IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Financial Statements for the three-month period ended September 30, 2020, presented comparatively
Legal Information
Denomination: IRSA PROPIEDADES COMERCIALES S.A.
Fiscal year N°: 131, beginning July 1, 2020.
Legal address: Moreno 877, 22nd floor, Autonomous City of Buenos Aires, Argentina.
Main business: Real estate investment and development.
Date of registration with the Public Registry of Commerce of the By-laws: August 29, 1889.
Date of registration of last amendment: October 29, 2018.
Expiration of company charter: August 28, 2087.
Registration number with the Supervisory Board of Companies: 801,047.
Capital stock: 126,014,050 common shares.
Subscribed, issued and paid up (in millions of ARS): 126.
Direct Majority Shareholder: IRSA Inversiones y Representaciones Sociedad Anónima (IRSA).
Majority Shareholder of the Group: Inversiones Financieras del Sur S.A.
Legal Address: Bolívar 108, 1st floor, Autonomous City of Buenos Aires, Argentina.
Main business: Real estate investment.
Direct and indirect ownership interest: 101,624,666 common shares.
Voting stock (direct and indirect equity interest): 80.65%.
CAPITAL STRUCTURE | |||
Outstanding shares | Shares authorized for public offering | Subscribed, issued and paid-in | |
(in millions of ARS) | |||
Registered, common shares with a nominal value of ARS 1 each, 1 vote per share | 126,014,050 | 126,014,050 | 126 |
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IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of September 30, 2020 and June 30, 2020
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.20 | 06.30.20 | |
ASSETS | |||
Non-current assets | |||
Investment properties | 8 | 133,852 | 126,485 |
Property, plant and equipment | 9 | 365 | 380 |
Trading properties | 10 | 196 | 196 |
Intangible assets | 11 | 1,074 | 1,096 |
Rights of use assets | 12 | 621 | 620 |
Investments in associates and joint ventures | 7 | 5,570 | 4,991 |
Deferred income tax assets | 19 | 148 | 238 |
Income tax and minimum presumed income tax credits | 7 | 7 | |
Trade and other receivables | 14 | 9,797 | 5,483 |
Investments in financial assets | 13 | 11 | - |
Total non-current assets | 151,641 | 139,496 | |
Current Assets | |||
Trading properties | 10 | 7 | 7 |
Inventories | 40 | 42 | |
Income tax and minimum presumed income tax credits | 99 | 106 | |
Trade and other receivables | 14 | 4,387 | 4,177 |
Derivative financial instruments | 13 | 5 | 7 |
Investments in financial assets | 13 | 7,631 | 6,748 |
Cash and cash equivalents | 13 | 2,628 | 4,981 |
Total current assets | 14,797 | 16,068 | |
TOTAL ASSETS | 166,438 | 155,564 | |
SHAREHOLDERS’ EQUITY | |||
Total capital and reserves attributable to equity holders of the parent | 89,252 | 76,956 | |
Non-controlling interest | 5,339 | 4,402 | |
TOTAL SHAREHOLDERS’ EQUITY | 94,591 | 81,358 | |
LIABILITIES | |||
Non-current liabilities | |||
Trade and other payables | 16 | 1,481 | 1,333 |
Borrowings | 17 | 28,536 | 28,614 |
Deferred income tax liabilities | 19 | 29,944 | 25,815 |
Income tax and minimum presumed income tax liabilities | 3 | - | |
Provisions | 18 | 87 | 78 |
Derivative financial instruments | 13 | 29 | 37 |
Leases liabilities | 586 | 649 | |
Total non-current liabilities | 60,666 | 56,526 | |
Current liabilities | |||
Trade and other payables | 16 | 3,995 | 3,834 |
Income tax liabilities | - | 5 | |
Payroll and social security liabilities | 120 | 199 | |
Borrowings | 17 | 6,823 | 13,457 |
Derivative financial instruments | 13 | 60 | 88 |
Provisions | 18 | 45 | 46 |
Leases liabilities | 138 | 51 | |
Total current liabilities | 11,181 | 17,680 | |
TOTAL LIABILITIES | 71,847 | 74,206 | |
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 166,438 | 155,564 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.20 | 09.30.19 | |
Income from sales, rentals and services | 20 | 895 | 2,784 |
Income from expenses and collective promotion fund | 20 | 406 | 914 |
Operating costs | 21 | (655) | (1,198) |
Gross profit | 646 | 2,500 | |
Net gain from fair value adjustments of investment properties | 8 | 16,266 | 8,583 |
General and administrative expenses | 21 | (464) | (365) |
Selling expenses | 21 | (403) | (165) |
Other operating results, net | 22 | (20) | (29) |
Profit from operations | 16,025 | 10,524 | |
Share of profit of associates and joint ventures | 7 | 593 | 493 |
Profit from operations before financing and taxation | 16,618 | 11,017 | |
Finance income | 23 | 422 | 73 |
Finance cost | 23 | (1,128) | (963) |
Other financial results | 23 | 1,305 | (6,393) |
Inflation adjustment | 23 | 301 | 10 |
Financial results, net | 900 | (7,273) | |
Profit before income tax | 17,518 | 3,744 | |
Income tax expense | 19 | (4,220) | (655) |
Profit for the period | 13,298 | 3,089 | |
Other comprehensive loss: | |||
Items that may be reclassified subsequently to profit or loss: | |||
Currency translation adjustment in associates | 7 | (12) | - |
Other comprehensive loss for the period (i) | (12) | - | |
Total comprehensive profit for the period | 13,286 | 3,089 | |
Total comprehensive profit/ (loss) attributable to: | |||
Equity holders of the parent | 12,349 | 2,738 | |
Non-controlling interest | 949 | 351 | |
Attributable to: | |||
Equity holders of the parent | (12) | - | |
Profit per share attributable to equity holders of the parent for the period: | |||
Basic | 98.01 | 21.73 | |
Diluted | 98.01 | 21.73 |
(i) The components of other comprehensive income have no impact on income tax.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2020
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Share capital | Inflation adjustment of share capital | Share premium | Legal reserve | Special reserve CNV 609/12 (1) | Other reserves | Retained earnings | Subtotal | Non-controlling interest | Total shareholder’s equity | |
Balance as of June 30, 2020 | 126 | 3,660 | 10,400 | 144 | 9,938 | 34,291 | 18,397 | 76,956 | 4,402 | 81,358 |
Profit for the period | - | - | - | - | - | - | 12,349 | 12,349 | 949 | 13,298 |
Other comprehensive loss for the period | - | - | - | - | - | (12) | - | (12) | - | (12) |
Changes in non-controlling interest | - | - | - | - | - | (41) | - | (41) | (12) | (53) |
Balance as of September 30, 2020 | 126 | 3,660 | 10,400 | 144 | 9,938 | 34,238 | 30,746 | 89,252 | 5,339 | 94,591 |
Reserve for future dividends | Special reserve | Currency translation adjustment | Revaluation surplus (1) | Changes in non-controlling interest | Total other reserves | |
Balance as of June 30, 2020 | 34,053 | 162 | (23) | 294 | (195) | 34,291 |
Other comprehensive loss for the period | - | - | (12) | - | - | (12) |
Changes in non-controlling interest | - | - | - | - | (41) | (41) |
Balance as of September 30, 2020 | 34,053 | 162 | (35) | 294 | (236) | 34,238 |
(1) See Note 17 to the Annual Financial Statements as of June 30, 2020.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity
for the three-month period ended September 30, 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Share capital | Inflation adjustment of share capital | Share premium | Legal reserve | Special reserve CNV 609/12 (1) | Other reserves | Retained earnings | Subtotal | Non-controlling interest | Total shareholder’s equity | |
Balance as of June 30, 2019 | 126 | 3,660 | 10,400 | 144 | 9,938 | 80,051 | (45,181) | 59,138 | 3,352 | 62,490 |
Profit for the period | - | - | - | - | - | - | 2,738 | 2,738 | 351 | 3,089 |
Balance as of September 30, 2019 | 126 | 3,660 | 10,400 | 144 | 9,938 | 80,051 | (42,443) | 61,876 | 3,703 | 65,579 |
Reserve for future dividends | Special reserve | Changes in non-controlling interest | Total other reserves | |
Balance as of June 30, 2019 | 34,840 | 45,343 | (132) | 80,051 |
Balance as of September 30, 2019 | 34,840 | 45,343 | (132) | 80,051 |
(1)
See Note 17 to the Annual Financial Statements as of June 30, 2020.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.20 | 09.30.19 | |
Operating activities: | |||
Cash (used in)/generated from operations | 15 | (3,847) | 2,055 |
Income tax paid | (3) | (26) | |
Net cash (used in)/ generated from operating activities | (3,850) | 2,029 | |
Investing activities: | |||
Capital contributions in associates and joint ventures | (9) | (17) | |
Change in non-controlling interest of subsidiaries | (53) | - | |
Acquisition of investment properties | (705) | (453) | |
Acquisition of property, plant and equipment | (5) | (28) | |
Advance payments | (11) | (345) | |
Acquisition of intangible assets | (4) | (4) | |
Acquisitions of investments in financial assets | (5,562) | (6,523) | |
Proceeds from investments in financial assets | 5,938 | 7,657 | |
Loans granted | - | (639) | |
Loans granted to related parties | (221) | (2,371) | |
Loans payment received from related parties | - | 159 | |
Proceeds from sales of investment properties | 9,601 | - | |
Collection of financial assets interests and dividends | 157 | 182 | |
Dividends received | - | 34 | |
Net cash generated from/ (used) in investing activities | 9,126 | (2,348) | |
Financing activities: | |||
Repurchase of non-convertible notes | (66) | (4) | |
Sale of non-convertible notes in potfolio | 504 | - | |
Borrowings obtained | 1,000 | 7,798 | |
Payment of borrowings | (1,308) | (7,977) | |
Payment of non-convertible notes | (10,151) | - | |
Payment of leases liabilities | (5) | (15) | |
Payment of derivative financial instruments | (214) | (68) | |
Proceeds from derivative financial instruments | 9 | 312 | |
Payment of interest | (1,598) | (1,394) | |
Short-term loans, net | 4,174 | 976 | |
Net cash used in by financing activities | (7,655) | (372) | |
Net decrease in cash and cash equivalents | (2,379) | (691) | |
Cash and cash equivalents at beginning of the period | 13 | 4,981 | 6,461 |
Foreign exchange gain and others on cash and cash equivalents | 33 | 453 | |
Inflation adjustment | (7) | (20) | |
Cash and cash equivalents at end of the period | 13 | 2,628 | 6,203 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
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IRSA Propiedades Comerciales S.A.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
1.
Group’s business and general information
IRSA PROPIEDADES COMERCIALES S.A. (“IRSA Propiedades Comerciales” or “the Company”) is an Argentine real estate company mainly engaged in holding, leasing, managing, developing, operating and acquiring shopping malls and office buildings and holds a predominant position within the Argentine market. IRSA Propiedades Comerciales was incorporated in 1889 under the name Sociedad Anonima Mercado de Abasto Proveedores (SAMAP) and until 1984 operated the main fresh product market in the Autonomous City of Buenos Aires. SAMAP’s core asset was the historical building of Mercado de Abasto, which served as site of the market from 1889 until 1984, when a sizable part of its operations was interrupted.
Since the Company was acquired by IRSA Inversiones y Representaciones Sociedad Anónima (hereinafter, IRSA) in 1994, it has grown through a series of acquisitions and development projects that resulted in a corporate reorganization pursuant to which the company was renamed Alto Palermo S.A. which was subsequently changed to our current denomination.
As of the end of these Unaudited Condensed Interim Consolidated Financial Statements (hereinafter, Financial Statements), the Company operates 333,345 square meters (sqm) in 14 shopping malls, 93,144 sqm in 7 premium offices and an extensive land reserve for future commercial developments; 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 Company also owns the historic building where the Patio Olmos Shopping Mall is located, operated by a third party.
See Note 28 in these Financial Statements for the sale of office’s building after September 30, 2020.
The Company’s shares are traded on the Buenos Aires Stock Exchange (MERVAL: IRCP) and in United States of America on the NASDAQ (NASDAQ: IRCP).
IRSA Propiedades Comerciales and its subsidiaries are hereinafter referred to jointly as "the Group". Our main shareholder and parent Company is IRSA and Inversiones Financieras del Sur S.A. is our ultimate parent Company.
These Financial Statements have been approved by the Board of Directors to be issued on November 17, 2020.
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 therefore must be read together with the Group's Annual Consolidated Financial Statements as of June 30, 2020 prepared in accordance with IFRS. Likewise, these Financial Statements include additional information required by Law No. 19,550 and / or CNV regulations. This information is included in the notes to these Financial Statements, as allowed by IFRS.
These Financial Statements for the interim of three-month periods ended September 30, 2020 and 2019 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
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IRSA Propiedades Comerciales S.A.
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 for 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 a hyperinflationary, 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 approaches to or exceeds 100%. Accumulated inflation in Argentina in three years has been over 100%. For this reason, in accordance with IAS 29, the Argentine economy must be considered as a hyperinflationary economy starting July 1, 2018.
In relation to the inflation index to be used and according to FACPCE Resolution No. 539/18, the inflation index is determinated based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of Consumer Price indices (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) will be considered. The table below shows the evolution of this index during the three months period ended September 30, 2020, according to official statistics by Argentine Institute of Statistics and Census (INDEC) and following the guidelines described in Resolution 539/18:
Price variation: | 09.30.20 (accumulated of three months) |
8% |
As a consequence of the aforementioned, these Financial Statements as of September 30, 2020 were restated in accordance with IAS 29.
2.2. Significant accounting policies
The accounting policies adopted for these Financial Statements are consistent with those used in the preparation of information under IFRS as described in Note 2 to the Annual Financial Statements as of June 30, 2020.
2.3. Comparability of information
The amounts as of June 30, 2020 and September 30, 2019, which are disclosed for comparative purposes, arise from the Financial Statements at said dates restated in accordance with IAS 29. Certain figures have been reclassified for comparison purposes in these Financial Statements.
2.4. Use of estimates
The preparation of Financial Statements at a certain date requires the Group’s Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these Financial Statements. In the preparation of these Financial Statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same applied by the Group in the preparation of the Annual Consolidated Financial Statements of the information are described in Note 3 as of June 30, 2020, except for what is mentioned in Note 27 to these 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 tenants. During summertime (January and February), the tenants of shopping mall experience the lowest sales levels in comparison with the winter holidays (July) and during the period of Christmas’ Seasons (December) when they tend to record peaks of sales. Apparel stores generally change their collections during Spring and Autumn, which impacts positively on shopping mall sales. Sale discounts at the end of each season also impact the business. Consequently, a higher level of revenues is generally expected in shopping mall operations during the second half of the year.
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IRSA Propiedades Comerciales S.A.
4.
Acquisitions and disposals
Sale of Boston Tower building
On July 15, 2020, IRSA Propiedades Comerciales has signed with an unrelated third party a bill of sale with possession of a medium-height floor of Boston Tower located at 265 Della Paolera in Catalinas District in the Autonomous City of Buenos Aires for a total area of approximately 1,063 square meters and 5 parking lots located in the building.
The price of the transaction was ARS 477 million (USD 6.7 million).
On August 25, 2020, IRSA Propiedades Comerciales has sold and transferred 5 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 6,235 square meters and 25 parking lots located in the building.
The price of the transaction was ARS 2,562 million (USD 34.7 million).
See Note 28 to these Financial Statements.
Sale of Bouchard building
On July 30, 2020 IRSA Propiedades Comerciales has sold the entire “Bouchard 710” building, located in the Plaza Roma district of the Autonomous City of Buenos Aires, to an unrelated third party. The tower consists of 15,014 m2 of gross rental area on 12 office floors and 116 parking lots.
The price of the transaction was ARS 6,300 million (USD 87 million).
Pareto S.A. – Shareholding increase
On July 31, 2020, 25,630 common shares with of par value ARS 1.00 were acquired, representing 22% of the capital share of Pareto S.A. As a result of this transaction, the ownership of IRSA Propiedades Comerciales on Pareto amounts to 91.96%.
The price of the transaction was ARS 53 million (USD 0.5 million).
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 Consolidated Financial Statements as of June 30, 2020. There have been no changes in risk management or risk management policies applied by the Group since year-end.
Since June 30, 2020 as of the date of this Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities of the Group except for that the indicated in Note 27. Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Group’s financial instruments.
6.
Segment reporting
The following is a summary analysis of the Group's business segments, corresponding to the periods ended September 30, 2020 and 2019. Additionally, a reconciliation between results of operations corresponding to segment information and the results of operations as per the Statements of Income and Other Comprehensive Income and total assets by segment and total assets according to the statement of financial position. The information by segments has been prepared and classified according to the businesses in which the Group carries out its activities, which are described in Note 6 of the Annual Consolidated Financial Statements as of June 30, 2020.
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IRSA Propiedades Comerciales S.A.
09.30.20 | ||||||||
Shopping Malls | Offices | Sales and developments | Others | Total segment reporting | Adjustment for expenses and collective promotion funds | Adjustment for share in (profit) / loss of joint ventures | Total as per statement of income and other comprehensive income / statement of financial position | |
Revenues | 367 | 532 | 2 | 2 | 903 | 406 | (8) | 1,301 |
Operating costs | (134) | (44) | (7) | (24) | (209) | (458) | 12 | (655) |
Gross profit / (loss) | 233 | 488 | (5) | (22) | 694 | (52) | 4 | 646 |
Net gain from fair value adjustments in investment properties | 1,178 | 12.598 | 3,309 | 18 | 17,103 | - | (837) | 16,266 |
General and administrative expenses | (328) | (85) | (34) | (18) | (465) | - | 1 | (464) |
Selling expenses | (73) | (33) | (297) | (1) | (404) | - | 1 | (403) |
Other operating results, net | (24) | (2) | (2) | - | (28) | 8 | - | (20) |
Profit / (Loss) from operations | 986 | 12,966 | 2,971 | (23) | 16,900 | (44) | (831) | 16,025 |
Share of loss of associates and joint ventures | - | - | - | (23) | (23) | - | 616 | 593 |
Profit / (Loss) before financing and taxation | 986 | 12,966 | 2,971 | (46) | 16,877 | (44) | (215) | 16,618 |
Investment properties | 54,124 | 69,564 | 14,177 | 99 | 137,964 | - | (4,112) | 133,852 |
Property, plant and equipment | 230 | 137 | - | - | 367 | - | (2) | 365 |
Trading properties | - | - | 203 | - | 203 | - | - | 203 |
Goodwill | 10,512 | 31,074 | - | - | 41,586 | - | �� (41,586) | - |
Right to receive units (barters) | - | - | 749 | - | 749 | - | - | 749 |
Inventories | 41 | - | - | - | 41 | - | (1) | 40 |
Investments in associates and joint ventures | - | - | - | 2,401 | 2,401 | - | 3,169 | 5,570 |
Operating assets | 64,907 | 100,775 | 15,129 | 2,500 | 183,311 | - | (42,532) | 140,779 |
09.30.19 | ||||||||
Shopping Malls | Offices | Sales and developments | Others | Total segment reporting | Adjustment for expenses and collective promotion funds | Adjustment for share in (profit) / loss of joint ventures | Total as per statement of income and other comprehensive income / statement of financial position | |
Revenues | 2,085 | 687 | 2 | 35 | 2,809 | 914 | (25) | 3.698 |
Operating costs | (180) | (31) | (12) | (32) | (255) | (954) | 11 | (1,198) |
Gross profit / (loss) | 1,905 | 656 | (10) | 3 | 2,554 | (40) | (14) | 2,500 |
Net gain from fair value adjustments in investment properties | 601 | 6,616 | 1,804 | 111 | 9,132 | - | (549) | 8,583 |
General and administrative expenses | (257) | (51) | (24) | (34) | (366) | - | 1 | (365) |
Selling expenses | (140) | (26) | (7) | (2) | (175) | - | 10 | (165) |
Other operating results, net | (27) | (1) | (2) | (8) | (38) | 10 | (1) | (29) |
Profit / (Loss) from operations | 2,082 | 7,194 | 1,761 | 70 | 11,107 | (30) | (553) | 10,524 |
Share of profit / (loss) of associates and joint ventures | - | - | - | 87 | 87 | - | 406 | 493 |
Profit / (Loss) before financing and taxation | 2,082 | 7,194 | 1,761 | 157 | 11,194 | (30) | (147) | 11,017 |
Investment properties | 54,964 | 39,543 | 10,592 | 339 | 105,438 | - | (3,540) | 101,898 |
Property, plant and equipment | 262 | 270 | - | - | 532 | - | (40) | 492 |
Trading properties | - | - | 201 | - | 201 | - | - | 201 |
Goodwill | 11 | 33 | - | 97 | 141 | - | (45) | 96 |
Right to receive units (barters) | - | - | 139 | - | 139 | - | - | 139 |
Inventories | 43 | - | - | - | 43 | - | (1) | 42 |
Investments in associates and joint ventures | - | - | - | 211 | 211 | - | 2,769 | 2,980 |
Operating assets | 55,280 | 39,846 | 10,932 | 647 | 106,705 | - | (857) | 105,848 |
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IRSA Propiedades Comerciales S.A.
