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Cresud S.A.C.I.F. y A. 6-K 2009

Documents found in this filing:

  1. 6-K
  2. 6-K
Form 6-K
Table of Contents

 

 

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 February, 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      ü                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      ü     

 

 

 


Table of Contents

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 six-month period ended on December 31, 2008 and on December 31, 2007 filed by the Company with the Bolsa de Comercio de Buenos Aires and with the Comisión Nacional de Valores.


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera

y Agropecuaria

Financial Statements

corresponding to the six-month periods

ended December 31, 2008 and 2007


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera

y Agropecuaria

Consolidated Financial Statements

corresponding to the six-month periods

ended December 31, 2008 and 2007


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Financial Statements

Index

 

Presentation

  

Consolidated Balance Sheet

   2

Consolidated Statement of Income

   3

Consolidated Statement of Cash Flows

   4

Notes to the Consolidated Financial Statements

   6

Balance Sheet

   75

Statement of Income

  

Statement of Changes in Shareholders’ Equity

   77

Statement of Cash Flows

   78

Notes to the Financial Statements

   79

Schedules

  

Additional Information to the Notes to the Financial Statements required by section 68 of the Buenos Aires Stock Exchange Regulations

   128

Business Highlights

   133

Report of Independent Auditors

   156


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Fiscal year No. 74 started on July 1, 2008

Financial Statements for the period ended December 31, 2008

In comparative format with previous fiscal year (Note 1- Consolidated Statement)

(in thousands of pesos)

 

Legal Address:    Moreno 877, 23rd Floor   
   Ciudad Autónoma de Buenos Aires   
Principal Activity:    Agriculture, livestock and real-estate   

DATES OF REGISTRATION AT THE PUBLIC REGISTRY OF COMMERCE

 

Of the by-laws:    February 19, 1937   
Of the latest amendment:    July 28, 2008   

Duration of the

Company:

   June 6, 2082   

Information on controlled companies in Note 2 to the Consolidated Financial Statements

CAPITAL STATUS ( Note 3 of basic financial statements)

SHARES

 

Type of stock

   Authorized      Subscribed      Paid-in

Ordinary certified shares of Ps.1 face value and 1 vote each

   501,536,281      501,536,281      501,536,281

 

1


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Balance Sheet as of December 31, 2008 and 2007 and June 30, 2008

(in thousands of pesos)

 

     December 31,
2008

(Notes 1 and 2)
    June 30,
2008
(Notes 1, and 2)
    December 31,
2007

(Notes 1 and 2)
 

ASSETS

      

Current Assets

      

Cash and banks (Note 4.a.)

   76,399     47,795     6,192  

Investments (Note 4.b.)

   360,295     485,292     1,039  

Trade accounts receivable, net (Note 4.c.)

   271,093     35,793     17,738  

Other receivables (Note 4.d.)

   219,290     55,390     40,361  

Inventories (Note 4.e.)

   183,037     111,525     92,485  

Other assets (Note 4.f.)

   —       1,071     19,802  
                  

Total Current Assets

   1,110,114     736,866     177,617  
                  

Non-Current Assets

      

Trade accounts receivable (Note 4.c.)

   5,935     —       —    

Other receivables (Note 4.d.)

   259,002     41,365     38,590  

Inventories (Note 4.e.)

   237,017     76,113     71,184  

Investments on controlled and related companies (Note 4.b.)

   979,622     1,132,382     758,831  

Other investments (Note 4.b.)

   51,295     352     352  

Property and Equipment, net (Note 4.g.)

   3,087,468     266,616     255,891  

Intangible assets, net (Note 4.h.)

   44,743     22,829     23,582  
                  

Subtotal Non-Current Assets

   4,665,082     1,539,657     1,148,430  
                  

Goodwill (Note 4.i.)

   (315,692 )   (206,763 )   (134,678 )
                  

Total Non-Current Assets

   4,349,390     1,332,894     1,013,752  
                  

Total Assets

   5,459,504     2,069,760     1,191,369  

LIABILITIES

      

Current Liabilities

      

Trade accounts payable (Note 4.j.)

   263,617     49,540     41,017  

Mortgages payable (Note 4.k.)

   3,450     —       —    

Short-term debt (Note 4.l.)

   430,084     195,600     217,810  

Salaries and social security payable (Note 4.m.)

   26,914     6,409     2,734  

Taxes payable (Note 4.n.)

   117,311     10,325     5,186  

Advances from customers (Note 4.o.)

   95,917     —       11,970  

Other liabilities (Note 4.p)

   104,243     474     1,697  

Provisions for lawsuits and contingencies (Note 4.q.)

   2,045     —       —    
                  

Total Current Liabilities

   1,043,581     262,348     280,414  
                  

Non-Current Liabilities

      

Trade accounts payable (Note 4.j.)

   47,001     —       —    

Advances from customers (Note 4.o.)

   143,471     —       —    

Long-term debt (Note 4.l.)

   1,006,498     —       —    

Taxes payable (Note 4.n.)

   178,109     41,818     56,945  

Other liabilities (Note 4.p.)

   71,460     293     320  

Provisions for lawsuits and contingencies (Note 4.q.)

   10,084     1,803     1,773  
                  

Total Non-Current Liabilities

   1,456,623     43,914     59,038  
                  

Total Liabilities

   2,500,204     306,262     339,452  
                  

Minority interest

   1,283,078     1,160     934  
                  

SHAREHOLDERS’ EQUITY

   1,676,222     1,762,338     850,983  
                  

Total Liabilities and Shareholders’ Equity

   5,459,504     2,069,760     1,191,369  

The accompanying notes are an integral part of the consolidated financial statements

 

Saul Zang

Vice-president I

Acting as President

 

2


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Income

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended December 31, 2008 and 2007

(in thousands of pesos)

 

     December 31,
2008
    December 31,
2007
 

Agricultural production income (Note 6)

   31,039     35,708  

Cost of agricultural production (Note 6)

   (41,241 )   (26,453 )
            

Production Profit - Agricultural

   (10,202 )   9,255  
            

Sales - crops, beef cattle, milk and others (Note 6)

   109,539     68,124  

Sales of farm (Note 6)

   —       5,917  

Cost of sales - crops, beef cattle, milk and others (Note 6)

   (88,595 )   (59,823 )

Cost of farms (Note 6)

   —       (2,684 )
            

Sales profit - Agricultural business

   20,944     11,534  
            

Sales and development of properties (Note 6)

   61,427     —    

Income from lease and service of offices, shopping centers, hotels, consumer financing and others (Note 6)

   263,586     —    

Cost of sales and development of properties (Note 6)

   (47,258 )   —    

Cost of lease and service offices, shopping centers, hotels, consumer financing and others (Note 6)

   (98,468 )   —    
            

Sales profit - Real estate business

   179,287     —    
            

Gross profit - Agricultural business

   10,742     20,789  
            

Gross profit - Real estate business

   179,287     —    
            

Gross profit

   190,029     20,789  
            

Selling expenses

   (76,249 )   (5,069 )

Administrative expenses

   (63,116 )   (9,000 )

Unrealized gain – on farm held for sale

   4,090     17,424  

Unrealized loss on inventories (Note 4.r)

   (4,022 )   (1,732 )

Net income from retained interest in securitized receivables

   (18,482 )   —    
            

Operating gain

   32,250     22,412  
            

Amortization of goodwill

   8,494     —    

Financial results

    

Generated by assets:

    

Exchange gains

   71,874     2,800  

Interest income

   4,241     1,429  

Gain on hedging operations

   25,556     —    

Interest on discount by assets

   (6,230 )   —    

Tax on bank account operations

   (2,609 )   (1,915 )

