11,846 
Machinery and equipment
  11 
  14 
Others
  602 
  5,088 
Total Right-of-use assets
  621 
  21,379 
Non-current
  621 
  21,379 
Total
  621 
  21,379 
 
    
    
 
The depreciation charge of the right-of use-assets is detailed below:
 
 
 
September 30, 2020
 
 
September 30, 2019
 
Real Estate
  397 
  579 
Telecommunications
  2,293 
  3,397 
Others
  646 
  1,096 
Total depreciation of right-of-use assets
  3,336 
  5,072 
 
    
    
 
 
20
 
 
 
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, 2020 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, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  4,152 
  - 
  - 
  - 
  4,152 
  3,396 
  7,548 
Investments in financial assets:
    
    
    
    
    
    
    
  - Public companies’ securities
  - 
  302 
  - 
  177 
  479 
  - 
  479 
  - Bonds
  - 
  2,109 
  - 
  - 
  2,109 
  - 
  2,109 
  - Investments in financial assets with quotation
  10 
  329 
  931 
  26 
  1,296 
  - 
  1,296 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Warrants
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Foreign-currency future contracts
  - 
  - 
  16 
  - 
  16 
  - 
  16 
Restricted assets (i)
  8 
  - 
  - 
  - 
  8 
  - 
  8 
Cash and cash equivalents:
    
    
    
    
    
    
    
  - Cash at bank and on hand
  4,330 
  - 
  - 
  - 
  4,330 
  - 
  4,330 
  - Short-term investments
  - 
  67 
  - 
  - 
  67 
  - 
  67 
Total assets
  8,500 
  2,807 
  947 
  203 
  12,457 
  3,396 
  15,853 
 
 
 
 
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, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  3,983 
  - 
  - 
  - 
  3,983 
  2,769 
  6,752 
Borrowings (excluding finance leases)
  56,438 
  - 
  - 
  - 
  56,438 
  - 
  56,438 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Forwards
  - 
  - 
  89 
  - 
  89 
  - 
  89 
Total liabilities
  60,421 
  - 
  89 
  - 
  60,510 
  2,769 
  63,279 
 
    
    
    
    
    
    
    
 
 
 
21
 
 
Financial assets and financial liabilities as of June 30, 2020 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, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statements of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  53,134 
  - 
  - 
  - 
  53,134 
  15,771 
  68,905 
Investments in financial assets:
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Public companies’ securities
  - 
  618 
  248 
  - 
  866 
  - 
  866 
  - Private companies’ securities
  - 
  - 
  - 
  3,132 
  3,132 
  - 
  3,132 
  - Deposits
  1,028 
  66 
  - 
  - 
  1,094 
  - 
  1,094 
  - Bonds
  - 
  9,940 
  1,555 
  - 
  11,495 
  - 
  11,495 
  - Investments in financial assets with quotation
  - 
  6,995 
  872 
  250 
  8,117 
  - 
  8,117 
Derivative financial instruments
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Foreign-currency future contracts
  - 
  - 
  139 
  - 
  139 
  - 
  139 
  - Others
  66 
  - 
  22 
  153 
  241 
  - 
  241 
Restricted assets (i)
  8,698 
  - 
  - 
  - 
  8,698 
  - 
  8,698 
Financial assets available for sale:
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Clal
  - 
  3,636 
  - 
  - 
  3,636 
  - 
  3,636 
Cash and cash equivalents:
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Cash at bank and on hand
  26,562 
  - 
  - 
  - 
  26,562 
  - 
  26,562 
  - Short term investments
  67,420 
  3,294 
  - 
  - 
  70,714 
  - 
  70,714 
Total assets
  156,908 
  24,549 
  2,836 
  3,535 
  187,828 
  15,771 
  203,599 
 
    
    
    
    
    
    
    
 
    
    
    
    
    
    
    
 
 
 
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, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  26,898 
  - 
  - 
  - 
  26,898 
  7,380 
  34,278 
Borrowings (excluding finance leases)
  404,954 
  - 
  - 
  - 
  404,954 
  - 
  404,954 
Derivative financial instruments:
  - 
    
    
    
    
    
    
  - Foreign-currency future contracts
  - 
  - 
  149 
  - 
  149 
  - 
  149 
  - Swaps
  - 
  - 
  1,028 
  22 
  1,050 
  - 
  1,050 
  - Others
  - 
  - 
  66 
  - 
  66 
  - 
  66 
Total liabilities
  431,852 
  - 
  1,243 
  22 
  433,117 
  7,380 
  440,497 
 
    
    
    
    
    
    
    
 
(i) Corresponds to security deposits and escrows.
 
 
22
 
 
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, 2020.
 
As of September 30, 2020, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group.
 
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
 
 
 
 
 
 
 
 
Promissory note
Theoretical price
Acquisition agreement.
 
Level 2
  - 
Investments in financial assets - Other private companies’ securities
Cash flow / NAV - Theoretical price
Projected revenue discounted at the discount rate /
The value is calculated in accordance with shares in the equity funds on the basis of their Financial Statements, based on fair value or investments assessments.
Level 3
  1 - 3.5 
Investments in financial assets - Others
Discounted cash flow - Theoretical price
Projected revenue discounted at the discount rate /
The value is calculated in accordance with shares in the equity funds on the basis of their Financial Statements, based on fair value or investment assessments.
Level 3
  1 - 3.5 
Derivative financial instruments – Forwards
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, 2020 and June 30, 2020:
 
 
 
Derivative financial instruments - Forwards
 
 
Investments in financial assets - Private companies' securities
 
 
nvestments in financial assets - Others
 
 
Investments in financial assets - Public companies
 
 
Derivative financial instruments
 
 
Total as of September 30, 2020
 
 
Total as of June 30, 2020
 
Balances at beginning of the period / year
  (22)
  3,132 
  250 
  - 
  153 
  3,513 
  4,460 
Additions and acquisitions
  - 
  - 
  - 
  - 
  - 
  - 
  38 
Transfer to level 1
  - 
  - 
  - 
  247 
  - 
  247 
  378 
Currency translation adjustment
  - 
  - 
  - 
  - 
  - 
  - 
  883 
Desconsolidation
  22 
  (3,132)
  (219)
  - 
  (153)
  (3,482)
  - 
Write off
  - 
  - 
  - 
  - 
  - 
  - 
  (1,709)
Gain / (loss) for the period / year (i)
  - 
  - 
  (5)
  (70)
  - 
  (75)
  (537)
Balances at the end of the period / year
  - 
  - 
  26 
  177 
  - 
  203 
  3,513 
 
 
(i)
Included within “Financial results, net” in the Statements of Income.
 
 
14.
Trade and other receivables
 
Group’s trade and other receivables as of September 30, 2020 and June 30, 2020 are as follows:
 
 
23
 
 
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Sale, leases and services receivables
  3,095 
  41,397 
Less: Allowance for doubtful accounts
  (669)
  (4,021)
Total trade receivables
  2,426 
  37,376 
Prepaid expenses
  530 
  14,529 
Borrowings, deposits and others
  1,470 
  10,797 
Advances to suppliers
  886 
  1,086 
Tax receivables
  763 
  866 
Others
  804 
  230 
Total other receivables
  4,453 
  27,508 
Total trade and other receivables
  6,879 
  64,884 
Non-current
  1,881 
  24,898 
Current
  4,998 
  39,986 
Total
  6,879 
  64,884 
 
    
    
 
Movements on the Group’s allowance for doubtful accounts were as follows:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Beginning of the period / year
  4,021 
  2,856 
Adjustments previous periods (IFRS 9)
  - 
  - 
Additions
  355 
  1,107 
Recovery
  (72)
  (117)
Currency translation adjustment
  (238)
  1,145 
Deconsolidation
  (3,328)
  (22)
Receivables written off during the period/year as uncollectable
  (20)
  (772)
Transfer to assets held for sale
  - 
  (22)
Incorporation by business combination
  - 
  19 
Inflation adjustment
  (49)
  (173)
End of the period / year
  669 
  4,021 
 
    
    
 
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 information
 
Following is a detailed description of cash flows generated by the Group’s operations for the three month periods ended September 30, 2020 and 2019:
 
 
Note
 
Three Month ended September 30, 2020
 
 
Three Month ended September 30, 2019
 
Profit for the period
 
  8,340 
  15,017 
Profit / (Loss) for the period from discontinued operations
 
  6,396 
  (13,887)
Adjustments for:
 
    
    
Income tax
19
  7,958 
  2,505 
Amortization and depreciation
21
  122 
  119 
Loss from disposal of property, plant and equipment
 
  - 
  - 
Net gain from fair value adjustment of investment properties
 
  (24,089)
  (12,349)
Financial results, net
 
  (87)
  12,670 
Provisions and allowances
 
  70 
  69 
Share of profit of associates and joint ventures
7
  (147)
  (737)
Changes in operating assets and liabilities:
 
    
    
Decrease in inventories
 
  5 
  1 
Decrease / (increase) in trading properties
 
  256 
  (52)
Decrease in restricted assets
 
  1,157 
  - 
(Increase) / decrease in trade and other receivables
 
  (643)
  392 
Increase / (decrease) in trade and other payables
 
  1,885 
  (476)
Decrease in salaries and social security liabilities
 
  (73)
  (160)
Decrease in provisions
 
  (12)
  (186)
Net cash generated by continuing operating activities before income tax paid
 
  1,138 
  2,926 
Net cash generated by discontinued operating activities before income tax paid
 
  2,405 
  7,897 
Net cash generated by operating activities before income tax paid
 
  3,543 
  10,823 
 
 
24
 
 
The following table presents a detail of significant non-cash transactions occurred in the three-month periods ended September 30, 2020 and 2019:
 
 
 
Three Month ended September 30, 2020
 
 
Three Month ended September 30, 2019
 
Decrease of associates and joint ventures through an increase of trade and other receivables
  - 
  26 
Increase in rights of use through increased lease liabilities
  24 
  - 
Increase of investment properties through a decrease of financial assets
  - 
  299 
Increase of trade and other receivables through a decrease of associates and joint ventures
  11 
  - 
Increase of property, plant and equipment through an increase of trade and other payables
  - 
  618 
Increase of intangible assets through an increase of trade and other payables
  - 
  36 
Increase of investment properties through an increase of borrowings
  81 
  - 
Increase of trading properties through an increase of borrowings
  12 
  5 
Distribution of dividends to non-controlling interest pending payment
  - 
  18 
Decrease of interest in associates and joint ventures
  30.980 
  - 
Increase in investment properties through an increase in trade and other payables
  - 
  499 
Increase of right-of-use assets through a decrease in property, plant and equipment
  - 
  23 
Decrease of investments in associates and joint ventures through a reclassification to assets held for sale
  - 
  4.434 
 
    
    
 
16.
Trade and other payables
 
Group’s trade and other payables as of September 30, 2020 and June 30, 2020 were as follows:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Trade payables
  800 
  20,151 
Advances from sales, leases and services
  2,640 
  2,850 
Construction obligations
  - 
  438 
Accrued invoices
  396 
  473 
Deferred income
  - 
  153 
Total trade payables
  3,836 
  24,065 
Dividends payable to non-controlling interest
  - 
  241 
Taxes payable
  215 
  171 
Construction provisions
  - 
  - 
Other payables
  2,701 
  9,801 
Total other payables
  2,916 
  10,213 
Total trade and other payables
  6,752 
  34,278 
Non-current
  1,745 
  2,335 
Current
  5,007 
  31,943 
Total
  6,752 
  34,278 
 
    
    
 
17.
Borrowings
 
The breakdown of the Group’s borrowings as of September 30, 2020 and June 30, 2020 was as follows:
 
 
 
 
Total as of September 30, 2020 (ii)
 
 
Total as of June 30, 2020 (ii)
 
 
Fair value as of September 30, 2020
 
 
Fair value as of June 30, 2020
 
NCN
  44,538 
  340,026 
  185,441 
  252,018 
Bank loans
  3,629 
  60,580 
  39,103 
  45,329 
Bank overdrafts
  7,110 
  2,614 
  7,110 
  2,428 
Other borrowings (i)
  1,161 
  1,734 
  1,161 
  1,611 
Total borrowings
  56,438 
  404,954 
  232,815 
  301,386 
Non-current
  31,967 
  320,616 
    
    
Current
  24,471 
  84,338 
    
    
 
  56,438 
  404,954 
    
    
 
    
    
    
    
 
 
25
 
 
Issuance of IRSA Non-convertible Notes
 
On July 21, 2020, subsequently to the closing of the fiscal year, the Company issued USD 38.4 million Non-convertible Notes in the local market through the following instruments:
 
Ps. 335.2 (equivalent to USD 4.7 million) Series VI NCNs denominated and payable in Argentine pesos at a variable rate (Private Badlar) + 4.0%, with interest accruing on a quarterly basis. The principal amount is repayable in two installments: the first one -equal to 30% of the par value of the notes- payable on the date that is 9 (nine) months after the Issue and Settlement Date and the second installment -equal to 70% of the par value of the notes- payable on the relevant due date, i.e. July 21, 2021. Notes were issued at 100% of their par value.
 
US$ 33.7 million Series VII NCNs denominated in US$ and payable in Argentine pesos at the applicable exchange rate, at a fixed 4.0% rate, with interest accruing on a quarterly basis. Repayment of capital is due on January 21, 2021. Notes were issued at 100% of their par value. The proceeds will be used to refinance short-term indebtedness.
 
Payment of non-convertible notes
 
On July 20, 2020, the Company paid the twentieth interest installment and the principal installment of the US$ 75 Series II Non-convertible Notes issued on July 20, 2010.
 
On August 6, 2020, the Company paid the second interest installment and the principal installment of the US$ 47 Series II Non-convertible Notes issued on August 6, 2019.
 
Payment of IRSA CP’s Series IV Non-convertible Notes
 
On September 14, 2020, the aggregate principal amount of the Series IV Non-convertible Notes in the amount of Ps. 10,381 (US$ 140 million) and interest accrued as of such date in the amount of Ps. 134 (US$ 1.8 million) were paid.
 
18.
Provisions
 
The table below shows the movements in the Group's provisions categorized by type:
 
 
 
Legal claims (i)
 
 
Investments in associates and joint ventures (ii)
 
 
Site dismantling and remediation
 
 
Other provisions
 
 
Total
 
 
Total
 
Beginning of period / year
  2,686 
  16 
  482 
  2,740 
  5,924 
  14,980 
Additions
  7 
  - 
  20 
  (79)
  (52)
  513 
Share of loss of associates
  - 
  1 
  (1)
  (1)
  (1)
  (8,032)
Incorporated by business combination
  - 
  - 
  - 
  - 
  - 
  60 
Recovery
  (1)
  - 
  - 
  - 
  (1)
  (1,132)
Used during the period / year
  (44)
  - 
  - 
  (20)
  (64)
  (896)
Inflation adjustment
  (17)
  - 
  - 
  - 
  (17)
  (73)
Desconsolidation
  (2,217)
  - 
  (468)
  (2,400)
  (5,085)
  - 
Currency translation adjustment
  (178)
  - 
  (33)
  (240)
  (451)
  504 
End of period / year
  236 
  17 
  - 
  - 
  253 
  5,924 
Non-current
    
    
    
    
  145 
  3,297 
Current
    
    
    
    
  108 
  2,627 
Total
    
    
    
    
  253 
  5,924 
 
 
26
 
 
(i) Additions and recovery are included in "Other operating results, net".
(ii) Corresponds to investments in New Lipstick and Puerto Retiro, companies that have negative equity. The increase and recovery is 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, 2020
 
 
September 30, 2019
 
Current income tax
  (5)
  (194)
Deferred income tax
  (7,953)
  (2,311)
Income tax from continuing operations
  (7,958)
  (2,505)
 
    
    
 
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 periods ended September 30, 2020 and 2019:
 
 
 
Three Month ended September 30, 2020
 
 
Three months ended September 30, 2019
 
Profit from continuing operations at tax rate applicable in the respective countries (*)
  (6,808)
  (1,458)
Permanent differences:
    
    
Share of profit of associates and joint ventures
  (44)
  190 
Unrecognized tax loss carryforwards (i)
  (2,415)
  (808)
Inflation adjustment permanent difference
  446 
  (1,013)
Tax rate differential
  1,636 
  662 
Non-taxable profit, non-deductible expenses and others
  222 
  1,113 
Fiscal transparency
  - 
  149 
Tax inflation adjustment
  (995)
  (1,340)
Income tax from continuing operations
  (7,958)
  (2,505)
 
    
    
 
(i)
 Corresponds principally to Operations Center in Argentina.
 
The gross movement in the deferred income tax account is as follows:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Beginning of period / year
  (46,727)
  (56,001)
Use of tax los carryforwards
  - 
  - 
Currency translation adjustment
  1,240 
  1,694 
Incorporated by business combination
  - 
  (933)
Deconsolidation
  11,248 
  15,370 
Charged to the revaluation surplus reserve
  - 
  386 
Revaluation surplus reserve
  - 
  (98)
Deferred income tax charge
  (7,734)
  (7,145)
End of period / year
  (41,973)
  (46,727)
Deferred income tax assets
  148 
  681 
Deferred income tax liabilities
  (42,121)
  (47,408)
Deferred income tax liabilities, net
  (41,973)
  (46,727)
 
    
    
 
 
27
 
 
 
20.
Revenues
 
 
 
Three months ended September 30, 2020
 
 
Three months ended September 30, 2019
 
Rental and services income
  1,304 
  3,704 
Sales of trading properties and developments
  299 
  80 
Revenue from hotels operation and tourism services
  6 
  703 
Total Group’s revenues
  1,609 
  4,487 
 
    
    
 
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, 2020
 
 
Total as of September 30, 2019
 
Cost of sale of goods and services
  294 
  - 
  - 
  294 
  72 
Salaries, social security costs and other personnel expenses
  368 
  165 
  23 
  556 
  932 
Depreciation and amortization
  72 
  50 
  - 
  122 
  119 
Fees and payments for services
  11 
  59 
  134 
  204 
  150 
Maintenance, security, cleaning, repairs and others
  242 
  46 
  - 
  288 
  583 
Advertising and other selling expenses
  22 
  - 
  2 
  24 
  170 
Taxes, rates and contributions
  59 
  16 
  238 
  313 
  323 
Interconnection and roaming expenses
  - 
  - 
  - 
  - 
  - 
Fees to other operators
  - 
  - 
  - 
  - 
  - 
Director´s fees
  - 
  285 
  - 
  285 
  128 
Leases and service charges
  25 
  9 
  6 
  40 
  53 
Allowance for doubtful accounts, net
  - 
  - 
  45 
  45 
  39 
Other expenses
  4 
  14 
  2 
  20 
  69 
Total as of September 30, 2020
  1,097 
  644 
  450 
  2,191 
    
Total as of September 30, 2019
  1,682 
  661 
  295 
    
  2,638 
 
    
    
    
    
    
 
22.
Cost of goods sold and services provided
 
 
 
Total as of September 30, 2020
 
 
Total as of September 30, 2019
 
Inventories at the beginning of the period (*)
  12,762 
  22,274 
Adjustments previous periods
  - 
  (8,126)
Purchases and expenses (**)
  7,700 
  41,852 
Capitalized finance costs
  - 
  99 
Currency translation adjustment
  8,262 
  (369)
Transfers
  - 
  (810)
Disposals
  (631)
  (1,231)
Deconsolidation
  (3,377)
  - 
Inventories at the end of the period (*)
  (1,611)
  (11,065)
Total costs
  23,105 
  42,624 
 
    
    
 
The following table presents the composition of the Group’s inventories as of September 30, 2020 and June 30, 2020:
 
 
 
Total as of September 30, 2020
 
 
Total as of September 30, 2019
 
Real estate
  1,546 
  7,721 
Others
  65 
  - 
Telecommunications
  - 
  5,041 
Total inventories at the end of the period (*)
  1,611 
  12,762 
 
    
    
 
(*) Inventories include trading properties and inventories.
 
