Blueprint
 
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Consolidated Financial Statements as of December 31, 2018 and for the six and three-month period ended as of that date, presented comparatively.
 
 
 
 
 
Legal information
 
Denomination: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Fiscal year N°: 86, beginning on July 1, 2018
 
Legal address: Moreno 877, 23rd floor – Autonomous City of Buenos Aires, Argentina
 
Company activity: Real estate, agricultural, commercial and financial activities
 
Date of registration of the by-laws in the Public Registry of Commerce: February 19, 1937
 
Date of registration of last amendment of the by-laws in the Public Registry of Commerce: October 31, 2014 and its reinstatement on November 14, 2014
 
Expiration of Company charter: June 6, 2082
 
Registration number with the Supervisory Board of Companies: 26, folio 2, book 45, Stock Companies
 
Stock: 501,642,804 common shares
 
Common stock subscribed, issued and paid up nominal value (millions of Ps.): 502
 
Parent Companies: Inversiones Financieras del Sur S.A. and Agroinvestment S.A.
 
Legal addresses: Road 8, km 17,500, Zonamérica Building 1, store 106, Montevideo, Uruguay (IFISA) - Cambara 1620, 2nd floor, office 202, Carrasco, 11000 Montevideo, Uruguay (Agroinvesment S.A.)
 
Parent companies' activity: Investment
 
Direct ownership interest: 174,173,103 shares
 
Voting stock (direct and indirect equity interest): 36.38% (*)
 
 
Type of stock
CAPITAL STATUS
Authorized to be offered publicly (Shares)
Subscribed, Issued and Paid-in, nominal value (millions of Ps.)
Ordinary certified shares of Ps. 1 face value and 1 vote each
501,642,804 (**)
502
 
 
(*) For computation purposes, treasury shares have been subtracted.
(**) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.
 
 
 
 
 
 
 
 
 
Index
 
Glossary of terms
1
Unaudited Condensed Interim Consolidated Statements of Financial Position
2
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
3
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity
4
Unaudited Condensed Interim Consolidated Statements of Cash Flows
6
Notes to the Unaudited Condensed Interim Consolidated Financial Statements:
 
Note 1 - The Group's business and general information
7
Note 2 - Summary of significant accounting policies
8
Note 3 - Seasonal effects on operations
11
Note 4 - Acquisitions and disposals
11
Note 5 - Financial risk management and fair value estimates
13
Note 6 - Segment information
14
Note 7 - Investments in associates and joint ventures
19
Note 8 - Investment properties
21
Note 9 - Property, plant and equipment
21
Note 10 - Trading properties
22
Note 11 - Intangible assets
22
Note 12 - Biological assets
23
Note 13 - Inventories
23
Note 14 - Financial instruments by category
24
Note 15 - Trade and other receivables
27
Note 16 - Cash flow information
28
Note 17 - Trade and other payables
29
Note 18 - Equity
29
Note 19 - Provisions
30
Note 20 - Borrowings
30
Note 21 - Taxation
31
Note 22 - Revenues
31
Note 23 - Costs
32
Note 24 - Expenses by nature
32
Note 25 - Other operating results, net
32
Note 26 - Financial results, net
33
Note 27 - Related parties transactions
33
Note 28 - CNV General Resolution N° 622
35
Note 29 - Cost of sales and services provided
35
Note 30 - Foreign currency assets and liabilities
36
Note 31 - Groups of assets and liabilities held for sale
36
Note 32 - Result from discontinued operations
37
Note 33 - CNV Resolution N° 629/14 - Storage of documentation
37
Note 34 - Other subsequent events of the period
38
Note 35 - Subsequent Events
39
 
 
 
 
 
 
 
 
Glossary of terms
 
The following are not technical definitions but help the reader to understand certain terms used in the wording of the notes to the Group’s Financial Statements.
 
Terms
 
Definitions
Acres
 
Agropecuaria Acres del Sud S.A.
Adama
 
Adama Agricultural Solutions Ltd.
Agropecuarias SC
 
Agropecuarias Santa Cruz de la Sierra S.A.
BACS
 
Banco de Crédito y Securitización S.A.
BCRA
 
Central Bank of the Argentine Republic
BHSA
 
Banco Hipotecario S.A.
Brasilagro
 
Brasilagro-Companhia Brasileira de Propriedades Agrícolas
CAMSA
 
Consultores Assets Management S.A.
Carnes Pampeanas
 
Sociedad Anónima Carnes Pampeanas S.A.
Cellcom
 
Cellcom Israel Ltd.
Clal
 
Clal Holdings Insurance Enterprises Ltd.
CNV
 
National Securities Commission
CODM
 
Chief operating decision maker
Condor
 
Condor Hospitality Trust Inc.
Cresud, “the Company”, “us”
 
Cresud S.A.C.I.F. y A.
DIC
 
Discount Investment Corporation Ltd.
DN B.V.
 
Dolphin Netherlands B.V.
Financial Statements
 
Unaudited Condensed Interim Consolidated Financial Statements
Annual Financial Statements
 
Consolidated Financial Statements as of June 30, 2018
Efanur
 
Efanur S.A.
ETH
 
C.A.A. Extra Holdings Ltd.
CPF
 
Collective Promotion Funds
IASB
 
International Accounting Standards Board
IDB Tourism
 
IDB Tourism (2009) Ltd.
IDBD
 
IDB Development Corporation Ltd.
IFISA
 
Inversiones Financieras del Sur S.A.
HASA
 
Hoteles Argentinos S.A.
IRSA
 
IRSA Inversiones y Representaciones S.A.
IRSA CP
 
IRSA Propiedades Comerciales S.A.
Israir
 
Israir Airlines & Tourism Ltd.
LRSA
 
La Rural S.A.
Metropolitan
 
Metropolitan 885 Third Avenue Leasehold LLC
MPIT
 
Minimum Presummed Income Tax
New Lipstick
 
New Lipstick LLC
NFSA
 
Nuevas Fronteras S.A.
IAS
 
International Accounting Standards
IFRS
 
International Financial Reporting Standard
NIS
 
New Israeli Shekel
NPSF
 
Nuevo Puerto Santa Fe S.A.
OASA
 
OGDEN Argentina S.A.
Ombú
 
Ombú Agropecuaria S.A.
NCN
 
Non-convertible notes
PBC
 
Property & Building Corporation Ltd.
PBEL
 
PBEL Real Estate Ltd.
Quality
 
Quality Invest S.A.
Shufersal
 
Shufersal Ltd.
Tarshop
 
Tarshop S.A.
Tarshop
 
Tarshop S.A.
Tyrus
 
Tyrus S.A.
Yuchan
 
Yuchán Agropecuaria S.A.
Yatay
 
Yatay Agropecuaria S.A.
 
 
 
 
 
 
 
 
1
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Consolidated Statements of Financial Position
as of December 31, 2018 and June 30, 2018
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
Note
 
12.31.18
 
06.30.18
ASSETS
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
Investment properties
 
8
 
206,275
 
208,494
Property, plant and equipment
 
9
 
31,449
 
29,853
Trading properties
 
10
 
4,494
 
8,487
Intangible assets
 
11
 
15,614
 
16,050
Biological assets
 
12
 
1,056
 
1,154
Other assets
 
 
 
50
 
241
Investment in associates and joint ventures
 
7
 
28,584
 
33,361
Deferred income tax assets
 
21
 
1,437
 
1,498
Income tax and MPIT credits
 
 
 
467
 
577
Restricted assets
 
14
 
4,005
 
2,776
Trade and other receivables
 
15
 
12,920
 
11,637
Investment in financial assets
 
14
 
2,100
 
2,187
Financial assets held for sale
 
14
 
8,927
 
9,928
Derivative financial instruments
 
14
 
5
 
38
Total non-current assets
 
 
 
317,383
 
326,281
Current assets
 
 
 
 
 
 
Trading properties
 
10
 
2,871
 
4,175
Biological assets
 
12
 
2,632
 
1,164
Inventories
 
13
 
2,606
 
3,009
Restricted assets
 
14
 
3,969
 
5,415
Income tax and MPIT credits
 
 
 
406
 
510
Financial assets held for sale
 
31
 
7,800
 
6,618
Groups of assets held for sale
 
15
 
22,389
 
21,941
Investment in financial assets
 
14
 
33,476
 
32,676
Trade and other receivables
 
14
 
7,206
 
5,693
Derivative financial instruments
 
14
 
206
 
198
Cash and cash equivalents
 
14
 
54,729
 
49,268
Total current assets
 
 
 
138,290
 
130,667
TOTAL ASSETS
 
 
 
455,673
 
456,948
SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Shareholders' equity (according to corresponding statement)
 
 
 
26,602
 
30,525
Non-controlling interest
 
 
 
68,795
 
70,638
TOTAL SHAREHOLDERS' EQUITY
 
 
 
95,397
 
101,163
LIABILITIES
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
 
Trade and other payables
 
20
 
239,632
 
238,963
Income tax and minimum presumed income tax liabilities
 
21
 
32,411
 
34,378
Borrowings
 
17
 
2,345
 
4,724
Deferred income tax liabilities
 
18
 
5,065
 
4,547
Derivative financial instruments
 
 
 
131
 
140
Payroll and social security liabilities
 
 
 
1
 
 -
Provisions
 
14
 
367
 
51
Employee benefits
 
 
 
103
 
97
Total non-current liabilities
 
 
 
280,055
 
282,900
Current liabilities
 
 
 
 
 
 
Trade and other payables
 
17
 
18,786
 
22,964
Income tax and minimum presumed income tax liabilities
 
20
 
52,596
 
40,897
Payroll and social security liabilities
 
18
 
1,354
 
1,350
Borrowings
 
31
 
4,589
 
4,134
Derivative financial instruments
 
 
 
1,983
 
2,382
Provisions
 
 
 
606
 
758
Group of liabilities held for sale
 
14
 
307
 
400
Total Current liabilities
 
 
 
80,221
 
72,885
TOTAL LIABILITIES
 
 
 
360,276
 
355,785
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
 
 
 
455,673
 
456,948
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
PRICE WATERHOUSE & CO. S.R.L.
 
 
 
 
(Socio)
 
 
 
 
)
 
 
 
)
C.P.C.E.C.A.B.A. T° 1 F° 17
Dr. Mariano C. Tomatis
Contador Público (UBA)
C.P.C.E.C.A.B.A. T° 241 F° 118
 
  arcelo H. Fuxman
Síndico Titular
Por Comisión Fiscalizadora
 
 
Alejandro G. Elsztain
Vicepresident II acting
as President
 
 
 
 
2
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Consolidated Statements of Income and Other Comprehensive Income
for the six and three-month periods ended December 31, 2018 and 2017
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
 Six months
 
 Three months
 
 
Note
 
12.31.18
 
12.31.17
 
12.31.18
 
12.31.17
Revenues
 
22
 
33,103
 
28,238
 
17,398
 
15,395
Costs
 
23
 
(20,739)
 
(17,275)
 
(12,289)
 
(9,513)
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
 
 
461
 
172
 
(52)
 
106
Changes in the net realizable value of agricultural products after harvest
 
 
 
34
 
81
 
(444)
 
26
Gross profit
 
 
 
12,859
 
11,216
 
4,613
 
6,014
Net gain from fair value adjustment of investment properties
 
 
 
(5,519)
 
10,336
 
(13,780)
 
8,316
Gain from disposal of farmlands
 
 
 
53
 
 -
 
52
 
 -
General and administrative expenses
 
24
 
(3,590)
 
(3,105)
 
(1,283)
 
(1,708)
Selling expenses
 
24
 
(3,915)
 
(3,785)
 
(1,213)
 
(2,044)
Other operating results, net
 
25
 
521
 
1,106
 
(190)
 
941
Management fees
 
 
 
 -
 
(785)
 
356
 
(739)
Profit / (Loss) from operations
 
 
 
409
 
14,983
 
(11,445)
 
10,780
Share of profit of associates and joint ventures
 
7
 
(717)
 
78
 
204
 
(533)
(Loss) / profit before financial results and income tax
 
 
 
(308)
 
15,061
 
(11,241)
 
10,247
Finance income
 
26
 
1,252
 
702
 
(742)
 
274
Finance cost
 
26
 
(10,348)
 
(9,928)
 
6,988
 
(3,171)
Other financial results
 
26
 
1,273
 
1,042
 
(7,958)
 
562
Inflation adjustment
 
26
 
(127)
 
(21)
 
373
 
(349)
Financial results, net
 
26
 
(7,950)
 
(8,205)
 
(1,339)
 
(2,684)
(Loss) / Profit before income tax
 
 
 
(8,258)
 
6,856
 
(12,580)
 
7,563
Income tax
 
21
 
1,921
 
3,327
 
3,258
 
4,874
(Loss) / Profit for the period from continuing operations
 
 
 
(6,337)
 
10,183
 
(9,322)
 
12,437
Profit for the period from discontinued operations
 
32
 
717
 
1,291
 
789
 
763
(Loss) / Profit for the period
 
 
 
(5,620)
 
11,474
 
(8,533)
 
13,200
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income / (loss):
 
 
 
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
 
 
 
Currency translation adjustment
 
 
 
782
 
(3,931)
 
(22,734)
 
(3,622)
Change in the fair value of hedging instruments net of income taxes
 
 
 
28
 
 -
 
27
 
 -
Items that may not be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
 
 
 
Revaluation of fixed assets transferred to investment properties
 
 
 
573
 
 -
 
 -
 
 -
Other comprehensive income from subsidiary
 
 
 
334
 
 -
 
 -
 
 -
Actuarial loss from defined benefit plans
 
 
 
 -
 
(72)
 
 -
 
(72)
Other comprehensive income / (loss) for the period from continuing operations
 
 
 
1,717
 
(4,003)
 
(22,707)
 
(3,694)
Other comprehensive income for the period from discontinued operations
 
 
 
16
 
399
 
(981)
 
399
Total other comprehensive income / (loss) for the period
 
 
 
1,733
 
(3,604)
 
(23,688)
 
(3,295)
Total comprehensive (loss) / income for the period
 
 
 
(3,887)
 
7,870
 
(32,221)
 
9,905
Total comprehensive (loss) / income from continuing operations
 
 
 
(4,620)
 
6,180
 
(32,573)
 
9,059
Total comprehensive income from discontinued operations
 
 
 
733
 
1,690
 
352
 
846
Total comprehensive (loss) / income from the period
 
 
 
(3,887)
 
7,870
 
(32,221)
 
9,905
(Loss) / profit for the period attributable to:
 
 
 
 
 
 
 
 
 
 
Equity holders of the parent
 
 
 
(3,925)
 
5,354
 
(3,571)
 
5,787
Non-controlling interest
 
 
 
(1,695)
 
6,120
 
(4,962)
 
7,413
(Loss) / profit from continuing operations attributable to:
 
 
 
 
 
 
 
 
 
 
Equity holders of the parent
 
 
 
(4,393)
 
4,924
 
223
 
(3,581)
Non-controlling interest
 
 
 
(1,944)
 
5,259
 
(9,545)
 
16,018
Total comprehensive (Loss) / income attributable to:
 
 
 
 
 
 
 
 
 
 
Equity holders of the parent
 
 
 
(3,424)
 
4,676
 
(4,164)
 
(24,937)
Non-controlling interest
 
 
 
(463)
 
3,194
 
(28,057)
 
34,842
(Loss) / profit for the period per share attributable to equity holders of the parent:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
(8.077)
 
10.723
 
(7.348)
 
11.520
Diluted
 
 
 
(8.077)
 
10.673
 
(7.348)
 
11.466
(Loss) / profit per share from continuing operations attributable to equity holders of the parent:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
(9.040)
 
9.862
 
0.459
 
4.983
Diluted
 
 
 
(9.010)
 
9.816
 
(7.062)
 
4.960
 
The accompanying notes are an integral part of these Financial Statements.
 
 
 
 
 
 
(Socio)
 
 
 
 
)
 
 
 
)
C.P.C.E.C.A.B.A. T° 1 F° 17
Dr. Mariano C. Tomatis
Contador Público (UBA)
C.P.C.E.C.A.B.A. T° 241 F° 118
 
 
Marcelo H. Fuxman
Síndico Titular
Por Comisión Fiscalizadora
 
 
Alejandro G. Elsztain
Vicepresident II acting
as President
 
 
3
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the six-month period ended December 31, 2018
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 Attributable to equity holders of the parent
 
 
 
 
 Share capital
 Treasury shares
  Inflation adjustment of share capital and treasury shares (i)
 Share premium
 Additional paid-in capital from treasury shares
 Legal reserve
 Special reserve (ii)
 Other reserves (iii)
 Retained earnings
 Subtotal
        Non-controlling interest
 Total Shareholders' equity
Balance as of June 30, 2018
 
482
20
5,396
6,072
53
213
2,969
4,367
10,953
30,525
70,638
101,163
Adjustments previous periods (IFRS 9 and 15) (Note 2.2)
 
 -
 -
 -
 -
 -
 -
 -
 -
(121)
(121)
(70)
(191)
Adjusted balance as of June 30, 2018
 
482
20
5,396
6,072
53
213
2,969
4,367
10,832
30,404
70,568
100,972
Loss for the period
 
 -
 -
 -
 -
 -
 -
 -
 -
(3,925)
(3,925)
(1,695)
(5,620)
Other comprehensive income for the period
 
 -
 -
 -
 -
 -
 -
 -
501
 -
501
1,232
1,733
Total comprehensive loss for the period
 
 -
 -
 -
 -
 -
 -
 -
501
(3,925)
(3,424)
(463)
(3,887)
As resolved by Ordinary and Extraordinary Shareholders' Meeting held on October 29, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
  - Results distribution
 
 -
 -
 -
 -
 -
 -
 -
18,650
(18,650)
 -
 -
 -
  - Treasury shares distribution
 
21
(21)
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
Reversal by sale of investment properties
 
 -
 -
 -
 -
 -
 -
 -
(21)
21
 -
 -
 -
Reserve for share-based payments
 
 -
 -
 -
 -
 -
 -
 -
4
 -
4
24
28
Acquisition of treasury stock
 
(6)
6
 -
 -
 -
 -
 -
(283)
 -
(283)
 -
(283)
Changes in non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
(99)
 -
(99)
(333)
(432)
Dividends distribution to non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(986)
(986)
Capitalized contributions
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(6)
(6)
Incorporation by business combination
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(9)
(9)
Balance as of December 31, 2018
 
497
5
5,396
6,072
53
213
2,969
23,119
(11,722)
26,602
68,795
95,397
 
(i)
Includes Ps. 1 of Inflation adjustment of treasury shares. See Note 18 to the Annual Financial Statements.
(ii)
Related to CNV General Resolution N° 609/12.
(iii)
Group’s other reserves for the period ended December 31, 2018 are comprised as follows:
 
 
 
 Cost of treasury shares
 Changes in non-controlling interest
 Revaluation surplus
 Reserve for currency translation adjustment
 Reserve shared-based compensation
 Special reserve
 Reserve for defined benefit plans
 Other comprehensive results from subsidiaries
 Other reserves from subsidiaries
 Reserve for the acquisition of securities issued by the Company
 Total other reserves
Balance as of June 30, 2018
 
(1,098)
(1,149)
107
3,937
100
2,263
(87)
206
38
50
4,367
Other comprehensive income for the period
 
 -
 -
334
167
 -
 -
 -
 -
 -
 -
501
Total comprehensive profit for the period
 
 -
 -
334
167
 -
 -
 -
 -
 -
 -
501
As resolved by Ordinary and Extraordinary Shareholders' Meeting held on October 29, 2018
 
 
 
 
 
 
 
 
 
 
 
 
  - Results distribution
 
 -
 -
 -
 -
 -
18,650
 -
 -
 -
 -
18,650
  - Treasury shares distribution
 
849
 -
 -
 -
 -
(849)
 -
 -
 -
 -
 -
Reversal by sale of investment properties
 
 -
 -
(21)
 -
 -
 -
 -
 -
 -
 -
(21)
Reserve for share-based payments
 
 -
 -
 -
 -
 -
 -
 -
4
 -
 -
4
Acquisition of treasury stock
 
(283)
 -
 -
 -
 -
 -
 -
 -
 -
 -
(283)
Changes in non-controlling interest
 
 -
(99)
 -
 -
 -
 -
 -
 -
 -
 -
(99)
Balance as of December 31, 2018
 
(532)
(1,248)
420
4,104
100
20,064
(87)
210
38
50
23,119
 
The accompanying notes are an integral part of these Financial Statements.
 
 
PRICE WATERHOUSE & CO. S.R.L.
 
 
 
 
(Socio)
 
 
 
 
)
 
 
 
)
C.P.C.E.C.A.B.A. T° 1 F° 17
Dr. Mariano C. Tomatis
Contador Público (UBA)
C.P.C.E.C.A.B.A. T° 241 F° 118
 
 
Marcelo H. Fuxman
Síndico Titular
Por Comisión Fiscalizadora
 
 
Alejandro G. Elsztain
Vicepresident II acting
as President
 
 
 
 
 
4
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
for the six-month period ended December 31, 2017
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 Share capital
 Treasury shares
  Inflation adjustment of share capital and treasury shares (i)
 Share premium
 Additional paid-in capital from treasury shares
 Legal reserve
 Special reserve (ii)
 Other reserves (iii)
 Retained earnings
 Subtotal
 Non-controlling interest
 Total Shareholders' equity
Balance as of July 1, 2017
 
499
2
5,396
6,072
52
163
2,969
4,932
10,315
30,400
56,094
86,494
Profit for the period
 
 -
 -
 -
 -
 -
 -
 -
 -
5,354
5,354
6,120
11,474
Other comprehensive loss for the period
 
 -
 -
 -
 -
 -
 -
 -
(678)
 -
(678)
(2,926)
(3,604)
Total comprehensive profit for the period
 
 -
 -
 -
 -
 -
 -
 -
(678)
5,354
4,676
3,194
7,870
As resolved by Ordinary and Extraordinary Shareholders' Meeting held on October 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
- Legal reserve
 
 -
 -
 -
 -
 -
51
 -
 -
(51)
 -
 -
 -
- Cash dividends
 
 -
 -
 -
 -
 -
 -
 -
2,263
(2,263)
 -
 -
 -
- Reserve for new developments
 
 -
 -
 -
 -
 -
 -
 -
 -
(611)
(611)
 -
(611)
Cash dividends distribution
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
3,327
3,327
Changes in non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
(1,944)
 -
(1,944)
65
(1,879)
Equity incentive plan granted
 
 -
 -
 -
 -
 -
 -
 -
3
 -
3
3
6
Share of changes in subsidiaries' equity
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(155)
(155)
Dividends distribution to non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
(814)
(814)
Acquisition of non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
15
15
Issuance of capital
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
3
3
Balance as of December 31, 2017
 
499
2
5,396
6,072
52
214
2,969
4,576
12,744
32,524
61,732
94,256
 
(i)
Includes Ps. 1 of Inflation adjustment of treasury shares. See Note 16 to the Annual Financial Statements.
(ii)
Related to CNV General Resolution N° 609/12.
(iii)
Group’s other reserves for the period ended December 31, 2017 are comprised as follows:
 
 
 
 Cost of treasury shares
 Special reserve
 Reserve for the acquisition of securities issued by the Company
 Changes in non-controlling interest
 Reserve shared-based compensation
 Other reserves from subsidiaries
 Other comprehensive income / (loss) from subsidiaries
 Reserve for currency translation adjustment
 Total other reserves
Balance as of June 30, 2017
 
(80)
 -
50
475
275
8
45
4,159
4,932
Other comprehensive income for the period
 
 -
 -
 -
 -
 -
 -
(76)
(602)
(678)
Total comprehensive profit for the period
 
 -
 -
 -
 -
 -
 -
(76)
(602)
(678)
As resolved by Ordinary and Extraordinary Shareholders' Meeting held on October 31, 2017
 
 
 
 
 
 
 
 
 
 
- Reserve for new developments
 
 -
2,263
 -
 -
 -
 -
 -
 -
2,263
Changes in non-controlling interest
 
 -
 -
 -
(1,944)
 -
 -
 -
 -
(1,944)
Reserve for share-based payments
 
 -
 -
 -
 -
3
 -
 -
 -
3
Balance as of December 31, 2017
 
(80)
2,263
50
(1,469)
278
8
(31)
3,557
4,576
 
The accompanying notes are an integral part of these Financial Statements.
 
 
PRICE WATERHOUSE & CO. S.R.L.
 
 
 
 
(Socio)
 
 
 
 
)
 
 
 
)
C.P.C.E.C.A.B.A. T° 1 F° 17
Dr. Mariano C. Tomatis
Contador Público (UBA)
C.P.C.E.C.A.B.A. T° 241 F° 118
 
 
Marcelo H. Fuxman
Síndico Titular
Por Comisión Fiscalizadora
 
 
Alejandro G. Elsztain
Vicepresident II acting
as President
 
 
 
 
5
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Consolidated Statements of Cash Flows
for the six-month periods ended December 31, 2018 and 2017
(All amounts in millions, except otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
Note
 
12.31.18
 
 12.31.17
Operating activities:
 
 
 
 
 
 
Net cash generated from operating activities before income tax paid
 
16
 
5,081
 
6,479
Income tax paid
 
 
 
(499)
 
(263)
Net cash generated from continuing operating activities
 
 
 
4,582
 
6,216
Net cash generated from discontinued operating activities
 
 
 
678
 
4,230
Net cash generated from operating activities
 
 
 
5,260
 
10,446
Investing activities:
 
 
 
 
 
 
Decrease of interest in associates and joint ventures
 
 
 
(216)
 
 -
Capital contributions to associates and joint ventures
 
 
 
182
 
46
Acquisition, improvements and advance payments for the development of investment properties
 
 
 
(2,571)
 
(1,901)
Payment for acquisition of non-controlling interest
 
 
 
(227)
 
 -
Proceeds from sales of investment properties
 
 
 
210
 
390
Acquisitions and improvements of property, plant and equipment
 
 
 
(1,992)
 
(1,753)
Advance payments
 
 
 
(21)
 
(237)
Acquisition of intangible assets
 
 
 
(1,065)
 
(543)
Proceeds from sales of property, plant and equipment
 
 
 
13
 
13
Acquisitions of subsidiaries, net of cash acquired
 
 
 
(39)
 
 -
Net increase of restricted deposits
 
 
 
(414)
 
(964)
Dividends collected from associates and joint ventures
 
 
 
169
 
1,398
Proceeds from sales of interest held in associates and joint ventures
 
 
 
4,746
 
78
Proceeds from loans granted
 
 
 
68
 
846
Acquisitions of investments in financial assets
 
 
 
(18,600)
 
(22,981)
Proceeds from disposal of investments in financial assets
 
 
 
19,528
 
14,432
Dividends received
 
 
 
43
 
117
Loans granted to related parties
 
 
 
23
 
(541)
Loans granted
 
 
 
 -
 
(141)
Decrease in securities
 
 
 
 -
 
50
Proceeds from sales of farmlands
 
 
 
 -
 
10
Advanced proceeds from sales of farmlands
 
 
 
 -
 
117
Cash incorporated by business combination, net of cash paid
 
 
 
 -
 
(1,123)
Proceeds from liquidation of associate
 
 
 
 -
 
104
Net cash used in continuing investing activities
 
 
 
(169)
 
(12,583)
Net cash used in discontinued investing activities
 
 
 
(22)
 
(1,343)
Net cash used in investing activities
 
 
 
(191)
 
(13,926)
Financing activities:
 
 
 
 
 
 
Borrowings and issuance of non-convertible notes
 
 
 
27,364
 
23,360
Payment of borrowings and non-convertible notes
 
 
 
(16,229)
 
(11,755)
Obtaining (Payment) of short term loans, net
 
 
 
1,027
 
(6)
Interest paid
 
 
 
(5,840)
 
(4,272)
Repurchase of own shares
 
 
 
(283)
 
 -
Repurchase of non-convertible notes
 
 
 
(1,966)
 
(6)
Capital contributions from non-controlling interest in subsidiaries
 
 
 
94
 
247
Acquisition of non-controlling interest in subsidiaries
 
 
 
(1,120)
 
(4)
Proceeds from sales of non-controlling interest in subsidiaries
 
 
 
5
 
5,010
Loans received from associates and joint ventures, net
 
 
 
52
 
 -
Payment of borrowings to related parties
 
 
 
(1)
 
 -
Dividends paid
 
 
 
(323)
 
(3,026)
Dividends paid to non-controlling interest in subsidiaries
 
 
 
(299)
 
(141)
Proceeds from derivative financial instruments, net
 
 
 
145
 
169
Payment of seller financing
 
 
 
(2)
 
(62)
Net cash generated from continuing financing activities
 
 
 
2,624
 
9,514
Net cash (used in) generated from discontinued financing activities
 
 
 
(28)
 
2,231
Net cash generated from financing activities
 
 
 
2,596
 
11,745
Net increase in cash and cash equivalents from continuing activities
 
 
 
7,037
 
3,147
Net increase in cash and cash equivalents from discontinued activities
 
 
 
628
 
5,118
Net increase in cash and cash equivalents
 
 
 
7,665
 
8,265
Cash and cash equivalents at beginning of the period
 
14
 
49,268
 
41,856
Cash and cash equivalents reclassified to held for sale
 
 
 
(634)
 
(104)
Foreign exchange gain on cash and changes in fair value of cash equivalents
 
 
 
(1,576)
 
71
Foreign exchange gain on cash and changes in fair value of cash equivalents
 
 
 
6
 
(5,695)
Cash and cash equivalents at the end of the period
 
 
 
54,729
 
44,393
 
The accompanying notes are an integral part of these Financial Statements.
 
PRICE WATERHOUSE & CO. S.R.L.
 
 
 
 
(Socio)
 
 
 
 
)
 
 
 
)
C.P.C.E.C.A.B.A. T° 1 F° 17
Dr. Mariano C. Tomatis
Contador Público (UBA)
C.P.C.E.C.A.B.A. T° 241 F° 118
 
 
Marcelo H. Fuxman
Síndico Titular
Por Comisión Fiscalizadora
 
 
Alejandro G. Elsztain
Vicepresident II acting
as President
 
 
6
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Notes to Consolidated Financial Statements
(Amounts in millions, except otherwise indicated)
 
 
1.
The Group’s business and general information
 
Cresud was founded in 1936 as a subsidiary of Credit Foncier, a Belgian company primarily engaged in providing rural and urban loans in Argentina and administering real estate holdings foreclosed by Credit Foncier. Credit Foncier was liquidated in 1959, and as part of such liquidation, the shares of Cresud were distributed to Credit Foncier’s shareholders. From the 1960s through the end of the 1970s, the business of Cresud shifted exclusively to agricultural activities.
 
In 2002, Cresud acquired a 19.85% interest in IRSA, a real estate company related to certain shareholders of Cresud. In 2009, Cresud increased its ownership percentage in IRSA to 55.64% and IRSA became Cresud’s direct principal subsidiary.
 
Cresud and its subsidiaries are collectively referred to hereinafter as the Group.
 
Main shareholders of the Company are jointly Inversiones Financieras del Sur S.A. and Agroinvestment S.A. Both entities are companies incorporated in Uruguay and belong to the same controlling group and ultimate beneficiary.
 
The Board of Directors has approved these Financial Statements for issuance on March 1, 2019.
 
As of December 31, 2018, the Group operates in two major lines of business: (i) agricultural business and (ii) urban properties and investments business, which is divided into two operations centers: (a) Operations Center in Argentina and (b) Operations Center in Israel. They are developed through several operating companies and the main ones are listed below:
 
 
(i)
Corresponds to Group’s associates, which are hence excluded from consolidation.
(ii)
The comparative results are included in discontinued operations, due to the loss of control in June 2018 (see Note 4.(l) to the Annual Financial Statements).
(iii)
Disclosed as financial assets held for sale.
(iv)
Assets and liabilities are disclosed as held for sale and the results as discontinued operations.
(v)
See Note 4 to the Annual Financial Statements for more information about the change within the Operations Center in Israel.
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
7
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
2.
Summary of significant accounting policies
 
2.1.
Basis of preparation
 
The CNV, in Title IV "Periodic Information Regime" - Chapter III "Rules relating to the presentation and valuation of financial statements" - Article 1, of its standards, has established the application of the Technical Resolution No. 26 (RT 26) of the FACPCE and its amendments, which adopt IFRS, issued by the IASB, for certain companies included in the public offering regime of Law No. 26,831, either because of its stock or its non-convertible notes, or that have requested authorization to be included in the aforementioned regime.
 
For the preparation of these financial statements, the Group has made use of the option provided by IAS 34, and has prepared them in condensed form. Therefore, these financial statements do not include all the information required in a complete set of annual financial statements and, consequently, their reading is recommended together with the annual financial statements as of June 30, 2018.
 
The management of the Group has prepared these financial statements in accordance with the accounting principles established by the CNV, which are based on the application of IFRS, in particular of IAS 34.
 
Additionally, the information required by the CNV indicated in article 1, Chapter III, Title IV of General Resolution N° 622/13 has been included. This information is included in a note to these financial statements.
 
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
 
In order to conclude on whether an economy is categorized as high inflation in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that is approximate or exceed 100%. Accumulated inflation in Argentina in three years is over 100%. It is for this reason that, in accordance with IAS 29, Argentina must be considered a country with high inflation economy starting July 1, 2018.
 
