Edgar Filing: IRSA INVESTMENTS & REPRESENTATIONS INC

form6k.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2014

IRSA Inversiones y Representaciones Sociedad Anónima

(Exact name of Registrant as specified in its charter)

IRSA Investments and Representations Inc.

(Translation of registrant´s name into English)

Republic of Argentina

(Jurisdiction of incorporation or organization)

Bolívar 108

(C1066AAB)

Buenos Aires, Argentina

(Address of principal executive offices)

Form 20-F x Form 40-F o

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 o No x

IRSA INVERSIONES Y REPRESENTACIONES SOCIEDAD ANÓNIMA

(THE “COMPANY”)

REPORT ON FORM 6-K

Attached is the English translation of the Financial Results for the nine month period ended March 31, 2014 and March 31, 2013, filed by the Company with the Bolsa de Comercio de Buenos Aires and the Comisión Nacional de Valores:

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited Condensed Interim Consolidated Financial Statements

as of March 31, 2014 and for the nine-month periods

ended March 31, 2014 and 2013

IRSA Inversiones y Representaciones Sociedad Anónima

Legal information

Denomination: IRSA Inversiones y Representaciones Sociedad Anónima.

Fiscal year N°: 71, beginning on July 1, 2013.

Legal address: 108 Bolívar St., 1st floor, Autonomous City of Buenos Aires, Argentina.

Company activity: Real estate investment and development.

Date of registration of the by-laws in the Public Registry of Commerce: June 23, 1943.

Date of registration of last amendment of the by-laws in the Public Registry of Commerce: March 15, 2013.

Expiration of the Company’s by-laws: April 5, 2043.

Registration number with the Superintendence: 213,036.

Capital: 578,676,460 shares.

Common Stock subscribed, issued and paid up (in thousands of Ps.): 578,676.

Parent Company: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (Cresud S.A.C.I.F. y A.).

Legal Address: 877 Moreno St., 23rd. floor, Autonomous City of Buenos Aires, Argentina.

Main activity: Real estate, agricultural, commercial and financial activities.

Interest of the Parent Company on the capital stock: 378,753,404 common shares.

Percentage of votes of the Parent Company on the equity: 65.45%

Type of stock	CAPITAL STATUS
Type of stock	Authorized for Public Offer of Shares (*)	Subscribed, Issued and Paid up (in thousands of Pesos)
Common stock with a face value of Ps.1 per share and entitled to 1 vote each	578,676,460	578,676

(*) Company not included in the Optional Statutory System of Public Offer of Compulsory Acquisition.

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited condensed interim consolidated statements of financial position

as of March 31, 2014 and June 30, 2013

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

	Note	03.31.2014		06.30.2013
ASSETS
Non- Current Assets
Investment properties	10	4,362,072		3,992,530
Property, plant and equipment	11	202,165		212,673
Trading properties	12	204,064		178,425
Intangible assets	13	115,178		79,653
Investments in associates and joint ventures	8,9	1,612,956		1,423,936
Deferred income tax assets	25	372,080		85,236
Restricted assets	16	18,334		10,881
Income tax and minimum presumed income tax ("MPIT") credit		148,815		130,086
Trade and other receivables	17	98,709		85,126
Investments in financial assets	18	1,075,168		267,455
Derivative financial instruments	19	6,900		21,208
Total Non-Current Assets		8,216,441		6,487,209
Current Assets
Trading properties	12	12,030		11,689
Inventories	14	18,275		16,321
Restricted assets	16	2,074		1,022
Income tax and minimum presumed income tax ("MPIT") credit		1,039		-
Trade and other receivables	17	678,509		769,333
Investments in financial assets	18	284,185		244,053
Derivative financial instruments	19	8,133		-
Cash and cash equivalents	20	239,277		796,902
Total Current Assets		1,243,522		1,839,320
TOTAL ASSETS		9,459,963		8,326,529
SHAREHOLDERS' EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital		574,188		578,676
Treasury stock		4,488		-
Inflation adjustment of share capital and treasury stock		123,329		123,329
Share premium		793,123		793,123
Cost of treasury stock		(32,998	)	-
Acquisition of additional interest in subsidiaries		(20,782	)	(20,782	)
Reserve for share-based compensation	33	20,375		8,258
Legal reserve		116,840		85,140
Special reserve		375,487		395,249
Reserve for new developments		469,831		492,441
Cumulative translation adjustment		156,905		50,776
Retained earnings		(91,280	)	239,328
Total capital and reserves attributable to equity holders of the parent…		2,489,506		2,745,538
Non-controlling interest		428,620		385,151
TOTAL SHAREHOLDERS' EQUITY		2,918,126		3,130,689
LIABILITIES
Non-Current Liabilities
Trade and other payables	21	225,096		211,118
Borrowings….…………	24	4,348,495		2,922,642
Deferred income tax liabilities	25	408,093		395,936
Salaries and social security liabilities	22	4,125		3,160
Provisions	23	181,727		57,737
Total Non-Current Liabilities		5,167,536		3,590,593
Current Liabilities
Trade and other payables	21	606,778		677,010
Income tax and minimum presumed income tax ("MPIT") liabilities		68,054		90,916
Salaries and social security liabilities	22	54,698		49,010
Derivative financial instruments	19	10,678		1,732
Borrowings	24	618,586		772,529
Provisions	23	15,507		14,050
Total Current Liabilities		1,374,301		1,605,247
TOTAL LIABILITIES		6,541,837		5,195,840
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		9,459,963		8,326,529