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IRSA Propiedades Comerciales S.A.
7.
Investments in associates and joint ventures
% of ownership interest held by non-controlling interests | Value of Group’s interest in equity | Group’s interest in comprehensive income | ||||
Name of the entity | 09.30.20 | 06.30.20 | 09.30.20 | 06.30.20 | 09.30.20 | 09.30.19 |
Joint ventures | ||||||
Quality Invest S.A. | 50.00% | 50.00% | 2,892 | 2,262 | 622 | 399 |
Nuevo Puerto Santa Fe S.A. | 50.00% | 50.00% | 277 | 282 | (6) | 6 |
La Rural S.A. | 50.00% | 50.00% | 235 | 218 | 16 | 81 |
Associates | ||||||
TGLT S.A.(4)(6) | 30.20% | - | 2,166 | 2,217 | (51) | - |
Others associates (3) | - | - | - | 12 | - | 7 |
Total interests in associates and joint ventures | 5,570 | 4,991 | 581 | 493 |
The table below lists information of the latest Financial Statements issued by associates and joint ventures:
Last Financial Statements issued | ||||||
Name of the entity | Place of business / Country of incorporation | Main activity | Common shares | Share capital (nominal value) | Income / (loss) for the period | Equity |
Joint ventures | ||||||
Quality Invest S.A. (2) | Argentina | Real estate | 163,039,244 | 406 | 1,243 | 5,717 |
Nuevo Puerto Santa Fe S.A. (1)(2) | Argentina | Real estate | 138,750 | 28 | (11) | 532 |
La Rural S.A. (2) | Argentina | Event organization and others | 714,498 | 1 | 224 | 327 |
Associates | ||||||
TGLT S.A. (4)(5) | Argentina | Real estate | 279,502,813 | 925 | (477) | 6,295 |
(1) Nominal value per share ARS 100.
(2) Correspond to profit for the three-month period ended at September 30, 2020 and 2019, respectively.
(3) Represents other individually non-significant associates.
(4) See Note 4 to the Annual Financial Statements as of June 30, 2020.
(5) Correspond to loss for the nine-month period ended at September 30, 2020.
(6) Includes ARS (12) of other comprehensive loss.
Changes in the Group’s investments in associates and joint ventures for the period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
09.30.20 | 06.30.20 | |
Beginning of the period / year | 4,991 | 2,472 |
Profit sharing, net | 593 | 190 |
Dividends | - | (41) |
Other comprehensive loss | (12) | (23) |
Reclassification to financial instruments (ii) | (11) | - |
Acquisition of interest in associates (i) | - | 2,342 |
Irrevocable contributions (Note 24) | 9 | 51 |
End of the period / year | 5,570 | 4,991 |
(i) See Note 4 to the Annual Financial Statements as of June 30, 2020.
(ii) Corresponds to the reclassification to the Avenida Inc. investment due to decrease of the share ownership below 5%.
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IRSA Propiedades Comerciales S.A.
8.
Investment properties
Changes in the Group’s investment properties for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Shopping Malls | Office and Other rental properties | Undeveloped parcels of land | Properties under development | Others | 09.30.20 | 06.30.20 | |
Fair value at beginning of the period / year | 50,566 | 62,722 | 11,055 | 2,061 | 81 | 126,485 | 92,819 |
Additions (iv) | 47 | 613 | - | 29 | - | 689 | 9,682 |
Capitalized lease costs | 4 | 12 | - | - | - | 16 | 22 |
Depreciation of capitalized lease costs (i) | (1) | (2) | - | - | - | (3) | (16) |
Transfers | - | - | - | - | - | - | 621 |
Disposals (iii) | - | (9,601) | - | - | - | (9,601) | (1,870) |
Net gain from fair value adjustment on investment properties (ii) | 943 | 11,949 | 3,122 | 234 | 18 | 16,266 | 27,050 |
Decrease due to loss of control (v) | - | - | - | - | - | - | (1,823) |
Fair value at end of the period / year | 51,559 | 65,693 | 14,177 | 2,324 | 99 | 133,852 | 126,485 |
(i)
As of September 30, 2020 the depreciation charge was included in “Costs” in the amount of ARS3 in the Statement of Income and Other Comprehensive Income (Note 21).
(ii)
For the three-month period ended September 30, 2020, the net gain from fair value adjustment on investment properties was ARS 16.266 million. The net impact of the values in Argentine pesos of our properties was mainly a consequence of the change in macroeconomic conditions:
a)
Net loss of ARS 86.3 million due to the variation in the projected income growth rate and the conversion to dollars of the projected cash flow in Argentine pesos according to the projected exchange rate estimates used in the cash flow;
b)
Net gain of ARS 3,695.0 million as a result of the conversion to Argentine pesos of the value of the shopping malls in dollars based on the exchange rate at the end of the period.
c)
In addition, for the impact of the inflation adjustment the Group reclassified by shopping malls ARS 3,595.6 million to Inflation adjustment.
d)
The value of our office buildings and other rental properties measured in real terms increased by 28.2% during the three-month period as of September 30, 2020, due to a devaluation of the Argentine peso exceeding the inflation rate of the period.
(iii) Disposal of Torre Boston and Bouchard (Note 4).
(iv) Includes addition for the acquisition of the building "200 Della Paolera" according to the degree of progress of the construction work. See Note 4 to the Annual Consolidated Financial Statements as of June 30, 2020.
(v) See Note 4 to the Annual Consolidated Financial Statements as of June 30, 2020.
The following amounts have been recognized in the Statements of Income and Other Comprehensive Income:
09.30.20 | 06.30.20 | |
Revenues from rental and services (Note 20) | 893 | 2,784 |
Expenses and collective promotion fund (Note 20) | 406 | 914 |
Rental and services costs (Note 21) | (648) | (1,183) |
Net unrealized gain from fair value adjustment on investment properties | 16,079 | 8,583 |
Net realized gain from fair value adjustment on investment properties (i)(ii) | 5,354 | - |
(i) As of September 30, 2020 includes ARS 1,792 for the sale of Torre Boston and ARS 3,562 for the sale of Bouchard 710.
(ii) As of September 30, 2020, ARS 187 corresponds to the result for changes in the fair value realized for the year (ARS 523 for the sale of Torre Boston and (ARS 336) for the sale of Bouchard 710) and ARS 5,167 for the result due to changes in fair value made in previous years (ARS 1,269 for the sale of Torre Boston and ARS 3,898 for the sale of Bouchard 710).
Valuation techniques are described in Note 9 to the Annual Financial Statements as of June 30, 2020. There were no changes to the valuation techniques. The Group has reassessed the assumptions at the end of the period, incorporating the effect of the changes in macroeconomics conditions.
9.
Property, plant and equipment
Changes in the Group’s property, plant and equipment for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Other buildings and facilities | Furniture and fixtures | Machinery and equipment | Vehicles | Others | 09.30.20 | 06.30.20 | |
Costs | 420 | 312 | 1,597 | 21 | 1 | 2,351 | 2,386 |
Accumulated depreciation | (282) | (211) | (1,457) | (21) | - | (1,971) | (1,873) |
Net book amount at beginning of the period / year | 138 | 101 | 140 | - | 1 | 380 | 513 |
Additions | - | 3 | 2 | - | - | 5 | 171 |
Disposals | - | - | (1) | - | - | (1) | (8) |
Transfers | - | - | - | - | - | - | (197) |
Depreciation charges (i) | (2) | (4) | (13) | - | - | (19) | (98) |
Net loss from fair value adjustment | - | - | - | - | - | - | (1) |
Net book amount at end of the period / year | 136 | 100 | 128 | - | 1 | 365 | 380 |
Costs | 420 | 315 | 1,598 | 21 | 1 | 2,355 | 2,351 |
Accumulated depreciation | (284) | (215) | (1,470) | (21) | - | (1,990) | (1,971) |
Net book amount at end of the period / year | 136 | 100 | 128 | - | 1 | 365 | 380 |
(i) On September 30, 2020 depreciation charges were included in “Costs” in the amount of ARS 18, and in “General and administrative expenses” in the amount of ARS 1 in the Statement of Income and Other Comprehensive Income (Note 21).
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IRSA Propiedades Comerciales S.A.
10.
Trading properties
Changes in in the Group’s trading properties for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Completed properties | Undeveloped sites | 09.30.20 | 06.30.20 | |
Net book amount at beginning of the period / year | 17 | 186 | 203 | 192 |
Additions | - | - | - | 16 |
Disposals | - | - | - | (20) |
Transfers | - | - | - | 15 |
Net book amount at end of the period / year | 17 | 186 | 203 | 203 |
Non - current | 196 | 196 | ||
Current | 7 | 7 | ||
Total | 203 | 203 |
11.
Intangible assets
Changes in the Group’s intangible assets for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Goodwill | Software | Right to receive units (Barters) (ii) | Others | 09.30.20 | 06.30.20 | |
Costs | 104 | 469 | 750 | 355 | 1,678 | 1,049 |
Accumulated amortization | - | (307) | - | (275) | (582) | (425) |
Net book amount at beginning of the period / year | 104 | 162 | 750 | 80 | 1,096 | 624 |
Additions | - | 4 | - | - | 4 | 703 |
Disposals | - | - | - | - | - | (5) |
Transfers | - | - | - | - | - | (69) |
Amortization charge (i) | - | (25) | (1) | - | (26) | (157) |
Net book amount at end of the period / year | 104 | 141 | 749 | 80 | 1,074 | 1,096 |
Costs | 104 | 473 | 750 | 355 | 1,682 | 1,678 |
Accumulated amortization | - | (332) | (1) | (275) | (608) | (582) |
Net book amount at end of the period / year | 104 | 141 | 749 | 80 | 1,074 | 1,096 |
(i) On September 30, 2020 amortization charges were included in “Costs” in the amount of ARS 4, and in “General and administrative expenses” in the amount of ARS 22 in the Statement of Income and Other Comprehensive Income (Note 21).
(ii) Corresponds to in kind receivables representing the right to receive residential apartments in the future under barter transactions.
12.
Rights of use assets
09.30.20 | 06.30.20 | |
Convention center | 154 | 157 |
Stadium DirecTV Arena | 436 | 441 |
Machinery and equipment | 23 | 14 |
Shopping malls | 8 | 8 |
Total rights of use assets | 621 | 620 |
Non-current | 621 | 620 |
Total | 621 | 620 |
09.30.20 | 09.30.19 | |
Convention center | (4) | - |
Stadium DirecTV Arena | (5) | (1) |
Machinery and equipment | (14) | - |
Total depreciation of rights of use (i) | (23) | (1) |
(i)
On September 30, 2020 amortization charges were included in “Costs” in the amount of ARS 9, and in “General and administrative expenses” in the amount of ARS 14 in the Statement of Income and Other Comprehensive Income (Note 21).
14
IRSA Propiedades Comerciales S.A.
13.
Financial instruments by category
The present note shows 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 see Note 14 to the Financial Statements as of June 30, 2020.
Financial assets and financial liabilities as of September 30, 2020 are as follows:
Financial assets at amortized cost (i) | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | ||
September 30, 2020 | Level 1 | Level 2 | ||||
Assets as per Statement of Financial Position | ||||||
Trade and other receivables (excluding allowance for doubtful accounts) (Note 14) | 12,945 | - | - | 12,945 | 1,892 | 14,837 |
Investments in financial assets: | ||||||
- Public companies’ securities | - | 233 | - | 233 | - | 233 |
- Mutual funds | 10 | 27 | 931 | 968 | - | 968 |
- Bonds | - | 6,441 | - | 6,441 | - | 6,441 |
Derivative financial instruments | ||||||
- Foreign-currency future contracts | - | - | 5 | 5 | - | 5 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 2,594 | - | - | 2,594 | - | 2,594 |
- Short- term investments | - | 34 | - | 34 | - | 34 |
Total | 15,549 | 6,735 | 936 | 23,220 | 1,892 | 25,112 |
Financial liabilities at amortized cost (i) | Financial liabilities at fair value through profit or loss | Subtotal financial liabilities | Non-financial liabilities | Total | |
Level 2 | |||||
Liabilities as per Statement of Financial Position | |||||
Trade and other payables (Note 16) | 1,417 | - | 1,417 | 4,059 | 5,476 |
Derivative financial instruments | |||||
- Swaps of interest rate (ii) | - | 89 | 89 | - | 89 |
Borrowings (Note 17) | 35,359 | - | 35,359 | - | 35,359 |
Total | 36,776 | 89 | 36,865 | 4,059 | 40,924 |
Group´s financial assets and financial liabilities as of June 30, 2020 were as follows:
Financial assets at amortized cost (i) | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | ||
June 30, 2020 | Level 1 | Level 2 | ||||
Assets as per Statement of Financial Position | ||||||
Trade and other receivables (excluding allowance for doubtful accounts) (Note 14) | 8,665 | - | - | 8,665 | 1,661 | 10,326 |
Investments in financial assets: | ||||||
- Public companies’ securities | - | 227 | - | 227 | - | 227 |
- Mutual funds | - | 66 | 872 | 938 | - | 938 |
- Bonds | - | 5,583 | - | 5,583 | - | 5,583 |
Derivative financial instruments | ||||||
- Foreign-currency future contracts | - | - | 7 | 7 | - | 7 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 2,996 | - | - | 2,996 | - | 2,996 |
- Short- term investments | 69 | 1,916 | - | 1,985 | - | 1,985 |
Total | 11,730 | 7,792 | 879 | 20,401 | 1,661 | 22,062 |
Financial liabilities at amortized cost (i) | Financial liabilities at fair value through profit or loss | Subtotal financial liabilities | Non-financial liabilities | Total | |
Level 2 | |||||
Liabilities as per Statement of Financial Position | |||||
Trade and other payables (Note 16) | 1,295 | - | 1,295 | 3,872 | 5,167 |
Derivative financial instruments | |||||
- Futures contracts | - | 23 | 23 | - | 23 |
- Swaps of interest rate (ii) | - | 102 | 102 | - | 102 |
Borrowings (Note 17) | 42,071 | - | 42,071 | - | 42,071 |
Total | 43,366 | 125 | 43,491 | 3,872 | 47,363 |
15
IRSA Propiedades Comerciales S.A.
(i)
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).
(ii)
The maturity date is February 16, 2023 and it is associated with the loan obtained through its subsidiary, Panameriacan Mall S.A, with the purpose of paying for the work that is being carried out at the Polo Dot.
The valuation models used by the Group for the measurement at different levels of hierarchy are no different from those used as of June 30, 2020.
The Group uses a range of valuation models for the measurement of Level 2 instruments, details of which may be obtained from the following table. When no quoted prices in an active market are available, fair values (particularly with derivatives) are based on recognized valuation methods.
Description | Pricing model | Parameters | Fair value hierarchy | Range | ||||
Foreign-currency contracts | Present value method - Theoretical price | Underlying asset price (Money market curve); Interest curve | Level 2 | - | ||||
Foreign exchange curve | ||||||||
Swaps of interest rate | Discounted cash flow | Interest rate futures | Level 2 | - | ||||
Investments in financial assets | NAV - Theoretical Price | Value is determinated based on the company´s shares in equity funds based on its Financial Statements, which are based on fair value, or evaluations of its investment. | Level 2 | - | ||||
As of September 30, 2020, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group, except for what is indicated in Note 27.
14. Trade and other receivables
The following table shows the amounts of Group's trade and other receivables as of September 30, 2020 and June 30, 2020:
09.30.20 | 06.30.20 | |
Lease and services receivables | 1,042 | 1,255 |
Post-dated checks | 438 | 324 |
Averaging of scheduled rent escalation | 641 | 708 |
Debtors under legal proceedings | 383 | 433 |
Property sales receivables | 18 | 18 |
Consumer financing receivables | 16 | 18 |
Less: allowance for doubtful accounts | (653) | (666) |
Total trade receivables | 1,885 | 2,090 |
Loans | 1,136 | 1,137 |
Advance payments | 539 | 549 |
Others (*) | 228 | 238 |
Prepayments | 418 | 237 |
Other tax receivables | 294 | 167 |
Expenses to be recovered | 42 | 44 |
Guarantee deposit | 2 | 2 |
Total other receivables | 2,659 | 2,374 |
Related parties (Note 24) | 9,640 | 5,196 |
Total trade and other receivables | 14,184 | 9,660 |
Non-current | 9,797 | 5,483 |
Current | 4,387 | 4,177 |
Total | 14,184 | 9,660 |
(*) Includes ARS 192 and ARS 196 as of September 30, 2020 and June 30, 2020, respectively, consistent with the assumption of debt with the State Assets Administration Agency (AABE). (Note 17)
16
IRSA Propiedades Comerciales S.A.
Movements on the Group’s allowance for doubtful accounts and other receivables are as follows:
09.30.20 | 06.30.20 | |
Beginning of the period / year | 666 | 412 |
Additions | 112 | 349 |
Unused amounts reversed | (72) | (21) |
Used during the year | - | (3) |
Inflation adjustment | (53) | (71) |
End of the period / year | 653 | 666 |
(i)
As of September 30, 2020 additions and unused amount reversed were charged to “Selling expenses”, in the amount of ARS 40 in the Statement of Income and Other Comprehensive Income (Note 21).
17
IRSA Propiedades Comerciales S.A.
15. Cash flow and cash equivalent information
Following is a detailed description of cash flows generated by the Group’s operations for the three-month periods ended September 30, 2020 and 2019:
Note | 09.30.20 | 09.30.19 | |
Net profit of the period | 13,298 | 3,089 | |
Adjustments: | |||
Income tax | 19 | 4,220 | 655 |
Amortization and depreciation | 21 | 71 | 71 |
Net gain from fair value adjustment on investment properties | 8 | (16,266) | (8,583) |
Disposals by concession maturity | 1 | - | |
Averaging of schedule rent escalation | 20 | 17 | (153) |
Directors’ fees | 24 | 259 | 103 |
Financial results, net | (4,737) | 8,037 | |
Provisions and allowances | 60 | 59 | |
Share of profit of associates and joint ventures | 7 | (593) | (493) |
Cash exchange difference and result from measurement at fair value of cash equivalent | - | (453) | |
Changes in operating assets and liabilities | |||
Decrease in inventories | 2 | 3 | |
(Increase)/ Decrease in trade and other receivables | (156) | 490 | |
Decrease/ (Increase) in trade and other payables | 68 | (587) | |
Decrease in payroll and social security liabilities | (79) | (174) | |
Uses of provisions | 22 | (12) | (1) |
Decrease in trading properties | - | (8) | |
Net cash (used in)/ generated by operating activities before income tax paid | (3,847) | 2,055 |
09.30.20 | 09.30.19 | |
Non-cash transactions | ||
Increase in trade and other receivables through a decrease in investment in financial assets | 4,125 | 532 |
Increase in investment properties through an increase trade and other payables | - | 47 |
Increase in rights of use assets through a decrease in properties plant and equipment | - | 23 |
Increase in rights of use assets through an increase in leases liabilities | 24 | - |
Increase in financial assets through an increase in borrowings | 18 | - |
Currency translation adjustment in associates | 12 | - |
Increase in investment in financial assets through a decrease in trade and other receivables | 365 | - |
Increase in investment in financial assets through a decrease in investments in associates and joint ventures | 11 | - |
16.
Trade and other payables
The following table shows the amounts of Group's trade and other payables as of September 30, 2020 and June 30, 2020:
09.30.20 | 06.30.20 | |
Rent and service payments received in advance | 1,198 | 1,342 |
Admission rights | 945 | 1,095 |
Accrued invoices | 206 | 282 |
Trade payables | 421 | 318 |
Tenant deposits | 86 | 108 |
Payments received in advance | 41 | 34 |
Total trade payables | 2,897 | 3,179 |
Tax payable | 168 | 125 |
Others | 168 | 169 |
Other payments received in advance to be accrued | 73 | 76 |
Tax payment plans | 8 | 8 |
Total other payables | 417 | 378 |
Related parties (Note 24) | 2,162 | 1,610 |
Total trade and other payables | 5,476 | 5,167 |
Non-current | 1,481 | 1,333 |
Current | 3,995 | 3,834 |
Total | 5,476 | 5,167 |
18
IRSA Propiedades Comerciales S.A.
17. Borrowings
The following table shows the Group's borrowings as of September 30, 2020 and June 30, 2020:
Book Value at 09.30.20 | Book Value at 06.30.20 | Fair Value at 09.30.20 | Fair Value at 06.30.20 | |
Non-Convertible notes | 27,295 | 37,642 | 19,909 | 28,098 |
Bank loans | 2,212 | 2,608 | 2,064 | 2,468 |
Bank overdrafts | 5,500 | 1,506 | 5,500 | 1,506 |
AABE Debts | 192 | 196 | 192 | 196 |
Loans with non-controlling interests | 160 | 119 | 160 | 119 |
Total borrowings | 35,359 | 42,071 | 27,825 | 32,387 |
Non-current | 28,536 | 28,614 | ||
Current | 6,823 | 13,457 | ||
Total | 35,359 | 42,071 |
18. Provisions
The following table shows the movements in the Group's provisions at September 30, 2020 and June 30, 2020 categorized by type of provision:
Labor, legal and other claims | 09.30.20 | 06.30.20 | |
Balances at the beginning of the period / year | 124 | 124 | 123 |
Inflation adjustment | (9) | (9) | (46) |
Increases (i) | 20 | 20 | 96 |
Recovery (i) | - | - | (40) |
Used during the year | (3) | (3) | (9) |
Balances at the end of the period / year | 132 | 132 | 124 |
Non-current | 87 | 78 | |
Current | 45 | 46 | |
Total | 132 | 124 |
(i)
Increases and recovery provisions were charged to “Other operating results, net”, in the Statement of Income and Other Comprehensive Income (Note 22).
