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 May, 2007

 


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   T     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  T

 



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

(THE “COMPANY”)

REPORT ON FORM 6-K

Attached is a copy of the English translation of the Financial Statements for the nine-month period ended on March 31, 2007 and March 31, 2006 filed with the Bolsa de Comercio de Buenos Aires and the Comisión Nacional de Valores.


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera

y Agropecuaria

For the nine-month periods ended March 31, 2007 and 2006


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Financial Statements

Index

 

Presentation

Consolidated Balance Sheet

Consolidated Statement of Income

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Consolidated Schedules

Balance Sheet

Statement of Income

Statement of Changes in Shareholders’ Equity

Statement of Cash Flows

Notes to the Financial Statements

Schedules

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

Stock Exchange Regulations

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, livestock and real-estate

Fiscal year No. 72 started on July 1, 2006

Financial Statements for the nine-month period

ended March 31, 2007. In comparative format with previous fiscal year

DATES OF REGISTRATION AT THE PUBLIC REGISTRY OF COMMERCE

 

Of the by-laws:

   February 19, 1937

Of the latest amendment:

   September 22, 1999

Duration of the Company:

   June 6, 2082

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

 

CAPITAL STATUS ( Note 3 of basic financial statements)
SHARES
Type of stock   Authorized
Pesos
  Subscribed
Pesos
 

Paid-in

Pesos

Ordinary certified shares of
Ps.1 face value and 1 vote each
  308,527,234   308,527,234   308,527,234

 

1


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Balance Sheet as of March 31, 2007 and 2006 and June 30, 2006

 

    

March 31, 2007

(Notes 1, 2 and 3)
Pesos

   

June 30, 2006

(Notes 1, 2 and 3)
Pesos

   

March 31, 2006

(Notes 1, 2 and 3)
Pesos

        

March 31, 2007

(Notes 1, 2 and 3)
Pesos

  

June 30, 2006

(Notes 1, 2 and 3)
Pesos

  

March 31, 2006

(Notes 1, 2 and 3)
Pesos

ASSETS

        

LIABILITIES

        

Current Assets

        

Current Liabilities

        

Cash and banks (Note 4.a.)

   81,163,170     25,997,361     10,046,193    

Debts:

        

Investments (Note 4.b.)

   44,595,462     6,223,788     7,896,475    

Trade accounts payable (Note 4.f.)

   35,550,761    26,438,528    22,571,638

Trade accounts receivable (Note 4.c.)

   10,138,773     11,084,617     8,696,345    

Loans (Note 4.g.)

   111,867,701    66,421,573    37,336,082

Other receivables (Note 4.d.)

   20,061,798     22,744,963     17,892,670    

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

   2,691,756    2,293,130    1,294,282

Inventories (Note 4.e.)

   74,850,519     28,932,135     50,714,748    

Taxes payable (Note 4.i.)

   7,426,126    3,313,836    2,052,600
                             

Total current assets

   230,809,722     94,982,864     95,246,431    

Other debts (\Note 4.j.)

   4,388,902    3,442,024    2,874,729
                                   
        

Total Debts

   161,925,246    101,909,091    66,129,331
                       
        

Total current liabilities

   161,925,246    101,909,091    66,129,331
                       
        

Non-current liabilities

        

Non-current assets

        

Trade accounts payable (Note 4.f.)

   392,740    835,292    981,422

Other receivables (Note 4.d.)

   45,145,571     36,005,292     15,093,109    

Taxes payable (Note 4.i.)

   42,919,394    42,770,882    50,572,947

Inventories (Note 4.e.)

   66,835,022     62,712,423     60,787,150    

Loans (Note 4.g.)

   24,800,000    98,096,955    109,201,097

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

   505,295,429     468,371,269     320,377,323    

Other debts (Note 4.j.)

   433,309    434,309    434,309

Other investments (Note 4.b.)

   20,717     37,052,716     86,946,920    

Provisions (Schedule E)

   285,811    183,893    106,570
                       

Fixed assets, net (Schedule A)

   238,813,485     224,775,512     219,686,357    

Total Non-current liabilities

   68,831,254    142,321,331    161,296,345
                       

Intangible assets, net (Schedule B)

   23,581,646     23,581,646     —      

Total Liabilities

   230,756,500    244,230,422    227,425,676
                                   

Subtotal Non-Current Assets

   879,691,870     852,498,858     702,890,859             
                             

Goodwill (Note 4.b.)

   (70,189,477 )   (76,825,838 )   (17,023,514 )  

Minority interest

   495,572    559,871    320,465
                                   

Total Non-Current Assets

   809,502,393     775,673,020     685,867,345    

SHAREHOLDERS’ EQUITY

   809,060,043    625,865,591    553,367,635
                                   

Total Assets

   1,040,312,115     870,655,884     781,113,776    

Total Liabilities and Shareholders’ Equity

   1,040,312,115    870,655,884    781,113,776
                                   

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

 

Eduardo S. Elsztain

President

 

2


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Income

For the nine-month periods beginning on July 1, 2006 and 2005

and ended March 31, 2007 and 2006

 

    

March 31, 2007

(Notes 1, 2 and 3)

Pesos

   

March 31, 2006

(Notes 1, 2 and 3)

Pesos

 

Production:

    

Crops

   30,857,314     15,098,936  

Beef Cattle

   17,268,886     17,035,525  

Milk

   7,409,701     5,862,005  
            

Total production

   55,535,901     37,996,466  
            

Cost of production (Schedule F.2):

    

Crops

   (20,986,576 )   (13,785,762 )

Beef cattle

   (10,453,631 )   (13,283,130 )

Milk

   (4,886,330 )   (3,323,002 )
            

Total cost of production

   (36,326,537 )   (30,391,894 )
            

Production profit

   19,209,364     7,604,572  
            

Sales:

    

Crops

   16,894,506     31,649,131  

Beef Cattle

   20,628,763     25,011,983  

Milk

   6,668,677     5,862,005  

Feed Lot

   3,102,229     1,782,828  

Others

   7,084,793     4,450,433  
            

Total sales

   54,378,968     68,756,380  
            

Cost of sales (Schedule F.1):

    

Crops

   (18,283,230 )   (26,632,570 )

Beef Cattle

   (19,511,316 )   (24,594,067 )

Milk

   (6,668,677 )   (5,862,005 )

Feed Lot

   (2,823,866 )   (1,498,624 )

Others

   (2,797,301 )   (2,052,416 )
            

Total cost of sales

   (50,084,390 )   (60,639,682 )
            

Sales profit

   4,294,578     8,116,698  
            

Gross profit

   23,503,942     15,721,270  
            

Selling expenses (Schedule H)

   (3,205,380 )   (6,023,312 )

Administrative expenses (Schedule H)

   (11,547,822 )   (6,348,710 )

Net gain on sale of farms

   436,629     9,897,186  

Holding gain – Beef cattle (Schedules F.1 and F.2)

   1,398,370     2,296,228  

Holding gain – Crops (Schedules F.1 and F.2)

   2,142,540     3,131,628  
            

Operating (loss) income

   12,728,279     18,674,291  
            

Financial gain (loss)

    

Generated by assets:

    

Exchange differences and discounts

   (852,638 )   10,668,341  

Interest income

   1,495,613     354,258  

Doubtful accounts

   —       (25,083 )

Tax on banking debits and credits

   (1,559,860 )   (1,283,625 )

Holding gain

   48,021     —    

Holding gain and result of transactions on securities investment

   448,023     —    

Gain on sales of convertible notes

   —       14,872,000  

Interest on bons

   2,219,032     6,239,486  

Others

   25,995     1,911,379  
            

Total

   1,824,186     32,736,756  
            

Generated by liabilities:

    

Reference stabilization index (CER)

   (7,677 )   (17,996 )

Interest loss

   58,276     (14,620 )

Financial expenses:

    

Interest on Convertible Notes (Note 7)

   (2,537,248 )   (6,534,054 )

Interest on loans

   (7,541,944 )   (1,268,724 )

Others

   (509,607 )   (489,967 )

Exchange differences and discounts

   (122,886 )   (9,191,889 )
            

Total

   (10,661,086 )   (17,517,250 )
            

Other income and expenses, net

    

Gains from other fixed assets sales

   52,508     34,468  

Others

   (367,030 )   —    

Shareholders’ personal assets tax and miscellaneous

   (2,686,199 )   (1,370,518 )
            
   (3,000,721 )   (1,336,050 )
            

Income from related companies

   40,188,874     11,459,724  

Management fee

   (4,079,574 )   (2,600,512 )
            

Net Income before income tax and minority interest

   36,999,958     41,416,959  
            

Income tax expense

   (348,091 )   (18,176,414 )

Minority interest

   64,299     136,482  
            

Net income for the period

   36,716,166     23,377,027  
            

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

 

Eduardo S. Elsztain
President

 

3


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Cash Flow

For the nine-month periods beginning on July 1, 2006 and 2005

and ended March 31, 2007 and 2006

 

    

March 31, 2007

(Notes 1, 2 and 3)
Pesos

    March 31, 2006
(Notes 1, 2 and 3)
Pesos
 

Changes in cash and cash equivalents

    

Cash and cash equivalents at the beginning of the period

   27,377,050     67,462,547  

Cash and cash equivalents at the end of the period (1)

   87,091,388     10,836,971  
            

Net increase (decrease) in cash and cash equivalents

   59,714,338     (56,625,576 )

Causes of changes in cash and cash equivalents

    
Operating activities     

Net income for the period

   36,716,166     23,377,027  

Accrued interest during the period

   10,079,192     7,092,959  

Income tax

   348,091     18,176,414  

Adjustments made to reach net cash flow from operating activities

    

Income from interest in related companies

   (40,188,874 )   (11,459,724 )

Minority interest

   (64,299 )   (136,482 )

Increase in allowances, provisions and accruals

   5,560,408     8,523,343  

Amortization and depreciation

   3,276,376     3,515,509  

Holding gain – Inventory

   (3,615,472 )   (5,427,856 )

Financial results

   (1,733,991 )   (5,185,619 )

Gain from sale of permanent investments

   —       (14,872,000 )

Gain from sale of fixed assets

   (489,137 )   (9,931,654 )

Changes in operating assets and liabilities

    

Decrease in current investments

   4,587,159     5,800,768  

(Increase) decrease in trade accounts receivable

   (749,382 )   1,066,967  

Increase in other receivables

   (10,120,886 )   (1,236,566 )

Increase in inventories

   (48,449,524 )   (7,055,457 )

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

   4,415,252     (25,496,535 )

Increase (decrease) in trade accounts payable

   9,874,055     (7,469,690 )

Dividends collected

   1,262,479     988,307  

(Decrease) increase in other debts

   (894,024 )   47,934  
            

Cash flows applied to operating activities

   (30,186,411 )   (19,682,355 )
            
Investment activities     

Increase in non-current investments

   (726,805 )   (4,034,772 )

Acquisition and upgrading of fixed assets

   (19,569,150 )   (49,574,732 )

Collection of receivables from sale of fixed assets

   3,850,808     5,736,964  

Sale of fixed assets

   564,464     9,870,951  

Cash flows applied to investment activities

   (15,880,683 )   (38,001,589 )
            
Financing activities     

Capital contributions from minority shareholders

   —       180,000  

Exercise of Warrant

   83,183,660     8,649,027  

Dividends paid

   (5,500,000 )   (10,000,000 )

Increase in financial loans

   75,086,654     33,455,667  

Decrease in financial loans

   (44,758,322 )   (14,712,326 )

Decrease in other liabilities

   (2,230,560 )   (16,514,000 )
            

Cash flows provided by financing activities

   105,781,432     1,058,368  
            
Net increase (decrease) in cash and cash equivalents    59,714,338     (56,625,576 )
            
Items not involving changes in cash and cash equivalents     

Transfer of inventory to fixed assets

   —       498,234  

Increase in other receivables by sale of fixed assets

   —       8,572,080  

Increase in interest in related companies by a decrease in non-current investments

   —       15,608,956  

Increase in fixed assets by increase in other liabilities

   —       7,160,617  

Decrease in other liabilities by decrease in fixed assets

   —       2,055,200  

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

   68,841,945     13,427,766  
            
Complementary information     

Interest paid

   7,005,219     6,534,054  

Income tax expense paid

   1,738,045     27,564,661  
            

(1) The difference with the cash at period end is generated by the effect of Cactus consolidation reversion as of March 31, 2007 (Ps. 939,275).

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

 

Eduardo S. Elsztain
President

 

4


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

and Subsidiaries

Notes to the Consolidated Financial Statements

For the nine-month periods beginning on July 1, 2006 and 2005

and ended March 31, 2007 and 2006

 

NOTE 1: BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

As a consequence of the application of the unifying accounting standards approved by the Comisión Nacional de Valores (C.N.V.), 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 (F.A.C.P.C.E.), the Balance Sheet as of March 31, 2007 and 2006 and the Statements of Income and the Statements of Cash Flows for the nine-month 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. Additionally, proportional consolidation has been applied for investments in which it has joint control (see Notes 1.b and 1.c to the basic financial statements).

The Company also 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., Agropecuaria Cervera S.A. and Cactus Argentina S.A. as of March 31, 2007 and 2006 have been used in order to determine the investment at its equity value, line by line consolidation and proportional consolidation.

For purposes of comparability, certain reclassifications have been made on the information as of June 30, 2006 and March 31, 2006.

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

 

NOTE 2: CORPORATE CONTROL

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

 

COMPANY

  

CRESUD

PERCENTAGE OF

VOTING SHARES

OWNED

  

CONSOLIDATED

PERCENTAGE OF

VOTING SHARES

OWNED

 

Inversiones Ganaderas S.A.

   99.99    99.99  

Futuros y Opciones.Com S.A.

   70.00    70.00  

Agropecuaria Cervera S.A.

   90.00    99.99 (*)

(*) Includes Interests in Participations of Inversiones Ganaderas S.A.

 

5


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

 

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

High relevant valuation and disclosure criteria applied in preparing the financial statements of Agropecuaria Cervera S.A. (ACER) and not explained in the valuation criteria note of the holding company are as follows:

Valuation criteria - fixed assets

The tree plantations included in the caption have been valued at replacement cost in accordance with the Tree Plantation Increase Report made on December 2003 by a forestry expert at the request of ACER previous shareholders.

ACER former board of directors based on such report as well as on own estimates accepted the value of Ps. 4,320,000 and recorded an equal amount in retained earnings in shareholders equity.

The current ACER management has reclassified such asset as Fixed Asset on the basis of its destination of use.

Other considerations – concessions granted

Among other goods and rights ACER has the concession planning an execution of an integral development project including: biological, economical and social issues on several real estates located in the department of Anta, province of Salta. The company is also duty authorized to perform a significant agricultural, cattle farming and forestry project which was awarded under resolution No. 190/99 and bidding No. 58/98 of the Ministry of Production and Employment.

Such concession was granted for a 35 year term with a postponement option of 29 additional years by ACER.

Among other obligations ACER has to invest Ps. 16 million in agriculture, cattle farming, hydraulic resources, continuing education, forestry development, forest planting, fauna, natural reserve and eco-tourism, and has to pay an annual US$ 60,000 cannon to the province of Salta to be paid as from the 20th year as from the commencement of the concession.

 

6


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

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

 

a.      Cash and banks

      
    

March 31,

2007

Pesos

   

June 30,

2006

Pesos

   

March 31,

2006

Pesos

 

Cash

   94,474     55,495     65,976  

Foreign currency (Schedule G)

   5,465     92,744     90,010  

Local currency checking account

   4,149,994     1,689,103     1,227,017  

Foreign currency checking account (Schedule G)

   76,789,252     23,770,872     8,218,713  

Local currency saving account

   75,869     106,504     28,197  

Foreign currency saving account (Schedule G)

   7,886     6,367     6,357  

Checks to be deposited

   40,230     276,276     409,923  
                  
   81,163,170     25,997,361     10,046,193  
                  

b.      Investments and Goodwill

      
    

March 31,

2007

Pesos

   

June 30,

2006

Pesos

   

March 31,

2006

Pesos

 

Investment

      

Investment (Schedules C and G)

   44,595,462     6,223,788     7,896,475  
                  
   44,595,462     6,223,788     7,896,475  
                  

Investment

      

Investment from related companies (Notes 12 and 15 and Schedule C)

   505,295,429     468,371,269     320,377,323  
                  
   505,295,429     468,371,269     320,377,323  
                  

Other investments

      

Other investments (Schedules C and G)

   20,717     37,052,716     86,946,920  
                  
   20,717     37,052,716     86,946,920  
                  

Goodwill

      

Goodwill (Schedule C)

   (70,189,477 )   (76,825,838 )   (17,023,514 )
                  
   (70,189,477 )   (76,825,838 )   (17,023,514 )
                  

 

7


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4: (Continued)

 

  c. Trade accounts receivable
    

March 31,

2007

Pesos

   

June 30,

2006

Pesos

   

March 31,

2006

Pesos

 

Current

      

Accounts receivable in local currency

   8,559,710     11,401,950     8,825,022  

Less:

      

Allowance for doubtful accounts (Schedule E)

   (372,359 )   (374,830 )   (356,214 )

Accounts receivable in foreign currency (Schedule G)

   1,938,419     44,982     181,491  

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

      

Cactus Argentina S.A.

   12,849     12,515     46,046  

Alto City.Com S.A.

   154     —       —    
                  
   10,138,773     11,084,617     8,696,345  
                  

 

  d. Other Receivables

 

    

March 31,

2007

Pesos

  

June 30,

2006

Pesos

  

March 31,

2006

Pesos

Current

        

Prepaid leases

   718,365    8,836,242    125,465

Income tax prepayments and tax credit (net of accrual for income tax)

   4,011,947    3,880,156    7,425,960

Guarantee deposits and premiums (Schedule G)

   3,142,675    1,447,771    1,564,245

Secured by mortgage (Schedule G)

   3,081,097    3,497,490    3,141,226

Prepaid expenses

   122,552    338,368    692,671

Gross sales tax credit

   23,103    4,539    3,816

Other tax credit

   89,809    —      —  

Tax prepayments

   2,814,008    3,545,790    3,890,413

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

        

Cactus Argentina S.A.

   4,159,990    191,651    185,390

IRSA Inversiones y Representaciones S.A. (Schedule G)

   82,419    —      1,331

Agro-Uranga S.A.

   601,684    39,993    160,609

Brasil Agro – Companhia Brasileira de Propiedaes Agrícolas

   30,537    559,088    —  

Credits to employees

   145,310    85,980    75,818

Directors

   —      —      10,940

Others

   1,038,302    317,895    614,786
              
   20,061,798    22,744,963    17,892,670
              

Non-current

        

Prepaid leases

   179    13,924    —  

Income tax prepayments and others

   30,344,349    24,351,881    5,672,316

Secured by mortgage (Schedule G)

   5,690,057    8,265,284    8,254,430

Tax on minimum presumed income

   6,238,499    2,422,271    82,006

Valued Added Tax credit

   2,081,813    —      —  

Deferred tax

   397,934    93,791    74,374

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

        

Cactus Argentina S.A.

   6,532    8,353    9,814

Alto Palermo S.A. (Schedule G)

   284,147    584,704    686,996

IRSA Inversiones y Representaciones S.A. (Schedule G)

   65,935    150,353    176,656

Others (Schedule G)

   36,126    114,731    136,517
              
   45,145,571    36,005,292    15,093,109
              

 

8


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4: (Continued)

 

e.      Inventories

       
    

March 31,
2007

Pesos

  

June 30,
2006

Pesos

   

March 31,
2006

Pesos

 

Current

       

Beef cattle

   13,547,883    10,913,612     13,609,916  

Crops

   23,777,230    10,550,495     14,800,090  

Unharvested crops

   27,822,308    1,662,592     18,025,519  

Seeds and fodder

   2,955,201    770,647     294,515  

Materials and others

   6,681,916    4,686,142     3,361,494  

Advances to suppliers

   65,981    348,647     623,214  
                 
   74,850,519    28,932,135     50,714,748  
                 

Non-Current

       

Beef cattle

   66,835,022    62,712,423     60,787,150  
                 
   66,835,022    62,712,423     60,787,150  
                 

f.       Trade accounts payable

       
    

March 31,
2007

Pesos

  

June 30,
2006

Pesos

   

March 31,
2006

Pesos

 

Current

       

Suppliers in local currency

   5,439,611    7,346,542     5,361,413  

Suppliers in foreign currency (Schedule G) (1)

   13,394,691    10,980,242     9,806,871  

Interest to be accrued (Schedule G) (2)

   —      (112,863 )   (272,250 )

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

       

Inversora Bolivar S.A.

   25,776    42,092     105,180  

Alto City.Com S.A.

   —      298     900  

Alto Palermo S.A.

   634,946    35,620     60,409  

IRSA Inversiones y Representaciones S.A.

   284,083    34,127     —    

Cactus Argentina S.A.

   92,425    481,353     223,455  

Estudio Zang, Bergel & Viñes

   209,745    73,851     191,597  

Fundación IRSA

   2,200,000    2,200,000     1,900,000  

Accrual for other expenses (Schedule G)

   10,017,666    5,311,539     4,517,773  

Short-term debts

   —      —       23,510  

Accrual for harvest expenses

   3,251,818    45,727     652,780  
                 
   35,550,761    26,438,528     22,571,638  
                 

Non-Current

       

Accrual for other expenses (Schedule G)

   392,740    835,292     981,422  
                 
   392,740    835,292     981,422  
                 

(1) As of December 31, 2006 includes US$ 1,449,726 from the acquisition of farm “San Pedro” corresponding to suppliers in foreign currency secured by mortgage. Please see note 11.
(2) Corresponds to the liability above mentioned.

 

9


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4: (Continued)

 

g.      Loans

      
    

March 31,
2007

Pesos

   

June 30,
2006

Pesos

   

March 31,
2006

Pesos

 

Current

      

Local financial loans (Note 17)

   102,092,963     65,605,326     34,014,572  

Convertible Notes 2007 Interest payable (Schedule G)

   284,281     332,179     1,602,388  

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

      

Shareholders

   —       482,985     1,715,992  

Directors

   3,148     1,083     3,130  

Convertible Notes 2007 expenses

   (23,215 )   —       —    

Convertible Notes 2007 (Schedule G)

   9,406,364     —       —    

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

      

Directors

   104,160     —       —    
                  
   111,867,701     66,421,573     37,336,082  
                  

Non-Current

      

Foreign financial loans (Notes 17 and 19)

   24,800,000     20,367,600     —    

Convertible Notes 2007 third parties (Schedule G)

   —       31,804,384     53,022,519  

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

      

Shareholders

   —       46,243,210     56,776,844  

Directors

   —       103,690     103,555  

Convertible Notes 2007 expenses

   —       (421,929 )   (701,821 )
                  
   24,800,000     98,096,955     109,201,097  
                  

h.      Salaries and social security payable

      
    

March 31,
2007

Pesos

   

June 30,
2006

Pesos

   

March 31,
2006

Pesos

 

Current

      

Accrual for vacation and statutory annual bonus

   2,675,816     1,905,899     1,091,873  

Social security taxes payable

   286     282,999     147,545  

Salaries payable

   —       64,237     32,622  

Health care payable

   15,346     22,689     12,856  

Others

   308     17,306     9,386  
                  
   2,691,756     2,293,130     1,294,282  
                  

 

10


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4: (Continued)

 

i.       Taxes payable

        
    

March 31,
2007

Pesos

  

June 30,
2006

Pesos

  

March 31,
2006

Pesos

Current

        

Accrual for income tax

   242,276    126,641    153,632

Tax on minimum presumed income

   4,004,291    2,377,347    64,350

Value added tax

   —      15,595    43,781

Property tax payable

   179,644    232,192    216,721

Taxes withheld Income tax

   126,841    274,592    105,850

Gross sales tax payable

   10,220    35,322    86,864

Taxes withheld-Gross sales tax payable

   4,222    2,215    4,397

Taxes withheld-Value added tax payable

   10,808    247,925    30,757

Others

   2,847,824    2,007    1,346,248
              
   7,426,126    3,313,836    2,052,600
              

Non-current

        

Deferred tax

   42,897,006    42,770,882    50,572,947

Tax on minimum presumed income

   22,388    —      —  
              
   42,919,394    42,770,882    50,572,947
              

j.       Other debts

        
    

March 31,
2007

Pesos

  

June 30,
2006

Pesos

  

March 31,
2006

Pesos

Current

        

Management fees accrual

   4,079,574    3,073,949    2,600,512

Other income to be accrued

   —      —      40,623

Loan to FYO minority shareholders

   134,196    134,196    134,196

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

        

Directors

   59,757    46,800    32,400

Cactus Feeders Inc.

