form6k.htm

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 

 FORM 6-K
 

 REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of June, 2013
 

 IRSA Inversiones y Representaciones Sociedad Anónima
(Exact name of Registrant as specified in its charter)
 
IRSA Investments and Representations Inc.
(Translation of registrant´s name into English)


 Republic of Argentina
(Jurisdiction of incorporation or organization)

Bolívar 108
(C1066AAB)
Buenos Aires, Argentina
 (Address of principal executive offices)


 Form 20-F x               Form 40-F  o
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes o               No x
 
 
 

 
 
IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited Condensed Interim Consolidated Financial Statements
as of March 31, 2013 and for the nine-month periods
ended March 31, 2013 and 2012


 
 

 
 
Legal information


Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.
Legal address: Bolívar 108, 1st floor, Buenos Aires, Argentina.
Company activity: Real estate investment and development.
Fiscal year No.: 70, beginning on July 1, 2012.
Date of registration of the By-laws in the Public Registry of Commerce: June 23, 1943.
Date of registration of last amendment of the by-laws in the Public Registry of Commerce: February 12, 2008.
Registration number with the Superintendence: 213,036.
Expiration of the Company’s by-laws: April 5, 2043.
Common Stock subscribed, issued and paid up 578,676,460


Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (Cresud S.A.C.I.F. y A.)
Legal Address: Moreno 877, 23rd. floor, Buenos Aires, Argentina
Main activity: Agricultural, livestock, and real estate
Percentage of votes of the Parent Company on the equity: 65.19%
Interest of the Parent Company on the capital stock: 377,253,404 common shares.


Type of stock
CAPITAL STATUS
 
Authorized for Public Offer of Shares (*)
Subscribed, Issued and Paid up (In thousands of Pesos)
Common stock with a face value of Ps. 1 per share and entitled to 1 vote each
578,676,460
578,676

(*) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
 
 
1

 

Unaudited Condensed Interim Consolidated Statements of Financial Position
as of March 31, 2013, June 30, 2012 and July 1st, 2011
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for the publication in Argentina
 
 
Note
    03.31.2013       06.30.2012       07.01.2011  
ASSETS
                         
Non- Current Assets
                         
Investment properties, net
9
    3,984,770       3,275,226       3,340,081  
Property, plant and equipment, net
10
    211,835       228,033       235,245  
Trading properties
11
    185,563       167,109       155,876  
Intangible assets, net
12
    77,167       29,389       31,900  
Investments in associates and joint ventures
7, 8
    1,430,688       1,445,815       1,373,215  
Deferred income tax assets
22
    74,413       34,255       17,903  
Restricted assets
3
    11,406       -       -  
Trade and other receivables, net
14
    229,097       196,372       165,009  
Investments in financial assets
15
    639,247       655,660       432,676  
Derivative financial instruments
16
    23,824       18,434       60,442  
Total Non-Current Assets
      6,868,010       6,050,293       5,812,347  
Current Assets
                         
Trading properties
11
    6,528       9,714       26,115  
Inventories
13
    16,531       15,659       6,820  
Restricted assets
3
    1,136       -       -  
Trade and other receivables, net
14
    540,231       475,877       419,995  
Investments in financial assets
15
    279,139       78,909       65,076  
Cash and cash equivalents
17
    399,276       259,169       301,559  
Total Current Assets
      1,242,841       839,328       819,565  
TOTAL ASSETS
      8,110,851       6,889,621       6,631,912  
                           
SHAREHOLDERS' EQUITY
                         
Capital and reserves attributable to equity holders of the parent
                         
Share capital
      578,676       578,676       578,676  
Inflation adjustment of share capital
      123,329       274,387       274,387  
Share premium
      793,123       793,123       793,123  
Acquisition of additional interest in subsidiaries
      (17,254 )     (15,714 )     -  
Cumulative translation adjustment
      38,500       14,502       -  
Reserve for share-based compensation
      8,321       2,595       -  
Legal reserve
      85,140       71,136       57,031  
Other reserves
      492,441       419,783       391,262  
Retained earnings
      716,478       510,853       656,525  
Total capital and reserves attributable to equity holders of the parent
      2,818,754       2,649,341       2,751,004  
Non-controlling interest
      505,460       390,428       331,609  
TOTAL SHAREHOLDERS' EQUITY
      3,324,214       3,039,769       3,082,613  
                           
LIABILITIES
                         
Non-Current Liabilities
                         
Trade and other payables
18
    196,920       166,656       149,355  
Borrowings
21
    2,618,989       2,048,397       1,725,272  
Deferred income tax liabilities
22
    396,441       411,232       485,032  
Provisions
20
    46,556       17,823       12,881  
Total Non-Current Liabilities
      3,258,906       2,644,108       2,372,540  
Current Liabilities
                         
Trade and other payables
18
    594,652       500,926       414,186  
Income tax liabilities
      71,715       104,869       57,791  
Salaries and social security liabilities
19
    41,504       39,607       34,089  
Borrowings…..
21
    806,724       557,896       667,587  
Provisions
20
    13,136       2,446       3,106  
Total Current Liabilities
      1,527,731       1,205,744       1,176,759  
TOTAL LIABILITIES
      4,786,637       3,849,852       3,549,299  
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
      8,110,851       6,889,621       6,631,912  

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       

 
2

 

Unaudited Condensed Interim Consolidated Statements of Income
 for the nine and three-month periods beginning on July 1st, 2012 and 2011
and January 1st, 2013 and 2012, respectively and ended March 31, 2013 and 2012
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for the publication in Argentina
 
     
Nine months
   
Three months
 
 
Note
    03.31.2013       03.31.2012       03.31.2013       03.31.2012  
Revenues
24
    1,604,059       1,328,523       518,018       415,604  
Costs
25
    (801,198 )     (637,257 )     (260,481 )     (196,821 )
Gross Profit
      802,861       691,266       257,537       218,783  
Gain from disposal of investment properties
9
    64,019       42,737       8,060       18,010  
General and administrative expenses
26
    (151,130 )     (125,055 )     (42,144 )     (43,071 )
Selling expenses
26
    (73,244 )     (56,257 )     (24,712 )     (21,763 )
Other operating results, net
28
    107,173       (11,998 )     (7,936 )     (3,537 )
Profit from operations
      749,679       540,693       190,805       168,422  
Share of profit /(loss) of associates and joint ventures
7,8
    15,112       15,922       728       (302 )
Profit before financial results and income tax
      764,791       556,615       191,533       168,120  
Finance income
29
    267,300       114,325       145,714       64,292  
Finance cost
29
    (571,737 )     (384,173 )     (192,856 )     (78,513 )
Financial results, net
29
    (304,437 )     (269,848 )     (47,142 )     (14,221 )
Profit before income tax
      460,354       286,767       144,391       153,899  
Income tax
22
    (81,093 )     (91,296 )     (11,009 )     (37,812 )
Profit for the period
      379,261       195,471       133,382       116,087  
                                   
Attributable to:
                                 
Equity holders of the parent
      320,638       176,622       96,856       95,071  
Non-controlling interest
      58,623       18,849       36,526       21,016  
                                   
Profit per share attributable to equity holders of the parent during the period:
                                 
Basic
      0.554       0.305       0.167       0.164  
Diluted
      0.554       0.305       0.167       0.164  

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       
 
3

 

Unaudited Condensed Interim Consolidated Statements of Comprehensive Income
for the nine and three-month periods beginning on July 1st, 2012 and 2011
and January 1st, 2013 and 2012, respectively and ended March 31, 2013 and 2012
 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for the publication in Argentina
 
   
Nine months
   
Three months
 
      03.31.2013       03.31.2012       03.31.2013       03.31.2012  
Profit for the period
    379,261       195,471       133,382       116,087  
Other comprehensive income:
                               
Items that may be reclassified subsequently to profit or loss:
                               
Currency translation adjustment
    40,306       10,955       16,573       2,074  
Other comprehensive income for the period, net of tax (i)
    40,306       10,955       16,573       2,074  
Total comprehensive income for the period
    419,567       206,426       149,955       118,161  
                                 
Attributable to:
                               
Equity holders of the parent
    357,551       188,700       110,348       98,365  
Non-controlling interest
    62,016       17,726       39,607       19,796  

(i)       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.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       
 
4

 


Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the nine-month periods ended March 31, 2013 and 2012
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for the publication in Argentina
 
   
Attributable to equity holders of the parent
             
   
Share capital
   
Inflation
adjustment
of share capital
   
Share Premium
   
Acquisition of additional interest in subsidiaries
   
Cumulative translation adjustment
   
Reserve
 for share-based compensation
   
Legal reserve
   
Other reserves
   
Retained earnings
   
Subtotal
   
Non-controlling interest
   
Total shareholders' equity
 
Balance at July 1st, 2012 
    578,676       274,387       793,123       (15,714 )     14,502       2,595       71,136       419,783       510,853       2,649,341       390,428       3,039,769  
Profit for the period
    -       -       -       -       -       -       -       -       320,638       320,638       58,623       379,261  
Others comprehensive income for the period
    -       -       -       -       36,913       -       -       -       -       36,913       3,393       40,306  
Total comprehensive income for the period
    -       -       -       -       36,913       -       -       -       320,638       357,551       62,016       419,567  
Appropriation of retained earnings approved by Shareholders’ meeting held 10.31.12
    -       -       -       -       -       -       14,004       72,658       (86,662 )     -       -       -  
Reclassification of the deferred tax liability – Approved by Shareholders’ meeting held 10.31.12
    -       (151,058 )     -       -       -       -       -       -       151,058       -       -       -  
Dividends distribution – approved by Shareholders meeting held 10.31.12
    -       -       -       -       -       -       -       -       (180,000 )     (180,000 )     (15,690 )     (195,690 )
Acquisition of subsidiary (Note 3)
    -       -       -       -       -       -       -       -       -       -       102,723       102,723  
Cumulative translation adjustment for interest held before business combination (Note 3)
    -       -       -       -       (12,915 )     -       -       -       -       (12,915 )     -       (12,915 )
Distribution of share capital
    -       -       -       -       -       -       -       -       -       -       (39,654 )     (39,654 )
Reserve for share-based compensation (Notes 27 y 30)
    -       -       -       -       -       5,726       -       -       -       5,726       209       5,935  
Conversion of corporate notes
    -       -       -       -       -       -       -       -       -       -       126       126  
Capital contribution of non-controlling interest
    -       -       -       -       -       -       -       -       -       -       6,092       6,092  
Acquisition of non-controlling interest
    -       -       -       (1,540 )     -       -       -       -       -       (1,540 )     (824 )     (2,364 )
Reimbursement of expired dividends
    -       -       -       -       -       -       -       -       591       591       34       625  
Balance as of March 31, 2013
    578,676       123,329       793,123       (17,254 )     38,500       8,321       85,140       492,441       716,478       2,818,754       505,460       3,324,214  

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       
 
 
5

 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the nine-month periods ended March 31, 2013 and 2012
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for the publication in Argentina
 
   
Attributable to equity holders of the parent
       
   
Share capital
   
Inflation
adjustment
of share capital
 
   
Share premium
   
Acquisition of additional interest in subsidiaries
   
Cumulative translation adjustment
   
Reserve for share-based compensation
   
Legal reserve
   
Other
reserves
   
Retained earnings
   
Subtotal
   
Non-
controlling interest
   
Total
shareholders' equity
 
Balance at July 1st, 2011 
    578,676       274,387       793,123       -       -       -       57,031       391,262       656,525       2,751,004       331,609       3,082,613  
Profit for the period
    -       -       -       -       -       -       -       -       176,622       176,622       18,849       195,471  
Other comprehensive income for the period
    -       -       -       -       12,078       -       -       -       -       12,078       (1,123 )     10,955  
Total comprehensive income for the period
    -       -       -       -       12,078       -       -       -       176,622       188,700       17,726       206,426  
Appropriation of retained earnings approved by Shareholders meeting held 10.31.11
    -       -       -       -       -       -       14,105       56,421       (70,526 )     -       -       -  
Dividends distribution – Approved by Shareholders meeting held 10.31.11
    -       -       -       -       -       -       -       -       (211,575 )     (211,575 )     (1,912 )     (213,487 )
Reimbursement of expired dividends
    -       -       -       -       -       -       -       -       3,640       3,640       169       3,809  
Capital contribution of non-controlling interest
    -       -       -       -       -       -       -       -       -       -       44,082       44,082  
Acquisition of non-controlling interest
    -       -       -       (15,311 )     -       -       -       -       -       (15,311 )     (92 )     (15,403 )
Reserve for share-based compensation (Notes 27 y 30)
    -       -       -       -       -       2,698       -       -       -       2,698       97       2,795  
Balance as of March 31, 2012
    578,676       274,387       793,123       (15,311 )     12,078       2,698       71,136       447,683       554,686       2,719,156       391,679       3,110,835  

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Eslztain  
    President  
       

 
6

 

Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the nine-month periods ended March 31, 2013 and 2012
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for the publication in Argentina
 
 
Note
    03.31.2013       03.31.2012  
Operating activities:
                 
Cash generated by operations                                                                                                  
17
    765,248       637,567  
Income tax paid
      (192,890 )     (122,352 )
Net cash generated by operating activities:                                                                                                  
      572,358       515,215  
Investing activities:
                 
Capital contributions in associates and joint ventures                                                                                                  
7, 8
    (39,925 )     -  
Purchases of associates and joint ventures                                                                                                  
3, 7
    (32,024 )     (148,328 )
Purchases of investment properties, net
9
    (157,324 )     (42,709 )
Proceeds from sale of investment properties, net
9
    91,456       52,827  
Purchases of property, plant and equipment, net
10
    (4,445 )     (9,787 )
Purchases of intangible assets, net
12
    (614 )     (1,363 )
Purchases of investments in financial assets                                                                                                  
      (157,881 )     (76,759 )
Proceeds from sale of investments in financial assets                                                                                                  
      153,117       -  
Advanced payments for purchases of  investment properties and property, plant and equipment, net
      (39,554 )     (9,130 )
Acquisition of subsidiaries, net of cash acquired
3
    (117,874 )     (6,644 )
Interest received
      5,300       -  
Loans granted to associates and joint ventures
      (813 )     (131,349 )
Dividends received
      49,602       5,819  
Loans repayments received from associates and joint ventures
      -       119,831  
Net cash used in investing activities
      (250,979 )     (247,592 )
Financing activities:
                 
Issuance of non-convertible notes                                                                                                  
      -       295,035  
Proceeds from borrowings                                                                                                  
      456,535       124,644  
Repayments of borrowings                                                                                                  
      (239,187 )     (342,482 )
Payment of seller financing                                                                                                  
      (6,420 )     (19,879 )
Acquisition of non-controlling interest in subsidiaries                                                                                                  
      (2,364 )     (7,364 )
Dividends paid                                                                                                  
      (180,260 )     (211,077 )
Capital contribution of non-controlling interest                                                                                                  
      6,092       44,082  
Interest paid                                                                                                  
      (221,152 )     (204,895 )
Payment for acquisition of non-controlling interest                                                                                                  
      (4,460 )     (9,730 )
Capital reduction of subsidiaries                                                                                                  
      (39,654 )     -  
Loans from associates and joint ventures, net                                                                                                  
      59,147       (1,535 )
Reimbursement of dividends                                                                                                  
      -       6,937  
Net cash used in financing activities
      (171,723 )     (326,264 )
Net increase / (decrease) in cash and cash equivalents
      149,656       (58,641 )
Cash and cash equivalents at beginning of period
17
    259,169       301,559  
Foreign exchange (loss) / gain on cash and cash equivalents
      (9,549 )     11,840  
Cash and cash equivalents at end of period                                                                                                  
      399,276       254,758  
The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       

 
7

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

1.  
The Group’s business and general information

IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”, “the Company” / “Us” or “the Society”) was founded in 1943 and is engaged in a diversified range of real estate activities in Argentina since 1991.

IRSA and its subsidiaries are collectively referred to hereinafter as “the Group”.

As of March 31, 2013, the Group operates in six business segments. See Note 5 for a description of such segments.

Group’s real estate business operations are conducted primarily through IRSA and IRSA’s principal subsidiary, Alto Palermo S.A. (“APSA”). Through APSA, the Group primarily owns, manages and develops shopping centers across Argentina. The Group primarily owns, manages and develops a portfolio of office and other rental properties in the Autonomous City of Buenos Aires, and it entered the US real estate market in 2009, mainly through the acquisition of non-controlling interests in office buildings and hotels (see Note 3). Through IRSA or APSA, the Group also develops residential properties for sale. The Group, through IRSA, is also involved in the operation of branded hotels. The Group uses the term “real estate” indistinctively in these consolidated financial statements to denote investment, development and/or trading properties activities.

The activities of the Group’s segment “Financial operations and others” is carried out mainly through Banco Hipotecario S.A. (“BHSA”), where IRSA has a 29.77% interest (without considering treasury shares of our own). BHSA is a commercial bank offering a wide variety of banking activities and related financial services to individuals, small and medium-sized companies and large corporations, including the provision of mortgaged loans. BHSA’s shares are listed on the Buenos Aires Stock Exchange (“BASE”). Besides that, the Group has a 42.95% interest in Tarshop S.A (“Tarshop”) which main activities are credit card and loan origination transactions.

IRSA’s shares are listed and traded on both the BASE and the New York Stock Exchange (“NYSE”). APSA’s shares are listed and traded on both the BASE and the NASDAQ of USA.

Cresud is the ultimate parent company and is a corporation incorporated and domiciled in Argentina. The address of its registered office is Moreno 877, Floor 23, Autonomous City of Buenos Aires, Argentina.

These Unaudited Condensed Interim Consolidated Financial Statements have been approved for issuance by the Board of Directors on May 17, 2013.

 
8

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”)

2.1  
Basis of preparation and transition to IFRS

The National Securities Commission, (“CNV”, as per its Spanish acronym), through General Resolutions No. 562/09 and 576/10, has provided for the application of Technical Resolutions No. 26 and 29 of the Argentine Federation of Professional Councils of Economic Sciences (as per its Spanish acronym “FACPCE”), which adopt the International Financial Reporting Standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”), for companies subject to the public offering regime ruled by Law 17,811, due to the listing of their shares or corporate notes, and for entities that have applied for authorization to be listed under the mentioned regime.

The Group is required to adopt IFRS as from the fiscal year beginning July 1st, 2012, being these financial statements the first interim financial statements for the nine-month periods prepared under those standards. Consequently, the Group’s transition date for the adoption of IFRS is July 1st, 2011.

The Unaudited Condensed Interim Consolidated Financial Statements of the Group for the nine-month periods ended March 31, 2013 and 2012 have been prepared in accordance with International Accounting Standards (“IAS”) 34 “Interim Financial Reporting” and IFRS 1. The Unaudited Condensed Interim Consolidated Financial Statements have been prepared in accordance with the accounting policies that the Group expects to adopt in its first annual consolidated financial statements for the fiscal year ended June 30, 2013 in accordance with IFRS. The accounting policies are based on IFRS issued by the IASB and the interpretations issued by the IFRS Interpretation Committee (“IFRIC”) that the Group expects to become applicable on such date.

The consolidated financial statements of the Group were prepared in accordance with the Argentine accounting standards (“Argentine GAAP”) in force, which differ from IFRS in some significant aspects. To prepare these Unaudited Condensed Interim Consolidated Financial Statements, the Management of the Company has modified certain valuation and presentation accounting policies that were previously applied under Argentine GAAP in order to comply with the IFRS.

Comparative figures and figures as of the transition date (July 1st, 2011) have been modified to reflect such adjustments. The notes below include a reconciliation of shareholders’ equity figures of consolidated financial statements prepared in accordance with the Argentine GAAP on the transition date (July 1st, 2011), on the adoption date (June 30, 2012) and on the closing date of the comparative period (March 31, 2012) and the statements of income and other comprehensive income figures for the fiscal year ended June 30, 2012 and for the nine and three-month periods ended March 31, 2012, and those presented in accordance with the IFRS in these condensed consolidated interim financial statements, as well as the effects of the adjustments to cash flows.

 
9

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

These Unaudited Condensed Interim Consolidated Financial Statements should be read together with the annual financial statements of the Group as of June 30, 2012 prepared in accordance with Argentine GAAP and with the Unaudited Condensed Interim Consolidated Financial Statements as of September 30, 2012, which include an Exhibit ("Exhibit I") which presents additional information as of June 30, 2012 and July 1st, 2011 under IFRS which is considered necessary to understand these condensed interim consolidated financial statements. The figures corresponding to the Unaudited statement of financial position, the statement of income, the statement of changes in shareholders’ equity, and the statement of cash flows under IFRS for the fiscal year ended June 30, 2012, for the nine and three-month periods ended March 31, 2012 and the figures of the statement of financial position as of July 1st, 2011 are detailed in Note 2.3 to these Unaudited Condensed Interim Consolidated Financial Statements. The Unaudited Condensed Interim Consolidated Financial Statements are presented in thousands of Argentine Pesos.

Unaudited Condensed Interim Consolidated Financial Statements corresponding to the nine and three-month periods ended March 31, 2013 and 2012 have not been audited. The management believes they include all necessary adjustments to fairly present the results of each period. The Company’s nine and three-month periods ended March 31, 2013 and 2012 results do not necessarily reflect the proportion of the Group’s full-year results.

The format of the primary financial statements under Argentine GAAP is governed by Technical Resolutions No. 8 and 9 of the Argentine Federation of Professional Councils of Economic Science (as per its Spanish acronym “FACPCE”) and Resolutions of the CNV. IAS 1 “Presentation of Financial Statements” requires certain disclosures to be made on the face of the primary statements and other required disclosures may be made in the notes or on the face of the financial statements, unless another standard specifies otherwise. The transition to IFRS has resulted in the Group changing the format of its statement of income, statement of financial position and statement of cash flows, as well as the disclosure of certain line items not prescribed by Argentine GAAP.

2.2  
Initial elections upon adoption of IFRS

IFRS exemption options

As a general rule, the Group is required to establish its IFRS accounting policies for the year ended June 30, 2013 and apply these retrospectively. However, advantage has been taken of certain exemptions afforded by IFRS 1 as further described below:

Exemption for business combinations

IFRS 1 provides the option to apply IFRS 3, “Business combinations”, prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Group elected to apply IFRS 3 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

 
10

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

The business combination exemption applies equally to acquisitions of investments in associates or joint ventures. The Group elected not to restate the acquisitions of investments in associates or joint ventures prior to transition date.

Exemption for deemed cost

IFRS 1 allows previous GAAP revaluations to be used as deemed cost under IFRS if those valuations were, at the time of the valuation, equivalent to fair value or depreciated cost adjusted to reflect changes in a price index. The Group elected to measure certain items of property, plant and equipment and investment properties at price-adjusted historical values as of July 1st, 2011.

In addition, IFRS 1 allows the carrying values of the assets and liabilities immediately following a business combination to be deemed cost for any cost-based measurement going forward from the date of the combination. The Group adopted a cost-based policy for all of its assets. As such, the Group used the previous fair values recognized in past business combinations (not restated as per the business combination exemption above) for certain items of investment properties and property, plant and equipment (primarily shopping centers, office buildings and hotels) as deemed cost at the date of transition. All depreciation methods were already in compliance with those required by IAS 16, “Property, plant and equipment”.

Exemption for accumulated exchange differences

The IFRS 1 allows accumulated exchange differences to be reset to zero on the transition date, thus avoiding the determination of accumulated exchange differences pursuant to IAS 21 “Effects of changes in foreign exchange rates” from the moment a subsidiary or associate was created or acquired. The Group chose to reset all accumulated exchange differences to zero on the transition date.

Exemption for compound financial instruments

IFRS 1 provides that if the liability component of a financial instrument is no longer outstanding at the date of transition to IFRS, first-time adopters do not have to separate it from the equity component. The Group elected not to restate convertible debt instruments that were not outstanding at the date of transition.

 
11

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

Exemption for borrowing costs

IFRS 1 has been amended to permit first-time adopters not to restate borrowing costs capitalized at transition date under previous GAAP. The Group elected to apply the provisions of IAS 23 “Borrowing costs” prospectively from the date of transition.

Exemption for assets and liabilities of subsidiaries

In accordance with IFRS 1, if a parent company adopts IFRS subsequent to its subsidiary, associate or joint venture adopting IFRS, the assets and liabilities of the subsidiary, associate or joint venture are to be included in the consolidated financial statements at the same carrying amounts as in the financial statements of the subsidiary, associate or joint venture, adjusted to reflect changes for the Group’s accounting policies upon consolidation, as applicable. The Group’s associates, Tarshop S.A. and Banco Hipotecario S.A., adopted IFRS in December 31, 2011.

The group has not used other optional exemptions of IFRS 1.

IFRS mandatory exceptions

Set out below are the applicable mandatory exceptions in IFRS 1 applied in the conversion from Argentine GAAP to IFRS.

Exception for estimates

IFRS estimates as of July 1st, 2011 are consistent with the estimates as at the same date made in conformity with Argentine GAAP. Therefore the estimates made by the Group under previous GAAP were not revised for application of IFRS except where necessary to reflect any difference in accounting policies.

Exception for non-controlling interests

IFRS 1 establishes that an entity must apply the requirements IFRS 10 “Consolidated financial statements” for accounting for changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control prospectively. Under Argentine GAAP, the Group accounted for acquisitions of non-controlling interests that did not result in change of control as business combinations. Furthermore, under Argentine GAAP, the Group accounted for disposals of non-controlling interests based on its carrying value at the date of disposal, recognizing any difference between the carrying value of the non-controlling interest and the consideration received in the statement of income. The Group did not restate these acquisitions prior to transition date.

 
12

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

IFRS 1 establishes that an entity must apply the requirements of IFRS 10 for accounting for a loss of control over a subsidiary prospectively. Under Argentine GAAP, the Group recognized any non-controlling equity investment retained under the equity method at the date control was lost.

The other compulsory exceptions of IFRS 1 have not been applied, as these are not relevant to the Group.

2.3  
Reconciliations of Argentine GAAP to IFRS

In accordance with the requirements of Technical Resolution No. 26 and 29 of the FACPCE, set out below are the reconciliations of shareholders’ equity from Argentine GAAP to IFRS as of June 30, 2012, at March 31, 2012 and July 1st, 2011, and the reconciliations of income and comprehensive income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012 and cash flows for the nine-month period ended March 31, 2012 and for the year ended June 30, 2012. The reconciliations included below were prepared based on the IFRS standards that are estimated to be applicable for the Group for the financial statements as of and for the year ended June 30, 2013. The items and amounts in the reconciliations included below are subject to change and should only be deemed final when the annual financial statements prepared under IFRS for the first time are issued.

The items and amounts included in the reconciliations could be modified to the extent that, when preparing financial statements as of and for the year ended June 30, 2013, applicable standards are different.

The first reconciliation provides an overview of the impact on equity of the transition as of July 1st, 2011, as of March 31, 2012 and June 30, 2012 (Note 2.3.1). The second reconciliation provides details of the impact on income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012 (Note 2.3.1). The third reconciliation provides details of the impact on other comprehensive income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012 (Note 2.3.1). The following reconciliations provide details of the impact of the transition on:

·  
Statement of financial position as of July 1st, 2011 (Note 2.3.2)
·  
Statement of financial position as of March 31, 2012 (Note 2.3.3)
·  
Statement of financial position as of June 30, 2012 (Note 2.3.4)
·  
Statement of income for the nine-month periods ended March 31, 2012 (Note 2.3.5)
·  
Statement of income for the three-month periods ended March 31, 2012 (Note 2.3.6)

 
13

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

·
  Statement of income for the fiscal year ended June 30, 2012 (Note 2.3.7)
·
  Statement of comprehensive income for the nine-month period ended March 31, 2012 (Note 2.3.8)
·
  Statement of comprehensive income for the three-month period ended March 31, 2012 (Note 2.3.9)
·
  Statement of comprehensive income for the fiscal year ended June 30, 2012 (Note 2.3.10)
·
  Statement of cash flows for the nine-month period ended March 31, 2012 and for the fiscal year ended June 30, 2012 (Note 2.3.11)

2.3.1.           Summary of equity

        07.01.11       03.31.12       06.30.12  
Total shareholders’ equity under Argentine GAAP attributable to IRSA
      2,313,687       2,365,292       2,335,279  
Revenue recognition – “scheduled rent increases”
(B)
    51,991       71,857       78,479  
Revenue recognition – “letting fees”
(C)
    (35,447 )     (42,306 )     (44,446 )
Trading property
(D)
    (29,315 )     (17,542 )     (18,946 )
Pre-operating and organization expenses
(E)
    (22,002 )     (18,308 )     (22,083 )
Goodwill
(F,G)
    425,839       411,332       406,526  
Non-current investments – financial assets
(H)
    151,411       156,526       138,204  
Initial direct costs on operating leases
(I)
    698       979       946  
Tenant deposits
(J)
    114       259       329  
Impairment of financial assets
(K)
    (2,088 )     (1,378 )     (519 )
Present value accounting – tax credits
(L)
    11,231       7,478       5,917  
Investments in associates
(N)
    (56,224 )     (130,301 )     (152,163 )
Investments in joint ventures
(O)
    (16,716 )     (15,626 )     (11,219 )
Acquisition of non-controlling interest
(P)
    -       (14,774 )     (15,178 )
Amortization of borrowing costs
(Q)
    110       487       123  
Deferred income tax
(S)
    (15,748 )     (28,035 )     (24,409 )
Non-controlling interest on adjustments above
(T)
    (26,537 )     (26,784 )     (27,499 )
Subtotal shareholders’ equity under IFRS attributable to IRSA
      2,751,004       2,719,156       2,649,341  
Non-controlling interest
      331,609       391,679       390,428  
Total shareholders’ equity under IFRS
      3,082,613       3,110,835       3,039,769  


 
14

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.1.           Summary of profit

     
Nine months
         
Three months
 
        03.31.12       06.30.12       03.31.12  
Profit under Argentine GAAP attributable to IRSA
      227,954       280,081       86,770  
Revenue recognition – “scheduled rent increases”
(B)
    19,866       26,488       6,622  
Revenue recognition – “letting fees”
(C)
    (6,859 )     (8,999 )     (2,782 )
Trading properties
(D)
    11,772       10,369       3,296  
Pre-operating and organization expenses
(E)
    3,717       (81 )     1,875  
Goodwill
(F,G)
    (14,474 )     (19,398 )     (3,639 )
Non-current investments – financial assets
(H)
    5,115       (13,207 )     42,855  
Initial direct costs on operating leases
(I)
    281       248       88  
Tenant deposits
(J)
    145       215       42  
Impairment of financial assets
(K)
    710       1,569       947  
Present value accounting – tax credits
(L)
    (3,753 )     (5,314 )     (1,920 )
Investment properties
(M)
    -       -       16,595  
Investments in associates
(N)
    (70,868 )     (89,837 )     (36,011 )
Investments in joint ventures
(O)
    1,092       5,497       (1,342 )
Amortization of borrowing costs
(Q)
    377       13       (194 )
Currency translation adjustment
(R)
    18,808       32,518       6,107  
Deferred income tax
(S)
    (12,850 )     (9,206 )     (15,450 )
Non-controlling interest on adjustments above
(T)
    (4,411 )     (7,065 )     (8,788 )
Profit under IFRS attributable to IRSA
      176,622       203,891       95,071  
Non-controlling interest
      18,849       20,785       21,016  
Profit under IFRS
      195,471       224,676       116,087  

2.3.1.           Summary of other comprehensive income

     
Nine months
         
Three months
 
        03.31.12       06.30.12       03.31.12  
Other comprehensive income under Argentine GAAP attributable to IRSA
      28,888       45,851       8,827  
Goodwill
(F,G)
    (33 )     85       36  
Investments in associates
(N)
    (3,208 )     (6,082 )     (1,195 )
Currency translation adjustment
(R)
    (18,808 )     (32,518 )     (6,107 )
Deferred income tax
(S)
    568       544       144  
Non-controlling interest on adjustments above
(T)
    4,671       6,622       1,589  
Other comprehensive income under IFRS attributable to IRSA
      12,078       14,502       3,294  
Other comprehensive income attributable to non-controlling interest
      (1,123 )     180       (1,220 )
Other comprehensive income under IFRS
      10,955       14,682       2,074  

 
15

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.           Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.2.  
Reconciliation of the statement of financial position as of July 1st, 2011

   
Balances under
Argentine GAAP I
 
Ref 2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref 2.3.12.2
 
Reclassifications III
 
Ref 2.3.12.3
 
Measurement adjustments IV
   
 
IFRS balances V
 
ASSETS
                                   
Non- current Assets
                                   
Investment properties
    -         -  
a
    3,339,383  
I,M
    698       3,340,081  
Property, plant and equipment, net
    3,405,980         (70,068 )
a,b,f,g
    (3,100,667 )       -       235,245  
Trading properties, net
    -         -  
a,b,c
    164,091  
D
    (8,215 )     155,876  
Intangible assets, net
    51,147         (73 )
g
    1,924  
E,F
    (21,098 )     31,900  
Inventories
    89,441         (59 )
b,c
    (89,382 )       -       -  
Investments in associates and joint ventures
    1,209,808         210,393  
f
    (1,797 )
G,N,O
    (45,189 )     1,373,215  
Other investments
    675,756         (64,608 )
a,b,d,f
    (611,148 )       -       -  
Deferred income tax assets
    18,678         (775 )       -         -       17,903  
Trade and other receivables, net
    145,248         (18,425 )       -  
B,L
    38,186       165,009  
Derivative financial instruments
    60,442         -         -         -       60,442  
Investments in financial assets
    -         -  
d
    281,265  
H
    151,411       432,676  
Negative Goodwill
    (398,075 )       -         -  
G
    398,075       -  
Total Non-current Assets
    5,258,425         56,385         (16,331 )       513,868       5,812,347  
Current Assets
                                             
Trading property
    -         -  
b
    48,120  
D,E
    (22,005 )     26,115  
Inventories, net
    262,660         (209,458 )
b,c
    (46,382 )       -       6,820  
Trade and other receivables, net
    404,167         (21,715 )
f
    14,593  
B,K
    22,950       419,995  
Investments in financial assets
    62,678         -  
e
    2,398         -       65,076  
Cash and cash equivalents
    309,659         (10,717 )
e
    2,617         -       301,559  
Other investments
    6,016         (1,001 )
e
    (5,015 )       -       -  
Total Current Assets
    1,045,180         (242,891 )       16,331         945       819,565  
TOTAL ASSETS
    6,303,605         (186,506 )       -         514,813       6,631,912  

 
16

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

   
Argentine GAAP balances I
 
Ref 2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
IFRS balances V
 
SHAREHOLDERS' EQUITY
                                   
Capital and reserves attributable to equity holders of the parent company
                                   
Share capital
    578,676         -         -         -       578,676  
Inflation adjustment  of share capital
    274,387         -         -         -       274,387  
Share premium
    793,123         -         -         -       793,123  
Legal reserve
    57,031         -         -         -       57,031  
Other reserves
    391,262         -         -         -       391,262  
Cumulative translation adjustment
    34,124         -         -  
A,R
    (34,124 )     -  
Retained earnings
    185,084         -         -         471,441       656,525  
Total capital and reserves attributable to equity holders of the parent company
    2,313,687         -         -         437,317       2,751,004  
Non-controlling interest
    304,932         -         -  
T
    26,677       331,609  
TOTAL SHAREHOLDERS' EQUITY
    2,618,619         -         -         463,994       3,082,613  
                                               
LIABILITIES
                                             
Non-current Liabilities
                                             
Trade and other payables
    132,565         (488 )       -  
C,J
    17,278       149,355  
Borrowings
    1,756,919         (31,647 )       -         -       1,725,272  
Deferred income tax liabilities
    476,864         (7,580 )       -  
S
    15,748       485,032  
Provisions
    12,881         -         -         -       12,881  
Total Non-current Liabilities
    2,379,229         (39,715 )       -         33,026       2,372,540  
Current Liabilities
                        -                    
Trade and other payables
    525,242         (128,959 )       -  
C,J
    17,903       414,186  
Income tax liabilities
    57,791         -         -         -       57,791  
Salaries and social security liabilities
    35,792         (1,703 )       -         -       34,089  
Borrowings
    683,813         (16,116 )       -  
Q
    (110 )     667,587  
Provisions
    3,119         (13 )       -         -       3,106  
Total Current Liabilities
    1,305,757         (146,791 )       -         17,793       1,176,759  
TOTAL LIABILITIES
    3,684,986         (186,506 )       -         50,819       3,549,299  
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
    6,303,605         (186,506 )       -         514,813       6,631,912  


 
17

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.3.           Reconciliation of statement of financial position as of March 31, 2012

