Cresud S.A.C.I.F. y A.

Good afternoon, everyone. I'm Santiago Donato, investor relations officer of Cresud, and I welcome you to the second quarter of fiscal year 2022 results conference call. First of all, I would like to remind you that both audio and slideshow may be accessed through the company's investor relations website at www.cresud.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company website. After management remarks, there will be a question and answer session for analysts and investors. If you want to make a question, please click the bottom label raised hand or use the chat. Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risk and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Elsztain, CEO. Please go ahead, sir.

Good afternoon, everybody. We are beginning our second quarter 2022, and we can directly go to page number two, where we can see the main highlights of the six first months. We are living in some special conditions related to climate. That is mainly affecting prices. We have a big plantation on the year in the whole region, but the region is being affected on the rain mainly. Some areas with little more rain and some with less rain. But from the other side, we are seeing much better margins than last year because of the increasing prices of the commodities Having higher costs of production too, but margins are improving a lot. If we speak about the first six months about the real estate activity, we had a lot of liquidity in Brazil, two sales in two farms that I'm going to explain a little later, very profitable in the Brazilian market. Related to whole agribusiness segment, we can see that this semester was Thank you very much. All of the industries bringing gains. When we see the net gain of the quarter, this is mainly explained because of the two sides. One is the agriculture that I was explaining, and I will do much more deeper later. And from the other side, it is the investments in IRSA, mainly related to the revaluation of Costa Urbana that was approved in the end of last year, 2021. We had the lack of, after more than 20 years of presentation, We received that approval to begin that development in this piece of land close to our office here in the middle of Buenos Aires City. And in the urban segment, there was a very big important new tool. Instead of only Cresud owning IRSA that owned IRSA commercial properties, in December 2, so good month for us, we received the approval of that merge between IRSA and IRSA commercial properties. And Cresud, after that merge, Thank you very much. have 39.4% of Brasilagro shares, Brasilagro that runs farms in Brazil, Bolivia and Paraguay. We have 50.1% of FIO, those two companies, FIO and Agrofi, our agricultural service. FIO, a broker of inputs and outputs, giving services to the farmers in the real world and a company that Cresut owns 50% and is achieving very good results. I will show you a little later. A company that is becoming one relevant, the biggest, the more important broker of Argentina by far and now launching its chapter in Brazil too. And in the other side, Agrofy, our marketplace in agriculture. Very global company that I will explain a little later too. And in the right, we see what happened after the merge. Irsa, where control of Cresud is 53.7% to be precise, and in Irsa having rental properties and development, plus Banco Hipotecario, where Irsa runs 30% of the shares. We can move to the next page, page number 4, and the evolution of our size. Cresud was preparing its company to have a good size. With this quarter million hectares of planted area, we in the four countries, still Argentina being the largest, but that probably will change next year. Brazil is growing a lot for next campaign too. We are planting the four countries, 119, 109, 14, and 14,000 hectares in each of the countries. Still having soybeans as the more relevant, 44. Second, 27, the corn. But sugarcane, the 10% of this size is a lot of sugarcane. We are of the biggest farmers doing sugarcane, not having usinas. Majority of the big planters of sugarcane are owners of factories. But we are one of species that without those factories, we are big plantations of sugarcane, mainly a majority in Brazil. But growing, now we are deciding to grow and expanding our sugarcane in Bolivia too. using the expertise that Brasil Agro has. If we move to next page, page number five, we can see the evolution on the soybeans and corn in the relation of the stock consumption and how tight was still that rush of stock consumption. Prices were beginning to decrease, thinking that South America was recovering in production, mainly explained by Brazil, Argentina, Paraguay, and Bolivia, but climate conditions made that to disappear like 20, 30 million tons depending the source, but a lot of soybeans and corn disappear because of droughts mainly in south of Brazil and corn belt of Argentina. Our areas of plantations are not exactly those, and today is very early to forecast where is our situation, but for sure it's not The damage that the Corn