Company Quick10K Filing
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Cresud
20-F 2018-10-31 Annual: 2018-10-31
20-F 2017-10-31 Annual: 2017-10-31
20-F 2016-06-30 Annual: 2016-06-30
SRG Seritage Growth Properties 1,363
IIPR Innovative Industrial Properties 1,004
RVI Retail Value 723
EFC Ellington Financial 521
LMRK Landmark Infrastructure Partners 393
PICO Pico Holdings 192
GRIF Griffin Industrial Realty 176
MMAC MMA Capital Management 174
HGSH China Hgs Real Estate 74
OBAS Optibase 61
CRESY 2018-10-31
Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Service
Item 16D. Exemption From The Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Change in Registrant’S Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosures
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
Note 8 Includes Summary Financial Information and Other Information of The Group's Associates.
EX-4.13 exhibit413-englishtransla.htm
EX-8.1 exhibit81.htm
EX-12.1 exhibit121.htm
EX-12.2 exhibit122.htm
EX-13.1 exhibit131.htm
EX-13.2 exhibit132.htm
EX-99.1 exhibit991summaryofinvest.htm

Cresud Earnings 2018-10-31

CRESY 20F Annual Report

Balance SheetIncome StatementCash Flow

20-F 1 cresud20f.htm 20-F FY2018 Blueprint
 
 
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
 
 
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended: June 30, 2018
 
OR
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of event requiring this shell company report ___
 
For the transition period from ___ to___
 
Commission file number: 001-29190
 
CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA FINANCIERA Y AGROPECUARIA
(Exact name of Registrant as specified in its charter)
 
Cresud Inc.
(Translation of Registrant’s name into English)
 
Republic of Argentina
(Jurisdiction of incorporation or organization)
 
Moreno 877, 23rd Floor,
(C1091AAQ) City of Buenos Aires, Argentina
(Address of principal executive offices)
 
Matías Iván Gaivironsky
Chief Financial and Administrative Officer
Tel +(5411) 4323-7449 – finanzas@cresud.com.ar
Moreno 877, 24th Floor,
(C1091AAQ) City of Buenos Aires, Argentina
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
 
 
Name of each exchange on which registered
 
 
 
American Depositary Shares (ADSs), each representing
ten shares of Common Stock
 
 
 
Nasdaq National Market of the
Nasdaq Stock Market
Common Stock, par value Ps. 1.00 per share
 
 
 
Nasdaq National Market of the
Nasdaq Stock Market*
 
 
*
Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.
 
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the period covered by the annual report: 501,642,804.
 
Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act:
 
Yes No
 
 
 
 
 
 
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.
 
Yes No
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
Yes No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):
 
Large accelerated filer Accelerated filer Non-accelerated filer Emerging growth company
 
 If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
 
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
 
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
 
 
 
 
 
U.S. GAAP
International Financial Reporting Standards as issued by the International Accounting Standards Board
Other
 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
 
Item 17 Item 18
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes No
 
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 23 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. Yes No
 
Please send copies of notices and communications from the Securities and Exchange Commission to:
 
Carolina Zang
 
 
David Williams
 
 
 
Jaime Mercado
 
Zang Vergel & Viñes Abogados
 
Simpson Thacher & Bartlett LLP
 
Florida 537 piso 18º
C1005AAK Buenos Aires, Argentina.
 
425 Lexington Avenue
New York, NY 10019
 
 
 
 
 
TABLE OF CONTENTS
 
 
Page No.
 
 
Disclosure Regarding Forward-Looking Information
i
Certain Measures and Terms
i
Presentation of Financial and Certain Other Information
ii
Market Data
iv
Part I
1
Item 1. Identity of Directors, Senior Management and Advisers
1
Item 2. Offer Statistics and Expected Timetable
1
Item 3. Key Information
1
A. Selected Consolidated Financial Data
1
B. Capitalization and Indebtedness
9
C. Reasons for the Offer and Use of Proceeds
9
D. Risk Factors
10
Item 4. Information on the Company
76
A. History and Development of the Company
76
B. Business Overview
87
C. Organizational Structure
175
D. Property, Plants and Equipment
176
Item 4A. Unresolved Staff Comments
179
Item 5. Operating and Financial Review and Prospects
179
A. Consolidated Operating Results
179
B. Liquidity and Capital Resources
236
C. Research and Developments, Patents and Licenses
242
D. Trend Information
243
E. Off-Balance Sheet Arrangements
246
F. Tabular Disclosure of Contractual Obligations
246
G. Safe Harbor
246
Item 6. Directors, Senior Management and Employees
247
A. Directors and Senior Management
247
B. Compensation
250
C. Board Practices
252
D. Employees
253
E. Share Ownership
254
Item 7. Major shareholders and related party transactions
255
A. Major Shareholders
255
B. Related Party Transactions
256
C. Interests of Experts and Counsel
260
Item 8. Financial Information
260
A. Audited Consolidated Statements and Other Financial Information
260
B. Significant Changes
268
Item 9. The Offer and Listing
268
A. Offer and Listing Details
268
B. Plan of Distribution
269
C. Markets
270
D. Selling Shareholders
271
E. Dilution
271
F. Expenses of the Issue
272
Item 10. Additional Information
272
A. Share Capital
272
B. Memorandum and Articles of Association
272
C. Material Contracts
277
D. EXCHANGE CONTROLS
277
E. Taxation
282
F. Dividends and Paying Agents
288
G. Statement by Experts
288
H. Documents on Display
288
I. Subsidiary Information
288
Item 11. Quantitative and Qualitative Disclosures about Market Risk
288
Item 12. Description of Securities Other than Equity Securities
288
Part II
290
Item 13. Defaults, Dividend Arrearages and Delinquencies
290
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
290
Item 15. Controls and Procedures
290
A. Disclosure Controls and Procedures
290
B. Management´s Annual Report on Internal Control Over Financial Reporting
290
C. Attestation Report of the Registered Public Accounting Firm
290
D. Changes in Internal Control Over Financial Reporting
291
Item 16. Reserved
291
Item 16A. Audit Committee Financial Expert
291
Item 16B. Code of Ethics
291
Item 16C. Principal Accountant Fees and Services
291
Item 16D. Exemption from the Listing Standards for Audit Committees
292
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
292
Item 16F. Change in Registrant’s Certifying Accountant
293
Item 16G. Corporate Governance
293
Item 16H. Mine Safety Disclosures
294
Part III
295
Item 17. Financial Statements
295
Item 18. Financial Statements
295
Item 19. Exhibits
295
 