   
Argentine GAAP balances I
 
Ref 2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
 
IFRS balances V
 
ASSETS
                                   
Non-current Assets
                                   
Investment properties, net
    -         -  
a
    3,265,282  
I
    979       3,266,261  
Property, plant and equipment, net
    3,350,152         (81,783 )
a,b,f,g
    (3,034,477 )       -       233,892  
Trading properties
    -         -  
b,c
    179,091  
D
    (13,389 )     165,702  
Intangible assets, net
    69,933         (6,991 )
g
    2,396  
E,F,P
    (33,411 )     31,927  
Investments in associates and joint ventures
    1,317,531         228,529  
f
    (277 )
G,N,O
    (117,985 )     1,427,798  
Other investments
    881,324         (64,593 )
a,b,d,f
    (816,731 )       -       -  
Deferred income tax assets
    44,370         (9,205 )       -         -       35,165  
Investments in financial assets
    -         -  
d
    481,751  
F
    156,526       638,277  
Trade and other receivables, net
    162,659         (22,583 )       -  
B,J,K
    45,310       185,386  
Inventories
    97,560         (101 )
b,c
    (97,459 )       -       -  
Negative Goodwill
    (383,720 )       -         -  
G
    383,720       -  
Total Non-current Assets
    5,539,809         43,273         (20,424 )       421,750       5,984,408  
Current Assets
                                             
Trading properties
    -         -  
b
    13,286  
D
    (4,153 )     9,133  
Inventories
    184,769         (163,290 )
b,c
    (13,537 )       -       7,942  
Trade and other receivables, net
    427,141         (25,380 )
f
    20,675  
B,J,K
    32,757       455,193  
Investments in financial assets
    101,552         (2,645 )
e
    31,168         -       130,075  
Cash and cash equivalents
    277,526         (22,768 )       -         -       254,758  
Investments
    31,168         -  
e
    (31,168 )       -       -  
Total Current Assets
    1,022,156         (214,083 )       20,424         28,604       857,101  
TOTAL ASSETS
    6,561,965         (170,810 )       -         450,354       6,841,509  


 
18

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

   
Argentine GAAP balances I
 
Ref 2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
 
IFRS balances V
 
SHAREHOLDERS' EQUITY
                                   
Capital and reserves attributable to equity holders of the parent company
                                   
Share capital
    578,676         -         -         -       578,676  
Inflation adjustment  of share capital
    274,387         -         -         -       274,387  
Share premium
    793,123         -         -         -       793,123  
Acquisition of non-controlling interest
    -         -         -  
P
    (15,311 )     (15,311 )
Legal reserve
    71,136         -         -         -       71,136  
Other reserves
    447,683         -         -         -       447,683  
Reserve for share-based compensation
    2,698         -         -         -       2,698  
Retained earnings
    134,577         -         -         420,109       554,686  
Cumulative translation adjustment
    63,012         -         -  
A,R
    (50,934 )     12,078  
Total capital and reserves attributable to equity holders of the parent company
    2,365,292         -         -         353,864       2,719,156  
Non-controlling interest
    364,895         -         -  
T
    26,784       391,679  
TOTAL SHAREHOLDERS' EQUITY
    2,730,187         -         -         380,648       3,110,835  
LIABILITIES
                                             
Non-current liabilities
                                             
Trade and other payables
    150,093         (3,495 )       -  
C,J
    21,493       168,091  
Derivative financial instruments
    836         -         -         -       836  
Borrowings
    2,122,620         (33,718 )       -         -       2,088,902  
Deferred Income tax
    421,897         (9,792 )       -  
S
    28,035       440,140  
Provisions
    12,929         (14 )       -         -       12,915  
Total Non-current Liabilities
    2,708,375         (47,019 )       -         49,528       2,710,884  
Current liabilities
                                             
Trade and other payables
    477,410         (102,748 )       -  
C,J
    20,665       395,327  
Income tax liabilities
    83,881         -         -         -       83,881  
Borrowings
    522,976         (20,029 )       -  
Q
    (487 )     502,460  
Salaries and social security liabilities
    28,310         (1,014 )       -         -       27,296  
Provisions
    10,826         -         -         -       10,826  
Total Current Liabilities
    1,123,403         (123,791 )       -         20,178       1,019,790  
TOTAL LIABILITIES
    3,831,778         (170,810 )       -         69,706       3,730,674  
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
    6,561,965         (170,810 )       -         450,354       6,841,509  


 
19

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.4.           Reconciliation of the statement of financial position as of June 30, 2012

   
Argentine GAAP balances I
 
Ref
2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
 
IFRS balances V
 
ASSETS
                                   
Non- current assets
                                   
Investment properties
    -         -  
a
    3,274,280  
I,M
    946       3,275,226  
Property, plant and equipment, net
    3,319,798         (88,717 )
a,b,f,g
    (3,003,048 )       -       228,033  
Trading properties
    -         -  
b,c
    180,433  
D
    (13,324 )     167,109  
Intangible assets, net
    71,157         (2,113 )
g
    2,475  
E,F
    (42,130 )     29,389  
Inventories
    97,221         (107 )
b,c
    (97,114 )       -       -  
Investments in associates and joint ventures
    1,342,337         239,177         -  
N,O
    (135,699 )     1,445,815  
Other investments
    978,672         (64,700 )
a,b,d
    (913,972 )       -       -  
Deferred income tax assets
    30,104         (12,104 )       -  
S
    16,255       34,255  
Trade and other receivables, net
    175,689         (28,987 )       -  
B,L
    49,670       196,372  
Investments
    -         -         -         -       -  
Investments in financial assets
    -         -  
d
    517,456  
H
    138,204       655,660  
Derivative financial instruments
    -         -  
d
    18,434         -       18,434  
Negative goodwill
    (377,463 )       -         -  
G
    377,463       -  
Total Non-current Assets
    5,637,515         42,449         (21,056 )       391,385       6,050,293  
Current Assets
                                             
Trading properties
    -         -  
b
    11,177  
D
    (1,463 )     9,714  
Inventories
    140,018         (113,182 )
b
    (11,177 )       -       15,659  
Trade and other receivables, net
    442,392         (22,707 )
f
    21,056  
B,L,K
    35,136       475,877  
Investments in financial assets
    76,546         (18,591 )
e
    20,954         -       78,909  
Cash and cash equivalents
    283,140         (23,971 )       -         -       259,169  
Other investments
    20,954         -  
e
    (20,954 )       -       -  
Total Current Assets
    963,050         (178,451 )       21,056         33,673       839,328  
TOTAL ASSETS
    6,600,565         (136,002 )       -         425,058       6,889,621  


 
20

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

   
Argentine GAAP balances I
 
Ref
2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
IFRS balances V
 
 
SHAREHOLDERS' EQUITY
                                   
Capital and reserves attributable to equity holders of the parent
                                   
Share capital
    578,676         -         -         -       578,676  
Inflation adjustment  of share capital
    274,387         -         -         -       274,387  
Share premium
    793,123         -         -         -       793,123  
Cumulative translation adjustment
    79,975         -         -  
A,R
    (65,473 )     14,502  
Reserve for share-based compensation
    2,595         -         -         -       2,595  
Acquisition of non-controlling interest
    -         -         -  
P
    (15,714 )     (15,714 )
Legal reserve
    71,136         -         -         -       71,136  
Other reserves
    419,783         -         -         -       419,783  
Retained earnings
    115,604         -         -         395,249       510,853  
Total capital and reserves attributable to equity holders of the parent
    2,335,279         -         -         314,062       2,649,341  
Non-controlling interest
    362,929         -         -  
T
    27,499       390,428  
TOTAL SHAREHOLDERS' EQUITY
    2,698,208         -         -         341,561       3,039,769  
                                               
LIABILITIES
                                             
Non-current Liabilities
                                             
Trade and other payables
    149,923         (4,576 )       -  
C,J
    21,309       166,656  
Borrowings
    2,065,826         (17,429 )       -         -       2,048,397  
Deferred income tax liabilities
    388,318         (12,880 )       -  
S
    35,794       411,232  
Provisions
    17,823         -         -         -       17,823  
Total Non-Current Liabilities
    2,621,890         (34,885 )       -         57,103       2,644,108  
Current Liabilities
                                             
Trade and other payables
    556,775         (82,366 )       -  
C,J
    26,517       500,926  
Income tax liabilities
    104,873         (4 )       -         -       104,869  
Salaries and social security liabilities
    40,686         (1,079 )       -         -       39,607  
Borrowings
    575,687         (17,668 )       -  
Q
    (123 )     557,896  
Provisions 
    2,446         -         -         -       2,446  
Total Current Liabilities
    1,280,467         (101,117 )       -         26,394       1,205,744  
TOTAL LIABILITIES
    3,902,357         (136,002 )       -         83,497       3,849,852  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
    6,600,565         (136,002 )       -         425,058       6,889,621  


 
21

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.5.           Reconciliation of statement of income for the nine-month period ended March 31, 2012

   
Argentine GAAP balances I
 
Ref
2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
IFRS balances V
 
Revenues
    1,078,611         (79,178 )
i,ii
    315,308  
B,C,J
    13,782       1,328,523  
Costs
    (402,932 )       69,588  
i,ii
    (329,340 )
E,F,D,I,M
    25,427       (637,257 )
Gross Profit
    675,679         (9,590 )       (14,032 )       39,209       691,266  
Gain from disposal of investment properties
    -         -  
ii
    18,205  
M
    24,532       42,737  
General and administrative expenses
    (128,911 )       3,856         -         -       (125,055 )
Selling expenses
    (63,513 )       7,120         -  
G,K
    136       (56,257 )
Other operating results, net
    -         -  
iii
    (13,014 )
E,F,G
    1,016       (11,998 )
Gain from recognition of inventories at net realizable value
    39,408         (4,570 )       -  
D,M
    (34,838 )     -  
Profit from operations 
    522,663         (3,184 )       (8,841 )       30,055       540,693  
Share of (profit) / loss of associates and joint ventures
    99,710         (4,046 )
iv
    (9,966 )
N,O
    (69,776 )     15,922  
Profit from operations before financial results and income tax 
    622,373         (7,230 )       (18,807 )       (39,721 )     556,615  
Finance income
    87,543         (3,354 )
iv
    9,966  
H,L,R
    20,170       114,325  
Finance cost
    (392,618 )       8,698         -  
Q,J
    (253 )     (384,173 )
Financial results, net
    (305,075 )       5,344  
iv
    9,966         19,917       (269,848 )
Other results, net
    (10,353 )       1,512  
iii
    8,841         -       -  
Amortization of goodwill, net
    14,267         -         -  
G
    (14,267 )     -  
Profit before income tax
    321,212         (374 )       -         (34,071 )     286,767  
Income tax
    (78,820 )       374         -  
S
    (12,850 )     (91,296 )
Profit for the period
    242,392         -         -         (46,921 )     195,471  
                                               
Attributable to:
                                             
Equity holders of the parent
    227,954         -         -         (51,332 )     176,622  
Non-controlling interest
    14,438         -         -  
T
    4,411       18,849  

 
22

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.6.           Reconciliation of statement of income for the three-month period ended March 31, 2012

   
Argentine GAAP balances I
   
Deconsolidation
 of joint ventures II (*)
   
Reclassifications III (*)
   
Measurement adjustments IV (*)
   
IFRS balances
NIIF V
 
Revenues
    339,197       (19,681 )     91,964       4,124       415,604  
Costs
    (128,683 )     16,615       (91,490 )     6,737       (196,821 )
Gross Profit
    210,514       (3,066 )     474       10,861       218,783  
Gain from disposal of investment properties
    -       -       1,573       16,437       18,010  
General and administrative expenses
    (45,234 )     1,696       -       467       (43,071 )
Selling expenses
    (25,291 )     1,976       -       1,552       (21,763 )
Other operating results, net
    1,703       -       (6,256 )     1,016       (3,537 )
Gain from recognition of inventories at net realizable value
    4,160       (1,626 )     -       (2,534 )     -  
Profit from operations 
    145,852       (1,020 )     (4,209 )     27,799       168,422  
Share of profit / (loss) of associates and joint ventures
    41,140       (1,523 )     (3,513 )     (36,406 )     (302 )
Profit from operations before financial results and income tax 
    186,992       (2,543 )     (7,722 )     (8,607 )     168,120  
Finance income
    52,635       (1,100 )     3,513       9,244       64,292  
Finance cost
    (119,049 )     3,232       -       37,304       (78,513 )
Financial results, net
    (66,414 )     2,132       3,513       46,548       (14,221 )
Other results, net
    (4,779 )     570       4,209       -       -  
Amortization of goodwill, net
    5,402       -       -       (5,402 )     -  
Profit before income tax
    121,201       159       -       32,539       153,899  
Income tax
    (22,203 )     (159 )     -       (15,450 )     (37,812 )
Profit for the period
    98,998       -       -       17,089       116,087  
                                         
Attributable to:
                                       
Equity holders of the parent
    86,770       -       -       8,301       95,071  
Non-controlling interest
    12,228       -       -       8,788       21,016  

(*)
Corresponds to the same items explained in Notes 2.3.5 and 2.3.7.

 
23

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.7.  
Reconciliation of statement of income for the year ended June 30, 2012

   
Argentine GAAP balances I
 
Ref
2.3.12.1
 
Deconsolidation
of joint ventures II
 
Ref
2.3.12.2
 
Reclassifications III
 
Ref
2.3.12.3
 
Measurement adjustments IV
   
 
IFRS balances V
 
Revenues
    1,571,440         (136,535 )
i,ii
    351,992  
B,C,D,J
    13,385       1,800,282  
Costs
    (575,447 )       124,700  
i,ii
    (444,148 )
E,F,D,I
    27,551       (867,344 )
Gross Profit
    995,993         (11,835 )       (92,156 )       40,936       932,938  
Gain from disposal of investment properties
    -         -  
ii
    92,156  
M
    24,533       116,689  
General and administrative expenses
    (182,369 )       5,043         -         -       (177,326 )
Selling expenses
    (99,201 )       12,859         -  
K
    1,569       (84,773 )
Gain from recognition of inventories at net realizable value
    42,817         (5,914 )       -  
D
    (36,903 )     -  
Other operating results, net
    -         -  
iii
    (27,496 )
E
    (3,251 )     (30,747 )
Profit from operations 
    757,240         153         (27,496 )       26,884       756,781  
Share of profit / (loss) of associates and joint ventures
    115,819         (8,697 )
iv
    (13,711 )
N,O
    (81,751 )     11,660  
Profit from operations before financial results and income tax 
    873,059         (8,544 )       (41,207 )       (54,867 )     768,441  
Finance income
    64,287         (7,346 )
iv
    13,711  
H,L,R
    26,287       96,939  
Finance cost
    (529,632 )       13,135         -  
H,G
    (13,194 )     (529,691 )
Financial results, net
    (465,345 )       5,789         13,711         13,093       (432,752 )
Other results, net
    (29,376 )       1,880  
iii
    27,496         -       -  
Amortization of goodwill, net
    18,145         -         -  
G
    (18,145 )     -  
Profit before income tax
    396,483         (875 )       -         (59,919 )     335,689  
Income tax
    (102,682 )       875         -  
S
    (9,206 )     (111,013 )
Profit / (Loss) for the year
    293,801         -         -         (69,125 )     224,676  
                                               
Attributable to:
                                             
Equity holders of the parent
    280,081         -         -         (76,190 )     203,891  
Non-controlling interest
    13,720         -         -  
T
    7,065       20,785  


 
24

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.8.           Reconciliation of the statement of comprehensive income for the nine-month period ended March 31, 2012

   
Argentine GAAP Balances I
 
Ref
2.3.12.2
 
Measurement adjustments IV
   
 
IFRS balances V
 
Profit for the period
    242,392         (46,921 )     195,471  
Other comprehensive income:
                         
Items that may be reclassified subsequently to profit or loss:
                         
Currency translation adjustment
    27,765  
A,R
    (16,810 )     10,955  
Other comprehensive income for the period
    27,765         (16,810 )     10,955  
Total comprehensive income for the period
    270,157         (63,731 )     206,426  
                           
Attributable to:
                         
Equity holders of the parent
    256,842         (68,142 )     188,700  
Non-controlling interest
    13,315         4,411       17,726  

2.3.9.           Reconciliation of the statement of comprehensive income for the three-month period ended March 31, 2012

   
Argentine
GAAP Balances I
   
Measurement adjustments IV (*)
   
IFRS balances V
 
Profit for the period
    98,998       17,089       116,087  
Other comprehensive income:
                       
Items that may be reclassified subsequently to profit or loss:
                       
Currency translation adjustment
    7,607       (5,533 )     2,074  
Other comprehensive income for the period
    7,607       (5,533 )     2,074  
Total comprehensive income for the period
    106,605       11,556       118,161  
                         
Attributable to:
                       
Equity holders of the parent
    95,597       2,768       98,365  
Non-controlling interest
    11,008       8,788       19,796  

 
(*)
Corresponds to the same items explained in Notes 2.3.8 and 2.3.10.

2.3.10.                      Reconciliation of the statement of comprehensive income for the year ended June 30, 2012

   
Argentine
GAAP Balances I
 
Ref
2.3.12.2
 
Measurement adjustments IV
   
IFRS balances V
 
Profit for the period
    293,801         (69,125 )     224,676  
Other comprehensive income:
                         
Items that may be reclassified subsequently to profit or loss:
                         
Currency translation adjustment
    46,031  
A,R
    (31,349 )     14,682  
Other comprehensive income  for the year
    46,031         (31,349 )     14,682  
Total comprehensive income for the year
    339,832         (100,474 )     239,358  
                           
Attributable to:
                         
Equity holders of the parent
    325,932         (107,539 )     218,393  
Non-controlling interest
    13,900         7,065       20,965  


 
25

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.11.                      Reconciliation of the statement of cash flows for the nine-month period ended March 31, 2012 and for the year ended June 30, 2012

Based on IAS 7 “Statement of Cash Flows” requirements, the Group has made the following reclassification between operating, investing and financing activities in the cash flow statements presented under Argentine GAAP and the cash flows statements under IFRS as further detailed below:

(a)  
Operating activities

      03.31.2012       06.30.2012  
Cash generated by operating activities under Argentine GAAP
    592,405       878,600  
Proceeds from sale of property, plant and equipment and investment properties
    (52,827 )     (132,941 )
Deconsolidation of joint ventures
    (12,523 )     (40,093 )
Foreign exchange (gain) / loss in cash and cash equivalents
    (11,840 )     5,361  
Cash generated by operating activities under IFRS
    515,215       710,927  

(b)  
Investing activities

      03.31.2012       06.30.2012  
Cash used in investing activities under Argentine GAAP
    (308,722 )     (402,324 )
Acquisition of non-controlling interest in subsidiaries
    7,364       8,054  
Proceeds from sale of property, plant and equipment and investment properties
    52,827       132,941  
Deconsolidation of joint ventures
    939       6,126  
Cash used in investing activities under IFRS
    (247,592 )     (255,203 )

(c)  
Financing activities

      03.31.2012       06.30.2012  
Cash used in financing activities under Argentine GAAP
    (318,431 )     (505,410 )
Acquisition of non-controlling interest in subsidiaries
    (7,364 )     (8,054 )
Deconsolidation of joint ventures
    (469 )     20,858  
Cash used in financing activities under IFRS
    (326,264 )     (492,606 )

 
26

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(d)  
Net decrease in cash and cash equivalents

      03.31.2012       06.30.2012  
Net decrease in cash and cash equivalents under Argentine GAAP
    (34,748 )     (29,134 )
Foreign exchange (gain) / loss in cash and cash equivalents
    (11,840 )     5,361  
Deconsolidation of joint ventures
    (12,053 )     (13,109 )
Net decrease in cash and cash equivalents under IFRS
    (58,641 )     (36,882 )

2.3.12.                      Explanation of the transition to IFRS

In addition to the exemptions and exceptions discussed above, the following narratives explain the significant differences between the previous Argentine GAAP accounting policies and the current IFRS applied by the Group. Only the differences having an impact on the Group are explained below. The following is not a complete summary of all of the differences between Argentine GAAP and IFRS. The descriptive caption next to each numbered item below corresponds to the same numbered and descriptive caption in the reconciliations above, which reflect the quantitative impacts from each change. Unless the quantitative impact is disclosed, the impact is not significant to the Group.

Column I in the tables included on previous pages represents Argentine GAAP balances prior to transition as published in the latest Group’s Argentine GAAP financial statements as of and for the year ended June 20, 3012 compared to transition date (July 1st, 2011), and in the Group’s Argentine GAAP financial statements for the nine-month period ended March 31, 2012. However, certain reclassifications and/or groupings have already been made to that information in Column I to avoid lengthy explanations of certain format changes introduced in these IFRS financial statements. The following changes have been made to the previous Argentine GAAP statement of financial position in Column I:

(1)  
The line items “Trade receivables” and “Other receivables” have been grouped into the new line item “Trade and other receivables, net”.

(2)  
The line items “Trade payables”, “Customer advances”, “Taxes payable” and “Other liabilities” have been also grouped into the new line item “Trade and other payables”, with the exception of  income tax payable and deferred income tax which have been shown separately.

(3)  
Goodwill which was previously disclosed separately offsetting negative goodwill has been included as part of “Intangible assets”.

(4)  
Cash equivalents previously disclosed as part of the line item current investments have been grouped together with cash and banks, in the line named “Cash and cash equivalents”.

 
27

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(5)  
Derivative financial instruments which were previously included as part of the non-current line items “Other receivables”, “Other payables” and/ or “Iinvestments” have been disclosed as separate assets or liabilities as appropriate.

(6)  
Investments in associates and joint ventures previously included as part of “Non-Current Investments” have been separately disclosed in the new line item “Investments in associates and joint ventures”.

(7)  
The portion of equity in a subsidiary not attributable directly or indirectly to a parent is known as “Minority interest” and is classified as a separate component between the liability and equity sections of the statement of financial position (mezzanine section). IFRS 10 “Consolidated financial statements” specifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as a separate component within equity in the consolidated financial statements. The Group has non-controlling interest in more than one subsidiary. Accordingly, the Group aggregated its various non-controlling interests on the consolidated statements, renamed them as “Non-controlling interest” and reclassified the aggregated amount from the mezzanine section to shareholders’ equity at transition date.

The following changes have been made to the statements of income for the year ended June 30, 2012 and for the nine and three-month periods ended March 31, 2012:

(1)  
The format of the statement of income has been restructured to simplify its reading. To that effect, all revenue streams of the Group which were previously disclosed separately (i.e. sales of development properties, leases and services revenue, and hotel revenue), together with its corresponding costs of sales, have been aggregated into two line items titled "Revenues" and "Costs" in Column I. Revenues and Costs are then cross-referenced to the respective notes in the financial statements where a detailed breakdown is provided per line of business.

(2)  
Pursuant to the Argentine GAAP in force, the share of losses and profits from associates and joint ventures is shown after the financial results. Likewise, under IFRS, the share of profits and losses from associates and joint ventures is generally shown after the financial income (expense) line. However, where associates and joint ventures are an integral vehicle to carry out the Group’s operations, it is more adequate to show the share of profits and losses of associates and joint ventures before financial income (expense). In accordance with its strategy, the Group conducts its operations through associates or joint ventures. Therefore, under the IFRS, the Group shows the profits or losses from associates and joint ventures before the financial income (expense) line. For simplicity, the share of profits and losses associates is shown before financial results, net, in Column I.

 
 
28

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(3)  
Non-controlling interests in the results of a consolidated subsidiary which was previously classified as a component of profits within the statement of income has been presented as an allocation of profit in Column I. As part of the adoption to IFRS, the term "Minority interest" has also been replaced with the new term "non-controlling interest" in accordance with IAS 1.

(4)  
Under the Argentine GAAP in force, financial results are broken down depending on whether it is generated by assets or by liabilities. Under the IFRSs, the Group has adopted the criterion of showing financial income and financial expenses on different lines in the statement of income. For simplicity, the Group has reclassified the figures as per Argentine GAAP shown under “Financial income (expense) generated by assets” and “Financial income (expense) generated by liabilities”, into “Financial income” and “Financial cost” as established by the IFRS, as applicable, in Column I.

(5)  
According to IFRS, income and expense items not recognized in the statement of income (that is, exchange differences related to translation of foreign businesses) are shown in the statement of comprehensive income as “Other comprehensive income”. According to Argentine GAAP, the statement of comprehensive income is not mandatory and, therefore, such items are recognized as part of shareholders’ equity, in a separate reserve account. For simplicity, these items are shown in “Other comprehensive income” in Column I.

 
2.3.12.1 Deconsolidation of joint ventures (Column II)

Argentine GAAP – Entities in which the Group has joint control are proportionately consolidated. As of July 1st, 2011, the Group’s joint ventures are Cyrsa S.A., Canteras Natal Crespo S.A., Puerto Retiro S.A., Baicom Networks S.A. and Quality Invest S.A.. As of March 31, 2012 and June 30, 2012, the joint ventures of the Group are Cyrsa S.A., Canteras Natal Crespo S.A., Puerto Retiro S.A., Baicom Networks S.A., Quality Invest S.A. and Nuevo Puerto Santa Fe S.A..

IFRS - The Group has assessed the nature of its joint arrangements in line with IFRS 11 “Joint Arrangements” and determined them to be joint ventures. Joint ventures are accounted for under the equity method of accounting.

 
29

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

As a result, the Group deconsolidated the accounts of the joint ventures and presented them as a single line item on the face of the statement of financial position. Column II titled “Deconsolidation of joint ventures” reflects the elimination on a line-by-line basis of the Argentine GAAP pro-rata equity interest in the joint ventures and the disclosure of the Group’s investments in the joint ventures as a single line item titled “Investments in associates and joint ventures” on the statement of financial position and as a single line item titled “Share of profit / loss of associates and joint ventures” on the statement of income. The impact of the IFRS adjustments on joint ventures balances is further discussed in Note 2.3.12.3 below.

2.3.12.2 Reclassifications (Column III)

Reclassifications affecting the statement of financial position

The column titled “Reclassifications” reflects the differences in presentation and format between the statement of financial position under Argentine GAAP and IFRS. Unless otherwise stated, amounts have been reclassified for presentational purposes under IFRS prior to affecting the corresponding IFRS adjustments, as applicable, to the Argentine GAAP corresponding amounts. The impact of the IFRS adjustments on reclassified balances is included in Column IV titled ¨Measurement Adjustments¨ and is further discussed in Note 2.3.12.3 below. Unless otherwise stated, reclassifications affect both the statement of financial position as of transition date (July 1st, 2011), March 31, 2012, and June 30, 2012.

(a) Investment properties, net

Argentine GAAP - There are not specific requirements for presentation of investment property. Accordingly, the Group does not present separately investment property and includes it as part of property, plant and equipment and non-current investments.

Certain property of the Group is being partially owner-occupied while the rest is being rented out to third parties. There is no such distinction under Argentine GAAP. Portions that are owner-occupied are accounted for and presented in the same way as portions that are being rented out.

Certain associates and joint ventures are currently occupying certain property of the Group. There is no distinction under Argentine GAAP and property rented out to associates or joint ventures are accounted for as property, plant and equipment.

IFRS - IAS 1 “Presentation of Financial Statements” requires investment property to be presented as a separate line item on the face of the statement of financial position within non-current assets.

 
30

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

In addition, the portions of the property that are being owner-occupied are accounted for and presented as property, plant and equipment under IAS 16 while the portions being rented out are treated and presented as investment property under IAS 40.

The Group’s property occupied by associates or joint ventures accounted for using the equity method of accounting is not considered part of the Group for consolidation purposes and, therefore, the property is not owner-occupied from the Group’s perspective. Therefore, this property is treated as investment property.

(b) Trading properties

Argentine GAAP – There are not specific requirements for separate presentation of trading properties. Trading properties are included as part of inventories and non-current investments.

IFRS – Trading properties are inventories under IAS 2 “Inventories”. The Group also has materials and supplies, and other items classified as inventories under IAS 2. Due to the significance and different nature of these inventories, the Group decided to present trading properties separately.

(c) In-kind receivables from barter transactions

Argentine GAAP – In-kind receivables from barter transactions representing the Group’s right to receive residential apartments to be constructed by a third-party developer are classified as inventory on the face of the statement of financial position.

IFRS – In-kind receivables representing are not financial assets under IFRS. These in-kind receivables are similar to trading properties and they are classified accordingly in current or non-current assets, as appropriate.

(d) Non-current investments – financial assets

Argentine GAAP – There are not specific requirements for separate presentation of financial assets. Certain financial assets carried at cost under Argentine GAAP were included within non-current investments.

IFRS – IAS 1 “Presentation of Financial Statements” requires financial assets carried at fair value through profit or loss to be presented as a separate line item on the face of the statement of financial position.

 
31

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(e) Current investments – investments in financial assets

Argentine GAAP – Certain instruments carried at fair value are included within the line item investments in the face of the statement of financial position.

IFRS – These investments are also carried at fair value but they are separately disclosed in the new line item titled “Investments in financial assets”.

(f) Advances for purchases of property, plant and equipment, inventories and investments in associates and joint ventures

Argentine GAAP – Receivables representing money advances made for the purchase of items of property, plant and equipment, inventories and investments in associates and joint ventures are shown as part of their respective balances.

IFRS - Advances for the purchase of items of investment properties, property, plant and equipment, inventories and investments in associates and joint ventures are not considered part of these balances until the respective item is received, and, thus, they are shown within “Trade and other receivables, net”.

(g) Software

Argentine GAAP – Under Argentina GAAP, the Group classified software into property, plant and equipment.

IFRS – Software is not considered part of property, plant and equipment, thus, it is shown within Intangible Assets, net”.

Reclassifications affecting the statement of income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012

(i) Revenue – service income and service charges

Argentine GAAP – The Group structures its operating leases to allow for recovery of a significant portion of property operating, real estate taxes, repairs and maintenance, and advertising and promotion expenses from tenants. A substantial portion of the Group’s leases require the tenants to reimburse the Group for a substantial portion of operating expenses, including common area maintenance, real estate taxes and insurance. The Group’s tenants are required to pay for their proportionate share of property common operating costs. These expenses (“service charge expenses”) are incurred and paid by the Group and subsequently charged to tenants without any mark-up (“service charge income”).

Under Argentine GAAP, service charge income and service charge expense are offset and presented net in the income statement.

 
32

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

IFRS – IAS 18 states that whether an entity is acting as a principal or an agent in transactions is dependent on the facts and circumstances of the relationship. The Group has assessed the substance of the transactions and concluded that the Group is acting as a principal since it has exposure to the significant risks and rewards associated with the rendering of services.

Therefore, service charge income is presented separately from property operating expenses. Property operating expenses are expensed as incurred and any property operating expenditure not recovered from tenants through service charges or when the property is vacant are charged to the statement of income. The Group’s advertising and promotional costs are expensed as incurred.

(ii) Gains on disposal of investment

Argentine GAAP – As part of the Group’s strategy, the Group may dispose of investment properties which are no longer considered core to the Group’s ongoing operations and for which profit can be realized from value appreciation. Gain on disposals of office buildings is classified as revenue in the statement of income.

IFRS – Based on the IFRS Conceptual Framework, gain on disposal of assets described above are not reported under “Revenues”.

Under IFRS, gains from the disposal of fixed assets are not included in “Revenue” as the standard refers to the sale of goods including goods produced by the entity for sale or purchased for resale. Only property acquired or constructed for sale and held as inventory (“Trading property”) would therefore be included in the “Revenues”, except for property held as an investment properties or property, plant and equipment.

(iii) Other operating results, net

Argentine GAAP - Under Argentine GAAP, certain income and expense items are included as part of financial results or other non-operating income and expenses, as appropriate. These items primarily comprise fees payable related to the management contract charges for provisions (i.e. generally charges for litigation and claims), gains or losses on disposal of property, plant and equipment items, gains or losses from the sale of subsidiaries and taxes borne by the Group on behalf of shareholders, among others.

IFRS - Under IFRS, income and expense items are generally presented according to its nature and the Group’s presentation policy. The items described above are generally presented as “Other operating results, net” under IFRS.

 
33

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(iv) Investment in financial assets

Argentine GAAP – Investments in entities in which the Company does not exercise significant influence, joint control or control, are accounted at cost plus dividends. The received dividends are included within share of profit or loss of associates and joint ventures.

IFRS – Investments in entities which are not subsidiaries, associates and joint ventures, are measured at fair value. Changes in fair values and gains from disposal of equity investments at fair value through profit or loss and dividends income are recorded within “Financial results, net” in the statement of income.

Reclassifications affecting the statements of cash flows for the nine-month period ended March 31, 2012 and for the year ended June 30, 2012.

Pursuant to Argentine GAAP, the Group proportionally consolidated the joint ventures’ accounts. Consequently, a difference is generated between the amount of cash and cash equivalents reported in the statement of cash flows under Argentine GAAP and the amount of cash and cash equivalents that would be reported in the statement of cash flows prepared under IFRS.

On the other hand, under the Argentine GAAP, the effect of exchange rate changes on cash and cash equivalents was shown as part of operating activities and not under a fourth category in the statement of cash flows as required by the IFRSs.

Additionally, pursuant to Argentine GAAP, proceeds from sale of property, plant and equipment (including properties classified as investment properties under IFRS) were reported as operating activities. In accordance with IFRS proceeds from sale of investment properties and property, plant and equipment are reported as investing activities.

Finally, pursuant to Argentine GAAP, acquisition of non-controlling interest was reported as investing activities, whereas, in accordance with IFRS, it must be reported as cash from financing activities.

Thus, cash flows generated by or used in operating, investing and financing activities were different in the statement of cash flow prepared under Argentine GAAP.

 
34

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

2.3.12.3 Measurement adjustments (Column IV)

Argentine GAAP differs in certain significant respects from IFRS. Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as further described below:

(A) Currency translation adjustment

As noted in the section titled “IFRS exemption options”, the Group has applied the one-time exemption to set the foreign currency cumulative translation adjustment (“CTA”) to zero as of July 1st, 2011.

(B) Revenue recognition – “scheduled rent increases”

Argentine GAAP - Revenue from “non-cancelable” leases subject to scheduled rent escalation clauses is recognized when the escalated payments are due. Therefore, revenue does not include an averaging of rental income. Rent-free periods, reduced rent or other tenant incentives, if any, are recognized in the period in which these incentives are provided.

IFRS - The Group applied IAS 17 “Leases”. As a result, lease income from operating leases with scheduled rent increases is recognized on a straight-line basis over the term of the leases. All tenant incentives, if any, are treated as a reduction of rental income on a straight-line basis over the lease terms.

(C) Revenue recognition – “letting fees”

Argentine GAAP - The Group does not generally use the services of a third-party lease agent for its shopping center properties. Rather, the Group acts as its own leasing agent and earns letting fees. Letting fees are recognized at the time a transaction is successfully completed. A transaction is considered successfully completed when both parties (the tenant and the Group) have signed the related lease contract.

IFRS - The Group considers that in these circumstances payments received from tenants for “letting fees” are not different from other payments received such as admission rights. Accordingly, revenue from letting fees is recognized under the straight-line method over the lease term.
 
 
35

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(D) Trading properties

Argentine GAAP - Trading properties are stated at the lower of cost adjusted for inflation or net realizable value. Additionally, trading properties are measured at net realizable value when contracts are exchanged for which a non-refundable deposit has been received securing the sale in advance of legal completion (i.e. transfer of deed of title and significant risk and rewards). This form of sale fixes the price of the property and the terms and conditions of the contract providing reasonable certainty about the closing of the transaction and realization of the gain. Accordingly, these transactions are deemed consummated for Argentine GAAP purposes and revenue is recognized at the time the contract is signed. Gains on the revaluation of trading property to net realizable value are shown as “gain from recognition of inventories at net realizable value” in the statement of income.

IFRS - Trading properties are measured at the lowest of cost or net realizable value. Revenue from the sale of properties is recognized only when the significant risks and rewards have transferred to the buyer. This will normally take place on unconditional exchange of contracts at the moment of the transfer of title deed. For conditional exchanges, sales are recognized when these conditions are satisfied.

(E) Pre-operating and organization expenses

Argentine GAAP - Under Argentine GAAP, pre-operating, organization expenses and other start-up costs (mainly related to the opening of new shopping centers) are capitalized and amortized under the straight-line method generally over a period of three to five years.

IFRS - IFRS prescribes that pre-operating expenses cannot be attributed to the cost of property, plant and equipment, investment properties, trading properties or the creation of intangible assets and are immediately recognized as expenses.

(F) Goodwill

Argentine GAAP - The Group accounts for acquisitions of businesses and non-controlling interests under the purchase method of accounting. Under the purchase method of accounting, the Group allocates the purchase price to tangible and intangible assets and liabilities based on the respective fair values. Goodwill represents the excess of cost over the fair value of net identifiable assets and is amortized under the straight-line method over the weighted average useful life of the tangible assets acquired. Goodwill does not exceed its respective estimated recoverable value at year-end.

IFRS - As noted in Note 2.2., the Group has applied the exemption in IFRS 1 for business combinations. Also, as noted in Note 2.2., the Group has applied the exception in IFRS 1 for acquisitions of non-controlling interests.

