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Cresud S.A.C.I.F. y A. 6-K 2009
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 November, 2009
CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA FINANCIERA Y AGROPECUARIA (Exact name of Registrant as specified in its charter) CRESUD INC. (Translation of registrant’s name into English)
Republic of Argentina (Jurisdiction of incorporation or organization) Moreno 877, 23rd Floor, (C1091AAQ) Buenos Aires, Argentina (Address of principal executive offices)
Form 20-F x Form 40-F ¨ 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 ¨ No x
CRESUD S.A.C.I.F. and A (THE “COMPANY”) REPORT ON FORM 6-K Attached is a copy of the English translation of the Financial Statements for the three-month period ended on September 30, 2009 and on September 30, 2008 filed by the Company with the Bolsa de Comercio de Buenos Aires and with the Comisión Nacional de Valores.
Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria Free Translation of the Unaudited Financial Statements corresponding to the three-month periods ended September 30, 2009 and 2008
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria Unaudited Financial Statements Index Presentation Consolidated Balance Sheet Consolidated Statement of Income Consolidated Statement of Cash Flow Notes to the Consolidated Financial Statements Balance Sheet Statement of Income Statement of Changes in Shareholders’ Equity Statement of Cash Flow Notes to the Financial Statements Schedules Additional Information to the Notes to the Financial Statements required by section 68 of the Buenos Aires Stock Exchange Regulations Business Highlights Report of Independent Auditors
Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria Free Translation from the original prepared in Spanish for the publication in Argentina Consolidated Unaudited Financial Statements corresponding to the three-month periods ended September 30, 2009 and 2008
Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria Fiscal year No. 75 started on July 1, 2009 Unaudited Financial Statements for the period ended September 30, 2009 In comparative format with previous fiscal year (Note 1- Consolidated Statements) (in thousands of pesos)
DATES OF REGISTRATION AT THE PUBLIC REGISTRY OF COMMERCE Free translation from the original prepared in spanish for publication in Argentina
Information on controlled companies in Note 2 to the Consolidated Unaudited Financial Statements
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Unaudited Consolidated Balance Sheet as of September 30, 2009 and 2008 and June 30, 2009 (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina
The accompanying notes are an integral part of the consolidated financial statements Alejandro G. Elsztain Vice-president II Acting as President
2
Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Unaudited Consolidated Statements of Income Corresponding to the three-month periods beginning on July 1, 2009 and 2008 and ended September 30, 2009 and 2008 (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
The accompanying notes are an integral part of the consolidated financial statements. Alejandro G. Elsztain Vice-president II Acting as President
3
Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Unaudited Consolidated Statements of Cash Flows Corresponding to the three-month periods beginning on July 1, 2009 and 2008 and ended September 30, 2009 and 2008 (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
Alejandro G. Elsztain Vice-president II Acting as President
4
Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Unaudited Consolidated Statements of Cash Flows Corresponding to the three-month periods beginning on July 1, 2009 and 2008 and ended September 30, 2009 and 2008 (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
Alejandro G. Elsztain Vice-president II Acting as President
5
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements Corresponding to the three-month periods beginning on July 1, 2009 and 2008 and ended September 30, 2009 and 2008 (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina. NOTE 1: BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS As a consequence of the application of the Technical Resolution No. 21 of the Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE), the Balance Sheet as of September 30, 2009 and 2008 and the Statements of Income and the Statements of Cash Flows for the periods ended on those dates were consolidated on a line by line basis with the financial statements of such companies in which it holds a majority of the voting shares. During the semester ended December 31, 2008, the Company acquired directly and indirectly 68,712,008 additional shares of IRSA Inversiones y Representaciones Sociedad Anónima (IRSA). Thus, the Company’s direct and indirect interest in IRSA through its affiliates amounted to 54.01%, therefore, from October 1, 2008, the Company began to consolidate the financial statements of IRSA in accordance with Technical Resolution No. 21. The consolidated financial statements as of September 30, 2008 disclosed in comparative balances do not include information consolidated with IRSA (See Note 18). The financial statements as of September 30, 2009 and 2008 of the subsidiary companies Inversiones Ganaderas S.A., Futuros y Opciones.Com S.A., Agropecuaria Anta S.A. (ex Agropecuaria Cervera S.A.), FyO Trading S.A., Agrology S.A. and IRSA Inversiones y Representaciones Sociedad Anónima have been used in order to determine line by line consolidation. For purposes of comparability, certain reclassifications have been made on the information as of June 30, 2009 and September 30, 2008. These Financial Statements and the corresponding notes are presented in thousand of Argentine Pesos. Figures expressed in United States dollars (US$), are presented in million.
