IRSA(IRS) - 2019 Q4 - Annual Report

PART I Key Information This section presents selected consolidated financial data for fiscal years 2019 and 2018, highlighting a net loss in 2019 compared to a profit in 2018, driven by changes in the fair value of investment properties and financial results Selected Consolidated Financial Data The company reported a Ps. 26,847 million net loss in FY2019, a reversal from a Ps. 23,237 million profit in FY2018, primarily due to fair value changes in investment properties Consolidated Statement of Income Highlights (in million Ps.) | Indicator | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Revenues | 69,767 | 58,824 | | Gross profit | 27,767 | 24,178 | | Net (loss) / gain from changes in fair value of investment properties | (23,710) | 16,981 | | Profit / (Loss) from operations | (12,073) | 27,521 | | Financial results, net | (12,055) | (28,460) | | Total Profit / (Loss) for the year | (26,847) | 23,237 | | Basic profit / (loss) per common share | (45.36) | (1.76) | Consolidated Statement of Financial Position Highlights (in million Ps.) | Indicator | As of June 30, 2019 | As of June 30, 2018 | | :--- | :--- | :--- | | Total Assets | 474,634 | 526,856 | | Total Liabilities | 388,815 | 407,341 | | Total Shareholders' Equity | 85,819 | 119,515 | - The company's financial statements for the fiscal year ended June 30, 2019, have been restated to reflect the effects of hyperinflation in Argentina, in accordance with IAS 29, applied starting July 1, 2018, as the cumulative three-year inflation rate exceeded 100%[42][25] - The company deconsolidated its subsidiary Shufersal as of June 21, 2018, after ceasing to have control, consequently, Shufersal's results of operations are not included in the consolidated figures after this date, affecting comparability between periods[41][29] Argentine Peso to U.S. Dollar Exchange Rates (Source: Banco de la Nación Argentina) | Period | Maximum | Minimum | Average | At closing | | :--- | :--- | :--- | :--- | :--- | | Fiscal year ended June 30, 2019 | 45.8700 | 27.1600 | 37.8373 | 42.3630 | | Fiscal year ended June 30, 2018 | 28.8000 | 16.7500 | 19.4388 | 28.8000 | New Israeli Shekel to U.S. Dollar Exchange Rates (Source: Bloomberg) | Period | Maximum | Minimum | Average | At closing | | :--- | :--- | :--- | :--- | :--- | | Fiscal year ended June 30, 2019 | 3.7767 | 3.5597 | 3.6443 | 3.5700 | | Fiscal year ended June 30, 2018 | 3.6573 | 3.3902 | 3.5275 | 3.6573 | Risk Factors The company faces significant risks primarily tied to Argentina's volatile macroeconomic and political conditions, including high inflation, currency devaluation, and potential government interventions - The company's operations and financial condition are highly dependent on the macroeconomic, regulatory, social, and political conditions in Argentina, where most of its Argentine operations are located, with key concerns including high inflation, currency devaluation, and economic volatility[63][64] - Argentina's economy has experienced significant volatility, with sluggish GDP growth and high inflation, with the market expectation for inflation in 2019 at 54.9% and a GDP contraction estimated at 2.5%, which could adversely affect the company's business[65] - The Argentine government and Central Bank have implemented new exchange controls and restrictions, limiting access to the foreign exchange market (MULC), which could impair the company's ability to pay dividends and repatriate capital[144][147][148] - The Israeli operations, particularly through IDBD and DIC, are subject to the Law to Promote Competition and Reduce Concentration, which restricts corporate pyramid structures to two tiers of reporting corporations, requiring and potentially continuing to require structural changes and divestments within the group[337][338][341] - Holders of GDSs may face practical limitations in exercising voting rights due to procedural steps involving the depositary, and shareholder rights under Argentine law may be fewer and less defined than in other jurisdictions like the United States[452][453] Information on the Company IRSA, founded in 1943, is a leading Argentine real estate company with operations structured into two main centers: Argentina and Israel, focusing on diversified property and investment portfolios History and Development of the Company Founded in 1943, IRSA has grown into a leading real estate company, dividing its business into two main hubs: Argentina and Israel, expanding its portfolio in both regions - The company's business is structured into two main hubs: the "Operations Center in Argentina" and the "Operations Center in Israel," following acquisitions in 2014[464] - In Argentina, IRSA, through its subsidiary IRSA CP, owns and operates 15 shopping