Form 6-K
Table of Contents

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15b-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May, 2005

 

CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA

FINANCIERA Y AGROPECUARIA

(Exact name of Registrant as specified in its charter)

 

CRESUD INC.

(Translation of registrant’s name into English)

 

Republic of Argentina

(Jurisdiction of incorporation or organization)

 

Moreno 877, 23rd Floor, (C1091AAQ)

Buenos Aires, Argentina

(Address of principal executive offices)

 

Form 20-F  x     Form 40-F  ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  ¨    No  x

 


 


Table of Contents

 

CRESUD S.A.C.I.F. and A

(THE “COMPANY”)

 

REPORT ON FORM 6-K

 

Attached is a copy of the English translation of the Unaudited Financial Statements for the nine-month period ended on March 31, 2005 and 2004.

 


Table of Contents

 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera

y Agropecuaria

 

Unaudited Financial Statements

corresponding to the nine-month period

ended March 31, 2005 and 2004

 


Table of Contents

 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Financial Statements

 

Index

 

     

Presentation

   

Unaudited Consolidated Balance Sheet

  2

Unaudited Consolidated Statement of Income

  3

Unaudited Consolidated Statement of Cash Flows

  4

Notes to the Unaudited Consolidated Financial Statements

  5

Unaudited Consolidated Schedules

   

Unaudited Balance Sheet

  22

Unaudited Statement of Income

  23

Unaudited Statement of Changes in Shareholders’ Equity

  24

Unaudited Statement of Cash Flows

  25

Notes to the Unaudited Financial Statements

  26

Unaudited Schedules

   

Additional Information to the Notes to the Unaudited Financial Statements required by section 68 of the

  60

Buenos Aires Stock Exchange Regulations

   

Unaudited Business Highlights

  66

Report of Independent Auditors

  80

 


Table of Contents

 

Name of the Company:

   Cresud Sociedad Anónima     
     Comercial, Inmobiliaria,     
     Financiera y Agropecuaria     

Legal Address:

   Moreno 877, 23rd Floor     
     Ciudad Autónoma de Buenos Aires     

Principal Activity:

   Agriculture, livestock and real-estate     

 

Financial statements for the period ended March 31, 2005 presented in

comparative form with the previous year and with the same period of the previous year

Financial year N° 70 started on July 1, 2004

 

DATES OF REGISTRATION AT THE PUBLIC REGISTRY OF COMMERCE

 

Of the by-laws:    February 19, 1937     
Of the latest amendment:    June 2, 1997     
Duration of the Company:    June 6, 2082     

 

Information on controlled companies in Note 2 to the unaudited consolidated Financial Statements

 

CAPITAL STATUS ( Note 3 of unaudited basic financial statements)

 

SHARES

 

Type of stock


   Authorized
pesos


   Subscribed
pesos


   Paid-in pesos

Ordinary certified shares of $1 face value and 1 vote each

   162,534,470    162,534,470    162,534,470

 

1


Table of Contents

 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Balance Sheet as at March 31, 2005, June 30, 2004 and March 31, 2004

 

    

March 31, 2005

(Notes 1, 2 and 3)
Pesos


    June 30, 2004
(Notes 1, 2 and 3)
Pesos


    March 31, 2004
(Notes 1, 2 and 3)
Pesos


 

ASSETS

                  

Current Assets

                  

Cash and banks (Note 4.a.)

   18,332,734     12,749,766     10,530,732  

Investments (Note 4.b.)

   100,660,590     1,874,997     8,050,485  

Trade accounts receivable (Note 4.c.)

   6,239,368     5,354,858     5,627,242  

Other receivables and prepaid expenses (Note 4.d.)

   15,917,607     15,019,353     10,694,149  

Inventories (Note 4.e.)

   47,076,758     35,441,885     36,946,313  
    

 

 

Total current assets

   188,227,107     70,440,859     71,848,921  
    

 

 

Non-current assets

                  

Other receivables and prepaid expenses (Note 4.d.)

   5,277,421     3,948,778     3,448,150  

Inventories (Note 4.e.)

   55,078,987     44,740,030     44,267,100  

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

   303,368,115     260,419,568     210,146,465  

Other investments (Note 4.b.)

   106,604,680     132,962,608     142,858,179  

Fixed assets, net (Schedule A)

   158,061,206     160,026,473     154,854,248  

Intangible assets (Schedule B)

   —       —       —    
    

 

 

Subtotal Non-Current Assets

   628,390,409     602,097,457     555,574,142  
    

 

 

Goodwill (Note 4.b.)

   (43,320,138 )   (25,869,346 )   (20,193,637 )
    

 

 

Total Non-Current Assets

   585,070,271     576,228,111     535,380,505  
    

 

 

Total Assets

   773,297,378     646,668,970     607,229,426  
    

 

 

LIABILITIES

                  

Current Liabilities

                  

Debts:

                  

Trade accounts payable (Note 4.f.)

   11,213,357     10,840,177     9,076,246  

Loans (Note 4.g.)

   26,199,626     8,090,261     3,829,413  

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

   1,066,091     1,475,373     819,034  

Taxes payable (Note 4.i.)

   23,578,691     2,206,532     1,586,989  

Other debts (Note 4.j.)

   15,560,123     6,689,562     1,891,609  
    

 

 

Total Debts

   77,617,888     29,301,905     17,203,291  
    

 

 

Total current liabilities

   77,617,888     29,301,905     17,203,291  
    

 

 

Non-current liabilities

                  

Taxes payable (Note 4.i.)

   35,485,840     26,213,217     26,289,861  

Loans (Note 4.g.)

   115,881,389     125,880,874     122,125,483  

Other debts (Note 4.j.)

   39,327     39,327     39,327  
    

 

 

Total non-current liabilities

   151,406,556     152,133,418     148,454,671  
    

 

 

Total Liabilities

   229,024,444     181,435,323     165,657,962  
    

 

 

Minority interest

   355,930     65,451     47,619  
    

 

 

SHAREHOLDERS’ EQUITY

   543,917,004     465,168,196     441,523,845  
    

 

 

Total Liabilities and Shareholder’s Equity

   773,297,378     646,668,970     607,229,426  
    

 

 

 

The accompanying notes and schedules are an integral part of these financial statements

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

2


Table of Contents

 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Statement of Income

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

 

     March 31, 2005
(Notes 1, 2 and 3)
Pesos


    March 31, 2004
(Notes 1, 2 and 3)
Pesos


 

Sales

            

Crops

   15,030,047     14,129,908  

Beef cattle

   27,112,319     19,754,421  

Milk

   2,217,786     2,511,919  

Feed Lot

   1,762,486     5,821,723  

Others

   3,749,554     3,691,983  
    

 

Total Sales

   49,872,192     45,909,954  
    

 

Cost of sales (Schedule F)

            

Crops

   (11,777,221 )   (6,562,370 )

Beef cattle

   (22,174,165 )   (13,844,971 )

Milk

   (1,068,897 )   (297,729 )

Feed Lot

   (1,601,788 )   (5,098,751 )

Others

   (871,358 )   (960,982 )
    

 

Total cost of sales

   (37,493,429 )   (26,764,803 )
    

 

Gross income

   12,378,763     19,145,151  
    

 

Selling expenses (Schedule H)

   (3,926,394 )   (3,140,643 )

Administrative expenses (Schedule H)

   (4,779,496 )   (4,827,743 )

Net gain on sale of farms

   7,657,269     1,668,751  

Gain from inventory holdings (Schedule F)

   9,321,932     1,912,069  
    

 

Operating income

   20,652,074     14,757,585  
    

 

Financial results

            

Generated by assets:

            

Exchange differences and discounts

   (4,766,644 )   4,543,155  

Interest income

   418,596     206,487  

Bad debts (Schedule E)

   2,826     93,518  

Reference stabilization index (CER)

   —       (303,646 )

Tax on banking debts and credits

   (1,096,727 )   (914,002 )

Holding results and operations of stocks and bonds

   68,754,172     —    

Convertible Bonds purchase interest

   7,994,072     8,697,554  

Others

   229,913     15,301  
    

 

     71,536,208     12,338,367  
    

 

Generated by liabilities:

            

Reference stabilization index (CER)

   (2,396 )   (4,930 )

Interest expense

   (99,837 )   —    

Financial expenses

            

Convertible Bonds issued interest (Note 7)

   (7,419,382 )   (8,071,022 )

Others

   (1,737,116 )   (948,137 )

Exchange differences and discounts

   1,892,887     (3,206,890 )
    

 

     (7,365,844 )   (12,230,979 )
    

 

Other expenses

            

Gains from other fixed assets sales

   36,281     319,347  

Others

   (3,352,530 )   27,181  
    

 

     (3,316,249 )   346,528  
    

 

Income from related companies

   20,861,453     3,086,305  

Management fees

   (6,905,699 )   (1,138,846 )
    

 

Income before income tax and minority interest

   95,461,943     17,158,960  
    

 

Income tax expense

   (33,420,169 )   (7,068,447 )

Minority interest

   109,521     159,091  
    

 

Net income for the period

   62,151,295     10,249,604  
    

 

 

The accompanying notes and schedules are an integral part of these financial statements

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

3


Table of Contents

 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Statement of Cash Flow

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

 

     March 31, 2005
(Notes 1, 2 and 3)
Pesos


    March 31, 2004
(Notes 1, 2 and 3)
Pesos


 

Changes in funds

            

Funds at the beginning of the year

   13,138,533     21,837,823  

Funds at the end of the period

   112,792,891     14,069,233  
    

 

Net increase (decrease) in funds

   99,654,358     (7,768,590 )

Causes of changes in funds

            

Operations activities

            

Income for the period

   62,151,295     10,249,604  

Liabilities interest

   7,319,715     8,071,022  

Income tax

   33,420,169     7,068,447  

Adjustments made to reach net funds from operations activities

            

Results from interest in related companies

   (20,861,453 )   (3,086,305 )

Minority interest

   (109,521 )   (159,091 )

Increase in allowances and reserves

   9,108,206     1,484,802  

Amortization and depreciation

   2,633,851     2,836,151  

Results from inventory holdings

   (9,321,932 )   (1,912,069 )

Financial results

   (7,078,085 )   (6,925,643 )

Result from sale of permanent investments

   (68,754,172 )   —    

Result from sale of fixed assets

   (7,693,550 )   (1,988,098 )

Changes in operating assets and liabilities

            

Decrease in current investments

   2,693,282     5,707,778  

(Increase) decrease in trade accounts receivable

   (881,684 )   2,139,532  

Decrease (increase) in other receivables

   5,412,245     (8,627,200 )

Increase in inventories

   (13,298,610 )   (18,420,365 )

Decrease in social securities contributions, taxes payable and advances to customers

   (3,184,669 )   (4,205,909 )

Decrease in trade accounts payable

   (1,832,153 )   (346,293 )

Dividends collected

   1,011,469     1,146,595  

Increase (decrease) in other debts

   1,964,862     (2,142,017 )
    

 

Net fund applied to operations activities

   (7,300,735 )   (9,109,059 )
    

 

Investment activities

            

Decrease (increase) in permanent investments

   93,528,147     (1,199,670 )

Increase in interest in related companies

   (6,349,709 )   (8,037,546 )

Acquisition and upgrading of fixed assets

   (8,978,683 )   (8,984,445 )

Collection of receivables related to the sale of fixed assets

   1,127,138     1,008,000  

Sale of fixed assets

   8,572,815     4,805,676  
    

 

Net funds applied to investment activities

   87,899,708     (12,407,985 )
    

 

Financing activities

            

Contributions of minority shareholders

   400,000     —    

Exercise of Warrant

   10,605,734     21,893,975  

Dividends paid

   (3,000,000 )   (1,500,000 )

Exercise of rights offering on treasury stock

   240,000     327,437  

Increase in financial loans

   44,356,365     —    

Decrease in financial loans

   (33,546,714 )   (5,667,108 )

Issuance expenses of Convertible Bonds

   —       (1,305,850 )
    

 

Net funds provided by financing activities

   19,055,385     13,748,454  
    

 

Net increase (decrease) in funds

   99,654,358     (7,768,590 )

Items not involving changes in funds

            

Transfer of inventory to fixed assets

   646,712     221,429  

Increase in other receivables by sale of fixed assets

   8,077,546     —    

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

   8,751,779     18,753,704  

Complementary information

            

Interest paid

   5,119,411     5,676,886  

Income tax expense paid

   562,791     933,971  

 

The accompanying notes and schedules are an integral part of these financial statements

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

4


Table of Contents

 

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

 

Corresponding to the periods beginning as from July 1, 2004 and 2003 and ended on

March 31, 2005 and 2004

 

NOTE 1: BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

 

As a consequence of the application of General Resolutions No. 368/01, 434/03, 441/03 and 459/04 of the Comisión Nacional de Valores, which require that consolidated Financial Statements be presented as established by Technical Resolution No. 21 of the Federación Argentina de Consejos Profesionales de Ciencias Económicas, the Balance Sheet as of March 31, 2005 and 2004 and the Statements of Income and the Statements of Cash Flows for the fiscal periods then ended were consolidated on a line by line basis with the financial statements of such companies in which it holds a majority of the voting shares, by application of the new rules, discontinuation of adjustment for inflation and application of proportional consolidation for investments in which it has joint control (see Note 1.b and 1.c to the unaudited basic financial statements).

 

As from this period, the Company has applied Technical Resolution No. 21 as concerns the proportional consolidation with Cactus Argentina S.A. on a 50% basis on account of the joint control held, and applied the same percentage for elimination of balances existing between them.

 

The financial statements of the subsidiary companies Inversiones Ganaderas S.A., Futuros y Opciones.Com S.A. and Cactus Argentina S.A. as of March 31, 2005 and 2004 have been used in order to determine the investment at its equity value, line by line consolidation and proportional consolidation.

 

For purposes of comparability, reclassifications have been made on the information at March 31, 2004 and June 30, 2004.

 

These Financial Statements and the corresponding notes and schedules are prepared in Argentine Pesos.

 

NOTE 2: CORPORATE CONTROL

 

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

 

COMPANY


   PERCENTAGE OF VOTING SHARES
OWNED


Inversiones Ganaderas S.A.

   99.99

Futuros y Opciones.Com S.A.

   70.00

JOINT CONTROL

    

Cactus Argentina S.A.

   50.00

 

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

 

The Financial Statements of the Subsidiary Companies mentioned in Note 2 have been prepared based on accounting principles consistent with those followed by Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria for the preparation of its Financial Statements, as detailed in Note 2 of the unaudited basic financial statements.

 

5


Table of Contents

 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

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

 

  a. Cash and banks

 

    

March 31,
2005

Pesos


   

June 30,

2004

Pesos


   

March 31,
2004

Pesos


 

Cash

   42,174     77,971     92,015  

Foreign currency (Schedule G)

   77,370     54,211     52,709  

Patacones currency

   73     39     37  

Local currency checking account

   343,824     4,961,714     1,648,848  

Patacones currency checking account

   22     22     22  

Foreign currency checking account (Schedule G)

   6,331,295     1,220,084     8,628,564  

Local currency saving account

   15,115     12,295     15,855  

Foreign currency saving account (Schedule G)

   11,252,686     5,949,506     —    

Checks to be deposited

   270,225     473,924     92,682  
    

 

 

     18,332,784     12,749,766     10,530,732  
    

 

 

 

b.      Investments and Goodwill

                  
    

March 31,
2005

Pesos


   

June 30,

2004

Pesos


   

March 31,
2004

Pesos


 

Investment

                  

Investment (Schedule C and G)

   100,660,590     1,874,997     8,050,485  
    

 

 

     100,660,590     1,874,997     8,050,485  
    

 

 

Investment

                  

Investment from related companies (Schedule C)

   303,368,115     260,419,568     210,146,465  
    

 

 

     303,368,115     260,419,568     210,146,465  
    

 

 

Other investments

                  

Other investments (Schedule C and G)

   106,604,680     132,962,608     142,858,179  
    

 

 

     106,604,680     132,962,608     142,858,179  
    

 

 

Goodwill

                  

Goodwill (Schedule C)

   (43,320,138 )   (25,869,346 )   (20,193,637 )
    

 

 

     (43,320,138 )   (25,869,346 )   (20,193,637 )
    

 

 

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4: (Continued)

 

  c. Trade accounts receivable

 

    

March 31,
2005

Pesos


   

June 30,
2004

Pesos


   

March 31,
2004

Pesos


 

Current

                  

Accounts receivable in local currency

   5,483,423     5,579,474     5,940,638  

Less:

                  

Provision for defaulting debtors (Schedule E)

   (370,709 )   (412,067 )   (384,661 )

Accounts receivable in foreign currency (Schedule G)

   1,061,542     3,983     55,186  

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

                  

Cactus Argentina S.A.

   65,112     95,472     16,079  

Alto Palermo S.A.

   —       87,359     —    

IRSA Inversiones y Representaciones Sociedad Anónima

   —       637     —    
    

 

 

     6,239,368     5,354,858     5,627,242  
    

 

 

 

d.      Other receivables and prepaid expenses

                  
    

March 31,
2005

Pesos


   

June 30,
2004

Pesos


   

March 31,
2004

Pesos


 

Current

                  

Prepaid leases

   165,910     4,465,136     598,390  

Tax on Minimum Hypothetical Income (Note 2.p.)

   38,006     61,086     61,087  

Guarantee deposits and premiums (Schedule G)

   1,951,565     2,188,998     4,040,763  

Secured by mortgage (Schedule G)

   8,164,858     1,033,997     992,804  

Prepaid expenses

   989,895     897,192     353,576  

Tax prepayments (net of accrual)

   2,946,290     3,793,343     3,062,205  

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

                  

Cactus Argentina S.A.

   681,982     673,200     670,126  

Agro-Uranga S.A.

   694,981     39,993     160,609  

Credits to employees

   41,801     37,751     —    

Shareholders

   —       1,711,833     455,583  

Others (Schedule G)

   242,319     116,824     299,006  
    

 

 

     15,917,607     15,019,353     10,694,149  
    

 

 

Non-current

                  

Prepaid leases

   75,916     5,115     —    

Value Added Tax

   5,080,327     3,847,020     3,338,689  

Tax on Minimum Hypothetical Income

   72,849     56,450     69,503  

Deferred tax

   44,044     40,193     33,182  

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

                  

Credits to employees

   3,385     —       6,426  

Others

   900     —       350  
    

 

 

     5,277,421     3,948,778     3,448,150  
    

 

 

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4: (Continued)

 

  e. Inventories

 

    

March 31,

2005

Pesos


  

June 30,

2004

Pesos


  

March 31,

2004

Pesos


Current

              

Livestock

   13,364,281    18,829,580    17,225,958

Crops

   12,077,749    8,639,910    6,272,900

Unharvested crops

   17,777,895    1,603,897    8,515,388

Seeds and fodder

   500,487    241,516    285,736

Materials and others

   2,779,406    4,686,649    3,539,372

Advances to suppliers

   576,940    1,440,333    1,106,959
    
  
  
     47,076,758    35,441,885    36,946,313
    
  
  

Non-Current

              

Livestock

   55,078,987    44,740,030    44,267,100
    
  
  
     55,078,987    44,740,030    44,267,100
    
  
  

 

  f. Trade accounts payable

 

    

March 31,

2005

Pesos


  

June 30,

2004

Pesos


  

March 31,

2004

Pesos


Current

              

Suppliers in local currency

   4,351,058    4,746,787    5,761,327

Suppliers in foreign currency (Schedule G)

   2,315,281    1,133,055    1,171,699

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

              

Inversora Bolivar S.A.

   6,777    5,349    —  

Alto Palermo S.A.

   74,664    175,133    —  

Alto City.Com S.A.

   298    —      —  

IRSA Inversiones y Representaciones S.A.

   159,268    1,108    —  

Cactus Argentina S.A.

   206,902    943,989    222,828

Estudio Zang, Bergel & Viñes

   76,847    81,646    —  

Fundación IRSA

   1,177,988    1,177,988    —  

Directors

   2,159    3,471    1,969

Accrual for other expenses (Schedule G)

   2,513,471    2,358,474    1,738,014

Accrual for cereal expenses

   328,644    213,177    180,409
    
  
  
     11,213,357    10,840,177    9,076,246
    
  
  

 

8


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4: (Continued)

 

  g. Loans

 

    

March 31,

2005

Pesos


   

June 30,

2004

Pesos


   

March 31,

2004

Pesos


 

Current

                  

Local financial loans (Note 16)

   22,554,698     6,757,677     —    

Convertible Bonds 2007 Interest payable (Schedule G)

   1,468,115     589,239     1,701,548  

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

                  

Shareholders

   2,173,764     740,021     2,116,063  

Directors

   3,049     3,324     11,802  
    

 

 

     26,199,626     8,090,261     3,829,413  
    

 

 

Non Current

                  

Convertible Bonds 2007 (Schedule G)

   47,189,423     56,416,538     55,086,045  

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

                  

Shareholders

   69,870,974     70,853,048     68,505,652  

Directors

   98,011     318,281     382,096  

Convertible Bonds 2007 expenses

   (1,277,019 )   (1,706,993 )   (1,848,310 )
    

 

 

     115,881,389     125,880,874     122,125,483  
    

 

 

h.      Salaries and social security payable

                  

Current

                  

Vacation, statutory annual bonus allowance

   874,254     1,070,155     689,489  

Social security administration

   114,964     196,017     9,393  

Salaries payable

   53,422     192,632     108,403  

Health care

   12,180     2,533     5,169  

Others

   11,271     14,036     6,580  
    

 

 

     1,066,091     1,475,373     819,034  
    

 

 

 

9


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4: (Continued)

 

  i. Taxes payable

 

    

March 31,

2005

Pesos


   

June 30,

2004

Pesos


   

March 31,

2004

Pesos


 

Current

                  

Accrual for income tax

   24,289,677     4,648,244     3,154,047  

Advances to Income tax

   (2,651,051 )   (2,808,338 )   (1,968,138 )

Tax on Minimum Hypothetical Income

   68,773     24,135     39,802  

Value added tax

   6,755     17,962     50,592  

Property tax payable

   80,182     103,284     110,364  

Taxes withheld for income tax

   68,995     188,125     82,371  

Gross sales tax payable

   80,846     91,306     164,793  

Taxes withheld-Gross sales tax payable

   —       (80,728 )   (74,005 )

Taxes withheld-Value added tax payable

   10,036     18,932     24,159  

Others (1)

   1,624,478     3,610     3,004  
    

 

 

     23,578,691     2,206,532     1,586,989  
    

 

 

Non-current

                  

Deferred tax

   33,961,761     26,213,217     26,289,861  

Tax on Minimum Hypothetical Income

   1,524,079     —       —    
    

 

 

     35,485,840     26,213,217     26,289,861  
    

 

 

 

(1) Including Personal Assets Tax of shareholders.