19. Current and deferred income tax
The details of the Group’s income tax expense are as follows:
09.30.20 | 09.30.19 | |
Current income tax | (1) | (2) |
Deferred income tax | (4,219) | (653) |
Income tax - Loss | (4,220) | (655) |
Changes in the deferred tax account are as follows:
09.30.20 | 06.30.20 | |
Beginning of the period / year | (25,577) | (20,108) |
Income tax | (4,219) | (5,469) |
Period / year end | (29,796) | (25,577) |
19
IRSA Propiedades Comerciales S.A.
Below there is a reconciliation between the income tax recognized and that which would result from applying the prevailing tax rate to the profit before income tax:
09.30.20 | 09.30.19 | |
Profit for year before income tax at the prevailing tax rate | (5,255) | (1,123) |
Tax effects of: | ||
Rate change | 1,263 | 1,155 |
Share of profit of associates and joint ventures | 178 | 148 |
Result by rate transparency | 60 | 149 |
Expiration of carry-forwards | (2) | - |
Tax loss carry-forwards | (35) | - |
Non-taxable, non-deductible items | (2) | (67) |
Difference between provisions and affidavits | 2 | - |
Minimum presumed income tax | 5 | - |
Others | 95 | 3 |
Inflation adjustment | (188) | (282) |
Tax inflation adjustment | (341) | (638) |
Income tax - Loss | (4,220) | (655) |
20.
Revenues
09.30.20 | 09.30.19 | |
Base rent | 636 | 1,644 |
Contingent rent | 63 | 496 |
Admission rights | 147 | 261 |
Parking fees | 3 | 121 |
Averaging of scheduled rent escalation | (17) | 153 |
Commissions | 29 | 56 |
Property management fees | 27 | 32 |
Others | 5 | 21 |
Total revenues from rentals and services | 893 | 2,784 |
Sale of trading properties | 2 | - |
Total revenues from sale of properties | 2 | - |
Total revenues from sales, rentals and services | 895 | 2,784 |
Expenses and collective promotion fund | 406 | 914 |
Total revenues from expenses and collective promotion funds | 406 | 914 |
Total revenues | 1,301 | 3,698 |
21. Expenses by nature
The Group disclosed expenses in the Statements of Income and Other Comprehensive Income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosure regarding expenses by nature and their relationship to the function within the Group.
Costs (ii) | General and administrative expenses | Selling expenses | 09.30.20 | 09.30.19 | |
Salaries, social security costs and other personnel administrative expenses (i) | 299 | 96 | 14 | 409 | 572 |
Taxes, rates and contributions | 53 | 3 | 228 | 284 | 221 |
Directors' fees | - | 259 | - | 259 | 103 |
Maintenance, security, cleaning, repairs and other | 214 | 22 | - | 236 | 440 |
Fees and payments for services | 7 | 34 | 119 | 160 | 55 |
Amortization and depreciation (Notes 8, 9, 11 and 12) | 34 | 37 | - | 71 | 71 |
Allowance for doubtful accounts (additions and unused amounts reversed) (Note 14) | - | - | 40 | 40 | 37 |
Leases and expenses | 24 | 9 | 1 | 34 | 45 |
Advertising and other selling expenses | 22 | - | 1 | 23 | 161 |
Traveling, transportation and stationery | 2 | - | - | 2 | 14 |
Bank expenses | - | 4 | - | 4 | 8 |
Other expenses | - | - | - | - | 1 |
Total expenses by nature 09.30.20 | 655 | 464 | 403 | 1,522 | - |
Total expenses by nature 09.30.19 | 1,198 | 365 | 165 | - | 1,728 |
(i)
For the three-month period ended September 30, 2020, includes ARS 406 of Salaries, Bonuses and Social Security and ARS 3 of other concepts. For the three-month period ended September 30, 2019, includes ARS 519 of Salaries, Bonuses and Social Security and ARS 53 of other concepts.
(ii)
For the three-month period ended September 30, 2020, includes ARS 648 of Rental and services costs and ARS 7 of Cost of sales and developments. For the three-month period ended September 30, 2019, includes ARS 1,183 of Rental and services costs, ARS 13 of Cost of sales and developments and ARS 2 of other consumer financing costs.
20
IRSA Propiedades Comerciales S.A.
22.
Other operating results, net
09.30.20 | 09.30.19 | |
Interest generated by operating credits | 11 | 24 |
Management fees | 1 | 3 |
Loss from sale of subsidiaries, associates and joint ventures | - | (8) |
Others | 1 | (3) |
Donations | (13) | (24) |
Lawsuits (Note 18) | (20) | (21) |
Total other operating results, net | (20) | (29) |
23.
Financial results, net
09.30.20 | 09.30.19 | |
- Interest income | 422 | 73 |
Finance income | 422 | 73 |
- Interest expense | (988) | (886) |
- Others financial costs | (140) | (77) |
Finance costs | (1,128) | (963) |
Foreign exchange, net | (90) | (6,275) |
- Fair value gain/ (loss) of financial assets at fair value through profit or loss | 1,554 | (348) |
- (Loss) / Gain from derivative financial instruments | (179) | 224 |
- Gain from repurchase of non-convertible notes | 20 | 6 |
Other financial results | 1,305 | (6,393) |
- Inflation adjustment | 301 | 10 |
Total financial results, net | 900 | (7,273) |
21
IRSA Propiedades Comerciales S.A.
24. Related parties transactions
The following is a summary of the balances with related parties:
Item | 09.30.20 | 06.30.20 |
Trade and other receivables | 9,640 | 5,196 |
Investments in financial assets | 6,946 | 5,997 |
Trade and other payables | (2,162) | (1,610) |
Leases liabilities | (24) | - |
Total | 14,400 | 9,583 |
Related parties | 09.30.20 | 06.30.20 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | (1,626) | (1,192) | Received advances |
4,339 | 3,423 | Non-convertible notes | |
6,932 | 2,813 | Loans granted | |
158 | 153 | Other credits | |
70 | 61 | Corporate services | |
12 | 13 | Equity incentive plan | |
5 | 10 | Reimbursement of expenses | |
11 | 11 | Leases and/or rights to use space | |
- | (1) | Reimbursement of expenses to pay | |
(15) | (16) | Equity incentive plan to pay | |
2 | - | Lease collections | |
Total direct parent company | 9,888 | 5,275 | |
Cresud S.A.CI.F. y A. | 1,666 | 1,702 | Non-convertible notes |
(3) | (3) | Equity incentive plan to pay | |
- | 2 | Leases and/or rights to use space | |
- | (1) | Reimbursement of expenses to pay | |
(188) | (195) | Corporate services to pay | |
Total direct parent company of IRSA | 1,475 | 1,505 | |
La Rural S.A. | 204 | 220 | Dividends |
7 | 5 | Leases and/or rights to use space | |
73 | - | Loans granted | |
- | 79 | Other credits | |
(1) | - | Reimbursement of expenses to pay | |
TGLT S.A. | - | 9 | Other credits |
Others associates and joint ventures | (24) | - | Leases liabilities |
7 | 1 | Reimbursement of expenses | |
7 | 10 | Management fee | |
(1) | (1) | Leases and/or rights to use space to pay | |
Total associates and joint ventures of IRSA Propiedades Comerciales | 272 | 323 | |
Directors | (304) | (136) | Fees |
Total Directors | (304) | (136) | |
IRSA International LLC | 528 | 290 | Loans granted |
Epsilon Opportunities LP | 930 | 872 | Mutual funds |
Tyrus S.A. | 1,596 | 1,499 | Loans granted |
Centro Comercial Panamericano S.A. | - | (38) | Other payables |
OFC S.R.L. | 1 | 1 | Other credits |
(20) | (22) | Other payables | |
Others | 8 | 7 | Reimbursement of expenses |
7 | 7 | Leases and/or rights to use space | |
11 | - | Non-convertible notes | |
(2) | (2) | Other payables | |
12 | 5 | Other credits | |
(1) | - | Leases and/or rights to use space to pay | |
- | (2) | Reimbursement of expenses to pay | |
(1) | (1) | Legal services | |
Total others | 3,069 | 2,616 | |
Total at the end of the period / year | 14,400 | 9,583 |
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IRSA Propiedades Comerciales S.A.
The following is a summary of the results with related parties:
Related parties | 09.30.20 | 09.30.19 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | 4 | 19 | Corporate services |
1,007 | 282 | Financial operations | |
2 | (1) | Leases and/or rights to use space | |
Total direct parent company | 1,013 | 300 | |
Cresud S.A.CI.F. y A. | 121 | 95 | Financial operations |
2 | 2 | Leases and/or rights to use space | |
(102) | (115) | Corporate services | |
Total direct parent company of IRSA | 21 | (18) | |
Others associates and joint ventures | 1 | - | Fees |
- | 4 | Financial operations | |
- | 3 | Leases and/or rights to use space | |
Total associates and joint ventures of IRSA Propiedades Comerciales | 1 | 7 | |
Directors | (259) | (103) | Fees |
Senior Management | (10) | (14) | Fees |
Total Directors | (269) | (117) | |
Banco de Crédito y Securitización | 14 | 15 | Leases and/or rights to use space |
BHN Vida S.A | 3 | - | Leases and/or rights to use space |
BHN Seguros Generales S.A. | 3 | - | Leases and/or rights to use space |
IRSA Internacional LLC | 15 | 61 | Financial operations |
Estudio Zang, Bergel & Viñes | (5) | (10) | Fees |
Others | - | 8 | Leases and/or rights to use space |
1 | - | Financial operations | |
Total others | 31 | 74 | |
Total at the end of the period / year | 797 | 246 |
The following is a summary of the transactions with related parties:
Related parties | 09.30.20 | 09.30.19 | Description of transaction |
Quality Invest S.A. | 9 | 17 | Irrevocable contributions granted |
Total irrevocables contributions | 9 | 17 |
25. CNV General Resolution N° 622/13
As required by Section 1, Chapter III, Title IV of CNV General Resolution N° 622/13, below there is a detail of the notes to the Financial Statements that disclose the information required by the Resolution in Exhibits.
Exhibit A - Property, plant and equipment | Note 8 - Investment properties |
Note 9 - Property, plant and equipment | |
Exhibit C - Equity investments | Note 7 - Investments in associates and joint ventures |
Exhibit B - Intangible assets | Note 11 - Intangible assets |
Exhibit D - Other investments | Note 13 - Financial instruments by category |
Exhibit E - Provisions | Note 14 - Trade and other receivables |
Note 18 - Provisions | |
Exhibit F - Cost of sales and services provided | Note 21 - Expenses by nature |
Note 10 - Trading properties | |
Exhibit G - Foreign currency assets and liabilities | Note 26 - Foreign currency assets and liabilities |
23
IRSA Propiedades Comerciales S.A.
26. Foreign currency assets and liabilities
Book amounts of foreign currency assets and liabilities are as follows:
Items (1) | Amount (2) | Exchange rate (3) | 09.30.20 | 06.30.20 |
Assets | ||||
Trade and other receivables | ||||
US Dollar | 20.97 | 75.98 | 1,593 | 1,668 |
Euros | 0.18 | 88.97 | 16 | 18 |
Trade and other receivables with related parties | ||||
US Dollar | 69.35 | 76.18 | 5,283 | 4,783 |
Total trade and other receivables | 6,892 | 6,469 | ||
Investments in financial assets | ||||
US Dollar | 7.74 | 75.98 | 588 | 608 |
Investment in financial assets with related parties | ||||
US Dollar | 91.06 | 76.18 | 6,937 | 5,884 |
Total investments in financial assets | 7,525 | 6,492 | ||
Cash and cash equivalents | ||||
US Dollar | 33.38 | 75.98 | 2,536 | 2,965 |
Total cash and cash equivalents | 2,536 | 2,965 | ||
Total Assets | 16,953 | 15,926 | ||
Liabilities | ||||
Trade and other payables | ||||
US Dollar | 5.71 | 76.18 | 435 | 452 |
Euros | 0.09 | 98.49 | 9 | - |
Trade and other payables with related parties | ||||
US Dollar | 0.01 | 76.18 | 1 | 1 |
Total trade and other payables | 445 | 453 | ||
Borrowings | ||||
US Dollar | 387.41 | 76.18 | 29,513 | 40,053 |
Borrowings with related parties | ||||
US Dollar | 0.51 | 76.18 | 39 | - |
Total borrowings | 29,552 | 40,053 | ||
Derivative financial instruments | ||||
US Dollar | 1.17 | 76.18 | 89 | 102 |
Total derivative financial instruments | 89 | 102 | ||
Leases liabilities | ||||
US Dollar | 7.61 | 76.18 | 580 | 571 |
Leases liabilities with related parties | ||||
US Dollar | 0.32 | 76.18 | 24 | - |
Total leases liabilities | 604 | 571 | ||
Total Liabilities | 30,690 | 41,179 |
(1) Considering foreign currencies those that differ from each one of the Group’s companies at each period/year-end.
(2) Expressed in millions of foreign currency.
(3) Exchange rate of the Argentine Peso as of September 30, 2020 according to Banco Nación Argentina.
27. Economic context in which the company operates
The Group operates in a complex economic context, whose main economic variables have recently had strong volatility, both nationally and internationally.
The results of our operations may be affected by fluctuations in the inflation index and in the exchange rate of the Argentine peso against other currencies, specifically the dollar, changes in interest rates that have an impact on the cost of capital, changes in government policies, capital controls and other political or economic events both internationally and locally that affect the country.
On December 2019, a new strain of coronavirus (COVID-19) appeared in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response, countries have taken extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, closing businesses deemed non-essential, instructing residents to practice social distancing, implementing quarantines, among other measures. The ongoing pandemic and these extraordinary government measures are affecting global economic activity, resulting in significant volatility in global financial markets.
On March 3, 2020, the first case of COVID-19 was registered in the country and until November 8, 2020, more than 1,200,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentinian Government implemented a series of sanitary isolation measures at the national level that began on March 19, 2020 and extended until November 8, 2020 inclusive in the metropolitan area of Buenos Aires, although it has been extended in some cities of several regions of the country. These measures include: the extension of the public emergency in health matters, the total closure of borders, the suspension of international and cabotage flights, the suspension of medium and long-distance land transport, the suspension of artistic and sports shows, closure of businesses not considered essential, including shopping malls and hotels.
24
IRSA Propiedades Comerciales S.A.
This series of measures affected a large part of Argentine companies, which experienced a fall in their income and a deterioration in the payment cycle. In this context, the Argentine government announced different measures aimed at alleviating the financial crisis of the companies affected by the COVID-19 pandemic. Likewise, it should be noted that, the stagnation of the Argentine economy it is accompanied by a context of international crisis as a consequence of the COVID-19 pandemic. In this scenario, a strong contraction of the Argentine economy is expected.
After severals negotiations between the Argentine government and the private holders of the external debt, the Argentine government announced a principle of agreement with the main groups of private holders, in order to avoid default. On August 28, 2020, the government reported that the holders of 93.55% of the total outstanding principal amount of all the bonds accepted the debt swap, and on August 31, 2020, the Argentine government obtained the required consents to swap and / or modify 99.01% of the total outstanding principal amount of all series of eligible bonds. As of the date of issuance of these Financial Statements, the new bonds are already trading on the market.
In addition, the government is challenged to achieve a successful debt renegotiation with the International Monetary Fund (IMF). In the event that Argentina achieves a favorable result and agrees to restructure its debt with the IMF, this could have a favorable impact on the Argentine economy, in the medium and long term. On the contrary, the lack of an agreement with external private holders could lead to a default of the Argentine sovereign debt and, consequently, this situation could generate limitations to the companies' ability to access new financing.
At a local level, the following was observed:
●
In August 2020, the indicator called Monthly Estimator of Economic Activity (EMAE) reported by the National Institute of Statistics and Censuses (INDEC), registered a variation of (11.6%) compared to the same month of 2019, and from 1.1% compared to the previous month.
●
The study on market expectations prepared by the Argentine Central Bank in October 2020, called the Compilation of Market Expectations (REM), estimates an inflation of 35.8% for 2020. REM analysts forecast a variation in real GDP for 2020 of (11.6%). In turn, they foresee that in 2021 the economic activity will increased in 4.5%.
●
Year-to-year inflation as of September 30, 2020 reached 36.6%.
●
Throughout the period from September 2019 to September 2020, the Argentine peso depreciated 32.3% against the US dollar according to the average wholesale exchange rate quoted by Banco de la Nación Argentina. Given the exchange restrictions since August 2019, there is an exchange gap of approximately 82% between the official price of the dollar and its price in parallel markets, which has an impact on the level of activity of the economy and affects the level of reserves of the Argentine Central Bank. Additionally, these exchange restrictions, or those that may be issued in the future, could affect the Group's ability to access the Single Exchange Free Market (MULC) to acquire the necessary currencies to meet its financial obligations.
COVID-19 Pandemic
As described above, the COVID-19 pandemic is adversely impacting the global economy, the Argentine economy and the Group's business.
The current estimated impacts of the COVID-19 pandemic on the Group as of the date of these Financial Statements are established below:
●
As a consequence of the social, preventive and mandatory isolation, the shopping malls across the country were closed since March 20, 2020, exclusively remaining operational those stores dedicated to activities considered essential such as pharmacies, supermarkets and banks. In the interior of the country, in May, June and July, some provinces proceeded to flexibilize isolation measures and open their commercial and recreational activities. On August 2020, the Arcos District, an open-air premium outlet in the city of Buenos Aires, was opened and in October 2020 the shopping centers located in Buenos Aires started operating. As of October 31, all the Group´s shopping centers were open operating with rigorous protocols. However, the uncertainty of the situation could cause setbacks in the openings already made, as happened in some shopping centers located in some provinces, due to the increase in cases in those regions.
25
IRSA Propiedades Comerciales S.A.
●
Given the closure of the shopping malls, the Group has decided to condone the invoincing and collection of the Base Rent until September 30, 2020, prioritizing the long-term relationship with the tenants. Additionally, an increase in the delinquency rates of some tenants has been detected. As a result of the above, the impact on shopping centers is a 82.4% decrease in rental and service income compared to the same quarter of previous year and a 12.6% increase compared to the last quarter of the previous year. Additionally, the charge for doubtful accounts in the first quarter of the fiscal year 2021 is ARS 40 million compared to ARS 37 million in the same quarter of previous year.
●
Regarding the offices, although the majority of tenants are working from home, they are operating with strict safety and hygiene protocols. To date, we have not seen any deterioration in collection.
●
La Rural, the Convention Centers of Buenos Aires and Punta del Este and the DirecTV Arena stadium, establishments that the Group owns directly or indirectly, have also been closed since March 20. All scheduled conferences are suspended, much of the fairs and conventions have been postponed, while the shows scheduled at the DIRECTV Arena have been mostly canceled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
On September 14, 2020, IRSA Propiedades Comerciales cancelled the Class IV Notes for a total of USD 140 million (see Note 4 to these Financial Statements).
It should be mentioned that IRSA Propiedades Comerciales has a cash position and equivalents (including current financial investments) as of September 30, 2020 of approximately USD 134.7 million and after the end of the fiscal year, it has sold office assets for the sum of USD 42.0 (see Note 28 to these Financial Statements). On the other hand, it does not have short-term debt maturities, except for bank debt for USD 72.7.
The final extent of the Coronavirus outbreak and its impact on the country's economy is unknown and cannot be reasonably predicted. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Group´s capacity to continue meeting its financial commitments for the next twelve months.
The Group is closely monitoring the situation and taking all necessary measures to preserve the human life and the Group's business.
28. Subsequent events
Ordinary and Extraordinary Shareholders’ Meeting
The Ordinary and Extraordinary Shareholders’ Meeting of IRSA Propiedades Comerciales, held on October 26, 2020, approved among others:
The share capital increase of ARS 53,997 million through the capitalization of the Inflation adjustment of share capital reserve for ARS 3,391 million, share premium for ARS 9,660, the special reserve CNV Resolution 609/2012 for ARS 9,164 million, the reserve for future dividends for ARS 31,632 and the special reserve for ARS 150 million.
The assignment of 5% of the income for the year amounting of ARS 854 million to the integration of the legal reserve.
