IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Financial Statements for the six-month period ended December 31, 2020, presented comparatively
1
Legal Information
Denomination: IRSA PROPIEDADES COMERCIALES S.A.
Fiscal year N°: 131, beginning July 1, 2020.
Legal address: Carlos Della Paolera, 8th floor, Autonomous City of Buenos Aires, Argentina. (In process)
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: 541,230,019 common shares (*).
Subscribed, issued and paid up (in millions of ARS): 54,123
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: 429,899,005 common shares.
Voting stock (direct and indirect equity interest): 79.92%.
CAPITAL STRUCTURE | |||
Type of shares | 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 100 each, 1 vote per share | 541,230,019 | 541,230,019 | 54,123 |
(*) It is clarified that as of the closing date of the financial statements said share capital increase was still in process by the control body, therefore the outstanding shares were 126,014,050.
2
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of December 31, 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 | 12.31.20 | 06.30.20 | |
ASSETS | |||
Non-current assets | |||
Investment properties | 8 | 131,161 | 140,813 |
Property, plant and equipment | 9 | 1,153 | 422 |
Trading properties | 10 | 213 | 218 |
Intangible assets | 11 | 1,191 | 1,220 |
Rights of use assets | 12 | 680 | 691 |
Investments in associates and joint ventures | 7 | 5,529 | 5,557 |
Deferred income tax assets | 19 | 214 | 265 |
Income tax and minimum presumed income tax credits | 11 | 9 | |
Trade and other receivables | 14 | 6,602 | 6,105 |
Investments in financial assets | 13 | 10 | - |
Total non-current assets | 146,764 | 155,300 | |
Current Assets | |||
Trading properties | 10 | 3 | 8 |
Inventories | 41 | 47 | |
Income tax and minimum presumed income tax credits | 131 | 118 | |
Trade and other receivables | 14 | 5,297 | 4,650 |
Derivative financial instruments | 13 | 6 | 8 |
Investments in financial assets | 13 | 6,079 | 7,513 |
Cash and cash equivalents | 13 | 1,064 | 5,545 |
Total current assets | 12,621 | 17,889 | |
TOTAL ASSETS | 159,385 | 173,189 | |
SHAREHOLDERS’ EQUITY | |||
Total capital and reserves attributable to equity holders of the parent (according to corresponding statement) | 80,118 | 85,674 | |
Non-controlling interest | 5,412 | 4,901 | |
TOTAL SHAREHOLDERS’ EQUITY | 85,530 | 90,575 | |
LIABILITIES | |||
Non-current liabilities | |||
Trade and other payables | 16 | 1,175 | 1,484 |
Borrowings | 17 | 31,339 | 31,855 |
Deferred income tax liabilities | 19 | 30,358 | 28,742 |
Provisions | 18 | 67 | 87 |
Derivative financial instruments | 13 | 22 | 42 |
Leases liabilities | 725 | 722 | |
Total non-current liabilities | 63,686 | 62,932 | |
Current liabilities | |||
Trade and other payables | 16 | 5,458 | 4,268 |
Income tax liabilities | 6 | 5 | |
Payroll and social security liabilities | 236 | 222 | |
Borrowings | 17 | 4,275 | 14,981 |
Derivative financial instruments | 13 | 61 | 98 |
Provisions | 18 | 74 | 52 |
Leases liabilities | 59 | 56 | |
Total current liabilities | 10,169 | 19,682 | |
TOTAL LIABILITIES | 73,855 | 82,614 | |
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 159,385 | 173,189 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
3
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income for the six and three-month periods ended December 31, 2020 and 2019
(All amounts in millions of Argentine Pesos, except profit per share and otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
Six months | Three months | ||||
Note | 12.31.20 | 12.31.19 | 12.31.20 | 12.31.19 | |
Income from sales, rentals and services | 20 | 3,094 | 6,814 | 2,098 | 3,715 |
Income from expenses and collective promotion fund | 20 | 1,128 | 2,100 | 676 | 1,082 |
Operating costs | 21 | (1,693) | (2,758) | (964) | (1,424) |
Gross profit | 2,529 | 6,156 | 1,810 | 3,373 | |
Net gain / (loss) from fair value adjustments of investment properties | 8 | 3,228 | 2,816 | (14,880) | (6,739) |
General and administrative expenses | 21 | (935) | (881) | (418) | (475) |
Selling expenses | 21 | (667) | (488) | (218) | (304) |
Other operating results, net | 22 | (76) | 30 | (54) | 62 |
Profit/ (loss) from operations | 4,079 | 7,633 | (13,760) | (4,083) | |
Share of (loss)/ profit of associates and joint ventures | 7 | (61) | 375 | (721) | (174) |
Profit/ (loss) from operations before financing and taxation | 4,018 | 8,008 | (14,481) | (4,257) | |
Finance income | 23 | 680 | 265 | 210 | 184 |
Finance cost | 23 | (2,172) | (2,197) | (916) | (1,125) |
Other financial results | 23 | 3,152 | (4,652) | 1,699 | 2,466 |
Inflation adjustment | 23 | 1,247 | (143) | 912 | (154) |
Financial results, net | 2,907 | (6,727) | 1,905 | 1,371 | |
Profit/ (loss) before income tax | 6,925 | 1,281 | (12,576) | (2,886) | |
Income tax expense | 19 | (1,640) | (1,622) | 3,058 | (893) |
Profit/ (loss) for the period | 5,285 | (341) | (9,518) | (3,779) | |
Other comprehensive income for the period: | |||||
Items that may be reclassified subsequently to profit or loss: | |||||
Currency translation adjustment in associates | 7' | 26 | - | 39 | - |
Revaluation surplus | 104 | - | 104 | - | |
Other comprehensive income for the period (i) | 130 | - | 143 | - | |
Total comprehensive income/ (loss) for the period | 5,415 | (341) | (9,375) | (3,779) | |
Total comprehensive income/ (loss) attributable to: | |||||
Equity holders of the parent | 4,761 | (519) | (8,987) | (3,566) | |
Non-controlling interest | 524 | 178 | (531) | (213) | |
Attributable to: | |||||
Equity holders of the parent | 130 | - | 143 | - | |
Profit/ (loss) per share attributable to equity holders of the parent for the period: | |||||
Basic | 0.09 | (4.12) | (0.17) | (28.30) | |
Diluted | 0.09 | (4.12) | (0.17) | (28.30) |
(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 six-month period ended December 31, 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 | 4,089 | 11,577 | 160 | 11,064 | 38,176 | 20,482 | 85,674 | 4,901 | 90,575 |
Profit for the period | - | - | - | - | - | - | 4,761 | 4,761 | 524 | 5,285 |
Other comprehensive income for the period | - | - | - | - | - | 130 | - | 130 | - | 130 |
Capitalization of reserves - Shareholders’ meeting as of October 26, 2020 (2) | 53,997 | 6,654 | (11,577) | - | (11,064) | (38,010) | - | - | - | - |
Dividend distribution - Shareholders’ meeting as of October 26, 2020 (2) | - | - | - | - | - | - | (10,407) | (10,407) | - | (10,407) |
Assignment of results - Shareholders’ meeting as of October 26, 2020 (2) | - | - | - | 1,024 | - | 7,832 | (8,856) | - | - | - |
Changes in non-controlling interest | - | - | - | - | - | (40) | - | (40) | (13) | (53) |
Balance as of December 31, 2020 | 54,123 | 10,743 | - | 1,184 | - | 8,088 | 5,980 | 80,118 | 5,412 | 85,530 |
Reserve for future dividends | Special reserve | Other reserves | Currency translation adjustment | Revaluation surplus (1) | Changes in non-controlling interest | Total other reserves | |
Balance as of June 30, 2020 | 37,911 | 180 | - | (26) | 328 | (217) | 38,176 |
Other comprehensive income for the period | - | - | - | 26 | 104 | - | 130 |
Capitalization of reserves - Shareholders’ meeting as of October 26, 2020 (2) | (37,911) | (180) | 81 | - | - | - | (38,010) |
Assignment of results - Shareholders’ meeting as of October 26, 2020 (2) | - | 7,832 | - | - | - | - | 7,832 |
Changes in non-controlling interest | - | - | - | - | - | (40) | (40) |
Balance as of December 31, 2020 | - | 7,832 | 81 | - | 432 | (257) | 8,088 |
(1) See Note 17 to the Annual Financial Statements as of June 30, 2020.
(2) See Note 27 to these Consolidated Financial Statements.
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
5
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity
for the six-month period ended December 31, 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 | 4,089 | 11,577 | 160 | 11,064 | 89,117 | (50,299) | 65,834 | 3,731 | 69,565 |
Loss for the period | - | - | - | - | - | - | (519) | (519) | 178 | (341) |
Dividend distribution - Shareholders’ meeting as of October 30, 2019 | - | - | - | - | - | - | (876) | (876) | (175) | (1,051) |
Assignment of results - Shareholders’ meeting as of October 30, 2019 | - | - | - | - | - | (51,173) | 51,173 | - | - | - |
Changes in non-controlling interest | - | - | - | - | - | (71) | - | (71) | 71 | - |
Balance as of December 31, 2019 | 126 | 4,089 | 11,577 | 160 | 11,064 | 37,873 | (521) | 64,368 | 3,805 | 68,173 |
Reserve for future dividends | Special reserve | Changes in non-controlling interest | Total other reserves | |
Balance as of June 30, 2019 | 38,787 | 50,477 | (147) | 89,117 |
Assignment of results - Shareholders’ meeting as of October 30, 2019 | (876) | (50,297) | - | (51,173) |
Changes in non-controlling interest | - | - | (71) | (71) |
Balance as of December 31, 2019 | 37,911 | 180 | (218) | 37,873 |
(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.
6
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the six-month periods ended December 31, 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 | 12.31.20 | 12.31.19 | |
Operating activities: | |||
Cash (used in)/ generated from operations | 15 | (5,283) | 4,539 |
Income tax paid | (8) | (90) | |
Net cash (used in)/ generated from operating activities | (5,291) | 4,449 | |
Investing activities: | |||
Capital contributions in associates and joint ventures | (17) | (36) | |
Changes in non-controlling interest in subsidiaries | (53) | - | |
Acquisition of investment properties | (1,879) | (871) | |
Acquisition of property, plant and equipment | (21) | (50) | |
Advance payments | (47) | (811) | |
Acquisition of intangible assets | (7) | (12) | |
Acquisitions of investments in financial assets | (10,890) | (9,118) | |
Proceeds from investments in financial assets | 15,887 | 10,805 | |
Loans granted | - | (1,172) | |
Loans granted to related parties | (2,459) | (3,039) | |
Loans payment received from related parties | 265 | 798 | |
Proceeds from sales of investment properties | 14,144 | 5 | |
Collection of financial assets interests and dividends | 348 | 353 | |
Dividends received | - | 132 | |
Net cash generated from/ (used in) investing activities | 15,271 | (3,016) | |
Financing activities: | |||
Repurchase of non-convertible notes | (73) | (300) | |
Sales of non-convertible notes in portfolio | 561 | - | |
Borrowings obtained | 37 | - | |
Payment of borrowings | (376) | - | |
Payment of non-convertible notes | (11,301) | - | |
Payment of leases liabilities | (19) | (31) | |
Payment of derivative financial instruments | (359) | (453) | |
Proceeds from derivative financial instruments | 50 | 476 | |
Payment of interest | (1,877) | (1,957) | |
Dividends paid | (2,064) | (876) | |
Dividends paid to non-controlling shareholders | - | (112) | |
Short-term loans, net | 951 | 144 | |
Net cash used in by financing activities | (14,470) | (3,109) | |
Net decrease in cash and cash equivalents | (4,490) | (1,676) | |
Cash and cash equivalents at beginning of the period | 13 | 5,545 | 7,193 |
Foreign exchange gain on cash and fair value result for cash equivalents | 28 | 161 | |
Inflation adjustment | (19) | (39) | |
Cash and cash equivalents at end of the period | 13 | 1,064 | 5,639 |
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 333,460 square meters (sqm) in 14 shopping malls, 114,475 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.
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 February 8, 2021.
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 six-month periods ended December 31, 2020 and 2019 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the Group's results for the entire fiscal years.
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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 six months period ended December 31, 2020, according to official statistics by Argentine Institute of Statistics and Census (INDEC) and following the guidelines described in Resolution 539/18:
Price variation: | 12.31.20 (six months) |
20% |
As a consequence of the aforementioned, these Financial Statements as of December 31, 2020 were restated in accordance with IAS 29.
2.2.
Significant accounting policies
The accounting policies 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 December 31, 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 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 1,247 square meters and 5 parking lots located in the building.
The price of the transaction was ARS 531 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 2,852 million (USD 34.7 million).
On November 5, 2020, IRSA Propiedades Comerciales has signed 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).
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 7,014 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 59 million (USD 0.5 million).
Acquisition of Hudson Property
On December 11, 2020, the purchase bill of the property called Casonas located in Hudson, Berazategui Party, was signed paying the remaining balance of 90% for USD 1 million. The initial 10% had been paid during the year ended June 30, 2018.
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.
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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 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 December 31, 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.
12.31.20 | ||||||||
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 Comprehensive Income/Statement of Financial Position | |
Revenues | 1,943 | 1,099 | 61 | 8 | 3,111 | 1,128 | (17) | 4,222 |
Operating costs | (292) | (89) | (26) | (78) | (485) | (1,235) | 27 | (1,693) |
Gross profit / (loss) | 1,651 | 1,010 | 35 | (70) | 2,626 | (107) | 10 | 2,529 |
Net (loss) / gain from fair value adjustments in investment properties | (4,762) | 7,629 | 837 | 33 | 3,737 | - | (509) | 3,228 |
General and administrative expenses | (674) | (172) | (68) | (24) | (938) | - | 3 | (935) |
Selling expenses | (116) | (71) | (487) | (2) | (676) | - | 9 | (667) |
Other operating results, net | (65) | (8) | (5) | - | (78) | 2 | - | (76) |
(Loss)/ profit from operations | (3,966) | 8,388 | 312 | (63) | 4,671 | (105) | (487) | 4,079 |
Share of (loss)/ profit of associates and joint ventures | - | - | - | (415) | (415) | - | 354 | (61) |
(Loss)/ profit before financing and taxation | (3,966) | 8,388 | 312 | (478) | 4,256 | (105) | (133) | 4,018 |
Investment properties | 54,518 | 66,825 | 14,407 | 123 | 135,873 | - | (4,712) | 131,161 |
Property, plant and equipment | 243 | 912 | - | - | 1,155 | - | (2) | 1,153 |
Trading properties | - | - | 216 | - | 216 | - | - | 216 |
Goodwill | 13 | 37 | - | - | 50 | - | (50) | - |
Right to receive units (barters) | - | - | 928 | - | 928 | - | - | 928 |
Inventories | 42 | - | - | - | 42 | - | (1) | 41 |
Investments in associates and joint ventures | - | - | - | 2,324 | 2,324 | - | 3,205 | 5,529 |
Operating assets | 54,816 | 67,774 | 15,551 | 2,447 | 140,588 | - | (1,560) | 139,028 |
12.31.19 | ||||||||
Shopping Mall | 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 Comprehensive Income/Statement of Financial Position | |
Revenues | 4,961 | 1,465 | 370 | 69 | 6,865 | 2,100 | (51) | 8,914 |
Operating costs | (394) | (71) | (74) | (53) | (592) | (2,191) | 25 | (2,758) |
Gross profit / (loss) | 4,567 | 1,394 | 296 | 16 | 6,273 | (91) | (26) | 6,156 |
Net (loss) / gain from fair value adjustments in investment properties | (2,554) | 4,372 | 1,266 | 76 | 3,160 | - | (344) | 2,816 |
General and administrative expenses | (594) | (153) | (59) | (76) | (882) | - | 1 | (881) |
Selling expenses | (346) | (52) | (55) | (7) | (460) | (34) | 6 | (488) |
Other operating results, net | (89) | (31) | (5) | 113 | (12) | 23 | 19 | 30 |
Profit/ (loss) from operations | 984 | 5,530 | 1,443 | 122 | 8,079 | (102) | (344) | 7,633 |
Share of profit of associates and joint ventures | - | - | - | 125 | 125 | - | 250 | 375 |
Profit/ (loss) before financing and taxation | 984 | 5,530 | 1,443 | 247 | 8,204 | (102) | (94) | 8,008 |
Investment properties | 58,359 | 40,997 | 8,554 | 331 | 108,241 | - | (3,674) | 104,567 |
Property, plant and equipment | 284 | 276 | - | - | 560 | - | (24) | 536 |
Trading properties | - | - | 210 | - | 210 | - | - | 210 |
Goodwill | 13 | 37 | - | 108 | 158 | - | (50) | 108 |
Right to receive units (barters) | - | - | 913 | - | 913 | - | - | 913 |
Inventories | 47 | - | - | - | 47 | - | (1) | 46 |
Investments in associates and joint ventures | - | - | - | 2,870 | 2,870 | - | 2,865 | 5,735 |
Operating assets | 58,703 | 41,310 | 9,677 | 3,309 | 112,999 | - | (884) | 112,115 |
12
IRSA Propiedades Comerciales S.A.
7.