In addition, Law No. 27,468 (published in the Official Gazette on December 4, 2018), amended Section 10 of Law No. 23,928, as amended, and established that the derogation of all the laws or regulations imposing or authorizing price indexation, monetary restatement, cost variation or any other method for strengthening debts, taxes, prices or rates of goods, works or services, does not extend to financial statements, as to which the provisions of Section 62 in fine of the General Companies Law No. 19,550 (1984 revision), as amended, shall continue to apply. Moreover, the referred law repealed Decree No. 1269/2002 dated July 16, 2002, as amended, and delegated to the Argentine Executive Branch the power to establish, through its controlling agencies, the effective date of the referred provisions in connection with the financial statements filed with it. Therefore, under General Resolution 777/2018 (published in the Official Gazette on December 28, 2018) the Argentine Securities Commission (CNV) ordered that issuers subject to its supervision shall apply the inflation adjustment to reflect the financial statements in terms of the current measuring unit set forth in IAS 29 in their annual, interim and special financial statements closed on or after December 31, 2018.
 
Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a high inflationary economy should be reported in terms of the measuring unit current as of the date of the financial statements. All the amounts included in the statement of financial position which are not stated in terms of the measuring unit current as of the date of the financial statements should be restated applying the general price index. All items in the statement of income should be stated in terms of the measuring unit current as of the date of the financial statements, applying the changes in the general price index occurred from the date on which the revenues and expenses were originally recognized in the financial statements.
 
Adjustment for inflation in the initial balances has been calculated considering the indexes reported by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) based on the price indexes published by the Argentine Institute of Statistics and Census (INDEC).
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
8
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The principal inflation adjustment procedures are the following:
 
Monetary assets and liabilities that are recorded in the current currency as of the balance sheet’s closing date are not restated because they are already stated in terms of the currency unit current as of the date of the financial statements.
Non-monetary assets and liabilities are recorded at cost as of the balance sheet date, and equity components are restated applying the relevant adjustment ratios.
All items in the statement of income are restated applying the relevant conversion factors.
The effect of inflation in the Company’s net monetary position is included in the statement of income under Financial results, nets, in the item “Inflation adjustment”.
Comparative figures have been adjusted for inflation following the procedure explained in the previous paragraphs.
 
Upon initially applying inflation adjustment, the equity accounts were restated as follows:
Capital was restated as from the date of subscription or the date of the most recent inflation adjustment for accounting purposes, whichever is later.The resulting amount was included in the “Capital adjustment” account.
The translation differences was restated to reflect the real terms.
Other comprehensive income / (loss) was restated as from each accounting allocation.
The other reserves in the statement of income were not restated as of the initial application date, i.e., June 30, 2016.
 
2.2
Accounting policies
 
The accounting policies applied in the presentation of these Financial Statements are consistent with those applied in the preparation of the Annual Financial Statements, as described in Note 2.2 to those Financial Statements except for what it’s mentioned in Note 2.1 to the present Financial Statements.
 
As described in Note 2.2 to the Annual Financial Statements, the Group adopted IFRS 15 “Revenues from contracts with customers” and IFRS 9 “Financial instruments” in the present fiscal year using the cumulative effect approach, so that the cumulative impact of the adoption was recognized in the retained earnings at the beginning of the period, and the comparative figures have not been modified due to this adoption.
 
The main changes are the following:
 
IFRS 15: Revenues from contracts with customers
 
The standard introduces a new five-step model for recognizing revenue from contracts with customers:
1)
Identifying the contract with the customer.
2)
Identifying separate performance obligations in the contract.
3)
Determining the transaction price.
4)
Allocating the transaction price to separate performance obligations.
5)
Recognizing revenue when the performance obligations are satisfied.
 
IFRS 9: Financial instruments
 
The new standard includes a new model of "expected credit loss" for receivables or other assets not measured at fair value. The new model presents a dual measurement approach for impairment: if the credit risk of a financial asset has not increased significantly since its initial recognition, an allowance for impairment will be recorded in the amount of expected credit losses resulting from the possible non- compliance events within a certain period. If the credit risk has increased significantly, in most cases the allowance will increase, and the amount of the expected losses should be recorded.
 
In accordance with the new standard, in cases where a change in terms or exchange of financial liabilities is immaterial and does not lead, at the time of analysis, to the reduction of the previous liability and recognition of the new liability, the new cash flows must be discounted at the original effective interest rate, recording the impact of the difference between the present value of the financial liability that has the new terms and the present value of the original financial liability in net income.
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
9
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The effect on the income statement for the six-month period ended December 31, 2018 for the first implementation of IFRS 15 is as follows:
 
 
 
 Six months
 
 
 12.31.18
 
 
According to previous standards
 
Implementation of IFRS 15
 
Current statement of income
Revenues
 
33,352
 
(249)
 
33,103
Costs
 
(20,941)
 
202
 
(20,739)
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
461
 
 -
 
461
Changes in the net realizable value of agricultural products after harvest
 
34
 
 -
 
34
Gross profit
 
12,906
 
(47)
 
12,859
Net gain from fair value adjustment of investment properties
 
(5,519)
 
 -
 
(5,519)
Gain from disposal of farmlands
 
53
 
 -
 
53
General and administrative expenses
 
(3,590)
 
 -
 
(3,590)
Selling expenses
 
(4,428)
 
513
 
(3,915)
Other operating results, net
 
521
 
 -
 
521
Management fees
 
 -
 
 -
 
 -
Profit from operations
 
(57)
 
466
 
409
Share of profit of associates and joint ventures
 
(787)
 
70
 
(717)
Profit from operations before financing and taxation
 
(844)
 
536
 
(308)
Finance income
 
1,252
 
 -
 
1,252
Finance cost
 
(10,365)
 
17
 
(10,348)
Other financial results
 
1,273
 
 -
 
1,273
Inflation adjustment
 
(127)
 
 -
 
(127)
Financial results, net
 
(7,967)
 
17
 
(7,950)
Income before income tax
 
(8,811)
 
553
 
(8,258)
Income tax
 
2,034
 
(113)
 
1,921
Income for the period from continuing operations
 
(6,777)
 
440
 
(6,337)
Loss for the period from discontinued operations
 
717
 
 -
 
717
Profit for the period
 
(6,060)
 
440
 
(5,620)
 
 
The effect on the retained earnings as of July 1, 2018 for the first implementation of IFRS 9 and 15 is as follows:
 
 
 
07.01.18
 
 
Implementation of IFRS 15
 
Implementation of IFRS 9
 
Total
ASSETS
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
Trading properties
 
(3,869)
 
 -
 
(3,869)
Investment in associates and joint ventures
 
142
 
(232)
 
(90)
Deferred income tax assets
 
(205)
 
 -
 
(205)
Trade and other receivables
 
634
 
(90)
 
544
Total non-current assets
 
(3,298)
 
(322)
 
(3,620)
Current assets
 
 
 
 
 
 
Trading properties
 
(935)
 
 -
 
(935)
Groups of assets held for sale
 
372
 
58
 
430
Total current assets
 
(563)
 
58
 
(505)
TOTAL ASSETS
 
(3,861)
 
(264)
 
(4,125)
SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Shareholders' equity (according to corresponding statement)
 
81
 
(202)
 
(121)
Non-controlling interest
 
212
 
(282)
 
(70)
TOTAL SHAREHOLDERS' EQUITY
 
293
 
(484)
 
(191)
LIABILITIES
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
 
Trade and other payables
 
 -
 
251
 
251
Income tax and minimum presumed income tax liabilities
 
(51)
 
(101)
 
(152)
Borrowings
 
(1,719)
 
 -
 
(1,719)
Total non-current liabilities
 
(1,770)
 
150
 
(1,620)
Current liabilities
 
 
 
 
 
 
Trade and other payables
 
(2,384)
 
 -
 
(2,384)
Income tax and minimum presumed income tax liabilities
 
 -
 
70
 
70
Total Current liabilities
 
(2,384)
 
70
 
(2,314)
TOTAL LIABILITIES
 
(4,154)
 
220
 
(3,934)
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
 
(3,861)
 
(264)
 
(4,125)
 
2.3
Comparability of information
 
Balance items as of June 30, 2018 and December 31, 2017 presented in these Financial Statements for comparative purposes arise from the financial statements as of and for such period, restated in accordance with IAS 29. Certain items from prior periods have been reclassified for consistency purposes regarding the loss of control in Shufersal. See note 4.(l) to Annual Financial Statements.
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
10
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
2.4
Use of estimates
 
The preparation of Financial Statements at a certain date requires Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of these financial statements. In the preparation of these financial statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same as the ones applied by the Group in the preparation of the Annual Financial Statements described in Note 3 to those Financial Statements.
 
 
3.
Seasonal effects on operations
 
Agricultural business
 
              Some of the Group’s businesses are more affected by seasonal effects than others. The operations of the Group’s agricultural business are subject to seasonal effects. The harvests and sale of grains in Argentina generally take place each year since March in the case of corn and soybean, since October in the case of wheat, and since December in the case of sunflower. In Brazil, the harvest and sale of soybean take place since February, and in the case of corn weather conditions make it possible to have two seasons, therefore the harvest take place between March and July. In Bolivia, weather conditions also make it possible to have two soybean, corn and sorghum seasons and, therefore, these crops are harvested in July and May, whereas wheat is harvested in August and September, respectively. In the case of sugarcane, harvest and sale take place between April and November of each year. Other segments of the agricultural business, such as beef cattle production tend to be more stable. However, beef cattle production is generally larger during the second quarter, when conditions are more favorable. As a result, there may be material fluctuations in the agricultural business results across quarters.
 
Urban properties and investments business
 
Operations Center in Argentina
 
The operations of the Group’s shopping malls are subject to seasonal effects, which affect the level of sales recorded by lessees. During summer time in Argentina (January and February), the lessees of shopping malls experience the lowest sales levels in comparison with the winter holidays (July) and Christmas and year-end holidays celebrated in December, when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping malls sales. Sale discounts at the end of each season also affect the business. As a consequence, for shopping mall operations, a higher level of business activity is expected in the period ranging between July and December, compared to the period between January and June.
 
Operations Center in Israel
 
The results of operations of telecommunications and tourism are usually affected by seasonality in summer months in Israel and by the Jewish New Year, given a higher consumption due to internal and external tourism.
 
 
4.
Acquisitions and disposals
 
Significant acquisitions and disposals for the six-month period ended December 31, 2018 are detailed below. Significant acquisitions and disposals for the fiscal year ended June 30, 2018, are detailed in Note 4 to the Annual Financial Statements.
 
Agricultural business
 
Sale of Jatobá
 
On June 13, 2018, the Group, through its subsidiary Brasilagro, entered into an agreement to sell a total area of 9,784 hectares (7,485 hectares of agricultural land) from Jatobá Establishment, a rural property located in the municipality of Jaborandi.
 
On July 31, 2018, the buyer made the payment of the first installment of 300,000 bags of soybeans, for an amount of Ps. 156, in accordance with the conditions set in the contract, obtaining the deed and enabling the accounting recognition of the income by the Group, for the value of 285 bags per useful hectare, equivalent to Ps. 916. The outstanding amount will be paid in six annual installments.
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
11
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
Sale of Alto Taquari
 
On November 21, 2018, the Group, through its subsidiary Brasilagro, entered into a sale agreement for 103 hectares of the Alto Taquari farmlands. The sale price is 1,100 bags of soybeans per useful hectare equivalent to
Ps. 63.4. The buyer made the initial payment of 22,656 bags of soybeans equivalent to Ps. 14; and the balance will be paid in eight semi-annual installments. The result of the operation recognized in the current period was Ps. 51.
 
 
Urban properties and investments business
 
Operations Center Argentina
 
Dividend distribution
 
On October 29, 2018 the Shareholder’s meeting of Cresud’s subsidiary IRSA was held, whereby the distribution of a dividend in kind for an equivalent of Ps. 1,412 payables in shares of IRSA CP was resolved. For the distribution, the value of IRSA CP share was taken as of October 26, 2018, which was Ps. 220 per share. The number of shares distributed amounted to 6,418,182, of which Cresud has received 4,068,097. This transaction was accounted for as an equity transaction generating a decrease in the equity attributable to holders of the parent for Ps. 99, restated as of the date of these financial statements.
 
 
Operations Center Israel
 
Sale of a subsidiary of IDBT
 
On August 14, 2018, the Board of Directors of IDB Tourism approved its engagement in a memorandum of understanding for the sale of 50% of the issued share capital of a company which manages the incoming tourism operation which is held by Israir for a total consideration of NIS 26 million (approximately Ps. 260 as of the date of the transaction). This transaction does not change the intentions of selling the whole investment in IDBT, which the management of the company expects to complete before June 2019.
 
Sale of Clal shares
 
On August 30, 2018 continuing with the instructions given by the Commissioner of Capital Markets, Insurance and Savings of Israel, IDBD has sold 5% of its stake in Clal through a swap transaction in the same conditions that applied to the swap transactions performed in the preceding months of May and August 2017, January and May 2018 described in Note 4 to the Annual Consolidated Financial Statements. The consideration was set at an amount of approximately NIS 173 million (equivalent to approximately Ps. 1,766 as of the transaction date). After the completion of the transaction, IDBD’s interest in Clal was reduced to 29.8% of its share capital.
 
Agreement to sell plot of land in USA
 
In August 2018, a subsidiary of IDBG signed an agreement to sell a plot of land next to the Tivoli project in Las Vegas for a consideration of US$ 18 (approximately Ps. 739 as of the date of issuance of these financial statements).
 
Interest increase in DIC
 
On July 5, 2018 Tyrus acquired 2,062,000 of DIC’s shares in the market for a total amount of NIS 20 (equivalent to Ps. 227 as of that date), which represent 1.35% of the Company’s outstanding shares at such date. As a result of this transaction, the Group’s equity interest has increased from 76.57% to 77.92%. This transaction was accounted for as an equity transaction generating an increase in the net equity attributable to the controlling shareholders by Ps. 7.
 
Sale of Shufersal shares
 
On November 27, 2018, DIC sold 7.5% of the total shares of Shufersal to institutional investors for a consideration of NIS 416 (approximately Ps. 4,166 as of the date of the transaction). After this transaction, the group holding went down to 26% approximately.
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
12
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Sale of real estate
 
In October 2018, a subsidiary of Ispro signed an agreement for the sale of all of its rights in real estate area of approximately 29 dunams (equivalent to 1 hectare), in which there are 12,700 square meters in the northern industrial zone in Yavneh for NIS 86.
 
Increase in participation in PBC
 
In December 2018, DIC acquired an additional 3% of PBC in the market for NIS 55 (equivalent to Ps. 554 as of that date). This transaction was accounted for as an equity transaction generating an increase in the equity attributable to holders of the parent for Ps. 52, restated as of the date of these financial statements.
 
Repurchase of own shares by DIC
 
In December 2018, DIC's Board of Directors approved a plan to buy back DIC shares, for a period of one year, until December 2019 amounting up to NIS 120 (approximately Ps. 1,203 as of the date of these financial statements). Acquisition of securities shall be carried out in accordance with market opportunities, dates, prices and quantities, as determined by the management of DIC, in such a way that in any event, the public holdings shall be, at any time, at least 10.1% of the total issued share capital of DIC.
 
In December 2018, DIC acquired 2.1 million shares for a total amount of NIS 19 (approximately Ps. 200 as of that date). Additionally, in December 2018, minority shareholders of DIC exercised DIC Series 6 options for an amount of NIS 9 (approximately Ps. 100 as of that date).
 
As a result of the operations described above, the participation of Dolphin IL in DIC increased by 0.35%. The present transactions were accounted for as an equity transaction generating a decrease in the equity attributable to holders of the parent for Ps. 31, restated as of the date of these financial statements.
 
Increase in participation in Cellcom
 
In December 2018, Discount Investment exercised 1.5 million options (Series 1) of Cellcom held by it in the amount of NIS 31 million (approximately Ps. 302 as of that date). In addition, in December 2018, DIC purchased approximately 0.6 million shares of Cellcom at a cost of NIS 15 million (approximately Ps. 151 as of that date). As a result of the exercise of the options and the acquisition, the share of DIC in Cellcom increased by 0.7%. The present transactions were accounted for as an equity transaction generating a decrease in the equity attributable to holders of the parent for Ps. 93, restated as of the date of these financial statements.
 
Increase in participation in Elron
 
In November and December 2018 DIC acquired an additional 9.2% of Elron in the market for NIS 31 (equivalent to Ps. 311 as of that date). This transaction was accounted for as an equity transaction generating a decrease in the equity attributable to holders of the parent for Ps. 23, restated as of the date of these financial statements.
 
 
5.
Financial risk management and fair value estimates
 
These Financial Statements do not include all the information and disclosures on financial risk management; therefore, they should be read along with Note 5 to the Annual Financial Statements. There have been no changes in risk management or risk management policies applied by the Group since year-end.
 
Since June 30, 2018 and up to the date of issuance of these Financial Statements, there have been no significant changes in business or economic circumstances affecting the fair value of the Group's assets or liabilities, except for what is mentioned in Note 6, (either measured at fair value or amortized cost). Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Group’s financial instruments.
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
13
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
6.
Segment information
 
As explained in Note 6 to the Annual Consolidated Financial Statements, segment information is reported from the perspective of products and services: (i) agricultural business and (ii) urban properties and investment business. In addition, this last segment is reported divided from the geographic point of view in two Operations Centers to manage its global interests: Argentina and Israel. As from fiscal year 2018 the CODM reviews the operating income/loss of each business excluding the amounts related to management fees, being such amount reviewed at an aggregate level outside each business. Additionally, the CODM reviews certain corporate expenses associated with each business in an aggregate manner and separately from each of the segments, such expenses have been disclosed in the "Corporate" segment of each business and operation center. Also, as described in Note 4.(l) to the Annual Financial Statements, the Group lost control of Shufersal as of June 30, 2018 and has reclassified its results to discontinued operations. Segment information for the period ended December 31, 2017 has been recast for the purposes of comparability with the present period
 
Below is a summary of the Group’s business units and a reconciliation between the operating income according to segment information and the operating income of the statement of income and other comprehensive income of the Group for the periods ended December 31, 2018 and 2017:
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
14
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Below is a summarized analysis of the lines of business of the Group for the year ended December 31, 2018:
 
 
 
 12.31.18
 
 
 
 
 Urban Properties and Investment business (II)
 
 
 
 
 
 
 
 
 
 
 
 
 Agricultural business (I)
 
 Operations Center in Argentina
 
 Operations Center in Israel
 
 Subtotal
 
 Total segment information
 
 Joint ventures (i)
 
 Adjustments (ii)
 
 Elimination of inter-segment transactions and non-reportable assets / liabilities (iii)
 
 Total Statement of Income / Financial Position
Revenues
 
5,437
 
4,624
 
22,149
 
26,773
 
32,210
 
(29)
 
1,142
 
(220)
 
33,103
Costs
 
(4,544)
 
(804)
 
(14,305)
 
(15,109)
 
(19,653)
 
18
 
(1,193)
 
89
 
(20,739)
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
343
 
 -
 
 -
 
 -
 
343
 
 -
 
 -
 
118
 
461
Changes in the net realizable value of agricultural products after harvest
 
34
 
 -
 
 -
 
 -
 
34
 
 -
 
 -
 
 -
 
34
Gross profit
 
1,270
 
3,820
 
7,844
 
11,664
 
12,934
 
(11)
 
(51)
 
(13)
 
12,859
Gain from disposal of farmlands
 
53
 
 -
 
 -
 
 -
 
53
 
 -
 
 -
 
 -
 
53
Net (loss) / profit from fair value adjustment of investment properties
 
(22)
 
(6,278)
 
780
 
(5,498)
 
(5,520)
 
1
 
 -
 
 -
 
(5,519)
General and administrative expenses
 
(401)
 
(854)
 
(2,352)
 
(3,206)
 
(3,607)
 
7
 
 -
 
10
 
(3,590)
Selling expenses
 
(443)
 
(326)
 
(3,149)
 
(3,475)
 
(3,918)
 
1
 
 -
 
2
 
(3,915)
Other operating results, net
 
172
 
(269)
 
511
 
242
 
414
 
108
 
 -
 
(1)
 
521
Management fees
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
Profit / (Loss) from operations
 
629
 
(3,907)
 
3,634
 
(273)
 
356
 
106
 
(51)
 
(2)
 
409
Share loss of associates and joint ventures
 
(13)
 
(258)
 
(321)
 
(579)
 
(592)
 
(125)
 
 -
 
 -
 
(717)
Segment profit / (loss)
 
616
 
(4,165)
 
3,313
 
(852)
 
(236)
 
(19)
 
(51)
 
(2)
 
(308)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reportable assets
 
19,678
 
82,737
 
327,989
 
410,726
 
430,404
 
(424)
 
 -
 
25,693
 
455,673
Reportable liabilities
 
 -
 
 -
 
(281,370)
 
(281,370)
 
(281,370)
 
 -
 
 -
 
(78,906)
 
(360,276)
Net reportable assets
 
19,678
 
82,737
 
46,619
 
129,356
 
149,034
 
(424)
 
 -
 
(53,213)
 
95,397
 
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
15
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Below is a summarized analysis of the lines of business of the Group for the year ended December 31, 2017:
 
 
 
 12.31.17
 
 
 
 
 
 Urban Properties and Investment business (II)
 
 
 
 
 
 
 
 
 
 
 
 
 Agricultural business (I)
 
 Operations Center in Argentina
 
 Operations Center in Israel
 
 Subtotal
 
 Total segment information
 
 Joint ventures (i)
 
 Adjustments (ii)
 
 Elimination of inter-segment transactions and non-reportable assets / liabilities (iii)
 
 Total Statement of Income / Financial Position
Revenues
 
4,602
 
4,135
 
18,312
 
22,447
 
27,049
 
(43)
 
1,336
 
(104)
 
28,238
Costs
 
(3,914)
 
(854)
 
(11,229)
 
(12,083)
 
(15,997)
 
22
 
(1,362)
 
62
 
(17,275)
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
144
 
 -
 
 -
 
 -
 
144
 
2
 
 -
 
26
 
172
Changes in the net realizable value of agricultural products after harvest
 
81
 
 -
 
 -
 
 -
 
81
 
 -
 
 -
 
 -
 
81
Gross profit
 
913
 
3,281
 
7,083
 
10,364
 
11,277
 
(19)
 
(26)
 
(16)
 
11,216
Net gain from fair value adjustment of investment properties
 
262
 
8,373
 
1,747
 
10,120
 
10,382
 
(46)
 
 -
 
 -
 
10,336
General and administrative expenses
 
(366)
 
(629)
 
(2,137)
 
(2,766)
 
(3,132)
 
21
 
 -
 
6
 
(3,105)
Selling expenses
 
(503)
 
(305)
 
(2,985)
 
(3,290)
 
(3,793)
 
2
 
 -
 
6
 
(3,785)
Other operating results, net
 
24
 
(67)
 
1,127
 
1,060
 
1,084
 
23
 
 -
 
(1)
 
1,106
Management fees
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(785)
 
 -
 
(785)
Profit from operations
 
330
 
10,653
 
4,835
 
15,488
 
15,818
 
(19)
 
(811)
 
(5)
 
14,983
Share (loss) / profit of associates and joint ventures
 
(11)
 
333
 
(367)
 
(34)
 
(45)
 
123
 
 -
 
 -
 
78
Segment profit
 
319
 
10,986
 
4,468
 
15,454
 
15,773
 
104
 
(811)
 
(5)
 
15,061
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reportable assets
 
15,633
 
86,908
 
288,005
 
374,913
 
390,546
 
(878)
 
 -
 
20,197
 
409,865
Reportable liabilities
 
 -
 
 -
 
(252,987)
 
(252,987)
 
(252,987)
 
 -
 
 -
 
(62,626)
 
(315,613)
Net reportable assets
 
15,633
 
86,908
 
35,018
 
121,926
 
137,559
 
(878)
 
 -
 
(42,429)
 
94,252
 
(i)
Represents the equity value of joint ventures that were proportionately consolidated for information by segment purposes.
(ii)
Includes Ps. (51) and Ps. (26) corresponding to Expenses and FPC as of December 31, 2018 and 2017, respectively and Ps. (75) corresponding to management fees, as of December 31, 2017.
(iii)
Includes deferred income tax assets, income tax and MPIT credits, trade and other receivables, investment in financial assets, cash and cash equivalents and intangible assets except for rights to receive future units under barter agreements, net of investments in associates with negative equity which are included in provisions in the amount of Ps. 3,434 and Ps. 3,621 as of December 31, 2018 and 207, respectively.
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
16
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
(I)
Agriculture line of business
 
The following tables present the reportable segments of the agriculture line of business:
 
 
 
 12.31.18
 
 
 Agricultural production
 
 Land transformation and sales
 
 Corporate
 
 Others
 
 Total Agricultural business
Revenues
 
3,042
 
 -
 
 -
 
2,395
 
5,437
Costs
 
(2,642)
 
(10)
 
 -
 
(1,892)
 
(4,544)
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
359
 
 -
 
 -
 
(16)
 
343
Changes in the net realizable value of agricultural products after harvest
 
34
 
 -
 
 -
 
 -
 
34
Gross profit / (loss)
 
793
 
(10)
 
 -
 
487
 
1,270
Gain from disposal of farmlands
 
 -
 
53
 
 -
 
 -
 
53
Net gain from fair value adjustment of investment properties
 
 -
 
(22)
 
 -
 
 -
 
(22)
General and administrative expenses
 
(248)
 
(1)
 
(71)
 
(81)
 
(401)
Selling expenses
 
(242)
 
(1)
 
 -
 
(200)
 
(443)
Other operating results, net
 
166
 
 -
 
 -
 
6
 
172
Profit / (loss) from operations
 
469
 
19
 
(71)
 
212
 
629
Share of loss of associates and joint ventures
 
(1)
 
 -
 
 -
 
(12)
 
(13)
Segment profit / (loss)
 
468
 
19
 
(71)
 
200
 
616
 
 
 
 
 
 
 
 
 
 
 
Investment properties
 
1,349
 
 -
 
 -
 
 -
 
1,349
Property, plant and equipment
 
12,077
 
42
 
 -
 
415
 
12,534
Investments in associates
 
190
 
 -
 
 -
 
38
 
228
Other reportable assets
 
4,535
 
 -
 
 -
 
1,032
 
5,567
Reportable assets
 
18,151
 
42
 
 -
 
1,485
 
19,678
 
 
 
12.31.17
 
 
 Agricultural production
 
 Land transformation and sales
 
 Corporate
 
 Others
 
 Total Agricultural business
 
Revenues
 
2,750
 
 -
 
 -
 
1,852
 
4,602
 
Costs
 
(2,163)
 
(13)
 
 -
 
(1,738)
 
(3,914)
 
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
144
 
 -
 
 -
 
 -
 
144
 
Changes in the net realizable value of agricultural products after harvest
 
81
 
 -
 
 -
 
 -
 
81
 
Gross profit / (loss)
 
812
 
(13)
 
 -
 
114
 
913
 
Net gain from fair value adjustment of investment properties
 
 -
 
262
 
 -
 
 -
 
262
 
General and administrative expenses
 
(224)
 
(1)
 
(65)
 
(76)
 
(366)
 
Selling expenses
 
(389)
 
 -
 
 -
 
(114)
 
(503)
 
Other operating results, net
 
19
 
 -
 
 -
 
5
 
24
 
Profit / (loss) from operations
 
218
 
248
 
(65)
 
(71)
 
330
 
Share of profit of associates and joint ventures
 
1
 
 -
 
 -
 
(12)
 
(11)
 
Segment profit / (loss)
 
219
 
248
 
(65)
 
(83)
 
319
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment properties
 
937
 
 -
 
 -
 
 -
 
937
 
Property, plant and equipment
 
10,518
 
50
 
 -
 
332
 
10,900
 
Investments in associates
 
193
 
 -
 
 -
 
(6)
 
187
 
Other reportable assets
 
3,026
 
 -
 
 -
 
583
 
3,609
 
Reportable assets
 
14,674
 
50
 
 -
 
909
 
15,633
 
 
(II)
Urban properties and investments line of business
 
Below is a summarized analysis of the lines of business of Group’s operations center in Argentina:
 
 
 
 12.31.18
 
 
 Shopping Malls
 
 Offices
 
 Sales and developments
 
 Hotels
 
 International
 
 Corporate
 
 Others
 
 Total
Revenues
 
2,741
 
546
 
61
 
947
 
279
 
 -
 
50
 
4,624
Costs
 
(207)
 
(29)
 
(32)
 
(468)
 
(14)
 
 -
 
(54)
 
(804)
Gross profit / (loss)
 
2,534
 
517
 
29
 
479
 
265
 
 -
 
(4)
 
3,820
Net (loss) / profit from fair value adjustment of investment properties
 
(8,898)
 
2,514
 
128
 
 -
 
2
 
 -
 
(24)
 
(6,278)
General and administrative expenses
 
(296)
 
(68)
 
(61)
 
(148)
 
(35)
 
(212)
 
(34)
 
(854)
Selling expenses
 
(175)
 
(34)
 
(13)
 
(99)
 
 -
 
 -
 
(5)
 
(326)
Other operating results, net
 
(41)
 
(12)
 
(124)
 
26
 
2
 
 -
 
(120)
 
(269)
(Loss) / Profit from operations
 
(6,876)
 
2,917
 
(41)
 
258
 
234
 
(212)
 
(187)
 
(3,907)
Share of profit / (loss) of associates and joint ventures
 
 -
 
 -
 
(14)
 
 -
 
(195)
 
 -
 
(49)
 
(258)
Segment (loss) / profit
 
(6,876)
 
2,917
 
(55)
 
258
 
39
 
(212)
 
(236)
 
(4,165)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment and trading properties
 
43,007
 
19,762
 
15,192
 
 -
 
60
 
 -
 
190
 
78,211
Property, plant and equipment
 
116
 
65
 
 -
 
1,199
 
113
 
 -
 
522
 
2,015
Investment in associates and joint ventures
 
1
 
 -
 
244
 
 -
 
(2,501)
 
 -
 
4,352
 
2,096
Other reportable assets
 
67
 
71
 
106
 
14
 
 -
 
 -
 
157
 
415
Reportable assets
 
43,191
 
19,898
 
15,542
 
1,213
 
(2,328)
 
 -
 
5,221
 
82,737
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
17
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
For the six-month period ended December 31, 2018, the net loss from the fair value adjustment of investment property amounted to Ps. (6,278), and it was generated by:
 
Shopping Malls Segment
 
The net result of shopping malls was affected by:
a) 
an increase of 55 basis points in the discount rate, representing a decrease of Ps. 3,040 in the value of shopping Malls;
b) 
an increase in the projected cash flows generated by the update of the projected inflation rates, representing an increase of Ps. 3,030 in the value of the shopping malls;
c) 
a net increase of Ps. 2,239, generated by the updating of the future exchange rates used for the conversion in dollars of the projected cash flows (Ps. 6,642 - Loss) and by the conversion of the present value of the projected cash flows at the rate of the current exchange rate at the end of this period (Ps. 8,881 - Profit) (depreciation of the Argentine peso of 30% against the dollar).
 
Offices, Sales and developments and Other Segments
 
The net result of the properties included in the present segments was mainly generated by the depreciation of 31% of the Argentine peso during this six-month period.
 
Additionally, due to the impact of the inflation adjustment Ps. 16,930 were reclassified to “inflation adjustment”, leaving a loss in changes in fair value of investment property of  Ps. (6,278).
 
 
 
12.31.17
 
 
 Shopping Malls
 
 Offices
 
 Sales and developments
 
 Hotels
 
 International
 
 Corporate
 
 Others
 
 Total
Revenues
 
2,939
 
382
 
85
 
725
 
 -
 
 -
 
4
 
4,135
Costs
 
(272)
 
(28)
 
(47)
 
(504)
 
 -
 
 -
 
(3)
 
(854)
Gross profit
 
2,667
 
354
 
38
 
221
 
 -
 
 -
 
1
 
3,281
Net gain / (loss) from fair value adjustment of investment properties
 
8,443
 
(152)
 
94
 
 -
 
 -
 
 -
 
(12)
 
8,373
General and administrative expenses
 
(210)
 
(52)
 
(67)
 
(135)
 
(47)
 
(106)
 
(12)
 
(629)
Selling expenses
 
(167)
 
(30)
 
(15)
 
(90)
 
 -
 
 -
 
(3)
 
(305)
Other operating results, net
 
(41)
 
1
 
(35)
 
(3)
 
(7)
 
 -
 
18
 
(67)
Profit / (Loss) from operations
 
10,692
 
121
 
15
 
(7)
 
(54)
 
(106)
 
(8)
 
10,653
Share of profit of associates and joint ventures
 
 -
 
36
 
(15)
 
 -
 
71
 
 -
 
241
 
333
Segment profit / (loss)
 
10,692
 
157
 
 -
 
(7)
 
17
 
(106)
 
233
 
10,986
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment and trading properties
 
56,165
 
12,497
 
9,668
 
 -
 
 -
 
 -
 
410
 
78,740
Property, plant and equipment
 
130
 
146
 
 -
 
1,258
 
83
 
 -
 
 -
 
1,617
Investment in associates and joint ventures
 
 -
 
 -
 
240
 
 -
 
992
 
 -
 
4,984
 
6,216
Other reportable assets
 
81
 
70
 
102
 
18
 
 -
 
 -
 
64
 
335
Reportable assets
 
56,376
 
12,713
 
10,010
 
1,276
 
1,075
 
 -
 
5,458
 
86,908
 
For the six-month period ended December 31, 2017, the net gain from fair value adjustment of investment property amounted to Ps. 8,373, and it was generated by:
 
Shopping Malls Segment
 
The net result of shopping malls was affected by:
a) 
an increase of Ps. 4,440 generated by the decrease of the Income Tax Rate used in the discounted cash flow.
b) 
a decrease of 25 basis points in the discount rate, representing an increase of Ps. 1,217 in the value of shopping Malls;
c) 
a decrease in the projected cash flows generated by the update of the projected inflation rates, representing a decrease of Ps. 768 in the value of the shopping malls;
d) 
a net increase of Ps. 4,586, generated by the updating of the future exchange rates used for the conversion in dollars of the projected cash flows (Ps. 1,008 - profit) and by the conversion of the present value of the projected cash flows at the rate of the current exchange rate at the end of this period (Ps. 3,578 - Profit)
 
Offices, Sales and developments and Other Segments
 
The net result of the properties included in the present segments was mainly generated by the depreciation of the Argentine peso during this six-month period.
 