(Loss) gain on financial operations

   (17,933 )   555  

Others

   (216 )   (19 )
            

Subtotal

   74,683     2,850  
            

Generated by liabilities:

    

Interest on discounts by liabilities

   106     —    

Interest on short and long-term debts and convertible notes

   (47,985 )   (9,302 )

Net income for repurchase of convertible notes (Note 14)

   111,844     —    

Others

   (301 )   (417 )

Exchange loss

   (99,879 )   (407 )
            

Subtotal

   (36,215 )   (10,126 )
            

Financial results, net

   38,468     (7,276 )
            

(Loss) gain on equity investees

   (56,750 )   9,005  

Other income and expenses (Note 4.s)

   (4,230 )   (2,414 )

Management fee

   (1,496 )   (1,583 )
            

Net gain before income tax and minority interest

   16,736     20,144  
            

Income tax expenses

   (23,348 )   (5,632 )

Minority interest

   18,908     (40 )
            

Net income for the period

   12,296     14,472  
            

Earnings per share :

    

Basic net gain per share (Note 5)

   0.02     0.05  

Diluted net gain per share (Note 5)

   0.02     0.05  

The accompanying notes are an integral part of the consolidated financial statements

 

Saul Zang

Vice-president I

Acting as President

 

3


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Cash Flows

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended December 31, 2008 and 2007

(in thousands of pesos)

 

     December 31,
2008
    December 31,
2007
 

Changes in cash and cash equivalents

    

Cash and cash equivalents at the beginning of the year

   521,086     85,244  

Cash and cash equivalents at the end of the period

   241,148     6,317  
            

Net decrease in cash and cash equivalents

   (279,938 )   (78,927 )
            

Causes of changes in cash and cash equivalents

    

Operating activities

    

Income for the period

   12,296     14,472  

Income tax

   23,348     5,632  

Adjustments made to reach net cash flow from operating activities

    

Loss (gain) on equity investees

   56,750     (9,005 )

Minority interest

   (18,908 )   97  

Increase in allowances, provisions and accruals

   51,556     5,639  

Depreciation

   37,675     2,385  

Unrealized loss on Inventories

   4,022     1,732  

Financial results

   94,032     (3,708 )

Unrealized gain – on farm held for sale

   (4,090 )   (17,424 )

Amortization

   (8,494 )   —    

Capitalized financial costs

   (11,768 )   —    

Result from barter of inventories

   (2,867 )   —    

Result from repurchases of non-convertible notes

   (111,844 )   —    

Changes in operating assets and liabilities

    

(Increase) Decrease in current investments

   (77,052 )   216  

(Increase) decrease in trade accounts receivable, leases and services

   (52,164 )   20,132  

Increase in other receivables

   (94,139 )   (12,349 )

Increase in inventories

   (27,921 )   (45,386 )

Increase in intangible assets

   (432 )   —    

Increase in social security payables, taxes payable and advances from customers

   46,960     8,972  

Increase in trade accounts payable

   3,147     5,866  

Dividends collected

   1,759     1,551  

Increase in accrued interest

   6,445     9,296  

Increase in other liabilities

   25,640     691  
            

Cash flows applied to operating activities

   (46,049 )   (11,191 )
            

Investment activities

    

Decrease in non-current investments

   37,768     —    

Increase in interest in equity method investees

   (3,597 )   (15,921 )

Increase in IRSA’s interest

   (89,893 )   (127,077 )

Acquisition , upgrading and collected of fixed assets

   (160,749 )   6,279  

Increase in goodwill

   (45 )   —    

Purchase and improvements of undeveloped parcels of lands

   4,701     —    

Loans granted

   (934 )   —    

Payment for subsidiary acquired, net of cash acquired

   171,481     —    
            

Cash flows applied to investment activities

   (41,268 )   (136,719 )
            

Financing activities

    

Contributions received by subsidiaries from minority shareholders

   10,778     —    

Exercise of Warrants and Options

   23     11,162  

Cash Dividends paid

   (41,608 )   (8,250 )

Proceeds from short-term and long-term debt

   76,620     93,863  

Payment of short-term debt

   (119,826 )   (24,099 )

Decrease in other liabilities

   —       (3,693 )

Repurchase of treasury stocks

   (48,612 )   —    

Expenditures for repurchase of non-convertible notes

   (69,196 )   —    

Decrease in mortgages payable

   (800 )   —    
            

Cash flows (applied to) provided by financing activities

   (192,621 )   68,983  
            

Net decrease in cash and cash equivalents

   (279,938 )   (78,927 )
            

 

Saul Zang

Vice-president I

Acting as President

 

4


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Cash Flows

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended December 31, 2008 and 2007

(in thousands of pesos)

 

     December 31,
2008
    December 31,
2007

Items not involving changes in cash and cash equivalents

    

Inventory transferred to Property and Equipment

   771     791

Increase in other receivables by sale of fixed assets

   —       311

Acquisition of subsidiary companies through a decrease of non-current investment

   —       37,764

Decrease in inventories through a decrease in advances from customers

   15,285     —  

Increase in inventories through a decrease in property and equipment

   11,999     —  

Transfer of undeveloped parcels of land to an inventories

   101     —  

Increase in other receivables through a decrease in undeveloped parcels of land

   4,065     —  

Increase in property and equipment through an increase in other liabilities

   10,882     —  

Decrease in non-current investments by transitory conversion differences

   30,283     —  

Increase in trade accounts receivable through a decrease in current investments

   31,630     —  

Increase in trade accounts receivable through a decrease in others assets

   19,434     —  

Increase in goodwill through a decrease in minority interest

   8,150     —  

Increase in fixed assets through an increase in trade accounts payable

   24,368     —  

Repayment of financial loans through issue of stock by exercise of conversion right

   —       8,519

Repurchase of treasury stock unpaid

   544     —  

Complementary information

    

Interest paid

   106,517     4,992

Income tax paid

   15,880     1,304
     December 31,
2008
    December 31,
2007

Acquisition of subsidiaries companies

    

Investments

   175,097     —  

Trade accounts receivable and rentals

   179,640     —  

Other receivables

   283,653     —  

Inventories

   198,387     —  

Non-Current Investments

   862,740     —  

Property and equipment, net

   2,581,810     —  

Intangible assets

   8,935     —  

Goodwill

   (65,724 )   —  

Trade accounts payable

   243,502     —  

Mortgage payable

   (3,882 )   —  

Advances from customers

   (237,539 )   —  

Financial loans

   (1,369,227 )   —  

Salaries and social security payable

   (31,674 )   —  

Taxes payable

   (122,574 )   —  

Other liabilities

   (134,325 )   —  

Minority interest

   (458,374 )   —  
          

Acquired assets that do not affect cash, net value

   1,623,441     —  
          

Acquires funds

   230,472     —  
          

Acquired assets, net value

   1,853,913     —  
          

Minority interest

   (852,656 )   —  

Equity method previous to the purchase

   (885,370 )   —  

Goodwill generated by the purchase

   (56,896 )   —  
          

Purchase value of subsidiaries companies

   58,991     —  
          

Acquires funds

   (230,472 )   —  
          
   (171,481 )   —  

 

Saul Zang

Vice-president I

Acting as President

 

5


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended on December 31, 2008 and 2007

 

NOTE 1: BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

As a consequence of the application of the unifying accounting standards approved by the Comisión Nacional de Valores (CNV), which require that consolidated Financial Statements be presented as established by Technical Resolution No. 21 of the Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE), the Balance Sheet as of December 31, 2008 and 2007 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 amounts to 54.01%, therefore, from October 1, 2008, the Company begins to consolidate the financial statements of IRSA Inversiones y Representaciones Sociedad Anónima in accordance with Technical Resolution No. 21.