The distribution of a dividend in the amount of ARS 9,700 million in proportion to the shareholdings of the shareholders, to be paid in cash, in periodic payments according to the following payment detail: the first payment in the amount of ARS 2,425 million to be paid within 30 calendar days of its approval by the Shareholders’ Meeting, the second payment on January 25, 2021 in the amount of ARS 2,425 million, the third payment on March 25, 2021 in the amount of ARS 2,425 million and the fourth and last payment on May 24, 2021 in the amount of ARS 2,425 million.
The integration of the special reserve in the amount of ARS 6,535 million.
26
IRSA Propiedades Comerciales S.A.
Sale of Boston Tower building
On November 5, 2020, IRSA Propiedades Comerciales has signed with an unrelated third party a bill of sale with possession of 4 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 3,892 square meters and 15 parking lots located in the building.
The price of the transaction was ARS 1,812 million (USD 22.9 million).
On November 12, 2020, IRSA Propiedades Comerciales has signed with an unrelated third party a bill of sale with possession of 3 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 3,266 square meters, a commercial space located on the ground floor of approximately 225 square meters and 15 parking lots located in the building.
The price of the transaction was ARS 1,521 million (USD 19.1 million).
�� Payment of cash dividend
On November 13, 2020, it was notified that according to the resolution of the Ordinary and Extraordinary Shareholders’ Meeting as of October 26, 2020 and the Company’s Board of Directors meeting as of November 13, 2020 will be available to shareholders on November 25, 2020, the cash dividend of ARS 9,700 million, and it is notified that based on the faculties delegated to the Company's Board of Directors, the dividend will be paid in a single payment, leaving the payment schedule without effect.
27
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 Propiedades Comerciales S.A.
Legal address: Moreno 877 – 22° floor
Autonomous City of Buenos Aires
Tax Code No. 30-52767733-1
Introduction
We have reviewed the unaudited condensed interim consolidated financial statements of IRSA Propiedades Comerciales Sociedad Anónima and its subsidiaries (hereinafter “the Company”) which included the unaudited condensed interim consolidated statements of financial position as of September 30, 2020 and the unaudited condensed interim consolidated statements of income and other comprehensive income, changes in shareholders’ equity and cash flows for the three-month period ended September 30, 2020 and selected explanatory notes.
The balances and other information corresponding to the fiscal year ended June 30, 2020 and the interim periods within that fiscal year are an integral part of these financial statements and, therefore, they should be considered in relation to those financial statements.
Management 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 the International Financial Reporting Standards (IFRS), adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and added by the National Securities Commission (CNV) to its regulations, as approved by the International Accounting Standard Board (IASB) and, for this reason, is responsible for the preparation and presentation of the unaudited condensed interim consolidated financial statements above mentioned in the first paragraph according to the International Accounting Standard No 34 "Interim Financial Reporting" (IAS 34).
Scope of our review
Our review was limited to the application of the procedures established in the International Standard on Review Engagements ISRE 2410 "Review of interim financial information performed by the independent auditor of the entity", which was adopted as a review standard in Argentina in Technical Resolution No. 33 of the FACPCE, without modification as approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of making inquiries of persons responsible for the preparation of the information included in the unaudited condensed interim consolidated financial statements, and applying analytical and other review procedures. A 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 statements of financial position, the consolidated statements of income and other comprehensive income and the consolidated statements of cash flows of the Company.
28
Free translation from the original prepared in Spanish for publication in Argentina
Conclusion
Nothing came to our attention as a result of our review that caused us to believe that these unaudited condensed interim consolidated financial statements above mentioned in the first paragraph of this report have not been prepared in all material respects in accordance with International Accounting Standard 34.
Report on compliance with current regulations
In accordance with current regulations, we report about IRSA Propiedades Comerciales Sociedad Anónima that:
a) the unaudited condensed interim consolidated financial statements of IRSA Propiedades Comerciales Sociedad Anónima are being processed for recording in the "Inventory and Balance Sheet Book", and comply, as regards those matters that are within our competence, except as mentioned before, with the provisions set forth in the Commercial Companies Law and in the corresponding resolutions of the National Securities Commission;
b) the unaudited condensed interim consolidated financial statements of IRSA Propiedades Comerciales Sociedad Anónima, arise from accounting records carried in all formal respects in accordance with applicable legal provisions 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 September 2020.
c) we have read the Business Summary (“Reseña Informativa”) on which, as regards those matters that are within our competence, we have no observations to make;
d) at September 30, 2020, the debt of IRSA Propiedades Comerciales Sociedad Anónima owed in favor of the Argentina Integrated Pension System which arises from accounting records amounted to ARS 30,053,105 which was not claimable at that date.
Autonomous City of Buenos Aires, November 17, 2020.
PRICE WATERHOUSE & CO. S.R.L. (Partner) C.P.C.E.C.A.B.A. Tº 1 Fº 17 Dr. Walter Zablocky Public Accountant (UNLP) C.P.C.E.C.A.B.A. Tº 340 Fº 156 | ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner) C.P.C.E. C.A.B.A. T° 1 F° 30 José Daniel Abelovich Contador Público (UBA) C.P.C.E. C.A.B.A. T° 102 F° 191 |
29
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Financial Statements for the three-month period ended September 30, 2020, presented comparatively
30
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Statements of Financial Position
as of September 30, 2020 and June 30, 2020
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.20 | 06.30.20 | |
ASSETS | |||
Non-current assets | |||
Investment properties | 7 | 95,489 | 94,602 |
Property, plant and equipment | 8 | 290 | 300 |
Trading properties | 9 | 110 | 110 |
Intangible assets | 10 | 866 | 885 |
Rights of use assets | 11 | 736 | 792 |
Investments in subsidiaries, associates and joint ventures | 6 | 35,064 | 30,345 |
Trade and other receivables | 13 | 9,275 | 5,034 |
Total non-current assets | 141,830 | 132,068 | |
Current Assets | |||
Trading properties | 9 | 7 | 7 |
Inventories | 34 | 35 | |
Income tax credits | 13 | 12 | |
Trade and other receivables | 13 | 3,104 | 3,299 |
Investments in financial assets | 12 | 5,442 | 4,935 |
Derivative financial instruments | 12 | 5 | 7 |
Cash and cash equivalents | 12 | 41 | 2,041 |
Total current assets | 8,646 | 10,336 | |
TOTAL ASSETS | 150,476 | 142,404 | |
SHAREHOLDERS’ EQUITY | |||
Capital and reserves attributable to equity holders of the parent | 89,327 | 76,990 | |
TOTAL SHAREHOLDERS’ EQUITY | 89,327 | 76,990 | |
LIABILITIES | |||
Non-current liabilities | |||
Trade and other payables | 15 | 1,198 | 1,044 |
Borrowings | 16 | 27,248 | 27,133 |
Leases liabilities | 2 | - | |
Deferred income tax liabilities | 18 | 23,306 | 20,754 |
Other liabilities | 6 | 65 | 85 |
Provisions | 17 | 73 | 63 |
Total non-current liabilities | 51,892 | 49,079 | |
Current liabilities | |||
Trade and other payables | 15 | 3,449 | 3,211 |
Payroll and social security liabilities | 97 | 166 | |
Borrowings | 16 | 5,650 | 12,892 |
Leases liabilities | 26 | 7 | |
Derivative financial instruments | 12 | - | 23 |
Provisions | 17 | 35 | 36 |
Total current liabilities | 9,257 | 16,335 | |
TOTAL LIABILITIES | 61,149 | 65,414 | |
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 150,476 | 142,404 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
31
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Statements of Income and Other Comprehensive Income
for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.20 | 09.30.19 | |
Income from sales, rentals and services | 19 | 600 | 2,128 |
Income from expenses and collective promotion fund | 19 | 333 | 798 |
Operating costs | 20 | (570) | (1,099) |
Gross profit | 363 | 1,827 | |
Net gain from fair value adjustments of investment properties | 7 | 9,790 | 5,448 |
General and administrative expenses | 20 | (435) | (320) |
Selling expenses | 20 | (390) | (139) |
Other operating results, net | 21 | 1 | (18) |
Profit from operations | 9,329 | 6,798 | |
Share of profit of associates and joint ventures | 6 | 4,689 | 2,696 |
Profit from operations before financing and taxation | 14,018 | 9,494 | |
Finance income | 22 | 421 | 41 |
Finance cost | 22 | (1,091) | (870) |
Other financial results | 22 | 1,239 | (6,186) |
Inflation adjustment | 22 | 314 | (51) |
Financial results, net | 883 | (7,066) | |
Profit before income tax | 14,901 | 2,428 | |
Income tax | 18 | (2,552) | 310 |
Profit for the period | 12,349 | 2,738 | |
Other comprehensive loss for the period: (i) | |||
Items that may be reclassified subsequently to profit or loss: | |||
Currency translation adjustment of associates | 6 | (12) | - |
Other comprehensive loss for the period | (12) | - | |
Total comprehensive income for the period | 12,337 | 2,738 | |
Profit per share for the period | |||
Basic | 98.01 | 21.73 | |
Diluted | 98.01 | 21.73 |
(i) Components of other comprehensive loss have no impact on income tax.
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
32
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Share capital | Inflation adjustment of share capital | Share premium | Legal Reserve | Special reserve CNV 609/12 (1) | Other reserves | Retained earnings | Total shareholder’s equity | |
Balance as of June 30, 2020 | 126 | 3,660 | 10,400 | 144 | 9,866 | 34,397 | 18,397 | 76,990 |
Profit for the period | - | - | - | - | - | - | 12,349 | 12,349 |
Other comprehensive loss for the period | - | - | - | - | - | (12) | - | (12) |
Balance as of September 30, 2020 | 126 | 3,660 | 10,400 | 144 | 9,866 | 34,385 | 30,746 | 89,327 |
Reserve for future dividends | Revaluation surplus (2) | Special reserve | Changes in non-controlling interest | Currency translation adjustment | Total shareholder’s equity | |
Balance as of June 30, 2020 | 34,053 | 294 | 162 | (89) | (23) | 34,397 |
Other comprehensive loss for the period | - | - | - | - | (12) | (12) |
Balance as of September 30, 2020 | 34,053 | 294 | 162 | (89) | (35) | 34,385 |
Share capital | Inflation adjustment of share capital | Share premium | Legal Reserve | Special reserve CNV 609/12 (1) | Other reserves | Retained earnings | Total shareholder’s equity | |
Balance as of June 30, 2019 | 126 | 3,660 | 10,400 | 144 | 9,866 | 80,157 | (45,181) | 59,172 |
Profit for the period | - | - | - | - | - | - | 2,738 | 2,738 |
Balance as of September 30, 2019 | 126 | 3,660 | 10,400 | 144 | 9,866 | 80,157 | (42,443) | 61,910 |
Reserve for future dividends | Special reserve | Changes in non-controlling interest | Total shareholder’s equity | |
Balance as of June 30, 2019 | 34,840 | 45,343 | (26) | 80,157 |
Balance as of September 30, 2019 | 34,840 | 45,343 | (26) | 80,157 |
(1) Corresponds to General Resolution 609/12 of National Securities Commission (“CNV”). Furthermore includes the effect for the standard change in investment properties as of June 1, 2011.
(2) See Note 17 to the Annual Consolidated Financial Statements as of June 30, 2020.
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
33
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Statements of Cash Flows
for the three-month periods ended September 30, 2020 and 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Note | 09.30.20 | 09.30.19 | |
Operating activities: | |||
Cash (used in) / generated from operations | 14 | (3,683) | 1,794 |
Income tax paid | - | (9) | |
Net cash (used in) / generated from operating activities | (3,683) | 1,785 | |
Investing activities: | |||
Acquisition of investment properties | (700) | (322) | |
Acquisition of property, plant and equipment | (5) | (13) | |
Acquisition of intangible assets | (4) | (4) | |
Acquisitions of financial assets | (3,227) | (6,054) | |
Decrease of financial assets | 3,933 | 6,611 | |
Loans payment received from related parties | 190 | 159 | |
Loans granted to related parties | (152) | (2,440) | |
Advance payments | (11) | (345) | |
Proceeds from sales of property, plant and equipment | 1 | - | |
Proceeds from sales of investment properties | 9,601 | - | |
Irrevocable contributions in subsidiaries, associates and joint ventures | (9) | (17) | |
Collection of financial assets interests | 142 | 163 | |
Proceeds for sale of subsidiaries, associates and joint ventures | (53) | - | |
Dividends received of subsidiaries | - | 37 | |
Net cash generated from / (used in) investing activities | 9,706 | (2,225) | |
Financing activities: | |||
Payments of financial leasing | - | (5) | |
Borrowings obtained | 963 | 7,798 | |
Payment of borrowings | (1,106) | (7,977) | |
Payment of non-convertible notes | (10,668) | - | |
Sale of non-convertible notes in portfolio | 504 | - | |
Repurchase of non-convertible notes | (66) | (4) | |
Proceeds from derivative financial instruments | 9 | 312 | |
Payment of derivative financial instruments | (198) | (63) | |
Interests paid | (1,582) | (1,367) | |
Short term loans, net | 4,119 | 982 | |
Net cash used in financing activities | (8,025) | (324) | |
Net decrease in cash and cash equivalents | (2,002) | (764) | |
Cash and cash equivalents at beginning of period | 12 | 2,041 | 4,052 |
Foreign exchange gain on cash and and fair value result for cash equivalents | 3 | 6 | |
Inflation adjustment | (1) | (8) | |
Cash and cash equivalents at end of period | 12 | 41 | 3,286 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
34
IRSA Propiedades Comerciales S.A.
Notes to the Unaudited Condensed Interim Separate Financial Statements
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
1.
General information
IRSA PROPIEDADES COMERCIALES S.A. (“IRSA Propiedades Comerciales”, or “the Company”) is an Argentine real estate company mainly engaged in holding, leasing, managing, developing, operating and acquiring shopping malls and office buildings and holds a predominant position within the argentine market. IRSA Propiedades Comerciales was incorporated in 1889 under the name SAMAP and until 1984 operated the major fresh foodstuff market in the Autonomous City of Buenos Aires. SAMAP’s core asset was the historical building of Mercado de Abasto, which served as site of the market from 1889 until 1984, when a sizable part of its operations was interrupted.
Since the Company was acquired by IRSA Inversiones y Representaciones Sociedad Anónima (hereinafter, IRSA) in 1994, it has grown through a series of acquisitions and development projects that resulted in a corporate reorganization giving rise to the previous organizational structure and company named Alto Palermo S.A.
As of the end of these unaudited Condensed Interim Separate Financial Statements (hereinafter, Financial Statements), the Company operates 333,345 square meters (sqm) in 14 shopping malls, 93,144 sqm in 7 premium offices and an extensive land reserve for future commercial developments; 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, seven 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 Company also owns the historic building where the Patio Olmos Shopping Mall is located, operated by a third party.
See Note 28 to the Unaudited Condensed Interim Consolidated Financial Statements.
The Company’s shares are traded on the Buenos Aires Stock Exchange (MERVAL: IRCP) and in United States of America on the NASDAQ (NASDAQ: IRCP).
These Financial Statements have been approved by the Board of Directors to be issued on November 17, 2020.
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 therefore must be read together with the Group's Annual Consolidated Financial Statements as of June 30, 2020 prepared in accordance with IFRS. Likewise, these Financial Statements include additional information required by Law No. 19,550 and / or CNV regulations. This information is included in the notes to these Financial Statements, as allowed by IFRS.
These Financial Statements for the interim periods of three month ended September 30, 2020 and 2019 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Company'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 for non-monetary items. This requirement also includes the comparative information of the Financial Statements.
35
IRSA Propiedades Comerciales S.A.
In order to conclude on whether an economy is categorized as a hyperinflationary, 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 approaches to or exceeds 100%. Accumulated inflation in Argentina in three years has been over 100%. For this reason, in accordance with IAS 29, the Argentine economy must be considered as a hyperinflationary economy starting July 1, 2018.
In relation to the inflation index to be used according to FACPCE Resolution No. 539/18, the inflation index is determined based on the Wholesale Price Index (IPIM) until 2016, considering the average variation of Consumer Price indices (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) will be considered. The table below shows the evolution of this index during the period ended September 30, 2020, according to official statistics by Argentine Institute of Statistics and Census (INDEC) and following the guidelines described in Resolution 539/18:
Price variation: | 09.30.20 (accumulated of three months) |
8% |
As a consequence of the aforementioned, these Financial Statements as of September 30, 2020 were restated in accordance with IAS 29.
2.2. Significant accounting policies
The accounting policies adopted for these Financial Statements are consistent with those used in the preparation of information under IFRS as described in Note 2 to the Annual Financial Statements as of June 30, 2020.
2.3. Comparability of information
The amounts as of June 30, 2020 and September 30, 2019, which are disclosed for comparative purposes, arise from the Financial Statements at said dates restated in accordance with IAS 29. Certain figures have been reclassified for comparison purposes in these Financial Statements.
See Note 27 to the Unaudited Condensed Interim Consolidated Financial Statements.
2.4. Use of estimates
The preparation of Financial Statements at a certain date requires that Management makes estimates and assessments about 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 the Financial Statements, the significant judgments made by Management upon applying the Company’s accounting policies and the main sources of uncertainty were the same as those applied by the Company to the preparation of Separate Annual Financial Statements as of and for the fiscal year ended June 30, 2020, except as indicated in Note 27 to the Unaudited Condensed Interim Consolidated Financial Statements.
3.
Seasonal effects on operations
See Note 3 to the Unaudited Condensed Interim Consolidated Financial Statements.
4.
Acquisitions and disposals
See relevants acquisitions and disposals descripted in the Note 4 to the Unaudited Condensed Interim Consolidated Financial Statements.
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 Separate Annual Financial Statements as of June 30, 2020. There have been no changes in risk management or risk management policies applied by the company's since year-end.
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IRSA Propiedades Comerciales S.A.
Since June 30, 2020 as of the date of this Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the company’s assets or liabilities of the company except for that the indicated in Note 27 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.
Investment in subsidiaries, associates and joint ventures
The table below lists information about the Company's investment in subsidiaries, associates and joint ventures:
% of ownership interest held | Value of Company’s interest in equity | Company’s interest in comprehensive income / (loss) | ||||
Name of the entity | 09.30.20 | 06.30.20 | 09.30.20 | 06.30.20 | 09.30.20 | 09.30.19 |
Subsidiaries | ||||||
Panamerican Mall S.A. | 80.00% | 80.00% | 20,603 | 16,731 | 3,872 | 1,467 |
Torodur S.A. | 100.00% | 100.00% | 5,748 | 5,675 | 73 | 504 |
Arcos del Gourmet S.A. | 90.00% | 90.00% | 1,688 | 1,695 | (7) | 39 |
Shopping Neuquén S.A. | 99.95% | 99.95% | 821 | 760 | 61 | (29) |
Centro de Entretenimientos La Plata S.A. (5)(4)(3) | 95.40% | 95.40% | 604 | 470 | 133 | 61 |
Pareto S.A. | 91.96% | 69.96% | 117 | 70 | (6) | (5) |
Entertainment Holdings S.A. | 70.00% | 70.00% | 89 | 124 | (34) | - |
Emprendimiento Recoleta S.A. (1) | 53.68% | 53.68% | 58 | 59 | (1) | (11) |
Entretenimiento Universal S.A. (2) | 3.75% | 3.75% | (1) | (1) | - | 1 |
Fibesa S.A. (2) | 97.00% | 97.00% | (64) | (84) | 21 | 31 |
La Malteria S.A. (6) | - | - | - | - | - | 232 |
Associates | ||||||
TGLT S.A. (6) (7) | 30.20% | 30.20% | 2,166 | 2,217 | (51) | - |
Joint ventures | ||||||
Quality Invest S.A. | 50.00% | 50.00% | 2,893 | 2,262 | 622 | 400 |
Nuevo Puerto Santa Fe S.A. (5) | 50.00% | 50.00% | 277 | 282 | (6) | 6 |
34,999 | 30,260 | 4,677 | 2,696 |
Last Financial Statements issued | ||||||
Name of the entity | Place of business / Country of incorporation | Main activity | Common shares | Share capital (nominal value) | Income / (loss) for the period | Equity |
Subsidiaries | ||||||
Panamerican Mall S.A. | Argentina | Real estate | 397,661,435 | 497 | 4,841 | 25,753 |
Torodur S.A. | Uruguay | Investment | 1,735,435,048 | 1,733 | 166 | 5,748 |
Arcos del Gourmet S.A. | Argentina | Real estate | 72,973,903 | 81 | (3) | 1,850 |
Shopping Neuquén S.A. | Argentina | Real estate | 53,511,353 | 54 | 61 | 822 |
Centro de Entretenimientos La Plata S.A. (5)(4)(3) | Argentina | Real estate | 35,130 | 3 | 8 | 94 |
Entertainment Holdings S.A. | Argentina | Investment | 32,503,379 | 46 | (41) | 241 |
Emprendimiento Recoleta S.A. (1) | Argentina | Real estate | 13,449,990 | 25 | (2) | 108 |
Entretenimiento Universal S.A. | Argentina | Event organization and others | 825 | - | (1) | (34) |
Fibesa S.A. | Argentina | Real estate | (i) | 2 | 1 | 96 |
Pareto S.A | Argentina | Developer | 107,130 | - | (7) | 46 |
Associates | ||||||
TGLT S.A. (6) | Argentina | Real estate | 279,502,813 | 925 | (477) | 6,295 |
Joint ventures | �� | |||||
Quality Invest S.A. | Argentina | Real estate | 163,039,244 | 406 | 1,243 | 5,717 |
Nuevo Puerto Santa Fe S.A. (5) | Argentina | Real estate | 138,750 | 28 | (11) | 532 |
(1)
Concession ended on November 18, 2018. As of September 30, 2020, is in liquidation.
