Blueprint
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 20-F/A
☐ REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30,
2018
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of
event requiring this shell company report ___
For
the transition period from ____ to ____
Commission file number 000-30982
IRSA Propiedades Comerciales S.A.
(Exact
name of Registrant as specified in its charter)
IRSA Commercial Properties Inc.
(Translation
of registrant’s name into English)
Republic of Argentina
(Jurisdiction
of incorporation or organization)
Moreno 877, 22nd Floor
Ciudad Autónoma de Buenos Aires, Argentina
(Address
of principal executive offices)
Mat’as Ivan Gaivironsky – Chief Financial and
Administrative Officer
Tel (+ 54 11) 4323 7449 ; ir@irsacp.com.ar
Moreno 877, 24th Floor, (C1091AAQ)
Ciudad Autónoma de Buenos Aires, Argentina
(Name,
Telephone, E-mail and/or Facsimile number and Address of Company
Contact Person)
Securities registered or to be registered pursuant to Section 12(b)
of the Act:
Title of each class
|
|
|
|
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Name of each exchange on which registered
|
American Depositary Shares (ADSs), each representing
four shares of Common Stock
|
|
|
|
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Nasdaq National Market of the
Nasdaq Stock Market
|
Common Stock, par value Ps.1.00 per share
|
|
|
|
|
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Nasdaq National Market of the
Nasdaq Stock Market*
|
* Not
for trading, but only in connection with the registration of
American Depositary Shares pursuant to the requirements of the
Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g)
of the Act: None
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None
Indicate
the number of outstanding shares of the issuer’s common stock
as of June 30, 2018: 126,014,050
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act:
☐ Yes x No
If this
report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section
13 or 15 (d) of the Securities Exchange Act of 1934.
xYes
☐ No
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
x Yes
☐ No
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required
to submit and post such files).
☐ Yes x No
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule
12b-2 of the Exchange Act. (check one):
Large accelerated
filer
☐ Accelerated filer
x
Non-accelerated filer ☐
Emerging
growth company ☐
Nonaccelerated filer ☐
If
an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange
Act. ☐
†The
term “new or revised financial accounting standard”
refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5,
2012.
Indicate
by check mark which basis of accounting the registrant has used to
prepare the financial statements included in this
filing:
U.S.
GAAP ☐
|
International
Financial Reporting Standards as issued x
by the
International Accounting Standards Board
|
Other
☐
|
If
“Other” has been checked in response to the previous
question, indicate by check mark which financial statement item the
registrant has elected to follow.
☐ Item 17 ☐ Item
18
If this
is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes x No
(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)
Indicate
by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 23 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by the court.
Yes
☐ No ☐
Please send copies of notices and communications from the
Securities and Exchange Commission to:
Carolina
Zang
|
|
David
Williams
|
|
|
Jaime
Mercado
|
Zang
Vergel & Viñes Abogados
|
|
Simpson
Thacher & Bartlett LLP
|
Florida
537 piso 18º
C1005AAK
Buenos Aires, Argentina.
|
|
425
Lexington Avenue
New
York, NY 10019
|
Explanatory Note
This
Amendment No. 1 to the Annual Report on Form 20-F (“Amendment
No. 1”) of IRSA Propiedades Comerciales S.A. (the
“Company”) amends the Company’s Annual Report on
Form 20-F for the fiscal year ended June 30, 2018 (the “Form
20-F”), which was filed with the Securities and Exchange
Commission (the “SEC”) on October 23, 2018. The Company
is filing this Amendment No. 1 solely for the purposes of replacing
the Report of Independent Registered Public Accounting Firm that
was included on page F-2 of the Form 20-F, with the report herein
included and filing an udpated Consent of Independent Registered
Public Accounting Firm as Exhibit 99.1. For such purposes, our
annual audited financial statements as of June 30, 2018 and 2017
and for the fiscal years ended June 30, 2018, 2017 and 2016 that
were filed togheter with our Form 20-F that includes the correct
Report of Independent Registered Public Accounting Firm, together
with the summary of Investment Properties by type as of June 30,
2018, filed as Exhibit 99.3 to Form 20-F (attached here tous
Exhibit 99.2).
This
Amendment No. 1 makes no changes to the financial statements of the
Company included in the Form 20-F, other than the changes described
above. Except as described above, this Amendment No. 1 does not
amend, update or restate the information in any other item of the
Form 20-F or reflect any events that have occurred after the filing
of the Form 20-F.
Report of Independent Registered Public Accounting
Firm
To the
Board of Directors and Shareholders of
IRSA
Propiedades Comerciales S.A.
Opinions on the Financial Statements and Internal Control over
Financial Reporting
We have audited the accompanying consolidated statements of
financial position of IRSA Propiedades Comerciales S.A. and its
subsidiaries as of June 30, 2018 and 2017, and the related consolidated statements of comprehensive income, changes in
shareholders’ equity and cash flows for each of the three
years in the period ended June 30, 2018, including the related
notes and the summary of investment properties schedule as of June
30, 2018 listed in the index appearing under Item 19 (99.2)
(collectively referred to as the “consolidated financial
statements”). We also have audited the Company’s
internal control over financial reporting as of June 30, 2018,
based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our
opinion, the consolidated financial statements referred to
above present fairly, in all material
respects, the financial position of the Company as of June
30, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the
period ended June
30, 2018 in conformity with International Financial
Reporting Standards as issued by the International Accounting
Standards Board. Also in our
opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of June 30,
2018, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the
COSO.
Basis for Opinions
The Company's management is responsible for these
consolidated financial statements, for
maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control Over Financial
Reporting appearing under Item 15. Our
responsibility is to express opinions on the Company’s
consolidated financial statements and
on the Company's internal control over financial reporting based on
our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States)
("PCAOB") and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in
accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audits to obtain reasonable assurance
about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all
material respects.
Our audits of the consolidated financial statements included performing
procedures to assess the risks of material misstatement of
the consolidated financial
statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the consolidated financial
statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our
opinions.
Definition and Limitations of Internal Control over Financial
Reporting
A
company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control
over financial reporting
includes
those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/
PRICE WATERHOUSE & Co. S.R.L
(Partner)
/s/
Walter Rafael Zablocky
Buenos
Aires, Argentina
October 22, 2018
We have served as the Company’s auditor since
1998.
Consolidated
statements of financial position
as
of June 30, 2018 and 2017
(All amounts in
thousands of Argentine Pesos, except shares and per share data and
as otherwise indicated)
Note
|
06.30.18
|
06.30.17
|
ASSETS
|
|
|
|
Non-current assets
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|
|
|
Investment
properties
|
9
|
54,054,811
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35,916,882
|
Property,
plant and equipment
|
10
|
109,437
|
120,536
|
Trading
properties
|
11
|
61,362
|
61,600
|
Intangible
assets
|
12
|
213,051
|
111,560
|
Investments
in associates and joint ventures
|
8
|
1,433,522
|
791,626
|
Deferred
income tax assets
|
20
|
60,734
|
59,455
|
Income
tax and minimum presumed income tax credits
|
|
156,152
|
29
|
Trade
and other receivables
|
14
|
955,509
|
777,818
|
Investments
in financial assets
|
13
|
29,139
|
66,717
|
Total non-current assets
|
|
57,073,717
|
37,906,223
|
Current Assets
|
|
|
|
Trading
properties
|
11
|
206
|
-
|
Inventories
|
|
24,882
|
22,722
|
Restricted
assets
|
13
|
-
|
49,525
|
Income
tax and minimum presumed income tax credits
|
|
43,269
|
1,933
|
Trade
and other receivables
|
14
|
1,766,075
|
1,453,312
|
Investments
in financial assets
|
13
|
5,145,463
|
1,180,249
|
Derivative
financial instruments
|
13
|
47,360
|
-
|
Cash
and cash equivalents
|
13
|
3,643,131
|
1,807,544
|
Total current assets
|
|
10,670,386
|
4,515,285
|
TOTAL ASSETS
|
|
67,744,103
|
42,421,508
|
SHAREHOLDERS’ EQUITY
|
|
|
|
Total
capital and reserves attributable to equity holders of the
parent
|
|
36,565,015
|
22,145,079
|
Non-controlling
interest
|
|
1,397,872
|
871,169
|
TOTAL SHAREHOLDERS’ EQUITY
|
|
37,962,887
|
23,016,248
|
LIABILITIES
|
|
|
|
Non-current liabilities
|
|
|
|
Trade
and other payables
|
17
|
483,908
|
406,598
|
Borrowings
|
18
|
15,362,726
|
5,918,119
|
Deferred
income tax liabilities
|
20
|
11,425,496
|
11,263,341
|
Provisions
|
19
|
12,258
|
16,509
|
Total non-current liabilities
|
|
27,284,388
|
17,604,567
|
Current liabilities
|
|
|
|
Trade
and other payables
|
17
|
1,870,552
|
1,104,982
|
Income
tax and minimum presumed income tax liabilities
|
|
46,061
|
268,957
|
Payroll
and social security liabilities
|
|
184,196
|
147,095
|
Borrowings
|
18
|
305,481
|
249,868
|
Derivative
financial instruments
|
13
|
46,711
|
4,950
|
Provisions
|
19
|
43,827
|
24,841
|
Total current liabilities
|
|
2,496,828
|
1,800,693
|
TOTAL LIABILITIES
|
|
29,781,216
|
19,405,260
|
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
|
|
67,744,103
|
42,421,508
|
The
accompanying notes are an integral part of these Consolidated
Financial Statements.
IRSA
Propiedades Comerciales S.A.
Consolidated
statements of comprehensive income
for
the fiscal years ended June 30, 2018, 2017 and 2016
(All amounts in
thousands of Argentine Pesos, except shares and per share data and
as otherwise indicated)
|
Note
|
|
|
|
Income
from sales, rentals and services
|
24
|
4,232,206
|
3,508,975
|
2,674,873
|
Income
from expenses and collective promotion fund
|
24
|
1,717,000
|
1,488,187
|
1,183,627
|
|
25
|
(2,139,447)
|
(1,899,786)
|
(1,460,204)
|
|
|
3,809,759
|
3,097,376
|
2,398,296
|
Net
gain from fair value adjustments of investment
properties
|
9
|
16,690,117
|
3,133,413
|
17,092,403
|
General
and administrative expenses
|
25
|
(415,242)
|
(322,176)
|
(221,580)
|
|
25
|
(294,865)
|
(236,528)
|
(162,221)
|
Other
operating results, net
|
26
|
(4,906)
|
(51,219)
|
(68,552)
|
|
|
19,784,863
|
5,620,866
|
19,038,346
|
Share
of profit of associates and joint ventures
|
8
|
639,525
|
152,703
|
204,299
|
Profit from operations before financing and taxation
|
|
20,424,388
|
5,773,569
|
19,242,645
|
|
27
|
688,153
|
242,438
|
512,555
|
|
27
|
(7,438,451)
|
(1,313,336)
|
(2,938,476)
|
|
27
|
2,268,439
|
284,024
|
1,714,702
|
|
|
(4,481,859)
|
(786,874)
|
(711,219)
|
|
|
15,942,529
|
4,986,695
|
18,531,426
|
|
20
|
(286,506)
|
(1,609,181)
|
(6,278,894)
|
|
|
15,656,023
|
3,377,514
|
12,252,532
|
Total comprehensive income for the year
|
|
15,656,023
|
3,377,514
|
12,252,532
|
|
|
|
|
|
|
|
|
|
Equity
holders of the parent
|
|
15,099,936
|
3,260,476
|
11,821,280
|
|
|
556,087
|
117,038
|
431,252
|
|
|
|
|
Profit per share attributable to equity holders of the parent for
the year (Note 28):
|
|
|
|
|
|
|
119.83
|
25.87
|
93.81
|
|
|
119.83
|
25.87
|
93.81
|
The accompanying
notes are an integral part of these Consolidated Financial
Statements.
IRSA
Propiedades Comerciales S.A.
Consolidated
statements of changes in shareholders’ equity
for
the fiscal years ended June 30, 2018, 2017 and 2016
(All amounts in
thousands of Argentine Pesos, except shares and per share data and
as otherwise indicated)
|
|
Inflation adjustment of share capital
|
|
|
Reserve for future dividends
|
Special reserve CNV 609/12 (1)
|
|
Changes in non-controlling interest
|
|
|
|
Total shareholder’s equity
|
Balance as of June 30, 2017
|
126,014
|
69,381
|
444,226
|
39,078
|
356,598
|
2,700,192
|
-
|
(19,784)
|
18,429,374
|
22,145,079
|
871,169
|
23,016,248
|
Comprehensive
income for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,099,936
|
15,099,936
|
556,087
|
15,656,023
|
Equity
contributions of the non-controling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
253
|
253
|
Assignment
of results - Shareholders’ meeting of October 31, 2017
(1)
|
-
|
-
|
-
|
-
|
(356,598)
|
-
|
2,627,076
|
-
|
(2,950,478)
|
(680,000)
|
-
|
(680,000)
|
Dividends
distribution to non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(36,400)
|
(36,400)
|
Incorporation
as result of business combination (Note 4)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
6,763
|
6,763
|
Balance as of June 30, 2018
|
126,014
|
69,381
|
444,226
|
39,078
|
-
|
2,700,192
|
2,627,076
|
(19,784)
|
30,578,832
|
36,565,015
|
1,397,872
|
37,962,887
|
|
|
Inflation adjustment of share capital
|
|
|
Reserve for future dividends
|
Special reserve CNV 609/12 (1)
|
|
Changes in non-controlling interest
|
|
|
|
Total shareholder’s equity
|
Balance as of June 30, 2016
|
126,014
|
69,381
|
444,226
|
39,078
|
-
|
2,700,192
|
-
|
(19,770)
|
16,295,496
|
19,654,617
|
775,600
|
20,430,217
|
Comprehensive
income for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3,260,476
|
3,260,476
|
117,038
|
3,377,514
|
Assignment
of results - Shareholders’ meeting of October 31, 2016
(1)
|
-
|
-
|
-
|
-
|
356,598
|
-
|
-
|
-
|
(816,598)
|
(460,000)
|
-
|
(460,000)
|
Assignment
of results - Shareholders’ meeting of April5, 2017
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(310,000)
|
(310,000)
|
-
|
(310,000)
|
Changes
in non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(14)
|
-
|
(14)
|
(851)
|
(865)
|
Incorporation
as result of business combination (Note 4)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
40,004
|
40,004
|
Dividends
distribution to non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(60,622)
|
(60,622)
|
Balance as of June 30, 2017
|
126,014
|
69,381
|
444,226
|
39,078
|
356,598
|
2,700,192
|
-
|
(19,784)
|
18,429,374
|
22,145,079
|
871,169
|
23,016,248
|
IRSA
Propiedades Comerciales S.A.
Consolidated
statements of changes in shareholders’ equity
for
the fiscal years ended June 30, 2018, 2017 and 2016
(All amounts in
thousands of Argentine Pesos, except shares and per share data and
as otherwise indicated)
|
|
Inflation adjustment of share capital
|
|
|
Reserve for future dividends
|
Special reserve CNV 609/12 (1)
|
|
Changes in non-controlling interest
|
|
|
|
Total shareholder’s equity
|
Balance as of June 30, 2015
|
126,014
|
69,381
|
444,226
|
39,078
|
-
|
2,700,192
|
-
|
(19,770)
|
4,757,796
|
8,116,917
|
443,500
|
8,560,417
|
Comprehensive
income for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
11,821,280
|
11,821,280
|
431,252
|
12,252,532
|
Assignment
of results - Shareholders’ meeting of October 31, 2015
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(283,580)
|
(283,580)
|
-
|
(283,580)
|
Dividends
distribution to non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(99,027)
|
(99,027)
|
Reduction
of capital contribution of non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(123)
|
(123)
|
Balance as of June 30, 2016
|
126,014
|
69,381
|
444,226
|
39,078
|
-
|
2,700,192
|
-
|
(19,770)
|
16,295,496
|
19,654,617
|
775,602
|
20,430,219
|
(1) See Note
16.
The accompanying
notes are an integral part of these Consolidated Financial
Statements.
IRSA
Propiedades Comerciales S.A.
Consolidated
statements of cash flows
for
the fiscal years ended June 30, 2018, 2017 and 2016
(All amounts in
thousands of Argentine Pesos, except shares and per share data and
as otherwise indicated)
|
Note
|
|
|
|
|
|
|
|
|
Cash
generated from operations
|
15
|
4,183,288
|
3,139,928
|
1,589,228
|
|
|
(559,281)
|
(264,721)
|
(575,855)
|
Net cash generated from operating activities
|
|
3,624,007
|
2,875,207
|
1,013,373
|
|
|
|
|
|
|
|
|
|
Capital
contributions in associates
|
8
|
-
|
(10,390)
|
-
|
Capital
contributions in joint ventures
|
8
|
(41,412)
|
(329)
|
(73,000)
|
Acquisition
of investment properties
|
9
|
(1,231,932)
|
(703,865)
|
(167,665)
|
Proceeds
from sale of investment properties
|
|
29,482
|
138,342
|
357,243
|
Acquisition
of property, plant and equipment
|
10
|
(15,774)
|
(23,866)
|
(13,747)
|
|
|
(90,451)
|
(169,647)
|
(6,596)
|
Acquisition
of intangible assets
|
12
|
(41,915)
|
(35,786)
|
(1,583)
|
Acquisitions
of investments in financial assets
|
|
(11,330,046)
|
(2,517,631)
|
(9,916,383)
|
Proceeds
from investments in financial assets
|
|
8,535,468
|
3,282,471
|
8,453,545
|
|
|
(7,626)
|
(8,953)
|
-
|
Loans
granted to related parties
|
|
(1,458)
|
(279,042)
|
(533,525)
|
Loans
repayment received from related parties
|
|
-
|
168,846
|
-
|
Proceeds
from sale of property plant and equipment
|
|
12,379
|
-
|
-
|
Collection
of financial assets interests
|
|
336,537
|
57,922
|
37,156
|
Acquisition
of subsidiaries, net of cash acquired
|
15
|
(46,345)
|
(46,146)
|
-
|
|
|
31,880
|
-
|
-
|
Net cash used in investing activities
|
|
(3,861,213)
|
(148,074)
|
(1,864,555)
|
|
|
|
|
|
|
|
|
|
Issuance
of non-convertible notes
|
|
2,365,003
|
-
|
5,411,199
|
|
|
715,421
|
104,205
|
729,299
|
Borrowings
obtained from related parties
|
|
4,000
|
3,500
|
-
|
|
|
(77,338)
|
(72,164)
|
(1,328,439)
|
Payment
of borrowings with related parties
|
|
-
|
-
|
(3,715,480)
|
Payments
of financial leasing
|
|
(4,192)
|
(1,338)
|
(2,678)
|
Payment
of non-convertible notes
|
|
-
|
(407,260)
|
(1,139,936)
|
|
|
(680,000)
|
(48,926)
|
(37,019)
|
Dividends
to non-controlling interest
|
|
-
|
(60,622)
|
(77,587)
|
Payment
of derivative financial instruments
|
|
(416,264)
|
(47,797)
|
(580,828)
|
Proceeds
from derivative financial instruments
|
|
638,044
|
130,993
|
1,831,621
|
|
|
(724,730)
|
(544,280)
|
(278,279)
|
Contributions
of the non-controling shareholders
|
|
253
|
-
|
-
|
|
|
(19,766)
|
(14,065)
|
(232,203)
|
Net cash generated / (used in) from financing
activities
|
|
1,800,431
|
(957,754)
|
579,670
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
1,563,225
|
1,769,379
|
(271,512)
|
Cash
and cash equivalents at beginning of year
|
13
|
1,807,544
|
33,049
|
303,499
|
Foreign
exchange gain on cash and fair value result on cash
equivalents
|
|
272,362
|
5,116
|
1,062
|
Cash and cash equivalents at end of the year
|
13
|
3,643,131
|
1,807,544
|
33,049
|
The accompanying
notes are an integral part of these Consolidated Financial
Statements.
IRSA
Propiedades Comerciales S.A.
Notes to the Unaudited Condensed Consolidated Financial
Statements
(All amounts
in thousands of Argentine Pesos, except shares and per share data
and as otherwise indicated)
1.
Group’s
business and general information
IRSA PROPIEDADES
COMERCIALES S.A. (“IRSA Propiedades Comerciales” or
“the Company”) is an Argentine real estate company
mainly engaged in holding, leasing, managing, developing, operating
and acquiring shopping malls and office buildings and holds a
predominant position within the Argentine market. IRSA Propiedades
Comerciales was incorporated in 1889 under the name Sociedad
Anonima Mercado de Abasto Proveedores (SAMAP) and until 1984
operated the main fresh product market in the Autonomous City of
Buenos Aires. SAMAP’s core asset was the historical building
of Mercado de Abasto, which served as site of the market from 1889
until 1984, when a sizable part of its operations was
interrupted.
Since the Company
was acquired by IRSA Inversiones y Representaciones Sociedad
Anónima (hereinafter, IRSA) in 1994, it has grown through a
series of acquisitions and development projects that resulted in a
corporate reorganization pursuant to which the company was renamed
Alto Palermo S.A. which was subrequentily changed to our current
denomination
The Company holds
16 Shopping malls, operating 344,025 square meters (sqm) in 15 of
them, 83,978 square meters in 7 premium offices and an extensive
land reserve for future commercial developments;operates and holds
a majority interest in a portfolio of 15 shopping malls in
Argentina, seven of which are located in the Autonomous City of
Buenos Aires (Abasto Shopping, Alcorta Shopping, Alto Palermo,
Patio Bullrich, Buenos Aires Design, Dot Baires Shopping and
Distrito Arcos), two in Buenos Aires province (Alto Avellaneda and
Soleil Premium Outlet) and the rest are situated in different
provinces (Alto Noa in the City of Salta, Alto Rosario in the City
of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba
Shopping Villa Cabrera in the City of Córdoba, Alto Comahue in
the City of Neuquén and La Ribera Shopping in the City of
Santa Fe). The Company also owns the historic building where the
Patio Olmos Shopping Mall is located, operated by a third
party.
The Company’s
shares are traded on the Buenos Aires Stock Exchange (BYMA: IRCP)
and in United States of America on the NASDAQ (NASDAQ:
IRCP).
IRSA Propiedades
Comerciales and its subsidiaries are hereinafter referred to
jointly as "the Group". See Notes 2.3 and 6 for further description
of the Group’s companies and segments. Our main shareholder
and parent company is IRSA and IFIS Limited is our ultimate parent
company.
These consolidated
financial statements (Financial Statements) have been approved by
the Board of Directors to be issued on August 23,
2018.
2.
Summary
of significant accounting policies
2.1
Basis
of preparation of the Consolidated Financial
Statements
These Consolidated
Financial Statements have been prepared in accordance with IFRS
issued by IASB and interpretations issued by the IFRIC. All IFRS
applicable as of the date of these Consolidated Financial
Statements have been applied.
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 in the
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 hyperinflationary
in the terms of IAS 29, the standard details a series of factors to
be considered, including the existence of a cumulative inflation
rate in three years that approximates or exceed 100%. Bearing in
mind that the downward trend in inflation observed in the previous
year has reversed, noticing a significant increase in inflation
during 2018, that it is also expected that the accumulated
inflation rate of the last three years will exceed 100% and that
the rest of the indicators do not contradict the conclusion that
Argentina should be considered a hyperinflationary economy for
accounting purposes, the Management understands that there is
sufficient evidence to conclude that Argentina is a
hyperinflationary economy in the terms of IAS 29, starting with the
year initiated on July 1, 2018. Consequently, the Group should
restate its next financial statements to be presented after the
aforementioned date. However, it must be taken into account that,
as of the date of issuance of these financial statements, Decree
PEN 664/03 is in force, and it does not allow the presentation of
restated for inflation financial statements before the National
Securities Commission (CNV) and other bodies of corporate
control.
IRSA
Propiedades Comerciales S.A.
In an inflationary
period, any entity that maintains an excess of monetary assets over
monetary liabilities, will lose purchasing power, and any entity
that maintains an excess of monetary liabilities over monetary
assets, will gain purchasing power, provided that such items are
not subject to an adjustment mechanism.
Briefly, the
restatement method of IAS 29 establishes that monetary assets and
liabilities must not be restated since they are already expressed
in the current unit of measurement at the end of the reporting
period. Assets and liabilities subject to adjustments based on
specific agreements must be adjusted in accordance with such
agreements. The non-monetary items measured at their current values
at the end of the reporting period, such as the net realization
value or others, do not need to be restated. The remaining
non-monetary assets and liabilities must be restated by a general
price index. The loss or gain from the net monetary position will
be included in the net result of the reporting year / period,
revealing this information in a separate line item.
As of June 30,
2018, the restatement criteria of financial information established
in IAS 29 have not been applied. However, in recent years’
certain macroeconomic variables that affect the Company's
businesses, such as wages and prices of inputs, have undergone
annual variations of certain importance. This circumstance must be
considered in the evaluation and interpretation of the financial
situation and the results presented by the Company in these
financial statements.
(b)
Current and non-current classification
The Group presents
current and non-current assets, and current and non-current
liabilities, as separate classifications in its statement of
financial position according with the operating cycle of each
activity.
The operating cycle
for activities related to the Group’s investment properties
is 12 months. Therefore, current assets and current liabilities
include the assets and liabilities that are either realized or
settled within 12 months from the end of the fiscal year. The
operating cycle of activities related to the Group’s
investment properties for sale depends on each specific project,
and thus cannot be clearly defined. In general, assets and
liabilities classified as investment properties for sale are
realized or discharged over many fiscal years, ranging between one
and three years or, in exceptional cases, over a longer period. As
a result, and for purposes of classification, the Group has assumed
the operating cycle of investment properties for sale to be 12
months.
All other assets
and liabilities are classified as non-current. Current and deferred
tax assets and liabilities (income tax payable), are presented
separately from each other and from other assets and liabilities as
current and non-current, respectively.
(c)
Presentation currency
The Consolidated
Financial Statements are presented in thousands of Argentine Pesos.
Unless otherwise stated or the context otherwise requires,
references to ‘Peso amounts’ or ‘Ps.’, are
to Argentine Pesos, and references to ‘USD’ or
‘US dollars’ are to United States dollars.
(d)
End of the fiscal year
The fiscal year
begins on July 1 and ends on June 30 each year.
IRSA
Propiedades Comerciales S.A.
(e)
Accounting conventions
These Consolidated
Financial Statements have been prepared under the deemed cost
convention, except for investment properties, financial assets and
financial liabilities (including derivative instruments) which have
been prepared at fair value through profit or loss and share-based
compensation at fair value.
The Group reports
cash flows from operating activities using the indirect method.
Interest paid is presented within cash used in financing
activities. Interest received is presented within cash generated by
investing activities. The acquisitions and disposals of investment
properties are disclosed as cash from investing activities because
this most appropriately reflects the Group’s business
activities. Cash flows in respect of trading properties are
disclosed as cash from operating activities because these assets
are sold in the ordinary course of business.
The preparation of
financial statements at a certain date requires the Company’s
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
consolidated financial statements. The most significant judgments
made by Management in applying the Group’s accounting
policies and the major estimates and significant judgments are
described in Note 3.
2.2.
New
accounting standards
The following
standards, amendments and interpretations have been published by
the IASB and by the IFRIC. Below we outline the standards,
amendments and interpretations that may potentially have an impact
on the Group at the time of application.
Standards and amendments adopted by the Group:
Standards
and amendments
|
Description
|
Date
of application by the Group
|
Cycle of annual
improvements 2014-2016. IFRS 12 “Disclosure of Interests in
other entities”.
|
Clarifies the
standard scope.
|
06-30-2018
|
Amendments to IAS 7
"Disclosure about the statement of cash flows".
|
The entity shall
disclose information so that users of the financial statements may
assess the changes in liabilities resulting from financing
activities, including both cash flow and non-cash-flow
derivatives.
|
06-30-2018
|
Amendments to IAS
12 "Recognition of deferred tax assets for unrealized
losses".
|
The amendments
clarify the accounting of deferred income tax assets in the case of
unrealized losses on instruments measured at fair
value
|
06-30-2018
|
IRSA
Propiedades Comerciales S.A.
Standards and amendments not adopted yet by the Group
Standards
and amendments
|
Description
|
Date
of application by the Group
|
Amendments to IAS
40 "Transfers of investment properties".
|
The amendments
clarify the conditions that should be met for an entity to transfer
a property to, or from, investment properties.
|
06-30-2019
|
Cycle of annual
improvements 2014-2016. IAS 28 “Investments in Associates and
Joint ventures”.
|
It clarifies that
the option to measure an associate or a joint venture at fair value
for a qualifying entity is available upon initial
recognition
|
06-30-2019
|
IFRS 16
"Leases".
|
The lessees are
required to account for leases under one single model in the
balance sheet that is similar to the one used to account for
financial leases under IAS 17. There are two exceptions to this
rule: to recognize the lease of low-cost assets and short-term
leases. There is almost no change to lessor
accounting.
|
06-30-2020
|
IFRS 9
“Financial Instruments”.
|
This version adds a
new impairment model based on expected losses and introduces some
minor amendments to the classification and measurement of financial
assets.
|
06-30-2019
|
IFRS 15
“Revenue from contracts with customers”.
|
Provides the new
revenue recognition model derived from contracts with customers.
The core principle underlying the model is satisfaction of
obligations assumed with customers. Applies to all contracts with
customers, other than those covered by other IFRSs, such as leases,
insurance and financial instruments contracts. The standard does
not address recognition of interest or dividend
income.
|
06-30-2019
|
Amendments to IFRS
2 "Share-based Payment".
|
The amendments
clarify the scope of the standard in relation to: (i) accounting
for the effects that the concession consolidation conditions have
on cash settled share-based payments, (ii) the classification of
the share-based payment transactions subject to net settlement, and
(iii) accounting for the amendment of terms and conditions of the
share-based payment transaction that reclassifies the transaction
from cash settled to equity settled.
|
06-30-2019
|
The future adoption
of these standards, amendments and interpretations adopted, will
not have a material impact on the Group, except IFRS
9.
IFRS 9: Financial instruments
The new standard
includes a new model of "expected credit loss" for credits or other
assets not measured at fair value. The new model presents a dual
measurement approach for impairment: if the credit risk of a
financial asset has not increased significantly since its initial
recognition, an impairment allowance will be recorded in the amount
of expected credit losses resulting from the events of
non-compliance that are possible within a certain period. If the
credit risk has increased significantly, in most cases the
allowance will increase and the amount of the expected loss will be
recorded.
In accordance with
the new standard, in cases where a change in terms or exchange of
financial liabilities is immaterial and does not lead, at the time
of analysis, to the reduction of the previous liability and
recognition of the new, the new cash flows must be discounted at
the original effective interest rate, with the difference between
the present value of the financial liability that has the new terms
and the present value of the original financial liability that is
recognized in results. As a result of the application of the new
standard, the amount of the liabilities, whose terms were modified
and which a new effective interest rate was calculated at the time
of the change in the terms in accordance with IAS 39, will be
recalculated from the date of the change in terms using the
original effective interest rate.
IRSA
Propiedades Comerciales S.A.
As of date of these
financial statements, our estimate of the application of IFRS 9,
would generate a decrease in retained earnings and in investment in
associates and joint ventures of Ps. 18.4 million, due to the
impact of the application of said standard on the calculation of
the allowance for uncollectible debtors in our associate Tarshop
S.A.. The methodology of this estimate may vary from that which is
defined in the model at the moment of the effective application of
the aforementioned standard.
2.3.
Scope
of consolidation
Subsidiaries are
all entities (including structured entities) over which the Group
has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its investment in the
entity and has the ability to effect such returns through its power
over the entity. The Group also analyzes whether there is control
when it does not hold more than 50% of the voting rights of an
entity, but does have capacity to define its relevant activities
because of de-facto control.
There may be
de-facto control where the relative size of voting rights held by
the Group in an entity in relation to the size and dilution of
other shareholders gives the Group power to define the relevant
activities of such entity.
Subsidiaries are
fully consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date control
ceases.
The Group uses the
acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Acquisition-related costs are expensed as incurred. Identifiable
assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair
values at the acquisition date.
IFRS 3
“Business Combination” allows up to 12 months to
finalize the accounting for a business combination. Where the
accounting for a business combination is not complete by the end of
the reporting period in which the business combination occurred,
the Group reports provisional amounts.
The Group has
elected to recognize acquisition of assets or group of assets
carried out between entities under common control who also qualify
as “Business Combination” according to IFRS 3, using
the acquisition method.
The Group
recognizes any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the
acquirer’s net assets. The Group chooses the method to be
used on case-by-case basis.
The amount by which
the aggregate of the fair value of consideration transferred, the
acquisition date fair value of the Company's previously held
interest and any non-controlling interest exceeds the fair value of
the assets and liabilities acquired is recorded as goodwill. If the
total of consideration transferred, non-controlling interest
recognized and previously held interest measured is less than the
fair value of the net assets of the subsidiary acquired in the case
of a bargain purchase, the difference is recognized directly in the
consolidated statements of comprehensive income as "Bargain
purchase gains".
Inter-company
transactions, balances and unrealized gains on transactions between
or among group companies are eliminated. Unrealized losses are also
eliminated. Accounting policies of subsidiaries are changed where
necessary to ensure consistency with the policies adopted by the
Group. The majority of subsidiaries have the same year-end as the
Group, however, a small number of subsidiaries have non-coterminous
year-ends. In these circumstances, special-purpose financial
statements prepared as of June 30 of each year are used for
purposes of the Group consolidation.
The Group conducts
its business through several operating and holding subsidiaries.
Unless otherwise stated, the subsidiaries listed in Note 7 have
share capital consisting solely of ordinary shares, which are held
directly by the Group and the proportion of ownership interests
held is equal to the voting rights held by the Group. The country
of incorporation or registration is also their place of
business.
IRSA
Propiedades Comerciales S.A.
The
Group takes into account both quantitative and qualitative aspects
in order to determine which non-controlling interests in
subsidiaries are considered significant. In quantitative terms, the
Group considers significant those investments that individually
represent at least 20% of the total equity attributable to
non-controlling interest in subsidiaries at each year-end.
Therefore, in qualitative terms, the Group considers, among other
factors, the specific risks to which each company is exposed, their
returns and the importance that each of them has for the
Group.
Summarized
financial information on subsidiaries with material non-controlling
interests and other information are included in Note
7.
(b)
Changes in ownership interests in subsidiaries without change of
control
Transactions with
non-controlling interests that do not result in loss of control are
accounted for as equity transactions, that is to say as
transactions with the owners in their capacity as owners. The
amount recorded is the difference between the fair value of any
consideration paid and/or collected and the relevant share acquired
and/or transferred of the carrying value of net assets of the
subsidiary.
(c)
Disposal of subsidiaries with loss of control
When the Group
ceases to have control any retained interest in the entity is
re-measured to its fair value at the date when control is lost,
with the change in carrying amount recognized in profit or loss.
The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate,
joint venture or financial asset. In addition, any amounts
previously recognized in other comprehensive income in respect of
that entity are accounted for as if the Group had directly disposed
of the related assets or liabilities. This may mean that amounts
previously recognized in other comprehensive income are
reclassified to profit or loss.
