6-K 1 fy21q2irsa.htm FINANCIAL STATEMENTS IIQ21 fy21q2irsa
 
 
 
 
 
  
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Unaudited Condensed Interim Consolidated Financial Statements as of December 31, 2020 and for the six and three-month periods ended as of that date, presented comparatively
 
 
 
 
  
Legal information
 
Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
 
Fiscal year N°: 78, beginning on July 1st, 2020.
 
Legal address: 261 Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina. (In process).
 
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: 578,676,460 shares.
 
Common Stock subscribed, issued and paid up nominal value (in millions of ARS): 579.
 
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. (In process).
 
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: 62.29% (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 ARS 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.
 
 
 

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 
9
Note 5 – Financial risk management and fair value estimates 
11
Note 6 – Segment information 
11
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 
17
Note 12 – Right-of-use assets 
17
Note 13 – Financial instruments by category 
18
Note 14 – Trade and other receivables 
20
Note 15 – Cash flow information 
20
Note 16 – Trade and other payables 
22
Note 17 – Borrowings 
22
Note 18 – Provisions 
25
Note 19 – Taxes 
25
Note 20 – Revenues 
26
Note 21 – Expenses by nature 
26
Note 22 – Cost of goods sold and services provided 
27
Note 23 – Other operating results, net 
27
Note 24 – Financial results, net 
27
Note 25 – Related party transactions 
28
Note 26 – CNV General Resolution N° 622 
30
Note 27 – Foreign currency assets and liabilities 
30
Note 28 – Groups of assets and liabilities held for sale 
31
Note 29 – Results from discontinued operations 
31
Note 30 – Other significant events of the period 
32
Note 31 – Subsequent Events 
34
 
 
 
 
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
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.
IFISA
 
Inversiones Financieras del Sur S.A.
IFRS
 
International Financial Reporting Standards
IRSA, The Company”, “Us”, “We”
 
IRSA Inversiones y Representaciones Sociedad Anónima
IRSA CP
 
IRSA Propiedades Comerciales S.A.
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.
Quality
 
Quality Invest S.A.
Shufersal
 
Shufersal Ltd.
Tarshop
 
Tarshop S.A.
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 December 31, 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
  12.31.2020 
  06.30.2020 
ASSETS
 
    
    
Non-current assets
 
    
    
Investment properties
 8
  164,276 
  272,713 
Property, plant and equipment
 9
  3,330 
  45,219 
Trading properties
 10, 22
  1,476 
  5,820 
Intangible assets
 11
  1,315 
  33,299 
Right-of-use assets
 12
  680 
  23,801 
Investments in associates and joint ventures
 7
  13,580 
  89,161 
Deferred income tax assets
 19
  214 
  759 
Income tax and MPIT credit
 
  25 
  30 
Restricted assets
 13
  - 
  2,242 
Trade and other receivables
 14
  2,242 
  27,719 
Investments in financial assets
 13
  772 
  4,210 
Derivative financial instruments
 13
  - 
  170 
Total non-current assets
 
  187,910 
  505,143 
Current assets
 
    
    
Trading properties
 10, 22
  52 
  2,776 
Inventories
 22
  69 
  5,613 
Restricted assets
 13
  - 
  7,441 
Income tax and MPIT credit
 
  146 
  368 
Group of assets held for sale
 28
  - 
  49,951 
Trade and other receivables
 14
  7,609 
  44,516 
Investments in financial assets
 13
  2,732 
  23,291 
Financial assets held for sale
 13
  - 
  4,047 
Derivative financial instruments
 13
  6 
  253 
Cash and cash equivalents
 13
  1,605 
  108,294 
Total current assets
 
  12,219 
  246,550 
TOTAL ASSETS
 
  200,129 
  751,693 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity attributable to equity holders of the parent (according to corresponding statement)
 
  70,107 
  68,466 
Non-controlling interest
 
  22,174 
  78,535 
TOTAL SHAREHOLDERS’ EQUITY
 
  92,281 
  147,001 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Borrowings
 17
  40,942 
  356,932 
Lease liabilities
 
  725 
  16,031 
Deferred income tax liabilities
 19
  42,177 
  52,778 
Trade and other payables
 16
  1,440 
  2,600 
Provisions
 18
  120 
  3,671 
Employee benefits
 
  - 
  536 
Derivative financial instruments
 18
  22 
  66 
Salaries and social security liabilities
 
  31 
  234 
Total non-current liabilities
 
  85,457 
  432,848   
Current liabilities
 
    
    
Trade and other payables
 16
  7,206 
  35,562 
Borrowings
 17
  14,531 
  93,891 
Lease liabilities
 
  59 
  5,835 
Provisions
 18
  135 
  2,924 
Group of liabilities held for sale
 28
  - 
  26,621 
Salaries and social security liabilities
 
  376 
  4,920 
Income tax and MPIT liabilities
 
  6 
  749 
Derivative financial instruments
 13
  78 
  1,342 
Total current liabilities
 
  22,391 
  171,844 
TOTAL LIABILITIES
 
  107,848 
  604,692 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  200,129 
  751,693 
 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
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 six and three-month periods ended December 31, 2020 and 2019
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
Six month
 
 
Three month
 
 
Note
  12.31.2020 
  12.31.2019 
  12.31.2020 
  12.31.2019 
Revenues
20
  4,951 
  10,916 
  3,160 
  5,921 
Costs
21, 22
  (2,629)
  (4,006)
  (1,408)
  (2,133)
Gross profit
 
  2,322 
  6,910 
  1,752 
  3,788 
Net gain / (loss) from fair value adjustment of investment properties
8
  9,266 
  5,293 
  (17,552)
  (8,455)
General and administrative expenses
21
  (1,515)
  (1,590)
  (798)
  (854)
Selling expenses
21
  (787)
  (758)
  (286)
  (430)
Other operating results, net
23
  (109)
  (1)
  (89)
  61 
Profit / (loss) from operations
 
  9,177 
  9,854 
  (16,973)
  (5,890)
Share of loss of associates and joint ventures
7
  (453)
  (1,513)
  (617)
  (2,333)
Income / (loss) before financial results and income tax
 
  8,724 
  8,341 
  (17,590)
  (8,223)
Finance income
24
  68 
  148 
  6 
  56 
Finance costs
24
  (3,167)
  (3,912)
  (1,394)
  (1,928)
Other financial results
24
  3,164 
  (5,769)
  2,470 
  4,420 
Inflation adjustment
24
  1,171 
  331 
  1,203 
  769 
Financial results, net
 
  1,236 
  (9,202)
  2,285 
  3,317 
Profit / (loss) before income tax
 
  9,960 
  (861)
  (15,305)
  (4,906)
Income tax (expense) / benefit
19
  (4,004)
  (2,720)
  4,855 
  69 
Profit / (loss) for the period from continuing operations
 
  5,956 
  (3,581)
  (10,450)
  (4,837)
(Loss) / profit for the period from discontinued operations
29
  (7,120)
  10,192 
  - 
  (5,268)
(Loss) / profit for the period
 
  (1,164)
  6,611 
  (10,450)
  (10,105)
Other comprehensive income:
 
    
    
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
    
    
Currency translation adjustment
 
  (35)
  (778)
  1,226 
  (2,783)
Other reserves
 
  285 
  - 
  285 
  - 
Items that may not be reclassified subsequently to profit or loss, net of income tax:
 
    
    
    
    
Actuarial profit from defined contribution plans
 
  - 
  - 
  - 
  12 
Other comprehensive income / (loss) for the period from continuing operations
 
  250 
  (778)
  1,511 
  (2,771)
Other comprehensive (loss) / income for the period from discontinued operations
 
  (8,395)
  10,838 
  - 
  (4,811)
Total other comprehensive (loss) / income for the period
 
  (8,145)
  10,060 
  1,511 
  (7,582)
Total comprehensive (loss) / income for the period
 
  (9,309)
  16,671 
  (8,939)
  (17,687)
 
    
    
    
    
Total comprehensive income / (loss) from continuing operations
 
  6,206 
  (4,359)
  (8,939)
  (7,608)
Total comprehensive (loss) / income from discontinued operations
 
  (15,515)
  21,030 
  - 
  (10,079)
Total comprehensive (loss) / income for the period
 
  (9,309)
  16,671 
  (8,939)
  (17,687)
 
    
    
    
    
(Loss) / profit for the period attributable to:
 
    
    
    
    
Equity holders of the parent
 
  (584)
  (1,936)
  (7,950)
  (6,955)
Non-controlling interest
 
  (580)
  8,547 
  (2,500)
  (3,150)
 
    
    
    
    
Profit / (loss) from continuing operations attributable to:
 
    
    
    
    
Equity holders of the parent
 
  5,054 
  (3,800)
  (7,949)
  (4,074)
Non-controlling interest
 
  902 
  219 
  (2,501)
  (763)
 
    
    
    
    
Total comprehensive (Loss) / income attributable to:
 
    
    
    
    
Equity holders of the parent
 
  (3,356)
  (5,314)
  (6,601)
  (9,285)
Non-controlling interest
 
  (5,953)
  21,985 
  (2,338)
  (8,402)
 
    
    
    
    
Total comprehensive (Loss) / income from continuing operations attributable to:
 
    
    
    
    
Equity holders of the parent
 
  8,789 
  14,421 
  (7,948)
  12,126 
Non-controlling interest
 
  (2,583)
  (18,780)
  (991)
  (19,734)
 
    
    
    
    
Loss per share attributable to equity holders of the parent:
 
    
    
    
    
Basic
 
  (1.02)
  (3.37)
  (13.83)
  (12.10)
Diluted
 
  (1.02)
  (3.37)
  (13.83)
  (12.10)
 
    
    
    
    
Profit / (loss) per share from continuing operations attributable to equity holders of the parent:
 
    
    
    
    
Basic
 
  8.79 
  (6.61)
  (13.82)
  (7.09)
Diluted
 
  8.76 
  (6.61)
  (13.82)
  (7.09)
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements. 
 
IRSA Inversiones y Representaciones Sociedad Anónima  
 
 
 
Date
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 six-month periods ended December 31, 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 
  2 
  16,335 
  17,426 
  114 
  581 
  11,271 
  7,064 
  15,098 
  68,466 
  78,535 
  147,001 
Loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (584)
  (584)
  (580)
  (1,164)
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2,772)
  - 
  (2,772)
  (5,373)
  (8,145)
Total profit and other comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2,772)
  (584)
  (3,356)
  (5,953)
  (9,309)
Assignment of results according to A.G.O.
  - 
  - 
  - 
  - 
  - 
  752 
  - 
  13,655 
  (14,407)
  - 
  - 
  - 
Distribution of dividends in shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (580)
  (580)
  - 
  (580)
Capitalisation of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  13 
  13 
Dividend distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2,141)
  (2,141)
Decrease due to loss of control
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (49,886)
  (49,886)
Other changes in equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  5,839 
  - 
  5,839 
  972 
  6,811 
Reserve for share-based payments
  - 
  - 
  - 
  - 
  2 
  - 
  - 
  (2)
  - 
  - 
  - 
  - 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (262)
  - 
  (262)
  634 
  372 
Balance as of December 31, 2020
  575 
  2 
  16,335 
  17,426 
  116 
  1,333 
  11,271 
  23,522 
  (473)
  70,107 
  22,174 
  92,281 
 
(1) Includes ARS 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 December 31, 2020 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
 
 
Special reserve
 
 
Reserve for defined contribution plans
 
 
Other reserves from subsidiaries
 
 
Revaluation surplus
 
 
Total Other reserves
 
Balance as of July 1, 2020
  (206)
  (6,316)
  236 
  2,028 
  (873)
  (407)
  12,458 
  (436)
  128 
  452 
  7,064 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,111)
  (86)
  - 
  163 
  - 
  262 
  (2,772)
Total comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,111)
  (86)
  - 
  163 
  - 
  262 
  (2,772)
Reserve for share-based payments
  1 
  - 
  (3)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2)
Distribution of dividends in shares
  - 
  - 
  - 
  - 
  - 
  - 
  13,655 
  - 
  - 
  - 
  13,655 
Changes in non-controlling interest
  - 
  (262)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (262)
Other changes in equity
  - 
  (60)
  - 
  - 
  5,175 
  (5)
  - 
  856 
  (128)
  1 
  5,839 
Balance as of December 31, 2020
  (205)
  (6,638)
  233 
  2,028 
  1,191 
  (498)
  26,113 
  583 
  - 
  715 
  23,522 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/ Saúl Zang
 
 
 
Name  Saúl Zang
 
 
 
Title  Vicepresident I
 
 
 
4
 
 
IRSA Inversiones y Representaciones Sociedad Anónima 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the six-month periods ended December 31, 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 
  2 
  16,335 
  17,426 
  94 
  581 
  11,268 
  81,556 
  (72,895)
  54,942 
  92,060 
  147,002 
Adjustments previous periods (IFRS 9 and 15)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (1,391)
  (1,391)
  (1,031)
  (2,422)
Balance as of July 1, 2019 (recast)
  575 
  2 
  16,335 
  17,426 
  94 
  581 
  11,268 
  81,556 
  (74,286)
  53,551 
  91,029 
  144,580 
(Loss) / profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (1,936)
  (1,936)
  8,547 
  6,611 
Other comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,378)
  - 
  (3,378)
  13,438 
  10,060 
Total profit / (loss) and other comprehensive income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,378)
  (1,936)
  (5,314)
  21,985 
  16,671 
Assignment of results according to A.G.O.
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (176)
  (176)
Loss absorption
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (72,453)
  72,453 
  - 
  - 
  - 
Issuance of shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  102 
  102 
Distribution of dividends in shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (707)
  - 
  (707)
  - 
  (707)
Capitalisation of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  31 
  31 
Dividend distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (1,654)
  (1,654)
Decrease due to loss of control
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (51,868)
  (51,868)
Other changes in equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  29 
  29 
  209 
  238 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (810)
  - 
  (810)
  4,403 
  3,593 
Balance as of December 31, 2019
  575 
  2 
  16,335 
  17,426 
  94 
  581 
  11,268 
  4,208 
  (3,740)
  46,749 
  64,061 
  110,810 
 
(1) Includes ARS 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 December 31, 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
  (197)
  (6,326)
  248 
  2,028 
  317 
  (10)
  (373)
  85,618 
  126 
  125 
  81,556 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,183)
  - 
  - 
  - 
  (195)
  - 
  (3,378)
Total comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,183)
  - 
  - 
  - 
  (195)
  - 
  (3,378)
Reserve for share-based payments
  7 
  - 
  (7)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Distribution of dividends in shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (707)
  - 
  - 
  (707)
Changes in non-controlling interest
  - 
  (810)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (810)
Loss absorption
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (72,453)
  - 
  - 
  (72,453)
Balance as of December 31, 2019
  (190)
  (7,136)
  241 
  2,028 
  (2,866)
  (10)
  (373)
  12,458 
  (69)
  125 
  4,208 
 
   
 
IRSA Inversiones y Representaciones Sociedad Anónima  
 
 
 
 
 
Date
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 six-month periods ended December 31, 2020 and 2019
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina 
 
 
Note
  12.31.2020   
  12.31.2019   
Operating activities:
 
    
    
Net cash generated from continuing operating activities before income tax paid
15
  1,964 
  5,512 
Income tax and MPIT paid
 
  (34)
  (294)
Net cash generated from continuing operating activities
 
  1,930 
  5,218 
Net cash generated from discontinued operating activities
 
  2,473 
  17,626 
Net cash generated from operating activities
 
  4,403 
  22,844 
Investing activities:
 
    
    
Contributions and issuance of capital in associates and joint ventures
 
  (27)
  (162)
Acquisition and improvements of investment properties
 
  (2,032)
  (1,695)
Proceeds from sales of investment properties
 
  14,158 
  4 
Acquisitions and improvements of property, plant and equipment
 
  (75)
  (97)
Acquisitions of intangible assets
 
  (9)
  (20)
Acquisitions of subsidiaries, net of cash acquired
 
  - 
  (97)
Net increase of restricted deposits
 
  - 
  (250)
Dividends collected from associates and joint ventures
 
  - 
  82 
Proceeds from loans granted
 
  - 
  37 
Acquisitions of investments in financial assets
 
  (11,732)
  (14,502)
Proceeds from disposal of investments in financial assets
 
  15,351 
  19,283 
Interest received from financial assets
 
  313 
  391 
Dividends received from financial assets
 
  - 
  10 
Loans granted to related parties
 
  - 
  (275)
Loans granted
 
  - 
  (1,172)
Net cash generated from continuing investing activities
 
  15,947 
  1,537 
Net cash generated from discontinued investing activities
 
  35,434 
  17,278 
Net cash generated from investing activities
 
  51,381 
  18,815 
Financing activities:
 
    
    
Borrowings and issuance of non-convertible notes
 
  3,303 
  9,711 
Payment of borrowings and non-convertible notes
 
  (27,252)
  (12,940)
Collections of short term loans, net
 
  2,377 
  1,740 
Interests paid
 
  (3,754)
  (3,628)
Repurchase of non-convertible notes
 
  (133)
  (2,676)
Acquisition of non-controlling interest in subsidiaries
 
  (144)
  (343)
Loans received from associates and joint ventures, net
 
  - 
  109 
Dividends paid to non-controlling interest in subsidiaries
 
  (2,064)
  (276)
Sale of own non-convertible notes
 
  3,138 
  - 
Net proceeds from derivate financial instrument
 
  (336)
  (11)
Net cash used in continuing financing activities
 
  (24,865)
  (8,314)
Net cash used in discontinued financing activities
 
  (14,492)
  (54,022)
Net cash used in financing activities
 
  (39,357)
  (62,336)
Net decrease in cash and cash equivalents from continuing activities
 
  (6,988)
  (1,559)
Net increase / (decrease) in cash and cash equivalents from discontinued activities
 
  23,415 
  (19,118)
Net increase / (decrease) in cash and cash equivalents
 
  16,427 
  (20,677)
Cash and cash equivalents at beginning of period
 
  108,294 
  103,600 
Cash and cash equivalents reclassified as held-for-sale
 
  - 
  (711)
Deconsolidation of subsidiaries
 
  (115,963)
  - 
Foreign exchange gain and inflation adjustment on cash and changes in fair value of cash equivalents
 
  (7,153)
  5,943 
Cash and cash equivalents at end of period
13
  1,605 
  88,155 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
  
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
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 February 12, 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 IFIS Limited is our ultimate parent company.
 
The Group, with the acquisition of IDBD, established two Operations Centers, Argentina and Israel, to manage its global business. With the loss control of the Israel Operations Center and its deconsolidation from October 1, 2020, the Group manages its operations through a single Operation Center.
 
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 and as required by IFRS 5, the results of the Israel Operations Center have been reclassified to discontinued operations for all periods presented.
 
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 six month ended December 31, 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.
 
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)
 
 
7
 
 
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 December 31, 2020, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
 
 
 
Quarter ended September 30, 2020
 
 
Quarter ended December 31, 2020
 
 
As of December 31, 2020 (accumulated six months)
 
Price variation
  8%
  11%
  20%
 
As a consequence of the aforementioned, these financial statements as of December 31, 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 December 31, 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 notes 1 and 6 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.
 
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 ranging between July and December, compared to the period between January and June.
 
 
8
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
4.           Acquisitions and disposals
 
Significant acquisitions and disposals for the six-month period ended December 31, 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 ARS 477.7 (US$ 6.7), which has been paid in full.
 
On August 25, 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 ARS 2,562 (US$ 34.7), which has been paid in full.
 
On November 5, 2020, IRSA CP has signed a purchase and sale agreement with possession of 4 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 3,892 square meters and 15 parking lots located in the building. The price of the transaction was ARS 1,812 (US$ 22.9).
 
On November 12, 2020, IRSA CP has signed with an unrelated third party a purchase and sale agreement with possession of 3 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 3,266 square meters, a commercial space located on the ground floor of approximately 225 square meters and 15 parking lots located in the building. The price of the transaction was ARS 1,521 (US$ 19.1).
 
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 ARS 6,300 (US$ 87), 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 through 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 before August 7, 2020.
 
D.
Condor Merger Agreement
 
On July 19, 2019, Condor entered into a merger agreement with Nexponint 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 ordinary share. 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.
 
 
9
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
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 Nexponint Hospitality Trust and some of its affiliates ("NHT Parties") to resolve any and all claims between them related to the aforementioned merger agreement.
 