The consolidated financial statements as of June 30, 2008 and as of December 31, 2007, disclosed in comparative balances do not include information consolidated with IRSA. (See Note 18).

The financial statements of the subsidiary companies Inversiones Ganaderas S.A., Futuros y Opciones.Com S.A. and Agropecuaria Anta S.A. (ex Agropecuaria Cervera S.A.) as of December 31, 2008 and 2007 have been used in order to determine line by line consolidation. Likewise, as the companies Fyo Trading S.A. and Agrology S.A were organized on May 2 and 8, 2008, respectively, their financial statements are only consolidated as of December 31, 2008 and June 30, 2008.

For purposes of comparability, certain reclassifications have been made on the information as of June 30, 2008 and December 31, 2007.

The consolidated statement of Income as of December 31, 2008, includes income (loss) of IRSA Inversiones y Representaciones Sociedad Anónima from October 1 through December 31, 2008.

These Financial Statements and the corresponding notes are presented in thousand of Argentine Pesos. Figures expressed in United States dollars (US$), in whole millions.

 

6


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 2: CORPORATE CONTROL

The Company’s interest in other companies is shown in the following table:

 

COMPANY

   CRESUD
PERCENTAGE OF
VOTING SHARES
OWNED
   CONSOLIDATED
PERCENTAGE OF
VOTING SHARES
OWNED
 

IRSA Inversiones y Representaciones Sociedad Anónima

   50.23    54.01 (1)

Inversiones Ganaderas S.A.

   99.99    99.99  

Futuros y Opciones.Com S.A.

   66.20    66.20  

Agropecuaria Anta S.A. (ex Agropecuaria Cervera S.A.)

   90.00    99.99 (2)

Agrology S.A.

   97.00    99.99 (2)

FyO Trading S.A.

   3.63    67.43 (3)

 

  (1) Includes interests in participations of Agrology S.A.
  (2) Includes interests in participations of Inversiones Ganaderas S.A.
  (3) Includes interests in participations of Futuros y Opciones.Com S.A.

 

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

The Financial Statements of the Subsidiary Companies 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

 

   

Real Estate Business

 

  1) Revenue recognition of IRSA Inversiones y Representaciones Sociedad Anónima

 

   

Sales of properties

IRSA records revenue from the sale of properties when all of the following criteria are met:

 

   

The sale has been consummated.

 

   

There is sufficient evidence to demonstrate the buyer’s ability and commitment to pay for the property.

 

   

The Company’s receivable is not subject to future subordination.

 

   

The Company has transferred the property to the buyer.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

In addition, 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 Company’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

Revenues from leases are recognized on a straight –line basis over the life of the related lease contracts.

 

  2) Revenue recognition of Alto Palermo S.A. (APSA)

 

   

Net income for admission rights and rental of stores and stands

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 gross sales (the “Percentage Rent”) (which generally ranges between 4% and 10% of tenant’s gross sales).

Furthermore, pursuant to the rent adjustment 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 the accrue method.

Certain lease agreements contain provisions, which provide for rents based on a percentage of sales or based on a percentage of sales volume above a specified threshold. APSA determines the compliance with specific targets and calculates the additional rent on a monthly basis as provided for 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 nine-months, upon not less than 60 days’ 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.

 

8


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

Additionally, APSA monthly charges its tenants administration fees relating 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. These fees are prorated among the tenants according to their leases and varies from shopping center to shopping center.

Administration fees are recognized monthly when accrued. In addition to rent, tenants are generally charged “admission rights”, 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.

 

   

Lease agent operations

Fibesa S.A. and Comercializadora Los Altos S.A., companies in which APSA have shares of 99.9999% and 100% respectively, act as the leasing agents for APSA bringing together that company and potential lessees for the retail space available in certain of APSA’s shopping centers. Fibesa S.A.’s and Comercializadora Los Altos S.A´s revenues are derived primarily from collected commissions calculated as a percentage of the final rental income value. Revenues are recognized at the time the transaction is successfully concluded.

 

   

Credit card operations “Consumer Financing”

Revenues derived from credit card transactions consist commissions, 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 interest which is recognized by the accrued method during the period irrespective of whether collection has or has not been made.

 

   

Hotel operations

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.

 

9


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

  b) Inventories

 

   

Real Estate Business

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.

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 and there have been disclosed under “Inventories”.

 

  c) Others assets

 

   

Agricultural Business

The other assets for which price-fixing prepayments were received and the contractual conditions of the transaction ensure the actual materialization of the sale and the income and they are valued at net realization value. Profits arising from such valuation are shown in the “Unrealized gain – on farm held for sale” caption of the Statements of Income.

 

10


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

  d) Non-current investments

 

   

Real Estate Business

 

   

Investments in debt securities:

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. The value thus obtained does not exceed the respective estimated recoverable value at the end of the period/year.

 

   

Investments in subsidiaries and affiliated companies:

Long term investments in subsidiaries and affiliated companies, have been valued by using the equity method of accounting based on the unaudited financial statements at December 31, 2008 issued by them. The accounting standards used by the subsidiaries to prepare their unaudited financial statements are the same as those used by the Company. The accounting standards used by the related companies to prepare their unaudited financial statements are those currently in effect.

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 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.

This item also 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 subsidiary Banco Hipotecario S.A. and Manibil S.A..

 

   

Banco Hipotecario S.A.:

IRSA has an important investment in Banco Hipotecario S.A. This investment is valued according to the equity method due to the significant influence of the economic group on the decisions of Banco Hipotecario S.A. and to the intention of keeping said investment on a permanent basis.

As of December 31, 2008, the equity method was applied on preliminary figures because as of the time of issuance of these financial statements, Banco Hipotecario S.A. had not yet concluded with the preparation and subsequent approval of its financial statements.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

NOTE 3: (continued)

 

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.

 

   

Tyrus S.A.:

Uruguay-based Tyrus S.A. has been classified as not integrated into the Company’s operations because it is a company engaged in holding the shares pertaining to the investment in Metropolitan (See Note 9.B.e.) whose operations are carried out fully abroad. IRSA does not control foreign operations, which are conducted with a significant degree of autonomy with respect to the Company’s own operations. Besides, such operations are mainly financed with funds originating in its own transactions or in local loans.

Given that Tyrus S.A.’s assets and liabilities are located outside Argentina, they 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 of IRSA Inversiones y Representaciones Sociedad Anónima, in the line “Transitory conversion differences” and they amounted to Ps. 9,361 as of December 31, 2008.

The Company is now following the procedures to analyze the current value of the assets and liabilities acquired for purposes of allocating the purchase value, in conformity with Technical Resolution No. 21.

 

   

Certificates of participation in IRSA I financial trust:

The certificates of participation in IRSA I financial trust have been valued at the amount resulting from apportioning the participation certificate holding to the trust assets.

 

   

Undeveloped parcels of lands:

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 the Company 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. As of June 30, 2008, IRSA maintained allowances for impairment of certain parcels of undeveloped land for which their market value is lower than cost.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

Land and land improvements are transferred to inventories or fixed assets when construction commences or their trade is decided.

The values thus obtained, net of the allowances recorded, do not exceed their respective estimated recoverable values at the end of the period.

 

  e) Business combinations

 

   

Real Estate Business

Entities purchased by the Company were recorded in line with the “acquisition method” set forth in Technical Resolution No. 18. All assets and liabilities acquired to third independent parties were adjusted to show their fair value. In to such extent, IRSA identified the assets and liabilities acquired including intangible assets such as:

 

  - The estimated current value of the costs that IRSA avoids incurring as a result of acquiring effective rent contracts, for which the estimated costs of entering into similar contracts were taken into account as well as other factors such as the geographical location and the size of the area rented. The value of the effective rent contracts is included in intangibles and it is amortized as a rental cost in the remaining initial term of each contract.

