EX-1 2 a6kirsa.htm UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, AS OF SEPTEMBER 30, 2021 AND FOR THE THREE-MONTHS PERIOD ENDED SEPTEMBER 30, 2021 a6kirsa
 
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Unaudited Condensed Interim Consolidated Financial Statements as of September 30, 2021 and for the three-month period ended as of that date, presented comparatively
 
 
 
 
 
 
 
 
 
Legal information
 
 
Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
 
Fiscal year N°: 79, beginning on July 1st, 2021.
 
Legal address: 261 Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina.
 
Company activity: Real estate investment and development.
 
Date of registration of the by-laws in the Public Registry of Commerce: June 23, 1943.
 
Date of registration of last amendment of the by-laws in the Public Registry of Commerce: General Ordinary and Extraordinary Shareholders’ Meeting held on December 12, 2019 and registered in the Superintendence on October 13,2020 with the number 9896, Book 1200 Volume – of Joint Stock Companies.
 
Expiration of the Company’s by-laws: April 5, 2043.
 
Registration number with the Superintendence: 213,036.
 
Capital: 658,707,201 shares.
 
Common Stock subscribed, issued and paid up nominal value (in millions of ARS): 659.
 
Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
(Cresud S.A.C.I.F. y A.).
 
Legal Address: 261 Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina.
 
Main activity: Real estate, agricultural, commercial and financial activities.
 
Direct and indirect interest of the Parent Company on the capital stock: 408,746,837 common shares.
 
Percentage of votes of the Parent Company (direct and indirect interest) on the shareholders’ equity: 62.22% (1).
 
 
Type of stock
CAPITAL STATUS
Shares authorized for Public Offering (2)
Subscribed, issued and paid up nominal value
(in millions of Pesos)
Common stock with a face value of ARS 1 per share and entitled to 1 vote each
658,707,201
659
 
(1) For computation purposes, treasury shares have been subtracted.
(2) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
 
 
 
 
Index
 
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 
 
8
Note 4 – Acquisitions and disposals 
 
8
Note 5 – Financial risk management and fair value estimates 
 
10
Note 6 – Segment information 
 
10
Note 7 – Investments in associates and joint ventures 
 
12
Note 8 – Investment properties 
 
13
Note 9 – Property, plant and equipment 
 
15
Note 10 – Trading properties 
 
15
Note 11 – Intangible assets 
 
16
Note 12 – Right-of-use assets 
 
16
Note 13 – Financial instruments by category 
 
17
Note 14 – Trade and other receivables 
 
19
Note 15 – Cash flow information 
 
19
Note 16 – Trade and other payables 
 
20
Note 17 – Borrowings 
 
20
Note 18 – Provisions 
 
21
Note 19 – Taxes 
 
21
Note 20 – Revenues 
 
22
Note 21 – Expenses by nature 
 
22
Note 22 – Cost of goods sold and services provided 
 
23
Note 23 – Other operating results, net 
 
23
Note 24 – Financial results, net 
 
23
Note 25 – Related party transactions 
 
24
Note 26 – CNV General Resolution N° 622 
 
26
Note 27 – Foreign currency assets and liabilities 
 
26
Note 28 – Results from discontinued operations 
 
27
Note 29 – Other significant events of the period 
 
27
Note 30 – Subsequent Events 
 
29
 
 
Glossary
 
The following are not technical definitions, but help the reader to understand certain terms used in the wording of the notes to the Group´s Financial Statements.
 
Terms
 
Definitions
BACS
 
Banco de Crédito y Securitización S.A.
BHSA
 
Banco Hipotecario S.A.
Clal
 
Clal Holdings Insurance Enterprises Ltd.
CNV
 
Securities Exchange Commission
CPF
 
Collective Promotion Funds
Condor
 
Condor Hospitality Trust Inc.
Cresud
 
Cresud S.A.C.I.F. y A.
DIC
 
Discount Investment Corporation Ltd.
Efanur
 
Efanur S.A.
Financial Statements
 
Unaudited Condensed Interim Consolidated Financial Statements
Annual Financial Statements
 
Consolidated Financial Statements as of June 30, 2019
HASAU
 
Hoteles Argentinos S.A.U.
IAS
 
International Accounting Standards
IASB
 
International Accounting Standards Board
IDBD
 
IDB Development Corporation Ltd.
IFRS
 
International Financial Reporting Standards
IRSA, The Company”, “Us”, “We”
 
IRSA Inversiones y Representaciones Sociedad Anónima
IRSA CP
 
IRSA Propiedades Comerciales S.A.
MPIT
 
Minimum presumed income tax
NCN
 
Non-convertible notes
New Lipstick
 
New Lipstick LLC
NIS
 
New Israeli Shekel
Quality
 
Quality Invest S.A.
Shufersal
 
Shufersal Ltd.
TGLT
 
TGLT S.A.
Tyrus
 
Tyrus S.A.
 
 
 
1
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of September 30, 2021 and June 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Note
  09.30.2021 
  06.30.2021 
ASSETS
 
    
    
Non-current assets
 
    
    
Investment properties
8
  193,895 
  200,154 
Property, plant and equipment
9
  4,521 
  4,531 
Trading properties
10, 22
  1,803 
  1,797 
Intangible assets
11
  2,480 
  2,623 
Right-of-use assets
12
  871 
  886 
Investments in associates and joint ventures
7
  13,616 
  13,294 
Deferred income tax assets
19
  560 
  487 
Income tax and MPIT credit
 
  28 
  33 
Trade and other receivables
14
  3,339 
  3,111 
Investments in financial assets
13
  683 
  1,331 
Total non-current assets
 
  221,796 
  228,247 
Current assets
 
    
    
Trading properties
10, 22
  125 
  125 
Inventories
22
  76 
  79 
Income tax and MPIT credit
 
  153 
  180 
Trade and other receivables
14
  9,302 
  9,262 
Investments in financial assets
13
  3,499 
  3,460 
Cash and cash equivalents
13
  2,153 
  2,110 
Total current assets
 
  15,308 
  15,216 
TOTAL ASSETS
 
  237,104 
  243,463 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity attributable to equity holders of the parent (according to corresponding statement)
 
  66,801 
  67,572 
Non-controlling interest
 
  22,423 
  22,831 
TOTAL SHAREHOLDERS’ EQUITY
 
  89,224 
  90,403 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Borrowings
17
  51,226 
  51,061 
Lease liabilities
 
  830 
  932 
Deferred income tax liabilities
19
  71,311 
  75,130 
Trade and other payables
16
  1,702 
  1,516 
Income tax and MPIT liabilities
 
  1,367 
  - 
Provisions
18
  101 
  125 
Derivative financial instruments
13
  4 
  10 
Salaries and social security liabilities
 
  88 
  94 
Total non-current liabilities
 
  126,629 
  128,868 
Current liabilities
 
    
    
Trade and other payables
16
  5,752 
  5,577 
Borrowings
17
  13,856 
  16,839 
Lease liabilities
 
  114 
  59 
Provisions
18
  147 
  161 
Salaries and social security liabilities
 
  400 
  476 
Income tax and MPIT liabilities
 
  941 
  1,028 
Derivative financial instruments
13
  41 
  52 
Total current liabilities
 
  21,251 
  24,192 
TOTAL LIABILITIES
 
  147,880 
  153,060 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  237,104 
  243,463 
  
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima
 
 
 
 
 


By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
 
 
 
2
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
for the three-month period ended September 30, 2021 and 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Three months
 
 
Note
  09.30.2021 
  09.30.2020 
Revenues
20
  4,382 
  2,453 
Costs
21, 22
  (1,754)
  (1,673)
Gross profit
 
  2,628 
  780 
Net (loss) / gain from fair value adjustment of investment properties
8
  (6,494)
  36,728 
General and administrative expenses
21
  (737)
  (982)
Selling expenses
21
  (338)
  (686)
Other operating results, net
23
  252 
  16 
(Loss) / profit from operations
 
  (4,689)
  35,856 
Share of (loss) / profit of associates and joint ventures
7
  (155)
  225 
(Loss) / income before financial results and income tax
 
  (4,844)
  36,081 
Finance income
24
  62 
  86 
Finance costs
24
  (2,004)
  (2,429)
Other financial results
24
  2,966 
  952 
Inflation adjustment
24
  340 
  (89)
Financial results, net
 
  1,364 
  (1,480)
(Loss) / profit before income tax
 
  (3,480)
  34,601 
Income tax
19
  2,466 
  (12,133)
(Loss) / profit for the period from continuing operations
 
  (1,014)
  22,468 
Loss for the period from discontinued operations
28
  - 
  (9,752)
(Loss) / profit for the period
 
  (1,014)
  12,716 
Other comprehensive income:
 
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
Currency translation adjustment
 
  (164)
  (720)
Other comprehensive (loss) / income for the period from continuing operations
 
  (164)
  (720)
Other comprehensive income for the period from discontinued operations
 
  - 
  (12,503)
Total other comprehensive loss for the period
 
  (164)
  (13,223)
Total comprehensive loss for the period
 
  (1,178)
  (507)
 
    
    
Total comprehensive (loss) / income from continuing operations
 
  (1,178)
  21,748 
Total comprehensive income from discontinued operations
 
  - 
  (22,255)
Total comprehensive loss for the period
 
  (1,178)
  (507)
 
    
    
(Loss) / profit for the period attributable to:
 
    
    
Equity holders of the parent
 
  (600)
  10,086 
Non-controlling interest
 
  (414)
  2,630 
 
    
    
Profit / (loss) from continuing operations attributable to:
 
    
    
Equity holders of the parent
 
  (600)
  17,788 
Non-controlling interest
 
  (414)
  4,680 
 
    
    
Total comprehensive (Loss) / income attributable to:
 
    
    
Equity holders of the parent
 
  (762)
  4,443 
Non-controlling interest
 
  (416)
  (4,950)
 
    
    
Total comprehensive (Loss) / income from continuing operations attributable to:
 
    
    
Equity holders of the parent
 
  (762)
  18,257 
Non-controlling interest
 
  (416)
  3,491 
 
    
    
(Loss) / profit per share attributable to equity holders of the parent: (i)
 
    
    
Basic
 
  (0.91)
  17.53 
Diluted
 
  (0.91)
  17.48 
 
    
    
(Loss) / profit per share from continuing operations attributable to equity holders of the parent: (i)
 