Investments in associates and joint ventures
Name of the entity | % of ownership interest held by non-controlling interests | Value of Group’s interest in equity | Group’s interest in comprehensive income | |||
12.31.20 | 06.30.20 | 12.31.20 | 06.30.20 | 12.31.20 | 12.31.19 | |
Joint Ventures | ||||||
Quality Invest S.A. | 50.00% | 50.00% | 2,919 | 2,518 | 383 | 251 |
Nuevo Puerto Santa Fe S.A. | 50.00% | 50.00% | 286 | 315 | (29) | (1) |
La Rural S.A. | 50.00% | 50.00% | 277 | 243 | 32 | 129 |
Associates | ||||||
TGLT S.A.(4)(6) | 30.20% | - | 2,047 | 2,468 | (421) | - |
Others associates (3) | - | - | - | 13 | - | (4) |
Total interests in associates and joint ventures | 5,529 | 5,557 | (35) | 375 |
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 | 203,158,129 | 406 | 766 | 5,764 |
Nuevo Puerto Santa Fe S.A. (1)(2) | Argentina | Real estate | 138,750 | 28 | (57) | 547 |
La Rural S.A. (2) | Argentina | Event organization and others | 714,498 | 1 | 75 | 466 |
Associates | ||||||
TGLT S.A. (4)(5)(7) | Argentina | Real estate | 279,502,813 | 925 | (1,479) | 5,803 |
(1) Nominal value per share ARS 100.
(2) Correspond to profit for the six-month period ended at December 31, 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 year ended at December 31, 2020.
(6) Includes ARS 26 in other comprehensive income. For the purpose of the valuation of the investment in the Company, it has been considered the financial information prepared by TGLT S.A..
Changes in the Group’s investments in associates and joint ventures for the period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
12.31.20 | 06.30.20 | |
Beginning of the period/ year | 5,557 | 2,752 |
Profit sharing, net | (61) | 213 |
Dividends | - | (46) |
Other comprehensive income/ (loss) | 26 | (26) |
Reclassification to financial instruments (ii) | (12) | - |
Acquisition of interest in associates (i) | - | 2,607 |
Irrevocable contributions (Note 24) | 19 | 57 |
End of the period/ year | 5,529 | 5,557 |
(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%.
13
IRSA Propiedades Comerciales S.A.
8.
Investment properties
Changes in the Group’s investment properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Shopping Malls | Office and Other rental properties | Undeveloped parcels of land | Properties under development | Others | 12.31.20 | 06.30.20 | |
Fair value at beginning of the period / year | 56,294 | 69,827 | 12,307 | 2,295 | 90 | 140,813 | 103,335 |
Additions (iv) | 125 | 1,622 | 53 | 73 | - | 1,873 | 10,779 |
Capitalized lease costs | 5 | 5 | - | - | - | 10 | 24 |
Depreciation of capitalized lease costs (i) | (3) | (3) | - | - | - | (6) | (18) |
Transfers (vi) | - | (613) | - | - | - | (613) | 691 |
Disposals (iii) | - | (14,144) | - | - | - | (14,144) | (2,082) |
Net (loss) / gain from fair value adjustment on investment properties (ii) | (4,886) | 5,885 | 2,047 | 149 | 33 | 3,228 | 30,114 |
Decrease due to loss of control (v) | - | - | - | - | - | - | (2,030) |
Fair value at end of the period / year | 51,535 | 62,579 | 14,407 | 2,517 | 123 | 131,161 | 140,813 |
(i)
As of December 31, 2020 the depreciation charge was included in “Costs” in the amount of ARS 6 in the Statement of Income and Other Comprehensive Income (Note 21).
(ii)
For the six-month period ended December 31, 2020, the net gain from fair value adjustment on investment properties was ARS 3,228 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 235.0 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 8,350.9 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)
An increase of 103 basis points in the discount rate, mainly caused by a rise in the country risk component of the WACC discount rate used to discount the cash flow, which generated a decrease in the value of shopping malls of ARS 4,743.8 million.
d)
In addition, for the impact of the inflation adjustment the Group reclassified by shopping malls ARS 9,323.0 million to Inflation adjustment.
e)
The value of our office buildings and other rental properties measured in real terms increased by 14.9% during the six-month period as of December 31, 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.
(vi) As of December 31, 2020 includes the transfer of the 24 th floor of Intercontinental Building from property, plant and equipment and the transfer of the 8 th floor of the building "200 Della Paolera" to property, plant and equipment. As of June 30, 2020 includes the transfer of 22nd and 23rd floor of the Intercontinental Building.
The following amounts have been recognized in the Statements of Income and Other Comprehensive Income:
12.31.20 | 12.31.19 | |
Revenues from rental and services (Note 20) | 3,035 | 6,447 |
Expenses and collective promotion fund (Note 20) | 1,128 | 2,100 |
Rental and services costs (Note 21) | (1,663) | (2,687) |
Net unrealized gain from fair value adjustment on investment properties | 4,437 | 2,756 |
Net realized gain from fair value adjustment on investment properties (i)(ii) | 7,915 | 672 |
(i) As of December 31, 2020 includes ARS 3,950 for the sale of Torre Boston and ARS 3,965 for the sale of Bouchard 710. As of December 31, 2019 includes ARS 436 corresponding to the barter transaction of the Caballito Ferro land and ARS 236 for the deconsolidation of the La Maltería S.A land.
(ii) As of December 31, 2020, (ARS 1,209) corresponds to the realized result from fair value adjustment for the period ((ARS 835) for the sale of Torre Boston and (ARS 374) for the sale of Bouchard 710) and ARS 9,124 for realized result from fair value adjustment made in previous years (ARS 4,786 for the sale of Torre Boston and ARS 4,338 for the sale of Bouchard 710). As of December 31, 2019 ARS 60 corresponds to net realized fair value adjustment on investment properties for the period (which includes the barter transaction of the Caballito Ferro land) and ARS 612 corresponds to the realized fair value adjustment made in previous years (ARS 376 corresponding to the barter transaction of the Caballito Ferro land and ARS 236 for the deconsolidation of the La Maltería SA land).
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.
14
IRSA Propiedades Comerciales S.A.
9.
Property, plant and equipment
Changes in the Group’s property, plant and equipment for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Other buildings and facilities | Furniture and fixtures | Machinery and equipment | Vehicles | Others | 12.31.20 | 06.30.20 | |
Costs | 468 | 347 | 1,778 | 23 | 1 | 2,617 | 2,654 |
Accumulated depreciation | (314) | (236) | (1,622) | (23) | - | (2,195) | (2,086) |
Net book amount at beginning of the period / year | 154 | 111 | 156 | - | 1 | 422 | 568 |
Additions | 8 | 4 | 9 | - | - | 21 | 191 |
Disposals | - | - | (1) | - | - | (1) | (8) |
Transfers | 750 | - | - | - | - | 750 | (219) |
Depreciation charges (i) | (1) | (9) | (29) | - | - | (39) | (109) |
Net loss from fair value adjustment | - | - | - | - | - | - | (1) |
Net book amount at end of the period / year | 911 | 106 | 135 | - | 1 | 1,153 | 422 |
Costs | 1,226 | 351 | 1,786 | 23 | 1 | 3,387 | 2,617 |
Accumulated depreciation | (315) | (245) | (1,651) | (23) | - | (2,234) | (2,195) |
Net book amount at end of the period / year | 911 | 106 | 135 | - | 1 | 1,153 | 422 |
(i) On December 31, 2020 depreciation charges were included in “Costs” in the amount of ARS 37, and in “General and administrative expenses” in the amount of ARS 2 in the Statement of Income and Other Comprehensive Income (Note 21).
10.
Trading properties
Changes in in the Group’s trading properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Completed properties | Undeveloped sites | 12.31.20 | 06.30.20 | |
Net book amount at beginning of the period / year | 19 | 207 | 226 | 215 |
Additions | - | - | - | 18 |
Disposals (i) | (10) | - | (10) | (23) |
Transfers | - | - | - | 16 |
Net book amount at end of the period / year | 9 | 207 | 216 | 226 |
Non - current | 213 | 218 | ||
Current | 3 | 8 | ||
Total | 216 | 226 |
(i)
As of December 31, 2020 it corresponds to the sale of two apartments of the Astor Berutti building and as of June 30, 2020 it corresponds to the 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).
11.
Intangible assets
Changes in the Group’s intangible assets for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Goodwill | Software | Right to receive units (Barters) (ii) | Others | 12.31.20 | 06.30.20 | |
Costs | 107 | 523 | 1,162 | 76 | 1,868 | 1,169 |
Accumulated amortization | - | (341) | (231) | (76) | (648) | (473) |
Net book amount at beginning of the period / year | 107 | 182 | 931 | - | 1,220 | 696 |
Additions | - | 7 | - | - | 7 | 782 |
Disposals | - | - | - | - | - | (6) |
Transfers | - | - | - | - | - | (77) |
Amortization charge (i) | - | (33) | (3) | - | (36) | (175) |
Net book amount at end of the period / year | 107 | 156 | 928 | - | 1,191 | 1,220 |
Costs | 107 | 530 | 1,162 | 76 | 1,875 | 1,868 |
Accumulated amortization | - | (374) | (234) | (76) | (684) | (648) |
Net book amount at end of the period / year | 107 | 156 | 928 | - | 1,191 | 1,220 |
(i) On December 31, 2020 amortization charges were included in “Costs” in the amount of ARS 8, and in “General and administrative expenses” in the amount of ARS 28 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.
15
IRSA Propiedades Comerciales S.A.
12.
Rights of use assets
Changes in the Group´s Rights of use assets for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
12.31.20 | 06.30.20 | |
Convention center | 169 | 175 |
Stadium DirecTV Arena | 479 | 492 |
Machinery and equipment | 23 | 15 |
Shopping malls | 9 | 9 |
Total rights of use assets | 680 | 691 |
Non-current | 680 | 691 |
Total | 680 | 691 |
12.31.20 | 12.31.19 | |
Convention center | (8) | (6) |
Stadium DirecTV Arena | (11) | (10) |
Machinery and equipment | (17) | - |
Total amortizations and depreciation (i) | (36) | (16) |
(i)
On December 31, 2020 amortization charges were included in “Costs” in the amount of ARS 24, in “General and administrative expenses” in the amount of ARS 1 and in “Selling expenses” in the amount of ARS 11 in the Statement of Income and Other Comprehensive Income (Note 21).
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 December 31, 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 | ||
December 31, 2020 | Level 1 | Level 2 | ||||
Assets as per Statement of Financial Position | ||||||
Trade and other receivables (excluding allowance for doubtful accounts) (Note 14) | 10,371 | - | - | 10,371 | 2,173 | 12,544 |
Investments in financial assets: | ||||||
- Public companies’ securities | - | 279 | - | 279 | - | 279 |
- Mutual funds | 10 | 1 | - | 11 | - | 11 |
- Bonds | - | 5,799 | - | 5,799 | - | 5,799 |
Derivative financial instruments | ||||||
- Foreign-currency future contracts | - | - | 6 | 6 | - | 6 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 625 | - | - | 625 | - | 625 |
- Short- term investments | - | 439 | - | 439 | - | 439 |
Total | 11,006 | 6,518 | 6 | 17,530 | 2,173 | 19,703 |
Financial liabilities at amortized cost (i) | Financial liabilities at fair value through profit or loss | Subtotal financial liabilities | Non-financial liabilities | Total | ||
Level 1 | Level 2 | |||||
Liabilities as per Statement of Financial Position | ||||||
Trade and other payables (Note 16) | 1,951 | - | - | 1,951 | 4,682 | 6,633 |
Derivative financial instruments | ||||||
- Foreign-currency future contracts | - | 2 | 1 | 3 | - | 3 |
- Swaps of interest rate (ii) | - | - | 80 | 80 | - | 80 |
Borrowings (Note 17) | 35,614 | - | - | 35,614 | - | 35,614 |
Total | 37,565 | 2 | 81 | 37,648 | 4,682 | 42,330 |
16
IRSA Propiedades Comerciales S.A.
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) | 9,647 | - | - | 9,647 | 1,849 | 11,496 |
Investments in financial assets: | ||||||
- Public companies’ securities | - | 253 | - | 253 | - | 253 |
- Mutual funds | - | 74 | 970 | 1,044 | - | 1,044 |
- Bonds | - | 6,216 | - | 6,216 | - | 6,216 |
Derivative financial instruments | ||||||
- Foreign-currency future contracts | - | - | 8 | 8 | - | 8 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 3,335 | - | - | 3,335 | - | 3,335 |
- Short- term investments | 77 | 2,133 | - | 2,210 | - | 2,210 |
Total | 13,059 | 8,676 | 978 | 22,713 | 1,849 | 24,562 |
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) | 1,441 | - | 1,441 | 4,311 | 5,752 |
Derivative financial instruments | |||||
- Foreign-currency future contracts | - | 26 | 26 | - | 26 |
- Swaps of interest rate (ii) | - | 114 | 114 | - | 114 |
Borrowings (excluding finance leases liabilities) (Note 17) | 46,836 | - | 46,836 | - | 46,836 |
Total | 48,277 | 140 | 48,417 | 4,311 | 52,728 |
(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-currency contracts | Present value method - Theoretical price | 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 December 31, 2020, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group, except for what is indicated in Note 27.
17
IRSA Propiedades Comerciales S.A.
14.
Trade and other receivables
The following table shows the amounts of Group's trade and other receivables as of December 31, 2020 and June 30, 2020:
12.31.20 | 06.30.20 | |
Lease and services receivables | 1,748 | 1,397 |
Post-dated checks | 441 | 361 |
Averaging of scheduled rent escalation | 933 | 788 |
Debtors under legal proceedings | 416 | 482 |
Property sales receivables | 15 | 19 |
Consumer financing receivables | 16 | 20 |
Less: allowance for doubtful accounts | (645) | (741) |
Total trade receivables | 2,924 | 2,326 |
Loans | 1,280 | 1,266 |
Advance payments | 580 | 611 |
Others (*) | 243 | 266 |
Prepayments | 428 | 264 |
Other tax receivables | 232 | 186 |
Expenses to be recovered | 29 | 49 |
Guarantee deposit | 2 | 2 |
Total other receivables | 2,794 | 2,644 |
Related parties (Note 24) | 6,181 | 5,785 |
Total trade and other receivables | 11,899 | 10,755 |
Non-current | 6,602 | 6,105 |
Current | 5,297 | 4,650 |
Total | 11,899 | 10,755 |
(*) Includes ARS 209 and ARS 218 as of December 31, 2020 and June 30, 2020, respectively, consistent with the assumption of debt with the State Assets Administration Agency (AABE). (Note 17)
Movements on the Group’s allowance for doubtful accounts and other receivables are as follows:
12.31.20 | 06.30.20 | |
Beginning of the period/ year | 741 | 458 |
Additions (i) | 68 | 389 |
Unused amounts reversed (i) | (49) | (24) |
Used during the year | - | (3) |
Inflation adjustment | (115) | (79) |
End of the period / year | 645 | 741 |
(i)
As of December 31, 2020 additions and unused amount reversed were charged to “Selling expenses”, in the amount of ARS 19 in the Statement of Income and Other Comprehensive Income (Note 21).
15.
Cash flow and cash equivalent information
Following is a detailed description of cash flows generated by the Group’s operations for the six-month periods ended December 31, 2020 and 2019:
Note | 12.31.20 | 12.31.19 | |
Net profit / (loss) for the period | 5,285 | (341) | |
Adjustments: | |||
Income tax | 19 | 1,640 | 1,622 |
Amortization and depreciation | 21 | 117 | 185 |
Net gain from fair value adjustment on investment properties | 8 | (3,228) | (2,816) |
Gain from disposal of trading properties | - | (305) | |
Disposals by concession maturity | 1 | 2 | |
Averaging of schedule rent escalation | 20 | (284) | (218) |
Directors’ fees | 24 | 454 | 138 |
Financial results, net | (9,415) | 6,977 | |
Provisions and allowances | 53 | 177 | |
Share of profit of associates and joint ventures | 7 | 61 | (375) |
Changes in operating assets and liabilities | |||
Decrease in inventories | 6 | 3 | |
Decrease/ (increase) in trading properties | 10 | (18) | |
(Increase)/ decrease in trade and other receivables | (334) | 461 | |
Decrease / (increase) in trade and other payables | 369 | (763) | |
Decrease / (increase) in payroll and social security liabilities | 14 | (150) | |
Uses of provisions | 18 | (32) | (40) |
Net cash (used in)/ generated by operating activities before income tax paid | (5,283) | 4,539 |
18
IRSA Propiedades Comerciales S.A.
12.31.20 | 12.31.19 | |
Non-cash transactions | ||
Increase in investment properties through an increase trade and other payables | - | 55 |
Decrease in equity through an increase in trade and other payables | - | 1 |
Increase in rights of use assets through a decrease in property plant and equipment | - | 26 |
Increase in investment properties through an increase in borrowings | - | - |
Increase in property plant and equipment through a decrease in investment properties | - | - |
Decrease in equity through an increase in borrowings | - | 63 |
Increase in trade and other receivables through a decrease in investment in financial assets | 9,177 | 1 |
Increase in investment in financial assets through a decrease in investment in associates and joint ventures (dividends) | - | 26 |
Increase in investment in associates and joint ventures through a decrease in investment in financial assets | - | 985 |
Decrease in investment properties through an increase in intangible assets | - | 449 |
Decrease in trade and other payables through a decrease in trade and other receivables | 394 | - |
Increase in investment in financial assets through a decrease in trade and other receivables | 408 | - |
Currency translation adjustment in associates | 26 | - |
Increase in rights of use assets through an increase in leases liabilities | 24 | - |
Decrease in financial assets through a decrease in trade and other payables | 20 | - |
Reclassification to financial instruments | 12 | - |
Decrease in equity through a decrease in trade and other receivables (Dividends) | 8,343 | - |
Decrease in financial leases through a decrease in trade and other receivables | 6 | - |
Decrease in property plant and equipment through an increase in equity | 104 | - |
Decrease in property plant and equipment through an increase in tax payables | 33 | - |
Decrease in investment properties through an increase in property plant and equipment | 838 | - |
Decrease in property plant and equipment through an increase in investment properties | 225 | - |
Increase in irrevocable contributions through a decrease in trade and other receivables | 2 | - |
Increase in investment properties through a decrease in trade and other receivables | 4 | - |
Increase in investment in financial assets through an increase in borrowings | 704 | - |
Decrease in investment in financial assets through a decrease in borrowings | 240 | - |
16.
