United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM 20-F/A

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended June 30, 2018

 OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Date of event requiring this shell company report ___

For the transition period from ____ to ____

Commission file number 000-30982

IRSA Propiedades Comerciales S.A.

 (Exact name of Registrant as specified in its charter)

IRSA Commercial Properties Inc.

(Translation of registrant’s name into English)

Republic of Argentina

(Jurisdiction of incorporation or organization)

Moreno 877, 22nd Floor

Ciudad Autónoma de Buenos Aires, Argentina

(Address of principal executive offices)

Mat’as Ivan Gaivironsky – Chief Financial and Administrative Officer

Tel (+ 54 11) 4323 7449 ; ir@irsacp.com.ar

Moreno 877, 24th Floor, (C1091AAQ) Ciudad Autónoma de Buenos Aires, Argentina

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American Depositary Shares (ADSs), each representing four shares of Common Stock	Nasdaq National Market of the Nasdaq Stock Market
Common Stock, par value Ps.1.00 per share	Nasdaq National Market of the Nasdaq Stock Market*

* Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of the issuer’s common stock as of June 30, 2018: 126,014,050

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

☐ Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

 xYes ☐ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☐ Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer             ☐ Accelerated filer x           Non-accelerated filer ☐

Emerging growth company ☐         Non­accelerated filer ☐

 If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued x by the International Accounting Standards Board Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 23 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court.

Yes ☐ No ☐

Please send copies of notices and communications from the Securities and Exchange Commission to:

Carolina Zang	David Williams
	Jaime Mercado
Zang Vergel & Viñes Abogados	Simpson Thacher & Bartlett LLP
Florida 537 piso 18º C1005AAK Buenos Aires, Argentina.	425 Lexington Avenue New York, NY 10019

Explanatory Note

This Amendment No. 1 to the Annual Report on Form 20-F (“Amendment No. 1”) of IRSA Propiedades Comerciales S.A. (the “Company”) amends the Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2018 (the “Form 20-F”), which was filed with the Securities and Exchange Commission (the “SEC”) on October 23, 2018. The Company is filing this Amendment No. 1 solely for the purposes of replacing the Report of Independent Registered Public Accounting Firm that was included on page F-2 of the Form 20-F, with the report herein included and filing an udpated Consent of Independent Registered Public Accounting Firm as Exhibit 99.1. For such purposes, our annual audited financial statements as of June 30, 2018 and 2017 and for the fiscal years ended June 30, 2018, 2017 and 2016 that were filed togheter with our Form 20-F that includes the correct Report of Independent Registered Public Accounting Firm, together with the summary of Investment Properties by type as of June 30, 2018, filed as Exhibit 99.3 to Form 20-F (attached here tous Exhibit 99.2).

This Amendment No. 1 makes no changes to the financial statements of the Company included in the Form 20-F, other than the changes described above. Except as described above, this Amendment No. 1 does not amend, update or restate the information in any other item of the Form 20-F or reflect any events that have occurred after the filing of the Form 20-F.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

IRSA Propiedades Comerciales S.A.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of IRSA Propiedades Comerciales S.A. and its subsidiariesas ofJune 30, 2018 and2017, and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period endedJune 30, 2018, including the related notes and the summary of investment properties schedule as of June 30, 2018 listed in the index appearing under Item 19 (99.2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of June 30, 2018, based on criteria established inInternal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period endedJune 30, 2018in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2018, based on criteria established in Internal Control - Integrated Framework (2013)issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting

F-2

 

includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICE WATERHOUSE & Co. S.R.L

                                                      (Partner)

/s/ Walter Rafael Zablocky

Buenos Aires, Argentina

October 22, 2018

We have served as the Company’s auditor since 1998.

F-3

Consolidated statements of financial position

as of June 30, 2018 and 2017

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

Note		06.30.18	06.30.17
ASSETS
Non-current assets
Investment properties	9	54,054,811	35,916,882
Property, plant and equipment	10	109,437	120,536
Trading properties	11	61,362	61,600
Intangible assets	12	213,051	111,560
Investments in associates and joint ventures	8	1,433,522	791,626
Deferred income tax assets	20	60,734	59,455
Income tax and minimum presumed income tax credits		156,152	29
Trade and other receivables	14	955,509	777,818
Investments in financial assets	13	29,139	66,717
Total non-current assets		57,073,717	37,906,223
Current Assets
Trading properties	11	206	-
Inventories		24,882	22,722
Restricted assets	13	-	49,525
Income tax and minimum presumed income tax credits		43,269	1,933
Trade and other receivables	14	1,766,075	1,453,312
Investments in financial assets	13	5,145,463	1,180,249
Derivative financial instruments	13	47,360	-
Cash and cash equivalents	13	3,643,131	1,807,544
Total current assets		10,670,386	4,515,285
TOTAL ASSETS		67,744,103	42,421,508
SHAREHOLDERS’ EQUITY
Total capital and reserves attributable to equity holders of the parent		36,565,015	22,145,079
Non-controlling interest		1,397,872	871,169
TOTAL SHAREHOLDERS’ EQUITY		37,962,887	23,016,248
LIABILITIES
Non-current liabilities
Trade and other payables	17	483,908	406,598
Borrowings	18	15,362,726	5,918,119
Deferred income tax liabilities	20	11,425,496	11,263,341
Provisions	19	12,258	16,509
Total non-current liabilities		27,284,388	17,604,567
Current liabilities
Trade and other payables	17	1,870,552	1,104,982
Income tax and minimum presumed income tax liabilities		46,061	268,957
Payroll and social security liabilities		184,196	147,095
Borrowings	18	305,481	249,868
Derivative financial instruments	13	46,711	4,950
Provisions	19	43,827	24,841
Total current liabilities		2,496,828	1,800,693
TOTAL LIABILITIES		29,781,216	19,405,260
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES		67,744,103	42,421,508

  The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

IRSA Propiedades Comerciales S.A. 

Consolidated statements of comprehensive income

for the fiscal years ended June 30, 2018, 2017 and 2016

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Note	06.30.18	06.30.17	06.30.16
Income from sales, rentals and services	24	4,232,206	3,508,975	2,674,873
Income from expenses and collective promotion fund	24	1,717,000	1,488,187	1,183,627
Operating costs	25	(2,139,447)	(1,899,786)	(1,460,204)
Gross profit		3,809,759	3,097,376	2,398,296
Net gain from fair value adjustments of investment properties	9	16,690,117	3,133,413	17,092,403
General and administrative expenses	25	(415,242)	(322,176)	(221,580)
Selling expenses	25	(294,865)	(236,528)	(162,221)
Other operating results, net	26	(4,906)	(51,219)	(68,552)
Profit from operations		19,784,863	5,620,866	19,038,346
Share of profit of associates and joint ventures	8	639,525	152,703	204,299
Profit from operations before financing and taxation		20,424,388	5,773,569	19,242,645
Finance income	27	688,153	242,438	512,555
Finance cost	27	(7,438,451)	(1,313,336)	(2,938,476)
Other financial results	27	2,268,439	284,024	1,714,702
Financial results, net		(4,481,859)	(786,874)	(711,219)
Profit before income tax		15,942,529	4,986,695	18,531,426
Income tax expense	20	(286,506)	(1,609,181)	(6,278,894)
Profit for the year		15,656,023	3,377,514	12,252,532
Total comprehensive income for the year		15,656,023	3,377,514	12,252,532
Attributable to:
Equity holders of the parent		15,099,936	3,260,476	11,821,280
Non-controlling interest		556,087	117,038	431,252
Profit per share attributable to equity holders of the parent for the year (Note 28):
Basic		119.83	25.87	93.81
Diluted		119.83	25.87	93.81

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

IRSA Propiedades Comerciales S.A. 

Consolidated statements of changes in shareholders’ equity

for the fiscal years ended June 30, 2018, 2017 and 2016

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Share capital	Inflation adjustment of share capital	Share premium	Legal reserve	Reserve for future dividends	Special reserve CNV 609/12 (1)	Special reserve	Changes in non-controlling interest	Retained earnings	Subtotal	Non-controlling interest	Total shareholder’s equity
Balance as of June 30, 2017	126,014	69,381	444,226	39,078	356,598	2,700,192	-	(19,784)	18,429,374	22,145,079	871,169	23,016,248
Comprehensive income for the year	-	-	-	-	-	-	-	-	15,099,936	15,099,936	556,087	15,656,023
Equity contributions of the non-controling interest	-	-	-	-	-	-	-	-	-	-	253	253
Assignment of results - Shareholders’ meeting of October 31, 2017 (1)	-	-	-	-	(356,598)	-	2,627,076	-	(2,950,478)	(680,000)	-	(680,000)
Dividends distribution to non-controlling interest	-	-	-	-	-	-	-	-	-	-	(36,400)	(36,400)
Incorporation as result of business combination (Note 4)	-	-	-	-	-	-	-	-	-	-	6,763	6,763
Balance as of June 30, 2018	126,014	69,381	444,226	39,078	-	2,700,192	2,627,076	(19,784)	30,578,832	36,565,015	1,397,872	37,962,887

	Share capital	Inflation adjustment of share capital	Share premium	Legal reserve	Reserve for future dividends	Special reserve CNV 609/12 (1)	Special reserve	Changes in non-controlling interest	Retained earnings	Subtotal	Non-controlling interest	Total shareholder’s equity
Balance as of June 30, 2016	126,014	69,381	444,226	39,078	-	2,700,192	-	(19,770)	16,295,496	19,654,617	775,600	20,430,217
Comprehensive income for the year	-	-	-	-	-	-	-	-	3,260,476	3,260,476	117,038	3,377,514
Assignment of results - Shareholders’ meeting of October 31, 2016 (1)	-	-	-	-	356,598	-	-	-	(816,598)	(460,000)	-	(460,000)
Assignment of results - Shareholders’ meeting of April5, 2017 (1)	-	-	-	-	-	-	-	-	(310,000)	(310,000)	-	(310,000)
Changes in non-controlling interest	-	-	-	-	-	-	-	(14)	-	(14)	(851)	(865)
Incorporation as result of business combination (Note 4)	-	-	-	-	-	-	-	-	-	-	40,004	40,004
Dividends distribution to non-controlling interest	-	-	-	-	-	-	-	-	-	-	(60,622)	(60,622)
Balance as of June 30, 2017	126,014	69,381	444,226	39,078	356,598	2,700,192	-	(19,784)	18,429,374	22,145,079	871,169	23,016,248

F-6

  IRSA Propiedades Comerciales S.A.

Consolidated statements of changes in shareholders’ equity

for the fiscal years ended June 30, 2018, 2017 and 2016

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Share capital	Inflation adjustment of share capital	Share premium	Legal reserve	Reserve for future dividends	Special reserve CNV 609/12 (1)	Special reserve	Changes in non-controlling interest	Retained earnings	Subtotal	Non-controlling interest	Total shareholder’s equity
Balance as of June 30, 2015	126,014	69,381	444,226	39,078	-	2,700,192	-	(19,770)	4,757,796	8,116,917	443,500	8,560,417
Comprehensive income for the year	-	-	-	-	-	-	-	-	11,821,280	11,821,280	431,252	12,252,532
Assignment of results - Shareholders’ meeting of October 31, 2015 (1)	-	-	-	-	-	-	-	-	(283,580)	(283,580)	-	(283,580)
Dividends distribution to non-controlling interest	-	-	-	-	-	-	-	-	-	-	(99,027)	(99,027)
Reduction of capital contribution of non-controlling interest	-	-	-	-	-	-	-	-	-	-	(123)	(123)
Balance as of June 30, 2016	126,014	69,381	444,226	39,078	-	2,700,192	-	(19,770)	16,295,496	19,654,617	775,602	20,430,219

(1) See Note 16.

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-7

 IRSA Propiedades Comerciales S.A.

Consolidated statements of cash flows

for the fiscal years ended June 30, 2018, 2017 and 2016

(All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

	Note	06.30.18	06.30.17	06.30.16
Operating activities:
Cash generated from operations	15	4,183,288	3,139,928	1,589,228
Income tax paid		(559,281)	(264,721)	(575,855)
Net cash generated from operating activities		3,624,007	2,875,207	1,013,373
Investing activities:
Capital contributions in associates	8	-	(10,390)	-
Capital contributions in joint ventures	8	(41,412)	(329)	(73,000)
Acquisition of investment properties	9	(1,231,932)	(703,865)	(167,665)
Proceeds from sale of investment properties		29,482	138,342	357,243
Acquisition of property, plant and equipment	10	(15,774)	(23,866)	(13,747)
Advance payments		(90,451)	(169,647)	(6,596)
Acquisition of intangible assets	12	(41,915)	(35,786)	(1,583)
Acquisitions of investments in financial assets		(11,330,046)	(2,517,631)	(9,916,383)
Proceeds from investments in financial assets		8,535,468	3,282,471	8,453,545
Loans granted, net		(7,626)	(8,953)	-
Loans granted to related parties		(1,458)	(279,042)	(533,525)
Loans repayment received from related parties		-	168,846	-
Proceeds from sale of property plant and equipment		12,379	-	-
Collection of financial assets interests		336,537	57,922	37,156
Acquisition of subsidiaries, net of cash acquired	15	(46,345)	(46,146)	-
Dividends received		31,880	-	-
Net cash used in investing activities		(3,861,213)	(148,074)	(1,864,555)
Financing activities:
Issuance of non-convertible notes		2,365,003	-	5,411,199
Borrowings obtained		715,421	104,205	729,299
Borrowings obtained from related parties		4,000	3,500	-
Payment of borrowings		(77,338)	(72,164)	(1,328,439)
Payment of borrowings with related parties		-	-	(3,715,480)
Payments of financial leasing		(4,192)	(1,338)	(2,678)
Payment of non-convertible notes		-	(407,260)	(1,139,936)
Dividends paid		(680,000)	(48,926)	(37,019)
Dividends to non-controlling interest		-	(60,622)	(77,587)
Payment of derivative financial instruments		(416,264)	(47,797)	(580,828)
Proceeds from derivative financial instruments		638,044	130,993	1,831,621
Interest paid		(724,730)	(544,280)	(278,279)
Contributions of the non-controling shareholders		253	-	-
Short-term loans, net		(19,766)	(14,065)	(232,203)
Net cash generated / (used in) from financing activities		1,800,431	(957,754)	579,670
Net increase (decrease) in cash and cash equivalents		1,563,225	1,769,379	(271,512)
Cash and cash equivalents at beginning of year	13	1,807,544	33,049	303,499
Foreign exchange gain on cash and fair value result on cash equivalents		272,362	5,116	1,062
Cash and cash equivalents at end of the year	13	3,643,131	1,807,544	33,049

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-8

IRSA Propiedades Comerciales S.A.

Notes to the Unaudited Condensed Consolidated Financial Statements

 (All amounts in thousands of Argentine Pesos, except shares and per share data and as otherwise indicated)

1.

Group’s business and general information

IRSA PROPIEDADES COMERCIALES S.A. (“IRSA Propiedades Comerciales” or “the Company”) is an Argentine real estate company mainly engaged in holding, leasing, managing, developing, operating and acquiring shopping malls and office buildings and holds a predominant position within the Argentine market. IRSA Propiedades Comerciales was incorporated in 1889 under the name Sociedad Anonima Mercado de Abasto Proveedores (SAMAP) and until 1984 operated the main fresh product market in the Autonomous City of Buenos Aires. SAMAP’s core asset was the historical building of Mercado de Abasto, which served as site of the market from 1889 until 1984, when a sizable part of its operations was interrupted.

Since the Company was acquired by IRSA Inversiones y Representaciones Sociedad Anónima (hereinafter, IRSA) in 1994, it has grown through a series of acquisitions and development projects that resulted in a corporate reorganization pursuant to which the company was renamed Alto Palermo S.A. which was subrequentily changed to our current denomination

The Company holds 16 Shopping malls, operating 344,025 square meters (sqm) in 15 of them, 83,978 square meters in 7 premium offices and an extensive land reserve for future commercial developments;operates and holds a majority interest in a portfolio of 15 shopping malls in Argentina, seven of which are located in the Autonomous City of Buenos Aires (Abasto Shopping, Alcorta Shopping, Alto Palermo, Patio Bullrich, Buenos Aires Design, Dot Baires Shopping and Distrito Arcos), two in Buenos Aires province (Alto Avellaneda and Soleil Premium Outlet) and the rest are situated in different provinces (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera in the City of Córdoba, Alto Comahue in the City of Neuquén and La Ribera Shopping in the City of Santa Fe). The Company also owns the historic building where the Patio Olmos Shopping Mall is located, operated by a third party.

The Company’s shares are traded on the Buenos Aires Stock Exchange (BYMA: IRCP) and in United States of America on the NASDAQ (NASDAQ: IRCP).

IRSA Propiedades Comerciales and its subsidiaries are hereinafter referred to jointly as "the Group". See Notes 2.3 and 6 for further description of the Group’s companies and segments. Our main shareholder and parent company is IRSA and IFIS Limited is our ultimate parent company.

These consolidated financial statements (Financial Statements) have been approved by the Board of Directors to be issued on August 23, 2018.

2.

Summary of significant accounting policies

2.1

Basis of preparation of the Consolidated Financial Statements

(a)

Basis of preparation

These Consolidated Financial Statements have been prepared in accordance with IFRS issued by IASB and interpretations issued by the IFRIC. All IFRS applicable as of the date of these Consolidated Financial Statements have been applied.

IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be expressed in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. To do so, in general terms, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be calculated in the non-monetary items. This requirement also includes the comparative information of the financial statements.

In order to conclude on whether an economy is categorized as hyperinflationary in the terms of IAS 29, the standard details a series of factors to be considered, including the existence of a cumulative inflation rate in three years that approximates or exceed 100%. Bearing in mind that the downward trend in inflation observed in the previous year has reversed, noticing a significant increase in inflation during 2018, that it is also expected that the accumulated inflation rate of the last three years will exceed 100% and that the rest of the indicators do not contradict the conclusion that Argentina should be considered a hyperinflationary economy for accounting purposes, the Management understands that there is sufficient evidence to conclude that Argentina is a hyperinflationary economy in the terms of IAS 29, starting with the year initiated on July 1, 2018. Consequently, the Group should restate its next financial statements to be presented after the aforementioned date. However, it must be taken into account that, as of the date of issuance of these financial statements, Decree PEN 664/03 is in force, and it does not allow the presentation of restated for inflation financial statements before the National Securities Commission (CNV) and other bodies of corporate control.

F-9

IRSA Propiedades Comerciales S.A.

In an inflationary period, any entity that maintains an excess of monetary assets over monetary liabilities, will lose purchasing power, and any entity that maintains an excess of monetary liabilities over monetary assets, will gain purchasing power, provided that such items are not subject to an adjustment mechanism.

Briefly, the restatement method of IAS 29 establishes that monetary assets and liabilities must not be restated since they are already expressed in the current unit of measurement at the end of the reporting period. Assets and liabilities subject to adjustments based on specific agreements must be adjusted in accordance with such agreements. The non-monetary items measured at their current values at the end of the reporting period, such as the net realization value or others, do not need to be restated. The remaining non-monetary assets and liabilities must be restated by a general price index. The loss or gain from the net monetary position will be included in the net result of the reporting year / period, revealing this information in a separate line item.

As of June 30, 2018, the restatement criteria of financial information established in IAS 29 have not been applied. However, in recent years’ certain macroeconomic variables that affect the Company's businesses, such as wages and prices of inputs, have undergone annual variations of certain importance. This circumstance must be considered in the evaluation and interpretation of the financial situation and the results presented by the Company in these financial statements.

(b)

Current and non-current classification

The Group presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position according with the operating cycle of each activity.

The operating cycle for activities related to the Group’s investment properties is 12 months. Therefore, current assets and current liabilities include the assets and liabilities that are either realized or settled within 12 months from the end of the fiscal year. The operating cycle of activities related to the Group’s investment properties for sale depends on each specific project, and thus cannot be clearly defined. In general, assets and liabilities classified as investment properties for sale are realized or discharged over many fiscal years, ranging between one and three years or, in exceptional cases, over a longer period. As a result, and for purposes of classification, the Group has assumed the operating cycle of investment properties for sale to be 12 months.

All other assets and liabilities are classified as non-current. Current and deferred tax assets and liabilities (income tax payable), are presented separately from each other and from other assets and liabilities as current and non-current, respectively.

(c)

Presentation currency

The Consolidated Financial Statements are presented in thousands of Argentine Pesos. Unless otherwise stated or the context otherwise requires, references to ‘Peso amounts’ or ‘Ps.’, are to Argentine Pesos, and references to ‘USD’ or ‘US dollars’ are to United States dollars.

(d)

End of the fiscal year

The fiscal year begins on July 1 and ends on June 30 each year.

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IRSA Propiedades Comerciales S.A. 

(e)

Accounting conventions

These Consolidated Financial Statements have been prepared under the deemed cost convention, except for investment properties, financial assets and financial liabilities (including derivative instruments) which have been prepared at fair value through profit or loss and share-based compensation at fair value.

(f)

Cash flows

The Group reports cash flows from operating activities using the indirect method. Interest paid is presented within cash used in financing activities. Interest received is presented within cash generated by investing activities. The acquisitions and disposals of investment properties are disclosed as cash from investing activities because this most appropriately reflects the Group’s business activities. Cash flows in respect of trading properties are disclosed as cash from operating activities because these assets are sold in the ordinary course of business.

(g)

Use of estimates

The preparation of financial statements at a certain date requires the Company’s Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual results might differ from the estimates and evaluations made at the date of preparation of consolidated financial statements. The most significant judgments made by Management in applying the Group’s accounting policies and the major estimates and significant judgments are described in Note 3.

2.2.

New accounting standards

The following standards, amendments and interpretations have been published by the IASB and by the IFRIC. Below we outline the standards, amendments and interpretations that may potentially have an impact on the Group at the time of application.

Standards and amendments adopted by the Group:

Standards and amendments	Description	Date of application by the Group
Cycle of annual improvements 2014-2016. IFRS 12 “Disclosure of Interests in other entities”.	Clarifies the standard scope.	06-30-2018
Amendments to IAS 7 "Disclosure about the statement of cash flows".	The entity shall disclose information so that users of the financial statements may assess the changes in liabilities resulting from financing activities, including both cash flow and non-cash-flow derivatives.	06-30-2018
Amendments to IAS 12 "Recognition of deferred tax assets for unrealized losses".	The amendments clarify the accounting of deferred income tax assets in the case of unrealized losses on instruments measured at fair value	06-30-2018

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  IRSA Propiedades Comerciales S.A.

Standards and amendments not adopted yet by the Group

Standards and amendments	Description	Date of application by the Group
Amendments to IAS 40 "Transfers of investment properties".	The amendments clarify the conditions that should be met for an entity to transfer a property to, or from, investment properties.	06-30-2019
Cycle of annual improvements 2014-2016. IAS 28 “Investments in Associates and Joint ventures”.	It clarifies that the option to measure an associate or a joint venture at fair value for a qualifying entity is available upon initial recognition	06-30-2019
IFRS 16 "Leases".	The lessees are required to account for leases under one single model in the balance sheet that is similar to the one used to account for financial leases under IAS 17. There are two exceptions to this rule: to recognize the lease of low-cost assets and short-term leases. There is almost no change to lessor accounting.	06-30-2020
IFRS 9 “Financial Instruments”.	This version adds a new impairment model based on expected losses and introduces some minor amendments to the classification and measurement of financial assets.	06-30-2019
IFRS 15 “Revenue from contracts with customers”.	Provides the new revenue recognition model derived from contracts with customers. The core principle underlying the model is satisfaction of obligations assumed with customers. Applies to all contracts with customers, other than those covered by other IFRSs, such as leases, insurance and financial instruments contracts. The standard does not address recognition of interest or dividend income.	06-30-2019
Amendments to IFRS 2 "Share-based Payment".	The amendments clarify the scope of the standard in relation to: (i) accounting for the effects that the concession consolidation conditions have on cash settled share-based payments, (ii) the classification of the share-based payment transactions subject to net settlement, and (iii) accounting for the amendment of terms and conditions of the share-based payment transaction that reclassifies the transaction from cash settled to equity settled.	06-30-2019

The future adoption of these standards, amendments and interpretations adopted, will not have a material impact on the Group, except IFRS 9.

IFRS 9: Financial instruments

The new standard includes a new model of "expected credit loss" for credits or other assets not measured at fair value. The new model presents a dual measurement approach for impairment: if the credit risk of a financial asset has not increased significantly since its initial recognition, an impairment allowance will be recorded in the amount of expected credit losses resulting from the events of non-compliance that are possible within a certain period. If the credit risk has increased significantly, in most cases the allowance will increase and the amount of the expected loss will be recorded.

In accordance with the new standard, in cases where a change in terms or exchange of financial liabilities is immaterial and does not lead, at the time of analysis, to the reduction of the previous liability and recognition of the new, the new cash flows must be discounted at the original effective interest rate, with the difference between the present value of the financial liability that has the new terms and the present value of the original financial liability that is recognized in results. As a result of the application of the new standard, the amount of the liabilities, whose terms were modified and which a new effective interest rate was calculated at the time of the change in the terms in accordance with IAS 39, will be recalculated from the date of the change in terms using the original effective interest rate.

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IRSA Propiedades Comerciales S.A. 

As of date of these financial statements, our estimate of the application of IFRS 9, would generate a decrease in retained earnings and in investment in associates and joint ventures of Ps. 18.4 million, due to the impact of the application of said standard on the calculation of the allowance for uncollectible debtors in our associate Tarshop S.A.. The methodology of this estimate may vary from that which is defined in the model at the moment of the effective application of the aforementioned standard.

2.3.

Scope of consolidation

(a)

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment in the entity and has the ability to effect such returns through its power over the entity. The Group also analyzes whether there is control when it does not hold more than 50% of the voting rights of an entity, but does have capacity to define its relevant activities because of de-facto control.

There may be de-facto control where the relative size of voting rights held by the Group in an entity in relation to the size and dilution of other shareholders gives the Group power to define the relevant activities of such entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

IFRS 3 “Business Combination” allows up to 12 months to finalize the accounting for a business combination. Where the accounting for a business combination is not complete by the end of the reporting period in which the business combination occurred, the Group reports provisional amounts.

The Group has elected to recognize acquisition of assets or group of assets carried out between entities under common control who also qualify as “Business Combination” according to IFRS 3, using the acquisition method.

The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquirer’s net assets. The Group chooses the method to be used on case-by-case basis.

The amount by which the aggregate of the fair value of consideration transferred, the acquisition date fair value of the Company's previously held interest and any non-controlling interest exceeds the fair value of the assets and liabilities acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the consolidated statements of comprehensive income as "Bargain purchase gains".

Inter-company transactions, balances and unrealized gains on transactions between or among group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. The majority of subsidiaries have the same year-end as the Group, however, a small number of subsidiaries have non-coterminous year-ends. In these circumstances, special-purpose financial statements prepared as of June 30 of each year are used for purposes of the Group consolidation.

