IRS

Business Context and Reporting Period

Company: IRSA Inversiones y Representaciones Sociedad Anónima (IRSA)
Parent Company: Cresud S.A.C.I.F. y A. (55.06% ownership)
Reporting Period: Nine months ended March 31, 2025 (Unaudited)
Business Activity: Real estate investment and development, including shopping malls, office buildings, hotels, and residential developments.
Accounting Basis: IFRS, restated for hyperinflation (IAS 29) using the Argentine Consumer Price Index.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Turnaround: The Group reported a net profit of ARS 35,063 million, a significant improvement from a loss of ARS 174,216 million in the prior year. This is primarily driven by a reduced loss from fair value adjustments on investment properties (ARS 141,903 million loss vs. ARS 601,653 million loss previously), attributed to lower inflation exposure on USD-valued properties.
• Revenue Stability: Total revenues increased slightly by 0.9% year-over-year. The Shopping Malls segment saw an 8.6% revenue increase, while the Hotels segment declined by 27.9% due to reduced international tourism.
• Liquidity Expansion: Cash and cash equivalents surged to ARS 287,954 million from ARS 37,214 million, driven by strong operating cash flow (ARS 122,741 million) and financing activities.
• Debt Structure: Total borrowings increased to ARS 683,125 million. This includes the issuance of Series XXIV Notes (USD 300 million) in March 2025 and the exchange of Series XIV Notes.

Guidance, Outlook, and Risks

Management Commentary & Outlook

• Shopping Malls: Tenant sales grew 13.4% in the third quarter, with portfolio occupancy reaching 98.1% (excluding the newly acquired Terrazas de Mayo). Management expects favorable evolution driven by real wage recovery.
• Hotels: Facing challenges with lower occupancy and revenues due to the appreciation of the Argentine Peso against the USD, reducing competitiveness for international tourists.
• Development: Continued focus on the "Ramblas del Plata" project (formerly Costa Urbana), with the first stage commercialization underway. Plans include residential developments in Caballito and the Polo Dot mixed-use complex.
• Financial Strategy: Management aims to optimize cost structures and maintain liquidity through asset disposals, note issuances, and share repurchases.

Risks and Contingencies

• Legal Proceedings: Ongoing litigation regarding the IDBD claim (NIS 140 million) and the Puerto Retiro joint venture (Supreme Court ruling on forfeiture of Plant I). Management notes the Puerto Retiro civil action is directed solely against the joint venture, not IRSA directly.
• Macroeconomic Environment: Continued exposure to Argentine inflation and exchange rate volatility. Recent regulatory changes regarding foreign exchange access for dividends and imports are being monitored.
• Impairment: Recognized an impairment loss of ARS 8,339 million on trading properties held for sale.

Investor Verification Checklist

• Hyperinflation Restatement: Verify the impact of IAS 29 restatement on comparative figures and the specific inflation index used (National CPI).
• Debt Maturities: Review the amortization schedule for the new Series XXIV Notes (USD 300M) and the remaining balance of Series XIV Notes.
• Hotel Segment Performance: Assess the sustainability of the hotel segment's decline and the impact of currency fluctuations on international tourist inflows.
• Legal Provisions: Confirm the adequacy of provisions for the IDBD lawsuit and Puerto Retiro litigation outcomes.
• Capital Structure: Note the recent share buyback program completion and the exercise of warrants, which increased the share count to 757,699,663.