   —      272    46,502

Others

   115,375    186,807    20,496
              
   4,388,902    3,442,024    2,874,729
              

Non-current

        

Other income to be accrued

   433,309    433,309    433,309

Guarantee deposit

   —      1,000    1,000
              
   433,309    434,309    434,309
              

 

11


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 5:

 

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

 

Based on their estimated
collection term

  

Current and non-current

Investment

   Trade accounts receivable    Other receivables
  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

   March 31,
2007
   June 30,
2006
   March 31,
2006
  

March 31,

2007

   June 30,
2006
   March 31,
2006

4th quarter 2006/2005 financial period

   —      —      2,604,146    —      —      8,548,703    —      —      5,400,453

1st quarter 2007/2006 financial period

   —      —      —      —      11,084,617    —      —      6,144,831    2,838,966

2nd quarter 2007/2006 financial period

   —      386,779    —      —      —      —      —      591,375    8,007,137

3rd quarter 2007/2006 financial period

   —      —      —      —      —      —      —      5,072,356    547,723

4th quarter 2007/2006 financial period

   1,124,267    —      —      9,956,927    —      —      9,776,246    479,592    10,128

1st quarter 2008/2007 financial period

      —      —      —      —      —      2,990,282    2,179,021    2,180,582

2nd quarter 2008/2007 financial period

   37,199,999    37,031,999    86,166,588    —      —      —      490,789    5,712    10,128

3rd quarter 2008/2007 financial period

            —      —      —      765,764    433,663    437,517

4th quarter 2008/2007 financial period

   —      —      —      —      —      —      164,555    5,713    10,128

1st quarter 2009/2008 financial period

   —      —      —      —      —      —      2,183,297    2,173,309    2,174,871

2nd quarter 2009/2009 financial period

   —      —      —      —      —      —      —      —      1,964

1st quarter 2010/2009 financial period

   —      —      —      —      —      —      1,753,380    1,745,358    1,744,050

1st quarter 2011/2010 financial period

   —      —      —      —      —      —      1,753,380    1,745,357    1,743,066

Overdue

   —      —      —      —      —      —      —      —      —  

With no stated current term

   6,271,196    5,837,009    5,292,329    181,846    —      147,642    6,038,717    10,456,809    1,098,391

With no stated non-current term

   20,717    20,717    780,332    —      —      —      39,290,959    27,717,159    6,780,675
                                            

Total

   44,616,179    43,276,504    94,843,395    10,138,773    11,084,617    8,696,345    65,207,369    58,750,255    32,985,779
                                            

b) Assets classified according to their interest rate (in Pesos)

 

Interest rate that
they accrue

  

Current and non-current

Investment

   Trade accounts receivable    Other receivables
  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

At fixed interest rate

   37,199,999    37,031,999    86,166,588    —      —      —      8,606,937    11,237,071    11,111,155

At variable interest rate

   6,271,196    5,837,009    5,292,328    —      —      —      13,236,463    4,049,594    2,449,378

Non-interest bearing

   1,144,984    407,496    3,384,479    10,138,773    11,084,617    8,696,345    43,363,969    43,463,590    19,425,246
                                            

Total

   44,616,179    43,276,504    94,843,395    10,138,773    11,084,617    8,696,345    65,207,369    58,750,255    32,985,779
                                            

 

12


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 5: (Continued)

 

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

 

Based on

their
estimated

payment

term

  Trade accounts payable   Loans   Salaries and social security
payable
  Taxes payable   Other debts   Provisions
   

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

3rd quarter 2006/2005   —     —     —     —     —     —     —     —     —     —     —     —     —     —     —     —     —     —  
4th quarter 2006/2005   —     —     15,258,186   —     —     3,321,510   —     —     458,460   —     —     1,834,618   —     —     2,528,060   —     —     —  
1st quarter 2007/2006   —     26,411,544   7,277,500   —     13,935,806   13,398,902   —     1,965,120   588,579   —     831,206   —     —     120,996   13,541   —     —     —  
2nd quarter 2007/2006   —     —     —     —     816,247   —     —     231,052   72,719   —     2,476,625   217,982   —     105,360   13,541   —     —     —  
3rd quarter 2007/2006   —     —     —     —     —     —     —     96,958   174,524   —     6,005   —     —     7,523   —     —     —     —  
4th quarter 2007/2006   35,807,031   —     —     645,148   —     —     443,950   —     —     7,084,369   —     —     4,139,331   3,073,949   1,472   —     —     —  
1st quarter 2008/2007   —     —     —     14,749,006   —     —     1,776,557   —     —     —     —     —     —     —     1,472   —     —     —  
2nd quarter 2008/2007   —     —     —       77,729,355   109,201,097   471,249   —     —     99,481   —     —     —     —     1,472   —     —     —  
3rd quarter 2008/2007   —     —     —     9,487,309   —     —     —     —     —     242,276   —     —     —     —     1,472   —     —     —  
4th quarter 2008/2007   —     —     —     —     —     —     —     —     —     —     —     —     —     —     1,472   —     —     —  
1st quarter 2009/2008   —     —     —     —     —     —     —     —     —     —     —     —     —     —     1,472   —     —     —  
2nd quarter 2009/2008   —     —     —     24,800,000   20,367,600   —     —     —     —     —     —     —     —     —     982   —     —     —  
Overdue   —     —     —     —     —     —     —     —     —     —     —     —     —     —     —     —     —     —  
With no stated current term   11,351   26,984   35,952   86,986,238   51,669,520   20,615,670   —     —     —     —     —     —     249,571   134,196   319,587   —     —     —  
With no stated non-current term   125,119   835,292   981,422   —     —     —     —     —     —     42,919,394   42,770,882   50,572,947   433,309   434,309   424,495   285,811   183,893   106,570
                                                                       

Total

  35,943,501   27,273,820   23,553,060   136,667,701   164,518,528   146,537,179   2,691,756   2,293,130   1,294,282   50,345,520   46,084,718   52,625,547   4,822,211   3,876,333   3,309,038   285,811   183,893   106,570
                                                                       
b) Liabilities classified according to their interest rate (in Pesos)

Interest in

rate

that they
accrue

  Trade accounts payable   Loans   Salaries and social security
payable
  Taxes payable   Other debts   Provisions
   

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

 

March 31,

2007

 

June 30,

2006

 

March 31,

2006

At fixed interest rate   4,439,062   6,720,357   6,552,112   136,380,272   164,124,210   143,917,490   —     —     —     —     —     —     —     —     —     —     —     —  
At variable interest rate     —         —       —     —     —     —     —     —     —     3,792,015   1,622,660   —     —     —  
Non-interest bearing   31,504,439   20,553,463   17,000,948   287,429   394,318   2,619,689   2,691,756   2,293,130   1,294,282   50,345,520   46,084,718   52,625,547   4,822,211   84,318   1,686,378   285,811   183,893   106,570
                                                                       
Total   35,943,501   27,273,820   23,553,060   136,667,701   164,518,528   146,537,179   2,691,756   2,293,130   1,294,282   50,345,520   46,084,718   52,625,547   4,822,211   3,876,333   3,309,038   285,811   183,893   106,570
                                                                       

 

13


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 6: EARNINGS PER SHARE

 

Following is 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 notes into company’s ordinary stock for up to an amount of US$ 50,000,000 mentioned in Note 14 to the basic financial statements, exercise their right to convert into stock the titles they bear.

 

    

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Average appraised stock in circulation

   226,737,205     166,847,072  

Average appraised diluted ordinary stock

   321,214,392     321,214,392  
    

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Earnings for the calculation of basic earnings per share

   36,716,166     23,377,027  

Exchange differences

   184,879     7,482,465  

Financing expenses

   2,537,248     6,534,054  

Income tax

   (888,570 )   (4,575,341 )

Management fees

   (183,356 )   (944,118 )

Earnings for the calculation of diluted earnings per share

   38,366,367     31,874,087  

BASIC Earnings per share

  

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Earnings

   36,716,166     23,377,027  

Number of shares

   226,737,205     166,847,072  

Earnings per share

   0,16     0,14  

DILUTED Earnings per share

  

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Earnings

   38,366,367     31,874,087  

Number of shares

   321,214,392     321,214,392  

Earnings per share

   0,12     0,10  

 

14


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 7: SEGMENT INFORMATION

 

As of March 31, 2007:

 

Description

  

Crops

Pesos

   Beef Cattle
Pesos
  

Milk

Pesos

   Feed Lot
Pesos
   Others
Pesos
   Without
specific
allocation
Pesos
  

Total

Pesos

Sales

   16,894,506    20,628,763    6,668,677    3,102,229    7,084,793       54,378,968

Assets

   200,112,195    143,108,164    52,021,328    10,439,272    2,990,428    631,640,728    1,040,312,115

Liabilities

   17,358,848    4,915,983    109,688    92,425    380,572    207,898,984    230,756,500

Fixed asset additions (transfers)

   6,672,772    5,442,193    247,140    —      351,972    6,874,781    19,588,858

Depreciation of fixed assets

   1,559,763    905,671    329,845    —      —      355,152    3,150,431

Income from related parties

   3,148,328    20,559    390,623    85,466    —      36,543,898    40,188,874

As of March 31, 2006:

 

Description

  

Crops

Pesos

   Beef Cattle
Pesos
  

Milk

Pesos

   Feed Lot
Pesos
    Others
Pesos
    Without
specific
allocation
Pesos
  

Total

Pesos

Sales

   31,649,131    25,011,983    5,862,005    1,782,828     4,450,432     —      68,756,379

Assets

   144,028,508    144,529,295    20,361,462    3,883,139     2,558,810     465,752,562    781,113,776

Liabilities

   7,035,020    1,018,682    26,575    827,696     966,896     217,550,807    227,425,676

Fixed asset additions (transfers)

   10,394,410    9,145,356    1,182,903    (731,423 )   (79,770 )   42,750,737    62,662,213

Depreciation of fixed assets

   1,507,882    852,737    359,300    229,575     47,273     518,742    3,515,509

Income from related parties

   1,098,374    9,749    229,719    —       —       10,121,882    11,459,724

 

NOTE 8: “EXAGRIND S.A. – ESTANCIA SAN RAFAEL AGAINST TALI SUMAJ AND OTHER DAMAGES AND LOSSES” LAWSUIT

Exagrind S.A. has filed a lawsuit against Inversiones Ganaderas S.A. (IGSA) on claims for damages and losses produced by a fire in Estancia San Rafael, which is close to Tali Sumaj, Province of Catamarca. The fire took place on September 6, 2000.

The estimated amount of the legal action is Ps. 2,914,000 at the date the claim was filed.

In turn, IGSA filed an extraordinary appeal with the High Court of the Province of Catamarca, requesting to be given the remainder term to answer the lawsuit as, at the time of revoking the first instance judge decision that postponed the terms to answer until a new notice was dispatched, such period had not yet expired. The management of IGSA is awaiting the decision of the Court of Cassation.

Additionally, in March 2007 -under the request of Exagrind S.A.- the court in charge of the case seized an inhibition of assets, which has already been appealed and a real estate on attachment has been offered in replacement. The management of IGSA is awaiting the sentence of the court.

 

15


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 9: ACQUISITIONS AND SALES OF FARMS

 

On August 28, 2006, IGSA signed a preliminary sale contract of 1,800 hectares of the establishment called “El Recreo” of its property, in the amount of US$ 0.3 million. As advance payment the Company has received US$ 0.05 million. This sale has not been shown in the Financial Statement as the property of the land has not yet been transferred.

Likewise, on January 19, 2007 IGSA entered into a preliminary sales contract for 50 hectares of “El Recreo” establishment owned both by IGSA and Arcor Sociedad Anónima Industrial y Comercial in the amount of Ps. 0.4 million having such amount been fully paid to the Company. This sale has been recognized as the possession of the plot of land was effected at the time of signing the preliminary sales contract.

 

16


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Fixed Assets

 

For the nine-month periods ended March 31, 2007 and 2006

and the year ended June 30, 2006

(Notes 1, 2, and 3)

Schedule A

 

Principal Account

  Value at the
beginning of
the period/year
Pesos
  Additions
and/or
transfers
Pesos
  Deductions
and/or
transfers
Pesos
  Value at the
end of the
period/year
Pesos
  Depreciation   Net carrying
value as of
March
31, 2007
Pesos
  Net carrying
value as of
June
30, 2006
Pesos
  Net carrying
value as of
March
31, 2006
Pesos
          Rate
%
  Accumulated at
the beginning of
the period/year
Pesos
  Decrease
of the
period/year
Pesos
  Current
period/year
Pesos
  Accumulated
at the end of
the period/year
Pesos
     

Real estate

  155,053,376   —     5,071   155,048,305   —     —     —     —     —     155,048,305   155,053,376   145,305,256

Wire fences

  4,780,673   —     —     4,780,673   3   1,236,208   —     119,798   1,356,006   3,424,667   3,544,465   3,466,307

Watering troughs

  3,930,660   26,584   —     3,957,244   5   1,175,796   —     131,760   1,307,556   2,649,688   2,754,864   2,283,418

Alfalfa fields and meadows

  3,297,931   —     —     3,297,931   12-25-50   1,506,332   —     350,882   1,857,214   1,440,717   1,791,599   1,618,462

Buildings and constructions

  29,779,631   124,011   —     29,903,642   2   2,486,149   —     444,140   2,930,289   26,973,353   27,293,482   27,337,678

Machinery

  10,594,431   602,050   2,920   11,193,561   10   7,025,548   2,920   554,000   7,576,628   3,616,933   3,568,883   3,664,413

Vehicles

  2,309,795   114,148   220,118   2,203,825   20   1,194,039   165,292   249,479   1,278,226   925,599   1,115,756   786,040

Tools

  197,916   10,570   —     208,486   10   152,253   —     7,370   159,623   48,863   45,663   48,265

Furniture and equipment

  1,213,670   38,415   2,632   1,249,453   10   829,699   1,913   70,633   898,419   351,034   383,971   401,352

Corral and leading lanes

  868,155   38,998   —     907,153   3   158,319   —     21,380   179,699   727,454   709,836   551,031

Roads

  2,200,904   1,500   —     2,202,404   10   894,000   —     128,538   1,022,538   1,179,866   1,306,904   363,577

Facilities

  12,615,362   93,308   —     12,708,670   10-20-33   5,823,780   —     728,196   6,551,976   6,156,694   6,791,582   6,278,123

Computer equipment

  1,453,980   935,140   7,954   2,381,166   20   1,007,257   7,954   287,129   1,286,432   1,094,734   446,723   397,155

Silo plants

  1,096,519   —     —     1,096,519   5   406,464   —     42,302   448,766   647,753   690,055   704,977

Feed Lot

  —     —     —     —     —     —     —     —     —     —     2,287,845   2,353,099

Constructions in progress

  8,841,634   10,499,580   37,282   19,303,932   —     —     —     —     —     19,303,932   8,841,633   17,879,769

Advances to suppliers

  204,572   264,891   —     469,463   —     —     —     —     —     469,463   204,572   40,511

Forest Products- Posts

  70,383   25,311   14,711   80,983   —     —     —     —     —     80,983   70,384   70,384

Forest Products raw materials

  4,320,000   —     —     4,320,000   —     —     —     —     —     4,320,000   4,320,000   4,320,000
Improvements in third parties buildings   3,553,919   6,814,352   —     10,368,271   —     —     —     14,824   14,824   10,353,447   3,553,919   1,816,540
                                               

Total as of March 31, 2007

  (1) 246,383,511   19,588,858   290,688   265,681,681   —     23,895,844   178,079   (2) 3,150,431   26,868,196   238,813,485   —     —  
                                               

Total as oft June 30, 2006

  188,561,525   84,736,740   22,993,849   (1) 250,304,416   —     22,063,929   1,647,113   5,112,088   25,528,904   —     224,775,512   —  
                                               

Total as of March 31, 2006

  188,561,525   63,160,447   7,965,342   243,756,630   —     22,063,929   1,509,165   3,515,509   24,070,273   —     —     219,686,357
                                               

(1) The difference is generated by the effect of Cactus consolidation reversion as of March 31, 2007.
(2) The difference between current depreciation and the amount shown in Schedule H (Ps. 125,945) is generated by the effect of Cactus consolidation reversion as of March 31, 2007.

 

17


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Intangible Assets

 

For the nine-month periods ended March 31, 2007 and 2006

and the year ended June 30, 2006

(Notes 1, 2, and 3)

Schedule B

 

Principal Account

  

Value at the

beginning of

the period/year

Pesos

  

Additions

of the

period/year
Pesos

  

Value at the

end of the

period/year
Pesos

   Amortization   

Net carrying

value as of

March 31,

2007
Pesos

  

Net carrying

value as of

June 30,

2006
Pesos

  

Net carrying
value as of

March 31,

2006
Pesos

           

Accumulated at

the beginning of

the period/year

Pesos

   Current period/year   

Accumulated

at the end of

the period/year

Pesos

        
              

Rate

%

  

Current

period/year

Pesos

           

Concessions received

   23,581,646    —      23,581,646    —         —      —      23,581,646    23,581,646   

Development expenditures

   1,410,368    —      1,410,368    1,410,368    33,33    —      1,410,368    —      —      —  

Organization expenses

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

Brands and patents

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

Total as of March 31, 2007

   25,459,770    —      25,459,770    1,878,124       —      1,878,124    23,581,646      
                                                 

Total as of June 30, 2006

   1,878,124    23,581,646    25,459,770    1,878,124       —      1,878,124       23,581,646   
                                                 

Total as of March 31, 2006

                  —               —  
                                                 

 

18


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Investments

For the nine-month periods beginning on July, 1 2006 and 2005, ended March 31 2007 and 2006 and the year ended June 30, 2006

(Notes 1, 2, and 3)

Schedule C

 

Type and characteristics
of the securities

   Amount   

Value as of

March 31,

2007

Pesos

  

Value as of

June 30,

2006

Pesos

  

Value as of

March 31,
2006

Pesos

  

Market
value

Pesos

   INFORMATION ON THE ISSUER
                  Principal
activity
   Latest financial statements
                     Capital
Pesos
  

Income for

the period
Pesos

  

Shareholders´

Equity
Pesos

Current Investments

                          

Mutual Funds

                          

Bony Hamilton Fund in Dollars

   992,234    3.036,236    54,906    46,617    3.060000            

Banco Río Special Fund in Pesos

      1,952,707    898,081    465,382               

BankBoston 1784 Fund

      —      246,404    40,013               
                                
      4,988,943    1,199,391    552,012               
                                

Bonds and Convertible Notes

                          

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

                          

IRSA Inversiones y Representaciones S.A. Convertible Notes 2007

   12,000,000    37,199,999       2,604,146               

Interest on IRSA Convertible Notes 2007 (US$)

      1,124,267    386,779                  

Global 2010 Bonds

   110,000    117,811    92,510    103,732    1,071009            

Bocon Pro 1

   157,647    630    630    630    0.003996            

Nobacs

         3,030,000    2,982,000               

Mortgage Bonds

   1,107,036    1,073,825    1,334,180    1,415,189    0.970000            

Raymond James – Interest of Bonds

         —                    
                                
      39,516,532    4,844,099    7,105,697               
                                

Shares

                          
                                

MATBA

      89,987                     
                                
      89,987                     
                                

Deposits in foreign banks in Dollars

         180,298    238,766               
                                
         180,298    238,766               
                                

Total current investments

      44,595,462    6,223,788    7,896,475               
                                

 

19


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Investments

For the nine-month periods begining on July, 1 2006 and 2005, ended March 31 2007 and 2006 and the year ended June 30, 2006

(Notes 1, 2, and 3)

Schedule C (Cont.)

 

Type and characteristics
of the securities

   Amount   

Value as of

March 31,

2007

Pesos

   

Value as of

June 30,

2006

Pesos

   

Value as of

March 31,

2006

Pesos

   

Market
value

Pesos

   INFORMATION ON THE ISSUER
               Principal
Activity
   Latest financial statements
                  Capital
Pesos
  

Income for

the period
Pesos

  

Shareholders´
Equity

Pesos

Non-current investments                        

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

                       

Agro-Uranga S.A.

            Unlisted    Agriculture    2,500,000    9,964,264    20,178,615

Shares

   893,069    7,208,359     5,465,153     5,573,730                

Contribution on account of future subscriptions of shares

        7,865     7,865                

Higher property value

      11,179,150     11,179,150     11,179,150                
                                   
      18,387,509     16,652,168     16,760,745                
                                   

CACTUS ARGENTINA S.A.

                       
                       

Shares

   4,337,175    6,259,901         Unlisted    Exploitation and
administration of
Agriculture and beef
products
   18,071,563    525,453    26,082,921

Contribution on account of future subscriptions of shares

                       
      6,259,901                    
                                   

IRSA Inversiones y Representaciones S.A.

                       

Shares (Note 14)

   116,305,767    418,848,524     396,839,494     303,616,578        Real Estate    453,557,582    113,856,341    1,633,390,635
                                   
      418,848,524     396,839,494     373,616,578                
                                   

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas

                       

Shares

   43,205    61,799,495     54,879,607     —          Agriculture and    875,381,000    39,969,000    835,627,000
                                   
      61,799,495     54,879,607     —          Real Estate         
                                   
   Subtotal    505,295,429     468,371,269     320,377,323                
                                   
Other Investments                        

IRSA Convertible Notes 2007 (US$)

                       

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

                       

IRSA Inversiones y Representaciones S.A.

        37,031,999     86,166,588                

BrasilAgro –Companhia Brasileira de Propiedades Agrícolas (pending registration)

        —       759,615                

Coprolán

      20,717     20,717     20,717     Unlisted            
                                   
   Subtotal    20,717     37,052,716     86,946,920                
                                   
Goodwill                        

IRSA Inversiones y Representaciones S.A. negative goodwill

      (70,189,477 )   (76,825,838 )   (40,605,160 )              

Agropecuaria Cervera S.A. goodwill

      —       —       23,581,646                
                                   
   Subtotal    (70,189,477 )   (76,825,838 )   (17,023,514 )              
                                   

Total non-current investments

      435,126,669     428,598,147     390,300,729                
                                   

 

20


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Allowances and Provisions

For the nine-month periods ended March 31, 2007 and 2006

and the year ended June 30, 2006

(Notes 1, 2, and 3)

Schedule E

 

Item

   Balances at the
beginning of
the period/year
Pesos
   Increases
(1)
Pesos
   Decreases
(1)
Pesos
    Applications
Pesos
   

Value as of
March 31,

2007

Pesos

  

Value as of
June 30,

2006

Pesos

  

Value as of
March 31,

2006

Pesos

Deducted from assets                   

Allowance for doubtful accounts

   374,830    —      —       (2,471 )   372,359    374,830    356,214
Included in liabilities                   

Non-current law contingencies for pending lawsuits

   69,343    240,595    (24,127 )   —       285,811    183,893    106,570
                                    

Total as of March 31, 2007

   (2)  444,173    240,595    (24,127 )   (2,471 )   658,170      
                                    

Total as of June 30, 2006

   490,542    148,311    (25,000 )   (55,130 )      (2)  558,723   
                                    

Total as of March 31, 2006

   485,412    52,372    (25,000 )   (50,000 )         462,784
                                    

(1) Included in Financial Results.
(2) The difference is generated by the effect of Cactus consolidation reversion as of March 31, 2007.

