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

Good afternoon, everyone, and welcome to Cresud’s First Quarter 2017 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. I'll now 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 of first quarter of 2017 on page number two. If we talk about financial consolidated results, we see that that revenues of Cresud after consolidating the Israel and Argentina, we are achieving almost ARS20 billion of revenue from those 2 billion coming from agribusiness and Argentina urban business center and the rest from Israel business center. The breaking income in this quarter is ARS1.1 million and from this almost half 0.4 billion coming from Argentina and urban and agriculture business center and the rest from Israel. And in the net income, there is a loss accumulated up to now of almost ARS900 million from that the loss from Argentina is ARS55 million and the rest come from the Israel business center. And to the Cresud shareholder, the loss instead of the ARS873 million is ARS485 million, comparing to the loss of last year of ARS289 million. When we talk about the agribusiness segment in Argentina and in the region, we have good weather condition in the whole region and the prices are still sustained having very good campaigns in South America and in the States too, but still prices are better than in the worst moments of last year. We are growing and we're going to show you growth for next campaign in planting area. We are growing 9% comparing to a year years and we are growing again in developing hectares in the region for 2017. After many years, we are waiting and we decided to begin our capital activity in Brazil, and we began to buy surpass 5,000 hecs in Brazil. So, today we are now capital ratios in Argentina mainly, but in Brazil and in Paraguay too. We have sold a farm in Argentina for the foreigner for $6 million in the first quarter of 2017, probably one of the first farms sold to a foreigner an Italian economy. The work and agreement of CRESCA that is our partnership with Casado, and Brasilagro and Casado that had a farm together 14,000 hectares agreed to sell to third-party for 120 days. The mandate will be for that time after that is ready to sell, will be sold; if not, we're going to divide in equal part; and we are going to run each of us the part that we decide that we divided between parties, the parties two. So, this is going to be all sell or a division and in each of us going is to develop the land at each space. And as the yields on property and investments, this was a good quarter. We had a good operating result from Argentina business centers, the EBITDA was good. We had a growth of 24% comparing in the three years. The sale of investment properties in this case was zero compared to last year that was more active. So, this is not a very good result in that in the sales of investment property, but in the operational and in the rental was very good too. The net income was affected mainly by higher financial costs and mainly because IDBD consolidation, that came last year. During this quarter, we acquired from IDBD 8.8% of DIC share for almost $26.7 million. So, today is the control part of the state directly and IRSA indirectly. If we move to Page number 3, we can see planted and developed area and compare return of growth of this year, we are growing mainly growth come from Argentina, the rest are almost even, but Argentina growth from 106,000 hectares to 134,000 hectares, so 9% growth year-to-year. And in development, a big growth 62% would go into 13,000 hectares per year, coming from years that in the past we were doing more than 20,000 hectares a year. But now recovering and probably, if there is a separation of the CRESCA, we're going to begin again because there we have all the permits to do development, so maybe we're going to grow a little more in Paraguay next year, if the separation is split of funds count. So, now I will introduce to Mr. Carlos Blousson.

