IRSA(IRS) - 2024 Q4 - Annual Report

Economic Overview - As of June 30, 2024, Argentine GDP decreased by 1.7% year-over-year, an improvement from a 4.9% decrease in the same period of 2023[263] - The inflation rate for the fiscal year ending June 30, 2024, was 271.5%, significantly higher than 115.6% in 2023[264] - The average exchange rate as of June 30, 2024, was ARS 910.50 per USD, compared to ARS 256.50 per USD in 2023, reflecting a depreciation of 255.0%[264] - The unemployment rate as of June 30, 2024, was 7.6%, up from 6.2% in the same period of 2023[263] Sales and Revenue Performance - National shopping mall sales in June 2024 reached ARS 463,761 million, representing a 165.3% increase compared to June 2023[263] - Accumulated sales for the first half of 2024 increased by 220.5% in current terms and 0.7% in real terms compared to the same period in 2023[263] - Total revenues for the fiscal year ended June 30, 2024, reached ARS 270,550 million, a significant increase compared to previous years[277] - Revenues from shopping malls increased to ARS 179,650 million, up ARS 3,404 million from ARS 176,246 million[284] - Revenues from the Offices segment decreased by 4.6% from ARS 17,031 million in FY 2023 to ARS 16,243 million in FY 2024, primarily due to a reduction in lease revenue[287] - Revenues from the Sales and Developments segment decreased by 43.2% from ARS 16,280 million in FY 2023 to ARS 9,246 million in FY 2024, influenced by non-recurrent sales transactions[287] - Revenues from the Hotels segment increased by 10.7% from ARS 55,596 million in FY 2023 to ARS 61,569 million in FY 2024, attributed to improved rates and occupancy levels[287] Profit and Loss Analysis - Gross profit for the same period was ARS 221,784 million, reflecting a strong operational performance despite challenges[277] - The net loss from fair value adjustments of investment properties amounted to ARS 350,955 million, indicating significant valuation impacts[277] - The company reported a segment loss of ARS 169,273 million, highlighting operational challenges in certain segments[277] - The overall profit for the year shifted from a profit of ARS 226,586 million in FY 2023 to a loss of ARS 33,803 million in FY 2024, reflecting the impact of various financial factors[119] Cost Management - General and administrative expenses totaled ARS 51,179 million, showing a focus on cost management[277] - Selling expenses were recorded at ARS 17,491 million, reflecting the company's investment in marketing and sales efforts[277] - Costs associated with shopping malls decreased by ARS 1,223 million to ARS (10,714) million, compared to ARS (11,937) million previously[284] - General and administrative expenses for the Shopping Malls segment decreased by 13.0% from ARS 24,826 million in FY 2023 to ARS 21,608 million in FY 2024, with expenses as a percentage of revenues falling from 14.1% to 12.0%[293] Investment and Asset Management - The company’s investment properties are revalued quarterly, which may lead to significant fluctuations in operational results based on market conditions[267] - Reportable assets as of June 30, 2024, were ARS 1,945,139 million, demonstrating the company's asset base[277] - The total outstanding debt as of June 30, 2024, was ARS 366,754 million, with scheduled maturities including ARS 181,405 million due within one year[328] Corporate Governance - The board of directors consists of twelve regular directors and three alternate directors, with terms expiring in 2024 and 2025[342] - Directors are elected for three-fiscal year terms by a majority vote of shareholders at a general ordinary shareholders' meeting[342] - The company is managed by a board of directors, which is responsible for all management decisions and execution of shareholder resolutions[342] Future Outlook - Future outlook includes continued focus on market expansion and new product development to drive revenue growth[302] - The company provided an optimistic outlook, projecting a revenue growth of 20% for the next fiscal year, targeting $1.44 billion[345] - Market expansion plans include entering three new countries by Q2 2024, which is anticipated to increase market share by 10%[345] Legal and Regulatory Matters - The Argentine Government is seeking to extend Indarsa's bankruptcy to Puerto Retiro, which could impact the company's financial standing[371] - The company is awaiting a final judgment in the bankruptcy extension lawsuit, with no assurance of a favorable outcome[371] - The Central Bank dismissed charges against IRSA and its directors on June 25, 2024, related to a sale transaction of securities settled in foreign currency[374] Shareholder Information - Major shareholders include CRESUD with 397,831,498 shares, representing 53.7% ownership, and ANSES with 40,542,680 shares, representing 5.5% ownership[357] - The total number of outstanding shares as of June 30, 2024, was 741,459,162, with 23,401,746 shares held in treasury[358] - The company paid cash dividends totaling ARS 21,900 million or ARS 27.31 per share on May 5, 2023, and ARS 64,000 million or ARS 88.47 per share on October 12, 2023[383] Taxation and Compliance - The corporate tax rate in Argentina was reduced from 35% to 30% for fiscal years from January 1, 2018, to December 31, 2019, and further reduced to 25% starting January 1, 2020[435] - Dividends distributed from profits accrued in fiscal years starting January 1, 2021, are subject to a withholding tax of 13%[436] - Argentina has signed tax treaties with multiple countries to avoid double taxation, but none with the United States[443]