 

21


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Cost of Production

For the nine-month periods ended March 31, 2007 and 2006

(Notes 1, 2, and 3)

 

Schedule F.2

 

    Crops     Beef cattle     Milk     Total  
 

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,

2007

Pesos

   

March 31,

2006

Pesos

 

Inventories at the beginning of the period

                   

Beef cattle

  —       —       —       —       9,389,631     6,823,744     9,389,631       6,823,744    

Unharvested crops

  1,662,592     826,336     —       —       —       —       1,662,592       826,336    

Seeds and fodder

  —       —       168,766     172,941     123,568     17,653     292,334       190,594    

Materials and others

  4,142,815     3,768,385     —       4,358     119,865     65,430     4,262,680       3,838,173    
                                                           
  5,805,407     4,594,721     168,766     177,299     9,633,064     6,906,827       15,607,237       11,678,847  

Holding gain (loss)

  —       —       —       —       (2,105 )   375,173       (2,105 )     375,173  

Holding gain—Crops

  941,124                 941,124      

Gain (loss) on commodities market

                   

Transfer of inventories to expenses

      964,412     268,229           964,412       268,229  

Production

      504,930       741,024         1,245,954      

Transfer of unharvested crops to expenses

  (16,878,052 )   (12,003,717 )   (989,989 )   (204,789 )   (927,062 )   (1,018,566 )     (18,795,103 )     (13,227,072 )

Recovery of inventories

            (317,795 )         (317,795 )

Purchases

  42,178,739     27,144,125     851,604     476,131     2,480,584     3,138,055       45,510,927       30,758,311  

Operating expenses (Schedule H)

  21,236,013     14,946,376     11,407,999     12,775,895     3,822,523     3,571,080       36,466,535       31,293,351  

Less:

                   

Inventories at the end of the period

                   

Beef cattle

          (10,014,349 )   (9,127,509 )   (10,014,349 )     (9,127,509 )  

Crops

                   

Unharvested crops

  (27,822,308 )   (18,025,519 )           (27,822,308 )     (18,025,519 )  

Seeds and fodder

      (1,930,511 )   (174,511 )   (659,538 )   (100,004 )   (2,590,049 )     (274,515 )  

Materials and others

  (4,474,347 )   (2,870,224 )   (523,580 )   (35,124 )   (187,811 )   (104,259 )   (5,185,738 )   (45,612,444 )   (3,009,607 )   (30,437,150 )
                                                           

Cost of Production

  20,986,576     13,785,762     10,453,631     13,283,130     4,886,330     3,323,002       36,326,537       30,391,894  
                                                           

 

23


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Cost of Sales

For the nine-month periods ended March 31, 2007 and 2006

(Notes 1, 2, and 3)

Schedule F.1

 

     Crops     Beef cattle     Milk    Feed Lot     Others     Total  
    

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

  

March 31,
2006

Pesos

  

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Inventories at the beginning of the period

                              

Beef cattle

   —       —       64,236,404     61,552,248     —      —      —       —       —       —       64,236,404       61,552,248    

Crops

   10,550,495     24,930,778     —       —       —      —      —       —       —       —       10,550,495       24,930,778    

Seeds and fodder

   478,313     128,575     —       —       —      —      —       —       —       —       478,313       128,575    

Materials and others

   —       —       —       —       —      —      150,085     155,791     273,377     623,879     423,462       779,670    
                                                                                  
   11,028,808     25,059,353     64,236,404     61,552,248     —      —      150,085     155,791     273,377     623,879       75,688,674       87,391,271  

Holding gain - Beef Cattle

   —       —       1,303,265     1,914,483     —      —      62,083     6,572     35,127     —         1,400,475       1,921,055  

Holding gain - Crops

   1,190,284     3,131,628         —      —      —       —       11,132     —         1,201,416       3.131,628  

Production

   30,352,384     15,098,936     17,268,886     17,035,525     6,668,677    5,862,005    —       —         55,122       54,289,947       38,051,588  

Gain (loss) on commodities market

   1,776,102     (438,424 )       —      —      39,550     (9,499 )     —         1,815,652       (447,923 )

Transfer of inventories to expenses

   —             —         (964,412 )   (791,868 )   (89,320 )   (77,763 )     (1,053,732 )     (869,631 )

Transfer to fixed assets and inventories

   —             —      —      —           (151,928 )     —         (151,928 )

Transfer of unharvested crops to expenses

   (2,337,798 )   (3,731,225 )   (59,273 )   (30,340 )   —      —      —         (825,981 )   (362,837 )     (3,223,052 )     (4,124,402 )

Recovery of inventories

   —           317,795     —      —      —               —         317,795  

Purchases

   415,832     2,332,392     9,065,131     9,073,914     —      —      3,048,994     1,694,728     2,608,413     698,198       15,138,370       13,799,231  

Operating expenses (Schedule H)

   —       —         —       —      —      577,038     627,335     2,280,731     1,435,197       2,857,769       2,062,532  

Less:

                              

Inventories at the end of the period

                              

Beef cattle

   —       —       (70,368,556 )   (65,269,557 )   —      —      —             (70,368,556 )     (65,269,557 )  

Crops

   (23,777,230 )   (14,800,090 )       —      —      —             (23,777,230 )     (14,800,090 )  

Effect of Catus consolidation reversion

       (1,934,541 )           (89,472 )         (2,024,013 )      

Seeds and fodder

   (365,152 )   (20,000 )       —      —      —           —       (365,152 )     (20,000 )  

Materials and others

   —             —      —      —       (184,435 )   (1,496,178 )   (167,452 )   (1,496,178 )   (98,031,129 )   (351,887 )   (80,441,534 )
                                                                                  

Cost of Sales

   18,283,230     26,632,570     19,511,316     24,594,067     6,668,677    5,862,005    2,823,866     1,498,624     2,797,301     2,052,416       50,084,390       60,639,682  
                                                                          

 

22


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Foreign currency assets and liabilities

For the nine-month periods ended March 31, 2007 and 2006 and the year ended June 30, 2006

(Notes 1, 2, and 3)

 

Schedule G

 

Item

   March 31, 2007    June 30, 2006    March 31, 2006
   Type and amount
of foreign
Currency
   Current
rate
Pesos
   Amount in
local currency
Pesos
   Type and amount
of foreign
currency
   Amount in
local currency
Pesos
   Type and amount
of foreign
currency
   Amount in
local currency
Pesos

Current Assets

                    

Cash and banks

                    

Cash and banks in Dollars

   US$  25,098,740    3.060    76,802,144    US$ 7,835,857    23,868,019    US$ 2,733,315    8,314,743

Cash and banks in Brazilian Reais

   Rs 325    1.412    459    Rs 1,524    1,964    Rs 250    337

Investments:

                    

Mutual funds

   US$ 992,234    3.060    3,036,236    US$ 18,026    54,906    US$ 15,324    46,617

Interest of IRSA Convertible Notes 2007

   US$ 362,667    3.100    1,124,267      —      —        —     

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

     —                    

IRSA Inversiones y Representaciones S.A.

   US$ 12,000,000    3.100    37,199,999    US$ 125,333    386,779    US$ 844,953    2,604,146

Deposits in foreign banks

   US$         —      US$      59,192
180,298
   US$      78,490
238,766

Trade accounts receivable:

                    

Trade accounts receivable

   US$ 633,470    3.060    1,938,419    US$ 14,768    44,982    US$ 59,662    181,491

Other receivables:

                    

Secured by mortgages

   US$ 1,006,894    3.060    3,081,097    US$ 1,148,224    3,497,490    US$ 1,032,619    3,141,226

Guarantee deposits

   US$ 1,027,018    3.060    3,142,675    US$ 475,302    1,447,771    US$ 514,216    1,564,245

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

                    

Cactus Argentina S.A.

   US$ 2,107    3.100    6,532    US$ 4,140    12,775      3,184    9,814

IRSA Inversiones y Representaciones S.A.

   US$ 26,587    3.100    82,419    US$ —      —        —     

Others

   US$ 20,000    3.100    62,000    US$ 20,698    63,875      15,922    49,071

Non current assets

                    

Other receivables

                    

Secured by mortgages

   US$ 1,859,496    3.060    5,690,057    US$ 2,713,488    8,265,284    US$ 2,713,488    8,254,430

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

                    

Alto Palermo S.A.

   US$ 91,660    3.100    284,147    US$ 189,470    584,704      222,906    686,996

IRSA Inversiones y Representaciones S.A.

   US$ 21,269    3.100    65,935    US$ 48,721    150,353      57,319    176,656

Others

   US$ 11,654    3.100    36,126    US$ 27,067    83,529      31,844    98,142

Investments:

                    

IRSA Convertible Notes 2007

     —                    

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

                    

IRSA Inversiones y Representaciones S.A.

     —            US$  12,000,000    37,031,999    US$  27,958,010    86,166,588
                                        

Total US$

   US$ 43,153,796       132,552,053    US$ 24,680,286    75,672,764    US$ 36,281,252    111,532,931
                                        

Total Rs

   Rs 325       459    Rs 1,524    1,964    Rs 250    337
                                        

Total Assets

         132,552,512       75,674,728      
                                        

US$: US Dollars

Rs: Brazilian Reais

 

24


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Foreign currency assets and liabilities

For the nine-month periods ended March 31, 2007 and 2006 and the year ended June 30,2006

(Notes 1, 2, and 3)

 

Schedule G (Cont.)

 

Item

   March 31, 2007    June 30, 2006     March 31, 2006  
   Type and amount
of foreign
currency
   Current
exchange
rate
Pesos
   Amount in
Local
currency
Pesos
  

Type and amount
of foreign

currency

    Amount in
local
currency
Pesos
    Type and amount
of foreign
Currency
    Amount in
local
currency
Pesos
 

Current liabilities

                 

Trade accounts payable:

                 

Suppliers

   US$ 4,320,868    3.100    13,394,691    US$ 3,558,082     10,980,242     US$ 3,181,983     9,806,871  

Interest to be accrued

   US$ —      3.100    —      US$ (36,573 )   (112,863 )   US$ (88,335 )   (272,250 )

Accrual for other expenses

   US$ 158,054    3.100    489,967    US$ 862,487     2,661,634     US$ 1,373,600     4,233,435  

Loans:

                 

Local banks

   US$ 4,873,137    3.100    15,106,725    US$ 4,399,210     13,575,961       4,347,470     13,398,902  

Interest of Convertible Notes 2007

   US$ 91,704    3.100    284,281    US$ 107,641     332,179     US$ 519,918     1,602,388  

Convertible Notes 2007

   US$ 3,034,311    3.100    9,406,364      —       —        

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

                 

Shareholders

   US$ —      3.100    —      US$ 156,508     482,985     US$ 556,779     1,715,992  

Directors

   US$ 34,615    3.100    107,308    US$ 351     1,083     US$ 1,016     3,130  

Non-current liabilities

                 

Trade accounts payable:

                 

Accrual for other expenses

   US$ 126,690    3.100    392,740    US$ 270,671     835,292       318,437     981,422  

Loans:

                 

Foreign banks

   US$ 8,000,000    3.100    24,800,000    US$ 6,600,000     20,367,600      

Convertible Notes 2007

   US$ —      3.100    —      US$  10,306,022     31,804,384     US$ 17,203,932     53,022,519  

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

                 

Shareholders

   US$ —      3.100    —      US$ 14,984,838     46,243,210     US$  18,422,078     56,776,844  

Directors

   US$ —      3.100    —      US$ 33,600     103,690     US$ 33,600     103,555  
                                             

Total Liabilities

   US$ 20,639,379       63,982,076    US$ 41,242,837     127,275,397     US$ 45,870,478     141,372,808  
                                             

US$: US Dollars

 

25


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Information in Compliance with Section 64, subsection B of Law No. 19,550

For the nine-month periods ended March 31, 2007 and 2006

(Notes 1, 2, and 3)

 

Schedule H

 

    

Total

March 31, 2007
Pesos

   Operating Expenses    Expenses   

Total

March 31, 2006
Pesos

Items

     

Total

Pesos

  

Crops

Pesos

   Beef cattle
Pesos
  

Milk

Pesos

   Feed Lot
Pesos
   Others
Pesos
   Selling
Pesos
   Administrative
Pesos
  

Directors´ fees

   289,897    —      —      —      —      —      —      —      289,897    185,724

Fees and payments for services

   4,920,212    664,963    192,396    267,484    113,658    —      91,425    —      4,255,249    1,958,020

Salaries and wages

   8,977,978    5,312,498    1,622,181    1,753,590    549,227    —      1,387,500    171,449    3,494,031    5,862,710

Social security taxes

   2,218,454    944,183    481,054    365,591    82,296    —      15,242    —      1,274,271    1,044,586

Taxes, rates and contributions

   1,134,140    553,302    395,188    111,434    36,397    —      10,283    11,766    569,072    626,223

Gross sales taxes

   418,772    —      —      —      —      —      —      418,772    —      479,577

Office and administrative expenses

   1,169,801    224,375    —      —      —      —      224,375    2,495    942,931    803,128

Bank commissions and expenses

   49,962    41,276    9,506    8,657    694    —      22,419    —      8,686    26,579

Depreciation of fixed assets (4)

   3,276,376    2,930,675    1,506,062    881,569    321,067    125,945    96,032    —      345,701    3,515,509

Vehicle and traveling expenses

   600,432    465,407    168,148    171,995    21,169    —      104,095    40,404    94,621    621,144

Spare parts and repairs

   1,991,011    1,969,778    912,744    803,922    155,515    —      97,597    1,539    19,694    1,315,555

Insurance

   244,769    201,226    102,028    70,067    7,071    —      22,060    —      43,543    207,347

Benefits to Employees

   511,993    339,508    90,950    171,711    40,955    —      35,892    —      172,485    296,991

Beef cattle expenses (1)

   7,272,555    6,664,285    —      6,664,285    —      —      —      608,270    —      9,925,274

Dairy farm expenses (2)

   2,494,001    2,482,749    —      —      2,482,749    —      —      11,252    —      2,264,870

Agricultural expenses (3)

   17,396,219    15,555,595    15,426,102    —      —      —      129,493    1,840,624    —      15,554,087

Feed lot expenses

   451,093    451,093    —      —      —      451,093    —      —      —      413,478

Silo expenses

   60,772    44,336    44,336    —      —      —      —      16,436    —      24,950

Coal expenses

   —      —      —      —      —      —      —      —      —      202

ACER expenses

   —      —      —      —      —      —      —      —      —      21,649

FyO expenses

   59,721    7,500    —      —      —      —      7,500    52,221    —      61,391

General expenses

   539,348    471,555    285,318    137,694    11,725    —      36,818    30,152    37,641    515,581
                                                 

Total at March 31, 2007

   54,077,506    39,324,304    21,236,013    11,407,999    3,822,523    577,038    2,280,731    3,205,380    11,547,822   
                                                 

Total at March 31, 2006

      33,355,883    14,946,376    12,775,895    3,571,080    627,335    1,435,197    6,023,312    6,348,710    45,724,575
                                                 

(1) Includes cattle food and additives, lodging, animal health and others.
(2) Includes cattle food and additives, animal health and others.
(3) Includes seeds, agrochemicals, irrigation, services hired, leases and others.
(4) The difference between this amount and current depreciation shown in Schedule A (Ps. 125,945) is generated by the effect of Cactus consolidation reversion as of March 31, 2007.

 

26


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Balance Sheet as of March 31, 2007 and 2006 and June 30, 2006

 

     March, 31 2007
(Notes 1 and 2)
Pesos
    June 30, 2006
(Notes 1 and 2)
Pesos
    March, 31 2006
(Notes 1 and 2)
Pesos
         March, 31 2007
(Notes 1 and 2)
Pesos
   June 30, 2006
(Notes 1 and 2)
Pesos
   March, 31 2006
(Notes 1 and 2)
Pesos

ASSETS

         LIABILITIES         

Current Assets

         Current Liabilities         

Cash and banks (Note 8.a.)

   80,863,031     24,600,563     9,101,296     Debts:         

Investments (Note 8.b.)

   42,552,768     4,899,005     7,152,314    

Trade accounts payable (Note 8.f.)

   31,088,938    23,927,124    21,288,319

Trade accounts receivable (Note 8.c.)

   5,707,752     8,449,745     6,472,743    

Loans (Note 8.g.)

   111,867,701    66,421,573    37,336,082

Other receivables (Note 8.d.)

   19,381,082     21,265,678     16,802,356    

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

   2,466,241    1,930,617    1,058,735

Inventories (Note 8.e.)

   74,154,168     27,227,281     49,263,569    

Taxes payable (Note 8.i.)

   6,904,261    2,921,376    1,659,998
                             

Total Current Assets

   222,658,801     86,442,272     88,792,278    

Other debts (Note 8.j.)

   4,139,331    3,284,656    2,653,212
                                   
        

Total Debts

   156,466,472    98,485,346    63,996,346
                       
        

Total Current Liabilities

   156,466,472    98,485,346    63,996,346
                       

Non-Current Assets

                 

Other receivables (Note 8.d.)

   55,772,611     39,575,208     16,530,828     Non-Current Liabilities         

Inventories (Note 8.e.)

   63,866,830     59,330,235     57,206,925    

Trade accounts payable (Note 8.f.)

   392,740    835,292    981,422

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

   521,515,299     489,669,438     341,441,146    

Loans (Note 8.g.)

   24,800,000    98,096,955    109,201,097

Other investments (Note 8.b.)

   20,717     37,052,716     86,946,920    

Taxes payable (Note 8.i.)

   42,182,332    41,874,123    49,600,797

Fixed assets, net (Schedule A)

   217,391,261     208,071,858     204,991,842    

Provisions (Schedule E)

   45,216    69,343    68,243
                       

Intangible assets, net (Schedule B)

   21,910,761     21,910,761     —      

Total Non-Current Liabilities

   67,420,288    140,875,713    159,851,559
                                   

Subtotal Non-Current Assets

   880,477,479     855,610,216     707,117,661     Total liabilities    223,886,760    239,361,059    223,847,905
                                   

Goodwill (Note 8.b.)

   (70,189,477 )   (76,825,838 )   (18,694,399 )           
                             

Total Non-Current Assets

   810,288,002     778,784,378     688,423,262     SHAREHOLDERS’ EQUITY    809,060,043    625,865,591    553,367,635
                                   

Total Assets

   1,032,946,803     865,226,650     777,215,540     Total Liabilities and Shareholders’ Equity    1,032,946,803    865,226,650    777,215,540
                                   

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

Eduardo S. Elsztain

President

 

27


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria

Statement of Income

For the nine-month periods beginning on July 1, 2006 and 2005 and ended March 31, 2007 and 2006

 

     March 31, 2007
(Notes 1 and 2)
Pesos
    March 31, 2006
(Notes 1 and 2)
Pesos
 

Production :

    

Crops

   30,857,314     15,098,936  

Beef cattle

   15,716,310     16,062,122  

Milk

   7,409,701     5,862,005  
            

Total production

   53,983,325     37,023,063  
            

Cost of production (Schedule F.2)

    

Crops

   (21,007,800 )   (13,785,762 )

Beef cattle

   (9,036,041 )   (11,267,586 )

Milk

   (4,886,330 )   (3,323,002 )
            

Total cost of production

   (34,930,171 )   (28,376,350 )
            

Production profit

   19,053,154     8,646,713  
            

Sales

    

Crops

   16,894,506     31,649,131  

Beef cattle

   16,919,602     19,725,313  

Milk

   6,668,677     5,862,005  

Other

   3,916,355     2,709,371  
            

Total sales

   44,399,140     59,945,820  
            

Cost of sales (Schedule F.1)

    

Crops

   (18,283,230 )   (26,632,570 )

Beef cattle

   (15,872,785 )   (19,445,784 )

Milk

   (6,668,677 )   (5,862,005 )

Other

   (44,338 )   (208,143 )
            

Total cost of sale

   (40,869,030 )   (52,148,502 )
            

Sales profit

   3,530,110     7,797,318  
            

Gross profit

   22,583,264     16,444,031  
            

Selling expenses (Schedule H)

   (2,731,060 )   (5,677,277 )

Administrative expenses (Schedule H)

   (11,109,140 )   (5,797,957 )

Net gain on sale of farms

   —       9,872,997  

Holding gain – Beef cattle (Schedules F.1 and F.2)

   1,290,256     1,908,341  

Holding gain – Crops (Schedules F.1 and F.2)

   2,131,408     3,131,628  
            

Operating income

   12,164,728     19,881,763  
            

Financial gain (loss):

    

Generated by assets:

    

Exchange differences and discounts

   (842,082 )   10,626,544  

Interest income

   2,078,673     399,182  

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

    

Interest on Notes (Note 7)

   2,219,032     6,239,486  

Tax on banking debits and credits

   (1,118,899 )   (1,047,795 )

Net gain on sale of bonds

   —       —    

Holding gain and transactions on security stock

   444,032     —    

Gain on sale of Negotiable Notes

   —       14,872,000  

Others

   —       1,808,564  
            

Total

   2,780,756     32,897,981  
            

Generated by liabilities:

    

Financial expenses:

    

Interest on Convertible Notes (Note 7)

   (2,537,248 )   (6,534,054 )

Interest on loans

   (7,541,944 )   (1,268,724 )

Others

   (408,984 )   (513,521 )

Exchange differences and discounts

   (121,473 )   (9,141,170 )
            

Total

   (10,609,649 )   (17,457,469 )
            

Other income and expenses, net:

    

Gains from other fixed assets sales

   44,966     29,157  

Shareholders’ Personal asset tax and miscellaneous

   (2,686,199 )   (1,352,988 )
            
   (2,641,233 )   (1,323,831 )
            

Income from controlled and related companies

   39,626,904     10,360,623  

Management fee (Note 5)

   (4,079,574 )   (2,600,512 )
            

Net Income before income tax

   37,241,932     41,758,555  
            

Income tax expense (Note 6)

   (525,766 )   (18,381,528 )
            

Net income for the period

   36,716,166     23,377,027  
            

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

Eduardo S. Elsztain

President

 

28


Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria

Statement of Changes in Shareholders’ Equity

For the nine-month periods beginning on July 1, 2006 and 2005 and ended March 31, 2007 and 2006

(Notes 1 and 2)

 

Items

   Shareholders’ contributions     Retained earnings    Unappropiated
earnings
Pesos
    Transitory
conversion
differences
Pesos
    Total as of
March 31,
2007
Pesos
    Total as of
March 31,
2006
Pesos
 
   Capital
(Note 3)
   Inflation
adjustment
of Common
stock
Pesos
   Paid-in capital
(1)
Pesos
    Subtotal
Pesos
    Legal
reserve
Pesos
   New projects
reserve
Pesos
        
   Common stock
Pesos
                     

Balances at the beginning of the exercise

   220,604,549    166,218,124    106,916,990     493,739,663     11,532,537    —      127,243,810     (6,650,419 )   625,865,591     523,070,970  

Conversion of Notes in common stock (Note 14)

   43,829,353    —      25,012,592     68,841,945     —      —      —       —       68,841,945     13,427,766  

Exercise of Warrants (Note 14)

   44,093,332    —      39,090,328     83,183,660     —      —      —       —       83,183,660     8,649,027  

Shareholders meeting held on October 31, 2006:

                        

Legal Reserve

   —      —      —       —       1,644,164    —      (1,644,164 )   —       —       —    

Cash dividends

   —      —      —       —       —      —      (5,500,000 )   —       (5,500,000 )   (10,000,000 )

New projects Reserve

   —      —      —       —       —      120,099,646    (120,099,646 )   —       —       —    

Related companies Law No. 19,550 Section 33:

                        

Cactus Argentina S.A.

   —      —      1,658,109     1,658,109     —      —      —       —       1,658,109     —    

IRSA (Note 15)

   —      —      (4,995,191 )   (4,995,191 )   —      —      —       —       (4,995,191 )   (5,157,155 )

Transitory conversion differences

   —      —      —       —       —      —      —       3,289,763     3,289,763     —    

Net income for the period

   —      —      —       —       —      —      36,716,166     —       36,716,166     23,377,027  
                                                        

Balances as of March 31, 2007

   308,527,234    166,218,124    167,682,828     642,428,186     13,176,701    120,099,646    36,716,166     (3,360,656 )   809,060,043    
                                                        

Balances as of March 31, 2006

   176,199,596    166,218,124    81,679,817     424,097,537     11,532,537    —      117,737,561     —         553,367,635  
                                                        

(1) See notes 2.o, 12.c and 15.

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

Eduardo S. Elsztain

President

 

29


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Statement of Cash Flow

For the nine-month periods beginning on July 1, 2006 and 2005 and ended March 31, 2007 and 2006

 

     March 31, 2007
(Notes 1 and 2)
Pesos
    March 31, 2006
(Notes 1 and 2)
Pesos
 

Changes in cash and cash equivalents

    

Cash and cash equivalents at the beginning of the period

   24,655,469     66,248,838  

Cash and cash equivalents at the end of the period

   83,899,267     9,147,913  
            

Net increase (decrease) in cash and cash equivalents

   59,243,798     (57,100,925 )

Causes of changes in cash and cash equivalents

    
Operating activities     

Net income for the period

   36,716,166     23,377,027  

Accrued interest during the period

   10,079,192     7,092,959  

Income tax

   525,766     18,381,528  

Adjustments made to reach net cash flow from operating activities

    

Income from interest in controlled and related companies

   (39,626,904 )   (10,360,623 )

Increase in allowances, provisions and accruals

   4,788,722     8,498,343  

Depreciation

   2,959,823     3,122,307  

Holding gain – Inventory

   (3,421,664 )   (5,039,969 )

Financial results

   (1,828,740 )   (5,185,619 )

Gain from sale of permanent investments

   —       (14,872,000 )

Gain from sale of fixed assets

   (44,966 )   (9,902,154 )

Changes in operating assets and liabilities

    

Decrease in current investments

   4,771,899     5,800,768  

Decrease in trade accounts receivable

   2,741,993     2,933,657  

Increase in other receivables

   (4,411,935 )   (2,758,460 )

Increase in inventories

   (48,041,818 )   (9,537,904 )

Increase (decrease) in social security payable & taxes payable and advances to customers

   4,300,952     (25,655,429 )

Increase (decrease) in trade accounts payable

   5,793,646     (7,783,438 )

Dividends collected

   1,262,479     988,307  

Decrease in other debts

   (801,998 )   (1,604,227 )
            

Cash flows applied to operating activities

   (24,237,387 )   (22,504,927 )
            
Investment activities     

Increase in non-current investments

   (726,805 )   (2,223,325 )

Increase in related companies loans

   (13,189,990 )   —    

Acquisition and upgrading of fixed assets

   (12,319,703 )   (48,577,205 )

Collections of receivables from sale of fixed assets

   3,850,808     5,736,964  

Sale of fixed assets

   85,443     9,589,200  
            

Cash flows applied to investment activities

   (22,300,247 )   (35,474,366 )
            
Financing activities     

Exercise of Warrants

   83,183,660     8,649,027  

Dividends paid

   (5,500,000 )   (10,000,000 )

Increase in financial loans

   75,086,654     33,455,667  

Decrease in financial loans

   (44,758,322 )   (14,712,326 )

Decrease in others liabilities

   (2,230,560 )   (16,514,000 )
            

Cash flows provided by financing activities

   105,781,432     878,368  
            
Net increase (decrease) in cash and cash equivalents    59,243,798     (57,100,925 )
            
Items not involving changes in cash and cash equivalents     

Transfer of inventory to fixed assets

   —       498,234  

Increase in interest in related companies by a decrease in non-current investments

   —       15,608,956  

Increase in other receivables by sale of fixed assets

     8,572,080  

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

   68,841,945     13,427,766  

Increase in fixed assets due to an increase in other debts

   —       7,160,617  

Decrease in other liabilities through a decrease in fixed assets

   —       2,055,200  
            
Complementary information     

Interest paid

   7,005,219     6,534,054  

Income tax paid

   1,718,759     27,564,661  
            

 

Eduardo S. Elsztain
President

 

30


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements

For the nine-month periods ended March 31, 2007 and 2006

and the year ended June 30, 2006

 

NOTE 1: ACCOUNTING STANDARDS

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 period.

