Good morning, everyone, and welcome to IRSA’s Fourth Quarter 2019 Results Conference Call. Today's live webcast, both audio and slide show, may be accessed through the company's Investor Relations website 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 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 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 turn the call over to Mr. Alejandro Elsztain, II-Vice President. Please go ahead, sir..

Thank you very much. Good morning everybody. We are beginning our Annual Report. This is finishing our fiscal year 2019 of 30 of June. We can begin in Page number 2, seeing that we are achieving a very big loss. When we see the company was affected by some mainly fair value, but we talk about the adjusted EBITDA.

The adjusted EBITDA of the businesses that we are running was a very positive number.

We achieved ARS 19.7 billion, and this is 13% comparing to last year numbers, the EBITDA.And when we divided the two segments, the Argentinian and the Israeli, we see that the Argentina Business Center is ARS 5.6 billion, that is a drop of 2.4% comparing to last year numbers.

Remember that this year we’re adjusting by inflation more than 50% inflation. And in the case of Israel, we achieved ARS 14 billion, that is 18.6% comparing to last year numbers, not to 2019, to 2018 numbers. When we see related to Argentina, we see an increase of 6.8%, and this is the EBITDA growth.

And there are two segments that they were very benefit and Daniel will explain later that office business and the hotels.

The two are driven by dollars and because of the evaluation and dilution in cost, we had much more benefit on the year comparing to last year numbers not in the shopping center that we added in real decrease on the sales.And as we speak about the Israel numbers and we remember that we have a delay of three months in the result of Israel, we see an increase of 39% and that was mainly driven because of the revenue recognition according to IFRS in the residential business.

This up to here the segment is not showing an increase but the rental is increasing too in the next segment. So Israel business, rental business is working very well on the year.

If we see related to the net income of the company, it is a net loss of ARS 26.8 billion comparing to a gain of last year of ARS 23 billion.The main explanation of this, we're going to see later with Matias that is because of the fair value of investment properties in Argentina Business Center.

This is the evaluation of the shopping centers of the company in Argentina.

We had two material effects on the balance sheet in this annual report, one is the opening of the Zetta building in the North that we are going to see the result of that business and from the other side in Israel, the other big material thing was the sale of 19.5% of the class shares and we have today 35% directly are through swaps and we are going to show what we were doing recently paying to bondholders with those shares.

So now, I will introduce Daniel Elsztain please..

Thank you, Alejandro. Good morning, everyone. On Page number 3, we’ll start with Argentina numbers on the left side of the page with the shopping centers numbers. In terms of total GLA, we see a small reduction this year compared to last year. This is mainly explained by the end of the concession of the Buenos Aires Design.

It was more dedicated to construction and decoration that belongs to the city, we gave back. So the total GLA now is 332,000 square meters, occupation is 95%. It's a small drop also compared to last year. This is mainly explained by Walmart that or by shopping centers that we closed.

So we have that empty space if we would exclude that specific supermarket, the total occupancy would have been 98.5% compared to last year of 99%.Regarding more sales, we see in real terms reduction of 13.5% compared to last year. But we see in the trend that we are this quarter was a little bit better that it was the previous quarter.

When we see this in nominated terms, we see an increase of 36% and if we could exclude the effect of the sales of Walmart, this could have been a 12 reduction in real terms of 12.6% compared to last year.Just as a note, at the end of this quarter, we were seeing a reduction in inflation, we were seeing an increase on consumption.

That changed after the primaries, but it was at least it was a good or a better ending of the fiscal year that we were seeing in previous quarters. Regarding the office segment, we see from this year compared to last year, we see an increase in the total GLA, we're running from 83,000 square meters to 115,000 square meters.

This is incorporating the Zetta Building at the Polo Dot Office Center an increase of 38% of our portfolio, we're going to have another increase for next fiscal year because we're including the 200 Della Paolera building in the Catalina neighborhood, there will be an increase of another 30,000 square meters of GLA.In terms of price per square meter, we're running on $26.4 per month per square meter.

This is a triple net is excluding, all the common charges, occupancy is driving at 88.3%.

But this reduction is mainly explained by the big class portfolio that we have, if we see that we have here breakdown, the Class A and AAA buildings portfolio is running at 97.2% of our total GLA, this business is pretty stable and prices are stable and as Alejandro mentioned is all dollar nominated.So all the rents in our offices is collected in dollars.

So that's why we see the big increase because we increase the size and also we are collecting all the rent in dollar terms. On page number 4, we see some numbers of the Zetta Building that was recently concluded and open, open in May 2019. Total investment of $60 million estimated EBITDA almost $9 million at cap rate of 15% unlevered cap rate.