Trade and other payables
The following table shows the amounts of Group's trade and other payables as of December 31, 2020 and June 30, 2020:
12.31.20 | 06.30.20 | |
Rent and service payments received in advance | 1,178 | 1,494 |
Admission rights | 965 | 1,219 |
Accrued invoices | 374 | 314 |
Trade payables | 429 | 354 |
Tenant deposits | 79 | 120 |
Payments received in advance | 67 | 38 |
Total trade payables | 3,092 | 3,539 |
Tax payable | 295 | 140 |
Others | 192 | 188 |
Other payments received in advance to be accrued | 79 | 84 |
Tax payment plans | 7 | 9 |
Total other payables | 573 | 421 |
Related parties (Note 24) | 2,968 | 1,792 |
Total trade and other payables | 6,633 | 5,752 |
Non-current | 1,175 | 1,484 |
Current | 5,458 | 4,268 |
Total | 6,633 | 5,752 |
17.
Borrowings
The following table shows the Group's borrowings as of December 31, 2020 and June 30, 2020:
Book Value at 12.31.20 | Book Value at 06.30.20 | Fair Value at 12.31.20 | Fair Value at 06.30.20 | |
Non-Convertible notes | 30,682 | 41,905 | 28,098 | 31,281 |
Bank loans | 2,434 | 2,904 | 2,443 | 2,747 |
Bank overdrafts | 1,891 | 1,676 | 1,891 | 1,677 |
AABE Debts | 209 | 218 | 209 | 218 |
Loans with non-controlling interests | 179 | 133 | 135 | 133 |
Related parties (Note 24) | 219 | - | 248 | - |
Total borrowings | 35,614 | 46,836 | 33,024 | 36,056 |
Non-current | 31,339 | 31,855 | ||
Current | 4,275 | 14,981 | ||
Total | 35,614 | 46,836 |
19
IRSA Propiedades Comerciales S.A.
18.
Provisions
The following table shows the movements in the Group's provisions at December 31, 2020 and June 30, 2020 categorized by type of provision:
Labor, legal and other claims | 12.31.20 | 06.30.20 | |
Balances at the beginning of the period / year | 139 | 139 | 137 |
Inflation adjustment | (25) | (25) | (51) |
Increases (i) | 36 | 36 | 107 |
Recovery (i) | (2) | (2) | (45) |
Used during the year | (7) | (7) | (9) |
Balances at the end of the period /year | 141 | 141 | 139 |
Non-current | 67 | 87 | |
Current | 74 | 52 | |
Total | 141 | 139 |
(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:
12.31.20 | 12.31.19 | |
Current income tax | (8) | 7 |
Deferred income tax | (1,632) | (1,629) |
Income tax - Loss | (1,640) | (1,622) |
Changes in the deferred tax account are as follows:
12.31.20 | 06.30.20 | |
Beginning of the period/ year | (28,477) | (22,386) |
Income tax | (1,632) | (6,091) |
Appraisal surplus reserve | (35) | - |
Period / year end | (30,144) | (28,477) |
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:
12.31.20 | 12.31.19 | |
Profit for period before income tax at the prevailing tax rate | (2,078) | (384) |
Tax effects of: | ||
Rate change | 1,463 | 1,302 |
Share of profit of associates and joint ventures | (18) | 113 |
Result by rate transparency | 103 | 120 |
Result from sale of subsidiaries | - | (553) |
Expiration of carry-forwards | (3) | - |
Tax loss carry-forwards | (61) | (95) |
Non-taxable, non-deductible items | (8) | (31) |
Difference between provisions and affidavits | 276 | 59 |
Others | 88 | 16 |
Inflation adjustment | (253) | (549) |
Tax inflation adjustment | (1,149) | (1,620) |
Income tax - Loss | (1,640) | (1,622) |
20
IRSA Propiedades Comerciales S.A.
20.
Revenues
12.31.20 | 12.31.19 | |
Base rent | 1,691 | 3,666 |
Contingent rent | 463 | 1,433 |
Admission rights | 325 | 617 |
Averaging of scheduled rent escalation | 284 | 218 |
Others | 135 | 38 |
Commissions | 70 | 147 |
Property management fees | 59 | 68 |
Parking fees | 8 | 260 |
Total revenues from rentals and services | 3,035 | 6,447 |
Sale of trading properties | 59 | 367 |
Total revenues from sale of properties | 59 | 367 |
Total revenues from sales, rentals and services | 3,094 | 6,814 |
Expenses and collective promotion fund | 1,128 | 2,100 |
Total revenues from expenses and collective promotion funds | 1,128 | 2,100 |
Total revenues | 4,222 | 8,914 |
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 | 12.31.20 | 12.31.19 | |
Salaries, social security costs and other personnel administrative expenses (i) | 690 | 272 | 31 | 993 | 1.219 |
Directors' fees | - | 453 | - | 453 | 265 |
Taxes, rates and contributions | 145 | 14 | 416 | 575 | 563 |
Maintenance, security, cleaning, repairs and other | 509 | 51 | - | 560 | 1.021 |
Fees and payments for services | 32 | 68 | 193 | 293 | 162 |
Advertising and other selling expenses | 164 | - | 5 | 169 | 427 |
Amortization and depreciation (Notes 8, 9, 11 and 12) | 76 | 40 | 1 | 117 | 185 |
Leases and expenses | 50 | 20 | 1 | 71 | 85 |
Allowance for doubtful accounts (additions and unused amounts reversed) (Note 14) | - | - | 19 | 19 | 121 |
Other expenses | 10 | 3 | - | 13 | 9 |
Traveling, transportation and stationery | 7 | 3 | 1 | 11 | 29 |
Bank expenses | - | 11 | - | 11 | 18 |
Cost of sale of properties | 10 | - | - | 10 | 23 |
Total 12.31.20 | 1.693 | 935 | 667 | 3.295 | - |
Total 12.31.19 | 2.758 | 881 | 488 | - | 4.127 |
(i)
For the six-month period ended December 31, 2020, includes ARS 987 of Salaries, Bonuses and Social Security and ARS 6 of other concepts. For the six-month period ended December 31, 2019, includes ARS 1,195 of Salaries, Bonuses and Social Security and ARS 24 of other concepts.
(ii)
For the six-month period ended December 31, 2020, includes ARS 1,663 of Rental and services costs and ARS 30 of Cost of sales and developments. For the six-month period ended December 31, 2019, includes ARS 2,687 of Rental and services costs and ARS 71 of Cost of sales and developments.
22.
Other operating results, net
12.31.20 | 12.31.19 | |
Interest generated by operating credits | (20) | 43 |
Management fees | 3 | 5 |
Loss from disposals of property plant and equipment | - | (3) |
Loss from sale of subsidiaries, associates and joint ventures | - | (8) |
Others | 6 | 95 |
Donations | (31) | (45) |
Lawsuits (Note 18) | (34) | (57) |
Total other operating results, net | (76) | 30 |
21
IRSA Propiedades Comerciales S.A.
23.
Financial results, net
12.31.20 | 12.31.19 | |
- Interest income | 680 | 265 |
Finance income | 680 | 265 |
- Interest expense | (1,917) | (2,037) |
- Others financial costs | (255) | (160) |
Finance costs | (2,172) | (2,197) |
Foreign exchange, net | (114) | (4,434) |
- Fair value gain/ (loss) of financial assets at fair value through profit or loss | 3,572 | (281) |
- Loss from derivative financial instruments | (273) | (23) |
- (Loss)/ Gain from repurchase of non-convertible notes | (33) | 86 |
Other financial results | 3,152 | (4,652) |
- Inflation adjustment | 1,247 | (143) |
Total financial results, net | 2,907 | (6,727) |
24.
Related parties transactions
The following is a summary of the balances with related parties:
Item | 12.31.20 | 06.30.20 |
Trade and other receivables | 6,181 | 5,785 |
Investments in financial assets | 5,340 | 6,677 |
Trade and other payables | (2,968) | (1,792) |
Borrowings | (219) | - |
Leases liabilities | (10) | - |
Total | 8,324 | 10,670 |
Related parties | 12.31.20 | 06.30.20 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | (2,091) | (1,327) | Received advances |
3,434 | 3,811 | Non-convertible notes | |
5,491 | 3,131 | Loans granted | |
231 | 170 | Other receivables | |
93 | 68 | Corporate services | |
12 | 15 | Equity incentive plan | |
6 | 12 | Reimbursement of expenses | |
19 | 12 | Leases and/or rights to use space | |
(3) | (1) | Reimbursement of expenses to pay | |
(15) | (18) | Equity incentive plan to pay | |
9 | - | Lease collections | |
Total direct parent company | 7,186 | 5,873 | |
Cresud S.A.CI.F. y A. | 1,896 | 1,895 | Non-convertible notes |
(3) | (3) | Equity incentive plan to pay | |
- | 2 | Leases and/or rights to use space | |
(26) | - | Leases and/or rights to use space to pay | |
- | (1) | Reimbursement of expenses to pay | |
(350) | (218) | Corporate services to pay | |
Total direct parent company of IRSA | 1,517 | 1,675 | |
La Rural S.A. | 204 | 244 | Dividends |
- | 6 | Leases and/or rights to use space | |
(1) | - | Leases and/or rights to use space to pay | |
73 | - | Loans granted | |
- | 88 | Other receivables | |
TGLT S.A. | - | 11 | Other receivables |
Other associates and joint ventures | (10) | - | Leases liabilities |
4 | 2 | Reimbursement of expenses | |
8 | 11 | Management fee | |
(2) | (1) | Leases and/or rights to use space to pay | |
Total associates and joint ventures | 276 | 361 | |
Directors | (430) | (152) | Fees |
Total Directors | (430) | (152) | |
IRSA International LLC | - | 323 | Loans granted |
(26) | - | Other payables | |
Epsilon Opportunities LP | - | 971 | Mutual funds |
Tyrus S.A. | - | 1,668 | Loans granted |
Centro Comercial Panamericano S.A. | - | (43) | Other payables |
Helmir S.A. | (172) | - | Borrowings |
OFC S.R.L. | 1 | 1 | Other receivables |
(20) | (24) | Other payables | |
Others | 10 | 8 | Reimbursement of expenses |
8 | 8 | Leases and/or rights to use space | |
10 | - | Non-convertible notes | |
(1) | (1) | Other payables | |
12 | 5 | Other receivables | |
(47) | - | Borrowings | |
- | (2) | Reimbursement of expenses to pay | |
- | (1) | Legal services | |
Total others | (225) | 2,913 | |
Total at the end of the period/ year | 8,324 | 10,670 |
22
IRSA Propiedades Comerciales S.A.
The following is a summary of the results with related parties:
Related parties | 12.31.20 | 12.31.19 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | 21 | 46 | Corporate services |
578 | 71 | Financial operations | |
3 | - | Leases and/or rights to use space | |
Total direct parent company | 602 | 117 | |
Cresud S.A.CI.F. y A. | 200 | 63 | Financial operations |
5 | 7 | Leases and/or rights to use space | |
(223) | (257) | Corporate services | |
Total direct parent company of IRSA | (18) | (187) | |
Helmir S.A. | 1 | - | Financial operations |
TGLT S.A. | - | (159) | Financial operations |
Other associates and joint ventures | 3 | - | Fees |
- | 7 | Financial operations | |
- | 2 | Leases and/or rights to use space | |
Total associates and joint ventures | 4 | (150) | |
Directors | (454) | (265) | Fees |
Senior Management | (18) | (23) | Fees |
Total Directors | (472) | (288) | |
Banco de Crédito y Securitización | 32 | 35 | Leases and/or rights to use space |
BHN Vida S.A | 6 | - | Leases and/or rights to use space |
BHN Seguros Generales S.A. | 6 | - | Leases and/or rights to use space |
IRSA Internacional LLC | 35 | 60 | Financial operations |
Estudio Zang, Bergel & Viñes | (9) | (18) | Fees |
Others | (15) | 16 | Leases and/or rights to use space |
2 | - | Financial operations | |
Total others | 57 | 93 | |
Total at the end of the period | 173 | (415) |
The following is a summary of the transactions with related parties:
Related parties | 12.31.20 | 12.31.19 | Description of transaction |
Quality Invest S.A. | 19 | 11 | Irrevocable contributions granted |
Total irrevocable contributions | 19 | 11 | |
Nuevo Puerto Santa Fe | - | 34 | Dividends received |
Total dividends received | - | 34 | |
IRSA Inversiones y Representaciones S.A. | 8,079 | 711 | Dividends granted |
Cresud S.A. | 350 | 13 | Dividends granted |
E-commerce Latina S.A. | 141 | 11 | Dividends granted |
Tyrus S.A. | 51 | - | Dividends granted |
Total dividends granted | 8,621 | 735 | |
TGLT S.A. | - | 1,622 | Sale of shares |
Total sale of shares | - | 1,622 | |
TGLT S.A. | - | 2,607 | Shares purchase |
Total shares purchase | - | 2,607 |
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) | 12.31.20 | 06.30.20 |
Assets | ||||
Trade and other receivables | ||||
US Dollar | 20.51 | 83.95 | 1,722 | 1,857 |
Euros | 0.16 | 103.07 | 17 | 20 |
Trade and other receivables with related parties | ||||
US Dollar | 2.52 | 84.15 | 212 | 5,325 |
Total trade and other receivables | 1,951 | 7,202 | ||
Investments in financial assets | ||||
US Dollar | 7.77 | 83.95 | 652 | 677 |
Investment in financial assets with related parties | ||||
US Dollar | 63.35 | 84.15 | 5,331 | 6,550 |
Total investments in financial assets | 5,983 | 7,227 | ||
Cash and cash equivalents | ||||
Uruguayan Pesos | 134.17 | 1.99 | 267 | - |
US Dollar | 4.10 | 83.95 | 344 | 3,300 |
Total cash and cash equivalents | 611 | 3,300 | ||
Total Assets | 8,545 | 17,729 | ||
Liabilities | ||||
Trade and other payables | ||||
Uruguayan Pesos | 12.06 | 1.99 | 24 | - |
US Dollar | 5.82 | 84.15 | 490 | 503 |
Euros | 0.01 | 103.53 | 1 | - |
Trade and other payables with related parties | ||||
US Dollar | 0.08 | 84.15 | 7 | 1 |
Total trade and other payables | 522 | 504 | ||
Borrowings | ||||
US Dollar | 391.79 | 84.15 | 32,969 | 44,590 |
Borrowings with related parties | ||||
US Dollar | 2.57 | 84.15 | 216 | - |
Total borrowings | 33,185 | 44,590 | ||
Derivative financial instruments | ||||
US Dollar | 0.95 | 84.15 | 80 | 114 |
Total derivative financial instruments | 80 | 114 | ||
Leases liabilities | ||||
US Dollar | 7.77 | 84.15 | 654 | 635 |
Leases liabilities | ||||
US Dollar | 0.12 | 84.15 | 10 | - |
Total leases liabilities | 664 | 635 | ||
Total Liabilities | 34,451 | 45,843 |
(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 December 31, 2020 according to Banco Nación Argentina.
27.
Relevant events of the period
Payment of Non-convertible notes Class IV
On September 14, 2020, IRSA Propiedades Comerciales cancelled the Class IV Notes for a total of USD 140 million.
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.
●
The integration of the special reserve in the amount of ARS 6,535 million.
24
IRSA Propiedades Comerciales S.A.
The amounts are expressed in the closing currency as of June 30, 2020 as approved by the Ordinary and Extraordinary Shareholders' Meeting.
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 January 29, 2021, more than 1,900,000 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.
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.
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.
At a local level, the following was observed:
●
In November 2020, the indicator called Monthly Estimator of Economic Activity (EMAE) reported by the National Institute of Statistics and Censuses (INDEC), registered a variation of (3.7%) compared to the same month of 2019, and from 1.4% compared to the previous month.
●
The retail inflation for 2020 reached 36.1%. The study on market expectations prepared by the Argentine Central Bank in December 2020, called the Compilation of Market Expectations (REM), estimates an inflation of 49.8% for December 2021. REM analysts foresee that in 2021 the economic activity will increased in 5.5%.
●
Throughout the period from December 2019 to December 2020, the Argentine peso depreciated 40.5% 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, as of December 2020 there is an exchange gap of approximately 70% 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.
25
IRSA Propiedades Comerciales S.A.
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 malls located in Buenos Aires started operating. As of October 31, all the Group´s shopping malls were open operating with rigorous protocols that include reduced hours of 8 hours and public restrictions, social distancing, among other safety and hygiene measures. The entertainment protocol is even more rigorous with closed cinemas in most cases. Although the Group expects to fully resume the activity in our shopping malls, the uncertainty of the situation could cause setbacks in the openings already made.
●
Given the closure of the shopping malls, the Group has decided to condone the billing and collection of the 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 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 malls 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.
●
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.
It should be mentioned that IRSA Propiedades Comerciales has a cash position and equivalents (including current financial investments) as of December 31, 2020 of approximately USD 84.9 million. On the other hand, it does not have short-term debt maturities, except for bank debt for USD 24.6 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 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
After the end of the period and until the issuance of these Condensed Consolidated Interim Financial Statements, no other relevant events have occurred that could significantly affect these Financial Statements as of December 31, 2020.
26
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: Carlos Della Paolera 261– 8º floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52767733-1
Introduction
We have reviewed the accompanying unaudited condensed interim consolidated financial statements of IRSA Propiedades Comerciales S.A. and its subsidiaries (“the Company”), which comprise the unaudited condensed interim consolidated statement of financial position as of December 31, 2020, the unaudited condensed interim consolidated statements of income and other comprehensive income for the six and three-month periods ended December 31, 2020, and the unaudited condensed interim consolidated statements of changes in shareholders’ equity and of cash flows for the six-month period then ended, and selected explanatory notes.