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 2: CORPORATE CONTROL The Company’s interest in other companies is shown in the following table:
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES The Financial Statements of the Subsidiaries mentioned in Note 2 have been prepared based on accounting principles consistent with those followed by Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria for the preparation of its Financial Statements, as detailed in Note 2 of the basic financial statements. High relevant valuation and disclosure criteria applied in preparing the financial statements of consolidated companies and not explained in the valuation criteria note of the holding company are as follows: a) Revenue recognition
IRSA records revenue from the sale of properties when all of the following criteria are met:
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
IRSA uses the percentage-of-completion method of accounting with respect to sales of development properties under construction. Under this method, revenue is recognized based on the ratio of costs incurred to total estimated costs according to budgeted costs. IRSA does not commence revenue and cost recognition until such time as the decision to proceed with the project is made and construction activities have begun. The percentage-of-completion method of accounting requires the IRSA’s Management to prepare budgeted costs in connection with sales of properties/units. All changes to estimated costs of completion are incorporated into revised estimates during the contract period.
Revenues from leases are recognized on a straight –line basis over the life of the related lease contracts.
Leases with tenants are accounted for as operating leases. Tenants are generally charged a rent, which consists of the higher of (i) a monthly base rent (the “Base Rent”) and (ii) a specified percentage of the tenant’s monthly revenues (the “Percentage Rent”) (which generally ranges between 4% and 10% of tenant’s gross revenues). Furthermore, pursuant to the rent escalation clause in most leases, the tenant’s Base Rent generally increases between 7% and 12% each year during the term of the lease. Minimum rental income is recognized following on the accrued criteria. Certain lease agreements contain provisions, which provide for rents based on a percentage of revenues or based on a percentage of revenues volume above a specified threshold. APSA determines the compliance with specific targets and calculates the additional rent on a monthly basis as provided in the contracts. Thus, these contingent rents are not recognized until the required thresholds are exceeded. Generally, APSA’s lease agreements vary from 36 to 120 months. Law No. 24,808 provides that tenants may rescind commercial lease agreements after the initial six-months, upon not less than 60 days’
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
written notice, subject to penalties which vary from one to one and a half months rent if the tenant rescinds during the first year of its lease, and one month of rent if the tenant rescinds after the first year of its lease. Additionally, APSA charges its tenants monthly administration fees related to the administration and maintenance of the common area and the administration of contributions made by tenants to finance promotional efforts for the overall shopping centers operations. The administration fees are prorated among the tenants according to their leases which vary from shopping center to shopping center. Administration fees are recognized monthly when earned. In addition to rent, tenants are generally charged “admission rights”, a non refundable admission fee, that tenants may be required to pay upon entering into a lease or upon lease renewal. Admission right is normally paid in one lump sum or in a small number of monthly installments. Admission rights are recognized in earnings using the straight-line method over the life of the respective lease agreements.
Revenues derived from credit card transactions consist of commissions and financing income, charges to clients for life and disability insurance and for statements of account, among other. Commissions are recognized at the time the merchants’ transactions are processed, while the rest financial income is recognized when accrued. Income generated from granting consumer loans mainly includes financial interests, which are recognized by the accrued method during the period whether collection has or has not been made.