 
 
 

 
 
 
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
 
This annual report includes forward-looking statements, principally under the captions “Summary,” “Item 3.D. Risk Factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things:
 
Factors that could cause actual results to differ materially and adversely include but are not limited to:
 
● changes in general economic, financial, business, political, legal, social or other conditions in Argentina, Brazil in Latin America or in Israel or changes in developed or emerging markets;
 
● changes in capital markets in general that may affect policies or attitudes toward lending to or investing in Argentina or Argentine companies, including volatility in domestic and international financial markets;
 
● inflation and deflation;
 
● fluctuations in prevailing interest rates;
 
● increases in financing costs or our inability to obtain additional financing on attractive terms, which may limit our ability to fund existing operations and to finance new activities;
 
● current and future government regulation and changes in law or in the interpretation by Argentine courts of the recently adopted Civil and Commercial Code, among others;
 
● adverse legal or regulatory disputes or proceedings;
 
● fluctuations and declines in the aggregate principal amount of Argentine public debt outstanding;
 
● government intervention in the private sector and in the economy, including through nationalization, expropriation, labor regulation or other actions;
 
● restrictions on transfer of foreign currencies and other exchange controls;
 
● increased competition in the shopping mall sector, office or other commercial properties and related industries;
 
● potential loss of significant tenants at our shopping malls, offices or other commercial properties;
 
● our ability to take advantage of opportunities in the real estate market of Argentina or Israel on a timely basis;
 
● restrictions on energy supply or fluctuations in prices of utilities in the Argentine market;
 
● our ability to meet our debt obligations;
 
● shifts in consumer purchasing habits and trends;
 
● technological changes and our potential inability to implement new technologies;
 
● deterioration in regional, national or global businesses and economic conditions;
 
● incidents of government corruption that adversely impact the development of our real estate projects.
 
● fluctuations and declines in the exchange rate of the Peso and the NIS against other currencies;
 
● risks related to our investment in Israel; and
 
● the risk factors discussed under “Item 3.D. Risk Factors.”
 
You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “anticipates,” “could,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “potential,” “continue” or similar expressions.Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking
 
 
i
 
 
 
statements after we distribute this annual report because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur and are not guarantees of future performance.
 
As of June 30, 2018, the Company has established two operations centers to manage its global business, which we refer to in this annual report as the “Operation Center in Argentina” and the “Operation Center in Israel.”
 
You should not place undue reliance on such statements which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future.
 
Available information
 
We file annual and current reports and other information with the United States Securities and Exchange Commission, or “SEC.” You may read and copy any document we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at http://www.sec.gov that contains reports and other information regarding issuers that file electronically with the SEC. The information contained on this website does not form part of this annual report form 20-F.
 
You may obtain a copy of these filings at no cost by writing to us at: Moreno 877, 24th Floor, City of Buenos Aires (C1091AAQ), Argentina or telephoning us at +54 (11) 4814-7800.
 
PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION
 
As used throughout this annual report, the terms “Cresud,” “Group,” “we,” “us,” and “our” refer to Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria, together with our consolidated subsidiaries, except where we make clear that such terms refer only to the parent company.
 
The terms “Argentine government” and “government” refer to the federal government of Argentina, the term “Central Bank” refers to the Banco Central de la República Argentina (the Argentine Central Bank), the terms “CNV” and “CNV Rules” refers to the Comisión Nacional de Valores (the Argentine National Securities Commission) and the rules issued by the CNV, respectively. In this annual report, when we refer to “Peso,” “Pesos” or “Ps.” we mean Argentine Pesos, the legal currency of Argentina; when we refer to “U.S. dollar,” “U.S. dollars” or “US$” we mean United States dollars, the legal currency of the United States; when we refer to “NIS” we mean Israeli New Shekel.
 
Financial Statements
 
This annual report contains our Audited Consolidated Financial Statements as of June 30, 2018 and 2017 for our fiscal years ended June 30, 2018, 2017 and 2016 (our “Audited Consolidated Financial Statements”). We preare our Audited Consolidated Financial Statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Our Audited Consolidated Financial Statements included elsewhere herein have been audited by Price Waterhouse & Co S.R.L. City of Buenos Aires, Argentina, member of PriceWaterhouseCoopers International Limited, an independent registered public accounting firm whose report is included herein.
 
IDB Development Corporation Ltd. (“IDBD”) and Discount Investment Corporation (“DIC”) report their quarterly and annual results following the Israeli regulations, whose legal deadlines are after the deadlines in Argentina and since IDBD and DIC fiscal years end differently from IRSA, the results of operations from IDBD and DIC are consolidated with a lag of three months and adjusted for the effects of significant transactions taking place in such period. For these reasons, it is possible to obtain the quarterly results of IDBD and DIC in time so that they can be consolidated by IRSA and reported to the CNV in its Consolidated Financial Statements within the legal deadlines set in Argentina. This way, the consolidated comprehensive income for the year ended June 30, 2018 includes the results of IDBD and DIC for the 12-month period from April 1, 2017 to March 31, 2018, adjusted for the significant transactions that occurred between April 1, 2018 and June 30, 2018. In addition, IDBD’s results of operations for the period beginning October 11, 2015 (the acquisition of control) through March 31, 2016 are included in the company’s consolidated comprehensive income for fiscal year ended June 30, 2016, adjusted by significant transactions occurred between April 1, 2016 and June 30, 2016.
 