 

  j. Others debts

 

    

March 31,

2005

Pesos


  

June 30,

2004

Pesos


  

March 31,

2004

Pesos


Current

              

Advances to customers (Schedule G)

   7,889,200    4,432,500    —  

Accrual for Management fees

   6,905,699    1,537,173    1,138,846

Loan to FYO minority shareholders

   134,196    134,196    134,196

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

              

Cactus Feeders Inc.

   513,253    550,177    610,007

Others

   117,775    35,516    8,560
    
  
  
     15,560,123    6,689,562    1,891,609
    
  
  

Non-current

              

Guarantee deposit

   1,000    1,000    1,000

Allowances

   38,327    38,327    38,327
    
  
  
     39,327    39,327    39,327
    
  
  

 

10


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 5:

 

a) Assets based on their estimated collection term (in pesos)

 

Based on their estimated collection term


  Current and non-current investment

  Trade accounts receivable

  Other receivables and prepaid expenses

  March 31,
2005


  June 30,
2004


  March 31,
2004


  March 31,
2005


  June 30,
2004


  March 31,
2004


  March 31,
2005


  June 30,
2004


  March 31,
2004


4th quarter 2004/2003 financial period

  —     —     4,412,090   —     —     5,397,220   —     —     4,134,382

1st quarter 2005/2004 financial period

  —     —     —     —     4,246,050   —     —     3,271,016   2,661

2nd quarter 2005/2004 financial period

  —     1,388,504   —     —     —     —     —     100,699   116,443

3rd quarter 2005/2004 financial period

  —     —     —     —     —     —     —     296,954   994,496

4th quarter 2005/2004 financial period

  3,338,226   —     —     6,214,368   —     —     3,748,270   307,543   6,426

1st quarter 2006/2005 financial period

  —     —     —     —     —     —     8,172,640   —     —  

2nd quarter 2006/2005 financial period

  —     —     —     —     —     —     646,991   —     —  

3rd quarter 2006/2005 financial period

  —     —     —     —     —     —     825   —     —  

4th quarter 2006/2005 financial period

  —     —     —     —     —     —     3,385   17,154   17,154

1st quarter 2007/2006 financial period

  —     —     —     —     —     —     —     4,765   —  

2nd quarter 2007/2006 financial period

  —     —     —     —     —     —     25,582   —     —  

3rd quarter 2007/2006 financial period

  —     —     —     —     —     —     —     —     —  

4th quarter 2007/2006 financial period

  —     —     —     —     —     —     —     —     —  

2nd quarter 2008/2007 financial period

  106,583,963   132,941,891   142,837,462   —     —     —     —     —     —  

Overdue

  —     —     —     25,000   —     —     —     —     —  

With no stated current term

  97,322,364   486,493   3,638,395   —     1,108,808   230,022   3,348,881   11,043,141   5,446,167

With no stated non-current term

  20,717   20,717   20,717   —     —     —     5,248,454   3,926,859   3,424,570
   
 
 
 
 
 
 
 
 

Total

  207,265,270   134,837,605   150,908,664   6,239,368   5,354,858   5,627,242   21,195,028   18,968,131   14,142,299
   
 
 
 
 
 
 
 
 

 

b) Assets classified according to the interest rate that they accrue (in pesos)

 

Interest rate that they accrue


   Current and non-current investment

   Trade accounts receivable

   Other receivables and prepaid expenses

   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


At fixed interest rate

   106,583,964    132,941,891    142,837,462    —      —      —      8,143,356    3,535,277    335,283

At variable interest rate

   94,877,040    486,493    3,638,395    —      —      —      910,592    2,307,257    2,901,213

Non-interest bearing

   5,804,266    1,409,221    4,432,807    6,239,368    5,354,858    5,627,242    12,141,080    13,125,597    10,905,803
    
  
  
  
  
  
  
  
  

Total

   207,265,270    134,837,605    150,908,664    6,239,368    5,354,858    5,627,242    21,195,028    18,968,131    14,142,299
    
  
  
  
  
  
  
  
  

 

11


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 5:

 

a) Liabilities based on their estimated payment term (in pesos)

 

Based on their
estimated payment
term


  Trade accounts payable

  Loans

  Salaries and social
security payable


  Taxes payable

  Other debts

  March 31,
2005


  June 30,
2004


    March 31,
2004


  March 31,
2005


  June 30,
2004


  March 31,
2004


  March 31,
2005


  June 30,
2004


  March 31,
2004


  March 31,
2005


  June 30,
2004


  March 31,
2004


  March 31,
2005


  June 30,
2004


  March 31,
2004


4th quarter 2004/2003 financial period

  —     —       9,074,277   —     —     3,829,413   —     —     756,121   —     —     1,382,339   —     —     471,385

1st quarter 2005/2004 financial period

  —     11,750,406     —     —     6,757,677   —     —     1,406,519   —     —     342,491   —     —     1,552,956   2,663

2nd quarter 2005/2004 financial period

  —     3,471     1,969   —     1,332,584   —     —     68,854   62,913   —     1,864,041   197,570   —     11,498   2,663

3rd quarter 2005/2004 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     7,666   —  

4th quarter 2005/2004 financial period

  11,213,357   —       —     16,086,293   —     —     507,601   —     —     1,863,094   —     —     7,023,474   4,585,412   —  

1st quarter 2006/2005 financial period

  —     —       —     10,113,333   —     —     558,490   —     —     —     —     —     7,889,200   —     —  

2nd quarter 2006/2005 financial period

  —     —       —     —     —     —     —     —     —     21,715,597   —     —     —     —     —  

3rd quarter 2006/2005 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     —  

4th quarter 2006/2005 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     —  

1st quarter 2007/2006 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     —  

2nd quarter 2007/2006 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     —  

3rd quarter 2007/2006 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     —  

4th quarter 2007/2006 financial period

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     —  

2nd quarter 2008/2007 financial period

  —     —       —     115,881,389   125,880,874   122,125,483   —     —     —     —     —     —     —     —     —  

Overdue

  —     —       —     —     —     —     —     —     —     —     —     7,080       37,448   34,493

With no stated current term

  —     (913,700 )   —     —     —     —     —     —     —     —     —     —     647,449   494,582   1,380,405

With no stated non-current term

  —     —       —     —     —     —     —     —     —     35,485,840   26,213,217   26,289,861   39,327   39,327   39,327
   
 

 
 
 
 
 
 
 
 
 
 
 
 
 

Total

  11,213,357   10,840,177     9,076,246   142,081,015   133,971,135   125,954,896   1,066,091   1,475,373   819,034   59,064,531   28,419,749   27,876,850   15,599,450   6,728,889   1,930,936
   
 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

b) Liabilities classified according to the interest rate that they accrue (in pesos)

 

Interest rate
that they
accrue


   Trade accounts payable

   Loans

  

Salaries and social

security payable


   Taxes payable

   Other debts

   March 31,
2005


   June 30,
2004


   March
31, 2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March
31, 2004


At fixed interest rate

   —      —      —      139,713,106    132,638,551    122,125,483    —      —      —      —      —      —      —      2,349,579    349,877

At variable interest rate

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

Non-interest bearing

   11,213,357    10,840,177    9,076,246    2,367,909    1,332,584    3,829,413    1,066,091    1,475,373    819,034    59,064,531    28,419,749    27,876,850    15,599,450    4,379,310    1,581,059
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  

Total

   11,213,357    10,840,177    9,076,246    142,081,015    133,971,135    125,954,896    1,066,091    1,475,373    819,034    59,064,531    28,419,749    27,876,850    15,599,450    6,728,889    1,930,936
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 

12


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 6: EARNINGS PER SHARE

 

Following is a conciliation between the average appraised ordinary stock in circulation and the average appraised diluted ordinary stock. The last one has been determined considering the possibility that the bearers of convertible bonds into company’s ordinary stock for up to an amount of US$ 50,000,000 mentioned in Note 14 of the basic financial statements, exercise their right to convert into stock the titles they bear.

 

     March 31,
2005


    March 31,
2004


 

Average appraised stock in circulation

   152,945,734     132,941,251  

Average appraised diluted ordinary stock

   321,214,392     321,214,392  
     March 31,
2005


    March 31,
2004


 

Earnings for the calculation of basic earnings per share

   62,151,295     10,249,604  

Exchange differences

   (1,677,679 )   3,276,531  

Financing expenses

   7,835,584     9,016,919  

Income tax

   (2,010,094 )   (4,012,888 )

Management fees

   (414,781 )   (828,056 )

Earnings for the calculation of diluted earnings per share

   65,884,325     17,702,110  

BASIC Earnings per share


   March 31,
2005


    March 31,
2004


 

Earnings

   62,151,295     10,249,604  

Number of shares

   152,945,734     132,941,251  

Earnings per share

   0.41     0.08  

DILUTED Earnings per share


   March 31,
2005


    March 31,
2004


 

Earnings

   65,884,325     17,702,110  

Number of shares

   321,214,392     321,214,392  

Earnings per share

   0.21     0.06  

 

13


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 7: SEGMENT INFORMATION

 

As of March 31, 2005:

 

Description


   Crops

   Beef Cattle

   Milk

   Feed Lot

   Others

   Without
especific
allocation


   Total

Sales

   15,030,047    27,112,319    2,217,786    1,762,486    3,749,554    —      49,872,192

Assets

   96,005,996    117,973,933    25,970,893    4,331,624    1,463,144    527,551,788    773,297,378

Liabilities

   5,414,854    580,566    201,135    1,311,996    517,011    220,998,882    229,024,444

Fixed asset additions

   1,932,891    1,302,443    2,688,570    119,954    63,029    2,871,796    8,978,683

Depreciation of fixed assets

   903,728    732,112    103,496    223,517    60,213    610,785    2,633,851

Income from related companies

   1,200,538    48,109    167,474    —      433,817    19,011,515    20,861,453

 

As of March 31, 2004:

 

Description


   Crops

   Beef Cattle

   Milk

   Feed Lot

   Others

    Without
especific
allocation


   Total

Sales

   14,129,908    19,754,421    2,511,919    5,821,723    3,691,983     —      45,909,954

Assets

   100,352,242    142,254,463    11,161,891    5,443,681    2,387,421     345,629,728    607,229,426

Liabilities

   2,656,481    1,564,278    38,381    1,489,425    340,724     159,568,673    165,657,962

Fixed asset additions

   5,385,676    2,610,290    43,370    388,795    38,357     517,957    8,984,445

Depreciation of fixed assets

   615,954    885,055    158,087    182,765    38,631     586,022    2,466,514

Amortization of intangible assets

   —      —      —      —      369,637     —      369,637

Income from related companies

   1,399,507    109,898    212,317    —      (494,759 )   1,859,342    3,086,305

 

NOTE 8: SALE OF FARMS

 

On July 29, 2003, Inversiones Ganaderas S.A. sold to Las Rejas S.A. three properties owned by it located in the district of Santo Domingo, department of La Paz, Province of Catamarca, with a total area of 5,997 hectares, for an amount of US$ 430,000, fully paid as of the date of execution of the deed. This sale generated a gain of Ps. 583,406 (Pesos Five hundred eighty three thousand four hundred and six).

 

14


Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Fixed Assets

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1, 2, and 3)

 

Schedule A

 

    

Value at
the
beginning
of the year
Pesos


  

Additions
and/or
transfers
Pesos


  

Deductions
and/or
transfers
Pesos


  

Value at
the end of
period/year
Pesos


   Depreciation

  

Net
carrying
value at
March 31,
2005 Pesos


  

Net
carrying
value at
June 30,
2004

Pesos


  

Net
carrying
value at
March 31,
2004

Pesos


Principal Account


               Rate %

   Accumulated
at the
beginning of
the year
Pesos


   Decrease
of the
period/
year
Pesos


   Current
period/
year
Pesos


   Accumulated
at the end of
period/year
Pesos


        

Real estate

   124,620,756    1,141,949    7,860,697    117,902,008    —      —      —      —      —      117,902,008    124,620,756    121,966,863

Wire fences

   5,253,545    —      97,814    5,155,731    3    1,228,003    12,132    126,982    1,342,853    3,812,878    4,025,542    4,068,609

Watering troughs

   3,712,614    999    22,251    3,691,362    5    1,032,887    5,563    134,751    1,162,075    2,529,287    2,679,727    2,693,354

Alfalfa fields and meadows

   2,169,597    316,797    —      2,486,394    12-25-50    1,443,928    —      338,240    1,782,168    704,226    725,669    792,285

Buildings and constructions

   5,676,309    118,987    —      5,795,296    2    1,980,142    —      75,700    2,055,842    3,739,454    3,696,167    3,627,885

Machinery

   8,432,336    94,992    174,379    8,352,949    10    5,722,682    125,516    588,775    6,185,941    2,167,008    2,709,654    2,914,996

Vehicles

   1,345,118    249,588    140,558    1,454,148    20    695,065    90,374    189,387    794,078    660,070    650,053    484,209

Tools

   193,361    1,451    3,919    190,893    10    130,040    2,351    10,732    138,421    52,472    63,321    68,750

Furniture and equipment

   1,048,119    71,876    —      1,119,995    10    669,664    —      73,674    743,338    376,657    378,455    398,064

Corral and leading lanes

   652,931    3,667    —      656,598    3    131,165    —      16,250    147,415    509,183    521,766    514,347

Roads

   1,191,255    2,145    161,927    1,031,473    10    668,531    83,651    76,469    661,349    370,124    522,724    553,933

Facilities

   7,485,195    47,227    35,010    7,497,412    10-20-33    3,589,058    1,412    598,203    4,185,849    3,311,563    3,896,137    2,989,208

Computer equipment

   1,393,473    229,247    297    1,622,423    20    1,110,169    296    141,835    1,251,708    370,715    283,304    290,051

Silo plants

   1,169,114              1,169,114    5    315,645         47,306    362,951    806,163    853,469    866,382

Feed Lot

   3,815,528    119,954    79,365    3,856,117         1,176,189    56,776    215,547    1,334,960    2,521,157    2,639,339    2,582,059

Constructions in progress

   11,585,564    6,378,344    20,151    17,943,757    —      —      —      —      —      17,943,757    11,585,564    8,032,344

Advances to suppliers

   174,826    848,172    738,514    284,484    —      —      —      —      —      284,484    174,826    2,010,909
    
  
  
  
       
  
  
  
  
  
  

Total at March 31, 2005

   179,919,641    9,625,395    9,334,882    180,210,154         19,893,168    378,071    2,633,851    22,148,948    158,061,206    —       
    
  
  
  
       
  
  
  
  
  
    

Total at June 30, 2004

   170,555,220    15,571,176    6,206,755    179,919,641         19,622,754    3,297,090    3,567,504    19,893,168         160,026,473     
    
  
  
  
       
  
  
  
       
    

Total at March 31, 2004

   170,555,220    9,205,874    5,055,580    174,705,514         19,622,754    2,238,002    2,466,514    19,851,266              154,854,248
    
  
  
  
       
  
  
  
            

 

15


Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Intangible Assets

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1, 2, and 3 )

 

Schedule B

 

    

Value at the
beginning of the
year and end of
the period
Pesos


   Amortization

  

Net carrying
value at
March 31,
2005

Pesos


  

Net carrying
value at
March 30,
2005

Pesos


  

Net carrying
value at
June 31,
2004

Pesos


       

Accumulated
at the beginning
of the year
Pesos


   Current year

  

Accumulated
at the end of
the period/year

Pesos


        

Principal Account


         Rate
%


   Amount
Pesos


           

Development expenditures

   1,410,368    1,410,368    33.33    —      1,410,368    —      —      —  

Organization expenses

   448,818    448,818         —      448,818    —      —      —  

Brands and patents

   18,938    18,938         —      18,938    —      —      —  
    
  
       
  
  
  
  

Total at March 31, 2005

   1,878,124    1,878,124         —      1,878,124    —            
    
  
       
  
  
  
    

Total at June 30, 2004

   1,878,124    1,508,487         369,637    1,878,124         —       
    
  
       
  
       
  

Total at March 31, 2004

   1,878,124    1,508,487         369,637    1,878,124              —  
    
  
       
  
            

 

16


Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Investments

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1, 2, and 3)

 

Schedule C

 

                              INFORMATION ON THE ISSUER

       

Value at

March 31,
2005

Pesos


   

Value at

June 30,
2004
Pesos


   

Value at

March 31,
2004
Pesos


            Latest financial statements

Type and characteristics of the securities


  Amount

        Market
value
Pesos


  Principal activity

 

Capital

Pesos


  Income
for the period
Pesos


  Shareholders’
Equity
Pesos


Current Investments

                                         

Mutual Funds

                                         

Fondo Bony Hamilton in dollars

  32,534,579   93,601,984     —       —       2,877000                

Fondo especial Banco Rio in pesos

  1,463,316   206,901     57,122     —       0,141392                

Fondo plazo fijo Banco Rio in dollars

  1,862   2,523     4,081     4,030     1,354995                
       

 

 

                   
        93,811,408     61,203     4,030                      
       

 

 

                   

Notes and Convertible Bonds

                                         

Interest of Convertible Bonds 2007 -IRSA (US$) Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                         

IRSA Inversiones y Representaciones S. A.

      3,338,226     1,388,504     4,412,090                      

Bonos Global 2010

  110,000   95,732     97,096     99,264     0,870291                

Bocon Pro 1

  157,647   630     630     630     0,003996                

Bonos Arg Discount

  1,500,000   2,445,324     —       —       1,630216                

Letes

  356,190   320,571     —       —       0,900000                
       

 

 

                   
        6,200,483     1,486,230     4,511,984                      
       

 

 

                   

Deposits in foreign banks in dollars

      648,699     327,564     3,534,471                      
       

 

 

                   
        648,699     327,564     3,534,471                      
       

 

 

                   

Total current investments

      100,660,590     1,874,997     8,050,485                      
       

 

 

                   

Non-current investments

                                         

Related companies Law N° 19,550 Section 33

                                         

AGRO-URANGA S.A.

                        unlisted   Agricultural and livestock   2,500,000   4,241,002   14,181,944

Shares

  893,069   4,932,749     5,230,031     5,425,695                      

Contribution on account of future subscriptions of shares

      7,865     7,865     7,865                      

Higher property value

      11,179,150     11,179,150     11,179,150                      
       

 

 

                   
        16,119,764     16,417,046     16,612,710                      
       

 

 

                   

IRSA Inversiones y Representaciones S.A

                                         

Shares (Note 14)

  68,915,391   287,248,351     244,002,522     193,533,755     listed   Real state   338,372,526   78,202,410   1,194,535,346
       

 

 

                   
        287,248,351     244,002,522     193,533,755                      
       

 

 

                   
    Subtotal   303,368,115     260,419,568     210,146,465                      
       

 

 

                   

Other Investments

                                         

Convertible Bonds 2007 - IRSA (US$)

                  142,837,462                      

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                         

IRSA Inversiones y Representaciones S.A.