 

  a. Presentation standards

These financial statements are stated in Argentine Pesos (Ps.), and have been prepared in accordance with the disclosure and valuation accounting standards contained in the Technical Resolutions issued by the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.), as approved, with resolutions issued by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires (C.P.C.E.C.A.B.A.) and the Comisión Nacional de Valores (C.N.V.).

 

  b. Unifying of accounting standards

On July 8, 2004, the F.A.C.P.C.E. and the C.P.C.E.C.A.B.A. entered into an agreement with the purpose of unifying technical standards. The latter council issued Resolution CD 93/05 on August 10, 2005 adopting the accounting standards approved by the former including the changes up to April 1, 2005.

The standards referred to above became effective for annual or interim periods financial statements of years started on January 1, 2006. On the other hand, the C.N.V. has adopted the same standards including certain modifications, and has also established their applicability for the years started as from January 1, 2006 as well.

The changes introduced due to the unifying of accounting standards that have generated significant effects on the Company´s financial statements are:

 

   

In accordance with the new accounting standards, the Company has decided not to recognize the deferred liabilities generated by the adjustment for inflation on fixed assets and other non-monetary assets. Consequently, additional information on this issue is stated in Note 6.

 

   

The balance of the “Transitory Convertion Differences” account has to be shown in the statement of changes in stockholders´ equity as from the time the unifying accounting standards became effective.

The financial statements for the nine-month periods ended March 31, 2007 and 2006 have not been audited. The Company´s management estimates that such statements include all adjustments necessary to fairly present the income accounts of each period, which do not necessarily show the proportion of the Company´s profits and losses for the entire periods.

 

  c. The effects of inflation

The financial statements have been prepared in constant currency units by recognizing the effects of inflation up to August 31, 1995. As from this date and up to December 31, 2001 the restatement of the financial statements has been discontinued due to that period of monetary stability. As from January 1, 2002 and up to March 2003 the effects of inflation were recognized as it was an inflationary period. As from such date, in accordance with Resolution 441

 

31


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 1: (Continued)

 

issued on April 8, 2003 by the National Securities Commission, the Company discontinued the restatement of its financial statements. This criterion does not agree with the terms of Resolution MD 041/2003 of the Professional Council in Economic Sciences of the City of Buenos Aires (CPCECABA), by which the restatement of financial statements was discontinued as from October 1, 2003. As of March 31, 2007, this change has not generated any significant effect on the Company´s financial statements.

 

  d. Comparative Information

For comparison purposes, certain reclassifications have been made as of June 30, 2006 and March 31, 2006.

 

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 fiscal year. Estimates are used when accounting for the allowance for conversion of Convertible Notes into shares of stock, doubtful accounts, investments, depreciation, income taxes, deferred liabilities, transitory conversion differences and provisions for contingencies, accrual for expenses, donations and assets’ recoverable value and classification of the current and non-current assets. 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 date of the financial statements, converted at the buying and selling exchange rate, respectively, prevailing at period-end or year-end.

 

  d. Temporary investments

The units of ownership of common investment funds, the mortgage certificates, nobacs and bonds were valued at quotation value at period-end or year-end net of sales expenses. Temporary investments do not exceed their recoverable value at the date of the financial statements.

 

  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.

 

32


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2: (Continued)

 

  f. Credits and loans

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

 

  g. Derivates financial instruments

Futures relate to cereal commitments deliverable at a previously agreed price (see note 4), and Dollars commitments.

Premiums collected or paid correspond to options bought or written and are included in Other receivables.

The assets or liabilities originated in derivatives instruments have been valued at their market value at period-end or year-end (see Note 4).

Differences generated by the application of the above mentioned valuation criteria to assets and liabilities from derivative instruments corresponding to crops and Dollars have been recognized under net income of the fiscal year under Cost of sales and under Financial Results in the Income Statement, respectively.

The comparative information includes transactions with metals.

 

  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 date of these financial statements.

Other receivables and payables in foreign currency have been valued at their amount in such currency at the period-end or year-end closing date, converted to the buyer and seller exchange rate, respectively, prevailing at the period-end or year-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) Biological Assets (Under development): Breeding and Cattle: have been measured at replacement cost of goods and services needed to obtain similar assets, which does not exceed the net realization value as of each period-end.

Include:

 

   

Unharvested crops

 

   

Calves

 

33


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2: (Continued)

 

  2) Biological Assets (In production): Cattle: Have been measured at the direct replacement cost of a similar asset, acquired to third parties in the markets in which the Company regularly operates, and do not exceed the net realization value as of each period-end or year-end.

Include:

 

   

Dairy cattle

 

   

Breeding cows

 

  3) Biological Assets (Finished): Cattle: have been measured at their net realization value represented by the respective quotations as of each period-end or year-end in the markets in which the Company regularly operates, net of additional costs generated by marketing.

Include:

 

   

Steers and heifers

 

   

Cattle round-up, mares and sheep

 

  4) Farming Products: Crops: have been measured at net realization value, representing the different quotations as of each period-end in the markets in which the Company regularly operates, net of additional costs generated by marketing.

Include

 

   

Harvested crops

 

  5) Non-biological Assets – Raw material: Seeds and various goods: have been measured at reproduction or replacement cost as of each period-end or year-end, which does not exceed the net realization value.

Include:

 

   

Seeds

 

   

Agrochemicals

 

   

Semen – Cattle raising and dairy

 

   

Food and by-products

 

   

Packs and bundles

 

   

Poles

 

   

Bags and blankets

 

   

Silos raw materials

Profits arising from production have been determined according to the quantitative and qualitative changes of stock subject to the biologic transformation measured as from the beginning of the year to the closing of these financial statements.

Cattle holding results have been calculated as the price difference of the steer kilogram between stock at beginning and closing of these financial statements.

Production cost of cattle calculated to show production profits and losses are shown in Schedule F.2.

 

34


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2: (Continued)

 

Adjustment for valuation of net realization value (V.N.R.) of crops has been calculated as the difference between the production valued at net realization value at the time of harvesting and the value of the same production valued at net realization value as of closing of these financial statements.

The production cost of crop calculated to show production results are shown in Schedule F.2.

Dairy cattle and other purposes not related with direct marketing in the next 12 months were valued at replacement value.

 

  6) 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 these financial statements.

 

  k. Long term investments in other companies

 

  1. Investments in subsidiaries and affiliates

The investments in subsidiaries and affiliates in which the Company has significant influence have been accounted for under the equity method, as required by Technical Resolution No. 21 of the F.A.C.P.C.E. approved by C.N.V.

Interests in subsidiaries and affiliates as of March 31, 2007 are as follows:

 

Subsidiaries and affiliates

   % Equity interest

Inversiones Ganaderas S.A.

   99.99

Agropecuaria Cervera S.A.

   90.00

Futuros y Opciones.Com S.A.

   70.00

Cactus Argentina S.A. (Note 12.c)

   24.00

Agro Uranga S.A.

   35.72

IRSA Inversiones y Representaciones S.A.

   25.64

BrasilAgro Companhia Brasileira de Propiedades Agrícolas (Note 12.b)

   7.40

The Company presents as complementary information the consolidated financial statements as of March 31, 2007 and 2006 with Inversiones Ganaderas S.A., Agropecuaria Cervera S.A. and Futuros y Opciones.Com S.A.

During the thrid quarter the interest in Cactus Argentina S.A. has been reduced from 50% to 24%, due to the inclusion of a new shareholder (please see Note 12.c). Consequently, for the results as of December 12, 2006 and for the comparative information, proportional consolidation of 50% is included.

 

35


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2: (Continued)

 

  2. Goodwill

The negative goodwill corresponding to the investment in Inversiones y Representaciones S.A. (IRSA) had been valued at cost restated as of February 28, 2003, and calculated as a difference between the market value of such investment and its equity value at the time of changing the March 2002-valuation method, and in each one of the purchases restated, if any, at that same date (Note 1.c).

Amortization is calculated in accordance with the estimated useful life, which is 20 years and has been classified under Gain from controlled companies and related companies in the statement of income.

Current valuations and economic conditions tend to make less risky any permanent investment opportunity and also help increasing the possibility to obtain significant long-term profits through IRSA shares.

 

  3. Other Investments

 

  - Investments in debt securities

IRSA’s Convertible Notes were valued taking into account the face value at period-end or year-end in Dollars, at the sellers’ exchange rate plus interest accrued as of the date of these financial statements.

 

  - Other investments

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

 

  l. Fixed assets

 

  - Purchase value

Valued at cost restated 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 month of the fiscal year of addition.

 

  - Net carrying value

The net carrying value of fixed assets does not exceed their recoverable value at the end of the period or fiscal year.

 

36


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2: (Continued)

 

  m. Intangible assets

The amortizations of the right of concession of ACER will be calculated according to the duration of the project (please see Note 12.a), which is 35 year term with an option of 29 additional years. The project´s right of concession will be amortized as from its starting.

 

  n. Shareholders’ equity

Initial balances have been restated in accordance with the criteria set forth in Note 1.c. Movements for the period and/or year are recorded at their historical values.

 

  o. Paid-in capital – Related Companies Law No. 19,550 Section 33

Increases or decreases of the equity value of investments in IRSA Inversiones y Representaciones S.A. and Cactus Argentina S.A. generated on the basis of changes in their shareholders´ equity, arising from transactions of shareholders different from the Company and its subsidiaries, were included in this caption as established in Technical Resolution 17 of the F.A.C.P.C.E. and Resolution CD 243/01 of the C.P.C.E.C.A.B.A.

 

  p. Transitory Conversion Differences – Current translation adjustment

These transitory differences result from the exchange differences shown in the conversion of the financial statements of BrasilAgro from Brazilian Reais to Argentine Pesos.

 

  q. Results for the period

Charges for assets consumed are calculated considering the values of the assets.

Inventory holding gains or losses are disclosed in one line in the Income Statement and in Schedule F and are calculated as explained in note 2.j.5.

Cost of sales is calculated by inventory difference and the results of cattle, crops and milk productions are disclosed in the Income Statement.

The remaining results for the period represent incurred costs.

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

 

  r. Income tax

The Company has recognized the income tax 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 beef cattle and the sale and replacement of fixed assets.

 

37


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2: (Continued)

 

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.

The company determines the tax on minimum presumed income applying the prevailing rate of 1% on computable assets at fiscal year-end. This tax is supplementary to the income tax. The Company’s tax liability for each fiscal year will be the higher of these two taxes.

 

  s. Tax on minimum presumed income

However, if the tax on minimum presumed 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 10 (ten) fiscal years.

 

  t. Revenue recognition

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

 

38


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 3: COMMON AND TREASURY STOCK

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

 

    

Authorized

Pesos

  

Subscribed

Pesos

  

Paid in

Pesos

Common and treasury stock at June 30, 2003

   124,098,095    124,098,095    124,098,095

Incentive Plan (Note 12) - Fiscal Year 2004

   332,437    332,437    332,437

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

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

Exercise of Warrants (Note 13) - Fiscal Year 2004

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

Incentive Plan (Note 12) - Fiscal Year 2005

   240,000    240,000    240,000

Conversion of notes in common stock (Note 13) - Fiscal Year 2005

   5,918,871    5,918,871    5,918,871

Exercise of Warrants (Note 13) - Fiscal Year 2005

   6,092,889    6,092,889    6,092,889

Conversion of notes in common stock (Note 13) - Fiscal Year 2006-

   29,151,389    29,151,389    29,151,389

Exercise of Warrants (Note 13) - Fiscal Year 2006

   28,668,581    28,668,581    28,668,581

Conversion of notes in common stock (Note 13) - Fiscal Year 2007-

   43,829,353    43,829,353    43,829,353

Exercise of Warrants (Note 13) - Fiscal Year 2007

   44,093,332    44,093,332    44,093,332
              

Common and treasury stock at March 31, 2007

   308,527,234    308,527,234    308,527,234
              

As of March 31, 2007, the capital authorized to be publicly offered is formed of 308,527,234 common, book-entry shares of Ps.1 par value each and entitled to one vote per share, all of which were outstanding.

 

39


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 4: DERIVATIVE FINANCIAL INSTRUMENTS

At March 31, 2007 the Company had arranged futures and options on the Futures Market as follows:

 

Cereal

   Tons    Margins
Pesos
   Premium paid
or (collected)
Pesos
    Premium at fair
value Pesos
    Gain (loss) for
valuation at fair
value Pesos
       
Futures               
Purchase               

Corn

   4,445           (2,677 )  

Soybean

   13,600           (619,300 )  

US$

             732,528     (a )

Sell

              

Corn

   20,700    443,394        (951,660 )  

Soybean

   29,420    817,020        (1,177,436 )  

Wheat

   500    10,710        (5,539 )  

US$

             (27,126 )   (b )
Options               

Purchase Call

              

Corn

   29,210       1,110,780     359,722     (751,058 )  

Wheat

   12,700       137,700     139,605     1,905    

Sell Call

              

Corn

   35,560       (491,513 )   (195,638 )   295,875    

Soybean

   24,800    18,482    (614,142 )   (750,598 )   (136,456 )  

Wheat

   17,680       (411,570 )   (232,429 )   179,141    

Purchase Put

              

Corn

   12,700       99,450     305,984     206,534    

Soybean

   6,800       336,600     318,252     (18,348 )  

Wheat

   4,080       169,830     216,755     46,925    

Sell Put

              

Corn

   29,210       (382,118 )   (875,114 )   (492,996 )  

Soybean

   23,100       (324,819 )   (360,174 )   (35,355 )  

Wheat

   17,680       (273,870 )   (724,429 )   (450,559 )  
                              

Total

   282,185    1,289,606    (643,672 )   (1,798,064 )   (3,205,602 )  
                              

(a) Corresponds to a future of sell of 10,513,683 Dollars composed of: (I) US$ 5,108,210 and US$ 3,405,473 with Bank Río de la Plata due on 06/01/2007 and 06/05/2007 respectively; and (II) US$ 2,000,000 with Bank MBA due on 05/31/2007. The gains generated as of March 31, 2007 are shown within financial results of the income statement.
(b) Corresponds to a future of purchase of 4,000,000 Dollars composed of: (I) US$ 1,000,000 with Bank Río de la Plata due on 05/31/2007; (II) US$ 2,000,000 with Bank Boston due on 05/31/2007; and (III) US$ 1,000,000 with Bank MBA due on 05/31/2007. The losses generated as of March 31, 2007 are shown within financial results of the income statement.

 

40


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 4: (Continued)

 

Crops: As of march 31, 2007 and 2006 the Company recognized a loss of Ps. 1,776,102 and gains of Ps. 438,424, respectively, to reflect the closing of the transactions carried out during those periods. These results are disclosed under the cost of sales of crops in a line of Schedule F.

At March 31, 2006 the Company had arranged futures and options on the Futures Market as follows:

 

Cereal

   Tons    Margins
Pesos
    Premium
paid or
(collected)
Pesos
    Premium
at fair
value
Pesos
    Gain (loss) for
valuation at
fair value
Pesos
 

Future

           

Purchase

           

Corn

   14,700    34,070         298,518  

Sell

           

Corn

   2,924    25,553         (24,776 )

Soybean

   6,600    200,772         12,016  

Wheat

   1,700    36,200         2,434  

US$

            5,554 (a)

Options

           

Purchase Cell

           

Corn

   6,350      106,470     65,590     (40,880 )

Soybean

   2,040      9,240     6,271     (2,969 )

Wheat

   6,800      153,621     98,809     (54,812 )

Sell Call

           

Corn

   11,430      (97,724 )   (130,609 )   (32,885 )

Soybean

   16,120    26,316     (393,361 )   (188,243 )   205,118  

Wheat

   6,800      (86,697 )   (49,405 )   37,292  

Purchase Put

           

Corn

   17,780      102,287     51,711     (50,576 )

Soybean

   25,980    (2,087 )   818,024     635,145     (182,879 )

Sell Put

           

Corn

   6,350      (17,111 )   (3,802 )   13,309  

Wheat

   6,800      (94,302 )   (106,410 )   (12,108 )
                             

Total

   132,374    320,824     500,447     379,057     172,356  
                             

(a) It means US$ 5,048,886 and the gain generate as of March 31, 2006 was included in finatial result.

 

41


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 5: MANAGEMENT AGREEMENT

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

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

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

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

The financial statements as of March 31, 2007 and 2006 include a charge in the Statement of Income of Ps. 4,079,574 and Ps. 2,600,512 and an accrual of Ps. 4,079,574 and Ps. 2,600,512 respectively.

 

NOTE 6: INCOME TAX – DEFERRED TAX

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

 

  - Deferred assets as of March 31, 2007:

 

     Cumulative tax
loss
carryforwards
    Other     TOTAL

Initial Balance

   1,893,068     145,436     2,038,504

Gain (Loss) Recognized

   1,268,143 (1)   (108,141 )   1,160,002

Closing Balance

   3,161,211     37,295     3,198,506

(1) The tax losses carryforward is conformed by Ps. 1,280,342 for the current year and an adjustment of the previous year for differences between accrual and tax return for (Ps. 12,199).

 

  - Deferred liabilities as of March 31, 2007:

 

     Fixed Assets     Inventories     Investments     Accruals     TOTAL  

Initial Balance

   (27,120,281 )   (16,237,592 )   —       (554,754 )   (43,912,627 )

Gain (Loss) Recognized

   54,228     (2,004,031 )   (32 )   481,624     (1,468,211 )

Closing Balance

   (27,066,053 )   (18,241,623 )   (32 )   (73,130 )   (45,380,838 )

As of March 31, 2007, net liabilities at period-end as per the information included in the preceding tables amount to Ps. 42,182,332.

 

42


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 6: (Continued)

 

As mentioned in Note 1.b the Company has decided not to recognize the deferred liabilities generated by the inflation adjustment on fixed assets and other non-monetary assets, which as of closing of the current period is Ps. 16,225,788. It is estimated that this liability will end up according to the detail that follows:

 

Term

   TOTAL

1 year

   152,162

2 years

   106,540

3 years

   99,344

over 3 years

   1,530,589

no term

   14,337,153

Total

   16,225,788

Below there is a conciliation between the income tax recognized and that which would result from applying the prevailing tax rate on the Net Income for accounting purposes:

 

Description

   March 31, 2007     March 31, 2006  

Net Income before income tax

   37,241,932     41,758,555  

Tax rate

   35 %   35 %

Net income at tax rates:

   13,034,676     14,615,494  

Permanent differences at tax rate:

    

Restatement into constant currency

   188,100     1,583,160  

Conversion of Notes in common stock

     5,419,175  

Donations

   2,404     7,827  

Loss from controlled and related companies

   (13,869,416 )   (3,626,218 )

Personal asset tax

   940,170     467,200  

Miscellaneous permanent differences

   229,831     (85,110 )

Income tax

   525,765     18,381,528  

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. 3,161,211 and may be offset against taxable income of future periods, as follows:

 

Origination year

   Amount    Expiration Year

2003

   1,718,015    2008

2005

   162,854    2010

2007

   1,280,342    2012

 

43


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 6: (Continued)

 

 

  - Deferred assets as of March 31, 2006:

 

     Cumulative
tax loss
carryforwards
    Others     TOTAL  

Initial Balance

   2,367,216     494,355     2,861,571  

Gain (Loss) Recognized

   (364,410 )   (454,795 )   (819,205 )

Closing Balance

   2,002,806     39,560     2,042,366  

 

  - Deferred liabilities as of March 31, 2006:

 

     Fixed Assets     Inventories     Investments     Accruals     Others    TOTAL  

Initial Balance

   (22,615,009 )   (14,240,940 )   (2,730,064 )   (1,271,064 )   9,282    (40,847,795 )

Gain (Loss) Recognized

   (4,575,451 )   (517,132 )   (5,419,220 )   (283,566 )   —      (10,795,368 )

Closing Balance

   (27,190,460 )   (14,758,072 )   (8,149,284 )   (1,554,630 )   9,282    (51,643,163 )

 

44


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 7: BALANCES AND RESULTS WITH SUBSIDIARIES, RELATED COMPANIES LAW No. 19,550 SECTION 33 AND RELATED PARTIES:

a. Balances at March 31, 2007 and 2006 and June 30, 2006 with Subsidiaries, related companies and related parties:

 

    

March 31,
2007

Pesos

  

June 30,
2006

Pesos

  

March 31,
2006

Pesos

IRSA Inversiones y Representaciones S.A.(3)

        

Current Investments

        

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

   1,124,267    386,779    999,287

-Convertible Notes 2007-IRSA (US$)

   37,199,999    —      —  

Non-Current Investments

        

-Convertible Notes 2007-IRSA (US$)

   —      37,031,999    99,928,688

Current other receivables

   82,419    —      1,331

Non-Current other receivables

   65,935    150,353    176,656

Current Trade accounts payable

   284,083    34,127    —  

Inversiones Ganaderas S.A.(1)

        

Current Trade accounts receivable

   —      38,990    —  

Non-Current other receivables

   1,404,360    1,290,553    1,257,743

Current trade accounts payable

   45,809    —      147,642

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

        

Current Trade accounts receivable

   259,665    1,141,179    757,729

Current Other receivables

   23,603    23,603    23,603

Cactus Argentina S.A.(3)

        

Current Trade accounts receivable

      —      38,921

Current Other receivables

   4,159,990    383,303    370,781

Non-Current other receivables

   6,532    16,706    19,628

Current Trade accounts payable

   92,425    962,706    415,222

Agro-Uranga S.A.(3)

        

Current Other receivables

   601,684    39,993    160,609

Fundación IRSA (4)

        

Current Trade accounts payable

   2,200,000    2,200,000    1,900,000

Inversora Bolívar (4)

        

Current Trade accounts payable

   25,776    42,092    105,180

Alto Palermo S.A.(4)

        

Non-Current other receivables

   284,147    584,704    686,996

Current Trade accounts payable

   634,946    35,620    60,409

Alto City.Com S.A.(4)

        

Current Trade accounts receivable

   154    —      —  

Current Trade accounts payable

   —      298    900

Brasil Agro-Compahía Brasileira de Propiedades Agricolas(4)

        

Current other receivables

   30,537    559,088    —  

Agropecuaria Cervera S.A.(4)

        

Current trade accounts receivable

   7,956    —      —  

Current other receivables

   —      5,512    14,398

Non-Current other receivables

   12,093,299    2,501,462    364,917

Consultores Asset Management S.A.(4)

        

Management Fees

   4,079,574    3,073,949    2,600,512

Credits to employees (4)

        

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

   107,714    83,385    71,942

Estudio Zang, Bergel & Viñes (4)

        

Current Trade accounts payable

   205,909    45,262    163,592

(1) Controlled company
(3) Related company
(4) Related party

 

45


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 7: BALANCES AND RESULTS WITH SUBSIDIARIES, RELATED COMPANIES LAW No. 19,550 SECTION 33 AND RELATED PARTIES (Continued):

 

a. Balances as of March 31, 2007 and 2006 and June 30, 2006 with Subsidiaries, related companies and related parties (Continued):

 

    

March 31,

2007

Pesos

  

June 30,

2006

Pesos

  

March 31,

2006

Pesos

Directors (4)

        

Current Loans

        

Convertible Notes 2007 (Schedule G) Directors

   104,160    —      —  

Convertible Notes 2007 Interest payable (Schedule G) Directors

   3,148    1,083    3,130

Non-Current Loans

        

Convertible Notes 2007 (Schedule G) Directors

   —      103,690    103,555

Other current debts

   59,757    46,800    32,400

Shareholders (2)

        

Current Loans

        

Convertible Notes 2007 Interest payable (Schedule G) Shareholders

   —      482,985    1,715,992

Non-Current Loans

        

Convertible Notes 2007 (Schedule G) Shareholders

   —      46,243,210    56,776,844

(2) Shareholder
(4) Related party

 

46


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 7: BALANCES AND RESULTS WITH SUBSIDIARIES, RELATED COMPANIES LAW No. 19,550 SECTION 33 AND RELATED PARTIES (Continued):

 

b. Gain and losses provided by Subsidiaries, related companies and related parties corresponding to the periods ended at March 31, 2007 and 2006,

 

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

   Year    Sales and Fees for
shared services
    Interest paid     Salaries     Fees     Livestock
expenses
    Interest income     Administrative
services
   Others  

Shareholders

   2007    —       (1,724,804 )   —       —       —       —       —      —    
   2006    —       (3,375,552 )   —       —       —       —       —      —    

Agro-Uranga S.A.

