Unaudited Pro Forma Consolidated Statement of Income
for the nine month period ended
March 31, 2015
(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)
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Historical
Acquired Properties
F
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Revenues
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1,960,739
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125,898
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-
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2,086,637
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Costs
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(830,563)
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(27,559)
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(50,934)
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(d)
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(909,056)
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Gross profit
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1,130,176
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98,339
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(50,934)
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1,177,581
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Gain from disposal of investments properties
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3,361
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-
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-
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3,361
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General and administrative expenses
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(91,129)
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-
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-
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(91,129)
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Selling expenses
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(79,717)
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(1,878)
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-
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(81,595)
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Other operating results, net
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(69,292)
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-
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58,626
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(e)
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(10,666)
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Profit from Operations
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893,399
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96,461
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7,692
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997,552
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Share of (loss) profit of associates and joint ventures
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21,749
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-
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-
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21,749
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Profit from Operations Before Financing and Taxation
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915,148
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96,461
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7,692
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1,019,301
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Finance income
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79,369
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-
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-
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79,369
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Finance cost
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(390,274)
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-
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(85,656)
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(f)
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(475,930)
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Other financial results
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92,565
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-
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-
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92,565
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Financial results
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(218,340)
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-
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(85,656)
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(303,996)
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Profit Before Income Tax
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696,808
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96,461
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(77,964)
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715,305
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Income tax expense
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(225,810)
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-
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(6,474)
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(g)
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(232,284)
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Profit for the period
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470,998
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96,461
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(84,438)
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483,021
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Total Comprehensive Income for the period
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470,998
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96,461
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(84,438)
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483,021
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Attributable to:
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Equity holders of the parent
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441,364
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96,461
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(84,438)
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453,387
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Non-Controlling interest
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29,634
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-
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-
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29,634
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Profit per share attributable to equity holders of the parent for the period
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Basic
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0.35
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0.08
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(0.07)
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0.36
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Diluted
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0.35
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0.08
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(0.07)
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0.36
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(1)
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These figures include financial information of the “Distrito Arcos” Shopping Center from its opening date on December 18, 2014 to March 31, 2015 only, and of the “Alto Comahue” Shopping Center from its opening date on March 17, 2015 to March 31, 2015 only.
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OTHER FINANCIAL DATA
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Depreciation and amortization
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120,377
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—
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50,934
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171,311
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Notes to the Unaudited Pro Forma Consolidated Financial Information
Note 1. Basis of pro forma financial presentation
The Company’s preliminary purchase price allocation has been disclosed in Note 4 to the Company’s March 31, 2015 unaudited interim financials as furnished on Form 6-K dated March 27, 2015.
The unaudited pro forma consolidated statement of income for the year ended June 30, 2014 (column D) represents the combination of the historical statement of income for the year ended June 30, 2014 derived from the historical consolidated financial statements for such year (column A) together with the historical direct revenues and certain expenses of the Acquired Properties for the year ended June 30, 2014 derived from the statement of revenues and certain expenses for the Acquired Properties for such year (column B) plus the pro forma adjustments (column C) as further described in Note 2 below.
The unaudited pro forma consolidated statement of income for the nine months ended March 31, 2015 (column H) represents the combination of the historical statement of income for the nine months ended March 31, 2015 derived from the historical consolidated financial statements for such period (column E) together with the historical direct revenues and certain expenses of the Acquired Properties for the period from July 1, 2014 through December 22, 2014 (column F) plus the pro forma adjustments (column G) as further described below.
The unaudited pro forma consolidated statement of income for the nine months ended March 31, 2015 excludes, as a non-recurring expense, an amount of Ps. 58.6 million the Company incurred in connection with the acquisition of the Acquired Properties, relating to notary fees other transaction-related taxes that will not be capitalized. Additionally, the unaudited pro forma consolidated statement of income data does not reflect the effects of all anticipated cost savings and any related non-recurring costs to achieve those cost savings. The unaudited pro forma consolidated statements of income do not purport to represent the actual results of operations that would have occurred if the acquisitions had taken place on the dates specified, nor are they necessarily indicative of the results of operations that may be achieved in the future.
Note 2. Pro forma adjustments
The following pro forma adjustments have been computed for the year ended June 30, 2014:
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(a)
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Reflects the pro forma additional depreciation expense for the year attributable to recording the Acquired Properties on July 1, 2013. Depreciation is based on the preliminary purchase price allocation. Pro forma depreciation expense is computed in accordance with the Company’s policies for depreciation of investment property and is recorded on a straight-line basis over the estimated useful lives of the Acquired Properties averaging 25 years.
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(b)
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Reflects the pro forma additional interest expense for the year associated with the assumption of debt for the acquisition of the Acquired Properties. The Company assumed a debt of Ps. 2,109.2 (represents U$S 246,4 million at the exchange rate of the date of transaction 8.56) upon acquisition which accrues interest at a fixed rate of 8,5% per annum and matures January 2017 and July 2020.
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(c)
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Reflects the income tax related to the pro forma adjustments. The statutory rate in Argentina is 35%.
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The following pro forma adjustments have been computed for the nine months ended March 31, 2015:
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(d)
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Reflects the pro forma additional depreciation expense for the five months period ended November 30, 2014 attributable to the Acquired Properties as described in point a) above.
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(e)
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Reflects the elimination of non-recurring expenses associated with the acquisition of the Acquired Properties, including notary fees and transaction-related taxes that will not be capitalized.
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(f)
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Reflects the pro forma additional interest expense for the six months period associated with the assumption of debt for the acquisition of the Acquired Properties as described in point b) above.
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(g)
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Reflects the income tax related to the pro forma adjustments. The statutory rate in Argentina is 35%.
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As part of our ongoing monitoring for business opportunities, and subject to the general and specific conditions prevailing in the domestic and international markets, we continue to evaluate different alternatives in order to optimize our capital structure. Such investment reengineering could include a variety of transactional approaches such as capital increases, repurchase of shares or sale or transfer of a minority portion of our equity interest in IRSA Commercial Properties S.A. or other of our subsidiaries.
Sincerely yours,
Armando Ricci
Attorney-in-fact