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
Lease agent operations Fibesa S.A., company in which Alto Palermo S.A. has an interest of 100%, acts as the leasing agent for APSA bringing together the Company and potential lessees for the retail space available in certain of the Company’s shopping centers. Fibesa S.A.’s revenues are derived primarily from collected commissions calculated as a percentage of the final rental income value and admission’s rights. Revenues are recognized at the time that the transaction is successfully concluded.
IRSA recognizes revenues from its rooms, catering and restaurant facilities as accrued on the close of each business day. Net operating results from each business unit are disclosed in Note 6. b) Cash and Banks
The available cash has been computed at its face value. c) Inventories
A property is classified as inventories upon determination by the Board of Directors that the property is to be marketed for sale in the normal course of business over the next several years. Properties classified as inventories have been valued at acquisition or construction cost restated as mentioned in Note 1.c. to the basic financial statements or estimated market value, whichever is lower. Costs include land and land improvements, direct construction costs, construction overhead costs, financial costs and real estate taxes. Inventories on which advance payments that establish price have been received, and the operation’s contract terms and conditions assure that the sale will be effectively accomplished and that the income will be realized, are valued at its fair market value. Profits arising from such valuation are shown in the “Gain from valuation of assets at net realizable value” caption of the Statements of Income.
10
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
Properties held for sale are classified as current or non-current based on the estimated date of sale and the time at which the related receivable is expected to be collected by the Company. The amount recorded in inventories, net of allowances set up, does not exceed their estimated recoverable value at the end of the period/year. Credits in kind: IRSA has credits in kinds related to rights to receive certain property units to be built. The units have been valued according to the accounting measuring standards corresponding to inventories receivables (the price established in the deed or net realizable value, as applicable) and there have been disclosed under “Inventories”. d) Non-current investments
Investments in debt securities were valued based on the best estimate of the discounted amount receivable, applying the corresponding internal rate of return estimated at the time of incorporation to assets, as IRSA will hold them to maturity.
Long term investments in subsidiaries and equity investments, have been valued by using the equity method of accounting based on the financial statements at September 30, 2009 issued by them. The accounting standards used by the subsidiaries to prepare their financial statements are the same as those used by IRSA. The accounting standards used by the related companies to prepare their financial statements are those currently in effect. This item includes the lower or higher value paid for the purchase of shares in subsidiaries and affiliated companies assignable to the assets acquired, and goodwill related to the subsidiaries and affiliated companies acquired.
The Financial Statements of Banco Hipotecario S.A. and Banco de Crédito y Securitización S.A. are prepared in accordance with the Central Bank of the
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
Argentine Republic (“BCRA”) standards. For the purpose of the valuation of the investment in IRSA, adjustments necessary to adequate the financial statements to the professional accounting standards have been considered. In accordance with the regulations of the BCRA and the contracts signed as a result of Banco Hipotecario S.A.’s financial debt restructuring process, there are certain restrictions on the distribution of profits by Banco Hipotecario S.A. to IRSA.
Uruguay-based Tyrus S.A. has been classified as not integrated into the IRSA’s operations in relation to its holding of shares pertaining to the investment in Metropolitan whose operations are carried out fully abroad. IRSA does not control foreign operations, which are conducted with a significant degree of autonomy respect to the IRSA’s own operations. Besides, such operations are mainly financed with funds originating in its own transactions or in local loans. The Tyrus’s assets and liabilities were converted into Pesos at the exchange rate in force at the close of the period. The Statement of Income accounts have been converted into Pesos at the exchange rates in force at the time of each transaction. Foreign exchange gains/losses arising from the conversion have been charged to the Shareholders’ equity caption in the line “Cumulative Translation Adjustment” and they amounted to Ps. 14,133 as of September 30, 2009.
IRSA acquires undeveloped land in order to provide an adequate and well-located supply for its residential and office building operations. IRSA’s strategy for land acquisition and development is dictated by specific market conditions where IRSA conducts its operations. Land held for development and sale and improvements are stated at cost restated as mentioned in Note 1.c. to the basic financial statements or market value, whichever is lower. Land and land improvements are transferred to inventories or fixed assets when construction commences or their trade is decided. The values thus obtained, do not exceed their respective estimated recoverable values at the end of de period/year.