(2)
Included in other payables.
(3)
Corresponds to profit for the three-month periods ended September 30, 2020 and 2019, respectively.
(4)
Include the necessary adjustments to get to the balances in accordance with the International Financial Reporting Standards.
(5)
Nominal value per share ARS 100.
(6)
See note 4 to the Annual Consolidated Financial Statements as of June 30, 2020.
(7)
Includes (ARS 12) of other comprehensive loss.
(i) Corresponds to 2,323,126 share. Nominal value per share ARS 1 with rights to 5 votes.
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IRSA Propiedades Comerciales S.A.
Changes in the Company’s investments in subsidiaries, associates and joint ventures for the period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
09.30.20 | 06.30.20 | |
Beginning of the period / year | 30,260 | 22,336 |
Irrevocable contributions (Note 23) | 9 | 1,292 |
Share of profit, net | 4,689 | 6,625 |
Sale of interest of subsidiaries (ii) | - | (1,501) |
Acquisition of interest in associates (iii) (Note 23) | 53 | 2,342 |
Changes in non-controlling interest (iv) | - | (63) |
Other comprehensive loss | (12) | (23) |
Dividends distribution | - | (748) |
End of the period / year (i) | 34,999 | 30,260 |
(i)
It includes (ARS 65) and (ARS 85) as of September 30, 2020 and June 30, 2020, respectively, in relation to the equity interest in Fibesa S.A. and Entretenimiento Universal S.A. disclosed under Other liabilities.
(ii)
Corresponds to the sale of La Malteria S.A. See note 4 to the Annual Consolidated Financial Statements as of June 30, 2020.
(iii)
Corresponds to the acquisition of 22% common shares of Pareto S.A. as of September 30, 2020 and the participation in TGLT S.A. as of June 30, 2020. See note 4 to the Annual Consolidated Financial Statements as of June 30, 2020.
(iv)
Corresponds to changes in non-controlling interest generated by the share premium of La Arena S.A.
7.
Investment properties
Changes in the Company’s investment properties for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Shopping Malls | Office and Other rental properties | Undeveloped parcels of land | Properties under development | 09.30.20 | 06.30.20 | |
Fair value at beginning of the period / year | 41,531 | 44,894 | 6,131 | 2,046 | 94,602 | 66,053 |
Additions (ii) | 42 | 613 | - | 29 | 684 | 9,393 |
Disposals (iii) | - | (9,601) | - | - | (9,601) | (1,803) |
Transfers | - | - | - | - | - | 621 |
Capitalized lease costs | 4 | 12 | - | - | 16 | 18 |
Depreciation of capitalized lease costs (i) | (1) | (1) | - | - | (2) | (11) |
Net gain from fair value adjustment on investment properties | 911 | 6,914 | 1,731 | 234 | 9,790 | 20,331 |
Fair value at end of the period / year | 42,487 | 42,831 | 7,862 | 2,309 | 95,489 | 94,602 |
(i)
On September 30, 2020 the depreciation charges were included in “Costs” in the amount of ARS 2, in the Statement of Income and Other Comprehensive Income (Note 20).
(ii)
Includes addition for the acquisition of the building "200 Della Paolera" according to the degree of progress of the construction work. See Note 4 to the Annual Consolidated Financial Statements as of June 30, 2020.
(iii)
Disposal of Torre Boston and Bouchard 710 included in Office and Other rental properties. (See Note 4 to the Unaudited Condensed Interim Consolidated Financial Statements). As of June 30, 2020 includes the barter disposal of "Land Plot 1" of Caballito Ferro Land and the disposal for the sale of two floors of "200 Della Paolera". (See Note 4 to the Annual Consolidated Financial Statements).
The following amounts have been recognized in the Statements of Income and Other Comprehensive Income:
09.30.20 | 09.30.19 | |
Rentals and services income (Note 19) | 598 | 2,128 |
Expenses and collective promotion fund (Note 19) | 333 | 798 |
Rental and services costs (Note 20) | (556) | (1,086) |
Net unrealized loss from fair value adjustment on investment properties | 9,603 | 5,448 |
Net realized gain from fair value adjustment on investment properties (i) (ii) | 5,354 | - |
(i)
As of September 30, 2020 includes ARS 1,792 for the sale of Torre Boston and ARS 3,562 for the sale of Bouchard 710.
(ii)
As of September 30, 2020, ARS 187 corresponds to the result for changes in the fair value realized to the year (ARS 523 for the sale of Torre Boston and (ARS 336) for the sale of Bouchard 710) and ARS 5,167 for the result due to changes in fair value made in previous years (ARS 1,269 for the sale of Torre Boston and ARS 3,898 for the sale of Bouchard 710).
Valuation techniques are described in Note 9 to the Annual Consolidated Financial Statements as of June 30, 2020. There were no changes to the valuation techniques.
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IRSA Propiedades Comerciales S.A.
8.
Property, plant and equipment
Changes in the Company’s property, plant and equipment for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Other buildings and facilities | Furniture and fixtures | Machinery and equipment | Vehicles | Others | 09.30.20 | 06.30.20 | |
Costs | 420 | 222 | 1,383 | 21 | 1 | 2,047 | 2,105 |
Accumulated depreciation | (282) | (170) | (1,274) | (21) | - | (1,747) | (1,671) |
Net book amount at beginning of the period / year | 138 | 52 | 109 | - | 1 | 300 | 434 |
Additions | - | 3 | 2 | - | - | 5 | 144 |
Disposals | - | - | (1) | - | - | (1) | (5) |
Transfers | - | - | - | - | - | - | (197) |
Depreciation charges (i) | (2) | (3) | (9) | - | - | (14) | (76) |
Net book amount at end of the period / year | 136 | 52 | 101 | - | 1 | 290 | 300 |
Costs | 420 | 225 | 1,384 | 21 | 1 | 2,051 | 2,047 |
Accumulated depreciation | (284) | (173) | (1,283) | (21) | - | (1,761) | (1,747) |
Net book amount at end of the period / year | 136 | 52 | 101 | - | 1 | 290 | 300 |
(i) On September 30, 2020 the depreciation charges were included in “Costs” in the amount of ARS 13 and in “General and administrative expenses” in the amount of ARS 1 in the Statement of Income and Other Comprehensive Income (Note 20).
9.
Trading properties
Changes in the Company’s, trading properties for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Completed properties | Undeveloped sites | 09.30.20 | 06.30.20 | |
Net book amount the beginning of the period / year | 17 | 100 | 117 | 106 |
Additions | - | - | - | 16 |
Transfers | - | - | - | 15 |
Disposals (i) | - | - | - | (20) |
Net book amount the end of the period / year | 17 | 100 | 117 | 117 |
Non current | 110 | 110 | ||
Current | 7 | 7 | ||
Total | 117 | 117 | ||
(i)
Barter disposal of “Torre 1” on the airspace of the Coto Supermarket. (See Note 4 to the Annual Consolidated Financial Statements as of June 30, 2020)
10.
Intangible assets
Changes in the Company’s intangible assets for the three-month period ended September 30, 2020 and for the year ended June 30, 2020 were as follows:
Software | Right to receive units (ii) | Others | 09.30.20 | 06.30.20 | |
Costs | 427 | 750 | 68 | 1,245 | 616 |
Accumulated amortization | (292) | - | (68) | (360) | (216) |
Net book amount at beginning of the period / year | 135 | 750 | - | 885 | 400 |
Additions | 4 | - | - | 4 | 703 |
Disposals | - | - | - | - | (5) |
Transfers | - | - | - | - | (69) |
Amortization charges (i) | (23) | - | - | (23) | (144) |
Net book amount at end of the period / year | 116 | 750 | - | 866 | 885 |
Costs | 431 | 750 | 68 | 1,249 | 1,245 |
Accumulated amortization | (315) | - | (68) | (383) | (360) |
Net book amount at end of the period / year | 116 | 750 | - | 866 | 885 |
(i) On September 30, 2020 the amortization charges were included in “Costs” in the amount of ARS 1 and in “General and administrative expenses” in the amount of ARS 22 in the Statement of Income and Other Comprehensive Income (Note 20).
(ii) Corresponds to in kind receivables representing the right to receive residential apartments in the future under barter transactions.
39
IRSA Propiedades Comerciales S.A.
11.
Rights of use assets
09.30.20 | 06.30.20 | |
Shopping malls (Note 23) | 714 | 779 |
Machinery and equipment | 10 | 13 |
Others | 12 | - |
Total rights of use | 736 | 792 |
Non-current | 736 | 792 |
Total | 736 | 792 |
09.30.20 | 09.30.19 | |
Shopping malls | 65 | 51 |
Machinery and equipment | 3 | 2 |
Others | 11 | - |
Total depreciation of rights of use (i) | 79 | 53 |
(i)
On September 30, 2020 the depreciation charges were included in “Costs”in the amount of ARS 67 and in “General and administrative expenses” in the amount of ARS 12 in the Statement of Income and Other Comprehensive Income (Note 20).
12.
Financial instruments by category
The present note shows the financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line 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 Separate Annual Financial Statements as of June 30, 2020.
Financial assets and financial liabilities as of September 30, 2020 are as follows:
Financial assets at amortized cost (i) | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | ||
September 30, 2020 | Level 1 | Level 2 | ||||
Assets as per Statement of Financial Position | ||||||
Trade and other receivables (excluding allowance for doubtful accounts) (Note 13) | 11,623 | - | - | 11,623 | 1,308 | 12,931 |
Investments in financial assets: | ||||||
- Investment in equity public companies´ securities | - | 81 | - | 81 | - | 81 |
- Bonds | - | 5,334 | - | 5,334 | - | 5,334 |
- Mutual funds | - | 27 | - | 27 | - | 27 |
Derivative financial instruments | ||||||
- Foreign - currency future contracts | - | - | 5 | 5 | - | 5 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 40 | - | - | 40 | - | 40 |
- Short- term investments | - | 1 | - | 1 | - | 1 |
Total | 11,663 | 5,443 | 5 | 17,111 | 1,308 | 18,419 |
Financial liabilities at amortized cost (i) | Non-financial liabilities | Total | |
Liabilities as per Statement of Financial Position | |||
Trade and other payables (Note 15) | 1,037 | 3,610 | 4,647 |
Borrowings (Note 16) | 32,898 | - | 32,898 |
Total | 33,935 | 3,610 | 37,545 |
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IRSA Propiedades Comerciales S.A.
Company´s financial assets and financial liabilities as of June 30, 2020 were as follows:
Financial assets at amortized cost (i) | Financial assets at fair value through profit or loss | Subtotal financial assets | Non-financial assets | Total | ||
June 30, 2020 | Level 1 | Level 2 | ||||
Assets as per Statement of Financial Position | ||||||
Trade and other receivables (excluding allowance for doubtful accounts) (Note 13) | 7,809 | - | - | 7,809 | 1,088 | 8,897 |
Investments in financial assets: | ||||||
- Investment in equity public companies´ securities | - | 75 | - | 75 | - | 75 |
- Bonds | - | 4,794 | - | 4,794 | - | 4,794 |
- Mutual funds | - | 66 | - | 66 | - | 66 |
Derivative financial instruments | ||||||
- Foreign - currency future contracts | - | - | 7 | 7 | - | 7 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 267 | - | - | 267 | - | 267 |
- Short- term investments | 69 | 1,705 | - | 1,774 | - | 1,774 |
Total | 8,145 | 6,640 | 7 | 14,792 | 1,088 | 15,880 |
Financial liabilities at amortized cost (i) | Non-financial liabilities | Total | |
Liabilities as per Statement of Financial Position | |||
Trade and other payables (Note 15) | 891 | 3,364 | 4,255 |
Derivative financial instruments | 23 | - | 23 |
Borrowings (Note 16) | 40,025 | - | 40,025 |
Total | 40,939 | 3,364 | 44,303 |
(i)
The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value, except for borrowings (See Note 16).
Liabilities carried at amortized cost also include liabilities under finance leases where the Company is the lessee and which therefore have to be measured in accordance with IFRS 16 “Leases”. Finance leases are excluded from the scope of IFRS 7 “financial instruments: disclosures”.
The Company´s uses a range of valuation models for the measurement of Level 2 instruments, see Note 13 to the Unaudited Condensed Interim Consolidated Financial Statements.
13.
Trade and other receivables
The following table shows the amounts of Company’s trade and other receivables as of September 30, 2020 and June 30, 2020:
09.30.20 | 06.30.20 | |
Lease and services receivables | 860 | 1,057 |
Post-dated checks | 375 | 278 |
Averaging of scheduled rent escalation | 254 | 311 |
Debtors under legal proceedings | 319 | 361 |
Property sales receivables | 18 | 18 |
Consumer financing receivables | 16 | 18 |
Less: allowance for doubtful accounts | (552) | (564) |
Total trade receivables | 1,290 | 1,479 |
Advance payments | 432 | 445 |
Prepayments | 383 | 226 |
Other tax receivables | 239 | 106 |
Loans | 78 | 84 |
Expenses to be recovered | 34 | 35 |
Others | 18 | 23 |
Total other receivables | 1,184 | 919 |
Related parties (Note 23) | 9,905 | 5,935 |
Total current trade and other receivables | 12,379 | 8,333 |
Non-current | 9,275 | 5,034 |
Current | 3,104 | 3,299 |
Total | 12,379 | 8,333 |
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IRSA Propiedades Comerciales S.A.
Movements on the Company’s allowance for doubtful accounts and other receivables are as follows:
09.30.20 | 06.30.20 | |
Beginning of the period / year | 564 | 329 |
Additions (Note 20) | 95 | 287 |
Unused amounts reversed (Note 20) | (59) | (10) |
Inflation adjustment | (48) | (42) |
End of the period / year | 552 | 564 |
14.
Cash flow and cash equivalent information
Following is a detailed description of cash flows generated by the Company’s operations for the three-month periods ended September 30, 2020 and 2019:
Note | 09.30.20 | 09.30.19 | |
Net profit for the period | 12,349 | 2,738 | |
Adjustments: | |||
Income tax | 18 | 2,552 | (310) |
Amortization and depreciation | 20 | 118 | 109 |
Net gain from fair value adjustments of investment properties | 7 | (9,790) | (5,448) |
Directors’ fees provision | 256 | 99 | |
Averaging of schedule rent escalation | 19 | 36 | (26) |
Financial results, net | (4,689) | 7,220 | |
Provisions and allowances | 13 and 17 | 55 | 41 |
Share of profit of associates and joint ventures | 6 | (4,689) | (2,696) |
Foreign unrealized exchange gain on cash and fair value result of cash equivalents | (3) | (6) | |
Changes in operating assets and liabilities: | |||
Decrease in inventories | 1 | 2 | |
Acquisition of trading properties | - | (8) | |
Decrease in trade and other receivables | 39 | 574 | |
Increase / (decrease) in trade and other payables | 161 | (341) | |
Decrease in payroll and social security liabilities | (69) | (153) | |
Uses of provisions and inflation adjustment | 17 | (10) | (1) |
Net cash (used in) / generated from operating activities before income tax paid | (3,683) | 1,794 |
The following table shows a detail of non-cash transactions occurred in the three-month periods ended September 30, 2020 and 2019:
Non-cash transactions | 09.30.20 | 09.30.19 |
Currency translation adjustment | 12 | - |
Increase in financial assets through an increase in borrowings | 18 | - |
Decrease in financial assets through a decrease in trade and other payables | 17 | - |
Increase in rights of use assets through a decrease in leases liabilities | 24 | - |
Increase in investment in financial assets through a decrease in trade and other receivables | 365 | - |
Increase in trade and other receivables through a decrease in investment in financial assets | 4,125 | - |
Increase in trade and other payables through an increase in rights of use assets | - | 6 |
Increase in rights of use assets through a decrease in trade and other receivables | - | 988 |
42
15.
Trade and other payables
The following table shows the amounts of Company’s trade and other payables as of September 30, 2020 and June 30, 2020:
09.30.20 | 06.30.20 | |
Admission rights | 867 | 1,007 |
Rent and service payments received in advance | 876 | 980 |
Trade payables | 339 | 255 |
Accrued invoices | 125 | 201 |
Tenant deposits | 63 | 85 |
Payments received in advance | 37 | 24 |
Total trade payables | 2,307 | 2,552 |
Tax payables | 158 | 114 |
Other income to be accrued | 40 | 41 |
Other payables | 7 | 8 |
Tax payment plans | 6 | 6 |
Total other payables | 211 | 169 |
Related parties (Note 23) | 2,129 | 1,534 |
Total trade and other payables | 4,647 | 4,255 |
Non-current | 1,198 | 1,044 |
Current | 3,449 | 3,211 |
Total | 4,647 | 4,255 |
16.
Borrowings
The following table shows the Company’s borrowings as of September 30, 2020 and June 30, 2020:
Book Value at 09.30.20 | Book Value at 06.30.20 | Fair Value at 09.30.20 | Fair Value at 06.30.20 | |
Non-Convertible notes | 27,295 | 37,642 | 19,909 | 28,098 |
Bank loans | 162 | 361 | 162 | 361 |
Related parties (Note 23) | 18 | 543 | 18 | 451 |
Bank overdrafts | 5,423 | 1,479 | 5,423 | 1,479 |
Total borrowings | 32,898 | 40,025 | 25,512 | 30,389 |
Non-current | 27,248 | 27,133 | ||
Current | 5,650 | 12,892 | ||
Total | 32,898 | 40,025 |
17.
Provisions
The following table shows the movements in the Company’s provisions as of September 30, 2020 and June 30, 2020:
09.30.20 | 06.30.20 | |
Balances at the beginning of the period / year | 99 | 98 |
Increases (Note 21) | 19 | 82 |
Recovery (Note 21) | - | (37) |
Used during the period / year | (3) | (8) |
Inflation adjustment | (7) | (36) |
Balances at the end of the period / year | 108 | 99 |
Non-current | 73 | 63 |
Current | 35 | 36 |
Total | 108 | 99 |
43
IRSA Propiedades Comerciales S.A.
18.
Current and deferred income tax
The detail of the income tax expense of the Company are as follows:
09.30.20 | 09.30.19 | |
Deferred income tax | (2,552) | 310 |
Income tax | (2,552) | 310 |
Changes in the deferred tax account are as follows:
09.30.20 | 06.30.20 | |
Beginning of the period / year | (20,754) | (15,662) |
Income tax | (2,552) | (4,994) |
Appraisal surplus reserve | - | (98) |
End of the period / year | (23,306) | (20,754) |
Below there is a reconciliation between the income tax recognized and that which would result from applying the prevailing tax rate on the profit before income tax for the three-month periods ended September 30, 2020 and 2019:
09.30.20 | 09.30.19 | |
Profit for period before income tax at the prevailing tax rate | (4,470) | (728) |
Tax effects of: | ||
Rate change | 892 | 823 |
Share of profit of subsidiaries, associates and joint ventures | 1,407 | 809 |
Tax inflation adjustment | (524) | (541) |
Inflation adjustment | 36 | (56) |
Non-taxable profit, non-deductible expenses and others | 97 | 3 |
Result by rate transparency | 10 | - |
Income tax | (2,552) | 310 |
19.
Revenue
09.30.20 | 09.30.19 | |
Base rent | 413 | 1,292 |
Admission rights | 135 | 237 |
Contingent rent | 58 | 454 |
Property management fees | 22 | 29 |
Others | 4 | 17 |
Parking fees | 2 | 73 |
Averaging of scheduled rent escalation | (36) | 26 |
Rentals and services income | 598 | 2,128 |
Sale of trading properties | 2 | - |
Gain from disposal of trading properties | 2 | - |
Total revenues from sales, rentals and services | 600 | 2,128 |
Expenses and collective promotion fund | 333 | 798 |
Total revenues from expenses and collective promotion funds | 333 | 798 |
Total revenues | 933 | 2,926 |
44
IRSA Propiedades Comerciales S.A.
20. Expenses by nature
Costs (2) | General and administrative expenses | Selling expenses | 09.30.20 | 09.30.19 | |
Salaries, social security costs and other personnel administrative expenses (1) | 231 | 89 | 14 | 334 | 486 |
Taxes, rates and contributions | 40 | 1 | 221 | 262 | 184 |
Directors' fees | - | 256 | - | 256 | 99 |
Maintenance, security, cleaning, repairs and other | 167 | 18 | - | 185 | 350 |
Fees and payments for services | 7 | 25 | 118 | 150 | 38 |
Amortization and depreciation | 81 | 37 | - | 118 | 109 |
Allowance for doubtful accounts (additions and unused amounts reversed) (Note 13) | - | - | 36 | 36 | 25 |
Leases and expenses | 21 | 8 | - | 29 | 105 |
Advertising and other selling expenses | 19 | - | 1 | 20 | 145 |
Traveling, transportation and stationery | 2 | 1 | - | 3 | 5 |
Other expenses | 2 | - | - | 2 | 12 |
Total expenses by nature 09.30.20 | 570 | 435 | 390 | 1,395 | - |
Total expenses by nature 09.30.19 | 1,099 | 320 | 139 | - | 1,558 |
(1)
For the three-month period ended September 30, 2020, includes ARS 265 of Salaries, Bonuses and Social Security and ARS 69 of other concepts. For the three-month period ended September 30, 2019, includes ARS 435 of Salaries, Bonuses and Social Security and ARS 51 of other concepts.