  36,538,897   106,583,963     132,941,891     —                        

Coprolán

      20,717     20,717     20,717     unlisted                
       

 

 

                   
    Subtotal   106,604,680     132,962,608     142,858,179                      
       

 

 

                   

Goodwill

                                         

Goodwill

      164,919     659,676     824,595                      

IRSA negative goodwill

      (43,485,057 )   (26,529,022 )   (21,018,232 )                    
       

 

 

                   
    Subtotal   (43,320,138 )   (25,869,346 )   (20,193,637 )                    
       

 

 

                   

Total non-current investments

      366,652,657     367,512,830     332,811,007                      
       

 

 

                   

 

17


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Allowances

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1, 2, and 3)

 

Schedule E

 

Item


   Opening
balances
Pesos


   Decreases (1)
Pesos


    Deductions
Pesos


    Value at
March 31,
2005
Pesos


   Value at
June 30,
2004
Pesos


   Value at
March 31,
2004
Pesos


Deducted from assets

                               

Defaulting debtors

   412,067    (2,826 )   (38,532 )   370,709    412,067    384,661

Included in liabilities

                               

Allowances

                               

For pending lawsuits (2)

   38,327    —       —       38,327    38,327    38,327
    
  

 

 
  
  

Total at March 31, 2005

   450,394    (2,826 )   (38,532 )   409,036          
    
  

 

 
         

Total at June 30, 2004

   517,452    (67,058 )   —            450,394     
    
  

 

      
    

Total at March 31, 2004

   517,452    (94,464 )   —                 422,988
    
  

 

           

 

(1) Included in Statement of Income

 

(2) Included in Non-Current Other debts

 

18


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Cost of sales

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

(Notes 1, 2, and 3)

 

Schedule F

 

    Crops

    Beef cattle

    Milk

    Feed Lot

    Others

    Total

 
    March 31,
2005
Pesos


    March 31,
2004
Pesos


    March 31,
2005
Pesos


    March 31,
2004
Pesos


    March 31,
2005
Pesos


    March 31,
2004
Pesos


    March 31,
2005
Pesos


    March 31,
2004
Pesos


    March 31,
2005
Pesos


    March 31,
2004
Pesos


    March 31, 2005
Pesos


    March 31, 2004
Pesos


 

Inventories at the beginning of the year

                                                                                   

Beef cattle

  —       —       59,418,980     48,854,176     4,150,630     2,294,684     —       —       —       —       63,569,610           51,148,860        

Crops

  8,639,910     6,301,776     —       —       —       —       —       —       —       —       8,639,910           6,301,776        

Unharvested crops

  1,603,897     1,112,230     —       —       —       —       —       —       —       —       1,603,897           1,112,230        

Seeds and fodder

  —       —       134,870     106,386     103,508     58,969     —       —       3,138     —       241,516           165,355        

Materials

  3,842,213     1,222,255     —       —       44,982     33,362     601,626     145,137     197,822     246,069     4,686,649           1,646,823        
   

 

 

 

 

 

 

 

 

 

 

       

     
    14,086,026     8,636,261     59,553,850     48,960,562     4,299,120     2,387,015     601,626     145,137     200,960     246,069           78,741,582           60,375,044  

Holding results

  —       —       9,062,762     1,523,761     259,170     388,308     —       —       —       —             9,321,932           1,912,069  

Commodities market results

  2,924,090     (2,132,913 )   —       —       —       —       4,528     —       —       —             2,928,618           (2,132,913 )

Transfer of Inventories to expenses

  (149,403 )   (164,529 )   27,851     21,777     —       —       (65,938 )   (65,503 )   —       —             (187,490 )         (208,255 )

Transfer of Inventories to fixed assets

  (572,364 )   (220,039 )   —       —       —       —       —       —       (74,348 )   (1,390 )         (646,712 )         (221,429 )

Transfer of Unharvested crops to expenses

  (11,608,487 )   (5,847,565 )   (400,174 )   (260,344 )   (480,058 )   (260,405 )   —       —       (370,876 )   (421,992 )         (12,859,595 )         (6,790,306 )

Recovery of Inventories

  —       —       150,440     184,161     (150,440 )   (184,161 )   —       —       —       —             —             —    

Purchases

  27,919,030     15,876,757     4,599,061     12,891,041     929,239     827,041     660,306     5,095,578     565,247     482,725           34,672,883           35,173,142  

Operating expenses (Schedule H)

  11,322,950     7,866,730     12,912,144     8,185,776     1,459,122     1,295,561     571,786     539,614     835,014     876,174           27,101,016           18,763,905  

Less:

                                                                                   

Inventories at the end of the period

                                                                                   

Beef cattle (1)

  —       —       (63,474,828 )   (57,471,806 )   (4,968,440 )   (4,021,252 )   —       —       —       —       (68,443,268 )         (61,493,058 )      

Crops

  (12,077,749 )   (8,272,900 )   —       —       —       —       —       —       —       —       (12,077,749 )         (6,272,900 )      

Unharvested crops

  (17,777,895 )   (8,515,388 )   —       —       —       —       —       —       —       —       (17,777,895 )         (8,515,388 )      

Seeds and fodder

  —       —       (271,597 )   (189,957 )   (228,890 )   (92,564 )   —       —       —       (3,215 )   (500,487 )         (285,736 )      

Materials

  (2,288,977 )   (2,664,094 )   —       —       (49,926 )   (41,814 )   (170,520 )   (616,075 )   (269,983 )   (217,389 )   (2,779,406 )   (101,578,805 )   (3,539,372 )   (80,106,454 )
   

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

  11,777,221     6,562,370     22,159,509     13,844,971     1,068,897     297,729     1,601,788     5,098,751     886,014     960,982           37,493,429           26,764,803  
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Foreign currency assets and liabilities

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1, 2, and 3)

 

Schedule G

 

     March 31, 2005

   June 30, 2004

   March 31, 2004

Item


  

Type and amount

of foreign

currency


  

Current

exchange

rate

Pesos


  

Amount in

local currency
Pesos


  

Type and amount

of foreign

currency


  

Amount in

local currency

Pesos


  

Type and amount

of foreign

currency


  

Amount in

local currency
Pesos


Current Assets

                                        

Cash and banks

                                        

Cash and banks

   U$S 6,138,808    2,88    17,661,351    U$S 2,475,600    7,223,801    U$S 3,073,466    8,681,273

Investments:

                                        

Mutual funds

   U$S 32,535,456    2,88    93,604,507    U$S 1,399    4,081    U$S 1,429    4,030

Interest of Convertible Bonds 2007-IRSA

                                        

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                        

IRSA Inversiones y Representaciones Sociedad Anonima

   U$S 1,144,404    2,92    3,338,226    U$S 469,406    1,388 504    U$S 1,542,689    4,412,090

Deposits in local banks

   U$S —      2,88         U$S 112,256    327,564    U$S —      —  

Deposits in foreign banks

   U$S 225,478    2,88    648,699    U$S —           U$S 1,253,359    3,534,471

Trade accounts receivable

                                        

Accounts receivable

   U$S 368,975    2,88    1,061,542    U$S 1,365    3,983    U$S 19,570    55,186

Other receivables and prepaid expenses:

                                        

Secured by mortgages

   U$S 2,837,976    2,88    8,164,858    U$S 354,351    1,033,997    U$S 352,058    992,304

Guarantee deposits

   U$S 678,333    2,88    1,951,565    U$S 750,171    2,188,998    U$S 1,432,895    4,040,763

Non-Current Assets

                                        

Investments:

                                        

Convertible Bonds 2007 - IRSA

                                        

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                        

IRSA Inversiones y Representaciones Sociedad Anonima

   U$S 36,538,897    2,92    106,583,963    U$S 44,943,168    132,941,891    U$S 49,943,168    142,837,462
    

  
  
  

  
  

  

Total Assets

   U$S 80,468,327         233,014,711    U$S 49,107,716    145,112,819    U$S 57,623,634    164,558,079
    

       
  

  
  

  

Current liabilities

                                        

Trade account payable:

                                        

Suppliers

   U$S 793,720    2,92    2,315,281    U$S 383,048    1,133,055    U$S 409,685    1,171,699

Accrual for other expenses

   U$S 607,354    2,92    1,771,652    U$S 499,662    1,477,683    U$S 153,420    438,782

Loans:

                                        

Interest of Convertible Bonds 2007

   U$S 503,296    2,92    1,468,115    U$S 199,202    589,239    U$S 1,338,956    1,701,548

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                        

Shareholders

   U$S 745,205    2,92    2,173,764    U$S 250,176    740,021    U$S 722,206    2,116,063

Directors

   U$S 1,045    2,92    3,049    U$S 1,124    3,324    U$S 4,028    11,802

Other debts

                                        

Advances from customers

   U$S 2,704,559    2,92    7,889,200    U$S 1,500,000    4,432,500    U$S —      —  

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                        

Cactus Feeders Inc

   U$S 13,961    2,92    40,724    U$S 13,263    39,231    U$S 34,817    102,015

Non-current liabilities

                                        

Loans:

                                        

Convertible Bonds 2007

   U$S 16,177,382    2,92    47,189,423    U$S 19,072,528    56,416 538    U$S 43,347,480    55,086,045

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                        

Shareholders

   U$S 23,953,025    2,92    69,870,974    U$S 23,953,025    70,853,048    U$S 23,360,769    68,505,652

Directors

   U$S 33,600    2,92    98,011    U$S 107,600    318,281    U$S 130,408    382,096
    

  
  
  

  
  

  

Total Liabilities

   U$S 45,533,147         132,820,193    U$S 45,979,628    136,002,920    U$S 69,521,769    129,515,702
    

       
  

  
  

  

 

US$: US dollars

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

 

Unaudited Consolidated Information submitted in compliance with Section 64, subsection B of Law N0 19,550

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

(Notes 1, 2, and 3)

 

Schedule H

 

     Total    Operating Expenses

   Expenses

   Total

Items


  

March 31,

2005

Pesos


  

Total

Pesos


  

Crops

Pesos


  

Beef cattle

Pesos


  

Milk

Pesos


  

Feed Lot

Pesos


  

Others

Pesos


  

Selling

Pesos


  

Administrative

Pesos


  

March 31,

2004

Pesos


Directors’ fees

   90,169    —      —      —      —      —      —      —      90,169    7,597

Fees and payments for services

   995,406    213,180    7,020    133,384    24,827    —      47,949    —      782,226    1,060,621

Salaries and wages

   4,735,448    2,405,679    427,540    1,298,210    249,831    —      430,098    47,672    2,282,097    5,178,326

Social security contributions

   830,802    397,974    144,319    153,042    18,689    —      81,924    9,080    423,748    619,842

Taxes, rates and contributions

   376,881    322,850    102,669    187,668    23,748    —      8,765    —      54,031    366,219

Gross sales taxes

   410,200    —      —      —      —      —      —      410,200    —      402,810

Office and administrative expenses

   598,415    116,666    —      2,903    —      —      113,763    1,836    479,913    303,655

Bank commissions and expenses

   22,051    22,051    4,269    4,739    307    —      12,736    —      —      20,554

Depreciation of fixed assets

   2,633,851    2,403,789    1,140,480    841,292    151,360    204,770    65,887    —      230,062    2,466,514

Vehicle and travelling expenses

   491,224    267,105    104,692    129,482    10,838    —      22,093    16,376    207,743    392,613

Spare parts and repairs

   1,022,348    1,017,992    541,978    391,020    68,984    —      16,010    —      4,356    794,945

Insurance

   193,552    52,828    24,178    20,435    1,760    —      6,455    —      140,724    240,218

Employees’ benefits

   276,421    200,002    39,780    141,097    6,827    —      12,298    144    76,275    120,276

Amortization of intangible assets

   —      —      —      —      —      —      —      —      —      369,637

Livestock expenses (1)

   10,338,566    9,474,714    —      9,474,714    —      —      —      863,852    —      5,628,308

Dairy farm expenses (2)

   896,496    888,771    —      —      888,771    —      —      7,725    —      776,075

Agricultural expenses (3)

   11,104,307    8,581,038    8,581,038    —      —      —      —      2,523,269    —      6,875,184

Feed lot expenses

   367,016    367,016    —      —      —      367,016    —      —      —      365,987

Silo expenses

   97,032    97,032    97,032    —      —      —      —      —      —      233,522

Coal expenses

   —      —      —      —      —      —      —      —      —      10,329

Firewood expenses

   —      —      —      —      —      —      —      —      —      497

FyO expenses

   52,616    6,750    —      —      —      —      6,750    45,866    —      39,301

General expenses

   274,105    265,579    107,955    134,158    13,180    —      10,286    374    8,152    424,078

Contributions and services

   —      —      —      —      —      —      —      —      —      35,183
    
  
  
  
  
  
  
  
  
  

Total at March 31, 2005

   35,806,906    27,101,016    11,322,950    12,912,144    1,459,122    571,786    835,014    3,926,394    4,779,496    —  
    
  
  
  
  
  
  
  
  
  

Total at March 31, 2004

        18,763,905    7,866,780    8,185,776    1,295,561    539,614    876,174    3,140,643    4,827,743    26,732,291
         
  
  
  
  
  
  
  
  

 

(1) Includes cattle food, additives, lodging, animal health and others.

 

(2) Includes cattle food, additives, lodging, animal health and others.

 

(3) Includes seeds, agrochemicals, irrigation, services hired, leases and others.

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Balance Sheet as at March 31, 2005, June 30, 2004 and March 31, 2004

 

    

March 31, 2005

(Notes 1 and 2)

Pesos


   

June 30, 2004

(Notes 1 and 2)

Pesos


   

March 31, 2004

(Notes 1 and 2)

Pesos


 

ASSETS

                  

Current Assets

                  

Cash and banks (Note 8.a.)

   18,162,422     12,522,961     9,732,714  

Investments (Note 8.b.)

   99,805,081     1,490,311     7,555,974  

Trade accounts receivable (Note 8.c.)

   5,330,354     3,577,620     3,708,165  

Other receivables and prepaid expenses (Note 8.d.)

   16,070,228     15,915,028     11,922,144  

Inventories (Note 8.e.)

   46,258,634     34,330,261     36,184,984  
    

 

 

Total Current Assets

   185,626,719     67,836,181     69,103,981  
    

 

 

                    
                    

Non-Current Assets

                  
                    

Other receivables and prepaid expenses (Note 8.d.)

   5,156,243     4,138,826     3,355,843  

Inventories (Note 8.e.)

   49,804,357     40,982,536     40,691,688  

Investments on controlled and related companies (Note 8.b.)

   318,339,764     274,977,554     224,316,655  

Other investments (Note 8.b.)

   106,604,680     132,962,608     142,858,179  

Fixed assets, net (Schedule A)

   149,675,795     151,547,192     146,413,833  
    

 

 

Subtotal Non-Current Assets

   629,580,839     604,608,716     557,636,198  
    

 

 

Goodwill (Note 8.b.)

   (43,320,138 )   (25,869,346 )   (20,193,637 )
    

 

 

Total Non-Current Assets

   586,260,701     578,739,370     537,442,561  
    

 

 

Total Assets

   771,887,420     646,575,551     606,546,542  
    

 

 

LIABILITIES                   
Current Liabilities                   
Debts:                   

Trade accounts payable (Note 8.f.)

   10,720,217     11,051,036     8,367,425  

Loans (Note 8.g.)

   26,199,626     8,090,261     3,829,413  

Salaries and social security payable (Note 8.h.)

   913,151     1,359,719     729,828  

Taxes payable (Note 8.i.)

   23,444,691     1,722,271     1,276,818  

Other debts (Note 8.j.)

   16,646,149     8,170,624     3,563,540  
    

 

 

Total Debts

   77,923,834     30,393,911     17,767,024  
    

 

 

Total Current Liabilities

   77,923,834     30,393,911     17,767,024  
    

 

 

                    
Non-Current Liabilities                   

Loans (Note 8.g.)

   115,881,389     125,880,874     122,125,483  

Taxes payable (Note 8.i.)

   33,961,761     25,132,570     25,130,190  

Other debts (Note 8.j.)

   203,432     —       —    
    

 

 

Total Non-Current Liabilities

   150,046,582     151,013,444     147,255,673  
    

 

 

Total liabilities    227,970,416     181,407,355     165,022,697  
    

 

 

SHAREHOLDERS’ EQUITY (as per corresponding statement)    543,917,004     465,168,196     441,523,845  
    

 

 

Total Liabilities and Shareholders’ Equity    771,887,420     646,575,551     606,546,542  
    

 

 

 

The accompanying notes and schedules are an integral part of these financial statements.

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Statement of Income

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

 

     March 31, 2005
(Notes 1 and 2)
Pesos


    March 31, 2004
(Notes 1 and 2)
Pesos


 

Sales

            

Crops

   15,030,047     14,129,908  

Beef cattle

   26,261,038     18,579,458  

Milk

   2,217,786     2,511,919  

Other

   2,995,176     3,128,857  
    

 

Total Sales

   46,504,047     38,350,142  
    

 

Cost of sales (Schedule F)

            

Crops

   (11,777,221 )   (6,565,500 )

Beef cattle

   (22,035,238 )   (13,018,537 )

Milk

   (1,068,897 )   (297,729 )

Other

   (1,161 )   (801 )
    

 

Total cost of sale

   34,882,517 )   (19,882,567 )
    

 

Gross income

   11,621,530     18,467,575  
    

 

Selling expenses (Schedule H)

   (3,760,424 )   (2,995,296 )

Administrative expenses (Schedule H)

   (4,347,610 )   (4,366,111 )

Net gain on sale of farms

   7,657,263     1,085,345  

Gain from inventory holdings (Schedule F)

   8,634,643     1,792,625  
    

 

Operating income

   19,805,414     13,984,138  
    

 

Financial results

            

Generated by assets:

            

Exchange differences and discounts

   (4,720,303 )   4,550,455  

Interest income

   420,120     209,032  

Bad debts (Schedule E)

   2,826     94,464  

Reference stabilization index (CER)

         (302,116 )

Tax on debts and credits

   (962,665 )   (724,422 )

Holding results and operations of stocks and bonds

            

Result from sale of Convertible Bonds

   68,754,172     —    

Convertible Bonds purchase interest

   7,994,072     8,697,554  

Others

   126,915     13,620  
    

 

     71,615,137     12,538 587  
    

 

Generated by liabilities:

            

Financial expenses

            

Convertible Bonds issued interest (Note 7)

   (7,419,382 )   (8,071,022 )

Others

   (1,726,096 )   (1,049,142 )

Exchange differences and discounts

   1,906,481     (3,206,303 )
    

 

     (7,238,997 )   (12,326,467 )
    

 

Other income and expenses:

            

Gains from others fixed assets sales

   40,175     301,995  

Others

   (3,320,033 )   (5,358 )
    

 

     (3,279,858 )   296,637  
    

 

Gain from controlled and related companies

   21,172,218     3,338,813  

Management fees (Note 5)

   (6,905,699 )   (1,138,846 )
    

 

Income before income tax

   95,168,215     16,692,862  
    

 

Income tax expense (Note 6)

   (33,016,920 )   (6,443,258 )
    

 

Net income for the period

   62,151,295     10,249,604  
    

 

 

The accompanying notes and schedules are an integral part of these financial statements.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Statement of Changes in Shareholders’ Equity

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

(Notes 1 and 2)

 

     Shareholders’ contributions

   Retained
earnings


  

Unappropriated

earnings

Pesos


   

Total at

March 31,

2005
Pesos


   

Total at

March 31,

2004
Pesos


 
     Capital (Note 3)

   

Inflation
adjustment

of Common
stock
Pesos


            

Legal

reserve
Pesos


      

Items


  

Common
stock

Pesos


   Treasury
stock
Pesos


       Paid-in capital
Pesos


   Total
Pesos


         

Balances at the beginning of the year

   150,532,819    240,000     166,218,124    106,323,100    423,314,043    6,087,440    35,766,713     465,168,196     391,799,125  

Subscription of incentive plan (Note 12)

   240,000    (240,000 )             —           240,000     240,000     327,437  

Conversion of bonds in common stock (Note 13)

   5,847,066               2,904,713    8,751,779               8,751,779     18,753,704  

Exercise of Warrants (Note 13)

   5,914,585               4,631,149    10,605,734               10,605,734     21,893,975  

Appropriation of profits resolved by Shareholders’ Meeting held on October 22, 2004

                                                 

Increase in legal reserve

                             1,605,151    (1,605,151 )   —       —    

Cash dividends

                                  (3,000,000 )   (3,000,000 )   (1,500,000 )

Net income for the period

                                  62,151,295     62,151,295     10,249,604  
    
  

 
  
  
  
  

 

 

Balances at March 31, 2005

   162,534,470    —       166,218,124    113,918,962    442,671,556    7,692,591    93,552,857     543,917,004     —    
    
  

 
  
  
  
  

 

 

Balances at March 31, 2004

   149,453,998    245,000     166,218,124    105,610,988    421,528,110    6,087,440    13,908,295           441,523,845  
    
  

 
  
  
  
  

       

 

The accompanying notes and schedules are an integral part of these financial statements.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

24


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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Statement of Cash Flow

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

 

     March 31, 2005
(Notes 1 and 2)
Pesos


    March 31, 2004
(Notes 1 and 2)
Pesos


 

Changes in funds

            

Funds at the beginning of the year

   12,527,042     20,739,345  

Funds at the end of the period

   111,767,020     12,776,704  
    

 

Net increase (decrease) in funds

   99,239,978     (7,962,641 )

Causes of changes in funds

            

Operation activities

            

Income for the period

   62,151,295     10,249,604  

Liabilities interest

   7,319,715     8,071,022  

income tax

   33,016,920     6,443,258  

Adjustments made to reach net cash flow from operation activities

            

Results from interest in controlled and related companies

   (21,172,218 )   (3,338,813 )

Increase in allowances and reserves

   9,111,032     2,094,519  

Depreciation

   2,234,423     2,113,909  

Results from inventory holdings

   (8,634,649 )   (1,792,625 )

Financial results

   (6,981,621 )   (6,925,644 )

Result from sale of fixed assets

   (7,697,444 )   (1,387,340 )

Result from sale of permanent investments

   (68,754,172 )   —    

Changes in operating assets and liabilities

            

Decrease in current investments

   2,596,816     5,707,778  

(Increase) decrease in trade accounts receivable

   (1,752,734 )   2,508,486  

Decrease (increase) in other receivables

   6,466,525     (9,544,056 )

Increase in inventories

   (12,762,257 )   (18,270,995 )

Decrease in social securities charges & taxes payable and advances to customers

   (2,911,877 )   (4,023,370 )

(Decrease) increase in trade accounts payable

   (2,536,152 )   186,537  

Dividends collected

   1,011,469     1,146,595  

Increase (decrease) in other debts

   1,670,362     (1,684,145 )
    

 

Net funds applied to operation activities

   (7,624,567 )   (8,445,288 )
    

 

Investment activities

            

Decrease (increase) in permanent investments

   93,528,147     (1,199,670 )

Increase in interest in related companies

   (6,349,709 )   (8,037,546 )

Acquisition and upgrading of fixed assets

   (8,650,536 )   (8,554,699 )

Collection of receivables related to the sale of fixed assets

   1,127,138     1,008,000  

Sale of fixed assets

   8,554,120     3,518,108  
    

 

Net funds provided by (applied to) investment activities

   88,209,160     (13,265,807 )
    

 

Financing activities

            

Exercise of Warrants

   10,605,734     21,893,975  

Dividends paid

   (3,000,000 )   (1,500,000 )

Exercise of rights offering on treasury stock

   240,000     327,437  

Increase in financial loans

   44,356,365     —    

Decrease in financial loans

   (33,546,714 )   (5,667,108 )

Issuance expenses of Convertible Bonds

   —       (1,305,850 )
    

 

Net funds provided by financing activities

   18,655,385     13,748,454  
    

 

Net increase (decrease) in funds

   99,239,978     (7,962,641 )

Items not involving changes in funds

            

Transfer of inventory to fixed assets

   646,712     221,429  

Increase in other receivables by sale of fixed assets

   8,077,546     —    

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

   8,751,779     18,753,704  

Complementary information

            

Interest paid

   5,107,038     5,667,108  

Income tax paid

   244,857     727,313  

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

 

NOTE 1: STANDARDS ACCOUNTING

 

Below is a description of the most relevant accounting standards used by the Company in the preparation of these Financial Statements, which have been applied on a consistent basis from the previous Fiscal Year.

 

  a. Presentation standards

 

These financial statements are stated in Argentine pesos, and have been prepared in accordance with the disclosure and valuation accounting standards contained in the Technical Resolutions issued by the Federación Argentina de Consejos Profesionales de Ciencias Económicas, as approved, with resolutions issued by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires and the Comisión Nacional de Valores.

 

  b. New Accounting Standards

 

The Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires enacted the following technical resolutions: N° 16: “Conceptual regime for professional accounting regulations”; N° 17: “Professional accounting regulations: development of matters of general application”, N° 18: “Professional accounting regulations: development of some matters of particular application” and N° 19 “ Modifications to technical resolutions N° 6, 8, 9, 11 and 14” and N° 20 “Derivative instruments and hedging transactions”, through Resolutions C 238/01, C 243/01, C 261/01, C 262/01 and C 187/02, respectively; establishing that such technical resolutions and the modifications incorporated, will be in force for Fiscal Years initiated as from July 1, 2002 (other than Technical Resolution No. 20, which shall become effective for fiscal years beginning as from January 1, 2003).

 

The Comisión Nacional de Valores, through Resolution N° 434/03 has adopted such technical resolutions with some exceptions and modifications, which have been in force for fiscal years initiated as from January 1, 2003.

 

The main changes basically result from the registration of income tax under the deferred tax method, as concerns agreements involving derivative instruments at their current value and the valuation of receivables and payables with no stated rate at their discounted value.