Associates are all
entities over which the Group has significant influence but not
control, generally accompanying a shareholding of between 20% and
less than 50% of the voting rights. Investments in associates are
accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognized at cost, and
the carrying amount is increased or decreased to recognize the
investor’s share of the profit or loss of the investee after
the date of acquisition. The Group’s investment in associates
includes goodwill identified on acquisition.
If the ownership
interest in an associate is reduced but significant influence is
retained, only a proportionate share of the amounts previously
recognized in other comprehensive income is reclassified to profit
or loss where appropriate.
The Group’s
share of post-acquisition profit or loss is recognized in the
consolidated statements of comprehensive income, and its share of
post acquisition movements is recognized in other comprehensive
income with a corresponding adjustment to the carrying amount of
the investment. When the Group’s share of losses in an
associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not
recognize further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the
associate.
The Group
determines at each reporting date whether there is any objective
evidence that the investment in the associate is impaired. If this
is the case, the Group calculates the amount of any impairment as
the difference between the recoverable amount of the associate and
its carrying value and recognizes the impairment loss within
“share of profit of associates and joint ventures line
item” in the Statements of comprehensive income.
Profits and losses
resulting from upstream and downstream transactions between the
Group and its associate are recognized in the Group’s
financial statements only to the extent of any unrelated
investor’s interests in the associates. Unrealized losses are
eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency
with the policies adopted by the Group.
For purposes of
including the earnings of associates by applying the equity method,
the Group uses financial statements of the associates as of the
same date or a later date, provided the difference between the
reporting date of the associate and that of the Group is no longer
than three months. In these cases, the Group assesses and adjusts
the results of such associates for material transactions or other
material events occurred during the interim period.
The Group takes
into account both quantitative and qualitative aspects in order to
determine which non-controlling interests in associates are
considered significant. In
quantitative terms, investments that individually represent at
least 20% of equity in earnings of joint ventures in the
consolidated statements of comprehensive income and,
simultaneously, at least 20% of all investments in joint ventures
total equity attributable to non-controlling interest in associates
at each year-end are considered significant. Therefore, in qualitative terms, the Group
considers, among other factors, the specific risks to which each
company is exposed, their returns and the importance that each
company has for the Group.
Summarized
financial information and other information for associates is
included in Note 8.
Joint arrangements
are arrangements of which the Group and other party or parties have
joint control bound by a contractual arrangement. Under IFRS 11,
investments in joint arrangements are classified as either joint
ventures or joint operations depending on the contractual rights
and obligations each investor has rather than the legal structure
of the joint arrangement. A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. A joint operation is a
joint arrangement whereby the parties that have joint control of
the arrangement have rights to the assets and obligations for the
liabilities, relating to the arrangement. The Group has assessed
the nature of its joint arrangements and determined them to be
joint ventures.
Investments in
joint ventures are accounted for under the equity method. Under the
equity method of accounting, interests in joint ventures are
initially recognized in the consolidated statement of financial
position at cost and adjusted thereafter to recognize the
Group’s share of the post-acquisition of profits or losses
and movements in other comprehensive income in the consolidated
statements of comprehensive income and in other comprehensive
income, respectively.
When the
Group’s share of losses in a joint venture equals or exceeds
its interests in the joint ventures (which includes any long-term
interests that, in substance, form part of the Group’s net
investment in the joint ventures), the Group does not recognize
further losses, unless it has incurred obligations or made payments
on behalf of the joint ventures.
The Group
determines at each reporting date whether there is any objective
evidence that the investment in a joint venture is impaired. If
this is the case, the Group calculates the amount of impairment as
the difference between the recoverable amount of the joint venture
and its carrying value and recognizes the amount adjacent to share
of profit of associates and joint ventures in the statements of
comprehensive income.
Unrealized gains on
transactions between the Group and its joint ventures are
eliminated to the extent of the Group’s interest in the joint
ventures. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the joint ventures have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
The Group takes
into account both quantitative and qualitative aspects in order to
determine which non-controlling interests in joint ventures are
considered significant. In
quantitative terms, the investments that individually represent at
least 20% of equity in earnings of joint ventures in the
consolidated statements of comprehensive income and,
simultaneously, at least 20% the total equity attributable to
non-controlling interest in joint ventures at the each year-end are
considered significant. Therefore, in
qualitative terms the Group considers, among other factors, the
specific risks to which each company is exposed to, their returns
and the importance that each company has for the
Group.
Summarized
financial information and other information for significant joint
ventures is included in Note 8.
Operating segments
are reported in a manner consistent with the internal reporting
provided to the Chief Operating Decision Maker (“CODM”)
the
Group’s Executive Committee. This CODM is responsible
for allocating resources and assessing performance of the operating
segments. The operating segments are described in Note
6.
IRSA
Propiedades Comerciales S.A.
2.5.
Foreign
currency translation
(a)
Functional and presentation currency
Items included in
the financial statements of each of the Group’s entities are
measured using the currency of the primary economic environment in
which the entity operates (‘the functional currency’).
These Financial Statements are presented in Argentine Pesos, which
is the Group’s presentation currency.
(b)
Transactions and balances in foreign currency
Foreign currency
transactions are translated into Argentine Pesos using the exchange
rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognized in the profit or loss for the year.
Foreign exchange
gains and losses are presented in the statements of comprehensive
income within finance income and finance costs, as appropriate,
unless they are capitalized as explained in Note 2.19.
2.6.
Investment
properties
Investment
properties are those properties owned by the Group that are held
either to earn long-term rental income or for capital appreciation
and that are not occupied by the Group for its own operations.
Properties occupied by associates or joint ventures are accounted
for as investment properties in these Consolidated Financial
Statements.
Investment property
also includes properties that are being constructed or developed
for future use as investment property. The Group also classifies
land whose future use has not been determined yet as investment
property.
When a property is
partially owner-occupied, with the rest being held for rental
income or capital appreciation, the Group accounts for the portions
separately. The portion that is owner-occupied is accounted for as
property, plant and equipment under IAS 16 “Property, Plant
and Equipment” and the portion that is held for rental income
or capital appreciation, or both, is treated as investment property
under IAS 40 “Investment Property”.
The Group’s
investment properties primarily comprise the Group’s
portfolio of shopping malls and offices, certain property under
development and other undeveloped land.
Investment property
is measured initially at cost. Cost comprises the purchase price
and directly attributable expenditures, such as legal fees, certain
direct taxes, commissions and in the case of properties under
construction, the capitalization of financial costs.
For properties
under development, capitalization of costs includes not only
financial costs, but also all costs directly attributable to works
in process, from commencement of construction until it is completed
and property is in conditions to start operating. Capitalized costs
include mainly the part attributable to third-party service costs,
as well as the materials necessary for construction. Capitalization
of such costs ceases when the property reaches the operating
conditions indicated above.
Direct expenses
related to lease contract negotiation (as well as payment to third
parties for services rendered and certain specific taxes related to
execution of such contracts) are capitalized as part of the book
value of the relevant investment properties and amortized over the
term of the lease.
Borrowing costs
associated with properties under development or undergoing major
refurbishment are capitalized. The finance cost capitalized is
calculated using the Group’s weighted average cost of
borrowings after adjusting for borrowings associated with specific
developments. Where borrowings are associated with specific
developments, the amount capitalized is the gross interest incurred
on those borrowings less any investment income arising on their
temporary investment. Finance cost is capitalized from the
commencement of the development work until the date of practical
completion. The capitalization of finance costs is suspended if
there are prolonged periods when development activity is
interrupted. Finance cost is also capitalized on the purchase cost
of land or property acquired specifically for redevelopment in the
short term but only when activities necessary to prepare the asset
for redevelopment are in progress.
IRSA
Propiedades Comerciales S.A.
After initial
recognition, investment property is carried at fair value.
Investment property that is being redeveloped for continuing use as
investment property or for which the market has become less active,
continues to be measured at fair value. Investment properties under
construction are measured at fair value if the fair value is
considered to be reliably determinable. Investment properties under
construction for which the fair value cannot be determined
reliably, but for which the Group
expects that the fair value of the property will be reliably
determinable when construction is completed, are measured at
cost less impairment until the fair value becomes reliably
determinable or construction is completed, whichever is
earlier.
Fair values are
determined differently depending on the type of property being
measured.
Generally, fair
value of office buildings and land reserves is based on active
market prices, adjusted, if necessary, for differences in the
nature, location or condition of the specific asset. If this
information is not available, the Group uses alternative valuation
methods, such as recent prices on less active markets or discounted
cash flow projections (Level 2).
The fair value of
the Group’s portfolio of Shopping Malls is based on
discounted cash flow projections. This method of valuation is
commonly used in the shopping mall industry in the region where the
Group conducts its operations (Level 3).
As required by
Resolution 576/10 of the CNV, valuations are performed as of the
financial position date by accredited professional appraisers who
have recognized and relevant professional qualifications and have
recent experience in the location and category of the investment
property being valued. These valuations form the basis for
the carrying
amounts in the consolidated Financial Statements. The fair value of
investment property reflects, among other things, rental income
from current leases and other assumptions market participants would
make when pricing the property under current market
conditions.
Subsequent
expenditure is capitalized to the asset’s carrying amount
only when it is probable that future economic benefits associated
with the expenditure will flow to the Group and the cost of the
asset can be measured reliably. All other repairs and maintenance
costs are expensed when incurred. When part of an investment
property is replaced, the carrying amount of the replaced part is
derecognized.
Changes in fair
values are recognized in the consolidated statements of
comprehensive income under the line item “Net gain from fair
value adjustments of investment properties”.
Asset transfers,
including assets classified as investments properties which are
reclassified under other items or vice-versa, may only be carried
out when there is a change of use evidenced by: a) commencement of
occupation of real property by the Group, where investment property
is transferred to property, plant and equipment; b) commencement of
development activities for sale purposes, where investment property
is transferred to property for sale; c) the end of Group
occupation, where it is transferred from property, plant and
equipment to investment properties; or d) commencement of an
operating lease transaction with a third party, where properties
for sale are transferred to investment property. The value of the
transfer is the one that the property had at the time of the
transfer and subsequently is valued in accordance with the
accounting policy related to the item.
The Group may sell
its investment property when it considers they are not core to its
ongoing rental business activities. Where the Group disposes of a
property at fair value in an arm’s length transaction, the
carrying value immediately prior to the sale is adjusted to the
transaction price, and the adjustment is recorded in the other
comprehensive consolidated statements of comprehensive income in
the line “Net gain from fair value adjustments of investment
properties”.
Investment
properties are derecognized when they are disposed of or when they
are permanently withdrawn from use and no future economic benefits
are expected to arise from their disposal. The disposal of
properties is recognized when the significant risks and rewards
have been transferred to the buyer. As for unconditional
agreements, proceeds are recognized when legal title to property
passes to the buyer and the buyer intends to make the respective
payment therefor. In the case of conditional agreements, the
disposal is accounted for where such conditions have been met.
Where consideration receivable for the sale of the properties is
deferred, it is discounted to present value.
The difference
between the discounted amount and the amount receivable is treated
as interest income and recognized over the period using the
effective interest method. Direct expenses related to the sale are
recognized in the line "other operating results, net" in the
consolidated statements of comprehensive income at the time they
are incurred.
IRSA
Propiedades Comerciales S.A.
2.7.
Property,
plant and equipment
This category
primarily comprises buildings or portions of a building used for
administrative purposes, machines, computers and other equipment,
motor vehicles, furniture, fixtures and fittings and improvements
to the Group’s corporate offices.
All property, plant
and equipment (“PPE”) is stated at historical cost less
depreciation and accumulated impairment, if any. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items. For properties under development,
capitalization of costs includes not only financial costs, but also
all costs directly attributable to works in process, from
commencement of construction until it is completed and property is
in conditions to start operating. Capitalized costs include mainly
the part attributable to third-party service costs, as well as the
materials necessary for construction. Capitalization of such costs
ceases when the property reaches the operating conditions indicated
above.
Borrowing costs are
directly incurred for the purpose of acquiring, constructing or
producing a qualifying PPE are capitalized as part of its cost. A
qualifying PPE is an asset that necessarily takes a substantial
period of time to get ready for its intended use. Borrowing costs
are capitalized during the period of construction or production of
the eligible asset; such capitalization ceases once the necessary
activities for the asset to have the intended use have been
completed, or else capitalization is suspended while construction
activity is suspended.
Subsequent costs
are included in the asset’s carrying amount or recognized as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. Such costs
may include the cost of improvements and replacement of parts as
they meet the conditions to be capitalized the carrying amount of
those parts that are replaced is derecognized. Repairs and
maintenance are charged to the consolidated statements of
comprehensive income during the financial period in which they are
incurred. Depreciation, based on a component approach, is
calculated using the straight-line method to allocate the cost over
the assets’ estimated useful lives.
As of June 30, 2018
useful lives are as follows:
Other buildings and
facilities
|
Between 1 and 22
years
|
Furniture and
fixtures
|
Between 3 and 10
years
|
Machinery and
equipment
|
Between 1 and 10
years
|
Vehicles
|
5
years
|
Other
|
3
years
|
As of each
period-end, an evaluation is performed to determine the existence
of indicators of any decrease in recoverable value or useful life
of assets. If there are any indicators, the recoverable amount
and/or residual useful life of impaired asset(s) is estimated, and
an impairment adjustment is made, if applicable. As of each
year-end, the residual useful life of assets is estimated and
adjusted, if necessary.
An asset’s
carrying amount is written down immediately to its recoverable
amount if its carrying amount is greater than its estimated
recoverable amount (see Note 2.10.).
Gains from the sale
of these assets are recognized when the significant risks and
rewards have been transferred to the buyer. This will normally take
place on unconditional exchange, generally when legal title passes
to the buyer and it is probable that the buyer will pay. For
conditional exchanges, sales are recognized when these conditions
are satisfied.
Gains and losses on
disposals are determined by comparing the proceeds, net of direct
expenses related to those proceeds, with carrying amount at the
date of each transaction. Gains and losses from the disposal of
property, plant and equipment items are recognized within
“Other operating results, net” in the consolidated
statements of comprehensive income.
Leases are
classified at their inception as either operating or finance leases
based on the economic substance of the agreement.
IRSA
Propiedades Comerciales S.A.
A Group company is the lessor:
Operating lease – properties leased to tenants under
operating leases are included in “Investment
properties” in the statements of financial position. See Note
2.25 for the recognition of rental income.
Finance lease
– the Group does not have any finance leases.
A Group company is the lessee:
Operating lease – leases in which substantially all risks and
rewards of ownership are retained by another party, as lessor, are
classified as operating leases.
Payments, including
prepayments, made under operating leases (net of any incentives
received from the lessor) are charged to the consolidated
statements of comprehensive income on a straight-line basis over
the period of the lease. Significant leases where the Group acts as
lessee under operating leases mainly include principal
offices.
Finance lease -
leases of assets where the Group has substantially all the risks
and rewards of ownership are classified as finance leases. Finance
leases are capitalized at the commencement of the lease at the
lower of the fair value of the property and the present value of
the minimum lease payments. Capitalized lease assets are
depreciated over the shorter of the estimated useful life of the
assets and the lease term. The finance charges are charged over the
lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
Liabilities corresponding to finance leases, measured at discounted
value, are included in current and non-current borrowings.
Significant leases where the Group acts as lessee under finance
leases include machinery and computer equipment.
Goodwill represents
future economic benefits arising from assets that are not capable
of being individually identified and separately recognized by the
Group on an acquisition. Goodwill is initially measured as the
difference between the fair value of the consideration transferred,
plus the amount of non-controlling interest in the acquisition and,
in business combinations achieved in stages, the acquisition-date
fair value of the previously held equity interest in the
acquisition; and the net fair value of the identifiable assets and
liabilities assumed on the acquisition date.
At acquisition
goodwill is allocated to those cash generating units expected to
benefit from the acquisition for the purpose of impairment (see
Note 2.10.). Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses. Goodwill arising on
the acquisition of subsidiaries is included within
“Intangible assets” in the statements of financial
position.
Goodwill may also
arise upon investments in associates and joint ventures, being the
surplus of the cost of investment over the Group’s share of
the fair value of the net identifiable assets. Such goodwill is
recorded within investments in associates or joint
ventures.
Goodwill is not
amortized but tested for impairment at each fiscal year end, or
more frequently if there is an indication of
impairment.
Acquired computer
software licenses are capitalized on the basis of the costs
incurred to acquire and bring to use the specific software. These
costs are amortized over their estimated useful lives between 3 and
5 years.
Costs associated
with maintaining computer software programs are recognized as an
expense as incurred. Development costs that are directly
attributable to the design and testing of identifiable and unique
software products controlled by the Group are recognized as
intangible assets when the following criteria are met: (i) it is
technically feasible to complete the software product so that it
will be available for use; (ii) management intends to complete the
software product and use or sell it; (iii) there is an ability to
use or sell the software product; (iv) it can be demonstrated how
the software product will generate probable future economic
benefits; (v) adequate technical, financial and other resources to
complete the development and to use or sell the software product
are available; and (vi) the expenditure attributable to the
software product during its development can be reliably
measured.
IRSA
Propiedades Comerciales S.A.
Directly
attributable costs that are capitalized as part of the software
product include the software development employee costs and an
appropriate portion of relevant overheads.
Other development
expenditures that do not meet these criteria are recognized as an
expense as incurred. Development costs previously recognized as an
expense are not recognized as an asset in a subsequent
period.
Computer software
development costs recognized as assets are amortized over their
estimated useful lives, which does not exceed 5 years.
The Group acquired
certain rights to develop a plot of land and facilities. These
rights primarily comprise the right to develop the land and
attached buildings and facilities known as Distrito Arcos
(“Arcos”).
The Arcos land and
attached facilities is owned by Administration of Railway
Infrastructure (“ADIF”, as per its Spanish acronym), a
governmental agency created for the management of certain
State’s properties, particularly assets pertaining to the
railway system. Arcos are the old warehouse and adjacent spaces
below the tracks of the San Martin railway lines. The right was
acquired as part of the Arcos acquisition and is carried at
acquisition cost less accumulated amortization. Amortization is
calculated using the straight-line method over the period in which
the economic benefits of use accrue. The Group must pay ADIF a fee
on a monthly basis.
(d)
Right to receive future units under barter agreements
The Group also
enters into barter transactions where the Group normally exchanges
undeveloped parcels of land with third-party developers for future
property to be constructed on the bartered land. The Group
generally receives monetary assets as part of the transactions
and/or a right to receive future units to be constructed by
developers. Such rights are initially recognized at cost (which is
the fair value of the land assigned) and such rights are not
adjusted later, unless there is any sign of
impairment.
2.10.
Impairment
of assets
For the purpose of
impairment testing, assets are grouped at the lowest levels for
which there are separately identifiable cash flows, referred to as
cash-generating units. In order to determine whether any impairment
loss should be recognized, the book value of cash-generating units
or cash generating unit groups is compared against its recoverable
value. Net book value of cash-generating units and cash generating
unit groups include goodwill and assets with limited useful life
(such as, investment properties, property, plant and equipment,
intangible assets and working capital).
If the recoverable
amount of the cash-generating unit is less than the carrying amount
of the unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro rata on the basis of the carrying
amount of each asset in the unit. Impairment losses recognized for
goodwill are included in the statements of comprehensive income and
are not reversed in a subsequent period.
The recoverable
amount of a cash-generating unit is the higher of fair value less
costs-to-sell and value-in-use. The fair value is the amount at
which a cash-generating unit may be sold in a current transaction
between unrelated, willing and duly informed parties. Value-in-use
is the present value of all estimated future cash flows expected to
be derived from cash-generating units or cash-generating unit
groups.
(b)
Properties, plant and equipment and defined-lived
intangible assets
At the date of each
statement of financial position, the Group reviews the carrying
amounts of its property, plant and equipment, and limited-duration
intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated
in order to determine the extent, if any, of the impairment
loss.
When the asset does
not generate cash flows independently of other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
IRSA
Propiedades Comerciales S.A.
If the recoverable
amount of an asset or cash-generating unit is estimated to be less
than its carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount. An
impairment loss is recognized immediately in the statements of
comprehensive income.
Assets or
cash-generating units that have suffered an impairment loss are
revised as of each year-end date to assess a potential reversal of
such impairment. The impairment loss recognized in prior fiscal
years may only be reversed if there has been a change in the
estimates used to assess the recoverable value of assets or the
cash-generating unit since the recognition of the impairment
loss.
Where an impairment
loss subsequently reverses the carrying amount of the asset or
cash-generating unit is increased to the revised estimate of its
recoverable amount, not to exceed the carrying amount that would
have been determined if no impairment loss had been recognized for
the asset or cash-generating unit in prior years. A reversal of an
impairment loss is recognized in the statements of comprehensive
income.
Trading properties
comprise those properties either intended for sale or in the
process of construction for sale. Trading properties are carried at
the lower of cost and net realizable value. Where there is a change
in use of investment properties evidenced by the commencement of
development with a view to sale, the properties are reclassified as
trading properties at cost, which is the carrying value at the date
of change in use. They are subsequently carried at the lower of
cost and net realizable value.
Cost comprises all
direct costs of purchase, costs of conversion and other costs
incurred in bringing the trading properties to their present
location and condition.
Borrowing costs
incurred for the purpose of acquiring, constructing or producing a
qualifying trading property are capitalized as part of its cost. A
qualifying trading property is an asset that necessarily takes a
substantial period of time to get ready for its intended use.
Borrowing costs are capitalized while acquisition, construction or
production is underway and cease once the asset is substantially
complete or suspended if development of the asset is
suspended.
Net realizable
value is the estimated selling price of a property in the ordinary
course of business less costs to complete and selling expenses. If
the net realizable value is lower than the carrying amount, a
write-down is recognized in the amount by which the carrying amount
exceeds its net realizable value. Write-downs are reversed when
circumstances that caused the write-down cease to exist, or when
net realizable value increases.
Inventories mainly
include materials, supplies or other assets required to offer
different services.
Supplies and other
of materials and assets classified in this category are measured at
the lower of cost or net realizable value. The cost of supplies,
materials and other assets is determined using the weighted average
cost method.
2.13.
Financial
instruments
Classification
The Group
classifies financial assets in the following categories: those to
be measured at fair value and those to be measured at amortized
cost. This classification depends on whether the financial asset is
a debt or equity instrument.
Debt instruments
A debt instrument
is classified at amortized cost only if both of the following
criteria are met: i) the objective of the Group’s business
model is to hold the asset to collect the contractual cash flows;
and (ii) the contractual terms give rise on specified dates to cash
derived solely from payments of principal and interest due on the
principal outstanding. The nature of any derivatives embedded in
the debt instrument are considered in determining whether the cash
flows of the instrument are derived solely from payment of
principal and interest due on the principal outstanding and are not
accounted for separately.
IRSA
Propiedades Comerciales S.A.
If either of the
two criteria above is not met, the debt instrument is classified at
“fair value through profit or loss”. The Group has not
designated any debt investment as measured at fair value through
profit or loss to eliminate or significantly reduce an accounting
mismatch. Changes in fair values and gains from disposal of
financial assets at fair value through profit or loss are recorded
within “Financial results, net” in the statements of
comprehensive income.
Equity instruments
All equity
instruments, which are neither subsidiaries, associate companies
nor joint ventures of the Group, are measured at fair value. Equity
investments that are held for trading are measured at fair value
through profit or loss. For all other equity investments, the Group
can make an irrevocable election at initial recognition to
recognize changes in fair value through other comprehensive income
rather than profit or loss. The Group decided to recognize changes
in fair value of equity instruments through changes in profit or
loss.
Changes in fair
values and results from disposal of equity investments at fair
value through profit or loss and dividends income are recorded
within ”Financial results, net” in the statements of
comprehensive income.
Regular purchases
and sales of financial assets are recognized on the trade
date–the date on which the Group commits to purchase or sell
the asset. Financial assets are derecognized when the rights to
receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks
and rewards of ownership.
At initial
recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs that are directly attributable to
the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are
expensed in the statements of comprehensive income.
Results on debt
instruments measured at amortized cost and not identified for
hedging purposes are charged to income where the financial assets
are derecognized or an impairment loss is recognized and during the
amortization process under the effective interest
method.
All equity
investments, which are neither subsidiary associate companies nor
joint venture of the Group, are measured at fair
value.
The Group is
required to reclassify all affected investments in debt instruments
when and only when its business model for managing those assets
changes.
The Group assesses
at the end of each reporting period whether there is objective
evidence that a financial asset or group of financial assets
measured at amortized cost is impaired. A financial asset or a
group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment as a
result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss
event (or events) can be reliably estimated.
Evidence of
impairment may include indications that the debtors or a group of
debtors is experiencing significant financial difficulties,
defaults or delinquency in interest or principal payments, the
probability that they will enter bankruptcy or other financial
reorganization, and where observable data indicate that there is a
measurable decrease in the estimated future cash
flows.
IRSA
Propiedades Comerciales S.A.
The amount of the
impairment is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective
interest rate. The carrying amount of the asset is reduced and the
amount of the loss is recognized in the consolidated statements of
comprehensive income. As a practical expedient, the Group may
measure impairment on the basis of an instrument’s fair value
using an observable market price. If, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was
recognized, the reversal of the previously recognized impairment
loss is recognized in the consolidated statements of comprehensive
income.
Financial assets
and liabilities are offset and the net amount reported in the
statement of financial position when there is a legally enforceable
right to offset the recognized amounts and there is an intention to
settle on a net basis, or realize the asset and settle the
liability simultaneously.
2.14.
Derivative
financial instruments and hedging activities
Derivative
financial instruments are initially recognized at fair value. The
method of recognizing the resulting gain or loss depends on whether
the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged.
The Group manages
exposures to various risks using hedging instruments that provide
the appropriate economic outcome. The Group does not use derivative
financial instruments for speculative purposes. To date, the Group
has used future and forward contracts, as appropriate.
The Group’s
policy is to apply hedge accounting to hedging relationships where
it is permissible under IFRS 9, practical to do so and its
application reduces volatility, but transactions that may be
effective hedges in economic terms may not always qualify for hedge
accounting under IFRS 9. To date the Group has not applied hedge
accounting to any of its derivative financial instruments. Trading
derivatives are classified as a current asset or liability on the
statement of financial position. Gains and losses on other
derivatives are classified in “Financial results, net”,
in the statements of comprehensive income.
The fair values of
financial instruments that are traded in active markets are
computed by reference to market prices. The fair value of
derivative financial instruments that are not traded in an active
market is determined by using valuation techniques. The Group uses
its judgment to select a variety of methods and make assumptions
that are mainly based on market conditions existing at the end of
each reporting period.
2.15.
Trade
and other receivables
Trade receivables
are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method.
A provision of
doubtful accounts is recorded when there is objective evidence that
the Group may not be able to collect all receivables within their
original payment term. Indicators of doubtful accounts include
significant financial distress of the debtor, the debtor
potentially filing a petition for reorganization or bankruptcy, or
any event of default or past due account.
In the case of
larger non-homogeneous receivables, the Group generally measures
the impairment provision on an individual basis. When assessed
individually, the Group records a provision for impairment which
amounts to the difference between the value of the discounted
expected future cash flows of the receivable and its carrying
amount, taking into account the existing collateral, if any. This
provision takes into consideration the financial situation of the
debtor, the resources, payment track-record and, if applicable, the
value of collateral.
The Group
collectively evaluates for impairment smaller-balance homogeneous
receivables, which are grouped on the basis of similar risk
characteristics, taking into account asset type, collateral type,
past-due status and other relevant factors. The Group applies
allowance factors, which in the judgment of management represent
the expected losses over the life of the receivables. In
determining those factors, the Group considers the following: (i)
delinquencies of the credits, (ii) loss history and the general
behaviour of clients, (iii) trends in volume and terms of
receivables, (iv) the experience and depth of the debtors’
management, (v) national and local economic trends, (vi)
concentrations of credit by individual credit size and by class of
receivable, and (vii) the effect of other external
factors.
IRSA
Propiedades Comerciales S.A.
The amount of the
provision for doubtful accounts is the difference between the
asset’s carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest
rate. The carrying amount of the asset is reduced through the use
of an allowance account, and the amount of the loss is recognized
in the statements of comprehensive income within “Selling
expenses”. Subsequent recoveries of amounts previously
written off are credited against “Selling expenses” in
the statements of comprehensive income.
2.16.
Trade
and other payables
Trade payables are
initially recognized at fair value and subsequently measured at
amortized cost using the effective interest method.
2.17.
Tenant deposits
The Group generally
obtains deposits from tenants as a guarantee for returning the
property at the end of the lease term in a specified good condition
or for the lease payments for a period of generally 3 years. The
deposits are generally equivalent to one month of lease rentals.
Such deposits are treated as both a financial asset and a financial
liability in accordance with IFRS 9, and they are initially
recognized at fair value. The difference between fair value and
cash received is considered to be part of the minimum lease
payments received for the operating lease (refer to Note 2.25. for
the recognition of rental income). The deposits are subsequently
measured at amortized cost.
Borrowings are
recognized initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortized cost; any
difference between the proceeds (net of transaction costs) and the
redemption value is recognized as finance cost over the period of
the borrowings using the effective interest method.
General and
specific borrowing costs (interest and foreign exchange
differences) directly attributable to the acquisition, construction
or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially
completed.
Investment income
earned on the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from the
borrowing costs eligible for capitalization. All other borrowing
costs are recognized in profit or loss in the period in which they
are incurred.
The Group
capitalizes borrowing costs on qualifying investment properties,
property, plant and equipment and trading properties.
Provisions are
recognized when: (i) the Group has a present legal or constructive
obligation as a result of past events; (ii) it is probable that an
outflow of resources will be required to settle the obligation; and
(iii) a reliable estimate of the amount of the obligation can be
made. Provisions are not recognized for future operating
losses.
The amount of its
accruals is based on up-to-date developments, estimates of the
outcomes of the matters and legal counsel’s experience in
contesting, litigating and settling matters. As the scope of the
liabilities becomes better defined or more information is
available, the Group may be required to change its estimates of
future costs, which could have a material adverse effect on its
results of operations and financial condition or
liquidity.
Provisions are
measured at the present value of the cash flows expected to be
required to settle the obligation using a pre-tax rate that
reflects current market assessments of the time value of money and
the risks specific to the obligation. The increase in provisions
due to passage of time is recognized in the statements of
comprehensive income.
(a)
Pension plans obligations
The Group operates
a defined contribution plan. A defined contribution plan is a
pension plan under which the Group pays fixed contributions into a
separate entity. The Group has no legal or constructive obligations
to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee
service in the current and prior periods. The contributions are
recognized as employee benefit expense in the statement of
comprehensive income when they are due.
Termination
benefits are payable when employment is terminated by the Group
before the normal retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these benefits. The Group
recognizes termination benefits when it is demonstrably committed
to either terminating the employment of current employees according
to a detailed formal plan without possibility of withdrawal; or
providing termination benefits as a result of an offer made to
encourage voluntary redundancy.
The Group
recognizes a liability and an expense for bonuses based on a
formula that takes into consideration the profit attributable to
the Company’s shareholders after certain adjustments. The
Group recognizes a provision where contractually obliged or where
there is a past practice that has created a constructive
obligation.
2.22.
Shared
based payments
The
Group operates an incentive plan, under which certain selected
employees, directors and top management of IRSA Propiedades
Comerciales S.A., IRSA and Cresud have a right to matching shares
of IRSA and Cresud, although they must hold their purchased shares
and remain with the employer entity for a specified period of
time.
The
fair value of the equity settled awards is measured at the date of
grant. Management measures the fair value using the valuation
technique that it considers to be the most appropriate to value
each class of award. Methods used may include Black-Scholes
calculations or other models as appropriate. The valuations take
into account factors such as non-transferability, exercise
restrictions and behavioural considerations.
The
fair value of the share-based payment is recognized in the
statements of comprehensive income under the straight-line method
over the vesting period in which the right to receive shares of
IRSA and Cresud becomes irrevocable (“vesting period”);
such value is based on the best available estimate of the number of
shares expected to vest.
Such
estimate is revised if subsequent information becomes available
indicating that the number of shares expected to vest differs from
original estimates.
2.23.
Current
income tax, deferred income tax and minimum presumed income
tax
Tax expense for the
year comprises the charge for tax currently payable and deferred
taxation. Tax is recognized in the statement of income, except to
the extent that it relates to items recognized in other
comprehensive income or directly in equity, in which case, the tax
is also recognized in other comprehensive income or directly in
equity, respectively.
Current income tax
charge is calculated on the basis of the tax laws enacted or
substantially enacted at the date of the statement of financial
position in the countries where the Company and its subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation.
The Group establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
IRSA
Propiedades Comerciales S.A.
Deferred income tax
is recognized, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated Financial Statements. However,
deferred tax liabilities are not recognized if they arise from the
initial recognition of goodwill; deferred income tax is not
accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted by
the date of the statement of financial position and are expected to
apply when the related deferred income tax asset is realized or the
deferred income tax liability is settled.
Deferred income tax
assets are recognized only to the extent that it is probable that
future taxable profit will be available against which the temporary
differences can be utilized.
Deferred income tax
is provided on temporary differences arising on investments in
subsidiaries, associates and joint ventures, except for deferred
income tax liabilities where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax
assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities
relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where
there is an intention to settle the balances on a net
basis.
Entities in
Argentina are subject to the Minimum Presumed Income Tax
(“MPIT”). Pursuant to this tax regime, an entity is
required to pay the greater of the income tax or the MPIT. The MPIT
provision is calculated on an individual entity basis at the
statutory asset tax rate of 1% and is based upon the taxable assets
of each company as of the end of the year, as defined by Argentine
law. Any excess of the MPIT over the income tax may be carried
forward and recognized as a tax credit against future income taxes
payable over a 10-year period. When the Group assesses that it is
probable that it will use the MPIT payment against future taxable
income tax charges within the applicable 10-year period, the Group
recognizes the MPIT as a current or non-current receivable, as
applicable, within “Trade and other receivables” in the
statements of financial position.
Minimum presumed
income tax was repealed by the Law No. 27,260 in section 76 for the
annual periods beginning on January 1, 2019.
In this respect,
considering recent Instruction No. 2 issued by the Federal
Administration of Public Revenue (AFIP), if the Company posts
financial and tax losses, no provision for income tax would be
recorded.
2.24.
Cash
and cash equivalents
Cash and cash
equivalents includes cash on hand, deposits held with banks, and
other short-term highly liquid investments with original maturities
of three months or less. Cash equivalents do not include bank
overdrafts.
2.25.
Revenue recognition
Revenue from
Group’s activities is principally derived from business
activities carried out in shopping malls and in rental buildings
and mainly include rental income from shopping mall properties and
offices leased under operating leases, admission rights,
commissions and revenue from several services provided to the
Group’s lessees.
Revenue from the
sale of properties is recognized when: (a) material risks and
benefits derived from title to property have been transferred; (b)
the Company does not retain any management function on the assets
sold nor does it have any control whatsoever on such assets; (c)
the amount of revenues and costs associated to the transaction may
be measured on a reliable basis; and (d) the Company is expected to
accrue the economic benefits associated to the
transaction.