(2)
For the three-month period ended September 30, 2020, includes ARS 556 of Rental and services costs and ARS 14 of Cost of sales and developments. For the three-month period ended September 30, 2019, includes ARS 1,086 of Rental and services costs and ARS 13 of Cost of sales and developments.
21.
Other operating results, net
09.30.20 | 09.30.19 | |
Management fees | 16 | 11 |
Interest generated by operating credits | 9 | 21 |
Others | 2 | (3) |
Loss for sale of subsidiaries, associates and joint ventures | - | (8) |
Donations | (7) | (23) |
Lawsuits (Note 17) | (19) | (16) |
Total other operating results, net | 1 | (18) |
22.
Financial results, net
09.30.20 | 09.30.19 | |
- Interest income | 421 | 41 |
Finance income | 421 | 41 |
- Interest expense | (959) | (808) |
- Other finance costs | (132) | (62) |
Finance costs | (1,091) | (870) |
- Foreign exchange, net | (52) | (6,190) |
- Fair value gains / (loss) of financial assets and liabilities at Fair value through profit or loss | 1,464 | (261) |
- (Loss) / Gain from derivative financial instruments | (169) | 259 |
- (Loss) / Gain for repurchase of non-convertible notes | (4) | 6 |
Other financial results | 1,239 | (6,186) |
- Inflation adjustment | 314 | (51) |
Total financial results, net | 883 | (7,066) |
45
IRSA Propiedades Comerciales S.A.
23.
Related parties transactions
The following is a summary of the balances with related parties:
Items | 09.30.20 | 06.30.20 |
Trade and other receivables | 9,905 | 5,935 |
Rights of use assets | 714 | 779 |
Investments in financial assets | 5,270 | 4,728 |
Trade and other payables | (2,129) | (1,534) |
Borrowings | (18) | (543) |
Leases liabilities | (24) | - |
Total | 13,718 | 9,365 |
Related parties | 09.30.20 | 06.30.20 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | 3,930 | 3,064 | Non-convertible notes |
6,887 | 2,813 | Loans granted | |
152 | 152 | Other receivables | |
70 | 61 | Corporate services | |
12 | 13 | Equity incentive plan | |
2 | - | Lease collections | |
11 | 11 | Leases and/or rights to use space | |
1 | 1 | Commissions | |
5 | 10 | Reimbursement of expenses receivable | |
(1,626) | (1,192) | Received advances | |
Total direct parent company | 9,444 | 4,933 | |
Cresud S.A.CI.F. y A. | 1,340 | 1,664 | Non-convertible notes |
(3) | (3) | Equity incentive plan to pay | |
- | 2 | Leases and/or rights to use space | |
- | (1) | Reimbursement of expenses payable | |
(188) | (195) | Corporate services to pay | |
Total direct parent company of IRSA | 1,149 | 1,467 | |
Torodur S.A. | 16 | 204 | Loans granted |
- | (543) | Non-convertible notes | |
Panamerican Mall S.A. | 156 | - | Loans granted |
11 | 27 | Reimbursement of expenses receivable | |
- | 154 | Other receivables | |
2 | 11 | Management fee receivable | |
(3) | (3) | Lease collections to pay | |
(1) | (2) | Leases and/or rights to use space to pay | |
Arcos del Gourmet S.A. | 106 | 110 | Loans granted |
20 | 23 | Reimbursement of expenses receivable | |
12 | 13 | Management fee | |
- | 1 | Lease collections | |
17 | 19 | Other receivables | |
(1) | - | Leases and/or rights to use space to pay | |
Fibesa S.A. | 7 | 7 | Others |
- | 2 | Leases and/or rights to use space | |
- | 1 | Management fee | |
(18) | - | Loans granted | |
(1) | - | Lease collections to pay | |
Shopping Neuquen S.A. | 714 | 779 | Rights of use assets |
135 | 134 | Loans granted | |
28 | 31 | Reimbursement of expenses receivable | |
Ogden Argentina S.A | 257 | 253 | Loans granted |
Boulevard Norte S.A. | (3) | (3) | Reimbursement of expenses payable |
Entretenimiento Universal S.A. | 34 | 34 | Loans granted |
Centro de Entretenimiento La Plata S.A. | 1 | 9 | Reimbursement of expenses receivable |
Pareto S.A. | 3 | 2 | Other receivables |
La Arena S.A. | 2 | 3 | Reimbursement of expenses receivable |
Total subsidiaries of IRSA Propiedades Comerciales S.A | 1,494 | 1,266 |
46
IRSA Propiedades Comerciales S.A.
Related parties | 09.30.20 | 06.30.20 | Description of transaction |
Nuevo Puerto Santa Fe S.A. | 7 | 9 | Management fee |
2 | - | Reimbursement of expenses | |
(1) | (1) | Leases and/or rights to use space to pay | |
Quality S.A. | - | 1 | Management fee |
5 | 1 | Reimbursement of expenses | |
(24) | - | Leases liabilities | |
TGLT SA | 10 | 9 | Other receivables |
Total associates and joint ventures | (1) | 19 | |
Directors | (298) | (131) | Fees |
Total Directors | (298) | (131) | |
IRSA International LLC | 307 | 290 | Loans granted |
Tyrus S.A. | 1,598 | 1,499 | Loans granted |
Banco Hipotecario S.A. | 5 | 5 | Leases and/or rights to use space |
Fundación Museo de los Niños | 7 | 6 | Reimbursement of expenses |
La Rural S.A. | 7 | 6 | Leases and/or rights to use space |
Others related parties | 5 | 3 | Leases and/or rights to use space |
2 | 2 | Reimbursement of expenses | |
- | (1) | Reimbursement of expenses to pay | |
(1) | - | Leases and/or rights to use space to pay | |
(1) | (1) | Dividends | |
(1) | - | Other payables | |
3 | 3 | Other receivables | |
(1) | (1) | Legal services | |
Total others | 1,930 | 1,811 | |
Total | 13,718 | 9,365 |
The following is a summary of the results with related parties:
Related parties | 09.30.20 | 09.30.19 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | 4 | 19 | Corporate services |
937 | 265 | Financial operations | |
2 | (1) | Leases and/or rights to use space | |
Total direct parent company | 943 | 283 | |
Cresud S.A.CI.F. y A. | 178 | 95 | Financial operations |
2 | 2 | Leases and/or rights to use space | |
(102) | (115) | Corporate services | |
Total direct parent company of IRSA | 78 | (18) | |
Arcos del Gourmet S.A. | 7 | - | Fees |
- | 1 | Financial operations | |
(1) | (61) | Leases and/or rights to use space | |
Fibesa S.A. | (1) | 3 | Leases and/or rights to use space |
1 | 1 | Fees | |
Torodur S.A. | 51 | - | Financial operations |
Shopping Neuquen S.A. | (65) | (51) | Leases and/or rights to use space |
- | 1 | Financial operations | |
Ogden Argentina S.A | 4 | 54 | Financial operations |
Panamerican Mall S.A. | 9 | - | Financial operations |
- | (3) | Leases and/or rights to use space | |
6 | 12 | Fees | |
La Arena S.A. | - | (7) | Fees |
Entretenimiento Universal S.A. | 1 | 7 | Financial operations |
Total subsidiaries | 12 | (43) | |
Nuevo Puerto Santa Fe S.A. | 1 | 3 | Fees |
- | (1) | Leases and/or rights to use space | |
Quality Invest S.A. | (8) | - | Financial operations |
Total associates and joint ventures | (7) | 2 | |
Directors | (256) | (99) | Fees |
Senior Managment | (10) | (14) | Fees |
Total directors | (266) | (113) | |
IRSA International LLC | 15 | 5 | Financial operations |
Tyrus S.A | 98 | - | Financial operations |
Banco de Crédito y Securitización | 14 | 13 | Leases and/or rights to use space |
Estudio Zang, Bergel & Viñes | (4) | (8) | Fees |
Others | (2) | (1) | Financial operations |
9 | 9 | Leases and/or rights to use space | |
- | 1 | Fees | |
Total others | 130 | 19 | |
Total | 890 | 130 |
47
IRSA Propiedades Comerciales S.A.
The following is a summary of the transactions with related parties:
Related parties | 09.30.20 | 09.30.19 | Description of transaction |
Quality Invest S.A. | 9 | 17 | Irrevocable contributions granted |
Total irrevocable contributions to joint ventures | 9 | 17 | |
Pareto S.A. | 53 | - | Share acquisition |
Total share acquisition | 53 | - |
24.
CNV General Resolution N° 622/13
As required by Section 1, Chapter III, Title IV of CNV General Resolution N° 622/13, below there is a detail of the notes to the Financial Statements that disclose the information required by the Resolution in Exhibits.
Exhibit A - Property, plant and equipment | Note 7 - Investment properties |
Note 8 - Property, plant and equipment | |
Exhibit B - Intangible assets | Note 10 - Intangible assets |
Exhibit C - Equity investments | Note 6 - Investment in subsidiaries, associates and joint ventures |
Exhibit D - Other investments | Note 12 - Financial instruments by category |
Exhibit E – Provisions | Note 13 - Trade and other receivables |
Note 17 - Provisions | |
Exhibit F – Cost of sales and services provided | Note 9 - Trading properties |
Note 20 - Expenses by nature | |
Exhibit G - Foreign currency assets and liabilities | Note 25 - Foreign currency assets and liabilities |
48
IRSA Propiedades Comerciales S.A.
25.
Foreign currency assets and liabilities
Book amounts of foreign currency assets and liabilities are as follows:
Items (1) | Amount (2) | Exchange rate (3) | 09.30.20 | 06.30.20 |
Assets | ||||
Trade and other receivables | ||||
US Dollar | 5.74 | 75.98 | 436 | 529 |
Euro | 0.18 | 88.97 | 16 | 18 |
Trade and other receivables with related parties | ||||
US Dollar | 72.46 | 76.18 | 5,520 | 5,269 |
Total trade and other receivables | 5,972 | 5,816 | ||
Investments in financial assets | ||||
US Dollar | 0.83 | 75.98 | 63 | 64 |
Investment in financial assets with related parties | ||||
US Dollar | 69.18 | 76.18 | 5,270 | 4,615 |
Total investments in financial assets | 5,333 | 4,679 | ||
Cash and cash equivalents | ||||
US Dollar | 0.21 | 75.98 | 16 | 266 |
Total cash and cash equivalents | 16 | 266 | ||
Total Assets | 11,321 | 10,761 | ||
Liabilities | ||||
Trade and other payables | ||||
US Dollar | 2.74 | 76.18 | 209 | 229 |
Euro | 0.10 | 89.39 | 9 | - |
Trade and other payables with related parties | ||||
US Dollar | 0.05 | 76.18 | 4 | 4 |
Total trade and other payables | 222 | 233 | ||
Borrowings | ||||
US Dollar | 358.83 | 76.18 | 27,336 | 37,681 |
Borrowings from related parties | ||||
US Dollar | - | 76.18 | - | 543 |
Total borrowings | 27,336 | 38,224 | ||
Leases liabilities | ||||
US Dollar | 0.05 | 76.18 | 4 | 7 |
Leases liabilities with related parties | ||||
US Dollar | 0.32 | 76.18 | 24 | - |
Total Leases liabilities | 28 | 7 | ||
Total Liabilities | 27,586 | 38,464 |
(1)
Considering foreign currencies those that differ from each one of the company’s companies at each period/year-end.
(2)
Expressed in millions of foreign currency.
(3)
Exchange rate of the Argentine Peso as of September 30, 2020, according to Banco Nación Argentina.
26.
Economic context in which the Company operates
See Note 27 to the Unaudited Condensed Interim Consolidated Financial Statements.
27.
Subsequent events
See Note 28 to the Unaudited Condensed Interim Consolidated Financial Statements.
49
IRSA Propiedades Comerciales S.A.
Information required by Section N° 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution N° 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of September 30, 2020
(Stated in millions of Argentine Pesos)
Free translation from the original prepared in Spanish for the publication in Argentina
1.
Specific and significant legal systems that imply contingent lapsing or rebirth of benefits envisaged by such provisions.
None.
2.
Significant changes in the Company´s activities or other similar circumstances that occurred during the fiscal years included in the Financial Statements, which affect their comparison with Financial Statements filed in previous fiscal years, or that could affect those to be filed in future fiscal years.
See Note 2.3.
3.
Receivables and liabilities by maturity date.
Overdue | Without term | Without term | To become due | To become due | |||||||||
Up to | From 3 to 6 | From 6 to 9 | From 9 to 12 | From 1 to 2 | From 2 to 3 | From 3 to 4 | From 4 | Total | |||||
Current | Non-current | 3 months | months | months | months | years | years | years | years on | ||||
Receivables | Trade and other receivables | 162 | - | 8 | 1,490 | 376 | 625 | 451 | 9,195 | 22 | 22 | 28 | 12,379 |
Total | 162 | - | 8 | 1,490 | 376 | 625 | 451 | 9,195 | 22 | 22 | 28 | 12,379 | |
Liabilities | Trade and other payables | 387 | - | - | 2,714 | 155 | 102 | 91 | 902 | 94 | 47 | 155 | 4,647 |
Leases liabilities | 12 | - | 2 | 3 | 3 | 3 | 5 | - | - | - | - | 28 | |
Borrowings | - | - | - | 5,632 | - | - | 18 | - | 27,248 | - | - | 32,898 | |
Deferred income tax liabilities | - | - | 23,306 | - | - | - | - | - | - | - | - | 23,306 | |
Payroll and social security liabilities | - | - | - | 83 | - | - | 14 | - | - | - | - | 97 | |
Provisions | - | 35 | 73 | - | - | - | - | - | - | - | - | 108 | |
Total | 399 | 35 | 23,381 | 8,432 | 158 | 105 | 128 | 902 | 27,342 | 47 | 155 | 61,084 |
50
IRSA Propiedades Comerciales S.A.
Information required by Section N° 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution N° 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of September 30, 2020
(Stated in millions of Argentine Pesos)
Free translation from the original prepared in Spanish for the publication in Argentina
4.a.
Breakdown of accounts receivable and liabilities by currency and maturity.
Current | Non-current | Total | ||||||||
Local | Foreign | Local | Foreign | Local | Foreign | |||||
Items | Currency | Currency | Total | Currency | Currency | Total | Currency | Currency | Total | |
Receivables | Trade and other receivables | 2,013 | 1,091 | 3,104 | 4,394 | 4,881 | 9,275 | 6,407 | 5,972 | 12,379 |
Total | 2,013 | 1,091 | 3,104 | 4,394 | 4,881 | 9,275 | 6,407 | 5,972 | 12,379 | |
Liabilities | Trade and other payables | 3,234 | 216 | 3,450 | 1,191 | 6 | 1,197 | 4,425 | 222 | 4,647 |
Leases liabilities | - | 26 | 26 | - | 2 | 2 | - | 28 | 28 | |
Borrowings | 5,601 | 49 | 5,650 | (39) | 27,287 | 27,248 | 5,562 | 27,336 | 32,898 | |
Deferred income tax liabilities | - | - | - | 23,306 | - | 23,306 | 23,306 | - | 23,306 | |
Payroll and social security liabilities | 97 | - | 97 | - | - | - | 97 | - | 97 | |
Provisions | 35 | - | 35 | 73 | - | 73 | 108 | - | 108 | |
Total | 8,967 | 291 | 9,258 | 24,531 | 27,295 | 51,826 | 33,498 | 27,586 | 61,084 |
4.b.
Breakdown of accounts receivable and liabilities by adjustment clause.
As of September 30, 2020, there are not receivables and liabilities subject to adjustment clause.
4.c.
Breakdown of accounts receivable and liabilities by interest clause.
Current | Non- current | ||||||||||||
Accruing interest | Accruing interest | Accruing interest | |||||||||||
Items | Fixed rate | Floating rate | Non-Accruing interest | Subtotal | Fixed rate | Floating rate | Non-Accruing interest | Subtotal | Fixed rate | Floating rate | Non-Accruing interest | Total | |
Receivables | Trade and other receivables | 657 | - | 2,447 | 3,104 | 8,839 | - | 437 | 9,276 | 9,495 | - | 2,884 | 12,379 |
Total | 657 | - | 2,447 | 3,104 | 8,839 | - | 437 | 9,276 | 9,495 | - | 2,884 | 12,379 | |
Trade and other payables | 1 | - | 3,448 | 3,449 | 4 | - | 1,193 | 1,197 | 6 | - | 4,641 | 4,647 | |
Leases liabilities | - | - | 26 | 26 | - | - | 2 | 2 | - | - | 28 | 28 | |
Borrowings | 208 | 5,315 | 126 | 5,649 | 27,248 | - | - | 27,248 | 27,457 | 5,315 | 126 | 32,898 | |
Liabilities | Deferred income tax liabilities | - | - | - | - | - | - | 23,306 | 23,306 | - | - | 23,306 | 23,306 |
Payroll and social security liabilities | - | - | 97 | 97 | - | - | - | - | - | - | 97 | 97 | |
Provisions | - | - | 35 | 35 | - | - | 73 | 73 | - | - | 108 | 108 | |
Total | 209 | 5,315 | 3,732 | 9,256 | 27,252 | - | 24,574 | 51,826 | 27,463 | 5,315 | 28,306 | 61,084 |
51
IRSA Propiedades Comerciales S.A.
Information required by Section N° 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution N° 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of September 30, 2020
(Stated in millions of Argentine Pesos)
Free translation from the original prepared in Spanish for the publication in Argentina
5.
Related parties.
a.
Interest in related parties. See Note 6.
b.
Related parties debit/credit balances. See Note 23.
6.
Borrowings to directors.
See Note 23.
7.
Inventories.
In view of the nature of the inventories, no physical inventory counts are conducted and there are no slow turnover assets.
8.
Current values.
See Note 2 to the Unaudited Condensed Interim Consolidated Financial Statements.
9.
Appraisal revaluation of fixed assets.
None.
10.
Obsolete unused fixed assets.
None.
11.
Equity interest in other companies in excess of that permitted by section 31 of the Business Companies Law N° 19,550.
None.
12.
Recovery values.
See Note 2 to the Financial Statements.
52
IRSA Propiedades Comerciales S.A.
Information required by Section N° 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution N° 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of September 30, 2020
(Stated in millions of Argentine Pesos)
Free translation from the original prepared in Spanish for the publication in Argentina
13.
Insurances.
Insured amounts | Accounting values | ||
Real Estate | in USD | in ARS | Risk covered |
Abasto - Shopping mall and offices | 154 | 7,690 | Fire, all risk and loss of profit |
Alto Palermo | 80 | 8,878 | Fire, all risk and loss of profit |
Mendoza Plaza | 66 | 2,084 | Fire, all risk and loss of profit |
Paseo Alcorta | 66 | 4,413 | Fire, all risk and loss of profit |
Alto Avellaneda | 64 | 5,045 | Fire, all risk and loss of profit |
Alto Rosario | 59 | 4,422 | Fire, all risk and loss of profit |
Patio Bullrich | 35 | 2,513 | Fire, all risk and loss of profit |
Córdoba Shopping – Villa Cabrera | 42 | 1,363 | Fire, all risk and loss of profit |
Alto Noa | 31 | 1,245 | Fire, all risk and loss of profit |
Soleil Premium Outlet | 32 | 1,998 | Fire, all risk and loss of profit |
República building | 52 | 9,656 | Fire, all risk and loss of profit |
Intercontinental building | 7 | 1,221 | Fire, all risk and loss of profit |
Bouchard 710 | 36 | 6,802 | Fire, all risk and loss of profit |
Suipacha 664 | 16 | 1,612 | Fire, all risk and loss of profit |
Della Paolera 265 | 106 | 7,151 | Fire, all risk and loss of profit |
Alto Comahue | 46 | 1,359 | Fire, all risk and loss of profit |
Distrito Arcos | 47 | 2,122 | Fire, all risk and loss of profit |
Dot Baires Shopping | 147 | 5,640 | Fire, all risk and loss of profit |
Edificio Dot | 22 | 4,549 | Fire, all risk and loss of profit |
Building annexed to DOT | 15 | 1,858 | Fire, all risk and loss of profit |
Anchorena 665 | 4 | 161 | Fire, all risk and loss of profit |
Caballito warehouse | 2 | - | Fire, all risk and loss of profit |
Zelaya 3102 | 1 | 46 | Fire, all risk and loss of profit |
Anchorena 545 (Chanta IV) | 47 | 13,278 | Fire, all risk and loss of profit |
SUBTOTAL | 1,177 | 95,106 | |
Unique policy | 177 | - | Third party liability |
In our opinion, the above-described policies adequately cover current risks.
