Blueprint
 
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Unaudited Condensed Interim Consolidated Financial Statements as of March 31, 2018 and for the nine-month and three-month periods ended as of that date, presented comparatively
 
 
 
 
 
 
 
 
 
 
 
Legal information
 
 
Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
 
Fiscal year N°: 75, beginning on July 1st, 2017.
 
Legal address: 108 Bolívar St., 1st floor, Autonomous City of Buenos Aires, Argentina.
 
Company activity: Real estate investment and development.
 
Date of registration of the by-laws in the Public Registry of Commerce: June 23, 1943.
 
Date of registration of last amendment of the by-laws in the Public Registry of Commerce: August 7, 2017.
 
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 (in millions of Ps.): 579.
 
Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
(Cresud S.A.C.I.F. y A.).
 
Legal Address: 877 Moreno St., 23rd. floor, Autonomous City of Buenos Aires, Argentina.
 
Main activity: Real estate, agricultural, commercial and financial activities.
 
Direct and indirect interest of the Parent Company on the capital stock: 366,788,251 common shares.
 
Percentage of votes of the Parent Company (direct and indirect interest) on the shareholders’ equity: 63.77% (1).
 
 
Type of stock
CAPITAL STATUS
Shares authorized for Public Offering (2)
Subscribed, issued and paid up
(in millions of Pesos)
Common stock with a face value of Ps. 1 per share and entitled to 1 vote each
578,676,460
579
 
(1) For computation purposes, Treasury shares have been subtracted.
(2) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
 
 
 
 
 
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 
11
Note 4 – Acquisitions and disposals 
11
Note 5 – Financial risk management and fair value estimates 
14
Note 6 – Segment information 
14
Note 7 – Investments in associates and joint ventures 
16
Note 8 – Investment properties 
18
Note 9 – Property, plant and equipment 
19
Note 10 – Trading properties 
19
Note 11 – Intangible assets 
20
Note 12 – Financial instruments by category 
20
Note 13 – Trade and other receivables 
23
Note 14 – Cash flow information 
24
Note 15 – Trade and other payables 
25
Note 16 – Borrowings 
25
Note 17 – Provisions 
26
Note 18 – Taxes 
27
Note 19 – Revenues 
28
Note 20 – Expenses by nature 
29
Note 21 – Cost of goods sold and services provided 
29
Note 22 – Other operating results, net 
30
Note 23 – Financial results, net 
30
Note 24 – Related party transactions 
31
Note 25 – CNV General Resolution N° 622 
32
Note 26 – Foreign currency assets and liabilities 
33
Note 27 – Groups of assets and liabilities held for sale 
34
Note 28 – Results from discontinued operations 
34
Note 29 – Subsequent Events 
35
 
 
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.
Baicom
 
Baicom Networks S.A.
BCRA
 
Central Bank of the Argentine Republic
BHSA
 
Banco Hipotecario S.A.
Cellcom
 
Cellcom Israel Ltd.
Clal
 
Clal Holdings Insurance Enterprises Ltd.
CLN Token
 
Colu Token
CNV
 
Securities Exchange Commission
Condor
 
Condor Hospitality Trust Inc.
Cresud
 
Cresud S.A.C.I.F. y A.
DIC
 
Discount Investment Corporation Ltd.
Dolphin
 
Dolphin Fund Ltd. and Dolphin Netherlands B.V.
Financial Statements
 
Unaudited Condensed Interim Consolidated Financial Statements
Annual Financial Statements
 
Consolidated Financial Statements as of June 30, 2017
CPF
 
Collective Promotion Funds
IASB
 
International Accounting Standards Board
IDB Tourism
 
IDB Tourism (2009) Ltd
IDBD
 
IDB Development Corporation Ltd.
IFISA
 
Inversiones Financieras del Sur S.A.
IRSA, The Company”, “Us”, “We”
 
IRSA Inversiones y Representaciones Sociedad Anónima
IRSA CP
 
IRSA Propiedades Comerciales S.A.
Israir
 
Israir Airlines & Tourism Ltd.
Lipstick
 
Lipstick Management LLC
LRSA
 
La Rural S.A.
Metropolitan
 
Metropolitan 885 Third Avenue Leasehold LLC
New Lipstick
 
New Lipstick LLC
IAS
 
International Accounting Standards
IFRS
 
International Financial Reporting Standards
NIS
 
New Israeli Shekel
NCN
 
Non-Convertible Notes
PBC
 
Property & Building Corporation Ltd.
PBEL
 
PBEL Real Estate LTD
Quality
 
Quality Invest S.A.
Shufersal
 
Shufersal Ltd.
Tarshop
 
Tarshop S.A.
 
 
1
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of March 31, 2018 and June 30, 2017
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
03.31.18
 
06.30.17
ASSETS
 
 
 
 
Non-current assets
 
 
 
 
Investment properties
8
121,359
 
99,953
Property, plant and equipment
9
30,992
 
27,113
Trading properties
10, 21
4,066
 
4,532
Intangible assets
11
13,814
 
12,387
Other assets
 
129
 
 -
Investments in associates and joint ventures
7
8,557
 
7,885
Deferred income tax assets
18
282
 
285
Income tax and MPIT credit
 
201
 
145
Restricted assets
12
1,322
 
448
Trade and other receivables
13
5,911
 
4,974
Investments in financial assets
12
1,388
 
1,772
Financial assets held for sale
12
7,509
 
6,225
Derivative financial instruments
12
 -
 
31
Total non-current assets
 
195,530
 
165,750
Current assets
 
 
 
 
Trading properties
10, 21
3,189
 
1,249
Inventories
21
4,301
 
4,260
Restricted assets
12
1,077
 
506
Income tax and MPIT credit
 
335
 
339
Group of assets held for sale
27
3,220
 
2,681
Trade and other receivables
13
17,550
 
17,264
Investments in financial assets
12
18,748
 
11,951
Financial assets held for sale
12
2,822
 
2,337
Derivative financial instruments
12
24
 
51
Cash and cash equivalents
12
32,961
 
24,854
Total current assets
 
84,227
 
65,492
TOTAL ASSETS
 
279,757
 
231,242
SHAREHOLDERS’ EQUITY
 
 
 
 
Shareholders' equity attributable to equity holders of the parent (according to corresponding statement)
 
30,651
 
25,864
Non-controlling interest
 
28,400
 
21,472
TOTAL SHAREHOLDERS’ EQUITY
 
59,051
 
47,336
LIABILITIES
 
 
 
 
Non-current liabilities
 
 
 
 
Borrowings
16
141,144
 
109,489
Deferred income tax liabilities
18
23,756
 
23,024
Trade and other payables
15
2,507
 
3,040
Provisions
17
858
 
943
Employee benefits
 
930
 
763
Derivative financial instruments
12
16
 
86
Salaries and social security liabilities
 
94
 
127
Total non-current liabilities
 
169,305
 
137,472
Current liabilities
 
 
 
 
Trade and other payables
15
24,670
 
20,839
Borrowings
16
20,367
 
19,926
Provisions
17
945
 
890
Group of liabilities held for sale
27
2,182
 
1,855
Salaries and social security liabilities
 
2,683
 
2,041
Income tax and MPIT liabilities
 
369
 
797
Derivative financial instruments
12
185
 
86
Total current liabilities
 
51,401
 
46,434
TOTAL LIABILITIES
 
220,706
 
183,906
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
279,757
 
231,242
 
 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
                                                                                                                                                                                                                                                                                                                                                                                                                       ______________________   
                                                                                                                                                                                                                                                                                                                                                                                                                         Eduardo S. Elsztain
                                                                                                                                                                                                                                                                                                                                                                                                                          President
 