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

	IRSA Inversiones y Representaciones S.A.

	By:	/s/ Fernando A. Elsztain
		Fernando A. Elsztain
		Director Acting as President

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited Condensed Interim Consolidated Statements of Income

for the nine and three-month periods beginning on July 1st, 2013 and 2012

and January 1st, 2014 and 2013, respectively and ended March 31, 2014 and 2013

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

		Nine months					Three months
	Note		03.31.2014		03.31.2013			03.31.2014		03.31.2013
Revenues	27		2,047,841		1,594,094			673,881		514,058
Costs	28		(947,806	)	(791,233	)		(305,936	)	(256,521	)
Gross Profit			1,100,035		802,861			367,945		257,537
Gain from disposal of investment properties	10		115,362		64,019			107,881		8,060
General and administrative expenses	29		(193,902	)	(151,130	)		(64,523	)	(42,144	)
Selling expenses	29		(100,534	)	(73,244	)		(34,773	)	(24,712	)
Other operating results, net	31		(27,793	)	107,173			(10,449	)	(7,936	)
Profit from operations			893,168		749,679			366,081		190,805
Share of profit of associates and joint ventures	8,9		102,690		15,112			51,507		728
Profit before financial results and income tax			995,858		764,791			417,588		191,533
Finance income	32		89,444		103,479			29,189		45,514
Finance cost	32		(1,533,757	)	(553,530	)		(807,309	)	(195,101	)
Other financial results	32		257,315		151,755			202,778		104,381
Financial results, net	32		(1,186,998	)	(298,296	)		(575,342	)	(45,206	)
(Loss) / Profit before income tax			(191,140	)	466,495			(157,754	)	146,327
Income tax	25		112,298		(87,234	)		104,986		(12,945	)
(Loss) / Profit for the period			(78,842	)	379,261			(52,768	)	133,382

Attributable to:

Equity holders of the parent	(92,030	)	320,638	(70,352	)	96,856
Non-controlling interest	13,188		58,623	17,584		36,526

(Loss) / Profit per share attributable to equity holders of the parent during the period:
Basic	(0.160	)	0.554	(0.123	)	0.167
Diluted	(0.160	)	0.554	(0.123	)	0.167

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

	IRSA Inversiones y Representaciones S.A.

	By:	/s/ Fernando A. Elsztain
		Fernando A. Elsztain
		Director Acting as President

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited Condensed Interim Consolidated Statements of Income

for the nine and three-month periods beginning on July 1st , 2013 and 2012 and January 1st, 2014 and 2013, respectively and ended March 31, 2014 and 2013

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

	Nine months				Three months
		03.31.2014		03.31.2013		03.31.2014		03.31.2013
(Loss) / Profit for the period		(78,842	)	379,261		(52,768	)	133,382
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation adjustment		149,786		40,306		78,010		16,573
Other comprehensive income for the period (i)		149,786		40,306		78,010		16,573
Total comprehensive income for the period		70,944		419,567		25,242		149,955

Attributable to:
Equity holders of the parent		14,099		357,551		(15,659	)	110,348
Non-controlling interest		56,845		62,016		40,901		39,607

(i)	Components of other comprehensive income have no impact on income tax.

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

	IRSA Inversiones y Representaciones S.A.