 

  - The value of the rent contracts acquired, for which the market conditions to the date of acquisition were taken into account as well as other factors including geographical location, size and location of the area rented in the building, profile and credit risk conditions of the lessees to determine if the rental contracts acquired have higher or lesser conditions to those of the market at the time of the acquisition. The current value of the difference between the contracts acquired under the terms of the contracts and the market conditions were taken into account, disclosing an asset or a liability (shown in Other liabilities) depending if the contracts acquired are higher or lesser to the market values.

The values thus determined should be amortized as an increase or decrease of the income for rentals during the remaining term of the respective contracts, including any renewal considered in the valuation. If a lessee terminates its rent contract, the non-amortized portion of the intangible assets will be recorded in the Statement of Income.

 

  - Relationships with clients. The items that IRSA considered to assign value to such relationships include the nature and extension of the commercial relationships currently existing with lessees, growth prospects for development of new business, lessee´s credit qualities and renewal prospects. IRSA has not identified any lessee with whom it has developed a type of relationship allowing the recognition of an intangible asset.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

The process of identification and the determination of the price paid is a matter that requires complex judgments and significant estimates.

IRSA used the information contained in valuations estimated by independent appraisers as primary base for assigning the price paid for the land and the building acquired. The amounts assigned to all the other assets and liabilities were 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, the difference between the price paid and the addition of the current values of the net assets acquired generate goodwill. 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. The goodwill generated due to an acquisition of net assets is shown in line with the tangible asset acquired. Amortizations have been calculated by the straight line method on the basis of the estimated useful life considering the weight average of the remaining useful life of the tangible assets acquired.

 

  f) Property and equipment, net

 

   

Agricultural Business

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.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

   

Real Estate Business

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. IRSA capitalizes the financial costs accrued costs associated with long-term construction projects. During the period/year ended December 31 and June 30, 2008, financial costs were capitalized in the building known as “DIQUE IV” for Ps. 6,999 and Ps. 109, respectively.

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 renovations 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 unaudited 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. Accumulated depreciation is computed under the straight-line method over the estimated useful lives of the assets.

 

15


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (Continued)

 

  g) Intangible assets

 

   

Agricultural Business

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, and has to pay an annual US$ 0.06 million cannon to the province of Salta to be paid as from the 20th year as from the commencement of the concession.

On July 2, 2008, a memorandum of understanding was executed by which the concession agreement mentioned in Note 12 was renegotiated.

The total price paid for acquiring Agropecuaria Anta S.A. (ex Agropecuaria Cervera S.A.) was allocated to identified individual assets; they include Ps. 22,453 as concession rights that are booked as intangible assets to these consolidated financial statements.

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.

 

   

Real Estate Business

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

Trademarks include the expenses and fees related to their registration.

 

   

Pre-operating and organization expenses

This item reflects expenses generated by the opening of new shopping malls restated as mentioned in Note 1.c. to the basic financial statements. Those expenses are amortized by the straight-line method in 3 years, beginning as from the date of opening of the shopping center.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

   

Saving expenses of contracts

Intangible assets, related to new projects development expenses, have been valued at acquisition cost and they will be amortized during the period in which IRSA starts developing the project.

Intangible assets correspond to expenses that IRSA avoids incurring as a result of acquiring effective rent contracts and the estimated costs of entering into rent contracts acquired (See Note 3.e.). These are shown net of their accumulated amortization.

Intangible assets are amortized during the average initial remaining useful life of the rent contracts acquired.

The value of these assets does not exceed its estimated recoverable value as of period/year-end.

 

  h) Goodwill

 

   

Real Estate Business

 

  i. Negative goodwill: Negative goodwill represents the excess of the market value of net assets of the subsidiaries at the percentage of participation acquired over the acquisition cost. 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 an 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 Emprendimiento Recoleta S.A., Empalme S.A.I.C.F.A y G., Mendoza Plaza Shopping S.A. (the last one through APSA), Palermo Invest S.A., Alto Palermo S.A. and Tyrus S.A..

 

  ii. Goodwill: the goodwill represents the excess of the acquisition cost over the net assets´ market value of the business acquired to the share percentage.

Includes the goodwill originated by the purchase of shares of Tarshop S.A., Fibesa S.A (these two last through APSA) and Alto Palermo S.A.

Additionally, also includes goodwill originated from the purchase of net assets of Museo Renault y Della Paolera 265.

 

17


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 3: (continued)

 

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.

The residual value of goodwill arising from acquisition of net assets and shares in companies has been shown in the “Goodwill” caption. Amortizations were classified in the “Amortization of the Goodwill” caption of the statement of income.

Values thus obtained do not exceed the respective estimated recoverable values at period/year end.

 

  i) Liabilities in kind related with barter transactions

 

   

Real Estate Business

Liabilities in kind corresponding to obligations to deliver units to be built are valued considering the cost of the assets received. IRSA estimates 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”.

 

  j) Deferred financing cost

 

   

Real Estate Business

Expenses incurred in connection with the issuance of Negotiable Obligations and proceeds of loans 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.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: Details of consolidated balance sheet and consolidated statement of income accounts

As of December 31, 2008 and 2007, and as of June 30, 2008 the principal items of the financial statements are as follow:

 

  a. Cash and banks

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Cash

   5,283    143    50

Foreign currency

   1,301    19    5

Banks in local currency

   24,688    1,619    3,717

Banks in foreign currency

   43,560    44,730    2,259

Checks to be deposited

   1,567    1,284    161
              
   76,399    47,795    6,192
              

 

  b. Investments

 

Investments

   December 31,
2008
    June 30,
2008
   December 31,
2007

Current

       

Mutual Funds (2)

   225,497     473,292    124

Time deposits and money markets

   16,295     —      —  
               
   241,792     473,292    124
               

Bonds and Notes(1)

       

Government bonds

       

-Pre 2009 bonds

   6,767     —      —  

-Pro 2012 bonds

   2,445     —      —  

- Participation trust certificates

   12,058     —      —  

-Certificates of participation - Tarshop Trust

   104,248     —      —  

Allowance for impairment of investments

   (10,951 )   —      —  

- Non-convertible Notes IRSA 2017 (US$)

   —       11,285    —  

-Global 2010 bonds

   34     92    118

-Bocon Pro 1

   1     1    1

-Mortgage Bonds

   1,292     622    796
               

Subtotal

   115,894     12,000    915
               

Public shares (1)

   2,561     —      —  

Others investments (1)

   48     —      —  
               
   360,295     485,292    1,039
               

Non-current

       

Investment on controlled and related companies

       

Subsidiaries, related companies Law No. 19,550 Section 33 and related parties:

       

Agro-Uranga S.A.

       

Shares

   5,957     9,031    6,217

Higher property value

   11,179     11,179    11,179
               
   17,136     20,210    17,396
               

 

(1)    Not considered cash equivalent for purposes of Statements of Cash Flows

(2)    As of December 31, 2008 includes Ps. 77,043 corresponding to mutual funds, not considered as cash for the purpose of the Statement of Cash Flows.

 

19


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

NOTE 4: (Continued)

 

  b. Investments (Continued)

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Cactus Argentina S.A.

       

Shares

   6,169     7,604    8,188
               
   6,169     7,604    8,188
               

Exportaciones Agroindustriales Argentinas S.A.

       

Shares

   46     —      —  
               
   46     —      —  
               

IRSA Inversiones y Representaciones Sociedad Anónima

       

Shares

   —       810,728    649,165

Higher values

   —       122,593    —  
               
   —       933,321    649,165
               

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

       

Shares

   127,481     160,519    84,082

Higher values (1)

   6,887     6,887    —  

Goodwill

   3,841     3,841    —  

Negative Goodwill

   (1,548 )   —      —  
               
   136,661     171,247    84,082
               

Banco Hipotecario S.A.

