Form 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2008

CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA

FINANCIERA Y AGROPECUARIA

(Exact name of Registrant as specified in its charter)

CRESUD INC.

(Translation of registrant’s name into English)

Republic of Argentina

(Jurisdiction of incorporation or organization)

Moreno 877, 23rd Floor, (C1091AAQ)

Buenos Aires, Argentina

(Address of principal executive offices)

Form 20-F  x    Form 40-F  ¨

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

Yes  ¨    No  x

 

 

 


Table of Contents

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

(THE “COMPANY”)

REPORT ON FORM 6-K

Attached is a copy of the English translation of the Financial Statements for the three-month period ended on September 30, 2008 and on September 30, 2007 filed by the Company with the Bolsa de Comercio de Buenos Aires and with the Comisión Nacional de Valores.


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera

y Agropecuaria

Financial Statements

corresponding to the periods

ended September 30, 2008 and 2007


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria

Financial Statements

 

Index

  

Presentation

  

Consolidated Balance Sheet

   2

Consolidated Statement of Operations

   3

Consolidated Statement of Cash Flows

   4

Notes to the Consolidated Financial Statements

   5

Balance Sheet

   19

Statement of Operations

   20

Statement of Changes in Shareholders’ Equity

   21

Statement of Cash Flows

   22

Notes to the Financial Statements

   23

Schedules

   61

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

   70

Stock Exchange Regulations

  

Business Highlights

   76

Report of Independent Auditors

   89


Table of Contents
Name of the Company:    Cresud Sociedad Anónima
   Comercial, Inmobiliaria,
   Financiera y Agropecuaria
Legal Address:    Moreno 877, 23rd Floor   
   Ciudad Autónoma de Buenos Aires   
Principal Activity:    Agriculture, livestock and real-estate   
Fiscal year No. 74 started on July 1, 2008
Financial Statements for the period ended September 30, 2008
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:    July 28, 2008      
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

   501,536,281    501,536,281    501,536,281
              

 

1


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Balance Sheet as of September 30, 2008 and 2007 and June 30, 2008

 

    September 30,
2008

(Notes 1, 2 and 3)
Pesos
  June 30, 2008
(Notes 1, 2 and 3)
Pesos
  September 30,
2007
(Notes 1, 2 and 3)
Pesos

ASSETS

     

Current Assets

     

Cash and banks (Note 4.a.)

  29,737,433   47,795,227   9,957,241

Investments (Note 4.b.)

  299,946,622   485,292,447   5,684,184

Trade accounts receivable (Note 4.c.)

  35,516,404   35,792,871   22,539,941

Other receivables (Note 4.d.)

  89,826,296   55,390,709   63,212,063

Inventories (Note 4.e.)

  89,847,098   111,525,262   55,761,227

Other assets (Note 4.f.)

  —     1,070,506   —  
           

Total current assets

  544,873,853   736,867,022   157,154,656
           
     
     

Non-current assets

     

Trade accounts receivable (Note 4.c.)

  374,812   —     —  

Other receivables (Note 4.d.)

  41,095,509   41,364,810   41,960,410

Inventories (Note 4.e.)

  70,881,746   76,113,042   63,250,421

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

  958,394,563   925,618,251   543,808,007

Other investments (Note 4.b.)

  352,260   352,260   352,260

Fixed assets, net (Note 4.g.)

  289,431,359   266,615,763   251,794,814

Intangible assets, net (Note 4.h.)

  22,640,888   22,829,041   23,581,646
           

Total Non-Current Assets

  1,383,171,137   1,332,893,167   924,747,558
           

Total Assets

  1,928,044,990   2,069,760,189   1,081,902,214
           

LIABILITIES

     

Current Liabilities

     

Debts:

     

Trade accounts payable (Note 4.i.)

  44,365,668   49,539,528   44,049,135

Loans (Note 4.j.)

  106,579,702   195,600,209   128,693,724

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

  4,360,435   6,409,289   3,009,195

Taxes payable (Note 4.l.)

  12,206,174   10,324,198   8,565,732

Other debts (Note 4.m)

  19,927,464   473,960   4,882,150
           

Total Debts

  187,439,443   262,347,184   189,199,936
           

Total current liabilities

  187,439,443   262,347,184   189,199,936
           

Non-current liabilities

     

Trade accounts payable (Note 4.i.)

  —     —     11,034

Loans (Note 4.j.)

  —     —     25,200,000

Taxes payable (Note 4.l.)

  42,978,265   41,817,828   47,801,186

Other debts (Note 4.m.)

  279,845   293,386   334,009

Provisions (Note 4.n.)

  1,542,263   1,803,330   1,752,101
           

Total Non-current liabilities

  44,800,373   43,914,544   75,098,330
           

Total Liabilities

  232,239,816   306,261,728   264,298,266
           

Minority interest

  1,211,320   1,160,330   900,168
           

SHAREHOLDERS’ EQUITY

  1,694,593,854   1,762,338,131   816,703,780
           

Total Liabilities and Shareholders’ Equity

  1,928,044,990   2,069,760,189   1,081,902,214
           

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

 

 
Alejandro G. Elsztain
    Vice President

 

2


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Operations

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended September 30, 2008 and 2007

 

     September 30, 2008
(Notes 1, 2 and 3)
Pesos
    September 30, 2007
(Notes 1, 2 and 3)
Pesos
 

Production income:

    

Crops

   6,502,806     3,188,380  

Beef cattle

   1,951,032     3,886,877  

Milk

   6,064,398     4,244,943  
            

Total production income

   14,518,236     11,320,200  
            

Cost of production:

    

Crops

   (6,736,853 )   (4,193,440 )

Beef cattle

   (4,904,445 )   (5,660,484 )

Milk

   (4,991,858 )   (3,052,007 )
            

Total cost of production

   (16,633,156 )   (12,905,931 )
            

Production loss

   (2,114,920 )   (1,585,731 )
            

Sales:

    

Crops

   50,761,231     18,554,889  

Beef cattle

   5,741,636     11,834,626  

Milk

   5,307,795     4,112,227  

Others

   12,859,513     3,762,964  
            

Total Sales

   74,670,175     38,264,706  
            

Cost of sales:

    

Crops

   (41,530,940 )   (18,015,606 )

Beef cattle

   (5,534,761 )   (10,718,468 )

Milk

   (5,327,808 )   (4,112,227 )

Others

   (9,727,640 )   (2,393,254 )
            

Total cost of sales

   (62,121,149 )   (35,239,555 )
            

Sales profit

   12,549,026     3,025,151  
            

Gross profit

   10,434,106     1,439,420  
            

Selling expenses

   (7,842,221 )   (2,936,374 )

Administrative expenses

   (6,352,550 )   (4,228,067 )

Holding gain – Beef cattle

   (1,111,393 )   514,151  

Holding gain – Crops, raw materials and MAT

   (3,160,019 )   (1,957,073 )
            

Operating expense

   (8,032,077 )   (7,167,943 )
            

Financial gain (loss)

    

Generated by assets:

    

Exchange differences and discounts

   15,357,308     3,245,600  

Interest income

   1,615,032     973,118  

Doubtful Accounts

   178,873     19,233  

Tax on banking debits and credits

   (1,725,186 )   (912,089 )

Holding gain and result of transactions on securities investment

   1,292,421     567,330  

Interest on bonds

   —       (387,392 )

Others

   (9,329 )   8,729  
            

Total

   16,709,119     3,514,529  
            

Generated by liabilities:

    

Interest on Convertible bonds

   —       (92,362 )

Interest on loans

   (5,291,161 )   (2,975,638 )

Others

   (284,241 )   (319,900 )

Exchange differences and discounts

   (4,958,368 )   (2,042,869 )
            

Total

   (10,533,770 )   (5,430,769 )
            

Other income and expenses, net

    

Gain (loss) from other fixed assets sales

   111,564     (118 )

Others

   32,748     (4,495 )

Shareholders’ personal assets tax

   (2,120,326 )   (1,544,284 )
            
   (1,976,014 )   (1,548,897 )
            

Loss from related companies

   (34,061,100 )   (5,271,034 )
            

Net loss before income tax and minority interest

   (37,893,842 )   (15,904,114 )
            

Income tax benefit

   546,155     3,365,000  

Minority interest

   (50,990 )   (63,296 )
            

Net loss for the period

   (37,398,677 )   (12,602,410 )
            

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

 

 
Alejandro G. Elsztain
    Vice President

 

3


Table of Contents

Cresud Sociedad Anónima

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Statement of Cash Flows

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended September 30, 2008 and 2007

 

     September 30, 2008
(Notes 1, 2 and 3)
Pesos
    September 30, 2007
(Notes 1, 2 and 3)
Pesos
 

Changes in cash and cash equivalents

    

Cash and cash equivalents at the beginning of the year

   521,086,431     85,243,861  

Cash and cash equivalents at the end of the period

   319,526,215     14,610,088  
            

Net decrease in cash and cash equivalents

   (201,560,216 )   (70,633,773 )

Causes of changes in cash and cash equivalents

    

Operating activities

    

Loss for the period

   (37,398,677 )   (12,602,410 )

Accrued interest during the period

   5,252,624     3,067,116  

Income tax

   (546,155 )   (3,365,000 )

Adjustments made to reach net cash flow from operating activities

    

Loss from interest in related companies

   34,061,100     5,271,034  

Minority interest

   50,990     63,296  

Increase in allowances, provisions and accruals

   786,593     11,185,350  

Depreciation of fixed assets

   1,649,634     1,188,631  

Amortization of intangible assets

   188,153     —    

Holding gain – Inventory

   4,271,412     1,442,922  

Financial results

   1,774,142     (79,217 )

(Gain) loss from sale of fixed assets

   (111,564 )   118  

Changes in operating assets and liabilities

    

Decrease in current investments

   69,261     97,268  

(Increase) decrease in trade accounts receivable

   (182,544 )   15,371,423  

Increase in other receivables

   (37,254,924 )   (21,325,206 )

Decrease in inventories

   22,435,629     108,830  

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

   1,539,714     510,712  

(Decrease) increase in trade accounts payable

   (6,137,321 )   1,716,465  

Dividends collected

   158,983     589,482  

Increase (Decrease) in other debts

   4,340,593     (1,381,893 )
            

Cash flows (applied to) provided by operating activities

   (5,052,357 )   1,858,921  
            

Investment activities

    

Increase in interest related companies

   (76,505,091 )   (77,184,802 )

Acquisition and upgrading of fixed assets

   (24,295,768 )   (6,823,214 )

Collection of receivables from sale of fixed assets

   2,929,655     2,302,627  

Sale of fixed assets

   1,215,027     1,539  
            

Cash flows applied to investment activities

   (96,656,177 )   (81,703,850 )
            

Financing activities

    

Exercise of Warrants and options

   23,002     4,008,355  

Increase in financial loans

   6,173,175     35,005,994  

Decrease in financial loans

   (100,446,306 )   (29,074,793 )

Repurchase of treasury stock

   (5,601,553 )   —    

Decrease in seller financing

   —       (728,400 )
            

Cash flows (applied to) provided by financing activities

   (99,851,682 )   9,211,156  
            

Net decrease in cash and cash equivalents

   (201,560,216 )   (70,633,773 )
            

Items not involving changes in cash and cash equivalents

    

Transfer of inventory to fixed assets

   202,419     242,327  

Increase in interest in related companies through a decrease of non-current investment

   —       37,764,000  

Increase in interest in related companies through an increase of current other debts

   13,423,440     —    

Conversion of notes in common stock

   —       2,767,494  

Repurchase of treasury stock unpaid

   1,675,930    
            

Complementary information

    

Interest paid

   2,226,684     2,201,335  

Income tax paid

   1,524,434     603,014  
            

 

 
Alejandro G. Elsztain
    Vice President

 

4


Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements

Corresponding to the periods beginning on July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

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 September 30, 2008 and 2007 and the Statements of Operations and the Statements of Cash Flows for the periods ended on those dates 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 (see Note 1.b to the basic financial statements).

The financial statements of the subsidiary companies Inversiones Ganaderas S.A., Futuros y Opciones.Com S.A. and Agropecuaria Cervera S.A. as of September 30, 2008 and 2007 have been used in order to determine line by line consolidation.

Likewise, as the companies Fyo Trading S.A. and Agrology S.A were organized on May 2 and 8, 2008, respectively, their financial statements are only consolidated as of September 30, 2008 and June 30, 2008.

For purposes of comparability, certain reclassifications have been made on the information as of June 30, 2008 and September 30, 2007.

These Financial Statements and the corresponding notes 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.

   68.10    68.10  

Agropecuaria Cervera S.A.

   90.00    99.99 (1)

Agrology S.A.

   97.00    99.99 (1)

Fyo Trading S.A.

   3.63    69.26 (2)

 

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

 

(2) Includes Interests in Participations of Futuros y Opciones.Com S.A.

 

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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 consolidated companies and not explained in the valuation criteria note of the holding company are as follows:

Valuation criteria - intangible assets

The total price paid for acquiring Agropecuaria Cervera S.A. was allocated to identified individual assets; they include Ps. 22.6 million as concession rights that are booked as intangible assets to these consolidated financial statements.

The amortization of the concession right of Agropecuaria Cervera S.A. is calculated according to its duration, whose remaining time is 30 years.

Valuation criteria - fixed assets

The tree plantations (wood) comprising this account has been valued at cost less respective accumulated depreciation as the Company has no intention to sell it, but use it in the production process.

Its cost was calculated according to a “Report on forestry mass increase” carried out by a forestry engineer at the request of the preceding shareholders of Agropecuaria Cervera S.A. (ACER).

ACER former board of directors based on such report as well as on owns estimates accepted the value of the tree plantations (wood) in Ps. 4,320,000.

Depreciation for the year was calculated based on the remaining concession term

Other considerations - concessions granted

Among other goods and rights ACER has the concession planning and 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.

On July 2, 2008, a memorandum of understanding was executed by which the concession agreement mentioned in note 13 was renegotiated.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 3:    (Continued)

 

Others assets

The other assets for which price-fixing prepayments were received and the contractual conditions of the transaction ensure the actual materialization of the sale and the income and they are valued at net realization value.

 

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Table of Contents

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 operations accounts

As of September 30, 2008 and 2007, and as of June 30, 2008 the principal items of the financial statements are as follow:

 

  a. Cash and banks

 

     September 30,
2008

Pesos
   June 30,
2008
Pesos
   September 30,
2007

Pesos

Cash

   144,796    143,329    39,459

Foreign currency

   20,659    19,471    8,000

Local currency checking account

   3,035,536    1,563,460    4,220,350

Foreign currency checking account

   23,722,817    44,627,787    4,721,291

Local currency saving account

   191,698    54,628    34,586

Foreign currency saving account

   636,184    102,177    512,072

Checks to be deposited

   1,985,743    1,284,375    421,483
              
   29,737,433    47,795,227    9,957,241
              

b.      Investments and Goodwill

     September 30,
2008

Pesos
   June 30,
2008
Pesos
   September 30,
2008

Pesos

Current Investments

        

Mutual Funds

        

-Bony Hamilton Fund (US$)

   64,214,523    146,303,888    1,805,840

-Banco Río Special Fund in pesos

   2,299,392    79,599    2,847,007

-Macro Pionero in pesos

   189,690    46,279    —  

-Deutsche Managed Dollar Fund (US$)

   188,075,653    245,683,963    —  

-Deutsche Managed Dollar Fund (€)

   33,471,630    —      —  

-Credit Suisse Overnight (US$)

   —      59,956,710    —  

-Credit Suisse Overnight (€)

   —      21,220,765    —  

-1784 BKB Fund

   1,537,894    —      —  
              
   289,788,782    473,291,204    4,652,847
              

Bonds and Convertible Notes (1)

        

Bonos IRSA 2017 (US$)

   9,496,923    11,285,167    —  

Global 2010 Bonds

   101,284    92,486    116,315

Bocon Pro 1

   630    630    630

Mortgage Bonds

   559,003    622,960    914,392
              
   10,157,840    12,001,243    1,031,337
              
   299,946,622    485,292,447    5,684,184
              
     September 30,
2008

Pesos
   June 30,
2008
Pesos
   September 30,
2008

Pesos

Non-current

        

Investment on controlled and related companies

        

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

        

AGRO-URANGA S.A.

        

Shares

   8,968,049    9,030,618    7,353,634

Higher property value

   11,179,150    11,179,150    11,179,150
              
   20,147,199    20,209,768    18,532,784
              

CACTUS ARGENTINA S.A.

        

Shares

   7,084,433    7,603,606    5,886,729
              
   7,084,433    7,603,606    5,886,729
              

 

(1) Do not qualify as cash equivalents in the Statement of Cash Flows.

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4:    (Continued)

 

  b. Investments and Goodwill (Continued)

 

     September 30,
2008

Pesos
    June 30,
2008
Pesos
    September 30,
2008

Pesos
 

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

      

IRSA Inversiones y Representaciones S.A.

      

Shares

   885,369,863     810,727,664     568,838,723  

Higher values (1)

   122,211,081     122,593,239     —    
                  
   1,007,580,944     933,320,903     568,838,723  
                  

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas

      

Shares

   134,922,671     160,519,236     72,492,917  

Higher values (2)

   6,887,167     6,887,167     —    
                  
   141,809,838     167,406,403     72,492,917  
                  
   1,176,622,414     1,128,540,680     665,751,153  
                  

Other Investments

      

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

      

Coprolán

   20,717     20,717     20,717  

Exportaciones Agroindustriales Argentinas S.A.

   241,556     241,556     241,556  

MAT

   89,987     89,987     89,987  
                  
   352,260     352,260     352,260  
                  

Goodwill

      

IRSA Inversiones y Representaciones S.A. negative goodwill (3)

   (234,664,931 )   (219,359,509 )   (121,943,146 )

IRSA Inversiones y Representaciones S.A. positive goodwill

   12,596,167     12,596,167     —    

BrasilAgro-Companhia Brasileira de Propiedades Agrícolas goodwill

   3,840,913     3,840,913     —    
                  
   (218,227,851 )   (202,922,429 )   (121,943,146 )
                  
   958,746,823     925,970,511     544,160,267  
                  

 

(1) Consist of Ps. 9,058,005 higher value of inventory, Ps. 72,634,723 higher value of investments, Ps. 74,002,447 higher value of fixed assets, Ps. 32,309,944 higher value of intangible assets, Ps. (12,388,354) higher value of liabilities and Ps. (53,405,684) higher value of tax effect.

 

(2) Consist of Ps. 10,595,643 higher value of fixed assets and Ps. (3,708,476) higher value of tax effect.

 

(3) The change as regards the previous year responds to additions for Ps. 18,305,851 and amortizations for Ps. 3,000,429.

 

  c. Trade accounts receivable

 

     September 30,
2008

Pesos
    June 30,
2008

Pesos
    September 30,
2008

Pesos
 

Accounts receivable in local currency

   33,175,890     30,357,657     20,386,038  

Less:

      

Allowance for doubtful accounts

   (465,219 )   (381,020 )   (353,126 )

Accounts receivable in foreign currency

   1,835,088     4,608,610     1,583,889  

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

      

Cactus Argentina S.A.

   953,617     1,206,691     923,140  

IRSA Inversiones y Representaciones S.A.

   16,095     —       —    

Comercializadora los Altos S.A. (Ex-Alto City.Com S.A.)

   933     933     —    
                  
   35,516,404     35,792,871     22,539,941  
                  

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4:    (Continued)

 

c.      Trade accounts receivable (Continued)

        
     September 30,
2008

Pesos
   June 30,
2008

Pesos
   September 30,
2008

Pesos

Non-current

        

Accounts receivable in foreign currency

   374,812    —      —  
              
   374,812    —      —  
              

d.      Other receivables

        
     September 30,
2008

Pesos
   June 30,
2008

Pesos
   September 30,
2007

Pesos

Current

        

Prepaid leases

   30,548,569    11,366,483    15,469,334

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

   13,571,851    14,853,470    10,351,869

Guarantee deposits and premiums

   7,225,929    1,174,275    12,018,952

Secured by mortgage

   5,814,746    6,188,608    6,921,671

Outstanding NDF

   2,472,786    —      —  

Prepaid expenses

   221,581    113,109    202,364

Other tax credit

   241,141    22,869    225,902

Tax on minimum presumed income

   52,429    41,944    —  

Outstanding Valued Added tax, Gross sales tax and others tax credit

   21,170,147    14,149,134    11,256,986

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

        

Cactus Argentina S.A.

   3,509,908    3,391,603    5,512,551

Agro-Uranga S.A.

   —      56,410    —  

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas

   305,949    305,949    30,537

Consultores Asset Management S.A.

   1,280,709    1,280,709    —  

Inversiones Financieras del Sur S.A.

   278,226    160,177    —  

Credits to employees

   207,513    237,749    202,396

Directors

   991    991    3,877

Others

   2,923,821    2,047,229    1,015,624
              
   89,826,296    55,390,709    63,212,063
              

Non-current

        

Prepaid leases

   —      —      179

Outstanding Valued Added tax and others tax credit

   12,304,460    12,814,725    9,371,830

Income tax prepayments

   —      147,930    11,741,506

Secured by mortgage

   5,534,894    7,048,582    11,123,438

Tax on minimum presumed income

   20,159,183    20,055,857    8,909,859

Deferred tax

   3,096,972    1,297,716    714,426

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

        

Cactus Argentina S.A.

   —      —      2,006

Alto Palermo S.A.

   —      —      70,215

IRSA Inversiones y Representaciones S.A.