 
2
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
for the nine-month and three-month periods ended March 31, 2018 and 2017
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
Nine month
 
Three month
 
Note
03.31.18
 
03.31.17(recast)
 
03.31.18
 
03.31.17(recast)
Revenues
19
65,696
 
55,201
 
22,656
 
18,370
Costs
20, 21
(44,764)
 
(38,462)
 
(15,487)
 
(12,837)
Gross profit
 
20,932
 
16,739
 
7,169
 
5,533
Net gain / (loss) from fair value adjustment of investment properties
8
12,796
 
3,042
 
1,294
 
(428)
General and administrative expenses
20
(3,457)
 
(2,809)
 
(1,262)
 
(1,000)
Selling expenses
20
(12,125)
 
(9,951)
 
(4,408)
 
(3,387)
Other operating results, net
22
545
 
(207)
 
(59)
 
(86)
Profit from operations
 
18,691
 
6,814
 
2,734
 
632
Share of profit of associates and joint ventures
7
571
 
142
 
178
 
80
Profit before financial results and income tax
 
19,262
 
6,956
 
2,912
 
712
Finance income
23
992
 
657
 
342
 
147
Finance costs
23
(11,148)
 
(5,531)
 
(3,079)
 
(816)
Other financial results
23
1,838
 
2,481
 
642
 
950
Financial results, net
 
(8,318)
 
(2,393)
 
(2,095)
 
281
Profit before income tax
 
10,944
 
4,563
 
817
 
993
Income tax expense
18
159
 
(1,113)
 
(338)
 
(86)
Profit for the period from continuing operations
 
11,103
 
3,450
 
479
 
907
Profit / (loss) for the period from discontinued operations
28
187
 
3,056
 
(20)
 
(1,217)
Profit / (loss) for the period
 
11,290
 
6,506
 
459
 
(310)
Other comprehensive income:
 
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
 
Currency translation adjustment
 
2,505
 
3,298
 
2,048
 
796
Share of other comprehensive (loss) / income of associates and joint ventures
 
(499)
 
(1,523)
 
(291)
 
400
Change in the fair value of hedging instruments net of income taxes
 
(3)
 
2
 
30
 
12
Other reserves
 
 -
 
1
 
 -
 
1
Items that may not be reclassified subsequently to profit or loss, net of income tax:
 
 
 
 
 
 
 
 
Actuarial profit from defined contribution plans
 
(125)
 
(23)
 
(78)
 
(4)
Other comprehensive income for the period from continuing operations
 
1,878
 
1,755
 
1,709
 
1,205
Other comprehensive income for the period from discontinued operations
 
67
 
409
 
75
 
409
Total other comprehensive income for the period
 
1,945
 
2,164
 
1,784
 
1,614
Total comprehensive income for the period
 
13,235
 
8,670
 
2,243
 
1,304
 
 
 
 
 
 
 
 
 
Total comprehensive income from continuing operations
 
12,981
 
5,205
 
2,188
 
2,112
Total comprehensive income / (loss) from discontinued operations
 
254
 
3,465
 
55
 
(808)
Total comprehensive income for the period
 
13,235
 
8,670
 
2,243
 
1,304
 
 
 
 
 
 
 
 
 
Profit / (loss) for the period attributable to:
 
 
 
 
 
 
 
 
Equity holders of the parent
 
9,405
 
3,784
 
487
 
(51)
Non-controlling interest
 
1,885
 
2,722
 
(28)
 
(259)
 
 
 
 
 
 
 
 
 
(Loss) / profit from continuing operations attributable to:
 
 
 
 
 
 
 
 
Equity holders of the parent
 
9,285
 
2,508
 
507
 
1,005
Non-controlling interest
 
1,818
 
942
 
(28)
 
(98)
 
 
 
 
 
 
 
 
 
Total comprehensive income attributable to:
 
 
 
 
 
 
 
 
Equity holders of the parent
 
8,786
 
4,386
 
140
 
529
Non-controlling interest
 
4,449
 
4,284
 
2,103
 
775
 
 
 
 
 
 
 
 
 
Profit / (loss) per share from continuing operations attributable to equity holders of the parent:
 
 
 
 
 
 
 
 
Basic
 
16.36
 
6.58
 
0.85
 
(0.09)
Diluted
 
16.24
 
6.54
 
0.84
 
(0.09)
 
 
 
 
 
 
 
 
 
Profit per share from continuing operations attributable to equity holders of the parent:
 
 
 
 
 
 
 
 
Basic
 
16.15
 
4.36
 
0.88
 
1.75
Diluted
 
16.04
 
4.33
 
0.88
 
1.74
 
(i)
   As of March 31, 2018, it includes Ps. (2,228) which corresponds to the DIC´s debt exchange (see Note 16).
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
The previous period has been recast due to the change in the accounting policy for investment properties described in Note 2.3.
 
 
 
 
                                                                                                                                                                                                                                                                                                                                                                                                                       ______________________   
                                                                                                                                                                                                                                                                                                                                                                                                                         Eduardo S. Elsztain
                                                                                                                                                                                                                                                                                                                                                                                                                          President
 
 
3
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the nine-month period ended March 31, 2018
(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, 2017
575
4
123
793
17
143
2,751
2,165
19,293
25,864
21,472
47,336
Profit for the period
 -
 -
 -
 -
 -
 -
 -
 -
9,405
9,405
1,885
11,290
Other comprehensive (loss) / profit for the period
 -
 -
 -
 -
 -
 -
 -
(619)
 -
(619)
2,564
1,945
Total comprehensive (loss) / profit for the period
 -
 -
 -
 -
 -
 -
 -
(619)
9,405
8,786
4,449
13,235
Acquisition of non-controlling interest
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
16
16
Appropriation of retained earnings approved by Shareholders’ meeting held as of 10.31.17
 -
 -
 -
 -
 -
 -
 -
2,081
(2,081)
 -
 -
 -
Shared-based compensation
 -
 -
 -
 -
1
 -
 -
3
 -
4
43
47
Dividends distribution
 -
 -
 -
 -
 -
 -
 -
 -
(1,400)
(1,400)
 -
(1,400)
Dividends distribution to non-controlling interest in subsidiaries
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(1,421)
(1,421)
Changes in non-controlling interest
 -
 -
 -
 -
 -
 -
 -
(2,603)
 -
(2,603)
3,841
1,238
Balance as of March 31, 2018
575
4
123
793
18
143
2,751
1,027
25,217
30,651
28,400
59,051
 
 
 The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 (1)
Includes Ps. 1 of Inflation adjustment of treasury shares. See Note 17 to the Annual Financial Statements.
 (2)  Related to CNV General Resolution N° 609/12. See Notes 2.1.b) and 17 to the Annual Financial Statements.
 (3)
Group´s other reserves for the period ended March 31, 2018 are comprised as follows:
 
 
 
Cost of treasury stock
 
Changes in non-controlling interest
 
Reserve for share-based payments
 
Reserve for future dividends
 
Currency translation adjustment reserve
 
Hedging instrument
 
Special reserve
 
Reserve for defined contribution plans
 
Other reserves from subsidiaries
 
Total Other reserves
Balance as of July 1, 2017
(28)
 
186
 
78
 
494
 
1,394
 
19
 
 -
 
(15)
 
37
 
2,165
Other comprehensive (loss) / profit for the period
 -
 
 -
 
 -
 
 -
 
(566)
 
