Form 6-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of February, 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

 



 

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 six-month period ended on December 31, 2004 and 2003.

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera

y Agropecuaria

 

Unaudited Financial Statements

corresponding to the six-month period

ended December 31, 2004 and 2003

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Financial Statements

 

Index

 

Presentation

    

Unaudited Consolidated Balance Sheet

    

Unaudited Consolidated Statement of Income

    

Unaudited Consolidated Statement of Cash Flows

    

Notes to the Unaudited Consolidated Financial Statements

    

Unaudited Consolidated Schedules

    

Unaudited Balance Sheet

    

Unaudited Statement of Income

    

Unaudited Statement of Changes in Shareholders’ Equity

    

Unaudited Statement of Cash Flows

    

Notes to the Unaudited Financial Statements

    

Unaudited Schedules

    

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

    

Unaudited Business Highlights

    

Report of Independent Auditors

    

 


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 and livestock and real-estate

 

Financial statements for the period ended December 31, 2004 presented in

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

Financial year Nº 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

   Subscribed

   Paid-in

     pesos    pesos    pesos

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

   155,650,742    155,650,742    155,650,742

 


 

Cresud Sociedad Anónima

 

Comerical, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Unaudited Consolidated Balance Sheet as at December 31, 2004, June 30, 2004 and December 31, 2003

 

     December 31, 2004
(Notes 1, 2 and 3)


    June 30, 2004
(Notes 1, 2 and 3)


    December 31, 2003
(Notes 1, 2 and 3)


         December 31, 2004
(Notes 1, 2 and 3)


   June 30, 2004
(Notes 1, 2 and 3)


   December 31, 2003
(Notes 1, 2 and 3)


     Pesos     Pesos     Pesos          Pesos    Pesos    Pesos

ASSETS

                    

LIABILITIES

              

Current Assets

                    

Current Liabilities

              

Cash and banks (Note 4.a.)

   27,085,469     12,749,766     20,556,016    

Debts:

              

Investments (Note 4.b.)

   2,358,471     1,874,997     2,472,098    

Trade accounts payable (Note 4.f.)

   11,675,837    10,840,177    7,678,783

Trade accounts receivable (Note 4.c.)

   6,483,785     5,354,858     6,269,391    

Loans (Note 4.g.)

   38,606,380    8,090,261    1,383,511

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

   7,413,206     15,019,353     7,857,643    

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

   895,492    1,475,373    780,615

Inventories (Note 4.e.)

   45,751,060     35,441,885     32,367,196    

Taxes payable (Note 4.i.)

   4,494,052    2,206,532    1,394,101
    

 

 

                  

Total current assets

   89,091,991     70,440,859     69,522,344    

Other debts (Note 4.j.)

   10,758,911    6,689,562    1,283,383
    

 

 

      
  
  
                      

Total Debts

   66,430,672    29,301,905    12,520,393
                           
  
  
                      

Total current liabilities

   66,430,672    29,301,905    12,520,393
                           
  
  

Non-current assets

                                     

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

   5,358,746     3,948,778     3,961,539                     

Inventories (Note 4.e.)

   50,872,903     44,740,030     39,315,176    

Non-current liabilities

              

Investments (Note 4.b.)

   291,220,422     260,419,568     206,067,742    

Taxes payable (Note 4.i.)

   28,774,261    26,213,217    24,181,231

Other investments (Note 4.b.)

   134,949,064     132,962,608     146,354,259    

Loans (Note 4.g.)

   123,285,777    125,880,874    127,670,143

Fixed assets, net (Schedule A)

   163,458,765     160,026,473     149,839,384    

Other debts (Note 4.j.)

   39,327    39,327    39,327
                           
  
  

Intangible assets (Schedule B)

   —       —       123,212    

Total non-current liabilities

   152,099,365    152,133,418    151,890,701
    

 

 

      
  
  

Subtotal Non-Current Assets

   645,859,900     602,097,457     545,661,312    

Total Liabilities

   218,530,037    181,435,323    164,411,094
    

 

 

      
  
  

Goodwill (Note 4.b.)

   (36,326,481 )   (25,869,346 )   (19,931,610 )  

Minority interest

   5,366    65,451    104,178
    

 

 

      
  
  

Total Non-Current Assets

   609,533,419     576,228,111     525,729,702    

SHAREHOLDERS’ EQUITY

   480,090,007    465,168,196    430,736,774
    

 

 

      
  
  

Total Assets

   698,625,410     646,668,970     595,252,046     Total Liabilities and Shareholders’ Equity    698,625,410    646,668,970    595,252,046
    

 

 

      
  
  

 

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

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

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 December 31, 2004 and 2003

 

     December 31, 2004
(Notes 1, 2 and 3)


    December 31, 2003
(Notes 1, 2 and 3)


 
     Pesos     Pesos  

Sales

            

Crops

   11,236,161     8,793,868  

Beef cattle

   18,690,480     12,165,707  

Milk

   1,567,574     1,831,837  

Feed Lot

   1,390,251     4,398,817  

Others

   2,358,210     2,208,215  
    

 

Total Sales

   35,242,676     29,398,444  
    

 

Cost of sales (Schedule F)

            

Crops

   (11,391,820 )   (7,143,937 )

Beef cattle

   (14,691,109 )   (9,124,948 )

Milk

   (876,965 )   (396,276 )

Feed Lot

   (1,258,982 )   (3,851,046 )

Others

   (580,398 )   (671,997 )
    

 

Total cost of sales

   (28,799,274 )   (21,188,204 )
    

 

Gross income

   6,443,402     8,210,240  
    

 

Selling expenses (Schedule H)

   (2,506,807 )   (2,192,027 )

Administrative expenses (Schedule H)

   (3,132,965 )   (3,546,056 )

Net gain on sale of farms

   —       1,669,470  

Gain from inventory holdings (Schedule F)

   6,254,786     1,345,036  
    

 

Operating income

   7,058,416     5,486,663  
    

 

Financial results

            

Generated by assets:

            

Exchange differences and discounts

   6,847     8,181,406  

Interest income

   222,693     122,269  

Bad debts (Schedule E)

   —       29,928  

Reference stabilization index (CER)

   —       (302,619 )

Tax on debts and credits

   (673,530 )   (558,327 )

Convertible Bonds purchase interest

   5,473,411     5,846,354  

Others

   159,180     7,138  
    

 

     5,188,601     13,326,149  
    

 

Generated by liabilities:

            

Reference stabilization index (CER)

   1,653     (2,795 )

Interest expense

   (102,488 )   (4,734 )

Financial expenses

            

Convertible Bonds issued interest

   (5,160,478 )   (5,625,121 )

Others

   (1,158,260 )   (778,532 )

Exchange differences and discounts

   (963,859 )   (6,312,762 )
    

 

     (7,383,432 )   (12,723,944 )
    

 

Other expenses

            

Gains from others fixed assets sales

   22,061     251,561  

Others

   (3,328,555 )   5,434  
    

 

     (3,306,494 )   256,995  
    

 

Income from related companies

   14,087,524     2,102,625  

Management fees

   (1,059,305 )   (529,129 )
    

 

Income before income tax and minority interest

   14,585,310     7,919,359  
    

 

Income tax expense

   (5,111,658 )   (3,259,735 )

Minority interest

   60,085     102,532  
    

 

Net income for the period

   9,533,737     4,762,156  
    

 

 

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

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

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 December 31, 2004 and 2003

 

     December 31, 2004
(Notes 1, 2 and 3)


    December 31, 2003
(Notes 1, 2 and 3)


 
     Pesos     Pesos  

Changes in funds

            

Funds at the beginning of the year

   13,138,533     21,837,823  

Funds at the end of the period

   27,831,763     21,376,305  
    

 

Net increase (decrease) in funds

   14,693,230     (461,518 )

Causes of changes in funds

            

Operations activities

            

Income for the period

   9,533,737     4,762,156  

Liabilities interest

   5,911,384     5,625,120  

Income tax

   5,111,658     3,047,982  

Adjustments made to reach net funds from operations activities

            

Results from interest in related companies

   (14,087,524 )   (2,102,625 )

Minority interest

   (60,085 )   (102,532 )

Increase in allowances and reserves

   3,648,938     2,306,749  

Amortization and depreciation

   1,765,735     1,837,383  

Results from inventory holdings

   (6,254,786 )   (1,345,036 )

Financial results

   (4,817,103 )   (4,677,012 )

Result from sale of fixed assets

   (22,061 )   (1,921,031 )

Changes in operating assets and liabilities

            

Increase in current investments

   5,362,711     5,707,778  

(Decrease) increase in trade accounts receivable

   (1,128,927 )   1,496,244  

Increase in other receivables

   6,368,304     (4,567,719 )

Decrease in inventories

   (10,691,110 )   (9,272,155 )

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

   (842,975 )   (3,206,887 )

Decrease in trade accounts payable

   (1,753,973 )   (2,618,599 )

Dividends collected

   981,315     1,104,139  

Increase (decrease) in other debts

   3,010,044     (2,696,206 )
    

 

Net fund provided by (applied to) operations activities

   2,035,282     (6,622,251 )
    

 

Investment activities

            

Increase in permanent investments

   (1,502,678 )   (1,199,672 )

Increase in interest in related companies

   (7,418,437 )   (5,204,531 )

Acquisition and upgrading of fixed assets

   (4,919,680 )   (3,217,599 )

Sale of fixed assets

   247,562     4,677,982  
    

 

Net funds applied to investment activities

   (13,593,233 )   (4,943,820 )
    

 

Financing activities

            

Exercise of Warrant

   4,474,246     19,258,074  

Dividends paid

   (3,000,000 )   (1,500,000 )

Exercise of rights offering on treasury stock

   173,200     319,437  

Increase in financial loans

   36,468,450     —    

Decrease in financial loans

   (11,864,715 )   (5,667,108 )

Issuance expenses of Convertible Bonds

   —       (1,305,850 )
    

 

Net funds provided by financing activities

   26,251,181     11,104,553  
    

 

Net increase (decrease) in funds

   14,693,230     (461,518 )
    

 

Items not involving changes in funds

            

Transfer of inventory to fixed assets

   503,848     37,228  

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

   3,740,628     16,097,982  
    

 

Complementary information

            

Interest paid

   5,108,487     5,669,516  

Income tax expense paid

   385,077     854,224  

 

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

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

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 December 31, 2004 and 2003

 

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 December 31, 2004 and 2003 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 December 31, 2004 and 2003 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 December 31, 2003 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.

 


 

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

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Cash

   65,568    77,971    74,323

Foreign currency (Schedule G)

   294,718    54,211    37,820

Patacones currency

   73    39    —  

Local currency checking account

   631,400    4,961,714    1,207,040

Patacones currency checking account

   22    22    22

Foreign currency checking account (Schedule G)

   9,055,590    1,220,084    18,970,354

Local currency saving account

   9,897    12,295    18,855

Foreign currency saving account (Schedule G)

   16,610,427    5,949,506    32,424

Checks to be deposited

   417,774    473,924    215,178
    
  
  
     27,085,469    12,749,766    20,556,016
    
  
  

 

  b. Investments and Goodwill

 

     December 31,
2004


   

June 30,

2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Investment

                  

Investment (Schedule C and G)

   2,358,471     1,874,997     2,472,098  
    

 

 

     2,358,471     1,874,997     2,472,098  
    

 

 

Investment

                  

Investment from related companies (Schedule C)

   291,220,422     260,419,568     206,067,742  
    

 

 

     291,220,422     260,419,568     206,067,742  
    

 

 

Other investments

                  

Other investments (Schedule C and G)

   134,949,064     132,962,608     146,354,259  
    

 

 

     134,949,064     132,962,608     146,354,259  
    

 

 

Goodwill

                  

Goodwill (Schedule C)

   (36,326,481 )   (25,869,346 )   (19,931,610 )
    

 

 

     (36,326,481 )   (25,869,346 )   (19,931,610 )
    

 

 

 


 

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

 

     December 31,
2004


    June 30,
2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Current

                  

Accounts receivable in local currency

   5,885,829     5,579,474     6,510,559  

Less:

                  

Provision for defaulting debtors (Schedule E)

   (373,535 )   (412,067 )   (449,197 )

Accounts receivable in foreign currency (Schedule G)

   956,193     3,983     78,202  

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

                  

Cactus Argentina S.A.

   15,298     95,472     71,453  

Alto Palermo S.A.

   —       87,359     40,003  

IRSA Inversiones y Representaciones Sociedad Anónima

   —       637     18,371  
    

 

 

     6,483,785     5,354,858     6,269,391  
    

 

 

 

  d. Other receivables and prepaid expenses

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Prepaid leases

   30,727    4,465,136    32,016

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

   8,368    61,086    61,607

Guarantee deposits and premiums (Schedule G)

   315,433    2,188,998    1,448,794

Secured by mortgage (Schedule G)

   1,055,695    1,033,997    1,061,931

Prepaid expenses

   1,113,756    897,192    446,759

Expenses to recover

   —      —      39,387

Deferred tax

   —      —      30,377

Tax prepayments (net of accrual)

   3,610,634    3,793,343    2,966,567

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

              

Cactus Argentina S.A.

   677,164    673,200    668,993

Agro-Uranga S.A.

   234,279    —      —  

Credits to employees

   35,542    37,751    43,020

Shareholders

   —      1,711,833    455,583

Others (Schedule G)

   331,608    156,817    602,609
    
  
  
     7,413,206    15,019,353    7,857,643
    
  
  

Non-current

              

Secured by mortgage (Schedule G)

   —      —      1,008,000

Value Added Tax

   5,180,327    3,847,020    2,129,515

Tax on Minimum Hypothetical Income

   99,148    56,450    815,556

Deferred tax

   76,668    40,193    —  

Others

   2,603    5,115    8,468
    
  
  
     5,358,746    3,948,778    3,961,539
    
  
  

 


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4: (Continued)

 

  e. Inventories

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Livestock

   16,954,543    18,829,580    15,664,891

Crops

   4,803,409    8,639,910    3,782,649

Unharvested crops

   20,090,681    1,603,897    9,374,173

Seeds and fodder

   170,057    241,516    139,344

Materials and others

   3,410,623    4,686,649    2,141,665

Advances to suppliers

   321,747    1,440,333    1,264,474
    
  
  
     45,751,060    35,441,885    32,367,196
    
  
  

Non-Current

              

Livestock

   50,872,903    44,740,030    39,315,176
    
  
  
     50,872,903    44,740,030    39,315,176
    
  
  

 

  f. Trade accounts payable

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Suppliers in local currency

   4,178,801    4,746,787    2,732,591

Suppliers in foreign currency (Schedule G)

   2,839,943    1,133,055    993,622

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

              

Inversora Bolívar S.A.

   6,341    5,349    —  

Alto Palermo S.A.

   44,233    175,133    38,931

IRSA Inversiones y Representaciones S.A.

   116,259    1,108    35,378

Cactus Argentina S.A.

   265,108    943,989    224,345

Estudio Zang, Bergel & Viñes

   23,486    81,646    15,757

Fundación IRSA

   1,177,988    1,177,988    460,642

Directors

   43,543    3,471    967

Accrual for other expenses (Schedule G)

   2,685,005    2,358,474    2,975,595

Accrual for cereal expenses

   295,130    213,177    200,955
    
  
  
     11,675,837    10,840,177    7,678,783
    
  
  

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4:  (Continued)

 

  g. Loans

 

     December 31,
2004


   

June 30,

2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Current

                  

Local financial loans (Note 16) (Schedule G)

   37,220,355     6,757,677     —    

Convertible Bonds 2007 Interest payable (Schedule G)

   592,928     589,239     612,819  

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

                  

Shareholders

   792,845     740,021     767,329  

Directors

   252     3,324     3,363  
    

 

 

     38,606,380     8,090,261     1,383,511  
    

 

 

Non Current

                  

Convertible Bonds 2007 (Schedule G)

   53,363,537     56,416,538     57,451,821  

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

                  

Shareholders

   71,356,061     70,853,048     71,937,067  

Directors

   22,640     318,281     315,268  

Convertible Bonds 2007 expenses

   (1,456,461 )   (1,706,993 )   (2,034,013 )
    

 

 

     123,285,777     125,880,874     127,670,143  
    

 

 

 

  h. Salaries and social security payable

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Vacation, statutory annual bonus allowance

   687,495    1,070,155    482,590

Social security administration

   192,804    196,017    163,380

Salaries payable

   1,642    192,632    125,796

Health care scheme

   2,657    2,533    1,979

Others

   10,894    14,036    6,870
    
  
  
     895,492    1,475,373    780,615
    
  
  

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 4:  (Continued)

 

  i. Taxes payable

 

     December 31,
2004


    June 30,
2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Current

                  

Accrual for income tax

   2,669,428     4,648,244     258,129  

Advances to Income tax

   —       (2,808,338 )   —    

Tax on Minimum Hypothetical Income

   102,270     24,135     788,336  

Value added tax

   21,445     17,962     106,181  

Property tax payable

   80,613     103,284     89,746  

Taxes withheld for income tax

   68,500     188,125     35,059  

Sales tax payable

   (183,098 )   91,306     170,066  

Taxes withheld-Gross sales tax payable

   128,575     (80,728 )   (87,300 )

Taxes withheld-Value added tax payable

   57     18,932     31,485  

Others (1)

   1,606,262     3,610     2,399  
    

 

 

     4,494,052     2,206,532     1,394,101  
    

 

 

Non-current

                  

Deferred tax

   28,774,261     26,213,217     24,181,231  
    

 

 

     28,774,261     26,213,217     24,181,231  
    

 

 

 

(1) Including Personal Assets Tax of shareholders.