IRSA
Propiedades Comerciales S.A.
Revenue from the
provision of services is recognized when: (a) the amount of revenue
and costs associated to the services may be measured on a reliable
basis; (b) the Company is expected to accrue the economic benefits
associated to the transaction, and (c) the level of completion of
services may be measured on a reliable basis.
●
Shopping malls portfolio
Primarily comprises
rental income from shopping mall properties lease out over
operating leases, admission rights, commissions and revenue from
several services provided to the Group’s
lessees.
The Argentine Civil
and Commercial Code section 1221 provides that tenants may rescind
commercial lease within the initial six months by means of written
notification. If option is used within the first year of the lease,
the Tenant shall pay the Lessor, as compensation, the equivalent of
one-and-a-half month’s rent, and one month’s rent if
the tenant makes use of the option after that period. Given that
the rule does not provide for advance notice, Lease Agreements
include a provision whereby the lessee must give at least 60 days
advance notice of its intention to terminate the lease. The
exercise of such early termination could materially and adversely
affect the Group.
The Group analyzed
the definition of leasing term in IAS 17 wich provides that a
non-cancellable lease is a lease that is cancellable only (a) upon
the occurrence of some remote contingency, (b) with the permission
of the lessor, (c) if the lessee enters into a new lease with the
same lessor or (d) upon payment by the lessee of such an additional
amount that, at inception of the lease, continuation of the lease
is reasonably certain.
The Group has
determined that, in all operating leases, the lease term for
accounting purposes matches the term of the contract. The Group
concluded that, even though a lease is cancellable under law,
tenants would incur significant “economic penalties” if
the leases are terminated prior to expiry. The Group considered
that these economic penalties are of such amount that continuation
of the lease contracts by tenants appears to be reasonably certain
at the inception of the respective agreements. The Group reached
this conclusion based on factors such as: (i) the strategic
geographical location and accessibility to customers of the
Group’s investment properties; (ii) the nature and tenure of
tenants (mostly well-known local and international retail chains);
(iii) limited availability of identical revenue-producing space in
the areas where the Group’s investment properties are
located; (iv) the tenants’ brand image and other competitive
considerations; (v) tenants’ significant expenses incurred in
renovation, maintenance and improvements on the leased space to fit
their own image; (vi) the majority of the Group’s tenants
only have stores in shopping malls with a few or none street
stores. See datails in Note 24.
Lessees of
shopping malls are generally required to pay the higher of: (i) a
base monthly rent (the “Base Rent”) and (ii) a specific
percentage of gross monthly sales recorded by the Lessee (the
“Contingent Rent”), which generally ranges between 2%
and 10% of gross sales. Moreover, in accordance with agreements
entered into for most locations, the Base Rent is subject to
scheduled increases, typically between 10% on a semi-annually over the term of the
lease.
In addition, some
lease contracts include provisions that set forth variable rent
based on specific volumes of sales and other types of
ratios.
Rental income from
shopping mall properties leased out under operating leases is
recognized in the consolidated statements of comprehensive income
on a straight-line basis over the term of the leases. When lease
incentives are granted, they are recognized as an integral part of
the net consideration for the use of the property and are therefore
recognized on the same straight-line basis.
Contingent rents,
being lease payments that are not fixed at the inception of a
lease, are recorded as income in the periods in which they are
known and can be determined. Rent reviews are recognized when such
reviews have been agreed with tenants.
Tenants in the
Group’s shopping mall are also generally charged a
non-refundable admission right upon entering a lease contract or
renewing an existing one. Admission rights are treated as
additional rental income and recognized in the statement of
comprehensive income under a straight-line basis over the term of
the respective lease agreement.
The Group acts as
its own leasing agent for arranging and closing lease agreements in
its shopping malls properties and consequently earns letting fees.
Letting fees are paid by tenants upon the successful closing of an
agreement. A transaction is considered successfully concluded when
both parties have signed the related lease contract. Letting fees
received by the Group are treated as additional rental income and
are recognized in the statement of comprehensive income on a
straight-line basis over the term of the lease
agreements.
IRSA
Propiedades Comerciales S.A.
Lease contracts
also provide that common area maintenance (“CAM”) of
the Group’s shopping malls are borne by the corresponding
lessees, generally on a prorrata basis. CAM include all such
expenses convenient and necessary for various purposes including,
but not limited to, the operation, maintenance, management, safety,
preservation, repair, supervision, insurance and enhancement of the
shopping malls. The lessor is responsible for determining the need
and suitability of incurring a common area service charge. The
Group makes the original payment for such expenses, which are then
reimbursed by the lessees. The Group considered that it acts as a
principal in these cases.
Service charge
income related to can is presented separately from property
operating expenses. Property operating expenses are expensed as
incurred.
Under the lease
contracts entered into, lessees also agree to participate in
collective promotion funds (“CPF”) to be used in
advertising and promoting the Group’s shopping malls. Each
lessee’s participation is generally calculated as a
percentage of the 15% monthly rent accrued.
Revenue so derived
is also included under rental income and services segregated from
advertising and promotion expenses. Such expenses are charged to
income when incurred.
On the other hand,
revenue includes income from managed operations and other services
such as car parking lots. Those revenues are recognized on an
accrual basis as services are provided.
●
Office and other rental properties portfolio
Rental income from
office and other rental properties include rental income from
office leased out under operating leases, income for services and
expenses recovery paid by tenant.
Rental income from
office and other rental properties leased out under operating
leases is recognized in the consolidated statements of
comprehensive income on a straight-line basis over the term of the
leases (‘rent averaging’). When lease incentives are
granted, they are recognized as an integral part of the net
consideration for the use of the property and are therefore
recognized on the same straight-line basis.
Contingent rents,
are recorded as income in the periods in which they are collected.
Rent reviews are recognized when such reviews have been agreed with
tenants.
Lease contracts
also provide that common area service charges of the Group’s
office and other rental properties are borne by the corresponding
lessees, generally on a proportionally basis. These common area
service charges include all such expenses convenient and necessary
for various purposes including, but not limited to, the operation,
maintenance, management, safety, preservation, repair, supervision,
insurance and enhancement of the shopping malls. The Group acts as
the management of rental properties. The Group makes the original
payment for such expenses, which are then reimbursed by the
lessees. The Group considered that it acts as a principal in these
cases. The Group accrues reimbursements from tenants for
recoverable portions of all these expenses as service charge
revenue in the period the applicable expenditures are incurred and
is presented separately from property operating expenses. Property
operating expenses are expensed as incurred.
●
Sales and Development activities
Revenue from sale
and developments of real estate properties primarily comprises the
results from the sale of trading properties. Results from the sale
of properties are recognized only when the significant risks and
rewards have been transferred to the buyer. This normally takes
place on unconditional exchange of contracts (except where payment
or completion is expected to occur significantly after exchange).
For conditional exchanges, sales are recognized when these
conditions are satisfied.
IRSA
Propiedades Comerciales S.A.
The Group applies
IFRIC 15 “Agreements for the Construction of Real
Estate”. IFRIC 15 gives guidance as to which standard applies
when accounting for the construction of real estate; that is IAS 11
“Construction Contracts” or IAS 18
“Revenue”. IFRIC 15 interprets that an agreement meets
the definition of a construction contract under IAS 11 when the
buyer is able to specify the major structural elements of the
design of the property either before or during construction.
Furthermore, IFRIC 15 interprets that an agreement is for the sale
of goods under IAS 18 when construction takes place independently
of the agreement and the buyer has only a limited ability to
influence the design. The Group has assessed the nature of its
agreements and determined that they are within the scope of IAS 18.
As a result, the Group recognizes revenue from the sale of open
market private homes and commercial units entirely at the delivery
in accordance with IAS 18.
The Group also
enters into barter transactions where the Group normally exchanges
undeveloped parcels of land with third-party developers for future
property to be constructed on the bartered land and on occasion,
the Group also receives cash as part of the transactions. Legal
title to the land together with all risks and rewards of ownership
are transferred to the developer upon sale. The Group generally
requires the developer to issue insurances or to mortgage the land
in favor of the Group as performance guarantee. In the event the
developer does not fulfil its obligations, the Group forecloses on
the land through the execution of the mortgage or the surety
insurances, together with a cash penalty.
The Group may sell
the residential apartments to third-party homebuyers once they are
finalized and transferred from the developer. In these
circumstances, revenue is recognized when the significant risks and
rewards are transferred to the buyer. This will normally take place
when the deeds of title are transferred to the
homebuyer.
However, the Group
may market residential apartments during construction or even
before construction commences. In these situations, buyers
generally surrender a down payment to the Group with the remaining
amount being paid when the developer completes the property and
transfers it to the Group, and the Group in turn transfers it to
the buyer. In these cases, revenue is not recognized until the
apartments are completed and the transaction is legally completed,
that is when the apartments are transferred to the homebuyers and
deeds of title are executed. This is because in the event the
residential apartments are not completed by the developer and
consequently not delivered to the homebuyer, the Group is
contractually obligated to return to the homebuyer any down payment
received plus a penalty amount. The Group may then seek legal
remedy against the developer for non-performance of its obligations
under the agreement. The Group exercised judgment and considers
that the most significant risk associated with the asset the Group
holds (i.e. the right to receive the apartments) consisting of the
unfulfillment of the developer's obligations (i.e. to complete the
construction of the apartments) has not been transferred to the
homebuyers upon reception of the down payment.
Ordinary shares are
classified as equity. Incremental costs directly attributable to
the issue of new ordinary shares or options are shown in equity as
a deduction, net of tax, from the proceeds.
When any of
Group’s subsidiaries purchase the Company’s equity
share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of tax) is
deducted from equity attributable to the Company’s equity
holders until the shares are cancelled or reissued. When such
ordinary shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction
costs and related income tax effects, is included in equity
attributable to the Company’s equity holders.
Instruments issued
by the Group that will be settled by the Company delivering a fixed
number of its own equity instruments in exchange for a fixed amount
of cash or another financial asset are classified as
equity.
IRSA
Propiedades Comerciales S.A.
Earnings per share
is calculated by dividing the profit for the year attributable to
equity holders of the parent by the weighted average of common
shares outstanding during the year. Diluted earnings per share is
computed by dividing the profit for the year by the weighted
average of common shares outstanding, and when dilutive, adjusted
for the effect of all potentially dilutive shares, including share
options, on an as-if converted basis.
In computing
diluted earnings per share, income available to common shareholders
used in the basic earnings per share calculation is adjusted to add
back the after-tax amount of interest recognized in the year with
respect to any debt convertible to common stock. The
weighted-average number of common shares outstanding is adjusted to
include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been
issued. Diluted earnings per share is based on the most
advantageous conversion rate or exercise price over the entire term
of the instrument from the standpoint of the security holder. The
calculation of diluted earnings per share excludes potential common
shares if their effect is anti-dilutive (Note 28).
2.28.
Dividend distribution
Cash dividend
distribution to the Group’s shareholders is recognized as a
liability in the period in which the dividends are approved. Such
amounts have been recorded either under Retained Earnings, if
already forfeited or under Trade and Other Payables, if not
forfeited.
Dividends earned
are recorded when declared.
2.30.
Comparative
information
Balance items as of
June 30, 2017 and 2016 shown in these Financial Statements for
comparative purposes arise from Financial Statements then ended.
Reclassifications have been made in the comparative information as
of June 30, 2017 and 2016.
During the fiscal
year ended June 30, 2018, 2017 and 2016, there was a devaluation of
the Argentine peso in relation to the US Dollar that accounted for
approximately 74%, 11% and 65%, respectively. This situation
affects the comparability of figures disclosed in these Financial
Statements, arising mainly from the impact of the exchange rate on
our assets and liabilities in foreign currency.
2.31.
Seasonal effects on
operations
The operations of
the Group’s shopping mall are subject to seasonal effects,
which affect the level of sales recorded by tenants. During summer
time (January and February), the tenants of shopping mall
experience the lowest sales levels in comparison with the winter
holidays (July) and during the period of Christmas’ Seasons
(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 mall sales. Sale discounts at
the end of each season also impact in the business. As a
consequence, a higher level of revenues is generally expected in
shopping mall operations during the second half of the year rather
than the first.
3.
Significant judgments, key assumptions
and estimates
Not all of these
significant accounting policies require management to make
subjective or complex judgments or estimates. The following is
intended to provide an understanding of the policies that
management considers critical because of the level of complexity,
judgment or estimations involved in their application and their
impact on the Consolidated Financial Statements. These judgments
involve assumptions or estimates in respect of future events.
Actual results may differ from these estimates.
IRSA
Propiedades Comerciales S.A.
Estimation
|
Main
assumptions
|
Potential
implications
|
Main
references
|
Business
combination - Allocation of acquisition prices
|
Assumptions
regarding timing, amount of future revenues and expenses, revenue
growth, expected rate of return, economic conditions, discount
rate, among other.
|
If the assumptions
made be inaccurate, the recognized combination may not be
correct.
|
Note 4 –
Acquisitions and dispositions
|
Recoverable amounts
of cash-generating units (even those including goodwill),
associates and assets.
|
The discount rate
and the expected growth rate before taxes in connection with
cash-generating units.
The discount rate
and the expected growth rate after taxes in connection with
associates.
Cash flows are
determined based on past experiences with the asset or with similar
assets and in accordance with the Group’s best factual
assumption relative to the economic conditions expected to
prevail.
Business continuity
of cash-generating units.
Appraisals made by
external appraisers and valuators with relation to the
assets’ fair value, net of realization costs (including real
estate assets).
|
If any of the
assumptions made be inaccurate, this could lead to differences in
the recoverable values of cash-generating units.
|
Note 10 –
Property, plant and equipment
Note 12 –
Intangible assets
|
Estimated useful
life of intangible assets and property, plant and
equipment
|
Estimated useful
life of assets based on their conditions.
|
Recognition of
accelerated or decelerated depreciation by comparison against final
actual earnings (losses).
|
Note 10 –
Property, plant and equipment
Note 12 –
Intangible assets
|
Fair value
valuation of investment properties
|
Fair value
valuation made by external appraisers and valuators. See Note
9.
|
Incorrect valuation
of investment property values
|
Note 9 –
Investment properties
|
Income
tax
|
The Group estimates
the income tax amount payable for transactions where the
Treasury’s Claim cannot be clearly determined.
Additionally, the
Group evaluates the recoverability of assets due to deferred taxes
considering whether some or all of the assets will not be
recoverable.
|
Upon the improper
determination of the provision for income tax, the Group will be
bound to pay additional taxes, including fines and compensatory and
punitive interest.
|
Note 20 –
Taxes
|
Allowance for
doubtful accounts
|
A periodic review
is conducted of receivables risks in the Group’s
clients’ portfolios. Bad debts based on the expiration of
account receivables and account receivables’ specific
conditions.
|
Incorrect
recognition of charges / reimbursements of the allowance for bad
debt.
|
Note 14 –
Trade and other receivables
|
Level 2 and 3
financial instruments
|
Main assumptions
used by the Group are:
● Discounted
projected income by interest rate
● Values determined
in accordance with the shares in equity funds on the basis of its
Financial Statements, based on fair value or investment
assessments.
● Comparable market
multiple (EV/GMV ratio).
● Underlying
asset price (Market price); share price volatility (historical) and
market interest-rate (Libor rate curve).
|
Incorrect
recognition of a charge to income / (loss).
|
Note 13 –
Financial instruments by category
|
Probability
estimate of contingent liabilities.
|
Whether more
economic resources may be spent in relation to litigation against
the Group; such estimate is based on legal advisors’
opinions.
|
Charge / reversal
of provision in relation to a claim.
|
Note 19 –
Provisions
|
4.
Acquisitions
and disposals
Fiscal year ended as of June 30, 2018
Acquisition
of La Arena
On February 20,
2018 IRSA Propiedades Comerciales, through its subsidiary Ogden
Argentina S.A. ("OASA"), which the Company controlled thorugh
Entertainment Holdings S.A., acquired a 60% equity interest in La
Arena, which developed and operates the stadium known as "DIRECTV
ARENA", located in Tortuguitas, province of Buenos
Aires.
The price set for
the transaction amounted to USD 4.2 million, of which USD 1.9
million were outstanding as of the date of this annual
report.
See
in Note 15 the balances of business combination.
Acquisition
of plot of land La Plata
On March 22, 2018
IRSA Propiedades Comerciales acquired, directly and indirectly,
100% of a plot of land of 78,614 sqm of surface located in Camino
General Belgrano, between 514th Av., 19th Av. and 511 Street,
in the town of La Plata, province of Buenos
Aires.
The operation was
made through the purchase of 100% of the shares of common stock of
the company Centro de Entretenimientos La Plata SA ("CELAP"), owner
of 61.85% of the property and the direct purchase of the remaining
38.15% share of common stock from non-related third
parties.
IRSA
Propiedades Comerciales S.A.
The total price of
the transaction was USD 7.5 million, which has been fully
paid.
The purpose of this
acquisition is the future development of a mixed-use
project.
Acquisition
of plot of land in Mendoza
On March 14, 2018
the Company acquired a 3,641 sqm of plot of land adjacent to
Mendoza Shopping, for an amount of USD 1.2 million. As of the date
of these Financial Statements, USD 0.8 million were
outstanding.
Sale
of units in Intercontinental Building
IRSA Propiedades
Comerciales sold 851,79 square meters corresponding to one floor of
office and eight parking lots in the Intercontinental Plaza
building The consideration
was USD 3 million, which was fully paid.
Fiscal year ended as of June 30, 2017
Acquisition
of control over Entertainment Holdings S.A. (EHSA)
In July 2016, IRSA
Propiedades Comerciales, acquired 20% shareholding in EHSA, a
company where it already owned 50%. It also acquired 1.25% interest
in Entretenimiento Universal S.A. (“ENUSA”). The amount
paid for the acquisition was Ps. 53 million. As a result, the Group
now holds 70% of the voting stock of EHSA.
EHSA holds, both
directly and indirectly, 100% of the shares of OGDEN Argentina S.A.
(“OASA”) and 95% of the shares of ENUSA.
OASA holds 50% of
the voting stock of La Rural S.A. (“LRSA”), a company
that holds the right to commercially operate the emblematic
“Predio Ferial de Palermo” in the Autonomous City of
Buenos Aires, where the Sociedad Rural Argentina
(“SRA”) holds the remaining 50%.
See
in Note 15 the balances of business combination.
Purchase of Philips Building
On June 5, 2017,
IRSA Propiedades Comerciales acquired the Philips Building located
in Saavedra, Autonomous City of Buenos Aires, next to the DOT
Shopping Mall. The building has a constructed area of 10,142 square
meters and is intended for office development and lease. The
acquisition price was USD 29 million, which was fully paid up as of
June 30, 2017.
Furthermore, the
Company has signed an agreement with the seller which allow them to
remain leasing the building for a term of 7 months and 15 days,
which expire on January 19, 2018.
Sale
of units in Intercontinental Building
IRSA Propiedades
Comerciales sold 2,432 square meters corresponding to three floors
of office and 24 parking lots in the Intercontinental Plaza
building. The Company still holds 3,876 square meters profitable of
the building. The consideration was USD 9 million, which was fully
paid by the purchaser as of June 30, 2017.
Catalinas
Tower
On November 16,
2016, IRSA signed an agreement with DYCASA S.A., the primary
building contractor for the development of Catalinas Tower who, on
November 29, 2016, started the corresponding works. The execution
term is 28 months and completion is scheduled for March 2019. On
April 6, 2016, IRSA Propiedades Comerciales has purchased from IRSA
a portion of the future units to be built.
IRSA
Propiedades Comerciales S.A.
5.
Financial
risk management
Risk
management principles and procedures
The risk management
function within the Group is carried out in respect of financial
risks. Financial risks are risks arising from financial instruments
to which the Group is exposed during or at the end of the reporting
period. Financial risk comprises market risk (including foreign
currency risk, interest rate risk and other price risk), credit
risk, liquidity risk and capital risk.
The Group’s
diverse activities are exposed to a variety of financial risks in
the normal course of business. The Group’s overall risk
management program focuses on the unpredictability of financial
markets and seeks to minimize the Group’s capital costs by
using suitable means of financing and to manage and control the
Group’s financial risks effectively. The Group uses financial
instruments to hedge certain risk exposures when deemed appropriate
based on its internal management risk policies.
The Group’s
principal financial instruments comprise cash and cash equivalents,
receivables, payables, interest bearing assets and liabilities,
other financial liabilities, other investments and derivative
financial instruments. The Group manages its exposure to key
financial risks in accordance with the Group’s risk
management policies.
The Group’s
risk management policies are implemented at all its subsidiaries
companies in order to identify and analyze the risks faced by the
Group, to set appropriate risk limits and controls to monitor risks
and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the
Group’s activities. The Group’s management framework
includes policies, procedures, limits and allowed types of
derivative financial instruments.
The Group has
established a Risk Committee, comprising Senior Management and a
member of the Audit Committee of Cresud (IRSA’s parent
company), which reviews and oversees management’s compliance
with these policies, procedures and limits and has overall
accountability for the identification and management of risk across
the Group.
This section
provides a description of the principal risks and uncertainties
that could have a material adverse effect on the Group’s
strategy, performance, results of operations and financial
condition. The principal risks and uncertainties facing the
businesses, set out below, do not appear in any particular order of
potential materiality or probability of occurrence.
(a)
Market
risk management
Market risk is the
risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. The
Group’s market risks arise from open positions in foreign
currencies, interest-bearing assets and liabilities, and risk of
market price of equity securities, to the extent that these are
exposed to general and specific market movements. The Group sets
limits on the exposure to these risks that may be accepted, which
are monitored on a regular basis.
The examples of
sensitivities to market risks included below are based on a change
in one factor while holding all other factors constant. In practice
this is unlikely to occur, and changes in some of the factors may
be correlated – for example, changes in interest rate and
changes in foreign currency rates.
Foreign exchange risk and associated derivative financial
instruments
The Group publishes
its consolidated Financial Statements in Argentine Pesos but
conducts business in many foreign currencies. As a result, the
Group is subject to foreign currency exchange risk due to exchange
rate movements, which affect the Group’s transaction costs.
Foreign exchange risk arises when future commercial transactions or
recognized assets or liabilities are denominated in a currency that
is not the entity’s functional currency, that is, Argentine
Pesos.
The real estate
activities of the Group’s subsidiaries are primarily located
in Argentina where the Argentine Peso is the functional currency. A
significant majority of the Group’s business activities is
conducted in the respective functional currencies of the
subsidiaries (the Argentine Peso), thus not exposing the Group to
foreign exchange risk. However, in the ordinary course of business,
the Group transacts in currencies other than the respective
functional currencies of the subsidiaries. These transactions are
primarily denominated in US dollars. The Group’s net
financial position exposure to the US dollar is managed on a
case-by-case basis, by entering into different derivative
instruments and/or by borrowing in foreign currencies. Exposure to
other foreign currencies has not been significant to
date.
IRSA
Propiedades Comerciales S.A.
Financial
instruments are only considered sensitive to foreign exchange rates
where they are not in the functional currency of the entity that
holds them. The following table shows the US dollar-denominated net
amounts of the financial instruments for the years ended June 30,
2018 and 2017. All amounts are presented in Argentine Pesos, the
presentation currency of the Group:
|
Net monetary position liability
|
|
06.30.18
|
06.30.17
|
Borrowing
position with third parties
|
(9,697,165)
|
(5,267,218)
|
Lending
position with related parties
|
360,966
|
315,194
|
Net
monetary position
|
(9,336,199)
|
(4,952,024))
|
The Group estimates
that, other factors being constant, a 10% oscillation of the US
dollar against the Argentine Peso at year-end would impact in the
profit before income tax in an amount of Ps. 933,620 and Ps.
495,202 for the years ended June 30, 2018 and 2017,
respectively.
This sensitivity
analysis provides only a limited, point-in-time view of the
sensitivity of the foreign exchange risk associated with
Group’s financial instruments. The actual impact of the
foreign exchange rate changes on the Group’s financial
instruments may differ significantly from the impact shown in the
sensitivity analysis.
Furthermore, the
Group also uses derivative instruments, such as foreign currency
forward contracts, to manage exposure to foreign exchange risk. As
of June 30, 2018 and 2017 there were foreign-currency forward
contracts in the amount of Ps. 47,360 (assets) and Ps. 4,950
(liabilities), respectively.
Interest rate risk
The Group is
exposed to interest rate risk on its investments in debt
instruments, short-term and long-term borrowings and derivative
financial instruments.
The primary
objective of the Group’s investment activities is to preserve
principal while at the same time maximizing yields without
significantly increasing risk. To achieve this objective, the Group
diversifies its portfolio in accordance with the limits set by the
Group. The Group maintains a portfolio of cash equivalents and
short-term investments in a variety of securities, including both
government and corporate obligations and money market funds and ETF
funds.
As the
Group’s investments in this type of financial instrument
subject to this risk are not significant, changes in market
interest rates do not have any significant direct effect on the
Group’s income.
The Group’s
interest rate risk principally arises from long-term borrowings
(Note 18). Borrowings issued at floating rates expose the Group to
the risk that the actual cash flows differ from those expected.
Borrowings issued at fixed rates expose the Group to the risk that
the fair values of these differ from those expected. The Group
manages this risk by maintaining an appropriate mix between fixed
and floating rate interest bearing liabilities. These activities
are evaluated regularly to determine that the Group is not exposed
to interest rate movements that could adversely impact its ability
to meet its financial obligations and to comply with its borrowing
covenants.
The Group’s
interest rate risk policy is approved by its management. The Group
analyzes its interest rate exposure on a dynamic basis. Various
scenarios are simulated, taking into consideration refinancing,
renewal of existing positions and alternative financing sources.
Based on these scenarios, the Group calculates the impact on profit
and loss of a defined interest rate shift. The scenarios are run
only for liabilities that represent the major interest-bearing
positions. Trade payables are normally interest-free and have
settlement dates within one year. The simulation is done on a
regular basis to verify that the maximum potential loss is within
the limits set by Management.
See in Note 18 the
breakdown of the Group’s fixed-rate and floating-rate
borrowings per currency denomination (excluding finance leases) for
the years ended June 30, 2018 and 2017:
The Group
estimates that, other factors being constant, a 1% oscillation in
floating rates at year-end would impact the profit before income
tax for the year ended June 30, 2018 and 2017 by Ps. 10.89 million
and Ps. 0.96 million, respectively. Additionally, the variation of
1% in the swap rate would impact in the statement of comprehensive
income before taxes in Ps. (16) million.
IRSA
Propiedades Comerciales S.A.
Other price risk
The Group is
exposed to price risk inherent in equity investments, which are
classified on the consolidated statement of financial position at
fair value through profit or loss. The Group regularly reviews the
prices evolution of these equity securities in order to identify
significant movements. (Note 13)
As of June 30, 2018
and 2017, the total value of the investment in equity securities
issued by other companies equals to Ps. 201.7 million and Ps. 157.7
million, respectively.
The Group estimates
that, other factors being constant, a 10% oscillation in equity
indexes at fiscal year-end would decrease profit before income tax
for the years ended June 30, 2018 and 2017 by Ps. 20.2 million and
Ps. 15.8 million, respectively.
(b)
Credit
risk management
Credit risk refers
to the risk that counterparty will default on its contractual
obligations resulting in a financial loss to the Group. Credit
limits have been established to ensure that the Group deals only
with approved counterparties and that counterparty concentration
risk is addressed and the risk of loss is mitigated. Counterparty
exposure is measured as the aggregate of all obligations of any
single legal entity or economic entity to the Group.
The Group is subject
to credit risk arising from deposits with banks and financial
institutions, investments of surplus cash balances, the use of
derivative financial instruments and from outstanding receivables.
Credit risk is managed on a country-by-country basis.
The Group’s
policy is to manage credit exposure from deposits, short-term
investments and other financial instruments by maintaining
diversified funding sources in various financial institutions. All
the institutions that operate with the Group are well known because
of their experience in the market and high credit quality. The
Group places its cash and cash equivalents, investments, and other
financial instruments with various high credit quality financial
institutions, thus mitigating the amount of credit exposure to any
one institution. The maximum exposure to credit risk is represented
by the carrying amount of cash and cash equivalents and short-term
investments in the statement of financial position.
The Group’s
primary objective for holding derivative financial instruments is
to manage currency exchange rate risk and interest rate risk. The
Group generally enters into derivative transactions with
high-credit-quality counterparties and, by policy, limits the
amount of credit exposure to each counterparty. The amounts subject
to credit risk related to derivative instruments are generally
limited to the amounts, if any, by which counterparty’s
obligations exceed the obligations that the Group has with that
counterparty. The credit risk associated with derivative financial
instruments is represented by the carrying value of the assets
positions of these instruments.
The Group’s
policy is to manage credit risks associated with trade and other
receivables within defined trading limits. All Group’s
significant counterparties have internal trading
limits.
Trade receivables
from investment and development property activities are primarily
derived from leases and services from shopping malls, office and
other rental properties; receivables from the sale of trading
properties and investment properties (primarily undeveloped land
and non-retail rental properties). The Group has a large customer
base and is not dependent on any single customer.
The Group has
specific policies to ensure that rental contracts are transacted
with counterparties with appropriate credit quality. The majority
of the Group’s shopping mall, office and other rental
properties’ tenants are well-recognized retailers,
diversified companies, professional organizations, and others.
Owing to the long-term nature and diversity of its tenancy
arrangements, the credit risk of this type of trade receivables is
considered to be low. Generally, the Group has not experienced any
significant losses resulting from the non-performance of any
counterpart to the lease contracts. As a result, the allowance for
doubtful accounts balance is low. Individual risk limits are set
based on internal or external ratings in accordance with limits set
by the Group, as applicable. If customers are independently rated,
these ratings are used. If there is no independent rating, risk
control assesses the credit quality of the customer, taking into
account its past experience, financial position, actual experience
and other factors. Based on the Group’s analysis, the Group
determines the amount of the deposit that is required from the
tenant at inception of the lease. Management does not expect any
losses from non-performance by these counterparties (Note
14).
(c)
Liquidity
risk management
The Group is
exposed to liquidity risks, including risks associated with
refinancing borrowings as they mature, the risk that borrowing
facilities are not available to meet cash requirements, and the
risk that financial assets cannot readily be converted to cash
without loss of value. Failure to manage liquidity risks could have
a material impact on the Group’s cash flow and statement of
financial position. Prudent liquidity risk management implies
maintaining sufficient cash, the availability of funding through an
adequate amount of committed credit facilities and the ability to
close out market positions. Due to the dynamic nature of the
underlying businesses, the Group aims to maintain flexibility in
funding its existing and prospective debt requirements by
maintaining diversified funding sources with adequate committed
funding lines from high quality lenders.
The Group monitors
its current and projected financial position using several key
internally generated reports: cash flow; debt maturity; and
interest rate exposure. The Group also undertakes sensitivity
analysis to assess the impact of proposed transactions, movements
in interest rates and changes in property values on the key
profitability, liquidity and balance sheet ratios.
The Group’s
debt and derivative positions are continually reviewed to meet
current and expected debt requirements. The Group maintains a
balance between longer-term and shorter-term financings. Short-term
financing is principally raised through bank facilities and
overdraft positions. Medium- to longer-term financing comprises
public and private bond issues, including private placements.
Financing risk is spread by using a variety of types of debt. The
maturity profile is managed by spreading the repayment dates and
extending facilities.
The tables below
analyze the Group’s non-derivative financial liabilities and
derivative financial liabilities into relevant maturity groupings
based on the remaining period at the statement of financial
position to the contractual maturity date. The amounts disclosed in
the tables are the contractual undiscounted cash flows and as a
result, they do not reconcile to the amounts disclosed on the
statement of financial position. However, undiscounted cash flows
in respect of balances due within 12 months generally equal their
carrying amounts in the statement of financial position, as the
impact of discounting is not significant. The tables include both
interest and principal flows.
Where the interest
payable is not fixed, the amount disclosed has been determined by
reference to the conditions existing at each reporting
date.
At June 30, 2018
|
|
|
|
|
|
|
Trade
and other payables
|
776,952
|
71,444
|
3,670
|
2,498
|
-
|
854,564
|
Borrowings
(excluding finance lease liabilities)
|
1,138,838
|
1,387,782
|
5,374,580
|
1,235,747
|
11,381,419
|
20,518,366
|
Finance
leases
|
6,945
|
6,498
|
1,803
|
-
|
-
|
15,246
|
Derivative
financial instruments
|
264
|
-
|
-
|
-
|
46,447
|
46,711
|
Total
|
1,922,999
|
1,465,724
|
5,380,053
|
1,238,245
|
11,427,866
|
21,434,887
|
At June 30, 2017
|
|
|
|
|
|
|
Trade
and other payables
|
480,612
|
5,940
|
4,570
|
1,497
|
1,489
|
494,108
|
Borrowings
(excluding finance lease liabilities)
|
787,406
|
523,845
|
523,845
|
523,845
|
6,748,934
|
9,107,875
|
Finance
leases
|
1,690
|
968
|
668
|
-
|
-
|
3,326
|
Derivative
financial instruments
|
4,950
|
-
|
-
|
-
|
-
|
4,950
|
Total
|
1,274,658
|
530,753
|
529,083
|
525,342
|
6,750,423
|
9,610,259
|
(d)
Capital
risk management
The capital structure of the Group consists of
shareholder’s equity and
short-term to long-term net borrowings. The type and maturity of
the Group’s borrowings are analyzed further in Note 18. The
Group’s equity is analyzed into its components in the
consolidated statement of changes in equity. Capital is
managed so as to promote the long-term success of the business and
to maintain sustainable returns for shareholders.
The Group seeks to
manage its capital requirements to maximize value through the mix
of debt and equity funding, while ensuring that Group entities
continue to operate as going concerns, comply with applicable
capital requirements and maintain strong credit
ratings.
The Group assesses
the adequacy of its capital requirements, cost of capital and
gearing (i.e., debt/equity mix) as part of its broader strategic
plan. The Group continuously reviews its capital structure to
ensure that (i) sufficient funds and financing facilities are
available to implement the Group’s property development and
business acquisition strategies, (ii) adequate financing facilities
for unforeseen contingencies are maintained, and (iii)
distributions to shareholders are maintained within the
Group’s dividend distribution policy. The Group also protects
its equity in assets by contracting insurance.
The Group’s
strategy is to maintain key financing metrics (namely, net debt to
total equity ratio (gearing) and loan-to-value ratio
(“LTV”) in order to ensure that asset level performance
is translated into enhanced returns for shareholders while
maintaining an appropriate risk reward balance to accommodate
changing financial and operating market cycles.
The following table
details a number of the Group’s key metrics in relation to
managing its capital structure. The ratios are within the ranges
previously established by the Group’s strategy.
|
06.30.18
|
06.30.17
|
Gearing
ratio (i)
|
29.21%
|
21.13%
|
Debt
ratio (ii)
|
28.66%
|
16.94%
|
(i) Calculated as
total current and non-current borrowings divided by total current
and non-current borrowings plus equity.
(ii) Calculated as
total current and non-current borrowings divided by total
properties at fair value (including trading properties, property,
plant and equipment, investment properties and units to be received
under barter agreements).