6
 
 -
 
(59)
 
 -
 
(619)
Total comprehensive loss for the period
 -
 
 -
 
 -
 
 -
 
(566)
 
6
 
 -
 
(59)
 
 -
 
(619)
Share-based compensation
2
 
 -
 
1
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
3
Appropriation of retained earnings approved by Shareholders’ meeting held as of 10.31.17
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
2,081
 
 -
 
 -
 
2,081
Changes in non-controlling interest
 -
 
(2,602)
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(1)
 
(2,603)
Balance as of March 31, 2018
(26)
 
(2,416)
 
79
 
494
 
828
 
25
 
2,081
 
(74)
 
36
 
1,027
 
 
 
 
 
                                                                                                                                                                                                                                                                                                                                                                                                                       ______________________   
                                                                                                                                                                                                                                                                                                                                                                                                                         Eduardo S. Elsztain
                                                                                                                                                                                                                                                                                                                                                                                                                          President
 
 
4
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the nine-month period ended March 31, 2017
(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, 2016 (recast)
575
4
123
793
16
117
2,755
990
16,259
21,632
14,224
35,856
Profit for the period
 -
 -
 -
 -
 -
 -
 -
 -
3,784
3,784
2,722
6,506
Other comprehensive profit for the period
 -
 -
 -
 -
 -
 -
 -
602
 -
602
1,562
2,164
Total comprehensive profit for the period
 -
 -
 -
 -
 -
 -
 -
602
3,784
4,386
4,284
8,670
Appropriation of retained earnings approved by Shareholders’ meeting held as of 10.31.16
 -
 -
 -
 -
 -
26
(4)
(26)
4
 -
 -
 -
Shared-based compensation
 -
 -
 -
 -
 -
 -
 -
9
 -
9
70
79
Currency translation adjustment for interest held before business combination 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
2
2
Incorporated by business combination
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
45
45
Changes in non-controlling interest
 -
 -
 -
 -
 -
 -
 -
(221)
 -
(221)
1,629
1,408
Dividends distribution to non-controlling interest in subsidiaries
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(1,982)
(1,982)
Balance as of March 31, 2017 (recast)
575
4
123
793
16
143
2,751
1,354
20,047
25,806
18,272
44,078
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
The previous period has been recast due to the change in the accounting policy for investment properties described in Note 2.3.
(1) Includes Ps. 1 of Inflation adjustment of treasury shares. See Note 17 to the Annual Financial Statements.
(2) Related to CNV General Resolution N° 609/12. See Notes 2.1.b) and 17 to the Annual Financial Statements.
(3) Group’s other reserves for the period ended March 31, 2017 are comprised as follows.
 
 
Cost of treasury stock
 
Changes in non-controlling interest
 
Reserve for share-based payments
 
Reserve for future dividends
 
Currency translation adjustment reserve
 
Hedging instruments
 
Reserve for defined contribution plans
 
Other reserves from subsidiaries
 
Total Other reserves
Balance as of July 1, 2016 (recast)
(29)
 
21
 
67
 
520
 
421
 
(37)
 
(10)
 
37
 
990
Other comprehensive income / (loss) for the period
 -
 
 -
 
 -
 
 -
 
553
 
77
 
(28)
 
 -
 
602
Total comprehensive income / (loss) for the period
 -
 
 -
 
 -
 
 -
 
553
 
77
 
(28)
 
 -
 
602
Share-based compensation
 -
 
 -
 
9
 
 -
 
 -
 
 -
 
 -
 
 -
 
9
Appropriation of retained earnings approved by Shareholders’ meeting held as of 10.31.16
 -
 
 -
 
 -
 
(26)
 
 -
 
 -
 
 -
 
 -
 
(26)
Changes in non-controlling interest
 -
 
(219)
 
 -
 
 -
 
 -
 
 -
 
 -
 
(2)
 
(221)
Balance as of March 31, 2017 (recast)
(29)
 
(198)
 
76
 
494
 
974
 
40
 
(38)
 
35
 
1,354

 

     
 
 
 
                                                                                                                                                                                                                                                                                                                                                                                                                       ______________________   
                                                                                                                                                                                                                                                                                                                                                                                                                         Eduardo S. Elsztain
                                                                                                                                                                                                                                                                                                                                                                                                                          President
 
 
5
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the nine-month periods ended March 31, 2018 and 2017
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
03.31.18
 
03.31.17 (recast)
Operating activities:
 
 
 
 
Net cash generated from continuing operating activities before income tax paid
14
9,984
 
6,862
Income tax and MPIT paid
 
(848)
 
(784)
Net cash generated from continuing operating activities
 
9,136
 
6,078
Net cash generated from discontinued operating activities
 
256
 
234
Net cash generated from operating activities
 
9,392
 
6,312
Investing activities:
 
 
 
 
Interest held decrease (increase) in associates and joint ventures
 
23
 
(447)
Acquisition, improvements and advance payments for contructions of investment properties
 
(2,326)
 
(1,911)
Proceeds from sales of investment properties
 
566
 
238
Acquisitions and improvements of property, plant and equipment
 
(2,612)
 
(1,825)
Proceeds from sales of property, plant and equipment
 
39
 
 -
Acquisitions of intangible assets
 
(721)
 
(329)
Acquisitions of subsidiaries, net of cash acquired
 
(651)
 
(46)
Net increase of restricted assets
 
(744)
 
 -
Dividends collected
 
111
 
206
Proceeds from sales of interest held in associates and joint ventures
 
252
 
 -
Proceeds from loans granted
 
620
 
 -
Proceeds from liquidation of an associate
 
8
 
 -
Acquisitions of investments in financial assets
 
(15,743)
 
(2,351)
Proceeds from disposal of investments in financial assets
 
12,921
 
3,354
Interest received from financial assets
 
387
 
102
Dividends received from financial assets
 
45
 
 -
Payment for other assets acquisition
 
(120)
 
 -
Loans granted to related parties
 
(345)
 
(92)
Loans granted
 
(102)
 
 -
Net cash used in continuing investing activities
 
(8,392)
 
(3,101)
Net cash (used in) / generated from discontinued investing activities
 
(101)
 
3,960
Net cash (used in) / generated from in investing activities
 
(8,493)
 
859
Financing activities:
 
 
 
 
Borrowings
 
20,946
 
17,335
Payment of borrowings
 
(11,611)
 
(12,256)
Proceeds (payment) of short term borrowings, net
 
257
 
(875)
Payment of borrowings to related parties
 
 -
 
(9)
Interests paid
 
(5,690)
 
(3,803)
Capital distributions to non-controlling interest in subsidiaries
 
(58)
 
(72)
Capital contributions from non-controlling interest in subsidiaries
 
384
 
156
Acquisition of non-controlling interest in subsidiaries
 
(612)
 
(1,005)
Proceeds from sales of non-controlling interest in subsidiaries
 
3,352
 
2,663
Dividends paid
 
(1,392)
 
(724)
Dividends paid to non-controlling interest in subsidiaries
 
(403)
 
 -
Proceeds from derivative financial instruments
 
(12)
 
 -
Net cash generated from continuing financing activities
 
5,161
 
1,410
Net cash used in discontinued financing activities
 
(86)
 
(759)
Net cash generated from financing activities
 
5,075
 
651
Net increase in cash and cash equivalents from continuing activities
 
5,905
 
4,387
Net increase in cash and cash equivalents from discontinued activities
 
69
 
3,435
Net increase in cash and cash equivalents
 
5,974
 
7,822
Cash and cash equivalents at beginning of period
13
24,854
 
13,866
Cash and cash equivalents reclassified to held for sale
 
(269)
 
(161)
Foreign exchange gain on cash and changes in fair value of cash equivalents
 
2,402
 
852
Cash and cash equivalents at end of period
13
32,961
 
22,379
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
The previous period has been recast due to the change in the accounting policy for investment properties described in Note 2.3.
 