    
    
Basic
 
  (0.91)
  30.92 
Diluted
 
  (0.91)
  30.83 
 
(i) The loss/profit per share have been calculated using 656,700,315 shares at 09.30.21 and 575,377,891 at 09.30.20. If 656,700,315 shares had been used for the calculation, the result per share would be ARS 15.36 for 09.30.20. See note 17 to the Annual Financial Statements.
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima
 
 
 
 
 


By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
 
 
 
3
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Attributable to equity holders of the parent
 
 
 
 
 
 
 
 
 
Share capital
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (i)
 
 
 Warrants (iii)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Legal reserve
 
 
Special reserve Resolution CNV 609/12 (ii)
 
 
Other reserves (iv)
 
 
Accumulated deficit
 
 
Subtotal
 
 
Non-controlling interest
 
 
Total Shareholders’ equity
 
Balance as of July 1, 2021
  657 
  2 
  22,596 
  1,944 
  26,347 
  162 
  1,752 
  15,432 
  29,827 
  (31,147)
  67,572 
  22,831 
  90,403 
Loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (600)
  (600)
  (414)
  (1,014)
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (162)
  - 
  (162)
  (2)
  (164)
Total (loss) and other comprehensive (loss) for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (162)
  (600)
  (762)
  (416)
  (1,178)
Warrants exercise (iii)
  - 
  - 
  - 
  (1)
  3 
  - 
  - 
  - 
  - 
  - 
  2 
  - 
  2 
Capitalisation of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  8 
  8 
Other changes in equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (9)
  - 
  (9)
  - 
  (9)
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2)
  - 
  (2)
  - 
  (2)
Balance as of September 30, 2021
  657 
  2 
  22,596 
  1,943 
  26,350 
  162 
  1,752 
  15,432 
  29,654 
  (31,747)
  66,801 
  22,423 
  89,224 
 
(i) Includes ARS 1 of Inflation adjustment of treasury shares. See Note 17 to the Annual Financial Statements.
(ii) Related to CNV General Resolution N° 609/12.
(iii) Between September 17,2021 and September 25,2021, 30,741 warrants were exercised so the equivalent in shares was issued.
(iv) Group´s other reserves for the period ended September 30, 2021 are comprised as follows:
 
 
 
Cost of treasury stock
 
 
Changes in non-controlling interest
 
 
Reserve for share-based payments
 
 
Reserve for future dividends
 
 
Currency translation adjustment reserve
 
 
Hedging instruments
 
 
Special reserve
 
 
Reserve for defined contribution plans
 
 
Revaluation surplus
 
 
Total Other reserves
 
Balance as of July 1, 2021
  (279)
  (9,204)
  315 
  2,778 
  707 
  (705)
  34,435 
  139 
  1,641 
  29,827 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (162)
  - 
  - 
  - 
  - 
  (162)
Total comprehensive loss for the period
  - 
  - 
  - 
  - 
  (162)
  - 
  - 
  - 
  - 
  (162)
Changes in non-controlling interest
  - 
  (2)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2)
Other changes in equity
  - 
  - 
  - 
  - 
  (9)
  - 
  - 
  - 
  - 
  (9)
Balance as of September 30, 2021
  (279)
  (9,206)
  315 
  2,778 
  536 
  (705)
  34,435 
  139 
  1,641 
  29,654 
 
 There are no cumulative unpaid dividends on preferred shares.
 The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

 
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima
 
 
 
 
 


By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
 
 
 
4
 
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
Attributable to equity holders of the parent
 
 
 
 
 
 
 

 
Share capital
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (i)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Legal reserve
 
 
Special reserve Resolution CNV 609/12 (ii)
 
 
Other reserves (iii)
 
 
Retained earnings
 
 
Subtotal
 
 
Non-controlling interest
 
 
Total Shareholders’ equity
 
Balance as of July 1, 2020
  575 
  2 
  22,586 
  23,866 
  156 
  796 
  15,436 
  9,674 
  20,679 
  93,770 
  107,559 
  201,329 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  10,086 
  10,086 
  2,630 
  12,716 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (5,643)
  - 
  (5,643)
  (7,580)
  (13,223)
Total profit and other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (5,643)
  10,086 
  4,443 
  (4,950)
  (507)
Capitalisation of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  6 
  6 
Dividend distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (30)
  (30)
Other changes in equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  9,035 
  - 
  9,035 
  (66,852)
  (57,817)
Reserve for share-based payments
  - 
  - 
  - 
  - 
  3 
  - 
  - 
  (3)
  - 
  - 
  - 
  - 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  53 
  - 
  53 
  (108)
  (55)
Balance as of September 30, 2020
  575 
  2 
  22,586 
  23,866 
  159 
  796 
  15,436 
  13,116 
  30,765 
  107,301 
  35,625 
  142,926 
 
(i) Includes ARS 1 of Inflation adjustment of treasury shares. See Note 16 to the Annual Financial Statements.
(ii) Related to CNV General Resolution N° 609/12.
(iii) Group’s other reserves for the period ended September 30, 2020 are comprised as follows:
 
 
 
Cost of treasury stock
 
 
Changes in non-controlling interest
 
 
Reserve for share-based payments
 
 
Reserve for future dividends
 
 
Currency translation adjustment reserve
 
 
Hedging instruments
 
 
Reserve for defined contribution plans
 
 
Special reserve
 
 
Other reserves from subsidiaries
 
 
Revaluation surplus
 
 
Total Other reserves
 
Balance as of July 1, 2020
  (282)
  (8,650)
  323 
  2,778 
  (1,195)
  (601)
  (643)
  17,062 
  175 
  707 
  9,674 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (5,300)
  (119)
  (224)
  - 
  - 
  - 
  (5,643)
Total comprehensive loss for the period
  - 
  - 
  - 
  - 
  (5,300)
  (119)
  (224)
  - 
  - 
  - 
  (5,643)
Reserve for share-based payments
  2 
  - 
  (5)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3)
Changes in non-controlling interest
  - 
  53 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  53 
Other changes in equity
  - 
  (79)
  - 
  - 
  7,675 
  328 
  1,195 
  - 
  (175)
  91 
  9,035 
Balance as of September 30, 2020
  (280)
  (8,676)
  318 
  2,778 
  1,180 
  (392)
  328 
  17,062 
  - 
  798 
  13,116 
 
    There are no cumulative unpaid dividends on preferred shares.
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima
 
 
 
 
 


By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
 
 
 
 
5
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the three-month period ended September 30, 2021 and 2020
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
  09.30.2021 
  09.30.2020 
Operating activities:
 
    
    
Net cash generated from continuing operating activities before income tax paid
15
  1,659 
  1,735 
Income tax and MPIT paid
 
  (6)
  (5)
Net cash generated from continuing operating activities
 
  1,653 
  1,730 
Net cash generated from discontinued operating activities
 
  - 
  3,395 
Net cash generated from operating activities
 
  1,653 
  5,125 
Investing activities:
 
    
    
Contributions and issuance of capital in associates and joint ventures
 
  (29)
  (12)
Acquisition and improvements of investment properties
 
  (370)
  (1,096)
Proceeds from sales of investment properties
 
  238 
  14,643 
Acquisitions and improvements of property, plant and equipment
 
  (97)
  (69)
Acquisitions of intangible assets
 
  (8)
  (9)
Acquisitions of investments in financial assets
 
  (896)
  (9,424)
Proceeds from disposal of investments in financial assets
 
  767 
  10,383 
Interest received from financial assets
 
  189 
  239 
Dividends received from financial assets
 
  1 
  - 
Net cash (used in) / generated from continuing investing activities
 
  (205)
  14,655 
Net cash generated from discontinued investing activities
 
  - 
  48,532 
Net cash (used in) / generated from investing activities
 
  (205)
  63,187 
Financing activities:
 
    
    
Borrowings and issuance of non-convertible notes
 
  2,853 
  5,285 
Payment of borrowings and non-convertible notes
 
  (709)
  (30,508)
Collections of short-term loans, net
 
  (201)
  7,412 
Interests paid
 
  (2,801)
  (4,001)
Repurchase of non-convertible notes
 
  (177)
  (101)
Acquisition of non-controlling interest in subsidiaries
 
  - 
  (81)
Proceeds from warrants exercise
 
  2 
  - 
Sale of own non-convertible notes
 
  - 
  800 
Net proceeds from derivate financial instrument
 
  (15)
  (343)
Net cash used in continuing financing activities
 
  (1,048)
  (21,537)
Net cash used in discontinued financing activities
 
  - 
  (19,850)
Net cash used in financing activities
 
  (1,048)
  (41,387)
Net increase / (decrease) in cash and cash equivalents from continuing activities
 
  400 
  (5,152)
Net increase in cash and cash equivalents from discontinued activities
 
  - 
  32,077 
Net increase in cash and cash equivalents
 
  400 
  26,925 
Cash and cash equivalents at beginning of period
 
  2,110 
  148,318 
Deconsolidation of subsidiaries
 
  - 
  (158,820)
Foreign exchange gain and inflation adjustment on cash and changes in fair value of cash equivalents
 
  (357)
  (9,719)
Cash and cash equivalents at end of period
13
  2,153 
  6,704 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
Company Name IRSA Inversiones y Representaaciones Sociedad Anónima
 
 
 
 
 


By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
 
 
 
 
6
IRSA Inversiones y Representaciones Sociedad Anónima
 
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(Amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
1.
The Group’s business and general information
 
These Financial Statements have been approved for issuance by the Board of Directors, on November 8, 2021.
 
IRSA was founded in 1943, and it is engaged in a diversified range of real estate activities in Argentina since 1991. IRSA and its subsidiaries are collectively referred to hereinafter as “the Group”. Cresud is our direct parent company and Consultores Asset Management S.A. is our ultimate parent company.
 
As stated in Note 1 to the consolidated financial statements as of June 30, 2021, on September 25, 2020 the Court decreed the insolvency and liquidation of IDBD and appointed a trustee for its shares along with a custodian over DIC and Clal shares. After this decision, the Board of Directors of IDBD was removed from its functions, therefore, the Group lost control as of that date, consequently, the results of such company as of September 30,2020 are included in discontinued operations.
 
