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

Good day, everyone, and welcome to Cresud’s Second 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 instructions 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 would now like to 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 second quarter of 2017 conference call. And if you move to Page number 2, we can see the main highlights for the six months of this year. In the financial consolidated results, revenue for Cresud achieved ARS38.7 billion and we divided 4.7 billion coming from agribusiness and Argentina urban business center and the rest coming from Israel. The operating income ARS2 billion and from those almost a 1 billion coming from agribusiness and Argentina urban center and the rest from Israel. The net income for the six months, this time we've a gain of ARS3.8 billion, and we can compare it to the loss of last year 152 million, coming from agribusiness and Argentina business center. And to the Cresud shareholder, the gain was ARS919 million comparing to a loss of ARS771 million, last six months. If we're dividing the agribusiness, we can see overall good weather conditions in the region and the commodity prices are expected to be assumed, and we're going to talk a little later about planting area we're achieving 194,000 hectares and developing 13,000. We began to buy cattle in Brazil this year, and this is -- we were waiting up to a drop on the prices of the cattle in there. And we began buying almost 5,000 hecs, but now we're going to keep buying in Brazil to full two farms that we have in Bahia region. We sold the farm in Argentina for $6 million in the first quarter of this year. Later, we didn't have any more farm sales, but we're thinking that they're coming in the next quarter. We made an agreement with CRESCA that was signed in October of 2016; Brasilagro and Carlos Casado agreed to sell to third parties or divide. So, that will be divided and we're finishing that division between the two partners and maybe will be sold, but if not, it's going to be value directly. And in the urban properties, we have very good operations in the Argentina business center. The rental EBITDA grew 28.6%, year-to-year, the six months comparing to the last six months year; and there we've very strong results from Israel because of two main reasons, one was Adama sale and the second was the share increase of Clal, and that we're going to explain a little bit later. If we move to Page number 3, we can see the comparison of planted and developed area after two years. We grew in planted area 8% from 179,000 hectares to 194,000 hectares. And later and very recently, we bought a farm in Brazil and a farm that brings, not only owned land, but rented land. So, this is not including that that we're going to include in Brasilagro very soon. But the size of that is 10,000 agriculture area of own land and 15,000 of rented area, but not the whole year because it's coming just now in February, March. So, this is going to be an adjustment of planted area because of this new business that was done in Brasilagro. And in developed area, we did 62% more than last year. Because of the conditions, we were doing majority of the 2017 numbers, at 13.3000 hectares in Brazil. And in Page number 4, we can see something that we related in the past that is developed El Invierno and La Esperanza farm that were sold in the $6 million, ARS89 million; and big majority of profit, ARS71 million of profit at six times book value. If we move to Page number 5, we can see the acquisition that recently we did. We were studying many farms last years, but we didn’t find any package that we like up to this São José farm was very big farm, it is 25,000 hectares of beautiful land in the region of Maranhão, North of Brazil close to Balasa, a important city of the State of Maranhão. And we have the chance of buy10,000 of the 25, and to rent the rest for a long-term rental and partnership because we’ve paid percentage of the crop as we're sharing crop in sugarcane. This is mainly for doing sugarcane and grains. 15,000 from the 25 are going to be for sugarcane and the rest mainly for soybeans and corn. And we both, we see a beautiful piece of land and it's going to -- is developed. We're going to increase yields. We're going to keep doing irrigation, improving the crop field of sugarcane and bringing the other crops to the business. So, we're very happy of this new purchase that we'll find a week ago. And this is showing again growth, where we see the opportunity and just in a situation of distress, to believe the asset and probably selling later in much higher price. I'll introduce now to Mr. Carlos Blousson.

Thank you, Alejandro. Good afternoon everyone. Today, I'm going to talk about our production forecast and the global stocks, weather condition for 2017 campaign and the commodity price. Let me start to the Slide number 6, there about farming production forecast and global. As you can see in the bar graph regarding soybean production, Argentina's forecast in the last campaign has reached about 55 million tons, going down in comparison with last campaign, due to two reasons, less planting area and two high rain season in the south of Santa Fe province. However, the soybean production in Argentina next month will define real. Same thing about corn, it has increased up to 37 million tons, 27% more than the previous campaign because the planting area Argentina has increased by 20% and the weather condition has been positive. Lot more that the farmers have met the government measures. Let me draw your attention to [indiscernible] situation. In terms of soybean productions, it's increased 7% as expected as a good weather conditions, because the area keeps stable, plus the [Indiscernible] has been faster. On the corn, the Brazilian corn production has increased 25%, coming back to the normal productions after weather condition are positive especially in the soybean production. Talking about United States, the last campaign United States is still directed to corn of 9% more with soybean production because of the nice weather condition; and in term of corn, it's also aiming with another 9% because of regular conditions and more planting area heating record of 385 million tons. Both corn and soybean have increased in their hay production level reaching 385 million tons and 117 million tons respectively. As the fertilizer of [Indiscernible] good production in soybean and corn in United States, we can see all slide how the stocks United States are growing during the last three campaigns. If we move to the next Slide number 7, about the weather conditions and commodity prices. As you can see in the left upward part of the slide, you will see good weather condition in general. Moving from green area that broke hard rain in the Northeast of Argentina and in Brazil we expect low trend situation now. The planting is currently on track. So, let's go to the commodity prices now. If you take a look at the graph, you will see the price have increased slowly close to 5% in the last three months. On other hand [Indiscernible] three year in terms of soybean, the prices have increased 18.7% because of the trade demand especially in China. Regarding corn also the demand and supply, as I said preview and they still grew the prices went down to 2.1%. Thank you very much. Now, Matias will continue with the presentation.