 
 
 
 
        
                                                                                                                                                                                                                                                                                                                                                                                                                       ______________________   
                                                                                                                                                                                                                                                                                                                                                                                                                         Eduardo S. Elsztain
                                                                                                                                                                                                                                                                                                                                                                                                                          President
 
 
 
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 May 9, 2018.
 
IRSA was founded in 1943, and it is engaged in a diversified range of real estate activities in Argentina since 1991. IRSA and its subsidiaries are collectively referred to hereinafter as “the Group”. Cresud is our direct parent company and IFIS Limited is our ultimate parent company.
 
The Group has established two Operations Centers, Argentina and Israel, to manage its global business, mainly through the following companies:
 
(*) See note 4 for more information about the changes within the Operations Center in Israel.
 
 
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", therefore, should be read together with the Annual Financial Statements of the Group as of June 30, 2017 prepared in accordance with IFRS in force. Furthermore, these Financial Statements include supplementary information required by Law N° 19,550 and/or regulations of the CNV. Such information is included in notes to these Financial Statements according to IFRS.
 
These Financial Statements corresponding to the interim nine-month periods ended March 31, 2018 and 2017 have not been audited. The management considers they include all necessary adjustments to fairly present the results of each period. The Company’s interim periods results do not necessarily reflect the proportion of the Group’s full-year results.
 
Under IAS 29 “Financial Reporting in Hyperinflationary Economies”, the Financial Statements of an entity whose functional currency belongs to a hyperinflationary economy, regardless of whether they apply historic cost or current cost methods, should be stated at the current unit of measure as of the date of this Consolidated Financial Statements. For such purpose, in general, inflation is to be computed in non-monetary items from the acquisition or revaluation date, as applicable. In order to determine whether an economy is to be considered hyperinflationary, the standard lists a set of factors to be taken into account, including an accumulated inflation rate near or above 100% over a three-year period.
 
 
 
 
6
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
For the Groups' business in Argentina, considering the released inflation data in Argentina and the declining inflation trend in recent years, the Management is of the view that there is not enough evidence to conclude that Argentina is a hyperinflationary economy. Therefore, no restatement has been applied on financial information, as set forth by IAS 29, for the reporting periods. However, over the last years, certain macroeconomic variables, such as payroll costs and goods prices, have experienced significant annual changes, which should be taken into consideration in assessing and interpreting the financial situation and results of operations of the Group in these Financial Statements.
 
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.
 
In addition to the policies described in the annual financial statements, during the current period the Group acquired CLN tokens, which are valued at the lower value between the cost of acquisition and the net realizable value, and were classified as other non-current assets.
 
2.3.
Comparability of information
 
Balance items as of June 30, 2017 and March 31, 2017 shown in these Unaudited Condensed Interim Consolidated Financial Statements for comparative purposes arise from financial statements then ended. As mentioned in Note 2 to the Annual Financial Statements, during the fiscal year ended June 30, 2017 the Group’s Board of Directors decided to change the accounting policy for investment property from cost model to fair value model, as permitted under IAS 40. Therefore, the previously issued Interim Financial Statements were retroactively recast as required by IAS 8.
 
The table below includes the reconciliation between the Statements of Income and Other Comprehensive Income for the nine-month and the three-month periods ended March 31, 2017 as they were originally issued, and the recast statements included in these Financial Statements for comparative purposes. There is no impact on any of the relevant total sums of the Consolidated Statement of Cash Flows.
 
 
8
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Statement of Income and Other Comprehensive Income for the nine-month period ending as of March 31, 2017:
 
 
Nine month
 
03.31.2017 (originally issued)
 
03.31.2017 (adjustment)
 
03.31.2017 (other reclassifications) g)
 
03.31.2017 (recast)
Revenues
55,201
 
 -
 
 -
 
55,201
Costs
(38,956)
 
826
    a)
(332)
 
(38,462)
Gross profit
16,245
 
826
 
(332)
 
16,739
Gain from disposal of investment properties
210
 
(182)
    b)
(28)
 
 -
Net gain from fair value adjustment of investment properties
 -
 
3,103
    c)
(61)
 
3,042
General and administrative expenses
(2,839)
 
 -
 
30
 
(2,809)
Selling expenses
(10,249)
 
 -
 
298
 
(9,951)
Other operating results, net
(220)
 
(19)
 
32
 
(207)
Profit from operations
3,147
 
3,728
 
(61)
 
6,814
Share of (loss) / profit of associates and joint ventures
(152)
 
229
    d)
65
 
142
Profit before finance results and income tax
2,995
 
3,957
 
4
 
6,956
Finance income
718
 
 -
 
(61)
 
657
Finance costs
(5,527)
 
 -
 
(4)
 
(5,531)
Other financial results
2,420
 
 -
 
61
 
2,481
Financial results, net
(2,389)
 
 -
 
(4)
 
(2,393)
Profit before income tax
606
 
3,957
 
 -
 
4,563
Income tax
137
 
(1,250)
    e)
 -
 
(1,113)
Profit from continuing operations
743
 
2,707
 
 -
 
3,450
Profit from discontinued operations
3,056
 
 -
 
 -
 
3,056
Profit for the period
3,799
 
2,707
 
 -
 
6,506
Other comprehensive income / (loss)
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
Currency translation adjustment
1,224
 
2,074
f)
 -
 
3,298
Share of other comprehensive income / (loss) of associates and joint ventures
310
 
(1,833)
d)
 -
 
(1,523)
Change in the fair value of hedging instruments net of income tax
2
 
 -
 
 -
 
2
Other reserves
1
 
 -
 
 -
 
1
Items that may not be reclassified subsequently to profit or loss, net of income tax
 
 
 
 
 
 
 
Actuarial loss from defined contribution plans
(23)
 
 -
 
 -
 
(23)
Other comprehensive income for the period from continuing operations
1,514
 
241
 
 -
 
1,755
Other comprehensive income for the period from discontinued operations
409
 
 -
 
 -
 
409
Other comprehensive income for the period
5,722
 
2,948
 
 -
 
8,670
 
 
 
 
 
 
 
 
Profit for the period attributable to:
 
 
 
 
 
 
 
Equity holders of the parent
2,138
 
1,646
 
 -
 
3,784
Non-controlling interest
1,661
 
1,061
 
 -
 
2,722
 
 
 
 
 
 
 
 
Total comprehensive income for the period attributable to:
 
 
 
 
 
 
 
Equity holders of the parent
2,654
 
1,732
 
 -
 
4,386
Non-controlling interest
3,068
 
1,216
 
 -
 
4,284
 
 

 
9
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Statement of Income and Other Comprehensive Income for the three-month period ending as of March 31, 2017:
 
 
Three month
 
03.31.2017 (originally issued)
 
03.31.2017 (adjustment)
 
03.31.2017 (other reclassifications) g)
 
03.31.2017 (recast)
Revenues
18,370
 
 -
 
 -
 
18,370
Costs
(13,011)
 
295
     a)
(121)
 
(12,837)
Gross profit
5,359
 
295
 
(121)
 
5,533
Gain from disposal of investment properties
105
 
(77)
    b)
(28)
 