malls, including prominent locations like Alto Palermo, Abasto Shopping, and Dot Baires Shopping[474][465] - The company expanded into the Israeli market in FY2014 by investing in IDB Development Corporation Ltd. (IDBD) and gained control in October 2015, holding a 100% indirect interest in IDBD and an 83.77% interest in Discount Investment Corporation (DIC) as of June 30, 2019[492][493] - A significant recent development in Argentina was the distribution of a dividend in kind in October 2018, consisting of IRSA CP shares valued at Ps. 1,827 million[495] - In Israel, a key event was the loss of control over Shufersal in June 2018, when DIC sold a 16.56% stake, leading to its deconsolidation, with DIC's stake further reduced to 26.02% in November 2018[525][528] Business Overview IRSA's business is divided into two operational centers, Argentina and Israel, encompassing diversified real estate, telecommunications, and insurance assets - The company's operations are divided into two main centers: Argentina and Israel, with Argentine operations segmented into Shopping Malls, Offices, Sales and Developments, Hotels, International, and Others, and Israeli operations segmented into Real Estate, Supermarkets, Telecommunications, Insurance, and Others[562][563][571] Argentine Shopping Mall Portfolio Overview (as of June 30, 2019) | Metric | Value | | :--- | :--- | | Number of Malls | 15 | | Total GLA (sqm) | 332,150 | | Average Occupancy Rate | 94.7% | | Total Tenant Sales (FY2019) | Ps. 66,075 million | | Rental Revenue (FY2019) | Ps. 6,306 million | Argentine Office Portfolio Overview (as of June 30, 2019) | Class | GLA (sqm) | Occupancy Rate | | :--- | :--- | :--- | | AAA & A | 96,158 | 97.2% | | B | 19,220 | 45.0% | | Total | 115,378 | 88.3% | - In Israel, the Real Estate segment is operated through PBC, which owns approximately 1,235,000 sqm of rental properties in Israel and the 80,000 sqm HSBC Tower in New York[798] - The Telecommunications segment in Israel is operated through Cellcom, which had approximately 2.851 million cellular subscribers at the end of 2018[854] - The Insurance segment in Israel consists of an investment in Clal, with IDBD in the process of selling its holdings as per the regulator's outline, and IDBD's direct stake at 20.3% as of June 30, 2019, with an additional 24% held through swaps[903][904][920] Organizational Structure IRSA's organizational structure, headed by Cresud, includes majority stakes in Argentine real estate and significant holdings in Israeli diversified investments through IDBD and DIC Key Subsidiary Ownership Percentages (as of June 30, 2019) | Subsidiary | Main Activity | Country | Ownership % | | :--- | :--- | :--- | :--- | | IRSA CP | Real estate | Argentina | 83.80% | | IDB Development Corporation Ltd. | Investment | Israel | 100.00% | | Discount Investment Corporation Ltd. | Investment | Israel | 83.77% | | Property & Building Corporation Ltd. | Real estate | Israel | 68.80% | | Cellcom Israel Ltd. | Telecommunications | Israel | 44.10% | - DIC exercises effective control over Cellcom despite holding less than 50% of the capital, due to having the highest percentage of votes (47.2%) and the atomized nature of other shareholdings[1063] Property, Plant and Equipment The company's extensive property portfolio as of June 30, 2019, is diversified across Argentina (offices, malls, hotels, land) and Israel (commercial properties via PBC) Key Properties - Operations Center in Argentina (as of June 30, 2019) | Property Type | Key Assets | Net Book Value (Ps. millions) | | :--- | :--- | :--- | | Offices | República Building, Bankboston Tower, Zetta Building | 24,027 | | Shopping Malls | Abasto, Alto Palermo, Dot Baires | 32,232 | | Land Reserves | Santa María del Plata, La Maltería | 11,385 | | Hotels | Intercontinental, Libertador, Llao Llao | 1,394 | Key Properties - Operations Center in Israel (as of June 30, 2019) | Property | Location | Use | Net Book Value (Ps. millions) | | :--- | :--- | :--- | :--- | | HSBC Building | United States | Rental properties | 39,779 | | Matam park - Haifa | Israel | Rental properties | 21,504 | | Herzeliya North | Israel | Rental properties | 14,696 | | Tivoli | United States | Rental properties | 9,107 | Operating and Financial Review and Prospects This section provides a detailed analysis of the company's financial performance, liquidity, and future outlook, highlighting a net loss in FY2019 due to property revaluation and macroeconomic volatility Operating Results The company reported a Ps. 26,847 million consolidated net loss in FY2019, primarily due to a Ps. 40,691 million negative swing in investment property fair value adjustments Consolidated Results of Operations (in million Ps.) | Indicator | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Revenues | 69,767 | 58,824 | | Gross profit | 27,767 | 24,178 | | (Loss) / profit from operations | (12,073) | 27,521 | | Financial results, net | (12,055) | (28,460) | | (Loss) / profit for the year | (26,847) | 23,237 | - The primary driver for the shift from profit to loss was the net loss from fair value adjustment of investment properties, which amounted to a loss of Ps. 23,710 million in FY2019 compared to a gain of Ps. 16,981 million in FY2018, largely due to the inflationary effect in Argentina exceeding the appreciation of the properties[1179][1180] - The Operations Center in Argentina recorded a segment loss of Ps. 26,688 million in FY2019, a stark contrast to the Ps. 16,484 million profit in FY2018, while the Operations Center in Israel recorded a segment profit of Ps. 9,724 million in FY2019, up from Ps. 8,605 million in FY2018[1132] - Financial results improved significantly, showing a net loss of Ps. 12,055 million in FY2019 compared to a net loss of Ps. 28,460 million in FY2018, mainly due to a positive variation in net exchange differences as inflation outpaced currency devaluation during the period[1261][1262] Liquidity and Capital Resources As of June 30, 2019, the company maintained positive liquidity with Ps. 67,317 million working capital, despite financial challenges at its Israeli subsidiary IDBD Cash Flow Summary (in million Ps.) | Cash Flow | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Net cash from operating activities | 18,920 | 14,287 | | Net cash from / (used in) investing activities | 7,829 | (21,363) | | Net cash (used in) / from financing activities | (19,419) | (4,312) | | Net increase / (decrease) in cash | 7,330 | (11,388) | - As of June 30, 2019, the company had a positive consolidated working capital of Ps. 67,317 million and cash and cash equivalents of Ps. 60,482 million[1396][1398] - The Israeli subsidiary IDBD faces financial challenges, including negative equity and low credit rating, but IRSA has guaranteed a commitment to make capital contributions of up to NIS 210 million to IDBD's parent company, Dolphin, between September 2019 and September 2021 to support its liquidity[1399][1400][1401] Debt Maturity Schedule (as of June 30, 2019, in million Ps.) | Period | Argentina | Israel | Total | | :--- | :--- | :--- | :--- | | Less than 1 year | 8,263 | 37,241 | 45,504 | | 1 to 2 years | 11,948 | 27,930 | 39,878 | | 2 to 3 years | 1,312 | 31,415 | 32,727 | | More than 3 years | 15,568 | 178,835 | 194,403 | | Total | 37,091 | 275,421 | 312,512 | Trend Information The company faces a challenging macroeconomic environment in Argentina with high inflation and contraction, while Israel's economy shows solid performance - The Argentine macroeconomic context is challenging, with the EMAE (monthly economic activity estimator) showing no variation year-over-year as of June 30, 2019, and industrial activity contracting by 6.9% in the first half of 2019[1444] - Shopping mall sales in Argentina increased nominally by 44.7% in June 2019 compared to June 2018, but this is largely an effect of high inflation[1443][1452] - The premium office market in Buenos Aires shows stability, with a vacancy rate of 8.99% and average rental prices around US$24.3 per square meter as of Q2 2019[1453][1454] - Israel's economy demonstrates solid performance, with projected GDP growth of 3.2% for 2019, historically low unemployment (around 4%), and inflation remaining within the 1-3% target range[1456][1458] Tabular Disclosure of Contractual Obligations As of June 30, 2018, the company's total contractual obligations amounted to Ps. 393,545 million, primarily from borrowings Contractual Obligations as of June 30, 2018 (in million Ps.) | Obligation Type | Total | Less than 1 year | 1-3 years | 3-4 years | More than 4 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Trade and other payables | 17,709 | 16,661 | 777 | 1 | 270 | | Borrowings | 369,622 | 56,157 | 95,373 | 65,566 | 152,526 | | Purchase obligations | 6,100 | 4,274 | 1,480 | 346 | - | | Total | 393,545 | 77,164 | 97,671 | 65,914 | 152,796 | Directors, Senior Management and Employees This section details the company's leadership, compensation, and workforce, noting concentrated share ownership by Chairman Eduardo S. Elsztain Directors and Senior Management The company is managed by a Board of Directors with fourteen regular members, an Executive Committee, and an independent Audit Committee - The Board of Directors is composed of fourteen regular directors and three alternate directors, elected for three-year terms, with key figures including Eduardo S. Elsztain (Chairman), Saúl Zang (First Vice-Chairman), and Alejandro G. Elsztain (Second Vice-Chairman)[1467] - An Executive Committee, consisting of five regular directors, is