	By:	/s/ Fernando A. Elsztain
		Fernando A. Elsztain
		Director Acting as President

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited condensed interim consolidated statements of changes in shareholders’ equity

for the nine-month periods ended March 31, 2014 and 2013

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

	Attributable to equity holders of the parent
	Share capital			Treasury stock		Inflation adjustment of share capital and treasury stock (2)		Share premium		Cost of treasury stock			Acquisition of additional interest in subsidiaries			Reserve for share-based compensation		Legal reserve		Special reserve (1)			Reserve for new development			Cumulative translation adjustment		Retained earnings			Subtotal			Non-controlling interest			Total shareholders' equity
Balance at July 1st, 2013		578,676			-		123,329		793,123		-			(20,782	)		8,258		85,140		395,249			492,441			50,776		239,328			2,745,538			385,151			3,130,689
Loss for the period		-			-		-		-		-			-			-		-		-			-			-		(92,030	)		(92,030	)		13,188			(78,842	)
Other comprehensive income for the period		-			-		-		-		-			-			-		-		-			-			106,129		-			106,129			43,657			149,786
Total comprehensive income for the period		-			-		-		-		-			-			-		-		-			-			106,129		(92,030	)		14,099			56,845			70,944
Distribution of retained earnings approved by Shareholders’ meeting held 10.31.13		-			-		-		-		-			-			-		31,700		(19,762	)		(22,610	)		-		10,672			-			-			-
Dividends distribution – approved by Shareholders’ meeting held 10.31.13		-			-		-		-		-			-			-		-		-			-			-		(250,000	)		(250,000	)		-			(250,000	)
Reserve for share-based compensation (Note 33)		-			-		-		-		-			-			12,117		-		-			-			-		-			12,117			424			12,541
Purchase of Treasury stock		(4,488	)		4,488		-		-		(32,998	)		-			-		-		-			-			-		-			(32,998	)		-			(32,998	)
Distribution of share capital of subsidiaries		-			-		-		-		-			-			-		-		-			-			-		-			-			(3,917	)		(3,917	)
Reimbursement of expired dividends		-			-		-		-		-			-			-		-		-			-			-		750			750			33			783
Dividends distributed by subsidiaries		-			-		-		-		-			-			-		-		-			-			-		-			-			(10,503	)		(10,503	)
Capital contribution of non-controlling interest		-			-		-		-		-			-			-		-		-			-			-		-			-			587			587
Balance at March 31, 2014		574,188			4,488		123,329		793,123		(32,998	)		(20,782	)		20,375		116,840		375,487			469,831			156,905		(91,280	)		2,489,506			428,620			2,918,126

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

(1)	Related to CNV General Resolution No. 609/12. See Note 26.

(2)	Includes Ps. 957 of Inflation adjustment treasury stock. See Note 26.

	IRSA Inversiones y Representaciones S.A.

	By:	/s/ Fernando A. Elsztain
		Fernando A. Elsztain
		Director Acting as President

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited condensed interim consolidated statements of changes in shareholders’ equity

for the nine-month periods ended March 31, 2014 and 2013

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

	Attributable to equity holders of the parent
	Share capital		Inflation adjustment of share capital			Share premium		Acquisition of additional interest in subsidiaries			Reserve for share-based compensation		Legal reserve		Reserve for new developments		Cumulative translation adjustment			Retained earnings			Subtotal			Non-controlling interest			Total shareholders’ equity
Balance at July 1st, 2012		578,676		274,387			793,123		(15,714	)		2,595		71,136		419,783		14,502			510,853			2,649,341			390,428			3,039,769
Profit for the period		-		-			-		-			-		-		-		-			320,638			320,638			58,623			379,261
Other comprehensive income for the period		-		-			-		-			-		-		-		36,913			-			36,913			3,393			40,306
Total comprehensive income for the period		-		-			-		-			-		-		-		36,913			320,638			357,551			62,016			419,567
Appropriation of retained earnings approved by Shareholders’ meeting held 10.31.12		-		-			-		-			-		14,004		72,658		-			(86,662	)		-			-			-
Reclassification of the deferred tax liability – Approved by Shareholders’ meeting held 10.31.12		-		(151,058	)		-		-			-		-		-		-			151,058			-			-			-
Dividends distribution – approved by Shareholders’ meeting held 10.31.12		-		-			-		-			-		-		-		-			(180,000	)		(180,000	)		(15,690	)		(195,690	)
Acquisition of non-controlling interest by business combination		-		-			-		-			-		-		-		-			-			-			102,723			102,723
Cumulative translation adjustment for interest held before business combination		-		-			-		-			-		-		-		(12,915	)		-			(12,915	)		-			(12,915	)
Reserve for share-based compensation (Note 33)		-		-			-		-			5,726		-		-		-			-			5,726			209			5,935
Acquisition of additional interest in subsidiaries		-		-			-		(1,540	)		-		-		-		-			-			(1,540	)		(824	)		(2,364	)
Distribution of share capital of subsidiaries		-		-			-		-			-		-		-		-			-			-			(39,654	)		(39,654	)
Reimbursement of expired dividends		-		-			-		-			-		-		-		-			591			591			34			625
Conversion of notes		-		-			-		-			-		-		-		-			-			-			126			126
Capital contribution of non-controlling interest		-		-			-		-			-		-		-		-			-			-			6,092			6,092
Balance at March 31, 2013		578,676		123,329			793,123		(17,254	)		8,321		85,140		492,441		38,500			716,478			2,818,754			505,460			3,324,214