2.
Summary of significant accounting policies
 
2.1.
Basis of preparation
 
These financial statements have been prepared in accordance with IAS 34 “Interim financial reporting” and should therefore be read in conjunction with the Group's annual Consolidated Financial Statements as of June 30, 2021 prepared in accordance with IFRS. Also, these financial statements include additional information required by Law No. 19,550 and / or regulations of the CNV. Such information is included in the notes to these financial statements, as accepted by IFRS.
 
These financial statements for the interim periods of three months ended September 30, 2021 and 2020 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
 
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
 
In order to conclude on whether an economy is categorized as highly inflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that approximates or exceed 100%. Accumulated inflation in Argentina in three years is over 100%. For that reason, in accordance with IAS 29, Argentina must be considered a country with a highly inflationary economy starting July 1, 2018.
 
In relation to the inflation index to be used and in accordance with FACPCE Resolution No. 539/18, it is determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of the Consumer Price Index (CPI) of the Autonomous City of Buenos Aires for the months of November and December 2015, because during those two months there were no national IPIM measurements. Then, from January 2017, the National Consumer Price Index (National CPI) is considered. The table below presents the index for the period ended September 30, 2021, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
 
 
 
As of September 30, 2021 (accumulated three months)
 
Price variation
  9%
 
 
7
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
As a consequence of the aforementioned, these financial statements as of September 30, 2021 were restated in accordance with IAS 29.
 
2.2.
Significant accounting policies
 
The accounting policies applied in the presentation of these Financial Statements are consistent with those applied in the preparation of the Annual Financial Statements, as described in Note 2 to those Financial Statements.
 
2.3.
Comparability of information
 
Balance items as of June 30, 2021 and September 30, 2020 presented in these Unaudited Condensed Interim Consolidated Financial Statements for comparative purposes arise from the financial statements as of and for such periods restated according to IAS 29 (See note 2.1). Certain items from prior periods have been reclassified for consistency purposes.
 
See Note 29 for information on the context in which the Group operates.
 
2.4.
Use of estimates
 
The preparation of Financial Statements at a certain date requires Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements. In the preparation of these financial statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same as the ones applied by the Group in the preparation of the Annual Financial Statements described in Note 3 to those Financial Statements.
 
3.
Seasonal effects on operations
 
The operations of the Group’s shopping malls are subject to seasonal effects, which affect the level of sales recorded by lessees. During summer time in Argentina (January and February), the lessees of shopping malls experience the lowest sales levels in comparison with the winter holidays (July) and Christmas and year-end holidays celebrated in December, when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping malls sales. Sale discounts at the end of each season also affect the business. As a consequence, for shopping mall operations, a higher level of business activity is expected in the period from July through December, compared to the period from January through June.
 
4.
Acquisitions and disposals
 
Significant acquisitions and disposals for the three-month period ended September 30, 2021 are detailed below. Significant acquisitions and disposals for the fiscal year ended June 30, 2021, are detailed in Note 4 to the Annual Financial Statements.
 
A.
Sale of real estate parcels in Hudson
 
On August 2, 2021, our subsidiary IRSA CP signed the bill for the sale of several parcels of the property called Casonas located in Hudson, Berazategui district. The price of the transaction was USD 0.6.
 
 
8
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
B.
Sale of Mariano Acosta Plot
 
On August 9, 2021, the sales ticket for Mariano Acosta Plot was signed for a total amount of USD 0.7. With the signing of the ticket, the amount of USD 0.5 was received and the remaining balance of USD 0.2 at the signing of the deed.
 
C.
Sale of Merlo Plot
 
On August 9, 2021, the sales ticket for Merlo Plot was signed for a total amount of USD 0.7. With the signing of the ticket, the amount of USD 0.5 was received and the remaining balance of USD 0.2 at the signing of the deed.
 
D.
Sale of portfolio Hotels - Condor Agreement
 
On September 22, 2021, Condor Hospitality Trust S.A. (“Condor”) has signed a sale agreement for its portfolio of 15 hotels in the United States with B9 Cowboy Mezz A LLC, an affiliate of Blackstone Real Estate Partners.
 
In this context, Condor announced a Liquidation and Dissolution Plan with the intention of distributing certain net proceeds from the sale of the hotel portfolio to shareholders in one or more instalments.
 
The sale agreement and the implementation of the Liquidation Plan are subject to the approval of the Condor Shareholders' Meeting.
 
As of the date of these financial statement presentation, the Company owns, directly and indirectly, 3,191,213 ordinary shares representing 21.7% of the capital stock.
 
E.
IRSA – IRSA CP Merger Proposal
 
On September 30, 2021, IRSA & IRSA CP Boards of Directors approved the prior merger agreement between both companies and the corresponding special financial statements as of June 30, 2021, initiating the corporate reorganization process under the terms of art. 82 et seq. of the General Law of Companies. The merger process has particular characteristics given that they are two companies included in the public offering regime, reason why, not only apply the current provisions of the General Law of Companies but also the procedures established regarding reorganization of companies of the regulations of the “Comisión Nacional de Valores” (National Securities Commission) and the markets, both national and foreign, where their shares are listed.
 
The Merger is carried out in order to streamline the technical, administrative, operational and economic resources of both Companies, standing out among others: (a) the operation and maintenance of a single transactional information system and centralization of the entire accounting registration process; (b) presentation of a single financial statement to the different control agencies with the consequent cost savings in accounting and advisory fees, tariffs and other related expenses; (c) simplification of the accounting information reporting and consolidation process, as a consequence of the reduction that the merger would imply for the corporate structure as a whole; (d) removal of the IRSA CP public offering listing on BYMA and NASDAQ with the associated costs that this represents; (e) cost reduction for legal fees and tax filings; (f) increase in the percentage of the capital stock that is listed in the different markets, increasing the liquidity of the listed shares; (g) tax efficiencies and (h) preventively avoid the potential overlap of activities between the Companies.
 
The merger is subject to the approval of the shareholders' meeting of both companies whose call will be made once they have the administrative approval of the United States Securities and Exchange Commission, an entity to which they are subject since both companies list their shares in markets that operate in said jurisdiction.
 
 
 
9
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
Once the merger by absorption between IRSA as the absorbing company and IRSA CP as the absorbed company has been approved, the effective date will be July 1, 2021, date from which the transfer to the absorbing company of all the assets of the absorbed company will take effect, thereby incorporating all its rights and obligations, assets, and liabilities into the equity of the absorbing company, all subject to the required corporate approvals.
 
Likewise, and within the framework of the reorganization process, the Board of Directors has approved the exchange ratio, which has been established at 1.40 IRSA shares for each IRSA CP share, which is equivalent to 0.56 IRSA GDS for each ADS of IRSA CP.
 
The exchange of IRSA CP shares for IRSA shares will be carried out once the entire administrative process has been completed and once the registration has been made in the “Inspección General de Justicia” (General Inspection of Justice), a process that may take several months.
 
5.
Financial risk management and fair value estimates
 
These Financial Statements do not include all the information and disclosures on financial risk management; therefore, they should be read along with Note 5 to the Annual Financial Statements. There have been no changes in risk management or risk management policies applied by the Group since year-end.
 
From June 30, 2021 and up to the date of issuance of these Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities (either measured at fair value or amortized cost) except for what is mentioned in Note 30 in relation to COVID-19.
 
6.
Segment information
 
Segment information was prepared and classified according to the business in which the Group operates, they were descripted in Note 6 to the Annual Financial Statements.
 
Below is a summary of the Group’s operating segments and a reconciliation between the operating income according to segment information and the operating income of the Statements of Income and Other Comprehensive Income of the Group for the periods ended September 30, 2021 and 2020:
 
 
 
Three Months ended September 30, 2021
 
 
 
Total
 
 
Joint ventures (1)
 
 
Expensesand collectivepromotion funds
 
 
Elimination of inter-segment transactions and non-reportable assets / liabilities (2)
 
 
Total as per statement of income / statement of financial position
 
Revenues
  3,430 
  (24)
  985 
  (9)
  4,382 
Costs
  (745)
  16 
  (1,025)
  - 
  (1,754)
Gross profit / (loss)
  2,685 
  (8)
  (40)
  (9)
  2,628 
Net gain from fair value adjustment of investment properties
  (6,609)
  115 
  - 
  - 
  (6,494)
General and administrative expenses
  (752)
  2 
  - 
  13 
  (737)
Selling expenses
  (337)
  (1)
  - 
  - 
  (338)
Other operating results, net
  239 
  1 
  16 
  (4)
  252 
(Loss) / profit from operations
  (4,774)
  109 
  (24)
  - 
  (4,689)
Share of profit of associates and joint ventures
  (80)
  (75)
  - 
  - 
  (155)
Segment (loss) / profit
  (4,854)
  34 
  (24)
  - 
  (4,844)
Reportable assets
  217,894 
  (1,588)
  - 
  20,798 
  237,104 
Reportable liabilities
  - 
  - 
  - 
  (147,880)
  (147,880)
Net reportable assets
  217,894 
  (1,588)
  - 
  (127,082)
  89,224 
 
 
 
 
 
10
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Three Months ended September 30, 2020
 
 
 
Total
 
 
Joint ventures (1)
 
 
Expensesand collectivepromotion funds
 
 
Elimination of inter-segment transactions and non-reportable assets / liabilities (2)
 
 
Total as per statement of income / statement of financial position
 
Revenues
  1,857 
  (12)
  617 
  (9)
  2,453 
Costs
  (993)
  21 
  (701)
  - 
  (1,673)
Gross profit / (loss)
  864 
  9 
  (84)
  (9)
  780 
Net gain from fair value adjustment of investment properties
  38,004 
  (1,276)
  - 
  - 
  36,728 
General and administrative expenses
  (997)
  1 
  - 
  14 
  (982)
Selling expenses
  (687)
  1 
  - 
  - 
  (686)
Other operating results, net
  (26)
  2 
  45 
  (5)
  16 
Profit / (loss) from operations
  37,158 
  (1,263)
  (39)
  - 
  35,856 
Share of profit of associates and joint ventures
  (720)
  945 
  - 
  - 
  225 
Segment profit / (loss)
  36,438 
  (318)
  (39)
  - 
  36,081 
Reportable assets
  282,110 
  (1,454)
  - 
  24,918 
  305,574 
Reportable liabilities
  - 
  - 
  - 
  (162,650)
  (162,650)
Net reportable assets
  282,110 
  (1,454)
  - 
  (137,732)
  142,924 
 
(1) Represents the equity value of joint ventures that were proportionately consolidated for segment information.
(2) Includes deferred income tax assets, income tax and MPIT credits, trade and other receivables, investment in financial assets, cash and cash equivalents and intangible assets except for rights to receive future units under barter agreements, net of investments in associates with negative equity which are included in provisions in the amount of ARS 8 and ARS 26 as of September 30, 2021 and 2020 respectively.
 
