EX-99.1 2 fy21q2irsa.htm ADDITIONAL EXHIBITS 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:
 
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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.
 
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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%.
 
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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.
 
 
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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:
 
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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.
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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.
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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.
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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.
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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.
 
 
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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.
 
 
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