Alejandro Elsztain - CEO Carlos Blousson - General Manager of Argentina and Bolivia Matias Gaivironsky - CFO

Good afternoon everyone, and welcome to Cresud's Third Quarter of 2016 Results Conference Call. Today's live webcast, both audio and slide show may be accessed through the company's Investor Relations website at www.cresud.com.ar/ir, by clicking on the banner Teleconference. The following presentation and the earnings release issued last week are also available for download on the company’s website. After management’s remarks there will be a question-and-answer session for analysts and investors. At that time further instruction will be given. [Operator Instructions] 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 risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements. Now I'll turn the call over to Mr. Alejandro Elsztain, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good afternoon everybody. We are beginning the highlights for the nine months period of 2016, and if you go to page number two we can understand, and there is a big change in our balance sheet. Since this quarter we started to consolidate the results of our investment of our subsidiary IRSA in IDBD, our company in Israel. So Matias later will explain how we are explaining and to make it easier to analysts and to investors these numbers. Here in the three first lines the revenues, operating income and net income will be divided to make it - to explain the Argentine business center separating to the Israel business center. So revenues grew up to ARS 21 billion pesos. From those ARS 5 billion are coming from Argentina, argibusiness, and Argentina urban business center, both a combination of agribusiness and the urban. In the case of the operating income we achieved a positive number of ARS 3.4 billion and this is ARS 2.6 billion coming from our agribusiness and Argentina urban business center and the rest from Israel. And at the net income we have the loss of ARS 1.5 billion. From the loss we see there is a small loss in Argentina from Argentina business center argibusiness of ARS 300 million, almost ARS 300 million and the rest comes from Israel. And to the Cresud shareholders the growth of ARS 936 million comparing to a loss of last year of half of nine month 2015. And if you go down to the details about the agribusiness, as you already now know, the government entered to - in December directly and changed many measures and improved the sector situation a lot. And the low commodity prices are fixed but now we've recovery on the prices too. So there is now a very much better combination plus a good climate on the region that Carlos will explain later. So that good climate made up to achieve very good results in the majority of Argentinean area and in Paraguay area, not the same in the areas of Brazil and Bolivia. Bolivia was almost even to the budget. We planted in this campaign 174,000 hectares, was lower 17% lower to last year numbers. And this is mainly explained by the big sale we made of a farm in Brazil, the Cremaq farm, and some reduction we have in the leases of Argentina. And this year, in the change of the environment we decided to develop less, so we achieved only 8,700 hectares of developed area for this year. If we make a summary about the urban investments, we have very positive results coming from IRSA rental companies and sale of investment properties, very good numbers and we finished our presentations on IRSA few minutes ago. So you can go to that page, to that presentation. During the quarter, IRSA acquired a minority interest in IDBD, increasing the stake to 68.3%, and delisted the company. So today IDBD is not more listed in the Tel Aviv Stock Exchange. If we go - move to page number three, here the new government measures, the situation why the farmers of the Argentine economy are really now enjoying a very different mood. And this is reduction of 5% in taxes of exports for the soybean and in the case of corn and wheat to zero, and to meat to zero and the valuation on the currency the farmers were receiving ARS 8 or ARS 9. Now they're receiving ARS 14, ARS 15 per dollar. So there really the change on the margins is improving impressively. And so this is going to decrease the transformation cost for the future too. If we move to page number four, we can see the evolution on the planted and we explained the decrease of 17% in the planted area in the region, mainly because of I told about the new measures [ph] and Brazil decreased because of the sale of the farm. And the development, the there is good news, recent good news from last month that we'll receive the new permits to keep the development in Paraguay, hold the fund. So now we have the permit to finish all that projects, it's very good news. So we can keep developing that too. And in the farm sale there is only one new, and that is very recent. There was a farm sale money deposit for a farm of $6 million. That is just we received the 5% payment, but really deal is not completely. But probably we'll have some news on the fiscal year 2016. This could be happen and cannot, [ph] but there was a reserve coming to Cresud in Argentina for a small farm in Argentina of 2,400 hectares. Now I will introduce to Carlos Blousson. Thank you very much.