5.1
Other
non-financial risks
Property risk:
There are several
risks affecting the Group’s property investments. The
composition of the Group’s property portfolio including asset
concentration and lot size may impact liquidity and relative
property performance. The Group has a large multi-asset portfolio
and monitors its concentration and the average size of its plots of
land.
A change in trends
and economic conditions causes shifts in customer demands for
properties with impact on new lettings, renewal of existing leases
and reduced rental growth. Also changes increase risk of tenant
insolvencies. The Group conducts several actions to mitigate some
of these risks whenever possible. The variety of asset types and
geographical spread as well as a diversified tenant base, with
monitoring of tenant concentration, helps mitigating these
risks.
The development,
administration and profitability of shopping malls are impacted by
various factors including: the accessibility and the attractiveness
of the area where the shopping mall is located, the intrinsic
attractiveness of the shopping mall, the flow of people, the level
of sales of each shopping mall rental unit, the increasing
competition from internet sales, the amount of rent collected from
each shopping mall rental unit and the fluctuations in their
occupancy levels in the shopping malls. In the event that there is
an increase in operational costs, caused by inflation or other
factors, it could have a material adverse effect on the Group if
its tenants are unable to pay their higher rent obligations due to
the increase in expenses. The Argentine Civil and Commercial Code
provides that tenants may rescind commercial lease agreements after
the initial six months by means of reliable notification. If the
resolutory option is used within the first year of the lease, the
Tenant shall pay the Lessor, as compensation, the sum equivalent to
one-and-a-half month’s rent, and one month’s rent if he
makes use of the option after that period. Given that the rule does
not provide for advance notice, Lease Agreements include a
provision whereby the lessee should give at least sixty days
advance notice of its intention to terminate the lease. The
exercise of such rescission rights could materially and adversely
affect the Group.
Risks associated
with development of properties include the following: the potential
abandonment of development opportunities; construction costs
exceeding original estimates, possibly making a project
uneconomical; occupancy rates and rents at newly completed projects
may be insufficient to make the project profitable; the
Group’s inability to obtain financing on favorable terms for
the development of the project; construction and lease-up may not
be completed on schedule, resulting in increased debt service
expense and construction costs; the Group’s inability to
obtain, or the delays in obtaining, all necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations; preconstruction buyers may default on their
purchase contracts or units in new buildings may remain unsold upon
completion of constructions; prices for residential units may be
insufficient to cover development costs. The Group also takes
several actions to monitor these risks and respond appropriately
whenever it is under its control. The Group has in-house property
market research capability and development teams that monitor
development risks closely.
The Group generally
adopts conservative assumptions on leasing and other variables and
monitors the level of committed future capital expenditure on
development programs relative to the level of undrawn
facilities.
IFRS 8 requires an
entity to report financial and descriptive information about its
reportable segments, which are operating segments or aggregations
of operating segments that meet specified criteria. Operating
segments are components of an entity about which separate financial
information is available that is evaluated regularly by the chief
operating decision maker (“CODM”) in deciding how to
allocate resources and in assessing performance, without prejudice
of the powers and responsibilities of the Board of Directors. The
CODM evaluates the business based on the differences in the nature
of its products, operations and risks. The amount reported for each
segment is the measure reported to the CODM for these purposes and
later to the Board of Directors. In turn, the Board of
Directors’ performance is assessed by the Shareholders’
Meeting, which is the Company’s governance body.
Operating segments
identified are disclosed as reportable segments if they meet any of
the following quantitative thresholds:
●
The
operating segment’s reported revenue, including both sales to
external customers and inter-segment sales or transfers, is 10% or
more of the combined revenue, internal and external, of all
operating segments.
●
The
absolute amount of its reported profit or loss is 10% or more of
the greater, in absolute amount, of:
o
the
combined reported profit of all operating segments that do not
report a loss; and
o
the
combined reported loss of all operating segments that report a
loss.
●
Its
assets are 10% or more of the combined assets of all operating
segments.
In addition, the
operating segments that do not meet any of the quantitative
thresholds could be considered as reportable segments if management
estimates that this information could be useful for the users of
the financial statements.
If, after
determining reportable segments in accordance with the preceding
quantitative thresholds, the total external revenue attributable to
those segments is less than 75% of the Group’s consolidated
external revenue, additional segments are identified as reportable
segments, even if they do not meet the thresholds described above,
until at least 75% of the Group’s consolidated external
revenue is included in reportable segments. Once 75% of the
Group’s consolidated external revenue is included in
reportable segments, the remaining operating segments are
aggregated in “Other segments”.
IRSA
Propiedades Comerciales S.A.
Segment information
has been prepared and classified according to different types of
businesses in which the Group conducts its activities. The
Group’s Investment and Development Properties business is
comprised of the following segments:
●
“Shopping
Malls” includes the
operation and development of shopping malls, through which we
generate rental income and fees charged for services related to the
lease of retail stores and other spaces. Our Shopping Malls segment
includes highly diversified, multi-format assets with a particular
focus on retailers that cater to middle- to high-income
consumers.
●
“Offices”
includes the lease of offices and
other rental properties and services related to these
properties.
●
“Sales and
Developments” includes
the sales of undeveloped parcels of land and properties, and
activities related to the development and maintenance of such
properties.
●
“Others”
includes the financing activities
developed through our associated company Tarshop S.A., our
residual consumer financing transactions and the operations
developed by our subsidiary Entertainment Holdings
S.A.
Group’s shopping malls, offices and other rental
properties, and trading properties, are located in
Argentina.
The
CODM evaluates performance of business segments based on segment
profit, defined as profit or loss from operations before financing
and taxation. The measurement principles for the segment reporting
structure are based on the IFRS principles adopted in the
consolidated Financial Statements, except for:
● The
operating income from the joint ventures Nuevo Puerto Santa Fe S.A.
and Quality Invest S.A. are reported under the proportional
consolidation method. Under this method, the income/loss generated
by joint ventures is reported in the statements of comprehensive
income line-by-line, rather than in a single item as required by
IFRS. Management believes that the proportional consolidation
method provides more useful information to understand the business
return, because the assets and income/loss generated by
consolidated operations are similar to the assets and income/loss
booked under the equity method. This is due to the fact that under
the proportional consolidation method, revenues and expenses are
reported separately, instead of offsetting and reporting them as a
single item in the statements of comprehensive income. Therefore,
the proportional consolidation method is used by the CODM to assess
and understand the return and the results of operations of these
businesses as a whole. Operating results of La Rural S.A. joint
venture is accounted for under the equity method. Management
believes that, in this case, this method provides more adequate
information for this type of investment.
● Operating
results does not include the amounts pertaining to building
administration expenses and collective promotion funds, and
excludes total recovered costs, whether by way of building
administration expenses or other concepts included under financial
results (for example default interest and other concepts) and not
analyzed to assess the operating performance of the segment. The
CODM examines the net amount from both concepts (total surplus or
deficit between building administration expenses and collective
promotion funds and recoverable expenses).
Revenues
generated and goods and services exchanged between segments are
calculated on the basis of market prices. Intercompany transactions
between segments, if any, are eliminated.
These
costs and income are presented now for reconciliation of all
segments and their respective consolidating operating
income.
IRSA
Propiedades Comerciales S.A.
The
Group introduced a change in the way the CODM evaluates performance
for "offices and others" and "sales and developments" segments. For
those investment properties sold in our offices and others segment,
their change in fair value (or realized gain) is now shown as part
of the sales and developments segment The changes have affected (1)
“offices and others” and “sales and
developments” segments in the fiscal year ended June 30,
2017, which are related to the allocation of the realized changes
in fair value of investment properties in “sales and
developments” segment; and (2) “offices and
others” and “financial operations and others” in
the period ended March 31, 2018, changing the name of the latter to
“Others” and adding the operations developed by our
subsidiary Entertainment Holdings S.A..
The
following is a summary analysis of the Group's business segments,
corresponding to the fiscal years ended June 30, 2018, 2017 and
2016. Additionally, a reconciliation between results of operations
corresponding to segment information and the results of operations
as per the statements of comprehensive income; and total assets by
segment and total assets according to the statement of financial
position. The information by segments has been prepared and
classified according to the businesses in which the Group carries
out its activities:
IRSA
Propiedades Comerciales S.A.
|
06.30.18
|
|
|
|
|
|
|
Adjustment for expenses and collective promotion funds
|
Adjustment for share in profit/ (loss) of joint ventures
|
Total as per Statement of Comprehensive Income
|
Revenue
|
3,664,651
|
492,096
|
105,525
|
9,326
|
4,271,598
|
1,717,000
|
(39,392)
|
5,949,206
|
Operating
costs
|
(329,785)
|
(48,407)
|
(18,688)
|
(19,752)
|
(416,632)
|
(1,747,051)
|
24,236
|
(2,139,447)
|
Gross profit (loss)
|
3,334,866
|
443,689
|
86,837
|
(10,426)
|
3,854,966
|
(30,051)
|
(15,156)
|
3,809,759
|
Net
gain from fair value adjustment of investment
properties
|
11,340,085
|
5,042,427
|
1,000,147
|
45,580
|
17,428,239
|
-
|
(738,122)
|
16,690,117
|
General
and administrative expenses
|
(320,234)
|
(39,438)
|
(38,566)
|
(18,100)
|
(416,338)
|
-
|
1,096
|
(415,242)
|
Selling
expenses
|
(238,170)
|
(47,362)
|
(10,635)
|
(1,955)
|
(298,122)
|
-
|
3,257
|
(294,865)
|
Other
operating results, net
|
(56,451)
|
348
|
33,569
|
13,684
|
(8,850)
|
-
|
3,945
|
(4,905)
|
Profit (Loss) from operations
|
14,060,096
|
5,399,664
|
1,071,352
|
28,783
|
20,559,895
|
(30,051)
|
(744,980)
|
19,784,864
|
Share
in profit of associates and joint ventures
|
-
|
-
|
-
|
20,171
|
20,171
|
-
|
619,354
|
639,525
|
Segment profit (loss) before financing and Taxation
|
14,060,096
|
5,399,664
|
1,071,352
|
48,954
|
20,580,066
|
(30,051)
|
(125,626)
|
20,424,389
|
Investment
properties
|
40,467,248
|
12,625,243
|
2,394,577
|
191,667
|
55,678,735
|
-
|
(1,623,924)
|
54,054,811
|
Property,
plant and equipment
|
55,952
|
53,956
|
-
|
-
|
109,908
|
-
|
(471)
|
109,437
|
Trading
properties
|
-
|
-
|
61,568
|
-
|
61,568
|
-
|
-
|
61,568
|
Goodwill
|
1,323
|
3,913
|
-
|
100,861
|
106,097
|
-
|
(5,236)
|
100,861
|
Rights
to receive units (barter transactions)
|
-
|
-
|
26,596
|
-
|
26,596
|
-
|
-
|
26,596
|
Inventories
|
25,492
|
-
|
-
|
-
|
25,492
|
-
|
(610)
|
24,882
|
Investments
in associates and joint ventures
|
-
|
-
|
-
|
189,815
|
189,815
|
-
|
1,243,343
|
1,433,158
|
Operating assets
|
40,550,015
|
12,835,487
|
2,482,741
|
329,968
|
56,198,211
|
-
|
(386,898)
|
55,811,313
|
|
06.30.17
|
|
|
|
|
|
|
Adjustment for expenses and collective promotion funds
|
Adjustment for share in profit/ (loss) of joint ventures
|
Total as per Statement of Comprehensive Income
|
Revenue
|
3,046,588
|
401,767
|
99,136
|
891
|
3,548,382
|
1,488,187
|
(39,407)
|
4,997,162
|
Operating
costs
|
(349,445)
|
(27,908)
|
(22,534)
|
(48)
|
(399,935)
|
(1,512,738)
|
12,887
|
(1,899,786)
|
Gross profit (loss)
|
2,697,143
|
373,859
|
76,602
|
843
|
3,148,447
|
(24,551)
|
(26,520)
|
3,097,376
|
Net
gain from fair value adjustmentof investment
properties
|
2,068,103
|
1,064,586
|
193,187
|
-
|
3,325,876
|
-
|
(192,463)
|
3,133,413
|
General
and administrative expenses
|
(261,475)
|
(31,464)
|
(30,483)
|
(1,539)
|
(324,961)
|
-
|
2,785
|
(322,176)
|
Selling
expenses
|
(188,081)
|
(33,871)
|
(13,740)
|
(2,982)
|
(238,674)
|
-
|
2,146
|
(236,528)
|
Other
operating results, net
|
(57,712)
|
(6,731)
|
(4,062)
|
16,183
|
(52,322)
|
-
|
1,103
|
(51,219)
|
Profit (Loss) from operations
|
4,257,978
|
1,366,379
|
221,504
|
12,505
|
5,858,366
|
(24,551)
|
(212,949)
|
5,620,866
|
Share
in profit of associates and joint ventures
|
-
|
-
|
-
|
13,677
|
13,677
|
-
|
139,026
|
152,703
|
Segment profit (loss) before Financing and Taxation
|
4,257,978
|
1,366,379
|
221,504
|
26,182
|
5,872,043
|
(24,551)
|
(73,923)
|
5,773,569
|
Investment
properties
|
28,799,277
|
6,841,517
|
1,158,695
|
-
|
36,799,489
|
-
|
(882,607)
|
35,916,882
|
Property,
plant and equipment
|
55,409
|
65,663
|
-
|
-
|
121,072
|
-
|
(536)
|
120,536
|
Trading
properties
|
-
|
-
|
61,600
|
-
|
61,600
|
-
|
-
|
61,600
|
Goodwill
|
1,323
|
3,913
|
-
|
26,375
|
31,611
|
-
|
(5,236)
|
26,375
|
Rights
to receive units (barter transactions)
|
-
|
-
|
27,560
|
-
|
27,560
|
-
|
-
|
27,560
|
Inventories
|
23,260
|
-
|
-
|
-
|
23,260
|
-
|
(538)
|
22,722
|
Investments
in associates
|
-
|
-
|
-
|
197,605
|
197,605
|
-
|
593,815
|
791,420
|
Operating assets
|
28,879,269
|
6,911,093
|
1,247,855
|
223,980
|
37,262,197
|
-
|
(295,102)
|
36,967,095
|
IRSA
Propiedades Comerciales S.A.
|
06.30.16
|
|
|
|
|
|
|
Adjustment for expenses and collective promotion funds
|
Adjustment for share in profit/ (loss) of joint ventures
|
Total as per Statement of Comprehensive Income
|
Revenue
|
2,409,082
|
284,137
|
2,679
|
1,013
|
2,696,911
|
1,183,627
|
(22,038)
|
3,858,500
|
Operating
costs
|
(250,306)
|
(12,254)
|
(5,720)
|
(77)
|
(268,357)
|
(1,201,305)
|
9,458
|
(1,460,204)
|
Gross profit (loss)
|
2,158,776
|
271,883
|
(3,041)
|
936
|
2,428,554
|
(17,678)
|
(12,580)
|
2,398,296
|
Net
gain from fair value adjustmentof investment
properties
|
16,131,702
|
867,413
|
425,114
|
-
|
17,424,229
|
-
|
(331,826)
|
17,092,403
|
General
and administrative expenses
|
(178,643)
|
(23,308)
|
(20,296)
|
-
|
(222,247)
|
-
|
667
|
(221,580)
|
Selling
expenses
|
(145,278)
|
(12,824)
|
(4,264)
|
(1,835)
|
(164,201)
|
-
|
1,980
|
(162,221)
|
Other
operating results, net
|
(61,556)
|
(1,377)
|
(7,831)
|
(18)
|
(70,782)
|
-
|
2,230
|
(68,552)
|
Profit (Loss) from operations
|
17,905,001
|
1,101,787
|
389,682
|
(917)
|
19,395,553
|
(17,678)
|
(339,529)
|
19,038,346
|
Share
in profit of associates and joint ventures
|
-
|
-
|
-
|
(11,017)
|
(11,017)
|
-
|
215,316
|
204,299
|
Segment profit (loss) before Financing and Taxation
|
17,905,001
|
1,101,787
|
389,682
|
(11,934)
|
19,384,536
|
(17,678)
|
(124,213)
|
19,242,645
|
Investment
properties
|
26,633,273
|
4,876,164
|
1,362,670
|
-
|
32,872,107
|
-
|
(638,011)
|
32,234,096
|
Property,
plant and equipment
|
49,053
|
69,870
|
-
|
-
|
118,923
|
-
|
(598)
|
118,325
|
Trading
properties
|
-
|
-
|
48,029
|
-
|
48,029
|
-
|
-
|
48,029
|
Goodwill
|
1,323
|
3,911
|
-
|
-
|
5,234
|
-
|
(5,234)
|
-
|
Rights
to receive units (barter transactions)
|
-
|
-
|
38,281
|
-
|
38,281
|
-
|
-
|
38,281
|
Inventories
|
18,560
|
-
|
-
|
-
|
18,560
|
-
|
(358)
|
18,202
|
Investments
in associates
|
-
|
-
|
-
|
134,527
|
134,527
|
-
|
463,232
|
597,759
|
Operating assets
|
26,702,209
|
4,949,945
|
1,448,980
|
134,527
|
33,235,661
|
-
|
(180,969)
|
33,054,692
|
7.
Information about
subsidiaries
The
Group conducts its business through several operating and holding
subsidiaries.
The
subsidiaries are shown by percentage of participation held by the
Group:
|
06.30.18
|
06.30.17
|
Name of the entity
|
Place of business / Country of incorporation
|
Main activity
|
% of ownership interest held
|
% of ownership interest held by non-controlling
interests
|
% of ownership interest held
|
% of ownership interest held by non-controlling
interests
|
|
|
|
|
|
Fibesa
S.A.
|
Argentina
|
Mandatary
|
100.00%
|
-
|
100.00%
|
-
|
Centro
de Entretenimientos La Plata S.A.
|
Argentina
|
Real
estate
|
100.00%
|
-
|
-
|
-
|
Torodur
S.A.
|
Uruguay
|
Investment
|
100.00%
|
-
|
100.00%
|
-
|
Shopping
Neuquén S.A.
|
Argentina
|
Real
estate
|
99.95%
|
0.05%
|
99.92%
|
0.08%
|
Arcos
del Gourmet S.A.
|
Argentina
|
Real
estate
|
90.00%
|
10.00%
|
90.00%
|
10.00%
|
Panamerican
Mall S.A.
|
Argentina
|
Real
estate
|
80.00%
|
20.00%
|
80.00%
|
20.00%
|
Entertainment
Holdings S.A.
|
Argentina
|
Investment
|
70.00%
|
30.00%
|
70.00%
|
30.00%
|
Emprendimiento
Recoleta S.A.
|
Argentina
|
Real
estate
|
53.68%
|
46.32%
|
53.68%
|
46.32%
|
Restrictions, commitments and other matters in respect of
subsidiaries
According to Law
N° 19,550, 5% of the profit in each fiscal year must be
separated to constitute a legal reserve until they reach legal
capped amounts (20% of the nominal value of total capital). This
legal reserve is not available for dividend distribution and can
only be released to absorb losses. The Group has not reached the
legal limit of this reserve. Dividends are paid across the
Group’s subsidiaries based on their individual accounting
statements.
Arcos del Gourmet
Injuction
order
In December 2013,
the Judicial Branch confirmed an injunction order that suspended
the opening of the Shopping Mall on the grounds that it did not
have certain government permits in the context of two legal
proceedings, where a final decision has been rendered for Distrito
Arcos.
The plaintiff filed
a petition for the continuation of the preliminary injunction by
means of an extraordinary appeal of unconstitutionality which was
denied by the lower and appellate courts; consequently, it filed an
appeal with the Supreme Court of Justice of the Autonomous City of
Buenos Aires, which referred the proceedings to the Court of
Appeals for re-consideration of certain parameters related to green
areas, as established by the lower court.
Nowadays, the
Distrito Arcos is open to the public and operating
normally.
Concession
Status
In November 2008,
Arcos del Gourmet S.A. signed a contract with the Agencia de
Administración de Bienes del Estado (State Assets
Administration Office, or AABE in Spanish) for which the Company
had been granted the concession to use the properties located in
the jurisdiction of Estación Palermo, ex Línea San
Martín - Palermo loading deck (on Juan B. Justo Avenue from
Santa Fe Avenue to Paraguay Street) until December 31, 2025 (the
“Arcos concession agreement”).
Subsequently, in
September 2011, a contract for the readjustment of this concession
was entend in to with the Railway Infrastructure Administrator
(ADIF in spanish) (to which the rail assets were transferred in the
jurisdiction of AABE), puorsuant to the term of the Arcos
concession agreement was extended until December 31, 2030. This new
agreement provides for an automatic extension of 3 years and 4
months in the event that the Company complies with the agreement
and ADIF so finds. Likewise, a new extension is established for an
additional 3 years if the Company so declares and ADIF corroborates
compliance with the obligations. This agreement established an
initial monthly fee of Ps.200 (plus VAT) until December 31, 2025,
and Ps.250 (plus VAT) as of January 1, 2026, these values being
adjustable every 2 years until the end of the term of the
concession.
The Argentine
government issued Executive Order 1723/2012, whereby several plots
of land located in prior rail yards of Palermo, Liniers and
Caballito were designated for development and urbanization
projects.
In this respect and
as part of several measures related to other licensed persons
and/or concessionaires, the Company was notified, of Resolution
170/2014 revoking of the Arcos Concession agreement.
It should further
be pointed out that such measure:
(i) has not been
adopted due to noncompliance of the company.
(ii) there is no
the interruption of the commercial development or operation of the
shopping mall, which continues to operate under normal
conditions;
Notwithstanding the
foregoing, Arcos del Gourmet S.A. has filed applicad the relevant
administrative resources (appeal) and has also filed a judicial
action requesting that the revocation of the Arcos Concession
agreement be overruled. Likewise, the Company has concurrently
brought an action of lease rental payments as a result of which it
is making judicial deposits in time and form of the agreed monthly
rental payments pursuant to the Concession to Agreement for that
the Company interprets has been improperly revoked. To date, the
administrative remedy has been waived (by operation of law since
judicial proceedings have been commenced), the Argentine govermant
answered the complaint in the case where the parties contest the
admissibility of the order revoking the concession, and the
complaint has already been served which was answered by Trenes
Argentinos opposing exceptions, which have already been answered by
the Company.
Emprendimiento Recoleta S.A
As a result of a
public auction, in February 1991, the City of Buenos Aires granted
to Emprendimiento Recoleta S.A (ERSA) a 20-year concession to
use a plot of land in Centro Cultural Recoleta, which was set to
expire in November 2013. In addition, pursuant to Resolution No.
1125/00 issued by the Secretariat of Economy and Finance of the
Government of the City of Buenos Aires (Secretaria de Hacienda y
Finanzas del GCBA) an extension was granted for “Edificio
Esquina” or “Edificio Ballena” to be used as a
Multipurpose Area (“Salones de usos múltiples”);
and pursuant to Decree No. 867/10 dated November 25, 2010, a
five-year extension was granted so the agreement is set to expire
on November 18, 2018.
As of the date of
these financial statements, no additional extension of the
concession term had been agreed upon, for which reason it shall end
on November 18, 2018, and on such date the ninety (90)-day term
agreed by contract for the return of the property under concession
to the Government of the City of Buenos Aires on the terms and
conditions set forth in the agreement shall start running. For such
purposes and in order to take all legal precautions available, ERSA
has filed early eviction proceedings (also known as “condena
de futuro”) against all lessees of the shopping
mall.
On April 12, 2018,
ERSA was given notice by the First Instance Court hearing Federal
Criminal and Correctional Matters No. 1 (Juzgado Nacional en lo
Criminal y Correccional Federal N° 1), in the case entitled
“Blaksley Enrique and others, violation of Section
303”, of the resolution ordering an intervention of ERSA for
a term of six months, and appointment of observer for collection
and reporting purposes, and a general restriction on the
disposition of property. In response to such court order, ERSA
filed a motion to dismiss to defend the company’s interests.
As of the date hereof, ERSA has not been notified of any resolution
on such motion or the appointment of an observer. On July 20, 2018
and subsequently, on August 10, 2018, it received two further
notices from the same Court, whereby: 1) ERSA it is ordered to
transfer to the Court’s account 7.36 % of all revenues of the
company from any sources; and 2) the intervenors were appointed
representatives of the 46.316% minority shareholders at all
shareholders’ and board meetings. A motion to dismiss was
filed against such orders.
It should be noted
that the end of ERSA’s concession has no significant impact
on the Group’s financial statements.
IRSA
Propiedades Comerciales S.A.
Panamerican Mall S.A.
Below is the
summarized financial information of subsidiaries with material
non-controlling interests which are considered significant for the
Group, presented before intercompany eliminations.
|
|
|
|
|
|
% of ownership interest held by non-controlling
interests
|
Book value of non-controlling interest
|
% of ownership interest held by controlling interests
|
|
06.30.18
|
684,125
|
8,651,271
|
399,058
|
2,874,630
|
6,061,708
|
20%
|
1,211,783
|
80%
|
4,847,130
|
06.30.17
|
424,643
|
5,136,295
|
228,464
|
1,659,926
|
3,672,548
|
20%
|
734,510
|
80%
|
2,938,038
|
|
|
Comprehensive income for the year
|
Cash from operating activities
|
Cash from investing activities
|
Cash from financing activities
|
Net increase in cash and cash equivalents
|
Dividends paid to non-controlling interest
|
06.30.18
|
649,681
|
2,571,160
|
300,458
|
(712,855)
|
446,230
|
33,833
|
36,400
|
06.30.17
|
545,783
|
423,749
|
(4,917)
|
215,148
|
(153,121)
|
57,110
|
42,598
|
The non-controlling
interests of the remaining subsidiaries summarize Ps. 186,089 and
Ps. 136,659 as of June 30, 2018 and 2017 respectively. Non of these
subsidiaries have non-controlling interest that individually are
considered significant for the group.
8.
Interests
in joint ventures
Restrictions, commitments and other matters in respect of joint
ventures
According to
Business Companies Law N° 19,550, 5% of the profit of the year
is separated to constitute a legal reserve until they reach legal
capped amounts (20% of total capital). This legal reserve is not
available for dividend distribution and can only be released to
absorb losses. The Group’s joint ventures have not reached
the legal limit of this reserve.
There are no
contingent liabilities relating to the Group’s interest in
joint ventures, and there are no contingent liabilities of the
joint ventures themselves, other those mentioned
bellow.
Quality Invest S.A.
On March 31,
2011, Quality Invest and Nobleza Piccardo S.A.I.C. y F., or
“Nobleza Piccardo,” executed the title deed for the
purchase of a plot of land of 159,996 square meters located in the
District of San Martin, Province of Buenos Aires, currently
intended for industrial purposes and suitable in terms of
characteristics and scale for mixed-use developments. The price for
the property was USD 33 million, being paid 30% as of that
date. For the remaining balance a mortgage was constituted in the
first degree of privilege over the property in favor of Nobleza
Piccardo. Capital plus interest calculated at a nominal annual rate
of 7.5% on balances, was paid in full in advance in March
2013.
On May 16,
2012, the Municipality of San Martin granted a pre-feasibility
permit for commercial use, entertainment, events, offices, etc.,
which would enable performance of a mixed-use development
thereon.
Pursuant to an
Ordinance 11,706 enacted on December 30, 2014, a rezoning
permit was obtained for the plot of land to be used mainly for
commercial purposes, which considerably expands the uses and
potential buildable square meters through new urban indicators. On
January 5, 2016, the Provincial Decree 1,835 was published in
the Official Gazette of the Province of Buenos Aires granting its
approval, and the new urban and rezoning standards thus became
effective.
As approved in the
Ordinance, on January 20, 2015, Quality Invest entered into a
zoning agreement with the Municipality of San Martin which governs
various issues related to applicable regulations and provides for a
mandatory assignment of square meters in exchange for monetary
contributions subject to fulfillment of certain administrative
milestones of the rezoning process, the first of which (for
Ps.20,000) was paid to the Municipality ten days after the
execution of the aforementioned agreement.
Moreover, on
June 27, 2016, the plot subdivision plan was filed with the
Municipality, in compliance with another significant milestone
committed under the zoning agreement.
On June 28, 2017,
Quality Invest S.A. signed an agreement with EFESUL S.A. in order
to assume as their own the obligations that the latter agreed with
the Municipality of General San Martin within the framework of the
aforementioned Urban Agreement. These agreement contemplates a
donation, which will be paid based on the work progress that the
Municipality develops on the property initially transferred by
EFESUL S.A.
In addition, during
July 2017, Quality Invest S.A. subscribed two addendums to the
aforementioned Urban Development Agreement, which contemplate the
following: 1) a new subdivision plan of the property will be
presented within 120 days of the addendum signing and 2) the
payment of the twelveth installment in cash was replaced by the sum
of Ps.71 million payables in 18 equal and consecutive monthly
installments.
On March 8, 2018,
it was agreed with the renowned Gehl Firm (Denmark) - Urban Quality
Consultant - the elaboration of a master plan, generating a modern
concept of New Urban District of Mixed Uses.
Added to this,
local consultants were also hired as: Guillermo Oliveto (Consultant
W) in Market Analysis, Gastón Biggio (GUT) in naming and
branding of the District, Colla & Colombo Consultants in
Business Analysis and Alejandro Langlois in Vehicular Impact, among
others. In this way, the Company have a clear sizing and
positioning of the business to which will deal
opportunely.
Regarding
the project, we are working on the definition of the master plan
that includes a mix of uses (Residential, Commercial, etc.) in
order to carry out a large-scale urban development contemplating
more of 500,000 square meters. The regulations for this master plan
are framed in a zoning called the Main Commercial District
(Distrito Comercial Principal), which entered into force in 2016
through the publication of the Provincial Decree of the Municipal
Ordinance No.11,706.
La Rural S.A.
In connection
with the Fairground, as publicly known, in December 2012 the
National Executive Branch issued Executive Order 2552/12 that
annulled an executive order dated 1991 which had approved the sale
of the Fairground to the Sociedad Rural Argentina (SRA); the effect
of this new order was to revoke the sale transaction. Subsequent,
on March 21, 2012, the National Executive Branch notified the SRA
of said executive order and further ordered that the property be
returned to the Argentine government within 30 subsequent days.
Then, the SRA issued a press release publicly disclosing the
initiation of legal actions and the obtaining of a precautionary
measure for which Decree 2552/12 was suspended. Furthermore, as it
has become publicly known, on August 21, 2013, the Supreme Court of
Justice rejected the appeal filed by the Argentine government
against the interim measure timely requested by the
SRA.
Neither has IRSA
Propiedades Comerciales been served notice formally nor is it a
party involved in the legal actions brought by the
SRA.
In connection
with the Fairground, as publicly known, in December 2012 the
National Executive Branch issued Executive Order 2552/12 that
annulled an executive order dated 1991 which had approved the sale
of the Fairground to the Sociedad Rural Argentina (SRA); the effect
of this new order was to revoke the sale transaction. Subsequent,
on March 21, 2012, the National Executive Branch notified the SRA
of said executive order and further ordered that the property be
returned to the Argentine government within 30 subsequent days.
Then, the SRA issued a press release publicly disclosing the
initiation of legal actions and the obtaining of a precautionary
measure for which Decree 2552/12 was suspended. Furthermore, as it
has become publicly known, on August 21, 2013, the Supreme Court of
Justice rejected the appeal filed by the Argentine government
against the interim measure timely requested by the
SRA.
Neither has IRSA
Propiedades Comerciales been served notice formally nor is it a
party involved in the legal actions brought by the
SRA.
Given the potential
dimension of the dispute, as it has been known to the public, we
estimate that if Executive Order 2552/12 was found to be
unconstitutional, such order shall have no legal effects either in
EHSA or in the acquisition by IRSA Propiedades Comerciales of an
equity interest in EHSA. However, should the opposite happen, that
is, a court order declaring the Executive Order 2699/91, this could
have a real impact on acquired assets. In this scenario, the
judicial decision may render the purchase of the Plot of Land by
SRA null and void, and all acts executed by SRA in relation to the
Plot of Land, including the right of use currently held by the
entity where EHSA has an indirect equity interest, through vehicle
entities, would also become null and void.
On June 1, 2015, a
ruling was issued in case 4573/2012 SOCIEDAD RURAL ARGENTINA vs.
NATIONAL STATE – EXECUTIVE POWER ON DECLARATORY ACTION,
whereby the injunction staying the effects of Executive Order
2552/12 were lifted.
On June 2, 2015 the
SRA filed a writ of appeals against the ruling indicated above and
on that same date the appeal was admitted with staying effects.
While the appeal filed by SRA was filed in the Appellate court, the
decision of the judge of first instance who decided to lift the
precautionary measure had no effect and was suspended.
On September 17,
2015, the court of appeals revoked the decision and rejected in the
motion by of the Argentine government to lift the precautionary
measure and the Law N° 26,854 was declared inapplicable to the
case of precautionary measures against the Government. As a result,
the injunction issued on January 4, 2013 was confirmed. The
National Government filed an extraordinary federal appeal and
subsequently a complaint, both were dismissed, therefore, the
precautionary measure was reaffirmed.
On March 11, 2016
La Rural S.A. was summoned as third party in the case referred to
above, and filed an answer to such summons on April 6,
2016.
IRSA
Propiedades Comerciales S.A.
On April 21,
2016 the National Government presented itself, requested the
annotation of litis as a precautionary measure, opposed the
exception of incompetence, raised the inadmissibility of the
declaratory action of certainty, in subsidy, proceeded to answer
the complaint. It also requested the suspension of the sentence
until the criminal case is resolved and opposed, as a counterclaim,
a motion declare the anulment of Decree 2699/91, as well as all
those acts enacted in consequence of said decree.
By order of April
29, 2016, the National Government was presented, opposed to the
exception raised, the claim in subsidy was contested and the action
of injuriousness filed, and it ordered the transfer of the
different Government proposals to the SRA.
On the same
occasion, the precautionary measure for the annotation of the
requested litigation was admitted under the responsibility of the
National Government regarding the individualized properties in the
process.
On November 22,
2016, SRA answered the transfer of the injuriousness action filed
by the National Government, which was considered as answered on
December 1.
On December 21,
2016, the National Government, for its part, answered the exception
of expiration opportunely opposed. Nevertheless, it was indicated
that confirmation with La Rural S.A. was pending.
On June 19, 2017,
the transfer of the exception of incompetence raised by the
National Government was substantiated, which was answered by La
Rural SA in June 2017. On the same occasion, SRA accused expiry of
that previous exception in the terms of article 310 CPCCN, which
was resolved by order of July 14, 2017.
On that occasion it
was resolved to sustain the expiration filed by Sociedad Rural
Argentina regarding the incident of exception of incompetence filed
by the National Government. Therefore, the process was settled in
the Civil and Commercial Federal jurisdiction.
On August 28, 2017,
the National Government notified the transfer of the request of
certain sections of the SRA's submission that answered the
counterclaim and was transferred to the third party of the
prescription exception opposed by the SRA at the time of answer the
counterclaim. Both substations were answered by SRA and La Rural SA
on September 4, 2017.