 
36

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(G) Negative Goodwill

Argentine GAAP - Under Argentine GAAP, when the amount paid in a business combination or acquisition of a non-controlling interest is lower than the carrying amount of the acquired assets and assumed liabilities, the Group recognizes such amount as negative goodwill on the statement of financial position (as a deduction to non-current assets) and amortizes it over the period considered to justify negative goodwill not exceeding 20 years. However, under Argentine GAAP, when negative goodwill exists, acquired intangible assets which otherwise would be recognized are reduced to absorb the negative goodwill even if they are then assigned a zero value.

Additionally, where the amount paid for the acquisition of associates and/or joint ventures is lower to the investor's interest in the net fair values of the associate and/or joint venture's identifiable assets and liabilities, the Group recognizes such amount as negative goodwill on the statement of financial position and amortizes it over the period considered to justify negative goodwill not exceeding 20 years. That amortization is recognized under the line “Share of profit / (loss) of associates and joint ventures” in the statement of income.

IFRS - As noted in Note 2.2., the Group has applied the exemption in IFRS 1 for business combinations. Also, as noted in Note 2.2., the Group has applied the exception in IFRS 1 for acquisitions of non-controlling interests. Consequently, business combinations and acquisitions of non-controlling interests completed prior to July 1st, 2011 have not been restated, and the carrying amount of negative goodwill under IFRS as of July 1st, 2011 equals the carrying amount under Argentine GAAP as of that date. In accordance with IFRS, negative goodwill is recognized in profit or loss immediately.

Additionally, acquisitions of associates and/or joint ventures are initially recorded at cost of the investment. Any difference between the cost of the investment and the investor's interest in the net fair values of the associates’ and/ or joint venture’s identifiable assets and liabilities is goodwill. Negative goodwill is taken to the income statement in the period when the associate and/or joint venture is acquired.

(H) Non-current investments – investments in financial assets

Argentine GAAP - The Group holds investments in quoted equity securities with readily determinable fair values, namely TGLT S.A., Hersha Hospitality Trust and Supertel. Under Argentine GAAP, these investments are carried at acquisition cost since they are not held for the purpose of trading in the short term.

IFRS - Under IFRS 9 “Financial Instruments”, all equity investments are measured at fair value. For certain equity investments, the Group can make an irrevocable election at initial recognition to recognize changes in fair value through other comprehensive income rather than profit or loss. However, the Group has decided to not recognize changes in fair value through other comprehensive income. The Group has elected to recognize changes in the fair value of these equity securities in the statement of income.
 
 
37

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(I) Initial direct costs on operating leases

Argentine GAAP - Under Argentine GAAP, certain initial direct costs (i.e. legal fees, commissions and other fees) paid to third parties for arranging a lease (when the Group is a lessor) are recognized as an immediate expense when incurred.

IFRS - Initial direct costs incurred by lessors in arranging an operating lease are added to the carrying amount of the leased assets (i.e. investment properties) and are recognized as an expense over the lease term on the same basis as the lease income.

(J) Tenant deposits

Argentine GAAP - The Group obtains deposits from tenants as a guarantee for returning the property at the end of the lease term in a specified good condition or for the lease payments for a period of generally 3 years. The deposit amounts, usually, one month of rent. These deposits are treated as liabilities under Argentine GAAP and measured at the amount received by the tenants.

IFRS - Tenant deposits are treated as a financial liability in accordance with IFRS 9, and they are initially recognized at fair value. The difference between fair value and cash received is considered to be part of the minimum lease payments received for the operating lease (deferred income). The deposits are subsequently measured at amortized cost, and deferred income is amortized under the straight line method over the lease term.

(K) Impairment of financial assets

Argentine GAAP - At July 1st, 2011, March 31, and June 30, 2012, the Group maintains receivables relating to credit card loans, which are carried at amortized cost. Under Argentine GAAP, the Group determined an allowance for doubtful accounts based on specific criteria set forth for financial and banking institutions.

IFRS - The Group applied the criteria for impairment provisions in IFRS 9.

(L) Present value accounting – tax credits

Argentine GAAP - Under Argentine GAAP, certain long-term tax credits are present-valued as of year-end.

IFRS - Under IFRS, there is no requirement to discount long-term tax credits. The Group elects to measure tax receivables and payables at the amounts expected to be recovered from or paid to the tax authorities and thus, not discounting long-term tax credits.

 
38

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(M) Investment properties

Argentine GAAP - There are not specific requirements for presentation of investment property. Accordingly, the Group includes it as part of property, plant and equipment and non-current investments and are measured at acquisition cost less accumulated amortization and loss for impairments, if any. Additionally, trading properties are measured at net realizable value when contracts are exchanged for which a non-refundable deposit has been received securing the sale in advance of legal completion (i.e. transfer of title deed and significant risk and rewards). This form of sale fixes the price of the property and the terms and conditions of the contract providing reasonable certainty about the closing of the transaction and realization of the gain. Accordingly, these transactions are deemed consummated for Argentine GAAP purposes and revenue is recognized at the time the contract is signed. Gains on the revaluation of trading property to net realizable value are shown as “Gain from recognition of inventories at net realizable value” in the statement of income.

IFRS - Investments properties are measured at cost, less accumulated depreciation and loss for impairments, if any. Revenue from the sale of properties is recognized only when the significant risks and rewards have transferred to the buyer. This will normally take place with the transfer of title deed. For conditional exchanges, sales are recognized when these conditions are satisfied.

(N) Impact of adjustments in accordance with IFRS in investments in associates

Argentine GAAP - Investments in entities in which the Group exercises significant influence, but not control, are accounted for under the equity method. Under the equity method, the investment is recorded at original cost and periodically increased (decreased) by the investor's proportionate share of earnings (losses) of the investee and decreased by all dividends received from the investor by the investee. The Group applies its percentage ownership interest to the financial statements of its equity method investments prepared under Argentine GAAP.

As of July 1st, 2011, the associates of the Group are Banco Hipotecario S.A., Banco de Crédito & Securitización S.A., Manibil S.A., New Lipstick LLC, Lipstick Management LLC, Rigby 183 LLC and Tarshop S.A. As of March 31 and June 30, 2012 Bitania 26 S.A. is incorporated.

IFRS - The Group assessed all of its interests in the entities mentioned in the paragraph above and determined that the Company exercises significant influence over them. Accordingly, under IFRS, the Group also accounts for these investments under the equity method of accounting. However, the Group has assessed the impact of IFRS adjustments on the financial statements of these investments prepared under Argentine GAAP prior to the application of the equity method.

 
39

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

Following is a description of the most significant IFRS adjustments to the equity, income and comprehensive income of its associates. For ease of presentation and to facilitate an understanding of the nature of the IFRS adjustments, associates were grouped by business activities. Associates are not discussed below when IFRS adjustments were not significant to the Group or no IFRS adjustments were identified:

Banking business

The Group assessed the financial statements of associates of the Group related to the banking business as of July 1st, 2011, March 31, and June 30, 2012 and determined the following adjustments to IFRS:

- Under Argentine GAAP, revenues from life and disability insurance and loan origination fees are recognized on an up-front basis. Under IFRS, these revenues are recognized on a straight line basis over the term of the respective underlying receivables.

- Under Argentine GAAP, the allowance for doubtful accounts for loan losses are recognized based on specific criteria as set forth by the Central Bank for financial and banking institutions. Under IFRS, the associate applied the impairment provisions in IFRS 9.

- Under Argentine GAAP, receivables transferred to trusts in securitization programs are treated as sales and a gain or loss is recognized on the sale. Usually the transferor retains an interest in the trust and maintains a cash reserve which serves as collateral for payments of amounts due under the debt securities issued by the trust. Under IFRS, following the provisions of IFRS 9, the associate is not able to derecognize financial assets with these characteristics. As a result, the associate continues recognizing the receivables and a liability for the consideration received upon transfer. The receivables recognized are then tested for impairment following the IFRS 9 criteria.

- Under Argentine GAAP, the calculation of the insurance technical reserves is recognized following the regulations issued by the National Insurance Superintendence. Under IFRS, following the guidance of IFRS 4 “insurance contracts”, the associate measured the insurance technical reserve in accordance with the “best estimation” approach.

Investment properties

The Company assessed the financial statements of the associates related to the investment property business and determined the following adjustments to IFRS as of July 1st, 2011, March 31 and June 30, 2012:

 
40

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

- Under Argentine GAAP, revenue from non-cancelable leases subject to scheduled rent escalation clauses is recognized when the escalated payments are due. Therefore, revenue does not include an averaging of rental income. Rent-free periods, reduced rent or other tenant incentives, if any, are recognized in the period in which these incentives are provided. Under IFRS, lease income from operating leases with scheduled rent increases is recognized on a straight-line basis over the term of the leases. All tenant incentives, if any, are treated as a reduction of rental income on a straight-line basis over the lease terms.

- Under Argentine GAAP, lease expense where the entity is the lessee under an operating ground lease agreement subject to escalation clauses is recognized when the escalated payments are due. Therefore, lease expenses are not recognized on a straight-line basis. Under IFRS, lease payments for operating leases with scheduled rent increases are recognized on a straight-line basis over the term of the leases.

(O) Impact of IFRS adjustment on joint ventures

Argentine GAAP - Investments in entities in which the Group exercises joint control are accounted for under the proportionate consolidation method. Under the proportionate consolidation method, the financial statements of the Group reflect the Group’s pro-rata equity interest in the jointly controlled entities on a line-by-line basis. The Group applied its pro-rata equity interest to the financial statements of its jointly-controlled entities prepared under Argentine GAAP.

IFRS – The Group assessed all of its interests in joint arrangements and determined that they are joint ventures under IFRS 11 “Joint Arrangements”. Accordingly, the Group accounted for its joint ventures under the equity method of accounting. The Group has assessed the impact of IFRS adjustments on the financial statements of joint ventures prepared under Argentine GAAP prior to the application of the equity method.

As of July 1st, 2011, the joint ventures of the Group are Cyrsa S.A., Canteras Natal Crespo S.A., Puerto Retiro S.A., Baicom Networks S.A. and Quality Invest S.A. As of March 31 and June 30, 2012 Nuevo Puerto Santa Fe S.A. is incorporated.

Following is a description of the most significant IFRS adjustments to the equity and income of the joint ventures. Joint ventures are not discussed below when IFRS adjustments were not significant to the Group or no adjustments were identified.

 
41

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

- Under Argentine GAAP, the joint venture has historically accounted for revenues and therefore profits from all property sales on a percentage of completion basis once contracts for the sale of a property have been exchanged and only if the eventual profit from that property can be foreseen with reasonable certainty. Under IFRS, the joint venture has applied IFRIC 15 “Agreements for the construction of Real Estate”. The Group assessed the contractual terms of the agreements and concluded that revenue from open market sales of real estate should be accounted for on legal completion of the agreement in accordance with IAS 18 “Revenue”. As a result, the joint venture recognizes revenue from the sale of private homes and commercial units entirely at the point of legal completion in accordance with IAS 18. The most significant impact of IFRIC 15 is therefore the deferral of profits previously recognized from the point of exchange of contracts onwards until the point of legal completion. All of these profits are now recognized at a later date.

- Under Argentine GAAP, tenant deposits are treated as liabilities and measured at the amount received by the tenants. Under IFRS, tenant deposits are treated as both a financial asset and a financial liability in accordance with IFRS 9, and they are initially recognized at fair value. The difference between fair value and cash received is considered to be part of the minimum lease payments received for the operating lease. The deposits are subsequently measured at amortized cost.

- Under Argentine GAAP, revenue from non-cancelable leases subject to scheduled rent escalation clauses is recognized when the escalated payments are due. Under IFRS, the Group applied IAS 17 “Leases”. Consequently, revenue derived from operating leases with scheduled increases in recognized on a straight line basis over the lease agreement term.

- Under Argentine GAAP, certain long-term tax credits are present-valued as of year-end. Under IFRS, there is no requirement to discount long-term tax credits. The joint venture elects to measure tax receivables and payables at the amounts expected to be recovered from or paid to the tax authorities and thus, not discounting long-term tax credits. As a result, the joint venture eliminated the effect of discounting tax.

(P) Acquisition of non-controlling interest

As stated in Note 2.2., the Group has applied the exception provided by IFRS 1 for accounting for changes in the interest in subsidiaries that do not result in loss of control. Consequently, acquisitions of non-controlling interests that took place before July 1st, 2011 have not been restated.

IFRS adjustments detailed below relate to acquisitions of non-controlling interest that took place on July 1st, 2011 or after date.

 
42

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

Argentine GAAP - Under Argentine GAAP, the Group accounted for the acquisition of the non-controlling interests under the purchase method of accounting. Under the purchase method of accounting, the purchase price paid is allocated to the net assets acquired based on its fair value. Assets, including goodwill, and liabilities of the acquired business are recognized using a cost accumulation approach (i.e. for the previous equity interests acquired). These acquisitions generated goodwill since the cost of acquisition exceeded the fair value of the net tangible and intangible assets acquired.

IFRS - Under IFRS, the Group applied the principles of IFRS 10 in accounting for changes in ownership interests. As per IFRS 10, when an additional interest is obtained and control is maintained, the transaction is accounted for as an equity transaction. The Group does not recognize any additional acquisition adjustments to reflect the subsequent acquisition of additional interest in the subsidiary if there is no change in control.

Under IFRS, the difference between the fair value of the consideration paid and the related carrying value of the non-controlling interest acquired is recognized in the controlling interest’s equity as a credit or debit to a reserve in net equity. Therefore, no gain or loss is recognized in the statement of income and no additional goodwill is recognized. The carrying value of the non-controlling interest is adjusted to reflect the change in the non-controlling interest’s ownership interest in the subsidiary.

(Q) Amortization of borrowing costs

Argentine GAAP - Under Argentine GAAP, transactions costs directly attributable to the acquisition of borrowings are amortized under the straight-line method over the contract term.

IFRS – Transaction costs directly attributable to the acquisition of borrowings are deducted from the fair value at which the financial liability is initially recognized. Subsequently, they are amortized using the effective interest method over the contract term.

(R) Currency translation adjustment

Argentine GAAP - Foreign operations shall be classified as integrated or non-integrated entities depending if their activities are carried out as an extension of the reporting entity. Exchange differences resulting from the translation of integrated entities are recognized in the statement of income. Exchange differences resulting from the translation of non-integrated entities are recognized in a separate reserve in equity.

IFRS – Exchange differences resulting from the translation of foreign operations of subsidiaries and associates are recognized in the statement of other comprehensive income.

 
43

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

(S) Deferred income tax

Argentine GAAP - The Group accounts for income taxes using the deferred tax method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax based assets and liabilities and are measured using the enacted tax rates. Argentine GAAP does not prescribe detailed specific guidance related to the recognition of a valuation allowance. The Group assesses the need for a valuation allowance based on several factors including but not limited to current projections, legal expiration periods and others.

IFRS – There is no difference in the determination of deferred income taxes. However, deferred tax assets are recognized when it is considered probable (defined as “more likely than not”) that sufficient taxable profits will be available to utilize the temporary difference or unused tax losses. IFRS does not allow the recognition of valuation allowances.

IFRS establishes more specific and strict procedures to assess whether a deferred tax asset should be recognized. All available evidence, both positive and negative, is considered to determine whether, based on the weight of that evidence, a deferred tax asset should be recognized. Judgment must be used in considering the relative impact of negative and positive evidence. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. The more negative evidence that exists (a) the more positive evidence is necessary and (b) the more difficult it is to support a conclusion that a deferred tax asset can be recognized.

(T) Non-controlling interest

Differences for non-controlling interest include the effect of recording, where applicable, the corresponding effect of other differences between Argentine GAAP and IFRS.

2.4.           Significant Accounting Policies

The principal accounting policies applied in the presentation of these Unaudited Condensed Interim Consolidated Financial Statements are consistent with those applied in the preparation of the information under IFRS as of June 30, 2012, which are described in Exhibit I attached hereto and are based upon such IFRS expected to be in force as of June 30, 2013. The most significant accounting policies are described in Exhibit I.

2.5.  
Use of estimates

The preparation of financial statements at a certain date requires the Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual future results might differ from the estimates and evaluations made at the date of preparation of these financial statements.


 
44

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
2.  
Basis of preparation and adoption of International Financial Reporting Standards (“IFRS”) (Continued)

In the preparation of these condensed interim consolidated 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 for the year ended June 30, 2012 which are described in Exhibit I.

2.6           Seasonal effects on operations

The operations of the Group’s shopping centers are also subject to seasonal effects, which affect the level of sales recorded by lessees. During summer time (January and February), the lessees of shopping centers experience the lowest sales levels in comparison with the winter holidays (July) and Christmas holidays (December) when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping mall sales. Sale discounts at the end of each season also affect the business. As a consequence, a higher level of revenues is generally expected in the second half of the year rather than the first in shopping center operations.


3.  
Acquisitions and disposals

Transactions with non-controlling interest

APSA

During the current nine-month period, the Group, through IRSA and E-Commerce Latina S.A., acquired an additional equity interest of 0.1% in APSA for a total consideration of Ps. 2.3 million. As a result of this transaction, the non-controlling interest was reduced by Ps. 0.8 million and the interest attributable to the shareholders’ of the controlling parents was reduced by Ps. 1.5 million. The effect on shareholders’ equity of this change in the equity interest in APSA is summarized as follows:
 
   
Ps.
 
Carrying value of the equity interests acquired by the Group
    824  
Price paid for the non-controlling interest
    (2,364 )
Reserve created due to the acquisition recognized in the parent’s equity
    (1,540 )

 
45

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

3.  
Acquisition and disposals (Continued)

Acquisition of equity interest in joint venture

On November 29, 2012 the Group through APSA acquired shares of common stock, representing 50% of Entertainment Holdings S.A. (“EHSA”)’s capital stock and votes for Ps. 32 million. Under the acquisition agreement, APSA is entitled to exercise joint control over EHSA. EHSA is an Argentine company whose main asset consists of an indirect interest of 50% in the capital and voting rights of La Rural S.A. (“LRSA”), whereby it has joint control over this Company together with Sociedad Rural Argentina (“SRA”), who owns the remaining 50%. Thus, APSA is the owner of an indirect interest of 25% in LRSA, whose main asset consists of an usufruct agreement on the Predio Ferial de Buenos Aires, located between Cerviño, Sarmiento, Santa Fé Avenues and Oro street, in the city of Buenos Aires (the “Predio Ferial”) entered into with SRA, owner of such Predio Ferial.
 
The fair value of the APSA’s investment in the joint business was determined based on the fair value of EHSA’s net assets, being the main asset the usufruct agreement mentioned above. APSA has preliminary allocated the price paid at the fair value of the net assets acquired based on the information available as of the closing date of Unaudited Condensed Interim Consolidated Financial Statements. Such fair value amounted to Ps. 15.3 million, which means a goodwill figure of Ps. 10.6 million recognized in the “Investments in associates and joint business” line in the balance sheet as of March 31, 2013. The fair value and identified goodwill should not be treated as final until the process of allocating the price paid is finalized.
 
The fair value of the usufruct agreement has been determined by the application of the discounted cash flow method. This estimate considered a discount rate that reflects the market assessments regarding uncertainties in terms of the cash flow amount and timing. The amount of net future cash flows was estimated based on the specific features of the property, the agreements in force, market information and future forecasts as of the valuation date. Net income forecasts, revenues growth rates and discount rates are among the most important assumptions used in the valuation.

Purchase of financial assets

During this period the Group purchased:

a) Government bonds of the City of Buenos Aires, for a nominal value of Ps. 19.0 million. These bonds accrue interest at an annual 7.95% fixed rate, payable semi- annually and maturing on April 29, 2014.

b) BHSA Non-Convertible Notes for Ps. 5 million, which accrue interest at an annual 18.75% fixed annual rate, payable semi- annually maturing on August 8, 2013.

 
46

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

3.  
Acquisition and disposals (Continued)

Disposal of financial assets

During the current nine-month period, the Group sold 3,823,412 ordinary shares of Hersha Hospitality Trust (“Hersha”) for a total amount of US$ 19.4 million. Consequently, as of the date of issuance of these Unaudited Condensed Interim Consolidated Financial Statements, the Group’s interest in Hersha’s capital stock decreased from 9.13% (at the beginning of the year) to 7.19%. Subsequent to March 31, 2013, the Group sold an additional number of Hersha’s shares (see Note 33).

In November and December 2012, IRSA sold all of its shareholdings in NH Hoteles S.A. (138,572 shares for a consideration of € 0.38 million) and in NH Hoteles S.A. (387,758 shares for a total consideration of US$ 1.4 million).

In December 2012, IRSA sold all of its shareholdings in Metrovacesa F (1,238,990 shares for a consideration of € 2.7 million); Metrovacesa SM (229,995 shares for a total consideration of € 0.5 million) and Metrovacesa F (919,087 shares for a consideration of US$ 2.7 million).

Significant sales of investment properties

On August 31, 2012, IRSA executed the transfer deeds that formalize the sale of certain functional units of the building “Libertador 498” of the Autonomous City of Buenos Aires. The total price of the transaction amounted to Ps. 15 million and was paid on the execution of the title conveyance deeds. This transaction generated a gain of Ps. 12.7 million.

On September 14, 2012, IRSA sold certain functional units on floors 18 and 19, as well as parking areas, of the building Bouchard 551. The total price of the transaction was US$ 8.5 million paid upon execution of the conveyance deed. This transaction generated a gain of Ps. 18.4 million.

On October 4 and 11, 2012, IRSA signed the transfer deed for the sale of several functional units (stores and parking spaces) of the building “Libertador 498”. The transactions price was set at Ps. 29.4 million, amount that had been completely collected. This transaction generated a gain of Ps. 24.9 million.

On January 8, 2013, IRSA sold certain functional units (stores and parking spaces) of the building “Costeros Dique IV”. The total price of the transaction was Ps. 9.2 million. This transaction generated a gain of Ps. 7.8 million.

On March 14, the Group through APSA sold, a functional unit of the building located on Anchorena 559. The transaction Price was set at Ps. 0.4 million, which resulted in approximately Ps. 0.2 million gain.

 
47

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

3.  
Acquisition and disposals (Continued)

Acquisition of Rigby 183 LLC

On June 30, 2012, the Group held through its subsidiary IMadison LLC a 49% equity interest in the capital stock of Rigby 183 LLC (“Rigby”), a company that owns office buildings for rental at Madison Avenue 183, New York, USA. On November 27, 2012, the Group, through its subsidiary IRSA International LLC, purchased an additional 25.5% equity interest in Rigby’s capital stock, thus taking control over said company. As a result of the acquisition, the Group expects to increase its footprint in the US real estate market. The goodwill from the acquisition, which amounts to Ps. 45.7 million, is attributable to the synergies expected to be achieved by combining the Group’s and Rigby’s operations.

The following chart shows the consideration paid by the Group, the fair value of the acquired assets, the assumed liabilities and the non-controlling interest as of the acquisition date.

Consideration paid:
    11.27.2012  
Cash and cash equivalents                                                                                                                  
    118,373  
Total consideration paid                                                                                                                  
    118,373  
Fair value of the interest in Rigby’s equity held before the business combination
    227,462  
Total consideration                                                                                                                  
    345,835  
Recognized balances of acquired identifiable assets and assumed liabilities:
       
Cash and cash equivalents                                                                                                                  
    499  
Investment properties (Note 9)                                                                                                                  
    679,219  
Restricted assets (i)                                                                                                                  
    11,818  
Trade and other receivables, net                                                                                                                  
    2,317  
Borrowings                                                                                                                  
    (252,834 )
Trade and other payables                                                                                                                  
    (12,081 )
Deferred income tax liabilities (Note 22)                                                                                                                  
    (26,103 )
Total net identifiable assets                                                                                                                  
    402,835  
Non-controlling interest                                                                                                                  
    (102,723 )
Goodwill (Note 12)                                                                                                                  
    45,723  
Total                                                                                                                  
    345,835  
(i)  
It pertains to cash held in escrow as security deposits and taxes paid in advance by tenants.

The acquisition-related costs (which amount to Ps. 2.5 million) were charged under “General and Administrative Expenses” in the statement of income.

The fair value of the investment property acquired is Ps. 679.2 million and was assessed by a qualified independent appraiser. The fair value of trade and other receivables amounts to Ps. 14.1 million, including trade receivables in the amount of Ps. 0.1 million. As of the acquisition date, the Group estimates that these receivables are recoverable. The fair value of the non-controlling interest in Rigby, an unlisted company, has been determined on a proportional basis to the fair value of net acquired assets.
 
 
48

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


3.  
Acquisition and disposals (Continued)

The Group recognized income of Ps. 124.1 million derived from the reassessment of the fair value of the 49% interest held in Rigby before the business combination. In addition, all cumulative currency translation gains (losses) accumulated in shareholders’ equity from the interest held in Rigby before the business combination (Ps. 12.9 million) were charged to income. These gains were disclosed under "Other operating results, net" in the statement of income.

The revenues Rigby has generated since November 27, 2012 and that have been disclosed in the consolidated statement of income amount to Ps. 25.6 million. Rigby has also run a net loss of Ps. 2.6 million during said period. If Rigby had been included in the consolidation since July 1st, 2012, the consolidated income statement would have shown pro-forma revenues in the amount of Ps. 1,618.4 million and pro-forma net income of Ps. 317.2 million.


4.           Financial risk management

4.1.
Financial risk

The group´s diverse activities are exposed to a variety of financial risk: market risk (including foreign currency risk, interest rate risk and price risk) credit risk, liquidity risk and capital risk.

The Exhibit I provides information on financial risk management as of June 30, 2012 and July 1st, 2011. Since June 30, 2012, there have been no significant changes in the risk management or risk management policies applied by the Group.

4.2.           Fair value estimates

Since June 30, 2012 there have been no significant changes in business or economic circumstances affecting the fair value of the Group's financial assets or liabilities (either measured at fair value or amortized cost), nor any transfers between the different hierarchies used to assess the fair value of the Group's financial instrument and / or reclassifications between categories of financial instruments.


 
49

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

5.
Segment information

Below is a summarized analysis of the lines of business of the Group for the period ended March 31, 2013:

 
    03.31.2013  
   
Shopping Center Properties
   
Offices
and others
   
Sales and developments
   
Hotels
   
International
   
Financial operations and others
   
Total
 
Revenues
    1,183,590       213,084       117,178       174,694       25,632       1,100       1,715,278  
Costs
    (566,096 )     (85,962 )     (89,066 )     (126,233 )     (20,361 )     (845 )     (888,563 )
Gross Profit
    617,494       127,122       28,112       48,461       5,271       255       826,715  
Gain from disposal of investment properties
    -       -       64,019       -       -       -       64,019  
General and administrative expenses
    (46,819 )     (31,389 )     (28,111 )     (36,526 )     (9,105 )     (216 )     (152,166 )
Selling expenses
    (39,023 )     (8,667 )     (12,609 )     (21,124 )     -       (187 )     (81,610 )
Other operating results, net
    (17,590 )     (2,120 )     (8,418 )     456       134,487       (616 )     106,199  
Profit / (loss) from operations
    514,062       84,946       42,993       (8,733 )     130,653       (764 )     763,157  
Share of profit / (loss) of associates
    -       -       1,478       (4 )     (58,446 )     62,924       5,952  
Segment Profit / (Loss)
    514,062       84,946       44,471       (8,737 )     72,207       62,160       769,109  
Investment properties, net
    2,067,356       839,898       535,834       -       710,525       -       4,153,613  
Property, plant and equipment, net
    13,636       23,325       3,795       171,002       199       -       211,957  
Trading properties
    -       -       144,150       -       81,691       -       225,841  
Goodwill
    1,666       19,971       -       -       48,547       -       70,184  
Inventories
    10,140       -       511       5,984       -       -       16,635  
Investments in associates
    -       -       26,873       21,252       691       1,082,112       1,130,928  
Operating assets
    2,092,798       883,194       711,163       198,238       841,653       1,082,112       5,809,158  


 
50

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

5.  
Segment information (Continued)

Below is a summarized analysis of the lines of business of the Group for the period ended March 31, 2012:
 
    03.31.2013  
   
Shopping Center Properties
   
Offices
and others
   
Sales and developments
   
Hotels
   
International
   
Financial operations and others
   
Total
 
Revenues
    969,781       185,433       89,457       130,020       -       4,169       1,378,860  
Costs
    (466,786 )     (69,820 )     (51,486 )     (83,940 )     -       (1,917 )     (673,949 )
Gross Profit
    502,995       115,613       37,971       46,080       -       2,252       704,911  
Gain from disposal of investment properties
    -       -       42,737       -       -       -       42,737  
General and administrative expenses
    (42,166 )     (26,034 )     (24,965 )     (27,200 )     (5,807 )     (182 )     (126,354 )
Selling expenses
    (29,989 )     (6,258 )     (10,914 )     (16,554 )     -       1,793       (61,922 )
Other operating results, net
    (4,058 )     (6,356 )     (2,544 )     (1,531 )     (333 )     1,033       (13,789 )
Profit / (Loss) from operations
    426,782       76,965       42,285       795       (6,140 )     4,896       545,583  
Share of profit / (loss) of associates
    -       -       632       89       (44,007 )     62,127       18,841  
Segment profit / (loss)
    426,782       76,965       42,917       884       (50,147 )     67,023       564,424  


 
51

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

5.  
Segment information (Continued)

The following tables present a reconciliation between the total results of segment operations and the results of operations as per the statements of income. The adjustments relate to the presentation of the results of operations of joint ventures accounted for under the equity method under IFRS.

 
     03.31. 2013  
   
As per Total segment information
   
Adjustment for share of profit / (loss) of
joint ventures
   
As per statements
of income
 
Revenues
    1,715,278       (111,219 )     1,604,059  
Costs
    (888,563 )     87,365       (801,198 )
Gross Profit
    826,715       (23,854 )     802,861  
Gain from disposal of investment properties
    64,019       -       64,019  
General and administrative expenses
    (152,166 )     1,036       (151,130 )
Selling expenses
    (81,610 )     8,366       (73,244 )
Other operating results, net
    106,199       974       107,173  
Profit from operations
    763,157       (13,478 )     749,679  
Share of profit of associates and joint ventures
    5,952       9,160       15,112  
Profit before financial results and income tax
    769,109       (4,318 )     764,791  

 
     03.31. 2012  
   
As per Total segment information
   
Adjustment for share of profit / (loss) of
joint ventures
   
As per statements
of income
 
Revenues
    1,378,860       (50,337 )     1,328,523  
Costs
    (673,949 )     36,692       (637,257 )
Gross profit
    704,911       (13,645 )     691,266  
Gain from disposal of investment properties
    42,737       -       42,737  
General and administrative expenses
    (126,354 )     1,299       (125,055 )
Selling expenses
    (61,922 )     5,665       (56,257 )
Other operating results, net
    (13,789 )     1,791       (11,998 )
Profit from operations
    545,583       (4,890 )     540,693  
Share of profit / (loss) of associates and joint ventures
    18,841       (2,919 )     15,922  
Profit Before financial results and income tax
    564,424       (7,809 )     556,615  

 
52

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

5.           Segment information (Continued)

Total segment assets are allocated based on the operations of the segment and the physical location of the asset. In line with the discussion above, segment assets include the proportionate share of the assets of joint ventures. The statements of financial position under IFRS show the net investment in these joint ventures as a single item.

      03.31.2013  
Total reportable assets as per segment information
    5,809,158  
Investment properties, net
    (168,843 )
Property, plant and equipment, net
    (122 )
Trading properties
    (33,750 )
Inventories
    (104 )
Investments in associates and joint venture
    299,760  
Total assets as per the statements of financial position
    5,906,099  


6.  
Information about main subsidiaries

The Group conducts its business through several operating and holding subsidiaries which are listed in Note 1.3 of Exhibit I. The Group considers that the subsidiaries below are the ones with non-controlling interests material to the Group.

Set out below are the summarized financial information for each subsidiary that has non-controlling interests that are material to the Group:

Summarized statements of financial position

   
APSA (i)
   
TYRUS (i)
   
EFANUR (i)
 
      03.31.2013       06.30.2012       07.01.2011       03.31.2013       06.30.2012       07.01.2011       03.31.2013       06.30.2012       07.01.2011  
Assets
                                                                       
Non- current assets
    2,085,131       1,954,917       1,858,277       1,427,330       769,240       788,363       179,376       135,922       -  
Current assets
    774,762       548,949       521,078       219,322       46,050       76,269       4,776       2,975       -  
Total assets
    2,859,893       2,503,866       2,379,355       1,646,652       815,290       864,632       184,152       138,897       -  
Liabilities
                                                                       
Non-current liabilities
    1,012,703       973,319       909,950       497,445       24,077       24,878       41,900       37,926       -  
Current liabilities
    752,328       558,024       536,651       46,369       38,451       65,869       1,835       1,216       -  
Total liabilities
    1,765,031       1,531,343       1,446,601       543,814       62,528       90,747       43,735       39,142       -  
Net assets
    1,094,862       972,523       932,754       1,102,838       752,762       773,885       140,417       99,755       -  

 
53

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

6.  
Information about main subsidiaries (Continued)

Summarized statements of income and statements of comprehensive income

   
APSA (i)
   
TYRUS (i)
   
EFANUR (i)
 
      03.31.2013       03.31.2012       03.31.2013       03.31.2012       03.31.2013       03.31.2012  
Revenues
    1,196,747       1,011,288       25,632       -       -       -  
Profit before income tax
    403,874       410,493       174,970       (18,068 )     41,601       670  
Income tax expense
    (143,168 )     (140,014 )     (19,402 )     -       -       -  
Profit for the period
    260,706       270,479       155,568       (18,068 )     41,601       670  
Other comprehensive income
    -       -       37,305       12,737       -       -  
Profit attributable to non-controlling interest
    14,937       9,762       26,018       5,580       15,910       443  
Dividends paid to non-controlling interest
    (7,895 )     (4,316 )     -       -       -       -  

Summarized cash flows

   
APSA (i)
   
TYRUS (i)
   
EFANUR (i)
 
      03.31.2013       03.31.2012       03.31.2013       03.31.2012       03.31.2013       03.31.2012  
Net cash generated by (used in) operating activities
    490,736       420,863       (10,730 )     (7,071 )     (431 )     186  
Net cash (used in) generated by investing activities
    (335,122 )     (135,721 )     (146,787 )     (38,047 )     4,527       (131,374 )
Net cash (used in) generated by financing activities
    (80,012 )     (247,480 )     187,093       (21,924 )     (2,829 )     131,795  
Net increase / (decrease) in cash and cash equivalents
    75,602       37,662       29,576       (67,042 )     1,267       607  
Foreign exchange gain /(loss) on cash and cash equivalents
    3,776       (4,177 )     2,749       4,591       289       46  
Cash and cash equivalents at beginning of year
    102,698       145,552       38,854       70,147       1,446       -  
Cash and cash equivalents at end of year
    182,076       179,037       71,179       7,696       3,002       653  

(i)  
Includes consolidated financial information.
The information above is the amount before inter-company eliminations.

 
54

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

7.  
Interests in joint ventures

As of March 31, 2013, the joint ventures of the Group are Canteras Natal Crespo S.A., Cyrsa S.A., Puerto Retiro S.A., Baicom Networks S.A., Quality Invest S.A. Nuevo Puerto Santa Fe S.A. (“NPSF”) and EH. The shares in these joint ventures are not publicly traded.

As of June 30, 2012, the joint ventures of the Group were Canteras Natal Crespo S.A., Cyrsa S.A., Puerto Retiro S.A., Baicom Networks S.A., Quality Invest S.A. and NPSF.

As noted Note 3, the Group through APSA acquired shares of common stock, representing 50% of Entertainment Holdings S.A. (“EH”)´s capital stock and votes and as a consequence  holds a jointly indirect interest in LRSA of 25% which operates the fairground Predio.

In connection with the Fairground, as publicly known, in December 2012 the Executive Branch issued Executive Order 2552/12 that annulled an executive order dated 1991 which approved the sale of the Fairground to the SRA; the effect of this new order was to revoke the sale transaction. Subsequent to December 21, 2012, the Executive Branch notified the SRA of said executive order and further ordered that the property be returned to the Federal Government within 30 subsequent days. Then, the SRA issued a press release publicly disclosing the initiation of legal actions.

Neither has the Group been served notice formally nor is it a party involved in the legal actions brought by the SRA.

As of the date of these Unaudited Condensed Interim Consolidated Financial Statements, the above mentioned legal matters resulted in certain delays in gathering all the necessary financial information to register the acquisition pursuant to IFRS 3. However, the Group has strived to complete the preliminary allocation of the price paid based on its fair value estimates made on the information available to date. Therefore, values included are preliminary and are subject to changes. The Group expects to finalize this process by June 30, 2013.

Changes in the Group’s investments in joint ventures for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of period / year
    228,970       193,666  
Acquisition of joint ventures
    32,024       43,038  
Capital contribution
    29,606       15,850  
Share of profit, net
    9,160       (23,584 )
End of period / year
    299,760       228,970  

 
55

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

8.  
Interests in associates

As of June 30, 2012, the associate of the Group were New Lipstick LLC, Rigby 183 LLC, BHSA, Tarshop S.A., Manibil S.A., Lipstick Management LLC, Banco de Crédito y Securitización S.A. (“BACS”) and Bitania 26 S.A..