 

  j. Other debts

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Advances to customers (Schedule G)

   8,718,400    4,432,500    —  

Accrual for Management fees

   1,059,305    1,537,173    529,129

Loan to FYO minority shareholders

   134,196    134,196    134,196

Cactus Argentina S.A.

   102,865    —      —  

Cactus Feeders Inc.

   512,092    550,177    610,057

Others

   232,053    35,516    10,001
    
  
  
     10,758,911    6,689,562    1,283,383
    
  
  

Non-current

              

Guarantee deposit

   1,000    1,000    1,000

Allowances

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

 


 

Cresud Sociedad Anonina

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 5:

 

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

 

Based on their estimated collection

or payment term


 

Current and non-current

investment


  Trade accounts receivable

 

Other receivables and

prepaid expenses


  December 31, 2004

  June 30, 2004

  December 31, 2003

  December 31, 2004

  June 30, 2004

  December 31, 2003

  December 31, 2004

    June 30, 2004

  December 31, 2003

3rd quarter 2004/2003 financial
year

  —     —     1,560,891   —     —     6,125,771   —       —     3,939,610

4th quarter 2004/2003 financial
year

  —     —     —     —     —     —     —       —     1,618

1st quarter 2005/2004 financial
year

  —     —     —     —     4,246,050   —     —       3,271,016   1,642

2nd quarter 2005/2004 financial
year

  —     1,388,504   —     —     —     —     —       100,699   66,043

3rd quarter 2005/2004 financial
year

  —     —     —     6,451,657   —     —     (40,648 )   296,954   1,016,118

4th quarter 2005/2004 financial
year

  1,499,204   —     —     —     —     —     623,767     307,543   —  

1st quarter 2006/2005 financial
year

  —     —     —     —     —     —     7,090     —     —  

2nd quarter 2006/2005 financial
year

  —     —     —     —     —     —     1,828,422     —     —  

3rd quarter 2006/2005 financial
year

  —     —     —     —     —     —     1,703     —     —  

4th quarter 2006/2005 financial
year

  —     —     —     —     —     —     99,148     17,154   781,368

1st quarter 2007/2006 financial
year

  —     —     —     —     —     —     —       4,765   —  

2nd quarter 2007/2006 financial
year

  —     —     —     —     —     —     —       —     —  

3rd quarter 2007/2006 financial
year

  —     —     —     —     —     —     —       —     —  

4th quarter 2007/2006 financial
year

  —     —     —     —     —     —     —       —     —  

2nd quarter 2008/2007 financial
year

  134,928,347   132,941,891   146,333,542   —     —     —     —       —     —  

Overdue

  —     —     —     —     —     —     —       —     —  

With no stated current term

  859,267   486,493   911,207   32,128   1,108,808   143,620   4,994,575     11,043,141   3,848,730

With no stated non-current term

  20,717   20,717   20,717   —     —     —     5,257,895     3,926,859   2,164,053
   
 
 
 
 
 
 

 
 

Total

  137,307,535   134,837,605   148,826,357   6,483,785   5,354,858   6,269,391   12,771,952     18,968,131   11,819,182
   
 
 
 
 
 
 

 
 

 

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

 

Interest rate that
they accrued


  

Current and non-current

investment


   Trade accounts receivable

  

Other receivables and

prepaid expenses


     December 31, 2004

   June 30, 2004

   December 31, 2003

   December 31, 2004

   June 30, 2004

   December 31, 2003

   December 31, 2004

   June 30, 2004

   December 31, 2003

At fixed interest rate

   134,928,347    132,941,891    146,333,542    —      —      —      870,069    3,535,277    2,328,050

At variable interest rate

   859,267    486,493    911,207    —      —      —      1,912,383    2,307,257    571,094

Non-interest bearing

   1,519,921    1,409,221    1,581,608    6,483,785    5,354,858    6,269,391    9,989,500    13,125,597    8,920,038
    
  
  
  
  
  
  
  
  

Total

   137,307,535    134,837,605    148,826,357    6,483,785    5,354,858    6,269,391    12,771,952    18,968,131    11,819,182
    
  
  
  
  
  
  
  
  

 


 

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 collection or payment term (in pesos)

 

Based on their

estimated collection

or payment term


  Trade accounts payable

  Loans

 

Salaries and social

security payable


  Taxes payable

  Other debts

 

Dec. 31,

2004


  June 30, 2004

    Dec. 31,
2003


  Dec. 31, 2004

 

June 30,

2004


  Dec. 31, 2003

  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31, 2004

  June 30, 2004

  Dec. 31, 2003

  Dec. 31, 2004

  June 30,
2004


  Dec. 31,
2003


3rd qtr. 04/03 financial year

  —     —       7,656,361   —     —     1,383,511   —     —     780,615   —     —     1,118,847   —     —     545,969

4th qtr. 04/03 financial year

  —     —       —     —     —     —     —     —     —     —     —     —     —     —     2,643

1st qtr. 05/04 financial year

  —     11,750,406     —     —     6,757,677   —     —     1,406,519   —     —     342,491   —     —     1,552,956   2,643

2nd qtr. 05/04 financial year

  —     3,471     967   —     1,332,584   —     —     68,854   —     —     1,864,041   265,098   —     11,498   2,643

3rd qtr. 05/04 financial year

  11,207,197   —       —     22,353,572   —     —     531,148   —     —     227,040   —     —     1,948,431   7,666   —  

4th qtr. 05/04 financial year

  —     —       —     1,386,025   —     —     23,670   —     —     1,594,461   —     —     5,663,591   4,585,412   —  

1st qtr. 06/05 financial year

  —     —       —     14,866,783   —     —     340,674   —     —     —     —     —     —     —     —  

2nd qtr. 06/05 financial year

  —     —       —     —     —     —     —     —     —     2,672,551   —     —     1,747,984   —     —  

3rd qtr. 06/05 financial year

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

4th qtr. 06/05 financial year

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

1st qtr. 07/08 financial year

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

2nd qtr. 07/06 financial year

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

3rd qtr. 07/06 financial year

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

4th qtr. 07/06 financial year

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

2nd qtr. 08/07 financial year

  —     —       —     123,285,777   125,880,874   127,670,143   —     —     —     —     —     —     —     —     —  

Overdue

  —     —       —     —     —     —     —     —     —     —     —     10,156   —     37,448   32,617

With no stated current term

  468,640   (913,700 )   21,455   —     —     —     —     —     —     —     —     —     1,398,905   494,582   696,868

With no stated non-current term

  —     —       —     —     —     —     —     —     —     28,774,261   26,213,217   24,181,231   39,327   39,327   39,327
   
 

 
 
 
 
 
 
 
 
 
 
 
 
 

Total

  11,675,837   10,840,177     7,678,783   161,892,157   133,971,135   129,053,654   895,492   1,475,373   780,615   33,268,313   28,419,749   25,575,332   10,798,238   6,728,889   1,322,710
   
 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

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

 

Interest rate that

they accrued


  Trade accounts payable

  Loans

 

Salaries and social

security payable


  Taxes payable

  Other debts

    Dec. 31, 2004

  June 30, 2004

  Dec. 31,
2003


  Dec. 31, 2004

   

June 30,

2004


  Dec. 31, 2003

  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31, 2004

  June 30, 2004

  Dec. 31, 2003

  Dec. 31, 2004

  June 30,
2004


  Dec. 31,
2003


At fixed interest rate

  —     —     —     161,962,593     132,638,551   127,670,143   —     —     —     —     —     —     1,904,861   2,349,579   148,706

At variable interest rate

  —     —     —     —       —     —     —     —     —     —     —     —     100,133        

Non-interest bearing

  11,675,837   10,840,177   7,678,783   (70,436 )   1,332,584   1,383,511   895,492   1,475,373   780,615   33,268,313   28,419,749   25,575,332   8,793,244   4,379,310   1,174,004
   
 
 
 

 
 
 
 
 
 
 
 
 
 
 

Total

  11,675,837   10,840,177   7,678,783   161,892,157     133,971,135   129,053,654   895,492   1,475,373   780,615   33,268,313   28,419,749   25,575,332   10,798,238   6,728,889   1,322,710
   
 
 
 

 
 
 
 
 
 
 
 
 
 
 

 


 

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 tittles they bear.

 

     December 31, 2004

    December 31, 2003

 

Average appraised stock in circulation

   151,044,430     126,260,350  

Average appraised diluted ordinary stock

   321,214,392     321,214,392  
     December 31, 2004

    December 31, 2003

 

Earnings for the calculation of basic earnings per share

   9,533,737     4,762,156  

Exchange differences

   895,000     6,351,172  

Financing expenses

   5,401,152     6,385,641  

Income tax

   (2,055,220 )   (4,157,613 )

Management fees

   (424,093 )   (857,920 )

Earnings for the calculation of diluted earnings per share

   13,350,576     12,483,436  

BASIC Earnings per share


   December 31, 2004

    December 31, 2003

 

Earnings

   9,533,737     4,762,156  

Number of shares

   151,044,430     126,260,350  

Earnings per share

   0.06     0.04  

DILUTED Earnings per share


   December 31, 2004

    December 31, 2003

 

Earnings

   13,350,576     12,483,436  

Number of shares

   321,214,392     321,214,392  

Earnings per share

   0.04     0.04  

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements (Continued)

 

NOTE 7: SEGMENT INFORMATION

 

As of December 31, 2004:

 

Description


   Crops

   Beed Cattle

   Milk

   Feed Lot

   Others

   Without
especific
allocation


   Total

Sales

   11,236,161    18,690,480    1,567,574    1,390,251    2,358,210    —      35,242,676

Assets

   90,698,881    124,725,397    10,625,415    4,299,093    885,413    467,391,211    698,625,410

Liabilities

   6,225,253    1,635,917    132,597    1,106,071    324,540    209,105,659    218,530,037

Fixed asset additions

   1,005,637    675,197    1,084,530    104,821    28,354    2,021,141    4,919,680

Depreciation of fixed assets

   696,971    495,815    94,141    149,890    34,469    294,449    1,765,735

Income from related companies

   387,458    12,777    55,212    —      254,052    13,378,025    14,087,524

 

As of December 31, 2003:

 

Description


   Crops

   Beed Cattle

   Milk

   Feed Lot

   Others

    Without
especific
allocation


   Total

Sales

   8,793,868    12,165,707    1,831,837    4,398,817    2,208,215     —      29,398,444

Assets

   93,874,367    133,351,330    10,086,765    5,580,174    1,259,864     351,099,546    595,252,046

Liabilities

   4,063,420    1,573,546    9,024    2,001,098    973,166     155,790,840    164,411,094

Fixed asset additions

   2,291,544    453,614    66,356    175,677    63,103     167,305    3,217,599

Depreciation of fixed assets

   728,932    582,124    48,862    113,826    25,699     91,515    1,590,958

Amortization of intangible assets

   —      —      —      —      246,425     —      246,425

Income from related companies

   514,687    23,415    70,977    —      (329,840 )   1,823,386    2,102,625

 

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).

 


 

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 December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1, 2, and 3)

 

Schedule A

 

Principal Account


  Value at
the
beginning
of the year


 

Additions

and/or
transfers


 

Deductions

and/or
transfers


 

Value at
the end of

period/year


  Depreciation

 

Net

carrying
value at
December 31,
2004


 

Net

carrying
value at
June 30,

2004


 

Net

carrying

value at
December
31,

2003


          Rate%

  Accumulated
at the
beginning of
the year


  Decrease
of the
period/
year


  Current
period/
year


  Accumulated
at the end of
period/year


     
    Pesos   Pesos   Pesos   Pesos       Pesos   Pesos   Pesos   Pesos   Pesos   Pesos   Pesos

Real estate

  124,620,756   352,353   —     124,973,109   —     —     —     —     —     124,973,109   124,620,756   121,966,864

Wire fences

  5,253,545   —     —     5,253,545   3   1,228,003   —     86,213   1,314,216   3,939,329   4,025,542   4,111,781

Watering troughs

  3,712,614   999   —     3,713,613   5   1,032,887   —     90,391   1,123,278   2,590,335   2,679,727   2,735,601

Alfalfa fields and meadows

  2,169,597   316,797   —     2,486,394   12-25-50   1,443,928   —     225,494   1,669,422   816,972   725,669   907,638

Buildings and constructions

  5,676,309   118,986   —     5,795,295   2   1,980,142   —     50,466   2,030,608   3,764,687   3,696,167   3,644,152

Machinery

  8,432,336   9,335   34,177   8,407,494   10   5,722,682   29,397   392,031   6,085,316   2,322,178   2,709,654   3,113,984

Vehicles

  1,345,118   249,588   105,098   1,489,608   20   695,065   62,006   129,803   762,862   726,746   650,053   417,933

Tools

  193,361   1,450   —     194,811   10   130,040   —     7,350   137,390   57,421   63,321   66,181

Furniture and equipment

  1,048,119   41,473   —     1,089,592   10   669,664   —     54,305   723,969   365,623   378,455   357,270

Corral and leading lanes

  652,931   3,667   —     656,598   3   131,165   —     10,833   141,998   514,600   521,766   519,547

Roads

  1,191,255   2,146   —     1,193,401   10   668,531   —     59,692   728,223   465,178   522,724   585,164

Facilities

  7,485,195   19,163   32,946   7,471,412   10-20-33   3,589,058   —     390,334   3,979,392   3,492,020   3,896,137   2,878,137

Computer equipment

  1,393,473   210,751   296   1,603,928   20   1,110,169   296   92,708   1,202,581   401,347   283,304   278,213

Silo plants

  1,169,114   —     —     1,169,114   5   315,645   —     31,537   347,182   821,932   853,469   882,114

Feed Lot

  3,815,528   104,821   —     3,920,349   —     1,176,189   —     144,578   1,320,767   2,599,582   2,639,339   2,480,935

Constructions in progress

  11,585,564   3,487,918   —     15,073,482   —     —     —     —     —     15,073,482   11,585,564   4,876,039

Advances to suppliers

  174,826   504,081   144,683   534,224   —     —     —     —     —     534,224   174,826   17,831
   
 
 
 
 
 
 
 
 
 
 
 

Total at December 31, 2004

  179,919,641   5,423,528   317,200   185,025,969       19,893,168   91,699   1,765,735   21,567,204   163,458,765        
   
 
 
 
 
 
 
 
 
 
 
 

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 December 31, 2003

  170,555,220   3,254,827   4,851,337   168,958,710       19,622,754   2,094,386   1,590,958   19,119,326           149,839,384
   
 
 
 
 
 
 
 
 
 
 
 

 

19


 

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 December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1, 2, and 3)

 

Schedule B

 

Principal Account


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


   Amortization

   Net
carrying
value at
December
31, 2004


   Net
carrying
value at
June 30,
2004


  

Net

carrying
value at
December 31,
2003


      Accumulated
at the
beginning of
the year


   Current year

   Accumulated
at the end of
the period/
year


        
         Rate
%


   Amount

           
     Pesos    Pesos         Pesos    Pesos    Pesos    Pesos    Pesos

Development expenditures

   1,410,368    1,410,368    33.33    —      1,410,368    —      —      117,532

Organization expenses

   448,818    448 818         —      448 818    —      —      —  

Brands and patents

   18,938    18,938         —      18,938    —      —      5,680
    
  
  
  
  
  
  
  

Total at December 31, 2004

   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 December 31, 2003

   1,878,124    1,508,487         246,425    1,754,912              123,212
    
  
  
  
  
  
  
  

 


 

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 December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1, 2, and 3)

 

Schedule C

 

                              INFORMATION ON THE ISSUER

                                  Latest financial statements

Type and

characteristics

of the securities


  Amount

 

Value at
December

31, 2004


   

Value at

June

30, 2004


   

Value at
December

31, 2003


    Market
value


  Principal
activity


  Capital

  Income for
the period


 

Shareholders’

Equity


        Pesos     Pesos     Pesos     Pesos       Pesos   Pesos   Pesos

Current Investments

                                         

Mutual Funds

                                         

Fondo especial Banco Rio in pesos

  369,108   83,626     57,122     —       0.223842                

Fondo plazo fijo Banco Rio in dollars

  1,862   2,523     4,081     3,999     2.295653                
       

 

 

                   
        86,149     61,203     3,999                      
       

 

 

                   

Notes and Convertible Bonds

                                         

Interest of Convertible Bonds 2007- IRSA (US$)

                                         

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

                                         

IRSA Inversionesy Representaciones SA

      1,499,204     1,388,504     1,560,891                      

Bonos Global 2010

  110,000   112,343     97,096     90,288     1.021300                

Bocon Pro 1

  157,647   630     630     630     0.003996                
       

 

 

                   
        1,612,177     1,486,230     1,651,809                      
       

 

 

                   

Deposits in local banks in pesos

      —       —       816,290                      
       

 

 

                   
        —       —       816,290                      
       

 

 

                   

Deposits in foreign banks in dollars

      660,145     327,564     —                        
       

 

 

                   
        660,145     327,564     —                        
       

 

 

                   

Total current investments

      2,358,471     1,874,997     2,472,098                      
       

 

 

                   

Non-current investments

                                         

Related companies Law N° 19,550 Section 33

AGRO-URANGA S. A.