responsible for managing the day-to-day business of the company[1489] - The Audit Committee is fully independent and composed of three members: Oscar Pedro Bergotto, Demian Brener, and Maria Julia Bearzi, with Ms. Bearzi serving as the financial expert[1510] Compensation Total compensation for directors was Ps. 51.8 million in FY2019, with senior management compensation totaling Ps. 149 million across both operational centers - Total compensation paid to the Board of Directors for the fiscal year ended June 30, 2019, was Ps. 51,821,340[1518] - Senior Management compensation for FY2019 was Ps. 17 million for the Operations Center in Argentina and Ps. 132 million for the Operations Center in Israel[1519][1520] - The Supervisory Committee received total fees of Ps. 1,260,000 for their duties during FY2019[1523] - A new incentive plan for employees, management, and directors, allowing for the issuance of shares up to 1% of the capital stock, was approved at the shareholders' meeting on October 30, 2019[1533] Employees As of June 30, 2019, the company employed 1,702 people in Argentina and a significantly larger workforce in Israel, primarily through subsidiaries like Shufersal and Cellcom Employee Headcount - Operations Center in Argentina | Segment | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Development, Sales & Other | 12 | 31 | 31 | | Shopping Malls and Offices | 865 | 928 | 947 | | Hotels | 832 | 812 | 790 | | Total | 1,709 | 1,771 | 1,768 | Employee Headcount - Operations Center in Israel (Key Subsidiaries) | Company | 2019 | 2018 | | :--- | :--- | :--- | | Shufersal | 15,762 | 15,155 | | Cellcom | 3,901 | 3,988 | | PBC | 552 | 614 | | IDB Tourism | 615 | 855 | Share Ownership As of June 30, 2019, Chairman Eduardo S. Elsztain beneficially owned 62.3% of the company's common shares, primarily through Cresud - As of June 30, 2019, Chairman Eduardo S. Elsztain beneficially owned 359,102,211 common shares, representing 62.3% of the company's stock, primarily through his holdings in Cresud[1547] - Other key insiders hold minor stakes, with Alejandro G. Elsztain owning 0.4% and Daniel R. Elsztain owning less than 0.1% of the shares[1547] - No options to purchase common shares have been granted to the company's Directors, Senior Managers, or members of the Supervisory or Audit Committees[1548] Major Shareholders and Related Party Transactions This section details the company's ownership structure, with Cresud as the principal shareholder, and outlines various related-party transactions conducted on arm's-length terms Major Shareholders As of June 30, 2019, Cresud was the largest shareholder with 62.1% of common shares, beneficially owned by Eduardo S. Elsztain Major Share Ownership as of June 30, 2019 | Shareholder | Number of Shares | Percentage | | :--- | :--- | :--- | | Cresud (beneficially owned by Eduardo S. Elsztain) | 359,102,211 | 62.1% | | ANSES | 25,914,834 | 4.5% | | Directors and officers (excluding E. Elsztain) | 2,637,257 | 0.5% | - As of June 30, 2019, approximately 61.2% of the company's outstanding common shares were held in the United States in the form of Global Depositary Shares (GDSs)[1559] Related Party Transactions The company engages in various arm's-length related-party transactions, including leasing, corporate service agreements, financial operations, and donations to Fundación IRSA - The company has a Master Agreement for the Exchange of Corporate Services with its parent company Cresud and its subsidiary IRSA CP to share costs and optimize efficiency across areas like HR, Finance, and Legal[1565][1566] - IRSA and its related parties lease office and retail spaces from each other, for instance, IRSA rents its executive offices from IRSA CP, and related entities like Banco Hipotecario lease space in IRSA CP's shopping malls[1561][1567] - The company conducts financial operations with related entities, including using Banco Hipotecario and its subsidiary BACS as underwriters for capital market transactions and investing liquid funds in mutual funds managed by BACS[1572] - IRSA provides financial and in-kind support to Fundación IRSA, a non-profit organization led by company executives, which includes granting space in shopping malls for the Fundación Museo de los Niños[1573][1574] - In November 2018, IRSA sold a significant portion of the "Catalinas" building under development to its subsidiary IRSA CP for US$60.3 million, a transaction approved by the Audit Committee[1583][1584] Financial Information This section references the company's audited consolidated financial statements and details significant legal proceedings in Argentina, the U.S., and Israel - The company is involved in a significant legal proceeding where the Argentine government seeks to extend the bankruptcy of Inversora