The Group conducts its business through several operating and holding subsidiaries. Unless otherwise stated, the subsidiaries listed in Note 7 have share capital consisting solely of ordinary shares, which are held directly by the Group and the proportion of ownership interests held is equal to the voting rights held by the Group. The country of incorporation or registration is also their place of business.

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IRSA Propiedades Comerciales S.A.

The Group takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in subsidiaries are considered significant. In quantitative terms, the Group considers significant those investments that individually represent at least 20% of the total equity attributable to non-controlling interest in subsidiaries at each year-end. Therefore, in qualitative terms, the Group considers, among other factors, the specific risks to which each company is exposed, their returns and the importance that each of them has for the Group.

Summarized financial information on subsidiaries with material non-controlling interests and other information are included in Note 7.

(b)

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, that is to say as transactions with the owners in their capacity as owners. The amount recorded is the difference between the fair value of any consideration paid and/or collected and the relevant share acquired and/or transferred of the carrying value of net assets of the subsidiary.

(c)

Disposal of subsidiaries with loss of control

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

(d)

Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and less than 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognized in the consolidated statements of comprehensive income, and its share of post acquisition movements is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of any impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the impairment loss within “share of profit of associates and joint ventures line item” in the Statements of comprehensive income.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognized in the Group’s financial statements only to the extent of any unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

For purposes of including the earnings of associates by applying the equity method, the Group uses financial statements of the associates as of the same date or a later date, provided the difference between the reporting date of the associate and that of the Group is no longer than three months. In these cases, the Group assesses and adjusts the results of such associates for material transactions or other material events occurred during the interim period.

F-14

The Group takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in associates are considered significant.In quantitative terms, investments that individually represent at least 20% of equity in earnings of joint ventures in the consolidated statements of comprehensive income and, simultaneously, at least 20% of all investments in joint ventures total equity attributable to non-controlling interest in associates at each year-end are considered significant. Therefore, in qualitative terms, the Group considers, among other factors, the specific risks to which each company is exposed, their returns and the importance that each company has for the Group.

Summarized financial information and other information for associates is included in Note 8.

(e)

Joint arrangements

Joint arrangements are arrangements of which the Group and other party or parties have joint control bound by a contractual arrangement. Under IFRS 11, investments in joint arrangements are classified as either joint ventures or joint operations depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.

Investments in joint ventures are accounted for under the equity method. Under the equity method of accounting, interests in joint ventures are initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition of profits or losses and movements in other comprehensive income in the consolidated statements of comprehensive income and in other comprehensive income, respectively.

When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

The Group determines at each reporting date whether there is any objective evidence that the investment in a joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognizes the amount adjacent to share of profit of associates and joint ventures in the statements of comprehensive income.

Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

The Group takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in joint ventures are considered significant.In quantitative terms, the investments that individually represent at least 20% of equity in earnings of joint ventures in the consolidated statements of comprehensive income and, simultaneously, at least 20% the total equity attributable to non-controlling interest in joint ventures at the each year-end are considered significant. Therefore, in qualitative terms the Group considers, among other factors, the specific risks to which each company is exposed to, their returns and the importance that each company has for the Group.

Summarized financial information and other information for significant joint ventures is included in Note 8.

2.4.

   Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) the Group’s Executive Committee. This CODM is responsible for allocating resources and assessing performance of the operating segments. The operating segments are described in Note 6.

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    IRSA Propiedades Comerciales S.A.

2.5.

Foreign currency translation

(a)

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). These Financial Statements are presented in Argentine Pesos, which is the Group’s presentation currency.

(b)

Transactions and balances in foreign currency

Foreign currency transactions are translated into Argentine Pesos using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit or loss for the year.

Foreign exchange gains and losses are presented in the statements of comprehensive income within finance income and finance costs, as appropriate, unless they are capitalized as explained in Note 2.19.

2.6.

Investment properties

Investment properties are those properties owned by the Group that are held either to earn long-term rental income or for capital appreciation and that are not occupied by the Group for its own operations. Properties occupied by associates or joint ventures are accounted for as investment properties in these Consolidated Financial Statements.

Investment property also includes properties that are being constructed or developed for future use as investment property. The Group also classifies land whose future use has not been determined yet as investment property.

When a property is partially owner-occupied, with the rest being held for rental income or capital appreciation, the Group accounts for the portions separately. The portion that is owner-occupied is accounted for as property, plant and equipment under IAS 16 “Property, Plant and Equipment” and the portion that is held for rental income or capital appreciation, or both, is treated as investment property under IAS 40 “Investment Property”.

The Group’s investment properties primarily comprise the Group’s portfolio of shopping malls and offices, certain property under development and other undeveloped land.

Investment property is measured initially at cost. Cost comprises the purchase price and directly attributable expenditures, such as legal fees, certain direct taxes, commissions and in the case of properties under construction, the capitalization of financial costs.

For properties under development, capitalization of costs includes not only financial costs, but also all costs directly attributable to works in process, from commencement of construction until it is completed and property is in conditions to start operating. Capitalized costs include mainly the part attributable to third-party service costs, as well as the materials necessary for construction. Capitalization of such costs ceases when the property reaches the operating conditions indicated above. 

Direct expenses related to lease contract negotiation (as well as payment to third parties for services rendered and certain specific taxes related to execution of such contracts) are capitalized as part of the book value of the relevant investment properties and amortized over the term of the lease.

Borrowing costs associated with properties under development or undergoing major refurbishment are capitalized. The finance cost capitalized is calculated using the Group’s weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amount capitalized is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Finance cost is capitalized from the commencement of the development work until the date of practical completion. The capitalization of finance costs is suspended if there are prolonged periods when development activity is interrupted. Finance cost is also capitalized on the purchase cost of land or property acquired specifically for redevelopment in the short term but only when activities necessary to prepare the asset for redevelopment are in progress.

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    IRSA Propiedades Comerciales S.A.

After initial recognition, investment property is carried at fair value. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active, continues to be measured at fair value. Investment properties under construction are measured at fair value if the fair value is considered to be reliably determinable. Investment properties under construction for which the fair value cannot be determined reliably, but for which the Group expects that the fair value of the property will be reliably determinable when construction is completed, are measured at cost less impairment until the fair value becomes reliably determinable or construction is completed, whichever is earlier.

Fair values are determined differently depending on the type of property being measured.

Generally, fair value of office buildings and land reserves is based on active market prices, adjusted, if necessary, for differences in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods, such as recent prices on less active markets or discounted cash flow projections (Level 2).

The fair value of the Group’s portfolio of Shopping Malls is based on discounted cash flow projections. This method of valuation is commonly used in the shopping mall industry in the region where the Group conducts its operations (Level 3).

As required by Resolution 576/10 of the CNV, valuations are performed as of the financial position date by accredited professional appraisers who have recognized and relevant professional qualifications and have recent experience in the location and category of the investment property being valued. These valuations form the basis for the carrying amounts in the consolidated Financial Statements. The fair value of investment property reflects, among other things, rental income from current leases and other assumptions market participants would make when pricing the property under current market conditions.

Subsequent expenditure is capitalized to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the asset can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.

Changes in fair values are recognized in the consolidated statements of comprehensive income under the line item “Net gain from fair value adjustments of investment properties”.

Asset transfers, including assets classified as investments properties which are reclassified under other items or vice-versa, may only be carried out when there is a change of use evidenced by: a) commencement of occupation of real property by the Group, where investment property is transferred to property, plant and equipment; b) commencement of development activities for sale purposes, where investment property is transferred to property for sale; c) the end of Group occupation, where it is transferred from property, plant and equipment to investment properties; or d) commencement of an operating lease transaction with a third party, where properties for sale are transferred to investment property. The value of the transfer is the one that the property had at the time of the transfer and subsequently is valued in accordance with the accounting policy related to the item.

The Group may sell its investment property when it considers they are not core to its ongoing rental business activities. Where the Group disposes of a property at fair value in an arm’s length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in the other comprehensive consolidated statements of comprehensive income in the line “Net gain from fair value adjustments of investment properties”.

Investment properties are derecognized when they are disposed of or when they are permanently withdrawn from use and no future economic benefits are expected to arise from their disposal. The disposal of properties is recognized when the significant risks and rewards have been transferred to the buyer. As for unconditional agreements, proceeds are recognized when legal title to property passes to the buyer and the buyer intends to make the respective payment therefor. In the case of conditional agreements, the disposal is accounted for where such conditions have been met. Where consideration receivable for the sale of the properties is deferred, it is discounted to present value.

The difference between the discounted amount and the amount receivable is treated as interest income and recognized over the period using the effective interest method. Direct expenses related to the sale are recognized in the line "other operating results, net" in the consolidated statements of comprehensive income at the time they are incurred.

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IRSA Propiedades Comerciales S.A.

2.7.

Property, plant and equipment

This category primarily comprises buildings or portions of a building used for administrative purposes, machines, computers and other equipment, motor vehicles, furniture, fixtures and fittings and improvements to the Group’s corporate offices.

All property, plant and equipment (“PPE”) is stated at historical cost less depreciation and accumulated impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. For properties under development, capitalization of costs includes not only financial costs, but also all costs directly attributable to works in process, from commencement of construction until it is completed and property is in conditions to start operating. Capitalized costs include mainly the part attributable to third-party service costs, as well as the materials necessary for construction. Capitalization of such costs ceases when the property reaches the operating conditions indicated above. 

Borrowing costs are directly incurred for the purpose of acquiring, constructing or producing a qualifying PPE are capitalized as part of its cost. A qualifying PPE is an asset that necessarily takes a substantial period of time to get ready for its intended use. Borrowing costs are capitalized during the period of construction or production of the eligible asset; such capitalization ceases once the necessary activities for the asset to have the intended use have been completed, or else capitalization is suspended while construction activity is suspended.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Such costs may include the cost of improvements and replacement of parts as they meet the conditions to be capitalized the carrying amount of those parts that are replaced is derecognized. Repairs and maintenance are charged to the consolidated statements of comprehensive income during the financial period in which they are incurred. Depreciation, based on a component approach, is calculated using the straight-line method to allocate the cost over the assets’ estimated useful lives.

As of June 30, 2018 useful lives are as follows:

Other buildings and facilities	Between 1 and 22 years
Furniture and fixtures	Between 3 and 10 years
Machinery and equipment	Between 1 and 10 years
Vehicles	5 years
Other	3 years

As of each period-end, an evaluation is performed to determine the existence of indicators of any decrease in recoverable value or useful life of assets. If there are any indicators, the recoverable amount and/or residual useful life of impaired asset(s) is estimated, and an impairment adjustment is made, if applicable. As of each year-end, the residual useful life of assets is estimated and adjusted, if necessary.

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount (see Note 2.10.).

Gains from the sale of these assets are recognized when the significant risks and rewards have been transferred to the buyer. This will normally take place on unconditional exchange, generally when legal title passes to the buyer and it is probable that the buyer will pay. For conditional exchanges, sales are recognized when these conditions are satisfied.

Gains and losses on disposals are determined by comparing the proceeds, net of direct expenses related to those proceeds, with carrying amount at the date of each transaction. Gains and losses from the disposal of property, plant and equipment items are recognized within “Other operating results, net” in the consolidated statements of comprehensive income.

2.8.

        Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement.

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  IRSA Propiedades Comerciales S.A. 

A Group company is the lessor: Operating lease – properties leased to tenants under operating leases are included in “Investment properties” in the statements of financial position. See Note 2.25 for the recognition of rental income.

Finance lease – the Group does not have any finance leases.

A Group company is the lessee: Operating lease – leases in which substantially all risks and rewards of ownership are retained by another party, as lessor, are classified as operating leases.

Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statements of comprehensive income on a straight-line basis over the period of the lease. Significant leases where the Group acts as lessee under operating leases mainly include principal offices.

Finance lease - leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the commencement of the lease at the lower of the fair value of the property and the present value of the minimum lease payments. Capitalized lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. The finance charges are charged over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Liabilities corresponding to finance leases, measured at discounted value, are included in current and non-current borrowings. Significant leases where the Group acts as lessee under finance leases include machinery and computer equipment.

2.9.

        Intangible assets

(a)

Goodwill

Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognized by the Group on an acquisition. Goodwill is initially measured as the difference between the fair value of the consideration transferred, plus the amount of non-controlling interest in the acquisition and, in business combinations achieved in stages, the acquisition-date fair value of the previously held equity interest in the acquisition; and the net fair value of the identifiable assets and liabilities assumed on the acquisition date.

At acquisition goodwill is allocated to those cash generating units expected to benefit from the acquisition for the purpose of impairment (see Note 2.10.). Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill arising on the acquisition of subsidiaries is included within “Intangible assets” in the statements of financial position.

Goodwill may also arise upon investments in associates and joint ventures, being the surplus of the cost of investment over the Group’s share of the fair value of the net identifiable assets. Such goodwill is recorded within investments in associates or joint ventures.

Goodwill is not amortized but tested for impairment at each fiscal year end, or more frequently if there is an indication of impairment.

(b)

Software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives between 3 and 5 years.

Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met: (i) it is technically feasible to complete the software product so that it will be available for use; (ii) management intends to complete the software product and use or sell it; (iii) there is an ability to use or sell the software product; (iv) it can be demonstrated how the software product will generate probable future economic benefits; (v) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and (vi) the expenditure attributable to the software product during its development can be reliably measured.

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    IRSA Propiedades Comerciales S.A.

Directly attributable costs that are capitalized as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

Computer software development costs recognized as assets are amortized over their estimated useful lives, which does not exceed 5 years.

(c)

Rights of use

The Group acquired certain rights to develop a plot of land and facilities. These rights primarily comprise the right to develop the land and attached buildings and facilities known as Distrito Arcos (“Arcos”).

The Arcos land and attached facilities is owned by Administration of Railway Infrastructure (“ADIF”, as per its Spanish acronym), a governmental agency created for the management of certain State’s properties, particularly assets pertaining to the railway system. Arcos are the old warehouse and adjacent spaces below the tracks of the San Martin railway lines. The right was acquired as part of the Arcos acquisition and is carried at acquisition cost less accumulated amortization. Amortization is calculated using the straight-line method over the period in which the economic benefits of use accrue. The Group must pay ADIF a fee on a monthly basis.

(d)

Right to receive future units under barter agreements

The Group also enters into barter transactions where the Group normally exchanges undeveloped parcels of land with third-party developers for future property to be constructed on the bartered land. The Group generally receives monetary assets as part of the transactions and/or a right to receive future units to be constructed by developers. Such rights are initially recognized at cost (which is the fair value of the land assigned) and such rights are not adjusted later, unless there is any sign of impairment.

2.10.

Impairment of assets

(a)

Goodwill

For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, referred to as cash-generating units. In order to determine whether any impairment loss should be recognized, the book value of cash-generating units or cash generating unit groups is compared against its recoverable value. Net book value of cash-generating units and cash generating unit groups include goodwill and assets with limited useful life (such as, investment properties, property, plant and equipment, intangible assets and working capital).

If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognized for goodwill are included in the statements of comprehensive income and are not reversed in a subsequent period.

The recoverable amount of a cash-generating unit is the higher of fair value less costs-to-sell and value-in-use. The fair value is the amount at which a cash-generating unit may be sold in a current transaction between unrelated, willing and duly informed parties. Value-in-use is the present value of all estimated future cash flows expected to be derived from cash-generating units or cash-generating unit groups.

(b)

Properties, plant and equipment and defined-lived intangible assets

At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment, and limited-duration intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss.

When the asset does not generate cash flows independently of other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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    IRSA Propiedades Comerciales S.A.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statements of comprehensive income.

Assets or cash-generating units that have suffered an impairment loss are revised as of each year-end date to assess a potential reversal of such impairment. The impairment loss recognized in prior fiscal years may only be reversed if there has been a change in the estimates used to assess the recoverable value of assets or the cash-generating unit since the recognition of the impairment loss.

Where an impairment loss subsequently reverses the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in the statements of comprehensive income.

2.11.

        Trading properties

Trading properties comprise those properties either intended for sale or in the process of construction for sale. Trading properties are carried at the lower of cost and net realizable value. Where there is a change in use of investment properties evidenced by the commencement of development with a view to sale, the properties are reclassified as trading properties at cost, which is the carrying value at the date of change in use. They are subsequently carried at the lower of cost and net realizable value.

Cost comprises all direct costs of purchase, costs of conversion and other costs incurred in bringing the trading properties to their present location and condition.

Borrowing costs incurred for the purpose of acquiring, constructing or producing a qualifying trading property are capitalized as part of its cost. A qualifying trading property is an asset that necessarily takes a substantial period of time to get ready for its intended use. Borrowing costs are capitalized while acquisition, construction or production is underway and cease once the asset is substantially complete or suspended if development of the asset is suspended.

Net realizable value is the estimated selling price of a property in the ordinary course of business less costs to complete and selling expenses. If the net realizable value is lower than the carrying amount, a write-down is recognized in the amount by which the carrying amount exceeds its net realizable value. Write-downs are reversed when circumstances that caused the write-down cease to exist, or when net realizable value increases.

2.12.

Inventories

Inventories mainly include materials, supplies or other assets required to offer different services.

Supplies and other of materials and assets classified in this category are measured at the lower of cost or net realizable value. The cost of supplies, materials and other assets is determined using the weighted average cost method.

2.13.

      Financial instruments

Classification

The Group classifies financial assets in the following categories: those to be measured at fair value and those to be measured at amortized cost. This classification depends on whether the financial asset is a debt or equity instrument.

Debt instruments

A debt instrument is classified at amortized cost only if both of the following criteria are met: i) the objective of the Group’s business model is to hold the asset to collect the contractual cash flows; and (ii) the contractual terms give rise on specified dates to cash derived solely from payments of principal and interest due on the principal outstanding. The nature of any derivatives embedded in the debt instrument are considered in determining whether the cash flows of the instrument are derived solely from payment of principal and interest due on the principal outstanding and are not accounted for separately.

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  IRSA Propiedades Comerciales S.A. 

If either of the two criteria above is not met, the debt instrument is classified at “fair value through profit or loss”. The Group has not designated any debt investment as measured at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch. Changes in fair values and gains from disposal of financial assets at fair value through profit or loss are recorded within “Financial results, net” in the statements of comprehensive income.

Equity instruments

All equity instruments, which are neither subsidiaries, associate companies nor joint ventures of the Group, are measured at fair value. Equity investments that are held for trading are measured at fair value through profit or loss. For all other equity investments, the Group can make an irrevocable election at initial recognition to recognize changes in fair value through other comprehensive income rather than profit or loss. The Group decided to recognize changes in fair value of equity instruments through changes in profit or loss.

Changes in fair values and results from disposal of equity investments at fair value through profit or loss and dividends income are recorded within ”Financial results, net” in the statements of comprehensive income.

Regular purchases and sales of financial assets are recognized on the trade date–the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the statements of comprehensive income.

Results on debt instruments measured at amortized cost and not identified for hedging purposes are charged to income where the financial assets are derecognized or an impairment loss is recognized and during the amortization process under the effective interest method.

All equity investments, which are neither subsidiary associate companies nor joint venture of the Group, are measured at fair value.

The Group is required to reclassify all affected investments in debt instruments when and only when its business model for managing those assets changes.

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets measured at amortized cost is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulties, defaults or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future cash flows.

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    IRSA Propiedades Comerciales S.A.

The amount of the impairment is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated statements of comprehensive income. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the reversal of the previously recognized impairment loss is recognized in the consolidated statements of comprehensive income.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

2.14.

Derivative financial instruments and hedging activities

Derivative financial instruments are initially recognized at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group manages exposures to various risks using hedging instruments that provide the appropriate economic outcome. The Group does not use derivative financial instruments for speculative purposes. To date, the Group has used future and forward contracts, as appropriate.

The Group’s policy is to apply hedge accounting to hedging relationships where it is permissible under IFRS 9, practical to do so and its application reduces volatility, but transactions that may be effective hedges in economic terms may not always qualify for hedge accounting under IFRS 9. To date the Group has not applied hedge accounting to any of its derivative financial instruments. Trading derivatives are classified as a current asset or liability on the statement of financial position. Gains and losses on other derivatives are classified in “Financial results, net”, in the statements of comprehensive income.

The fair values of financial instruments that are traded in active markets are computed by reference to market prices. The fair value of derivative financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

2.15.

Trade and other receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

A provision of doubtful accounts is recorded when there is objective evidence that the Group may not be able to collect all receivables within their original payment term. Indicators of doubtful accounts include significant financial distress of the debtor, the debtor potentially filing a petition for reorganization or bankruptcy, or any event of default or past due account.

In the case of larger non-homogeneous receivables, the Group generally measures the impairment provision on an individual basis. When assessed individually, the Group records a provision for impairment which amounts to the difference between the value of the discounted expected future cash flows of the receivable and its carrying amount, taking into account the existing collateral, if any. This provision takes into consideration the financial situation of the debtor, the resources, payment track-record and, if applicable, the value of collateral.

The Group collectively evaluates for impairment smaller-balance homogeneous receivables, which are grouped on the basis of similar risk characteristics, taking into account asset type, collateral type, past-due status and other relevant factors. The Group applies allowance factors, which in the judgment of management represent the expected losses over the life of the receivables. In determining those factors, the Group considers the following: (i) delinquencies of the credits, (ii) loss history and the general behaviour of clients, (iii) trends in volume and terms of receivables, (iv) the experience and depth of the debtors’ management, (v) national and local economic trends, (vi) concentrations of credit by individual credit size and by class of receivable, and (vii) the effect of other external factors.

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IRSA Propiedades Comerciales S.A.

The amount of the provision for doubtful accounts is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the statements of comprehensive income within “Selling expenses”. Subsequent recoveries of amounts previously written off are credited against “Selling expenses” in the statements of comprehensive income.

2.16.

Trade and other payables

Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method.

2.17.   Tenant deposits

The Group generally obtains deposits from tenants as a guarantee for returning the property at the end of the lease term in a specified good condition or for the lease payments for a period of generally 3 years. The deposits are generally equivalent to one month of lease rentals. Such deposits are treated as both a financial asset and a financial liability in accordance with IFRS 9, and they are initially recognized at fair value. The difference between fair value and cash received is considered to be part of the minimum lease payments received for the operating lease (refer to Note 2.25. for the recognition of rental income). The deposits are subsequently measured at amortized cost.

2.18.

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized as finance cost over the period of the borrowings using the effective interest method.

2.19.

Borrowing costs

General and specific borrowing costs (interest and foreign exchange differences) directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

The Group capitalizes borrowing costs on qualifying investment properties, property, plant and equipment and trading properties.

2.20.

Provisions

Provisions are recognized when: (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. Provisions are not recognized for future operating losses.

The amount of its accruals is based on up-to-date developments, estimates of the outcomes of the matters and legal counsel’s experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material adverse effect on its results of operations and financial condition or liquidity.

Provisions are measured at the present value of the cash flows expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in provisions due to passage of time is recognized in the statements of comprehensive income.

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2.21.

Employee benefits

(a)

Pension plans obligations

The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognized as employee benefit expense in the statement of comprehensive income when they are due.

(b)

Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.

(c)

Bonus plans

The Group recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the Company’s shareholders after certain adjustments. The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.22.

Shared based payments

The Group operates an incentive plan, under which certain selected employees, directors and top management of IRSA Propiedades Comerciales S.A., IRSA and Cresud have a right to matching shares of IRSA and Cresud, although they must hold their purchased shares and remain with the employer entity for a specified period of time.

The fair value of the equity settled awards is measured at the date of grant. Management measures the fair value using the valuation technique that it considers to be the most appropriate to value each class of award. Methods used may include Black-Scholes calculations or other models as appropriate. The valuations take into account factors such as non-transferability, exercise restrictions and behavioural considerations.

The fair value of the share-based payment is recognized in the statements of comprehensive income under the straight-line method over the vesting period in which the right to receive shares of IRSA and Cresud becomes irrevocable (“vesting period”); such value is based on the best available estimate of the number of shares expected to vest.

Such estimate is revised if subsequent information becomes available indicating that the number of shares expected to vest differs from original estimates.

2.23.

Current income tax, deferred income tax and minimum presumed income tax

Tax expense for the year comprises the charge for tax currently payable and deferred taxation. Tax is recognized in the statement of income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity, in which case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. The Group establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

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 IRSA Propiedades Comerciales S.A.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated Financial Statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Entities in Argentina are subject to the Minimum Presumed Income Tax (“MPIT”). Pursuant to this tax regime, an entity is required to pay the greater of the income tax or the MPIT. The MPIT provision is calculated on an individual entity basis at the statutory asset tax rate of 1% and is based upon the taxable assets of each company as of the end of the year, as defined by Argentine law. Any excess of the MPIT over the income tax may be carried forward and recognized as a tax credit against future income taxes payable over a 10-year period. When the Group assesses that it is probable that it will use the MPIT payment against future taxable income tax charges within the applicable 10-year period, the Group recognizes the MPIT as a current or non-current receivable, as applicable, within “Trade and other receivables” in the statements of financial position.

Minimum presumed income tax was repealed by the Law No. 27,260 in section 76 for the annual periods beginning on January 1, 2019.

In this respect, considering recent Instruction No. 2 issued by the Federal Administration of Public Revenue (AFIP), if the Company posts financial and tax losses, no provision for income tax would be recorded.

2.24.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less. Cash equivalents do not include bank overdrafts.

2.25.   Revenue recognition

Revenue from Group’s activities is principally derived from business activities carried out in shopping malls and in rental buildings and mainly include rental income from shopping mall properties and offices leased under operating leases, admission rights, commissions and revenue from several services provided to the Group’s lessees.

Revenue from the sale of properties is recognized when: (a) material risks and benefits derived from title to property have been transferred; (b) the Company does not retain any management function on the assets sold nor does it have any control whatsoever on such assets; (c) the amount of revenues and costs associated to the transaction may be measured on a reliable basis; and (d) the Company is expected to accrue the economic benefits associated to the transaction.

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IRSA Propiedades Comerciales S.A.

Revenue from the provision of services is recognized when: (a) the amount of revenue and costs associated to the services may be measured on a reliable basis; (b) the Company is expected to accrue the economic benefits associated to the transaction, and (c) the level of completion of services may be measured on a reliable basis.

●

Shopping malls portfolio

Primarily comprises rental income from shopping mall properties lease out over operating leases, admission rights, commissions and revenue from several services provided to the Group’s lessees.

The Argentine Civil and Commercial Code section 1221 provides that tenants may rescind commercial lease within the initial six months by means of written notification. If option is used within the first year of the lease, the Tenant shall pay the Lessor, as compensation, the equivalent of one-and-a-half month’s rent, and one month’s rent if the tenant makes use of the option after that period. Given that the rule does not provide for advance notice, Lease Agreements include a provision whereby the lessee must give at least 60 days advance notice of its intention to terminate the lease. The exercise of such early termination could materially and adversely affect the Group.

The Group analyzed the definition of leasing term in IAS 17 wich provides that a non-cancellable lease is a lease that is cancellable only (a) upon the occurrence of some remote contingency, (b) with the permission of the lessor, (c) if the lessee enters into a new lease with the same lessor or (d) upon payment by the lessee of such an additional amount that, at inception of the lease, continuation of the lease is reasonably certain.