                        unlisted   Agricultural
and
livestock
  2,500,000   1,551,749   13,035,586

Shares

  893,069   4,523,238     5,230,031     4,313,051                      

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                      
       

 

 

                   
        15,710,253     16,417,046     15,500,066                      
       

 

 

                   

IRSA Inversiones y Representaciones S.A.

                                         

Shares

  69,242,276   275,510,169     244,002,522     190,567,676     listed   Real state   261,520,248   56,756,060   1,040,570,752
       

 

 

                   
        275,510,169     244,002,522     190,567,676                      
       

 

 

                   
    Subtotal   291,220,422     260,419,568     206,067,742                      
       

 

 

                   

Other Investments

                                         

Convertible Bonds 2007 - IRSA (US$)

                                         

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

                                         

IRSA Inversiones y Representaciones S.A.

  45,293,168   134,928,347     132,941,891     146,333,542                      

Coprolan

      20,717     20,717     20,717     unlisted                
       

 

 

                   
    Subtotal   134,949,064     132,962,608     146,354,259                      
       

 

 

                   

Goodwill

                                         

Goodwill

      329,838     659,676     989,514                      

IRSA negative goodwill

      (36,656,319 )   (26,529,022 )   (20,921,124 )                    
       

 

 

                   
    Subtotal   (36,326,481 )   (25,869,346 )   (19,931,610 )                    
       

 

 

                   

Total non-current investments

      389,843,005     367,512,830     332,490,391                      
       

 

 

                   

 

 


 

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 December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1, 2, and 3 )

 

Schedule E

 

Item


   Opening
balances


   Deductions

    Value at
December
31, 2004


  

Value at
June

30, 2004


   Value at
December
31, 2003


     Pesos    Pesos     Pesos    Pesos    Pesos

Deducted from asset

                         

Defaulting debtors

   412,067    (38,532 )   373,535    412,067    449,197

Included in liabilities

                         

Allowances

                         

For pending lawsuits (1)

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

 
  
  

Total at December 31, 2004

   450,394    (38,532 )   411,862          
    
  

 
  
  

Total at June 30, 2004

   517,452    (67,058 )        450,394     
    
  

 
  
  

Total at December 31, 2003

   517,452    (29,928 )             487,524
    
  

 
  
  

 

(1) Included in Non-Current Other debts

 


 

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 December 31, 2004 and 2003

(Notes 1, 2, and 3)

 

Schedule F

 

    Crops

    Beef cattle

    Milk

    Others

    Others

    Total

 
   

December

31, 2004


   

December

31, 2003


   

December

31, 2004


   

December

31, 2003


    December
31, 2004


   

December

31, 2003


    December
31, 2004


    December
31, 2003


    December
31, 2004


   

December

31, 2003


    December 31, 2004

    December 31, 2003

 
    Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos  

Inventories at the beginning of the year

                                                                                   

Beef cattle

  —       —       59,418,980     48,848,045     4,150,630     2,294,684     —       —       —       —       63,569,610           51,142,729        

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     112,516     103,508     58,969     —       —       3,138           241,516           171,485        

Materials

  3,842,219     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     48,960,561     4,299,120     2,387,015     601,626     145,137     200,960     246,069           78,741,582           60,375,043  

Holding results

  —       —       5,995,616     1,115,586     259,170     229,450     —       —       —       —             6,254,786           1,345,036  

Commodities market results

  2,088,522     753,010     —       —       —       —       57,784     —       —       —             2,146,306           753,010  

Transfer of Inventories to expenses

  (149,403 )   (164,529 )   (35 )   33,580     —       —       —       (64,832 )   (23,501 )   —             (172,939 )         (195,781 )

Transfer of Inventories to fixed assets

  (464,153 )   (35,860 )   —       —       —       —       —       —       (39,695 )   (1,367 )         (503,848 )         (37,227 )

Transfer of Unharvested crops to expenses

  (6,646,273 )   (2,783,694 )   (136,871 )   (149,777 )   (376,780 )   (204,552 )   —       —       (262,674 )   (283,890 )         (7,422,598 )         (3,421,913 )

Recovery of Inventories

  —       —       101,950     139,734     (101,950 )   (139,734 )   —       —       —       —             —             —    

Purchases

  25,562,280     11,876,012     3,118,043     4,153,319     398,128     563,961     537,075     3,942,326     416,257     277,057           30,031,783           20,812,675  

Operating expenses (Schedule H)

  4,562,016     3,397,918     9,535,065     6,660,866     976,650     933,330     389,831     331,666     562,856     651,479           16,026,418           11,975,259  

Less:

                                                                                   

Inventories at the end of the period

                                                                                   

Beef cattle

  —       —       (63,387,666 )   (51,726,196 )   (4,439,780 )   (3,253,871 )   —       —       —       —       (67,827,446 )         (54,980,067 )      

Crops

  (4,803,409 )   (3,782,649 )   —       —       —       —       —       —       —       —       (4,803,409 )         (3,782,649 )      

Unharvested crops

  (20,090,681 )   (9,374,173 )   —       —       —       —       —       —       —       —       (20,090,681 )         (9,374,173 )      

Seeds and fodder

  —       —       (88,843 )   (62,725 )   (78,055 )   (76,619 )   —       —       (3,159 )   —       (170,057 )         (139,344 )      

Materials

  (2,753,105 )   (1,378,359 )   —       —       (59,538 )   (42,704 )   (327,334 )   (503,251 )   (270,646 )   (217,351 )   (3,410,623 )   (96,302,216 )   (2,141,665 )   (70,417,898 )
   

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

  11,391,820     7,143,937     14,691,109     9,124,948     876,965     396,276     1,258,982     3,851,046     580,398     671,997           20,799,274           21,188,204  
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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 December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1, 2, and 3)

 

Schedule G

 

     December 31, 2004

   June 30, 2004

   December 31, 2003

Item


   Type and amount
of foreign
currency


   Current
exchange
rate


  

Amount in
local currency


  

Type and amount
of foreign

currency


   Amount in
local currency


  

Type and amount

of foreign


          Pesos    Pesos         Pesos    currency    Pesos

Current Assets

                                        

Cash and banks

                                        

Cash and banks

   US$ 8,833,186    2.94    25,960,735    US$ 2,475,600    7,223,801    US$ 6,611,319    19,040,598

Investments:

                                        

Mutual funds

   US$ 858    2.94    2,523    US$ 1,399    4,081    US$ 1,389    3,999

Interest of Convertible Bonds 2007-IRSA

                                        

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

                                        

IRSA Inversiones y Representaciones Sociedad Anónima

   US$ 503,257    2.98    1,499,204    US$ 469,406    1,388,504    US$ 541,976    1,560,891

Deposits in local banks

   US$ —      2.94    —      US$ 112,256    327,564    US$ 175,210    504,605

Deposits in foreign banks

   US$ 224,616    2.94    660,145    US$ —      —      US$ —      —  

Trade accounts receivable

                                        

Accounts receivable

   US$ 325,346    2.94    956,193    US$ 1,365    3,983    US$ 27,153    78,202

Other receivables and prepaid expenses:

                                        

Secured by mortgages

   US$ 359,202    2.94    1,055,695    US$ 354,351    1,033,997    US$ 368,726    1,061,931

Guarantee deposits

   US$ 107,327    2.94    315,433    US$ 750,171    2,188,998    US$ 502,324    1,446,694

Non Current Assets

                                        

Other receivables and prepaid expenses:

                                        

Secured by mortgages

   US$ —           —      US$ —      —      US$ 350,000    1,008,000

Investments:

                                        

Convertible Bonds 2007-IRSA

                                        

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

                                        

IRSA Inversiones y Representaciones Sociedad Anónima

   US$ 45,293,168    2.98    134,928,347    US$ 44,943,168    132,941,891    US$  49,943,188    146,333,542
    

  
  
  

  
  

  

Total Assets

   US$ 55,646,960         165,378,275    US$ 49,107,716    145,112,819    US$ 58,521,285    171,038,462
    

  
  
  

  
  

  

Current liabilities

                                        

Trade account payable:

                                        

Suppliers

   US$ 953,321    2.98    2,839,943    US$ 383,048    1,133,055    US$ 339,120    993,622

Accrual for other expenses

   US$ 870,929    2.98    2,129,666    US$ 499,662    1,477,683    US$ 155,191    454,710

Loans:

                                        

Local financial loans

   US$ 4,068,000    2.98    12,118,572    US$ —      —      US$ —      —  

Interest of Convertible Bonds 2007

   US$ 199,036    2.98    592,928    US$ 199,202    589,239    US$ 209,153    612,819

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

                                        

Shareholders

   US$ 266,145    2.98    792,845    US$ 250,176    740,021    US$ 261,887    767,329

Directors

   US$ 85    2.98    252    US$ 1,124    3,324    US$ 1,148    3,363

Other debts

                                        

Advances to customers

   US$ 1,411,516    2.98    4,204,906    US$ 1,500,000    4,432,500    US$ —      —  

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

                                        

Cactus Argentina S.A.

   US$ 70,000    2.94    205,730    US$ —      —      US$ —      —  

Cactus Feeders Inc.

   US$ 13,961    2.98    41,590    US$ 13,263    39,231    US$ 9,076    35,670

Non-current liabilities

                                        

Loans:

                                        

Convertible Bonds 2007

   US$
 
 
17,913,238
   2.98    53,363,537    US$ 19,072,528    56,416,538    US$ 19,608,130    57,451,821

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

                                        

Shareholders

   US$ 23,953,025    2.98    71,356,061    US$  23,953,025    70,853,048    US$ 24,551,900    71,937,067

Directo rs

   US$ 7,600    2.98    22,640    US$ 107,600    318,281    US$ 107,600    315,268
    

  
  
  

  
  

  

Total Liabilities

   US$
 
 
49,726,856
        147,668,670    US$ 45,979,628    136,002,920    US$ 45,243,205    132,571,669
    

  
  
  

  
  

  

 

US$: US dollars

 


 

Cresud Sociedud Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

 

Unaudited Consolidated 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 December 31, 2004 and 2003

(Notes 1, 2, and 3)

 

Schedule H

 

Items


   Total
December 31,
2004


   Operating Expenses

   Expenses

   Total
December
31, 2003


      Total

   Crops

   Beef cattle

   Milk

   Feed Lot

   Others

   Selling

   Administrative

  
     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Directors’ fees

   46,408    —      —      —      —      —      —      —      46,408    3,730

Fees and payments for services

   608,422    132,330    5,726    84,599    6,875    —      35,130    —      476,092    759,431

Salaries and wages

   3,183,508    1,569,861    249,754    830,780    146,061    —      343,266    39,431    1,574,216    3,612,925

Social security contributions

   494,327    202,965    81,521    108,932    12,512    —      —      —      291,362    438,033

Taxes, rates and contributions

   217,611    191,547    54,344    114,950    15,370    —      6,883    —      26,064    221,269

Gross sales taxes

   286,533    —      —      —      —      —      —      286,533    —      288,287

Office and administrative expenses

   352,376    73,903    —      1,824    —      —      72,079    1,320    277,153    165,577

Bank commissions and expenses

   15,466    15,466    1,891    4,466    182    —      8,927    —      —      22,107

Depreciation of fixed assets

   1,765,735    1,613,438    759,378    574,844    100,400    137,349    41,467    —      152,297    1,590,958

Vehicle and travelling expenses

   331,332    175,735    58,029    88,155    6,901    —      22,650    8,026    147,571    259,172

Spare parts and repairs

   617,545    614,368    311,710    265,241    36,717    —      700    —      3,177    521,117

Insurance

   123,954    33,496    13,667    14,317    1,372    —      4,140    —      90,458    161,729

Employees’ benefits

   183,077    134,766    21,643    101,090    4,468    —      7,565    144    48,167    80,941

Amortization of intangible assets

   —      —      —      —      —      —      —      —      —      246,425

Livestock expenses

   7,866,754    7,260,478    —      7,260,478    —      —      —      606,276    —      5,005,637

Dairy farm expenses

   643,214    636,126    —      —      636,126    —      —      7,088    —      584,715

Agricultural expenses

   4,465,418    2,929,287    2,929,287    —      —      —      —      1,536,131    —      3,040,597

Feed lot expenses

   252,482    252,482    —      —      —      252,482    —      —      —      223,531

Silo expenses

   41,963    41,963    41,963    —      —      —      —      —      —      123,395

Coal expenses

   —      —      —      —      —      —      —      —      —      8,060

Firewood expenses

   —      —      —      —      —      —      —      —      —      338

FyO expenses

   25,984    4,500    —      —      —      —      4,500    21,484    —      76,680

General expenses

   144,081    143,707    33,103    85,389    9,666    —      15,549    374    —      278,688
    
  
  
  
  
  
  
  
  
  

Total at December 31, 2004

   21,666,190    16,026,418    4,562,016    9,535,065    976,650    389,831    562,856    2,506,807    3,132,965    —  
    
  
  
  
  
  
  
  
  
  

Total at December 31, 2003

        11,975,259    3,397,918    6,660,866    933,330    331,666    651,479    2,192,027    3,546,056    17,713,342
    
  
  
  
  
  
  
  
  
  

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

 

Unaudited Balance Sheet as at December 31, 2004, June 30, 2004 and December 31, 2003

 

    

December 31, 2004

(Notes 1 and 2)


   

June 30,2004

(Notes 1 and 2)


   

December 31, 2003

(Notes 1 and 2)


        

December 31,2004

(Notes 1 and 2)


  

June 30, 2004

(Notes 1 and
2)


  

December 31, 2003

(Notes 1 and 2)


     Pesos     Pesos     Pesos          Pesos    Pesos    Pesos

ASSETS

                    

LIABILITIES

              

Current Assets

                    

Current Liabilities

              

Cash and banks (Note 8.a.)

   26,578,404     12,522,961     19,903,682    

Debts:

              

Investments (Note 8.b.)

   1,639,729     1,490,311     1,655,808    

Trade accounts payable (Note 8.f.)

   11,649,093    11,051,036    5,995,956

Trade accounts receivable (Note 8.c.)

   6,298,620     3,577,620     3,941,177    

Loans (Note 8.g.)

   38,606,380    8,090,261    1,383,511

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

   7,845,706     15,915,028     8,542,617    

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

   765,705    1,359,719    689,109

Inventories (Note 8.e.)

   45,284,709     34,330,261     31,429,530    

Taxes payable (Note 8.i.)

   4,372,111    1,722,271    959,654
    

 

 

                  

Total Current Assets

   87,647,168     67,836,181     65,472,814    

Other debts (Note 8.j.)