According to this agreement, NHT and its affiliates shall make three payments to Condor in three installments ending on December 30, 2020 and totalling USD 7.0. As of the date of these financial statements, the total compensation for breach of the contract has been collected.
 
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
  93,794 
Property, plant and equipment
  38,292 
Trading properties
  6,136 
Intangible assets
  29,161 
Right-of-use assets
  20,629 
Investments in associates and joint ventures
  38,654 
Deferred income tax assets
  453 
Income tax credit
  340 
Restricted assets
  6,703 
Trade and other receivables
  56,408 
Investments in financial assets
  25,249 
Derivative financial instruments
  294 
Inventories
  3,760 
Group of assets held for sale
  43,909 
Cash and cash equivalents
  115,963 
TOTAL ASSETS
  479,745 
Borrowings
  339,376 
Lease liabilities
  18,908 
Deferred income tax liabilities
  12,975 
Trade and other payables
  25,363 
Income tax liabilities
  475 
Provisions
  5,661 
Employee benefits
  498 
Derivative financial instruments
  498 
Salaries and social security liabilities
  3,532 
Group of liabilities held for sale
  22,985 
TOTAL LIABILITIES
  430,271 
TOTAL NET ASSETS
  49,474 
Non-controlling interest
  (49,886)
Result for loss of control
  (412)
Recycling of currency translation adjustment and other reserves
  (2,797)
Total result for loss of control (*)
  (3,209)
 
(*) Included within discontinued operations
 
  
 
 
10
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 

F. Distribution of dividends in kind
 
On October 26, 2020, the Ordinary and Extraordinary Shareholders’ Meeting of IRSA, approved, a dividend distribution in kind for the equivalent amount of ARS 484 (representative of ARS 0.84 per share) payable in shares of IRSA CP. IRSA CP’s quoted price per share as of October 23, 2020, was considered and, it amounted to 320 pesos per share. As a result 1,512,500 shares were distributed. This transaction was accounted for as a change in equity generating a reduction of the equity attributable to the controlling shareholders for ARS 673 restated for inflation as of the date of these financial statements. As of the end of the period the groups interest in IRSA CP amounts to 79.92%.
 
               G. Manibil Sale
 
On December 22, 2020, the Company sold 217,332,873 ordinary Class B shares, nominative not endorsable, with a nominal value of ARS 1 and entitled to one vote per share owned by the Company, representing 49% of the stock capital of MANIBIL S.A., a company dedicated to real estate developments. The price for the sale of the shares amounts to ARS 576.9. The operation was completed in February 2021, for which the Company is no longer a shareholder of MANIBIL S.A.
 
5.
Financial risk management and fair value estimates
 
These Financial Statements do not include all the information and disclosures on financial risk management; therefore, they should be read along with Note 5 to the 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, 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 used to report its financial performance separately in two Operations Centers. However, as described in Note 1, during September 2020 the Group lost control of IDBD and has reclassified its results to discontinued operations. Because of losing control of IDBD, from October 1, 2020, the Group reports its financial performance through a single Operation Center. Segment information for the period ended December 31, 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 December 31, 2020 and 2019:
 
 
 
Six Months ended December 31, 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
  3,854 
  (17)
  1,127 
  (13)
  4,951 
Costs
  (1,423)
  31 
  (1,237)
  - 
  (2,629)
Gross profit / (loss)
  2,431 
  14 
  (110)
  (13)
  2,322 
Net gain from fair value adjustment of investment properties
  9,774 
  (508)
  - 
  - 
  9,266 
General and administrative expenses
  (1,538)
  3 
  - 
  20 
  (1,515)
Selling expenses
  (794)
  7 
  - 
  - 
  (787)
Other operating results, net
  (104)
  1 
  1 
  (7)
  (109)
Profit / (loss) from operations
  9,769 
  (483)
  (109)
  - 
  9,177 
Share of profit of associates and joint ventures
  (807)
  354 
  - 
  - 
  (453)
Segment profit / (loss)
  8,962 
  (129)
  (109)
  - 
  8,724 
Reportable assets
  184,867 
  (958)
  - 
  16,220 
  200,129 
Reportable liabilities
  - 
  - 
  - 
  (107,848)
  (107,848)
Net reportable assets
  184,867 
  (958)
  - 
  (91,628)
  92,281 

 
 
11
 
 
 
 
 
Six Months ended December 31, 2019
 
 
 
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
  8,891 
  (54)
  2,095 
  (16)
  10,916 
Costs
  (1,852)
  31 
  (2,189)
  4 
  (4,006)
Gross profit / (loss)
  7,039 
  (23)
  (94)
  (12)
  6,910 
Net gain from fair value adjustment of investment properties
  5,637 
  (344)
  - 
  - 
  5,293 
General and administrative expenses
  (1,617)
  7 
  - 
  20 
  (1,590)
Selling expenses
  (730)
  5 
  (33)
  - 
  (758)
Other operating results, net
  (39)
  19 
  27 
  (8)
  (1)
Profit / (loss) from operations
  10,290 
  (336)
  (100)
  - 
  9,854 
Share of profit of associates and joint ventures
  (1,755)
  242 
  - 
  - 
  (1,513)
Segment profit / (loss)
  8,535 
  (94)
  (100)
  - 
  8,341 
Reportable assets
  139,307 
  (812)
  - 
  34,758 
  173,253 
Reportable liabilities
  - 
  - 
  - 
  (122,649)
  (122,649)
Net reportable assets
  139,307 
  (812)
  - 
  (87,891)
  50,604 
 
(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 8,482 and ARS 6,051 as of December 31, 2020 and 2019 respectively.
 
Below is a summarized analysis of the segments from the Group’s Operations Center in Argentina for the periods ended December 31, 2020 and 2019:
 
  
 
Six Months ended December 31, 2020
 
  
 
Operations Center in Argentina
 
  
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  1,943 
  1,118 
  358 
  119 
  297 
  - 
  19 
  3,854 
Costs
  (292)
  (91)
  (371)
  (335)
  (251)
  - 
  (83)
  (1,423)
Gross profit / (loss)
  1,651 
  1,027 
  (13)
  (216)
  46 
  - 
  (64)
  2,431 
Net (loss) / gain from fair value adjustment of investment properties
  (4,762)
  7,796 
  6,167 
  - 
  3 
  - 
  570 
  9,774 
General and administrative expenses
  (674)
  (178)
  (146)
  (157)
  (31)
  (325)
  (27)
  (1,538)
Selling expenses
  (116)
  (79)
  (529)
  (47)
  (20)
  - 
  (3)
  (794)
Other operating results, net
  (65)
  (8)
  (37)
  10 
  (1)
  - 
  (3)
  (104)
(Loss) / profit from operations
  (3,966)
  8,558 
  5,442 
  (410)
  (3)
  (325)
  473 
  9,769 
Share of profit of associates and joint ventures
  - 
  - 
  (15)
  - 
  (542)
  - 
  (250)
  (807)
Segment (loss) / profit
  (3,966)
  8,558 
  5,427 
  (410)
  (545)
  (325)
  223 
  8,962 
 
    
    
    
    
    
    
    
    
Investment properties and trading properties
  54,295 
  69,176 
  44,353 
  - 
  111 
  - 
  2,026 
  169,961 
Investment in associates and joint ventures
  - 
  - 
  623 
  - 
  1,858 
  - 
  7,839 
  10,320 
Other operating assets
  298 
  1,046 
  995 
  2,133 
  - 
  7 
  107 
  4,586 
Operating assets
  54,593 
  70,222 
  45,971 
  2,133 
  1,969 
  7 
  9,972 
  184,867 
 
(i) For the six-month period ended December 31, 2020, the net gain from fair value adjustment of investment properties was ARS 9,266. 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 235.0 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 8,350.9 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 103 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 4,743.8.
(d) Additionally, due to the impact of the inflation adjustment, ARS 9,323.0 were reclassified for shopping malls from “Net gain from fair value adjustment” to “Inflation Adjustment” in the Statement of Income and Other Comprehensive Income.
 
The value of our office buildings and other rental properties measured in real terms increased by 15.0% during the six-month period ended as of December 31, 2020, due to the implicit exchange rate.
 
 
12
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
  
 
Six Months ended December 31, 2019
 
  
 
Operations Center in Argentina
 

 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Revenues
  4,961 
  1,491 
  626 
  1,726 
  7 
  - 
  80 
  8,891 
Costs
  (394)
  (81)
  (350)
  (961)
  (7)
  - 
  (59)
  (1,852)
Gross profit
  4,567 
  1,410 
  276 
  765 
  - 
  - 
  21 
  7,039 
Net (loss) / gain from fair value adjustment of investment properties
  (2,554)
  4,528 
  3,463 
  - 
  - 
  - 
  200 
  5,637 
General and administrative expenses
  (594)
  (158)
  (155)
  (241)
  (74)
  (317)
  (78)
  (1,617)
Selling expenses
  (346)
  (59)
  (133)
  (184)
  - 
  - 
  (8)
  (730)
Other operating results, net
  (89)
  (42)
  (4)
  (12)
  (1)
  - 
  109 
  (39)
Profit / (loss) from operations
  984 
  5,679 
  3,447 
  328 
  (75)
  (317)
  244 
  10,290 
Share of profit of associates and joint ventures
  - 
  - 
  - 
  - 
  (519)
  - 
  (1,236)
  (1,755)
Segment profit / (loss)
  984 
  5,679 
  3,447 
  328 
  (594)
  (317)
  (992)
  8,535 
 
    
    
    
    
    
    
    
    
Investment properties and trading properties
  58,359 
  42,405 
  35,217 
  - 
  121 
  - 
  1,473 
  137,575 
Investment in associates and joint ventures
  - 
  - 
  620 
  - 
  (10,251)
  - 
  7,236 
  (2,395)
Other operating assetsInvestment
  344 
  195 
  979 
  2,250 
  244 
  7 
  108 
  4,127 
Operating assets
  58,703 
  42,600 
  36,816 
  2,250 
  (9,886)
  7 
  8,817 
  139,307 
 
Below is a summarized analysis of the segments from the Group’s Operations Center in Israel where only assets and liabilities are presented as of December 31,2019:
 
 
 
Six Months ended December 31, 2019
 
 
 
Operations Center in Israel
 
 
 
Real Estate
 
 
Supermarkets
 
 
Telecommunications
 
 
Insurance
 
 
Corporate
 
 
Others
 
 
Total
 
Operating assets
  182,170 
  30,553 
  156,780 
  9,989 
  39,527 
  90,512 
  509,531 
Operating liabilities
  (167,716)
  - 
  (122,483)
  - 
  (131,502)
  (27,623)
  (449,324)
Operating assets (liabilities), net
  14,454 
  30,553 
  34,297 
  9,989 
  (91,975)
  62,889 
  60,207 
 
7. Investments in associates and joint ventures
 
Changes in the Group’s investments in associates and joint ventures for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Beginning of the period / year
  89,142 
  42,882 
Adjustment previous periods (IFRS 9 and IAS 28)
  - 
  (2,372)
Increase of equity interest in associates and joint ventures
  - 
  4,005 
Capital contributions
  27 
  3,238 
Capital reduction
  - 
  (127)
Decrease of interest in associate (iv)
  (34,843)
  - 
Deconsolidation (iii)
  (38,654)
  34,967 
Share of profit
  121 
  10,387 
Currency translation adjustment
  (2,629)
  64 
Dividends (i)
  - 
  (2,181)
Other comprehensive income
  (44)
  (1,489)
Reclassification to held-for-sale
  - 
  (2,481)
Others
  452 
  (3)
Incorporation by business combination
  - 
  2,252 
End of the period / year (ii)
  13,572 
  89,142 
 
(i)
Note 25.
(ii)
As of December 31, 2020 and June 30, 2020 includes ARS (8) and ARS (19), reflecting interests in companies with negative equity, which were disclosed in “Provisions” (Note 18).
(iii)
The amount as of December 31, 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.
 
 
13
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
% ownership interest
 
 
Value of Group's interest in equity
 
 
Group's interest in comprehensive income / (loss)
 
Name of the entity
 
December 31, 2020
 
 
June 30, 2020
 
 
December 31, 2020
 
 
June 30, 2020
 
 
December 31, 2020
 
 
December 31, 2019
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
  49.96%
  49.96%
  189 
  560 
  (378)
  (501)
BHSA
  29.91%
  29.91%
  5,042 
  4,881 
  161 
  (1,352)
Condor
  18.89%
  18.89%
  1,601 
  1,775 
  (166)
  (18)
PBEL
  N/A 
  45.40%
  - 
  - 
  - 
  - 
Shufersal
  N/A 
  26.02%
  - 
  33,691 
  19 
  - 
Mehadrin
  N/A 
  45.41%
  - 
  - 
  - 
  - 
Gav-Yam
  N/A 
  N/A 
  - 
  32,691 
  31 
  - 
Quality
  50.00%
  50.00%
  2,919 
  2,518 
  383 
  252 
La Rural SA
  50.00%
  50.00%
  277 
  243 
  32 
  128 
TGLT
  30.20%
  N/A 
  2,047 
  2,468 
  (421)
  - 
Other joint ventures
  N/A 
  N/A 
  1,497 
  10,315 
  (2,169)
  529 
Total associates and joint ventures
    
    
  13,572 
  89,142 
  (2,508)
  (962)
 
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 
  (***) 539 
  (***) 16.342 
Condor
EE.UU.
Hotel
  2,245,100 
  (*) 232 
  (*) (11) 
  (*) 72 
PBEL
India
Real estate
  N/A 
  N/A 
  (**) (2) 
  N/A 
Shufersal
Israel
Retail
  N/A 
  N/A 
  (**) 89 
  N/A 
Mehadrin
Israel
Agropecuaria
  N/A 
  N/A 
  N/A 
  N/A 
Gav-Yam
Israel
Inmobiliaria
  N/A 
  N/A 
  (**) 76 
  N/A 
Quality
Argentina
Real estate
  203,158,129 
  406 
  766 
  5,764 
La Rural SA
Argentina
Organization of events
  714,498 
  1 
  75 
  466 
TGLT (1)
Argentina
Real estate
  279,502,813 
  925 
  (1,479)
  5,803 
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.
(***) 
Preliminary information as of December 31, 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.
 
 
14
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
8. Investment properties
 
Changes in the Group’s investment properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Six Months ended December 31, 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
  230,930 
  37,813 
  3,970 
  272,713 
  399,727 
Adjustments previous periods
  - 
  - 
  - 
  - 
  511 
Additions
  488 
  53 
  - 
  541 
  6,446 
Incorporation by business combination
  - 
  - 
  - 
  - 
  292 
Capitalized finance costs
  - 
  - 
  - 
  - 
  97 
Capitalized leasing costs
  10 
  1 
  - 
  11 
  24 
Amortization of capitalized leasing costs (i)
  (6)
  - 
  - 
  (6)
  (18)
Transfers
  (414)
  - 
  - 
  (414)
  - 
Reclassification to assets held for sale
  - 
  - 
  - 
  - 
  (29,040)
Deconsolidation
  (91,416)
  (951)
  (1,427)
  (93,794)
  (188,810)
Disposals
  (14,154)
  - 
  - 
  (14,154)
  (18,159)
Currency translation adjustment
  (9,607)
  (99)
  (159)
  (9,865)
  64,089 
Net (loss)/ gain from fair value adjustment
  1,683 
  6,006 
  1,555 
  9,244 
  37,554 
Fair value at the end of the period / year
  117,514 
  42,823 
  3,939 
  164,276 
  272,713 
 
(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:
 
 
  12.31.2020 
  12.31.2019 
Rental and services income
  4,187 
  8,568 
Direct operating expenses
  (1,633)
  (2,696)
Development reimbursements / (expenses)
  (88)
  (63)
Net realized gain from fair value adjustment of investment properties (i) (ii)
  7,915 
  672 
Net unrealized gain from fair value adjustment of investment properties
  1,351 
  4,621 
 
(i) As of December 31, 2020 includes ARS 3,950 for the sale of Torre Boston and ARS 3,965 for the sale of Bouchard 710. As of December 31, 2019 includes ARS 436 corresponding to the barter transaction of the Caballito Ferro land and ARS 236 for the deconsolidation of the La Maltería S.A land.
 
(ii) As of December 31, 2020, (ARS 1,209) corresponds to the realized result from fair value adjustment for the period ((ARS 835) for the sale of Torre Boston and (ARS 374) for the sale of Bouchard 710) and ARS 9,124 for realized result from fair value adjustment made in previous years (ARS 4,786 for the sale of Torre Boston and ARS 4,338 for the sale of Bouchard 710). As of December 31, 2019 ARS 60 corresponds to net realized fair value adjustment on investment properties for the period (which includes the barter transaction of the Caballito Ferro land) and ARS 612 corresponds to the realized fair value adjustment made in previous years (ARS 376 corresponding to the barter transaction of the Caballito Ferro land and ARS 236 for the deconsolidation of the La Maltería S.A. land).
 
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 December 31, 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.
 
 
15
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
9. Property, plant and equipment
 
Changes in the Group’s property, plant and equipment for the six-month period ended December 31, 2020 and for the year ended June 30, 2019 were as follows:
 
 
 
Six Months ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Agricultural establishments
 
 
Buildings and facilities
 
 
Machinery and equipment
 
 
Communication networks
 
 
Others
 
 
Total
 
 
Total
 
Costs
  11,384 
  14,475 
  5,373 
  120,965 
  15,453 
  167,650 
  139,721 
Accumulated depreciation
  (6,167)
  (8,300)
  (4,529)
  (95,660)
  (7,775)
  (122,431)
  (101,484)
Net book amount at the beginning of the period / year
  5,217 
  6,175 
  844 
  25,305 
  7,678 
  45,219 
  38,237 
Additions
  44 
  92 
  10 
  464 
  594 
  1,204 
  6,798 
Disposals
  - 
  (22)
  (1)
  (44)
  - 
  (67)
  (3,961)
Incorporation by business combination
  - 
  - 
  - 
  - 
  - 
  - 
  7,320 
Deconsolidation
  (4,869)
  (3,419)
  (634)
  (22,599)
  (6,771)
  (38,292)
  (1,272)
Reclassification to assets assets held for sale
  - 
  (22)
  - 
  - 
  - 
  (22)
  (328)
Currency translation adjustment
  (370)
  (274)
  (49)
  (1,823)
  (543)
  (3,059)
  6,981 
Transfers
  - 
  768 
  - 
  - 
  - 
  768 
  (312)
Depreciation charges (i)
  (22)
  (238)
  (32)
  (1,303)
  (826)
  (2,421)
  (8,244)
Balances at the end of the period / year
  - 
  3,060 
  138 
  - 
  132 
  3,330 
  45,219 
Costs
  - 
  6,153 
  1,939 
  - 
  447 
  8,539 
  167,650 
Accumulated depreciation
  - 
  (3,093)
  (1,801)
  - 
  (315)
  (5,209)
  (122,431)
Net book amount at the end of the period / year
  - 
  3,060 
  138 
  - 
  132 
  3,330 
  45,219 
 
(i) As of December 31, 2020, depreciation charges of property, plant and equipment were recognized as follows: ARS 140 in "Costs" and ARS 7 in "General and administrative expenses", respectively in the Statement of Income (Note 21). On the other hand, ARS 2,274 has been charged to the result of discontinued operations.
 