The Group has determined that, in all operating leases, the lease term for accounting purposes matches the term of the contract. The Group concluded that, even though a lease is cancellable under law, tenants would incur significant “economic penalties” if the leases are terminated prior to expiry. The Group considered that these economic penalties are of such amount that continuation of the lease contracts by tenants appears to be reasonably certain at the inception of the respective agreements. The Group reached this conclusion based on factors such as: (i) the strategic geographical location and accessibility to customers of the Group’s investment properties; (ii) the nature and tenure of tenants (mostly well-known local and international retail chains); (iii) limited availability of identical revenue-producing space in the areas where the Group’s investment properties are located; (iv) the tenants’ brand image and other competitive considerations; (v) tenants’ significant expenses incurred in renovation, maintenance and improvements on the leased space to fit their own image; (vi) the majority of the Group’s tenants only have stores in shopping malls with a few or none street stores. See datails in Note 24.

                Lessees of shopping malls are generally required to pay the higher of: (i) a base monthly rent (the “Base Rent”) and (ii) a specific percentage of gross monthly sales recorded by the Lessee (the “Contingent Rent”), which generally ranges between 2% and 10% of gross sales. Moreover, in accordance with agreements entered into for most locations, the Base Rent is subject to scheduled increases, typically between 10% on a semi-annually over the term of the lease.

In addition, some lease contracts include provisions that set forth variable rent based on specific volumes of sales and other types of ratios.

Rental income from shopping mall properties leased out under operating leases is recognized in the consolidated statements of comprehensive income on a straight-line basis over the term of the leases. When lease incentives are granted, they are recognized as an integral part of the net consideration for the use of the property and are therefore recognized on the same straight-line basis.

Contingent rents, being lease payments that are not fixed at the inception of a lease, are recorded as income in the periods in which they are known and can be determined. Rent reviews are recognized when such reviews have been agreed with tenants.

Tenants in the Group’s shopping mall are also generally charged a non-refundable admission right upon entering a lease contract or renewing an existing one. Admission rights are treated as additional rental income and recognized in the statement of comprehensive income under a straight-line basis over the term of the respective lease agreement.

The Group acts as its own leasing agent for arranging and closing lease agreements in its shopping malls properties and consequently earns letting fees. Letting fees are paid by tenants upon the successful closing of an agreement. A transaction is considered successfully concluded when both parties have signed the related lease contract. Letting fees received by the Group are treated as additional rental income and are recognized in the statement of comprehensive income on a straight-line basis over the term of the lease agreements.

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IRSA Propiedades Comerciales S.A.

Lease contracts also provide that common area maintenance (“CAM”) of the Group’s shopping malls are borne by the corresponding lessees, generally on a prorrata basis. CAM include all such expenses convenient and necessary for various purposes including, but not limited to, the operation, maintenance, management, safety, preservation, repair, supervision, insurance and enhancement of the shopping malls. The lessor is responsible for determining the need and suitability of incurring a common area service charge. The Group makes the original payment for such expenses, which are then reimbursed by the lessees. The Group considered that it acts as a principal in these cases.

Service charge income related to can is presented separately from property operating expenses. Property operating expenses are expensed as incurred.

Under the lease contracts entered into, lessees also agree to participate in collective promotion funds (“CPF”) to be used in advertising and promoting the Group’s shopping malls. Each lessee’s participation is generally calculated as a percentage of the 15% monthly rent accrued.

Revenue so derived is also included under rental income and services segregated from advertising and promotion expenses. Such expenses are charged to income when incurred.

On the other hand, revenue includes income from managed operations and other services such as car parking lots. Those revenues are recognized on an accrual basis as services are provided.

●

Office and other rental properties portfolio

Rental income from office and other rental properties include rental income from office leased out under operating leases, income for services and expenses recovery paid by tenant.

Rental income from office and other rental properties leased out under operating leases is recognized in the consolidated statements of comprehensive income on a straight-line basis over the term of the leases (‘rent averaging’). When lease incentives are granted, they are recognized as an integral part of the net consideration for the use of the property and are therefore recognized on the same straight-line basis.

Contingent rents, are recorded as income in the periods in which they are collected. Rent reviews are recognized when such reviews have been agreed with tenants.

Lease contracts also provide that common area service charges of the Group’s office and other rental properties are borne by the corresponding lessees, generally on a proportionally basis. These common area service charges include all such expenses convenient and necessary for various purposes including, but not limited to, the operation, maintenance, management, safety, preservation, repair, supervision, insurance and enhancement of the shopping malls. The Group acts as the management of rental properties. The Group makes the original payment for such expenses, which are then reimbursed by the lessees. The Group considered that it acts as a principal in these cases. The Group accrues reimbursements from tenants for recoverable portions of all these expenses as service charge revenue in the period the applicable expenditures are incurred and is presented separately from property operating expenses. Property operating expenses are expensed as incurred.

●

Sales and Development activities

Revenue from sale and developments of real estate properties primarily comprises the results from the sale of trading properties. Results from the sale of properties are recognized only when the significant risks and rewards have been transferred to the buyer. This normally takes place on unconditional exchange of contracts (except where payment or completion is expected to occur significantly after exchange). For conditional exchanges, sales are recognized when these conditions are satisfied.

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IRSA Propiedades Comerciales S.A.

The Group applies IFRIC 15 “Agreements for the Construction of Real Estate”. IFRIC 15 gives guidance as to which standard applies when accounting for the construction of real estate; that is IAS 11 “Construction Contracts” or IAS 18 “Revenue”. IFRIC 15 interprets that an agreement meets the definition of a construction contract under IAS 11 when the buyer is able to specify the major structural elements of the design of the property either before or during construction. Furthermore, IFRIC 15 interprets that an agreement is for the sale of goods under IAS 18 when construction takes place independently of the agreement and the buyer has only a limited ability to influence the design. The Group has assessed the nature of its agreements and determined that they are within the scope of IAS 18. As a result, the Group recognizes revenue from the sale of open market private homes and commercial units entirely at the delivery in accordance with IAS 18.

The Group also enters into barter transactions where the Group normally exchanges undeveloped parcels of land with third-party developers for future property to be constructed on the bartered land and on occasion, the Group also receives cash as part of the transactions. Legal title to the land together with all risks and rewards of ownership are transferred to the developer upon sale. The Group generally requires the developer to issue insurances or to mortgage the land in favor of the Group as performance guarantee. In the event the developer does not fulfil its obligations, the Group forecloses on the land through the execution of the mortgage or the surety insurances, together with a cash penalty.

The Group may sell the residential apartments to third-party homebuyers once they are finalized and transferred from the developer. In these circumstances, revenue is recognized when the significant risks and rewards are transferred to the buyer. This will normally take place when the deeds of title are transferred to the homebuyer.

However, the Group may market residential apartments during construction or even before construction commences. In these situations, buyers generally surrender a down payment to the Group with the remaining amount being paid when the developer completes the property and transfers it to the Group, and the Group in turn transfers it to the buyer. In these cases, revenue is not recognized until the apartments are completed and the transaction is legally completed, that is when the apartments are transferred to the homebuyers and deeds of title are executed. This is because in the event the residential apartments are not completed by the developer and consequently not delivered to the homebuyer, the Group is contractually obligated to return to the homebuyer any down payment received plus a penalty amount. The Group may then seek legal remedy against the developer for non-performance of its obligations under the agreement. The Group exercised judgment and considers that the most significant risk associated with the asset the Group holds (i.e. the right to receive the apartments) consisting of the unfulfillment of the developer's obligations (i.e. to complete the construction of the apartments) has not been transferred to the homebuyers upon reception of the down payment.

2.26.

      Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

When any of Group’s subsidiaries purchase the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of tax) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. When such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and related income tax effects, is included in equity attributable to the Company’s equity holders.

Instruments issued by the Group that will be settled by the Company delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash or another financial asset are classified as equity.

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IRSA Propiedades Comerciales S.A. 

2.27.

Earnings per share

Earnings per share is calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average of common shares outstanding during the year. Diluted earnings per share is computed by dividing the profit for the year by the weighted average of common shares outstanding, and when dilutive, adjusted for the effect of all potentially dilutive shares, including share options, on an as-if converted basis.

In computing diluted earnings per share, income available to common shareholders used in the basic earnings per share calculation is adjusted to add back the after-tax amount of interest recognized in the year with respect to any debt convertible to common stock. The weighted-average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Diluted earnings per share is based on the most advantageous conversion rate or exercise price over the entire term of the instrument from the standpoint of the security holder. The calculation of diluted earnings per share excludes potential common shares if their effect is anti-dilutive (Note 28).

2.28.      

Dividend distribution

Cash dividend distribution to the Group’s shareholders is recognized as a liability in the period in which the dividends are approved. Such amounts have been recorded either under Retained Earnings, if already forfeited or under Trade and Other Payables, if not forfeited.

2.29.

Dividends income

Dividends earned are recorded when declared.

2.30.

Comparative information

Balance items as of June 30, 2017 and 2016 shown in these Financial Statements for comparative purposes arise from Financial Statements then ended. Reclassifications have been made in the comparative information as of June 30, 2017 and 2016.

During the fiscal year ended June 30, 2018, 2017 and 2016, there was a devaluation of the Argentine peso in relation to the US Dollar that accounted for approximately 74%, 11% and 65%, respectively. This situation affects the comparability of figures disclosed in these Financial Statements, arising mainly from the impact of the exchange rate on our assets and liabilities in foreign currency.

2.31.       Seasonal effects on operations

The operations of the Group’s shopping mall are subject to seasonal effects, which affect the level of sales recorded by tenants. During summer time (January and February), the tenants of shopping mall experience the lowest sales levels in comparison with the winter holidays (July) and during the period of Christmas’ Seasons (December) when they tend to record peaks of sales. Apparel stores generally change their collections during the spring and the fall, which impacts positively on shopping mall sales. Sale discounts at the end of each season also impact in the business. As a consequence, a higher level of revenues is generally expected in shopping mall operations during the second half of the year rather than the first.

3.

 Significant judgments, key assumptions and estimates

Not all of these significant accounting policies require management to make subjective or complex judgments or estimates. The following is intended to provide an understanding of the policies that management considers critical because of the level of complexity, judgment or estimations involved in their application and their impact on the Consolidated Financial Statements. These judgments involve assumptions or estimates in respect of future events. Actual results may differ from these estimates.

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IRSA Propiedades Comerciales S.A. 

Estimation	Main assumptions	Potential implications	Main references
Business combination - Allocation of acquisition prices	Assumptions regarding timing, amount of future revenues and expenses, revenue growth, expected rate of return, economic conditions, discount rate, among other.	If the assumptions made be inaccurate, the recognized combination may not be correct.	Note 4 – Acquisitions and dispositions
Recoverable amounts of cash-generating units (even those including goodwill), associates and assets.	The discount rate and the expected growth rate before taxes in connection with cash-generating units. The discount rate and the expected growth rate after taxes in connection with associates. Cash flows are determined based on past experiences with the asset or with similar assets and in accordance with the Group’s best factual assumption relative to the economic conditions expected to prevail. Business continuity of cash-generating units. Appraisals made by external appraisers and valuators with relation to the assets’ fair value, net of realization costs (including real estate assets).	If any of the assumptions made be inaccurate, this could lead to differences in the recoverable values of cash-generating units.	Note 10 – Property, plant and equipment Note 12 – Intangible assets
Estimated useful life of intangible assets and property, plant and equipment	Estimated useful life of assets based on their conditions.	Recognition of accelerated or decelerated depreciation by comparison against final actual earnings (losses).	Note 10 – Property, plant and equipment Note 12 – Intangible assets
Fair value valuation of investment properties	Fair value valuation made by external appraisers and valuators. See Note 9.	Incorrect valuation of investment property values	Note 9 – Investment properties
Income tax	The Group estimates the income tax amount payable for transactions where the Treasury’s Claim cannot be clearly determined. Additionally, the Group evaluates the recoverability of assets due to deferred taxes considering whether some or all of the assets will not be recoverable.	Upon the improper determination of the provision for income tax, the Group will be bound to pay additional taxes, including fines and compensatory and punitive interest.	Note 20 – Taxes
Allowance for doubtful accounts	A periodic review is conducted of receivables risks in the Group’s clients’ portfolios. Bad debts based on the expiration of account receivables and account receivables’ specific conditions.	Incorrect recognition of charges / reimbursements of the allowance for bad debt.	Note 14 – Trade and other receivables
Level 2 and 3 financial instruments	Main assumptions used by the Group are: ●Discounted projected income by interest rate ●Values determined in accordance with the shares in equity funds on the basis of its Financial Statements, based on fair value or investment assessments. ●Comparable market multiple (EV/GMV ratio). ●Underlying asset price (Market price); share price volatility (historical) and market interest-rate (Libor rate curve).	Incorrect recognition of a charge to income / (loss).	Note 13 – Financial instruments by category
Probability estimate of contingent liabilities.	Whether more economic resources may be spent in relation to litigation against the Group; such estimate is based on legal advisors’ opinions.	Charge / reversal of provision in relation to a claim.	Note 19 – Provisions

4.

Acquisitions and disposals

Fiscal year ended as of June 30, 2018

Acquisition of La Arena

On February 20, 2018 IRSA Propiedades Comerciales, through its subsidiary Ogden Argentina S.A. ("OASA"), which the Company controlled thorugh Entertainment Holdings S.A., acquired a 60% equity interest in La Arena, which developed and operates the stadium known as "DIRECTV ARENA", located in Tortuguitas, province of Buenos Aires.

The price set for the transaction amounted to USD 4.2 million, of which USD 1.9 million were outstanding as of the date of this annual report.

See in Note 15 the balances of business combination.

Acquisition of plot of land La Plata

On March 22, 2018 IRSA Propiedades Comerciales acquired, directly and indirectly, 100% of a plot of land of 78,614 sqm of surface located in Camino General Belgrano, between 514th Av., 19th Av. and 511 Street, in the town of La Plata, province of Buenos Aires.  

The operation was made through the purchase of 100% of the shares of common stock of the company Centro de Entretenimientos La Plata SA ("CELAP"), owner of 61.85% of the property and the direct purchase of the remaining 38.15% share of common stock from non-related third parties.

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IRSA Propiedades Comerciales S.A. 

The total price of the transaction was USD 7.5 million, which has been fully paid.

The purpose of this acquisition is the future development of a mixed-use project.

Acquisition of plot of land in Mendoza

On March 14, 2018 the Company acquired a 3,641 sqm of plot of land adjacent to Mendoza Shopping, for an amount of USD 1.2 million. As of the date of these Financial Statements, USD 0.8 million were outstanding.

Sale of units in Intercontinental Building

IRSA Propiedades Comerciales sold 851,79 square meters corresponding to one floor of office and eight parking lots in the Intercontinental Plaza buildingThe consideration was USD 3 million, which was fully paid.

Fiscal year ended as of June 30, 2017

Acquisition of control over Entertainment Holdings S.A. (EHSA)

In July 2016, IRSA Propiedades Comerciales, acquired 20% shareholding in EHSA, a company where it already owned 50%. It also acquired 1.25% interest in Entretenimiento Universal S.A. (“ENUSA”). The amount paid for the acquisition was Ps. 53 million. As a result, the Group now holds 70% of the voting stock of EHSA.

EHSA holds, both directly and indirectly, 100% of the shares of OGDEN Argentina S.A. (“OASA”) and 95% of the shares of ENUSA.

OASA holds 50% of the voting stock of La Rural S.A. (“LRSA”), a company that holds the right to commercially operate the emblematic “Predio Ferial de Palermo” in the Autonomous City of Buenos Aires, where the Sociedad Rural Argentina (“SRA”) holds the remaining 50%.

See in Note 15 the balances of business combination.

Purchase of Philips Building

On June 5, 2017, IRSA Propiedades Comerciales acquired the Philips Building located in Saavedra, Autonomous City of Buenos Aires, next to the DOT Shopping Mall. The building has a constructed area of 10,142 square meters and is intended for office development and lease. The acquisition price was USD 29 million, which was fully paid up as of June 30, 2017.

Furthermore, the Company has signed an agreement with the seller which allow them to remain leasing the building for a term of 7 months and 15 days, which expire on January 19, 2018.

Sale of units in Intercontinental Building

IRSA Propiedades Comerciales sold 2,432 square meters corresponding to three floors of office and 24 parking lots in the Intercontinental Plaza building. The Company still holds 3,876 square meters profitable of the building. The consideration was USD 9 million, which was fully paid by the purchaser as of June 30, 2017.

Catalinas Tower

On November 16, 2016, IRSA signed an agreement with DYCASA S.A., the primary building contractor for the development of Catalinas Tower who, on November 29, 2016, started the corresponding works. The execution term is 28 months and completion is scheduled for March 2019. On April 6, 2016, IRSA Propiedades Comerciales has purchased from IRSA a portion of the future units to be built.

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IRSA Propiedades Comerciales S.A. 

5.

Financial risk management

Risk management principles and procedures

The risk management function within the Group is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Group is exposed during or at the end of the reporting period. Financial risk comprises market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, liquidity risk and capital risk.

The Group’s diverse activities are exposed to a variety of financial risks in the normal course of business. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the Group’s capital costs by using suitable means of financing and to manage and control the Group’s financial risks effectively. The Group uses financial instruments to hedge certain risk exposures when deemed appropriate based on its internal management risk policies.

The Group’s principal financial instruments comprise cash and cash equivalents, receivables, payables, interest bearing assets and liabilities, other financial liabilities, other investments and derivative financial instruments. The Group manages its exposure to key financial risks in accordance with the Group’s risk management policies.

The Group’s risk management policies are implemented at all its subsidiaries companies in order to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group’s management framework includes policies, procedures, limits and allowed types of derivative financial instruments.

The Group has established a Risk Committee, comprising Senior Management and a member of the Audit Committee of Cresud (IRSA’s parent company), which reviews and oversees management’s compliance with these policies, procedures and limits and has overall accountability for the identification and management of risk across the Group.

This section provides a description of the principal risks and uncertainties that could have a material adverse effect on the Group’s strategy, performance, results of operations and financial condition. The principal risks and uncertainties facing the businesses, set out below, do not appear in any particular order of potential materiality or probability of occurrence.

(a)

Market risk management

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group’s market risks arise from open positions in foreign currencies, interest-bearing assets and liabilities, and risk of market price of equity securities, to the extent that these are exposed to general and specific market movements. The Group sets limits on the exposure to these risks that may be accepted, which are monitored on a regular basis.

The examples of sensitivities to market risks included below are based on a change in one factor while holding all other factors constant. In practice this is unlikely to occur, and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

Foreign exchange risk and associated derivative financial instruments

The Group publishes its consolidated Financial Statements in Argentine Pesos but conducts business in many foreign currencies. As a result, the Group is subject to foreign currency exchange risk due to exchange rate movements, which affect the Group’s transaction costs. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency, that is, Argentine Pesos.

The real estate activities of the Group’s subsidiaries are primarily located in Argentina where the Argentine Peso is the functional currency. A significant majority of the Group’s business activities is conducted in the respective functional currencies of the subsidiaries (the Argentine Peso), thus not exposing the Group to foreign exchange risk. However, in the ordinary course of business, the Group transacts in currencies other than the respective functional currencies of the subsidiaries. These transactions are primarily denominated in US dollars. The Group’s net financial position exposure to the US dollar is managed on a case-by-case basis, by entering into different derivative instruments and/or by borrowing in foreign currencies. Exposure to other foreign currencies has not been significant to date.

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IRSA Propiedades Comerciales S.A.

Financial instruments are only considered sensitive to foreign exchange rates where they are not in the functional currency of the entity that holds them. The following table shows the US dollar-denominated net amounts of the financial instruments for the years ended June 30, 2018 and 2017. All amounts are presented in Argentine Pesos, the presentation currency of the Group:

	Net monetary position liability
	06.30.18	06.30.17
Borrowing position with third parties	(9,697,165)	(5,267,218)
Lending position with related parties	360,966	315,194
Net monetary position	(9,336,199)	(4,952,024))

The Group estimates that, other factors being constant, a 10% oscillation of the US dollar against the Argentine Peso at year-end would impact in the profit before income tax in an amount of Ps. 933,620 and Ps. 495,202 for the years ended June 30, 2018 and 2017, respectively.

This sensitivity analysis provides only a limited, point-in-time view of the sensitivity of the foreign exchange risk associated with Group’s financial instruments. The actual impact of the foreign exchange rate changes on the Group’s financial instruments may differ significantly from the impact shown in the sensitivity analysis.

Furthermore, the Group also uses derivative instruments, such as foreign currency forward contracts, to manage exposure to foreign exchange risk. As of June 30, 2018 and 2017 there were foreign-currency forward contracts in the amount of Ps. 47,360 (assets) and Ps. 4,950 (liabilities), respectively.

Interest rate risk

The Group is exposed to interest rate risk on its investments in debt instruments, short-term and long-term borrowings and derivative financial instruments.

The primary objective of the Group’s investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, the Group diversifies its portfolio in accordance with the limits set by the Group. The Group maintains a portfolio of cash equivalents and short-term investments in a variety of securities, including both government and corporate obligations and money market funds and ETF funds.

As the Group’s investments in this type of financial instrument subject to this risk are not significant, changes in market interest rates do not have any significant direct effect on the Group’s income.

The Group’s interest rate risk principally arises from long-term borrowings (Note 18). Borrowings issued at floating rates expose the Group to the risk that the actual cash flows differ from those expected. Borrowings issued at fixed rates expose the Group to the risk that the fair values of these differ from those expected. The Group manages this risk by maintaining an appropriate mix between fixed and floating rate interest bearing liabilities. These activities are evaluated regularly to determine that the Group is not exposed to interest rate movements that could adversely impact its ability to meet its financial obligations and to comply with its borrowing covenants.

The Group’s interest rate risk policy is approved by its management. The Group analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated, taking into consideration refinancing, renewal of existing positions and alternative financing sources. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. Trade payables are normally interest-free and have settlement dates within one year. The simulation is done on a regular basis to verify that the maximum potential loss is within the limits set by Management.

See in Note 18 the breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination (excluding finance leases) for the years ended June 30, 2018 and 2017:

  The Group estimates that, other factors being constant, a 1% oscillation in floating rates at year-end would impact the profit before income tax for the year ended June 30, 2018 and 2017 by Ps. 10.89 million and Ps. 0.96 million, respectively. Additionally, the variation of 1% in the swap rate would impact in the statement of comprehensive income before taxes in Ps. (16) million.

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IRSA Propiedades Comerciales S.A.

Other price risk

The Group is exposed to price risk inherent in equity investments, which are classified on the consolidated statement of financial position at fair value through profit or loss. The Group regularly reviews the prices evolution of these equity securities in order to identify significant movements. (Note 13)

As of June 30, 2018 and 2017, the total value of the investment in equity securities issued by other companies equals to Ps. 201.7 million and Ps. 157.7 million, respectively.

The Group estimates that, other factors being constant, a 10% oscillation in equity indexes at fiscal year-end would decrease profit before income tax for the years ended June 30, 2018 and 2017 by Ps. 20.2 million and Ps. 15.8 million, respectively.

(b)

Credit risk management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Group. Credit limits have been established to ensure that the Group deals only with approved counterparties and that counterparty concentration risk is addressed and the risk of loss is mitigated. Counterparty exposure is measured as the aggregate of all obligations of any single legal entity or economic entity to the Group.

              The Group is subject to credit risk arising from deposits with banks and financial institutions, investments of surplus cash balances, the use of derivative financial instruments and from outstanding receivables. Credit risk is managed on a country-by-country basis.

The Group’s policy is to manage credit exposure from deposits, short-term investments and other financial instruments by maintaining diversified funding sources in various financial institutions. All the institutions that operate with the Group are well known because of their experience in the market and high credit quality. The Group places its cash and cash equivalents, investments, and other financial instruments with various high credit quality financial institutions, thus mitigating the amount of credit exposure to any one institution. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents and short-term investments in the statement of financial position.

The Group’s primary objective for holding derivative financial instruments is to manage currency exchange rate risk and interest rate risk. The Group generally enters into derivative transactions with high-credit-quality counterparties and, by policy, limits the amount of credit exposure to each counterparty. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which counterparty’s obligations exceed the obligations that the Group has with that counterparty. The credit risk associated with derivative financial instruments is represented by the carrying value of the assets positions of these instruments.

The Group’s policy is to manage credit risks associated with trade and other receivables within defined trading limits. All Group’s significant counterparties have internal trading limits.

Trade receivables from investment and development property activities are primarily derived from leases and services from shopping malls, office and other rental properties; receivables from the sale of trading properties and investment properties (primarily undeveloped land and non-retail rental properties). The Group has a large customer base and is not dependent on any single customer.

F-35

The Group has specific policies to ensure that rental contracts are transacted with counterparties with appropriate credit quality. The majority of the Group’s shopping mall, office and other rental properties’ tenants are well-recognized retailers, diversified companies, professional organizations, and others. Owing to the long-term nature and diversity of its tenancy arrangements, the credit risk of this type of trade receivables is considered to be low. Generally, the Group has not experienced any significant losses resulting from the non-performance of any counterpart to the lease contracts. As a result, the allowance for doubtful accounts balance is low. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Group, as applicable. If customers are independently rated, these ratings are used. If there is no independent rating, risk control assesses the credit quality of the customer, taking into account its past experience, financial position, actual experience and other factors. Based on the Group’s analysis, the Group determines the amount of the deposit that is required from the tenant at inception of the lease. Management does not expect any losses from non-performance by these counterparties (Note 14).

(c)

Liquidity risk management

The Group is exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, the risk that borrowing facilities are not available to meet cash requirements, and the risk that financial assets cannot readily be converted to cash without loss of value. Failure to manage liquidity risks could have a material impact on the Group’s cash flow and statement of financial position. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding its existing and prospective debt requirements by maintaining diversified funding sources with adequate committed funding lines from high quality lenders.

The Group monitors its current and projected financial position using several key internally generated reports: cash flow; debt maturity; and interest rate exposure. The Group also undertakes sensitivity analysis to assess the impact of proposed transactions, movements in interest rates and changes in property values on the key profitability, liquidity and balance sheet ratios.

The Group’s debt and derivative positions are continually reviewed to meet current and expected debt requirements. The Group maintains a balance between longer-term and shorter-term financings. Short-term financing is principally raised through bank facilities and overdraft positions. Medium- to longer-term financing comprises public and private bond issues, including private placements. Financing risk is spread by using a variety of types of debt. The maturity profile is managed by spreading the repayment dates and extending facilities.

The tables below analyze the Group’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows and as a result, they do not reconcile to the amounts disclosed on the statement of financial position. However, undiscounted cash flows in respect of balances due within 12 months generally equal their carrying amounts in the statement of financial position, as the impact of discounting is not significant. The tables include both interest and principal flows.

Where the interest payable is not fixed, the amount disclosed has been determined by reference to the conditions existing at each reporting date.