   11,857,335    8,170,624    2,913,384
    

 

 

      
  
  
                      

Total Debts

   67,250,624    30,393,911    11,941,614
                           
  
  

Non-Current Assets

                    

Total Current Liabilities

   67,250,624    30,393,911    11,941,614
                           
  
  

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

   5,279,475     4,138,826     3,918,883                     

Inventories (Note 8.e.)

   46,102,732     40,982,536     35,852,040    

Non-Current Liabilities

              

Investments (Note 8.b.)

   305,920,570     274,977,554     220,366,049    

Loans (Note 8.g.)

   123,285,777    125,880,874    127,670,143

Other investments (Note 8.b. )

   134,949,064     132,962,608     146,354,259    

Taxes payable (Note 8.i.)

   27,491,943    25,132,570    23,111,814

Fixed assets, net (Schedule A)

   155,026,463     151,547,192     141,427,910    

Other debts (Note 8.j.)

   480,640    —      —  
    

 

 

      
  
  

Subtotal Non-Current Assets

   647,278,304     604,608,716     547,919,141    

Total Non-Current Liabilities

   151,258,360    151,013,444    151,781,957
    

 

 

      
  
  

Goodwill (Note 8.b.)

   (36,326,481 )   (25,869,346 )   (19,931,610 )  

Total liabilities

   218,508,984    181,407,355    162,723,571
    

 

 

      
  
  

Total Non-Current Assets

   610,951,823     578,739,370     527,987,531    

SHAREHOLDERS’ EQUITY (as per corresponding statement)

   480,090,007    465,168,196    430,736,774
    

 

 

      
  
  

Total Assets

   698,598,991     646,575,551     593,460,345    

Total Liabilities and Shareholders’ Equity

   698,598,991    646,575,551    593,460,345
    

 

 

      
  
  

 

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

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 

26


 

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 December 31, 2004 and 2003

 

    

December 31, 2004

(Notes 1 and 2)


   

December 31, 2003

(Notes 1 and 2)


 
     Pesos     Pesos  

Sales

            

Crops

   11,236,161     8,793,868  

Beef cattle

   18,129,885     11,071,481  

Milk

   1,567,574     1,831,837  

Other

   1,923,693     1,822,775  
    

 

Total Sales

   32,857,313     23,519,961  
    

 

Cost of sales (Schedule F)

            

Crops

   (11,391,820 )   (7,143,937 )

Beef cattle

   (14,531,019 )   (8,386,427 )

Milk

   (876,965 )   (396,276 )

Other

   (8,554 )   (1,418 )
    

 

Total cost of sale

   (26,808,358 )   (15,928,058 )
    

 

Gross income

   6,048,955     7,591,903  
    

 

Selling expenses (Schedule H)

   (2,408,431 )   (2,102,952 )

Administrative expenses (Schedule H)

   (2,822,516 )   (3,236,153 )

Net gain on sale of farms

   —       1,085,345  

Gain from inventory holdings (Schedule F)

   5,744,136     1,240,082  
    

 

Operating income

   6,562,144     4,578,225  
    

 

Financial results

            

Generated by assets:

            

Exchange differences and discounts

   38,496     8,182,662  

Interest income

   223,891     94,913  

Bad debts (Schedule E)

   —       29,928  

Reference stabilization index (CER)

   —       (302,136 )

Tax on debts and credits

   (585,499 )   (443,589 )

Convertible Bonds purchase interest

   5,473,411     5,846,354  

Others

   82,666     6,625  
    

 

     5,232,965     13,414,757  
    

 

Generated by liabilities:

            

Financial expenses

            

Convertible Bonds issued interest

   (5,160,478 )   (5,625,121 )

Others

   (1,152,651 )   (817,230 )

Exchange differences and discounts

   (947,991 )   (6,305,896 )
    

 

     (7,261,120 )   (12,748,247 )
    

 

Other income and expenses:

            

Gains from others fixed assets sales

   20,061     251,561  

Others

   (3,315,633 )   1,656  
    

 

     (3,295,572 )   253,217  
    

 

Gain from controlled and related companies

   14,229,684     2,483,250  

Management fees (Note 5)

   (1,059,305 )   (529,129 )
    

 

Income before income tax

   14,408,796     7,452,073  
    

 

Income tax expense (Note 6)

   (4,875,059 )   (2,689,917 )
    

 

Net income for the period

   9,533,737     4,762,156  
    

 

 

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

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

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 December 31, 2004 and 2003

(Notes 1 and 2)

 

     Shareholders’ contributions

   Retained
earnings


                  
     Capital (Note 3)

   

Inflation
adjustment

of Common
stock


   Paid-in capital

   Total

  

Legal

reserve


   Unappropriated
earnings


   

Total at
December 31,

2004


   

Total at

December 31,

2003


 

Items


   Common stock

   Treasury stock

                   
     Pesos    Pesos     Pesos    Pesos    Pesos    Pesos    Pesos     Pesos     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)

   173,200    (173,200 )             —           173,200     173,200     319,437  

Conversion of bonds in common stock (Note 13)

   2,479,890               1,260,738    3,740,628               3,740,628     16,097,982  

Exercise of Warrants (Note 13)

   2,464,833               2,009,413    4,474,246               4,474,246     19,258,074  

Appropriation of profits resolved by Shareholders’ Meeting held on October 31, 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

                                  9,533,737     9,533,737     4,762,156  
    
  

 
  
  
  
  

 

 

Balances at December 31, 2004

   155,650,742    66,800     166,218,124    109,593,251    431,528,917    7,692,591    40,868,499     480,090,007     —    
    
  

 
  
  
  
  

 

 

Balances at December 31, 2003

   146,121,345    253,000     166,218,124    103,644,018    416,236,487    6,087,440    8,412,847           430,736,774  
    
  

 
  
  
  
  

 

 

 

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

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

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 December 31, 2004 and 2003

 

    

December 31, 2004

(Notes 1 and 2)


   

December 31, 2003

(Notes 1 and 2)


 
     Pesos     Pesos  

Changes in funds

            

Funds at the beginning of the year

   12,527,042     20,739,345  

Funds at the end of the period

   26,605,956     19,907,681  
    

 

Net increase (decrease) in funds

   14,078,914     (831,664 )

Causes of changes in funds

            

Operation activities

            

Income for the period

   9,533,737     4,762,156  

Liabilities interest

   5,911,384     5,625,120  

Income tax

   4,875,059     2,478,164  

Adjustments made to reach net cash flow from operation activities

            

Results from interest in controlled and related companies

   (14,229,684 )   (2,483,250 )

Increase in allowances and reserves

   3,648,938     2,306,749  

Depreciation

   1,501,016     1,358,544  

Results from inventory holdings

   (5,744,136 )   (1,240,082 )

Financial results

   (4,817,103 )   (4,677,012 )

Result from sale of fixed assets

   (20,061 )   (1,336,906 )

Changes in operating assets and liabilities

            

Decrease in current investments

   5,362,711     5,707,778  

(Increase) decrease in trade accounts receivable

   (2,721,637 )   486,106  

Decrease (increase) in other receivables

   7,101,433     (3,119,130 )

Increase in inventories

   (10,834,356 )   (9,044,234 )

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

   (459,860 )   (3,198,756 )

Decrease in trade accounts payable

   (1,991,576 )   (3,536,008 )

Dividends collected

   981,315     1,104,139  

Increase (decrease) in other debts

   3,108,046     (1,195,455 )
    

 

Net funds provided by (applied to) operation activities

   1,205,226     (6,002,077 )
    

 

Investment activities

            

Increase in permanent investments

   (1,502,678 )   (1,199,670 )

Increase in interest in related companies

   (7,418,437 )   (5,204,531 )

Acquisition and upgrading of fixed assets

   (4,701,940 )   (3,043,197 )

Sale of fixed assets

   245,562     3,513,258  
    

 

Net funds applied to investment activities

   (13,377,493 )   (5,934,140 )
    

 

Financing activities

            

Exercise of Warrants

   4,474,246     19,258,074  

Dividends paid

   (3,000,000 )   (1,500,000 )

Exercise of rights offering on treasury stock

   173,200     319,437  

Increase in financial loans

   36,468,450     —    

Decrease in financial loans

   (11,864,715 )   (5,667,108 )

Issuance expenses of Convertible Bonds

   —       (1,305,850 )
    

 

Net funds provided by financing activities

   26,251,181     11,104,553  
    

 

Net increase (decrease) in funds

   14,078,914     (831,664 )
    

 

Items not involving changes in funds

            

Transfer of inventory to fixed assets

   503,848     37,227  

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

   3,740,628     16,097,982  
    

 

Complementary information

            

Interest paid

   5,107,038     5,667,108  

Income tax paid

   244,857     727,313  

 

 

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

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 December 31, 2004 and 2003

 

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.

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 1: (Continued)

 

Financial statements corresponding to the six month economic periods ended to December 31, 2004 and 2003 have not been audited yet. The management believes they include all necessary settlements to reasonably show the results of each period. Results for the six month economic periods ended to December 31, 2004 and 2003 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 December 31, 2004, 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 December 21, 2003 and June 30, 2004.

 


 

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 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 and notes are carried at market value as of period-end.

 

Temporary investments do not exceed their recoverable value estimated at fiscal period-end.

 

  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.

 

  g. Futures and Options

 

Futures relate to cereal commitments deliverable at a previously agreed price (see Note 4). Premiums collected or paid correspond to options bought or written.

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

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.

 

  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. 21of the Federación Argentina de Consejos Profesionales de Ciencias Económicas approved by Comisión Nacional de Valores.

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

Holdings at December 31, 2004 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

   26.48

 

Consolidated financial statements with Inversiones Ganaderas S.A., Futuros y Opciones.Com and Cactus Argentina S.A. in proportional consolidation of 50% at December 31, 2004 and 2003 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.

 

As of December 31, 2004, the Company recorded as negative goodwill the difference between the prices of conversions of warrants into IRSA’s shares and the value assigned according to the calculation of the proportional equity value. In such negative goodwill the impact of IRSA’s results from third-party dilutions resulting from the exercise of conversion and warrants for shares will be recognized. Therefore, such amount will not be subject to amortization.

 

  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.).

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

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.

 

  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.

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 2: (Continued)

 

  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.

 

NOTE 3: COMMON AND TREASURY STOCK

 

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

 

     Authorized

   Subscribed

   Paid in

     Pesos    Pesos    Pesos

Common and treasury stock at June 30, 2001

   119,669,749    119,669,749    119,669,749

Preferred offering

              

Fiscal year ended June 30, 2002 (Note 12)

   2,353    2,353    2,353

Incentive Plan

              

Fiscal year 02 (Note 12)

   480,000    480,000    480,000

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 and 2nd quarter

   173,200    173,200    173,200

Conversion of bonds in common stock (Note 13)-Fiscal year 2005-1st and 2nd quarter

   2,479,890    2,479,890    2,479,890

Exercise of Warrants (Note13)-Fiscal year 2005-1st and 2nd quarter

   2,464,833    2,464,833    2,464,833
    
  
  

Common and treasury stock at December 31, 2004

   155,650,742    155,650,742    155,650,742
    
  
  

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 3: (Continued)

 

As of December 31, 2004, the capital authorized to be publicly offered is formed of 155,650,742 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 December 31, 2004 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

   5,440    227.81    (37,979 )

Corn

   12,700    98.42    (10,874 )

 

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

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


Corn

   12,700    86.61    39,248

 

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

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


Soybean

   2,720    205.77    37,979

 

FUTURES – C.B.O.T. — SEASON 2004/2005

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Corn-sell

   12,700    93.57    (1,188,312 )

 

As of December 2004 and 2003, the Company charged to income Ps. 2,088,522 and Ps. 753,010, respectively, in connection with the transactions closed during such periods. These results are disclosed combining the cost of grains in one line of Schedule F.

 

At December 31, 2003 the Company had arranged futures and options on the forward market as follows:

 

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

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   13,600    323.35    (99,944 )

Corn

   17,780    106.29    (33,598 )

Wheat

   14,960    168.35    (58,467 )

 


 

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 2003/2004

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


Soybean

   10,880    293.95    135,124

Corn

   45,720    90.55    305,984

Wheat

   14,960    146.64    176,900

 

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

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Soybean

   10,880    252.62    (127,928 )

Corn

   45,720    94.48    (102,595 )

Wheat

   14,960    142.63    (56,468 )

 

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

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


Soybean

   13,600    264.56    199,887

 

OPTIONS – SELL CALL – SEASON 2003/2004

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$


 

Corn

   3,100    100.26    (14,923 )

 

OPTIONS – SELL PUT – SEASON 2003/2004

 

Cereal


   Tons

  

Average price

US$ (1)


  

Premium

US$ (2)


 

Wheat

   200    100.00    (630 )

 

FUTURES – C.B.O.T. - SEASON 2003/2004

 

Cereal


   Tons

  

Average price

US$ (1)


  

Total amount

US$ (2)


Corn-purchase

   3,100    89.00    287,959

 

(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.

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 5: (Continued)

 

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 N° 271 of Law N° 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 December 31, 2004 and December 31, 2003 includes a charge in the Statement of Income of Ps. 1,059,305 and a Ps. 529,129 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 December 31, 2004:

 

     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
    

 
  
  

 

    Deferred liabilities as of December 31, 2004:

 

     Fixed Assets

    Inventories

    Investments

    Accrual

    TOTAL

 

Initial Balance

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

Charge to results

   106,320     (1,062,968 )   (1,509,122 )   46,947     (2,418,823 )
    

 

 

 

 

Closing Balance

   (13,415,841 )   (12,608,426 )   (2,730,111 )   (1,022,875 )   (29,777,253 )
    

 

 

 

 

 

As of December 31, 2004, net liabilities at period-end as per the information included in the preceding tables amount to Ps. 27,491,944.

 

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:

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 6: (Continued)

 

Description


   December 31, 2004

    December 31, 2003

 

Income before income tax

   14,408,796     7,452,073  

Tax rate

   35 %   35 %
    

 

Net results at tax rates:

   5,043,079     2,608,226  

Permanent differences at tax rate:

            

Restatement into constant currency

   62,175     724,011  

Penalties

   159     847  

Donations

   —       (92,333 )

Amortization FYO Goodwill

   55,643     55,066  

Result from purchase and sale of stock

   2,066,984     244,230  

Loss from controlled and related companies

   (4,980,389 )   (869,138 )

Personal asset tax

   1,157,197     —    

Conversion of bonds in common stock

   1,509,585     —    

Miscellaneous permanent differences

   (39,374 )   19,008  
    

 

     4,875,059     2,689,917  
    

 

 

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

 

    Deferred assets as of December 31, 2003:

 

     Cumulative
tax loss
carryforwards


   Provisions

    Other

    TOTAL

 

Initial Balance

   2,257,116    (6,335 )   250,802     2,501,583  

Charge to income

   66,425    (10,475 )   (253,313 )   (197,363 )
    
  

 

 

Closing Balance

   2,323,541    (16,810 )   (2,511 )   2,304,220  
    
  

 

 

 


 

Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 6: (Continued)

 

    Deferred liabilities as of December 31, 2003:

 

    

Fixed

Assets


    Inventories

    Investments

    Provisions

    TOTAL

 

Initial Balance

   (13,019,043 )   (10,355,850 )   (2,705 )   (1,001,793 )   (24,379,391 )

Charge to income

   (672,657 )   (126,040 )   2,269     (240,215 )   (1,036,643 )
    

 

 

 

 

Closing Balance

   (13,691,700 )   (10,481,890 )   (436 )   (1,242,008 )   (25,416,034 )
    

 

 

 

 

 

As of December 31, 2003, net liabilities at period-end as per the information included in the preceding tables amount to Ps. 23,111,814.

