Alejandro Elsztain - CEO Carlos Blousson - CEO International Operations Matias Gaivironsky - CFO

Good afternoon everyone, and welcome to Cresud's Fourth 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 Web site. 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. I'll now turn the call over to Mr. Alejandro Elsztain, Chief Executive Officer. Please go ahead, sir.

Hello, good after everybody. We are beginning for the fiscal year 2016 so as a whole year, now in the third page, in the page number 2, this highlights for the [Indiscernible] that is the whole year. So we are beginning in page number 2 on the first comment, the financial consolidated results, considering that this year we are consolidating IDBD the Israeli company. The revenue for the whole year achieved ARS35.4 billion and we revised [ph] it to make easier to investors and analysts the products comes from Argentina and Argentina includes all the America and the other area, the Israelis area. And so the Argentinean area including the urban is 7.2 billion from the 35 billion of revenues. At operating income 3.7 billion and from those, 3 billion come from Argentina and the rest from abroad. And at the net income level there is a loss for this year of 2.5 billion and loss of 420 million coming from the agribusiness business and Argentina Business Center and to [indiscernible] a loss of 1.4 billion versus a loss of 114 of last year. The agribusiness, divided between the agribusiness and the urban, there were many government measures at this year and we repeated many times the last two quarters, but really the changing the environment for this business for the future. And there is a lot of commodity prices now after the rebound came back because very good yields expectations on the United States, but the Argentina improved a lot because devaluation come into the country. About the weather conditions of Argentina, Bolivia and Paraguay, they were very good the last campaign that we're closing now. There was a drought in our regions in Bahia & Piaui where we make agriculture. The farming operation was very good and the income grew by Ps. 562 million and considering that we reduced the area last year we had more planted area than this year as we closed. But because of the good conditions and good prices in majority of our places we had a much better operational business comparing year-to-year. But this year, we didn't have any farm sales. Finally we did one after the closing of the balance sheet, the 30th June now [ph], but later the first quarter of next year we closed our farm and we're going to explain beginning we are achieving with that. And in development of area as you know we're doing less because of the much more extensive traditions in Argentina because of note devaluation coming to the country. So, we were only developing less than 9,000 acres last year. And about the urban and investment the [indiscernible] -- the urban investment of IRSA, they were very positive, rental segment was very positive and we had our presentation in the conference call and that grew a lot was in line of the inflation comparing year-to-year. And in this year we were able to acquire the 66%-68% of IDBD and that's the reason why now we're consolidating that investment in our balance sheet. If we go through page number 3, we spoke about that, I will go fast. There was a reduction, first two weeks of government and they finally, they went to zero in corn, in wheat, in beef and they decreased 5% in soybeans and they're forecasting to decrease 5% a year. So very good news for the farmers. And devaluation, the farmers were receiving with taxes and [indiscernible] of none. It went to 15 in few days, so 65% of devaluation. This is changing the breakdown of crops in the country and much more corn and weak to the country and this is very good news for the whole country. Because now it’s more sustainable the rotation and the sustainability of the industry long-term for Argentina. And the evaluation efforts because of the developing now it will be achieved [ph] for us to keep developing our land bank in the North of the country. When we talk about the planting area in page number 4. We can see, there was a drop in total service of 16%, the campaigning that we are closing. So we went from 214,000 hectares in the whole region to 179. Now when we see the expectation for next year, we are thinking on a growth of 9% for next campaign in a focus. But we are speaking about growing in rental area and in own area in Cresud in Argentina and in the rest of the regions. In developing, we dropped like I explained before, but we are expecting to go again this is growing like 50% compared to last year in the combination of the countries and this could be much more, maybe we can grow much more than this. In page number 5, every time show what is the price for our main assets, the price of the land in Argentina, in Brazil, Paraguay and Bolivia. There was a small drop in dollars in the region not in Argentina that stayed stable, the prices in dollars, I mean if you see our evolution, we are closing one first year of our registry, without no sales that combination of the counties probably lives in Brazil and Argentina lack of liquidity of last year in the change of covenant. This year after few months of the first year, I will close one [indiscernible] $6 million that we are going to explain now. In next page, page number 6. We can explain one farm sales that was at Ps. 93 million, $6 million, six times in the book value. So no internal rate of return comparing to our average, this is the fund that in general were not very comfortable in operation, it was a neighbor of our existing [indiscernible] that is very profitable every year. But this labor fund didn’t achieve good yields in majority of the years that we had. So we decided a very good year of plantation to sell the same, because we thought, it was a special year for the farm. I will prefer to have the money to reinvest in another area. If we move to next page, we can see that there were lose on land ownership. This in the past, there was some restrictions and the new government came and began to change some of the existing. Not saying