As required under Rule 3-09 of Regulation S-X, this annual report contains the audited consolidated financial statements of December 31, 2017 d for the fiscal year ended December 31, 2016 and 2017 of Banco Hipotecario S.A. (“Banco Hipotecario”), in which IRSA holds a 29.91% equity interest. Such financial statements have been prepared in conformity with the regulations set forth by the Central Bank (“Argentine Banking GAAP”), which differ in certain significant respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”) and IFRS. Note 27 to the audited consolidated financial statements of Banco Hipotecario provides a description of the principal differences between Argentine Banking GAAP and IFRS (as adopted by the Central Bank), as they relate to us, and a reconciliation to IFRS (as adopted by the Central Bank) of the consolidated balance sheet of Banco Hipotecario as of December 31, 2017 and of our consolidated income statement for the year ended December 31, 2017. In addition, Note 32 to the audited consolidated financial statements of Banco Hipotecario provides a description of the principal differences between Argentine Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of our consolidated shareholders’ equity as of December 31, 2017 and 2016 and our consolidated net income for the years ended December 31, 2017 and 2016.
 
ii
 
 
Effective January 1, 2018, Banco Hipotecario began preparing its consolidated financial statements in accordance with IFRS, with certain criteria of measurement and exposure specifically established by the Central Bank (see note 27 to our audited consolidated financial statements). As established in IFRS 1 “First Time Adoption of International Financial Reporting Standards,” Banco Hipotecarios’s transition date to IFRS (as adopted by the Central Bank) is January 1, 2017.

The Company has established two Operations Centers to manage its global business, mainly through the following companies:
 
 
(i) Corresponds to Company’s associates, which are hence excluded from consolidation.
(ii) The results are included in discontinued operations, due to the loss of control in June 2018.
(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) For more information about the change within the Operations Center in Israel see Note 4 to the Audited Consolidated Financial Statements.
 
Inflation
 
We have determined that, as of July 1, 2018, the Argentine economy qualifies as a hyperinflationary economy according to the guidelines to International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS 29”) since the total cumulative inflation in Argentina in the 36 months prior to July 1, 2018, as measured by the wholesale price index published by the INDEC, exceeded 100%. IAS 29 will be applicable to our financial statements for periods ending after July 1, 2018. See Note 2.1(a) to our Audited Consolidated Finacial Statements.
 
IAS 29 requires that the financial information recorded in a hyperinflationary currency be adjusted by applying a general price index and expressed in the measuring unit (the hyperinflationary currency) current at the end of the reporting period. Therefore, our audited consolidated financial statements included in this annual report will be adjusted by applying a general price index and expressed in the measuring unit (the hyperinflationary currency) current at the end of the most recent reporting period. We have not estimated yet the impact of the application of IAS 29 provisions in our audited consolidated financial statements. Our Audited Consolidated Financial Statements included in this annual report were not restated into constant currency.
 
For more information, see “Risk Factors—Risks Relating to Argentina—The peso qualifies as a currency of a hyperinflationary economy under IAS 29. We cannot assure you whether regulatory agencies of the Argentine national government will require us to not apply IAS 29 to financial statements furnished to such regulators” and “—Continuing inflation may have an adverse effect on the economy and our business, financial condition and results of operations.”
 
 
iii
 
 
 
Currency translations and rounding
 
In this annual report where we refer to “Peso,” “Pesos,” or “Ps.” we mean Argentine Pesos, the lawful currency in Argentina; when we refer to “U.S. Dollars,” or “US$” we mean United States Dollars, the lawful currency of the United States of America; when we refer to “Real,” “Reals,” “Rs.” or “R$” we mean Brazilian Real, the lawful currency in the Federative Republic of Brazil; when we refer to “NIS,” we mean New Israeli Shekels, the lawful currency of Israel; and when we refer to “Central Bank” we mean the Banco Central de la República Argentina (Argentine Central Bank).
 
Our functional and presentation currency is the Peso, and accordingly our Financial Statements included in this annual report are presented in Pesos. We have translated some of the Peso amounts contained in this annual report into U.S. dollars for convenience purposes only. Unless otherwise specified or the context otherwise requires, the rate used to convert Peso amounts to U.S. dollars is the seller exchange rate quoted by Banco de la Nación Argentina of Ps.28.8500 per US$1.00 for information provided as of June 30, 2018. The average seller exchange rate for the fiscal year 2018, quoted by Banco de la Nación Argentina was Ps.19.4888. The U.S. dollar-equivalent information presented in this annual report is provided solely for the convenience of investors and should not be construed as implying that the Peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. The seller exchange rate quoted by Banco de la Nación Argentina was Ps.36.7900 per US$1.00 as of October 25, 2018. See “Item 3. Key Information—Local Exchange Market and Exchange Rates.” and “Item 3. Risk Factors— Continuing inflation may have an adverse effect on the economy and our business, financial condition and the results of our operations”.
 
We have also translated certain NIS amounts into U.S. dollars at the offer exchange rate for June 30, 2018 which was NIS 3.6553=U.S.$1.00. We make no representation that the Peso, NIS or U.S. dollar amounts actually represent or could have been or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all. See “Item 3 – Key information - Local Exchange Market and Exchange Rates.”
 
Certain numbers and percentages included in this annual report have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in various tables or other sections of this annual report may vary slightly, and figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them.
 
Fiscal years
 
References to fiscal years 2018, 2017, 2016, 2015 and 2014 are to our fiscal years starting on July 1 and ending on June 30 of each such year.
 
Certain measurements
 
In Argentina the standard measure of area in the real estate market is the square meter (m2), while in the United States and certain other jurisdictions the standard measure of area is the square foot (sq. ft.). All units of area shown in this annual report (e.g., gross leasable area of buildings (“GLA” or “gross leasable area”,) and size of undeveloped land) are expressed in terms of square meters. One square meter is equal to approximately 10.764 square feet. One hectare is equal to approximately 10,000 square meters and to approximately 2.47 acres.
 
As used herein, GLA in the case of shopping malls, refers to the total leasable area of the property, regardless of our ownership interest in such property (excluding common areas and parking and space occupied by supermarkets, hypermarkets, gas stations and co-owners, except where specifically stated).
 
Market share data
 
Information regarding market share in a specified region or area is based on data compiled by us from internal sources and from publications such as Bloomberg, the International Council of Shopping Centers, or “ICSC,” the Argentine Chamber of Shopping Centers (Cámara Argentina de Shopping Centers), and Colliers International. While we believe that these sources are reliable, we have not independently verified the information prepared by these sources.
 
 
 iv
 
 
 
PART I
 
Item 1. Identity of Directors, Senior Management and Advisers
 
This item is not applicable.