23.
Other operating results, net
 
 
28
 
 
 
 
Three months ended September 30, 2020
 
 
Three months ended September 30, 2019
 
Gain from disposal of subsidiary and associates (1)
  - 
  (8)
Donations
  (19)
  (38)
Lawsuits and other contingencies
  (25)
  (30)
Operating interest expense
  13 
  26 
Others (2)
  13 
  (6)
Total other operating results, net
  (18)
  (56)
 
    
    
 
24.
Financial results, net
 
 
 
Three months ended September 30, 2020
 
 
Three months ended September 30, 2019
 
Finance income:
 
 
 
 
 
 
 - Interest income
  17 
  83 
 - Dividend income
  12 
  - 
 - Other finance income
  27 
  - 
Total finance income
  56 
  83 
Finance costs:
    
    
 - Interest expenses
  (1,485)
  (1,661)
 - Loss on debt swap
  (5)
  (3)
 - Other finance costs
  (196)
  (164)
Subtotal finance costs
  (1,686)
  (1,828)
Capitalized finance costs
  93 
  46 
Total finance costs
  (1,593)
  (1,782)
Other financial results:
    
    
 - Fair value gain of financial assets and liabilities at fair value through profit or loss, net
  800 
  (456)
 - Exchange differences, net
  (8)
  (8,929)
 - Gain from repurchase of negotiable obligations
  20 
  8 
 - Gain from derivative financial instruments, net
  (188)
  225 
Total other financial results
  624 
  (9,152)
 - Inflation adjustment
  (29)
  (393)
Total financial results, net
  (942)
  (11,244)
 
    
    
 
 
29
 
 
 
25.
Related party transactions
 
The following is a summary of the balances with related parties as of September 30, 2020 and June 30, 2019:
 
Item
 
 September 30, 2020
 
 
 June 30, 2020
 
 
 
Trade and other receivables
  387 
  1,416 
 
 
Investments in financial assets
  2 
  1,702 
 
 
Borrowings
  (29)
  (169)
 
 
Trade and other payables
  (70)
  (410)
 
 
Total
  290 
  2,539 
 
 
 
    
    
 
 
 
    
    
 
 
 Related party
 
 September 30, 2020
 
 
 June 30, 2020
 
 Description of transaction
 Item
Manibil S.A.
  - 
  - 
 Contributions in advance
 Trade and other receivable
New Lipstick LLC
  - 
  - 
 Loans granted
 Trade and other receivable
 
  - 
  (83)
 Loans obtained
 Borrowings
 
  18 
  17 
 Reimbursement of expenses receivable
 Trade and other receivable
Condor
  222 
  290 
 Public companies securities
 Trade and other receivable
IRSA Real Estate Strategies LP
  127 
  125 
 Reimbursement of expenses receivable
 Trade and other receivable
Other associates and joint ventures
  - 
  131 
 Reimbursement of expenses receivable
 Trade and other receivable
 
  - 
  - 
 Leases and/or rights of use payable
 Trade and other payables
 
  (29)
  (29)
 Loans obtained
 Borrowings
 
  - 
  9 
 Management fees
 Trade and other receivable
 
  - 
  90 
  Leases and/or rights of use receivable
 Trade and other receivable
 
  - 
  219 
 Dividends
 Trade and other receivable
 
  (1)
  (1)
 Reimbursement of expenses receivable
 Trade and other payables
 
  - 
  - 
 Reimbursement of expenses payable
 Trade and other receivable
Total associates and joint ventures
  337 
  1,276 
 
 
Cresud
  (4)
  (3)
 Reimbursement of expenses receivable
 Trade and other payables
 
  (48)
  (264)
 Corporate services receivable
 Trade and other payables
 
  2 
  1,702 
 NCN
 Investment in financial assets
 
  4 
  4 
 Leases and/or rights of use receivable
 Trade and other payables
 
  (1)
  (1)
 Management fee
 Trade and other payables
 
  - 
  (3)
 Share based payments
 Trade and other payables
Total parent company
  (47)
  1,435 
 
 
Directors
  (16)
  (137)
 Fees for services received
 Trade and other payables
 
  - 
  4 
Advances
Trade and other receivable
Others (1)
  - 
  - 
  Leases and/or rights of use receivable
 Trade and other receivable
 
  - 
  (57)
 Loans granted
 Trade and other receivable
 
  - 
  (1)
 Reimbursement of expenses payable
 Trade and other payables
 
  16 
  19 
 Reimbursement of expenses receivable
 Trade and other receivable
Total directors and others
  - 
  (172)
 
 
 
  290 
  2,539 
 
 
 
    
    
 
 
 
    
    
 
 
 
    
    
 
 
 
 
(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.
 
 
30
 
       
The following is a summary of the results with related parties for the three-month periods ended September 30, 2020 and 2019:
 
Related party
 
 Three Month ended September 30, 2020
 
 
 Three months ended September 30, 2019
 
Description of transaction
 BACS
  28 
  - 
 Leases and/or rights of use
 Manibil
  - 
  - 
 Corporate services
 Tarshop
  - 
  - 
 Leases and/or rights of use
 
  - 
  - 
 Commissions
 La Rural S.A.
  - 
  - 
 Leases and/or rights of use
 Condor
  - 
  - 
 Financial operations
 Other associates anf joint ventures
  - 
  - 
 Financial operations
 Otras asociadas y negocios conjuntos
  9 
  41 
 Leases and/or rights of use
 Otras asociadas y negocios conjuntos
  - 
  (3)
 Corporate services
Otras asociadas y negocios conjuntos
  (9)
  - 
 Honorarios y remuneraciones
Total associates and joint ventures
  28 
  38 
 
Cresud
  4 
  4 
 Leases and/or rights of use
Cresud
  (204)
  (155)
 Corporate services
Cresud
  299 
  96 
 Financial operations
Total parent company
  99 
  (55)
 
 Directors
  (515)
  (145)
 Fees and remunerations
 Otras (1)
  - 
  41 
 Leases and/or rights of use
 Otras (1)
  - 
  - 
 Financial operations
 Otras (1)
  - 
  (14)
 Donationd
 
  - 
  (11)
 Corporate services
 
  (20)
  - 
 Fees and remuneration
Total others
  (535)
  (129)
 
Total at the end of the period
  (408)
  (146)
 
 
    
    
 
 
(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, 2020 and 2019:
 
Related party
 
 Three Month ended September 30, 2020
 
 
 Three months ended September 30, 2019
 
Description of the operation
Condor
  - 
  36 
Dividends received
Total dividends received
  - 
  36 
 
Quality
  8 
  16 
Capital contributions
Manibil
  - 
  94 
Capital contributions
Total capital contributions
  8 
  110 
 
Pareto
  53 
  - 
Purchase and exchange of shares
Total other transactions
  53 
  - 
 
 
    
    
 
 
 
31
 
 
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 09.30.20
 
 
Total as of 06.30.20
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  11 
  75.980 
  870 
  3,246 
Euros
  0 
  88.965 
  11 
  948 
Receivables with related parties:
    
    
    
    
US Dollar
  0 
  76.180 
  18 
  335 
Total trade and other receivables
    
    
  899 
  4,529 
Investments in financial assets
    
    
    
    
US Dollar
  0 
  75.980 
  10 
  3,879 
Pounds
  3 
  22.223 
  69 
  84 
Investments with related parties:
    
    
    
    
US Dollar
  16 
  76.180 
  1,212 
  1,305 
Total investments in financial assets
    
    
  1,291 
  5,268 
Derivative financial instruments
    
    
    
    
US Dollar
  - 
  75.980 
  - 
  - 
Total Derivative financial instruments
    
    
  - 
  - 
Cash and cash equivalents
    
    
    
    
US Dollar
  22 
  75.980 
  1,689 
  14,015 
Euros
  1 
  88.965 
  1 
  1,665 
Total cash and cash equivalents
    
    
  1,690 
  15,680 
Total Assets
    
    
  3,880 
  25,477 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  181 
  76.180 
  13,822 
  14,201 
Euros
  0 
  98.490 
  - 
  328 
Payables to related parties:
    
    
    
    
US Dollar
  - 
  76.180 
  - 
  - 
Total Trade and other payables
    
    
  13,822 
  14,529 
Borrowings
    
    
    
    
US Dollar
  241 
  76.180 
  18,385 
  65,590 
Borrowings with related parties
    
    
    
    
US Dollar
  1 
  76.180 
  67 
  379 
Total Borrowings
    
    
  18,452 
  65,969 
Derivative financial instruments
    
    
    
    
US Dollar
  0 
  76.180 
  1 
  102 
Total derivative financial instruments
    
    
  1 
  102 
Lease liabilities
    
    
    
    
US Dollar
  0 
  76.180 
  2 
  - 
Total lease liabilities
    
    
  2 
  - 
Total Liabilities
    
    
  32,277 
  80,600 
 
(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, 2020 according to Banco de la Nación Argentina.
 
 
32
 
 
28.
Groups of assets and liabilities held for sale
 
As mentioned in Note 4.C. to the Annual Financial Statements, the Group had as of June 30, 2020
 has certain assets and liabilities classified as held for sale. The following table presents the main ones:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Property, plant and equipment
  - 
  38,453 
Intangible assets
  - 
  1,467 
Investments in associates
  - 
  241 
Deferred income tax assets
  - 
  876 
Investment properties
  - 
  - 
Income tax credits
  - 
  - 
Trade and other receivables
  - 
  1,991 
Cash and cash equivalents
  - 
  1,840 
Total assets held-for-sale
  - 
  44,868 
Trade and other payables
  - 
  10,686 
Salaries and social security liabilities
  - 
  417 
Employee benefits
  - 
  416 
Deferred income tax liabilities
  - 
  2,103 
Borrowings
  - 
  10,290 
Total liabilities held-for-sale
  - 
  23,912 
Total net assets held-for-sale
  - 
  20,956 

 
29.
Results from discontinued operations
 
The results of the discontinued operations include the IDBD / DIC operations which were deconsolidated in the current period (see Note 4.E) and the results of the comparative periods have been reclassified.
 
 
 
Three months ended September 30, 2020
 
 
Three months ended September 30, 2019
 
Revenues
  27,124 
  27,100 
Costs
  (22,008)
  (18,143)
Gross profit
  5,116 
  8,957 
Net loss from fair value adjustment of investment properties
  (20)
  - 
General and administrative expenses
  (3,122)
  (2,569)
Selling expenses
  (2,974)
  (3,185)
Other operating results, net
  (1,867)
  19,881 
(Loss) / profit from operations
  (2,867)
  23,084 
Share of profit / (loss) of associates and joint ventures
  515 
  (528)
(Loss) / profit before financial results and income tax
  (2,352)
  22,556 
Finance income
  377 
  317 
Finance cost
  (4,946)
  (7,321)
Other financial results
  327 
  (1,624)
Financial results, net
  (4,242)
  (8,628)
(Loss) / profit before income tax
  (6,594)
  13,928 
Income tax
  198 
  (41)
(Loss) / profit from discontinued operations
  (6,396)
  13,887 
 
    
    
(Loss) / profit for the period from discontinued operations attributable to:
    
    
Equity holders of the parent
  (5,064)
  4,271 
Non-controlling interest
  (1,332)
  9,616 
(Loss) / profit per share from discontinued operations attributable to equity holders of the parent:
    
    
Basic
  (8.81)
  7.42 
Diluted
  (8.81)
  7.36 
 
    
    
 
(1)
 As of September 30, 2020 corresponds mainly to the loss of control of IDBD; As of September 30, 2019, it mainly corresponds to the result from the loss of control of Gav-Yam and the fair value measurement of the remaining investment.
 
 
33
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
30.
Other relevant events of the period
 
Economic context in which the company operates
 
The Company does business in a complex framework due to the macroeconomic conditions, whose main variables have recently shown high volatility, and also due to regulatory, social and political conditions, both at a national and international level.
 
Its operating income may be affected by fluctuations in the inflation index and the argentine peso exchange rate against other currencies, mainly the dollar, variations in interest rates which have an impact on the cost of capital, changes in government policies, capital control and other political or economic developments both locally and internationally.
 
In December 2019, a new coronavirus strain (SARS-COV-2), causing a 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 actions intended to prevent the spread of the virus, including, travel bans, border shutdowns, closing of non-essential businesses, instructions to residents to practice social distancing and implementation of lockdowns, among others. The ongoing pandemic and these extraordinary governmental actions are affecting the worldwide economy and have rendered global financial markets highly volatile.
 
The first case of COVID-19 in Argentina was reported on March 3, 2020 and until November 8, 2020, more than 1,200,000 cases of infections had been confirmed in Argentina. As a result, the Argentine the National Government implemented a series of health measures of social, preventive and mandatory isolation at the national level that began on March 19, 2020 and extended several times, most recently until November 8, 2020 inclusive in the Metropolitan Area of Buenos Aires although it has been extended in some cities in the interior of the country. Among this measures, that affected the local economy, the following stand out: the extension of the public emergency in health matters, the total closure of borders, the suspension of international and domestic flights, the suspension of medium and long-distance land transport, the suspension of artistic and sports shows, closure of businesses not considered essential, including shopping malls and hotels.
 
These measures have significantly affected Argentine companies, which have faced drops in income and the deterioration of their flow of payments. In this context, the Argentine Government announced several actions intended to tackle the financial crisis of the companies adversely affected by the COVID-19 pandemic. In addition to the stagnation of the Argentine economy, there is an international crisis caused by the COVID-19 pandemic. In view of this scenario, a severe downturn in the Argentine economy is expected.
 
After several negotiations between the Argentine Government and the bondholders, the Argentine Government announced the execution of an agreement in principle with the main groups of bondholders in order to avoid the default. On August 28, 2020, the Government informed that the holders of 93.55% of the aggregate outstanding principal amount of all bonds have accepted a debt exchange and, on August 31, 2020, the Argentine Government obtained the consents required to exchange and/or amend 99.01% of the aggregate outstanding principal amount of all series of eligible bonds. As of the date of these financial statements, the new bonds are already being traded on the market.
 
However, the Government still faces the challenge of arriving at a successful renegotiation of the debt with the IMF. A favorable outcome for Argentina and the restructuring of its debt with the IMF would have a positive impact on the Argentine economy in the mid- and long-term. On the contrary, failure to reach an agreement with foreign private creditors might lead Argentina to default on its sovereign debt and, as a result, this situation may trigger restrictions on the companies’ ability to obtain new financing.
 
At the local environment, the following circumstances may be noted:
 
In August 2020, an indicador called “Monthly Estimator of Economic Activity” (“EMAE”) reported by the National Institute of Statistics and Censuses (“INDEC”), registered a variation of (11.6%) compared to the same month of 2019, and from 1,1% compared to the previous month.
 
The market expectations survey prepared by Central Bank in October 2020, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 35.8% for 2020. The analysts who confirm the REM forecast a variation in real GDP for 2020 of (11.6)%. In turn, they foresee that in 2021 economic activity will rebound in activity, reaching an economic growth of 4.5%.
 
 
34
 
 
The interannual inflation as of September 30, 2020 reached 36.6%.
 
In the period from September 2019 to September 2020, the argentine peso depreciated 32.3% compared to the US dollar at the average wholesale exchange rate quoted byBanco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of September 30, 2020 the exchange gap between the official peso/US dollar exchange rate and the peso/US dollar exchange rate offered in the black market is almost 82%. This has an impact on the level of economic activity and detrimentally affects the reserves of the of the Argentine Central Bank. In addition, the current foreign exchange restrictions or those that may be imposed in the future may impair the Company’s ability to access the Sole Free FX Market (Mercado Único Libre de Cambio or MULC) to purchase the currency required to meet its financial obligations.
 
On September 15, 2020, the Argentine Central Bank issued Communication “A” 7106 which establishes, among other things, that entities with principal maturities falling due between October 15, 2020 and March 31, 2021 related to the issuance of foreign-currency denominated publicly-registered debt securities in Argentina by private sector clients or by the entities themselves, must submit to the Argentine Central Bank a refinancing plan based on the following criteria: (a) the net amount for which access to the foreign exchange is granted within the original terms must not exceed 40% of the principal amount due, and (b) the remaining principal amount must have been refinanced through new foreign debt with an average life of at least 2 years. It is worth mentioning that for the maturities to be registered from the effective date of the communication (September 16, 2020) and until 12.31.2020, the refinancing plan must be submitted prior to 09.30.2020; and the submission deadline for the remaining maturities -between January 1, 2021 and March 31, 2021, must be submitted with a term of at least 30 calendar days before the maturity of the capital to be refinanced.
 
COVID-19 PANDEMIC
 
As described above, the COVID-19 is having an adverse impact on both the global and the Argentine economy and the Company’s business.
 
Below follows a description of the expected effects of the COVID-19 pandemic on the Company as of the date of these financial statements:
 
Because of the social, preventive and obligatory lockdown, shopping malls throughout the country were closed since March 20, 2020, exclusively remaining operational those stores dedicated to activities considered essential such as pharmacies, supermarkets and banks. The reopening of shopping malls in the interior of the country began during the months of May, June, and July. In August 2020, the Arcos District, an open-air premium outlet in the city of Buenos Aires, was opened and in October 2020, the Group’s shopping malls in City and Greater Buenos Aires were reopened. As of October 31, 2020, all the Group’s shopping malls were open and operating under strict protocols. However the uncertainty posed by this situation may cause the closing of stores that have already opened, as happened in some shopping malls in the interior of the country in previous months due to the increase in cases in those regions.
 
As a result of the shopping mall closings, the Company has decided to differ the invoicing and collection of the Monthly Guaranteed Amount (Valor Mensual Asegurado or V.M.A.) until September 30, 2020, with some exceptions, and not to collect the collective promotion fund during such period in an attempt to prioritize its long-term relationship with the lessees. Additionally, an increase in the delinquency rate of some lessees has been noticedAs a result of the above, the impact on shopping malls is a 82.4% decrease in income from rentals and services during the first quarter of fiscal year 2021 compared to the same period of last fiscal year, and a 12.6% increase compared to the immediately preceding quarter. Additionally, the charge for bad debts in the first quarter of fiscal year 2021 is ARS 40 million and ARS 37 million in the same period of previous fiscal year.
 
In relation rental of offices, although most of the tenants are working in the home office mode, they are operational with strict safety and hygiene protocols. To date, we have not evidenced a deterioration in collections.
 