 -
Net gain from fair value adjustment of investment properties
 -
 
(367)
    c)
(61)
 
(428)
General and administrative expenses
(1,008)
 
 -
 
8
 
(1,000)
Selling expenses
(3,500)
 
 -
 
113
 
(3,387)
Other operating results, net
(97)
 
(17)
 
28
 
(86)
Profit from operations
859
 
(166)
 
(61)
 
632
Share of (loss) / profit of associates and joint ventures
(59)
 
143
    d)
(4)
 
80
Profit before finance results and income tax
800
 
(23)
 
(65)
 
712
Finance income
(14)
 
 -
 
161
 
147
Finance costs
(659)
 
 -
 
(157)
 
(816)
Other financial results
889
 
 -
 
61
 
950
Financial results, net
216
 
 -
 
65
 
281
Profit before income tax
1,016
 
(23)
 
 -
 
993
Income tax
(197)
 
111
    e)
 -
 
(86)
Profit from continuing operations
819
 
88
 
 -
 
907
Loss from discontinued operations
(1,217)
 
 -
 
 -
 
(1,217)
Loss for the period
(398)
 
88
 
 -
 
(310)
Other comprehensive income / (loss)
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
Currency translation adjustment
1,103
 
(307)
    f)
 -
 
796
Share of other comprehensive income of associates and joint ventures
 -
 
400
    d)
 -
 
400
Change in the fair value of hedging instruments net of income tax
12
 
 -
 
 -
 
12
Other reserves
1
 
 -
 
 -
 
1
Items that may not be reclassified subsequently to profit or loss, net of income tax
 
 
 
 
 
 
 
Actuarial loss from defined contribution plans
(4)
 
 -
 
 -
 
(4)
Other comprehensive income for the period from continuing operations
1,112
 
93
 
 -
 
1,205
Other comprehensive income for the period from discontinued operations
409
 
 -
 
 -
 
409
Other comprehensive income for the period
1,123
 
181
 
 -
 
1,304
 
 
 
 
 
 
 
 
Profit for the period attributable to:
 
 
 
 
 
 
 
Equity holders of the parent
71
 
(122)
 
 -
 
(51)
Non-controlling interest
(469)
 
210
 
 -
 
(259)
 
 
 
 
 
 
 
 
Total comprehensive income for the period attributable to:
 
 
 
 
 
 
 
Equity holders of the parent
620
 
(91)
 
 -
 
529
Non-controlling interest
503
 
272
 
 -
 
775
 
 
a)
 Corresponds to the elimination of depreciation expense from investment property, and the adjustment, if applicable, to the depreciation of property, plant and equipment to adjust the value of transfers from investment property to that item.
b)
 It relates to the elimination of the gain from disposal of investment property, as such property is accounted for at its fair value on the date of sale, which generally coincides with the transaction price.
c) 
It represents the net change in fair value of investment property.
d)
 It relates to change in the value, as per the equity method, in associates and joint ventures after applying the change to equity in the accounting policy implemented by the Company.
e)
 It reflects the tax effect on the items indicated above, as applicable.
f) 
It pertains to exchange differences related to the change in the accounting policy implemented by the Group in subsidiaries, associates and joint ventures with functional currency other than the peso.
g) 
See Notes 2.26 and 32 to the Annual Financial Statements.
 
 
 
10
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
2.4.
Use of estimates
 
The preparation of Financial Statements at a certain date requires the Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements. In the preparation of these financial statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same applied by the Group in the preparation of the Annual Financial Statements described in Note 3 to those Financial Statements.
 
3.
Seasonal effects on operations
 
Operations Center in Argentina
 
The operations of the Group’s shopping malls are subject to seasonal effects, which affect the level of sales recorded by lessees. During summer time in Argentina (January and February), the lessees of shopping malls experience the lowest sales levels in comparison with the winter holidays (July) and Christmas and year-end holidays celebrated in December, when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping malls sales. Sale discounts at the end of each season also affect the business. As a consequence, for shopping mall operations, a higher level of business activity is expected in the period ranging between July and December, compared to the period between January and June.
 
Operations Center in Israel
 
The operations of the supermarket chain are subject to fluctuations of quarterly sales and income due to the increase in activity during religious holidays in different quarters throughout the year. For instance, in Pesaj (Passover) sometime between March and April, and Rosh Hashaná (Jewish New Year), sometime between September and October each year.
 
The results of operations of Telecommunications and Tourism are also usually affected by seasonality in summer months in Israel and by the Jewish New Year, given a higher consumption due to internal and external tourism.
 
4.
Acquisitions and disposals
 
Significant acquisitions and disposals for the nine-month period ended March 31, 2018 are detailed below. Significant acquisitions and disposals for the fiscal year ended June 30, 2017, are detailed in Note 4 to the Annual Financial Statements.
 
Operations Center in Argentina
 
Sale of ADS of IRSA CP
 
During October 2017, IRSA completed the sale in the secondary market of 10,240,000 ordinary shares of IRSA CP, par value Ps. 1 per share, represented by American Depositary Shares (“ADSs”), representing four ordinary shares each, which represents nearly 8.1% of IRSA CP capital for a total amount of Ps. 2,440 (US$ 138). After the transaction, IRSA’s direct and indirect interest in IRSA CP amounts to approximately 86.5%. This transaction was accounted in equity as an increase in the equity attributable to the parent for an amount of Ps. 271, net of taxes.
 
During February 2018, IRSA and a subsidiary have sold 180,075 ordinary shares of IRSA CP, par value Ps. 1 per share, which represents nearly 0.14% of IRSA CP capital for a total amount of Ps. 49. After the transaction, IRSA’s direct and indirect interest in IRSA CP amounts to approximately 86.34%. This transaction was accounted in equity as an increase in the equity attributable to the parent for an amount of Ps. 0.7, net of taxes.
 
 
11
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Operations Center in Israel
 
Purchase of DIC shares by Dolphin
 
As mentioned in Note 7 to the Annual Financial Statements, in connection with the Promotion of Competition and Reduction of Concentration Law in Israel, after June 30, 2017, Dolphin Netherlands B.V. made a non-binding tender offer for the acquisition of all DIC shares held by IDBD. For purposes of the transaction, a committee of independent directors has been set up to assess the tender offer and negotiate the terms and conditions. The Audit Committee has issued an opinion without reservations as to the transaction in accordance with the terms of section 72 et al. of the Capital Markets Law N° 26,831.
 
In November 2017, Dolphin IL Investments Ltd. (Dolphin IL), a subsidiary of Dolphin Netherlands B.V., has subscribed the final documents for the acquisition of the total shares owned by IDBD in DIC.
 
The transaction has been made for an amount of NIS 1,843 (equivalent to NIS 17.20 per share of DIC). The consideration was paid NIS 70 in cash (equivalent to Ps. 348 as of the date of the transaction) and NIS 1,773 (equivalent to Ps. 8,814 as of the date of the transaction) were financed by IDBD to Dolphin, maturing in five years, with the possibility of an extension of three additional years in tranches of one year each, that will accrue an initial interest of 6.5% annually, which will increase by 1% annually in case of extension for each annual tranche. Furthermore, guarantees have been implemented for IDBD, for IDBD bondholders and their creditors, through pledges of different degree of privilege over DIC shares resulting from the purchase. Moreover, a pledge will be granted in relation to 9,636,097 (equivalent to 6.38%) of the shares of DIC that Dolphin currently holds in the first degree of privilege in favor of IDBD and in second degree of privilege in favor of IDBD's creditors. This transaction has no effect in the Groups consolidation structure and has been accounted in equity as a decrease in the equity attributable to the parent for an amount of Ps. 114.
 