On October 5, 2017,
the Federal Oral Criminal Court No. 2 requested the referral of the
proceedings in the context of the case: "Menem, Carlos Saúl
and other s / inf. Art. 261, first paragraph of the CP ". For
presentations of December 2017 and March 2018, SRA requested the
Oral Court to return the proceedings in order to continue with the
process. As of the date of these financial statements, the
proceedings have not been returned and are in the possession of the
Oral Criminal Court No. 2.
There are no
contingent liabilities relating to the Group’s interest in
joint ventures, and there are no contingent liabilities of the
joint ventures themselves, other those previously the mentioned
above.
Set out below is
the summarized financial information for the joint ventures
considered to be material to the Group:
|
|
|
|
|
|
|
Book value of non-controlling interest
|
|
|
06.30.18
|
|
|
|
|
|
|
|
|
|
|
4,888
|
2,820,477
|
64,283
|
648,184
|
2,112,898
|
50%
|
1,056,449
|
3,911
|
1,061,610
|
|
4,979,104
|
1,446,607
|
5,182,946
|
772,227
|
470,538
|
20%
|
94,108
|
-
|
94,108
|
06.30.17
|
|
|
|
|
|
|
|
|
|
|
17,804
|
1,486,497
|
82,300
|
466,009
|
955,992
|
50%
|
477,996
|
3,911
|
481,907
|
|
4,752,937
|
1,132,158
|
4,222,263
|
1,259,347
|
403,485
|
20%
|
80,697
|
-
|
80,694
|
IRSA
Propiedades Comerciales S.A.
|
|
Comprehensive income for the year
|
Cash from operating activities
|
Cash from investing activities
|
Cash from financing activities
|
Net increase (decrease) in cash and cash equivalents
|
06.30.18
|
|
|
|
|
|
|
|
12,538
|
1,078,880
|
(79,768)
|
(495)
|
80,270
|
7
|
|
3,854,868
|
67,073
|
(431,855)
|
(7,620)
|
395,160
|
(44,315)
|
06.30.17
|
|
|
|
|
|
|
|
26,435
|
237,304
|
(10,586)
|
(253)
|
10,833
|
(6)
|
|
1,622,801
|
26,033
|
(772,527)
|
(11,081)
|
808,132
|
24,524
|
Below
is shown a detail of the investment and values of shares held by de
Group in associates and joint ventures as of June 30, 2018 and
2017, as well as the Group's participation in the comprehensive
results of these companies as of June 30, 2018, 2017 and
2016:
|
|
Value of Company’s interest in equity
|
Company’s interest in comprehensive income
|
Name of the entity
|
06.30.18
|
06.30.17
|
06.30.16
|
06.30.18
|
06.30.17
|
06.30.18
|
06.30.17
|
06.30.16
|
Joint ventures
|
|
|
|
|
|
|
|
|
Quality
Invest S.A.
|
50.00%
|
50.00%
|
50.00%
|
1,061,850
|
481,907
|
540,930
|
118,652
|
154,072
|
Nuevo
Puerto Santa Fe S.A. (1)(5)
|
50.00%
|
50.00%
|
50.00%
|
181,493
|
111,908
|
78,424
|
20,374
|
61,244
|
La
Rural S.A.(2)
|
50.00%
|
50.00%
|
-
|
92,923
|
113,365
|
13,728
|
15,314
|
-
|
Entertainment
Holdings S.A.
|
-
|
-
|
50.00%
|
-
|
-
|
-
|
-
|
20,419
|
Entretenimiento
Universal S.A
|
-
|
-
|
2.50%
|
-
|
-
|
-
|
-
|
11
|
Associates
|
|
|
|
|
|
|
|
|
Tarshop
S.A.(2)
|
20.00%
|
20.00%
|
20.00%
|
94,108
|
80,694
|
13,415
|
5,207
|
(31,447)
|
Otra
asociadas (3)
|
|
|
|
2,784
|
3,546
|
(6,972)
|
(6,844)
|
-
|
Total interests in associates
and joint ventures (4)
|
|
|
|
1,433,158
|
791,420
|
639,525
|
152,703
|
204,299
|
|
|
|
|
Last financial statements issued
|
Name of the entity
|
Place of business / Country of incorporation
|
Main activity
|
|
Share capital (nominal value)
|
|
|
Joint ventures
|
|
|
|
|
|
|
Quality
Invest S.A.
|
Argentina
|
Real
estate
|
120,827,022
|
241,654
|
1,078,880
|
2,112,897
|
Nuevo
Puerto Santa Fe S.A. (1)(5)
|
Argentina
|
Real
estate
|
138,750
|
27,750
|
156,848
|
360,340
|
La
Rural S.A. (2)
|
Argentina
|
Event
organization and others
|
714,498
|
1,430
|
77,598
|
156,856
|
Associates
|
|
|
|
|
|
|
Tarshop
S.A. (2)
|
Argentina
|
Consumer
financing
|
48,759,288
|
598,796
|
67,073
|
470,538
|
(1) Nominal value
per share Ps. 100.
(2) Correspond to
profit for the fiscal year ended at June 30, 2018 and
2017.
(3) Represents
other individually non-significant associates.
(4) Includes Ps 364
and Ps. 206. as of June 30, 2018 and 2017, respectively, in
relation to the equity interest in Avenida Compras disclosed under.
(See Note 19)
(5) Include the
necessary adjustments to arrive at balances under international
financial reporting standards.
Changes in the
Group’s investments in associates and joint ventures for the
years ended June 30, 2018 and 2017 were as follows:
|
|
|
Beginning of the year
|
791,420
|
597,759
|
Profit
sharing, net
|
639,525
|
152,703
|
Irrevocable
contributions (Note 29)
|
43,574
|
3,000
|
Capital
contributions (Note 29)
|
1,649
|
-
|
Dividends
distributed (Note 29)
|
(43,010)
|
(20,284)
|
Incorporation
as result of business combination, net (i)
|
-
|
47,852
|
Acquisitions
of companies
|
-
|
10,390
|
End of the year (4)
|
1,433,158
|
791,420
|
(i) In July 2016,
the Group through IRSA Propiedades Comerciales acquired 20%
shareholding in Entertainment Holdings S.A (EHSA). It also acquired
1.25% interest in Entretenimiento Universal S.A.
(“ENUSA”). The amount paid for the acquisition was Ps.
53 million. As a result, the Group now holds 70% of the voting
stock of EHSA (Note 4).
The Group's
investment properties are measured at fair value. The following
table shows the Group’s hierarchy of fair values per
investment property category and the changes in the investment
property’s balances for the fiscal years ended June 30, 2018
and 2017:
|
|
Office and other rental properties
|
Undeveloped parcels of land
|
Properties under development
|
|
|
Fair value hierarchy
|
|
|
|
|
|
|
Fair value as of 06.30.16
|
26,425,132
|
4,446,294
|
1,355,500
|
7,170
|
-
|
32,234,096
|
Additions
|
100,002
|
466,332
|
5,539
|
107,194
|
-
|
679,067
|
Capitalization
of financial costs (Note 27)
|
-
|
-
|
-
|
2,310
|
-
|
2,310
|
Capitalized
lease costs
|
1,397
|
3,349
|
-
|
20,052
|
-
|
24,798
|
Depreciation
of capitalized lease costs (i)
|
(636)
|
(1,366)
|
-
|
-
|
-
|
(2,002)
|
Transfers
|
-
|
(80,160)
|
(330,366)
|
410,526
|
-
|
-
|
Transfer
to trading properties (Note 11)
|
(13,617)
|
-
|
-
|
-
|
-
|
(13,617)
|
Disposals
|
-
|
(141,183)
|
-
|
-
|
-
|
(141,183)
|
Net
gain from fair value adjustment on investment properties
(ii)
|
2,048,501
|
905,487
|
128,022
|
51,403
|
-
|
3,133,413
|
Fair value as of 06.30.17
|
28,560,779
|
5,598,753
|
1,158,695
|
598,655
|
-
|
35,916,882
|
Additions
|
106,901
|
504
|
256,505
|
982,760
|
-
|
1,346,670
|
Incorporation
as result of business combination (Note 15)
|
-
|
-
|
-
|
-
|
106,795
|
106,795
|
Capitalization
of financial costs (Note 27)
|
-
|
-
|
-
|
14,385
|
-
|
14,385
|
Capitalized
lease costs
|
12,930
|
3,940
|
-
|
1,290
|
-
|
18,160
|
Depreciation
of capitalized lease costs (i)
|
(1,961)
|
(2,479)
|
-
|
-
|
-
|
(4,440)
|
Transfers
|
343
|
-
|
-
|
(343)
|
-
|
-
|
Transfer
to property plant and equipment (Note10)
|
-
|
(3,026)
|
-
|
-
|
-
|
(3,026)
|
Disposals
|
(1,250)
|
(29,482)
|
-
|
-
|
-
|
(30,732)
|
Net
gain from fair value adjustment on investment
properties(iiI)
|
11,200,624
|
4,060,764
|
979,377
|
403,772
|
45,580
|
16,690,117
|
Fair value as of 06.30.18
|
39,878,366
|
9,628,974
|
2,394,577
|
2,000,519
|
152,375
|
54,054,811
|
(i) As of June 30,
2018 and 2017 depreciation charges were included in
“Costs” in the amount of Ps 4,440 and Ps. 2,002,
respectively, in the statement of comprehensive income (Note
25)
(ii) For fiscal
year 2017 the increase in the value of our investment properties as
measured in Pesos was primarily due to: (i) a 16 basis points
decrease in the discount rate applied in calculating the discounted
cash flows appraisal method to appraise our shopping mall
properties that resulted in increases in value, mainly as a result
of macroeconomic improvements that led to a decrease in the cost of
capital; and (ii) the Peso depreciated by approximately 11% against
the U.S. dollar. The value of our offices properties is booked in
U.S. dollars per accepted practice in the Argentine real estate.
The appraised values of our shopping mall properties increased 8.1%
during fiscal 2017 largely due to a decreased in our capital cost.
The appraised value of our office buildings increased 40.3% in
fiscal 2017 largely as a result of the impact of the depreciation
of the Peso and higher rental rates during the period.
(iii) For fiscal
year 2018 the net impact in the peso values of the Company’s
properties was primarily a consequence of the change in the
macroeconomic conditions: (i) depreciation of Argentine peso of 73%
against the U.S. dollar; (ii) an increase in the projected
inflation rate, with the resulting increase in the cash flow of
revenues of shopping malls; (iii) an increase of 44 basis points in the discount rate; and (iv)
an additional effect due to in the income tax rate used in the
methodology applied to value discounted cash flows; such amendment
was set forth by the fiscal reform recently approved (See note 20).
The values of our shopping mall properties increased 40.4% during
the fiscal year ended June 30, 2018, largely due to the change in
the applicable income tax rate and the impact of the depreciation
of the peso, partially offset by an increase in the discount rate.
The value of our office buildings increased 85.7% during the fiscal
year ended June 30, 2018 largely as a result of the impact of the
depreciation of the peso and higher rental rates for our
properties.
(*)
Corresponds to the DirectTV Arena Stadium.
Valuation processes
The Group's
investment properties were valued at each reporting date by
independent professionally qualified appraisers who hold a
recognized relevant professional qualification and have experience
in the locations and segments of the investment properties
appraised. For all investment properties, their current use equates
to the highest and best use.
The Group's finance
department includes a team that reviews the appraisals performed by
the independent appraisers for financial reporting purposes (the
"review team"). At each financial year end, the review team:
i) verifies all major and important assumptions relevant to
the appraisal in the valuation report from the independent
appraiser; ii) assesses property valuation movements compared
to the valuation report; and iii) holds discussions with the
independent appraiser.
Changes in Level 2
and 3 fair values, if any, are analyzed at each reporting date
during the appraisal discussions between the review team and the
independent appraiser. The Board of Directors ultimately approves
the fair value calculations for recording into the Financial
Statements.
IRSA
Propiedades Comerciales S.A.
Valuation techniques used for the estimation of fair value of the
investment property:
For shopping malls,
the valuation was determined using the discounted cash flow
(“DCF”) projections based on significant unobservable
assumptions. Within these
assumptions the following are the key ones:
●
Future rental cash inflows based on the location, type and quality
of the properties and supported by the terms of any existing lease,
and considering the estimations of the Gross National Income (GNI)
and the estimated inflation rated given by external
advisors.
●
It was considered that all Shopping malls will grow with the same
elasticity in relation to the evolution of the GNI and projected
Inflation.
●
Cash flows from future investments, expansions, or improvements in
shopping malls were not considered.
●
Estimated vacancy rates taking into account current and future
market conditions once the current leases expired.
●
Given the inflationary context, the volatility of certain
macroeconomic variables, it is not possible have a relevant
interest long-term rate in pesos to discount the projected cash
flows for the shopping centers. As result, we proceeded to
dollarize the projected cash flows through the future Ps / USD
exchange rate curve provided by an external consultant and
discounted them with a long-term rate in dollar, the capital cost
rate weighted average ("WACC").
●
The projected cash flows were discounted using the Company's
weighted average cost of capital (WACC) as the discount rate for
each valuation date.
●
Terminal value: it was determined on the basis of the growth rate
and the discount rate.
●
Cash flows for the concessions were projected until the due date of
the concession determinate in the current agreements.
●
The projected cash flows in dollars were discounted with the WACC
rate for each valuation date.
For offices and,
other properties for lease and undeveloped land, the valuation was
determined using market comparables. These values are adjusted for
differences in key attributes such as location, size of the
property and quality of the interior design. The most significant
contribution to this comparable market approach is the price per
square meter.
It can sometimes be
difficult to reliably determine the fair value of the property
under development. In order to assess whether the fair value of the
property under development can be determined reliably, management
considers the following factors, among others:
● The
provisions of the construction contract.
● The
stage of completion.
● Whether
the project/property is standard (typical for the market) or
non-standard.
● The
level of reliability of cash inflows after completion.
● The
development risk specific to the property.
● Past
experience with similar constructions.
● Status
of construction permits.
There were no
changes to the valuation techniques during the fiscal years 2018
and 2017.
The following table
presents information regarding the fair value measurements of
investment properties using significant unobservable inputs (Level
3):
June 30, 2018
Property type
|
Valuation technique
|
|
|
Shopping
Malls
|
Discounted
cash flow
|
9.79%
|
3%
|
For the next 5
years the Group considered an average exchange rate Ps./USD with
increasing trend that begins at Ps. 19.51 (corresponding to the
year ended June 30, 2018) and ends at Ps. 49.05. Over the long
term, the model assumes a nominal depreciation rate of the peso of
5.6%, estimated based on the projected inflation rates of Argentina
and US. The inflation considered shows a decreasing trend,
beginning at 25% (corresponding to the year ended June 30, 2018)
and leveling off at around 8% in 10 years. The premises were
determinated of the closing date of the fiscal year.
IRSA
Propiedades Comerciales S.A.
June 30, 2017
Property type
|
Valuation technique
|
|
|
Shopping
Malls
|
Discounted
cash flow
|
9.35%
|
3%
|
For the next 5
years the Group considered an average exchange rate Ps./USD with
increasing trend that begins at Ps. 15.45 (corresponding to the
year ended June 30, 2017) and ends at Ps. 27.66. Over the long
term, the model assumes a nominal depreciation rate of the peso of
5.5%, estimated based on the projected inflation rates of Argentina
and US. The inflation considered shows a decreasing trend,
beginning at 31% (corresponding to the year ended June 30, 2017)
and leveling off at around 8% in 10 years.
Sensitivity
of unobservable assumptions - Shopping malls (in millions of
pesos):
|
|
|
|
|
|
|
Devaluation
rate + 10% (3)
|
Devaluation
rate - 10% (4)
|
2018
|
(5,046)
|
6,796
|
3,104
|
(2,307)
|
4,035
|
(3,643)
|
(3,575)
|
4,369
|
2017
|
(3,948)
|
5,445
|
2,464
|
(1,794)
|
2,684
|
(2,425)
|
(2,565)
|
3,135
|
(1) assume a 10%
higher inflation rate for each period vis-a-vis projected
rates.
(2) assume a 10%
lower inflation rate for each period vis-a-vis projected
rates.
(3) assume a 10%
higher exchange rate for each period vis-a-vis projected
rates.
(4) assume a 10%
lower exchange rate for each period vis-a-vis projected
rates.
The following
amounts have been recognized in the statements of comprehensive
income:
|
|
|
|
Revenues
from rental and services (Note 24)
|
4,128,454
|
3,409,292
|
2,672,701
|
Expenses
and collective promotion fund (Note 24)
|
1,717,000
|
1,488,187
|
1,183,627
|
Rental
and services costs (Note 25)
|
(2,120,715)
|
(1,874,392)
|
(1,454,409)
|
Net
unrealized gain from fair value adjustment on investment
properties
|
16,669,347
|
3,068,248
|
16,919,859
|
Net
realized gain from fair value adjustment on investment
properties
|
20,770
|
65,165
|
172,544
|
Certain of the
Group’s investment properties have been mortgaged or
otherwise restricted to secure some of the Group’s borrowings
and other liabilities. The net book value of those properties as of
June 30, 2018 and 2017 is as follows:
|
06.30.18
|
06.30.17
|
Córdoba
Shopping (i)
|
1,112,547
|
759,103
|
Total
|
1,112,547
|
759,103
|
(i)
A portion of the
Córdoba Shopping mall property is encumbered with an
antichresis right as collateral for an advance rent received from
NAI International II Inc. amounting to Ps. 9.6 million and Ps. 12.2
million, as of June 30, 2018 and 2017, respectively, (included in
“Trade and other payables” in the statement of
financial position).
IRSA
Propiedades Comerciales S.A.
10.
Property, plant and
equipment
Changes in the
Group’s property, plant and equipment for the years ended
June 30, 2018 and 2017 are as follows:
|
Other buildings and facilities
|
|
|
|
|
|
As of June 30, 2016
|
|
|
|
|
|
|
Costs
|
88,118
|
22,583
|
124,586
|
3,154
|
56
|
238,497
|
Accumulated
depreciation
|
(18,390)
|
(11,018)
|
(89,423)
|
(1,341)
|
-
|
(120,172)
|
Net book amount as of 06.30.16
|
69,728
|
11,565
|
35,163
|
1,813
|
56
|
118,325
|
Additions
|
509
|
3,958
|
19,345
|
-
|
54
|
23,866
|
Depreciation
charges (i)
|
(4,772)
|
(2,321)
|
(13,989)
|
(573)
|
-
|
(21,655)
|
As of June 30, 2017
|
65,465
|
13,202
|
40,519
|
1,240
|
110
|
120,536
|
Costs
|
88,627
|
26,541
|
143,931
|
3,154
|
110
|
262,363
|
Accumulated
depreciation
|
(23,162)
|
(13,339)
|
(103,412)
|
(1,914)
|
-
|
(141,827)
|
Net book amount as of 06.30.17
|
65,465
|
13,202
|
40,519
|
1,240
|
110
|
120,536
|
Additions
|
3,235
|
991
|
20,563
|
-
|
-
|
24,789
|
Transfers
from investment properties (Note 9)
|
3,026
|
-
|
-
|
-
|
-
|
3,026
|
Disposals
|
(12,379)
|
-
|
-
|
-
|
-
|
(12,379)
|
Incorporation
as result of business combination (Note 15)
|
-
|
-
|
67
|
126
|
-
|
193
|
Depreciation
charges (i)
|
(5,580)
|
(2,253)
|
(18,323)
|
(572)
|
-
|
(26,728)
|
As of June 30, 2018
|
53,767
|
11,940
|
42,826
|
794
|
110
|
109,437
|
Costs
|
82,509
|
27,532
|
164,561
|
3,280
|
110
|
277,992
|
Accumulated
depreciation
|
(28,742)
|
(15,592)
|
(121,735)
|
(2,486)
|
-
|
(168,555)
|
Net book amount as of 06.30.18
|
53,767
|
11,940
|
42,826
|
794
|
110
|
109,437
|
(i) As of June 30,
2018 and 2017, depreciation charges were charged to
“Costs” in the amount of Ps. 23,218 and Ps. 18,126,
respectively, to “General and administrative expenses”
in the amount of Ps. 3,324 and Ps. 3,253, respectively and to
“Selling expenses” in the amount of Ps. 186 and Ps.
276, respectively, in the Statements of Comprehensive Income (Note
25).
As
of June 30, 2018 and 2017, there are no properties under
development included in this items, there were no capitalization of
financial costs anual no items of property plant and equipment have
assets been mortgaged to guarantee group loans.
During the fiscal years
ended June 30, 2017 and 2016, borrowing costs were not
capitalized.
The Group leases
computer equipment under non-cancellable finance lease agreements.
The lease terms have an average of 4 and 5 years, and ownership of
the assets lie within the Group (Note 23). Book amount of this
equipment, included in class "Machinery and equipment”, is as
follows:
|
06.30.18
|
06.30.17
|
Costs
– capitalized finance leases
|
12,658
|
9,217
|
Accumulated
depreciation
|
(4,427)
|
(7,333)
|
Net book amount
|
8,231
|
1,884
|
Changes in trading
properties for the fiscal years ended June 30, 2018 and 2017 are as
follows:
|
|
|
|
As of June 30, 2016
|
387
|
47,642
|
48,029
|
Transfers
from investment properties (Note 9)
|
-
|
13,617
|
13,617
|
Transfers
from intangible assets (Note 12)
|
12,857
|
-
|
12,857
|
Disposals
(i)
|
(12,903)
|
-
|
(12,903
|
As of June 30, 2017
|
341
|
61,259
|
61,6
|
Transfers
from intangible assets (Note 12)
|
8,837
|
-
|
8,837
|
Disposals
(i)
|
(8,869)
|
-
|
(8,869)
|
As of June 30, 2018
|
309
|
61,259
|
61,568
|
IRSA
Propiedades Comerciales S.A.
|
|
|
Description
|
06.30.18
|
06.30.17
|
Date of acquisition
|
Undeveloped sites:
|
|
|
|
Air
space Coto
|
6,024
|
6,024
|
Sep-97
|
Córdoba
plot of land
|
15,544
|
15,544
|
May-15
|
Córdoba
plot of land (Shopping)
|
23,935
|
23,935
|
Dec-06
|
Residencial
project Neuquén
|
15,756
|
15,756
|
May-06
|
Total undeveloped sites
|
61,259
|
61,259
|
|
|
|
|
|
Completed properties:
|
|
|
|
Condominios
II
|
309
|
341
|
Nov-13
|
Total completed properties
|
309
|
341
|
|
Total trading properties
|
61,568
|
61,600
|
|
Non-current
|
61,362
|
61,600
|
|
Current
|
206
|
-
|
|
Total
|
61,568
|
61,600
|
|
(i)
As of June 30, 2018
and 2017 the sales properties costs were charged to
“Costs” in the Statements of Comprehensive Income.
(Note 25)
During the fiscal
years ended June 30, 2018 and 2017 no borrowing costs were
capitalized.
None of the
Group’s trading properties have been mortgaged or otherwise
restricted to secure Group’s borrowings and other
payables.
Changes in the
Group’s intangible assets for the fiscal years ended June 30,
2018 and 2017 are as follows:
|
|
|
|
Right to receive units (Barters) (iii)
|
|
|
As of June 30, 2016
|
|
|
|
|
|
|
Costs
|
-
|
16,829
|
20,873
|
38,281
|
11,861
|
87,844
|
Accumulated
depreciation
|
-
|
(15,098)
|
(1,414)
|
-
|
(4,193)
|
(20,705)
|
Net book amount as of 06.30.16
|
-
|
1,731
|
19,459
|
38,281
|
7,668
|
67,139
|
Additions
|
-
|
33,650
|
-
|
2,136
|
-
|
35,786
|
Incorporation
as result of business combination (Note 15)
|
26,375
|
-
|
-
|
-
|
-
|
26,375
|
Transfers
to trading properties (Note 11)
|
-
|
-
|
-
|
(12,857)
|
-
|
(12,857)
|
Amortization
charge (i)
|
-
|
(2,271)
|
(419)
|
-
|
(2,193)
|
(4,883)
|
As of June 30, 2017
|
26,375
|
33,110
|
19,040
|
27,560
|
5,475
|
111,560
|
Costs
|
26,375
|
50,479
|
20,873
|
27,560
|
11,861
|
137,148
|
Accumulated
depreciation
|
-
|
(17,369)
|
(1,833)
|
-
|
(6,386)
|
(25,588)
|
Net book amount as of 06.30.17
|
26,375
|
33,110
|
19,040
|
27,560
|
5,475
|
111,560
|
Additions
|
-
|
41,915
|
-
|
7,873
|
-
|
49,788
|
Incorporation
as result of business combination (Note 15)
|
74,486
|
-
|
-
|
-
|
-
|
74,486
|
Transfers
to trading properties (Note 11)
|
-
|
-
|
-
|
(8,837)
|
-
|
(8,837)
|
Amortization
charge (i)
|
-
|
(10,422)
|
(1,333)
|
-
|
(2,191)
|
(13,946)
|
As of June 30, 2018
|
100,861
|
64,603
|
17,707
|
26,596
|
3,284
|
213,051
|
Costs
|
100,861
|
92,394
|
20,873
|
26,596
|
11,861
|
252,585
|
Accumulated
depreciation
|
-
|
(27,791)
|
(3,166)
|
-
|
(8,577)
|
(39,534)
|
Net book amount as of 06.30.18
|
100,861
|
64,603
|
17,707
|
26,596
|
3,284
|
213,051
|
(i) As of June 30,
2018 and 2017, depreciation charges were charged to
“Costs” in the amount of Ps. 5,643 and Ps. 2,094,
respectively, to “General and administrative expenses”
in the amount of Ps. 8,174 and Ps. 2,700, respectively and to
“Selling expenses” in the amount of Ps. 129 and Ps. 89,
respectively, in the Statements of Comprehensive Income (Note 25).
There are no impairment charges for any of the reported
years.
(ii) Corresponds to
Distrito Arcos.
(iii) Corresponds
to in-kind receivables representing the right to receive
residential apartments in the future under barter transactions
(Note 32).
13.
Financial instruments by
category
The note shows the
financial assets and financial liabilities by category 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.
IRSA
Propiedades Comerciales S.A.
Financial assets
and financial liabilities as of June 30, 2018 were as
follows:
|
Financial assets at amortized cost (i)
|
Financial assets at fair value through profit or loss
|
Subtotal financial assets
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
Assets as per statement of financial position
|
|
|
|
|
|
|
|
Trade
and other receivables (excluding allowance for doubtful accounts)
(Note 14)
|
1,424,384
|
-
|
-
|
-
|
1,424,384
|
1,498,699
|
2,923,083
|
Investments
in financial assets:
|
|
|
|
|
|
|
|
-
Investment in equity public companies
|
-
|
201,699
|
-
|
-
|
201,699
|
-
|
201,699
|
-
Non-convertible notes issued by related parties (Notes 29 and
31)
|
-
|
248,544
|
-
|
-
|
248,544
|
-
|
248,544
|
-
Mutual funds
|
-
|
1,163,536
|
-
|
-
|
1,163,536
|
-
|
1,163,536
|
-
ETF funds
|
-
|
121,971
|
-
|
-
|
121,971
|
-
|
121,971
|
-
Government bonds
|
-
|
2,848,848
|
-
|
-
|
2,848,848
|
-
|
2,848,848
|
-
Non-Convertible Notes TGLT
|
-
|
-
|
-
|
580,462
|
580,462
|
-
|
580,462
|
-
Financial trusts
|
9,542
|
-
|
-
|
-
|
9,542
|
-
|
9,542
|
Derivative
financial instruments
|
|
|
|
|
|
|
|
-
Futures contracts
|
-
|
-
|
47,360
|
-
|
47,360
|
-
|
47,360
|
Cash
and cash equivalents:
|
|
|
|
|
|
|
|
-
Cash at banks and on hand
|
1,199,068
|
-
|
-
|
-
|
1,199,068
|
-
|
1,199,068
|
-
Short- term investments
|
-
|
2,444,063
|
-
|
-
|
2,444,063
|
-
|
2,444,063
|
Total
|
2,632,994
|
7,028,661
|
47,360
|
580,462
|
10,289,477
|
1,498,699
|
11,788,176
|
|
Financial liabilities at amortized cost (i)
|
Financial liabilities at fair value through profit or
loss
|
Subtotal financial liabilities
|
Non-financial liabilities
|
|
|
|
|
|
|
|
Liabilities as per statement of financial position
|
|
|
|
|
|
Trade
and other payables (Note 17)
|
853,305
|
-
|
853,305
|
1,501,155
|
2,354,460
|
Derivative
financial instruments
|
|
|
|
|
|
-
United States treasury bonds
|
-
|
263
|
263
|
-
|
263
|
-
Swaps of interest rate (ii)
|
-
|
46,448
|
46,448
|
-
|
46,448
|
Borrowings
(excluding finance leases liabilities) (Note 18)
|
15,653,804
|
-
|
15,653,804
|
-
|
15,653,804
|
Total
|
16,507,109
|
46,711
|
16,553,820
|
1,501,155
|
18,054,975
|
Financial assets
and financial liabilities as of June 30, 2017 were as
follows:
|
Financial assets at amortized cost (i)
|
Financial assets at fair value through profit or loss
|
Subtotal financial assets
|
|
|
|
|
|
|
|
|
June 31, 2017
|
|
|
|
|
|
Assets as per statement of financial position
|
|
|
|
|
|
Trade
and other receivables (excluding allowance for doubtful accounts)
(Note 14)
|
1,096,254
|
-
|
1,096,254
|
1,266,624
|
2,362,878
|
Investments
in financial assets:
|
|
|
|
|
|
-
Investment in equity public companies
|
-
|
157,689
|
157,689
|
-
|
157,689
|
-
Non-convertible notes issued by related parties (Notes 29 and
31)
|
-
|
267,365
|
267,365
|
-
|
267,365
|
-
Mutual funds
|
-
|
196,016
|
196,016
|
-
|
196,016
|
-
EFT funds
|
-
|
70,148
|
70,148
|
-
|
70,148
|
-
Government bonds
|
-
|
555,748
|
555,748
|
-
|
555,748
|
-
Restringed assets (*) (Note 31)
|
49,525
|
-
|
49,525
|
-
|
49,525
|
Cash
and cash equivalents:
|
|
|
|
|
|
-
Cash at banks and on hand
|
119,705
|
-
|
119,705
|
-
|
119,705
|
-
Short- term investments
|
-
|
1,687,839
|
1,687,839
|
-
|
1,687,839
|
Total
|
1,265,484
|
2,934,805
|
4,200,289
|
1,266,624
|
5,466,913
|
(*) Represents cash
related to the Employee Capitalization Plan.
IRSA
Propiedades Comerciales S.A.
|
Financial liabilities at amortized cost (i)
|
Financial liabilities at fair value through profit or
loss
|
Subtotal financial liabilities
|
Non-financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities as per statement of financial position
|
|
|
|
|
|
Trade
and other payables (Note 17)
|
492,944
|
-
|
492,944
|
1,018,636
|
1,511,580
|
Derivative
financial instruments
|
|
|
|
|
|
- Futures contracts
|
-
|
4,950
|
4,950
|
-
|
4,950
|
- Borrowings (excluding finance
leases liabilities) (Note 18)
|
6,164,838
|
-
|
6,164,838
|
-
|
6,164,838
|
Total
|
6,657,782
|
4,950
|
6,662,732
|
1,018,636
|
7,681,368
|
(i) The fair
value of financial assets and liabilities at their amortized cost
does not differ significantly from their book value.
(ii) The maturity
date is February 16, 2023 and it is associated with the loan
obtained through its subsidiary, Panameriacan Mall S.A, with the
purpose of paying for the work that is being carried out at the
Polo Dot (Note 18).
Financial
liabilities carried at amortized cost also include liabilities
under finance leases where the Group is the lessee and which
therefore have to be measured in accordance with IAS 17
“Leases”. Finance leases are excluded from the scope of
IFRS 7 “Financial Instruments: Disclosures”. Therefore,
finance leases have been shown separately.
The following are
details of the book value of financial instruments recognized,
which were offset in the statements of financial
position:
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
Trade
and other receivables (excluding the allowance for doubtful
accounts and other receivables)
|
1,507,724
|
(83,340)
|
1,424,384
|
1,182,876
|
(86,622)
|
1,096,254
|
Financial liabilities
|
|
|
|
|
|
|
Trade
and other payables
|
(936,645)
|
83,340
|
(853,305)
|
(579,566)
|
86,622
|
(492,944)
|
Results of
derivative financial instruments are included in “Financial
results, net” in the statements of comprehensive income (Note
27) and can be assigned to the following categories:
|
Financial assets / (liabilities) at amortized cost
|
Financial assets / (liabilities) at fair value through profit or
loss
|
|
June 30, 2018
|
|
|
|
Interest
income
|
234,947
|
5,031
|
240,005
|
Dividend
income
|
34,172
|
-
|
34,172
|
Interest
expense
|
(928,218)
|
-
|
(928,218)
|
Foreign
exchange losses, net
|
(5,993,197)
|
-
|
(5,993,197)
|
Other
finance costs
|
(117,445)
|
-
|
(117,445)
|
Fair
value gains of financial assets through profit or loss
|
-
|
2,041,061
|
2,041,061
|
Gain
from derivative financial instruments
|
-
|
227,378
|
227,378
|
Net (loss) income
|
(6,769,741)
|
2,273,470
|
(4,496,244)
|
|
Financial assets / (liabilities) at amortized cost
|
Financial assets / (liabilities) at fair value through profit or
loss
|
|
June 30, 2017
|
|
|
|
Interest
income
|
177,892
|
6,404
|
184,296
|
Dividend
income
|
9,705
|
-
|
9,705
|
Interest
expense
|
(639,768)
|
-
|
(639,768)
|
Foreign
exchange losses, net
|
(550,408)
|
-
|
(550,408)
|
Other
finance costs
|
(77,033)
|
-
|
(77,033)
|
Fair
value gains of financial assets through profit or loss
|
-
|
203,087
|
203,087
|
Gain
from derivative financial instruments
|
-
|
81,105
|
81,105
|
Loss
from repurchase of non-convertible notes
|
-
|
(168)
|
(168)
|
Net (loss) income
|
(1,079,612)
|
290,428
|
(789,184)
|
IRSA
Propiedades Comerciales S.A.
|
Financial assets / (liabilities) at amortized cost
|
Financial assets / (liabilities) at fair value through profit or
loss
|
|
June 30, 2016
|
|
|
|
Interest
income
|
94,541
|
7,628
|
102,169
|
Interest
expense
|
(612,486)
|
-
|
(612,486)
|
Foreign
exchange losses, net
|
(1,815,553)
|
-
|
(1,815,553)
|
Other
finance costs
|
(100,051)
|
-
|
(100,051)
|
Fair
value gains of financial assets through profit or loss
|
-
|
466,328
|
466,328
|
Gain
from derivative financial instruments
|
-
|
1,248,374
|
1,248,374
|
Net (loss) income
|
(2,433,549)
|
1,722,330
|
(711,219)
|
Determination of fair values
IFRS 9 defines the
fair value of a financial instrument as the amount for which an
asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length
transaction. All financial instruments recognized at fair value are
allocated to one of the valuation hierarchy levels of IFRS 7. This
valuation hierarchy provides for three levels.