   —      —      14,043

Others

   —      —      12,908
              
   41,095,509    41,364,810    41,960,410
              

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4:    (Continued)

 

e.      Inventories

        
     September 30,
2008

Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Beef cattle

   15,767,098    12,836,555    11,433,903

Crops

   24,354,623    67,224,392    26,231,584

Unharvested crops

   12,377,983    6,486,244    7,090,301

Seeds and fodder

   2,186,870    3,276,838    1,489,767

Materials and others

   35,160,524    21,701,233    9,515,672
              
   89,847,098    111,525,262    55,761,227
              

Non-Current

        

Beef cattle

   70,881,746    76,113,042    63,250,421
              
   70,881,746    76,113,042    63,250,421
              

f.       Others assets

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Properties for sale – (real state)

   —      1,070,506    —  
              
   —      1,070,506    —  
              

g.      Fixed assets

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Real estates

   170,033,757    169,161,018    165,730,670

Wire fences

   5,673,428    5,731,695    5,701,014

Watering troughs

   4,550,236    4,617,769    3,602,519

Alfalfa fields and meadows

   4,116,910    3,357,213    1,586,275

Buildings and constructions

   30,384,456    30,562,814    27,624,382

Machinery

   3,740,500    3,565,400    3,522,159

Vehicles

   1,160,757    905,959    978,945

Tools

   61,662    54,208    46,700

Furniture and equipment

   361,074    374,715    323,506

Feeder and Drinking troughs

   20,464    —      —  

Corral and leading lanes

   776,387    784,164    776,457

Roads

   1,495,255    1,545,786    1,324,487

Facilities

   7,657,059    7,974,314    6,733,797

Computer equipment

   772,522    852,928    1,020,341

Silo plants

   719,927    738,550    794,419

Constructions in progress

   19,850,145    11,100,818    11,795,342

Advances to suppliers

   14,660,588    1,709,727    747,591

Forest Products-Posts

   94,688    91,060    161,457

Forest Products raw materials

   4,140,000    4,176,000    4,320,000

Improvements in third parties buildings

   19,161,544    19,311,625    15,004,753
              
   289,431,359    266,615,763    251,794,814
              

h.      Intangible assets

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Concession rights

   22,640,888    22,829,041    23,581,646
              
   22,640,888    22,829,041    23,581,646
              

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

 

NOTE 4:     (Continued)

 

i.       Trade accounts payable

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Suppliers in local currency

   3,965,869    5,477,995    2,381,106

Suppliers in foreign currency (1)

   21,527,989    12,492,961    18,916,171

Subsidiaries, related companies Law No. 19,550

Section 33 and related parties:

        

Inversora Bolivar S.A.

   77,118    185,256    40,106

Alto Palermo S.A.

   758,766    3,374,758    1,772,646

Shoping Alto Palermo S.A.

   943    2,681    —  

IRSA Inversiones y Representaciones S.A.

   —      85,405    130,265

Cactus Argentina S.A.

   230,277    88,134    389,245

Estudio Zang, Bergel & Viñes

   485,009    893,152    44,799

Fundación IRSA

   1,073,000    1,073,000    1,800,000

CYRSA S.A.

   39,947    39,948    —  

Accrual for other expenses

   16,195,109    24,247,357    18,574,797

Accrual for harvest expenses

   11,641    1,578,881    —  
              
   44,365,668    49,539,528    44,049,135
              

Non-Current

        

Accrual for other expenses

   —      —      11,034
              
   —      —      11,034
              

 

(1) As of September 30, 2008 includes US$ 1,553,180 from the acquisition of farm “San Pedro” corresponding to suppliers in foreign currency secured by mortgage. See Note 11 to the basic financial statements.

 

j.       Loans

       
     September 30,
2008
Pesos
    June 30,
2008
Pesos
   September 30,
2007
Pesos
 

Current

       

Local financial loans

   91,762,949     171,138,334    122,455,684  

Foreign financial loans

   25,339,753     24,461,875    —    

Guarantee paid

   (10,523,000 )   —      —    

Convertible Notes 2007 Interest

     —      178,059  

Subsidiaries, related companies Law No. 19,550

Section 33 and related parties:

       

Directors

   —       —      5,022  

Convertible Notes 2007 expenses

   —       —      (2,872 )

Convertible Notes 2007

   —       —      5,951,991  

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

       

Directors

   —       —      105,840  
                 
   106,579,702     195,600,209    128,693,724  
                 

Non-Current

       

Foreign financial

   —       —      25,200,000  
                 
   —       —      25,200,000  
                 

 

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Table of Contents

Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 4:    (Continued)

 

k.      Salaries and social security payable

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Accrual for vacation and statutory annual bonus

   2,384,184    5,187,704    1,752,826

Social security taxes payable

   1,393,330    857,623    858,306

Salaries payable

   —      318,410    56,768

Health care payable

   575,474    34,760    338,440

Others

   7,447    10,792    2,855
              
   4,360,435    6,409,289    3,009,195
              

l.       Taxes payable

        
     September 30,
2008

Pesos
   June 30,
2008

Pesos
   September 30,
2007

Pesos

Current

        

Accrual for income tax

   382,788    290,125    —  

Tax on minimum presumed income

   7,614,852    8,993,932    6,695,477

Value added tax

   —      25,654    —  

Property tax payable

   47,472    46,251    —  

Taxes withheld Income tax

   1,625,587    663,912    812,973

Gross sales tax payable

   320,326    293,211    75,293

Taxes withheld-Gross sales tax payable

   19,870    1,877    —  

Taxes withheld-Value added tax payable

   60,669    —      13,358

Others

   2,134,610    9,236    968,631
              
   12,206,174    10,324,198    8,565,732
              

Non-current

        

Deferred income tax

   42,978,265    41,817,828    47,801,186
              
   42,978,265    41,817,828    47,801,186
              

m.    Other debts

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Premium collected

   4,150,280    —      3,890,946

Debt for purchase of shares

   15,099,370       —  

Management fees accrual

   —      —      704,444

Other income to be accrued

   54,164    54,164    54,164

Loan to FYO minority shareholders

   134,196    134,196    134,196

Subsidiaries, related companies Law No. 19,550

Section 33 and related parties:

        

Directors

   323,400    285,600    98,400

Others in local currency

   166,054    —      —  
              
   19,927,464    473,960    4,882,150
              

Non-current

        

Other income to be accrued

   279,845    293,386    334,009
              
   279,845    293,386    334,009
              

n.      Provisions

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Non-current law contingencies for pending lawsuits

   1,542,263    1,803,330    1,752,101
              
   1,542,263    1,803,330    1,752,101
              

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

 

NOTE 5:    EARNINGS PER SHARE

Following is a reconciliation between the weighted average of outstanding shares of common stock and the diluted weighted average of shares of common stock. As of September 30, 2008, it has been determined considering the possibility that the holders of options issued by the Company exercise them in shares of common stock of the Company up to 60,000,000 shares (See Note 16 to the basic financial statements). As of September 30, 2007, the diluted weighted average of shares of common stock has been determined considering the possibility that the holders of corporate bonds convertible into shares of common stock of the Company for up to an amount in nominal value of US$ 50,000,000, mentioned in Note 13 to the basic financial statements would exercise their right to convert the bonds they held into shares.

 

     September 30,
2008
    September 30,
2007
 

Weight average of outstanding shares of common stock

   501,241,869     310,012,653  

Diluted weighted average of shares of common stock

   560,484,776     321,214,392  
     September 30,
2008
    September 30,
2007
 

Earnings for the calculation of basic earnings per share

   (37,398,677 )   (12,602,410 )

Exchange differences

   —       159,297  

Financing expenses

   —       92,362  

Income tax

   —       (88,081 )

Earnings for the calculation of diluted earnings per share

   (37,398,677 )   (12,438,832 )

BASIC Earnings per share

   September 30,
2008
    September 30,
2007
 

Earnings

   (37,398,677 )   (12,602,410 )

Number of shares

   501,241,869     310,012,653  

Earnings per share

   (0.07 )   (0.04 )

DILUTED Earnings per share

   September 30,
2008
    September 30,
2007
 

Earnings

   (37,398,677 )   (12,438,832 )

Number of shares

   560,484,776     321,214,392  

Earnings per share

   (0.07 )   (0.04 )

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

 

NOTE 6:    SEGMENT INFORMATION

As of September 30, 2008:

 

Description

   Crops
Pesos
    Beef Cattle
Pesos
    Milk
Pesos
    Others
Pesos
    Without specific
allocation

Pesos
    Total
Pesos
 

Sales

   50,761,231     5,741,636     5,307,795     12,859,513     —       74,670,175  

Assets

   307,060,516     183,034,993     43,909,305     6,384,938 (1)   1,387,655,238     1,928,044,990  

Liabilities

   28,790,747     2,412,567     357,069     368,065     200,311,368     232,239,816  

Fixed asset additions (transfers)

   3,135,167     7,950,690     337,138     57,853     13,017,339     24,498,187  

Depreciation of fixed assets

   921,980     344,921     136,721     82,150     163,862     1,649,634  

Amortization of intangible assets

   —       —       —       188,153     —       188,153  

(Loss) Income from related parties

   (91,428 )   (519,530 )   (6,784 )   —       (33,443,358 )   (34,061,100 )

 

(1) Includes investment in BrasilAgro and IRSA.

As of September 30, 2007:

 

Description

   Crops
Pesos
   Beef Cattle
Pesos
   Milk
Pesos
   Others
Pesos
    Without specific
allocation

Pesos
    Total
Pesos
 

Sales

   18,554,889    11,834,626    4,112,227    3,762,964     —       38,264,706  

Assets

   225,762,080    167,423,210    46,339,993    10,609,283 (2)   631,767,648     1,081,902,214  

Liabilities

   25,488,657    3,434,933    612,432    341,044     234,421,200     264,298,266  

Fixed asset additions (transfers)

   4,590,610    1,835,557    203,645    674,726     56,770     7,361,308  

Depreciation of fixed assets

   654,880    308,930    37,272    37,108     150,441     1,188,631  

Amortization of intangible assets

   —      —      —      —       —       —    

Income (loss) from related parties

   404,879    63,997    50,316    —       (5,790,226 )   (5,271,034 )

 

(2) Includes investment in BrasilAgro and IRSA.

 

NOTE 7: “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. 2,914,600 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 High Court of the Province of Catamarca.

Additionally, in March 2007 -under the request of Exagrind S.A.- the court in charge of the case seized an inhibition of assets. This measure was lifted in June 2007 and a real estate on attachment has been accepted in replacement.

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

 

NOTE 8:    RESTRICTED ASSETS

In agreement with Note 7 to the consolidated financial statements, on June 4, 2007 a pre-judgement attachment was seized on the “Tali Sumaj” land owned by IGSA in substitution for a more burdensome measure that had been previously ordered.

NOTE 9:    ORGANIZATION OF NEW COMPANIES

On May 8, 2008, Agrology S.A. was organized with a capital stock of Ps. 50,000 out of which, Cresud contributed Ps. 48,500 (97%) and IGSA, Ps. 1,500 (3%).

Agrology S.A.’s purpose is engaging in contributing to, associating with or investing capital in persons or companies organized or to be organized or natural persons in Argentina or abroad by means of purchasing securities, shares, debentures, any kind of real estate property and instruments from any of the systems created or to be created and to manage and administer the equity interests in the companies it may control.

On May 2, 2008, FyO Trading S.A. was organized and its capital stock is made up by 3.63% held by Cresud and 96.37% held by FyO. The capital stock amounts to Ps. 20,000 and is subscribed and paid in.

 

NOTE 10: AGREEMENT TO PURCHASE SHARES OF COMMON STOCK AND GDRS AND AGREEMENT TO ASSIGN THE CREDIT LINE BETWEEN IGSA AND AGROLOGY

On May 28, 2008, IGSA sold to Agrology S.A. its equity interest in IRSA representative of 1,218,260 shares of common stock and 2,065,653 Global Depositary Receipts (“GDRs”) for Ps. 96,040,041. As counterpart of such transaction, Agrology replaced IGSA as borrower for the payable to Cresud it carried for up to such amount on the credit line previously agreed upon between the parties.

NOTE 11:    SECURITIES LOAN

Due to such sale of shares of common stock and GDRs mentioned in note 10 to the Consolidated Financial Statements, IGSA assigned Agrology S.A. the securities loan agreement with Inversiones Financieras del Sur S.A. executed on March 12, 2008, by which it was granted 790,631 Global Depositary Shares (GDRs) represented by Global Depositary Receipts representative of 10 book-entry shares of common stock, with a face value of PS. 1 per share, of IRSA Inversiones y Representaciones Sociedad Anónima, which are free of any encumbrance and are freely available for Agrology.

This loan does not imply transferring any political or economic rights related to the GDR’s, which will be held by Agrology. As regards exercising the political rights (vote), the Parties agreed that the Company will grand a power of attorney to Inversiones Financieras del Sur S.A. with the respective voting instructions. As regards dividends, Inversiones Financieras del Sur S.A. commits itself to transferring forthwith to Agrolgy the funds related to this item.

This loan will accrue interest at a monthly rate equivalent to 3-month LIBOR, plus 150 basis points. It will be effective for 30 days and may be renewed for periods, up to a maximum of 360 days.

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

NOTE 11:    (Continued)

 

On August 6, 2008, Agrology executed a securities loan agreement with Inversiones Financieras del Sur S.A. by which 1,275,022 Global Depository Shares were granted, represented by GRDs representative of 10 shares of common book-entry shares with a face value of Ps. 1 per share of IRSA. This agreement was executed under the same conditions as the previous agreement.

NOTE 12:    GRANTED GUARANTEES OF FUTUROS Y OPCIONES.COM S.A.

By means of brokerage of agreement with guarantee, Futuros y Opciones.com S.A. assumes before the purchaser the obligation to comply with the agreement in the event the seller did not deliver the merchandise. This compliance is implemented by returning the amounts agreed upon by such transaction that may be pending delivery, as well as the price difference that may arise between the price at which the agreement was executed and the price of the merchandise on the date the agreement is cancelled.

As of September 30, 2008 and June 30, 2008, the balance of brokerage transactions carried out by means of such agreement with guarantee, which was pending delivery, within the established contractual terms, amounted to Ps. 9,830,897 and Ps. 14,051,741, respectively.

As of September 30, 2008 and June 30, 2008, there are no agreements that failed to be complied with for which the Company may have been claimed in its capacity of guarantor.

 

NOTE 13: MEMORANDUM OF UNDERSTANDING TO RENEGOTIATE THE CONCESSION AGREEMENT

On July 2, 2008, a memorandum of understanding was executed by ACER in which the concession agreement for the northern area and the concession agreement for the southern area of the real estate property of Salta Forestal S.A. were renegotiated by establishing that the concessionaire should pay as concession fee the amount in US Dollars equivalent to a quintal of soybean per harvested hectare of any crop in the northern and southern area per year. It should be paid until July 1, of each year starting in 2009.

For the purposes of determining the concession fee, 2,000 hectares in the southern area rented out to Compañía Argentina de Granos are not included.

Likewise, ACER assume the commitment of reducing the concession scope by returning 30,000 hectares whose location will result from a sketch that the parties will prepare by mutual agreement.

On August 29, 2008, the Memorandum of Understanding was approved by Decree No. 3,766 of the Executive Power of the Province of Salta.

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

 

NOTE 14:    SALE OF PLOTS OF LAND BELONGING TO “EL RECREO”

On July 24, 2008, a title deed conveying ownership was executed by IGSA for the sale of two plots of land belonging to the establishment “El Recreo” (1,829 hectares), located in the Province of Catamarca. The transaction was agreed upon at USD 360,000, out of which USD 120,000 was collected upon executing the title deed.

The balance of USD 240,000 will be collected in two equal annual consecutive installment plus interest equivalent to LIBOR plus 3%.

Income for such transaction was recognized in the last year as provided by F.A.C.P.C.E.’s Technical Resolution No. 17 caption 5.11.2.

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria

Balance Sheet as of September 30, 2008 and 2007 and June 30, 2008

 

     September 30,
2008
(Notes 1 and 2)
Pesos
   June 30,
2008
(Notes 1 and 2)
Pesos
   September 30,
2007
(Notes 1 and 2)
Pesos

ASSETS

        

Current Assets

        

Cash and banks (Note 8.a.)

   26,095,947    46,686,394    7,944,940

Investments (Note 8.b.)

   297,457,540    485,166,569    4,838,857

Trade accounts receivable (Note 8.c.)

   36,455,736    30,904,077    19,349,744

Other receivables (Note 8.d.)

   224,468,611    182,116,126    62,679,505

Inventories (Note 8.e.)

   80,469,873    102,044,094    54,667,445
              

Total Current Assets

   664,947,707    846,917,260    149,480,491
              
        
        
        
        

Non-Current Assets

        

Other receivables (Note 8.d.)

   33,357,265    35,890,383    58,487,834

Inventories (Note 8.e.)

   67,527,300    72,531,891    61,004,920

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

   894,603,642    865,535,414    581,408,382

Other investments (Note 8.b.)

   262,273    262,273    262,273

Fixed assets, net (Schedule A)

   258,414,763    236,576,639    224,720,686
              

Total Non-Current Assets

   1,254,165,243    1,210,796,600    925,884,095
              

Total Assets

   1,919,112,950    2,057,713,860    1,075,364,586
              

LIABILITIES

        

Current Liabilities

        

Debts:

        

Trade accounts payable (Note 8.f.)

   40,978,561    45,837,964    41,745,135

Loans (Note 8.g.)

   106,579,702    193,106,374    128,693,724

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

   3,665,791    5,318,290    2,504,801

Taxes payable (Note 8.i.)

   11,267,374    9,768,870    8,177,033

Other debts (Note 8.j.)

   19,739,104    285,600    4,693,790
              

Total Debts

   182,230,532    254,317,098    185,814,483
              

Total Current Liabilities

   182,230,532    254,317,098    185,814,483
              

Non-Current Liabilities

        

Trade accounts payable (Note 8.f.)

   —      —      11,034

Loans (Note 8.g.)

   —      —      25,200,000

Taxes payable (Note 8.i.)

   42,203,601    40,975,673    47,590,073

Provisions (Schedule E)

   84,963    82,958    45,216
              

Total Non-Current Liabilities

   42,288,564    41,058,631    72,846,323
              

Total liabilities

   224,519,096    295,375,729    258,660,806
              
SHAREHOLDERS’ EQUITY    1,694,593,854    1,762,338,131    816,703,780
              

Total Liabilities and Shareholders’ Equity

   1,919,112,950    2,057,713,860    1,075,364,586
              

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

 

 
Alejandro G. Elsztain
    Vice President

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria

Statement of Operations

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

 

     September 30, 2008
(Notes 1 and 2)
Pesos
    September 30, 2007
(Notes 1 and 2)
Pesos
 

Production income:

    

Crops

   6,097,326     2,352,225  

Beef cattle

   1,668,149     3,851,532  

Milk

   6,064,398     4,244,943  
            

Total production income

   13,829,873     10,448,700  
            

Cost of production (Schedule F.2)

    

Crops

   (6,130,986 )   (3,557,378 )

Beef cattle

   (4,224,928 )   (5,479,615 )

Milk

   (4,991,858 )   (3,052,007 )
            

Total cost of sale

   (15,347,772 )   (12,089,000 )
            

Production loss

   (1,517,899 )   (1,640,300 )
            

Sales

    

Crops

   50,734,340     18,330,710  

Beef cattle

   4,400,789     11,086,951  

Milk

   5,307,795     4,112,227  

Other

   3,574,498     921,533  
            

Total Sales

   64,017,422     34,451,421  
            

Cost of sales (Schedule F.1)

    

Crops

   (41,698,761 )   (17,275,136 )

Beef cattle

   (4,182,175 )   (10,541,076 )

Milk

   (5,327,808 )   (4,112,227 )

Other

   (1,915,709 )   (154,756 )
            

Total cost of sale

   (53,124,453 )   (32,083,195 )
            

Sales profit

   10,892,969     2,368,226  
            

Gross profit

   9,375,070     727,926  
            

Selling expenses (Schedule H)

   (7,356,062 )   (2,667,226 )

Administrative expenses (Schedule H)

   (6,046,580 )   (4,125,998 )

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

   (1,125,409 )   442,909  

Holding gain – Crops, raw materials and MAT

   (2,646,888 )   (1,937,276 )
            

Operating loss

   (7,799,869 )   (7,559,665 )
            

Financial gain (loss):

    

Generated by assets:

    

Exchange differences and discounts

   15,722,941     3,245,715  

Interest income

   6,229,899     1,389,933  

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

    

Interest on Notes

   —       (387,392 )

Doubtful accounts (Schedule E)

   (84,199 )   19,233  

Tax on banking debits and credits

   (1,402,700 )   (718,661 )

Holding gain and transactions on security stock

   1,125,549     567,330  
            

Total

   21,591,490     4,116,158  
            

Generated by liabilities:

    

Financial expenses:

    

Interest on Convertible Notes

   —       (92,362 )

Interest on loans

   (5,252,624 )   (2,974,754 )

Others

   (284,241 )   (319,555 )

Exchange differences and discounts

   (4,698,505 )   (2,040,839 )
            

Total

   (10,235,370 )   (5,427,510 )
            

Other income and expenses, net:

    

Gain from other fixed assets sales

   111,520     —    

Shareholders’ Personal asset tax

   (2,120,326 )   (1,544,284 )

Others

   14,990     —    
            
   (1,993,816 )   (1,544,284 )
            

Loss from controlled and related companies (Note 8.k)

   (37,733,184 )   (5,511,597 )

Net loss before income tax

   (36,170,749 )   (15,926,898 )
            

Income tax (expense) benefit (Note 6)

   (1,227,928 )   3,324,488  
            

Net loss for the period

   (37,398,677 )   (12,602,410 )
            

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

 

  

Alejandro G. Elsztain

    Vice President

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria

Statement of Changes in Shareholders’ Equity

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

 

Items

  Shareholders’ contributions   Retained earnings   Unappropiated
Earnings
(deficit)

Pesos
    Transitory
conversion
differences
Pesos
    Total as of
September 30,
2008

Pesos
    Total as of
September 30,
2007

Pesos
 
  Capital (Note 3)   Inflation adjustment   Paid-in
capital (1)
Pesos
  Subtotal
Pesos
  Legal
Reserve
Pesos
  New
projects
reserve
Pesos
       
  Common
stock

Pesos
    Treasury
stock
Pesos
  Common
stock

Pesos
    Treasury
stock
Pesos
               

Balances at the beginning of the year

  501,531,865     —     166,218,124     —     879,187,851   1,546,937,840   15,644,814   158,743,802   22,948,038     18,063,637     1,762,338,131     824,954,215  

Conversion of Notes in common stock (Note 13)

                      —       2,767,494  

Exercise of Warrants (Note 13)

                      —       4,008,355  

Exercise of Options (Note 16)

  4,416           18,586   23,002           23,002     —    

Repurchase of treasury stock (Note 19)

  (2,153,886 )   2,153,886   (710,782 )   710,782           (7,277,483 )     (7,277,483 )   —    

Related companies Law 19,550 Section 33:

                      —       (6,300,417 )

IRSA (Note 14)

                       

Transitory conversion differences

                    (23,091,119 )   (23,091,119 )   3,876,543  

Net loss for the period

                  (37,398,677 )     (37,398,677 )   (12,602,410 )
                                                           

Balances as of September 30, 2008

  499,382,395     2,153,886   165,507,342     710,782   879,206,437   1,546,960,842   15,644,814   158,743,802   (21,728,122 )   (5,027,482 )   1,694,593,854    
                                                           

Balances as of September 30, 2007

  313,396,410     —     166,218,124     —     161,578,267   641,192,801   13,176,701   120,099,646   36,759,859     5,474,773       816,703,780  
                                                       

 

(1) See notes 2.p., 12.b. and 14.