Below is a summarized analysis of the segments from the Group’s Operations Center in Argentina for the periods ended September 30, 2021 and 2020:
 
 
 
Three Months ended September 30, 2021
 
 
 
Operations Center in Argentina
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  2,225 
  716 
  - 
  473 
  2 
  - 
  14 
  3,430 
Costs
  (274)
  (48)
  (31)
  (296)
  (7)
  - 
  (89)
  (745)
Gross profit / (loss)
  1,951 
  668 
  (31)
  177 
  (5)
  - 
  (75)
  2,685 
Net (loss) / gain from fair value adjustment of investment properties (i)
  (3,698)
  (1,833)
  (1,244)
  - 
  3 
  - 
  163 
  (6,609)
General and administrative expenses
  (312)
  (87)
  (78)
  (113)
  (12)
  (115)
  (35)
  (752)
Selling expenses
  (208)
  (47)
  (36)
  (44)
  - 
  - 
  (2)
  (337)
Other operating results, net
  26 
  19 
  185 
  (3)
  4 
  - 
  8 
  239 
(Loss) / profit from operations
  (2,241)
  (1,280)
  (1,204)
  17 
  (10)
  (115)
  59 
  (4,774)
Share of profit of associates and joint ventures
  - 
  - 
  - 
  - 
  328 
  - 
  (408)
  (80)
Segment (loss) / profit
  (2,241)
  (1,280)
  (1,204)
  17 
  318 
  (115)
  (349)
  (4,854)
 
    
    
    
    
    
    
    
    
Investment properties and trading properties
  56,144 
  82,436 
  59,670 
  - 
  109 
  - 
  2,483 
  200,842 
Investment in associates and joint ventures
  - 
  - 
  - 
  - 
  2,871 
  - 
  7,235 
  10,106 
Other operating assets
  369 
  1,494 
  2,129 
  2,796 
  - 
  9 
  149 
  6,946 
Operating assets
  56,513 
  83,930 
  61,799 
  2,796 
  2,980 
  9 
  9,867 
  217,894 
 
(i) For the three-month period ended September 30, 2021, the net loss from fair value adjustment of investment properties was ARS 6,494. The net impact of the values in pesos of our properties was mainly a consequence of the change in macroeconomic conditions:
(a) loss of ARS 3,185.6 as a consequence of the variation in the projected income growth rate increase in the projected inflation rate and the conversion to dollars of the projected cash flow in pesos according to the exchange rate estimates used in the cash flow from shopping malls;
(b) positive impact of ARS 1,525.5 resulting from the conversion into pesos of the value of the shopping malls in dollars based on the exchange rate at the end of the period;
(c) an increase of 30 basis points in the discount rate, mainly due to an increase in the country-risk rate component of the WACC discount rate used to discount the cash flow, which led to a decrease in the value of the shopping malls of ARS 1,280.1.
(d) Additionally, due to the impact of the inflation adjustment, ARS 4,717.0 were reclassified for shopping malls from “Net gain from fair value adjustment” to “Inflation Adjustment” in the Statement of Income and Other Comprehensive Income.
(e) The value of our office buildings and other rental properties measured in real terms decreased by 2.4% during the three-month period ended as of September 30, 2021, due to the implicit exchange rate.
 
 
 
11
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Three Months ended September 30, 2020
 
 
 
Operations Center in Argentina
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  560 
  825 
  59 
  9 
  401 
  - 
  3 
  1,857 
Costs
  (204)
  (69)
  (148)
  (197)
  (337)
  - 
  (38)
  (993)
Gross profit / (loss)
  356 
  756 
  (89)
  (188)
  64 
  - 
  (35)
  864 
Net gain from fair value adjustment of investment properties
  1,796 
  19,992 
  15,393 
  - 
  3 
  - 
  820 
  38,004 
General and administrative expenses
  (500)
  (133)
  (101)
  (87)
  (26)
  (120)
  (30)
  (997)
Selling expenses
  (111)
  (56)
  (465)
  (29)
  (24)
  - 
  (2)
  (687)
Other operating results, net
  (28)
  2 
  (9)
  12 
  - 
  - 
  (3)
  (26)
Profit / (loss) from operations
  1,513 
  20,561 
  14,729 
  (292)
  17 
  (120)
  750 
  37,158 
Share of profit of associates and joint ventures
  - 
  - 
  (12)
  - 
  (589)
  - 
  (119)
  (720)
Segment profit / (loss)
  1,513 
  20,561 
  14,717 
  (292)
  (572)
  (120)
  631 
  36,438 
 
    
    
    
    
    
    
    
    
Investment properties and trading properties
  82,524 
  109,819 
  66,933 
  - 
  157 
  - 
  3,027 
  262,460 
Investment in associates and joint ventures
  - 
  - 
  861 
  - 
  2,716 
  - 
  10,905 
  14,482 
Other operating assetsInvestment
  431 
  360 
  1,233 
  2,979 
  - 
  9 
  156 
  5,168 
Operating assets
  82,955 
  110,179 
  69,027 
  2,979 
  2,873 
  9 
  14,088 
  282,110 
 

7.
Investments in associates and joint ventures
 
Changes in the Group’s investments in associates and joint ventures for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
 
 
 
September 30, 2021
 
 
June 30, 2021
 
Beginning of the period / year
  13,287 
  122,084 
Increase of equity interest and capital contributions
  604 
  46 
Decrease of interest in associate (iv)
  - 
  (47,919)
Deconsolidation (i)
  - 
  (52,940)
Share of profit
  (155)
  (3,317)
Impairment (iii)
  (2)
  (684)
Currency translation adjustment
  (131)
  (3,911)
Other comprehensive income
  - 
  (59)
Others
  5 
  (13)
End of the period / year (ii)
  13,608 
  13,287 
 
(i)
Corresponds to the deconsolidation of IDBD. See Note 4.G to the consolidated Financial Statements as of June 30, 2021.
(ii)
As of September 30, 2021 and June 30, 2021 includes ARS (8) and ARS (7), reflecting interests in companies with negative equity, which were disclosed in “Provisions” (Note 18).
(iii)
Corresponds to the investment in TGLT S.A.
(iv)
Corresponds to the sale of the remaining equity interest in Shufersal in July 2020.
 
 
% ownership interest
 
 
Value of Group's interest in equity
 
 
Group's interest in comprehensive income / (loss)
 
Name of the entity
 
September 30, 2021
 
 
June 30, 2021
 
 
September 30, 2021
 
 
June 30, 2021
 
 
September 30, 2021
 
 
September 30, 2020
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
  49.96%
  49.96%
  226 
  238 
  (4)
  (503)
BHSA
  29.91%
  29.91%
  5,499 
  5,859 
  (359)
  (91)
Condor
  21.70%
  18.89%
  2,564 
  1,770 
  331 
  (84)
Quality
  50.00%
  50.00%
  3,154 
  3,199 
  (72)
  948 
La Rural SA
  50.00%
  50.00%
  178 
  185 
  (6)
  24 
TGLT
  27.82%
  27.82%
  1,001 
  1,024 
  (23)
  (59)
Other joint ventures
  N/A 
  N/A 
  986 
  1,012 
  (153)
  (2,910)
Total associates and joint ventures
    
    
  13,608 
  13,287 
  (286)
  (2,675)
 
 
 
12
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Below is additional information about the Group’s investments in associates and joint ventures:
 
 
 
 
 
  Latest financial statement issued
Name of the entity
Place of business / Country of incorporation
Main activity
 
Common shares 1 vote
 
 
Share capital (nominal value)
 
 
Profit / (loss) for the period
 
 
Shareholders’ equity
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
U.S.
Real estate
  N/A 
  - 
  (*) (0) 
  (*) (41) 
BHSA
Argentina
Financial
  448,689,072 
  (**) 1,500 
  (**) (685) 
  (**) 18,145 
Condor
EE.UU.
Hotel
  3,191,214 
  (*) 232 
  (*) (125) 
  (*) 119 
Quality
Argentina
Real estate
  406,316,259 
  406 
  (144)
  6,206 
La Rural SA
Argentina
Organization of events
  714,498 
  1 
  (2)
  101 
TGLT
Argentina
Real estate
  257,320,997 
  925 
  (82)
  4,635 
 
(*) 
Amounts in millions of US Dollars under USGAAP. Condor’s year-end falls on December 31, so the Group estimates their interest with a three-month lag, including material adjustments, if any.
(**) 
Information as of September 30, 2021 according to IFRS.
 
Puerto Retiro (joint venture):
 
There have been no changes to what was informed in Note 8 to the Annual Financial Statements.
 
8.
Investment properties
 
Changes in the Group’s investment properties for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
 
 
 
Three Months ended September 30, 2021
 
 
Year ended June 30, 2021
 
 
 
Rental properties
 
 
Undeveloped parcels of land
 
 
Properties under development
 
 
Total
 
 
Total
 
Fair value at the beginning of the period / year
  137,155 
  59,212 
  3,787 
  200,154 
  373,502 
Additions
  224 
  3 
  260 
  487 
  1,133 
Capitalized leasing costs
  5 
  - 
  - 
  5 
  24 
Amortization of capitalized leasing costs (i)
  (5)
  - 
  - 
  (5)
  (14)
Transfers
  - 
  - 
  - 
  - 
  (579)
Deconsolidation
  - 
  - 
  - 
  - 
  (128,458)
Disposals
  (12)
  (233)
  - 
  (245)
  (23,415)
Currency translation adjustment
  (5)
  - 
  (2)
  (7)
  (13,518)
Net (loss) from fair value adjustment
  (5,233)
  (1,244)
  (17)
  (6,494)
  (8,521)
Fair value at the end of the period / year
  132,129 
  57,738 
  4,028 
  193,895 
  200,154 
 
(i)
Amortization charges of capitalized leasing costs were included in “Costs” in the Statements of Income (Note 21).