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

	IRSA Inversiones y Representaciones S.A.

	By:	/s/ Fernando A. Elsztain
		Fernando A. Elsztain
		Director Acting as President

IRSA Inversiones y Representaciones Sociedad Anónima

Unaudited condensed interim consolidated statements of cash flows

for the nine-month periods ended March 31, 2014 and 2013

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

	Note	03.31.2014		03.31.2013
Operating activities:
Cash generated by operations	20	914,162		753,425
Income tax and Minimum Presumed Income tax paid		(227,742	)	(212,669	)
Net cash generated by operating activities		686,420		540,756
Investing activities:
Capital contributions in associates and joint ventures	8	(1,580	)	(39,925	)
Purchases of associates and joint ventures	4,8,9	(13,045	)	(32,024	)
Purchases of investment properties	10	(178,630	)	(157,324	)
Proceeds from sale of investment properties		254,650		91,456
Purchases of property, plant and equipment	11	(10,804	)	(4,445	)
Purchases of intangible assets	13	(11,605	)	(614	)
Purchase of investments in financial assets		(1,757,417	)	(702,139	)
Proceeds from sale of investments in financial assets		1,109,381		685,831
Advanced payments		(28,999	)	(39,554	)
Proceeds from sale of joint ventures		15,536		-
Acquisition of subsidiaries, net of cash acquired		-		(117,874	)
Interest received		8,551		16,844
Loans granted to associates and joint ventures		-		(813	)
Dividends received		16,402		49,602
Net cash used in investing activities		(597,560	)	(250,979	)
Financing activities:
Proceeds from borrowings		142,002		456,535
Repayments of borrowings		(363,044	)	(187,483	)
Payment of non-convertible notes		(255,824	)	(51,046	)
Acquisition of derivative financial instruments		(903	)	-
Dividends paid		(106,391	)	(180,260	)
Acquisition of non-controlling interest in subsidiaries		-		(2,364	)
Capital contribution of non-controlling interest		587		6,092
Interest paid		(346,248	)	(221,152	)
Capital reduction of subsidiaries		(3,917	)	(39,654	)
Loans from associates and joint ventures, net		17,138		59,147
Payment for acquisition of non-controlling interest		-		(4,460	)
Repurchase of treasury stock		(32,998	)	-
Payment of seller financing of shares		(1,640	)	(6,420	)
Payment of seller financing		(1,215	)	(658	)
Issuance of non-convertible notes		218,262		-
Proceeds from derivative financial instruments		45,696		-
Net cash used in financing activities		(688,495	)	(171,723	)
Net (decrease) / increase in cash and cash equivalents		(599,635	)	118,054
Cash and cash equivalents at beginning of year	20	796,902		259,169
Foreign exchange gain on cash and cash equivalents		42,010		22,053
Cash and cash equivalents at end of period		239,277		399,276

The accompanying notes are an integral part of these Unaudited Condensed Interim Consolidated Financial Statements.

	IRSA Inversiones y Representaciones S.A.

	By:	/s/ Fernando A. Elsztain
		Fernando A. Elsztain
		Director Acting as President

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

1.	The Group’s business and general information

IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”, “the Company” / “Us” or “the Society”) was founded in 1943 and is engaged in a diversified range of real estate activities in Argentina since 1991.

IRSA and its subsidiaries are collectively referred to hereinafter as “the Group”.

As of March 31, 2014, the Group operates in six business segments. See Note 7 to the Condensed Consolidated Financial Statements as of June 30, 2013 for a description of such segments.