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

 

  

Alejandro G. Elsztain

    Vice President

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Statement of Cash Flow

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

 

     September 30, 2008
(Notes 1 and 2)
Pesos
    September 30, 2007
(Notes 1 and 2)
Pesos
 

Changes in cash and cash equivalents

    

Cash and cash equivalents at the beginning of the year

   519,851,719     83,396,914  

Cash and cash equivalents at the end of the period

   313,395,647     11,752,460  
            

Net decrease in cash and cash equivalents

   (206,456,072 )   (71,644,454 )

Causes of changes in cash and cash equivalents

    

Operating activities

    

Loss for the period

   (37,398,677 )   (12,602,410 )

Accrued interest during the period

   965,028     3,067,116  

Income tax

   1,227,928     (3,324,488 )

Adjustments made to reach net cash flow from operating activities

    

Loss from interest in controlled and related companies

   37,558,364     5,511,597  

Increase in allowances , provisions and accruals

   881,267     11,180,855  

Depreciations of fixed assets

   1,315,197     1,118,038  

Amortization of intangible assets

   174,820     —    

Holding gain – Inventory

   3,772,297     1,494,367  

Financial results

   1,774,142     (79,217 )

Gain from sale of fixed assets

   (111,520 )   —    

Changes in operating assets and liabilities

    

Decrease in current investments

   69,261     97,268  

(Increase) decrease in trade accounts receivable

   (5,551,659 )   16,321,225  

Increase in other receivables

   (34,959,085 )   (19,708,264 )

Decrease (increase) in inventories

   22,604,096     (816,269 )

(Decrease) increase in social security payable & taxes payable and advances from customers

   (153,995 )   642,378  

(Decrease) increase in trade accounts payable

   (5,822,864 )   1,638,473  

Dividends collected

   158,983     589,482  

Increase (decrease) in other debts

   4,354,134     (1,368,353 )
            

Cash flows (applied to) provided by operating activities

   (9,142,283 )   3,761,798  
            

Investment activities

    

Increase in interest in related companies

   (76,469,091 )   (77,184,802 )

Increase in related companies loans

   (3,577,124 )   (6,245,780 )

Acquisition and upgrading of fixed assets

   (22,983,283 )   (3,489,453 )

Collections of receivables from sale of fixed assets

   2,929,655     2,302,627  

Sale of fixed assets

   143,901     —    
            

Cash flows applied to investment activities

   (99,955,942 )   (84,617,408 )
            

Financing activities

    

Exercise of Warrants and Options

   23,002     4,008,355  

Increase in financial loans

   6,173,175     35,005,994  

Decrease in financial loans

   (97,952,471 )   (29,074,793 )

Decrease in seller financing

   —       (728,400 )

Repurchase of treasury stock

   (5,601,553 )   —    
            

Cash flows (applied to) provided by financing activities

   (97,357,847 )   9,211,156  
            

Net decrease in cash and cash equivalents

   (206,456,072 )   (71,644,454 )
            

Items not involving changes in cash and cash equivalents

    

Transfer of inventory to fixed assets

   202,419     242,327  

Increase in interest in related companies through a decrease of non-current investment

   —       37,764,000  

Increase in interest in related companies through an increase of non-current other debts

   13,423,440     —    

Conversion of notes in common stock

   —       2,767,494  

Repurchase of treasury stock unpaid

   1,675,930     —    

Complementary information

    

Interest paid

   2,226,684     2,201,335  

Income tax paid

   1,428,607     540,749  

 

  

Alejandro G. Elsztain

    Vice President

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

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 Federación Argentina de Consejos Profesionales de Ciencias Económicas (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.

 

  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 issued on April 8, 2003 by the C.N.V., the Company discontinued the restatement of its financial statements. This criterion does not agree with the terms of Resolution MD 041/2003 of the C.P.C.E.C.A.B.A., by which the restatement of financial statements was discontinued as from October 1, 2003. As of September 30, 2008, this change has not generated any significant effect on the Company’s financial statements.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 1:    (Continued)

 

  d. Comparative Information

For comparison purposes, certain reclassifications have been made as of September 30, 2007 and June 30, 2008.

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 assessments 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 period.

Estimates are used when accounting for the allowance for doubtful accounts, depreciation and amortization, income taxes, deferred liabilities, transitory conversion differences, provisions for contingencies, accrual for expenses 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 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.

 

  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.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

  g. Derivates financial instruments

Futures relate to cereal commitments deliverable at a previously agreed price.

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

The assets and liabilities originated in derivatives instruments have been valued at their market value at period-end or year-end.

Differences generated by the application of the above mentioned valuation criteria to assets and liabilities from derivative instruments corresponding to crops have been recognized under net income of the fiscal year under “Holding gain – Crops, raw materials and MAT”.

As of September 30, 2008, purchases and sales of dollars operations are included under the financial results.

 

  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 period-end or year-end, 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): Unharvested crops 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 (NRV) as of each period-end or year-end.

Include:

 

   

Unharvested crops

 

   

Calves

 

  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 (NRV) as of each period-end or year-end.

Include:

 

   

Dairy cattle

 

   

Breeding cows

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

  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 and mares

 

  4) Farming Products: Crops: have been measured at net realization value, representing the different 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

 

   

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 (NRV).

Include:

 

   

Seeds

 

   

Agrochemicals

 

   

Semen - Cattle raising and dairy

 

   

Food and by-products

 

   

Packs and bundles

 

   

Poles

 

   

Bags and blankets

 

   

Silos raw materials

 

  6) The remaining inventories were valued at replacement cost.

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.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

Interests in subsidiaries and affiliates as of September 30, 2008 are as follows:

 

Subsidiaries and affiliates

   % Equity interest

Inversiones Ganaderas S.A.

   99.99

Agrology S.A.

   97.00

Agropecuaria Cervera S.A.

   90.00

Futuros y Opciones.Com S.A.

   68.10

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

   24.00

Agro Uranga S.A.

   35.72

IRSA Inversiones y Representaciones S.A. (“IRSA”) (Note 12.d)

   43.98

BrasilAgro Companhia Brasileira de Propiedades Agrícolas (“BrasilAgro”) (Note 12.a)

   14.39

Fyo Trading S.A.

   3.63

Exportaciones Agroindustriales Argentinas S.A. (Note 12.c.)

   0.36

The Company presents as complementary information the consolidated financial statements as of September 30, 2008 and 2007 with Inversiones Ganaderas S.A., Agropecuaria Cervera S.A. and Futuros y Opciones.Com S.A. Likewise, as the companies Fyo Trading S.A. and Agrology S.A were organized on May 2 and 8, 2008, respectively, their financial statements are only consolidated as of September 30, 2008 and June 30, 2008.

 

  2. Acquisitions of equity interests in companies

The acquisitions of companies were booked according to the “acquisition method” as established by Technical Resolution No. 18. All assets and liabilities acquired from independent third parties were adjusted to reflect their current value.

In such sense, the Company identified assets and liabilities acquired, including intangible assets such as: lease agreements acquired under conditions upper or lower than market; costs of executing lease agreements in effect (the latter being the market cost that the Company avoids to incur for acquiring lease agreement in effect), the value of trademarks acquired, the value of deposits related to the investment in Banco Hipotecario and the intangible value of customer relationships.

This identification process and the respective determination of current values call for complex determinations and significant estimates.

The Company used information contained in valuations carried out by independent experts as primary basis to assign the price paid to plots of land, buildings, shopping malls, inventory and hotels of the acquired companies. The amounts assigned to the rest of assets and liabilities were based on independent valuations or in the Company’s own analysis with comparable assets and liabilities.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

The current value of acquired intangible values considers the value of the property as if it were vacant.

As provided by Technical Resolution No. 21, if the value of tangible and intangible assets and liabilities exceeds the price paid, intangible assets acquired are not recognized as they would increase the negative goodwill generated by these acquisitions upon the purchase. If the price paid exceeds the value of identified tangible and intangible assets and liabilities, the surplus is considered to be positive goodwill.

This account includes the increase value paid for the purchase of shares of affiliated and related companies that may be assigned to assets acquired and (positive and negative) goodwill related to the affiliates BrasilAgro and IRSA.

 

  3. Goodwill

 

   

Negative goodwill

As provided by Technical Resolution No. 21, the negative goodwill related to the equity interest in the affiliate IRSA has been valued at cost restated as of February 28, 2003 as the case may be, which was calculated as the difference between the value paid for such investment and the current value of the equity interest acquired, the latter being determined as established in note 2.k.2.

IRSA’s shares were acquired by means of purchases on the market and converting of bonds into shares and exercising warrants issued by IRSA.

The (negative) goodwill related to acquiring an additional interest in IRSA during the three-month period ended September 30, 2008, resulting from the purchase of shares on the market, has been valued at cost, which was calculated as the difference between the value paid by such investment and the book value of the interest acquired. As to this goodwill, the Company is currently analyzing the book value of assets and liabilities acquired identified as provided by Technical Resolution No. 21, caption 1.3.1.

The amortization of the negative goodwill is recognized over a period equal to the weighted average of the remaining useful life of IRSA’s identifiable assets that are subject to depreciation, which ranges from 20 to 29 years or in an accelerated manner, the party proportional to the negative goodwill so long as IRSA carries its identifiable assets. Amortizations have been classified in the account “Loss from interests in controlled and related companies” in the Statement of Operations.

 

   

Positive goodwill

As provided by Technical Resolution No. 21, the positive goodwill related to the equity interest in the affiliates IRSA and BrasilAgro has been valued at cost, which was calculated as the difference between the value paid for such investments and the current value of the equity interests acquired, the latter being determined as established in note 2.k.2. IRSA and BrasilAgro shares were acquired by means purchases on the market.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

The positive goodwill has not been amortized as it has an undefined useful life.

Upon refining the useful life, the following factors have been considered: (i) nature and expected life of acquired businesses; (ii) stability and expected life of the respective industry branch; (iii) effects that the obsolescence of products, changes in demand and other economic factors may have on the acquired business; (iv) feasibility of maintaining the required disbursement value to obtain future economic benefits from the acquired business and (v) the control period over the acquired business and legal or contractual provisions that may affect its useful life.

Based on these factors, the Company has estimated that it is not possible to estimate the specific useful life for the positive goodwill related to equity interests in the affiliates IRSA and BrasilAgro generated by applying the “acquisition method” provided by Technical Resolution No. 18, and it has therefore determined that they shall have an undefined useful life.

As provided by Technical Resolution No. 18, if the Company determines that the goodwill has an undefined useful life, its amortization will not be computed and its recoverable value should be compared at each year-end to verify whether the its value has decreased, allocating losses for impairment in value to income for the year in which such losses were determined.

 

  l. Other investments

 

   

Investments in debt securities

IRSA’s Convertible Notes were valued at quotation value at period-end or year-end

 

   

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.) or at their cost for acquisitions made after such date.

 

  m. 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 the fiscal year.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

  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. Treasury stock

The acquisition cost of treasury stock has been debited from the account “unappropriated earnings” as provided by sec. 220, subsec. 2, Law No. 19,550.

Likewise, the “common stock account” was debited for the face value of repurchased shares and the “inflation adjustment of common stock account”, for the proportional portion of the adjustment for inflation related to the shares acquired. In turn, the accounts “Treasury stock” and “inflation adjustment of treasury stock account” were respectively credited.

 

  p. 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 captions 9 second part of 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.

 

   

Options issued: the value of options issued by the Company, which was determined as provided in note 16, has been allocated to the account Additional Paid-in Capital.

 

  q. 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.

 

  r. Results for the period

Production income has been determined based on quantitative and qualitative changes of stocks subject to the biological transformation process measured from the beginning of the year through the closing date of these financial statements.

Cattle and grain production cost calculated to reflect production income is reflected in Schedule F.2.

Cost of sales is calculated by inventory difference and the income for the production of meat, grain and milk is disclosed in the statement of income.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

The adjustment for valuation to the net realization value of grain has been calculated as the difference between the production value at net realization value (NRV) upon harvesting and the value of the same production valued at net realization value (NRV) as of the closing date of these financial statements.

Cattle holding gain is disclosed in a line of the statement of operations and Schedule F and is calculated as stated in Note 2.j.

The results generated by futures and options on the Futures Market are recognized under “Holding gain – Crops, raw materials and MAT” on the statement of operations. The closed positions are recognized as a difference between the exercise price and their close price; and the opens positions at the end of the period, as the difference between their exercise price and the market value price for futures, and as a difference between the premium and the market value premium for options.

The charges for consumption of assets were determined based on the values of such assets.

The rest of income for the year is disclosed at incurred cost.

Financial income segregated into that generated by assets and by liabilities is disclosed in the statement of operations.

 

  s. 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.

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.

 

  t. Tax on minimum presumed income

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.

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.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 2:    (Continued)

 

Because since this year, the law which created this tax has not been extended, the Company did not account the provision for the tax on minimum presumed income since this period.

 

  u. Revenue recognition

The Company books its operating income as stated in Note 2.r. The Company books its sales when products are received by its customers.

 

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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 as of June 30, 2005

   162,784,579    162,784,579    162,784,579

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

   44,352,015    44,352,015    44,352,015

Exercise of Warrants (Note 13) - Fiscal Year 2007

   44,619,656    44,619,656    44,619,656

Conversion of notes in common stock (Note 13) - Fiscal Year 2008

   5,343,374    5,343,374    5,343,374

Exercise of Warrants (Note 13) - Fiscal Year 2008

   5,855,178    5,855,178    5,855,178

Capital Increase- Ordinary share (Note 16)

   180,000,000    180,000,000    180,000,000

Exercise of Options (Note 16) - Fiscal Year 2008

   757,093    757,093    757,093

Exercise of Options (Note 16) - Fiscal Year 2009

   4,416    4,416    4,416
              

Common and treasury stock as of September 30, 2008 (1)

   501,536,281    501,536,281    501,536,281
              

 

(1) During this period 206,020 ADR’s and 93,686 shares of common stock were repurchased. See note 19.

As of September 30, 2008, the capital authorized to be publicly offered is formed of 501,536,281 common, book-entry shares of Ps. 1 par value each and entitled to one vote per share.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 4:    DERIVATIVE FINANCIAL INSTRUMENTS

As of September 30, 2008 the Company had arranged futures and options on the Futures Market and dollars as follows:

 

Cereal / Currency

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

Futures

            

Purchase

            

US$

   —      —      —       —       2,472,786 (a)

Sell

            

Corn

   16,500    357,473    —       —       967,899  

Soybean

   2,700    83,565    —       —       351,004  

Wheat

   5,400    116,991    —       —       360,196  

Sunflower

   100    15,475    —       —       184,153  

Options

            

Purchase Call

            

Corn

   6,350    —      61,900     967     (60,933 )

Sell Call

            

Corn

   4,000    41,473    (89,136 )   (21,046 )   68,090  

Soybean

   3,000    30,486    (54,163 )   (18,261 )   35,902  

Purchase Put

            

Corn

   16,510    —      632,928     696,532     63,604  

Soybean

   72,760    —      2,930,191     6,183,904     3,253,713  

Sell Put

            

Corn

   16,510    —      (280,871 )   (256,485 )   24,386  

Soybean

   64,600    —      (1,602,436 )   (3,854,488 )   (2,252,052 )
                            

Total

   208,430    645,463    1,598,413     2,731,123     5,468,748  
                            

 

(a) Corresponds to a future of purchase of 40,747,000 Dollars composed of (i) US$4,074,000, US$2,059,000 and US$4,070,000 with Santander Río Bank due for 03/31/2009 , (ii) US$5,274,000 with Itaú Bank due for 03/31/2009; (iii) US$10,000,000 and US$5,000,000 with Macro Bank due for 03/31/2009; and (iv) US$5,180,000 and US$5,090,000 with Standard Bank due for 03/31/2009 .The gains generated as of September 30, 2008 are shown within financial results in the statement of operations.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 4:    (Continued)

 

As of September 30, 2007 the Company had arranged futures and options on the Futures Market and dollars as follows:

 

Cereal / Currency

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

Futures

           

Purchase

           

Corn

   11,430    —       —       —       (19,048 )

Wheat

   12,240    —       —       —       875,205  

Sell

           

Corn

   16,610    278,656     —       —       (259,763 )

Soybean

   18,200    566,020     —       —       (2,032,230 )

Wheat

   26,700    137,151     —       —       (8,124,181 )

US$

   —      —       —       —       (460,306 )(a)

Options

           

Purchase Call

           

Corn

   22,860    —       903,455     92,129     (811,326 )

Soybean

   10,432    (67,363 )   629,386     699,435     70,049  

Wheat

   19,040    —       1,781,253     2,802,086     1,020,833  

Sell Call

           

Corn

   25,400    —       (202,150 )   (177,844 )   24,306  

Soybean

   13,012    16,499     (485,938 )   (631,604 )   (145,666 )

Wheat

   26,160    120,037     (767,361 )   (2,755,390 )   (1,988,029 )

Purchase Put

           

Sunflower

   500    —       6,220     1,555     (4,665 )

Soybean

   4,080    —       69,975     2,331     (67,644 )

Wheat

   20,940    (2,774 )   522,325     71,266     (451,059 )

Sell Put

           

Corn

   22,860    —       (405,855 )   (250,147 )   155,708  

Soybean

   2,000    560     (29,079 )   (6,220 )   22,859  

Wheat

   24,480    —       (619,668 )   (69,741 )   549,927  
                             

Total

   276,944    1,048,786     1,402,563     (222,144 )   (11,645,030 )
                             

 

(a) Corresponds to a future of sell of 12,400,006 Dollars composed of: (I) US$5,002,307 and US$2,452,846 with Santander Río Bank due on 01/07/2008 and 01/21/2008 respectively; (II) US$2,000,000 with MBA Bank due on 11/13/2007; and (III) US$2,954,853 with Standard Bank. The losses generated as of September 30, 2007 are shown within financial results of the statement of operations.

Crops: As of September 30, 2008 and 2007 the Company recognized results of Ps. 3,559,137 (gain) and Ps. 9,253,043 (loss), respectively, to reflect the closing of the transactions carried out during those periods. This results is disclosed a part of the statement in the line “Holding gain – Crops, raw materials and MAT” in the statement of operations.

 

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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 September 30, 2008 and 2007 does not include any charge in the Statement of Operations by this concept.

NOTE 6:    INCOME TAX – DEFERRED TAX

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

 

   

Deferred assets as of September 30, 2008:

 

     Cumulative
tax loss
carryforwards
   Cash in
foreign
currency
    TOTAL

Initial balance

   13,479,317    8,058,199     21,537,516

Gain (Loss) recognized

   7,495,806    (7,315,727 )   180,079

Closing balance

   20,975,123    742,472     21,717,595

 

   

Deferred liabilities as of September 30, 2008:

 

     Fixed
Assets
    Inventories     Investments    Accruals     TOTAL  

Initial balance

   (43,747,536 )   (19,928,988 )   —      1,163,335     (62,513,189 )

Gain (Loss) recognized

   55,062     (443,523 )   12,513    (1,032,059 )   (1,408,007 )

Closing balance

   (43,692,474 )   (20,372,511 )   12,513    131,276     (63,921,196 )

As of September 30, 2008, net liabilities at period-end as per the information included in the preceding tables amount to Ps. 42,203,601.

 

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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. 14,293,338. It is estimated that this liability will end up according to the detail that follows:

 

   

Term

   TOTAL
 

1 year

   183,736
 

2 years

   106,688
 

3 years

   76,580
over 3 years    1,143,676
 

no term

   12,782,658
      
 

  Total

   14,293,338
      

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

 

Description

   September 30,
2008
    September 30,
2007
 

Net loss before income tax

   (36,170,749 )   (15,926,898 )

Tax rate

   35 %   35 %
            

Net loss at tax rates:

   (12,659,762 )   (5,574,414 )

Permanent differences at tax rate:

    

Restatement into constant currency

   46,911     59,746  

Donations

   2,982     1,472  

Results from controlled and related

companies

   13,145,428     1,929,059  

Personal asset tax

   742,114     535,386  

Miscellaneous permanent differences

   (49,745 )   (275,735 )
            

Income tax expense (benefit)

   1,227,928     (3,324,488 )
            

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. 20,975,123 and may be offset against taxable income of future years, as follows:

 

Origination year

  Amount   Expiration Year
2005   162,854   2010
2007   633,943   2012
2008   12,682,520   2013
2009   7,495,806   2014

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 6:    (Continued)

 

Minimum presumed income tax credits booked by the Company, which were pending use as of the period-end, amount to Ps. 19,534,790 and under current regulations, they may be compensated with taxable income for future years according to the following detail:

 

Origination year

   Amount    Expiration Year

2006

   1,942,817    2016

2007

   5,264,625    2017

2008

   12,327,348    2018

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

 

   

Deferred assets as of June 30, 2008:

 

     Cumulative
tax loss
carryforwards
   Cash in
foreign
currency
   TOTAL

Initial balance

   2,683,880    372,955    3,056,835

Gain recognized

   10,795,437    7,685,244    18,480,681

Closing balance

   13,479,317    8,058,199    21,537,516

 

   

Deferred liabilities as of June 30, 2008:

 

     Fixed Assets     Inventories     Accruals     TOTAL  

Initial balance

   (35,931,323 )   (17,738,498 )   (301,575 )   (53,971,396 )

(Loss) gain recognized

   (7,816,213 )   (2,190,490 )   1,464,910     (8,541,793 )

Closing balance

   (43,747,536 )   (19,928,988 )   1,163,335     (62,513,189 )

As of June 30, 2008, net liabilities at year-end as per the information included in the preceding tables amount to Ps. 40,975,673.