 
35
 
 
La Rural, the Buenos Aires and Punta del Este Convention Centers and the DIRECTV Arena stadium, establishments that the Group owns directly or indirectly, have also been closed since March 20. All planned congresses were suspended, most of the fairs and conventions have been postponed, while the shows scheduled at the DIRECTV Arena stadium were mostly cancelled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
 
The Libertador hotel in the City of Buenos Aires and Llao Llao in the province of Río Negro have temporarily closed since the mandatory lockdown decreed in March 2020, while the Intercontinental Hotel in the City of Buenos Aires has worked only under a contingency and emergency plan. As a result of the above, the impact on these financial statements is a 99% decrease in revenues compared to same period of previous fiscal year After the end of first quarter of fiscal year 2021, on November 16, the Llao Llao Hotel opened its doors operating under strict protocols. It is expected that the hotels in the city of Buenos Aires will gradually begin to restart their activity in the coming months.
 
In financial matters, in May and July 2020, IRSA has issued Notes in the local market for an approximate amount of USD 105.4 million. With those proceeds, the Company canceled its Series II Notes for a nominal value of USD 71.4 million maturing on July 20, 2020 and Series II Notes for a nominal value of CLP 31,502.6 million (equivalent to approximately USD 41 million) maturing on August 6, 2020. On the other hand, IRSA CP canceled its Series IV Notes on September 14 for a nominal value of USD 140 million.
 
The maturity of IRSA Series I notes for a nominal value of USD 181.5 million falls within the period contemplated by communication “A” 7106 of the BCRA mentioned above. In this sense, IRSA presented a proposal to the BCRA in the corresponding terms and carried out an exchange operation through the payment in cash of USD 72.6 million and the issuance of two new series of Notes: Series VIII and Series IX for a nominal value of USD 31.7 million and USD 80.7 million (including USD 6.5 million of new subscriptions). The exchange offer was accepted by 98.3%
 
In the next 12 months, IRSA faces the maturity of its Series III Notes for a nominal value of ARS 354 million (equivalent to USD 4.6 million) maturing on February 21, 2021, Series IV Notes for a nominal value of USD 51.4 million maturing on May 21, 2021, Series VI Notes for a nominal value of ARS 335 million (equivalent to USD 4.4 million) maturing on July 21, 2021, bank overdrafts for an amount equivalent to USD 22.0 million and other banking debt for USD 11.8 million. For its part, IRSA CP has maturities of banking debt for the approximate sum of USD 72.7 million.
 
It is important to mention that IRSA has approved with IRSA CP a credit line for up to USD 180 million over 3 years, of which as of September 30, 2020 IRSA used approximately USD 104.5 million, leaving the balance available. Additionally, at the Annual Shareholders Meeting, held on October 26, 2020, IRSA CP approved the distribution of a cash dividend of ARS 9,700 million that will be paid on November 25. As of September 30, IRSA owned an 80.65% stake in IRSA CP.
 
The final extent of the Coronavirus outbreak and its impact on the country's economy is unknown and difficult to fully predict. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Company’s ability to meet financial commitments for the next twelve months.
 
The Company is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.
 
 
36
 
 
31.
Subsequent events
 
Investors Assembly
 
At the General Ordinary and Extraordinary Shareholders’ Meeting held on October 26, 2020, a distribution of a dividend in kind for ARS 484 million in shares of IRSA Propiedades Comerciales, subsidiary of IRSA.
 
Exchange of debentures
 
On November 12, 2020, the company carried out an exchange operation of its Series I Notes, for a nominal value of USD 181.5 million
 
Nominal Value of Existing Notes presented and accepted for the Exchange (for both Series): approximately USD 178.5 which represents 98.31% acceptance, through the participation of 6,571 orders.
 
Series VIII: Face Value of Existing Notes presented and accepted for the Exchange: approximately USD 104.3 million.
 
Nominal Value to be Issued: approximately USD 31.7 million.
 
Issuance Price: 100% nominal value.
 
Maturity Date: It will be November 12, 2023.
 
Consideration of the Exchange Offer: eligible holders whose existing notes have been accepted for the Exchange by the Company, will receive for every USD 1 submitted to the Exchange, the accrued interest of the existing notes until the settlement and issue date and the following:
 
A sum of money of approximately USD 72,6 million for repayment of capital of such existing notes presented to the Exchange, in cash, in United States Dollars, which will be equivalent to USD 0.69622593 for each USD 1 of existing notes presented to the Exchange; and
 
The remaining amount until completing 1 USD for each 1 USD of existing notes presented to the Exchange, in notes Series VIII.
 
Annual Nominal Fixed Interest Rate: 10.00%.
 
Amortization: The capital of the Series VIII Notes will be amortized in 3 annual installments (33% of the capital on November 12, 2021, 33% of the capital on November 12, 2022, 34% of the capital on the maturity date of Series VIII).
 
Interest Payment Dates: Interest will be paid quarterly for the expired period as of the issue and settlement date.
 
Payment Address: Payment will be made to an account at Argentine Securities Commission in the Autonomous City of Buenos Aires
 
Series IX: Face Value of Existing Notes presented and accepted for the Exchange: approximately USD 74.2 million.
 
Nominal Value to be Issued (together with the Face Value to be issued as a result of the cash subscription): approximately USD 80.7 million.
 
Issuance Price: 100% nominal value.
 
Maturity Date: It will be March 1, 2023.
 
Consideration of the Exchange Offer: the eligible holders whose existing notes have been accepted for the Exchange by the Company, will receive Series IX Notes for 100% of the capital amount presented for exchange and accepted by the Company and the accrued interest of the existing notes until the settlement and issue date.
 
Early Bird: will consist of the payment of USD 0.02 for each USD 1 of existing notes delivered and accepted in the Exchange on or before the deadline date to Access the Early Bird. Said consideration will be paid in Pesos on the issue and settlement date according to the exchange rate published by Communication “A” 3500 of the Central Bank of Argentina on the business day prior to the expiration date of the Exchange, which is ARS 79.3433 for each USD 1 of Existing Notes delivered and accepted in the Exchange.
 
Annual Nominal Fixed Interest Rate: 10.00%.
 
Amortization: The capital of the Series IX Notes will be amortized in one installment on the maturity date.
 
Interest Payment Dates: Interest will be paid quarterly for the expired period from the issuance and settlement date.
 
Payment Address: Payment will be made to an account at Argentine Securities Commission in New York, United States, for which purpose the Company will make US dollars available to an account reported by the Argentine Securities Commission in said jurisdiction.
 
Modifications to the Terms of the Existing Notes: Considering that consent has been obtained for an amount greater than 90% of the existing notes capital, the Company has modified and replaced the following essential and non-essential terms and conditions of the existing notes.
 
By virtue of the implementation of the Proposed Non-Essential Modifications, the entire section of "Certain Commitments" and "Events of Default" is eliminated from the terms and conditions set forth in the prospectus supplements dated May 2, 2019 and dated July 25, 2019 corresponding to the existing notes.
 
 
37
 
 
Additionally, pursuant to the implementation of the Proposed Essential Modifications, the following terms and conditions of the Existing Notes are modified and replaced:
 
Expiration Date: It will be March 1, 2023.
 
Interest Payment Dates: will be the same dates reported for Class IX in the Notice of Results.
 
It is clarified that the terms and conditions of the Series I Notes not modified by the Proposed Essential Modifications and the Proposed Non-Essential Modifications will maintain their full validity.
 
Boston Tower Office Floors Sale
 
On November 5, 2020, IRSA Commercial Properties sold and transferred 4 additional floors for a gross rental area of approximately 3,892 sqm and 15 garage units located in the building. The transaction price was approximately Ps. 1,812 (USD 22.9 million).
 
Finally, on November 12, 2020, the Company sold and transferred the last 3 floors with a rental area of 3,266 m2, a retail store of 228 m2 and 15 parking spaces for a total price of approximately Ps. 1,521 (USD 19.1 million)
 
Loan to related party
 
On October 23, 2020, Dolphin Netherlands has granted a loan to Yad Leviim Ltd. for a term of 60 days, in a principal amount of USD 16,250,000 at a rate interest of 5% per year. Yad Leviim Ltd. is a company controlling by Eduardo Elsztain.
 
 
38
 
 
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: Bolívar 108 – 1st 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, 2020, the unaudited condensed interim consolidated statements of income and other comprehensive income, 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, 2020 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 statements of financial position and the consolidated statements of income and other comprehensive income and of cash flows of the Company.
 
 
39
 
 
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.
 
Emphasis of matter paragraph – Loss of control of subsidiaries in Israel
 
Without modifying our conclusion, we draw attention to the information included in Note 1 to the accompanying unaudited condensed interim consolidated financial statements regarding the loss of control of IDBD and DIC, subsidiaries of the Operations Center in Israel.
 
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 are in the process of being 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;
 
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, 2020 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 1,058,161.42, which is not due at that date.

Autonomous City of Buenos Aires, November 17, 2020
 
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
 
José Daniel Abelovich
Public Accountant (UBA)
C.P.C.E. C.A.B.A. V. 102 F. 191
 
 
 
 
40
 
 
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Separate Financial Statements as of September 30, 2020 and for the three-month periods ended as of that date, presented comparatively
 
 
 
 
41
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Financial Position
 
as of September 30, 2020 and June 30, 2020
 
(All amounts in millions, except otherwise indicated)
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
  09.30.20 
  06.30.20 
ASSETS
 
    
    
Non-current assets
 
    
    
Investment properties
7
  33,047 
  25,770 
Property, plant and equipment
8
  34 
  19 
Trading properties
9
  503 
  503 
Intangible assets
10
  77 
  77 
Investments in subsidiaries, associates and joint ventures
6
  80,756 
  71,549 
Trade and other receivables
12
  957 
  607 
Total non-current assets
 
  115,374 
  98,525 
Current assets
 
    
    
Trading properties
9
  583 
  1,030 
Inventories
 
  1 
  1 
Trade and other receivables
12
  1,206 
  1,804 
Income tax and MPIT credit
 
  3 
  4 
Derivative financial instruments
11
  11 
  1 
Investments in financial assets
11
  8 
  290 
Cash and cash equivalents
11
  14 
  2,372 
Total current assets
 
  1,826 
  5,502 
TOTAL ASSETS
 
  117,200 
  104,027 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity (according to corresponding statements)
 
  70,934 
  60,286 
TOTAL SHAREHOLDERS’ EQUITY
 
  70,934 
  60,286 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Trade and other payables
13
  19 
  82 
Borrowings
14
  10,607 
  4,219 
Deferred income tax liabilities
15
  11,755 
  7,998 
Provisions
16
  981 
  264 
Total non-current liabilities
 
  23,362 
  12,563 
Current liabilities
 
    
    
Trade and other payables
13
  1,203 
  1,285 
Salaries and social security liabilities
 
  6 
  10 
Borrowings
14
  21,659 
  29,844 
Derivative financial instruments
11
  - 
  2 
Provisions
16
  35 
  36 
Lease liabilities
 
  1 
  1 
Total current liabilities
 
  22,904 
  31,178 
TOTAL LIABILITIES
 
  46,266 
  43,741 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  117,200 
  104,027 
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
                                            .
 

42
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Income and Other Comprehensive Income
for the three-month periods ended September 30, 2020 and 2019
 (All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Note
  09.30.20 
  09.30.19 
Revenues
17
  726 
  483 
Costs
18
  (572)
  (253)
Gross profit
 
  154 
  230 
Net gain from fair value adjustment of investment properties
7
  7,277 
  3,286 
General and administrative expenses
18
  (107)
  (127)
Selling expenses
18
  (12)
  (56)
Other operating results, net
19
  (4)
  (19)
Profit from operations
 
  7,308 
  3,314 
Share of profit of subsidiaries, associates and joint ventures
6
  6,215 
  7,329 
Profit before financial results and income tax
 
  13,523 
  10,643 
Finance income
20
  10 
  21 
Finance costs
20
  (876)
  (930)
Other financial results
20
  (174)
  (3,519)
Inflation adjustment
20
  (338)
  (510)
Financial results, net
 
  (1,378)
  (4,938)
Profit before income tax
 
  12,145 
  5,705 
Income tax
15
  (3,757)
  (1,590)
Profit for the period
 
  8,388 
  4,115 
 
    
    
Other comprehensive income:
 
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
Share of other comprehensive loss of subsidiaries, associates and joint ventures
 
  (225)
  (80)
Currency translation adjustment of subsidiaries, associates and joint ventures
 
  (3,476)
  (865)
Total other comprehensive loss for the period (i)
6'
  (3,701)
  (945)
Total comprehensive profit for the period
 
  4,687 
  3,170 
 
    
    
Profit per share for the period:
 
    
    
Basic
 
  14.59 
  7.16 
Diluted
 
  14.51 
  7.11 
 
  The accompanying notes are an integral part of these Financial Statements.
 (i) Components of other comprehensive income have no impact on income tax.
 
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
                                           .

2
 
43
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
 
 
Legal reserve
 
 
CNV 609/12 Resolution reserve
 
 
 Other reserves (2)
 
 
Retained earnings
 
 
Total Shareholders’ equity
 
Balance as of June 30, 2020
  575 
  4 
  14,613 
  15,653 
  102 
  522 
  10,124 
  7,533 
  11,160 
  60,286 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  8,388 
  8,388 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,701)
  - 
  (3,701)
Reserve for share-based payments
  - 
  - 
  - 
  - 
  2 
  - 
  - 
  (2)
  - 
  - 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  35 
  - 
  35 
Other changes in subsidiaries` equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  5,926 
  - 
  5,926 
Balance as of September 30, 2020
  575 
  4 
  14,613 
  15,653 
  104 
  522 
  10,124 
  9,791 
  19,548 
  70,934 
 
 
(1) Includes Ps. 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
  (185)
  (4,487)
  212 
  1,822 
  (784)
  11,190 
  (235)
  7,533 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,476)
  - 
  (225)
  (3,701)
Reserve for share-based payments
  1 
  - 
  (3)
  - 
  - 
  - 
  - 
  (2)
Changes in non-controlling interest
  - 
  35 
  - 
  - 
  - 
  - 
  - 
  35 
Other changes in the equity
  - 
  (52)
  - 
  - 
  5,034 
  - 
  944 
  5,926 
Balance as of September 30, 2020
  (184)
  (4,504)
  209 
  1,822 
  774 
  11,190 
  484 
  9,791 

The accompanying notes are an integral part of these Financial Statements.
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 
 
 
 
 
President
 
 
 
                                            .

 
44
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
 
for the three-month period ended September 30, 2019
 
(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
 
 
Legal reserve
 
 
CNV 609/12 Resolution reserve
 
 
Other reserves (2)
 
 
Retained earnings
 
 
Total Shareholders’ equity
 
Balance as of June 30, 2019 (recast)
  575 
  4 
  14,613 
  15,653 
  85 
  522 
  10,124 
  73,943 
  (65,081)
  50,438 
Adjustments of previous periods (IFRS 16 and 28)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (1,248)
  (1,248)
Balance as of June 30, 2019 (recast)
  575 
  4 
  14,613 
  15,653 
  85 
  522 
  10,124 
  73,943 
  (66,329)
  49,190 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  4,115 
  4,115 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (945)
  - 
  (945)
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (185)
  - 
  (185)
Other changes in subsidiaries` equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  23 
  23 
Balance as of September 30, 2019
  575 
  4 
  14,613 
  15,653 
  85 
  522 
  10,124 
  72,813 
  (62,191)
  52,198 
 
(1) Includes Ps. 1 of inflation adjustment of treasury shares. See Note 16 of Consolidated Financial Statements as of June 30, 2019.
(2) The composition of Other reserves of the Company as of September 30, 2019 is as follows:
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
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, 2019
  (177)
  (4,998)
  223 
  1,821 
  283 
  76,906 
  (115)
  73,943 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (865)
  - 
  (80)
  (945)
Reserve for share-based payments
  3 
  - 
  (3)
  - 
  - 
  - 
  - 
  - 
Changes in non-controlling interest
  - 
  (185)
  - 
  - 
  - 
  - 
  - 
  (185)
Balance as of September 30, 2019
  (174)
  (5,183)
  220 
  1,821 
  (582)
  76,906 
  (195)
  72,813 
 
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
                .

 
45
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Cash Flows
for the three-month period ended September 30, 2020 and 2019
(All amounts in millions, except otherwise indicated)
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Nota
  09.30.20 
  09.30.19 
Operating activities
 
    
    
Profit for the period
 
  8,388 
  4,115 
Adjustments:
 
    
    
Income tax
15
  3,757 
  1,590 
Amortization and depreciation
18
  2 
  3 
Gain from disposal of trading properties
 
  (159)
  (235)
Financial results, net
 
  4,579 
  6,538 
Increase in trading properties
9
  (15)
  (365)
Net gain from fair value adjustment of investment properties
7
  (7,277)
  (3,286)
Share of profit of subsidiaries, associates and joint ventures
6
  (6,215)
  (7,329)
Gain from disposal of subsidiaries
 
  (4)
  (137)
Provisions and allowances
 
  4 
  1 
Decrease/ (Increase) in trade and other receivables
 
  205 
  (5)
Increase in trade and other payables
 
  612 
  428 
(Decrease) in payroll and social security liabilities
 
  (3)
  - 
Net cash flow generated from operating activities
 
  3,874 
  1,318 
Investing activities
 
    
    
Capital contributions to subsidiaries, associates and joint ventures
6
  (10)
  (1,780)
Issuance of capital
 
  - 
  (94)
Acquisition of property, plant and equipment
8
  (16)
  (3)
Acquisition of intangible assets
10
  (1)
  - 
Increase of investments in financial assets
 
  (619)
  (6,802)
Proceeds from sale of investments in financial assets
 
  892 
  7,266 
Increase in loans granted to subsidiaries, associates and joint ventures
 
  - 
  (15)
Proceeds from borrowings granted to subsidiaries, associates and joint ventures
 
  3 
  - 
Interest collection of fixed term
 
  - 
  8 
Net cash flow generated from/ (used in) investing activities
 
  249 
  (1,420)
Financing activities
 
    
    
Short-term loans obtained, net
 
  687 
  708 
Payment of loans
 
  (223)
  (239)
Interests paid
 
  (1,026)
  (831)
Loans obtained from subsidiaries, associates and joint ventures
 
  (1)
  2,178 
Payment of loans from subsidiaries, associates and joint ventures
 
  (20)
  (194)
Payment of NCN
 
  (8,302)
  (10,031)
Issuance of NCN
 
  2,424 
  8,495 
Payments from derivative financial instruments
 
  (20)
  - 
Net cash flow used in financing activities
 
  (6,481)
  86 
Decrease in cash and cash equivalents, net
 
  (2,358)
  (16)
Cash and cash equivalents at the beginning of the period
11
  2,372 
  55 
Foreign exchange gain of cash and changes in fair value of cash equivalents
 
  - 
  (1)
Cash and cash equivalents at the end of the period
11
  14 
  38 
 
    
    
Additional information
 
    
    
Currency translation adjustment
 
  (3,476)
  (865)
Other comprehensive loss of subsidiaries
 
  (225)
  (80)
Changes in non-controlling interest
 
  35 
  (185)
Other changes in subsidiaries` equity
 
  5,926 
  23 
Increase in borrowings of subsidiaries, associates and joint ventures through a decrease in trade and other receivables
 
  - 
  7 
Increase in borrowings through an increase in trading properties
 
  93 
  45 
Issuance of NCN
 
  365 
  23 
 
  The accompanying notes are an integral part of these Financial Statements.
 