 
 
13
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The following amounts have been recognized in the Statements of Income:
 
 
  09.30.2021 
  09.30.2020 
Rental and services income
  3,909 
  1,989 
Direct operating expenses
  (1,417)
  (996)
Development reimbursements / (expenses)
  (32)
  (26)
Net realized gain from fair value adjustment of investment properties (i) (ii)
  122 
  8,163 
Net unrealized gain from fair value adjustment of investment properties
  (6,616)
  28,565 
 
(i)
As of September 30, 2021 includes ARS 18 for the sale of Casona Hudson, ARS 55 for the sale of Merlo Plot and ARS 49 for the sale of Mariano Acosta Plot. As of September 30, 2020 includes ARS 2,732 for the sale of Boston Tower and ARS 5,431 for the sale of Bouchard 710.
 
(ii)
As of September 30, 2021, (ARS 99) corresponds to the realized result from fair value adjustment for the period ((ARS 68) for the sale of Casona Hudson, (ARS 15) for the sale of Merlo Plot and (ARS 16) for the sale of Mariano Acosta Plot) and ARS 221 for realized result from fair value adjustment made in previous years (ARS 86 for the sale of Casona Hudson, ARS 70 for the sale of Merlo Plot and ARS 65 for the sale of Mariano Acosta Plot). As of September 30, 2020 ARS 285 corresponds to net realized fair value adjustment on investment properties for the period (ARS 797 for the sale of Boston Tower and (ARS 512) for the sale of Bouchard 710) and ARS 7,878 corresponds to the realized fair value adjustment made in previous years (ARS 1,935 for the sale of Boston Tower and ARS 5,943 for the sale of Bouchard 710).
 
Valuation techniques are described in Note 9 to the Annual Financial Statements. There were no changes to such techniques. The Group has reassessed the assumptions September 30, 2021, considering the market conditions existing at that date due to the pandemic described in Note 29, incorporating the effect of the variation in the exchange rate in other assets denominated in US Dollars.
 
Costa Urbana –former Solares de Santa María– Costanera Sur, Buenos Aires City (IRSA)
 
The Company owns an important property of more than 70 hectares, which was acquired in 1997, facing the Río de la Plata on the Costanera Sur, south of Puerto Madero, 10 minutes from downtown Buenos Aires, originally called “Solares de Santa María” which was renamed “Costa Urbana”. The Company intends to create a mixed-use development including residential complexes, offices, stores, hotels, sports clubs and service areas (schools, supermarkets and parking spaces).
 
After some unsuccessful approval attempts with the City of Buenos Aires Government and its Legislature, and after new negotiations carried out in recent years, the Company has signed a new agreement with the Executive Power of the City of Buenos Aires under the “Urban Agreement” modality framed within Decree No. 475 published on December 30, 2020, by means of which it approved the regulation of article 10.9. “Urban Agreements” of Law No. 6099 (text consolidated by Law No. 6347). According to article 10.9 of the Urban Code, these agreements are contracts entered into between the owner of a land/property and the Executive Power, which imply a regulatory change that must be approved by the City of Buenos Aires Legislature. Under this modality, a new urbanization project was proposed, in which more than 67% of the property’s surface is destined for public use, maintaining the original Total Occupancy Factor (“FOT 1”) that implies a capacity to develop more than 895,000 sqm. The Bill was raised for treatment in the first reading on the Legislature premises and it was approved without abstentions on August 19, 2021 by 36 votes out of a total of 55. As part of the approval process, the non-binding Public Hearing was held from October 15, 2021 to November 8, 2021 and is pending the treatment in second reading for final legislative approval.
 
The accounting valuation as of September 30, 2021 does not reflect any of these potential changes, valuing the land with the same methodology and assumptions as in previous years.
 
 
14
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
9.
Property, plant and equipment
 
Changes in the Group’s property, plant and equipment for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
 
 
 
Three Months ended September 30, 2021
 
 
Year ended June 30, 2021
 
 
 
Buildings and facilities
 
 
Machinery and equipment
 
 
Others
 
 
Total
 
 
Total
 
Costs
  7,733 
  2,746 
  632 
  11,111 
  229,607 
Accumulated depreciation
  (3,562)
  (2,560)
  (458)
  (6,580)
  (167,677)
Net book amount at the beginning of the period / year
  4,171 
  186 
  174 
  4,531 
  61,930 
Additions
  22 
  20 
  55 
  97 
  1,810 
Disposals
  - 
  - 
  - 
  - 
  (99)
Deconsolidation
  - 
  - 
  - 
  - 
  (52,444)
Reclassification to assets assets held for sale
  - 
  - 
  - 
  - 
  (31)
Currency translation adjustment
  - 
  - 
  - 
  - 
  (4,191)
Transfers
  - 
  - 
  - 
  - 
  1,081 
Depreciation charges (i)
  (77)
  (21)
  (9)
  (107)
  (3,525)
Balances at the end of the period / year
  4,116 
  185 
  220 
  4,521 
  4,531 
Costs
  7,755 
  2,766 
  687 
  11,208 
  11,111 
Accumulated depreciation
  (3,639)
  (2,581)
  (467)
  (6,687)
  (6,580)
Net book amount at the end of the period / year
  4,116 
  185 
  220 
  4,521 
  4,531 
 
(i)
As of September 30, 2021, depreciation charges of property, plant and equipment were recognized as follows: ARS 75 in "Costs" and ARS 32 in "General and administrative expenses", respectively in the Statement of Income (Note 21).

 
10.
Trading properties
 
Changes in the Group’s trading properties for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
 
 
 
Three Months ended September 30, 2021
 
 
Year ended June 30, 2021
 
 
 
Completed properties
 
 
Properties under development
 
 
Undeveloped sites
 
 
Total
 
 
Total
 
Beginning of the period / year
  132 
  877 
  913 
  1,922 
  11,773 
Additions
  - 
  44 
  1 
  45 
  880 
Deconsolidation
  - 
  - 
  - 
  - 
  (8,404)
Currency translation adjustment
  - 
  (39)
  - 
  (39)
  (758)
Disposals
  - 
  - 
  - 
  - 
  (1,569)
End of the period / year
  132 
  882 
  914 
  1,928 
  1,922 
Non-current
    
    
    
  1,803 
  1,797 
Current
    
    
    
  125 
  125 
Total
    
    
    
  1,928 
  1,922 
 
 
 
15
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
11.
Intangible assets
 
Changes in the Group’s intangible assets for the three-month period ended September 30, 2021 and for the year ended June 30, 2021 were as follows:
 
 
 
Three Months ended September 30, 2021
 
 
Year ended June 30, 2021
 
 
 
Goodwill
 
 
Information systems and software
 
 
Contracts and others
 
 
Total
 
 
Total
 
Costs
  148 
  862 
  2,588 
  3,598 
  115,495 
Accumulated amortization
  - 
  (638)
  (337)
  (975)
  (69,890)
Net book amount at the beginning of the period / year
  148 
  224 
  2,251 
  2,623 
  45,605 
Additions
  - 
  7 
  1 
  8 
  2,377 
Disposals
  - 
  - 
  (123)
  (123)
  (121)
Impairment
  - 
  - 
  - 
  - 
  (44)
Deconsolidation
  - 
  - 
  - 
  - 
  (39,939)
Currency translation adjustment
  - 
  - 
  - 
  - 
  (2,702)
Amortization charges (i)
  - 
  (28)
  - 
  (28)
  (2,553)
Balances at the end of the period / year
  148 
  203 
  2,129 
  2,480 
  2,623 
Costs
  148 
  869 
  2,466 
  3,483 
  3,598 
Accumulated amortization
  - 
  (666)
  (337)
  (1,003)
  (975)
Net book amount at the end of the period / year
  148 
  203 
  2,129 
  2,480 
  2,623 
 
(i)
As of September 30, 2021, amortization charges were recognized in the amount of ARS 9 in "Costs" and ARS 19 in "General and administrative expenses", in the Statement of Income (Note 21).
 
 
12.
Right-of-use assets
 
The Group’s right-of-use assets as of September 30, 2021 and June 30, 2021 are the following:
 
 
 
September 30, 2021
 
 
June 30, 2021
 
Real Estate
  14 
  12 
Machinery and equipment
  4 
  4 
Others
  853 
  870 
Total Right-of-use assets
  871 
  886 
Non-current
  871 
  886 
Total
  871 
  886 
 
The depreciation charge of the right-of use-assets is detailed below:
 
 
 
September 30, 2021
 
 
September 30, 2020
 
Real Estate
  12 
  1,412 
Telecommunications
  - 
  323 
Others
  2 
  297 
Total depreciation of right-of-use assets (i)
  14 
  2,032 
 
(i)
As of September 30, 2021, amortization charges were recognized in the amount of ARS 11 in "Costs" and ARS 3 in "General and administrative expenses", in the Statement of Income (Note 21). Includes ARS 1,996 charged to the result of discontinued operations as of September 30, 2020
 
 
 
16
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
13.
Financial instruments by category
 
This note presents the financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line in the Consolidated Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. For further information related to fair value hierarchy refer to Note 13 to the Annual Financial Statements. Financial assets and financial liabilities as of September 30, 2021 are the following:
 
 
 
Financial assets at amortized cost
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
 
 
 
 
 
 
 
 
September 30, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  8,332 
  - 
  - 
  - 
  8,332 
  5,277 
  13,609 
Investments in financial assets:
    
    
    
    
    
    
    
  - Public companies’ securities
  - 
  327 
  - 
  - 
  327 
  - 
  327 
  - Bonds
  - 
  2,957 
  - 
  - 
  2,957 
  - 
  2,957 
  - Investments in financial assets with quotation
  11 
  833 
  - 
  54 
  898 
  - 
  898 
Cash and cash equivalents:
    
    
    
    
    
    
    
  - Cash at bank and on hand
  1,311 
  - 
  - 
  - 
  1,311 
  - 
  1,311 
  - Short-term investments
  - 
  842 
  - 
  - 
  842 
  - 
  842 
Total assets
  9,654 
  4,959 
  - 
  54 
  14,667 
  5,277 
  19,944 
 
 
 
 
Financial liabilities at amortized cost
 
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
 
 
 
 
 
 
 