10. Trading properties
 
Changes in the Group’s trading properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Six Months ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Completed properties
 
 
Properties under development
 
 
Undeveloped sites
 
 
Total
 
 
Total
 
Beginning of the period / year
  2,427 
  992 
  5,177 
  8,596 
  10,018 
Additions
  - 
  (87)
  309 
  222 
  2,768 
Deconsolidation
  (1,698)
  (113)
  (4,325)
  (6,136)
  (186)
Capitalized financial costs
  - 
  256 
  - 
  256 
  14 
Currency translation adjustment
  (157)
  (17)
  (298)
  (472)
  1,051 
Transfers
  155 
  (155)
  - 
  - 
  257 
Disposals
  (630)
  (137)
  (171)
  (938)
  (5,326)
End of the period / year
  97 
  739 
  692 
  1,528 
  8,596 
Non-current
    
    
    
  1,476 
  5,820 
Current
    
    
    
  52 
  2,776 
Total
    
    
    
  1,528 
  8,596 
 
 
16
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
11. Intangible assets
 
Changes in the Group’s intangible assets for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Six Months ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Goodwill
 
 
Trademarks
 
 
Licenses
 
 
Customer relations
 
 
Information systems and software
 
 
Contracts and others
 
 
Total
 
 
Total
 
Costs
  6,763 
  10,092 
  13,530 
  28,441 
  9,485 
  16,015 
  84,326 
  70,030 
Accumulated amortization
  - 
  (950)
  (10,629)
  (25,475)
  (4,424)
  (9,549)
  (51,027)
  (39,345)
Net book amount at the beginning of the period / year
  6,763 
  9,142 
  2,901 
  2,966 
  5,061 
  6,466 
  33,299 
  30,685 
Additions
  - 
  - 
  - 
  22 
  320 
  706 
  1,048 
  5,403 
Disposals
  - 
  - 
  - 
  - 
  (88)
  - 
  (88)
  (263)
Deconsolidation
  (6,521)
  (8,469)
  (2,627)
  (2,506)
  (3,914)
  (5,124)
  (29,161)
  (3,932)
Assets incorporated by business combination
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  69 
Currency translation adjustment
  (104)
  (651)
  (208)
  (217)
  (365)
  (432)
  (1,977)
  6,923 
Amortization charges (i)
  - 
  (22)
  (66)
  (265)
  (832)
  (621)
  (1,806)
  (5,586)
Balances at the end of the period / year
  138 
  - 
  - 
  - 
  182 
  995 
  1,315 
  33,299 
Costs
  138 
  - 
  - 
  - 
  598 
  1,305 
  2,041 
  84,326 
Accumulated amortization
  - 
  - 
  - 
  - 
  (416)
  (310)
  (726)
  (51,027)
Net book amount at the end of the period / year
  138 
  - 
  - 
  - 
  182 
  995 
  1,315 
  33,299 
 
(ii) As of December 31, 2020, amortization charges were recognized in the amount of ARS 4 in "Costs" and ARS 36 in "General and administrative expenses", in the Statement of Income (Note 21). On the other hand, ARS 1,806 has been charged to the result of discontinued operations.
 
12. Right-of-use assets
 
The Group’s right-of-use assets as of December 31, 2020 and June 30, 2020 are the following:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Real Estate
  9 
  4,933 
Telecommunications
  - 
  13,188 
Machinery and equipment
  13 
  16 
Others
  658 
  5,664 
Total Right-of-use assets
  680 
  23,801 
Non-current
  680 
  23,801 
Total
  680 
  23,801 
 
The depreciation charge of the right-of use-assets is detailed below:
 
 
 
December 31, 2020
 
 
December 31, 2019
 
Real Estate
  1,180 
  643 
Telecommunications
  270 
  1,974 
Others
  42 
  165 
Total depreciation of right-of-use assets (i)
  1,492 
  2,782 
 
 
17
 

IRSA Inversiones y Representaciones Sociedad Anónima
 
(i)
Includes ARS 1,457 and ARS 2,770 charged to the result of discontinued operations as of December 31, 2020 and 2019 respectively.
 
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 December 31, 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
 
 
 
 
 
 
 
 
 
 
December 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  6,553 
  - 
  - 
  - 
  6,553 
  3,958 
  10,511 
Investments in financial assets:
    
    
    
    
    
    
    
  - Public companies’ securities
  - 
  357 
  - 
  237 
  594 
  - 
  594 
  - Bonds
  - 
  2,365 
  - 
  - 
  2,365 
  - 
  2,365 
  - Investments in financial assets with quotation
  10 
  499 
  - 
  36 
  545 
  - 
  545 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Foreign-currency future contracts
  - 
  - 
  6 
  - 
  6 
  - 
  6 
Cash and cash equivalents:
    
    
    
    
    
    
    
  - Cash at bank and on hand
  1,077 
  - 
  - 
  - 
  1,077 
  - 
  1,077 
  - Short-term investments
  - 
  528 
  - 
  - 
  528 
  - 
  528 
Total assets
  7,640 
  3,749 
  6 
  273 
  11,668 
  3,958 
  15,626 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
December 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  5,255 
  - 
  - 
  - 
  5,255 
  3,391 
  8,646 
Borrowings (excluding finance leases)
  55,471 
  2 
  - 
  - 
  55,473 
  - 
  55,473 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Foreign-currency future contracts
  - 
  1 
  19 
  - 
  20 
  - 
  20 
  - Swaps
  - 
  - 
  80 
  - 
  80 
  - 
  80 
Total liabilities
  60,726 
  3 
  99 
  - 
  60,828 
  3,391 
  64,219 
 
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)
  59,153 
  - 
  - 
  - 
  59,153 
  17,558 
  76,711 
Investments in financial assets:
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Public companies’ securities
  - 
  688 
  276 
  - 
  964 
  - 
  964 
  - Private companies’ securities
  - 
  - 
  - 
  3,486 
  3,486 
  - 
  3,486 
  - Deposits
  1,144 
  73 
  - 
  - 
  1,217 
  - 
  1,217 
  - Bonds
  - 
  11,066 
  1,731 
  - 
  12,797 
  - 
  12,797 
  - Investments in financial assets with quotation
  - 
  7,788 
  971 
  278 
  9,037 
  - 
  9,037 
Derivative financial instruments
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Foreign-currency future contracts
  - 
  - 
  155 
  - 
  155 
  - 
  155 
  - Others
  74 
  - 
  24 
  170 
  268 
  - 
  268 
Restricted assets (i)
  9,683 
  - 
  - 
  - 
  9,683 
  - 
  9,683 
Financial assets available for sale:
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Clal
  - 
  4,047 
  - 
  - 
  4,047 
  - 
  4,047 
Cash and cash equivalents:
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - Cash at bank and on hand
  29,570 
  - 
  - 
  - 
  29,570 
  - 
  29,570 
  - Short term investments
  75,057 
  3,667 
  - 
  - 
  78,724 
  - 
  78,724 
Total assets
  174,681 
  27,329 
  3,157 
  3,934 
  209,101 
  17,558 
  226,659 
 
 
 
18
 
 
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, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  29,946 
  - 
  - 
  - 
  29,946 
  8,216 
  38,162 
Borrowings (excluding finance leases)
  450,823 
  - 
  - 
  - 
  450,823 
  - 
  450,823 
Derivative financial instruments:
    
    
    
    
    
    
    
  - Foreign-currency future contracts
  - 
  - 
  165 
  - 
  165 
  - 
  165 
  - Swaps
  - 
  - 
  1,145 
  24 
  1,169 
  - 
  1,169 
  - Others
  - 
  - 
  74 
  - 
  74 
  - 
  74 
Total liabilities
  480,769 
  - 
  1,384 
  24 
  482,177 
  8,216 
  490,393 
 
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 December 31, 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 
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 December 31, 2020 and June 30, 2020:
 
 
 
Derivative financial instruments - Forwards
 
 
Investments in financial assets - Private companies' securities
 
 
Investments in financial assets - Others
 
 
Investments in financial assets - Public companies
 
 
Derivative financial instruments
 
 
Total as of December 31, 2020
 
 
Total as of June 30, 2020
 
Balances at beginning of the period / year
  (24)
  3,486 
  278 
  - 
  170 
  3,910 
  4,965 
Additions and acquisitions
  - 
  - 
  - 
  - 
  - 
  - 
  42 
Transfer to level 1
  - 
  - 
  - 
  275 
  - 
  275 
  421 
Currency translation adjustment
  - 
  - 
  - 
  - 
  - 
  - 
  982 
Deconsolidation
  24 
  (3,486)
  (243)
  - 
  (170)
  (3,875)
  - 
Write off
  - 
  - 
  - 
  - 
  - 
  - 
  (1,902)
Gain / (loss) for the period / year (i)
  - 
  - 
  1 
  (38)
  - 
  (37)
  (598)
Balances at the end of the period / year
  - 
  - 
  36 
  237 
  - 
  273 
  3,910 
 
(i)
Included within “Financial results, net” in the Statements of Income.
 
 
19
 
 
IRSA Inversiones y Representaciones Sociedad Anónima

14. Trade and other receivables
 
Group’s trade and other receivables as of December 31, 2020 and June 30, 2020 are as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Sale, leases and services receivables
  4,044 
  46,086 
Less: Allowance for doubtful accounts
  (660)
  (4,476)
Total trade receivables
  3,384 
  41,610 
Prepaid expenses
  544 
  16,175 
Borrowings, deposits and others
  3,240 
  12,020 
Advances to suppliers
  941 
  1,209 
Tax receivables
  877 
  964 
Others
  865 
  257 
Total other receivables
  6,467 
  30,625 
Total trade and other receivables
  9,851 
  72,235 
Non-current
  2,242 
  27,719 
Current
  7,609 
  44,516 
Total
  9,851 
  72,235 
 
Movements on the Group’s allowance for doubtful accounts were as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Beginning of the period / year
  4,476 
  3,180 
Additions
  339 
  1,232 
Recovery
  (52)
  (131)
Currency translation adjustment
  (246)
  1,273 
Deconsolidation
  (3,705)
  (24)
Receivables written off during the period/year as uncollectable
  (22)
  (859)
Transfer to assets held for sale
  - 
  (24)
Incorporation by business combination
  - 
  22 
Inflation adjustment
  (130)
  (193)
End of the period / year
  660 
  4,476 
 
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 six-month period ended December 31, 2020 and 2019:
 
 
Note
 
Six Months ended December 31, 2020
 
 
Six Months ended December31, 2019
 
(Loss) / profit for the period
 
  (1,164)
  6,611 
(Loss) / profit for the period from discontinued operations
 
  7,120 
  (10,192)
Adjustments for:
 
    
    
Income tax
19
  4,004 
  2,720 
Amortization and depreciation
21
  229 
  318 
Net gain from fair value adjustment of investment properties
 
  (9,266)
  (5,293)
Financial results, net
 
  (2,120)
  10,753 
Provisions and allowances
 
  72 
  199 
Share of (profit) /loss of associates and joint ventures
7
  453 
  1,513 
Changes in operating assets and liabilities:
 
    
    
Decrease in inventories
 
  10 
  1 
Decrease / (increase) in trading properties
 
  749 
  (457)
(Increase) / decrease in trade and other receivables
 
  (686)
  1,190 
Increase / (decrease) in trade and other payables
 
  2,600 
  (1,530)
Increase / (decrease) in salaries and social security liabilities
 
  7 
  (133)
Decrease in provisions
 
  (44)
  (188)
Net cash generated by continuing operating activities before income tax paid
 
  1,964 
  5,512 
Net cash generated by discontinued operating activities before income tax paid
 
  2,672 
  17,803 
Net cash generated by operating activities before income tax paid
 
  4,636 
  23,315 
 
 
 
20
 
  
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The following table presents the balances disposed because of the loss of control of IDBD:
 
 
 
09.30.2020
 
Investment properties
  93,794 
Property, plant and equipment
  38,292 
Trading properties
  6,136 
Intangible assets
  29,161 
Right-of-use assets
  20,629 
Investments in associates and joint ventures
  38,654 
Deferred income tax assets
  453 
Income tax credit
  340 
Restricted assets
  6,703 
Trade and other receivables
  56,408 
Investments in financial assets
  25,249 
Derivative financial instruments
  294 
Inventories
  3,760 
Group of assets held for sale
  43,909 
Borrowings
  (339,376)
Lease liabilities
  (18,908)
Deferred income tax liabilities
  (12,975)
Trade and other payables
  (25,363)
Income tax liabilities
  (475)
Provisions
  (5,661)
Employee benefits
  (498)
Derivative financial instruments
  (498)
Salaries and social security liabilities
  (3,532)
Group of liabilities held for sale
  (22,985)
Net value of incorporated assets that do not affect cash
  (66,489)
Cash and cash equivalents
  (115,963)
Non-controlling interest
  (49,886)
Net value of disposal assets
  (232,338)
 
The following table presents a detail of significant non-cash transactions occurred in the six-month period ended December 31, 2020 and 2019:
 
 
 
Six Months ended December 31, 2020
 
 
Six Months ended December31, 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
  - 
  334 
Increase of trade and other receivables through a decrease of associates and joint ventures
  - 
  26 
Increase of property, plant and equipment through an increase of trade and other payables
  - 
  609 
Increase of intangible assets through an increase of trade and other payables
  - 
  696 
Decrease of property, plant and equipment through an increase of receivables and tax debts
  33 
  - 
Increase of trading properties through an increase of trade and other payables
  256 
  87 
Distribution of dividends to non-controlling interest pending payment
  - 
  1,378 
Increase of investments in associates and joint ventures through a decrease of investments in financial assets
  - 
  984 
Decrease in borrowings through a decrease in financial assets
  - 
  2,942 
Distribution of dividends in shares
  580 
  707 
Increase in investment properties through an increase in borrowings
  - 
  662 
Increase of right-of-use assets through a decrease in property, plant and equipment
  - 
  26 
Increase in investments in associates and joint ventures from an increase in trade and other payables
  - 
  1,623 
Decrease of investments in associates and joint ventures through a reclassification to assets held for sale
  - 
  4,415 
Increase of investments in associates and joint ventures through an increase of trade and other payables
  - 
  83 
 
 
21
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
16. Trade and other payables
 
Group’s trade and other payables as of December 31, 2020 and June 30, 2020 were as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Trade payables
  1,126 
  22,433 
Advances from sales, leases and services
  3,102 
  3,172 
Construction obligations
  - 
  488 
Accrued invoices
  616 
  526 
Deferred income
  - 
  170 
Total trade payables
  4,844 
  26,789 
Dividends payable to non-controlling interest
  - 
  268 
Taxes payable
  369 
  191 
Other payables
  3,433 
  10,914 
Total other payables
  3,802 
  11,373 
Total trade and other payables
  8,646 
  38,162 
Non-current
  1,440 
  2,600 
Current
  7,206 
  35,562 
Total
  8,646 
  38,162 
 
17. Borrowings
 
The breakdown of the Group’s borrowings as of December 31, 2020 and June 30, 2020 was as follows:
 
 
 
Total as of December 31, 2020
 
 
Total as of June 30, 2020
 
 
Fair value as of December 31, 2020
 
 
Fair value as of June 30, 2020
 
NCN
  45,860 
  378,541 
  43,378 
  252,018 
Bank loans
  3,970 
  67,441 
  3,979 
  45,329 
Bank overdrafts
  4,132 
  2,910 
  4,132 
  2,428 
Other borrowings
  1,511 
  1,931 
  1,511 
  1,611 
Total borrowings
  55,473 
  450,823 
  53,000 
  301,386 
Non-current
  40,942 
  356,932 
    
    
Current
  14,531 
  93,891 
    
    
Total
  55,473 
  450,823 
    
    
 
Issuance of IRSA Non-convertible Notes
 
On July 21, 2020, subsequently to the closing of the fiscal year, the Company issued USD 38.4 Non-convertible Notes in the local market through the following instruments:
 
●
ARS 335.2 (equivalent to USD 4.7) 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 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 were used to refinance short-term indebtedness. On January 21, 2021, the commitments of this note were cancelled.
 
 
22
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
  
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 ARS 10,381 (US$ 140) and interest accrued as of such date in the amount of ARS 134 (US$ 1.8) were paid.
 
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.
 
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.
 
Nominal Value to be Issued: approximately USD 31.7.
 
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 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.
 
Nominal Value to be Issued (together with the Face Value to be issued as a result of the cash subscription): approximately USD 80.7 .
 
Issuance Price: 100% nominal value.
 
Maturity Date: It will be March 1, 2023.

 
 
23
IRSA Inversiones y Representaciones Sociedad Anónima
 
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.
 
The implementation of the Proposed Essential Modifications and Proposed Non-Essential Modifications were approved by the Board of Directors, on November 11, 2020.
 
●
Repayment Series I: In relation to the Exchange Offer ended on November 10, 2020, on November 12, 2020, IRSA made a partial repayment of Series I Notes for a Nominal Value of USD 178,5, after the partial repayment the Nominal Value under circulation was USD 3,1.
 
Loan to related party
 
On October 23, 2020, Dolphin Netherlands has granted a loan to Yad Leviim Ltd. in a principal amount of USD 16,250,000 at a rate interest of 5% per year. Then, on December 17, Dolphin Netherlands assigned the receivable to Tyrus S.A., partially canceling the current loan agreement between both companies. Yad Leviim Ltd. is a company controlling by Eduardo Elsztain.
 
 
24
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
18. Provisions
 
The table below shows the movements in the Group's provisions categorized by type:
 
 
 
Six months ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Legal claims (i)
 
 
Investments in associates and joint ventures (ii)
 
 
Site dismantling and remediation
 
 
Other provisions
 
 
Total
 
 
Total
 
Beginning of period / year
  2,990 
  19 
  536 
  3,050 
  6,595 
  16,677 
Additions
  51 
  - 
  22 
  (88)
  (15)
  571 
Share of loss of associates
  - 
  2 
  - 
  (1)
  1 
  (8,942)
Incorporated by business combination
  - 
  - 
  - 
  - 
  - 
  67 
Recovery
  (21)
  (13)
  - 
  - 
  (34)
  (1,261)
Used during the period / year
  (63)
  - 
  - 
  (22)
  (85)
  (997)
Inflation adjustment
  (46)
  - 
  - 
  - 
  (46)
  (81)
Deconsolidation
  (2,468)
  - 
  (521)
  (2,672)
  (5,661)
  - 
Currency translation adjustment
  (196)
  - 
  (37)
  (267)
  (500)
  561 
End of period / year
  247 
  8 
  - 
  - 
  255 
  6,595 
Non-current
    
    
    
    
  120 
  3,671 
Current
    
    
    
    
  135 
  2,924 
Total
    
    
    
    
  255 
  6,595 
 
(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:
 
 
 
December 31, 2020
 
 
December 31, 2019
 
Current income tax
  10 
  (287)
Deferred income tax
  (4,014)
  (2,252)
Minimum presumed income tax
  - 
  (181)
Income tax from continuing operations
  (4,004)
  (2,720)
 
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 six-month period ended December 31, 2020 and 2019:

 
 
Six Months ended December 31, 2020
 
 
Six months ended December 31, 2019
 
Profit from continuing operations at tax rate applicable in the respective countries
  (2,988)
  358 
Permanent differences:
    
    
Share of profit of associates and joint ventures
  136 
  (625)
Unrecognized tax loss carryforwards
  (1,184)
  (1,597)
Inflation adjustment permanent difference
  1,205 
  1,511 
Tax rate differential
  1,748 
  1,186 
Non-taxable profit, non-deductible expenses and others
  60 
  (286)
Fiscal transparency
  - 
  119 
Tax inflation adjustment
  (2,981)
  (3,386)
Income tax from continuing operations
  (4,004)
  (2,720)
 
 
 
25
IRSA Inversiones y Representaciones Sociedad Anónima
 
The gross movement in the deferred income tax account is as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Beginning of period / year
  (52,019)
  (62,344)
Currency translation adjustment
  1,397 
  1,886 
Incorporated by business combination
  - 
  (1,039)
Deconsolidation
  12,522 
  17,111 
Charged / (Credited) to the revaluation surplus reserve
  - 
  430 
Revaluation surplus reserve
  (70)
  (109)
Deferred income tax charge
  (3,793)
  (7,954)
End of period / year
  (41,963)
  (52,019)
Deferred income tax assets
  214 
  759 
Deferred income tax liabilities
  (42,177)
  (52,778)
Deferred income tax liabilities, net
  (41,963)
  (52,019)
 
20. Revenues
 
 
 
Six months ended December 31, 2020
 
 
Six months ended December 31, 2019
 
Rental and services income
  4,187 
  8,568 
Sales of trading properties and developments
  645 
  623 
Revenue from hotels operation and tourism services
  119 
  1,725 
Total Group’s revenues
  4,951 
  10,916 
 
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 December 31, 2020
 
 
Total as of December 31, 2019
 
Cost of sale of goods and services
  576 
  - 
  - 
  576 
  404 
Salaries, social security costs and other personnel expenses
  874 
  466 
  51 
  1,391 
  1,980 
Depreciation and amortization
  159 
  69 
  1 
  229 
  318 
Fees and payments for services
  39 
  253 
  220 
  512 
  394 
Maintenance, security, cleaning, repairs and others
  583 
  103 
  1 
  687 
  1,291 
Advertising and other selling expenses
  164 
  - 
  10 
  174 
  453 
Taxes, rates and contributions
  158 
  46 
  471 
  675 
  768 
Director´s fees
  - 
  504 
  - 
  504 
  352 
Leases and service charges
  52 
  16 
  10 
  78 
  95 
Allowance for doubtful accounts, net
  - 
  - 
  22 
  22 
  122 
Other expenses
  24 
  58 
  1 
  83 
  177 
Total as of December 31, 2020
  2,629 
  1,515 
  787 
  4,931 
  - 
Total as of December 31, 2019
  4,006 
  1,590 
  758 
  - 
  6,354 
 
 
 
26
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
22. Cost of goods sold and services provided
 
 
 
Total as of December 31, 2020
 
 
Total as of December 31, 2019
 
Inventories at the beginning of the period
  14,209 
  11,984 
Purchases and expenses
  23,487 
  32,166 
Capitalized finance costs
  - 
  87 
Currency translation adjustment
  (4,270)
  5,296 
Disposals
  (938)
  (3,348)
Deconsolidation
  (3,760)
  (185)
Inventories at the end of the period
  (1,597)
  (10,295)
Total costs
  27,131 
  35,705 
 
The following table presents the composition of the Group’s inventories as of December 31, 2020 and June 30, 2020:
 
 
 
Total as of December 31, 2020
 
 
Total as of June 30, 2020
 
Real estate
  1,528 
  8,596 
Telecommunications
  - 
  2,023 
Fruits
  - 
  3,242 
Others
  69 
  348 
Total inventories at the end of the period (*)
  1,597 
  14,209 
 
(*) Inventories include trading properties and inventories.
 