As of December 31, 2012, Rigby 183 LLC began to be reported on a consolidated basis an ceased to be an affiliate, thus as of March 31, 2013, the associates of the Group are New Lipstick LLC, BHSA, Tarshop S.A., Manibil S.A., Lipstick Management LLC, BACS and Bitania 26 S.A..

Changes in the Group’s investments in associates for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year                                                                                
    1,216,845       1,179,549  
Acquisition of associates                                                                                
    -       6,166  
Capital contributions                                                                                
    10,319       -  
Share of profit, net                                                                                
    5,952       35,244  
Currency translation adjustment                                                                                
    4,996       (4,114 )
Dividend payments (ii)                                                                                
    (33,813 )     -  
Decrease for the taking over (see Note 3)                                                                                
    (103,315 )     -  
End of the period/year (i) year
     (*) 1,100,984       1,216,845  

(i)       Includes a balance of Ps. (29,944) reflecting interests in companies with negative equity as of March 31, 2013 which is reclassified to “Provisions” (see Note 20).
(ii)      During the period, the Group cashed dividends from Manibil S.A. and BHSA in the amount of Ps. 3.3 million and Ps. 30.5 million, respectively.


9.  
Investment properties

Changes in the Group’s investment properties for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year
    3,275,226       3,340,081  
Currency translation adjustment
    42,070       -  
Additions and acquisitions
    157,324       108,863  
Acquisition of subsidiaries (ii)
    679,219       -  
Sales and disposals (ii)
    (27,437 )     (38,889 )
Depreciation charge (i)
    (141,632 )     (134,829 )
End of the period / year
    3,984,770       3,275,226  

(i)  Depreciation charges of investment properties were included in “Costs” in the Statements of Income (Note 26).
(ii)  See Note 3.

 
56

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

9.           Investment properties (Continued)

The following amounts have been recognized in the statements of income:

      03.31.2013       03.31.2012  
Rental and service income
    1,408,089       1,144,231  
Direct operating expenses
    (664,274 )     (532,470 )
Gain from disposal of investment properties
    64,019       42,737  


10.  
Property, plant and equipment, net

Changes in the Group’s property, plant and equipment for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year
    228,033       235,245  
Currency translation adjustment
    24       -  
Additions
    4,445       19,089  
Disposals of unused assets
    (939 )     (2,919 )
Depreciation charge (i)
    (19,728 )     (23,382 )
End of the period / year
    211,835       228,033  

(i)     Depreciation charges of property, plant and equipment were included in “General and administrative expenses” and “Costs” in the Statement of Income (Note 26).


11.  
Trading properties

Changes in the Group’s trading properties for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year
    176,823       181,991  
Additions
    6,643       15,399  
Currency translation adjustment
    13,609       -  
Sales
    (4,984 )     (20,567 )
End of the period / year
    192,091       176,823  


 
57

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

12.  
Intangible assets, net

Changes in the Group’s intangible assets for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year
    29,389       31,900  
Additions
    614       711  
Acquisition of subsidiary (goodwill)
    45,723       -  
Currency translation adjustment
    2,824       -  
Disposals
    -       (2,960 )
Amortization change (i)
    (1,383 )     (262 )
End of the period / year
    77,167       29,389  

(i)  
Amortization charges of intangible assets are included in “General and administrative expenses” in the Statement of Income (Note 26).


13.  
Inventories

Group’s inventories as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Current
                       
Hotel supplies (i)
    5,984       4,792       3,575  
Materials and others items of inventories (i)
    10,547       10,867       3,245  
Current inventories
    16,531       15,659       6,820  
Total inventories
    16,531       15,659       6,820  

 
(i)
Inventories cost are included in “Costs” in the Statement of Income (Note 26).

 
58

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

14.  
Trade and other receivables, net

Group’s trade and other receivables, as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
                       
Trade, leases and services receivable
    64,097       54,547       31,611  
Less: allowance for trade receivables
    (2,208 )     (2,208 )     (2,208 )
Non-current trade receivables                                                               
    61,889       52,339       29,403  
VAT receivables                                                               
    34,145       33,942       48,214  
Minimum presumed income tax (“MPIT”)
    126,273       103,263       78,387  
Other tax receivables                                                               
    141       1,346       1,103  
Advance payments                                                               
    5,141       2,980       3,114  
Others                                                               
    527       1,592       3,958  
Non-current other receivables, net
    166,227       143,123       134,776  
Related parties (Note 31)                                                               
    981       910       830  
Non-current trade and other receivables, net
    229,097       196,372       165,009  
                         
Current
                       
Consumer financing receivables
    16,261       15,992       75,117  
Leases and services receivables
    188,875       180,113       146,277  
Receivables from hotel operations
    28,792       14,106       9,954  
Checks to be deposited
    178,269       126,809       94,890  
Notes receivables
    4,808       8,317       5,987  
Trade and lease debtors under legal proceedings
    46,112       46,208       48,954  
Less: allowance for trade receivables
    (69,916 )     (65,899 )     (117,552 )
Current trade receivables, net
    393,201       325,646       263,627  
VAT receivables
    12,320       20,196       27,607  
MPIT
    -       732       226  
Other tax receivables
    9,564       5,691       7,282  
Loans granted
    5,583       11,155       644  
Prepaid expenses
    50,867       47,284       42,679  
Restituted funds receivables
    -       -       4,278  
Advance from vendors
    36,963       21,056       14,595  
Dividends received
    4,726       -       -  
Other
    4,461       6,891       11,925  
Less: allowance for other receivables
    (181 )     -       -  
Current other receivables, net
    124,303       113,005       109,236  
Related parties (Note 31)
    22,727       37,226       47,132  
Current trade and other receivables, net
    540,231       475,877       419,995  
Total trade and other receivables, net
    769,328       672,249       585,004  


 
59

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

14.  
Trade and other receivables, net (Continued)

Movements on the Group’s allowance for trade and other receivables are as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year
    68,107       119,760  
Charges of the period / year
    14,757       15,554  
Unused amounts reversed
    (9,109 )     (8,590 )
Used during the period / year
    (1,215 )     (58,617 )
Receivables written off
    (235 )     -  
End of the period / year
    72,305       68,107  

The creation and release of provision for impaired receivables have been included in “Selling expenses” in the statements of income (Note 26). Amounts charged to the allowance account are generally written off, when there is no expectation of recovery.


15.  
Investments in financial assets

Group’s financial assets at fair value through profit or loss as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
                       
Financial assets at fair value
                       
Investment in equity securities in TGLT S.A
    53,512       65,131       68,656  
Investment in equity securities in Hersha
    397,982       432,770       355,942  
Common shares of Supertel
    155,552       117,488       -  
Others
    10,085       10,221       271  
Financial assets at amortized cost
                       
Non-Convertible Notes related parties and others (Note 31)
    22,116       30,050       7,807  
Total investments in non-current financial assets
    639,247       655,660       432,676  
Current
                       
Financial assets at fair value
                       
Mutual funds (Note 31)
    211,180       57,955       60,061  
Mortgage bonds (Note 31)
    520       496       477  
Non-Convertible Notes.
    23,954       9       12  
Non-Convertible Notes related parties and others (Note 31)
    5,021       8,781       2,615  
Investment in equity securities in Hersha
    25,898       -       -  
Others
    1,175       11,668       1,911  
Financial assets at amortized cost
                       
Non-Convertible Notes related parties and others (Note 31)
    11,391       -       -  
Total investments in current financial assets
    279,139       78,909       65,076  
Total investments in financial assets.
    918,386       734,569       497,752  

 
60

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

16.  
Derivative financial instruments

Group’s derivative financial instruments as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Assets
                       
Non-current
                       
Hersha call option
    -       -       60,442  
Warrants of Supertel
    23,824       18,434       -  
Total non-current derivative financial instruments
    23,824       18,434       60,442  
Total derivative financial instruments
    23,824       18,434       60,442  


17.  
Cash flow information

The following table shows the amounts of cash and cash equivalents as of March 31, 2013 and for the year ended June 30, 2012 and July 1st, 2011:

      03.31.2013       06.30.2012       07.01.2011  
Cash at bank and on hand
    239,823       234,519       161,193  
Time deposits in local currency
    114,702       -       -  
Mutual funds
    44,751       24,650       140,366  
Total cash and cash equivalents                                                                
    399,276       259,169       301,559  


 
61

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
17.
Cash flow information (Continued)

Following is a detailed description of cash flows generated by the Group’s operations for the nine-month periods ended March 31, 2013 and 2012.

 
Note
    03.31.2013       03.31.2012  
Profit for the period
      379,261       195,471  
Adjustments for:
                 
Income tax expense
22
    81,093       91,296  
Retirement of obsolete properties, plant and equipment
10
    939       -  
Amortization and depreciation
26
    162,743       128,726  
(Gain) from disposal of investment properties
9
    (64,019 )     (42,737 )
Dividends received
29
    (14,329 )     (9,863 )
Share-based payments
27
    5,935       2,795  
Loss on financial instruments
29
    (147,527 )     (26,497 )
(Gain) / loss on derivative financial instruments
29
    (5,390 )     5,417  
(Gain) from purchase of subsidiaries
28
    (137,062 )     -  
Interest expense, net
29
    208,668       201,710  
Provisions and allowances
      73,097       41,427  
Share of (profit) of associates and joint ventures
7,8
    (15,112 )     (15,922 )
Unrealized foreign exchange loss, net
      239,165       75,030  
Other financial results
      -       27,360  
Changes in operating assets and liabilities:
                 
Increase in inventories
      (872 )     (1,300 )
(Increase) / Decrease in trading properties
      (1,659 )     15,213  
Increase in trade and other receivables, net
      (27,936 )     (46,675 )
Increase in restricted founds
      (12,542 )     -  
Increase in trade and other payables
      39,575       2,130  
Increase / (Decrease) in salaries and social security liabilities
      1,897       (6,014 )
Decrease in provisions
      (677 )     -  
Net cash generated by operating activities before income tax paid
      765,248       637,567  

 
62

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

17.
Cash flow information (Continued)

The following table shows a detail of non-cash transactions occurred in the periods ended March 31, 2013 and 2012:



      03.31.2013       03.31.2012  
Increase in investments in financial assets through an increase in borrowings
    18,767       -  
Reimbursement of expired dividends
    625       3,809  
Dividends payable
    54,097       -  
Decrease in non-controlling interest through an increase in trade and other payables
    -       8,039  
Foreign currency translation of subsidiaries
    -       10,955  
Increase in trade and other receivables, net through an increase in trade and other payables
    -       429  
Conversion of corporate notes
    126       38  
Increase in capital through a capitalization (decrease) in trade and other payables
    -       1,000  
Decrease in trade and other receivables, net
    -       8,671  
Decrease in investments in associates and joint ventures
    -       16,004  
Decrease in trade and other payables through a decrease in equity investments in associates and joint ventures
    -       (24,675 )

 
63

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

18.  
Trade and other payables

Group’s trade and other payables as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
                       
Trade payables
    -       4       47  
Admission rights
    107,532       85,281       66,885  
Sale and rent payments received in advance
    47,969       44,846       45,345  
Guarantee deposits
    14,376       8,346       3,875  
Non-current trade payables
    169,877       138,477       116,152  
Tax payment facilities plan
    16,659       15,426       17,386  
Other tax liabilities
    1,067       3,460       2,759  
Deferred income tax
    8,704       8,903       10,143  
Other
    372       370       2,481  
Non-current other payables
    26,802       28,159       32,769  
Related parties (Note 31)
    241       20       434  
Non-current trade and other payables
    196,920       166,656       149,355  
Current
                       
Trade payables
    54,474       54,267       40,923  
Invoices to be received
    76,223       65,008       57,989  
Guarantee deposits
    6,538       2,957       3,978  
Admission rights
    93,598       78,030       60,580  
Sale and rent payments received in advance
    176,609       119,099       106,599  
Current trade payables
    407,442       319,361       270,069  
VAT payables
    23,588       24,980       21,615  
MPIT
    11,556       8,683       11,435  
Deferred revenue
    1,315       266       17,079  
Other tax liabilities
    25,342       21,707       26,677  
Dividends payable to non-controlling shareholders
    56,599       34,724       -  
Others
    5,853       7,330       6,067  
Current other payables
    124,253       97,690       82,873  
Related parties (Note 31)
    62,957       83,875       61,244  
Current trade and other payables
    594,652       500,926       414,186  
Total trade and other payables
    791,572       667,582       563,541  

 
64

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


19.  
Salaries and social security liabilities

Group’s Salaries and social security liabilities as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Current
                       
Provision for vacation, bonuses and severance
    24,848       30,323       25,681  
Social security payable
    14,119       6,584       7,545  
Others
    2,537       2,700       863  
Current salaries and social security liabilities
    41,504       39,607       34,089  
Total salaries and social security liabilities
    41,504       39,607       34,089  


20.  
Provisions

The table below shows the movements in the Group's provisions for other liabilities categorized by type of provision:

   
Labor, legal and other claims
   
Tax and social security
   
Investments
in associates (*)
   
Others
   
Total as per
 
At July 1, 2011
    14,925       670       -       392       15,987  
Additions
    11,705       1,697       -       90       13,492  
Recovery
    (5,674 )     (797 )     -       (126 )     (6,597 )
Used during the year
    (2,628 )     -       -       15       (2,613 )
At June 30, 2012
    18,328       1,570       -       371       20,269  
Additions
    13,094       -       29,944       -       43,038  
Recovery
    (2,469 )     (469 )     -       -       (2,938 )
Used during the period
    (677 )     -       -       -       (677 )
At March 31, 2013
    28,276       1,101       29,944       371       59,692  
 
(*)
Corresponds to equity interests in affiliates with negative equity.

The analysis of total provisions is as follows:
      03.31.2013       06.30.2012       07.01.2011  
Non-current
    46,556       17,823       12,881  
Current
    13,136       2,446       3,106  
      59,692       20,269       15,987  
 
 
65

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
21.  
Borrowings

The breakdown of the Group borrowings as of March 31, 2013, June 30, 2012 and July 1st, 2011 was as follows:

                     
Book value
 
Secured / unsecured
 
Currency
 
Rate
 
Effective
interest rate %
 
Nominal Value
 
03.31.2013
 
06.30.2012
 
07.01.2011
Non-current
                             
APSA CN due 2014                                                                      
Unsecured
 
US$
 
Fixed
 
10 %
 
50,000
 
-
 
39
 
4,640
NCN IRSA due 2017                                                                      
Unsecured
 
US$
 
Fixed
 
8.5 %
 
150,000
 
745,773
 
675,843
 
612,419
APSA NCN due 2017                                                                      
Unsecured
 
US$
 
Fixed
 
7.875 %
 
120,000
 
546,059
 
480,964
 
432,591
NCN IRSA due 2020                                                                      
Unsecured
 
US$
 
Fixed
 
11.5 %
 
150,000
 
749,681
 
661,078
 
598,116
NCN IRSA due 2013                                                                      
Unsecured
 
Ps.
 
Floating
 
Badlar + 2.49%
 
153,152
 
-
 
51,032
 
-
NCN IRSA due 2014                                                                      
Unsecured
 
US$
 
Fixed
 
7.45 %
 
33,832
 
-
 
114,665
 
-
Seller financing of plot of land (vii)                                                                      
Secured
 
US$
 
Fixed
 
3.5 %
 
2,700
 
13,829
 
12,223
 
-
Seller financing of Soleil Factory (i)                                                                      
Secured
 
US$
 
Fixed
 
5 %
 
12,610
 
46,112
 
38,689
 
35,125
Seller financing of Arcos del Gourmet S.A. (ii)
Unsecured
 
US$
 
Fixed
 
11.69 %
 
258
 
1,238
 
1,530
 
-
Seller financing of Zetol S.A. (iv)                                                                      
Secured
 
US$
 
Fixed
 
3.5 %
 
2,618
 
13,412
 
11,854
 
14,796
Other borrowings                                                                      
                   
-
 
-
 
27,585
Syndicated loan (Note 31) (v)                                                                      
Unsecured
 
Ps.
 
Fixed
 
15.01 %
 
118,000
 
90,722
 
-
 
-
Banco Provincia de Buenos Aires loan (vi)
Unsecured
 
Ps.
 
Fixed
 
15.01 %
 
29,000
 
22,429
 
-
 
-
Banco M&T loan                                                                      
Secured
 
US$
 
Fixed
 
1.673 %
 
75,000
 
389,506
 
-
 
-
Finance leases obligations                                                                      
Secured
 
US$
 
Fixed
 
7.5 %
 
792
 
228
 
480
 
-
Total Non-current borrowings                                                                      
                   
2,618,989
 
2,048,397
 
1,725,272


 
66

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

21.  
Borrowings (Continued)

                     
Book value
 
Secured / unsecured
 
Currency
 
Rate
 
Effective
interest rate %
 
Nominal Value
 
03.31.2013
 
06.30.2012
 
07.01.2011
Current
                             
APSA NCN due 2012
Unsecured
 
Ps.
 
Fixed
 
11%
 
154,020
 
-
 
-
 
28,889
NCN IRSA due 2017
Unsecured
 
US$
 
Fixed
 
8.5%
 
150,000
 
9,647
 
23,175
 
20,960
APSA NCN due 2017
Unsecured
 
US$
 
Fixed
 
7.875%
 
120,000
 
15,323
 
4,555
 
4,490
NCN IRSA due 2020
Unsecured
 
US$
 
Fixed
 
11.5%
 
150,000
 
15,985
 
34,003
 
30,800
NCN IRSA due 2013
Unsecured
 
Ps.
 
Floating
 
Badlar + 2.49%
 
153,152
 
104,344
 
102,888
 
-
NCN IRSA due 2014
Unsecured
 
US$
 
Fixed
 
7.45 %
 
33,832
 
174,388
 
38,278
 
-
Bank overdrafts
Unsecured
 
Ps.
 
Floating
         
316,375
 
195,270
 
420,032
Short-term loans
                   
30,309
 
126,654
 
139,585
Syndicated loan (Note 31) (v)
Unsecured
 
Ps.
 
Fixed
 
15.01 %
 
118,000
 
25,528
 
-
 
-
Banco Provincia de Buenos Aires loan (vi)
Unsecured
 
Ps.
 
Fixed
 
15.01 %
 
29,000
 
6,522
 
-
 
-
Seller financing of plot of land (vii)
Secured
 
US$
 
Fixed
 
3.5 %
 
1,800
 
12,287
 
10,342
 
-
Seller financing of Soleil Factory (i)
Secured
 
US$
 
Fixed
 
5 %
 
12,610
 
2,424
 
2,854
 
4,714
Seller financing of Arcos del Gourmet S.A. (ii)
Unsecured
 
US$
 
Fixed
 
11.69 %
 
1,700
 
8,072
 
10,235
 
-
Seller financing of Zetol S.A. (iv)
Secured
 
US$
 
Fixed
 
3.5 %
 
283
 
1,469
 
1,281
 
18,117
Seller financing of Nuevo Puerto Santa Fe S.A. (iii)
Unsecured
 
US$
 
Fixed
 
7.44 %
 
269
 
-
 
7,417
 
-
Finance lease obligations
Secured
 
US$
 
Fixed
 
7.5 %
 
792
 
575
 
944
 
-
Related party (Note 31)
Unsecured
 
Ps.
 
Floating
 
Badlar
 
78,079
 
83,476
 
-
 
-
Current borrowings
                   
806,724
 
557,896
 
667,587
Total borrowings
                   
3,425,713
 
2,606,293
 
2,392,859
 
CN: Convertible Notes.
NCN: Non-convertible Notes
 
(i)
Seller financing of Soleil Factory (investment properties): Mortgage financing of US$ 20.7 million with a fixed 5% interest rate due in June 2017.
(ii)
Seller financing - Arcos del Gourmet S.A. (intangible assets).
(iii)
Seller financing - Nuevo Puerto Santa Fe S.A. (investment properties): Financing of US$ 4.5 million without interest paid in 19 installments due in February 2013.
(iv)
Seller financing of Zetol S.A. (trading properties): Mortgage financing of US$ 7 million with a fixed 3.5% interest rate. The balance is payable, by choice of the seller, in money or with the delivery of units in buildings to be built representative of 12% of the total marketable square meters built.
(v)
On November 16, 2012, the Group executed a syndicated loan for Ps. 118 million with several banks, including Banco Hipotecario. Principal will be payable in 9 quarterly consecutive installments.
(vi)
On December 12, 2012, the Group subscribed a loan with Banco Provincia de Buenos Aires for Ps. 29 million. Principal will be repaid in 9 quarterly consecutive installments beginning in December 2013.
(vii)
Seller financing of plot of land - Vista al Muelle S.A. in Canelones, Uruguay (Trading properties). Nominal value US$ 1.800 with a fixed 3,5% interest rate annual.
 
 
67

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


22.  
Current and deferred income tax

The details of the provision for the Group’s income tax, were as follows:

      03.31.2013       03.31.2012  
Current income tax
    (159,049 )     (151,864 )
Deferred income tax
    77,956       60,568  
Income tax gain
    (81,093 )     (91,296 )

The gross movement on the deferred income tax account was as follows:

      03.31.2013       06.30.2012  
Beginning of the period / year                                                                                  
    (376,977 )     (467,129 )
Acquisition of subsidiary                                                                                  
    (26,103 )     -  
Currency translation adjustment                                                                                  
    3,096       -  
Income tax and deferred income tax                                                                                  
    77,956       90,152  
End of the period / year                                                                                  
    (322,028 )     (376,977 )

The Group did not recognize deferred income tax assets of Ps. 24.7 million and Ps. 48.9 million as of March 31, 2013 and June 30, 2012, respectively. Although management believes that it will become profitable in the foreseeable future, as a result of the history of recent losses incurred during the development phase of the different Group’s business operations and the lack of verifiable and objective evidence due to the limited operating history of the Group itself, the Board of Directors has determined that there is sufficient uncertainty as to the generation of sufficient income to utilize the losses within a reasonable timeframe, therefore, no deferred tax asset is recognized in relation to these losses.

Below is a reconciliation between income tax recognized and that which would result applying the prevailing tax rate on Profit before income tax for the nine-month periods ended March 31, 2013 and 2012:

      03.31.2013       03.31.2012  
Tax calculated at the tax rates applicable to profits in the respective countries
    172,220       97,553  
Permanent differences:
               
Share of loss of associates and joint ventures                                                                                  
    (21,552 )     (15,384 )
Unrecognized tax losses                                                                                  
    (23,800 )     7,427  
Non-deductible items                                                                                  
    2,002       5,250  
Non-taxable items                                                                                  
    -       (8,677 )
Non-taxable income                                                                                  
    (43,554 )     8,612  
Others                                                                                  
    (4,223 )     (3,485 )
Income tax gain                                                                                  
    81,093       91,296  

 
68

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

23.  
Dividends

The dividends paid in the period ended March 31, 2013 were Ps. 180.3 million.

Dividends for the year ended June 30, 2012 amounted to Ps. 180 million which were approved by the General Shareholders meeting as of October 31, 2012.

Expired dividends

Out of the balance of current dividends which, as of June 30, 2012, amounted to Ps. 6,092, Ps. 625 became forfeited on November 17, 2012 and during the period were canceled Ps. 2,965. The remaining balance of Ps. 2,502 is disclosed under Trade and other payables.

Dividends not yet paid

Out of the balance of Ps. 56,599 as of March 31, 2013, Ps. 2,502 corresponds to dividends not yet paid as of June 30, 2012 mentioned above and Ps. 54,097 to dividends approved by Shareholders’ meeting held on October 31, 2012.


24.  
Revenues

      03.31.2013       03.31.2012  
Base rent                                                                                   
    600,070       469,951  
Contingent rent                                                                                   
    184,351       152,966  
Admission rights                                                                                   
    78,339       63,872  
Averaging scheduled rent escalation                                                                                   
    13,031       13,007  
Parking fees                                                                                   
    44,981       31,966  
Letting fees                                                                                   
    28,123       29,899  
Service charges                                                                                   
    432,043       361,716  
Property management fee                                                                                   
    25,229       18,904  
Others                                                                                   
    1,923       1,950  
Total rental and service income                                                                                   
    1,408,090       1,144,231  
Sale of trading properties                                                                                   
    20,175       50,103  
Revenue from hotel operations                                                                                   
    174,694       130,020  
Consumer financing                                                                                   
    1,100       4,169  
Total other revenues                                                                                   
    195,969       184,292  
Total revenues                                                                                   
    1,604,059       1,328,523  

 
69

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

25.  
Cost

      03.31.2013       03.31.2012  
Costs of rental and services                                                                                   
    664,274       532,472  
Costs of sale and development                                                                                   
    9,845       18,928  
Costs from hotel operations                                                                                   
    126,234       83,940  
Costs from consumer financing                                                                                   
    845       1,917  
Total costs                                                                                   
    801,198       637,257  


26.  
Expenses by nature

The Group disclosed expenses the statements of income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”.

The following tables provide the additional required disclosure of expenses by nature and their relationship to the function within the Group.


 
70

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


26.  
Expenses by nature (Continued)

For the period ended March 31, 2013:

   
Group Costs
                   
   
Cost of sale and development
   
Cost of rental and services
   
Costs from consumer financing
   
Costs from hotel operations
   
General and administrative expenses
   
Selling expenses
   
Total
 
Leases and expenses
    1,285       25,874       -       134       1,414       647       29,354  
Depreciation and amortization
    354       146,802       -       10,851       4,573       163       162,743  
Allowance for trade and other receivables (charge and recovery)
    -       -       -       -       -       5,648       5,648  
Advertising and other selling expenses
    -       86,532       -       3,655       -       12,113       102,300  
Taxes, rates and contributions
    1,041       47,515       -       -       5,229       36,690       90,475  
Maintenance, security, cleaning, repairs and others
    1,929       157,114       34       16,307       8,085       487       183,956  
Fees and payments for services
    103       22,473       802       969       22,679       2,632       49,658  
Director´s fees
    -       -       -       -       57,529       -       57,529  
Salaries, social security costs and other personnel expenses
    475       169,149       3       71,364       42,558       12,773       296,322  
Cost of sale of properties
    4,628       -       -       -       -       -       4,628  
Food, beverage and other lodging expenses
    -       -       -       22,435       2,085       505       25,025  
Others
    30       8,815       6       519       6,978       1,586       17,934  
Total expenses by nature
    9,845       664,274       845       126,234       151,130       73,244       1,025,572  


 
71

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


26.  
Expenses by nature (Continued)

For the period ended March 31, 2012:

   
Group costs
                   
   
Cost of
sale and development
   
 
Cost of rental and services
   
Costs from consumer financing
   
Costs from hotel operations
   
General and administrative expenses
   
Selling expenses
   
Total
 
Leases and expenses
    1,543       22,470       -       46       414       608       25,081  
Depreciation and amortization.
    -       117,999       17       7,742       2,940       28       128,726  
Allowance for trade and other receivables (charge and recovery)
    -       -       -       -       -       2,570       2,570  
Advertising and other selling expenses
    -       83,592       -       2,578       -       11,033       97,203  
Taxes, sales and contributions
    1,083       33,462       -       -       2,336       28,629       65,510  
Maintenance, security, cleaning, repair and others
    1,342       124,888       249       13,896       6,673       417       147,465  
Fees and payments for services
    345       13,660       1,612       2,404       21,715       2,235       41,971  
Director’s fees
    -       -       -       -       44,327       -       44,327  
Salaries, social security costs and other personnel expenses
    67       129,795       14       42,413       39,229       9,872       221,390  
Cost of sale of properties
    14,537       -       -       -       -       -       14,537  
Food, beverage and other lodging expenses
    -       -       -       14,473       2,294       339       17,106  
Others
    11       6,606       25       388       5,127       526       12,683  
 Total expenses by nature
    18,928       532,472       1,917       83,940       125,055       56,257       818,569  

 
72

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


27.  
Employee costs

      03.31.2013       03.31.2012  
Salaries, bonuses, social security expenses and others
    290,387       218,595  
Shared-based compensation                                                                                   
    5,935       2,795  
Total employee costs                                                                                   
    296,322       221,390  


28.  
Other operating results, net

      03.31.2013       03.31.2012  
Result from purchase of subsidiaries (Note 3)                                                                                    
    137,062       -  
Tax on shareholders´ personal assets                                                                                    
    (4,681 )     (3,200 )
Donations                                                                                    
    (7,606 )     (6,366 )
Management fees                                                                                    
    1,037       -  
Judgments and other contingencies (1)                                                                                    
    (12,443 )     (7,695 )
Others                                                                                    
    (6,196 )     5,263  
Total other operating results, net                                                                                    
    107,173       (11,998 )
(1)
Includes legal expenses.


29.  
Financial results, net

      03.31.2013       03.31.2012  
Finance income:
               
 - Interest income                                                                                   
    22,816       13,018  
 - Foreign exchange gain                                                                                   
    58,136       50,325  
 - Dividends income                                                                                   
    14,329       9,863  
 - Gain from derivative financial instruments                                                                                   
    5,390       162  
 - Fair value gains of financial assets                                                                                   
    164,572       40,957  
 - Gain from sale of financial assets                                                                                   
    2,057       -  
Total finance income                                                                                   
    267,300       114,325  

Finance costs:
           
 - Interest expense                                                                                   
    (231,484 )     (214,728 )
 - Foreign exchange losses                                                                                   
    (290,443 )     (125,355 )
 - Fair value loss of financial assets                                                                                   
    (17,045 )     (14,460 )
 - Loss from derivative financial instruments                                                                                   
    (1,162 )     (6,779 )
 - Other financial costs                                                                                   
    (31,603 )     (22,851 )
Total finance costs                                                                                   
    (571,737 )     (384,173 )
Total financial results, net                                                                                   
    (304,437 )     (269,848 )


 
73

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
30.  
Shared-based payments

Equity incentive plan

The Group incurred a charge of Ps. 5.9 million and Ps. 2.8 million for the nine-month periods ended March 31, 2013 and 2012, respectively, related to the awards granted under the Equity Incentive Plan (1,064,008 shares granted over the period).


 
74

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 


31.  
Related party transactions

The following is a summary of the balances with related parties as of March 31, 2013:

Related party
 
Reference
 
Description of
transaction
 
Investments in non-current financial assets
 
Investments in current financial assets
 
Trade and other receivables non-current
 
Trade and other receivables current
 
Trade and other payables non-current
 
Trade and other payables current
 
Borrowings non-current
 
Borrowings current
Consultores Assets Management S.A.
 
(4)
 
Reimbursement of expenses
 
-
 
-
 
-
 
2,493
 
-
 
(41)
 
-
 
-
Estudio Zang, Bergel & Viñes
 
(5)
 
Advances
 
-
 
-
 
-
 
26
 
-
 
-
 
-
 
-
       
Professional fees
 
-
 
-
 
-
 
79
 
-
 
(732)
 
-
 
-
Fundación IRSA
 
(4)
 
Reimbursement of expenses
 
-
 
-
 
-
 
50
 
-
 
(2)
 
-
 
-
Museo de los Niños
 
(4)
 
Reimbursement of expenses
 
-
 
-
 
-
 
629
 
-
 
(174)
 
-
 
-
       
Leases
 
-
 
-
 
-
 
614
 
-
 
-
 
-
 
-
Directors
     
Reimbursement of expenses
 
-
 
-
 
-
 
-
 
(220)
 
-
 
-
 
-
       
Fees
 
-
 
-
 
-
 
-
 
-
 
(15,268)
 
-
 
-
       
Guarantee deposits
 
-
 
-
 
-
 
-
 
(21)
 
(72)
 
-
 
-
Quality invest S.A.
 
(2)
 
Reimbursement of expenses
 
-
 
-
 
-
 
5
 
-
 
(38)
 
-
 
-
New Lipstick LLC
 
(3)
 
Reimbursement of expenses
 
-
 
-
 
-
 
1,446
 
-
 
-
 
-
 
-
Lipstick Management LLC
 
(3)
 
Reimbursement of expenses
 
-
 
-
 
-
 
482
 
-
 
-
 
-
 
-
IRSA Development LP
 
(3)
 
Reimbursement of expenses
 
-
 
-
 
-
 
9
 
-
 
-
 
-
 
-
       
Capital contributions
 
-
 
-
 
-
 
-
 
-
 
(5)
 
-
 
-


 
75

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

31.  
Related party transactions (Continued)

 
 
Related party
 
Reference
 
Description of
transaction
   
Investments in financial assets non-current
     
Investments in financial assets current
     
Trade and other receivables non-current
     
Trade and other receivables current
     
Trade and other payables non-current
     
Trade and other payables current
     
Borrowings non-current
     
Borrowings current
 
Inversiones Financieras del Sur S.A.
(6)
Borrowings
    -       -       -       189       -       -       -       -  
   
Reimbursement of expenses
    -       -       -       -       -       (3 )     -       -  
Elsztain Managing Partners Limited
(4)
Management fees
    -       -       -       -       -       (48 )     -       -  
Banco Hipotecario S.A.
(8)
Mortgage bonds
    -       520       -       -       -       -       -       -  
   
Reimbursement of expenses
    -       -       -       312       -       (347 )     -       -  
   
Leases
    -       -       -       1       -       -       -       -  
   
Borrowings
    -       -       -       -       -       -       (15,600 )     (4,293 )
   
Non-Convertible Notes
    -       5,021       -       -       -       -       -       -  
Cyrsa S.A.
(9)
Reimbursement of expenses
    -       -       -       1,010       -       (309 )     -       -  
   
Borrowings
    -       -       -       -       -       -       -       (83,476 )
Tarshop S.A.
(10)
Reimbursement of expenses
    -       -       -       168       -       (216 )     -       -  
   
Leases
    -       -       -       6       -       -       -       -  
   
Rental
    -       -       -       1,557       -       (49 )     -       -  
Nuevo Puerto Santa Fe S.A.
(2)
Reimbursement of expenses
    -       -       -       780       -       (160 )     -       -  
   
Leases to be accrued
    -       -       -       -       -       (133 )     -       -  
   
Space rentals
    -       -       -       36       -       (28 )     -       -  
Canteras Natal Crespo S.A.
(9)
Management fees
    -       -       -       547       -       -       -       -  
   
Contributions to be paid in
    -       -       -       155       -       -       -       -  
   
Borrowings
    -       -       -       95       -       -       -       -  
   
Reimbursement of expenses
    -       -       -       490       -       -       -       -  
Baicom Networks S.A.
(11)
Reimbursement of expenses
    -       -       -       14       -       (2 )     -       -  
   
Management fees
    -       -       -       6       -       -       -       -  
   
Borrowings
    -       -       981       -       -       -       -       -  

 
76

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

31  
Related party transactions (Continued)

Related party
 
Reference
 
Description of
transaction
 
Investments in financial assets non-current
 
Investments in financial assets current
 
Trade and other receivables non-current
 
Trade and other receivables current
 
Trade and other payables non-current
 
Trade and other payables current
 
Borrowings Non-current
 
Borrowings current
Puerto Retiro S.A.
 
(12)
 
Reimbursement of expenses
 
-
 
-
 
-
 
158
 
-
 
-
 
-
 
-
       
Loans granted
 
-
 
-
 
-
 
3,777
 
-
 
-
 
-
 
-
       
Contributions
 
-
 
-
 
-
 
101
 
-
 
-
 
-
 
-
Cactus Argentina S.A.
 
(13)
 
Reimbursement of expenses
 
-
 
-
 
-
 
8
 
-
 
-
 
-
 
-
Cresud S.A.C.I.F. y A.
 
(1)
 
Other receivables
 
-
 
-
 
-
 
14
 
-
 
-
 
-
 
-
       
Reimbursement of expenses
 
-
 
-
 
-
 
3,449
 
-
 
(33,833)
)
-
 
-
       
Shared services
 
-
 
-
 
-
 
2,670
 
-
 
(11,489)
-
 
-
       
Offices rental
 
-
 
-
 
-
 
429
 
-
 
-
 
-
 
-
       
Borrowings
 
-
 
-
 
-
 
853
 
-
 
-
 
-
 
-
       
Non-convertible Notes – Cresud S.A.C.I.F y A.
 
22,116
 
11,391
 
-
 
-
 
-
 
-
 
-
 
-
Futuros y Opciones.com S.A.
 
(13)
 
Reimbursement of expenses
 
-
 
-
 
-
 
43
 
-
 
(8)
)
-
 
-
       
Other receivables
 
-
 
-
 
-
 
3
 
-
 
-
 
-
 
-
Boulevard Norte S.A.
 
(14)
 
Reimbursement of expenses
 
-
 
-
 
-
 
14
 
-
 
-
 
-
 
-
FyO Trading S.A.
 
(13)
 
Reimbursement of expenses
 
-
 
-
 
-
 
8
 
-
 
-
 
-
 
-
Helmir S.A.
 
(13)
 
Reimbursement of expenses
 
-
 
-
 
-
 
1
 
-
 
-
 
-
 
-
Dolphin Fund Plc.
 