 
September 30, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  3,062 
  - 
  - 
  - 
  3,062 
  4,392 
  7,454 
Borrowings (excluding finance leases)
  65,082 
  - 
  - 
  - 
  65,082 
  - 
  65,082 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Swaps
  - 
  - 
  45 
  - 
  45 
  - 
  45 
Total liabilities
  68,144 
  - 
  45 
  - 
  68,189 
  4,392 
  72,581 
 
Financial assets and financial liabilities as of June 30, 2021 were as follows:
 
 
 
Financial assets at amortized cost
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
 
 
 
 
 
 
 
 
June 30, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statements of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  7,902 
  - 
  - 
  - 
  7,902 
  5,401 
  13,303 
Investments in financial assets:
    
    
    
    
    
    
    
  - Public companies’ securities
  - 
  1,067 
  - 
  - 
  1,067 
  - 
  1,067 
  - Bonds
  - 
  2,963 
  - 
  - 
  2,963 
  - 
  2,963 
  - Investments in financial assets with quotation
  11 
  698 
  - 
  52 
  761 
  - 
  761 
Cash and cash equivalents:
    
    
    
    
    
    
    
  - Cash at bank and on hand
  1,232 
  - 
  - 
  - 
  1,232 
  - 
  1,232 
  - Short term investments
  - 
  878 
  - 
  - 
  878 
  - 
  878 
Total assets
  9,145 
  5,606 
  - 
  52 
  14,803 
  5,401 
  20,204 
 
 
 
17
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Financial liabilities at amortized cost
 
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
 
 
 
 
 
 
 
 
June 30, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  3,152 
  - 
  - 
  - 
  3,152 
  3,941 
  7,093 
Borrowings (excluding finance leases)
  67,900 
  - 
  - 
  - 
  67,900 
  - 
  67,900 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Swaps
  - 
  - 
  62 
  - 
  62 
  - 
  62 
Total liabilities
  71,052 
  - 
  62 
  - 
  71,114 
  3,941 
  75,055 
 
The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value, except for borrowings (Note 17). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant. Fair values are based on discounted cash flows (Level 3).
 
The valuation models used by the Group for the measurement of Level 2 and Level 3 instruments are no different from those used as of June 30, 2021.
 
As of September 30, 2021, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group, except as mentioned in Note 29.
 
The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments. Details of such models are presented in the following table. When no quoted prices are available in an active market, fair values (particularly with derivatives) are based on recognized valuation methods.
 
Description
Pricing model / method
Parameters
Fair value hierarchy
 
Range
 
 
 
 
 
 
 
 
Condor´s Promissory note
Theoretical price
Price of the underlying (Market price) and volatility of the share (historical) and market interest rate (Libor Curve).
Level 3
 
Price of the underlying 6 to 8. Volatility of the share 57% to 77%. Market interest rate 1.15% to 1.75%
 
Derivative financial instruments – Swaps
Theoretical price
Underlying asset price and volatility
Level 2 and 3
  - 
 
The following table presents the changes in Level 3 instruments as of September 30, 2021 and June 30, 2021:
 
 
 
Investments in financial assets - Others
 
 
Total as of September 30, 2021
 
 
Total as of June 30, 2021
 
Balances at beginning of the period / year
  52 
  52 
  5,355 
Currency translation adjustment
  (2)
  (2)
  (5)
Deconsolidation
  - 
  - 
  (5,308)
Gain for the period / year (i)
  4 
  4 
  10 
Balances at the end of the period / year
  54 
  54 
  52 
 
(i)
Included within “Financial results, net” in the Statements of Income.
 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
14.
Trade and other receivables
 
Group’s trade and other receivables as of September 30, 2021 and June 30, 2021 are as follows:
 
 
 
September 30, 2021
 
 
June 30, 2021
 
Sale, leases and services receivables
  5,434 
  5,019 
Less: Allowance for doubtful accounts
  (968)
  (930)
Total trade receivables
  4,466 
  4,089 
Prepaid expenses
  703 
  880 
Borrowings, deposits and others
  3,817 
  4,010 
Advances to suppliers
  952 
  1,038 
Tax receivables
  1,606 
  1,274 
Others
  1,097 
  1,082 
Total other receivables
  8,175 
  8,284 
Total trade and other receivables
  12,641 
  12,373 
Non-current
  3,339 
  3,111 
Current
  9,302 
  9,262 
Total
  12,641 
  12,373 
 
Movements on the Group’s allowance for doubtful accounts were as follows:
 
 
 
September 30, 2021
 
 
June 30, 2021
 
Beginning of the period / year
  930 
  6,131 
Additions
  146 
  825 
Recovery
  (34)
  (250)
Currency translation adjustment
  9 
  (302)
Deconsolidation
  - 
  (5,074)
Receivables written off during the period/year as uncollectable
  - 
  (31)
Inflation adjustment
  (83)
  (369)
End of the period / year
  968 
  930 
 
The creation and release of the allowance for doubtful accounts have been included in “Selling expenses” in the Statement of Income (Note 21).
 
15.
Cash flow and cash equivalent information
 
Following is a detailed description of cash flows generated by the Group’s operations for the three-month period ended September 30, 2021 and 2020:
 
 
Note
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
(Loss) / profit for the period
 
  (1,014)
  12,716 
Profit for the period from discontinued operations
 
  - 
  9,752 
Adjustments for:
 
    
    
Income tax
19
  (2,466)
  12,133 
Amortization and depreciation
21
  149 
  186 
Net gain / (loss) from fair value adjustment of investment properties
 
  6,494 
  (36,728)
Financial results, net
 
  (1,611)
  (135)
Provisions and allowances
 
  124 
  108 
Share of (profit) / loss of associates and joint ventures
7
  155 
  (225)
Changes in operating assets and liabilities:
 
    
    
Decrease in inventories
 
  4 
  8 
(Increase) / decrease in trading properties
 
  (14)
  390 
Decrease in restricted assets
 
  - 
  1,764 
Decrease / (increase) in trade and other receivables
 
  19 
  (980)
(Decrease) / increase in trade and other payables
 
  (52)
  2,874 
Decrease in salaries and social security liabilities
 
  (86)
  (111)
Decrease in provisions
 
  (43)
  (17)
Net cash generated by continuing operating activities before income tax paid
 
  1,659 
  1,735 
Net cash generated by discontinued operating activities before income tax paid
 
  - 
  3,667 
Net cash generated by operating activities before income tax paid
 
  1,659 
  5,402 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
The following table presents a detail of significant non-cash transactions occurred in the three-month period ended September 30, 2021 and 2020:
 
 
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
Increase in rights of use through increased lease liabilities
  - 
  37 
Increase of trade and other receivables through a decrease of associates and joint ventures
  - 
  17 
Decrease of interest in associates and joint ventures
  - 
  47,236 
Increase of investment properties through an increase of borrowings
  - 
  124 
Increase of trading properties through an increase of trade and other payables
  - 
  18 
Distribution of dividends in shares
  575 
  - 
Increase in investment properties through an increase in borrowings
  117 
  - 
 
 
16.
Trade and other payables
 
Group’s trade and other payables as of September 30, 2021 and June 30, 2021 were as follows:
 
 
 
September 30, 2021
 
 
June 30, 2021
 
Trade payables
  998 
  1,125 
Advances from sales, leases and services
  3,356 
  3,293 
Accrued invoices
  979 
  939 
Total trade payables
  5,333 
  5,357 
Taxes payable
  1,119 
  746 
Other payables
  1,002 
  990 
Total other payables
  2,121 
  1,736 
Total trade and other payables
  7,454 
  7,093 
Non-current
  1,702 
  1,516 
Current
  5,752 
  5,577 
Total
  7,454 
  7,093 
 
 
17.
Borrowings
 
The breakdown of the Group’s borrowings as of September 30, 2021 and June 30, 2021 was as follows:
 
 
 
Total as of September 30, 2021
 
 
Total as of June 30, 2021
 
 
Fair value as of September 30, 2021
 
 
Fair value as of June 30, 2021
 
NCN
  55,473 
  56,700 
  53,715 
  53,306 
Bank loans
  2,687 
  3,405 
  2,687 
  3,419 
Bank overdrafts
  4,993 
  5,775 
  4,993 
  5,770 
Other borrowings
  1,595 
  1,511 
  1,595 
  1,511 
AABE Debt
  281 
  282 
  281 
  282 
Loans with non-controlling interests
  53 
  227 
  53 
  227 
Total borrowings
  65,082 
  67,900 
  63,324 
  64,515 
Non-current
  51,226 
  51,061 
    
    
Current
  13,856 
  16,839 
    
    
Total
  65,082 
  67,900 
    
    
 
 
 
20
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
Issuance of IRSA Non-convertible Notes
 
On August 26, 2021, the Company issued USD 58.1 Non-convertible Notes in the local market through the following instruments:
 
●
Series XIII: denominated in dollars and payable in pesos at the applicable exchange rate for USD 58.1 million at a fixed rate of 3.9%, with semi-annual payments. The principal payment will be in three installments, counted from the date of issuance: the first for 25% of the nominal value on August 26, 2023; the second for 25% on February 26, 2024, and the third for 50% of the nominal value on August 26, 2024. The price of issuance was 100.0% of the nominal value.
 
The funds have been used to refinance short-term liabilities.
 
 
18.
Provisions
 
The table below shows the movements in the Group's provisions categorized by type:
 
 
 
Three Months ended September 30, 2021
 
 
Year ended June 30, 2021
 
 
 
Legal claims (i)
 
 
Investments in associates and joint ventures (ii)
 
 
Total
 
 
Total
 
Beginning of period / year
  279 
  7 
  286 
  9,033 
Additions
  25 
  - 
  25 
  11 
Share of loss of associates
  - 
  1 
  1 
  - 
Deconsolidation
  - 
  - 
  - 
  (7,754)
Recovery
  (12)
  - 
  (12)
  (57)
Used during the period / year
  (29)
  - 
  (29)
  (141)
Inflation adjustment
  (23)
  - 
  (23)
  (125)
Currency translation adjustment
  - 
  - 
  - 
  (681)
End of period / year
  240 
  8 
  248 
  286 
Non-current
    
    
  101 
  125 
Current
    
    
  147 
  161 
Total
    
    
  248 
  286 
 
(i)
Additions and recovery are included in "Other operating results, net".
(ii)
Corresponds to investments in Puerto Retiro, company that has negative equity. The increase and recovery are included in "Share of profit of associates and joint ventures ".
 