   2007    —       —       —       —       —       —       —     
   2006    —       —       —       —       —       —       —      28,001  

Alto Palermo S.A.

   2007    (1,305,291 )   —       —       —       —       —       —      —    
   2006    (464,856 )   —       —       —       —       —       —      —    

Alto City S.A.

   2007    5,987     —       —       —       —       —       —      —    
   2006    —       —       —       —       —       —       —      —    

Cactus Argentina S.A.

   2007    —       —       —       —       (2,148,065 )   15,730     119,600    (45,553 )
   2006    —       —       —       —       (2,048,973 )   22,134     100,640    6,659  

Directors

   2007    —       (27,788 )   (294,278 )   (289,897 )   —       —       —      —    
   2006    —       (6,157 )   (2,458,174 )   (185,724 )   —       —       —      —    

Estudio Zang, Bergel & Viñes

   2007    —       —       —       (205,909 )   —       —       —      —    
   2006    —       —       —       (201,212 )   —       —       —      —    

Futuros y opciones.Com S.A.

   2007    —       —       —       —       —       —       123,300    (21,223 )
   2006    —       —       —       —       —       —       123,300    (75,048 )

Inversiones Ganaderas S.A.

   2007    —       —       —       —       —       100,025     6,634    (883,049 )
   2006    —       (121,134 )   —       —       —       28,549     52,497    (119,194 )

Agropecuaria Cervera S.A.

   2007    —       —       —       —       —       561,837     —      6,845  
   2006    —       —       —       —       —       —       —      —    

Inversora Bolívar S.A.

   2007    —       —       —       —       —       —       —      (101,623 )
   2006    —       —       —       —       —       —       —      (79,569 )

IRSA Inversiones y Representaciones S.A.

   2007    (230,829 )   —       —       —       —       2,219,032     —      —    
   2006    (18,640 )   —       —       —       —       6,239,486     —      —    

Credits to employees

   2007    —       —       —       —       —       (5,786 )   —      —    
   2006    —       —       —       —       —       3,038     —      —    
                                                  

Total 2007

      (1,530,133 )   (1,752,592 )   (294,278 )   (495,806 )   (2,148.065 )   2,890,838     249,534    (1,044,963 )
                                                  

Total 2006

      (483,496 )   (3,502,843 )   (2,458,174 )   (386,936 )   (2,048,973 )   6,293,207     276,437    (239,151 )
                                                  

 

47


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 8: Details of balance sheet and income statement accounts

 

  a. Cash and banks

 

    

March 31,
2007

Pesos

  

June 30,

2006

Pesos

  

March 31,
2006

Pesos

Cash

   77,859    39,334    50,806

Foreign currency (Schedule G)

   5,465    91,649    88,912

Local currency checking account

   3,871,787    482,584    439,391

Foreign currency checking account (Schedule G)

   76,789,252    23,728,848    8,182,807

Local currency saving account

   75,869    106,504    28,197

Foreign currency saving account (Schedule G)

   7,886    6,367    6,357

Checks to be deposited

   34,913    145,277    304,826
              
   80,863,031    24,600,563    9,101,296
              

 

  b. Investments and Goodwill

 

    

March 31,
2007

Pesos

   

June 30,

2006

Pesos

   

March 31,
2006

Pesos

 

Investment

      

Investment (Schedule C and G)

   42,552,768     4,899,005     7,152,314  
                  
   42,552,768     4,889,005     7,152,314  
                  

Investment

      

Investment on controlled and related companies (Notes 12 and 15 and Schedule C)

   521,515,229     489,669,438     341,441,146  
                  
   521,515,229     489,669,438     341,441,146  
                  

Other investments

      

Other investments (Schedules C and G)

   20,717     37,052,716     86,946,920  
                  
   20,717     37,052,716     86,946,920  
                  

Goodwill

      

Goodwill (Schedule C)

   (70,189,477 )   (76,825,838 )   (18,694,399 )
                  
   (70,189,477 )   (76,825,838 )   (18,694,399 )
                  

 

48


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  c. Trade accounts receivable

 

    

March 31,
2007

Pesos

   

June 30,

2006

Pesos

   

March 31,

2006

Pesos

 

Current

      

Accounts receivable in local currency

   4,003,451     7,641,236     5,870,446  

Less:

      

Allowance for doubtful accounts (Schedule E)

   (372,359 )   (374,830 )   (356,214 )

Accounts receivable in foreign currency (Schedule G)

   1,808,885     3,170     161,861  

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

      

Inversiones Ganaderas S.A.

   —       38,990     —    

Futuros y Opciones.Com S.A.

   259,665     1,141,179     757,729  

Cactus Argentina S.A.

   —       —       38,921  

Agropecuaria Cervera S.A.

   7,956     —       —    

Alto cIty.Com S.A.

   154     —       —    
                  
   5,707,752     8,449,745     6,472,743  
                  

 

  d. Other receivables

 

    

March 31,
2007

Pesos

  

June 30,

2006

Pesos

  

March 31,
2006

Pesos

Current

        

Prepaid leases

   718,365    8,836,242    125,465

Income tax credit and advances (net of accrual for income tax)

   3,965,415    3,880,156    7,425,960

Guarantee deposits and premiums (Schedule G)

   3,142,675    1,434,978    1,557,857

Secured by mortgage (Schedule G)

   3,081,097    3,497,490    3,141,226

Prepaid expenses

   116,095    298,282    649,087

Tax prepayments (net of accruals)

   2,471,191    2,023,789    2,951,166

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

        

Cactus Argentina S.A. (Schedule G)

   4,159,990    383,303    370,781

Futuros y Opciones.Com S.A.

   23,603    23,603    23,603

Agropecuaria Cervera S.A.

   —      5,512    14,398

IRSA Inversiones y Representaciones S.A. (Schedule G)

   82,419    —      1,331

Agro-Uranga S.A.

   601,684    39,993    160,609

BrasilAgro Companhia Brasileira de Propiedades Agrícolas

   30,537    559,088    —  

Credits to employees

   107,714    83,385    71,942

Directors

   —         10,940

Others (Schedule G)

   880,297    199,857    297,991
              
   19,381,082    21,265,678    16,802,356
              

Non-current

        

Secured by mortgage (Schedule G)

   5,690,057    8,265,284    8,254,430

Income tax prepayments, VAT and others

   30,344,349    24,351,881    5,672,316

Tax on minimum presumed income

   5,847,627    2,316,812    —  

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

        

Inversiones Ganaderas S.A.

   1,404,360    1,290,553    1,257,743

Cactus Argentina S.A.

   6,532    16,706    19,628

Agropecuaria Cervera S.A

   12,093,299    2,501,462    364,917

Alto Palermo S.A. (Schedule G)

   284,147    584,704    686,996

IRSA Inversiones y representaciones S.A (Schedule G)

   65,935    150,353    176,656

Prepaid leases

   179    13,924    —  

Others (Schedule G)

   36,126    83,529    98,142
              
   55,772,611    39,575,208    16,530,828
              

 

49


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 8: (Continued)

 

  e. Inventories

 

    

March 31,
2007

Pesos

  

June 30,

2006

Pesos

  

March 31,
2006

Pesos

Current         
Livestock    13,545,481    9,505,196    12,445,288
Crops    23,777,230    10,550,495    14,800,090
Unharvested crops    27,822,308    1,662,592    18,025,519
Seeds and fodder    2,955,201    770,647    294,515
Materials and others    5,987,967    4,389,704    3,074,943
Advances to suppliers    65,981    348,647    623,214
              
   74,154,168    27,227,281    49,263,569
              
Non-Current         
Livestock    63,866,830    59,330,235    57,206,925
              
   63,866,830    59,330,235    57,206,925
              

 

  f. Trade accounts payable

 

    

March 31,
2007

Pesos

  

June 30,

2006

Pesos

   

March 31,
2006

Pesos

 
Current        
Suppliers in local currency    1,531,486    4,767,504     3,972,974  

Suppliers in foreign currency (Schedule G

Note 11) (1)

   13,236,620    10,913,582     9,777,918  
Interest to be accrued (2) (Schedule G)    —      (112,863 )   (272,250 )
Subsidiaries, related companies Law No. 19,550 Section 33 and related parties:        

Inversora Bolívar S.A.

   25,776    42,092     105,180  

Alto Palermo S.A.

   634,946    35,620     60,409  

Inversiones Ganaderas S.A.

   45,809    —       147,642  

Alto City.Com S.A.

   —      298     900  

IRSA Inversiones y Representaciones S.A.

   284,083    34,127     —    

Cactus Argentina S.A.

   92,425    962,706     415,222  

Estudio Zang, Bergel & Viñes

   205,909    45,262     163,592  

Fundación IRSA

   2,200,000    2,200,000     1,900,000  
Accrual for other expenses (Schedule G)    9,580,066    4,993,069     4,363,952  
Accrual for cereal expenses    3,251,818    45,727     652,780  
                 
   31,088,938    23,927,124     21,288,319  
                 
Non-Current        
Accrual for other expenses (Schedule G)    392,740    835,292     981,422  
                 
   392,740    835,292     981,422  
                 

(1) Includes as of March 31, 2007 US$ 1,449,726 for the acquisition of farm “San Pedro”, corresponding to suppliers in foreign currency secured by mortgage. See note 11.
(2) Corresponds to the liability mentioned in (1).

 

50


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 8: (Continued)

 

  g. Loans

 

Current    March 31,
2007
Pesos
    June 30,
2006
Pesos
    March 31,
2006
Pesos
 
      

Local financial loans (Note 17)

   102,092,963     65,605,326     34,014,572  

Convertible Notes 2007 (Schedule G)

   9,406,364     —       —    

Convertible Notes 2007 -Subsidiaries, related companies Law No. 19,550 Section 33 and related parties:

      

Directors

   104,160     —       —    

Convertible Notes 2007 expenses

   (23,215 )   —       —    

Convertible Notes 2007 Interest payable (Schedule G)

   284,281     332,179     1,602,388  

Convertible Notes 2007 Interest payable - Subsidiaries, related companies Law No. 19,550 Section 33 and related parties:

      

Shareholders

   —       482,985     1,715,992  

Directors

   3,148     1,083     3,130  
                  
   111,867,701     66,421,573     37,336,082  
                  

Non-Current

      

Foreign Financial Loans (Notes 17 and 19 and Schedule G)

   24,800,000     20,367,600     —    

Convertible Notes 2007 (Schedule G)

   —       31,804,384     53,022,519  

Convertible Notes 2007 - Subsidiaries, related companies Law No. 19,550 Section 33 and related parties:

      

Shareholders

   —       46,243,210     56,776,844  

Directors

   —       103,690     103,555  

Convertible Notes 2007 expenses

   —       (421,929 )   (701,821 )
                  
   24,800,000     98,096,955     109,201,097  
                  

 

  h. Salaries and social security payable

 

Current    March 31,
2007
Pesos
   June 30,
2006
Pesos
   March 31,
2006
Pesos
        

Accrual for vacation and statutory annual bonus

   2,450,587    1,653,322    912,933

Social security taxes payable

   —      210,397    115,335

Salaries payable

   —      36,479    13,205

Health care payable

   15,346    20,371    11,777

Others

   308    10,048    5,485
              
   2,466,241    1,930,617    1,058,735
              

 

51


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 8: (Continued)

 

  i. Taxes payable

 

     March 31,
2007
Pesos
   June 30,
2006
Pesos
   March 31,
2006
Pesos

Current

        

Accrual for income tax

   —      15,346    —  

Tax on minimum presumed income (Note 2.s.)

   3,904,810    2,316,812    —  

Property tax payable

   176,230    228,778    213,307

Taxes withheld for income tax

   108,637    109,980    23,485

Gross sale tax payable

   47    18,218    74,957

Taxes withheld-value added tax

   10,808    231,654    12,710

Others (1)

   2,703,729    588    1,335,539
              
   6,904,261    2,921,376    1,659,998
              

Non-Current

        

Deferred tax

   42,182,332    41,874,123    49,600,797
              
   42,182,332    41,874,123    49,600,797
              

(1) Includes shareholders personal assets tax.

 

  j. Other debts

 

     March 31,
2007
Pesos
   June 30,
2006
Pesos
   March 31,
2006
Pesos

Current

        

Management fees agreement accrual (Note 5)

   4,079,574    3,073,949    2,600,512

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

        

Directors

   59,757    46,800    32,400

Others

   —      163,907    20,300
              
   4,139,331    3,284,656    2,653,212
              

 

52


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 9:

 

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

 

Based on their estimated
collection term

   Current and non-current
investment
   Trade accounts receivable    Other receivables and
prepaid expenses
  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

3rd quarter 2006/2005 financial period

   —      —      —      —      —      —      —      —      —  

4th quarter 2006/2005 financial period

   —      —      2,604,146    —      —      6,472,743    —      —      5,482,770

1st quarter 2007/2006 financial period

   —      —      —      —      8,449,745    —      —      6,018,833    2,713,837

2nd quarter 2007/2006 financial period

   —      386,779    —      —      —      —      —      335,871    7,522,095

3th quarter 2007/2006 financial period

   —      —      —      —      —      —      —      4,643,977    427,389

4th quarter 2007/2006 financial period

   1,124,267    —      —      5,707,752    —      —      9,568,132    335,871    2,944

1st quarter 2008/2007 financial period

   —      —      —      —      —      —      2,987,027    2,173,309    2,173,398

2nd quarter 2008/2007 financial period

   37,199,999    37,031,999    86,166,588    —      —      —      335,847    —      2,944

3th quarter 2008/2007 financial period

   —      —      —      —      —      —      765,764    427,951    430,333

4th quarter 2008/2007 financial period

   —      —      —      —      —      —      —      —      2,944

1st quarter 2009/2008 financial period

   —      —      —      —      —      —      2,183,297    2,173,309    2,173,399

2nd quarter 2009/2008 financial period

   —      —      —      —      —      —      —      —      1,964

1st quarter 2010/2009 financial period

   —      —      —      —      —      —      1,753,380    1,745,358    1,743,066

1st quarter 2011/2010 financial period

   —      —      —      —      —      —      1,753,380    1,745,357    1,743,066

Overdue

   —      —      —      —      —      —      —      —      —  

With no stated current term

   4,228,502    4,512,226    4,548,168    —      —      —      5,724,312    9,931,126    656,265

With no stated non-current term

   20,717    20,717    780,332    —      —      —      50,082,554    31,309,924    8,256,770
                                            

Total

   42,573,485    41,951,721    94,099,234    5,707,752    8,449,745    6,472,743    75,153,693    60,840,866    33,333,184
                                            

 

b) Assets classified according to their interest rate (in Pesos)

 

Interest rate that
they accrue

   Current and non-current
investment
   Trade accounts receivable    Other receivables and
prepaid expenses
  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

  

March 31,

2007

  

June 30,

2006

  

March 31,

2006

At fixed interest rate

   37,199,999    37,031,999    86,166,588    —      —      —      8,606,937    11,237,071    11,213,240

At variable interest rate

   4,228,502    4,512,226    4,548,168    —      —      —      13,260,066    4,270,361    2,449,378

Non-interest bearing

   1,144,984    407,496    3,384,478    5,707,752    8,449,745    6,472,743    53,286,690    45,333,454    19,670,566
                                            

Total

   42,573,485    41,951,721    94,099,234    5,707,752    8,449,745    6,472,743    75,153,693    60,840,886    33,333,184
                                            

 

53


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 9: (Continued)

 

Liabilities based on their estimated payment term:

 

Based on their
estimated
payment term

  Trade accounts payable   Loans   Salaries and social security
payable
  Taxes payable   Other debts   Provisions
  March 31,
2007
  June 30,
2006
  March 31,
2006
  March 31,
2006
  June 30,
2006
  March 31
2006
  March
31, 2007
  June 30,
2006
  March
31, 2006
  March 31,
2007
  June 30,
2006
  March 31,
2006
  March
31, 2007
  June 30,
2006
  March
31, 2006
  March 31,
2007
  June 30,
2006
  March 31,
2006

4th quarter

2006/2005

  —     —     14,010,819   —     —     3,321,510   —     —     295,633   —     —     1,659,998   —     —     2,653,212   —     —     —  

1st quarter

2007/2006

  —     23,927,124   7,277,500   —     13,935,806   13,398,902   —     1,699,565   588,578   —     589,218   —     —     112,870   —     —     —     —  

2nd quarter

2007/2006

  —     —     —     —     816,247   —     —     231,052   —     —     2,332,158   —     —     97,837   —     —     —     —  

3th quarter

2007/2006

  —     —     —     —     —     —     —     —     174,524   —       —     —     —     —     —     —     —  

4th quarter

2007/2006

  31,088,938   —     —     645,148   —     —     218,435   —     —     6,904,261   —     —     4,139,331   3,073,949   —     —     —     —  

1st quarter

2008/2007

  —     —     —     14,749,006   —     —     1,776,557   —     —       —     —     —       —     —     —     —  

2nd quarter

2008/2007

  —     —     —     —     77,729,355   109,201,097   471,249   —     —       —     —     —     —     —     —     —     —  

3nd quarter

2008/2007

  —     —     —     9,487,309   —     —       —     —       —     —     —     —     —     —     —     —  

2nd quarter

2009/2008

  —     —     —     24,800,000   20,367,600   —       —     —       —     —     —     —     —     —     —     —  

Overdue

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

With no stated

current term

  —     —     —     86,986,238   51,669,520   20,615,670     —     —       —     —     —     —     —     —     —     —  

With no stated

non-current term

  392,740   835,292   981,422   —     —         —     —     42,182,332   41,874,123   49,600,797   —     —     —     45,216   69,343   68,243
                                                                       

Total

  31,481,678   24,762,416   22,269,741   136,667,701   164,518,528   146,537,179   2,466,241   1,930,617   1,058,735   49,086,593   44,795,499   51,260,795   4,139,331   3,284,656   2,653,212   45,216   69,343   68,243
                                                                       

Liabilities classified according to their interest rate:

 

Interest in rate
that they accrue

  Trade accounts payable   Loans   Salaries and social security
payable
  Taxes payable   Other debts   Provisions
  March 31,
2007
  June 30,
2006
  March 31,
2006
  March 31,
2007
 

June 30,

2006

  March 31,
2006
  March
31, 2007
  June 30,
2006
  March
31, 2006
  March 31,
2007
  June 30,
2006
  March 31,
2006
  March
31, 2007
  June 30,
2006
  March
31, 2006
  March 31,
2007
  June 30,
2006
  March 31,
2006

At fixed

interest rate

  4,439,062   6,720,357   6,552,112   136,380,272   164,124,210   143,917,490   —     —     —     —     —     —     —     —     —     —     —     —  

At variable

interest rate

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

Non-interest

bearing

  27,042,616   18,042,059   15,717,629   287,429   394,318   2,619,689   2,466,241   1,930,617   1,058,735   49,086,593   44,795,499   51,260,795   4,139,331   3,284,656   2,653,212   45,216   69,343   68,243
                                                                       

Total

  31,481,678   24,762,416   22,269,741   136,667,701   164,518,528   146,537,179   2,466,241   1,930,617   1,058,735   49,086,593   44,795,499   51,260,795   4,139,331   3,284,656   2,653,212   45,216   69,343   68,243
                                                                       

 

54


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the 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 C.N.V., 5% of the net and realized profit for the year plus (less) prior year adjustments must be appropriated by resolution of shareholders to a legal reserve until such reserve equals 20% of the Company’s outstanding capital,

 

NOTE 11: PURCHASE AND SALE OF FARMS

 

  a) On July 25, 2005 the Company signed the deed of sale of the farm “El Gualicho” with a surface area of 5,727 hectares, located in the Department of General Roca and Presidente Roque Saenz Peña, Province of Córdoba, The agreed sale price was US$ 5,727,083. The sale generated a gain of Ps. 9,872,997.

 

  b) On September 1, 2005 the Company signed the deed for the purchase of the farm “San Pedro” of 6,022 hectares located in the Department of Uruguay, Province of Entre Ríos, The purchase price was US$ 16,000,000. This purchase generated a debt of US$ 6,500,000. On December 14, 2005 US$ 4,000,000 were paid and on September 1, 2006 US$ 720,000 were paid.

 

  c) On December 14, 2005 the Company cancelled the mortgage for the purchase of the farm “El Invierno”. The purchase price payment was US$ 1,500,000

 

  d) On March 30, 2007 the preliminary sales contract for 20,834 hectares of the Tapenagá establishment was entered into. The operation amounted to US$ 7.3 million. To the date of the preliminary sales contract US$ 1.0 million were collected and the outstanding amount will be financed. The possession of such establishment will become effective on May 29, 2007.

 

NOTE 12: INVESTMENTS IN COMPANIES

 

  a) Agropecuaria Cervera S.A.

On December 27, 2005, the Company and its subsidiary Inversiones Ganaderas S.A. have acquired the capacity of shareholders of Agropecuaria Cervera S.A. (ACER), by subscribing an agreement to exchange goods.

The shareholders transferred the ACER shares in the following proportions: a) in favor of Cresud thirty six thousand (36,000) common shares, registered, non-endorsable, class A, of Pesos one (Ps. 1) par value with right to five (5) votes each; and b) in favor of IGSA four thousand (4,000) common shares, registered, non-endorsable, class A, of Pesos one (Ps. 1) par value with right to five (5) votes each.

We would mention that ACER has, among other goods and rights, the concession of starting into production of an integral development project including biologic, economic and social issues on several buildings located in the Department of Anta, Province of Salta. The company has been duly authorized to carry out an outstanding crop farming, cattle and forestry project.

 

55


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 12: (Continued)

 

As considerations for the exchange referred to above, the actions that follow were effected:

 

   

Cresud transferred 3,580,886 Negotiable Obligations convertible into common shares, with 8% annual interest, maturing in year 2007, having options in a face value of one US dollar each, issued by IRSA Inversiones y Representaciones S.A.

 

   

The Company paid the amount of Pesos nine hundred and sixty two thousand five hundred and twenty three (Ps. 962,523) with consideration in the contribution made to the company in ACER. As part of the price, the Company paid US dollar Seven hundred thousand (US$ 700,000), staying such contribution in guarantee for future contingencies during a two-year term.

b) BrasilAgro – Companhia de Propiedades Agrícolas (BrasilAgro)

BrasilAgro was founded for the purpose of replicating Cresud´s Business in Brazil. The Company will be mainly involved in four business lines keeping its focus on agricultural real estate: (i) sugar cane, (ii) crops and cotton, (iii) forestry activities, and (iv) livestock.

The BrasilAgro founder partners are Cresud S.A.C.I.F. y A., Cape Town, Tarpon Investimentos, Tarpon Agro, Agro Managers and Agro Investment.

Cape Town is a company whose sole shareholder, Mr. Elie Horn, is the chairman of Cyrela Brazil Realty, one of the largest Brazilian real estate companies. Tarpon has large experience as manager of financial resources and specializes in variable income. Agro Managers and Agro Investment are investment means that people related to Cresud S.A.C.I.F. y A. utilize.

On March 15, 2006, BrasilAgro subscribed a consulting agreement with Parana Consultora de Investimentos. Parana will provide consulting services in matters related, among other, to the purchase and sale of land, transactions in capital markets, hedging policies and mergers and acquisitions. As consideration for its services, Parana will receive from BrasilAgro a yearly remuneration equivalent to 1% of the capital subscribed of BrasilAgro. Parana´s shareholders are Tarpon with a 50% interest, Consultores Asset Management with a 37.5% interest and Alejandro Elsztain with a 12.5% interest.

On March 24, 2006, Cresud S.A.C.I.F. y A. entered into a shareholders agreement with Mr. Elie Horn and with Tarpon, which established among other matters that both parties should have a joint vote at the Shareholders´ Meetings and that both parties have a preemptive right to acquire shares held by the other party.

The board of directors of BrasilAgro has nine members of which Cresud S.A.C.I.F. y A., in his capacity as founder of the company, has appointed three members, Tarpon and Cape Town other three and complementarily the Company has three independent directors. The BrasilAgro shares started to be listed in the Novo Market of the Brazilian Stock Exchange (BOVESPA) under the symbol AGRO3 on May 2, 2006 in compliance with Brazil highest standards in terms of corporate governance.