 

 
 
 
 
 

By:  
/s/  Eduardo S. Elsztain
 
 
 

 
 
 
President
 
 
 
 
 
 
46
IRSA Inversiones y Representaciones Sociedad Anónima
 
Notes to the Unaudited Condensed Interim 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 Bolívar 108, 1st. 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.
These Unaudited Condensed Interim Separate Financial Statements have been approved for issue by the Board of Directors on November 17, 2020.
 
2.
Basis of preparation of the Unaudited Condensed Interim Separate Financial Statements
 
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 share capital or its non-convertible notes, or that have requested authorization to be included in the aforementioned regime.
 
For the preparation of these Unaudited Condensed Interim Separate Financial Statements, the Company has made use of the option provided by IAS 34, and has prepared them in a condensed form. Therefore, these financial statements do not include all the information required in a complete set of annual financial statements and, consequently, it is recommended that they be read together with the annual financial statements as of June 30, 2020.
 
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 for 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 a high inflation one, 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 to or exceeds 100%. Accumulated inflation in Argentina in three years has been over 100%. For this reason, in accordance with IAS 29, the Argentine economy must be considered as a high inflation economy starting July 1, 2018.
 
Regarding the inflation index to be used and in accordance with FACPCE Resolution No. 539/18, it will be determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of Consumer Price indices (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) will be considered. The table below shows the evolution of this index during the period ended September 30, 2020, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
 
Quarterly price variation
  09.30.2020 
 
  8%
 
 
 
47
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
As a consequence of the aforementioned, these Unaudited Financial Statements as of September 30, 2020 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, 2020. 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, 2020 and September 30, 2019, which are disclosed for comparative purposes, arise from the financial statements at said dates restated in accordance with IAS 29.
 
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, 2020, described in Note 3 to those financial statements, except as indicated in Note 25.
 
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, 2020 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, 2020. 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 and Tyrus. The main associates include BHSA and New Lipstick. Its main joint ventures include Cyrsa S.A. and Puerto Retiro S.A.
 
The Company indirectly participates through Tyrus in IDB Development Ltd. (“IDBD”) and Discount Investment Company Ltd (“DIC”). These companies have certain financial restrictions and agreements in relation to their financial debt, including their debentures and loans with banks and financial institutions. These commitments and other restrictions resulting from the indebtedness of IDBD and DIC (such as the pledges granted by IDBD over part of its shareholding in DIC) do not have recursive effects against IRSA, nor has IRSA guaranteed them with its assets, so the economic risk of IRSA is limited to the value of said investments.
 
IDBD's financial condition as of June 30, 2020 had a deficit in shareholders’ equity, ongoing negative cash flows from continuing operating activities activities and a low credit rating. IDBD´s cash flow required to meet its liabilities, including short-term liabilities is based on the financial support of its controlling shareholder (Dolphin Netherlands BV) and on the realization of assets which the realization date is not under IDBD´s control. As a result of the above, IDBD has been into negotiations with its creditors in order to restructure its financial debt on more favorable terms. As a result, the Company recognized an impairment loss of Ps. 2,160 in its separate financial statements as of June 30, 2020, equivalent to the net value of its investment in IDBD and DIC as of that date.
 
 
48
 
 
As of June 30, 2020, the aggregate principal amount of the (i) IDBD Series 9 Bonds was NIS 901 million (“Series 9”), (ii) IDBD Series 14 Bonds was NIS 889 million collateralized by DIC shares owned directly or indirectly by IDBD representing 70% of the share capital of DIC (“Series 14”), (iii) IDBD Series 15 Bonds was NIS 238 million collateralized by shares of Clal representing 5% of the share capital of Clal (“Series 15”).
 
 As no agreement has been reached, on September 17, 2020, the Series 9 trustee submitted to the District Court in Tel-Aviv-Jaffa (the "Court") a petition to grant an order for the opening of proceedings for IDBD pursuant to the Insolvency and Economic Rehabilitation Law, 5778 – 2018 and to instruct the appointment of a trustee for IDBD pursuant to Section 43 and to grant the trustee any and all authority over the decision making of IDBD.
 
On September 21, 2020, the Series 14 bond holders approved the immediate fully payment of the remaining balances of such serie.
 
On September 22, 2020, IDBD and Dolphin Netherlands B.V. submitted an initial response to the Petition, arguing that it is in the best interest of IDBD and its creditors to exhaust the negotiations among the controlling shareholder and its creditors during a short period with the aim to maximize the value of its assets, avoid costs and additional negative effects.
 
In addition, responses by the Series 14 trustee and the Series 15 trustee were filed requesting the enforcement of liens and the appointment of a receiver as well as an urgent hearing, which was scheduled for September 24, 2020.
 
On September 25, 2020, the Court resolved that IDBD is insolvent and therefore it resolved to grant all three orders requested and accordingly, issued an order for the initiation of proceedings and liquidation of IDBD, and has appointed a liquidator to IDBD and interim receivers over the Pledged DIC and Clal Shares.
 
Under IFRS 10 “Consolidated Financial Statements” (“IFRS 10”), an investor controls an investee if and only if the investor has all the following: a) power over the investee; b) exposure, or rights, to variable returns from its involvement with the investee; and c) the ability to use its power over the investee to affect the amount of the investor’s returns. Based on the facts and circumstances outlined above, our management believe that, as from September 25, 2020, IRSA lost control over IDBD and DIC and consequently it derecognized the reserves disclosed in other comprehensive income associated with said investments, recognizing a loss of Ps. 2,904 in the three-month period ended September 30, 2020.
 
To date, we are analyzing together with our local and international advisors the judicial decision, of September 25, 2020 and its alternatives.
 
Detailed below is the evolution of investments in subsidiaries, associates and joint ventures of the Company, for the three-month period ended September 30, 2020 and for the year ended June 30, 2020:
 
 
  09.30.20 
  06.30.20 
Beginning of period / year
  71,333 
  61,172 
Adjustments of previous periods (IFRS 16 and IAS 28)
  - 
  (1,406)
Share of profit
  6,215 
  11,614 
Other comprehensive loss
  (3,701)
  (1,060)
Capital contributions (Note 21)
  10 
  2,363 
Changes in non-controlling interest
  35 
  508 
Dividends
  - 
  (634)
Sale of interest
  - 
  (1,123)
Other changes in subsidiaries’ equity
  5,926 
  (101)
End of the period / year
  79,818 
  71,333 
 
(i)
Includes Ps. (938) and Ps. (216) reflecting interests in companies with negative equity as of September 30, 2020 and June 30, 2020, respectively, which are disclosed in “Provisions” (see Note 16).
 
 
49
IRSA Inversiones y Representaciones Sociedad Anónima
 
 

  Name of the entity
    % ownership interest       
    Company´s interest in equity       
    Company’s interest in comprehensive income       
 
  09.30.20 
  06.30.20 
  09.30.20 
  06.30.20 
  30.09.2020 
  30.09.2019 
Subsidiaries
    
    
    
    
    
    
IRSA CP
  79.27%
  79.27%
  70,780 
  61,486 
  9,327 
  2,640 
Tyrus
  100.00%
  100.00%
  (938)
  (216)
  (6,761)
  2,818 
Efanur
  100.00%
  100.00%
  2,139 
  2,249 
  (110)
  410 
Ritelco S.A.
  100.00%
  100.00%
  1,992 
  1,989 
  39 
  313 
Inversora Bolívar S.A.
  95.13%
  95.13%
  951 
  962 
  (12)
  17 
ECLSA
  96.74%
  96.74%
  1,520 
  1,360 
  162 
  58 
Palermo Invest S.A.
  97.00%
  97.00%
  472 
  486 
  (14)
  38 
NFSA
  76.34%
  76.34%
  388 
  438 
  (50)
  (3)
Llao Llao Resort S.A.
  50.00%
  50.00%
  364 
  370 
  (6)
  (3)
HASAU
  100.00%
  100.00%
  263 
  282 
  (18)
  (9)
Liveck S.A.
  9.30%
  9.30%
  59 
  57 
  (1)
  3 
Associates
    
    
    
    
    
    
BHSA (1) (2)
  4.93%
  4.93%
  690 
  700 
  (10)
  79 
Manibil S.A.
  49.00%
  49.00%
  565 
  573 
  (8)
  2 
BACS (2)
  33.36%
  33.36%
  349 
  349 
  1 
  (10)
Joint ventures
    
    
    
    
    
    
IRSA - Galerías Pacífico S.A. - U.T.
  50.00%
  50.00%
  173 
  202 
  (29)
  26 
Cyrsa S.A.
  50.00%
  50.00%
  51 
  46 
  4 
  5 
Total subsidiaries, associates and joint ventures
    
    
  79,818 
  71,333 
  2,514 
  6,384 
 
 



   
 
Latest financial statements issued
 
Name of the entity
Location of business / Country of incorporation
Main activity
 
Common shares 1 vote
 
 
Share capital (nominal value)
 
 
Profit / (loss) for the period
 
 
Shareholders’ equity
 
Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IRSA CP
Argentina
Real estate
  99,894,541 
  126 
  12,349 
  89,253 
Tyrus
Uruguay
Investment
  16,025,861,475 
  7,480 
  (3,063)
  (938)
Efanur
Uruguay
Investment
  132,181,770 
  131 
  (117)
  2,139 
Ritelco S.A.
Uruguay
Investment
  94,369,151 
  94 
  40 
  1,993 
Inversora Bolívar S.A.
Argentina
Investment
  88,422,547 
  93 
  (16)
  999 
ECLSA
Argentina
Investment
  77,316,130 
  80 
  166 
  1,568 
Palermo Invest S.A.
Argentina
Investment
  155,953,673 
  161 
  (14)
  768 
NFSA
Argentina
Hotel
  38,068,999 
  50 
  (70)
  668 
Llao Llao Resort S.A.
Argentina
Hotel
  73,580,206 
  147 
  (12)
  727 
HASAU
Argentina
Hotel
  25,625,473 
  26 
  (18)
  261 
Liveck S.A.
Uruguay
Investment
  41,855,579 
  450 
  (8)
  381 
Associates
 
 
    
    
    
    
BHSA (1) (2)
Argentina
Financial
  73,939,835 
  1,500 
  (194)
  14,001 
Manibil S.A.
Argentina
Real estate
  151,872,872 
  444 
  (16)
  1,153 
BACS (2)
Argentina
Financial
  29,297,626 
  88 
  3 
  1,048 
Joint ventures
 
 
    
    
    
    
IRSA - Galerías Pacífico S.A. - U.T.
Argentina
Hotel
  500,000 
  1 
  (58)
  346 
Cyrsa S.A.
Argentina
Real estate
  8,748,270 
  17 
  9 
  102 
 
 
(1)
Considered significant. See Notes 7 to 8 to the Annual Consolidated Financial Statements.
(2)
Information as of September 30, 2020 according to BCRA's standards. For the purpose of the valuation of the investments in the Company, figures as of September 30, 2020 have been considered, with the necessary IFRS adjustments. Share market price of Banco Hipotecario S.A as of September 30, 2020 amounts to Ps. 9,35. See Note 8 to the Consolidated Financial Statements as of June 30, 2020.
 
 
7.            
Investment properties
 
 
 
Period ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Rental properties
 
 
Undeveloped parcels of land
 
 
Total
 
 
Total
 
Fair value at the beginning of the period / year
  3,801 
  21,969 
  25,770 
  16,020 
Net gain from fair value adjustment
  1,073 
  6,204 
  7,277 
  9,750 
Fair value at the end of the period / year
  4,874 
  28,173 
  33,047 
  25,770 

 
 
50
 
 
The following amounts have been recognized in the Statements of Comprehensive Income:
 
 
  09.30.20 
  09.30.19 
Sale, rental and services´ income (Note 17)
  12 
  14 
Rental and services´ costs (Note18)
  3 
  11 
Cost of sales and developments (Note18)
  11 
  10 
Net unrealized gain from fair value adjustment of investment properties
  7,277 
  3,286 
 
Valuation techniques are described in Note 9 to the Consolidated Financial Statements as of June 30, 2020. There were no changes to the valuation techniques.
 
8.            
Property, plant and equipment
 
 
 
Period ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Buildings and facilities
 
 
Furniture and fixtures
 
 
Machinery and equipment
 
 
Vehicles
 
 
Total
 
 
Total
 
Costs
  201 
  56 
  193 
  4 
  454 
  453 
Accumulated depreciation
  (187)
  (55)
  (189)
  (4)
  (435)
  (429)
Net book amount at the beginning of the period / year
  14 
  1 
  4 
  - 
  19 
  24 
Additions
  - 
  15 
  1 
  - 
  16 
  1 
Depreciation (Note 18)
  - 
  - 
  (1)
  - 
  (1)
  (6)
Balances at the end of the period / year
  14 
  16 
  4 
  - 
  34 
  19 
Costs
  201 
  71 
  194 
  4 
  470 
  454 
Accumulated depreciation
  (187)
  (55)
  (190)
  (4)
  (436)
  (435)
Net book amount at the end of the period / year
  14 
  16 
  4 
  - 
  34 
  19 
 

9.            
Trading properties
 
 
 
Period ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Completed properties
 
 
Undevelopedproperties
 
 
Properties under development
 
 
Total
 
 
Total
 
Beginning of the period / year
  79 
  578 
  876 
  1,533 
  3,340 
Additions
  - 
  - 
  15 
  15 
  1,751 
Capitalized finance costs
  - 
  - 
  93 
  93 
  100 
Disposals (Not 18)
  - 
  - 
  (555)
  (555)
  (3,658)
End of the period / year
  79 
  578 
  429 
  1,086 
  1,533 
Non-current
    
    
    
  503 
  503 
Current
    
    
    
  583 
  1,030 
Total
    
    
    
  1,086 
  1,533 
 
10.            
Intangible assets
 
 
 
Period ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Computer software
 
 
Future units to be received from barters
 
 
Total
 
 
Total
 
Costs
  37 
  60 
  97 
  95 
Accumulated amortization
  (20)
  - 
  (20)
  (16)
Net book amount at the beginning of the period / year
  17 
  60 
  77 
  79 
Additions
  1 
  - 
  1 
  2 
Amortization
  (1)
  - 
  (1)
  (4)
Balances at the end of the period / year
  17 
  60 
  77 
  77 
Costs
  38 
  60 
  98 
  97 
Accumulated amortization
  (21)
  - 
  (21)
  (20)
Net book amount at the end of the period / year
  17 
  60 
  77 
  77 
 
 
51
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
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, 2020.
 
Financial assets and financial liabilities as of September 30, 2020 and June 30, 2020 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
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 12)
  1,601 
  - 
  - 
  1,601 
  576 
  2,177 
Investments in financial assets:
    
    
    
    
    
    
 - Mutual funds (ii)
  - 
  8 
  - 
  8 
  - 
  8 
Derivative financial instruments:
    
    
    
    
    
    
 - Options
  - 
  - 
  11 
  11 
  - 
  11 
Cash and cash equivalents:
    
    
    
    
    
    
 - Cash at bank and on hand
  14 
  - 
  - 
  14 
  - 
  14 
Total
  1,615 
  8 
  11 
  1,634 
  576 
  2,210 
 
    
    
    
    
    
    
 
 
 
Financial liabilities at amortized cost (i)
 
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 1
 
 
 
 
 
 
 
 
 
 
September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 13)
  628 
  - 
  628 
  594 
  1,222 
Borrowings (Note 14)
  32,266 
  - 
  32,266 
  - 
  32,266 
Total
  32,894 
  - 
  32,894 
  594 
  33,488 
 
    
    
    
    
    
 
 
 
Financial assets at amortized cost (i)
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 12)
  1,858 
  - 
  - 
  1,858 
  564 
  2,422 
Investments in financial assets:
    
    
    
    
    
    
 - Mutual funds (ii)
  - 
  290 
  - 
  290 
  - 
  290 
Derivative financial instruments:
    
    
    
    
    
    
 - Swaps
  - 
  - 
  1 
  1 
  - 
  1 
Cash and cash equivalents:
    
    
    
    
    
    
 - Cash at bank and on hand
  11 
  - 
  - 
  11 
  - 
  11 
 - Short-term investments
  1,001 
  1,360 
  - 
  2,361 
  - 
  2,361 
Total
  2,870 
  1,650 
  1 
  4,521 
  564 
  5,085 
 
 
 
Financial liabilities at amortized cost (i)
 
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 1
 
 
 
 
 
 
 
 
 
 
June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 13)
  663 
  - 
  663 
  704 
  1,367 
Derivative financial instruments:
    
    
    
    
    
- Foreign-currency future contracts
  - 
  2 
  2 
  - 
  2 
Borrowings (excluding finance leases) (Note 14)
  34,063 
  - 
  34,063 
  - 
  34,063 
Total
  34,726 
  2 
  34,728 
  704 
  35,432 
 
(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.
 
As of September 30, 2020, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Company.
 