The balances and other information for the fiscal year ended on June 30, 2020 and its interim periods are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.
Management’s responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and included by the National Securities Commission (CNV) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the unaudited condensed interim consolidated financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34).
Scope of our review
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim consolidated financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated statement of financial position and the consolidated statements of income and other comprehensive income and of cash flows of the Company.
27
Free translation from the original prepared in Spanish for publication in Argentina
Conclusion
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim consolidated financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34.
Report on compliance with current regulations
In accordance with current regulations, we report, in connection with IRSA Propiedades Comerciales S.A. that:
a) the unaudited condensed interim consolidated financial statements of IRSA Propiedades Comerciales S.A. are in the process of being transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
b) the unaudited condensed interim consolidated financial statements of IRSA Propiedades Comerciales S.A., arise from accounting records carried in all formal aspects in accordance with legal requirements except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the General Journal Book of the accounting entries corresponding to the month of December 2020.
c) we have read the Business Summary (“Reseña Informativa”), on which we have no observations to make regarding matters that are within our competence;
d) at December 31, 2020 the debt of IRSA Propiedades Comerciales S.A. accrued in favor of the Argentine Integrated Social Security System, as shown by the Company’s accounting records, amounted to ARS 25,709,085 which is not due at that date.
Autonomous City of Buenos Aires, February 8, 2021.
/s/ PRICE WATERHOUSE & CO. S.R.L. (Partner) | /s/ ABELOVICH, POLANO & ASOCIADOS S.R.L (Partner) | |||
Name: C.P.C.E.C.A.B.A. Tº 1 Fº 17 Dr. Walter Zablocky | Name C.P.C.E. C.A.B.A. T° 1 F° 30 José Daniel Abelovich | |||
Title Public Accountant (UNLP)C.P.C.E.C.A.B.A. Tº 340 Fº 156 | Title Contador Público (UBA) C.P.C.E. C.A.B.A. T° 102 F° 191 |
28
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Financial Statements for the six-month period ended December 31, 2020, presented comparatively
29
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Statements of Financial Position
as of December 31, 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 | 12.31.20 | 06.30.20 | |
ASSETS | |||
Non-current assets | |||
Investment properties | 7 | 92,507 | 105,317 |
Property, plant and equipment | 8 | 1,077 | 335 |
Trading properties | 9 | 118 | 123 |
Intangible assets | 10 | 965 | 985 |
Rights of use assets | 11 | 745 | 882 |
Investments in subsidiaries, associates and joint ventures | 6 | 36,195 | 33,782 |
Trade and other receivables | 13 | 6,014 | 5,605 |
Total non-current assets | 137,621 | 147,029 | |
Current Assets | |||
Trading properties | 9 | 3 | 8 |
Inventories | 33 | 39 | |
Income tax credits | 30 | 13 | |
Trade and other receivables | 13 | 4,134 | 3,672 |
Investments in financial assets | 12 | 5,245 | 5,494 |
Derivative financial instruments | 12 | 6 | 8 |
Cash and cash equivalents | 12 | 452 | 2,273 |
Total current assets | 9,903 | 11,507 | |
TOTAL ASSETS | 147,524 | 158,536 | |
SHAREHOLDERS’ EQUITY | |||
Capital and reserves attributable to equity holders of the parent (according to corresponding statement) | 80,194 | 85,710 | |
TOTAL SHAREHOLDERS’ EQUITY | 80,194 | 85,710 | |
LIABILITIES | |||
Non-current liabilities | |||
Trade and other payables | 15 | 895 | 1,163 |
Borrowings | 16 | 30,132 | 30,206 |
Deferred income tax liabilities | 18 | 23,835 | 23,105 |
Other liabilities | 6 | 60 | 95 |
Provisions | 17 | 57 | 70 |
Total non-current liabilities | 54,979 | 54,639 | |
Current liabilities | |||
Trade and other payables | 15 | 4,809 | 3,574 |
Payroll and social security liabilities | 204 | 186 | |
Borrowings | 16 | 7,263 | 14,353 |
Leases liabilities | 12 | 8 | |
Derivative financial instruments | 12 | 3 | 26 |
Provisions | 17 | 60 | 40 |
Total current liabilities | 12,351 | 18,187 | |
TOTAL LIABILITIES | 67,330 | 72,826 | |
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 147,524 | 158,536 |
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
30
IRSA Propiedades Comerciales S.A.
Unaudited Condensed Interim Separate Statements of Income and Other Comprehensive Income
for the six and three-month periods ended December 31, 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
Six months | Three months | ||||
Note | 12.31.20 | 12.31.19 | 12.31.20 | 12.31.19 | |
Income from sales, rentals and services | 19 | 2,236 | 5,407 | 1,568 | 3,038 |
Income from expenses and collective promotion fund | 19 | 930 | 1,843 | 559 | 955 |
Operating costs | 20 | (1,436) | (2,580) | (801) | (1,357) |
Gross profit | 1,730 | 4,670 | 1,326 | 2,636 | |
Net gain/ (loss) from fair value adjustments of investment properties | 7 | 99 | 1,357 | (10,800) | (4,708) |
General and administrative expenses | 20 | (880) | (777) | (396) | (421) |
Selling expenses | 20 | (619) | (437) | (185) | (282) |
Other operating results, net | 21 | (24) | (53) | (25) | (33) |
Profit/ (loss) from operations | 306 | 4,760 | (10,080) | (2,808) | |
Share of profit of associates and joint ventures | 6 | 2,350 | 1,826 | (2,870) | (1,175) |
Profit/ (loss) from operations before financing and taxation | 2,656 | 6,586 | (12,950) | (3,983) | |
Finance income | 22 | 659 | 228 | 190 | 182 |
Finance cost | 22 | (2,087) | (2,003) | (872) | (1,034) |
Other financial results | 22 | 2,915 | (4,502) | 1,536 | 2,385 |
Inflation adjustment | 22 | 1,315 | (300) | 965 | (243) |
Financial results, net | 2,802 | (6,577) | 1,819 | 1,290 | |
Profit/ (loss) before income tax | 5,458 | 9 | (11,131) | (2,693) | |
Income tax expense | 18 | (697) | (528) | 2,144 | (873) |
Profit/ (loss) for the period | 4,761 | (519) | (8,987) | (3,566) | |
Other comprehensive income for the period: (i) | |||||
Items that may be reclassified subsequently to profit or loss: | |||||
Currency translation adjustment of associates | 6 | 26 | - | 39 | - |
Revaluation surplus | 104 | - | 104 | - | |
Other comprehensive income for the period | 130 | - | 143 | - | |
Total comprehensive income/ (loss) for the period | 4,891 | (519) | (8,844) | (3,566) | |
Profit/ (loss) per share for the period | |||||
Basic | 0.09 | (4.12) | (109.02) | (28.31) | |
Diluted | 0.09 | (4.12) | (109.02) | (28.31) |
(i) Components of other comprehensive income have no impact on income tax.
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 Changes in Shareholders’ Equity
for the six-month period ended December 31, 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 | Total shareholder’s equity | |
Balance as of June 30, 2020 | 126 | 4,089 | 11,577 | 160 | 10,983 | 38,293 | 20,482 | 85,710 |
Profit for the period | - | - | - | - | - | - | 4,761 | 4,761 |
Other comprehensive income for the period | - | - | - | - | - | 130 | - | 130 |
Capitalization of reserves - Shareholders’ meeting as of October 26, 2020 (3) | 53,997 | 6,654 | (11,577) | - | (10,983) | (38,091) | - | - |
Dividend distribution - Shareholders’ meeting as of October 26, 2020 (3) | - | - | - | - | - | - | (10,407) | (10,407) |
Assignment of results - Shareholders’ meeting as of October 26, 2020 (3) | - | - | - | 1,024 | - | 7,832 | (8,856) | - |
Balance as of December 31, 2020 | 54,123 | 10,743 | - | 1,184 | - | 8,164 | 5,980 | 80,194 |
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 | 37,911 | 327 | 180 | (99) | (26) | 38,293 |
Other comprehensive income for the period | - | 104 | - | - | 26 | 130 |
Capitalization of reserves - Shareholders’ meeting as of October 26, 2020 (3) | (37,911) | - | (180) | - | - | (38,091) |
Assignment of results - Shareholders’ meeting as of October 26, 2020 (3) | - | - | 7,832 | - | - | 7,832 |
Balance as of December 31, 2020 | - | 431 | 7,832 | (99) | - | 8,164 |
(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.
(3)
See Note 27 to the Unaudited Condensed Interim Consolidated Financial Statements as of December 31, 2020.
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 six-month period ended December 31, 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, 2019 | 126 | 4,089 | 11,577 | 160 | 10,983 | 89,236 | (50,299) | 65,872 |
Loss for the period | - | - | - | - | - | - | (519) | (519) |
Dividend distribution - Shareholders’ meeting as of October 30, 2019 | - | - | - | - | - | - | (876) | (876) |
Assignment of results - Shareholders’ meeting as of October 30, 2019 | - | - | - | - | - | (51,173) | 51,173 | - |
Changes in non-controlling interest | - | - | - | - | - | (71) | - | (71) |
Balance as of December 31, 2019 | 126 | 4,089 | 11,577 | 160 | 10,983 | 37,992 | (521) | 64,406 |
Reserve for future dividends | Special reserve | Changes in non-controlling interest | Total shareholder’s equity | |
Balance as of June 30, 2019 | 38,787 | 50,477 | (28) | 89,236 |
Assignment of results - Shareholders’ meeting as of October 30, 2019 | (876) | (50,297) | - | (51,173) |
Changes in non-controlling interest | - | - | (71) | (71) |
Balance as of December 31, 2019 | 37,911 | 180 | (99) | 37,992 |
(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.
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 six-month periods ended December 31, 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 | 12.31.20 | 12.31.19 | |
Operating activities: | |||
Cash (used in) / generated from operations | 14 | (5,852) | 3,908 |
Income tax paid | - | (10) | |
Net cash (used in) / generated from operating activities | (5,852) | 3,898 | |
Investing activities: | |||
Acquisition of investment properties | (1,848) | (667) | |
Acquisition of property, plant and equipment | (21) | (29) | |
Acquisition of intangible assets | (8) | (12) | |
Acquisitions of financial assets | (6,577) | (7,704) | |
Decrease of financial assets | 11,133 | 9,122 | |
Loans payment received from related parties | 262 | 804 | |
Loans granted to related parties | (2,412) | (6,977) | |
Advance payments | (47) | (811) | |
Proceeds from sales of investment properties | 14,144 | 5 | |
Acquisition of rights of use assets | - | (22) | |
Proceeds from sales of property, plant and equipment | 1 | - | |
Irrevocable contributions in subsidiaries, associates and joint ventures | (17) | (36) | |
Collection of financial assets interests | 329 | 310 | |
Acquisition of interest in subsidiaries, associates and joint ventures | (53) | - | |
Dividends received of subsidiaries | - | 794 | |
Net cash generated from / (used in) investing activities | 14,886 | (5,223) | |
Financing activities: | |||
Payments of financial leasing | (9) | (11) | |
Payment of borrowings with related parties | (3) | - | |
Borrowings obtained with related parties | 3,823 | - | |
Payment of non-convertible notes | (11,876) | - | |
Sale of non-convertible notes in portfolio | 561 | - | |
Repurchase of non-convertible notes | (73) | (102) | |
Proceeds from derivative financial instruments | 50 | 476 | |
Payment of derivative financial instruments | (323) | (438) | |
Interests paid | (1,845) | (1,896) | |
Dividends paid | (2,064) | (875) | |
Short term loans, net | 900 | 151 | |
Net cash used in financing activities | (10,859) | (2,695) | |
Net decrease in cash and cash equivalents | (1,825) | (4,020) | |
Cash and cash equivalents at beginning of period | 12 | 2,273 | 4,510 |
Foreign exchange gain on cash and fair value result for cash equivalents | 6 | (25) | |
Inflation adjustment | (2) | (10) | |
Cash and cash equivalents at end of period | 12 | 452 | 455 |
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 333,460 square meters (sqm) in 14 shopping malls, 114,475 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.
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 February 8, 2021.
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 six month ended December 31, 2020 and 2019 have not been audited. Management considers that they include all the necessary adjustments to fairly present the results of each period. Intermediate period results do not necessarily reflect the proportion of the 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 December 31, 2020, according to official statistics by Argentine Institute of Statistics and Census (INDEC) and following the guidelines described in Resolution 539/18:
Price variation: | 12.31.20 (accumulated of six months) |
20% |
As a consequence of the aforementioned, these Financial Statements as of December 31, 2020 were restated in accordance with IAS 29.
��
2.2.
Significant accounting policies
The accounting policies 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 December 31, 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 relevant 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.
36
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 | 12.31.20 | 06.30.20 | 12.31.20 | 06.30.20 | 12.31.20 | 12.31.19 |
Subsidiaries | ||||||
Panamerican Mall S.A. | 80.00% | 80.00% | 20,889 | 18,625 | 2,264 | 872 |
Torodur S.A. | 100.00% | 100.00% | 6,499 | 6,317 | 182 | 439 |
Arcos del Gourmet S.A. | 90.00% | 90.00% | 1,834 | 1,887 | (53) | 31 |
Shopping Neuquén S.A. | 99.95% | 99.95% | 853 | 846 | 7 | (94) |
Centro de Entretenimientos La Plata S.A. (5)(4)(3) | 95.40% | 95.40% | 612 | 524 | 88 | 39 |
Pareto S.A. | 91.96% | 69.96% | 120 | 78 | (11) | (14) |
Entertainment Holdings S.A. | 70.00% | 70.00% | 74 | 138 | (64) | 17 |
Emprendimiento Recoleta S.A. (1) | 53.68% | 53.68% | 62 | 66 | (4) | (25) |
Entretenimiento Universal S.A. (2) | 3.75% | 3.75% | (1) | (1) | - | - |
Fibesa S.A. (2) | 97.00% | 97.00% | (59) | (94) | 34 | 79 |
La Malteria S.A. (6) | - | - | - | - | - | 231 |
Associates | ||||||
TGLT S.A. (6) (7) | 30.20% | 30.20% | 2,047 | 2,468 | (421) | - |
Joint ventures | ||||||
Quality Invest S.A. | 50.00% | 50.00% | 2,919 | 2,518 | 383 | 252 |
Nuevo Puerto Santa Fe S.A. (5) | 50.00% | 50.00% | 286 | 315 | (29) | (1) |
36,135 | 33,687 | 2,376 | 1,826 |
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 | 2,829 | 26,110 |
Torodur S.A. | Uruguay | Investment | 1,735,435,048 | 1,733 | 284 | 6,498 |
Arcos del Gourmet S.A. | Argentina | Real estate | 72,973,903 | 81 | (60) | 2,003 |
Shopping Neuquén S.A. | Argentina | Real estate | 53,511,353 | 54 | 7 | 854 |
Centro de Entretenimientos La Plata S.A. (5)(4)(3) | Argentina | Real estate | 36,824 | 4 | 8 | 105 |
Entertainment Holdings S.A. | Argentina | Investment | 32,503,379 | 46 | (74) | 239 |
Emprendimiento Recoleta S.A. (1) | Argentina | Real estate | 13,449,990 | 25 | (7) | 115 |
Entretenimiento Universal S.A. | Argentina | Event organization and others | 825 | - | (1) | (37) |
Fibesa S.A. | Argentina | Real estate | (i) | 2 | (1) | 105 |
Pareto S.A | Argentina | Developer | 107,130 | - | (12) | 47 |
Associates | ||||||
TGLT S.A. (6) | Argentina | Real estate | 279,502,813 | 925 | (1,479) | 5,803 |
Joint ventures | ||||||
Quality Invest S.A. | Argentina | Real estate | 203,158,129 | 406 | 766 | 5,764 |
Nuevo Puerto Santa Fe S.A. (5) | Argentina | Real estate | 138,750 | 28 | (57) | 547 |
(1) Concession ended on November 18, 2018. As of December 31, 2020, is in liquidation.
(2) Included in other payables.
(3) Corresponds to profit for the six-month periods ended December 31, 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 26 of other comprehensive income. For the purpose of the valuation of the investment in the Company, it has been considered the financial information prepared by TGLT S.A.
(i) Corresponds to 2,323,126 shares. 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 December 31, 2020 and for the year ended June 30, 2020 were as follows:
12.31.20 | 06.30.20 | |
Beginning of the period / year | 33,687 | 24,866 |
Irrevocable contributions (Note 23) | 19 | 1,438 |
Share of profit, net | 2,350 | 7,375 |
Sale of interest of subsidiaries (ii) | - | (1,671) |
Acquisition of interest in associates (iii) (Note 23) | 53 | 2,607 |
Changes in non-controlling interest (iv) | - | (71) |
Other comprehensive income/ (loss) | 26 | (26) |
Dividends distribution | - | (831) |
End of the period / year (i) | 36,135 | 33,687 |
(i)
It includes (ARS 60) and (ARS 95) as of December 31, 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 December 31, 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 six-month period ended December 31, 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 | 12.31.20 | 06.30.20 | |
Fair value at beginning of the period / year | 46,235 | 49,980 | 6,825 | 2,277 | 105,317 | 73,535 |
Additions (ii) | 105 | 1,611 | 53 | 74 | 1,843 | 10,457 |
Disposals (iii) | - | (14,144) | - | - | (14,144) | (2,007) |
Transfers (iv) | - | (613) | - | - | (613) | 691 |
Capitalized lease costs | 4 | 5 | - | - | 9 | 20 |
Depreciation of capitalized lease costs (i) | (2) | (2) | - | - | (4) | (13) |
Net (loss)/ gain from fair value adjustment on investment properties | (3,892) | 2,682 | 1,159 | 150 | 99 | 22,634 |
Fair value at end of the period / year | 42,450 | 39,519 | 8,037 | 2,501 | 92,507 | 105,317 |
(i)
On December 31, 2020 the depreciation charges were included in “Costs” in the amount of ARS 4, 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).
