Good morning everyone, and welcome to IRSA's First Quarter 2019 Results Conference Call. Today's live Web site, both audio and slide show maybe accessed through the company's Investor Relations Web site at www.irsa.com.ar by clicking on the banner Webcast Link.

The following presentation and the earnings release issued yesterday 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 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. At this time, I'd like to turn the conference call over to Mr. Alejandro Elsztain, Second Vice President. Please go ahead, sir..

Thank you very much. Good morning, everybody. We are beginning our first quarter 2019 results. And we see in page number three, the consolidated financial statement. The net income attributable to IRSA reached ARS9.4 billion comparing to ARS500 million last year.

When we see the adjusted EBITDA, we reached ARS3 billion that is 31% higher than last year numbers. Remember that we divide between the Argentine and the Israel business. And if you see the Argentine Business Center we had a gain of ARS7.6 billion, and this is mainly explained by higher rental results.

And from other side, higher results from the fair evaluation of our investment properties. That was offset by part of -- because of the financial losses related to devaluation that came to Argentina last quarter.

Related to Israel Business Center, there was a gain of ARS3.5 billion, and this is mainly explained by the increase in the share of the [indiscernible] share that increased a lot in this quarter.

Related to dividends, we recently announced dividends at IRSA, and we paid ARS1.4 billion in kind, we paid with IRSA Commercial Properties share we gave to shareholders -- we're going to give this week, in the 12th of November, 5% of IRSA Commercial Properties share to the shareholders in the intention that we have go give liquidity to the share of IRSA Commercial Properties.

In related to the rental segment, and Danny is going to explain later this more in detail. We grew 31% year-to-year, and occupancy stays high in the two businesses. And in the hotels there is a recovery in the occupation too. Related to Israel Business Center, we sold an additional 5% of our shares through, again, a swap transaction, like in the past.

Today, the state that we are running reduced to 29.8%. And during this quarter Clal's shares increased 34% in price. If we move to the next page, number three, we see the main events that Daniel Elsztain is going to explain now..

Thank you, Alejandro. Good morning, everyone. Here we can see the main events of the first year of -- this fiscal year, starting with the rental operation figures. The shopping mall sales grew by 24.1% in this Q, and occupancy remain at very high levels, at the number of 98.7%.

The average rent for the office portfolio remains stable at $25.7 per square meter per month. And the office portfolio occupancy reached 93.4%. This is lower than the first year of 2018, where we had 96% occupancy. And this is mainly explained by the incorporation in our portfolio of the Phillips building that came with an occupation of 69%.

But never the less, it was higher than the previous quarter -- of the last quarter of 2018 because we did some listing mainly on the Boston Tower, we occupy one floor.

The CapEx on this Q was the acquisition of Maltería Hudson, with a construction capacity of 177,000 square meters in Hudson; it's in the province of Buenos Aires, an intersection of very important highways. The acquisition cost was $7 million to develop a mixed use project, and this acquisition was done in July, 2018.

Also, we acquired 14,000 square meters of Catalinas building under development from our controller IRSA for a total amount of $60.3 million. This was recently done. This happened in November, 2018, few days ago. Also, during this quarter we started the construction of the expansion of Alta Palermo Shopping, our flagship shopping center.

This is total construction of 39,000 square meters that are supposed to be finished by fiscal year 2020. Also, we have plans to develop 15,000 square meters of expansion more during this fiscal year. Maybe not all of them will be completely finalized for this fiscal year, but we are going to be under construction of this amount of square meters.

When we go to the bottom of the page, we see adjusted EBITDA by segment. We see on the Shopping segment, we only grew 10.3%. This is mainly explained because our revenues did not reach inflation, but our costs yet were following inflation, and this explains the shrink of this EBITDA in the Shopping segment.

And in the Office segment we can see the opposite effect, that our rents are in dollars, we collected in revenue the total amount of the devaluation and our costs were only going up following inflation. When we see the net income we see a tremendous growth.

The net income grew 303%, this is reaching a total net income of approximately ARS7.8 billion, and attributable to the controlling company it's about ARS7.08 billion, this is an increase of 277%.

This is mainly explained by higher operating results and higher results from change in fair value of our properties that more than compensated the financial losses on the devaluation. Also we, on October, our shareholders' meeting approved a cash dividend for the total amount of ARS545 million.

This is a dividend yield of 1.9%, and the payment date is November 9, which is actually today, but the money will be disposable as of tomorrow -- today, sorry. Today is the 9th. On page number four, here is a good news on the company. We have this land for 20 years. This is in the neighborhood of Kawashito [ph].

We have been dealing with the city asking for permits for a long, long time. But finally, we got the permits to do a mixed use project in this plot of land. The idea is to do a 76,000 square meters of residential development with a ground floor dedicated to retail, having approximately number of 11,000 square meter of retail.