12
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
e) Business combinations
Significant entities on net asset acquired by the Company were recorded in line with the “purchased method” set forth in Technical Resolution No. 18. All assets and liabilities acquired to third independent parties were adjusted to show their fair value. IRSA identified the assets and liabilities acquired including intangible assets such as: lease agreements acquired for prices and terms that are either higher or lower than in the market; costs of executing and delivering the lease agreements in force (costs that IRSA avoids incurring as a result of acquiring effective lease agreements); the value of acquired brands, the value of any deposits associated to the investment and the intangible value inherent in customer relations. The process of identification and the determination of the purchased price paid is a matter that requires complex judgments and significant estimates. IRSA uses the information contained in valuations estimated by independent appraisers as primary base for assigning the price paid for the land, the building and the shopping centers. The amounts assigned to all the other assets and liabilities are based on independent valuations or on the IRSA’s own analysis on comparable assets and liabilities. The current value of tangible assets acquired considers the property value as if it was empty. In accordance with the terms of Technical Resolution No. 21, if the value of identified tangible and intangible assets and liabilities exceeds the price paid, the intangible assets acquired are not recognized as they would cause an increase of the negative goodwill generated by these acquisitions at the time of the purchase. Furthermore, as regards the negative goodwill generated, the portion concerning the investees’ expectations of future expenses or losses will be recognized in the statements of income for the same periods in which such expenses or losses are accrued and expensed. The portion that is not concerned with the investees’ expectations of future expenses or losses will be treated as follows: (i) the amount that does not exceed the investor’s interest over the current values of the investees’ identifiable non-monetary assets will be consistently recognized in the statement of income throughout a period equivalent to a weighted average of the remaining useful lives of the investees’ identifiable assets subject to depreciation; (ii) the amount that exceeds the current values of the investees’ identifiable non-monetary assets will be recognized in the statement of income at the time of the acquisition.
13
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
If the price paid is larger than the value of tangible and intangible assets and liabilities as identified, the excess is considered to be goodwill. f) Property and equipment, net
The tree plantations (wood) comprising this account has been valued at cost less respective accumulated depreciation as the Company has no intention to sell it, but use it in the production process. Its cost was calculated according to a “Report on forestry mass increase” carried out by a forestry engineer at the request of the preceding shareholders of Agropecuaria Anta S.A. (ex Agropecuaria Cervera S.A.) (ANTA). ANTA former Board of Directors based on such report as well as on owns estimates accepted the value of the tree plantations (wood) in Ps. 4,320. Depreciation for the period was calculated based on the remaining concession term. Other considerations – concessions granted Among other goods and rights ANTA has the concession planning and execution of an integral development project including: biological, economical and social issues on several real estates located in the department of Anta, province of Salta. The company is also duty authorized to perform a significant agricultural, cattle farming and forestry project which was awarded under resolution No. 190/99 and bidding No. 58/98 of the Ministry of Production and Employment. Such concession was granted for a 35 year term with a postponement option of 29 additional years by ANTA. Among other obligations ANTA has to invest Ps. 16,000 in agriculture, cattle farming, hydraulic resources, continuing education, forestry development, forest planting, fauna, natural reserve and eco-tourism. On July 2, 2008, a memorandum of understanding was executed by which the concession agreement mentioned in Note 12 was renegotiated.
14
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
Fixed assets comprise primarily of rental properties and other properties and equipment held for use by IRSA Inversiones y Representaciones Sociedad Anónima. Fixed assets value, net of allowances set up, does not exceed estimated recoverable value at the end of the period/year. Rental properties Rental properties are carried at acquisition and/or construction cost, restated as mentioned in Note 1.c. to the basic financial statements, less accumulated depreciation and allowance for impairment at the end of the period/year. IRSA capitalizes the financial accrued costs associated with long-term construction projects. During the year ended June 30, 2009, financial costs were capitalized in the building known as “DIQUE IV” for Ps. 7,561. Accumulated depreciation is computed under the straight-line method over the estimated useful lives of each asset. Expenditures for ordinary maintenance and repairs are charged to results in the period incurred. IRSA has allowances for impairment of certain rental properties. Significant renewals and improvements, which improve or extend the useful life of the asset are capitalized and depreciated over its estimated remaining useful life. At the time depreciable assets are retired or otherwise disposed of, the cost and the accumulated depreciation of the assets are eliminated from the accounts and the resulting gain or loss is disclosed in the Statement of Income. Other properties and equipment Other properties and equipment properties are carried at cost, restated as mentioned in Note 1.c. to the basic financial statements, less accumulated depreciation at the end of the period/year. Accumulated depreciation is computed under the straight-line method over the estimated useful lives of the assets.