At June 30, 2018	Less than 1 year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	More than 4 years	Total
Trade and other payables	776,952	71,444	3,670	2,498	-	854,564
Borrowings (excluding finance lease liabilities)	1,138,838	1,387,782	5,374,580	1,235,747	11,381,419	20,518,366
Finance leases	6,945	6,498	1,803	-	-	15,246
Derivative financial instruments	264	-	-	-	46,447	46,711
Total	1,922,999	1,465,724	5,380,053	1,238,245	11,427,866	21,434,887

At June 30, 2017	Less than 1 year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	More than 4 years	Total
Trade and other payables	480,612	5,940	4,570	1,497	1,489	494,108
Borrowings (excluding finance lease liabilities)	787,406	523,845	523,845	523,845	6,748,934	9,107,875
Finance leases	1,690	968	668	-	-	3,326
Derivative financial instruments	4,950	-	-	-	-	4,950
Total	1,274,658	530,753	529,083	525,342	6,750,423	9,610,259

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(d)

Capital risk management

The capital structure of the Group consists of shareholder’s equity and short-term to long-term net borrowings. The type and maturity of the Group’s borrowings are analyzed further in Note 18. The Group’s equity is analyzed into its components in the consolidated statement of changes in equity. Capital is managed so as to promote the long-term success of the business and to maintain sustainable returns for shareholders.

The Group seeks to manage its capital requirements to maximize value through the mix of debt and equity funding, while ensuring that Group entities continue to operate as going concerns, comply with applicable capital requirements and maintain strong credit ratings.

The Group assesses the adequacy of its capital requirements, cost of capital and gearing (i.e., debt/equity mix) as part of its broader strategic plan. The Group continuously reviews its capital structure to ensure that (i) sufficient funds and financing facilities are available to implement the Group’s property development and business acquisition strategies, (ii) adequate financing facilities for unforeseen contingencies are maintained, and (iii) distributions to shareholders are maintained within the Group’s dividend distribution policy. The Group also protects its equity in assets by contracting insurance.

The Group’s strategy is to maintain key financing metrics (namely, net debt to total equity ratio (gearing) and loan-to-value ratio (“LTV”) in order to ensure that asset level performance is translated into enhanced returns for shareholders while maintaining an appropriate risk reward balance to accommodate changing financial and operating market cycles.

The following table details a number of the Group’s key metrics in relation to managing its capital structure. The ratios are within the ranges previously established by the Group’s strategy.

	06.30.18	06.30.17
Gearing ratio (i)	29.21%	21.13%
Debt ratio (ii)	28.66%	16.94%

(i) Calculated as total current and non-current borrowings divided by total current and non-current borrowings plus equity.

(ii) Calculated as total current and non-current borrowings divided by total properties at fair value (including trading properties, property, plant and equipment, investment properties and units to be received under barter agreements).

5.1

Other non-financial risks

Property risk:

There are several risks affecting the Group’s property investments. The composition of the Group’s property portfolio including asset concentration and lot size may impact liquidity and relative property performance. The Group has a large multi-asset portfolio and monitors its concentration and the average size of its plots of land.

A change in trends and economic conditions causes shifts in customer demands for properties with impact on new lettings, renewal of existing leases and reduced rental growth. Also changes increase risk of tenant insolvencies. The Group conducts several actions to mitigate some of these risks whenever possible. The variety of asset types and geographical spread as well as a diversified tenant base, with monitoring of tenant concentration, helps mitigating these risks.

The development, administration and profitability of shopping malls are impacted by various factors including: the accessibility and the attractiveness of the area where the shopping mall is located, the intrinsic attractiveness of the shopping mall, the flow of people, the level of sales of each shopping mall rental unit, the increasing competition from internet sales, the amount of rent collected from each shopping mall rental unit and the fluctuations in their occupancy levels in the shopping malls. In the event that there is an increase in operational costs, caused by inflation or other factors, it could have a material adverse effect on the Group if its tenants are unable to pay their higher rent obligations due to the increase in expenses. The Argentine Civil and Commercial Code provides that tenants may rescind commercial lease agreements after the initial six months by means of reliable notification. If the resolutory option is used within the first year of the lease, the Tenant shall pay the Lessor, as compensation, the sum equivalent to one-and-a-half month’s rent, and one month’s rent if he makes use of the option after that period. Given that the rule does not provide for advance notice, Lease Agreements include a provision whereby the lessee should give at least sixty days advance notice of its intention to terminate the lease. The exercise of such rescission rights could materially and adversely affect the Group.

F-37

Risks associated with development of properties include the following: the potential abandonment of development opportunities; construction costs exceeding original estimates, possibly making a project uneconomical; occupancy rates and rents at newly completed projects may be insufficient to make the project profitable; the Group’s inability to obtain financing on favorable terms for the development of the project; construction and lease-up may not be completed on schedule, resulting in increased debt service expense and construction costs; the Group’s inability to obtain, or the delays in obtaining, all necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations; preconstruction buyers may default on their purchase contracts or units in new buildings may remain unsold upon completion of constructions; prices for residential units may be insufficient to cover development costs. The Group also takes several actions to monitor these risks and respond appropriately whenever it is under its control. The Group has in-house property market research capability and development teams that monitor development risks closely.

The Group generally adopts conservative assumptions on leasing and other variables and monitors the level of committed future capital expenditure on development programs relative to the level of undrawn facilities.

6.

Segment reporting

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance, without prejudice of the powers and responsibilities of the Board of Directors. The CODM evaluates the business based on the differences in the nature of its products, operations and risks. The amount reported for each segment is the measure reported to the CODM for these purposes and later to the Board of Directors. In turn, the Board of Directors’ performance is assessed by the Shareholders’ Meeting, which is the Company’s governance body.

Operating segments identified are disclosed as reportable segments if they meet any of the following quantitative thresholds:

●

The operating segment’s reported revenue, including both sales to external customers and inter-segment sales or transfers, is 10% or more of the combined revenue, internal and external, of all operating segments.

●

The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of:

o

the combined reported profit of all operating segments that do not report a loss; and

o

the combined reported loss of all operating segments that report a loss.

●

Its assets are 10% or more of the combined assets of all operating segments.

In addition, the operating segments that do not meet any of the quantitative thresholds could be considered as reportable segments if management estimates that this information could be useful for the users of the financial statements.

If, after determining reportable segments in accordance with the preceding quantitative thresholds, the total external revenue attributable to those segments is less than 75% of the Group’s consolidated external revenue, additional segments are identified as reportable segments, even if they do not meet the thresholds described above, until at least 75% of the Group’s consolidated external revenue is included in reportable segments. Once 75% of the Group’s consolidated external revenue is included in reportable segments, the remaining operating segments are aggregated in “Other segments”.

F-38

  IRSA Propiedades Comerciales S.A.

Segment information has been prepared and classified according to different types of businesses in which the Group conducts its activities. The Group’s Investment and Development Properties business is comprised of the following segments:

●

 “Shopping Malls” includes the operation and development of shopping malls, through which we generate rental income and fees charged for services related to the lease of retail stores and other spaces. Our Shopping Malls segment includes highly diversified, multi-format assets with a particular focus on retailers that cater to middle- to high-income consumers.

●

 “Offices” includes the lease of offices and other rental properties and services related to these properties.

●

 “Sales and Developments” includes the sales of undeveloped parcels of land and properties, and activities related to the development and maintenance of such properties.

●

 “Others” includes the financing activities developed through our associated company Tarshop S.A., our residual consumer financing transactions and the operations developed by our subsidiary Entertainment Holdings S.A.

Group’s shopping malls, offices and other rental properties, and trading properties, are located in Argentina.

The CODM evaluates performance of business segments based on segment profit, defined as profit or loss from operations before financing and taxation. The measurement principles for the segment reporting structure are based on the IFRS principles adopted in the consolidated Financial Statements, except for:

●The operating income from the joint ventures Nuevo Puerto Santa Fe S.A. and Quality Invest S.A. are reported under the proportional consolidation method. Under this method, the income/loss generated by joint ventures is reported in the statements of comprehensive income line-by-line, rather than in a single item as required by IFRS. Management believes that the proportional consolidation method provides more useful information to understand the business return, because the assets and income/loss generated by consolidated operations are similar to the assets and income/loss booked under the equity method. This is due to the fact that under the proportional consolidation method, revenues and expenses are reported separately, instead of offsetting and reporting them as a single item in the statements of comprehensive income. Therefore, the proportional consolidation method is used by the CODM to assess and understand the return and the results of operations of these businesses as a whole. Operating results of La Rural S.A. joint venture is accounted for under the equity method. Management believes that, in this case, this method provides more adequate information for this type of investment.

●Operating results does not include the amounts pertaining to building administration expenses and collective promotion funds, and excludes total recovered costs, whether by way of building administration expenses or other concepts included under financial results (for example default interest and other concepts) and not analyzed to assess the operating performance of the segment. The CODM examines the net amount from both concepts (total surplus or deficit between building administration expenses and collective promotion funds and recoverable expenses).

Revenues generated and goods and services exchanged between segments are calculated on the basis of market prices. Intercompany transactions between segments, if any, are eliminated.

These costs and income are presented now for reconciliation of all segments and their respective consolidating operating income.

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  IRSA Propiedades Comerciales S.A.

The Group introduced a change in the way the CODM evaluates performance for "offices and others" and "sales and developments" segments. For those investment properties sold in our offices and others segment, their change in fair value (or realized gain) is now shown as part of the sales and developments segment The changes have affected (1) “offices and others” and “sales and developments” segments in the fiscal year ended June 30, 2017, which are related to the allocation of the realized changes in fair value of investment properties in “sales and developments” segment; and (2) “offices and others” and “financial operations and others” in the period ended March 31, 2018, changing the name of the latter to “Others” and adding the operations developed by our subsidiary Entertainment Holdings S.A..

The following is a summary analysis of the Group's business segments, corresponding to the fiscal years ended June 30, 2018, 2017 and 2016. Additionally, a reconciliation between results of operations corresponding to segment information and the results of operations as per the statements of comprehensive income; and total assets by segment and total assets according to the statement of financial position. The information by segments has been prepared and classified according to the businesses in which the Group carries out its activities:

F-40

IRSA Propiedades Comerciales S.A.

	06.30.18
	Shopping Malls	Offices	Sales and developments	Others	Total segmet reporting	Adjustment for expenses and collective promotion funds	Adjustment for share in profit/ (loss) of joint ventures	Total as per Statement of Comprehensive Income
Revenue	3,664,651	492,096	105,525	9,326	4,271,598	1,717,000	(39,392)	5,949,206
Operating costs	(329,785)	(48,407)	(18,688)	(19,752)	(416,632)	(1,747,051)	24,236	(2,139,447)
Gross profit (loss)	3,334,866	443,689	86,837	(10,426)	3,854,966	(30,051)	(15,156)	3,809,759
Net gain from fair value adjustment of investment properties	11,340,085	5,042,427	1,000,147	45,580	17,428,239	-	(738,122)	16,690,117
General and administrative expenses	(320,234)	(39,438)	(38,566)	(18,100)	(416,338)	-	1,096	(415,242)
Selling expenses	(238,170)	(47,362)	(10,635)	(1,955)	(298,122)	-	3,257	(294,865)
Other operating results, net	(56,451)	348	33,569	13,684	(8,850)	-	3,945	(4,905)
Profit (Loss) from operations	14,060,096	5,399,664	1,071,352	28,783	20,559,895	(30,051)	(744,980)	19,784,864
Share in profit of associates and joint ventures	-	-	-	20,171	20,171	-	619,354	639,525
Segment profit (loss) before financing and Taxation	14,060,096	5,399,664	1,071,352	48,954	20,580,066	(30,051)	(125,626)	20,424,389
Investment properties	40,467,248	12,625,243	2,394,577	191,667	55,678,735	-	(1,623,924)	54,054,811
Property, plant and equipment	55,952	53,956	-	-	109,908	-	(471)	109,437
Trading properties	-	-	61,568	-	61,568	-	-	61,568
Goodwill	1,323	3,913	-	100,861	106,097	-	(5,236)	100,861
Rights to receive units (barter transactions)	-	-	26,596	-	26,596	-	-	26,596
Inventories	25,492	-	-	-	25,492	-	(610)	24,882
Investments in associates and joint ventures	-	-	-	189,815	189,815	-	1,243,343	1,433,158
Operating assets	40,550,015	12,835,487	2,482,741	329,968	56,198,211	-	(386,898)	55,811,313

	06.30.17
	Shopping Malls	Offices	Sales and developments	Others	Total segmet reporting	Adjustment for expenses and collective promotion funds	Adjustment for share in profit/ (loss) of joint ventures	Total as per Statement of Comprehensive Income
Revenue	3,046,588	401,767	99,136	891	3,548,382	1,488,187	(39,407)	4,997,162
Operating costs	(349,445)	(27,908)	(22,534)	(48)	(399,935)	(1,512,738)	12,887	(1,899,786)
Gross profit (loss)	2,697,143	373,859	76,602	843	3,148,447	(24,551)	(26,520)	3,097,376
Net gain from fair value adjustmentof investment properties	2,068,103	1,064,586	193,187	-	3,325,876	-	(192,463)	3,133,413
General and administrative expenses	(261,475)	(31,464)	(30,483)	(1,539)	(324,961)	-	2,785	(322,176)
Selling expenses	(188,081)	(33,871)	(13,740)	(2,982)	(238,674)	-	2,146	(236,528)
Other operating results, net	(57,712)	(6,731)	(4,062)	16,183	(52,322)	-	1,103	(51,219)
Profit (Loss) from operations	4,257,978	1,366,379	221,504	12,505	5,858,366	(24,551)	(212,949)	5,620,866
Share in profit of associates and joint ventures	-	-	-	13,677	13,677	-	139,026	152,703
Segment profit (loss) before Financing and Taxation	4,257,978	1,366,379	221,504	26,182	5,872,043	(24,551)	(73,923)	5,773,569
Investment properties	28,799,277	6,841,517	1,158,695	-	36,799,489	-	(882,607)	35,916,882
Property, plant and equipment	55,409	65,663	-	-	121,072	-	(536)	120,536
Trading properties	-	-	61,600	-	61,600	-	-	61,600
Goodwill	1,323	3,913	-	26,375	31,611	-	(5,236)	26,375
Rights to receive units (barter transactions)	-	-	27,560	-	27,560	-	-	27,560
Inventories	23,260	-	-	-	23,260	-	(538)	22,722
Investments in associates	-	-	-	197,605	197,605	-	593,815	791,420
Operating assets	28,879,269	6,911,093	1,247,855	223,980	37,262,197	-	(295,102)	36,967,095

F-41

IRSA Propiedades Comerciales S.A.

	06.30.16
	Shopping Malls	Offices	Sales and developments	Others	Total segmet reporting	Adjustment for expenses and collective promotion funds	Adjustment for share in profit/ (loss) of joint ventures	Total as per Statement of Comprehensive Income
Revenue	2,409,082	284,137	2,679	1,013	2,696,911	1,183,627	(22,038)	3,858,500
Operating costs	(250,306)	(12,254)	(5,720)	(77)	(268,357)	(1,201,305)	9,458	(1,460,204)
Gross profit (loss)	2,158,776	271,883	(3,041)	936	2,428,554	(17,678)	(12,580)	2,398,296
Net gain from fair value adjustmentof investment properties	16,131,702	867,413	425,114	-	17,424,229	-	(331,826)	17,092,403
General and administrative expenses	(178,643)	(23,308)	(20,296)	-	(222,247)	-	667	(221,580)
Selling expenses	(145,278)	(12,824)	(4,264)	(1,835)	(164,201)	-	1,980	(162,221)
Other operating results, net	(61,556)	(1,377)	(7,831)	(18)	(70,782)	-	2,230	(68,552)
Profit (Loss) from operations	17,905,001	1,101,787	389,682	(917)	19,395,553	(17,678)	(339,529)	19,038,346
Share in profit of associates and joint ventures	-	-	-	(11,017)	(11,017)	-	215,316	204,299
Segment profit (loss) before Financing and Taxation	17,905,001	1,101,787	389,682	(11,934)	19,384,536	(17,678)	(124,213)	19,242,645
Investment properties	26,633,273	4,876,164	1,362,670	-	32,872,107	-	(638,011)	32,234,096
Property, plant and equipment	49,053	69,870	-	-	118,923	-	(598)	118,325
Trading properties	-	-	48,029	-	48,029	-	-	48,029
Goodwill	1,323	3,911	-	-	5,234	-	(5,234)	-
Rights to receive units (barter transactions)	-	-	38,281	-	38,281	-	-	38,281
Inventories	18,560	-	-	-	18,560	-	(358)	18,202
Investments in associates	-	-	-	134,527	134,527	-	463,232	597,759
Operating assets	26,702,209	4,949,945	1,448,980	134,527	33,235,661	-	(180,969)	33,054,692

F-42

 7.

           Information about subsidiaries

The Group conducts its business through several operating and holding subsidiaries.

The subsidiaries are shown by percentage of participation held by the Group:

			06.30.18		06.30.17
Name of the entity	Place of business / Country of incorporation	Main activity	% of ownership interest held	% of ownership interest held by non-controlling interests	% of ownership interest held	% of ownership interest held by non-controlling interests
Fibesa S.A.	Argentina	Mandatary	100.00%	-	100.00%	-
Centro de Entretenimientos La Plata S.A.	Argentina	Real estate	100.00%	-	-	-
Torodur S.A.	Uruguay	Investment	100.00%	-	100.00%	-
Shopping Neuquén S.A.	Argentina	Real estate	99.95%	0.05%	99.92%	0.08%
Arcos del Gourmet S.A.	Argentina	Real estate	90.00%	10.00%	90.00%	10.00%
Panamerican Mall S.A.	Argentina	Real estate	80.00%	20.00%	80.00%	20.00%
Entertainment Holdings S.A.	Argentina	Investment	70.00%	30.00%	70.00%	30.00%
Emprendimiento Recoleta S.A.	Argentina	Real estate	53.68%	46.32%	53.68%	46.32%

Restrictions, commitments and other matters in respect of subsidiaries

According to Law N° 19,550, 5% of the profit in each fiscal year must be separated to constitute a legal reserve until they reach legal capped amounts (20% of the nominal value of total capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. The Group has not reached the legal limit of this reserve. Dividends are paid across the Group’s subsidiaries based on their individual accounting statements.

Arcos del Gourmet

Injuction order

In December 2013, the Judicial Branch confirmed an injunction order that suspended the opening of the Shopping Mall on the grounds that it did not have certain government permits in the context of two legal proceedings, where a final decision has been rendered for Distrito Arcos.

The plaintiff filed a petition for the continuation of the preliminary injunction by means of an extraordinary appeal of unconstitutionality which was denied by the lower and appellate courts; consequently, it filed an appeal with the Supreme Court of Justice of the Autonomous City of Buenos Aires, which referred the proceedings to the Court of Appeals for re-consideration of certain parameters related to green areas, as established by the lower court.

Nowadays, the Distrito Arcos is open to the public and operating normally.

Concession Status

In November 2008, Arcos del Gourmet S.A. signed a contract with the Agencia de Administración de Bienes del Estado (State Assets Administration Office, or AABE in Spanish) for which the Company had been granted the concession to use the properties located in the jurisdiction of Estación Palermo, ex Línea San Martín - Palermo loading deck (on Juan B. Justo Avenue from Santa Fe Avenue to Paraguay Street) until December 31, 2025 (the “Arcos concession agreement”).

Subsequently, in September 2011, a contract for the readjustment of this concession was entend in to with the Railway Infrastructure Administrator (ADIF in spanish) (to which the rail assets were transferred in the jurisdiction of AABE), puorsuant to the term of the Arcos concession agreement was extended until December 31, 2030. This new agreement provides for an automatic extension of 3 years and 4 months in the event that the Company complies with the agreement and ADIF so finds. Likewise, a new extension is established for an additional 3 years if the Company so declares and ADIF corroborates compliance with the obligations. This agreement established an initial monthly fee of Ps.200 (plus VAT) until December 31, 2025, and Ps.250 (plus VAT) as of January 1, 2026, these values being adjustable every 2 years until the end of the term of the concession.

The Argentine government issued Executive Order 1723/2012, whereby several plots of land located in prior rail yards of Palermo, Liniers and Caballito were designated for development and urbanization projects.

F-43

In this respect and as part of several measures related to other licensed persons and/or concessionaires, the Company was notified, of Resolution 170/2014 revoking of the Arcos Concession agreement.

It should further be pointed out that such measure:

(i) has not been adopted due to noncompliance of the company.

(ii) there is no the interruption of the commercial development or operation of the shopping mall, which continues to operate under normal conditions;

Notwithstanding the foregoing, Arcos del Gourmet S.A. has filed applicad the relevant administrative resources (appeal) and has also filed a judicial action requesting that the revocation of the Arcos Concession agreement be overruled. Likewise, the Company has concurrently brought an action of lease rental payments as a result of which it is making judicial deposits in time and form of the agreed monthly rental payments pursuant to the Concession to Agreement for that the Company interprets has been improperly revoked. To date, the administrative remedy has been waived (by operation of law since judicial proceedings have been commenced), the Argentine govermant answered the complaint in the case where the parties contest the admissibility of the order revoking the concession, and the complaint has already been served which was answered by Trenes Argentinos opposing exceptions, which have already been answered by the Company.

Emprendimiento Recoleta S.A

As a result of a public auction, in February 1991, the City of Buenos Aires granted to Emprendimiento RecoletaS.A (ERSA) a 20-year concession to use a plot of land in Centro Cultural Recoleta, which was set to expire in November 2013. In addition, pursuant to Resolution No. 1125/00 issued by the Secretariat of Economy and Finance of the Government of the City of Buenos Aires (Secretaria de Hacienda y Finanzas del GCBA) an extension was granted for “Edificio Esquina” or “Edificio Ballena” to be used as a Multipurpose Area (“Salones de usos múltiples”); and pursuant to Decree No. 867/10 dated November 25, 2010, a five-year extension was granted so the agreement is set to expire on November 18, 2018.

As of the date of these financial statements, no additional extension of the concession term had been agreed upon, for which reason it shall end on November 18, 2018, and on such date the ninety (90)-day term agreed by contract for the return of the property under concession to the Government of the City of Buenos Aires on the terms and conditions set forth in the agreement shall start running. For such purposes and in order to take all legal precautions available, ERSA has filed early eviction proceedings (also known as “condena de futuro”) against all lessees of the shopping mall.

On April 12, 2018, ERSA was given notice by the First Instance Court hearing Federal Criminal and Correctional Matters No. 1 (Juzgado Nacional en lo Criminal y Correccional Federal N° 1), in the case entitled “Blaksley Enrique and others, violation of Section 303”, of the resolution ordering an intervention of ERSA for a term of six months, and appointment of observer for collection and reporting purposes, and a general restriction on the disposition of property. In response to such court order, ERSA filed a motion to dismiss to defend the company’s interests. As of the date hereof, ERSA has not been notified of any resolution on such motion or the appointment of an observer. On July 20, 2018 and subsequently, on August 10, 2018, it received two further notices from the same Court, whereby: 1) ERSA it is ordered to transfer to the Court’s account 7.36 % of all revenues of the company from any sources; and 2) the intervenors were appointed representatives of the 46.316% minority shareholders at all shareholders’ and board meetings. A motion to dismiss was filed against such orders.

It should be noted that the end of ERSA’s concession has no significant impact on the Group’s financial statements.

F-44

IRSA Propiedades Comerciales S.A.

Panamerican Mall S.A.

Below is the summarized financial information of subsidiaries with material non-controlling interests which are considered significant for the Group, presented before intercompany eliminations.

	Current assets	Non-current assets	Current liabilities	Non-current liabilities	Net assets	% of ownership interest held by non-controlling interests	Book value of non-controlling interest	% of ownership interest held by controlling interests	Book amount
06.30.18	684,125	8,651,271	399,058	2,874,630	6,061,708	20%	1,211,783	80%	4,847,130
06.30.17	424,643	5,136,295	228,464	1,659,926	3,672,548	20%	734,510	80%	2,938,038

	Revenues	Comprehensive income for the year	Cash from operating activities	Cash from investing activities	Cash from financing activities	Net increase in cash and cash equivalents	Dividends paid to non-controlling interest
06.30.18	649,681	2,571,160	300,458	(712,855)	446,230	33,833	36,400
06.30.17	545,783	423,749	(4,917)	215,148	(153,121)	57,110	42,598

The non-controlling interests of the remaining subsidiaries summarize Ps. 186,089 and Ps. 136,659 as of June 30, 2018 and 2017 respectively. Non of these subsidiaries have non-controlling interest that individually are considered significant for the group.

8.

Interests in joint ventures

Restrictions, commitments and other matters in respect of joint ventures

According to Business Companies Law N° 19,550, 5% of the profit of the year is separated to constitute a legal reserve until they reach legal capped amounts (20% of total capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. The Group’s joint ventures have not reached the legal limit of this reserve.

There are no contingent liabilities relating to the Group’s interest in joint ventures, and there are no contingent liabilities of the joint ventures themselves, other those mentioned bellow.

Quality Invest S.A.

On March 31, 2011, Quality Invest and Nobleza Piccardo S.A.I.C. y F., or “Nobleza Piccardo,” executed the title deed for the purchase of a plot of land of 159,996 square meters located in the District of San Martin, Province of Buenos Aires, currently intended for industrial purposes and suitable in terms of characteristics and scale for mixed-use developments. The price for the property was USD 33 million, being paid 30% as of that date. For the remaining balance a mortgage was constituted in the first degree of privilege over the property in favor of Nobleza Piccardo. Capital plus interest calculated at a nominal annual rate of 7.5% on balances, was paid in full in advance in March 2013.

On May 16, 2012, the Municipality of San Martin granted a pre-feasibility permit for commercial use, entertainment, events, offices, etc., which would enable performance of a mixed-use development thereon.

Pursuant to an Ordinance 11,706 enacted on December 30, 2014, a rezoning permit was obtained for the plot of land to be used mainly for commercial purposes, which considerably expands the uses and potential buildable square meters through new urban indicators. On January 5, 2016, the Provincial Decree 1,835 was published in the Official Gazette of the Province of Buenos Aires granting its approval, and the new urban and rezoning standards thus became effective.

As approved in the Ordinance, on January 20, 2015, Quality Invest entered into a zoning agreement with the Municipality of San Martin which governs various issues related to applicable regulations and provides for a mandatory assignment of square meters in exchange for monetary contributions subject to fulfillment of certain administrative milestones of the rezoning process, the first of which (for Ps.20,000) was paid to the Municipality ten days after the execution of the aforementioned agreement.

Moreover, on June 27, 2016, the plot subdivision plan was filed with the Municipality, in compliance with another significant milestone committed under the zoning agreement.

F-45

On June 28, 2017, Quality Invest S.A. signed an agreement with EFESUL S.A. in order to assume as their own the obligations that the latter agreed with the Municipality of General San Martin within the framework of the aforementioned Urban Agreement. These agreement contemplates a donation, which will be paid based on the work progress that the Municipality develops on the property initially transferred by EFESUL S.A.