 


 

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 December 31, 2004, June 30, 2004 and December 31, 2003 with Subsidiaries, related companies and related parties:

 

     December 31, 2004

   June 30, 2004

   December 31, 2003

IRSA Invesiones v Representaciones S.A.(3)

              

Current Investments

              

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

   1,499,204    1,388,504    1,560,891

Non-Current Investments

              

- Convertible Bonds 2007 -IRSA (US$)

   134,928,347    132,941,891    146,333,542

Current Trade accounts receivable

   —      637    18,371

Current Trade accounts payable

   116,259    1,108    35,378

Inversiones Ganaderas S.A.(1)

              

Current Trade accounts receivable

   29,195    9,216    78,555

Current Other debts

   1,747,984    2,196,666    2,384,255

Non-Current Other debts

   480,640    —      —  

Futuros y opciones.Com S.A(1)

              

Current Trade accounts receivable

   424,147    —      —  

Current Other receivables and prepaid expenses

   23,603    738,735    321,310

Current Trade accounts payable

   —      3,720    14,033

Cactus Argentina S.A.(3)

              

Current Trade accounts receivable

   30,261    29,845    13,709

Current Other receivables and prepaid expenses

   1,354,328    1,346,401    1,337,986

Current Trade accounts payable

   530,217    1,853,969    434,578

Current Other debts

   205,730    —      —  

Agro-Uranga S.A.(3)

              

Current Other receivables and prepaid expenses

   234,279    —      —  

Fundación IRSA (4)

              

Current Trade accounts payable

   1,177,988    1,177,988    460,642

Inversora Bolivar (4)

              

Current Trade accounts payable

   6,341    5,349    —  

Alto Palermo S.A.(4)

              

Current Trade accounts receivable

   —      87,359    40,003

Current Trade accounts payable

   44,233    175,133    38,931

Credits to employees (4)

              

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

   15,362    37,751    43,020

Estudio Zang, Bergel & Viñes(4)

              

Current Trade accounts payable

   23,486    81,646    15,757

Directors(4)

              

Current Trade accounts payable

   43,543    3,471    967

Current Loans

              

Convertible Bonds 2007 Interest payable (Schedule G)

              

Directors

   252    3,324    3,363

Non-Current Loans

              

Convertible Bonds 2007 (Schedule G)

   22,640    318,281    315,268

Directors

              

Shareholders (2)

              

Current Loans

              

Convertible Bonds 2007 Interest payable (Schedule G)

   592,928    589,239    612,819

Directors

   792,845    740,021    767,329

Non-Current Loans

              

Convertible Bonds 2007 (Schedule G)

   53,363,537    56,416,538    57,451,821

Directors

   71,356,061    70,853,048    71,937,067

 

(1) Controlled company

 

(2) Shareholder

 

(3) Related company

 

(4) Related party

 


 

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 December 31, 2004 and 2003:

 

Subsidiaries, related companies
Law Nº19,550 Section
33 and related parties:


   Year

   Sales and Fees for
shared services


    Interest paid

    Salaries and
social securities


    Fees

    Livestock
expenses


    Interest
income


   Administrative
services


   Others

 

Shareholders

   2004    —       (2,951,938 )   —       —       —       —      —      —    
     2003    —       (3,119,828 )   —       —       —       —      —      —    

Agro-Uranga S.A.

   2004    —       —       —       —       —       —      —      106,780  
     2003    —       —       —       —       —       —      —      —    

Alto Palermo S.A.

   2004    (8,765 )   —       —       —       —       —      —      —    
     2003    (50,887 )   —       —       —       —       —      —      —    

Cactus Argentina S.A.

   2004    —       —       —       —       (3,002,994 )   10,634    83,520    26,353  
     2003    —       —       —       —       (3,035,337 )   9,273    92,960    7,048  

Directors

   2004    —       (937 )   (131,053 )   (46,408 )   —       9,859    —      —    
     2003    —       (13,673 )   (158,841 )   (3,730 )   —       11,226    —      —    

Estudio Zang, Bergel & Viñes

   2004    —       —       —       (62,024 )   —       —      —      —    
     2003    —       —       —       (24,058 )   —       —      —      —    

Fundación IRSA

   2004    —       —       —       —       —       —      —      —    
     2003    —       —       —       —       —       —      —      —    

Futuros y opciones.Com S.A.

   2004    —       —       —       —       —       —      19,200    (608 )
     2003    —       —       —       —       —       —      19,200    (25,052 )

Inversiones Ganaderas S.A.

   2004    —       (70,093 )   —       —       —       —      43,289    80,744  
     2003    —       (63,213 )   —       —       —       —      —      (653 )

Inversora Bolívar

   2004    —       —       —       —       —       —      —      (82,317 )
     2003    —       —       —       —       —       —      —      —    

IRSA Inversiones y Representaciones S.A.

   2004    (43,787 )   —       —       —       —       —      —      (16,487 )
     2003    (54,058 )   —       —       —       —       —      —      —    

Credits to employees

   2004    —       —       —       —       —       14,042    —      —    
     2003    —       —       —       —       —       12,971    —      —    

Senior Management

   2004    —       —       (864,019 )   —       —       —      —      —    
     2003    —       —       (758,667 )   —       —       —      —      —    
         

 

 

 

 

 
  
  

Total at December 31, 2004

        (52,552 )   (3,022,968 )   (995,072 )   (108,432 )   (3,002,994 )   34,535    146,009    114,465  
         

 

 

 

 

 
  
  

Total at December 31, 2003

        (104,945 )   (3,196,714 )   (917,508 )   (27,788 )   (3,035,337 )   33,470    112,160    (18,657 )
         

 

 

 

 

 
  
  

 


 

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

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Cash

   59,966    69,859    58,924

Foreign currency (Schedule G)

   293,009    46,431    36,870

Patacones currency

   39    39    —  

Local currency checking account

   162,493    4,781,351    675,868

Patacones currency checking account

   22    22    22

Foreign currency checking account (Schedule G)

   9,055,590    1,220,084    18,898,279

Local currency saving account

   9,897    12,295    18,541

Foreign currency saving account (Schedule G)

   16,610,427    5,949,506    —  

Checks to be deposited

   386,961    443,374    215,178
    
  
  
     26,578,404    12,522,961    19,903,682
    
  
  

 

  b. Investments and Goodwill

 

     December 31,
2004


   

June 30,

2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Investment

                  

Investment (Schedule C and G)

   1,639,729     1,490,311     1,655,808  
    

 

 

     1,639,729     1,490,311     1,655,808  
    

 

 

Investment

                  

Investment from controlled and related companies (Schedule C)

   305,920,570     274,977,554     220,366,049  
    

 

 

     305,920,570     274,977,554     220,366,049  
    

 

 

Other investments

                  

Other investments (Schedule C and G)

   134,949,064     132,962,608     146,354,259  
    

 

 

     134,949,064     132,962,608     146,354,259  
    

 

 

Goodwill

                  

Goodwill (Schedule C)

   (36,326,481 )   (25,869,346 )   (19,931,610 )
    

 

 

     (36,326,481 )   (25,869,346 )   (19,931,610 )
    

 

 

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  c. Trade accounts receivable

 

     December 31,
2004


    June 30,
2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Current

                  

Accounts receivable in local currency

   5,207,564     3,833,851     4,151,088  

Less:

                  

Provision for defaulting debtors (Schedule E)

   (348,535 )   (387,067 )   (424,197 )

Accounts receivable in foreign currency (Schedule G)

   955,988     3,779     63,648  

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

                  

Inversiones Ganaderas S.A.

   29,195     9,216     78,555  

Futuros y Opciones.Com S.A.

   424,147     —       —    

Cactus Argentina S.A.

   30,261     29,845     13,709  

Alto Palermo S.A.

   —       87,359     40,003  

IRSA Inversiones y Representaciones Sociedad Anónima

   —       637     18,371  
    

 

 

     6,298,620     3,577,620     3,941,177  
    

 

 

 

  d. Other receivables and prepaid expenses

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Prepaid leases

   30,727    4,465,136    32,016

Guarantee deposits and premiums (Schedule G)

   232,112    2,188,998    1,446,694

Secured by mortgage (Schedule G)

   1,055,695    1,033,997    1,061,931

Prepaid expenses

   1,102,780    897,192    446,759

Tax prepayments (net of provisions)

   3,491,577    3,368,062    2,817,630

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

              

Cactus Argentina S.A.

   1,354,328    1,346,401    1,337,986

Futuros y Opciones.Com S.A.

   23,603    738,735    321,310

Agro-Uranga S.A.

   234,279    —      —  

Credits to employees

   15,362    37,751    43,020

Shareholders

   —      1,711,833    455,583

Others

   305,243    126,923    579,688
    
  
  
     7,845,706    15,915,028    8,542,617
    
  
  

Non-current

              

Secured by mortgage (Schedule G)

   —      —      1,008,000

Value Added Tax

   5,180,327    4,121,672    2,129,515

Tax on Minimum Hypothetical Income

   99,148    17,154    781,368
    
  
  
     5,279,475    4,138,826    3,918,883
    
  
  

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  e. Inventories

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Livestock

   16,877,063    18,366,149    15,535,226

Crops

   4,803,409    8,639,910    3,782,649

Unharvested crops

   20,090,681    1,603,897    9,374,173

Seeds and fodder

   166,898    238,378    139,344

Materials and others

   3,024,911    4,041,594    1,580,539

Advances to suppliers

   321,747    1,440,333    1,017,599
    
  
  
     45,284,709    34,330,261    31,429,530
    
  
  

Non-Current

              

Livestock

   46,102,732    40,982,536    35,852,040
    
  
  
     46,102,732    40,982,536    35,852,040
    
  
  

 

  f. Trade accounts payable

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Suppliers in local currency

   4,071,023    4,339,383    1,880,406

Suppliers in foreign currency (Schedule G)

   2,709,862    1,110,314    924,954

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

              

Inversora Bolívar S.A.

   6,341    5,349    —  

Alto Palermo S.A.

   44,233    175,133    38,931

IRSA Inversiones y Representaciones S.A.

   116,259    1,108    35,378

Cactus Argentina S.A.

   530,217    1,853,969    434,578

Futuros y Opciones.Com S.A.

   —      3,720    14,033

Estudio Zang, Bergel & Viñes

   23,486    81,646    15,757

Fundación IRSA

   1,177,988    1,177,988    460,642

Directors

   43,543    3,471    967

Accrual for other expenses (Schedule G)

   2,631,011    2,085,778    1,989,355

Accrual for cereal expenses

   295,130    213,177    200,955
    
  
  
     11,649,093    11,051,036    5,995,956
    
  
  

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  g. Loans

 

     December 31,
2004


    June 30,
2004


    December 31,
2003


 
     Pesos     Pesos     Pesos  

Current

                  

Local financial loans (Note 16) (Schedule G)

   37,220,355     6,757,677     —    

Convertible Bonds 2007 Interest payable (Schedule G)

   592,928     589,239     612,819  

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

                  

Shareholders

   792,845     740,021     767,329  

Directors

   252     3,324     3,363  
    

 

 

     38,606,380     8,090,261     1,383,511  
    

 

 

Non-Current

                  

Convertible Bonds 2007 (Schedule G)

   53,363,537     56,416,538     57,451,821  

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

                  

Shareholders

   71,356,061     70,853,048     71,937,067  

Directors

   22,640     318,281     315,268  

Convertible Bonds 2007 expenses

   (1,456,461 )   (1,706,993 )   (2,034,013 )
    

 

 

     123,285,777     125,880,874     127,670,143  
    

 

 

 

  h. Salaries and social security payable

 

     December 31,
2004


   June 30,
2004


   December 31,
2003


     Pesos    Pesos    Pesos

Current

              

Vacation, statutory annual bonus allowance

   594,686    1,001,301    436,826

Social security administration

   161,927    166,415    135,266

Salaries payable

   1,263    180,340    111,956

Health care scheme

   1,891    2,533    1,979

Others

   5,938    9,130    3,082
    
  
  
     765,705    1,359,719    689,109
    
  
  

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  i. Taxes payable

 

    

December 31,

2004


   

June 30,

2004


   

December 31,

2003


 
     Pesos     Pesos     Pesos  

Current

                  

Accrual for income tax

   2,617,633     4,246,881     —    

Advances to Income tax

   —       (2,808,338 )   —    

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

   99,147     17,154     781,367  

Value Added Tax

   —       —       7,317  

Property tax payable

   80,613     103,284     79,590  

Taxes withheld for income tax

   47,534     163,926     26,427  

Gross sales taxes

   (196,384 )   80,085     152,265  

Taxes withheld-Gross sales taxes

   128,575     (81,215 )   (87,312 )

Others (1)

   1,594,993     494     —    
    

 

 

     4,372,111     1,722,271     959,654  
    

 

 

Non-Current

                  

Deferred tax

   27,491,943     25,132,570     23,111,814  
    

 

 

     27,491,943     25,132,570     23,111,814  
    

 

 

 

(1) Including Personal Assets Tax of shareholders

 

  j. Other debts

 

    

December 31,

2004


  

June 30,

2004


  

December 31,

2003


     Pesos    Pesos    Pesos

Current

              

Advances to customers (Schedule G)

   8,718,400    4,432,500    —  

Accrual for Management fees (Note 5)

   1,059,305    1,537,173    529,129

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

              

Inversiones Ganaderas S.A.

   1,747,984    2,196,666    2,384,255

Cactus Argentina S.A. (Schedule G)

   205,730    —      —  

Others

   125,916    4,285    —  
    
  
  
     11,857,335    8,170,624    2,913,384
    
  
  

Non-current

              

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

              

Inversiones Ganaderas S.A.

   480,640    —      —  
    
  
  
     480,640    —      —  
    
  
  

 


 

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiers y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 9:

 

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

 

     Current and non-current investment

   Trade accounts receivable

  

Other receivables and

prepaid expenses


Based on their estimated collection or

payment term


   December 31,
2004


  

June 30,

2004


  

December 31,

2003


  

December 31,

2004


  

June 30,

2004


  

December 31,

2003


  

December 31,

2004


  

June 30,

2004


  

December 31,

2003


3rd quarter 2004/2003 financial year

   —      —      1,560,891    —      —      3,941,177    —      —      3,875,503

4th quarter 2004/2003 financial year

   —      —      —      —      —      —      —      —      —  

1st quarter 2005/2004 financial year

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

2nd quarter 2005/2004 financial year

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

3rd quarter 2005/2004 financial year

   —      —      —      6,298,620    —      —      2,411,856    1,033,997    1,008,000

4th quarter 2005/2004 financial year

   1,499,204    —      —      —      —      —      597,727    305,826    —  

1st quarter 2006/2005 financial year

   —      —      —      —      —      —      —      —      —  

2nd quarter 2006/2005 financial year

   —      —      —      —      —      —      —      —      —  

3rd quarter 2006/2005 financial year

   —      —      —      —      —      —      —      —      —  

4th quarter 2006/2005 financial year

   —      —      —      —      —      —      99,148    17,154    781,368

1st quarter 2007/2006 financial year

   —      —      —      —      —      —      —      —      —  

2nd quarter 2007/2006 financial year

   —      —      —      —      —      —      —      —      —  

3rd quarter 2007/2006 financial year

   —      —      —      —      —      —      —      —      —  

4th quarter 2007/2006 financial year

   —      —      —      —      —      —      —      —      —  

2nd quarter 2008/2007 financial year

   134,928,347    132,941,891    146,333,542    —      —      —      —      —      —  

Overdue

   —      —      —      —      —      —      —      —      —  

With no stated current term

   140,525    101,807    94,917    —      —      —      4,836,123    11,324,978    4,667,114

With no stated non-current term

   20,717    20,717    20,717    —      —      —      5,180,327    4,121,672    2,129,515
    
  
  
  
  
  
  
  
  

Total

   136,588,793    134,452,919    148,010,067    6,298,620    3,577,620    3,941,177    13,125,181    20,053,854    12,461,500
    
  
  
  
  
  
  
  
  

 

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

 

     Current and non-current investment

   Trade accounts receivable

   Other receivables and prepaid expenses

Interest rate that they accrue


  

December 31,

2004


  

June 30,

2004


  

December 31,

2003


  

December 31,

2004


  

June 30,

2004


  

December 31,

2003


  

December 31,

2004


  

June 30,

2004


  

December 31,

2003


At fixed interest rate

   134,928,347    132,941,891    146,333,542    —      —      —      1,342,403    1,327,126    2,313,411

At variable interest rate

   140,525    101,807    94,917    —      —      —      153,498    2,307,893    571,094

Non-interest bearing

   1,519,921    1,409,221    1,581,608    6,298,620    3,577, 620    3,941,177    11,629,280    16,418,835    9,576,995
    
  
  
  
  
  
  
  
  

Total

   136,588,793    134,452,919    148,010,067    6,298,620    3,577,620    3,941,177    13,125,181    20,053,854    12,461,500
    
  
  
  
  
  
  
  
  

 


 

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 9:

 

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

 

Based on their
estimated collection
or payment term


  Trade accounts payable

  Loans

  Salaries and social
security payable


  Taxes payable

  Other debts

  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31
2004


  June 30,
2004


  Dec. 31,
2003


3rd quarter 2004/2003 financial year

  —     —     5,994,989   —     —     1,383,511   —     —     689,109   —     —     959,654   —     —     529,129

4th quarter 2004/2003 financial year

  —     —     —     —     —     —     —     —     —     —     —     —     —     —     265,353