Item 2. Offer Statistics and Expected Timetable
 
This item is not applicable.
 
Item 3. Key Information
 
A. SELECTED CONSOLIDATED FINANCIAL DATA
 
 
The following selected consolidated financial data has been derived from our Audited Consolidated Financial Statements as of the dates and for each of the periods indicated below. This information should also be read in conjunction with our Audited Consolidated Financial Statements included under Item 8. “Financial Information”, and the discussion in Item 5. “Operating and Financial Review and Prospects”.
 
The selected consolidated statements of income and other comprehensive income data for the years ended June 30, 2018, 2017 and 2016 and the selected consolidated statements of financial position data and cash flow as of June 30, 2018 and 2017 have been derived from our Audited Consolidated Financial Statements included in this annual report, which have been audited by Price Waterhouse & Co S.R.L. Buenos Aires, Argentina, member of PriceWaterhouseCoopers International Limited, an independent registered public accounting firm.
 
The summarized consolidated statement of comprehensive income and cash flow data for the fiscal year 2015 and 2014 and the summarized consolidated statement of financial position data as of June 30, 2016, 2015 and 2014 have been derived from our audited consolidated financial statements for the fiscal years ended June 30, 2016, 2015 and 2014 which have been retroactively recast to give effect to the change of measurement basis for our investment properties. These financial statements are not included in this annual report.
 
We have determined that, as of July 1, 2018, the Argentine economy qualifies as hyperinflationary economy according to IAS 29. IAS 29 requires that the financial statements recorded in the currency of a hyperinflationary economy be adjusted in terms of a measuring unit current at the end of reporting period. We did not apply the restatement criteria to the financial information for the periods reported in this annual report since IAS 29 will be applicable to our financial statementes for periods ending after July 1, 2018. For more information on inflation, see “Operating and Financial Review and Prospects — Factors Affecting our Results of Operations—Effects of Inflation.”
 
On October 11, 2015, we acquired, through our subsidiary IRSA, control of IDBD. In conformity with IFRS 3, IDBD’s information is included in our financial statements since the acquisition date, without affecting the information from previous years. Therefore, the consolidated financial information for periods ending after the acquisition date may not be comparable to previous periods. For more information see, Item 5. “Operating and Financial Review and Prospects-Factors Affecting Comparability of our Results.”
 
Changes in presentation of financial statements previously issued due to change in accounting policies
 
Expenses relating to the agricultural activity include items such as planting, harvesting, irrigation, agrochemicals, fertilizers, veterinary services and others. The Group chose not to continue to charge these costs of production directly in the Statements of Income and Other Comprehensive Income as they are incurred; instead, it capitalized them as part of the cost of biological assets. Both options are accept able under IAS. The Group believes this change will help to better understand the performance of the agribusiness activity and therefore provides more information that is relevant to Management, users of the Financial Statements and others.
 The Company has therefore retroactively modified the comparative amounts of the Consolidated Financial Statements as required by IAS 8, reflecting the aforementioned change, reducing “Cost” line and increasing “Initial recognition and changes in the fair value of biological assets and agricultural products at the point of harvest” line in the Statements of Income and Other Comprehensive Income in Ps. 1,995 million, Ps. 1,236, million, Ps. 1,236 million and Ps. 468 million as of June 30, 2017, 2016, 2015 and 2014 respectively. There is no impact in any of the total and subtotal amounts of the Financial Statements.
 
 
1
 
 
 
 
 
 
For the fiscal year ended June 30,
 
 
 
2018 (1)
 
 
2018
 
 
2017
 
 
2016
 
 
2015
 
 
2014
 
 
 
(in millions of US$)
 
 
(in millions of Ps.; except per share data)
 
Consolidated Statements of Income and Other Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
  1,351 
  38,986 
  30,746 
  15,622 
  5,652 
  4,604 
Costs
  (859)
  (24,780)
  (19,330)
  (9,380)
  (3,379)
  (2,746)
Initial recognition and changes in the fair value of biological assets and agricultural produce at the point of harvest
  36 
  1,042 
  204 
  401 
  111 
  220 
Changes in the net realizable value of agricultural produce after harvest
  11 
  303 
  (74)
  208 
  (34)
  (17)
Gross profit
  539 
  15,551 
  11,546 
  6,851 
  2,350 
  2,061 
 
  - 
  - 
  - 
  - 
  - 
  - 
Net gain from fair value adjustment of investment properties
  784 
  22,629 
  4,888 
  17,516 
  4,055 
  4,235 
Gain / (loss) from disposal of farmlands
  31 
  906 
  280 
  (2)
  550 
  90 
General and administrative expenses
  (153)
  (4,414)
  (3,628)
  (1,950)
  (607)
  (534)
Selling expenses
  (184)
  (5,306)
  (4,503)
  (2,173)
  (474)
  (352)
Other operating results, net
  40 
  1,152 
  (128)
  (110)
  17 
  (88)
Management fees
  (19)
  (554)
  (200)
  (534)
  (145)
  (70)
Profit from operations
  1,038 
  29,964 
  8,255 
  19,598 
  5,746 
  5,342 
 
  - 
  - 
  - 
  - 
  - 
  - 
Share of (loss) / profit of associates and joint ventures
  (21)
  (603)
  96 
  534 
  (817)
  (322)
Profit from operations before financing and taxation
  1,017 
  29,361 
  8,351 
  20,132 
  4,929 
  5,020 
 
  - 
  - 
  - 
  - 
  - 
  - 
Finance income
  69 
  1,998 
  1,055 
  1,450 
  246 
  290 
Finance cost
  (908)
  (26,209)
  (8,936)
  (7,351)
  (1,685)
  (2,852)
Other financial results
  13 
  384 
  3,178 
  (145)
  149 
  (12)
Financial results, net
  (826)
  (23,827)
  (4,703)
  (6,046)
  (1,290)
  (2,574)
Profit before income tax
  191 
  5,534 
  3,648 
  14,086 
  3,639 
  2,446 
 Income tax
  (8)
  (233)
  (2,713)
  (5,785)
  (1,396)
  (1,090)
Profit for the year from continuing operations
  183 
  5,301 
  935 
  8,301 
  2,243 
  1,356 
 Profit from discontinued operations after income tax
  433 
  12,479 
  4,093 
  817 
  - 
  - 
Profit for the year
  616 
  17,780 
  5,028 
  9,118 
  2,243 
  1,356 
 