 

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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 as of September 30, 2008 and 2007 and June 30, 2008 with Subsidiaries, related companies and related parties:

 

     September 30,
2008

Pesos
   June 30,
2008

Pesos
   September 30,
2007

Pesos
IRSA Inversiones y Representaciones S.A.(3)         

Current Trade accounts receivable

   16,095    —      —  

Non-Current other receivables

   —      —      14,043

Current Trade accounts payable

   —      85,405    130,265
Inversiones Ganaderas S.A.(1)         

Current Trade accounts receivable

   169,222    131,991    —  

Current other receivables

   3,045,125    3,446,305    —  

Current trade accounts payable

   —      —      125,790
Futuros y opciones.Com S.A.(1)         

Current Trade accounts receivable

   13,268,830    6,758,759    7,846,432

Current Other receivables

   23,603    23,603    23,603
Cactus Argentina S.A.(3)         

Current Trade accounts receivable

   354,829    18,814    —  

Current Other receivables

   3,509,908    3,391,603    5,512,551

Non-Current other receivables

   —      —      2,006

Current Trade accounts payable

   —      —      389,245
Agrology S.A. (1)         

Current Trade accounts receivable

   4,086    4,086    —  

Current Other receivables (5)

   101,758,370    97,470,774    —  
Agro-Uranga S.A.(3)         

Current Other receivables

   —      56,410    —  
Fundación IRSA (4)         

Current Trade accounts payable

   1,073,000    1,073,000    1,800,000

CYRSA S.A.(4)

        

Current Trade accounts payable

   39,947    39,948    —  

Inversora Bolívar (4)

        

Current Trade accounts payable

   77,118    185,256    40,106

Alto Palermo S.A.(4)

        

Non-Current other receivables

   —      —      70,215

Current Trade accounts payable

   754,801    3,370,825    1,772,646

Shopping Alto Palermo S.A. (4)

        

Current Trade accounts payable

   943    2,681    —  

Comercializadora de los altos S.A.(4)

        

Current Trade accounts receivable

   933    933    —  

BrasilAgro-Compahía Brasileira de Propiedades Agricolas(4)

        

Current other receivables

   305,949    305,949    30,537

Agropecuaria Cervera S.A.(1)

        

Current Trade accounts receivable

   —      290,062    —  

Current other receivables

   30,937,233    26,695,934    —  

Non-Current other receivables

   —      —      20,041,244

Current trade accounts payable

   169,003    —      767,265

Consultores Asset Management S.A.(4)

        

Current other receivables

   1,280,709    1,280,709    —  

Management Fees

   —      —      704,444

Credits to employees (4)

        

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

   168,990    209,582    170,913

 

(1) Controlled company

 

(2) Shareholder

 

(3) Related company

 

(4) Related party

 

(5) Related to a loan for consumption whose funds were used by Agrology S.A. to acquire IRSA’s shares.

 

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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 September 30, 2008 and 2007 and June 30, 2008 with Subsidiaries, related companies and related parties (Continued):

 

     September 30,
2008

Pesos
   June 30,
2008
Pesos
   September 30,
2007

Pesos

Estudio Zang, Bergel & Viñes (4)

        

Current Trade accounts payable

   474,955    889,155    40,854

Directors (4)

        

Current Loans

        

Convertible Notes 2007 and interest payable (Schedule G)

        

Directors

   —      —      5,022

Convertible Notes 2007 (Schedule G)

        

Directors

      —      105,840

Other current debts

   323,400    285,600    98,400

 

(4) Related party

 

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Table of Contents

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 as of September 30, 2008 and 2007:

 

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

  

Year

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

Agro-Uranga S.A.

   2009    —       —       —       —       —       —      215,016  
   2008    —       —       —       —       —       —      —    

Alto Palermo S.A.

   2009    (192,420 )   —       —       —       —       —      (3,400 )
   2008    (31,904 )   —       —       —       —       —      —    

Brasil Agro – Companhia Brasileira de Porpiedades Agrícolas

   2009    —       —       —       —       —       407,878    —    
   2008    —       —       —       —       —       —      —    

Comercializadora Los Altos S.A. (Ex-Alto City.Com)

   2009    —       —       —       —       —       —      —    
   2008    —       —       —       —       —       —      —    

Consultores Assets Management S.A.

   2009    —       —       —       —       —       —      —    
   2008    —       —       —       —       —       —      —    

Cactus Argentina S.A.

   2009    —       —       —       (242,419 )   118,305     44,490    269,496  
   2008    —       —       —       (1,036,252 )   165,779     50,160    2,220  

Directors

   2009    —       (126,603 )   —       —       —       —      —    
   2008    —       (97,594 )   —       —       —       —      —    

Estudio Zang, Bergel & Viñes

   2009    —       —       (539,688 )   —       —       —      —    
   2008    —       —       (184,629 )   —       —       —      —    

Futuros y opciones.Com S.A.

   2009    —       —       —       —       —       —      (108,256 )
   2008    —       —       —       —       —       —      (214,567 )

Inversiones Ganaderas S.A.

   2009    —       —       —       —       149,482     —      26,976  
   2008    —       —       —       —       228     —      —    

Agropecuaria Cervera S.A.

   2009    —       —       —       —       741,299     —      (473,784 )
   2008    —       —         —       437,630     —      —    

Inversora Bolívar S.A.

   2009    —       —       —       —       —       —      (96,617 )
   2008    —       —       —       —       —       —      (79,006 )

IRSA Inversiones y Representaciones S.A.

   2009    (14,103 )   —       —       —       303,757     —      —    
   2008    (63,345 )   —       —       —       (387,392 )   —      —    

Agrology S.A.

   2009    —       —       —       —       4,287,596     —      —    
   2008    —       —       —       —       —       —      —    

Credits to employees

   2009    —       —       —       —       —       —      —    
   2008    —       —       —       —       3,151     —      —    
                                            

Total 2009

      (206,523 )   (126,603 )   (539,688 )   (242,419 )   5,600,439     452,368    (170,569 )
                                            

Total 2008

      (95,249 )   (97,594 )   (184,629 )   (1,036,252 )   219,396     50,160    (291,353 )
                                            

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 8:    Details of balance sheet and statement of operations accounts

 

  a. Cash and banks

 

     September 30,
2008

Pesos
    June 30,
2008
Pesos
    September 30,
2007

Pesos
 

Cash

   114,984     108,863     26,510  

Foreign currency (Schedule G)

   20,659     19,471     8,000  

Local currency checking account

   1,969,266     1,039,108     2,401,543  

Foreign currency checking account (Schedule G)

   23,013,455     44,307,810     4,642,075  

Local currency saving account

   191,698     54,628     34,586  

Foreign currency saving account (Schedule G)

   636,184     102,177     512,072  

Checks to be deposited

   149,701     1,054,337     320,154  
                  
   26,095,947     46,686,394     7,944,940  
                  

b.      Investments and Goodwill

      
     September 30,
2008

Pesos
    June 30,
2008
Pesos
    September 30,
2007

Pesos
 

Investment

      

Investment (Schedule C and G)

   297,457,540     485,166,569     4,838,857  
                  
   297,457,540     485,166,569     4,838,857  
                  

Investment

      

Investment on controlled and related companies (Notes 12 and 14 and Schedule C)

   1,119,159,802     1,074,786,152     703,351,528  
                  
   1,119,159,802     1,074,786,152     703,351,528  
                  

Other investments

      

Other investments (Schedule C)

   262,273     262,273     262,273  
                  
   262,273     262,273     262,273  
                  

Goodwill

      

Goodwill (Schedule C)

   (224,556,160 )   (209,250,738 )   (121,943,146 )
                  
   (224,556,160 )   (209,250,738 )   (121,943,146 )
                  

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 8:    (Continued)

 

c.      Trade accounts receivable

      
     September 30,
2008
Pesos
    June 30,
2008
Pesos
    September 30,
2007
Pesos
 

Current

      

Accounts receivable in local currency

   21,646,684     21,236,632     10,921,912  

Less:

      

Allowance for doubtful accounts (Schedule E)

   (465,219 )   (381,020 )   (353,126 )

Accounts receivable in foreign currency (Schedule G)

   1,460,276     2,843,820     934,526  

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

      

Inversiones Ganaderas S.A.

   169,222     131,991     —    

Futuros y Opciones.Com S.A.

   13,268,830     6,758,759     7,846,432  

Cactus Argentina S.A.

   354,829     18,814     —    

IRSA Inversiones y Representaciones S.A.

   16,095     —       —    

Agropecuaria Cervera S.A.

   —       290,062     —    

Agrology S.A.

   4,086     4,086     —    

Comercializadora de los Altos S.A. (Ex-Alto CIty.Com S.A.)

   933     933     —    
                  
   36,455,736     30,904,077     19,349,744  
                  

d.      Other receivables

      
     September 30,
2008
Pesos
    June 30,
2008
Pesos
    September 30,
2007
Pesos
 

Current

      

Prepaid leases

   30,548,569     11,366,483     15,469,334  

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

   13,166,815     14,415,538     10,294,355  

Guarantee deposits and premiums (Note 4 and Schedule G)

   7,225,929     1,174,275     12,018,952  

Secured by mortgage (Schedule G)

   5,814,746     6,188,608     6,921,671  

Outstanding NDF (Note 4)

   2,472,786     —       —    

Prepaid expenses

   220,139     109,485     201,051  

Outstanding valued added tax, gross sales tax and others tax credit

   20,741,199     13,984,579     11,090,673  

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

      

Cactus Argentina S.A.

   3,509,908     3,391,603     5,512,551  

Futuros y Opciones.Com S.A.

   23,603     23,603     23,603  

Agropecuaria Cervera S.A.

   30,937,233     26,695,934     —    

Inversiones Ganaderas S.A.

   3,405,125     3,446,305     —    

Agrology S.A.

   101,758,370     97,470,774     —    

Agro-Uranga S.A.

   —       56,410     —    

BrasilAgro - Companhia Brasileira de Propiedades Agrícolas

   305,949     305,949     30,537  

Consultores Asset Management S.A.

   1,280,709     1,280,709    

Credits to employees

   168,990     209,582     170,913  

Others (Schedule G)

   2,888,541     1,996,289     945,865  
                  
   224,468,611     182,116,126     62,679,505  
                  

Non-current

      

Secured by mortgage (Schedule G)

   5,534,894     7,048,582     11,123,438  

Income tax prepayments, VAT and others

   8,287,581     9,307,011     7,044,453  

Income tax advances

   —       —       11,741,506  

Tax on minimum presumed income

   19,534,790     19,534,790     8,437,842  

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

      

Cactus Argentina S.A. (Schedule G)

   —       —       2,006  

Agropecuaria Cervera S.A.

   —       —       20,041,244  

Alto Palermo S.A. (Schedule G)

   —       —       70,215  

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

   —       —       14,043  

Prepaid leases

   —       —       179  

Others (Schedule G)

   —       —       12,908  
                  
   33,357,265     35,890,383     58,487,834  
                  

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 8:    (Continued)

 

e.      Inventories

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Beef cattle

   15,116,059    11,356,534    10,975,388

Crops

   20,506,389    62,989,034    26,136,862

Unharvested crops

   11,995,175    6,051,754    6,904,835

Seeds and fodder

   2,160,965    3,205,282    1,489,767

Materials and others

   30,691,285    18,441,490    9,160,593
              
   80,469,873    102,044,094    54,667,445
              

Non-Current

        

Beef cattle

   67,527,300    72,531,891    61,004,920
              
   67,527,300    72,531,891    61,004,920
              

f.       Trade accounts payable

        
     September 30,
2008
Pesos
   June 30,
2008
Pesos
   September 30,
2007
Pesos

Current

        

Suppliers in local currency

   3,348,448    3,801,404    626,858

Suppliers in foreign currency (Schedule G and Note 11) (1)

   20,412,254    12,229,011    17,731,492

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

        

Inversora Bolívar S.A.

   77,118    185,256    40,106

Alto Palermo S.A.

   754,801    3,370,825    1,772,646

Shopping Alto Palermo S.A.

   943    2,681    —  

Inversiones Ganaderas S.A.

   —      —      125,790

IRSA Inversiones y Representaciones S.A.

   —      85,405    130,265

Cactus Argentina S.A.

   —      —      389,245

Estudio Zang, Bergel & Viñes

   474,955    889,155    40,854

Fundación IRSA

   1,073,000    1,073,000    1,800,000

CYRSA S.A.

   39,947    39,948    —  

Agropecuaria Cervera S.A.

   169,003    —      767,265

Accrual for other expenses (Schedule G)

   14,616,451    22,582,398    18,320,614

Accrual for cereal expenses

   11,641    1,578,881    —  
              
   40,978,561    45,837,964    41,745,135
              

Non-Current

        

Accrual for other expenses (Schedule G)

   —      —      11,034
              
   —      —      11,034
              

 

(1) Includes as of September 30, 2008 US$1,553,180 for the acquisition of farm “San Pedro”, corresponding to suppliers in foreign currency secured by mortgage. See Note 11.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 8:    (Continued)

 

g.      Loans

       
     September 30,
2008
Pesos
    June 30,
2008
Pesos
   September 30,
2007
Pesos
 

Current

       

Local financial loans (Note 15 and Schedule G)

   91,762,949     168,644,499    122,455,684  

Foreign financial loans ( Notes 15 and 17 and Schedule G)

   25,339,753     24,461,875    —    

Guarantee paid (Notes 15 and 17 and Schedule G)

   (10,523,000 )   —      —    

Convertible Notes 2007 (Schedule G)

   —       —      5,951,991  

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

       

Directors

   —       —      105,840  

Convertible Notes 2007 expenses

   —       —      (2,872 )

Convertible Notes 2007 Interest payable (Schedule G)

   —       —      178,059  

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

       

Directors

   —       —      5,022  
                 
   106,579,702     193,106,374    128,693,724  
                 

Non-Current

       

Foreign Financial Loans (Notes 15 and 17 and Schedule G)

   —       —      25,200,000  
                 
   —       —      25,200,000  
                 

h.      Salaries and social security payable

       
     September 30,
2008
Pesos
    June 30,
2008
Pesos
   September 30,
2007
Pesos
 

Current

       

Accrual for vacation and statutory annual bonus

   1,929,567     4,592,292    1,466,981  

Social security taxes payable

   1,160,750     691,238    698,963  

Health care payable

   575,474     34,760    338,440  

Others

   —       —      417  
                 
   3,665,791     5,318,290    2,504,801  
                 

i.       Taxes payable

       
     September 30,
2008
Pesos
    June 30,
2008
Pesos
   September 30,
2007
Pesos
 

Current

       

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

   7,565,325     8,993,932    6,495,025  

Property tax payable

   47,472     46,251    —    

Taxes withheld for income tax

   1,230,545     486,333    635,058  

Gross sale tax payable

   242,178     241,681    68,402  

Taxes withheld-value added tax

   60,669     —      13,358  

Others

   2,121,185     673    965,190  
                 
   11,267,374     9,768,870    8,177,033  
                 

Non-Current

       

Deferred income tax

   42,203,601     40,975,673    47,590,073  
                 
   42,203,601     40,975,673    47,590,073  
                 

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 8:    (Continued)

 

  j. Other debts

 

     September 30,
2008

Pesos
   June 30,
2008

Pesos
   September 30,
2007

Pesos

Current

        

Premiums collected (Note 4 and Schedule G)

   4,150,280    —      3,890,946

Debt for purchase of shares (Notes 12 d) and 19 and Schedule G)

   15,099,370    —      —  

Management fees agreement accrual (Note 5)

   —      —      704,444

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

        

Directors

   323,400    285,600    98,400

Others

   166,054    —      —  
              
   19,739,104    285,600    4,693,790
              

 

  k. Loss from controlled and related companies

 

     September 30,
2008

Pesos
    September 30,
2007

Pesos
 

IRSA Inversiones y Representaciones S.A.

    

- Loss equity method

   (30,900,072 )   (7,510,454 )

- Amortization negative goodwill

   3,000,429     1,160,455  

- Depreciation higher values

   (407,263 )   —    

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas

    

- Gain equity method

   (2,505,446 )   559,772  

Cactus Argentina S.A.

    

- (Loss) gain equity method

   (519,173 )   61,349  

Agro-Uranga S.A.

    

- (Loss) gain equity method

   (62,569 )   457,843  

Inversiones Ganaderas S.A.

    

- Loss equity method

   (494,639 )   (134,300 )

Agropecuaria Cervera S.A.

    

- Loss equity method

   (772,143 )   (253,954 )

- Depreciation concession right

   (174,820 )   —    

- Depreciation tree platations (wood)

   (32,400 )   —    

Futuros y Opciones.Com S.A.

    

- Gain equity method

   108,855     147,692  

Agrology S.A.

    

- Loss equity method

   (4,973,943 )   —    
            
   (37,733,184 )   (5,511,597 )
            

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 9:

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
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007

2nd quarter 2008/2007 financial period

  —     —     —     —     —     19,349,744   —     —     25,207,741

3th quarter 2008/2007 financial period

  —     —     —     —     —     —     —     —     6,460,981

4th quarter 2008/2007 financial period

  —     —     —     —     —     —     —     —     5,731,561

1st quarter 2009/2008 financial period

  —     —     —     —     30,904,077   —     —     14,291,318   4,072,284

2nd quarter 2009/2008 financial period

  —     —     —     36,455,736   —     —     29,792,947   16,183,633   —  

3th quarter 2009/2008 financial period

  —     —     —     —     —     —     12,404,268   1,767,384   —  

4th quarter 2009/2008 financial period

  —     —     —     —     —     —     7,324,804   5,626,439   3,779,689

1st quarter 2010/2009 financial period

  —     —     —     —     —     —     3,008,136   1,710,405   1,782,030

4th quarter 2010/2009 financial period

  —     —     —     —     —     —     3,761,459   3,627,772   3,779,689

1st quarter 2011/2010 financial period

  —     —     —     —     —     —     1,773,435   1,710,405   1,782,030

Overdue

  —     —     —     —     —     —     —     —     —  

With no stated current term

  297,457,540   485,166,569   4,838,857   —     —     —     171,938,456   144,247,352   21,206,938

With no stated non-current term

  262,273   262,273   262,273   —     —     —     27,822,371   28,841,801   47,364,396
                                   

Total

  297,719,813   485,428,842   5,101,130   36,455,736   30,904,077   19,349,744   257,825,876   218,006,509   121,167,339
                                   

Assets classified according to their interest rate (in Pesos)

Based on their estimated collection term

  Current and non-current investment   Trade accounts receivable   Other receivables and prepaid expenses
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007

At fixed interest rate

  9,285,000   10,746,000   —     —     —     —     11,238,778   13,015,721   22,705,301

At variable interest rate

  287,960,617   473,881,402   4,838,857   —     —     —     128,745,233   125,738,745   18,652,208

Non-interest bearing

  474,196   801,440   262,273   36,455,736   30,904,077   19,349,744   117,841,865   79,252,043   79,809,830
                                   

Total

  297,719,813   485,428,842   5,101,130   36,455,736   30,904,077   19,349,744   257,825,876   218,006,509   121,167,339
                                   

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 9:    (Continued)

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
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007

2nd quarter 2008/2007

  —     —     41,745,135   —     —     8,558,359   —     —     2,504,801   —     —     7,212,516   —     —     4,693,790   —     —     —  

3rd quarter 2008/2007

  —     —     —     —     —     9,909,675   —     —     —     —     —     —     —     —     —     —     —     —  

4th quarter 2008/2007

  —     —     —     —     —     10,837,627   —     —     —     —     —     964,517   —     —     —     —     —     —  

1st quarter 2009/2008

  —     45,837,964   —     —     20,917,954   3,815,532   —     4,874,128   —     —     774,938   —     —     285,600   —     —     —     —  

2nd quarter 2009/2008

  40,978,561   —     —     21,414,863   24,461,875   25,200,000   2,897,735   444,162   —     1,581,723   8,993,932   —     19,739,104   —     —     —     —     —  

3rd quarter 2009/2008

  —     —     —     16,160,522   —     —     —     —     —     7,565,325       —       —     —     —     —  

4th quarter 2009/2008

  —     —     —     —     —     —     —     —     —     2,120,326       —       —     —     —     —  

1st quarter 2010/2009

  —     —     —     —     —     —     768,056     —     —         —       —     —     —     —  

Overdue

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

With no stated current term

  —     —     —     69,004,317   147,726,545   95,572,531   —     —     —     —     —     —     —     —     —     —     —     —  

With no stated non-current term

  —     —     11,034   —     —     —     —     —     —     42,203,601   40,975,673   47,590,073   —     —     —     84,963   82,958   45,216
                                                                       

Total

  40,978,561   45,837,964   41,756,169   106,579,702   193,106,374   153,893,724   3,665,791   5,318,290   2,504,801   53,470,975   50,744,543   55,767,106   19,739,104   285,600   4,693,790   84,963   82,958   45,216
                                                                       

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
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007
  September 30,
2008
  June 30,
2008
  September 30,
2007

At fixed interest rate

  4,869,220   4,698,370   4,892,518   106,133,318   192,194,045   153,710,643   —     —     —     —     —     —     —     —     —     —     —     —  

At variable interest rate

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

Non-interest bearing

  36,109,341   41,139,594   36,863,651   446,384   912,329   183,081   3,665,791   5,318,290   2,504,801   53,470,975   50,744,543   55,767,106   19,739,104   285,600   4,693,790   84,963   82,958   45,216
                                                                       

Total

  40,978,561   45,837,964   41,756,169   106,579,702   193,106,374   153,893,724   3,665,791   5,318,290   2,504,801   53,470,975   50,744,543   55,767,106   19,739,104   285,600   4,693,790   84,963   82,958   45,216
                                                                       

 

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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 N0 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.