Belt and south of Brazil is damaging. Remember where our areas in Brazil and in Argentina, we have a lot of the plantation in the north, in Salta, in the west of Buenos Aires and south of Cordoba, where this region, when we can see the map, is in a very good condition. So we think that in next quarter we will be easier to forecast where we are, but we are not thinking the damage is affecting to the region the same to Cresuda and Brasil Agro together. and that effect in the yields of this year waiting for the new campaign in the United States is affecting the rebound on the prices so today Cresud and Brasil Agro are receiving part of that benefit in the crop that we are going to harvest between March to June or September the late corn that we are going to harvest. If we move to next page, in page number 6, and we can see the two things that were closed in this quarter and were reflected in the balance sheet, in the gains, are two farms. The first one is a portion, really is a portion, is less than half, is the third of the farm, that we swapped for shares. Do you remember that Rio de Medio was not paid by cash, was swapped by shares, but less than two years later we were selling a small portion for more than the price we paid for the whole. and with a lot of gains, more than 40% internal rate of returning dollars, and a lot of gains like close to 60 million reais after just receiving the farm. And in the case of Alto Taquari, that it's a farm that we bought a long time ago, but the total farm, close to total farm because it is bigger, bigger than this, we are not selling 100%, we divide it in two cells. A., Matias Ivan Gaivironsky, Gil Kotler, Alejandro Gustavo Elsztain, Diego Chillado Biaus, Eran Saar, Mariana de Elsztain, Diego Chillado Biaus, Eran Saar, Mariana de Elsztain is the nominal value for more than 550 million reais. Shows the evolution of prices of farms that we had. This is in Mato Grosso, in a region of Mato Grosso, where we were planting sugarcane and grains. So we bought for 10,000 reais and we are selling for close to 200,000 reais per hectare nominal. This is the kind of gain that we are doing in the buying and selling in Brazil. The second part, the second portion, the gain will be reflected in the future balances. If we move to the next page, page number seven, and to show why we are beginning to talk about FIO, FIO began like 20 years ago and was using our expertise of having the size of Cresud and why not to help other farmers to improve their margins. It began very shy, but today is the largest Broker of the country by far more than 2 million tons of the second. So by far the largest broker of the country. It's finished the last year 6.4 million tons, forecasting 7 million tons for next campaign. Making EBT the last campaign we closed close to 15 million dollars. This is a company that we launched from zero and began like a marketplace too early, but finally went to a broker. Broker of Inputs Outputs Service Consultancy and this is the gain the company is doing having close to 300 employees 75 from them are in technology so this is by far digital broker of the country and now we hired the CEO in Brazil this 2022 we are launching our development of this the service for cranes in Brazil too and now it puts in fertilizers and other things. It's becoming global too, not only in Argentina, but doing in Bolivia, Chile, Paraguay. So it's developing the rest of the region too. So FIO is becoming a big service company to the farmers. This today in numbers is doing with close to 500 farmers or big companies like YPF. and other big oil companies of the country doing their brokerage grants for them. So this company is really becoming very relevant. And to give you a flavor of this company that never we spoke a lot, but this year we went to the market, we issued our first bond, and the bond was launched for $12.3 million. First issuance of the bond of the company and the interest rate the company is paying for a two-year bond is zero interest. Imagine what the market likes the story of FIO, not having close to zero debt. We can move now to the last of our investments, Agrofy. Agrofy, that is our marketplace, e-commerce of the South American region. The other competitors come from the Northern Hemisphere, from the South Hemisphere, this is the player. Agrofy, these days in December too, Thank you very much. Cresu today brands close to 18%. And this company is in that regional growth, improving the platform transactionality and giving some fintech solutions. You can see the map where we are. Mexico will be 2023, but the others, we are there. And this company is competing for that position, being the marketplace of the Americas. And we receive investments like IARA, Bungis in Ghent and other companies from the United States and Brazil, so a lot of foreigners investing in Agrofy, where we have two board members on there too, not having the control, but this company is competing in that arena. Having said that, I will invite now Matias to speak about IRSA, our CFO. Please, Matias.