 

As at February 19, 2003, the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires, enacted Technical Resolution N° 21 “Proportional value- merge of financial statements- information to provide on related parties” through Resolution M.D. N° 5/2003.

 

The above mentioned Technical Resolution and the amendments introduced became effective for fiscal years ended as from April 1, 2003. Furthermore, The Comisión Nacional de Valores has adopted such Technical Resolution, through Resolution Nª 459/04 introducing some modifications, which will be in force for fiscal years started as from April 1, 2004, consequently the Company has considered their application.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 1: (Continued)

 

On January 12, 2005, the Professional Council of Economic Sciences of the City of Buenos Aires approved Technical Resolution No. 22, “Professional accounting rules: agricultural business” under its Resolution M.D. No. 01/2005. Such Technical Resolution will become effective for fiscal years starting as from July 1, 2005, and to date it has not been approved by the Comisión Nacional de Valores.

 

Financial statements corresponding to the nine-month economic periods ended to March 31, 2005 and 2004 have not been audited yet. The management believes they include all necessary settlements to reasonably show the results of each period. Results for the nine-month economic periods ended to March 31, 2005 and 2004 do not necessarily reflect the proportion of the company’s result for such complete years.

 

  c. Accounting for inflation

 

The Company’s financial statements have been prepared in accordance with Resolution M.D. 3/02 of the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires, which has established the application of Technical Resolution No. 6, as amended by Technical Resolution No. 19 of the Federación Argentina de Consejos Profesionales de Ciencias Económicas, as from fiscal years or interim periods ended on or after March 31, 2002.

 

On March 25, 2003, the Poder Ejecutivo Nacional issued Decree No. 664 establishing that financial statements for fiscal years ended as from that date should be stated in nominal currency. Therefore, in accordance with Resolution No. 441 issued by the Comisión Nacional de Valores on April 8, 2003, the Company discontinued restatement of its financial statements effective March 1, 2003. This criteria does not comply with Resolution M.D. 041/2003, enacted by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires, by means of which the restatement of financial statements as of October 1, 2003 is no longer compulsory. However, as of March 31, 2005, this deviation did not have a material effect on the Company’s financial statements.

 

As a consequence of the above, the initial balances at the Company’s financial statements are presented in constant currency as of February 28, 2003, having considered the accounting measurements restated by the changes in the purchasing power of the currency until interruption of the adjustment and those arising in the period of stability, restated into currency of December 2001. Transactions subsequent to February 28, 2003 have been recorded at their historical values.

 

The coefficients prepared based on the domestic wholesale price index, published by the Instituto Nacional de Estadísticas y Censos, have been applied for purposes of the abovementioned restatement of comparative information.

 

  d. Comparative Information

 

For comparison purposes, reclassifications have been made as of March 31, 2004 and June 30, 2004.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

 

  a. Use of estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for the allowance for conversion of convertible bonds into shares of stock, doubtful accounts, depreciation, amortization, impairment of current and non-current assets, income taxes, deferred liabilities and allowances for contingencies, accrual for expenses and assets’ recoverable value. Actual results could differ from those estimates.

 

  b. Local currency assets and liabilities

 

The local currency assets and liabilities are stated at period-end nominal currency.

 

  c. Foreign currency assets and liabilities

 

Assets and liabilities denominated in foreign currency have been valued at the amount of such currency as of the closing of the financial statements, converted at the buying and selling exchange rate, respectively, prevailing at year-end.

 

  d. Temporary investments

 

Mutual funds are carried at market value as of period-end.

 

The Argentine debt bonds were valued at incurred cost.

 

The AR Discount bonds relating to the sovereign debt exchange launched by the Argentine government of its defaulted securities were valued at their purchase, rather than their listing, value because the issuance of such bonds, originally scheduled for March 31, 2005, has been suspended as a consequence of a legal action pending before the Second District Court of Appeals of the State of New York, United States of America.

 

  e. Trade accounts receivable and payable

 

Trade accounts receivable and payable have been valued at their cash price estimated at the time of the transaction, plus interest and implied financial components accrued on the basis of the internal rate of return determined at such time, provided they are significant.

 

  f. Credits and loans

 

Credits and loans have been valued in accordance with the sum of money delivered and received, respectively, net of transaction costs, plus financial results accrued on the basis of the rate estimated at such time as of period-end.

 

28


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

  g. Futures and Options

 

Futures relate to cereal commitments deliverable at a previously agreed price (see Note 4) and bullions traded in the Chicago market.

 

Premiums collected or paid correspond to options bought or written.

 

The assets or liabilities originated in derivatives instruments have been valued at their market value at the closing of the period.

 

Differences generated by the application of the above mentioned valuation criteria to assets and liabilities from derivative instruments have been recognized under net income.

 

  h. Other receivables and payables

 

Other receivables and payables have been valued on the basis of the agreed values plus interest accrued as of the closing of the financial statements.

 

Other receivables and payables in foreign currency have been valued at their amount in such currency at the fiscal period-end closing date, converted to the buyer and seller exchange rate, respectively, prevailing at the fiscal period-end closing date.

 

  i. Balances with related parties

 

Receivables and payables with related parties have been valued in accordance with the conditions agreed between the parties involved.

 

  j. Inventories

 

  1. Livestock for raising and grazing cattle have been stated at their market value at the end of the period, net of estimated selling expenses. The livestock for dairy production and other purposes not related to direct sale over the next 12 months were valued at replacement cost.

 

  2. Crops: at their quoted market value at the end of the period, less estimated sale expenses.

 

  3. Sown lands: Sown lands are valued at the replacement cost of the supplies used, plus expenses accrued as of the closing of the financial statements.

 

  4. The remaining inventories were valued at replacement value.

 

The carrying values of inventories, which are determined as discussed above, do not exceed their estimated recoverable values at the end of the period.

 

29


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

  k. Long term investments in other companies

 

  1. Investments in subsidiaries and affiliates

 

The investments in subsidiaries and affiliates in which the Company has significant influence have been accounted for under the equity method, as required by Technical Resolution No. 21 of the Federación Argentina de Consejos Profesionales de Ciencias Económicas approved by Comisión Nacional de Valores.

 

Holdings at March 31, 2005 are as follows:

 

Subsidiaries and affiliates


   % Equity
interest


Inversiones Ganaderas S.A.

   99.99

Futuros y Opciones.Com S.A.

   70.00

Cactus Argentina S.A.

   50.00

Agro Uranga S.A.

   35.72

IRSA Inversiones y

    

Representaciones Sociedad Anónima (Note 14)

   26.35

 

Consolidated financial statements with Inversiones Ganaderas S.A., Futuros y Opciones.Com and Cactus Argentina S.A. in proportional consolidation of 50% at March 31, 2005 and 2004 are presented as complementary information.

 

Current valuations and economic conditions reduce the risks inherent to long-term investment opportunities and increase the possibility of obtaining significant return in the long term. In view of these circumstances: (i) the value of the investment was set at market value; (ii) the value of the investment was calculated by the equity method of accounting; and (iii) the difference between (i) and (ii) was recognized as negative goodwill to be amortized over 20 years.

 

The Company records under Negative Goodwill the difference between the prices of the conversions of Convertible Bonds and/or Warrants into IRSA’s shares and the value assigned according to the calculation of the proportional equity value. Such amount is not subject to depreciation as it is impacted by the results from dilutions of third-party holders of Convertible Bonds of IRSA under the same headings.

 

As of March 31, 2005, the investment in Futuros y Opciones.Com S.A., valued on the basis of the proportional equity method (RT21), is disclosed as “Pending Contributions” under Other Liabilities because the equity of such Company for purposes of computing the investment is negative as of March 31, 2005. This situation will be reverted with the subsequent irrevocable contributions to be made by the shareholders.

 

30


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

  2. Other Investments

 

    Investments in debt securities

 

IRSA’s Convertible Bonds were valued taking into account the amount existing at period-end in dollars, at the sellers’ exchange rate plus interest accrued as of the closing date of these financial statements.

 

    Other investments

 

The remaining investments correspond to non-listed securities, which were valued at their restated cost as of February 28, 2003 (Note 1.c.).

 

    Goodwill

 

The goodwill relating to the purchase of the subsidiary Futuros y Opciones.Com S.A. has been valued at its restated cost as of February 28, 2003, calculated as the difference between the price paid for such investment and its equity value calculated at the time of purchase, which was also restated as of that date (Note. 1.c.).

 

Depreciation is calculated in accordance with the estimated useful life, which is 5 years and has been classified under Result from interest in subsidiaries and related companies in the statement of income.

 

  l. Fixed assets

 

    Purchase value:

 

Valued at cost restated into period-end currency applying the coefficients mentioned in Note 1. c., based on the corresponding dates of origin.

 

    Depreciation

 

Calculated by the straight-line method based on the estimated useful lives of the assets as from the period of addition.

 

    The carrying value

 

The carrying value of fixed assets does not exceed their estimated recoverable value at the end of the period.

 

  m. Shareholders’ equity

 

Initial balances have been restated into period-end currency following the criteria set forth in Note 1.c. Movements for the period are recorded at their historical values.

 

31


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

  n. Results for the period

 

The results for the period are disclosed in the paid cost.

 

The income statement shows the financial results, discriminating those generated by assets and those generated by liabilities.

 

  o. Income Tax

 

The Company has recognized the income tax liability on the basis of the deferred tax liability method, thus considering temporary differences between registration of assets and liabilities for accounting and tax purposes. The principal temporary differences originate in the valuation of livestock and the sale and replacement of fixed assets.

 

In order to determine deferred assets and liabilities the tax rate expected to be in effect at the temporary of reversal or use has been applied on the temporary differences identified and tax loss carryforwards, considering the laws enacted as of the date of issuance of these financial statements (35%).

 

Assets and liabilities generated by the application of the deferred tax method have been valued at face value.

 

  p. Tax on minimum hypothetical income

 

The Company determines the tax on minimum hypothetical income applying the prevailing rate of 1% on computable assets at fiscal period-end. This tax is supplementary to the income tax. The Company’s tax liability for each period will be the higher of these two taxes. However, if the tax on minimum hypothetical income exceeds the income tax in any fiscal year, such excess may be computed as payment on account of the income tax that may be payable in any of the following ten fiscal years.

 

  q. Revenue recognition

 

Revenue is recognized on sales of products when the customer receives title to the goods, generally upon delivery.

 

32


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 3: COMMON AND TREASURY STOCK

 

The activity in the Company’s shares during the last three financial years was as follows:

 

     Authorized
Pesos


   Subscribed
Pesos


  

Paid in

Pesos


Common and treasury stock at June 30, 2002

   120,152,102    120,152,102    120,152,102

Incentive Plan

              

Fiscal Year 03 (Note 12)

   3,559,853    3,559,853    3,559,853

Conversion of bonds in common stock (Note 13)-Fiscal Year 2003

   386,140    386,140    386,140

Incentive Plan (Note 12) - Fiscal Year 04

   332,437    332,437    332,437

Conversion of bonds in common stock (Note 13)-Fiscal Year 2004

   13,136,577    13,136,577    13,136,577

Exercise of Warrants (Note13)-Fiscal Year 2004

   12,965,710    12,965,710    12,965,710

Incentive Plan (Note 12) - Fiscal Year 05-1st , 2nd and 3rd quarter

   240,000    240,000    240,000

Conversion of bonds in common stock (Note 13)-Fiscal Year 2005-1st , 2nd and 3rd quarter

   5,847,066    5,847,066    5,847,066

Exercise of Warrants (Note13)-Fiscal Year 2005-1st , 2nd and 3rd quarter

   5,914,585    5,914,585    5,914,585
    
  
  

Common and treasury stock at March 31, 2005

   162,534,470    162,534,470    162,534,470
    
  
  

 

As of March 31, 2005, the capital authorized to be publicly offered is formed of 162,534,470 common, book-entry shares of $ 1 par value each and entitled to one vote per share, all of which were outstanding.

 

NOTE 4: FUTURES

 

At March 31, 2005 the Company had arranged futures and options on the futures market as follows:

 

OPTIONS – C.B.O.T. – SELL CALL – SEASON 2004/2005

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   27,880    280.98    (194,500 )

Corn

   46,355    98.74    (113,794 )

Wheat

   2,720    121.26    (20,488 )

 

33


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 4: (Continued)

 

OPTIONS – C.B.O.T. - PURCHASE CALL – SEASON 2004/2005

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   11,560    266.72    121,806  

Corn

   31,750    86.61    93,995  

OPTIONS – C.B.O.T. – PURCHASE PUT – SEASON 2004/2005

                

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   14,605    91.57    94,995  

Corn

   16,320    220.46    271,047  

FUTURES – C.B.O.T. — SEASON 2004/2005

                

Cereal


   Tons

  

Average price

US$ (1)


  

Total amount

US$


 

Corn-sell

   31,750    92.63    (2,941,095 )

OPTIONS – SELL CALL – SEASON 2004/2005

                

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   500    162.00    (1,250 )

Wheat

   1,200    103.33    (5,003 )

OPTIONS – PURCHASE PUT – SEASON 2004/2005

                

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   500    142.00    1,250  

FUTURES – SEASON 2004/2005

                

Cereal


   Tons

  

Average price

US$ (1)


  

Total amount

US$


 

Soybean

   9,200    174.12    1,601,904  

Wheat

   3,800    116.07    441,066  
                  

 

BULLIONS - FUTURES – C.B.O.T.

 

Bullion


   Amount of
ounces


   Average
purchase price
for contract-
US$


   Average
market price
for contract-
US$


  

Total amount

US$ (a)


Silver

   705,000    720.51    719.28    101,418

 

34


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 4: (Continued)

 

(a) The loss generated as of March 31, 2004 is Ps. 27,556 and is included in the Income Statement under financial results.

 

As of March 31, 2005 and 2004 the Company charged to income $ 2,924,090 (loss) and $ 2,132,913 (gain), respectively, to reflect the closing of the transactions carried out during those periods. These results are disclosed under the cost of grain in a line of Schedule F.

 

At March 31, 2004 the Company had arranged futures and options on the forward market as follows:

 

OPTIONS – C.B.O.T. – PURCHASE CALL – SEASON 2003/2004

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Corn

   27,200    102.88    127,928  

OPTIONS – C.B.O.T. – SELL PUT - SEASON 2003/2004

                

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   6,120    332.33    (26,735 )

Corn

   31,750    118.10    (149,992 )

OPTIONS – C.B.O.T.-PURCHASE PUT - SEASON 2003/2004

                

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   5,000    233.32    17,799  

OPTIONS – SELL PUT – SEASON 2003/2004

                

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   1,500    227.33    (9,150 )

FUTURES – C.B.O.T. — SEASON 2003/2004

                

Cereal


   Tons

  

Average price

US$ (1)


  

Total amount

US$


 

Soybean-purchase

   14,552    274.85    3,999,617  

Soybean-sell

   12,240    340.07    (4,162,457 )

FUTURES – SEASON 2003/2004

                

Cereal


   Tons

  

Average price

US$ (1)


  

Total amount

US$


 

Corn-purchase

   6,100    89.72    547,292  

Soybean-sell

   2,700    250.02    (675,054 )

 

35


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 4: (Continued)

 

(1) Strike price without deducting expenses.

 

(2) Premiums paid (collected).

 

NOTE 5: MANAGEMENT AGREEMENT

 

The Company signed a management agreement with Dolphin Fund Management S.A. (formerly called Consultores Asset Management S.A.), for consulting in relation to livestock and farming activities serving as an intermediary in transactions and investment consulting in relation to security investments.

 

In exchange for its services, such company will receive a payment equivalent to 10% of the net income resulting from the annual or the special financial statements.

 

Since certain directors of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria are also executive directors and shareholders of Dolphin Fund Management S.A., the above-mentioned agreement was approved by the Extraordinary Shareholders´ Meeting held on October 25, 1994, in compliance with Article Nº 271 of Law Nº 19,550.

 

On November 2003, Dolphin Fund Management S.A. was divided into two companies: Consultores Asset Management S.A. and Dolphin Fund Management S.A. As from that moment the management contract is held by Consultores Asset Management S.A.

 

In relation to this issue, the financial statements as of March 31, 2005 and March 31, 2004 includes a charge in the Statement of Income of Ps. 6,905,699 and a Ps. 1,138,846 respectively and the same provision for this periods.

 

NOTE 6: INCOME TAX – DEFERRED TAX

 

The following tables show the development and composition of deferred tax Assets and Liabilities.

 

    Deferred assets as of March 31, 2005:

 

     Cumulative
tax loss
carryforwards


    Provisions

   Other

   TOTAL

Initial Balance

   2,224,649     20    1,191    2,225,860

Charge to results

   (20,840 )   —      80,289    59,449

Closing Balance

   2,203,809     20    81,480    2,285,309

 

36


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 6: (Continued)

 

    Deferred liabilities as of March 31, 2005:

 

     Fixed Assets

    Inventories

    Investments

    Accruals

    TOTAL

 

Initial Balance

   (13,522,161 )   (11,545,458 )   (1,220,989 )   (1,069,822 )   (27,358,430 )

Charge to results

   (4,308,268 )   (2,535,921 )   (1,509,115 )   (535,336 )   (8,888,640 )

Closing Balance

   (17,830,429 )   (14,081,379 )   (2,730,104 )   (1,605,158 )   (36,247,070 )

 

As of March 31, 2005, net liabilities at period-end as per the information included in the preceding tables amount to Ps. 33,961,761.

 

Below is a conciliation between the Income Tax charged to Income and that which would result from applying the prevailing tax rate on the Income for accounting purposes:

 

Description


   March 31, 2005

    March 31, 2004

 

Income before income tax

   95,168,215     16,692,862  

Tax rate

   35 %   35 %

Net results at tax rates:

   33,308,875     5,842,502  

Permanent differences at tax rate:

            

Restatement into constant currency

   4,066,732     904,270  

Penalties

   159     1,687  

Donations

   3,050     (204,109 )

Amortization FYO Goodwill

   83,465     82,887  

Result from purchase and sale of stock

   2,398,665     1,085,872  

Loss from controlled and related companies

   (7,410,276 )   (1,168,585 )

Personal asset tax

   1,157,196     —    

Conversion of bonds in common stock

   1,509,585     —    

Miscellaneous permanent differences

   (2,100,531 )   (101,266 )
     33,016,920     6,443,258  

 

During this period the Income Tax rate was 35%.

 

Cumulative tax loss carryforwards recorded by the Company pending utilization at period-end amount to approximately Ps. 2,203,809 and may be offset against taxable income of future fiscal years, as follows:

 

Origination year

   Amount

   Expiration Year

2003    2,003,809    2008

 

37


Table of Contents

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 6: (Continued)

 

    Deferred assets as of March 31, 2004:

 

     Cumulative
tax loss
carryforwards


   Provisions

    Other

    TOTAL

 

Initial Balance

   2,257,115    (6,335 )   250,802     2,501,582  

Charge to income

   108,446    (9,658 )   (256,226 )   (157,438 )

Closing Balance

   2,365,561    (15,993 )   (5,424 )   2,344,144  

 

    Deferred liabilities as of March 31, 2004:

 

     Fixed Assets

    Inventories

    Investments

    Accruals

    TOTAL

 

Initial Balance

   (13,019,043 )   (10,355,850 )   (2,706 )   (1,001,793 )   (24,379,392 )

Charge to income

   (669,851 )   (1,252,730 )   2,258     (1,174,619 )   (3,094,942 )

Closing Balance

   (13,688,894 )   (11,608,580 )   (448 )   (2,176,412 )   (27,474,334 )

 

As of March 31, 2004, net liabilities at period-end as per the information included in the preceding tables amount to Ps. 25,130,190.

 

38


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 7: BALANCES AND RESULTS WITH SUBSIDIARIES, RELATED COMPANIES LAW N° 19,550 SECTION 33 AND RELATED PARTIES:

 

a. Balances at March 31, 2005, June 30, 2004 and March 31, 2004 with Subsidiaries, related companies and related parties:

 

     March 31,
2005


  

June 30,

2004


   March 31,
2004


IRSA Inversiones y Representaciones S.A.(3)

              

Current Investments

              

- Interest of Convertible Bonds 2007 -IRSA (US$)

   3,338,226    1,388,504    4,412,090

Non-Current Investments

              

- Convertible Bonds 2007 -IRSA (US$)

   106,583,963    132,941,891    142,837,462

Current Trade accounts receivable

   —      637    —  

Current Trade accounts payable

   159,268    1,108    30,928

Inversiones Ganaderas S.A.(1)

              

Current Trade accounts receivable

   10,348    9,216    17,839

Current Other debts

   1,630,854    2,196,666    2,424,694

Non-Current Other debts

   203,432    —      —  

Futuros y opciones.Com S.A.(1)

              

Current Trade accounts receivable

   693,540    —      —  

Current Other receivables and prepaid expenses

   23,603    738,735    877,395

Current Trade accounts payable

   —      3,720    845

Pending Contributions

   102,896    —      —  

Cactus Argentina S.A.(3)

              

Current Trade accounts receivable

   45,164    29,845    25,370

Current Other receivables and prepaid expenses

   1,363,965    1,346,401    1,340,252

Current Trade accounts payable

   413,804    1,853,969    445,657

Agro-Uranga S.A.(3)

              

Current Other receivables and prepaid expenses

   694,981    39,993    160,609

Fundación IRSA (4)

              

Current Trade accounts payable

   1,177,988    1,177,988    477,988

Inversora Bolívar (4)

              

Current Trade accounts payable

   6,777    5,349    —  

Alto Palermo S.A.(4)

              

Current Trade accounts payable

   74,664    87,774    64,531

Current Trade accounts payable

   298    —      —  

Credits to employees (4)

              

Current credits to Senior management, directors and staff of the company

   35,114    37,751    30,247

Estudio Zang, Berqel & Viñes (4)

              

Current Trade accounts payable

   75,154    81,647    52,649

Directors (4)

              

Current Trade accounts payable

   2,159    3,471    1,969

Current Loans

              

Convertible Bonds 2007 Interest payable (Schedule G)

              

Directors

   3,049    3,324    11,802

Non-Current Loans

              

Convertible Bonds 2007 (Schedule G)

              

Directors

   98,011    318,281    382,096

Shareholders (2)

              

Current Loans

              

Convertible Bonds 2007 Interest payable (Schedule G)

              

Directors

   2,173,764    740,021    2,116,063

Non-Current Loans

              

Convertible Bonds 2007 (Schedule G)

              

Directors

   69,870,974    70,853,048    68,505,652

 

(1) Controlled company

 

(2) Shareholder

 

(3) Related company

 

(4) Related party

 

39


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 7: (Continued)

 

b. Results provided by Subsidiaries, related companies and related parties corresponding to the periods ended at March 31, 2005 and 2004:

 

     Year

   Sales and
Fees for
shared
services


    Interest
paid


    Salaries and
social
securities


    Fees

    Livestock
expenses


    Interest
income


   Administrative
services


    Others

 

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

                                                    

Shareholders

   2005    —       (4,424,774 )   —       —       —       —      —       —    
     2004    —       (4,459,899 )   —       —       —       —      —       —    

Agro-Uranga S.A.