On May 2, 2006, a loan agreement for USD 8 million was executed with Crédit Suisse, which imposes some restrictions on our ability to pay dividends. Under this loan agreement falling due on November 2, 2008, we are not allowed to pay dividends or make other restricted payments (including the purchase or redemption of our capital stock) in cash, obligations or other assets, for a total amount not exceeding USD 5 million in any calendar year.

On October 27, 2008, the debt was canceled as it is mentioned in note 22.c

NOTE 11:     PURCHASE AND SALE OF FARMS

 

  a) On September 25, 2008, a new extension was executed to pay USD 1,553,180 for the purchase of the establishment “San Pedro”. It extends the term through December 2, 2008, plus interest calculated at 7% annual rate, since September 3, 2008 through October 2, 2008, accruing no interest from such last date through the payment day.

 

  b) On September 5, 2008, the title deed conveying ownership for the purchase of 10,910 hectares of the establishment Estancia Carmen, located in the Province of Santa Cruz was executed. The transaction was agreed upon at USD 711,284, which was fully paid off.

 

  c) On July 28, 2008, an agreement of sale for the purchase of 4,566 hectares in the establishment “Las Londras” located in the Province of Guarayos, Bolivia was executed. The transaction was agreed upon at USD 11,414,334 out of which USD 1,100,000 was paid, the remainder will be paid off as follows: USD 3,799,489 on the day the agreement is notarized; USD 4,028,461 fixed and without interest 12 months after such date; and USD 2,486,384 fixed and without interest 24 months after the previously mentioned date.

 

  d) On July 28, 2008, an agreement of sale for the purchase of 883 and 2,969 hectares in the establishments “San Cayetano” and “San Rafael” respectively located in the Province of Guarayos, Bolivia was executed. The transaction was agreed upon at USD 8,860,516 out of which USD 874,000 was paid, the remainder will be paid off as follows: USD 2,929,199 on the day the agreement is notarized; USD 3,127,142 fixed and without interest 12 months after such date; and USD 1,930,175 fixed and without interest 24 months after the previously mentioned date.

 

  e) On July 28, 2008, an agreement of sale for the purchase of 3,748 hectares in the establishment “La Fon Fon” located in the Province of Obispo Santiesteban, Bolivia was executed. The transaction was agreed upon at USD 8,620,845 out of which USD 1,429,200 was paid, the remainder will be paid off as follows: USD 2,271,125 on the day the agreement is notarized; USD 3,042,555 fixed and without interest 12 months after such date; and USD 1,877,965 fixed and without interest 24 months after the previously mentioned date.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 12:     INVESTMENTS IN COMPANIES

a) BrasilAgro – Companhia de Propiedades Agrícolas (BrasilAgro)

The Company values the investment in BrasilAgro according to the equity method taking into account its significant impact that derives from: (i) its capacity to affect the operative and financial decisions considering that from the nine members of the Board of Directors, three of them -including the president- are appointed by the Company, other three are designated by the stockholders of BrasilAgro and the remaining three are independent directors appointed jointly by both parts, and (ii) the stockholders´ agreement existing among the founder shareholders, that is the Company, Tarpon Agro and Cape Town (shareholders founders). Under the terms of such agreement, the parties have agreed to vote jointly in Meeting of Shareholders in respect of matters related to proposals to change directors´ and administrators´ fees, increases of capital sock and appropriation of dividends, among other issues.

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.

 

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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 583.2 million Reais, 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 42.4 million Reais (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.

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.

During last year, Cresud acquired 4,086,000 shares for Ps. 83,958,788. Such purchase generated a change in the interest in BrasilAgro of 7.40% at 14.39%, which was registered in accordance with the acquisition method as stated in note 2.k.2.

As of September 30, 2008, the Company has not registered any value for the holding of such options.

During this period, Cresud did not acquire the shares of BrasilAgro, maintaining its equity interest at 14.39%.

Likewise, as of September 30, 2008, BrasilAgro has acquired its first eight properties, which represent 158,997 hectares.

b) 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. 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.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 12:     (Continued)

 

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, as of September 30, 2008 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.

c) Exportaciones Agroindustriales Argentinas S.A.

On May 15, 2007 Cresud acquired 0.57% of the Exportaciones Agroindustriales Argentinas S.A. (EAASA) shareholding by the acquisition of 120 shares of the latter to Cactus Argentina S.A. As of September 30, 2008, the Company holding’s in EEASA had decreased to a 0.36 %.

d) IRSA Inversiones y Representaciones Sociedad Anónima

As of June 30, 2007, our interest amounted to 25.01% representative of 116,305,767 shares. Between September and November 2007, we acquired additional 82.5 million shares of common stock by (i) converting USD 12 million corporate bonds convertible at 8% falling due in November 2007 into 22 million shares of common stock and (ii) exercising all our options to acquire 60.5 million shares of common stock for a total purchase price of USD 39.6 million. We later acquired 55,676,358 shares, increasing our interest to 43.98% as of September 30, 2008.

Resulting from these acquisitions is pending of payment Ps. 13.4 million as of the closing date of these financial statements, which are disclosed in “Other debts” in the balance sheet. Such amount was paid after the period-end.

NOTE 13:     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

 

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Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 13:     (Continued)

 

  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 Comisión Nacional de Valores dated October 1, 2002 and by the Bolsa de Comercio de Buenos Aires, 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:

 

  a) The conversion price is US$ 0.5078 per share (US$ 5.0775 ADS), while the Warrant price is US$ 0.6093 per share (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 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 year beginning June 30, 2003 and ended November 14, 2007, 49,910,874 corporate bonds were converted into 98,288,372 shares of common stock, which originated an increase in the Company’s shareholders’ equity of PS. 152,102,667. In the same year, 49,867,018 warrant options were exercised; consequently, 98,202,054 shares of common stock were issued for PS. 182,912,273.

On November 14, 2007, convertible notes fell due, out of which 89,126 convertible notes were pending conversion, which were settled in cash. Likewise, there were 132,982 warrant options that were not exercised.

NOTE 14:     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:

 

  1. 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)

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 14:     (Continued)

 

  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 USD 0.5571 to USD 0.54505 and the warrants price went from USD 0.6686 to USD 0.6541. Such adjustment was effective as from December 20, 2002.

During the period beginning July 2003 and ended November 14, 2007, the Company acquired 600,500 Convertible Notes for USD 937,798.

During the same period, the Company sold 12,335,157 Convertible Notes of IRSA Inversiones y Representaciones Sociedad Anónima. The sale generated income for PS. 83,623,172.

Likewise, in the same period, the Company exercised its conversion right and exercised warrants of 37,958,011 Convertible Notes of IRSA Inversiones y Representaciones Sociedad Anónima giving rise to issuing 139,295,450 shares of common stock with a face value of PS. 1 each one. The adquisicion of these share has been registered in accordance with the acquisition method as stated in note 2.k.2.

During the same period, third party holders of Convertible Notes into shares of common stock of IRSA have exercised the conversion right of 61,984,332 Convertible Notes and have exercised 61,938,795 warrants originating the issuance of 227,381,884 shares of common stock with a face value of PS. 1 each one.

As a consequence of such conversions and exercise of third parties warrants, the Company’s investment value has decreased in Ps. 64.4 million, such effect being recorded in Paid-In Capital (Related Companies Law No. 19,550 – Section 33) of Shareholders´ Equity (see Note 2.p.).

On November 14, 2007, convertible corporate bonds of IRSA Inversiones y Representaciones Sociedad Anónima matured.

NOTE 15:     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. As of September 30, 2008 our debt amounts to Ps. 106.6 million.

Upon analyzing the structure of such payable, we found a loan from Crédit Suisse to finance a Company’s investment in BrasilAgro for Ps. 25.3 million (note 12.a) repaid after the period-end (see note 22.c.), Ps. 22.8 million to finance our crop production, the remaining balance Ps. 69.0 million, are concentrated in the short-term.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 15:     (Continued)

 

The chart that follows discloses our Company debt as of September 30, 2008:

 

Bank

   Currency    Total
(Millions Ps.)
   Term

Short-term

   Pesos    69.0    Up to 90 days

Crop production financing

   Pesos    22.8    Up to 168 days

Investement in BrasilAgro financing (net of guarantee in cash for Ps. 10.5 million)

   Pesos    14.8    Up to 30 days

NOTE 16:     CAPITAL INCREASE

During March 2008, the capital increase by 180 million shares with face value of Ps. 1 entitled to one vote per share was concluded.This capital increase was approved by the Shareholders’ Meeting of October 10, 2007. Thus, 180 million shares offered at the subscription price of US$ 1.60 or PS. 5.0528 per share were fully subscribed, both locally and internationally.

After this capital increase, the Company’s outstanding shares amount to 500,774,772.

Additionally, for each subscribed share, each shareholder received at no additional cost 1 option entitling the holder to purchase 0.33333333 new shares at a price of US$ 1.68 per each share to be acquired. That is to say, 180 million options entitling holder to purchase a total of 60 million additional shares at the previously mentioned price were granted. Options fall due on May 22, 2015 and may be exercised between the 17th and the 22nd day of February, May, September and November. Options are listed on the Buenos Aires Stock Exchange under the symbol “CREW2” and on the Nasdaq under the symbol “CRESW”.

Funds obtained from increasing capital, net of issuance expenses, amount to PS. 881.1 million, while the tax effect of issuance expenses amounted to Ps. 9.9 million.

Funds obtained were assigned to shares and options issued based on the current value estimated upon subscription.

During last year, 2,271,290 options were exercised, consequently, 757,093 shares of common stock were issued for Ps. 3,986,205.

In the current period, 13,250 options were exercised; consequently, 4,416 shares of common stock were issued for Ps. 23,002.

NOTE 17:     RESTRICTED ASSETS

As of September 30, 2008, the amount of 1,834,860 ADR´s of IRSA Inversiones y Representaciones S.A. are included in Non-Current Investments which availability is restricted as a result of the loan contracted for financing the Brazil investment as mentioned in Note 12.a) to these financial statements. On October 24, 20008, such restriction was lifted (see note 22.c).

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 17:     (Continued)

 

The “San Pedro” establishment was included in fixed assets as of September 30, 2008. Such establishment has a mortgage on a fraction of its land to guarantee the payment for the purchase. To date, the amount of US$ 1.6 million is owed for such acquisition.

NOTE 18:     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.

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.

As of September 30, 2008 the Company had made contributions to the Program that amount Ps. 691,808.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

 

NOTE 19:     REPURCHASE OF TREASURY STOCK

On August 26, 2008, the Company’s Board of Directors decided to acquired treasury stock under section 68, Law No. 17,811 and CNV regulations for a maximum amount of Ps. 30,000,000 and 10,000,000 shares of common book-entry shares of face value of Ps. 1 per share and entitled to 1 vote. Acquisitions will be carried out for a term of 70 days running as from the date of publication of the information in the Boletín de la Bolsa de Comercio de Buenos Aires (Buenos Aires stock exchange bulletin) and a minimum of Ps. 3 and a maximum Ps. 3.5 per share will be paid.

This decision was taken to contribute to the decrease in the draw down and reduction of fluctuations in the listed price of the Company’s shares aiming at contributing to strengthening the shares on the market, minimizing possible temporary imbalances that there may be between the supply and demand on the market, considering the excessive cost of capital that the current listed prices show.

As of the publication date of these financial statements, purchases of treasury shares amounted to 206,020 ADRs and 93,686 shares of common stock paying an amount of USD 2,243,470 and Ps. 314,584, respectively.

Resulting from these acquisitions is pending of payment Ps. 1.7 million at the closing date of these financial statements, which are disclosed in “Other debts” in the balance sheet. Such amount was paid after the period-end.

NOTE 20:     EXPANDING BUSINESS INTO THE REPUBLIC OF PARAGUAY

Under the framework of a series of transactions that constitute for Cresud a new expansion of the agricultural and livestock businesses in South America, on September 3, 2008, the Company executed jointly with Carlos Casado S.A., an Argentine company owning large stretches of land in southern Paraguay, a framework agreement by which it was decided to generate synergy between both companies to do business on the real estate, agricultural and livestock, and forestry markets, as well as series of related agreements aiming at formalizing the productive coalition between both companies.

Within such context, Cresud participates together with Carlos Casado (with a 50% interest each) in a stock company organized under the law of the Republic of Paraguay, (the “Company”) under which Cresud will assume the capacity of advisor under an advisory agreement, for the agricultural, livestock and forestry exploitation of an important rural area in Paraguay (hereinafter the “Property”) and possibly of up to 100,000 hectares also located in Paraguay, derived from the option exercised by the Company, granted by Carlos Casado S.A. As of the issuance date of these financial statements, the Company created does not have assets neither liabilities significant.

The advisory agreement shall be valid for 10 year terms as from the date the framework agreement is executed and will automatically renewed for two additional 10-year period as from maturity date of the original period, in turn being able to be renewed after the expiration of the additional period.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 20:     (Continued)

 

Cresud has additionally executed a pre-purchase agreement as committed to acquire about 41,931 hectares in Paraguay, owned by Carlos Casado S.A. for a total and agreed-upon amount of USD 5,241,375 in turn, to be contributed in kind to the Company aiming at developing the agricultural and forestry business in the neighboring country. As of the issuance date of these financial statements, the Company had paid USD 100,000 toward the price and as the beginning of performing such agreement. The unpaid balance will be settled upon executing the title deed.

NOTE 21:     FINANCIAL CAPITAL MARKET SITUATION

Over the last few months, the financial markets of the main countries in the world have been affected by volatility, illiquidity and lack of credit, hence resulting in a significant drop in international stock exchange indexes and a world economic deceleration started to be surface. In spite of the measures taken by the main countries, the future evolution of international markets is uncertain, affecting in direct form the market value of financial assets, particularly shares, bonds and investment funds.

As regards Argentina, stock markets showed pronounced drops in the prices of public and private securities, as well as a hike in interest rates, country-risk premium and exchange rates. This worsened after closing these financial statements and it is ongoing as of their issuance date.

The Company’s Management is in the process of monitoring and constantly evaluating the effects derived from the previously mentioned situations on the Company itself as well as affiliates aiming at adopting in real time those required measures to cushion the effects of the global conjuncture.

As regards the listed price of issued shares, the Company’s Management states that such price has also been affected, understanding that such drop does not respond to the its equity situation or the Company’s course of business but is an immediate consequence of the process the domestic and international markets are going through.

NOTE 22:     SUBSEQUENT EVENTS

 

  a) Sale of portions of plots of land belonging to the establishment “Los Pozos”

On October 7, 2008, the agreement of sale without possession for the purchase of 1,658 hectares of the establishment “Los Pozos”, located in the Province of Salta was executed. The transaction was agreed upon at USD 530,592, out of which USD 261,049 was collected. The balance of USD 269,543 will be paid off upon executing the title deed on April 1, 2009.

 

  b) Repurchase of treasury stock

On October 10, 2008, the Company’s Board of Directors decided to change the minimum price of the plan to repurchase treasury stock made public on August 26, 2008. Taking into account the atypical market behavior, it was decided to a floor of Ps. 2.13 subject to an Ps./USD exchange rate Ps. 3.2235 per share, which implies that changes in the exchange rate will in turn adjust the limit automatically.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 22:     (Continued)

 

Afterwards, on October 23, 2008 and due to a steep downtrend undergone by the market and worsened in turn by the general context of world markets, it was decided to set a Ps. 1 floor to a USD/Ps. exchange rate of Ps. 3.24 per share.

Finally, on October 24, 2008, the Board of Directors has decided in defense of economic interests of all shareholders and consequently, to preserve the company, to change the maximum amount of shares subject to acquisition to up to 30,000,000 book-entry shares of common stock, face value of Ps. 1 per share and entitled to 1 vote per share, in American Depositary Shares representing 10 shares each as provided by applicable regulations.

Up to November 7, 2008, purchases of treasury stock amounted to 1,049,654 ADR’s and 127,178 shares of common stock paying an amount of USD 6,369,538 and Ps. 270,616, respectively.

 

  c) Settlement of payable to Crédit Suisse International

On October 24, 2008, the Company executed an agreement by which it settled the transaction previously agreed upon with Crédit Suisse International on May 2, 2006, by means of the full payment of the unpaid balance under the transaction framework for a principal of USD 8,000,000.

At the same time, the Company received from Crédit Suisse International the amount of 1,834,860 DGR’s from IRSA, which constituted the security for the previously mentioned transaction.

Thus, the obligations from both parties were reciprocally settled, as well as the rights and obligations resulting from such commercial relationship.

 

  d) Meeting of Shareholders

The General and Extraordinary Shareholders’ Meeting held on October 31, 2008 approved the following:

 

   

Letters to the Shareholders and financial statements ended June 30, 2008.

 

   

Appropriating 5% on income for the year ended June 20, 3008 to the legal reserve.

 

   

Distributing cash dividends for Ps. 20,000,000 made available to shareholders as from November 10, 2008.

 

   

That income for the year be brought forward to the new year, empowering the Board to use the balance and the freely available reserves mentioned above, according to the company’s needs, under current applicable regulations and subject to approval by the shareholders’ meeting with the broadest powers to, among other uses, distribute dividends or decide on the acquisition of proprietary shares as provided by CNV (Comisión Nacional de Valores) Resolution No. 535, sec. 220, Argentine Business Associations Law, sec. 68, Law No. 17,811 and other relevant provisions in the CNV Standards effective at each time. Due to the financial crisis in the domestic and international markets clearly affecting the listed price of the Company shares, which do not respond to the Company’s situation, it is imperative to protect the interests of shareholders preserving the listed prices.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Notes to the Financial Statements (Continued)

NOTE 22:     (Continued)

 

   

That the shareholders’ personal assets tax paid over by the Company as substitute taxpayer for Ps. 4,008,607 be fully absorbed by the Company as long as such decision is not amended by the shareholders’ meeting’s decision.

 

   

Renewing the delegation of powers to the Board to set the time and issuance currency, price, payment terms and conditions, interest rate and type, use of funds and other terms and conditions as approved by the shareholders meeting of October 31, 2006, for the issuance of corporate bonds within the global program under sec. 9, Law No. 23,576.

 

  e) Agreement with Carlos Casado S.A.

On November 3, 2008, an addendum to the framework agreement with Carlos Casado S.A. was executed, as mentioned in note 20. In such addendum, the parties agreed that the title deed for the real property in question will be executed on February 3, 2009.

 

  f) Acquisition of IRSA shares and consolidation of financial statements

During October 2008, the Company acquired 34,396,820 additional shares of IRSA Inversiones y Representaciones S.A. on the market for USD 17,378,643. Thus, the Company’s direct and indirect interest in IRSA Inversiones y Representaciones S.A. through its affiliates amounts to about 53.7%, hence it controls IRSA Inversiones y Representaciones S.A., as it has the votes required to reach corporate decisions at regular shareholders’ meeting as from such date as provided by Technical Resolution No. 21.

Consequently, the Company will present its financial statements consolidated with those of IRSA Inversiones y Representaciones S.A. as from such date.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Fixed Assets

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule A

 

Principal Account

  Value
at the
beginning of
the year
Pesos
  Additions
and/or
Transfers
Pesos
  Deductions
and/or
Transfers
Pesos
  Value
at the
end of the
period/year
Pesos
  Depreciation   Net
carrying
Value as of
September 30,
2008

Pesos
  Net
carrying
Value as of
June 30,
2008

Pesos
  Net
carrying
Value as of
September 30,
2007

Pesos
          Rate
%
  Accumulated
at the
beginning
of the year
Pesos
  Decrease of
the period/year
Pesos
  Current
year

Pesos
  Accumulated
at the
end of the
period/year

Pesos
     

Real estate

  165,330,355   2,158,747   —     167,489,102   —     —     —     —     —     167,489,102   165,330,355   161,714,505

Wire fences

  6,090,317   —     —     6,090,317   3   871,751   —     46,650   918,401   5,171,916   5,218,566   5,152,331

Watering troughs

  5,529,426   3,920   —     5,533,346   5   1,269,519   —     66,368   1,335,887   4,197,459   4,259,907   3,229,403

Alfalfa fields and meadows

  5,187,237   600,803   —     5,788,040   12-25-50   2,111,871   —     247,734   2,359,605   3,428,435   3,075,366   1,556,047

Buildings and constructions

  34,293,610   —     —     34,293,610   2   3,755,481   —     176,495   3,931,976   30,361,634   30,538,129   27,330,323

Machinery

  11,558,878   349,886   38,845   11,869,919   10   8,167,003   38,845   171,516   8,299,674   3,570,245   3,391,875   3,431,657

Vehicles

  2,480,633   374,364   162,442   2,692,555   20   1,631,088   130,913   105,993   1,606,168   1,086,387   849,545   907,977

Tools

  223,274   11,510   1,450   233,334   10   169,066   598   3,204   171,672   61,662   54,208   46,700

Furniture and equipment

  1,220,433   —     —     1,220,433   10   937,833   —     15,081   952,914   267,519   282,600   266,303

Feeder and drinking troughs

  —     20,550   —     20,550   20   —     —     86   86   20,464   —     —  

Corral and leading lanes

  938,092   —     —     938,092   3   168,628   —     6,926   175,554   762,538   769,464   759,200

Roads

  2,415,834   —     —     2,415,834   10   893,210   —     49,632   942,842   1,472,992   1,522,624   1,295,499

Facilities

  15,531,005   7,730   —     15,538,735   10-20-33   7,743,132   —     295,902   8,039,034   7,499,701   7,787,873   6,665,027

Computer equipment

  2,190,547   60,172   —     2,250,719   20   1,523,518   —     110,987   1,634,505   616,214   667,029   756,445

Silo plants

  1,277,416   —     —     1,277,416   5   538,866   —     18,623   557,489   719,927   738,550   794,419

Constructions in progress

  10,380,821   7,247,962   600,803   17,027,980   —     —     —     —     —     17,027,980   10,380,821   10,067,259

Advances to suppliers

  1,709,727   12,950,861   —     14,660,588   —     —     —     —     —     14,660,588   1,709,727   747,591
                                               

Total as of September 30, 2008

  266,357,605   23,786,505   803,540   289,340,570     29,780,966   170,356   1,315,197   30,925,807   258,414,763    
                                           

Total as of June 30, 2008

  247,764,980   27,142,187   8,549,562   266,357,605     25,658,036   394,964   4,517,894   29,780,966     236,576,639  
                                         

Total as of September 30, 2007

  247,764,980   4,027,547   295,767   251,496,760     25,658,036   —     1,118,038   26,776,074       224,720,686
                                         

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Investments

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1, 2, and 3)

Schedule C

 

                         

INFORMATION ON THE ISSUER

 

Securities

  Amount   Value as of
September 30,
2008

Pesos
    Value as of
June 30,

2008
Pesos
  Value as of
September 30,
2007

Pesos
  Market
value
Pesos
 

Principal activity

  Latest financial statements  
              Capital
Pesos
  Income (loss)
for the period

Pesos
    Shareholders´
Equity
Pesos
 

Current Investments

                 

Mutual Funds

                 

Bony Hamilton Fund (US$)

  20,747,826   64,214,523     146,303,888   1,805,840          

Santander Río Bank Special Fund in pesos

    —       —     2,001,680          

Deutsche Managed Euro Fund (€)

  7,685,793   33,471,630     —     —            

Deutsche Managed Dollar Fund (US$)

  60,767,578   188,075,653     245,683,963   —            

Credit Suisse Overnight (US$)

    —       59,956,710   —            

Credit Suisse Overnight (€)

    —       21,220,765   —            

1784 BKB Fund

  1,254,128   1,537,894     —     —     1.226266        
                         
    287,299,700     473,165,326   3,807,520          
                         

Bonds and Convertible Notes (5)

                 

Bonos IRSA 2017 (US$)

  5,000,000   9,496,923     11,285,167   —     1.857        

Bonos Global 2010

  110,000   101,284     92,486   116,315   0.921        

Bocon Pro 1

  157,647   630     630   630   0.004        

Mortgage Bonds

  599,789   559,003     622,960   914,392   0.932        
                         
    10,157,840     12,001,243   1,031,337          
                         

Total current investments

    297,457,540     485,166,569   4,838,857          
                         

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   (175,152 )   25,104,580  

Shares

  893,069   8,968,049     9,030,618   7,353,634          

Higher value of property

    11,179,150     11,179,150   11,179,150          
                         
    20,147,199     20,209,768   18,532,784          
                         

INVERSIONES GANADERAS S.A.

