CRESUD INC

CRESUD Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria is a prominent Latin American agricultural company with a growing presence in Argentina, Brazil, and other Latin American countries, primarily through its investment in Brasilagro. The company's core business model revolves around the acquisition, development, and exploitation of agricultural properties with attractive prospects for production and value appreciation, coupled with the selective sale of such properties once appreciation has been realized ¹. CRESUD also engages in leasing land to third parties and providing agency and agro-industrial services ¹. Beyond its agricultural operations, CRESUD is directly and indirectly involved in the real estate business through IRSA Inversiones y Representaciones S.A. and its subsidiaries and joint ventures, focusing on the development, acquisition, and operation of shopping malls, premium offices, and luxury hotels in Argentina ¹. CRESUD holds a 54.06% equity interest in IRSA, net of treasury shares ¹.

The company's business model is diversified across two main segments: agricultural business and urban properties and investment business ¹. The agricultural business generates revenue from planting, harvesting, and selling crops such as wheat, corn, soybeans, cotton, and sunflowers; breeding, purchasing, and fattening free-range cattle; leasing farms to third parties; and planting, harvesting, and selling sugarcane ¹. The urban properties and investment business, primarily through IRSA, generates revenue from shopping mall operations (lease and service revenue), office rentals, property sales and developments, and luxury hotels ¹. The company also has investments in associates and joint ventures, including a 29.12% interest in Banco Hipotecario, a significant financial institution in Argentina ¹.

The agricultural business is further segmented into "Agricultural production," "Land transformation and Sales," "Other segments," and "Corporate" ¹. The "Agricultural production" segment, encompassing crops, cattle, sugarcane, and agricultural rentals and services, held assets of ARS 839,697 million ¹ as of June 30, 2025, representing 80.85% ¹ of the total agricultural business assets, and generated a profit from operations of ARS 16,305 million ¹ for the fiscal year ended June 30, 2025. Within "Agricultural production," the "Crops" activity had assets of ARS 560,909 million ¹ and generated a loss from operations of (ARS 5,229) million ¹ for fiscal year 2025. The "Cattle" activity had assets of ARS 122,022 million ¹ and generated a profit from operations of ARS 8,545 million ¹. The "Sugarcane" activity had assets of ARS 141,527 million ¹ and generated a profit from operations of ARS 8,931 million ¹. "Agricultural Rentals and Services" had assets of ARS 15,239 million ¹ and generated a profit from operations of ARS 4,058 million ¹. The "Land transformation and Sales" segment, focused on gains from development and disposal of farmlands, had assets of ARS 117,320 million ¹ and generated a profit from operations of ARS 55,929 million ¹. The "Other segments," primarily including brokerage activities through FyO, had assets of ARS 81,519 million ¹ and generated a loss from operations of (ARS 18,755) million ¹. The "Corporate" segment, covering corporate expenses related to the agricultural business, generated operating losses of (ARS 5,925) million ¹.

The urban properties and investment business is segmented into "Shopping Malls," "Offices," "Sales and Developments," "Hotels," and "Others" ¹. The "Shopping Malls" segment had assets of ARS 1,465,040 million ¹ as of June 30, 2025, representing 53.08% ¹ of the operating assets for this business, and generated an operating profit of ARS 650,765 million ¹ for fiscal year 2025. The "Offices" segment had assets of ARS 255,125 million ¹ and generated an operating loss of (ARS 133,692) million ¹. The "Sales and Developments" segment had assets of ARS 812,722 million ¹ and generated an operating loss of (ARS 324,287) million ¹. The "Hotels" segment had assets of ARS 48,164 million ¹ and generated an operating profit of ARS 3,949 million ¹. The "Others" segment, including entertainment and financial activities through BHSA/BACS, had assets of ARS 178,912 million ¹ and generated an operating profit of ARS 14,378 million ¹.