(7)
 
Shares/Mutual funds
 
-
 
142,838
 
-
 
-
 
-
 
-
 
-
 
-
Total
         
22,116
 
159,770
 
981
 
22,727
 
(241)
)
(62,957)
)
(15,600)
)
(87,769))



 
77

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

31.  
Related party transactions (Continued)

The following is a summary of the results and transactions with related parties for the nine-month period ended March 31, 2013:

Related party
Reference
 
Rental
   
Fees
   
Income/expenses of shared services
   
Legal fees
   
Interest income / (expenses)
   
Others
 
Estudio Zang, Bergel & Viñes
(5)
    -       -       -       (1,667 )     -       -  
Fundacion IRSA
(4)
    -       -       (2 )     -       -       (1,420 )
Directors
      -       (57,529 )     -       -       -       -  
Canteras Natal Crespo S.A.
(9)
    -       -       72       -       8       -  
Cyrsa S.A.
(9)
    -       -       -       -       (5,397 )     -  
Tarshop S.A.
(10)
    4,271       -       234       -       -       -  
Baicom Networks S.A.
(11)
    -       -       9       -       71       -  
Consultores Assets Management S.A.
(4)
    140       -       -       -       -       -  
Puerto Retiro S.A.
(12)
    -       -       -       -       343       -  
Banco Hipotecario S.A.
(8)
    -       -       -       -       56       -  
Quality Invest S.A.
(2)
    -       -       -       -       10       162  
Inversiones Financieras del Sur S.A.
(6)
    -       -       -       -       155       -  
Cresud S.A.C.I. F. y A.
(1)
    1,258       (12,267 )     (49,022 )     -       4,426       -  
Nuevo Puerto Santa Fe S.A.
(2)
    (27 )     -       -       -       -       794  
        5,642       (69,796 )     (48,709 )     (1,667 )     (328 )     (464 )

(1)  
Majority shareholder.
(2)  
Joint venture of APSA.
(3)  
Direct or indirect associate of Tyrus.
(4)  
Related to the President of the Company.
(5)  
Legal services related to the Board of Directors.
(6)  
Shareholder of Cresud S.A.C.I.F. y A.
(7)  
Since 1996, the Group maintains an investment in Dolphin Fund Plc, an Investment Fund related to the Group’s president. The investment is recorded as financial instruments at fair value through profit and loss. As of March 31, 2013 this investment amounts to Ps. 142.8 million. During October 2012, there has been additional investment for an amount of US$ 20 million.
(8)  
Associate.
(9)  
Join venture.
(10)  
Associate of APSA.
(11)  
Joint venture through E-Commerce Latina S.A.
(12)  
Joint venture through Inversora Bolívar S.A.
(13)  
Subsidiary of Cresud.
(14)  
Subsidiary of EH, joint venture of APSA.

 
78

IRSA Inversiones y Representaciones Sociedad Anónima
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

32.  
Negative working capital

As of the period-end, the Group has recorded negative working capital which is currently under consideration of the Board of Directors and Management.


33.  
Events after the date of the statement of financial position

1.  
Advanced dividends distribution

On May 3, 2013, the General Shareholders’ Meeting of APSA approved the ratification and distribution of an advanced cash dividend established by the Board of Directors in the amount if of Ps. 166,500 for the current year.

2.  
Sale of Hersha’s shares

During April and May, 2013 the Group sold 872,602 ordinary shares of Hersha for a total amount of US$ 5.1 million.

3.  
Significant sale of investment properties

On May 8, 2013, IRSA signed the transfer deed for the sale of the 17th floor and two parking units of the Building Maipú 1300 and two parking units of the building Libertador 498. The total price of the transaction was Ps. 7.8 million (US$ 1.5 million). Such transaction generated a gain of approximately Ps. 6.3 million.
 
79

Free translation from the original prepared in Spanish for publication in Argentina

 
Limited Review Report


 
To the Shareholders, President and Board of Directors of
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Legal address: Bolívar 108 - 1° floor
 
Autonomous City of Buenos Aires
 
C.U.I.T.: 30-52532274-9


1.  
We have reviewed the accompanying unaudited condensed interim consolidated statement of financial position of IRSA Inversiones y Representaciones Sociedad Anónima and its subsidiaries as of March 31, 2013, and the related unaudited condensed interim consolidated statements of income, unaudited condensed interim consolidated statements of comprehensive income for the nine and three-month periods ended March 31, 2013, and the unaudited condensed interim consolidated statements of changes of shareholders’ equity and unaudited condensed interim consolidated statements of cash flows for the nine-month period ended March 31, 2013 and selected explanatory notes. The balances and other information corresponding to the fiscal year ended June 30, 2012 and the interim periods within that fiscal period are an integral part of these financial statements and, therefore, they should be considered in relation to these financial statements.

2.  
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). The IFRS as issued by the International Accounting Standard Board (IASB) were adopted as accounting standards by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) and incorporated by the National Securities Commission (CNV) to its regulations. Therefore, 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 Accounting Standard 34 "Interim Financial Reporting" (IAS 34). Our responsibility is to express a conclusion based on the review that we have performed with the scope detailed in paragraph 3.

 
3.  
We conducted our review in accordance with Technical Resolution No. 7 issued by the FACPCE for a review of interim financial statements. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit, the objective of which is to express an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 
80

 
 
 
Free translation from the original prepared in Spanish for publication in Argentina

 
Limited Review Report (Continued)
 

4.  
As mentioned in note 2.1 to the unaudited condensed interim consolidated financial statements, these unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34. The fiscal year ended June 30, 2013 will be the first year of application of IFRS. The adjustments and other effects of the transition to IFRS are presented in note 2.3 to these unaudited condensed interim consolidated financial statements. The amounts included in the reconciliations shown in note 2.3 are subject to change as a consequence of potential changes in IFRS which may occur until June 30, 2013, and should only be considered as final upon issuance of the annual financial statements for the fiscal year ended June 30, 2013.

5.  
Nothing came to our attention as a result of our review that caused us to believe that these unaudited condensed interim consolidated financial statements have not been prepared in all material respects in accordance with IAS 34.

 
6.  
In accordance with current regulations, we hereby inform that:

a)  
the unaudited condensed interim consolidated financial statements of IRSA Inversiones y Representaciones Sociedad Anónima are recorded in the "Inventory and Balance Sheet Book" and carried in all formal respects in conformity with legal requirements, and comply, as regards those matters that are within our competence, with the provisions set forth in the Commercial Companies Law and the corresponding resolutions of the CNV;

b)  
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal respects in accordance with applicable legal provisions;

 
c)  
we have read the Business Summary (“Reseña Informativa”) and the Additional Information to the notes to the unaudited condensed interim consolidated financial statements required by Article 68 of the Buenos Aires Stock Exchange Regulations, on which, as regards those matters that are within our competence, we have no observations to make;

 
d)  
at March 31, 2013, the debt of IRSA Inversiones y Representaciones Sociedad Anónima owed in favor of the Argentine Integrated Pension System which arises from accounting records and submissions amounted to Ps. 283,208, which was not callable at that date.


 
Autonomous City of Buenos Aires, May 17, 2013.

 PRICE WATERHOUSE & Co. S.R.L.      ABELOVICH, POLANO & ASOCIADOS S.R.L.  
(Partner)
   
(Partner)
 
C.P.C.E.C.A.B.A. Tº 1 Fº 17
Carlos Martín Barbafina
Public Accountant (UCA)
C.P.C.E.C.A.B.A. T° 175  F° 65
   
C.P.C.E. C.A.B.A. T° 1 F° 30
Marcelo Héctor Fuxman
Public Accountant (U.B.A.)
C.P.C.E. C.A.B.A. T° 134 F° 85
 
 
   
 
 

 
 
81

 

 
IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited Condensed Interim Separate Financial Statements as of March 31, 2013 and for the nine-month periods ended March 31, 2013 and 2012

 
 
 

 
 
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Financial Position
as of March 31, 2013, June 30, 2012 and July 1st, 2011
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

 
Note
    03.31.2013       06.30.2012       07.01.2011  
ASSETS
                         
Non-current Assets
                         
Investment properties, net                                                                                        
6
    844,113       890,433       925,906  
Property, plant and equipment, net                                                                                        
7
    8,294       8,765       10,138  
Trading properties                                                                                        
8
    64,799       66,997       65,252  
Intangible assets, net
9
    5,934       5,987       8,724  
Investments in subsidiaries, associates and joint ventures
5
    3,791,602       3,357,430       3,289,725  
Deferred income tax assets                                                                                        
18
    52,595       -       -  
Trade and other receivables, net                                                                                        
11
    148,333       139,449       60,567  
Investments in financial assets                                                                                        
12
    102       163,594       149,157  
Total Non-current Assets                                                                                        
      4,915,772       4,632,655       4,509,469  
Current Assets
                         
Trading properties                                                                                        
8
    2,451       4,120       10,840  
Inventories                                                                                        
10
    511       474       427  
Trade and other receivables, net                                                                                        
11
    63,616       67,854       126,605  
Investments in financial assets
12
    2,720       20,680       24,302  
Cash and cash equivalents                                                                                        
13
    122,338       76,872       45,163  
Total Current Assets                                                                                        
      191,636       170,000       207,337  
TOTAL ASSETS                                                                                        
      5,107,408       4,802,655       4,716,806  
                           
SHAREHOLDERS’ EQUITY
                         
Shared capital
      578,676       578,676       578,676  
Inflation adjustment  of share capital                                                                                        
      123,329       274,387       274,387  
Share premium
      793,123       793,123       793,123  
Reserve for share-based payments                                                                                        
      8,321       2,595       -  
Legal reserve
      85,140       71,136       57,031  
Other reserves
      492,441       419,783       391,262  
Cumulative translation adjustment                                                                                        
      38,500       14,502       -  
Acquisition of additional interest in subsidiaries                                                                                        
      (17,254 )     (15,714 )     -  
Retained earnings                                                                                        
      716,478       510,853       656,525  
TOTAL SHAREHOLDERS’ EQUITY                                                                                        
      2,818,754       2,649,341       2,751,004  
                           
LIABILITIES
                         
Non-Current Liabilities
                         
Trade and other payables                                                                                        
14
    9,281       6,699       5,032  
Borrowings                                                                                        
17
    1,588,456       1,550,369       1,293,259  
Deferred income tax liabilities                                                                                        
18
    -       19,179       79,464  
Provisions                                                                                        
16
    7,065       6,198       -  
Total Non-Current Liabilities                                                                                        
      1,604,802       1,582,445       1,377,755  
Current Liabilities
                         
Trade and other payables                                                                                        
14
    132,768       113,228       52,693  
Salaries and social security liabilities                                                                                        
15
    3,520       5,151       3,086  
Borrowings
17
    541,819       451,615       531,186  
Provisions                                                                                        
16
    5,745       875       1,082  
Total Current Liabilities                                                                                        
      683,852       570,869       588,047  
TOTAL LIABILITIES                                                                                        
      2,288,654       2,153,314       1,965,802  
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
      5,107,408       4,802,655       4,716,806  

The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       

 
1

 
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Income
for the nine and three-month periods beginning on July 1st, 2012 and 2011
and January 1st, 2013 and 2012, respectively, and ended March 31, 2013 and 2012
 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina.

     
Nine months
   
Three months
 
 
Note
    03.31.2013       03.31.2012       03.31.2013       03.31.2012  
Revenues
20
    207,196       187,466       69,735       61,859  
Costs
21
    (80,683 )     (69,055 )     (26,578 )     (22,368 )
Gross profit
      126,513       118,411       43,157       39,491  
Gain from disposal of investment properties
6
    63,783       42,737       7,824       18,010  
General and administrative expenses
22
    (56,828 )     (48,572 )     (17,910 )     (17,267 )
Selling expenses
22
    (12,415 )     (10,550 )     (5,110 )     (3,465 )
Other operating results, net
24
    (11,080 )     (8,553 )     (1,795 )     (1,898 )
Profit from operations
      109,973       93,473       26,166       34,871  
Share of profit of subsidiaries, associates, and joint ventures
5
    439,099       255,403       151,428       110,013  
Profit from operations before financial results and income tax
      549,072       348,876       177,594       144,884  
Finance income
25
    91,017       59,433       21,821       34,363  
Finance cost
25
    (391,225 )     (278,591 )     (130,732 )     (88,227 )
Financial results, net
25
    (300,208 )     (219,158 )     (108,911 )     (53,864 )
Profit before income tax
      248,864       129,718       68,683       91,020  
Income tax
18
    71,774       46,904       28,173       4,051  
Profit for the period
      320,638       176,622       96,856       95,071  
                                   
                                   
Profit per share for the period:
                                 
Basic
      0.554       0.305       0.167       0.164  
Diluted
      0.554       0.305       0.167       0.164  

The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       

 
2

 

IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Comprehensive Income
for the nine and three-month periods beginning on July 1st, 2012 and 2011
and January 1st, 2013 and 2012, respectively, and ended March 31, 2013 and 2012
 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina.


   
Nine months
   
Three months
 
      03.31.2013       03.31.2012       03.31.2013       03.31.2012  
Profit for the period
    320,638       176,622       96,856       95,071  
Other Comprehensive Income:
                               
Items that may be reclassified subsequently to profit or loss:
                               
Currency translation adjustment of subsidiaries, associates, and joint ventures (Note 5)
    36,913       12,078       13,492       3,294  
Other comprehensive income for the period (i)
    36,913       12,078       13,492       3,294  
Total comprehensive income for the period
    357,551       188,700       110,348       98,365  

(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.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       


 
3

 

IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the nine-month periods ended March 31, 2013 and 2012
 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina.


 
      Share capital       
Inflation adjustment of share capital
     
Share premium
     
Acquisition of additional
interest in subsidiaries
     
Cumulative translation adjustment
     
Reserve for share-based compensation
     
Legal reserve
     
Other reserves
     
Retained earnings
     
Total Shareholders’ equity
 
Balance at July 1st, 2012 
    578,676       274,387       793,123       (15,714 )     14,502       2,595       71,136       419,783       510,853       2,649,341  
Profit for the period
    -       -       -       -       -       -       -       -       320,638       320,638  
Other comprehensive income for the period
    -       -       -       -       36,913       -       -       -       -       36,913  
Total comprehensive income for the period
    -       -       -       -       36,913       -       -       -       320,638       357,551  
Appropriation of retained earnings approved by Shareholders’ meeting held 10.31.12
    -       -       -       -       -       -       14,004       72,658       (86,662 )     -  
Application of deferred income tax liability approved by Shareholders’ meeting held 10.31.12
    -       (151,058 )     -       -       -       -       -       -       151,058       -  
Distribution of dividends approved by Shareholders’ meeting held 10.31.12
    -       -       -       -       -       -       -       -       (180,000 )     (180,000 )
Reserve for share-based compensation
    -       -       -       -       -       5,726       -       -       -       5,726  
Cumulative translation adjustment for interest held before business combination
    -       -       -       -       (12,915 )     -       -       -       -       (12,915 )
Acquisition of subsidiary
    -       -       -       (1,540 )     -       -       -       -       -       (1,540 )
Reimbursement of expired dividends
    -       -       -       -       -       -       -       -       591       591  
Balance at March 31, 2013
    578,676       123,329       793,123       (17,254 )     38,500       8,321       85,140       492,441       716,478       2,818,754  

The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       

 
4

 
 
IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the nine-month periods ended March 31, 2013 and 2012
 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina.


 
     
Share capital
     
Inflation adjustment of share capital
     
Share premium
     
Acquisition of additional
interest in subsidiaries
     
Cumulative translation adjustment
     
Reserve for share-based compensation
     
Legal reserve
     
Other reserves
     
Retained earnings
     
Total Shareholders’ equity
 
Balance at July 1st, 2011 
    578,676       274,387       793,123       -       -       -       57,031       391,262       656,525       2,751,004  
Profit for the period
    -       -       -       -       -       -       -       -       176,622       176,622  
Other comprehensive income  for the period
    -       -       -       -       12,078       -       -       -       -       12,078  
Total comprehensive income for the period
    -       -       -       -       12,078       -       -       -       176,622       188,700  
Appropriation of retained earnings approved by Shareholders’ meeting held 10.31.11
    -       -       -       -       -       -       14,105       56,421       (70,526 )     -  
Distribution of dividends approved by Shareholders’ meeting held 10.31.11
    -       -       -       -       -       -       -       -       (211,575 )     (211,575 )
Reserve for share-based compensation
    -       -       -       -       -       2,698       -       -       -       2,698  
Reimbursement of expired dividends
    -       -       -       -       -       -       -       -       3,640       3,640  
Acquisition of subsidiary
    -       -       -       (15,311 )     -       -       -       -       -       (15,311 )
Balance at March 31, 2012
    578,676       274,387       793,123       (15,311 )     12,078       2,698       71,136       447,683       554,686       2,719,156  

The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       
 
 
5

 


IRSA Inversiones y Representaciones Sociedad Anónima
Unaudited Condensed Interim Separate Statements of Cash Flows
for the nine-month periods ended March 31, 2013 and 2012
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina.


 
Note
    03.31.2013       03.31.2012  
Operating activities:
                 
Cash generated from the operations                                                                                                 
13
    78,095       123,655  
Net cash generated by operating activities
      78,095       123,655  
Investing activities:
                 
Capital contributions to subsidiaries, associates and joint ventures
5
    (88,717 )     (59,237 )
Additions of investment properties
6
    (2,242 )     (7,226 )
Proceeds from sale of investment properties, net
6
    91,123       52,827  
Additions of property, plant and equipment
7
    (1,023 )     (1,446 )
Additions of intangible assets, net
9
    (156 )     (135 )
Additions of investments in financial assets
      -       (25,792 )
Proceeds from sale of investments in financial assets
      245,829       -  
Interest received
      15,121       27,436  
Loans granted to subsidiaries, associates and joint ventures
      (24,555 )     (115,544 )
Loans repayments received from subsidiaries, associates and joint ventures 
      17,882       151,038  
Dividends received
      142,410       111,793  
Net cash generated by investing activities
      395,672       133,714  
Financing activities:
                 
Bank overdrafts, net
      (52,491 )     (222,897 )
Proceeds from borrowings
      -       80,000  
Repayments of borrowings
      (132,074 )     (50,000 )
Dividends paid
19
    (163,216 )     (211,575 )
Interest paid
      (190,110 )     (187,496 )
Payment of borrowings from subsidiaries, associates and joint ventures
      (2,715 )     -  
Proceeds from borrowings from subsidiaries, associates and joint ventures
      107,071       46,881  
Acquisition of non-controlling interest in subsidiaries
      (648 )     -  
Issuance of non-convertible notes
      -       295,035  
Net cash used in financing activities:
      (434,183 )     (250,052 )
Net increase in cash and cash equivalents
      39,584       7,317  
Cash and cash equivalents at the beginning of the period
13
    76,872       45,163  
Foreign exchange gain on cash and cash equivalents
      5,882       519  
Cash and cash equivalents at end of period
      122,338       52,999  

The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
  Inversiones y Representaciones S.A.  
       
 
By:
/s/ Eduardo S. Elsztain  
    Eduardo S. Elsztain  
    President  
       

 
6

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


1.  
General information and company’s business

IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA” or the “Company”) was founded in 1943, primarily engaged in managing real estate holdings in Argentina since 1991.

IRSA is a corporation incorporated and domiciled in Argentina. The address of its registered office is Moreno 877, 23rd Floor, Buenos Aires, Argentina.
 
The Company primarily owns, manages and develops a portfolio of office and other rental properties in Buenos Aires. In addition, IRSA through its subsidiaries, associates and joint ventures manages and develops shopping centers and branded hotels across Argentina, and also office properties in the United States of America.

These Unaudited Condensed Interim Separate Financial Statements have been approved for issue by the Board of Directors on May 17, 2013.


2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”)

2.1.
Basis of preparation and transition to RT 26

The National Securities Commission, (“CNV”, as per its Spanish acronym), through General Resolutions No. 562/09 and 576/10, has provided for the application of Technical Resolutions No. 26 and 29 of the Argentine Federation of Professional Councils of Economic Sciences (“FACPCE”, as per its Spanish acronym), which adopt the International Financial Reporting Standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”), for companies subject to the public offering regime ruled by Law 17,811, due to the listing of their shares or corporate notes, and for entities that have applied for authorization to be listed under the mentioned regime.

The Company is required to adopt IFRS as from the fiscal year beginning July 1st, 2012. Consequently, the Company’s transition date for the adoption of IFRS as defined by IFRS 1, “First time adoption of IFRS”, is July 1st, 2011.

The Unaudited Condensed Interim Separate Financial Statements of the Company for the nine and three-month periods ended March 31, 2013 and 2012 have been prepared in accordance with RT 26 of FACPCE, adopted by CNV. This Technical Resolution differs from International Accounting Standard (IAS) 34 “Interim Financial Reporting” issued by IASB, in reference to the accounting measurement criteria of the investments in subsidiaries, joint ventures and associates, which are accounted for under the equity method described by IAS 28 “Investments in associates”. This criterion differs from the provisions of paragraph 38 of IAS 27 “Separate Financial Statements”, whereby such investments are measured at cost or fair value.

 
 
7

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

These Unaudited Condensed Interim Separate Financial Statements have been prepared in accordance with the accounting policies that the Company expects to adopt in its first annual separate financial statements as of June 30, 2013, issued in accordance with IFRS. The accounting policies are based on IFRS issued by the IASB and the interpretations issued by the IFRS Interpretation Committee (“IFRIC”) that the Company expects to become applicable on such date.

The separate financial statements of the Company were prepared in accordance with the Argentine accounting standards (Argentine GAAP) in force, which differ from IFRS in some significant areas. To prepare these Unaudited Condensed Interim Separate Financial Statements, the Management of the Company has modified certain valuation and presentation accounting policies that were previously applied under Argentine GAAP in order comply with the IFRS.

Comparative figures and figures as of the transition date (July 1st, 2011) have been modified to reflect such adjustments. The notes below include a reconciliation of shareholders’ equity of separate financial statements prepared in accordance with the Argentine GAAP on the transition date (July 1st, 2011), on the adoption date (June 30, 2012) and on the closing date of the comparative period (March 31, 2012) and the statement of income and other comprehensive income for the fiscal year ended June 30, 2012 and for the nine and three-month periods ended March 31, 2012, and those presented in accordance with RT 26 in these Unaudited Condensed Interim Separate Financial Statements, as well as the effects of the adjustments to cash flows.

These Unaudited Condensed Interim Separate Financial Statements should be read together with the annual financial statements of the Company as of June 30, 2012 prepared in accordance with Argentine GAAP in force, and with the Unaudited Condensed Interim Separate Financial Statements as of September 30, 2012, with include an exhibit (the “Exhibit I”) which presents additional information as of June 30, 2012 and July 1st, 2011 under IFRS which is considered necessary to understand these Unaudited Condensed Interim Separate Financial Statements. Amounts included in the statement of financial position, statement of income, statement of changes in shareholders’ equity and statement of cash flows prepared under IFRS for the year ended June 30, 2012 and the amounts included in the statement of financial position as of July 1st, 2011 are detailed in Note 2.3 to these Unaudited Condensed Interim Separate Financial Statements. These Unaudited Condensed Interim Separate Financial Statements are presented in Argentine Pesos.

These Unaudited Condensed Interim Separate Financial Statements corresponding to the nine and three-month periods ended March 31, 2013 and 2012 have not been audited. The Company’s Management believes they include all necessary adjustments to fairly present the results of each period. The Company’s nine and three-month periods ended March 31, 2013 and 2012 results do not necessarily reflect the proportion of the Company’s full-year results.

 
8

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

The format of the primary financial statements under Argentine GAAP is governed by Technical Resolutions 8 and 9 of the FACPCE and Resolutions of the CNV. IAS 1, “Presentation of Financial Statements” requires certain disclosures to be made on the face of the primary statements and other required disclosures may be made in the notes of the financial statements, unless another standard specifies otherwise. The transition to Technical Resolutions No. 26 has resulted in the Company changing the format of its statements of income, statements of financial position and statements of cash flows, as well as the disclosure of certain line items not prescribed by Argentine GAAP.

2.2.           Initial elections upon adoption of RT No. 26

As a general rule, the Company is required to establish its IFRS accounting policies for the year ended June 30, 2013 and apply these retrospectively. However, advantage has been taken of certain exemptions and exceptions afforded by IFRS 1.

In Note 2.2. to the Unaudited Condensed Interim Consolidated Financial Statements of the Company indicates the exemptions and exceptions that are applicable in IFRS 1 and that have been applied in the transition from Argentine GAAP to RT 26.

2.3.
Reconciliations of Argentine GAAP to Technical Resolution No. 26 (“RT 26”)

In accordance with the requirements of Technical Resolution No. 26 and No. 29 of FACPCE, set out below are the reconciliations of shareholders’ equity in accordance with Argentine GAAP and RT 26 at June 30, 2012, at March 31, 2012 and July 1st, 2011, and the reconciliations of income, comprehensive income and cash flows for the year ended June 30, 2012 and for the nine and three-month periods ended March 31, 2012. The reconciliations included below were prepared based on the IFRS standards that are estimated to be applicable for the Company for the financial statements as of and for the year ended June 30, 2013. The items and amounts in the reconciliations included below are subject to change and should only be deemed final when the consolidated financial statements prepared under RT 26 for the first time as of and for the year ended June 30, 2013 are issued.

The items and amounts included in the reconciliations could be modified to the extent that, when preparing financial statements as of and for the year ended June 30, 2013, applicable standards are different.

The first reconciliation provides an overview of the impact on shareholders’ equity of the transition at July 1st, 2011, at March 31, 2012 and June 30, 2012 (Note 2.3.1). The second reconciliation provides an overview of the impact on income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012 (Note 2.3.1).  The third reconciliation provides an overview of the impact on other comprehensive income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012 (Note 2.3.1).


 
9

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

The following reconciliations provide details of the impact of the transition on:
 
·  
Statement of financial position as of July 1st, 2011 (Note 2.3.2)
·  
Statement of financial position as of March 31, 2012 (Note 2.3.3)
·  
Statement of financial position as of June 30, 2012 (Note 2.3.4)
·  
Statement of income for the nine-month period ended March 31, 2012 (Note 2.3.5)
·  
Statement of income for the three-month period ended March 31, 2012 (Note 2.3.6)
·  
Statement of income for the year ended June 30, 2012 (Note 2.3.7)
·  
Statement of comprehensive income for the nine-month period ended March 31, 2012 (Note 2.3.8)
·  
Statement of comprehensive income for the three-month period ended March 31, 2012 (Note 2.3.9)
·  
Statement of comprehensive income for the year ended June 30, 2012 (Note 2.3.10)
·  
Statements of cash flow for the nine-month period ended March 31, 2012 and for the year ended June 30, 2012 (Note 2.3.11)

2.3.1.           Summary of equity

        07.01.2011       03.31.2012       06.30.2012  
Shareholders’ equity under Argentine GAAP
      2,313,687       2,365,292       2,335,279  
Revenue recognition – “scheduled rent increases”
(B)
    4,445       3,823       3,616  
Trading properties
(C)
    (3,620 )     (2,196 )     (2,913 )
Pre-operating and organization expenses
(D)
    (41 )     (41 )     (1,180 )
Goodwill
(E)
    368,574       353,978       348,865  
Non-current investments – financial assets
(F)
    10,187       10,487       10,160  
Initial direct costs on operating leases
(G)
    465       620       595  
Tenant deposits
(H)
    73       170       217  
Present value accounting – tax credits
(I)
    -       (110 )     (178 )
Investments in subsidiaries
(K)
    81,874       14,056       (22,634 )
Investments in associates
(L)
    (3,889 )     (6,768 )     (7,501 )
Investments in joint ventures
(M)
    (16,795 )     (16,006 )     (11,421 )
Acquisition of non-controlling interest
(N)
    -       -       (33 )
Amortization of borrowing costs
(O)
    110       487       123  
Deferred income tax
(Q)
    (4,066 )     (4,636 )     (3,654 )
Shareholders’ equity under RT 26
      2,751,004       2,719,156       2,649,341  

 
10

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.1.           Summary of profit

        03.31.12       06.30.12    
01.01.12 to 03.31.12
 
Profit under Argentine GAAP
      227,954       280,081       86,770  
Revenue recognition – “scheduled rent increases”
(B)
    (622 )     (829 )     (209 )
Trading properties
(C)
    1,424       707       -  
Pre-operating and organization expenses
(D)
    -       (1,139 )     -  
Goodwill
(E)
    (14,382 )     (19,709 )     (4,691 )
Non-current investments – financial assets
(F)
    300       (27 )     2,227  
Initial direct costs on operating leases
(G)
    156       130       95  
Tenant deposits
(H)
    99       144       121  
Present value accounting – tax credits
(I)
    (110 )     (178 )     (110 )
Investment properties
(J)
    -       -       16,595  
Investments in subsidiaries
(K)
    (35,914 )     (57,476 )     3,012  
Investments in associates
(L)
    (2,880 )     (3,612 )     (2,412 )
Investments in joint ventures
(M)
    789       5,374       352  
Amortization of borrowing costs
(O)
    378       12       (193 )
Deferred income tax
(Q)
    (570 )     413       (6,486 )
Profit under RT 26
      176,622       203,891       95,071  


2.3.1.  
Summary of other comprehensive income
 
        03.31.12       06.30.12    
01.01.12 to 03.31.12
 
Other comprehensive income under Argentine GAAP
      28,888       45,851       8,827  
Currency translation adjustment from subsidiaries, associates and joint ventures
(L)
    (16,810 )     (31,349 )     (5,533 )
Other comprehensive income under RT 26
      12,078       14,502       3,294  


 
11

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.2.      
Reconciliation of statement of financial position as of July 1st, 2011

   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
ASSETS
                           
Non-current Assets
                           
Investment properties, net
    -  
a
    925,441  
G
    465       925,906  
Property, plant and equipment, net
    930,893  
a,b,f,g
    (920,755 )       -       10,138  
Trading properties 
    -  
b,c
    68,160  
C
    (2,908 )     65,252  
Intangible assets, net
    8,473  
g
    292  
D
    (41 )     8,724  
Inventories   
    61,685  
b,c
    (61,685 )       -       -  
Investments in subsidiaries, associates and joint ventures
    2,898,095         -  
E,K,L,M
    391,630       3,289,725  
Other investments 
    144,072  
a,b,d,f
    (144,072 )       -       -  
Trade and other receivables, net
    59,380         -  
B
    1,187       60,567  
Investments in financial assets
    8,255  
d
    130,715  
F
    10,187       149,157  
Negative Goodwill 
    (38,134 )       -  
E
    38,134       -  
Total Non-current Assets 
    4,072,719         (1,904 )       438,654       4,509,469  
Current Assets
                                   
Trading properties
    -  
b,c
    11,552  
C
    (712 )     10,840  
Inventories  
    11,979  
b,c
    (11,552 )       -       427  
Trade and other receivables, net
    121,443  
f
    1,904  
B
    3,258       126,605  
Investments in financial assets
    2,170  
e
    22,132         -       24,302  
Cash and cash equivalents
    45,163         -         -       45,163  
Other investments
    22,132  
e
    (22,132 )       -       -  
Total Current Assets   
    202,887         1,904         2,546       207,337  
TOTAL ASSETS  
    4,275,606         -         441,200       4,716,806  


 
12

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)


   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
SHAREHOLDERS’ EQUITY
                           
Share capital
    578,676         -         -       578,676  
Inflation adjustment of share capital
    274,387         -         -       274,387  
Share premium
    793,123         -         -       793,123  
Cumulative translation adjustment
    34,124         -  
A
    (34,124 )     -  
Legal reserve
    57,031         -         -       57,031  
Other reserves
    391,262         -         -       391,262  
Retained earnings
    185,084         -         471,441       656,525  
TOTAL SHAREHOLDERS’ EQUITY…..
    2,313,687         -         437,317       2,751,004  
                                     
LIABILITIES
                                   
Non-current Liabilities
                                   
Trade and other payables
    5,526         -  
H
    (494 )     5,032  
Borrowings
    1,293,259         -         -       1,293,259  
Deferred income tax liabilities
    75,398         -  
Q
    4,066       79,464  
Total Non-current Liabilities
    1,374,183         -         3,572       1,377,755  
Current Liabilities
                                   
Trade and other payables
    52,272         -  
H
    421       52,693  
Payroll and social security liabilities
    3,086         -         -       3,086  
Borrowings
    531,296         -  
O
    (110 )     531,186  
Provisions
    1,082         -         -       1,082  
Total Current Liabilities
    587,736         -         311       588,047  
TOTAL LIABILITIES
    1,961,919         -         3,883       1,965,802  
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
    4,275,606         -         441,200       4,716,806  



 
13

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina



2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.3.  
Reconciliation of statement of financial position as of March 31, 2012

   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
ASSETS
                           
Non-current Assets
                           
Investment properties, net
    -  
a
    911,539  
G
    620       912,159  
Property, plant and equipment, net
    917,672  
a,b,f,g
    (906,292 )       -       11,380  
Trading properties
    -  
b,c
    69,602  
C
    (1,857 )     67,745  
Intangible assets, net
    6,476  
g
    235  
D,E
    227       6,938  
Investments in subsidiaries, associates and joint ventures
    3,184,593         -  
E,K,L,M
    308,416       3,493,009  
Other investments
    161,540  
a,b,d
    (161,540 )       -       -  
Deferred income tax asset
    4,325         -         -       4,325  
Trade and other receivables, net
    74,847         -  
B
    850       75,697  
Investments in financial assets
    -  
d
    148,442  
F
    10,487       158,929  
Inventories
    63,281  
b,c
    (63,281 )       -       -  
Negative Goodwill
    (36,576 )       -  
E
    36,576       -  
Total Non-current Assets
    4,376,158         (1,295 )       355,319       4,730,182  
Current assets
                                   
Trading properties
    -  
b
    3,999  
C
    (339 )     3,660  
Inventories
    -  
a,b,f
    490         -       490  
Trade and other receivables, net
    62,324  
f
    1,295  
B
    2,973       66,592  
Investments in financial assets
    2,441  
e
    29,377         -       31,818  
Cash and cash equivalents
    52,999         -         -       52,999  
Investments
    29,377  
a,b,e
    (29,377 )       -       -  
Inventories
    4,489  
b
    (4,489 )       -       -  
Total Current Assets
    151,630         1,295         2,634       155,559  
TOTAL ASSETS
    4,527,788         -         357,953       4,885,741  



 
14

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

 
2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)


   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
SHAREHOLDERS’ EQUITY
                           
Share capital
    578,676         -         -       578,676  
Inflation adjustment of share capital
    274,387         -         -       274,387  
Share Premium
    793,123         -         -       793,123  
Cumulative Translation Adjustment
    63,012         -  
A
    (50,934 )     12,078  
Reserve for share-based payments
    2,698         -         -       2,698  
Legal reserve
    71,136         -         -       71,136  
Other reserves
    447,683         -         -       447,683  
Acquisition of additional interest in subsidiaries
    -         -  
K
    (15,311 )     (15,311 )
Retained earnings
    134,577         -         420,109       554,686  
TOTAL SHAREHOLDERS’ EQUITY
    2,365,292         -         353,864       2,719,156  
                                     
LIABILITIES
                                   
Non-current Liabilities
                                   
Trade and other payables
    7,644         -  
H,I
    (465 )     7,179  
Deferred income tax liabilities
    33,367         -  
Q
    4,636       38,003  
Borrowings
    1,621,385         -         -       1,621,385  
Total Non-current Liabilities
    1,662,396         -         4,171       1,666,567  
Current Liabilities
                                   
Trade and other payables
    132,537         -  
H
    405       132,942  
Payroll and social security liabilities
    3,131         -         -       3,131  
Borrowings
    358,045         -  
O
    (487 )     357,558  
Provisions
    6,387         -         -       6,387  
Total Current Liabilities
    500,100         -         (82 )     500,018  
Total Liabilities
    2,162,496         -         4,089       2,166,585  
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
    4,527,788         -         357,953       4,885,741  


 
15

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina



2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.4.  
Reconciliation of statement of financial position as of June 30, 2012


   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
ASSETS
                           
Non-current Assets
                           
Investment properties, net
    -  
a
    889,838  
G
    595       890,433  
Property, plant and equipment, net
    894,317  
a,f,g
    (885,552 )       -       8,765  
Trading properties
    -  
b,c
    68,854  
C
    (1,857 )     66,997  
Intangible assets, net
    6,452  
g
    506  
D,E
    (971 )     5,987  
Inventories
    63,089  
b,c
    (63,089 )       -       -  
Investments in subsidiaries, associates and joint ventures
    3,086,419         -  
E,K,L,M
    271,011       3,357,430  
Other investments
    165,246  
a,b,d
    (165,246 )       -       -  
Trade and other receivables, net
    136,472         -  
B
    2,977       139,449  
Investments in financial assets
    -  
d
    153,434  
F
    10,160       163,594  
Negative goodwill
    (36,056 )       -  
E
    36,056       -  
Total Non-current Assets
    4,315,939         (1,255 )       317,971       4,632,655  
Current Assets
                                   