In addition, during July 2017, Quality Invest S.A. subscribed two addendums to the aforementioned Urban Development Agreement, which contemplate the following: 1) a new subdivision plan of the property will be presented within 120 days of the addendum signing and 2) the payment of the twelveth installment in cash was replaced by the sum of Ps.71 million payables in 18 equal and consecutive monthly installments.

On March 8, 2018, it was agreed with the renowned Gehl Firm (Denmark) - Urban Quality Consultant - the elaboration of a master plan, generating a modern concept of New Urban District of Mixed Uses.

Added to this, local consultants were also hired as: Guillermo Oliveto (Consultant W) in Market Analysis, Gastón Biggio (GUT) in naming and branding of the District, Colla & Colombo Consultants in Business Analysis and Alejandro Langlois in Vehicular Impact, among others. In this way, the Company have a clear sizing and positioning of the business to which will deal opportunely.

Regarding the project, we are working on the definition of the master plan that includes a mix of uses (Residential, Commercial, etc.) in order to carry out a large-scale urban development contemplating more of 500,000 square meters. The regulations for this master plan are framed in a zoning called the Main Commercial District (Distrito Comercial Principal), which entered into force in 2016 through the publication of the Provincial Decree of the Municipal Ordinance No.11,706.

La Rural S.A.

 In connection with the Fairground, as publicly known, in December 2012 the National Executive Branch issued Executive Order 2552/12 that annulled an executive order dated 1991 which had approved the sale of the Fairground to the Sociedad Rural Argentina (SRA); the effect of this new order was to revoke the sale transaction. Subsequent, on March 21, 2012, the National Executive Branch notified the SRA of said executive order and further ordered that the property be returned to the Argentine government within 30 subsequent days. Then, the SRA issued a press release publicly disclosing the initiation of legal actions and the obtaining of a precautionary measure for which Decree 2552/12 was suspended. Furthermore, as it has become publicly known, on August 21, 2013, the Supreme Court of Justice rejected the appeal filed by the Argentine government against the interim measure timely requested by the SRA.

Neither has IRSA Propiedades Comerciales been served notice formally nor is it a party involved in the legal actions brought by the SRA.

 In connection with the Fairground, as publicly known, in December 2012 the National Executive Branch issued Executive Order 2552/12 that annulled an executive order dated 1991 which had approved the sale of the Fairground to the Sociedad Rural Argentina (SRA); the effect of this new order was to revoke the sale transaction. Subsequent, on March 21, 2012, the National Executive Branch notified the SRA of said executive order and further ordered that the property be returned to the Argentine government within 30 subsequent days. Then, the SRA issued a press release publicly disclosing the initiation of legal actions and the obtaining of a precautionary measure for which Decree 2552/12 was suspended. Furthermore, as it has become publicly known, on August 21, 2013, the Supreme Court of Justice rejected the appeal filed by the Argentine government against the interim measure timely requested by the SRA.

Neither has IRSA Propiedades Comerciales been served notice formally nor is it a party involved in the legal actions brought by the SRA.

Given the potential dimension of the dispute, as it has been known to the public, we estimate that if Executive Order 2552/12 was found to be unconstitutional, such order shall have no legal effects either in EHSA or in the acquisition by IRSA Propiedades Comerciales of an equity interest in EHSA. However, should the opposite happen, that is, a court order declaring the Executive Order 2699/91, this could have a real impact on acquired assets. In this scenario, the judicial decision may render the purchase of the Plot of Land by SRA null and void, and all acts executed by SRA in relation to the Plot of Land, including the right of use currently held by the entity where EHSA has an indirect equity interest, through vehicle entities, would also become null and void.

On June 1, 2015, a ruling was issued in case 4573/2012 SOCIEDAD RURAL ARGENTINA vs. NATIONAL STATE – EXECUTIVE POWER ON DECLARATORY ACTION, whereby the injunction staying the effects of Executive Order 2552/12 were lifted.

On June 2, 2015 the SRA filed a writ of appeals against the ruling indicated above and on that same date the appeal was admitted with staying effects. While the appeal filed by SRA was filed in the Appellate court, the decision of the judge of first instance who decided to lift the precautionary measure had no effect and was suspended.

On September 17, 2015, the court of appeals revoked the decision and rejected in the motion by of the Argentine government to lift the precautionary measure and the Law N° 26,854 was declared inapplicable to the case of precautionary measures against the Government. As a result, the injunction issued on January 4, 2013 was confirmed. The National Government filed an extraordinary federal appeal and subsequently a complaint, both were dismissed, therefore, the precautionary measure was reaffirmed.

On March 11, 2016 La Rural S.A. was summoned as third party in the case referred to above, and filed an answer to such summons on April 6, 2016.

F-46

IRSA Propiedades Comerciales S.A.

               On April 21, 2016 the National Government presented itself, requested the annotation of litis as a precautionary measure, opposed the exception of incompetence, raised the inadmissibility of the declaratory action of certainty, in subsidy, proceeded to answer the complaint. It also requested the suspension of the sentence until the criminal case is resolved and opposed, as a counterclaim, a motion declare the anulment of Decree 2699/91, as well as all those acts enacted in consequence of said decree.

By order of April 29, 2016, the National Government was presented, opposed to the exception raised, the claim in subsidy was contested and the action of injuriousness filed, and it ordered the transfer of the different Government proposals to the SRA.

On the same occasion, the precautionary measure for the annotation of the requested litigation was admitted under the responsibility of the National Government regarding the individualized properties in the process.

On November 22, 2016, SRA answered the transfer of the injuriousness action filed by the National Government, which was considered as answered on December 1.

On December 21, 2016, the National Government, for its part, answered the exception of expiration opportunely opposed. Nevertheless, it was indicated that confirmation with La Rural S.A. was pending.

On June 19, 2017, the transfer of the exception of incompetence raised by the National Government was substantiated, which was answered by La Rural SA in June 2017. On the same occasion, SRA accused expiry of that previous exception in the terms of article 310 CPCCN, which was resolved by order of July 14, 2017.

On that occasion it was resolved to sustain the expiration filed by Sociedad Rural Argentina regarding the incident of exception of incompetence filed by the National Government. Therefore, the process was settled in the Civil and Commercial Federal jurisdiction.

On August 28, 2017, the National Government notified the transfer of the request of certain sections of the SRA's submission that answered the counterclaim and was transferred to the third party of the prescription exception opposed by the SRA at the time of answer the counterclaim. Both substations were answered by SRA and La Rural SA on September 4, 2017.

On October 5, 2017, the Federal Oral Criminal Court No. 2 requested the referral of the proceedings in the context of the case: "Menem, Carlos Saúl and other s / inf. Art. 261, first paragraph of the CP ". For presentations of December 2017 and March 2018, SRA requested the Oral Court to return the proceedings in order to continue with the process. As of the date of these financial statements, the proceedings have not been returned and are in the possession of the Oral Criminal Court No. 2.

There are no contingent liabilities relating to the Group’s interest in joint ventures, and there are no contingent liabilities of the joint ventures themselves, other those previously the mentioned above.

Set out below is the summarized financial information for the joint ventures considered to be material to the Group:

	Current assets	Non-current assets	Current liabilities	Non-current liabilities	Net assets	% of ownership interest	Book value of non-controlling interest	Goddwill and others	Book amount
06.30.18
Quality Invest S.A	4,888	2,820,477	64,283	648,184	2,112,898	50%	1,056,449	3,911	1,061,610
Tarshop	4,979,104	1,446,607	5,182,946	772,227	470,538	20%	94,108	-	94,108
06.30.17
Quality Invest S.A	17,804	1,486,497	82,300	466,009	955,992	50%	477,996	3,911	481,907
Tarshop	4,752,937	1,132,158	4,222,263	1,259,347	403,485	20%	80,697	-	80,694

F-47

IRSA Propiedades Comerciales S.A.

	Revenues	Comprehensive income for the year	Cash from operating activities	Cash from investing activities	Cash from financing activities	Net increase (decrease) in cash and cash equivalents
06.30.18
Quality Invest S.A	12,538	1,078,880	(79,768)	(495)	80,270	7
Tarshop S.A.	3,854,868	67,073	(431,855)	(7,620)	395,160	(44,315)
06.30.17
Quality Invest S.A	26,435	237,304	(10,586)	(253)	10,833	(6)
Tarshop S.A.	1,622,801	26,033	(772,527)	(11,081)	808,132	24,524

Below is shown a detail of the investment and values of shares held by de Group in associates and joint ventures as of June 30, 2018 and 2017, as well as the Group's participation in the comprehensive results of these companies as of June 30, 2018, 2017 and 2016:

	% of ownership interest			Value of Company’s interest in equity		Company’s interest in comprehensive income
Name of the entity	06.30.18	06.30.17	06.30.16	06.30.18	06.30.17	06.30.18	06.30.17	06.30.16
Joint ventures
Quality Invest S.A.	50.00%	50.00%	50.00%	1,061,850	481,907	540,930	118,652	154,072
Nuevo Puerto Santa Fe S.A. (1)(5)	50.00%	50.00%	50.00%	181,493	111,908	78,424	20,374	61,244
La Rural S.A.(2)	50.00%	50.00%	-	92,923	113,365	13,728	15,314	-
Entertainment Holdings S.A.	-	-	50.00%	-	-	-	-	20,419
Entretenimiento Universal S.A	-	-	2.50%	-	-	-	-	11
Associates
Tarshop S.A.(2)	20.00%	20.00%	20.00%	94,108	80,694	13,415	5,207	(31,447)
Otra asociadas (3)				2,784	3,546	(6,972)	(6,844)	-
Total interests in associates and joint ventures (4)				1,433,158	791,420	639,525	152,703	204,299

				Last financial statements issued
Name of the entity	Place of business / Country of incorporation	Main activity	Common shares	Share capital (nominal value)	Income for the year	Equity
Joint ventures
Quality Invest S.A.	Argentina	Real estate	120,827,022	241,654	1,078,880	2,112,897
Nuevo Puerto Santa Fe S.A. (1)(5)	Argentina	Real estate	138,750	27,750	156,848	360,340
La Rural S.A. (2)	Argentina	Event organization and others	714,498	1,430	77,598	156,856
Associates
Tarshop S.A. (2)	Argentina	Consumer financing	48,759,288	598,796	67,073	470,538

(1) Nominal value per share Ps. 100.

(2) Correspond to profit for the fiscal year ended at June 30, 2018 and 2017.

(3) Represents other individually non-significant associates.

(4) Includes Ps 364 and Ps. 206. as of June 30, 2018 and 2017, respectively, in relation to the equity interest in Avenida Compras disclosed under. (See Note 19)

(5) Include the necessary adjustments to arrive at balances under international financial reporting standards.

Changes in the Group’s investments in associates and joint ventures for the years ended June 30, 2018 and 2017 were as follows:

	06.30.18	06.30.17
Beginning of the year	791,420	597,759
Profit sharing, net	639,525	152,703
Irrevocable contributions (Note 29)	43,574	3,000
Capital contributions (Note 29)	1,649	-
Dividends distributed (Note 29)	(43,010)	(20,284)
Incorporation as result of business combination, net (i)	-	47,852
Acquisitions of companies	-	10,390
End of the year (4)	1,433,158	791,420

(i) In July 2016, the Group through IRSA Propiedades Comerciales acquired 20% shareholding in Entertainment Holdings S.A (EHSA). It also acquired 1.25% interest in Entretenimiento Universal S.A. (“ENUSA”). The amount paid for the acquisition was Ps. 53 million. As a result, the Group now holds 70% of the voting stock of EHSA (Note 4).

F-48

9.

       Investment properties

The Group's investment properties are measured at fair value. The following table shows the Group’s hierarchy of fair values per investment property category and the changes in the investment property’s balances for the fiscal years ended June 30, 2018 and 2017:

	Shopping malls	Office and other rental properties	Undeveloped parcels of land	Properties under development	Others (*)
Fair value hierarchy	3	2	2	2	3	Total
Fair value as of 06.30.16	26,425,132	4,446,294	1,355,500	7,170	-	32,234,096
Additions	100,002	466,332	5,539	107,194	-	679,067
Capitalization of financial costs (Note 27)	-	-	-	2,310	-	2,310
Capitalized lease costs	1,397	3,349	-	20,052	-	24,798
Depreciation of capitalized lease costs (i)	(636)	(1,366)	-	-	-	(2,002)
Transfers	-	(80,160)	(330,366)	410,526	-	-
Transfer to trading properties (Note 11)	(13,617)	-	-	-	-	(13,617)
Disposals	-	(141,183)	-	-	-	(141,183)
Net gain from fair value adjustment on investment properties (ii)	2,048,501	905,487	128,022	51,403	-	3,133,413
Fair value as of 06.30.17	28,560,779	5,598,753	1,158,695	598,655	-	35,916,882
Additions	106,901	504	256,505	982,760	-	1,346,670
Incorporation as result of business combination (Note 15)	-	-	-	-	106,795	106,795
Capitalization of financial costs (Note 27)	-	-	-	14,385	-	14,385
Capitalized lease costs	12,930	3,940	-	1,290	-	18,160
Depreciation of capitalized lease costs (i)	(1,961)	(2,479)	-	-	-	(4,440)
Transfers	343	-	-	(343)	-	-
Transfer to property plant and equipment (Note10)	-	(3,026)	-	-	-	(3,026)
Disposals	(1,250)	(29,482)	-	-	-	(30,732)
Net gain from fair value adjustment on investment properties(iiI)	11,200,624	4,060,764	979,377	403,772	45,580	16,690,117
Fair value as of 06.30.18	39,878,366	9,628,974	2,394,577	2,000,519	152,375	54,054,811

(i) As of June 30, 2018 and 2017 depreciation charges were included in “Costs” in the amount of Ps 4,440 and Ps. 2,002, respectively, in the statement of comprehensive income (Note 25)

(ii) For fiscal year 2017 the increase in the value of our investment properties as measured in Pesos was primarily due to: (i) a 16 basis points decrease in the discount rate applied in calculating the discounted cash flows appraisal method to appraise our shopping mall properties that resulted in increases in value, mainly as a result of macroeconomic improvements that led to a decrease in the cost of capital; and (ii) the Peso depreciated by approximately 11% against the U.S. dollar. The value of our offices properties is booked in U.S. dollars per accepted practice in the Argentine real estate. The appraised values of our shopping mall properties increased 8.1% during fiscal 2017 largely due to a decreased in our capital cost. The appraised value of our office buildings increased 40.3% in fiscal 2017 largely as a result of the impact of the depreciation of the Peso and higher rental rates during the period.

(iii) For fiscal year 2018 the net impact in the peso values of the Company’s properties was primarily a consequence of the change in the macroeconomic conditions: (i) depreciation of Argentine peso of 73% against the U.S. dollar; (ii) an increase in the projected inflation rate, with the resulting increase in the cash flow of revenues of shopping malls; (iii) an increase of 44 basis points in the discount rate; and (iv) an additional effect due to in the income tax rate used in the methodology applied to value discounted cash flows; such amendment was set forth by the fiscal reform recently approved (See note 20). The values of our shopping mall properties increased 40.4% during the fiscal year ended June 30, 2018, largely due to the change in the applicable income tax rate and the impact of the depreciation of the peso, partially offset by an increase in the discount rate. The value of our office buildings increased 85.7% during the fiscal year ended June 30, 2018 largely as a result of the impact of the depreciation of the peso and higher rental rates for our properties.

(*)       Corresponds to the DirectTV Arena Stadium.

Valuation processes

The Group's investment properties were valued at each reporting date by independent professionally qualified appraisers who hold a recognized relevant professional qualification and have experience in the locations and segments of the investment properties appraised. For all investment properties, their current use equates to the highest and best use.

The Group's finance department includes a team that reviews the appraisals performed by the independent appraisers for financial reporting purposes (the "review team"). At each financial year end, the review team: i) verifies all major and important assumptions relevant to the appraisal in the valuation report from the independent appraiser; ii) assesses property valuation movements compared to the valuation report; and iii) holds discussions with the independent appraiser.

Changes in Level 2 and 3 fair values, if any, are analyzed at each reporting date during the appraisal discussions between the review team and the independent appraiser. The Board of Directors ultimately approves the fair value calculations for recording into the Financial Statements.

F-49

  IRSA Propiedades Comerciales S.A.

Valuation techniques used for the estimation of fair value of the investment property:

For shopping malls, the valuation was determined using the discounted cash flow (“DCF”) projections based on significant unobservable assumptions. Within these assumptions the following are the key ones:

●

Future rental cash inflows based on the location, type and quality of the properties and supported by the terms of any existing lease, and considering the estimations of the Gross National Income (GNI) and the estimated inflation rated given by external advisors.

●

It was considered that all Shopping malls will grow with the same elasticity in relation to the evolution of the GNI and projected Inflation.

●

Cash flows from future investments, expansions, or improvements in shopping malls were not considered.

●

Estimated vacancy rates taking into account current and future market conditions once the current leases expired.

●

Given the inflationary context, the volatility of certain macroeconomic variables, it is not possible have a relevant interest long-term rate in pesos to discount the projected cash flows for the shopping centers. As result, we proceeded to dollarize the projected cash flows through the future Ps / USD exchange rate curve provided by an external consultant and discounted them with a long-term rate in dollar, the capital cost rate weighted average ("WACC").

●

The projected cash flows were discounted using the Company's weighted average cost of capital (WACC) as the discount rate for each valuation date.

●

Terminal value: it was determined on the basis of the growth rate and the discount rate.

●

Cash flows for the concessions were projected until the due date of the concession determinate in the current agreements.

●

The projected cash flows in dollars were discounted with the WACC rate for each valuation date.

For offices and, other properties for lease and undeveloped land, the valuation was determined using market comparables. These values are adjusted for differences in key attributes such as location, size of the property and quality of the interior design. The most significant contribution to this comparable market approach is the price per square meter.

It can sometimes be difficult to reliably determine the fair value of the property under development. In order to assess whether the fair value of the property under development can be determined reliably, management considers the following factors, among others:

●       The provisions of the construction contract.

●       The stage of completion.

●       Whether the project/property is standard (typical for the market) or non-standard.

●       The level of reliability of cash inflows after completion.

●       The development risk specific to the property.

●       Past experience with similar constructions.

●       Status of construction permits.

There were no changes to the valuation techniques during the fiscal years 2018 and 2017.

The following table presents information regarding the fair value measurements of investment properties using significant unobservable inputs (Level 3):

June 30, 2018

Property type	Valuation technique	Discount rate	Growth rate
Shopping Malls	Discounted cash flow	9.79%	3%

For the next 5 years the Group considered an average exchange rate Ps./USD with increasing trend that begins at Ps. 19.51 (corresponding to the year ended June 30, 2018) and ends at Ps. 49.05. Over the long term, the model assumes a nominal depreciation rate of the peso of 5.6%, estimated based on the projected inflation rates of Argentina and US. The inflation considered shows a decreasing trend, beginning at 25% (corresponding to the year ended June 30, 2018) and leveling off at around 8% in 10 years. The premises were determinated of the closing date of the fiscal year.

F-50

IRSA Propiedades Comerciales S.A.

June 30, 2017

Property type	Valuation technique	Discount rate	Growth rate
Shopping Malls	Discounted cash flow	9.35%	3%

For the next 5 years the Group considered an average exchange rate Ps./USD with increasing trend that begins at Ps. 15.45 (corresponding to the year ended June 30, 2017) and ends at Ps. 27.66. Over the long term, the model assumes a nominal depreciation rate of the peso of 5.5%, estimated based on the projected inflation rates of Argentina and US. The inflation considered shows a decreasing trend, beginning at 31% (corresponding to the year ended June 30, 2017) and leveling off at around 8% in 10 years.

Sensitivity of unobservable assumptions - Shopping malls (in millions of pesos):

	Discount rate + 1%	Discount rate -1%	Growth rate + 1 %	Growth rate - 1 %	Inflation + 10% (1)	Inflation  - 10% (2)	Devaluation rate + 10% (3)	Devaluation rate - 10% (4)
2018	(5,046)	6,796	3,104	(2,307)	4,035	(3,643)	(3,575)	4,369
2017	(3,948)	5,445	2,464	(1,794)	2,684	(2,425)	(2,565)	3,135

(1) assume a 10% higher inflation rate for each period vis-a-vis projected rates.

(2) assume a 10% lower inflation rate for each period vis-a-vis projected rates.

(3) assume a 10% higher exchange rate for each period vis-a-vis projected rates.

(4) assume a 10% lower exchange rate for each period vis-a-vis projected rates.

The following amounts have been recognized in the statements of comprehensive income:

	06.30.18	06.30.17	06.30.16
Revenues from rental and services (Note 24)	4,128,454	3,409,292	2,672,701
Expenses and collective promotion fund (Note 24)	1,717,000	1,488,187	1,183,627
Rental and services costs (Note 25)	(2,120,715)	(1,874,392)	(1,454,409)
Net unrealized gain from fair value adjustment on investment properties	16,669,347	3,068,248	16,919,859
Net realized gain from fair value adjustment on investment properties	20,770	65,165	172,544

Certain of the Group’s investment properties have been mortgaged or otherwise restricted to secure some of the Group’s borrowings and other liabilities. The net book value of those properties as of June 30, 2018 and 2017 is as follows:

	06.30.18	06.30.17
Córdoba Shopping (i)	1,112,547	759,103
Total	1,112,547	759,103

(i)

A portion of the Córdoba Shopping mall property is encumbered with an antichresis right as collateral for an advance rent received from NAI International II Inc. amounting to Ps. 9.6 million and Ps. 12.2 million, as of June 30, 2018 and 2017, respectively, (included in “Trade and other payables” in the statement of financial position).

F-51

IRSA Propiedades Comerciales S.A. 

10.

          Property, plant and equipment

Changes in the Group’s property, plant and equipment for the years ended June 30, 2018 and 2017 are as follows:

	Other buildings and facilities	Furniture and fixtures	Machinery and equipment	Vehicles	Othes	Total
As of June 30, 2016
Costs	88,118	22,583	124,586	3,154	56	238,497
Accumulated depreciation	(18,390)	(11,018)	(89,423)	(1,341)	-	(120,172)
Net book amount as of 06.30.16	69,728	11,565	35,163	1,813	56	118,325
Additions	509	3,958	19,345	-	54	23,866
Depreciation charges (i)	(4,772)	(2,321)	(13,989)	(573)	-	(21,655)
As of June 30, 2017	65,465	13,202	40,519	1,240	110	120,536
Costs	88,627	26,541	143,931	3,154	110	262,363
Accumulated depreciation	(23,162)	(13,339)	(103,412)	(1,914)	-	(141,827)
Net book amount as of 06.30.17	65,465	13,202	40,519	1,240	110	120,536
Additions	3,235	991	20,563	-	-	24,789
Transfers from investment properties (Note 9)	3,026	-	-	-	-	3,026
Disposals	(12,379)	-	-	-	-	(12,379)
Incorporation as result of business combination (Note 15)	-	-	67	126	-	193
Depreciation charges (i)	(5,580)	(2,253)	(18,323)	(572)	-	(26,728)
As of June 30, 2018	53,767	11,940	42,826	794	110	109,437
Costs	82,509	27,532	164,561	3,280	110	277,992
Accumulated depreciation	(28,742)	(15,592)	(121,735)	(2,486)	-	(168,555)
Net book amount as of 06.30.18	53,767	11,940	42,826	794	110	109,437

(i) As of June 30, 2018 and 2017, depreciation charges were charged to “Costs” in the amount of Ps. 23,218 and Ps. 18,126, respectively, to “General and administrative expenses” in the amount of Ps. 3,324 and Ps. 3,253, respectively and to “Selling expenses” in the amount of Ps. 186 and Ps. 276, respectively, in the Statements of Comprehensive Income (Note 25).

             As of June 30, 2018 and 2017, there are no properties under development included in this items, there were no capitalization of financial costs anual no items of property plant and equipment have assets been mortgaged to guarantee group loans.

During the fiscal years ended June 30, 2017 and 2016, borrowing costs were not capitalized.

The Group leases computer equipment under non-cancellable finance lease agreements. The lease terms have an average of 4 and 5 years, and ownership of the assets lie within the Group (Note 23). Book amount of this equipment, included in class "Machinery and equipment”, is as follows:

	06.30.18	06.30.17
Costs – capitalized finance leases	12,658	9,217
Accumulated depreciation	(4,427)	(7,333)
Net book amount	8,231	1,884

11.

         Trading properties

Changes in trading properties for the fiscal years ended June 30, 2018 and 2017 are as follows:

	Completed properties	Undeveloped sites	Total
As of June 30, 2016	387	47,642	48,029
Transfers from investment properties (Note 9)	-	13,617	13,617
Transfers from intangible assets (Note 12)	12,857	-	12,857
Disposals (i)	(12,903)	-	(12,903
As of June 30, 2017	341	61,259	61,6
Transfers from intangible assets (Note 12)	8,837	-	8,837
Disposals (i)	(8,869)	-	(8,869)
As of June 30, 2018	309	61,259	61,568

F-52

IRSA Propiedades Comerciales S.A. 

	Net book amount
Description	06.30.18	06.30.17	Date of acquisition
Undeveloped sites:
Air space Coto	6,024	6,024	Sep-97
Córdoba plot of land	15,544	15,544	May-15
Córdoba plot of land (Shopping)	23,935	23,935	Dec-06
Residencial project Neuquén	15,756	15,756	May-06
Total undeveloped sites	61,259	61,259
Completed properties:
Condominios II	309	341	Nov-13
Total completed properties	309	341
Total trading properties	61,568	61,600
Non-current	61,362	61,600
Current	206	-
Total	61,568	61,600

(i)

As of June 30, 2018 and 2017 the sales properties costs were charged to “Costs” in the Statements of Comprehensive Income. (Note 25)

During the fiscal years ended June 30, 2018 and 2017 no borrowing costs were capitalized.

None of the Group’s trading properties have been mortgaged or otherwise restricted to secure Group’s borrowings and other payables.

12.