For the fiscal year ended June 30, 2025, CRESUD reported consolidated revenues of ARS 914,157 million ¹, a decrease from ARS 959,359 million ¹ in the prior fiscal year. Consolidated profit from operations, before financing and taxation, was ARS 247,835 million ¹, a significant improvement from a loss of (ARS 145,974) million ¹ in the previous year. The total consolidated assets increased by 5.09% ¹ from ARS 4,842,217 million ¹ to ARS 5,088,822 million ¹. Consolidated shareholders' equity increased by 1.63% ¹ from ARS 2,178,241 million ¹ to ARS 2,213,792 million ¹. The company's consolidated financial gross debt amounted to ARS 1,343,112 million ¹ as of June 30, 2025.

Year-over-year comparisons for the agricultural business segments show varied performance. The "Crops" activity experienced a revenue decrease of 23.8% ¹ from ARS 258,615 million ¹ in FY2024 to ARS 197,038 million ¹ in FY2025, shifting from a profit of ARS 6,046 million ¹ to a loss of (ARS 5,229) million ¹. "Sugarcane" revenues increased by 9.0% ¹ from ARS 66,034 million ¹ to ARS 71,980 million ¹, with operating profit more than doubling from ARS 4,274 million ¹ to ARS 8,931 million ¹. "Cattle" revenues grew by 25.8% ¹ from ARS 35,545 million ¹ to ARS 44,721 million ¹, moving from an operating loss of (ARS 7,177) million ¹ to a profit of ARS 8,545 million ¹. "Leases and Agricultural Services" revenues decreased by 5.4% ¹ from ARS 13,985 million ¹ to ARS 13,236 million ¹, but operating profit increased by 169.6% ¹ from ARS 1,505 million ¹ to ARS 4,058 million ¹. The "Others" segment in agricultural business saw revenues decrease by 6.3% ¹ from ARS 129,435 million ¹ to ARS 121,291 million ¹, and shifted from a profit of ARS 16,302 million ¹ to a loss of (ARS 18,755) million ¹. The "Land transformation and Sales" segment's profit from operations decreased by 30.1% ¹ from ARS 80,047 million ¹ to ARS 55,929 million ¹.

Significant operational developments during the reported period include BrasilAgro's acquisition of Agrícola Nova Horizonte S.A. on May 20, 2024, a company with 4,767 hectares ¹ leased for 16 years ¹, for a total value of BRL 6.2 million ¹ (ARS 1,421 million ¹). BrasilAgro also completed the sale of 1,157 hectares ¹ of the Alto Taquari farm on September 26, 2024, for 1,272,274 bags of soybeans ¹, equivalent to BRL 189.4 million ¹ (ARS 43,395 million ¹), recognizing a gain of ARS 22,179 million ¹. Additionally, BrasilAgro transferred 190 hectares ¹ of the Rio do Meio farm on September 30, 2024, for 54,053 bags of soybeans ¹ (BRL 7 million ¹ or ARS 1,604 million ¹), and an additional 660 hectares ¹ on May 23, 2025, for 75,454 bags of soybeans ¹ (BRL 10 million ¹ or ARS 2,132 million ¹), with a total gain of ARS 2,300 million ¹. CRESUD itself sold a 3,630-hectare ¹ fraction of the "Los Pozos" farm on September 30, 2024, for USD 2.23 million ¹ (ARS 2,742 million ¹), recognizing a gain of ARS 2,597 million ¹. In urban properties, IRSA acquired a property adjacent to its Alto Avellaneda shopping mall on August 1, 2024, for USD 12.2 million ¹ (ARS 14,636 million ¹). IRSA also sold a floor in the "261 Della Paolera" tower on October 15, 2024, for approximately USD 7.1 million ¹ (ARS 8,558 million ¹), generating a gain of ARS 5,340 million ¹. On December 3, 2024, IRSA acquired the "Terrazas de Mayo" shopping mall for USD 27.75 million ¹ (ARS 34,335 million ¹). IRSA also signed sales and barter agreements for lots in "Ramblas del Plata" totaling approximately USD 23.4 million ¹ (ARS 28,138 million ¹) and USD 38.5 million ¹ (ARS 45,197 million ¹) respectively, during January, February, and March 2025, and an additional three barter agreements for three lots in May 2025 for approximately USD 12.2 million ¹ (ARS 14,554 million ¹). BrasilAgro completed the sale of the entire Preferencia farm, totaling 17,799 hectares ¹, in June 2025 for BRL 140.0 million ¹ (ARS 29,854 million ¹), recognizing a gain of ARS 14,916 million ¹.