23. Other operating results, net
 
 
 
Six months ended December 31, 2020
 
 
Six months ended December 31, 2019
 
Gain from disposal of subsidiary and associates
  - 
  (8)
Donations
  (62)
  (70)
Lawsuits and other contingencies
  (50)
  (77)
Operating interest expense
  (15)
  49 
Others
  18 
  105 
Total other operating results, net
  (109)
  (1)
 
24. Financial results, net
 
 
 
Six months ended December 31, 2020
 
 
Six months ended December 31, 2019
 
Finance income:
 
 
 
 
 
 
 - Interest income
  48 
  144 
 
 - Dividend income
  20 
  4 
Total finance income
  68 
  148 
Finance costs:
    
    
 - Interest expenses
  (3,026)
  (3,722)
 - Loss on debt swap
  (2)
  (6)
 - Other finance costs
  (395)
  (272)
Subtotal finance costs
  (3,423)
  (4,000)
Capitalized finance costs
  256 
  88 
Total finance costs
  (3,167)
  (3,912)
Other financial results:
    
    
 - Fair value gain of financial assets and liabilities at fair value through profit or loss, net
  3,767 
  (159)
 - Exchange differences, net
  (28)
  (5,587)
 - Gain from repurchase of negotiable obligations
  (219)
  86 
 - Gain from derivative financial instruments, net
  (314)
  (109)
 - Other financial results
  (42)
  - 
Total other financial results
  3,164 
  (5,769)
 - Inflation adjustment
  1,171 
  331 
Total financial results, net
  1,236 
  (9,202)
 
 
27
 
 
25. Related party transactions
 
The following is a summary of the balances with related parties as of December 31, 2020 and June 30, 2019:
 
Item
 
 December 31, 2020
 
 
 June 30, 2020
 
Trade and other receivables
  2,319 
  1,578 
Investments in financial assets
  1,896 
  1,895 
Borrowings
  (204)
  (188)
Trade and other payables
  (1,093)
  (457)
Total
  2,918 
  2,828 
 
 
 Related party
 
 December 31, 2020
 
 
 June 30, 2020
 
 Description of transaction
 Item
New Lipstick LLC
  - 
  (92)
 Loans obtained
 Borrowings
 
  - 
  19 
 Reimbursement of expenses receivable
 Trade and other receivable
Condor
  237 
  322 
 Public companies securities
 Trade and other receivable
 
  237 
  - 
 Loans granted
 Trade and other receivable
 
  26 
  - 
 Dividends
 Trade and other receivable
Real Estate Strategies LP
  141 
  139 
 Reimbursement of expenses receivable
 Trade and other receivable
PBS Real Estate Holdings S.R.L
  - 
  566 
 Reimbursement of expenses receivable
 Trade and other receivable
Other associates and joint ventures
  9 
  146 
 Reimbursement of expenses receivable
 Trade and other receivable
 
  - 
  - 
 Leases and/or rights of use payable
 Trade and other payables
 
  (204)
  (32)
 Loans obtained
 Borrowings
 
  - 
  10 
 Management fees
 Trade and other receivable
 
  11 
  101 
  Leases and/or rights of use receivable
 Trade and other receivable
 
  204 
  243 
 Dividends
 Trade and other receivable
 
  (79)
  (1)
 Reimbursement of expenses receivable
 Trade and other payables
Total associates and joint ventures
  582 
  1,421 
 
 
Cresud
  (16)
  (4)
 Reimbursement of expenses receivable
 Trade and other payables
 
  (451)
  (294)
 Corporate services receivable
 Trade and other payables
 
  1,896 
  1,895 
 NCN
 Investment in financial assets
 
  - 
  5 
 Leases and/or rights of use receivable
 Trade and other payables
 
  (2)
  (1)
 Management fee
 Trade and other payables
 
  (3)
  (4)
 Share based payments
 Trade and other payables
Total parent company
  1,424 
  1,597 
 
 
Directors
  (454)
  (152)
 Fees for services received
 Trade and other payables
 
  - 
  5 
 Advances
 Trade and other receivable

Yad Levim LTD
  1,381 
  - 
 Loans granted
 Trade and other receivable
Others (1)
  (88)
  (1)
  Leases and/or rights of use receivable
 Trade and other receivable
 
  - 
  (64)
 Loans obtained
 Borrowings
 
  73 
  - 
 Loans granted
 Trade and other receivable
 
  - 
  22 
 Reimbursement of expenses receivable
 Trade and other receivable
Total directors and others
  912 
  (190)
 
 
 
(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.
 
 
28
 
 
  
The following is a summary of the results with related parties for the six-month periods ended December 31, 2020 and 2019:
 
Related party
 
 Six Months ended December 31, 2020
 
 
 Six months ended December 31, 2019
 
Description of transaction
 BACS
  32 
  35 
 Leases and/or rights of use
 Other associates and joint ventures
  - 
  (5)
 Financial operations
 
  (3)
  18 
 Leases and/or rights of use
 
  (17)
  18 
 Corporate services
Total associates and joint ventures
  12 
  66 
 
Cresud
  17 
  8 
 Leases and/or rights of use
 
  (295)
  (338)
 Corporate services
 
  162 
  63 
 Financial operations
Total parent company
  (116)
  (267)
 
 Directors
  (504)
  (351)
 Fees and remunerations
 Others (1)
  - 
  (159)
 Financial operations
 Otras (1)
  - 
  (18)
 Donationd
 
  12 
  (23)
 Fees and remuneration
Total others
  (492)
  (551)
 
Total at the end of the period
  (596)
  (752)
 
 
(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 six-month periods ended December 31, 2020 and 2019:
 
Related party
 
 Six Months ended December 31, 2020
 
 
 Six months ended December 31, 2019
 
Description of the operation
Condor
  - 
  35 
Dividends received
Nuevo Puerto Santa Fe S.A.
  - 
  34 
Dividends received
Emco
  - 
  20 
Dividends received
Total dividends received
  - 
  89 
 
Cresud
  350 
  451 
Dividends granted
Helmir
  - 
  11 
Dividends granted
Total dividends distribution
  350 
  462 
 
Quality
  19 
  35 
Capital contributions
Manibil
  - 
  105 
Capital contributions
Puerto Retiro
  8 
  - 
Capitalized loan
Others
  - 
  105 
Capital contributions
Total capital contributions
  27 
  245 
 
TGLT S.A.
  - 
  4,230 
Purchase and exchange of shares
Total other transactions
  - 
  4,230 
 
 
 
 
29
 
 
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 12.31.2020
 
 
Total as of 06.30.2020
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  10 
  83.950 
  862 
  3,613 
Euros
  0 
  103.074 
  12 
  1,056 
Receivables with related parties:
    
    
    
    
US Dollar
  17 
  84.150 
  1,399 
  373 
Total trade and other receivables
    
    
  2,273 
  5,042 
Investments in financial assets
    
    
    
    
US Dollar
  0 
  83.950 
  11 
  4,318 
Pounds
  1 
  114.224 
  77 
  93 
Nuevo Israel Shekel
  19 
  26.174 
  489 
  - 
Investments with related parties:
    
    
    
    
US Dollar
  0 
  84.150 
  2 
  1,453 
Total investments in financial assets
    
    
  579 
  5,864 
Cash and cash equivalents
    
    
    
    
 
US Dollar
  5 
  83.950 
  393 
  15,602 
Euros
  0 
  103.074 
  1 
  1,854 
Total cash and cash equivalents
    
    
  394 
  17,456 
Total Assets
    
    
  3,246 
  28,362 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  4 
  84.150 
  357 
  15,809 
Euros
  - 
  103.530 
  - 
  366 
Total Trade and other payables
    
    
  357 
  16,175 
Borrowings
    
    
    
    
US Dollar
  188 
  84.150 
  15,837 
  73,019 
Borrowings with related parties
    
    
    
    
US Dollar
  11 
  84.150 
  946 
  422 
Total Borrowings
    
    
  16,783 
  73,441 
Derivative financial instruments
    
    
    
    
US Dollar
  0 
  84.150 
  1 
  114 
Total derivative financial instruments
    
    
  1 
  114 
Lease liabilities
    
    
    
    
US Dollar
  0 
  84.150 
  1 
  - 
Total lease liabilities
    
    
  1 
  - 
Total Liabilities
    
    
  17,142 
  89,730 
 
(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 December 31, 2020 according to Banco de la Nación Argentina.
 
 
30
 
 
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:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Property, plant and equipment
  - 
  42,809 
Intangible assets
  - 
  1,634 
Investments in associates
  - 
  268 
Deferred income tax assets
  - 
  976 
Investment properties
  - 
  - 
Income tax credits
  - 
  - 
Trade and other receivables
  - 
  2,216 
Cash and cash equivalents
  - 
  2,048 
Total assets held-for-sale
  - 
  49,951 
Trade and other payables
  - 
  11,896 
Salaries and social security liabilities
  - 
  464 
Employee benefits
  - 
  463 
Deferred income tax liabilities
  - 
  2,341 
Borrowings
  - 
  11,457 
Total liabilities held-for-sale
  - 
  26,621 
Total net assets held-for-sale
  - 
  23,330 
 
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.
 
 
 
Six months ended December 31, 2020
 
 
Six months ended December 31, 2019
 
Revenues
  30,197 
  63,420 
Costs
  (24,502)
  (43,853)
Gross profit
  5,695 
  19,567 
Net loss from fair value adjustment of investment properties
  (22)
  (223)
General and administrative expenses
  (3,476)
  (5,443)
Selling expenses
  (3,311)
  (7,658)
Impairment of associates and joint ventures
  - 
  (2,207)
Other operating results, net (1)
  (2,078)
  19,660 
(Loss) / profit from operations
  (3,192)
  23,696 
Share of profit / (loss) of associates and joint ventures
  574 
  (608)
(Loss) / profit before financial results and income tax
  (2,618)
  23,088 
Finance income
  419 
  680 
Finance cost
  (5,506)
  (12,016)
Other financial results
  364 
  (1,015)
Financial results, net
  (4,723)
  (12,351)
(Loss) / profit before income tax
  (7,341)
  10,737 
Income tax
  221 
  (545)
(Loss) / profit from discontinued operations
  (7,120)
  10,192 
 
    
    
(Loss) / profit for the period from discontinued operations attributable to:
    
    
Equity holders of the parent
  (5,638)
  1,864 
Non-controlling interest
  (1,482)
  8,328 
(Loss) / profit per share from discontinued operations attributable to equity holders of the parent:
    
    
Basic
  (9.81)
  3.24 
Diluted
  (9.81)
  3.23 
 
(1)
As of December 31, 2020 corresponds mainly to the loss of control of IDBD by ARS 3,209; As of December 31, 2019, it mainly corresponds to the result from the loss of control of Gav-Yam by ARS 21,962 and the fair value measurement of the remaining investment.
 
 
31
 
 
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 January 29, 2021, more than 1,900,000 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 this scenario, a strong contraction of the Argentine economy was evidenced.
 
Additionally, the government is challenged to achieve a successful debt renegotiation with the International Monetary Fund (IMF). In the event that 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.
 
At the local environment, the following circumstances may be noted:
 
●
In November 2020, an indicator called “Monthly Estimator of Economic Activity” (“EMAE”) reported by the National Institute of Statistics and Censuses (“INDEC”), registered a variation of (3.7%) compared to the same month of 2019, and from 1,4% compared to the previous month.
 
●
The annual inflation reached 36.1% in 2020. The market expectations survey prepared by Central Bank in December 2020, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 49.8% for 2021. The analysts who participate in the REM foresee that in 2021 economic activity will rebound in activity, reaching an economic growth of 5.5%.
 
●
In the period from December 2019 to December 2020, the argentine peso depreciated 40.5% compared to the US dollar at the average wholesale exchange rate quoted by Banco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of December 31, 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 70%. 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.
 
 
32
 
 
 
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. From October to the date of these Financial Statements, all the Group's shopping malls are open operating with strict protocols that include reduced time to 8 hours and public restrictions, social distancing, among other safety and hygiene measures. The Entertainment category protocol is even more rigorous with closed cinemas in most cases. Although we hope to fully resume the activity in our shopping malls, the uncertainty of the situation could cause setbacks in the openings already made.
●
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.
●
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.
●
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. The reopening took place in November and December under strict protocols and, after closing, a recovery in occupancy was evidenced, mainly at the Llao Llao hotel. As a result of the foregoing, the impact on these financial statements is a 93% decrease in income in the first half of the 2021 fiscal year compared to the same period of the previous fiscal year.
 
 
33
 
 
 
In financial matters, the maturity of IRSA Series I notes for a nominal value of USD 181.5 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 and the issuance of two new series of Notes: Series VIII and Series IX for a nominal value of USD 31.7 and USD 80.7 (including USD 6.5 of new subscriptions). The exchange offer was accepted by 98.3%.
 
In the next 12 months, IRSA faces the maturity of its Class III notes for a nominal value of ARS 247.8 (equivalent to USD 2.9) maturing on February 21, 2021, Class IV notes for a value USD 51.4 nominal value due on May 21, 2021, Class VI notes for a nominal value of ARS 335 (equivalent to USD 4.0) due July 21, 2021, Class VIII notes for a nominal value of USD 10.5 (33% of the capital) maturing on November 12, 2021, bank overdrafts for an equivalent of USD 27.6 and other bank debt for USD 13.7. For its part, IRSA PC has bank debt maturities for the approximate sum of USD 24.6.
 
It is important to mention that IRSA has approved with IRSA PC a credit line for up to the sum of USD 180 for 3 years, of which as of December 31, 2020 IRSA used approximately USD 62.6, leaving the balance available. Likewise, IRSA PC has a cash position and equivalents (including current financial investments) as of December 31, 2020 of approximately USD 84.9.
 
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.
 
31. Subsequent events

After the end of the period and until the issuance of these Condensed Consolidated Interim Financial Statements, no other relevant events have occurred that could significantly affect these financial statements as of December 31, 2020.
 
 
34
 
 
Free translation from the original prepared in Spanish for publication in Argentina
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
To the Shareholders, President and Directors of
IRSA Inversiones y Representaciones Sociedad Anónima
Legal address: Carlos Della Paolera 261 - 9th floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52532274-9
 
Introduction
We have reviewed the accompanying unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima and its subsidiaries (“the Company”), which comprise the unaudited condensed interim consolidated statement of financial position at December 31, 2020, the unaudited condensed interim consolidated statements of income and other comprehensive income for the six-month period and three-month period ended December 31, 2020, the interim consolidated statements of changes in shareholders’ equity and of cash flows for the six-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 statement of financial position and the consolidated statements of income and other comprehensive income and of cash flows of the Company.
 
 
35
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
Conclusion
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim consolidated financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34 Interim financial reporting.
 
Report on compliance with current regulations
In accordance with current regulations, we report, in connection with IRSA Inversiones y Representaciones Sociedad Anónima, that:
 
a)
the unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima have not been transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
 
b)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal aspects in accordance with legal requirements;
 
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 December 31, 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 343,613.02, which is not due at that date.
 
Autonomous City of Buenos Aires, February 12, 2021 
 
/s/ PRICE WATERHOUSE & CO. S.R.L.  (Partner)
 
 
/s/ ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner)
 
Name C.P.C.E.C.A.B.A. Vº 1 Fº 17  Walter Zablocky
 
 
Name  C.P.C.E. C.A.B.A. T° 1 F° 30 José Daniel Abelovich
 
Title  Public Accountant (UNLP)C.P.C.E.C.A.B.A. Vº 340 Fº 156
 
 
Title Contador Público (UBA) C.P.C.E. C.A.B.A. T° 102 F° 191
 
 
36
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Separate Financial Statements as of December 31, 2020 and for the six and three-month periods ended as of that date, presented comparatively
 
 

 
 
 
37
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Financial Position
as of December 31, 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
  12.31.2020 
  06.30.2020 
ASSETS
 
    
    
Non-current assets
 
    
    
Investment properties
7
  33,332 
  28,689 
Property, plant and equipment
8
  34 
  21 
Trading properties
9
  560 
  560 
Intangible assets
10
  86 
  86 
Investments in subsidiaries, associates and joint ventures
6
  74,969 
  79,654 
Trade and other receivables
12
  1,120 
  675 
Total non-current assets
 
  110,101 
  109,685 
Current assets
 
    
    
Trading properties
9
  366 
  1,146 
Inventories
 
  1 
  1 
Trade and other receivables
12
  846 
  2,008 
Income tax and MPIT credit
 
  3 
  4 
Derivative financial instruments
11
  - 
  1 
Investments in financial assets
11
  9 
  323 
Cash and cash equivalents
11
  54 
  2,642 
Total current assets
 
  1,279 
  6,125 
TOTAL ASSETS
 
  111,380 
  115,810 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity (according to corresponding statements)
 
  70,634 
  67,114 
TOTAL SHAREHOLDERS’ EQUITY
 
  70,634 
  67,114 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Trade and other payables
13
  5 
  92 
Borrowings
14
  17,965 
  4,697 
Deferred income tax liabilities
15
  11,313 
  8,904 
Provisions
16
  44 
  294 
Total non-current liabilities
 
  29,327 
  13,987 
Current liabilities
 
    
    
Trade and other payables
13
  1,494 
  1,431 
Salaries and social security liabilities
 
  3 
  10 
Borrowings
14
  9,868 
  33,224 
Derivative financial instruments
11
  17 
  2 
Provisions
16
  37 
  41 
Lease liabilities
 
  - 
  1 
Total current liabilities
 
  11,419 
  34,709 
TOTAL LIABILITIES
 
  40,746 
  48,696 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  111,380 
  115,810 
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
 
38
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Income and Other Comprehensive Income
for the six and three-month periods ended December 31, 2020 and 2019
 (All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Six month
 
 
Three month
 
 
Note
  12.31.2020 
  12.31.2019 
  12.31.2020 
  12.31.2019 
Revenues
17
  2,082 
  1,772 
  1,274 
  1,234 
Costs
18
  (1,255)
  (1,373)
  (618)
  (1,091)
Gross profit
 
  827 
  399 
  656 
  143 
Net gain from fair value adjustment of investment properties
7
  4,643 
  2,158 
  (3,458)
  (1,500)
General and administrative expenses
18
  (254)
  (326)
  (135)
  (185)
Selling expenses
18
  (52)
  (108)
  (39)
  (46)
Other operating results, net
19
  (708)
  (615)
  (704)
  (594)
Profit from operations
 
  4,456 
  1,508 
  (3,680)
  (2,182)
Share of profit of subsidiaries, associates and joint ventures
6
  (950)
  205 
  (7,869)
  (7,954)
Profit before financial results and income tax
 
  3,506 
  1,713 
  (11,549)
  (10,136)
Finance income
20
  21 
  35 
  10 
  12 
Finance costs
20
  (1,682)
  (2,095)
  (707)
  (1,060)
Other financial results
20
  1,289 
  (1,845)
  1,483 
  2,073 
Inflation adjustment
20
  (104)
  255 
  272 
  823 
Financial results, net
 