Additionally, due to the impact of the inflation adjustment Ps. 6,852 were reclassified to “inflation adjustment”, leaving a profit in changes in fair value of investment property of Ps. (8,373).
 
Below is a summarized analysis of the lines of business of Group’s operations center in Israel:
 
 
 
 12.31.18
 
 
 Real Estate
 
 Supermarkets
 
 Telecommunications
 
 Insurance
 
 Corporate
 
 Others
 
 Total
 
Revenues
 
6,020
 
 -
 
15,641
 
 -
 
 -
 
488
 
22,149
 
Costs
 
(2,657)
 
 -
 
(11,389)
 
 -
 
 -
 
(259)
 
(14,305)
 
Gross profit / (loss)
 
3,363
 
 -
 
4,252
 
 -
 
 -
 
229
 
7,844
 
Net loss from fair value adjustment of investment properties
 
780
 
 -
 
 -
 
 -
 
 -
 
 -
 
780
 
General and administrative expenses
 
(301)
 
 -
 
(1,377)
 
 -
 
(275)
 
(399)
 
(2,352)
 
Selling expenses
 
(92)
 
 -
 
(2,966)
 
 -
 
 -
 
(91)
 
(3,149)
 
Other operating results, net
 
 -
 
 -
 
 -
 
 -
 
269
 
242
 
511
 
Profit / (Loss) from operations
 
3,750
 
 -
 
(91)
 
 -
 
(6)
 
(19)
 
3,634
 
Share of (loss) / profit of associates and joint ventures
 
(222)
 
164
 
 -
 
 -
 
 -
 
(263)
 
(321)
 
Segment profit / (loss)
 
3,528
 
164
 
(91)
 
 -
 
(6)
 
(282)
 
3,313
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reportable assets
 
176,637
 
13,758
 
67,232
 
16,133
 
35,432
 
18,797
 
327,989
 
Reportable liabilities
 
(137,278)
 
 -
 
(52,133)
 
 -
 
(82,227)
 
(9,732)
 
(281,370)
 
Net reportable assets
 
39,359
 
13,758
 
15,099
 
16,133
 
(46,795)
 
9,065
 
46,619
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
18
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
 
 
 12.31.17
 
 
 Real Estate
 
 Supermarkets
 
 Telecommunications
 
 Insurance
 
 Corporate
 
 Others
 
 Total
Revenues
 
3,723
 
 -
 
14,088
 
 -
 
 -
 
501
 
18,312
Costs
 
(1,092)
 
 -
 
(9,912)
 
 -
 
 -
 
(225)
 
(11,229)
Gross profit
 
2,631
 
 -
 
4,176
 
 -
 
 -
 
276
 
7,083
Net gain from fair value adjustment of investment properties
 
1,747
 
 -
 
 -
 
 -
 
 -
 
 -
 
1,747
General and administrative expenses
 
(266)
 
 -
 
(1,316)
 
 -
 
(244)
 
(311)
 
(2,137)
Selling expenses
 
(79)
 
 -
 
(2,777)
 
 -
 
 -
 
(129)
 
(2,985)
Other operating results, net
 
35
 
 -
 
232
 
 -
 
614
 
246
 
1,127
Profit / (Loss) from operations
 
4,068
 
 -
 
315
 
 -
 
370
 
82
 
4,835
Share of (loss) / profit of associates and joint ventures
 
(238)
 
 -
 
 -
 
 -
 
 -
 
(129)
 
(367)
Segment profit / (loss)
 
3,830
 
 -
 
315
 
 -
 
370
 
(47)
 
4,468
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reportable assets
 
131,140
 
62,439
 
46,023
 
13,563
 
26,702
 
8,138
 
288,005
Reportable liabilities
 
(103,912)
 
(45,029)
 
(36,160)
 
 -
 
(67,507)
 
(379)
 
(252,987)
Net reportable assets
 
27,228
 
17,410
 
9,863
 
13,563
 
(40,805)
 
7,759
 
35,018
 
7.
Investments in associates and joint ventures
 
Changes in the Group’s investments in associates and joint ventures for the six-month period ended December 31, 2018 and for the year ended June 30, 2018 were as follows:
 
 
 
 12.31.18
 
 06.30.18
Beginning of the period / year
 
30,235
 
15,155
Adjustment previous periods (IFRS 9 and 15)
 
(90)
 
 -
Increase in equity interest in associates and joint ventures
 
216
 
(572)
Issuance of capital and contributions
 
41
 
273
Capital reduction
 
(218)
 
(421)
Decrease of interest in associates
 
(4,139)
 
(431)
Share of profit / (loss)
 
(717)
 
(1,847)
Transfer to borrowings to associates
 
 -
 
(270)
Currency translation adjustment
 
(5)
 
2,179
Incorporation of deconsolidated subsidiary, net
 
 -
 
16,782
Dividends (i)
 
(173)
 
(473)
Liquidation distribution
 
 -
 
(92)
Reclassification to held for sale
 
 -
 
(70)
Others
 
 -
 
22
End of the period / year (ii)
 
25,150
 
30,235
 
(i)
See Note 26.
(ii)
As of December 31, 2018, and June 30, 2018 includes Ps. (3,422) of New Lipstick and Ps. (12) of Puerto Retiro and Ps. (3,126) of New Lipstick respectively, reflecting interests in companies with negative equity, which were disclosed in “Provisions” (see Note 19).
 
Below is additional information about the Group’s investments in associates and joint ventures:
 
Name of the entity
 
% ownership interest
 
Value of Group's interest in equity
 
Group's interest in comprehensive income / (loss)
 
12.31.18
 
06.30.18
 
12.31.18
 
06.30.18
 
12.31.18
 
12.31.17
Associates
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick (1)
 
49.90%
 
49.90%
 
(3,422)
 
(3,126)
 
(296)
 
83
Tarshop
 
20.00%
 
20.00%
 
4
 
158
 
28
 
(7)
BHSA
 
29.91%
 
29.91%
 
3,919
 
4,181
 
(79)
 
309
Condor
 
18.89%
 
18.90%
 
900
 
888
 
51
 
(9)
PBEL
 
45.00%
 
45.00%
 
1,228
 
1,337
 
(1)
 
(120)
Shufersal
 
26.02%
 
33.56%
 
13,758
 
16,782
 
286
 
 -
Other associates
 
-
 
-
 
2,439
 
3,032
 
(238)
 
136
 
 
 
 
 
 
 
 
 
 
 
 
 
Joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Quality
 
50.00%
 
50.00%
 
1,405
 
1,364
 
21
 
102
La Rural S.A.
 
50.00%
 
50.00%
 
241
 
223
 
17
 
35
Mehadrin
 
45.41%
 
45.41%
 
2,446
 
2,896
 
(395)
 
(361)
Cresca S.A.
 
50.00%
 
50.00%
 
1
 
1
 
 -
 
 -
Other joint ventures
 
-
 
-
 
2,231
 
2,499
 
(116)
 
366
Total associates and joint ventures
 
 
 
 
 
25,150
 
30,235
 
(722)
 
534
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
19
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
Name of the entity
 
Location of business / Country of incorporation
 
Main activity
 
Common shares 1 vote
 
Last financial statement issued
 
 
 
 
Share capital (nominal value)
 
Profit / (loss) for the period
 
Shareholders' equity
Associates
 
 
 
 
 
 
 
 
 
 
 
 
New Lipstick (1)
 
U.S.
 
Real estate
 
N/A
 
N/A
 
(*) (16)
 
(*) (194)
Tarshop
 
Argentina
 
Financing
 
48,759,288
 
599
 
101
 
601
BHSA
 
Argentina
 
Financial
 
448,689,072
 
(***) 1,500
 
(***) 2,238
 
(***) 8,719
Condor
 
U.S.
 
Hotel
 
2,245,100
 
N/A
 
 (*) 3
 
 (*) 110
PBEL
 
India
 
Real estate
 
450
 
(**) 1
 
(**) (9)
 
(**) (498)
Shufersal
 
Israel
 
Retail
 
79,282,087
 
(**) 242
 
(**) 149
 
(**) 1,907
 
 
 
 
 
 
 
 
 
 
 
 
 
Joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Quality
 
Argentina
 
Real estate
 
120,827,022
 
280
 
38
 
N/A
La Rural S.A.
 
Argentina
 
Organization of events
 
714,498
 
1
 
49
 
 -
Mehadrin
 
Israel
 
Agriculture
 
1,509,889
 
(**) 3
 
(**) (73)
 
195
 
(1)
Metropolitan, a subsidiary of New Lipstick, has renegotiated its non-recourse debt with IRSA, which amounted to US$ 113.1, and obtained a debt reduction of US$ 20 by the lending bank, an extension to April 30, 2020 and an interest rate reduction from LIBOR + 4 b.p. to 2 b.p. upon payment of US$ 40 in cash (US$ 20 in September 2017 and US$ 20 in October 2017), of which IRSA has contributed with US$ 20. Following the renegotiation, Metropolitan’s debt amounts to US$ 53.1. Additionally, Metropolitan has exercised on January 16, 2019 the purchase option on part of the land where the property is built with a deposit the sum of US$ 5.2 corresponding to 1% of the purchase price. Furthermore, Metropolitan has agreed to cause IRSA and other shareholders to furnish the bank, on or before February 1, 2020, with a payment guarantee with financial ratios acceptable to the Bank for the outstanding balance of the purchase price, or a letter of credit in relation to the loan balance then outstanding.
 
 (*) 
  Amounts in millions of US Dollars under USGAAP. Condor’s year-end falls on December 31, so the Group estimates their interest with a six-month lag, including material adjustments, if any.
(**) 
  Amounts in millions of NIS.
(***) 
Information as of December 31, 2018 according to BCRA's standards.
 
Puerto Retiro (joint venture)
 
At present, this 8.3 hectare plot of land, which is located in one of the most privileged areas of the city, near Catalinas, Puerto Madero and Retiro and is the only privately owned waterfront property facing directly to Río de la Plata, is affected by a zoning regulation defined as U.P. which prevents the property from being used for any purposes other than strictly port activities.
 
The Company was involved in a judicial bankruptcy action brought by the National Government, to which this Board of Directors is totally alien. Management and legal counsel of the Company believe that there are sufficient legal and technical arguments to consider that the petition for extension of the bankruptcy case will be dismissed by the court. However, in view of the current status of the action, its result cannot be predicted.
Moreover, Tandanor filed a civil action against Puerto Retiro S.A. and the other defendants in the criminal case for violation of Section 174 (5) based on Section 173 (7) of the Criminal Code of Argentina. Such action seeks -on the basis of the nullity of the decree that approved the bidding process involving the Dársena Norte property- the restitution of the property and a reimbursement in favor of Tandanor for all such amounts it has allegedly lost as a result of a suspected fraudulent transaction involving the sale of the property. Puerto Retiro has presented the allegation on the merit of the evidence, highlighting that the current shareholders of Puerto Retiro did not participate in any of the suspected acts in the criminal case since they acquired the shares for consideration and in good faith several years after the facts told in the process. Likewise, it was emphasized that the company Puerto Retiro is foreign to the bidding / privatization carried out for the sale of Tandanor shares. The dictation of the sentence is expected.
 
On September 7, 2018, the Oral Federal Criminal Court No. 5 rendered a decision. According to the sentence read by the president of the Court, Puerto Retiro won the preliminary objection of limitation filed in the civil action. However, in the criminal case, where Puerto Retiro is not a party, it was ordered, among other issues, the confiscation (“decomiso”) of the property owned by Puerto Retiro known as Planta I. The grounds of the Court`s judgement will be read on November 11, 2018. From that moment, all the parties will be able to file the appeals. Although there are solid arguments to try to refute the disposed seizure, this can be affirmed with a greater degree of certainty after the publications of the fundamentals of the ruling, at this time only the resolute part of this ruling is known.
 
In the criminal action, the claimant reported the violation by Puerto Retiro of the injunction ordered by the criminal court consisting in an order to stay (“prohibición de innovar”) and not to contract with respect to the property disputed in the civil action. As a result of such report, the Oral Federal Court (Tribunal Oral Federal) No. 5 started interlocutory proceedings, and on June 8, 2017, it ordered and carried out the closing of the property that was subject to lease agreements with Los Cipreses S.A. and Flight Express S.A. with the aim of enforcing the referred order. As a result, the proceedings were forwarded to the Criminal Court for it to appoint the court that will investigate the alleged commission of the crime of contempt.
 
Faced with the evolution of the legal cases that affect it and based on the reports of its legal advisors, Puerto Retiro Management has decided to register an allowance equivalent to 100% of the book value of its investment property, without prejudice to reverse it when a favorable ruling is obtained in the interposed actions.
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
20
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
8.
Investment properties
 
Changes in the Group’s investment properties for the six-month period ended December 31, 2018 and for the year ended June 30, 2018 were as follows:
 
 
 
 Leased out farmland
 
 Rental properties
 
 Underdeveloped parcels of land
 
 Properties under development
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Fair value at the beginning of the period / year
 
1,177
 
180,560
 
15,997
 
10,760
 
208,494
 
165,316
Additions
 
 -
 
504
 
296
 
1,612
 
2,412
 
4,723
Capitalized finance costs
 
 -
 
 -
 
 -
 
27
 
27
 
110
Capitalized leasing costs
 
 -
 
4
 
 -
 
 -
 
4
 
29
Amortization of capitalized leasing costs (i)
 
 -
 
(4)
 
 -
 
 -
 
(4)
 
(6)
Transfers
 
 -
 
742
 
(476)
 
(266)
 
 -
 
 -
Transfers to property, plant and equipment
 
(730)
 
(522)
 
 -
 
 -
 
(1,252)
 
(32)
Transfers from property, plant and equipment (ii)
 
1,819
 
 -
 
 -
 
 -
 
1,819
 
2,824
Transfers to / from trading properties
 
 -
 
 -
 
(62)
 
(493)
 
(555)
 
325
Transfers to assets held for sale
 
 -
 
 -
 
 -
 
 -
 
 -
 
(664)
Assets incorporated by business combination
 
 -
 
 -
 
 -
 
 -
 
 -
 
152
Deconsolidation
 
 -
 
 -
 
 -
 
 -
 
 -
 
(5,924)
Disposals
 
(1,015)
 
(10)
 
 -
 
 -
 
(1,025)
 
(702)
Currency translation adjustment
 
120
 
1,431
 
23
 
300
 
1,874
 
28,299
Net gain from fair value adjustment
 
(22)
 
(8,337)
 
639
 
2,201
 
(5,519)
 
14,044
Fair value at the end of the period / year
 
1,349
 
174,368
 
16,417
 
14,141
 
206,275
 
208,494
 
(i)
Amortization charges of capitalized leasing costs were included in “Costs” in the Statements of Income (Note 24).
(ii)
As of December 31, 2018 and June 30, 2018 includes Ps. 1,531 and Ps. 464, respectively, corresponding to the difference between valuation at cost and fair value.
 
The following amounts have been recognized in the Statements of Income:
 
 
 
 12.31.18
 
 12.31.17
Rental and services income
 
8,712
 
8,111
Direct operating expenses
 
(2,313)
 
(2,231)
Development expenses
 
(1,865)
 
(550)
Net realized gain from fair value adjustment of investment properties
 
1,075
 
2,472
Net unrealized gain from fair value adjustment of investment properties
 
(6,594)
 
7,864
 
Valuation techniques are described in Note 9 to the Annual Financial Statements. There were no changes to such techniques. The Company has reassessed the assumptions at the end of the period, incorporating the effect of the variation in the exchange rate in other assets denominated in US Dollars.
 
9.
Property, plant and equipment
 
Changes in the Group’s property, plant and equipment for the six-month period ended December 31, 2018 and for the year ended June 30, 2018 were as follows:
 
 
 
 Owner occupied farmland
 
 Bearer plant
 
 Buildings and facilities
 
 Machinery and equipment
 
 Communication networks
 
 Others
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Costs
 
11,356
 
803
 
6,201
 
1,331
 
51,052
 
5,734
 
76,477
 
98,912
Accumulated depreciation
 
(922)
 
(135)
 
(3,393)
 
(894)
 
(38,792)
 
(2,488)
 
(46,624)
 
(44,547)
Net book amount at the beginning of the period / year
 
10,434
 
668
 
2,808
 
437
 
12,260
 
3,246
 
29,853
 
54,365
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additions
 
228
 
106
 
166
 
14
 
1,095
 
687
 
2,296
 
6,518
Disposals
 
(35)
 
 -
 
(1)
 
(1)
 
(16)
 
(3)
 
(56)
 
(691)
Deconsolidation
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(36,968)
Impairment / recovery
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(131)
Assets incorporated by business combinations
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
312
Currency translation adjustment
 
141
 
25
 
1
 
 -
 
13
 
68
 
248
 
14,302
Transfers from investment properties
 
730
 
 -
 
 -
 
 -
 
 -
 
522
 
1,252
 
17
Transfers to investment properties
 
(288)
 
 -
 
 -
 
 -
 
 -
 
 -
 
(288)
 
(2,360)
Transfers
 
1
 
 -
 
(1)
 
 -
 
 -
 
 -
 
 -
 
 -
Depreciation charges (i)
 
(65)
 
(81)
 
(137)
 
(17)
 
(1,053)
 
(503)
 
(1,856)
 
(5,511)
Balances at the end of the period / year
 
11,146
 
718
 
2,836
 
433
 
12,299
 
4,017
 
31,449
 
29,853
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs
 
12,072
 
948
 
6,827
 
1,344
 
51,189
 
7,089
 
79,469
 
76,480
Accumulated depreciation
 
(926)
 
(230)
 
(3,991)
 
(911)
 
(38,890)
 
(3,072)
 
(48,020)
 
(46,627)
Net book amount at the end of the period / year
 
11,146
 
718
 
2,836
 
433
 
12,299
 
4,017
 
31,449
 
29,853
 
(i)
Amortization charge was recognized in the amount of Ps. 1,495 under "Costs", in the amount of Ps. 165 under "General and administrative expenses" and Ps. 37 under "Selling expenses" as of December 31, 2018, in the Statements of Income (Note 24).
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
21
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
10.
Trading properties
 
Changes in the Group’s trading properties for the six-month period ended December 31, 2018 and for the year ended June 30, 2018 were as follows:
 
 
 
 Completed properties
 
 Properties under development
 
 Undeveloped sites
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Beginning of the period / year
 
3,354
 
7,032
 
2,276
 
12,662
 
10,100
Adjustment previous periods (IFRS 15)
 
(893)
 
(3,911)
 
 -
 
(4,804)
 
 -
Additions
 
 -
 
1,407
 
8
 
1,415
 
2,784
Capitalized finance costs
 
 -
 
28
 
 -
 
28
 
14
Currency translation adjustment
 
(316)
 
(121)
 
(82)
 
(519)
 
2,512
Transfers
 
1,051
 
(754)
 
(297)
 
 -
 
(1)
Transfers from intangible assets
 
 -
 
 -
 
 -
 
 -
 
22
Transfers to investment properties
 
 -
 
555
 
 -
 
555
 
(325)
Disposals due to sales
 
(1,823)
 
 -
 
 -
 
(1,823)
 
(2,444)
Disposals due to advance in work in progress
 
 -
 
(149)
 
 -
 
(149)
 
 -
End of the period / year
 
1,373
 
4,087
 
1,905
 
7,365
 
12,662
 
 
 
 
 
 
 
 
 
 
 
Non-current
 
 
 
 
 
 
 
4,494
 
8,487
Current
 
 
 
 
 
 
 
2,871
 
4,175
Total
 
 
 
 
 
 
 
7,365
 
12,662
 
 
11.
Intangible assets
 
Changes in the Group’s intangible assets for the six-month period ended December 31, 2018 and for the year ended June 30, 2018 were as follows:
 
 
 
 Goodwill
 
 Trademarks
 
 Licenses
 
 Customer relations
 
 Information systems and software
 
 Contracts and others
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Costs
 
4,073
 
4,173
 
2,112
 
8,838
 
7,445
 
3,873
 
30,514
 
29,647
Accumulated amortization
 
 -
 
(251)
 
(613)
 
(5,905)
 
(5,300)
 
(2,395)
 
(14,464)
 
(9,907)
Net book amount at the beginning of the period / year
 
4,073
 
3,922
 
1,499
 
2,933
 
2,145
 
1,478
 
16,050
 
19,740
Additions
 
 -
 
 -
 
 -
 
 -
 
364
 
564
 
928
 
961
Disposals
 
 -
 
 -
 
 -
 
 -
 
(8)
 
 -
 
(8)
 
 -
Deconsolidation
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(9,289)
Transfers to trading properties
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(22)
Assets incorporated by business combination
 
 -
 
 -
 
 -
 
 -
 
40
 
 -
 
40
 
1,513
Currency translation adjustment
 
11
 
(3)
 
(11)
 
(90)
 
2
 
50
 
(41)
 
6,102
Amortization charges (i)
 
 -
 
(34)
 
(59)
 
(505)
 
(358)
 
(399)
 
(1,355)
 
(2,955)
Balances at the end of the period / year
 
4,084
 
3,885
 
1,429
 
2,338
 
2,185
 
1,693
 
15,614
 
16,050
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs
 
4,085
 
4,167
 
5,586
 
11,950
 
4,117
 
4,550
 
34,455
 
30,518
Accumulated amortization
 
(1)
 
(282)
 
(4,157)
 
(9,612)
 
(1,932)
 
(2,857)
 
(18,841)
 
(14,468)
Net book amount at the end of the period / year
 
4,084
 
3,885
 
1,429
 
2,338
 
2,185
 
1,693
 
15,614
 
16,050
 
(i)
Amortization charge was recognized in the amount of Ps. 393 under "Costs", in the amount of Ps. 354 under "General and administrative expenses" and Ps. 608 under "Selling expenses" as of December 31, 2018 in the Statements of Income (Note 24).
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
22
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
12.
Biological assets
 
Changes in the Group’s biological assets and their allocation to the fair value hierarchy six-month period ended December 31, 2018 and for the year ended June 30, 2018 were as follows:
 
 
 
Agricultural business
 
 
Sown land-crops
 
Sugarcane fields
 
Breeding cattle and cattle for sale
 
Other cattle
 
Others
 
Total as of 12.31.18
 
Total as of 06.30.18
 
 
 
Level 1
 
Level 3
 
Level 3
 
Level 2
 
Level 2
 
Level 1
 
 
 
Net book amount at the beginning of the period / year
 
76
 
336
 
575
 
1,240
 
72
 
19
 
2,318
 
2,035
 
Purchases
 
 -
 
 -
 
 -
 
61
 
135
 
 -
 
196
 
221
 
Changes by transformation
 
(61)
 
61
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
Initial recognition and changes in the fair value of biological assets (i)
 
200
 
182
 
218
 
(124)
 
(25)
 
 -
 
451
 
918
 
Decrease due to harvest
 
 -
 
(784)
 
(1,764)
 
 -
 
 -
 
 -
 
(2,548)
 
(4,490)
 
Sales
 
 -
 
 -
 
 -
 
(220)
 
(1)
 
 -
 
(221)
 
(518)
 
Consumes
 
 -
 
 -
 
 -
 
(1)
 
(95)
 
(1)
 
(97)
 
(9)
 
Costs for the period / year
 
1,537
 
273
 
1,465
 
241
 
5
 
3
 
3,524
 
3,995
 
Addition
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
Foreign exchange gain
 
28
 
2
 
26
 
9
 
 -
 
 -
 
65
 
166
 
Balances at the end of the period / year
 
1,780
 
70
 
520
 
1,206
 
91
 
21
 
3,688
 
2,318
 
 
 
 -
 
 
 
 
 
 
 
 
 
 
 
 
 
 -
 
Non-current (Production)
 
 -
 
 -
 
 -
 
1,019
 
16
 
21
 
1,056
 
1,154
 
Current (Consumable)
 
1,780
 
70
 
520
 
187
 
75
 
 -
 
2,632
 
1,164
 
Net book amount at the end of the period / year
 
1,780
 
70
 
520
 
1,206
 
91
 
21
 
3,688
 
2,318
 
 
(i)
Biological assets with a production cycle of more than one year (that is, cattle) generated “Initial recognition and changes in fair value of biological assets” amounting to Ps. (149) and Ps. (226) for the six-month periods ended December 31, 2018 and for the fiscal year ended June 30, 2018, respectively; amounts of Ps. (91) and Ps. (159), was attributable to price changes, and amounts of Ps. (58) and Ps. (67), was attributable to physical changes, respectively.
 
 
 
During the six-month period ended December 31, 2018, there were transfers between the fair value hierarchies 1 and 3 of grain seeding (due to the degree of phenological growth of the crop) for Ps. 61. There were also no reclassifications between categories thereof.
 
The fair value less estimated point of sale costs of agricultural produce at the point of harvest (which have been harvested during the period) amount to Ps. 2,558 and Ps. 4,531 for the six-month period ended December 31, 2018 and the year ended June 30, 2018, respectively.
 
See information on valuation processes used by the entity in Note 13 to the Annual Financial Statements.
 
As of December 31, 2018 and June 30, 2018, the better and maximum use of biological assets shall not significantly differ from the current use.
 
 
13.
Inventories
 
Breakdown of Group’s inventories as of December 31, 2018 and June 30, 2018 are as follows:
 
 
 
 12.31.18
 
 06.30.18
Crops
 
654
 
1,456
Materials and supplies
 
954
 
468
Seeds and fodders
 
199
 
198
Sugarcane
 
 -
 
1
Beef
 
42
 
83
Agricultural inventories
 
1,849
 
2,206
Telephones and other communication equipment
 
715
 
755
Others
 
42
 
48
Total inventories
 
2,606
 
3,009
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
23
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
14.
 Financial instruments by category
 
Determining fair values
 
The present note shows the financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line in the Consolidated Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. For further information related to fair value hierarchy see Note 15 to the Annual Financial Statements.
 
Financial assets and financial liabilities as of December 31, 2018 are as follows:
 
 
 
 Financial assets at amortized cost
 
 Financial assets at fair value through profit or loss
 
 Subtotal financial assets
 
 Non-financial assets
 
 Total
 
 
 
 Level 1
 
 Level 2
 
 Level 3
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 15)
 
29,067
 
 -
 
 -
 
 -
 
29,067
 
7,762
 
36,829
Investment in financial assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Public companies’ securities
 
 -
 
 -
 
 -
 
159
 
159
 
 -
 
159
- Private companies’ securities
 
 -
 
 -
 
 -
 
1,520
 
1,520
 
 -
 
1,520
- Deposits
 
4,851
 
 -
 
 -
 
 -
 
4,851
 
 -
 
4,851
 - Bonds
 
1
 
 -
 
554
 
 -
 
555
 
 -
 
555
 - Mutual funds
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
- Convertible Notes
 
 -
 
 -
 
 -
 
938
 
938
 
 -
 
938
- Investments in financial assets with quotation
 
 -
 
27,553
 
 -
 
 -
 
27,553
 
 -
 
27,553
Derivative financial instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Crops options contracts
 
 -
 
99
 
 -
 
 -
 
99
 
 -
 
99
 - Crops futures contracts
 
 -
 
5
 
 -
 
 -
 
5
 
 -
 
5
 - Foreign-currency options contracts
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 - Foreign-currency future contracts
 
 -
 
16
 
35
 
 -
 
51
 
 -
 
51
 - Swaps
 
 -
 
6
 
40
 
 -
 
46
 
 -
 
46
 - Others
 
 -
 
 -
 
10
 
 -
 
10
 
 -
 
10
Restricted assets (i)
 
7,974
 
 -
 
 -
 
 -
 
7,974
 
 -
 
7,974
Financial assets held for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Clal
 
 -
 
16,133
 
 -
 
 -
 
16,133
 
 -
 
16,133
Cash and cash equivalents (excluding bank overdrafts):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Cash on hand and at bank
 
11,772
 
 -
 
 -
 
 -
 
11,772
 
 -
 
11,772
 - Short-term bank in deposits
 
219
 
 -
 
 -
 
 -
 
219
 
 -
 
219
 - Mutual funds
 
40,779
 
305
 
 -
 
 -
 
41,084
 
 -
 
41,084
 - Short-term investments
 
 -
 
1,654
 
 -
 
 -
 
1,654
 
 -
 
1,654
Total assets
 
94,663
 
45,771
 
639
 
2,617
 
143,690
 
7,762
 
151,452
 
 
 
Financial liabilities at amortized cost
 
Financial liabilities at fair value through profit or loss
 
Subtotal financial liabilities
 
Non-financial liabilities
 
Total
 
 
 
 Level 1
 
 Level 2
 
 Level 3
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 17)
 
15,811
 
 -
 
 -
 
 -
 
15,811
 
5,320
 
21,131
Borrowings (excluding finance lease liabilities) (Note 20)
 
292,000
 
 -
 
 -
 
 -
 
292,000
 
 -
 
292,000
Finance lease obligations
 
228
 
 -
 
 -
 
 -
 
228
 
 -
 
228
Derivative financial instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Crops options contracts
 
 -
 
79
 
 -
 
 -
 
79
 
 -
 
79
 - Crops futures contracts
 
 -
 
3
 
 -
 
 -
 
3
 
 -
 
3
 - Foreign-currency options contracts
 
 -
 
42
 
 -
 
 -
 
42
 
 -
 
42
 - Foreign-currency contracts
 
 -
 
 -
 
1
 
 -
 
1
 
 -
 
1
 - Swaps
 
 -
 
 -
 
348
 
 -
 
348
 
 -
 
348
 - Forwards
 
 -
 
 -
 
161
 
 -
 
161
 
 -
 
161
 - Others
 
 -
 
10
 
 -
 
30
 
40
 
 -
 
40
Total liabilities
 
308,039
 
134
 
510
 
30
 
308,713
 
5,320
 
314,033
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
24
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Financial assets and financial liabilities as of June 30, 2018 were as follows:
 
 
 
 Financial assets at amortized cost
 
 Financial assets at fair value through profit or loss
 
 Subtotal financial assets
 
 Non-financial assets
 
 Total
 
 
 
 Level 1
 
 Level 2
 
 Level 3
 
 
 
June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 15)
 
26,902
 
 -
 
 -
 
 -
 
26,902
 
7,743
 
34,645
Investment in financial assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Public companies’ securities
 
 -
 
 -
 
 -
 
172
 
172
 
 -
 
172
- Private companies’ securities
 
 -
 
 -
 
 -
 
1,489
 
1,489
 
 -
 
1,489
- Deposits
 
1,781
 
 -
 
 -
 
 -
 
1,781
 
 -
 
1,781
 - Bonds
 
13
 
 -
 
644
 
 -
 
657
 
 -
 
657
 - Mutual funds
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
- Convertible Notes
 
 -
 
 -
 
 -
 
1,011
 
1,011
 
 -
 
1,011
- Investments in financial assets with quotation
 
 -
 
29,753
 
 -
 
 -
 
29,753
 
 -
 
29,753
Derivative financial instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Crops options contracts
 
 -
 
38
 
 -
 
 -
 
38
 
 -
 
38
 - Crops futures contracts
 
 -
 
73
 
 -
 
 -
 
73
 
 -
 
73
 - Foreign-currency options contracts
 
 -
 
14
 
 -
 
 -
 
14
 
 -
 
14
 - Foreign-currency future contracts
 
 -
 
 -
 
91
 
 -
 
91
 
 -
 
91
 - Swaps
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 - Others
 
 -
 
 -
 
20
 
 -
 
20
 
 -
 
20
Restricted assets (i)
 
8,191
 
 -
 
 -
 
 -
 
8,191
 
 -
 
8,191
Financial assets held for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Clal
 
 -
 
15,621
 
 -
 
 -
 
15,621
 
 -
 
15,621
Cash and cash equivalents (excluding bank overdrafts):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Cash on hand and at bank
 
8,711
 
 -
 
 -
 
 -
 
8,711
 
 -
 
8,711
 - Short-term bank in deposits
 
446
 
 -
 
 -
 
 -
 
446
 
 -
 
446
 - Mutual funds
 
 -
 
450
 
 -
 
 -
 
450
 
 -
 
450
 - Short-term investments
 
36,118
 
3,543
 
 -
 
 -
 
39,661
 
 -
 
39,661
Total assets
 
82,162
 
49,492
 
755
 
2,672
 
135,081
 
7,743
 
142,824
 
 
 
Financial liabilities at amortized cost
 
Financial liabilities at fair value through profit or loss
 
Subtotal financial liabilities
 
Non-financial liabilities
 
Total
 
 
 
 Level 1
 
 Level 2
 
 Level 3
 
 
 
June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities as per Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 17)
 
21,805
 
 -
 
 -
 
 -
 
21,805
 
5,883
 
27,688
Borrowings (excluding finance lease liabilities) (Note 20)
 
279,643
 
 -
 
 -
 
 -
 
279,643
 
 -
 
279,643
Finance lease obligations
 
217
 
 -
 
 -
 
 -
 
217
 
 -
 
217
Derivative financial instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Crops options contracts
 
 -
 
34
 
 -
 
 -
 
34
 
 -
 
34
 - Crops futures contracts
 
 -
 
74
 
 -
 
 -
 
74
 
 -
 
74
 - Foreign-currency options contracts
 
 -
 
23
 
 -
 
 -
 
23
 
 -
 
23
 - Foreign-currency contracts
 
 -
 
57
 
11
 
 -
 
68
 
 -
 
68
 - Swaps
 
 -
 
1
 
60
 
 -
 
61
 
 -
 
61
 - Forward contracts
 
 -
 
 -
 
150
 
 -
 
150
 
 -
 
150
 - Others
 
 -
 
11
 
 -
 
30
 
41
 
 -
 
41
Total liabilities
 
301,665
 
200
 
221
 
30
 
302,116
 
5,883
 
307,999
 
(i)
Corresponds to deposits in guarantee and escrows
 
The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value, except for borrowings (Note 20). The fair value of payables approximates their respective carrying amounts because, due to their short-term nature, the effect of discounting is not considered significant. Fair values are based on discounted cash flows (Level 3).
 
