Earnings Release | IQ 2022

Earnings Release

IQ FY 2022

IRSA invites you to participate in its conference call for the first quarter of the Fiscal Year 2022

Wednesday, November 10, 2021 04:00 PM BA (02:00 PM US EST)

To participate, please access through the following link:

https://irsacorp.zoom.us/j/87584599610?pwd=ZTUvVXdGRGhUbnIzMDBBc0tWdTdudz09

Webinar ID: 875 8459 9610

Password: 450632

In addition, you can participate communicating to this numbers:

Argentina: [phone] or [phone] or [phone] or [phone]

Israel: [phone] or [phone]

Brasil : [phone] or [phone] or [phone] or [phone]

US: [phone] or [phone] or [phone] or [phone] or [phone] Chile: [phone] or [phone] or [phone] or [phone] or [phone]

Preferably, 10 minutes before the call is due to begin. The conference will be held in English.

Main Highlights of the Period

• Rental segment showed a recovery in the main indicators of shopping malls and hotels, while the office segment showed a slight decrease in the average rent and occupancy. The rental adjusted EBITDA reached ARS 2,152 million during the quarter (ARS 1,506 million in shopping malls, ARS 567 million in offices and ARS 79 million in hotels), 36.5% lower than the observed in the same period of 2020, not affected by the closure of operations.
• The net result for the first quarter of fiscal year 2022 recorded a loss of ARS 1,014 million compared to a gain of ARS 22,468 million in the same quarter of the previous fiscal year, mainly explained by negative results due to changes in the fair value of investment properties.
• During the quarter, the Company's Board of Directors approved a corporate reorganization process consisting of the merger by absorption between the company and IRSA CP, in which IRSA would be the absorbing company. The process is subject to the approval of the Shareholders' Meeting that will be carried out in the coming months.
• As a subsequent event, our subsidiary IRSA CP sold 3 floors of "261 Della Paolera" building with a surface area of 3,582 sqm for an approximate amount of USD 32 million.

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I. Brief comment on the Company's activities during the period, including references to significant events occurred after the end of the period.

Economic context in which the Group operates

The Group operates in a complex context both due to macroeconomic conditions, whose main variables have recently experienced strong volatility, as well as regulatory, social, and political conditions, both nationally and internationally.

The results from operations may be affected by fluctuations in the inflation and the exchange rate of the Argentine peso against other currencies, mainly the dollar, changes in interest rates which have an impact on the cost of capital, changes in government policies, capital controls and other political or economic events both locally and internationally.

In December 2019, a new strain of coronavirus (SARS-COV-2), which caused severe acute respiratory syndrome (COVID-19) appeared in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response, countries have taken extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, closing businesses deemed non-essential, instructing residents to practice social distancing, implementing lockdowns, among other measures. The ongoing pandemic and these extraordinary government measures are affecting global economic activity, resulting in significant volatility in global financial markets.

On March 3, 2020, the first case of COVID-19 was registered in the country and as of today, more than 5,290,000 cases of infections had been confirmed in Argentina, by virtue of which the Argentinian Government implemented a series of health measures of social, preventive and mandatory lockdown at the national level with the closure of non-essential activities, including shopping malls, as well as the suspension of flights and border closures, for much of the year 2020. Since October 2020, a large part of the activities started to become more flexible, in line with a decrease in infections, although between April 16 and June 11, 2021, because of the sustained increase in the cases registered, the National Government established restrictions on night activity and the closure of shopping malls in Buenos Aires Metropolitan Area. Due to the flexibility that has occurred in the economic activities since the beginning of this fiscal year and as of the date of issuance of these financial statements, 100% of the shopping malls are operational.

At the local environment, the following circumstances were observed:

• In August 2021, the Monthly Economic Activity Estimator ("EMAE" in Spanish) reported by the National Institute of Statistics and Censuses ("INDEC" in Spanish), registered a variation of 12.8% compared to the same month of 2020, and 1.1% compared to the previous month.
• The annual retail inflation reached 52.47% in the last 12 months. The survey on market expectations prepared by the Argentine Central Bank in September 2021, called the Market Expectations Survey ("REM" in Spanish), estimates a retail inflation of 48.2% i.a. for December 2021 and 46.0% for December 2022. Analysts participating in the REM forecast a rebound in economic activity in 2021, reaching an economic growth of 7.6%.
• In the period from September 2020 to September 2021, the Argentine peso depreciated 29.6% against the US dollar according to the wholesale average exchange rate of Banco de la Nación Argentina. Given the exchange restrictions in force since August 2019, as of September 30, 2021, there is an exchange gap of approximately 78.9% between the official price of the dollar and its price in parallel markets, which impacts the level of activity in the economy and affects the level of reserves of the Argentine Central Bank. Additionally, these exchange restrictions, or those that may be dictated in the future, could affect the Group's ability to access the Single Free
  Exchange Market ("MULC" in Spanish) to acquire the necessary currencies to meet its financial obligations.

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COVID-19 pandemic

As described above, the COVID-19 pandemic has adversely impacted both the global economy and the Argentine economy and the Group's business, mainly in Shopping Malls and Hotels segments. Since the beginning of fiscal year 2022, and until the date of presentation of the financial statements, the Company's shopping malls are fully operational, as well as the office buildings, despite the remote work modality that some tenants continue to apply. Regarding hotels, although they have been operating since December 2020, the sector continues working with certain restrictions on air flows and the influx of international tourism.

The final extent of the Coronavirus outbreak and its impact on the country's economy is still uncertain. However, although it has produced significant short-term effects, they are not expected to affect business continuity and the Group's ability to meet its financial commitments for the next twelve months.

The Group is closely monitoring the situation and taking all necessary measures to preserve human life and the Group's businesses.

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