Management has called a General Ordinary and Extraordinary Shareholders’ Meeting for October 30, 2025, to consider the allocation of net income for the fiscal year ended June 30, 2025, amounting to ARS 75,608,298,323.55 ², and unallocated results from previous fiscal years for ARS 19,480,344,053.25 ³. The meeting will also consider the distribution of dividends payable in cash and/or in kind for up to ARS 88,500,000,000 ⁴. Additionally, the Board of Directors' compensation of ARS 686,090,660.27 ⁵ for the fiscal year ended June 30, 2025, will be considered.

One major growth vector for the company is the expansion of its agricultural operations into other countries in the region, as indicated by FyO's continued work on its expansion plans ⁶. This strategy aims to leverage FyO's expertise in providing specialized agricultural products and services, including production services, processing, logistics, and marketing, to new geographic markets ⁶. The company also plans to develop new products to significantly increase export volumes, driven by growing global demand ⁷. This expansion is supported by the company's focus on optimizing production processes, soil conservation, and the application of rational techniques and environmental care ⁷.

Another significant growth area is the continued development and digitalization of the agribusiness sector through Agrofy Global. Agrofy aims to consolidate and scale its membership and transaction businesses, strengthening its value proposition for both sellers and producers ⁸. Key initiatives include driving the growth of Agrofy Pay as a comprehensive payment solution within the agribusiness ecosystem and expanding the use of artificial intelligence tools, such as "Clementina," to enhance the purchasing experience for agricultural producers ⁸. These efforts are expected to maintain Agrofy's position as the leading online business platform for agriculture in Argentina and Brazil, building on its current traffic exceeding 40 million visits ⁹.

In terms of operational outlook, Agrofy is focused on streamlining its organizational structure, aligning available resources with key growth and profitability objectives ⁸. This includes efforts to contain expenses and improve operational efficiency, which led to a substantial improvement in gross margins and a significant reduction in the burn rate in the past fiscal year ⁸. This strategy is complemented by prudent management of working capital, aiming for a stronger and more orderly financial position ⁸.

Planned capital allocation includes the consideration of distributing up to 5,300,000 ¹⁰ own shares to shareholders in proportion to their holdings ¹⁰. The company also plans to consider the annual budget for the implementation of the Audit Committee's annual plan ¹¹. Furthermore, the Board of Directors has resolved to call a General Ordinary and Extraordinary Shareholders’ Meeting to consider the subscription of an addendum to the warrant agreement to incorporate the option of warrant holders to exercise the warrants on a cashless basis ¹².

Management has explicitly flagged several structural headwinds and execution risks. The Argentine economy is expected to grow by 5.5% ¹³ in 2025 and 4.3% ¹⁴ in 2026 and 2027, driven by agriculture, energy, and mining sectors, according to the World Bank ¹³. However, the IMF projects a GDP growth of 4.5% ¹⁵ in 2025 and 4.0% ¹⁶ in 2026 ¹⁵. The current Argentine administration faces significant macroeconomic challenges, including reducing inflation, achieving commercial and fiscal surpluses, accumulating reserves, supporting the peso, eliminating exchange controls, refinancing debt, and improving economic competitiveness ¹⁷. The legislative elections in the Province of Buenos Aires on September 7, 2025, where the opposition party Fuerza Patria obtained approximately 47.28% ¹⁸ of the vote against 33.71% ¹⁹ for the ruling coalition, may increase political uncertainty and the risk of policy reversals at the national level ¹⁸. Mid-term national legislative elections in October 2025, where 127 of 257 ²⁰ members of Congress and 24 of 72 ²¹ members of the Senate will be elected, also contribute to political uncertainty ²⁰. The Central Bank announced a new inflation estimate for 2025 of approximately 29.5% ²² on September 4, 2025 ²². The company also highlights the ongoing legal proceedings against Argentina related to the YPF expropriation, with a judgment ordering Argentina to pay USD 16 billion ²³, and the U.S. Supreme Court's rejection of Argentina's appeal, authorizing the seizure of Argentine assets totaling USD 310 million ²⁴.