Group’s real estate business operations are conducted primarily through IRSA and IRSA’s principal subsidiary, Alto Palermo S.A. (“APSA”). Through APSA and IRSA, the Group owns, manages and develops shopping centers across Argentina, a portfolio of office and other rental properties in the Autonomous City of Buenos Aires, and it entered the United States of America (“USA”) real estate market in 2009, mainly through the acquisition of non-controlling interests in office buildings and hotels. Through IRSA or APSA, the Group also develops residential properties for sale. The Group, through IRSA, is also involved in the operation of branded hotels. The Group uses the term “real estate” indistinctively in these consolidated financial statements to denote investment, development and/or trading properties activities.

The activities of the Group’s segment “Financial operations and others” are carried out mainly through Banco Hipotecario S.A. (“BHSA”), where IRSA has a 29.77% interest (without considering treasury shares of our own). BHSA is a commercial bank offering a wide variety of banking activities and related financial services to individuals, small and medium-sized companies and large corporations, including the provision of mortgaged loans. BHSA’s shares are listed on the Buenos Aires Stock Exchange (“BASE”). Besides that, the Group has a 42.95% interest in Tarshop S.A (“Tarshop”), a company which main activities are credit card and loan origination transactions.

IRSA’s shares are listed and traded on both the BASE and the New York Stock Exchange (“NYSE”). APSA’s shares are listed and traded on both the BASE and the NASDAQ of USA.

Cresud S.A.C.I.F y A. is our ultimate parent company and is a corporation incorporated and domiciled in Argentina. The address of its registered office is Moreno 877, Floor 23, Autonomous City of Buenos Aires, Argentina.

These Unaudited Condensed Interim Consolidated Financial Statements have been approved for issuance by the Board of Directors on May 12, 2014.

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

2.	Basis of preparation of the Unaudited Condensed Interim Consolidated Financial Statements

2.1.	Basis of preparation

These Unaudited Condensed Interim Consolidated Financial Statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. Furthermore, some additional issues were included as required by the Business Companies Act and/or regulations of the CNV, including supplementary information provided in the last paragraph of section 1, Chapter III, Title IV of General Ruling 622/13 of the CNV. Such information is included in the Notes to the Unaudited Condensed Consolidated Interim Financial Statements.

These Unaudited Condensed Interim Consolidated Financial Statements should be read together with the Annual Consolidated Financial Statements of the Group as of June 30, 2013 prepared in accordance with IFRS in force. These Unaudited Condensed Interim Consolidated Financial Statements are presented in thousands of Argentine Pesos.

These Unaudited Condensed Interim Consolidated Financial Statements corresponding to the nine-month periods ended, March 31, 2014 and 2013 have not been audited. The management believes they include all necessary adjustments to fairly present the results of each period. The Company’s nine-month periods ended March 31, 2014 and 2013 results do not necessarily reflect the proportion of the Group’s full-year results.

2.2. Significant accounting policies

The principal accounting policies applied in the presentation of these Unaudited Condensed Interim Consolidated Financial Statements are consistent with those applied in the preparation of the information under IFRS as of June 30, 2013, which are described in Note 2 of the Annual Consolidated Financial Statements.

2.3.	Use of estimates

The preparation of financial statements at a certain date requires the Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual future results might differ from the estimates and evaluations made at the date of preparation of these financial statements.

In the preparation of these Unaudited Condensed Interim Consolidated Financial Statements, the significant judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were the same applied by the Group in the preparation of the Annual Consolidated Financial Statements for the year ended June 30, 2013, save for changes in accrued income tax, provision for legal claims, allowance for bad debts and accrued supplementary rental.

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

2.	Basis of preparation of the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

2.4.	Comparative Information

Balance items as of March 31, 2013 and June 30, 2013 shown in these financial statements for comparative purposes arise from Unaudited Condensed Interim Consolidated Financial Statements then ended. Certain reclassifications have been made in order to present figures comparatively with those of this period.

During the period, the Argentine Peso devalued against the US$ and other currencies by around 32%, which has an impact in comparative information presented in these Financial Statements, due mainly to the currency exposure of our income from offices rental, and our net assets and liabilities in foreign currency as detailed in Note 39.

3. Seasonal effects on operations

The operations of the Group’s shopping centers are also subject to seasonal effects, which affect the level of sales recorded by lessees. During summer time (January and February), the lessees of shopping centers experience the lowest sales levels in comparison with the winter holidays (July) and year-end holidays (December) when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping mall sales. Sale discounts at the end of each season also affect the business. As a consequence, a higher level of revenues is generally expected in the second half of the year rather than the first in shopping center operations.