1st quarter 2005/2004 financial year

  —     11,047,565   —     —     6,757,677   —     —     1,359,719   —     —     266,574   —     —     1,541,458   —  

2nd quarter 2005/2004 financial year

  —     3,471   967   —     1,332,584   —     —     —     —     —     1,455,697   —     —     2,196,666   2,118,902

3rd quarter 2005/2004 financial year

  11,649,093   —     —     22,353,572   —     —     444,433   —     —     160,017   —     —     4,396,907   —     —  

4th quarter 2005/2004 financial year

  —     —     —     1,386,025   —     —     —     —     —     1,594,461   —     —     5,506,714   4,432,500   —  

1st quarter 2006/2005 financial year

  —     —     —     14,866,783   —     —     321,272   —     —     —     —     —     —     —     —  

2nd quarter 2006/2005 financial year

  —     —     —     —     —     —     —     —     —     2,617,633   —     —     1,747,984   —     —  

3rd quarter 2006/2005 financial year

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

4th quarter 2006/2005 financial year

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

1st quarter 2007/2006 financial year

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

2nd quarter 2007/2006 financial year

  —     —     —     —     —     —     —     —     —     —     —     —     480,640   —     —  

3rd quarter 2007/2006 financial year

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

4th quarter 2007/2006 financial year

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

2nd quarter 2008/2007 financial year

  —     —     —     123,285,777   125,880,874   127,670,143   —     —     —     —     —     —     —     —     —  

Overdue

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

With no stated current term

  —     —     —     —     —     —     —     —     —     —     —     —     205,730   —     —  

With no stated non-current term

  —     —     —     —     —     —     —     —     —     27,491,943   25,132,570   23,111,814   —     —     —  
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total

  11,649,093   11,051,036   5,995,956   161,892,157   133,971,135   129,053,654   765,705   1,359,719   689,109   31,864,054   26,854,841   24,071,468   12,337,975   8,170,624   2,913,384
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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

 

Interest rate that
they accrue


  Trade accounts payable

  Loans

  Salaries and social
security payable


  Taxes payable

  Other debts

  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


    June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


  Dec. 31,
2004


  June 30,
2004


  Dec. 31,
2003


At fixed interest rate

  —     —     —     161,962,593     132,638,551   127,670,143   —     —     —     —     —     —     2,228,624   2,196,666   —  

At variable interest rate

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

Non-interest bearing

  11,649,093   11,051,036   5,995,956   (70,436 )   1,332,584   1,383,511   765,705   1,359,719   689,109   31,864,054   26,854,841   24,071,468   10,109,351   5,973,958   2,913,384
   
 
 
 

 
 
 
 
 
 
 
 
 
 
 

Total

  11,649,093   11,051,036   5,995,956   161,892,157     133,971,135   129,053,654   765,705   1,359,719   689,109   31,864,054   26,854,841   24,071,468   12,337,975   8,170,624   2,913,384
   
 
 
 

 
 
 
 
 
 
 
 
 
 
 

 


 

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: SALE OF FARMS

 

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 August 25, 2004, a preliminary sales agreement was signed for the “Ñacurutú” farm, and on February 1, 2005 the title deed was signed. Ñacurutú is a 30,353-hectare 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, tow thousand and fifty six). This sale will provide a profit of approximately US$ 2,600,000.

 

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.

 

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.

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 12: (Continued)

 

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 173,200 shares of Ps. 1 per value each were issued to directors and executive officers of the Company under the preferred offering of treasury stock.

 

After the exercise of the preference offer above mentioned, the remaining balance is 66,800 shares, at the end of the current period.

 

After the closing of the period, an aggregate of 66,800 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 January 15, 2005, the deadline for exercising the Stock Purchase Option, 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%.

 

  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).

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 13: (Continued)

 

  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, 1,259,290 Convertible Bonds were converted into 2,479,890 ordinary shares, which resulted in a Ps. 3,740,628 increase in the Company’s net shareholders’ equity. In the same period, 1,251,644 warrants were exercised, resulting in the issuance of 2,464,833 common shares for Ps. 4,474,246.

 

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 stocks (US$ 5.5713 GDS), while the warrant price is US$ 0.6686 stocks (US$ 6.6856 GDS)

 

  b) For each of IRSA’s convertible bond the holder has the right to convert it to 1.7949 stocks (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 stocks 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.

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

NOTE 14: (Continued)

 

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 Statements 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.

 

During this period, third parties holders of Notes Convertible into common shares of IRSA have exercised their conversion and have effective their exercise of warrants for a total of Ps. 6.3 million, resulting in the issuance of 3,542,943 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 a result of these transactions, as of December 31, 2004 the Company recorded Ps. 12.6 million as negative goodwill against which the impact of losses for dilutions due to the exercise of conversions and/or warrants from third party holders of IRSA’s Convertible Notes will be recognized.

 

NOTE 15: IRSA Inversiones y Representaciones Sociedad Anónima (IRSA) – INCREASE TO INVESMENT 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.

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Unaudited Financial Statements (Continued)

 

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 December 31, 2004, current loans with local financial institutions amounted to Ps. 37.2 million. This allowed us to promote new production projects and generate a more efficient capital structure for the Company.

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Fixed Assets

 

Corresponding to the period beginning as from July 1, 2004

and ended on December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1 and 2)

 

Schedule A

 

                         Depreciation

              

Principal Account


  

Value at

the beginning

of the year


  

Additions

and/or

transfers


  

Deductions

and/or

transfers


  

Value at

the end of
period/year


   Rate %

  

Accumulated

at the beginning

of the year


   Decrease
of the
period/
year


  

Current

period/
year


  

Accumulated

at the end of

period/year


  

Net carrying
value at

December 31,
2004


  

Net
carrying
value at

June 30,
2004


  

Net carrying
value at

December 31,
2003


     Pesos    Pesos    Pesos    Pesos         Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Real estate

   120,668,102    352,353    —      121,020,455    —      —      —      —      —      121,020,455    120,668,102    118,017,185

Wire fences

   4,176,054    —      —      4,176,054    3    834,294    —      62,897    897,191    3,278,863    3,341,760    3,404,788

Watering troughs

   3,136,281    —      —      3,136,281    5    895,579    —      80,020    975,599    2,160,682    2,240,702    2,288,833

Alfalfa fields and meadows

   1,686,488    316,797    —      2,003,285    12-25-50    1,105,794    —      198,255    1,304,049    699,236    580,694    735,424

Buildings and constructions

   5,431,487    118,986    —      5,550,473    2    2,063,502    —      45,270    2,108,772    3,441,701    3,367,985    3,310,883

Machinery

   8,285,123    9,335    34,177    8,260,281    10    5,633,188    29,397    384,284    5,988,075    2,272,206    2,651,935    3,041,996

Vehicles

   1,304,710    224,475    105,098    1,424,087    20    654,956    62,006    127,142    720,092    703,995    649,754    419,320

Tools

   193,361    1,450    —      194,811    10    130,040    —      7,350    137,390    57,421    63,321    66,185

Furniture and equipment

   996,477    35,046    —      1,031,523    10    644,610    —      44,671    689,281    342,242    351,867    329,474

Corral and leading lanes

   608,664    —      —      608,664    3    111,773    —      9,078    120,851    487,813    496,891    493,303

Roads

   1,093,420    2,146    —      1,095,566    10    603,155    —      54,800    657,955    437,611    490,265    547,837

Facilities

   7,414,628    6,080    32,946    7,387,762    10-20-33    3,567,870    —      385,078    3,952,948    3,434,814    3,846,758    2,818,428

Computer equipment

   1,199,977    196,375    296    1,396,056    20    969,121    296    70,634    1,039,459    356,597    230,856    207,175

Silo plants

   1,169,114    —      —      1,169,114    5    315,645    —      31,537    347,182    821,932    853,469    882,178

Constructions in progress

   11,568,150    3,408,521    —      14,976,671    —      —      —      —      —      14,976,671    11,568,150    4,847,070

Advances to suppliers

   144,683    534,224    144,683    534,224    —      —      —      —      —      534,224    144,683    17,831
    
  
  
  
  
  
  
  
  
  
  
  

Total at December 31, 2004

   169,076,719    5,205,788    317,200    173,965,307         17,529,527    91,699    1,501,016    18,938,844    155,026,463          
    
  
  
  
  
  
  
  
  
  
  
  

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 December 31, 2003

   159,535,365    3,080,424    4,265,027    158,350,762         17,652,983    2,088,675    1,358,544    16,922,852              141,427,910
    
  
  
  
  
  
  
  
  
  
  
  

 

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Investments

 

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

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1 and 2)

 

Schedule C

 

Type and characteristics of the
securities


  Amount

 

Value at

December
31, 2004


   

Value at

June 30,

2004


   

Value at

December
31, 2003


    Market
Value


 

INFORMATION ON THE ISSUER


           

Principal activity


  Latest financial statements

              Capital

   Income
(loss)


    Shareholders’
Equity


        Pesos     Pesos     Pesos     Pesos       Pesos    Pesos     Pesos

Current Investments

                                            

Mutual Funds

                                            

Fondo especial Banco Rio in pesos

  110,475   25,029     —       —       0.226558                   

Fondo plazo fijo Banco Rio in dollars

  1,.862   2,523     4,081     3,999     1.354995                   
       

 

 

                      
        27,552     4,081     3,999                         
       

 

 

                      

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.

      1,499,204     1,388,504     1,560,891                         

Bonos Global 2010

  110, 000   112,343     97,096     90,288     1.021300                   

Bocon Pro 1

  157,647   630     630     630     0.003996                   
       

 

 

                      
        1,612,177     1,486,230     1,651,809                         
       

 

 

                      

Total current investment

      1,639,729     1,490,311     1,655,808                         
       

 

 

                      

Non-current investments

                                            

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

                                            

AGRO-URANGA S.A.

                        unlisted   Agricultural and livestock   2,500,000    1,551,749     13,035,586

Shares

  893,069   4,523,238     5,230,031     4,313,051                         

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                         
       

 

 

                      
        15,710,253     16,417,046     15,500,066                         
       

 

 

                      

INVERSIONES GANADERAS S.A.

                        unlisted   Raising and grazing cattle   5,326,589    351,644     11,477,885

Shares

  5,326,588   10,748,274     10,396,631     10,253,055                         

Contribution on account of future subscriptions of shares

      729,585     729,585     729,584                         
       

 

 

                      
        11,477,859     11,126,216     10,982,639                         
       

 

 

                      

CACTUS ARGENTINA S.A.

                        unlisted   Explotation and administration of agricultural and beef cattle products   1,300,000    (138,566 )   6,419,664

Shares

  650,000   1,074,214     1,143,497     937,100                         

Contribution on account of future subscriptions of shares

      2,135,618     2,135,618     2,135,543                         
       

 

 

                      
        3,209,832     3,279,115     3,072,643                         
       

 

 

                      

FUTUROS Y OPCIONES.COM S.A.

                        unlisted   Gives information about markets and services of economic and financial consulting through internet   12,000    (200,285 )   17,795

Shares

  8,400   (2,714,336 )   (2,574,138 )   (2,483,616 )                       

Contribution on account of future subscriptions of shares

      2,726,793     2,726,793     2,726,641                         
       

 

 

                      
        12,457     152,655     243,025                         
       

 

 

                      

IRSA Inversiones y Representaciones S.A.

                                            

Shares

  69,242,276   275,510,169     244,002,522     190,567,676     listed   Real state   261,520,248    56,756,060     1,040,570,752
       

 

 

                      
        275,510,169     244,002,522     190,567,676                         
       

 

 

                      
    Subtotal   305,920,570     274,977,554     220,366,049                         
       

 

 

                      

Other Investments

                                            

Convertible Bonds 2007- IRSA (US$)

                                            

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

                                            

IRSA Inversiones y Representaciones S.A.

  45,293,168   134,928,347     132,941,891     146,333,542                         

Coprolán

      20,717     20,717     20,717     unlisted                   
       

 

 

                      
    Subtotal   134,949,064     132,962,608     146,354,259                         
       

 

 

                      

Goodwill

                                            

Goodwill

      329,838     659,676     989,514                         

IRSA negative goodwill

      (36,656,319 )   (26,529,022 )   (20,921,124 )                       
       

 

 

                      
    Subtotal   (36,326,481 )   (25,8f69,346 )   (19,931,610 )                       
       

 

 

                      

Total non-current investments

      404,543,153     382,070,816     346,788,698                         
       

 

 

                      

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Unaudited Allowances

 

Corresponding to the period beginning as from July 1, 2004

and ended on December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1 and 2)

 

Schedule E

 

Item


   Opening balances

   Deductions

    Value at
December
31, 2004


   Value at
June
30, 2004


   Value at
December
31, 2003


     Pesos    Pesos     Pesos    Pesos    Pesos

Deducted from assets

                         

Defaulting debtors

   387,067    (38,532 )   348,535    387,067    424,197
    
  

 
  
  

Total at December 31, 2004

   387,067    (38,532 )   348,535          
    
  

 
  
  

Total at June 30, 2004

   454,125    (67,058 )        387,067     
    
  

 
  
  

Total at December 31, 2003

   454,125    (29,928 )             424,197
    
  

 
  
  

 


 

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 December 31, 2004 and 2003

(Notes 1 and 2)

 

Schedule F

 

    Crops

    Beef cattle

    Milk

    Others

    Total

 
   

December 31,

2004


   

December 31,

2003


   

December 31,

2004


   

December 31,

2003


   

December 31,

2004


   

December 31,

2003


   

December 31,

2004


   

December 31,

2003


   

December

31, 2004


   

December

31, 2003


 
    Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     Pesos     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

  —       —       5,484,966     1,010,632     259,170     229,450     —       —             5,744,136           1,240,082  

Commodities market results

  2,088,522     753,010     —       —       —       —       —       —             2,088,522           753,010  

Transfer of Inventories to expenses

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

Transfer of Inventories to fixed assets

  (464,153 )   (35,860 )   —       —       —       —       (39,695 )   (1,367 )         (503,848 )         (37,227 )

Transfer of Unharvested crops to expenses

  (6,646,273 )   (2,783,694 )   (136,871 )   (149,777 )   (376,780 )   (204,552 )   (262,674 )   (283,890 )         (7,422,598 )         (3,421,913 )

Recovery of Inventories

  —       —       101,950     139,734     (101,950 )   (139,734 )   —       —             —             —    

Purchases

  25,562,280     11,876,012     3,097,849     4,009,929     398,128     563,961     335,654     277,057           29,393,911           16,726,959  

Operating expenses (Schedule H)

  4,562,016     3,397,918     9,279,058     6,367,720     976,650     933,330     33,144     —             14,850,868           10,698,968  

Less:

                                                                       

Inventories at the end of the year

                                                                       

Beef cattle

  —       —       (58,540,015 )   (48,133,395 )   (4,439,780 )   (3,253,871 )   —       —       (62,979,795 )         (51,387,266 )      

Crops

  (4,803,409 )   (3,782,649 )   —       —       —       —       —       —       (4,803,409 )         (3,782,649 )      

Unharvested crops

  (20,090,681 )   (9,374,173 )   —       —       —       —       —       —       (20,090,681 )         (9,374,173 )      

Seeds and fodder

  —       —       (88,843 )   (62,725 )   (78,055 )   (76,619 )   —       —       (166,898 )         (139,344 )      

Materials

  (2,753,105 )   (1,378,359 )   —       —       (59,538 )   (42,704 )   (212,268 )   (159,476 )   (3,024,911 )   (91,065,694 )   (1,580,539 )   (66,263,971 )
   

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

  11,391,820     7,143,937     14,531,019     8,386,427     876,965     396,276     8,554     1,418           26,808,358           15,928,058  
   

 

 

 

 

 

 

 

 

 

 

 

 


 

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 December 31, 2004

comparative with the year ended on June 30, 2004 and with the period ended on December 31, 2003

(Notes 1 and 2)

 

Schedule G

 

     December 31, 2004

   June 30, 2004

   December 31, 2003

Item


  

Type and amount
of foreign

currency


   Current
exchange
rate


   Amount in
local currency


  

Type and amount
of foreign

currency


   Amount in
local currency


  

Type and amount
of foreign

currency


   Amount in
local currency


          Pesos    Pesos         Pesos         Pesos

Current Assets

                                        

Cash and banks

                                        

Cash and banks

   US$ 8,832,605    2.94    25,959,026    US$ 2,472,934    7,216,021    US$ 6,574,705    18,935,149

Investments:

                                        