There were no significant changes to the processes mentioned in Note 18 to the Annual Financial Statements.
 
19.
Taxes
 
The details of the Group’s income tax, is as follows:
 
 
September 30, 2021
 
 
September 30, 2020
 
Current income tax (i)
  (1,426)
  (8)
Deferred income tax
  3,892 
  (12,125)
Income tax from continuing operations
  2,466 
  (12,133)
 
(i)
If the merger with IRSA CP is approved by the General Shareholders' Meeting, the income tax liability from the absorbed company will be offset with the unrecognized tax loss carryforwards which amounts to ARS 12,869.
 
 
 
21
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Below is a reconciliation between income tax recognized and the amount which would result from applying the prevailing tax rate on profit before income tax for the three-month period ended September 30, 2021 and 2020:
 
 
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
Profit from continuing operations at tax rate applicable in the respective countries
  1,218 
  (10,380)
Permanent differences:
    
    
Share of profit of associates and joint ventures
  54 
  (67)
Unrecognized tax loss carryforwards
  463 
  (3,682)
Inflation adjustment permanent difference
  2,471 
  680 
Tax rate differential
  (12)
  2,494 
Non-taxable profit, non-deductible expenses and others
  (279)
  338 
Tax inflation adjustment
  (1,449)
  (1,516)
Income tax from continuing operations
  2,466 
  (12,133)
 
The gross movement in the deferred income tax account is as follows:
 
 
 
September 30, 2021
 
 
June 30, 2021
 
Beginning of period / year
  (74,643)
  (71,245)
Currency translation adjustment
  - 
  1,836 
Deconsolidation
  - 
  17,150 
Assets held for sale
  - 
  42 
Revaluation surplus reserve
  - 
  (91)
Deferred income tax charge
  3,892 
  (22,335)
End of period / year
  (70,751)
  (74,643)
Deferred income tax assets
  560 
  487 
Deferred income tax liabilities
  (71,311)
  (75,130)
Deferred income tax liabilities, net
  (70,751)
  (74,643)
 
20.
Revenues
 
 
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
Rental and services income
  3,909 
  1,989 
Sales of trading properties and developments
  - 
  455 
Revenue from hotels operation and tourism services
  473 
  9 
Total Group’s revenues
  4,382 
  2,453 
 
21.
Expenses by nature
 
The Group discloses expenses in the statements of income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosures regarding expenses by nature and their relationship to the function within the Group.
 
 
 
Costs
 
 
General and administrative expenses
 
 
Selling expenses
 
 
Total as of September 30, 2021
 
 
Total as of September 30, 2020
 
Cost of sale of goods and services
  39 
  - 
  - 
  39 
  448 
Salaries, social security costs and other personnel expenses
  643 
  310 
  20 
  973 
  848 
Depreciation and amortization
  95 
  54 
  - 
  149 
  186 
Fees and payments for services
  52 
  106 
  15 
  173 
  311 
Maintenance, security, cleaning, repairs and others
  530 
  61 
  1 
  592 
  440 
Advertising and other selling expenses
  175 
  - 
  11 
  186 
  37 
Taxes, rates and contributions
  165 
  21 
  176 
  362 
  477 
Director´s fees
  - 
  142 
  - 
  142 
  435 
Leases and service charges
  40 
  10 
  1 
  51 
  59 
Allowance for doubtful accounts, net
  - 
  - 
  111 
  111 
  69 
Other expenses
  15 
  33 
  3 
  51 
  31 
Total as of September 30, 2021
  1,754 
  737 
  338 
  2,829 
  - 
Total as of September 30, 2020
  1,673 
  982 
  686 
  - 
  3,341 
 
 
 
 
22
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
22.
Cost of goods sold and services provided
 
 
 
Total as of September 30, 2021
 
 
Total as of September 30, 2020
 
Inventories at the beginning of the period
  2,001 
  19,458 
Purchases and expenses
  1,794 
  11,742 
Currency translation adjustment
  (37)
  12,597 
Disposals
  - 
  (962)
Deconsolidation
  - 
  (5,149)
Inventories at the end of the period
  (2,004)
  (2,456)
Total costs
  1,754 
  35,230 
 
The following table presents the composition of the Group’s inventories as of September 30, 2021 and June 30, 2021:
 
 
 
Total as of September 30, 2021
 
 
Total as of June 30, 2021
 
Real estate
  1,928 
  1,922 
Others
  76 
  79 
Total inventories at the end of the period (*)
  2,004 
  2,001 
 
(*) Inventories include trading properties and inventories.
 
 
23.
Other operating results, net
 
 
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
Donations
  (16)
  (28)
Lawsuits and other contingencies
  (13)
  (39)
Operating interest expense
  66 
  64 
Others
  215 
  19 
Total other operating results, net
  252 
  16 
 
 
24.
Financial results, net
 
 
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
Finance income:
 
 
 
 
 
 
 - Interest income
  62 
  27 
 - Dividend income
  - 
  18 
 - Other finance income
  - 
  41 
Total finance income
  62 
  86 
Finance costs:
    
    
 - Interest expenses
  (1,863)
  (2,265)
 - Loss on debt swap
  - 
  (7)
 - Other finance costs
  (141)
  (299)
Subtotal finance costs
  (2,004)
  (2,571)
Capitalized finance costs
  - 
  142 
Total finance costs
  (2,004)
  (2,429)
Other financial results:
    
    
 - Fair value gain of financial assets and liabilities at fair value through profit or loss, net
  124 
  1,220 
 - Exchange differences, net
  2,842 
  (13)
 - (Loss) / gain from repurchase of negotiable obligations
  (1)
  31 
 - Gain / (loss) from derivative financial instruments, net
  3 
  (286)
 - Other financial results
  (2)
  - 
Total other financial results
  2,966 
  952 
 - Inflation adjustment
  340 
  (89)
Total financial results, net
  1,364 
  (1,480)
 
 
 
23
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
25.
Related party transactions
 
The following is a summary of the balances with related parties as of September 30, 2021 and June 30, 2021:
 
Item
 
 September 30, 2021
 
 
 June 30, 2021
 
Trade and other receivables
  2,639 
  3,258 
Investments in financial assets
  1,596 
  1,721 
Borrowings
  (983)
  (986)
Trade and other payables
  (652)
  (499)
Total
  2,600 
  3,494 
 
 Related party
 
 September 30, 2021
 
 
 June 30, 2021
 
 Description of transaction
 Item
New Lipstick LLC
  24 
  25 
 Reimbursement of expenses receivable
 Trade and other receivable
Condor
  - 
  601 
 Public companies securities
 Trade and other receivable
 
  312 
  313 
 Loans granted
 Trade and other receivable
 
  6 
  5 
 Others
 Trade and other receivable
 
  50 
  52 
 Others
 Investment in financial assets
Lipstick Management LLC
  (167)
  (175)
 Loans obtained
 Borrowings
Metropolitan 885 Third Av. LLC
  (489)
  (516)
 Loans obtained
 Borrowings
La Rural S.A.
  73 
  80 
 Loans granted
 Trade and other receivable
 
  204 
  223 
 Dividends
 Trade and other receivable
 
  (3)
  (14)
 Leases and/or rights of use payable
 Trade and other payables
Other associates and joint ventures
  - 
  2 
 Reimbursement of expenses receivable
 Trade and other receivable
 
  (38)
  (39)
 Loans obtained
 Borrowings
 
  14 
  7 
  Leases and/or rights of use receivable
 Trade and other receivable
 
  (2)
  (2)
 Unpaid contributions
 Trade and other payables
 
  7 
  7 
 Reimbursement of expenses receivable
 Trade and other receivable
 
  (97)
  (115)
 NCN
 Borrowings
 
  (24)
  (80)
 Others
 Trade and other payables
 
  12 
  26 
 Others
 Trade and other receivable
 
  1 
  1 
 Share based payments
 Trade and other payables
 
  (2)
  (7)
 Lease liabilities
 Trade and other payables
 
  9 
  8 
 Loans granted
 Trade and other receivable
Total associates and joint ventures
  (110)
  402 
 
 
Cresud
  38 
  14 
 Reimbursement of expenses receivable
 Trade and other receivable
 
  (159)
  (97)
 Corporate services payable
 Trade and other payables
 
  1,546 
  1,669 
 NCN
 Investment in financial assets
 
  (227)
  (157)
 Others
 Trade and other payables
 
  (3)
  (3)
 Share based payments
 Trade and other payables
Total parent company
  1,195 
  1,426 
 
 
Futuros y Opciones S.A.
  - 
  (104)
 Loans obtained
 Borrowings
 
  3 
  3 
 Others
 Trade and other receivable
Helmir S.A.
  (33)
  (35)
 NCN
Borrowings
Total subsidiaries of parent company
  (30)
  (136)
 
 
Directors
  (230)
  (138)
 Fees for services received
 Trade and other payables
 
  5 
  5 
 Advances
 Trade and other receivable
Finkelstein
  (159)
  - 
 Loans obtained
 Borrowings
Yad Levim LTD
  1,681 
  1,758 
 Loans granted
 Trade and other receivable
Others (1)
  (1)
  (1)
 Legal Services
 Trade and other payables
 
  - 
  (2)
 Loans obtained
 Borrowings
 
  237 
  160 
 Others
 Trade and other receivable
 
  (2)
  (1)
 Management Fee
 Trade and other payables
 
  14 
  21 
 Reimbursement of expenses receivable
 Trade and other receivable
Total directors and others
  1,545 
  1,802 
 
 
 Total at the end of the period / year
  2,600 
  3,494 
 
 
 
(1)
Includes CAMSA, Estudio Zang, Bergel & Viñes, Austral Gold, Fundación IRSA, Hamonet S.A., CAM Communication LP, Gary Gladstein and Fundación Museo de los Niños.
 
