6-K 1 irsafy23q2.htm FINANCIAL STATEMENTS AS OF DEC-2022 irsafy23q2
 
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Unaudited Condensed Interim Consolidated Financial Statements as of December 31, 2022 and for the six and three-month periods ended as of that date, presented comparatively
 
 
 
 
 
 
 
 
 
 
Legal information
 
 
Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
 
Fiscal year N°:80, beginning on July 1st, 2022.
 
Legal address: 261Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina.
 
Company activity: Real estate investment and development.
 
Date of registration of the by-laws in the Public Registry of Commerce: June 23, 1943.
 
Date of registration of last amendment of the by-laws in the Public Registry of Commerce: General Ordinary and Extraordinary Shareholders’ Meeting held on December 12, 2019 and registered in the Superintendence on October 13,2020 with the number 9896, Book 1200 Volume – of Joint Stock Companies.
 
Expiration of the Company’s by-laws: April 5, 2043.
 
Registration number with the Superintendence: 213,036.
 
Capital:810,895,390 shares. (*)
 
Common Stock subscribed, issued and paid-up nominal value (in millions of ARS):811.
 
Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
(Cresud S.A.C.I.F. y A.).
 
Legal Address: 261 Carlos Della Paolera St., 9th floor, Autonomous City of Buenos Aires, Argentina.
 
Main activity of parent Company: Real estate, agricultural, commercial and financial activities.
 
Direct and indirect interest of the Parent Company on the capital stock: 448,405,846 common shares.
 
Percentage of votes of the Parent Company (direct and indirect interest) on the shareholders’ equity:56.08% (1).
 
Type of stock
CAPITAL STATUS
Shares authorized for Public Offering (2)
Subscribed, issued and paid-upnominal value
(in millions of Pesos)
Common stock with a face value of ARS 1 per share and entitled to 1 vote each
810,895,390
811
 
(1) For computation purposes, treasury shares have been subtracted.
(2) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
 
(*) The capital increase and the issuance of shares resolvedby the board of directorson 01/13/2023, are in process of being registered in the “Inspección General de Justicia” (General Inspection of Justice).
 
 
Index
 
Glossary  ...
1
Unaudited Condensed Interim Consolidated Statements of Financial Position                                                                                                                             
2
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
3
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
4
Unaudited Condensed Interim Consolidated Statements of Cash Flows                                                                                                                             
6
Notes to the Unaudited Condensed Interim Consolidated Financial Statements:
 
Note 1 – The Group’s business and general information 
7
Note 2 – Summary of significant accounting policies 
7
Note 3 – Seasonal effects on operations 
8
Note 4 – Acquisitions and disposals 
9
Note 5 – Financial risk management and fair value estimates 
9
Note 6 – Segment information 
9
Note 7 – Investments in associates and joint ventures 
11
Note 8 – Investment properties 
12
Note 9 – Property, plant and equipment 
14
Note 10 – Trading properties 
14
Note 11 – Intangible assets 
15
Note 12 – Right-of-use assets 
15
Note 13 – Financial instruments by category 
16
Note 14 – Trade and other receivables 
17
Note 15 – Cash flow information 
18
Note 16 – Trade and other payables 
19
Note 17 – Borrowings 
19
Note 18 – Provisions 
20
Note 19 – Taxes 
21
Note 20 – Revenues 
23
Note 21 – Expenses by nature 
23
Note 22 – Cost of goods sold and services provided 
23
Note 23 – Other operating results, net 
24
Note 24 – Financial results, net 
24
Note 25 – Related party transactions 
25
Note 26 – CNV General Resolution N° 622 
27
Note 27 – Foreign currency assets and liabilities 
27
Note 28 – Other significant events of the period 
28
Note 29 – Subsequent Events 
28
 
 
Glossary
 
The following are not technical definitions, but help the reader to understand certain terms used in the wording of the notes to the Group´s Financial Statements.
 
Terms
 
Definitions
BACS
 
Banco de Crédito y Securitización S.A.
BHSA
 
Banco Hipotecario S.A.
Celap
 
Centro de Entretenimientos La Plata S.A.
CNV
 
Securities Exchange Commission
Condor
 
Condor Hospitality Trust Inc.
CPF
 
Collective Promotion Funds
Cresud
 
Cresud S.A.C.I.F. y A.
Financial Statements
 
Unaudited Condensed Interim Consolidated Financial Statements
Annual Financial Statements
 
Consolidated Financial Statements as of June 30, 2022
IAS
 
International Accounting Standards
IASB
 
International Accounting Standards Board
IFRS
 
International Financial Reporting Standards
IRSA, The Company”, “Us”, “We”
 
IRSA Inversiones y Representaciones Sociedad Anónima
IRSA CP
 
IRSA Propiedades Comerciales S.A.
GCDI
 
GCDI S.A.
MPIT
 
Minimum presumed income tax
NCN
 
Non-convertible notes
New Lipstick
 
New Lipstick LLC
Puerto Retiro
 
Puerto Retiro S.A.
TGLT
 
TGLT S.A.
Zetol
 
Zetol S.A.
 
 
 
 
 
1
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of December 31, 2022and June 30, 2022
(All amounts in millions of pesos, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Note
 
12.31.2022
 
 
06.30.2022
 
ASSETS
 
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
 
Investment properties
8
  391,197 
  419,617 
Property, plant and equipment
9
  9,066 
  11,431 
Trading properties
10, 22
  4,359 
  4,351 
Intangible assets
11
  5,054 
  4,834 
Right-of-use assets
12
  1,723 
  1,777 
Investments in associates and joint ventures
7
  24,200 
  23,083 
Deferred income tax assets
19
  125 
  109 
Income tax credit
 
  14 
  34 
Trade and other receivables
14
  5,764 
  6,204 
Investments in financial assets
13
  1,327 
  1,226 
Total non-current assets
 
  442,829 
  472,666 
Current assets
 
    
    
Trading properties
10, 22
  86 
  276 
Inventories
22
  200 
  179 
Income tax credit
 
  111 
  77 
Trade and other receivables
14
  17,080 
  15,496 
Investments in financial assets
13
  23,242 
  26,382 
Derivative financial instruments
13
  7 
  - 
Cash and cash equivalents
13
  5,677 
  18,279 
Total current assets
 
  46,403 
  60,689 
TOTAL ASSETS
 
  489,232 
  533,355 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity attributable to equity holders of the parent (according to corresponding statement)
 
  234,326 
  227,271 
Non-controlling interest
 
  15,769 
  15,557 
TOTAL SHAREHOLDERS’ EQUITY
 
  250,095 
  242,828 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Borrowings
17
  42,895 
  18,674 
Lease liabilities
 
  1,522 
  1,642 
Deferred income tax liabilities
19
  129,170 
  141,053 
Trade and other payables
16
  5,429 
  5,089 
Provisions
18
  3,705 
  280 
Salaries and social security liabilities
 
  87 
  133 
Total non-current liabilities
 
  182,808 
  166,871 
Current liabilities
 
    
    
Borrowings
17
  42,138 
  88,249 
Lease liabilities
 
  232 
  114 
Trade and other payables
16
  11,948 
  12,195 
Income tax liabilities
 
  864 
  21,629 
Provisions
18
  230 
  283 
Derivative financial instruments
13
  - 
  23 
Salaries and social security liabilities
 
  917 
  1,163 
Total current liabilities
 
  56,329 
  123,656 
TOTAL LIABILITIES
 
  239,137 
  290,527 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  489,232 
  533,355 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
.
AlejandroG. Elsztain
Vice President II
 
 
2
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements ofIncome and OtherComprehensive Income
for the six and three-month periods ended December 31, 2022 and 2021
(All amounts in millions of pesos, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Six months
 
 
Three months
 
 
Note
 
12.31.2022
 
 
12.31.2021
 
 
12.31.2022
 
 
12.31.2021
 
Revenues
20
  30,890 
  21,527 
  17,205 
  12,120 
Costs
21, 22
  (10,479)
  (8,212)
  (5,478)
  (4,447)
Gross profit
 
  20,411 
  13,315 
  11,727 
  7,673 
Net (loss) / gain from fair value adjustment of investment properties
8
  (29,530)
  43,731 
  (21,755)
  57,674 
General and administrative expenses
21
  (3,948)
  (3,689)
  (2,156)
  (2,107)
Selling expenses
21
  (1,294)
  (1,636)
  (716)
  (911)
Other operating results, net
23
  (3,061)
  (79)
  (3,284)
  (209)
(Loss) / profit from operations
 
  (17,422)
  51,642 
  (16,184)
  62,120 
Share of profit / (loss) of associates and joint ventures
7
  1,318 
  (234)
  196 
  98 
(Loss) / profit before financial results and income tax
 
  (16,104)
  51,408 
  (15,988)
  62,218 
Finance income
24
  269 
  307 
  200 
  174 
Finance costs
24
  (5,174)
  (7,513)
  (3,006)
  (3,621)
Other financial results
24
  2,545 
  14,914 
  2,293 
  8,545 
Inflation adjustment
24
  8,616 
  837 
  3,350 
  107 
Financial results, net
 
  6,256 
  8,545 
  2,837 
  5,205 
(Loss) / profit before income tax
 
  (9,848)
  59,953 
  (13,151)
  67,423 
Income tax
19
  25,284 
  (10,241)
  27,066 
  (15,536)
Profit for the period
 
  15,436 
  49,712 
  13,915 
  51,887 
Other comprehensive income:
 
    
    
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
    
    
Currency translation adjustment
 
  (395)
  (845)
  (90)
  (494)
Revaluation surplus
 
  (175)
  - 
  (175)
  - 
Total other comprehensive loss for the period
 
  (570)
  (845)
  (265)
  (494)
Total comprehensive income for the period
 
  14,866 
  48,867 
  13,650 
  51,393 
 
    
    
    
    
Profit / (loss) for the period attributable to:
 
    
    
    
    
Equity holders of the parent
 
  15,090 
  50,105 
  13,727 
  51,392 
Non-controlling interest
 
  346 
  (393)
  188 
  495 
 
    
    
    
    
Total comprehensive income / (loss) attributable to:
 
    
    
    
    
Equity holders of the parent
 
  14,518 
  49,285 
  13,443 
  50,920 
Non-controlling interest
 
  348 
  (418)
  205 
  472 
 
    
    
    
    
Profit per share attributable to equity holders of the parent: (i)
 
    
    
    
    
Basic
 
  18.85 
  61.94 
  17.14 
  63.53 
Diluted
 
  16.92 
  56.25 
  15.39 
  57.69 
 
(i)
The basic profit per share has been calculated using 800,680,810 shares at 12.31.22 and 808,898,749shares at 12.31.21. If 800,680,810 shares had been used for the calculation, the result per share would be ARS 62.58 for 12.31.21. The diluted profit per share has been calculated using 892,063,760 shares at 12.31.22 and 890,815,983 shares at 12.31.21. If 892,063,760 shares had been used for the calculation, the result per share would be ARS 56.17 for 12.31.21. See note 17 to the Annual Financial Statements as of June 30, 2022.
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
.
AlejandroG. Elsztain
Vice President II
 
 
3
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the six-monthperiodended December 31, 2022
(All amounts in millions of pesos, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Attributable to equity holders of the parent
 
 
 
 
 
 
 
 
 
Share capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding shares
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (i)
 
 
Warrants (iii)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Legal reserve
 
 
Special reserve Resolution CNV 609/12 (ii)
 
 
Other reserves (v)
 
 
Retained earnings
 
 
Subtotal
 
 
Non-controlling interest
 
 
Total Shareholders’ equity
 
Balance as of July 1, 2022
  805 
  6 
  49,409 
  4,171 
  94,303 
  348 
  4,461 
  33,130 
  (8,946)
  49,584 
  227,271 
  15,557 
  242,828 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  15,090 
  15,090 
  346 
  15,436 
Other comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (572)
  - 
  (572)
  2 
  (570)
Total comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (572)
  15,090 
  14,518 
  348 
  14,866 
Assignment of results according to A.G.O.
  - 
  - 
  - 
  - 
  - 
  - 
  2,201 
  - 
  36,723 
  (38,924)
  - 
  - 
  - 
Warrants exercise (iii)
  - 
  - 
  - 
  (1)
  3 
  - 
  - 
  - 
  - 
  - 
  2 
  - 
  2 
Repurchase of treasury shares (iv)
  (5)
  5 
  - 
  - 
  - 
  - 
  - 
  - 
  (807)
  - 
  (807)
  - 
  (807)
Dividends distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (6,209)
  (6,209)
  (152)
  (6,361)
Other changes in equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (433)
  - 
  (433)
  - 
  (433)
Reserve for share-based payments
  - 
  - 
  - 
  - 
  - 
  (3)
  - 
  - 
  3 
  - 
  - 
  - 
  - 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (16)
  - 
  (16)
  16 
  - 
Balance as of December 31, 2022
  800 
  11 
  49,409 
  4,170 
  94,306 
  345 
  6,662 
  33,130 
  25,952 
  19,541 
  234,326 
  15,769 
  250,095 
 
(i) Includes ARS2 of Inflation adjustment of treasury shares. See Note 17 to the Annual Financial Statements.
(ii) Related to CNV General Resolution N° 609/12.
(iii) As of December 31, 2022, the remaining warrants to exercise amount to 79,939,561, equivalent to the same number of shares. See Note 28 to these Financial Statements.
(iv) Related to the Shares Buyback Program approved by the Board on March 11, 2022. As of December 31, 2022 the Company has bought 9,419,623 shares. See Note 28 to these Financial Statements.
(v) Group´s other reserves for the period ended December 31, 2022 are comprised as follows:
 
 
 
Cost of treasury stock
 
 
Reserve for future dividends
 
 
Currency translation adjustment reserve
 
 
Special reserve
 
 
Other reserves (1)
 
 
Total Other reserves
 
Balance as of July 1, 2022
  (1,064)
  5,963 
  721 
  1,913 
  (16,479)
  (8,946)
Other comprehensive loss for the period
  - 
  - 
  (397)
  - 
  (175)
  (572)
Total comprehensive loss for the period
  - 
  - 
  (397)
  - 
  (175)
  (572)
Repurchase of treasury shares
  (807)
  - 
  - 
  - 
  - 
  (807)
Assignment of results according to A.G.O.
  - 
  - 
  - 
  36,723 
  - 
  36,723 
Other changes in equity
  - 
  - 
  (433)
  - 
  - 
  (433)
Reserve for share-based payments
  4 
  - 
  - 
  - 
  (1)
  3 
Changes in non-controlling interest
  - 
  - 
  - 
  - 
  (16)
  (16)
Balance as of December 31, 2022
  (1,867)
  5,963 
  (109)
  38,636 
  (16,671)
  25,952 
 
(1) Includes revaluation surplus.
 
There are no cumulative unpaid dividends on preferred shares.
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
 
.
AlejandroG. Elsztain
Vice President II
 
 
4
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the six-monthperiodended December 31, 2021
(All amounts in millions of pesos, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Attributable to equity holders of the parent
 
 
 
 
 
 
 
 
 
Share capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding shares
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (i)
 
 
Warrants
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Legal reserve
 
 
Special reserve Resolution CNV 609/12 (ii)
 
 
Other reserves (iii)
 
 
Retained earnings
 
 
Subtotal
 
 
Non-controlling interest
 
 
Total Shareholders’ equity
 
Balance as of July 1, 2021
  657 
  2 
  49,265 
  4,174 
  56,564 
  347 
  3,762 
  33,130 
  64,030 
  (66,867)
  145,064 
  49,014 
  194,078 
Profit / (loss) for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  50,105 
  50,105 
  (393)
  49,712 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (820)
  - 
  (820)
  (25)
  (845)
Total comprehensive (loss) / income for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (820)
  50,105 
  49,285 
  (418)
  48,867 
Assignment of results according to A.G.O.
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (72,009)
  72,009 
  - 
  - 
  - 
Warrants exercise
  - 
  - 
  - 
  (2)
  8 
  - 
  - 
  - 
  - 
  - 
  6 
  - 
  6 
Capitalization of irrevocable contributions
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  33 
  33 
Dividends distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (58)
  (58)
Incorporated by merger
  152 
  - 
  144 
  - 
  38,002 
  - 
  699 
  - 
  (922)
  (4,985)
  33,090 
  (33,090)
  - 
Balance as of December 31, 2021
  809 
  2 
  49,409 
  4,172 
  94,574 
  347 
  4,461 
  33,130 
  (9,721)
  50,262 
  227,445 
  15,481 
  242,926 
 
(i) Includes ARS2 of Inflation adjustment of treasury shares. See Note 17 to the Annual Financial Statements.
(ii) Related to CNV General Resolution N° 609/12.
(iii) Group’s other reserves for the period ended December 31, 2021 are comprised as follows:
 
 
 
Cost of treasury stock
 
 
Reserve for future dividends
 
 
Currency translation adjustment reserve
 
 
Special reserve
 
 
Other reserves (1)
 
 
Total Other reserves
 
Balance as of July 1, 2021
  (600)
  5,963 
  1,519 
  73,922 
  (16,774)
  64,030 
Other comprehensive loss for the period
  - 
  - 
  (820)
  - 
  - 
  (820)
Total comprehensive loss for the period
  - 
  - 
  (820)
  - 
  - 
  (820)
Assignment of results according to A.G.O.
  - 
  - 
  - 
  (72,009)
  - 
  (72,009)
Incorporated by merger
  - 
  - 
  (27)
  - 
  (895)
  (922)
Balance as of December 31, 2021
  (600)
  5,963 
  672 
  1,913 
  (17,669)
  (9,721)
 
(1) Includes revaluation surplus.
 
There are no cumulative unpaid dividends on preferred shares.
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
.
AlejandroG. Elsztain
Vice President II
 
 
5
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed InterimConsolidated Statements of Cash Flows
for the six-monthperiodsended December 31, 2022and 2021
(All amounts in millions of pesos, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
 
12.31.2022'
 
 
12.31.2021'
 
Operating activities:
 
 
 
 
 
 
 
Net cash generated from operations before income tax paid
15
  11,124 
  9,348 
Income tax paid
 
  (484)
  (208)
Net cash generated from operating activities
 
  10,640 
  9,140 
Investing activities:
 
    
    
Contributions and issuance of capital in associates and joint ventures
 
  - 
  (58)
Acquisition and improvements of investment properties
 
  (1,323)
  (2,823)
Proceeds from sales of investment properties
 
  2,128 
  8,982 
Acquisitions and improvements of property, plant and equipment
 
  (234)
  (259)
Proceeds from sales of property, plant and equipment
 
  9 
  - 
Acquisitions of intangible assets
 
  (40)
  (8)
Dividends collected from associates and joint ventures
 
  212 
  5,131 
Proceeds from loans granted
 
  - 
  651 
Payment of derivative financial instruments
 
  (10)
  (80)
Acquisitions of investments in financial assets
 
  (7,505)
  (2,686)
Proceeds from disposal of investments in financial assets
 
  10,029 
  2,843 
Interest collected
 
  105 
  230 
Proceeds from sales of intangible assets
 
  - 
  483 
Net cash generated from investing activities
 
  3,371 
  12,406 
Financing activities:
 
    
    
Borrowings and issuance of non-convertible notes
 
  2 
  13,254 
Payment of borrowings and non-convertible notes
 
  (13,684)
  (11,047)
Payment of short-term loans, net
 
  (3,221)
  (1,005)
Interests paid
 
  (4,739)
  (7,030)
Repurchase of non-convertible notes
 
  - 
  (5,378)
Proceeds from warrants exercise
 
  2 
  6 
Loans received from associates and joint ventures, net
 
  5 
  - 
Payment of borrowings to related parties
 
  (18)
  (582)
Sale of non-convertible notes in portfolio
 
  443 
  - 
Dividends paid
 
  (4,308)
  - 
Payment of lease liabilities
 
  (12)
  (25)
Repurchase of treasury shares
 
  (807)
  - 
Net proceeds from derivative financial instrument
 
  - 
  (62)
Net cash used in financing activities
 
  (26,337)
  (11,869)
Net (decrease) / increase in cash and cash equivalents
 
  (12,326)
  9,677 
Cash and cash equivalents at beginning of period
 
  18,279 
  4,531 
Inflation adjustment
 
  (227)
  (92)
Foreign exchange (loss) / gain on cash and changes in fair value for cash equivalents
 
  (49)
  35 
Cash and cash equivalents at end of period
13
  5,677 
  14,151 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
 
.
AlejandroG. Elsztain
Vice President II
 
 
6
IRSA Inversiones y Representaciones Sociedad Anónima
 
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(Amounts in millions of pesos, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
1.
The Group’s business and general information
 
These Financial Statements have been approved for issuanceby the Board of Directors, on February8, 2023.
 
IRSA was founded in 1943, and it has engaged in diverse real estate activities in Argentina since 1991. IRSA and its subsidiaries are collectively referred to hereinafter as “the Group”.
 
Cresud is our direct parent company, whose main shareholdersareInversiones Financieras del Sur S.A., Agroinvestment S.A. and Consultores Venture Capital Uruguay S.A., whose final beneficiary is Eduardo Sergio Elsztain.
 
As of the end of these Consolidated Financial Statements, the Group owns 15 shopping malls, 6 office buildings, three hotels and an extensive land reserve for future mixed-use developments. Additionally, the Group holds a 29.91% interest in Banco Hipotecario S.A. (BHSA), which is a leading commercial bank in the provision of mortgaged loans in Argentina. BHSA's shares are listed on the BYMA.
 
The Group operates and holds a majority interest (with the exception of La Ribera Shopping Center, of which it has a 50% ownership interest) in a portfolio of 14 shopping malls in Argentina, six of which are located in the Autonomous City of Buenos Aires (Abasto Shopping, Alcorta Shopping, Alto Palermo, Patio Bullrich, 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 Group also owns the historic building where the Patio Olmos Shopping Mall is located, operated by a third party.
 
Likewise, the Group manages a 6 office buildings portfolio and hasmajority stakes in three luxury hotels including the Libertador and Intercontinental hotels in the Autonomous City of Buenos Aires and the exclusive Llao Llao resort, in the city ofBariloche, in southern Argentina. Additionally, the Group participates in the development of residential properties for sale, as well as in other investments.
 
2.
Summary of significant accounting policies
 
2.1.
Basis of preparation
 
These financial statements have been prepared in accordance with IAS 34 “Interim financial reporting” and should therefore be read in conjunction with the Group's annual Consolidated Financial Statements as of June 30, 2022 prepared in accordance with IFRS. Also, these financial statements include additional information required by Law No. 19,550 and / or regulations of the CNV. Such information is included in the notes to these financial statements, as accepted by IFRS.
 
These financial statements for the interim periods of six monthsended December 31, 2022 and 2021 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
 
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
 
 
7
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
In order to conclude on whether an economy is categorized as highly inflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years thatapproximates or exceeds 100%. Accumulated inflation in Argentina in three years is over 100%. For that reason, in accordance with IAS 29, Argentina must be considered a country with a highly inflationary economy starting July 1, 2018.
 
In relation to the inflation index to be used and in accordance with FACPCE Resolution No. 539/18, it is determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of the Consumer Price Index (CPI) of the Autonomous City of Buenos Aires for the months of November and December 2015, because during those two months there were no national IPIM measurements. Then, from January 2017, the National Consumer Price Index (National CPI) is considered. The table below presents the index for the period ended December 31, 2022, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18.
 
 
 
As of December 31, 2022 (accumulated sixmonths)
 
Price variation
  43%
 
As a consequence of the aforementioned, these financial statements as of December 31, 2022were restated in accordance with IAS 29.
 
2.2.
Significant accounting policies
 
The accounting policies applied in the presentation of these Financial Statements are consistent with those applied in the preparation of the Annual Financial Statements, as described in Note 2 to those Financial Statements.
 
 
2.3.
Comparability of information
 
Balance items as of June 30, 2022 and December 31, 2021presented in these Unaudited Condensed Interim Consolidated Financial Statements for comparative purposes arise from the financial statements as of and for such periods restated according to IAS 29 (See note 2.1). Certain items from prior periods have been reclassified for consistency purposes.
 
2.4.
Use of estimates
 
The preparation of Financial Statements at a certain date requires Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements. In the preparation of these financial statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same as the ones applied by the Group in the preparation of the Annual Financial Statements described in Note 3 to those Financial Statements.
 
 
3.
Seasonal effects on operations
 
The operations of the Group’s shopping malls are subject to seasonal effects, which affect the level of sales recorded by lessees. During summertime in Argentina (January and February), the lessees of shopping malls experience the lowest sales levels in comparison with the winter holidays (July) and Christmas and year-end holidays celebrated in December, when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping malls sales. Sale discounts at the end of each season also affect the business. As a consequence, for shopping mall operations, a higher level of business activity is expected in the period from July through December, compared to the period from January through June.
 
 
 
8
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
4.
Acquisitions and disposals
 
Significant acquisitions and disposals for the six-monthperiodended December 31, 2022are detailed below. Significant acquisitions and disposals for the fiscal year ended June 30, 2022, are detailed in Note 4 to the Annual Financial Statements.
 
A.
“Della Paolera 261” floor sale
 
On August 17, the Company sold and transferred one floor of the tower “261 Della Paolera” for a total leasable area of approximately 1,184 square meters and 8 parking spaces located in the building. The transaction price was set at approximately USD 12.6 million (USD/square meters 10,60), which had already been paid.
 