   2005    —       —       —       —       —       —      —       106,780  
     2004    —       —       —       —       —       —      —       —    

Alto Palermo S.A.

   2005    (89,961 )   —       —       —       —       —      —       —    
     2004    (69,416 )   —       —       —       —       —      —       —    

Cactus Argentina S.A.

   2005    —       —       —       —       (3,545,306 )   17,101    108,720     28,573  
     2004    —       —       —       —       (5,151,665 )   14,015    141,200     173,296  

Directors

   2005    —       (6,207 )   (193,269 )   (90,169 )   —       13,772    —       —    
     2004    —       (24,875 )   (221,209 )   (7,597 )   —       26,861    —       —    

Estudio Zang, Bergel & Viñes

   2005    —       —       —       (95,104 )   —       —      —       —    
     2004    —       —       —       (52,649 )   —       —      —       —    

Fundación IRSA

   2005    —       —       —       —       —       —      —       —    
     2004    —       —       —       —       —       —      —       —    

Futuros y opciones.Com S.A.

   2005    —       —       —       —       —       —      28,800     (608 )
     2004    —       —       —       —       —       —      (30,155 )   (30,918 )

Inversiones Ganaderas S.A.

   2005    —       (92,935 )   —       —       —       —      60,136     132,569  
     2004    —       (103,651 )   —       —       —       —      —       2,061  

Inversora Bolívar

   2005    —       —       —       —       —       —      —       (125,329 )
     2004    —       —       —       —       —       —      —       (35,072 )

IRSA Inversiones y Representaciones S.A.

   2005    (104,113 )   —       —       —       —       7,994,072    —       —    
     2004    (92,970 )   —       —       —       —       8,697,554    —       —    

Credits to employees

   2005    —       —       —       —       —       14,793    —       —    
     2004    —       —       —       —       —       13,993    —       —    

Senior Management

   2005    —       —       (864,019 )   —       —                     
     2004    —       —       (758,667 )   —       —                     
         

 

 

 

 

 
  

 

Total at March 31, 2005

        (194,074 )   (4,523,916 )   (1,057,288 )   (185,273 )   (3,545,306 )   8,039,738    197,656     141,985  
         

 

 

 

 

 
  

 

Total at March 31, 2004

        (162,386 )   (4,588,425 )   (979,876 )   (60,246 )   (5,151,665 )   8,752,423    171,355     109,367  
         

 

 

 

 

 
  

 

 

40


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: Details of balance sheet and income statement accounts

 

  a. Cash and banks

 

    

March 31,

2005

Pesos


   

June 30,

2004

Pesos


   

March 31,

2004

Pesos


 

Cash

   34,138     69,859     75,826  

Foreign currency (Schedule G)

   75,139     46,431     50,196  

Patacones currency

   39     39     37  

Local currency checking account

   318,678     4,781,351     938,329  

Patacones currency checking account

   22     22     22  

Foreign currency checking account (Schedule G)

   6,282,300     1,220,084     8,628,564  

Local currency saving account

   15,115     12,295     13,794  

Foreign currency saving account (Schedule G)

   11,252,686     5,949,506     —    

Checks to be deposited

   184,305     443,374     25,946  
    

 

 

     18,162,422     12,522,961     9,732,714  
    

 

 

b.      Investments and Goodwill

                  
    

March 31,
2005

Pesos


   

June 30,

2004

Pesos


   

March 31,
2004

Pesos


 

Investment

                  

Investment (Schedule C and G)

   99,805,081     1,490,311     7,555,974  
    

 

 

     99,805,081     1,490,311     7,555,974  
    

 

 

Investment

                  

Investment on controlled and related companies (Schedule C)

   318,339,764     274,977,554     224,316,655  
    

 

 

     318,339,764     274,977,554     224,316,655  
    

 

 

Other investments

                  

Other investments (Schedule C and G)

   106,604,680     132,962,608     142,858,179  
    

 

 

     106,604,680     132,962,608     142,858,179  
    

 

 

Goodwill

                  

Goodwill (Schedule C)

   (43,320,138 )   (25,869,346 )   (20,193,637 )
    

 

 

     (43,320,138 )   (25,869,346 )   (20,193,637 )
    

 

 

 

41


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  c. Trade accounts receivable

 

    

March 31,
2005

Pesos


   

June 30,
2004

Pesos


   

March 31,
2004

Pesos


 

Current

                  

Accounts receivable in local currency

   3,937,855     3,921,210     3,982,317  

Less:

                  

Provision for defaulting debtors (Schedule E)

   (345,709 )   (387,067 )   (359,661 )

Accounts receivable in foreign currency (Schedule G)

   989,156     3,779     42,300  

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

                  

Inversiones Ganaderas S.A.

   10,348     9,216     17,839  

Futuros y Opciones.Com S.A.

   693,540     —       —    

Cactus Argentina S.A.

   45,164     29,845     25,370  

IRSA Inversiones y Representaciones Sociedad Anónima

   —       637     —    
    

 

 

     5,330,354     3,577,620     3,708,165  
    

 

 

d.      Other receivables and prepaid expenses

                  
     March 31,
2005
Pesos


   

June 30,

2004

Pesos


   

March 31,

2004

Pesos


 

Current

                  

Prepaid leases

   165,910     4,465,136     598,390  

Guarantee deposits and premiums (Schedule G)

   1,951,565     2,188,998     4,040,763  

Secured by mortgage (Schedule G)

   8,164,858     1,033,997     992,804  

Prepaid expenses

   973,269     897,192     353,576  

Tax prepayments (net of accruals)

   2,481,699     3,368,062     2,876,994  

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

                  

Cactus Argentina S.A.

   1,363,965     1,346,401     1,340,252  

Futuros y Opciones.Com S.A.

   23,603     738,735     877,395  

Agro-Uranga S.A.

   694,981     39,993     160,609  

Credits to employees

   35,114     37,751     30,247  

Shareholders

   —       1,711,833     455,583  

Others

   215,264     86,930     195,531  
    

 

 

     16,070,228     15,915,028     11,922,144  
    

 

 

Non-current

                  

Value Added Tax

   5,080,327     4,121,672     3,338,689  

Tax on Minimum Hypothetical Income

   —       17,154     17,154  

Prepaid leases

   75,916     —       —    
    

 

 

     5,156,243     4,138,826     3,355,843  
    

 

 

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  e. Inventories

 

    

March 31,

2005

Pesos


  

June 30,

2004

Pesos


  

March 31,

2004

Pesos


Current

              

Livestock

   12,745,725    18,366,149    17,224,122

Crops

   12,077,749    8,639,910    6,272,900

Unharvested crops

   17,777,895    1,603,897    8,515,388

Seeds and fodder

   500,487    238,378    282,521

Materials and others

   2,579,838    4,041,594    2,868,660

Advances to suppliers

   576,940    1,440,333    1,021,393
    
  
  
     46,258,634    34,330,261    36,184,984
    
  
  

Non-Current

              

Livestock

   49,804,357    40,982,536    40,691,688
    
  
  
     49,804,357    40,982,536    40,691,688
    
  
  

f.       Trade accounts payable

              
    

March 31,
2005

Pesos


  

June 30,
2004

Pesos


  

March 31,
2004

Pesos


Current

              

Suppliers in local currency

   3,905,339    4,426,742    4,634,443

Suppliers in foreign currency (Schedule G)

   2,302,374    1,110,314    1,060,960

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

              

Inversora Bolivar S.A.

   6,777    5,349    —  

Alto Palermo S.A.

   74,664    87,774    64,531

Alto City.Com S.A.

   298    —      —  

IRSA Inversiones y Representaciones S.A.

   159,268    1,108    30,928

Cactus Argentina S.A.

   413,804    1,853,969    445,657

Futuros y Opciones.Com S.A.

   —      3,720    845

Estudio Zang, Bergel & Viñes

   75,154    81,646    52,649

Fundación IRSA

   1,177,988    1,177,988    477,988

Directors

   2,159    3,471    1,969

Accrual for other expenses (Schedule G)

   2,273,748    2,085,778    1,417,046

Accrual for cereal expenses

   328,644    213,177    180,409
    
  
  
     10,720,217    11,051,036    8,367,425
    
  
  

 

43


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  g. Loans

 

    

March 31,
2005

Pesos


   

June 30,

2004

Pesos


   

March 31,

2004

Pesos


 

Current

                  

Local financial loans (Note 16)

   22,554,698     6,757,677     —    

Convertible Bonds 2007 Interest payable (Schedule G)

   1,468,115     589,239     1,701,548  

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

                  

Shareholders

   2,173,764     740,021     2,116,063  

Directors

   3,049     3,324     11,802  
    

 

 

     26,199,626     8,090,261     3,829,413  
    

 

 

Non-Current

                  

Convertible Bonds 2007 (Schedule G)

   47,189,423     56,416,538     55,086,045  

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

                  

Shareholders

   69,870,974     70,853,048     68,505,652  

Directors

   98,011     318,281     382,096  

Convertible Bonds 2007 expenses

   (1,277,019 )   (1,706,993 )   (1,848,310 )
    

 

 

     115,881,389     125,880,874     122,125,483  
    

 

 

h.      Salaries and social security payable

                  
    

March 31,
2005

Pesos


   

June 30,

2004

Pesos


   

March 31,
2004

Pesos


 

Current

                  

Vacation, statutory annual bonus allowance

   760,536     1,001,301     626,576  

Social security administration

   111,169     166,415     116  

Salaries payable

   27,545     180,340     94,048  

Health care

   10,093     2,533     5,169  

Others

   3,808     9,130     3,919  
    

 

 

     913,151     1,359,719     729,828  
    

 

 

 

44


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  i. Taxes payable

 

     March 31,
2005
Pesos


    June 30,
2004
Pesos


    March 31,
2004
Pesos


 

Current

                  

Accrual for income tax

   24,289,677     4,246,881     2,979,125  

Advances to Income tax

   (2,651,051 )   (2,808,338 )   (1,968,138 )

Tax on Minimum Hypothetical Income (Note 2.p.)

   —       17,154     17,154  

Property tax payable

   80,182     103,284     103,284  

Taxes withheld for income tax

   30,590     163,926     71,639  

Taxes withheld-Gross sales taxes

   —       (81,215 )   (74,005 )

Gross sales taxes

   71,128     80,085     146,566  

Taxes withheld-Value Added Tax

   10,032     —       —    

Others (1)

   1,614,133     494     1,193  
    

 

 

     23,444,691     1,722,271     1,276,818  
    

 

 

Non-Current

                  

Deferred tax

   33,961,761     25,130,570     25,130,190  
    

 

 

     33,961,761     25,130,570     25,130,190  
    

 

 

(1)    Including Personal Assets Tax of shareholders.

                  

j.       Other debts

                  
     March 31,
2005
Pesos


    June 30,
2004
Pesos


    March 31,
2004
Pesos


 

Current

                  

Advances to customers (Schedule G)

   7,889,200     4,432,500     —    

Accrual for Management fees (Note 5)

   6,905,699     1,537,173     1,138,846  

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

                  

Inversiones Ganaderas S.A.

   1,630,854     2,196,666     2,424,694  

Pending Contributions

                  

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

                  

Futuros y Opciones.Com S.A. (Note 2 k.)

   102,896     —       —    

Others

   117,500     4,285     —    
    

 

 

     16,646,149     8,170,624     3,563,540  
    

 

 

Non-current

                  

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

                  

Inversiones Ganaderas S.A.

   203,432     —       —    
    

 

 

     203,432     —       —    
    

 

 

 

45


Table of Contents

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria

 

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 9:

 

a) Assets based on their estimated collection term (in pesos)

 

Based on their estimated collection
term


   Current and non-current
investment


   Trade accounts receivable

   Other receivables and
prepaid expenses


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


4th quarter 2004/2003 financial period

   —      —      4,412,090    —      —      3,708,165    —      —      4,780,726

1st quarter 2005/2004 financial period

   —      —      —      —      3,577,620    —      —      3,250,227    —  

2nd quarter 2005/2004 financial period

   —      1,388,504    —      —      —      —      —      —      —  

3rd quarter 2005/2004 financial period

   —      —      —      —      —      —      —      1,033,997    992,804

4th quarter 2005/2004 financial period

   3,338,226    —      —      5,330,354    —      —      3,614,587    305,826    —  

1st quarter 2006/2005 financial period

   —      —      —      —      —      —      8,164,858    —      —  

2nd quarter 2006/2005 financial period

   —      —      —      —      —      —      442,270    —      —  

3rd quarter 2006/2005 financial period

   —      —      —      —      —      —      —      —      —  

4th quarter 2006/2005 financial period

   —      —      —      —      —      —      —      17,154    17,154

1st quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —  

2nd quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —  

3rd quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —  

4th quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —  

2nd quarter 2008/2007 financial period

   106,583,963    132,941,891    142,837,462    —      —      —      —      —      —  

Overdue

   —      —      —      —      —      —      —      —      —  

With no stated current term

   96,466,855    101,807    3,143,884    —      —      —      3,848,513    11,324,978    6,148,614

With no stated non-current term

   20,717    20,717    20,717    —      —      —      5,156,243    4,121,672    3,338,689
    
  
  
  
  
  
  
  
  

Total

   206,409,761    134,452,919    150,414,153    5,330,354    3,577,620    3,708,165    21,226,471    20,053,854    15,277,987
    
  
  
  
  
  
  
  
  

 

b) Assets classified according to the interest rate that they accrue (in pesos)

 

Interest rate that they accrue


   Current and non-current
investment


   Trade accounts
receivable


   Other receivables and
prepaid expenses


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


At fixed interest rate

   106,583,963    132,941,891    142,837,462    —      —      —      8,281,716    1,327,126    992,804

At variable interest rate

   94,021,531    101,807    3,143,884    —      —      —      910,592    2,307,893    2,901,213

Non-interest bearing

   5,804,267    1,409,221    4,432,807    5,330,354    3,577,620    3,708,165    12,034,163    16,418,835    11,383,970
    
  
  
  
  
  
  
  
  

Total

   206,409,761    134,452,919    150,414,153    5,330,354    3,577,620    3,708,165    21,226,471    20,053,854    15,277,987
    
  
  
  
  
  
  
  
  

 

46


Table of Contents

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria

 

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 9:

 

a) Liabilities based on their estimated payment term (in pesos)

 

Based on their
estimated
payment
term


   Trade accounts payable

   Loans

   Salaries and social
security payable


   Taxes payable

   Other debts

   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


  

March 31,

2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


4th quarter 2004/2003 financial period

   —      —      8,365,456    —      —      3,829,413    —      —      729,828    —      —      1,276,818    —      —      1,407,896

1st quarter 2005/2004 financial period

   —      11,047,565    —      —      6,757,677    —      —      1,359,713    —      —      266,574    —      —      1,541,458    —  

2nd quarter 2005/2004 financial period

   —      3,471    1,969    —      1,332,584    —      —      —      —      —      1,455,697    —      —      2,196,666    2,155,644

3rd quarter 2005/2004 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

4th quarter 2005/2004 financial period

   10,720,217    —      —      16,036,293    —      —      428,826    —      —      1,806,065    —      —      7,023,199    4,432,500    —  

1st quarter 2006/2005 financial period

   —      —      —      10,113,333    —      —      404,325    —      —      —      —      —      7,889,200    —      —  

2nd quarter 2006/2005 financial period

   —      —      —      —      —      —      —      —      —      21,638,626    —      —      1,630,854    —      —  

3rd quarter 2006/2005 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

4th quarter 2006/2005 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

1st quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

2nd quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      203,432    —      —  

3rd quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

4th quarter 2007/2006 financial period

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

2nd quarter 2008/2007 financial period

   —      —           115,881,389    125,880,874    122,125,483    —      —      —      —      —      —      —      —      —  

Overdue

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

With no stated current term

   —      —      —      —      —      —      —      —      —      —      —      —      102,896    —      —  

With no stated non-current term

   —      —      —      —      —      —      —      —      —      33,961,761    25,132,570    25,130,190    —      —      —  
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  

Total

   10,720,217    11,051,036    8,367,425    142,001,015    133,971,135    125,954,096    913,151    1,359,719    729,828    57,406,452    26,854,841    26,407,008    16,049,581    8,170,624    3,563,540
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 

b) Liabilities classified according to the interest rate that they accrue (in pesos)

 

Interest
rate that
they accrue


   Trade accounts payable

   Loans

   Salaries and social
security payable


   Taxes payable

   Other debts

   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


   March 31,
2005


   June 30,
2004


  

March 31,

2004


   March 31,
2005


   June 30,
2004


   March 31,
2004


At fixed interest rate

   —      —      —      139,713,106    132,638,551    122,125,483    —      —      —      —      —      —      1,798,011    2,196,666    —  

At variable interest rate

   —      —      —      —      —      —      —      —      —      —      —      —      —      —      —  

Non-interest bearing

   10,720,217    11,051,036    8,367,425    2,367,909    1,332,584    3,829,413    913,151    1,359,719    729,828    57,406,452    26,854,841    26,407,008    15,051,570    5,973,958    3,563,540
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  

Total

   10,720,217    11,051,036    8,367,425    142,081,015    133,971,135    125,954,896    913,151    1,359,719    729,828    57,406,452    26,854,841    26,407,008    16,849,581    8,170,624    3,563,540
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 

47


Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 10: RESTRICTIONS ON DISTRIBUTION OF PROFITS

 

In accordance with the Argentine Corporations Law, the Company’s by-laws and Resolution N° 368/2001 of the Comisión Nacional de Valores (C.N.V.), 5% of the net and realized profit for the year plus (less) prior year adjustments must be appropriated by resolution of shareholders to a legal reserve until such reserve equals 20% of the Company’s outstanding capital.

 

NOTE 11: PURCHASE AND SALE OF FARMS

 

PURCHASE:

 

On March 9, 2005 the purchase and sales agreement of 72 hectares located in Cuartel Segundo, district of Luján, Province of Buenos Aires, was executed. The agreed purchase price was Ps. 784,888. The date of execution of the deed of conveyance will be June 1, 2006. This purchase generated a debt of Ps. 484,888 that will be paid upon execution of the relevant title deed.

 

SALE:

 

On June 30, 2004 a bill of sale was signed for the farm “San Enrique”, of 977 hectares, located in the Department of General López, Province of Santa Fe. The price for the sale of the farm was of US$ 5,000,000 (US Dollars five million). The title deed had not been executed as of the closing of the financial statements. This sale will generate a profit of US$ 4,300,000 (US Dollars four million and three hundred) approximately.

 

On February 1, 2005, a bill of sale was signed for the farm “Ñacurutú”, with a surface area of 30,353 hectares, property located in the Departments of Gral. Obligado and Vera in the Province of Santa Fe. The price was agreed at US$ 5,615,256 (US Dollars five million six hundred and fifteen thousand, two hundred and fifty six). This sale will generate a profit of US$ 7,657,269 (US Dollar seven million, six hundred and fifty seven thousand, two hundred and sixty nine).

 

On February 24, 2005 the bill of sale of the property “El Gualicho”, with a surface area of 5,727 hectares, located in the province of Córdoba, was executed. The agreed sale price was US$ 5,727,083 (US Dollars five million seven hundred and twenty seven thousand eighty three). The date of execution of the deed will be July 15, 2005 (the resulting profit will be recognized in the next fiscal year). This sale will result in an estimated profit of US$ 3,445,135 (US Dollars three millions four hundred and forty five thousand one hundred and thirty five).

 

NOTE 12: STOCK OPTION PLAN

 

As resolved upon at the General Extraordinary Shareholders’ Meeting at second call held on November 19, 2001 and in accordance with the resolutions adopted by the Board of Directors at its meeting dated December 7, 2001, the shareholders approved a Stock Option Plan (the “Plan”) relating to the shares that would remain after the shareholders exercised their pre-emptive rights to acquire treasury stock (the “Shares”), covering 4,614,643 shares.

 

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Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 12: (Continued)

 

The stock balance remaining after expiration of the preemptive and accretion periods is intended to be offered under the Incentive Plan approved at the above mentioned Shareholders’ Meeting, at Ps. 1 (one peso) par value, plus interest accrued as from actual exercise at a six-months LIBOR rate per annum. In accordance with the terms approved at the referred Shareholders’ Meeting, from a legal standpoint the implementation of the Plan is made by means of the transfer of the Shares in trust. From this balance, two thirds of the options relating to the Shares under the Plan were allocated for distribution by the Company’s Board of Directors among certain executive officers. The remaining third was set aside for allotment by the Company’s Board of Directors among any employees or executives at the time of allotment and 6 (six) months after the initial allotment, and up to 3 (three) months before the expiration of the exercise period.

 

In January 2002 an aggregate of 2,353 shares of Ps. 1 par value each were issued under the preferred offering of treasury stock.

 

In April and June 2002, an aggregate of 480,000 shares of Ps. 1 par value each were issued to executive officers of the Company under the preferred offering of treasury stock.

 

During the fiscal year ended on June 30, 2003, an aggregate of 3,559,853 shares of Ps. 1 per value each were issued to directors and executive officers of the Company under the preferred offering of treasury stock.

 

During the fiscal year ended on June 30, 2004, an aggregate of 332,437 shares of Ps. 1 per value each were issued to directors and executive officers of the Company under the preferred offering of treasury stock.

 

During the current period, an aggregate of 240,000 shares of Ps. 1 per value each were issued to directors and executive officers of the Company under the preferred offering of treasury stock

 

As of March 31, 2005, there was no pending exercise balance.

 

NOTE 13: ISSUANCE OF CONVERTIBLE BONDS

 

The Shareholders meeting held on March 8, 2002 approved:

 

  a) The issue of simple convertible bonds, non-convertible into shares of the Company, for an amount of up to US$ 50,000,000 (or its equivalent in other currencies) for a maximum term of 5 years, accruing interest at a fixed rate not to exceed 12%; and/or,

 

  b) the issuance of convertible bonds into company’s common stock, for a total amount of US$ 50,000,000 (or its equivalent in other currency) with a maturity date in a term of 5 years or more according to the management’s decision and a fix rate not exceeding 12% or floating rate with a reference rate such as LIBOR plus a spread not exceeding 10%.