          Unlisted   Rising and grazing cattle   11,668,570   (494,640 )   9,010,762  

Shares

  11,668,569   7,811,084     8,305,723   9,654,154          
                         
    7,811,084     8,305,723   9,654,154          
                         

CACTUS ARGENTINA S.A.

          Unlisted   Explotation and administration of agriculture products and rising cattle      

Shares

  6,589,335   7,084,433     7,603,606   5,886,729       27,455,563   (2,163,222 )   29,518,470  
                         
    7,084,433     7,603,606   5,886,729          
                         

FUTUROS Y OPCIONES.COM S.A.

          Unlisted   Gives information about markets through Internet, and commercial services      

Shares

  654,398   2,585,880     2,477,025   2,100,343       960,937   159,846     3,797,180  
                         
    2,585,880     2,477,025   2,100,343          
                         

AGROPECUARIA CERVERA S.A.

                 

Shares

  1,201,273   2,790,436     3,594,979   3,935,117   Unlisted   Agricultural and forestall   1,334,748   (857,937 )   3,100,486  

Concession rights

    21,036,662     21,211,482   21,910,761          
                         
    23,827,098     24,806,461   25,845,878          
                         

AGROLOGY S.A.

                 

Shares

  48,500   (4,713,317 )   260,625   —     Unlisted   Investing   50,000   (5,127,776 )   (4,859,090 )
                         
    (4,713,317 )   260,625   —            
                         

FYO TRADING S.A.

                 

Shares

  726   726     726   —     Unlisted   Brokerage   20,000   —       726  
                         
    726     726   —            
                         

 

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Cresud Sociedad Anónima,

Comercial, Inmobiliaria, Financiera y Agropecuaria and Subsidiaries

Consolidated Investments (Continued)

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1, 2, and 3)

Schedule C (Continued)

 

                                

INFORMATION ON THE ISSUER

Securities

   Amount    Value as of
September 30,
2008

Pesos
    Value as of
June 30,
2008
Pesos
    Value as of
September 30,
2007

Pesos
    Market
value
Pesos
  

Principal activity

   Latest financial statements
                  Capital
Pesos
   Income (loss)
for the period

Pesos
    Shareholders´
Equity
Pesos

IRSA Inversiones y Representaciones S.A

                      

Shares

   221,942,648    815,289,185     737,990,876     568,838,723     2.26    Real Estate    578,676,461    (70,264,834 )   1,853,916,708

Higher values (2)

      105,317,676     105,724,939     —                 
                                  
      920,606,861     843,715,815     568,838,723               
                                  

BrasilAgro – Companhia Brasileira de Propiedades Agrícolas

                      

Shares

   8,407,300    134,922,671     160,519,236     72,492,917 (1)   10.00    Agricultural and Real Estate    875,381,000    (17,410,000 )   937,559,000

Higher values (3)

      6,887,167     6,887,167     —                 
                                  
      141,809,838     167,406,403     72,492,917               
                                  
   Subtotal    1,119,159,802     1,074,786,152     703,351,528               
                                  

Other Investments

                      

Coprolan

      20,717     20,717     20,717     Unlisted           

Exportaciones Agroindustriales Argentinas S.A.

      241,556     241,556     241,556     Unlisted           
                                  
   Subtotal    262,273     262,273     262,273               
                                  

Goodwill

                      

Companhia Brasilerira de Propiedades Agrícolas BrasilAgro goodwill

      3,840,913     3,840,913     —                 

IRSA Inversiones y Representaciones S.A. negative goodwill (4)

      (234,664,931 )   (219,359,509 )   (121,943,146 )             

IRSA Inversiones y Representaciones S.A. positive goodwill

      6,267,858     6,267,858     —                 
                                  
   Subtotal    (224,556,160 )   (209,250,738 )   (121,943,146 )             
                                  

Total non-current investments

      894,865,915     865,797,687     581,670,655               
                                  

 

(1) In Brazilian Reais

 

(2) Consist of Ps. 8,026,906 higher value of inventory, Ps. 64,689,970 higher value of investments, Ps. 63,881,267 higher value of fixed assets, Ps. 25,075,652 higher value of intangible assets, Ps. (10,458,283) higher value of liabilities and Ps. (45,897,836) higher value of tax effect.

 

(3) Consist of Ps. 10,595,643 higher value of fixed assets and Ps. (3,708,476) higher value of tax effect.

 

(4) The change as regards the previous year responds to additions for Ps. 18,305,851 and depreciation for Ps. 3,000,429.

 

(5) Does not qualify as cash equivalents in the Statement of Cash Flows.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Allowances and Provisions

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule E

 

Item

   Balances at
beginning of
the year
Pesos
    Increases
Pesos
   Decreases
Pesos
    Value as of
September 30,
2008

Pesos
   Value as of
June 30,
2008

Pesos
   Value as of
September 30,
2007

Pesos

Deducted from assets

               

Allowance for doubtful accounts

   381,020 (1)   84,199    —       465,219    381,020    353,126

Included in liabilities

               

For pending lawsuits

   82,958 (2)   2,005    —       84,963    82,958    45,216
                               

Total as of September 30, 2008

   463,978     86,204    —       550,182      
                             

Total as of June 30, 2008

   417,575     115,826    (69,423 )      463,978   
                             

Total as of September 30, 2007

   417,575     —      (19,233 )         398,342
                           

 

(1) Included in financial result in the statement of operations.

 

(2) Included in other income and expenses in the statement of operations.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Cost of sales

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule F.1

 

    Crops     Beef cattle     Milk   Others     Total  
    September 30,
2008

Pesos
    September 30,
2007

Pesos
    September 30,
2008

Pesos
    September 30,
2007

Pesos
    September 30,
2008

Pesos
    September 30,
2007

Pesos
  September 30,
2008

Pesos
    September 30,
2007

Pesos
    September 30,
2008
Pesos
    September 30,
2007
Pesos
 

Inventories at the beginning of the year

                       

Beef cattle

  —       —       68,694,539     65,090,604     —       —     —       —       68,694,539       65,090,604    

Crops

  62,989,034     30,866,271     —       —       —       —     —       —       62,989,034       30,866,271    

Seeds and fodder

  590,847     360,162     —       —       —       —     —       —       590,847       360,162    

Materials and others

  —       —       536,373     —       17,594     —     658,994     693,296     1,212,961       693,296    
                                                             
  63,579,881     31,226,433     69,230,912     65,090,604     17,594     —     658,994     693,296       133,487,381       97,010,333  

Holding gain - Beef cattle

  —       —       (1,125,386 )   473,985     —       —     —       —         (1,125,386 )     473,985  

Holding gain - Crops and raw materials

  (9,189,399 )   6,779,626     —       —       —       —     —       —         (9,189,399 )     6,779,626  

Production

  6,043,135     2,238,864     1,668,149     3,851,532     5,367,098     4,112,227   —       —         13,078,382       10,202,623  

Transfer of inventories to fixed assets

  —       —       —       —       —       —     (153,113 )   (186,123 )     (153,113 )     (186,123 )

Transfer of inventories to expenses

  (1,164,826 )   (1,593,789 )   (20,424 )   (19,177 )   (56,884 )   —     (501,499 )   (530,211 )     (1,743,633 )     (2,143,177 )

Purchases

  3,400,155     5,133,161     1,694,736     1,308,940     —       —     533,494     542,327       5,628,385       6,984,428  

Operating expenses (Schedule H)

  —       —       —       —       —       —     1,986,029     301,922       1,986,029       301,922  

Less:

                       

Inventories at the end of the period

                       

Beef cattle

  —       —       (66,899,355 )   (60,164,808 )   —       —     —       —       (66,899,355 )     (60,164,808 )  

Crops

  (20,506,389 )   (26,136,862 )   —       —       —       —     —       —       (20,506,389 )     (26,136,862 )  

Seeds and fodder

  (463,796 )   (372,297 )   —       —       —       —     —       —       (463,796 )     (372,297 )  

Materials and others

  —       —       (366,457 )   —       —       —     (608,196 )   (666,455 )   (974,653 )   (88,844,193 )   (666,455 )   (87,340,422 )
                                                                     

Cost of Sales

  41,698,761     17,275,136     4,182,175     10,541,076     5,327,808     4,112,227   1,915,709     154,756       53,124,453       32,083,195  
                                                             

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Cost of production

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule F.2

 

    Crops     Beef cattle     Milk     Total  
    September 30,
2008

Pesos
    September 30,
2007

Pesos
    September 30,
2008

Pesos
    September 30,
2007

Pesos
    September 30,
2008

Pesos
    September 30,
2007

Pesos
    September 30,
2008
Pesos
    September 30,
2007
Pesos
 

Inventories at the beginning of the year

                   

Beef cattle

  —       —       —       —       15,193,886     11,113,378     15,193,886       11,113,378    

Unharvested crops and other unharvested

  6,051,754     2,342,025     —       —       —       —       6,051,754       2,342,025    

Seeds and fodder

  —       —       1,934,000     1,336,519     680,435     554,095     2,614,435       1,890,614    

Materials and others

  16,685,976     3,609,519     397,897     465,981     144,656     160,940     17,228,529       4,236,440    
                                                   
  22,737,730     5,951,544     2,331,897     1,802,500     16,018,977     11,828,413       41,088,604       19,582,457  

Holding gain - Beef cattle

  —       —       —       —       (23 )   (31,076 )     (23 )     (31,076 )

Holding gain - Crops and raw materials

  2,983,374     536,140     —       —       —       —         2,983,374       536,140  

Production

  —       —       54,191     113,361     697,300     132,716       751,491       246,077  

Transfer of inventories to fixed assets

  (49,306 )   (56,204 )   —       —       —       —         (49,306 )     (56,204 )

Transfer of unharvested crops to expenses

  (8,923,082 )   (3,328,929 )   (1,489,159 )   (1,249,930 )   (2,121,791 )   (1,332,584 )     (12,534,032 )     (5,911,443 )

Purchases

  24,239,334     11,685,338     244,872     343,630     1,855,471     1,964,782       26,339,677       13,993,750  

Operating expenses (Schedule H)

  6,344,693     3,513,587     4,569,254     5,550,827     5,007,020     2,996,828       15,920,967       12,061,242  

Less:

                   

Inventories at the end of the period

                   

Beef cattle

  —       —       —       —       (15,744,004 )   (11,815,500 )   (15,744,004 )     (11,815,500 )  

Unharvested crops and other unharvested

  (11,995,175 )   (6,904,835 )   —       —       —       —       (11,995,175 )     (6,904,835 )  

Seeds and fodder

  —       —       (1,098,601 )   (570,288 )   (598,568 )   (547,182 )   (1,697,169 )     (1,117,470 )  

Materials and others

  (29,206,582 )   (7,839,263 )   (387,526 )   (510,485 )   (122,524 )   (144,390 )   (29,716,632 )   (59,152,980 )   (8,494,138 )   (28,331,943 )
                                                           

Cost of Production

  6,130,986     3,557,378     4,224,928     5,479,615     4,991,858     3,052,007       15,347,772       12,089,000  
                                                   

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Foreign currency assets and liabilities

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule G

 

     September 30, 2008    June 30, 2008    September 30, 2007

Item

   Type and amount
of foreign
Currency
   Current
exchange rate
Pesos
   Amount in
local currency
Pesos
   Amount in
local currency
Pesos
   Amount in
local currency
Pesos
   Amount in
local currency
Pesos
   Amount in
local currency
Pesos

Current Assets

                    

Cash and banks

                    

Cash and banks in Dollars

   US$ 264,036    3.095    817,191    US$ 283,155    845,219    US$ 1,658,683    5,158,504

Cash and banks in Brazilian Reais

   Rs 1,246    1.560    1,944    Rs 2,646    4,472    Rs 2,584    3,643

Cash and banks in Euros

   14,764    4.355    64,225    1,876    8,821    —      —  

Cash and banks in Yen

   JPY 773,750,000    0.029    22,786,938    JPY 1,547,500,000    43,570,946    JPY —      —  

Investments:

                    

Mutual funds (US$)

   US$ 81,515,404    3.095    252,290,176    US$ 151,405,213    451,944,561    US$ 580,656    1,805,840

Mutual funds (€)

   7,685,793    4.355    33,471,630    4,514,000    21,220,765    —      —  

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

                    

Bonos IRSA 2017 (US$)

   US$ 3,068,473    3.095    9,496,923    US$ 3,780,625    11,285,167    US$ —      —  

Trade accounts receivable:

                    

Trade accounts receivable

   US$ 471,818    3.095    1,460,276    US$ 952,704    2,843,820    US$ 300,491    934,526

Other receivables:

                    

Secured by mortgages

   US$ 1,878,755    3.095    5,814,746    US$ 2,073,236    6,188,608    US$ 2,225,618    6,921,671

Guarantee deposits and premiums paid

   US$ 2,334,711    3.095    7,225,929    US$ 393,392    1,174,275    US$ 3,864,615    12.018.952

Others

   US$ —         —      US$ —      —      US$ 17,514    55,169

Non-Current Assets

                    

Other receivables

                    

Secured by mortgages

   US$ 1,788,334    3.095    5,534,894    US$ 2,361,334    7,048,582    US$ 3,576,668    11,123,438

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

                    

Alto Palermo S.A.

   US$ —         —      US$ —      —      US$ 22,290    70,215

IRSA Inversiones y Representaciones S.A.

   US$ —         —      US$ —      —      US$ 4,458    14,043

Cactus Argentina S.A.

   US$ —         —      US$ —      —      US$ 637    2,006

Others

   US$ —         —      US$ —      —      US$ 4,098    12,908
                                      

Total US$

   US$ 91,321,531       282,640,135    US$ 161,249,659    481,330,232    US$ 12,255,728    38,117,272
                                      

Total Rs

   Rs 1,246       1,944    Rs 2,646    4,472    Rs 2,584    3,643
                                      

Total €

   7,700,557       33,535,855    4,515,876    21,229,586    —      —  
                                      

Total JPY

   JPY 773,750,000       22,786,938    JPY 1,547,500,000    43,570,946    JPY —      —  
                                      

Total Assets

         338,964,872       546,135,236       38,120,915
                          

US$: US Dollars

Rs: Brazilian Reais

€: Euros

JPY: Japanese Yens

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Foreign currency assets and liabilities (Continued)

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule G (Continued)

 

     September 30, 2008     June 30, 2008    September 30, 2007

Item

   Type and amount
of foreign
Currency
    Current
exchange rate
Pesos
   Amount in
local currency
Pesos
    Type and amount
of foreign
currency
   Amount in
local currency
Pesos
   Type and amount
of foreign
currency
   Amount in
local currency
Pesos

Current liabilities

                  

Trade accounts payable:

                  

Suppliers

   US$ 6,511,086     3.135    20,412,254     US$ 4,042,648    12,229,011    US$ 5,629,045    17,731,492

Subsidiaries, related companies Law No. 19,550

                  

Section 33 and related parties:

                  

Accrual for other expenses

   US$ 1,184,574     3.135    3,713,638     US$ 1,227,649    3,713,638    US$ 17,514    55,170

Loans:

                  

Local financial loans

   US$ 7,259,532     3.135    22,758,632     US$ 6,915,026    20,917,954    US$ 8,534,334    26,883,153

Foreign financial loans

   US$ 8,082,856     3.135    25,339,753     US$ 8,086,570    24,461,875    US$ —      —  

Guarantee paid

   US$ (3,400,000 )   3.095    (10,523,000 )   US$ —      —      US$ —      —  

Interest of Convertible Notes 2007

     —          —       US$ —      —      US$ 58,121    183,081

Convertible Notes 2007

   US$ —          —       US$ —      —      US$ 1,889,521    5,951,991

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

                  

Directors

   US$ —          —       US$ —      —      US$ 33,600    105,840

Other debts:

                  

Premium colleted

   US$ 1,323,853     3.135    4,150,280     US$ —      —      US$ 1,235,221    3,890,946

Debt for purchase of shares

   US$ 4,816,386     3.135    15,099,370     US$ —      —      US$ —      —  

Non-current liabilities

                  

Trade accounts payable

                  

Accrual for other expenses

   US$ —          —       US$ —      —      US$ 3,503    11,034

Loans:

                  

Foreign Banks

   US$ —          —       US$ —      —      US$ 8,000,000    25,200,000
                                        

Total Liabilities

   US$ 25,778,287        80,950,927     US$ 20,271,893    61,322,478    US$ 25,400,859    80,012,707
                                        

US$: US Dollars

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Information submitted in compliance with Section 64, subsection B of Law No. 19,550

Corresponding to the periods beginning as from July 1, 2008 and 2007

and ended on September 30, 2008 and 2007

(Notes 1 and 2)

Schedule H

 

     Total as of
September 30,

2008
Pesos
   Operating Expenses    Expenses    Total as of
September 30,

2007
Pesos

Items

      Total
Pesos
   Crops
Pesos
   Beef cattle
Pesos
   Milk
Pesos
   Others
Pesos
   Selling
Pesos
   Administrative
Pesos
  

Directors’ fees

   166,591    —      —      —      —      —      —      166,591    76,179

Fees and payments for services

   1,729,272    242,399    18,091    153,517    70,791    —      —      1,486,873    1,370,695

Salaries and wages

   4,407,472    1,705,294    323,385    847,715    534,194    —      —      2,702,178    2,558,167

Social security taxes

   1,191,090    415,992    86,510    195,929    133,553    —      —      775,098    785,944

Taxes, rates and contributions

   279,062    214,380    122,761    13,951    77,668    —      —      64,682    53,420

Gross sales taxes

   757,562    —      —      —      —      —      757,562    —      335,311

Office and administrative expenses

   259,864    —      —      —      —      —      —      259,864    352,237

Bank commissions and expenses

   —      —      —      —      —      —      —      —      3,001

Depreciation of fixed assets

   1,315,197    1,156,851    570,561    310,690    275,600    —      —      158,346    1,118,038

Vehicle and traveling expenses

   325,277    177,314    51,205    100,472    25,637    —      —      147,963    240,798

Spare parts and repairs

   768,002    765,439    143,111    424,740    197,588    —      —      2,563    561,210

Insurance

   77,989    55,072    19,461    27,848    7,763    —      —      22,917    30,898

Benefits to Employees

   360,232    137,581    23,958    79,099    34,524    —      —      222,651    163,065

Livestock expenses (1)

   2,520,056    2,179,547    —      2,179,547    —      —      340,509    —      3,955,501

Dairy farm expenses (2)

   3,574,399    3,560,739    —      —      3,560,739    —      13,660    —      2,214,982

Agricultural expenses (3)

   12,978,829    6,734,498    4,748,469    —      —      1,986,029    6,244,331    —      4,987,832

Silo expenses

   2,391    2,391    2,391    —      —      —      —      —      14,596

General expenses

   578,044    556,883    233,869    235,746    87,268    —      —      21,161    329,265

Lease of machinery and equipment

   15,693    —      —      —      —      —      —      15,693    162

Safety and hygiene expenses

   2,616    2,616    921    —      1,695    —      —      —      2,419

Advertising expenses

   —      —      —      —      —      —      —      —      2,668
                                            

Total as of September 30, 2008

   31,309,638    17,906,996    6,344,693    4,569,254    5,007,020    1,986,029    7,356,062    6,046,580    —  
                                            

Total as of September 30, 2007

      12,363,164    3,513,587    5,550,827    2,996,828    301,922    2,667,226    4,125,998    19,156,388
                                          

 

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

 

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

 

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

 

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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 MODIFICATIONS 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 without a due date as of September 30, 2008

 

     Other
Receivables
Pesos
   Law No. 19.550 Section 33
        FYO    CACTUS    IGSA    AGROLOGY    BRASILAGRO    CAMSA    ACER
        Other Receivables
        Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Current

   30,717,559    23,603    3,509,908    3,405,125    101,758,370    305,949    1,280,709    30,937,233

Non-current

   27,822,371    —      —      —         —         —  

 

  b. Trade Accounts Receivable and other receivables to fall due as of September 30, 2008

 

     Trade
Accounts

Receivable
Pesos
   Law No. 19.550 Section 33    Other
Receivables
Pesos
        FYO    IGSA    CACTUS    COMERCIALIZADORA
DE LOS ALTOS S.A.
   AGROLOGY    ACER   
        Trade accounts receivable   
        Pesos    Pesos    Pesos    Pesos    Pesos    Pesos   

12.31.08

   22,641,741    13,268,830    169,222    354,829    933    4,086    16,095    29,792,947

03.31.09

   —      —      —      —      —         —      12,404,268

06.30.09

   —      —      —      —      —         —      7,324,804

09.30.09

   —      —      —      —      —         —      3,008,136

06.30.10

   —      —      —      —      —         —      3,761,459

09.30.10

   —      —      —      —      —         —      1,773,435

 

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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 as of September 30, 2008.