Trading properties
    -  
b,c
    5,176  
C
    (1,056 )     4,120  
Inventories
    5,650  
b,c
    (5,176 )       -       474  
Trade and other receivables, net
    65,960  
f
    1,255  
B
    639       67,854  
Investments in financial assets
    2,494  
e
    18,186         -       20,680  
Cash and cash equivalents
    76,872         -         -       76,872  
Other investments
    18,186  
e
    (18,186 )       -       -  
Total Current Assets
    169,162         1,255         (417 )     170,000  
TOTAL ASSETS
    4,485,101         -         317,554       4,802,655  



 
16

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)



   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
SHAREHOLDERS’ EQUITY
                           
Share capital
    578,676         -         -       578,676  
Inflation adjustment of share capital
    274,387         -         -       274,387  
Share premium
    793,123         -         -       793,123  
Cumulative translation adjustment
    79,975         -  
A
    (65,473 )     14,502  
Reserve for share-based payments
    2,595         -         -       2,595  
Legal reserve                                    
    71,136         -         -       71,136  
Other reserves
    419,783         -         -       419,783  
Acquisition of non-controlling interest
    -         -  
K
    (15,714 )     (15,714 )
Retained earnings
    115,604         -         395,249       510,853  
TOTAL SHAREHOLDERS’ EQUITY
    2,335,279         -         314,062       2,649,341  
                                     
LIABILITIES
                                   
Non-current Liabilities
                                   
Trade and other payables
    7,517         -  
H,I
    (818 )     6,699  
Borrowings
    1,550,369         -         -       1,550,369  
Deferred income tax liabilities
    15,525         -  
Q
    3,654       19,179  
Provisions
    6,198         -         -       6,198  
Total Non-current Liabilities
    1,579,609         -         2,836       1,582,445  
Current Liabilities
                                   
Trade and other payables
    112,449         -  
H
    779       113,228  
Payroll and social security liabilities
    5,151         -         -       5,151  
Borrowings
    451,738         -  
O
    (123 )     451,615  
Provisions
    875         -         -       875  
Total Current Liabilities
    570,213         -         656       570,869  
Total Liabilities
    2,149,822         -         3,492       2,153,314  
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
    4,485,101         -         317,554       4,802,655  


 
17

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.5.           Reconciliation of statement of income for the nine-month period ended March 31, 2012

   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
Revenues
    200,829  
i,ii
    (13,254 )
B,H
    (109 )     187,466  
Costs
    (67,139 )
i,ii
    (5,338 )
C,E
    3,422       (69,055 )
Gross profit
    133,690         (18,592 )       3,313       118,411  
Gain from disposal of investment properties
    -  
ii
    18,205  
J
    24,532       42,737  
General and Administrative expenses
    (48,532 )
iii
    (40 )       -       (48,572 )
Selling expenses
    (10,993 )
iii
    443         -       (10,550 )
Gain from recognition of inventories at net realizable value
    26,285         -  
C,J
    (26,285 )     -  
Other operating results, net
    -  
iii
    (8,553 )       -       (8,553 )
Profit from operations
    100,450         (8,537 )       1,560       93,473  
Share of profit of subsidiaries, associates and joint ventures
    308,051  
iv
    (1,575 )
K,L,M
    (51,073 )     255,403  
Profit from operations before financial results and income tax
    408,501         (10,112 )       (49,513 )     348,876  
Amortization of goodwill, net
    1,558         -  
E
    (1,558 )     -  
Finance income
    58,624  
iv
    809         -       59,433  
Finance cost
    (279,580 )
iv
    680  
F,G,H,I,O
    309       (278,591 )
Financial results, net
    (220,956 )       1,489         309       (219,158 )
Other income and expenses, net
    (8,623 )
iii
    8,623         -       -  
Profit before Income Tax
    180,480         -         (50,762 )     129,718  
Income tax
    47,474         -  
Q
    (570 )     46,904  
Profit of the period
    227,954         -         (51,332 )     176,622  
 
 
 
18

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
2.  
 Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.6.  
Reconciliation of statement of income for the three-month period ended March 31, 2012
 
   
Argentine GAAP balances I
   
Reclassifications II (*)
   
Measurement adjustments III (*)
   
RT 26 balances IV
 
Revenues
    70,540       (8,656 )     (25 )     61,859  
Costs
    (30,615 )     6,696       1,551       (22,368 )
Gross profit
    39,925       (1,960 )     1,526       39,491  
Gain from disposal of investment properties
    -       1,573       16,437       18,010  
General and Administrative expenses
    (17,227 )     (40 )     -       (17,267 )
Selling expenses
    (3,908 )     443       -       (3,465 )
Gain from recognition of inventories at net realizable value
    1,254       -       (1,254 )     -  
Other results, net
    -       (1,898 )     -       (1,898 )
Profit from operations
    20,044       (1,882 )     16,709       34,871  
Share of profit / (loss) of subsidiaries, associates and joint ventures
    113,718       (343 )     (3,362 )     110,013  
Profit from operations before financial results and income tax
    133,762       (2,225 )     13,347       144,884  
Amortization of goodwill, net
    519       -       (519 )     -  
Finance income
    33,554       809       -       34,363  
Finance cost
    (89,634 )     (552 )     1,959       (88,227 )
Financial results, net
    (56,080 )     257       1,959       (53,864 )
Other income and expenses, net
    (1,968 )     1,968       -       -  
Profit before income tax
    76,233       -       14,787       91,020  
Income tax
    10,537       -       (6,486 )     4,051  
Profit for the period
    86,770       -       8,301       95,071  

(*) Corresponds to the same references explained in Notes 2.3.5 and 2.3.7
 

 
 
19

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
 Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.7.
Reconciliation of statement of income for the year ended June 30, 2012
 

   
Argentine GAAP balances I
 
Ref. 2.3.12.1
 
Reclassifications II
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
Revenues
    344,010  
i,ii
    (90,424 )
B,H
    (135 )      253,451  
Costs
    (96,207 )
i,ii
    (1,732 )
C,E
    4,339       (93,600 )
Gross profit
    247,803         (92,156 )       4,204       159,851  
Gain from disposal of investment properties
    -  
ii
    92,156  
J
    24,532       116,688  
General and Administrative expenses
    (68,141 )       -         -       (68,141 )
Selling expenses
    (19,142 )       -         -       (19,142 )
Gain from recognition of inventories at net realizable value
    28,033         -  
C,J
    (28,033 )     -  
Other operating results, net
    -  
iii
    11,466  
D,E
    (1,139 )     10,327  
Profit from operations
    188,553         11,466         (436 )     199,583  
Share of profit / (loss) of subsidiaries, associates and joint ventures
    368,474  
iv
    (2,133 )
K,L,M
    (73,348 )     292,993  
Profit from operations before financial results and income tax
    557,027         9,333         (73,784 )     492,576  
Amortization of goodwill, net
    2,078         -  
E
    (2,078 )     -  
Finance income
    46,429         2,133         -       48,562  
Finance cost
    (396,791 )
iv
    -  
F,H,O,I
    (741 )     (397,532 )
Financial results, net
    (350,362 )       2,133         (741 )     (348,970 )
Other income and expenses, net
    11,466  
iii
    (11,466 )       -       -  
Profit before income tax
    220,209         -         (76,603 )     143,606  
Income tax
    59,872         -  
Q
    413       60,285  
Profit for the year
    280,081         -         (76,190 )     203,891  
                                     


 
20

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.8. 
Reconciliation of statement of comprehensive income for the nine-month period ended March 31, 2012


   
Argentine GAAP balances I
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
Profit for the period
    227,954         (51,332 )     176,622  
Other comprehensive income:
                         
Items that may be reclassified subsequently to profit or loss:
                         
Currency translation adjustments of subsidiaries, associates and joint ventures
    28,888  
L
    (16,810 )     12,078  
Other comprehensive income / (loss) for the period
    28,888         (16,810 )     12,078  
Total comprehensive income / (loss) for the period
    256,842         (68,142 )     188,700  


2.3.9. 
Reconciliation of statement of comprehensive income for the three-month period ended March 31, 2012


   
Argentine GAAP balances I
   
Measurement adjustments III (*)
   
RT 26 balances IV
 
Profit for the period
    86,770       8,301       95,071  
Other comprehensive income:
                       
Items that may be reclassified subsequently to profit or loss:
                       
Currency translation adjustments of subsidiaries, associates and joint ventures
    8,827       (5,533 )     3,294  
Other comprehensive income / (loss) for the period
    8,827       (5,533 )     3,294  
Total comprehensive Income / (loss) for the period
    95,597       2,768       98,365  

 
(*) Corresponds to the same references explained in Notes 2.3.8 and 2.3.10.


2.3.10. 
Reconciliation of statement of comprehensive income for the year ended June 30, 2012

   
Argentine GAAP balances I
 
Ref. 2.3.12.2
 
Measurement adjustments III
   
RT 26 balances IV
 
Profit for the year
    280,081         (76,190 )     203,891  
Other comprehensive income:
                         
Items that may be reclassified subsequently to profit or loss:
                         
Currency translation adjustments of subsidiaries, associates and joint ventures
    45,851  
L
    (31,349 )     14,502  
Other comprehensive income/(loss) for the year
    45,851         (31,349 )     14,502  
Total comprehensive income/(loss) for the year
    325,932         (107,539 )     218,393  


 
21

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.11. 
Reconciliation of statements of cash flows for the nine-month period ended March 31, 2012 and for the year ended June 30, 2012

Based on IAS 7 “Statement of Cash Flows” requirements, the Company has made the following reclassification between operating, investing and financing activities in the cash flows statements presented under Argentine GAAP and the cash flows statements under RT 26 as further detailed below:

(a)  
Operating activities
 
      03.31.2012       06.30.2012  
Cash generated by operating activities under Argentine GAAP
    177,001       244,489  
Proceeds from sale of investment properties and property, plant and equipment
    (52,827 )     (132,941 )
Foreign exchange gain on cash and cash equivalents
    (519 )     (517 )
Cash generated by operating activities under RT 26
    123,655       111,031  

(b)  
Investing activities
 
      03.31.2012       06.30.2012  
Cash generated by investing activities under Argentine GAAP
    80,887       191,012  
Proceeds from sale of investment properties and property, plant and equipment
    52,827       132,941  
Cash generated by investing activities under RT 26
    133,714       323,953  

(c)  
Financing activities
 
      03.31.2012       06.30.2012  
Cash used in financing activities under Argentine GAAP
    (250,052 )     (403,791 )
Cash used in financing activities under RT 26
    (250,052 )     (403,791 )

(d)  
Net increase / (decrease) in cash and cash equivalents
 
      03.31.2012       06.30.2012  
Net increase in cash and cash equivalents under Argentine GAAP
    7,836       31,710  
Exchange gain on cash and cash equivalents 
    (519 )     (517 )
Net increase in cash and cash equivalents under RT 26
    7,317       31,193  


 
22

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

2.3.12. 
Explanation of the transition to IFRS

In addition to the exemptions and exceptions discussed above, the following narratives explain the significant differences between the Argentine GAAP accounting policies and the RT No. 26 applied by the Company. Only the differences having an impact on the Company are explained below. The following is not a complete summary of all of the differences between Argentine GAAP and RT No. 26. The descriptive caption next to each numbered item below corresponds to the same numbered and descriptive caption in the summary tables above, which reflect the quantitative impacts from each change. Unless the quantitative impact is disclosed, the change impact is not significant to the Company.

Column I in the tables included on previous pages represents the Argentine GAAP balances prior to transition as published in the latest Company’s Argentine GAAP financial statements as of and for the year ended June 30, 2012 compared to the transition date (July 1st, 2011) and in the financial statements of the Company prepared under Argentine GAAP as of and for the nine-month period ended March 31, 2012. However, certain reclassifications and/or groupings have already been made to that information in Column I to avoid lengthy explanations of certain format changes introduced in these first financial statements according to RT 26. The following changes have been made to the previous Argentine GAAP statement of financial position included in Column I:

(1)  
The line items “Trade receivables” and “Other receivables” have been grouped into the new line item “Trade and other receivables, net”.

(2)  
The line items “Trade payables”, “Customer advances”, “Taxes payable” and “Other liabilities” have been also grouped into the new line item “Trade and other payables”, with the exception of  income tax and deferred income taxes which have been shown separately.

(3)  
Goodwill which was previously disclosed separately offsetting negative goodwill has been included as part of “Intangible assets, net”.

(4)  
Cash equivalents previously disclosed as part of the line item current investments have been grouped together with cash and banks, and the resulting line renamed “Cash and cash equivalents”.

(5)  
Derivative financial instruments which were previously included as part of the non-current line items “Other receivables”, “Other payables” and/ or “Non-current investments” have been disclosed as separate assets or liabilities as appropriate.

 
(6)  
Investments in subsidiaries, associates and joint ventures previously included as part of “Non-current investments” have been separately disclosed in the new line item “Investments in subsidiaries, associates and joint ventures”.

 

 
23

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

The following changes have been made to the statements of income for the year ended June 30, 2012 and for the nine and three-month periods ended March 31, 2012:

(1)  
The format of the statements of income has been restructured to simplify its reading. To that effect, all revenue streams of the Company which were previously disclosed separately (i.e. sale of development properties, leases and services revenue), together with its corresponding costs of sales, have been aggregated into two line items titled "Revenues" and "Costs" in Column I. Revenues and Costs are then cross-referenced to respective notes in the financial statements where a detailed breakdown of the items included is provided per line of business.

(2)  
According to Argentine GAAP, the share of losses and profits from subsidiaries, associates and joint ventures  is shown after the financial results. Likewise, under IFRSs, the share of profits and losses from subsidiaries, associates and joint ventures is generally shown after the financial results. However, where subsidiaries, associates and joint ventures are an integral vehicle to carry out the Company’s operations, it is more adequate to show the share of profits and losses of subsidiaries, associates and joint ventures before financial results. In accordance with its strategy, the Company conducts its operations through controlled companies, associates or joint ventures. Therefore, under RT 26, the Company shows the profits or losses from subsidiaries, associates and joint ventures before the financial results. For simplicity, the share of profits and losses from subsidiaries, associates and joint ventures is shown before financial results, in Column I.

(3)  
According to Argentine GAAP, the financial results are separated between those generated by assets from those generated by liabilities. According to RT 26, the Company adopted the policy based on showing the finance income and the finance cost separately in the statements of income. In order to simplify the explanations, the Company reclassified the accounts according to Argentine GAAP presented in the captions “Financial results generated by assets” and “Financial results generated by liabilities” to “Finance Income” and “Finance Cost”, respectively, in Column I.

 
(4)  
According to RT 26, income and expense items not recognized in the statements of income (that is, exchange differences related to translation of foreign businesses) are shown in the statement of comprehensive income as “Other comprehensive income”. According to Argentine GAAP in force, the statements of comprehensive income are not mandatory and, therefore, such items are recognized as part of shareholders’ equity, in a separate reserve account.  For simplicity, these items are shown in “Other comprehensive income” in Column I.


 
24

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

 2.3.12.1
 Reclassifications (Column II)

Reclassifications affecting the statements of financial position

The column titled “Reclassifications” reflects the various differences in disclosure and format between the statements of financial position according to Argentine GAAP and RT 26. Unless otherwise stated, amounts have been reclassified for presentational purposes under RT 26 prior to affecting the corresponding RT 26 adjustments, as applicable, to the Argentine GAAP amounts. The impact of the RT 26 adjustments on reclassified balances is included in Column III titled “Measurement Adjustments” and is further discussed in Note 2.3.12.2 below. Unless otherwise stated, these reclassifications affect both the statements of financial position as of the transition date, i.e. July 1st, 2011, March 31, 2012 and as of June 30, 2012.

           (a) Investment properties

The reclassification is consistent with the one described in Note 2.3.12.2 a) to the Unaudited Condensed Interim Consolidated Financial Statements.

(b) Trading properties

The reclassification is consistent with the one described in Note 2.3.12.2 b) to the Unaudited Condensed Interim Consolidated Financial Statements.

(c) In-kind receivables from barter transactions

The reclassification is consistent with the one described in Note 2.3.12.2 c) to the Unaudited Condensed Interim Consolidated Financial Statements.

(d) Non-current investments – investments in financial assets

The reclassification is consistent with the one described in Note 2.3.12.2 d) to the Unaudited Condensed Interim Consolidated Financial Statements.

(e) Current investments – investments in financial assets

The reclassification is consistent with the one described in Note 2.3.12.2 e) to the Unaudited Condensed Interim Consolidated Financial Statements.


 
25

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

(f) Advances for purchases of property, plant and equipment, inventories and investments in associates and joint ventures

The reclassification is consistent with the one described in Note 2.3.12.2 f) to the Unaudited Condensed Interim Consolidated Financial Statements.

(g) Computer Software

The reclassification is consistent with the one described in Note 2.3.12.2 g) to the Unaudited Condensed Interim Consolidated Financial Statements.
 
 
Reclassifications affecting the statements of income for the nine and three-month periods ended March 31, 2012 and for the year ended June 30, 2012

(i) Revenues – service income and service charges

The reclassification is consistent with the one described in Note 2.3.12.2 i) to the Unaudited Condensed Interim Consolidated Financial Statements.

(ii) Gain from disposal of investment properties

The reclassification is consistent with the one described in Note 2.3.12.2 ii) to the Unaudited Condensed Interim Consolidated Financial Statements.

(iii) Other operating results, net

The reclassification is consistent with the one described in Note 2.3.12.2 iii) to the Unaudited Condensed Interim Consolidated Financial Statements.

(iv) Investments in financial assets

The reclassification is consistent with the one described in Note 2.3.12.2 iv) to the Unaudited Condensed Interim Consolidated Financial Statements.



 
26

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 


2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

Reclassifications affecting the statements of cash flows for the nine-month period ended March 31, 2012 and for the fiscal year ended June 30, 2012.

Under Argentine GAAP, the effect of changes in exchange rate of cash and cash equivalents were shown as operating activities and were not presented as a forth category in the statement of cash flow, as RT 26 required.
 
Additionally, pursuant to Argentine GAAP, proceeds derived from sale of property, plant and equipment (including properties classified as investment properties under RT 26) were reported as operating activities. In accordance with RT 26, proceeds derived from sale of investment properties and property, plant and equipment are reported as investment activities.

Finally, according to Argentine GAAP, the acquisition of non-controlling interests was reported as investing activities, while under RT 26 are reported as cash from financing activities.
 
Thus, cash flows generated by or used in operating, investing and financing activities were different in the statement of cash flow prepared under Argentine GAAP.

 
2.3.12.2 Measurement adjustments (Column III)

Argentine GAAP differs in certain significant respects from RT 26. Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as further described below:

(A)  
Foreign currency translation

The Company has applied the one-time exemption to set the foreign currency cumulative translation adjustment (“CTA”) to zero as of July 1st, 2011
 
(B)  
Revenue recognition – “scheduled rent increases”

The adjustment is consistent with the one described in Note 2.3.12.3 B) to the Unaudited Condensed Interim Consolidated Financial Statement.


 
27

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

(C) Trading properties

The adjustment is consistent with the one described in Note 2.3.12.3 D) to the Unaudited Condensed Interim Consolidated Financial Statements.

(D) Pre-operating and organization expenses

The adjustment is consistent with the one described in Note 2.3.12.3 E) to the Unaudited Condensed Interim Consolidated Financial Statements.

(E) Goodwill

Goodwill:

The adjustment is consistent with the one described in Note 2.3.12.3 F) to the Unaudited Condensed Interim Consolidated Financial Statements.

Negative goodwill:

The adjustment is consistent with the one described in Note 2.3.12.3 G) to the Unaudited Condensed Interim Consolidated Financial Statements.

 (F) Non-current investments – financial assets

The adjustment is consistent with the one described in Note 2.3.12.3 H) to the Unaudited Condensed Interim Consolidated Financial Statements.

(G) Initial direct costs on operating leases

The adjustment is consistent with the one described in Note 2.3.12.3 I) to the Unaudited Condensed Interim Consolidated Financial Statements.

(H) Tenant deposits

The adjustment is consistent with the one described in Note 2.3.12.3 J) to the Unaudited Condensed Interim Consolidated Financial Statements.


 
28

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

(I)
Present value accounting – tax credits

The adjustment is consistent with the one described in Note 2.3.12.3 L) to the Unaudited Condensed Interim Consolidated Financial Statements.

(J) Investment properties

The adjustment is consistent with the one described in Note 2.3.12.3 M) to the Unaudited Condensed Interim Consolidated Financial Statements.

(K)
Impact of adjustments according to RT 26 in investments in subsidiaries

Argentine GAAP - Investment in entities in which the Company exercises control, are accounted for under equity method. Under this method, the investment is recognized at its original cost and periodically increased (decreased) for the investor share in profits (loss) of the subsidiary, and decreased by dividends received from the subsidiary. The Company applies its share to the financial statements of its investments booked under the equity method, prepared in accordance with Argentine GAAP.

As of July 1st, 2011, and June 30, 2012, the subsidiaries of the Company are those detailed in Exhibit I.
 
RT 26 – The Company has assessed all of its interests in the companies indicated in the preceding paragraph and has determined that it exercises control over all of them. Consequently, under RT 26, the Company also accounts for such investments under the equity method. Nevertheless, the Company has assessed the impact of adjustments to RT 26 to financial statements of such entities prepared under the Argentine GAAP in force, before the application of the equity method.
 
In Notes 2.3.12.3 (B),(C),(D),(E),(F),(G),(H),(I),(J),(K),(L),(N),(O),(P),(S) and (T) to the Unaudited Condensed Interim Consolidated Financial Statements, there is a description of the most significant adjustments to the shareholders’ equity and profit or loss of subsidiaries, as per RT 26.
 

 
29

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina



2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

(L) Impact of adjustments according to RT 26 in investments in associates

The adjustment is consistent with the one described in Note 2.3.1.12.3 N) to the Unaudited Condensed Interim Consolidated Financial Statements.

(M) Impact of adjustments to RT 26 in investments in joint ventures

The adjustment is consistent with the one described in Note 2.3.1.12.3 O) to the Unaudited Condensed Interim Consolidated Financial Statements.

(N) Acquisition of non-controlling interest

The adjustment is consistent with the one described in Note 2.3.12.3 P) to the Unaudited Condensed Interim Consolidated Financial Statements.

(O) Amortization of borrowing costs

The adjustment is consistent with the one described in Note 2.3.12.3 Q) to the Unaudited Condensed Interim Consolidated Financial Statements.

(P) Currency translation adjustments

The adjustment is consistent with the one described in Note 2.3.12.3 R) to the Unaudited Condensed Interim Consolidated Financial Statements.

(Q) Deferred income tax

The adjustment is consistent with the one described in Note 2.3.12.3 S) to the Unaudited Condensed Interim Consolidated Financial Statements.

2.4.  
Significant accounting policies

The principal accounting policies adopted for the preparation of these Unaudited Condensed Interim Separate Financial Statements are consistent with those used in preparing the information under RT 26 as of June 30, 2012 (which is shown in Exhibit I), and are based on those IFRS expected to be in force on June 30, 2013 (except for the accounting of investments in subsidiaries, associates and joint ventures, as described in Note 2.1). In addition, the most significant accounting policies are described in Exhibit I.


 
30

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

2.  
Basis of preparation and adoption of Technical Resolution No. 26 (“RT 26”) (Continued)

       2.5. 
Use of estimates

The preparation of financial statements at a certain date requires the Management to make estimates and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements.

In the preparation of the Unaudited Condensed Interim Separate Financial Statements, the main significant judgments made by Management in applying the Company’s accounting policies and the major sources of uncertainty were the same that the Company used in the preparation of financial statements as of and for the fiscal year ended June 30, 2012, which are described in Exhibit I.
 
           3. 
Acquisitions and disposals

On January 14, 2013, IRSA accepted the repurchase offer submitted by APSA in connection with all of the Series I notes issued by APSA, which are convertible into shares (“ONC” as per the initials in Spanish), mature in July 2014 and amount to a face value of US$ 31.7 million, for a total price of US$ 35.4 million, or US$ 1.1148554 per each CN. On January 15, 2013, APSA paid IRSA the amount of Ps. 175.2 million, thus recording a gain derived from the repurchase of Ps. 10.3 million, shown in the financial income (expenses) line.

See other acquisitions and disposals made by the Company for the nine-month period ended March 31, 2013 in Note 3 to the Unaudited Condensed Interim Consolidated Financial Statements.


           4. 
Financial risk management

 
       4.1.
Risk management principles and processes
 
The Company’s activities are exposed to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk), credit risk, liquidity risk and capital risk.

Exhibit I provides information on financial risk management as of June 30, 2012 and July 1st, 2011. Since June 30, 2012 there have been no changes in the risk management or risk management policies applied by the Company.
 
 
31

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

           4.
 Financial risk management (Continued)

       4.2. 
Fair value estimates
 
Since June 30, 2012 there have been no significant changes in business on economic circumstances affecting the fair value of the Company's financial assets or liabilities (either measured at fair value or amortized cost), nor any transfers between the different hierarchies used to assess the fair value of the Company's financial instruments and/ or reclassifications between categories of financial instruments.


           5.
 Information about principal subsidiaries, associates and joint ventures
 
The Company conducts its business through several operating and holding subsidiaries, associates and joint ventures.
 
Set out below is the summarized financial information for investments in subsidiaries, associates and joint ventures for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012:
 

Subsidiaries

      03.31.2013       06.30.2012  
Beginning of the period/year
    3,031,541       2,984,283  
Acquisition of subsidiaries
    -       202  
Capital contribution
    113,886       68,857  
Disposal of subsidiaries
    -       (19,448 )
Share of profit, net
    415,272       274,690  
Translation adjustment (iii)
    23,998       5,344  
Dividend payments (ii)
    (139,417 )     (284,431 )
Reimbursement of expired dividends
    591       -  
Acquisition of non-controlling interest
    (892 )     -  
Reserve for share-based compensation
    4,624       2,044  
End of the period/year (i) year
    3,449,603       3,031,541  

(i)  
Includes (Ps. 226) of investments with negative equity as of March 31, 2013, which are classified to Provisions (Note 16).
(ii)  
During the period, the Company collected dividends from APSA and Nuevas Fronteras S.A. for an amount of Ps. 133.8 million and Ps. 5.6 million, respectively.
(iii)  
As of March 31, 2013, corresponds to the translation adjustment of the period plus the reclassification of translation adjustment.


Associates

      03.31.2013       06.30.2012  
Beginning of the period/year
    206,245       188,317  
Acquisition of associates
    -       1,429  
Share of profit, net
    13,195       16,499  
Dividend payments
    (8,452 )     -  
End of the period/year
    210,988       206,245  


 
32

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

5.           Information about principal subsidiaries, associates and joint ventures (Continued)

Joint ventures

      03.31.2013       06.30.2012  
Beginning of the period/year                                                                          
    119,644       117,125  
Capital contributions                                                                          
    509       715  
Share of profit, net
    10,632       1,804  
End of the period/year
    130,785       119,644  


6.           Investment properties

Changes in Company’s investment properties for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of period / year
    890,433       925,906  
Additions
    2,242       12,343  
Sales (ii)
    (27,340 )     (27,365 )
Depreciation charge (i)
    (21,222 )     (20,451 )
End of period / year
    844,113       890,433  

(i) Depreciation charges of investment properties were included in “Costs” in the Statement of Income (Note 22).
(ii) See Note 3 to the Unaudited Condensed Interim Consolidated Financial Statements.

The following amounts have been recognized in the statement of income:

      03.31.2013       03.31.2012  
Rental and service income
    191,282       169,413  
Direct operating expenses
    (75,114 )     (61,993 )
Gain from disposal of investment properties
    63,783       42,737  


 
33

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

7.           Property, plant and equipment, net

Changes in Company’s property, plant and equipment for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of period / year
    8,765       10,138  
Additions
    1,023       2,705  
Disposals of unused property, plant and equipment
    (931 )     (2,366 )
Depreciation charge (i)
    (563 )     (1,712 )
End of period / year
    8,294       8,765  

(i) Depreciation charges of property, plant and equipment were included in “Costs” and “General and administrative expenses” in the statement of income (Note 22).


8.           Trading properties

Changes in Company’s trading properties for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

        03.31.2013         06.30.2012  
Beginning of period / year
    71,117       76,092  
Additions
    -       1,886  
Sales
    (3,867 )     (6,861 )
End of period / year
    67,250       71,117  


 
34

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

9.           Intangible assets

Changes in Company’s intangible assets for the nine-month period ended March 31, 2013 and for the year ended June 30, 2012 were as follows:

      03.31.2013       06.30.2012  
Beginning of period / year
    5,987       8,724  
Additions
    156       1,188  
Disposals
    -       (2,951 )
Amortization charge (i)
    (209 )     (974 )
End of period / year
    5,934       5,987  

(i) Amortization charges of intangible assets are included in “General and administrative expenses” in the statement of income (Note 22).


10.           Inventories

Company’s inventories as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Current
                       
Materials and other inventories (i)
    511       474       427  
Current inventories
    511       474       427  
Total inventories
    511       474       427  

(i)  
The cost of inventories is recorded in “Costs” in the statement of income (Note 22).


 
35

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


11.           Trade and other receivables, net

Company’s trade and other receivables, as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
                       
Sale, leases and services receivable
    10,701       10,322       3,072  
Non-current trade receivables
    10,701       10,322       3,072  
Minimum Presumed Income tax (MPIT)
    95,200       76,328       54,278  
Others
    526       -       366  
Non-current other receivables
    95,726       76,328       54,644  
Related parties (Note 27)
    41,906       52,799       2,851  
Total non-current trade and other receivables, net
    148,333       139,449       60,567  
Current
                 
Sale, leases and services receivable
    26,489       29,663       32,700  
Checks to be deposited
    -       16       6,908  
Notes receivable
    -       381       -  
Overdue debtors and debtors under legal proceedings
    2,911       2,911       8,596  
Less: allowance for trade receivables
    (5,521 )     (4,783 )     (9,822 )
Trade receivables, net
    23,879       28,188       38,382  
Gross sales tax credit
    35       414       -  
Other tax receivables
    2,218       2,530       2,363  
Prepaid expenses
    1,574       4,974       5,417  
Expenses and services to recover
    1,666       2,369       -  
Advance payments
    2,989       1,255       1,904  
Others
    947       1,222       8,395  
Less: allowance for other receivables
    (23 )     -       -  
Current other receivables, net
    9,406       12,764       18,079  
Related parties (Note 27)
    30,331       26,902       70,144  
Current trade and other receivables, net
    63,616       67,854       126,605  
Total trade and other receivables, net
    211,949       207,303       187,172  

Movements on the Company’s allowance for trade and other receivables are as follows:

      03.31.2013       06.30.2012  
Beginning of period / year
    4,783       9,822  
Additions of the period / year
    1,352       938  
Unused amounts reversed
    (591 )     (533 )
Used during the period / year
    -       (5,444 )
End of period / year
    5,544       4,783  

The creation and release of provision for impaired receivables have been included in “Selling expenses” in the statement of income (Note 22). Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.


 
36

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

12.           Investments in financial assets

Company’s investments in financial assets as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
                       
Financial assets at fair value
                       
Investment in equity securities in TGLT
    77       86       105  
Investment in equity securities in Hersha
    -       19,608       18,337  
Other equity securities in public companies
    25       221       271  
Financial assets at amortized cost
                       
Convertible notes APSA 2014 (i)
    -       143,679       130,444  
Total Non-current investments in financial assets
    102       163,594       149,157  
Current
                       
Financial assets at fair value
                       
Mutual funds
    2,709       2,494       2,170  
Public companies securities
    -       11,643       2,892  
Financial assets at amortized cost
                       
Notes APSA 2012
    -       -       13,367  
Interest on convertible notes APSA 2014 (i)
    -       6,534       5,861  
Other investments
    11       9       12  
Total Current investments in financial assets
    2,720       20,680       24,302  
Total investments in financial assets
    2,822       184,274       173,459  

(i)  
As a result of the sale of convertible notes APSA 2014, the company posted income of Ps. 10,299. See Note 25.

13.
Cash flow information

The following table shows the amounts of cash and cash equivalents as of March 31, 2013, June 30, 2012 and July 1st, 2011:

      03.31.2013       06.30.2012       07.01.2011  
Cash at bank and on hand
    81,464       76,405       27,276  
Mutual funds
    40,874       467       17,887  
Total cash and cash equivalents
    122,338       76,872       45,163  

 
37

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


13.
Cash flow information (Continued)

Following is a detailed description of cash flows generated by the Company’s operations for the nine-month periods ended March 31, 2013 and 2012.

 
 
Note
    03.31.2013       03.31.2012  
Profit for the period                                                                                     
      320,638       176,622  
Adjustments for:
                 
Income tax                                                                                     
18
    (71,774 )     (46,904 )
Depreciation and amortization                                                                                     
22
    21,994       17,285  
Gain from disposal of investment property                                                                                     
6
    (63,783 )     (42,737 )
Disposals of unused property, plant and equipment
7
    931       -  
Gain from disposal of financial assets                                                                                     
25
    (10,299 )     -  
Share-based payments                                                                                     
23, 26
    1,102       606  
Loss of derivative financial instruments                                                                                     
25
    -       887  
Changes in fair value of investments in financial assets
25
    (26,440 )     3,665  
Dividends income                                                                                     
25
    -       (634 )
Interest expense, net                                                                                     
25
    155,941       155,017  
Provisions and allowances                                                                                     
      38,472       29,636  
Share of (profit)/ loss of subsidiaries, associates and joint ventures
      (439,099 )     (255,403 )
Unrealized foreign exchange (gain) / loss, net                                                                                     
      176,222       76,002  
Increase in inventories                                                                                     
      (37 )     (16 )
Decrease in trading properties                                                                                     
      3,867       4,783  
Decrease in trade and other receivables, net                                                                                     
      1,095       14,679  
Decrease in trade and other payables                                                                                     
      (26,517 )     (8,009 )
Decrease in salaries and social security liabilities
      (4,218 )     (1,824 )
Net cash generated by operating activities                                                                                     
      78,095       123,655  

Additional information
             
        03.31.2013       03.31.2012  
Increase in investments in financial assets through an increase in borrowings
      18,767       -  
Dividends receivable
      5,615       1,000  
Increase in investments in subsidiaries through a decrease in trade and other receivables
      25,678       7,850  
Reserve for share-based payment
5
    4,624       2,092  
Cumulative translation adjustment
      23,998       12,078  
Acquisition of non-controlling interest
      1,540       15,311  
Reimbursement of expired dividends
5
    591       3,640  
Dividends payable
      52,487       -  


 
38

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


14.           Trade and other payables

Company’s trade and other payables as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
                       
Sales, rent and services payments received in advance
    4,139       617       -  
Guarantee deposits
    3,759       5,739       4,285  
Trade payables
    7,898       6,356       4,285  
Tax on Shareholders´ personal assets payable
    1,067       -       -  
Others
    299       327       747  
Non-current other payables
    1,366       327       747  
Related parties (Note 27)
    17       16       -  
Non-current trade and other payables
    9,281       6,699       5,032  
                         
Current
                       
Trade payables
    5,063       7,061       6,635  
Invoices to be received
    7,980       10,019       6,746  
Sales, rent and services payments received in advance
    23,043       10,216       4,971  
Guarantee deposits
    4,250       1,336       2,901  
Total current trade payables
    40,336       28,632       21,253  
VAT payables
    2,411       6,961       6,635  
Other tax payables
    13,629       10,098       6,116  
Dividends payable to non-controlling shareholders
    52,487       28,632       -  
Others
    2,532       3,254       1,302  
Current other payables
    71,059       48,945       14,053  
Related parties (Note 27)
    21,373       35,651       17,387  
Current trade and other payables
    132,768       113,228       52,693  
Total trade and other payables
    142,049       119,927       57,725  


 
39

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina


15.           Salaries and social security liabilities

Company’s Salaries and social security liabilities as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

      03.31.2013       06.30.2012       07.01.2011  
Current
                       
Provision for vacation and bonuses                                                                         
    3,076       4,475       2,720  
Salaries payable                                                                         
    18       252       72  
Social security payable                                                                         
    426       424       294  
Total current salaries and social security liabilities
    3,520       5,151       3,086  
Total salaries and social security liabilities
    3,520       5,151       3,086  


16.           Provisions

The table below shows the movements in Company's provisions categorized by type of provision:

   
Labor, legal and other claims
   
Investments in subsidiaries (*)
   
Total
 
At July 1st, 2011 
    1,082       -       1,082  
Additions
    5,992       99       6,091  
Used during year
    (100 )     -       (100 )
At June 30, 2012
    6,974       99       7,073  
Additions
    6,095       127       6,222  
Used during period
    (485 )     -       (485 )
At March 31, 2013
    12,584       226       12,810  
 
(*)     Corresponds to investments in subsidiaries with negative equity.
 