that [indiscernible] what it wants, but we can see the main changes of a degree that modifies the percentage to consider the [indiscernible] from 35 to 51 of the shares of the company. Simplifies makes more [indiscernible], the process of cabin [ph] authorization and intimate service represent the plan of equivalents. What that is mean? In the pact, there was low allowed already thousand hectares, but now the new regulations allows more than thousand, because they are making equivalents this within areas and within states. So for example, some states, majority of the states began to declare. It's begun to be clear, for example they said we did, the last one that we explained in DeLaval was made to an Italian. In their province a foreigner could buy 3,000 hectares or more, a little more. So we could surpass perfectly well the sale of our farm to a foreigner. So that will benefit the liquidity for this market for the future because it's more explaining and gives some room and majority of our farms, we are going to be able to be sell to foreigners and the size for maximum is 15%, so there's a lot of room. They don’t allow to a foreigner to buy a very big piece, but this law will give, they don't allow to a foreign to buy a very big piece, but this law will give liquidity to the Argentine market to the farms of Cresud for short term. So we are very glad of this announcement of the government and more clarity for the foreigners coming to buy in Argentina. So now I will introduce Carlos Blousson.

Thank you Alejandro. Good afternoon everybody. Today I'm going to talk about our farming performance this year. Let me start it starting with Slide 7, projection forecasts of the global stocks. As you can see in the graph we plan on the soybean production. Argentina's forecast production in the last campaign has reached about 57 million tons, 7% below than the last campaign due to hard rain in the area, lean [ph] recovered time, especially in the center of the country. Regarding the corn production, it has been stagnant up to 28 million tons remaining stable in the last two campaign, but if you take a look at the next campaign 2016-2017 the volume is expected to increase by 20% because of the new government issues that increase productivity improvement as Alejandro mention it before. Then we move to the sale situation, in farmers' [ph] soybean production it remains stable at around 100 million tons. And contributions have decreased $0.24 due to dried weather conditions in [indiscernible], this results made a significant decrease in the yields. Regarding 2017 and campaign in United States corn planting increased 4% and soybean decreased 1% as was expected. Both corn and soybean have remained at their high production levels reaching 359 million tons and 107 million tons respectively. As a quarter of these good production in soybean and corn we can see in this slide how [indiscernible] have growth during the last three campaigns. That leads me to the world stocks, regarding cold war [ph] stocks, they have increased from 15% to 22% and serving [indiscernible] stocks have grown from 21% to 28%. In Slide 8, [indiscernible] let me draw your attention to the next couple of parts of the slide, you can see good work in [indiscernible] in the central Argentina and drought cleared in the case of the [indiscernible]. So [indiscernible] now. If you take a look at the graph you will see that in the fiscal period prices remained as low and stagnant. Another chance in terms of the soybean in the last quarter April to June, there was a price increase because Argentina had its commission and we keep, we could keep, but it went down again with United States potential showed a good performance that resulted in a 13% decrease. Regarding corn in the last quarter due to the strong demand, there was an increase of the 11%. Finally, if you can see comparison of 2015 and 2016 the presenting good weather condition by Brazil with a decrease of 30% in the [Indiscernible] areas Alejandro mentioned before prices grew in remaining stable and the production cuts. Let's go to the next slide, Slide 9, crop production and yields. From the last period the regulation production went down 18% due to the bad weather condition and pending area decrease. The crop breakdowns gross 47% in soybean, 99% in corn, 11% in sugarcane and the rest in other. The yield evolutions remain stable in corn. Argentina was good, but Brazil got a high drop because of the weather conditions last year [ph], incur with the soybean there was a slightly global decrease despite of [Indiscernible] good performance that [Indiscernible] couldn’t make proceeded balanced due to Brazil drop. Now moving to the next slide, sugar, cattle & milk production. In sugarcane the production increased by 25% because of the goods conditions in Brazil and Bolivia too. The beef cattle productions grew 9% because of the good weather condition in the northwest of Argentina and the total shares remain 7,700 heads. Milk production was reduced by 5% because the way you milk this cow has reduced from 2,200 to 1,800 heads because we reduced the amount of milk cow had that we're getting the most [Indiscernible]. Now move to the slide number 11, Other segments. From the book of company feel the results were extremely good for the 47 points higher because during the fiscal year the grain traded 2.2 million tons increasing 20% in a year due to the stock market shares 3.1% in soybean and 5.5% on corn. During the fiscal year, FyO sold its portal of news to Agrofy Company. The Agrofy Company, as their business drove market with becoming leading business platform in the farming industry Cresud stake the 45% and more than 500 agribusiness suppliers sell their products through this platform. This Company’s year was started in last three months. Finally, our current company meat packing plant had full results from our meat packing plant in the La Pampa. The cattle price, the retail cattle price has gone up, exchange remained stable after the positive impact of depreciation. And the local market could not calculate to price the higher costs. The results go down 30% compared to last year. So here now continues Matias' presentation.