15
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
The cost of maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements are added to the carrying amount of the respective assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts. g) Intangible assets
Related to the concession right mentioned in Note 3.f. The amortization of the concession right of Agropecuaria Anta S.A. (ex Agropecuaria Cervera S.A.) is calculated according to its duration, whose remaining time is 30 years.
Intangible assets are carried at cost restated as mentioned in Note 1.c. to the basic financial statements, less accumulated amortization and corresponding allowances for impairment in value. Included in the Intangible Assets caption are the following:
Trademarks include the expenses and fees related to their registration.
16
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
h) Goodwill
Goodwill has been restated following the guidelines mentioned in Note 1.c. to the basic financial statements and amortization has been calculated by the straight-line method based on estimated useful life, that in no case exceed 20 years, considering the weighted-average of the remaining useful life of identifiable assets acquired subject to depreciation. Includes goodwill originated from the purchase of shares of Fibesa S.A., Emprendimiento Recoleta S.A., Empalme S.A.I.C.F.A y G. (“Empalme”) and Mendoza Plaza Shopping S.A. (through APSA). Goodwill related to the subsidiary Tarshop S.A., (through APSA), has been determined due to an increase in the equity interest that took place during the fiscal year ended June 30, 2009. Such goodwill is amortized by the straight-line method over a 12 years period.
Amortizations were calculated through the straight line method on the basis of an estimated useful life considering the weight average of the remaining useful life of the assets acquired.
17
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
The residual value of goodwill arising from acquisition of net assets and shares in companies has been shown in the “Negative goodwill, net” caption. Amortizations were classified in the “Amortization of negative goodwill” caption of the statement of income. Goodwills related to the acquisition of interests in subsidiaries is included in non-current investments. Values thus obtained do not exceed the respective estimated recoverable values at the end of the period. i. Customer advances
Customer advances represent payments received in advance in connection with the sale and rent of properties and has been valued according to the amount of money received. j) Allowances
Allowance for doubtful accounts: IRSA Inversiones y Representaciones Sociedad Anónima allows for losses relating to trade receivables, leases and other accounts receivable. The allowance for losses is recognized when, based on current information and events, it is probable that IRSA Inversiones y Representaciones Sociedad Anónima will be unable to collect all amounts due according to the terms of the agreements. The allowance is determined on a one-by-one basis considering the present value of expected future cash flows. While Management uses the information available to make assessments, future adjustments to the allowance may be necessary if future economic conditions differ substantially from the assumptions used in making the assessments. Management has considered all events and/or transactions that are subject to reasonable and normal methods of estimations, and the financial statements reflect that consideration. For impairment of assets: IRSA Inversiones y Representaciones Sociedad Anónima regularly asses its non-current assets for recoverability at the end of every period.