Thank you Alejandro. Good afternoon everyone. Today I am going to talk about this quarter production focus, livestock, commodity price levels and regional climate conditions. Let's go to slide five, Argentina's total soybean production for current campaign has reached about 56 million tons, 10% below than the last campaign due to the bad weather condition last month making losses in area and units. Regarding corn, production is stagnated at 27 million tons in the current campaign, a number which has been similar for the last three campaigns. Sorghum production in Brazil continued its upward trend to 100 million tons. Corn productions decreased by 5% due to suffering of decreased area and units, reaching 81 million tons. Regarding the 2016 and 2017 campaign in United States, the corn planting area is expected to increase by 4% as well as soybean is expected to decrease by 1%. Both corn and soybean in United States keep on their highest production levels reaching 356 million tons in corn and 103 million tons in soybeans. As consequence of this good production in soybean and corn we can see in this slide how world stocks in these grain increased during the last three campaign. In soybean global stock grew from 21% to 28% and corn global stock increased from 15% to 22%. Let’s move to the slide six, low commodity price but recovering. These [indiscernible] low stock reflect directly on this low price. The graph show how soybean price had decreased 6.4% in the last year and the corn one 6.8% [ph] in the last year. However in the last month the harvest has been delayed due to the heavy rains in Argentina, resulting in decrease of 5 million tons in the soybean production. So price have peaked 16.1% in the soybean and 9.4% in corn. These prices are the highest over the last 18 months, and in this last year the prices in term of reais per Shekels increased by 80% and in Argentina peso per ton by 64% reflecting the impact of devaluation in both country. If you move to the slide seven, we can see how good work condition in the region allowed a positive result during the summer. In this season rainfall is above average but we are having effect of El Niño. As we can see in the map Argentina had good weather condition overall, but excessive rain in the East. That was not a problem for us because there was not a high production in this area. In Brazil there were good weather except for the Northeast which suffered from drought and affected Brasil soybean productions. The regional harvest progress in soybean is 61%, 82% in Brazil, 24% in Argentina and [indiscernible] in Paraguay and Bolivia. And the regional corn one is 8%, 40% in Brazil, only 4% in Argentina, 100% in Bolivia and another 20% in Paraguay. The estimated grain production is 177,000 tons and 229,000 tons of sugarcane. The crop breakdown is 47%, soybean; 28% corn; 12% sugarcane and the rest others. Cattle productions in Argentina reached 6,300 tons. This production has been similar for the last three years. There was also a slight decrease of 71,800 in the number of heads. Milk production reached 12.6 million litres per year with less daily milking cows 1,950 heads and increase in the milking production cow per day to 22.9 litres a day due to increase in productivity. Thank you everyone. Please Matias?