Thank you very much, Carlos. Good afternoon everybody. Going to page 12, here we have explanation of our Argentina business center the investment in IRSA. Remember that we control 63.4% of IRSA. So shopping centers the operation was very good. Occupancy maintaining very high levels 98.4%, sales increasing at the level of 34.3%, that is tenant sales, same-store sales were 29.6%, up compared to the same period for the previous year. In offices, the same occupancy very high, we recovered very high levels, 98.6% and maintained the rent per square meters in good levels, $25.9 per square meter per month. Regarding the sales of investment properties during the year, we sold some assets at the IRSA level, so, we sold an office building in [indiscernible], we sold some floors in Maipu, [indiscernible] and a plot of land in Santa Fe. Going to Page 13, here we have the breakdown of our Israeli Business Center, the investment of IRSA in IDB, remember that IRSA control 68.3% of IDB, so from now IRSA started to consolidate IDB in its financial statements, so Cresud as well start to consolidate. So, we mentioned in the past that IDB is the holding company well diversified in Israel, controller of the largest telecommunication, agrochemical and supermarket company. PBC, that is the real estate and farming company, there they control the second largest insurance company in Israel, Clal. Most of the subsidiaries are listed in the Tel Aviv Stock Exchange. So, it's a big conglomerate of different companies. The main events from the last fiscal year was that we appointed the CEO and the CFO, new CEO and CFO for both companies, remember that IRSA took control of IDB in October last year, so from that day they start to manage the company. In March, this year we renegotiated the tender offers obligation and the commitment that IRSA had towards IDB, so we renegotiate the terms and condition in better term for IRSA, decreasing the entry price. During the year also we received an offer from ChemChina to acquire 40% of ADAMA, from now, we excepted the offer for $230 million, that will be linked to IDB, that they expect to close that deal before the end of October. And also important development that was that IDB and DIC started to raise money in the local market again, the both companies issued bonds in the local market. IDB is still subject to approval, so we have the money pledged and we're waiting for approval to withdraw the money, but the good news is that the both companies start to have access again for financing. So, we've been decreasing leverage in the companies since IRSA invested in IDB, without access into the market and without selling any asset there. Going to Page 15, we'll try to explain our financial statements, and what we lead and we come into last quarter, but to refresh what we did in terms of the consolidation. Now the company has two main segments one the Agri business and the other is the urban properties and investments. In the Agri business with surprising three segments Farming that we use to have more segments that we are paid all-in one in farming before was milk, grain, sugarcane and cattle. Now it’s only one that is farming. Than farmland development there we include all the sales of farm. And the other segment that is basically our investment in field and the mid-parking facility. In urban properties, we also separating two main business center. One, the Argentina business center, that is the shipping center, the office is the sales and development hotel, there is the international and others, and then this for the business center with each segment that is the real estate supermarket at Cellcom telecommunications insurance and other. So we try to maintain separately information from the agriculture part. Again the urban part of fields [ph] and now we separate as well the Israeli investment in a single business center. So going to page 16. Starting explanation of the operational income. You can see a decrease in the result, big decrease in the result of farm level sales from Ps. 552 million to minus Ps. 12 million this year. This is basically this year, we haven’t sold any farm and last year, we sold [indiscernible] that was a big farm that we sold in Brazil and also [indiscernible] in Bolivia. In farming, we see an increase significant increased from minus Ps. 250 million last year to Ps. 312 million this year. You can see most of the lines were positive in grains, we have an important increase of Ps. 457 million from minus 277 to 154 positive that is basically all the measures, the positive measures that impacted the campaign in Argentina better prices, lower tax retentions and better production. Compensated somehow in Brazil with lower results, because of the weather conditions in Brazil very good results in [indiscernible] as well, when you compare with the previous year. In sugarcane also as important increase, the better productions and better prices was the main resource of this increase. And the cattle as well, we have better prices now. So we’ve recognize a hold in grain during this year compared with the previous year. In the other segment that we have here to our stake in field and the meat packing came