       

Shares

   220,112     —      —  

Higher values (2)

   11,240     —      —  

Goodwill

   28,407     —      —  
               
   259,759     —      —  
               

Banco Crédito y Securitización S.A.

       

Shares

   4,927     —      —  
               
   4,927     —      —  
               

Manibil S.A.

       

Shares

   179     —      —  

Irrevocable capital contributions

   23,892     —      —  

Goodwill

   10     —      —  
               
   24,081     —      —  
               

Metropolitan 885 Third Avenue LLC

       

Shares

   72,737     —      —  
               
   72,737     —      —  
               

Advances for shares purchases

   7,844     —      —  
               
   7,844     —      —  
               

 

(1)    Consist of Ps. 10,596 higher value of fixed assets and Ps. (3,709) higher value of tax effect.

(2)    Consist of Ps. 317 higher value of intangible assets, Ps. 28,360 higher value of liabilities and Ps. (17,437) higher value of receivables.

 

20


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

NOTE 4: (Continued)

 

  b. Investments (Continued)

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Undeveloped parcels of land:

       

- Santa Maria del Plata

   177,147     —      —  

- Puerto Retiro

   62,834     —      —  

- Terreno Berutti

   52,030     —      —  

- Caballito

   39,405     —      —  

- Patio Olmos

   32,945     —      —  

- Pereiraola

   23,413     —      —  

- Other land reserves

   20,262     —      —  
               

- Terreno Torres de Rosario

   15,172     —      —  

- Espacio Aereo Coto

   14,158     —      —  

- Canteras Natal Crespo

   6,000     —      —  

- Pilar

   3,866     —      —  

- Torres Jardin IV

   3,030     —      —  
               
   450,262     —      —  
               
   979,622     1,132,382    758,831
               

Other Investments

       

MAT

   90     90    90

Coprolán

   21     21    21

Certificates of participation - Tarshop Trust

   54,934     —      —  

Allowance for impairment of investments

   (5,138 )   —      —  

Other investments

   1,388     —      —  

Exportaciones Agroindustriales Argentinas S.A.

   —       241    241
               
   51,295     352    352
               

 

  c. Trade accounts receivable

 

     December 31,
2008
    June 30,
2008
    December 31,
2008
 

Current

      

Trade accounts receivable – agricultural business

   22,536     30,357     13,932  

Debtors from sale of real estate

   1,245     —       —    

Debtors from leases and services

   74,003     —       —    

Debtors from Tarjeta Shopping

   136,590     —       —    

Debtors from hotel activities

   11,007     —       —    

Debtors from Tarjeta Shopping – collection agents

   4,586     —       —    

Debtors from expenses and collective promotion fund

   28,277     —       —    

Debtors from leases under legal proceedings

   30,853     —       —    

Debtors under legal proceedings and past due debts

   1,409     —       —    

Less:

     —       —    

Allowance for doubtful accounts

   (122,388 )   (381 )   (394 )

Accounts receivable in foreign currency

   9,617     4,609     3,640  

Subsidiaries, related companies Law No. 19,550 Section 33 and related parties (note 4 t.)

   2,783     1,208     560  

Collections to be deposited

   70,575     —       —    
                  
   271,093     35,793     17,738  
                  

 

21


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  c. Trade accounts receivable (Continued)

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Non-current

       

Trade accounts receivable – agricultural business

   424     —      —  

Debtors from sale of real estate

   2,328     —      —  

Debtors from leases and services

   1,977     —      —  

Debtors from Tarjeta Shopping

   9,210     —      —  

Less:

       

Allowance for doubtful accounts

   (8,004 )   —      —  
               
   5,935     —      —  
               

 

  d. Other receivables

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Subsidiaries, related companies Law No. 19,550 Section 33 and related parties (Note 4 t.)

   37,238    5,433    4,638

Receivables from the sale of shares

   31,422    —      —  

Outstanding VAT, Gross sales tax and others tax credit

   28,100    14,150    14,499

Income tax advances and tax credit

   19,179    14,853    9,201

Outstanding NDF

   17,574    —      —  

Prepaid expenses

   17,178    113    179

Trust programs account receivables

   13,526    —      —  

Guarantee deposits and premiums

   12,141    1,174    1,634

Others

   11,373    2,046    2,656

Directors’ fees advances, net

   8,219    —      —  

Secured by mortgage

   6,567    6,189    7,291

Expenses to be recovered

   5,324    —      —  

Receivables from operations with hedging instruments

   4,007    —      —  

Loans granted

   2,990    —      —  

Receivable for services of third offered in Tarshop´ business

   2,600    —      —  

Guarantee of defaulted credits

   541    —      —  

Pre-paid insurance

   403    —      —  

Judicial liens

   212    —      —  

Other tax credit

   197    23    235

Administration and reserve fund

   193    —      —  

Prepaid leases

   179    11,367    28

Tax on minimum presumed income

   70    42    —  

Tax on personal assets to be recovered

   57    —      —  
              
   219,290    55,390    40,361
              

 

22


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  d. Other receivables (Continued)

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Non-current

       

Deferred tax

   118,956     1,298    678

Tax on minimum presumed income

   67,661     20,056    10,282

Outstanding VAT and others tax credit

   65,917     12,814    2,718

Present value – other receivables

   (12,488 )   —      —  

Receivables from the sale of farms

   6,104     7,049    11,120

Trust programs account receivables

   4,931     —      —  

Guarantee of defaulted credits

   3,461     —      —  

Mortgages receivable under legal proceeding

   2,208     —      —  

Allowance for doubtful accounts

   (2,208 )   —      —  

Prepaid expenses

   678     —      —  

Guarantee deposits and premiums

   398     —      —  

Subsidiaries, related companies Law No. 19,550 Section 33 and related parties (note 4 t.)

   4     —      —  

Prepaid leases

   —       —      277

Income tax advances

   —       148    13,515

Others

   3,380     —      —  
               
   259,002     41,365    38,590
               

 

  e. Inventories

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Agricultural business

        

Unharvested crops

   76,428    6,486    42,281

Materials and others

   39,690    21,701    16,411

Crops

   17,209    67,224    18,390

Beef cattle

   16,939    12,837    13,458

Seeds and fodder

   1,638    3,277    1,574

Real estate business

        

Credit from barter transaction of Dique III 1 c)

   23,314    —      —  

Inventories (Hotels)

   3,453    —      —  

Abril/ Baldovinos

   2,696    —      —  

Other Inventories

   1,108    —      —  

San Martín de Tours

   490    —      —  

Dock 13

   33    —      —  

Torres Abasto

   21    —      —  

Torres Jardín

   18    —      —  

Advances to suppliers

   —      —      371
              
   183,037    111,525    92,485
              

Non-Current

        

Agricultural Business

        

Beef cattle

   72,023    76,113    71,184

Real estate business

        

Horizons

   85,600    —      —  

Credit from barter of Caballito (Koad)

   26,942    —      —  

Credit from barter of Caballito (Cyrsa)

   20,974    —      —  

Credit from barter Benavídez

   11,265    —      —  

Credit from barter Rosario

   11,111    —      —  

Caballito land

   4,429    —      —  

Abril/ Baldovinos

   3,899    —      —  

 

23


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  e. Inventories (Continued)

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Other inventories

   695    —      —  

Torres Jardín

   79    —      —  
              
   237,017    76,113    71,184
              

 

  f. Others assets

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Farm held for sale

   —      1,071    19,802
              
   —      1,071    19,802
              

 

  g. Property and equipment

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Agricultural business

   359,696    266,616    255,891

Real estate business

        

Shopping Center

   1,421,180    —      —  

Office buildings

   992,763    —      —  

Hotels

   217,255    —      —  

Other fixed assets

   92,551    —      —  

Commercial real estate

   4,023    —      —  
              
   3,087,468    266,616    255,891
              

 

  h. Intangible assets

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Concession rights

   22,453    22,829    23,582

Intangible Assets – saving expenses of contracts in acquired leases

   15,113    —      —  

Pre-operating expenses

   4,953    —      —  

Tarshop’s customers

   1,918    —      —  

Trademarks

   306    —      —  
              
   44,743    22,829    23,582
              

 

  i. Goodwill

 

     December 31,
2008
    June 30,
2008
    December 31,
2007
 

Goodwill

      

IRSA Inversiones y Representaciones Sociedad Anónima

   35,280     12,597     —    

Alto Palermo S.A.