  (476)
  (3,650)
  1,058 
  1,848 
Profit / (loss) before income tax
 
  3,030 
  (1,937)
  (10,491)
  (8,288)
Income tax
15
  (2,409)
  (842)
  1,774 
  928 
Profit / (loss) for the period
 
  621 
  (2,779)
  (8,717)
  (7,360)
 
    
    
    
    
Other comprehensive income:
 
    
    
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
    
    
Share of other comprehensive loss of subsidiaries, associates and joint ventures
 
  339 
  (195)
  645 
  (86)
Currency translation adjustment of subsidiaries, associates and joint ventures
 
  (3,111)
  (3,183)
  1,621 
  (2,005)
Total other comprehensive loss for the period (i)
6
  (2,772)
  (3,378)
  2,266 
  (2,091)
Total comprehensive profit for the period
 
  (2,151)
  (6,157)
  (6,451)
  (9,451)
 
    
    
    
    
Profit / (loss) per share for the period
 
    
    
    
    
Basic
 
  1.08 
  (4.83)
  (15.16)
  (12.80)
Diluted
 
  1.07 
  (4.83)
  (15.16)
  (12.80)
 
 (i) Components of other comprehensive income have no impact on income tax.
  The accompanying notes are an integral part of these Financial Statements.
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
39
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the six-month period ended December 31, 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 
  2 
  16,336 
  17,426 
  114 
  581 
  11,271 
  8,386 
  12,423 
  67,114 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  621 
  621 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2,772)
  - 
  (2,772)
Shareholders’ meeting held as of 10.26.20
  - 
  - 
  - 
  - 
  - 
  752 
  - 
  13,655 
  (14,407)
  - 
Dividend distribution in shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (580)
  (580)
Reserve for share-based payments
  - 
  - 
  - 
  - 
  2 
  - 
  - 
  (2)
  - 
  - 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  410 
  - 
  410 
Other changes in subsidiaries` equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  5,841 
  - 
  5,841 
Balance as of December 31, 2020
  575 
  2 
  16,336 
  17,426 
  116 
  1,333 
  11,271 
  25,518 
  (1,943)
  70,634 
 
 
(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 December 31, 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
  (206)
  (4,996)
  236 
  2,028 
  (872)
  12,458 
  (262)
  8,386 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3,111)
  - 
  339 
  (2,772)
Shareholders’ meeting held as of 10.26.20
  - 
  - 
  - 
  - 
  - 
  - 
  13,655 
  13,655 
Reserve for share-based payments
  1 
  - 
  (3)
  - 
  - 
  - 
  - 
  (2)
Changes in non-controlling interest
  - 
  410 
  - 
  - 
  - 
  - 
  - 
  410 
Other changes in subsidiaries` equity
  - 
  (60)
  - 
  - 
  5,176 
  - 
  725 
  5,841 
Balance as of December 31, 2020
  (205)
  (4,646)
  233 
  2,028 
  1,193 
  12,458 
  14,457 
  25,518 
 
                  The accompanying notes are an integral part of these Financial Statements.
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
40
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the six-month period ended December 31, 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 
  2 
  16,336 
  17,426 
  94 
  581 
  11,271 
  82,320 
  (72,453)
  56,152 
Adjustments of previous periods (IFRS 16 and 28)
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (1,391)
  (1,391)
Balance as of June 30, 2019 (recast)
  575 
  2 
  16,336 
  17,426 
  94 
  581 
  11,271 
  82,320 
  (73,844)
  54,761 
Loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (2,779)
  (2,779)
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,378)
  - 
  (3,378)
Shareholders’ meeting held as of 10.30.19
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (72,453)
  72,453 
  - 
Dividend distribution in shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (707)
  - 
  (707)
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (208)
  - 
  (208)
Other changes in subsidiaries` equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  26 
  26 
Balance as of December 31, 2019
  575 
  2 
  16,336 
  17,426 
  94 
  581 
  11,271 
  5,574 
  (4,144)
  47,715 
 
 
(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 December 31, 2019 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, 2019
  (197)
  (5.564)
  248 
  2.028 
  317 
  85.617 
  (129)
  82.320 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  (3.183)
  - 
  (195)
  (3.378)
Reserve for share-based payments
  7 
  - 
  (7)
  - 
  - 
  - 
  - 
  - 
Shareholders’ meeting held as of 10.30.19
  - 
  - 
  - 
  - 
  - 
  (72.453)
  - 
  (72.453)
Dividend distribution in shares
  - 
  - 
  - 
  - 
  - 
  (707)
  - 
  (707)
Changes in non-controlling interest
  - 
  (208)
  - 
  - 
  - 
  - 
  - 
  (208)
Balance as of December 31, 2019
  (190)
  (5.772)
  241 
  2.028 
  (2.866)
  12.457 
  (324)
  5.574 
 
The accompanying notes are an integral part of these Financial Statements.
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
41
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Cash Flows
for the six-month period ended December 31, 2020 and 2019
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Note
  12.31.2020 
  12.31.2019 
Operating activities
 
    
    
Profit/ (Loss) for the period
 
  621 
  (2,779)
Adjustments:
 
    
    
Income tax
15
  2,409 
  842 
Amortization and depreciation
18
  6 
  4 
Gain from disposal of trading properties
 
  (833)
  (404)
Financial results, net
 
  (769)
  4,740 
(Decrease)/ Increase in trading properties
9
  341 
  (915)
Net gain from fair value adjustment of investment properties
7
  (4,643)
  (2,158)
Share of profit of subsidiaries, associates and joint ventures
6
  950 
  (205)
Gain from disposal of subsidiaries
 
  672 
  603 
Provisions and allowances
 
  (15)
  (39)
Decrease in salaries and social security liabilities
 
  (7)
  - 
(Decrease)/ Increase in trade and other receivables
 
  (34)
  48 
Increase in trade and other payables
 
  1,270 
  1,120 
Net cash flow generated from operating activities
 
  (32)
  857 
Investing activities
 
    
    
Capital contributions to subsidiaries, associates and joint ventures
6
  (398)
  (2,141)
Issuance of capital
 
  - 
  (105)
Acquisition of property, plant and equipment
8
  (17)
  - 
Acquisition of intangible assets
10
  (2)
  (1)
Increase of investments in financial assets
 
  (903)
  (7,878)
Proceeds from sale of investments in financial assets
 
  2,041 
  8,603 
Increase in loans granted to subsidiaries, associates and joint ventures
 
  - 
  (131)
Dividends received
 
  - 
  711 
Net cash flow generated from/ (used in) investing activities
 
  721 
  (942)
Financing activities
 
    
    
Short-term loans obtained, net
 
  1,426 
  1,590 
Payment of loans
 
  (333)
  (523)
Interests paid
 
  (1,921)
  (1,762)
Loans obtained from subsidiaries, associates and joint ventures
 
  9,884 
  2,833 
Payment of loans from subsidiaries, associates and joint ventures
 
  (33)
  (788)
Payment of NCN
 
  (15,241)
  (12,396)
Issuance of NCN
 
  2,971 
  9,452 
Payments from derivative financial instruments
 
  (27)
  (33)
Net cash flow used in financing activities
 
  (3,274)
  (1,627)
Decrease in cash and cash equivalents, net
 
  (2,585)
  (1,712)
Cash and cash equivalents at the beginning of the period
11
  2,642 
  60 
Foreign exchange gain of cash and changes in fair value of cash equivalents
 
  (3)
  1,740 
Cash and cash equivalents at the end of the period
11
  54 
  88 
 
    
    
Additional information
 
    
    
Currency translation adjustment
 
  (3,111)
  (3,183)
Other comprehensive loss of subsidiaries
 
  339 
  (195)
Changes in non-controlling interest
 
  410 
  (208)
Other changes in subsidiaries` equity
 
  5,841 
  - 
Increase in borrowings through an increase in trading properties
 
  256 
  87 
Increase in investments in associates and joint ventures through a decrease in dividends received
 
  1,929 
  - 
Dividends received through a decrease in borrowings of subsidiaries
 
  6,196 
  - 
Increase in investments in associates and joint ventures through a decrease in trade and other receivables
 
  - 
  8 
Decrease in investments in associates and joint ventures through a decrease in trade and other receivables
 
  393 
  - 
Decrease in investments in associates and joint ventures through an increase in financial assets
 
  713 
  - 
Dividends paid through a decrease in investments in associates and joint ventures
 
  580 
  707 
Issuance of NCN through of payment of loans
 
  406 
  - 
 
  The accompanying notes are an integral part of these Financial Statements.
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/ Saúl Zang
 
 
 
Name Saúl Zang
 
 
 
Title Vicepresident I
 
 
42
IRSA Inversiones y Representaciones Sociedad Anónima
 
Notes to the Unaudited Condensed Interim Consolidated Separate Financial Statements
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
1.
General information and company’s business
 
IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA” or “The Company”) was founded in 1943, it is primarily engaged in managing real estate holdings in Argentina since 1991.
 
IRSA is a corporation incorporated and domiciled in Argentina. The registered office is 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 February 12, 2021.
 
2.
Basis of preparation of the Unaudited Condensed Interim Separate Financial Statements
 
2.1. 
Basis of preparation
 
These financial statements have been prepared in accordance with IAS 34 “Interim financial reporting” and should therefore be read in conjunction with the Group's annual Consolidated Financial Statements as of June 30, 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 six month ended December 31, 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.
 
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 December 31, 2020, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
 
Price variation
 
Quarter ended
September 30, 2020
 
 
Quarter ended December 31, 2020
 
 
 As of December 31, 2020 (accumulated six months)
 
 
  8%
  11%
  20%
 
43
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
As a consequence of the aforementioned, these Unaudited Consolidated Financial Statements as of December 31, 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 December 31, 2019, which are disclosed for comparative purposes, arise from the financial statements at said dates restated in accordance with IAS 29 (note 2.1).
 
2.4.            
Use of estimates
 
The preparation of Financial Statements at a certain date requires Management to make estimates and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these Unaudited Condensed Interim Separate Financial Statements. In the preparation of these Unaudited Condensed Interim Separate Financial Statements, the main significant judgments made by Management in applying the Company’s accounting policies and the major sources of uncertainty were the same that the Company used in the preparation of the Separate Financial Statements for the fiscal year ended June 30, 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 six-month period ended December 31, 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 participated, until September 30, 2020, 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 25, 2020 had a deficit in shareholders’ equity, ongoing negative cash flows from continuing operating 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
 
44
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
realization of assets which the realization date is not under IDBD´s control. As a result of the above, IDBD had 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. 2,405 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.
 
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 series.
 
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.
 
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 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 believes that, as from September 25, 2020, IRSA lost control over IDBD and DIC and consequently it has derecognized the reserves disclosed in other comprehensive income associated with said investments, recognizing a loss of Ps. 3,233 in the six-month period ended December 31, 2020.
 
Detailed below is the evolution of investments in subsidiaries, associates and joint ventures of the Company, for the six-month period ended December 31, 2020 and for the year ended June 30, 2020:
 
 
  12.31.2020 
  06.30.2020 
Beginning of period / year
  79,413 
  68,101 
Adjustments of previous periods (IFRS 16 and IAS 28)
  - 
  (1,565)
Share of (loss) / profit
  (950)
  12,929 
Other comprehensive loss
  (2,772)
  (1,180)
Capital contributions (Note 21)
  2,327 
  2,634 
Changes in non-controlling interest
  410 
  570 
Dividends
  (8,125)
  (709)
Sale of interest
  (1,175)
  (1,250)
Other changes in subsidiaries’ equity
  5,841 
  (117)
End of the period / year
  74,969 
  79,413 
 
(i)
Includes Ps. (241) reflecting interests in companies with negative equity as of June 30, 2020, which are disclosed in “Provisions” (see Note 16).
 
45
IRSA Inversiones y Representaciones Sociedad Anónima
 
 

 
Name of the entity
         
% ownership interest
         
Company´s interest in equity
         
Company’s interest in comprehensive income

 
12.31.2020 
 
 
06.30.2020 
 
 
12.31.2020 
 
 
06.30.2020 
 
 
  12.31.2020
 
 
12.31.2019
Subsidiaries
    
    
    
    
    
    
IRSA CP
  78.07%
  79.27%
  62,326 
  68,451 
  3,208 
  148 
Tyrus
  100.00%
  100.00%
  3,028 
  (241)
  (5,363)
  (2,585)
Efanur
  100.00%
  100.00%
  2,312 
  2,503 
  (192)
  263 
Ritelco S.A.
  100.00%
  100.00%
  849 
  2,214 
  (1,325)
  (53)
Inversora Bolívar S.A.
  95.13%
  95.13%
  1,093 
  1,071 
  21 
  (283)
ECLSA
  96.74%
  96.74%
  1,609 
  1,514 
  96 
  (283)
Palermo Invest S.A.
  97.00%
  97.00%
  564 
  541 
  24 
  (274)
NFSA
  76.34%
  76.34%
  431 
  488 
  (58)
  25 
Llao Llao Resort S.A.
  50.00%
  50.00%
  401 
  412 
  (11)
  (5)
HASAU
  100.00%
  100.00%
  269 
  314 
  (62)
  14 
Liveck S.A.
  9.30%
  9.30%
  65 
  64 
  (1)
  (1)
Associates
    
    
    
    
    
    
BHSA (1) (2)
  4.93%
  4.93%
  806 
  779 
  27 
  (223)
Manibil S.A.
  49.00%
  49.00%
  623 
  638 
  (15)
  - 
BACS (2)
  33.36%
  33.36%
  387 
  388 
  (1)
  (9)
Joint ventures
    
    
    
    
    
    
IRSA - Galerías Pacífico S.A. - U.T.
  50.00%
  50.00%
  151 
  225 
  (74)
  92 
Cyrsa S.A.
  50.00%
  50.00%
  55 
  52 
  4 
  1 
Total subsidiaries, associates and joint ventures
    
    
  74,969 
  79,413 
  (3,722)
  (3,173)
 
 

   
 
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 
  4,761 
  80,117 
Tyrus
Uruguay
Investment
  16,025,861,475 
  7,480 
  (2,308)
  3,029 
Efanur
Uruguay
Investment
  132,181,770 
  131 
  (183)
  2,312 
Ritelco S.A.
Uruguay
Investment
  94,369,151 
  94 
  (1,333)
  849 
Inversora Bolívar S.A.
Argentina
Investment
  88,422,547 
  93 
  19 
  1,149 
ECLSA
Argentina
Investment
  77,316,130 
  80 
  97 
  1,659 
Palermo Invest S.A.
Argentina
Investment
  155,953,673 
  161 
  25 
  895 
NFSA
Argentina
Hotel
  38,068,999 
  50 
  (84)
  737 
Llao Llao Resort S.A.
Argentina
Hotel
  73,580,206 
  147 
  (22)
  801 
HASAU
Argentina
Hotel
  25,625,473 
  26 
  (63)
  265 
Liveck S.A.
Uruguay
Investment
  41,855,579 
  415 
  (13)
  420 
Associates
 
 
    
    
    
    
BHSA (1) (2)
Argentina
Financial
  73,939,835 
  1,500 
  539 
  16,342 
Manibil S.A.
Argentina
Real estate
  151,872,872 
  444 
  (30)
  1,272 
BACS (2)
Argentina
Financial
  29,297,626 
  88 
  (3)
  1,161 
Joint ventures
 
 
    
    
    
    
IRSA - Galerías Pacífico S.A. - U.T.
Argentina
Hotel
  500,000 
  1 
  (147)
  303 
Cyrsa S.A.
Argentina
Real estate
  8,748,270 
  17 
  7 
  110 
 
 
(1)
Considered significant. See Notes 7 and 8 to the Annual Consolidated Financial Statements. Preliminary information as of December 31, 2020 according to BCRA's standards. For the purpose of the valuation of the investments in the Company, figures as of December 31, 2020 have been considered, with the necessary IFRS adjustments. Share market price of Banco Hipotecario S.A as of December 31, 2020 amounts to Ps. 9,37. See Note 8 to the Consolidated Financial Statements as of June 30, 2020.
(2)
As mentioned in note 4 G. to the Consolidated Financial Statements, the Company, on December 22, 2020, sold 217,332,873 shares, that represents the 49% of the capital stock of Manibil SA. The operation was completed in February 2021, so the Company leaves the character of shareholder of that Company from that moment.
 
7.            
Investment properties
 
Changes in the Company’s investment properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Period ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Rental properties
 
 
Undeveloped parcels of land
 
 
Total
 
 
Total
 
Fair value at the beginning of the period / year
  4,231 
  24,458 
  28,689 
  17,835 
Net gain from fair value adjustment
  685 
  3,958 
  4,643 
  10,854 
Fair value at the end of the period / year
  4,916 
  28,416 
  33,332 
  28,689 
 
46
IRSA Inversiones y Representaciones Sociedad Anónima
 
  
The following amounts have been recognized in the Statements of Comprehensive Income:
 
 
  12.31.2020 
  12.31.2019 
Sale, rental and services´ income (Note 17)
  38 
  38 
Rental and services´ costs (Note18)
  11 
  11 
Cost of sales and developments (Note18)
  24 
  22 
Net unrealized gain from fair value adjustment of investment properties
  4,643 
  2,158 
 
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
 
Changes in the Company’s property, plant and equipment for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
 
 
Period ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Buildings and facilities
 
 
Furniture and fixtures
 
 
Machinery and equipment
 
 
Vehicles
 
 
Total
 
 
Total
 
Costs
  224 
  62 
  215 
  5 
  506 
  505 
Accumulated depreciation
  (208)
  (62)
  (210)
  (5)
  (485)
  (478)
Net book amount at the beginning of the period / year
  16 
  - 
  5 
  - 
  21 
  27 
Additions
  - 
  16 
  1 
  - 
  17 
  1 
Depreciation (Note 18)
  (1)
  - 
  (3)
  - 
  (4)
  (7)
Balances at the end of the period / year
  15 
  16 
  3 
  - 
  34 
  21 
Costs
  224 
  78 
  216 
  5 
  523 
  506 
Accumulated depreciation
  (209)
  (62)
  (213)
  (5)
  (489)
  (485)
Net book amount at the end of the period / year
  15 
  16 
  3 
  - 
  34 
  21 
 
9.            
Trading properties
 
Changes in the Company’s trading properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
    
 
 
Year ended June 30, 2020
 
 
 
                       Period ended December 31, 2020
 
Ye 
 
 
 
Completed properties
 
 
Undevelopedproperties
 
 
Properties under development
 
 
Total
 
 
Total
 
 
Beginning of the period / year
 
  88 
  975 
  643 
  1,706 
  3,717 
 
Additions
 
  - 
  - 
  175 
  175 
  1,950 
 
Capitalized finance costs
 
  - 
  - 
  256 
  256 
  111 
 
Disposals (Not 18)
 
  - 
  (171)
  (1,040)
  (1,211)
  (4,072)
 
End of the period / year
 
  88 
  804 
  34 
  926 
  1,706 
 
Non-current
 
    
    
    
  560 
  560 
 
Current
 
    
    
    
  366 
  1,146 
 
Total
 
    
    
    
  926 
  1,706 
 
10.            
Intangible assets
 
Changes in Company’s intangible assets for the six -month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
 
  
 
Period ended December 31, 2020
 
 
Year ended June 30, 2020
 
 
 
Computer software
     
 
Future units to be received from barters
 
 
Total
 
 
Total
 
 
Costs
 
  41 
  67 
  108 
  105 
 
Accumulated amortization
 
  (22)
  - 
  (22)
  (18)
 
Net book amount at the beginning of the period / year
 
  19 
  67 
  86 
  87 
 
Additions
 
  2 
  - 
  2 
  3 
 
Amortization
 
  (2)
  - 
  (2)
  (4)
 
Balances at the end of the period / year
 
  19 
  67 
  86 
  86 
 
Costs
 
  43 
  67 
  110 
  108 
 
Accumulated amortization
 
  (24)
  - 
  (24)
  (22)
 
Net book amount at the end of the period / year
 
  19 
  67 
  86 
  86 
 
47
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 December 31, 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
 
 
 
 
 
 
 
 
 
 
 
December 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 12)
  
  1,195 
  - 
  - 
  1,195 
  783 
  1,978 
 
Investments in financial assets:
 
    
    
    
    
    
    
 
 - Mutual funds (ii)
 
  - 
  9 
  - 
  9 
  - 
  9 
 
Cash and cash equivalents:
 
    
    
    
    
    
    
 
 - Cash at bank and on hand
 
  54 
  - 
  - 
  54 
  - 
  54 
 
Total
 
  1,249 
  9 
  - 
  1,258 
  783 
  2,041 
    
    
    
    
    
    
    
 
 
 
Financial liabilities at amortized cost (i)
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
  
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
 
December 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 13)
 
  810 
  - 
  - 
  810 
  689 
  1,499 
 
Derivative financial instruments:
 
    
    
    
    
    
    
 
- Foreign-currency future contracts
 
  - 
  - 
  17 
  17 
  - 
  17 
 
Borrowings (Note 14)
 
  27,833 
  - 
  - 
  27,833 
  - 
  27,833 
 
Total
 
  28,643 
  - 
  17 
  28,660 
  689 
  29,349 
    
    
    
    
    
    
    
 
 
 
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)
  2,072 
  - 
  - 
  2,072 
  624 
  2,696 
 
Investments in financial assets:
 
    
    
    
    
    
    
 
 - Mutual funds (ii)
 
  - 
  323 
  - 
  323 
  - 
  323 
 
Derivative financial instruments:
 
    
    
    
    
    
    
 
 - Swaps
 
  - 
  - 
  1 
  1 
  - 
  1 
 
Cash and cash equivalents:
 
    
    
    
    
    
    
 
 - Cash at bank and on hand
 
  13 
  - 
  - 
  13 
  - 
  13 
 
 - Short-term investments
 
  1,115 
  1,514 
  - 
  2,629 
  - 
  2,629 
 
Total
 
  3,200 
  1,837 
  1 
  5,038 
  624 
  5,662 

 
 
Financial liabilities at amortized cost (i)  
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 13)
 
  736 
  - 
  736 
  787 
  1,523 
 
Derivative financial instruments:
 
    
    
    
    
    
 
- Foreign-currency future contracts
 
  - 
  2 
  2 
  - 
  2 
 
Borrowings (Note 14)
 
  37,921 
  - 
  37,921 
  - 
  37,921 
 
Total
 
  38,657 
  2 
  38,659 
  787 
  39,446 

(i)
The fair value of financial assets and liabilities at amortized cost does not differ significantly from their book value, except for borrowings (Note 14). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant.
(ii)
See description of reprofiling of public debt instruments in Note 33 to the consolidated annual financial statements.
 