(iv)
As of December 31, 2020 includes the transfer of the 24 th floor of Intercontinental Building from property, plant and equipment and the transfer of the 8 th floor of the building "200 Della Paolera" to property, plant and equipment. As of June 30, 2020 includes the transfer of 22nd and 23rd floor of the Intercontinental Building.
The following amounts have been recognized in the Statements of Income and Other Comprehensive Income:
12.31.20 | 12.31.19 | |
Rentals and services income (Note 19) | 2,177 | 5,040 |
Expenses and collective promotion fund (Note 19) | 930 | 1,843 |
Rental and services costs (Note 20) | (1,401) | (2,510) |
Net unrealized gain from fair value adjustment on investment properties | 1,308 | 1,297 |
Net realized gain from fair value adjustment on investment properties (i) (ii) | 7,915 | 436 |
(i)
As of December 31, 2020 includes ARS 3,950 for the sale of Torre Boston and ARS 3,965 for the sale of Bouchard 710. As of December 31, 2019 includes ARS 436 corresponding to the barter transaction of the Caballito Ferro land.
(ii)
As of December 31, 2020, (ARS 1,209) corresponds to the realized result from fair value adjustment for the period ((ARS 835) for the sale of Torre Boston and (ARS 374) for the sale of Bouchard 710) and ARS 9,124 for the realized result from fair value adjustment in previous years (ARS 4,786 for the sale of Torre Boston and ARS 4,338 for the sale of Bouchard 710). As of December 31, 2019 ARS 60 corresponds to the net realized fair value adjustment on investment properties for the period and ARS 376 corresponding to the realized result from fair value adjustment in previous years for the barter transaction of the Caballito Ferro land.
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.
38
IRSA Propiedades Comerciales S.A.
8.
Property, plant and equipment
Changes in the Company’s property, plant and equipment for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Other buildings and facilities | Furniture and fixtures | Machinery and equipment | Vehicles | Others | 12.31.20 | 06.30.20 | |
Costs | 468 | 248 | 1,540 | 23 | 1 | 2,280 | 2,344 |
Accumulated depreciation | (314) | (190) | (1,418) | (23) | - | (1,945) | (1,861) |
Net book amount at beginning of the period / year | 154 | 58 | 122 | - | 1 | 335 | 483 |
Additions | 8 | 4 | 9 | - | - | 21 | 160 |
Disposals | - | - | (1) | - | - | (1) | (5) |
Transfers | 750 | - | - | - | - | 750 | (219) |
Depreciation charges (i) | (1) | (6) | (21) | - | - | (28) | (84) |
Net book amount at end of the period / year | 911 | 56 | 109 | - | 1 | 1,077 | 335 |
Costs | 1,226 | 252 | 1,548 | 23 | 1 | 3,050 | 2,280 |
Accumulated depreciation | (315) | (196) | (1,439) | (23) | - | (1,973) | (1,945) |
Net book amount at end of the period / year | 911 | 56 | 109 | - | 1 | 1,077 | 335 |
(i) On December 31, 2020 the depreciation charges were included in “Costs” in the amount of ARS 26 and in “General and administrative expenses” in the amount of ARS 2 in the Statement of Income and Other Comprehensive Income (Note 20).
9.
Trading properties
Changes in the Company’s, trading properties for the six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Completed properties | Undeveloped sites | 12.31.20 | 06.30.20 | |
Net book amount the beginning of the period / year | 19 | 112 | 131 | 119 |
Additions | - | - | - | 19 |
Transfers | - | - | - | 16 |
Disposals (i) | (10) | - | (10) | (23) |
Net book amount the end of the period / year | 9 | 112 | 121 | 131 |
Non-current | 118 | 123 | ||
Current | 3 | 8 | ||
Total | 121 | 131 |
(i)
As of December 31, 2020 corresponds to the sale of two apartments of Astor Berutti building. As of June 30, 2020 corresponds to the 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 six-month period ended December 31, 2020 and for the year ended June 30, 2020 were as follows:
Software | Right to receive units (ii) | Others | 12.31.20 | 06.30.20 | |
Costs | 475 | 835 | 76 | 1,386 | 687 |
Accumulated amortization | (325) | - | (76) | (401) | (241) |
Net book amount at beginning of the period / year | 150 | 835 | - | 985 | 446 |
Additions | 8 | - | - | 8 | 782 |
Disposals | - | - | - | - | (6) |
Transfers | - | - | - | - | (77) |
Amortization charges (i) | (28) | - | - | (28) | (160) |
Net book amount at end of the period / year | 130 | 835 | - | 965 | 985 |
Costs | 483 | 835 | 76 | 1,394 | 1,386 |
Accumulated amortization | (353) | - | (76) | (429) | (401) |
Net book amount at end of the period / year | 130 | 835 | - | 965 | 985 |
(i) On December 31, 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 27 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
12.31.20 | 06.30.20 | |
Shopping malls (Note 23) | 723 | 867 |
Machinery and equipment | 12 | 15 |
Others | 10 | - |
Total rights of use | 745 | 882 |
Non-current | 745 | 882 |
Total | 745 | 882 |
Results
12.31.20 | 12.31.19 | |
Shopping malls | 144 | 128 |
Machinery and equipment | 2 | 5 |
Others | 15 | - |
Total amortization and depreciation of rights of use (i) | 161 | 133 |
(i)
On December 31, 2020 the depreciation charges were included in “Costs” in the amount of ARS 149 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 December 31, 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 | ||
December 31, 2020 | Level 1 | Level 2 | ||||
Assets as per Statement of Financial Position | ||||||
Trade and other receivables (excluding allowance for doubtful accounts) (Note 13) | 9,083 | - | - | 9,083 | 1,589 | 10,672 |
Investments in financial assets: | ||||||
- Investment in equity public companies´ securities | - | 98 | - | 98 | - | 98 |
- Bonds | - | 5,146 | - | 5,146 | - | 5,146 |
- Mutual funds | - | 1 | - | 1 | - | 1 |
Derivative financial instruments | ||||||
- Foreign - currency future contracts | - | - | 6 | 6 | - | 6 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 107 | - | - | 107 | - | 107 |
- Short- term investments | - | 345 | - | 345 | - | 345 |
Total | 9,190 | 5,590 | 6 | 14,786 | 1,589 | 16,375 |
Financial liabilities at amortized cost (i) | Non-financial liabilities | Total | |
Liabilities as per statement of financial position | |||
Trade and other payables (Note 15) | 1,499 | 4,205 | 5,704 |
Derivative financial instruments | 3 | - | 3 |
Borrowings (Note 16) | 37,395 | - | 37,395 |
Total | 38,897 | 4,205 | 43,102 |
40
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) | 8,695 | - | - | 8,695 | 1,210 | 9,905 |
Investments in financial assets: | ||||||
- Investment in equity public companies´ securities | - | 83 | - | 83 | - | 83 |
- Bonds | - | 5,337 | - | 5,337 | - | 5,337 |
- Mutual funds | - | 74 | - | 74 | - | 74 |
Derivative financial instruments | ||||||
- Foreign - currency future contracts | - | - | 8 | 8 | - | 8 |
Cash and cash equivalents: | ||||||
- Cash at banks and on hand | 297 | - | - | 297 | - | 297 |
- Short- term investments | 77 | 1,899 | - | 1,976 | - | 1,976 |
Total | 9,069 | 7,393 | 8 | 16,470 | 1,210 | 17,680 |
Financial liabilities at amortized cost (i) | Non-financial liabilities | Total | |
Liabilities as per statement of financial position | |||
Trade and other payables (Note 15) | 992 | 3,745 | 4,737 |
Derivative financial instruments | 26 | - | 26 |
Borrowings (Note 16) | 44,559 | - | 44,559 |
Total | 45,577 | 3,745 | 49,322 |
(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 December 31, 2020 and June 30, 2020:
12.31.20 | 06.30.20 | |
Lease and services receivables | 1,455 | 1,177 |
Averaging of scheduled rent escalation | 571 | 346 |
Post-dated checks | 362 | 309 |
Debtors under legal proceedings | 331 | 402 |
Consumer financing receivables | 16 | 20 |
Property sales receivables | 15 | 19 |
Less: allowance for doubtful accounts | (524) | (628) |
Total trade receivables | 2,226 | 1,645 |
Advance payments | 468 | 495 |
Prepayments | 393 | 251 |
Other tax receivables | 157 | 118 |
Loans | 112 | 94 |
Expenses to be recovered | 22 | 39 |
Others | 13 | 28 |
Total other receivables | 1,165 | 1,025 |
Related parties (Note 23) | 6,757 | 6,607 |
Total current trade and other receivables | 10,148 | 9,277 |
Non-current | 6,014 | 5,605 |
Current | 4,134 | 3,672 |
Total | 10,148 | 9,277 |
41
IRSA Propiedades Comerciales S.A.
Movements on the Company’s allowance for doubtful accounts and other receivables are as follows:
12.31.20 | 06.30.20 | |
Beginning of the period / year | 628 | 366 |
Additions (Note 20) | 23 | 319 |
Unused amounts reversed (Note 20) | (28) | (11) |
Inflation adjustment | (99) | (46) |
End of the period / year | 524 | 628 |
14.
Cash flow and cash equivalent information
Following is a detailed description of cash flows generated by the Company’s operations for the six-month periods ended December 31, 2020 and 2019:
Note | 12.31.20 | 12.31.19 | |
Net profit/ (loss) for the period | 4,761 | (519) | |
Adjustments: | |||
Income tax | 18 | 697 | 528 |
Amortization and depreciation | 20 | 221 | 275 |
Gain from disposal of trading properties | - | (305) | |
Net gain from fair value adjustments of investment properties | 7 | (99) | (1,357) |
Directors’ fees provision | 444 | 251 | |
Averaging of schedule rent escalation | 19 | (289) | (46) |
Financial results, net | (9,712) | 6,741 | |
Provisions and allowances | 13 and 17 | 26 | 154 |
Share of profit of associates and joint ventures | 6 | (2,350) | (1,826) |
Foreign unrealized exchange gain on cash and fair value result of cash equivalents | (6) | 25 | |
Changes in operating assets and liabilities: | |||
Decrease in inventories | 6 | 1 | |
Decrease/ (increase) of trading properties | 10 | (18) | |
(Increase)/ decrease in trade and other receivables | (503) | 435 | |
Increase / (decrease) in trade and other payables | 948 | (263) | |
Increase/ (decrease) in payroll and social security liabilities | 18 | (136) | |
Uses of provisions and inflation adjustment | 17 | (24) | (32) |
Net cash (used in) / generated from operating activities before income tax paid | (5,852) | 3,908 |
The following table shows a detail of non-cash transactions occurred in the six-month periods ended December 31, 2020 and 2019:
Non-cash transactions | 12.31.20 | 12.31.19 |
Currency translation adjustment | 26 | - |
Increase in investments in financial assets through an increase in borrowings | 704 | - |
Decrease in investments in financial assets through a decrease in trade and other payables | 20 | - |
Increase in rights of use assets through an increase in leases liabilities | 24 | - |
Increase in investments in financial assets through a decrease in trade and other receivables | 408 | - |
Increase in irrevocable contributions through a decrease in trade and other receivables | 2 | - |
Decrease in property, plant and equipment through an increase in equity | 104 | - |
Decrease in property, plant and equipment through an increase in tax payables | 33 | - |
Decrease in investment properties through an increase in property, plant and equipment | 838 | - |
Decrease in property, plant and equipment through an increase in investment properties | 225 | - |
Decrease in equity through a decrease in trade and other receivables (Dividends) | 8,343 | - |
Decrease in borrowings through a decrease in investments in financial assets | 240 | - |
Decrease in trade and other payables through a decrease in trade and other receivables | 394 | - |
Decrease in trade and other receivables through a decrease in borrowings | 122 | - |
Decrease in leases liabilities through a decrease in trade and other receivables | 6 | - |
Increase in investment properties through a decrease in trade and other receivables | 4 | - |
Increase in trade and other receivables through a decrease in investments in financial assets | 8,310 | 1 |
Decrease in equity through an increase in trade and other payables (Dividends) | - | 1 |
Increase in investment in associates and joint ventures through a decrease in equity | - | 71 |
Increase in investments in financial assets through a decrease in investment in associates and joint ventures | - | 26 |
Increase in investment in associates and joint ventures through a decrease in investments in financial assets | - | 985 |
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 | - | 1,100 |
Increase in rights of use assets through a decrease in property, plant and equipment | - | 26 |
Decrease in investment properties through an increase in intangible assets | - | 449 |
42
IRSA Propiedades Comerciales S.A.
15.
Trade and other payables
The following table shows the amounts of Company’s trade and other payables as of December 31, 2020 and June 30, 2020:
12.31.20 | 06.30.20 | |
Admission rights | 879 | 1,121 |
Rent and service payments received in advance | 855 | 1,091 |
Trade payables | 334 | 284 |
Accrued invoices | 246 | 224 |
Tenant deposits | 59 | 95 |
Payments received in advance | 52 | 27 |
Total trade payables | 2,425 | 2,842 |
Tax payables | 282 | 127 |
Other income to be accrued | 43 | 45 |
Other payables | 12 | 8 |
Tax payment plans | 5 | 7 |
Total other payables | 342 | 187 |
Related parties (Note 23) | 2,937 | 1,708 |
Total trade and other payables | 5,704 | 4,737 |
Non-current | 895 | 1,163 |
Current | 4,809 | 3,574 |
Total | 5,704 | 4,737 |
16.
Borrowings
The following table shows the Company’s borrowings as of December 31, 2020 and June 30, 2020:
Book Value at 12.31.20 | Book Value at 06.30.20 | Fair Value at 12.31.20 | Fair Value at 06.30.20 | |
Non-Convertible notes | 30,682 | 41,905 | 28,098 | 31,281 |
Bank loans | 324 | 402 | 324 | 402 |
Related parties (Note 23) | 4,531 | 605 | 4,516 | 502 |
Bank overdrafts | 1,858 | 1,647 | 1,858 | 1,647 |
Total borrowings | 37,395 | 44,559 | 34,796 | 33,832 |
Non-current | 30,132 | 30,206 | ||
Current | 7,263 | 14,353 | ||
Total | 37,395 | 44,559 |
17.
Provisions
The following table shows the movements in the Company’s provisions as of December 31, 2020 and June 30, 2020:
12.31.20 | 06.30.20 | |
Balances at the beginning of the period / year | 110 | 109 |
Increases (Note 21) | 33 | 91 |
Recovery (Note 21) | (2) | (41) |
Used during the period / year | (3) | (9) |
Inflation adjustment | (21) | (40) |
Balances at the end of the period / year | 117 | 110 |
Non-current | 57 | 70 |
Current | 60 | 40 |
Total | 117 | 110 |
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:
12.31.20 | 12.31.19 | |
Deferred income tax | (697) | (528) |
Income tax | (697) | (528) |
Changes in the deferred tax account are as follows:
12.31.20 | 06.30.20 | |
Beginning of the period / year | (23,105) | (17,436) |
Income tax | (697) | (5,560) |
Appraisal surplus reserve | (33) | (109) |
End of the period / year | (23,835) | (23,105) |
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 six-month periods ended December 31, 2020 and 2019:
12.31.20 | 12.31.19 | |
Profit for period before income tax at the prevailing tax rate | (1,637) | (3) |
Tax effects of: | ||
Difference between provisions and affidavits | 269 | - |
Rate change | 1,107 | 910 |
Share of profit of subsidiaries, associates and joint ventures | 705 | 548 |
Loss from sale of subsidiaries | - | (553) |
Tax inflation adjustment | (1,548) | (1,417) |
Inflation adjustment | 307 | (40) |
Non-taxable profit, non-deductible expenses and others | (7) | (30) |
Others | 107 | - |
Regain of tax loss carryforward | - | 57 |
Income tax | (697) | (528) |
19.
Revenue
12.31.20 | 12.31.19 | |
Base rent | 1,133 | 2,874 |
Contingent rent | 389 | 1,309 |
Admission rights | 295 | 565 |
Averaging of scheduled rent escalation | 289 | 46 |
Property management fees | 48 | 60 |
Others | 19 | 29 |
Parking fees | 4 | 157 |
Rentals and services income | 2,177 | 5,040 |
Sale of trading properties | 59 | 367 |
Gain from disposal of trading properties | 59 | 367 |
Total revenues from sales, rentals and services | 2,236 | 5,407 |
Expenses and collective promotion fund | 930 | 1,843 |
Total revenues from expenses and collective promotion funds | 930 | 1,843 |
Total revenues | 3,166 | 7,250 |
44
IRSA Propiedades Comerciales S.A.
20.
Expenses by nature
Costs (2) | General and administrative expenses | Selling expenses | 12.31.20 | 12.31.19 | |
Salaries, social security costs and other personnel administrative expenses (1) | 528 | 266 | 31 | 825 | 1,034 |
Taxes, rates and contributions | 109 | 2 | 395 | 506 | 479 |
Directors' fees | - | 444 | - | 444 | 251 |
Maintenance, security, cleaning, repairs and other | 395 | 43 | 1 | 439 | 829 |
Fees and payments for services | 15 | 55 | 192 | 262 | 129 |
Amortization and depreciation | 180 | 41 | - | 221 | 275 |
Advertising and other selling expenses | 137 | - | 3 | 140 | 384 |
Leases and expenses | 46 | 17 | 1 | 64 | 242 |
Other expenses | 9 | 11 | - | 20 | 18 |
Traveling, transportation and stationery | 7 | 1 | 1 | 9 | 24 |
Cost of sale of properties | 10 | - | - | 10 | 23 |
Allowance for doubtful accounts (additions and unused amounts reversed) (Note 13) | - | - | (5) | (5) | 106 |
Total expenses by nature 12.31.20 | 1,436 | 880 | 619 | 2,935 | - |
Total expenses by nature 12.31.19 | 2,580 | 777 | 437 | - | 3,794 |
(1)
For the six-month period ended December 31, 2020, includes ARS 685 of Salaries, Bonuses and Social Security and ARS 140 of other concepts. For the six-month period ended December 31, 2019, includes ARS 937 of Salaries, Bonuses and Social Security and ARS 97 of other concepts.