 

56


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 12: (Continued)

 

These shares were placed in conjunction with the Banco de Investimentos Credit Suisse (Brasil) S.A. in the Brazilian market by applying an investment mechanism ruled by the control authorities and with a sales effort abroad, all in compliance with the U.S. Securities Act of 1933 and other regulations established by the Securities and Exchange Commission. The amount initially offered amounted to 432 million Reais, equivalent to 432,000 common registered shares of 1,000 Reais per share of BrasilAgro.

In accordance with the practice of the Brazilian market, BrasilAgro had an option to increase the size of the issue by 20% and Credit Suisse Investment Bank had another option for increasing the issue by 15% (Green shoe). As the placement had demand in excess, both BrasilAgro and Credit Suisse exercised such option up to 583,200 shares equivalent to Reais 583.2 million, which were fully placed.

In addition to the funds originally contributed Cresud S.A.C.I.F. y A. made contributions during the offer for a total amount of Reais 42.4 million (approximately US$ 20.6 million). In line with such contribution Cresud S.A.C.I.F. y A. has a total of 42,705 shares equivalent to 7.3% of BrasilAgro capital.

On January 19 and 22, 2007 Cresud S.A.C.I.F. y A. acquired 400 and 100 shares of BrasilAgro, respectively. Due to these new acquisitions the holding of Cresud S.A.C.I.F. y A. amounts to 43,205 shares which is equivalent to 7.4% of the capital stock of BrasilAgro.

As a contribution for having founded the company, Cresud S.A.C.I.F. y A. received 104,902 purchase options to subscribe additional BrasilAgro shares for 15 years at no cost and at the same price of the original offer of shares that is Reais 1,000 adjusted by the IPCA inflation index. Should such option be exercised, Cresud S.A.C.I.F. y A. will be able to acquire 59,850 additional shares and its holding would then be 14.1% of BrasilAgro diluted capital stock. These options may be exercised as follows: a third part as from the first anniversary of the placement, another third as from the second year and the balance as from the third year.

In addition, Cresud received with no cost a second series of options totaling 104,902, which can only be exercised at the option of Cresud whenever a third party makes an offer to purchase the BrasilAgro shares. The exercise price of these options will be the same price as the purchase offer referred to in the previous paragraph. The second series of options matures in year 2021.

As of December 31, 2006, the Company has not registered any value for the holding of such options.

On March 7, 2007 BrasilAgro completed the acquisition of a rural property of 31,500 hectares located in the municipality of Jaborandi, State of Bahia.

c) Cactus Argentina S.A.

Inclusion of a new shareholder in Cactus Argentina S.A. (Cactus)

On January 10, 2007 Tyson Foods Inc. joined the capital stock of Cactus by subscribing the stock subscription agreement and the stockholders agreement.

 

57


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 12: (Continued)

 

Cactus issued 9,397,213 shares with a premium over par of Ps. 7,296,954 having Tyson subscribed 100% by paying Ps. 16,694,167. Consequently, the stock participations were modified as follows: Cactus Feeders Inc. 24%; Cresud SACIF y A 24% and Tyson Foods Inc. 52% (through Provemex Holdings LLC).

Accordingly, on March 31, 2007 Cresud registered a premium over par for such operation of Ps. 1,658,109.

In association with Tyson Foods Inc. and Cactus Feeders, Cactus has started an undertaking in Argentina that will be the country´s first fully integrated cattle project. Beef cuts for the Argentine consumer will be produced in said undertaking having access to the European and other international markets.

Cactus Argentina S.A. acquires the Exportaciones Agroindustriales Argentinas S.A. shareholding

On January 11, 2007 Cactus acquired 100% of the Exportaciones Agroindustriales Argentinas S.A. (EAASA) shareholding by subscribing a sales contract of shares in the amount of Ps. 16,839,993.

EAASA owns a meat packing plant in Santa Rosa, Province of La Pampa with capacity to slaughter and process approximately 9,500 cattle heads per month. The idea of Cactus is to expand in the future the slaughter capacity to 15,000 heads per month.

 

NOTE 13: 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”) during a 30-day period 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-month 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.

 

58


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 13: (Continued)

 

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

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

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

During the fiscal year ended on June 30, 2005, an aggregate of 240,000 shares of Ps. 1 per value each were issued to directors and executive officers of the Company under the preferred offering of treasury stock. As of that date, there was no pending exercise balance.

 

NOTE 14: ISSUANCE OF CONVERTIBLE NOTES

The Shareholders meeting held on March 8, 2002 approved:

 

  a) The issue of simple Convertible Notes, 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 Notes 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 Notes, with a premium determined by the management, between 20 and 30% over the conversion price of the Convertible Note, 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 Notes who have exercised their conversion rights.

Authorization for the public offer and quotation of Convertible Notes has been approved by Resolution No. 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 Notes 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:

 

59


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 14: (Continued)

 

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

 

  b) For each of Cresud’s Convertible Note 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 Notes and options will be due on November 14, 2007.

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

During the fiscal year ended on June 30, 2003, 196,084 Convertible Notes 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 Notes 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 period, 6,583,995 Warrants were exercised, resulting in the issuance of 12,965,710 ordinary shares for Ps. 23,068,638.

During the fiscal year ended on June 30, 2005, 3,005,609 Convertible Notes were converted into 5,918,871 ordinary shares, which resulted in an increase of the Company’s net shareholders’ equity of Ps. 8,857,011. In the same period, 3,093,975 warrants were exercised, resulting in the issuance of 6,092,889 common shares for Ps. 10,919,379.

During the fiscal year ended on June 30, 2006, 14,803,084 Convertible Notes were converted into 29,151,389 ordinary shares, which resulted in an increase of the Company’s net shareholders’ equity of Ps. 45,108,945. In the same period, 14,557,910 warrants were exercised, resulting in the issuance of 28,668,581 common shares for Ps. 53,587,195.

During the current fiscal year 22,256,549 Convertible Notes were converted into 83,183,660 ordinary shares, which resulted in a Ps. 68,841,945 increase in the Company’s net shareholders’ equity. During the same period 22,390,599 warrants were exercised, resulting in the issuance of 44,093,332 ordinary shares for Ps. 83,183,660.

 

NOTE 15: PURCHASE AND SALE OF CONVERTIBLE NOTES

During November and December 2002, 49,692,668 convertible notes 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:

 

60


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 15: Continued

 

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

 

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

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

The conversion price of the Convertible Notes 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 Notes 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 converted 5,000,000 Convertible Notes into 9,174,312 common shares.

During the fiscal year ended on June 30, 2004, third parties bearers of Convertible Notes 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 face value of Ps. 1 each. Consequently, the Company holding as of June 30, 2004 amounts to 44,943,168 Convertible Notes.

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

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

During the fiscal year ended on June 30, 2005, third parties bearers of Convertible Notes into IRSA’s ordinary stock have exercised their conversion and warrant rights for a total amount of Ps. 171.5 million originating the issuance of 99,289,144 ordinary shares with a face value of Ps. 1 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.

During this fiscal year ended on June 30, 2006, third party holders of IRSA’s Convertible Notes exercised their conversion and warrants rights for a total of Ps. 72.5 million, resulting in the issuance of 39,726,997 common shares of Ps. 1 par value each.

As a consequence of such conversions and exercise of third parties warrants, the Company’s investment value has decreased in Ps. 12.2 million, such effect being recorded in Paid-In Capital (Related Companies Law No. 19,550 – Section 33) of Shareholders’ Equity (see Note 2.p).

During the fiscal year ended on June 30, 2006, the Company converted 20,958,011 Convertible Negotiable Obligations into 38,455,065 common shares, still remaining a stock of Negotiable Obligations convertible into common shares of IRSA as of closing for US$ 12,000,000.

 

61


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 15: (Continued)

 

Likewise, during the current period the Company has not converted any of the Convertible Negotiable Obligations to common shares and as of the end of the period still remains US$ 12,000,000 of IRSA Negotiable Obligations convertible and a stock of 32,958,011 warrants.

In line with conversions and the exercise of third parties warrants, the Company has diminished the investment value in $ 5.0 million and has recorded such effect in Premium over Par Companies section 33, Law 19,550 of Shareholders’ Equity (please see note 2 p.)

 

NOTE 16: INVESTMENT OF IRSA INVERSIONES Y REPRESENTACIONES SOCIEDAD ANÓNIMA IN BANCO HIPOTECARIO S.A. (BHSA) AS OF JUNE 30, 2006

With respect to the IRSA investment in the related company BHSA of $ 152,772,000 as of June 30, 2006 with a holding of 11.76%, were report the following:

On August 9, 2005, IRSA sold 2,305,122 shares of Banco Hipotecario S.A. to Buenos Aires Trade and Finance Center S.A. (which was a subsidiary in which IRSA has an interest of 100%) at a price per share of US$ 4.57 (market value), in a total amount of US$ 10,540,000 (equivalent to Ps. 30,281,000). For this transaction IRSA recorded a gain of Ps. 1,845,000.

As of December 31, 2005 the Company completed merger procedures to take-over its subsidiary company Buenos Aires Trade and Finance Center S.A. Consequently, as of year ended June 30, 2006, the total shareholding in Banco Hipotecario is 10,141,015.

COMPENSATIONS BY THE NATIONAL GOVERNMENT TO FINANCIAL ENTITIES AS A RESULT OF THE ASYMMETRIC “PESIFICATION”

The National Government, through Decree 905, provided for the issuance of “National Government Compensating Bonds”, to compensate financial entities for the adverse equity effects generated due to the conversion into Pesos, under various exchange ratios, of the credits and obligations denominated in foreign currency as established by Law No. 25,561, Decree No. 214 and addenda. Decree No. 905 also provided for covering the negative difference in the net position of foreign currency denominated assets and liabilities resulting from its translation into Pesos as established by the above-mentioned regulations, and entitled the Argentine Republic Central Bank (BCRA) to determine the pertinent rules.

After several submissions, Banco Hipotecario S.A. submitted the last presentation as regards sections 28 and 29 of Decree No. 905—Compensation to Financial Entities, as follows:

 

  -  

National Government Compensation Bond - US$ 2012 (section 29, points b, c and d): compensating bond – difference between “pesified” assets and liabilities at $ 1.00 for the rate of exchange difference of $ 0.40, translated at $ 1.40 per US$ dollar: US$ 360,811.

 

  -  

National Government Compensation Bond coverage - US$ 2012 (section 29 point e). Coverage bond – difference between assets and liabilities in US Dollars net of the compensating bond: US$ 832,827.

 

62


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 16: (Continued)

 

In September 2002 and October 2005, the Argentine Central Bank credited US$ 344,050 and US$ 16,761 in BODEN 2012 respectively, for compensation.

On August 1, 2005, a note was submitted to the Argentine Central Bank stating the acceptance of the number of BODEN verified by the Superintendence of Financial and Exchange Entities.

Finally, between September 2005 and January 2006, the coverage BODEN 2012 subscription amounted to US$ 773,531.

As of March 31, 2007 the Bank in analyzing guarantees to be granted for obtaining assistance from the BCRA for subscribing the remaining coverage BODEN amount.

EXPOSURE TO THE NON-FINANCIAL PUBLIC SECTOR

Banco Hipotecario S.A. keeps recorded in its financial statements assets with the Non-Financial Public Sector amounting to Ps. 3,268,587. On the other hand, liabilities to the Argentine Central Bank recorded as of March 31, 2007 amount to Ps. 176,540 being the credit balance related to advances to subscribe BODEN 2012 in line with sections 28 and 29 of Decree No. 905/02.

The net exposure with the Public Sector, without considering liquid assets in accounts authorized by the Argentine Central Bank, amount to Ps. 3,092,047 and Ps. 3,643,712 as of March 31, 2007 and 2006, respectively.

On June 27, 2005 and July 18, 2006 BACS Banco de Crédito y Securitización S.A. and the Bank submitted notes (jointly for the last date) to the BCRA requesting that the calculation of the compensating bonds be reviewed. On September 26, 2006 the BCRA responded the claim stating that there they had no right to be compensated for this operation according to the dispositions of Decree No. 905/02.

 

NOTE 17: FINANCIAL LOANS

In line with the outstanding investment opportunities that became definite during the last year, such as our participation in BrasilAgro, and the acquisition of land and the develop investments in Norwest zone during the current year. The company contracted debt in higher levels than those incurred in previous years. As of March 31, 2007 our debt, without considering our convertible negotiable obligations, amounts to Ps. 126.9 million.

On analyzing the breakdown of such debt, we note the Credit Suisse loan to finance our investment in BrasilAgro for Ps. 24.8 million (Note 12.b) and Ps. 14.6 million to finance our crop production, the remaining balance, Ps. 87.5 million, are concentrated in the short-term.

Our aim for next year will be to adjust these maturities so as to generate cash in the Company, without putting aside a reduction of debt in line with future cash income arising from the regular business trend, the sale of assets or due to exercising options adhered to our convertible negotiable obligations.

 

63


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 17: (Continued)

 

The chart that follows discloses our Company debt as of December 31, 2006:

 

Bank

   Currency   

Total

(Millions)

   Term

Short-term

   Pesos    87.5    Up to 270 days

Crop production financing

   Pesos    14.6    Up to 203 days

Long-term

   Pesos    24.8    2.5 years

 

NOTE 18: IGSA’S TAX DEFERRAL

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

The project is oriented towards the livestock business, and requires a total minimum investment of Ps. 1,600,002 to be made over a three year term. The investor is given the choice of deferring the payment of the amounts payable as income tax and value added tax. The amount of the deferred tax will be equal to 75% the direct capital contribution, i.e Ps. 1,200,000. Deferred amounts do not accrue interest and are repayable in five consecutive annual payments as from the sixth fiscal year following the start-up date of the project that enjoys the benefit.

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

On December 30, 2003, given the significant benefit granted under Decree No. 384/2003 to those taxpayers who early repay deferred tax liabilities, Cresud S.A. repaid the deferred amount, for the sum of Ps. 249,317. Up to date it has still not made use of the remaining sums available under the project.

 

NOTE 19: RESTRICTED ASSETS

As of March 31, 2007, the amount of 1,834,860 ADR´s of IRSA Inversiones y Representaciones S.A. are included in Non-Current Investments and Non-Current Loans which availability is restricted as a result of the loan contracted for financing the Brazil investment as mentioned in Note 12.b) to these financial statements.

 

64


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 20: ORDINARY AND EXTRAORDINARY MEETING OF SHAREHOLDERS

During the Company’s Ordinary and Extraordinary Meeting of Shareholders held on October 31, 2006 the following issues, among other, referred to the agenda were approved by the majority stockholders:

 

   

The Annual Report and the financial statements as of June 30, 2006.

 

   

The appropriation of a cash dividend for up to Ps. 5,500,000 minus the amount equivalent to 5% for Legal Reserve.

 

   

The creation of a global program for issuing simple negotiable bonds, non-convertible into shares, with or without guarantee or guaranteed by third parties, in a maximum outstanding amount at any time of up to US$ 50,000,000 (US Dollars fifty million) or its equivalent in other currencies, in conformity with the dispositions of the negotiable bonds Law No. 23,567 and addenda.

 

   

The establishment of a Reserve for New Projects arising from retained earnings as of 2006 closing net of appropriations for legal reserve and dividends in cash.

 

NOTE 21: CAPITALIZATION PROGRAM FOR EXECUTIVE MANAGEMENT

The Company is currently developing a capitalization program for executive management staff through contributions made by employees and by the Company (the “Program”).

The Plan is addressed to employees selected by the Company with the purpose of keeping them in the company and increasing their total compensation through an extraordinary reward, provided that certain specific conditions are complied with.

Participation and contributions to the Plan are on a voluntary basis. Once the beneficiary (the “Participant”) has accepted, he will be able to make two types of contributions: a monthly one (based on the salary) and an extraordinary one (based on the annual bonus). The suggested contribution is up to 2.5% of the salary and up to 15% of the annual bonus. On the other hand, the Company contribution will be 200% of the monthly contributions and 300% of the employee’s extraordinary contributions.

Funds collected from participants’ contributions will initially be sent to an independent financial means especially created for such purpose and placed in Argentina as a Common Investment Fund, which will be approved by the C.N.V. Such funds will be freely redeemed under the requirement of the participants. The funds arising from the Company contributions will flow to other independent financial means separated from the previous one.

The participants or their successors will have access to 100% of the Program (that is, including Company contributions made in favor of the financial means especially created) under the circumstances that follow:

 

   

ordinary retirement in line with the applicable working regulations

 

   

total or permanent disability or inability

 

   

death.

 

65


Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 21: (Continued)

 

In case of resignation or discharge without legal justification, the participant will obtain the amounts contributed by the Company only if he has participated in the plan during a minimum term of 5 (five) years, provided certain conditions were complied with.

 

NOTE 22: SUBSEQUENT EVENTS

The Company has not recorded any significant subsequent effect that should be disclosed in a note to the financial statements.

 

66


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Fixed Assets

For the nine-month periods ended March 31, 2007 and 2006 and year ended June 30, 2006

(Notes 1 and 2)

 

Schedule A

 

Principal
Account

  

Value

at the
beginning

of the

period/year

Pesos

  

Additions

and/or

transfers

Pesos

  

Deductions

and/or

transfers

Pesos

  

Value

at the end
of the
period/year

Pesos

   Depreciation   

Net
carrying
Value

as of
March 31,
2007

Pesos

  

Net
carrying
Value

as of
June 30,
2006

Pesos

  

Net
carrying
Value

as of
March 31,
2006

Pesos

               Rate %   

Accumulated
at the
beginning

of the

period/year

Pesos

  

Decrease
of the

period/
year

Pesos

  

Current
period

Pesos

  

Accumulated
at the

end of the
period/year

Pesos

        

Real estate

   151,024,186    —      —      151,024,186    —      —      —      —      —      151,024,186    151,024,186    141,276,066

Wire fences

   3,687,149    —      —      3,687,149    3    748,749    —      84,947    833,696    2,853,453    2,938,400    2,840,958

Watering troughs

   3,353,328    26,584    —      3,379,912    5    997,004    —      116,506    1,113,510    2,266,402    2,356,324    1,879,692

Alfalfa fields and meadows

   2,814,822    —      —      2,814,822    12-25-50    1,071,596    —      339,995    1,411,591    1,403,231    1,743,226    1,559,558

Buildings and constructions

   29,376,727    124,011    —      29,500,738    2    2,545,563    —      434,133    2,979,696    26,521,042    26,831,164    26,871,971

Machinery

   10,402,597    592,100    2,920    10,991,777    10    6,903,504    2,920    542,180    7,442,764    3,549,013    3,499,093    3,613,207

Vehicles

   2,179,159    113,036    195,005    2,097,190    20    1,130,562    155,247    241,229    1,216,544    880,646    1,048,597    769,717

Tools

   196,306    10,570    —      206,876    10    150,643    —      7,370    158,013    48,863    45,663    48,265

Furniture and equipment

   1,128,401    19,317    2,632    1,145,086    10    788,828    1,913    62,702    849,617    295,469    339,573    356,081

Corral and leading lanes

   820,223    38,998    —      859,221    3    131,905    —      18,824    150,729    708,492    688,318    528,635

Roads

   2,073,669    1,500    —      2,075,169    10    806,116    —      122,320    928,436    1,146,733    1,267,553    321,045

Facilities

   12,476,589    59,469    —      12,536,058    10-20-33    5,731,047    —      720,090    6,451,137    6,084,921    6,745,542    6,224,491

Computer equipment

   1,159,824    776,376    —      1,936,200    20    810,047    —      227,225    1,037,272    898,928    349,777    332,132

Silo plants

   1,096,519    —      —      1,096,519    5    406,464    —      42,302    448,766    647,753    690,055    704,977

Constructions in progress

   8,299,815    10,330,133    37,282    18,592,666    —      —      —      —      —      18,592,666    8,299,815    17,624,536

Advances to suppliers

   204,572    264,891    —      469,463    —      —      —      —      —      469,463    204,572    40,511
                                                           

Total as of March 31, 2007

   230,293,886    12,356,985    237,839    242,413,032       22,222,028    160,080    2,959,823    25,021,771    217,391,261      
                                                           

Total as of June 30, 2006

   177,353,527    75,633,293    22,692,934    230,293,886       19,271,508    1,608,274    4,558,794    22,222,028       208,071,858   
                                                           

Total as of March 31, 2006

   177,353,527    56,236,056    7,698,835    225,890,748       19,271,508    1,494,909    3,122,307    20,898,906          204,991,842
                                                           

 

67


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Intangible Assets

For the nine-month periods ended March 31, 2007 and 2006 and year ended June 30, 2006

(Notes 1, 2 and 3)

 

Schedule B

 

Principal
Account

  

Value at the
beginning

of the

period/year

Pesos

  

Additions

of the
period/year

Pesos

  

Value at the
end of the

period/year

Pesos

   Depreciation   

Net carrying
value as of
March 31,
2007

Pesos

  

Net carrying
value as of
June 30,
2006

Pesos

  

Net
carrying
value

as of
March 31,
2006

Pesos

           

Accumulated
at the
beginning

of the

period/year

Pesos

   Of the Year   

Accumulated
at the end

of the

period/year

Pesos

        
               Rate
%
  

Current

period/
year

Pesos

           

Concessions rights

   21,910,761       21,910,761    —         —      —      21,910,761    21,910,761    —  
                                                 

Total as of March 31, 2007

   21,910,761    —      21,910,761    —         —      —      21,910,761    —      —  
                                                 

Total as of June 30, 2006

   —      21,910,761    21,910,761    —         —      —      —      21,910,761    —  
                                                 

Total as of March 31, 2006

   —      —      —      —         —      —      —      —      —  
                                                 

 

68


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Investments

For the nine-month periods ended March 31, 2007 and 2006 and year ended June 30, 2006

(Notes 1 and 2)

 

Schedule C

 

Securities

   Amount   

Value at
March 31,
2007

Pesos

   

Value at
June 30,

2006

Pesos

   

Value at
March 31,

2006

Pesos

   

Market
Value

Pesos

   INFORMATION ON THE ISSUER
              

Principal

activity

   Latest financial statements
                 

Capital

Pesos

  

Income
(loss)

for the
fiscal
period

Pesos

   

Shareholders´

Equity

Pesos

                      
                      

Current Investments

                      

Mutual Funds

                      

Bony Hamilton Fund

   992,234    3,036,236     54,906     46,617     3.060000           
                                  
      3,036,236     54,906     46,617               
                                  

Notes and Convertible Notes

                      

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

                      

IRSA Inversiones y Representaciones S.A. Convertible Notes 2007

   12,000,00    37,199,999     —       —                 

Interest of Convertible Notes 2007 -IRSA (US$)

      1,124,267     386,779     2,604,146               

Bonos Global 2010

   110,000    117,811     92,510     103,732     1.071000           

Bocon Pro 1

   157,647    630     630     630     0.003996           

Nobacs

      —       3,030,000     2,982,000               

Raymond James – Interest of Notes

      —       —       —                 

Mortgage Bonds

   1,107,036    1,073,825     1,334,180     1,415,189     0.976000           
                                  
      39,516,532     4,844,099     7,105,697               
                                  

Total current investments

      42,552,768     4,899,005     7,152,314               
                                  

Non-current investments

                      

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

                      

AGRO-URANGA S.A.

            Unlisted    Agricultural
livestock
   2,500,000    9,964,264     20,178,615

Shares

   893,069    7,208,359     5,465,153     5,573,730               

Contribution on account of future subscriptions of shares

        7,865     7,865               

Higher value of property

      11,179,150     11,179,150     11,179,150               
                                  
      18,387,509     16,652,168     16,760,745               
                                  

INVERSIONES GANADERAS S.A.

            Unlisted    Rising and
grazing cattle
   11,668,570    (31,423 )   10,637,999

Shares

   11,668,569    10,639,616     10,669,399     10,798,817               

Contribution on account of future subscriptions of shares

      —       —                   
                                  
      10,639,616     10,669,399     10,798,817               
                                  

CACTUS ARGENTINA S.A.

            Unlisted    Exploitation
and
administration
   18,071,563    525,453     26,082,921

Shares

   4,337,175    6,259,901     4,431,650     4,493,393        of Agriculture
and beef
cattle
       

Contribution on account of future subscriptions of shares

      —       —       —          products        
                                  
      6,259,901     4,431,650     4,493,393               
                                  

FUTUROS Y OPCIONES.COM S.A.

            Unlisted    Gives
information
about markets

And services
   860,937    (214,330 )   1,651,829

Shares

   686,656    1,156,281     886,312     327,697        of economics
and Financial

consulting
through
       

Contribution on account of future subscriptions of shares

      —       420,000     420,000        Internet        
                                  
      1,156,281     1,306,312     747,697               
                                  

AGROPECUARIA CERVERA S.A.