  - 
  - 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
    
Profit / (loss) from continuing operations attributable to:
    
    
    
    
    
    
 Equity holders of the parent
  (28)
  (772)
  461 
  4,951 
  954 
  641 
 Non-controlling interest
  211 
  6,073 
  474 
  3,350 
  1,289 
  715 
 
  - 
  - 
  - 
  - 
  - 
  - 
Profit for the year attributable to:
    
    
    
    
    
    
 Equity holders of the parent
  187 
  5,392 
  1,511 
  5,167 
  954 
  641 
 Non-controlling interest
  429 
  12,388 
  3,517 
  3,951 
  1,289 
  715 
 
 
2
 
 
 
 
 
IFRS
 
 
 
For the fiscal year ended June 30,
 
 
 
2018 (1)
 
 
2018
 
 
2017
 
 
2016
 
 
2015
 
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Profit for the year
  616 
  17,780 
  5,028 
  9,118 
  2,243 
  1,356 
Other comprehensive income / (loss):
    
    
    
    
    
    
Items that may be reclassified subsequently to profit or loss:
    
    
    
    
    
    
 Currency translation adjustment
  447 
  12,910 
  3,718 
  (1,715)
  (445)
  1,268 
 Share of other comprehensive income of associates and joint ventures
  119 
  3,426 
  354 
  5,100 
  - 
  - 
 Revaluation surplus
  7 
  192 
    
    
    
    
 Change in the fair value of hedging instruments net of income taxes
  (1)
  (19)
  124 
  3 
  - 
  - 
Items that may not be reclassified subsequently to profit or loss:
    
    
    
    
    
    
 Actuarial loss from defined benefit plans
  - 
  (12)
  (10)
  (10)
  - 
  - 
Other comprehensive income for the year from continuing operations
  572 
  16,497 
  4,186 
  3,378 
  (445)
  1,268 
Other comprehensive income for the year from discontinued operations
  15 
  435 
  1,170 
  1,641 
  - 
  - 
Total other comprehensive income for the year
  587 
  16,932 
  5,356 
  5,019 
  (445)
  1,268 
Total comprehensive income for the year
  1,203 
  34,712 
  10,384 
  14,137 
  1,798 
  2,624 
 
  - 
  - 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
    
 Total comprehensive income from continuing operations
  756 
  21,798 
  5,121 
  11,679 
  1,798 
  2,624 
 Total comprehensive income from discontinued operations
  447 
  12,914 
  5,263 
  2,458 
  - 
  - 
Total comprehensive income for the year
  1,203 
  34,712 
  10,384 
  14,137 
  1,798 
  2,624 
 
    
    
    
    
    
    
  Total comprehensive income / (loss) from continuing operations attributable to:
    
    
    
    
    
    
 Equity holders of the parent
  (32)
  (926)
  (753)
  3,257 
  760 
  997 
 Non-controlling interest
  788 
  22,724 
  5,874 
  8,422 
  1,038 
  1,627 
 
    
    
    
    
    
    
Total comprehensive income for the year attributable to:
    
    
    
    
    
    
Attributable to:
    
    
    
    
    
    
 Equity holders of the parent
  253 
  7,308 
  2,603 
  5,715 
  760 
  997 
 Non-controlling interest
  950 
  27,404 
  7,781 
  8,422 
  1,038 
  1,627 
 
    
    
    
    
    
    
 
                                                                                                                
                                        For the fiscal year ended June 30,
 
 
  2018(1)
  2018 
  2017 
  2016 
  2015 
  2014 
                                                                                                                                                                         
(in millions of US$)
 
                                                                    (in millions of Ps.) -                 
CASH FLOW DATA
    
    
    
    
    
    
Net cash generated from operating activities
  477 
  13,775 
  9,252 
  4,219 
  512 
  884 
Net cash generated from (used in) investing activities
  (415)
  (11,972)
  (2,415)
  8,640 
  855 
  (886)
Net cash used in financing activities
  (80)
  (2,299)
  1,899 
  (4,647)
  (1,777)
  (447)
 
 
3
 
 
 
 
 
As of fiscal year ended June 30,
 
 
 
2018 (1)
 
 
2018
 
 
2017
 
 
2016
 
 
2015
 
 
2014
 
 
 
(in millions of US$)
 
 
(in millions of Ps.)
 
Consolidated Statements of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Current Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment properties
  5,668 
  163,510 
  100,189 
  82,505 
  19,306 
  16,081 
Property, plant and equipment
  716 
  20,646 
  31,150 
  26,801 
  2,213 
  2,510 
Trading properties
  209 
  6,020 
  4,534 
  4,733 
  143 
  134 
Intangible assets
  429 
  12,363 
  12,443 
  11,814 
  176 
  175 
Biological assets
  31 
  900 
  671 
  497 
  346 
  302 
Other assets
  7 
  189 
  - 
  - 
  - 
  - 
Investment in associates and joint ventures
  858 
  24,747 
  8,227 
  17,175 
  3,190 
  2,704 
Deferred income tax assets
  58 
  1,679 
  1,631 
  1,249 
  654 
  516 
Income tax and MPIT credits
  16 
  453 
  229 
  173 
  161 
  177 
Restricted assets
  75 
  2,178 
  528 
  129 
  4 
  51 
Trade and other receivables
  316 
  9,129 
  5,456 
  3,773 
  427 
  475 
Investment in financial assets
  59 
  1,704 
  1,772 
  2,226 
  623 
  275 
Financial assets held for sale
  270 
  7,788 
  6,225 
  3,346 
  - 
  - 
Derivative financial instruments
  1 
  30 
  31 
  8 
  208 
  - 
Employee benefits
  - 
  - 
  - 
  4 
  - 
  - 
Total Non-Current Assets
  8,713 
  251,336 
  173,086 
  154,433 
  27,451 
  23,400 
 
  - 
  - 
  - 
  - 
  - 
  - 
Current Assets
    
    
    