48
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
As of December 31, 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.
 
12.          Trade and other receivables
 
Company’s trade and other receivables, as of December 31, 2020 and June 30, 2020 are comprised as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Sales, leases and services receivables
  324 
  1,049 
Less: Allowance for doubtful accounts
  (12)
  (13)
Total trade receivables
  312 
  1,036 
Borrowings granted, deposits and others
  722 
  848 
Advance payments
  219 
  249 
Tax credits
  537 
  353 
Prepaid expenses
  6 
  16 
Long-term incentive plan
  15 
  18 
Others
  155 
  163 
Total other receivables
  1,654 
  1,647 
Total trade and other receivables
  1,966 
  2,683 
Non-current
  1,120 
  675 
Current
  846 
  2,008 
Total
  1,966 
  2,683 
 
Movements on the Company’s allowance for doubtful accounts are as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Beginning of period /year
  13 
  43 
Additions
  6 
  5 
Disposals / Recoveries
  (4)
  (22)
Inflation adjustment
  (3)
  (13)
End of the period / year
  12 
  13 
 
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
 
Company’s trade and other payables as of December 31, 2020 and June 30, 2020 were as follows:
 
 
 
December 31, 2020
 
 
June 30, 2020
 
Customers´ advances
  682 
  775 
Trade payables
  637 
  605 
Accrued invoices
  133 
  115 
Tenant deposits
  1 
  1 
Total trade payables
  1,453 
  1,496 
Director´s fees
  23 
  - 
Long-term incentive plan
  13 
  16 
Tax amnesty plans
  1 
  2 
Other tax payables
  5 
  9 
Other
  4 
  - 
Total other payables
  46 
  27 
Total trade and other payables
  1,499 
  1,523 
Non-current
  5 
  92 
Current
  1,494 
  1,431 
Total
  1,499 
  1,523 
 
14. Borrowings
 
Company’s borrowings as of December 31, 2020 and June 30, 2020 are comprised as follows:
 
49
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
Book value as of 12.31.2020
 
 
Book value as of 06.30.2020
 
 
Fair value as of 12.31.2020
 
 
Fair value as of 06.30.2020
 
NCN
  14,141 
  26,463 
  14,257 
  26,680 
Bank loans
  1,457 
  1,726 
  1,457 
  1,726 
Related parties (Note 21)
  9,995 
  8,500 
  9,995 
  8,578 
Bank overdrafts
  2,240 
  1,232 
  2,240 
  1,232 
Total borrowings
  27,833 
  37,921 
  27,949 
  38,216 
Non-current
  17,965 
  4,697 
    
    
Current
  9,868 
  33,224 
    
    
Total
  27,833 
  37,921 
    
    
 
15. Currents and deferred income tax
 
The charge for the Company’s income tax is comprised as follows:
 
 
  12.31.2020 
  12.31.2019 
Deferred income tax
  (2,409)
  (662)
Income MPIT
  - 
  (180)
Income tax
  (2,409)
  (842)
 
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 six-month periods ended December 31, 2020 and 2019:
 
 
  12.31.2020 
  12.31.2019 
Net income at tax rate (i)
  (909)
  581 
Permanent differences:
    
    
Share of profit of subsidiaries, associates and joint ventures
  (487)
  37 
Income tax rate differential
  280 
  (117)
Difference between provision and tax return
  65 
  37 
Tax loss carryfowards´ allowance
  (1,120)
  (1,502)
Inflation adjustment for tax purposes
  (1,779)
  (1,756)
Inflation adjustment
  1,506 
  2,069 
Non deductible expenses and others
  35 
  (11)
Income tax
  (2,409)
  (662)
Forecast Income MPIT
  - 
  (180)
Income tax
  (2,409)
  (842)
 
(1) Income tax rate in effect in Argentina as of December 31, 2020 and 2019 was 30 %.

The gross movement on the deferred income tax account is the following:
 
 
  12.31.2020 
  06.30.2020 
Beginning of the period / year
  (8,904)
  (8,030)
Income tax charge
  (2,409)
  (874)
End of the period / year
  (11,313)
  (8,904)
 
 
 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
 
 
50
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
  The table below presents the changes in the Company's provisions:
 
 
Period ended December 31, 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
 
  241 
  94 
  335 
  73 
 
Additions
 
  - 
  29 
  29 
  296 
 
Decrease
 
  (241)
  (16)
  (257)
  (7)
 
Utilization
 
  - 
  (10)
  (10)
  (1)
 
Inflation adjustment
 
  - 
  (16)
  (16)
  (26)
 
End of period / year
 
  - 
  81 
  81 
  335 
 
Non current
 
    
    
  44 
  294 
 
Current
 
    
    
  37 
  41 
 
Total
 
    
    
  81 
  335 
 
(i)
Additions and decreases are included in "Other operating results, net” (Note 19).
 
17. Revenues
 
 
  12.31.2020 
  12.31.2019 
Sale of trading properties
  2,044 
  1,734 
Rental income, averaging of scheduled rental escalation and expense reimbursements
  32 
  34 
Property management fees
  6 
  4 
Sales, rental and services´ income
  2,082 
  1,772 
 
18. Expenses by nature
 
The Company discloses expenses in the Statements of Income and Other Comprehensive Income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosure regarding expenses by nature and their relationship to the function within the Company.
 
  
 
Costs (i)
 
 
General and administrative expenses
 
 
Selling expenses
 
  12.31.2020 
  12.31.2019 
 
Cost of sales of trading properties (Note 9)
 
  1,211 
  - 
  - 
  1,211 
  1,330 
 
Salaries, social security costs and other personnel expenses
 
  2 
  118 
  2 
  122 
  144 
 
Taxes, rates and contributions
 
  14 
  - 
  44 
  58 
  95 
 
Fees and payments for services
 
  1 
  35 
  2 
  38 
  54 
 
Director´s fees (Note 21)
 
  - 
  50 
  - 
  50 
  86 
 
Maintenance, security, cleaning, repairs and others
 
  23 
  19 
  - 
  42 
  40 
 
Traveling, transportation and stationery expenses
 
  - 
  8 
  - 
  8 
  22 
 
Leases and services’ charges
 
  3 
  12 
  - 
  15 
  20 
 
Advertising and other selling expenses
 
  - 
  - 
  2 
  2 
  5 
 
Bank charges
 
  - 
  7 
  - 
  7 
  7 
 
Amortization and depreciation (Note 8 and 10)
 
  1 
  5 
  - 
  6 
  4 
 
Allowance for doubtful accounts (charge and recovery, net) (Note 12)
 
  - 
  - 
  2 
  2 
  - 
 
Total expenses by nature as of 12.31.2020
 
  1,255 
  254 
  52 
  1,561 
  - 
 
Total expenses by nature as of 12.31.2019
 
  1,373 
  326 
  108 
  - 
  1,807 
 
(1)
For the six-month period ended December 31, 2020, includes Ps. 11 of rental and services costs and Ps. 1.244 of costs of sales and developments, of which Ps. 24 corresponds to investment properties and Ps. 1.220 to trading properties. For the six-month period ended December 31, 2019, includes Ps. 11 which correspond to rental and services costs; Ps. 1.362 to costs of sales and developments, of which Ps.32 corresponds to investment properties and Ps. 1.330 to trading properties.
 
19. Other operating results, net
 
 
  12.31.2020 
  12.31.2019 
Lawsuits and other contingencies (i)
  (12)
  (8)
Donations
  (31)
  (23)
Operating interest expense
  4 
  5 
Others
  3 
  14 
Loss of sale of subsidiaries, associates and joint ventures
  (672)
  (603)
Total other operating results, net
  (708)
  (615)
 
(i)
Includes legal costs and expenses.
 

51
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
20. Financial results, net
 
 
  12.31.2020 
  12.31.2019 
Interest income
  21 
  35 
Total finance income
  21 
  35 
Interest expense
  (1,802)
  (2,078)
Other finance costs
  (136)
  (104)
Subtotal finance costs
  (1,938)
  (2,182)
Capitalized finance costs
  256 
  87 
Total finance costs
  (1,682)
  (2,095)
Net exchange difference
  (541)
  (1,952)
Net gain from changes in fair value of financial assets
  1,915 
  195 
Loss from derivative financial instruments, net
  (43)
  (87)
Loss from repurchase of non-convertible notes
  - 
  (1)
Other financial results
  (42)
  - 
Total other financial results
  1,289 
  (1,845)
Inflation adjustment
  (104)
  255 
Total financial results, net
  (476)
  (3,650)
 
21.  Related party transactions
 
The following is a summary of the balances with related parties as of December 31, 2020 and June 30, 2020:
  
Item  
 December 31, 2020
 
 
 June 30, 2020
 
Trade and other receivables
  1,043 
  1,825 
Trade and other payables
  (1,151)
  (1,263)
Borrowings
  (9,995)
  (8,500)
Total
  (10,103)
  (7,938)
 
(1)
It includes AL 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 Nuevo Puerto Santa Fe.
(2)
It includes Consultores Asset Management S.A., Chacabuco 175 S.R.L. y Dolphin Fund Ltd.
 
 
52
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Related party
 
December 31, 2020
 
 
June 30, 2020
 
Operation description
Item
Cresud
  (1)
  (1)
Long-term incentive plan payable
Trade and other payables
 
  (769)
  - 
Non-Convertible Notes
Borrowings
 
  (101)
  (77)
Corporate services payable
Trade and other payables
 
  (16)
  (3)
Reimbursement of expenses payable
Trade and other payables
 
  4 
  5 
Leases receivable
Trade and other receivables
 
  (2)
  (1)
Management fee
Trade and other payables
Total parent company
  (885)
  (77)
 
 
IRSA CP
  (485)
  (750)
Reimbursement of expenses receivable
Trade and other payables
 
  109 
  737 
Reimbursement of expenses receivable
Trade and other receivables
 
  (19)
  (12)
Leases and rights of use payable
Trade and other payables
 
  (2,753)
  (4,437)
Non-Convertible Notes
Borrowings
 
  (5,445)
  (3,131)
Loans received
Borrowings
 
  (93)
  (68)
Corporate services payable
Trade and other payables
 
  (12)
  (15)
Long-term incentive plan payable
Trade and other payables
 
  (6)
  (12)
Reimbursement of expenses payable
Trade and other payables
 
  - 
  (1)
Commissions
Trade and other payables
 
  (9)
  - 
Leases payable
Trade and other payables
 
  (168)
  (169)
Other liabilities
Trade and other payables
Tyrus
  464 
  462 
Borrowings granted
Trade and other receivables
 
  1 
  1 
Reimbursement of expenses receivable
Trade and other receivables
ECLSA
  194 
  323 
Borrowings granted
Trade and other receivables
 
  107 
  129 
Dividends receivable
Trade and other receivables
Panamerican Mall S.A.
  1 
  1 
Long-term incentive plan receivable
Trade and other receivables
Efanur
  (117)
  (117)
Loans received
Borrowings
Torodur S.A.
  (593)
  (492)
Non-Convertible Notes
Borrowings
Ritelco S.A.
  (34)
  (33)
Loans received
Borrowings
NFSA
  (35)
  (38)
Loans received
Borrowings


  14 
  6 
Management fees receivables
Trade and other receivables
Fibesa S.A.
  13 
  15 
Long-term incentive plan receivable
Trade and other receivables
 
  (47)
  - 
Loans received
Borrowings
Real Estate Investment Group VII LP
  (29)
  (29)
Loans received
Borrowings
Palermo Invest S.A.
  12 
  15 
Dividends receivable
Trade and other receivables

  1 
  - 
Contributions to integrate
Trade and other receivable

  20   
  20   
 
Borrowings granted
 
Trade and other receivables 
HASAU
  2 
  2 
Hotel services receivable
Trade and other receivables
 
  - 
  (34)
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
  20 
  20 
Reimbursement of expenses receivable
Trade and other receivables
Lipstick Management LLC
  (94)
  (92)
Loans received
Borrowings
Cyrsa S.A.
  (32)
  (33)
Loans received
Borrowings
Inversora Bolívar S.A.
  10 
  11 
Dividends receivable
Trade and other receivables
 
  13 
  1 
Contributions to integrate
Trade and other receivables
 
  39 
  38 
Borrowings granted
Trade and other receivables
Liveck S.A.
  1 
  - 
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)
  (151)
Other liabilities
Trade and other payables
Emprendimiento Recoleta S.A
  1 
  1 
Long-term incentive plan receivable
Trade and other receivables
TGLT S.A.
  (84)
  - 
Other liabilities
Trade and other payables
Others subsidiaries, associates and joint ventures (1)
  3 
  3 
Reimbursement of expenses receivable
Trade and other receivables
 
  1 
  1 
Long-term incentive plan receivable
Trade and other receivables
Total subsidiaries, associates and joint ventures
  (9,153)
  (7,825)
 
 
Directors
  (23)
  - 
Fees
Trade and other payables
 
  - 
  6 
Advances granted
Trade and other receivables
 
  5 
  5 
Borrowings granted
Trade and other receivables
Total directors
  (18)
  11 
 
 
Consultores Asset Management S.A.
  - 
  16 
Reimbursement of expenses receivable
Trade and other receivables
BHN Vida S.A.
  - 
  (64)
Non-Convertible Notes
Borrowings
 
  - 
  1 
Reimbursement of expenses receivable
Trade and other receivables
 
  (16)
  - 
Non-Convertible Notes
Borrowings
 
  (5)
  - 
Reimbursement of expenses payable
Trade and other payables
 
  (31)
  - 
Surety
Borrowings
 
  4 
  - 
Other credits
Trade and other receivables
Estudio Zang, Bergel y Viñes Abogados
  - 
  (2)
Legal Services
Trade and other payables
Others subsidiaries, associates and joint ventures (2)
  1 
  2 
Reimbursement of expenses receivable
Trade and other receivables
Total others
  (47)
  (47)
 
 
Total
  (10,103)
  (7,938)
 
 
 
53
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The following is a summary of the results with related parties for the six-month period ended December 31, 2020 and 2019:
 
Related party
 
 December 31, 2020
 
 
 December 31, 2019
 
Operation description
Cresud
  12 
  4 
Leases and/or rights of use
 
  (38)
  - 
Financial operations
 
  (72)
  (80)
Corporate services
Total parent company
  (98)
  (76)
 
IRSA CP
  482 
  (671)
Financial operations
 
  (21)
  (46)
Corporate services
 
  (3)
  - 
Leases and/or rights of use
ECLSA
  4 
  27 
Financial operations
Ritelco
  - 
  (4)
Financial operations
Efanur
  (1)
  (14)
Financial operations
Tyrus
  6 
  56 
Financial operations
Lipstick
  1 
  (11)
Financial operations
REIG VII
  - 
  (1)
Financial operations
Torodur
  (41)
  (74)
Financial operations
Palermo Invest
  - 
  (4)
Financial operations
Others subsidiaries, associates and joint ventures (1)
  7 
  5 
Fees
Total subsidiaries, associates and joint ventures
  434 
  (737)
 
Directors
  (50)
  (86)
Fees
Senior Management
  (4)
  (5)
Fees
Total Directors and Senior Managment
  (54)
  (91)
 
Fundación IRSA
  (9)
  (18)
Donations
Museo de los niños
  (13)
  - 
Donations
Estudio Zang, Bergel & Viñes
  (8)
  (4)
Fees
BHN Vida S.A.
  3 
  - 
Financial operations
Others subsidiaries, associates and joint ventures (2)
  1 
  4 
Leases and/or rights of use
 
  (3)
  (7)
Donations
Total others
  (29)
  (25)
 
Total at the end of the period
  253 
  (929)
 
 
(1)
It includes ECLASA, Nuevas Fronteras S.A., HASAU, e Inversora Bolívar 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 six-month period ended December 31, 2020 and 2019:
 
Sociedad relacionada
 
 
December 31, 2020
 
 
December 31, 2019
 
Operation description
IRSA CP
  (8,125)
  (241)
Dividends distribution
Cresud
  - 
  (438)
Dividends distribution
Helmir S.A.
  - 
  (27)
Dividends distribution
 Total distribution of dividends
  (8,125)
  (706)
 
Tyrus
  (2,307)
  (2,120)
Contributions granted
HASAU
  (17)
  - 
Contributions granted
Liveck S.A.
  (3)
  (105)
Contributions granted
Manibil S.A.
  - 
  (22)
Contributions granted
Total contributions to subsidiaries
  (2,327)
  (2,247)
 
 
54
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 12.31.2020
 
 
Total as of 06.30.2020
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  3.32 
  83.950 
  279 
  339 
Euros
  0.11 
  103.074 
  11 
  10 
Receivables with related parties
    
    
    
    
US Dollar
  8.99 
  84.150 
  756 
  869 
Total Trade and other receivables
    
    
  1,046 
  1,218 
Investments in financial assets
    
    
    
    
US Dollar
  0.11 
  83.950 
  9 
  9 
Total Investments in financial assets
    
    
  9 
  9 
Derivative financial instruments
    
    
    
    
US Dollar
  - 
  - 
  - 
  1 
Total Derivative financial instruments
    
    
  - 
  1 
Cash and cash equivalents
    
    
    
    
US Dollar
  0.63 
  83.950 
  53 
  11 
Total Cash and cash equivalents
    
    
  53 
  11 
Total Assets
    
    
  1,108 
  1,239 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  0.29 
  84.150 
  24 
  128 
Payables with related parties
    
    
    
    
US Dollar
  3.20 
  84.150 
  270 
  173 
 
    
    
    
    
Total Trade and other payables
    
    
  294 
  301 
Lease liabilities
    
    
    
    
US Dollar
  - 
  - 
  - 
  1 
Total Lease liabilities
    
    
  - 
  1 
Borrowings
    
    
    
    
US Dollar
  180.40 
  84.150 
  15,181 
  27,888 
Borrowings with related parties
    
    
    
    
US Dollar
  52.43 
  84.150 
  4,412 
  8,386 
Total Borrowings
    
    
  19,593 
  36,274 
Total Liabilities
    
    
  19,887 
  36,576 
 
(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 December 31, 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
 
55
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
24.
     CNV General Resolution N° 629/14 – Storage of documentation
 
On August 14, 2014, the CNV issued General Resolution N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Company has entrusted the storage of certain non-sensitive and old information to the following provider:
 
Storage of documentation responsible
 
Location
Iron Mountain Argentina S.A.
 