            Unlisted    Agricultural
and forestal
   1,334,748    (518,706 )   4,915,527

Shares

   1,201,273    4,423,973     3,725,535     3,858,643               

Contribution on account of future subscriptions of shares

      —       1,165,273     1,165,273               
                                  
      4,423,973     4,890,808     5,023,916               
                                  

IRSA Inversiones y Representaciones S.A.

            Unlisted    Real Estate    453,557,582    113,856,341     1,633,390,635

Shares (Note 15)

   116,305,767    418,848,524     396,839,494     303,616,578               
                                  
      418,848,524     396,839,494     303,616,578               
                                  

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas

               Agricultural
and Real
Estate
   875,381,000    39,969,000     835,627,000

Shares

   43,205    61,799,495     54,879,607     —                 
                                  
      61,799,495     54,879,607     —                 
                                  
   Sub-Total    521,515,299     489,669,438     341,441,146               
                                  

Other Investments

                      

Convertible Notes 2007—IRSA (US$)

                      

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

                      

IRSA Inversiones y Representaciones S.A.

      —       37,031,999     86,166,588               

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas (Pendig Registration)

      —       —       759,615     Unlisted           

Coprolán

      20,717     20,717     20,717     Unlisted           
                                  
   Subtotal    20,717     37,052,716     86,946,920               
                                  

Goodwill

                      

IRSA negative goodwill

      (70,189,477 )   (76,825,838 )   (40,605,160 )             
                                  

Agropecuaria Cervera S.A.

      —       —       21,910,761               
                                  
   Subtotal    (70,189,477 )   (76,825,838 )   (18,694,399 )             
                                  

Total non-current investments

      451,346,539     449,896,316     409,693,667               
                                  

 

69


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Allowances and Provisions

For the nine-month periods ended March 31, 2007 and 2006 and the year ended June 30, 2006

(Notes 1 and 2)

 

Schedule E

 

Item

  

Balances
at

beginning
of the

period/
year

Pesos

  

Increases

Pesos

  

Decreases

Pesos

   

Applications

Pesos

   

Value at
March 31,
2007

Pesos

  

Value at
June 30,
2006

Pesos

  

Value at
March 31,
2006

Pesos

Deducted from assets

                  

Allowance for doubtful accounts

   374,830    —      —       (2,471 )   372,359    374,830    356,214

Included in liabilities

                  

For pending lawsuits

   69,343    —      (24,127 )   —       45,216    69,343    68,243
                                    

Total at March 31, 2007

   444,173    —      (24,127 )   (2,471 )   417,575    —      —  
                                    

Total at June 30, 2006

   422,085    22,088    —       —       —      444,173    —  
                                    

Total at March 31, 2006

   422,085    2,372    —       —       —      —      424,457
                                    

 

70


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y AgropecuariaCost of sales

Cost of sales

For the nine-month periods ended March 31, 2007 and 2006

(Notes 1 and 2)

 

Schedule F.1

 

     Crops     Beef cattle     Milk    Others     Total  
  

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

  

March 31,
2006

Pesos

  

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Inventories at the beginning of the period

                          

Beef cattle

   —       —       59,445,800     55,019,469     —      —      —       —       59,445,800     —       55,019,469     —    

Crops

   10,550,495     24,930,778     —       —       —      —      —       —       10,550,495     —       24,930,778     —    

Seeds and fodder

   478,313     128,575     —       —       —      —      —       —       478,313     —       128,575     —    

Materials and others

   —       —       —       —       —      —      127,024     190,843     127,024     —       190,843     —    
                                                                      
   11,028,808     25,059,353     59,445,800     55,019,469     —      —      127,024     190,843     —       70,601,632     —       80,269,665  

Holding gain—Cattle

   —       —       1,292,361     1,533,168     —      —      —       —       —       1,292,361     —       1,533,168  

Holding gain—Crops

   1,190,284     3,131,628     —       —       —      —      —       —         1,190,284     —       3,131,628  

Production

   30,352,384     15,098,936     15,716,310     16,062,122     6,668,677    5,862,005    —       55,122     —       52,737,371     —       37,078,185  

Gain (loss) on public commodities market

   1,776,102     (438,424 )   —       —       —      —      —       —       —       1,776,102     —       (438,424 )

Transfer of inventories to expenses

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

Transfer of inventories to fixed assets

   —       —       —       —       —      —      —       (151,928 )   —       —       —       (151,928 )

Transfer of unharvested crops to expenses

   (2,337,798 )   (3,731,225 )   (59,273 )   (320 )   —      —      (825,981 )   (362,837 )   —       (3,223,052 )   —       (4,094,382 )

Recovery of inventories

   —       —       —       317,795     —      —      —       —       —       —       —       317,795  

Purchases

   415,832     2,332,392     6,875,549     7,038,254     —      —      1,509,026     559,564     —       8,800,407     —       9,930,210  

Operating expenses (Schedule H)

   —       —       —       —       —      —      36,498     17,839     —       36,498     —       17,839  

Less:

                          

Inventories at the end of the period

                          

Beef cattle

   —         (67,397,962 )   (60,524,704 )   —      —      —       —       (67,397,962 )     (60,524,704 )   —    

Crops

   (23,777,230 )   (14,800,090 )   —       —       —      —      —       —       (23,777,230 )     (14,800,090 )  

Seeds and fodder

   (365,152 )   (20,000 )   —       —       —      —      —       —       (365,152 )     (20,000 )  

Materials and others

   —       —       —       —       —      —      (802,229 )   (100,460 )   (802,229 )   (92,342,573 )   (100,460 )   (75,445,254 )
                                                                      

Cost of Sales

   18,283,230     26,632,570     15,872,785     19,445,784     6,668,677    5,862,005    44,338     208,143       40,869,030       52,148,502  
                                                                      

 

71


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Cost of production

For the nine-month periods ended March 31, 2007 and 2006

(Notes 1 and 2)

 

Schedule F.2

 

     Crops     Beef cattle     Milk     Total  
  

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31,
2007

Pesos

   

March 31,
2006

Pesos

   

March 31, 2007

Pesos

   

March 31, 2006

Pesos

 

Inventories at the beginning of the period

                    

Beef cattle

   —       —       —       —       9,389,631     6,823,744     9,389,631       6,823,744    

Unharvested crops

   1,662,592     826,336     —       —       —       —       1,662,592       826,336    

Seeds and fodder

   —       —       168,766     172,941     123,568     17,653     292,334       190,594    

Materials and others

   4,142,815     3,768,385     —       —       119,865     65,430     4,262,680       3,833,815    
                                                            
   5,805,407     4,594,721     168,766     172,941     9,633,064     6,906,827     —       15,607,237       11,674,489  

Holding gain—Cattle

   —       —       —       —       (2,105 )   375,173     —       (2,105 )     375,173  

Holding gain—Crops

   941,124     —       —       —       —       —       —       941,124     —       —    

Production

   —       —       504,930     —       741,024     —       —       1,245,954     —       —    

Transfer of inventories to fixed assets

   —       —       —       —       —       —       —       —       —       —    

Transfer of unharvested crops to expenses

   (16,878,052 )   (12,003,717 )   (989,989 )   (204,789 )   (927,062 )   (1,018,566 )   —       (18,795,103 )   —       (13,227,072 )

Recovery of inventories

   .     —       —       —       —       (317,795 )   —       —       —       (317,795 )

Purchases

   42,199,963     27,144,125     851,604     —       2,480,584     3,138,055     —       45,532,151     —       30,282,180  

Operating expenses (Schedule H)

   21,236,013     14,946,376     10,954,821     11,473,945     3,822,523     3,571,080     —       36,013,357     —       29,991,401  

Less:

           —       —            

Inventories at the end of the period

                    

Beef cattle

   —       —       —       —       (10,014,349 )   (9,127,509 )   (10,014,349 )     (9,127,509 )  

Unharvested crops

   (27,822,308 )   (18,025,519 )   —       —       —       —       (27,822,308 )     (18,025,519 )  

Seeds and fodder

   —       —       (1,930,511 )   (174,511 )   (659,538 )   (100,004 )   (2,590,049 )     (274,515 )  

Materials and others

   (4,474,347 )   (2,870,224 )   (523,580 )   —       (187,811 )   (104,259 )   (5,185,738 )   (45,612,444 )   (2,974,483 )   (30,402,026 )
                                                            

Cost of Production

   21,007,800     13,785,762     9,036,041     11,267,586     4,886,330     3,323,002       34,930,171       28,376,350  
                                                            

 

72


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Foreign currency assets and liabilities

For the nine-month periods ended March 31, 2007 and 2006 and the year ended June 30, 2006

(Notes 1 and 2)

 

Schedule G

 

Item

   March 31, 2007    June 30, 2006    March 31, 2006
   Type and
amount of
foreign
currency
   Current
exchange
rate
Pesos
   Amount in
local
currency
Pesos
   Type and
amount of
foreign
currency
   Amount in
local currency
Pesos
   Type and
amount of
foreign
currency
   Amount in
Local currency
Pesos

Current Assets

                    

Cash and banks

                    

Cash and banks in Dollars

   US$  25,098,740    3.060    76,802,144    US$ 7,821,715    23,824,945    US$ 2,721,167    8,277,789

Cash and banks in Brazilian Reais

   Rs 325    1.412    459    Rs 1,489    1,919    Rs 213    287

Investments:

                    

Mutual funds

   US$ 992,234    3.060    3,036,236    US$ 18,026    54,906    US$ 15,324    46,617

Interest from IRSA Convertible Notes 2007

     362,667    3.100    1,124,267            

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

                    

IRSA Inversiones y Representaciones S.A.

   US$ 12,000,000    3.100    37,199,999    US$ 125,333    386,779    US$ 844,953    2,604,146

Trade accounts receivable:

                    

Trade accounts receivable

   US$ 591,139    3.060    1,808,885    US$ 1,041    3,170    US$ 53,209    161,861

Other receivables:

                    

Secured by mortgages

   US$ 1,006,894    3.060    3,081,097    US$ 1,148,224    3,497,490    US$ 1,032,619    3,141,226

Guarantee deposits

   US$ 1,027,018    3.060    3,142,675    US$ 471,102    1,434,978    US$ 512,116    1,557,857

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

                    

Cactus Argentina S.A

   US$ 2,107    3.100    6,532    US$ 4,140    12,775      3,184    9,814

IRSA Inversiones y Representaciones S.A.

   US$ 26,587    3.100    82,419    US$ —      —        

Others

   US$ 20,000    3.100    62,000    US$ 20,698    63,875      15,922    49,071

Non-Current Assets

                    

Other receivables

                    

Secured by mortgages

   US$ 1,859,496    3.060    5,690,057    US$ 2,713,488    8,265,284    US$ 2,713,488    8,254,430

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

                    

Alto Palermo S.A

   US$ 91,660    3.100    284,147    US$ 189,470    584,704      222,906    686,996

IRSA Inversiones y Representaciones S.A.

   US$ 21,269    3.100    65,935    US$ 48,721    150,353      57,319    176,656

Others

   US$ 11,654    3.100    36,126    US$ 27,067    83,529      31,844    98,142

Investments:

                    

IRSA Convertible Notes 2007

                    

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

                    

IRSA Inversiones y Representaciones S.A.

   US$ —         —      US$  12,000,000    37,031,999    US$  27,958,010    86,166,588
                                      

US$

   US$ 43,111,465       132,422,519    US$ 24,589,025    75,394,787    US$ 36,182,061    111,231,193
                                      

Rs

   Rs 325       459    Rs 1,489    1,919      213    287
                                      

Total Assets

         132,422,978       75,396,706       111,231,480
                          

US$: US Dollars

Rs: Brazilian Reais

 

73


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Foreign currency assets and liabilities

For the nine-month periods ended March 31, 2007 and 2006 and the year ended June 30, 2006

(Notes 1 and 2)

 

Schedule G (Cont)

 

Item

   March 31, 2007    June 30, 2006     March 31, 2006  
   Type and amount
of foreign
currency
   Current
exchange
rate
Pesos
   Amount in
local currency
Pesos
   Type and amount
of foreign
currency
    Amount in
local currency
Pesos
    Type and amount
of foreign
currency
    Amount in
local currency
Pesos
 

Current liabilities

                 

Trade accounts payable:

                 

Suppliers

   US$ 4,269,877    3.100    13,236,620    US$ 3,536,482     10,913,582     US$ 3,172,589     9,777,918  

Interest to be accrued

   US$ —      3.100    —      US$ (36,573 )   (112,863 )   US$ (88,335 )   (272,250 )

Accrual for other expenses

   US$ 158,054    3.100    489,967    US$ 862,487     2,661,634     US$ 1,373,600     4,233,435  

Loans:

                 

Local banks

   US$ 4,873,173    3.100    15,106,725    US$ 4,399,210     13,575,961     US$ 4,347,470     13,398,902  

Interest of Convertible Notes 2007

   US$ 91,704    3.100    284,281    US$ 107,641     332,179     US$ 519,918     1,602,288  

Convertible Notes 2007

   US$ 3,034,311    3.100    9,406,364         

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

                 

Shareholders

   US$ —      3.100    —      US$ 156,508     482,985     US$ 556,779     1,715,902  

Directors

   US$ 34,615    3.100    107,308    US$ 351     1,083     US$ 1,016     3,130  

Other debts:

                 

Security transactions payable

   US$ —            US$ —       —       US$ —       —    

Advances to customers

   US$ —            US$ —       —       US$ —       —    

Non-current liabilities

                 

Trade accounts payable

                 

Accrual for other expenses

   US$ 126,690    3.100    392,740    US$ 270,671     835,292     US$ 318,437     981,422  

Loans:

                 

Foreign Banks

   US$ 8,000,000    3.100    24,800,000    US$ 6,600,000     20,367,600     US$ —       —    

Convertible Notes 2007

   US$ —      3.100    —      US$ 10,306,022     31,804,384     US$ 17,203,932     53,022,519  

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

                 

Shareholders

   US$ —      3.100    —      US$ 14,984,838     46,243,210     US$ 18,422,078     56,776,844  

Directors

   US$ —      3.100    —      US$ 33,600     103,690     US$ 33,600     103,555  
                                             

Total Liabilities

   US$  20,588,388       63,824,005    US$  41,221,237     127,208,737     US$  45,861,083     141,343,855  
                                             

US$: US Dollars

 

74


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Information submitted in compliance with Section 64, subsection B of Law No. 19,550

For the nine-month periods ended March 31, 2007 and 2006

(Notes 1 and 2)

 

Schedule H

 

Items

  

Total

March 31,

2007

   Operating Expenses    Expenses   

Total

March 31,

     

Total

Pesos

  

Crops

Pesos

   Beef cattle
Pesos
  

Milk

Pesos

   Others
Pesos
   Selling
Pesos
   Administrative
Pesos
  

2006

Pesos

Directors’ fees

   289,897    —      —      —      —      —      —      289,897    185,724

Fees and payments for services

   4,579,128    532,622    192,396    226,568    113,658    —      —      4,046,506    1,697,065

Salaries and wages

   7,189,017    3,793,141    1,622,181    1,621,733    549,227    —      —      3,395,876    4,760,445

Social security taxes

   2,148,660    901,730    481,054    338,380    82,296    —      —      1,246,930    841,572

Taxes, rates and contributions

   1,085,863    541,649    395,188    110,055    36,397    —      —      544,223    449,550

Gross sales taxes

   293,045    —      —      —      —      —      293,045    —      393,564

Office and administrative expenses

   917,458    —      —      —      —      —      —      917,458    573,153

Bank commissions and expenses

   18,857    18,857    9,506    8,657    694    —      —      —      8,939

Depreciation of fixed assets

   2,959,823    2,617,238    1,506,062    790,109    321,067    —      —      342,585    3,122,307

Vehicle and traveling expenses

   448,516    380,007    168,148    159,357    21,169    31,333    —      68,509    534,510

Spare parts and repairs

   1,846,218    1,826,524    912,744    758,265    155,515    —      —      19,694    1,302,349

Insurance

   223,691    180,810    102,028    66,546    7,071    5,165    —      42,881    198,754

Benefits to Employees

   468,443    296,296    90,950    164,391    40,955    —      —      172,147    277,068

Livestock expenses (1)

   7,170,680    6,598,417    —      6,598,417    —      —      572,263    —      8,856,972

Dairy farm expenses (2)

   2,494,001    2,482,749    —      —      2,482,749    —      11,252    —      2,264,870

Agricultural expenses (3)

   17,264,166    15,426,102    15,426,102    —      —      —      1,838,064    —      15,554,087

Silo expenses

   60,772    44,336    44,336    —      —      —      16,436    —      24,950

General expenses

   431,820    409,386    285,318    112,343    11,725    —      —      22,434    437,695
                                            

Total at March 31, 2007

   49,890,055    36,049,855    21,236,012    10,954,821    3,822,523    36,498    2,731,060    11,109,140    —  
                                            

Total at March 31, 2006

      30,009,240    14,946,376    11,473,945    3,571,080    17,839    5,677,277    5,797,957    41,484,474
                                            

(1) Includes cattle food and additives, lodging, animal health and others.
(2) Includes cattle food and additives, animal health and others.
(3) Includes seeds, agrochemicals, irrigation, services hired, leases and others.

 

75


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

 

Additional Information to the Notes to the Financial Statements

 

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 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 and prepaid expenses without a due date at March 31, 2007

 

     Other
Receivables
Pesos
   Law No. 19,550 Section 33
      AGRO
URANGA
   FYO    CACTUS    IGSA    IRSA    BRASILAGRO    ACER
     

Others
Receivables

Pesos

  

Other

Receivables

Pesos

  

Other

Receivables

Pesos

  

Other

Receivables

Pesos

  

Other

Receivables

Pesos

  

Other

Receivables

Pesos

  

Other

Receivables

Pesos

Current

   826,079    601,684    23,603    4,159,990    —      82,419    30,537    —  

Non-current

   36,512,428    —      —      6,532    1,404,360    65,935    —      12,093,299

 

  b. Trade Accounts Receivable and other receivables to fall due at March 31, 2007

 

     Trade
Accounts
Receivables
Pesos
   Law No. 19,550 Section 33   

Other

Receivables

Pesos

   Law No. 19,550 Section 33
      FYO    IGSA    ALTOCITY    ACER       IRSA    CACTUS    ACER
     

Trade
Accounts
Receivable

Pesos

  

Trade
Accounts
Receivable

Pesos

  

Trade
Accounts
Receivable

Pesos

  

Trade
Accounts
Receivable

Pesos

     

Other
Receivable

Pesos

  

Other
Receivable

Pesos

  

Other
Receivable

Pesos

                          

06-30-07

   5,439,977    259,665    —      154    7,956    9,568,132    —      —      —  

09-30-07

   —      —      —      —      —      2,987,027    —      —      —  

12-31-07

   —      —      —      —      —      335,847    —      —      —  

03-31-08

   —      —      —      —      —      765,764    —      —      —  

06-30-08

   —      —      —      —      —      —      —      —      —  

09-30-08

   —      —      —      —      —      2,183,297    —      —      —  

12-31-08

   —      —      —      —      —      —      —      —      —  

09-30-09

   —      —      —      —      —      1,753,380    —      —      —  

09-30-10

   —      —      —      —      —      1,753,380    —      —      —  

09-30-11

   —      —      —      —      —      —      —      —      —  

 

76


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Financial Statements

(Continued)

 

4. CLASSIFICATION OF OUTSTANDING DEBTS ACCORDING TO THEIR MATURITY

 

  a. There are no past due debts at March 31, 2007.

 

  b. Debts without a due date at March 31, 2007.

 

    

Trade

Payables

Pesos

  

Loans

Pesos

  

Taxes

Payable

Pesos

  

Allowances

Pesos

Current

   —      86,986,238    —      —  

Non- current

   392,740    —      42,182,332    45,216

 

  c. Debts to fall due at March 31, 2007.

 

     Trade
Accounts
Payable
Pesos
   Law No. 19,550 Section 33   

Loans

Pesos

  

Salaries
and

Social
Security
Payable
Pesos

   Taxes
Payable
Pesos
   Other
Debts
Pesos
      IGSA    CACTUS            
      Trade
Accounts
Payable
Pesos
   Trade
Accounts
Payable
Pesos
           
                    

06/30/07

   30,950,704    45,809    92,425    645,148    218,435    6,904,261    4,139,331

09/30/07

   —      —      —      14,749,006    1,776,557    —      —  

03/31/08

   —      —      —      9,487,309    471,249    —      —  

12/31/08

   —      —      —      24,800,000    —      —      —  

 

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

 

  a.     

 

     Trade
Accounts
Receivable
Pesos
   Law No. 19,550 Section 33    Other
Receivables
Pesos
   Law No. 19,550 Section 33
      FYO    IGSA    ALTOCITY    ACER       IRSA    ACER    AGRO
URANGA
   IGSA    FYO    Cactus
      Trade
accounts
receivable
Pesos
   Trade
accounts
receivable
Pesos
   Trade
accounts
receivable
Pesos
   Trade
accounts
receivable
Pesos
      Other
receivables
Pesos
   Other
receivables
Pesos
   Other
receivables
Pesos
   Other
receivables
Pesos
   Other
receivables
Pesos
   Other
receivables
Pesos
                                   

In Pesos (Ps.)

   3,631,092    259,665    —      154    7,956    44,337,350    82,419    12,093,299    601,684    1,404,360    23,603    4,159,990

In Dollars (US$)

   1,808,885    —      —      —      —      12,296,102    148,354    —      —      —      —      6,532

 

77


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Financial Statements

(Continued)

 

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

 

  c.     

 

     Trade
Accounts
Receivable
Pesos
   Law No. 19,550 Section 33    Other
Receivables
Pesos
   Law No. 19,550 Section 33
      IGSA    FYO    Altocity    ACER       IGSA    FYO    ACER    Agro
Uranga
   IRSA    Cactus
      Trade Accounts Receivable       Other Receivables
      Pesos    Pesos    Pesos    Pesos       Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Outstanding balances accruing interests

   —      —      —      —      —      8,606,937    1,038,986    —      11,951,080    —      —      —  

Outstanding balances not accruing interests

   5,439,977    —      259,665    154    7,956    48,108,934    95,374    23,603    142,219    601,684    148,354    4,166,522

 

6. CLASSIFICATION OF DEBTS ACCORDING TO THEIR FINANCIAL EFFECTS

 

  a.     

 

     Trade
Accounts
Payable
Pesos
   Law No. 19,550 Section 33    Loans Pesos    Salaries
and Social
security
Payables
Pesos
   Taxes
Payables
Pesos
  

Other
debts

Pesos

   Provisions
Pesos
      IRSA    Cactus    IGSA               
      Trade
Accounts
Payables
Pesos
   Trade
Accounts
Payables
Pesos
   Trade
Accounts
Payables
Pesos
              

In Pesos (Ps.)

   16,940,034    284,083    92,425    45,809    86,963,023    2,466,241    49,086,593    4,139,331    45,216

In Dollars (US$)

   14,119,327    —      —         49,704,678    —      —      —      —  

 

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

 

78


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Financial Statements

(Continued)

 

  c.     

 

     Trade
Accounts
Payable
Pesos
   Law No. 19,550 Section 33   

Loans

Pesos

   Salaries
and Social
Security
Payable
Pesos
   Taxes
Payable
Pesos
   Other
Debts
Pesos
   Provisions
Pesos
      IRSA    Cactus    IGSA               
      Trade
Accounts
Payable
Pesos
   Trade
Accounts
Payable
Pesos
   Trade
Accounts
Payable
Pesos
              

Outstanding debts accruing Interests

   4,439,062    —      —      —      136,380,272    —      —      —      —  

Outstanding debts not accruing interests

   29,620,299    284,083    92,425    45,809    287,429    2,466,241    49,086,593    4,139,331    45,216

 

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 consolidated financial statements and intercompany balances as of March 31, 2007 are described in captions 4 and 5 above.

 

8. RECEIVABLES FROM OR LOANS TO DIRECTORS AND STATUTORY AUDIT COMMITTEE MEMBERS

As of March 31, 2007 there were advance payments to directors for Ps. 217,725, and there were no receivables due from or loans to Statutory Auditors and relatives up to and including second degree, of directors and Statutory Auditors.

 

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 fair value:

a. Cattle for fattening, valued at the market value net of estimated sale expenses: quotation in (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 (Diario La Nación) net of estimated sale expenses.

d. The remaining inventory stated at its replacement cost: seeds, forage and materials: replacement cost published by a well-known magazine (revista Márgenes Agropecuarios).

 

79


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Financial Statements

(Continued)

 

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. EQUITY INTERESTS IN OTHER COMPANIES

There are no equity interests in other companies in excess of the provisions of Law No. 19,550 Section 31.

 

14. RECOVERABLE VALUES

The recoverable value of the inventory under consideration is the net realizable value (selling price at the end of the period less estimated selling expenses). The recoverable value of fixed assets under consideration is the economic use value determined by the possibility of absorbing the depreciations with the income of the Company.