 

  b. Debts without a due date as of September 30, 2008.

 

     Trade Accounts
Payable

Pesos
   Loans
Pesos
   Taxes Payable
Pesos
   Allowances
Pesos

Current

   —      69,004,317    —      —  

Non-current

   —      —      42,203,601    84,963

 

  c. Debts to fall due as of September 30, 2008.

 

     Trade
Accounts
Payable

Pesos
   Law No. 19,550 Section 33    Loans
Pesos
   Salaries
and
Social
Security
Payable
Pesos
   Taxes
Payable
Pesos
   Other
Debts
Pesos
        IBSA    CYRSA    APSA    ACER            
        Trade Accounts Payable            
        Pesos    Pesos    Pesos    Pesos            

12.31.08

   39,937,692    77,118    39,947    754,801    169,003    21,414,863    2,897,735    1,581,723    19,739,104

03.31.09

   —      —      —      —      —      16,160,522    —      7,565,325    —  

06.30.09

   —      —      —      —      —      —      —      2,120,326    —  

09.30.09

   —      —      —      —      —      —      768,056    —      —  

 

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     
        FYO    IGSA    CACTUS    COMERCIALIZA-
DORA DE LOS
ALTOS S.A
   AGROLOGY    IRSA
        Trade Accounts Receivable
        Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

In Pesos

   21,181,465    13,268,830    169,222    354,829    933    4,086    16,095

In Dollars

   1,460,276    —      —      —      —      —      —  

 

     Others
Accounts
Receivable

Pesos
   Law No. 19,550 Section 33
      FYO    CACTUS    IGSA    AGROLOGY    BRASIL
AGRO
   CAMSA    ACER
      Trade Accounts Receivable
        Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

In Pesos

   98,029,410    23,603    3,509,908    3,405,125    101,758,370    305,949    1,280,709    30,937,233

In Dollars

   18,575,569    —      —      —      —      —      —      —  

 

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

 

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Additional Information to the Notes to the Financial Statements (Continued)

 

c.

 

     Trade
Accounts
Receivable
Pesos
   Law No. 19.550 Section 33
        FYO    IGSA    CACTUS    COMERCIALI-
ZADORA DE
LOS ALTOS
S.A
   AGROLOGY    ACER
        Trade Accounts Receivable
        Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Outstanding balances accruing interests

   —      —      —      —      —      —      —  

Outstanding balances not accruing interests

   22,641,741    13,268,830    169,222    354,829    933    4,086    16,095

 

     Other
Accounts
Receivable
Pesos
   Law No. 19.550 Section 33
        FYO    CACTUS    IGSA    AGROLOGY    BRASIL
AGRO
   CAMSA    ACER
        Trade Accounts Receivable
        Pesos    Pesos    Pesos    Pesos    Pesos    Pesos    Pesos

Outstanding balances accruing interests

   10,937,843    —      2,757,420    3,296,499    96,040,041    —      —      26,952,208

Outstanding balances not accruing interests

   105,667,136    23,603    752,488    108,626    5,718,329    305,949    1,280,709    3,985,025

 

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
Payable
Pesos
   Taxes
Payable
Pesos
   Other
Debt
Pesos
   Provisions
Pesos
        IBSA    CYRSA    APSA    ACER               
        Trade Accounts Payable               
        Pesos    Pesos    Pesos    Pesos               

In Pesos

   15,811,800    77,118    39,947    754,801    169,003    69,004,317    3,665,791    53,470,975    489,454    84,963

In Dollars

   24,125,892    —      —      —      —      37,575,385    —      —      19,249,650    —  

 

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

c.

 

     Trade
Accounts
Payable

Pesos
   Law No. 19.550 Section 33    Loans
Pesos
   Salaries
and
Social
Security
Payable
Pesos
   Taxes
Payable
Pesos
   Other
Debt
Pesos
   Provisions
Pesos
        IBSA    CYRSA    APSA    ACER               
        Trade Accounts Payable               
        Pesos    Pesos    Pesos    Pesos               

Outstanding debts accruing Interests

   4,869,220    —      —      —      —      106,133,318    —      —      —      —  

Outstanding debts not accruing interests

   35,068,472    77,118    39,947    754,801    169,003    446,384    3,665,791    53,470,975    19,739,104    84,963

 

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Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Financial Statements (Continued)

 

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 September 30, 2008 are described in captions 4 and 5 above.

 

8. RECEIVABLES FROM OR LOANS TO DIRECTORS AND STATUTORY AUDIT COMMITTEE MEMBERS

As of September 30, 2008 there were advance payments to directors for Ps. 1,123,710, 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 fiscal 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 and other representative of the market.

 

  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).

 

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.

 

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Inmobiliaria, Financiera y Agropecuaria

Additional Information to the Notes to the Financial Statements (Continued)

 

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
   Book value
Pesos

Buildings, machinery, silos and furniture

  

Theft, fire and technical insurance

   75,808,311    35,535,539

Vehicles

  

Theft, fire and civil and third parties liability

   2,321,686    1,086,387

 

16. CONTINGENCIES

As of September 30, 2008 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 PREFERRED STOCK

There are no cumulative dividends not paid on preferred stock.

 

19. LIMITATIONS OF PROFIT DISTRIBUTIONS

See Note 10 to the Financial Statements.

 

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Inmobiliaria, Financiera y Agropecuaria

Business Highlight

Buenos Aires, November 11, 2008 - Cresud S.A.C.I.F. y A. (Nasdaq: CRESY – BCBA: CRES), one of the leading agricultural companies in Argentina, announces today its results for the first quarter of Fiscal Year 2009 ended September 30, 2008.

Results for the first quarter of fiscal year 2009 showed a net loss of Ps. 37.4 million compared to a Ps. 12.6 million loss posted the same period of the previous fiscal year. The decrease in net results is mainly explained by the operating losses and interests in Related Companies.

Consolidated sales for the period amounted to Ps. 74.7 million, 95.1% higher than those posted for the same period of the previous fiscal year. Noteworthy in this respect is the increase in crop sales, in excess of 173.6% when compared to the first quarter of fiscal year 2008.

Production revenues amounted to Ps. 14.5 million in the first quarter of fiscal year 2009, 28.3% up from those recorded in the same quarter of the previous fiscal year. This improvement resulted mainly from a Ps. 3.3 million increase in the Crops segment and a Ps. 1.8 million increase in the Milk segment.

Gross profit during the first quarter of fiscal year 2009 amounted to Ps. 10.4 million as compared to the Ps. 1.4 million gross profit posted during the same period of the previous year. This increase mainly results from a higher gross profit from the crops segment, which amounted to Ps. 9.5 million in the first quarter of fiscal year 2009 compared to a loss of Ps. 0.5 million in the same period of the previous fiscal year. The Others segment also contributed to this result, as the gross profit from this segment increased to Ps. 3.1 million in the first quarter of fiscal year 2009 from Ps. 1.4 million in the first quarter of fiscal year 2008.

Operating results for the quarter ended September 30, 2008 showed a Ps. 8.0 million loss compared to a loss of Ps. 7.2 million recorded in the same period of the previous fiscal year. This result is mainly due to an increase in gross profit of Ps. 9.0 million, higher selling expenses of Ps. 4.9 million, an increase of Ps. 2.1 million in administrative expenses, a Ps. 1.6 million reduction in the result from holdings of cattle and a Ps. 1.2 million reduction in adjustment for valuation of crops at net realizable value and forward market sales.

Results from related companies showed a Ps. 34.1 million loss mainly due to the results of our interest in IRSA Inversiones y Representaciones S.A. as of September 30, 2008.

Summary of Operations

Crops

Crops sales for the quarter totaled Ps. 50.8 million, compared to sales for Ps. 18.6 million in the previous fiscal year. The increase in sales is mainly due to the volume of crops sold and higher commodity prices, which amounted to 76,352 tons at an average price per ton of Ps. 670.7 compared to the 37,625 tons sold at an average price of Ps. 508.0 in the same period of the previous fiscal year. The higher sales volume was also favored by the increase in crop production and larger stock of crops at the beginning of the first quarter of fiscal year 2009.

The stock of crops as of the end of the quarter totaled 52,299 tons, 26,321 of which were corn, 13,834 were soybean, 6,131 were wheat, and 6,013 were other crops.

Gross results in the segment for the period ended September 30, 2008 were a Ps. 9.0 million profit, compared to the Ps. 0.5 million loss for the same period of the previous fiscal year.

 

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Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

For the current season we have allocated 104,563 hectares to agriculture, 63,387 of which are leased from third parties and 8,064 are operated under concession. Compared to the same period of the previous fiscal year, we have increased the number of total hectares allocated to agriculture by 44,385.

Beef Cattle

As of September 30, 2008, the Company’s cattle stock was 79,788 head, with a total of 128,917 hectares allocated to beef cattle activities.

Beef cattle sales amounted to Ps. 5.7 million for the first quarter of fiscal year 2009, when a total of 1,923 tons were sold, whilst during the first quarter of fiscal year 2008 the tons sold had amounted to 4,669.

The gross result from the beef cattle segment was a Ps. 2.7 million loss and beef cattle production amounted to 830 tons for the first quarter of fiscal year 2009, compared to a Ps. 0.7 million loss yet with a production of 1,249 tons in the same period of the previous fiscal year. The decrease in production volumes was mainly due to scarce rainfall in certain areas, which led us to sell animals prematurely and to relocate cattle in other farms in certain cases, causing delays in the fattening process.

Milk

Milk production increased by 9.0% in the quarter, from 5.0 million liters as of September 30, 2007 to 5.4 million as of September 30, 2008. This increase was mainly due to the higher number of milking cows.

The gross result went down from a profit of Ps. 1.2 million in the first quarter of fiscal year 2008 to a profit of Ps. 1.1 million in the first quarter of fiscal year 2009.

During the first quarter of fiscal year 2008 we had 7,276 cattle head in 3,723 hectares allocated to milk production, whereas in the first quarter of fiscal year 2009 this figure increased to 8,534 head in 4,106 hectares. On average, there are 3,223 milking cows per day, 13.2% higher than for the same period of the previous year.

At present, the Company has three dairy facilities, two in the “La Juanita” farm and one in “El Tigre”, a dairy farm equipped with state-of-the-art technology.

Purchase and Sale of Farms

In July 2008, the sales deed was executed for the conveyance of two parcels of land in “El Recreo” farm (1,829 hectares) located in the Province of Catamarca. The transaction was closed at US$ 0.36 million, which were paid as follows: US$ 0.12 million at the time of the sales deed and the balance of US$ 0.24 million to be paid in two annual and consecutive installments plus interest equivalent to the Libor rate plus 3%.

Following its international expansion strategy, Cresud has entered into a series of agreements aimed at strengthening its position in the South American region. In July 2008, the Company executed various preliminary purchase agreements involving an aggregate surface area of 12,166 hectares located in the Republic of Bolivia for a total of US$ 28.9 million, 11.8% of which has been already paid. These transactions include:

 

   

Preliminary purchase agreement for 4,566 hectares of the “Las Londras” farm located in the Province of Guarayos. The agreed price was US$ 11.4 million.

 

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Preliminary purchase agreement for 883 and 2,969 hectares of the “San Cayetano” and “San Rafael” farms, respectively, located in the Province of Guarayos. The agreed price was US$ 8.9 million.

 

   

Preliminary purchase agreement for 3,748 hectares of the “La Fon Fon” farm located in the Province of Obispo Santiesteban. The agreed price was US$ 8.6 million.

In addition, in September 2008, Cresud executed a preliminary purchase agreement, on an agency basis, for a 50% interest in 41,931 hectares in Paraguay owned by Carlos Casado S.A. for US$ 5.2 million in order to contribute them in kind to a company organized as a result of the agreements executed with Carlos Casado S.A., with a view to developing the agriculture and forestry businesses in Paraguay. The title deed to this property will be executed during the third quarter of this fiscal year. (see International Expansion).

In September 2008 we signed the deed of conveyance for the purchase of 10,910 hectares of the “Estancia Carmen” farm, located in the Province of Santa Cruz, adjacent to our “8 de Julio” farm. The transaction was agreed for a price of US$ 0.7 million, which have been fully paid.

After the closing of the first quarter of fiscal year 2009, we executed a preliminary sales agreement without transfer of possession in connection with 1,658 hectares of the “Los Pozos” establishment located in the Province of Salta. The agreed sales price was US$ 0.5 million, i.e. US$ 320.0 per hectare, US$ 0.3 million of which have been already paid. The balance is payable upon execution of the title deed, scheduled for April 1, 2009.

Development of marginal lands

We consider the potential offered by the sector to lie on the development of marginal areas, where with current state-of-the-art technology, similar yields to those registered in core areas can be obtained with larger profits.

During the first quarter of fiscal 2009, we continued with the development of our “Los Pozos” farm located in the Province of Salta. As of September 30, 2008, we had approximately 62,000 hectares of prairies sown, 38,800 of which were allocated to beef cattle production. In the first quarter of fiscal year 2009, 389 hectares were used for agricultural production. In turn, we expect to end this fiscal year with approximately 4,200 hectares allocated to agricultural production and 43,000 hectares to beef cattle production.

In addition, in the first quarter of 2009 progress was also made in the development of Agropecuaria Cervera S.A. By the end of fiscal year 2009, we anticipate that approximately 8,000 hectares will be devoted to our own production and that 5,132 hectares will be leased to third parties.

As of September 30, 2008, Cresud held own land reserves amounting to over 217,915 hectares. In addition, we have a concession over 148,788 hectares reserved for future development. We believe that there are technological tools available to improve productivity in these farms and, therefore, achieve appreciation in the long term. However, current or future environmental regulations could prevent us from fully developing our land reserves by requiring that we maintain part of this land as natural woodland not to be used for production purposes.

 

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Business Highlight (Continued)

 

Investments in other companies

BrasilAgro

BrasilAgro, a Brazilian company listed in the Bovespa since May 2006, was founded with the purpose of replicating Cresud’s business in Brazil. The Company was organized in 2005 to explore the opportunities in the Brazilian real estate market for farming purposes. BrasilAgro’s founding shareholders include Cresud, Cape Town, Tarpon Investimentos, Tarpon Agro, Agro Managers and Agro Investment. The Company is engaged mainly in four business lines while keeping its focus on Agricultural Real Estate: sugar cane, grains and cotton, forestry, and beef cattle.

Within our international expansion plan we consider Brazil to be a key country, as we believe it has a huge growth potential in the sector. As of September 30, 2008, Cresud held 14.39% of BrasilAgro’s common outstanding shares of stock.

As of September 30, 2008, BrasilAgro had 8 properties, with an aggregate surface area of 158,997 hectares, acquired at highly attractive prices as compared to the average in the respective regions, all of which offering high appreciation potential.

 

Property

  

Province

  

Date of acquisition

   Surface area
(in hectares)
  

Main activity

(Project)

   Value R$ /Ha.
(thousands of R$)
Sao Pedro    Chapado do Céu (GO)    Sep-06    2,443    Sugar cane    R$ 4.1
Cremaq    Baixa Grande do Ribeiro (PI)    Oct-06    32,375    Grains    R$ 1.3
Jatobá (1)    Jaborandi (BA)    Mar-07    31,602    Grains and cotton    R$ 1.1
Alto Taquari    Alto Taquari (MT)    Aug-07/Under analysis (2)    5,266    Sugar cane    R$ 6.5
Araucaria (3)    Mineiros (GO)    Apr-07    15,543    Sugar cane    R$ 5.8
Chaparral    Correntina (BA)    Nov-07    37,799    Livestock/Grains    R$ 1.2
Nova Buriti    Januária (MG)    Dec-07    24,185    Forestry    R$ 0.9
Preferencia    Barreiras (BA)    Sep-08/Under analysis(2)    16,83    Livestock/Grains    R$ 0.6
                

Total

      166,043      
                

Total owned by BrasilAgro

      158,997      
                

 

(1) The Jatobá establishment is owned by Jaborandi S.A., in which BrasilAgro has a 90% interest.

 

(2) Subject to the sellers’ agreement in respect of certain conditions precedent.

 

(3) Corresponds to the total surface area of the Araucária establishment, purchased by BrasilAgro and Brenco. All rights and obligations acquired as a result of the purchase of the establishment are shared between BrasilAgro and Brenco on a 75%/25% basis, respectively.

In September 2008, BrasilAgro purchased 16,830 hectares of the “Preferencia” establishment, located in the district of Barreiras, Bahia. The price was agreed at R$ 600.0 per hectare. The property has good conditions for cattle breeding and crop production.

In the first quarter of fiscal year 2009, BrasilAgro posted revenues of R$ 3.2 million, from the sale of 1.1 tons of soybean and 9.1 tons of corn. Its net result was an income of R$ 1.3 million.

For the 2008/2009 season, BrasilAgro will allocate 25,834 hectares to sow crops (summer harvest and sugar cane). In addition, it also had 4,311 hectares of sugar cane sown from the previous season. 27% of the soybean (summer harvest), 20% of the corn (summer harvest) and 58% of the sugar cane have been already sown, whereas the sowing of rice (summer harvest) is now starting.

To date, BrasilAgro has applied Reais 274.6 million, including amounts committed and paid under land purchase transactions, compared to the aggregate of Reais 552.6 million received as a result of the initial public offering of shares.

 

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Business Highlight (Continued)

 

BrasilAgro will maintain its focus on the agricultural real estate business and will look for new business opportunities that allow it to consolidate a significant property portfolio, as well as the development of its four business lines: sugar cane, grains and cotton, forestry, and livestock.

Cactus Argentina S.A.

Cactus Argentina S.A., our feedlot and packing plant operator in which we hold a 24.0% interest, continued consolidating its growth and playing a major role in our Company’s cattle beef production. Cactus Argentina S.A. holds 98.04% of the shares in the “Exportaciones Agroindustriales Argentina S.A – Carnes Pampeanas” packing plant.

Cactus Argentina S.A. has thus achieved a vertical integration in the cattle beef industry. The feedlot cattle beef production is processed in the Exportaciones Argroindustriales Argentina S.A. packing plant for the Argentine and export markets. Feedlot cattle beef production with a corn-based diet has been growing at a very dynamic pace. The company has gained market reputation thanks to the uniform final product offered by feedlot-finished animals, which provides purchasers with high-quality products and has succeeded in offering differential sales prices.

During the period ended September 30, 2008, Cactus Argentina S.A. recorded a consolidated gross profit of Ps. 7.0 million, compared to a gross profit of Ps. 5.7 million obtained in the same quarter of the previous fiscal year. However, its net result for the quarter was a loss of Ps. 2.2 million, mainly due to the markdowns resulting from the fall in the international prices of products marketed by the packing plant and the volatility in delivery caused by the local conditions.

With respect to the Argentine beef cattle market, despite the Government intervention, there was a recovery in beef cattle exports compared to the preceding months. Although the prices are lower than the ones recorded in the same period of the previous fiscal year, there was a 178.6% increase in exports (measured in product weight tons) during the July-September 2008 quarter, according to the IPCVA report.

FyO

Futuros Y Opciones.com S.A. (FyO), the Internet portal in which we hold a 68.10% equity interest, continues to strengthen its position as the leading website in the agricultural sector, covering a broad range of commercial services for the agricultural and livestock industry including direct sales of inputs and crop brokerage activities.

Today FyO has a database of 40,000 users, and more than 5,000 agricultural farmers who are authorized to close deals. Its strategy is focused on commercial and financial services to farmers by leveraging on Cresud’s experience and operational capacity in the business, with FyO being the nexus with the customer.

FyO also deals in the futures and options market known as Mercado a Término de Buenos Aires. Traded volumes have surpassed expectations as our futures’ hedging service becomes a fundamental tool for our customers’ price risk management policy.

During the quarter ended September 30, 2008 Futuros y Opciones.com S.A.’s income amounted to Ps. 9.0 million, 193.4% higher than the income recorded in the same period of the previous year. The net result for the quarter was a Ps. 0.2 million profit.

 

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Business Highlight (Continued)

 

Main indicators for the three-month period ended September 30, 2008 and 2007:

 

Description

   3 months ended
September 30, 2008
   3 months ended
September 30, 2007
   %  

Sales

           

Wheat

      7,737    1,838    320.9 %

Corn

      29,163    19,548    49.2 %

Sunflower

      2,476    3,157    (21.6 %)

Soybean

      34,424    12,526    174.8 %

Other

      2,552    557    358.1 %
                   

Total Crops (tons)

   76,352    37,625    102.9 %
                   

Beef (tons)

   1,923    4,669    (58,8 %)
                   

Milk (thousands of liters)

   5,323    4,952    7.5 %
                   
Production            

Corn

      14,376    9,116    57.7 %

Soybean

      862    12    7,080.5 %

Other

      461    57    709.3 %
                   

Total Crops (tons)

   15,700    9,185    70.9 %
                   

Beef (tons)

   830    1,249    (33.5 %)
                   

Milk (thousands of liters)

   5,397    4,952    9.0 %
                   
Operated surface area (in hectares)         

Crops

   Owned farms    33,112    25,354    30.6 %
  

Leased farms

   63,387    29,624    114.0 %
  

Farms under concession

   8,064    5,200    51.1 %

Beef cattle

   Owned farms    96,501    97,901    (1.4 %)
   Leased farms    32,416    28,591    13.4 %

Milk

   Owned farms    4,106    3,723    10.3 %

Sheep

   Owned farms    100,911    90,000    12.1 %
Land reserves (in hectares)         
   Owned farms    217,915    225,668    (3.4 %)
   Farms under concession    148,788    151,648    (1.9 %)
Surface area under irrigation (in hectares)         
   Owned farms    4,063    3,748    8.4 %
   Leased farms    1,334    976    36.7 %
Storage capacity (tons)         
   Owned plants    10,000    10,000    0.0 %
   Leased plants    —      8,000    (100.0 %)
Beef cattle stock         

Breeding (head)

   62,567    62,334    0.4 %

Fattening (head)

   17,221    15,943    8.0 %

Milking cows (head)

   8,534    7,276    17.3 %

Total Beef Cattle Stock (head)

   88,322    85,553    3.2 %
                   

Daily average milking cows (head)

   3,223    2,848    13.2 %
                   

Stock of Sheep (head)

   11,661    15,000    (22.3 %)
                   

Note:- Does not include Agro-Uranga S.A. (35.72% of 8,299 hectares) or Cactus due to deconsolidation (24.00%)

-Farms in concession correspond to a surface area proportional to our 99.99% interest in Agropecuaria Cervera S.A

 

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Business Highlight (Continued)

 

Results from IRSA Inversiones y Representaciones S.A.