In the case of
Level 1, valuation is based on quoted prices in active markets
for identical financial assets or liabilities that the Group can
refer to at the date of the statement of financial position. A
market is deemed active if transactions take place with sufficient
frequency and in sufficient quantity for price information to be
available on an ongoing basis. Since a quoted price in an active
market is the most reliable indicator of fair value, this should
always be used if available.
The financial
instruments the Group has allocated to this level mainly comprise
equity investments, mutual funds, bonds and non-convertible notes
for which quoted prices in active markets are available. In the
case of equity shares, the Group allocates them to this level when
either a stock market price is available or prices are provided by
a price quotation on the basis of actual market
transactions.
In the case of
Level 2, fair value is determined by using valuation methods
based on inputs directly or indirectly observable in the market.
The financial instruments the Group has allocated to this level
comprise foreign-currency forward contracts.
In the case of
Level 3, the Group uses valuation techniques not based on inputs
observable in the market. This is only permissible insofar as no
observable market data are available. The inputs used reflect the
Group’s assumptions regarding the factors which any market
player would consider in their pricing. The Group uses the best
available information for this, including internal company data.
The Group uses the best available information, including internal
data. The Group has determined that the value of purchase option of
Arcos del Gourmet S.A. it is a level 3 financial instrument, wich
fair value is zero as of June 30, 2018 and 2017.
When no quoted
prices in an active market are available, fair values are based on
recognized valuation methods. The Group uses a range of valuation
models for the measurement of Level 2 and Level 3 instruments,
details of which may be obtained from the following
table:
Description
|
Pricing model
|
Parameters
|
Fair value hierarchy
|
|
Foreign-currency
contracts
|
Present
value method - Theoretical price
|
Money
market curve; Interest curve
|
Level
2
|
-
|
Foreign
exchange curve
|
|
|
|
|
Arcos
del Gourmet S.A. purchase option
|
Discounted
cash flow
|
Projected
revenues and discount rate
|
Level
3
|
Projected
income: USD 0,5MM – USD 1MM Discount rate 8.7% -
9.5%
|
|
|
Non-Convertible
Notes - TGLT
|
Black
& Scholes - Black & Scholes
|
Price
and volatility of the subjacent
|
Level
3
|
Price:
Ps. 13 - Ps. 16 Volatility of the subjacent: 40% - 60% Market
interest rate: 6% - 7%
|
Market
Interest rate
|
|
|
|
|
Swaps
of interest rate
|
Discounted
cash flow
|
Interest
rate futures
|
Level
2
|
-
|
IRSA
Propiedades Comerciales S.A.
14.
Trade and other receivables
The following table
shows the amounts of Trade and other receivables as of June 30,
2018 and 2017:
|
|
|
Post-dated
checks
|
492,745
|
422,984
|
Lease
and services receivables
|
474,311
|
338,595
|
Averaging
of scheduled rent escalation
|
301,203
|
271,747
|
Debtors
under legal proceedings
|
159,821
|
100,808
|
Consumer
financing receivables
|
16,441
|
15,786
|
Property
sales receivables
|
20,238
|
5,510
|
Less:
allowance for doubtful accounts
|
(201,333)
|
(131,583)
|
Total trade receivables
|
1,263,426
|
1,023,847
|
Advance
payments
|
271,800
|
285,158
|
Prepayments
|
150,666
|
113,190
|
Other
receivables from partners of joint ventures (*)
|
88,133
|
89,131
|
VAT
receivables
|
82,399
|
45,821
|
Loans
|
44,373
|
20,324
|
Other
tax receivables
|
19,225
|
8,656
|
Expenses
to be recovered
|
8,077
|
5,226
|
Others
|
7,451
|
6,108
|
Less:
allowance for doubtful accounts
|
(166)
|
(165)
|
Total other receivables
|
671,958
|
573,449
|
Related
parties (Note 29)
|
786,200
|
633,834
|
Total current trade and other receivables
|
2,721,584
|
2,231,130
|
Non-current
|
955,509
|
777,818
|
Current
|
1,766,075
|
1,453,312
|
Total
|
2,721,584
|
2,231,130
|
(*) Includes
Ps. 83,942 and Ps. 66,711 at June 30 of 2018 and 2017 respectively,
of agreement for assumption of debt with the State Assets
Administration Office, or AABE in Spanish. (See Note
18)
As of June 30, 2018
and 2017, all non-current receivables are due within 7 years, from
the end of the fiscal year.
The fair values of
trade and other receivables approximate their respective carrying
amounts because, due to their short-term nature, the impact of
discounting is not considered significant. Fair values are based on
discounted cash flows.
Trade receivables
are generally presented in the statement of financial position net
of allowances for doubtful accounts. Impairment policies and
procedures by type of receivables are discussed in detail in Note
2.15.
Movements on the
Group’s allowance for doubtful accounts and other receivables
are as follows:
|
|
|
Beginning of the year
|
131,748
|
93,532
|
Additions
(Note 25)
|
86,645
|
49,360
|
Unused
amounts reversed (Note 25)
|
(12,742)
|
(8,627)
|
Used
during the year
|
(4,152)
|
(2,517)
|
End of the year
|
201,499
|
131,748
|
The allowance for
doubtful accounts’ additions and unused amounts reversed have
been included in “Selling expenses” in the statements
of comprehensive income (Note 25). Amounts charged to the allowance
account are generally written off, when no recovery is
expected.
The Group’s
trade receivables comprise: shopping mall leased related and
services, leases office and related services, consumer financing;
and sale of properties. The maximum exposure to credit risk at the
reporting date is the carrying value of each class of receivables
(Note 5).
The Group also has
receivables from related parties. Neither of which are due nor
impaired.
IRSA
Propiedades Comerciales S.A.
Due to the distinct
characteristics of each type of receivable, an aging analysis of
past due unimpaired and impaired receivables are shown by type and
class as of June 30, 2018 and 2017 (includes not past due
receivables to reconcile with the amounts in the statements of
financial position):
Type of receivables
|
|
|
|
|
|
|
Shopping
mall lease and services receivables
|
144,863
|
15,347
|
4,097
|
1,077,825
|
184,387
|
1,426,519
|
Office
leases and services receivables
|
355
|
-
|
701
|
-
|
505
|
1,561
|
Consumer
financing receivables
|
-
|
-
|
-
|
-
|
16,441
|
16,441
|
Properties
sales receivables
|
1,273
|
-
|
16,674
|
2,291
|
-
|
20,238
|
Total as of June 30, 2018
|
146,491
|
15,347
|
21,472
|
1,080,116
|
201,333
|
1,464,759
|
Shopping
mall leases and services receivables
|
61,085
|
3,605
|
9,364
|
941,762
|
115,792
|
1,131,608
|
Office
leases and services receivables
|
1,838
|
376
|
305
|
2
|
5
|
2,526
|
Consumer
financing receivables
|
-
|
-
|
-
|
-
|
15,786
|
15,786
|
Property
sales receivable
|
1,982
|
34
|
368
|
3,126
|
-
|
5,510
|
Total as of June 30, 2017
|
64,905
|
4,015
|
10,037
|
944,890
|
131,583
|
1,155,430
|
Leases and services receivables from investment
properties:
Trade receivables
related to leases and services from the shopping malls and offices
represent 97.5% and 98.1% of the Group’s total trade
receivables as of June 30, 2018 and 2017, respectively. The Group
has a large customer base and is not dependent on any single
customer. Leases and services receivables that are not due and for
which no allowance has been recorded relate to a wide and varied
number of customers for whom there is no external credit rating
available. Most of these customers have been actively renting a
minimum of six months. New customers with less than six months are
constantly monitored. At the end of the year, the Group has not
experienced credit issues with these new customers.
As of June 30, 2018
and 2017, the Group provided for profit net with respect to leases
and services receivables for an amount of Ps. 73,248 and Ps.
40,327, respectively.
Consumer financing receivables:
Trade receivables
related to the residual activities of the Group represent only 1.1%
and 1.4% of the Group’s total trade receivables as of June
30, 2018 and 2017, respectively.
As of June 30, 2018
and 2017, the Group provided for recorded net gains (losses) on
impairment of consumer financing receivables in an amount of Ps.
655 and Ps. 406, respectively.
The estimation of
the credit risk is complex and requires the use of rating and
scoring models which are essential to measure default risk. In
measuring the consumption credit risks of credit purchases made
through credit cards and cash advances, the Company considers two
components: (i) the probability of default by client or
counterparty, and (ii) the likeable recovery rate of obligations in
arrears. The models are reviewed regularly to check their
effectiveness with respect to actual performance and, where
necessary, to enhance them.
Receivables from the sale of properties:
Trade receivables
related to the sale of properties represent 1.4% and 0.5% of the
Group’s total trade receivables as of June 30, 2018 and 2017,
respectively. Payments on these receivables are generally received
when due and are generally secured by mortgages on the properties,
thus credit risk on outstanding amounts is considered
low.
IRSA
Propiedades Comerciales S.A.
15.
Cash flow and cash equivalent information
Following is a
detailed description of cash flows generated by the Group’s
operations for the years ended June 30, 2018, 2017 and
2016.
|
Note
|
|
|
|
|
|
15,656,023
|
3,377,514
|
12,252,532
|
|
|
|
|
|
|
20
|
286,506
|
1,609,181
|
6,278,894
|
Amortization
and depreciation
|
25
|
45,114
|
28,540
|
22,944
|
Net
gain from fair value adjustment on investment
properties
|
9
|
(16,690,117)
|
(3,133,413)
|
(17,092,403)
|
(Gain)
/ Loss from disposal of trading properties
|
|
(94,328)
|
(85,889)
|
241
|
Written
off unused investment properties / property plant and
equipment
|
|
-
|
-
|
23,650
|
|
|
-
|
-
|
4,297
|
Averaging
of schedule rent escalation
|
24
|
(29,456)
|
(90,197)
|
(42,832)
|
|
29
|
67,126
|
44,770
|
27,700
|
ILP
Long term incentive program
|
22
|
6,404
|
16,545
|
16,359
|
|
|
5,379,151
|
1,117,164
|
699,211
|
Provisions
and allowances
|
25
y 26
|
98,907
|
54,764
|
15,397
|
Share
of profit of associates and joint ventures
|
8
|
(639,525)
|
(152,703)
|
(204,299)
|
Interest
held before the business combination
|
|
-
|
(7,618)
|
-
|
Foreign
unrealized exchange gain on cash and fair value result of cash
equivalents
|
|
(272,362)
|
(5,116)
|
(1,062)
|
Right
to receive units due to default due to non-compliance
|
12
|
(7,873)
|
-
|
-
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
(2,160)
|
(4,520)
|
(2,855)
|
Decrease
in trading properties
|
|
100,238
|
98,792
|
1,159
|
Increase
in trade and other receivables
|
|
(229,761)
|
(156,265)
|
(606,342)
|
Increase
in trade and other payables
|
|
485,697
|
396,988
|
187,298
|
Decrease
in payroll and social security liabilities
|
|
34,583
|
39,713
|
12,689
|
|
19
|
(10,879)
|
(8,322)
|
(3,350)
|
Net cash generated from operating activities before income tax
paid
|
|
4,183,288
|
3,139,928
|
1,589,228
|
The following table
shows a detail of non-cash transactions occurred in the years ended
June 30, 2018, 2017 and 2016:
|
|
|
|
Non-cash transactions
|
|
|
|
Decrease
in intangible assets trought an increase in trading
properties
|
8,837
|
12,857
|
-
|
Increase
in trading properties trought a decrease in investment
properties
|
-
|
13,617
|
23,935
|
Increase
in investment properties trought an increase in trade and other
payables
|
132,898
|
-
|
-
|
Increase
in investment properties trought an increase in
borrowings
|
14,385
|
2,310
|
-
|
Increase
in property plant and equipment a traves in un increase in
borrowings
|
9,015
|
-
|
1,852
|
Increase
in property plant and equipment trought a decrease in investment
properties
|
3,026
|
-
|
15,224
|
Increase
in investment properties troughtof a decrease in property plant and
equipment
|
-
|
-
|
-
|
Increase
in trade and other receivables trought a decrease in trading
properties
|
2,959
|
-
|
-
|
Increase
in trade and other receivables trought an increase in trade and
other payables
|
16,659
|
-
|
-
|
Increase
in trade and other receivables trought a decrease in investment in
associates and joint ventures (Dividends)
|
7,165
|
-
|
-
|
Decrease
in trade and other receivables trought an increase in investment in
associates and joint ventures
|
3,811
|
2,671
|
-
|
Increase
in investment in associates and joint ventures trought a decrease
in provisions
|
158
|
-
|
-
|
Decrease
in borrowings and trade and other payables trought a decrease in
associates and joint ventures
|
3,965
|
20,284
|
-
|
Decrease
in borrowings trought a decrease in investment in financial
assets
|
-
|
-
|
372,203
|
Decrease
in trade and other receivables trought a decrease in
borrowings
|
-
|
30,123
|
3,591
|
Decrease
in trade and other receivables trought a decrease in trade and
other payables (Dividends)
|
-
|
64,109
|
253,663
|
Decrease
in non-controling equity trought an increase in trade and other
payables
|
36,400
|
-
|
64,209
|
Decrease
in equity trought a decrease in trade and other receivables
(Dividends)
|
-
|
656,965
|
-
|
Adquisición
in non-controling interst
|
-
|
865
|
-
|
Increase
in trade and other receivables trought an increase in
borrowings
|
1,250
|
-
|
-
|
Increase
in trade and other receivables trought an increase in
borrowings
|
70
|
-
|
-
|
|
|
|
|
IRSA
Propiedades Comerciales S.A.
Balances incorporated as result of business
combination
|
|
|
Investments
in joint ventures
|
-
|
(106,892)
|
Trade
and other receivables
|
(36,346)
|
-
|
Income
tax and minimum presumed income tax credits
|
(106)
|
(97,167)
|
Investment
properties (Note 9)
|
(106,795)
|
-
|
Property,
plant and equipment (Note 10)
|
(193)
|
-
|
Borrowings
|
-
|
54,516
|
Salaries
and social security costs
|
2,518
|
-
|
Deferred
income tax (Note 20)
|
12,070
|
6,314
|
Income
tax and minimum presumed income tax liabilities
|
1,332
|
1,060
|
Trade
and other payables
|
110,161
|
13,375
|
Provisions
(Note 19)
|
452
|
2,361
|
Total net non-cash assets acquired
|
(16,907)
|
(126,433)
|
Cash
and cash equivalent acquired
|
-
|
(6,902)
|
Fair
value of interest held before combination
|
-
|
66,658
|
Goodwill
(Note 12)
|
(74,486)
|
(26,375)
|
Non-controlling
interest
|
6,763
|
40,004
|
Total net assets acquired
|
(84,630)
|
(53,048)
|
Financed
amount
|
38,285
|
-
|
Cash
acquired
|
-
|
6,902
|
Acquisition of subsidiaries, net of cash acquired
|
(46,345)
|
(46,146)
|
16.
Shareholder's equity
Share capital and premium
The share capital
of IRSA Propiedades Comerciales was originally represented by
common shares with a nominal value of Ps. 0.1 per share and one
vote each. On December 18, 2012, the Superintendence of
Corporations registered an amendment to the Company’s by-laws
whereby it increased the nominal value of its shares from Ps. 0.1
to Ps. 1 each. This amendment, was registered under number 20,264
of Stock Companies Book 62 T°. The CNV admitted the shares
indicated above for listing on the Stock Exchange.
There have been no
changes to capital accounts as of June 30, 2018, 2017 and
2016.
As of June 30,
2018, the capital stock consisted of 126,014,050 common shares with
a par value of Ps. 1.00 per share, entitled to one vote each and
was as follows:
|
|
|
|
Status
|
|
Body
|
|
Date of record with
the Public Registry of Commerce
|
Subscribed, Issued
and Paid up
|
1
|
Extraordinary
Shareholders’ Meeting
|
10.29.87
|
12.29.87
|
Subscribed, Issued
and Paid up
|
1
|
Extraordinary
Shareholders’ Meeting
|
10.26.88
|
12.29.88
|
Subscribed, Issued
and Paid up
|
38
|
Extraordinary
Shareholders’ Meeting
|
10.25.89
|
02.05.90
|
Subscribed, Issued
and Paid up
|
9,460
|
Ordinary and
Extraordinary Shareholders’ meeting
|
08.31.95
|
03.15.96
|
Subscribed, Issued
and Paid up
|
16,000
|
Ordinary and
Extraordinary Shareholders’ meeting
|
10.29.96
|
05.15.98
|
Subscribed, Issued
and Paid up
|
38,000
|
Ordinary and
Extraordinary Shareholders’ meeting
|
03.10.98
|
10.21.99
|
Subscribed, Issued
and Paid up
|
6,500
|
Ordinary and
Extraordinary Shareholders’ meeting
|
08.06.99
|
05.07.02
|
Subscribed, Issued
and Paid up
|
8,206
|
(*) Board of
Directors meeting
|
06.28.04
|
05.04.05
|
Subscribed, Issued
and Paid up
|
47,755
|
(**) Board of
Directors meeting
|
11.16.10
|
03.02.11
|
Subscribed, Issued
and Paid up
|
28
|
(***) Board of
Directors meeting
|
09.22.11
|
01.04.12
|
Subscribed, Issued
and Paid up
|
25
|
(****) Board of
Directors meeting
|
03.13.13
|
01.16.15
|
|
126,014
|
|
|
|
(*) Capital
subscribed in connection with the conversion of convertible notes
made until August 2006. Such conversions have been
registered.
(**) Capital
subscribed in connection with the conversion of convertible notes
made on October 7, 2010.
(***) Capital
subscribed in connection with the conversion of convertible notes
made on September 21, 2011.
(****)
Capital subscribed in connection with the conversion of convertible
notes made on March 13, 2013.
IRSA
Propiedades Comerciales S.A.
Inflation adjustment of share capital
Under Argentine
GAAP, the Group’s financial statements were previously
prepared on the basis of general price-level accounting which
reflected changes in the purchase price of the Argentine Peso in
the historical financial statements through February 28, 2003. The
inflation adjustment related to share capital was appropriated to
an inflation adjustment reserve that formed part of shareholders'
equity. The balance of this reserve could be applied only towards
the issuance of common stock to shareholders of the Company.
Resolution 592/11 of the CNV requires that at the transition date
to IFRS certain equity accounts, such as the inflation adjustment
reserve, are not adjusted and are considered an integral part of
share capital.
Legal reserve
According to Law
N° 19,550, 5% of the profit of the year is destined to
constitute legal reserves until they reach legal capped amount (20%
of share capital). This legal reserve is not available for dividend
distribution and can only be released to absorb losses. IRSA
Propiedades Comerciales has reached the legal limit of these
reserves.
Reserve for future dividends
The Company and
subsidiaries may separate portions of their profits of the year to
constitute voluntary reserves according to company law and
practice. These special reserves may be for general purposes or for
specific uses.
Resolution reserve CNV 609/12- unassigned
The CNV, through
General Resolutions N° 562/09 and 576/10, has provided for the
application of Technical Resolutions N° 26 and 29 of the
FACPCE, which adopt IFRS, as issued by the IASB, for
company’s subject to the public offering regime ruled by Law
N° 17,811, due to the listing of their shares or corporate
notes, and for entities that have applied for authorization to be
listed under the mentioned regime.
The Group adopted
IFRS, as issued by the IASB, in the fiscal year beginning July 1,
2012, being its transition date July 1, 2011.
As mentioned in
Note 2.1.b) to these Financial Statements, in the third quarter of
fiscal 2017, the Company’s Board of Directors decided to
change the accounting policy applicable to investment properties
replacing the acquisition cost method with fair value accounting,
as permitted by IAS 40, and retroactively modified the comparative
figures until the date of transition to IFRS (July 1,
2011).
Pursuant to CNV
General Ruling N° 609/12, the Company set up a special reserve
reflecting the positive difference between the balance of retained
earnings disclosed in the first closing of the last Financial
Statements prepared in accordance with previously effective
accounting standards and the exchange result recognized in the
equity on the transition date as a result of the change in
accounting policy in investment properties indicated in Note
2.1.b). The reserve for application of IFRS recorded in a timely
manner amounted to Ps. 15,802 and the reserve for policy change
amounted to Ps. 2,684,390.
This reserve may
not be used to make distributions in kind or in cash, and may only
be reversed to be capitalized to absorb potential negative balances
in Retained Earnings. Changes in fair value that have occurred
after the transition period are part of the unallocated
results.
As for unallocated
results, the effect of the aforementioned policy change amounted to
Ps. 15,478,896.
Special reserve
The Ordinary and
Extraordinary General Shareholders' Meeting on October 31, 2017
constituted a special reserve for Ps. 2,627,076
IRSA
Propiedades Comerciales S.A.
Dividends
Dividends
distributed corresponding to the results of the years ended as of
June 30, 2017, 2016 and 2015 were:
● Ps. 680,000
(Ps 5.40 per share), approved by the Ordinary and Extraordinary
General Shareholders' Meeting on October 31, 2017.
● Ps. 770,000
(Ps 6.11 per share), approved Ps460,000 by the Ordinary and
Extraordinary General Shareholders' Meeting on October 31, 2016 and
Ps. 310,000, in advance by by the Ordinary Shareholders' Meeting on
April 5, 2017.
●
Ps. 283,580
(Ps 2.25 per share), approved by the Ordinary and Extraordinary
General Shareholders' Meeting on October 31, 2015.
As of June 30,
2018, 2017 and 2016 there were no prescribed dividends
corresponding to dividends pending of payment from previous
years.
The canceled
dividends during the years ended as of June 30, 2018, 2017 and 2016
were Ps. 680,000, Ps. 770,000 and Ps. 283,580.
17.
Trade and other payables
The following table
shows the amounts of trade and other payables as of June 30, 2018
and 2017:
|
|
|
Admission
rights
|
589,141
|
468,323
|
Rent
and service payments received in advance
|
505,883
|
380,352
|
Accrued
invoices
|
340,480
|
162,980
|
Trade
payables
|
168,900
|
133,459
|
Payments
received in advance
|
77,667
|
22,115
|
Tenant
deposits
|
46,690
|
29,187
|
Total trade payables
|
1,728,761
|
1,196,416
|
VAT
payables
|
201,279
|
55,194
|
Others
(*)
|
102,119
|
62,911
|
Withholdings
payable
|
50,793
|
56,857
|
Tax
payment plans
|
47,981
|
16,503
|
Dividends
available to minority shareholders
|
36,525
|
125
|
Other
tax payables
|
21,980
|
12,367
|
Other
income to be accrued
|
6,431
|
6,925
|
Total other payables
|
467,108
|
210,882
|
Related
parties (Note 29)
|
158,591
|
104,282
|
Total trade and other payables
|
2,354,460
|
1,511,580
|
Non-current
|
483,908
|
406,598
|
Current
|
1,870,552
|
1,104,982
|
Total
|
2,354,460
|
1,511,580
|
(*) As of June 30,
2017 includes the Capitalization plan - Ps. 49,525.
The fair value of
payables approximates their respective carrying amounts because,
due to their short-term nature.
The fair value of
currents trade and other payables approximate their respective book
values due to theris short- term nature. The fair values of
non-current trade and other payables approximate their book values.
The impact of the discount is not significant.
IRSA
Propiedades Comerciales S.A.
The following table
shows the Company's borrowings as of June 30, 2018 and
2017:
|
|
|
Non-Convertible
notes
|
14,516,230
|
5,991,004
|
Bank
loans
|
1,014,282
|
77,445
|
AABE
Debts
|
83,942
|
66,711
|
Loans
with non-controling interests
|
28,504
|
-
|
Finance
leases
|
14,403
|
3,149
|
Bank
overdrafts
|
6,692
|
26,107
|
Related
parties (Note 29)
|
4,154
|
3,571
|
Total borrowings
|
15,668,207
|
6,167,987
|
Non-current
|
15,362,726
|
5,918,119
|
Current
|
305,481
|
249,868
|
Total
|
15,668,207
|
6,167,987
|
On September 5,
2017, the Class III and IV Non-convertible notes were auctioned,
for a nominal value of USD 140 million with a maturity date of 36
months from the issue date, integrated and payable in dollars,
which will accrue a fixed annual interest rate of 5.0%, with
interest payable quarterly. The capital will be amortized in a
single quota that mature on September 14, 2020. The settlement was
on September 12, 2017. The class III has been declared
void.
On February 16,
2018 the Group, through its subsidiary Panameriacan Mall S.A.
signed a loan for USD 35 million in order to found the work that is
being done in Polo Dot. The expiration date operates on February
16, 2023.
As of June 30, 2018
and 2017, the Group did not hold collateralized liabilities (seller
financing and long-term borrowings, excluding finance
leases).
Borrowings also
include liabilities under finance leases where the Group is the
lessee and which therefore are measured in accordance with IAS 17
“Leases”. Information regarding liabilities under
finance leases is disclosed in Note 23.
The maturity of the
Group's borrowings (excluding obligations under finance leases) and
the Group's classification related to interest rates is as
follows:
|
|
|
Fixed rate:
|
|
|
Less
than one year
|
28,242
|
76,661
|
Between
2 and 3 years
|
4,026,046
|
-
|
More
than 4 years
|
10,235,361
|
5,849,857
|
|
14,289,649
|
5,926,518
|
Floating rate:
|
|
|
Less
than one year
|
10,033
|
29,297
|
Between
1 and 2 years
|
225,519
|
-
|
Between
2 and 3 years
|
310,692
|
-
|
Between
3 and 4 years
|
388,163
|
-
|
More
than 4 years
|
155,346
|
66,711
|
|
1,089,753
|
96,008
|
Accrued interest:
|
|
|
Less
than one year
|
260,632
|
142,312
|
Between
1 and 2 years
|
13,770
|
-
|
|
274,402
|
142,312
|
|
15,653,804
|
6,164,838
|
The fair value of
current borrowings at fixed-rates and current and non-current
borrowings at floating-rates approaches its carrying amount, as the
effect of discounting is not significant. The fair value of debt
instruments that are not quoted on a market are valued at their
technical value, that is, nominal value plus accrued
interest.
IRSA
Propiedades Comerciales S.A.
The following table
shows a detail of the borrowings evolution as of June 30, 2018,
2017 and 2016:
|
|
|
|
Balances at the beginning of the year
|
6,167,987
|
5,893,068
|
3,794,940
|
Borrowings
obtained
|
728,506
|
106,667
|
1,275,756
|
Payment
of borrowings
|
(85,495)
|
(111,103)
|
(5,046,597)
|
Interest
paid
|
(724,730)
|
(542,410)
|
(278,279)
|
Accrued
interest
|
876,610
|
607,400
|
580,210
|
Foreign
exchange
|
6,327,426
|
565,364
|
2,214,158
|
Short
terms loans, net
|
(19,766)
|
(14,065)
|
(232,203)
|
Issuance
of non-convertible notes
|
2,365,003
|
-
|
5,411,199
|
Payment
of non-convertible notes
|
-
|
(407,260)
|
(1,686,393)
|
Repurchase
of non-convertible notes
|
-
|
-
|
(139,723)
|
Others
|
32,666
|
70,326
|
-
|
Balances at the end of the year
|
15,668,207
|
6,167,987
|
5,893,068
|
The fair value of
non-current borrowings at fixed rates (excluding obligations under
finance leases) is as follows:
|
06.30.18
|
06.30.17
|
NCN
Class II due 2023
|
10,760,445
|
6,877,234
|
NCN
Class IV due 2020
|
3,997,825
|
-
|
Bank
loans
|
1,017,269
|
2,338
|
|
15,775,539
|
6,879,572
|
The following table
breakdown the borrowings by fixed and floating rate of the Group by
emission currency (excluding the financial leases)
Borrowings by currency and rate
|
|
|
Fixed rate:
|
|
|
Argentine
Peso
|
-
|
76,661
|
US
Dollar
|
14,289,649
|
5,849,857
|
Subtotal borrowings at fixed rate
|
14,289,649
|
5,926,518
|
Floating rate:
|
|
|
Argentine
Peso
|
80,205
|
96,008
|
US
Dollar
|
1,009,548
|
-
|
Subtotal borrowings at floating rate
|
1,089,753
|
96,008
|
Accrued
interest
|
274,402
|
142,312
|
Total borrowings
|
15,653,804
|
6,164,838
|
Financial
leasing
|
14,403
|
3,149
|
Total borrowings in accordance with financial
statement
|
15,668,207
|
6,167,987
|
The following table
shows the movements in the Group's provisions for other
liabilities:
|
Labor, legal and other claims
|
Investments in associates (*)
|
06.30.18
|
06.30.17
|
Balances at the beginning of the year
|
41,144
|
206
|
41,350
|
33,074
|
|
33,513
|
-
|
33,513
|
25,860
|
|
(8,509)
|
-
|
(8,509)
|
(11,829)
|
|
-
|
158
|
158
|
206
|
|
(10,879)
|
-
|
(10,879)
|
(8,322)
|
Incorporation
as result of business combination (Note 15)
|
452
|
-
|
452
|
2,361
|
Balances at the end of the year
|
55,721
|
364
|
56,085
|
41,350
|
|
|
|
12,258
|
16,509
|
|
|
|
43,827
|
24,841
|
|
|
|
56,085
|
41,350
|
(*) Corresponds to
investments in associates with negative equity. (Note
8)
IRSA
Propiedades Comerciales S.A.
Included in the
item are certain amounts in respect of which the Group has
established a provision for legal claims, none of which is
considered significant.
20.
Current and deferred income tax
The Group’s
income tax has been calculated on the estimated taxable profit for
each year at the rates prevailing in the respective tax
jurisdictions. The subsidiaries of the Group in the jurisdictions
where the Group operates are required to calculate their income
taxes on a separate basis; thus, they are not permitted to
compensate subsidiaries’ losses against other
subsidiarie’s income.
The details of the
provision for the Group’s income tax are as
follows:
|
06.30.18
|
06.30.17
|
06.30.16
|
Current
income tax
|
(137,667)
|
(510,130)
|
(223,220)
|
Deferred
income tax
|
(148,806)
|
(1,099,051)
|
(6,055,674)
|
Minimum
presumed income tax
|
(33)
|
-
|
-
|
Income tax expense
|
(286,506)
|
(1,609,181)
|
(6,278,894)
|
The statutory tax
rates in the countries where the Group operates for all of the
years presented are:
Tax
jurisdiction
|
|
Argentina
|
35%
|
Uruguay
|
0%
|
Deferred tax assets
and liabilities of the Group as of June 30, 2018, 2017 and 2016 are
expected to be recovered as follows:
|
06.30.18
|
06.30.17
|
Deferred
income tax asset to be recovered after more than 12
months
|
80,696
|
174,165
|
Deferred
income tax asset to be recovered within 12 months
|
1,086,937
|
143,910
|
Deferred income tax asset
|
1,167,633
|
318,075
|
|
|
|
Deferred
income tax liabilities to be recovered after more than 12
months
|
(12,356,539)
|
(9,435,983)
|
Deferred
income tax liabilities to be recovered within 12
months
|
(175,856)
|
(2,085,978)
|
Deferred income tax liabilities
|
(12,532,395)
|
(11,521,961)
|
Deferred income tax, net
|
(11,364,762)
|
(11,203,886)
|
Deferred income tax
(broken down into assets and liabilities) during the fiscal years
ended June 30, 2018 and 2017, without considering offsetting
balances within the same tax jurisdiction, is the
following:
|
|
(Charged) / Credited to the statement of income
|
Incorporation as result of business combination (Note
15)
|
|
Deferred income tax asset
|
|
|
|
|
Tax
loss carry-forwards
|
158
|
851,966
|
1,472
|
853,596
|
Trade
and other payables
|
270,839
|
11,119
|
-
|
281,958
|
Other
|
38,296
|
(7,191)
|
-
|
31,105
|
Trading
properties
|
8,782
|
(7,808)
|
-
|
974
|
Subtotal deferred income tax assets
|
318,075
|
848,086
|
1,472
|
1,167,633
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
Investment
properties
|
(11,060,948)
|
(809,615)
|
(13,542)
|
(11,884,105)
|
Property, plant and
equipment and trading properties
|
(235,750)
|
(227,200)
|
-
|
(462,950)
|
Investments
|
(129,454)
|
33,131
|
-
|
(96,323)
|
Trade and other
receivables
|
(67,439)
|
(4,287)
|
-
|
(71,726)
|
Other
|
(28,370)
|
11,181
|
-
|
(17,189)
|
Trade and other
payables
|
-
|
(102)
|
-
|
(102)
|
Subtotal
deferred income tax liabilities
|
(11,521,961)
|
(996,892)
|
(13,542)
|
(12,532,395)
|
Deferred
income tax liabilities, net
|
(11,203,886)
|
(148,806)
|
(12,070)
|
(11,364,762)
|
IRSA
Propiedades Comerciales S.A.
|
|
(Charged) / Credited to the statement of income
|
Incorporation as result of business combination (Note
15)
|
|
Deferred income tax asset
|
|
|
|
|
Tax
loss carry-forwards
|
19,352
|
(19,194)
|
-
|
158
|
Trade
and other payables
|
187,024
|
83,850
|
(35)
|
270,839
|
Others
|
29,601
|
7,722
|
973
|
38,296
|
Trading
properties
|
(2,163)
|
10,945
|
-
|
8,782
|
Subtotal deferred income tax assets
|
233,814
|
83,323
|
938
|
318,075
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
Investment
properties
|
(9,948,064)
|
(1,112,884)
|
-
|
(11,060,948)
|
Property,
plant and equipment and trading properties
|
(173,976)
|
(61,774)
|
-
|
(235,750)
|
Investments
|
(87,985)
|
(34,217)
|
(7,252)
|
(129,454)
|
Trade
and other receivables
|
(91,530)
|
24,091
|
-
|
(67,439)
|
Other
|
(30,780)
|
2,410
|
-
|
(28,370)
|
Subtotal deferred income tax liabilities
|
(10,332,335)
|
(1,182,374)
|
(7,252)
|
(11,521,961)
|
Deferred income tax liabilities, net
|
(10,098,521)
|
(1,099,051)
|
(6,314)
|
(11,203,886)
|
Deferred income tax
assets are recognized for tax loss carry-forwards to the extent
that the realization of the related tax benefits through future
taxable profits is probable. Tax loss carry-forwards may have
expiration dates or may be permanently available for use by the
Group depending on the tax jurisdiction where the tax loss carry
forward is generated. Tax loss carry-forwards in Argentina and
Uruguay generally expire within 5 years.
In order to fully
realize the deferred income tax asset, the Group will need to
generate taxable income in the countries where the net operating
losses were incurred. Based upon the level of historical taxable
income and projections for future over the years in which the
deferred income tax assets are deductible, management believes that
as the end of the present year it is probable that the Group will
realize all of the deferred income tax assets in
Argentina.