 
52
IRSA Inversiones y Representaciones Sociedad Anónima
 
12.
Trade and other receivables
 
Company’s trade and other receivables, as of September 30, 2020 and June 30, 2020 are comprised as follows:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Sales, leases and services’ receivables
  107 
  108 
Leases and services receivables
  582 
  834 
Less: Allowance for doubtful accounts
  (14)
  (11)
Total trade receivables
  675 
  931 
Borrowings granted, deposits and others
  901 
  900 
Advance payments
  211 
  226 
Tax credits
  348 
  317 
Prepaid expenses
  8 
  15 
Long-term incentive plan
  15 
  16 
Others
  5 
  6 
Total other receivables
  1,488 
  1,480 
Total trade and other receivables
  2,163 
  2,411 
Non-current
  957 
  607 
Current
  1,206 
  1,804 
Total
  2,163 
  2,411 
 
Movements on the Company’s allowance for doubtful accounts are as follows:
 
 
 
September 30, 2020
 
 
June 30, 2020
 
Beginning of period /year
  11 
  39 
Additions
  4 
  4 
Disposals / Recoveries
  - 
  (20)
Inflation adjustment
  (1)
  (12)
End of the period / year
  14 
  11 
 
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, 2020
 
 
June 30, 2020
 
Customers´ advances
  582 
  694 
Trade payables
  524 
  544 
Accrued invoices
  74 
  104 
Tenant deposits
  1 
  1 
Total trade payables
  1,181 
  1,343 
Director´s fees
  14 
  - 
Long-term incentive plan
  13 
  14 
Tax amnesty plans
  1 
  2 
Other tax payables
  10 
  8 
Other
  3 
  - 
Total other payables
  41 
  24 
Total trade and other payables
  1,222 
  1,367 
Non-current
  19 
  82 
Current
  1,203 
  1,285 
Total
  1,222 
  1,367 
 
14.
Borrowings
 
Company’s borrowings as of September 30, 2020 and June 30, 2020 are comprised as follows:
 
 
 
Book value as of 09.30.20
 
 
Book value as of 06.30.20
 
 
Fair value as of 09.30.20
 
 
Fair value as of 06.30.20
 
NCN
  17,121 
  23,771 
  - 
  23,965 
Bank loans
  1,418 
  1,550 
  1,418 
  1,550 
Related parties (Note 21)
  12,117 
  7,635 
  - 
  7,705 
Bank overdrafts
  1,610 
  1,107 
  1,610 
  1,107 
Total borrowings
  32,266 
  34,063 
  3,028 
  34,327 
Non-current
  10,607 
  4,219 
    
    
Current
  21,659 
  29,844 
    
    
Total
  32,266 
  34,063 
    
    
 
 
53
 
 
15.
Currents and deferred income tax
 
The charge for the Company’s income tax is comprised as follows:

 
  09.30.20 
  09.30.19 
Deferred income tax
  (3,757)
  (1,590)
Income tax
  (3,757)
  (1,590)

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, 2020 and 2019: 
 
 
  09.30.20 
  09.30.19 
Net income at tax rate (i)
  (3,644)
  (1,712)
Permanent differences:
    
    
Share of profit of subsidiaries, associates and joint ventures
  1,864 
  2,160 
Income tax rate differential
  430 
  232 
Difference between provision and tax return
  57 
  - 
Tax loss carryfowards´ allowance
  (2,373)
  (808)
Inflation adjustment for tax purposes
  (634)
  (703)
Inflation adjustment
  634 
  (732)
Non deductible expenses and others
  (91)
  (27)
Income tax
  (3,757)
  (1,590)
 
 
  09.30.20 
  06.30.20 
Beginning of the period / year
  (7,998)
  (7,212)
Income tax charge
  (3,757)
  (786)
End of the period / year
  (11,755)
  (7,998)
 
 
Law No. 27,541 of solidarity and productive revival in the framework of Argentine public emergency, published on December 23, 2019 introduced some modifications to different taxes and the creation of the tax for an Inclusive Selfless Argentina (PAIS).
 
The main modifications affecting the Group in relation to income tax are the following:
 
1)
In the first and second fiscal year beginning after January 1, 2018 (namely, for the Group’s fiscal years beginning on July 1, 2019 and 2020), the gain or loss resulting from tax inflation adjustment will be charged by one sixth in the determination exercise and the remaining five sixths in the following fiscal years;
 
2)
The tax rate applicable to companies for the third fiscal year beginning after January 1, 2018 was increased from 25% to 30% (namely, for the Group’s fiscal years beginning on July 1, 2019)
 
16. Provisions
 
The table below presents the changes in the Company's provisions:
 
 
 
Period ended September 30, 2020
 
 
Year ended June 30, 2020
 
 
 
Investments in subsidiaries, associates and joint ventures
 
 
Labor, legal and other claims (i)
 
 
Total
 
 
Total
 
Beginning of period / year
  216 
  84 
  300 
  66 
Additions
  722 
  1 
  723 
  264 
Decrease
  - 
  (1)
  (1)
  (6)
Utilization
  - 
  - 
  - 
  (1)
Inflation adjustment
  - 
  (6)
  (6)
  (23)
End of period / year
  938 
  78 
  1.016 
  300 
Non current
    
    
  981 
  264 
Current
    
    
  35 
  36 
Total
    
    
  1.016 
  300 
 
(i)
Additions and recoveries are included in "Other operating results, net”.
 
 
54
 
 
17. Revenues
 
 
  09.30.20 
  09.30.19 
Sale of trading properties
  714 
  467 
Rental income, averaging of scheduled rental escalation and expense reimbursements
  12 
  14 
Property management fees
  - 
  2 
Sales, rental and services´ income
  726 
  483 

18. Expenses by nature
 
 
 
Costs (i)
 
 
General and administrative expenses
 
 
Selling expenses
 
  09.30.20 
  09.30.19 
Cost of sales of trading properties (Note 9)
  555 
  - 
  - 
  555 
  231 
Salaries, social security costs and other personnel expenses
  1 
  43 
  - 
  44 
  64 
Taxes, rates and contributions
  6 
  - 
  8 
  14 
  53 
Fees and payments for services
  - 
  16 
  - 
  16 
  19 
Director´s fees (Note 21)
  - 
  25 
  - 
  25 
  25 
Maintenance, security, cleaning, repairs and others
  9 
  7 
  - 
  16 
  15 
Traveling, transportation and stationery expenses
  - 
  4 
  - 
  4 
  11 
Leases and services’ charges
  1 
  6 
  - 
  7 
  10 
Advertising and other selling expenses
  - 
  - 
  - 
  - 
  1 
Bank charges
  - 
  4 
  - 
  4 
  3 
Amortization and depreciation (Note 8 and 10)
  - 
  2 
  - 
  2 
  3 
Allowance for doubtful accounts (charge and recovery, net) (Note 12)
  - 
  - 
  4 
  4 
  1 
Total expenses by nature as of 09.30.20
  572 
  107 
  12 
  691 
  - 
Total expenses by nature as of 09.30.19
  253 
  127 
  56 
  - 
  436 

(1)
For the three-month period ended September 30, 2020, includes Ps. 3 of rental and services costs and Ps. 569 of costs of sales and developments, of which Ps. 11 corresponds to investment properties and Ps. 558 to trading properties. For the three-month period ended September 30, 2019, includes Ps. 11 which correspond to rental and services costs; Ps. 242 to costs of sales and developments, of which Ps. 11 corresponds to investment properties and Ps. 231 to trading properties
 
19. Other operating results, net
 
 
  09.30.20 
  09.30.19 
Lawsuits and other contingencies (i)
  - 
  (4)
Donations
  (6)
  (14)
Operating interest expense
  3 
  2 
Others
  (1)
  (3)
Total other operating results, net
  (4)
  (19)
 
(i)
Includes legal costs and expenses.
 
20. Financial results, net
 
 
  09.30.20 
  09.30.19 
Interest income
  10 
  21 
Total finance income
  10 
  21 
Interest expense
  (914)
  (893)
Other finance costs
  (55)
  (82)
Subtotal finance costs
  (969)
  (975)
Capitalized finance costs
  93 
  45 
Total finance costs
  (876)
  (930)
Net exchange difference
  (126)
  (3,698)
Net (loss) / gain from changes in fair value of financial assets
  (40)
  177 
(Loss) from derivative financial instruments, net
  (8)
  - 
Gain from repurchase of non-convertible notes
  - 
  2 
Total other financial results
  (174)
  (3,519)
Inflation adjustment
  (338)
  (510)
Total financial results, net
  (1,378)
  (4,938)
 
 
 
55
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
21.  Related party transactions
 
The following is a summary of the balances with related parties as of September 30, 2020 and June 30, 2020:
 
Item
 
September 30, 2020
 
 
June 30, 2020
 
Trade and other receivables
  1,337 
  1,638 
Trade and other payables
  (1,108)
  (1,133)
Borrowings
  (12,117)
  (7,635)
Total
  (11,888)
  (7,130)
 


 
 
September 30, 2020
 
 
June 30, 2020
 
Operation description
Item
Cresud
  (1)
  (1)
Long-term incentive plan payable
Trade and other payables
 
  (47)
  (69)
Corporate services payable
Trade and other payables
 
  (4)
  (2)
Reimbursement of expenses payable
Trade and other payables
 
  4 
  5 
Leases receivable
Trade and other receivables
 
  (1)
  (1)
Management fee
Trade and other payables
Total parent company
  (49)
  (68)
 
 
IRSA CP
  (569)
  (674)
Reimbursement of expenses receivable
Trade and other payables
 
  369 
  662 
Reimbursement of expenses receivable
Trade and other receivables
 
  (11)
  (11)
Leases and rights of use payable
Trade and other payables
 
  (4,364)
  (3,986)
Non-Convertible Notes
Borrowings
 
  (6,887)
  (2,813)
Loans received
Borrowings
 
  (70)
  (61)
Corporate services payable
Trade and other payables
 
  (12)
  (13)
Long-term incentive plan payable
Trade and other payables
 
  (5)
  (10)
Reimbursement of expenses payable
Trade and other payables
 
  (1)
  (1)
Commissions
Trade and other payables
 
  (2)
  - 
Leases payable
Trade and other payables
 
  (152)
  (152)
Other liabilities
Trade and other payables
Tyrus
  417 
  415 
Borrowings granted
Trade and other receivables
 
  1 
  1 
Reimbursement of expenses receivable
Trade and other receivables
ECLSA
  295 
  290 
Borrowings granted
Trade and other receivables
 
  107 
  116 
Dividends receivable
Trade and other receivables
Panamerican Mall S.A.
  1 
  1 
Long-term incentive plan receivable
Trade and other receivables
Efanur
  (106)
  (104)
Loans received
Borrowings
Torodur S.A.
  (444)
  (443)
Non-Convertible Notes
Borrowings
Ritelco S.A.
  (30)
  (30)
Loans received
Borrowings
NFSA
  (33)
  (34)
Loans received
Borrowings
NFSA
  9 
  5 
Management fees receivables
Trade and other receivables
Fibesa S.A.
  13 
  14 
Long-term incentive plan receivable
Trade and other receivables
 
  (46)
  - 
Loans received
Borrowings
Real Estate Investment Group VII LP
  (26)
  (25)
Loans received
Borrowings
Palermo Invest S.A.
  12 
  13 
Dividends receivable
Trade and other receivables
Palermo Invest S.A.
  18 
  18 
Borrowings granted
Trade and other receivables
HASAU
  2 
  2 
Hotel services receivable
Trade and other receivables
 
  (16)
  - 
Other liabilities
Trade and other payables
 
  (10)
  (31)
Loans received
Borrowings
Llao Llao Resorts S.A.
  3 
  3 
Hotel services receivable
Trade and other receivables
 
  - 
  1 
Reimbursement of expenses receivable
Trade and other receivables
New Lipstick
  18 
  18 
Reimbursement of expenses receivable
Trade and other receivables
Lipstick Management LLC
  (84)
  (83)
Loans received
Borrowings
Cyrsa S.A.
  (29)
  (29)
Loans received
Borrowings
Inversora Bolívar S.A.
  10 
  10 
Dividends receivable
Trade and other receivables
 
  34 
  34 
Borrowings granted
Trade and other receivables
Banco Hipotecario S.A
  (1)
  (1)
Leases and rights of use payable
Trade and other payables
IRSA – Galerías Pacífico S.A. - U.T.
  (126)
  (135)
Other liabilities
Trade and other payables
Emprendimiento Recoleta S.A
  1 
  1 
Long-term incentive plan receivable
Trade and other receivables
TGLT S.A.
  (76)
  - 
Other liabilities
Trade and other payables
Others subsidiaries, associates and joint ventures (1)
  - 
  2 
Reimbursement of expenses receivable
Trade and other receivables
Others subsidiaries, associates and joint ventures (1)
  1 
  1 
 Contributions in advance
Trade and other receivables
 
  1 
  1 
Long-term incentive plan receivable
Trade and other receivables
Total subsidiaries, associates and joint ventures
  (11,788)
  (7,028)
 
 
Directors
  (14)
  - 
Fees
Trade and other payables
 
  - 
  5 
Advances granted
Trade and other receivables
 
  5 
  5 
Borrowings granted
Trade and other receivables
Total directors
  (9)
  10 
 
 
Consultores Asset Management S.A.
  16 
  14 
Reimbursement of expenses receivable
Trade and other receivables
BHN Vida S.A.
  (58)
  (57)
Non-Convertible Notes
Borrowings
Estudio Zang, Bergel y Viñes Abogados
  - 
  (2)
Legal Services
Trade and other payables
Others subsidiaries, associates and joint ventures (2)
  - 
  1 
Reimbursement of expenses receivable
Trade and other receivables
Total others
  (42)
  (44)
 
 
Total
  (11,888)
  (7,130)
 
 
 
(1)
It includes ALL GOLF Center S.A., Panamerican Mall S.A, Emprendimiento Recoleta S.A., Quality Invest S.A., Puerto Retiro, Arcos del Gourmet S.A., Inversora Bolívar S.A., y Palermo Invest S.A.
(2)
It includes Austral Gold Argentina S.A., Chacabuco 175 S.R.L. y Dolphin Fund Ltd.
 
 
56
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, 2020 and 2019:
 

 
September 30, 2020
 
 
September 30, 2019
 
Operation description
Cresud
  2 
  3 
Leases and/or rights of use
 
  - 
  - 
Financial operations
 
  (31)
  (40)
Corporate services
Total parent company
  (29)
  (37)
 
IRSA CP
  (464)
  (799)
Financial operations
 
  (4)
  (19)
Corporate services
 
  (2)
  1 
Leases and/or rights of use
ECLSA
  5 
  37 
Financial operations
Ritelco
  - 
  (5)
Financial operations
Efanur
  (1)
  (19)
Financial operations
Tyrus
  3 
  66 
Financial operations
Lipstick
  (1)
  (15)
Financial operations
REIG VII
  - 
  (5)
Financial operations
Torodur
  (23)
  (81)
Financial operations
Palermo Invest
  - 
  (4)
Financial operations
Others subsidiaries, associates and joint ventures (1)
  3 
  3 
Fees
 
  1 
  - 
Financial operations
Total subsidiaries, associates and joint ventures
  (483)
  (840)
 
Directors
  (25)
  (25)
Fees
Senior Management
  (2)
  (4)
Fees
Total Directors and Senior Managment
  (27)
  (29)
 
Fundación IRSA
  - 
  (11)
Donations
Estudio Zang, Bergel & Viñes
  (3)
  (1)
Fees
BHN Vida S.A.
  1 
  - 
Financial operations
Others subsidiaries, associates and joint ventures (2)
  - 
  3 
Leases and/or rights of use
 
  - 
  (3)
Donations
Total others
  (2)
  (12)
 
Total at the end of the period
  (541)
  (918)
 
 
(1)
It includes Inversora Bolívar S.A., Cyrsa S.A., BACS, Palermo Invest S.A., Efanur and Liveck S.A.
(2)
It includes Puerta 18, Austral Gold Argentina S.A., Hamonet S.A., y Consultores Asset Management S.A.
 
The following is a summary of the transactions with related parties without impact in results for the three-month period ended September 30, 2020 and 2019:
 

 
 
September 30, 2020
 
 
September 30, 2019
 
Operation description
Tyrus
  (7)
  (1,781)
Contributions granted
Liveck S.A.
  (3)
  (7)
Contributions granted
Manibil S.A.
  - 
  (95)
Contributions granted
Total contributions to subsidiaries
  (10)
  (1,883)
 
 
 
 
57
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 09.30.20
 
 
Total as of 06.30.20
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  4.01 
  75.980 
  305 
  305 
Euros
  0.11 
  88.965 
  10 
  9 
Receivables with related parties
    
    
    
    
US Dollar
  10.40 
  76.180 
  792 
  780 
Total Trade and other receivables
    
    
  1,107 
  1,094 
Investments in financial assets
    
    
    
    
US Dollar
  0.11 
  75.980 
  8 
  8 
Total Investments in financial assets
    
    
  8 
  8 
Derivative financial instruments
    
    
    
    
US Dollar
  - 
  75.980 
  - 
  1 
Total Derivative financial instruments
    
    
  - 
  1 
Cash and cash equivalents
    
    
    
    
US Dollar
  0.08 
  75.980 
  6 
  10 
Total Cash and cash equivalents
    
    
  6 
  10 
Total Assets
    
    
  1,121 
  1,113 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  0.42 
  76.180 
  32 
  115 
Payables with related parties
    
    
    
    
US Dollar
  3.29 
  76.180 
  251 
  155 
Total Trade and other payables
    
    
  283 
  270 
Lease liabilities
    
    
    
    
US Dollar
  0.01 
  76.180 
  1 
  - 
Total Lease liabilities
    
    
  1 
  - 
Borrowings
    
    
    
    
US Dollar
  233.58 
  76.180 
  17,794 
  24,982 
Borrowings with related parties
    
    
    
    
US Dollar
  106.56 
  76.180 
  8,118 
  7,534 
Total Borrowings
    
    
  25,912 
  32,516 
Total Liabilities
    
    
  26,196 
  32,786 
 

(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, 2020 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
 
 
 
58
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 providers:
 
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 30 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
26.
Subsequent events
 
See Note 30 to the Unaudited Condensed Interim Consolidated Financial Statements, in addition are as follows:
 
Dividend distribution from IRSA CP
 
On October 26, 2020, IRSA CP Shareholders' Meeting has decided to distribute a cash dividend of Ps. 9,700. The amount per share will be (V $ N1) Ps. 76.9755 and an amount per ADR of Ps. 307.9022 (Argentine pesos per ADR).
The Company maintains a holding percentage of 79.27% over said Company.
 
 
59
IRSA Inversiones y Representaciones Sociedad Anónima
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations and Section 12,
Chapter III, Title IV of the National Securities Commission Regulations
Statement of Financial Position as of September 30, 2020
(Stated in millions)
Free translation from the original prepared in Spanish for publication in Argentina
 
1.
Specific and significant systems that imply contingent lapsing or rebirth of benefits envisaged by such provisions.
 
None.
 
2.
Significant changes in the Company´s activities or other similar circumstances that occurred during the fiscal years included in the financial statements, which affect their comparison with financial statements filed in previous fiscal years, or that could affect those to be filed in future fiscal years.
 
See Note 2.3.
 
3.
Receivables and liabilities by maturity date.
 
 
    
 
Past due
 
 
Without term
 
 
Without term
 
  To be due                               
 
    
  09.30.20 
 
Current
 
 
Non-current
 
 
Up to 3 months
 
 
From 3 to 6 months
 
 
From 6 to 9 months
 
 
From 9 to 12 months
 
 
From 1 to 2 years
 
 
From 2 to 3 years
 
 
Total
 
 
Accounts receivables
 
 
Trade and other receivables
 
  207 
  353 
  6 
  631 
  1 
  8 
  6 
  951 
  - 
  2,163 
    
 
Total
 
  207 
  353 
  6 
  631 
  1 
  8 
  6 
  951 
  - 
  2,163 
 
Liabilities
 
 
Trade and other payables
 
  377 
  - 
  - 
  237 
  3 
  3 
  583 
  19 
  - 
  1,222 
    
 
Borrowings
 
  - 
  - 
  - 
  16,144 
  362 
  825 
  4,328 
  10,607 
  - 
  32,266 
    
 
Salaries and social security liabilities
 
  - 
  1 
  - 
  5 
  - 
  - 
  - 
  - 
  - 
  6 
    
 
Provisions
 
  - 
  35 
  981 
  - 
  - 
  - 
  - 
  - 
  - 
  1,016 
    
 
Lease liabilities
 
  - 
  - 
  - 
  - 
  - 
  1 
  - 
  - 
  - 
  1 
    
 
Total
 
  377 
  36 
  981 
  16,386 
  365 
  829 
  4,911 
  10,626 
  - 
  34,511 
 
 
4.a. 
Breakdown of accounts receivable and liabilities by maturity and currency.
 