         Intangible assets

Changes in the Group’s intangible assets for the fiscal years ended June 30, 2018 and 2017 are as follows:

	Goodwill	Software	Rights of use (ii)	Right to receive units (Barters) (iii)	Others	Total
As of June 30, 2016
Costs	-	16,829	20,873	38,281	11,861	87,844
Accumulated depreciation	-	(15,098)	(1,414)	-	(4,193)	(20,705)
Net book amount as of 06.30.16	-	1,731	19,459	38,281	7,668	67,139
Additions	-	33,650	-	2,136	-	35,786
Incorporation as result of business combination (Note 15)	26,375	-	-	-	-	26,375
Transfers to trading properties (Note 11)	-	-	-	(12,857)	-	(12,857)
Amortization charge (i)	-	(2,271)	(419)	-	(2,193)	(4,883)
As of June 30, 2017	26,375	33,110	19,040	27,560	5,475	111,560
Costs	26,375	50,479	20,873	27,560	11,861	137,148
Accumulated depreciation	-	(17,369)	(1,833)	-	(6,386)	(25,588)
Net book amount as of 06.30.17	26,375	33,110	19,040	27,560	5,475	111,560
Additions	-	41,915	-	7,873	-	49,788
Incorporation as result of business combination (Note 15)	74,486	-	-	-	-	74,486
Transfers to trading properties (Note 11)	-	-	-	(8,837)	-	(8,837)
Amortization charge (i)	-	(10,422)	(1,333)	-	(2,191)	(13,946)
As of June 30, 2018	100,861	64,603	17,707	26,596	3,284	213,051
Costs	100,861	92,394	20,873	26,596	11,861	252,585
Accumulated depreciation	-	(27,791)	(3,166)	-	(8,577)	(39,534)
Net book amount as of 06.30.18	100,861	64,603	17,707	26,596	3,284	213,051

(i) As of June 30, 2018 and 2017, depreciation charges were charged to “Costs” in the amount of Ps. 5,643 and Ps. 2,094, respectively, to “General and administrative expenses” in the amount of Ps. 8,174 and Ps. 2,700, respectively and to “Selling expenses” in the amount of Ps. 129 and Ps. 89, respectively, in the Statements of Comprehensive Income (Note 25). There are no impairment charges for any of the reported years.

(ii) Corresponds to Distrito Arcos.

(iii) Corresponds to in-kind receivables representing the right to receive residential apartments in the future under barter transactions (Note 32).

13.

          Financial instruments by category

The note shows the financial assets and financial liabilities by category and a reconciliation to the corresponding line in the Consolidated Statements of Financial Position, as appropriate. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy.

F-53

IRSA Propiedades Comerciales S.A. 

Financial assets and financial liabilities as of June 30, 2018 were as follows:

	Financial assets at amortized cost (i)	Financial assets at fair value through profit or loss			Subtotal financial assets	Non-financial assets	Total
June 30, 2018		Level 1	Level 2	Level 3
Assets as per statement of financial position
Trade and other receivables (excluding allowance for doubtful accounts) (Note 14)	1,424,384	-	-	-	1,424,384	1,498,699	2,923,083
Investments in financial assets:
- Investment in equity public companies	-	201,699	-	-	201,699	-	201,699
- Non-convertible notes issued by related parties (Notes 29 and 31)	-	248,544	-	-	248,544	-	248,544
- Mutual funds	-	1,163,536	-	-	1,163,536	-	1,163,536
- ETF funds	-	121,971	-	-	121,971	-	121,971
- Government bonds	-	2,848,848	-	-	2,848,848	-	2,848,848
- Non-Convertible Notes TGLT	-	-	-	580,462	580,462	-	580,462
- Financial trusts	9,542	-	-	-	9,542	-	9,542
Derivative financial instruments
- Futures contracts	-	-	47,360	-	47,360	-	47,360
Cash and cash equivalents:
- Cash at banks and on hand	1,199,068	-	-	-	1,199,068	-	1,199,068
- Short- term investments	-	2,444,063	-	-	2,444,063	-	2,444,063
Total	2,632,994	7,028,661	47,360	580,462	10,289,477	1,498,699	11,788,176

	Financial liabilities at amortized cost (i)	Financial liabilities at fair value through profit or loss	Subtotal financial liabilities	Non-financial liabilities	Total
		Level 2
Liabilities as per statement of financial position
Trade and other payables (Note 17)	853,305	-	853,305	1,501,155	2,354,460
Derivative financial instruments
- United States treasury bonds	-	263	263	-	263
- Swaps of interest rate (ii)	-	46,448	46,448	-	46,448
Borrowings (excluding finance leases liabilities) (Note 18)	15,653,804	-	15,653,804	-	15,653,804
Total	16,507,109	46,711	16,553,820	1,501,155	18,054,975

Financial assets and financial liabilities as of June 30, 2017 were as follows:

	Financial assets at amortized cost (i)	Financial assets at fair value through profit or loss	Subtotal financial assets	Non-financial assets	Total
		Level 1
June 31, 2017
Assets as per statement of financial position
Trade and other receivables (excluding allowance for doubtful accounts) (Note 14)	1,096,254	-	1,096,254	1,266,624	2,362,878
Investments in financial assets:
- Investment in equity public companies	-	157,689	157,689	-	157,689
- Non-convertible notes issued by related parties (Notes 29 and 31)	-	267,365	267,365	-	267,365
- Mutual funds	-	196,016	196,016	-	196,016
- EFT funds	-	70,148	70,148	-	70,148
- Government bonds	-	555,748	555,748	-	555,748
- Restringed assets (*) (Note 31)	49,525	-	49,525	-	49,525
Cash and cash equivalents:
- Cash at banks and on hand	119,705	-	119,705	-	119,705
- Short- term investments	-	1,687,839	1,687,839	-	1,687,839
Total	1,265,484	2,934,805	4,200,289	1,266,624	5,466,913

(*) Represents cash related to the Employee Capitalization Plan.

F-54

IRSA Propiedades Comerciales S.A. 

	Financial liabilities at amortized cost (i)	Financial liabilities at fair value through profit or loss	Subtotal financial liabilities	Non-financial liabilities	Total
		Level 2
Liabilities as per statement of financial position
Trade and other payables (Note 17)	492,944	-	492,944	1,018,636	1,511,580
Derivative financial instruments
- Futures contracts	-	4,950	4,950	-	4,950
- Borrowings (excluding finance leases liabilities) (Note 18)	6,164,838	-	6,164,838	-	6,164,838
Total	6,657,782	4,950	6,662,732	1,018,636	7,681,368

(i)  The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value.

(ii) The maturity date is February 16, 2023 and it is associated with the loan obtained through its subsidiary, Panameriacan Mall S.A, with the purpose of paying for the work that is being carried out at the Polo Dot (Note 18).

Financial liabilities carried at amortized cost also include liabilities under finance leases where the Group is the lessee and which therefore have to be measured in accordance with IAS 17 “Leases”. Finance leases are excluded from the scope of IFRS 7 “Financial Instruments: Disclosures”. Therefore, finance leases have been shown separately.

The following are details of the book value of financial instruments recognized, which were offset in the statements of financial position:

	06.30.18			06.30.17
	Gross amounts recognized	Gross amounts offset	Net amount presented	Gross amounts recognized	Gross amounts offset	Net amount presented
Financial assets
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables)	1,507,724	(83,340)	1,424,384	1,182,876	(86,622)	1,096,254
Financial liabilities
Trade and other payables	(936,645)	83,340	(853,305)	(579,566)	86,622	(492,944)

Results of derivative financial instruments are included in “Financial results, net” in the statements of comprehensive income (Note 27) and can be assigned to the following categories:

	Financial assets / (liabilities) at amortized cost	Financial assets / (liabilities) at fair value through profit or loss	Total
June 30, 2018
Interest income	234,947	5,031	240,005
Dividend income	34,172	-	34,172
Interest expense	(928,218)	-	(928,218)
Foreign exchange losses, net	(5,993,197)	-	(5,993,197)
Other finance costs	(117,445)	-	(117,445)
Fair value gains of financial assets through profit or loss	-	2,041,061	2,041,061
Gain from derivative financial instruments	-	227,378	227,378
Net (loss) income	(6,769,741)	2,273,470	(4,496,244)

	Financial assets / (liabilities) at amortized cost	Financial assets / (liabilities) at fair value through profit or loss	Total
June 30, 2017
Interest income	177,892	6,404	184,296
Dividend income	9,705	-	9,705
Interest expense	(639,768)	-	(639,768)
Foreign exchange losses, net	(550,408)	-	(550,408)
Other finance costs	(77,033)	-	(77,033)
Fair value gains of financial assets through profit or loss	-	203,087	203,087
Gain from derivative financial instruments	-	81,105	81,105
Loss from repurchase of non-convertible notes	-	(168)	(168)
Net (loss) income	(1,079,612)	290,428	(789,184)

F-55

IRSA Propiedades Comerciales S.A. 

	Financial assets / (liabilities) at amortized cost	Financial assets / (liabilities) at fair value through profit or loss	Total
June 30, 2016
Interest income	94,541	7,628	102,169
Interest expense	(612,486)	-	(612,486)
Foreign exchange losses, net	(1,815,553)	-	(1,815,553)
Other finance costs	(100,051)	-	(100,051)
Fair value gains of financial assets through profit or loss	-	466,328	466,328
Gain from derivative financial instruments	-	1,248,374	1,248,374
Net (loss) income	(2,433,549)	1,722,330	(711,219)

Determination of fair values

IFRS 9 defines the fair value of a financial instrument as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 7. This valuation hierarchy provides for three levels.

In the case of Level 1, valuation is based on quoted prices in active markets for identical financial assets or liabilities that the Group can refer to at the date of the statement of financial position. A market is deemed active if transactions take place with sufficient frequency and in sufficient quantity for price information to be available on an ongoing basis. Since a quoted price in an active market is the most reliable indicator of fair value, this should always be used if available.

The financial instruments the Group has allocated to this level mainly comprise equity investments, mutual funds, bonds and non-convertible notes for which quoted prices in active markets are available. In the case of equity shares, the Group allocates them to this level when either a stock market price is available or prices are provided by a price quotation on the basis of actual market transactions.

In the case of Level 2, fair value is determined by using valuation methods based on inputs directly or indirectly observable in the market. The financial instruments the Group has allocated to this level comprise foreign-currency forward contracts.

In the case of Level 3, the Group uses valuation techniques not based on inputs observable in the market. This is only permissible insofar as no observable market data are available. The inputs used reflect the Group’s assumptions regarding the factors which any market player would consider in their pricing. The Group uses the best available information for this, including internal company data. The Group uses the best available information, including internal data. The Group has determined that the value of purchase option of Arcos del Gourmet S.A. it is a level 3 financial instrument, wich fair value is zero as of June 30, 2018 and 2017.

When no quoted prices in an active market are available, fair values are based on recognized valuation methods. The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from the following table:

Description	Pricing model	Parameters	Fair value hierarchy	Range
Foreign-currency contracts	Present value method - Theoretical price	Money market curve; Interest curve	Level 2	-
Foreign exchange curve
Arcos del Gourmet S.A. purchase option	Discounted cash flow	Projected revenues and discount rate	Level 3	Projected income: USD 0,5MM – USD 1MM Discount rate 8.7% - 9.5%
Non-Convertible Notes - TGLT	Black & Scholes - Black & Scholes	Price and volatility of the subjacent	Level 3	Price: Ps. 13 - Ps. 16 Volatility of the subjacent: 40% - 60% Market interest rate: 6% - 7%
Market Interest rate
Swaps of interest rate	Discounted cash flow	Interest rate futures	Level 2	-

F-56

IRSA Propiedades Comerciales S.A. 

14.

         Trade and other receivables

The following table shows the amounts of Trade and other receivables as of June 30, 2018 and 2017:

	06.30.18	06.30.17
Post-dated checks	492,745	422,984
Lease and services receivables	474,311	338,595
Averaging of scheduled rent escalation	301,203	271,747
Debtors under legal proceedings	159,821	100,808
Consumer financing receivables	16,441	15,786
Property sales receivables	20,238	5,510
Less: allowance for doubtful accounts	(201,333)	(131,583)
Total trade receivables	1,263,426	1,023,847
Advance payments	271,800	285,158
Prepayments	150,666	113,190
Other receivables from partners of joint ventures (*)	88,133	89,131
VAT receivables	82,399	45,821
Loans	44,373	20,324
Other tax receivables	19,225	8,656
Expenses to be recovered	8,077	5,226
Others	7,451	6,108
Less: allowance for doubtful accounts	(166)	(165)
Total other receivables	671,958	573,449
Related parties (Note 29)	786,200	633,834
Total current trade and other receivables	2,721,584	2,231,130
Non-current	955,509	777,818
Current	1,766,075	1,453,312
Total	2,721,584	2,231,130

(*)     Includes Ps. 83,942 and Ps. 66,711 at June 30 of 2018 and 2017 respectively, of agreement for assumption of debt with the State Assets Administration Office, or AABE in Spanish. (See Note 18)

As of June 30, 2018 and 2017, all non-current receivables are due within 7 years, from the end of the fiscal year.

The fair values of trade and other receivables approximate their respective carrying amounts because, due to their short-term nature, the impact of discounting is not considered significant. Fair values are based on discounted cash flows.

Trade receivables are generally presented in the statement of financial position net of allowances for doubtful accounts. Impairment policies and procedures by type of receivables are discussed in detail in Note 2.15.

Movements on the Group’s allowance for doubtful accounts and other receivables are as follows:

	06.30.18	06.30.17
Beginning of the year	131,748	93,532
Additions (Note 25)	86,645	49,360
Unused amounts reversed (Note 25)	(12,742)	(8,627)
Used during the year	(4,152)	(2,517)
End of the year	201,499	131,748

The allowance for doubtful accounts’ additions and unused amounts reversed have been included in “Selling expenses” in the statements of comprehensive income (Note 25). Amounts charged to the allowance account are generally written off, when no recovery is expected.

The Group’s trade receivables comprise: shopping mall leased related and services, leases office and related services, consumer financing; and sale of properties. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables (Note 5).

The Group also has receivables from related parties. Neither of which are due nor impaired.

F-57

  IRSA Propiedades Comerciales S.A.

Due to the distinct characteristics of each type of receivable, an aging analysis of past due unimpaired and impaired receivables are shown by type and class as of June 30, 2018 and 2017 (includes not past due receivables to reconcile with the amounts in the statements of financial position):

Type of receivables	Up to 3 months	3 to 6 months	Over 6 months	To mature	Allowed	Total
Shopping mall lease and services receivables	144,863	15,347	4,097	1,077,825	184,387	1,426,519
Office leases and services receivables	355	-	701	-	505	1,561
Consumer financing receivables	-	-	-	-	16,441	16,441
Properties sales receivables	1,273	-	16,674	2,291	-	20,238
Total as of June 30, 2018	146,491	15,347	21,472	1,080,116	201,333	1,464,759
Shopping mall leases and services receivables	61,085	3,605	9,364	941,762	115,792	1,131,608
Office leases and services receivables	1,838	376	305	2	5	2,526
Consumer financing receivables	-	-	-	-	15,786	15,786
Property sales receivable	1,982	34	368	3,126	-	5,510
Total as of June 30, 2017	64,905	4,015	10,037	944,890	131,583	1,155,430

Leases and services receivables from investment properties:

Trade receivables related to leases and services from the shopping malls and offices represent 97.5% and 98.1% of the Group’s total trade receivables as of June 30, 2018 and 2017, respectively. The Group has a large customer base and is not dependent on any single customer. Leases and services receivables that are not due and for which no allowance has been recorded relate to a wide and varied number of customers for whom there is no external credit rating available. Most of these customers have been actively renting a minimum of six months. New customers with less than six months are constantly monitored. At the end of the year, the Group has not experienced credit issues with these new customers.

As of June 30, 2018 and 2017, the Group provided for profit net with respect to leases and services receivables for an amount of Ps. 73,248 and Ps. 40,327, respectively.

Consumer financing receivables:

Trade receivables related to the residual activities of the Group represent only 1.1% and 1.4% of the Group’s total trade receivables as of June 30, 2018 and 2017, respectively.

As of June 30, 2018 and 2017, the Group provided for recorded net gains (losses) on impairment of consumer financing receivables in an amount of Ps. 655 and Ps. 406, respectively.

The estimation of the credit risk is complex and requires the use of rating and scoring models which are essential to measure default risk. In measuring the consumption credit risks of credit purchases made through credit cards and cash advances, the Company considers two components: (i) the probability of default by client or counterparty, and (ii) the likeable recovery rate of obligations in arrears. The models are reviewed regularly to check their effectiveness with respect to actual performance and, where necessary, to enhance them.

Receivables from the sale of properties:

Trade receivables related to the sale of properties represent 1.4% and 0.5% of the Group’s total trade receivables as of June 30, 2018 and 2017, respectively. Payments on these receivables are generally received when due and are generally secured by mortgages on the properties, thus credit risk on outstanding amounts is considered low.

F-58

IRSA Propiedades Comerciales S.A.

15.

       Cash flow and cash equivalent information

Following is a detailed description of cash flows generated by the Group’s operations for the years ended June 30, 2018, 2017 and 2016.

	Note	06.30.18	06.30.17	06.30.16
Net income for the year		15,656,023	3,377,514	12,252,532
Adjustments:
Income tax expense	20	286,506	1,609,181	6,278,894
Amortization and depreciation	25	45,114	28,540	22,944
Net gain from fair value adjustment on investment properties	9	(16,690,117)	(3,133,413)	(17,092,403)
(Gain) / Loss from disposal of trading properties		(94,328)	(85,889)	241
Written off unused investment properties / property plant and equipment		-	-	23,650
Goodwill disposals		-	-	4,297
Averaging of schedule rent escalation	24	(29,456)	(90,197)	(42,832)
Directors’ fees	29	67,126	44,770	27,700
ILP Long term incentive program	22	6,404	16,545	16,359
Financial results, net		5,379,151	1,117,164	699,211
Provisions and allowances	25 y 26	98,907	54,764	15,397
Share of profit of associates and joint ventures	8	(639,525)	(152,703)	(204,299)
Interest held before the business combination		-	(7,618)	-
Foreign unrealized exchange gain on cash and fair value result of cash equivalents		(272,362)	(5,116)	(1,062)
Right to receive units due to default due to non-compliance	12	(7,873)	-	-
Changes in operating assets and liabilities
Increase in inventories		(2,160)	(4,520)	(2,855)
Decrease in trading properties		100,238	98,792	1,159
Increase in trade and other receivables		(229,761)	(156,265)	(606,342)
Increase in trade and other payables		485,697	396,988	187,298
Decrease in payroll and social security liabilities		34,583	39,713	12,689
Uses in provisions	19	(10,879)	(8,322)	(3,350)
Net cash generated from operating activities before income tax paid		4,183,288	3,139,928	1,589,228

The following table shows a detail of non-cash transactions occurred in the years ended June 30, 2018, 2017 and 2016:

	06.30.18	06.30.17	06.30.16
Non-cash transactions
Decrease in intangible assets trought an increase in trading properties	8,837	12,857	-
Increase in trading properties trought a decrease in investment properties	-	13,617	23,935
Increase in investment properties trought an increase in trade and other payables	132,898	-	-
Increase in investment properties trought an increase in borrowings	14,385	2,310	-
Increase in property plant and equipment a traves in un increase in borrowings	9,015	-	1,852
Increase in property plant and equipment trought a decrease in investment properties	3,026	-	15,224
Increase in investment properties troughtof a decrease in property plant and equipment	-	-	-
Increase in trade and other receivables trought a decrease in trading properties	2,959	-	-
Increase in trade and other receivables trought an increase in trade and other payables	16,659	-	-
Increase in trade and other receivables trought a decrease in investment in associates and joint ventures (Dividends)	7,165	-	-
Decrease in trade and other receivables trought an increase in investment in associates and joint ventures	3,811	2,671	-
Increase in investment in associates and joint ventures trought a decrease in provisions	158	-	-
Decrease in borrowings and trade and other payables trought a decrease in associates and joint ventures	3,965	20,284	-
Decrease in borrowings trought a decrease in investment in financial assets	-	-	372,203
Decrease in trade and other receivables trought a decrease in borrowings	-	30,123	3,591
Decrease in trade and other receivables trought a decrease in trade and other payables (Dividends)	-	64,109	253,663
Decrease in non-controling equity trought an increase in trade and other payables	36,400	-	64,209
Decrease in equity trought a decrease in trade and other receivables (Dividends)	-	656,965	-
Adquisición in non-controling interst	-	865	-
Increase in trade and other receivables trought an increase in borrowings	1,250	-	-
Increase in trade and other receivables trought an increase in borrowings	70	-	-

F-59

IRSA Propiedades Comerciales S.A. 

Balances incorporated as result of business combination

	06.30.18	06.30.17
Investments in joint ventures	-	(106,892)
Trade and other receivables	(36,346)	-
Income tax and minimum presumed income tax credits	(106)	(97,167)
Investment properties (Note 9)	(106,795)	-
Property, plant and equipment (Note 10)	(193)	-
Borrowings	-	54,516
Salaries and social security costs	2,518	-
Deferred income tax (Note 20)	12,070	6,314
Income tax and minimum presumed income tax liabilities	1,332	1,060
Trade and other payables	110,161	13,375
Provisions (Note 19)	452	2,361
Total net non-cash assets acquired	(16,907)	(126,433)
Cash and cash equivalent acquired	-	(6,902)
Fair value of interest held before combination	-	66,658
Goodwill (Note 12)	(74,486)	(26,375)
Non-controlling interest	6,763	40,004
Total net assets acquired	(84,630)	(53,048)
Financed amount	38,285	-
Cash acquired	-	6,902
Acquisition of subsidiaries, net of cash acquired	(46,345)	(46,146)

16.        Shareholder's equity

Share capital and premium

The share capital of IRSA Propiedades Comerciales was originally represented by common shares with a nominal value of Ps. 0.1 per share and one vote each. On December 18, 2012, the Superintendence of Corporations registered an amendment to the Company’s by-laws whereby it increased the nominal value of its shares from Ps. 0.1 to Ps. 1 each. This amendment, was registered under number 20,264 of Stock Companies Book 62 T°. The CNV admitted the shares indicated above for listing on the Stock Exchange.

There have been no changes to capital accounts as of June 30, 2018, 2017 and 2016.

As of June 30, 2018, the capital stock consisted of 126,014,050 common shares with a par value of Ps. 1.00 per share, entitled to one vote each and was as follows:

		Approved by
Status	Par Value	Body	Date	Date of record with the Public Registry of Commerce
Subscribed, Issued and Paid up	1	Extraordinary Shareholders’ Meeting	10.29.87	12.29.87
Subscribed, Issued and Paid up	1	Extraordinary Shareholders’ Meeting	10.26.88	12.29.88
Subscribed, Issued and Paid up	38	Extraordinary Shareholders’ Meeting	10.25.89	02.05.90
Subscribed, Issued and Paid up	9,460	Ordinary and Extraordinary Shareholders’ meeting	08.31.95	03.15.96
Subscribed, Issued and Paid up	16,000	Ordinary and Extraordinary Shareholders’ meeting	10.29.96	05.15.98
Subscribed, Issued and Paid up	38,000	Ordinary and Extraordinary Shareholders’ meeting	03.10.98	10.21.99
Subscribed, Issued and Paid up	6,500	Ordinary and Extraordinary Shareholders’ meeting	08.06.99	05.07.02
Subscribed, Issued and Paid up	8,206	(*) Board of Directors meeting	06.28.04	05.04.05
Subscribed, Issued and Paid up	47,755	(**) Board of Directors meeting	11.16.10	03.02.11
Subscribed, Issued and Paid up	28	(***) Board of Directors meeting	09.22.11	01.04.12
Subscribed, Issued and Paid up	25	(****) Board of Directors meeting	03.13.13	01.16.15
	126,014

(*)  Capital subscribed in connection with the conversion of convertible notes made until August 2006. Such conversions have been registered.

(**)  Capital subscribed in connection with the conversion of convertible notes made on October 7, 2010.

(***)  Capital subscribed in connection with the conversion of convertible notes made on September 21, 2011.

(****)  Capital subscribed in connection with the conversion of convertible notes made on March 13, 2013.

F-60

IRSA Propiedades Comerciales S.A. 

Inflation adjustment of share capital

Under Argentine GAAP, the Group’s financial statements were previously prepared on the basis of general price-level accounting which reflected changes in the purchase price of the Argentine Peso in the historical financial statements through February 28, 2003. The inflation adjustment related to share capital was appropriated to an inflation adjustment reserve that formed part of shareholders' equity. The balance of this reserve could be applied only towards the issuance of common stock to shareholders of the Company. Resolution 592/11 of the CNV requires that at the transition date to IFRS certain equity accounts, such as the inflation adjustment reserve, are not adjusted and are considered an integral part of share capital.

Legal reserve

According to Law N° 19,550, 5% of the profit of the year is destined to constitute legal reserves until they reach legal capped amount (20% of share capital). This legal reserve is not available for dividend distribution and can only be released to absorb losses. IRSA Propiedades Comerciales has reached the legal limit of these reserves.

Reserve for future dividends

The Company and subsidiaries may separate portions of their profits of the year to constitute voluntary reserves according to company law and practice. These special reserves may be for general purposes or for specific uses.

Resolution reserve CNV 609/12- unassigned

The CNV, through General Resolutions N° 562/09 and 576/10, has provided for the application of Technical Resolutions N° 26 and 29 of the FACPCE, which adopt IFRS, as issued by the IASB, for company’s subject to the public offering regime ruled by Law N° 17,811, due to the listing of their shares or corporate notes, and for entities that have applied for authorization to be listed under the mentioned regime.

The Group adopted IFRS, as issued by the IASB, in the fiscal year beginning July 1, 2012, being its transition date July 1, 2011.

As mentioned in Note 2.1.b) to these Financial Statements, in the third quarter of fiscal 2017, the Company’s Board of Directors decided to change the accounting policy applicable to investment properties replacing the acquisition cost method with fair value accounting, as permitted by IAS 40, and retroactively modified the comparative figures until the date of transition to IFRS (July 1, 2011).

Pursuant to CNV General Ruling N° 609/12, the Company set up a special reserve reflecting the positive difference between the balance of retained earnings disclosed in the first closing of the last Financial Statements prepared in accordance with previously effective accounting standards and the exchange result recognized in the equity on the transition date as a result of the change in accounting policy in investment properties indicated in Note 2.1.b). The reserve for application of IFRS recorded in a timely manner amounted to Ps. 15,802 and the reserve for policy change amounted to Ps. 2,684,390.

This reserve may not be used to make distributions in kind or in cash, and may only be reversed to be capitalized to absorb potential negative balances in Retained Earnings. Changes in fair value that have occurred after the transition period are part of the unallocated results.

As for unallocated results, the effect of the aforementioned policy change amounted to Ps. 15,478,896.

Special reserve

The Ordinary and Extraordinary General Shareholders' Meeting on October 31, 2017 constituted a special reserve for Ps. 2,627,076

F-61

IRSA Propiedades Comerciales S.A.

Dividends

Dividends distributed corresponding to the results of the years ended as of June 30, 2017, 2016 and 2015 were:

● Ps. 680,000 (Ps 5.40 per share), approved by the Ordinary and Extraordinary General Shareholders' Meeting on October 31, 2017.

● Ps. 770,000 (Ps 6.11 per share), approved Ps460,000 by the Ordinary and Extraordinary General Shareholders' Meeting on October 31, 2016 and Ps. 310,000, in advance by by the Ordinary Shareholders' Meeting on April 5, 2017.

●

 Ps. 283,580 (Ps 2.25 per share), approved by the Ordinary and Extraordinary General Shareholders' Meeting on October 31, 2015.

As of June 30, 2018, 2017 and 2016 there were no prescribed dividends corresponding to dividends pending of payment from previous years.

The canceled dividends during the years ended as of June 30, 2018, 2017 and 2016 were Ps. 680,000, Ps. 770,000 and Ps. 283,580.

17.