It should be noted that the financial position of IDBD and its subsidiaries at the Operations Center in Israel does not affect the financial position of IRSA and subsidiaries at the Operations Center in Argentina. In addition, the commitments and other covenants resulting from IDBD’s financial debt do not have impact on IRSA since such indebtedness has no recourse against IRSA and it is not granted by IRSA’s assets.
 
Purchase of IDBD shares by IFISA
 
In December 1, 2017, Dolphin Netherlands BV, has executed a stock purchase agreement for all of the shares that IFISA held of IDBD, which amounted to 31.7% of the capital stock. In this way, as of the end of December 31, 2017, Dolphin holds the 100% of IDBD's shares.
 
The transaction was made at a price of NIS 398 (equivalent to NIS 1.894 per share and approximately to
Ps. 1,968 as of the date of the transaction). As consideration of the transaction all receivables from IFISA to Dolphin have been canceled plus a payment of USD 33.7 (equivalents to Ps. 588 as of the date of the transaction). This transaction was accounted in equity as a decrease in the equity attributable to the parent for an amount of Ps. 2,923.
 
Tender offer for Clal
 
In July 2017, IDBD received a non-binding offer from an international group for the potential acquisition of its entire interest in Clal. The consideration will be based on the equity value of Clal, in accordance with Clal Financial Statement at the time of completing the transaction and is subject to the performance of a due diligence and the execution of an agreement, as well as obtaining the approvals required by law. IDBD is analyzing the offer. On June 30, 2017, this value amounted to NIS 4,880 (equivalent to approximately Ps. 23,278 as of the date of these Financial Statements), at the proportionate equity interest as of the date of the transaction. In November 2017 the period for the parties to execute an agreement for the sale of the shares, has expired. However, the parties continue negotiating according to the principles of the initial proposal. There is no certainty that the offer will go forward under the terms proposed, or that the transaction will be completed.
 
 
 
12
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Sale of Shufersal shares
 
On December 24, 2017, DIC sold shares of Shufersal, in a manner whereby its equity interest decreased from 53.30% to 50.12%. The consideration with respect to the sale of the aforementioned shares amounted to NIS 169.5 (equivalent to Ps. 847 as of the date of the transaction). This transaction was accounted in equity as an increase in the equity attributable to the parent for an amount of Ps. 385.
 
Acquisition of New Pharm
 
As mentioned in Note 4.G to the Annual Financial Statements, Shufersal entered into an agreement for the purchase of the shares of New Pharm Drugstores Ltd. ("New Pharm"), representative of 100% of that Company’s share capital. On December 20, 2017, the transaction was completed and Shufersal is the sole shareholder of New Pharm, after the sale of one of its stores and the approval by the antitrust committee. The total consideration was NIS 126 (equivalent to Ps. 630 as of the date of the transaction).
 
The Group is working on the allocation of the purchase price of the net assets acquired. The information below is preliminary and is subject to change. The following table summarizes the consideration, the fair value of the assets acquired and the liabilities assumed:
 
 
 
December 2017
Identified assets and assumed liabilities:
 
 
 
 
 
Property, plant and equipment
 
200
Inventories
 
380
Trade and other receivables
 
335
Cash and cash equivalents
 
25
Provisions
 
(15)
Borrowings
 
(260)
Employee benefits
 
(25)
Trade and other payables
 
(930)
Total identified net assets
 
(290)
Goodwill (pending allocation)
 
920
Total consideration
 
630
 
Revenues of New Pharm as of March 31, 2018 are not significant. If New Pharm had been consolidated since the beginning of the year, the Group's consolidated statement of income for the nine-month period ended March 31, 2018 would show a pro forma income of PS. 68,256 and a pro-forma net result of Ps. 11,501.
 
Ispro
 
In August 2017, PBC’s Board of Directors, decided to start a process to examine the potential sale of its interest in Ispro. In this respect, it has received several offers. As of the date of these Financial Statements, the transaction does not comply with the requirements to be classified as assets held for sale.
 
Israir
 
On January 10, 2018, the Anti-Trust Authority communicated IDBD its objection to the transaction between Sun D’or and Israir, described in note 4.f to the Annual Consolidated Financial Statements. The Group is evaluating the reasons for the objection and has appealed the ruling. The Group evaluated the situation and the criteria established by IFRS 5 and kept the classification of the investment as discontinued operations.
 
 
13
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Transfer of Cellcom’s shares
 
On January 22, 2018 DIC transferred 5% of Cellcom’s shares (the “Transferred Shares”), by way of a loan transaction in equal parts to two private companies incorporated in Israel, which are related parties to the Group. The agreement will be in effect from the date of its closing until December 31, 2018 and will be extended automatically for a year, until it is terminated in accordance with its terms. DIC will be entitled to terminate the agreement at any time, in its discretion, and to receive back all or some of the Transferred Shares. The Israeli entities will not be entitled to transfer the Transferred Shares to any entity whatsoever without DIC’s consent. The Israeli entities will together be entitled to appoint 10% of Cellcom directors (i.e., as of the present date - one director). Additionally, the Israeli entities and the designated director will undertake to vote, together with DIC, on all resolutions which will be presented to Cellcom’s general meeting. Furthermore, the economic benefits of the Transferred Shares will be kept by DIC. The Transferred Shares are pledged in favor of DIC.
 
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.
 
Since June 30, 2017 as of the date of this Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities (either measured at fair value or amortized cost). Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Group’s financial instruments.
 
 
6.
Segment information
 
As explained in Note 6 to the Annual Financial Statements, the Group reports its financial performance separately in two Operations Centers. At the beginning of the fiscal year initiated as of July 1, 2017 the CODM reviewed certain corporate expenses associated with all the segments of the Operations Center in Argentina and Israel in an aggregate manner. During this period, the corporate expenses analysis were done separately, and it has been included as a new Corporate segment. The segment information for the period ended March 31, 2017 has been modified for comparability purposes. Below is a summary of the business unit and a reconciliation between the operating income according to segment information and the operating income of the statement of income and other comprehensive income of the Group for the periods ended March 31, 2018 and 2017:
 
 
March 31, 2018
 
 
Operations Center in Argentina
 
Operations Center in Israel
 
Total
 
Joint ventures (1)
 
Expenses and collective promotion funds
 
Elimination of inter-segment transactions and non-reportable assets / liabilities
 
Total as per statement of income / statement of financial position
Revenues
3,901
 
60,558
 
64,459
 
(37)
 
1,281
 
(7)
 
65,696
Costs
(810)
 
(42,667)
 
(43,477)
 
17
 
(1,304)
 
 -
 
(44,764)
Gross profit / (loss)
3,091
 
17,891
 
20,982
 
(20)
 
(23)
 
(7)
 
20,932
Net gain from fair value adjustment of investment properties
11,627
 
1,375
 
13,002
 
(206)
 
 -
 
 -
 
12,796
General and administrative expenses
(655)
 
(2,825)
 
(3,480)
 
14
 
 -
 
9
 
(3,457)
Selling expenses
(305)
 
(11,826)
 
(12,131)
 
6
 
 -
 
 -
 
(12,125)
Other operating results, net
(80)
 
610
 
530
 
17
 
 -
 
(2)
 
545
Profit / (loss) from operations
13,678
 
5,225
 
18,903
 
(189)
 
(23)
 
 -
 
18,691
Share of profit / (loss) of associates and joint ventures
569
 
(214)
 