B.
Córdoba barter transaction
 
On August 18, 2022, the transfer of ownership was made for the barter of the property "Lot 16" located in the province of Córdoba, whose commitment had been celebrated on May 17, 2016. The price of the transaction was USD 2 million, and in exchange, the client assumes the commitment and the obligation to transfer, under the horizontal property regime, future real estate consisting of functional units (apartments) and complementary units (storage rooms), whose construction and completion will be at its sole expense.
 
C.
Zetol – Sell of plot and Boating Trust interest
 
On November 23, 2022, Zetol sold the property number 46,931 located in Ciudad de la Costa, department of Canelones, to the Boating Trust for an amount of USD 8 million. The form of payment was the equivalent of USD 6 million in units and USD 2 million remains as an account receivable.
 
Theunits were delivered to the Maneiro family as partial cancellation of the debt that Liveck maintains with them for the purchase of the shares of Zetol.
 
Later that day, a novation agreement was made between Zetol and the Trust, substituting the receivable of USD 2 million that Zetol had for the sale of the plot, becoming trustor and beneficiary of the trust that will carry out the real estate development. Dueto this, Zetol has the right to receive the net proceeds from the sale of units, equivalent to 791.7 square meters. Such a contract has established a minimum amount to be received.
 
5.
Financial risk management and fair value estimates
 
These Financial Statements do not include all the information and disclosures on financial risk management; therefore, they should be read along with Note 5 to the Annual Financial Statements.There have been no changes in risk management or risk management policies applied by the Group since year-end.
 
From June 30, 2022and up to the date of issuance of these Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities (either measured at fair value or amortized cost).
 
6.
Segment information
 
Segmentinformation was prepared and classified according to the business in which the Group operates, they were described in Note 6 to the Annual Financial Statements.
 
Below is a summary of the Group’s operating segments and a reconciliation between the operating income according to segment information and the operating income of the Statements of Income and Other Comprehensive Income of the Group for the periods ended December 31, 2022 and 2021:
 
 
9
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Six months ended December 31, 2022
 
 
 
Total
 
 
Joint ventures (1)
 
 
Expensesand collectivepromotion funds
 
 
Elimination of inter-segment transactions and non-reportable assets / liabilities (2)
 
 
Total as per statement of income and other comprehensive income / statement of financial position
 
Revenues
  24,916 
  (138)
  6,112 
  - 
  30,890 
Costs
  (4,315)
  63 
  (6,227)
  - 
  (10,479)
Gross profit / (loss)
  20,601 
  (75)
  (115)
  - 
  20,411 
Net loss from fair value adjustment of investment properties
  (30,222)
  692 
  - 
  - 
  (29,530)
General and administrative expenses
  (3,984)
  20 
  - 
  16 
  (3,948)
Selling expenses
  (1,303)
  9 
  - 
  - 
  (1,294)
Other operating results, net
  (3,086)
  (14)
  55 
  (16)
  (3,061)
Loss from operations
  (17,994)
  632 
  (60)
  - 
  (17,422)
Share of profit of associates and joint ventures
  1,737 
  (419)
  - 
  - 
  1,318 
Segment loss
  (16,257)
  213 
  (60)
  - 
  (16,104)
Reportable assets
  436,559 
  (2,641)
  - 
  55,314 
  489,232 
Reportable liabilities
  - 
  - 
  - 
  (239,137)
  (239,137)
Net reportable assets
  436,559 
  (2,641)
  - 
  (183,823)
  250,095 
 
 
 
Six months ended December 31, 2021
 
 
 
Total
 
 
Joint ventures (1)
 
 
Expensesand collectivepromotion funds
 
 
Elimination of inter-segment transactions and non-reportable assets / liabilities (2)
 
 
Total as per statement of income and other comprehensive income / statement of financial position
 
Revenues
  17,173 
  (123)
  4,506 
  (29)
  21,527 
Costs
  (3,625)
  64 
  (4,651)
  - 
  (8,212)
Gross profit / (loss)
  13,548 
  (59)
  (145)
  (29)
  13,315 
Net gain / (loss) from fair value adjustment of investment properties
  43,602 
  129 
  - 
  - 
  43,731 
General and administrative expenses
  (3,746)
  10 
  - 
  47 
  (3,689)
Selling expenses
  (1,629)
  (7)
  - 
  - 
  (1,636)
Other operating results, net
  (117)
  - 
  56 
  (18)
  (79)
Profit / (loss) from operations
  51,658 
  73 
  (89)
  - 
  51,642 
Share of (loss) / profit of associates and joint ventures
  (152)
  (82)
  - 
  - 
  (234)
Segment profit / (loss)
  51,506 
  (9)
  (89)
  - 
  51,408 
Reportable assets
  513,155 
  (3,448)
  - 
  51,911 
  561,618 
Reportable liabilities
  - 
  - 
  - 
  (318,693)
  (318,693)
Net reportable assets
  513,155 
  (3,448)
  - 
  (266,782)
  242,925 
 
(1) Represents the equity value of joint ventures that were proportionately consolidated for segment information.
(2) Includes amounts pertaining to building administration expenses and collective promotion funds (“FPC”, as per its Spanish acronym) as well as total recovered costs, whether by way of expenses or other concepts included under financial results (for example default interest and other concepts). Includes deferred income tax assets, income tax credits, trade and other receivables, investment in financial assets, cash and cash equivalents and intangible assets except for rights to receive future units under barter agreements, net of investments in associates with negative equity which are included in provisions in the amount of ARS11as of December 31, 2021.
 
Below is a summarized analysis of the segments from the Group for the periods ended December 31, 2022 and 2021:
 
 
 
Six months ended December 31, 2022
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
Others
 
 
Total
 
Revenues
  15,793 
  1,635 
  2,172 
  4,971 
  345 
  24,916 
Costs
  (1,021)
  (127)
  (499)
  (2,392)
  (276)
  (4,315)
Gross profit
  14,772 
  1,508 
  1,673 
  2,579 
  69 
  20,601 
Net loss from fair value adjustment of investment properties
  (5,897)
  (7,934)
  (16,342)
  - 
  (49)
  (30,222)
General and administrative expenses
  (1,942)
  (228)
  (720)
  (718)
  (376)
  (3,984)
Selling expenses
  (733)
  (21)
  (140)
  (372)
  (37)
  (1,303)
Other operating results, net
  115 
  (14)
  (3)
  (24)
  (3,160)
  (3,086)
Profit / (loss) from operations
  6,315 
  (6,689)
  (15,532)
  1,465 
  (3,553)
  (17,994)
Share of profit of associates and joint ventures
  - 
  - 
  - 
  - 
  1,737 
  1,737 
Segment profit / (loss)
  6,315 
  (6,689)
  (15,532)
  1,465 
  (1,816)
  (16,257)
 
    
    
    
    
    
    
Investment properties and trading properties
  125,452 
  90,472 
  187,589 
  - 
  564 
  404,077 
Investment in associates and joint ventures
  - 
  - 
  - 
  - 
  18,255 
  18,255 
Other operating assets
  381 
  1,227 
  4,601 
  5,923 
  2,095 
  14,227 
Operating assets
  125,833 
  91,699 
  192,190 
  5,923 
  20,914 
  436,559 
 
 
 
10
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Six months ended December 31, 2021
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and developments
 
 
Hotels
 
 
Others
 
 
Total
 
Revenues
  11,668 
  2,347 
  390 
  2,694 
  74 
  17,173 
Costs
  (1,140)
  (214)
  (353)
  (1,523)
  (395)
  (3,625)
Gross profit / (loss)
  10,528 
  2,133 
  37 
  1,171 
  (321)
  13,548 
Net (loss) / gain from fair value adjustment of investment properties
  (11,530)
  1,200 
  53,757 
  - 
  175 
  43,602 
General and administrative expenses
  (1,681)
  (520)
  (806)
  (501)
  (238)
  (3,746)
Selling expenses
  (651)
  (169)
  (542)
  (238)
  (29)
  (1,629)
Other operating results, net
  (136)
  (8)
  (144)
  (8)
  179 
  (117)
(Loss) / profit from operations
  (3,470)
  2,636 
  52,302 
  424 
  (234)
  51,658 
Share of loss of associates and joint ventures
  - 
  - 
  - 
  - 
  (152)
  (152)
Segment (loss) / profit
  (3,470)
  2,636 
  52,302 
  424 
  (386)
  51,506 
 
    
    
    
    
    
    
Investment properties and trading properties
  118,214 
  159,577 
  201,500 
  - 
  731 
  480,022 
Investment in associates and joint ventures
  - 
  - 
  - 
  - 
  16,277 
  16,277 
Other operating assets
  526 
  4,814 
  4,609 
  5,926 
  981 
  16,856 
Operating assets
  118,740 
  164,391 
  206,109 
  5,926 
  17,989 
  513,155 
 
    
    
    
    
    
    
 
7.
Investments in associates and joint ventures
 
Changes in the Group’s investments in associates and joint ventures for thesix-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
December 31, 2022
 
 
June 30, 2022
 
Beginning of the period / year
  23,072 
  28,523 
Increase of equity interest and capital contributions
  - 
  1,481 
Share of profit / (loss)
  1,318 
  (508)
Currency translation adjustment
  22 
  (677)
Dividends
  (212)
  (5,131)
Others
  - 
  (616)
End of the period / year (i)
  24,200 
  23,072 
 
(i)
As of June 30, 2022 includes ARS (11), reflecting interests in companies with negative equity, which were disclosed in “Provisions” (Note 18).
 
 
% ownership interest
 
 
Value of Group's interest in equity
 
 
Group's interest in comprehensive income / (loss)
 
Name of the entity
 
December 31, 2022
 
 
June 30, 2022
 
 
December 31, 2022
 
 
June 30, 2022
 
 
December 31, 2022
 
 
December 31, 2021
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
  49.96%
  49.96%
  207 
  205 
  2 
  (11)
BHSA
  29.91%
  29.91%
  15,077 
  13,828 
  1,250 
  (364)
Quality
  50.00%
  50.00%
  5,030 
  5,520 
  (490)
  (84)
La Rural S.A.
  50.00%
  50.00%
  847 
  348 
  509 
  (9)
GCDI (former TGLT S.A.) (1)
  27.82%
  27.82%
  1,149 
  1,163 
  (14)
  (160)
Other joint ventures
  N/A 
  N/A 
  1,890 
  2,008 
  83 
  100 
Total associates and joint ventures
    
    
  24,200 
  23,072 
  1,340 
  (528)
 
Below is additional information about the Group’s investments in associates and joint ventures:
 


   
 
Latest financial statements issued
 
Name of the entity
Place of business / Country of incorporation
Main activity
 
Common shares 1 vote
 
 
Share capital (nominal value)
 
 
(Loss) / profit for the period
 
 
Shareholders’ equity
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick
U.S.
Real estate
  N/A 
  - 
  (*) (1) 
  (*) (43) 
BHSA
Argentina
Financial
  448,689,072 
  (**) 1,500 
  (**) 4,178 
  (**) 48,889 
Quality
Argentina
Real estate
  1,421,672,293 
  2,843 
  (979)
  9,841 
La Rural SA
Argentina
Organization of events
  714,998 
  1 
  (39)
  377 
GCDI (former TGLT S.A.) (1)
Argentina
Real estate
  257,330,595 
  915 
  (1,805)
  4,131 
 
 
(*) 
Amounts in millions of US Dollars under USGAAP.
(**) 
Information as of December 31, 2022 according to IFRS.
(1) 
Unaudited financial information as of December 31, 2022.
 
 
11
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Puerto Retiro (joint venture):
 
There have been no changes to what was informed in Note 8 to the Annual Financial Statements.
 
8.
Investment properties
 
Changes in the Group’s investment properties for the six-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
Six months ended December 31, 2022
 
 
Year ended June 30, 2022
 
 
 
Nivel 2
 
 
Nivel 3
 
 
Nivel 2
 
 
Nivel 3
 
Fair value at the beginning of the period / year
  298,385 
  121,232 
  219,576 
  210,117 
Additions
  501 
  849 
  10,536 
  2,936 
Capitalized leasing costs
  2 
  14 
  33 
  27 
Amortization of capitalized leasing costs (i)
  (6)
  (7)
  (52)
  (13)
Transfers
  1,351 
  591 
  89,204 
  (90,572)
Disposals
  (2,180)
  - 
  (41,656)
  - 
Currency translation adjustment
  (5)
  - 
  (49)
  - 
Net (loss) / gain from fair value adjustment (ii)
  (24,309)
  (5,221)
  20,793 
  (1,263)
Fair value at the end of the period / year
  273,739 
  117,458 
  298,385 
  121,232 
 
(i)
Amortization charges of capitalized leasing costs were recognized as follows: ARS 9 in "Costs" and ARS 4 in "General and administrative expenses" in the Statement of Income (Note 21).
 
(ii)
For the six-month period ended December 31, 2022, the net loss from fair value adjustment of investment properties was ARS 29,530. The net impact of the values in pesos of our properties was mainly a consequence of the change in macroeconomic conditions:
 
a)
gain of ARS 1,642as a consequence of the variation in the projected income growth rate increase and the conversion to dollars of the projected cash flow in pesos according to the exchange rate estimates used in the cash flow from shopping malls.
b)
positive impact of ARS 34,941resulting from the conversion into pesos of the value of the shopping malls in dollars based on the exchange rate at the end of the period.
c)
an increase of 54 basis points in the discount rate, mainly due to an increase in the country-risk rate component of the WACC discount rate used to discount the cash flow, which led to a decrease in the value of the shopping malls of ARS 3,624.
d)
Additionally, due to the impact of the inflation adjustment, ARS 38,824 were reclassified for shopping malls from “Net gain from fair value adjustment” to “Inflation Adjustment” in the Statement of Income and Other Comprehensive Income.
e)
The value of our office buildings and other rental properties measured in real terms decreased by 8,68% during the six-month period ended as of December 31, 2022, due to the variation of the implicit exchange rate. Likewise, there is an impact for the sales of the period.
 
The following is the balance by type of investment property of the Group as of June 30, 2022 and 2021:
 
 
 
12.31.2022
 
 
12.31.2021
 
Shopping Malls
  124,561 
  128,966 
Offices and other rental properties
  97,979 
  106,356 
Undeveloped parcels of land
  168,079 
  183,067 
Properties under development
  211 
  811 
Others
  367 
  417 
Total
  391,197 
  419,617 
 
    
    
 
 
 
12
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The following amounts have been recognized in the Statements of Income and Other Comprehensive Income:
 
 
 
12.31.2022
 
 
12.31.2021
 
Rental and services income (Note 20)
  17,795 
  14,082 
Direct operating expenses
  (7,673)
  (6,411)
Development expenses
  (77)
  (164)
Net realized gain from fair value adjustment of investment properties (i)
  1,101 
  4,049 
Net unrealized (loss) / gain from fair value adjustment of investment properties
  (30,631)
  39,682 
 
(i)
As of December 31, 2022 corresponds ARS 62to the realized result from fair value adjustment for the period((ARS 11) for the sale of parking spaces of Libertador 498 and ARS 73 for the sale of floors of Catalinas Building) and ARS 1,039for realized result from fair value adjustment made in previous years(ARS 48 for the sale of parking spaces of Libertador 498 and ARS 991 for the sale of floors of Catalinas Building).As of December31, 2021, (ARS 123) corresponds to the result for changes in the fair value realized for the period ((ARS 146) for the sale of Casona Hudson, (ARS 31) for the sale of the Merlo Land, (ARS 35) for the sale of the Mariano Acosta Land, (ARS 154) for the sale of parking spaces of Libertador 498 and ARS 243 for the sale of floors of Catalinas Building) and ARS 4,172 for the result of changes in fair value made in previous years (ARS 171 for the sale of Casona Hudson, ARS 150 for the sale of the Merlo Land, ARS 142 for the sale of the Mariano Acosta Land, ARS 316 for the sale of parking spaces of Libertador 498 and ARS 3,393 for the sale of floors of Catalinas Building).
 
Valuation techniques are described in Note 9 to the Annual Financial Statements. There were no changes to such techniques.
 
Costa Urbana –former Solares de Santa María– Costanera Sur, Buenos Aires City (IRSA)
 
On December 21, 2021, it was published the law from Buenos Aires City congress approving the Regulations for the development of the property of approximately 70 hectares, owned by the Company since 1997, previously known as "Solares de Santa María", located in front of the Río de la Plata in the South Coast of the Autonomous City of Buenos Aires, southeast of Puerto Madero. The published law grants a New Standard, designated: "U73 - Public Park and Costa Urbana Urbanization", which enables the combination of diverse uses such as homes, offices, retail, services, public spaces, education, and entertainment.
 
The Company will have a construction capacity of approximately 895,000 sqm, which will drive growth for the coming years through the development of mixed-use projects
 
IRSA will allocate 50.8 hectares for public use, which represents approximately 71% of the total area of the property to the development of public green spaces and will contribute with three additional lots of the property, two for the Sustainable Urban Development Fund (FODUS) and one for the Innovation Trust, Science and Technology of the Government of the Autonomous City of Buenos Aires, to which the sum of USD 2 million in cash and the amount of 3,000,000 sovereign bonds (AL35) will also be contributed
 
Likewise, the Company will be in charge of the infrastructure and road works on the property and will carry out the public space works contributing up to USD 40 million together with the maintenance of the public spaces assigned for 10 years or until the sum of USD 10 million is completed.
 
“Costa Urbana” will change the landscape of Buenos Aires City, giving life to an undeveloped area and will be in an exceptional property due to its size, location and connectivity, providing the City the possibility of expanding and recovering access to the Río de la Plata coast with areas for walks, recreation, green spaces, public parks and mixed uses.
 
On October 29, 2021, a notification was received in relation to a collective protective petition requesting the convening of a public hearing prescribed by art. 63 of the Constitution of the City of Buenos Aires and the suspension of the treatment of Bill 1831 - J 2021 (first Instance trail in contentious Administrative and Tax matters No. 10, Sec. 19 - Cause "Civil Association Observatory of the Right to the city and others against GCBA and Others on protection - others" - EXP J-01-00166469-3/2021-0). The Company proceeded to answer the notification on November 12, 2021, requesting its rejection and on March 10, 2022, the court issued a ruling partially upholding the protective petition. On March 15, 2022, IRSA appealed the ruling, as did the Government of the Autonomous City of Buenos Aires, co-defendant in the case. On March 17, 2022, the court granted the appeals in relation and with suspensive effect, of the contested sentence (in accordance with the provisions of Law No. 2145). As of the date of these Consolidated Financial Statements,the matter is to be resolved by the Administrative, Tax and Consumer Relations Litigation- Room IV.
 
 
13
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
9.
Property, plant and equipment
 
Changes in the Group’s property, plant and equipment for the six-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
Six months ended December 31, 2022
 
 
Year ended June 30, 2022
 
 
 
Buildings and facilities
 
 
Machinery and equipment
 
 
Others
 
 
Total
 
 
Total
 
Costs
  19,136 
  5,995 
  1,355 
  26,486 
  23,854 
Accumulated depreciation
  (8,360)
  (5,657)
  (1,038)
  (15,055)
  (14,127)
Net book amount at the beginning of the period / year
  10,776 
  338 
  317 
  11,431 
  9,727 
Additions
  178 
  32 
  24 
  234 
  479 
Disposals
  (9)
  - 
  - 
  (9)
  (4)
Currency translation adjustment
  - 
  - 
  - 
  - 
  (4)
Transfers
  (2,128)
  11 
  - 
  (2,117)
  2,162 
Depreciation charges (i)
  (334)
  (110)
  (29)
  (473)
  (929)
Balances at the end of the period / year
  8,483 
  271 
  312 
  9,066 
  11,431 
Costs
  17,177 
  6,038 
  1,379 
  24,594 
  26,486 
Accumulated depreciation
  (8,694)
  (5,767)
  (1,067)
  (15,528)
  (15,055)
Net book amount at the end of the period / year
  8,483 
  271 
  312 
  9,066 
  11,431 
 
(i)
As of December 31, 2022, depreciation charges of property, plant and equipment were recognized as follows: ARS322 in "Costs", ARS149 in "General and administrative expenses" and ARS 2 in "Selling expenses", respectively in the Statement of Incomeand Other Comprehensive Income (Note 21).
 
10.
Trading properties
 
Changes in the Group’s trading properties for the six-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
Six months ended December 31, 2022
 
 
Year ended June 30, 2022
 
 
 
Completed properties
 
 
Properties under development
 
 
Undeveloped sites
 
 
Total
 
 
Total
 
Beginning of the period / year
  284 
  2,331 
  2,012 
  4,627 
  4,125 
Additions
  - 
  87 
  83 
  170 
  727 
Currency translation adjustment
  - 
  (43)
  - 
  (43)
  (225)
Disposals
  (3)
  (283)
  (23)
  (309)
  - 
End of the period / year
  281 
  2,092 
  2,072 
  4,445 
  4,627 
Non-current
    
    
    
  4,359 
  4,351 
Current
    
    
    
  86 
  276 
Total
    
    
    
  4,445 
  4,627 
 
 
14
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
11.
Intangible assets
 
Changes in the Group’s intangible assets for the six-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
Six months ended December 31, 2022
 
 
Year ended June 30, 2022
 
 
 
Goodwill
 
 
Information systems and software
 
 
Contracts and others
 
 
Total
 
 
Total
 
Costs
  317 
  1,887 
  4,936 
  7,140 
  7,724 
Accumulated amortization
  - 
  (1,582)
  (724)
  (2,306)
  (2,093)
Net book amount at the beginning of the period / year
  317 
  305 
  4,212 
  4,834 
  5,631 
Additions
  - 
  40 
  333 
  373 
  147 
Disposals
  - 
  - 
  - 
  - 
  (674)
Impairment
  - 
  - 
  - 
  - 
  (57)
Amortization charges (i)
  - 
  (146)
  (7)
  (153)
  (213)
Balances at the end of the period / year
  317 
  199 
  4,538 
  5,054 
  4,834 
Costs
  317 
  1,927 
  5,269 
  7,513 
  7,140 
Accumulated amortization
  - 
  (1,728)
  (731)
  (2,459)
  (2,306)
Net book amount at the end of the period / year
  317 
  199 
  4,538 
  5,054 
  4,834 
 
(i)
As of December 31, 2022, amortization charges were recognized in the amount ofARS50 in "Costs" and ARS103in "General and administrative expenses", in the Statement of Income and Other Comprehensive Income (Note 21).
 
 
12.
Right-of-use assets
 
The Group’s right-of-use assets as of December 31, 2022and June 30, 2022 are the following:
 
 
 
December 31, 2022
 
 
June 30, 2022
 
Real Estate
  23 
  24 
Machinery and equipment
  - 
  3 
Convention center
  1,700 
  1,750 
Total Right-of-use assets
  1,723 
  1,777 
Non-current
  1,723 
  1,777 
Total
  1,723 
  1,777 
 
The depreciation charge of the right-of use-assets is detailed below:
 
 
 
December 31, 2022
 
 
December 31, 2021
 
Real Estate
  55 
  55 
Others
  - 
  14 
Total depreciation of right-of-use assets (i)
  55 
  69 
 
(i)
Asof December 31, 2022, amortization charges were recognized as follows: ARS 54in "Costs" and ARS 1 in "General and administrative expenses" in theConsolidated Statement of Income andOther Comprehensive Income (Note 21).
 
 
15
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
13.
Financial instruments by category
 
Thisnote presents the financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line in the Consolidated Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. For further information related to fair value hierarchy refer to Note 14 to the Annual Financial Statements. Financial assets and financial liabilities as of December 31, 2022are the following:
 
 
 
Financial assets at amortized cost
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
December 31, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  18,308 
  - 
  - 
  18,308 
  5,507 
  23,815 
Investments in financial assets:
    
    
    
    
    
    
  - Public companies’ securities
  - 
  2,340 
  - 
  2,340 
  - 
  2,340 
  - Mutual funds
  - 
  16,715 
  - 
  16,715 
  - 
  16,715 
  - Bonds
  - 
  4,719 
  - 
  4,719 
  - 
  4,719 
  - Others
  410 
  385 
  - 
  795 
  - 
  795 
Derivative financial instruments:
    
    
    
    
    
    
  - Swaps
  - 
  - 
  2 
  2 
  - 
  2 
  - Bond futures
  - 
  5 
  - 
  5 
  - 
  5 
Cash and cash equivalents:
    
    
    
    
    
    
  - Cash at bank and on hand
  3,282 
  - 
  - 
  3,282 
  - 
  3,282 
  - Short-term investments
  - 
  2,395 
  - 
  2,395 
  - 
  2,395 
Total assets
  22,000 
  26,559 
  2 
  48,561 
  5,507 
  54,068 
 
 
 
 
Financial liabilities at amortized cost
 
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
December 31, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  5,003 
  - 
  - 
  5,003 
  12,374 
  17,377 
Borrowings
  85,033 
  - 
  - 
  85,033 
  - 
  85,033 
Total liabilities
  90,036 
  - 
  - 
  90,036 
  12,374 
  102,410 
 
Financial assets and financial liabilities as of June 30, 2022 were as follows:
 
 
 
Financial assets at amortized cost
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
June 30, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statements of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)
  17,250 
  - 
  - 
  17,250 
  5,671 
  22,921 
Investments in financial assets:
    
    
    
    
    
    
  - Public companies’ securities
  - 
  1,926 
  - 
  1,926 
  - 
  1,926 
  - Mutual funds
  - 
  19,844 
  - 
  19,844 
  - 
  19,844 
  - Bonds
  - 
  5,445 
  - 
  5,445 
  - 
  5,445 
  - Others
  14 
  379 
  - 
  393 
  - 
  393 
Cash and cash equivalents:
    
    
    
    
    
    
  - Cash at bank and on hand
  14,328 
  - 
  - 
  14,328 
  - 
  14,328 
  - Short term investments
  - 
  3,951 
  - 
  3,951 
  - 
  3,951 
Total assets
  31,592 
  31,545 
  - 
  63,137 
  5,671 
  68,808 
 
 
 
16
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
 
Financial liabilities at amortized cost
 
 
Financial liabilities at fair value through profit or loss
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
Level 1
 
 
Level 2
 
 
 
 
 
 
 
 
 
 
June 30, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
  6,352 
  - 
  - 
  6,352 
  10,932 
  17,284 
Borrowings
  106,923 
  - 
  - 
  106,923 
  - 
  106,923 
Derivative financial instruments:
    
    
    
    
    
    
  - Swaps
  - 
  - 
  23 
  23 
  - 
  23 
Total liabilities
  113,275 
  - 
  23 
  113,298 
  10,932 
  124,230 
 
The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value, except for borrowings (Note 17). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant. Fair values are based on discounted cash flows (Level 3).
 