   21,382     —       —    

Della Paolera 265 y Museo Renault

   9,545     —       —    

Tarshop S.A.

   8,150     —       —    

Fibesa S.A.

   3,422     —       —    

Negative goodwill

      

IRSA Inversiones y Representaciones Sociedad Anónima

   (286,353 )   (219,360 )   (134,678 )

Alto Palermo S.A.

   (47,817 )   —       —    

Palermo Invest S.A.

   (43,329 )   —       —    

 

24


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

NOTE 4: (Continued)

 

  i. Goodwill (Continued)

 

     December 31,
2008
    June 30,
2008
    December 31,
2007
 

Empalme S.A.I.C.F.A. y G.

   (9,401 )   —       —    

Mendoza Plaza Shopping S.A.

   (6,151 )   —       —    

Emprendimiento Recoleta S.A.

   (374 )   —       —    

Tyrus S.A.

   (46 )   —       —    
                  
   (315,692 )   (206,763 )   (134,678 )
                  

 

  j. Trade accounts payable

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Suppliers (1)

   198,698    17,972    13,688

Accrual for inputs and other expenses

   61,688    24,247    23,812

Subsidiaries, related companies Law No. 19,550 Section 33 and related parties (Note 4.t)

   1,696    5,742    3,517

Accrual for harvest expenses

   849    1,579    —  

Others

   686    —      —  
              
   263,617    49,540    41,017
              

Non-Current

        

Suppliers

   47,001    —      —  
              
   47,001    —      —  
              

 

  k. Mortgage payable

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Mortgage payable Bariloche plots of land

   3,450    —      —  
              
   3,450    —      —  
              

 

  l. Short-term and long-term debts

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Current

       

Bank loans

   336,355     195,600    217,810

Bank loans – Accrued interest

   10,382     —      —  

Debt related to purchase of subsidiaries

   11,222     —      —  

Non-convertible Notes IRSA 2017 - Interest

   14,290     —      —  

Expenses for issuance of debt – Non-Convertible Notes IRSA 2017

   (875 )   —      —  

Convertible Notes – APSA US$ 120 M. – Interest

   3,512     —      —  

Expenses for issuance of debt –APSA US$ 120 M.

   (508 )   —      —  

APSA 2014 Convertible Notes - Accrued interest

   2,389     —      —  

Convertible Notes – APSA US$ 154 M. – Capital

   39,765     —      —  

Convertible Notes – APSA US$ 154 M. – Interest

   808     —      —  

Expenses for issuance of debt –APSA US$ 154 M.

   (536 )   —      —  

Debts for the purchase of Berutti plot of land

   13,280     —      —  
               
   430,084     195,600    217,810
               

 

      (1) As of December 31, 2008 includes US$ 1.7 million from the acquisition of farm “San Pedro” (secured by mortgage). See Note 11 to the basic financial statements.

 

25


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  l. Short-term and long-term debts (Continued)

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Non-Current

       

Financial loans

   110,330     —      —  

Non-Convertible Notes IRSA 2017

   403,476     —      —  

Expenses for issuance of debt – Non-Convertible Notes IRSA 2017

   (6,268 )   —      —  

Convertible Notes – APSA US$ 120 M.

   334,837     —      —  

Expenses for issuance of debt – APSA US$ 120 M.

   (3,596 )   —      —  

APSA 2014 Convertible Notes

   53,486     —      —  

Convertible Notes – APSA US$ 154 M.

   99,413     —      —  

Expenses for issuance of debt – APSA US$ 154 M.

   (293 )   —      —  

Debts for the purchase of Berutti plot of land

   15,113     —      —  
               
   1,006,498     —      —  
               

 

  m. Salaries and social security payable

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Accrual for vacation and statutory annual bonus

   17,816    5,188    2,191

Social security taxes payable

   8,112    858    491

Salaries payable

   536    318    29

Health care payable

   —      35    21

Others

   450    10    2
              
   26,914    6,409    2,734
              

 

  n. Taxes payable

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Accrual for income tax

   40,271    290    —  

Value added tax

   32,966    26    62

Tax on minimum presumed income

   22,234    8,994    2,656

Property tax payable

   —      46    —  

Tax on personal assets

   7,836    —      1,987

Gross sales tax payable

   4,112    293    167

Taxes withheld -Income tax

   2,015    664    305

Taxes withheld-Gross sales tax payable

   574    2    —  

Taxes withheld-VAT payable

   417    —      —  

Gross sales tax payable – Plan of facilities

   134    —      —  

Others

   6,752    10    9
              
   117,311    10,325    5,186
              

Non-current

        

Deferred income tax

   174,209    41,818    56,945

Gross sales tax payable – Plan of facilities

   2,762    —      —  

Gross sales tax payable

   1,138    —      —  
              
   178,109    41,818    56,945
              

 

26


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  o. Advances from customers

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Admission rights

   43,377    —      —  

Leases and service advances

   19,019    —      —  

Advanced payments from customers

   33,521    —      11,970
              
   95,917    —      11,970
              

Non-current

        

Admission rights

   65,730    —      —  

Leases and service advances

   40,020    —      —  

Advanced payments from customers

   37,721    —      —  
              
   143,471    —      —  
              

 

  p. Other liabilities

 

     December 31,
2008
    June 30,
2008
   December 31,
2007

Current

       

Loans with shareholders of related parties

   46,451     —      —  

Other liabilities – lowest value of acquired contracts

   15,239     —      —  

Payables to Nationals Park Administration

   10,173     —      —  

Subsidiaries, related companies Law No. 19,550 Section 33 and related parties (Note 4.t)

   8,280     286    100

Premium collected

   7,938     —      —  

Management fees accrual

   —       —      1,409

Guarantee deposits

   4,524     —      —  

Donations payable

   3,509     —      —  

Administration and reserve fund

   3,121     —      —  

Directors

   548     —      —  

Contributed leasehold improvements to be accrued and unrealized gains

   530     54    54

Loan to FyO minority shareholders

   134     134    134

Others

   3,796     —      —  
               
   104,243     474    1,697
               

Non-current

       

Debts for the purchase of farm

   40,101     —      —  

Loans with shareholders of related parties

   12,086     —      —  

Unrealized gains

   10,209     —      —  

Guarantee deposits

   5,429     —      —  

Other liabilities – lowest value of acquired contracts

   3,169     —      —  

Present value – other liabilities

   (338 )   —      —  

Other income to be accrued

   266     293    320

Directors’ guarantee deposits

   20     —      —  

Others

   518     —      —  
               
   71,460     293    320
               

 

  q. Provisions for lawsuits and contingencies

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Current

        

Law contingencies for pending lawsuits

   2,045    —      —  
              
   2,045    —      —  
              

 

27


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  q. Provisions for lawsuits and contingencies (Continued)

 