    
    
    
Trading properties
  112 
  3,232 
  1,249 
  241 
  3 
  5 
Biological assets
  32 
  913 
  559 
  552 
  180 
  266 
Inventories
  81 
  2,324 
  5,036 
  3,900 
  511 
  440 
Restricted assets
  147 
  4,248 
  541 
  748 
  607 
  - 
Income tax and MPIT credits
  14 
  400 
  340 
  541 
  31 
  20 
Financial assets and other assets held for sale
  155 
  4,466 
  2,337 
  1,256 
  - 
  1,648 
Groups of assets held for sale
  180 
  5,192 
  2,681 
  - 
  - 
  - 
Trade and other receivables
  596 
  17,208 
  18,336 
  14,158 
  1,773 
  1,438 
Investment in financial assets
  889 
  25,646 
  11,853 
  9,673 
  504 
  495 
Derivative financial instruments
  5 
  155 
  65 
  53 
  30 
  33 
Cash and cash equivalents
  1,340 
  38,650 
  25,363 
  14,096 
  634 
  1,003 
Total Current Assets
  3,551 
  102,434 
  68,360 
  45,218 
  4,273 
  5,348 
 
  - 
  - 
  - 
  - 
  - 
  - 
TOTAL ASSETS
  12,264 
  353,770 
  241,446 
  199,651 
  31,724 
  28,748 
 
  - 
  - 
  - 
  - 
  - 
  - 
SHAREHOLDERS’ EQUITY
    
    
    
    
    
    
 
    
    
    
    
    
    
Capital and Reserves Attributable to Equity Holders of the Parent
 
 
 
    
    
    
    
Share capital
  17 
  482 
  499 
  495 
  495 
  491 
Treasury shares
  1 
  20 
  3 
  7 
  7 
  11 
Share warrants
  - 
  - 
  - 
  - 
  - 
  106 
Inflation adjustment of share capital and treasury shares
  2 
  65 
  65 
  65 
  65 
  65 
Share premium
  23 
  659 
  659 
  659 
  659 
  773 
Additional paid-in capital from treasury shares
  1 
  21 
  20 
  16 
  13 
  - 
Legal reserve
  4 
  113 
  83 
  83 
  - 
  82 
Other reserves
  116 
  3,334 
  2,496 
  1,299 
  812 
  1,184 
Special reserve
  53 
  1,516 
  1,516 
  1,516 
  1,516 
  2,350 
Retained earnings
  510 
  14,715 
  11,064 
  9,521 
  4,461 
  2,436 
Equity Attributable to Equity Holders of the Parent
  727 
  20,925 
  16,405 
  13,661 
  8,028 
  7,498 
Non-controlling interest
  1,885 
  54,396 
  32,768 
  23,539 
  6,528 
  5,729 
TOTAL SHAREHOLDERS’ EQUITY
  2,612 
  75,321 
  49,173 
  37,200 
  14,556 
  13,227 
 
 
4
 
 
 
  - 
  - 
  - 
  - 
  - 
  - 
LIABILITIES
    
    
    
    
    
    
Non-Current Liabilities
    
    
    
    
    
    
Trade and other payables
  123 
  3,577 
  3,988 
  2,464 
  666 
  485 
Borrowings
  6,498 
  187,462 
  112,025 
  93,808 
  5,833 
  5,315 
Deferred income tax liabilities
  921 
  26,563 
  23,125 
  19,204 
  5,889 
  4,623 
Derivative financial instruments
  1 
  40 
  86 
  120 
  270 
  321 
Payroll and social security liabilities
  3 
  76 
  140 
  20 
  5 
  5 
Provisions
  124 
  3,567 
  955 
  547 
  42 
  43 
Employee benefits
  4 
  110 
  763 
  689 
  - 
  - 
Total Non-Current Liabilities
  7,674 
  221,395 
  141,082 
  116,852 
  12,705 
  10,792 
 
  - 
  - 
  - 
  - 
  - 
  - 
Current Liabilities
    
    
    
    
    
    
Trade and other payables
  620 
  17,892 
  21,970 
  18,443 
  1,307 
  1,004 
Income tax and MPIT liabilities
  21 
  595 
  817 
  624 
  142 
  73 
Payroll and social security liabilities
  65 
  1,868 
  2,254 
  1,856 
  230 
  202 
Borrowings
  1,112 
  32,083 
  23,287 
  23,488 
  2,466 
  2,639 
Derivative financial instruments
  11 
  314 
  114 
  147 
  263 
  53 
Provisions
  37 
  1,059 
  894 
  1,041 
  55 
  21 
Group of liabilities held for sale
  112 
  3,243 
  1,855 
  - 
  - 
  937 
Total Current Liabilities
  1,978 
  57,054 
  51,191 
  45,599 
  4,463 
  4,929 
 
  - 
  - 
  - 
  - 
  - 
  - 
TOTAL LIABILITIES
  9,652 
  278,449 
  192,273 
  162,451 
  17,168 
  15,721 
 
    
    
    
    
    
    
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES
  12,264 
  353,770 
  241,446 
  199,651 
  31,724 
  28,948 
 
 
5
 
 
 
 
 
 
 As of fiscal year ended June 30,
 
 
 
2018(1) (1)
 
 
2018
 
 
2017
 
 
2016
 
 
2015
 
 
2014
 
Other Financial Data
 
(in US$, except for percentages, ratios and number of shares)
 