The valuation models used by the Group for the measurement of Level 2 and Level 3 instruments are no different from those used as of June 30, 2022.
 
As ofDecember 31, 2022, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group.
 
The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments.Details of such models are presented in the following table. When no quoted prices are available in an active market, fair values (particularly with derivatives) are based on recognized valuation methods.
 
Description
Pricing model / method
Parameters
Fair value hierarchy
 
Range
 
 
 
 
 
 
 
 
Derivative financial instruments – Swaps
Theoretical price
Underlying asset price and volatility
Level 2
  - 
 
 
14.
Trade and other receivables
 
Group’s trade and other receivables as of December 31, 2022and June 30, 2022 are as follows:
 
 
 
December 31, 2022
 
 
June 30, 2022
 
Sale, leases and services receivables
  12,308 
  11,463 
Less: Allowance for doubtful accounts
  (971)
  (1,221)
Total trade receivables
  11,337 
  10,242 
Borrowings, deposits and others
  6,248 
  6,210 
Advances to suppliers
  1,513 
  1,312 
Tax receivables
  1,247 
  1,338 
Prepaid expenses
  417 
  484 
Long-term incentive plan
  1 
  1 
Dividends
  117 
  292 
Others
  1,964 
  1,821 
Total other receivables
  11,507 
  11,458 
Total trade and other receivables
  22,844 
  21,700 
Non-current
  5,764 
  6,204 
Current
  17,080 
  15,496 
Total
  22,844 
  21,700 
 
 
 
17
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Movements on the Group’s allowance for doubtful accounts were as follows:
 
 
 
December 31, 2022
 
 
June 30, 2022
 
Beginning of the period / year
  1,221 
  1,996 
Additions (i)
  72 
  358 
Recovery (i)
  (75)
  (403)
Currency translation adjustment
  132 
  104 
Receivables written off during the period/year as uncollectible
  - 
  (17)
Inflation adjustment
  (379)
  (817)
End of the period / year
  971 
  1,221 
 
(i)
Additions and recovery of the allowance for doubtful accounts have been included in “Selling expenses” in the Statement of Income and Other Comprehensive Income (Note 21).
 
15.
Cash flow and cash equivalent information
 
Following is a detailed description of cash flows generated by the Group’s operations for the six-month periods ended December 31, 2022and 2021:
 
 
Note
 
Six months ended December 31, 2022
 
 
Six months ended December 31, 2021
 
Profit for the period
 
  15,436 
  49,712 
Adjustments for:
 
    
    
Income tax
19
  (25,284)
  10,241 
Amortization and depreciation
21
  694 
  670 
Net loss / (gain) from fair value adjustment of investment properties
 
  29,530 
  (43,731)
Gain from disposal of trading properties
 
  (1,691)
  - 
Realization of currency translation adjustment
 
  (281)
  - 
Net gain from disposal of intangible assets
 
  - 
  (150)
Financial results, net
 
  (9,231)
  (7,745)
Provisions and allowances
 
  4,540 
  1,083 
Share of (profit) / loss of associates and joint ventures
7
  (1,318)
  234 
Changes in operating assets and liabilities:
 
    
    
Increase in inventories
 
  (21)
  (10)
Decrease / (increase) in trading properties
 
  94 
  (94)
Increase in trade and other receivables
 
  (731)
  (869)
(Decrease) / increase in trade and other payables
 
  (300)
  64 
(Decrease) / increase in salaries and social security liabilities
 
  (288)
  47 
Decrease in provisions
 
  (25)
  (104)
Net cash generated by operating activities before income tax paid
 
  11,124 
  9,348 
 
The following table presents a detail of significant non-cash transactions occurred in the six-month periods ended December 31, 2022and 2021:
 
 
 
Six months ended December 31, 2022
 
 
Six months ended December 31, 2021
 
Decrease in investment properties through an increase in property, plant and equipment
  10 
  2,195 
Decrease in lease liabilities through a decrease in trade and other receivables
  - 
  6 
Increase in intangible assets through a decrease in trading properties
  333 
  - 
Currency translation adjustment and other comprehensive income
  570 
  845 
Increase in investment properties through an increase in trade and other payables
  43 
  263 
Increase in investments in associates through a decrease in investments in financial assets
  - 
  1,237 
Issuance of NCN
  26,325 
  - 
Decrease in investments in financial assets through a decrease in trade and other payables
  244 
  - 
Decrease in dividends receivables through an increase in investments in financial assets
  7 
  - 
Decrease in property, plant and equipment through an increase of revaluation surplus
  175 
  - 
Decrease in investment properties through a decrease in investments in financial assets
  52 
  - 
Decrease in property, plant and equipment through an increase in investment properties
  2,128 
  - 
Decrease in Shareholders’ Equity through a decrease in investments in financial assets
  2,053 
  - 
 
 
 
18
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
16.
Trade and other payables
 
Group’s trade and other payables as of December 31, 2022and June 30, 2022were as follows:
 
 
 
December 31, 2022
 
 
June 30, 2022
 
Customers´ advances (*)
  5,165 
  5,209 
Trade payables
  2,268 
  2,288 
Accrued invoices
  1,377 
  1,687 
Admission fees (*)
  4,585 
  3,684 
Other income to be accrued
  133 
  137 
Tenant deposits
  89 
  96 
Total trade payables
  13,617 
  13,101 
Taxes payable
  2,486 
  1,901 
Other payables
  1,274 
  2,282 
Total other payables
  3,760 
  4,183 
Total trade and other payables
  17,377 
  17,284 
Non-current
  5,429 
  5,089 
Current
  11,948 
  12,195 
Total
  17,377 
  17,284 
 
    
    
 
(*)It mainly corresponds to admission rights and rents collected in advance, which will accrue in an average term of 3 to 5 years.
 
17.
Borrowings
 
The breakdown of the Group’s borrowings as of December 31, 2022and June 30, 2022 was as follows:
 
 
 
Total as of December 31, 2022
 
 
Total as of June 30, 2022
 
 
Fair value as of December 31, 2022
 
 
Fair value as of June 30, 2022
 
NCN
  77,995 
  94,735 
  74,830 
  89,292 
Bank loans
  479 
  1,448 
  479 
  1,456 
Bank overdrafts
  4,472 
  8,400 
  4,472 
  8,400 
Other borrowings
  1,186 
  1,453 
  1,186 
  1,453 
AABE Debt
  591 
  579 
  591 
  579 
Loans with non-controlling interests
  310 
  308 
  310 
  308 
Total borrowings
  85,033 
  106,923 
  81,868 
  101,488 
Non-current
  42,895 
  18,674 
    
    
Current
  42,138 
  88,249 
    
    
Total
  85,033 
  106,923 
    
    
 
Series XIV Notes (Exchange of Series II Notes)
 
As a consequence of the regulations established by the BCRA, on July 6, 2022, the company completed the exchange of its Series II Notes, originally issued by IRSA CP, in an aggregate principal amount of USD 360 million, maturing on March 23, 2023. On July 6, 2022, the expiration of the exchange was announced, USD 239 million of Series II Notes were validly tendered and accepted, representing an acceptance of 66.38%. On July 8, the exchange offer was settled, the new Series XIV Notes were issued for an amount of USD 171.2 million and the Series II Notes were partially canceled, the outstanding principal amount is USD 121 million.
 
The exchange offered two alternatives:
 
-Option A: Cash payment for up to 30% of the total amount of participation in the exchange, and the difference to complete the exchanged face value, in Series XIV Notes with a premium of 1,015 times. For each USD 1,000 tendered, the bondholder received USD 493.18 million in cash and USD 514.42 million in Series XIV Notes. Under Option A, 60.83% of the notes were accepted.
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
-Option B: For each USD 1,000 of Series II Notes the bondholder received 1,030 of Series XIV Notes. Under Option B, 39.17% of the notes were accepted.
 
In both options, the interest accrued as of the settlement date was paid.
 
Series XIV Notes were issued under New York Law, will mature on June 22, 2028 and will accrue interest at a fixed rate of 8.75%, with interest payable semi-annually on June 22 and December 22 of each year, until expiration. Amortization will be in annual installments payable on June 22 of each year, each for 17.5% from 2024 to 2027 and the remaining 30% on June 22, 2028. The issue price was 100%.
 
18.
Provisions
 
The table below shows the movements in the Group's provisions categorized by type:
 
 
 
Six months ended December 31, 2022
 
 
Year ended June 30, 2022
 
 
 
Legal claims
 
 
Investments in associates and joint ventures (ii)
 
 
Total
 
 
Total
 
Beginning of period / year
  552 
  11 
  563 
  612 
Additions (i)
  3,865 
  - 
  3,865 
  488 
Share of profit of associates
  - 
  (11)
  (11)
  (4)
Recovery (i)
  (110)
  - 
  (110)
  (113)
Used during the period / year
  (25)
  - 
  (25)
  (139)
Inflation adjustment
  (347)
  - 
  (347)
  (281)
End of period / year
  3,935 
  - 
  3,935 
  563 
Non-current
    
    
  3,705 
  280 
Current
    
    
  230 
  283 
Total
    
    
  3,935 
  563 
 
(i) Additions and recoveryof legal claims are included in "Other operating results, net". As of December 31, 2022 it includes the provision for the IDBD´s lawsuit.
(ii) Corresponds to investments in Puerto Retiro, a joint venture withnegative equity.
 
IDBD
 
Asindicated in Note 1 to the Annual Consolidated Financial Statements as of June 30, 2022, the Group lost control of IDBD on September 25, 2020.
 
OnSeptember 21, 2020, IDBD filed a lawsuit against Dolphin Netherlands B.V. (“Dolphin BV”) and IRSA before the Tel-Aviv Jaffa District Court (civil case no. 29694-09-20). The amount claimed by IDBD is NIS 140 million, alleging that Dolphin BV and IRSA breached an alleged legally binding commitment to transfer to IDBD 2 installments of NIS 70 million. On December 24, 2020, and following approval by the insolvency court, the IDBD trustee filed a motion to dismiss the claim, maintaining the right as IDBD trustee, to file a new inter alia claim in the same matter, after conduct an investigation into the reasons for IDBD's insolvency. On December 24, 2020, the court entered a judgment to dismiss the claim as requested. On October 31, 2021, the Insolvency Commissioner notified that he did not oppose the motion, and on that same date, the court affirmed the motion initiated by the trustee of IDBD.
 
OnDecember 26, 2021 IDBD filed the lawsuit against Dolphin BV and IRSA for the sum of NIS 140 million.
 
OnJanuary 30, 2023, a copy of the lawsuit was sent to The Company and we are evaluating the legal defense alternatives for the Company's interests. The sum of NIS 70 million, equivalent to ARS 3,528 million, was accounted in provisions in these financial statements.
 
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
19.
Taxes
 
The details of the Group’s income tax, is as follows:
 
 
 
December 31, 2022
 
 
December 31, 2021
 
Current income tax
  13,385 
  (1,517)
Deferred income tax
  11,899 
  (8,724)
Income tax
  25,284 
  (10,241)
 
Below is a reconciliation between income tax recognized and the amount which would result from applying the prevailing tax rate on profit before income tax for the six-month periods ended December 31, 2022and 2021:
 
 
 
Six months ended December 31, 2022
 
 
Six months ended December 31, 2021
 
Loss/ (profit) for the period at tax rate applicable in the respective countries
  (1,075)
  (20,982)
Permanent differences:
    
    
Share of profit of associates and joint ventures
  576 
  82 
Unrecognized tax loss carryforwards
  (10,465)
  7,420 
Difference between provision and tax return
  11,312 
  407 
Inflation adjustment permanent difference
  8,662 
  9,638 
Tax rate differential
  - 
  134 
Non-taxable profit, non-deductible expenses and others
  18,459 
  (823)
Tax inflation adjustment
  (2,185)
  (6,117)
Income tax
  25,284 
  (10,241)
 
The gross movement in the deferred income tax account is as follows:
 
 
 
December 31, 2022
 
 
June 30, 2022
 
Beginning of period / year
  (140,944)
  (160,244)
Revaluation surplus reserve
  - 
  (355)
Deferred income tax charge
  11,899 
  19,655 
End of period / year
  (129,045)
  (140,944)
Deferred income tax assets
  125 
  109 
Deferred income tax liabilities
  (129,170)
  (141,053)
Deferred income tax liabilities, net
  (129,045)
  (140,944)
 
Submission of income tax presentation
 
Dated November 15, 2021 IRSA CP hereinafter "the taxpayer", which according to what is detailed in the Note. 4.C to the Consolidated Financial Statements as of June 30, 2022 has been absorbed by the Company, filed to the Argentine Tax Authority the income tax for the fiscal year ended June 30, 2021 applying the systemic and comprehensive inflation adjustment mechanism as detailed: restating tax amortizations according to articles 87 and 88; updating the computable cost of real estate acquired or built prior to July 1, 2018 and sold in this fiscal year under the terms of article 63; updating the loss of the fiscal period 2018, until the limit of the tax result of the exercise, following the methodology provided in article 25 and updating the costs of inventories as established in article 59, all articles mentioned belong to the income tax law (ordered text in 2019).
 
In the same sense, on November 16, 2022, IRSA filed to the Argentine Tax Authority the income tax for the fiscal year ended June 30, 2022, applying the same systematic and comprehensive inflation adjustment mechanism mentioned in the previous paragraph updating accumulated losses.
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The non-application of the aforementioned mechanisms would have implied that the tax to be paid amounted to ARS 1,377 in the fiscal year 2021 and ARS 11,892 in the fiscal year 2022, in this way the effective rate to be paid would have consumed a substantial portion of the income obtained by the taxpayer exceeding the reasonable limit of taxation, being configured in the opinion of the taxpayer and his tax and legal advisors an assumption of confiscation, an assumption that at the date of issuance of these financial statements has not been validated or challenged by the Argentine Tax Authority or by higher courts. Together with the aforementioned income tax presentations, a multinote form was presented in which the application of the mechanisms was reported, arguing that the effective tax rate would represent a percentage that would exceed the reasonable limits of taxation, setting up a situation of confiscation, in violation of art. 17 of the National Constitution (according to doctrine of the judgment "Candy S.A. c/AFIP and another a/ protection action", judgment of 07/03/2009, Judgments 332:1571, and subsequent precedents).
 
The aforementioned legal doctrine of the Supreme Court of Justice is fully applicable to the particular case of IRSA, since the application of the regulations that do not allow the application of the integral and systematic inflation adjustment would prevent, as happened in the "Candy case", recognizing the totality of the inflationary effect in its tax balance causing the company to pay taxes on fictitious income.
 
Asof the date of issuance of these Financial Statements, there are new jurisprudential precedents in line with the position of the Company and the “Candy” judgment mentioned above. Thus, at the end of October 2022, theSupreme Court of Justice, in the “Telefónica de Argentina S.A. and another c/ EN – AFIP – DGI s/ Dirección General Impositiva” judgment ratified the opinion of the Attorney General of the Nation issued in the “Complaint Appeal No. 1, Telefónica de Argentina S.A. and Other c/ EN-AFIP DGI s/ Dirección General Impositiva” maintaining the inadmissibility of a tax that results confiscatory for the taxpayer in its application.
 
Considering the foregoing, the Company's Board of Directors together with its legal and tax advisors re-evaluated during the present period the accounting decision taken at the end of the previous fiscal year 2021, in light of the new elements of judgment, and concluded that all the existing evidence and, in particular, the last sentence of the Supreme Court of Justice of the Nation, mentioned in the previous paragraph, configure a position of favorability greater than a position of rejection in higher instances in the face of a possible controversy with the Argentine Tax Authority. For all the detailed reasons, they have decided, following the guidelines established by the IFRS, to reverse the provision for the aforementioned tax registered as of June 30, 2022 and 2021 for $13,979 million, their provisioned interest accounted at the closing of the Annual Financial Statements for ARS 366 million and register in the deferred income tax, the updating of the remaining losses, aligning the accounting treatment with the tax criteria duly presented.
 
Notwithstanding, IRSA did not recognize assets for deferred income tax (loss) for ARS10,451 for fiscal year 2023, as detailed below.
 
The Group analyzes the recoverability of its deferred tax assets when there are events or changes in circumstances that imply a potential indication of revaluation or devaluation. The value in use is determined on the basis of projected tax cash flows.
 
The aforementioned cash flows are prepared based on estimates regarding the future behavior of certain variables that are sensitive in determining the recoverable value, among which are: (i) sales projections; (ii) expense projections; (iii) macroeconomic variables such as growth rates, inflation rates, exchange rates, among others.
 
Aspreviously mentioned, during this period, the Company reassessed its position regarding the eventual tax controversy and reversed the originally recognized liability. Such reassessment also implied the need to analyze the recoverability of the losses that originate from the application of the methodology mentioned. The Company prepared its tax projections and considering, among other aspects, that these assets have a legal prescription period, that estimates include assumptions with high volatility and instability due to the current macroeconomic context where it carries out its business, that the consumption or not of this tax asset is also associated with possible sales of real estate whose realization is uncertain, the Company has decided for a prudential criterion to keep it provisioned, until the moment in which the aforementioned variables stabilize and the projected scenarios are consolidated, in order to avoid recognizing uncertain assets and whose recoverability is highly volatile and tied to elements beyond their control.
 
 
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IRSA Inversiones y Representaciones Sociedad Anónima
 
 
20.
Revenues
 
 
 
Six months ended December 31, 2022
 
 
Six months ended December 31, 2021
 
Base rent
  8,088 
  6,861 
Contingent rent
  7,127 
  6,042 
Admission rights
  1,235 
  906 
Parking fees
  649 
  383 
Commissions
  319 
  243 
Property management fees
  151 
  168 
Others
  148 
  115 
Averaging of scheduled rent escalation
  78 
  (636)
Rentals and services income
  17,795 
  14,082 
Revenue from hotels operation and tourism services
  4,970 
  2,693 
Sale of trading properties
  2,012 
  245 
Total revenues from sales, rentals and services
  24,777 
  17,020 
Expenses and collective promotion fund
  6,113 
  4,507 
Total revenues from expenses and collective promotion funds
  6,113 
  4,507 
Total Group’s revenues
  30,890 
  21,527 
 
21.
Expenses by nature
 
The Group discloses expenses in the statements of income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosures regarding expenses by nature and their relationship to the function within the Group.
 
 
 
Costs
 
 
General and administrative expenses
 
 
Selling expenses
 
 
Total as of December 31, 2022
 
 
Total as of December 31, 2021
 
Cost of sale of goods and services
  684 
  - 
  - 
  684 
  300 
Salaries, social security costs and other personnel expenses
  3,302 
  1,709 
  214 
  5,225 
  4,588 
Depreciation and amortization
  435 
  257 
  2 
  694 
  670 
Fees and payments for services
  202 
  548 
  146 
  896 
  802 
Maintenance, security, cleaning, repairs and others
  2,831 
  301 
  3 
  3,135 
  2,683 
Advertising and other selling expenses
  2,120 
  1 
  139 
  2,260 
  1,185 
Taxes, rates and contributions
  651 
  125 
  775 
  1,551 
  1,957 
Director´s fees
  - 
  780 
  - 
  780 
  750 
Leases and service charges
  111 
  74 
  5 
  190 
  249 
Allowance for doubtful accounts, net
  - 
  - 
  (3)
  (3)
  71 
Other expenses
  143 
  153 
  13 
  309 
  282 
Total as of December 31, 2022
  10,479 
  3,948 
  1,294 
  15,721 
  - 
Total as of December 31, 2021
  8,212 
  3,689 
  1,636 
  - 
  13,537 
 
22.
Cost of goods sold and services provided
 
 
 
Total as of December 31, 2022
 
 
Total as of December 31, 2021
 
Inventories at the beginning of the period
  4,806 
  4,293 
Purchases and expenses
  10,670 
  8,433 
Currency translation adjustment
  (43)
  (252)
Disposals
  (309)
  - 
Inventories at the end of the period
  (4,645)
  (4,262)
Total costs
  10,479 
  8,212 
 
 
 
23
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The following table presents the composition of the Group’s inventories as of December 31, 2022and June 30, 2022:
 
 
 
Total as of December 31, 2022
 
 
Total as of June 30, 2022
 
Real estate
  4,445 
  4,627 
Others
  200 
  179 
Total inventories at the end of the period (*)
  4,645 
  4,806 
 
(*) Inventories include trading properties and inventories.
 
23.
Other operating results, net
 
 
 
Six months ended December 31, 2022
 
 
Six months ended December 31, 2021
 
Realization of currency translation adjustment (*)
  285 
  - 
Donations
  (60)
  (67)
Lawsuits and other contingencies
  (3,763)
  (262)
Administration fees
  39 
  22 
Interest and allowances generated by operating credits
  207 
  154 
Others
  231 
  74 
Total other operating results, net
  (3,061)
  (79)
 
(*) Corresponds to the liquidation of Condor, Real Estate Investment Group VII LP and Jiwin S.A.
 
24.
Financial results, net
 
 
 
Six months ended December 31, 2022
 
 
Six months ended December 31, 2021
 
Finance income:
 
 
 
 
 
 
 - Interest income
  269 
  307 
Total finance income
  269 
  307 
Finance costs:
    
    
 - Interest expenses
  (4,779)
  (6,832)
 - Other finance costs
  (395)
  (681)
Subtotal finance costs
  (5,174)
  (7,513)
Capitalized finance costs
  - 
  - 
Total finance costs
  (5,174)
  (7,513)
Other financial results:
    
    
 - Fair value gain of financial assets and liabilities at fair value through profit or loss, net
  853 
  1,668 
 - Exchange differences, net
  1,862 
  11,661 
 - Gain from repurchase of negotiable obligations
  81 
  1,538 
 - Gain from derivative financial instruments, net
  23 
  21 
 - Other financial results
  (274)
  26 
Total other financial results
  2,545 
  14,914 
 - Inflation adjustment
  8,616 
  837 
Total financial results, net
  6,256 
  8,545 
 
 
 
24
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
25.
Related party transactions
 
The following is a summary of the balances with related parties as of December 31, 2022and June 30, 2022:
 
Item
 
 December 31, 2022
 
 
 June 30, 2022
 
Trade and other receivables
  5,965 
  6,269 
Investments in financial assets
  2,518 
  4,055 
Borrowings
  (211)
  (237)
Trade and other payables
  (1,168)
  (1,594)
Total
  7,104 
  8,493 
 
 Related party
 
 December 31, 2022
 
 
 June 30, 2022
 
 Description of transaction
 Item
New Lipstick LLC
  43 
  43 
 Reimbursement of expenses receivable
 Trade and other receivables
Comparaencasa Ltd.
  386 
  391 
 Other investments
 Investments in financial assets
 
  - 
  (59)
 Others
 Trade and other payables
Galerias Pacifico
  1,632 
  1,006 
 Others
 Trade and other receivables
La Rural S.A.
  395 
  352 
 Loans granted
 Trade and other receivables
 
  117 
  292 
 Dividends
 Trade and other receivables
 
  (20)
  (7)
 Others
 Trade and other payables
 
  8 
  6 
 Others
 Trade and other receivables
 
  (2)
  - 
 Leases and/or rights of use payable
Trade and other payables
Other associates and joint ventures
  - 
  1 
 Reimbursement of expenses receivable
 Trade and other receivables
 
  (62)
  (87)
 Borrowings
 Borrowings
 
  9 
  10 
  Leases and/or rights of use receivable
Trade and other receivables
 
  24 
  - 
 Unpaid contributions
 Trade and other payables
 
  22 
  27 
 Management Fee
 Trade and other receivables
 
  (88)
  (90)
 NCN
 Borrowings
 
  (33)
  (60)
 Others
 Trade and other payables
 
  19 
  72 
 Others
 Trade and other receivables
 
  1 
  1 
 Share based payments
 Trade and other payables
Total associates and joint ventures
  2,451 
  1,898 
 
 
Cresud
  5 
  7 
 Reimbursement of expenses receivable
 Trade and other receivables
 
  (233)
  (595)
 Corporate services payable
 Trade and other payables
 
  2,132 
  3,664 
 NCN
 Investment in financial assets
 
  (306)
  (293)
 Others
 Trade and other payables
 
  (3)
  (4)
 Share based payments
 Trade and other payables
Total parent company
  1,595 
  2,779 
 
 
Futuros y Opciones S.A.
  2 
  3 
 Others
 Trade and other receivables
Helmir S.A.
  (61)
  (60)
 NCN
Borrowings
Total subsidiaries of parent company
  (59)
  (57)
 
 
Directors
  (453)
  (521)
 Fees for services received
 Trade and other payables
 
  - 
  862 
 Advances
 Trade and other receivables
Yad Leviim LTD
  3,198 
  3,160 
 Loans granted
 Trade and other receivables
Others (1)
  (12)
  (19)
 Legal Services
 Trade and other payables
 
  488 
  392 
 Others
 Trade and other receivables
 
  (102)
  (20)
 Others
 Trade and other payables
 
  (29)
  (17)
 Management Fee
 Trade and other payables
 
  27 
  36 
 Reimbursement of expenses receivable
 Trade and other receivables
Total directors and others
  3,117 
  3,873 
 
 
 Total at the end of the period / year
  7,104 
  8,493 
 
 
 
(1) Includes CAMSA, Estudio Zang, Bergel & Viñes, Austral Gold, Fundación IRSA, Hamonet S.A., Gary Gladstein and Fundación Museo de los Niños.
 