 

15. INSURANCES

The types of insurance used by the company are the following:

 

Insured property

  

Risk covered

  

Amount

insured

Pesos

  

Account
Value

Pesos

Buildings, machinery, silos and furniture

   Theft, fire and technical insurance    74,951,028    31,912,205

Vehicles

   Theft, fire and civil and third parties liability    2,321,686    880,646

 

16. CONTINGENCIES

As of March 31, 2007 there are no contingent situations that have not been accounted for.

 

17. IRREVOCABLE CONTRIBUTIONS TO CAPITAL ON ACCOUNT OF FUTURE SUBSCRIPTIONS

None.

 

18. DIVIDENDS ON PREFERED STOCK

There are no cumulative dividends not paid on preferred stock.

 

19. LIMITATIONS OF PROFIT DISTRIBUTIONS

See Note 19 to the Financial Statements.

 

80


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight

Buenos Aires, May 14, 2007—Cresud S.A.C.I.F. y A. (Nasdaq: CRESY – BCBA: CRES), one of the leading agricultural companies in Argentina, announced today its results for the nine-month period of fiscal year 2007, ended March 31, 2007.

The results for the nine-month period of 2007 showed a net profit of Ps. 36.7 million compared to the Ps. 23.4 million profit for the same period the previous fiscal year. The increase in the net result is mainly due to a 251% increase in results from our ownership interests in related companies.

Consolidated net sales for the period were Ps. 54.4 million, 21% lower than consolidated net sales for the same period the previous fiscal year, mainly due to a reduction in sales of crops resulting from harvest delays caused by weather conditions.

Gross profit for the nine-month period of fiscal year 2007 was Ps. 23.5 million compared to Ps. 15.7 million gross profit for the same period the previous year.

This rise in gross profit is due to higher crop yields, in addition to an increase in average prices per ton, compared to the same period the previous fiscal year.

Operating results for the period ended March 31, 2007 were a Ps. 12.7 million profit, compared to the Ps. 18.7 million profit for the same period the previous fiscal year. The reduction is explained by the fact that the profit for fiscal year 2006 reflects a Ps. 9.9 million gain from the sale of farms.

Results from related companies were a Ps. 40.2 million profit compared to a Ps. 11.5 million profit in the same period of fiscal year 2006, mainly due to the result of our ownership share in IRSA Inversiones y Representaciones S.A. as of March 31, 2007.

 

81


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Summary of operations

Crops

Crop sales totaled Ps. 16.9 million for the period, compared to Ps. 31.6 million crop sales for the previous period. Crops sales amounted to 40,352 tons at an average price per ton of Ps. 418.7 compared to 94,993 tons sold at an average price of Ps. 333.2 during the same period the previous fiscal year. The reduction in sales volumes resulted from harvest delays caused by weather conditions and lower opening stock levels compared to the same period of the previous fiscal year.

At March 31, 2007, wheat harvests had finished with yields of 16,902 tons. At that date, we had harvested 31% of the area sown with sunflower, whilst corn amounts to 21% and soybean to 18%.

Our crop stock as of the end of the nine-month period totaled 55,664 tons, of which 9,857 correspond to wheat, 22,329 correspond to corn, 4,637 correspond to sunflower and 15,411 to soybean. The remaining stock comprises a variety of other crops.

In the period ended March 31, 2007 gross profit in this segment was Ps. 8.5 million compared to a profit of Ps. 6.3 million for the same period the previous fiscal year. Gross profit in this segment rose mainly as a result of an increase of approximately 27% in the price of crops.

In the current campaign, our agricultural activities extend over a surface area of 48,015 hectares, 25,307 of which are leased from third parties. The total number of hectares devoted to agricultural activities has risen by 30% compared to the previous year.

Beef Cattle

At March 31, 2007, the Company had a 100,605-head cattle stock, slightly higher than for the same period the previous year, with a total surface area devoted to beef cattle activities of 119,361 hectares.

Livestock sales decreased by 18% compared to the previous fiscal year, from Ps. 25.0 million at March 31, 2006 to Ps. 20.6 million at March 31, 2007. During the nine-month period of the current fiscal year, sales totaled 8,680 tons, whereas for the same period of fiscal year 2006 the tons sold had amounted to 10,839.

Gross profit in the cattle beef segment was Ps. 7.9 million, compared to Ps. 4.2 million for the same period of the previous fiscal year. This increase in the business unit’s gross profit is mainly due to the lower production and sales costs.

Cattle beef production was 8,112 tons, a 4.6% increase compared to the previous fiscal year.

During the first nine months of 2007, upward trends in the international prices of beef cattle intensified as a result of sustained demand (caused by the increase in the purchasing power of developing economies and higher consumption of red meat to the detriment of white meat) and of limited supply (derived from the restrictions arising from the requirements imposed by the health authorities on the main suppliers). These pressures fed local inflationary expectations, as a result of which the Argentine Government had to take the measures necessary to increase production in the area, such as a ban on exports and restrictions upon the minimum weight of cattle to be slaughtered. However, an agreement has been recently entered into between the government and farming institutions aimed at maintaining the fixed price of certain cuts whilst freeing the rest of the cuts to trade at market prices.

 

82


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Milk

Milk production increased by 15.7% in the nine-month period, from 10.9 million liters at March 31, 2006, to 12.6 million liters at March 31, 2007.

Gross profit in this segment at March 31, 2007 was Ps. 2.5 million, remaining unchanged from the levels recorded in the previous period.

At present, the Company’s dairy establishments are: “El Tigre”, equipped with state-of-the-art technology, and “La Juanita”, where the feeding system is mainly pasture-based (implying lower costs).

The Company recently opened a second dairy farm at La Juanita. This second dairy farm has a capacity to milk 1,200 cows per day. Productive capacity of this farm is expected to rise by approximately 24,000 liters per day, thereby generating more than 40,000 liters of milk per day.

Feed Lot

During this quarter the Company’s interest in Cactus Argentina S.A. changed from 50% to 24% due to its recent association with Tyson foods Inc. Therefore, for purposes of the results as of December 31, 2006 and the comparative information the 50% proportional consolidation with Cactus Argentina S.A. has been included.

Furthermore, the recent association with Tyson foods Inc. constitutes the first Argentine livestock vertically integrated project, which shall produce beef cattle cuts for the Argentine consumer and shall have access to the European market and other international markets.

Purchase and sale of farms

On March 30, 2007, we signed the preliminary agreement for the sale of 20,834 hectares of the “Tapenagá” farm. The sales price was agreed at US$ 7,292,000, of which US$ 1,000,000 was paid upon execution of the preliminary sales agreement, while the balance is to be financed. Delivery of possession will take place on May 29, 2007.

In addition, on January 19, 2007, Inversiones ganaderas S.A. (“IGSA”), a subsidiary of Cresud, executed a preliminary agreement with Arcor Sociedad Anónima Industrial y Comercial for the sale of 50 hectares of the “El Recreo” establishment owned by IGSA, for the sum of Ps. 433,700. As of March 31, this sum had been fully paid and possession of the land had been delivered.

In September 2005, we signed the title deed for the acquisition of “San Pedro”, a 6,022-hectare farm located in the Department of Concepción del Uruguay, province of Entre Ríos. The purchase price was agreed at US$ 16.0 million, of which US$ 9.5 million were paid upon execution of the title deed, US$ 4.0 million were paid on December 14, 2005, and US$ 1.05 were paid on September 1, 2006. The remaining US$ 1.4 million matures in September 2007.

 

83


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Development of marginal lands

We believe that the potential of the segment lies on the development of marginal land, as has been the case in various countries worldwide. With the help of state-of-the-art technology we can obtain yields similar to, and returns better than, those in the core areas.

During the first nine months of fiscal year 2007, development efforts continued at our “Los Pozos” farm located in the province of Salta, where 32,000 hectares have already been prepared for agricultural and/or livestock activities. A further 32,000 hectares continue to be developed.

Furthermore, 5,700 hectares of Cervera Agropecuaria have been prepared for production activities, and a further 30,000 hectares continue to be developed.

At March 31, 2007, Cresud’s land reserves amounted in the aggregate to 250,722 hectares, which had been acquired at very low prices. In our opinion, the development of these areas, accompanied by technological breakthroughs will contribute to appreciate the value of land which will in turn imply significant gains for the Company.

Expansion to Brazil

The Company continues to add properties for the production of crops, cotton and sugar cane.

“Jatobá” Farm

Brasil Agro purchased the “Jatobá” farm in association with the Maeda group (which holds a 10% interest). This farm has an area of 31,500 hectares and is located in the district of Jaborandi, in the State of Bahia. In this farm, the Company plans to start large-scale production of crops and cotton. The farm was purchased at a price of R$35.4 million (US$ 17.2 million)1.

“Araucária” Farm

In April, the Company executed an irrevocable agreement for the purchase of a property known as “Araucária”, a farm of 15,543 rural hectares located in the district of Mineiros (State of Goias), intended for the production of sugar cane. The purchase price was R$ 80.0 million (US$ 38.9 million) and the transaction was made in association with Brenco (which holds a 25% interest)1.

“Alto Taquari” Farm

In April, the Company executed an agreement for the purchase of “Alto Taquari” farm. The farm has 5,266 hectares and is located in the district of Taquari (Mato Grosso). The purchase price was R$35.0 million (US$ 17.0 million). In this property, the Company plans to produce sugar cane. If any of the conditions in the Agreement is not met, the Company may, at its exclusive discretion, terminate the Agreement free of any liens or penalty.

BrasilAgro will continue to focus its activities on agricultural Real Estate and on the development of its four main business lines: sugar cane; crops and cotton; forestry and livestock.


1

Calculated at an exchange rate of Reais 2.0554 = US$ 1 (as of Mach 30, 2007).

 

84


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Internet

The Company holds a 70% equity interest in Fyo.com, an Internet site. Fyo.com’s position as leader in the farming sector continues to strengthen on the basis of the broad range of business services offered to the sector and Fyo.com’s role in direct sales of supplies and crop brokerage services.

At present, Futuros y Opciones.com S.A. has a database of 60,000 users and more than 7,000 farmers authorized to carry out business. The strategy implemented consists in focusing on business services to farmers by leveraging on Cresud’s experience and operating capacity in the business, with Fyo.com being the link with customers.

During the period ended March 31, 2007, Futuros y Opciones.com S.A. posted income for Ps. 2.7 million, 53% higher than the income for the same period of the previous fiscal year. Net results for the period were a Ps. 0.2 million loss, as compared to the Ps. 0.5 million loss for the same period in fiscal year 2006.

 

85


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Principal indicators for the nine-month periods ended March 31, 2007 and 2006

 

     9-month period
ended March 31, 2007
   9-month period
ended March 31, 2006
   %  

Sales (volume)

        

Wheat (tons)

   17,809    9,685    83.9 %

Corn (tons)

   8,534    53,364    -84.0 %

Sunflower (tons)

   1,534    1,810    -15.3 %

Soybean (tons)

   12,475    26,674    -53.2 %

Others (tons)

   —      3,460    0.0 %
                

Total crops (tons)

   40,352    94,993    -57.5 %
                

Beef cattle (tons)

   8,680    10,839    -19.9 %

Milk (Thousands of liters)

   12,570    10,864    15.7 %

Production

        

Wheat (Tons)

   16,902    21,615    -21,8 %

Corn (Tons)

   27,784    11,299    145.9 %

Sunflower (Tons)

   5,713    7,118    -19.7 %

Soybean (Tons)

   16,227    9,017    79.9 %

Beef cattle (Tons)

   8,112    7,759    4.6 %

Milk (Thousands of liters)

   12,570    10,864    15.7 %

Exploited surface (hectares)

        

Crops             Ownedfarms

   22,708    20,018    13.4 %

                        Leasedfarms

   25,307    17,004    48.8 %

Beef cattle     Ownedfarms

   104,933    97,299    7.8 %

                        Leasedfarms

   14,428    32,647    -55.8 %

Dairy              Ownedfarms

   2,376    1,505    57.9 %

Land Reserve (hectares)

   250,722    258,477    -3.0 %

Surface under irrigation

        

                        Ownedfarms

   3,701    3,750    -1.3 %

                        Leasedfarms

   1,002    —      0.0 %

Storage capacity (tons)

        

                        Ownedplants

   10,000    18,000    -44.4 %

                        Leasedplants

   8,000    —      0.0 %

Total head of cattle

   100,605    92,773    8.4 %

Dairy farm stock (head)

   7,043    5,729    22.9 %

Milking cows

   3,520    3,307    6.4 %

Note: This table does neither include Agro-Uranga (35.72% of 8,299 hectares) nor Agropecuaria Cervera S.A. (99.99% of 160,000 hectares under concession).

 

86


Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Business Highlight (Continued)

 

Results from IRSA Inversiones y Representaciones S.A.

The result derived from our equity interest in IRSA Inversiones y Representaciones (NYSE: IRS – BCBA: IRSA) showed a Ps. 113.9 million profit in the nine-month period compared to a Ps. 40.9 million profit at March 31, 2006.

The 178.3% increase in net income compared to the same period of the previous year is undoubtedly outstanding, and was driven by the improvement in both operating income and financial results.

IRSA’s income increased by 36.9%, from Ps. 381.3 million as of March 31, 2006 to Ps. 521.9 million as of March 31, 2007, explained by the following increases (i) Ps. 42.7 million in the Shopping Centers segment, (ii) Ps. 59.6 million in the Credit Card segment, (iii) Ps. 7.2 million in the Sales and Developments segment, (iv) Ps. 14.7 million in the Hotels segment, (v) Ps. 16.4 million in the Offices and Other Rental Properties segment and (vi) Ps. 0.1 million in Financial Operations and Others segment.

IRSA is Argentina’s leading real estate company with a fully diversified portfolio of properties. IRSA participates in the following business segments:

 

   

Office rental with more than 137,581 sqm. for lease of premium offices.

 

   

Operation of Shopping Centers through its 62.36% equity interest in Alto Palermo S.A. (APSA) (Nasdaq: APSA, BCBA: APSA). APSA is one of the leading operators of shopping centers in Argentina and owns or has majority interests in 10 shopping centers with 277,513 sqm. of Gross Leasable Area.

 

   

Holding and operation of luxury hotels through its equity interest in 3 five-star hotels.

Besides, IRSA owns residential properties for sale and land reserves for current and future developments valued at Ps. 532.35 million.

Additionally, IRSA has an 11.76% ownership interest in Banco Hipotecario, the leading Argentine mortgage bank whose net worth amounts to Ps. 2,639 million. This amount has been calculated in accordance with the regulations of the Argentine Central Bank on the basis of temporary amounts as at the time of issuance of IRSA’s financial statements at March 31, 2007, Banco Hipotecario S.A. had not yet completed the issuance and approval of its financial statements.

IRSA’s total consolidated assets amount to Ps. 3,677.7 million and its net worth amounts to Ps. 1,633.4 million.

At March 31, 2007, the amount of outstanding Convertible Notes and warrants was US$ 23.6 million and 44.7 million, respectively. Outstanding shares at that date were 453,354,332.

At March 31, 2007, our equity interest in IRSA amounted to 25.6% of its total outstanding shares. In addition, our holdings of Convertible Notes issued by IRSA amount to US$ 12.0 million. These Convertible Notes bear an option to purchase additional shares in IRSA. Should the option and conversion rights be exercised on an equal footing with all remaining bondholders, Cresud would become the owner of 34.3% of IRSA’s capital stock. Our ownership interest in IRSA is currently valued by application of the proportional equity method.

 

87


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Other Highlights


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

As of the date of this report, Cresud’s indebtedness resulting from the issuance of Convertible Notes diminished by US$ 46,932,089, from the US$ 50.0 million originally issued, as a result of the conversions received.

In addition, as of the date of this report, a total amount of 46,626,479 Warrants have been exercised, which generated income for the company in the amount of US$ 55.9 million.

Therefore, after giving effect to all the conversions received and warrants exercised, the amount of Convertible Notes outstanding as of the date of this report is 3,067,911 and the amount of outstanding Warrants is 3,373,521. The amount of shares issued was 73,154,809, which raised the company’s total outstanding shares to 308,527,234.

At March 31, 2007, the Company’s holdings in IRSA’s Convertible Notes amounted to US$ 12.0 million; such Notes accrue interest at an 8% annual rate (payable on a half-yearly basis). During this period, Cresud did not make any conversion.

The following is a detail of the past, present and potential situation of the Convertible Notes issued on November 14, 2002 under the laws of the State of New York at an 8% interest rate (payable on a half-yearly basis) maturing on November 14, 2007 and convertible at a price of US$ 0.5078 per share of 1.00 par value (1.9693 shares for each Convertible Note). The Convertible Notes also have a warrant attached that allows its holder to purchase 1.9693 shares of Ps. 1.00 par value at a price of US$ 0.6093 each per Convertible Note.

LOGO

Note: Total conversion refers to a situation in which all the holders of Convertible Notes exercise their right to convert the notes into shares and all the options granted by the Warrants.

LOGO

 

88


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Prospects for the coming quarter

Prospects for the coming quarter are quite encouraging, as the prices of commodities continue to be strong. Definition of this pricing trend will be determined by the confirmation of actual sowings in the United States.

As concerns the livestock market, upward trends in the international prices of beef cattle continue to intensify, and in the light of the agreement recently entered into between the Argentine Government and farming institutions, we expect a positive price restatement.

As concerns the milk market, the low Argentine production caused by the weather conditions and higher demand from the domestic market have led to an increase in prices in the last months, and this positive trend is expected to continue.

 

Eduardo S. Elsztain
President

 

89


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Comparative Shareholders’ Equity Structure

 

    

As of March
31, 2007

Pesos

  

As of March
31, 2006

Pesos

  

As of March
31, 2005

Pesos

  

As of March
31, 2004

Pesos

  

As of March
31, 2003

Pesos

Current Assets

   230,809,722    95,246,431    89,091,991    69,522,344    82,707,765

Non-current Assets

   809,502,393    685,867,345    609,533,419    525,729,702    497,572,921
                        

Total Assets

   1,040,312,115    781,113,776    698,625,410    595,252,046    580,280,686
                        

Current Liabilities

   161,925,246    66,129,331    66,430,672    12,520,393    27,866,941

Non-current Liabilities

   68,831,254    161,296,345    152,099,365    151,890,701    193,294,773
                        

Total Liabilities

   230,756,500    227,425,676    218,530,037    164,411,094    221,161,714
                        

Minority Interest

   495,572    320,465    5,366    104,178    318,671
                        

Shareholders’ Equity

   809,060,043    553,367,635    480,090,007    430,736,774    358,800,301
                        
   1,040,312,115    781,113,776    698,625,410    595,252,046    580,280,686
                        

Comparative Income Structure

 

    

As of March
31, 2007

Pesos

   

As of March
31, 2006

Pesos

   

As of March
31, 2005

Pesos

   

As of March
31, 2004

Pesos

   

As of March
31, 2003

Pesos

 

Operating income (loss)

   12,728,279     18,674,291     7,058,416     5,486,663     20,659,485  

Financial and holding gain (loss)

   (8,836,900 )   15,219,507     (2,194,831 )   602,205     (13,012,668 )

Other income and expenses and income on equity

   37,188,153     10,123,674     10,781,030     2,359,620     39,728,645  

Management fees

   (4,079,574 )   (2,600,512 )   (1,059,305 )   (529,129 )   (3,419,171 )
                              

Operating net income (loss)

   36,999,958     41,416,959     14,585,310     7,919,359     43,956,291  

Income tax

   (348,091 )   (18,176,414 )   (5,111,658 )   (3,259,735 )   (7,964,246 )

Minority Interest

   64,299     136,482     60,085     102,532     112,129  
                              

Net Income

   36,716,166     23,377,027     9,533,737     4,762,156     36,104,174  
                              

Production volume

 

    

Three-month

period
March 31,

2007

   Accumulated
July 1, 2006 to
March 31,
2007
  

Three-month

period
March 31,
2006

   Accumulated
July 1, 2005 to
March 31,
2006
  

Three-month

period
March 31,
2005

   Accumulated
July 1,
2004 to
March 31,
2005
  

Three-month

period
March 31,
2004

   Accumulated
July 1, 2003 to
March 31,
2004
  

Three-month

period
March 31,
2003

   Accumulated
July 1, 2002 to
March 31,
2003

Beef Cattle (in Kgs.)

   2,912,046    8,112,493    3,226,444    7,758,548    2,492,476    8,480,476    3,364,013    8,475,050    2,480,263    7,986,199

Butyraceous (in Kgs.)

   137,260    455,048    110,820    397,149    49,490    175,086    49,984    185,179    44,113    157,801

Crops (in quintals) *

   498,974    696,416    351,735    522,413    308,221    532,601    185,386    325,436    274,577    349,321

* One quintals equals one hundred kilograms

 

Eduardo S. Elsztain
President

 

90


Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Sales volume

 

    

Three-month

period
March 31,
2007

   Accumulated
July 1, 2006 to
March 31,
2007
  

Three-month

period
March 31,
2006

   Accumulated
July 1, 2005 to
March 31,
2006
  

Three-month

period
March 31,
2005

   Accumulated
July 1, 2004 to
March 31,
2005
  

Three-month

period
March 31,
2004

   Accumulated
July 1, 2003 to
March 31,
2004
  

Three-month

period
March 31,
2003

   Accumulated
July 1, 2002 to
March 31,
2003

Beef Cattle (in Kgs.)

   1,984,396    8,680,231    3,228,274    10,838,907    4,125,490    13,078,115    4,229,517    10,645,720    2,478,953    7,334,778

Butyraceous (in Kgs.)

   137,260    455,048    110,820    397,149    49,490    175,086    49,984    185,179    44,113    157,801

Crops (in quintals) *

   90,961    403,518    86,461    949,929    136,257    455,315    154,306    389,377    173,570    884,990

* One quintals equals one hundred kilograms

Local Market

 

    

Three-month

period
March 31,
2007

   Accumulated
July 1, 2006 to
March 31,
2007
  

Three-month

period
March 31,
2006

   Accumulated
July 1, 2005 to
March 31,
2006
  

Three-month

period
March 31,
2005

   Accumulated
July 1, 2004 to
March 31,
2005
  

Three-month

period
March 31,
2004

   Accumulated
July 1, 2003 to
March 31,
2004
  

Three-month

period
March 31,
2003

   Accumulated
July 1, 2002 to
March 31,
2003

Beef Cattle (in Kgs.)

   1,984,396    8,680,231    3,228,274    10,838,907    4,125,490    13,078,115    4,229,517    10,645,720    2,478,953    7,334,778

Butyraceous (in Kgs.)

   137,260    455,048    110,820    397,149    49,490    175,086    49,984    185,179    44,113    157,801

Crops (in quintals) *

   90,961    403,518    86,461    949,929    136,257    455,315    154,306    389,377    173,570    884,990

* One quintals equals one hundred kilograms

Exports

There were no exports (foreign trade) in the last five fiscal years.

Ratios

 

    

As of March 31,
2007

Pesos

  

As of March 31,
2006

Pesos

  

As of March 31,
2005

Pesos

  

As of March 31,
2004

Pesos

  

As of March 31,

2003

Pesos

Liquidity

   1.425    1.440    1.341    5.553    2.968

Solvency

   3.506    2.433    2.197    2.620    1.622

Non-current assets to assets

   0.778    0.878    0.872    0.883    0.857

Return on Equity

   0.054    0.045    0.021    0.012    0.109

 

Eduardo S. Elsztain
President

 

91


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

CUIT 30-50930070-0

 

1. We have reviewed the balance sheets of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria at March 31, 2007 and 2006, and the related statements of income, of changes in shareholders’ equity and of cash flows for the nine-month periods ended March 31, 2007 and 2006 and the complementary notes 1 to 22 and schedules A, B, C, E, F.1, F.2, 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, 2006 and 2005, on which we issued our unqualified report dated September 8, 2006, we report that:

 

  a) The financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria at March 31, 2007 and 2006 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, 2006.


4. In accordance with current regulations, we report that:

 

  a) the financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria and its consolidated financial statements have been transcribed to the “Inventory and Balance Sheet Book” and comply, within the field of our competence, with the Corporations Law and pertinent resolutions of the National Securities Commission;

 

  b) the financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria arise from official accounting records carried in all formal respects in accordance with legal requirements; that maintain the security and integrity conditions based on which they were authorized by the National Securities Commission;

 

  c) we have read the business highlights and the additional information to the notes to the financial statements required by section 68 of the Buenos Aires Stock Exchange Regulations, on which, as regards those matters that are within our competence, we have no observations to make;

 

  d) at March 31, 2007, there is no debt accrued in favor of the Integrated Pension and Survivors’ Benefit System according to the accounting.

Autonomus City of Buenos Aires, May 14, 2007.

 

PRICE WATERHOUSE & CO. S.R.L.

(Partner)

Dr. Andrés Suarez


SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Buenos Aires, Argentina.

CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA

FINANCIERA Y AGROPECUARIA

 

By:  

/S/ Saúl Zang

Name:   Saúl Zang
Title:   Vice Chairman of the Board of Directors

Dated: May 15, 2007