 
Items
 

  Current           
  Non-current           
  Totals           
 

 

 
Local currency
 
 
Foreign currency
 
 
Total
 
 
Local currency
 
 
Foreign currency
 
 
Total
 
 
Local currency
 
 
Foreign currency
 
 
Total
 
 
Accounts receivables
 
Trade and other receivables
  812 
  394 
  1,206 
  244 
  713 
  957 
  1,056 
  1,107 
  2,163 
    
Total
  812 
  394 
  1,206 
  244 
  713 
  957 
  1,056 
  1,107 
  2,163 
 
Liabilities
 
Trade and other payables
  920 
  283 
  1,203 
  19 
  - 
  19 
  939 
  283 
  1,222 
    
Borrowings
  2,468 
  19,191 
  21,659 
  3,886 
  6,721 
  10,607 
  6,354 
  25,912 
  32,266 
    
Salaries and social security liabilities
  6 
  - 
  6 
  - 
  - 
  - 
  6 
  - 
  6 
    
Provisions
  35 
  - 
  35 
  981 
  - 
  981 
  1,016 
  - 
  1,016 
    
Lease liabilities
  - 
  1 
  1 
  - 
  - 
  - 
  - 
  1 
  1 
    
Total
  3,429 
  19,475 
  22,904 
  4,886 
  6,721 
  11,607 
  8,315 
  26,196 
  34,511 
 
 
 
60
RSA Inversiones y Representaciones Sociedad Anónima
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations and Section 12,
Chapter III, Title IV of the National Securities Commission Regulations
Statement of Financial Position as of September 30, 2020
(Stated in millions)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
4.b. 
Breakdown of accounts receivable and liabilities by adjustment clause.
 
On September 30, 2020 there are no receivables and liabilities subject to adjustment clause.
 
4.c. 
Breakdown of accounts receivable and liabilities by interest clause
 
 
Items
 
    
  Current                
  Non-current                
  Accruing interest      
 
Non- 
 
 

 
    
    
  Accruing interest      
 
Non-accruing interest
 
 
Total
 
  Accruing interest      
 
Non-accruing interest 
 
Total
 
         
accruing
 
Total 
 
 
    
 
Fixed rate
 
 
Floating rate
 
 
  (*)
 
 
 
 
 
Fixed rate
 
 
Floating rate
 
 
(*)
   
 
 
 
 
 
Fixed rate
 
 
Floating rate
 
 
interest 
 
 
 
 
 
Accounts receivables
 
 
Trade and other receivables
 
  550 
  89 
  567 
  1,206 
  712 
  - 
  245 
  957 
  1,262 
  89 
  812 
  2,163 
    
 
Total
 
  550 
  89 
  567 
  1,206 
  712 
  - 
  245 
  957 
  1,262 
  89 
  812 
  2,163 
 
Liabilities
 
 
Trade and other payables
 
  - 
  - 
  1,203 
  1,203 
  1 
  - 
  18 
  19 
  1 
  - 
  1,221 
  1,222 
    
 
Borrowings
 
  18,993 
  2,309 
  357 
  21,659 
  10,143 
  466 
  (2)
  10,607 
  29,136 
  2,775 
  355 
  32,266 
    
 
Salaries and social security liabilities
 
  - 
  - 
  6 
  6 
  - 
  - 
  - 
  - 
  - 
  - 
  6 
  6 
    
 
Provisions
 
  - 
  - 
  35 
  35 
  - 
  - 
  981 
  981 
  - 
  - 
  1,016 
  1,016 
    
 
Lease liabilities
 
  1 
  - 
  - 
  1 
  - 
  - 
  - 
  - 
  1 
  - 
  - 
  1 
    
 
Total
 
  18,994 
  2,309 
  1,601 
  22,904 
  10,144 
  466 
  997 
  11,607 
  29,138 
  2,775 
  2,598 
  34,511 
 
(*) Includes the balance as of 09.30.2020 of the interest payable corresponding to the loans.
 
 
61
RSA Inversiones y Representaciones Sociedad Anónima
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations and Section 12,
Chapter III, Title IV of the National Securities Commission Regulations
Statement of Financial Position as of September 30, 2020
(Stated in millions)
Free translation from the original prepared in Spanish for publication in Argentina
 
5. 
Related parties.
 
a.
Interest in related parties:
 
Name of the entity
 
% ownership interest of the Group
 
Entity's with direct ownership interest of IRSA:
 
 
 
IRSA CP
  79.27%
E-commerce Latina S.A.
  96.74%
Efanur S.A.
  100.00%
Hoteles Argentinos S.A.
  100.00%
Inversora Bolívar S.A.
  95.13%
Llao Llao Resort S.A.
  50.00%
Nuevas Fronteras S.A.
  76.34%
Palermo Invest S.A.
  97.00%
Ritelco S.A.
  100.00%
Tyrus S.A.
  100.00%
Liveck S.A.
  9.30%
 
 
b.
Related parties debit/credit balances. See Note 21 to the Unaudited Condensed Interim Separate Financial Statements.
 
6.
Loans to Directors.
 
See Note 21 to the Unaudited Condensed Interim Separate Financial Statements.
 
7.
Physical inventory.
 
In view of the nature of the inventories, no physical inventories are performed and there are no slow turnover assets.
 
8.
Current values.
 
See Notes 7, 8 and 10 to the Unaudited Condensed Interim Separate Financial Statements.
 
9.
Appraisal revaluation of property, plant and equipment.
 
None.
 
10.
Obsolete unused property, plant and equipment.
 
None.
 
11.
Equity interest in other companies in excess of that permitted by section 31 of law N° 19,550.
 
None.
 
12.
Recovery values.
 
See Notes 6, 7, 8 and 10 to the Unaudited Condensed Interim Separate Financial Statements.
 
 
 
 
62
RSA Inversiones y Representaciones Sociedad Anónima
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations and Section 12,
Chapter III, Title IV of the National Securities Commission Regulations
Statement of Financial Position as of September 30, 2020
(Stated in millions)
Free translation from the original prepared in Spanish for publication in Argentina
13.
Insurances.
 
Insured Assets.
 
Real Estate
 
Insured amounts (1)
 
 
Accounting values
 
Risk covered
Bouchard 551
  1 
  310 
All operational risk with additional coverage and minor risks
Libertador 498
  3 
  228 
All operational risk with additional coverage and minor risks
Santa María del Plata
  0.044 
  21,588 
All operational risk with additional coverage and minor risks
Abril Manor House
  3 
  51 
All operational risk with additional coverage and minor risks
Catalinas Norte Plot
  2 
  814 
All operational risk with additional coverage and minor risks
Subtotal
  9 
  22,991 
 
 
 
(1)
The insured amounts are in US Dollars.
 
In our opinion, the above-described insurance policies cover current risks adequately.
 
14.
Allowances and provisions that, taken individually or as a whole, exceed 2% of the shareholder´s equity.
 
None.
 
15.
Contingent situations at the date of the financial statements which probabilities are not remote and the effects on the Company´s financial position have not been recognized.
 
Not applicable.
 
16.
Status of the proceedings leading to the capitalization of irrevocable contributions towards future subscriptions.
 
Not applicable.
 
17.
Unpaid accumulated dividends on preferred shares.
 
None.
 
18.
Restrictions on distributions of profits.
 
According to Argentine law, 5% of the profit of the year is separated to constitute legal reserves until they reach legal capped amounts (20% of total capital). These legal reserves are not available for dividend distribution.
 
In addition, according to CNV General Resolution N° 609/12, a special reserve was constituted which cannot be released to make distributions in cash or in kind. See Note 16 to the Consolidated Financial Statements at June 30, 2020.
 
IRSA NCN due 2019 and 2020 both contain certain customary covenants and restrictions, including, among others, limitations for the incurrence of additional indebtedness, restricted payments, disposal of assets, and entering into certain transactions with related companies. Restricted payments include restrictions on the payment of dividends.
 
 
Autonomous City of Buenos Aires, Nov 17, 2020.
 
 
63
 
 
 
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: Bolívar 108 – 1st 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”), which comprise the unaudited condensed interim separate statement of financial position at September 30, 2020, the unaudited condensed interim separate statements of income and other comprehensive income, 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, 2020 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).
 
 
 
64
 
 
 
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.
 
Emphasis of matter paragraph – Investment in Israel
 
Without modifying our conclusion, we draw attention to the information included in Note 6 to the accompanying unaudited condensed interim separate financial statements regarding the recoverability of the investment in the Operations Center in Israel.
 
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 are in the process of being 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;
 
c) we have read the additional information to the notes to the unaudited condensed interim separate financial statements required by section 12, Chapter III, Title IV of the rules of the National Securities Commission, on which we have no observations to make regarding matters that are within our competence;
 
 
65
 
 
 
d) at September 30, 2020 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 1,058,161.42, which is not due at that date.
 
Autonomous City of Buenos Aires, November 17, 2020
 
 
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
 
José Daniel Abelovich
Public Accountant (UBA)
C.P.C.E. C.A.B.A. V. 102 F. 191
 

 
66
 
  
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 index and the argentine peso exchange rate against other currencies, mainly the dollar, variations in interest rates which have an impact on the cost of capital, changes in government policies, capital control and other political or economic developments 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 quarantines, among other measures. The ongoing pandemic and these extraordinary government actions 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 until November 8, 2020, more than 1,200,000 cases of infections had been confirmed in Argentina, by virtue of which the National Government implemented a series of health measures of social, preventive and mandatory isolation at the national level that began on March 19, 2020 and extended several times, most recently until November 8, 2020 inclusive in the Metropolitan Area of Buenos Aires although it has been extended in some cities in the interior of the country. Among this measures, that affected the local economy, the following stand out: the extension of the public emergency in health matters, the total closure of borders, the suspension of international and cabotage flights, the suspension of medium and long-distance land transport, the suspension of artistic and sports shows, closure of businesses not considered essential, including shopping malls and hotels.
 
This series of measures affected a large part of Argentine companies, which experienced a drop in their income and inconveniences in the payment chain. In this context, the Argentine government announced different measures aimed at alleviating the financial crisis of the companies affected by the COVID-19 pandemic. Likewise, it should be noted that, to the stagnation of the Argentine economy, a context of international crisis is added because of the COVID-19 pandemic. In this scenario, a strong contraction of the Argentine economy is expected.
 
After various negotiations between the Argentine government and the bondholders, the Argentine government announced the conclusion of a principle of agreement with the main groups of creditors, to avoid default. On August 28, 2020, the government reported that 93.55% of the holders of the total outstanding principal amount of all the bonds accepted the debt swap, and on August 31, 2020, the national government obtained the required consents to redeem and / or modify 99.01% of the total outstanding principal amount of all series of eligible bonds. As of the date of issuance of these financial statements, the new bonds are already trading on the market.
 
 
67
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
In turn, the government is challenged to achieve a successful debt renegotiation with the IMF. If Argentina achieves a favourable result and agrees to restructure its debt with the IMF, this could have a positive impact on the Argentine economy, in the medium and long term. On the contrary, the lack of an agreement with external private creditors could lead to a default of the Argentine sovereign debt and, consequently, this situation could generate limitations to the companies' ability to access new financing.
 
At the local environment, the following circumstances are displayed:
 
In August 2020, the Monthly Economic Activity Estimator (“EMAE” in Spanish) reported by the National Institute of Statistics and Censuses (“INDEC” in Spanish), registered a variation of (11.6)% compared to the same month of 2019, and 1.1% compared to the previous month.
 
The survey on market expectations prepared by the Central Bank in October 2020, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 35.8% for 2020. The analysts who confirm the REM forecast a variation in real GDP for 2020 of (11.6)%. In turn, they foresee that in 2021 economic activity will rebound in activity, reaching an economic growth of 4.5%.
 
The interannual inflation as of September 30, 2020 reached 36.6%.
 
In the period from September 2019 to September 2020, the argentine peso depreciated 32.3% against the US dollar according to the wholesale average exchange rate of Argentine Nation Bank. Given the exchange restrictions in force since August 2019, as of September 30, 2020 there is an exchange gap of approximately 82% 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 Central Bank of the Argentine Republic. 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 foreign exchange necessary to meet its financial obligations.
 
On September 15, 2020, the Central Bank of the Argentine Republic (“BCRA”) published Communications “A” 7105 and 7106, which establishes, among other measures, that those who register financial debts with capital maturities in foreign currency scheduled between 10.15.2020 and 03.31.2021, they had to submit a refinancing plan to the BCRA based on the following criteria: (a) that the net amount for which the exchangemarket will be accessed in the original terms will not exceed 40% of the amount of capital maturing in the period indicated above, and (b) that the rest of the capital is, as a minimum, refinanced with a new external debt with an average life of 2 years, provided that the new debt is settled in the market of changes. It is worth mentioning that for the maturities to be registered from the effective date of the communication (September 16, 2020) and until 12.31.2020, the refinancing plan must be submitted prior to 09.30.2020; and the submission deadline for the remaining maturities -between January 1, 2021 and March 31, 2021, must be submitted with a term of at least 30 calendar days before the maturity of the capital to be refinanced.
 
COVID-19 pandemic
 
As described above, the COVID-19 pandemic is adversely impacting both the global economy and the Argentine economy and the Group's business.
 
The current estimated impacts of the COVID-19 pandemic on the Company as of the date of these financial statements are set out below:
 
Because of the social, preventive and obligatory lockdown, shopping malls throughout the country were closed since March 20, 2020, exclusively remaining operational those stores dedicated to activities considered essential such as pharmacies, supermarkets and banks. The reopening of shopping malls in the interior of the country began during the months of May, June, and July. In August 2020, the Arcos District, an open-air premium outlet in the city of Buenos Aires, was opened and in October 2020, the Group’s shopping malls opened in the City and Greater Buenos Aires. As of October 31, 2020, all the Group’s shopping malls were open operating under strict protocols. However, the uncertainty of the situation could cause setbacks in the openings already made, as happened in some shopping malls in the interior of the country in previous months due to the increase in cases in those regions.
 
 
68
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 

Given the closure of the shopping malls, the Group has decided to condone the billing and collection of the Insured Monthly Value until September 30, 2020, with some exceptions and to subsidize the collective promotion fund during the same period, prioritizing the long-term relationship with its tenants. Additionally, an increase in the delinquency rates of some tenants has been detected. As a result of the above, the impact on shopping malls is a 82.4% decrease in rental and service income during the first quarter of fiscal year 2021 compared to the same period of last fiscal year, and a 12.6% increase compared to the immediately preceding quarter. Additionally, the charge for bad debts in the first quarter of fiscal year 2012 is ARS 40 million and ARS 37 million in the same period of previous fiscal year.
 
In relation to the offices business, although most of the tenants are working in the home office mode, they are operational with strict safety and hygiene protocols. To date, we have not evidenced a deterioration in collections.
 
La Rural, the Buenos Aires and Punta del Este Convention Centers and the DIRECTV Arena stadium, establishments that the Group owns directly or indirectly, have also been closed since March 20. All planned congresses were suspended, most of the fairs and conventions have been postponed, while the shows scheduled at the DIRECTV Arena stadium were mostly cancelled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
 
The Libertador hotel in the City of Buenos Aires and Llao Llao in the province of Río Negro have temporarily closed since the mandatory lockdown decreed in March 2020, while the Intercontinental Hotel in the City of Buenos Aires has worked only under a contingency and emergency plan. As a result of the above, the impact on these financial statements is a 99% decrease in revenues compared to same period of previous fiscal year After the end of first quarter of fiscal year 2021, on November 16, the Llao Llao Hotel opened its doors operating under strict protocols. It is expected that the hotels in the city of Buenos Aires will gradually begin to restart their activity in the coming months.
 
In financial matters, in May and July 2020, IRSA has issued Notes in the local market for an approximate amount of USD 105.4 million. With those proceeds, the Company canceled its Series II Notes for a nominal value of USD 71.4 million maturing on July 20, 2020 and Series II Notes for a nominal value of CLP 31,502.6 million (equivalent to approximately USD 41 million) maturing on August 6, 2020. On the other hand, IRSA CP canceled its Series IV Notes on September 14 for a nominal value of USD 140 million.
 
The maturity of IRSA Series I notes for a nominal value of USD 181.5 million falls within the period contemplated by communication “A” 7106 of the BCRA mentioned above. In this sense, IRSA presented a proposal to the BCRA in the corresponding terms and carried out an exchange operation through the payment in cash of USD 72.6 million and the issuance of two new series of Notes: Series VIII and Series IX for a nominal value of USD 31.7 million and USD 80.7 million (including USD 6.5 million of new subscriptions). The exchange offer was accepted by 98.3%
 
In the next 12 months, IRSA faces the maturity of its Series III Notes for a nominal value of ARS 354 million (equivalent to USD 4.6 million) maturing on February 21, 2021, Series IV Notes for a nominal value of USD 51.4 million maturing on May 21, 2021, Series VI Notes for a nominal value of ARS 335 million (equivalent to USD 4.4 million) maturing on July 21, 2021, bank overdrafts for an amount equivalent to USD 22.0 million and other banking debt for USD 11.8 million. For its part, IRSA CP has maturities of banking debt for the approximate sum of USD 72.7 million.
 
 
 
69
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
It is important to mention that IRSA has approved with IRSA CP a credit line for up to USD 180 million over 3 years, of which as of September 30, 2020 IRSA used approximately USD 104.5 million, leaving the balance available. Additionally, at the Annual Shareholders Meeting, held on October 26, 2020, IRSA CP approved the distribution of a cash dividend of ARS 9,700 million that will be paid on November 25. As of September 30, IRSA owned an 80.65% stake in IRSA CP.
 
The final extent of the Coronavirus outbreak and its impact on the country's economy is unknown and difficult to fully predict. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Company’s ability to meet financial commitments for the next twelve months.
 
The Company is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.
 
 
 
70
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
Consolidated Results
 
(in millions of ARS)
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Revenues
  1,609 
  4,487 
  -64.1%
Net gain from fair value adjustment of investment properties
  24,089 
  12,349 
  95.1%
Profit from operations
  23,489 
  14,142 
  66.1%
Depreciation and amortization
  122 
  119 
  2.5%
EBITDA(1)
  23,611 
  14,261 
  65.6%
Adjusted EBITDA(1)
  4,876 
  1,912 
  155.0%
Profit of the Period from continuing operations
  14,736 
  1,130 
  1,204.1%
Result of the Period from discontinued operations
  -6,396 
  13,887 
  -146.1%
Profit of the period
  8,340 
  15,017 
  -44.5%
Attributable to equity holders of the parent
  6,615 
  4,509 
  46.7%
Attributable to non-controlling interest
  1,725 
  10,508 
  -83.6%
(1) See Point XIX: EBITDA Reconciliation
 
Company’s income decreased by 64.1% during the first quarter of fiscal year 2021 compared to the same period of 2020 mainly due to the impact of COVID-19 pandemic in our subsidiary IRSA CP Shopping Malls segment that straightly affected operations, while adjusted EBITDA increased 155.0% mainly explained by Sales and Developments segment whose adjusted EBITDA reached ARS 4,923 million because of Bouchard 710 and Boston Tower’s office sales made by IRSA CP. Rental segments Adjusted EBITDA reached ARS 92 million, negative ARS 150 million from the Shopping Malls segment, ARS 386 million from the Offices segment, and negative ARS 144 million from Hotels Segment, which represents a decrease of 96% compared to the same period of previous fiscal year.
 