14.
Allowances and provisions that, taken individually or as a whole, exceed 2% of the shareholder’s equity.
None.
15.
Contingent situations at the date of the Financial Statements which probabilities are not remote and the effects on the Company´s financial position have not been recognized
Not applicable.
16.
Status of the proceedings leading to the capitalization of irrevocable contributions towards future subscriptions.
Not applicable.
17. Unpaid accumulated dividends on preferred shares.
None.
18. Restrictions on distributions of profits.
See Note 17 to the Unaudited Condensed Consolidated Financial Statements.
53
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 PROPIEDADES COMERCIALES S.A.
Legal address: Moreno 877 – 22° floor
Autonomous City of Buenos Aires
Tax Code No. 30-52767733-1
Introduction
We have reviewed the unaudited condensed interim separate financial statements of IRSA PROPIEDADES COMERCIALES S.A. (hereinafter “the Company”) which included the unaudited condensed interim separate statements of financial position as of September 30, 2020, and the unaudited condensed interim separate statements of income and other comprehensive income, changes in shareholders’ equity and cash flows for three-month period ended September 30, 2020 and selected explanatory notes.
The balances and other information corresponding to the fiscal year ended June 30, 2020 and the interim periods within that fiscal year are an integral part of these financial statements and, therefore, they should be considered in relation to those financial statements.
Management 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 the International Financial Reporting Standards (IFRS), adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and added by the National Securities Commission (CNV) to its regulations, as approved by the International Accounting Standard Board (IASB) and, for this reason, is responsible for the preparation and presentation of the unaudited condensed interim separate financial statements above mentioned in the introductory paragraph according to the International Accounting Standard No 34 "Interim Financial Reporting" (IAS 34).
Scope of our review
Our review was limited to the application of the procedures established in the International Standard on Review Engagements ISRE 2410 "Review of interim financial information performed by the independent auditor of the entity", which was adopted as a review standard in Argentina in Technical Resolution No. 33 of the FACPCE as approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of making inquiries of persons responsible for the preparation of the information included in the unaudited condensed interim separate financial statements and applying analytical and other review procedures. A 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 statement of financial position, the separate statement of income and other comprehensive income and separate statement of cash flow of the Company.
54
Free translation from the original prepared in Spanish for publication in Argentina
Conclusion
Nothing came to our attention as a result of our review that caused us to believe that these unaudited condensed interim separate financial statements above mentioned in the introductory paragraph of this report have not been prepared in all material respects in accordance with International Accounting Standard 34.
Report on compliance with current regulations
In accordance with current regulations, we report about IRSA PROPIEDADES COMERCIALES S.A. that:
a)
the unaudited condensed interim separate financial statements of IRSA PROPIEDADES COMERCIALES S.A. are being processed for recording in the "Inventory and Balance Sheet Book", and comply as regards those matters that are within our competence, except as mentioned before, with the provisions set forth in the Commercial Companies Law and in the corresponding resolutions of the National Securities Commission;
b)
the unaudited condensed interim separate financial statements of IRSA PROPIEDADES COMERCIALES S.A arise from accounting records carried in all formal aspects in conformity with the applicable legal provisions except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the Genera Journal Book of the accounting entries corresponding to the month of September 2020.
c)
we have read the additional information to the notes to the unaudited condensed interim separate financial statements required by section 12 of Chapter III Title IV of the text of the National Securities Commission, on which, as regards those matters that are within our competence, we have no observations to make;
d)
as of September 30, 2020, the debt of IRSA PROPIEDADES COMERCIALES S.A. owed in favor of the Argentina Integrated Pension System which arises from accounting records and submissions amounted to ARS 30,053,105 which was no claimable at that date.
Autonomous City of Buenos Aires, November 17, 2020.
PRICE WATERHOUSE & CO. S.R.L. (Partner) C.P.C.E.C.A.B.A. Tº 1 Fº 17 Dr. Walter Zablocky Public Accountant (UNLP) C.P.C.E.C.A.B.A. Tº 340 Fº 156 | ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner) C.P.C.E.C.A.B.A. T° 1 F° 30 José Daniel Abelovich Public Accountant (U.B.A.) C.P.C.E.C.A.B.A. T° 102 F° 191 |
55
Free translation from the original prepared in Spanish for publication in Argentina
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
I. Brief comment on the Group’s activities during the period. including references to significant events occurred after the end of the period.
Economic context where the Group operates
The Group operates in a complex context both due to macroeconomic conditions, whose main variables have recently experienced strong volatility, and regulatory, social, and political conditions, both nationally and internationally.
The results of our operations may be affected by fluctuations in the inflation index and in the exchange rate of the argentine peso against other currencies, mainly the dollar, changes in interest rates which have an impact on the cost of capital, changes in government policies, capital control and other political or economic events both locally and internationally.
In December 2019, a new strain of coronavirus (SARS-COV-2), which caused severe acute respiratory syndrome (COVID-19) appeared in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response, countries have taken extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, closing businesses deemed non-essential, instructing residents to practice social distancing, implementing quarantines, among other measures. The ongoing pandemic and these extraordinary government measures are affecting global economic activity, resulting in significant volatility in global financial markets.
On March 3, 2020, the first case of COVID-19 was registered in the country and until November 8, 2020, more than 1,200,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentine government implemented a series of health measures of social, preventive and mandatory isolation at the national level that began on March 19, 2020 and extended several times, most recently until November 8, 2020 inclusive in the Metropolitan Area of Buenos Aires although it has been extended in some cities in the interior of the country. Among this measures, that affected the local economy, the following stand out: the extension of the public emergency in health matters, the total closure of borders, the suspension of international and cabotage flights, the suspension of medium and long-distance land transport, the suspension of artistic and sports shows, closure of businesses not considered essential, including shopping malls and hotels.
This series of measures affected a large part of Argentine companies, which experienced a fall in their income and a deterioration in the payment cycle.. In this context, the Argentine government announced different measures aimed at alleviating the financial crisis of the companies affected by the COVID- 19 pandemic. Likewise, it should be noted that, to the stagnation of the Argentine economy, a context of international crisis is added because of the COVID-19 pandemic. In this scenario, a strong contraction of the Argentine economy is expected.
After several negotiations between the Argentine government and the bondholders, the Argentine government announced a principle of agreement with the main groups of private holders in order to avoid default. On August 28, 2020, the government reported that the holders of 93.55% of the total outstanding principal amount of all the bonds accepted the debt swap, and on August 31, 2020, the Argentine government obtained the required consents to swap and / or modify 99.01% of the total outstanding principal amount of all series of eligible bonds. As of the date of issuance of these financial statements, the new bonds are already trading on the market.
In turn, the government is challenged to achieve a successful debt renegotiation with the IMF. If Argentina achieves a favourable result and agrees to restructure its debt with the IMF, this could have a positive impact on the Argentine economy, in the medium and long term. On the contrary, the lack of an agreement with external private holders could lead to a default of the Argentine sovereign debt and, consequently, this situation could generate limitations to the companies' ability to access new financing.
56
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
At a local level, the following circumstances were observed:
In August 2020, the Monthly Economic Activity Estimator (“EMAE” in Spanish) reported by the National Institute of Statistics and Censuses (“INDEC” in Spanish), registered a variation of (11.6)% compared to the same month of 2019, and 1.1% compared to the previous month.
The survey on market expectations prepared by the Central Bank in October 2020, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 35.8% for 2020. The analysts who confirm the REM forecast a variation in real GDP for 2020 of (11.6)%. In turn, they foresee that in 2021 economic activity will rebound, reaching an economic growth of 4.5%.
The interannual inflation as of September 30, 2020 reached 36.6%.
In the period from September 2019 to September 2020, the argentine peso depreciated 32.3% against the US dollar according to the average wholesale exchange rate of Argentine Nation Bank. Given the exchange restrictions in force since August 2019, as of September 30, 2020 there is an exchange gap of approximately 82% between the official price of the dollar and its price in parallel markets, which impacts the level of activity in the economy and affects the level of reserves of the Argentine Central Bank . Additionally, these exchange restrictions, or those that may be issued in the future, could affect the Group's ability to access the Single Free Exchange Market (MULC in Spanish) to acquire the foreign currency necessary to meet its financial obligations.
As described above, the COVID-19 pandemic is adversely impacting both global and Argentine economy, and the Group's business. The current estimated impacts of the COVID-19 pandemic on the Company as of the date of these Financial Statements are established below:
As a consequence of the social, preventive and mandatory isolation, shopping malls throughout the country were closed since March 20, 2020, exclusively remaining operational those stores dedicated to activities considered essential such as pharmacies, supermarkets and banks. The reopening of shopping malls in the interior of the country began during the months of May, June, and July. In August 2020, the Arcos District, an open-air premium outlet in the city of Buenos Aires, was opened and in October 2020, the Group’s shopping malls opened in the City and Greater Buenos Aires. As of October 31, 2020, all the Group’s shopping malls were open operating under strict protocols. However, the uncertainty of the situation could cause setbacks in the openings already made, as happened in some shopping malls in the interior of the country in previous months due to the increase in cases in those regions.
Given the closure of the shopping malls, the Group has decided to condone the billing and collection of Base Rent until September 30, 2020, with some exceptions and to subsidize the collective promotion fund during the same period, prioritizing the long-term relationship with its tenants. Additionally, an increase in the delinquency rates of some tenants has been detected. As a result of the above, the impact on shopping malls is a 82.4% decrease in rental and service income during the first quarter of fiscal year 2021 compared to the same period of last fiscal year, and a 12.6% increase compared to the last quarter of the previous year. Additionally, the charge for doubtful accounts in the first quarter of fiscal year 2021 is ARS 40 million compared to ARS 37 million in the same period of previous fiscal year.
In relation to the offices business, although most of the tenants are working from home, they are operating with strict safety and hygiene protocols. To date, we have not seen any deterioration in collection.
La Rural, the Buenos Aires and Punta del Este Convention Centers and the DIRECTV Arena stadium, establishments that the Group owns directly or indirectly, have also been closed since March 20. All scheduled conferences were suspended, most of the fairs and conventions have been postponed, while the shows scheduled at the DIRECTV Arena stadium were mostly cancelled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
57
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
In September 2020, IRSA Propiedades Comerciales cancelled its Class IV Notes for a nominal value of USD 140 million.
IRSA Propiedades Comerciales has a cash and equivalents position (including current financial investments) as of September 30, 2020 of approximately USD 134.7 million after the end of the fiscal year, it has sold office assets for the sum of USD 42.0 million (see Section IX Material and Subsequent Events). On the other hand, it does not have short-term debt maturities, except for bank debt for USD 72.7 million.
The final extent of the Coronavirus outbreak and its impact on the country's economy is unknown and cannot be reasonably predicted . However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Company’s capacity to meet its financial commitments for the next twelve months.
The Company is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's business.
58
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
Consolidated Results in current currency
(In ARS million) | IQ 21 | IQ 20 | YoY Var |
Income from sales. leases and services(1) | 895 | 2,784 | -67.9% |
Net gain from fair value adjustment on investment properties | 16,266 | 8,583 | 89.5% |
Net realized Result from changes in the fair value of investment properties(4) | 5,354 | - | - |
Profit from operations | 16,025 | 10,524 | 52.3% |
Depreciation and amortization | 71 | 71 | - |
Consolidated EBITDA(2) | 18,155 | 4,628 | 292.3% |
Consolidated Adjusted EBITDA(2) | 5,184 | 2,012 | 157.7% |
Consolidated NOI(3) | 5,668 | 2,406 | 135.6% |
Result for the period | 13,298 | 3,089 | 330.5% |
(1) Does not include Incomes from Expenses and Promotion Funds
(2) See Point XIV: EBITDA Reconciliation
(3) See Point XV: NOI Reconciliation
(4) As of September 30, 2020, ARS 187 million correspond to the result for changes in the fair value realized for the fiscal year (ARS 523 million for the sale of Torre Boston and negative ARS 336 million for the sale of Bouchard 710) and ARS 5,167 for the result from changes in fair value realized in previous years (ARS 1,269 for the sale of Torre Boston and ARS 3,898 for the sale of Bouchard 710).
Company’s income decreased by 67.9% during the first quarter of fiscal year 2021 compared to the same period of 2020 mainly due to the impact of COVID-19 pandemic in the Shopping Malls segment that straightly affected operations, while adjusted EBITDA increased 157.7% mainly explained by Sales and Developments segment whose adjusted EBITDA reached ARS 5,091 million, compared to a negative adjusted EBITDA of ARS 40 million in the same period of fiscal year 2020, due to the impact of Bouchard 710 and Boston Tower’s office sales. Rental segments Adjusted EBITDA reached ARS 231 million, negative ARS 150 million from the Shopping Malls segment and ARS 381 million from the Offices segment, which represents a decrease of 89% compared to the same period of previous fiscal year.
Net result for the first quarter of fiscal year 2021 registered a gain of ARS 13,298 million compared to ARS 3,089 million in the same period of 2020, which implies an increase of 330.5%. This significant increase is explained by changes in the fair value of investment properties partially offset by the decreased in Shopping Malls segment revenues.
II. Shopping Malls
Shopping Malls’ Operating Indicators
IQ 21 | IVQ 20 | IIIQ 20 | IIQ 20 | IQ 20 | |
Gross leasable area (sqm) | 333,345 | 333,062 | 332,642 | 332,812 | 332,277 |
Tenants’ sales (3 months cumulative in current currency) | 5,174 | 1,686 | 18,381 | 30,140 | 25,113 |
Occupancy | 92.8% | 93.2% | 94.8% | 95.0% | 94.3% |
During the first quarter of fiscal year 2020, our tenants’ sales reached ARS 5,174 million, 79.4% lower, in real terms, than the same period of 2020. Compared to the immediately previous quarter (IVQ20), there is an increase of 207% in real terms due to the reopening of some of the company's shopping centers that were operating as of September 30, 2020. These reopening began in the interior of the country during the months of May, June and July 2020. In August, the Arcos District, an open-air premium outlet in the city of Buenos Aires, was opened and after the end of the quarter, In October 2020, the Group's shopping centers opened in the City and Greater Buenos Aires. As of October 31, 2020, all Group's shopping centers were open, operating with rigorous protocols.
Our portfolio’s leasable area totaled 333,345 sqm during the quarter, in line with the same period of previous fiscal year. Portfolio’s occupancy remained at approximately 92.8%.
59
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
Shopping Malls’ Financial Indicators
(in millions of ARS) | IQ 21 | IQ 20 | YoY Var |
Income from sales. rentals and services | 367 | 2,085 | -82.4% |
Net gain from fair value adjustment of investment properties | 1,178 | 601 | 96.0% |
Profit from operations | 986 | 2,082 | -52.6% |
Depreciation and amortization | 42 | 37 | 13.5% |
EBITDA(1) | 1,028 | 2,119 | -51.5% |
Adjusted EBITDA(1) | -150 | 1,518 | -109,9% |
NOI(2) | 202 | 1,802 | -88.8% |
(1) See Section XIV: EBITDA Reconciliation
(2) See Section XV: NOI Reconciliation
Income from this segment decreased 82.4% during the first quarter of fiscal year 2021, compared with same period of previous fiscal year, mainly explained by the closure of operations due to COVID-19 from March 20 to October 14, 2020, date from which all the company’s shopping malls are operational.
The Adjusted EBITDA was a negative balance of ARS 150 million, 109.9% below the same period in fiscal year 2019 as a direct consequence of the impact of the pandemic COVID-19 to the operations.
Operating data of our Shopping Malls
Date of acquisition | Location | Gross Leasable Area (sqm)(1) | Stores | Occupancy (2) | IRSA CP Interest (3) | |
Alto Palermo | Dec-97 | City of Buenos Aires | 18,655 | 136 | 94,5% | 100% |
Abasto Shopping(4) | Nov-99 | City of Buenos Aires | 36,761 | 163 | 94,6% | 100% |
Alto Avellaneda | Dec-97 | Province of Buenos Aires | 38,801 | 126 | 96,2% | 100% |
Alcorta Shopping | Jun-97 | City of Buenos Aires | 15,725 | 114 | 97,4% | 100% |
Patio Bullrich | Oct-98 | City of Buenos Aires | 11,396 | 89 | 89,7% | 100% |
Dot Baires Shopping | May-09 | City of Buenos Aires | 48,805 | 164 | 71.7% | 80% |
Soleil | Jul-10 | Province of Buenos Aires | 15,156 | 79 | 95,9% | 100% |
Distrito Arcos | Dec-14 | City of Buenos Aires | 14,335 | 65 | 100,0% | 90.0% |
Alto Noa Shopping | Mar-95 | Salta | 19,313 | 85 | 99,6% | 100% |
Alto Rosario Shopping(4) | Nov-04 | Santa Fe | 33,682 | 140 | 98,3% | 100% |
Mendoza Plaza Shopping | Dec-94 | Mendoza | 43,123 | 127 | 96,0% | 100% |
Córdoba Shopping | Dec-06 | Córdoba | 15,361 | 104 | 98,1% | 100% |
La Ribera Shopping | Aug-11 | Santa Fe | 10,530 | 70 | 97,4% | 50% |
Alto Comahue | Mar-15 | Neuquén | 11,702 | 95 | 93,9% | 99.95% |
Patio Olmos(5) | Sep-07 | Córdoba | ||||
Total | 333,345 | 1,557 | 92.8% |
(1) Corresponds to gross leasable area in each property. Excludes common areas and parking spaces.
(2) Calculated dividing occupied square meters by gross leasable area as of the last day of the fiscal period.
(3) Company’s effective interest in each of its business units.
(4) Excludes Museo de los Niños (3,732 square meters in Abasto and 1,261 square meters in Alto Rosario).
(5) IRSA Propiedades Comerciales owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party.
60
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
Cumulative tenants’ sales as of September 30
(per Shopping Mall in millions of ARS) | IQ 21 | IQ 20 | YoY Var |
Alto Palermo | 127 | 3,116 | -95.9% |
Abasto Shopping | 94 | 3,231 | -97.1% |
Alto Avellaneda | 92 | 2,829 | -96.7% |
Alcorta Shopping | 17 | 1,765 | -99.0% |
Patio Bullrich | 168 | 1,193 | -85.9% |
Dot Baires Shopping | 83 | 2,390 | -96.5% |
Soleil | 184 | 1,377 | -86.6% |
Distrito Arcos | 500 | 1,491 | -66.5% |
Alto Noa Shopping | 653 | 1,099 | -40.6% |
Alto Rosario Shopping | 1,230 | 2,509 | -51.0% |
Mendoza Plaza Shopping | 1,226 | 1,971 | -37.8% |
Córdoba Shopping | 506 | 771 | -34.4% |
La Ribera Shopping(2) | 142 | 572 | -75.2% |
Alto Comahue | 152 | 799 | -81.0% |
Total | 5,174 | 25,113 | -79.4% |
(1) Through our joint venture Nuevo Puerto Santa Fe S.A.
Cumulative tenants’ sales per type of business
(per Type of Business. in millions of ARS) | IQ 21 | IQ 20 | YoY Var |
Anchor Store | 381 | 1,327 | -71.3% |
Clothes and Footwear | 2,477 | 13,575 | -81.8% |
Entertainment | - | 1,047 | -100.0% |
Home | 143 | 493 | -71.0% |
Restaurant | 452 | 3,065 | -85.3% |
Miscellaneous | 939 | 3,140 | -70.1% |
Services | 23 | 296 | -92.2% |
Electronic appliances | 759 | 2,170 | -65.0% |
Total | 5,174 | 25,113 | -79.4% |
Revenues from cumulative leases as of September 30
(in millions of ARS) | IQ 21 | IQ 20 | YoY Var |
Base Rent (1) | 65 | 1,045 | -93.8% |
Percentage Contingent Rent | 63 | 499 | -87.4% |
Total Rent | 128 | 1,544 | -91.7% |
Revenues from non-traditional advertising | 33 | 56 | -41.1% |
Admission rights | 146 | 263 | -44.5% |
Fees | 25 | 29 | -13.8% |
Parking | 3 | 122 | -97.5% |
Commissions | 29 | 56 | -48.2% |
Others | 3 | 15 | -80.0% |
Subtotal (2) | 367 | 2,085 | -82.4% |
Expenses and Collective Promotion Funds | 354 | 844 | -58.1% |
Total | 721 | 2,929 | -75.4% |
(1) Includes Revenues from stands for ARS 43.8 million cumulative as of September 2020
(2) Does not include Patio Olmos.
61
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
III. Offices
The corporate activity carried out remotely or virtual work that characterized this stage of confinement by COVID-19 brought with it a combination of lower demand, increased vacancy that reached 11.3%, 1.1 bps higher than previous quarter, and a slight decrease in the rental prices of category A + and A office buildings in Buenos Aires, which went from USD 26.3 to USD 26.0 for this quarter.