As of June 30,
2018, the tax loss carry-forwards of the Group and the
jurisdictions which generated them are as follows:
Jurisdiction
|
|
|
|
|
Argentina
|
2,487
|
2014
|
2019
|
25%
|
Argentina
|
252
|
2015
|
2020
|
25%
|
Argentina
|
182
|
2016
|
2021
|
25%
|
Argentina
|
2,816
|
2017
|
2022
|
25%
|
Argentina
|
2,819,414
|
2018
|
2023
|
30%
|
Argentina
|
41,634
|
2018
|
2023
|
25%
|
|
2,866,785
|
|
|
|
The Group did not
recognize deferred income tax assets of Ps. 4,071 and Ps. 1,308 as
of June 30, 2018 and 2017 corresponding to losses of P.s 15,808 and
Ps. 3,737, respectively, related to certain subsidiaries. Although
management estimates that these subsidiaries will become profitable
in the future, as a result of the recent loss history during the
last periods and the lack of verifiable and objective evidence, it
has been determined that there is sufficient uncertainty as to the
generation of sufficient income to be able to offset losses within
a reasonable timeframe, therefore, no deferred tax asset is
recognized in relation to these losses.
The Group did not
recognize deferred income tax liabilities of Ps. 222 million and
Ps. 168 million as of June 30, 2018 and 2017, respectively, related
to the potential dividend distribution of its investments in
foreign subsidiaries, Torodur S.A. In addition, the withholdings
and/or similar taxes paid at source may be creditable against the
Group’s potential final tax liability.
IRSA
Propiedades Comerciales S.A.
from
applying the prevailing tax rate on the Profit Before Income Tax
for the years ended June 30, 2018, 2017 and 2016:
|
|
|
|
Profit
for the year before income tax at the prevailing tax rate
(i)
|
(5,357,337)
|
(1,746,909)
|
(6,346,363)
|
Tax
effects of:
|
|
|
|
Rate
change
|
4,729,172
|
-
|
-
|
Share
of profit of associates and joint ventures (ii)
|
226,273
|
55,399
|
71,505
|
Non-taxable
financial dividends
|
122,597
|
63,529
|
-
|
Non-taxable
/ non-deductible items
|
(7,223)
|
5,548
|
2,492
|
Derivative
special tax
|
(846)
|
-
|
-
|
Difference
between provisions and affidavits
|
1,077
|
-
|
-
|
Minimum
presumed income tax
|
(33)
|
-
|
-
|
(Recovery)
/ expiration of carry-forwards
|
-
|
7,038
|
(7,038)
|
Results
from revaluation of equity interest held before
combination
|
-
|
2,666
|
-
|
Others
|
(186)
|
3,548
|
510
|
Income tax loss
|
(286,506)
|
(1,609,181)
|
(6,278,894)
|
(i) Does not
include Uruguayan-source income / (loss) of Ps. 635,853, as of June
30, 2018, (Ps.4,474) as of June 30, 2017 and Ps. 398,960 as of June
30, 2016.
(ii) Does not
include Uruguayan-source income / (loss) by pasticipation in
associated and joint ventures of Ps. (6,969) and Ps. (5,580) as of
June 30, 2018 and 2017.
On December 27,
2017, the Argentine Congress approved the Tax Reform, through Law
No. 27,430, which was enacted on December 29, 2017, and has
introduced many changes to the income tax treatment applicable to
financial income. The key components of the Tax Reform are as
follows:
-
Dividends: Tax on dividends distributed by Argentine companies
would be as follows: (i) dividends originated from profits obtained
before fiscal year of the Group ending June 30, 2018 will not be
subject to withholding tax; (ii) dividends derived from profits
generated during fiscal years ending June 30, 2019 and 2020 paid to
Argentine Individuals and/or foreign residents, will be subject to
a 7% withholding tax; and (iii) dividends originated from profits
obtained during fiscal year ending June 30, 2021 onward will be
subject to withholding tax at a rate of 13%.
-
Income tax: Corporate income tax gradually would be reduced to 30%
for fiscal years beginning at January 1, 2018 through December 31,
2019, and to 25% for fiscal periods beginning at after January 1,
2020, inclusive.
-
Presumptions of dividends: Certain facts will be presumed to
constitute dividend payments, such as: i) withdrawals from
shareholders, ii) shareholders private use of property of the
company, iii) transactions with shareholders at values different
from market values, iv) personal expenses from shareholders or
shareholder remuneration without substance.
Revaluation of
assets: The regulation establishes that, at the option of the
companies, tax revaluation of assets is permitted for assets
located in Argentina and affected to the generation of taxable
profits. The special tax on the amount of the revaluation
depends on the asset, being (i) 8% for real estate not classified
as inventories, (ii) 15% for real estate classified as inventories,
(iii) 5% for shares, quotas and equity interests owned by
individuals and (iv) 10% for the rest of the assets. As of the
date of these Financial Statements, the Group has not exercised the
option. The gain generated by the revaluation is exempted
according to article N 291 of Law 27,430 and, the additional
tax generated by the revaluation is not deductible.
In addition, the
Argentine tax reform contemplates other amendments regarding the
following matters: social security contributions, tax
administrative procedures law, criminal tax law, tax on liquid
fuels, and excise taxes, among others. At the date of these
Financial Statements, many issues are pending regulation by the
government.
IRSA
Propiedades Comerciales S.A.
The Group maintains
a defined contribution plan (the “Plan”) covering key
member of management in Argentina. The Plan became effective on
January 1, 2006. Participants may make contributions to the Plan of
up to 2.5% of their monthly salary (“Base
Contributions”) and contributions of up to 15% of their
annual bonus (“Extraordinary Contributions”). Under the
Plan, the Group matches employee contributions to the plan at a
rate of 200% for Base Contributions and 300% for Extraordinary
Contributions.
All contributions
are invested in funds administered outside of the Group.
Participants or their assignees, as the case may be, may have
access to the 100% of the Company contributions under the following
circumstances:
(i)
ordinary retirement
in accordance with applicable labor regulations;
(ii)
total or permanent
incapacity or disability;
In case of
resignation or termination without good cause, the manager will
received the Group’s contribution only if the employee has
participated in the Plan for at least 5 years.
Contributions made
by the Group under the Plan amount to Ps. 16.8, Ps. 11.6 and Ps.
10.3 million for the fiscal years ended June 30, 2018, 2017 and
2016, respectively.
22.
Equity
Incentive Plan
The Group maintains
an equity incentive plan, under which certain selected employees,
directors and top management of the Group, IRSA and Cresud (the
“Participants”). Engagement is voluntary and by
invitation of the Board of Directors.
This plan was
effectively established on September 30, 2011 and is administered
by the Board of Directors of the Group, IRSA and Cresud, as
appropriate, or a committee appointed by the Board of Directors of
the respective companies.
Initially, the
Incentive Plan established that Participants would be entitled to
receive shares (“Contributions”) of IRSA Propiedades
Comerciales, IRSA and Cresud, based on a percentage of the annual
bonus, on condition that they keep holding the acquired shares and
remain an employee of the Company for at least 5 years, among other
conditions required to qualify for such Contributions. Due to the
small number of transactions in the market it was not possible to
fulfil the formal aspects of the plan and as established by the
Shareholders’ Meeting the Board of IRSA Propiedades
Comerciales decided to modify certain conditions, including,
delivery of IRSA and Cresud shares (upon transfer of funds by IRSA
Propiedades Comerciales) to replace the shares of IRSA Propiedades
Comerciales, IRSA and Cresud.
Consequently,
shares shall be under the ownership of IRSA and Cresud, and as the
conditions established by the Plan are verified, such contributions
are transferred to the Participants.
Additionally, IRSA
Propiedades Comerciales’s Board of Directors resolved to
include a special one-off bonus composed of unrestricted shares
issued by IRSA for the fiscal year ended on June 30, 2014, to
employees with 2 or more years of service.
As of June 30, 2018
and 2017 IRSA Propiedades Comerciales has a credit of PS. 12.4 and
Ps. 10.5 million with IRSA Inversiones y Representaciones S.A. and
a liability of Ps. 2.5 and Ps. 1.1 millon with Cresud S.A.C.I.F. y
A.. The subsidiaries of IRSA Propiedades Comerciales have a
liability of Ps. 14.6 and Ps. 15.4 million with IRSA Inversiones y
Representaciones S.A..
As of June 30,
2018, 2017 and 2016, the amount accrued for the plans amounts to
Ps. 82.1 million, Ps. 77.2 million and Ps. 64.2 million
respectively, based on the market value of the shares to be granted
pertaining to the Group’s contributions, proportionately to
the period already elapsed for the vesting of shares in the
Incentive Plan and adjusted for the probability that any
beneficiary should leave the Group before the term and/or the
conditions required to qualify for the benefits of the plan are met
at fiscal year-end.
For the
fiscal years ended June 30, 2018, 2017 and 2016, the Group has
incurred in a charge related to the Incentive Plan and the
extraordinary gratification of Ps. 6.4 million, Ps. 16.5 million
and Ps. 16.4 million, respectively.
IRSA
Propiedades Comerciales S.A.
The Group as lessee
Operating leases:
The Group leases
two properties that are used as a shopping mall. These agreements
provide for fixed monthly rent payments, adjusted pursuant to a
rent escalation clause. Rent expense for the years ended June 30,
2018, 2017 and 2016 amounted to Ps. 6,951, Ps. 5,700 and Ps. 5,222,
respectively and are included in "Costs" in the Statements of
income.
Furthermore, the
Group also leases office space under an operating lease with
companies related to the Chairman and Director of the Group (Note
29).
The future minimum
payments that the Group must pay off under non-cancellable
operating leases are as follows:
|
06.30.18
|
06.30.17
|
No
latter than a year
|
13,763
|
7,102
|
Later
than 1 year and not later than 5 years
|
18,105
|
12,446
|
More
than 5 years
|
40,000
|
42,400
|
|
71,868
|
61,948
|
Finance leases:
The Group leases
certain computer equipment under various finance leases for an
average term of four years. The book value of these assets under
financial leases is included in Note 10.
At the commencement
of the lease term, the Group recognizes a lease liability equal to
the carrying amount of the leased asset. In subsequent periods, the
liability decreases by the amount of lease payments made to the
lessors using the effective interest method. The interest component
of the lease payments is recognized in the statements of
comprehensive income. The book value of these liabilities under
finance leases is included in Note 18.
Lease liabilities
are effectively secured as the rights to the leased assets revert
to the lessor in the event of default.
The future minimum
payments that the Group must pay off under financial leases are as
follows:
|
|
|
Not
later than 1 year
|
6,945
|
1,690
|
Later
than 1 year and not later than 5 years
|
8,301
|
1,636
|
Subtotal value of finance lease liabilities
|
15,246
|
3,326
|
Future
- financial charges on finance leases
|
(843)
|
(177)
|
Present value of finance lease liabilities
|
14,403
|
3,149
|
The fair value of
finance lease liabilities is as follows:
|
|
|
Not
later than 1 year
|
6,574
|
1,598
|
Later
than 1 year and not later than 5 years
|
7,829
|
1,551
|
Present value of finance lease liabilities
|
14,403
|
3,149
|
Under the terms of
these agreements, no contingent rents are payable. The inherent
interest rate is fixed at the contract date for all of the lease
term. The average interest rate on financial lease payables as of
June 30, 2018 and 2017 and 2016 was 11.62%, 20.63% and 14.40%,
respectively.
The Group as lessor
Operating leases:
●
Leases of shopping malls, office and other buildings
The Group enters
into cancellable operating leases relating to shopping malls. The
agreements have an average term raging from three to five years.
Some leases related to anchor stores have terms of ten years, which
are usually extendable. Tenants normally pay a rent which consists
of the higher of (i) the base rent; and (ii) the percentage rent
(which generally ranges between 2% and 12% of the tenants’
gross sales). Furthermore, pursuant to one rent escalation clause
in most lease arrangements, the tenants’ base rent generally
increases between 18% and 24% each year during the agreement term.
Regarding the supplementary rental, because this item is not known
until the end of the period, it falls within the definition of
contingency rental under IAS 17 "Leases". Accordingly, rental
income is recognized once the contingent rent is
known.
The book value of
assets for such leases are described in Note 9.
For the fiscal
years ended June 30, 2018, 2017 and 2016, the base and contingent
rental income of the Group’s shopping malls amounted to Ps.
2,825,140, Ps. 2,270,643 and Ps. 1,851,472, respectively, and are
included under “Income from sales, rents and services”
in the consolidated statement of comprehensive income.
Additionally, IRSA
Propiedades Comerciales, owns a shopping mall property known as
"Patio Olmos" in the Province of Córdoba, Argentina. The Group
leases this property to a third party shopping mall operator under
an operating lease agreement expiring in 2032. The agreement
provides for fixed monthly payments, adjusted pursuant to a rent
escalation clause. Rental income for the years ended June 30, 2018,
2017 and 2016 amounted to Ps. 2,919, Ps. 2,250 and Ps. 4,196,
respectively, and is included in the line item “Income from
sales, rents and services” in the consolidated statements of
comprehensive income.
The Group also
enters into cancellable operating leases agreements relating to
offices and other buildings. These agreements have an average term
raging from three to five years. The tenants are charged a base
rent on a monthly basis.
Office and other
buildings leases amount to Ps. 480,365, Ps. 382,087 and Ps. 280,175
for the fiscal years ended June 30, 2018, 2017 and 2016,
respectively, and are included within “income from sales,
rents and services” in the statements of comprehensive
income.
The book value of
assets for such leases are described in Note 9.
IRSA
Propiedades Comerciales S.A.
The future minimum
proceeds under non-cancellable operating leases from Group’s
shopping malls, offices and other buildings are as
follows:
|
|
|
2018
|
-
|
1,421,954
|
2019
|
1,904,572
|
1,004,397
|
2020
|
1,305,965
|
439,775
|
2021
|
636,762
|
89,098
|
2022
|
172,217
|
10,030
|
Later
than 2022
|
25,679
|
209
|
|
4,045,195
|
2,965,463
|
Finance leases:
The Group does not
act as a lessor in connection with finance leases.
|
|
|
|
Base
rent
|
2,589,799
|
2,029,990
|
1,548,213
|
Contingent
rent
|
718,625
|
624,990
|
587,630
|
Admission
rights
|
343,420
|
300,933
|
207,190
|
Parking
fees
|
236,323
|
192,749
|
153,213
|
Commissions
|
123,284
|
107,580
|
84,815
|
Averaging
of scheduled rent escalation
|
29,456
|
90,197
|
42,832
|
Property
management fees
|
65,833
|
52,303
|
41,213
|
Others
|
21,714
|
10,550
|
7,595
|
Total revenues from rentals and services
|
4,128,454
|
3,409,292
|
2,672,701
|
Sale
of trading properties
|
103,197
|
98,792
|
1,159
|
Total revenues from sale of properties
|
103,197
|
98,792
|
1,159
|
Other
revenues
|
555
|
891
|
1,013
|
Other revenues
|
555
|
891
|
1,013
|
Total revenues from sales, rentals and services
|
4,232,206
|
3,508,975
|
2,674,873
|
Expenses
and collective promotion fund
|
1,717,000
|
1,488,187
|
1,183,627
|
Total revenues from expenses and collective promotion
funds
|
1,717,000
|
1,488,187
|
1,183,627
|
Total revenues
|
5,949,206
|
4,997,162
|
3,858,500
|
The Group presented
the statement of comprehensive income classified according to their
function as part of the line items “Costs”,
“General and administrative expenses” and
“Selling expenses”.
The following
tables provide additional disclosure regarding expenses by nature
and their relationship to the function within the
Group.
|
|
General and administrative expenses
|
|
06.30.18
|
|
Salaries,
social security costs and other personnel administrative expenses
(i)
|
773,968
|
114,249
|
23,914
|
912,131
|
Maintenance,
security, cleaning, repairs and other
|
739,853
|
19,512
|
804
|
760,169
|
Taxes,
rates and contributions
|
238,669
|
11,795
|
157,836
|
408,300
|
Advertising
and other selling expenses
|
263,869
|
-
|
28,330
|
292,199
|
Directors'
fees
|
-
|
164,339
|
-
|
164,339
|
Fees
and payments for services
|
10,911
|
60,678
|
8,117
|
79,706
|
Allowance
for doubtful accounts (additions and unused amounts reversed) (Note
14)
|
-
|
-
|
73,903
|
73,903
|
Leases
and expenses
|
47,615
|
6,037
|
400
|
54,052
|
Amortization
and depreciation (Notes 9,10 y 12)
|
33,301
|
11,498
|
315
|
45,114
|
Traveling,
transportation and stationery
|
18,387
|
13,987
|
1,215
|
33,589
|
Bank
expenses
|
2,910
|
12,585
|
-
|
15,495
|
Cost
of sale of properties (Note 11)
|
8,869
|
-
|
-
|
8,869
|
Other
expenses
|
1,095
|
562
|
31
|
1,688
|
Total 06.30.18
|
2,139,447
|
415,242
|
294,865
|
2,849,554
|
|
|
General and administrative expenses
|
|
06.30.17
|
|
Salaries,
social security costs and other personnel administrative expenses
(i)
|
653,834
|
95,201
|
27,500
|
776,535
|
Maintenance,
security, cleaning, repairs and other
|
645,022
|
7,216
|
795
|
653,033
|
Taxes,
rates and contributions
|
173,718
|
4,294
|
131,254
|
309,266
|
Advertising
and other selling expenses
|
280,598
|
-
|
29,312
|
309,910
|
Directors'
fees
|
-
|
131,481
|
-
|
131,481
|
Fees
and payments for services
|
12,811
|
58,130
|
2,517
|
73,458
|
Allowance
for doubtful accounts (additions and unused amounts reversed) (*)
(Note 14)
|
-
|
-
|
41,310
|
41,310
|
Leases
and expenses
|
77,619
|
4,516
|
525
|
82,660
|
Amortization
and depreciation (Notes 9,10 y 12)
|
22,222
|
5,953
|
365
|
28,540
|
Traveling,
transportation and stationery
|
16,803
|
8,127
|
893
|
25,823
|
Bank
expenses
|
-
|
7,059
|
-
|
7,059
|
Cost
of sale of properties (Note 11)
|
12,903
|
-
|
-
|
12,903
|
Other
expenses
|
4,256
|
199
|
146
|
4,601
|
Commercial
compensation
|
-
|
-
|
1,911
|
1,911
|
Total 06.30.17
|
1,899,786
|
322,176
|
236,528
|
2,458,490
|
|
|
General and administrative expenses
|
|
06.30.16
|
|
Salaries,
social security costs and other personnel administrative expenses
(i)
|
515,022
|
53,448
|
20,911
|
589,381
|
Maintenance,
security, cleaning, repairs and other
|
444,824
|
4,428
|
503
|
449,755
|
Taxes,
rates and contributions
|
127,361
|
1,957
|
101,833
|
231,151
|
Advertising
and other selling expenses
|
284,935
|
-
|
21,706
|
306,641
|
Directors'
fees
|
-
|
113,673
|
-
|
113,673
|
Fees
and payments for services
|
9,008
|
28,562
|
3,481
|
41,051
|
Allowance
for doubtful accounts (additions and unused amounts reversed)
(*)
|
-
|
-
|
12,005
|
12,005
|
Leases
and expenses
|
46,873
|
3,077
|
375
|
50,325
|
Amortization
and depreciation
|
14,802
|
7,911
|
231
|
22,944
|
Traveling,
transportation and stationery
|
14,043
|
2,597
|
805
|
17,445
|
Bank
expenses
|
-
|
5,896
|
-
|
5,896
|
Cost
of sale of properties
|
1,400
|
-
|
-
|
1,400
|
Other
expenses
|
1,936
|
31
|
-
|
1,967
|
Commercial
compensation
|
-
|
-
|
371
|
371
|
Total 06.30.16
|
1,460,204
|
221,580
|
162,221
|
1,844,005
|
(*) At June 30,
2017 y 2016 includes debt relief for Ps 577 and Ps. 10,
respectively.
(i)
For the fiscal year
ended June 30, 2018 includes Ps. 842,559 of Salaries, Bonuses and
Social Security; Ps. 6,404 of Equity incentive plan and Ps. 63,168
of other concepts. For the fiscal year ended June 30, 2017 includes
Ps. 694,067 Salaries, Bonuses and Social Security; Ps. 16,545 of
Equity incentive plan and Ps. 65,923 of other concepts. For the
fiscal year ended June 30, 2016 includes Ps. 519,782 Salaries,
Bonuses and Social Security; Ps. 16,359 of Equity incentive plan
and Ps. 53,240 of other concepts.
(ii)
For the fiscal year
ended June 30, 2018 includes Ps. 2,120,715 of Rental and services
costs; Ps. 18,713 of Cost of sales and developments and Ps.19 of
other consumer financing costs. For the fiscal year ended June 30,
2017 includes Ps. 1,874,392 of Rental and services costs; Ps.
25.346 of Cost of sales and developments and Ps. 48 of other
consumer financing costs. For the fiscal year ended June 30, 2016
includes Ps. 1,454,409 of Rental and services costs; Ps. 5,718 of
Cost of sales and developments and Ps. 77 of other consumer
financing costs.
26.
Other
operating results, net
|
06.30.18
|
06.30.17
|
06.30.16
|
Gain
resulting from sale anual reserval of property plant and
equipment
|
35,602
|
437
|
-
|
Others
|
12,347
|
10,508
|
(17,451
|
Donations
|
(26,967)
|
(52,910)
|
(38,889)
|
Lawsuits
(Note 19)
|
(25,004)
|
(14,031)
|
(3,402)
|
Gain
resulting from the revaluation of equity interes held before the
bussines combination
|
-
|
7,618
|
-
|
Expenses
related to the sale of investment property
|
(884)
|
(2,841)
|
(8,810)
|
Total
other operating results, net
|
(4,906)
|
(51,219)
|
(68,552)
|
IRSA
Propiedades Comerciales S.A.
27.
Financial
results, net
|
|
|
|
-
Foreign exchange
|
413,976
|
48,437
|
410,386
|
-
Interest income
|
240,005
|
184,296
|
102,169
|
-
Dividends income
|
34,172
|
9,705
|
-
|
Finance income
|
688,153
|
242,438
|
512,555
|
-
Foreign exchange
|
(6,407,173)
|
(598,845)
|
(2,225,939)
|
-
Interest expense
|
(928,218)
|
(639,768)
|
(612,486)
|
-
Others financial costs
|
(117,445)
|
(77,033)
|
(100,051)
|
Subtotal finance costs
|
(7,452,836)
|
(1,315,646)
|
(2,938,476)
|
Less:
Capitalized finance costs
|
14,385
|
2,310
|
-
|
Finance costs
|
(7,438,451)
|
(1,313,336)
|
(2,938,476)
|
-
Fair value gains of financial assets at fair value through profit
or loss
|
2,041,061
|
203,087
|
466,328
|
-
Gain from derivative financial instruments
|
227,378
|
81,105
|
1,248,374
|
-
Loss from repurchase of non - convertible notes
|
-
|
(168)
|
-
|
Other financial results
|
2,268,439
|
284,024
|
1,714,702
|
Total financial results, net
|
(4,481,859)
|
(786,874)
|
(711,219)
|
Basic earnings per
share amounts are calculated in accordance with IAS 33 "Earning per
share" by dividing the profit attributable to equity holders of the
Group by the weighted average number of ordinary shares outstanding
during the year (Note 16).
On December 18,
2012, the Superintendence of Corporations registered an amendment
to the Company’s by-laws whereby it increased the nominal
value of its shares from Ps. 0.1 to Ps. 1 each. This amendment,
which was notified through the CNV, was registered under number
20,264 of Stock Companies Book 62 T°. Furthermore,
the CNV has admitted the shares indicated above for listing in the
Stock Exchange.
|
|
|
|
Profit
attributable to equity holders of the Parent
|
15,099,936
|
3,260,476
|
11,821,280
|
Weighted
average number of ordinary shares in issue (thousands)
|
126,014
|
126,014
|
126,014
|
Basic earnings per share
|
119.83
|
25.87
|
93.81
|
As mentioned in
Note 16, the nominal value of shares increased from Ps. 0.1 to Ps.
1 per share. The number of shares, prices and any other information
per share included in these Financial Statements for all of these
periods have adjusted retroactively to reflect the change from Ps.
0.1 to Ps. 1.
Diluted earnings
per share amounts are calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
dilutive potential shares. As of June 30, 2018, 2016 and 2016, the
Group has no convertible instruments. The diluted earnings per
share is equal to basic earnings per share.
29.
Related
party transactions
In the normal
course of business, the Group conducts transactions with different
entities or parties related to it. An individual or legal entity is
considered a related party where:
-
An entity,
individual or close relative of such individual or legal entity
exercises control, or joint control, or significant influence over
the reporting entity, or is a member of the Board of Directors or
the Senior Management of the entity or its parent
company.
-
An entity is a
subsidiary, associate or joint venture of the entity or its parent
or controlled company.
The following
section provides a brief description of the main transactions
conducted with related parties which are not described in other
notes of these consolidated Financial Statements:
1.
Remuneration
of the Board of Directors
Law N° 19,550
provides that the remuneration of the Board of Directors, where it
is not set forth in the Company’s by-laws, shall be fixed by
the Shareholders' Meetings. The maximum amount of remuneration that
the members of the Board are allowed to receive, including salary
and other performance-based remuneration of permanent
technical-administrative functions, may not exceed 25% of the
profits.
Such maximum amount
is limited to 5% where no dividends are distributed to the
Shareholders, and will be increased proportionately to the
distribution, until reaching such cap where total profits are
distributed.
Some of our
Directors are hired under the Employment Contract Act N°
20,744. This Act rules on certain conditions of the work
relationship, including remuneration, salary protection, working
hours, vacations, paid leaves, minimum age requirements, workmen
protection and forms of suspension and contract
termination.
The remuneration of
directors for each fiscal year is based on the provisions
established by the Law N° 19,550, taking into consideration
whether such directors perform technical-administrative functions
and depending upon the results recorded by the Company during the
fiscal year. Once such amounts are determined, they should be
approved by the Shareholders’ Meeting.
2.
Senior
Management remuneration
The members of the
Senior or Top Management are appointed and removed by the Board of
Directors, and perform functions in accordance with the
instructions delivered by the Board itself.
The remuneration
earned by the Company's Senior Management (including Directors) was
Ps. 35.4 million; Ps. 29.8 million and Ps. 38.5 million as of June
30, 2018, 2017 and 2016, respectively. The remuneration earned by
Senior Management for their functions consists of an amount that is
fixed taking into account the manager's background, capacity and
experience, and an annual bonus which varies according to their
individual performance and the Group's results. Members of senior
management participate in defined contribution and share-based
incentive plans that are described in Notes 21 and 22,
respectively.
The Group’s
Senior Management is composed of as follows:
Name
|
Date of birth
|
Position
|
In the position since
|
Alejandro
G. Elsztain
|
31/03/1966
|
General
Manager
|
2002
|
Daniel
R. Elsztain
|
22/12/1972
|
Operating
Manager
|
2011
|
Matias
Gaivironsky
|
23/02/1976
|
Real
Estate Manager
|
2011
|
Juan
José Martinucci
|
31/01/1972
|
Financial
and Administrative Manager
|
2013
|
Arnaldo
Jawerbaum
|
13/08/1966
|
Investment
Manager
|
2017
|
3. Corporate Service Agreement with Cresud and
IRSA
Whereas, given that
the Group, IRSA and Cresud have operating areas with certain
characteristics of affinity, the Board of Directors considered it
was convenient to implement alternatives that allows to reduce
certain fixed costs, with the aim of reducing their incidence on
the operating results, building on and enhancing the individual
efficiencies of each of the companies in the different areas that
form part of operating administration.
To such end, on
June 30, 2004, a Master Agreement for the Exchange of Corporate
Services (“Frame Agreement") was entered into between IRSA
Propiedades Comerciales S.A., IRSA and Cresud, which was amended
several times to bring it in line with the current context. The
agreement has a term of 24 months, is renewable automatically for
equal periods, unless it is terminated by any of the parties upon
prior notice.
IRSA
Propiedades Comerciales S.A.
Under the current
Master Agreement corporate services are provided in the following
areas: Human Resources, Finance, Institutional Relations,
Administration and Control, Insurance, Security, Agreements,
Technical Tasks, Infrastructure and Services, Procurement,
Architecture and Design, Development and Works, Real Estate,
Hotels, Board of Directors, Board of directors of Real Estate
Business, General Manager Office, Board Safety, Audit Committee,
Real Estate Business Management, Human Resources of Real Estate
Business, Fraud Prevention, Internal Audit and Agricultural
Investment Management.
Pursuant to this
agreement, the companies hired an external consulting firm to
review and evaluate half-yearly the criteria used in the process of
liquidating the corporate services, as well as the basis for
distribution and source documentation used in the process indicated
above, by means of a half-yearly report.
It should be noted
that the operations indicated above allows both Group IRSA and
Cresud to keep our strategic and commercial decisions fully
independent and confidential, with cost and profit apportionment
being made on the basis of operating efficiency and equity, without
pursuing individual economic benefits for any of the
companies.
The Group hires
legal services from Estudio Zang, Bergel & Viñes, from
which Saúl Zang is a partner and sits at the Board of
Directors of the Group companies.
5.
Donations
granted to Fundación IRSA and Fundación Museo de los
Niños
Fundación IRSA
is a non-profit charity institution that seeks to support and
generate initiatives concerning education, the promotion of
corporate social responsibility and the entrepreneurial spirit of
the youth. It carries out corporate volunteering programs and
fosters donations by the Group’s employees. The main members
of Fundación IRSA's Board of Administrators are: Eduardo S.
Elsztain (Chairman); Saúl Zang (Vice Chairman I), Alejandro
Elsztain (Vice Chairman II) and Mariana C. de Elsztain (secretary).
It finances its activities with the donations made by IRSA
Propiedades Comerciales S.A., IRSA, Cresud and others Group’s
companies.
Fundación
Museo de los Niños is a non-profit association, created by the
same founders of Fundación IRSA and its Management Board is
formed by the same members as Fundación
IRSA’s.
On October 31,
1997, IRSA Propiedades Comerciales S.A. entered into an agreement
with Fundación IRSA whereby 3,800 square meters of the
constructed area at the Abasto shopping mall was granted under a
gratuitous bailment agreement for a term of 30 years. Subsequently,
on October 29, 1999, Fundación IRSA assigned free of cost all
the rights of use over such store and its respective obligations to
Fundación Museo de los Niños.
On November 29,
2005, IRSA Propiedades Comerciales S.A. signed another agreement
with Fundación Museo de los Niños granting under
gratuitous bailment 2,670.11 square meters of the constructed area
at Alto Rosario shopping mall for a term of 30 years.
Fundación
Museo de los Niños has used these spaces to set up "Museo de
los Niños, Abasto” and “Museo de los Niños,
Rosario", two interactive learning centers intended for children
and adults. Both agreements establish the payment of common
expenses and direct expenses related to the services performed by
these stores should be borne by Fundación Museo de los
Niños.
6.
Offices
and Shopping malls spaces rental
IRSA and Cresud
rent office space for their executive offices located at the
Intercontinental Plaza tower at Moreno 877 in the Autonomous City
of Buenos Aires, which we have owned since December 2014. They also
rent space at our Abasto Shopping Mall.
The offices of our
President are located at Bolívar 108, in the Autonomous City
of Buenos Aires. The property has been rented to Isaac Elsztain e
Hijos S.A., a company controlled by Eduardo Sergio Elsztain, our
President, and some of his family members and to Hamonet S.A., a
company controlled by Fernando A. Elsztain, one of our directors,
and some of its family members.
IRSA
Propiedades Comerciales S.A.
In addition,
Tarshop, Banco de Crédito y Securitización S.A., BHN
Sociedad de Inversión S.A., BHN Seguros Generales S.A. and BHN
Vida S.A. rent offices owned by us in different buildings. In
addition, we also let various spaces in our Shopping Malls (stores,
stands, storage space or advertising space) to third parties and
related parties such as Tarshop S.A. and Banco Hipotecario S.A..
Lease agreement entered into with these related parties include
clauses and values in line with those agreed upon with unrelated
parties.
7.
Special
reimbursement programs with several means of payment
The Group carries
out diverse commercial activities and promotions intended to
promote larger number of visitors and consumption inside its
shopping malls. Some promotions are offered on specific dates or
periods, different types of discounts to clients and/or
interest-free financing plans. To this end, the Group enters into
agreements with various third party financial entities and/or
related parties, such as Banco Hipotecario S.A. and Tarshop
S.A..
These agreements
usually establish different refund percentages for those clients
that make purchases at all the participating stores using the means
of payment specific of each financial entity and, on occasions,
additional financing plans with interest-free instalments. The cost
of the refunds granted to the clients is generally distributed as a
percentage among the lessors of the shopping malls and the
financial entities, while the cost of interest-free financing is
borne, in general, by the latter. The Group acts as an intermediary
and is in charge of the lessors’ engagement and the
advertising of these promotions. This activity results in no money
flows or transfer of revenues or costs between the Group and its
related parties.
On certain
occasions, the Group hires hospitality and event venue rental
services from Nuevas Fronteras S.A., Hoteles Argentinos S.A. and
Llao Llao Resorts S.A., all subsidiaries of our parent company
IRSA.
9.
Property
purchase - sale
The Group in the
course of business operations may acquire or sell to or from other
related parties certain real estate properties used for rental
purposes.
In the normal
course of its activities, the Group enters into diverse loan
agreements or credit facilities between the group’s companies
and/or other related parties. These loans accrue interest at market
rates.
11.
Financial
and service operations
The Group works
with several financial entities in the Argentine market for
operations including, but not limited to, credit, investment,
purchase and sale of securities and financial derivatives. Such
entities include Banco Hipotecario S.A. and its subsidiaries.
Furthermore, Banco Hipotecario S.A. and BACS Banco de Crédito
y Securitización S.A. usually act as underwriters in Capital
Market transactions for the Group. All transactions are carried out
at arm’s length.
12.
Purchase
of financial assets
The Group usually
invests excess cash in several instruments that may include those
issued by related companies, acquired at issuance or from unrelated
third parties through secondary market deals.
13.
Investment
in investment funds managed by BACS Administradora de
Activos
The Group invests
its liquid funds in mutual funds managed by BACS Administradora de
Activos S.A.S.G.F.C.I. among other entities.
IRSA
Propiedades Comerciales S.A.