The valuation models used by the Group for the measurement of Level 2 and Level 3 instruments are no different from those used as of June 30, 2018.
 
As of December 31, 2018, there have been no changes to the economic or business circumstances affecting the fair value of the financial assets and liabilities of the Group.
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
25
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from the following table. When no quoted prices are available in an active market, fair values (particularly with derivatives) are based on recognized valuation methods.
 
Description
 
Pricing model / method
 
Parameters
 
Fair value hierarchy
 
Range
Interest rate swaps
 
Cash flows - Theoretical price
 
Interest rate future contracts and cash flows
 
Level 2
 
-
Preferred shares of Condor
 
Binomial tree – Theoretical price I
 
Underlying asset price (Market price); share price volatility (historical) and market interest rate (Libor rate curve).
 
Level 3
 
Underlying asset price 10 to 11
Share price volatility 58% to 78%
Market interest-rate
2.9% to 3.5%
Promissory note
 
Discounted cash flows -
Theoretical price
 
Underlying asset price (Market price); share price volatility (historical) and market interest rate (Libor rate curve).
 
Level 3
 
Underlying asset price 10 to 11
Share price volatility 58% to 78%
Market interest-rate
2.9% to 3.5%
TGLT Non-Convertible Notes
 
Black-Scholes – Theoretical price
 
Underlying asset price (Market price); share price volatility (historical) and market interest rate (Libor rate curve).
 
Level 3
 
Underlying asset price 10 to 13
Share price volatility 55% to 75%
Market interest rate
8% to 9%
 
Call option of Arcos
 
Discounted cash flows
 
Projected revenues and discounting rate.
 
Level 3
 
-
Investments in financial assets - Other private companies’ securities
 
Cash flow / NAV - Theoretical price
 
Projected revenue discounted at the discount rate /
The value is calculated in accordance with shares in the equity funds on the basis of their Financial Statements, based on fair value or investments assessments.
 
Level 3
 
1 - 3.5
Investments in financial assets - Others
 
Discounted cash flow -
Theoretical price
 
Projected revenue discounted at the discount rate /
The value is calculated in accordance with shares in the equity funds on the basis of their Financial Statements, based on fair value or investment assessments.
 
Level 3
 
1 - 3.5
Derivative financial instruments – Forwards
 
Theoretical price
 
Underlying asset price and volatility
 
Level 2 and 3
 
-
 
The following table presents the changes in Level 3 instruments as of December 31, 2018 and June 30, 2018:
 
 
 
 Investments in financial assets - Public companies’ Securities
 
 Derivative financial instruments - Others
 
 Investments in financial assets - Private companies’ Securities
 
 Investments in financial assets - Convertible Notes
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Balances at beginning of the period / year
 
172
 
(30)
 
1,489
 
1,011
 
2,642
 
1,711
Additions and acquisitions
 
 -
 
 -
 
89
 
 -
 
89
 
740
Transfer to level 1
 
 -
 
 -
 
 -
 
 -
 
 -
 
(161)
Currency translation adjustment
 
5
 
 -
 
16
 
 -
 
21
 
365
Deconsolidation
 
 -
 
 -
 
 -
 
 -
 
 -
 
(166)
Write off
 
 -
 
 -
 
 -
 
 -
 
 -
 
(85)
Gain / (loss) for the period / year (i)
 
(18)
 
 -
 
(74)
 
(73)
 
(165)
 
238
Balances at the end of the period / year
 
159
 
(30)
 
1,520
 
938
 
2,587
 
2,642
 
(i) Included within “Financial results, net” in the Statements of Income.
 
 
Clal
 
As mentioned in Note 15 to the Annual Financial Statements, IDBD is subject to a judicial process on the sale of its equity interest in Clal. Following completion of the transactions mentioned in Note 4 to these Financial Statements, IDBD’s interest in Clal was reduced to 29.8% of its share capital.
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
26
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
15.
Trade and other receivables
 
Group’s trade and other receivables as of December 31, 2018 and June 30, 2018 are as follows:
 
 
 
 12.31.18
 
 06.30.18
Trade, leases and services receivable
 
23,997
 
21,593
Less: allowance for doubtful accounts
 
(1,520)
 
(1,067)
Total trade receivables
 
22,477
 
20,526
Prepayments
 
6,502
 
6,141
Borrowings, deposits and other debit balances
 
3,560
 
4,144
Guarantee deposits
 
162
 
209
Tax receivables
 
1,256
 
1,035
Others
 
1,352
 
1,523
Total other receivables
 
12,832
 
13,052
Total trade and other receivables
 
35,309
 
33,578
 
 
 
 
 
Non-current
 
12,920
 
11,637
Current
 
22,389
 
21,941
Total
 
35,309
 
33,578
 
The fair value of current trade and other receivables approximate their respective carrying amounts due to their short-term nature, as the impact of discounting is not considered significant. Fair values are based on discounted cash flows (Level 3).
 
Movements on the Group’s allowance for doubtful accounts were as follows:
 
 
 
 12.31.18
 
 06.30.18
Beginning of the period / year
 
1,067
 
500
Adjustments previous periods (IFRS 9)
 
112
 
 -
Additions (i)
 
297
 
453
Recoveries (i)
 
(35)
 
(45)
Currency translation adjustment
 
245
 
736
Deconsolidation
 
 -
 
(187)
Receivables written off during the period / year as uncollectable
 
(114)
 
(385)
Inflation adjustment
 
(52)
 
(5)
End of the period / year
 
1,520
 
1,067
 
(i)
The creation and release of the allowance for doubtful accounts have been included in “Selling expenses” in the Statement of Income (Note 24).
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
27
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
16.
Cash flow information
 
Following is a detailed description of cash flows generated by the Group’s operations for the six-month periods ended December 31, 2018 and 2017:
 
 
 
Note
 
 12.31.18
 
 12.31.17
(Loss) / Profit for the period
 
 
 
(5,620)
 
11,474
Profit from discontinued operations
 
 
 
(717)
 
(1,291)
Adjustments for:
 
 
 
 
 
 
Income tax
 
21
 
(1,921)
 
(3,327)
Amortization and depreciation
 
24
 
3,056
 
2,930
(Gain) / Loss from disposal of property, plant and equipment
 
 
 
(1)
 
35
Net (gain) / loss from fair value adjustment of investment properties
 
 
 
5,519
 
(10,336)
Share-based compensation
 
 
 
19
 
35
Gain from disposal of intangible assets
 
 
 
(8)
 
 -
Gain from disposal of subsidiary and associates
 
 
 
(696)
 
 -
Gain from disposal of trading properties
 
 
 
(296)
 
 -
Impairment of other assets
 
 
 
154
 
 -
Financial results, net
 
 
 
6,412
 
8,149
Provisions and allowances
 
 
 
408
 
828
Share of loss / (profit) of associates and joint ventures
 
 
 
717
 
(78)
Loss from revaluation of receivables arising from the sale of farmland
 
 
 
1
 
12
(Gain) / Loss from repurchase of Non-convertible Notes
 
 
 
(53)
 
6
Changes in net realizable value of agricultural products after harvest
 
 
 
(34)
 
(81)
Unrealized initial recognition and changes in fair value of biological assets and agricultural products at the point of harvest
 
 
 
(436)
 
(214)
Unrealized gain from derivative financial instruments
 
 
 
(29)
 
(22)
Other operating results
 
 
 
1
 
1
Gain from disposal of farmlands
 
 
 
(53)
 
 -
Impairment of associates and joint ventures
 
 
 
130
 
 -
 
 
 
 
 
 
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
Decrease in inventories
 
 
 
338
 
246
Decrease in trading properties
 
 
 
69
 
834
Increase in restricted assets
 
 
 
(117)
 
 -
Decrease / (increase) in trade and other receivables
 
 
 
662
 
(1,816)
Decrease in trade and other payables
 
 
 
(1,567)
 
(889)
Decrease in salaries and social security liabilities
 
 
 
(291)
 
(188)
Decrease in provisions
 
 
 
(63)
 
(7)
(Increase) / Decrease in biological assets
 
 
 
(607)
 
138
Net variation in derivative financial instruments
 
 
 
104
 
40
 
 
 
 
 
 
 
Net cash generated by continuing operating activities before income tax paid
 
 
 
5,081
 
6,479
Net cash generated by discontinued operating activities before income tax paid
 
 
 
678
 
4,230
Net cash generated by operating activities before income tax paid
 
 
 
5,759
 
10,709
 
 
The following table presents a detail of significant non-cash transactions occurred in the six-month periods ended December 31, 2018 and 2017:
 
 
 
 
 
 12.31.18
 
 12.31.17
Dividends not collected
 
 
 
(4)
 
(42)
Increase in investments in subsidiaries, associates and joint ventures through an decrease in trade and other receivables
 
 
 
(4)
 
 -
Increase in investment properties through a decrease in trade and other payables
 
 
 
4
 
 -
Decrease in investments in subsidiaries, associates and joint ventures through an increase in trade and other receivables
 
 
 
(167)
 
1
Increase in investments in subsidiaries, associates and joint ventures through an decrease in borrowings
 
 
 
5
 
 -
Decrease in trade and other receivables through an increase in investments in subsidiaries, associates and joint ventures
 
 
 
6
 
 -
Increase in property, plant and equipment through an increase in trade and other payables
 
 
 
303
 
19
Increase in investment properties through an increase in borrowings
 
 
 
27
 
 -
Increase in intangible assets through an increase in trade and other payables
 
 
 
176
 
 -
Increase in trading properties through an increase in borrowings
 
 
 
28
 
 -
Increase in investment properties through a decrease in trade and other receivables
 
 
 
174
 
52
Increase in investment properties through a decrease in trading properties
 
 
 
555
 
 -
Purchase of non-controlling interest through a decrease in trade and other receivables
 
 
 
 -
 
2,041
Changes in non-controlling interest through a decrease in trade and other receivables
 
 
 
 -
 
322
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
28
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
17.
Trade and other payables
 
Group’s trade and other payables as of December 31, 2018 and June 30, 2018 were as follows:
 
 
 
 12.31.18
 
 06.30.18
Trade payables
 
10,811
 
13,911
Sales, rental and services payments received in advance
 
3,101
 
4,555
Construction obligations
 
986
 
1,881
Accrued invoices
 
1,456
 
1,725
Deferred income
 
76
 
47
Total trade payables
 
16,430
 
22,119
Dividends payable to non-controlling shareholders
 
121
 
157
Taxes payable
 
495
 
615
Construction obligations
 
372
 
664
Management fees
 
1,130
 
1,722
Others
 
2,583
 
2,411
Total other payables
 
4,701
 
5,569
Total trade and other payables
 
21,131
 
27,688
 
 
 
 
 
Non-current
 
2,345
 
4,724
Current
 
18,786
 
22,964
Total
 
21,131
 
27,688
 
 
18.
Equity
 
Cresud’s Shareholder’s meeting
 
On October 29, 2018, the Shareholders' Meeting of Cresud was held, which approved, among other things: (i) to allocate the profit for the fiscal year ended June 30, 2018, which showed a profit of Ps. 4,983, to the integration of a special reserve that may be allocated to the distribution of future dividends, to the development of projects and businesses aligned with the business plan of the Company or for the cancellation of liabilities, delegating to the board of Directors the implementation of the actions necessary for the application of the funds to any of said destinations; (ii) allocate the unallocated results in the amount of Ps. 9,646 to the constitution of a special reserve that may be destinated for future dividends, to the development of projects and businesses aligned with the business plan of the Company or for the cancellation of liabilities; (iii) the distribution of treasury shares for up to the sum of 20,656,215 shares, allocating (a) the amount of 93,020 shares to the incentive plan for employees of the Company and (b) the amount of 20,563,195 to the shareholders in proportion to their stake; and (ii) amend articles of the corporate statute numbers eighth (related to the issuance of shares), eleventh (referred to Negotiable Obligations) and twenty-second (related to the Audit Committee), to adapt it to the new legal provisions.
 
Distribution of treasury shares
 
In accordance with the resolutions Shareholders' Meeting held on October 9, 2018 and the provisions of the Board of Directors of Cresud on the same day, the distribution of treasury stock of the Company duly acquired by a company took place on November 12, 2018. The number of shares distributed was 20,656,215, which constitutes 0.04294551131 shares per ordinary share and 0.4294551131 per ADS, and a percentage of 4.171713807% of the capital of Ps. 502 and 4.294551131% of the net capital which exclude treasury shares of Ps. 481.
 
Buyback plan of Cresud shares
 
The Board of Directors of Cresud approved the buyback plan and established the terms and conditions for the acquisition of treasury shares, under the terms of Article 64 of Law No. 26,831 and the rules of the CNV, for up to a maximum amount of Ps. 300 million and up to 10% of the share capital in the form of ordinary shares or ADSs, up to a daily limit of up to 25% of the average volume of shares in both markets, during the previous 90 business days, and at a price comprised between a minimum of Ps. 1 per share and up to a maximum of US $ 15.50 per ADS and up to a maximum value in pesos equivalent to the maximum price per ADS divided by 10 and multiplied by the exchange rate of the Banco de la Nación Argentina at every purchase date. Additionally, the length of the buyback plan was set, up to 90 days, beginning the day following the date of publication of the information in the Daily Bulletin of the Buenos Aires Stock Exchange.
 
During the six-month period ended December 31, 2018, the Company acquired 249,215 ordinary shares (VN $ 1 per share) for a total of Ps. 11 and 240,487 ADS (representing 2,404,870 ordinary shares) for a total of US$ 2.8 (equivalent to Ps. 107). As of the date of issuance of these financial statements, no deadline has been established for the use of the shares acquired.
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
29
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
19.
Provisions
 
The table below shows the movements in the Group's provisions categorized by type:
 
 
 
 Legal claims (i)
 
 Investments in associates and joint ventures (ii)
 
 Sited dismantling and remediation
 
 Onerous contracts
 
 Other provisions
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Beginning of period / year
 
1,344
 
3,126
 
211
 
 -
 
1,216
 
5,897
 
3,003
Additions
 
196
 
231
 
 -
 
 -
 
54
 
481
 
3,491
Inflation adjustment
 
(30)
 
 -
 
 -
 
 -
 
 -
 
(30)
 
(17)
Recovery
 
(110)
 
 -
 
(9)
 
 -
 
 -
 
(119)
 
(612)
Deconsolidation
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
(587)
Currency translation adjustment
 
25
 
77
 
(1)
 
 -
 
89
 
190
 
604
Incorporated by business combination
 
 -
 
 -
 
 -
 
 -
 
 -
 
 -
 
15
End of period / year
 
1,425
 
3,434
 
201
 
 -
 
1,359
 
6,419
 
5,897
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current
 
 
 
 
 
 
 
 
 
 
 
5,065
 
4,547
Current
 
 
 
 
 
 
 
 
 
 
 
1,354
 
1,350
Total
 
 
 
 
 
 
 
 
 
 
 
6,419
 
5,897
 
(i)
Additions and recoveries are included in "Other operating results, net".
(ii)
Corresponds to the equity interest in New Lipstick with negative equity. Additions and recoveries are included in “Share of profit of associates and joint ventures”
 
There were no significant changes to the processes mentioned in Note 20 to the Annual Financial Statements.
 
 
20.
Borrowings
 
The breakdown and fair value of the Group’s borrowings as of December 31, 2018 and June 30, 2018 was as follows:
 
 
 
 Book value
 
 
Fair value
 
 
 12.31.18
 
 06.30.18
 
 
 12.31.18
 
 06.30.18
NCN
 
243,695
 
226,876
 
 
244,116
 
306,337
Bank loans
 
44,517
 
46,594
 
 
46,960
 
58,509
Bank overdrafts
 
218
 
1,429
 
 
218
 
1,665
Other borrowings (i)
 
3,798
 
4,961
 
 
5,194
 
8,138
Total borrowings (ii)
 
292,228
 
279,860
 
 
296,488
 
374,649
 
 
 
 
 
 
 
 
 
 
Non-current
 
239,632
 
238,963
 
 
 
 
 
Current
 
52,596
 
40,897
 
 
 
 
 
Total
 
292,228
 
279,860
 
 
 
 
 
 
(i)
Includes finance leases in the amount of Ps. 228 and Ps. 217 as of December 31 and June 30, 2018, respectively.
(ii)
Includes Ps. 281,127 and Ps. 180,814 as of December 31 and June 30, 2018, respectively, corresponding to the Operations Center in Israel.
 
 
 
The following table describes the Group’s issuance of debt during the present period:
 
Entity
Class
Issuance / expansion date
Amount in original currency
Maturity date
Interest rate
Principal payment
Interest payment
 
Cresud
Class XXIV
Nov-18
USD 73.6
11/14/2020
9.00% n.a
At expiration
quarterly
 
Cellcom
SERIES K
Jul-18
NIS 220
07/05/2026
3.55% e.a.
Annual payments since 2021
annually
(1)
Cellcom
SERIES K
Dec-18
NIS 187
07/05/2026
3.55% e.a.
Annual payments since 2021
annually
 
Cellcom
SERIES L
Dec-18
NIS 213
01/05/2028
3.55% e.a.
Annual payments since 2023
annually
 
PBC
SERIES I
Jul-18
NIS 507
06/29/2029
3.95% e.a.
At expiration
quarterly
(1)
Gav - Yam
SERIES A
Jul-18
NIS 320
10/31/2023
3.55% e.a.
Annual payments since 2021
biannually
 
Gav - Yam
SERIES A
Dec-18
NIS 351
10/31/2023
3.55% e.a.
Annual payments since 2021
biannually
 
Gav - Yam
SERIES H
Sep-18
NIS 596
06/30/2034
2.55% e.a.
At expiration
annually
(1)
 
(1)
Corresponds to an expansion of the series.
 
IDBD
 
On August 9, 2018 the Board of Directors of IDBD resolved to perform a partial prepayment of series M debentures of IDBD which took place on August 28, 2018. The partial prepayment amounted to NIS 146 million (approximately Ps 1,491 as of the date of issuance of these financial statements) which represents a 14.02% of the remaining amount of series M debentures.
 
30 
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
21.
Taxes
 
The details of the Group’s income tax, is as follows:
 
 
 
 12.31.18
 
 12.31.17
Current income tax
 
(626)
 
(1,093)
Deferred income tax
 
2,547
 
4,420
Income tax from continuing operations
 
1,921
 
3,327
 
Below is a reconciliation between income tax recognized and the amount which would result from applying the prevailing tax rate on profit before income tax for the six-month periods ended December 31, 2018 and 2017:
 
 
 
 12.31.18
 
 12.31.17
Tax calculated at the tax rates applicable to profits in the respective countries (*)
 
2,585
 
(3,563)
Permanent differences:
 
 
 
 
Share of (loss) / profit of joint ventures and associates
 
(183)
 
1,061
Tax rate differential
 
297
 
7,669
Taxable profit of non-argentinian holding subsidiaries
 
(45)
 
 -
Provision for unrecoverability of tax loss carry-forwards / Unrecognized tax loss carry-forwards
 
(1,256)
 
(1,501)
Changes in fair value of financial instruments
 
93
 
 -
Non-taxable profit, non-deductible expenses and others
 
144
 
219
Permanent inflation adjustment
 
286
 
(558)
Income tax from continuing operations
 
1,921
 
3,327
 
(*) The Income Tax rate in effect in Argentina as of December 31, 2017 was 35%, while as of December 31, 2018 is 30%. See Note 20 to the Annual Financial Statements.
 
 
The gross movement in the deferred income tax account is as follows:
 
 
 
 12.31.18
 
 06.30.18
Beginning of period / year
 
(32,880)
 
(36,977)
Adjustments previous periods (IFRS 9 and 15)
 
(53)
 
 -
Incorporated by business combination
 
 -
 
3,804
Deconsolidation
 
 -
 
 -
Currency translation adjustment
 
(67)
 
(4,926)
Revaluation surplus
 
(521)
 
(89)
Reserve for changes of non-controlling interest
 
 -
 
(19)
Use of tax loss carry-forwards
 
 -
 
 -
Charged to the Statement of Income
 
2,547
 
5,327
End of the period / year
 
(30,974)
 
(32,880)
 
 
 
 
 
Deferred income tax assets
 
1,437
 
1,498
Deferred income tax liabilities
 
(32,411)
 
(34,378)
Deferred income tax liabilities, net
 
(30,974)
 
(32,880)
 
 
22.
Revenues
 
 
 
 12.31.18
 
 12.31.17
Beef
 
1,631
 
1,432
Crops
 
1,581
 
1,367
Sugarcane
 
1,065
 
914
Cattle
 
165
 
228
Supplies
 
242
 
136
Dairy
 
 -
 
118
Consignment
 
288
 
112
Advertising and brokerage fees
 
158
 
105
Agricultural rental and other services
 
40
 
16
Other
 
54
 
265
Income from sales and services from agricultural business
 
5,224
 
4,693
Trading properties and developments
 
2,340
 
580
Communication services
 
11,937
 
10,613
Sale of communication equipment
 
3,704
 
3,480
Rental and services
 
8,672
 
8,095
Hotel operations, tourism services and others
 
1,226
 
777
Income from sales and services from urban properties and investment business
 
27,879
 
23,545
Total revenues
 
33,103
 
28,238
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
31
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
23.
Costs
 
 
 
 12.31.18
 
 12.31.17
Other operative costs
 
10
 
13
Cost of property operations
 
10
 
13
Beef
 
1,413
 
1,345
Crops
 
1,501
 
1,035
Sugarcane
 
883
 
796
Cattle
 
221
 
237
Supplies
 
185
 
143
Dairy
 
 -
 
86
Consignment
 
29
 
24
Advertising and brokerage fees
 
103
 
98
Agricultural rental and other services
 
110
 
75
Cost of sales and services from agricultural business
 
4,445
 
3,839
Trading properties and developments
 
1,866
 
550
Communication services
 
8,744
 
7,585
Sale of communication equipment
 
2,646
 
2,330
Rental and services
 
2,304
 
2,226
Revenue from supermarkets
 
 -
 
56
Hotel operations, tourism services and others
 
724
 
676
Cost of sales and services from sales and services from urban properties and investment business
 
16,284
 
13,423
Total costs
 
20,739
 
17,275
 
 
24.
Expenses by nature
 
The Group discloses expenses in the statements of income by function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”. The following table provides additional disclosures regarding expenses by nature and their relationship to the function within the Group.
 
 
 
 Production costs
 
 Costs (i)
 
 General and administrative expenses
 
 Selling expenses
 
 Total as of 12.31.18
 
 Total as of 12.31.17
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sale of goods and services
 
 -
 
4,590
 
 -
 
 -
 
4,590
 
2,961
Supplies and labors
 
2,309
 
1,570
 
 -
 
10
 
3,889
 
2,796
Cost of sale of agricultural products and biological assets
 
(35)
 
2,163
 
 -
 
 -
 
2,128
 
1,739
Salaries, social security costs and other personnel expenses
 
529
 
2,091
 
1,408
 
1,432
 
5,460
 
4,569
Depreciation and amortization
 
159
 
1,892
 
519
 
645
 
3,215
 
3,066
Fees and payments for services
 
11
 
1,916
 
768
 
54
 
2,749
 
2,433
Maintenance, security, cleaning, repairs and others
 
29
 
1,372
 
233
 
99
 
1,733
 
1,407
Advertising and other selling expenses
 
 -
 
242
 
5
 
657
 
904
 
1,182
Taxes, rates and contributions
 
16
 
259
 
36
 
295
 
606
 
484
Interaction and roaming expenses
 
 -
 
1,675
 
 -
 
 -
 
1,675
 
1,518
Fees to other operators
 
 -
 
2,330
 
 -
 
 -
 
2,330
 
1,765
Director's fees
 
 -
 
 -
 
311
 
 -
 
311
 
200
Leases and service charges
 
3
 
52
 
19
 
100
 
174
 
133
Allowance for doubtful accounts, net
 
 -
 
2
 
8
 
248
 
258
 
146
Freights
 
22
 
1
 
 -
 
168
 
191
 
291
Bank expenses
 
 -
 
42
 
11
 
7
 
60
 
9
Commissions
 
 -
 
 -
 
 -
 
 -
 
 -
 
21
Conditioning and clearance
 
 -
 
 -
 
 -
 
35
 
35
 
53
Travel, library expenses and stationery
 
16
 
2
 
6
 
1
 
25
 
21
Other expenses
 
465
 
540
 
266
 
164
 
1,435
 
1,219
Total as of 12.31.18
 
3,524
 
20,739
 
3,590
 
3,915
 
31,768
 
 
Total as of 12.31.17
 
1,848
 
17,275
 
3,105
 
3,785
 
 
 
26,013
 
(i)
Includes Ps. 10 and Ps. 13 of other agricultural operating costs as of December 31, 2018 and 2017, respectively.
 
 
25.
 Other operating results, net
 
 
 
 12.31.18
 
 12.31.17
Gain from commodity derivative financial instruments
 
176
 
38
Gain from disposal of subsidiaries and associates (i)
 
696
 
608
Impairment of associates and joint ventures (ii)
 
(130)
 
 -
Donations
 
(42)
 
(46)
Lawsuits and other contingencies
 
(25)
 
575
Others
 
(154)
 
(69)
Total other operating results, net
 
521
 
1,106
 
(i)
As of December 31, 2018 and 2017 includes the result from the sale of the Group’s equity interest in Cyber Secdo and Rimon, respectively.
(ii)
See Note 35.
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
32
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
26.
Financial results, net
 
 
 
 12.31.18
 
 12.31.17
Financial income
 
 
 
 
Interest income
 
625
 
558
Foreign exchange gains
 
437
 
10
Dividends income
 
43
 
67
Other financial income
 
147
 
67
Total financial income
 
1,252
 
702
Financial costs
 
 
 
 
Interest expenses
 
(7,798)
 
(6,158)
Loss on debt swap
 
 -
 
(3,486)
Foreign exchange losses
 
(2,309)
 
(10)
Other financial costs
 
(296)
 
(287)
Total financial costs
 
(10,403)
 
(9,941)
Capitalized finance costs
 
55
 
13
Total finance costs
 
(10,348)
 
(9,928)
Other financial results:
 
 
 
 
Fair value gains of financial assets and liabilities at fair value through profit or loss
 
1,000
 
976
Gain / (Loss) from repurchase of Non-convertible notes
 
53
 
(6)
(Loss) / Gain from derivative financial instruments (except commodities)
 
221
 
84
Gain on the revaluation of receivables arising from the sale of farmland
 
(1)
 
(12)
Total other financial results
 
1,273
 
1,042
Inflation adjustment
 
(127)
 
(21)
Total financial results, net
 
(7,950)
 
(8,205)
 
 
27.
Related party transactions
 
The following is a summary of the balances with related parties as of December 31, 2018 and June 30, 2018:
 
Item
 
 12.31.18
 
 06.30.18
Trade and other receivables
 
921
 
977
Investments in financial assets
 
159
 
172
Trade and other payables
 
(1,394)
 
(1,868)
Borrowings
 
(7)
 
(13)
Total
 
(321)
 
(732)
 
 
Related party
 
 12.31.18
 
 06.30.18
 
Description of transaction
Agro Uranga S.A.
 
6
 
34
 
Sale of goods and / or services receivable
Condor
 
159
 
172
 
Public companies' securities
 
 
12
 
 -
 
Dividends receivable
Cresca S.A.
 
(14)
 
(14)
 
Other liabilities
New Lipstick LLC
 
9
 
9
 
Reimbursement of expenses receivable
 
 
773
 
746
 
Loans granted
Manibil S.A.
 
49
 
92
 
Contributions in advance
Uranga Traiding S.A.
 
(3)
 
 -
 
Purchase of goods and / or services payable
Other associates and joint ventures (i)
 
2
 
3
 
Leases and/or rights of use receivable
 
 
 -
 
(1)
 
Leases and/or rights of use to pay
 
 
 -
 
(4)
 
Purchase of goods and / or services payable
 
 
1
 
1
 
Shared-based compensation receivable
 
 
13
 
9
 
Loans granted
 
 
(7)
 
(13)
 
Loans payable
 
 
6
 
6
 
Reimbursement of expenses receivable
 
 
(1)
 
(1)
 
Reimbursement of expenses payable
Total associates and joint ventures
 
1,005
 
1,039
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
33
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
 
Related party
 
 12.31.18
 
 06.30.18
 
Description of transaction
CAMSA and its subsidiaries
 
(1,130)
 
(1,722)
 
Fees payable
 
 
3
 
3
 
Reimbursement of expenses receivable
LRSA
 
 -
 
37
 
Leases and/or rights of use receivable
 
 
 -
 
(1)
 
Reimbursement of expenses payable
 
 
43
 
 -
 
Loans granted
 
 
2
 
 -
 
Fees payable
 
 
 -
 
9
 
Dividends receivable
IRSA Real Estate Strategies LP
 
 -
 
24
 
Dividends receivable
 
 
3
 
3
 
Reimbursement of expenses
Other related parties (ii)
 
(11)
 
(14)
 
Other liabilities
 
 
(2)
 
(3)
 
Legal services payable
 
 
1
 
1
 
Leases and/or rights of use receivable
Total other related parties
 
(1,091)
 
(1,663)
 
 
Directors and Senior Management
 
(235)
 
(108)
 
Fees for services received
Total Directors and Senior Management
 
(235)
 
(108)
 
 
Total
 
(321)
 
(732)
 
 
 
(i)
Includes Agrofy Global, Lipstick Management LLC, Mehadrin, Banco Hipotecario S.A., Tarshop S.A., BACS, Puerto Retiro S.A., Austral Gold Ltd., Cyrsa S.A., Nuevo Puerto Santa Fe S.A. and Quality Invest S.A.
(ii)
Includes Estudio Zang, Bergel & Viñes, Museo de los Niños, Hamonet S.A., CAM Communication L.P., Gary Goldstein, Fundación IRSA, Lartiyrigoyen and SAMSA.
 
 
The following is a summary of the results with related parties for the six-month periods ended December 31, 2018 and 2017:
 
Related party
 
 12.31.18
 
 12.31.17
 
Description of transaction
Agrofy S.A.
 
2
 
2,112
 
Management fees / Directory
 
 
 -
 
957
 
Financial operations
Agro-Uranga S.A.
 
 -
 
138
 
Sale of goods and/or services
BACS
 
16
 
8
 
Leases and/or rights of use
Condor
 
 -
 
24
 
Financial operations
ISPRO-MEHADRIN
 
 -
 
53
 
Corporate services
 
 
 -
 
570
 
Management fees / Directory
Other associates and joint ventures
 
22
 
14
 
Leases and/or rights of use
 
 
 -
 
2
 
Management fees / Directory
 
 
26
 
 -
 
Corporate services
 
 
7
 
12
 
Financial operations
 
 
1
 
 -
 
Commissions
Total associates and joint ventures
 
74
 
3,891
 
 
CAMSA and its subsidiaries
 
 -
 
(785)
 
Management fee
Taaman
 
 -
 
78
 
Corporate services
Willi-Food International Ltd.
 
 -
 
136
 
Corporate services
Other related parties (i)
 
21
 
(1)
 
Leases and/or rights of use
 
 
(7)
 
 -
 
Fees and remunerations
 
 
3
 
4
 
Corporate services
 
 
(1)
 
(8)
 
Legal services
 
 
5
 
4
 
Financial operations
 
 
(8)
 
(7)
 
Donations
 
 
1
 
65
 
Commissions
Total other related parties
 
14
 
(515)
 
 
IFISA
 
 -
 
60
 
Financial operations
Total Parent Company
 
 -
 
60
 
 
Directors
 
(13)
 
(7)
 
Compensation of Directors and senior management
 
 
(255)
 
(83)
 
Fees and remunerations
Senior Management
 
(14)
 
(135)
 
Compensation of Directors and senior management
Total Directors and Senior Management
 
(282)
 
(225)
 
 
Total
 
(194)
 
3,210
 
 
 
(i)
Includes Estudio Zang, Bergel & Viñes, Fundación IRSA, Ramat Hanassi, Austral Gold Argentina S.A., Isaac Elsztain e Hijos, Hamonet S.A., LRSA, TGLT, New Lipstick, BHN Vida S.A.and BHSA.
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
34
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The following is a summary of the transactions with related parties for the six-month periods ended December 31, 2018 and 2017:
 
Related party
 
 12.31.18
 
 12.31.17
 
Description of transaction
Uranga Trading S.A.
 