In November, 2012, the Group took control over Ribgy 183 LLC (“Rigby”), a company that owns a rental office building located in New York, US (see Note 4 to the annual consolidated financial statements). Therefore, balances as of March 31, 2013 include Rigby's operations from the mentioned date.

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

4.	Acquisitions and disposals

For the nine-month period ended as of March 31, 2014

Subscription of shares of Avenida Inc. and Avenida Compras S.A.

On August 29, 2013, the Group, through Torodur S.A., subscribed 3,703,704 shares of Avenida Inc., a Company incorporated in Delaware, United States, and 23,077 shares of Avenida Compras S.A., a Company incorporated in Buenos Aires, Argentina, representing 26.09% and 2.10%, of its outstanding capital, respectively. Additionally, Avenida Inc. owns 90.91% of Avenida Compras S.A., thus being the Group’s indirect interest in Avenida Compras of 25.81%. The transaction price was Ps. 13.0 million, which has already been fully paid. The Group has a warrant to increase its interest in Avenida Inc. up to 37.04%.

Stock call Option agreement for Arcos del Gourmet S.A.

On September 16, 2013, APSA entered into an agreement with Messrs. Eduardo Giana, Pablo Bossi and Patricio Tobal (non-controlling shareholders of Arcos Gourmet S.A.), whereby the latter grant to APSA an exclusive and irrevocable option to purchase 10% of the equity interest in Arcos del Gourmet S.A.. The term to exercise the option runs from the execution of the agreement to December 31, 2018. The stock purchase price, in the event option is exercised, is US$ 8.0 million. Furthermore, in the mentioned agreement a payment of a fixed amount of Ps. 2.0 million was arranged, which was cancelled, and another variable amount payable monthly, which results from applying 4.5% on the amounts accrued in each previous calendar month for rental and right of admission, net of certain expenses, during 5 years counted from the opening of the shopping mall, in relation to the assignment of rights to earn dividends of Arcos during such period.

Condominios del Alto - Performance of Exchange Agreement

On November 14, 2013 Alto Palermo S.A. (“APSA”) and Condominios del Alto S.A. (Condominios) executed a conveyance deed whereby Condominios conveyed upon APSA freehold and full possession of the units agreed in exchange. Upon such execution, APSA stated that the mortgage on the property has been fully discharged.

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

4.	Acquisition and disposals (Continued)

Subscription of shares of Dolphin Fund Ltd. (“Dolphin”)

During the nine-month period ended March 31, 2014, the Group has increased its stake in Dolphin Fund Ltd. (Dolphin) by US$109.5 million.

On January 5, 2014, the competent court in dealing with IDB Holding Corporation Ltd. (“IDBH”) debt restructuring has approved the offer made by Dolphin through Dolphin B.V. together with C.A.A. Extra Holdings Limited (“ETH”), a company incorporated under the laws of Israel, controlled by Mordechay Ben Moshé, in order to acquired approximately 53.3% of IDB Development Corporation (“IDBD”), controlled by IDBH, within the framework of the debt restructuring process mentioned, pursuant to Israel’s applicable laws. The transaction was closed on May 7, 2014 (See Note 41).

IDBD is one of the Israeli largest and most diversified investment groups, which is involved, through its subsidiaries, in several markets and industries, including real estate, retail, agribusiness, oil & gas production, insurance, telecommunications, etc.; controlling companies as Clal Insurance (Insurance Company), Cellcom (Mobile communications), Koor Industries (owner of 40% of Makhteshim Agan Industries-Agrochemicals), Super-Sol (supermarket), PBC (Real Estate), among others.

Significant sale of investment properties

On January 14, 2014, IRSA signed the transfer deed for the sale of the 11th floor and seven parking units of the Building Maipú 1300. The total price of the transaction was Ps. 9.6 million (US$ 1.4 million). Such transaction generated a gain before tax of approximately Ps. 7.9 million.

On January 24, 2014, IRSA signed the transfer deed for the sale of the 7th floor and 28 parking units of the Building Bouchard 551. The total price of the transaction was Ps. 124.6 million, equivalents to US$ 16.0 million. Such transaction generated a gain before tax of approximately Ps. 99.9 million.

On November 15, 2013, IRSA signed the transfer deed for the sale of the 12th floor and two parking units of the Building Maipú 1300 and two parking units of the building Libertador 498. The total price of the transaction was Ps. 9.0 million (US$ 1.5 million). Such transaction generated a gain before tax of approximately Ps. 7.5 million.