 
25
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
The following is a summary of the results with related parties for the six-monthperiods ended December 31, 2022and 2021:
 
Related party
 
 Six months ended December 31, 2022
 
 
 Six months ended December 31, 2021
 
Description of transaction
 BACS
  - 
  43 
 Leases and/or rights of use
Condor
  2 
  (4)
 Financial operations
 BHN Vida S.A
  (2)
  23 
 Leases and/or rights of use
BHN Seguros Generales S.A.
  - 
  21 
 Financial operations
 Comparaencasa Ltd.
  7 
  - 
 Financial operations
 Otras asociadas y negocios conjuntos
  42 
  - 
 Financial operations
 
  (18)
  - 
 Leases and/or rights of use
 
  32 
  - 
 Corporate services
Total associates and joint ventures
  63 
  83 
 
Cresud
  35 
  58 
 Leases and/or rights of use
 
  - 
  (631)
 Corporate services
 
  939 
  (245)
 Financial operations
Total parent company
  974 
  (818)
 
 Helmir
  (5)
  2 
 Financial operations
Total parent company
  (5)
  2 
 
 Directors
  (780)
  (721)
 Fees and remunerations
 Yad Leviim LTD
  72 
  86 
 Financial operations
 Others (1)
  59 
  - 
 Financial operations
 
  3 
  - 
 Leases and/or rights of use
 
  (50)
  (33)
 Donations
 
  (35)
  (33)
 Legal services
 
  (22)
  - 
 Fees and remuneration
 Otras (1)
  6 
  - 
 Legal services
Total others
  (747)
  (701)
 
Total at the end of the period
  285 
  (1,434)
 
 
(1)
Includes Isaac Elsztain e Hijos, CAMSA. Hamonet S.A., Estudio Zang, Bergel y Viñes, Austral Gold, La Rural, GDCIand Fundación IRSA.
 
The following is a summary of the transactions with related parties for the six-monthperiods ended December 31, 2022and 2021:
 
Related party
 
 Six months ended December 31, 2022
 
 
 Six months ended December 31, 2021
 
Description of the operation
Quality
  - 
  58 
Capital contributions
Condor
  - 
  1,237 
Exchange of shares
Total capital contributions
  - 
  1,295 
 
Condor
  69 
  5,131 
Dividends received
Nuevo Puerto Santa Fe
  143 
  - 
Dividends received
Total other transactions
  212 
  5,131 
 
 
 
 
26
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
26.
CNV General Resolution N° 622
 
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622, below there is a detail of the notes to the Unaudited Condensed Interim Consolidated Financial Statements that disclose the information required by the Resolution in Exhibits.
 
Exhibit A - Property, plant and equipment
Note 8 Investment properties and Note 9 Property, plant and equipment
Exhibit B - Intangible assets
Note 11 Intangible assets
Exhibit C - Investment in associates
Note 7 Investments in associates and joint ventures
Exhibit D - Other investments
Note 13 Financial instruments by category
Exhibit E – Provisions
Note 14Trade and other receivables and Note 18 Provisions
Exhibit F - Cost of sales and services provided
Note 22Cost of goods sold and services provided
Exhibit G - Foreign currency assets and liabilities
Note 27 Foreign currency assets and liabilities
 
27.
Foreign currency assets and liabilities
 
Book amounts of foreign currency assets and liabilities are as follows:
 
Item / Currency (1)
 
Amount (2)
 
 
Peso exchange rate (3)
 
 
Total as of 12.31.2022
 
 
Total as of 06.30.2022
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  26.34 
  176.96 
  4,662 
  4,883 
Euros
  0.08 
  189.26 
  15 
  16 
Receivables with related parties:
    
    
    
    
US Dollar
  19.10 
  177.16 
  3,384 
  3,239 
Total trade and other receivables
    
    
  8,061 
  8,138 
Investments in financial assets
    
    
    
    
US Dollar
  26.99 
  176.96 
  4,777 
  2,465 
Pounds
  0.72 
  213.91 
  153 
  140 
New Israel Shekel
  10.54 
  50.40 
  531 
  821 
Investments with related parties:
    
    
    
    
US Dollar
  13.01 
  177.16 
  2,304 
  4,098 
Total investments in financial assets
    
    
  7,765 
  7,524 
Derivative financial instruments
    
    
    
    
US Dollar
  0.04 
  176.96 
  7 
  - 
Total Derivative financial instruments
    
    
  7 
  - 
Cash and cash equivalents
    
    
    
    
US Dollar
  14.05 
  176.96 
  2,487 
  13,197 
Euros
  0.01 
  189.26 
  2 
  1 
Total cash and cash equivalents
    
    
  2,489 
  13,198 
Total Assets
    
    
  18,322 
  28,860 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  9.12 
  177.16 
  1,615 
  1,535 
Euros
  - 
  189.92 
  - 
  1 
Payables to related parties:
    
    
    
    
US Dollar
  0.03 
  177.16 
  6 
  86 
Total Trade and other payables
    
    
  1,621 
  1,622 
Borrowings
    
    
    
    
US Dollar
  406.29 
  177.16 
  71,979 
  89,423 
Borrowings with related parties
    
    
    
    
US Dollar
  1.11 
  177.16 
  196 
  199 
Total Borrowings
    
    
  72,175 
  89,622 
Derivative financial instruments
    
    
    
    
US Dollar
  - 
  177.16 
  - 
  23 
Total derivative financial instruments
    
    
  - 
  23 
Lease liabilities
    
    
    
    
US Dollar
  9.29 
  177.16 
  1,645 
  1,595 
Total lease liabilities
    
    
  1,645 
  1,595 
Provisions
    
    
    
    
New Israel Shekel
  70.00 
  50.40 
  3,528 
  - 
Total Provisions
    
    
  3,528 
  - 
Total Liabilities
    
    
  78,969 
  92,862 
 
(1) Considering foreign currencies as those that differ from each Group’s subsidiaries functional currency at each period/year-end.
(2) Stated in millionsof each foreign currency.
(3) Exchange ratesas of December 31, 2022according to Banco de la Nación Argentina.
 
 
27
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
28.
Other relevant events of the period
 
Shares Buyback Program extension and completion
 
On July 12, 2022, the Board of Directors resolved to extend the term of the shares repurchase plan that was determined by the Board of Directors on March 11, 2022, for an additional period of one hundred and twenty (120) days, maintaining the other terms and conditions that were duly informed.
 
On September 22, 2022, the Company completed the share buyback program, having acquired the equivalent of 9,419,623 IRSA common shares, which represent approximately 99.51% of the approved program and 1.16% of the outstanding shares.
 
 
Ordinaryand Extraordinary Shareholders' Meeting - IRSA
 
On October 28, 2022, the Ordinary and Extraordinary Shareholders’ Meeting resolved:
 
The distribution of a dividend to shareholders for up to ARS 4,340 million, payable in cash and/or in kind.
On October 31, 2022, the Board of Directors established the payment thereof in cash
The creation of a new incentive plan for employees, management and directors to join without a share premium for up to 1.16% of the Share Capital.
 
 
Change in Warrants terms and conditions
 
Because of the payment of cash dividends made on November 8, 2022, certain terms and conditions of the outstanding warrants to subscribe common shares have changed:
 
●
Number of shares to be issued per warrant: Pre-dividend ratio: 1. Post-dividend ratio: 1.0442.
 
●
Exercise price per new share to be issued: Pre-dividend price: USD 0.432. Post-dividend price: USD 0.414.
 
The other terms and conditions of the warrants remain the same.
 
Warrants exercise
 
During the six-month period ended December 31, 2022, certain warrant holders exercised their right to acquire additional shares. For this reason, USD 6,718 were received, due to the conversion of15,561warrants to common shares. Amounts in USD are expressed in integers.
 
29.
Subsequent events
 
Series XV and XVI Notes
 
On January 31, 2023, IRSA issued new Notes for a total amount of USD 90.0 million.
 
●
Series XV (dollar MEP): for USD 61.75 million at a fixed rate of 8.0%, with semi-annual payments. Theprincipal will be paid at maturity on March 25, 2025. The price of issuance was 100.0% of the nominal value.
 
●
Series XVI (blue chip swap dollar): for USD 28.25 million at a fixed rate of 7.0%, with semi-annual payments.The principal will be paid at maturity on July 25, 2025. The price of issuance was 100.0% of the nominalvalue. USD 5.07million were subscribed in cash and USD 23.18 million in kind with Series IX Notes (NominalValue USD 22.5 million).
 
 
 
28
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
Series II Notes Redemption
 
Afterthe end of the period, on February 3, 2023, The Company resolved to early redeem the total outstanding amountof Series II Notes, for USD 121 million maturing on March 23,2023. The proposed redemption will take place on February 3,2023, in accordance with the terms and conditions detailed inthe Offering Memorandum of Series II Notes. The redemptionprice was 100% of the face value of the Series II Notes, plus accrued and unpaid interest, as of thedate set for redemption.
 
Series IX Notes Partial Cancellation
 
 
On February 6, 2023, and regarding the issuance of Series XVI Notes, which were partiallysubscribed with Series IX Notes, the Company announced that it will proceed to cancel the Notes detailed below:
 
●
Series IX Notes:
 
Issuance Date: November 12, 2020
Maturity Date: March 1, 2023
Nominal Value originally issued: USD 81 million
Nominal Value to be cancelled: USD 22.5 million
Nominal Value under circulation: USD 58 million
 
 
 
 
 
29
 
 
 
 
 
 
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
To the Shareholders, President and Directors of
IRSA Inversiones y Representaciones Sociedad Anónima
Legal address: Carlos Della Paolera 261 - 9th floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52532274-9
 
Introduction
We have reviewed the accompanying unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima and its subsidiaries (“the Company”), which comprise the unaudited condensed interim consolidated statement of financial position at December 31, 2022, the unaudited condensed interim consolidated statements of income and other comprehensive income for the six month period and three month period ended December 31, 2022, the unaudited condense interim consolidated statements of changes in shareholders’ equity and of cash flows for the six month period then ended, and selected explanatory notes.
 
The balances and other information for the fiscal year ended on June 30, 2022 and its interim periods are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.
 
Management’s responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim consolidated financial statements in accordance with International Financial Reporting Standards, adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and included by the National Securities Commission (CNV) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the unaudited condensed interim consolidated financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 Interim Financial Information (IAS 34).
 
Scope of our review
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim consolidated financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated statement of financial position and the consolidated statements of income and other comprehensive income and of cash flows of the Company.
 
 
30
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Conclusion
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim consolidated financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34 Interim financial reporting.
 
Report on compliance with current regulations
In accordance with current regulations, we report, in connection with IRSA Inversiones y Representaciones Sociedad Anónima, that:
 
a)
the unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima have not been transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
 
b)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal aspects in accordance with legal requirements except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the General Journal Book of the accounting entries corresponding to the month of December 2022;
 
c)
we have read the Business Summary (“Reseña Informativa”), on which we have no observations to make regarding matters that are within our competence;
 
d)
at December 31, 2022 the debt of IRSA Inversiones y Representaciones Sociedad Anónima accrued in favor of the Argentine Integrated Social Security System, as shown by the Company’s accounting records, amounted to ARS 83,115,169, which was not due at that date.
 
Autonomous City of Buenos Aires, February 8, 2023.
 
PRICE WATERHOUSE & CO. S.R.L.
(Partner)
 
ABELOVICH, POLANO & ASOCIADOS S.R.L.
(Partner)
C.P.C.E.C.A.B.A. V° 1 F° 17
 
C.P.C.E.C.A.B.A. V. 1 F. 30
Marcelo Héctor Fuxman
Public Accountant (UBA)
C.P.C.E. C.A.B.A. V. 134 F. 85
Carlos Brondo
Public Accountant (UNCUYO)
C.P.C.E.C.A.B.A. V. 391 F. 078
 
Noemí I. Cohn
Public Accountant (UBA)
C.P.C.E. C.A.B.A. V. 116 F. 135
 
 
31
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Unaudited Condensed Interim Separate Financial Statements as of December 31, 2022and for the six and three-month periods ended as of that date, presented comparatively
 
 
 
 
 
 
 
 
 
 
 
32
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Financial Position
as of December 31, 2022and June 30, 2022
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
 
12.31.2022
 
 
06.30.2022
 
ASSETS
 
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
 
Investment properties
7
  298,377 
  322,024 
Property, plant and equipment
8
  2,860 
  2,982 
Trading properties
9
  2,066 
  2,007 
Intangible assets
10
  4,563 
  4,338 
Rights of use assets
11
  452 
  856 
Investments in subsidiaries, associates and joint ventures
6
  104,905 
  113,933 
Income tax credit
 
  - 
  13 
Trade and other receivables
13
  1,309 
  1,195 
Total non-current assets
 
  414,532 
  447,348 
Current assets
 
    
    
Trading properties
9
  6 
  9 
Inventories
 
  82 
  77 
Income tax credit
 
  84 
  52 
Trade and other receivables
13
  15,717 
  10,928 
Investments in financial assets
12
  20,593 
  23,459 
Cash and cash equivalents
12
  1,577 
  15,004 
Total current assets
 
  38,059 
  49,529 
TOTAL ASSETS
 
  452,591 
  496,877 
SHAREHOLDERS’ EQUITY
 
    
    
Shareholders' equity (according to corresponding statements)
 
  234,657 
  227,602 
TOTAL SHAREHOLDERS’ EQUITY
 
  234,657 
  227,602 
LIABILITIES
 
    
    
Non-current liabilities
 
    
    
Trade and other payables
14
  3,981 
  3,763 
Borrowings
15
  45,243 
  28,925 
Deferred income tax liabilities
16
  106,360 
  116,313 
Provisions
17
  264 
  273 
Total non-current liabilities
 
  155,848 
  149,274 
Current liabilities
 
    
    
Trade and other payables
14
  8,245 
  9,012 
Salaries and social security liabilities
 
  363 
  648 
Borrowings
15
  53,321 
  89,611 
Derivative financial instruments
 
  - 
  20,522 
Provisions
17
  157 
  207 
Lease liabilities
 
  - 
  1 
Total current liabilities
 
  62,086 
  120,001 
TOTAL LIABILITIES
 
  217,934 
  269,275 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
 
  452,591 
  496,877 
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
.
AlejandroG. Elsztain
VicePresident II
 
1
33
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements ofIncome and Other Comprehensive Income
for the six and three-month periods ended December 31, 2022 and 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Six month
 
 
Three month
 
 
Note
 
12.31.2022
 
 
12.31. 2021
 
 
12.31. 2022
 
 
12.31. 2021
 
Revenues
18
  19,070 
  14,917 
  10,218 
  14,829 
Costs
19
  (6,520)
  (5,556)
  (3,394)
  (5,447)
Gross profit
 
  12,550 
  9,361 
  6,824 
  9,382 
Net (loss)/ gain from fair value adjustment of investment properties
7
  (22,504)
  46,296 
  (16,738)
  48,114 
General and administrative expenses
19
  (2,788)
  (2,807)
  (1,515)
  (2,450)
Selling expenses
19
  (781)
  (1,286)
  (453)
  (1,221)
Other operating results, net
20
  277 
  (86)
  277 
  (128)
(Loss)/ Profit from operations
 
  (13,246)
  51,478 
  (11,605)
  53,697 
Share of (loss)/ profit of subsidiaries, associates and joint ventures
6
  (1,951)
  (2,320)
  (1,882)
  1,111 
(Loss)/ Profit before financial results and income tax
 
  (15,197)
  49,158 
  (13,487)
  54,808 
Finance income
21
  48 
  185 
  18 
  167 
Finance costs
21
  (4,347)
  (7,328)
  (2,208)
  (6,198)
Other financial results
21
  1,562 
  16,010 
  511 
  13,135 
Inflation adjustment
21
  8,521 
  1,095 
  3,803 
  1,464 
Financial results, net
 
  5,784 
  9,962 
  2,124 
  8,568 
(Loss)/ Profit before income tax
 
  (9,413)
  59,120 
  (11,363)
  63,376 
Income tax
16
  24,503 
  (9,692)
  25,089 
  (12,652)
Profit for the period
 
  15,090 
  49,428 
  13,726 
  50,724 
 
    
    
    
    
Other comprehensive income:
 
    
    
    
    
Items that may be reclassified subsequently to profit or loss:
 
    
    
    
    
Currency translation adjustment and other comprehensive results of subsidiaries, associates and joint ventures
 
  (572)
  (820)
  (285)
  (472)
Total other comprehensive loss for the period (i)
 
  (572)
  (820)
  (285)
  (472)
Total comprehensive income for the period
 
  14,518 
  48,608 
  13,441 
  50,252 
 
    
    
    
    
Profit per share for the period (ii)
 
    
    
    
    
Basic
 
  18.85 
  61.10 
  17.14 
  62.70 
Diluted
 
  16.92 
  55.47 
  15.39 
  56.93 
 
(i)
Components of other comprehensive income have no impact on income tax.
(ii)
The basic profitper share has been calculated using 800,680,810 shares at12.31.22 and 808,898,749 at12.31.21. If 800,680,810 shares had been used for the calculation, the profit per share would be ARS$ 61.73for12.31.21. The diluted profit per share has been calculated using 892,063,760 shares at 12.31.22 and 890,815,983 at 12.31.21. If 892,063,760 shares had been used for the calculation, the profit per share would be ARS $ 55.41 for 12.31.2021 See Note 17 to the Annual Financial Statements as of June 30, 2022.
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
 
.
AlejandroG. Elsztain
VicePresident II
 
 
34
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the six-month period ended December 31, 2022
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
Share capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding shares
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (1)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Warrants (2)
 
 
Legal reserve
 
 
CNV 609/12 Resolution reserve
 
 
 Other reserves (3)
 
 
Retained earnings
 
 
Total Shareholders’ equity
 
Balance as of June 30, 2022
  805 
  6 
  49,409 
  94,303 
  348 
  4,171 
  4,461 
  33,141 
  (3,058)
  44,016 
  227,602 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  15,090 
  15,090 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (572)
  - 
  (572)
Repurchase of treasury shares
  (5)
  5 
  - 
  - 
  - 
  - 
  - 
  - 
  (807)
  - 
  (807)
Exercise of warrants
  - 
  - 
  - 
  3 
  - 
  (1)
  - 
  - 
  - 
  - 
  2 
Reserve for share-based payments
  - 
  - 
  - 
  - 
  (3)
  - 
  - 
  - 
  3 
  - 
  - 
Dividends distribution
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (6,209)
  (6,209)
Shareholders’ meeting held as of 10.28.22
  - 
  - 
  - 
  - 
  - 
  - 
  2,201 
  - 
  36,723 
  (38,924)
  - 
Other changes in shareholders’ equity
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (449)
  - 
  (449)
Balance as of December 31, 2022
  800 
  11 
  49,409 
  94,306 
  345 
  4,170 
  6,662 
  33,141 
  31,840 
  13,973 
  234,657 
 
(1) IncludesARS 1 ofinflation adjustment of treasury shares. See Note 17of Consolidated Financial Statements as of June 30, 2022.
(2) As of December 31, 2022, the remaining warrants to exercise amount to 79.939.561, equivalent to the same number of shares. See Note 28 to the interim condensed consolidated financial statements.
(3) The composition of other reserves of the Company as of December 31, 2022 is as follows:
 
 
 
 
Cost of treasury shares
 
 
Reserve for future dividends
 
 
Reserve for currency translation adjustment
 
 
Special reserve
 
 
Other reserves (i)
 
 
Total other reserves
 
Balance as of June 30, 2022
  (1,064)
  5,963 
  721 
  1,913 
  (10,591)
  (3,058)
Other comprehensive loss for the period
  - 
  - 
  (397)
  - 
  (175)
  (572)
Repurchase of treasury shares
  (807)
  - 
  - 
  - 
  - 
  (807)
Reserve for share-based payments
  4 
  - 
  - 
  - 
  (1)
  3 
Shareholders’ meeting held as of 10.28.22
  - 
  - 
  - 
  36,723 
  - 
  36,723 
Other changes in shareholders’ equity
  - 
  - 
  (433)
  - 
  (16)
  (449)
Balance as of December 31, 2022
  (1,867)
  5,963 
  (109)
  38,636 
  (10,783)
  31,840 
 
(i)
Includes revaluation surplus
 
There are no cumulative unpaid dividends on preferred shares
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
 
 
.
AlejandroG. Elsztain
VicePresident II
 
 
35
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the six-month period ended December 31, 2021
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
Share capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding shares
 
 
Treasury shares
 
 
Inflation adjustment of share capital and treasury shares (1)
 
 
Share premium
 
 
Additional paid-in capital from treasury shares
 
 
Warrants (2)
 
 
Legal reserve
 
 
CNV 609/12 Resolution reserve
 
 
Other reserves (3)
 
 
Retained earnings
 
 
Total Shareholders’ equity
 
Balance as of June 30, 2021
  657 
  2 
  49,265 
  56,564 
  347 
  4,174 
  3,762 
  33,141 
  69,781 
  (72,013)
  145,680 
Profit for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  49,428 
  49,428 
Other comprehensive loss for the period
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (820)
  - 
  (820)
Exercise of warrants (2)
  - 
  - 
  - 
  8 
  - 
  (2)
  - 
  - 
  - 
  - 
  6 
Incorporated by merger
  152 
  - 
  144 
  38,002 
  - 
  - 
  699 
  - 
  (101)
  (4,991)
  33,905 
Shareholders’ meeting held as of 10.21.21
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (72,009)
  72,009 
  - 
Balance as of December 31, 2021
  809 
  2 
  49,409 
  94,574 
  347 
  4,172 
  4,461 
  33,141 
  (3,149)
  44,433 
  228,199 
 
(1) IncludesARS 1 of inflation adjustment of treasury shares. See Note 17 of Consolidated Financial Statements as of June 30, 2022.
(2) As of December 31, 2021, the remaining warrants to exercise amount to 79,964,078, equivalent to the same number of shares. See Note 29 to the interim condensed consolidated financial statements.
(3) The composition of Other reserves of the Company as of December 31, 2021is as follows:
 
 
 
Cost of treasury shares
 
 
Reserve for future dividends
 
 
Reserve for currency translation adjustment
 
 
Special reserve
 
 
Other reserves
 
 
Total other reserves
 
Balance as of June 30, 2021
  (600)
  5,963 
  1,519 
  73,922 
  (11,023)
  69,781 
Other comprehensive loss for the period
  - 
  - 
  (820)
  - 
  - 
  (820)
Incorporated by merger
  - 
  - 
  (27)
  - 
  (74)
  (101)
Shareholders’ meeting held as of 10.21.21
  - 
  - 
  - 
  (72,009)
  - 
  (72,009)
Balance as of December 31, 2021
  (600)
  5,963 
  672 
  1,913 
  (11,097)
  (3,149)
 
There are no cumulative unpaid dividends on preferred shares.
 
The accompanying notes are an integral part of these Financial Statements.
 