Av. Amancio Alcorta 2482, Autonomous City of Buenos Aires
 
Pedro de Mendoza 2143, Autonomous City of Buenos Aires
 
Saraza 6135, Autonomous City of Buenos Aires
 
Azara 1245, Autonomous City of Buenos Aires
 
Polígono industrial Spegazzini, Autopista Ezeiza Km 45, Cañuelas, Province of Buenos Aires
 
 
Cañada de Gómez 3825, Autonomous City of Buenos Aires
 
It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of Section I, Chapter V, Title II of the CNV RULES (2013 as amended) are available at the registered office.
 
On February 5, 2014 there was a widely known accident in Iron Mountain’s warehouse. Such company is a supplier of the Company and Company’s documentation was being kept in the mentioned warehouse. Based on the internal review carried out by the Company, duly reported to the CNV on February 12, 2014, the information kept at the Iron Mountain premises that were on fire do not appear to be sensitive or capable of affecting normal operations.
 
25.
Economic context in which the Company operates
 
See Note 30 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
26.
Subsequent events
 
Subsequent to the end of the period and until the issuance of the Condensed Interim Consolidated Separate Statements, no other relevant events have occurred that could significantly affect these Condensed Interim Separate Statements as of December 31, 2020.
 
56
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 December 31, 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.
 
 
 
     Items 
 
Past due
 
 
Without term
 
 
Without term
 
  To be due                   
  
  12.31.20 
 
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
 
  50 
  361 
  7 
  274 
  33 
  37 
  91 
  1,113 
  - 
  1,966 
    
 
Total
 
  50 
  361 
  7 
  274 
  33 
  37 
  91 
  1,113 
  - 
  1,966 
 
Liabilities
 
 
Trade and other payables
 
  401 
  - 
  - 
  305 
  6 
  4 
  778 
  5 
  - 
  1,499 
    
 
Borrowings
 
  - 
  - 
  - 
  3,168 
  4,893 
  520 
  1,287 
  10,012 
  7,953 
  27,833 
    
 
Salaries and social security liabilities
 
  2 
  1 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  3 
    
 
Provisions
 
  - 
  37 
  44 
  - 
  - 
  - 
  - 
  - 
  - 
  81 
    
 
Total
 
  403 
  38 
  44 
  3,473 
  4,899 
  524 
  2,065 
  10,017 
  7,953 
  29,416 
 
4.a. 
Breakdown of accounts receivable and liabilities by maturity and currency.
 
 
 
 
 
    Current                    
    Non-current                    
    Totals                    
 
  Items
   Local currency   
   Foreign currency   
   Total   
   Local currency   
   Foreign currency   
   Total   
   Local currency   
   Foreign currency   
   Total   
Accounts receivables
Trade and other receivables
  458 
  388 
  846 
  462 
  658 
  1,120 
  920 
  1,046 
  1,966 
 
Total
  458 
  388 
  846 
  462 
  658 
  1,120 
  920 
  1,046 
  1,966 
Liabilities
Trade and other payables
  1,200 
  294 
  1,494 
  5 
  - 
  5 
  1,205 
  294 
  1,499 
 
Borrowings
  3,863 
  6,005 
  9,868 
  4,377 
  13,588 
  17,965 
  8,240 
  19,593 
  27,833 
 
Salaries and social security liabilities
  3 
  - 
  3 
  - 
  - 
  - 
  3 
  - 
  3 
 
Provisions
  37 
  - 
  37 
  44 
  - 
  44 
  81 
  - 
  81 
 
Total
  5,103 
  6,299 
  11,402 
  4,426 
  13,588 
  18,014 
  9,529 
  19,887 
  29,416 
 
 

57
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 December 31, 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 December 31, 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-accuing interest
 
 
Total
 
 
  Accruing interest      
 
Non-accruing interest (*)
 
 
Total
 
  Accruing interest      
 
Non-accruing interest (*)
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
    
    
 
Fixed rate
 
 
Floating rate
 
 
 
 
 
 
 
 
Fixed rate
 
 
Floating rate
 
 
 
 
 
 
 
 
Fixed rate
 
 
Floating rate
 
 
 
 
 
 
 
 
Accounts receivables
 
 
Trade and other receivables
 
  269 
  - 
  577 
  846 
  658 
  - 
  462 
  1,120 
  927 
  - 
  1,039 
  1,966 
    
 
Total
 
  269 
  - 
  577 
  846 
  658 
  - 
  462 
  1,120 
  927 
  - 
  1,039 
  1,966 
 
Liabilities
 
 
Trade and other payables
 
  - 
  - 
  1,494 
  1,494 
  1 
  - 
  4 
  5 
  1 
  - 
  1,498 
  1,499 
    
 
Borrowings
 
  9,858 
  - 
  10 
  9,868 
  17,965 
  - 
  - 
  17,965 
  27,823 
  - 
  10 
  27,833 
    
 
Salaries and social security liabilities
 
  - 
  - 
  3 
  3 
  - 
  - 
  - 
  - 
  - 
  - 
  3 
  3 
    
 
Provisions
 
  - 
  - 
  37 
  37 
  - 
  - 
  44 
  44 
  - 
  - 
  81 
  81 
    
 
Total
 
  9,858 
  - 
  1,544 
  11,402 
  17,966 
  - 
  48 
  18,014 
  27,824 
  - 
  1,592 
  29,416 
 
(*) Includes the balance as of 12.31.2020 of the interest payable corresponding to the loans.
 
58
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 December 31, 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.U.
  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.
 
59
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 December 31, 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, February 12, 2021.
 
60
Free translation from the original prepared in Spanish for publication in Argentina
 
 
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM SEPARATE FINANCIAL STATEMENTS
 
To the Shareholders, President and Directors of
IRSA Inversiones y Representaciones Sociedad Anónima
Legal address: Carlos Della Paolera 261 - 9th floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52532274-9
 
Introduction
 
We have reviewed the accompanying unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima (“the Company”), including the unaudited condensed interim separate statement of financial position at December 31, 2020, the unaudited condensed interim separate statements of income and other comprehensive income for the six-month period and three-month period ended December 31, 2020 and the interim separate statements of changes in shareholders’ equity and of cash flows for the six-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).
 
61
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Scope of our review
 
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim separate financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the separate statements of financial position, and the separate statements of income and other comprehensive income and of cash flows of the Company.
 
Conclusion
 
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim separate financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34 Interim Financial Reporting.
 
 
Report on compliance with current regulations
 
In accordance with current regulations, we report, in connection with IRSA Inversiones y Representaciones Sociedad Anónima, that:
 
a)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima have not been transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
 
b)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal aspects in accordance with legal requirements;
 
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;
 
62
   
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
d)
at December 31, 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 343,613.02, which was not due at that date.
 
 
Autonomous City of Buenos Aires, February 12, 2021
 
 
/s/ PRICE WATERHOUSE & CO. S.R.L. (Partner)
 
 
/s/ ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner)
 
 
Name C.P.C.E.C.A.B.A. V° 1 F° 17 Walter Zablocky
 
 
 
Name C.P.C.E. C.A.B.A. V. 134 F. 85 José Daniel Abelovich
 
Title  Public Accountant (UNLP) C.P.C.E.C.A.B.A. V. 340 F. 156
 
 
Title Public Accountant (UBA) C.P.C.E. C.A.B.A. V. 102 F. 191
 
 
 
63
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020

 
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 January 29, 2021, more than 1,900,000 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 was evidenced.
 
Additionally, the government is challenged to achieve a successful debt renegotiation with the IMF. In the event that 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.
 
At the local environment, the following circumstances are displayed:
 
●
In November 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 (3.7)% compared to the same month of 2019, and 1.4% compared to the previous month.
 
●
The annual inflation reached 36.1% in 2020. The survey on market expectations prepared by the Central Bank in December 2020, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 49.8% for 2021. The analysts who participate in the REM foresee that in 2021 economic activity will rebound in activity, reaching an economic growth of 5.5%.
 
●
In the period from December 2019 to December 2020, the argentine peso depreciated 40.5% 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 December 31, 2020 there is an exchange gap of approximately 70% between the official price of the dollar and its price in parallel markets, which impacts the level of activity
 
64
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 

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.
 
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:
 
●
As a consequence of the social, preventive and obligatory isolation, shopping malls throughout the country were closed since March 20, 2020, leaving exclusively those premises dedicated to items 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. From October to the date of these Financial Statements, all the Group's shopping malls are open operating with strict protocols that include reduced time to 8 hours and public restrictions, social distancing, among other safety and hygiene measures. The Entertainment category protocol is even more rigorous with closed cinemas in most cases. Although we hope to fully resume the activity in our shopping malls, the uncertainty of the situation could cause setbacks in the openings already made.
 
●
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.
 
●
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 hotels in the City of Buenos Aires and Llao Llao in the province of Río Negro have temporarily closed since the mandatory lockdown was decreed in March 2020, while the Intercontinental Hotel in the City of Buenos Aires has only worked under a plan of contingency and emergency. The reopening took place in November and December under strict protocols and, after closing, a recovery in occupancy was evidenced, mainly at the Llao Llao hotel. As a result of the foregoing, the impact on these financial statements is a 93% decrease in income in the first half of the 2021 fiscal year compared to the same period of the previous fiscal year.
  
In financial matters, 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 Class III notes for a nominal value of ARS 247.8 million (equivalent to USD 2.9 million) maturing on February 21, 2021, Class IV notes for a value USD 51.4 million nominal value due on May 21, 2021, Class VI notes for a nominal value of ARS 335 million (equivalent to USD 4.0 million) due July 21, 2021, Class VIII notes for a nominal value of USD 10.5 million (33% of the capital) maturing on November 12, 2021, bank
  
65
 
 
 overdrafts for an equivalent of USD 27.6 million and other bank debt for USD 13.7 million. For its part, IRSA PC has bank debt maturities for the approximate sum of USD 24.6 million.
 
It is important to mention that IRSA has approved with IRSA PC a credit line for up to the sum of USD 180 million for 3 years, of which as of December 31, 2020 IRSA used approximately USD 62.6 million, leaving the balance available. Likewise, IRSA PC has a cash position and equivalents (including current financial investments) as of December 31, 2020 of approximately USD 84.9 million.
  
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.
 
66
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
Consolidated Results
 
(in millions of ARS)
               
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 20 
 
YoY Var
 
Revenues
  3,160 
  5,921 
  (46.6)%
  4,951 
  10,916 
  (54.6)%
Net gain from fair value adjustment of investment properties
  (798) 
  (854) 
  (6.6)%
  (1,515) 
  (1,590) 
  (4.7)%
Profit from operations
  (16,973) 
  (5,890) 
  188.2%
  9,177 
  9,854 
  (6.9)%
Depreciation and amortization
  93 
  318 
  (70.8)%
  229 
  318 
  (28.0)%
EBITDA(1)
  (16,880) 
  (5,572) 
  202.9%
  9,406 
  10,172 
  (7.5)%
Adjusted EBITDA(1)
  2,627 
  2,558 
  2.7%
  8,055 
  4,554 
  76.9%
Profit / (loss) for the period
  (10,450) 
  (10,105) 
  3.4%
  (1,164) 
  6,611 
  (117.6)%
Attributable to equity holders of the parent
  (7,950) 
  (6,955) 
  14.3%
  -584 
  (1,936) 
  (69.8)%
Attributable to non-controlling interest
  (2,500) 
  (3,150) 
  (20.6)%
  -580 
  8,547 
  (106.8)%
(1)
See Point XIX: EBITDA Reconciliation
 
Company’s income decreased by 54.6% during the first half 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 76.9% mainly explained by Sales and Developments segment whose adjusted EBITDA reached ARS 7,197 million because of Bouchard 710 and Boston Tower’s office sales made by IRSA CP. Rental segments Adjusted EBITDA reached ARS 1,341 million, ARS 864 million from the Shopping Malls segment, ARS 783 million from the Offices segment, and negative ARS 306 million from Hotels Segment, which represents a decrease of 74.5% compared to the same period of previous fiscal year.
 
The net result for the first half of fiscal year 2021 recorded a loss of ARS 1,164 million compared to a ARS 6,611 million gain in the same period of 2020, which implies a decrease of 117.6%. The profit from continuing operations shows a gain of ARS 5,956 million, compared to a loss of ARS 3,581 million in the same period of the previous fiscal year. 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 7,120 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.
 
II. Shopping Malls (through our subsidiary IRSA Propiedades Comerciales S.A.)
 
During the first half of fiscal year 2021, our tenants’ sales reached ARS 27,497 million, 55.3% lower, in real terms, than in the same period of 2020. Compared to the immediately previous quarter (IQ21), there is an increase of 277% due to the reopening of 100% of the Company’s shopping centers in October 2020, that are operating with rigorous protocols.
 
Our portfolio’s leasable area totaled 333,460 sqm during the quarter, in line with the same period of previous fiscal year. Portfolio’s occupancy decreased to 88.3%, mainly due to the exit of Falabella in Alto Avellaneda and DOT Baires Shopping. Excluding this effect, occupancy reached 94.0%.
 
Shopping Malls’ Operating Indicators
 
(in ARS million, except indicated)
 
IIQ 21
 
 
IQ 21
 
 
IVQ 20
 
 
IIIQ 20
 
 
IIQ 20
 
Gross leasable area (sqm)
  333,460 
  333,345 
  333,062 
  332,642 
  332,812 
Tenants’ sales (3 months cumulative)
  21,737 
  5,760 
  1,877 
  20,463 
  33,554 
Occupancy
  88.3%
  92.8%
  93.2%
  94.8%
  95.0%
 
67
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
Shopping Malls’ Financial Indicators
 
(in millions of ARS)
 
              
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 20 
 
YoY Var
 
Revenues from sales, leases, and services
  1,534 
  2,640 
  (41.9)%
  1,943 
  4,961 
  (60.8)%
Net result from fair value adjustment on investment properties
  (6,073) 
  (3,223) 
  88.4%
  (4,762) 
  (2,554) 
  86.5%
Result from operations
  (5,064) 
  (1,334) 
  279.6%
  (3,966) 
  984 
  (503.0)%
Depreciation and amortization
  21 
  57 
  (63.2)%
  68 
  98 
  -30.6%
EBITDA (1)
  (5,043) 
  (1,277) 
  294.9%
  (3,898) 
  1,082 
  (460.3)%
Adjusted EBITDA (1)
  1,030 
  1,946 
  (47.1)%
  864 
  3,636 
  (76.2)%
(1)
See Point XIX: EBITDA Reconciliation
 
Income from this segment decreased 60.8% during the first half 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 recovered during the second quarter of the year given the impact of the malls’ reopening, reaching ARS 1,030 million, 47.1% below the same period in 2020, prior to the pandemic.
 
Operating data of our Shopping Malls
 
 
Date of acquisition
Location
 
Gross Leasable Area (sqm)(1)
 
 
Stores
 
 
Occupancy (2)
 
 
IRSA CP Interest (3)
 
Alto Palermo
Dec-97
City of Buenos Aires
  18,655 
  135 
  96.8%
  100%
Abasto Shopping(4)
Nov-99
City of Buenos Aires
  36,794 
  162 
  97.1%
  100%
Alto Avellaneda
Dec-97
Province of Buenos Aires
  38,800 
  126 
  67.6%
  100%
Alcorta Shopping
Jun-97
City of Buenos Aires
  15,812 
  112 
  98.2%
  100%
Patio Bullrich
Oct-98
City of Buenos Aires
  11,396 
  89 
  90.2%
  100%
Dot Baires Shopping
May-09
City of Buenos Aires
  48,805 
  166 
  63.2%
  80%
Soleil
Jul-10
Province of Buenos Aires
  15,156 
  79 
  97.8%
  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 
  99.7%
  100%
Alto Rosario Shopping(4)
Nov-04
Santa Fe
  33,682 
  139 
  94.9%
  100%
Mendoza Plaza Shopping
Dec-94
Mendoza
  43,123 
  127 
  96.9%
  100%
Córdoba Shopping
Dec-06
Córdoba
  15,357 
  104 
  95.5%
  100%
La Ribera Shopping
Aug-11
Santa Fe
  10,530 
  70 
  96.5%
  50%
Alto Comahue
Mar-15
Neuquén
  11,702 
  95 
  92.2%
  99.95%
Patio Olmos(5)
Sep-07
Córdoba
    
    
    
    
Total
 
 
  333,460 
  1,554 
  88.3%
    
(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.
 
68
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
Cumulative tenants’ sales as of December 31
 
(per Shopping Mall in ARS million)
              
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 20 
 
YoY Var
 
Alto Palermo
  2,372 
  4,343 
  (45.4)%
  2,514 
  7,813 
  (67.8)%
Abasto Shopping
  2,059 
  4,194 
  (50.9)%
  2,164 
  7,791 
  (72.2)%
Alto Avellaneda
  1,528 
  3,813 
  (59.9)%
  1,630 
  6,962 
  (76.6)%
Alcorta Shopping
  1,952 
  2,650 
  (26.3)%
  1,971 
  4,616 
  (57.3)%
Patio Bullrich
  1,264 
  1,715 
  (26.3)%
  1,451 
  3,043 
  (52.3)%
Dot Baires Shopping
  1,719 
  3,416 
  (49.7)%
  1,811 
  6,077 
  (70.2)%
Soleil
  1,289 
  1,714 
  (24.8)%
  1,493 
  3,247 
  (54.0)%
Distrito Arcos
  1,736 
  1,989 
  (12.7)%
  2,293 
  3,649 
  (37.2)%
Alto Noa Shopping
  1,183 
  1,322 
  (10.5)%
  1,910 
  2,545 
  (25.0)%
Alto Rosario Shopping
  2,838 
  3,374 
  (15.9)%
  4,208 
  6,167 
  (31.8)%
Mendoza Plaza Shopping
  2,157 
  2,288 
  (5.7)%
  3,521 
  4,483 
  (21.5)%
Córdoba Shopping
  909 
  1,079 
  (15.8)%
  1,472 
  1,938 
  (24.0)%
La Ribera Shopping(2)
  323 
  647 
  (50.1)%
  481 
  1,284 
  (62.5)%
Alto Comahue
  408 
  1,010 
  (59.6)%
  578 
  1,899 
  (69.6)%
Total
  21,737 
  33,554 
  (35.2)%
  27,497 
  61,514 
  (55.3)%
(1) Through our joint venture Nuevo Puerto Santa Fe S.A.
 
Cumulative tenants’ sales per type of business (1)
 
(per Type of Business. in ARS million)
              
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 20 
 
YoY Var
 
Anchor Store
  555 
  1,814 
  (69.4)%
  979 
  3,294 
  (70.3)%
Clothes and Footwear
  13,518 
  19,579 
  (31.0)%
  16,275 
  34,691 
  (53.1)%
Entertainment
  45 
  662 
  (93.2)%
  50 
  1,828 
  (97.3)%
Home
  573 
  700 
  (18.1)%
  721 
  1,249 
  (42.3)%
Restaurant
  1,188 
  3,185 
  (62.7)%
  1,672 
  6,597 
  (74.7)%
Miscellaneous
  3,378 
  4,736 
  (28.7)%
  4,448 
  8,232 
  (46.0)%
Services
  222 
  342 
  (35.1)%
  248 
  671 
  (63.0)%
Electronic appliances
  2,258 
  2,536 
  (11.0)%
  3,104 
  4,952 
  (37.3)%
Total
  21,737 
  33,554 
  (35.2)%
  27,497 
  61,514 
  (55.3)%
 
Revenues from cumulative leases as of December 31
 
(in ARS million) 
 
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 20 
 
YoY Var
 
Base Rent (1)
  815 
  1,130 
  (27.9)%
  887 
  2,294 
  (61.3)%
Percentage Rent
  393 
  886 
  (55.6)%
  463 
  1,443 
  (67.9)%
Total Rent
  1,208 
  2,016 
  (40.1)%
  1,350 
  3,737 
  (63.8)%
Revenues from non-traditional advertising
  5 
  67 
  (92.5)%
  42 
  129 
  (67.4)%
Admission rights
  164 
  328 
  (50.0)%
  327 
  619 
  (47.2)%
Fees
  27 
  31 
  (12.9)%
  55 
  64 
  (14.1)%
Parking
  5 
  124 
  (96.0)%
  8 
  259 
  (96.9)%
Commissions
  38 
  63 
  (39.7)%
  70 
  125 
  (44.0)%
Others
  87 
  11 
  709.1%
  91 
  28 
  240.7%
Subtotal (2)
  1,534 
  2,640 
  (41.9)%
  1,943 
  4,961 
  (60.8)%
Expenses and Collective Promotion Funds
  627 
  997 
  (37.1)%
  1,021 
  1,937 
  (47.3)%
Total
  2,161 
  3,637 
  (40.5)%
  2,964 
  6,898 
  (57.0)%
(1)
Includes Revenues from stands for ARS 63 million cumulative as of December 2020
(2)
Includes ARS 3.8 million from Patio Olmos.
 