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

5. Financial risk management and fair value estimates

5.1	Financial risk

The group´s diverse activities are exposed to a variety of financial risk: market risk (including foreign currency risk, interest rate risk and price risk) credit risk, liquidity risk and capital risk.

The Unaudited Condensed Interim Consolidated Financial Statements do not include all the information and disclosures on financial risk management; therefore they should be read along with the annual consolidated financial statements for the year ended June 30, 2013. There have been no changes in the risk management or risk management policies applied by the Group since year end.

5.2	Fair value estimates

Since June 30, 2013 to the date of these financial statements, there have been no significant changes in business on economic circumstances affecting the fair value of the Company's financial assets and liabilities (either measured at fair value or amortized cost), except for our investment in Supertel Hospitality Inc. ("Supertel"), which fair value was affected by the decrease in the market value of its common shares, because of the suspension of dividends’ payment. This had been decided in order to fortify its financial situation. Furthermore, there have been no transfers between the different hierarchies used to assess the fair value of the Company’s financial instrument.

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

6.	Segment information

Below is a summarized analysis of the lines of business of the Group for the period ended March 31, 2014:

	March 31, 2014
	Shopping Center			Offices and other properties			Sales and developments			Hotels			International			Financial operations and others			Total
Revenues		1,477,167			242,973			46,451			253,971			64,322			457			2,085,341
Costs		(665,171	)		(79,757	)		(25,440	)		(158,915	)		(42,492	)		(241	)		(972,016	)
Gross Profit		811,996			163,216			21,011			95,056			21,830			216			1,113,325
Gain from disposal of investment properties		-			-			115,362			-			-			-			115,362
General and administrative expenses		(72,207	)		(31,349	)		(27,726	)		(44,609	)		(19,421	)		(55	)		(195,367	)
Selling expenses		(49,275	)		(13,962	)		(8,314	)		(31,604	)		-			250			(102,905	)
Other operating results, net		(23,088	)		(1,765	)		(2,414	)		(761	)		423			(2,001	)		(29,606	)
Profit / (loss) from operations		667,426			116,140			97,919			18,082			2,832			(1,590	)		900,809
Share of profit / (loss) of associates and joint ventures		-			(244	)		3,874			556			(80,848	)		160,159			83,497
Segment Profit / (Loss) before financial results and income tax		667,426			115,896			101,793			18,638			(78,016	)		158,569			984,306
Investment properties		2,296,390			772,176			367,573			-			1,085,925			-			4,522,064
Property, plant and equipment		18,224			19,645			3,806			160,331			263			-			202,269
Trading properties		-			-			219,529			-			2,904			-			222,433
Goodwill		1,667			9,392			-			-			75,843			-			86,902
Inventories		9,860			-			582			8,022			-			-			18,464
Investments in associates		-			23,850			35,795			21,895			1,637			1,245,266			1,328,443
Operating assets		2,326,141			825,063			627,285			190,248			1,166,572			1,245,266			6,380,575

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

6.	Segment information (Continued)

Below is a summarized analysis of the lines of business of the Group for the period ended March 31, 2013:

	March 31, 2013
	Shopping Center			Office and other properties			Sales and developments			Hotels			International			Financial operations and others			Total
Revenues		1,173,547			214,040			117,178			174,694			25,632			1,100			1,706,191
Costs		(556,053	)		(85,962	)		(89,066	)		(126,233	)		(20,361	)		(845	)		(878,520	)
Gross Profit		617,494			128,078			28,112			48,461			5,271			255			827,671
Gain from disposal of investment properties		-			-			64,019			-			-			-			64,019
General and administrative expenses		(47,693	)		(31,392	)		(28,113	)		(36,935	)		(9,105	)		(216	)		(153,454	)
Selling expenses		(39,023	)		(8,667	)		(12,609	)		(21,205	)		-			(187	)		(81,691	)
Other operating results, net		(17,590	)		(1,895	)		(8,230	)		456			134,487			(616	)		106,612
Profit / (Loss) from operations		513,188			86,124			43,179			(9,223	)		130,653			(764	)		763,157
Share of profit / (loss) of associates and joint ventures		-			-			1,478			(4	)		(58,446	)		62,924			5,952
Segment profit / (loss) before financial results and income tax		513,188			86,124			44,657			(9,227	)		72,207			62,160			769,109
Investment properties		2,215,383			845,322			382,383			-			710,525			-			4,153,613
Property, plant and equipment		13,372			23,589			3,795			171,002			199			-			211,957
Trading properties		-			-			144,150			-			81,691			-			225,841
Goodwill		1,667			9,392			-			-			48,547			-			59,606
Inventories		10,140			-			511			5,984			-			-			16,635
Investments in associates		-			32,024			26,873			21,252			691			1,082,112			1,162,952
Operating assets		2,240,562			910,327			557,712			198,238			841,653			1,082,112			5,830,604