 
   .
AlejandroG. Elsztain
VicePresident II
 
 
36
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statementsof Cash Flows
for the six-month periods ended December 31, 2022 and 2021
(All amounts in millions, except otherwise indicated)
 
Free translation from the original prepared in Spanish for publication in Argentina

 
 
Note
 
12.31.2022
 
 
12.31.2021
 
Operating activities (1)
 
 
 
 
 
 
 
Profit for the period
 
  15,090 
  49,428 
Adjustments:
 
    
    
Income tax
16
  (24,503)
  9,692 
Amortization and depreciation
19
  739 
  682 
Gain from disposal of trading properties
 
  (321)
  - 
Financial results, net
 
  (5,632)
  (9,621)
Increase in trading properties
9
  (82)
  - 
Net loss/ (gain) from fair value adjustment of investment properties
7
  22,504 
  (46,296)
Share of loss of subsidiaries, associates and joint ventures
6
  1,951 
  2,320 
Gain from disposal of intangible assets
 
  - 
  (150)
Provisions and allowances
 
  801 
  995 
Management fees
 
  - 
  (175)
Increase in inventories
 
  (5)
  (2)
(Decrease)/ Increase in salaries and social security liabilities
 
  (285)
  21 
Decrease in trade and other receivables
 
  275 
  164 
Use of provisions
 
  (23)
  (88)
Decrease in trade and other payables
 
  (2,213)
  (1,023)
Net cash flow generated from operating activities before income tax paid
 
  8,296 
  5,947 
Income tax paid
 
  (18)
  - 
Net cash flow generated from operating activities
 
  8,278 
  5,947 
Investing activities (1)
 
    
    
Capital contributions to subsidiaries, associates and joint ventures
6
  (83)
  (674)
Acquisition of investment properties
 
  (1,056)
  (2,472)
Acquisition of property, plant and equipment
8
  (50)
  (56)
Acquisition of intangible assets
10
  (1)
  (6)
Increase of investments in financial assets
 
  (6,702)
  (2,141)
Proceeds from sale of investment properties
 
  2,128 
  8,957 
Proceeds from sale of properties, plant and equipment
 
  9 
  - 
Proceeds from sale of intangible assets
 
  - 
  220 
Proceeds from loans granted to related parties
 
  1 
  - 
Derivative financial instruments, net
 
  (2)
  - 
Decrease in derivative financial instruments
 
  - 
  (19)
Increase in loans granted to related parties
 
  (128)
  - 
Proceeds from sale of investments in financial assets
 
  8,574 
  2,421 
Capital contributions to subsidiaries, associates and joint ventures pending subscription
 
  (1)
  - 
Proceeds from loans granted to related parties
 
  - 
  10 
Interest collected
 
  86 
  201 
Dividends received
 
  1,027 
  547 
Net cash flow generated from investing activities
 
  3,802 
  6,988 
Financing activities (1)
 
    
    
Payment of short-term loans, net
 
  (3,287)
  (925)
Borrowings obtained
 
  - 
  803 
Payment of loans
 
  - 
  (1,044)
Interests paid
 
  (4,863)
  (7,001)
Loans obtained from subsidiaries, associates and joint ventures
 
  711 
  448 
Payment of loans from subsidiaries, associates and joint ventures
 
  (22)
  (10)
Payment of finance leases
 
  (2)
  - 
Repurchase of treasury shares
 
  (807)
  - 
Exercise of warrants
 
  2 
  - 
Payment of NCN
 
  (13,022)
  (8,877)
Issuance of NCN
 
  - 
  12,451 
Repurchase of non-convertible notes
 
  - 
  (5,205)
Dividends paid
 
  (4,156)
  - 
Net cash flow used in financing activities
 
  (25,446)
  (9,360)
(Decrease)/ increase in cash and cash equivalents, net
 
  (13,366)
  3,575 
Cash and cash equivalents at the beginning of the period
12
  15,004 
  1,262 
Cash and cash equivalents incorporated by merger
 
  - 
  127 
Foreign exchange gain in cash and changes in fair value of cash equivalents
 
  31 
  279 
Inflation adjustment
 
  (106)
  (51)
Cash and cash equivalents at the end of the period
12
  1,563 
  5,192 
 
(1)
See operations that do not affect cash flows in Note 24 to these financial statements.
 
 
 
.
AlejandroG. Elsztain
VicePresident II
 
 
37
IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed InterimSeparate Financial Statements
(All amounts in millions, exceptotherwise indicated)
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
1.
General information and company’s business
 
IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA” or “The Company”) was founded in 1943, it is primarily engaged in managing real estate holdings in Argentina since 1991.
 
IRSA is a corporation incorporated and domiciled in Argentina. The registered office is Carlos Della Paolera 261, 9th. Floor, Buenos Aires, Argentina.
 
The Company owns, manages and develops a portfolio of office and other rental properties in Buenos Aires.Directly and indirectly, it also participates in the operation of shopping malls. In addition, IRSA through its subsidiaries, associates and joint ventures manages and develops branded hotels across Argentina.
 
These Unaudited Condensed Interim Separate Financial Statements have been approved for issue by the Board of Directors on February8, 2023.
 
2.
Basis of preparation of the Unaudited Condensed Interim Separate Financial Statements
 
2.1. 
Basis of preparation
 
These financial statements have been prepared in accordance with IAS 34 “Interim financial reporting” and should therefore be read in conjunction with the Group's annual Consolidated Financial Statementsas of June 30, 2022 and the Financial Statements of Fusion as of June 30, 2021 prepared in accordance with IFRS. Also, these financial statements include additional information required by Law No. 19,550 and / or regulations of the CNV. Such information is included in the notes to these financial statements, as accepted by IFRS.
 
These financial statements for the interim periods of six months ended December 31, 2022 and 2021 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
 
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
 
In order to conclude on whether an economy is categorized as highly inflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that approximates or exceeds 100%. Accumulated inflation in Argentina in three years is over 100%. For that reason, in accordance with IAS 29, Argentina must be considered a country with a highly inflationary economy starting July 1, 2018.
 
 
38
IRSA Inversiones y Representaciones Sociedad Anónima
 
In relation to the inflation index to be used and in accordance with FACPCE Resolution No. 539/18, it is determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of the Consumer Price Index (CPI) of the Autonomous City of Buenos Aires for the months of November and December 2015, because during those two months there were no national IPIM measurements. Then, from January 2017, the National Consumer Price Index (National CPI) is considered. The table below presents the index for the period ended December 31, 2022, according to official statistics (INDEC) and following the guidelines described in Resolution 539/18:
 
Price variation
 
December 31, 2022
(six-month accumulated)
 
 
  43%
 
As a consequence of the aforementioned, these Unaudited Consolidated Financial Statements as of December 31, 2022 were restated in accordance with IAS 29.
 
2.2. Significant accounting policies
 
The accounting policies adopted in the preparation of these Unaudited Condensed Interim Separate Financial Statements are consistent with those applied in the Annual Financial Statements as of June 30, 2022. The main accounting policies are described in Note 2 of those Annual Financial Statements.
 
2.3.
Comparability of information
 
The amounts as of June 30, 2022 and December 31, 2021, which are disclosed for comparative purposes, arise from the financial statements at said dates restated in accordance with IAS 29 (note 2.1).Certain items from prior periods have been reclassified for consistency purposes.
 
See note 4.1 to the present financial statements and note 29 to the Unaudited Condensed Interim Consolidated Financial Statementsas of June 30, 2022.
 
2.4.            
Use of estimates
 
The preparation of Financial Statements at a certain date requires Management to make estimates and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these Unaudited Condensed Interim Separate Financial Statements.In the preparation of these Unaudited Condensed Interim Separate Financial Statements, the main significant judgments made by Management in applying the Company’s accounting policies and the major sources of uncertainty were the same that the Company used in the preparation of the Separate Financial Statements for the fiscal year ended June 30, 2022, described in Note 3 to those financial statements.
 
3. 
Seasonal effects on operations
 
See Note 3 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
4.            
Acquisitions and disposals
 
See description of acquisitions and disposals made by the Company and/or its subsidiaries for the six-month period ended December 31, 2022 in Note 4 to the interim condensed consolidated financial statements.
 
 
39
IRSA Inversiones y Representaciones Sociedad Anónima
 
5.            
Financial risk management and fair value estimates
 
These Unaudited Condensed Interim Financial Statements do not include all the information and disclosures of the risk management, so they should be read together with the Annual Separate Financial Statements as of June 30, 2022. There hasbeen no changes in the risk management or risk management policies applied by the Company since the end of the annual fiscal year.See notes to the Unaudited Condensed Interim Consolidated Financial Statements. Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Company’s financial instruments.
 
6.            
Information about the main subsidiaries, associates and joint ventures
 
The Company conducts its business through several operating and holding subsidiaries, associates and joint ventures. Its main subsidiaries include Tyrus S.A., Panamerican Mall S.A. and Torodur S.A..The main associates include BHSA. The main joint ventures include Cyrsa S.A., Puerto Retiro S.A. and Quality S.A.
 
Detailed below is the evolution of investments in subsidiaries, associates and joint ventures of the Company, for the six-month period ended December 31, 2022and for the year ended June 30, 2022:
 
 
 
12.31.2022
 
 
06.30.2022
 
Beginning of period / year
  113,812 
  164,963 
Share of loss
  (1,951)
  (1,863)
Other comprehensive loss
  (572)
  (771)
Capital contributions (Note 22)
  155 
  1,103 
Incorporated by merger (iii)
  - 
  (47,137)
Dividends (Note 22)
  (1,277)
  (2,474)
Decrease in participation (ii)
  (4,981)
  - 
Other changes in subsidiaries’ equity
  (449)
  - 
Others
  - 
  (9)
End of the period / year (i)
  104,737 
  113,812 
 
(i)
Includes ARS (168) as of December 31, 2022 and ARS (121) as of June 30, 2022 reflecting interests in companies with negative equity, which were disclosed in “provisions”
(ii)
Corresponds to the Efanur´s liquidation.
(iii)
Incorporation by merger with IRSA CP. See Note 4.1. to the annual financial statements as of June 30, 2022
 
Name of the entity
    % ownership interest            
    % ownership interest            
    Company’s interest in comprehensive (loss) / income
Subsidiaries
   12.31.2022   
   12.31.2022   
   12.31.2022   
   12.31.2022   
   12.31.2022   
   12.31.2022   
Tyrus S.A.
  100.00%
  100.00%
  5,316 
  7,720 
  (2,623)
  (477)
Efanur S.A.(*)
  - 
  100.00%
  - 
  5,631 
  (141)
  (90)
Ritelco S.A.
  100.00%
  100.00%
  2,356 
  2,299 
  213 
  (82)
Inversora Bolívar S.A.
  96.57%
  96.57%
  2,362 
  2,149 
  212 
  (62)
E-Commerce Latina S.A.
  98.93%
  98.93%
  3,601 
  3,434 
  167 
  (129)
Palermo Invest S.A.
  97.34%
  97.34%
  2,898 
  2,688 
  209 
  (62)
Nuevas Fronteras S.A.
  76.34%
  76.34%
  1,044 
  933 
  111 
  (101)
Llao Llao Resort S.A.
  50.00%
  50.00%
  1,026 
  1,022 
  5 
  (84)
Hoteles Argentinos SAU
  100.00%
  100.00%
  575 
  569 
  6 
  (62)
Liveck S.A.
  9.30%
  9.30%
  256 
  220 
  35 
  (18)
Panamerican Mall S.A. (8)
  80.00%
  80.00%
  46,565 
  49,265 
  (2,055)
  (193)
Torodur S.A. (8)
  100.00%
  100.00%
  14,851 
  14,719 
  133 
  (1,683)
Arcos del Gourmet S.A. (8)
  90.00%
  90.00%
  5,077 
  4,820 
  592 
  84 
Shopping Neuquén S.A. (8)
  99.95%
  99.95%
  4,670 
  4,480 
  191 
  146 
Centro de Entretenimientos La Plata S.A. (5)(6)(8)
  95.40%
  95.40%
  1,464 
  1,386 
  (74)
  (14)
We Are Appa S.A. (8)
  93.63%
  93.63%
  83 
  306 
  (221)
  (374)
Entertainment Holdings S.A. (8)
  70.00%
  70.00%
  490 
  147 
  343 
  160 
Emprendimiento Recoleta S.A. (3)(8)
  53.68%
  53.68%
  111 
  112 
  (1)
  (41)
Entretenimiento Universal S.A. (4)(8)
  3.75%
  3.75%
  (1)
  (1)
  1 
  2 
Fibesa S.A. (4)(8)
  97.00%
  97.00%
  (167)
  (120)
  281 
  111 
Associates
    
    
    
    
    
    
BHSA (1) (2)
  4.93%
  4.93%
  2,411 
  2,202 
  207 
  (59)
BACS (2)
  37.72%
  37.72%
  975 
  1,012 
  (37)
  (29)
GCDI S.A.( Ex TGLT S.A.) (7)(8)(9)
  27.82%
  27.82%
  1,149 
  1,163 
  (14)
  (333)
Joint ventures
    
    
    
    
    
    
IRSA - Galerías Pacífico S.A. - U.T.
  50.00%
  50.00%
  1,683 
  1,137 
  546 
  329 
Cyrsa S.A.
  50.00%
  50.00%
  104 
  109 
  (5)
  (16)
Quality Invest S.A. (8)
  50.00%
  50.00%
  5,030 
  5,520 
  (490)
  (84)
Nuevo Puerto Santa Fe S.A. (6)(8)
  50.00%
  50.00%
  808 
  890 
  62 
  21 
Total subsidiaries, associates and joint ventures
    
    
  104,737 
  113,812 
  (2,347)
  (3,140)
 
 
40
IRSA Inversiones y Representaciones Sociedad Anónima
 
 


   
 
Latest financial information issued
 
Name of the entity
Location of business / Country of incorporation
Main activity
 
Common shares 1 vote
 
 
Share capital (nominal value)
 
 
Profit/ (Loss) for the period
 
 
Shareholders’ equity
 
Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tyrus
Uruguay
Investment
  21,365,969,546 
  12,213 
  1,096 
  5,209 
Efanur (*)
Uruguay
Investment
  461,751,428 
  133 
  27 
  4,979 
Ritelco S.A.
Uruguay
Investment
  453,321,176 
  94 
  211 
  2,357 
Inversora Bolívar S.A.
Argentina
Investment
  1,725,502,782 
  1,787 
  220 
  2,446 
E-Commerce Latina S.A.
Argentina
Investment
  1,710,302,484 
  1,729 
  168 
  3,633 
Palermo Invest S.A.
Argentina
Investment
  1,324,755,303 
  1,363 
  214 
  2,523 
Nuevas Fronteras S.A.
Argentina
Hotel
  38,068,999 
  50 
  121 
  1,763 
Llao Llao Resort S.A.
Argentina
Hotel
  73,580,206 
  147 
  10 
  2,053 
Hoteles Argentinos SAU
Argentina
Hotel
  685,978,099 
  767 
  6 
  609 
Liveck S.A.
Islas Vírgenes Británicas
Investment
  54,690,725 
  724 
  386 
  1,936 
Panamerican Mall S.A. (8)
Argentina
Real estate
  397,661,430 
  497 
  (2,671)
  58,206 
Torodur S.A.(8)
Uruguay
Investment
  581,675,948 
  1,884 
  131 
  14,864 
Arcos del Gourmet S.A. (8)
Argentina
Real estate
  72,973,903 
  81 
  658 
  5,641 
Shopping Neuquén S.A. (8)
Argentina
Real estate
  37,819,875 
  54 
  191 
  4,673 
Centro de Entretenimiento La Plata S.A. (5)(6)(8)
Argentina
Real estate
  25,853 
  95 
  19 
  510 
We Are Appa S.A. (8)
Argentina
Developer
  484,832,538 
  518 
  (242)
  (172)
Entertainment Holdings S.A. (8)
Argentina
Investment
  32,503,379 
  46 
  387 
  1,040 
Emprendimiento Recoleta S.A. (3)(8)
Argentina
Real estate
  13,449,990 
  25 
  (1)
  206 
Entretenimiento Universal S.A.(8)
Argentina
Event organization and others
  825 
  - 
  22 
  (20)
Fibesa S.A.(8)
Argentina
Real estate
 
(i)
 
  2 
  348 
  533 
Associates
 
 
    
    
    
    
BHSA (1) (2)
Argentina
Financial
  73,939,835 
  1,500 
  4,178 
  48,889 
BACS (2)
Argentina
Financial
  33,125,751 
  88 
  (97)
  2,585 
GCDI ( Ex TGLT S.A.) (7)(8)(9)
Argentina
Real estate
  257,330,595 
  915 
  (1,805)
  4,131 
Joint ventures
 
 
    
    
    
    
IRSA - Galerías Pacífico S.A. - U.T.
Argentina
Hotel
  500,000 
  1 
  1,091 
  3,366 
Cyrsa S.A.
Argentina
Real estate
  8,748,270 
  17 
  (10)
  209 
Quality Invest S.A. (8)
Argentina
Real estate
  1,421,672,293 
  2,843 
  (979)
  9,841 
Nuevo Puerto Santa Fe S.A. (6)(8)
Argentina
Real estate
  13,875,000 
  28 
  124 
  1,542 
 
(1)
Considered significant. See Notes 7 and8 to the Annual Consolidated Financial Statements.
(2)
Information as of December 31, 2022 according to BCRA's standards. For the purpose of the valuation of the investments in the Company, figures as of December 31, 2022 have been considered, with the necessary IFRS adjustments. Share market price of Banco Hipotecario S.A as of December 31, 2022 amounts to ARS18.50. See Note 8 to the Consolidated Financial Statements as of June 30, 2022.
(3)
Concession ended on November 18, 2018. As of December 31, 2022, is in liquidation.
(4)
Included in provisions
(5)
Include the necessary adjustments to get to the balances in accordance with the International Financial Reporting Standards.
(6)
Nominal value per share ARS 100.
(7)
See note 4 to the Annual Consolidated Financial Statements as of June 30, 2022.
(8)
Incorporation by merger with IRSA CP, SeeNote 4.1to the Annual Consolidated Financial Statements as of June 30, 2022.
(9)
Unaudited financial information as of December 31, 2022.
(i)
Corresponds to 2,323,126 shares. Nominal value per share ARS 1 with 5 votes rights.
(*) Company liquidated as of October 31, 2022.
 
7.            
Investment properties
 
Changes in the Company’s investment properties for the six-month period ended December 31, 2022 and for the year ended June 30, 2022 were as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
 
 
Level 2
 
 
Level 3
 
 
Level 2
 
 
Level 3
 
Fair value at the beginning of the period / year
  229,034 
  92,990 
  8,681 
  81,959 
Additions
  287 
  758 
  10,325 
  2,461 
Disposals
  (2,179)
  - 
  (41,631)
  - 
Transfers
  (601)
  591 
  82,461 
  (81,633)
Incorporated by merger (ii)
  - 
  - 
  141,062 
  97,146 
Net (loss)/ gain from fair value adjustment
  (18,458)
  (4,046)
  28,141 
  (6,956)
Additions of capitalized leasing costs
  1 
  10 
  21 
  26 
Amortization of capitalized lease costs (i)
  (4)
  (6)
  (26)
  (13)
Fair value at the end of the period / year
  208,080 
  90,297 
  229,034 
  92,990 
 
(ii)
Amortization charges of capitalized leasing costs were included in “Costs” in the Statements of Income and Other Comprehensive Income (Note 19).
(iii)
Incorporation by merger with IRSA CP, Note 4.1to the Annual Consolidated Financial Statements as of June 30, 2022.
 
 
 
41
IRSA Inversiones y Representaciones Sociedad Anónima
 
The balance by type of investment property of the Company as of December 31, 2022and June 30, 2022 is presented below:
 
 
 
12.31.2022
 
 
06.30.2022
 
Offices and other rental properties
  46,526 
  52,534 
Land reserve
  154,294 
  168,008 
Properties under development
  158 
  758 
Shopping malls
  97,399 
  100,724 
 
  298,377 
  322,024 
 
The following amounts have been recognized in the Statements of Comprehensive Income and Other Comprehensive Income:
 
 
 
12.31.2022
 
 
06.30.2022
 
Sales (Note 18)
  18,725 
  14,672 
Rental and services´ costs (Note 19)
  (6,400)
  (5,294)
Cost of sales and developments (Note 19)
  (51)
  (111)
Net unrealized (loss)/ gain from fair value adjustment on investment properties
  (23,605)
  42,247 
Net realized gain from fair value adjustment on investment properties (i)
  1,101 
  4,049 
 
(i)
As of December 31, 2022 corresponds ARS 62 to the realized result from fair value adjustment for the year (ARS 73for the sale of floors of Catalinas Building and (ARS 11) for the sale of parking spaces in Libertador 498) and ARS 1,039 for realized result from fair value adjustment made in previous years (ARS 991 for the sale of floors of Catalinas Building, and ARS 48 for the sale of parking spaces in Libertador 498). As of December 31, 2021, (ARS 123) corresponds to the result for changes in the fair value realized for the period ((ARS 146) for the sale for the sale of Casona Hudson, (ARS 31) for the sale of Merlo Plot and (ARS 35) for the sale of Mariano Acosta Plot), (ARS 154) for the sale of parking spaces in Libertador 498, ARS 243 for the sale of floors of Catalinas Building and ARS 4,172for the result of changes in fair value made in previous years for the sale (ARS 171 for the sale of Casona Hudson, ARS 150 for the saleof Merlo Plot and ARS 142 for the sale of Mariano Acosta Plot, ARS 316 for the sale of parking spaces in Libertador 498 buildingand ARS3,393 for the sale of floors of Catalinas Building).
 
Valuation techniques are described in Note 9 to the Consolidated Financial Statements as of June 30, 2022. There were no changes to the valuation techniques.
 
8.            
Property, plant and equipment
 
Changes in the Company’s property, plant and equipment for the six-month period ended December 31, 2022 and for the year endedJune 30, 2022 were as follows:
 
 
 
12.31.2022
 
 
06.30.22
 
 
 
Buildings and facilities
 
 
Furniture and fixtures
 
 
Machinery and equipment
 
 
Vehicles
 
 
Others
 
 
Total
 
 
Total
 
Costs
  4,295 
  977 
  5,352 
  72 
  3 
  10,699 
  1,536 
Accumulated depreciation
  (1,770)
  (803)
  (5,072)
  (72)
  - 
  (7,717)
  (1,462)
Net book amount at the beginning of the period / year
  2,525 
  174 
  280 
  - 
  3 
  2,982 
  74 
Additions
  - 
  21 
  28 
  - 
  1 
  50 
  73 
Disposals
  (9)
  - 
  - 
  - 
  - 
  (9)
  (2)
Transfers
  (2)
  - 
  12 
  - 
  - 
  10 
  (34)
Depreciation (Note 19)
  (62)
  (15)
  (96)
  - 
  - 
  (173)
  (285)
Incorporated by merger (i)
  - 
  - 
  - 
  - 
  - 
  - 
  3,156 
Balances at the end of the period / year
  2,452 
  180 
  224 
  - 
  4 
  2,860 
  2,982 
Costs
  4,284 
  998 
  5,392 
  72 
  4 
  10,750 
  10,699 
Accumulated depreciation
  (1,832)
  (818)
  (5,168)
  (72)
  - 
  (7,890)
  (7,717)
Net book amount at the end of the period / year
  2,452 
  180 
  224 
  - 
  4 
  2,860 
  2,982 
 
(i) Incorporation by merger with IRSA CP, See Note 4.1 to the Annual Consolidated Financial Statements as of June 30, 2022.
 
 
42
IRSA Inversiones y Representaciones Sociedad Anónima
9.            
Trading properties
 
Changes in the Company’s trading properties for the six-month period ended December 31, 2022 and for the year ended June 30, 2022 were as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
 
 
Completed properties
 
 
Undevelopedproperties
 
 
Total
 
 
Total
 
Beginning of the period / year
  285 
  1,731 
  2,016 
  1,654 
Additions
  - 
  82 
  82 
  52 
Disposals
  (3)
  (23)
  (26)
  - 
Incorporated by merger (i)
  - 
  - 
  - 
  310 
End of the period / year
  282 
  1,790 
  2,072 
  2,016 
Non-current
    
    
  2,066 
  2,007 
Current
    
    
  6 
  9 
Total
    
    
  2,072 
  2,016 
 
(i) Incorporation by merger with IRSA CP, See Note 4.1 to the Annual Consolidated Financial Statements as of June 30, 2022.
 
10.            
Intangible assets
 
Changes in Company’s intangible assets for the six-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
 
 
Computer software
 
 
Future units to be received from barters
 
 
Total
 
 
Total
 
Costs
  1,752 
  4,160 
  5,912 
  2,238 
Accumulated amortization
  (1,574)
  - 
  (1,574)
  (82)
Net book amount at the beginning of the period / year
  178 
  4,160 
  4,338 
  2,156 
Additions
  2 
  332 
  334 
  7 
Disposals
  - 
  - 
  - 
  (411)
Amortization (Note 19)
  (109)
  - 
  (109)
  (157)
Incorporated by merger (i)
  - 
  - 
  - 
  2,743 
Balances at the end of the period / year
  71 
  4,492 
  4,563 
  4,338 
Costs
  1,754 
  4,492 
  6,246 
  5,912 
Accumulated amortization
  (1,683)
  - 
  (1,683)
  (1,574)
Net book amount at the end of the period / year
  71 
  4,492 
  4,563 
  4,338 
 
(i) Incorporation by merger with IRSA CP, See Note 4.1 to the Annual Consolidated Financial Statements as of June 30, 2022.
 
11.            
Rights of use assets
 
Changes in Company’s rights of use assets for the six-month period ended December 31, 2022and for the year ended June 30, 2022 were as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
Shopping malls
  452 
  853 
Machinery and equipment
  - 
  3 
Total rights of use assets
  452 
  856 
Non-current
  452 
  856 
Total
  452 
  856 
 
The charges to income related to rights of use assets were the following:
 
 
 
12.31.2022
 
 
06.30.2022
 
Shopping malls
  444 
  425 
Machinery and equipment
  3 
  4 
Others
  - 
  14 
Total amortization and depreciation (Note 19)
  447 
  443 
 
 
 
43
IRSA Inversiones y Representaciones Sociedad Anónima
 
12.            
Financial instruments by category
 
This note presents financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line item in the Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. For further information, related to fair value hierarchy see Note 14 to the Consolidated Financial Statements as of June 30, 2022.
 