The net result for the first quarter of fiscal year 2021 recorded a gain of ARS 8,340 million compared to ARS 15,017 million in the same period of 2020, which implies a decrease of 44.5%. The profit from continuing operations shows a gain of ARS 14,736 million, compared to a gain of ARS 1,130 million in the same period of the previous fiscal year, which implies an increase of 1,204.1%. This significant increase is explained by higher results from changes in the fair value of investment properties, partially offset by the decrease in income from the Shopping Malls segment of our subsidiary IRSA CP. On the other hand, the result of discontinued operations reflects a loss of ARS 6,396 million because of the deconsolidation of the investment in Israel as of September 30, 2020, explained by the operating result for the period and the loss due to the derecognition of remaining assets and associated reserves. For more information see “Material and Subsequent Events”.
 
II. Shopping Malls (through our subsidiary IRSA Propiedades Comerciales S.A.)
 
During the first quarter of fiscal year 2020, our tenants’ sales reached ARS 5,174 million, 79.4% lower, in real terms, than the same period of 2020. Compared to the immediately previous quarter (IVQ20), there is an increase of 207% in real terms due to the reopening of some of the company's shopping centers that were operating as of September 30, 2020. These reopening began in the interior of the country during the months of May, June, and July 2020. In August, the Arcos District, an open-air premium outlet in the city of Buenos Aires, was opened and after the end of the quarter, In October 2020, the Group's shopping centers opened in the City and Greater Buenos Aires. As of October 31, 2020, all Group's shopping centers were open, operating with rigorous protocols.
 
 
 
71
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
Our portfolio’s leasable area totaled 333,345 sqm during the quarter, in line with the same period of previous fiscal year. Portfolio’s occupancy remained at approximately 92.8%.
 
Shopping Malls’ Operating Indicators
 
(in ARS million, except indicated)
 
IQ 21
 
 
IVQ 20
 
 
IIIQ 20
 
 
IIQ 20
 
 
IQ 20
 
Gross leasable area (sqm)
  333,345 
  333,062 
  332,642 
  332,812 
  332,277 
Tenants’ sales (3 months cumulative)
  5,174 
  1,686 
  18,381 
  30,140 
  25,113 
Occupancy
  92.8%
  93.2%
  94.8%
  95.0%
  94.3%
 
Shopping Malls’ Financial Indicators
 
(in millions of ARS)
 
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Revenues from sales, leases, and services
  367 
  2,085 
  -82.4%
Net result from fair value adjustment on investment properties
  1,178 
  601 
  96.0%
Result from operations
  986 
  2,082 
  -52.6%
Depreciation and amortization
  42 
  37 
  13.5%
EBITDA (1)
  1,028 
  2,119 
  -51.5%
Adjusted EBITDA (1)
  (150)
  1,518 
  -109.9%
(1) See Point XIX: EBITDA Reconciliation
 
Income from this segment decreased 82.4% during the first quarter of fiscal year 2021, compared with same period of previous fiscal year, mainly explained by the closure of operations due to COVID-19 from March 20 to October 14, 2020, date from which all the company’s shopping malls are operational.
 
Adjusted EBITDA was negative by ARS 150 million, a 109.9% decrease when compared to the same period of fiscal year 2020 as a direct consequence of the impact of the COVID-19 pandemic on operations.
 
Operating data of our Shopping Malls
 
 
Date of opening
Location
 
Gross Leasable Area sqm (1)
 
 
Stores
 
 
Occupancy Rate (2)
 
 
IRSA CP’s Interest (3)
 
Alto Palermo
Dec-97
City of Buenos Aires
  18,655 
  136 
  94.5%
  100%
Abasto Shopping(4)
Nov-99
City of Buenos Aires
  36,761 
  163 
  94.6%
  100%
Alto Avellaneda
Dec-97
Province of Buenos Aires
  38,801 
  126 
  96.2%
  100%
Alcorta Shopping
Jun-97
City of Buenos Aires
  15,725 
  114 
  97.4%
  100%
Patio Bullrich
Oct-98
City of Buenos Aires
  11,396 
  89 
  89.7%
  100%
Dot Baires Shopping
May-09
City of Buenos Aires
  48,805 
  164 
  71.7%
  80%
Soleil
Jul-10
Province of Buenos Aires
  15,156 
  79 
  95.9%
  100%
Distrito Arcos
Dec-14
City of Buenos Aires
  14,335 
  65 
  100.0%
  90.0%
Alto Noa Shopping
Mar-95
Salta
  19,313 
  85 
  99.6%
  100%
Alto Rosario Shopping(4)
Nov-04
Santa Fe
  33,682 
  140 
  98.3%
  100%
Mendoza Plaza Shopping
Dec-94
Mendoza
  43,123 
  127 
  96.0%
  100%
Córdoba Shopping
Dec-06
Córdoba
  15,361 
  104 
  98.1%
  100%
La Ribera Shopping
Aug-11
Santa Fe
  10,530 
  70 
  97.4%
  50%
Alto Comahue
Mar-15
Neuquén
  11,702 
  95 
  93.9%
  99.95%
Patio Olmos(6)
Sep-07
Córdoba
    
    
    
    
Total
 
 
  333,345 
  1,557 
  92.8%
    
(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 and 1,261 square meters in Alto Rosario).
(5) IRSA CP owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party.
 
 
72
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
Cumulative tenants’ sales as of September 30
 
(per Shopping Mall, in ARS. million)
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Alto Palermo
  127 
  3,116 
  -95.9%
Abasto Shopping
  94 
  3,231 
  -97.1%
Alto Avellaneda
  92 
  2,829 
  -96.7%
Alcorta Shopping
  17 
  1,765 
  -99.0%
Patio Bullrich
  168 
  1,193 
  -85.9%
Dot Baires Shopping
  83 
  2,390 
  -96.5%
Soleil
  184 
  1,377 
  -86.6%
Distrito Arcos
  500 
  1,491 
  -66.5%
Alto Noa Shopping
  653 
  1,099 
  -40.6%
Alto Rosario Shopping
  1,230 
  2,509 
  -51.0%
Mendoza Plaza Shopping
  1,226 
  1,971 
  -37.8%
Córdoba Shopping
  506 
  771 
  -34.4%
La Ribera Shopping(1)
  142 
  572 
  -75.2%
Alto Comahue
  152 
  799 
  -81.0%
Total
  5,174 
  25,113 
  -79.4%
(1) Through our joint venture Nuevo Puerto Santa Fe S.A.
 
Cumulative tenants’ sales per type of business
 
(per Type of Business. in ARS million)
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Anchor Store
  381 
  1,327 
  -71.3%
Clothes and Footwear
  2,477 
  13,575 
  -81.8%
Entertainment
  - 
  1,047 
  -100.0%
Home
  143 
  493 
  -71.0%
Restaurant
  452 
  3,065 
  -85.3%
Miscellaneous
  939 
  3,140 
  -70.1%
Services
  23 
  296 
  -92.2%
Electronic appliances
  759 
  2,170 
  -65.0%
Total
  5,174 
  25,113 
  -79.4%
 
Detailed Revenues as of September 30
 
(in ARS million) 
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Base Rent (1)
  65 
  1,045 
  -93.8%
Percentage Rent
  63 
  499 
  -87.4%
Total Rent
  128 
  1,544 
  -91.7%
Revenues from non-traditional advertising
  33 
  56 
  -41.1%
Admission rights
  146 
  263 
  -44.5%
Fees
  25 
  29 
  -13.8%
Parking
  3 
  122 
  -97.5%
Commissions
  29 
  56 
  -48.2%
Others
  3 
  15 
  -80.0%
Subtotal (2)
  367 
  2,085 
  -82.4%
Expenses and Collective Promotion Funds
  354 
  844 
  -58.1%
Total
  721 
  2,929 
  -75.4%
(1) Includes Revenues from stands for ARS 43.8 million cumulative as of September 2020
(2) Does not include Patio Olmos.
 
 
73
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
III. Offices
 
The corporate activity carried out remotely or virtual work that characterized this stage of confinement by COVID-19 brought with it a combination of lower demand, increased vacancy that reached 11.3%, 1.1 bps higher than previous quarter, and a slight decrease in the rental prices of category A + and A office buildings in Buenos Aires, which went from USD 26.3 to USD 26.0 for this quarter.
 
Offices’ Operating Indicators
 
 
 
IQ 21
 
 
IVQ 20
 
 
IIIQ 20
 
 
IIQ 20
 
 
IQ 20
 
Leasable area
  93,144 
  115,640 
  115,640 
  115,640 
  115,640 
Total Occupancy
  83.7%
  86.1%
  87.0%
  88.7%
  88.1%
Class A+ & A Occupancy
  91.6%
  93.0%
  93.9%
  97.1%
  96.6%
Class B Occupancy
  53.6%
  52.4%
  53.2%
  47.5%
  46.2%
Rent USD/sqm
  26.0 
  26.6 
  26.6 
  26.9 
  26.6 
 
Gross leasable area was 93,144 sqm as of the three-month period of fiscal year 2021, highly decreased when compared to the same period of previous year due to the sale of Bouchard Building and six floors sales of the Boston Tower.
 
Portfolio average occupancy decreases compared to previous quarters reaching 83.7%, mainly due to a slightly higher vacancy in our premium portfolio (class A+&A), mainly motivated by the sale of 100% occupied Boston Tower floors. Category B offices increased 1.3 bps their occupancy. The average rental price reached USD 26.0 per sqm, slightly below previous quarters.
 
Offices’ Financial Indicators
 
(in ARS million) 
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Revenues from sales, leases and services
  541 
  697 
  -22.4%
Net gain from fair value adjustment on investment properties, PP&E e inventories
  13,112 
  6,845 
  91.6%
Profit from operations
  13,483 
  7,413 
  81.9%
Depreciation and amortization
  15 
  7 
  114.3%
EBITDA(1)
  13,498 
  7,420 
  81.9%
Adjusted EBITDA (1)
  386 
  575 
  -32.9%
(1) See Point XIX: EBITDA Reconciliation
 
In real terms, during the first quarter of fiscal year 2021, revenues from the offices segment decreased by 22.4% compared to the same period of 2020.
 
Adjusted EBITDA from this segment diminished 32.9% compared to the same period of the previous year due to the decrease in revenues related to the sale of offices floors, decrease in occupancy, and increase in commercial bonuses. Adjusted EBITDA margin was 71.3%, 11.2 bps higher than the same period of previous year.
 
 
 
74
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
Below is information on our Office segment and other rental properties as of September 30, 2020.
 
Offices & Others
Date of Acquisition
 
Gross Leasable Area (sqm)(1)
 
 
Occupancy (2)
 
 
IRSA CP’s Actual Interest
 
 
IQ 21 - Rental revenues (ARS thousand)
 
AAA & A Offices
 
 
 
 
 
 
 
 
 
 
 
 
 
República Building
Apr-08
  19,885 
  86.9%
  100%
  115,706 
BankBoston Tower
Aug-07
  7,383 
  85.6%
  100%
  71,721 
Intercontinental Plaza(3)
Nov-97
  2,979 
  100.0%
  100%
  31,654 
Bouchard 710
Jun-05
  - 
  - 
  100%
  31,066 
Dot Building
Nov-06
  11,242 
  84.9%
  80%
  55,714 
Zetta
May-19
  32,173 
  97.5%
  80%
  188,072 
Total AAA & A Offices
 
  73,662 
  91.6%
    
  493,933 
 
    
    
    
    
B Offices
 
    
    
    
    
Philips
Jun-17
  8,017 
  85.8%
  100%
  8,574 
Suipacha 652/64
Nov-91
  11,465 
  31.2%
  100%
  27,684 
Total B Buildings
 
  19,482 
  53.6%
    
  36,258 
Subtotal Offices
 
  93,144 
  83.7%
    
  530,191 
 
    
    
    
    
Other rental properties(4)
 
    
    
    
  10,150 
Total Offices
 
  93,144 
  83.7%
    
  540,341 
(1) Corresponds to the total leasable surface area of each property as of September 30, 2020. Excludes common areas and parking spaces.
(2) Calculated by dividing occupied square meters by leasable area as of September 30, 2020.
(3) We own 13.2% of the building that has 22,535 square meters of gross rental area.
(4) Includes rental income from 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).
 
IV. Sales and Developments
 
(in millions of ARS)
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Revenues
  39 
  83 
  -53.0%
Net gain from fair value adjustment on investment properties
  10,096 
  5,153 
  95.9%
Profit from operations
  9,661 
  5,045 
  91.5%
Depreciation and amortization
  4 
  12 
  -66.7%
Net realized gain from fair value adjustment on investment properties
  5,354 
  - 
  - 
EBITDA(1)
  9,665 
  5,057 
  91.1%
Adjusted EBITDA(1)
  4,923 
  -96 
  - 
(1) See Point XIX: EBITDA Reconciliation
 
Revenues from the “Sales and Development” segment decreased 53.0% during the first quarter of fiscal year 2021 compared to the same period of previous year, due to a drop in Catalinas' revenue recognition because of a lesser work progress when compared to the same period of last fiscal year. Adjusted EBITDA of the segment was a ARS 4,923 million gain, mainly explained by the impact of the realized fair value of the sales of Bouchard 710 and Boston Tower sqm, compared to a ARS 96 million loss in the same period of fiscal year 2020.
 
 
 
Investment Properties Sales
 
Office Buildings
Date
 
Floors
 
 
GLA
 
 
Price
(USD MM)
 
 
Price sqm
(USD)
 
Bouchard 710 – Total
Jul-2020
  12 
  15,014 
  87.2 
  5,800 
Boston Tower – Partial
Jul & Aug-2020
  6 
  7,482 
  41.4 
  5,530 
IQ21 Sales
 
    
  22,496 
  128.6 
    
Boston Tower - Remaining
Nov-2020
  7 
  7,158 
  42.0(1)
  5,710 
Subsequent Sales
 
    
  7,158 
  42.0 
    
(1) Includes the value of a retail store for USD 1.1 million.
 
 
 
75
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
V. CAPEX (through our subsidiary IRSA Propiedades Comerciales S.A.)
 
The works that the company had in progress before the emergence of COVID-19 have been suspended due to the interruption of construction activity in the city of Buenos Aires on March 20. To date, the works were resumed in their entirety, operating with all the protocols in force.
 
200 Della Paolera - Catalinas building
 
The building under construction will have 35,000 sqm of GLA consisting of 30 office floors and 316 parking spaces and is located in the “Catalinas” area in the City of Buenos Aires, one of the most sought-after spots for Premium office development in Argentina. The company owns 28,051 square meters consisting of 24 floors and 272 parking spaces in the building. The total estimated investment in the project amounts to ARS 2,600 million and as of today, work progress is 97%.
 
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 today is 66% and construction works are expected to be finished by June 2021.
 
VI. Hotels
 
Hotels segment has also been affected by the social, preventive, and mandatory isolation decreed by the Argentine government as of March 20, 2020, together with the closure of borders and the arrival of tourism. The Libertador hotel in the City of Buenos Aires and Llao Llao in the province of Río Negro have temporarily closed since the mandatory lockdown decreed in March 2020, while the Intercontinental Hotel in the City of Buenos Aires has worked only under a contingency and emergency plan. After the end of first quarter of fiscal year 2021, on November 16, the Llao Llao Hotel opened its doors operating under strict protocols. It is expected that the hotels in the city of Buenos Aires will gradually begin to restart their activity in the coming months.
 
(in millions of ARS)
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Revenues
  6 
  701 
  -99.1%
Profit from operations
  (191)
  84 
  -327.4%
Depreciation and amortization
  47 
  44 
  6.8%
EBITDA
  (144)
  128 
  -212.5%
 
During the first quarter of fiscal year 2021, Hotels segment recorded a decrease in revenues of 99.1% while the segment’s EBITDA reached ARS 144 million negative, a 212.5% decrease when compared to the same period of previous fiscal year.
 
The following chart shows certain information regarding our luxury hotels:
 
Hotels
 
Date of Acquisition
 
 
IRSA’s Interest
 
 
Number of rooms
 

Intercontinental (1)
 
11/01/1997
 
  76.34%
  313 
Sheraton Libertador (2)
 
03/01/1998
 
  100.00%
  200 
Llao Llao (3)
 
06/01/1997
 
  50.00%
  205 
Total
  - 
  - 
  718 
(1) Through Nuevas Fronteras S.A. (Subsidiary of IRSA).
(2) Through Hoteles Argentinos S.A.U.
(3) Through Llao Llao Resorts S.A.
 
 
 
76
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
Hotels’ operating and financial indicators
 
 
 
IQ 21
 
 
IVQ 20
 
 
IIIQ 20
 
 
IIQ 20
 
 
IQ 20
 
Average Occupancy
  0.6%
  0.6%
  52.8%
  68.1%
  61.6%
Average Rate per Room (USD/night)
  95 
  86 
  193 
  180 
  163 
 
VII. International
 
Lipstick Building, New York, United States
 
On August 7, 2020, Metropolitan signed an agreement with the owner of the Ground Lease in which it terminated the relationship, leaving the administration of the building. For this reason, Metropolitan ceases to recognize the liabilities associated with the ground lease, as well as ceases to recognize all the assets and liabilities associated with the building and the operation of the administration.
 
Investment in Condor Hospitality Inc.
 
On July 19, 2019, Condor signed an agreement and merger plan. As agreed, each Condor ordinary share, whose nominal value is USD 0.01 will be canceled before the merger and will become the right to receive a cash amount equivalent to USD 11.10 per ordinary share. Additionally, in accordance with the terms and conditions of the merger agreement, each Series E convertible share will be automatically canceled and will become entitled to receive a cash amount equal to USD 10.00 per share. The closing of the acquisition, scheduled for March 23, 2020, did not occur.
 
On October 14, 2020, Condor signed an agreement with NexPoint Hospitality Trust (“NHT”) and some of its affiliates to resolve and settle all claims between them related to the merger agreement. According to this agreement, NHT and its affiliates shall make three payments to Condor in three instalments ending on December 30, 2020 and totalling USD 7.0 million.
 
As of the date of these financial statement presentation, the group owned 2,245,100 common shares and 325,752 preferred E shares.
 
VIII. Corporate
 
(in millions of ARS)
 
IQ 21
 
 
IQ 20
 
 
YoY Var
 
Revenues
  - 
  - 
  - 
Loss from operations
  (74)
  (88)
  -15.9%
Depreciation and amortization
  1 
  1 
  - 
EBITDA
  (73)
  (87)
  -16.1%
 
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, 2020. During the first quarter of fiscal year 2021, the investment in Banco Hipotecario generated a ARS 60 million loss compared to a ARS 477 million gain during the same period of 2020. For further information, visit http://www.cnv.gob.ar or http://www.hipotecario.com.ar.
 