The following is a
summary of the balances with related parties:
Item
|
|
|
Trade
and other receivables
|
786,200
|
633,834
|
Investments
in financial assets
|
248,544
|
267,365
|
Trade
and other payables
|
(158,591)
|
(104,282)
|
Borrowings
|
(4,154)
|
(3,571)
|
Total
|
871,999
|
793,346
|
Related parties
|
06.30.18
|
06.30.17
|
Description of transaction
|
IRSA
Inversiones y Representaciones Sociedad Anónima
(IRSA)
|
673,406
|
542,052
|
Advances
|
|
41,709
|
22,854
|
Corporate
services
|
|
40,863
|
25,425
|
Non-convertible
notes
|
|
12,448
|
10,472
|
Equity
incentive plan
|
|
9,023
|
16,482
|
Reimbursement
of expenses
|
|
428
|
-
|
Others
|
|
-
|
4
|
Loans
granted
|
|
-
|
265
|
Commissions
|
|
-
|
535
|
Lease
collections
|
|
(439)
|
(9)
|
Reimbursement
of expenses to pay
|
|
(14,609)
|
(15,380)
|
Equity
incentive plan to pay
|
Total direct parent company
|
762,829
|
602,700
|
|
Cresud
S.A.CI.F. y A.
|
207,681
|
241,940
|
Non-convertible
notes
|
|
(2,546)
|
(1,113)
|
Equity
incentive plan to pay
|
|
(15,375)
|
(23,385)
|
Reimbursement
of expenses to pay
|
|
(55,483)
|
(13,595)
|
Corporate
services to pay
|
Total direct parent company of IRSA
|
134,277
|
203,847
|
|
La
Rural S.A.
|
28,712
|
119
|
Leases
and/or rights to use space
|
|
7,165
|
8,841
|
Dividends
|
|
-
|
3,676
|
Loans
granted
|
|
-
|
16,394
|
Canon
|
|
(845)
|
(55)
|
Reimbursement
of expenses to pay
|
Other
associates and joint ventures
|
4,309
|
4,557
|
Loans
granted
|
|
509
|
812
|
Management
fee
|
|
314
|
931
|
Reimbursement
of expenses
|
|
-
|
1,625
|
Leases
and/or rights to use space
|
|
-
|
(105)
|
Lease
collections
|
|
(235)
|
-
|
Reimbursement
of expenses to pay
|
|
(286)
|
(619)
|
Advertising
space to pay
|
|
(518)
|
(1,288)
|
Leases
and/or rights to use space
|
|
(4,154)
|
(3,571)
|
Borrowings
obtained
|
Total associates and joint ventures of IRSA Propiedades
Comerciales
|
34,971
|
31,317
|
|
Directors
|
(12)
|
(17)
|
Reimbursement
of expenses to pay
|
|
(67,126)
|
(44,770)
|
Fees
|
Total Directors
|
(67,138)
|
(44,787)
|
|
Others
|
4,685
|
3,370
|
Leases
and/or rights to use space to pay
|
|
3,283
|
746
|
Reimbursement
of expenses
|
|
209
|
-
|
Advertising
space
|
|
-
|
(40)
|
Hotel
services to pay
|
|
-
|
99
|
Commissions
|
|
(4)
|
(219)
|
Reimbursement
of expenses to pay
|
|
(5)
|
(272)
|
Dividends
to pay
|
|
(9)
|
(41)
|
Leases
and/or rights to use space to pay
|
|
(27)
|
-
|
Commissions
to pay
|
|
(1,072)
|
(3,374)
|
Legal
services
|
Total Others
|
7,060
|
269
|
|
Total
|
871,999
|
793,346
|
|
IRSA
Propiedades Comerciales S.A.
The
following is a summary of the results with related
parties:
Related parties
|
06.30.18
|
06.30.17
|
06.30.16
|
Description of transaction
|
IRSA
Inversiones y Representaciones Sociedad Anónima
(IRSA)
|
35,056
|
23,972
|
19,165
|
Corporate
services
|
|
17,448
|
516
|
(1,491,911)
|
Financial
operations
|
|
910
|
2,533
|
(375)
|
Leases
and/or rights to use space
|
|
163
|
127
|
76
|
Commissions
|
Total direct parent company
|
53,577
|
27,148
|
(1,473,045)
|
|
Cresud
S.A.CI.F. y A.
|
151,002
|
61,923
|
84,980
|
Financial
operations
|
|
1,931
|
867
|
1,417
|
Leases
and/or rights to use space
|
|
(162,756)
|
(128,819)
|
(88,517)
|
Corporate
services
|
Total direct parent company of IRSA
|
(9,823)
|
(66,029)
|
(2,120)
|
|
La
Rural S.A.
|
12,209
|
-
|
-
|
Financial
operations
|
|
12,678
|
8,518
|
-
|
Leases
and/or rights to use space
|
Tarshop
S.A.
|
15,809
|
13,816
|
11,802
|
Leases
and/or rights to use space
|
|
322
|
-
|
265
|
Commissions
|
Nuevo
Puerto Santa Fe S.A.
|
3,882
|
3,565
|
3,619
|
Fees
|
|
(548)
|
(1,165)
|
(1,716)
|
Financial
operations
|
|
(504)
|
5,641
|
(385)
|
Leases
and/or rights to use space
|
Others
associates and joint ventures
|
216
|
216
|
216
|
Fees
|
|
1,286
|
707
|
31
|
Financial
operations
|
Total associates and joint ventures of IRSA Propiedades
Comerciales
|
45,350
|
31,298
|
13,832
|
|
Directors
|
(164,339)
|
(131,481)
|
(113,673)
|
Fees
|
Senior
Managment
|
(9,606)
|
(6,677)
|
(6,246)
|
Fees
|
Total Directors
|
(173,945)
|
(138,158)
|
(119,919)
|
|
Estudio
Zang, Bergel & Viñes
|
(10,038)
|
(9,185)
|
(2,940)
|
Fees
|
Banco
de Crédito y Securitización
|
17,180
|
9,507
|
6,493
|
Leases
and/or rights to use space
|
REIG
V
|
-
|
58,125
|
-
|
Financial
operations
|
Others
|
9,389
|
7,335
|
2,578
|
Leases
and/or rights to use space
|
|
25
|
21
|
222
|
Commissions
|
|
(2,079)
|
(609)
|
(96)
|
Donations
|
|
-
|
-
|
4,912
|
Financial
operations
|
Total others
|
14,477
|
65,194
|
11,169
|
|
Total
|
(70,364)
|
(80,547)
|
(1,570,083)
|
|
The
following is a summary of the transactions with related
parties:
Related parties
|
06.30.18
|
06.30.17
|
Description of transaction
|
IRSA
Inversiones y Representaciones S.A.
|
586,745
|
726,974
|
Dividends
granted
|
Tyrus
|
652
|
738
|
Dividends
granted
|
Total Dividends granted
|
587,397
|
727,712
|
|
La
Rural S.A
|
34,172
|
8,841
|
Dividends
received
|
Nuevo
Puerto Santa Fe S.A.
|
8,838
|
11,443
|
Dividends
received
|
Total Dividends received
|
43,010
|
20,284
|
|
Quality
Invest S.A.
|
37,364
|
3,000
|
Irrevocable
contributions granted
|
|
1,649
|
-
|
Equity
contributions granted
|
Avenida
Inc.
|
6,210
|
-
|
Irrevocable
contributions
granted
|
Total Contributions
|
45,223
|
3,000
|
|
30.
CNV
General Resolution N° 622/13
As required by
Section 1°, Chapter III, Title IV of CNV General Resolution
N° 622/13, below there is a detail of the notes to the
Consolidated Financial Statements that disclose the information
required by the Resolution.
Exhibit
A - Property, plant and equipment
|
Note
9 - Investment properties
|
|
Note
10 - Property, plant and equipment
|
Exhibit
B - Intangible assets
|
Note
8 - Intangible assets
|
Exhibit
C - Equity investments
|
Note
12 - Information about, associates and joint ventures
|
Exhibit
D - Other investments
|
Note
13 - Financial instruments by category
|
Exhibit
E - Provisions
|
Note
14 - Trade and other receivables
|
|
Note
19 - Provisions
|
Exhibit
F - Cost of sales and services provided
|
Note
25 - Expenses by nature
|
|
Note
11 - Trading properties
|
Exhibit
G - Foreign currency assets and liabilities
|
Note
31 - Foreign currency assets and liabilities
|
31.
Foreign currency assets and liabilities
Book amounts of
foreign currency assets and liabilities are as
follows:
Items (1)
|
|
|
06.30.18
|
|
|
06.30.17
|
Assets
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
Uruguayan
Pesos
|
25
|
0.92
|
23
|
3
|
0.58
|
2
|
US
Dollar
|
9,245
|
28.75
|
265,788
|
5,423
|
16.53
|
89,640
|
Euros
|
142
|
33.54
|
4,777
|
-
|
-
|
-
|
Trade and other receivables with related parties
|
|
|
|
|
|
|
US
Dollar
|
3,897
|
28.85
|
112,422
|
3,147
|
16.63
|
52,334
|
Total trade and other receivables
|
|
|
383,010
|
|
|
141,976
|
Restricted assets
|
|
|
|
|
|
|
US
Dollar
|
-
|
-
|
-
|
2,996
|
16.53
|
49,525
|
Total Restricted assets
|
|
|
-
|
|
|
49,525
|
Investments in financial assets
|
|
|
|
|
|
|
US
Dollar
|
119,323
|
28.75
|
3,430,544
|
43,368
|
16.53
|
716,867
|
Investment in financial assets with related parties
|
|
|
|
|
|
|
US
Dollar
|
8,615
|
28.85
|
248,544
|
16,077
|
16.63
|
267,365
|
Total investments in financial assets
|
|
|
3,679,088
|
|
|
984,232
|
Cash and cash equivalents
|
|
|
|
|
|
|
Uruguayan
Pesos
|
2
|
0.91
|
2
|
7
|
0.58
|
4
|
US
Dollar
|
84,029
|
28.75
|
2,415,829
|
6,170
|
16.53
|
101,987
|
Pound
|
2
|
37.90
|
57
|
1
|
21.49
|
32
|
Euros
|
1
|
33.54
|
38
|
6
|
18.85
|
105
|
Total cash and cash equivalents
|
|
|
2,415,926
|
|
|
102,128
|
Total Assets
|
|
|
6,478,024
|
|
|
1,277,861
|
Liabilities
|
|
|
|
|
|
|
Trade and other payables
|
|
|
|
|
|
|
Uruguayan
Pesos
|
15
|
0.91
|
14
|
9
|
0.58
|
5
|
US
Dollar
|
5,723
|
28.85
|
165,114
|
9,452
|
16.63
|
157,190
|
Euros
|
41
|
33.73
|
1,391
|
-
|
-
|
-
|
Trade and other payables with related parties
|
|
|
|
|
|
|
US
Dollar
|
-
|
-
|
-
|
271
|
16.63
|
4,505
|
Total trade and other payables
|
|
|
166,519
|
|
|
161,700
|
Borrowings
|
|
|
|
|
|
|
US
Dollar
|
542,367
|
28.85
|
15,647,296
|
364,889
|
16.63
|
6,068,102
|
Total borrowings
|
|
|
15,647,296
|
|
|
6,068,102
|
Borrowings
|
|
|
|
|
|
|
US
Dollar
|
9
|
28.85
|
264
|
-
|
-
|
-
|
Total borrowings
|
|
|
264
|
|
|
-
|
Provisions
|
|
|
|
|
|
|
US
Dollar
|
5
|
28.85
|
144
|
5
|
16.63
|
83
|
Total Provisions
|
|
|
144
|
|
|
83
|
Total Liabilities
|
|
|
15,814,223
|
|
|
6,229,885
|
(1)
Considering foreign currencies those that differ from each one of
the Group’s companies’ functional currency at each
year-end.
(2) Expressed in
thousands of foreign currency.
(3) Exchange rate
of the Argentine Peso as of June 30, 2018 and 2017 as reported by
the Argentina Central Bank.
32.
Barter transactions
The Group generally
enters into barter transactions with third-party developers in the
ordinary course of business. By virtue of these transactions, the
Group generally exchanges undeveloped plots of land for units to be
constructed and received in the future. Following is a description
of pending transactions that have not yet been perfected by the
third parties as of June 30, 2018:
IRSA
Propiedades Comerciales S.A.
Beruti
On October 13,
2010, the Group and TGLT entered into an agreement to barter a plot
of land located at Beruti 3351/59 in the city of Buenos Aires for
cash and future residential apartments to be constructed by TGLT on
the mentioned land. The transaction, which was subject to certain
precedent conditions including the completion by TGLT of its
initial public offering, was agreed upon at USD 18.8 million. TGLT
constructed an apartment building with residential and commercial
parking space. In consideration, TGLT had to transfer to IRSA
Propiedades Comerciales S.A. (i) a number of apartments to be
determined representing 17.33% of total square meters of
residential space; (ii) a number of parking spaces to be determined
representing 15.82% of total square meters of parking space; (iii)
all spaces reserved for commercial parking in the future building
and (iv) the amount of USD 10.7 million payable upon delivering the
deeds of title on the land. TGLT completed its initial public
offering in the Buenos Aires Stock Exchange on October 29, 2010 and
therefore the precedent condition for the transaction was fulfilled
on that date. TGLT paid the mentioned USD 10.7 million on November
5, 2010. On December 16, 2010, the title deed to the Beruti plot of
land was executed. To secure performance of obligations assumed by
TGLT under the deed of sale, a mortgage was granted in favour of
IRSA Propiedades Comerciales S.A..
An association
named Asociación Amigos Alto Palermo presented an injunction
requesting that the construction is prohibited and obtained a
suspension interim measure for this purpose. Later, the Court of
Appels from the Autonomous City of Buenos Aires ordered the lifting
of such interim measure. On December 4, 2013 the delivery terms for
committed units were extended for 11 months and on November 4, 2014
a new 11-month extension was signed. On June 11, 2015 final
judgment was rendered in favour of IRSA Propiedades Comerciales and
TGLT.
On December 30,
2016, TGLT S.A. and IRSA Propiedades Comerciales executed a
possession conveyance deed in wich TGLT is not able to execute the
relevant title conveyance deed, as it had not completed
registration of the Condominium interest as
contracted.
During the fiscal
year ended June 30, 2018, third parties were assigned the right to
notarize in public deeds part of the units, which generated income
of Ps. 94.3 million.
As already
explained, the remaining part of the transactions continues to be
classified as a barter.
Conil
On November 5,
2014, the Group executed a conveyance deed evidencing a swap and
mortgage transaction in favour of Darío Palombo (acting as
Trustee of “Fideicomiso Esquina Guemes”) to convey
title on four plots of land located in Avellaneda district. The
agreement provides for the development by the Trust of two building
construction undertakings. In consideration for such work, the
compensation agreed included the amount of USD 0.01 million and
delivery, within 24 months as from such agreement execution, of two
functional units for commercial purposes and one functional unit
for office purposes (the non-monetary compensation was valued at
USD 0.7 million).
On June 26, 2018,
an extension of the barter transaction was signed, in which the
buyer undertakes to deliver the public deed in a maximum period of
54 months for BUILDING "A" and 80 months for the BUILDING " B ",
both counting from November 5, 2014.
In the same act, a
delivery commitment was signed for a department unit with an
approximate area of 57.5 sm, located on the 4th floor, along with a
14 m2 garage located on the ground floor, both belonging to
Building 'B' as payment for the fines due from the failure of
delivery of possession of the units of both buildings, until date
of signature of extension of the barter transaction, which is
equivalent to USD 291,600.
IRSA
Propiedades Comerciales S.A.
Coto Residential Project
The Group owns air
space of approximately 23,000 square meters above Hipermercado Coto
near the Abasto Shopping Mall at the heart of the Autonomous City
of Buenos Aires. On September 24, 1997, the Group and Coto Centro
Integral de Comercialización S.A. (Coto) granted a title deed
by which the Group acquired the rights to receive the parking
spaces and the rights to increase the height of the building
located between the Agüero, Lavalle, Guardia Vieja and Gallo
streets, in the Abasto neighbourhood.
On June 2016, a
conditional Exchange Agreement was executed for a one year term, to
be later formalized through the execution of a conveyance deed. The
project will be a residential development for a consideration of
apartments covering an area of 3,621 square meters plus payment of
USD 1 million. The consideration will be delivered no later than
June 2021 for Tower I, and no later than September 2022 for Tower
II. The value in the bill of sale was set at USD 7.5
million.
Córdoba Shopping Project
The Group owns a
plot of land next to Córdoba Shopping, with building capacity
of approximately 17,300 square meters, at the heart of Cordoba
City.
In May 2016, an
Exchange Agreement was executed for a building of 13,500 square
meters, subject to conditions for a term of one year, after which
it may be formalized through a title conveyance deed. The project
will be a mixed development, combining residential and office
space, and the consideration will include apartments covering 2,160
square meters, parking space, and procedures to obtain permits,
combinations and subdivisions of 3 plots of land. Delivery of the
consideration will take place no later than May 2021 for Tower I
and no later than July 2023 for Tower II. The Exchange Value was
set at USD 4 million.
The two mentioned
contracts that are part of the Coto residential project and the
Córdoba Shopping exchange project include conditions precedent
and/or suspensive clauses. Since suspensive clauses have not
materialized yet, the real property involved is classified as
trading properties.
33.
CNV General Ruling N° 629/14 –
Storage of documentation
On August 14, 2014,
the CNV issued General Resolution N° 629 whereby it introduced
amendments to rules related to storage and conservation of
corporate books, accounting books and commercial documentation. In
this sense, it should be noted that the Group has entrusted the
storage of certain non-sensitive and old information to the
following providers:
Documentation storage provider
|
|
Home location
|
Iron Mountain
Argentina S.A.
|
|
Av. Amancio Alcorta
2482, C.A.B.A.
|
Iron Mountain
Argentina S.A.
|
|
Pedro de Mendoza
2143, C.A.B.A.
|
Iron Mountain
Argentina S.A.
|
|
Saraza 6135,
C.A.B.A.
|
Iron Mountain
Argentina S.A.
|
|
Azara 1245,
C.A.B.A. (i)
|
Iron Mountain
Argentina S.A.
|
|
Polígono
Industrial Spegazzini, Au Ezeiza-Cañuelas KM 45
|
Iron Mountain
Argentina S.A.
|
|
Cañada de
Gómez 3825, C.A.B.A.
|
(i) On
February 5, 2014, there was a widely known fire in Iron
Mountain’s warehouse. To the original date of these Financial
Statements, the Group had not been notified whether the
documentation in storage has been affected by the fire or as to its
condition after the accident. Nevertheless, based on the internal
review carried out by the Group, duly reported to the CNV on
February 12, 2014, the information kept at the warehouse that were
on fire do not appear to be sensitive or capable of affecting
normal business operations.
It is further noted
that a detailed list of all documentation held in custody by
providers, as well as documentation required in section 5 a.3) of
section I, Chapter V, Title II of the RULES (2013 as amended) are
available at the registered office.
IRSA
Propiedades Comerciales S.A.
La
Malteria S.A.
On July 11, 2018,
the Company "La Malteria S.A." was formed, with a capital
contribution of Ps. 0.1 represented by 100,000 common nominative
shares with a par value of 1 peso. IRSA Commercial Properties S.A.
subscribed 95,000 shares of share capital, while the remaining
5,000 were subscribed by FIBESA Sociedad Anónima.
Acquisition
de predio Malteria Hudson
In July 2018, we
announced the acquisition, of a property of 147,895 square meters
of surface and approximately 40,000 sqm of built surface known as
“Maltería Hudson”, located in the intersection of
route 2 and Buenos Aires - La Plata highway, in the City of Hudson,
province of Buenos Aires. The price of the operation was set at the
amount of USD 7.0 million.
Moreover, we
entered into an agreement to buy the two adjoining properties to
“La Maltería” of approximately 49,000 sqm and
57,000 sqm respectively, for a total amount of USD
720,825
In addition, we
granted an option to a non-related third party to buy from us
between 15% to 30% of the outstanding shares of “La
Maltería S.A.” at the acquisition price plus a certain
interest for a six month period.
The purpose of this
acquisition is the future development of a mixed-use project, with
a total constructive capacity of approximately 177,000
sqm.
Devaluation
of the Argentine Peso
As of the issuance
date of these financial statements, the Argentine peso has suffered
a devaluation against the US dollar and other currencies close to
31%, as compared to the exchange rate as of the end of the year,
which has an impact on the figures presented in these Financial
Statements, mainly originated by exposure to the exchange rate of
our revenues and costs of the "offices and other properties"
segment, and our assets and liabilities, denominated in foreign
currency.
Item 19. Exhibits
Documents
filed as exhibits to this Amendment No.1:
Exhibit No.
|
Description of Exhibit
|
12.1
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act 2002
|
12.2
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act 2002
|
13.1
|
Certification
pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certification
pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
99.1
99.2
|
Consent
of Independent Registered Public Accounting Firm.
Summary
of Investment Properties by type as of June 30, 2018 (in accordance
with SEC S-X 12.28).
|
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F/A and that it has duly caused and
authorized the undersigned to sign this annual report on its
behalf.
|
IRSA Propiedades Comerciales S.A.
|
|
|
|
|
|
Date:
November 1, 2018
|
By:
|
/s/
Matias I. Gaivironsky
|
|
|
|
Name
Matias I. Gaivironsky
|
|
|
|
Title
Chief Financial and Administrative Officer
|
|
002761-0005-16061-Active.28106184.3 10/31/2018
12:51 PM
EXHIBIT 12.1
SECTION 302 CERTIFICATION
I, Alejandro G. Elsztain, certify that:
1.
|
I have
reviewed this amendment to the annual report on Form 20-F/A
of IRSA Propiedades Comerciales S.A.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
converted by this report.
|
3.
|
Based
on my knowledge, the financial statements included in this
amendment, fairly present in all material respects the financial
position at June 30, 2018 and 2017 and the results of operations
and cash flows of the Company for the periods ended June 30, 2018,
2017 and 2016;
|
4.
|
The
Company’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Company and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervisions, to
ensure that material information relating to the Company, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report
is being prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the Company’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such
evaluation;
|
|
d)
|
Disclosed
in this report any change in the Company’s internal control
over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting; and
|
5.
|
The
Company’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit
committee of the Company’s board of directors (or persons
performing the equivalent functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal control over financial reporting.
|
|
IRSA Propiedades Comerciales S.A.
|
|
|
|
|
|
November
1, 2018.
|
By:
|
/s/ Alejandro
G. Elsztain
|
|
|
|
Alejandro G.
Elsztain
|
|
|
|
Chief
Executive Officer
|
|
EXHIBIT 12.2
SECTION 302 CERTIFICATION
I, Matias Gaivironsky, certify that:
1.
|
I have
reviewed this amendment to the annual report on Form 20-F/A of IRSA
Propiedades Comerciales S.A.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
converted by this report.
|
3.
|
Based
on my knowledge, the financial statements included in this
amendment, fairly present in all material respects the financial
position at June 30, 2018 and 2017 and the results of operations
and cash flows of the Company for the periods ended June 30, 2018,
2017 and 2016;
|
4.
|
The
Company’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Company and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervisions, to
ensure that material information relating to the Company, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report
is being prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the Company’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such
evaluation;
|
|
d)
|
Disclosed
in this report any change in the Company’s internal control
over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting; and
|
5.
|
The
Company’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit
committee of the Company’s board of directors (or persons
performing the equivalent functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal control over financial reporting.
|
|
IRSA Propiedades Comerciales S.A.
|
|
|
|
|
|
November
1, 2018.
|
By:
|
/s/ Matias
Gaivironsky
|
|
|
|
Matias
Gaivironsky
|
|
|
|
Chief
Financial Officer
|
|
EXHIBIT 13.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18
U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE
SARBANES-OXLEY ACT OF 2002
In connection with the Amendment No. 1 to the Annual Report on Form
20-F/A of IRSA Propiedades Comerciales S.A. (the
“Company”) for the fiscal year ended June 30, 2018 as
filed with the Securities and Exchange Commission on the date
hereof (the “Report”), Alejandro G. Elsztain, as
Chief Executive Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that the Report fully
complies with the requirements of Section 13 (a) or 15 (d) of the
Securities and Exchange Act of 1934.
|
IRSA Propiedades Comerciales S.A.
|
|
|
|
|
|
November
1, 2018.
|
By:
|
/s/ Alejandro
G. Elsztain
|
|
|
|
Alejandro
G. Elsztain
|
|
|
|
Chief
Executive Officer
|
|
|
|
|
|
This certification accompanies the Report pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 and shall not, except as to the
extent required by the Sarbanes-Oxley Act of 2002, be deemed filed
by the Company for purposes of Section 18 of the Securities and
Exchange Act of 1934, as amended
EXHIBIT 13.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18
U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE
SARBANES-OXLEY ACT OF 2002
In connection with the Amendment No. 1 to the Annual Report on Form
20-F/A of IRSA Propiedades Comerciales S.A. (the
“Company”) for the fiscal year ended June 30, 2018 as
filed with the Securities and Exchange Commission on the date
hereof (the “Report”), Alejandro G. Elsztain, as
Chief Executive Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that the Report fully
complies with the requirements of Section 13 (a) or 15 (d) of the
Securities and Exchange Act of 1934.
|
IRSA Propiedades Comerciales S.A.
|
|
|
|
|
|
November
1, 2018.
|
By:
|
/s/ Matias
Gaivironsky
|
|
|
|
Matias
Gaivironsky
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
This certification accompanies the Report pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 and shall not, except as to the
extent required by the Sarbanes-Oxley Act of 2002, be deemed filed
by the Company for purposes of Section 18 of the Securities and
Exchange Act of 1934, as amended.
EXHIBIT 99.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We
hereby consent to the incorporation by reference in the
Registration Statement on
Form F-3
(No. 333-220896)
of IRSA Propiedades Comerciales S.A. of our report dated October
22, 2018 relating to the financial statements, financial statement
schedule and the effectiveness of internal control over financial
reporting, which appears in this Amendment No.1 to Form
20-F.
/s/
PRICE WATERHOUSE & Co. S.R.L
(Partner)
/s/
Walter Rafael Zablocky
Buenos
Aires, Argentina
November 1, 2018
EX-99.2 11 SUMMARY OF INVESTMENT PROPERTIES BY TYPE AS
OF JUNE 30, 2018 (IN ACCORDANCE WITH SEC SX 12-28 (1)).
EXHIBIT
99.2
Investment
properties
The following
summary of the group´s investment properties by type as of
June 30, 2018 prepared in accordance with SEC SX 12-28
(1):
|
|
|
Costs
at the end of the year
|
|
|
|
|
|
|
|
Buildings,
facilities and improvement
|
|
|
Buildings,
facilities and improvement
|
|
|
|
Fair
Value at the end of the year (2)
|
|
Date
of acquisition
|
Shopping
malls:
|
|
|
|
|
|
|
|
|
|
|
|
Abasto
|
9,753
|
251,247
|
22,455
|
9,753
|
273,702
|
283,455
|
1,098
|
6,840,104
|
7,124,657
|
|
Jul-94
|
Alto Palermo
Shopping
|
8,694
|
424,322
|
25,359
|
8,694
|
449,681
|
458,375
|
1,480
|
6,710,356
|
7,170,211
|
|
Nov-97
|
Alto
Avellaneda
|
18,089
|
186,584
|
38,752
|
18,089
|
225,336
|
243,425
|
145
|
4,299,645
|
4,543,215
|
|
Dec-97
|
Alcorta
Shopping
|
8,006
|
101,992
|
52,843
|
8,006
|
154,835
|
162,841
|
699
|
3,121,973
|
3,285,513
|
|
Jun-97
|
Alto
Noa
|
227
|
46,336
|
20,633
|
227
|
66,969
|
67,196
|
59
|
1,017,381
|
1,084,636
|
|
Mar-95
|
Buenos Aires
Design
|
-
|
53,083
|
7,622
|
-
|
60,705
|
60,705
|
3
|
(50,270)
|
10,438
|
|
Nov-97
|
Patio
Bullrich
|
9,814
|
163,711
|
22,569
|
9,814
|
186,280
|
196,094
|
326
|
1,694,358
|
1,890,778
|
|
Oct-98
|
Alto
Rosario
|
25,686
|
74,743
|
34,160
|
25,686
|
108,903
|
134,589
|
2,629
|
3,240,618
|
3,377,836
|
|
Nov-04
|
Mendoza
Plaza
|
10,546
|
126,413
|
31,785
|
10,546
|
158,198
|
168,744
|
5,212
|
1,565,482
|
1,739,438
|
|
Dec-94
|
Dot Baires
Shopping
|
99,915
|
364,359
|
22,109
|
99,915
|
386,468
|
486,383
|
1,600
|
4,126,580
|
4,614,563
|
|
Nov-06
|
Córdoba
Shopping (3)
|
1,141
|
98,714
|
12,485
|
1,141
|
111,199
|
112,340
|
50
|
1,000,157
|
1,112,547
|
|
Dec-06
|
Distrito
Arcos
|
-
|
-
|
294,861
|
-
|
294,861
|
294,861
|
-
|
765,253
|
1,060,114
|
-
|
Nov-09
|
Alto
Comahue
|
1,143
|
4,467
|
296,926
|
1,143
|
301,393
|
302,536
|
-
|
570,073
|
872,609
|
-
|
May-06
|
Patio
Olmos
|
11,532
|
21,417
|
-
|
11,532
|
21,417
|
32,949
|
530
|
225,003
|
258,482
|
|
Sep-07
|
Soleil Premium
Outlet
|
23,267
|
55,905
|
82,218
|
23,267
|
138,123
|
161,390
|
612
|
1,314,698
|
1,476,700
|
-
|
Jul-10
|
Ocampo parking
space
|
3,201
|
21,137
|
207
|
3,201
|
21,344
|
24,545
|
-
|
232,084
|
256,629
|
-
|
Sep-06
|
Shopping
centers
|
231,014
|
1,994,430
|
964,984
|
231,014
|
2,959,414
|
3,190,428
|
14,443
|
36,673,495
|
39,878,366
|
|
|
Office
and other rental properties:
|
|
|
|
|
|
|
|
|
|
|
|
Abasto
offices
|
-
|
-
|
15,276
|
-
|
15,276
|
15,276
|
-
|
93,858
|
109,134
|
|
Jul-94
|
Dot
building
|
13,346
|
39,182
|
9,664
|
13,346
|
48,846
|
62,192
|
729
|
1,241,264
|
1,304,185
|
|
Nov-06
|
Anchorena 545
(Chanta IV)
|
812
|
4,495
|
-
|
812
|
4,495
|
5,307
|
-
|
60,824
|
66,131
|
-
|
Ago-08
|
Anchorena
665
|
2,206
|
8,820
|
-
|
2,206
|
8,820
|
11,026
|
-
|
84,097
|
95,123
|
-
|
Ago-08
|
Zelaya
3102
|
1,442
|
-
|
-
|
1,442
|
-
|
1,442
|
-
|
13,094
|
14,536
|
-
|
Jul-05
|
Suipacha
664
|
40,916
|
87,885
|
1,889
|
40,916
|
89,774
|
130,690
|
117
|
332,620
|
463,427
|
|
Dec-14
|
Bouchard
710
|
337,222
|
180,599
|
4,099
|
337,222
|
184,698
|
521,920
|
2,472
|
1,357,763
|
1,882,155
|
-
|
Dec-14
|
Intercontinental
Plaza building
|
2,879
|
49,515
|
987
|
2,878
|
50,503
|
53,381
|
24
|
145,767
|
199,172
|
|
Dec-14
|
República
building
|
391,506
|
316,686
|
924
|
391,506
|
317,610
|
709,116
|
563
|
1,961,672
|
2,671,351
|
-
|
Dec-14
|
Bank Boston
tower
|
295,682
|
239,114
|
-
|
295,682
|
239,114
|
534,796
|
1,105
|
1,472,549
|
2,008,450
|
-
|
Dec-14
|
Paseo del
Sol
|
-
|
2,608
|
-
|
-
|
2,608
|
2,608
|
-
|
9,266
|
11,874
|
-
|
Jul-15
|
Phillips
building
|
-
|
469,034
|
-
|
-
|
469,034
|
469,034
|
136
|
334,266
|
803,436
|
-
|
Jun-17
|
Office
and other rental properties
|
1,086,011
|
1,397,938
|
32,839
|
1,086,010
|
1,430,778
|
2,516,788
|
5,146
|
7,107,040
|
9,628,974
|
|
|
Undeveloped
parcels of land
|
|
|
|
|
|
|
|
|
|
|
|
Building annexed to
Dot
|
23,992
|
-
|
-
|
23,992
|
-
|
23,992
|
-
|
1,073,962
|
1,097,954
|
-
|
Nov-06
|
Luján plot of
land
|
41,861
|
-
|
(298)
|
41,563
|
-
|
41,563
|
-
|
263,745
|
305,308
|
-
|
May-12
|
Caballito
–Ferro plot of land
|
36,890
|
-
|
74,267
|
111,157
|
-
|
111,157
|
-
|
264,747
|
375,904
|
-
|
Nov-97
|
Annexed to Dot plot
of land
|
1,980
|
-
|
-
|
1,980
|
-
|
1,980
|
-
|
2,207
|
4,187
|
-
|
Feb-17
|
Mendoza plot of
land
|
3,375
|
-
|
-
|
3,375
|
-
|
3,375
|
-
|
2,663
|
6,038
|
-
|
Dec-16
|
Intercontinental
Tower B plot of land
|
90,584
|
-
|
-
|
90,584
|
-
|
90,584
|
-
|
260,496
|
351,080
|
-
|
Dec-14
|
Mendoza Av Este 2992
plot of land
|
-
|
-
|
26,406
|
26,406
|
-
|
26,406
|
-
|
9,638
|
36,044
|
-
|
Mar-18
|
La Plata plot of
land
|
154,125
|
-
|
-
|
154,125
|
-
|
154,125
|
-
|
63,937
|
218,062
|
-
|
Mar-18
|
Undeveloped
parcels of land
|
352,807
|
-
|
100,375
|
453,182
|
-
|
453,182
|
-
|
1,941,395
|
2,394,577
|
|
|
Properties
under development
|
|
|
|
|
|
|
|
|
|
|
|
PH Office
Park
|
31,166
|
-
|
815,732
|
31,166
|
815,732
|
846,898
|
38,036
|
697,669
|
1,582,603
|
-
|
Nov-06
|
Alto Palermo
Shopping annex
|
36,578
|
-
|
32,487
|
36,578
|
32,487
|
69,065
|
-
|
115,638
|
184,703
|
-
|
Jun-06
|
Phillips
building
|
-
|
-
|
7,266
|
-
|
7,266
|
7,266
|
-
|
-
|
7,266
|
-
|
Jun-17
|
Alto
Avellaneda
|
-
|
-
|
36,283
|
-
|
36,283
|
36,283
|
-
|
-
|
36,283
|
-
|
Dec-97
|
Mendoza
Plaza
|
-
|
-
|
30,339
|
-
|
30,339
|
30,339
|
-
|
-
|
30,339
|
|
-
|
Alto
Comahue
|
-
|
-
|
120,033
|
-
|
120,033
|
120,033
|
-
|
-
|
120,033
|
|
-
|
EH
UTE
|
-
|
-
|
39,292
|
-
|
39,292
|
39,292
|
-
|
-
|
39,292
|
|
-
|
Properties
under development
|
67,744
|
-
|
1,081,432
|
67,744
|
1,081,432
|
1,149,176
|
38,036
|
813,307
|
2,000,519
|
|
|
Others
|
|
|
|
|
|
|
|
|
|
|
|
DirecTV Arena
stadium
|
-
|
-
|
106,795
|
-
|
106,795
|
106,795
|
-
|
45,580
|
152,375
|
-
|
Feb-18
|
Others
|
-
|
-
|
106,795
|
-
|
106,795
|
106,795
|
-
|
45,580
|
152,375
|
|
|
Total
|
1,737,576
|
3,392,368
|
2,286,425
|
1,837,950
|
5,578,419
|
7,416,369
|
57,625
|
46,580,817
|
54,054,811
|
|
|
(1)
All
invesment properties are located in Argentina.
(2)
See
note 10 to our Audited Financial Statements for the roll forward on
the fair value of investment properties.
(3)
Encumbrance
antichresis.