 

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Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 13: (Continued)

 

  c) the subscription option, for the holders of convertible bonds, with a premium determined by the management, between 20 and 30% over the conversion price of the convertible bond, with a value that will remain constant in terms of US currency. The exercise of the above mentioned would occur quarterly, only for the holders of the convertible bonds who have exercised their conversion rights.

 

Authorization for the public offer and quotation of convertible bonds has been approved by Resolution N° 14,320 of the Argentine Securities and Exchange Commission dated October 1, 2002 and by the Buenos Aires Stock Exchange, authorizing the issue up to US$ 50,000,000 in securities composed by convertible bonds into common stock with an 8% annual interest rate due in the year 2007, granting the right at the moment of conversion to achieve 50,000,000 common stock subscription options. Likewise, the conversion price and the Warrants price established are as follows:

 

  a) The conversion price is US$ 0.5078 stocks (US$ 5.0775 ADS), while the Warrant price is US$ 0.6093 stocks (US$ 6.0930 ADS).

 

  b) For each of Cresud’s convertible bond the holder has the right to convert it to US$ 1.96928 stocks (US$ 0.1969 ADS) and has an option to purchase the same amount of stock at the price of the Warrant.

 

Convertible bonds and options will be due on November 14, 2007.

 

Convertible bonds were paid in cash and the proceeds will be destined to the subscription of IRSA’s Convertible Bonds and for the generation of working capital.

 

During the fiscal year ended on June 30, 2003, 196,084 Convertible Bonds were converted into 386,140 ordinary shares, which resulted in a Ps. 593,038 increase in the Company’s net shareholders’ equity.

 

During the fiscal year ended on June 30, 2004, 6,670,763 Convertible Bonds were converted into 13,136,577 ordinary shares, which resulted in a Ps. 19,364,974 increase in the Company’s net shareholders’ equity. During the same year, 6,583,995 Warrants were exercised, resulting in the issuance of 12,965,710 ordinary shares for Ps. 23,068,638.

 

During the current period, 2,969,146 Convertible Bonds were converted into 5,847,066 ordinary shares, which resulted in a Ps. 8,751,779 increase in the Company’s net shareholders’ equity. In the same period, 3,003,431 warrants were exercised, resulting in the issuance of 5,914,585 common shares for Ps. 10,605,734.

 

50


Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 14: PURCHASE OF CONVERTIBLE BONDS

 

During November and December 2002, 49,692,688 convertible bonds issued by IRSA were purchased; these can be converted into common stock with an 8% annual interest rate and due in 2007, and grant the holder at the time of conversion to 49,692,688 options to subscribe common stock. The conversion price and the warrants price established are as follows:

 

  a) The conversion price is US$ 0.5571 per share (US$ 5.5713 GDS), while the warrant price is US$ 0.6686 per share (US$ 6.6856 GDS)

 

  b) For each of IRSA’s convertible bond the holder has the right to convert it to 1.7949 shares (0.1795 GDS) and has an option to purchase the same amount of stock at the price of the warrant.

 

Due to the distribution of 4,587,285 shares of the company’s portfolio, IRSA has re stated the conversion price of its convertible bonds according to the subscription clauses.

 

The conversion price of the convertible bonds went from US$ 0.5571 to US$ 0.54505 and the warrants price went from US$ 0.6686 to US$ 0.6541. Such adjustment was effective as from December 20, 2002.

 

Convertible bonds and options are due on November 14, 2007.

 

During the months of July and November 2003 the Company purchased 250,500 Notes, and in May 2004 it converted 5,000,000 Notes into 9,174,312 common shares. Therefore, as of June 30, 2004, the Company held 44,943,168 Notes.

 

During the fiscal year ended on June 30, 2004, third parties bearers of convertible bonds into IRSA’s ordinary stock have exercised their conversion and warrant rights for a total amount of Ps. 62.8 million originating the issuance of 27,616,878 ordinary shares with a nominal value of Ps. 1 each. As a consequence of the exercise of such conversion rights, the company has registered a Ps. 10.3 million loss originated by the dilution of their equity share in IRSA, which is shown in “Results of subsidiaries Law 19,550 and related companies” in the Statement of Income.

 

As of June 30, 2004, this effect was reverted due to the exercise of share conversion rights mentioned above.

 

In July 2004 the Company purchased 350,000 Notes issued by IRSA Inversiones y Representaciones Sociedad Anónima for US$ 511,115.

 

In March 2005 the Company sold 8,754,271 Convertible Bonds of IRSA Inversiones y Representaciones Sociedad Anónima for a total amount of Ps. 32,499,426. This sale resulted in a profit of Ps. 68,754,172.

 

During this period, third party holders of IRSA’s Convertible Bonds exercised their conversion and warrants rights for a total of Ps.6.3 million, resulting in the issuance of 80,395,222 common shares of Ps. 1 par value each. On the other hand, the Company exercised warrants for a total of Ps. 17.7 million, resulting in the issuance of 9,174,311 common shares of Ps. 1 par value each.

 

As of March 31, 2005 third party holders of IRSA’s Convertible Bonds exercised their conversion and warrant rights resulting in the issuance of 76,852,278 common shares of Ps. 1 par value each. As a consequence of such conversions and exercise of warrants, the Company has seen its interest reduced by 6.014 %.

 

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Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 14: (Continued)

 

The Board of Directors has instructed the management to evaluate the conditions necessary for restoring the shareholding interest to the level that existed before the events described in the preceding paragraph. As of the date of these financial statements, the management estimates the conditions for such restitution to occur before year-end are likely to be met, and therefore has not recognized the effect of the above mentioned dilution.

 

NOTE 15: IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) – INCREASE TO INVESTMENT IN BANCO HIPOTECARIO S.A. (BHSA)

 

On December 30, 2003, IRSA Group purchased 4,116,267 shares of Banco Hipotecario S.A. at US$ 2.3868 each and 37,537 options at US$ 33.86 each, achieving the right to purchase an additional amount totaling 3,753,700 shares.

 

Such transaction implied a disburse amounting US$ 11.1 million.

 

Furthermore, on February 2, 2004, IRSA Group exercised a substantial portion of the options acquired mentioned above, jointly with the options held before the end of the year. In this respect, 4,773,853 shares were acquired for a total amount of Ps. 33.4 million.

 

During the last quarter of fiscal year 2004, the IRSA Group sold a portion of its shareholding in Banco Hipotecario S.A. (2,487,571 shares) to IFIS S.A. (indirect shareholder of the Company) for a unit price of Ps. 7 (market value). The total amount of the transaction was US$ 6.1 million and generated a loss of Ps. 1.61 million.

 

At the date of issuance of the present financial statements, IRSA´s ownership of BHSA shares amounts 17,641,015.

 

NOTA 16: LOANS

 

During this semester, the Company has developed an external funding strategy to raise working capital for the crop season at convenient rates and terms consisting in the pre-financing of exports, which allow us to develop new businesses optimizing risks and have the liquidity required to take advantage of any investment opportunities that may arise.

 

Therefore, as of March 31, 2005, current loans with local financial institutions amounted to Ps. 22.6 million. This allowed us to promote new production projects and generate a more efficient capital structure for the Company.

 

NOTE 17: IGSA’S TAX DEFERRAL

 

On December 19, 1996, under Decree 1968/96 the province of Catamarca approved the investment project submitted by Inversiones Ganaderas S.A., and conferred to it the benefits of Law 22,021 as amended by Law No. 22,702 subject to the conditions and scope detailed in the referred Decree.

 

The project is oriented towards the livestock business, and requires a total minimum investment of 1,600,002 to be made over a three year term. The investor is given the choice of deferring the payment of the amounts payable as income tax and value added tax.

 

52


Table of Contents

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 17: (Continued)

 

The amount of the deferred tax will be equal to 75% the direct capital contribution, i.e., Ps. 1,200,000. Deferred amounts do not accrue interest and are repayable in five consecutive annual payments as from the sixth fiscal year following the start-up date of the project that enjoys the benefit.

 

On October 15, 2002, Cresud S.A deferred the balance assessed in the value added tax return for fiscal period 9/2002 for the sum of Ps. 540,000.

 

On December 30, 2003, given the significant benefit granted under Decree 384/2003 to those taxpayers who early repay deferred tax liabilities, Cresud S.A repaid the deferred amount, for the sum of Ps. 249,317. To date it has still not made use of the remaining sums available under the project.

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Fixed Assets

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1 and 2)

 

Schedule A

 

                    Depreciation

           

Principal Account


  Value at
the beginning
of the year
Pesos


  Additions
and/or
transfers
Pesos


  Deductions
and/or
transfers
Pesos


  Value at
the end of
period/year
Pesos


  Rate %

  Accumulated
at the beginning
of the year
Pesos


  Decrease
of the
period/
year
Pesos


  Current
period/
year
Pesos


  Accumulated
at the end of
period/year
Pesos


 

Net carrying

value at
March 31,
2005
Pesos


 

Net carrying

value at
June 30,
2004 Pesos


 

Net carrying

value at
March 31,
2004
Pesos


Real estate

  120,668,102   1,141,949   7,860,697   113,949,354   —     —     —     —     —     113,949,354   120,668,102   118,017,185

Wire fences

  4,176,054       97,814   4,078,240   3   834,294   12,132   92,008   914,170   3,164,070   3,341,760   3,373,274

Watering troughs

  3,136,281   —     22,251   3,114,030   5   895,579   5,563   119,195   1,009,211   2,104,819   2,240,702   2,249,232

Alfalfa fields and meadows

  1,686,488   316,797   —     2,003,285   12-25-50   1,105,794   —     297,382   1,403,176   600,109   580,694   633,690

Buildings and constructions

  5,431,487   118,987   —     5,550,474   2   2,063,502   —     67,906   2,131,408   3,419,066   3,367,985   3,297,215

Machinery

  8,285,123   94,992   174,379   8,205,736   10   5,633,188   125,516   577,154   6,084,826   2,120,910   2,651,935   2,853,719

Vehicles

  1,304,710   224,475   140,558   1,388,627   20   654,956   90,374   185,395   749,977   638,650   649,754   497,618

Tools

  193,361   1,451   3,919   190,893   10   130,040   2,351   10,732   138,421   52,472   63,321   68,754

Furniture and equipment

  996,477   41,109   —     1,037,586   10   644,610   —     67,460   712,070   325,616   351,867   370,734

Corral and leading lanes

  608,664   —     —     608,664   3   111,773   —     13,617   125,390   483,274   496,891   488,797

Roads

  1,093,420   2,145   161,927   933,638   10   603,155   83,651   69,131   588,635   345,003   490,265   519,052

Facilities

  7,414,628   28,880   35,010   7,408,498   10-20-33   3,567,870   1,412   579,173   4,145,631   3,262,867   3,846,758   2,923,241

Computer equipment

  1,199,977   209,800   297   1,409,480   20   969,121   296   107,964   1,076,789   332,691   230,856   229,037

Silo plants

  1,169,114   —     —     1,169,114   5   315,645   —     47,306   362,951   806,163   853,469   866,446

Constructions in progress

  11,568,150   6,238,347   20,151   17,786,346   —     —     —     —     —     17,786,346   11,568,150   8,014,930

Advances to suppliers

  144,683   878,316   738,514   284,485   —     —     —     —     —     284,485   144,683   2,010,909
   
 
 
 
 
 
 
 
 
 
 
 

Total at March 31, 2005

  169,076,719   9,297,248   9,255,517   169,118,450       17,529,527   321,295   2,234,423   19,442,655   149,675,795        
   
 
 
 
     
 
 
 
 
 
   

Total at June 30, 2004

  159,535,365   14,880,715   5,339,361   169,076,719       17,652,983   3,116,505   2,993,049   17,529,527       151,547,192    
   
 
 
 
     
 
 
 
     
 

Total at March 31, 2004

  159,535,365   8,776,128   4,311,329   164,000,164       17,652,983   2,180,561   2,113,909   17,586,331           146,413,833
   
 
 
 
     
 
 
 
         

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Investments

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1 and 2)

 

Schedule C

 

Type and characteristics of the
securities


   Amount

   Value at
March 31,
2005 Pesos


    Value at
June 30,
2004 Pesos


    Value at
March 31,
2004 Pesos


    Market
value
Pesos


  INFORMATION ON THE ISSUER

              Principal activity

   Latest financial statements

                 Capital
Pesos


   Income
(loss) for
the period
Pesos


    Shareholders’
Equity Pesos


Current Investments

                                               

Mutual Funds

                                               

Fondo Bony Hamilton in dollars

   32,534,579    93,601,984     —       —       2,87700                    

Fondo especial Banco Rio in pesos

   110,475    91     —       —       0,000824                    

Fondo plazo fijo Banco Rio in dollars

   1,862    2,523     4,081     4,030     1,354995                    
         

 

 

                       
          93,604,598     4,081     4,030                          
         

 

 

                       

Notes and Convertible Bonds

                                               

Interest of Convertible Bonds 2007 - IRSA (US$)

                                               

Subsidiaries, related companies Law N° 19,550

                                               

Section 33 and related parties:

                                               

IRSA Inversiones y Representaciones S.A.

        3,338,226     1,388,504     4,412,090                          

Bonos Global 2010

   110,000    95,732     97,096     99,264     0,870291                    

Bocon Pro 1

   157,647    630     630     630     0,003996                    

Bonos Arg Discount

   1,500,000    2,445,324     —       —       1,63022                    

Letes

   356,190    320,571     —       —       0,90000                    
         

 

 

                       
          6,200,483     1,486,230     4,511,984                          
         

 

 

                       

Deposits in foreign banks in dollars

        —       —       3,039,960                          
         

 

 

                       
          —       —       3,039,960                          
         

 

 

                       

Total current investments

        99,805,081     1,490,311     7, 555,974                          
         

 

 

                       

Non-current investments

                                               

Subsidiaries, related companies Law N° 19,550 Section 33 anil related parties:

                                               

AGRO-URANGA S.A.

                          unlisted   Agricultural and livestock    2,500,000    4,241,002     14,181,944

Shares

   893,069    4,932,749     5,230,031     5,425,695                          

Contribution on account of future subscriptions of shares

        7,865     7,865     7,865                          

Higher value of property

        11,179,150     11,179,150     11,179,150                          
         

 

 

                       
          16,119,764     16,417,046     16, 612,710                          
         

 

 

                       

INVERSIONES GANADERAS S.A.

                          unlisted   Raising and grazing cattle    5,326,589    655,372     11,781,613

Shares

   5,326,588    11,052,003     10,396,631     10,131,038                          

Contribution on account of future subscriptions of shares

        729,585     729,585     729,585                          
         

 

 

                       
          11,781,588     11,126,216     10,860,623                          
         

 

 

                       

CACTUS ARGENTINA S.A.

                          unlisted   Explotation and administration
of agricultural and beef cattle
products
   1,300,000    (178,108 )   6,380,122

Shares

   650,000    1,054,443     1,143,497     1,062,894                          

Contribution on account of future subscriptions of shares

        2,135,618     2,135,618     2,135,618                          
         

 

 

                       
          3,190,061     3,279,115     3,198,512                          
         

 

 

                       

FUTUROS Y OPCIONES.COM S.A.

                          unlisted   Gives information about
markets and services of
economic and financial
consulting through internet
   12,000    (365,074 )   253,006

Shares

   8,400    —       (2,574,138 )   (2,615,738 )                        

Contribution on account of future subscriptions of shares

        —       2,726,793     2,726,793                          
         

 

 

                       
          —       152,655     111,055                          
         

 

 

                       

IRSA Inversiones y Representaciones S.A. Shares

   68,915,391    287,248,351     244,002,522     193,533,755     listed   Real state    338,372,526    78,202,410     1,194,535,346
         

 

 

                       
          287,248,351     244,002,522     193,533,755                          
         

 

 

                       
     Subtotal    318,339,764     274,977,554     224,316,655                          
         

 

 

                       

Other Investments

                                               

Convertible Bonds 2007 - IRSA (U$S)

                                               

Subsidiaries, related companies Law N° 19,550 Section 33 and related parties:

                                               

IRSA Inversiones y Representaciones S.A.

   36,538,897    106,583,963     132,941,891     142,837,462                          
         

 

 

                       

Coprotán

        20,717     20,717     20,717     unlisted                    
         

 

 

                       
     Subtotal    106,604,680     132,962,608     142,858,179                          
         

 

 

                       

Goodwill

                                               

Goodwil

        164,919     659,676     824,595                          

IRSA negative goodwill

        (43,485,057 )   (26,529,022 )   (21,018,232 )                        
         

 

 

                       
     Subtotal    (43,320,138 )   (25,869,346 )   (20,193,637 )                        
         

 

 

                       

Total non-current investments

        381,624,306     382,070,816     346,981,197                          
         

 

 

                       

 

55


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Allowances

 

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1 and 2)

 

Schedule E

 

Item


   Opening
balances
Pesos


   Deductions (1)
Pesos


    Applications
Pesos


    Value at
March
31, 2005
Pesos


   Value at
June 30,
2004
Pesos


   Value at
March
31, 2004
Pesos


Deducted from assets
Defaulting debtors

   387,067    (2,826 )   (38,532 )   345,709    387,067    359,661
    
  

 

 
  
  

Total at March 31, 2005

   387,067    (2,826 )   (38,532 )   345,709          
    
  

 

 
  
    

Total at June 30, 2004

   454,125    (67,058 )   —            387,067     
    
  

 

      
  

Total at March 31, 2004

   454,125    (94,464 )   —                 359,661
    
  

 

      
  

 

(1) The accounting appropriation is included in Statement of Income

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Cost of sales

 

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

(Notes 1 and 2)

 

Schedule F

 

     Crops

    Beef cattle

    Milk

    Others

    Total

 
    

March 31,
2005

Pesos


    March 31,
2004
Pesos


   

March 31,
2005

Pesos


   

March 31,
2004

Pesos


    March 31,
2005
Pesos


    March 31,
2004
Pesos


    March 31,
2005
Pesos


    March 31,
2004
Pesos


   

March 31,

2005

Pesos


   

March 31,

2004

Pesos


 

Inventories at the beginning of the year

                                                                        

Beef cattle

   —       —       55,198,055     45,097,923     4,150,630     2,294,684     —       —       59,348,685           47,392,607        

Crops

   8,639,910     6,301,776     —       —       —       —       —       —       8,639,910           6,301,776        

Unharvested crops

   1,603,897     1,112,230     —       —       —       —       —       —       1,603,897           1,112,230        

Seeds and fodder

   —       —       134,870     106,386     103,508     58,969     —       —       238,378           165,355        

Materials

   3,842,219     1,222,255     —       —       44,982     33,362     154,393     169,094     4,041,594           1,424,711        
    

 

 

 

 

 

 

 

 

       

     
     14,086,026     8,636,261     55,332,925     45,204,309     4,299,120     2,387,015     154,393     169,094           73,872,464           56,396,679  

Holding results

   —       —       8,375,479     1,404,317     259,170     388,308     —       —             8,634,649           1,792,625  

Commodities market results

   2,924,090     (2,132,913 )   —             —             —       —             2,924,090           (2,132,913 )

Transfer of Inventories to expenses

   (149,403 )   (164,529 )   —             —             —       —             (149,403 )         (164,529 )

Transfer of Inventories to fixed assets

   (572,364 )   (220,039 )   —             —             (74,348 )   (1,390 )         (646,712 )         (221,429 )

Transfer of Unharvested crops to expenses

   (11,608,487 )   (5,847,565 )   (400,174 )   (260,344 )   (480,058 )   (260,405 )   (370,876 )   (421,992 )         (12,859,595 )         (6,790,306 )

Recovery of Inventories

   —       —       150,440     184,161     (150,440 )   (184,161 )   —       —             —             —    

Purchases

   27,919,030     15,879,887     3,868,098     10,418,901     929,239     827,041     506,664     417,755           33,223,031           27,543,584  

Operating expenses (Schedule H)

   11,322,950     7,866,780     12,561,709     10,151,708     1,459,122     1,295,561     26,263     86           25,370,044           19,314,135  

Less:

                                                                        

Inventories at the end of the period

                                                                        

Beef cattle (1)

   —       —       (57,581,642 )   (53,894,558 )   (4,968,440 )   (4,021,252 )   —       —       (62,550,082 )         (57,915,810 )      

Crops

   (12,077,749 )   (6,272,900 )   —       —       —             —       —       (12,077,749 )         (6,272,900 )      

Unharvested crops

   (17,777,895 )   (8,515,388 )   —       —       —             —       —       (17,777,895 )         (8,515,388 )      

Seeds and fodder

   —       —       (271,597 )   (189,957 )   (228,890 )   (92,564 )   —       —       (500,487 )         (282,521 )      

Materials

   (2,288,977 )   (2,664,094 )   —       —       (49,926 )   (41,814 )   (240,935 )   (162,752 )   (2,579,838 )   (95,486,051 )   (2,868,660 )   (75,855,279 )
    

 

 

 

 

 

 

 

       

       

Cost of Sales

   11,777,221     6,565,500     22,035,238     13,018,537     1,068,897     297,729     1,161     801           34,882,517           19,882,567  
    

 

 

 

 

 

 

 

       

       

 

(1) Includes cattle births of the period

 

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Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Foreign currency assets and liabilities

Corresponding to the period beginning as from July 1, 2004 and ended on March 31, 2005

comparative with the year ended on June 30, 2004 and with the period ended on March 31, 2004

(Notes 1 and 2)

 

Schedule G

 

    March 31, 2005

  June 30, 2004

  March 31, 2004

Item


 

Type and amount
of foreign

currency


 

Current

exchange
rate

Pesos


 

Amount in
local currency

Pesos


 

Type and amount
of foreign

currency


  Amount in
local currency
Pesos


 

Type and amount
of foreign

currency


 

Amount in
local currency

Pesos


Current Assets

                                 

Cash and banks

                                 

Cash and banks

  U$S 6,121,003   2,88   17,610,125   U$S 2,472,934   7,218,021   U$S 3,077,574   8,678,780

investments:

                                 

Mutual funds

  U$S 32,535,456   2,88   93,604,507   U$S 1,399   4,081   U$S 1,429   4,030

Interest of Convertible Bonds 2007 - IRSA

                                 