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
IRSA Inversiones y Representaciones Sociedad Anónima has estimated the recoverable value of rental properties based on their economic use value, which is determined based on estimated future cash flows discounted. For the rest of the assets (inventories and undeveloped parcels of land) IRSA Inversiones y Representaciones Sociedad Anónima makes a comparison with market values based on values of comparable properties. If the recoverable value of assets, which had been impaired in prior years, increases, IRSA Inversiones y Representaciones Sociedad Anónima records the corresponding reversals of impairment loss as required by accounting standards. The amount charged to the Statement of Income to reflect the allowance for impairment and its reversal has been disclosed in the “Results from transactions and holdings of real estate assets” in the Statement of Income, in case of correspond. For lawsuits: IRSA Inversiones y Representaciones Sociedad Anónima has certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor issues. IRSA Inversiones y Representaciones Sociedad Anónima accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, IRSA Inversiones y Representaciones Sociedad Anónima’s estimates of the outcomes of these matters and IRSA Inversiones y Representaciones Sociedad Anónima’s lawyers’ experience in contesting, litigating and settling other matters. As the scope of the liabilities becomes better defined, there may be changes in the estimates of future costs, which could have an effect on IRSA Inversiones y Representaciones Sociedad Anónima’s future results of operations and financial condition or liquidity. At the date of issuance of these financial statements, IRSA’s Inversiones y Representaciones Sociedad Anónima Management understands that there are no elements to foresee other potential contingencies having a negative impact on these financial statements. k) Liabilities in kind related to barter transactions
Liabilities in kind corresponding to obligations to deliver units to be built are valued considering the cost of the assets received. IRSA Inversiones and
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 3: (continued)
Representaciones Sociedad Anónima estimate that this value does exceed the cost of construction of the units to deliver plus additional costs to transfer the assets to the creditor. Liabilities in kind have been shown in the “Trade account payables”. l) Deferred financing cost
Expenses incurred in connection with the issuance of debt are amortized over the life of the related issuances. In the case of redemption or conversion of these notes, the related expenses are amortized using the accelerated depreciation method. Amortization has been recorded under “Financial results, net” in the Statements of Income as a greater financing expense. NOTE 4: Details of consolidated balance sheet and consolidated statement of income accounts As of September 30, 2009 and 2008 and as of June 30, 2009 the principal items of the financial statements are as follow: a. Cash and banks The breakdown for this item is as follow:
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
b. Investments The breakdown for this item is as follow:
21
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
22
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
23
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
c. Trade accounts receivable The breakdown for this item is as follow:
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
d. Other receivables The breakdown for this item is as follow:
25
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
e. Inventories The breakdown for this item is as follow:
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
f. Property and equipment The breakdown for this item is as follow:
g. Intangible assets The breakdown for this item is as follow:
h. Goodwill The breakdown for this item is as follow:
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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
i. Trade accounts payable The breakdown for this item is as follow:
j. Mortgage payable The breakdown for this item is as follow:
28
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
k. Short-term and long-term debts The breakdown for this item is as follow:
29
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
l. Salaries and social security payable The breakdown for this item is as follow:
m. Taxes payable The breakdown for this item is as follow:
30
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
n. Advances from customers The breakdown for this item is as follow:
In addition includes balances owed to NAI INTERNATIONAL II. INC., due to the financing agreement enclosed by Empalme S.A.I.C.F.A. y G. See note 24 B.1.
o. Other liabilities The breakdown for this item is as follow:
31
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
p. Provisions for lawsuits and contingencies The breakdown for this item is as follow:
q. Unrealized gain (loss) on inventories The breakdown for this item is as follow:
r. Other income and expenses, net The breakdown for this item is as follow:
32
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
33
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
s. Companies under Law No. 19,550 Section 33 and others related parties: Balances as of September 30, 2009, compared to the balances as of June 30, 2009 and September 30, 2008, as well as the Statement of income for the three-month periods ended September 30, 2009 and 2008, held with related companies, persons and shareholders are as follows:
34
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
35
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 4: (continued)
NOTE 5: EARNINGS PER SHARE Following reconciliation between the weighted average of outstanding shares of common stock and the diluted weighted average of shares of common stock. As of September 30, 2009 and 2008, it has been determined considering the possibility that the holders of options issued by the Company exercise them in shares of common stock of the Company up to 60,000,000 shares (see Note 15 to the basic financial statements).
36
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries Notes to the Unaudited Consolidated Financial Statements (continued) (in thousands of pesos) Free translation from the original prepared in Spanish for the publication in Argentina.
NOTE 6: SEGMENT REPORTING As of September 30, 2009 :
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