Mutual funds

   US$ 858    2.94    2,523    US$ 1,399    4,081    US$ 1,389    3,999

Interest of Convertible Bonds 2007 - IRSA

                                        

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

                                        

IRSA Inversiones y Representaciones Sociedad Anónima

   US$ 503,257    2.98    1,499,204    US$ 469,406    1,388,504    US$ 541,976    1,560,891

Trade accounts receivable:

                                        

Trade accounts receivable

   US$ 325,277    2.94    955,988    US$ 1,295    3,779    US$ 22,100    63,648

Other receivables and prepaid expenses:

                                        

Secured by mortgages

   US$ 359,202    2.94    1,055,695    US$ 354,351    1,033,997    US$ 368,726    1,061,931

Guarantee deposits

   US$ 78,977    2.94    232,112    US$ 750,171    2,188,998    US$ 502,324    1,446,694

Non-Current Assets

                                        

Other receivables and prepaid expenses:

                                        

Secured by mortgages

   US$ —                US$ —           US$ 350,000    1,008,000

Investments:

                                        

Convertible Bonds 2007 - IRSA

                                        

Subsidiaries, related companies Law 19,550 Article 33 and

                                        

related parties:

                                        

IRSA Inversiones y Representaciones Sociedad Anónima

   US$ 45,293,168    2.98    134,928,347    US$ 44,943,168    132,941,891    US$ 49,943,188    146,333,542
    

  
  
  

  
  

  

Total Assets

   US$ 55,393,344         164,632,895    US$ 48,992,724    144,777,271    US$ 58,304,408    170,413,854
    

  
  
  

  
  

  

Current liabilities

                                        

Trade accounts payable:

                                        

Suppliers

   US$ 909,655    2.98    2,709,862    US$ 375,360    1,110,314    US$ 315,684    924,954

Accrual for other expenses

   US$ 714,893    2.98    2,129,666    US$ 499,662    1,477,683    US$ 155,191    454,710

Loans:

                                        

Local financial loans

   US$ 4,068,000    2.98    12,118,572    US$ —           US$ —       

Interest of Convertible Bonds 2007

   US$ 199,036    2.98    592,928    US$ 199,202    589,239    US$ 209,153    612,819

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

                                        

Shareholders

   US$ 266,145    2.98    792,845    US$ 250,176    740,021    US$ 261,887    767,329

Directors

   US$ 85    2.98    252    US$ 1,124    3,324    US$ 1,148    3,363

Other debts:

                                        

Advances to customers

   US$ 1,411,516    2.98    4,204,906    US$ 1,500,000    4,432,500    US$ —      —  

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

                                        

Cactus Argentina S.A.

   US$ 70,000    2.94    205,730      —      —        —      —  

Non-current liabilities

                                        

Loans:

                                        

Convertible Bonds 2007

   US$ 17,913,238    2.98    53,363,537    US$ 19,072,528    56,416,538    US$ 19,608,130    57,451,821

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

                                        

Shareholders

   US$ 23,953,025    2.98    71,356,061    US$ 23,953,025    70,853,048    US$ 24,551,900    71,937,067

Directors

   US$ 7,600    2.98    22,640    US$ 107,600    318,281    US$ 107,600    315,268
    

  
  
  

  
  

  

Total Liabilities

   US$ 49,513,192         147,496,999    US$ 45,958,677    135,940,948    US$ 45,210,693    132,467,331
    

  
  
  

  
  

  

 

US$: US dollars

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

 

Unaudited Infonnation 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 December 31, 2004 and 2003

(Notes 1 and 2)

 

Schedule H

 

Items


   Total
December
31, 2004


   Operating Expenses

   Expenses

   Total
December 31,
2003


      Total

   Crops

   Beef cattle

   Milk

   Others

   Selling

   Administrative

  
     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Directors’ fees

   46,408                                  46,408    3,730

Fees and payments for services

   503,171    99,766    5,726    84,599    6,875    2,566    —      403,405    632,450

Salaries and wages

   2,554,573    1,117,629    249,754    721,814    146,061    —      —      1,436,944    3,223,972

Social security contributions

   464,522    193,744    81,521    99,711    12,512    —      —      270,778    382,284

Taxes, rates and contributions

   203,632    179,811    54,344    110,097    15,370    —      —      23,821    196,533

Gross sales taxes

   260,488    —      —      —      —      —      260,488    —      266,305

Office and administrative expenses

   219,318    —      —      —      —      —      —      219,318    79,991

Bank commissions and expenses

   6,855    6,855    1,891    3,992    182    790    —      —      9,961

Depreciation of fixed assets

   1,501,016    1,355,948    759,378    487,833    100,400    8,337    —      145,068    1,358,544

Vehicle and travelling expenses

   295,806    154,337    58,029    82,165    6,901    7,242    —      141,469    233,684

Spare parts and repairs

   598,008    598,008    311,710    248,881    36,717    700    —      —      503,317

Insurance

   118,787    30,585    13,667    13,000    1,372    2,546    —      88,202    160,596

Employees’ maintenance

   174,362    127,259    21,643    101,090    4,468    58    —      47,103    76,324

Livestock expenses

   7,852,215    7,247,491    —      7,247,491    —      —      604,724    —      4,907,955

Dairy farm expenses

   643,214    636,126    —      —      636,126    —      7,088    —      584,715

Agricultural expenses

   4,465,418    2,929,287    2,929,287    —      —      —      1,536,131    —      3,058,699

Silo expenses

   41,963    41,963    41,963    —      —      —      —      —      123,395

General expenses

   132,059    132,059    33,103    78,385    9,666    10,905    —      —      235,618
    
  
  
  
  
  
  
  
  

Total at December 31, 2004

   20,081,815    14,850,868    4,562,016    9,279,058    976,650    33,144    2,408,431    2,822,516    —  
    
  
  
  
  
  
  
  
  

Total at December 31, 2003

        10,698,968    3,397,918    6,367,720    933,330    —      2,102,952    3,236,153    16,038,073
    
  
  
  
  
  
  
  
  

 


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

 

Additional Information to the Notes to the Unaudited Financial Statements

for the period ended December 31, 2004

 

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 December 31, 2004.

 

          Intercompany Law Nº 19,550 Section 33

          FYO

   Agro-Uranga

   Cactus

    

Other

Receivables


  

Other

Receivables


  

Other

Receivables


  

Other

Receivables


     Pesos    Pesos    Pesos    Pesos

Current

   3,537,666    23,603    234,279    1,040,575

 

  b. Accounts Receivable and other receivables to fall due at December 31, 2004

 

         

Intercompany

Law Nº 19,550 Section 33


       

Intercompany

Law Nº
19,550
Section 33


         

IGSA


   FYO

   Cactus

       

Cactus


     Trade
Accounts
Receivable


   Trade
Accounts
Receivable


   Trade
Accounts
Receivable


   Trade
Accounts
Receivable


   Other
Receivables


   Other
Receivables


     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

03.31.05

   5,815,017    29,195    424,147    30,261    2,411,856    —  

06.30.05

   —      —      —      —      283,975    313,753

09.30.05

   —      —      —      —      —      —  

06.30.06

   —      —      —      —      99,148    —  

 

4. CLASSIFICATION OF OUTSTANDING DEBTS ACCORDING TO THEIR MATURITY

 

  a. There are no past due debts at December 31, 2004.

 

  b. Debts without a due date at December 31, 2004 amount to Ps. 205,730 current and Ps. 27,491,943 non-current.

 


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 December 31, 2004

 

    

Accounts

Payable


  

Intercompany

Law Nº 19,550
Section 33


   Loans

  

Salaries

and

Social

Security

Charges


  

Tax

Payable


   Other
Debts


  

Intercompany

Law Nº 19,550
Section 33


      IRSA

   Cactus

               IGSA

      Accounts Payable

               Other Debts

     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

03.31.05

   11,002,617    116,259    530,217    22,353,572    444,433    160,017    4,396,907    —  

06.30.05

   —      —      —      1,386,025    —      1,594,461    5,506,714    —  

09.30.05

   —      —      —      14,866,783    321,272    —      —      —  

12.31.05

   —      —      —      —      —      2,617,633    —      1,747,984

12.31.06

   —      —      —      —      —      —      —      480,640

12.31.07

   —      —      —      123,285,777    —      —      —      —  

 

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

 

a.

 

         

Intercompany

Law Nº 19,550 Section 33


       

Intercompany

Law Nº 19,550 Section 33


         

IGSA


   FYO

   Cactus

       

Cactus


   FYO

   Agro-
Uranga


     Trade
Accounts
Receivable


   Trade
Accounts
Receivable


   Trade
Accounts
Receivable


   Trade
Accounts
Receivable


   Other
Receivables


   Other
Receivables


   Other
Receivables


   Other
Receivables


     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

In pesos

   4,859,029    29,195    424,147    30,261    5,044,837    1,354,328    23,603    234,279

In US Dollars

   955,988    —      —      —      1,287,807    —      —      —  

 

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

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

  c.     

 

     Trade
Accounts
Receivable
  

Intercompany

Law Nº 19,550 Section 33


   Other
Receivables
  

Intercompany

Law Nº 19,550 Section 33


        IGSA

   FYO

   Cactus

      Cactus

   FYO

   IRSA

        Trade
Accounts
Receivables


   Trade
Accounts
Receivables


   Trade
Accounts
Receivables


      Other
Receivables


   Other
Receivables


   Other
Receivables


     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Outstanding balances accruing interests

   —      —      —      —      1,182,148    313,753    —      —  

Outstanding balances not accruing interests

   5,815,017    29,195    424,147    30,261    10,330,823    1,040,575    23,603    234,279

 

6. CLASSIFICATION OF DEBTS ACCORDING TO THEIR FINANCIAL EFFECTS

 

  a.     

 

     Accounts Payable

  

Intercompany

Law Nº 19,550 Section 33


   Loans

  

Salaries

and

Social

Security

Charges


  

Taxes

Payable


  

Other

Debts


  

Intercompany

Law Nº 19,550 Section 33


        IRSA

   Cactus

               IGSA

   Cactus

        Accounts Payable

               Other Debts

     Pesos    Pesos    Pesos    Pesos    Pesos    Pesos         Pesos    Pesos

In pesos

   6.163.089    116.259    530.217    23.645.322    765.705    31.864.054    5.698.715    2.228.624    —  

In US Dollars

   4.839.528    —      —      138.246.835    —      —      4.204.906    —      205.730

 

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

 


 

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     Pesos    Pesos    Pesos    Pesos    Pesos

Outstanding debts accruing Interests

   —      —      —      161.962.593     —      —      —           2.228.624

Outstanding debts not accruing interests

   11.002.617    116.259    530.217    (70.436 )   765.705    31.864.054    9.903.621    205.730    —  

 

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 December 31, 2004 are described in points 4 and 5 above.

 

8. RECEIVABLES FROM OR LOANS TO DIRECTORS AND SUPERVISORY COMMITTEE MEMBERS

 

At December 31, 2004 there were advance payments to directors for Ps. 2,865, 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:

 

a. 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.

 


 

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 Agromercado”).

 

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


   Account
Value


        
          Pesos    Pesos
Buildings, machinery, silos and furniture    Theft. fire and technical insurance    2.792.050    7.234.678
Vehicles    Theft, fire and civil and third parties liability    1.420.707    703.995

 

16. PROVISIONS

 

There are no provisions in excess of 2% of the shareholders’ equity.

 

17. CONTINGENCIES

 

At December 31, 2004 there are no contingent situations that have not been accounted for.

 

18. IRREVOCABLE CONTRIBUTIONS TO CAPITAL ON ACCOUNT OF FUTURE SUBSCRIPTIONS

 

None.

 

19. DIVIDENDS ON PREFERED STOCK

 

There are no cumulative dividends not paid on preferred stock.

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Unaudited Financial Statements

(Continued)

 

20. LIMITATIONS OF PROFIT DISTRIBUTIONS

 

See Note 10 to the Unaudited Financial Statements.

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

 

UNAUDITED BUSINESS HIGHLIGHTS

 

Comparative Shareholders’ Equity Structure

 

    

At December 31,

2004


  

At December 31,

2003


  

At December 31,

2002


  

At December 31,

2001


  

At December 31,

2000


     Pesos    Pesos    Pesos    Pesos    Pesos

Current Assets

   89,091,991    69,522,344    82,707,765    131,390,490    160,544,471

Non Current Assets

   609,533,419    525,729,702    497,572,921    235,135,415    266,777,336
    
  
  
  
  

Total Assets

   698,625,410    595,252,046    580,280,686    366,525,905    427,321,807
    
  
  
  
  

Current Liabilities

   66,430,672    12,520,393    27,866,941    61,417,713    30,154,605

Non Current Liabilities

   152,099,365    151,890,701    193,294,773    1,164,992    1,370,658
    
  
  
  
  

Total Liabilities

   218,530,037    164,411,094    221,161,714    62,582,705    31,525,263
    
  
  
  
  

Minority Interest

   5,366    104,178    318,671    347,591    126,600
    
  
  
  
  

Shareholders’ Equity

   480,090,007    430,736,774    358,800,301    303,595,609    395,669,944
    
  
  
  
  
     698,625,410    595,252,046    580,280,686    366,525,905    427,321,807
    
  
  
  
  

 

Comparative Income Structure

 

    

At December 31,

2004


   

At December 31,

2003


   

At December 31,

2002


   

At December 31,

2001


   

At December 31,

2000


 
     Pesos     Pesos     Pesos     Pesos     Pesos  

Operating income

   7,058,416     5,486,663     20,659,485     1,312,814     6,227,497  

Financial and holding results

   (2,194,831 )   602,205     (13,012,668 )   (83,463,137 )   7,204,226  

Other income and expenses and results from related companies

   10,781,030     2,359,620     39,728,645     (589,446 )   (669,708 )

Management fees

   (1,059,305 )   (529,129 )   (3,419,171 )   —       (1,104,648 )
    

 

 

 

 

Operating net income (loss)

   14,585,310     7,919,359     43,956,291     (82,739,769 )   11,657,367  

Income tax

   (5,111,658 )   (3,259,735 )   (7,964,246 )   —       (1,904,747 )

Minority interest

   60,085     102,532     112,129     186,145     189,208  
    

 

 

 

 

Net income (loss)

   9,533,737     4,762,156     36,104,174     (82,553,624 )   9,941,828  
    

 

 

 

 

 

Production volume

 

    

2Q December 31,

2004


  

Accumulated

July 1,

2004 to

December 31,

2004


  

2Q December 31,

2003


  

Accumulated

July 1,

2003 to

December 31,

2003


  

2Q December 31,

2002


  

Accumulated

July 1,

2002 to

December 31,

2002


  

2Q December 31,

2001


  

Accumulated

July 1,

2001 to
December 31,

2001


  

2Q December 31,

2000


  

Accumulated

July 1,

2000 to

December 31,

2000


Beef Cattle

(in Kgs.)

   4,261,029    5,987,932    3,027,981    5,111,038    3,253,774    5,505,936    1,960,698    5,249,556    4,117,652    7,203,006
    
  
  
  
  
  
  
  
  
  

Butyraceous

(in Kgs.)

   72,518    125,596    71,199    135,196    56,314    113,688    70,843    153,063    66,024    133,066
    
  
  
  
  
  
  
  
  
  

Crops

(in quintals)*

   205,947    224,380    115,712    140,050    74,744    128,056    187,752    211,134    81,956    183,910
    
  
  
  
  
  
  
  
  
  

 

* One quintals equals one hundred kilograms

 

Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

 

UNAUDITED BUSINESS HIGHLIGHTS (Continued)

 

Sales volume

 

    

2Q December 31,

2004


  

Accumulated

July 1, 2004

to December 31,

2004


  

2Q December 31,

2003


  

Accumulated

July 1, 2003

to December 31,

2003


  

2Q December 31,

2002


  

Accumulated

July 1, 2002

to December 31,

2002


  

2Q December 31,

2001


  

Accumulated

July 1, 2001

to December 31.2001


  

2Q December 31,

2000


  

Accumulated

July 1, 2000

to December 31,

2000


Beef Cattle (in Kgs.)

   4,037,087    8,952,625    3,454,520    6,621,506    2,250,703    4,855,825    4,448,217    9,531,526    4,544,073    8,519,132
    
  
  
  
  
  
  
  
  
  

Butyraceous (in Kgs.)