 
24
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
The following is a summary of the results with related parties for the three-month periods ended September 30, 2021 and 2020:
 
Related party
 
 Three Months ended September 30, 2021
 
 
 Three Months ended September 30, 2020
 
Description of transaction
 BACS
  20 
  43 
 Leases and/or rights of use
 BHN Vida S.A
  6 
  - 
 Leases and/or rights of use
 BHN Seguros Generales S.A.
  6 
  - 
 Financial operations
 Helmir
  1 
  - 
 Financial operations
 Other associates and joint ventures
  (8)
  14 
 Leases and/or rights of use
 
  - 
  (14)
 Corporate services
Total associates and joint ventures
  25 
  43 
 
Cresud
  (43)
  6 
 Leases and/or rights of use
 
  (212)
  (311)
 Corporate services
 
  (2)
  456 
 Financial operations
Total parent company
  (257)
  151 
 
 Directors
  (140)
  (785)
 Fees and remunerations
 Senior Management
  (24)
  - 
 Fees and remunerations
 
  14 
  - 
 Financial operations
 
  (5)
  - 
 Legal services
 
  - 
  (30)
 Fees and remuneration
Total others
  (155)
  (815)
 
Total at the end of the period
  (387)
  (621)
 
 
(1)
Includes Isaac Elsztain e Hijos, CAMSA. Hamonet S.A., Ramat Hanassi, Estudio Zang, Bergel y Viñes, Austral Gold, La Rural, New Lipstick, Condor, TGLT and Fundación IRSA.
 
The following is a summary of the transactions with related parties for the three-month periods ended September 30, 2021 and 2020:
 
Related party
 
 Three Months ended September 30, 2021
 
 
 Three Months ended September 30, 2020
 
Quality
  27 
  12 
Condor
  577 
  - 
Total capital contributions
  604 
  12 
We Are Appa (former Pareto)
  - 
  81 
Total other transactions
  - 
  81 
 
 
 
25
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
26.
CNV General Resolution N° 622
 
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622, below there is a detail of the notes to the Unaudited Condensed Interim Consolidated Financial Statements that disclose the information required by the Resolution in Exhibits.
 
Exhibit A - Property, plant and equipment
Note 8 Investment properties and Note 9 Property, plant and equipment
Exhibit B - Intangible assets
Note 11 Intangible assets
Exhibit C - Investment in associates
Note 7 Investments in associates and joint ventures
Exhibit D - Other investments
Note 13 Financial instruments by category
Exhibit E – Provisions
Note 18 Provisions
Exhibit F - Cost of sales and services provided
Note 22 Cost of goods sold and services provided
Exhibit G - Foreign currency assets and liabilities
Note 27 Foreign currency assets and liabilities
 
27.
Foreign currency assets and liabilities
 
Book amounts of foreign currency assets and liabilities are as follows:
 
Item / Currency (1)
 
Amount (2)
 
 
Peso exchange rate (3)
 
 
Total as of 09.30.2021
 
 
Total as of 06.30.2021
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  35 
  98.540 
  3,433 
  3,552 
Euros
  0 
  113.883 
  26 
  26 
Receivables with related parties:
    
    
    
    
US Dollar
  20 
  98.740 
  2,018 
  2,100 
Total trade and other receivables
    
    
  5,477 
  5,678 
Investments in financial assets
    
    
    
    
US Dollar
  8 
  98.540 
  770 
  738 
Pounds
  1 
  132.625 
  82 
  109 
Nuevo Israel Shekel
  20 
  30.590 
  618 
  667 
Investments with related parties:
    
    
    
    
US Dollar
  23 
  98.740 
  2,282 
  2,450 
Total investments in financial assets
    
    
  3,752 
  3,964 
Cash and cash equivalents
    
    
    
    
US Dollar
  10 
  98.540 
  1,012 
  1,152 
Euros
  0 
  113.883 
  1 
  1 
Total cash and cash equivalents
    
    
  1,013 
  1,153 
Total Assets
    
    
  10,242 
  10,795 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  11 
  98.740 
  1,111 
  1,321 
Euros
  0 
  114.361 
  14 
  35 
Payables to related parties:
    
    
    
    
US Dollar
  0 
  98.740 
  7 
  58 
Total Trade and other payables
    
    
  1,132 
  1,414 
Borrowings
    
    
    
    
US Dollar
  539 
  98.740 
  53,242 
  54,744 
Borrowings with related parties
    
    
    
    
US Dollar
  15 
  98.740 
  1,500 
  1,590 
Total Borrowings
    
    
  54,742 
  56,334 
Derivative financial instruments
    
    
    
    
US Dollar
  0 
  98.740 
  45 
  63 
Total derivative financial instruments
    
    
  45 
  63 
Lease liabilities
    
    
    
    
US Dollar
  8 
  98.740 
  824 
  855 
Lease liabilities with related parties
    
    
    
    
US Dollar
  0 
  98.740 
  2 
  7 
Total lease liabilities
    
    
  826 
  862 
Total Liabilities
    
    
  56,745 
  58,673 
 
(1) Considering foreign currencies those that differ from each Group’s subsidiaries functional currency at each period/year-end.
(2) Stated in millions of each foreign currency.
(3) Exchange rates as of September 30, 2021 according to Banco de la Nación Argentina.
 
 
26
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
28.
Results from discontinued operations
 
The results of the discontinued operations include the IDBD / DIC operations which were deconsolidated in the comparative period (see Note 4.G to the Annual Financial Statements).
 
 
 
 
Three Months ended September 30, 2021
 
 
Three Months ended September 30, 2020
 
Revenues
  - 
  41,357 
Costs
  - 
  (33,557)
Gross profit
  - 
  7,800 
Net gain from fair value adjustment of investment properties
  - 
  (30)
General and administrative expenses
  - 
  (4,760)
Selling expenses
  - 
  (4,535)
Other operating results, net
  - 
  1,548 
Profit from operations
  - 
  23 
Share of profit of associates and joint ventures
  - 
  786 
Profit before financial results and income tax
  - 
  809 
Finance income
  - 
  574 
Finance cost
  - 
  (7,541)
Other financial results
  - 
  498 
Financial results, net
  - 
  (6,469)
Profit before income tax
  - 
  (5,660)
Income tax
  - 
  302 
Loss from operations that are discontinued
  - 
  (5,358)
Loss for loss of control
  - 
  (4,394)
Loss from discontinued operations
  - 
  (9,752)
 
    
    
Loss for the period from discontinued operations attributable to:
    
    
Equity holders of the parent
  - 
  (7,702)
Non-controlling interest
  - 
  (2,050)
Loss per share from discontinued operations attributable to equity holders of the parent:
    
    
Basic
  - 
  (13.39)
Diluted
  - 
  (13.39)
 
 
29.
Other relevant events of the period
 
Economic context in which the Group operates
 
The Group operates in a complex context both due to macroeconomic conditions, whose main variables have recently experienced strong volatility, as well as regulatory, social, and political conditions, both nationally and internationally.
 
The results from operations may be affected by fluctuations in the inflation and the exchange rate of the Argentine peso against other currencies, mainly the dollar, changes in interest rates which have an impact on the cost of capital, changes in government policies, capital controls and other political or economic events both locally and internationally.
 
In December 2019, a new strain of coronavirus (SARS-COV-2), which caused severe acute respiratory syndrome (COVID-19) appeared in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response, countries have taken extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, closing businesses deemed non-essential, instructing residents to practice social distancing, implementing lockdowns, among other measures. The ongoing pandemic and these extraordinary government measures are affecting global economic activity, resulting in significant volatility in global financial markets.
 
 
27
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
On March 3, 2020, the first case of COVID-19 was registered in the country and as of today, more than 5,290,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentinian Government implemented a series of health measures of social, preventive and mandatory lockdown at the national level with the closure of non-essential activities, including shopping malls, as well as the suspension of flights and border closures, for much of the year 2020. Since October 2020, a large part of the activities started to become more flexible, in line with a decrease in infections, although between April 16 and June 11, 2021, because of the sustained increase in the cases registered, the National Government established restrictions on night activity and the closure of shopping malls in Buenos Aires Metropolitan Area. Due to the flexibility that has occurred in the economic activities since the beginning of this fiscal year and as of the date of issuance of these financial statements, 100% of the shopping malls are operational.
 
At the local environment, the following circumstances were observed:
 
●
In August 2021, the Monthly Economic Activity Estimator (“EMAE” in Spanish) reported by the National Institute of Statistics and Censuses (“INDEC” in Spanish), registered a variation of 12.8% compared to the same month of 2020, and 1.1% compared to the previous month.
 
●
The annual retail inflation reached 52.47% in the last 12 months. The survey on market expectations prepared by the Argentine Central Bank in September 2021, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 48.2% i.a. for December 2021 and 46.0% for December 2022. Analysts participating in the REM forecast a rebound in economic activity in 2021, reaching an economic growth of 7.6%.
 
●
In the period from September 2020 to September 2021, the Argentine peso depreciated 29.6% against the US dollar according to the wholesale average exchange rate of Banco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of September 30, 2021, there is an exchange gap of approximately 78.9% between the official price of the dollar and its price in parallel markets, which impacts the level of activity in the economy and affects the level of reserves of the Argentine Central Bank. Additionally, these exchange restrictions, or those that may be dictated in the future, could affect the Group's ability to access the Single Free Exchange Market (“MULC” in Spanish) to acquire the necessary currencies to meet its financial obligations.
 
COVID-19 PANDEMIC
 
As described above, the COVID-19 pandemic has adversely impacted both the global economy and the Argentine economy and the Group's business, mainly in Shopping Malls and Hotels segments. Since the beginning of fiscal year 2022, and until the date of presentation of the financial statements, the Company's shopping malls are fully operational, as well as the office buildings, despite the remote work modality that some tenants continue to apply. Regarding hotels, although they have been operating since December 2020, the sector continues working with certain restrictions on air flows and the influx of international tourism.
 
The final extent of the Coronavirus outbreak and its impact on the country's economy is still uncertain. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Group’s ability to meet its financial commitments for the next twelve months.
 
The Group is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.
 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
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Subsequent events
 
IRSA Shareholders’ Meeting
 
On October 21, 2021, the Ordinary Shareholders’ Meeting approved among others:
 
Partially write off the special reserve in the amount of ARS 30,693 which, restated for inflation at the time of the shareholders’ meeting, amounts to the sum of ARS 33,543, and use it for the total absorption of the negative result for the fiscal year ended June 30, 2021.
 
 
Sale of Catalinas Tower building
 
On November 2, 2021, our subsidiary, IRSA CP, completed the sale of three medium-height floors of the “261 Della Paolera” tower located in the Catalinas district of the Autonomous City of Buenos Aires for a total area of approximately 3,582 square meters and 36 parking lots located in the building.
 
The transaction price was approximately ARS 3,197, which as of the date of issuance of these financial statements were paid in full.
 
 
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