 
77
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
X. EBITDA by Segment (ARS million)
 
IQ 21
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Profit / (loss) from operations
  986 
  13,483 
  9,661 
  (191)
  11 
  (74)
  492 
  24,368 
Depreciation and amortization
  42 
  15 
  4 
  47 
  - 
  1 
  13 
  122 
EBITDA
  1,028 
  13,498 
  9,665 
  (144)
  11 
  (73)
  505 
  24,490 
 
IQ 20
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Profit / (loss) from operations
  2,082 
  7,413 
  5,045 
  84 
  (43)
  (88)
  257 
  14,750 
Depreciation and amortization
  37 
  7 
  12 
  44 
  1 
  1 
  10 
  112 
EBITDA
  2,119 
  7,420 
  5,057 
  128 
  (42)
  (87)
  267 
  14,862 
EBITDA Var
  -51,5%
  81,9%
  91,1%
  -212,5%
  - 
  -16,1%
  89,1%
  64,8%
 
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
  1,218 
  (8)
  405 
  (6)
  1,609 
Costs
  (651)
  14 
  (460)
  - 
  (1,097)
Gross result
  567 
  6 
  (55)
  (6)
  512 
Net loss from fair value adjustment of investment properties
  24,926 
  (837)
  - 
  - 
  24,089 
General and administrative expenses
  (654)
  1 
  - 
  9 
  (644)
Selling expenses
  (451)
  1 
  - 
  - 
  (450)
Other operating results, net
  (25)
  1 
  9 
  (3)
  (18)
Result from operations
  24,363 
  (828)
  (46)
  - 
  23,489 
Share of loss of associates and joint ventures
  (472)
  619 
  - 
  - 
  147 
Result before financial results and income tax
  23,891 
  (209)
  (46)
  - 
  23,636 
*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, 2020:
 
Description
Currency
 
Amount (USD MM) (1)
 
 
Interest Rate
 
Maturity
Bank overdrafts
ARS
  22.0 
 
Floating
 
< 360 days
Series I NCN
USD
  181.5 
  10.0%
Nov-20
Series III NCN
ARS
  4.6 
 
Variable
 
Feb-21
Series IV NCN
USD
  51.4 
  7.0%
May-21
Series VI NCN
ARS
  4.4 
 
Floating
 
Jul-21
Series VII NCN
USD
  33.7 
  4.0%
Jan-22
Series V NCN
USD
  9.2 
  9.0%
May-22
Loan with IRSA CP(3)
USD
  104.5 
  - 
Mar-22
Other debt
USD
  17.6 
  - 
Feb-22
IRSA’s Total Debt
USD
  428.9 
    
 
Cash & Cash Equivalents + Investments
USD
  0.3 
    
 
IRSA’s Net Debt
USD
  428.6 
    
 
Bank loans and overdrafts
ARS
  72.7 
  - 
 < 360 days
PAMSA loan
USD
  27.0 
 
Fixed
 
Feb-23
IRSA CP NCN Class II
USD
  360.0 
  8.75%
Mar-23
IRSA CP’s Total Debt
USD
  459.7 
    
 
Cash & Cash Equivalents + Investments (2)
USD
  134.7 
    
 
Intercompany Credit
USD
  104.5 
    
 
IRSA CP’s Net Debt
USD
  220.5 
    
 
(1) 
Principal amount in USD (million) at an exchange rate of ARS 76.18/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, 2020
 
 
XIII. Material and Subsequent Events
 
July 2020: Notes issuance
 
On July 21, 2020, the company issued in the local market a total amount of USD 38.4 million through the following Notes:
 
Series VI: denominated and payable in pesos for ARS 335.2 million (equivalent at the time of issuance to USD 4.7 million) at a variable rate (private BADLAR + 4.0%) with quarterly payments. The principal will be paid in two installments: the first for an amount equivalent to 30% of the nominal value payable 9 (nine) months from the Issue and Settlement Date, and the second for an amount equivalent to 70% of the nominal value payable on the due date, July 21, 2021. Price of issuance was 100.0% of the nominal value.
 
Series VII: denominated in dollars and payable in pesos at the applicable exchange rate for USD 33.7 million at a fixed rate of 4.0%, with quarterly payments and principal expiring on January 21, 2022. Price of issuance was 100.0% of the nominal value.
 
The funds have been used to refinance short-term liabilities.
 
September 2020: Investment in IDBD and DIC
 
IDBD financial situation as of June 30, 2020 showed a negative Shareholders Equity, negative Cash Flows and a downgrade in the credit rating. In order to comply with financial liabilities, including short term debts, IDBD cash flow depended on the financial support of its controlling shareholder (Dolphin Netherlands B.V.) and the sale of assets which was not under the control of IDBD. IDBD has been keeping negotiations with financial creditors (bondholders) to restructure its financial debt in more favorable conditions.
 
As of June 30, 2020, the aggregate principal amount of the (i) IDBD Series 9 Bonds was NIS 901 million (“Series 9”), (ii) IDBD Series 14 Bonds was NIS 889 million collateralized by DIC shares owned directly or indirectly by us representing 70% of the share capital of DIC (“Series 14”), (iii) IDBD Series 15 Bonds was NIS 238million collateralized by shares of Clal representing 5% of the share capital of Clal (“Series 15”).
 
On September 7, 2020, the Company reported that, regarding the capital contributions committed for September 2, 2020 and 2021, for NIS 70 million each, it considered that there were doubts regarding the fulfilment of the previous conditions established to make said contributions. Therefore, it has resolved not to make the corresponding payment for this year.
 
On September 17, 2020, the Series 9 trustee submitted to the District Court in Tel-Aviv-Jaffa (the "Court") a petition to grant an order for the opening of proceedings for IDBD pursuant to the Insolvency and Economic Rehabilitation Law, 5778 – 2018 and to instruct the appointment of a trustee for IDBD pursuant to Section 33 and to grant the trustee any and all authority over the decision making of IDBD as well as the request of an immediate hearing to open the proceedings against IDBD (the “Petition”).
 
On September 21, 2020, the Series 14 trustee informed that the holders of Series 14 approved to make the entire uncleared balance of Series 14 repayable immediately.
 
On September 22, 2020, IDBD and Dolphin Netherlands B.V. submitted an initial response to the Petition, arguing that it was in the best interest of IDBD and its creditors to exhaust the negotiations among the controlling shareholder and its creditors during a short period with the aim to maximize the value of its assets, avoid costs and additional negative effects.
 
In addition, responses by the Series 14 trustee and the Series 15 trustee were filed requesting the enforcement of liens and the appointment of a receiver as well as an urgent hearing, which was scheduled for September 24, 2020.
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
On September 25, 2020, the Court resolved that IDBD is insolvent and has therefore resolved to grant all three orders requested and accordingly, issued an order for the initiation of proceedings and liquidation of IDBD, and has appointed a liquidator to IDBD and interim receivers over the Pledged DIC Shares and the Pledged Clal Shares. After this decision, the IDBD Board of Directors was removed from its functions, so the Group lost control on that date, proceeding to deconsolidate the financial statements.
 
October 2019: General Ordinary and Extraordinary Shareholders’ Meeting
 
At the General Ordinary and Extraordinary Shareholders’ Meeting held on October 30, 2019, the following matters, inter alia, were resolved:
 
Distribution of a dividend in kind for ARS 484 million in shares of IRSA Propiedades Comerciales, subsidiary of IRSA.
 
Designation of board members.
 
Compensations to the Board of Directors for the fiscal year ended June 30, 2020.
 
Incentive plan for employees. management and directors to be integrated without premium for up to 1% of the Capital Stock.
 
November 2020: Dividend distribution announcement
 
The company announced that a dividend in the amount of ARS 484 million was made available to the Shareholders as of November 17, 2020 payable in shares of IRSA Propiedades Comerciales SA, according to the share price of that company as of October 23, 2020 that amounts to ARS 320 per share.
 
The Company paid the sum of 1,512,500 shares of IRSA Propiedades Comerciales S.A. at a ratio of 0.00261372304655 shares IRSA Propiedades Comerciales S.A. per IRSA share and 0.0261372304655 per IRSA ADR. The dividend was charged to the fiscal year ended June 30, 2020, and was paid to all shareholders who had such quality as of November 16, 2020 according to the record kept by Caja de Valores S.A.
 
November 2020: Notes Issuance – Exchange Offer Series I Notes - BCRA “A” 7106 Communication
 
On November 12, 2020, the company carried out an exchange operation of its Series I Notes, for a nominal value of USD 181.5 million
 
Nominal Value of Existing Notes presented and accepted for the Exchange (for both Series): approximately USD 178.5 which represents 98.31% acceptance, through the participation of 6,571 orders.
 
Series VIII: Face Value of Existing Notes presented and accepted for the Exchange: approximately USD 104.3 million.
 
Nominal Value to be Issued: approximately USD 31.7 million.
 
Issuance Price: 100% nominal value.
 
Maturity Date: It will be November 12, 2023.
 
Consideration of the Exchange Offer: eligible holders whose existing notes have been accepted for the Exchange by the Company, will receive for every USD 1 submitted to the Exchange, the accrued interest of the existing notes until the settlement and issue date and the following:
 
A sum of money of approximately USD 72,6 million for repayment of capital of such existing notes presented to the Exchange, in cash, in United States Dollars, which will be equivalent to USD 0.69622593 for each USD 1 of existing notes presented to the Exchange; and
 
The remaining amount until completing 1 USD for each 1 USD of existing notes presented to the Exchange, in notes Series VIII.
 
Annual Nominal Fixed Interest Rate: 10.00%.
 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
Amortization: The capital of the Series VIII Notes will be amortized in 3 annual installments (33% of the capital on November 12, 2021, 33% of the capital on November 12, 2022, 34% of the capital on the maturity date of Series VIII).
 
Interest Payment Dates: Interest will be paid quarterly for the expired period as of the issue and settlement date.
 
Payment Address: Payment will be made to an account at Argentine Securities Commission in the Autonomous City of Buenos Aires
 
Series IX: Face Value of Existing Notes presented and accepted for the Exchange: approximately USD 74.2 million.
 
Nominal Value to be Issued (together with the Face Value to be issued as a result of the cash subscription): approximately USD 80.7 million.
 
Issuance Price: 100% nominal value.
 
Maturity Date: It will be March 1, 2023.
 
Consideration of the Exchange Offer: the eligible holders whose existing notes have been accepted for the Exchange by the Company, will receive Series IX Notes for 100% of the capital amount presented for exchange and accepted by the Company and the accrued interest of the existing notes until the settlement and issue date.
 
Early Bird: will consist of the payment of USD 0.02 for each USD 1 of existing notes delivered and accepted in the Exchange on or before the deadline date to Access the Early Bird. Said consideration will be paid in Pesos on the issue and settlement date according to the exchange rate published by Communication “A” 3500 of the Central Bank of Argentina on the business day prior to the expiration date of the Exchange, which is ARS 79.3433 for each USD 1 of Existing Notes delivered and accepted in the Exchange.
 
Annual Nominal Fixed Interest Rate: 10.00%.
 
Amortization: The capital of the Series IX Notes will be amortized in one installment on the maturity date.
 
Interest Payment Dates: Interest will be paid quarterly for the expired period from the issuance and settlement date.
 
Payment Address: Payment will be made to an account at Argentine Securities Commission in New York, United States, for which purpose the Company will make US dollars available to an account reported by the Argentine Securities Commission in said jurisdiction.
 
Modifications to the Terms of the Existing Notes: Considering that consent has been obtained for an amount greater than 90% of the existing notes capital, the Company has modified and replaced the following essential and non-essential terms and conditions of the existing notes.
 
By virtue of the implementation of the Proposed Non-Essential Modifications, the entire section of "Certain Commitments" and "Events of Default" is eliminated from the terms and conditions set forth in the prospectus supplements dated May 2, 2019 and dated July 25, 2019 corresponding to the existing notes.
 
Additionally, pursuant to the implementation of the Proposed Essential Modifications, the following terms and conditions of the Existing Notes are modified and replaced:
 
Expiration Date: It will be March 1, 2023.
 
Interest Payment Dates: will be the same dates reported for Class IX in the Notice of Results.
 
It is clarified that the terms and conditions of the Series I Notes not modified by the Proposed Essential Modifications and the Proposed Non-Essential Modifications will maintain their full validity.
 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
XIV. Summarized Comparative Consolidated Balance Sheet
 
(in ARS million) 
  09.30.2020 
  06.30.2020 
Non-current assets
  187,230 
  453,746 
Current assets
  13,185 
  221,464 
Total assets
  200,415 
  675,210 
Capital and reserves attributable to the equity holders of the parent
  70,375 
  61,500 
Non-controlling interest
  23,364 
  70,544 
Total shareholders’ equity
  93,739 
  132,044 
Non-current liabilities
  76,626 
  388,806 
Current liabilities
  30,050 
  154,360 
Total liabilities
  106,676 
  543,166 
Total liabilities and shareholders’ equity
  200,415 
  675,210 
 
XV. Summarized Comparative Consolidated Income Statement
 
 (in ARS million) 
  09.30.2020 
  09.30.2019 
Profit from operations
  23,489 
  14,142 
Share of profit of associates and joint ventures
  147 
  737 
Profit from operations before financing and taxation
  23,636 
  14,879 
Financial income
  56 
  83 
Financial cost
  (1,593)
  (1,782)
Other financial results
  624 
  (9,152)
Inflation adjustment
  (29)
  (393)
Financial results, net
  (942 
  (11,244)
Profit before income tax
  22,694 
  3,635 
Income tax
  (7,958)
  (2,505)
Profit for the period from continued operations
  14,736 
  1,130 
Profit from discontinued operations after taxes
  (6,396)
  13,887 
Profit for the period
  8,340 
  15,017 
Other comprehensive income for the period
  (8,673)
  15,847 
Total comprehensive income for the period
  (333)
  30,864 
 
    
    
Attributable to:
    
    
Equity holders of the parent
  2,914 
  3,568 
Non-controlling interest
  (3,247)
  27,296 
 
XVI. Summary Comparative Consolidated Cash Flow
 
(in ARS million) 
  09.30.2020 
  09.30.2019 
Net cash generated from operating activities
  3,362 
  10,467 
Net cash generated from investing activities
  41,441 
  3,490 
Net cash used in financing activities
  (27,144)
  (35,239)
Net increase / (decrease) in cash and cash equivalents
  17,659 
  (21,282)
Cash and cash equivalents at beginning of year
  97,276 
  93,059 
Cash and cash equivalents reclassified to held for sale
  - 
  36 
Subsidiaries deconsolidation
  (104,164)
  - 
Foreign exchange gain on cash and changes in fair value of cash equivalents
  (6,374)
  13,875 
Cash and cash equivalents at period-end
  4,397 
  85,688 
 
 
 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
 
 
XVII. Comparative Ratios
 
(in ARS million) 
  09.30.2020 
 
 
 
  09.30.2019 
 
 
 
Liquidity
    
 
 
 
    
 
 
 
CURRENT ASSETS
  13,185 
  0.44 
  224,335 
  1.62 
CURRENT LIABILITIES
  30,050 
    
  138,883 
    
Indebtedness
    
    
    
    
TOTAL LIABILITIES
  106,676 
  1.52 
  594,595 
  11.54 
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
  70,375 
    
  51,512 
    
Solvency
    
    
    
    
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
  70,375 
  0.66 
  51,512 
  0.09 
TOTAL LIABILITIES
  106,676 
    
  594,595 
    
Capital Assets
    
    
    
    
NON-CURRENT ASSETS
  187,230 
  0.93 
  484,335 
  0.68 
TOTAL ASSETS
  200,415 
    
  708,670 
    
 
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:
 
 
For the three-month period ended September 30 (in ARS million)
 
 
 
2020
 
 
2019
 
Profit for the period
  8,340 
  15,017 
(Loss) / Profit from discontinued operations
  6,396 
  (13,887)
Interest income 
  (17)
  (83)
Interest expense 
  1,485 
  1,661 
Income tax
  7,958 
  2,505 
Depreciation and amortization 
  122 
  119 
EBITDA (unaudited) 
  24,284 
  5,332 
Unrealized net gain from fair value adjustment of investment properties
  (18,735)
  (12,349)
Share of profit of associates and joint ventures 
  (147)
  (737)
Dividends earned
  (12)
  - 
Foreign exchange differences net 
  8 
  8,929 
(Gain) / loss from derivative financial instruments 
  188 
  (225)
Fair value gains of financial assets and liabilities at fair value through profit or loss
  (800)
  456 
Inflation adjustment
  29 
  393 
Other financial costs/income
  61 
  113 
Adjusted EBITDA (unaudited) 
  4,876 
  1,912 
Adjusted EBITDA Margin (unaudited)(1)
  303.05%
  42.61%
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by revenue from sales, rents and services.
 
 
 
83
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of September 30, 2020
 
XIX. Brief comment on future prospects for the Fiscal Year
 
The year 2021 is projected as a great challenge for the company due to the impact of COVID-19 pandemic in the economic activity in Argentina.
 
As is public knowledge and was mentioned at the beginning of this informative review, as a consequence of the social, preventive and compulsory lockdown, shopping malls throughout the country were closed since March 20, 2020, leaving open exclusively those stores dedicated to essential activities such as pharmacies, supermarkets and banks. This had a significant impact on the revenues of this segment in the last two quarters andwill have it in the next quarter since the company's shopping malls opened 100% in mid-October and are working under rigorous protocols that include social distancing, reduced traffic and hours, access controls, among other safety and hygiene measures. The office segment operated normally during the confinement period
 
The hotel segment has also been affected by social, preventive and mandatory lockdown. The Libertador hotel in the City of Buenos Aires and Llao Llao in the province of Río Negro have temporarily closed since March 20, while the Intercontinental Hotel in the City of Buenos Aires has only worked under a contingency and emergency plan. Subsequently, on November 16, the Llao Llao Hotel opened its doors operating under strict protocols. It is expected that the hotels in the city of Buenos Aires will gradually begin to relax their activity in the coming months.
 
Looking ahead to the next fiscal year, we will continue working on reducing and make the cost structure more efficient, hoping that the activity of shopping malls will evolve in line with the economic recovery. To date, although it is too early to evaluate a performance of the activity, we can perceive a gradual recovery in sales in our shopping malls, although progressive. Regarding the hotel business, we expect gradual openings until the regularization of air flows, which will lead to the full operations.
 
The Company’s Board of Directors will continue evaluating financial, economic and / or corporate tools that allow the Company to improve its position in the market in which it operates and to have the necessary liquidity to face its obligations. In the context of this analysis, the indicated tools may be linked to corporate reorganization processes (merger, spin-off or a combination of both), implementation of financial and / or corporate efficiencies in international companies directly or indirectly owned by the Company through reorganization processes, public and / or private disposal of assets that may include real estate as well as negotiable securities owned by the Company, incorporation of shareholders through capital increases through the public offering of shares to raise new capital, issuance of convertible negotiable obligations or subscription options or a combination of these three instruments, repurchase of shares and instruments similar to those described that are useful for the proposed objectives. All this as it was described in the Annual Report of the Company corresponding to the fiscal year ending June 30, 2020.
 
The Company keeps its commitment to preserve the health and well-being of its clients, employees, tenants and the entire population, constantly reassessing 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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