 
(in Ps, except for percentages, ratios, number of shares, per share and per ADS data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per share (2)
  (0.05)
  (1.55)
  0.93 
  10.00 
  2.68 
  (2.15)
Diluted net income per share (3)
  (0.05)
  (1.50)
  0.92 
  9.87 
  2.38 
  (2.15)
Basic net income per ADS (2)(4)
  (0.54)
  (15.54)
  9.26 
  100.02 
  26.80 
  (21.50)
Diluted net income per ADS (3)(4)
  (0.52)
  (14.96)
  9.22 
  98.69 
  23.80 
  (21.50)
Capital stock
  18 
  502 
  502 
  502 
  502 
  502 
Number of common shares
  501,642,804 
  501,642,804 
  501,642,804 
  501,642,804 
  501,642,804 
  501,562,730 
Weighted – average number of common shares outstanding
  496,687,276 
  496,687,276 
  497,806,965 
  494,991,778 
  492,020,463 
  496,132,488 
Diluted weighted – average number of common shares (5)
  516,403,816 
  516,403,816 
  500,161,805 
  554,375,631 
  554,375,631 
  558,487,656 
Dividends paid (6)
  14,00 
  395 
  0,00 
  0,00 
  0,00 
  0,00 
Dividends per share
  0,00 
  0,80 
  0,00 
  0,00 
  0,00 
  0,00 
Dividends per ADS (4)
  0,00 
  7,95 
  0,00 
  0,00 
  0,00 
  0,00 
Depreciation and amortization
  136 
  3,936 
  3,518 
  1,612 
  112 
  297 
Capital expenditure
  274 
  7,914 
  5,196 
  1,933 
  517 
  436 
Working Capital
  1.573 
  45.380 
  17.169 
  (381,00)
  (190,00)
  419 
Gross margin (7)
  0.39 
  0.39 
  0.37 
  0.43 
  0.41 
  0.43 
Operating margin (8)
  0.75 
  0.75 
  0.27 
  1.22 
  1.00 
  1.11 
Net margin (9)
  0.44 
  0.44 
  0.16 
  0.57 
  0.39 
  0.28 
Ratio of current assets to current liabilities (10)
  1.80 
  1.80 
  1.34 
  0.99 
  0.96 
  1.09 
Ratio of shareholders’ equity to total liabilities (11)
  0.27 
  0.27 
  0.26 
  0.23 
  0.85 
  0.84 
Ratio of non current assets to total assets(12)
  0.71 
  0.71 
  0.72 
  0.77 
  0.87 
  0.81 
Ratio of “Return on Equity” – ROE (13)
  0.29 
  0.29 
  0.12 
  0.35 
  0.16 
  0.11 
 
(1)
Solely for the convenience of the reader, we have translated Peso amounts into U.S. dollars at the exchange rate quoted by Banco de La Nación Argentina for June 30, 2018 which was Ps.28.25 = US$1.00. We make no representation that the Peso or U.S. dollar amounts actually represent, could have been or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all. The seller exchange rate quoted by Banco de la Nación Argentina was Ps.36.7900 per US$1.00 as of October 25, 2018
(2)
Basic net income per share is computed by dividing the net income available to common shareholders for the period by the weighted average common shares outstanding during the period.
(3)
Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common shares assuming the total conversion of outstanding notes and exercise of outstanding options. Due to the loss for the years 2016, 2015, 2014, 2013 and 2012, there is no diluted effect on this result.
(4)
Determined by multiplying per share amounts by ten (one ADS equals ten common shares).
(5)
Assuming exercise of all outstanding warrants to purchase our common shares.
(6)
The shareholders’ meeting held in October 2017 approved the distribution of a cash dividend for an amount of Ps.395 million for the fiscal year ended June 30, 2017.
(7)
Gross profit divided by the sum of revenues and initial recognition and changes in fair value of biological assets and agricultural produce at the point of harvest.
(8)
Operating income divided by the sum of revenues and initial recognition and changes in fair value of biological assets and agricultural produce at the point of harvest.
(9)
Net income divided by the sum of revenues and initial recognition and changes in fair value of biological assets and agricultural produce at the point of harvest.
(10)
Current assets over current liabilities.
(11)
Shareholders’ equity over total liabilities.
(12)
Non-current assets over total assets.
(13)
Profitability refers to income for the year divided by average shareholders’ equity.
 
 
6
 
 
 
Local Exchange Market and Exchange Rates
 
Operations Center in Argentina
 
A.1. Local Exchange Market and Exchange Rates
 
In the period from 2001 to 2015, the Argentine government established a series of exchange control measures that restricted the free disposition of funds and the transfer of funds abroad. In 2011, these measures had significantly curtailed access to the MULC by both individuals and private sector entities. This made it necessary, among other things, to obtain prior approval from the Central Bank to enter into certain foreign exchange transactions such as payments relating to royalties, services or fees payable to related parties of Argentine companies outside Argentina.
 
With the change of government and political environment, in December 2015, one of the first measures taken by the Argentine government was to lift the main restrictions that limited access to individuals to the MULC. Through Communication “A” 5,850 and later, as the local economy stabilized, Communication “A” 6,037, the Central Bank lifted the previous limitations and allowed unrestricted access to the foreign exchange market, subject to some requirements, as detailed below.
 
The following table shows the maximum, minimum, average and closing exchange rates for each applicable period to purchases of U.S. dollars.
 
 
 
Maximum(1)(2)
 
 
Minimum(1)(3)
 
 
Average(1)(4)
 
 
At closing(1)
 
Fiscal year ended:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2014 
  8.0830 
  5.4850 
  6.9333 
  8.0830 
June 30, 2015 
  9.0380 
  8.1630 
  8.5748 
  9.0380 
June 30, 2016 
  15.7500 
  9.1400 
  12.2769 
  14.9900 
June 30, 2017 
  16.5800 
  14.5100 
  15.4017 
  16.5800 
June 30, 2018 
  28.8000 
  16.7500 
  19.4388 
  28.8000 
Month ended:
    
    
    
    
April 30, 2018 
  20.5000 
  20.0850 
  20.1834 
  20.4900 
May 31, 2018 
  24.9400 
  21.1500 
  23.6783 
  24.9100 
June 30, 2018 
  28.8000 
  24.8500 
  26.5665 
  28.8000 
July 31, 2018 
  28.2500 
  27.1600 
  27.5241 
  27.3600 
August 31, 2018 
  37.5500 
  27.2400 
  30.1129 
  36.7500 
September 30, 2018 
  41.1500 
  36.8900 
  38.4341 
  41.1500 
October (through October 25, 2018) 
  39.5000 
  36.9000 
  37.0583 
  36.6900 
 
Source: Banco de la Nación Argentina
 
(1) Average between the offer exchange rate and the bid exchange rate according to Banco de la Nación Argentina’s foreign currency exchange rate.
(2) The maximum exchange rate appearing in the table was the highest end-of-month exchange rate in the year or shorter period, as indicated.
(3) The minimum exchange rate appearing in the table was the lowest end-of-month exchange rate in the year or shorter period, as indicated.
(4) Average exchange rates at the end of the month.
 