Financial assets and financial liabilities as of December 31, 2022and June 30, 2022are as follows:
 
 
 
Financial assets at amortized cost (i)
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
 
 
 
 
 
 
 
 
December 31, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 13)
  14,955 
  - 
  14,955 
  2,923 
  17,878 
Investments in financial assets:
    
    
    
    
    
 - Public companies’ securities
  - 
  376 
  376 
  - 
  376 
 - Mutual funds
  - 
  16,137 
  16,137 
  - 
  16,137 
 - Bonds
  - 
  4,080 
  4,080 
  - 
  4,080 
Cash and cash equivalents:
    
    
    
    
    
 - Cash at bank and on hand
  211 
  - 
  211 
  - 
  211 
 - Short- term investments
  - 
  1,366 
  1,366 
  - 
  1,366 
Total
  15,166 
  21,959 
  37,125 
  2,923 
  40,048 
 
    
    
    
    
    
 
    
    
    
    
    
 
    
    
    
    
    
 
 
 
Financial liabilities at amortized cost (i)
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2022
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 14)
  3,402 
  3,402 
  8,824 
  12,226 
Borrowings (Note 15)
  98,564 
  98,564 
  - 
  98,564 
Total
  101,966 
  101,966 
  8,824 
  110,790 
 
    
    
    
    
 
 
 
Financial assets at amortized cost (i)
 
 
Financial assets at fair value through profit or loss
 
 
Subtotal financial assets
 
 
Non-financial assets
 
 
Total
 
 
 
 
 
 
Level 1
 
 
 
 
 
 
 
 
 
 
June 30, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 13)
  10,040 
  - 
  10,040 
  3,159 
  13,199 
Investments in financial assets:
    
    
    
    
    
 - Public companies’ securities
  - 
  253 
  253 
  - 
  253 
 - Mutual funds
  - 
  19,460 
  19,460 
  - 
  19,460 
 - Bonds
  - 
  3,746 
  3,746 
  - 
  3,746 
Cash and cash equivalents:
    
    
    
    
    
 - Cash at bank and on hand
  11,772 
  - 
  11,772 
  - 
  11,772 
 - Short-term investments
  - 
  3,232 
  3,232 
  - 
  3,232 
Total
  21,812 
  26,691 
  48,503 
  3,159 
  51,662 
 
    
    
    
    
    
 
 
 
Financial liabilities at amortized cost (i)
 
 
Subtotal financial liabilities
 
 
Non-financial liabilities
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2022
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 14)
  4,797 
  4,797 
  7,978 
  12,775 
Borrowings (Note 15)
  118,536 
  118,536 
  - 
  118,536 
Total
  123,333 
  123,333 
  7,978 
  131,311 
 
(i)
The fair value of financial assets and liabilities at amortized cost does not differ significantly from their book value, except for borrowings (Note 15). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant.
 
As of December 31, 2022, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Company.
 
 
44
IRSA Inversiones y Representaciones Sociedad Anónima
13.            
Trade andother receivables
 
Company’s trade and other receivables, as of December 31, 2022and June 30, 2022are comprised as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
Sales, leases and services receivables
  7,640 
  8,174 
Less: Allowance for doubtful accounts
  (852)
  (1,076)
Total trade receivables
  6,788 
  7,098 
Borrowings granted, deposits and others
  7,523 
  2,285 
Advanced payments
  1,394 
  1,200 
Tax credits
  793 
  834 
Prepaid expenses
  350 
  403 
Long-term incentive plan
  15 
  21 
Others
  163 
  282 
Total other receivables
  10,238 
  5,025 
Total trade and other receivables
  17,026 
  12,123 
Non-current
  1,309 
  1,195 
Current
  15,717 
  10,928 
Total
  17,026 
  12,123 
 
Movements on the Company’s allowance for doubtful accounts are as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
Beginning of period /year
  1,076 
  21 
Additions
  65 
  328 
Disposals / Recoveries
  (72)
  (336)
Used during the period / year
  - 
  (16)
Incorporated by merger (i)
  - 
  1,693 
Currency translation adjustment
  115 
  92 
Inflation adjustment
  (332)
  (706)
End of the period / year
  852 
  1,076 
 
(i) Incorporation by merger with IRSA CP, See Note 4.1 to the Annual Consolidated Financial Statements as of June 30, 2022.
 
The additions, disposals and recoveries of the allowance for doubtful accounts have been included in “Selling expenses” in the Statements of Income (Note 19). Amounts charged to the allowance for doubtful accounts are generally written offwhen there is no expectation of recovery.
 
14.
Trade and other payables
 
Company’s trade and other payables as of December 31, 2022and June 30, 2022were as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
Customers´ advances (*)
  2,756 
  3,342 
Trade payables
  1,713 
  1,571 
Accrued invoices
  953 
  1,358 
Admission rights
  3,981 
  3,169 
Other income to be accrued
  103 
  109 
Tenant deposits
  41 
  53 
Total trade payables
  9,547 
  9,602 
Director´s fees
  443 
  880 
Long-term incentive plan
  3 
  4 
Tax amnesty plans
  50 
  40 
Other payables
  249 
  933 
Other tax payables
  1,934 
  1,316 
Total other payables
  2,679 
  3,173 
Total trade and other payables
  12,226 
  12,775 
Non-current
  3,981 
  3,763 
Current
  8,245 
  9,012 
Total
  12,226 
  12,775 
 
(*) As of December 31, 2022corresponds mainly to admission rights and rents collected in advance, which accrue in an average term of 3 to 5 years.
 
 
45
IRSA Inversiones y Representaciones Sociedad Anónima
 
15.
Borrowings
 
Company’s borrowings as of December 31, 2022and June 30, 2022are comprised as follows:
 
 
 
Book value as of 12.31.2022
 
 
Book value as of 06.30.2022
 
 
Fair value as of 12.31.2022
 
 
Fair value as of 06.30.2022
 
NCN
  77,846 
  94,585 
  74,687 
  89,150 
Related parties (Note 22)
  16,535 
  15,801 
  16,391 
  15,626 
Bank overdrafts
  4,183 
  8,150 
  4,183 
  8,150 
Total borrowings
  98,564 
  118,536 
  95,261 
  112,926 
Non-current
  45,243 
  28,925 
    
    
Current
  53,321 
  89,611 
    
    
Total
  98,564 
  118,536 
    
    
 
See Note 17 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
16.
Currents and deferred income tax
 
The charge for the Company’s income tax is comprised as follows:
 
 
 
12.31.2022
 
 
12.31.2021
 
Deferred income tax
  9,953 
  (8,810)
Current income tax
  14,550 
  (882)
Income tax
  24,503 
  (9,692)
 
Below is a reconciliation between income tax recognized and the amount which would arisefromapplying the prevailing tax rate on profit before income taxfor the six-month periods ended December 31, 2022 and 2021:
 
 
 
12.31.2022
 
 
12.31.2021
 
Net income at tax rate (i)
  3,295 
  (20,692)
Permanent differences:
    
    
Share of loss of subsidiaries, associates and joint ventures
  (683)
  (812)
Difference between provision and tax return
  11,311 
  403 
Recovery/ (provision) of tax loss carry forwards
  (10,382)
  7,599 
Tax inflation adjustment
  (5,128)
  (7,365)
Inflation adjustment
  11,534 
  11,171 
Non-deductible expenses and others
  14,556 
  4 
Income tax
  24,503 
  (9,692)
 
(i) The income tax rate applicable as of December 31, 2022 and 2021 is 35%. See note 19 to the interim condensed consolidated financial statements.
Changes in the deferred tax account are as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
Beginning of the period / year
  (116,313)
  (45,352)
Income tax charge
  9,953 
  19,332 
Incorporated by merger (i)
  - 
  (90,014)
Revaluation surplus
  - 
  (279)
End of the period / year
  (106,360)
  (116,313)
 
 
(i) Incorporation by merger with IRSA CP, See Note 4.1 to the Annual Consolidated Financial Statements as of June 30, 2022.
 
See Note 19 to the interim condensed consolidated financial statements.
 
 
 
46
IRSA Inversiones y Representaciones Sociedad Anónima
 
17.
Provisions
 
The table below presents the changes in the Company's provisionsas of December 31, 2022and June 30, 2022were as follows:
 
 
 
12.31.2022
 
 
06.30.2022
 
 
 
Investments in associates and joint ventures
 
 
Labor, legal and other claims
 
 
Total
 
 
Total
 
Beginning of period / year
  121 
  359 
  480 
  142 
Additions (i)
  - 
  127 
  127 
  325 
Decreases (i)
  - 
  (92)
  (92)
  (104)
Used during the period / year
  - 
  (23)
  (23)
  (113)
Incorporated by merger (ii)
  - 
  - 
  - 
  322 
Inflation adjustment
  - 
  (118)
  (118)
  (213)
Share of loss
  47 
  - 
  47 
  121 
End of period / year
  168 
  253 
  421 
  480 
Non-current
    
    
  264 
  273 
Current
    
    
  157 
  207 
Total
    
    
  421 
  480 
 
(i)
Additions and decreases in labor, legal and other claims are included in "Other operating results, net”.
(ii)
Incorporation by merger with IRSA CP, See Note 4.1 to the Annual Consolidated Financial Statements as of June 30, 2022.
 
18.
Revenues
 
 
 
12.31.2022
 
 
12.31.2021
 
Base rent
  6,067 
  5,217 
Contingent rent
  5,964 
  4,996 
Admission rights
  1,073 
  781 
Parking fees
  486 
  253 
Property management fees
  124 
  134 
Others
  21 
  82 
Averaging of scheduled rent escalation
  (67)
  (545)
Rentals and services income
  13,668 
  10,918 
Sale of trading properties
  345 
  245 
Total revenues from sales, rentals and services
  14,013 
  11,163 
Expenses and collective promotion funds
  5,057 
  3,754 
Total revenues from expenses and collective promotion funds
  5,057 
  3,754 
Total revenues
  19,070 
  14,917 
 
19.
Expenses by nature
 
The Company discloses expenses in theStatements of Income and OtherComprehensive Income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”.The following table provides additional disclosure regarding expenses by nature and their relationship to the function within the Company.
 
 
 
Costs (i)
 
 
General and administrative expenses
 
 
Selling expenses
 
 
12.31.2022
 
 
12.31.2021
 
Salaries, social security costs and other personnel expenses
  1,504 
  1,263 
  139 
  2,906 
  3,008 
Maintenance, security, cleaning, repairs and others
  1,929 
  130 
  2 
  2,061 
  1,841 
Taxes, rates and contributions
  527 
  3 
  456 
  986 
  1,469 
Advertising and other selling expenses
  1,763 
  - 
  109 
  1,872 
  991 
Director´s fees (Note 22)
  - 
  771 
  - 
  771 
  721 
Amortization and depreciation
  561 
  176 
  2 
  739 
  682 
Fees and payments for services
  25 
  299 
  69 
  393 
  407 
Leases and services’ charges
  139 
  63 
  5 
  207 
  216 
Traveling, transportation and stationery expenses
  27 
  41 
  6 
  74 
  120 
Cost of sales of trading properties
  26 
  - 
  - 
  26 
  78 
Allowance for doubtful accounts (charge and recovery, net) (Note 13)
  - 
  - 
  (7)
  (7)
  74 
Bank expenses
  - 
  42 
  - 
  42 
  27 
Others
  19 
  - 
  - 
  19 
  15 
Total expenses by nature as of 12.31.2022
  6,520 
  2,788 
  781 
  10,089 
  - 
Total expenses by nature as of 12.31.2021
  5,556 
  2,807 
  1,286 
  - 
  9,649 
 
(i)
For the six-month period ended December 31, 2022, includes ARS6,400 of rental and services costs and ARS120of costs of sales and developments, of which ARS51 corresponds to investment properties and ARS69to trading properties.For the six-month period ended December 31, 2021, includes ARS5,295 whichcorresponds torental and services costs andARS261tocosts of sales and developments, of which ARS111corresponds to investment properties and ARS150to trading properties.
 
 
47
IRSA Inversiones y Representaciones Sociedad Anónima
 
20.
Other operating results, net
 
 
 
12.31.2022
 
 
12.31.2021
 
Lawsuits and other contingencies (i)
  (37)
  (201)
Donations
  (54)
  (66)
Administration fees
  205 
  175 
Interest and allowances generated by operating assets
  170 
  129 
Others
  (7)
  (123)
Total other operating results, net
  277 
  (86)
 
(i)
Includes legal costs and expenses.
 
21.
Financial results, net
 
 
 
12.31.2022
 
 
12.31.2021
 
Interest income
  48 
  185 
Total finance income
  48 
  185 
Interest expense
  (4,060)
  (6,730)
Other finance costs
  (287)
  (598)
Total finance costs
  (4,347)
  (7,328)
Net exchange difference
  1,504 
  13,509 
Fair value net gain from financial assets and liabilities at fair value through profit or loss, net
  334 
  1,288 
(Loss)/ gain from derivative financial instruments, net
  (3)
  2 
Gain from repurchase of non-convertible notes
  1 
  1,184 
Other financial results
  (274)
  27 
Total other financial results
  1,562 
  16,010 
Inflation adjustment
  8,521 
  1,095 
Total financial results, net
  5,784 
  9,962 
 
 
 
48
IRSA Inversiones y Representaciones Sociedad Anónima
 
22.
Related party transactions
 
The following is a summary of the balances with related parties as of December 31, 2022 and June 30, 2022:
 
Item
 
12.31.2022
 
 
06.30.2022
 
Rights of use assets
  452 
  853 
Trade and other receivables
  7,704 
  2,708 
Investments in financial assets
  2,114 
  2,473 
Trade and other payables
  (1,266)
  (2,141)
Borrowings
  (16,535)
  (15,801)
Total
  (7,531)
  (11,908)
 
Related parties
 
12.31.2022
 
 
06.30.2022
 
Operation description
Cresud S.A.C.I.F. y A.
  5 
  7 
Leases and / or rights of use receivable
 
  2,114 
  2,473 
Bonds
 
  (233)
  (596)
Rentals and services received
 
  (305)
  (291)
Invoices to be received
 
  (3)
  (4)
Long-term incentive plan payable
 
  (1)
  (2)
Other liabilities
Total parent company
  1,577 
  1,587 
 
Shopping Neuquen S.A.
  452 
  853 
Rights of use assets
 
  1 
  50 
Leases and / or rights of use receivable
 
  224 
  280 
Borrowings granted
 
  (2)
  - 
Rentals and services received
Panamerican Mall S.A.
  75 
  129 
Leases and / or rights of use receivable
 
  1 
  2 
Long-term incentive plan
 
  (25)
  (11)
Other liabilities
Arcos del Gourmet S.A.
  31 
  58 
Leases and / or rights of use receivable
 
  - 
  - 
Rentals and services received
 
  (1)
  (7)
Other liabilities
Nuevo Puerto Santa Fe S.A.
  21 
  23 
Leases and / or rights of use receivable
 
  1 
  1 
Long-term incentive plan
 
  - 
  (3)
Rentals and services received
 
  - 
  (3)
Other liabilities
Fibesa S.A.
  1 
  4 
Leases and / or rights of use receivable
 
  6 
  - 
Borrowings granted
 
  13 
  18 
Long-term incentive plan
 
  (2)
  - 
Other liabilities
 
  (118)
  (119)
Non-Convertible Notes
 
  - 
  (5)
Loans received
E-Commerce Latina S.A.
  (983)
  (985)
Loans received
Ogden Argentina S.A.
  5 
  7 
Leases and / or rights of use receivable
 
  660 
  653 
Borrowings granted
Entretenimiento Universal S.A.
  88 
  87 
Borrowings granted
Torodur S.A.
  (3)
  (4)
Other liabilities
 
  (798)
  (1,274)
Non-Convertible Notes
 
  (10,067)
  (10,083)
Loans received
Ritelco S.A.
  8 
  4 
Leases and / or rights of use receivable
 
  (63)
  (63)
Loans received
Efanur S.A. (*)
  - 
  (392)
Loans received
Centro de Entretenimientos La Plata S.A.
  - 
  86 
Contributions to be integrated
 
  (1)
  (2)
Rentals and services received
We Are Appa S.A.
  - 
  6 
Leases and / or rights of use receivable
 
  401 
  273 
Borrowings granted
 
  (14)
  (37)
Rentals and services received
Other subsidiaries, associates and joint ventures (1)
  13 
  6 
Leases and / or rights of use receivable
 
  1 
  - 
Expenses paid in advance
 
  1 
  14 
Advance payments
 
  25 
  37 
Contributions to be integrated
 
  1 
  1 
Long-term incentive plan
 
  (24)
  (19)
Rentals and services received
 
  - 
  (12)
Invoices to be received
 
  (3)
  (8)
Other liabilities
 
  - 
  (22)
Loans received
Total subsidiaries, associates and joint ventures
  (10,075)
  (10,457)
 
 
 
 
49
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
Related parties
 
12.31.2022
 
 
06.30.2022
 
 Operation description
Directors
  - 
  - 
Rentals and services received
 
  (442)
  (879)
Directors' fees provision
Total directors
  (442)
  (879)
 
Cyrsa S.A.
  (62)
  (66)
Loans received
Consultores Assets Management
  27 
  28 
Leases and / or rights of use receivable
BHN Vida S.A.
  (5)
  (5)
Guarantee deposits received
 
  (66)
  (67)
Non-Convertible Notes
IRSA - Galerías Pacífico S.A. U.T.
  1 
  2 
Leases and / or rights of use receivable
 
  - 
  (1)
Invoices to be received
 
  (134)
  (191)
Other liabilities
 
  (1,491)
  (812)
Loans received
New Lipstick LLC
  43 
  43 
Leases and / or rights of use receivable
IRSA International LLC
  (54)
  (54)
Other liabilities
 
  (216)
  (214)
Loans received
 
  310 
  - 
Borrowings granted
Tyrus S.A.
  10 
  6 
Leases and / or rights of use receivable
 
  5,643 
  786 
Borrowings granted
 
  (2,481)
  (1,508)
Non-Convertible Notes
 
  (65)
  - 
Loans received
Helmir S.A.
  (61)
  (61)
Non-Convertible Notes
Real Estate Investment Group VII LP
  - 
  (61)
Loans received
Others Related parties (2)
  85 
  89 
Leases and / or rights of use receivable
 
  1 
  1 
Prepaid expenses
 
  2 
  4 
Advance payments to suppliers
 
  - 
  3 
Other credits
 
  (14)
  (12)
Rentals and services received
 
  (22)
  (23)
Non-Convertible Notes
 
  (42)
  (46)
Loans received
Total others
  1,409 
  (2,159)
 
Total
  (7,531)
  (11,908)
 
 
(1)
Includes Quality Invest S.A., Emprendimiento Recoleta S.A., Nuevo Puerto Santa Fe S.A., TGLT S.A. and La Rural S.A..
(2)
Includes Llao Llao Resorts S.A., Nuevas Fronteras S.A., Hoteles Argentinos SAU., Banco Hipotecario S.A., Museo de los niños, Estudio Zang, Bergel y Viñes, Inversiones Financieras del Sur S.A., Austral Gold, Agrofy S.A., BHN Seguros Generales S.A., Boulevard Norte S.A., UT La Rural S.A. - OFC S.R.L - Ogden y Enusa, Espacio Digital S.A. and Futuros y Opciones S.A..
(*) Company liquidated as of October 31, 2022.
 
 
50
IRSA Inversiones y Representaciones Sociedad Anónima
 
The following is a summary of the results with related parties for the six-month period ended December 31, 2022 and 2021:
 
Related parties
 
12.31.2022
 
 
12.31.2021
 
Operation description
Cresud S.A.C.I.F. y A.
  35 
  58 
Leases and/or rights of use
 
  1,040 
  (245)
Financial operations
 
  - 
  (631)
Corporate services
Total parent company
  1,075 
  (818)
 
Arcos del Gourmet S.A.
  (17)
  (10)
Leases and/or rights of use
 
  48 
  43 
Fees
Fibesa S.A.
  1 
  4 
Leases and/or rights of use
 
  - 
  2 
Fees
 
  (2)
  6 
Financial operations
Ritelco S.A.
  (2)
  8 
Financial operations
Torodur S.A.
  (35)
  1,572 
Financial operations
Efanur S.A.
  29 
  31 
Financial operations
Helmir S.A
  - 
  2 
Financial operations
Tyrus S.A.
  7 
  (72)
Financial operations
Lipstick Management
  - 
  23 
Financial operations
Shopping Neuquen S.A.
  (56)
  (33)
Financial operations
 
  (444)
  (425)
Leases and/or rights of use
Ogden Argentina S.A.
  (6)
  (70)
Financial operations
Entretenimiento Universal S.A.
  (1)
  (10)
Financial operations
E-Commerce Latina S.A.
  (20)
  (12)
Financial operations
La Rural S.A.
  (1)
  - 
Leases and/or rights of use
Panamerican Mall S.A.
  93 
  82 
Fees
 
  (32)
  (8)
Leases and/or rights of use
 
  - 
  (47)
Financial operations
Emprendimiento Recoleta S.A.
  (1)
  2 
Fees
Cyrsa S.A.
  4 
  8 
Financial operations
Centro de Entretenimientos La Plata S.A.
  (2)
  (4)
Leases and/or rights of use
We are Appa S.A
  6 
  6 
Fees
 
  6 
  2 
Leases and/or rights of use
Nuevo Puerto Santa Fe S.A.
  - 
  (2)
Leases and/or rights of use
 
  28 
  14 
Fees
Quality Invest S.A.
  6 
  4 
Fees
 
  (12)
  (2)
Leases and/or rights of use
Total subsidiaries, associates and joint ventures
  (403)
  1,114 
 
Directors
  (771)
  (721)
Fees
Senior Management
  - 
  (16)
Fees
Total Directors and Senior Management
  (771)
  (737)
 
BHN Seguros Generales S.A.
  - 
  21 
Leases and/or rights of use
BHN Sociedad de Inversión S.A.
  - 
  8 
Leases and/or rights of use
BHN Vida S.A.
  - 
  23 
Leases and/or rights of use
BACS Administradora de Activos S.A.
  - 
  18 
Leases and/or rights of use
Austral Gold
  - 
  4 
Leases and/or rights of use
 
  (2)
  4 
Fees
Consultores Assets Management
  - 
  8 
Leases and/or rights of use
 
  (2)
  2 
Fees
Hamonet S.A.
  3 
  (4)
Leases and/or rights of use
Isaac Elsztain e Hijos S.C.A.
  7 
  (10)
Leases and/or rights of use
Estudio Zang, Bergel & Viñes
  (26)
  (33)
Fees
Banco de Crédito y Securitización S.A.
  - 
  43 
Leases and/or rights of use
Nuevas Fronteras S.A.
  20 
  - 
Financial operations
Fundación IRSA
  38 
  (33)
Donations
 
  - 
  2 
Leases and/or rights of use
Museo de los niños
  (6)
  (12)
Leases and/or rights of use
Fundación Puerta 18
  (9)
  (10)
Donations
IRSA - Galerías Pacífico S.A. U.T.
  (12)
  14 
Financial operations
Fundación IRSA
  (38)
  - 
Donations
Hoteles Argentinos SAU
  - 
  2 
Fees
Nuevas Fronteras S.A.
  - 
  16 
Fees
 
  (20)
  4 
Financial operations
Other subsidiaries, associates and joint ventures
  (47)
  67 
 
Total at the end of the period
  (146)
  (374)
 
 
 
 
51
IRSA Inversiones y Representaciones Sociedad Anónima
 
The following is a summary of the transactions with related parties without impact in resultsfor the six-month period ended December 31, 2022 and 2021:
 
Related parties
 
12.31.2022
 
 
12.31.2021
 
Operation description
Fibesa S.A.
  329 
  210 
Dividends received
Arcos del Gourmet S.A
  336 
  549 
Dividends received
Panamerican Mall S.A.
  469 
  - 
Dividends received
Nuevo Puerto Santa Fe S.A.
  143 
  - 
Dividends received
Totaldividends received
  1,277 
  759 
 
Palermo Invest S.A.
  (2)
  (27)
Irrevocable contributions
Inversora Bolívar S.A.
  (1)
  (21)
Irrevocable contributions
E-Commerce Latina S.A.
  - 
  (243)
Irrevocable contributions
Tyrus S.A.
  - 
  (228)
Irrevocable contributions
Hoteles Argentinos SAU
  - 
  (62)
Irrevocable contributions
Quality Invest S.A.
  - 
  (58)
Irrevocable contributions
Torodur S.A
  - 
  (335)
Irrevocable contributions
Centro de Entretenimientos La Plata S.A.
  (152)
  - 
Irrevocable contributions
Total contributions to subsidiaries
  (155)
  (974)
 
 
23.
Foreign currency assets and liabilities
 
Book amounts of foreign currency assets and liabilities are as follows:
 
Item (1)
 
 Amount (2)
 
 
 Foreign exchange rate (3)
 
 
Total as of 12.31.2022
 
 
Total as of 06.30.2022
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
 
 
 
 
US Dollar
  6.83 
  176.96 
  1,209 
  1,414 
 Euros
  0.08 
  189.26 
  15 
  16 
Receivables with related parties
    
    
    
    
US Dollar
  40.84 
  177.16 
  7,236 
  1,914 
Total Trade and other receivables
    
    
  8,460 
  3,344 
Investments in financial assets
    
    
    
    
US Dollar
  11.23 
  176.96 
  1,987 
  1,029 
Investment in financial assets with related parties
    
    
    
    
US Dollar
  10.83 
  177.16 
  1,918 
  2,472 
Total Investments in financial assets
    
    
  3,905 
  3,501 
Cash and cash equivalents
    
    
    
    
US Dollar
  0.90 
  176.96 
  159 
  11,091 
Total Cash and cash equivalents
    
    
  159 
  11,091 
Total Assets
    
    
  12,524 
  17,936 
 
    
    
    
    
Liabilities
    
    
    
    
Trade and other payables
    
    
    
    
US Dollar
  3.61 
  177.16 
  640 
  594 
Euros
  - 
  189.92 
  - 
  1 
Payables with related parties
    
    
    
    
US Dollar
  0.38 
  177.16 
  68 
  87 
Total Trade and other payables
    
    
  708 
  682 
Lease liabilities
    
    
    
    
US Dollar
  - 
  177.16 
  - 
  1 
Total Lease liabilities
    
    
  - 
  1 
Borrowings
    
    
    
    
US Dollar
  395.48 
  177.16 
  70,064 
  86,217 
Borrowings with related parties
    
    
    
    
US Dollar
  93.02 
  177.16 
  16,480 
  15,794 
Total Borrowings
    
    
  86,544 
  102,011 
Total Liabilities
    
    
  87,252 
  102,694 
 
(1)
Considering foreign currencies those that differ fromthe Group’s functional currency at each period / year.
(2)
Expressed in millions of foreign currency.
(3)
Exchange rate as of December 31, 2022 according to Banco de la Nación Argentina records.
 