The analysis of total provisions is as follows:

      03.31.2013       06.30.2012       07.01.2011  
Non-current
    7,065       6,198       -  
Current
    5,745       875       1,082  
      12,810       7,073       1,082  
 

 
40

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

17.           Borrowings

Company’s borrowings as of March 31, 2013, June 30, 2012 and July 1st, 2011 were as follows:

                     
Book value
 
 
Secured/ unsecured
Currency
Fixed/ floating
 
Effective
interest rate %
   
Nominal value
      03.31.2013       06.30.2012       07.01.2011  
Non-current
                                         
IRSA NCN due 2013
Unsecured
Ps.
Floating
 
Badlar +2.49%
      153,152       -       51,032       -  
IRSA NCN due 2014
Unsecured
US$
Fixed
    7.45 %     33,832       -       114,665       -  
IRSA NCN due 2017 (Note 27)
Unsecured
US$
Fixed
    8.50 %     150,000       765,749       675,852       612,419  
IRSA NCN due 2020
Unsecured
US$
Fixed
    11.50 %     150,000       749,681       661,078       598,116  
Long-term loans
Secured
US$
Fixed
    12 %     -       -       -       27,585  
Related parties (Note 27)
Unsecured
Ps.
Floating
 
Badlar
      13,532       14,442       -       -  
Related parties (Note 27)
Unsecured
US$
Floating
 
Libor 3m +200
      8,012       41,038       36,271       55,139  
Related parties (Note 27)
Unsecured
US$
Fixed
    7.50 %     2,224       17,516       11,418       -  
Finance lease obligations
Secured
US$
Fixed
    7.50 %     126       30       53       -  
Total non-current borrowings
                          1,588,456       1,550,369       1,293,259  
Current
                                             
IRSA NCN due 2013
Unsecured
Ps.
Floating
 
Badlar +2.49%
      153,152       104,344       102,888       -  
IRSA NCN due 2014
Unsecured
US$
Fixed
    7.45 %     33,832       174,388       38,278       -  
IRSA NCN due 2017 (Note 27)
Unsecured
US$
Fixed
    8.5 %     150,000       9,647       23,175       20,960  
IRSA NCN due 2020
Unsecured
US$
Fixed
    11.5 %     150,000       15,985       34,003       30,800  
Bank overdrafts
Unsecured
Ps.
Floating
    -       -       90,045       143,997       365,198  
Short-term loans
Unsecured
Ps.
Floating
 
Badlar + 400 Bps or 18.85% the lowest
      -       -       50,004       50,240  
Short-term loans
Unsecured
Ps.
Fixed
    14 %     -       -       30,335       29,890  
Short-term loans
Secured
US$
Fixed
    12 %     968       -       914       28,728  
Finance lease obligations
Secured
US$
Fixed
    7.50 %     126       111       157       -  
Related parties (Note 27)
Unsecured
Ps.
Floating
 
Badlar
      67,369       83,484       7       -  
Related parties (Note 27)
Unsecured
Ps.
Fixed
    7.50 %     6,000       31,414       -       -  
Related parties (Note 27)
Unsecured
US$
Floating
 
Libor 3m +200
      8,012       654       410       198  
Related parties (Note 27)
Unsecured
US$
Fixed
    5 %     5,950       31,747       27,447       5,172  
Total Current borrowings
                          541,819       451,615       531,186  
Total borrowings
                          2,130,275       2,001,984       1,824,445  
NCN: Non-convertible Notes

 
41

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

18.           Current and deferred income tax

The details of the provision for the Company’s income tax are as follows:

      03.31.2013       03.31.2012  
Current income tax                                                                                 
    -       -  
Deferred income tax                                                                                 
    (71,774 )     (46,904 )
Income tax                                                                                 
    (71,774 )     (46,904 )

The gross movement on the deferred income tax account is as follows:

      03.31.2013       06.30.2012  
Beginning of period / year                                                                                 
    (19,179 )     (79,464 )
Income tax gain                                                                                 
    71,774       60,285  
End of period / year                                                                                 
    52,595       (19,179 )

Below is a reconciliation between income tax expense and the amount that would arise using the income tax rate applicable to Profit Before Income Tax for the nine-month periods ended March 31, 2013 and 2012:

      03.31.2013       03.31.2012  
Net income at tax rate                                                                                 
    87,102       45,401  
Permanent differences:
               
Share of profit/(loss) from subsidiaries, associates and joint ventures
    (153,685 )     (89,391 )
Others                                                                                 
    (6,307 )     (4,874 )
Non-deductible items                                                                                 
    1,116       1,960  
Income tax expense                                                                                 
    (71,774 )     (46,904 )


 
42

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
19.           Dividends

During the period ended March 31, 2013 the Company has paid dividends for an amount of Ps. 163.2 million.

Dividends for the year ended June 30, 2012 amounted to Ps. 180.0 million, which were approved at the Annual General Shareholders´ Meeting on October 31, 2012. As of March 31, 2013, dividends corresponding to the non-controlling shareholders’ for Ps. 52.3 million are not yet paid.

20.           Revenues

      03.31.2013       03.31.2012  
Rental and scheduled rent increases                                                                                 
    139,289       127,589  
Expenses                                                                                 
    49,123       40,014  
Property management fee                                                                                 
    2,701       1,737  
Others                                                                                 
    169       73  
Total rental and service income                                                                                 
    191,282       169,413  
Sale of trading properties                                                                                 
    15,914       18,053  
Total other revenue                                                                                 
    15,914       18,053  
Total revenues                                                                                 
    207,196       187,466  

21.
Costs

      03.31.2013       03.31.2012  
Leases and service costs                                                                                 
    75,114       61,993  
Cost of sales and development                                                                                 
    5,569       7,062  
Total cost of property operations                                                                                 
    80,683       69,055  
Total costs                                                                                 
    80,683       69,055  

22.           Expenses by nature

The Company disclosed expenses in the statements of income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”.

The following tables provide the additional required disclosure of expenses by nature and their relationship to the function within the Company.


 
43

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

22.           Expenses by nature (Continued)

For the period ended March 31, 2013:

   
Costs
                   
   
Cost of rental and services
   
Cost of sale
and development
   
General and administrative expenses
   
Selling expenses
   
Total
 
Leases and service charges
    10,219       787       558       -       11,564  
Depreciation and amortization
    21,321       -       640       33       21,994  
Allowances for trade and other receivables
    -       -       -       761       761  
Salaries, social security costs and other personnel expenses
    7,905       86       19,837       4,319       32,147  
Director´s fees
    -       -       26,645       -       26,645  
Fees and payments for services
    2,619       40       4,051       985       7,695  
Maintenance, security, cleaning, repairs  and others
    26,209       44       1,636       124       28,013  
Taxes, rates and contributions
    6,074       728       275       4,424       11,501  
Advertising and others selling expenses
    -       -       -       1,549       1,549  
Cost of sale of trading properties
    -       3,867       -       -       3,867  
Others
    767       17       3,186       220       4,190  
Total expenses by nature
    75,114       5,569       56,828       12,415       149,926  


 
44

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina



22.  
Expenses by nature (Continued)

For the period ended March 31, 2012:

   
Costs
                   
   
Cost of rental and services
   
Cost of sale
and development
   
General and administrative expenses
   
Selling expenses
   
Total
 
Leases and service charges
    8,287       1,073       626       8       9,994  
Depreciation and amortization
    16,803       -       482       -       17,285  
Allowances for trade and other receivables
    -       -       -       125       125  
Salaries, social security costs and other personnel expenses
    7,984       66       20,545       2,428       31,023  
Director´s fees
    -       -       17,996       -       17,996  
Fees and payments for services
    1,139       296       5,374       1,525       8,334  
Maintenance, security, cleaning, repairs  and others
    21,013       39       1,333       118       22,503  
Taxes, rates and contributions
    6,168       850       204       4,112       11,334  
Advertising and others selling expenses
    -       -       -       2,108       2,108  
Cost of sale of trading properties
    -       4,738       -       -       4,738  
Others
    599       -       2,012       126       2,737  
Total expenses by nature
    61,993       7,062       48,572       10,550       128,177  



 
45

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

23.           Employee costs

      03.31.2013       03.31.2012  
Salaries, bonuses and social security costs                                                                                 
    29,546       29,121  
Share-based compensation                                                                                 
    1,102       606  
Pension costs – defined contribution plan                                                                                 
    74       89  
Other expenses and benefits                                                                                 
    1,425       1,207  
Employee costs                                                                                 
    32,147       31,023  

24.           Other operating results, net

      03.31.2013       03.31.2012  
Related parties management fees (Note 27)                                                                                 
    486       612  
Personal assets tax                                                                                 
    (2,968 )     (3,065 )
Donations                                                                                 
    (221 )     (2,389 )
Lawsuits and other contingencies (1)                                                                                 
    (6,019 )     (5,278 )
Others                                                                                 
    (2,358 )     1,567  
Total other operating results, net                                                                                 
    (11,080 )     (8,553 )
(1)  
Includes judicial costs and expenses


25.           Financial results, net

      03.31.2013       03.31.2012  
Finance income:
               
 - Interest income                                                                                 
    11,775       15,664  
 - Foreign exchange gains                                                                                 
    42,503       43,135  
 - Fair value gains of investments in financial assets
    26,440       -  
 - Gain from sale of financial assets (i)                                                                                 
    10,299       -  
 - Dividends income                                                                                 
    -       634  
Total finance income                                                                                 
    91,017       59,433  
                 
Finance costs:
               
 - Interest expense                                                                                 
    (168,965 )     (170,681 )
 - Foreign exchange losses                                                                                 
    (213,601 )     (94,389 )
 - Loss on derivatives financial instruments                                                                                 
    -       (887 )
 - Fair value loss of investments in financial assets
    -       (3,665 )
 - Other finance costs                                                                                 
    (8,659 )     (8,969 )
Total finance costs                                                                                 
    (391,225 )     (278,591 )
Total financial results, net                                                                                 
    (300,208 )     (219,158 )
(i)  
See Note 3.


26.           Share-based payments

For more details on share-based payments, see Note 30 to the Unaudited Condensed Interim Consolidated Financial Statements.

 
 
46

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

27.           Related party transactions

The following is a summary of the balances with related parties as of March 31, 2013:
 
 

Related party
Ref.
Description
of transaction
 
Trade and other receivables, net non-current
   
Trade and other receivables, net current
   
 
Trade
and other payables
non-current
   
 
Trade
and other payables current
   
Borrowings
non-current
   
Borrowings
current
 
Consultores Asset Management S.A.
(5)
Reimbursement of expenses
    -       2,412       -       (36 )     -       -  
Estudio Zang, Bergel & Viñes
(6)
Advances
    -       23       -       -       -       -  
   
Legal service fees
    -       -       -       (248 )     -       -  
Fundación IRSA
(5)
Reimbursement of expenses
    -       40       -       (2 )     -       -  
Museo de los Niños
(5)
Reimbursement of expenses
    -       51       -       (12 )     -       -  
Directors
 
Reimbursement of expenses
    -       -       -       -       -       -  
   
Fees
    -       -       -       (7,455 )     -       -  
   
Guarantee deposits
    -       -       (8 )     -       -       -  
Quality Invest S.A.
(10)
Reimbursement of expenses
    -       5       -       (38 )     -       -  
New Lipstick LLC
(11)
Reimbursement of expenses
    -       1,233       -       -       -       -  
Banco Hipotecario S.A.  (3) Reimbursement of expenses     -       -       -       (81             -  
 Cyrsa S.A.  (4) Reimbursement of expenses     -       926       -       (70             -  
    Borrowings     -       -       -       -               (83,476
Tarshop S.A.  (8) Reimbursement of expenses     -       1       -       -               -  
 
Alto Palermo S.A.
 (2) Reimbursement of expenses     -       -       -       (5             -  
    Rental     -       477       -       -               -  
    Share-based payments     -       31       -       (132             -  
    Shared services     -       2,405       -       -               -  
    Borrowings     -       -       -       -               (31,414
Doneldon S.A.  (2) Reimbursement of expenses     -       34       -       -               -  
Arcos del Gourmet S.A.  (7) Reimbursement of expenses     -       7       -       -               -  
E-Commerce Latina S.A.  (2) Reimbursement of expenses     -       14       -       -               -  
    Management fees     -       3       -       -               -  
    Borrowings     -       -       -       -       (10,460     -  
 
Efanur S.A.
 (2) Reimbursement of expenses     -       72       -       -       -       -  
    Borrowings     41,900       -       -       -       -       -  
 
 
 

 
47

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
27.           Related party transactions (Continued)

Related party
Ref.
Description
of transaction
 
Trade and other receivables, net non-current
   
Trade and other receivables, net current
   
Trade and other payables
non-current
   
Trade and other payables current
   
Borrowings non-current
   
Borrowings current
 
 Emprendimientos Recoleta S.A.  (7)  Reimbursement of expenses                       (1     -       -  
     Non-Convertible Note IRSA Class I 2017                       -       (7,391     (161 )
Fibesa S.A.
(7)
Reimbursement of expenses
    -       106       -       -       -       -  
Hoteles Argentinos S.A.
(2)
Reimbursement of expenses
    -       54       -       -       -       -  
   
Other liabilities
    -       -       -       (986 )     -       -  
Imadison LLC
(12)
Reimbursement of expenses
    -       864       -       -       -       -  
Inversora Bolivar S.A.
(2)
Reimbursement of expenses
    -       43       -       (81 )     -       -  
   
Borrowings
    -       1,367       -       -       (12,529 )     -  
IRSA International LLC
(12)
Reimbursement of expenses
    -       946       -       (684 )     -       -  
Jiwin S.A.
(12)
Reimbursement of expenses
    -       3       -       -       -       -  
Llao Llao Resorts S.A.
(2)
Reimbursement of expenses
    -       2,083       -       -       -       -  
   
Guarantee deposits
    -       -       (9 )     -       -       -  
   
Borrowings
    -       84       -       -       -       -  
Nuevas Fronteras S.A.
(2)
Reimbursement of expenses
    -       1       -       (7 )     -       -  
   
Management fees
    -       70       -       -       -       -  
   
Dividends
    -       5,615       -       -       -       -  
   
Borrowings
    -       -       -       -       -       (31,747 )
Palermo Invest S.A.
(2)
Reimbursement of expenses
    -       41       -       -       -       -  
   
Borrowings
    -       83       -       -       (5,240 )     (8 )
Panamerican Mall S.A.
(7)
Reimbursement of expenses
    -       103       -       -       -       -  
   
Non-Convertible Note IRSA Class I 2017
    -       -       -       -       (12,585 )     (273 )
Real Estate Investment Group LP
(12)
Reimbursement of expenses
    -       36       -       (27 )     -       -  
Real Estate Investment Group LPV
(12)
Reimbursement of expenses
    -       12       -       -       -       -  
Real Estate Strategies Group LP
(13)
Reimbursement of expenses
    -       1,282       -       -       -       -  

 
48

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
27.           Related party transactions (Continued)

Related party
Ref.
Description
of transaction
 
Trade and other receivables, net non-current
   
Trade and other receivables, net current
   
Trade and other payables current
   
Trade and other payables non-current
   
Borrowings non-current
   
Borrowings current
 
Ritelco S.A.
(2)
Reimbursement of expenses
    -       21       -       (15 )     -       -  
   
Borrowings
    -       -       -       -       (44,767 )     (654 )
Sedelor S.A.
(2)
Reimbursement of expenses
    -       33       -       -       -       -  
Solares de Santa María S.A.
(2)
Reimbursement of expenses
    -       3,614       -       -       -       -  
   
Borrowings
    6       -       -       -       -       -  
Torodur S.A.
(7)
Reimbursement of expenses
    -       155       -       -       -       -  
Tyrus S.A.
(2)
Reimbursement of expenses
    -       105       -       -       -       -  
Unicity S.A.
(2)
Reimbursement of expenses
    -       7       -       -       -       -  
Zetol S.A.
(12)
Reimbursement of expenses
    -       142       -       -       -       -  
Codalis S.A.
(2)
Reimbursement of expenses
    -       42       -       -       -       -  
Canteras Natal Crespo S.A.
(4)
Reimbursement of expenses
    -       487       -       -       -       -  
   
Management fees
    -       547       -       -       -       -  
   
Capital contribution to be received
    -       155       -       -       -       -  
   
Borrowings
    -       95       -       -       -       -  
Baicom Networks S.A.
(14)
Reimbursement of expenses
    -       13       -       (2 )     -       -  
Puerto Retiro S.A.
(9)
Reimbursement of expenses
    -       157       -       -       -       -  
Cresud S.A.C.I.F. y A.
(1)
Reimbursement of expenses
    -       3,426       -       -       -       -  
   
Shared services
    -       -       -       (11,489 )     -       -  
   
Borrowings
    -       329       -       -       -       -  
   
Rental
    -       429       -       -       -       -  
Futuros y Opciones .Com S.A.
(15)
Reimbursement of expenses
    -       -       -       (2 )     -       -  
Irsa Development LP
(12)
Reimbursement of expenses
    -       2       -       -       -       -  
Alafox S.A.
(2)
Reimbursement of expenses
    -       44       -       -       -       -  
Helmir S.A.
(15)
Reimbursement of expenses
    -       1       -       -       -       -  
Total
        41,906       30,331       (17 )     (21,373 )     (92,972 )     (147,733 )

 
49

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

27.           Related party transactions (Continued)

The following is a summary of the results and transactions with related parties for the nine-month period ended March 31, 2013:

Related party
Ref.
 
Leases
   
Fees
   
Income / Loss from services and share expenses
   
Legal services
   
Interest Income / (Loss)
 
                                 
Alto Palermo S.A.
(2)
    3,002       1,633       6,100       -       17,713  
Canteras Natal Crespo S.A.
(4)
    -       -       72               8  
Consultores Assets Management S.A.
(5)
    140       -       -       -       -  
Cresud S.A.C.I.F. y A.
(1)
    1,258       (12,267 )     (6,339 )     -       -  
Cyrsa S.A.
(4)
    -       -       -       -       (5,397 )
Directors
      -       (26,245 )     -       -       -  
E-Commerce Latina S.A.
(2)
    -       -       4       -       (634 )
Estudio Zang, Bergel & Viñes
(6)
    -       -       -       (576 )     -  
Fibesa S.A.
(7)
    666       -       53       -       -  
Inversora Bolivar S.A.
(2)
    -       -       -       -       (678 )
Llao Llao Resorts S.A.
(2)
    91       -       -       -       83  
Nuevas Fronteras S.A.
(2)
    -       -       410       -       (1,064 )
Tyrus S.A.
(2)
    -       -       -       -       138  
Efanur S.A.
(2)
    -       -       -       -       978  
Palermo Invest S.A.
(2)
    -       -       -       -       (335 )
Emprendimiento Recoleta S.A.
(7)
    -       -       -       -       (472 )
Ritelco S.A.
(2)
    -       -       -       -       (868 )
Tarshop S.A.
(8)
    2,470       -       233       -       -  
Panamerican Mall S.A.
(7)
    -       -       -       -       (803 )
Total
      7,627       (36,879 )     533       (576 )     8,669  

(1)  
Parent
(2)  
Subsidiary
(3)  
Associate
(4)  
Joint venture
(5)  
Related to the President
(6)  
Legal advisors related to the Board of Directors
(7)  
Subsidiary of APSA
(8)  
Associate of APSA
(9)  
Joint venture through Inversora Bolívar S.A.
(10)  
Joint venture of APSA
(11)  
Direct / indirect associate of Tyrus
(12)  
Direct / indirect subsidiary of Tyrus
(13)  
Subsidiary of Efanur
(14)  
Joint venture through E-Commmerce Latina S.A.
(15)  
Subsidiary of the parent

 
50

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Separate Financial Statements (Continued)
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina

28.           Negative working capital

At the end of the period, the Company had negative working capital. This situation is presently being considered by the Board of Directors and by Management.


29.           Subsequent Events

See subsequent events in Note 33 to Unaudited Condensed Interim Consolidated Financial Statements.
 
 
51

IRSA Inversiones y Representaciones Sociedad Anónima

Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
Unaudited Statement of Financial Position as of March 31, 2013
Stated in thousands of pesos
Free translation from the original prepared in Spanish for 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 2.1.

3.         Receivables and liabilities by maturity date.

   
Falling due
(Point 3.a.)
   
Without term (Point 3.b)
   
Without term (Point 3.b)
   
To be due (Point 3.c.)
       
  Items 03.31.13  
Current
   
Non-current
   
Up to 3 months
   
From 3 to 6 months
   
From 6 to 9 months
   
From 9 to 12 months
   
From 1 to 2 years
   
From 2 to 3 years
   
From 3 to 4 years
   
From 4 years on
   
Total
 
Accounts receivable, net
Trade and other receivables, net
    2,837       470       95,515       47,969       1,454       9,893       993       50,887       768       579       584       211,949  
     
Total
    2,837       470       95,515       47,969       1,454       9,893       993       50,887       768       579       584       211,949  
Liabilities
Trade and other payables
    1,160       -       -       110,573       1,099       18,904       1,032       8,860       95       326       -       142,049  
     
Borrowings
    -       -       -       188,402       121,134       126,306       105,977       25       60,968       12,032       1,515,431       2,130,275  
     
Salaries and social security liabilities
    -       -       -       806       2,028       -       686       -       -       -       -       3,520  
     
Provisions
    -       5,745       -       -       -       -       -       7,065       -       -       -       12,810  
     
Total
    1,160       5,745       -       299,781       124,261       145,210       107,695       15,950       61,063       12,358       1,515,431       2,288,654  

 
 
52

IRSA Inversiones y Representaciones Sociedad Anónima

Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
Unaudited Statement of Financial Position as of March 31, 2013
Stated in thousands of pesos
Free translation from the original prepared in Spanish for publication in Argentina


4.a.         Breakdown of accounts receivable and liabilities by currency and maturity.

 
   
Current
Non-current
Totals
Concepts   
Local currency
Foreign currency 
Total 
Local currency
Foreign currency 
Total 
Local currency 
Foreign currency 
Total
Accounts receivables
Trade and other receivables, net
43,461
20,155
63,616
95,742
52,591
148,333
139,203
72,746
211,949
 
Total
43,461
20,155
63,616
95,742
52,591
148,333
139,203
72,746
211,949
Liabilities
Trade and other payables
117,842
14,926
132,768
3,920
5,361
9,281
121,762
20,287
142,049
 
Borrowings
275,802
266,017
541,819
12,973
1,575,483
1,588,456
288,775
1,841,500
2,130,275
 
Salaries and social security liabilities
3,520
-
3,520
-
-
-
3,520
-
3,520
 
Provisions
5,745
-
5,745
7,065
-
7,065
12,810
-
12,810
 
Total
402,909
280,943
683,852
23,958
1,580,844
1,604,802
426,867
1,861,787
2,288,654


4.b.    Breakdown of accounts receivable and liabilities by adjustment clause.

  As of March 31, 2013 there are not receivable and liabilities subject to adjustment clause.
 
53

IRSA Inversiones y Representaciones Sociedad Anónima

Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
Unaudited Statement of Financial Position as of March 31, 2013
Stated in thousands of pesos
Free translation from the original prepared in Spanish for publication in Argentina


4.c.         Breakdown of accounts receivable and liabilities by interest clause

 
      Current   Non-current        
   
Accruing interest
Non   
Accruing interest
 Non  
Accruing interest
Non
 
 
Concepts
 
Fixed rate
Floating rate
Accruing
interest
Total
Fixed rate
Floating rate
Accruing interest
Total
Fixed rate
Floating rate
Accruing interest
Total
Accounts receivables
Trade and other receivables, net
1,616
-
62,000
63,616
41,900
6
106,427
148,333
43,516
6
168,427
211,949
 
Total
1,616
-
62,000
63,616
41,900
6
106,427
148,333
43,516
6
168,427
211,949
Liabilities
Trade and other payables
-
-
132,768
132,768
-
-
9,281
9,281
-
-
142,049
142,049
 
Borrowings
234,613
180,192
127,014
541,819
1,531,416
59,640
(2,600))
1,588,456
1,766,029
239,832
124,414
2,130,275
 
Salaries and social security liabilities
-
-
3,520
3,520
-
-
-
-
-
-
3,520
3,520
 
Provisions
-
-
5,745
5,745
-
-
7,065
7,065
-
-
12,810
12,810
 
Total
234,613
180,192
269,047
683,852
1,531,416
59,640
13,746
1,604,802
1,766,029
239,832
282,793
2,288,654

 
 
54

IRSA Inversiones y Representaciones Sociedad Anónima

Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
Unaudited Statement of Financial Position as of March 31, 2013
Stated in thousands of pesos
Free translation from the original prepared in Spanish for publication in Argentina


5.           Related parties.

a.  
Interest in related parties:

     
Name of the entity
 
% of ownership interest held by the Company
Direct Controlling interest of IRSA:
   
Alafox S.A.
 
100.00%
APSA
 
95.68%
Codalis S.A.
 
100.00%
Doneldon S.A.
 
100.00%
E-Commerce Latina S.A.
 
100.00%
Efanur S.A.
 
100.00%
Hoteles Argentinos S.A.
 
80.00%
Inversora Bolívar S.A.
 
100.00%
Llao Llao Resorts S.A.
 
50.00%
Nuevas Fronteras S.A.
 
76.34%
Palermo Invest S.A.
 
100.00%
Ritelco S.A.
 
100.00%
Sedelor S.A.
 
100.00%
Solares de Santa María S.A.
 
100.00%
Tyrus S.A.
 
100.00%
Unicity S.A.
 
100.00%

b.  
Related parties debit/credit balances. See Note 27 to the Unaudited Condensed Interim Separate Financial Statements.

6.  
Loans to directors.

See Note 27 to the Unaudited Condensed Interim Separate Financial Statements.

7.  
Inventories.

In view of the nature of the inventories, no physical inventories are performed and there are no slow turnover assets.

8.  
Current values.

See Notes 6, 7, 8 and 10 to the Unaudited Condensed Interim Separate Financial Statements.

9.  
Appraisal revaluation of property, plant and equipment.

None.
 
55

IRSA Inversiones y Representaciones Sociedad Anónima

Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
Unaudited Statement of Financial Position as of March 31, 2013
Stated in thousands of pesos
Free translation from the original prepared in Spanish for publication in Argentina

10.  
Obsolete unused property, plant and equipment.

None.

11.  
Equity interest in other companies in excess of that permitted by section 31 of law N° 19,550.

None.

12.  
Recovery values.

See Notes 6, 7, 8 and 10 to the Unaudited Condensed Interim Separate Financial Statements.

13.  
Insurances.

Insured Assets

Real Estate
 
 
Insured amounts (1)
 
 
Accounting values
 
Risk covered
EDIFICIO REPÚBLICA
 
96,361
 
208,105
 
All operational risk with additional coverage and minor risks
BOUCHARD 551
 
63,303
 
123,373
 
All operational risk with additional coverage and minor risks
MORENO 877
 
49,508
 
65,534
 
All operational risk with additional coverage and minor risks
BOUCHARD 710
 
39,587
 
63,247
 
All operational risk with additional coverage and minor risks
MAIPU 1300
 
25,787
 
34,735
 
All operational risk with additional coverage and minor risks
SUIPACHA 652
 
17,041
 
9,379
 
All operational risk with additional coverage and minor risks
AVDA. DE MAYO 595
 
5,148
 
3,524
 
All operational risk with additional coverage and minor risks
LIBERTADOR 498
 
3,423
 
3,702
 
All operational risk with additional coverage and minor risks
DIQUE IV
 
3,056
 
62,244
 
All operational risk with additional coverage and minor risks
RIVADAVIA 2768
 
369
 
146
 
All operational risk with additional coverage and minor risks
MADERO 1020
 
216
 
160
 
All operational risk with additional coverage and minor risks
CONSTITUCIÓN 1159
 
98
 
6,948
 
All operational risk with additional coverage and minor risks
CONSTITUCIÓN 1111
 
93
 
779
 
All operational risk with additional coverage and minor risks
SUBTOTAL
 
303,990
 
581,876
   
SINGLE POLICY
 
15,000
 
-
 
Third party liability

 (1)
The insured amounts are in thousands of U.S. dollars.

In our opinion, the above-described insurance policies cover current risks adequately.
 
56

IRSA Inversiones y Representaciones Sociedad Anónima

Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
Unaudited Statement of Financial Position as of March 31, 2013
Stated in thousands of pesos
Free translation from the original prepared in Spanish for publication in Argentina


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 27 of Exhibit I to the Unaudited Condensed Interim Consolidated Financial Statements.


Autonomous City of Buenos Aires, May 17, 2013.

 
 
57

IRSA Inversiones y Representaciones Sociedad Anónima

Business Overview

In thousands of pesos
Free translation from the original prepared in Spanish for publications in Argentina

 


1.  
Brief comments on the Company’s activities during the period, including references to significant events occurred after the end of the period.

See attached.

2.  
Comparative summarized consolidated shareholders’ equity structure

      03.31.13       06.30.12       07.01.11  
Non-Current Assets
    6,868,010       6,050,293       5,812,347  
Current Assets
    1,242,841       839,328       819,565  
Total Assets
    8,110,851       6,889,621       6,631,912  
Non-Current Liabilities
    3,258,906       2,644,108       2,372,540  
Current Liabilities
    1,527,731       1,205,744       1,176,759  
Total Liabilities
    4,786,637       3,849,852       3,549,299  
Non-controlling interest
    505,460       390,428       331,609  
Shareholders’ Equity
    2,818,754       2,649,341       2,751,004  
Total
    8,110,851       6,889,621       6,631,912  

3.  
Comparative summarized consolidated income structure

      03.31.13       03.31.12  
Operating result
    749,679       540,693  
Share of profit of associates and joint ventures
    15,112       15,922  
Profit before financial results and income tax
    764,791       556,615  
Finance income
    267,300       114,325  
Finance cost
    (571,737 )     (384,173 )
Financial loss, net
    (304,437 )     (269,848 )
Profit Before Income Tax
    460,354       286,767  
Income tax
    (81,093 )     (91,296 )
Profit for the period
    379,261       195,471  
                 
Attributable to:
               
Equity holders of the parent
    320,638       176,622  
Non-controlling interest
    58,623       18,849  


 
58

IRSA Inversiones y Representaciones Sociedad Anónima

Business Overview

In thousands of pesos
Free translation from the original prepared in Spanish for publications in Argentina


4.       Statistical data as compared with the same period of previous year.

Summary of properties sold in units and in thousands of pesos.

 
03.31.13
 
03.31.12
Apartments & Loft Buildings
     
Torres Jardín
-
 
-
Torres de Abasto (1)
-
 
-
Barrio chico
-
 
371
Caballito Nuevo
6,983
 
9,248
Edificios Cruceros
-
 
-
Torres Renoir
-
 
-
Torres Renoir II
-
 
-
Alto Palermo Park
-
 
-
San Martín de Tours
-
 
-
Terreno Caballito
-
 
-
Torres de Rosario
4,260
 
4,777
Libertador 1703 and 1755 (Horizons)
96,963
 
39,337
Others
811
 
-
       
Residential Communities
     
Abril / Baldovinos (2)
1,113
 
-
El Encuentro
7,008
 
8,434
Villa Celina I, II and III
-
 
-
       
Undeveloped plots of land
     
Pereiraola
-
 
-
Santa María del Plata
-
 
-
Terreno Rosario (1)
-
 
27,273
Caballito Mz 35 (1)
-
 
-
Neuquén (1)
-
 
-
Aguero 596 (1)
-
 
-
Canteras Natal
39
 
17
C.Gardel 3134 (1)
-
 
-
Thames
-
 
-
C.Gardel 3128 (1)
-
 
-
Terreno Beruti (1)
-
 
-
Club de Campo Valle Escondido (1)
-
 
-
Terreno Mendoza
-
 
-
Torres Jardín IV
-
 
-
       
Others
     
Dique III
-
 
-
Bouchard 551
-
 
-
Madero 1020
-
 
-
Della Paolera 265
-
 
-
Madero 942
-
 
-
Dock del Plata
-
 
-
Libertador 498
-
 
-
Edificios Costeros
-
 
-
Sarmiento 517
-
 
-
Libertador 602
-
 
-
Laminar
-
 
-
Museo Renault
-
 
-
Reconquista 823
-
 
-
Locales Crucero I
-
 
-
Others
-
 
-
 
117,177
 
89,457


 
59

IRSA Inversiones y Representaciones Sociedad Anónima

Business Overview

In thousands of pesos
Free translation from the original prepared in Spanish for publications in Argentina


5.
Key ratios as compared.

 
03.31.13
 
06.30.12
 
Liquidity
       
Current assets
1,242,841
=0.81
839,328
=0.70
Current liabilities
1,527,731
1,205,744
         
Debt
       
Total liabilities
4,786,637
=1.70
3,849,852
=1.45
Shareholders’ Equity
2,818,754
2,649,341
         
Solvency
       
Shareholders’ Equity
2,818,754
=0.59
2,649,341
=0.69
Total liabilities
4,786,637
3,849,852
         
Non-Current Assets to total Assets
       
Non-Current Assets
6,868,010
=0.85
6,050,293
=0.88
Total assets
8,110,851
6,889,621
         

6.
Brief comment on the outlook for the coming period.

See attached.
 
60

 

 
Free translation from the original prepared in Spanish for publication in Argentina

 
Limited Review Report

 
To the Shareholders, President and Board of Directors of
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
Legal address: Bolívar 108 - 1° floor
 
Autonomous City of Buenos Aires
 
C.U.I.T.: 30-52532274-9


1.  
We have reviewed the accompanying unaudited condensed interim separate statement of financial position of IRSA Inversiones y Representaciones Sociedad Anónima as of March 31, 2013, and the related unaudited condensed interim separate statements of income, unaudited condensed interim separate statements of comprehensive income for the nine and three-month periods ended March 31, 2013 and the unaudited condensed interim separate statements of changes of shareholders’ equity and unaudited condensed interim separate statements of cash flows for the nine-month period ended March 31, 2013 and selected explanatory notes. The balances and other information corresponding to the fiscal year ended June 30, 2012 and the interim periods within that fiscal period are an integral part of these financial statements and, therefore, they should be considered in relation to these financial statements.

2.  
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 professional accounting standards of Technical Pronouncement No. 26 of the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) added by the National Securities Commission (CNV) to its regulations. Those standards differ from the International Financial Reporting Standards (IFRS) and, especially, from the International Accounting Standard No. 34 "Interim Financial Reporting" (IAS 34) approved by the International Accounting Standard Board (IASB) and used for the preparation of the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima with its subsidiaries as to the aspects mentioned in note 2.1 to the unaudited condensed interim separate financial statements attached. Our responsibility is to express a conclusion based on the review that we have performed with the scope detailed in paragraph 3.

 
3.  
We conducted our review in accordance with Technical Resolution No. 7 issued by the FACPCE for a review of interim financial statements. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of personnel responsible for financial and accounting matters. It is substantially less in scope than an audit, the objective of which is to express an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
 
 
 
61

 
 
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 

 
 
Limited Review Report (Continued)
 

4.  
As mentioned in note 2.1 to the unaudited condensed interim separate financial statements, these unaudited condensed interim separate financial statements have been prepared in accordance to Technical Pronouncement No. 26 of the FACPCE, which differ from the IFRS, and especially, from the IAS 34 used in the preparation of the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima with its subsidiaries as to the aspects mentioned in note 2.3 to the unaudited condensed interim separate financial statements attached. The fiscal year ended June 30, 2013 will be the first year of application of IFRS. The adjustments and other effects of the transition to IFRS are presented in note 2.3 to these unaudited condensed interim separate financial statements. The amounts included in the reconciliations shown in note 2.3 are subject to change as a consequence of potential changes in IFRS which may occur until June 30, 2013, and should only be considered as final upon issuance of the annual financial statements for the fiscal year ended June 30, 2013.

5.  
Nothing came to our attention as a result of our review that caused us to believe that these unaudited condensed interim separate financial statements have not been prepared in all material respects in accordance with Technical Pronouncement No. 26 of the FACPCE for separate financial statements of a parent company.

 
6.  
In accordance with current regulations, we hereby inform that:

a)  
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima are recorded in the "Inventory and Balance Sheet Book" and carried in all formal respects in conformity with legal requirements, and comply, as regards those matters that are within our competence, with the provisions set forth in the Commercial Companies Law and the corresponding resolutions of the CNV;

b)  
the unaudited condensed interim separate financial statements of IRSA Inversiones y Representaciones Sociedad Anónima arise from accounting records carried in all formal respects in accordance with applicable legal provisions;

 
c)  
we have read the Additional Information to the notes to the unaudited condensed interim separate financial statements required by Article 68 of the Buenos Aires Stock Exchange Regulations, on which, as regards those matters that are within our competence, we have no observations to make;

 
d)  
at March 31, 2013, the debt of IRSA Inversiones y Representaciones Sociedad Anónima owed in favor of the Argentine Integrated Pension System which arises from accounting records and submissions amounted to Ps. 283,208, which was not callable at that date.


 
Autonomous City of Buenos Aires, May 17, 2013.