23
 
 -
 
Irrevocable contributions
Manibil
 
 -
 
65
 
Irrevocable contributions
Quality
 
19
 
 -
 
Irrevocable contributions
Total contributions
 
42
 
65
 
 
Inversiones Financieras del Sur S.A.
 
 -
 
125
 
Dividends paid
Total dividends paid
 
 -
 
125
 
 
Agro-Uranga S.A.
 
13
 
6
 
Dividends received
Condor
 
38
 
 -
 
Dividends received
Emco
 
8
 
 -
 
Dividends received
La Rural S.A.
 
 -
 
19
 
Dividends received
Manaman
 
23
 
 -
 
Dividends received
Mehadrin
 
54
 
 -
 
Dividends received
Nuevo Puerto Santa Fe S.A.
 
9
 
 -
 
Dividends received
Nave by the sea
 
28
 
 -
 
Dividends received
Total dividends received
 
173
 
25
 
 
Inversiones Financieras del Sur S.A.
 
 -
 
2,911
 
Acquisition of non-controlling interest
Total other transactions
 
 -
 
2,911
 
 
 
 
28.
CNV General Resolution N° 622
 
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622, below there is a detail of the notes to this Financial Statements that disclose the information required by the Resolution in Exhibits.
 
Exhibit A - Property, plant and equipment
 
Note 8 - Investment properties
 
 
Note 9 - Property, plant and equipment
Exhibit B - Intangible assets
 
Note 11 - Intangible assets
Exhibit C - Equity investments
 
Note 7 - Investments in associates and joint ventures
Exhibit D - Other investments
 
Note 14 - Financial instruments by category
Exhibit E - Provisions
 
Note 19 - Provisions
Exhibit F - Cost of sales and services provided
 
Note 29 - Cost of sales and services provided
Exhibit G - Foreign currency assets and liabilities
 
Note 30 - Foreign currency assets and liabilities
 
 
29.
Cost of goods sold and services provided
 
Description
 
Cost of sales and services from agricultural business (i)
 
Cost of sales and services from sales and services from urban properties and investment business (ii) (iii)
 
Total as of 12.31.18
 
Total as of 12.31.17
Inventories at the beginning of the period / year
 
3,518
 
13,466
 
16,984
 
18,056
Adjustment previous periods (IFRS 15)
 
 -
 
(4,804)
 
(4,804)
 
 -
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
23
 
 -
 
23
 
(639)
Changes in the net realizable value of agricultural products after harvest
 
(56)
 
 -
 
(56)
 
19
Capitalized finance costs
 
 -
 
28
 
28
 
4
Currency translation adjustment
 
(48)
 
(835)
 
(883)
 
904
Transfers
 
 -
 
555
 
555
 
(703)
Harvest
 
1,621
 
 -
 
1,621
 
1,454
Acquisitions and classifications
 
2,978
 
22,245
 
25,223
 
53,128
Consume
 
(1,130)
 
 -
 
(1,130)
 
(837)
Disposals due to advance in work in progress
 
 -
 
(138)
 
(138)
 
 -
Expenses incurred
 
685
 
 -
 
685
 
864
Inventories at the end of the period / year
 
(3,146)
 
(8,122)
 
(11,268)
 
(18,052)
Cost as of 12.31.18
 
4,445
 
22,395
 
26,840
 
 -
Cost as of 12.31.17
 
3,839
 
50,359
 
 -
 
54,198
 
(i) 
Includes biological assets (see Note 12).
(ii) 
Includes trading properties (see Note 10).
(ii)
It includes costs for an amount of Ps. 6,111 and Ps. 36,936 that were exposed as discontinued operations as of December 31, 2018 and 2017.
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
35
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
30.
Foreign currency assets and liabilities
 
Book amounts of foreign currency assets and liabilities are as follows:
 
Item (3) / Currency
 
 Amount of foreign currency (2)
 
 Prevailing exchange rate (1)
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Assets
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
US Dollar
 
74
 
37.50
 
2,764
 
2,696
Euros
 
4
 
42.84
 
160
 
227
Chilean Pesos
 
 -
 
0.05
 
 -
 
5
Trade and other receivables related parties
 
 
 
 
 
 
 
 
US Dollar
 
 -
 
37.50
 
 -
 
1,741
Total Trade and other receivables
 
 
 
 
 
2,924
 
4,669
Investment in financial assets
 
 
 
 
 
 
 
 
US Dollar
 
62
 
37.50
 
2,336
 
4,861
Pounds
 
1
 
47.60
 
41
 
50
Total Investment in financial assets
 
 
 
 
 
2,377
 
4,911
Derivative financial instruments
 
 
 
 
 
 
 
 
US Dollar
 
1
 
37.50
 
43
 
55
Total Derivative financial instruments
 
 
 
 
 
43
 
55
Cash and cash equivalents
 
 
 
 
 
 
 
 
US Dollar
 
282
 
37.50
 
10,572
 
10,270
Euros
 
2
 
42.84
 
72
 
84
Brazilian Reais
 
 -
 
9.25
 
 -
 
 -
Chilean Pesos
 
18
 
0.05
 
1
 
1
Uruguayan pesos
 
 -
 
1.16
 
 -
 
 -
Total Cash and cash equivalents
 
 
 
 
 
10,645
 
10,355
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Trade and other payables
 
 
 
 
 
 
 
 
US Dollar
 
183
 
37.70
 
6,911
 
4,080
Euros
 
2
 
43.16
 
81
 
112
Chilean pesos
 
 -
 
0.05
 
 -
 
1
Trade and other payables related parties
 
 
 
 
 
 
 
 
US Dollar
 
 -
 
37.70
 
 -
 
(4)
Total Trade and other payables
 
 
 
 
 
6,992
 
4,189
Borrowings
 
 
 
 
 
 
 
 
US Dollar
 
1,263
 
37.70
 
47,612
 
45,798
Borrowings
 
 
 
 
 
 
 
 
US Dollar
 
1
 
37.70
 
38
 
 -
Total Borrowings
 
 
 
 
 
47,650
 
45,798
Derivative financial instruments
 
 
 
 
 
 
 
 
US Dollar
 
2
 
37.70
 
69
 
(14)
Total Derivative financial instruments
 
 
 
 
 
69
 
(14)
 
(1)
Exchange rates as of December 31, 2018 and June 30, 2018, respectively according to Banco Nación Argentina.
(2)
Considering foreign currencies those that differ from each Group’s subsidiaries functional currency at each period/year-end.
(3)
The Company uses derivative instruments as a complement in order to reduce its exposure to exchange rate movements (Note 14).
 
 
31.
Groups of assets and liabilities held for sale
 
As mentioned in Note 4 to the Annual Financial Statements, the Group has certain assets and liabilities classified as held for sale. The following table shows the main ones:
 
 
 
 12.31.18
 
 06.30.18
Property, plant and equipment
 
3,603
 
3,439
Intangible assets
 
 -
 
41
Investments in associates
 
362
 
60
Deferred income tax assets
 
80
 
131
Investment properties
 
905
 
664
Income tax credit
 
11
 
 -
Trade and other receivables
 
1,692
 
1,841
Cash and cash equivalents
 
1,147
 
442
Total group of assets held for sale
 
7,800
 
6,618
Trade and other payables
 
2,898
 
2,495
Employee benefits
 
181
 
191
Deferred and current income tax liability
 
10
 
20
Borrowings
 
1,500
 
1,428
Total group of liabilities held for sale
 
4,589
 
4,134
Total net financial assets held for sale
 
3,211
 
2,484
 
 
 
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
36
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
32.
Results from discontinued operations
 
The results from operations of Shufersal for the period ended December 31, 2017 and the results from Israir and IDB Tourism for both periods; have been reclassified in the Statements of Income under discontinued operations.
 
 
 
 12.31.18
 
 12.31.17
Revenues
 
7,005
 
48,873
Costs
 
(6,111)
 
(36,936)
Gross profit
 
894
 
11,937
Net gain from fair value adjustment of investment properties
 
 -
 
71
General and administrative expenses
 
(237)
 
(870)
Selling expenses
 
(272)
 
(8,929)
Other operating results, net
 
294
 
(168)
(Loss) / Profit from operations
 
679
 
2,041
Share of profit of joint ventures and associates
 
27
 
43
(Loss) / Profit from operations before financing and taxation
 
706
 
2,084
Financial income
 
57
 
71
Finance costs
 
(69)
 
(540)
Other financial results
 
23
 
(6)
Financial results, net
 
11
 
(475)
(Loss) / Profit before income tax
 
717
 
1,609
Income tax
 
 -
 
(318)
(Loss) / Profit for the period from discontinued operations
 
717
 
1,291
 
 
 
 
 
(Loss) / Profit for the period from discontinued operations attributable to:
 
 
 
 
Equity holders of the parent
 
734
 
430
Non-controlling interest
 
(17)
 
861
 
 
 
 
 
(Loss) / Profit per share from discontinued operations attributable to equity holders of the parent:
 
 
 
 
Basic
 
0.96
 
0.86
Diluted
 
0.93
 
0.86
 
As of December 31, 2017, Ps. 43,275 of the total revenues from discontinued operations and Ps 975 of the total profit from discontinued operations correspond to Shufersal.
 
 
33.
CNV General Ruling N° 629/14 – Storage of documentation
 
On August 14, 2014, the CNV issued General Ruling N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Group has entrusted the storage of certain non-sensitive and old information to the following providers:
 
Documentation storage provider
 
Location
Bank S.A.
 
Gral. Rivas 401, Avellaneda, Province of Buenos Aires
 
 
Ruta Panamericana Km 37,5, Garín, Province of Buenos Aires
 
 
Av. Fleming 2190, Munro, Province of Buenos Aires
 
 
Carlos Pellegrini 1401, Avellaneda, Province of Buenos Aires
Iron Mountain Argentina S.A.
 
Av. Amancio Alcorta 2482, Autonomous City of Buenos Aires
 
 
Pedro de Mendoza 2143, Autonomous City of Buenos Aires
 
 
Saraza 6135, Autonomous City of Buenos Aires
 
 
Azara 1245, Autonomous City of Buenos Aires
 
 
Polígono industrial Spegazzini, Autopista Ezeiza Km 45, Cañuelas, Province of Buenos Aires
 
 
Cañada de Gomez 3825, Autonomous City of Buenos Aires
 
It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of section I, Chapter V, Title II of the RULES (N.T. 2013 as amended) are available at the registered office.
 
On February 5, 2014 there was a widely known fire in Iron Mountain’s warehouse, which company is a supplier of the Group and where Group’s documentation was being kept. Based on the internal review carried out by the Group, duly reported to the CNV on February 12, 2014, the information kept at the Iron Mountain premises that were on fire do not appear to be sensitive or capable of affecting normal operations.
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
37
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
34.
Other relevant events of the period
 
Class action
 
Based on the resolution adopted by the New York Court in the class action filed against IRSA Inversiones y Representaciones S.A. and the Company that was dismissed by a resolution adopted by said Court on September 10, 2018, the plaintiffs of the Company filed a motion recognizing that, based on the provisions of the Court in the aforementioned resolution, the action for dismissal could eventually be dismissed. class initiated against Cresud, reserving the right to appeal to them.
 
The Company maintains that the allegations are unfounded and will continue to make a firm defense. See Note 20 to the Annual Financial Statements.
 
DIC class action
 
On October 3, 2018 it was sent an action and a motion to approve that action as a class action (jointly – the "Motion"), which had been filed with the District Court of Tel Aviv Yafo (the "Court") against the Group; against Mr. Eduardo Elsztain, the controlling person of the Company (the "Controlling Person"), who serves as chairman of the Company's board of directors; against directors serving in the Group who have an interest in the Controlling Person; and against additional directors and officers serving in the Company (all jointly – the "Respondents"), in connection with the exit of the Company's share, on February 1, 2018, from the TA 90 and TA 125 indices, whereon it had been traded on the Tel Aviv Stock Exchange Ltd. up to that date (the "Indices"), by an applicant alleging to have held the Group's shares prior to February 1, 2018 and thereafter (the "Applicant").
 
In the Motion, the Court is requested, inter alia, to approve the action as a class action and to charge the Respondents with compensating the members of the group according to the damage caused them. The estimated amount is approximately NIS 17.6 million.
 
The Company believes that it acted lawfully and as required in all that pertains to the subject of the Motion, and accordingly, after having preliminarily reviewed the Group's Motion, feels that it is unfounded.
 
IDBD class action
 
On October 3, 2018, an action and a motion to approve a class action had been filed with the District Court in Tel Aviv Yafo (jointly – the "Motion"). The Motion had been filed, against the IDBD, against Dolphin IL, against Mr. Eduardo Elsztain and against the Official Receiver, and in it, the court was requested to hold that the Transaction was not in compliance with the provisions of the Centralization Law, to appoint a trustee over DIC's shares owned by the respondents and to order the payment of monetary damages to the public shareholders in DIC for the alleged preservation of the pyramidal structure in IDBD, at a scope of between NIS 58 and 73 million.
 
The bulk of the Applicant's allegations is that the Group continues to be the Controlling Person in DIC (potentially and effectively) even after the completion of the sale od DIC shares to DIL as described in Note 4 in the annual financial statements (the “transaction”) and that the controlling person of the IDBD (in his capacity as chairman of the board of directors and controlling person of DIC as well) had a personal interest separate from the personal interest of the minority shareholders in DIC, in the manner of implementation of the Centralization Law's provisions, and that he and the Group breached the duty of good faith and the duty of decency toward DIC, and additionally the controlling person of IDBD breached his duty of trust and duty of care toward DIC, this being, allegedly, due to the fact that the decision regarding the preferred alternative for complying with the Centralization Law's Provisions was not brought before DIC's general meeting. The Applicant further alleges deprivation of the minority shareholders in DIC.
 
Having preliminarily reviewed the Motion, the Management feels that it is unfounded and that it will not change the fact that after the making of the Transaction, IDBD complies with the provisions of the Centralization Law, all as set forth in the Company's reports.
 
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
38
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
35.
Subsequent events
 
Partial sale of Clal
 
On January 2, 2019 continuing with the instructions given by the Commissioner of Capital Markets, Insurance and Savings of Israel, IDBD has sold 4.5% of its stake in Clal through a swap transaction in the same conditions that applied to the swap transactions performed in the preceding months of May and August 2017, January, May and August 2018 described in Note 4 to the Annual Consolidated Financial Statements. The consideration was set at an amount of approximately NIS 127 million (equivalent to approximately Ps. 1,270 as of the transaction date). After the completion of the transaction, IDBD’s interest in Clal was reduced to 25.3% of its share capital.
 
Additionally, on January 2, 2019 the swap transaction was completed with respect to 555,788 shares of Clal, which constitute 1% of the issued capital of Clal. It is hereby clarified that the terms of the swap transaction will remain in effect with respect to the balance of shares of Clal which are the subject of the swap transaction, which constitute approximately 29% of the issued capital of Clal as of the date of these financial statements.
 
DIC buyback plan
 
As indicated in Note 4 to these financial statements, DIC Board of Directors approved a plan to buy back DIC shares. During January and February of 2019 DIC acquired 10.1 million additional shares for a total amount of NIS 96 (approximately Ps. 969 as of the date of these financial statements), and the market holding after these repurchases amounted to 15.92 %.
 
Sale of Tarshop
 
On February 14, 2019, the Group sold its entire stake in Tarshop to BHSA. With this acquisition BHSA. will become the holder of 100% of the capital of said company. The price of the operation was established at USD 0.1, which have already been received.
 
The parties agreed that the seller will be entitled to a variable compensation, if the buyer, in a period not exceeding 2 years, sell all or part of the participation to a third party.
 
The result transcended to third parties for this transaction was approximately Ps. 66.
 
Payment of management fee
 
On January 10, 2019, the deferred fees for the 2012-2016 period and the accrued fees from 2017 to June 2018 corresponding to the management agreement signed with CAMSA for the total amount of $ 1,130 were paid. The payment was made approximately one third in cash, one third with shares of IRSA and one third with shares of IRSA CP, both owned by the Company. The aforementioned payment was approved by the Board of Directors of the Company and the Audit Committee.
 
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
39
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
To the Shareholders, President and Directors of
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Legal address: Moreno 877 – 23° floor
Autonomous City Buenos Aires
Tax Code No. 30-50930070-0
 
Introduction
 
 
We have reviewed the unaudited condensed interim consolidated financial statements of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria. and its subsidiaries (hereinafter “the Company”) which included the unaudited condensed interim consolidated statements of financial position as of December 31, 2018, and the unaudited condensed interim consolidated statement of comprehensive income for the six and three-month period ended December 31, 2018 and the unaudited condensed interim consolidated statement of changes in shareholders’ equity and the unaudited condensed interim consolidated statement of cash flows for the six-month period ended December 31, 2018 and selected explanatory notes.
 
The balances and other information corresponding to the fiscal year ended June 30, 2018 and the interim periods within that fiscal year are an integral part of these financial statements and, therefore, they should be considered in relation to those financial statements.
 
Management responsibility
 
 
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim consolidated financial statements in accordance with the International Financial Reporting Standards , adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and added by the National Securities Commission (CNV) to its regulations as approved by the International Accounting Standard Board (IASB) and , for this reason, is responsible for the preparation and presentation of the unaudited condensed interim consolidated financial statements mentioned in first paragraph according to the International Accounting Standard No. 34 "Interim Financial Reporting" (IAS 34).
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Scope of our review
 
Our review was limited to the application of the procedures established in the International Standard on Review Engagements ISRE 2410 "Review of interim financial information performed by the independent auditor of the entity", which was adopted as a review standard in Argentina in Technical Resolution No. 33 of the FACPCE as approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of making inquiries of persons responsible for the preparation of the information included in the unaudited condensed interim consolidated financial statements, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated statement of financial position, the consolidated statement of comprehensive income and consolidated statement of cash flow of the Company.
 
 
Conclusion
 
Nothing came to our attention as a result of our review that caused us to believe that these unaudited condensed interim consolidated financial statements above mentioned in the introductory paragraph of this report have not been prepared in all material respects in accordance with the regulations of the International Accounting Standard No. 34.
 
Report on compliance with current regulations
 
In accordance with current regulations, we report about Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria that:
 
 
a)
the unaudited condensed interim consolidated financial statements of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria are being processed for recording in the "Inventory and Balance Sheet Book", and comply, as regards those matters that are within our competence, except as mentioned before, with the provisions set forth in the Commercial Companies Law and in the corresponding resolutions of the National Securities Commission;
 
b)
the unaudited condensed interim consolidated financial statements of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria arise from accounting records carried in all formal respects in accordance with applicable legal provisions;
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
c)
we have read the Business Summary (“Reseña Informativa”) on which, as regards these matters that are within our competence, we have no observations to make;
 
d)
as of December 31, 2018, the debt of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria owed in favor of the Argentina Integrated Pension System which arises from accounting records and submissions amounted to Ps. 13,152,681 which was no callable at that date.
 
 
 
 
Autonomous City of Buenos Aires, March 1, 2019
 
 
 
PRICE WATERHOUSE & CO. S.R.L.
 
                                                (Partner)
C.P.C.E.C.A.B.A. Tº 1 Fº 17
Dr. Mariano C. Tomatis
Public Accountant (UBA)
C.P.C.E.C.A.B.A. Tº 241 Fº 118
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
 
 
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Separate Financial Statements as of December 31, 2018 and for the period of six months ending on that date, presented in comparative form.
 
 
Véase nuestro informe de fecha 09/11/18
PRICE WATERHOUSE & Co. S.R.L.
C.P.C.E.C.A.B.A. T° 1 F° 17
 
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Separate Statements of Financial Position
as of December 31, 2018 and June 30, 2018
(All amounts in millions of Argentine Pesos, except as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
Note
 
12.31.18
 
06.30.18
ASSETS
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
Investment properties
 
7
 
67
 
65
Property, plant and equipment
 
8
 
3,332
 
3,302
Intangible assets
 
9
 
122
 
126
Biological assets
 
10
 
691
 
835
Investments in subsidiaries, associates and joint ventures
 
6
 
35,098
 
38,362
Deferred income tax assets
 
18
 
865
 
820
Income tax and minimum presumed income tax credit
 
 
 
30
 
48
Trade and other receivables
 
13
 
550
 
511
Total Non-current assets
 
 
 
40,755
 
44,069
Current assets
 
 
 
 
 
 
Biological assets
 
10
 
1,004
 
479
Inventories
 
11
 
1,173
 
1,314
Restricted assets
 
12
 
3
 
4
Trade and other receivables
 
13
 
1,213
 
1,104
Investment in financial assets
 
12
 
147
 
 -
Derivative financial instruments
 
12
 
102
 
17
Cash and cash equivalents
 
12
 
527
 
245
Total Current assets
 
 
 
4,169
 
3,163
TOTAL ASSETS
 
 
 
44,924
 
47,232
SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Shareholders´ equity (according to corresponding statements)
 
 
 
26,050
 
30,524
TOTAL SHAREHOLDERS' EQUITY
 
 
 
26,050
 
30,524
LIABILITIES
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
 
Borrowings
 
17
 
8,085
 
6,249
Provisions
 
16
 
9
 
13
Total Non-current liabilities
 
 
 
8,094
 
6,262
Current liabilities
 
 
 
 
 
 
Trade and other payables
 
15
 
2,417
 
2,280
Income tax and minimum presumed income tax to paid
 
 
 
40
 
61
Payroll and social security liabilities
 
 
 
101
 
183
Borrowings
 
17
 
8,218
 
7,874
Derivative financial instruments
 
12
 
1
 
47
Provisions
 
16
 
3
 
1
Total Current liabilities
 
 
 
10,780
 
10,446
TOTAL LIABILITIES
 
 
 
18,874
 
16,708
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
 
 
 
44,924
 
47,232
 
 

The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements. 
 
 
 
 
 
 
 
 
 
 
 
                                                            )
 
 
 
 
Alejandro G. Elsztain
 Vice President II
acting as President
 
 
1
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Separate Statements of Income and Other Comprehensive Income for the six and three month periods ended December 31, 2018 and 2017
 (All amounts in millions of Argentine Pesos, except as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 
 
 Six months
 
 Three months
 
 
 
Note
 
12.31.18
 
12.31.17
 
12.31.18
 
12.31.17
Revenues
 
19
 
1,252
 
1,560
 
477
 
878
Costs
 
20
 
(1,128)
 
(1,142)
 
(449)
 
(643)
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
 
 
(96)
 
(176)
 
(96)
 
(133)
Changes in the net realizable value of agricultural products after harvest
 
 
 
58
 
77
 
58
 
29
Gross profit / (loss)
 
 
 
86
 
319
 
(10)
 
131
Net gain from fair value adjustment of investment properties
 
 
 
2
 
 -
 
(32)
 
 -
General and administrative expenses
 
21
 
(151)
 
(161)
 
(45)
 
(87)
Selling expenses
 
21
 
(208)
 
(359)
 
(60)
 
(195)
Other operating results, net
 
22
 
9
 
61
 
(176)
 
65
Management fees
 
 
 
 -
 
(785)
 
356
 
(739)
(Loss) / Profit from operations
 
 
 
(262)
 
(925)
 
33
 
(825)
Share of (loss) / profit of subsidiaries, associates and joint ventures
6
 
(2,988)
 
6,415
 
(8,216)
 
6,742
(Loss) / Profit before financing and taxation
 
 
 
(3,250)
 
5,490
 
(8,183)
 
5,917
Finance income
 
23
 
143
 
(3)
 
(750)
 
(22)
Finance costs
 
23
 
(1,177)
 
(195)
 
12,142
 
692
Other financial results
 
23
 
(117)
 
13
 
279
 
(3)
Result from exposure to changes in the purchasing power of the currency
 
23
 
286
 
115
 
7,634
 
866
Financial results, net
 
23
 
(865)
 
(70)
 
19,305
 
1,533
(Loss) / Profit before income tax
 
 
 
(4,115)
 
5,420
 
11,122
 
7,450
Income tax
 
18
 
45
 
130
 
(1,258)
 
(16)
(Loss) / Profit for the period
 
 
 
(4,070)
 
5,550
 
9,864
 
7,434
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income / (loss):
 
 
 
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
 
 
 
Currency translation adjustment from subsidiaries and associates
 
 
 
167
 
(1,794)
 
(13,435)
 
(1,646)
Participation in other comprehensive results of subsidiaries and associates
 
 
 
334
 
(76)
 
 -
 
 -
Other comprehensive income / (loss) for the period
 
 
 
501
 
(1,870)
 
(13,435)
 
(1,646)
(Loss) / Income and Other Comprehensive (Loss) / Income for the period
 
 
 
(3,569)
 
3,680
 
(3,571)
 
5,788
 
 
 
 
 
 
 
 
 
 
 
(Loss) / Profit per share attributable to equity holders of the parent during the period:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
(8.374)
 
7.515
 
(7.564)
 
11.520
Diluted
 
 
 
(8.374)
(i)
7.480
 
(7.564)
(i)
11.466
 
 
 
(i)
Since the result of the period showed loss, there is no dilutive effect of said result.
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
 
 
 
 
 
 
 
 
 
                                                            )
 
 
 
 
Alejandro G. Elsztain
 Vice President II
acting as President
 
 
 
2
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the six-month periods ended December 31, 2018
(All amounts in millions, except as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
 Share capital
 Treasury shares
  Inflation adjustment of share capital and treasury shares (i)
 Share premium
 Additional paid-in capital from treasury shares
 Legal reserve
 Special reserve RG 609/12 (ii)
 Other reserves (iii)
 Retained earnings
 Total Shareholders' equity
Balance as of June 30, 2018
 
482
20
5,396
6,072
53
213
3,380
4,112
10,796
30,524
Adjustments previous periods (IFRS 9 and 15) (Note 2.2)
 
 -
 -
 -
 -
 -
 -
 -
 -
(120)
(120)
Adjusted balance as of June 30, 2018
 
482
20
5,396
6,072
53
213
3,380
4,112
10,676
30,404
Loss for the period
 
 -
 -
 -
 -
 -
 -
 -
 -
(4,070)
(4,070)
Other comprehensive income for the period
 
 -
 -
 -
 -
 -
 -
 -
501
 -
501
Total comprehensive loss for the period
 
 -
 -
 -
 -
 -
 -
 -
501
(4,070)
(3,569)
As provided by Ordinary and Extraordinary Shareholders´ Meeting held on October 29, 2018:
 
 
 
 
 
 
 
 
 
 
 
  - Results distribution
 
 -
 -
 -
 -
 -
 -
 -
18,650
(18,650)
 -
  - Treasury shares distribution
 
21
(21)
 -
 -
 -
 -
 -
 -
 -
 -
Reversal by sale of investment properties
 
 -
 -
 -
 -
 -
 -
 -
(21)
21
 -
Reserve for share-based payments
 
 -
 -
 -
 -
 -
 -
 -
4
 -
4
Acquisition of treasury stock
 
(6)
6
 -
 -
 -
 -
 -
(283)
 -
(283)
Changes in non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
(506)
 -
(506)
Balance as of December 31, 2018
 
497
5
5,396
6,072
53
213
3,380
22,457
(12,023)
26,050
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
(i)
Includes Ps. 1 and Ps. 1 of inflation adjustment of Treasury shares as of December 31, 2018 and June 30, 2018, respectively.
(ii) Corresponding to General Resolution 609/12 of the National Securities Commission.
(iii) Group’s Other reserves at December 31, 2018 are comprised as:
 
 
 Cost of treasury shares
 Changes in non-controlling interest
 Reserve for currency translation adjustment
 Other comprehensive income / (loss)
 Reserve for share-based payments
 Special reserves
 Other subsidiary reserves
 Reserve for the acquisition of securities issued by the Company
 Total Other reserves
Balance as of June 30, 2018
 
(1,098)
(1,404)
3,937
47
100
2,263
217
50
4,112
Other comprehensive income for the period
 
 -
 -
167
334
 -
 -
 -
 -
501
Total comprehensive income for the period
 
 -
 -
167
334
 -
 -
 -
 -
501
As provided by Ordinary and Extraordinary Shareholders´ Meeting held on October 29, 2018:
 
 
 
 
 
 
 
 
 
 
  - Results distribution
 
 -
 -
 -
 -
 -
18,650
 -
 -
18,650
  - Treasury shares distribution
 
849
 -
 -
 -
 -
(849)
 -
 -
 -
Reversal by sale of investment properties
 
 -
 -
 -
(21)
 -
 -
 -
 -
(21)
Reserve for share-based payments
 
 -
 -
 -
 -
 -
 -
4
 -
4
Acquisition of treasury stock
 
(283)
 -
 -
 -
 -
 -
 -
 -
(283)
Changes in non-controlling interest
 
 -
(506)
 -
 -
 -
 -
 -
 -
(506)
Balance as of December 31, 2018
 
(532)
(1,910)
4,104
360
100
20,064
221
50
22,457
 
 
 
 
 
 
 
 
 
 
 
                                                            )
 
 
 
 
Alejandro G. Elsztain
 Vice President II
acting as President
 
 
3
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Separate Statements of Changes in Shareholders’ Equity
for the six-month periods ended December 31, 2017
(All amounts in millions, except as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 Share capital
 Treasury shares
  Inflation adjustment of share capital and treasury shares (i)
 Share premium
 Additional paid-in capital from treasury shares
 Legal reserve
 Special reserve RG 609/12 (ii)
 Other reserves (iii)
 Retained earnings
 Total Shareholders' equity
Balance as of June 30, 2017
 
499
2
5,396
6,072
52
163
3,380
4,661
10,626
30,851
Profit for the period
 
 -
 -
 -
 -
 -
 -
 -
 -
5,550
5,550
Other comprehensive loss for the period
 
 -
 -
 -
 -
 -
 -
 -
(1,870)
 -
(1,870)
Total comprehensive (loss) income for the period
 
 -
 -
 -
 -
 -
 -
 -
(1,870)
5,550
3,680
As provided by Ordinary Shareholders’ Meeting held and Extraordinary Shareholders’ Meeting held on October 31, 2017:
 
 
 
 
 
 
 
 
 
 
 
 - Legal reserve
 
 -
 -
 -
 -
 -
51
 -
 -
(51)
 -
 - New projects reserve
 
 -
 -
 -
 -
 -
 -
 -
2,263
(2,263)
 -
 - Cash dividends distribution
 
 -
 -
 -
 -
 -
 -
 -
 -
(611)
(611)
Changes in non-controlling interest
 
 -
 -
 -
 -
 -
 -
 -
830
 -
830
Reserve for share-based payments
 
 -
 -
 -
 -
 -
 -
 -
3
 -
3
Changes in interest in subsidiaries
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
 -
Balance as of December 31, 2017
 
499
2
5,396
6,072
52
214
3,380
5,887
13,251
34,753
 
 
The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
   (i)
Includes Ps. 1 and Ps. 1 of inflation adjustment of Treasury shares as of December 31, 2017 and June 30, 2017, respectively.
   (ii)       Corresponding to General Resolution 609/12 of the National Securities Commission.
   (ii)
Group’s Other reserves at December 31, 2017 are comprised as:
 
 
Cost of treasury shares
Changes in non-controlling interest
Reserve for currency translation adjustment
 Other comprehensive income / (loss)
Reserve for share-based payments
 Special reserves
Other subsidiary reserves
Reserve for the acquisition of securities issued by the Company
Total Other reserves
Balance as of June 30, 2017
 
(80)
 -
4,363
45
275
 -
8
50
4,661
Other comprehensive loss for the period
 
 -
 -
(1,794)
(76)
 -
 -
 -
 -
(1,870)
Total comprehensive loss for the period
 
 -
 -
(1,794)
(76)
 -
 -
 -
 -
(1,870)
As provided by Ordinary Shareholders’ Meeting held and Extraordinary Shareholders’ Meeting held on October 31, 2017:
 
 
 
 
 
 
 
 
 
 
 - New projects reserve
 
 -
 -
 -
 -
 -
2,263
 -
 -
2,263
 - Cash dividends distribution
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
Changes in non-controlling interest
 
 -
830
 -
 -
 -
 -
 -
 -
830
Reserve for share-based payments
 
 -
 -
 -
 -
3
 -
 -
 -
3
Changes in interest in subsidiaries
 
 -
 -
 -
 -
 -
 -
 -
 -
 -
Balance as of December 31, 2017
 
(80)
830
2,569
(31)
278
2,263
8
50
5,887
 
 
 
 
 
 
 
 
 
                                                            )
 
 
 
 
Alejandro G. Elsztain
Vice President II
acting as President
 
 
 
4
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Unaudited Condensed Interim Separate Statements of Cash Flows
for the six-month periods ended December 31, 2018 and 2017
(All amounts in millions of Argentine Pesos, except as otherwise indicated)
Free translation from the original prepared in Spanish for publication in Argentina
 
 
 
 
Note
 
 12.31.18
 
 12.31.17
Operating activities:
 
 
 
 
 
 
Cash used in operations
 
14
 
(1,852)
 
(853)
Net cash used in operating activities
 
 
 
(1,852)
 
(853)
Investing activities:
 
 
 
 
 
 
Capital contribution to subsidiaries, associates and joint ventures
 
6
 
(61)
 
(1)
Sale of interest in subsidiaries, associates and joint ventures
 
 
 
 -
 
78
Acquisition of property, plant and equipment
 
8
 
(72)
 
(75)
Proceeds from sale of property, plant and equipment
 
 
 
2
 
13
Proceeds from sale of farmlands
 
 
 
 -
 
10
Acquisition of investment in financial assets
 
 
 
(3,755)
 
(2,520)
Proceeds from disposals of investment in financial assets
 
 
 
3,622
 
2,702
Advance payments
 
 
 
(21)
 
(7)
Sale of farmlands advances
 
 
 
 -
 
117
Dividends received
 
 
 
198
 
1,436
Net cash (used in) / generated from investing activities
 
 
 
(87)
 
1,753
Financing activities:
 
 
 
 
 
 
Repurchase of non-convertible notes
 
 
 
(525)
 
(6)
Borrowings
 
 
 
2,343
 
1,731
Payment of borrowings
 
 
 
(1,009)
 
(1,813)
Obtaining / (payment) of short term loans, net
 
 
 
1,950
 
(30)
Payments / (proceeds) from derivative financial instruments
 
 
 
(47)
 
1
Purchase of treasury stock
 
 
 
(283)
 
 -
Payment of seller financing
 
 
 
(2)
 
 -
Dividends paid
 
 
 
 -
 
(611)
Interest paid
 
 
 
(211)
 
(108)
Net cash generated from / (used in) financing activities
 
 
 
2,216
 
(836)
Net increase in cash and cash equivalents
 
 
 
277
 
64
Cash and cash equivalents at beginning of the period
 
 
 
245
 
68
Result from exposure to inflation on cash and cash equivalents
 
 
 
1
 
1
Currency translation adjustment on cash and cash equivalents
 
 
 
4
 
33
Cash and cash equivalents at the end of the period
 
 
 
527
 
166
 
 
 
 
  The accompanying notes are an integral part of these Unaudited Condensed Interim Separate Financial Statements.
 