       Trade and other payables

The following table shows the amounts of trade and other payables as of June 30, 2018 and 2017:

	06.30.18	06.30.17
Admission rights	589,141	468,323
Rent and service payments received in advance	505,883	380,352
Accrued invoices	340,480	162,980
Trade payables	168,900	133,459
Payments received in advance	77,667	22,115
Tenant deposits	46,690	29,187
Total trade payables	1,728,761	1,196,416
VAT payables	201,279	55,194
Others (*)	102,119	62,911
Withholdings payable	50,793	56,857
Tax payment plans	47,981	16,503
Dividends available to minority shareholders	36,525	125
Other tax payables	21,980	12,367
Other income to be accrued	6,431	6,925
Total other payables	467,108	210,882
Related parties (Note 29)	158,591	104,282
Total trade and other payables	2,354,460	1,511,580
Non-current	483,908	406,598
Current	1,870,552	1,104,982
Total	2,354,460	1,511,580

(*) As of June 30, 2017 includes the Capitalization plan - Ps. 49,525.

The fair value of payables approximates their respective carrying amounts because, due to their short-term nature.

The fair value of currents trade and other payables approximate their respective book values due to theris short- term nature. The fair values of non-current trade and other payables approximate their book values. The impact of the discount is not significant.

F-62

IRSA Propiedades Comerciales S.A.

18.

        Borrowings

The following table shows the Company's borrowings as of June 30, 2018 and 2017:

	06.30.18	06.30.17
Non-Convertible notes	14,516,230	5,991,004
Bank loans	1,014,282	77,445
AABE Debts	83,942	66,711
Loans with non-controling interests	28,504	-
Finance leases	14,403	3,149
Bank overdrafts	6,692	26,107
Related parties (Note 29)	4,154	3,571
Total borrowings	15,668,207	6,167,987
Non-current	15,362,726	5,918,119
Current	305,481	249,868
Total	15,668,207	6,167,987

On September 5, 2017, the Class III and IV Non-convertible notes were auctioned, for a nominal value of USD 140 million with a maturity date of 36 months from the issue date, integrated and payable in dollars, which will accrue a fixed annual interest rate of 5.0%, with interest payable quarterly. The capital will be amortized in a single quota that mature on September 14, 2020. The settlement was on September 12, 2017. The class III has been declared void.

On February 16, 2018 the Group, through its subsidiary Panameriacan Mall S.A. signed a loan for USD 35 million in order to found the work that is being done in Polo Dot. The expiration date operates on February 16, 2023.

As of June 30, 2018 and 2017, the Group did not hold collateralized liabilities (seller financing and long-term borrowings, excluding finance leases).

Borrowings also include liabilities under finance leases where the Group is the lessee and which therefore are measured in accordance with IAS 17 “Leases”. Information regarding liabilities under finance leases is disclosed in Note 23.

The maturity of the Group's borrowings (excluding obligations under finance leases) and the Group's classification related to interest rates is as follows:

	06.30.18	06.30.17
Fixed rate:
Less than one year	28,242	76,661
Between 2 and 3 years	4,026,046	-
More than 4 years	10,235,361	5,849,857
	14,289,649	5,926,518
Floating rate:
Less than one year	10,033	29,297
Between 1 and 2 years	225,519	-
Between 2 and 3 years	310,692	-
Between 3 and 4 years	388,163	-
More than 4 years	155,346	66,711
	1,089,753	96,008
Accrued interest:
Less than one year	260,632	142,312
Between 1 and 2 years	13,770	-
	274,402	142,312
	15,653,804	6,164,838

The fair value of current borrowings at fixed-rates and current and non-current borrowings at floating-rates approaches its carrying amount, as the effect of discounting is not significant. The fair value of debt instruments that are not quoted on a market are valued at their technical value, that is, nominal value plus accrued interest.

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IRSA Propiedades Comerciales S.A. 

The following table shows a detail of the borrowings evolution as of June 30, 2018, 2017 and 2016:

	06.30.18	06.30.17	06.30.16
Balances at the beginning of the year	6,167,987	5,893,068	3,794,940
Borrowings obtained	728,506	106,667	1,275,756
Payment of borrowings	(85,495)	(111,103)	(5,046,597)
Interest paid	(724,730)	(542,410)	(278,279)
Accrued interest	876,610	607,400	580,210
Foreign exchange	6,327,426	565,364	2,214,158
Short terms loans, net	(19,766)	(14,065)	(232,203)
Issuance of non-convertible notes	2,365,003	-	5,411,199
Payment of non-convertible notes	-	(407,260)	(1,686,393)
Repurchase of non-convertible notes	-	-	(139,723)
Others	32,666	70,326	-
Balances at the end of the year	15,668,207	6,167,987	5,893,068

The fair value of non-current borrowings at fixed rates (excluding obligations under finance leases) is as follows:

	06.30.18	06.30.17
NCN Class II due 2023	10,760,445	6,877,234
NCN Class IV due 2020	3,997,825	-
Bank loans	1,017,269	2,338
	15,775,539	6,879,572

The following table breakdown the borrowings by fixed and floating rate of the Group by emission currency (excluding the financial leases)

Borrowings by currency and rate	06.30.18	06.30.17
Fixed rate:
Argentine Peso	-	76,661
US Dollar	14,289,649	5,849,857
Subtotal borrowings at fixed rate	14,289,649	5,926,518
Floating rate:
Argentine Peso	80,205	96,008
US Dollar	1,009,548	-
Subtotal borrowings at floating rate	1,089,753	96,008
Accrued interest	274,402	142,312
Total borrowings	15,653,804	6,164,838
Financial leasing	14,403	3,149
Total borrowings in accordance with financial statement	15,668,207	6,167,987

19.

       Provisions

The following table shows the movements in the Group's provisions for other liabilities:

	Labor, legal and other claims	Investments in associates (*)	06.30.18	06.30.17
Balances at the beginning of the year	41,144	206	41,350	33,074
Increases (Note 26)	33,513	-	33,513	25,860
Recovery (Note 26)	(8,509)	-	(8,509)	(11,829)
Increases	-	158	158	206
Used during the year	(10,879)	-	(10,879)	(8,322)
Incorporation as result of business combination (Note 15)	452	-	452	2,361
Balances at the end of the year	55,721	364	56,085	41,350
Non-current			12,258	16,509
Current			43,827	24,841
Total			56,085	41,350

(*) Corresponds to investments in associates with negative equity. (Note 8)

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  IRSA Propiedades Comerciales S.A.

Included in the item are certain amounts in respect of which the Group has established a provision for legal claims, none of which is considered significant.

20.

        Current and deferred income tax

The Group’s income tax has been calculated on the estimated taxable profit for each year at the rates prevailing in the respective tax jurisdictions. The subsidiaries of the Group in the jurisdictions where the Group operates are required to calculate their income taxes on a separate basis; thus, they are not permitted to compensate subsidiaries’ losses against other subsidiarie’s income.

The details of the provision for the Group’s income tax are as follows:

	06.30.18	06.30.17	06.30.16
Current income tax	(137,667)	(510,130)	(223,220)
Deferred income tax	(148,806)	(1,099,051)	(6,055,674)
Minimum presumed income tax	(33)	-	-
Income tax expense	(286,506)	(1,609,181)	(6,278,894)

The statutory tax rates in the countries where the Group operates for all of the years presented are:

Tax jurisdiction	Income tax rate
Argentina	35%
Uruguay	0%

Deferred tax assets and liabilities of the Group as of June 30, 2018, 2017 and 2016 are expected to be recovered as follows:

	06.30.18	06.30.17
Deferred income tax asset to be recovered after more than 12 months	80,696	174,165
Deferred income tax asset to be recovered within 12 months	1,086,937	143,910
Deferred income tax asset	1,167,633	318,075
Deferred income tax liabilities to be recovered after more than 12 months	(12,356,539)	(9,435,983)
Deferred income tax liabilities to be recovered within 12 months	(175,856)	(2,085,978)
Deferred income tax liabilities	(12,532,395)	(11,521,961)
Deferred income tax, net	(11,364,762)	(11,203,886)

Deferred income tax (broken down into assets and liabilities) during the fiscal years ended June 30, 2018 and 2017, without considering offsetting balances within the same tax jurisdiction, is the following:

	06.30.17	(Charged) / Credited to the statement of income	Incorporation as result of business combination (Note 15)	06.30.18
Deferred income tax asset
Tax loss carry-forwards	158	851,966	1,472	853,596
Trade and other payables	270,839	11,119	-	281,958
Other	38,296	(7,191)	-	31,105
Trading properties	8,782	(7,808)	-	974
Subtotal deferred income tax assets	318,075	848,086	1,472	1,167,633
Deferred income tax liabilities
Investment properties	(11,060,948)	(809,615)	(13,542)	(11,884,105)
Property, plant and equipment and trading properties	(235,750)	(227,200)	-	(462,950)
Investments	(129,454)	33,131	-	(96,323)
Trade and other receivables	(67,439)	(4,287)	-	(71,726)
Other	(28,370)	11,181	-	(17,189)
Trade and other payables	-	(102)	-	(102)
Subtotal deferred income tax liabilities	(11,521,961)	(996,892)	(13,542)	(12,532,395)
Deferred income tax liabilities, net	(11,203,886)	(148,806)	(12,070)	(11,364,762)

F-65

  IRSA Propiedades Comerciales S.A.

	06.30.16	(Charged) / Credited to the statement of income	Incorporation as result of business combination (Note 15)	06.30.17
Deferred income tax asset
Tax loss carry-forwards	19,352	(19,194)	-	158
Trade and other payables	187,024	83,850	(35)	270,839
Others	29,601	7,722	973	38,296
Trading properties	(2,163)	10,945	-	8,782
Subtotal deferred income tax assets	233,814	83,323	938	318,075
Deferred income tax liabilities
Investment properties	(9,948,064)	(1,112,884)	-	(11,060,948)
Property, plant and equipment and trading properties	(173,976)	(61,774)	-	(235,750)
Investments	(87,985)	(34,217)	(7,252)	(129,454)
Trade and other receivables	(91,530)	24,091	-	(67,439)
Other	(30,780)	2,410	-	(28,370)
Subtotal deferred income tax liabilities	(10,332,335)	(1,182,374)	(7,252)	(11,521,961)
Deferred income tax liabilities, net	(10,098,521)	(1,099,051)	(6,314)	(11,203,886)

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefits through future taxable profits is probable. Tax loss carry-forwards may have expiration dates or may be permanently available for use by the Group depending on the tax jurisdiction where the tax loss carry forward is generated. Tax loss carry-forwards in Argentina and Uruguay generally expire within 5 years.

In order to fully realize the deferred income tax asset, the Group will need to generate taxable income in the countries where the net operating losses were incurred. Based upon the level of historical taxable income and projections for future over the years in which the deferred income tax assets are deductible, management believes that as the end of the present year it is probable that the Group will realize all of the deferred income tax assets in Argentina.

As of June 30, 2018, the tax loss carry-forwards of the Group and the jurisdictions which generated them are as follows:

Jurisdiction	Tax loss carry-forward	Date of generation	Date of expiration	Rate
Argentina	2,487	2014	2019	25%
Argentina	252	2015	2020	25%
Argentina	182	2016	2021	25%
Argentina	2,816	2017	2022	25%
Argentina	2,819,414	2018	2023	30%
Argentina	41,634	2018	2023	25%
	2,866,785

The Group did not recognize deferred income tax assets of Ps. 4,071 and Ps. 1,308 as of June 30, 2018 and 2017 corresponding to losses of P.s 15,808 and Ps. 3,737, respectively, related to certain subsidiaries. Although management estimates that these subsidiaries will become profitable in the future, as a result of the recent loss history during the last periods and the lack of verifiable and objective evidence, it has been determined that there is sufficient uncertainty as to the generation of sufficient income to be able to offset losses within a reasonable timeframe, therefore, no deferred tax asset is recognized in relation to these losses.

The Group did not recognize deferred income tax liabilities of Ps. 222 million and Ps. 168 million as of June 30, 2018 and 2017, respectively, related to the potential dividend distribution of its investments in foreign subsidiaries, Torodur S.A. In addition, the withholdings and/or similar taxes paid at source may be creditable against the Group’s potential final tax liability.

F-66

IRSA Propiedades Comerciales S.A.

 from applying the prevailing tax rate on the Profit Before Income Tax for the years ended June 30, 2018, 2017 and 2016:

	06.30.18	06.30.17	06.30.16
Profit for the year before income tax at the prevailing tax rate (i)	(5,357,337)	(1,746,909)	(6,346,363)
Tax effects of:
Rate change	4,729,172	-	-
Share of profit of associates and joint ventures (ii)	226,273	55,399	71,505
Non-taxable financial dividends	122,597	63,529	-
Non-taxable / non-deductible items	(7,223)	5,548	2,492
Derivative special tax	(846)	-	-
Difference between provisions and affidavits	1,077	-	-
Minimum presumed income tax	(33)	-	-
(Recovery) / expiration of carry-forwards	-	7,038	(7,038)
Results from revaluation of equity interest held before combination	-	2,666	-
Others	(186)	3,548	510
Income tax loss	(286,506)	(1,609,181)	(6,278,894)

(i) Does not include Uruguayan-source income / (loss) of Ps. 635,853, as of June 30, 2018, (Ps.4,474) as of June 30, 2017 and Ps. 398,960 as of June 30, 2016.

(ii) Does not include Uruguayan-source income / (loss) by pasticipation in associated and joint ventures of Ps. (6,969) and Ps. (5,580) as of June 30, 2018 and 2017.

On December 27, 2017, the Argentine Congress approved the Tax Reform, through Law No. 27,430, which was enacted on December 29, 2017, and has introduced many changes to the income tax treatment applicable to financial income. The key components of the Tax Reform are as follows:

-    Dividends: Tax on dividends distributed by Argentine companies would be as follows: (i) dividends originated from profits obtained before fiscal year of the Group ending June 30, 2018 will not be subject to withholding tax; (ii) dividends derived from profits generated during fiscal years ending June 30, 2019 and 2020 paid to Argentine Individuals and/or foreign residents, will be subject to a 7% withholding tax; and (iii) dividends originated from profits obtained during fiscal year ending June 30, 2021 onward will be subject to withholding tax at a rate of 13%.

-    Income tax: Corporate income tax gradually would be reduced to 30% for fiscal years beginning at January 1, 2018 through December 31, 2019, and to 25% for fiscal periods beginning at after January 1, 2020, inclusive.

-    Presumptions of dividends: Certain facts will be presumed to constitute dividend payments, such as: i) withdrawals from shareholders, ii) shareholders private use of property of the company, iii) transactions with shareholders at values different from market values, iv) personal expenses from shareholders or shareholder remuneration without substance.

Revaluation of assets: The regulation establishes that, at the option of the companies, tax revaluation of assets is permitted for assets located in Argentina and affected to the generation of taxable profits. The special tax on the amount of the revaluation depends on the asset, being (i) 8% for real estate not classified as inventories, (ii) 15% for real estate classified as inventories, (iii) 5% for shares, quotas and equity interests owned by individuals and (iv) 10% for the rest of the assets. As of the date of these Financial Statements, the Group has not exercised the option. The gain generated by the revaluation is exempted according to article N 291 of Law 27,430 and, the additional tax generated by the revaluation is not deductible.

In addition, the Argentine tax reform contemplates other amendments regarding the following matters: social security contributions, tax administrative procedures law, criminal tax law, tax on liquid fuels, and excise taxes, among others. At the date of these Financial Statements, many issues are pending regulation by the government.

F-67

IRSA Propiedades Comerciales S.A.

21.

        Employee benefits

The Group maintains a defined contribution plan (the “Plan”) covering key member of management in Argentina. The Plan became effective on January 1, 2006. Participants may make contributions to the Plan of up to 2.5% of their monthly salary (“Base Contributions”) and contributions of up to 15% of their annual bonus (“Extraordinary Contributions”). Under the Plan, the Group matches employee contributions to the plan at a rate of 200% for Base Contributions and 300% for Extraordinary Contributions.

All contributions are invested in funds administered outside of the Group. Participants or their assignees, as the case may be, may have access to the 100% of the Company contributions under the following circumstances:

(i)

ordinary retirement in accordance with applicable labor regulations;

(ii)

total or permanent incapacity or disability;

(iii)

death.

In case of resignation or termination without good cause, the manager will received the Group’s contribution only if the employee has participated in the Plan for at least 5 years.

Contributions made by the Group under the Plan amount to Ps. 16.8, Ps. 11.6 and Ps. 10.3 million for the fiscal years ended June 30, 2018, 2017 and 2016, respectively.

22.

        Equity Incentive Plan

The Group maintains an equity incentive plan, under which certain selected employees, directors and top management of the Group, IRSA and Cresud (the “Participants”). Engagement is voluntary and by invitation of the Board of Directors.

This plan was effectively established on September 30, 2011 and is administered by the Board of Directors of the Group, IRSA and Cresud, as appropriate, or a committee appointed by the Board of Directors of the respective companies.

Initially, the Incentive Plan established that Participants would be entitled to receive shares (“Contributions”) of IRSA Propiedades Comerciales, IRSA and Cresud, based on a percentage of the annual bonus, on condition that they keep holding the acquired shares and remain an employee of the Company for at least 5 years, among other conditions required to qualify for such Contributions. Due to the small number of transactions in the market it was not possible to fulfil the formal aspects of the plan and as established by the Shareholders’ Meeting the Board of IRSA Propiedades Comerciales decided to modify certain conditions, including, delivery of IRSA and Cresud shares (upon transfer of funds by IRSA Propiedades Comerciales) to replace the shares of IRSA Propiedades Comerciales, IRSA and Cresud.

Consequently, shares shall be under the ownership of IRSA and Cresud, and as the conditions established by the Plan are verified, such contributions are transferred to the Participants.

Additionally, IRSA Propiedades Comerciales’s Board of Directors resolved to include a special one-off bonus composed of unrestricted shares issued by IRSA for the fiscal year ended on June 30, 2014, to employees with 2 or more years of service.

As of June 30, 2018 and 2017 IRSA Propiedades Comerciales has a credit of PS. 12.4 and Ps. 10.5 million with IRSA Inversiones y Representaciones S.A. and a liability of Ps. 2.5 and Ps. 1.1 millon with Cresud S.A.C.I.F. y A.. The subsidiaries of IRSA Propiedades Comerciales have a liability of Ps. 14.6 and Ps. 15.4 million with IRSA Inversiones y Representaciones S.A..

As of June 30, 2018, 2017 and 2016, the amount accrued for the plans amounts to Ps. 82.1 million, Ps. 77.2 million and Ps. 64.2 million respectively, based on the market value of the shares to be granted pertaining to the Group’s contributions, proportionately to the period already elapsed for the vesting of shares in the Incentive Plan and adjusted for the probability that any beneficiary should leave the Group before the term and/or the conditions required to qualify for the benefits of the plan are met at fiscal year-end.

  For the fiscal years ended June 30, 2018, 2017 and 2016, the Group has incurred in a charge related to the Incentive Plan and the extraordinary gratification of Ps. 6.4 million, Ps. 16.5 million and Ps. 16.4 million, respectively.

F-68

IRSA Propiedades Comerciales S.A.

23.

    Leases

The Group as lessee

Operating leases:

The Group leases two properties that are used as a shopping mall. These agreements provide for fixed monthly rent payments, adjusted pursuant to a rent escalation clause. Rent expense for the years ended June 30, 2018, 2017 and 2016 amounted to Ps. 6,951, Ps. 5,700 and Ps. 5,222, respectively and are included in "Costs" in the Statements of income.

Furthermore, the Group also leases office space under an operating lease with companies related to the Chairman and Director of the Group (Note 29).

The future minimum payments that the Group must pay off under non-cancellable operating leases are as follows:

	06.30.18	06.30.17
No latter than a year	13,763	7,102
Later than 1 year and not later than 5 years	18,105	12,446
More than 5 years	40,000	42,400
	71,868	61,948

Finance leases:

The Group leases certain computer equipment under various finance leases for an average term of four years. The book value of these assets under financial leases is included in Note 10.

At the commencement of the lease term, the Group recognizes a lease liability equal to the carrying amount of the leased asset. In subsequent periods, the liability decreases by the amount of lease payments made to the lessors using the effective interest method. The interest component of the lease payments is recognized in the statements of comprehensive income. The book value of these liabilities under finance leases is included in Note 18.

Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

The future minimum payments that the Group must pay off under financial leases are as follows:

	06.30.18	06.30.17
Not later than 1 year	6,945	1,690
Later than 1 year and not later than 5 years	8,301	1,636
Subtotal value of finance lease liabilities	15,246	3,326
Future - financial charges on finance leases	(843)	(177)
Present value of finance lease liabilities	14,403	3,149

F-69

The fair value of finance lease liabilities is as follows:

	06.30.18	06.30.17
Not later than 1 year	6,574	1,598
Later than 1 year and not later than 5 years	7,829	1,551
Present value of finance lease liabilities	14,403	3,149

Under the terms of these agreements, no contingent rents are payable. The inherent interest rate is fixed at the contract date for all of the lease term. The average interest rate on financial lease payables as of June 30, 2018 and 2017 and 2016 was 11.62%, 20.63% and 14.40%, respectively.

The Group as lessor

Operating leases:

●

Leases of shopping malls, office and other buildings

The Group enters into cancellable operating leases relating to shopping malls. The agreements have an average term raging from three to five years. Some leases related to anchor stores have terms of ten years, which are usually extendable. Tenants normally pay a rent which consists of the higher of (i) the base rent; and (ii) the percentage rent (which generally ranges between 2% and 12% of the tenants’ gross sales). Furthermore, pursuant to one rent escalation clause in most lease arrangements, the tenants’ base rent generally increases between 18% and 24% each year during the agreement term. Regarding the supplementary rental, because this item is not known until the end of the period, it falls within the definition of contingency rental under IAS 17 "Leases". Accordingly, rental income is recognized once the contingent rent is known.

The book value of assets for such leases are described in Note 9.

For the fiscal years ended June 30, 2018, 2017 and 2016, the base and contingent rental income of the Group’s shopping malls amounted to Ps. 2,825,140, Ps. 2,270,643 and Ps. 1,851,472, respectively, and are included under “Income from sales, rents and services” in the consolidated statement of comprehensive income.

Additionally, IRSA Propiedades Comerciales, owns a shopping mall property known as "Patio Olmos" in the Province of Córdoba, Argentina. The Group leases this property to a third party shopping mall operator under an operating lease agreement expiring in 2032. The agreement provides for fixed monthly payments, adjusted pursuant to a rent escalation clause. Rental income for the years ended June 30, 2018, 2017 and 2016 amounted to Ps. 2,919, Ps. 2,250 and Ps. 4,196, respectively, and is included in the line item “Income from sales, rents and services” in the consolidated statements of comprehensive income.

The Group also enters into cancellable operating leases agreements relating to offices and other buildings. These agreements have an average term raging from three to five years. The tenants are charged a base rent on a monthly basis.

Office and other buildings leases amount to Ps. 480,365, Ps. 382,087 and Ps. 280,175 for the fiscal years ended June 30, 2018, 2017 and 2016, respectively, and are included within “income from sales, rents and services” in the statements of comprehensive income.

The book value of assets for such leases are described in Note 9.

F-70

IRSA Propiedades Comerciales S.A.

The future minimum proceeds under non-cancellable operating leases from Group’s shopping malls, offices and other buildings are as follows:

	06.30.18	06.30.17
2018	-	1,421,954
2019	1,904,572	1,004,397
2020	1,305,965	439,775
2021	636,762	89,098
2022	172,217	10,030
Later than 2022	25,679	209
	4,045,195	2,965,463

Finance leases:

The Group does not act as a lessor in connection with finance leases.

24.

Revenues

	06.30.18	06.30.17	06.30.16
Base rent	2,589,799	2,029,990	1,548,213
Contingent rent	718,625	624,990	587,630
Admission rights	343,420	300,933	207,190
Parking fees	236,323	192,749	153,213
Commissions	123,284	107,580	84,815
Averaging of scheduled rent escalation	29,456	90,197	42,832
Property management fees	65,833	52,303	41,213
Others	21,714	10,550	7,595
Total revenues from rentals and services	4,128,454	3,409,292	2,672,701
Sale of trading properties	103,197	98,792	1,159
Total revenues from sale of properties	103,197	98,792	1,159
Other revenues	555	891	1,013
Other revenues	555	891	1,013
Total revenues from sales, rentals and services	4,232,206	3,508,975	2,674,873
Expenses and collective promotion fund	1,717,000	1,488,187	1,183,627
Total revenues from expenses and collective promotion funds	1,717,000	1,488,187	1,183,627
Total revenues	5,949,206	4,997,162	3,858,500

25.

    Expenses by nature

The Group presented the statement of comprehensive income classified according to their function as part of the line items “Costs”, “General and administrative expenses” and “Selling expenses”.

The following tables provide additional disclosure regarding expenses by nature and their relationship to the function within the Group.

	Costs (ii)	General and administrative expenses	Selling expenses	06.30.18
Salaries, social security costs and other personnel administrative expenses (i)	773,968	114,249	23,914	912,131
Maintenance, security, cleaning, repairs and other	739,853	19,512	804	760,169
Taxes, rates and contributions	238,669	11,795	157,836	408,300
Advertising and other selling expenses	263,869	-	28,330	292,199
Directors' fees	-	164,339	-	164,339
Fees and payments for services	10,911	60,678	8,117	79,706
Allowance for doubtful accounts (additions and unused amounts reversed) (Note 14)	-	-	73,903	73,903
Leases and expenses	47,615	6,037	400	54,052
Amortization and depreciation (Notes 9,10 y 12)	33,301	11,498	315	45,114
Traveling, transportation and stationery	18,387	13,987	1,215	33,589
Bank expenses	2,910	12,585	-	15,495
Cost of sale of properties (Note 11)	8,869	-	-	8,869
Other expenses	1,095	562	31	1,688
Total 06.30.18	2,139,447	415,242	294,865	2,849,554

F-71

	Costs (ii)	General and administrative expenses	Selling expenses	06.30.17
Salaries, social security costs and other personnel administrative expenses (i)	653,834	95,201	27,500	776,535
Maintenance, security, cleaning, repairs and other	645,022	7,216	795	653,033
Taxes, rates and contributions	173,718	4,294	131,254	309,266
Advertising and other selling expenses	280,598	-	29,312	309,910
Directors' fees	-	131,481	-	131,481
Fees and payments for services	12,811	58,130	2,517	73,458
Allowance for doubtful accounts (additions and unused amounts reversed) (*) (Note 14)	-	-	41,310	41,310
Leases and expenses	77,619	4,516	525	82,660
Amortization and depreciation (Notes 9,10 y 12)	22,222	5,953	365	28,540
Traveling, transportation and stationery	16,803	8,127	893	25,823
Bank expenses	-	7,059	-	7,059
Cost of sale of properties (Note 11)	12,903	-	-	12,903
Other expenses	4,256	199	146	4,601
Commercial compensation	-	-	1,911	1,911
Total 06.30.17	1,899,786	322,176	236,528	2,458,490

	Costs (ii)	General and administrative expenses	Selling expenses	06.30.16
Salaries, social security costs and other personnel administrative expenses (i)	515,022	53,448	20,911	589,381
Maintenance, security, cleaning, repairs and other	444,824	4,428	503	449,755
Taxes, rates and contributions	127,361	1,957	101,833	231,151
Advertising and other selling expenses	284,935	-	21,706	306,641
Directors' fees	-	113,673	-	113,673
Fees and payments for services	9,008	28,562	3,481	41,051
Allowance for doubtful accounts (additions and unused amounts reversed) (*)	-	-	12,005	12,005
Leases and expenses	46,873	3,077	375	50,325
Amortization and depreciation	14,802	7,911	231	22,944
Traveling, transportation and stationery	14,043	2,597	805	17,445
Bank expenses	-	5,896	-	5,896
Cost of sale of properties	1,400	-	-	1,400
Other expenses	1,936	31	-	1,967
Commercial compensation	-	-	371	371
Total 06.30.16	1,460,204	221,580	162,221	1,844,005

(*) At June 30, 2017 y 2016 includes debt relief for Ps 577 and Ps. 10, respectively.