 
52
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
24.
Additional information
 
Operations not affecting cash flows
 
12.31.2022
 
 
12.31. 2021
 
 
 
 
 
 
 
 
Currency translation adjustment
  (572)
  (820)
Decrease in lease liabilities through a decrease in trade and other receivables
  - 
  6 
Decrease in income tax liabilities through an increase in provisions
  - 
  212 
Increase in dividends receivable through a decrease in investments in subsidiaries, associates and joint ventures
  - 
  302 
Decrease in dividends receivable through an increase in investments in subsidiaries, associates and joint ventures
  - 
  16 
Other changes in subsidiaries` equity
  (449)
  - 
Issuance of NCN
  26,325 
  - 
Decrease in investment properties through an increase in property, plant and equipment
  10 
  - 
Decrease in trading properties through an increase in intangible assets
  333 
  - 
Increase in rights of use assets through an increase in lease liabilities
  44 
  - 
Decrease in investment properties through an decrease in financial assets
  52 
  - 
Decrease in investments in financial assets through a decrease in trade and other payables
  244 
  - 
Decrease in dividends receivable through an increase in investment in financial assets
  7 
  - 
Decrease in investments in subsidiaries, associates and joint ventures through decrease in other liabilities
  47 
  - 
Decrease in shareholders´ equity through decrease in investment in financial assets
  2,053 
  - 
Decrease in investments in subsidiaries, associates and joint ventures through an increase in financial assets
  250 
  - 
Decrease in investments in subsidiaries, associates and joint ventures through an increase in trade and other receivables
  4,805 
  - 
Decrease in investments in subsidiaries, associates and joint ventures through a decrease in borrowings
  424 
  - 
Increase in investment in subsidiaries, associates and joint ventures through a decrease in trade and other receivables
  72 
  - 
 
25.
CNV General Resolution N° 622/13
 
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622/13, below is a detail of the notes to the Unaudited Condensed Interim Separate Financial Statements that disclose the information required by the Resolution in Exhibits.
 
Exhibit A - Property, plant and equipment
Note 7 Investment properties and Note 8 Property, plant and equipment
Exhibit B - Intangible assets
Note 10 Intangible assets
Exhibit C - Equity investments
Note 6 Information about the main subsidiaries, associates and joint ventures
Exhibit D - Other investments
Note 12 Financial instruments by category
Exhibit E - Provisions
Note 13 Trade and other receivables and Note 17 Provisions
Exhibit F - Cost of sales and services provided
Note 9 Trading properties and Note 19 Expenses by nature
Exhibit G - Foreign currency assets and liabilities
Note 23 Foreign currency assets and liabilities
 
26.
CNV General Resolution N° 629/14 – Storage of documentation
 
On August 14, 2014, the CNV issued General Resolution N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Company has entrusted the storage of certain non-sensitive and old information to the following provider:
 
Storage of documentation responsible
 
Location
Iron Mountain Argentina S.A.
 
Av. Amancio Alcorta 2482, Autonomous City of Buenos Aires
 
San Miguel de Tucumán 601, Carlos Spegazzini.
 
Torcuato Di Tella 1800, Carlos Spegazzini.
 
Puente del Inca 2540, Carlos Spegazzini
 
It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of Section I, Chapter V, Title II of the CNV RULES (2013 as amended) are available at the registered office.
 
On February 5, 2014 there was a widely known accident in Iron Mountain’s warehouse. Such company is a supplier of the Company and Company’s documentation was being kept in the mentioned warehouse. Based on the internal review carried out by the Company, duly reported to the CNV on February 12, 2014, the information kept at the Iron Mountain premises that were on fire do not appear to be sensitive or capable of affecting normal operations.
 
 
53
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
27.
Negative working capital
 
As of December 31, 2022, the Company presents a negative working capital of ARS 24,027, which is permanently monitored by the Shareholder meeting and the Management.
 
28.
Other relevant events of the period
 
See Note 28 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
29.
Subsequent events
 
See Note 29 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
 
54
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM SEPARATE FINANCIAL STATEMENTS
 
To the Shareholders, President and Directors of
IRSA Inversiones y Representaciones Sociedad Anónima
Legal address: Carlos Della Paolera 261 - 9thfloor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52532274-9
 
Introduction
 
We have reviewed the accompanying unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima (“the Company”), including the unaudited condensed interim separate statement of financial position at December 31, 2022, the unaudited condensed interim separate statements of income and other comprehensive income for the six month period and three month period ended December 31, 2022 and the unaudited condense interim separate statements of changes in shareholders’ equity and of cash flows for the six month period then ended, and selected explanatory notes.
 
The balances and other information for the fiscal year ended on June 30, 2022 and its interim periods are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.
 
Management’s responsibility
 
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim separate financial statements in accordance with International Financial Reporting Standards, adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and included by the National Securities Commission (CNV) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the unaudited condensed interim separate financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 Interim Financial Information (IAS 34).
 
 
55
 
 
 
 
 
 
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Scope of our review
 
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim separate financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the separate statements of financial position, and the separate statements of income and other comprehensive income and of cash flows of the Company.

Conclusion
 
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim separate financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34 Interim Financial Reporting.
 
Report on compliance with current regulations
 
In accordance with current regulations, we report, in connection with IRSA Inversiones y Representaciones Sociedad Anónima, that:
 
a)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima have not been transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
 
b)
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal aspects in accordance with legal requirements except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the General Journal Book of the accounting entries corresponding to the month of December 2022;
 
 
 
56
 
Free translation from the original prepared in Spanish for publication in Argentina
 
 
c)
at December 31, 2022 the debt of IRSA Inversiones y Representaciones Sociedad Anónima accrued in favor of the Argentine Integrated Social Security System, as shown by the Company’s accounting records, amounted to ARS 83,115,169, which was not due at that date.
 
Autonomous City of Buenos Aires, February 8, 2023.
 
 
PRICE WATERHOUSE & CO. S.R.L.
(Partner)
 
ABELOVICH, POLANO & ASOCIADOS S.R.L.
(Partner)
C.P.C.E.C.A.B.A. Tº 1 Fº 17
 
C.P.C.E.C.A.B.A. T° 1 F° 30
Carlos Brondo
Public Accountant (UNCUYO)
C.P.C.E.C.A.B.A. T° 391 F° 078
 
Noemí I. Cohn
Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. T° 116 F° 135
 
 
 
57
 
 
I. Brief comment on the Company’s activities during the period, including references to significant events occurred after the end of the period.
 
Consolidated Results
 
(in millions of ARS)
 IQ 23
 
IQ 22
 
 
YoY Var
 
  6M 23 
  6M 22 
 
YoY Var
 
Revenues
  17,205 
  12,120 
  42.0%
  30,890 
  21,527 
  43.5%
Result from fair value adjustment of investment properties
  (21,755)
  57,674 
  (137.7)%
  (29,530)
  43,731 
  (167.5)%
Result from operations
  (16,184)
  62,120 
  (126.1%
  (17,422)
  51,642 
  (133.7)%
Depreciation and amortization
  439 
  349 
  25.8%
  694 
  670 
  3.6%
EBITDA (1)
  (15,745)
  62,469 
  (125.2)%
  (16,728)
  52,312 
  (132.0)%
Adjusted EBITDA (1)
  6,047 
  8,593 
  (29.6)%
  13,903 
  12,630 
  10.1%
Result for the period
  13,915 
  51,887 
  (73.2)%
  15,436 
  49,712 
  (68.9)%
Attributable to equity holders of the parent
  13,727 
  51,392 
  (73.3)%
  15,090 
  50,105 
  (69.9)%
Attributable to non-controlling interest
  188 
  495 
  (62.0)%
  346 
  (393)
  - 
(1)
See Point XVI: EBITDA Reconciliation
 
 
Group revenues increased by 43.5% during the first half of 2023 compared to the same period in 2022, mainly due to the Shopping Centers and Hotels segments, which strongly recovered their level of activity.
 
Adjusted EBITDA of the rental segments reached ARS 15,471 million, ARS 12,419 million in the Shopping Centers segment, ARS 1,328 million in the office segment and ARS 1,724 million in the Hotels segment, 47.5% higher than the first half of the previous year. Total Adjusted EBITDA reached ARS 13,903 million, increasing 10.1% in the period.
 
The net result for the first half of fiscal year 2023 registered a gain of ARS 15,436 million compared to a gain of ARS 49,712 million in the previous fiscal year. This is mainly explained by the loss recorded due to changes in the fair value of investment properties, partially offset by better operating results and the impact of the reversal of an income tax provision due to jurisprudence regarding tax inflation adjustment.
 
II.Shopping Malls
 
Our portfolio’s leasable area totaled 336,240 sqm of GLA.Real tenants’ sales of our shopping centers reached ARS 219,473 million in the first halfof fiscal year 2023, 22.2% higher than inthe first semester of the previous fiscal year.
 
Portfolio’s occupancy reached 93.9%,in similar levels than the previous quarter.
 
Shopping Malls’ Operating Indicators
 
 
 
IIQ 23
 
 
IQ 23
 
 
IVQ 22
 
 
IIIQ 22
 
 
IIQ 22
 
Gross leasable area (sqm)
  336,240 
  336,240 
  335,666 
  335,690 
  335,279 
Tenants’ sales (3 months cumulative in current currency)
  119,233 
  100,240 
  101,998 
  82,772 
  106,117 
Occupancy
  93.9%
  93.7%
  93.1%
  91.5%
  89.1%
 
 
 
58
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
Shopping Malls’ Financial Indicators
 
(in millions of ARS)
 
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
Revenues from sales, leases, and services
  8,712 
  6,893 
  26.4%
  15,793 
  11,668 
  35.4%
Net result from fair value adjustment on investment properties
  107 
  (3,591)
  - 
  (5,897)
  (11,530)
  (48.9)%
Result from operations
  7,027 
  1,345 
  422.5%
  6,315 
  (3,470)
  - 
Depreciation and amortization
  132 
  84 
  57.1%
  207 
  191 
  8.4%
EBITDA (1)
  7,159 
  1,429 
  401.0%
  6,522 
  (3,279)
  - 
Adjusted EBITDA (1)
  7,052 
  5,020 
  40.5%
  12,419 
  8,251 
  50.5%
(1)
See Point XVI: EBITDA Reconciliation
 
Income from this segmentduring the first halfof fiscal year 2023reached ARS15,793 million, anincreaseof35.4% when compared with the same period of previous fiscal year. Adjusted EBITDA reached ARS 12,419million, 50.5% higher than in the same period of fiscal year 2022 as costs increased at a lower rate than revenues.
 
Operating data of our shopping malls
 
 
Date of acquisition
Location
 
Gross Leasable Area (sqm)(1)
 
 
Stores
 
 
Occupancy (2)
 
 
IRSAInterest (3)
 
Alto Palermo
Dec-97
City of Buenos Aires
  20,507 
  140 
  99.1%
  100%
Abasto Shopping(4)
Nov-99
City of Buenos Aires
  37,163 
  160 
  98.6%
  100%
Alto Avellaneda
Dec-97
Province of Buenos Aires
  40,254 
  124 
  86.2%
  100%
Alcorta Shopping
Jun-97
City of Buenos Aires
  15,812 
  111 
  93.8%
  100%
Patio Bullrich
Oct-98
City of Buenos Aires
  11,664 
  91 
  92.1%
  100%
Dot Baires Shopping
May-09
City of Buenos Aires
  47,296 
  163 
  89.3%
  80%
Soleil
Jul-10
Province of Buenos Aires
  15,734 
  73 
  100.0%
  100%
Distrito Arcos
Dec-14
City of Buenos Aires
  14,457 
  67 
  100.0%
  90.0%
Alto Noa Shopping
Mar-95
Salta
  19,388 
  85 
  97.8%
  100%
Alto Rosario Shopping
Nov-04
Santa Fe
  34,858 
  136 
  96.4%
  100%
Mendoza Plaza Shopping
Dec-94
Mendoza
  41,511 
  128 
  87.5%
  100%
Córdoba Shopping
Dec-06
Córdoba
  15,368 
  103 
  100.0%
  100%
La Ribera Shopping
Aug-11
Santa Fe
  10,531 
  68 
  97.7%
  50%
Alto Comahue
Mar-15
Neuquén
  11,697 
  89 
  98.0%
  99.95%
Patio Olmos(5)
Sep-07
Córdoba
  - 
  - 
  - 
    
Total
 
 
  336,240 
  1,538 
  93.9%
    
(1) Corresponds to gross leasable area in each property. Excludes common areas and parking spaces.
(2) Calculated dividing occupied square meters by leasable area as of the last day of the fiscal period.
(3) Company’s effective interest in each of its business units.
(4) Excludes Museo de los Niños (3,732 squaremeters in Abasto).
(5) IRSA owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party.
 
 
59
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
Quarterly and cumulative tenants’ sales as of December31, 2022, compared to the same period of fiscal years 2022, 2021, 2020, and 2019
 
(ARS million) 
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
Alto Palermo
  16,280 
  13,647 
  19.3%
Abasto Shopping
  16,799 
  13,050 
  28.7%
Alto Avellaneda
  12,095 
  9,585 
  26.2%
Alcorta Shopping
  9,868 
  9,842 
  0.3%
Patio Bullrich
  5,167 
  5,050 
  2.3%
Buenos Aires Design(1)
  - 
  - 
  0.0%
Dot Baires Shopping
  9,522 
  8,648 
  10.1%
Soleil
  6,147 
  5,956 
  3.2%
Distrito Arcos
  8,815 
  7,835 
  12.5%
Alto Noa Shopping
  4,597 
  4,451 
  3.3%
Alto Rosario Shopping
  13,885 
  12,578 
  10.4%
Mendoza Plaza Shopping
  6,404 
  6,621 
  -3.3%
Córdoba Shopping
  4,367 
  4,221 
  3.5%
La Ribera Shopping(2)
  2,007 
  1,889 
  6.2%
Alto Comahue
  3,280 
  2,744 
  19.5%
Total sales
  119,233 
  106,117 
  12.4%
(1) December 5, 2018, end of concession
(2) Through our joint venture Nuevo Puerto Santa Fe S.A.
 
(ARS million) 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
 
6M 21
 
 
6M 20
 
 
6M 19
 
Alto Palermo
  29,147 
  22,306 
  30.7%
  22,248 
  22,248 
  22,248 
Abasto Shopping
  31,475 
  21,624 
  45.6%
  24,222 
  24,222 
  24,222 
Alto Avellaneda
  21,639 
  15,988 
  35.3%
  21,713 
  21,713 
  21,713 
Alcorta Shopping
  17,154 
  16,283 
  5.3%
  12,744 
  12,744 
  12,744 
Patio Bullrich
  9,532 
  8,152 
  16.9%
  8,179 
  8,179 
  8,179 
Buenos Aires Design(1)
  - 
  - 
  - 
  - 
  - 
  1,981 
Dot Baires Shopping
  17,207 
  14,257 
  20.7%
  18,603 
  18,603 
  18,603 
Soleil
  11,621 
  10,725 
  8.4%
  9,382 
  9,382 
  9,382 
Distrito Arcos
  16,703 
  13,405 
  24.6%
  8,818 
  8,818 
  8,818 
Alto Noa Shopping
  8,926 
  8,054 
  10.8%
  7,770 
  7,770 
  7,770 
Alto Rosario Shopping
  25,420 
  21,631 
  17.5%
  17,336 
  17,336 
  17,336 
Mendoza Plaza Shopping
  12,702 
  11,802 
  7.6%
  13,614 
  13,614 
  13,614 
Córdoba Shopping
  7,756 
  7,196 
  7.8%
  5,914 
  5,914 
  5,914 
La Ribera Shopping(2)
  3,903 
  3,186 
  22.5%
  4,026 
  4,026 
  4,026 
Alto Comahue
  6,288 
  4,925 
  27.7%
  5,525 
  5,525 
  5,525 
Total sales
  219,473 
  179,534 
  22.2%
  180,094 
  180,094 
  182,075 
(1) December 5, 2018, end of concession
(2) Through our joint venture Nuevo Puerto Santa Fe S.A.
 
Quarterly and cumulative tenants’ sales per type of business as of December 31, 2022, compared to the same period of fiscal years 2022, 2021, 2020 and 2019(1)
 
(ARS million) 
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
Department Store
  - 
  - 
  - 
Clothes and footwear
  73,604 
  66,373 
  10.9%
Entertainment
  1,979 
  2,145 
  (7.7)%
Home and decoration
  2,493 
  2,602 
  (4.2)%
Restaurants
  11,069 
  8,640 
  28.1%
Miscellaneous
  14,906 
  16,364 
  (8.9)%
Services
  1,876 
  1,594 
  17.7%
Home Appliances
  13,306 
  8,399 
  58.4%
Total
  119,233 
  106,117 
  12.4%
 
 
 
60
 
 
 
(ARS million) 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
 
6M 21
 
 
6M 20
 
 
6M 19
 
Department Store
  - 
  - 
  - 
  2,876 
  9,679 
  9,805 
Clothes and footwear
  130,724 
  110,030 
  18.8%
  47,847 
  102,001 
  100,268 
Entertainment
  5,821 
  3,787 
  53.7%
  148 
  5,376 
  5,386 
Home and decoration
  4,912 
  4,673 
  5.1%
  2,120 
  3,673 
  6,325 
Restaurants
  22,678 
  15,641 
  45.0%
  4,917 
  19,398 
  19,784 
Miscellaneous
  26,645 
  27,405 
  -2.8%
  13,078 
  24,204 
  22,960 
Services
  3,643 
  2,775 
  31.3%
  729 
  1,974 
  2,140 
Home Appliances
  25,050 
  15,223 
  64.6%
  9,122 
  14,558 
  15,407 
Total
  219,473 
  179,534 
  22.2%
  80,837 
  180,863 
  182,075 
(1) 
Includes sales from stands and excludes spaces used for special exhibitions.
 
Revenues from quarterly and cumulative leases as of December 30, 2022, compared to the same period of fiscal year 2022, 2021, 2020 &2019
 
(ARS million) 
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
Base rent
  3,176 
  2,075 
  53.1%
Percentage rent
  4,066 
  3,721 
  9.3%
Total rent
  7,242 
  5,796 
  24.9%
Non-traditional advertising
  183 
  152 
  20.4%
Revenues from admission rights
  658 
  485 
  35.7%
Fees
  69 
  76 
  (9.2)%
Parking
  348 
  249 
  39.8%
Commissions
  201 
  125 
  60.8%
Other
  11 
  10 
  10.0%
Subtotal
  8,712 
  6,893 
  26.4%
Expenses and Collective Promotion Fund
  3,161 
  2,441 
  29.5%
Total
  11,873 
  9,334 
  27.2%
 
(ARS million) 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
 
6M 21
 
 
6M 20
 
 
6M 19
 
Base rent
  5,909 
  3,609 
  63.7%
  2,608 
  6,746 
  6.213 
Percentage rent
  7,173 
  6,098 
  17.6%
  1,362 
  4,243 
  2.681 
Total rent
  13,082 
  9,707 
  34.8%
  3,970 
  10,989 
  8.894 
Non-traditional advertising
  355 
  244 
  45.5%
  123 
  263 
  326 
Revenues from admission rights
  1,240 
  910 
  36.3%
  962 
  1,821 
  1.420 
Fees
  136 
  152 
  -10.5%
  162 
  189 
  168 
Parking
  649 
  383 
  69.5%
  23 
  760 
  706 
Commissions
  308 
  242 
  27.3%
  206 
  368 
  359 
Other
  23 
  30 
  -23.3%
  267 
  80 
  503 
Subtotal
  15,793 
  11,668 
  35.4%
  5,713 
  14,470 
  12.376 
Expenses and Collective Promotion Fund
  5,858 
  4,507 
  30.0%
  3,002 
  5,696 
  4.372 
Total
  21,651 
  16,175 
  33.9%
  8,715 
  20,166 
  16.748 
(1)
Includes Revenues from stands for ARS 1,074.6 million cumulative as of December 2022
(2)
Includes ARS 14.4 million from Patio Olmos.
 
 
61
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
III. Offices
 
According to Colliers, the quarter closes with a slight decrease in vacancy standing at 17.5%, in the Buenos Aires City premium market,while prices of A+ & A segment remain stable at average levels of USD 22.7 per sqm.
 
Offices’ Operating Indicators
 
 
 
IIQ 23
 
 
IQ 23
 
 
IVQ 22
 
 
IIIQ 22
 
 
IIQ 22
 
Gross Leasable area
  82,708 
  82,708 
  83,892 
  103,777 
  109,859 
Total Occupancy
  68.6%
  68.5%
  73.3%
  66.4%
  68.6%
Class A+ & A Occupancy
  83.7%
  82.0%
  85.5%
  74.6%
  76.7%
Class B Occupancy
  19.6%
  24.9%
  33.5%
  30.9%
  30.9%
Rent USD/sqm
  24.8 
  25.0 
  24.5 
  24.6 
  24.9 
 
The gross leasable area during the second quarter of fiscal year 2023 was 82,708sqm,remaining unchanged compared with previous quarter. Portfolio average A+ & A reached 83.7%, and average rental price stoodat USD/sqm24.8.
 
 
Offices’ Financial Indicators
 
(in ARS million) 
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
Revenues from sales, leases and services
  830 
  827 
  0.4%
  1,635 
  2,347 
  (30.3)%
Net result from fair value adjustment on investment properties, PP&E e inventories
  (7,333)
  4,302 
  (270.5)%
  (7,934)
  1,200 
  (761.2)%
Profit from operations
  (6,704)
  4,529 
  (248.0)%
  (6,689)
  2,636 
  (353.8)%
Depreciation and amortization
  40 
  81 
  (50.6)%
  83 
  107 
  (22.4)%
EBITDA(1)
  (6,664)
  4,610 
  (244.6)%
  (6,606)
  2,743 
  (340.8)%
Adjusted EBITDA (1)
  669 
  308 
  117.2%
  1,328 
  1,543 
  (13.9)%
(1)
See Point XVI: EBITDA Reconciliation
 
During the first half of fiscal year 2023, revenues from the offices segment decreased by 30.3% and Adjusted EBITDA decreased 13.9% compared to the previous fiscal year, mainly explained by the impact of asset sales, the higher vacancy and official FX on dollarized rents. Adjusted EBITDA margin was 81.2%.
 
Below is information on our office segment:
 
Offices & Others
Date of Acquisition
 
Gross Leasable Area (sqm)(1)
 
 
Occupancy (2)
 
 
Actual Interest
 
 
6M 23 - Rental revenues (ARS thousand) (4)
 
AAA & A Offices
 
 
 
 
 
 
 
 
 
 
 
 
 
Boston Tower
Dec-14
 
 
 
 
 
 
 
 
 
  1,418 
Intercontinental Plaza (3)
Dec-14
  2,979 
  100.0%
  100%
  105,518 
Dot Building
Nov-06
  11,242 
  78.5%
  80%
  208,817 
Zetta
May-19
  32,173 
  93.9%
  80%
  874,692 
261 Della Paolera – Catalinas(5)
Dec-20
  16,832 
  64.8%
  100%
  370,165 
Total AAA & A Offices
 
  63,226 
  83.7%
    
  1,560,610 
 
    
    
    
    
B Offices
 
    
    
    
    
Suipacha 652/64
Dec-14
  11,465 
  - 
  100%
  - 
Philips
Jun-17
  8,017 
  47.6%
  100%
  74,188 
Total B Buildings
 
  19,482 
  19.6%
  100%
  74,188 
Subtotal Offices
 
  82,708 
  68.6%
    
  1,634,798 
(1) Corresponds to the total gross leasable area of each property as of December 31, 2022. Excludes common areas and parking lots.
(2) Calculated by dividing occupied square meters by gross leasable area as of December 31, 2022.
(3) We own 13.2% of the building that has 22,535 square meters of gross leasable area.
(4)Corresponds to the accumulated income of the period.
(5) We own 46.9% of the building that has 35,872 square meters of gross leasable area.
 
 
 
62
 

 
IV. Hotels
 
The hotel segment continues to recover strongly. The exclusive Llao Llao resort, in the city of Bariloche, in southern Argentina, continues to register historical record income and occupancy levels. The Intercontinental and Libertador hotels that the company owns in the city of Buenos Aires are evolving favorably reaching levels prior to the pandemic.
 
(in ARS million)
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
Revenues
  2,622 
  1,679 
  56.2%
  4,971 
  2,694 
  84.5%
Profit from operations
  772 
  387 
  99.5%
  1,465 
  424 
  245.5%
Depreciation and amortization
  179 
  138 
  29.7%
  259 
  271 
  (4.4)%
EBITDA
  951 
  525 
  81.1%
  1,724 
  695 
  148.1%
 
During the first semesterof fiscal year 2023, Hotels segment recorded an increase in revenues of 84.5% compared with the same period of fiscal year 2022 while the segment’s EBITDA reached ARS 1,724million, a 148.1% increase when compared to the same period of fiscal year 2022.
 