For this transaction, we had a small debt for the construction. Tenants are happy, we are happy. It's just fantastic building and it's the location is getting better and better.

We have demand on this location to make new product, nothing to be communicated thus far, but really it's a great location, a great product.On Page number 5, the 200 Della Paolera development, it’s under development 87% belongs to IRSA commercial properties, 68% were progress, we estimate to open in 4Q of fiscal year 2020, estimated investment of $90 million, this investment it was the original investment.

Inflation is helping us to make some reduction on these total numbers estimated stabilized EBITDA for this building will be somewhere between $10 million to $12 million approximately 12% cap rates.

We are seeing demand, good demand for prospect tenants on this building, so we hope to open this building with also with high occupancy levels next year.On page number 6, regarding our hotel portfolio, we have three hotels, five star hotels and one is the destination luxury hotel in Llao Llao.

We have seen a small drop in occupancy from 70% last yearto 65%although the room rates went up from $191 to $197.

And here all costs are pesos and we are getting here the rent in dollars, so that’s why we see a huge increase in EBITDA on this segment compared to last year’s ARS 71 million, this year ARS 588 million, this was a very good year for hotels in our portfolio.We’re very happy. Although it’s a small piece of all our portfolio in terms of size.

Also as an important event of the year on February 2019, IRSA acquired the 20% of the shares of the Hoteles Argentinos company.

That was the entity owner of the -- what it used to be the Sheraton Libertador, now it’s called only Libertador Hotel since we bought from Marriott that stake, we no longer call the hotel as Sheraton, it’s no longer flagged as Sheraton hotel and it’s running independently.On Page number 7, some investments on the abroad.

First we’re starting with the Lipstick go to the bottom of the page, we’re running at 97% occupancy with $77 per square foot per year on the building very similar to last year, NOI is at $27.4 million and the main event of the year is first there was a debt refinance from $53 million to $11 million debt is maturing and it’s being paid during the year but it is going to mature in April 2021, big event also for the ownership of the building, also in June 2019 there was a deposit, escrow deposit for an agreement to buy the ground lease from the ground lessor at the discounted price, the option value was $5.1 million, this option expires.

So the owner is entitled to collect deposits.

Nevertheless, the company is, we still in negotiations with the ground lessor and we are still looking the way to try to obtain those funds to execute the purchase of the building.On the right side of the Page, we can see some numbers on Condor, Condor as of July of 2019 signed an agreement to merge with a non-related company, this merge would represent for existing shareholders to collect the cash for their shares.

In the case of IRSA, the ordinary shares will be paid at a price of $11.10 and the preferred E convertible shares will get a price of $10 per preferred.

This transaction will be concluded, the closing will be sometime from October to December.The buyer and merger have the option to do any time from October to December and the estimated proceeds to IRSA will be approximately $29 million.

Since announcement, the price of the share went up very close to the transaction price, so now it’s trading in the range of $11 per share. So now we’re talking about some figures on Banco Hipotecario, Matias Gaivironsky, our CFO..

Thank you, Danny and good morning everybody. So going to Page 8, we have the evolution of our investment in Banco Hipotecario. Unfortunately, what happened after the primary generated, the valuation of the shares decreased significantly similar than the rest of the banks in Argentina and similar than the rest of the stocks in Argentina.

So now what you see that was the market value of our investment around last year decreasing significantly to levels of $87 million.Regarding the results this year, we posted a loss of ARS 1.7 billion against a gain last year of ARS 291 million is basically due to the impairment of an investment property at Banco Hipotecario level, they built building to develop a headquarters, they made an impairment on that building and also because of the inflation assessment, we are recognizing losses because of that Banco Hipotecario still they don’t have the obligation, yet to assess value on their balance sheets, but when we recognize the result from them, we have to do it.

So going to Page 9, Alejandro will continue with the Israeli investment..

We can see the current corporate structure between IDB and DIC, how we are running 100% of IDB and 82% of DIC. We can as you remember, we were because of the concentration law resolution, we had to solve the layer, the third layer of the company. And so we had to decide what to do with Mehadrin, Gav-Yam and Ispro.

From the case of Ispro, Ispro was 100% in our hands, but now we are privatizing the public debt. With that, we’ll be sold.In the case of DIC -- of Gav-Yam sorry, Gav-Yam we had, we came from 70%. And now we are showing here that we went to 35% of the shares. This Gav-Yam is the rental properties in Israel, mainly office buildings and logistics center.

And so we decided how to solve is to deconsolidate these Gav-Yam, so we sold the last quarter 16.7% of the shares of Gav-Yam. We had 51 now after those two sales, we have below the 35, with that we are not having more than 100% control of the company.