 
 
 
 
 
 
 
                                                            )
 
 
 
 
Alejandro G. Elsztain
Vice President II
acting as President
 
 
5
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
1.
General information
 
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (“Cresud” or the “Company”) was founded in 1936 as a subsidiary of Credit Foncier, a Belgian company primarily engaged in providing rural and urban loans in Argentina and administering real estate holdings foreclosed by Credit Foncier. Credit Foncier was liquidated in 1959, and as part of such liquidation, the shares of Cresud were distributed to Credit Foncier’s shareholders. From the 1960s through the end of the 1970s, the business of Cresud shifted exclusively to agricultural activities.
 
Cresud is a company organized and domiciled in the Republic of Argentina. The address of its registered office is Moreno 877, 23rd Floor, Buenos Aires, Argentina.
 
These Unaudited Condensed Interim Separate Financial Statements have been approved for issue by the Board of Directors on March 1, 2019.
 
2.
Basis of preparation of the Unaudited Condensed Interim Separate Financial Statements
 
2.1.
Basis of preparation
 
The National Securities Commission (CNV), in Title IV "Periodic Information Regime" - Chapter III "Rules relating to the presentation and valuation of financial statements" - Article 1, of its standards, has established the application of the Technical Resolution No. 26 (RT 26) of the FACPCE and its amendments, which adopt FRS, issued by the IASB, for certain companies included in the public offering regime of Law No. 26,831, either because of its stock or its non-convertible notes, or that have requested authorization to be included in the aforementioned regime.
 
For the preparation of these solo financial statements, the Company has use the option provided in IAS 34, and has prepared them in condensed form. Therefore, these financial statements do not include all the information required in a complete set of annual financial statements and, consequently, their reading is recommended together with the annual financial statements as of June 30, 2018.
 
In view of what has been mentioned in the preceding paragraphs, the management of the Company has prepared these financial statements in accordance with the accounting principles established by the CNV, which is based on the application of IFRS, in particular of IAS 34, with the only exception to the application of IAS 29 (which determines the mandatory restatement of financial statements), excluded by the CNV from its accounting framework.
 
Additionally, the information required by the CNV indicated in article 1, Chapter III, Title IV of RG N ° 622/13 has been included. This information is included in a note to these solo financial statements.
 
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated in the non-monetary items. This requirement also includes the comparative information of the financial statements.
 
In order to conclude on whether an economy is categorized as high inflation in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that is Approximate or exceed 100%. Accumulated inflation in three years is over 100%. It is for this reason that, in accordance with IAS 29, the Argentine economy must be considered as high inflation starting July 1, 2018.
 
In addition, Law No. 27,468 (published in the Official Gazette on December 4, 2018), amended Section 10 of Law No. 23,928, as amended, and established that the derogation of all the laws or regulations imposing or authorizing price indexation, monetary restatement, cost variation or any other method for strengthening debts, taxes, prices or rates of goods, works or services, does not extend to financial statements, as to which the provisions of Section 62 in fine of the General Companies Law No. 19,550 (1984 revision), as amended, shall continue to apply. Moreover, the referred law repealed Decree No. 1269/2002 dated July 16, 2002, as amended, and delegated to the Argentine Executive Branch the power to establish, through its controlling agencies, the effective date of the referred provisions in connection with the financial statements filed with it. Therefore, under General Resolution 777/2018 (published in the Official Gazette on December 28, 2018) the Argentine Securities Commission (CNV) ordered that issuers subject to its supervision shall apply the inflation adjustment to reflect the financial statements in terms of the current measuring unit set forth in IAS 29 in their annual, interim and special financial statements closed on or after December 31, 2018.
 
 
 
 
 
6
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
  
Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a high inflationary economy should be reported in terms of the measuring unit current as of the date of the financial statements. All the amounts included in the statement of financial position which are not stated in terms of the measuring unit current as of the date of the financial statements should be restated applying the general price index. All items in the statement of income should be stated in terms of the measuring unit current as of the date of the financial statements, applying the changes in the general price index occurred from the date on which the revenues and expenses were originally recognized in the financial statements.
 
Adjustment for inflation in the initial balances has been calculated considering the indexes reported by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) based on the price indexes published by the Argentine Institute of Statistics and Census (INDEC).
 
The principal inflation adjustment procedures are the following:
 
- Monetary assets and liabilities that are recorded in the current currency as of the balance sheet’s closing date are not restated because they are already stated in terms of the currency unit current as of the date of the financial statements.
- Non-monetary assets and liabilities are recorded at cost as of the balance sheet date, and equity components are restated applying the relevant adjustment ratios.
- All items in the statement of income are restated applying the relevant conversion factors.
- The effect of inflation in the Company’s net monetary position is included in the statement of income under Financial results, net, in the item “Income / (loss) from exposure to changes in the currency’s purchasing power”.
- Comparative figures have been adjusted for inflation following the procedure explained in the previous paragraphs.
 
Upon initially applying inflation adjustment, the equity accounts were restated as follows:
 
- Capital was restated as from the date of subscription or the date of the most recent inflation adjustment for accounting purposes, whichever is later.
- The resulting amount was included in the “Capital adjustment” account.
- The conversion difference was restated in real terms (as applicable).
- Other comprehensive income / (loss) was restated as from each accounting allocation.
- The other reserves in the statement of income were not restated as of the initial application date, i.e., June 30, 2016.
 
2.2.
Accounting policies
 
The accounting policies applied in the preparation of these Unaudited Condensed Interim Financial Statements are consistent with those applied in the Annual Consolidated Financial Statements as of June 30, 2018.
 
As described in Note 2.2 to the Annual Consolidated Financial Statements, the Company, mainly through its subsidiaries, adopted IFRS 15 “Revenues from contracts with customers” and IFRS 9 “Financial instruments” in the present fiscal year using the modified retrospective approach, so that the cumulative impact of the adoption was recognized in the retained earnings at the beginning, and the comparative figures have not been modified due to this adoption.
 
 
 
 
 
 
 
 
 
 
7
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The main changes are the following:
 
IFRS 15: Revenues from contracts with customers
 
The standard introduces a new five-step model for recognizing revenue from contracts with customers:
1.
Identifying the contract with the customer.
2.
Identifying separate performance obligations in the contract.
3.
Determining the transaction price.
4.
Allocating the transaction price to separate performance obligations.
5.
Recognizing revenue when the performance obligations are satisfied.
 
IFRS 9: Financial instruments
 
The new standard includes a new model of "expected credit loss" for receivables or other assets not measured at fair value. The new model presents a dual measurement approach for impairment: if the credit risk of a financial asset has not increased significantly since its initial recognition, an allowance for impairment will be recorded in the amount of expected credit losses resulting from the possible non- compliance events within a certain period. If the credit risk has increased significantly, in most cases the allowance will increase and the amount of the expected losses should be recorded.
 
In accordance with the new standard, in cases where a change in terms or exchange of financial liabilities is immaterial and does not lead, at the time of analysis, to the reduction of the previous liability and recognition of the new liability, the new cash flows must be discounted at the original effective interest rate, recording the impact of the difference between the present value of the financial liability that has the new terms and the present value of the original financial liability in net income.
 
 
2.3.
Comparative information
 
The balances as of June 30, 2018 and December 31, 2017, which are disclosed for comparative purposes, arise from the financial statements at such dates restated in accordance with IAS 29.
 
 
2.4.
Use of estimates
 
The preparation of financial statements at a certain date requires the Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Future results might differ from the estimates and evaluations made at the date of preparation of these Unaudited Condensed Interim Separate Financial Statements.
 
In the preparation of these Unaudited Condensed Interim Separate Financial Statements, the significant judgments made by Management in applying the Company’s accounting policies and the main sources of uncertainty were the same applied by the Company in the preparation of the Separate Financial Statements for the fiscal year ended June 30, 2018, described in Note 3 to them.
 
 
 
 
 
 
8
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
3.
Seasonal effects on operations
 
The operations of the Company are also subject to seasonal effects. The harvests and sale of grains (corn, soybean and sunflower) generally take place between January and September every year. Wheat is generally harvested between November and February every year. However, milk production is generally larger during the second quarter, when conditions are more favorable. As a result, there may be material fluctuations in the agricultural business results each quarter.
 
4.
Acquisitions and disposals
See summary of acquisitions and additional disposals of the Company for the six-month period ended December 31, 2018 in Note 4 to Unaudited Condensed Interim Consolidated Financial Statements.
 
5.
Financial risk management and fair value estimates
 
5.1.        Financial risk
 
The Company’s activities are exposed to several financial risks, market risk (including exchange rate risk, interest rate risk and price risk), credit risk, liquidity risk and capital risk.
 
The Unaudited Condensed Interim Separate Financial Statements do not include all the information and disclosures of the risk management, so they should be read together with the Annual Separate Financial Statements as of June 30, 2018. There have been no significant changes in the risk management or risk management policies applied by the Company since the fiscal year.
 
5.2.         Fair value estimates
 
Since June 30, 2018, to the balance sheet date, there have been no significant changes in business or economic circumstances affecting the fair value of the Company's financial assets, liabilities or biological assets (either measured at fair value or amortized cost). Nor there have been transfers between the several hierarchies used in estimating the fair value of the Company’s financial instruments, or reclassifications among their respective categories.
 
 
 
 
 
 
 
9
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
6.
Information about principal subsidiaries, associates and joint ventures
 
The Company conducts its business through several subsidiaries, associates and joint ventures.
Set out below are the changes in Company’s investment in subsidiaries and associates for the six-month period ended December 31, 2018 and for the fiscal year ended June 30, 2018:
 
 
 
12.31.18
 
06.30.18
Beginning of the period / year
 
38,362
 
33,715
Purchase of subsidiaries
 
943
 
 -
Changes in non-controlling interest (i)
 
(506)
 
(1,472)
Capital contribution
 
66
 
268
Disposal of interest in subsidiaries
 
 -
 
(14)
Share of profit of subsidiaries and associates
 
(2,988)
 
7,667
Foreign exchange gains
 
167
 
(356)
Others changes in subsidiaries’ equity
 
 -
 
59
Adjustments previous periods (IFRS 9 and 15)
 
(120)
 
 -
Impairment of interest in subsidiaries
 
(142)
 
 -
Share of changes in subsidiaries’ equity
 
334
 
33
Reserve for share-based payments
 
4
 
4
Dividends distributed
 
(1,022)
 
(1,542)
End of the period / year
 
35,098
 
38,362
 
(i)
 Includes the effect of changes in subsidiaries as consequence of repurchase of equity interest.
 
See changes in Company’s investment in associates and joint ventures for the six-month period ended December 31, 2018 in Note 7 to the Unaudited Condensed Interim Consolidated Financial Statements and for the year ended June 30, 2018 in Note 8 to the Annual Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
10
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
% of ownership interest
 
Registered value
 
Entity's interest in comprehensive income / (loss)
 
 
 
 
 
 
Last financial statement issued
Name of the entity
12.31.18
06.30.18
 
12.31.18
06.30.18
 
12.31.18
12.31.17
 
Market value as of 12.31.18
Place of business / country of incorporation
Main activity
Amount of common shares 1 vote
 
Common shares (nominal value)
Income /(loss) for the period
Shareholders' equity
Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brasilagro Companhia Brasileira de Propriedades Agrícolas (“Brasilagro”)
43.29%
43.29%
 
4,716
3,916
 
489
561
 
15.61
Brazil
Agricultural
23,291,500
 
875
1,010
8,607
Agropecuaria Santa Cruz de la Sierras S.A. (formerly Doneldon S.A.)
100.00%
100.00%
 
937
877
 
58
(15)
 
Not publicly traded
Uruguay
Investment
267,000,472
 
267
37
937
Futuros y opciones.Com S.A.
50.10%
50.10%
 
172
113
 
78
13
 
Not publicly traded
Argentina
Brokerage
817,683
 
2
156
343
Amauta Agro S.A. (formerly FyO Trading S.A.)
2.20%
2.20%
 
1
 -
 
 -
 -
 
Not publicly traded
Argentina
Brokerage
505,603
 
23
23
50
FyO Acopio S.A. (continuadora de Granos Olavarría S.A.)
2.20%
2.20%
 
4
3
 
1
 -
 
Not publicly traded
Argentina
Warehousing and Brokerage
11,264
 
1
63
194
Helmir S.A.
100.00%
100.00%
 
1,085
1,081
 
9
38
 
Not publicly traded
Uruguay
Investment
90,624,298
 
91
(1)
1,101
Sociedad Anómina Carnes Pampeanas S.A.
99.70%
99.68%
 
258
243
 
(27)
(96)
 
Not publicly traded
Argentina
Agroindustrial
496,050,302
 
498
(27)
259
IRSA Inversiones y Representaciones Sociedad Anónima
63.36%
63.36%
 
26,756
31,946
 
(3,427)
4,120
 
48.05
Argentina
Real Estate
364,599,461
 
575
(5,324)
42,149
IRSA Propiedades Comerciales S.A.
3.23%
0.00%
 
980
 -
 
 -
 -
 
189.50
Argentina
Real Estate
4,043,820
 
126
(4,360)
41,880
Total Subsidiaries
 
 
 
34,909
38,179
 
(2,819)
4,621
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Associates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agrouranga S.A.
35.72%
35.72%
 
152
183
 
1
 -
 
Not publicly traded
Argentina
Agricultural
2,590,466
 
7
5
76
Uranga Trading S.A.
35.72%
-
 
37
 -
 
(3)
 -
 
Not publicly traded
Argentina
Marketing, warehousing and processing
653,369
 
2
(7)
104
Total Associates
 
 
 
189
183
 
(2)
 -
 
 
 
 
 
 
 
 
 
Total Investments in subsidiaries, associates and join ventures
 
35,098
38,362
 
(2,821)
4,621
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
7.
Investment properties
 
Changes in Company’s investment properties for the six-month period ended December 31, 2018 and for the fiscal year ended June 30, 2018 were as follows:
 
 
 
 12.31.18
 
 06.30.18
Beginning of the period / year
 
65
 
8
Reclassification of property, plant and equipment (i)
 
 -
 
55
Changes in fair value
 
2
 
2
End of the period / year
 
67
 
65
 
 
The following amounts have been recognized in the Statement of Income and Other Comprehensive Income:
 
 
 12.31.18
 
 12.31.17
Rental and services income (Note 19)
 
40
 
2
Direct operating expenses (Note 20)
 
38
 
3
 
 
 
8.
Property, plant and equipment
 
Changes in Company’s property, plant and equipment for the six-month period ended December 31, 2018 and for the fiscal year ended June 30, 2018 were as follows:
 
 
 
 Owner occupied farmland (ii)
 
 Others
 
 Total as of 12.31.18
 
 Total as of 06.30.18
 
 
 
 
 
 
 
 
 
Costs
 
3,554
 
165
 
3,719
 
4,154
Accumulated depreciation
 
(339)
 
(78)
 
(417)
 
(473)
Net book amount at the beginning of the period / year
 
3,215
 
87
 
3,302
 
3,681
 
 
 
 
 
 
 
 
 
Additions
 
68
 
4
 
72
 
150
Disposals
 
 -
 
(1)
 
(1)
 
(362)
Reclassifications to investment properties
 
 -
 
 -
 
 -
 
(55)
Impairment
 
 -
 
 -
 
 -
 
(28)
Depreciation charge (i)
 
(29)
 
(12)
 
(41)
 
(84)
Balances at the end of the period / year
 
3,254
 
78
 
3,332
 
3,302
 
 
 
 
 
 
 
 
 
Costs
 
3,622
 
167
 
3,789
 
3,719
Accumulated depreciation
 
(368)
 
(89)
 
(457)
 
(417)
Net book amount at the end of the period / year
 
3,254
 
78
 
3,332
 
3,302
 
 
(i)
For the fiscal years ended December 31, 2018 and June 30, 2018, the depreciation expense of property, plant and equipment has been charged as follows: Ps. 8 and Ps. 13 in "Costs"; Ps. 3 and Ps. 5 in “General and administrative expenses” in “the Statement of Income and Other Comprehensive Income"; Ps. 30 and Ps. 66 were capitalized as part of the biological assets costs.
(ii)  Includes farms, buildings and facilities of farmlands properties.
 
 
 
 
 
 
 
12
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
9.            
Intangible assets
 
Changes in Company’s intangible assets for the six-month period ended as of December 31, 2018 and for the fiscal year ended as of June 30, 2018 were as follows:
 
 
 
Computer software
 
Rights of use
 
Total as of 12.31.18
 
Total as of 06.30.18
Costs
 
7
 
188
 
195
 
194
Accumulated amortization
 
(4)
 
(65)
 
(69)
 
(61)
Net book amount at the beginning of the period / year
 
3
 
123
 
126
 
133
Additions
 
 -
 
 -
 
 -
 
1
Amortization charges (i)
 
(1)
 
(3)
 
(4)
 
(8)
Balances at the end of the period / year
 
2
 
120
 
122
 
126
Costs
 
7
 
188
 
195
 
195
Accumulated amortization
 
(5)
 
(68)
 
(73)
 
(69)
Net book amount at the end of the period / year
 
2
 
120
 
122
 
126
 
 
(i) 
 Amortization charges are included in “General and administrative expenses” in the Statement of Income and Other Comprehensive Income. There are no impairment charges for any of the years presented.
 
10.
Biological assets
 
Changes in the Company’s biological assets for the six-month period ended as of December 31, 2018 and for the fiscal year ended as of June 30, 2018 were as follows:
 
 
 
Sown land-crops
 
Breeding cattle
 
Other cattle
 
Others
 
Total as of 12.31.18
 
Total as of 06.30.18
 
 
Level 1
 
Level 3
 
Level 2
 
Level 2
 
Level 1
 
 
Net book amount at the beginning of the period / year
 
36
 
316
 
921
 
22
 
19
 
1,314
 
1,588
Purchases
 
 -
 
 -
 
1
 
2
 
 -
 
3
 
14
Changes by transformation
 
(21)
 
21
 
 -
 
 -
 
 -
 
 -
 
 -
Initial recognition and changes in the fair value of biological assets
 
 -
 
60
 
(158)
 
(8)
 
 -
 
(106)
 
51
Decrease due to harvest
 
 -
 
(610)
 
 -
 
 -
 
 -
 
(610)
 
(1,881)
Sales
 
 -
 
 -
 
(140)
 
(1)
 
 -
 
(141)
 
(454)
Consumes
 
 -
 
 -
 
(1)
 
 -
 
(1)
 
(2)
 
(7)
Costs for the period
 
728
 
283
 
218
 
5
 
3
 
1,237
 
2,003
Balances at the end of the period / year
 
743
 
70
 
841
 
20
 
21
 
1,695
 
1,314
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current (production)
 
 -
 
 -
 
654
 
16
 
21
 
691
 
835
Current (consumable)
 
743
 
70
 
187
 
4
 
 -
 
1,004
 
479
Net book amount at the end of the period / year
 
743
 
70
 
841
 
20
 
21
 
1,695
 
1,314
 
 
During the six-month period ended December 31, 2018 and the year ended June 30, 2018 there have been no transfers between the several tiers used in estimating the fair value of the Company’s biological assets, or reclassifications among their respective categories.
 
See information on valuation processes used by the entity in Note 13 to the Consolidated Financial Statements as of June 30, 2018.
 
As of December 31, 2018 and June 30, 2018, the better and maximum use of biological assets shall not significantly differ from the current use.
 
 
 
 
 
13
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
11.
Inventories
 
Breakdown of Company’s inventories as of December 31, 2018 and June 30, 2018 are as follows:
 
 
 
 12.31.18
 
 06.30.18
Current
 
 
 
 
Crops
 
534
 
892
Materials and supplies
 
442
 
230
Seeds and fodders
 
197
 
192
Total inventories
 
1,173
 
1,314
 
 
As of December 31, 2018 and June 30, 2018 the cost of inventories recognized as expense amounted to Ps. 937 and Ps. 1,592, respectively and they have been included in “Costs” in the Unaudited Condensed Interim Separate Statement of Income and Other Comprehensive Income.
 
12.
Financial instruments by category
 
Determining fair values
 
See determination of the fair value of the Company's financial instruments in Note 15 to the Annual Consolidated Financial Statements as of June 30, 2018.
 
The following tables present the Company’s financial assets and financial liabilities that are measured at fair value as of December 31, 2018 and June 30, 2018 and their allocation to the fair value hierarchy:
 
 
 
 Financial assets at amortized cost
 
 Financial assets at fair value through profit or loss
 Subtotal financial assets
 
 Non-financial assets
 
 Total
December 31, 2018
 
 
 
 Level 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per statement of financial position
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 13)
 
1,245
 
 -
 
1,245
 
527
 
1,772
Investment in financial assets
 
 -
 
147
 
147
 
 -
 
147
Derivative financial instruments
 
 -
 
102
 
102
 
 -
 
102
Restricted assets (i)
 
3
 
 -
 
3
 
 -
 
3
Cash and cash equivalents
 
480
 
47
 
527
 
 -
 
527
Total assets
 
1,728
 
296
 
2,024
 
527
 
2,551
 
(i) Corresponds to the employee capitalization plan.
 
 
 
Financial liabilities at amortized cost
 
Financial liabilities at fair value
Subtotal financial liabilities
 
Non-financial liabilities
 
Total
 
 
 
 
 Level 1
 
 
 
 
 
 
Liabilities as per statement of financial position
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 15)
 
2,189
 
 -
 
2,189
 
228
 
2,417
Borrowings (excluding finance lease liabilities) (Note 17)
 
16,298
 
 -
 
16,298
 
 -
 
16,298
Finance lease obligations (Note 17)
 
5
 
 -
 
5
 
 -
 
5
Derivative financial instruments
 
 -
 
1
 
1
 
 -
 
1
Total liabilities
 
18,492
 
1
 
18,493
 
228
 
18,721
 
 
 
 
 
 
 
14
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
 
 Financial assets at amortized cost
 
 Financial assets at fair value through profit or loss
 Subtotal financial assets
 
 Non-financial assets
 
 Total
June 30, 2018
 
 
 
 Level 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets as per statement of financial position
 
 
 
 
 
 
 
 
 
 
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) (Note 13)
 
1,361
 
 -
 
1,361
 
265
 
1,626
Derivative financial instruments
 
 -
 
17
 
17
 
 -
 
17
Restricted assets (i)
 
4
 
 -
 
4
 
 -
 
4
Cash and cash equivalents
 
6
 
239
 
245
 
 -
 
245
Total assets
 
1,371
 
256
 
1,627
 
265
 
1,892
 
(i) Corresponds to the employee capitalization plan.
 
 
 
Financial liabilities at amortized cost
 
Financial liabilities at fair value
Subtotal financial liabilities
 
Non-financial liabilities
 
Total
 
 
 
 
 Level 1
 
 
 
 
 
 
Liabilities as per statement of financial position
 
 
 
 
 
 
 
 
 
 
Trade and other payables (Note 15)
 
2,150
 
 -
 
2,150
 
130
 
2,280
Borrowings (excluding finance lease liabilities) (Note 17)
 
14,117
 
 -
 
14,117
 
 -
 
14,117
Finance lease obligations (Note 17)
 
6
 
 -
 
6
 
 -
 
6
Derivative financial instruments
 
 -
 
47
 
47
 
 -
 
47
Total liabilities
 
16,273
 
47
 
16,320
 
130
 
16,450
 
When no quoted prices are available in an active market, fair values (particularly with derivatives) are based on recognized valuation methods. The Company uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from Note 15 to the Consolidated Financial Statements as of June 30, 2018.
 
13.
Trade and other receivables
 
Breakdown of the Company’s trade and other receivables as of December 31, 2018 and June 30, 2018 are as follows:
 
 
 
12.31.18
 
06.30.18
Receivables from sale of properties (i)
 
685
 
646
Receivables from sale of agricultural products and services
 
179
 
204
Debtors under legal proceedings
 
9
 
11
Less: allowance for doubtful accounts
 
(9)
 
(11)
Total trade receivables
 
864
 
850
Prepayments
 
273
 
145
Tax credits
 
184
 
103
Loans
 
25
 
28
Advance payments
 
70
 
17
Others
 
42
 
27
Total other receivables
 
594
 
320
Related parties (Note 24)
 
305
 
445
Total trade and other receivables
 
1,763
 
1,615
Non-current
 
550
 
511
Current
 
1,213
 
1,104
Total trade and other receivables
 
1,763
 
1,615
 
  (i)  Net of implicit interests
 
The fair value of current trade and other receivables approximate their respective carrying amounts because, due to their short-term nature, as the impact of discounting is not considered significant. Fair values are based on discounted cash flows (Level 2 of fair value hierarchy).
 
 
 
 
 
15
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The carrying amounts of the Company’s trade and other receivables denominated in foreign currencies are detailed in Note 27.
 
Trade receivables are generally presented in the statement of financial position net of allowances for doubtful receivables. Impairment policies and procedures by type of receivables are discussed in detail in Note 2.17 to the Consolidated Financial Statements as of June 30, 2018.
 
Movements on the Company’s allowance for doubtful accounts are as follows:
 
 
 
12.31.18
 
06.30.18
Beginning of the period / year
 
11
 
15
Charges
 
(1)
 
1
Result from exposure to changes in the purchasing power of the currency
 
(1)
 
(5)
End of the period / year
 
9
 
11
 
 
The addition and release of allowance for doubtful accounts have been included in “Selling expenses” in the Unaudited Condensed Interim Separate Statement of Income and Other Comprehensive Income (Note 21). Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash.
 
14.
Cash flow information
 
Following is a detailed description of cash flows used in the Company’s operations for the six-month periods ended as of December 31, 2018 and 2017:
 
 
 
 12.31.18
 
 12.31.17
(Loss) / Profit for the period
 
(4,070)
 
5,550
Adjustments for:
 
 
 
 
Income tax
 
(45)
 
(130)
Depreciation and amortization
 
15
 
16
Impairment of interest in subsidiaries
 
142
 
 -
Share based payments
 
 -
 
1
Unrealized (gain) / loss from derivative financial instruments of commodities
 
(109)
 
4
Loss / (Gain) from derivative financial instruments (except commodities)
 
24
 
(3)
Changes in fair value of financial assets at fair value through profit or loss
 
3
 
(31)
Accrued interest, net
 
(430)
 
(173)
Unrealized initial recognition and changes in the fair value of biological assets
 
(57)
 
127
Changes in net realizable value of agricultural products after harvest
 
(58)
 
(77)
Provisions
 
(34)
 
814
Gain from repurchase of Non-convertible Notes
 
(1)
 
 -
Loss from disposal of associates, subsidiaries and joint ventures
 
 -
 
(65)
Share of profit in subsidiaries, associates and joint ventures
 
2,988
 
(6,415)
Changes in fair value of investment properties
 
(2)
 
 -
 
 
 
 
 
Changes in operating assets and liabilities:
 
 
 
 
(Increase) / Decrease in biological assets
 
(293)
 
93
Decrease in inventories
 
199
 
172
Increase in trade and other receivables
 
(185)
 
(383)
Increase in derivative financial instruments
 
(2)
 
 -
Increase / (Decrease) in trade and other payables
 
144
 
(285)
Decrease in payroll and social security liabilities
 
(81)
 
(68)
Net cash used in operating activities before income tax paid
 
(1,852)
 
(853)
 
 
 
 
 
 
 
16
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The following table shows a detail of non-cash transactions occurred in the six-month periods ended as of December 31, 2018 and 2017:
 
 
 12.31.18
 
 12.31.17
Non-cash activities
 
 
 
 
Dividends not collected
 
(4)
 
(4)
Decrease of interest in subsidiaries, associates and joint venture by exchange differences on translating foreign operations
 
(167)
 
1,794
Increase of interest in subsidiaries, associates and joint ventures by a decrease in trade and other receivables
 
(5)
 
(62)
Increase / (decrease) of interest in subsidiaries, associates and joint ventures through reserve for share-based compensation
 
4
 
(3)
 
15.
Trade and other payables
 
The detail of the Company’s trade and other payables as of December 31, 2018 and June 30, 2018 are as follows:
 
 
 
 12.31.18
 
 06.30.18
Trade payables
 
485
 
147
Provisions
 
471
 
222
Sales, rent and services payments received in advance
 
214
 
19
Total trade payables
 
1,170
 
388
Taxes payable
 
14
 
111
Others
 
11
 
41
Total other payables
 
25
 
152
Related parties (Note 24)
 
1,222
 
1,740
Total trade and other payables
 
2,417
 
2,280
Current
 
2,417
 
2,280
Total trade and other payables
 
2,417
 
2,280
 
The fair value of trade and other payables approximate their respective carrying amounts due to their short-term nature, as the impact of discounting is considered as not significant. Fair values are based on discounted cash flows (Level 2 of fair value hierarchy). Book value of trade and other payables denominated in foreign currencies are detailed in Note 27.
 
16.
Provisions
 
The table below shows the movements in Company's provisions categorized by type of provision:
 
 
 
 Labor and tax claims and other claims
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Beginning of period / year
 
14
 
14
 
10
Additions
 
1
 
1
 
10
Used during the period
 
 -
 
 -
 
(2)
Result from exposure to changes in the purchasing power of the currency
 
(3)
 
(3)
 
(4)
End of period / year
 
12
 
12
 
14
 
 
 
 
 
 
 
Non-current
 
 
 
9
 
13
Current
 
 
 
3
 
1
Total
 
 
 
12
 
14
 
(i)
Corresponds to equity interests in subsidiaries, associates and joint ventures with negative equity.
 
 
 
 
 
 
17
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
17.
Borrowings
 
The detail of the Company’s borrowings as of December 31, 2018 and June 30, 2018 is as follows:
 
 
 
 Book value
 
 Fair Value
 
 
 12.31.18
 
 06.30.18
 
 12.31.18
 
 06.30.18
Non-convertible notes
 
8,059
 
7,390
 
8,458
 
7,151
Bank loans and others
 
6,564
 
5,698
 
6,570
 
6,003
Related parties (Note 24)
 
1,670
 
568
 
1,738
 
573
Finance leases obligations
 
5
 
6
 
5
 
6
Bank overdrafts
 
5
 
461
 
5
 
461
Total borrowings
 
16,303
 
14,123
 
16,776
 
14,194
Non-current
 
8,085
 
6,249
 
 
 
 
Current
 
8,218
 
7,874
 
 
 
 
Total borrowings
 
16,303
 
14,123
 
 
 
 
 
 
 
18.
Taxation
 
The detail of the provision for the Company’s income tax is as follows:
 
 
 
 12.31.18
 
 12.31.17
Deferred income tax
 
45
 
130
Income tax
 
45
 
130
 
 
 
The gross movements on the deferred income tax account were as follows:
 
 
 
 12.31.18
 
06.30.18
Beginning of the period / year
 
820
 
1,161
Charged to the Statement of Comprehensive Income
 
45
 
(341)
End of the period / year
 
865
 
820
 
 
The Company´s income tax expense charge differs from the theoretical amount that would arise using the weighted average tax rate applicable to Company´s profit before income tax as follows:
 
 
 
 12.31.18
 
 12.31.17
Tax calculated at the tax applicable tax rate in effect (i)
 
1,235
 
(1,897)
Permanent differences:
 
 
 
Share of profit of subsidiaries, associates and joint ventures
 
(964)
 
2,245
Result from exposure to changes in the purchasing power of the currency
 
392
 
12
Income tax rate change (*)
 
(137)
 
(212)
Provision for unrecoverability of tax loss carry-forwards
 
(418)
 
 -
Tax Transparency
 
(31)
 
 -
Impairment of interest in subsidiaries
 
(42)
 
 -
Loss from disposal of subsidiaries
 
 -
 
(6)
Non-taxable results, non-deductible expenses and others
 
10
 
(12)
Income tax
 
45
 
130
 
 
(*) As of December 31, 2018 corresponds to the effect of applying to the deferred tax items the changes in the applicable tax rates.
 
(i) 
The Income Tax rate in effect in Argentina as of December 31, 2017 was 35%, while as of December 31, 2018 is 30%. See note 20 to the Annual Consolidated Financial Statements.
 
