IRS

Business Context and Reporting Period

Company: IRSA Inversiones y Representaciones Sociedad Anónima (IRSA)
Reporting Period: Three months ended September 30, 2025 (First Quarter of Fiscal Year 2026)
Parent Company: Cresud S.A.C.I.F. y A. (53.32% ownership)
Primary Activities: Real estate investment and development, including shopping malls, office buildings, hotels, and residential developments in Argentina.
Accounting Basis: Unaudited Condensed Interim Consolidated Financial Statements prepared in accordance with IFRS and IAS 29 (Financial Reporting in Hyperinflationary Economies).

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Turnaround: The Company reported a net profit of ARS 163.4 billion, a significant reversal from a net loss of ARS 143.7 billion in the prior year. This was primarily driven by a net gain of ARS 219.9 billion from the fair value adjustment of investment properties, resulting from currency depreciation exceeding inflation on USD-valued assets.
• Revenue Growth: Total revenues increased by 9.2% year-over-year, driven by growth in the Shopping Malls and Offices segments.
• Segment Performance:
  • Shopping Malls: Operating profit increased 158.5% to ARS 119.2 billion. Tenant sales decreased 7.0% in nominal terms, but occupancy remained high at 97.8%.
  • Offices: Operating profit turned positive (ARS 50.6 billion) from a loss, with occupancy reaching 96.8% and premium portfolio occupancy at 100%.
  • Hotels: Revenues declined 2.3% and EBITDA dropped 22.1% due to lower international tourism and a weak winter season in Bariloche.
• Acquisitions: Acquired "Al Oeste" shopping mall for USD 9 million (ARS 12.4 billion recorded) and a property in Flores, Buenos Aires, for USD 6.8 million.
• Financial Results: Net financial results were negative ARS 24.0 billion, compared to a positive ARS 19.8 billion in the prior year, largely due to exchange rate differences.

Guidance, Outlook, and Risks

• Outlook: Management expects greater macroeconomic predictability following recent legislative elections. The Company plans to continue expanding its shopping mall portfolio, maintaining high office occupancy, and executing residential projects (Caballito, Polo Dot, Ramblas del Plata).
• Liquidity Strategy: The Company intends to evaluate financial tools to ensure liquidity, including potential asset disposals, issuance of shares or bonds, and share repurchase programs.
• Dividends: A cash dividend of ARS 173.8 billion was approved and distributed in November 2025.
• Risks and Contingencies:
  • Legal: Ongoing litigation with IDBD Development Corporation Ltd. for NIS 140 million. A provision has been recorded, and the case is in the evidentiary stage.
  • Macroeconomic: Continued exposure to Argentine inflation and exchange rate volatility, which significantly impacts fair value adjustments and financial results.
  • Tourism: Hotel segment performance remains sensitive to currency competitiveness and seasonal factors (e.g., snowfall in Bariloche).

Key Facts for Investor Verification

• Non-IFRS Measures: Verify the reconciliation of Adjusted EBITDA and Adjusted FFO, as these exclude significant fair value adjustments and financial results that drive reported net income.
• Hyperinflation Accounting: Confirm the impact of IAS 29 restatements on asset values and income statement comparability, particularly regarding the "Inflation Adjustment" line item.
• Debt Structure: Review the maturity profile of the USD 498.5 million debt portfolio, noting significant maturities in late 2025 and 2026.
• Related Party Transactions: Note significant balances and transactions with the parent company (Cresud) and associates (e.g., Banco Hipotecario S.A.), which generated a loss of ARS 6.8 billion in the quarter.
• Subsequent Events: Verify the execution of the deed for the Flores property acquisition and the finalization of the warrant exercise increasing share capital.