PRICE WATERHOUSE & Co. S.R.L.
 
 
                                                          (Partner)
C.P.C.E.C.A.B.A. Tº 1 Fº 17
Carlos Martín Barbafina
Public Accountant (UCA)
C.P.C.E.C.A.B.A. T° 175  F° 65
 
ABELOVICH, POLANO & ASOCIADOS S.R.L.
 
 
                                                     (Partner)
C.P.C.E. C.A.B.A. T° 1 F° 30
Marcelo Héctor Fuxman
Public Accountant (U.B.A.)
C.P.C.E. C.A.B.A. T° 134 F° 85

 
 
62

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
I. Brief comment on the Company’s activities during the period, including references to significant events occurred after the end of the period.

Buenos Aires, May 17, 2013 - IRSA Inversiones y Representaciones Sociedad Anónima (NYSE: IRS) (BASE: IRSA), Argentina’s leading real estate company, announces today the results of its operations for the nine-month period ended March 31, 2013.

Consolidated Income
(In millions of ARS, excluding joint businesses)

   
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Revenues
    518.0       415.6       24.6 %     1,604.1       1,328.5       20.7 %
Operating Income / (Loss)
    190.8       168.4       13.3 %     749.7       540.7       38.7 %
Depreciation and Amortization
    55.7       42.9       29.6 %     162.7       128.7       26.4 %
EBITDA
    246.5       211.3       16.6 %     912.4       669.4       36.3 %
Net Income for the period
    133.4       116.1       14.9 %     379.3       195.5       94.0 %

„  
Revenues grew by 24.6% in the third quarter of 2013 compared to the same quarter of 2012, and recorded a cumulative growth of 20.7% for the nine-month period, mainly explained by the performance of the Shopping Centers and Offices segments.

„  
Operating income grew 13.3% during the third quarter of 2013 and 38.7% for the cumulative nine-month period, mainly reflecting the consolidation of our investment in the 183 Madison building in New York during the past quarter. Additionally, all cumulative translation adjustment from interest held in Rigby before the business combination has been recycled to the income statement. EBITDA as of March 31, 2013 reached ARS 912.4 million (36.3% higher than in the same period of 2012). Excluding the effect of the consolidation of 183 Madison (ARS 137 million for the nine months of fiscal year 2013), EBITDA grew 16.0% compared to the same period of 2012.

„  
Net income increased by 94.0% for the first nine months of fiscal year 2013 compared to the same period of 2012, mainly due to the increase in operating income.

II. Shopping Centers (through our subsidiary Alto Palermo S.A.)

According to the Shopping Centers’ poll made by the INDEC1, as of March 31, 2013, cumulative tenants’ sales for the past twelve months recorded a 23.3% increase compared to the same period of the previous year and a 26.3% increase compared to the previous quarter.

Our tenants’ sales grew 24.8% in the nine-month period of fiscal year 2013 compared to the same period of the previous fiscal year, and 28.9% if we compare the third quarter of 2013 to the same quarter of 2012. This performance was driven by the growth in sales from the shopping centers in Greater Buenos Aires and the interior of Argentina. Portfolio occupancy remained stable, at 98.7%.

In this way, Revenues and EBITDA from this segment recorded increases of 25.7% and 23.3%, respectively, during the third quarter of 2013 and of 22.0% and 18.8% in the cumulative nine-month period. The EBITDA/revenue margin, excluding revenues from common expense and commercial advertising funds, reached 79.3% in the nine-month period ended March 31, 2013.
 
 
1

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
Financial indicators of the Shopping Centers segment
(In millions of ARS)

   
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Revenues
    374.6       298.1       25.7 %     1,183.6       969.8       22.0 %
Operating Income
    160.7       127.9       25.6 %     514.1       426.8       20.5 %
Depreciation and Amortization
    38.4       33.5       14.6 %     114.7       102.4       12.0 %
EBITDA
    199.1       161.4       23.3 %     628.8       529.2       18.8 %

Operating indicators of the Shopping Centers segment

   
IIIQ 13
   
IIQ 13
   
IQ 13
   
IVQ 12
   
IIIQ 12
 
Gross Leaseable Area (sqm)[2]
    308,793       309,021       309,021       309,021       307,685  
Tenants’ Sales (12 month cumulative, ARS million)
    11,751       13,967       10,471       9,966       9,393  
Tenants’ Sales in the same Shopping Centers [1] (12 month cumulative, ARS million)
    11,553       13,397       10,037       9,577       9,056  
Occupancy [2]
    98.7 %     98.8 %     98.4 %     98.4 %     97.8 %
 
[1]
Excludes “Ribera Shopping" shopping center.
 
[2]
Percentage over gross leaseable area as of period end.
 

Operating data of our Shopping Centers

Shopping Center
Date of Acquisition
 
Gross Leaseable Area (sqm)[1]
   
Stores
   
APSA’s Interest
   
Occupancy [2]
   
Book Value (ARS thousand) [3]
 
Alto Palermo
Nov-97
    18,690       146       100.0 %     98.5 %     241,207  
Abasto Shopping[4]
Jul-94
    37,708       175       100.0 %     100.0 %     298,295  
Alto Avellaneda
Nov-97
    36,943       140       100.0 %     100.0 %     145,521  
Paseo Alcorta
Jun-97
    14,141       109       100.0 %     100.0 %     126,390  
Patio Bullrich
Oct-98
    11,683       82       100.0 %     100.0 %     125,919  
Alto Noa Shopping
Mar-95
    19,141       91       100.0 %     100.0 %     35,705  
Buenos Aires Design
Nov-97
    13,746       61       53.7 %     97.7 %     17,360  
Alto Rosario Shopping[5]
Nov-04
    27,691       146       100.0 %     97.1 %     129,364  
Mendoza Plaza Shopping
Dec-94
    42,238       147       100.0 %     95.3 %     116,794  
Córdoba Shopping
Dec-06
    15,106       105       100.0 %     99.7 %     73,273  
Dot Baires Shopping
May-09
    49,719       153       80.0 %     99.9 %     469,884  
Soleil
Jul-10
    13,609       75       100.0 %     97.3 %     83,395  
La Ribera Shopping
Aug-11
    8,378       50       50.0 %     99.4 %     18,405  
Total Shopping Centers
      308,793       1,480               98.7 %     1,881,512  
 
 
 [1]  Corresponds to gross leasable area in each property. Excludes common areas and parking spaces.
 [2]  Calculated dividing occupied square meters by leaseable area on the last day of the period.
 [3]  Cost of acquisition plus improvements, less cumulative depreciation, plus adjustment for inflation, less allowance for impairment in value, plus recovery of allowances, if applicable.
 [4]  Excludes Museo de los Niños (3,732 sqm).
 [5]  Excludes Museo de los Niños (1,261 sqm).
 
 
2

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
Cumulative tenants’ sales as of March 31
(By Shopping Center, for the quarter and for the first nine months of each fiscal year, in millions of ARS)

Shopping Center
 
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Alto Palermo
    339.0       257.8       31.5 %     1,152.5       945.3       21.9 %
Abasto Shopping
    403.7       311.9       29.5 %     1,393.5       1,113.0       25.2 %
Alto Avellaneda
    401.9       313.1       28.4 %     1,354.9       1,054.4       28.5 %
Paseo Alcorta
    166.1       129.8       27.9 %     586.1       481.7       21.7 %
Patio Bullrich
    110.0       98.6       11.6 %     393.0       366.2       7.3 %
Alto Noa Shopping
    144.7       115.9       24.9 %     451.1       364.9       23.6 %
Buenos Aires Design
    55.7       49.8       11.8 %     175.6       168.5       4.2 %
Alto Rosario Shopping
    225.4       169.6       32.9 %     761.1       586.2       29.8 %
Mendoza Plaza Shopping
    278.4       210.1       32.5 %     865.8       667.7       29.7 %
Córdoba Shopping
    93.5       70.6       32.6 %     314.7       244.9       28.5 %
Dot Baires Shopping
    340.0       266.8       27.4 %     1,138.0       921.0       23.6 %
Soleil
    76.4       52.7       45.0 %     234.9       186.0       26.3 %
La Ribera Shopping [1]
    50.3       36.9       36.3 %     151.4       88.0       72.2 %
Total
    2,685.1       2,083.6       28.9 %     8,972.6       7,187.6       24.8 %
 
 
[1] APSA took possession of this Shopping Center on August 15, 2011.
 

 
Cumulative tenants’ sales as of March 31
(By Type of Business, for the quarter and for the first nine months of each fiscal year, in millions of ARS)

Type of Business
 
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Anchor Store
    184.3       148.3       24.3 %     623.1       518.0       20.3 %
Clothes and Footwear
    1,214.9       938.8       29.4 %     4,359.3       3,493.2       24.8 %
Entertainment
    109.9       86.4       27.1 %     328.9       249.6       31.8 %
Home
    539.5       400.2       34.8 %     1,680.9       1,309.3       28.4 %
Restaurant
    288.8       230.9       25.1 %     847.5       687.9       23.2 %
Miscellaneous
    325.5       264.7       23.0 %     1,077.0       890.0       21.0 %
Services
    22.2       14.3       55.5 %     55.9       39.6       41.3 %
Total
    2,685.1       2,083.6       28.9 %     8,972.6       7,187.6       24.8 %
 
 
Cumulative revenues from leases as of March 31
(Detailed revenues, for the quarter and for the first nine months of each fiscal year, in millions of ARS)
 
 
Detailed Revenues
 
IIIQ13
   
IIIQ12
   
YoY var
      9M 13       9M 12    
YoY var
 
Base Rent
    150.2       121.5       23.6 %     437.5       357.2       22.5 %
Percentage Rent
    42.0       31.7       32.4 %     186.7       154.0       21.2 %
Total Rent
    192.2       153.3       25.4 %     624.2       511.2       22.1 %
Admission rights
    26.9       22.2       21.1 %     78.3       63.9       22.6 %
Fees
    15.1       6.0       152.7 %     28.1       23.0       22.1 %
Parking
    14.2       10.6       34.4 %     45.0       32.0       40.7 %
Management fees
    4.4       4.2       4.6 %     13.0       10.3       26.2 %
Other
    0.1       1.3       (89.5 )%     1.8       1.6       12.5 %
Total Revenues before Common Expenses and Common Promotional Fund
    253.0       197.6       28.0 %     790.4       642.0       23.1 %
Common Expenses and Common Promotional Fund
    121.6       100.6       21.0 %     393.2       327.8       20.0 %
Total Revenues
    374.6       298.1       25.7 %     1,183.6       969.8       22.0 %


 
3

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
III. Offices

During the first quarter of calendar year 2013, the Premium office market of the City of Buenos Aires recorded a slight decrease in sales and rental prices measured in dollars and a vacancy rate of 6.1% in line with the same period of calendar year 2012.

Vacancy rates and rental and sales prices of A+ offices in the City of Buenos Aires

Rent
Source: LJ Ramos


   
IIIQ 13
   
IIQ 13
   
IQ13
   
IVQ12
   
IIIQ12
 
Premium portfolio occupancy
    97.3 %     96.4 %     96.8 %     96.5       97.0 %
Rent USD/sqm
    25.7       25.7       25.6       25.7       25.3  

Our A+ buildings recorded an occupancy rate of 97.3%, higher than in the second quarter of this fiscal year, due to higher occupancy rates in Juana Manso 295 and República buildings, and above the market average. Meanwhile, rental prices in USD/sqm remained stable during the quarter under review and in line with average revenues in the Buenos Aires Premium market.


in ARS MM
 
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Revenues
    72.7       65.2       11.4 %     213.1       185.4       14.9 %
Operating Income
    31.1       29.5       5.7 %     84.9       77.0       10.4 %
Depreciation and Amortization
    8.8       6.5       36.8 %     27.1       18.1       50.3 %
EBITDA
    39.9       36.0       11.3 %     112.1       95.1       18.0 %


„  
Revenues from the Offices segment increased by 11.4% in the quarter under review compared to the same period of the previous fiscal year and 14.9% compared to the first nine months of the previous fiscal year.
„  
EBITDA grew 18.0% in the first nine months of 2013 compared to 2012 and the EBITDA/Revenue margin for the period, excluding revenues from common maintenance expenses, stood at 66.8%, higher than the 65.3% recorded in the same period of 2012.

 
4

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
Below is information on our offices and other rental properties segment as of March 31, 2013.

Operating Data of the Offices segment
(In thousands of ARS, except as indicated)


   
Date of Acquisition
   
Gross Leaseable Area sqm (1)
   
Occupancy (2)
   
Interest
   
Book Value(3)
 
Offices
                             
Edificio República
 
Apr-08
      19,884       95.2 %     100 %     208,105  
Torre Bankboston
 
Aug-07
      14,873       96.4 %     100 %     147,530  
Bouchard 551
 
Mar-07
      21,021       100.0 %     100 %     123,373  
Intercontinental Plaza
 
Nov-97
      22,535       100.0 %     100 %     49,845  
Bouchard 710
 
Jun-05
      15,014       100.0 %     100 %     63,247  
Dique IV, Juana Manso 295
 
Dec-97
      11,298       94.4 %     100 %     62,244  
Maipú 1300
 
Sep-95
      10,280       97.5 %     100 %     34,735  
Libertador 498
 
Dec-95
      620       100.0 %     100 %     3,702  
Suipacha 652/64
 
Nov-91
      11,453       89.9 %     100 %     9,379  
Dot Building (7)
 
May-09
      11,242       100.0 %     96 %     103,069  
Other(4)
    N/A       3,067       90.8 %     -       861  
Subtotal Offices
            141,287       97.3 %     -       806,090  
                                         
Other Properties
                                       
Commercial Properties(5)
    N/A       312       -       -       779  
Santa María del Plata S.A.
 
Jul-97
      60,100       100.0 %     100 %     12,495  
Nobleza Piccardo (7)
 
May-11
      13,814       100.0 %     50 %     88,665  
Catalinas Norte Plot
 
Dec-09
      -       -       -       109,159  
Other Properties(6)
    N/A       2,072       100.0 %     -       7,728  
Subtotal Other Properties
            76,298       99.6 %             218,826  
                                         
TOTAL OFFICES AND OTHER
            217,585       98.1 %     -       1,024,916  
 
 
Notes:
(1) Total leaseable area for each property as of March 31, 2013. Excludes common areas and parking.
(2) Calculated dividing occupied square meters by leaseable area as of March 31, 2013.
(3) Cost of acquisition, plus improvements, less accumulated depreciation, plus adjustment for inflation, less allowance for impairment.
(4) Includes the following properties: Av. de Mayo 595, Rivadavia 2774, Madero 1020 and Costeros Dique IV.
(5) Includes the following properties: Constitución 1111 and Casona de Abril.
(6) Includes Constitución 1159 and Canteras.
(7) Through Alto Palermo S.A.
 


 
5

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 

IV.           Sales and Developments

During the first quarter of calendar year 2013, the construction business experienced a drop in its growth rate, evidenced by a reduction in the number of deeds of conveyance recorded, whereas sales prices of new apartments in the district of Recoleta remained stable, at USD/sqm 3,400.

Development of prices (USD/sqm) and number of deeds of conveyance

Deeds
Source: Reporte Inmobiliario
 
Sales and Developments in ARS MM
 
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Revenues
    31.5       23.7       32.4 %     117.2       89.5       30.9 %
Operating Income
    1.8       13.0       (86.2 )%     43.0       42.3       1.7 %
Depreciation and Amortization
    0.0       0.0       -       0.0       0.1       -  
EBITDA
    1.8       13.0       (86.2 )%     43.0       42.4       1.7 %

►  
Sales totaled ARS 31.5 million during the third quarter of 2013 and ARS 117.2 million for the first nine months of fiscal year 2013, mainly explained by the recognition of revenues from the “Horizons” project recorded in the second quarter of the period, offset by lower revenues from the Terreno Rosario project, which was sold during the first half of 2012. Cumulative EBITDA for the first nine months of fiscal year 2013 was 1.7% higher than in the same period of 2012.



 
6

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 


Sales and Developments Table
(In thousands of ARS, except as indicated)

DEVELOPMENT
    9M 13       9M 12    
YoY var
 
Residential Apartments
                     
Caballito Nuevo (10)
    6,983       9,248       (24.5 )%
Torres de Rosario (5)
    4,260       4,777       (10.8 )%
Libertador 1703 & 1755 (Horizons) (8)
    96,963       39,337       146.5 %
Other Residential Apartments(6)
    811       371       118.6 %
Subtotal Residential Apartments
    109,017       53,733       102.9 %
Residential Communities
                       
Abril/Baldovinos (7)
    1,113       -       -  
El Encuentro (11)
    7,008       8,434       (16.9 )%
Subtotal Residential Communities
    8,121       8,434       (3.7 )%
Land Reserves
                       
Terreno Rosario(5)
    -       27,273       -  
Canteras Natal Crespo
    39       17       129.4 %
Subtotal Land Reserves
    39       27,290       (99.9 )%
TOTAL
    117,177       89,457       31.0 %

DEVELOPMENT
 
Date of Acquisition
   
Area intended for sale (sqm) (1)
   
Total Units / Lots (2)
   
IRSA’s Effective Interest
   
Percentage Built
   
Percentage Sold (3)
   
Book
Value (4)
 
Residential Apartments
                                         
Torres Renoir
 
Sep-99
      5,383       28       100.00 %     100.00 %     100.00 %      
Caballito Nuevo
 
Nov-97
      67       1       100.00 %     100.00 %     99.07 %      
Torres de Rosario(5)
 
Apr-99
      2,661       17       95.67 %     100.00 %     60.00 %     4,077  
Libertador 1703 y 1755 (Horizons) (9)
 
Jan-07
      44,648       467       50.00 %     100.00 %     100.00 %     33,750  
Other residential apartments (6)
    N/A       138,520       1,438                               84,395  
Subtotal Residential Apartments
            191,279       1,951                               122,222  
                                                         
Residential Communities
                                                       
Abril/Baldovinos (7)
 
Jan-95
      5,137       4       100.00 %     100.00 %     99.50 %     521  
El Encuentro
 
Nov-97
      13,690       9       100.00 %     100.00 %     85.00 %     1,722  
Villa Celina I, II & III
 
May-92
      75,970       219       100.00 %     100.00 %     100.00 %     0  
Subtotal Residential Communities
            94,797       232                               2,243  
                                                         
Land Reserves
                                                       
Puerto Retiro
 
May-97
      82,051               50.00 %     0.00 %     0.00 %     51,337  
Santa María del Plata
 
Jul-97
      715,951               100.00 %     0.00 %     10.00 %     158,951  
Pereiraola
 
Dec-96
      1,299,630               100.00 %     0.00 %     100.00 %        
Terreno Rosario (5)
 
Apr-99
      31,000               95.67 %     0.00 %     100.00 %        
Terreno Caballito
 
Nov-97
      7,451               100.00 %     0.00 %     100.00 %        
Neuquén (5)
 
Jul-99
      4,332       1       95.67 %     0.00 %     100.00 %     45,226  
Terreno Baicom
 
Dec-09
      34,500       1       50.00 %     0.00 %     0.00 %     4,459  
Canteras Natal Crespo
 
Jul-05
      4,320,000               50.00 %     0.00 %     0.00 %     5,978  
Terreno Beruti (5)
 
Jun-08
      3,207               95.67 %     0.00 %     100.00 %     9,264  
Pilar
 
May-97
      740,237               100.00 %     0.00 %     0.00 %     1,550  
Coto air space(5)
 
Sep-97
      16,167       284       95.67 %     0.00 %     0.00 %     8,946  
Torres Jardín IV
 
Jul-96
      3,176               100.00 %     0.00 %     100.00 %        
Terreno Caballito (5)
 
Oct-98
      23,389               95.67 %     0.00 %     0.00 %     31,868  
Patio Olmos (5)
 
Sep-07
      5,147       0       95.67 %     100.00 %     0.00 %        
Other land reserves (8)
    N/A       13,680,711       1                               141,683  
Subtotal Land Reserves
            20,966,949       287                               459,262  
                                                         
TOTAL
            21,253,025       2,470                               583,727  


 
7

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 


Notes:
(1) Total property area intended for sale upon completion of the development or acquisition and before sale of any of the units (including parking and storage spaces, but excluding common areas). In the case of Land Reserves, the land area was considered.
(2) Represents the total units or plots upon completion of the development or acquisition (excludes parking and storage spaces).
(3) The percentage sold is calculated dividing the square meters sold by the total saleable square meters.
(4) Corresponds to the company’s total consolidated sales.
(5) Through Alto Palermo S.A. As of March 31, 2013, 4 apartments, 4 parking spaces, and one storage space remained available for sale in parcel 2-G and 13 apartments, 25 parking spaces and 2 storage spaces remained available for sale in parcel 2-H.
(6) Includes the following properties: Torres de Abasto through APSA (fully sold), units to be received in Beruti through APSA, Torres Jardín,  Edificios Cruceros (fully sold), San Martin de Tours, Rivadavia 2768, Alto Palermo Park (fully sold), Minetti D (fully sold), Dorrego 1916 (fully sold), Padilla 902 (fully sold), Caballito swap receivable and Pereiraola plots through IRSA.
(7) Includes sales of shares in Abril. As of March 31, 2013, 4 lots with a surface area of 5,137 sqm were pending sale.
(8) Includes the following land reserves: Terreno Pontevedra, Isla Sirgadero, Terreno San Luis, Mariano Acosta, Merlo and Intercontinental Plaza II through IRSA, Zetol and Vista al Muelle through Liveck and C.Gardel 3134 (fully sold), C.Gardel 3128 (fully sold), Aguero 596 (fully sold), República Arabe Siria (fully sold), Terreno Mendoza (fully sold), Zelaya 3102, Conil, Soleil air space and Others APSA (through APSA).-
(9) Owned by CYRSA S.A.
(10) As of March 31, 2013, one apartment and 13 parking spaces were pending sale.
(11) As of March 31, 2013, 9 plots with a surface area of 11,569 sqm were pending sale.



 
1 Survey of Shopping Centers. March 2013. INDEC www.indec.gov.ar
 
 
8

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
V.
Hotels

According to surveys made by the tourism development secretariat, Argentina received 500 thousand foreign tourists during the first two months of 2013, a lower number than in 2012, mainly explained by a smaller inflow of Chilean and Brazilian visitors. According to the INDEC, hotel occupancy in the City of Buenos Aires reached 45.34% during the quarter, and the city of Bariloche, where our “Llao Llao” premium resort is located, recorded a similar occupancy rate (43.75%).

The smaller inflow of international tourists was reflected in the operating results of our hotels, which were adversely affected by higher operating costs, although their occupancy levels were higher than the market average.

Hotels (in ARS MM)
 
IIIQ 13
   
IIIQ 12
   
YoY var
      9M 13       9M 12    
YoY var
 
Revenues
    57.9       45.0       28.7 %     174.7       130.0       34.4 %
Operating Income
    (1.8 )     2.0       -       (8.7 )     0.8       -  
Depreciation and Amortization
    4.4       3.4       31.5 %     14.3       9.9       45.2 %
EBITDA
    2.6       5.4       (50.8 )%     5.6       10.7       (47.4 )%

   
IIIQ 13
   
IIQ 13
   
IQ 13
   
IVQ 12
   
IIIQ 12
 
Average Occupancy
    67.2 %     69.4 %     62.4 %     53.4 %     62.4 %
Average Rate per Room (ARS/night)
    892       882       862       688       703  

  
During the third quarter of 2013 the hotel segment recorded an increase in revenues of 28.7%. However, EBITDA decreased due to higher operating costs.

The following is information on our hotels as of March 31, 2013:


 
Date of Acquisition
 
IRSA’s Interest
   
Number of Rooms
   
Average Occupancy (1)
   
Average Rate per Room (ARS)(2)
   
Book Value
(in thousands of ARS)
 
Intercontinental (3)
Nov-97
    76.3 %     309       68.0 %     724       48,703  
Sheraton Libertador(4)
Mar-98
    80.0 %     200       74.0 %     672       34,211  
Llao Llao(5)
Jun-97
    50.0 %     201       59.1 %     1,463       66,189  
Terrenos Bariloche(5)
Dec-06
    50.0 %     -                       21,900  
Total
      76.3 %     710       67.2 %     892       171,002  

Notes:
           
1) Cumulative average for the 9-month period.
 
2) Cumulative average for the 9-month period.
 
3) Through Nuevas Fronteras S.A. (IRSA’s subsidiary).
 
4) Through Hoteles Argentinos S.A. (IRSA’s subsidiary).
 
5) Through Llao Llao Resorts S.A. (IRSA’s subsidiary).
 

 
9

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 

VI.
International

Interest in Metropolitan 885 Third Ave. LLC (“Metropolitan”) through New Lipstick LLC (“New Lipstick”)

IRSA indirectly holds a 49.3% interest in New Lipstick LLC, a holding company that is owner of Metropolitan, a company whose main asset is the so-called “Lipstick” office building, and the debt associated to this asset, which amounts to approximately USD 115.0 million, following a restructuring previously reported by IRSA.

The Lipstick Building is a landmark building in the City of New York, located in Midtown Manhattan. As of March 31, 2013, its occupancy rate had increased by 5.8%, mainly explained by the lease of the 18th floor that was vacant. This lease represents 1792 sqm, for a term of 10 years, at a monthly base rent of USD 62 per sqm for the first 5 years and 67 USD/sqm for the rest of the contract term.


Lipstick
 
Mar-13
   
Mar-12
   
YoY var
 
Gross Leaseable Area (sqm)
    58,019       57,824       0.3 %
Occupancy
    89.0 %     86.1 %     5.8 %
Rental price (USD/sqm)
    62.6       62.1       0.8 %


Investment in Building located at 183 Madison Ave, New York, NY

As of the end of this quarter, through our subsidiaries we held a 74.50% interest in the stock capital of the company that owns the building located at 183 Madison Ave., New York, NY. The property has 19 floors and a gross leaseable area of 23,489 sqm. As of March 31, 2013, 96.1% of the building was occupied, at an average rental price of approximately 41.4 USD/sqm.

Madison 183
 
Mar-13
   
Mar-12
   
YoY var
 
Gross Leaseable Area (sqm)
    23,489       23,477       0.1 %
Occupancy
    96.1 %     83.8 %     14.7 %
Rental price (USD/sqm)
    41.4       35.3       17.3 %

Interest in Hersha Hospitality Trust (“Hersha”)

Hersha is a Real Estate Investment Trust (REIT) listed on the New York Stock Exchange (NYSE: HT), and is the holder of an indirect controlling interest in 64 hotels, mainly distributed in the northeastern coast of the United States, totaling 9,307 rooms.

During the third quarter of 2013, 1,823,412 common shares of Hersha were sold for a total of approximately USD 9.7 million. Consequently, the Group’s interest in Hersha’s stock capital decreased from 8.12% to 7.19%. As a result of this transaction, holding results for ARS 3.5 million were recorded. The accumulated result for the nine-month period ended March 31, 2013 generated by the Group’s investment in Hersha reached ARS 85.4 millions.

Investment in Supertel Hospitality Inc.

As of March 31, 2013, we, together with other shareholders, held 34% of the voting power at the shareholders’ meetings of Supertel Hospitality Inc., a REIT listed in NASDAQ under the symbol “SPPR”. This REIT has a portfolio of 85 middle-class and long-stay hotels with 7,614 rooms in 22 states in the United States of America, which are managed by various operators and franchises such as Comfort Inn, Days Inn, Hampton Inn, Holiday Inn, Sleep Inn and Super 8, among others.

 
 
10

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
VII. Financial Transactions and Others

Interest in Banco Hipotecario S.A. (“BHSA”)

 BHSA is a leading bank in the mortgage lending segment, in which IRSA held a 29.77% interest as of March 31, 2013 (excluding portfolio shares). For further information please refer to http://www.cnv.gob.ar or http://www.hipotecario.com.ar. For the first nine months of fiscal year 2013, BHSA’s contribution to IRSA’s income amounted to ARS 60.3 million, 3.8% higher than the ARS 58.1 million generated in 2012.

VIII. Total Segment Information

   
Shopping Centers
   
Offices
   
Sales and Developments
   
Hotels
   
International
   
Financial Transactions and Others
   
Total
   
Var
 
      9M 13       9M12       9M 13       9M12       9M 13       9M12       9M 13       9M12       9M 13       9M12       9M 13       9M12       9M 13       9M12        
Operating income
    514.1       426.8       84.9       77.0       43.0       42.3       (8.7 )     0.8       130.7       (6.1 )     (0.8 )     4.9       763.2       545.6       39.9 %
 Depreciation and amortization
    114.7       102.4       27.1       18.1       -       0.1       14.3       9.9       11.1       -       -       -       167.2       130.4       28.3 %
 EBITDA
    628.8       529.2       112.1       95.1       43.0       42.4       5.6       10.7       141.8       (6.1 )     (0.8 )     4.9       930.4       675.0       37.6 %


IX. Reconciliation with Income Statement as of March 31*

Below is an explanation of the reconciliation of the company’s income by segment with its consolidated income statement. The difference lies in the presence of joint businesses included in the segment but not in the income statement.

   
Total Segment Information
   
Interest in Joint Businesses
   
Income Statement
   
YoY var
 
      9M 13       9M 12       9M 13       9M 12       9M 13       9M 12        
Revenues
    1,715.3       1,378.9       (111.2 )     (50.3 )     1,604.1       1,328.5       20.7 %
Costs
    (888.6 )     (673.9 )     87.4       36.7       (801.2 )     (637.3 )     25.7 %
Gross Profit /(Loss
    826.7       704.9       (23.9 )     (13.6 )     802.9       691.3       16.1 %
Income / (loss) from sale of investment properties
    64.0       42.7       -       -       64.0       42.7       49.8 %
General and administrative expenses
    (152.2 )     (126.4 )     1.0       1.3       (151.1 )     (125.1 )     20.9 %
Selling expenses
    (81.6 )     (61.9 )     8.4       5.7       (73.2 )     (56.3 )     30.2 %
Other operating income, net
    106.2       (13.8 )     1.0       1.8       107.2       (12.0 )     -  
Operating Income / (Loss) before income / (loss) from interests in equity investees and joint businesses
    763.2       545.6       (13.5 )     (4.9 )     749.7       540.7       38.7 %
Income / (loss) from interests in equity investees and joint businesses
    6.0       18.8       9.2       (2.9 )     15.1       15.9       (5.1 )%
Operating Income / (Loss) before financial income / (loss) and income tax
    769.1       564.4       (4.3 )     (7.8 )     764.8       556.6       37.4 %

*Does not include Puerto Retiro, Baicom, CYRSA, Canteras Natal Crespo, Nuevo Puerto Santa Fe and Quality (San Martín Plot).

„  
The accumulated result of ARS 106.2 million recorded in “Other Operating Income, net” is mainly explained by the income generated by the consolidation of our investment in the building located at 183 Madison Avenue in the City of New York during the past quarter as a result of its equity value revaluation at fair value. Also noteworthy is the ARS 64.0 million result recorded in “Income / (loss) from sale of investment properties” reflecting the sales of “La Nación” and “El Rulero” buildings during the past quarter.


 
11

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 

X. Financial Debt and Other Indebtedness

Consolidated Financial Debt as of March 31, 2013

Description
Currency
Amount (USD MM) (1)
Interest Rate
Maturity
Bank Overdraft
 ARS
23.3
 Floating
 < 180 days
IRSA’s Tranche I Series I Notes
 USD
150.0
8.50%
Feb-17
IRSA’s Tranche II Series II Notes(2)
 USD
150.0
11.50%
Jul-20
IRSA’s Tranche III Series III Notes
 ARS
19.9
 BADLAR + 249 bps
Aug-13
IRSA’s Tranche III Series IV Notes
 USD
33.8
7.45%
Feb-14
Other Loans
 USD
5.0
Libor 1 month + 275 bps
Dec-13
Belmont Madison Building mortgage
USD
75.0
4.22%
Aug-17
IRSA’s Total Debt
 
457.0
   
Short Term Debt
ARS
55.1
15.01%
 Dec-15
APSA’s Tranche I Series I Notes(2)
USD
120.0
7.875%
May-17
Other Debt
USD
19.6
5.00%
Jul-17
APSA’s Total Debt
 
194.7
   
Total Consolidated Debt
 
651.8
   
Consolidated Cash
 
78.0
   
Repurchase of Debt
 
13.9
   
Net Consolidated Debt
 
559.9
   

(1) Principal face value in USD at an exchange rate of 5.122 ARS = 1 USD, without considering accrued interest or elimination of balances with   subsidiaries.
(2) As of June 30, 2012 APSA had repurchased USD 10.0 million in principal amount.
(3) As of June 30, 2012 APSA had repurchased USD 3.9 million in principal amount.

Significant Events occurred during the Quarter and Subsequent Events

·  
On January 14, 2013, IRSA accepted APSA’s repurchase offer for all its Convertible Series I Notes due in July 2014, currently amounting to USD 31,738,262 in principal amount, for a total price of USD 35.4 million or USD 1.1148554 per Convertible Note.
·  
On March 22, 2013 the Board of Directors of our subsidiary APSA resolved to call a General Ordinary Shareholders’ Meeting to be held on May 3, 2013, to consider the distribution of an interim cash dividend for the fiscal year started on July 1, 2012, based on the audited quarterly balance sheet as of December 31, 2012, for up to ARS 166,500,000.
·  
On May 3, 2013, the General Ordinary Shareholders’ Meeting of our subsidiary APSA was held, which approved the payment of an interim cash dividend for the current fiscal year for up to ARS 166,500,000 (equivalent to ARS/share 0.1321 and ARS/ADR 5.2851).

 
12

IRSA Inversiones y Representaciones Sociedad Anónima
 
Summary as of March 31, 2013
 
 
XI. Brief comment on prospects for the next period

Our shopping centers, managed through our subsidiary APSA, have continued to exhibit sound invoicing figures and occupancy rates close to 100%. During the fourth quarter of this fiscal year we expect to maintain the sales, visitors’ traffic and occupancy levels recorded in the first nine months, so as to continue consolidating our position as the leading shopping center company in Argentina.

We will make progress in the final stage of development of our fourteenth shopping center “Arcos del Gourmet” located in the neighborhood of Palermo, in the City of Buenos Aires. This development combines a “Fashion & Outlet” concept, offering a variety of premium brands in an open-air environment, with approximately 14,000 sqm of gross leaseable area and 65 stores. Over the last months the project has been eagerly accepted among tenants, and to date 63% of the lease agreements have been executed and more than 80%, negotiated. We expect that this new proposal, planned to be opened in the spring of 2013, will be just as successful as our former developments.

On the other hand, we continue working on the development of a new shopping center in the City of Neuquén, which has recorded significant economic growth in the past decades. Through this project we hope to achieve the same level of acceptance by the public as we had in the other five locations in the interior of Argentina where we landed.

In addition, we will continue making efforts to improve our shopping centers’ service offerings, so as to maintain our successful occupancy rates and visitors’ traffic.

Regarding the Offices business, we expect to continue our sales of non-strategic portfolio assets for attractive prices as we have actively done during the past months. Moreover, we will strive to achieve maximum occupancy in our buildings and the best possible lease agreements, trying to attract new firms wishing to relocate in the spaces we offer. Moreover, we are deciding on the most suitable timing for launching our “Catalinas Norte” project, which is strategically located and will add approximately 35,000 sqm of gross leaseable area to our portfolio.

As concerns the hotel business, the lower inflow of international visitors, mainly from Brazil and Chile, and the higher operating costs in our Llao Llao hotel, affected by the eruption of the Chilean volcano in 2012, adversely impacted on our hotels’ results. Betting on the growth of local tourism, we expect to recover occupancy levels in our Sheraton and Intercontinental hotels in the next fiscal year.

Regarding the Sales and Developments segment, we expect to continue selling non-strategic assets and small land reserves and to make progress in the sale of last units received following barter agreements in the residential projects Caballito Nuevo, Condominios del Alto (Rosario) and Barrio el Encuentro.

As concerns our investments outside Argentina, operating indicators in our New York buildings have improved in the first nine months of fiscal year 2013, thanks to our management’s experience in managing real estate assets. We will continue to work towards increasing occupancy and income levels in our Lipstick and Madison buildings. Moreover, we sold a portion of our interest the hotel REIT Hersha Hospitality Trust at a profit, and we maintained our investment in the REIT Supertel Hospitality Inc. In the future, we expect to obtain high returns from these highly opportune investments at the shares’ present values.

Given the quality of the real estate assets in our portfolio, the Company’s financial position and low indebtedness level, its experience in taking advantage of market opportunities and its credentials in the capital markets, we are confident that that we will remain on the growth track, consolidating the best real estate portfolio of Argentina and taking advantage of opportunities that may arise abroad.

 
13

 
 

 
SIGNATURES
 
 
Pursuant to the requirements of the Security Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Buenos Aires, Argentina.
 
  IRSA Inversiones y Representaciones S.A.  
       
June 3, 2013
By:
/s/ Saúl Zang  
    Saúl Zang  
    Responsible for the Relationship with the Markets