Offices’ Operating Indicators
IQ 21 | IVQ 20 | IIIQ 20 | IIQ 20 | IQ 20 | |
Gross Leasable area | 93,144 | 115,640 | 115,640 | 115,640 | 115,640 |
Total Occupancy | 83.7% | 86.1% | 87.0% | 88.7% | 88.1% |
Class A+ & A Occupancy | 91.6% | 93.0% | 93.9% | 97.1% | 96.6% |
Class B Occupancy | 53.6% | 52.4% | 53.2% | 47.5% | 46.2% |
Rent USD/sqm | 26.0 | 26.6 | 26.6 | 26.9 | 26.6 |
Gross leasable area was 93,144 sqm as of the three-month period of fiscal year 2021, highly decreased compared to the same period of previous year due to the sale of Bouchard Building and six floors sales of the Boston Tower.
Portfolio average occupancy decreased compared to previous quarters reaching 83.7%, mainly due to a higher vacancy in our premium portfolio (class A+&A), mainly motivated by the sale of 100% occupied Boston Tower floors. Category B offices increased 1.2 bps their occupancy. The average rental price reached USD 26.0 per sqm, slightly below previous quarters.
(in millions of ARS) | IQ 21 | IQ 20 | YoY Var |
Revenues from sales, rentals and services | 532 | 687 | -22.6% |
Net gain from fair value adjustment of investment properties. | 12,598 | 6,616 | 90.4% |
Profit from operations | 12,966 | 7,194 | 80.2% |
Depreciation and amortization | 13 | 7 | 85.7% |
EBITDA(1) | 12,979 | 7,201 | 80.2% |
Adjusted EBITDA (1) | 381 | 585 | -34.9% |
NOI(2) | 468 | 637 | -26.5% |
(1) See Section XIV: EBITDA Reconciliation
(2) See Section XV: NOI Reconciliation
In real terms, during first quarter of fiscal year 2021, revenues from the offices segment decreased by 22.6% compared to the same period of 2020. Excluding revenues generated during this quarter by the sqm sold in Bouchard 710 and Boston Tower office buildings, the decrease in revenues would have been 14%.
Adjusted EBITDA from this segment decreased 34.9% compared to the same period of the previous year due to the decrease in revenues related to the sale of offices floors, decrease in occupancy, and increase in bonuses. Adjusted EBITDA margin was 71.6%, 13.5 bps lower than the same period of previous year.
62
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
Below is information of our office segment and other rental properties as of September 30, 2020.
Offices & Others | Date of Acquisition | Gross Leasable Area (sqm)(1) | Occupancy (2) | IRSA Propiedades Comerciales's Actual Interest | IQ 21 - Rental revenues (ARS thousand) |
AAA & A Offices | |||||
Republica Building | Dec-14 | 19,885 | 86.9% | 100% | 115,706 |
Boston Tower | Dec-14 | 7,383 | 85.6% | 100% | 71,721 |
Intercontinental Plaza(3) | Dec-14 | 2,979 | 100.0% | 100% | 31,654 |
Bouchard 710 | Dec-14 | - | - | 100% | 31,066 |
Dot Building | Nov-06 | 11,242 | 84.9% | 80% | 55,714 |
Zetta | May-19 | 32,173 | 97.5% | 80% | 188,072 |
Total AAA & A Offices | 73,662 | 91.6% | 493,933 | ||
B Offices | |||||
Philips | Jun-17 | 8,017 | 85.8% | 100% | 8,574 |
Suipacha 652/64 | Dec-14 | 11,465 | 31.2% | 100% | 27,684 |
Total B Offices | 19,482 | 53.6% | 36,258 | ||
Subtotal Offices | 93,144 | 83.7% | 530,191 | ||
Other rental properties(4) | 1,415 | ||||
Total Offices and other rental properties | 93,144 | 83.7% | 531,606 |
(1) Corresponds to the total gross leasable area of each property as of September 30, 2020. Excludes common areas and parking spaces.
(2) Calculated by dividing occupied square meters by gross leasable area as of September 30, 2020.
(3) We own 13.2% of the building that has 22,535 square meters of gross rental area.
(5) Includes all those properties that are not buildings intended for rent, but that are partially or fully rented (Philips Deposit, Anchorena 665 and San Martin Plot)
IV. Sales & Developments and Others
The segment “Others” includes the Fair, Convention Center and Entertainment activities through our investments in La Rural S.A. and La Arena S.A.
Sales and Developments | Others | |||||
in millions of ARS | IQ 21 | IQ 20 | YoY Var | IQ 21 | IQ 20 | YoY Var |
Revenues | 2 | 2 | - | 2 | 35 | -94.3% |
Net gain from fair value adjustment of investment properties. | 3,309 | 1,804 | 83.4% | 18 | 111 | -83.8% |
Net realized Result from changes in the fair value of investment properties | 5,354 | - | 100.0% | - | - | - |
Profit / (loss) from operations | 2,971 | 1,761 | 68.7% | -23 | 70 | -132.9% |
Depreciation and amortization | 3 | 3 | - | 13 | 9 | 44.4% |
EBITDA(1) | 2,974 | 1,764 | 68.6% | -33 | 79 | -141.8% |
Adjusted EBITDA(1) | 5,019 | -40 | - | -28 | -32 | -12.5% |
NOI(2) | 5,055 | -13 | - | -10 | 10 | -200.0% |
(1) See Section XIV: EBITDA Reconciliation
(2) See Section XV: NOI Reconciliation
Revenues from “Sales and Developments” segment remained constant in real terms during the first quarter of fiscal year 2021 while revenues from the "Others" segment were decreased due to the cancellation of congresses, exhibitions and events in the context of pandemic.
Adjusted EBITDA of this segment was ARS 5,019 million mainly explained by the impact of the realized fair value of Bouchard 710 and Boston Tower sqm sales, while adjusted EBITDA for Others segment was negative ARS 28 million.
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
Investment Properties Sales | |||||
Office Buildings | Date | Floors | GLA | Price (USD MM) | Price sqm (USD) |
Bouchard 710 – Total | Jul-2020 | 12 | 15,014 | 87.2 | 5,827 |
Boston Tower – Partial | Jul & Aug-2020 | 6 | 7,482 | 41.4 | 5,530 |
Sales IQ21 | 22,496 | 128.6 | |||
Boston Tower - Remaining | Nov-2020 | 7 | 7,158 | 42.0(1) | 5,710 |
Subsequent Sales | 7,158 | 42.0 |
(1) Includes the value of a retail store for USD 1.1 million.
V. CAPEX
The works that the company had in progress before the emergence of COVID-19 have been suspended due to the interruption of construction activity in the city of Buenos Aires on March 20. To date, the works were resumed completely, operating with all the protocols in force.
200 Della Paolera - Catalinas building
The building under construction will have 35,000 sqm of GLA consisting of 30 office floors and 316 parking spaces and is located in the “Catalinas” area in the City of Buenos Aires, one of the most sought-after spots for Premium office development in Argentina. The company owns 28,051 square meters consisting of 24 floors and 256 parking spaces in the building. The total estimated investment in the project amounts to ARS 2,600 million and as of today, work progress is 97%.
Alto Palermo Expansion
We continue to work on the expansion of Alto Palermo shopping mall, the shopping mall with the highest sales per square meter in our portfolio, that will add a gross leasable area of approximately 3,900 square meters and will consist in moving the food court to a third level by using the area of an adjacent building acquired in 2015. Work progress as of today is 66% and construction works are expected to be finished by June 2021.
VI. Reconciliation with Consolidated Income Statement
Below is an explanation of the reconciliation of the Company’s total income by segment with its consolidated Income Statement. The difference lies in the presence of joint ventures included in the Income Statement per segment but not in the Income Statement.
For the first quarter ended September 30, 2020
Item (stated in millions of ARS) | Income by Segment | Expenses and Collective Promotion Funds | Adjustment for share of (profit) / loss of joint ventures (1) | Income Statement |
Revenues | 903 | 406 | -8 | 1,301 |
Costs | -209 | -458 | 12 | -655 |
Gross profit | 694 | -52 | 4 | 646 |
Net income from changes in the fair value of investment property | 17,103 | - | -837 | 16,266 |
General and administrative expenses | -465 | - | 1 | -464 |
Selling expenses | -404 | - | 1 | -403 |
Other operating results, net | -28 | 8 | - | -20 |
Profit from operations | 16,900 | -44 | -831 | 16,025 |
(1) Includes operating results from La Ribera Shopping and San Martín Plot (ex Nobleza Picardo) (50%).
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
VII. Consolidated Financial Debt
Below is a detail of IRSA Propiedades Comerciales S.A.’s debt as of September 30, 2020:
Description | Currency | Amount (USD MM)(1) | Interest Rate | Maturity |
Bank loans and overdrafts | ARS | 72.7 | - | < 360 days |
PAMSA loan | USD | 27.0 | Fixed | Feb-23 |
IRSA Propiedades Comerciales Notes Class II | USD | 360.0 | 8.75% | Mar-23 |
IRSA CP’s Total Debt | USD | 459.7 | ||
Cash & Cash Equivalents + Investments (2) | USD | 134.7 | ||
Intercompany Credit | USD | 104.5 | ||
IRSA CP’s Net Debt | USD | 220.5 |
(1) Principal amount at an exchange rate of ARS/USD 76.18, without considering accrued interest or eliminations of balances with subsidiaries.
(2) Includes Cash and cash equivalents and Investments in Current Financial Assets (includes related companies notes holding)
On September 14, 2020, the entire capital amount of the Class IV Notes was paid for a total of USD 140 million and the interest accumulated.
VIII. Dividends
Pursuant to Argentine law, the distribution and payment of dividends to shareholders is only valid if they result from realized net profits of the Company pursuant to annual financial statements approved by the shareholders. The approval, amount and payment of dividends are subject to approval by our shareholders at our annual ordinary shareholders’ meeting. The approval of dividends requires the affirmative vote of the majority of the shares entitled to vote at the meeting.
Pursuant to Argentine law and our by-laws, net realized profits for each fiscal year are allocated as follows:
●
5% of net profits is allocated to our legal reserve, until such reserve equals to 20% of our Share Capital;
●
a certain amount determined at a shareholders’ meeting is allocated to the compensation of our directors and the members of our Supervisory Committee; and
●
additional amounts are allocated to the payment of dividends, optional reserve, or to set up reserves for any other purpose as determined by our shareholders.
The following table illustrates the ratio between the amounts paid as dividends and the total amount paid as dividends on each fully paid-in share for the fiscal years mentioned.
Year | Dividend paid stated in terms of the measuring unit current as of September 30, 2020 | Dividend per share paid stated in terms of the measuring unit current as of September 30, 2020 | Dividend paid stated in terms of the measuring unit current as of the date of each corresponding shareholders’ meeting | Dividend per share paid stated in terms of the measuring unit current as of the date of each corresponding shareholders’ meeting |
(in thousands of ARS) | (ARS) | (in thousands of ARS) | (ARS) | |
2018 | 1,974,829 | 15,6715 | 680,000 | 5.3962 |
2019 | 1,084,675 | 8,6076 | 545,000 | 4.3249 |
2020 | 786,975 | 6,2452 | 595,000 | 4.7217 |
In accordance with the resolution of the Shareholders Meeting held on October 26 and the Board of Directors meeting dated November 13, 2020, on November 25, 2020, the Company will distribute among its shareholders a cash dividend in an amount of ARS 9,700 million equivalent to 7,697.6% of the Share Capital, an amount per share of ARS 76.9755 (nominal value of ARS 1) and an amount per ADR of ARS 307.9022 (Argentine Pesos per ADR).
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
Shareholders will receive payment in United States dollars in the Argentine Republic (CVSA Code 10,000) at a conversion rate to that currency that will be set according to the selling currency exchange rate reported by the National Bank of Argentina at the close of the business day immediately prior to the day of payment. Likewise, shareholders may choose to receive payment in US dollars New York Plaza (CVSA Code 7000), complying with the requirements and presentations established for this purpose by Caja de Valores SA, until 5:00 p.m. on November 20, 2020 inclusive.
IX. Material and Subsequent Events
October 2020: General Ordinary and Extraordinary Shareholders’ Meeting
On October 26, 2020, our General Ordinary and Extraordinary Shareholders’ Meeting was held. The following matters amoing others, were approved by majority of votes:
●
Distribution of ARS 9,700 million as cash dividends for ARS 9,700 million.
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Share Capital Increase from the sum of ARS 126 million to the sum of ARS 54,123 million through the capitalization of reserves.
●
Designation of board members.
●
Compensations to the Board of Directors for the fiscal year ended June 30, 2020
●
Incentive plan for employees. management and directors to be integrated without share premium up to 1% of the Share Capital
●
Change in the nominal value of the shares from the sum of ARS 1 to the sum of ARS 100.
November 2020: Appointment of new CEO
The Company informed that the Board of Directors held on October 29, 2020 has appointed Mr. Daniel Ricardo Elsztain as Chief Executive Officer.
November 2020: Boston Tower Office Floors Sale
On November 5, 2020, the Company sold and transferred 4 additional floors for a gross rental area of approximately 3,892 sqm and 15 parking spaces located in the building. The transaction price was approximately USD 22.9 million (USD/sqm 5,890), which was paid in full.
Finally, on November 11, 2020, the Company sold and transferred the last 3 floors with a rental area of 3,266 m2, a retail store of 228 m2 and 15 parking spaces for a total price of approximately USD 19.1 million (USD 1.1 corresponding to the retail store), which was already paid in full. The offices price reached USD/sqm 5,490.
After this transaction, the Company has no remaining leasable area in the building, keeping only 966 sqm on the first basement, partially rented.
X. Summary Comparative Consolidated Balance Sheet
(in millions of ARS) | 09.30.2020 | 09.30.2019 |
Non-current assets | 151,641 | 110,547 |
Current assets | 14,797 | 24,953 |
Total assets | 166,438 | 135,501 |
Equity attributable to the holders of the parent | 89,252 | 61,876 |
Non-controlling interest | 5,339 | 3,703 |
Total shareholders’ equity | 94,591 | 65,579 |
Non-current liabilities | 60,666 | 52,979 |
Current liabilities | 11,181 | 16,942 |
Total liabilities | 71,847 | 69,922 |
Total liabilities and shareholders’ equity | 166,438 | 135,501 |
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
XI. Summary Comparative Consolidated Income Statement
(in millions of ARS) | 09.30.2020 | 09.30.2019 |
Result from operations | 16,025 | 10,524 |
Share of profit of associates and joint ventures | 593 | 493 |
Result from operations before financing and taxation | 16,618 | 11,017 |
Financial income | 422 | 73 |
Financial cost | -1,128 | -963 |
Other financial results | 1,305 | -6,393 |
Inflation adjustment | 301 | 10 |
Financial results. net | 900 | -7,273 |
Result before income tax | 17,518 | 3,744 |
Income tax expense | -4,220 | -655 |
Result for the period | 13,298 | 3,089 |
Attributable to: | ||
Equity holders of the parent | 12,349 | 2,738 |
Non-controlling interest | 949 | 351 |
XII. Summary Comparative Consolidated Cash Flow
(in millions of ARS) | 09.30.2020 | 09.30.2019 |
Net cash (used in) / generated from operating activities | -3,850 | 2,029 |
Net cash generated from / (used in) investing activities | 9,126 | -2,348 |
Net cash used in financing activities | -7,655 | -372 |
Net decrease in cash and cash equivalents | -2,379 | -691 |
Cash and cash equivalents at beginning of year | 4,981 | 6,461 |
Foreign exchange gain and others on cash and cash equivalents | 33 | 453 |
Inflation adjustment | -7 | -20 |
Cash and cash equivalents at the end of the period | 2,628 | 6,203 |
XIII.
Comparative Ratios
(in million ARS) | 09.30.2020 | 09.30.2019 | ||
Liquidity | ||||
CURRENT ASSETS | 14,797 | 1.32 | 24,953 | 1.47 |
CURRENT LIABILITIES | 11,181 | 16,942 | ||
Indebtedness | ||||
TOTAL LIABILITIES | 71,847 | 0.80 | 69,922 | 1.13 |
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 89,252 | 61,876 | ||
Solvency | ||||
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 89,252 | 1.24 | 61,876 | 0.88 |
TOTAL LIABILITIES | 71,847 | 69,922 | ||
Capital Assets | ||||
NON-CURRENT ASSETS | 151,641 | 0.91 | 110,547 | 0.82 |
TOTAL ASSETS | 166,438 | 135,501 |
XIV.
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 other than interest expense, net (mainly foreign exchange net, 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) unrealized results from fair value of investment properties.
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. We present BITDA 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 for the relevant period to EBITDA and Adjusted EBITDA for the periods indicated:
For the three-month period ended September 30 (in millions of ARS) | ||
2020 | 2019 | |
Result for the period | 13,298 | 3,089 |
Interest income | -422 | -73 |
Interest expense | 988 | 886 |
Income tax expense | 4,220 | 655 |
Depreciation and amortization | 71 | 71 |
EBITDA | 18,155 | 4,628 |
Unrealized result from fair value adjustments in investment properties | -10,912 | -8,583 |
Share of profit of associates and joint ventures | -593 | -493 |
Foreign exchange, net | 90 | 6,275 |
Loss/(Gain) from derivative financial instruments | 179 | -224 |
Fair value (gain)/loss of financial assets and liabilities at fair value through profit or loss | -1,554 | 348 |
Other financial costs | 140 | 77 |
Repurchase of non-convertible notes | -20 | -6 |
Inflation adjustment | -301 | -10 |
Adjusted EBITDA | 5,184 | 2,012 |
Adjusted EBITDA Margin(1) | 579.2% | 72.3% |
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by income from sales, rents and services.
XV.
NOI Reconciliation
In addition, we present in this summary report Net Operating Income or “NOI” which we define as gross profit from operations, less selling expenses, plus net realized result from fair value adjustment 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 three-month period ended September 30 (in millions of ARS) | ||
2020 | 2019 | |
Gross profit | 646 | 2,500 |
Selling expenses | -403 | -165 |
Depreciation and amortization | 71 | 71 |
Net Realized result from fair value adjustment of investment properties | 5,354 | - |
NOI (unaudited) | 5,668 | 2,406 |
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
XVI.
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 net gain 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 three-month period ended September 30 (in millions of ARS) | ||
2020 | 2019 | |
Result for the period | 13,298 | 3,089 |
Unrealized Result from fair value adjustments of investment properties | -10,912 | -8,583 |
Depreciation and amortization | 71 | 71 |
Foreign exchange differences. net | 90 | 6,275 |
Loss/Gain from derivative financial instruments | 179 | -224 |
Fair value gain/loss of financial assets and liabilities at fair value through profit or loss | -1,554 | 348 |
Other financial costs | 140 | 77 |
Deferred income tax | 4,219 | 653 |
Non-controlling interest | -949 | -351 |
Non-controlling interest related to PAMSAS’s fair value | 941 | 403 |
Share of profit of associates and joint ventures | -593 | -493 |
Inflation adjustment | -301 | -10 |
Adjusted FFO | 4,629 | 1,255 |
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of September 30, 2020
XVII. Brief comment on prospects for the fiscal year
The year 2021 is projected as a great challenge for the shopping mall industry as a result of the impact of COVID19 pandemic in economic activity. As it is public knowledge and was mentioned at the beginning of this informative review, as a consequence of the social, preventive and mandatory lockdown, shopping malls throughout the country were closed since March 20, 2020, leaving open exclusively those stores dedicated to essential activities such as pharmacies, supermarkets and banks. This had a significant impact on the revenues of this segment in the last two quarters and will also impact the next quarter since the company's shopping malls opened 100% in mid-October and are working under rigorous protocols that include social distancing, reduced traffic and hours, access controls, among other safety and hygiene measures. The office segment operated normally during the confinement period.
Entertainment segment has also been affected by social, preventive, and mandatoryisolation. La Rural, the Convention Centers of Buenos Aires and Punta del Este and the DirecTV Arena stadium, establishments that the Company owns directly or indirectly, have been closed since March 20. All scheduled conferences are suspended, much of the fairs and conventions have been postponed, while the shows scheduled at the DirecTV Arena have been mostly canceled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
Looking ahead to the next fiscal year, we will continue working on reducing and improving the cost structure , hoping that the activity of shopping malls will evolve in line with the economic recovery. To date, although it is too early to evaluate a performance of the activity, we can perceive a gradual recovery in sales in our shopping malls, although progressive.
The Board of Directors of the Company will continue evaluating financial, economic, and / or corporate tools that allow the Company to improve its position in the market in which it operates and to have the necessary liquidity to meet its obligations. Within the framework of this analysis, the indicated tools may be linked to corporate reorganization processes (merger. spin-off or a combination of both), disposal of assets in public and / or private form that may include real estate as well as negotiable securities owned by the Company, incorporation of shareholders through capital increases with the public offering of shares to attract new capital, repurchase of shares and instruments similar to those described that are useful to the proposed objectives.
The Company keeps its commitment to preserve the health and well-being of its clients, employees, tenants and the entire population, constantly reassessing its decisions in accordance with the evolution of events, the regulations that are issued and the guidelines of the competent authorities.
Saúl Zang
First Vice-Chairman in exercise of the presidency
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