The company faces material risks stemming from macroeconomic and political conditions in Argentina, including exchange rate volatility, high inflation rates, and potential governmental intervention in the economy, which could adversely affect its financial performance and operational results. The Argentine Peso has experienced significant depreciation in the past, with a 72.5% ²⁵ depreciation in 2022, 356.3% ²⁶ in 2023, and 27.7% ²⁷ in 2024, and while it appreciated around 40% ²⁸ in real terms during 2024, future fluctuations remain unpredictable. Inflation continues to be a concern, with the National CPI variation at 117.8% ²⁹ in 2024, although it decelerated from 211.4% ³⁰ in 2023, and the Central Bank estimates 29.5% ³¹ for 2025. Political instability, evidenced by the opposition party securing a majority in the provincial legislature in the September 7, 2025, elections with 47.28% ³² of the vote, and upcoming national legislative elections in October 2025, could lead to policy reversals or hinder economic reforms. The maintenance or implementation of additional exchange controls and restrictions on transfers abroad could limit access to international credit and threaten the financial system, impacting the company's ability to pay dividends or service foreign currency-denominated debt. Legal and regulatory disputes, such as the ongoing YPF expropriation case where Argentina was ordered to pay USD 16 billion ³³, and the U.S. Supreme Court's authorization to seize USD 310 million ³⁴ in Argentine assets, could further strain public finances and the broader economy. In Brazil, the government's significant influence over the economy, coupled with political and economic conditions, including inflation and interest rate increases (SELIC rate at 15% ³⁵ as of June 30, 2025), and exchange rate fluctuations (Real depreciated 27.3% ³⁶ against the U.S. dollar in 2024), may adversely affect the company's investment in BrasilAgro. Restrictions on acquisitions of agricultural properties by foreign nationals in Brazil, where Brasilagro has 23% ³⁷ of its assets in Paraguay and 4.3% ³⁸ in Bolivia, could materially limit business development. Climate change-related risks, including physical risks like droughts and floods, and transition risks associated with a shift to a low-carbon economy, could increase expenses and affect strategies. Operational risks include dependence on key personnel, potential cybersecurity events, and the illiquidity of farmland assets. The company's consolidated financial gross debt of ARS 1,343,112 million ³⁹ as of June 30, 2025, exposes it to refinancing risks, especially given the macroeconomic conditions in Argentina.

Management's message to shareholders conveys a forward-looking perspective, emphasizing strategic growth and operational efficiency despite a challenging macroeconomic environment. The company is actively pursuing expansion plans for its agricultural business into other regional countries and is focused on developing new products to increase export volumes, driven by global demand. A key strategic priority is the continued digitalization of the agribusiness sector through Agrofy Global, with a focus on scaling membership and transaction businesses, enhancing the value proposition for both sellers and producers, and leveraging artificial intelligence tools like "Clementina" to improve user experience. Operationally, management is committed to streamlining the organizational structure, containing expenses, and improving efficiency to strengthen financial positioning. For the upcoming period, management has proposed the allocation of net income for the fiscal year ended June 30, 2025, amounting to ARS 75,608,298,323.55 ⁴⁰, and unallocated results from previous fiscal years for ARS 19,480,344,053.25 ⁴¹, with a consideration for the distribution of dividends payable in cash and/or in kind for up to ARS 88,500,000,000 ⁴².