So now we are deconsolidating for the balance sheet, we are complying to the concentration law.The last one that we need to solve is Mehadrin that would need to be defined before the end of the year. We have here 45% of the shares and we need to go out to 100% or below the 35% that is under discussion today.

So the concentration law is close to be sold, and from the other side, we have the Clal issue of the sale that we’re going to explain little later what we were doing till last quarter.Related to the CEO appointment, we are in the process of appointing a new CEO as you know, the headhunting that we were doing was close to be finished and we are receiving very good CVs of candidates of Israel candidates to be CEO of these two companies IDB and DIC, so we are close to that end.If we move to next page, in the page number 10, we can see the evolution of the shares and the portfolio of companies in Israel, we can see that in DIC, there was a big drop mainly related to the Cellcom.

I think today the Cellcom is the company that is damaging a lot of the DIC valuation. From the other side, we see the Clal evaluation and we show in the red color the shares, the day we are selling shares, so these are the dates that we were begun to sell shares and the last two are in this balance sheet.

So there was a in the case of Elron and in the case of Cellcom, we are buying in the decrease of the prices, we are buying more proportion of the company.In the case of Gav-Yam, we can see the evolution of the last years how the company did a very important increase to date in the maximum of the history of the company.

So we were selling in these increasing price of the shares when going to the 35%. In the case of Shufersal, we did some -- the same one last year, and one this year going to the 26% that today we are running and in the case of PBC, we have still a lot of shares.

Still, the company is improving, so we are discussing how to refocus this strategy of each company.So we wanted to share with you the evolution of the shares of the portfolio of Israel. Now I will give to Matias to explain the Clal sale process.

Matias?.

Thank you, Alejandro. So regarding our investment in Israel as Alejandro mentioned, we used to have two main challenges. One was related to concentration law. So we already solve it.

And the second one close to solving it because we have a minor, minor issue with one of our company, so the second one was regarding our investment in Clal.So since the beginning, the regulators haven't allowed us to, to have the control permit, and then they force us to sell in the market.

So you can see in the graph that since the beginning, our strategy was to maintain our stake. So we started since the beginning with all our stake direct held by the company. And then we start to do swap transactions in order to avoid missing the economic rights on the shares.

So finally, in August 2018, the regulators started to force us to sell in the market.At that moment, we requested to have the control permits for the first time since our original investment, we submitted request for control.

But finally, we decided to pull back the control permit in August 2019, when we realized that the chances to get the control in this stage was very limited. So, we decided to pull back and then the regulator ask us to not renew the swaps. So, we have to start selling the swaps or closing the swaps losing the economic rights.

So you can see that in June 2019, we started to sell the economic rights, so we decreased from the 54.8% to 44.3%.

At that moment instead of going to the market and sell the shares, we entered an agreement with three, two families in very well known families in Israel.And we gave an option to a third-party that used to be the CEO of the one of the largest insurance companies in Israel with idea that they will help us also to show confidence on the company.

So finally, we executed or they executed the two first options and we are in the process of executing the third, the third part that is the option to the former CEO of the company, so insurance companies.

So we at the end of September what we did was also to enter into agreement with the bondholders of IDB to exchange bonds of IDB for shares that was the way since this the bonds of the company are trading with a discount at the same day, Clal shares that are trading at deep discount on the book value was a way to sell indirectly Clal shares at much closer book value price, closer price than the book value.

So, what we did was to almost the same than selling this shares of Clal at 90% book value. So, we will try to keep doing this kind of transactions in the future.So, we are working on that.

Finally in Page 12, we can see the debt amortization is scheduled for IDB and DIC, starting with DIC, you can see that we have cash and cash equivalents for the same amount that we have the debt until 2022. So we don't see any problem with the DIC debt.

Regarding IDB, we are working in the structure, we are doing this kind of swaps between the bonds and shares that that is a way to cancel debt as well.We today have the resources to serve our debt for this year and we have assets that are held for sale that we expect to sell in the next year to cover the amortizations for the next year.

And due to these financial situation also, IRSA decided to invest an additional $70 million sorry 70 million shekels in IDB in this September, so we already did the first payment, and also commit to invest two additional tranches of 70 million shekels in September 2020 and September 2021, so now this is our only obligation with the company, our commitment also is subject to certain conditions.So it’s not 100% sure that we will invest the money but our commitment if that conditions are in place is we are obliged to inject the money in the company.

So now going to our financial results in Page 14, as Alejandro mentioned at the beginning, we are finishing the fiscal year with a loss of ARS 26.8 billion attributable to our controlling interest is ARS 25.8 billion against a gain last year of ARS 23.2 billion or ARS 14.7 billion.So, when we analyze the results here in the table, you have the Argentina Business Center, the Israeli Business Center and the total in Argentina the ARS 25 billion or ARS 25.6 billion is mainly related to the Line 4 change in fair value that you can see that we have a loss of ARS 27.1 billion.So, that is basically the main effect and then I will explain the rest of the effects.