(2)
For the six-month period ended December 31, 2020, includes ARS 1,401 of Rental and services costs and ARS 35 of Cost of sales and developments. For the six-month period ended December 31, 2019, includes ARS 2,510 of Rental and services costs and ARS 70 of Cost of sales and developments.
21.
Other operating results, net
12.31.20 | 12.31.19 | |
Management fees | 43 | 28 |
Others | 5 | (22) |
Interest generated by operating credits | (17) | 39 |
Loss for sale of subsidiaries, associates and joint ventures | - | (8) |
Donations | (24) | (42) |
Lawsuits (Note 17) | (31) | (48) |
Total other operating results, net | (24) | (53) |
22.
Financial results, net
12.31.20 | 12.31.19 | |
- Interest income | 659 | 228 |
Finance income | 659 | 228 |
- Interest expense | (1,847) | (1,877) |
- Other finance costs | (240) | (126) |
Finance costs | (2,087) | (2,003) |
- Foreign exchange, net | (257) | (4,268) |
- Fair value gains / (loss) of financial assets and liabilities at Fair value through profit or loss | 3,429 | (303) |
- (Loss) / Gain from derivative financial instruments | (253) | 32 |
- (Loss) / Gain for repurchase of non-convertible notes | (4) | 37 |
Other financial results | 2,915 | (4,502) |
- Inflation adjustment | 1,315 | (300) |
Total financial results, net | 2,802 | (6,577) |
45
IRSA Propiedades Comerciales S.A.
23.
Related parties transactions
The following is a summary of the balances with related parties:
Items | 12.31.20 | 06.30.20 |
Trade and other receivables | 6,757 | 6,607 |
Rights of use assets | 723 | 867 |
Investments in financial assets | 4,677 | 5,263 |
Trade and other payables | (2,937) | (1,708) |
Borrowings | (4,531) | (605) |
Leases liabilities | (10) | - |
Total | 4,679 | 10,424 |
Related parties | 12.31.20 | 06.30.20 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | 2,825 | 3,411 | Non-convertible notes |
5,445 | 3,131 | Loans granted | |
168 | 169 | Other receivables | |
93 | 68 | Corporate services | |
59 | - | Received granted | |
12 | 15 | Equity incentive plan | |
9 | - | Lease collections | |
19 | 12 | Leases and/or rights to use space | |
- | 1 | Commissions | |
6 | 12 | Reimbursement of expenses receivable | |
(2,089) | (1,327) | Received advances | |
Total direct parent company | 6,547 | 5,492 | |
Cresud S.A.CI.F. y A. | 1,852 | 1,852 | Non-convertible notes |
(3) | (3) | Equity incentive plan to pay | |
- | 2 | Leases and/or rights to use space | |
(26) | (1) | Reimbursement of expenses payable | |
(350) | (218) | Corporate services to pay | |
Total direct parent company of IRSA | 1,473 | 1,632 | |
Torodur S.A. | 11 | 227 | Loans granted |
(4,291) | - | Borrowings | |
- | (605) | Non-convertible notes | |
Panamerican Mall S.A. | 9 | 30 | Reimbursement of expenses receivable |
175 | 172 | Other receivables | |
7 | 13 | Management fee receivable | |
- | (3) | Lease collections to pay | |
(2) | (3) | Leases and/or rights to use space to pay | |
Arcos del Gourmet S.A. | 112 | 122 | Loans granted |
34 | 26 | Reimbursement of expenses receivable | |
22 | 15 | Management fee | |
(4) | - | Lease collections | |
17 | 21 | Other receivables | |
(1) | - | Leases and/or rights to use space to pay | |
Fibesa S.A. | 8 | 8 | Other receivables |
- | 3 | Leases and/or rights to use space | |
1 | - | Reimbursement of expenses receivable | |
- | 1 | Management fee | |
(21) | - | Borrowings | |
Shopping Neuquén S.A. | 723 | 867 | Rights of use assets |
146 | 149 | Loans granted | |
30 | 34 | Reimbursement of expenses receivable | |
Ogden Argentina S.A | 287 | 282 | Loans granted |
Boulevard Norte S.A. | (4) | (4) | Reimbursement of expenses payable |
Entretenimiento Universal S.A. | 39 | 38 | Loans granted |
Centro de Entretenimiento La Plata S.A. | 1 | 10 | Reimbursement of expenses receivable |
Pareto S.A. | 2 | 3 | Other receivables |
(3) | - | Other payables | |
La Arena S.A. | 3 | 3 | Reimbursement of expenses receivable |
Total subsidiaries | (2,699) | 1,409 |
46
IRSA Propiedades Comerciales S.A.
Related parties | 12.31.20 | 06.30.20 | Description of transaction |
Nuevo Puerto Santa Fe S.A. | 8 | 9 | Management fee |
2 | - | Loans granted | |
1 | - | Reimbursement of expenses receivable | |
(1) | (1) | Leases and/or rights to use space to pay | |
Quality S.A. | - | 1 | Management fee |
1 | 1 | Reimbursement of expenses receivable | |
(1) | - | Reimbursement of expenses payable | |
(10) | - | Leases liabilities | |
TGLT SA | 10 | 11 | Other receivables |
Total associates and joint ventures | 10 | 21 | |
Directors | (426) | (146) | Fees |
Total Directors | (426) | (146) | |
Futuros y Opciones.Com S.A. | (47) | - | Borrowings |
IRSA International LLC | - | 323 | Loans granted |
(26) | - | Other payables | |
Tyrus S.A. | - | 1,668 | Loans granted |
Banco Hipotecario S.A. | 6 | 6 | Leases and/or rights to use space |
Fundación Museo de los Niños | 9 | 7 | Reimbursement of expenses receivable |
Helmir S.A | (172) | - | Non-convertible notes |
La Rural S.A. | - | 8 | Leases and/or rights to use space |
Others related parties | 3 | 3 | Leases and/or rights to use space |
(1) | (1) | Dividends | |
2 | 3 | Other receivables | |
- | (1) | Legal services | |
Total others | (226) | 2,016 | |
Total | 4,679 | 10,424 |
The following is a summary of the results with related parties:
Related parties | 12.31.20 | 12.31.19 | Description of transaction |
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) | 21 | 46 | Corporate services |
506 | 55 | Financial operations | |
3 | - | Leases and/or rights to use space | |
Total direct parent company | 530 | 101 | |
Cresud S.A.CI.F. y A. | 269 | 63 | Financial operations |
5 | 7 | Leases and/or rights to use space | |
(223) | (257) | Corporate services | |
Total direct parent company of IRSA | 51 | (187) | |
Arcos del Gourmet S.A. | 16 | - | Fees |
(2) | 3 | Financial operations | |
(1) | (158) | Leases and/or rights to use space | |
Fibesa S.A. | (1) | 6 | Leases and/or rights to use space |
1 | 2 | Fees | |
1 | - | Leases and/or rights to use space | |
Torodur S.A. | (143) | (123) | Financial operations |
Shopping Neuquén S.A. | (144) | (128) | Leases and/or rights to use space |
(3) | 5 | Financial operations | |
Ogden Argentina S.A | 6 | 47 | Financial operations |
Panamerican Mall S.A. | 11 | (6) | Financial operations |
(2) | (7) | Leases and/or rights to use space | |
21 | 28 | Fees | |
La Arena S.A. | - | (7) | Fees |
Entretenimiento Universal S.A. | 2 | 5 | Financial operations |
Other subsidiaries | - | (1) | Financial operations |
1 | 1 | Fees | |
2 | - | Leases and/or rights to use space | |
Total subsidiaries | (235) | (333) | |
Nuevo Puerto Santa Fe S.A. | 3 | 7 | Fees |
(1) | (1) | Leases and/or rights to use space | |
Quality Invest S.A. | (8) | - | Financial operations |
1 | - | Leases and/or rights to use space | |
Total associates and joint ventures | (5) | 6 | |
Directors | (444) | (251) | Fees |
Senior Management | (18) | (23) | Fees |
Total directors | (462) | (274) | |
IRSA International LLC | 25 | 22 | Financial operations |
Tyrus S.A | 148 | - | Financial operations |
Helmir | 1 | - | Financial operations |
Banco de Crédito y Securitización | 32 | 35 | Leases and/or rights to use space |
Museo de los Niños | (14) | - | Donations |
Estudio Zang, Bergel & Viñes | (8) | (15) | Fees |
Others | (6) | (6) | Financial operations |
15 | 19 | Leases and/or rights to use space | |
Total others | 193 | 55 | |
Total | 72 | (632) |
47
IRSA Propiedades Comerciales S.A.
The following is a summary of the transactions with related parties:
Related parties | 12.31.20 | 12.31.19 | Description of transaction |
IRSA Inversiones y Representaciones S.A. | 8,079 | 711 | Dividends granted |
Cresud S.A.CI.F. y A. | 350 | 13 | Dividends granted |
E-commerce Latina S.A. | 141 | 11 | Dividends granted |
Tyrus S.A. | 51 | - | Dividends granted |
Total dividends granted | 8,621 | 735 | |
Panamerican Mall S.A. | - | (701) | Dividends received |
Fibesa S.A. | - | (86) | Dividends received |
Nuevo Puerto Santa Fe S.A. | - | (34) | Dividends received |
Total dividends received | - | (821) | |
Quality Invest S.A. | 19 | 36 | Irrevocable contributions granted |
Total irrevocable contributions to joint ventures | 19 | 36 | |
TGLT S.A. | - | 1,622 | Share sale |
Total share sale | - | 1,622 | |
Pareto S.A. | 53 | - | Share acquisition |
TGLT S.A. | - | 2,607 | Share acquisition |
Total share acquisition | 53 | 2,607 |
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) | 12.31.20 | 06.30.20 |
Assets | ||||
Trade and other receivables | ||||
US Dollar | 5.07 | 83.95 | 426 | 589 |
Euro | 0.16 | 103.07 | 17 | 20 |
Trade and other receivables with related parties | ||||
US Dollar | 8.47 | 84.15 | 713 | 5,866 |
Total trade and other receivables | 1,156 | 6,475 | ||
Investments in financial assets | ||||
US Dollar | 5.59 | 83.95 | 469 | 71 |
Investment in financial assets with related parties | ||||
US Dollar | 55.58 | 84.15 | 4,677 | 5,137 |
Total investments in financial assets | 5,146 | 5,208 | ||
Cash and cash equivalents | ||||
US Dollar | 1.56 | 83.95 | 131 | 296 |
Total cash and cash equivalents | 131 | 296 | ||
Total Assets | 6,433 | 11,979 | ||
Liabilities | ||||
Trade and other payables | ||||
US Dollar | 2.63 | 84.15 | 221 | 255 |
Euro | 0.01 | 103.53 | 1 | - |
Trade and other payables with related parties | ||||
US Dollar | 0.44 | 84.15 | 37 | 5 |
Total trade and other payables | 259 | 260 | ||
Borrowings | ||||
US Dollar | 365.03 | 84.15 | 30,717 | 41,949 |
Borrowings from related parties | ||||
US Dollar | 53.02 | 84.15 | 4,462 | 605 |
Total borrowings | 35,179 | 42,554 | ||
Leases liabilities | ||||
US Dollar | 0.01 | 84.15 | 1 | 8 |
Leases liabilities with related parties | ||||
US Dollar | 0.13 | 84.15 | 11 | - |
Total Leases liabilities | 12 | 8 | ||
Total Liabilities | 35,450 | 42,822 |
(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 December 31, 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 December 31, 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 | |||||||||
Items | 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 | 205 | - | 7 | 2,155 | 735 | 586 | 453 | 5,921 | 27 | 27 | 32 | 10,148 |
Total | 205 | - | 7 | 2,155 | 735 | 586 | 453 | 5,921 | 27 | 27 | 32 | 10,148 | |
Liabilities | Trade and other payables | 665 | 31 | - | 3,594 | 180 | 139 | 200 | 567 | 98 | 58 | 172 | 5,704 |
Leases liabilities | - | 12 | - | - | - | - | - | - | - | - | - | 12 | |
Borrowings | - | - | - | 2,951 | 21 | - | 4,291 | - | 30,132 | - | - | 37,395 | |
Deferred income tax liabilities | - | - | 23,835 | - | - | - | - | - | - | - | - | 23,835 | |
Payroll and social security liabilities | - | - | - | 136 | - | 68 | - | - | - | - | - | 204 | |
Provisions | - | 60 | 57 | - | - | - | - | - | - | - | - | 117 | |
Total | 665 | 103 | 23,892 | 6,681 | 201 | 207 | 4,491 | 567 | 30,230 | 58 | 172 | 67,267 |
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 December 31, 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 | ||||||||
Items | Local Currency | Foreign Currency | Total | Local Currency | Foreign Currency | Total | Local Currency | Foreign Currency | Total | |
Receivables | Trade and other receivables | 2,980 | 1,154 | 4,134 | 6,012 | 2 | 6,014 | 8,992 | 1,156 | 10,148 |
Total | 2,980 | 1,154 | 4,134 | 6,012 | 2 | 6,014 | 8,992 | 1,156 | 10,148 | |
Liabilities | Trade and other payables | 4,557 | 252 | 4,809 | 888 | 7 | 895 | 5,445 | 259 | 5,704 |
Leases liabilities | - | 12 | 12 | - | - | - | - | 12 | 12 | |
Borrowings | 2,251 | 5,012 | 7,263 | - | 30,132 | 30,132 | 2,251 | 35,144 | 37,395 | |
Deferred income tax liabilities | - | - | - | 23,835 | - | 23,835 | 23,835 | - | 23,835 | |
Payroll and social security liabilities | 204 | - | 204 | - | - | - | 204 | - | 204 | |
Provisions | 60 | - | 60 | 57 | - | 57 | 117 | - | 117 | |
Total | 7,072 | 5,276 | 12,348 | 24,780 | 30,139 | 54,919 | 31,852 | 35,415 | 67,267 |
4.b.
Breakdown of accounts receivable and liabilities by adjustment clause.
As of December 31, 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 | Subtotal | Fixed rate | Floating rate | Non-Accruing | Total | |
Receivables | Trade and other receivables | 765 | - | 3,369 | 4,134 | 5,450 | - | 564 | 6,014 | 6,215 | - | 3,933 | 10,148 |
Total | 765 | - | 3,369 | 4,134 | 5,450 | - | 564 | 6,014 | 6,215 | - | 3,933 | 10,148 | |
Trade and other payables | 1 | - | 4,833 | 4,834 | 4 | - | 891 | 895 | 5 | - | 5,699 | 5,704 | |
Leases liabilities | - | - | 12 | 12 | - | - | - | - | - | - | 12 | 12 | |
Borrowings | 5,405 | 1,815 | 43 | 7,263 | 30,132 | - | - | 30,132 | 35,537 | 1,815 | 43 | 37,395 | |
Liabilities | Deferred income tax liabilities | - | - | - | - | - | - | 23,835 | 23,835 | - | - | 23,835 | 23,835 |
Payroll and social security liabilities | - | - | 204 | 204 | - | - | - | - | - | - | 204 | 204 | |
Provisions | - | - | 60 | 60 | - | - | 57 | 57 | - | - | 117 | 117 | |
Total | 5,406 | 1,815 | 5,152 | 12,373 | 30,136 | - | 24,783 | 54,919 | 35,542 | 1,815 | 29,910 | 67,267 |
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 December 31, 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.
None.
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 December 31, 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 | 8,561 | Fire, all risk and loss of profit |
Alto Palermo | 80 | 9,884 | Fire, all risk and loss of profit |
Mendoza Plaza | 66 | 2,320 | Fire, all risk and loss of profit |
Paseo Alcorta | 66 | 4,913 | Fire, all risk and loss of profit |
Alto Avellaneda | 64 | 5,616 | Fire, all risk and loss of profit |
Alto Rosario | 59 | 4,922 | All risk, construction and assembly |
Patio Bullrich | 35 | 2,798 | Fire, all risk and loss of profit |
Córdoba Shopping – Villa Cabrera | 42 | 1,517 | Fire, all risk and loss of profit |
Alto Noa | 31 | 1,386 | Fire, all risk and loss of profit |
Soleil Premium Outlet | 32 | 2,224 | Fire, all risk and loss of profit |
República building | 52 | 10,749 | Fire, all risk and loss of profit |
Intercontinental building | 7 | 1,360 | Fire, all risk and loss of profit |
Bouchard 710 | 36 | 7,573 | Fire, all risk and loss of profit |
Suipacha 664 | 16 | 1,794 | Fire, all risk and loss of profit |
Della Paolera 265 | 106 | 7,960 | Fire, all risk and loss of profit |
Alto Comahue | 46 | 1,513 | Fire, all risk and loss of profit |
Distrito Arcos | 47 | 2,362 | Fire, all risk and loss of profit |
Dot Baires Shopping | 147 | 6,279 | Fire, all risk and loss of profit |
Edificio Dot | 22 | 5,065 | Fire, all risk and loss of profit |
Building annexed to DOT | 15 | 2,068 | Fire, all risk and loss of profit |
Anchorena 665 | 4 | 180 | Fire, all risk and loss of profit |
Caballito warehouse | 2 | - | Fire, all risk and loss of profit |
Zelaya 3102 | 1 | 52 | Fire, all risk and loss of profit |
Anchorena 545 (Chanta IV) | 47 | 14,782 | Fire, all risk and loss of profit |
SUBTOTAL | 1,177 | 105,878 | |
Unique policy | 177 | - | Third party liability |
The insurance amounts do not include the land value and correspond to the reconstruction value of the building.