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

6.	Segment information (Continued)

Operating results of the Cyrsa S.A., Nuevo Puerto Santa Fe S.A. ("NPSF"), Canteras Natal Crespo S.A. (for the comparative period), Puerto Retiro S.A., Baicom Networks S.A. and Quality Invest S.A. joint ventures have been presented under the method of proportionate consolidation. Under this method, the income/loss generated by joint businesses is reported in the income statements line-by-line, rather than in a single item as required by IFRS. Management believes that the proportional consolidation method provides more useful information to understand the business return, because the assets and income/loss generated by consolidated operations are similar to the assets and income/loss booked under the equity method. This is due to the fact that under the proportional consolidation method, revenues and expenses are reported separately, instead of offsetting and reporting them as a single item in the statement of income. Therefore, the proportional consolidation method is used by the Group’s Executive Committee to assess and understand the return and the results of operations of the business as a whole.

The following tables present a reconciliation between the total results of segment operations and the results of operations as per the statements of income. The adjustments relate to the presentation of the results of operations of joint ventures accounted for under the equity method under IFRS and the non-elimination of the inter-segment transactions.

	March 31, 2014
	Total segment information			Adjustment for share of profit / (loss) of joint ventures			Adjustment to income for elimination of inter-segment transactions			As per statements of income
Revenues		2,085,341			(37,282	)		(218	)		2,047,841
Costs		(972,016	)		24,210			-			(947,806	)
Gross profit		1,113,325			(13,072	)		(218	)		1,100,035
Gain from disposal of investment properties		115,362			-			-			115,362
General and administrative expenses		(195,367	)		636			829			(193,902	)
Selling expenses		(102,905	)		2,261			110			(100,534	)
Other operating results, net		(29,606	)		2,534			(721	)		(27,793	)
Profit from operations		900,809			(7,641	)		-			893,168
Share of profit of associates and joint ventures		83,497			19,193			-			102,690
Segment profit before financial results and income tax		984,306			11,552			-			995,858

	March 31, 2013
	Total segment information			Adjustment for share of profit / (loss) of joint ventures			Adjustment to income for elimination of inter-segment transactions			As per statements of income
Revenues		1,706,191			(111,141	)		(956	)		1,594,094
Costs		(878,520	)		87,287			-			(791,233	)
Gross profit		827,671			(23,854	)		(956	)		802,861
Gain from disposal of investment properties		64,019			-			-			64,019
General and administrative expenses		(153,454	)		1,035			1,289			(151,130	)
Selling expenses		(81,691	)		8,366			81			(73,244	)
Other operating results, net		106,612			975			(414	)		107,173
Profit from operations		763,157			(13,478	)		-			749,679
Share of profit of associates and		5,952			9,160			-			15,112
Segment profit before financial results and income tax		769,109			(4,318	)		-			764,791

IRSA Inversiones y Representaciones Sociedad Anónima

Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Continued)

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Free translation from the original prepared in Spanish for the publication in Argentina

6. Segment information (Continued)

Total segment assets are allocated based on the operations of the segment and the physical location of the asset. In line with the discussion above, segment assets include the proportionate share of the assets of joint ventures. The statements of financial position under IFRS show the net investment in these joint ventures as a single item.

	March 31, 2014			March 31, 2013
Total reportable assets as per segment information		6,380,575			5,830,604
Investment properties		(159,992	)		(168,843	)
Property, plant and equipment		(104	)		(122	)
Trading properties		(6,339	)		(33,750	)
Goodwill		(5,234	)		(5,235	)
Inventories		(189	)		(104	)
Investments in associates and joint ventures		284,513			267,736
Total assets as per the statements of financial position		6,493,230			5,890,286

7.	Information about main subsidiaries

The Group conducts its business through several operating and holding subsidiaries. The Group considers that the subsidiaries below are the ones with non-controlling interests material to the Group.

Summarized statements of financial position

	Panamerican Mall S.A. (“PAMSA”)				Rigby
	March 31, 2014		June 30, 2013		March 31, 2014		June 30, 2013
ASSETS
Total non-current assets		587,980		623,809		1,119,229		761,997
Total current assets		333,769		191,911		16,252		18,088
TOTAL ASSETS		921,749		815,720		1,135,481		780,085
LIABILITIES