The following chart shows certain information regarding our luxury hotels:
 
Hotels
 
Date of Acquisition
 
 
IRSA’s Interest
 
 
Number of rooms
 
 
Occupancy(4)
 
Intercontinental (1)
 
11/01/1997
  76,34%
  313 
  75.8%
Sheraton Libertador (2)
 
03/01/1998
 
  100,00%
  200 
  64.6%
Llao Llao(3)
 
06/01/1997
 
  50,00%
  205 
  71.4%
Total
  - 
  - 
  718 
  71.4%
(1)
Through Nuevas Fronteras S.A. (Subsidiary of IRSA).
(2)
Through Hoteles Argentinos S.A.U.
(3)
Through Llao Llao Resorts S.A.
(4)
Three months cumulated average.
 
Hotels’ operating and financial indicators.
 
 
 
IIQ 23
 
 
IQ 23
 
 
IVQ 22
 
 
IIIQ 22
 
 
IIQ 22
 
Average Occupancy
  71.4%
  62.7%
  52.0%
  45.2%
  42.5%
Average Rate per Room (USD/night)
  208 
  227 
  172 
  234 
  205 
 
V. Sales and Developments
 
(in ARS million)
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
Revenues
  1,631 
  364 
  348.1%
  2,172 
  390 
  456.9%
Net result from fair value adjustment on investment properties
  (15,099)
  56,928 
  (126.5)%
  (16,342)
  53,757 
  (130.4)%
Result from operations
  (14,143)
  56,044 
  (125.2)%
  (15,532)
  52,302 
  (129.7)%
Depreciation and amortization
  36 
  8 
  350.0%
  49 
  19 
  157.9%
Net result from fair value adjustment on investment properties
  37 
  3,798 
  (99.0)%
  1,101 
  4,049 
  (72.8)%
EBITDA (1)
  (14,107)
  56,052 
  (125.2)%
  (15,483)
  52,321 
  (129.6)%
Adjusted EBITDA (1)
  1,029 
  2,922 
  (64.8)%
  1,960 
  2,613 
  (25.0)%
(1)
See Point XVI: EBITDA Reconciliation
 
 
Adjusted EBITDA of “Sales and Developments”segment was increased by ARS 1,960 million during the first semesterof fiscal year 2023, 25.0% lesswhen compared to the previous fiscal year, mainly due to floors sales of the “261 Della Paolera” building made during this period.
 
 
 
63
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
VI. Others
 
(in millions of ARS)
 
IIQ 23
 
 
IIQ 22
 
 
YoY Var
 
 
6M 23
 
 
6M 22
 
 
YoY Var
 
Revenues
  196 
  46 
  326.1%
  345 
  74 
  366.2%
Net result from fair value adjustment on investment properties
  (23)
  149 
  (115.4)%
  (49)
  175 
  (128.0)%
Result from operations
  (3,650)
  10 
 
(36,600.0=%
 
  (3,553)
  (234)
  1,418.4%
Depreciation and amortization
  53 
  42 
  26.2%
  101 
  84 
  20.2%
EBITDA
  (3,597)
  52 
  (7,017.3)%
  (3,452)
  (150)
  2,201.3%
Adjusted EBITDA
  (3,574)
  (97)
  3,584.5%
  (3,403)
  (325)
  947.1%
 
VII. Financial Operations and Others
 
Interest in Banco Hipotecario S.A. (“BHSA”)
 
BHSA is a leading bank in the mortgage lending industry, in which IRSA held an equity interest of 29.91% as of December31, 2022. During the six-month period of fiscal year 2023, the investment in Banco Hipotecario generated an ARS 1,250 million gain compared to a ARS 364 million loss during the same period of 2022. For further information, visit http://www.cnv.gob.ar or http://www.hipotecario.com.ar.
 
VIII. EBITDA by Segment (ARS million)
 
6M 23
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
Others
 
 
Total
 
Result from operations
  6,315 
  (6,689)
  (15,532)
  1,465 
  (3,553)
  (17,994)
Depreciation and amortization
  207 
  83 
  49 
  259 
  101 
  699 
EBITDA
  6,522 
  (6,606)
  (15,483)
  1,724 
  (3,452)
  (17,295)
 
6M 22
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
Others
 
 
Total
 
Result from operations
  (3,470)
  2,636 
  52,302 
  424 
  (234)
  51,658 
Depreciation and amortization
  191 
  107 
  19 
  271 
  84 
  672 
EBITDA
  (3,279)
  2,743 
  52,321 
  695 
  (150)
  52,330 
EBITDA Var
  - 
  (340.8)%
  (129.6)%
  148.1%
  2,201.3%
  (133.0)%
 
 
 
64
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
IX. Reconciliation with Consolidated Statements of Income (ARS million)
 
Below is an explanation of the reconciliation of the company’s profit by segment with its Consolidated Statements of Income. The difference lies in the presence of joint ventures included in the segment but not in the Statements of Income.
 
 
 
Total as per segment
 
 
Joint ventures*
 
 
Expenses and CPF
 
 
 Elimination of inter-segment transactions
 
 
Total as per Statements of Income
 
Revenues
  24,916 
  (138)
  6,112 
  - 
  30,890 
Costs
  (4,315)
  63 
  (6,227)
  - 
  (10,479)
Gross result
  20,601 
  (75)
  (115)
  - 
  20,411 
Result from sales of investment properties
  (30,222)
  692 
  - 
  - 
  (29,530)
General and administrative expenses
  (3,984)
  20 
  - 
  16 
  (3,948)
Selling expenses
  (1,303)
  9 
  - 
  - 
  (1,294)
Other operating results, net
  (3,086)
  (14)
  55 
  (16)
  (3,061)
Result from operations
  (17,994)
  632 
  (60)
  - 
  (17,422)
Share of loss of associates and joint ventures
  1,737 
  (419)
  - 
  - 
  1,318 
Result before financial results and income tax
  (16,257)
  213 
  (60)
  - 
  (16,104)
*Includes Puerto Retiro, CYRSA, Nuevo Puerto Santa Fe and Quality (San Martín plot).
 
X. Financial Debt and Other Indebtedness
 
The following table describes our total indebtedness as of December 31, 2022:
 
Description
Currency
 
Amount (USD MM) (1)
 
 
Interest Rate
 
Maturity
Bank overdrafts
ARS
  24.7 
 
Floating
 
< 360 days
PAMSA loan
USD
  2.7 
  5.95%
Feb-23
Series II(3)
USD
  121.0 
  8.75%
Mar-23
Series IX(4)
USD
  56.1 
  10.0%
Mar-23
Series I
USD
  3.1 
  10.0%
Mar-23
Series VIII
USD
  10.8 
  10.0%
Nov-23
Series XI
USD
  12.8 
  5.0%
Mar-24
Series XII
ARS
  47.6 
 
Floating
 
Mar-24
Series XIII
USD
  29.6 
  3.9%
Aug-24
Series XIV
USD
  156.0 
  8.75%
Jun-28
IRSA’s Total Debt
USD
  464.4 
    
 
Cash & Cash Equivalents + Investments (2)
USD
  158.3 
    
 
IRSA’s Net Debt
USD
  306.1 
    
 
(1) 
Principal amount in USD (million) at an exchange rate of ARS 177.16/USD, without considering accrued interest or eliminations of balances with subsidiaries.
(2) 
Includes Cash and cash equivalents, Investments in Current Financial Assets and related companies notes holding.
(3) 
Originally issued by IRSA CP. On July 6, the exchange of the Series II Notes was completed and on July 8, being the settlement date, the Notes were partially cancelled, leaving an outstanding amount of USD 121 million and on February 3, 2023 it was announced the redemption of such amount (see point XI. Material and Subsequent Events).
(4) 
After the end of the period, on February 6, 2023, was announced the partial cancellation of the Series IX ONs for USD 22.5 million amount (see point XI. Material and Subsequent Events).
 
 
65
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
XI. Material and Subsequent Events
 
October 2022: General Ordinary and Extraordinary Shareholders’ Meeting
 
On October 28, 2022, our General Ordinary and Extraordinary Shareholders’ Meeting was held. The following matters. inter alia, were resolved by majority of votes:
 
●
Distribution of ARS 4,340 million as cash dividends as of the date of the Shareholders’ Meeting.
 
●
Designation of board members.
 
●
Compensations to the Board of Directors for the fiscal year ended June 30, 2022
 
●
Reform of articles sixteen, twenty-second and twenty-third of the bylaws.
 
●
Incentive plan for employees, management and directors to be integrated without premium for up to 1.16% of the Capital Stock
 
On November 8, 2022, the Company distributed among its shareholders the cash dividend in an amount of ARS 4,340,000,000 equivalent to 541.4380% of the stock capital, an amount per share of ARS 5.41438 (ARS 1 par value) and an amount per ADR of ARS 54.1438 (Argentine Pesos per ADR).
 
November 2022: Change in Warrants terms and conditions
 
Because of the payment of cash dividends made on November 8, 2022, certain terms and conditions of the outstanding warrants to subscribe common shares have changed:
 
●
Number of shares to be issued per warrant: Pre-dividend ratio: 1. Post-dividend ratio: 1.0442.
 
●
Exercise price per new share to be issued: Pre-dividend price: USD 0.432. Post-dividend price: USD 0.414
 
The other terms and conditions of the warrants remain the same.
 
November 2022: Warrants Exercise
 
Between November 17 and 25, 2022, certain warrants holders have exercised their right to acquire additional shares and6,875 ordinary shares of the Company were registered, with a nominal value of VN ARS 1. As a result of the exercise, USD 2,846.25 were collected by the Company.
 
After the exercise of these warrants, the number of shares and the capital stock of the Company increased from 810,888,515 to 810,895,390, and the new number of outstanding warrants decreased from 79,946,160 to 79,939,561.
 
January 2023: Note’s issuance
 
After the end of the period, onJanuary 31, 2023, IRSA issued new Notes fora total amount of USD 90.0 million:
 
●
Series XV (dollar MEP): for USD 61.75 million at a fixed rate of 8.0%, with semi-annual payments. The principal will be paid at maturity on March 25, 2025. The price of issuance was 100.0% of the nominal value.
 
●
Series XVI (blue chip swap dollar): for USD 28.25 million at a fixed rate of 7.0%, with semi-annual payments. The principal will be paid at maturity on July 25, 2025. The price of issuance was 100.0% of the nominal value.USD 5.07 million were subscribed in cash and USD 23.18 million in kind with Series IX Notes (Nominal Value USD 22.5 million).
 
The funds will be used to refinance short-term liabilities.
 
 
66
 
 
February2023: Series II Notes Redemption
 
After the end of the period, on February 3, 2023, The Company resolved to early redeem the total outstanding amountof Series II Notes, originally issued by IRSA Propiedades Comerciales S.A., for USD 121 million maturing on March 23, 2023.
 
The proposed redemption will take place on February 3, 2023, in accordance with the terms and conditions detailed in the Offering Memorandum of Series II Notes. 
 
The redemption price was 100% of the face value of the Series II Notes, plus accrued and unpaid interest, as of the date set for redemption.
 
February 2023: Series IX Notes Partial Cancellation
 
After the end of the period, on February 6, 2023, and regarding the issuance of Series XVI Notes, which were partially subscribed with Series IX Notes, the Company announced that it will proceed to cancel the Notes detailed below:
 
●
Series IX Notes
 
Issuance Date: November 12, 2020
 
Maturity Date: March 1, 2023
 
Nominal Value originally issued: USD 80,676,505
 
Nominal Value to be cancelled: USD 22,501,600
 
Nominal Value under circulation: USD 58,174,905
 
Valor nominal en circulación: USD 58.174.905
 
XII. Summarized Comparative Consolidated Balance Sheet
 
(in ARS million) 
 
12.31.2022
 
 
12.31.2021
 
 
12.31.2020
 
 
12.31.2019
 
 
12.31.2018
 
Non-current assets
  442,829 
  519,693 
  552,501 
  1,294,213 
  1,834,355 
Current assets
  46,403 
  41,925 
  35,927 
  713,338 
  794,070 
Total assets
  489,232 
  561,618 
  588,428 
  2,007,551 
  2,628,425 
Capital and reserves attributable to the equity holders of the parent
  234,326 
  227,444 
  206,131 
  137,458 
  260,150 
Non-controlling interest
  15,769 
  15,479 
  65,198 
  188,355 
  300,391 
Total shareholders’ equity
  250,095 
  242,923 
  271,329 
  325,813 
  560,541 
Non-current liabilities
  182,808 
  281,455 
  251,264 
  1,244,345 
  1,659,484 
Current liabilities
  56,329 
  37,240 
  65,835 
  437,393 
  408,400 
Total liabilities
  239,137 
  318,695 
  317,099 
  1,681,738 
  2,067,884 
Total liabilities and shareholders’ equity
  489,232 
  561,618 
  588,428 
  2,007,551 
  2,628,425 
 
 
 
67
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
XIII. Summarized Comparative Consolidated Income Statement
 '
 (in ARS million) 
 
12.31.2022
 
 
12.31.2021
 
 
12.31.2020
 
 
12.31.2019
 
 
12.31.2018
 
Profit from operations
  (17,422)
  51,642 
  27,164 
  28,973 
  (23,388)
Share of profit of associates and joint ventures
  1,318 
  (234)
  (1,330)
  (4,449)
  (2,360)
Loss from operations before financing and taxation
  (16,104)
  51,408 
  25,834 
  24,524 
  (25,748)
Financial income
  269 
  307 
  201 
  435 
  1,832 
Financial cost
  (5,174)
  (7,513)
  (9,313)
  (11,502)
  (20,702)
Other financial results
  2,545 
  14,914 
  9,303 
  (16,962)
  6,835 
Inflation adjustment
  8,616 
  837 
  3,261 
  973 
  (2,379)
Financial results, net
  6,256 
  8,545 
  3,452 
  (27,056)
  (14,414)
Results before income tax
  (9,848)
  59,953 
  29,286 
  (2,532)
  (40,162)
Income tax
  25,284 
  (10,241)
  (11,773)
  (7,997)
  13,117 
Result for the period from continued operations
  15,436 
  49,712 
  17,513 
  (10,529)
  (27,045)
Result for the period from discontinued operations after taxes
  - 
  - 
  (20,936)
  29,967 
  (6,436)
Result of the period
  15,436 
  49,712 
  (3,423)
  19,438 
  (33,481)
Other comprehensive results for the period
  (570)
  (845)
  (23,946)
  29,579 
  1,500 
Total comprehensive result for the period
  14,866 
  48,867 
  (27,369)
  49,017 
  (31,981)
 
    
    
    
    
    
Attributable to:
    
    
    
    
    
Equity holders of the parent
  14,518 
  49,285 
  (9,868)
  (15,624)
  (36,486)
Non-controlling interest
  348 
  (418)
  (17,501)
  64,641 
  4,505 
 
XIV. Summary Comparative Consolidated Cash Flow
 
(in ARS million) 
12.31.2022
 
12.31.2021
 
 
12.31.2020
 
 
12.31.2019
 
  12.31.2018 
Net cash generated from operating activities
  10,640 
  9,140 
  12,944 
  67,167 
  42,342 
Net cash generated from investing activities
  3,371 
  12,406 
  150,086 
  55,321 
  1,021 
Net cash used in financing activities
  (26,337)
  (11,869)
  (114,727)
  (183,283)
  5,064 
Net (decrease) / increase in cash and cash equivalents
  (12,326)
  9,677 
  48,303 
  (60,795)
  48,427 
Cash and cash equivalents at beginning of year
  18,279 
  4,531 
  318,411 
  304,609 
  292,389 
Cash and cash equivalents reclassified to held for sale
  - 
  - 
  - 
  (2,091)
  (3,899)
Inflation adjustment
  (227)
  (92)
  (6)
  (497)
  (40)
Deconsolidation of subsidiaries
  - 
  - 
  (340,958)
  - 
  - 
Foreign exchange (loss) / gain on cash and changes in fair value for cash equivalents
  (49)
  35 
  (21,026)
  17,971 
  (9,775)
Cash and cash equivalents at period-end
  5,677 
  14,151 
  4,724 
  259,197 
  327,102 
 
XV. Comparative Ratios
 
(in ARS million) 
 
12.31.2022
 
 
 
 
 
12.31.2021
 
 
 
 
 
12.31.2020
 
 
 
 
 
12.31.2019
 
 
 
 
 
12.31.2018
 
 
 
 
Liquidity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
  46,403 
  0.82 
  41,925 
  1.13 
  35,927 
  0.55 
  713,338 
  1.63 
  794,070 
  1.94 
CURRENT LIABILITIES
  56,329 
    
  37,240 
    
  65,835 
    
  437,393 
    
  408,400 
    
Solvency
    
    
    
    
    
    
    
    
    
    
SHAREHOLDERS’ EQUITY
  250,095 
  1.05 
  242,923 
  0.76 
  271,329 
  0.86 
  325,813 
  0.19 
  560,541 
  0.27 
TOTAL LIABILITIES
  239,137 
    
  318,695 
    
  317,099 
    
  1,681,738 
    
  2,067,884 
    
Capital Assets
    
    
    
    
    
    
    
    
    
    
NON-CURRENT ASSETS
  442,829 
  0.91 
  519,693 
  0.93 
  552,501 
  0.94 
  1,294,213 
  0.64 
  1,834,355 
  0.70 
TOTAL ASSETS
  489,232 
    
  561,618 
    
  588,428 
    
  2,007,551 
    
  2,628,425 
    
Profitability
    
    
    
    
    
    
    
    
    
    
RESULT OF THE PERIOD
  15,436 
  0.06 
  49,712 
  0.20 
  (3,423) 
  -0.01 
  19,438 
  0.04 
  (33,481) 
  (0.08) 
AVERAGE SHAREHOLDERS’ EQUITY
  246,509 
    
  252,260 
    
  298,571 
    
  443,177 
    
  417,565 
    
 
 
 
68
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
XVI. EBITDA Reconciliation
 
In this summary report we present EBITDA and Adjusted EBITDA. We define EBITDA as profit for the period excluding: (i) interest income, (ii) interest expense, (iii) income tax expense, and (iv) depreciation and amortization. We define Adjusted EBITDA as EBITDA minus (i) total financial results, net excluding interest expense, net (mainly foreign exchange differences, net gains/losses from derivative financial instruments; gains/losses of financial assets and liabilities at fair value through profit or loss; and other financial results, net) and minus (ii) share of profit of associates and joint ventures and minus (iii) net profit from fair value adjustment of investment properties, not realized.
 
EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. We present EBITDA and adjusted EBITDA because we believe they provide investors supplemental measures of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses EBITDA and Adjusted EBITDA from time to time, among other measures, for internal planning and performance measurement purposes. EBITDA and Adjusted EBITDA should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. EBITDA and Adjusted EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit from operations to EBITDA and Adjusted EBITDA for the periods indicated:
 
 
For the six-month period ended December 31 (in ARS million)
 
 
 
2022
 
 
2021
 
Profit for the period
  15,436 
  49,712 
Interest income 
  (269)
  (307)
Interest expense 
  4,779 
  6,832 
Income tax
  (25,284)
  10,241 
Depreciation and amortization 
  694 
  670 
EBITDA (unaudited) 
  (4,644)
  67,148 
Net gain / (loss) from fair value adjustment of investment properties
  29,530 
  (43,731)
Realized net gain from fair value adjustment of investment properties
  1,101 
  4,049 
Share of profit of associates and joint ventures 
  (1,318)
  234 
Foreign exchange differences net 
  (1,862)
  (11,661)
Result from derivative financial instruments 
  (23)
  (21)
Fair value gains of financial assets and liabilities at fair value through profit or loss
  (853)
  (1,668)
Inflation adjustment
  (8,616)
  (837)
Other financial costs/income
  588 
  (883)
Adjusted EBITDA (unaudited) 
  13,903 
  12,630 
Adjusted EBITDA Margin (unaudited) (1)
  45.01%
  58.67%
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by revenue from sales, rents and services.
 
 
 
69
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
XVII. 
NOI Reconciliation
 
In addition, we present in this summary report Net Operating Income or “NOI”. We define NOI as gross profit from operations, less Selling expenses, plus realized result from fair value adjustments of investment properties, plus Depreciation and amortization.
 
NOI is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS. We present NOI because we believe it provides investors a supplemental measure of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses NOI from time to time, among other measures, for internal planning and performance measurement purposes. NOI should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. NOI, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit from operations to NOI for the periods indicated:
 
 
For the six-month period ended December 31 (in ARS million)
 
 
 
2022
 
 
2021
 
Gross profit
  20,411 
  13,315 
Selling expenses 
  (1,294)
  (1,636)
Depreciation and amortization 
  694 
  670 
Realized result from fair value of investment properties
  1,101 
  4,049 
NOI (unaudited)
  20,912 
  16,398 
 
 
 
 
 
70
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
 
XVIII. 
FFO Reconciliation
 
We also present in this summary report Adjusted Funds From Operations attributable to the controlling interest (or “Adjusted FFO”), which we define as Total profit for the year or period plus depreciation and amortization of property, plant and equipment, intangible assets and amortization of initial costs of leases minus total net financial results excluding net financial interests, minus unrealized result from fair value adjustments of investment properties minus inflation adjustment plus deferred tax, and less non-controlling interest net of the result for fair value, less the result of participation in associates and joint ventures.
 
Adjusted FFO is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS. Adjusted FFO is not equivalent to our profit for the period as determined under IFRS. Our definition of Adjusted FFO is not consistent and does not comply with the standards established by the White Paper on funds from operations (FFO) approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), as revised in February 2004, or the “White Paper.”
 
We present Adjusted FFO because we believe it provides investors a supplemental measure of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses Adjusted FFO from time to time, among other measures, for internal planning and performance measurement purposes. Adjusted FFO should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. Adjusted FFO, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit from operations to Adjusted FFO for the periods indicated:
 
 
For the six-month period ended December 31 (in ARS million))
 
 
 
2022
 
 
2021
 
Result for the period 
  15,436 
  49,712 
Result from fair value adjustments of investment properties
  29,530 
  (43,731)
Result from fair value adjustments of investment properties, realized
  1,101 
  4,049 
Depreciation and amortization 
  694 
  670 
Foreign exchange, net 
  (1,862)
  (11,661)
Other financial results
  274 
  (26)
Results from derivative financial instruments 
  (23)
  (21)
Results of financial assets and liabilities at fair value through profit or loss
  (853)
  (1,668)
Other financial costs 
  395 
  681 
Income tax current / deferred
  (26,449)
  9,606 
Non-controlling interest
  (346)
  393 
Non-controlling interest related to PAMSA’s fair value
  (1,284)
  (403)
Results of associates and joint ventures
  (1,318)
  234 
Inflation adjustment
  (8,616)
  (837)
Repurchase of non-convertible notes
  (81)
  (1,538)
Adjusted FFO
  6,598 
  5,460 
 
 
71
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of December 31, 2022
 
 
XIX. Brief comment on prospects for the Next Quarter
 
The second quarter of fiscal year 2023 maintained the good operating performance in the rental businesses, mainly shopping centers and hotels, which exceeded their EBITDA levels prior to the pandemic.
 
The shopping mall business maintains its growth rate motivated by the visiting public, the recovery of gastronomy and entertainment items and clothing inflation, which was higher than average. We hope to maintain the levels of sales and visitors throughout the 2023 and occupy the area that became available because of the pandemic. Regarding the office segment, we are optimistic about its future evolution. We have been observing from companies a greater return to office and, along with it, an increase in demand for our spaces for rent.
 
The hotel segment continues to recover strongly. The exclusive Llao Llao resort, in the city of Bariloche, in southern Argentina, continues to register historical record income and occupancy levels and there are good prospects for the rest of 2023, given that it is a great attraction for high-income international and local tourism. The Intercontinental and Libertador hotels that the company owns in the city of Buenos Aires are evolving favorably and have reached their income levels prior to the pandemic.
 
Regarding the sales and development segment, we will continue to analyze real estate acquisition and sale opportunities while evaluating the best time to launch the mixed-use developments that the company has in its portfolio on its extensive land reserve. Regarding our largest development, Costa Urbana, we will continue to make progress in 2023 in the definition of the project, the presentations, and municipal administrative procedures to be able to comply with the agreed considerations and have the permits to carry out, in stages, the infrastructure works on the property, in accordance with the Urban Development Agreement approved by Law.
 
During fiscal year 2023, we´ll continue working on the reduction and efficiency of the cost structure, while we´ll continue evaluating financial, economic and/or corporate tools that allow the Company to improve its position in the market in which it operates and have the necessary liquidity to meet its obligations, such as public and/or private disposal of assets that may include real estate as well as negotiable securities owned by the Company, issuance of negotiable bonds, repurchase of own shares, among other useful instruments for the proposed objectives.
 
Looking to the future, we will continue to innovate in the development of unique real estate projects, betting on the integration of commercial and residential spaces, offering our clients a mix of attractive products and services, meeting places and a memorable experience, with the aim to achieve an increasingly modern and sustainable portfolio. Although the current economic context and the political agenda for the next electoral year generate uncertainty, we are confident in the quality of our portfolio and the ability of our management to carry out the business successfully.
 
Alejandro G. Elsztain
Second Vice-chairman
 
 
 
72