from again of Ps. 5 million to minus Ps. 8 million. There are mix effects defects here, one positive result from field, better results and compensated with lower results from the meat packing facility. In page 17. Now the part that came from IRSA, the urban segment. So very good results in the rental segment a little lower results in the sales and development due to lower sales during this year compared with the previous year and financial and other lower here is a mix of different components basically a better result from [indiscernible] this year compared with the previous year. And then results from our investment in Condor in United States, the credit card company, the shopping saw mixed results when you compare one year to the other. Regarding the Israeli investment in IDB, the Israel business center you can see here a breakdown of the different segment. PVC, that it's a real estate positive result falls in the operating income and EBITDA, the same in [indiscernible], negative results in operating but when you sum their amortizations, it’s positive 1.4 billion pesos, the other segment negative in both operating and EBITDA and that give us a total of Ps. 720 million and Ps. 2 billion positive on EBITDA. Remember up that here we have only six months of operations of [indiscernible] we started to consolidate in September so we have from September to March. We are consolidated IDB with our three months lag, so we are comparing the 12 month period for all the rest of the segment with a six month period inside on IDB. Going to page 18, we finished the operating income with an evaluation from 2.8 billion pesos to 3.7 billion pesos as we explained better results in dairy business and betters results IRSA and better results as well in IDB. The net financial results is the other very important line and the most important negative impact during the year. This is a loss from 1.3 billion pesos to 6.2 billion pesos so it's a big increase in losses, the main explanation of the losses, we open in the different business line, in their revisions you can see that we have FX losses of Ps. 1 billion from the 1. -- almost Ps. 1.2 billion, Ps. 1 billion came from FX losses remember that in Argentina we have a devaluation during the year from 9 pesos per dollar to 15 pesos per dollar that had a negative impact in all our debt so we have to recognize our dollar denominated debt in pesos, so that it generates a very important loss. Some of that were hedged with different futures as we want in the local market that compensate part of the devaluation but not all, so we have a cash effect on the hedges that we use against non-cash effect on the rest of the debt that we haven't paid yet. In the [indiscernible] business and investment Argentina business center the net financial cost was Ps. 900 million pesos and the FX losses 654 million pesos, but the other important effect so we have part that we placed one that came from Israel so we have part that is an interest that we paid in Israel 100 million but then we have a strong negative result of Ps. 1.9 billion that came from the fair value plant. We have to value plant at market value. The share of plant decreased 33% so we have to -- that negative impact. Remember that this is non-cash effect as well. With this we finish year with a net loss 756 million positive last year to Ps. 2.4 billion negative this year attributable to controlling shareholders Ps. 1.4 billion. In page 19, you have the evaluation of prices of what we have in our financial statement, we have land and we have offices and shopping centers, all real estate assets that are valued in dollar, so we're not recognizing any gain on that on the revelation of the peso. So we should -- if we value this at for value, we should recognize a strong gain instead of strong loss. Going to page 20 and our important event was the [indiscernible] of share something that we have proud of this. We’ve back to the Merval Index in Argentina that the liquidity of our shares in the local markets increased a lot from the last fiscal year to this fiscal year. So now there is much more decrease in the local market, so we enter again the Merval Index with now we have a weight almost 5% with projected weight will be around 8.2 probably in the 4th position of the Merval Index. Page 21 is the breakdown of our debt. The net debt of the Company remained in similar level than the year before $278.9 million of net debt. Amortization of scale remained flexible for this year and the next year and start amortization during 2018. So with this we finished the presentation, so now we open to receive your question.

Just for thanking everybody on very positive outlook for the region mainly for Argentina where the change is game and the result of the business is coming to clearly much better situation. And we're going to keep still what we're doing because of capital going down and that helps a lot. The development of new and the edges of other assets. So we are very optimistic on the business and we thank everybody and let's be in touch. Thank you very much.

Thank you. This conference -- this concludes today's presentation, you may disconnect your lines at this time.