355
 
216
 
 -
 
 -
 
571
Segment profit / (loss)
14,247
 
5,011
 
19,258
 
27
 
(23)
 
 -
 
19,262
Reportable assets
58,387
 
210,539
 
268,926
 
(225)
 
 -
 
11,056
 
279,757
Reportable liabilities
 -
 
(186,184)
 
(186,184)
 
 -
 
 -
 
(34,522)
 
(220,706)
Net reportable assets
58,387
 
24,355
 
82,742
 
(225)
 
 -
 
(23,466)
 
59,051
 
 
14
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
March 31, 2017 (recast)
 
 
Operations Center in Argentina
 
Operations Center in Israel
 
Total
 
Joint ventures (1)
 
Expenses and collective promotion funds
 
Elimination of inter-segment transactions and non-reportable assets / liabilities
 
Total as per statement of income / statement of financial position
Revenues
3,111
 
51,030
 
54,141
 
(26)
 
1,090
 
(4)
 
55,201
Costs
(578)
 
(36,750)
 
(37,328)
 
14
 
(1,148)
 
 -
 
(38,462)
Gross profit / (loss)
2,533
 
14,280
 
16,813
 
(12)
 
(58)
 
(4)
 
16,739
Net gain from fair value adjustment of investment properties
2,204
 
1,021
 
3,225
 
(183)
 
 -
 
 -
 
3,042
General and administrative expenses
(476)
 
(2,342)
 
(2,818)
 
3
 
 -
 
6
 
(2,809)
Selling expenses
(258)
 
(9,695)
 
(9,953)
 
2
 
 -
 
 -
 
(9,951)
Other operating results, net
(31)
 
(168)
 
(199)
 
(6)
 
 -
 
(2)
 
(207)
Profit / (loss) from operations
3,972
 
3,096
 
7,068
 
(196)
 
(58)
 
 -
 
6,814
Share of profit / (loss) of associates and joint ventures
75
 
(59)
 
16
 
126
 
 -
 
 -
 
142
Segment profit / (loss)
4,047
 
3,037
 
7,084
 
(70)
 
(58)
 
 -
 
6,956
Reportable assets
42,467
 
154,795
 
197,262
 
(259)
 
 -
 
6,688
 
203,691
Reportable liabilities
 -
 
(134,115)
 
(134,115)
 
 -
 
 -
 
(25,498)
 
(159,613)
Net reportable assets
42,467
 
20,680
 
63,147
 
(259)
 
 -
 
(18,810)
 
44,078
 
(1)
Represents the equity value of joint ventures that were proportionately consolidated for the 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 right to receive future units under barter agreements, net of investments in associates with negative equity which are included in provisions in the amount of Ps. 76 as of March 31, 2018.
 
 
Below is a summarized analysis of the business unit of the Group’s Operations Center in Argentina for the periods ended March 31, 2018 and 2017:
 
March 31, 2018
 
Operations Center in Argentina
 
Shopping Malls
 
Offices
 
Sales and developments
 
Hotels
 
International
 
Corporate
 
Others
 
Total
Revenues
2,696
 
387
 
78
 
739
 
 -
 
 -
 
1
 
3,901
Costs
(234)
 
(33)
 
(40)
 
(465)
 
 -
 
 -
 
(38)
 
(810)
Gross profit / (loss)
2,462
 
354
 
38
 
274
 
 -
 
 -
 
(37)
 
3,091
Net gain from fair value adjustment of investment properties
9,023
 
1,537
 
1,067
 
 -
 
 -
 
 -
 
 -
 
11,627
General and administrative expenses
(229)
 
(65)
 
(60)
 
(145)
 
(35)
 
(113)
 
(8)
 
(655)
Selling expenses
(174)
 
(31)
 
(17)
 
(82)
 
 -
 
 -
 
(1)
 
(305)
Other operating results, net
(39)
 
(4)
 
(25)
 
(12)
 
(15)
 
 -
 
15
 
(80)
Profit / (loss) from operations
11,043
 
1,791
 
1,003
 
35
 
(50)
 
(113)
 
(31)
 
13,678
Share of profit of associates and joint ventures
 -
 
 -
 
12
 
 -
 
1
 
 -
 
556
 
569
Segment profit / (loss)
11,043
 
1,791
 
1,015
 
35
 
(49)
 
(113)
 
525
 
14,247
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment properties and trading properties
38,056
 
9,610
 
6,725
 
 -
 
 -
 
 -
 
78
 
54,469
Investment in associates and joint ventures
1
 
 -
 
150
 
 -
 
661
 
 -
 
2,598
 
3,410
Other operating assets
83
 
48
 
56
 
170
 
63
 
 -
 
88
 
508
Operating assets
38,140
 
9,658
 
6,931
 
170
 
724
 
 -
 
2,764
 
58,387
 
 
 
15
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
March 31, 2017 (recast)
 
 
Operations Center in Argentina
 
 
Shopping Malls
 
Offices
 
Sales and developments
 
Hotels
 
International
 
Corporate
 
Others
 
Total
Revenues
2,216
 
323
 
4
 
568
 
 -
 
 -
 
 -
 
3,111
Costs
(172)
 
(24)
 
(22)
 
(360)
 
 -
 
 -
 
 -
 
(578)
Gross profit / (loss)
2,044
 
299
 
(18)
 
208
 
 -
 
 -
 
 -
 
2,533
Net gain from fair value adjustment of investment properties
1,382
 
690
 
132
 
 -
 
 -
 
 -
 
 -
 
2,204
General and administrative expenses
(179)
 
(56)
 
(24)
 
(100)
 
(30)
 
(86)
 
(1)
 
(476)
Selling expenses
(133)
 
(34)
 
(14)
 
(73)
 
 -
 
 -
 
(4)
 
(258)
Other operating results, net
(34)
 
(7)
 
(29)
 
1
 
(10)
 
 -
 
48
 
(31)
Profit / (loss) from operations
3,080
 
892
 
47
 
36
 
(40)
 
(86)
 
43
 
3,972
Share of profit of associates and joint ventures
 -
 
 -
 
5
 
 -
 
(55)
 
 -
 
125
 
75
Segment profit / (loss)
3,080
 
892
 
52
 
36
 
(95)
 
(86)
 
168
 
4,047
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment properties and trading properties
27,898
 
6,486
 
4,864
 
 -
 
 -
 
 -
 
 -
 
39,248
Investment in associates and joint ventures
 -
 
199
 
106
 
 -
 
655
 
 -
 
1,921
 
2,881
Other operating assets
83
 
34
 
35
 
161
 
2
 
 -
 
23
 
338
Operating assets
27,981
 
6,719
 
5,005
 
161
 
657
 
 -
 
1,944
 
42,467
 
 
Below is a summarized analysis of the business unit of the Group’s Operations Center in Israel for the periods ended March 31, 2018 and 2017:
 
 
 
March 31, 2018
 
Operations Center in Israel
 
Real Estate
 
Supermarkets
 
Telecommunications
 
Insurance
 
Corporate
 
Others
 
Total
 
Revenues
3,793
 
42,460
 
14,030
 
 -
 
 -
 
275
 
60,558
 
Costs
(1,238)
 
(31,360)
 
(9,907)
 
 -
 
 -
 
(162)
 
(42,667)
 
Gross profit
2,555
 
11,100
 
4,123
 
 -
 
 -
 
113
 
17,891
 
Net gain from fair value adjustment of investment properties
1,375
 
 -
 
 -
 
 -
 
 -
 
 -
 
1,375
 
General and administrative expenses
(261)
 