Subsidiaries, related companies Law 19,550 Article 33 and related parties:

                                 

IRSA Inversiones y Representaciones Sociedad Anónima

  U$S 1,144,404   2,92   3,338,226   U$S 469,406   1,388,504   U$S 1,542,689   4,412,090

Deposits in foreign banks

  U$S —         —     U$S —     —     U$S 1,078,000   3,039,960

Trade accounts receivable:

                                 

Trade accounts receivable

  U$S 343,815   2,88   989,156   U$S 1,295   3,779   U$S 15,000   42,300

Other receivables and prepaid expenses:

                                 

Secured by mortgages

  U$S 2,837,976   2,88   8,164,858   U$S 354,351   1,033,997   U$S 352,058   992,804

Guarantee deposits

  U$S 678,333   2,88   1,951,565   U$S 750,171   2,188,998   U$S 1,432,895   4,040,763

Non-Current Assets

                                 

Investments:

                                 

Convertible Bonds 2007 - IRSA

                                 

Subsidiaries, related companies Law 19,550 Article 33 and related parties:

                                 

IRSA Inversiones y Representaciones Sociedad Anónima

  U$S 36,538,897   2,92   106,583,963   U$S 44,943,168   132,941,891   U$S 49,943,168   142,837,482
   

     
 

 
 

 

Total Assets

  U$S 80,199,884       232,242,400   U$S 48,992,724   144,777,271   U$S 57,442,813   164,048,169
   

     
 

 
 

 

Current liabilities

                                 

Trade accounts payable:

                                 

Suppliers

  U$S 789,295   2,92   2,302,374   U$S 375,360   1,110,314   U$S 370,965   1,060,960

Accrual for other expenses

  U$S 607,354   2,92   1,771,852   U$S 499,662   1,477,683   U$S 153,420   438,782

Loans:

                                 

Interest of Convertible Bonds 2007

  U$S 503,296   2,92   1,468,115   U$S 199,202   589,239   U$S 1,338,956   1,701,548

Subsidiaries, related companies Law 19,550 Article 33 and related parties:

                                 

Shareholders

  U$S 745,205   2,92   2,173,764   U$S 250,176   740,021   U$S 722,206   2,116,063

Directors

  U$S 1,045   2,92   3,049   U$S 1,124   3,324   U$S 4,028   11,802

Other debts,

                                 

Advances to customers

  U$S 2,704,559   2,92   7,889,200   U$S 1,500,000   4,432,500   U$S —     —  

Non-current liabilities

                                 

Loans:

                                 

Convertible Bonds 2007

  U$S 16,177,382   2,92   47,189,423   U$S 19,072,528   56,416,538   U$S 43,347,480   55,086,045

Subsidiaries, related companies Law 19,550 Article 33 and related parties:

                                 

Shareholders

  U$S 23,953,025   2,92   69,870 974   U$S 23,953,025   70,853,048   U$S 23,380,769   68,505,652

Directors

  U$S 33,600   2,92   98,011   U$S 107,600   318,281   U$S 130,408   382,096
   

     
 

 
 

 

Total Liabilities

  U$S 45,514,761       132,766,562   U$S 45,958,677   135,940,948   U$S 69,448,232   129,302,948
   

     
 

 
 

 

 

US$: US dollars

 

58


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Information submitted in compliance with Section 64, subsection B of Law N° 19,550

Corresponding to the periods beginning as from July 1, 2004 and 2003

and ended on March 31, 2005 and 2004

(Notes 1 and 2)

 

Schedule H

 

Items


   Total
March 31,
2005 Pesos


   Operating Expenses

   Expenses

   Total
March 31,
2004 Pesos


      Total Pesos

   Crops Pesos

   Beef cattle
Pesos


   Milk Pesos

   Others
Pesos


   Selling
Pesos


   Administrative
Pesos


  

Directors’ fees

   90,169    —      —      —      —      —      —      90,169    7,597

Fees and payments for services

   821,909    167,797    7,020    133,384    24,827    2,566    —      654,112    897,575

Salaries and wages

   3,951,604    1,846,635    427,540    1,169,264    249,831    —      —      2,104,969    4,444,595

Social security contributions

   692,528    304,105    144,319    141,097    18,689    —      —      388,423    581,453

Taxes, rates and contributions

   359,689    308,886    102,669    182,469    23,748    —      —      50,803    307,221

Gross sales taxes

   371,920    —      —      —      —      —      371,920    —      393,920

Office and administrative expenses

   434,254    —      —      —      —      —      —      434,254    184,288

Bank commissions and expenses

   8,572    8,572    4,269    3,996    307    —      —      —      8,997

Depreciation of fixed assets

   2,234,423    2,015,139    1,140,480    710,775    151,360    12,524    —      219,284    2,113,909

Vehicle and travelling expenses

   437,062    237,708    104,692    1 20,622    10,838    1,556    —      199,354    346,631

Spare parts and repairs

   984,699    984,699    541,978    373,737    68,984    —      —      —      766,610

Insurance

   184,651    47,594    24,178    18,130    1,760    3,526    —      137,057    237,658

Employees’ maintenance

   256,889    187,704    39,780    141,097    6,827    —      —      69,185    111,558

Livestock expenses (1)

   10,298,720    9,441,210    —      9,441,210    —      —      857,51 0    —      8,003,114

Dairy farm expenses (2)

   896,496    888,771    —      —      888,771    —      7,725    —      776,075

Agricultural expenses (3)

   11,104,307    8,581,038    8,581,038    —      —      —      2,523,269    —      6,893,041

Silo expenses

   97,032    97,032    97,032    —      —      —      —      —      233,522

General expenses

   253,154    253,154    1 07,955    125,928    13,180    6,091    —      —      367,778
    
  
  
  
  
  
  
  
  

Total at March 31, 2005

   33,478,078    25,370,044    11,322,950    12,561,709    1,459,122    26,263    3,760,424    4,347,610    —  
    
  
  
  
  
  
  
  
  

Total at March 31, 2004

        19,314,135    7,866,780    10,151,708    1,295,561    86    2,995,296    4,366,111    26,675,542
         
  
  
  
  
  
  
  

 

(1) Includes cattle food, additives, lodging, animal health and others.

 

(2) Includes cattle food, additives, lodging, animal health and others.

 

(3) Includes seeds, agrochemicals, irrigation, services hired, leases and others.

 

59


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

for the period ended March 31, 2005

 

1. LEGAL FRAMEWORK

 

There are no specific significant legal regimes that would imply contingent suspension or application of the benefits included in these regulations.

 

2. RELEVANT MODIFICATONS IN THE COMPANY´S ACTIVITIES

 

They are detailed in the Unaudited Business Highlight, which is attached to the present financial statements.

 

3. CLASSIFICATION OF OUTSTANDING ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES ACCORDING TO THEIR MATURITY

 

  a. Other Receivables without a due date at March 31, 2005.

 

    

Other

Receivables

Pesos


   Intercompany Law Nº 19,550 Section 33

      FYO

   Agro-Uranga

   Cactus

     

Other

Receivables

Pesos


  

Other

Receivables

Pesos


  

Other

Receivables

Pesos


Current

   2,089,354    23,603    694,981    1,040,575

Non- current

   5,156,243    —      —      —  

 

  b. Accounts Receivable and other receivables to fall due at March 31, 2005

 

    

Trade

Accounts

Receivable

Pesos


  

Intercompany

Law Nº 19,550 Section 33


  

Other

Receivables

Pesos


  

Intercompany

Law Nº
19,550
Section 33


      IGSA

   FYO

   Cactus

      Cactus

     

Trade

Accounts

Receivable

Pesos


  

Trade

Accounts

Receivable

Pesos


  

Trade

Accounts

Receivable

Pesos


     

Other

Receivables

Pesos


06.30.05

   4,581,302    10,348    693,540    45,164    3,614,587    —  

09.30.05

   —      —      —      —      8,164,858    —  

12.31.05

   —      —      —      —      118,880    323,390

 

4. CLASSIFICATION OF OUTSTANDING DEBTS ACCORDING TO THEIR MATURITY

 

  a. There are no past due debts at March 31, 2005.

 

  b. Debts without a due date at March 31, 2005 amount to Ps. 102,896 current, corresponding to Futuros y Opciones.Com S.A. and Ps. 28,887,682 non-current.

 

60


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

4. CLASSIFICATION OF OUTSTANDING DEBTS ACCORDING TO THEIR MATURITY (Continued)

 

  c. Debts to fall due at March 31, 2005

 

    

Accounts

Payable

Pesos


   Intercompany Law Nº
19,550 Section 33


  

Loans

Pesos


  

Salaries

and

Social

Security

Charges

Pesos


  

Tax

Payable

Pesos


  

Other

Debts

Pesos


  

Intercompany

Law Nº
19,550
Section 33


        IRSA

   Cactus

               IGSA

        Accounts Payable

              

Other Debts

Pesos


        Pesos

   Pesos

              

06.30.05

   10,147,145    159,268    413,804    16,086,293    428,826    1,806,065    7,023,199    —  

09.30.05

   —      —      —      10,113,333    484,325    —      7,889,200    —  

12.31.05

   —      —      —      —      —      21,638,626    —      1,630,854

12.31.06

   —      —      —      —      —      —      —      203,432

12.31.07

   —      —      —      115,881,389    —      —      —      —  

 

5. CLASSIFICATION OF OUTSTANDING ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES ACCORDING TO THEIR FINANCIAL EFFECTS

 

a.

 

    

Trade

Accounts

Receivable

Pesos


  

Intercompany

Law Nº 19,550 Section 33


       

Intercompany

Law Nº 19,550 Section 33


        IGSA

   FYO

   Cactus

  

Other

Receivables

Pesos


   Cactus

   FYO

   Agro-
Uranga


       

Trade

Accounts

Receivable

Pesos


  

Trade

Accounts

Receivable

Pesos


  

Trade

Accounts

Receivable

Pesos


     

Other

Receivables

Pesos


  

Other

Receivables

Pesos


  

Other

Receivables

Pesos


In pesos

   3,592,146    10,348    693,540    45,164    9,027,499    1,363,965    23,603    694,981

In US Dollars

   989,156    —      —      —      10,116,423    —      —      —  

 

  b. All accounts receivable and other receivables are not subject to adjustment provisions.

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

c.

 

    

Trade

Accounts

Receivable

Pesos


  

Intercompany

Law Nº 19,550 Section 33


       

Intercompany

Law Nº 19,550 Section 33


        IGSA

   FYO

   Cactus

  

Other

Receivables

Pesos


   Cactus

   FYO

   Agro-
Uranga


       

Trade

Accounts
Receivables

Pesos


  

Trade

Accounts
Receivables

Pesos


  

Trade

Accounts
Receivables

Pesos


     

Other
Receivables

Pesos


  

Other
Receivables

Pesos


  

Other
Receivables

Pesos


Outstanding balances accruing interests

   —      —      —      —      8,988,138    204,170    —      —  

Outstanding balances not accruing interests

   4,581,302    10,348    693,540    45,164    10,155,784    1,159,795    23,603    694,981

 

6. CLASSIFICATION OF DEBTS ACCORDING TO THEIR FINANCIAL EFFECTS

 

a.

 

    

Accounts
Payable

Pesos


  

Intercompany

Law Nº 19,550
Section 33


  

Loans

Pesos


  

Salaries

and

Social

Security

Charges

Pesos


  

Taxes

Payable

Pesos


  

Other

Debts


  

Intercompany

Law Nº 19,550

Section 33


        IRSA

   Cactus

               IGSA

   FYO

        Accounts Payable

               Other Debts

        Pesos

   Pesos

               Pesos

   Pesos

In pesos

   6,073,119    159,268    413,804    21,277,679    913,151    57,406,452    7,023,199    1,834,286    102,896

In US Dollars

   4,074,026    —      —      120,803,336    —      —      7,889,200    —      —  

 

  b. All debts outstanding are not subject to adjustment provisions.

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

c.

 

    

Accounts
Payable

Pesos


  

Intercompany

Law Nº 19,550

Section 33


  

Loans

Pesos


  

Salaries

and

Social

Security

Charges

Pesos


  

Taxes

Payable

Pesos


  

Other

Debts


  

Intercompany

Law Nº 19,550

Section 33


        IRSA

   Cactus

               Cactus

   IGSA

        Accounts Payable

               Other Debts

        Pesos

   Pesos

               Pesos

   Pesos

Outstanding debts accruing interests

   —      —      —      139,713,106    —      —      —           1,798,011

Outstanding debts not accruing interests

   10,147,145    159,268    413,804    2,367,909    913,151    57,406,452    14,912,399    102,896    36,275

 

7. INTEREST IN OTHER COMPANIES (Law Nº 19,550 Section 33)

 

Interests in other companies’ capital and the number of votes held in those companies governed by Law Nº 19,550 Section 33 are explained in Note 2 to the unaudited consolidated financial statements and intercompany balances as of March 31, 2005 are described in points 4 and 5 above.

 

8. RECEIVABLES FROM OR LOANS TO DIRECTORS AND STATUTORY AUDIT COMMITTEE MEMBERS

 

At March 31, 2005 there were advance payments to directors for Ps. 88,010, and there were no receivables due from or loans to syndics and relatives up to and including second degree, of directors and syndics.

 

9. PHYSICAL INVENTORIES

 

The company conducts physical inventories once a year in each property, covering all the assets under such account. There is no relevant immobilization of inventory.

 

10. VALUATION OF INVENTORIES

 

We further inform the sources for the information used to calculate the current value:

 

aa. Cattle for fattening, valued at the market value net of estimated sale expenses: quotation in the Liniers Livestock Market (“Mercado de Hacienda de Liniers”).

 

b. Cattle for raising and daily production valued at its replacement cost: according to specific appraisals made by renowned experts.

 

c. Crops: official quotation of the Cámara Arbitral de Cereales for the port closest to the warehouse, published by media of wide circulation (“La Nación Newspaper”) net of estimated sale expenses.

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

d. The remaining inventory stated at its replacement cost: seeds, forage and materials: replacement cost published by a well-known magazine (revista Márgenes Agropecuarios).

 

11. TECHNICAL REVALUATION OF FIXED ASSETS

 

There are no fixed assets subject to technical revaluation.

 

12. OBSOLETE FIXED ASSETS

 

There are no obsolete fixed assets with accounting value.

 

13. MINORITY INTEREST

 

There are no minority interests in other companies in excess of the provisions of Law Nº 19,550 Section 33.

 

14. RECOVERABLE VALUES

 

The recoverable value of the inventory under consideration is the net realizable value (selling price at the end of the year less estimated selling expenses). The recoverable value of fixed assets under consideration is the economic use value determined by the possibility of absorbing the amortizations with the income of the Company.

 

15. INSURANCES

 

The types of insurance used by the company are the following:

 

Insured property


  

Risk covered


  

Amount insured

Pesos


  

Account
Value

Pesos


Buildings, machinery, silos and furniture

   Theft. fire and technical insurance    2,792,050    7,004,346

Vehicles

   Theft, fire and civil and third parties liability    1,420,707    638,650

 

16. PROVISIONS

 

There are no provisions in excess of 2% of the shareholders equity.

 

17. CONTINGENCIES

 

At March 31, 2005 there are no contingent situations that have not been accounted for.

 

18. IRREVOCABLE CONTRIBUTIONS TO CAPITAL ON ACCOUNT OF FUTURE SUBSCRIPTIONS

 

None.

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

19. DIVIDENDS ON PREFERED STOCK

 

There are no cumulative dividends not paid on preferred stock.

 

20. LIMITATIONS OF PROFIT DISTRIBUTIONS

 

See Note 10 to the Unaudited Financial Statements.

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

UNAUDITED BUSINESS HIGHLIGHTS

 

Comparative Shareholders Equity Structure

 

    

At March 31,

2005

Pesos


  

At March 31,

2004

Pesos


  

At March 31,

2003

Pesos


  

At March 31,

2002

Pesos


  

At March 31,

2001

Pesos


Current Assets

   188,227,107    71,848,921    85,739,891    75,335,253    165,888,964

Non Current Assets

   585,070,271    535,380,505    499,909,690    331,896,268    265,234,574
    
  
  
  
  

Total Assets

   773,297,378    607,229,426    585,649,581    407,231,521    431,123,538
    
  
  
  
  

Current Liabilities

   77,617,888    17,203,291    31,674,759    57,134,600    39,518,538

Non Current Liabilities

   151,406,556    148,454,671    171,168,755    12,860,198    1,299,848
    
  
  
  
  

Total Liabilities

   229,024,444    165,657,962    202,843,514    69,994,798    40,818,386
    
  
  
  
  

Minority Interest

   355,930    47,619    254,380    278,237    74,591
    
  
  
  
  

Shareholders’ Equity

   543,917,004    441,523,845    382,551,687    336,958,486    390,230,561
    
  
  
  
  
     773,297,378    607,229,426    585,649,581    407,231,521    431,123,538
    
  
  
  
  

 

Comparative Income Structure

 

    

At March 31,

2005

Pesos


   

At March 31,

2004

Pesos


   

At March 31,

2003

Pesos


   

At March 31,

2002

Pesos


   

At March 31,

2001

Pesos


 

Operating income

   20,652,074     14,757,585     22,529,248     (1,057,380 )   6,877,290  

Financial and holding results

   64,170,364     107,388     (17,028,158 )   (46,798,459 )   1,002,068  

Other income and expenses and results from related companies

   17,545,204     3,432,833     64,022,388     (200,982 )   (187,485 )

Management fees

   (6,905,699 )   (1,138,846 )   (4,887,308 )   —       (501,082 )
    

 

 

 

 

Operating net income (loss)

   95,461,943     17,158,960     64,636,170     (48,056,821 )   7,190,791  

Income tax

   (33,420,169 )   (7,068,447 )   (7,526,874 )   (1,386,034 )   (2,922,265 )

Minority interest

   109,521     159,091     176,376     255,490     241,209  
    

 

 

 

 

Net income (loss)

   62,151,295     10,249,604     57,285,672     (49,187,365 )   4,509,735  
    

 

 

 

 

 

Production Volume

 

   

3Q March 31,

2005


 

Accumulated

July 1, 2004 to

March 31, 2005


 

3Q March 31,

2004


 

Accumulated

July 1, 2003 to

March 31, 2004


 

3Q March 31,

2003


 

Accumulated

July 1, 2002 to

March 31, 2003


 

3Q March 31,

2002


 

Accumulated

July 1, 2001 to

March 31, 2002


 

3Q March 31,

2001


 

Accumulated

July 1, 2000 to

March 31, 2001


Beef Cattle (in Kgs.)

  2,492,476   8,480,476   3,364,013   8,475,050   2,480,263   7,986,199   4,282,224   9,531,779   2,902,618   10,105,624
   
 
 
 
 
 
 
 
 
 

Butyraceous (in Kgs. )

  49,490   175,086   49,984   185,179   44,113   157,801   36,763   189,825   52,825   185,891
   
 
 
 
 
 
 
 
 
 

Crops (in quintals)*

  308,221   532,601   185,386   325,436   274,577   349,321   321,151   532,285   245,270   429,180
   
 
 
 
 
 
 
 
 
 

 

* One quintals equals one hundred kilograms

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

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Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

UNAUDITED BUSINESS HIGHLIGHTS (Continued)

 

Sales Volume

 

   

3Q March 31,

2005


 

Accumulated

July 1, 2004

to March 31,

2005


 

3Q March 31,

2004


 

Accumulated

July 1, 2003

to March 31,

2004


 

3Q March 31,

2003


 

Accumulated

July 1, 2002

to March 31,

2003


 

3Q March 31,

2002


 

Accumulated

July 1, 2001

to March 31,

2002


 

3Q March 31,

2001


 

Accumulated

July 1, 2000

to March 31,

2001


Beef Cattle (in Kgs.)

  4,125,490   13,078,115   4,229,517   10,645,720   2,478,953   7,334,778   3,458,221   12,989,747   3,695,465   12,214,597
   
 
 
 
 
 
 
 
 
 

Butyraceous (in Kgs.)

  49,490   175,086   40,984   185,179   44,113   157,801   36,763   189,825   52,825   185,891
   
 
 
 
 
 
 
 
 
 

Crops (in quintals)*

  136,257   455,315   154,306   389,377   173,570   884,990   330,730   837,519   212,989   1,215,758
   
 
 
 
 
 
 
 
 
 

 

* One quintals equals one hundred kilograms

 

Local Market

 

   

3Q March 31,

2005


 

Accumulated

July 1, 2004

to March 31,

2005


 

3Q March 31,

2004


 

Accumulated

July 1, 2003

to March 31,

2004


 

3Q March 31,

2003


 

Accumulated

July 1, 2002

to March 31,

2003


 

3Q March 31,

2002


 

Accumulated

July 1, 2001

to March 31

2002


 

3Q March 31,

2001


 

Accumulated

July 1, 2000

to March 31,

2001


Beef Cattle (in Kgs.)

  4,125,490   13,078,115   4,229,517   10,645,720   2,478,953   7,334,778   3,458,221   12,989,747   3,695,465   12,214,597
   
 
 
 
 
 
 
 
 
 

Butyraceous (in Kgs.)

  49,490   175,086   49,984   185,179   44,113   157,801   36,763   189,825   52,825   185,891
   
 
 
 
 
 
 
 
 
 

Crops (in quintals)*

  136,257   455,315   154,306   389,377   173,570   884,990   330,730   837,519   212,989   1,215,758
   
 
 
 
 
 
 
 
 
 

 

* One quintals equals one hundred kilograms

 

Exports

 

   

3Q March 31,

2005


 

Accumulated

July 1, 2004

to March 31,

2005


 

3Q March 31,

2004


 

Accumulated

July 1, 2003

to March 31,

2004


 

3Q March 31,

2003


 

Accumulated

July 1, 2002

to March 31,

2003


 

3Q March 31,

2002


 

Accumulated

July 1, 2001

to March 31,

2002


 

3Q March 31,

2001


 

Accumulated

July 1, 2000

to March 31,

2001


Beef Cattle (in Kgs.)

  —     —     —     —     —     —     —     —     —     —  
   
 
 
 
 
 
 
 
 
 

Butyraceous (in Kgs.)