 
 
 
 
18
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
19.
Revenues
 
 
 
 12.31.18
 
 12.31.17
Crops
 
1,023
 
1,173
Cattle
 
178
 
263
Dairy
 
 -
 
118
Supplies
 
11
 
4
Leases and agricultural services
 
40
 
2
Total revenues
 
1,252
 
1,560
 
 
20.
Costs
 
 
 
 12.31.18
 
 12.31.17
 
 
 
 
 
Crops
 
929
 
821
Cattle
 
141
 
216
Dairy
 
 -
 
86
Supplies
 
8
 
1
Leases and agricultural services
 
38
 
3
Other costs
 
12
 
15
Total costs
 
1,128
 
1,142
 
 
 
 
21.
Expenses by nature
 
 
 Costs (i)
 
 Cost of Production
 
 General and administrative expenses
 
 Selling expenses
 
 Total as of 12.31.18
 
 Total as of 12.31.17
Supplies and labors
 
28
 
1,042
 
 -
 
 -
 
1,070
 
735
Leases and expenses
 
 -
 
2
 
6
 
 -
 
8
 
7
Amortization and depreciation
 
8
 
30
 
7
 
 -
 
45
 
55
Doubtful accounts (charge and recovery)
 
 -
 
 -
 
 -
 
(1)
 
(1)
 
 -
Cost of sale of agricultural products and biological assets
 
1,078
 
 -
 
 -
 
 -
 
1,078
 
1,124
Advertising, publicity and other selling expenses
 
 -
 
 -
 
 -
 
2
 
2
 
1
Maintenance and repairs
 
1
 
20
 
10
 
1
 
32
 
36
Payroll and social security liabilities
 
8
 
81
 
92
 
7
 
188
 
229
Fees and payments for services
 
 -
 
11
 
16
 
1
 
28
 
22
Freights
 
1
 
22
 
 -
 
118
 
141
 
247
Bank commissions and expenses
 
 -
 
 -
 
2
 
5
 
7
 
25
Travel expenses and stationery
 
1
 
16
 
6
 
 -
 
23
 
6
Conditioning and clearance
 
 -
 
 -
 
 -
 
35
 
35
 
54
Director’s fees
 
 -
 
 -
 
12
 
 -
 
12
 
10
Taxes, rates and contributions
 
1
 
13
 
 -
 
38
 
52
 
71
Others
 
2
 
 -
 
 -
 
2
 
4
 
8
Total expenses by nature as of 12.31.18
 
1,128
 
1,237
 
151
 
208
 
2,724
 
 
Total expenses by nature as of 12.31.17
 
1,142
 
968
 
161
 
359
 
 
 
2,630
 
 
(i) Include Ps. 12 and Ps. 15 of other agricultural operating costs as of December 31, 2018 and 2017, respectively.
 
 
 
 
 
 
19
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
22.
Other operating results, net
 
 
12.31.18
 
12.31.17
Administration fees
 
1
 
3
Gain from commodity derivative financial instruments
 
154
 
3
Contingencies
 
(1)
 
(6)
Donations
 
(179)
 
 -
Gain from disposal of associates, subsidiaries and/or joint ventures
 
 -
 
65
Others
 
34
 
(4)
Total other operating results, net
 
9
 
61
 
 
23.
Financial results, net
 
 
12.31.18
 
12.31.17
Financial income:
 
 
 
 
Interest income
 
32
 
1
Foreign exchange gains
 
111
 
(4)
Total financial income
 
143
 
(3)
 
 
 
 
 
Financial costs:
 
 
 
 
Interest expenses
 
(489)
 
(155)
Foreign exchange losses
 
(629)
 
(16)
Other financial costs
 
(59)
 
(24)
Total financial costs
 
(1,177)
 
(195)
 
 
 
 
 
Other financial results:
 
 
 
 
Fair value gains of financial assets at fair value through profit or loss
 
9
 
10
(Loss) / Gain from derivative financial instruments (except commodities)
 
(127)
 
3
Gain from repurchase of NCN
 
1
 
 -
Total other financial results
 
(117)
 
13
Result from exposure to changes in the purchasing power of the currency
 
286
 
115
Total financial results, net
 
(865)
 
(70)
 
 
 
24.
Related parties transactions
 
See description of the main transactions conducted with related parties in Note 31 to the Consolidated Financial Statements as of June 30, 2018.
 
The following is a summary of the balances with related parties as of December 31, 2018 and June 30, 2018:
 
Items
 
12.31.18
 
06.30.18
Trade and other payables
 
(1,222)
 
(1,740)
Borrowings
 
(1,670)
 
(568)
Trade and other receivables
 
305
 
445
Total
 
(2,587)
 
(1,863)
 
 
 
 
 
20
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
 
Related party
 
12.31.18
 
06.30.18
 
Description of transaction
IRSA Inversiones y Representaciones Sociedad Anónima
 
13
 
28
 
Corporate services receivable
 
 
1
 
(6)
 
Leases payable
 
 
12
 
9
 
Reimbursement of expenses receivable
 
 
1
 
1
 
Share based payments
 
 
1
 
1
 
Administration fees
Brasilagro Companhia Brasileira de Propriedades Agrícolas (“Brasilagro”)
 
(1)
 
 -
 
Reimbursement of expenses payable
 
 
1
 
126
 
Reimbursement of expenses receivable
Sociedad Anónima Carnes Pampeanas S.A. (formerly EAASA)
 
(2)
 
 -
 
Reimbursement of expenses receivable
 
 
132
 
17
 
Sale of goods and/or services
Helmir S.A.
 
(335)
 
(297)
 
Borrowings
Ombú Agropecuaria S.A.
 
2
 
4
 
Administration fees
 
 
(1)
 
 -
 
Reimbursement of expenses payable
 
 
1
 
 -
 
Reimbursement of expenses
Agropecuaria Acres del Sud S.A.
 
2
 
3
 
Administration fees
 
 
1
 
1
 
Reimbursement of expenses
Yatay Agropecuaria S.A.
 
2
 
3
 
Administration fees
 
 
(204)
 
 -
 
Borrowings
Yuchán Agropecuaria S.A.
 
 -
 
3
 
Administration fees
 
 
2
 
 -
 
Reimbursement of expenses receivable
Futuros y Opciones.Com S.A.
 
(7)
 
121
 
Brokerage operations receivable
 
 
52
 
(8)
 
MAT operations
Total Subsidiaries
 
(327)
 
6
 
 
Agro-Uranga S.A.
 
6
 
34
 
Purchase of goods and/or services
Uranga Trading
 
(3)
 
 -
 
Purchase of goods and/or services
Total Associates
 
3
 
34
 
 
 
 
 
 
 
 
 
IRSA Propiedades Comerciales S.A.
 
27
 
19
 
Reimbursement of expenses receivable
 
 
3
 
4
 
Share based payments
 
 
(1,111)
 
(237)
 
Non-convertible notes
 
 
44
 
71
 
Corporate services
Emprendimiento Recoleta S.A.
 
 -
 
(15)
 
Non-convertible notes
Panamerican Mall S.A.
 
(20)
 
(19)
 
Non-convertible notes
Amauta Agro S.A. (formerly FyO Trading S.A.)
 
1
 
 -
 
Reimbursement of expenses receivable
 
 
(54)
 
 -
 
Purchase of goods and/or services
FyO Acopio S.A. (formerly Granos Olavarría S.A.)
 
(18)

 -
 
Reimbursement of expenses payable
Total Subsidiaries of the subsidiaries
 
(1,128)

(177)
 
 
 
 
 
 
 
 
 
CAMSA and its subsidiaries
 
(1,130)
 
(1,722)
 
Management fees
Estudio Zang, Bergel & Viñes
 
(1)
 
(1)
 
Legal services
Other Related parties
 
(1,131)
 
(1,723)
 
 
 
 
 
 
 
 
 
Directors and Senior Management
 
(5)
 
(3)
 
Director's fees
 
 
1
 
 -
 
Reimbursement of expenses
Total Directors and Senior Management
 
(4)
 
(3)
 
 
Total
 
(2,587)
 
(1,863)
 
 
 
 
 
 
 
 
 
 
21
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
The following is a summary of the results with related parties for the six-month period ended as of December 31, 2018 and 2017:
 
Related party
 
12.31.18
 
12.31.17
 
Description of transaction
IRSA Inversiones y Representaciones Sociedad Anónima
 
(4)
 
(1)
 
Leases and/or rights of use
 
 
37
 
49
 
Corporate services
Futuros y Opciones.Com S.A.
 
(4)
 
(6)
 
Purchase of goods and/or services
 
 
1
 
 -
 
Management fees
 
 
 -
 
6
 
Sale of goods and/or services
Amauta Agro S.A. (formerly FyO Trading S.A.)
 
 -
 
1
 
Sale of goods and/or services
 
 
(49)
 
(24)
 
Purchase of goods and/or services
Sociedad Anónima Carnes Pampeanas S.A. (formerly EAASA)
 
115
 
58
 
Sale of goods and/or services
Helmir S.A.
 
(79)
 
(24)
 
Financial operations
Total subsidiaries
 
17
 
                59
 
 
 
 
 
 
 
 
 
Agro-Uranga S.A.
 
 -
 
3
 
Sale of goods and/or services
Total Associates
 
               -
 
                  3
 
 
 
 
 
 
 
 
 
Emprendimiento Recoleta S.A.
 
 -
 
(7)
 
Financial operations
Panamerican Mall S.A.
 
(2)
 
(3)
 
Financial operations
Yatay Agropecuaria S.A.
 
(4)
 
 -
 
Financial operations
IRSA Propiedades Comerciales S.A.
 
(2)
 
(3)
 
Leases and/or rights of use
 
 
109
 
124
 
Corporate services
 
 
(31)
 
(37)
 
Financial operations
FyO Acopio S.A. (continuadora de Granos Olavarría S.A.)
 
61
 
44
 
Sale of goods and/or services
 
 
9
 
 -
 
Management fees
 
 
(31)
 
(3)
 
Purchase of goods and/or services
Total Subsidiaries of the subsidiaries
 
109
 
               115
 
 
 
 
 
 
 
 
 
Estudio Zang, Bergel & Viñes
 
(1)
 
(3)
 
Legal services
CAMSA y sus subsidiarias
 
 -
 
(785)
 
Management fees
San Bernardo de Córdoba S.A.
 
 -
 
(1)
 
Leases and/or rights of use
Isaac Elsztain e Hijos S.C.A.
 
(1)
 
 -
 
Management fees
Other Related parties
 
(2)
 
(789)
 
 
 
 
 
 
 
 
 
Directores
 
(12)
 
(10)
 
Compensation of Directors and Senior Management
Senior Management
 
(4)
 
(10)
 
Compensation of Directors and Senior Management
Total Directors and Senior Management
 
(16)
 
(20)
 
 
Total
 
108
 
(632)
 
 
 
 
 
The following is a summary of the transactions with related parties for the six-month period ended as of December 31, 2018 and 2017:
 
Related party
 
12.31.18
 
12.31.17
 
Description of transaction
Agropecuarias Santa Cruz de la Sierra S.A. (formerly Doneldon S.A.)
 
2
 
 -
 
Additional paid-in capital
Sociedad Anónima Carnes Pampeanas S.A. (formerly EAASA)
 
37
 
 -
 
Additional paid-in capital
 
 
5
 
62
 
Capitalization of credits
Agropecuarias Santa Cruz de la Sierra S.A.
 
23
 
1
 
Additional paid-in capital
Total subsidiary contributions
 
67
 
63
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
943
 
1,373
 
Dividends received
Brasilagro Companhia Brasileira de Propriedades Agrícolas (“Brasilagro”)
 
46
 
24
 
Dividends received
Agro-Uranga S.A.
 
13
 
6
 
Dividends received
Futuros y Opciones.Com S.A.
 
20
 
 -
 
Dividends received
Total dividends received
 
1,022
 
1,403
 
 
 
 
 
22
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
25.
CNV General Resolution N° 622/13
As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622/13, below there is a detail of the notes to the Unaudited Condensed Interim Separate Financial Statements that disclosure the information required by the Resolution in Exhibits.
 
Exhibit A - Property, plant and equipment
 
Note 7 – Investment properties
 
 
Note 8 – Property, plant and equipment
Exhibit B - Intangible assets
 
Note 9 – Intangible assets
Exhibit C - Equity investments
 
Note 6 - Investments in subsidiaries, associates and joint ventures
Exhibit D - Other investments
 
Note 12 – Financial instruments by category
Exhibit E - Provisions
 
Note 13 – Trade and other receivables
 
 
Note 16 – Provisions
Exhibit F - Cost of sales and services
 
Note 26 – Cost of sales and services provided
Exhibit G - Foreign currency assets and liabilities
 
Note 27 – Foreign currency assets and liabilities
Exhibit H - Exhibit of expenses
 
Note 21 – Expenses by nature
 
 
 
 
26.
Cost of sales and services provided
 
 
Description
 
Biological assets (1)
Agricultural stock
Services and other operating costs
Total as of 12.31.18
Total as of 12.31.17
Beginning of the period / year
 
943
1,314
 -
2,257
2,072
Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest
 
(166)
 -
 -
(166)
(194)
Changes in the net realizable value of agricultural products after harvest
 
 -
58
 -
58
77
Increase due to harvest
 
 -
621
 -
621
717
Acquisitions and classifications
 
3
828
 -
831
369
Consume
 
(1)
(711)
 -
(712)
(381)
Expenses incurred
 
223
 -
38
261
294
Inventories
 
(861)
(1,173)
 -
(2,034)
(1,827)
Cost as of 12.31.18
 
141
937
38
1,116
 -
Cost as of 12.31.17
 
263
861
3
 -
1,127
 
(1)
Corresponds to breeding cattle movements and other cattle.
 
 
 
 
 
 
23
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
27.
Foreign currency assets and liabilities
 
Book amounts of foreign currency assets and liabilities as of December 31, 2018 and June 30, 2018 are as follows:
Items
 
 Amount of foreign currency
 
 Prevailing exchange rate (1)
 
 Total as of 12.31.18
 
 Total as of 06.30.18
Assets
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
 
 
 
 
US Dollar
 
20
 
37.500
 
737
 
717
Receivables with related parties:
 
 
 
 
 
 
 
 
US Dollar
 
 -
 
37.700
 
3
 
1
Brazilian Reais
 
 -
 
 -
 
 -
 
126
Total trade and other receivables
 
 
 
 
 
740
 
844
Investment in financial assets
 
 
 
 
 
 
 
 
US Dollar
 
2
 
37.500
 
89
 
 -
Total Investment in financial assets
 
 
 
 
 
89
 
 -
Cash and cash equivalents
 
 
 
 
 
 
 
 
US Dollar
 
5
 
37.500
 
185
 
29
Brazilian Reais
 
 -
 
9.250
 
1
 
 -
Total Cash and cash equivalents
 
 
 
 
 
186
 
29
Liabilities
 
 
 
 
 
 
 
 
Trade and other payables
 
 
 
 
 
 
 
 
US Dollar
 
9
 
37.700
 
326
 
129
Payables with related parties:
 
 
 
 
 
 
 
 
US Dollar
 
1
 
37.700
 
42
 
 -
Brazilian Reais
 
 -
 
10.250
 
1
 
 -
Bolivian Pesos
 
 -
 
0.168
 
1
 
 -
Total trade and other payables
 
 
 
 
 
370
 
129
Derivative financial instruments
 
 
 
 
 
 
 
 
US Dollar
 
 -
 
37.700
 
1
 
 -
Total derivative instruments
 
 
 
 
 
1
 
 -
Borrowings
 
 
 
 
 
 
 
 
US Dollar
 
434
 
37.700
 
16,348
 
13,661
Total Borrowings
 
 
 
 
 
16,348
 
13,661
 
(1)  Exchange rate as of December 31, 2018 according to Banco Nación Argentina records
 
28.
CNV General Ruling N° 629/14 – Storage of documentation
 
On August 14, 2014, the CNV issued General Ruling N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Company has entrusted the storage of certain non-sensitive and old information to the following providers:
 
Documentation storage provider
 
Location
Bank S.A.
 
Ruta Panamericana Km 37,5, Garín, Province of Buenos Aires
 
 
Av. Fleming 2190, Munro, Province of Buenos Aires
 
 
Carlos Pellegrini 1401, Avellaneda, Province of Buenos Aires
Iron Mountain Argentina S.A.
 
Av. Amancio Alcorta 2482, Autonomous City of Buenos Aires
 
 
Pedro de Mendoza 2143, Autonomous City of Buenos Aires
 
 
Saraza 6135, Autonomous City of Buenos Aires
 
 
Azara 1245, Autonomous City of Buenos Aires
 
 
Polígono industrial Spegazzini, Autopista Ezeiza Km 45, Cañuelas, Province of Buenos Aires
 
 
Cañada de Gomez 3825, Autonomous City of Buenos Aires
 
It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of section I, Chapter V, Title II of the RULES (N.T. 2013 as amended) are available at the registered office.
 
On February 5, 2014 there was a widely known fire in Iron Mountain’s warehouse, which is a supplier of the Company and where Company’s documentation was being kept. Based on the internal review carried out by the Company, duly reported to CNV on February 12, 2014, the information kept at the Iron Mountain premises that were on fire do not appear to be sensitive or capable of affecting normal operations.
 
 
24
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
29.
Negative working capital
 
At the end of the period, the Company carried a working capital deficit of Ps. 6,611 whose treatment is being considered by the Board of Directors and the respective Management.
 
 
30.
Subsequent events
 
See others subsequent events in Note 35 to the Unaudited Condensed Interim Consolidated Financial Statements.
 
 
 
 
 
 
 
25
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of December 31, 2018
Stated in millions of Argentine pesos
Free translation from the original prepared in Spanish for publication in Argentina
 
1.        Specific and significant legal systems that imply contingent lapsing or rebirth of benefits envisaged by such provisions.
 
None.
 
2.        Significant changes in the Company´s activities or other similar circumstances that occurred during the fiscal years included in the financial statements, which affect their comparison with financial statements filed in previous fiscal years, or that could affect those to be filed in future fiscal years.
 
Are detailed in the Business Review.
 
3.        Receivables and liabilities by maturity date.
 
 
 
Past due (Point 3 a.)
Without maturity (Point 3.b.)
Without maturity (Point 3.b.)
To be due (Point 3.c.)
 
Items
12.31.18
Current
Non-current
Up to 3 months
From 3 to 6 month
From 6 to 9 months
From 9 to 12 months
From 1 to 2 years
From 2 to 3 years
From 3 to 4 years
From 4 years on
Total
Accounts receivables
Trade and other receivables
-
252
-
809
150
 -
2
230
153
130
37
1,763
Income tax and minimum presumed income tax and deferred income tax
 -
 -
895
 -
 -
 -
 -
 -
 -
 -
 -
895
Total
 -
252
895
809
150
 -
2
230
153
130
37
2,658
Liabilities
Trade and other payables
-
74
-
2,340
-
3
 -
-
-
-
-
2,417
Borrowings
-
-
-
3,016
2,746
1,856
600
3,431
324
86
4,244
16,303
Payroll and social security liabilities
-
-
-
49
 -
52
 -
-
-
-
-
101
Provisions
-
3
9
-
-
-
-
-
-
-
-
12
Income tax and minimum presumed income tax
 -
 -
 -
 -
 -
 -
40
 -
 -
 -
 -
40
 
Total
 -
77
9
5,405
2,746
1,911
640
3,431
324
86
4,244
18,873
 
 
 
 
 
 
26
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of December 31, 2018
Stated in millions of Argentine pesos
Free translation from the original prepared in Spanish for publication in Argentina
 
 
4.a.        Breakdown of accounts receivable and liabilities by currency and maturity.
 
Items
Current
Non-current
Totals
Local Currency
Foreign Currency
Total
Local Currency
Foreign Currency
Total
Local Currency
Foreign Currency
Total

Accounts receivables
Trade and other receivables
960
253
1,213
63
487
550
1,023
740
1,763
Income tax and minimum presumed income tax and deferred income tax
 -
 -
 -
895
 -
895
895
 -
895
Total
960
253
1,213
958
487
1,445
1,918
740
2,658
Liabilities
Trade and other payables
2,047
370
2,417
 -
 -
 -
2,047
370
2,417
Borrowings
4
8,214
8,218
 -
8,085
8,085
4
16,299
16,303
Payroll and social security liabilities
101
 -
101
 -
 -
 -
101
 -
101
Provisions
3
 -
3
9
 -
9
12
 -
12
Income tax and minimum presumed income tax
40
 -
40
 -
 -
 -
40
 -
40
 
Total
2,195
8,584
10,779
9
8,085
8,094
2,204
16,669
18,873
 
 
 
4.b.        Breakdown of accounts receivable and liabilities by adjustment clause.
 
On December 31, 2018, there are no receivable and liabilities subject to adjustment clause.
 
 
 
 
 
 
27
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of December 31, 2018
Stated in millions of Argentine pesos
Free translation from the original prepared in Spanish for publication in Argentina
 
 
4.c. Breakdown of accounts receivable and liabilities by interest accrual.
 
 
 
 
 
Current
Non-Current
 
 
 

Items
Accruing interest
 
 
Accruing interest

 
Accruing interest
 
 
          
 
 
Fixed
Floating
Non-accruing interest
Subtotal
Fixed
Floating
Non-accruing interest
 
Subtotal
Fixed
Floating
Non-accruing interest
Total
Accounts receivables
Trade and other receivables
7
 -
1,206
1,213
11
 -
539
550
18
 -
1,745
1,763
Income tax and minimum presumed income tax and deferred income tax
 -
 -
 -
 -
 -
 -
895
895
 -
 -
895
895
 
Total
7
 -
1,206
1,213
11
 -
1,434
1,445
18
 -
2,640
2,658
Liabilities
Trade and other payables
 -
 -
2,417
2,417
 -
 -
 -
 -
 -
 -
2,417
2,417
Borrowings
7,899
86
233
8,218
7,823
258
4
8,085
15,722
344
237
16,303
Payroll and social security liabilities
 -
 -
101
101
 -
 -
 -
 -
 -
 -
101
101
Provisions
 -
 -
3
3
 -
 -
9
9
 -
 -
12
12
Income tax and minimum presumed income tax
 -
 -
40
40
 -
 -
 -
 -
 -
 -
40
40
 
Total
7,899
86
2,794
10,779
7,823
258
13
8,094
15,722
344
2,807
18,873
 
 
 
 
 
 
 
 
 
28
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
Information required by Section 68 of the Buenos Aires Stock Exchange Regulations
and Section 12, Chapter III, Title IV of Resolution 622/13
Unaudited Condensed Interim Separate Statement of Financial Position as of December 31, 2018
Stated in millions of Argentine pesos
Free translation from the original prepared in Spanish for publication in Argentina
 
5.
Companies under section 33 of law N°. 19,550 and other related parties.
 
a.
Interest in companies under section 33 of law N° 19,550.
 
Name of the entity
Place of business / Country of incorporation
Principal activity
(*)
% of ownership interest held by the Group
 
Direct equity interest:
 
 
 
Brasilagro-Companhía Brasileira de Propiedades Agrícolas (1)
Brazil
Agricultural
43.29% (2)
Agropecuaria Santa Cruz de la Sierra S.A. (formerly Doneldon S.A.)
Uruguay
Investment
100%
Futuros y Opciones.Com S.A.
Argentina
Brokerage
50.10%
Helmir S.A.
Uruguay
Investment
100.00%
IRSA Inversiones y Representaciones Sociedad Anónima
Argentina
Real Estate
63.36% (2)
Amauta Agro S.A. (formerly FyO Trading S.A. due to change of corporate name)
Argentina
Brokerage
2.20%
Sociedad Anónima Carnes Pampeanas S.A.
Argentina
Agro-industrial
99.70%
Agrouranga S.A.
Argentina
Agricultural
35.72%
Uranga Trading S.A.
Argentina
Marketing, warehousing and processing
35.72%
Granos de Olavarría S.A.
Argentina
Warehousing and brokerage
2.20%
(*) All companies whose main activity is “investment” do not have significant assets and liabilities other than their respective interest holdings in operating entities.
 
(1)
The Group has consolidated the investment in Brasilagro-Companhía Brasileira de Propiedades Agrícolas (“Brasilagro”) considering that the Company exercises “de facto control” over it.
(2)
For computation purposes, Treasury shares have been subtracted.
 
b.
Companies under section 33 of law N° 19,550 and other related parties debit / credit balances. See Note 24.
 
6.
Loans to directors.
 
See Note 24.
 
7.
Inventories.
 
The Company conducts physical inventories once a fiscal year in its most significant properties, covering all the assets they possess. There is no relevant immobilization of inventory.
 
8.           
Current values.
 
See Note 2 to the Consolidated Financial Statements as of June 30, 2018 and 2017.
 
 
 
 
 
 
 
29
Cresud Sociedad Anónima,
Comercial, Inmobiliaria, Financiera y Agropecuaria
 
9.           
Appraisal revaluation of property, plant and equipment.
 
None.
 
10.         
Obsolete unused property, plant and equipment.
 
None.
 
11.
Equity interest in other companies in excess of that permitted by section 31 of law N°. 19,550.
 
None.
 
12.         
Recovery values.
 
See Note 2 to the Consolidated Financial Statements as of June 30, 2018 and 2017.
 
13.         
Insurances.
 
The types of insurance used by the company were the following:
 
Insured property
Risk covered
Amount insured
Ps.
Book value
Ps.
Buildings, machinery, silos, installation and furniture and equipment
Theft, fire and technical insurance
1,658
3,304
Vehicles
Third parties, theft, fire and civil liability
38
27
 
14.
Allowances and provisions that, taken individually or as a whole, exceed 2% of the shareholder´s equity.
 
None.
 
15.
Contingent situations at the date of the financial statements which probabilities are not remote and the effects on the Company´s financial position have not been recognized.
 
Not applicable.
 
16.         Status of the proceedings leading to the capitalization of irrevocable contributions towards future subscriptions.
 
   Not applicable.
 
17.         Unpaid accumulated dividends on preferred shares.
 
   None.
 
18.         Restrictions on distributions of profits.
 
              According to the Argentine laws, 5% of the profit of the year is separated to constitute legal reserves until they reach legal capped amounts (20% of total capital). These legal reserves are not available for dividend distribution.
 
 
 
 
 
 
 
30
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED
 INTERIM SEPARATE FINANCIAL STATEMENTS
 
To the Shareholders, President and Directors of
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Legal address: Moreno 877 – 23° floor
Autonomous City Buenos Aires
Tax Code No. 30-50930070-0
 
 
Introduction
We have reviewed the unaudited condensed interim separate financial statements of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (hereinafter “the Company”) which included the unaudited condensed interim separate statements of financial position as of December 31, 2018, and the unaudited condensed interim separate statements of comprehensive income for the six-month period ended December 31, 2018 and the unaudited condensed interim separate statements of changes in shareholders’ equity and the unaudited condensed interim separate statements of cash flows for the six-month period ended December 31,2018 and selected explanatory notes.
 
The balances and other information corresponding to the fiscal year ended June 30, 2018 and the interim periods within that fiscal year are an integral part of these financial statements and, therefore, they should be considered in relation to those financial statements.
 
Management responsibility
The Board of Directors of the Company is responsible for the preparation and presentation of these unaudited condensed interim separate financial statements in accordance with the International Financial Reporting Standards (IFRS) adopted by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as professional accounting standards and added by the National Securities Commission (CNV) to its regulations, as approved by the International Accounting Standard Board (IASB) and, for this reason, is responsible for the preparation and presentation of the unaudited condensed interim separate financial statements above mentioned in the introductory paragraph according to the International Accounting Standard No 34 "Interim Financial Reporting" (IAS 34).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED
INTERIM SEPARATE FINANCIAL STATEMENTS (Continued)
 
Scope of our review
Our review was limited to the application of the procedures established in the International Standard on Review Engagements ISRE 2410 "Review of interim financial information performed by the independent auditor of the entity", which was adopted as a review standard in Argentina in Technical Resolution No. 33 of the FACPCE as approved by the International Auditing and Assurance Standards Board (IAASB). A review of interim financial information consists of making inquiries of persons responsible for the preparation of the information included in the unaudited condensed interim separate financial statements, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the separate statement of financial position, the separate statement of comprehensive income and separate statement of cash flow of the Company.
 
Conclusion
Nothing came to our attention as a result of our review that caused us to believe that these unaudited condensed interim separate financial statements above mentioned in the introductory paragraph of this report have not been prepared in all material respects in accordance with International Accounting Standard 34.
 
Report on compliance with current regulations
In accordance with current regulations, we report about Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria that:
 
 
a)
the unaudited condensed interim separate financial statements of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria are being processed for recording in the "Inventory and Balance Sheet Book", and comply as regards those matters that are within our competence, except as mentioned before, with the provisions set forth in the Commercial Companies Law and in the corresponding resolutions of the National Securities Commission;
 
b)
the unaudited condensed interim separate financial statements of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria arise from accounting records carried in all formal aspects in conformity with the applicable legal provisions;
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free translation from the original prepared in Spanish for publication in Argentina
 
REVIEW REPORT ON THE UNAUDITED CONDENSED
INTERIM SEPARATE FINANCIAL STATEMENTS (Continued)
 
 
c)
we have read the additional information to the notes to the unaudited condensed interim separate financial statements required by section 68 of the listing regulations of the Buenos Aires Stock Exchange and by section 12 of Chapter III Title IV of the text of the National Securities Commission, on which, as regards those matters that are within our competence, we have no observations to make;
 
d)
as of December 31, 2018, the debt of Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria owed in favor of the Argentina Integrated Pension System which arises from accounting records and submissions amounted to Ps. 13,152,681, which was no callable at that date.
 
 
Autonomous City of Buenos Aires, March 1, 2019
 
 
PRICE WATERHOUSE & CO. S.R.L.
 
 
                                                (Partner)
C.P.C.E.C.A.B.A. Tº 1 Fº 17
Dr. Mariano C. Tomatis
Public Accountant (UBA)
C.P.C.E.C.A.B.A. Tº 241 Fº 118
 
 
 
 
 
 
 
 
 
 
 
 
 
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
 
I. Brief comment on the Company’s activities during the period, including references to significant events occurred after the end of the period.
 
 
Financial Statements adjusted for inflation
 
 
IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated by non-monetary items. This requirement also includes the comparative information of the financial statements.
 
 
In order to conclude on whether an economy is categorized as high inflation in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of an accumulated inflation rate in three years that is approximate or exceed 100%. Accumulated inflation in Argentina in three years is over 100%. It is for this reason that, in accordance with IAS 29, Argentina must be considered a country with high inflation economy starting July 1, 2018.
 
 
In addition, Law No. 27,468 (published in the Official Gazette on December 4, 2018), amended Section 10 of Law No. 23,928, as amended, and established that the derogation of all the laws or regulations imposing or authorizing price indexation, monetary restatement, cost variation or any other method for strengthening debts, taxes, prices or rates of goods, works or services, does not extend to financial statements, as to which the provisions of Section 62 in fine of the General Companies Law No. 19,550 (1984 revision), as amended, shall continue to apply. Moreover, the referred law repealed Decree No. 1269/2002 dated July 16, 2002, as amended, and delegated to the Argentine Executive Branch the power to establish, through its controlling agencies, the effective date of the referred provisions in connection with the financial statements filed with it. Therefore, under General Resolution 777/2018 (published in the Official Gazette on December 28, 2018) the Argentine Securities Commission (CNV) ordered that issuers subject to its supervision shall apply the inflation adjustment to reflect the financial statements in terms of the current measuring unit set forth in IAS 29 in their annual, interim and special financial statements closed on or after December 31, 2018.
 
 
Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a high inflationary economy should be reported in terms of the measuring unit current as of the date of the financial statements. All the amounts included in the statement of financial position which are not stated in terms of the measuring unit current as of the date of the financial statements should be restated applying the general price index. All items in the statement of income should be stated in terms of the measuring unit current as of the date of the financial statements, applying the changes in the general price index occurred from the date on which the revenues and expenses were originally recognized in the financial statements.
 
 
Adjustment for inflation in the initial balances has been calculated considering the indexes reported by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) based on the price indexes published by the Argentine Institute of Statistics and Census (INDEC).
 
 
The principal inflation adjustment procedures are the following:
 
 
-
Monetary assets and liabilities that are recorded in the current currency as of the balance sheet’s closing date are not restated because they are already stated in terms of the currency unit current as of the date of the financial statements.
 
 
-
Non-monetary assets and liabilities are recorded at cost as of the balance sheet date, and equity components are restated applying the relevant adjustment ratios.
 
 
-
All items in the statement of income are restated applying the relevant conversion factors.
 
 
-
The effect of inflation in the Company’s net monetary position is included in the statement of income under Financial results, net, in the item “Inflation adjustment”.
 
 
-
Comparative figures have been adjusted for inflation following the procedure explained in the previous paragraphs.
 
 
 
 
 
 
1
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
 
Upon initially applying inflation adjustment, the equity accounts were restated as follows:
 
 
-
Capital was restated as from the date of subscription or the date of the most recent inflation adjustment for accounting purposes, whichever is later. The resulting amount was included in the “Capital adjustment” account.
 
 
-
The translation difference was recast to reflect the real terms.
 
 
-
Other comprehensive income / (loss) was restated as from each accounting allocation.
 
 
-
The other reserves in the statement of income were not restated as of the initial application date, i.e., June 30, 2016.
 