     December 31,
2008
   June 30,
2008
   December 31,
2007

Non-current

        

Law contingencies for pending lawsuits

   10,084    1,803    1,773
              
   10,084    1,803    1,773
              
   12,129    1,803    1,773
              

 

  r. Unrealized (loss) gain on inventories

 

     December 31,
2008
    December 31,
2007
 

Unrealized (loss) gain on inventories- Beef cattle

   (1,054 )   2,657  

Unrealized loss on inventories – Crops, raw materials and MAT

   (2,968 )   (4,389 )
            
   (4,022 )   (1,732 )
            

 

  s. Other expenses, net

 

     December 31,
2008
    December 31,
2007
 

Other income:

    

Gains on the sale of fixed assets

   125     —    

Others

   806     138  
            

Subtotal other income

   931     138  
            

Other expenses:

    

Tax on personal assets

   (3,653 )   (2,552 )

Unrecoverable VAT receivable

   (1,369 )   —    

Donations

   (133 )   —    

Lawsuits contingencies

   (1 )   —    

Others

   (5 )   —    
            

Subtotal other expenses

   (5,161 )   (2,552 )
            

Total other income and expenses, net

   (4,230 )   (2,414 )
            

 

28


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 4: (Continued)

 

  t. Companies under Law No. 19,550 Section 33 and others related parties:

Balances as of December 31, 2008, compared to the balances as of June 30, 2008, as well as the Statement of Income balances for the six-month periods ended December 31, 2008 and 2007, held with related companies, persons and shareholders are as follows:

 

               Gain (loss) for the period
ended as of
    Assets
(liabilities) as of

Companies

  

Relationship

  

Item

   December 31,
2008
    December 31,
2007
    December 31,
2008
   June 30,
2008
   December31,
2007

Shareholders in general

   Shareholders    Others income and expenses, tax on personal assets    (274 )   —       —      —      —  

Agro – Uranga S.A.

   Related party    Other receivables    —       —       1,413    56    1,214

Agro – Uranga S.A.

   Related party    Others    215     —       —      —      —  

Alto Palermo S.A.

   Joint control    Trade accounts payable    —       —       —      3,375    1,372

Alto Palermo S.A.

   Joint control    Sales and fees for shared services    —       (632 )   —      —      —  

Banco Hipotecario S.A.

   Related party    Other receivables    —       —       4    —      —  

Banco Hipotecario S.A.

   Related party    Other debts    —       —       16    —      —  

Banco crédito y securitización

   Related party    Trade accounts receivable    —       —       18    —      —  

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

   Related party    Other receivables    —       —       69    306    —  

BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

   Related party    Administrative services    408     —       —      —      —  

Cactus Argentina S.A.

   Related party    Trade accounts receivable    —       —       861    1,207    559

Cactus Argentina S.A.

   Related party    Other receivables    —       —       2,831    3,392    3,215

Cactus Argentina S.A.

   Related party    Trade accounts payable    —       —       142    88    132

Cactus Argentina S.A.

   Related party    Beef cattle expenses    (301 )   (1,565 )   —      —      —  

Cactus Argentina S.A.

   Related party    Interest    444     257     —      —      —  

Cactus Argentina S.A.

   Related party    Administrative services    75     86     —      —      —  

Cactus Argentina S.A.

   Related party    Others    274     5     —      —      —  

Canteras Natal Crespo S.A.

   Joint control    Trade accounts receivable    —       —       78    —      —  

Canteras Natal Crespo S.A.

   Joint control    Other receivables    —       —       693    —      —  

Canteras Natal Crespo S.A.

   Joint control    Sales and fees for shared services    24     —       —      —      —  

Canteras Natal Crespo S.A.

   Joint control    Interest    39     —       —      —      —  

Comercializadora los Altos (ex Alto City.Com S.A.)

   Subsidiary    Trade accounts receivable    —       —       —      1    1

Consorcio Libertador S.A.

   Related party    Trade accounts receivable    —       —       330    —      —  

Consorcio Libertador S.A.

   Related party    Other receivables    —       —       45    —      —  

Consorcio Libertador S.A.

   Related party    Trade accounts payable    —       —       75    —      —  

Consorcio Libertador S.A.

   Related party    Other debts    —       —       2    —      —  

Consorcio Libertador S.A.

   Related party    Sales and fees for shared services    61     —       —      —      —  

Consorcio Libertador S.A.

   Related party    Leases    5     —       —      —      —  

Consultores Asset Management S.A.

   Related party    Trade accounts receivable    —       —       375    —      —  

Consultores Asset Management S.A.

   Related party    Other receivables    —       —       7,574    —      —  

Consultores Asset Management S.A.

   Related party    Trade accounts payable    —       —       2    —      —  

Consultores Asset Management S.A.

   Related party    Fees    —       (1,583 )   —      —      —  

 

29


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

NOTE 4: (Continued)

 

  t. Companies under Law No. 19,550 Section 33 and others related parties (Continued)

 

               Gain (loss) for the
period ended as of
    Assets
(liabilities) as of

Companies

  

Relationship

  

Item

   December31
2008
    December31,
2007
    December 31,
2008
   June 30,
2008
   December 31,
2007

Cyrsa S.A.

   Joint control    Trade accounts receivable    —       —       1,061    —      —  

Cyrsa S.A.

   Joint control    Other receivables    —       —       416    —      —  

Cyrsa S.A.

   Joint control    Trade accounts payable    —       —       449    —      —  

Cyrsa S.A.

   Joint control    Other debts    —       —       100    —      —  

Cyrsa S.A.

   Joint control    Leases    138     —       —      —      —  

Directors

   Related party    Other receivables    —       —       189    1    1

Directors

   Related party    Other debts    —       —       8,767    286    100

Directors

   Related party    Salaries and social security payable    (271 )   (916 )   —      —      —  

Directors

   Related party    Fees    (5,403 )   —       —      —      —  

Directors

   Related party    Interest    (6 )   —       —      —      —  

Directors

   Related party    Administrative services    (10,504 )   —       —      —      —  

Directors

   Related party    Loans    —       —       63    —      —  

Banco Hipotecario S.A.’s Directors

   Related party    Interest    (6 )   —       —      —      —  

Estudio Zang, Bergel & Viñes

   Related party    Other receivables    —       —       19    —      —  

Estudio Zang, Bergel & Viñes

   Related party    Trade accounts payable    —       —       999    893    535

Estudio Zang, Bergel & Viñes

   Related party    Other debts    —       —       326    —      —  

Estudio Zang, Bergel & Viñes

   Related party    Fees    (1,175 )   (532 )   —      —      —  

Fundación IRSA

   Related party    Trade accounts receivable    —       —       14    —      —  

Fundación IRSA

   Related party    Other receivables    —       —       6    —      —  

Fundación IRSA

   Related party    Trade accounts payable    —       —       —      —      —  

Fundación IRSA

   Related party    Other debts    —       —       4,582    1,073    1,800

Inversiones Financieras del Sur S.A.

   Related party    Other receivables    —       —       74    160    —  

Inversora Bolívar S.A.

   Subsidiary    Trade accounts payable    —       —       —      185    89

Inversora Bolívar S.A.

   Subsidiary    Others    —       (110 )   —      —      —  

IRSA Inversiones y

Representaciones S.A.

   Subsidiary    Trade accounts payable    —       —       —      85    161

IRSA Inversiones y

Representaciones S.A.

   Subsidiary    Sales and fees for shared services    —       (275 )   —      —      —  

IRSA Inversiones y

Representaciones S.A.

   Subsidiary    Interest    —       (387 )   —      —      —  

Metroshop S.A.

   Joint control    Other receivables    —       —       23,138    —      —  

Metroshop S.A.