69
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 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, according to Cushman & Wakefield, 12.7%, increasing 17.6% when compared to the previous quarter, although with stable rental prices for premium offices in Buenos Aires at USD 27.4 / sqm.
 
Offices’ Operating Indicators
 
 
 
IIQ 21
 
 
IQ 21
 
 
IVQ 20
 
 
IIIQ 20
 
 
IIQ 20
 
Leasable area
  114,475 
  93,144 
  115,640 
  115,640 
  115,640 
Total Occupancy
  75.6%
  83.7%
  86.1%
  87.0%
  88.7%
Class A+ & A Occupancy
  79.5%
  91.6%
  93.0%
  93.9%
  97.1%
Class B Occupancy
  56.7%
  53.6%
  52.4%
  53.2%
  47.5%
Rent USD/sqm
  25.7 
  26.0 
  26.6 
  26.6 
  26.9 
 
The total leasable area during the second quarter of fiscal year 2021 was 114,475 m2, with the “261 Della Paolera” building being added to the portfolio, offsetting the sqm sold by the company in the previous 2 quarters.
 
“261 Della Paolera” building consists of 35,000 sqm of GLA in 30 office floors and 316 parking lots in the “Catalinas” area of ​​the City of Buenos Aires, one of the most premium for office development in Argentina. The company has 28,051 m2 corresponding to 24 floors and 256 parking spaces in the building. The building began operations on December 9, 2020, it is the headquarters of the Company, its subsidiary company IRSA CP and its controlling company CRESUD. The delivery of all the remaining floors is estimated for the third quarter of fiscal year 2021.
 
Portfolio average occupancy decreases compared to previous quarters reaching 75.6%, due to a higher vacancy in our premium portfolio (class A+&A), mainly motivated by the sale of Boston Tower which was 100% occupied, the exit of Falabella on Zetta Building and the incorporation of 261 Della Paolera building with an occupancy of 74.6%. Category B offices increased 3.1 bps their occupancy. The average rental price reached USD 25.7 per sqm, diminishing when compared to previous quarters.
 
Offices’ Financial Indicators
 
(in ARS million) 
 
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 21 
 
YoY Var
 
Revenues from sales, leases and services
  516 
  715 
  (27.8)%
  1,118 
  1,491 
  (25.0)%
Net gain from fair value adjustment on investment properties, PP&E e inventories
  (6,801) 
  (3,092) 
  120.0%
  7,796 
  4,528 
  72.2%
Profit from operations
  6,452) 
  (2,574) 
  150.7%
  8,558 
  5,679 
  50.7%
Depreciation and amortization
  4 
  21 
  (81.0)%
  21 
  29 
  (27.6)%
EBITDA(1)
  (6,448) 
  (2,553) 
  152.6%
  8,579 
  5,708 
  50.3%
Adjusted EBITDA (1)
  353 
  539 
  (34.5)%
  783 
  1,180 
  (33.6)%
(1)
See Point XIX: EBITDA Reconciliation
 
During the first half of fiscal year 2021, revenues from the offices segment decreased by 25.0% compared to the same period of 2020.
 
Adjusted EBITDA from this segment diminished 33.6% 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 70.0%, 9.1 bps higher than the same period of previous year.
 
70
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
Below is information on our Office segment and other rental properties as of December 31, 2020.
 
Offices & Others
Date of Acquisition
 
Gross Leasable Area (sqm)(1)
 
 
Occupancy (2)
 
 
IRSA CP’s Actual Interest
 
 
6M 21 - Rental revenues (ARS thousand)
 
AAA & A Offices
 
 
 
 
 
 
 
 
 
 
 
 
 
Republica Building
Dec-14
  19,885 
  76.6%
  100%
  237,415 
Boston Tower
Dec-14
  - 
  - 
  - 
  96,195 
Intercontinental Plaza(3)
Dec-14
  2,979 
  100.0%
  100%
  66,583 
Bouchard 710
Dec-14
  - 
  - 
  100%
  34,557 
Dot Building
Nov-06
  11,242 
  77.1%
  80%
  111,423 
Zetta
May-19
  32,173 
  84.7%
  80%
  377,599 
261 Della Paolera – Catalinas (5)
Dec-20
  28,714 
  74.6%
  100%
  82,632 
Total AAA & A Offices
 
  94,993 
  79.5%
    
  1,006,404 
 
    
    
    
    
B Offices
 
    
    
    
    
Suipacha 652/64
Dec-14
  11,465 
  31.2%
  100%
  22,119 
Philips
Jun-17
  8,017 
  93.1%
  100%
  62,929 
Total B Buildings
 
  19,482 
  56.7%
    
  85,048 
Subtotal Offices
 
  114,475 
  75.6%
    
  1,091,452 
 
    
    
    
    
Other rental properties(4)
 
    
    
    
  23,496 
Total Offices
 
  114,475 
  75.6%
    
  1,114,948 
(1) Corresponds to the total leasable surface area of each property as of December 31, 2020. Excludes common areas and parking spaces.
(2) Calculated by dividing occupied square meters by leasable area as of December 31, 2020.
(3) We own 13.2% of the building that has 22,535 square meters of gross rental area.
(4) Includes all those properties that are not buildings intended for rent, but that are partially or fully rented (Philips Deposit, Anchorena 665, San Martin Plot and Libertador).
(5) Includes 664 square meters of leasable area of the basement.
 
IV. 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 that date, while the Intercontinental Hotel in the City of Buenos Aires has worked only under a contingency and emergency plan. The reopening took place in November and December under strict protocols and, after closing, a recovery in occupancy was evidenced, mainly at the Llao Llao hotel.
 
(in millions of ARS)
              
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 21 
 
YoY Var
 
Revenues
  112 
  945 
  (88.1)%
  119 
  1,726 
  (93.1)%
Profit from operations
  (198) 
  234 
  (184.6)%
  (410) 
  328 
  (225.0)%
Depreciation and amortization
  52 
  73 
  (28.8)%
  104 
  122 
  (14.8)%
EBITDA
  (146) 
  307 
  (147.6)%
  (306) 
  450 
  (168.0)%
 
During the first half of fiscal year 2021, Hotels segment recorded a decrease in revenues of 93.1% while the segment’s EBITDA reached ARS 306 million negative, a 168.0% 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.
 
71
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
Hotels’ operating and financial indicators
 
 
 
IIQ 21
 
 
IQ 21
 
 
IVQ 20
 
 
IIIQ 20
 
 
IIQ 20
 
Average Occupancy
  8.0%
  0.6%
  0.6%
  52.8%
  68.1%
Average Rate per Room (USD/night)
  175 
  95 
  86 
  193 
  180 
 
V. Sales and Developments
 
(in millions of ARS)
              
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 21 
 
YoY Var
 
Revenues
  315 
  533 
  (40.9)%
  358 
  626 
  (42.8)%
Net gain from fair value adjustment on investment properties
  (5,073) 
  (2,274) 
  123.1%
  6,167 
  3,463 
  78.1%
Profit from operations
  (5,313) 
  (2,170) 
  144.8%
  5,442 
  3,447 
  57.9%
Depreciation and amortization
  3 
  4 
  (25.0)%
  7 
  7 
  - 
Net realized gain from fair value adjustment on investment properties
  1,955 
  - 
  - 
  7,915 
  - 
  - 
Barter Agreement results
  - 
  325 
  (100.0)%
  - 
  325 
  (100.0)%
EBITDA(1)
  (5,310) 
  (2,166) 
  145.2%
  5,449 
  3,454 
  57.8%
Adjusted EBITDA(1)
  1,718 
  (217) 
  - 
  7,197 
  (334) 
  - 
(1)
See Point XIX: EBITDA Reconciliation
 
Revenues from the “Sales and Development” segment decreased 42.8% during the first half 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 7,197 million gain, mainly explained by the impact of the sales of Bouchard 710 and Boston Tower, compared to a ARS 334 million loss in the same period of fiscal year 2020.
 
 
 
Investment Properties Sales – 6M2021
 
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 
IIQ21 Sales
 
    
  7,158 
  42.0 
    
(1) Includes the value of a retail store for USD 1.1 million.
 
VI. CAPEX (through our subsidiary IRSA Propiedades Comerciales S.A.)
 
Alto Palermo Expansion
 
We keep working on the expansion of Alto Palermo shopping mall, the shopping mall with the highest sales per square meter in our portfolio, that will add a gross leasable area of approximately 3,900 square meters and will consist in moving the food court to a third level by using the area of an adjacent building acquired in 2015. Work progress as of today is 71% and construction works are expected to be finished by August 2021.
 
 
72
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
VII. International
 
Investment in Condor Hospitality Inc.
 
On July 19, 2019, Condor signed an agreement and merger plan with Nextpoint Hospitality Trust. 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 statements, the total compensation for breach of the contract has been collected.
 
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)
              
IIQ 21
 
 
IIQ 20
 
 
YoY Var
 
  6M 21 
  6M 21 
 
YoY Var
 
Revenues
  - 
  - 
  - 
  - 
  - 
  - 
Loss from operations
  (243) 
  (220) 
  10.5%
  (325) 
  (317) 
  2.5%
Depreciation and amortization
  1 
  1 
  - 
  2 
  3 
  (33.3)%
EBITDA
  (242) 
  (219) 
  10.5%
  (323) 
  (314) 
  2.9%
 
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 December 31, 2020. During the first half of fiscal year 2021, the investment in Banco Hipotecario generated a ARS 161 million gain compared to a ARS 1,352 million loss during the same period of 2020. For further information, visit http://www.cnv.gob.ar or http://www.hipotecario.com.ar.
 
X. EBITDA by Segment (ARS million)
 
IIQ 21
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Profit / (loss) from operations
  (3,966) 
  8,558 
  5,442 
  (410) 
  (3) 
  (325) 
  473 
  9,769 
Depreciation and amortization
  68 
  21 
  7 
  104 
  - 
  2 
  29 
  231 
EBITDA
  (3,898) 
  8,579 
  5,449 
  (306) 
  (3) 
  (323) 
  502 
  10,000 
 
IIQ 20
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
Profit / (loss) from operations
  984 
  5,679 
  3,447 
  328 
  (75) 
  (317) 
  244 
  10,290 
Depreciation and amortization
  98 
  29 
  7 
  122 
  1 
  3 
  27 
  287 
EBITDA
  1,082 
  5,708 
  3,454 
  450 
  (74) 
  (314) 
  271 
  10,577 
EBITDA Var
  (460.3)%
  50.3%
  57.8%
  (168.0)%
  (95.9)%
  2.9%
  85.2%
  (5.5)%
 
 
73
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
XI. Reconciliation with Consolidated Statements of Income (ARS million)
 
Below is an explanation of the reconciliation of the company’s profit by segment with its Consolidated Statements of Income. The difference lies in the presence of joint ventures included in the segment but not in the Statements of Income.
 
 
 
Total as per segment
 
 
Joint ventures*
 
 
Expenses and CPF
 
 
 Elimination of inter-segment transactions
 
 
Total as per Statements of Income
 
Revenues
  3,854 
  (17) 
  1,127 
  (13) 
  4,951 
Costs
  (1,423) 
  31 
  (1,237) 
  - 
  (2,629) 
Gross result
  2,431 
  14 
  (110) 
  (13) 
  2,322 
Net loss from fair value adjustment of investment properties
  9,774 
  (508) 
  - 
  - 
  9,266 
General and administrative expenses
  (1,538) 
  3 
  - 
  20 
  (1,515) 
Selling expenses
  (794) 
  7 
  - 
  - 
  (787) 
Other operating results, net
  (104) 
  1 
  1 
  (7) 
  (109) 
Result from operations
  9,769 
  (483) 
  (109) 
  - 
  9,177 
Share of loss of associates and joint ventures
  (807) 
  354 
  - 
  - 
  (453) 
Result before financial results and income tax
  8,962 
  (129) 
  (109) 
  - 
  8,724 
*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 December 31, 2020:
 
Description
Currency
 
Amount (USD MM) (1)
 
 
Interest Rate
 
Maturity
Bank overdrafts
ARS
  27.6 
 
Floating
 
< 360 days
Series III NCN
ARS
  2.9 
 
Variable
 
Feb-21
Series IV NCN
USD
  51.4 
  7.0%
May-21
Series VI NCN
ARS
  4.0 
 
Floating
 
Jul-21
Series VII NCN
USD
  33.7 
  4.0%
Jan-22
Series V NCN
USD
  9.2 
  9.0%
May-22
Series IX NCN
USD
  80.7 
  10.0%
Mar-23
Series I NCN
USD
  3.1 
  10.0%
Mar-23
Series VIII NCN
USD
  31.7 
  10.0%
Nov-23
Loan with IRSA CP(3)
ARS
  62.6 
  - 
Mar-22
Other debt
USD
  16.6 
  - 
Feb-22
IRSA’s Total Debt
USD
  323.5 
    
 
Cash & Cash Equivalents + Investments
USD
  0.7 
    
 
IRSA’s Net Debt
USD
  322.8 
    
 
Bank loans and overdrafts
ARS
  24.6 
  - 
 < 360 days
PAMSA loan
USD
  25.2 
 
Fixed
 
Feb-23
IRSA CP NCN Class II
USD
  360.0 
  8.75%
Mar-23
IRSA CP’s Total Debt
USD
  409.8 
    
 
Cash & Cash Equivalents + Investments (2)
USD
  84.9 
    
 
Intercompany Credit
ARS
  62.6 
    
 
IRSA CP’s Net Debt
USD
  262.3 
    
 
(1) 
Principal amount in USD (million) at an exchange rate of ARS 84.15/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.
 
74
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
XIII. Material and Subsequent Events 
 
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%.
 
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
 
 
75
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020

 
●
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.
 
December 2020: Headquarters Change
 
The Company has moved its headquarters from Moreno 877 Piso 24 CABA to Carlos Della Paolera 261 Piso 9 CABA.
 
December 2020: Manibil Sale
 
On December 22, 2020, the Company sold 217,332,873 ordinary Class B shares, nominative not endorsable, with a nominal value of ARS 1 and entitled to one vote per share owned by the Company, representing 49% of the stock capital of MANIBIL SA, a company dedicated to real estate developments. The price for the sale of the shares amounts to ARS 576,974,387.50. The operation was completed in February 2021, for which the Company is no longer a shareholder of MANIBIL S.A.
 
76
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
XIV. Summarized Comparative Consolidated Balance Sheet
 
(in ARS million) 
 
12.31.2020
 
 
06.30.2020
 
Non-current assets
  187,910 
  505,143 
Current assets
  12,219 
  246,550 
Total assets
  200,129 
  751,693 
Capital and reserves attributable to the equity holders of the parent
  70,107 
  68,466 
Non-controlling interest
  22,174 
  78,535 
Total shareholders’ equity
  92,281 
  147,001 
Non-current liabilities
  85,457 
  432,848 
Current liabilities
  22,391 
  171,844 
Total liabilities
  107,848 
  604,692 
Total liabilities and shareholders’ equity
  200,129 
  751,693 
 
XV. Summarized Comparative Consolidated Income Statement
 
 (in ARS million) 
 
12.31.2020
 
 
12.31.2019
 
Profit from operations
  9,177 
  9,854 
Share of profit of associates and joint ventures
  (453)
  (1,513)
Profit from operations before financing and taxation
  8,724 
  8,341 
Financial income
  68 
  148 
Financial cost
  (3,167)
  (3,912)
Other financial results
  3,164 
  (5,769)
Inflation adjustment
  1,171 
  331 
Financial results, net
  1,236 
  (9,202)
Profit / (loss) before income tax
  9,960 
  (861)
Income tax
  (4,004)
  (2,720)
Profit / (loss) for the period from continued operations
  5,956 
  (3,581)
Profit from discontinued operations after taxes
  (7,120)
  10,192 
(Loss) / Profit for the period
  (1,164)
  6,611 
Other comprehensive (loss) / income for the period
  (8,145)
  10,060 
Total comprehensive (loss) / income for the period
  (9,309)
  16,671 
 
    
    
Attributable to:
    
    
Equity holders of the parent
  (3,356)
  (5,314)
Non-controlling interest
  (5,953)
  21,985 
 
XVI. Summary Comparative Consolidated Cash Flow
 
(in ARS million) 
 
12.31.2020
 
 
12.31.2019
 
Net cash generated from operating activities
  4,403 
  22,844 
Net cash generated from investing activities
  51,381 
  18,815 
Net cash used in financing activities
  (39,357)
  (62,336)
Net increase / (decrease) in cash and cash equivalents
  16,427 
  (20,677)
Cash and cash equivalents at beginning of year
  108,294 
  103,600 
Cash and cash equivalents reclassified to held for sale
  - 
  (711)
Subsidiaries deconsolidation
  (115,963)
  - 
Foreign exchange gain on cash and changes in fair value of cash equivalents
  (7,153)
  5,943 
Cash and cash equivalents at period-end
  1,605 
  88,155 
 
77
 
IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
XVII. Comparative Ratios
 
(in ARS million) 
 
12.31.2020
 
 
 
 
 
12.31.2019
 
 
 
 
Liquidity
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
  12,219 
  0.55 
  242,612 
  1.63 
CURRENT LIABILITIES
  22,391 
    
  148,761 
    
Indebtedness
    
    
    
    
TOTAL LIABILITIES
  107,848 
  1.54 
  571,973 
  12.23 
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
  70,107 
    
  46,751 
    
Solvency
    
    
    
    
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
  70,107 
  0.65 
  46,751 
  0.08 
TOTAL LIABILITIES
  107,848 
    
  571,973 
    
Capital Assets
    
    
    
    
NON-CURRENT ASSETS
  187,910 
  0.94 
  440,172 
  0.64 
TOTAL ASSETS
  200,129 
    
  682,785 
    
 
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 six-month period ended December 31 (in ARS million)
 
 
 
2020
 
 
2019
 
Profit for the period
  (1,164)
  6,611 
(Loss) / Profit from discontinued operations
  7,120 
  (10,192)
Interest income 
  (48)
  (144)
Interest expense 
  3,026 
  3,722 
Income tax
  4,004 
  2,720 
Depreciation and amortization 
  229 
  318 
EBITDA (unaudited) 
  13,167 
  3,035 
Unrealized net gain from fair value adjustment of investment properties
  (1,351)
  (5,293)
Barter agreements results
  - 
  (325)
Share of profit of associates and joint ventures 
  453 
  1,513 
Dividends earned
  (20)
  (4)
Foreign exchange differences net 
  28 
  5,587 
(Gain) / loss from derivative financial instruments 
  314 
  109 
Fair value gains of financial assets and liabilities at fair value through profit or loss
  (3,767)
  159 
Inflation adjustment
  (1,171)
  (331)
Other financial costs/income
  402 
  104 
Adjusted EBITDA (unaudited) 
  8,055 
  4,554 
Adjusted EBITDA Margin (unaudited)(1)
  162.69%
  41.72%
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by revenue from sales, rents and services.
 
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IRSA Inversiones y Representaciones Sociedad Anónima
Summary as of December 31, 2020
 
 
XIX. Brief comment on prospects for the Fiscal Year
 
The year 2021 is projected as a great challenge for the company. The COVID-19 pandemic, which originated in China and subsequently spread to numerous countries, including Argentina, continues to adversely impact both the global economy and the local economy.
 
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 and will 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 from March until the end of 2020 when the company's 3 hotels opened their doors with rigorous protocols. In the month of December 2020 and later, a recovery in hotel occupancy could be evidenced, mainly at our Llao Llao resort, due to the rise in domestic tourism.
 
Looking ahead to the next quarter, 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 hotels, we expect the company's 3 hotels to gradually recover their activity in the coming months and complete it with the regularization of air flows.
 
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.
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Date
By:  
/s/  Saúl Zang
 
 
 
Name  Saúl Zang
 
 
 
Title  First Vice-Chairman
 
 
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