Thank you, Carlos. Going to Page 8, we have the description of our investment in IRSA. This quarter, we have good results on the rental segments. You can see in occupancy levels remain very high at 98.4% in shopping mall. Tenant sales grew 18.6% during the last quarter compared with the same quarter on the previous year, it was on the slowdown in consumption in the recent quarters, and we hope that this trend will change in the coming quarters. In offices, the occupancy we rate 100% occupancy in the portfolio and great table during the last quarter. In next page, we have the description of our investment in IDB in Israel. The Israel is a business center. Here you can see the structure of the main subsidiary. So IRSA controls Dolphin with 99.99%. Then Dolphin controls 68.3% of IDB. And then if IFISA controls 31.7% of IDB. If IRSA is a company where that controlled by our [Indiscernible]. And then IRSA has directly 8.8% stake in DIC that is one of the main subsidiaries of IDB. So, in terms of our financial statement, DIC is fully consolidated in IRSA and in Cresud. Clal insurance is valued at market value, so we recognize without according to the valuation of the shares in the Israel Stock Exchange. And then, the other subsidiaries IDB Tourism that we IDB controlled 100%, that there is negotiation to dispose that asset, and in this quarter IDB recognizes that an impairment in IRSA also ARS230 million loss of impairment during the last six months. So, the main highlight for our investment in Israel was the disposal of Adama. So, DIC sold the stake in Adama, a 40% stake in Adama for $230 million in cash in excess of total debt on that asset. So, that generated a gain of ARS4.2 billion in Cresud. That is one of the main effects in our financial statement in this semester. The other important effect was valuation of Clal shares that increases 22% in the last semester, and that generated a gain of ARS1.1 billion. Also important to comment that IDB started to issue debt directly in the Israeli market, so the IDB raised two series of notes are now is in the market trying to issue a new series to finance the next amortization of debt in IDB. Going to Page 11, you can see here the main that the breakdown of our operating income by segment. The farmland sales last semester, in the last year, we haven't sold anything. So, we passed from minus ARS5 million to ARS66 million positive. This year, that is basically the farm that we sold for ARS6 million. Then in the farming segment, we passed from a gain of ARS133 million to a loss of ARS224 million, it's the most relevant quarters for the campaign will came in the next two quarters. And basically in this semester, we're affected by changes in prices, so that they're holding resource of grains were lower than in the previous year and in the same in the cattle segment. The other segment remained at not zero in both semesters. There is positive result that came from our stake in field. The Company that records firm in Argentina and compensated by our mid-parking facility that generated losses, so offset the gains of field. The next page, Page 12, we have the breakdown of our urban segment. So the rental segment generated good results 27% almost 28% increased, compared with the previous year. And sales and development lower from 929 to minus 51. This is basically because last year we sold much more investment properties than this fiscal year. We sold like seven floors of an office building and another office building in Argentina, so generated important without last year compared with only disposal of two floors of an office building this year. And in financial and others also decreasing in results from the ARS89 million to minus ARS55 million, mainly we've the results coming from Banco Hipotecario in IRSA in this line. And the urban properties, the Israeli business center story that generate positive results in all the lines in real estate, in supermarket and in telecommunication. And a loss in the other segment, that basically here we've all the SG&A costs of the holding companies of the Israel in that business. On Page 13, so we have the rest of the lines of our financial statements. So, the operating income was almost flat compared with the previous year. Here, we've the facts on the agriculture side, and the Argentina business center, again the gain on the Israeli business center, that offset the decrease in the Argentinean business center. The net financial results also remain similar [Indiscernible] million in the last year, against ARS2,900 million to ARS2,872 million this year; here the main reasons was last year we have an important devaluation of the pesos that devaluated the currency 44% against the devaluation this year of only 6%. So, the last year we generated important losses in FX losses or both in the Cresud and in the urban segment. And in this year, we've the effect of Clal in the Israel business center that last year we recognized a loss of ARS800 million, and in this year we're recognizing a gain of ARS1.3 billion. Those are the main effects on the financial result. Also, it's important to comment a gain Adama that here it's not included, but generated a gain of ARS4.2 billion. So, with this we finish a very good semester coming from a loss from ARS1.3 billion to a gain of ARS3,820 million attributable to our shareholders ARS2.9 billion. On Page 14, we've the breakdown of our debt. There was not any significant development here that remained stable at net debt at around $308 million with that debt amortization is scheduled divided in the next three-four years. So, with this we finish with the presentation. Now, we open to receive your questions.

It appears that we have no questions in the question queue. So this time I would like to turn the conference back over to Mr. Alejandro Elsztain for any closing remarks.

I will give one word more to Matias that wants to make an explanation.

Yes, sorry, I did a mistake on Page 13 I said that attributable to the controlling shareholders worth 2.9, that was the part of the non-controlling interest. So the controlling shareholders gain was ARS919 million. Making that correction just to finish in the quarter, the quarter brings not a very positive early quarter result, the first semester was not very good because part of that was not a making gain. But we're expecting a very good campaign on the region in the four countries, the conditions crops and crops are very good. And we're optimistic on selling more assets, there is interesting our funds plus the Argentina rental segment that is breaking very well plus the Israeli investment that is bringing core financing. So, we expect to keep this pace for the next quarter. Thank you very much and have a very good day. Bye.

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