(650)
 
(1,343)
 
 -
 
(270)
 
(301)
 
(2,825)
 
Selling expenses
(76)
 
(8,804)
 
(2,887)
 
 -
 
 -
 
(59)
 
(11,826)
 
Other operating results, net
132
 
(143)
 
141
 
 -
 
418
 
62
 
610
 
Profit / (loss) from operations
3,725
 
1,503
 
34
 
 -
 
148
 
(185)
 
5,225
 
Share of profit / (loss) of associates and joint ventures
31
 
14
 
 -
 
 -
 
 -
 
(259)
 
(214)
 
Segment profit / (loss)
3,756
 
1,517
 
34
 
 -
 
148
 
(444)
 
5,011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating assets
96,527
 
43,692
 
34,251
 
11,249
 
15,888
 
8,932
 
210,539
 
Operating liabilities
(75,726)
 
(30,401)
 
(27,183)
 
(919)
 
(47,615)
 
(4,340)
 
(186,184)
 
Operating assets (liabilities), net
20,801
 
13,291
 
7,068
 
10,330
 
(31,727)
 
4,592
 
24,355
 
 
16
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
March 31, 2017 (recast)
 
Operations Center in Israel
 
Real Estate
 
Supermarkets
 
Telecommunications
 
Insurance
 
Corporate
 
Others
 
Total
Revenues
3,830
 
35,030
 
11,721
 
 -
 
 -
 
449
 
51,030
Costs
(1,927)
 
(26,419)
 
(8,163)
 
 -
 
 -
 
(241)
 
(36,750)
Gross profit
1,903
 
8,611
 
3,558
 
 -
 
 -
 
208
 
14,280
Net gain from fair value adjustment of investment properties
1,021
 
 -
 
 -
 
 -
 
 -
 
 -
 
1,021
General and administrative expenses
(211)
 
(472)
 
(1,143)
 
 -
 
(311)
 
(205)
 
(2,342)
Selling expenses
(70)
 
(7,016)
 
(2,582)
 
 -
 
 -
 
(27)
 
(9,695)
Other operating results, net
31
 
(35)
 
(35)
 
 -
 
(55)
 
(74)
 
(168)
Profit / (loss) from operations
2,674
 
1,088
 
(202)
 
 -
 
(366)
 
(98)
 
3,096
Share of (loss) / profit of associates and joint ventures
(31)
 
8
 
 -
 
 -
 
 -
 
(36)
 
(59)
Segment profit / (loss)
2,643
 
1,096
 
(202)
 
 -
 
(366)
 
(134)
 
3,037
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating assets
66,339
 
30,713
 
29,354
 
7,194
 
12,313
 
8,882
 
154,795
Operating liabilities
(51,907)
 
(23,684)
 
(23,488)
 
 -
 
(27,475)
 
(7,561)
 
(134,115)
Operating assets (liabilities), net
14,432
 
7,029
 
5,866
 
7,194
 
(15,162)
 
1,321
 
20,680
 
 
 
 
 
7.
Investments in associates and joint ventures
 
Changes in the Group’s investments in associates and joint ventures for the nine-month period ended March 31, 2018 and for the year ended June 30, 2017 were as follows:
 
March 31, 2018
 
June 30, 2017
Beginning of the period / year
7,813
 
16,835
Increase in equity interest in associates and joint ventures
104
 
1,102
Issuance of capital and contributions
116
 
160
Capital reduction
(238)
 
(32)
Decrease for control obtainment
 -
 
(59)
Associates incorporated by business combination
 -
 
107
Share of profit
571
 
378
Transfer to borrowings to associates (i)
(190)
 
 -
Currency translation adjustment
538
 
232
Cash dividends (ii)
(127)
 
(250)
Distribution for associate liquidation (iii)
(72)
 
 -
Reclassification to held for sale
(44)
 
(10,709)
Others
10
 
49
End of the period / year (iv)
8,481
 
7,813
 
(i)       
Corresponds to a reclassification made at the time of formalizing the terms of repayment of the loan with the associate in the Operations Center in Israel.
(ii)      
See Note 24.
(iii)     
It corresponds to the distribution following the liquidation of Baicom.
(iv)    
As of March 31, 2018 and June 30, 2017 includes Ps. (76) and Ps. (72) respectively, reflecting interests in companies with negative equity, which were disclosed in “Provisions” (see Note 17).
 
 
 
17
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
Name of the entity
 
% ownership interest
 
Value of Group's interest in equity
 
Group's interest in comprehensive income / (loss)
 
 
March 31, 2018
June 30, 2017
 
March 31, 2018
June 30, 2017
 
March 31, 2018
March 31, 2017 (recast)
Associates
 
 
 
 
 
 
 
 
 
New Lipstick (1)
 
49.9%
49.9%
 
(76)
(72)
 
(4)
(70)
BHSA
 
29.9%
29.9%
 
2,246
1,693
 
553
48
Condor
 
28.1%
28.7%
 
727
634
 
126
98
PBEL
 
45.4%
45.4%
 
709
768
 
43
70
Other associates
 
 -
 -
 
1,371
1,552
 
(108)
239
Joint ventures
 
 
 
 
 
 
 
 
 
Quality
 
50.0%
50.0%
 
674
482
 
168
107
La Rural SA
 
50.0%
50.0%
 
114
113
 
14
7
Mehadrin
 
45.4%
45.4%
 
1,376
1,312
 
64
(34)
Other joint ventures
 
-
-
 
1,340
1,331
 
253
176
Total associates and joint ventures
 
 
 
 
8,481
7,813
 
1,109
641
 
(1) 
Metropolitan, a subsidiary of New Lipstick, has renegotiated its non-recourse debt with IRSA, which amounted to US$ 113.1, and obtained a debt reduction of US$ 20 by the lending bank, an extension to April 30, 2020 and an interest rate reduction from LIBOR + 4 b.p. to 2 b.p. upon payment of US$ 40 in cash (US$ 20 in September 2017 and US$ 20 in October 2017), of which IRSA has contributed with US$ 20. Following the renegotiation, Metropolitan’s debt amounts to US$ 53.1. Additionally, Metropolitan has agreed to exercise on or before February 1, 2019 the purchase option on part of the land where the property is built and, to deposit the sum of money corresponding to 1% of the purchase price. Furthermore, Metropolitan has agreed to cause IRSA and other shareholders to furnish the bank, on or before February 1, 2020, with a payment guarantee with financial ratios acceptable to the Bank for the outstanding balance of the purchase price, or a letter of credit in relation to the loan balance then outstanding.
 
Below is additional information about the Group’s investments in associates and joint ventures:
 
Name of the entity
 
Place of business / Country of incorporation
 
Main activity
 
Common shares 1 vote
 
Latest financial statements issued
 
 
 
 
Share capital (nominal value)
 
Profit / (loss) for the period
 
Shareholders’ equity
Associates
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
 
U.S.
 
Real estate
 
N/A
 
N/A
 
(*) (24)
 
(*) (159)
BHSA
 
Argentina
 
Financial
 
448,689,072
 
(***) 1,500
 
(***) 1,019
 
(***) 8,433
Condor
 
U.S.
 
Hotel
 
3,337,613
 
N/A
 
 (*) (9)
 
 (*) 112
PBEL
 
India
 
Real estate
 
450
 
(**) 1
 
(**) (72)
 
(**) (453)
Other associates
 
 
 
 
 
 
 
N/A
 
N/A
 
N/A
Joint ventures