Thank you, Alejandro. Good afternoon everybody. Today, I'm going to talk about our production forecast and the growth of crops for the condition for 2017 campaign, commodity price and farmer, sugarcane milk and cattle production. But let me begin with a farmland sale in the Slide number 4. If you go to the page number 4, during the first quarter in 2017, we sold two farms El Invierno and La Esperanza in Argentina for $6 million. These represent six times the book value on internal rate of return U.S. dollars of 4%. It is not a high return, but it was a farm with four operating results and no opposition potential, that the reason why we decide to sell them. This will show that the market in Argentina is a little bit more liquid compared to recent years. If we move to the next Page number 5, farming production forecast and global stock. As you can see in the bar graph regarding farming production, Argentina forecast in the last campaign has reached about 57 billion tons, remaining stable as the last campaign, but the only difference is that in the last campaign also there is similar same percent more of the dilution came from wheat. Talking about the corn production, it has increased up to 37 million tons from the similar percent more than the previous campaign because of the new government make sure that in clear the 22% in export tax reduction, as we mentioned in the last call. Let me draw your attention to the Brazil situation. In terms of soybean production, it increased 5% as expected as there good weather conditions because they're active sustainable. And the corn production has increased 25% coming back to the normal prediction after the weather condition, they are positive. Bear in mind that in the last campaign, there were some problem [Indiscernible] and the production reduced a lot. Regarding 2016 and 2017 campaign in United States, the corn planting increased 11%. That is why the production increased 10%, hitting a record of 382 million tons. And the soybean increased 9%, reaching a record yield. Both corn and soybean have remained stable as their highest production level, reaching 382 million tons and 117 million respectively. As a quarter of this good production in the soybean and corn, we can see on this slide how U.S. stocks have grown during the last three campaigns. That leads me to the world stocks. Regarding whole world stock, they have increased from 20% to 23% and soybean lowest cost has remained stable at 25% expecting South American prediction next season. If we move to the next Page number 6, the weather condition and commodity prices. As you can see in the left upper part of the slide, you will see good weather condition in general moving from the menu that world had while in the central Argentina are drought period with northeast in [Indiscernible] in Brasil last campaign. But we expect a more neutral situation now. We have started planting corn and soybean under good solid conditions. So, let’s go to the commodity prices now. As you take a look at the graph, you will see that prices have remained as low and stranded in the same in the last three months. On the other hand, income of soybean and corn in the last quarter April to June there was a constant decrease in prices because of what I mentioned about the U.S. harvest. Year-over-year, the soybean price increased 16.7% because of the demand grew too. Production corn year-to-year and despite the strong demand, good prices increase 4.3% because that represents an increase. Let’s move it to the next Page number seven, farming sugarcane, cattle and milk production. Crop productions reach 225,000 tons on September in 2016. This increase is mainly seen in Argentina because during this present campaign most of the crop hectares were harvested during the first quarter of fiscal year 2017, while last year part of this crop was harvested before. Regarding the sugarcane, production is decreased to 442,000 tons. The reason for this decrease compare in quarter is due to the field reduction in the number of planted hectares by hyper sales accounting reducing yields of 15%. In terms of milk production, it was top to 109, 000 tons. This cattle production grew 26% in comparison with the previous year because of the milk production in Argentina and Brasil as started its activity and deep 5,000 cattle head, the ratio then reaching 75,000 head. Milk production was reduced by 9% to 4.1 million liter because of the two reasons. The daily milking count heads were reduced to 108,000 head and milk production days count reduced to 24.1 liter per day. Thank you very much. Matias, please review you presentation.