 
 
 
 
 
 
 
 
 
 
2
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
 
Consolidated Results
 
(In ARS million)
6M 19
6M 18
YoY Var
Revenues
33,103
28,238
17.2%
Costs
-20,739
-17,275
20.1%
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
461
172
168.0%
Changes in the net realizable value of agricultural produce after harvest
34
81
-58.0%
Gross profit
12,859
11,216
14.6%
Net gain from fair value adjustment on investment properties
-5,519
10,336
-153.4%
Gain from disposal of farmlands
53
-
-
General and administrative expenses
-3,590
-3,105
15.6%
Selling expenses
-3,915
-3,785
3.4%
Other operating results, net
521
1,106
-52.9%
Fees
-
-785
-100.0%
Profit from operations
409
14,983
-97.3%
Depreciation and Amortization
3,215
3,066
4.9%
EBITDA (unaudited)
3,624
18,049
-79.9%
Adjusted EBITDA (unaudited)
9,973
7,713
29.3%
Profit from joint ventures and associates
-717
78
-1,019.2%
(Loss) / Profit from operations before financing and taxation
-308
15,061
-102.0%
Financial results, net
-7,950
-8,205
-3.1%
(Loss) / Profit before income tax
-8,258
6,856
-220.4%
Income tax expense
1,921
3,327
-42.3%
Result for the period from continued operations
-6,337
10,183
-162.2%
Result from discontinued operations after income tax
717
1,291
-44.5%
Result for the period
-5,620
11,474
-149.0%
 
 
 
 
Attributable to
 
 
 
Equity holder of the parent
-3,925
5,354
-173.3%
Non-controlling interest
-1,695
6,120
-127.7%
 
Consolidated revenues increased by 17.2% in the first semester of 2019 compared to the same period of 2018, while adjusted EBITDA reached ARS 9,973 million, 29.3% higher than in the same period of fiscal year 2018 mainly explained by the Agribusiness Segment that registered higher productive results from the grain segment and higher results from farmland sales made by our subsidiary Brasilagro.
 
 
The net result showed a loss of ARS 5,620 million for the first semester of 2019 compared to the same period of fiscal year 2018, mainly due to a loss from changes in the fair value of the investment properties of our subsidiary IRSA in Argentina.
 
 
 
 
 
 
 
 
 
 
3
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
  
Description of Operations by Segment
 
 
6M 2019
 

Urban Properties and Investments
 
Variation
 
Agribusiness
Argentina
Israel
Subtotal
Total
6M 19 vs. 6M 18
Revenues
5,437
4,624
22,149
26,773
32,210
19.1%
Costs
-4,544
-804
-14,305
-15,109
-19,653
22.9%
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
343
-
-
-
343
138.2%
Changes in the net realizable value of agricultural produce after harvest
34
-
-
-
34
-
Gross profit
1,270
3,820
7,844
11,664
12,934
14.7%
Net gain from fair value adjustment on investment properties
-22
-6,278
780
-5,498
-5,520
-153.2%
Gain from disposal of farmlands
53
-
-
-
53
-
General and administrative expenses
-401
-854
-2,352
-3,206
-3,607
15.2%
Selling expenses
-443
-326
-3,149
-3,475
-3,918
3.3%
Other operating results, net
172
-269
511
242
414
-61.8%
Profit / (Loss) from operations
629
-3,907
3,634
-273
356
-97.7%
Share of profit of associates
-13
-258
-321
-579
-592
1215.6%
Segment Profit / (Loss)
616
-4,165
3,313
-852
-236
-101.5%
 
 
 
6M 2018
 
 
Urban Properties and Investments
 
 
Agribusiness
Argentina
Israel
Subtotal
Total
Revenues
4,602
4,135
18,312
22,447
27,049
Costs
-3,914
-854
-11,229
-12,083
-15,997
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
144
-
-
-
144
Changes in the net realizable value of agricultural produce after harvest
81
-
-
-
81
Gross profit
913
3,281
7,083
10,364
11,277
Net gain from fair value adjustment on investment properties
262
8,373
1,747
10,120
10,382
Gain from disposal of farmlands
-
-
-
-
-
General and administrative expenses
-366
-629
-2,137
-2,766
-3,132
Selling expenses
-503
-305
-2,985
-3,290
-3,793
Other operating results, net
24
-67
1,127
1,060
1,084
Profit from operations
330
10,653
4,835
15,488
15,818
Share of profit of associates
-11
333
-367
-34
-45
Segment profit
319
10,986
4,468
15,454
15,773
 
Agricultural Business
 
 
Period Summary
 
 
The 2019 season is developing in Argentina under a mild “El Niño” pattern. Given the best productive conditions and the most competitive exchange rate, we plan to increase the planted area to 258,700 hectares, mainly in leased farms in the region.
 
 
As concerns sale of farms, in the second quarter of fiscal year 2019 ours subsidiary Brasilagro has consummated the sale of a fraction of 103 hectares of “Alto Taquarí” farm, located in Mato Grosso State, for an amount of BRL 8.0 million (BRL/ha 77,670). It should be noticed that during the first quarter of 2019 it has been consummated the sale of a fraction of 9,784 hectares of its "Jatobá" farm, located in Jaborandi, Bahía State, Brazil for BRL 177.8 million (BRL / ha 18,172).
 
 
 
 
 
 
4
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
Our Portfolio
 
 
Our portfolio under management is composed of 734,334 hectares, of which 289,485 are in operation and 444,849 are land reserves distributed among the four countries in the region where we operate: Argentina, with a mixed model combining land development and agricultural production; Bolivia, with a productive model in Santa Cruz de la Sierra; and through our subsidiary BrasilAgro, Brazil and Paraguay, where the strategy is mainly focused on the development of lands.
 
 
Breakdown of Hectares
 
 
Own and under Concession (*) (**) (***)
 
 
Productive Lands
Land Reserves
 
 
Agricultural
Cattle
Under Development
Reserved
Total
Argentina
59,699
150,328
2,060
324,101
536,188
Brazil
43,439
14,912
4,442
65,988
128,781
Bolivia
8,858
-
-
1,017
9,875
Paraguay
9,390
2,859
1,977
45,264
59,490
Total
121,386
168,099
8,479
436,370
734,334
(*) Includes Brazil, Paraguay, Agro-Uranga S.A. at 35.723% and 132,000 hectares under Concession.
(**) Includes 85,000 hectares intended for sheep breeding
(***) Excludes double crops.
 
Owned farms in our portfolio in Argentina, categorized as Property, Plant and Equipment, are valued at historical cost and have been adjusted for inflation as of December 31, 2018, reaching ARS 3,254 million, which represents an increase of 323%.
 
Leased (*)
 
 
Agricultural
Cattle
Other
Total
Argentina
68,300
14,585
2,201
85,086
Brazil
51,111
-
700
51,811
Bolivia
1,020
-
-
1,020
Total
120,431
14,585
2,901
137,917
(*) Excludes double crops.
 
Segment Income – Agricultural Business
 
 
I)
Land Development, Transformation and Sales
 
 
We periodically sell properties that have reached a considerable appraisal to reinvest in new farms with higher appreciation potential. We analyze the possibility of selling based on a number of factors, including the expected future yield of the farmland for continued agricultural and livestock exploitation, the availability of other investment opportunities and cyclical factors that have a bearing on the global values of farmlands.
 
 
During the first six-months of fiscal year 2019, our subsidiary Brasilagro has sold dos fractions of farms. In the first quarter, it has sold a fraction of 9,784 hectares of its "Jatobá" farm, located in Jaborandi, Bahía State, Brazil for BRL 177.8 million (BRL / ha 18.172). The farm was valued in books at BRL 18.0 million and the internal rate of return in dollars reached 7.05%. In the second quarter of the fiscal year, Brasilagro has consummated the sale of a fraction of 103 hectares of its "Alto Taquarí" farm, located in Mato Grosso State for BRL 8.0 million (BRL / ha 77,670). The farm was valued in books at BRL 1.2 million and the internal rate of return in dollars reached 17.2%.
 
 
In relation to the fraction of Jatobá sold in IQ19, this farm was considered as investment property in IQ18 since it was leased to third parties. The sale of the farm made in IQ19 had no impact on results since it has already been recognized at fair value. Adjusted EBITDA, which excludes changes in fair value of investment properties and includes the fair value realized from the sale, reflected that result and reached ARS 930 million for the six-month period of FY19.
 
 
 
 
 
5
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
 
in ARS million
6M 19
6M 18
YoY Var
Revenues
-
-
-
Costs
-10
-13
-23.1%
Gross loss
-10
-13
-23.1%
Net gain from fair value adjustment on investment properties
-22
262
-
Gain from disposal of farmlands
53
-
-
General and administrative expenses
-1
-1
0.0%
Selling expenses
-1
-
-
Profit from operations
19
248
-92.3%
Segment profit
19
248
-92.3%
EBITDA
25
252
-90.1%
Adjusted EBITDA
930
-8
-
 
 
Area under Development (hectares)
Projected for 2018/2019
Developed in 2017/2018
Argentina
2,060
2,486
Brasil
4,442
6,190
Paraguay
1,977
2,008
Total
8,479
10,684
 
During this campaign, we expect to transform 8,479 in the region: 2,060 hectares in Argentina, 1,977 hectares in Paraguay and 4,442 hectares in Brazil.
 
II)
Agricultural Production
 
 
The result of the Farming segment increased by ARS 249 million, from ARS 219 million gain during the first semester of fiscal year 2018 to ARS 468 million gain during the same period of 2019.
in ARS million
6M 19
6M 18
YoY Var
Revenues
3,042
2,750
10.6%
Costs
-2,642
-2,163
22.2%
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
359
144
149.3%
Changes in the net realizable value of agricultural produce after harvest
34
81
-58.0%
Gross profit
793
812
-2.5%
General and administrative expenses
-248
-224
10.3%
Selling expenses
-242
-389
-37.8%
Other operating results, net
166
19
773.7%
Profit from operations
469
218
115.1%
Profit from associates
-1
1
-
Segment profit
468
219
113.7%
EBITDA
643
401
60.3%
Adjusted EBITDA
643
401
60.3%
 
 
 
 
 
 
 
 
6
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
II,a) Crops and Sugarcane
Crops
In ARS Million
6M 19
6M 18
YoY Var
Revenues
1,646
1,417
16.2%
Costs
-1,501
-1,041
44.2%
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
299
-11
-
Changes in the net realizable value of agricultural produce after harvest
34
81
-58.0%
Gross profit
478
446
7.2%
General and administrative expenses
-126
-121
4.1%
Selling expenses
-205
-341
-39.9%
Other operating results, net
170
28
507.1%
Profit from operations
317
12
2,541.7%
Share of loss of associates
-1
1
-
Segment profit
316
13
2,330.8%
 
Sugarcane
In ARS Million
6M 19
6M 18
YoY Var
Revenues
1,065
914
16.5%
Costs
-883
-796
10.9%
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
218
317
-31.2%
Gross profit
400
435
-8.0%
General and administrative expenses
-73
-60
21.7%
Selling expenses
-10
-7
42.9%
Other operating results, net
-2
-5
-60.0%
Profit from operations
315
363
-13.2%
Segment profit
315
363
-13.2%
 
Operations
Production Volume1)
6M19
6M18
6M17
6M16
6M15
Corn
108,173
257,650
227,042
174,105
222,456
Soybean
13,178
11,088
4,649
12,064
18,464
Wheat
31,074
31,193
29,360
14,798
15,650
Sorghum
1,049
606
732
448
1,335
Sunflower
951
2,181
55
-
785
Others
1,947
1,171
2,150
5,284
2,716
Total Crops (tons)
156,372
303,889
263,988
206,699
261,406
Sugarcane (tons)
1,431,109
911,759
554,260
877,396
673,575
(1)
Includes Brasilagro, Acres del Sud, Ombú, Yatay and Yuchán. Excludes Agro-Uranga.
 
Volume of
6M19
6M18
6M17
6M16
6M15
 Sales (1)
D.M
F.M
Total
D.M
F.M
Total
D.M
F.M
Total
D.M
F.M
Total
D.M
F.M
Total
Corn
113.0
-
113.0
206.0
6.0
212.0
196.1
-
196.1
93.7
37.9
131.6
219.8
-
219.8
Soybean
53.0
42.6
95.6
69.8
5.8
75.6
53.1
-
53.1
86.9
8.5
95.4
76.4
14.2
90.6
Wheat
13.4
-
13.4
23.4
-
23.4
1.2
1.0
2.2
6.2
28.9
35.1
3.3
-
3.3
Sorghum
0.2
-
0.2
-
-
-
0.7
-
0.7
0.3
-
0.3
0.6
-
0.6
Sunflower
2.1
-
2.1
0.5
-
0.5
0.6
-
0.6
4.7
-
4.7
1.8
-
1.8
Others
0.2
-
0.2
0.8
-
0.8
2.1
-
2.1
2.7
-
2.7
0.7
-
0.7
Total Crops (thousands of tons)
181.9
42.6
224.5
300.5
11.8
312.3
253.8
1.0
254.8
194.5
75.3
269.8
302.6
14.2
316.8
Sugarcane (thousands of tons)
1,414.6
-
1,414.6
1,234.8
-
1,234.8
554.1
-
554.1
827.3
-
827.3
680.4
-
680.4
D.M.: Domestic market
F.M.: Foreign market
(1) Includes Brasilagro, CRESCA at 50%, Acres del Sud, Ombú, Yatay and Yuchán. Excludes Agro-Uranga.
 
The result of the Grains activity increased ARS 303 million, from ARS 13 million gain during the first semester of 2018 to ARS 316 million gain during the same quarter of 2019, mainly as a result of:
 
 
 
 
7
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
A positive variation in the production result of ARS 309.6 million originated mainly by the expected early soybean production in Brazil (BRL 16.4 million), an improvement in wheat dollar prices, boosted by the increase in the exchange rate and higher yields in Argentina, as well as a significant improvement in the yields of winter soybeans in Bolivia.
 
A positive variation from the result of commodity derivatives, net from income from sales, of ARS 45.8 million from:
Higher operated volumes in soybean and corn derivatives, as well as the impact of the exchange rate depreciation in Argentina.
 
Higher operated volume in soybean derivatives and better prices in Brazil.
 
The effects mentioned above were offset by a negative variation in the holding result of ARS 52.0 million, mainly due to the drop in soybean and peanut prices in Argentina compared to the prices of the beginning of this period, while in the previous period, prices were higher
 
The result of the Sugarcane activity decreased ARS 48 million, from a ARS 363 million gain in the first semester of the fiscal year 2018 to ARS 315 million gain in the first semester of 2019. This is mainly due to lower production results from Brazil as a result of an increase in production costs for cultural and irrigation work in "São José" field, as well as higher costs of cutting, hauling and transport as a result of the increase in fuels in said country, and an increase in administrative expenses allocated to the activity, offset by a gain in the sale result generated by higher prices due to an improvement in the quality of the sugarcane produced.
 
Area in Operation (hectares) (1)
As of 12/31/18
As of 12/31/17
YoY Var
Own farms
97,658
111,316
-12.3%
Leased farms
139,159
66,089
110.6%
Farms under concession
21,801
23,636
-7.8%
Own farms leased to third parties
14,325
9,533
50.3%
Total Area Assigned to Production
272,943
210,574
29.6%
(1) Includes AgroUranga, Brazil and Paraguay,
 
The area in operation assigned to the crops activity increased by 29.6% as compared to the same period of the previous fiscal year, mainly due to the larger area of leased farms and own farms leased to third parties.
 
 
II,b) Cattle Production
 
Production Volume (1)
6M19
6M18
6M17
6M16
6M15
Cattle herd (tons)
5,467
4,731
4,448
3,717
4,124
Milking cows (tons)
-
186
258
311
227
Cattle (tons)
5,467
4,917
4,706
4,028
4,351
Milk (thousands of liters)
-
3,891
7,971
9,082
9,129
(1)
Includes Carnes Pampeanas
 
Volume of
6M19
6M18
6M17
6M16
6M15
 Sales (1)
D.M
F.M
Total
D.M
F.M
Total
D.M
F.M
Total
D.M
F.M
Total
D.M
F.M
Total
Cattle herd
4.9
-
4.9
5.5
-
5.5
4.3
-
4.3
5.7
-
5.7
6.2
-
6.2
Milking cows
-
-
-
1.3
-
1.3
0.7
-
0.7
0.3
-
0.3
0.3
-
0.3
Cattle (thousands of tons)
4.9
-
4.9
6.8
-
6.8
5.0
-
5.0
6.0
-
6.0
6.5
-
6.5
Milk (millions of liters)
-
-
-
3.9
-
3.9
7.6
-
7.6
8.7
-
8.7
8.8
-
8.8
D.M.: Domestic market
F.M.: Foreign market
(1)
Includes Carnes Pampeanas
 
 
 
 
8
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
 
Cattle
In ARS Million
6M 19
6M 18
YoY Var
Revenues
256
402
-36.3%
Costs
-221
-322
-31.4%
Initial recognition and changes in the fair value of biological assets and agricultural produce
-158
-162
-2.5%
Gross profit
-123
-77
59.7%
General and administrative expenses
-27
-33
-18.2%
Selling expenses
-23
-40
-42.5%
Other operating results, net
-1
-3
-66.7%
Loss from operations
-174
-159
9.4%
Segment loss
-174
-159
9.4%
 
Area in operation – Cattle (hectares) (1)
As of 12/31/18
As of 12/31/17
YoY Var
Own farms
79,071
86,297
-8.4%
Leased farms
14,135
12,635
11.9%
Farms under concession
2,703
1,404
92.5%
Own farms leased to third parties
1,775
70
2.435.7%
Total Area Assigned to Cattle Production
97,684
100,406
-2.7%
(1) Includes AgroUranga, Brazil and Paraguay,
 
Stock of Cattle Heard
As of 12/31/18
As of 12/31/17
YoY Var
Breeding stock
88,755
83,630
6,1%
Winter grazing stock
18,502
9,949
86,0%
Milk farm stock
-
762
-100%
Sheep stock
10,402
10,842
-4,1%
Total Stock (heads)
117,659
105,183
11,9%
 
The result of the Cattle activity decreased by ARS 15 million: from a loss of ARS 159 million in the first semester of fiscal year 2018 to a loss of ARS 174 million in the same period of 2019, as a result of a negative variation in income for sale in Argentina, due to a greater number of cattle heads commercialized in the previous period, offset by a reduction in the general and administrative expenses allocated to the activity in Argentina.
 
II,c) Agricultural Rental and Services
in ARS million
6M 19
6M 18
YoY Var
Revenues
75
17
341,2%
Costs
-38
-4
850,0%
Gross profit
37
13
184,6%
General and Administrative expenses
-21
-9
133,3%
Selling expenses
-4
-1
300,0%
Loss from operations
-1
-1
-
Segment profit
11
2
450,0%
 
The result of the activity increased by ARS 9 million, going from a profit of ARS 2 million in the first semester of FY 2018 to a profit of ARS11 million in the same period of FY 2019 mostly due to a growth in hectares leased to third parties, accompanied by an increase in the prices of contracts agreed in soybean bags, along with the collection of an additional amount for productivity on extraordinary yields, partially offset by an increase in general and administrative expenses allocated to the activity.
 
 
 
 
 
9
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
III) Other Segments
 
We include within "Others" the results coming from our Agroindustrial activity, developed in our refrigeration plant in La Pampa and our investment in FyO.
The result of the “Others” segment increased by ARS 281 million, going from a loss of ARS 83 million for the first semester fiscal year 2018 to a gain of ARS 198 million for the same period of 2019. This is due to a profit of ARS 260.8 million from FyO due to higher grain and supplies operated volumes and the effect of devaluation, and a lower loss recorded in the meatpacking facility as a result of the positive impact of the exchange rate depreciation in Argentina on its total sales, mainly in foreign markets due to the entry into new markets such as Russia and the profits for export refunds.
 
In ARS million
6M 19
6M 18
YoY Var
Revenues
2,395
1,852
29.3%
Costs
-1,892
-1,738
8.9%
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
-16
-
-
Gross profit
487
114
326.3%
General and administrative expenses
-81
-76
7.9%
Selling expenses
-200
-114
76.3%
Other operating results, net
6
5
20.0%
Profit / (Loss) from operations
212
-71
-
Profit from associates
-12
-12
-8.3%
Segment Profit / (Loss)
200
-83
-
EBITDA
224
-58
-
Adjusted EBITDA
224
-58
-
 
 
IV) Corporate Segment
 
 
The negative result of the segment increased by ARS 5 million, going from a loss of ARS 65 million in the first semester of 2018 to a loss of ARS 70million for the same period of 2019.
 
In ARS million
6M 19
6M 18
YoY Var
General and administrative expenses
-71
-65
9.2%
Loss from operations
-71
-65
9.2%
Segment Loss
-71
-65
9.2%
EBITDA
-70
-65
-8.3%
Adjusted EBITDA
-70
-65
-8.3%
 
Urban Properties and Investments Business (through our subsidiary IRSA Inversiones y Representaciones Sociedad Anónima)
 
 
We develop our Urban Properties and Investments segment through our subsidiary IRSA, As of December 31, 2018, our direct and indirect equity interest in IRSA was 63,74% over stock capital.
 
 
 
 
 
 
 
10
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
Consolidated Results of our Subsidiary IRSA Inversiones y Representaciones S,A,
 
Consolidated Results – Information by Segment
 
In ARS million
6M 19
6M 18
YoY Var
Revenues
26,773
22,447
19.3%
Profit from operations
-273
15,488
-101.8%
EBITDA
2,791
18,110
-84.6%
Adjusted EBITDA
8,571
9,575
-10.5%
Segment Result
-852
15,454
-105.5%
 
Consolidated revenues from sales, rentals and services increased by 19.3% in the first semester of fiscal year 2019 compared to the same period in 2018, while adjusted EBITDA, which excludes the effect of the result from changes in the unrealized fair value of investment properties reached ARS 8,571 million, 10.5% lower than the same period in FY 2018.
 
 
Argentina Business Center
 
In ARS million
6M 19
6M 18
YoY Var
Revenues
4,624
4,135
11.8%
Profit from operations
-3,907
10,653
-136.7%
EBITDA
-3,764
10,676
-135.3%
Adjusted EBITDA
2,470
2,230
10.8%
 
Israel Business Center
 
In ARS million
6M 19
6M 18
YoY Var
Revenues
22,149
18,312
21.0%
Profit from operations
3,634
4,835
-24.8%
EBITDA
6,555
7,434
-11.8%
Adjusted EBITDA
6,101
5,776
5.6%
 
Financial Indebtedness and Other
 
 
The following tables contain a breakdown of company’s indebtedness:
 
 
Agricultural Business
 
Description
Currency
Amount (2)
Interest Rate
Maturity
Bank overdrafts
ARS
0.0
Variable
< 30 days
Cresud 2019 NCN, Series XVIII (1)
USD
32.6
4.00%
12-Sep-19
Cresud 2019 NCN, Series XXII (1)
USD
21.7
4.00%
1-Aug-19
Cresud 2020 NCN, Series XXIV
USD
73.6
9.00%
16-Nov-20
Cresud 2023 NCN, Series XXIII (1)
USD
113.2
6.50%
16-Feb-23
Other debt
USD
172.5
-
-
CRESUD’s Total Debt (3)
 
413.4
 
 
Cash and cash equivalents (3)
 
17.9
 
 
Total Net Debt
 
395.5
 
 
Brasilagro’s Total Net Debt
 
15.7
 
 
(1) Net of repurchases
(2) Principal amount stated in USD (million) at an exchange rate of 37.70 ARS/USD, 6.96 BOB/USD and 3.88 BRL/USD, without considering accrued interest or elimination of balances with subsidiaries.
(3) Does not include Carnes Pampeanas nor FyO
 
 
 
 
11
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
Urban Properties and Investments Business
 
 
Operations Center in Argentina
 
 
The following table describes our total debt as of December 31, 2018:
 
Description
Currency
Amount (1)
Interest Rate
Maturity
Bank overdrafts
ARS
0.0
Floating
< 360 days
IRSA 2020 Series II Non-Convertible Notes,
USD
71.4
11.50%
Jul-20
Series VII Non-Convertible Notes
ARS
10.2
Badlar + 299
Sep-19
Series VIII Non-Convertible Notes (2)
USD
183.5
7.00%
Sep-19
Other debt
USD
38.2
-
Feb-22
IRSA’s Total Debt
 
303.4
 
 
IRSA’s Cash + Cash Equivalents + Investments (3)
USD
9.2
 
 
IRSA’s Net Debt
USD
294.2
 
 
Bank overdrafts
ARS
3.0
 -
 < 360 d
PAMSA loan
USD
35.0
Fixed
Feb-323
IRCP NCN Class IV
USD
139.0
5.0%
Sep-20
IRSA CP NCN Class II
USD
360.0
8.75%
Mar-23
IRSA CP’s Total Debt
 
537.0
 
 
Cash & Cash Equivalents + Investments (4)
 
202.4
 
 
IRSA CP’s Net Debt
 
334.6
 
 
(1) Principal amount in USD (million) at an exchange rate of Ps, 37,70 Ps,/USD, without considering accrued interest or eliminations of balances with subsidiaries.
(2) Net of repurchases.
(3) “IRSA’s Cash & Cash Equivalents plus Investments” includes IRSA’s Cash & Cash Equivalents + IRSA’s Investments in current and non-current financial assets.
(4) “IRSA CP’s Cash & Cash Equivalents plus Investments” includes IRSA CP’s Cash and cash equivalents.
 
Israel Business Center
 
 
Net Financial Debt (USD million)
 
Indebtedness(1)
Total
Net
IDBD’s Total Debt
598
551
DIC’s Total Debt
687
462
(1) Principal amount in USD (million) at an exchange rate of 3,7458 NIS/USD, without considering accrued interest or elimination of balances with subsidiaries. Includes bonds and loans.
 
Comparative Summary Consolidated Balance Sheet Data
 
In millions of Ps,
Dec-18
Jun-18
Current assets
138,290
130,667
Non-current assets
317,383
326,281
Total assets
455,673
456,948
Current liabilities
80,221
72,885
Non-current liabilities
280,055
282,900
Total liabilities
360,276
355,785
Total capital and reserves attributable to the shareholders of the controlling company
26,602
30,525
Minority interests
68,795
70,638
Shareholders’ equity
95,397
101,163
Total liabilities plus minority interests plus shareholders’ equity
455,673
456,948
 
 
 
 
 
 
 
12
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 

Comparative Summary Consolidated Statement of Income Data
 
In millions of Ps,
Dec-18
Dec-17
Gross profit
12,859
11,216
Profit from operations
409
14,983
Share of (loss) / profit of associates and joint ventures
-717
78
Profit from operations before financing and taxation
-308
15,061
Financial results, net
-7,950
-8,205
(Loss) / Profit before income tax
-8,258
6,856
Income tax expense
1,921
3,327
(Loss) / Profit of the period of continuous operations
-6,337
10,183
Profit of discontinued operations after taxes
717
1,291
(Loss) / Profit for the period
-5,620
11,474
Controlling company’s shareholders
-3,925
5,354
Non-controlling interest
-1,695
6,120
 
Comparative Summary Consolidated Statement of Cash Flow Data
 
In millions of Ps,
Dec-18
Dec-17
Net cash generated by operating activities
5,260
10,446
Net cash used in investment activities
-191
-13,926
Net cash generated by financing activities
2,596
11,745
Total net cash generated during the fiscal period
7,665
8,265
 
Ratios
 
In millions of Ps,
Dec-18
Jun-18
Liquidity (1)
1.724
1.793
Solvency (2)
0.265
0.284
Restricted capital (3)
0.697
0.714
(1) Current Assets / Current Liabilities
(2) Total Shareholders’ Equity/Total Liabilities
(3) Non-current Assets/Total Assets
 
 
Material events of the quarter and subsequent events
 
October 2018: General Ordinary and Extraordinary Shareholders’ Meeting
 
 
On October 29, 2018, the Company’s General Ordinary and Extraordinary Shareholders’ Meeting was held, and the following resolutions were adopted by majority vote:
 
Distribution of 20,656,215 treasury shares, representing 4.1% of the share capital (0.04294551131 shares / ordinary share and 0.4294551131 shares / ADR), to be done on November 12, 2018.
 
 
Fees payable to the Board of Directors and Supervisory Committee for fiscal year 2018 ended June 30, 2018.
 
 
Renewal of appointment of regular and alternate directors due to expiration of their terms and appointment of new alternate director.
 
 
November 2018: Bond issuance
 
On November 8, we issued Negotiable Obligations in the local market for the sum of USD 73,6 million at a fixed interest rate of 9% per annum due in 2020, The funds were used to refinance short-term debt.
 
 
 
 
 
 
13
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
December 2018: New share repurchase plan
 
 
On December 6, 2018, the Board of Directors has approved the terms and conditions for the acquisition of the common shares issued by the Company under the provisions of Section 64 of Law Nº 26,831 and the Rules of the Comisión Nacional de Valores.
 
 
(i)
Maximum amount of the investment: Up to ARS 300,000,000.
 
 
(ii)
Maximum number of shares to be acquired: Up to 10% of the capital stock of the Company, in the form of common shares or American Depositary Shares.
 
 
(iii)
Daily limitation on market transactions: Up to 25% of the average volume of the daily transactions for the Shares and ADS in the markets during the previous 90 days.
 
 
(iv)
Payable Price: Up to ARS 15.50 per ADS and in the case of common shares, up to a maximum value in ARS equivalent to the maximum price per ADS divided by ten and multiplied by the value of the buyer exchange rate of the Argentine National Bank in force at the time of each repurchase.
 
 
(v)
Period in which the acquisitions will take place: : Until 90 days, beginning the day following to the date of publication of the information in the Daily Bulletin of the Buenos Aires Stock Exchange.
 
 
(vi)
Origin of the Funds: The acquisitions will be made with realized and liquid earnings pending of distribution of the Company.
 
During the six-month period ended December 31, 2018, the Company acquired 249,215 common shares (V.N. ARS 1 per share) for a total of ARS 11 million and 240,487 ADS (representing 2,404,870 common shares) for a total of USD 2.8 million (equivalents to ARS 107 million).
 
EBITDA Reconciliation
 
 
In this summary report we present EBITDA and Adjusted EBITDA. We define EBITDA as profit for the period excluding: (i) result of discontinued operations, (ii) income tax expense, (iii) financial results, net iv) results from participation in associates and joint ventures; and (v) depreciation and amortization. We define Adjusted EBITDA as EBITDA minus net profit from changes in the fair value of investment properties, not realized.
 
 
EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS. We present EBITDA and adjusted EBITDA because we believe they provide investors supplemental measures of our financial performance that may facilitate period-to-period comparisons on a consistent basis. Our management also uses EBITDA and Adjusted EBITDA from time to time, among other measures, for internal planning and performance measurement purposes. EBITDA and Adjusted EBITDA should not be construed as an alternative to profit from operations, as an indicator of operating performance or as an alternative to cash flow provided by operating activities, in each case, as determined in accordance with IFRS. EBITDA and Adjusted EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The table below presents a reconciliation of profit for the relevant period to EBITDA and Adjusted EBITDA for the periods indicated:
 
 
 
 
For the six-month period ended December 31 (in ARS million)
 
2018
2017
Profit for the period
-5,620
11,474
Profit from discontinued operations
-717
-1,291
Income tax expense 
-1,921
-3,327
Net financial results 
7,950
8,205
Share of profit of associates and joint ventures 
717
-78
Depreciation and amortization 
3,215
3,066
EBITDA (unaudited) 
3,624
18,049
Unrealized gain from fair value of investment properties
6,349
-10,336
Adjusted EBITDA (unaudited) 
9,973
7,713
 
 
 
 
 
14
Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria
Summary as of December 31, 2018
 
Prospects for fiscal year
 
 
The 2019 Campaign is developing in Argentina under the climatic characteristics of a neutral “el niño” phenomenon, with precipitations level above the average. We expect an increase in the country’s agricultural production greater than 30%, mainly driven by Soybean and Corn. Regarding the markets, in the case of oilseeds, the price trend will be influenced by the development of the trade conflict between China and the US, Should this dispute continue, we would see lower prices in the US and firmer prices in South America due to China's demand orientation towards this origin, while, if resolved, we would see a positive reaction from the Chicago quotes at the expense of the FOB premiums from South America. For cereals, the decline in production in the countries of Europe and Eastern Europe provide support to prices, providing good prospects for their prices.
 
 
Given the new agricultural scenario, with more competitive exchange rates in Argentina and Brazil, Cresud plans to plant more than 258,000 hectares in the region and to produce more than 800,000 tons, a historical record. Likewise, the Company is strongly complementing its activity in its own farms with farms leased to third parties in Argentina, Brazil and Bolivia.
 
 
Regarding livestock activity, we will focus on improving productivity by minimizing the impact of increased costs due to the economic situation, working efficiently to achieve the highest possible operating margins. We will continue concentrating our cattle production in our own farms, mainly in the Northwest of the country and hoping to continue appreciating the cattle price.
 
 
Regarding the transformation and farmland sales, we hope to get the permits to increase the area under development since we have a large area of land reserves in the region with agricultural and / or livestock potential while we will continue to sell the farms that have reached their maximum level of appreciation.
 
 
In relation to our urban properties and investments segment, the diversification in real estate assets of our subsidiary IRSA, in Argentina and abroad, including the United States and Israel, protects us from the exchange rate volatility of the last months. We trust in the value of our investment in IRSA and we expect good results for FY 2019.
 
 
We believe that companies like Cresud, with many years of experience and great knowledge of the sector, will have excellent opportunities to take advantage in the market, especially considering that our main job is to produce food for a world population that grows and demands it.
 
 
 
 
 
Alejandro G. Elsztain          
Second Vice-Chairman in exercise 
of the presidency             
 

 
 
 
 
 
15