  —     —     —     —     —     —     —     —     —     —  
   
 
 
 
 
 
 
 
 
 

Crops (in quintals)*

  —     —     —     —     —     —     —     —     —     —  
   
 
 
 
 
 
 
 
 
 

 

* One quintals equals one hundred kilograms

 

Ratios

 

    

At March 31,

2005

Pesos


  

At March 31,

2004

Pesos


  

At March 31,
2003

Pesos


  

At March 31,

2002

Pesos


   

At March 31,

2001

Pesos


Liquidity

   2,425    4,176    2,707    1,319     4,198

Solvency

   2,375    2,665    1,886    4,814     9,560

Fixed of capital

   0,757    0,882    0,854    0,815     0,615

Return on Equity

   0,123    0,025    0,162    (0,139 )   0,012
    
  
  
  

 

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight

 

Buenos Aires, May 11, 2005 - Cresud S.A.C.I.F. y A. (Nasdaq: CRESY – BASE: CRES), one of the leading agricultural companies in Argentina, announces today the results corresponding to the first nine months of Fiscal Year 2005 ended on March 31, 2005.

 

Results for the first nine months of Fiscal Year 2005 showed a net profit of Ps. 62.2 million as compared to a Ps. 10.2 million profit registered during the same period of the previous Fiscal Year, denoting a 506% increase.

 

The increase in the net result is mainly a consequence of: (i) the higher results registered in our cattle stock holdings (generated by a stronger market value) which went from Ps. 1.9 million during the same period of Fiscal Year 2004 to Ps. 9.3 million for the current period, (ii) stronger results due to the sale of farms, which increased Ps. 6.0 million amounting Ps. 7.7 million for the period ended March 31, 2005, and (iii) Ps. 68.8 million profit from the sale of IRSA’s Convertible Notes held by the company.

 

Consolidated net sales for the period amounted Ps. 49.9 million, 9% higher than those registered during the same period of the previous Fiscal Year, mainly due to the higher volume of crops and cattle sold during the nine-month period.

 

Gross Income during the first nine months of Fiscal Year 2005 amounted to Ps. 12.4 million as compared to Ps. 19.1 million gross profit registered during the same period of the previous Fiscal Year.

 

This reduction in gross profit is partly a consequence of crop lower prices. At the beginning of Fiscal Year 2004 the company had accumulated agricultural commodities that when appreciated generated profits due to their revalorization. On the contrary, the stock at the beginning of Fiscal Year 2005 did not undergo the same.

 

Besides, milk sales decreased and prices were slightly lower, therefore reducing the margin obtained from this activity. In addition, there were increases in the costs of this business unit as a consequence of the expenses generated by the operation of the dairy farm at the “El Tigre” facility, which is in an incipient productive stage due to its recent opening.

 

Operating Income showed for the nine month period ended on March 31, 2005 a Ps. 20.7 million profit, compared to a Ps. 14.8 million profit registered during the same period of the previous Fiscal Year.

 

Results from related companies generated a Ps. 20.9 million profit, mainly due to our share ownership in IRSA Inversiones y Representaciones S.A. as at March 31, 2005.

 

Alejandro G. Elsztain
Second Vice-Chairman
serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Summary of operations

 

Crops

 

During the period crop sales amounted Ps. 15.0 million, compared to Ps. 14.1 million registered during the same period of the previous Fiscal Year. Crop volume sold amounted 45,531 tons at an average price of Ps. 330 per ton compared to 38,938 tons sold at an average price of Ps. 363 during the same period of the previous Fiscal Year.

 

At March 31, 2005, 100% of the 5,884 sowed area destined to wheat was harvested obtaining a 4.0 tons per hectare yield, surpassing Company’s forecasts.

 

Sunflower harvest, with 1,765 hectares, also ended during the period. Yields obtained reached 2.0 tons per hectare while during the previous season it had amounted 1.6 tons per hectare.

 

Likewise, corn and soybean harvests are developing satisfactorily, with yields high above those forecasted. As of today, 82% of the area destined to soybean had been harvested, while the corn harvest had reached 39%.

 

Crop stocks at the closing of the period amounted 38,216 tons of which 17,332 tons corresponded to wheat and 13,089 to corn.

 

Gross profit for the period ended on March 31, 2005 amounted Ps. 3.3 million compared to a Ps. 7.6 million profit for the same period of the previous Fiscal Year. The drop registered in this item is partly consequence of crop’s lower prices, besides increases in direct costs. At the beginning of Fiscal Year 2004 the company had accumulated agricultural commodities that when appreciated generated profits due to their revalorization. On the contrary, the stocks accumulated at Fiscal Year 2005 did not follow during the period ended on March 31, 2005 similar trends

 

For the current season we have destined 35,848 hectares to agriculture, of which 16,142 hectares were leased to third parties.

 

Most of the leases were agreed with a fix payment prior to harvest and only a small percentage were crop-sharing agreements.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Beef Cattle

 

As of March 31, 2005, the Company’s cattle stock amounted to 93,880 heads with 126,964 hectares destined to this activity.

 

Livestock sales increased by 37% from Ps. 19.8 million as of March 31, 2004 to Ps. 27.1 million as of March 31, 2005. During the nine month period a total of 13,078 tons were sold, while during the first nine months of Fiscal Year 2004 tons sold amounted to 10,646. The sustained increase which beef cattle prices have been experiencing was also important for increasing Company’s revenues within this business unit.

 

Gross profit for the cattle beef segment amounted to Ps. 4.9 million, as compared to Ps. 5.9 million profit registered during the first nine months of the previous Fiscal Year. This decrease in the gross profit was a consequence of both the increase in direct costs and cattle finished in feed lot premises and the increase in initial stock holdings as compared to the previous year. For the nine month period ended on March 31, 2004, 46% of sales in tons were from cattle finished in feed lot premises, while during 2005, such sales increased to 76%.

 

Cattle beef production amounted 8,480 tons, while during the previous Fiscal Year it had amounted 8,475 tons.

 

LOGO

 

Source: Liniers market (Argentina) – Instituto Nacional de carnes (Uruguay)

 

Livestock prices had a favorable evolution during the course of the first nine months of Fiscal Year 2005. After the advance of the agriculture business over the cattle beef business, livestock offers experienced severe cuts, therefore helping to push up rising prices of livestock.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Additionally, there are promising perspectives for this market, mostly referring to reductions in commercial barriers worldwide, which would make for a better use of the cattle cuts and a higher final price for the cattle producer. After a year of the appearance of the last foot and mouth disease focus within the country, Argentina has obtained the free foot and mouth disease status with vaccination issued by the Animal Health Organization (OIE), which will grant an additional benefit to seek new markets, such as the US and Canada, were initial correspondence has taken place.

 

Furthermore, the export of thermo-processed cattle beef to China was approved, shortly enabling the opening of the commercialization of fresh meat.

 

Likewise, the price of livestock in Argentina could result in similar prices to those found in Uruguay (which is actually 13% above local prices) whose evolution after the opening of international markets had a positive outcome. In that sense, and in order to sustain its offer, Uruguay started importing livestock from Argentina, therefore arbitrating cattle markets.

 

Milk

 

Milk production decreased 7% during the period from 5.3 million liters as of March 31, 2004 to 4.9 million liters as of March 31, 2005.

 

Gross profit at March 31, 2005, amounted Ps. 1.1 million, 48% lower than that registered during the same period of the previous Fiscal Year. The main reason that caused this reduction was the increase in the costs of this business unit resulting from the expenses incurred in milk development, which does not yield enough income to compensate for such losses as it is still in an initial stage.

 

As of March 1, 2005 the company opened “El Tigre” a dairy facility with state of the art technology. In this sense, actual productive capacity would increase in approximately 36,000 litters daily. We are forecasting for this business unit yields above those of the agriculture segment. The estimated investment in this project amounts US$ 1.0 million approximately.

 

Currently “La Juanita”, the other productive dairy farm of the company, has a feeding system based solely on pastures. This low-cost feeding system allows us to improve milk margins compared to the use of grain-feeding system.

 

The milk business in Argentina went through severe oscillations during the course of time, from the euphoria of 1997 and 1998 to the 2001 crisis. Actually, with firm prices, this segment is once again attractive.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Feed Lot

 

During the nine month period ended as of March 31, 2005, our 170 hectare Feed Lot, located in the province of San Luis, where the Company’s equity interest through Cactus Argentina S.A. is 50%, was affected by the seasonality of the business hence decreasing the occupation levels and revenues.

 

Due to these facts, income decreased from Ps. 16.9 million at March 31, 2004 to Ps. 7.2 million during the current period. It is worth mentioning that draughts registered during the first semester of Fiscal Year 2004, had a positive effect rising the occupation levels of the feed lot and also reverting the trend generated during this time of the year.

 

The uniformity obtained in the final product of the feed lot cattle has granted buyers a high quality product, making its commercialization easy and obtaining higher prices at the moment of selling.

 

Due to the consistent occupation level the Feed Lot has been registering quarter after quarter we plan the development of a second enterprise of similar characteristics, which could be located within Argentina or abroad.

 

Due to the above mentioned, during the period closed March 31, 2005, Cactus Argentina S.A. registered a Ps. 0.2 million loss compared to a Ps. 0.6 million profit registered for the period ended on March 31, 2004.

 

Forecasts for the coming quarter are highly promising, expecting to surpass previous occupation levels, reaching 18,000 cattle heads.

 

Sale of farms

 

At the end of Fiscal Year 2004 and commencement of Fiscal Year 2005 bills of sale for the farms “Ñacurutú” and “San Enrique” have been signed. During February 2005, title deeds for “Ñacurutú”, a 30,353 hectare farm located in the province of Santa Fe were signed. The sale price amounted to US$ 5.6 million generating a Ps. 7.7 million profit. Likewise “San Enrique” would generate US$ 4.3 million profit, thus positively impacting on future financial statements corresponding to the current Fiscal Year.

 

During February 2005, we also signed bills of sale for “El Gualicho” farm of 5,727 hectares, located in the province of Cordoba. It is expected that this operation will generate a US$ 3.5 million profit which will be reflected in Fiscal Year 2006 financial statements.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

On the other hand, in March 2005 we signed the bill of sale for 72 hectares in Cuartel Segundo, Luján, province of Buenos Aires. The amount of money to pay for this operation reached Ps. 0.5 million which will be cancelled at the moment of signing title deeds.

 

This operations, besides confirming the company’s excellent record, are examples of the unrealized value of its assets.

 

Development of marginal lands

 

We believe that the business’s potential, as has happened in various countries worldwide, relies on the development of marginal land; using state of the art technology, yields comparable to those of the nucleus area can be obtained, with better yields.

 

For the current season, to the 12,700 productive hectares destined to cattle in our “Los Pozos” farm, located in Salta, we have added 4,000 additional hectares for cattle beef production, while 1,300 hectares are destined to agriculture. Due to the inclusion of these 4,000 hectares, we could increase our cattle stock in 2,500 additional heads, which together with the stability of fixed costs enabled an improvement in productive margins.

 

Besides, clearing works on 6,000 additional hectares for cattle are being, and will enter into production next Fiscal Year.

 

Additionally, the 1,185 hectares recently developed in our “Agro Riego San Luis” farm, located in the province of San Luis, for crop irrigation, have entered into production the current season. This farm improved its gross margin due to higher yields obtained thanks to better weather conditions, profitable commercial agreements with seed’s producers who rent a share of this farm, and the incorporation of new productive hectares which allows us to reduce fixed costs.

 

Cresud’s land reserves amount to 263,000 hectares which were acquired at very low prices. We believe that with the development of these areas, together with proper technology, the value of land will rise generating interesting returns for the Company.

 

Expansion to Brazil

 

After analyzing the potential of the Brazilian agricultural business, the Company has decided to expand its activities to that market through a private fund jointly with strategic local partners. At present, we are developing the business plan, and will start searching for investors in the next months.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Internet

 

Fyo.com, internet site where the Company’s equity interest amounts 70%, maintains its position as leading agriculture site and has started to expand the scope of commercial services for the farming community through the direct sale of inputs and crop brokerage.

 

At the present time, Futuros y Opciones.com S.A. has a database of 40,000 users and more than 5,000 farmers entitled to perform deals. Our strategy is focused in commercial services for farmers, using Cresud’s expertise and operative capacity in the business, being FyO the link with the client.

 

During the nine month period ended on March 31, 2005, Futuros y Opciones.com S.A.’s revenues amounted to Ps. 0.8 million, 39.4% higher than that registered during the same period of the previous Fiscal Year. The net result for the period showed a Ps. 0.4 million loss, 31.1% lower than the Ps. 0.5 million loss registered during Fiscal Year 2004.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Principal indicators for the nine-month period ended March 31, 2005 and 2004:

 

     9 months as of
March 31, 2005


   9 months as of
March 31, 2004


   %

 

Sales Volume

                

Wheat (tons)

   6,307    12,476    -49 %

Corn (tons)

   26,407    15,136    74 %

Sunflowers (tons)

   1,133    681    66 %

Soybean (tons)

   10,682    10,610    1 %

Others (tons)

   1,002    34    2,880 %
    
  
  

Total crops (tons)

   45,531    38,938    17 %
    
  
  

Beef Cattle (tons)

   13,078    10,646    25 %

Milk (Thousand of liters)

   4,897    5,280    -7 %

Production

                

Wheat (tons)

   23,747    16,707    42 %

Corn (tons)

   17,018    7,988    113 %

Sunflowers (tons)

   4,825    3,009    60 %

Soybean (tons)

   4,931    993    396 %

Beef Cattle (tons)

   8,480    8,475    0 %

Milk (Thousand of liters)

   4,897    5,280    -7 %

Exploited surface (hectares)

                

Crops                           Owned Farms

   19,706    12,312    60 %

                                     Leased Farms

   16,142    9,755    65 %

Beef Cattle                   Owned Farms

   126,964    126,105    1 %

                                     Leased Farms

   —      —         

Dairy Owned Farms

   1,583    820    93 %

Land Reserve (hectares)

   263,177    266,916    -1 %

Surface under irrigation

   3,929    2,841    38 %

Storage Capacity (tons)

   12,660    18,360    -31 %

Total head of cattle

   93,880    98,977    -5 %

Dairy Farm Stock (heads)

   4,121    3,399    21 %

Milking cows (heads)

   1,875    1,229    53 %

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Results from IRSA Inversiones y Representaciones S.A.

 

The result derived from our equity interest in IRSA Inversiones y Representaciones S. A. (NYSE: IRS – BASE: IRSA) showed a Ps. 78.2 million profit for the period compared to a Ps. 45.2 million profit as of March 31, 2004.

 

IRSA’s result was strongly influenced by an increase in the income which grew 46.3%, from Ps. 185.8 million for the nine month period of Fiscal Year 2004 to Ps. 271.9 million for the same period of the current Fiscal Year, mainly due to the increase of (i) Ps. 58.2 million in shopping centers, (ii) Ps. 11.4 million in the sales and development segment, (iii) Ps. 13.7 million in the hotels segment and (iv) Ps. 2.7 in the offices and other rental properties.

 

IRSA is Argentina’s leading real estate company with a totally diversified portfolio of properties. IRSA participates in the following business segments:

 

    Office rental with more than 83,000 m2 of premium offices for lease.

 

    Operation of Shopping Centers through its 61% equity interest in Alto Palermo S.A. (APSA) (NASDAQ: APSA, BASE: APSA). APSA is one of the leading operators of shopping centers in Argentina and owns or has majority interest in 9 shopping centers with 196,241 m2 of gross leasable area.

 

    Sale of residential properties

 

    Holding and operation of luxury hotels through its equity interest in 3 five star hotels

 

Besides, IRSA owns land reserves for current and future developments valued at Ps. 355.8 million.

 

Additionally, IRSA owns an 11.8% stake in Banco Hipotecario, Argentina’s largest mortgage supplier in the country which shareholder’s equity amounted to Ps. 1,959 million.

 

IRSA’s total Consolidated Assets amounts to Ps. 2,408.5 million and its Shareholder’s Equity amounts to Ps. 1,194.5 million.

 

During the current quarter IRSA received the conversion of Convertible Notes and Warrants from third parties increasing the amount of shares in circulation from 296,575,497 as of January 31, 2005 to 338,372,526 as of March 31, 2005. Such increase enabled a decrease in our holding in IRSA to 20.4%. For this reason, the Board has commended to our Management the evaluation of the conditions to resolve a potential re-composition of the stock holding, which as of December 31, 2004 amounted to 26.35%. It is possible that the conditions to carry out such re-composition occur prior to the end of the Fiscal Year, hence such variation in stock was not accounted for. Currently, our equity interest in IRSA is valued through the proportional equity value method.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Additionally, as of March 31, 2005 we owned US$ 36.5 million of Convertible Notes issued by IRSA which contain a Warrant attached to purchase additional shares of the company. If both the Convertible Notes and Warrants are exercised like the rest of the bearers, Cresud would own 35.1% of IRSA equity.

 

Other relevant highlights

 

Reduction of debt due to the conversion of notes and exercise of Warrants

 

During the nine month period, Cresud’s debt under Convertible Notes was reduced by US$ 3.0 million as a consequence of the exercise of conversion rights.

 

Likewise during the period, 3,003,431 Warrants have been exercised, resulting in an inflow of US$ 3.6 million in the Company.

 

In this way, considering all conversions and exercise of Warrants, the number of outstanding Convertible Notes as of today has reached US$ 40,164,007 while the number of outstanding Warrants amounts to 40,412,574. Shares issued amounted 38,250,078, increasing the Company’s total number of outstanding shares to 162,534,470.

 

It should be noted that the Company owned as of March 31, 2005 US$ 36.5 million Convertible Notes issued by IRSA which bear interest at the same rate as those issued by us.

 

During March 2005, we sold 8,754,271 of IRSA’s Convertible Notes receiving US$ 32.5 million. After the end of the nine month period ended as of March 31, 2005 we repurchased 8,929,250 of IRSA’s shares, increasing our stake up to 77,844,641 ordinary shares. As of today, our ownership in IRSA amounts to 22.4% and 36.6% on a fully diluted basis, situation where all the holders of the Convertible Notes convert those securities into shares and where all the Warrants are exercised.

 

The following graphics show past, actual and potential situation in the future of the Convertible Notes issued by Cresud on November 14, 2002, under New York Law, at an interest rate of 8% (paid semi-annually), due to November 14, 2007, which are convertible at a price of US$ 0.5078 per share of face value Ps. 1.00 (1.9693 shares of face value Ps. 1.00 per Note). Additionally, each Convertible Note holds a warrant which allows the holder to obtain for each Convertible Note 1.9693 shares, of face value Ps. 1.00, at a price of US$ 0.6093.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

LOGO

 

Notes:

 

“Assuming Conversion (Fully Diluted)” refers to the situation where all the holders of the Convertible Notes convert those securities into shares and where all the Warrants are exercised.

 

LOGO

 

Financial\ Structure

 

During the current Fiscal Year, the Company has developed an external financing strategy of its working capital for the productive season, at convenient rates and terms through export pre financing, which allows us to develop new business units optimizing risks and acquiring the necessary liquidity to take advantage of investment opportunities that could arise.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

During the quarter, as the harvest moved forward, we decided to cancel some loans. Hence, as of March 31, 2005, loans with local financial entities amounted to Ps. 22.6 million.

 

Perspectives for the coming quarter

 

Perspectives for the upcoming quarter are highly promising the opening of new international markets could continue impacting positively on the cattle beef segment. Moreover, we expect a recovery in the occupancy of our Feed Lot.

 

The last quarter of the year is the one with the highest impact on agricultural business, as most of the soybean and corn crops are harvested during this period.

 

The projected corn and soybean harvest reflects yields higher than those budgeted.

 

According to our strategy of developing new agricultural business projects, we are making progress in our expansion to Brazil, which we plan to materialize during the next Fiscal Year.

 

We are also starting to close the lease transactions relating to the agricultural activities for the next crop year. In line with our policy, we focus on opportunities that allow us to ensure minimum activity levels.

 

Alejandro G. Elsztain

Second Vice-Chairman

serving as Acting Chairman

 

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

 

Report of Independent Auditors

 

To the Shareholders, President and Board of Directors of

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

 

1. We have reviewed the balance sheets of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria at March 31, 2005 and 2004, and the related statements of income, of changes in shareholders’ equity and of cash flows for the nine-month periods ended March 31, 2005 and 2004 and the complementary notes 1 to 17 and schedules A, C, E, F, G and H. Furthermore, we have reviewed the consolidated financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria, which are presented as complementary information. These financial statements are the responsibility of the Company’s management.

 

2. We conducted our review in accordance with standards established by Technical Resolution N° 7 of the Argentine Federation of Professional Councils of Economic Sciences for limited reviews of financial statements. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters, It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

3. Based on our work and our examinations of the financial statements of this Company and the consolidated financial statements for the years ended June 30, 2004 and 2003, on which we issued our unqualified report dated September 7, 2004, we report that:

 

a) The financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria at March 31, 2005 and 2004 and its consolidated financial statements at those dates, set out in point 1, prepared in accordance with accounting standards prevailing in the Autonomous City of Buenos Aires, include all significant facts and circumstances of which we are aware, and we have no observations to make on them.

 

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b) The comparative information included in the basic and consolidated balance sheets and the supplementary notes and schedules to the attached financial statements arise from Company financial statements at June 30, 2004.

 

4. In accordance with current regulations, we report that:

 

  a) the financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria and its consolidated financial statements have been transcribed to the “Inventory and Balance Sheet Book” and comply, within the field of our competence, with the Corporations Law and pertinent resolutions of the National Securities Commission;

 

  b) the financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria arise from official accounting records carried in all formal respects in accordance with legal requirements; that maintain the security and integrity conditions based on which they were authorized by the National Securities Commission;

 

  c) we have read the business highlights and the additional information to the notes to the financial statements required by section 68 of the Buenos Aires Stock Exchange Regulations, on which, as regards those matters that are within our competence, we have no observations to make;

 

  d) at March 31, 2005, the debt accrued of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria accrued in favor of the Integrated Pension and Survivors’ Benefit System according to the accounting records amounted to $ 77,156.15 which is not yet due.

 

Autonomous City of Buenos Aires, May 11, 2005

 

PRICE WATERHOUSE & CO. S.R.L.

(Partner)

C.P.C.E.C.A.B.A. T’ 1 F’ 1

Dr. Andrés Suarez

Public Accountant (UBA)

C.P.C.E. Ciudad Autónoma de Buenos Aires

Tomo 245 - Folio 61

 

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SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Buenos Aires, Argentina.

 

CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA

FINANCIERA Y AGROPECUARIA

 

By:  

/S/ Saúl Zang

   

Name: Saúl Zang

   

Title: Vice Chairman of the Board of Directors

 

Dated: May 19, 2005

 

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