Dársena Norte S.A. (Indarsa) to IRSA's subsidiary, Puerto Retiro, where an adverse ruling could result in the loss of a key property asset, though a preliminary objection based on the statute of limitations was successful in the civil action[1606][1609][1611] - IRSA CP is in a dispute with the Argentine State-owned Property Administration Office (AABE), which revoked the concession agreement for the "Distrito Arcos" shopping mall, though the mall continues to operate normally while the case is under appeal[1619] - Putative class action lawsuits filed in the U.S. against IRSA and Cresud, alleging securities law violations related to the IDBD investment, were fully dismissed with prejudice, and the appeals were voluntarily dismissed by the plaintiffs, concluding the matters by May 2019[1631][1634][1636] - In Israel, a class action was filed against IDBD and its controlling shareholder concerning the sale of DIC shares to Dolphin IL, alleging non-compliance with the Concentration Law and seeking damages, though the company believes the claims are meritless[1663][1665][1666] The Offer and Listing IRSA's common shares trade on BYMA, and its GDSs are listed on the NYSE, with the Argentine market regulated by the CNV - IRSA's common shares are traded on the Bolsas y Mercados Argentinos (BYMA) under the symbol "IRSA"[1683] - The company's Global Depositary Shares (GDSs) are listed on the New York Stock Exchange (NYSE) under the symbol "IRS", with each GDS representing ten common shares[1683] - The Argentine securities market is governed by the Capital Markets Law No. 26,831 and regulated by the Comisión Nacional de Valores (CNV), with recent amendments under Law No. 27,440 aiming to modernize the framework and promote financing[1686] Additional Information This section covers key corporate, regulatory, and tax information, including bylaws, exchange controls, and tax implications for shareholders Memorandum and Articles of Association The company's bylaws define its purpose, grant broad management powers to the Board, and include a public tender offer requirement for significant acquisitions - The company's bylaws require any person or group seeking to acquire 35% or more of the capital stock to make a public tender offer for all outstanding shares, subject to certain exceptions[1727] - Dividends can only be paid from realized and net profits as per approved annual financial statements, with 5% of net profits allocated to a legal reserve until it reaches 20% of the capital stock[1719][1725] - The Board of Directors is elected for three-year terms, with one-third of the members elected each year, and the bylaws have been amended to allow for remote participation in board and shareholder meetings[1722][1717][1749] Exchange Controls Argentina has reinstated significant foreign exchange controls, restricting foreign currency access and requiring Central Bank approval for profit and dividend transfers abroad - The Argentine government, via Emergency Decree No. 609/2019 and Central Bank Communication "A" 6770, has reinstated significant restrictions on the foreign exchange market[1752] - Proceeds from the export of goods and services must be converted into Argentine Pesos through the official foreign exchange market within five business days of collection[1755][1758] - Prior approval from the Central Bank is required for the payment of profits and dividends abroad[1770] - Resident individuals are limited to purchasing a maximum of US$200 per month for savings or external asset formation, with only up to US$100 available in cash[1764] Taxation This section outlines U.S. and Argentine tax implications for investors, including dividend withholding taxes and capital gains exemptions for publicly traded shares - For U.S. Holders, dividends are taxable as ordinary income, with reduced tax rates potentially applying to dividends on GDSs (listed on NYSE) but not expected to apply to common shares[1807][1808] - The company does not believe it was a Passive Foreign Investment Company (PFIC) for the taxable year ending June 30, 2019, which avoids adverse U.S. tax consequences for U.S. Holders[1814] - In Argentina, dividends distributed from profits accrued since January 1, 2018, are subject to a 7% withholding tax for foreign beneficiaries and resident individuals, with this rate scheduled to increase to 13% for profits accrued from January 1, 2020[1835][1840] - Capital gains from the sale of publicly traded shares and GDSs are exempt from Argentine income tax for foreign beneficiaries, provided they are not from "non-cooperating" jurisdictions[1845] - Argentine companies must pay the Personal Assets Tax on behalf of their foreign and individual shareholders at a rate of 0.25% on the book value of the shares, though the company was