The company is looking the right developer to do along the start on the residential component, and to keep the retail component that we think has a very good opportunity, because there is nothing on this neighborhood and it's a very -- and an excellent location for retail in the city of Buenos Aires.

It's definitely the center of the city of Buenos Aires. So we are very happy with this news, and we are going to be working so we have good results on this plot of land. Also, on page number five, we can see a recent sale of Catalinas to the subsidiary IRSA Commercial Properties that we mentioned earlier. It is a 14,000 square meters at this building.

The total price was $60 million; the price per square meter is approximately $4,200 per square meter. And this includes 12 floors and 131 parking spaces. Ownership was split in three previous to this transaction. It was IRSA had a part, IRSA Commercial Properties and Globan [ph] that is the third-party that bought from IRSA more than a year ago.

And now the current ownership is 87% belongs to IRSA Commercial Properties, so there's no other rental properties now that belong to IRSA. And Globan owns four floors, it's 13% of this construction, because construction is going really on time, and is now growing about four floors per month in terms of construction.

The estimated opening is for fiscal 2020. And this transaction was made and approved by both independent boards in both of the board of directors of the two companies. On page number six, we can see the business in Hotel. The occupancy remains very stable; we had good numbers, 64.5%. The average rate remains also stable, about $189 dollars per room.

But what we see here is the big impact that had the valuation of this business. We can see on the bottom top right chart, that revenues grew 64.5 this is we are collecting dollars. The city of Buenos Aires is attracting people. We had the game for, like the Olympics for youth, we had the B20, now we have the G20.

And as of Buenos Aires also starting to become cheaper to our neighbor cities we're starting to see more tourists. And as we collect in dollars and our costs are growing as inflation, we see here a tremendous impact. We see an EBITDA that in the first quarter of 2018 was only ARS2 million, now EBITDA is ARS88 million.

So this is one of the business that is really benefiting from devaluation. If we move to page number seven we can see about the corporate structure of the investment in Israel. And the main two issues to remain to talk about is, one, it was the sale of Shufersal, that in the past we had more than 50% of the shares.

And today, after the sale we did recently, we have only 33.5%, and we are no more consolidating Shufersal in our balance sheet. So that was almost recent.

The thing that we are working now related to the IRSA is we need to reduce one more level of public company before December of 2019, it is the concentration law requirement, and we are waiting for that because of DIC [indiscernible] we need to reduce one more of those, and we working for that in this year.

And if you look the next page, and to show some of the examples of what we are doing in the real estate, [indiscernible] that is the pure rental company that runs property is mainly office buildings and logistic in Israel. These are some samples of the buildings that we are doing now.

One big building, the one of top-right, the TOHA [ph] building is almost 95% leased, is going to open now at the end of this year or beginning of next year, 2019. And is almost leased, and 95% is leased, so it's almost finished. And it's 57,000 square meters of rental properties that Gav-Yam owns half.

The other examples are Rehovot, we are doing a fourth building in Rehovot, 70% is leased. MATAM-YAM in Haifa that is finished and Amazon is 100% tenant of this building, taking 100% of that building, now is opened -- this is going to be open very soon. In Banega, we are making the fourth building.

We are doing logistic, and we beginning a big project in the north, this is in Haifa Bay, and we are launching a 7,000 square meters logistics center that you see in the right picture. So this company is doing today eight projects, almost 200,000 square meters of construction at the same time, all in Israel.

So this is kind of example of doing more rental and achieving almost a million on Gav-Yam level square meters of rental properties in Israel. If you move to page number nine, we can see main issue of the balance sheet by migration of the share.

This was a rebound of the last quarter, and still has a discount on related to the -- and 74% of book value, but recovery that affected a lot our balance sheet. We sold this last quarter, another 5% of Clal shares through another swap transaction. Today we state that we are running 29.8%.

And we recognized a big gain in this quarter because of these increase on the share price, of 34% of the share. Recently there was a new commission [indiscernible] that is probably is going to bring good news, and news to this company. So I see that takes the make issues of the Israel for the quarter. Now, I will turn it to Matías Gaivironsky..

Thank you, Alejandro. Good morning everybody. So going to page 10, here we have our stake in Banco Hipotecario. Remember that we control 30% of Banco Hipotecario. And we can see the evolution of the price of the shares and the value over two years that decreased because of the volatility in Argentina.

Now, it seems that it touched -- in the 30th of September on the $136 million, and now it's recovered a little, to $146 million. And when we see the results that we are receiving from Banco Hipotecario, here there is a new rule, IFRS 9, that is basically the way that we should have provisions in our financial statement.

It's not the same that Banco Hipotecario is using. Banco Hipotecario is on the other rule that the central bank impose them. So IRSA has to do an adjustment on their figures to comply with IFRS 9. So for that reason, when we see the evolution of the results we see a decrease from -- from ARS371 million to ARS160 million of result coming from the bank.