   Joint control    Other debts    —       —       6,756    —      —  

Museo de los niños

   Related party    Other receivables    —       —       519    —      —  

Parque Arauco S.A.

   Related party    Loans    —       —       55,812    —      —  

Credits to employees

   Related party    Interest    62     6     —      —      —  

Credits to employees

   Related party    Leases    (17 )   —       —      —      —  

Credits to employees

   Related party    Trade accounts receivable    —       —       2    —      —  

Credits to employees

   Related party    Other receivables        1,724    238    207

Credits to employees

   Related party    Trade accounts payable        29    —      —  

Credits to employees

   Related party    Other debts    —       —       7    —      —  

Puerto Retiro S.A.

   Joint control    Trade accounts receivable        24    —      —  

Puerto Retiro S.A.

   Joint control    Other receivables        13    —      —  

Rummaalá S.A.

   Joint control    Other receivables        3    —      —  

Shopping Alto Palermo S.A.

   Joint control    Trade accounts payable    —       —       —      3    —  

Management salaries

   Related party    Salaries and social security    —       (1,314 )   —      —      —  

 

30


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 5: EARNINGS PER SHARE

Following is a reconciliation between the weighted average of outstanding shares of common stock and the diluted weighted average of shares of common stock. As of December 31, 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 16 to the stand-alone financial statements).

 

     December 31,
2008
   December 31,
2007

Weight average of outstanding shares of common stock

   494,733    313,743

Diluted weighted average of shares of common stock

   553,976    313,743

 

     December 31,
2008
   December 31,
2007

Earnings for the calculation of basic earnings per share

   12,296    14,472

Earnings for the calculation of diluted earnings per share

   12,296    14,472

 

BASIC Earnings per share

   December 31,
2008
   December 31,
2007

Earnings

   12,296    14,472

Number of shares

   494,733    313,743

Earnings per share

   0.02    0.05

 

DILUTED Earnings per share

   December 30,
2008
   December 31,
2007

Earnings

   12,296    14,472

Number of shares

   553,976    313,743

Earnings per share

   0.02    0.05

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 6: SEGMENT INFORMATION

As of December 31, 2008 :

 

     Agricultural     Real estate  
     Crops    Beef
cattle
    Milk     Feed
lot
   Others     Farm
sales
   Non
Operating
(1)
   Subtotal
Agricultural
business
    Development
and sale of
properties
    Office
and

other
    Shopping
Centers
    Hotel
operations
    Consumer
financing
    Financial
operations
and
others (2)
   Subtotal
real
estate
business
    Total  

Description

   Local     Foreign                                   

Production income

   14,593     —      5,031     11,415     —      —       —      —      31,039     —       —       —       —       —       —      —       31,039  

Cost of production

   (23,030 )   —      (8,806 )   (9,405 )   —      —       —      —      (41,241 )   —       —       —       —       —       —      —       (41,241 )
                                                                                                 

Production profit

   (8,437 )   —      (3,775 )   2,010     —      —       —      —      (10,202 )   —       —       —       —       —       —      —       (10,202 )
                                                                                                 

Sales

   68,616     —      8,348     10,763     —      21,812     —      —      109,539     61,427     41,710     100,755     45,734     74,772     615    325,013     434,552  

Cost of sales

   (54,978 )   —      (7,610 )   (10,781 )   —      (15,226 )   —      —      (88,595 )   (48,246 )   (7,952 )   (27,167 )   (26,984 )   (35,378 )   —      (145,727 )   (234,322 )
                                                                                                 

Sales profit

   13,638     —      738     (18 )   —      6,586     —      —      20,944     13,181     33,758     73,588     18,750     39,394     615    179,287     200,230  
                                                                                                 

Gross profit

   5,201     —      (3,037 )   1,992     —      6,586     —      —      10,742     13,181     33,758     73,588     18,750     39,394     615    179,287     190,029  
                                                                                                 

Selling expenses

   (8,642 )   —      (628 )   (132 )   —      (1,540 )   —      —      (10,942 )   (823 )   (2,625 )   (7,720 )   (4,060 )   (50,079 )   —      (65,307 )   (76,249 )

Administrative expenses

   (6,373 )   —      (5,146 )   (752 )   —      (1,358 )   —      —      (13,629 )   (5,994 )   (9,906 )   (15,868 )   (9,779 )   (7,941 )   —      (49,488 )   (63,117 )

Unrealized gain on farm held for sale

   —       —      —       —       —      —       —      —      —       4,090     —       —       —       —       —      4,090     4,090  

Unrealized loss on inventories

   (2,968 )   —      (1,054 )   —       —      —       —      —      (4,022 )   —       —       —       —       —       —      —       (4,022 )

Net gain in credit card trust Tarshop

   —       —      —       —       —      —       —      —      —       —       —       —       —       (18,482 )   —      (18,482 )   (18,482 )
                                                                                                 

Operating (loss) gain

   (12,782 )   —      (9,865 )   1,108     —      3,688     —      —      (17,850 )   10,454     21,227     50,000     4,911     (37,108 )   615    50,100     32,250  

Assets

   391,495     9,422    185,837     42,539     6,169    15,966     —      127,568    778,996     542,265     1,174,006     1,825,502     253,655     173,512     711,568    4,680,508     5,459,504  

Liabilities

   56,182     35,979    2,492     356     —      6,529     —      255,987    357,525     262,510     306,365     968,824     240,875     229,387     134,718    2,142,679     2,500,204  

Non current investments in other companies

   15,110     —      46     2,027     6,169    —       —      136,661    160,013     24,081     72,737     —       —       —       264,686    361,504     521,517  

Increases and transfers of property and equipment

   7,188     60,869    16,268     401     —      10,866     —      912    96,504     3,118     442,585     250,887     40,077     6,822     —      743,489     839,993  

Amortization and depreciation

   1,840     9    690     278     —      539     —      325    3,681     160     14,849     36,086     6,524     941     —      58,560     62,241  

 

(1) Include equity method of BrasilAgro
(2) Include equity method of Banco Hipotecario S.A., Banco Crédito and Securitización S.A.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (continued)

(in thousands of pesos)

 

NOTE 6: (Continued)

 

As of December 31, 2007 :

 

Agricultural  

Description

   Crops     Beef cattle     Milk     Feed lot    Others     Farm sales     Non operating    Total
Pesos
 

Production income

   12,840     13,528     9,340     —      —       —       —      35,709  

Cost of production

   (10,455 )   (9,746 )   (6,252 )   —      —       —       —      (26,453 )
                                              

Production profit

   2,386     3,782     3,088     —      —       —       —      9,256  
                                              

Sales

   35,118     14,698     8,959     —      9,349     5,917     —      74,041  

Cost of sales

   (32,477 )   (13,519 )   (8,959 )   —      (4,869 )   (2,684 )   —      (62,507 )
                                              

Sales profit

   2,641     1,179     —       —      4,481     3,233     —      11,534  
                                              

Gross profit

   5,027     4,961     3,088     —      4,481     3,233     —      20,789  
                                              

Selling expenses

   (3,851 )   (568 )   (69 )   —      (581 )   —       —      (5,069 )

Administrative expenses

   (3,742 )   (3,961 )   (680 )   —      (618 )   —       —      (9,000 )

Unrealized gain on farm held for sale

   —       —       —       —      —       17,424     —      17,424  

Unrealized gain (loss) gain on inventories

   (4,389 )   2,657     —       —      —       —       —      (1,732 )
                                              

Operating (loss) gain

   (6,956 )   3,089     2,339     —      3,282     20,658     —      22,412  

Assets

   255,789     164,794     33,927     11,403    2,047     —       723,409    1,191,369  

Liabilities

   25,197     2,718 &nbs