IRSA Inversiones y Representaciones (NYSE: IRS – BCBA: IRSA) net results for the three months ended September 30, 2008 represented a loss of Ps.70.3 million compared to a loss of Ps.30.0 million posted during the same period of fiscal year 2008.

Operating income decreased to a loss of Ps.0.9 million as of September 30, 2008 compared to an income of Ps.55.2 million as of September 30, 2007, mainly due to the operating losses recorded in the consumer finance segment. Excluding the effect of this segment, the operating income of the other segments increased 54% from Ps.47.2 million to Ps.72.8 million. Revenues rose by 11.7%, from Ps.195.6 million as of September 30, 2007 to Ps.218.4 million as of September 30, 2008. The share of the various segments in net revenues was as follows: sales and developments Ps.2.3 million, offices and other rental properties Ps.29.5 million, shopping centers Ps.95.1 million, hotels Ps.42.2 million, consumer finance Ps.48.8 million, and financial operations and others recorded revenues of Ps.0.5 million.

Finally, the results from related companies showed a loss of Ps.28.6 million during the first quarter of fiscal year 2009 compared to a loss of Ps.19.5 million in the same period of fiscal year 2008, due to losses in the related company Banco Hipotecario S.A. because of the decrease in the valuation of its portfolio of financial assets resulting from the current financial conditions.

IRSA is one of Argentina’s leading real estate companies in terms of total assets. IRSA is engaged, directly or indirectly through subsidiaries and joint ventures, in a range of diversified real estate related activities in Argentina, including:

The acquisition, development and operation of shopping centers, through its 63.3% interest in Alto Palermo S.A. (APSA) (“APSA”) (Nasdaq: APSA, BCBA: APSA). APSA is one of Argentina’s leading operators of shopping centers and owns or holds a controlling interest in 10 shopping centers with 270,541 square meters of Gross Leaseable Area.

The origination, securitization and servicing of credit card loans through Tarshop, whose principal shareholder is Alto Palermo S.A. with a 93.4% interest.

The acquisition and development of residential properties and the acquisition of undeveloped land reserves for future development or sale.

The acquisition, development and exploitation of office buildings and other non-shopping center properties primarily for rental, for which purpose it has over 260,866 square meters of leaseable space.

The acquisition and exploitation of luxury hotels.

In addition, IRSA has residential buildings for sale and land reserves for current and future development with a book value of Ps.591.4 million. As of September 30, 2007 and 2008, IRSA had total assets of Ps.4,241.5 million and Ps.4,455.0 million, respectively, and shareholders’ equity of Ps.1,784.0 million and Ps.1,853.9 million, respectively.

Moreover, IRSA currently owns a 11.8% interest in Banco Hipotecario, one of the leading financial institutions in Argentina.

In the first quarter of fiscal year 2009, Cresud purchased 32,539,475 shares of IRSA. As a result of this acquisition, our investment in IRSA’s common shares increased from 42.13% as of June 30, 2008 to 47.76% as of September 30, 2008.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Other Relevant Highlights

Financial and Capital Market Situation

During the last months, the financial markets of the major countries of the world have been affected by volatility, illiquidity, credit shortage and uncertainty conditions, resulting in a significant decline in the international markets. In addition, an economic slowdown started to be observed around the world. In spite of the actions taken by central countries, the future evolution of the international markets is uncertain, directly affecting the price levels of financial assets, in particular, shares, debt securities and investment funds.

Regarding Argentina, the markets experienced steep drops in the prices of government and corporate securities, as well as an increase in interest rates, country risk index and foreign exchange rates, which worsened after these financial statements’ closing date and continue in place to date.

The Company is permanently monitoring and assessing the effects caused by the situations above mentioned on the Company itself as well as on its controlled companies, so as to swiftly adopt any measures that may be necessary to cushion the upshot of the global conjuncture.

Concerning the shares’ quotation prices, the Company’s management represents that although the listed price of the Company’s shares has also been affected, this fall is not motivated by the Company’s actual financial or business condition, but is an immediate consequence of the current process undergone by the national and international markets.

Capital Increase and Exercise of warrants

During March 2008 we completed our capital increase for 180 million shares of Ps.1.0 nominal value and one vote each, in which 100% of the shares offered were subscribed locally and internationally at a subscription price of US$ 1.60 or Ps.5.0528 per share. In addition, each shareholder received for each share subscribed, without additional cost, one warrant entitling the holder thereof to acquire 0.33333333 new shares at US$ 1.68 each, i.e. 180 million warrants were granted entitling the holders thereof to purchase an aggregate of 60 million additional shares at the above mentioned price. The warrants expire on May 22, 2015 and are listed on the Buenos Aires Stock Exchange with the symbol “CREW2”, and after obtaining the relevant authorizations, they are also listed on Nasdaq with the symbol “CRESW”.

During the first quarter of fiscal year 2009, certain holders of warrants exercised their right to purchase additional shares. Consequently, the Company issued an aggregate of 4,416 common shares of Ps.1.0 nominal value each, and 13,250 warrants were cancelled. The Company received US$ 0.007 million as proceeds from these transactions.

As of September 30, 2008, the amount of outstanding warrants was 177.7 million, whereas the capital stock was represented by 501,536,281 common shares.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Repurchase of shares

On August 26, 2008, the Company announced the potential repurchase of its own shares in order to help reduce the drop and lessen the fluctuations of the Company’s shares’ quotation prices and strengthen their value in the market. There are signs of distortion in the price of shares when considering the Company’s financial strength based on the quality of its assets, including the lands of great productive value and appreciation potential, and the productive business developed by Cresud in Argentina and Brazil. Cresud announced that it will use up to Ps.30.0 million for the share repurchase and that it might acquire up to 10.0 million common shares, in the form of shares or ADS (American Depositary Shares), at a price ranging from Ps.3.0 to Ps.3.5 each. After the closing of the quarter, in the light of the market’s atypical behavior, the Company has amended certain of the terms and conditions of its plan for repurchase of its own shares:

 

   

On October 8, 2008, it was resolved to fix the minimum price at Ps.2.40.

 

   

On October 10, 2008 it was resolved to fix the minimum price at Ps.2.13.

 

   

On October 23, 2008, the Argentine Securities Commission resolved to temporarily suspend the validity of the cap established in subsection e) of Section 11, Chapter I – Shares and other Negotiable Instruments, which provided that the treasury stock of a Company could not exceed 10% of its capital stock. Following such resolution, the maximum number of shares subject to purchase was increased to up to 30.0 million common shares of stock, in the form of shares or ADS, at a price per share ranging from Ps.1 to Ps.3.5. The minimum price will be adjusted, in turn, based on the changes in the U.S. dollar exchange rate.

During the first quarter of fiscal year 2009, purchases of own shares amounted to 206,020 ADRs and 93,686 common shares, for which the Company paid US$ 2.2 million and Ps. 0.3 million, respectively. After the closing of the quarter, until November 7, 2008, Cresud had additionally acquired 1,049,654 ADRs and 127,178 common shares for US$ 6.4 million and Ps.0.3 million, respectively. Therefore, the Company’s investment in own shares accounts for 2.55% of its total equity.

International Expansion: Paraguay

In the context of operations that represent a new expansion of Cresud’s agricultural and livestock business in South America, in September 2008, the Company entered into several agreements to carry out real estate and agricultural, livestock and forestry activities in the Republic of Paraguay. Under these agreements, a new corporation was organized with Carlos Casado S.A., in which Cresud holds a 50% interest and acts in the capacity as adviser for the agricultural, livestock and forestry development of a rural property and of a potential area of up to 100,000 hectares located in Paraguay to result from the exercise of an option. In turn, Cresud has executed a preliminary purchase agreement for a 50% interest in 41,931 hectares in Paraguay owned by Carlos Casado S.A. for US$ 5.2 million, in order to contribute them to the new company recently organized. The title deed to this property will be executed during the third quarter of this fiscal year.

Agropecuaria Cervera S.A.

On July 2, 2008, a memorandum of agreement was entered into whereby changes were introduced in certain provisions of the concession agreement for the northern region and the concession agreement for part of the southern region of the properties of Salta Forestal S.A. were renegotiated. Under the above mentioned memorandum of agreement, the concession holder shall pay an annual concession fee in

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

US$ equivalent to one soybean quintal per harvested hectare of any crops in the northern and southern regions. The annual concession fee shall be paid until July 1 each year as from 2009. For purposes of determination of the concession fee, the area comprising 2,000 hectares in the southern region has not been taken into consideration, as these hectares are leased to Compañía Argentina de Granos.

In addition, Agropecuaria Cervera S.A. agreed to reduce the area under concession by returning 30,000 hectares, the location of which will be defined in a sketch to be mutually agreed between the parties. On August 29, 2008, the Executive Branch of the Province of Salta passed Decree No. 3,766 whereby it approved the memorandum of agreement. Therefore, its provisions have become effective since that date.

Acquisition of IRSA’s shares and consolidation of financial statements

After the closing of the quarter, Cresud acquired 34,396,820 additional shares of IRSA in the market for US$ 17.4 million. Therefore, the Company’s interest in IRSA amounts to approximately 53.70%. As a result, in the next quarter Cresud will consolidate its financial statements with IRSA’s.

Approval of dividend distribution

After the closing of the first quarter of fiscal year 2009, the General Ordinary and Extraordinary Shareholders’ Meeting held on October 31, 2008 approved the distribution of cash dividends for Ps.20.0 million.

The following table sets forth the dividend payout ratio and the amount of dividends paid on each fully paid common share each year since 1996. Amounts in Pesos are presented in historical, non-inflation adjusted Pesos as of the respective payment dates.

 

Year

   Total
Dividends
   Dividends
per Share(1)
     (in million
Pesos)
   (Pesos)

1996

   —      —  

1997

   —      —  

1998

   3.8    0.099

1999

   11.0    0.092

2000

   1.3    0.011

2001

   8.0    0.030

2002

   —      —  

2003

   1.5    0.012

2004

   3.0    0.020

2005

   10.0    0.059

2006

   5.5    0.024

2007

   8.3    0.026

2008

   20.0    0.040

 

(1) Corresponds to per share payments. To calculate the dividends paid per ADS, the payment per share should be multiplied by ten. Amounts in Pesos are presented in historical Pesos as of the respective payment date.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Financial Debt

As of September 30, 2008 our total loan indebtedness amounted to Ps.106.6 million. Such indebtedness is composed of a loan granted by Credit Suisse for the purpose of financing our investment in BrasilAgro for Ps. 25.3 million and Ps.22.8 million for the purpose of financing our crop production, while the balance, i.e. Ps.69.0 million, is concentrated in the short term.

 

Type of indebtedness

   Currency    Amount
(Million Ps.)
   Term

Short term

   Ps.    69.0    Up to 90 days

Crop production financing

   Ps.    22.8    Up to 168 days

Financing of BrasilAgro investment

   Ps.    25.3    Up to 30 days

Note: The exchange rate considered for loans denominated in US$ was US$ 1= Ps. 3.135, the seller’s exchange rate quoted by Banco de la Nación Argentina as of September 30, 2008.

As of September 30, 2008, Cash amounted to Ps. 329.7 (including the Assets items: Cash and Banks and Temporary Investments).

After the closing of the first quarter of fiscal year 2009, the Company repaid its indebtedness incurred with Credit Suisse Internacional (“CSI”) on its maturity date, May 2, 2006. Therefore, Cresud repaid all amounts owed to CSI, for a principal amount of US$ 8.0 million. Simultaneously, Cresud received from CSI 1,834,860 GDRs of IRSA, held as collateral for the transaction.

Prospects for the coming quarter

We believe that in the new world scenario, companies such as Cresud, with a long track record and deep knowledge of the business, will have a position favorable to taking advantage of opportunities that may arise in the market. Despite the distortion in the prices of commodities due to the current financial situation, the demand for crops continues to be firm and global stocks remain at low levels.

For the coming quarter, our strategy is to continue developing our production activities. As concerns crops, we have very good prospects regarding the progress in the harvest of wheat and sowing of corn, soybean and sunflower during the next quarter. The status of sown wheat is optimal compared to budget, as 5% of the soybean, 65% of the corn, 67% of the sorghum and 85% of the sunflower have been already sown, all of them under excellent conditions.

As concerns marginal area development, we shall make progress in the development of new hectares for agricultural and livestock production in our Los Pozos farm. In addition, we plan to add more land for agricultural production in the concession over Agropecuaria Cervera’s farm.

Continuing with our regional expansion strategy, we are currently analyzing new alternatives in other Latin American countries which have conditions suited to agricultural development. We aim at developing a regional portfolio with major appreciation potential. So that its positioning in the region could be formalized, in the first quarter of fiscal year 2009, the Company entered into a number of agreements that will allow it to conduct business in the real estate, agricultural, livestock and forestry industries in the Republic of Paraguay and executed a series of preliminary purchase agreements for the purchase of an aggregate of 12,166 hectares in the Republic of Bolivia.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Another of the Company’s strategies is to continue increasing our investment in IRSA. We believe that IRSA is the best vehicle for accessing the urban real estate market given its substantial and diversified portfolio of residential and commercial properties, the strength of its management and what we believe are its attractive prospects for future growth and profitability.

Faced with the new scenario, Cresud is evaluating various possibilities aimed at preserving the Company’s strength and value, which rely on the quality of its assets, including its farms with substantial production value and appreciation potential, and its productive transactions carried out in various regions of Latin America. One of these alternatives, which we are already rolling out, is our plan to repurchase our own shares, whose purpose is to contribute to strengthen our shares in the market.

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight

 

Comparative Shareholders’ Equity Structure

 

     As of
September 30,
2008

Pesos
   As of
September 30,
2007

Pesos
   As of
September 30,
2006

Pesos
   As of
September 30,
2005

Pesos
   As of
September 30,
2004

Pesos

Current Assets

   544,873,853    157,154,656    104,526,028    116,402,428    84,214,108

Non-current Assets

   1,383,171,137    924,747,558    788,998,839    644,952,770    597,393,173
                        

Total Assets

   1,928,044,990    1,081,902,214    893,524,867    761,355,198    681,607,281
                        

Current Liabilities

   187,439,443    189,199,936    116,915,192    68,169,434    59,940,292

Non-current Liabilities

   44,800,373    75,098,330    144,642,760    161,440,120    154,577,225
                        

Total Liabilities

   232,239,816    264,298,266    261,557,952    229,609,554    214,517,517
                        

Minority Interest

   1,211,320    900,168    471,121    245,828    24,536
                        

Shareholders’ Equity

   1,694,593,854    816,703,780    631,495,794    531,499,816    467,065,228
                        
   1,928,044,990    1,081,902,214    893,524,867    761,355,198    681,607,281
                        

Comparative Income Structure

 

     As of
September 30,
2008

Pesos
    As of
September 30,
2007

Pesos
    As of
September 30,
2006

Pesos
    As of
September 30,
2005

Pesos
    As of
September 30,
2004

Pesos
 

Operating (loss) income

   (8,032,077 )   (7,167,943 )   (2,789,140 )   12,436,404     1,092,981  

Financial and holding (loss) gain

   6,175,349     (1,916,240 )   (3,100,330 )   1,451,018     (1,316,116 )

Other income and expenses and income on equity

   (36,037,114 )   (6,819,931 )   6,004,664     4,011,569     2,984,710  

Management fees

   —       —       (214,464 )   (1,219,231 )   (115,031 )
                              

Operating net (loss) income

   (37,893,842 )   (15,904,114 )   (99,270 )   16,679,760     2,646,544  

Income Tax benefit (expense)

   546,155     3,365,000     1,937,497     (5,737,799 )   (1,652,184 )

Minority Interest

   (50,990 )   (63,296 )   88,750     31,119     40,915  
                              

Net (loss) Income

   (37,398,677 )   (12,602,410 )   1,926,977     10,973,080     1,035,275  
                              

Production volume

 

    Three-month
period
September 30,
2008
  Accumulated
July 1, 2008
to

September
30, 2008
  Three-month
period
September
30, 2007
  Accumulated
July 1, 2007
to

September
30, 2007
  Three-month
period
September
30, 2006
  Accumulated
July 1, 2006
to

September
30, 2006
  Three-month
period
September
30, 2005
  Accumulated
July 1, 2005
to

June
30, 2005
  Three-month
period
September
30, 2004
  Accumulated
July 1, 2004
to

September
30, 2004

Beef Cattle

(in Kgs.)

  830,310   830,310   1,442,226   1,442,226   1,753,725   1,753,725   2,495,573   2,495,573   1,726,903   1,726,903

Butyraceous

(in Kgs.)

  201,890   201,890   182,040   182,040   142,933   142,933   131,184   131,184   53,078   53,078

Crops

(in quintals) *

  157,000   157,000   91,847   91,847   26,185   26,185   27,631   27,631   18,433   18,433

 

* One quintals equals one hundred kilograms

 

 
Alejandro G. Elsztain
    Vice President

 

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Cresud Sociedad Anónima, Comercial,

Inmobiliaria, Financiera y Agropecuaria

Business Highlight (Continued)

 

Sales volume

 

    Three-month
period
September 30,
2008
  Accumulated
July 1,
2008 to
September 30,
2008
  Three-month
period
September
30, 2007
  Accumulated
July 1,
2007 to
September 30,
2007
  Three-month
period
September 30,
2006
  Accumulated
July 1,
2006 to
September 30,
2006
  Three-month
period
September 30,
2005
  Accumulated
July 1,
2005 to
June 30,
2005
  Three-month
period
September 30,
2004
  Accumulated
July 1,
2004 to
September 30,
2004

Beef Cattle

(in Kgs.)

  1,923,201   1,923,201   4,668,848   4,668,848   4,578,436   4,578,436   4,799,655   4,799,655   4,915,538   4,915,538

Butyraceous

(in Kgs.)

  201,890   201,890   182,040   182,040   182,040   182,040   131,184   131,184   53,078   53,078

Crops

(in quintals) *

  763,517   763,517   375,683   375,683   202,289   202,289   396,222   396,222   193,501   193,501

 

* One quintals equals one hundred kilograms

Local Market

 

    Three-month
period
September 30,
2008
  Accumulated
July 1,
2008 to
September 30,
2008
  Three-month
period
September 30,
2007
  Accumulated
July 1,
2007 to
September 30,
2007
  Three-month
period
September 30,
2006
  Accumulated
July 1,
2006 to
September 30,
2006
  Three-month
period
September 30,
2005
  Accumulated
July 1,
2005 to
June 30,
2005
  Three-month
period
September 30,
2004
  Accumulated
July 1,
2004 to
September 30,
2004

Beef Cattle

(in Kgs.)

  1,923,201   1,923,201   4,668,848   4,668,848   4,578,436   4,578,436   4,799,655   4,799,655   4,915,538   4,915,538

Butyraceous

(in Kgs.)

  201,890   201,890   182,040   182,040   182,040   182,040   131,184   131,184   53,078   53,078

Crops

(in quintals) *

  763,517   763,517   375,683   375,683   202,289   202,289   396,222   396,222   193,501   193,501

 

* One quintals equals one hundred kilograms

Ratios

 

     As of
September 30,
2008

Pesos
    As of
September 30,
2007

Pesos
    As of
September 30,
2006

Pesos
   As of
September 30,
2005

Pesos
   As of
September 30,
2004

Pesos

Liquidity

   2.907     0.831     0.894    1.708    1.405

Solvency

   7.297     3.090     2.414    2.315    2.177

Non-current assets to assets

   0.717     0.855     0.883    0.847    0.876

Return on Equity (1)

   (0.022 )   (0.015 )   0.003    0.021    0.002

 

(1) Result of the period divided average shareholder’s equity.

 

 
Alejandro G. Elsztain
    Vice President

 

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Free translation from the original prepared in Spanish for publication in Argentina

Report of Independent Auditors

To the Shareholders, President and Board of Directors of

Cresud Sociedad Anónima Comercial,

Inmobiliaria, Financiera y Agropecuaria

Legal address: Moreno 877 - floor 23

Autonomous City of Buenos Aires

CUIT 30-50930070-0

 

  1. We have reviewed the balance sheets of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria at September 30, 2008 and 2007, and the related statements of operations, of changes in shareholders’ equity and of cash flows for the three-month periods ended September 30, 2008 and 2007 and the complementary notes 1 to 22 and schedules A, 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, 2008 and 2007, on which we issued our unqualified report dated September 8, 2008, we report that:

 

  a) The financial statements of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria at September 30, 2008 and 2007 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 supplementary notes and schedules to the attached financial statements arise from Company financial statements at June 30, 2008.

 

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  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 were 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 September 30, 2008, the debt of Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria accrued in favor of the Integrated Pension and Survivors’ Benefit System according to the accounting records amounted to $ 934,402 none of which was claimable at that date.

 

Autonomous City of Buenos Aires, November 11, 2008.
PRICE WATERHOUSE & CO. S.R.L.
(Partner)
Dr. Andrés Suarez

 

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Buenos Aires, Argentina.

CRESUD SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA

FINANCIERA Y AGROPECUARIA

 

By:    /S/ Saúl Zang
  Name:    Saúl Zang
  Title:   Vice Chairman of the Board of Directors

Dated: November 18, 2008