Thank you, Carlos. Going to Page 8, here we have the breakdown of our investment in near-term the Argentina business center of IRSA at Cresud control with 63.4%. So, you can see here the evolution of tenant sale that increased in the last quarter compared with the same quarter of the previous year 21% that is below inflation. So, we see in Argentina it's low down in consumption in the recent month. Regarding occupancy, very good levels we maintained our portfolio a 98.4%. The same in offices, excellent figures with we're reaching occupancy of 100%, maintaining the rent and exceeded our levels in the previous year. Page number 9, regarding our Israel business center, remember that IRSA controls through Dolphin 68.3% of IDBD. So, the latest developments were that subsidiary of IDBD, DIC accepted an offer from ChemChina to sell 40% stake in Adama for $230 million in excess of the total debt of IDBD had against Adama position. So, we expect to close the transaction in the coming days that will represent the net positive cash flow to DIC of around NIS800 million. Regarding Clal, remember that we consolidate IDBD and we are recognizing results over the evolution of the share of Clal at market value. So, prices of the shares increased by 4% during the quarter. So, we recognize it again of ARS181 million for that. Regarding the debt of IDBD, remember that we issued a bond last quarter for NIS325 million with area to pledge shares of Clal as a collateral. We went through the court for approval and unfortunately we were rejected on pulling shares of Clal as collateral. So, we had to cancel the debt issuance. So, we already cancelled from NIS325 million to NIS244 million. And the balance the 26% of the issuance is still under approval to pledge the Clal share. The rest of subsidiary from the financial side was very strong. The market is very liquid. Most of the companies, all of the company stopped the local market capital at a very low interest rate fixed and long-term debt. So, the market is still very liquid there. And the companies on the operational side having good results that and I will show you later. Finally, since IDBD had to cancel the issuance of the bond and had some amortization to a whole before the year-end. So, IDBS decided to sell shares of DIC in the market. And finally IRSA decided to acquire those shares for $26.7 million. So, now IDBD control 67.6% of DIC and IRSA had directly 8.8% of this year. Going to page 11, we can see the explanation of our financial statement. So starting with operating income, in the agribusiness segment so we have farmland sales for ARS68 million against negative of ARS2 million over the last year basically the farm that we sold this year against no disposals during the previous quarter. On the farming, we can see a decrease from ARS26 million negative to ARS135 million pesos negative. Remember that in this quarter, we are basically reflecting the result on our stock. And Carlos described it, the increasing prices on commodities mainly in corn and soybean. So, we have to recognize the fair value of our stock in September and that generate increase from the ARS26 million to ARS135 million pesos in this quarter. So basically, those are the most important effect in the farming. And others we see here important increase from minus 8 to 49 positive. During this quarter, that is basically the result from our subsidiary [Indiscernible] field that generated very good results over the activity and compensated some from negative results on the planting plant. Page 12, regarding our urban segment, rental segment increased by 30%. Good result of basically the increase in offices because of the devaluation and good results in shopping centers. Sales and development are increased from 344 last year against minus 51. Basically, this year we haven't sold an investment property yet. The last year, we sold office space and some plot of land that we recognized as positive results in the last year. Financials and others remain stable at minus 35 against minus 27 this year here we have the results from Banco Hipotecario that decreased in this quarter against the previous quarter. So positive result, but lower result this quarter against the previous one. And some results that came from our investment in United States in the Lipstick Building. In the urban properties and investment, in the Israeli business center, we have positive results and the operating income in all in real estate, supermarkets, and telecommunications. The same in EBITDA, remember, that here we are consolidating IDBD with a three month lag. So, we are using June figure to consolidate our September figures. So that lag we will maintain going forward as well. On Page 13, so finally I already opened the inflation on the operating income, so we conclude this quarter with a increase from ARS680 million to ARS1,133 million from those 449 came from Argentina and the rest from Israel. And the main drop is because of the lack of sales of investment properties, and what I described regarding the commodity stock, our grain stock. And then, the other very important effect to understand our financial statement is the net financial result that you can see here drop in result from a negative of AR447 million last year to ARS1,565 million this year. The ARS1,055 million came from Israel and the rest from Argentina and the main effects are higher financial cost basically interest payment because of the devaluation in Argentina. Last year, we had total interest at an exchange rate of 9. This quarter, we are acquiring interest at the success rate of 15. And then, part that came from devaluation of pesos. We don’t have an important evaluation this quarter is only 37 from 16 to 15.30, basically the same effect that we have in the previous year. And then, Israel is mainly the interest payments of all the debt of the holdings Israel, compensated by again of AR181 million that came from the appreciation of shares of Clal. Remember, in the last quarter, we recognized an important loss that was in the previous fiscal year. And in this quarter, we recognized the 4% increase in the shares of Clal. So, with this, we finish with the net loss of ARS833 million attributable to our controlling shareholders ARS485 million, again ARS356 million in the last year. On page 14, we have the debt amortization schedule of Cresud. They are not important as compared with the previous quarter. The net debt remains at a similar level $269.7 million with the debt amortization scale that is much in the coming years delighted in each of the fiscal year. Then with this, we finished the presentation. So, now we open to receive your questions.

Just to close the conference, the first quarter that is not so active in general in the agriculture arena. We have good conditions from the soil for plantation, and we expect to have more liquidity on the real estate market because the impact happened to Argentina. So, let’s see next quarter at the end of the year. Thank you very much. And have a very good day. Thanks.

Thank you. This concludes today’s presentation. You may disconnect your line at this time. Have a nice day.