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: Carlos Della Paolera 261– 8º floor
Autonomous City of Buenos Aires
Tax Registration Number: 30-52767733-1
Introduction
We have reviewed the accompanying unaudited condensed interim separate financial statements of IRSA Propiedades Comerciales S.A. (“the Company”), which comprise the unaudited condensed interim separate statement of financial position as of December 31, 2020, the unaudited condensed interim separate statements of income and other comprehensive income for the six and three-month periods ended December 31, 2020, and the unaudited condensed interim separate statements of changes in shareholders’ equity and of cash flows for the six-month period then ended, and selected explanatory notes.
The balances and other information for the fiscal year ended on June 30, 2020 and its interim periods are an integral part of the financial statements mentioned above; therefore, they must be considered in connection with these financial statements.
Management’s responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim separate financial statements in accordance with International Financial Reporting Standards (IFRS), adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and included by the National Securities Commission (CNV) in its regulations, as approved by the International Accounting Standards Board (IASB), and is therefore responsible for the preparation and presentation of the unaudited condensed interim separate financial statements mentioned in the first paragraph, in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34).
Scope of our review
Our review was limited to the application of the procedures established under International Standards on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, adopted as a review standard in Argentina by Technical Pronouncement No. 33 of the FACPCE and approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of inquiries of Company staff responsible for preparing the information included in the unaudited condensed interim separate financial statements and of analytical and other review procedures. This review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the separate statement of financial position and the separate statements of income and other comprehensive income and of cash flows of the Company.
54
Free translation from the original prepared in Spanish for publication in Argentina
Conclusion
On the basis of our review, nothing has come to our attention that causes us to believe that the unaudited condensed interim separate financial statements mentioned in the first paragraph of this report have not been prepared, in all material respects, in accordance with International Accounting Standard 34.
Report on compliance with current regulations
In accordance with current regulations, we report in connection with IRSA Propiedades Comerciales S.A. that:
a)
the unaudited condensed interim separate financial statements of IRSA Propiedades Comerciales S.A. are in the process of being transcribed into the Inventory and Balance Sheet book and, except for the above mentioned situation, as regards those matters that are within our competence, they are in compliance with the provisions of the General Companies Law and pertinent resolutions of the National Securities Commission;
b)
the unaudited condensed interim separate financial statements of IRSA Propiedades Comerciales S.A arise from accounting records carried in all formal aspects in accordance with legal requirements except for i) the lack of transcription to the Inventories and Balance Sheet Book, and ii) the lack of transcription to the General Journal Book of the accounting entries corresponding to the month of December 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 we have no observations to make regarding matters that are within our competence;
d)
at December 31, 2020, the debt of IRSA Propiedades Comerciales S.A. accrued in favor of the Argentine Integrated Social Security System, as shown by the Company’s accounting records, amounted to ARS 25,709,085 which is not due at that date.
Autonomous City of Buenos Aires, February 8, 2021.
/s/ PRICE WATERHOUSE & CO. S.R.L. (Partner) | /s/ ABELOVICH, POLANO & ASOCIADOS S.R.L. (Partner) | |||
Name C.P.C.E.C.A.B.A. Tº 1 Fº 17 Dr. Walter Zablocky | Name C.P.C.E.C.A.B.A. T° 1 F° 30 José Daniel Abelovich | |||
Title Public Accountant (UNLP) C.P.C.E.C.A.B.A. Tº 340 Fº 156 | Title 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 December 31, 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 from operations may be affected by fluctuations in the inflation and 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 controls 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 January 29, 2021, more than 1,900,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentinian 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 drop in their income and inconveniences in the payment chain. 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 was evidenced.
Additionally, the government is challenged to achieve a successful debt renegotiation with the International Monetary Fund. In the event that Argentina achieves a favourable result and agrees to restructure its debt with the IMF, this could have a positive impact on the Argentine economy in the medium and long term.
At the local environment, the following circumstances were observed:
●
In November 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 (3.7%) compared to the same month of 2019, and 1.4% compared to the previous month.
●
The annual retail inflation reached 36.1% in 2020. The survey on market expectations prepared by the Argentine Central Bank in December 2020, called the Market Expectations Survey (“REM” in Spanish), estimates a retail inflation of 49.8% for 2021. The analysts who participate in the REM foresee that in 2021 economic activity will rebound in activity, reaching an economic growth of 5.5%.
●
In the period from December 2019 to December 2020, the argentine peso depreciated 40.5% against the US dollar according to the wholesale average exchange rate of Banco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of December 31, 2020 there is an exchange gap of approximately 70% 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 dictated in the future, could affect the Group's ability to access the Single Free Exchange Market (MULC in Spanish) to acquire the necessary currencies to meet its financial obligations.
56
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
COVID-19 pandemic
As described above, the COVID-19 pandemic is adversely impacting both the global economy and 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 set out below:
●
As a consequence of the social, preventive and mandatory isolation, shopping malls throughout the country were closed since March 20, 2020, 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. From October to the date of these Financial Statements, all the Group's shopping malls are open operating with strict protocols that include reduced time to 8 hours and public restrictions, social distancing, among other safety and hygiene measures. The Entertainment category protocol is even more rigorous with closed cinemas in most cases. Although we hope to fully resume the activity in our shopping malls, the uncertainty of the situation could cause setbacks in the openings already made.
●
Given the closure of the shopping malls, the Group has decided to condone the billing and collection of the 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 immediately preceding quarter.
●
In relation to the offices business, although most of the tenants are working in the home office mode, they are operating with strict safety and hygiene protocols. To date, we have not evidenced a deterioration in collections.
●
La Rural, the Buenos Aires and Punta del Este Convention Centers and the DIRECTV Arena stadium, establishments that the Group owns directly or indirectly, have also been closed since March 20. All planned congresses were suspended, most of the fairs and conventions have been postponed, while the shows scheduled at the DIRECTV Arena stadium were mostly cancelled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
IRSA CP has a cash and equivalents position (including current financial investments) as of December 31, 2020 of approximately USD 84.9 million. On the other hand, it does not have short-term debt maturities, except for bank debt for USD 24.6 million.
The final extent of the Coronavirus outbreak and its impact on the country's economy is unknown and difficult to fully predict. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Group’s ability to meet its financial commitments for the next twelve months.
The Group is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.
57
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
Consolidated Results in current currency
(In ARS million) | IIQ 21 | IIQ 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Income from sales, leases and services(1) | 2,098 | 3,715 | (43.5)% | 3,094 | 6,814 | (54.6)% |
Net (loss) / gain from fair value adjustment on investment properties | (14,880) | (6,739) | 120.8% | 3,228 | 2,816 | 14.6% |
Net realized Result from changes in the fair value of investment properties (4) | 1,955 | 672 | 190.9% | 7,915 | 672 | 1,077.8% |
(Loss) / Profit from operations | (13,760) | (4,083) | 237.0% | 4,079 | 7,633 | (46.6%) |
Depreciation and amortization | 38 | 106 | (64.2%) | 117 | 185 | (36.8)% |
Consolidated EBITDA(2) | (11,932) | (1,914) | 523.4% | 8,279 | 3,238 | 156.0% |
Consolidated Adjusted EBITDA(2) | 3,113 | 2,417 | 28.8% | 8,883 | 4,657 | 90.7% |
Consolidated NOI(3) | 3,585 | 2,830 | 26.7% | 9,894 | 5,508 | 79.6% |
Result for the period | (9,518) | (3,779) | 151.9% | 5,285 | (341) | - |
(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 6M21, a loss of ARS 1,209 million correspond to the realized result from fair value adjustment for the period (negative ARS 835 million for the sale of Boston Tower and negative ARS 374 million for the sale of Bouchard 710) and a gain of ARS 9,124 million for the realized result from fair value adjustment in previous years (ARS 4,786 million for the sale of Boston Tower and ARS 4,338 million for the sale of Bouchard 710). As of 6M20, a gain of ARS 60 million correspond to realized result from fair value adjustment for the year (which include the barter agreement of the Caballito Ferro land plot) and ARS 612 million to realized result from fair value adjustment in previous years (ARS 376 million corresponding to the exchange of the Caballito Ferro land plot and ARS 236 million for the deconsolidation of La Maltería SA land plot).
Company’s income decreased by 54.6% during the first half 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 90.7% mainly explained by Sales and Developments segment whose adjusted EBITDA reached ARS 7,393 million due to the impact of Bouchard 710 and Boston Tower’s office sales. Rental segments Adjusted EBITDA reached ARS 1,641 million, ARS 864 million from the Shopping Malls segment and ARS 777 million from the Offices segment.
Net result for the first half of fiscal year 2021 registered a gain of ARS 5,285 million compared to a loss of ARS 341 million in the same period of 2020 mainly explained by higher changes in the fair value of investment properties and net financial results. However, it is worth mentioning that during the second quarter of the year a negative net result of ARS 9,518 million was recorded, mainly explained by the impact of the valuation at fair value of investment properties whose result is due to the inflation of the three-month period exceeds the depreciation of the exchange rate recorded, making it necessary to recognize a loss of ARS 14,880 because of the inflation adjustment in the valuation methodology.
II. Shopping Malls
Shopping Malls’ Operating Indicators
| IIQ 21 | IQ 21 | IVQ 20 | IIIQ 20 | IIQ 20 |
Gross leasable area (sqm) | 333,460 | 333,345 | 333,062 | 332,642 | 332,812 |
Tenants’ sales (3 months cumulative in current currency) | 21,737 | 5,760 | 1,877 | 20,463 | 33,554 |
Occupancy | 88.3% | 92.8% | 93.2% | 94.8% | 95.0% |
During the first half of fiscal year 2021, our tenants’ sales reached ARS 27,497 million, 55.3% lower, in real terms, than in the same period of 2020. Compared to the immediately previous quarter (IQ21), there is an increase of 277% due to the reopening of 100% of the Company’s shopping malls in October 2020, that are operating with rigorous protocols.
Our portfolio’s leasable area totaled 333,460 sqm during the quarter, in line with the same period of previous fiscal year. Portfolio’s occupancy decreased to 88.3%, mainly due to the exit of Falabella in Alto Avellaneda and DOT Baires Shopping. Excluding this effect, occupancy reached 94.0%.
58
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
Shopping Malls’ Financial Indicators
(in ARS million) | IIQ 21 | IIQ 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Income from sales. rentals and services | 1,534 | 2,640 | (41.9)% | 1,943 | 4,961 | (60.8)% |
Net (loss) / gain from fair value adjustment on investment properties | (6,073) | (3,223) | 88.4% | (4,762) | (2,554) | 86.5% |
(Loss) / Profit from operations | (5,064) | (1,334) | 279.6% | (3,966) | 984 | (503.0)% |
Depreciation and amortization | 21 | 57 | (63.2)% | 68 | 98 | -30.6% |
EBITDA(1) | (5,043) | (1,277) | 294.9% | (3,898) | 1,082 | (460.3)% |
Adjusted EBITDA(1) | 1,030 | 1,946 | (47.1)% | 864 | 3,636 | (76.2)% |
NOI(2) | 1,378 | 2,313 | (40.4)% | 1,603 | 4,319 | (62.9)% |
(1)
See Point XIV: EBITDA Reconciliation
(2)
See Point XV: NOI Reconciliation
Income from this segment decreased 60.8% during the first half 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.
Adjusted EBITDA recovered during the second quarter of the year given the impact of the malls’ reopening, reaching ARS 1,031 million, 47% below the same period in 2020, prior to the pandemic.
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 | 135 | 96.8% | 100% |
Abasto Shopping(4) | Nov-99 | City of Buenos Aires | 36,794 | 162 | 97.1% | 100% |
Alto Avellaneda | Dec-97 | Province of Buenos Aires | 38,800 | 126 | 67.6% | 100% |
Alcorta Shopping | Jun-97 | City of Buenos Aires | 15,812 | 112 | 98.2% | 100% |
Patio Bullrich | Oct-98 | City of Buenos Aires | 11,396 | 89 | 90.2% | 100% |
Dot Baires Shopping | May-09 | City of Buenos Aires | 48,805 | 166 | 63.2% | 80% |
Soleil | Jul-10 | Province of Buenos Aires | 15,156 | 79 | 97.8% | 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 | 99.7% | 100% |
Alto Rosario Shopping(4) | Nov-04 | Santa Fe | 33,682 | 139 | 94.9% | 100% |
Mendoza Plaza Shopping | Dec-94 | Mendoza | 43,123 | 127 | 96.9% | 100% |
Córdoba Shopping | Dec-06 | Córdoba | 15,357 | 104 | 95.5% | 100% |
La Ribera Shopping | Aug-11 | Santa Fe | 10,530 | 70 | 96.5% | 50% |
Alto Comahue | Mar-15 | Neuquén | 11,702 | 95 | 92.2% | 99.95% |
Patio Olmos(5) | Sep-07 | Córdoba | ||||
Total | 333,460 | 1,554 | 88.3% |
(1) Corresponds to gross leasable area in each property. Excludes common areas and parking spaces.
(2) Calculated dividing occupied square meters by leasable area as of the last day of the fiscal period.
(3) Company’s effective interest in each of its business units.
(4) Excludes Museo de los Niños (3,732 square meters in Abasto and 1,261 square meters in Alto Rosario).
(5) IRSA CP owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party.
59
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
Cumulative tenants’ sales as of December 31
(per Shopping Mall in ARS million) | IIQ 21 | IIQ 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Alto Palermo | 2,372 | 4,343 | (45.4)% | 2,514 | 7,813 | (67.8)% |
Abasto Shopping | 2,059 | 4,194 | (50.9)% | 2,164 | 7,791 | (72.2)% |
Alto Avellaneda | 1,528 | 3,813 | (59.9)% | 1,630 | 6,962 | (76.6)% |
Alcorta Shopping | 1,952 | 2,650 | (26.3)% | 1,971 | 4,616 | (57.3)% |
Patio Bullrich | 1,264 | 1,715 | (26.3)% | 1,451 | 3,043 | (52.3)% |
Dot Baires Shopping | 1,719 | 3,416 | (49.7)% | 1,811 | 6,077 | (70.2)% |
Soleil | 1,289 | 1,714 | (24.8)% | 1,493 | 3,247 | (54.0)% |
Distrito Arcos | 1,736 | 1,989 | (12.7)% | 2,293 | 3,649 | (37.2)% |
Alto Noa Shopping | 1,183 | 1,322 | (10.5)% | 1,910 | 2,545 | (25.0)% |
)Alto Rosario Shopping | 2,838 | 3,374 | (15.9)% | 4,208 | 6,167 | (31.8)% |
Mendoza Plaza Shopping | 2,157 | 2,288 | (5.7)% | 3,521 | 4,483 | (21.5)% |
Córdoba Shopping | 909 | 1,079 | (15.8)% | 1,472 | 1,938 | (24.0)% |
La Ribera Shopping(1) | 323 | 647 | (50.1)% | 481 | 1,284 | (62.5)% |
Alto Comahue | 408 | 1,010 | (59.6)% | 578 | 1,899 | (69.6)% |
Total | 21,737 | 33,554 | (35.2)% | 27,497 | 61,514 | (55.3)% |
(1) Through our joint venture Nuevo Puerto Santa Fe S.A.
Cumulative tenants’ sales per type of business
(per Type of Business. in ARS million) | IIQ 21 | IIQ 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Anchor Store | 555 | 1,814 | (69.4)% | 979 | 3,294 | (70.3)% |
Clothes and Footwear | 13,518 | 19,579 | (31.0)% | 16,275 | 34,691 | (53.1)% |
Entertainment | 45 | 662 | (93.2)% | 50 | 1,828 | (97.3)% |
Home | 573 | 700 | (18.1)% | 721 | 1,249 | (42.3)% |
Restaurant | 1,188 | 3,185 | (62.7)% | 1,672 | 6,597 | (74.7)% |
Miscellaneous | 3,378 | 4,736 | (28.7)% | 4,448 | 8,232 | (46.0)% |
Services | 222 | 342 | (35.1)% | 248 | 671 | (63.0)% |
Electronic appliances | 2,258 | 2,536 | (11.0)% | 3,104 | 4,952 | (37.3)% |
Total | 21,737 | 33,554 | (35.2)% | 27,497 | 61,514 | (55.3)% |
Revenues from cumulative leases as of December 31
(in ARS million) | IIQ 21 | IIQ 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Base Rent (1) | 815 | 1,130 | (27.9)% | 887 | 2,294 | (61.3)% |
Contingent Rent | 393 | 886 | (55.6)% | 463 | 1,443 | (67.9)% |
Total Rent | 1,208 | 2,016 | (40.1)% | 1,350 | 3,737 | (63.8)% |
Revenues from non-traditional advertising | 5 | 67 | (92.5)% | 42 | 129 | (67.4)% |
Admission rights | 164 | 328 | (50.0)% | 327 | 619 | (47.2)% |
Fees | 27 | 31 | (12.9)% | 55 | 64 | (14.1)% |
Parking fees | 5 | 124 | (96.0)% | 8 | 259 | (96.9)% |
Commissions | 38 | 63 | (39.7)% | 70 | 125 | (44.0)% |
Others | 88 | 11 | 709.1% | 91 | 28 | 240.7% |
Subtotal (2) | 1,534 | 2,640 | (41.9)% | 1,943 | 4,961 | (60.8)% |
Expenses and Collective Promotion Funds | 627 | 997 | (37.1)% | 1,021 | 1,937 | (47.3)% |
Total | 2,161 | 3,637 | (40.5)% | 2,964 | 6,898 | (57.0)% |
(1)
Includes Revenues from stands for ARS 63 million cumulative as of December 2020
(2)
Includes ARS 3.8 million from Patio Olmos.