Thank you, Carlos. Good afternoon everybody. So going to page eight, here the description of our investment in IRSA. Remember that we control IRSA with 63.4% stake. IRSA is the leading real estate company for Argentina. The main highlights of IRSA for this period for us like Alejandro mentioned we started to consolidate IDB. So now when you analyze revenues as well in year in Cresud you will have the fact of IDB inside. So we will maintain the breakdown in different business segments to make easier the analysis. So revenues amounted to ARS 19.7 billion. From those ARS 3.2 million came from Argentina business center and the rest from Israel. The EBITDA achieved ARS 4.3 billion. From those ARS 2.5 million came from Argentina business center. IRSA generated gains from sales of investment properties in this period from Ps 1.1 billion. There was some disposals of office buildings at the level of IRSA. And then regarding IRSA commercial properties where IRSA has 94.74% results were very good. Tenant sales keep growing for the period, 36.3%, 30% same-store sale, so occupancy very high, 98.6%. EBITDA growing by 34.7%; EBITDA margin very good levels of 77%. The same in offices; occupancy higher at 94%, stable in prices in dollar terms. Remember that we have devaluation in Argentina for round 60% and prices in dollars remain stable. EBITDA increased 80% in the nine months period. Regarding IDB, IRSA increased to 68.3% stake and did a major event that we financed or we structure our tender for obligation in a better condition for IRSA. So now IRSA fulfill 100% of the obligations in IRSA. We changed the tender offer that was mainly to our acquired shares at 8 shekels per share. We changed for a price of 2.45, 1.25 in cash, 1.20 in bonds and additional contingent payment if we sell Clal, if we get permission to control Clal in the future. After this we delisted the company. So now IDB is a private company. And regarding Hipotecario where IRSA has 30% generated very good results in the previous, 98% more than the previous year. So going to page 10 here we have the breakdown on how we are presenting our financial statements. Remember, that we started to consolidate IDB in IRSA since December was the first quarter IRSA took control of the company in October. So after that started to consolidate. The first stage was to consolidate only in the balance sheet and now we start to consolidate also results and the financial statements. So we are using a lag of three months with Israel so where we are finishing this quarter in March, we are using results of IDB in December and we are using only three months, so that we are presenting results from September to December, that is 3 months. So that we are presenting Argentina nine months and Israel three months. And we will maintain structure to separate the different business centers. So we will have one agriculture segment, that will include farming, farmland development and others. And then we will have under our urban properties and investment that before was IRSA, we open in two business center. One, the business center of Argentina and one the business center of Israel and we will have all the information separate by the difference segments of IRSA and Israel. Going to page 12, it has the breakdown of the operating income segment from IRSA. So the rental segment was strong 44% increased. Sales and development also increasing by 22% and financial and others has increased by 51%. That is mainly - sorry, that is mainly because of the previous year we have managed some money from disposal that we don't have this year. Regarding IDB we don't have comparison with the previous quarter, because we start this year. We have revenues by ARS 16.4 billion, gross margin of ARS 3.5 billion and operating income of ARS 778 million. Going back - I passed the page 11. So going back to the page 11, where we have the breakdown of our operating income of the agribusiness. On the farmland sales the previous year, we have the hectares that we sold in Paraguay. This year we are not yet selling anything. So Alejandro comment of potential transaction that we haven't closed yet. So hopefully next quarter we can present as sold but this comparison includes the disposal in the previous year against nothing this year. Regarding the farming, here we include the four segments grain, sugarcane, cattle and milk. You can see an important improvement in grain. That is mainly due to three different drivers. First, of course the changes in Argentina, the devaluation in Argentina. Also the reduction or the elimination in tax exports that generated holding results for Cresud. So we are improving significantly from a loss in the previous period of ARS 137 million with the gain of ARS 196 million this year. Also included an improvement in the production site in Argentina with better conditions and lower production in Brazil, and in Bolivia; in Brazil mainly to the drought as well in Bolivia and good climate conditions in Argentina. In sugarcane we also have an improvement in our operation from ARS 11 million to ARS 43 million. And in cattle, the same an improvement to ARS 56 million. That is mainly as well holding results with better prices in the cattle. In others, the result were flat from ARS 19 million to ARS 20 million this year. Here the breakdown is different. And here we include our stake, the results from our company here, and the meat packing plant. So we have lower results in the meat packing plant and much better results in the field operation. Going to page 13, here we have the rest of the business line. So you can see on the operating income much better results as we mentioned better results in the farming, better results in Argentina business center and the addition of the Israeli business center. Then we have lower net financial results. So here you can see a big loss in financial results. Most of the results are non-cash. So here we have net FX losses that we are recognizing our dollar denominated debt after the devaluation, that generated important losses; ARS 1.5 million is not cash. So we are not recognizing any gain on our dollar denominated assets. You know that most of our assets are dollar denominated. Then we have the net financial cost of ARS 1.5 billion, that also include Israel. And then the fair value of Clal, that we have a lower result on the devaluation of one of the most important subsidiaries of IDB, that we are recognizing at the price of the shares. So the share decreased in September and we are forced to value these at market pricings. We don't have the control of the shares even though that IDB control by 55%. So considering the equity value or the price that we have been discussing for a potential transaction in Israel this price reflects probably half of the potential of IDB. And then with this we finish with a net loss in the period of ARS 1.5 billion attributable to our controlling shareholders is ARS 936 million and non-controlling interest ARS 562 million. That is mainly because of the net financial results and the decrease in the price of Clal. Going to page 14, regarding our debt. So net debt remain at similar levels than the previous quarter. We used part of the cash to cancel debt. So we prefer to reduce the carry on the interest. So now the debt is a little lower than the previous quarter and the net amortization scale there are not any significant event. So remain stable compared with the previous quarter. So with this we finish the presentation. Now we open to receive your questions.

Thank you very much. We are closing the quarter that is reflecting a much better environment to our country. The measures to the sector are improving, the margins and the liquidity for the market indicate of the improvement in real estate. There are much more players now asking and searching for funds. So this really becoming much profitable and much more interesting for investors local and foreign investors. Argentina with the holdout results we were able to achieve our first bond, corporate bond that we did at the IRSA commercial properties level and this allows the companies of the country to improve the situation, financial situation and to look for the international capital markets. We were very dynamic on the urban rental and that was very positive number and a very good improve on the numbers on very good level of occupancy. Now we are launching lot of projects in the regions. So this is a much better environment for the region. So we thank very much to the investors and we see you next quarter at our annual results. Have a very good and a very good weekend. Thank you very much.

Thank you. This concludes today's presentation. You may now disconnect your lines at this time. Have a great day.