   72,518    125,596    71,199    135,196    56,314    113,688    70,843    153,063    66,024    133,066
    
  
  
  
  
  
  
  
  
  

Crops
(in

quintals)*

   125,556    319,058    113,710    236,011    338,738    711,420    80,809    506,789    506,077    1,008,238
    
  
  
  
  
  
  
  
  
  

 

* One quintals equals one hundred kilograms

 

Local Market

 

    

2Q December 31,

2004


  

Accumulated

July 1, 2004

to December 31,

2004


  

2Q December 31,

2003


  

Accumulated

July 1, 2003

to December 31,

2003


  

2Q December 31,

2002


  

Accumulated

July 1, 2002

to December

31, 2002


  

2Q December 31,

2001


  

Accumulated

July 1, 2001

to December 31,

2001


  

2Q December 31,

2000


  

Accumulated

July 1, 2000

to December 31,

2000


Beef Cattle
(in Kgs.)

   4,037,087    8,952,625    3,454,520    6,621,506    2,250,703    4,855,825    4,448,217    9,531,526    4,544,073    8,519,132
    
  
  
  
  
  
  
  
  
  

Butyraceous
(in Kgs.)

   72,518    125,596    71,199    135,196    56,314    113,688    70,843    153,063    66,024    133,066
    
  
  
  
  
  
  
  
  
  

Crops
(in quintals)*

   125,556    319,058    113,710    236,011    338,738    711,420    80,809    506,789    506,077    1,008,238
    
  
  
  
  
  
  
  
  
  

 

* One quintals equals one hundred kilograms

 

Exports

 

    

2Q December 31,

2004


  

Accumulated

July 1, 2004

to December 31,

2004


  

2Q December 31,

2003


  

Accumulated

July 1, 2003

to December 31,

2003


  

2Q December 31,

2002


  

Accumulated

July 1,2002

to December 31,

2002


  

2Q December 31,

2001


  

Accumulated

July 1, 2001

to December 31,

2001


  

2Q December 31,

2000


  

Accumulated

July 1, 2000

to December 31,

2000


Beef Cattle (in Kgs.)

   —      —      —      —      —      —      —      —      —      —  
    
  
  
  
  
  
  
  
  
  

Butyraceous
(in Kgs.)

   —      —      —      —      —      —      —      —      —      —  
    
  
  
  
  
  
  
  
  
  

Crops
(in quintals)*

   —      —      —      —      —      —      —      —      —      —  
    
  
  
  
  
  
  
  
  
  

 

* One quintals equals one hundred kilograms

 

Ratios

 

    

At December 31,

2004


  

At December 31,

2003


  

At December 31,

2002


  

At December 31,

2001


   

At December 31,

2000


     Pesos    Pesos    Pesos    Pesos     Pesos

Liquidity

   1.341    5.553    2.968    2.139     5.324

Solvency

   2.197    2.620    1.622    4.851     12.551

Fixed of capital

   0.872    0.883    0.857    0.642     0.624

Return on Equity

   0.020    0.012    0.106    (0.245 )   0.026

 

 
Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

 

Unaudited Business Highlight

 

Buenos Aires, February 10, 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 semester of fiscal year 2005 ended on December 31, 2004.

 

Results for the first semester of Fiscal Year 2005 showed a net profit of Ps. 9.5 million as compared to a Ps. 4.8 million profit registered during the same period of the previous Fiscal Year, denoting a 100.2% 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. 1.3 million during the same period of fiscal year 2004 to Ps. 6.3 million for the current semester, (ii) and the performance of our share in IRSA Inversiones y Representaciones S. A. (NYSE: IRS) (BASE: IRSA) which went from Ps. 1.8 million for December 2003 to Ps. 14.0 million at December 31, 2004; partly offset by lower results from exchange differences generated by assets and liabilities which decreased from a Ps. 1.9 million profit during the first semester of fiscal year 2004 to a Ps. 1.0 million loss for the current semester.

 

Consolidated net sales for the period amounted Ps. 35.2 million, 19.9% 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 semester.

 

Gross Income during the first six months of FY 2005 amounted to Ps. 6.4 million as compared to Ps. 8.2 million gross profit registered during the same period of the previous year.

 

This reduction in gross profit is partly a consequence of crop’s lower prices. At the beginning of the first semester of FY 2004 the company had accumulated agricultural commodities that when appreciated generated profits due to their revalorization. On the contrary, the stocks accumulated at the beginning of the first semester of FY 2005 did not follow during the semester ended on December 31, 2004 similar trends.

 

On the other hand, milk sales decreased and at slightly lower prices, consequently decreasing the margins for such activity. Besides, the costs of this business unit increased as a result of the expenses incurred in the development of the milking facility located at the “El Tigre” farm, which does not generate revenues yet.

 

Operating Income showed for the six-month period ended on December 31, 2004 a Ps. 7.1 million profit, compared to a Ps. 5.5 million profits registered during the same period of the previous fiscal year.

 

Results from related companies generated a Ps. 14.1 million profit, mainly due to our 26.5% share ownership in IRSA Inversiones y Representaciones S.A.

 

  

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Summary of operations

 

Crops

 

During the semester crop sales amounted Ps. 11.2 million, compared to Ps. 8.8 million registered during the previous year. Crop volume sold amounted 31,906 tons at an average price of Ps. 352 per ton compared to 23,601 tons sold at an average price of Ps. 373 during the same semester of the previous fiscal year.

 

The stock of grain as of the closing of the six-month period is 23,392 tons, consisting of 19,815 tons of wheat and 3,046 tons of corn.

 

Gross loss for the segment for the semester ended on December 31, 2004 amounted Ps. 0.2 million compared to a Ps. 1.6 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. At the beginning of the first semester of FY 2004 the company had accumulated agricultural commodities that when appreciated generated profits due to their revalorization. On the contrary, the stocks accumulated at the beginning of the first semester of FY 2005 did not follow during the semester ended on December 31, 2004 similar trends.

 

For the current season we have destined 35,848 hectares to agriculture, of which 16,142 hectares were leased to third parties. As compared to the previous fiscal year we have increased the amount of total hectares destined to agriculture in 13,303 hectares, mainly due to the commencement of operations in El Tigre farm, which increased the company’s area under production, and due to the higher amount of hectares leased to third parties.

 

Most of the leases were agreed with a fix payment prior to harvest and only small percentages were crop-sharing agreements.

 

The increase in the number of hectares leased from third parties for exploitation by the Company is explained by the fact that after the strong fall in the price of grains, many owners lowered leasehold prices, thus allowing higher potential yields. During the previous season, faced with the increase in land prices, the strategy was not to go along with market prices and lease lands only at those prices which enabled the Company to obtain adequate margins without having to speculate on future commodity prices.

 

Beef Cattle

 

As of December 31, 2004, the Company’s cattle stock amounted to 99,797 heads (7% higher than at December 31, 2003) with 126,964 hectares destined to this activity.

 

  

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Sale of livestock experienced a material increase of 53.6% from Ps. 12.2 million as of December 31, 2003 to Ps. 18.7 million as of December 31, 2004. During the semester a total of 8,953 tons were sold, while during the first six months of Fiscal Year 2004 tons sold amounted to 6,622. The sustained increase which beef cattle prices have been experiencing was also determinant for increasing Company’s revenues within this business unit.

 

Gross profit for the cattle beef segment amounted to Ps. 4.0 million, as compared to Ps. 3.0 million profit registered during the first semester of the previous Fiscal Year. This increase in the gross profit was a consequence both of the increase in the cattle beef sales and of the rise in margins produced by higher market values.

 

Cattle beef production amounted 5,988 tons, representing a 17% increase compared to the previous fiscal year.

 

LOGO

 

Livestock prices had a favourable evolution during the course of the first semester of Fiscal Year 2005. After the advance of the agriculture business over the cattle beef business, livestock offers experienced sever cuts, therefore helping to push up rising prices of livestock.

 

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, the country has obtained the free foot and mouth disease status with vaccination on behalf of 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.

 

  

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Furthermore, the export of thermo-processed cattle beef to China was approved, shortly enabling the opening of the commercialization of fresh meat market.

 

Likewise, the price of livestock in Argentina could result in similar prices to those found in Uruguay (which is actually 26% 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 fell slightly by 8% during the semester from 3.9 million liters as of December 31, 2003 to 3.5 million liters as of December 31, 2004.

 

Gross profit at December 31, 2004, amounted Ps. 0.7 million, 52% lower than that registered during the same semester of the previous fiscal year. The main reason for this reduction was the increase of costs in this business unit as a consequence of the expenses incurred in the development of dairy facilities that due to their condition are not generating income yet.

 

It is worth mentioning that the company is currently developing oversize dairy facilities with state of the art technology in our El Tigre farm. In this sense, once the project is concluded, it would increase the actual productive capacity 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 the Company’s only productive dairy farm is located at La Juanita, where the feeding system is based solely on pastures. This feeding system, of lower cost, allows an enhancement of milk margins as compared to systems based on grains.

 

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. Currently, with firm prices, this segment is once again attractive.

 

Feed Lot

 

During the semester, 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.

 

  

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Due to these facts, income decreased from Ps. 10.7 million at December 31, 2003 to Ps. 5.9 million during the current semester. It is worth mentioning that draughts registered during the first semester of the fiscal year, 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.

 

Regarding the above mentioned, during the semester closed December 31, 2004, Cactus Argentina S.A. registered a Ps. 0.1 million loss compared to a Ps. 0.4 million profit registered for the semester ended on December 31, 2003.

 

Sale of farms

 

At the end of Fiscal Year 2004 and commencement of Fiscal Year 2005 bills of sale for the farms Ñacurutu (sold after the closing of the semester) and San Enrique were signed which will result in profits for the Company amounting US$ 2.7 million and US$ 4,3 million respectively, thus positively impacting on future financial statements corresponding to the current Fiscal Year. The produce of such operations will suppose a yield close to 100 % in the first case and margin record of approximately 750 % in the second case. These transactions, besides confirming the excellent Company’s background regarding such operations, are clear examples of the unrealized value of corporate 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.

 

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, while 1,300 hectares are destined to agriculture.

 

Besides, clearing works on 6,000 additional hectares for cattle are being performed, and will enter into production next season. Currently, Los Pozos’ farm shows the highest returns in the cattle business for the Company’s and is above the industry’s average

 

  

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Additionally, the 1,185 hectares already developed in our “AgroRiego San Luis” farm, located in the province of San Luis, for crop irrigation, will enter into production the current season.

 

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.

 

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.

 

Currently, 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 semester ended on December 31, 2004, Futuros y Opciones.com S.A.’s revenues amounted to Ps. 0.5 million, 38% higher than that registered during the same semester of the previous Fiscal Year. The net result for the semester showed a Ps. 0.2 million loss, lower than the Ps. 0.3 million loss registered during Fiscal Year 2004.

 

  

Saúl Zang

First Vice-Chairman

serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Principal indicators for the six-month period

ended December 31, 2004 and 2003:

 

         

6 months as of

December 31, 2004


   6 months as of
December 31, 2003


   %

 

Sales Volume

                     

Wheat (tons)

        950    2.490    (62 %)

Corn (tons)

        19.959    11.472    74 %

Sunflowers (tons)

        —      —      0 %

Soybean (tons)

        9.994    9.611    4 %

Others (tons)

        1.002    28    3479 %
         
  
  

Total crops (tons)

        31.906    23.601    35 %
         
  
  

Beef Cattle (tons)

        8.953    6.622    35 %

Milk (Thousand of liters)

        3.525    3.851    (8 %)

Production

                     

Wheat (tons)

        20.595    11.571    78 %

Corn (tons)

        1.765    —         

Sunflowers (tons)

        —      —         

Soybean (tons)

        79    —         

Beef Cattle (tons)

        5.988    5.111    17 %

Milk (Thousand of liters)

        3.525    3.851    (8 %)

Exploited surface (hectares)

                     

Crops

   Owned Farms    19.706    12.312    60 %
     Leased Farms    16.142    9.755    65 %

Beef Cattle

   Owned Farms    126.964    126.190    1 %
     Leased Farms    —      —         

Dairy

   Owned Farms    1.583    820    93 %

Land Reserve (hectares)

        263.177    266.916    (1 %)

Surface under irrigation

        3.750    2.841    32 %

Storage Capacity (tons)

        12.660    18.360    (31 %)

Total head of cattle

        99.797    92.954    7 %

Dairy Farm Stock (heads)

        3.575    2.812    27 %

Milking cows (heads)

        1.406    1.190    18 %

 

  
Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

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. 14.0 million profit for the semester compared to a Ps. 1.8 million profit as of December 31, 2003.

 

IRSA’s result was strongly influenced by an increase in the operative result which grew 142.4%, from Ps. 24.5 million for the first six months of Fiscal Year 2004 to Ps. 59.3 million for the same period of the current Fiscal Year, mainly due to the better performance of revenues, which grew 49.3% amounting Ps. 185.2 million compared to the previous Ps. 124.1 million. The following is the share of the different segments in revenues from net consolidated sales: sales and development Ps. 27.5 million, offices and other property for lease Ps. 8.9 million, shopping centers Ps. 103.6 million and hotels Ps. 45.3 million.

 

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 85,000 m2 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 195,132 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. 352.0 million.

 

IRSA’s total Consolidated Assets amount to Ps. 2,346.1 million and its Shareholder’s Equity amounts Ps. 1,040.6 million.

 

At December 31, 2004 our ownership in IRSA amounted 26.5% of total shares in circulation. Additionally, we own u$ 45.3 million of convertible bonds 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 41% of IRSA equity. Currently, our equity interest in IRSA is valued through the proportional equity value method.

 

  
Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

Other relevant highlights

 

Reduction of debt due to the conversion of notes and exercise of Warrants

 

During the semester, Cresud’s debt under Convertible Notes was reduced by US$ 1,259,290 as a consequence of the exercise of conversion rights.

 

Likewise during the semester, 1,251,644 Warrants have been exercised, resulting in an inflow of US$ 1.5 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$ 41,723,863 while the number of outstanding Warrants amounts to 42,164,361. Shares issued amounted 31,728,541, increasing the Company’s total number of outstanding shares to 156,012,933.

 

It should be noted that since the Company holds Convertible Bonds issued by IRSA for a total 45.3 million, which bear interest at the same rate as those issued by us, funds to be collected from our holding in IRSA exceeds from those required to cover payment of our Convertible Notes.

 

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.

 

LOGO

 

Notes:

 

    1 ADR represents 10 common shares

 

    “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.

 

  
Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

LOGO

 

Financial Structure

 

During the current semester, 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 optimising risks and acquiring the necessary liquidity to take advantage of investment opportunities that could arise.

 

Hence, at December 31, 2004 current loans with local financial entities amounted Ps. 37.2 million, enabling the development of new productive projects and generating a more efficient capital structure for the Company.

 

Distribution of dividends

 

On November 17, 2004, and pursuant to the Ordinary and Extraordinary Shareholder’s Meeting held on October 22, 2004, cash dividends for a total amount of Ps. 3.0 million or Ps. 0.01983007 per common share of nominal value 1 each (Ps. 0.1983007 per ADR) were at shareholder’s availability.

 

Perspectives for the coming quarter

 

Perspectives for the upcoming quarter are highly promising with firm livestock prices, hence we are expecting an increase in our profits from this business unit. Additionally, the opening of new international markets could continue impacting positively on this business unit.

 

Besides, there are promising perspectives on the evolution of corn yields for the coming quarter, which are already above our budget. Notwithstanding the foregoing, price perspectives are conservative due to promising productive seasons in the U.S. and South America.

 

Regarding our investment in the dairy farm project, its opening will occur promptly. At the commencement, it will have 600 milking cows and will reach 2,000 heads within 18 months.

 

  
Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Unaudited Business Highlight (Continued)

 

According to our development of new agriculture project strategy, we will maintain evaluating different investment alternatives, which could be accomplished during the current fiscal period.

 

  
Saúl Zang
First Vice-Chairman
serving as Acting Chairman

 


 

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 December 31, 2004 and 2003, and the related statements of income, of changes in shareholders’ equity and of cash flows for the six-month periods ended December 31, 2004 and 2003 and the complementary notes 1 to 16 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 December 31, 2004 and 2003 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.

 


  b) The comparative information included in the basic and consolidated balance sheets and the suplementary 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 December 31, 2004, 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 $ 108.211,60 which is not yet due.

 

Autonomus City of Buenos Aires, February 10, 2005

 

PRICE WATERHOUSE & CO. S.R.L.
(Partner)
C.P.C.E.C.A.B.A. Tº 1 Fº 1
Dr. Andrés Suarez
Public Accountant (UBA)
C.P.C.E. Ciudad Autónoma de Buenos Aires
Tomo 245 - Folio 61

 


 

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: February 18, 2005