In Israel, we are finishing with 1.6 that also is related to financial results. Last year, we had the disposal of some Shufersal shares that make the company to deconsolidate the operations. So, you have the results in the Line 14 of net income from this continuing operations that created a gain of ARS 20.4 billion last year.

So, leaving aside that, we improve the results on the company and I will explain the Line 9 that is the next financial results on deeper in the following pages.So, moving to Page 15, here for us is the most representative in terms of the operational performance on the company, you can see the shopping malls decreasing by 15% in real terms, this is basically attributable to the lower consumption in Argentina, all metrics on consumption lag inflation, inflation accelerated significantly in Argentina to levels of 55% and consumption was in levels of 35%, 37%.Regarding offices, since we have dollar denominated revenues, we are generating very good results and also we have the incorporation of the Zetta building that also started to generate results in the segment.

So, for that reason, we have the 116% above last year, hotels, this also are improving significantly. And sales and development decreased basically last year, we sold more properties than this year, this is the part that is non-recurrence along the years.

Regarding the Israeli Business segment, here we have the real estate and telecommunications.Remember that the devaluation between the shekel and peso was 22%. So to compare apples-with-apples, you have to use the 22% is the devaluation.

So we can see better results in real estate basically related to recognition of the implementation of IFRS 15 that makes the company to recognize results on the developments on residential and telecommunication line or decreasing in the operations against last year.So, the competitive environment in Israel is still very heavy.

So, all the companies in the telecommunications segment are performing lower than the previous year. So, that is still the situation on that industry. The others segment is basically the results on the headquarters, the cost of the headquarters at other company. Page 16, to open the line of net financial results.

So starting with Argentina, we see an improvement from a loss of 10.1 -- sorry ARS 10.8 billion to ARS 2.1 billion. You can see in Line 2, the net foreign exchange losses last year, we had an important impact of ARS 9.2 billion against a gain of ARS 700 million this year.

In the bottom left of the page, you can see the evolution of the exchange rate.Last year the devaluation was 74%, with an inflation of in average 29% means that in real terms, we have a huge devaluation, this year the devaluation was 47% with an inflation of 55%.

So we have an appreciation in real terms, that is why we are recognizinga gain against the loss of last year.In the Line 1, we have the net interest losses that we increased our net interest payment is related with our dollar denominated debt with an evaluation, we are paying higher interest in Pesos.

And finally in Israel, we can see two lines, the first one is the net interest losses, we increased by 11.4% but remember that the real devaluation was 22%.So in real terms, we are paying lower interest in Israel. This is the basically the deleverage of the companies and the reduction on the cost of the debt.

In the Line 3, the fair value gain from financial assets and liabilities. Here we have the refinancing last year, we refinanced -- sorry one second.Yes, one second. Sorry in the Line 3, we have the exchange on the debt of DIC that we did last year. So we recognize it a lot.

And also we have the Clal evolution that last year decreased by 14%, the shares that you can see in the bottom of the page, and this year increased by 20%.So going to Page 17. Finally, we have here the debt amortization schedule. So we have the net debt of the company remain stable at $333 million, some financial events.

One was as we discussed it in the last earnings release, we establish credit line between IRSA and IRCP. So IRCP can lend up to $180 million to IRSA.So that was one of the events. And the second one was that we did two issuance of bonds, one in May 2019 that we issue $96.3 million at 10% interest rate that expire in November 2020.

And finally in August this year, we issued a second tranche of the Class 1. So we reopen the bond that we issued in May and we enlarged by $85 million at an yield of 8.75% and also we issue a new series of bonds that expire in next year in one year.

The currency is Chilean Pesos $45 million in Chilean Pesos at the rate of 10.5% half of that we already swap it to dollars and the other remain in Pesos Chilenos.So in the graph in the bottom, you can see the part that we have recently issued. So we refinance to the next year, the amortization of this fiscal year.

So then the next payments will be in fiscal year 2021. And also yesterday, we cancel the debt that expire yesterday, so we paid $130 million that expired yesterday. So with this, we finish with a formal presentation. Now we open the line to receive your questions..

It was a very active year. A lot of things, and resolution in Israel and Argentina and under construction, the real estate companies are doing a lot, office buildings in Israel and Argentina. The portfolio is improving its ability and its quality. So we are closing in valuation year but very good in activities and resolution on assets and shares.

So we expect to keep the company doing what we knew, what we know is to do more real estate globally as we were doing actively last year. So thanks to everybody to the conference call. And next let's work a lot for the next fiscal year that begins now. Thank you very much and have a very good day..