60
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 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, according to Cushman & Wakefield, 12.7%, increasing 17.6% when compared to the previous quarter, although with stable rental prices for premium offices in Buenos Aires at USD 27.4 / sqm.
Offices’ Operating Indicators
| IIQ 21 | IQ 21 | IVQ 20 | IIIQ 20 | IIQ 20 |
Gross Leasable area | 114,475 | 93,144 | 115,640 | 115,640 | 115,640 |
Total Occupancy | 75.6% | 83.7% | 86.1% | 87.0% | 88.7% |
Class A+ & A Occupancy | 79.5% | 91.6% | 93.0% | 93.9% | 97.1% |
Class B Occupancy | 56.7% | 53.6% | 52.4% | 53.2% | 47.5% |
Rent USD/sqm | 25.7 | 26.0 | 26.6 | 26.6 | 26.9 |
The gross leasable area during the second quarter of fiscal year 2021 was 114,475 m2, with the “261 Della Paolera” building being added to the portfolio, offsetting the sqm sold by the company in the previous 2 quarters.
“261 Della Paolera” building consists of 35,000 sqm of GLA in 30 office floors and 316 parking lots in the “Catalinas” area of the City of Buenos Aires, one of the most premium for office development in Argentina. The company has 28,051 m2 corresponding to 24 floors and 256 parking lots in the building. The building began operations on December 9, 2020, it is the headquarters of the Company, its controlling company IRSA and CRESUD and the delivery of all the remaining floors is estimated for the third quarter of fiscal year 2021.
Portfolio average occupancy decreased compared to previous quarters reaching 75.6%, due to a higher vacancy in our premium portfolio (class A+&A), mainly motivated by the sale of Boston Tower which was 100% occupied, the exit of Falabella on Zetta Building and the incorporation of 260 Della Paolera building with an occupancy of 74.6%. Category B offices increased 3.1 bps their occupancy. The average rental price reached USD 25.7 per sqm, diminishing when compared to previous quarters.
(in ARS million) | IIQ 21 | IIQ 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Income from sales, rentals and services | 507 | 700 | (27.6)% | 1,099 | 1,465 | (25.0)% |
Net (loss) / gain from fair value adjustment of investment properties. | (6,396) | (2,993) | 113.7% | 7,629 | 4,372 | 74.5% |
(Loss) / Profit from operations | (6,047) | (2,479) | 143.9% | 8,388 | 5,530 | 51.7% |
Depreciation and amortization | 4 | 14 | (71.4)% | 18 | 22 | (18.2)% |
EBITDA(1) | (6,043) | (2,465) | 145.2% | 8,406 | 5,552 | 51.4% |
Adjusted EBITDA (1) | 353 | 529 | (33.3)% | 777 | 1,180 | (34.2)% |
NOI(2) | 436 | 655 | (33.4)% | 957 | 1,364 | (29.8)% |
(1)
See Point XIV: EBITDA Reconciliation
(2)
See Point XV: NOI Reconciliation
During first half of fiscal year 2021, revenues from the offices segment decreased by 25.0% when 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 6.8%.
Adjusted EBITDA from this segment decreased 34.2% 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 70.7%, 9.8 bps lower than the same period of previous year.
61
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
Below is information on our office segment and other rental properties as of December 31, 2020.
Offices & Others | Date of Acquisition | Gross Leasable Area (sqm)(1) | Occupancy (2) | IRSA CP’s Actual Interest | 6M 21 - Rental revenues (ARS thousand) |
AAA & A Offices | |||||
Republica Building | Dec-14 | 19,885 | 76.6% | 100% | 237,415 |
Boston Tower | Dec-14 | - | - | - | 96,195 |
Intercontinental Plaza(3) | Dec-14 | 2,979 | 100.0% | 100% | 66,583 |
Bouchard 710 | Dec-14 | - | - | - | 34,557 |
Dot Building | Nov-06 | 11,242 | 77.1% | 80% | 111,423 |
Zetta | May-19 | 32,173 | 84.7% | 80% | 377,599 |
261 Della Paolera – Catalinas (5) | Dec-20 | 28,714 | 74.6% | 100% | 82,632 |
Total AAA & A Offices | 94,993 | 79.5% | 1,006,404 | ||
B Offices | |||||
Suipacha 652/64 | Dec-14 | 11,465 | 31.2% | 100% | 22,119 |
Philips | Jun-17 | 8,017 | 93.1% | 100% | 62,929 |
Total B Buildings | 19,482 | 56.7% | 85,048 | ||
Subtotal Offices | 114,475 | 75.6% | 1,091,452 | ||
Other rental properties(4) | 7,989 | ||||
Total Offices and Others | 114,475 | 75.6% | 1,099,441 |
(1) Corresponds to the total gross leasable area of each property as of December 31, 2020. Excludes common areas and parking lots.
(2) Calculated by dividing occupied square meters by gross leasable area as of December 31, 2020.
(3) We own 13.2% of the building that has 22,535 square meters of gross leasable area.
(4) Includes all those properties that are not buildings intended for rent, but that are partially or fully rented (Philips Deposit, Anchorena 665, San Martin Plot and Libertador).
(5) Includes 664 square meters of gross leasable area of the basement.
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 ARS million) | 6M 21 | 6M 20 | YoY Var | 6M 21 | 6M 20 | YoY Var |
Revenues | 61 | 370 | (83.5)% | 8 | 69 | (88.4)% |
Net gain from fair value adjustment on investment properties. | 837 | 1,266 | (33.9)% | 33 | 76 | (56.6)% |
Net realized Result from fair value adjustments of investment properties | 7,915 | - | - | - | - | - |
Profit / (loss) from operations | 312 | 1,443 | (78.4)% | (63) | 122 | (151.6)% |
Depreciation and amortization | 3 | 6 | (50.0)% | 29 | 27 | 7.4% |
EBITDA(1) | 315 | 1,449 | (78.3)% | (34) | 149 | (122.8)% |
Adjusted EBITDA(1) | 7,393 | (162) | - | (67) | 73 | (191.8)% |
NOI(2) | 7,466 | (98) | - | (43) | 36 | (219.4)% |
(1)
See Point XIV: EBITDA Reconciliation
(2)
See Point XV: NOI Reconciliation
Revenues from “Sales and Developments” segment decreased by 83.5% in real terms during the first half of fiscal year 2021 product of results from last fiscal year for the barter agreement of the Coto Airspace, partially offset by the sale of apartments and parking lots in the Astor Beruti building during this quarter. Revenues from the "Others" segment decreased by 88.4% mainly due to the cancellation of congresses, exhibitions, and events in the context of pandemic.
Adjusted EBITDA of Sales and Developments was ARS 7,393 million mainly explained by the impact of the realized fair value of Bouchard 710 and Boston Tower sales, while adjusted EBITDA for Others segment was negative ARS 67 million.
62
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
Investment Properties Sales – 6M2021 | |||||
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 |
IQ21 Sales | 22,496 | 128.6 | |||
Boston Tower - Remaining | Nov-2020 | 7 | 7,158 | 42.0(1) | 5,710 |
IIQ21 Sales | 7,158 | 42.0 |
(1) Includes the value of a retail store for USD 1.1 million.
V. CAPEX
Alto Palermo Expansion
We keep working 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 71% and construction works are expected to be finished by August 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 six-month period ended December 31, 2020
Item (stated in ARS million) | Income by Segment | Expenses and Collective Promotion Funds | Adjustment for share of profit / (loss) of joint ventures (1) | Income Statement |
Revenues | 3,111 | 1,128 | (17) | 4,222 |
Costs | (485) | (1,235) | 27 | (1,693) |
Gross profit | 2,626 | (107) | 10 | 2,529 |
Net income / (loss) from fair value adjustments of investment property | 3,737 | - | (509) | 3,228 |
General and administrative expenses | (938) | - | 3 | (935) |
Selling expenses | (676) | - | 9 | (667) |
Other operating results, net | (78) | 2 | - | (76) |
Profit / (loss) from operations | 4,671 | (105) | (487) | 4,079 |
(1) Includes operating results from La Ribera Shopping and San Martín Plot (ex Nobleza Picardo) (50%).
63
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
VII. Consolidated Financial Debt
Below is a detail of IRSA Propiedades Comerciales S.A.’s debt as of December 31, 2020:
Description | Currency | Amount (USD MM)(1) | Interest Rate | Maturity |
Bank loans and overdrafts | ARS | 24.6 | - | < 360 days |
PAMSA loan | USD | 25.2 | Fixed | Feb-23 |
IRSA CP Notes Series II | USD | 360.0 | 8.75% | Mar-23 |
IRSA CP’s Total Debt | USD | 409.8 | ||
Cash & Cash Equivalents + Investments (2) | USD | 84.9 | ||
Intercompany Credit | ARS | 62.6 | ||
IRSA CP’s Net Debt | USD | 262.3 |
(1)
Principal amount at an exchange rate of ARS/USD 84.15 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)
VIII. Dividends
Pursuant to Argentine law, the distribution and payment of dividends to shareholders is only valid if they result from realized and net profits of the Company pursuant to annual financial statements approved by the shareholders. The approval, amount and payment of dividends are subject to the approval by our shareholders at our annual ordinary shareholders’ meeting. The approval of dividends requires the affirmative vote of a majority of the shares entitled to vote at the meeting.
Pursuant to Argentine law and our by-laws, net and realized profits for each fiscal year are allocated as follows:
●
5% of such net profits are allocated to our legal reserve, until such reserve amounts to 20% of our capital stock;
●
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 December 31, 2020 | Dividend per share paid stated in terms of the measuring unit current as of December 31, 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 |
(ARS thousands) | (ARS) | (ARS thousands) | (ARS) | |
2018 | 2,198,519 | 17.4466 | 680,000 | 5.3962 |
2019 | 1,207,537 | 9.5826 | 545,000 | 4.3249 |
2020 | 876,116 | 6.9526 | 595,000 | 4.7217 |
2021 | 10,407,000 | 82.5860 | 9,700,000 | 76.9755 |
As of November 25, 2020, the Company distributed 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 (1 par value) and an amount per ADR of ARS 307.9022 (Argentine Pesos per ADR).
64
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
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 inter alia, were resolved by majority of votes:
●
Distribution of ARS 9,700 million as cash dividends.
●
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 premium for 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 lots units 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 lots for a total price of approximately USD 19.1 million (USD 1.1 corresponding to the retail store), which had already been paid. 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 of the first basement, partially rented.
December 2020: Headquarters Change
The Company informs that it has moved its headquarters from Moreno 877, 22°floor, Autonomous City of Buenos Aires to Carlos Della Paolera 261, 8° floor, Autonomous City of Buenos Aires.
December 2020: Release of Sustainability Report 2020
The Company released its Sustainability Report for the fiscal year 2020. It's based on the Global Reporting Initiative (GRI) standars regarding its economic, social and environmental performance for the fiscal year 2020.
65
IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
X. Summary Comparative Consolidated Balance Sheet
(in ARS million) | 12.31.2020 | 12.31.2019 |
Non-current assets | 146,764 | 117,169 |
Current assets | 12,621 | 25,800 |
Total assets | 159,385 | 142,969 |
Equity attributable to the holders of the parent | 80,118 | 64,370 |
Non-controlling interest | 5,412 | 3,805 |
Total shareholders’ equity | 85,530 | 68,175 |
Non-current liabilities | 63,686 | 57,357 |
Current liabilities | 10,169 | 17,437 |
Total liabilities | 73,855 | 74,794 |
Total liabilities and shareholders’ equity | 159,385 | 142,969 |
XI. Summary Comparative Consolidated Income Statement
(in ARS million) | 12.31.2020 | 12.31.2019 |
Result from operations | 4,079 | 7,633 |
Share of profit of associates and joint ventures | (61) | 375 |
Result from operations before financing and taxation | 4,018 | 8,008 |
Financial income | 680 | 265 |
Financial cost | (2,172) | (2,197) |
Other financial results | 3,152 | (4,652) |
Inflation adjustment | 1,247 | (143) |
Financial results. net | 2,907 | (6,727) |
Result before income tax | 6,925 | 1,281 |
Income tax | (1,640) | (1,622) |
Result for the period | 5,285 | (341) |
Attributable to: | ||
Equity holders of the parent | 4,761 | (519) |
Non-controlling interest | 524 | 178 |
XII. Summary Comparative Consolidated Cash Flow
(in ARS million) | 12.31.2020 | 12.31.2019 |
Net cash (used in) / generated from operating activities | (5,292) | 4,449 |
Net cash generated from / (used in) investing activities | 15,272 | (3,016) |
Net cash used in financing activities | (14,470) | (3,109) |
Net decrease in cash and cash equivalents | (4,490) | (1,676) |
Cash and cash equivalents at beginning of year | 5,545 | 7,193 |
Financial Results from cash and cash equivalents | 28 | 161 |
Inflation adjustment | (19) | (39) |
Cash and cash equivalents at period-end | 1,064 | 5,639 |
XIII.
Comparative Ratios
(in ARS million) | 12.31.2020 | 12.31.2019 | ||
Liquidity | ||||
CURRENT ASSETS | 12,621 | 1.24 | 25,800 | 1.48 |
CURRENT LIABILITIES | 10,169 | 17,437 | ||
Indebtedness | ||||
TOTAL LIABILITIES | 73,855 | 0.92 | 74,794 | 1.16 |
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 80,118 | 64,370 | ||
Solvency | ||||
SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 80,118 | 1.08 | 64,370 | 0.86 |
TOTAL LIABILITIES | 73,855 | 74,794 | ||
Capital Assets | ||||
NON-CURRENT ASSETS | 146,764 | 0.92 | 117,169 | 0.82 |
TOTAL ASSETS | 159,385 | 142,969 |
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
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 (does not include the result of the Coto Airspace barter agreement and main related expenses corresponding to 2019) minus Total financial results, nets, excluding net financial interests, less share of loss/profit in associates and joint ventures, and excluding unrealized result from fair value adjustments of investment properties (does not include the result of the exchange of the Caballito Ferro land and the deconsolidation of La Maltería SA land corresponding to 2019).
EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. We present EBITDA and adjusted EBITDA because we believe they provide investors supplemental measures of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses EBITDA and Adjusted EBITDA from time to time, among other measures, for internal planning and performance measurement purposes. EBITDA and Adjusted EBITDA should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. EBITDA and Adjusted EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit for the relevant period to EBITDA and Adjusted EBITDA for the periods indicated:
For the six-month period ended December 31 (in ARS million) | ||
2020 | 2019 | |
Result for the period | 5,285 | (341) |
Interest income | (680) | (265) |
Interest expense | 1,917 | 2,037 |
Income tax expense | 1,640 | 1,622 |
Depreciation and amortization | 117 | 185 |
EBITDA | 8,279 | 3,238 |
Unrealized result from fair value adjustments of investment properties | 4,687 | (2,816) |
Share of loss / (profit) of associates and joint ventures | 61 | (375) |
Foreign exchange, net | 114 | 4,434 |
Loss/Gain from derivative financial instruments | 273 | 23 |
Fair value (gain) /loss of financial assets and liabilities at fair value through profit or loss | (3,572) | 281 |
Other financial costs | 255 | 160 |
Repurchase of non-convertible notes | 33 | (86) |
Gain from barter agreement – Coto Airspace | - | (345) |
Inflation adjustment | (1,247) | 143 |
Adjusted EBITDA | 8,883 | 4,657 |
Adjusted EBITDA Margin(1) | 287% | 68.3% |
(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA, divided by income from sales, rentals and services.
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 2020
XV.
NOI Reconciliation
In addition, we present in this summary report Net Operating Income or “NOI”. We define NOI as gross profit from operations (includes the result of the Espacio Aéreo Coto barter agreement and main related expenses corresponding to 2019), less Selling expenses, plus realized result from fair value adjustments of investment properties (does not include the result of the swap of the Caballito Ferro land and the deconsolidation of the La Maltería SA land corresponding to 2019), plus Depreciation and amortization.
NOI is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS. We present NOI because we believe it provides investors a supplemental measure of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses NOI from time to time, among other measures, for internal planning and performance measurement purposes. NOI should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. NOI, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit from operations to NOI for the periods indicated:
For the six-month period ended December 31 (in ARS million) | ||
2020 | 2019 | |
Gross profit | 2,529 | 6,156 |
Selling expenses | (667) | (488) |
Depreciation and amortization | 117 | 185 |
Gain from barter agreement – Coto Airspace | - | (345) |
Realized result from fair value of investment properties | 7,915 | - |
NOI (unaudited) | 9,894 | 5,508 |
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 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 six-month period ended December 31 (in ARS million) | ||
2020 | 2019 | |
Result for the period | 5,285 | (341) |
Unrealized Result from fair value adjustments of investment properties | 4,687 | (2,816) |
Depreciation and amortization | 117 | 185 |
Foreign exchange, net | 114 | 4,434 |
Loss from derivative financial instruments | 273 | 23 |
Fair value (gain)/loss of financial assets and liabilities at fair value through profit or loss | (3,572) | 281 |
Other financial costs | 255 | 160 |
Deferred income tax | 1,632 | 1,629 |
Non-controlling interest | (524) | (178) |
Non-controlling interest related to PAMSAS’s fair value | 496 | 199 |
Share of loss / (profit) of associates and joint ventures | 61 | (375) |
Inflation adjustment | (1,247) | 143 |
Adjusted FFO | 7,577 | 3,344 |
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IRSA Propiedades Comerciales Sociedad Anónima
Summary as of December 31, 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 it is of 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 first semester of the fiscal year and will have it in the second semester as well since the company's shopping malls opened 100% in mid-October but 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 the lockdown and social distancing. 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 making the cost structure more efficient, 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 since the reopening, 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 through 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.
IRSA Propiedades Comerciales Sociedad Anónima | |||
Date | By: | /s/ Saúl Zang | |
Name Saúl Zang | |||
Title First Vice-Chairman |
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