exempt for the 2016-2018 fiscal years[1850][1851] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to and manages various market risks, including foreign exchange, interest rate, and other price risks, separately for its Argentine and Israeli operations - The company is exposed to market risks such as foreign exchange risk, interest rate risk, and other price risks in the normal course of business[1863] - Risk management is decentralized and handled separately for the Operations Center in Argentina and the Operations Center in Israel to address the specific risks of each region[2213] Description of Securities Other than Equity Securities This section details the fees associated with the company's Global Depositary Shares (GDSs), charged by The Bank of New York Mellon to investors - The Bank of New York Mellon acts as the depositary for the company's GDSs[1864] - Investors are charged fees for depositing or withdrawing shares, including up to US$5.00 per 100 GDSs for issuance/surrender and up to US$0.02 per GDS for cash distributions[1868] - The depositary has agreed to reimburse IRSA for certain reasonable expenses related to the GDS program, such as listing fees and investor relations expenses[1866] PART II Material Modifications to the Rights of Security Holders and Use of Proceeds This section outlines the Fair Price Provision in the company's bylaws, requiring a public tender offer for acquisitions of 35% or more of capital stock - The company's bylaws include a "Fair Price Provision" that requires a party seeking to acquire 35% or more of the capital stock to make a public tender offer for all outstanding shares[1872][1874] - The tender offer price must be paid in cash and be the highest value derived from five specific valuation methods, ensuring a fair price for all shareholders[1879][1882] - Acquisitions by existing controlling shareholders or those resulting from stock dividends or approved mergers are exempt from this tender offer requirement[1875][1876] Controls and procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of June 30, 2019 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[1880] - Based on the COSO 2013 framework, management assessed the internal control over financial reporting as effective as of June 30, 2019[1885] - The independent registered public accounting firm, Price Waterhouse & Co S.R.L., audited and confirmed the effectiveness of the company's internal control over financial reporting[1886] - During FY2019, the company implemented a new SAP Business Planning and Consolidation (BPC) module and updated its internal controls over financial reporting to accommodate the new system[1887] Corporate Governance and Accountant Fees This section covers corporate governance practices, including the independent Audit Committee, Code of Ethics, and details accountant fees for FY2019 - The Audit Committee is composed of three independent members: Oscar Pedro Bergotto, Demian Brener, and Maria Julia Bearzi, with Ms. Bearzi serving as the designated financial expert[1891][1510] - The company has adopted a Code of Ethics that applies to all directors, officers, and employees, which is available on its website[1892] Principal Accountant Fees (FY2019) | Fee Type | Operations Center in Argentina (Ps. million) | Operations Center in Israel (NIS million) | | :--- | :--- | :--- | | Audit Fees | 30 | 5.5 | | Audit-Related Fees | 1.3 | N/A | | Tax Fees | 0.9 | 0.3 | | All Other Fees | 2 | 0.5 | - A key corporate governance difference from NYSE standards is that Argentine law does not require a majority of the board to be independent; IRSA's board composition reflects this local practice[1909] PART III Financial Statements This section contains the company's audited consolidated financial statements for FY2019, 2018, and 2017, prepared under IFRS, with an unqualified auditor's opinion - The report includes the audited consolidated statements of financial position, income and other comprehensive income, changes in shareholders' equity, and cash flows for the three years ended June 30, 2019[1911][1916] - The independent auditor, Price Waterhouse & Co S.R.L., provided an unqualified opinion on the consolidated financial statements and the company's internal control over financial reporting[1920] Exhibits This section provides an index of all exhibits filed as part of the annual report, including corporate documents, financial agreements, and regulatory certifications - The exhibits include fundamental corporate documents such as the company's bylaws (Estatutos)[1912] - Key financial agreements are filed as exhibits, including the Deposit Agreement for the GDSs and indentures for various note series issued by IRSA and IRSA CP[1912] - Certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[1912]