If we move to page 12, we can see our financial statement divided by the Argentina Business Center and the Israel Business Center. So start with Argentina, we can see that the net income for the first quarter was ARS7.6 billion against ARS2.288 billion in the same quarter of the last year.

The main explanation here is the change in the fair value that, this quarter ARS16 billion, against ARS2.483 million of the last year. Again in terms of revenue, our revenues increased by 30%, and then we will see a breakdown in the different segments. The following important line to mention is the SG&A, our cost increased by 67%, from 267 to 447.

But when we combine the two lines between cost and SG&A, we see an increase of 34% that is in line with inflation. During the quarter, we decided to reclassify some of the concepts that used to be included in the cost line to the SG&A line.

So for that reason we see an increase of 67% on that line, and also some other affects that also affect higher than the inflation. Following that, we will have a breakdown on the net financial results, so I will explain later.

In the Israeli business segment, we see a gain during the year or during the quarter, of ARS3.485 billion against a loss of ARS2.2 million in the last year. Basically, here we have the increase in the shares of Clal, and also due to the negative result on the financial side, the swap that we did last year on VIC bond.

So finally, well, we finished the quarter with a net income of ARS11 billion against ARS74 million of the last year attributable to IRSA shareholders is ARS9.4 million against again last year of ARS553 million. So if we move to page 13, here we have a breakdown in our net financial results.

So here we can see, on the bottom-left, the evolution of the exchange rate. Last year, the devaluation in Argentina was 4% against a devaluation of 43% during this quarter, from 28.8 to 41.25. Remember that today, the exchange rate modest line of 35.5. So it is decreasing after the quarter.

So that affect in -- that devaluation generated net foreign exchange losses on all our dollar-related debt. So you can see that during the quarter we increased the loss from ARS412 million last year to ARS9.5 million this year. And also generate more interest payment because we are paying more pesos because of our dollar-denominated debt.

And also we increased during the year the debt of IRCP, so we increased by $175 million the rate of the gross debt of IRCP and also some at the IRSA level. And in the Israeli business segment we can see net interest expense is at ARS4.5 billion to ARS1.1 billion.

2.1..

Sorry, ARS 2.1 billion. That is in peso term. If you see that in shekels, it's -- we are reducing the interest statement.

And regarding Clal, the bottom price which is still evolution on the Clal shares that start year was flat, 1% increase -- sorry, 4% increase during the quarter that is reflected in the line of fair value gain from financial assets and liability that this quarter generated a gain of ARS4.6 billion against ARS70 million last year.

If we move to Page 14, on the operational side, in the Argentina business segment, we can see that the shopping mall -- the visa increased by 11%. The explanation here is that our revenues increased to the lower level than inflation and our cost remained -- follow inflation level. And the offices increased by 90%.

Here we have dollar denominated revenue, so the evaluation generate good returns in peso term. The cost remained -- we allocated a little more [indiscernible] but it grew like 90%. And in the hotels as Danny mentioned, we see a significant increase from ARS2 million only last year to ARS88 million this quarter.

In the Israeli business segment, here it is important to mention that the evaluation between the shekels and the peso during the year was 50% -- we take into consideration that evaluation, so about 50% is the real growth -- real degrees against this in shekels term.

While real estate grew at 70% and telecommunication and negative result or negative comparison of 3% lower than the previous year, another segment increasing from ARS196 million. Finally, going to Page 15, we have here the breakdown of our net debt as of December 30. It was $337 million.

This is before the operation of Catalinas [indiscernible] commercial property. So, it is receiving cash these days reducing some net debt. So, the amortization schedule, we have the amortization next year, $205 million that we will be working in the coming month to refinancing. So with this, we finished the presentation.

Now, we open the line to answer your questions..

Ladies and gentleman at this time, I am showing no questions. I would like to turn the conference call back over to Mr. Alejandro Elsztain for any closing remarks..

Just to finalize, I think IRSA is doing a very diversify activity, developing some assets like the office buildings that now we are doing, keep developing shopping centers. And in these times of changes, Argentina, the office building is showing more strength because of the dollar denominated contracts.

And the diversification helps not only in activity and performance, but in countries too where we are seeing a lot of development today in Israel. So we are seeing the portfolio is working well. And the company keeps growth in all of the lines of activities. So, we expect this growth to keep going in Israel and Argentina.

And we are optimistic that these times of changes that Argentina is -- they are beginning to come. We are seeing more financial comps these days. And the evaluation went up to 4.41 or something like that. Today it touched 35-36 level.

So this is [indiscernible] the capital market, and we expect the company to open the market to keep growing using the old proceeds, or the capital market proceeds. So, we thank you very much and have a very good day. Bye..

Ladies and gentlemen, thank you. That concludes today's presentation. You may disconnect your lines at this time..