Thank you, Alejandro, and good afternoon, everybody. So if we see on page 9, we have two major events during December last year that are Significant drivers for the future growth of the company. The first one is the approval of Costa Urbana. After 20 years of dealing with the approvals of the project, finally the City Congress of Buenos Aires approved the project. Basically, IRSA agreed with the city to donate around two-thirds of the project to the city to develop public spaces. will be the second largest park of Buenos Aires will be in this land. And in exchange of that, IRSA will have the rights to develop up to almost 900,000 square meters of different uses, residential, commercial, etc. So this is a significant use for IRSA and probably the growth of the company for the next 10 years will be drive by this project. The other important event during the semester was the merge between IRCP and IRSA. The shareholders of the two companies approved during December the merge. So now the merge is effective since July the 1st, 2021. And the company started to present consolidated or only one balance sheet since . As a result of the merger, Cresud's stake in IRSA will reduce from 62.3% to 53.7%. On the operational side, we can see in the shopping malls important news regarding real sales. The real sales increase against inflation for first time during the last, I would say, three years, that the real sales increased by 7.6% during the quarter. So the shoppings after the, this is comparing with pre-pandemic levels, no? So they remember that last year was affected by the pandemic. This 7.6 is before the COVID situation. So we are very happy to see the improvement of shopping malls after the restrictions on COVID are now no significant, so the shoppings are running on a normal situation. We still have room to growth in the case of traffic and some in occupancy, but we are happy to see the recovery. In the office buildings, we have a mixed Results from one hand, we see a decrease in occupancy and the stock slightly decreased. Here we did like a flight to quality where we sold some floors or buildings last year and replaced with the new building in Catalina, so in the Zeta building a couple of years ago. So the performance is a little below against the last year because of and some offices and some companies that decided to reduce spaces or move to other places and also the occupancy when we compare is related to the disposals that we did last year because the offices that we sold were fully occupied and then we opened the La Paulera with some vacancy and so that is the effect on the decrease in the vacancy. Also, we sold some floors during the semester in the La Paulera building, so for $41.2 million. So, IRSA is reducing debt with all these disposals. In the hotels are still affected by the pandemic, basically in the city of Buenos Aires with the restrictions on tourism that is still in place until November last year. So the two hotels were affected. In the case of the Xiao Xiao hotels, the operation was very, very good. So if we move to the page 12, the P&L of this semester, we can see a significant gain. We are closing the semester with 38 billion pesos gain compared with a loss of 4.9 billion pesos last year. We have different drivers. The first one is in line 6, the change in the fair value that we see a gain of 22.9 billion pesos. A.C.I.F. that generated a gain of 8.3 billion pesos. And finally, the other important effect is in the line 16, the net income from discontinuing operations that include the deconsolidation in last year of Israel in the case of IRSA that generated a loss of 10.1 billion pesos. So if we move to page 13, we can see some of these numbers on the operational side. In the adjusted EBITDA for the agribusiness, we see great results that generate a gain of 12.1 billion pesos against a gain of 2.4 last year. So we can see in all the lines that we have a better improvement against last year. In the case of farmland sales, as Alejandro mentioned, We sold two farms in Brazil that generated a great gain. In the case of the farming, we have also much better results compared with the previous year than when we do the breakdown between grains, sugarcane, cattle and agricultural services. We can see that the grains improving significant compared with the previous year. This is related to our hedge. Thank you very much. Also, the improvement in prices of sugar generated and ethanol and oil generated very good results of 4.8 compared with 2.4 last year. And cattle, we see a drop. This is related to prices evolution in Argentina that we have to adjust by inflation, and the prices increased less than the inflation. For that reason, we have the loss. And in Line 7, in others, we can see the evolution of the results of basically FIO this year that are generating very good results. In the case of the urban segment in shopping malls, compared with last year, we see a significant improvement, but last year was almost closed, the operation, or are very affected by the pandemic. So when we compare with the pre-pandemic levels, we are still 22% below 2019 or 2020. The offices, we see a drop of 30% in pesos. In dollars, this number is flat. But in pesos, since the devaluation was much lower than the inflation, we have this effect of 30% decrease. And on top of that, There was less square meters under production this year. And finally, the sales and development, we see the results of this year. There is 1.5 billion pesos against 10.8 last year. Last year, we sold more floors or more buildings than this year at IRSA level. If we move to page 14, the net financial results, We see the gain of 8.3 billion pesos against a loss of 1.4 billion pesos. It's basically all related to the net exchange differences in line two. The devaluation in Argentina during the semester was only 7% against an inflation of 20%. So when we see results in pesos term, we are recognizing this gain in the next exchange differences. So finally in page 15, here we see the evolution of our debt. We reduced the debt during the last quarter to $400 million with a debt amortization scale that is atomized between the next three years. We are working and we launched on Friday a new bond that we expect to close on Wednesday. The idea is to extend part of the debt, the tenor to a three-year tenor debt to 2025. So we are issuing a dollar link note with three years bullet maturity. So we expect to close this on Wednesday. So with this, we finish the formal presentation. Now we open the line to receive your questions.