 
 
7
 
 
Exchange controls
 
Although most exchange control regulations were lifted on August 2016, some remain in place and we cannot give you any assurance that additional exchange control regulations will not be adopted in the future. Please see “Item 3. Key information—d)Risk Factors—Risks Relating to Argentina—Exchange controls, restrictions on transfers abroad and capital inflow restrictions may limit the availability of international credit.”
 
Exchange controls regulations currently in effect in Argentina include the following:
 
Registration requirements
 
All incoming and outgoing funds to and from the MULC and any foreign indebtedness (financial and commercial) are subject to registration requirements before the Central Bank for informative purposes, in accordance with Communication “A” 6,401, as amended.
 
Corporate profits and dividends
 
Argentine companies may freely access the MULC for remittances abroad to pay earnings and dividends in so far as they arise from closed and fully audited balance sheets and have satisfied applicable certification requirements.
 
Restrictions on foreign indebtedness
 
Pursuant to Resolution E 1/2017 of the Ministerio de Hacienda and Communication “A” 6,150 of the Argentine Central Bank, it was deleted the obligation that required non-residents to perform portfolio investments in the country intended for the holding of private sector financial assets to maintain for a period of 120 days of permanence the funds in the country.
 
As of that resolution and the provisions of Communication “A” 6,244 of the Argentine Central Bank, there are no restrictions on entry and exit in the MULC.
 
Restrictions on exports, imports and services
 
Regarding exports, in 2016 the Central Bank relaxed certain rules related to the inflow and outflow of foreign currency collected abroad as a result of the collection of exports of goods, advance payments, and pre-export financings, establishing that the deadline to repatriate to Argentina the foreign currency is 10 years. The prior 10-business day period applicable for the transfer of funds collected abroad as a result of the collection of exports of goods, advance payments, and pre-export financings to a correspondent bank account of a local financial institution (cuenta de corresponsalía) was eliminated in December 2015. In relation to the export of services, Communication “A” 6,137 the Central Bank eliminated the obligation to repatriate to Argentina the foreign currency obtained.
 
Regarding imports, access to the foreign exchange market for the payment of imports with customs clearance date as of December 17, 2015 can be paid through the local foreign exchange market without any limit. AFIP Regulation No. 3,252 published on January 5, 2012 which required importers to file affidavits was eliminated in December 2015 and the import monitoring system (Sistema Integral de Monitoreo de Importaciones, or “SIMI”) was created, which established an obligation for importers to submit certain information electronically. Importers do not have to repatriate the goods within a specified period (previously this period was 365 calendar days from the date of access to the foreign exchange market).
 
Regarding the payment of services, access to the foreign exchange market for payments of services rendered as from December 17, 2015 may be carried out without restriction and without the Central Bank’s prior authorization.
 
Direct investments
 
Communication A 6401 established a new reporting system of direct investments, which replaced the reporting system established by Communications A 3602 and A 4237, applicable since December 31, 2017. As of date, investors who are Argentine residents must comply with the information regime if the value of their investments abroad reaches or exceeds the equivalent of US$1,000,000 (measured in terms of 1) the sum of the flows of external assets and liabilities during the previous calendar year, and 2) the balance of holdings of external assets and liabilities at the end of the previous calendar year). If the value of investments abroad does not exceed the equivalent of US$50,000,000, the information regime must be complied on an annual basis (in case it is less than US$10,000,000, the information regime will be annual but with a simplified form), instead of quarterly. If the value of the investments is less than the equivalent of US$1,000,000, compliance with said regime is optional.
 
Future and forward operations
 
The Central Bank has significantly amended the foreign exchange regulations in derivatives by eliminating the restriction on the execution of cross-border derivative transactions. In August 2016, the Central Bank introduced new foreign exchange regulations on derivative transactions which allowed local residents from entering into derivative transactions with foreign residents. Moreover, the regulations now provide that Argentine residents may access the foreign exchange market to pay premiums, post collateral and make payments related to forwards, futures, options and other derivatives entered into in foreign exchanges or with non-resident counterparties.
 
 
 
8
 
 
 
The foreign exchange regulations now allow Argentine residents to enter into derivative transaction with foreign counterparties without the need for authorization of the Central Bank. They also allow them to purchase foreign currency to make payments under such derivative transactions.
 
Law No. 27,440 in its articles 188 to 194 introduces, among others, the following modifications related to derivatives:
 
● The right of the non-bankrupted party and the contracting party of an insurance entity subject to a judicial liquidation process to be resolv in advance the derivatives and passes granted by the Bankruptcy Law No. 24,522 and Law No. 20,091 of the Insurance Entities shall not apply;
● The restriction for the exercise of the contractual mechanisms of early termination, termination, settlement, compensation and execution of guarantees contained in the derivatives established by the Financial Entities Law No. 21,526 and the Central Bank regulations shall not apply to.
 
Operation Center in Israel
 
The following table shows the maximum, minimum, average and closing exchange rates for each period applicable to purchases of New Israeli Shekels (NIS).
 
 
 
Maximum(1)(2)
 
 
Minimum(1)(3)
 
 
Average(1)(4)
 
 
At closing(1)
 
Fiscal year ended:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2014 
  3.6213 
  3.4320 
  3.5075 
  3.4320 
June 30, 2015 
  3.9831 
  3.4260 
  3.8064 
  3.7747 
June 30, 2016 
  3.9604 
  3.7364 
  3.8599 
  3.8596 
June 30, 2017 
  3.8875 
  3.4882 
  3.6698 
  3.4882 
June 30, 2018 
  3.6573 
  3.3902 
  3.5276 
  3.6573 
Month ended:
    
    
    
    
April 30, 2018 
  3.5995 
  3.5020 
  3.5380 
  3.5995 
May 31, 2018 
  3.6260 
  3.5613 
  3.5881 
  3.5648 
June 30, 2018 
  3.6573 
  3.5569 
  3.6064 
  3.6573 
July 31, 2018 
  3.6708 
  3.6234 
  3.6439