(i)

For the fiscal year ended June 30, 2018 includes Ps. 842,559 of Salaries, Bonuses and Social Security; Ps. 6,404 of Equity incentive plan and Ps. 63,168 of other concepts. For the fiscal year ended June 30, 2017 includes Ps. 694,067 Salaries, Bonuses and Social Security; Ps. 16,545 of Equity incentive plan and Ps. 65,923 of other concepts. For the fiscal year ended June 30, 2016 includes Ps. 519,782 Salaries, Bonuses and Social Security; Ps. 16,359 of Equity incentive plan and Ps. 53,240 of other concepts.

(ii)

For the fiscal year ended June 30, 2018 includes Ps. 2,120,715 of Rental and services costs; Ps. 18,713 of Cost of sales and developments and Ps.19 of other consumer financing costs. For the fiscal year ended June 30, 2017 includes Ps. 1,874,392 of Rental and services costs; Ps. 25.346 of Cost of sales and developments and Ps. 48 of other consumer financing costs. For the fiscal year ended June 30, 2016 includes Ps. 1,454,409 of Rental and services costs; Ps. 5,718 of Cost of sales and developments and Ps. 77 of other consumer financing costs.

26.

        Other operating results, net

	06.30.18	06.30.17	06.30.16
Gain resulting from sale anual reserval of property plant and equipment	35,602	437	-
Others	12,347	10,508	(17,451
Donations	(26,967)	(52,910)	(38,889)
Lawsuits (Note 19)	(25,004)	(14,031)	(3,402)
Gain resulting from the revaluation of equity interes held before the bussines combination	-	7,618	-
Expenses related to the sale of investment property	(884)	(2,841)	(8,810)
Total other operating results, net	(4,906)	(51,219)	(68,552)

F-72

IRSA Propiedades Comerciales S.A.

27.

        Financial results, net

	06.30.18	06.30.17	06.30.16
- Foreign exchange	413,976	48,437	410,386
- Interest income	240,005	184,296	102,169
- Dividends income	34,172	9,705	-
Finance income	688,153	242,438	512,555
- Foreign exchange	(6,407,173)	(598,845)	(2,225,939)
- Interest expense	(928,218)	(639,768)	(612,486)
- Others financial costs	(117,445)	(77,033)	(100,051)
Subtotal finance costs	(7,452,836)	(1,315,646)	(2,938,476)
Less: Capitalized finance costs	14,385	2,310	-
Finance costs	(7,438,451)	(1,313,336)	(2,938,476)
- Fair value gains of financial assets at fair value through profit or loss	2,041,061	203,087	466,328
- Gain from derivative financial instruments	227,378	81,105	1,248,374
- Loss from repurchase of non - convertible notes	-	(168)	-
Other financial results	2,268,439	284,024	1,714,702
Total financial results, net	(4,481,859)	(786,874)	(711,219)

28.

        Earnings per share

(a)

Basic

Basic earnings per share amounts are calculated in accordance with IAS 33 "Earning per share" by dividing the profit attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the year (Note 16).

On December 18, 2012, the Superintendence of Corporations registered an amendment to the Company’s by-laws whereby it increased the nominal value of its shares from Ps. 0.1 to Ps. 1 each. This amendment, which was notified through the CNV, was registered under number 20,264 of Stock Companies Book 62 T°.Furthermore, the CNV has admitted the shares indicated above for listing in the Stock Exchange.

	06.30.18	06.30.17	06.30.16
Profit attributable to equity holders of the Parent	15,099,936	3,260,476	11,821,280
Weighted average number of ordinary shares in issue (thousands)	126,014	126,014	126,014
Basic earnings per share	119.83	25.87	93.81

As mentioned in Note 16, the nominal value of shares increased from Ps. 0.1 to Ps. 1 per share. The number of shares, prices and any other information per share included in these Financial Statements for all of these periods have adjusted retroactively to reflect the change from Ps. 0.1 to Ps. 1.

(b)

Diluted

Diluted earnings per share amounts are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares. As of June 30, 2018, 2016 and 2016, the Group has no convertible instruments. The diluted earnings per share is equal to basic earnings per share.

29.

        Related party transactions

In the normal course of business, the Group conducts transactions with different entities or parties related to it. An individual or legal entity is considered a related party where:

  -

An entity, individual or close relative of such individual or legal entity exercises control, or joint control, or significant influence over the reporting entity, or is a member of the Board of Directors or the Senior Management of the entity or its parent company.

  -

An entity is a subsidiary, associate or joint venture of the entity or its parent or controlled company.

The following section provides a brief description of the main transactions conducted with related parties which are not described in other notes of these consolidated Financial Statements:

F-73

1.

Remuneration of the Board of Directors

Law N° 19,550 provides that the remuneration of the Board of Directors, where it is not set forth in the Company’s by-laws, shall be fixed by the Shareholders' Meetings. The maximum amount of remuneration that the members of the Board are allowed to receive, including salary and other performance-based remuneration of permanent technical-administrative functions, may not exceed 25% of the profits.

Such maximum amount is limited to 5% where no dividends are distributed to the Shareholders, and will be increased proportionately to the distribution, until reaching such cap where total profits are distributed.

Some of our Directors are hired under the Employment Contract Act N° 20,744. This Act rules on certain conditions of the work relationship, including remuneration, salary protection, working hours, vacations, paid leaves, minimum age requirements, workmen protection and forms of suspension and contract termination.

The remuneration of directors for each fiscal year is based on the provisions established by the Law N° 19,550, taking into consideration whether such directors perform technical-administrative functions and depending upon the results recorded by the Company during the fiscal year. Once such amounts are determined, they should be approved by the Shareholders’ Meeting.

2.

Senior Management remuneration

The members of the Senior or Top Management are appointed and removed by the Board of Directors, and perform functions in accordance with the instructions delivered by the Board itself.

The remuneration earned by the Company's Senior Management (including Directors) was Ps. 35.4 million; Ps. 29.8 million and Ps. 38.5 million as of June 30, 2018, 2017 and 2016, respectively. The remuneration earned by Senior Management for their functions consists of an amount that is fixed taking into account the manager's background, capacity and experience, and an annual bonus which varies according to their individual performance and the Group's results. Members of senior management participate in defined contribution and share-based incentive plans that are described in Notes 21 and 22, respectively.

The Group’s Senior Management is composed of as follows:

Name	Date of birth	Position	In the position since
Alejandro G. Elsztain	31/03/1966	General Manager	2002
Daniel R. Elsztain	22/12/1972	Operating Manager	2011
Matias Gaivironsky	23/02/1976	Real Estate Manager	2011
Juan José Martinucci	31/01/1972	Financial and Administrative Manager	2013
Arnaldo Jawerbaum	13/08/1966	Investment Manager	2017

                3.    Corporate Service Agreement with Cresud and IRSA

Whereas, given that the Group, IRSA and Cresud have operating areas with certain characteristics of affinity, the Board of Directors considered it was convenient to implement alternatives that allows to reduce certain fixed costs, with the aim of reducing their incidence on the operating results, building on and enhancing the individual efficiencies of each of the companies in the different areas that form part of operating administration.

To such end, on June 30, 2004, a Master Agreement for the Exchange of Corporate Services (“Frame Agreement") was entered into between IRSA Propiedades Comerciales S.A., IRSA and Cresud, which was amended several times to bring it in line with the current context. The agreement has a term of 24 months, is renewable automatically for equal periods, unless it is terminated by any of the parties upon prior notice.

F-74

IRSA Propiedades Comerciales S.A.

Under the current Master Agreement corporate services are provided in the following areas: Human Resources, Finance, Institutional Relations, Administration and Control, Insurance, Security, Agreements, Technical Tasks, Infrastructure and Services, Procurement, Architecture and Design, Development and Works, Real Estate, Hotels, Board of Directors, Board of directors of Real Estate Business, General Manager Office, Board Safety, Audit Committee, Real Estate Business Management, Human Resources of Real Estate Business, Fraud Prevention, Internal Audit and Agricultural Investment Management.

Pursuant to this agreement, the companies hired an external consulting firm to review and evaluate half-yearly the criteria used in the process of liquidating the corporate services, as well as the basis for distribution and source documentation used in the process indicated above, by means of a half-yearly report.

It should be noted that the operations indicated above allows both Group IRSA and Cresud to keep our strategic and commercial decisions fully independent and confidential, with cost and profit apportionment being made on the basis of operating efficiency and equity, without pursuing individual economic benefits for any of the companies.

4.

    Legal services

The Group hires legal services from Estudio Zang, Bergel & Viñes, from which Saúl Zang is a partner and sits at the Board of Directors of the Group companies.

5.

Donations granted to Fundación IRSA and Fundación Museo de los Niños

Fundación IRSA is a non-profit charity institution that seeks to support and generate initiatives concerning education, the promotion of corporate social responsibility and the entrepreneurial spirit of the youth. It carries out corporate volunteering programs and fosters donations by the Group’s employees. The main members of Fundación IRSA's Board of Administrators are: Eduardo S. Elsztain (Chairman); Saúl Zang (Vice Chairman I), Alejandro Elsztain (Vice Chairman II) and Mariana C. de Elsztain (secretary). It finances its activities with the donations made by IRSA Propiedades Comerciales S.A., IRSA, Cresud and others Group’s companies.

Fundación Museo de los Niños is a non-profit association, created by the same founders of Fundación IRSA and its Management Board is formed by the same members as Fundación IRSA’s.

On October 31, 1997, IRSA Propiedades Comerciales S.A. entered into an agreement with Fundación IRSA whereby 3,800 square meters of the constructed area at the Abasto shopping mall was granted under a gratuitous bailment agreement for a term of 30 years. Subsequently, on October 29, 1999, Fundación IRSA assigned free of cost all the rights of use over such store and its respective obligations to Fundación Museo de los Niños.

On November 29, 2005, IRSA Propiedades Comerciales S.A. signed another agreement with Fundación Museo de los Niños granting under gratuitous bailment 2,670.11 square meters of the constructed area at Alto Rosario shopping mall for a term of 30 years.

Fundación Museo de los Niños has used these spaces to set up "Museo de los Niños, Abasto” and “Museo de los Niños, Rosario", two interactive learning centers intended for children and adults. Both agreements establish the payment of common expenses and direct expenses related to the services performed by these stores should be borne by Fundación Museo de los Niños.

6.

Offices and Shopping malls spaces rental

IRSA and Cresud rent office space for their executive offices located at the Intercontinental Plaza tower at Moreno 877 in the Autonomous City of Buenos Aires, which we have owned since December 2014. They also rent space at our Abasto Shopping Mall.

The offices of our President are located at Bolívar 108, in the Autonomous City of Buenos Aires. The property has been rented to Isaac Elsztain e Hijos S.A., a company controlled by Eduardo Sergio Elsztain, our President, and some of his family members and to Hamonet S.A., a company controlled by Fernando A. Elsztain, one of our directors, and some of its family members.

F-75

IRSA Propiedades Comerciales S.A.

In addition, Tarshop, Banco de Crédito y Securitización S.A., BHN Sociedad de Inversión S.A., BHN Seguros Generales S.A. and BHN Vida S.A. rent offices owned by us in different buildings. In addition, we also let various spaces in our Shopping Malls (stores, stands, storage space or advertising space) to third parties and related parties such as Tarshop S.A. and Banco Hipotecario S.A.. Lease agreement entered into with these related parties include clauses and values in line with those agreed upon with unrelated parties.

7.

Special reimbursement programs with several means of payment

The Group carries out diverse commercial activities and promotions intended to promote larger number of visitors and consumption inside its shopping malls. Some promotions are offered on specific dates or periods, different types of discounts to clients and/or interest-free financing plans. To this end, the Group enters into agreements with various third party financial entities and/or related parties, such as Banco Hipotecario S.A. and Tarshop S.A..

These agreements usually establish different refund percentages for those clients that make purchases at all the participating stores using the means of payment specific of each financial entity and, on occasions, additional financing plans with interest-free instalments. The cost of the refunds granted to the clients is generally distributed as a percentage among the lessors of the shopping malls and the financial entities, while the cost of interest-free financing is borne, in general, by the latter. The Group acts as an intermediary and is in charge of the lessors’ engagement and the advertising of these promotions. This activity results in no money flows or transfer of revenues or costs between the Group and its related parties.

8.

Hospitality Services

On certain occasions, the Group hires hospitality and event venue rental services from Nuevas Fronteras S.A., Hoteles Argentinos S.A. and Llao Llao Resorts S.A., all subsidiaries of our parent company IRSA.

9.

Property purchase - sale

The Group in the course of business operations may acquire or sell to or from other related parties certain real estate properties used for rental purposes.

10.

Borrowings

In the normal course of its activities, the Group enters into diverse loan agreements or credit facilities between the group’s companies and/or other related parties. These loans accrue interest at market rates.

11.

Financial and service operations

The Group works with several financial entities in the Argentine market for operations including, but not limited to, credit, investment, purchase and sale of securities and financial derivatives. Such entities include Banco Hipotecario S.A. and its subsidiaries. Furthermore, Banco Hipotecario S.A. and BACS Banco de Crédito y Securitización S.A. usually act as underwriters in Capital Market transactions for the Group. All transactions are carried out at arm’s length.

12.

Purchase of financial assets

The Group usually invests excess cash in several instruments that may include those issued by related companies, acquired at issuance or from unrelated third parties through secondary market deals.

13.

Investment in investment funds managed by BACS Administradora de Activos

The Group invests its liquid funds in mutual funds managed by BACS Administradora de Activos S.A.S.G.F.C.I. among other entities.

F-76

IRSA Propiedades Comerciales S.A.

The following is a summary of the balances with related parties:

Item	06.30.18	06.30.17
Trade and other receivables	786,200	633,834
Investments in financial assets	248,544	267,365
Trade and other payables	(158,591)	(104,282)
Borrowings	(4,154)	(3,571)
Total	871,999	793,346

Related parties	06.30.18	06.30.17	Description of transaction
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA)	673,406	542,052	Advances
	41,709	22,854	Corporate services
	40,863	25,425	Non-convertible notes
	12,448	10,472	Equity incentive plan
	9,023	16,482	Reimbursement of expenses
	428	-	Others
	-	4	Loans granted
	-	265	Commissions
	-	535	Lease collections
	(439)	(9)	Reimbursement of expenses to pay
	(14,609)	(15,380)	Equity incentive plan to pay
Total direct parent company	762,829	602,700
Cresud S.A.CI.F. y A.	207,681	241,940	Non-convertible notes
	(2,546)	(1,113)	Equity incentive plan to pay
	(15,375)	(23,385)	Reimbursement of expenses to pay
	(55,483)	(13,595)	Corporate services to pay
Total direct parent company of IRSA	134,277	203,847
La Rural S.A.	28,712	119	Leases and/or rights to use space
	7,165	8,841	Dividends
	-	3,676	Loans granted
	-	16,394	Canon
	(845)	(55)	Reimbursement of expenses to pay
Other associates and joint ventures	4,309	4,557	Loans granted
	509	812	Management fee
	314	931	Reimbursement of expenses
	-	1,625	Leases and/or rights to use space
	-	(105)	Lease collections
	(235)	-	Reimbursement of expenses to pay
	(286)	(619)	Advertising space to pay
	(518)	(1,288)	Leases and/or rights to use space
	(4,154)	(3,571)	Borrowings obtained
Total associates and joint ventures of IRSA Propiedades Comerciales	34,971	31,317
Directors	(12)	(17)	Reimbursement of expenses to pay
	(67,126)	(44,770)	Fees
Total Directors	(67,138)	(44,787)
Others	4,685	3,370	Leases and/or rights to use space to pay
	3,283	746	Reimbursement of expenses
	209	-	Advertising space
	-	(40)	Hotel services to pay
	-	99	Commissions
	(4)	(219)	Reimbursement of expenses to pay
	(5)	(272)	Dividends to pay
	(9)	(41)	Leases and/or rights to use space to pay
	(27)	-	Commissions to pay
	(1,072)	(3,374)	Legal services
Total Others	7,060	269
Total	871,999	793,346

F-77

IRSA Propiedades Comerciales S.A.

The following is a summary of the results with related parties:

Related parties	06.30.18	06.30.17	06.30.16	Description of transaction
IRSA Inversiones y Representaciones Sociedad Anónima (IRSA)	35,056	23,972	19,165	Corporate services
	17,448	516	(1,491,911)	Financial operations
	910	2,533	(375)	Leases and/or rights to use space
	163	127	76	Commissions
Total direct parent company	53,577	27,148	(1,473,045)
Cresud S.A.CI.F. y A.	151,002	61,923	84,980	Financial operations
	1,931	867	1,417	Leases and/or rights to use space
	(162,756)	(128,819)	(88,517)	Corporate services
Total direct parent company of IRSA	(9,823)	(66,029)	(2,120)
La Rural S.A.	12,209	-	-	Financial operations
	12,678	8,518	-	Leases and/or rights to use space
Tarshop S.A.	15,809	13,816	11,802	Leases and/or rights to use space
	322	-	265	Commissions
Nuevo Puerto Santa Fe S.A.	3,882	3,565	3,619	Fees
	(548)	(1,165)	(1,716)	Financial operations
	(504)	5,641	(385)	Leases and/or rights to use space
Others associates and joint ventures	216	216	216	Fees
	1,286	707	31	Financial operations
Total associates and joint ventures of IRSA Propiedades Comerciales	45,350	31,298	13,832
Directors	(164,339)	(131,481)	(113,673)	Fees
Senior Managment	(9,606)	(6,677)	(6,246)	Fees
Total Directors	(173,945)	(138,158)	(119,919)
Estudio Zang, Bergel & Viñes	(10,038)	(9,185)	(2,940)	Fees
Banco de Crédito y Securitización	17,180	9,507	6,493	Leases and/or rights to use space
REIG V	-	58,125	-	Financial operations
Others	9,389	7,335	2,578	Leases and/or rights to use space
	25	21	222	Commissions
	(2,079)	(609)	(96)	Donations
	-	-	4,912	Financial operations
Total others	14,477	65,194	11,169
Total	(70,364)	(80,547)	(1,570,083)

The following is a summary of the transactions with related parties:

Related parties	06.30.18	06.30.17	Description of transaction
IRSA Inversiones y Representaciones S.A.	586,745	726,974	Dividends granted
Tyrus	652	738	Dividends granted
Total Dividends granted	587,397	727,712
La Rural S.A	34,172	8,841	Dividends received
Nuevo Puerto Santa Fe S.A.	8,838	11,443	Dividends received
Total Dividends received	43,010	20,284
Quality Invest S.A.	37,364	3,000	Irrevocable contributions granted
	1,649	-	Equity contributions granted
Avenida Inc.	6,210	-	Irrevocable contributions granted
Total Contributions	45,223	3,000

30.

        CNV General Resolution N° 622/13

As required by Section 1°, Chapter III, Title IV of CNV General Resolution N° 622/13, below there is a detail of the notes to the Consolidated Financial Statements that disclose the information required by the Resolution.

Exhibit A - Property, plant and equipment	Note 9 - Investment properties
	Note 10 - Property, plant and equipment
Exhibit B - Intangible assets	Note 8 - Intangible assets
Exhibit C - Equity investments	Note 12 - Information about, associates and joint ventures
Exhibit D - Other investments	Note 13 - Financial instruments by category
Exhibit E - Provisions	Note 14 - Trade and other receivables
	Note 19 - Provisions
Exhibit F - Cost of sales and services provided	Note 25 - Expenses by nature
	Note 11 - Trading properties
Exhibit G - Foreign currency assets and liabilities	Note 31 - Foreign currency assets and liabilities

F-78

31.         Foreign currency assets and liabilities

Book amounts of foreign currency assets and liabilities are as follows:

Items (1)	Amount (2)	Exchange rate (3)	06.30.18	Amount (2)	Exchange rate (3)	06.30.17
Assets
Trade and other receivables
Uruguayan Pesos	25	0.92	23	3	0.58	2
US Dollar	9,245	28.75	265,788	5,423	16.53	89,640
Euros	142	33.54	4,777	-	-	-
Trade and other receivables with related parties
US Dollar	3,897	28.85	112,422	3,147	16.63	52,334
Total trade and other receivables			383,010			141,976
Restricted assets
US Dollar	-	-	-	2,996	16.53	49,525
Total Restricted assets			-			49,525
Investments in financial assets
US Dollar	119,323	28.75	3,430,544	43,368	16.53	716,867
Investment in financial assets with related parties
US Dollar	8,615	28.85	248,544	16,077	16.63	267,365
Total investments in financial assets			3,679,088			984,232
Cash and cash equivalents
Uruguayan Pesos	2	0.91	2	7	0.58	4
US Dollar	84,029	28.75	2,415,829	6,170	16.53	101,987
Pound	2	37.90	57	1	21.49	32
Euros	1	33.54	38	6	18.85	105
Total cash and cash equivalents			2,415,926			102,128
Total Assets			6,478,024			1,277,861
Liabilities
Trade and other payables
Uruguayan Pesos	15	0.91	14	9	0.58	5
US Dollar	5,723	28.85	165,114	9,452	16.63	157,190
Euros	41	33.73	1,391	-	-	-
Trade and other payables with related parties
US Dollar	-	-	-	271	16.63	4,505
Total trade and other payables			166,519			161,700
Borrowings
US Dollar	542,367	28.85	15,647,296	364,889	16.63	6,068,102
Total borrowings			15,647,296			6,068,102
Borrowings
US Dollar	9	28.85	264	-	-	-
Total borrowings			264			-
Provisions
US Dollar	5	28.85	144	5	16.63	83
Total Provisions			144			83
Total Liabilities			15,814,223			6,229,885

(1)  Considering foreign currencies those that differ from each one of the Group’s companies’ functional currency at each year-end.

(2) Expressed in thousands of foreign currency.

(3) Exchange rate of the Argentine Peso as of June 30, 2018 and 2017 as reported by the Argentina Central Bank.

32.         Barter transactions

The Group generally enters into barter transactions with third-party developers in the ordinary course of business. By virtue of these transactions, the Group generally exchanges undeveloped plots of land for units to be constructed and received in the future. Following is a description of pending transactions that have not yet been perfected by the third parties as of June 30, 2018:

F-79

  IRSA Propiedades Comerciales S.A.

Beruti

On October 13, 2010, the Group and TGLT entered into an agreement to barter a plot of land located at Beruti 3351/59 in the city of Buenos Aires for cash and future residential apartments to be constructed by TGLT on the mentioned land. The transaction, which was subject to certain precedent conditions including the completion by TGLT of its initial public offering, was agreed upon at USD 18.8 million. TGLT constructed an apartment building with residential and commercial parking space. In consideration, TGLT had to transfer to IRSA Propiedades Comerciales S.A. (i) a number of apartments to be determined representing 17.33% of total square meters of residential space; (ii) a number of parking spaces to be determined representing 15.82% of total square meters of parking space; (iii) all spaces reserved for commercial parking in the future building and (iv) the amount of USD 10.7 million payable upon delivering the deeds of title on the land. TGLT completed its initial public offering in the Buenos Aires Stock Exchange on October 29, 2010 and therefore the precedent condition for the transaction was fulfilled on that date. TGLT paid the mentioned USD 10.7 million on November 5, 2010. On December 16, 2010, the title deed to the Beruti plot of land was executed. To secure performance of obligations assumed by TGLT under the deed of sale, a mortgage was granted in favour of IRSA Propiedades Comerciales S.A..

An association named Asociación Amigos Alto Palermo presented an injunction requesting that the construction is prohibited and obtained a suspension interim measure for this purpose. Later, the Court of Appels from the Autonomous City of Buenos Aires ordered the lifting of such interim measure. On December 4, 2013 the delivery terms for committed units were extended for 11 months and on November 4, 2014 a new 11-month extension was signed. On June 11, 2015 final judgment was rendered in favour of IRSA Propiedades Comerciales and TGLT.

On December 30, 2016, TGLT S.A. and IRSA Propiedades Comerciales executed a possession conveyance deed in wich TGLT is not able to execute the relevant title conveyance deed, as it had not completed registration of the Condominium interest as contracted.

During the fiscal year ended June 30, 2018, third parties were assigned the right to notarize in public deeds part of the units, which generated income of Ps. 94.3 million.

As already explained, the remaining part of the transactions continues to be classified as a barter.

Conil

On November 5, 2014, the Group executed a conveyance deed evidencing a swap and mortgage transaction in favour of Darío Palombo (acting as Trustee of “Fideicomiso Esquina Guemes”) to convey title on four plots of land located in Avellaneda district. The agreement provides for the development by the Trust of two building construction undertakings. In consideration for such work, the compensation agreed included the amount of USD 0.01 million and delivery, within 24 months as from such agreement execution, of two functional units for commercial purposes and one functional unit for office purposes (the non-monetary compensation was valued at USD 0.7 million).

On June 26, 2018, an extension of the barter transaction was signed, in which the buyer undertakes to deliver the public deed in a maximum period of 54 months for BUILDING "A" and 80 months for the BUILDING " B ", both counting from November 5, 2014.

In the same act, a delivery commitment was signed for a department unit with an approximate area of 57.5 sm, located on the 4th floor, along with a 14 m2 garage located on the ground floor, both belonging to Building 'B' as payment for the fines due from the failure of delivery of possession of the units of both buildings, until date of signature of extension of the barter transaction, which is equivalent to USD 291,600.

F-80

IRSA Propiedades Comerciales S.A.

Coto Residential Project

The Group owns air space of approximately 23,000 square meters above Hipermercado Coto near the Abasto Shopping Mall at the heart of the Autonomous City of Buenos Aires. On September 24, 1997, the Group and Coto Centro Integral de Comercialización S.A. (Coto) granted a title deed by which the Group acquired the rights to receive the parking spaces and the rights to increase the height of the building located between the Agüero, Lavalle, Guardia Vieja and Gallo streets, in the Abasto neighbourhood.

On June 2016, a conditional Exchange Agreement was executed for a one year term, to be later formalized through the execution of a conveyance deed. The project will be a residential development for a consideration of apartments covering an area of 3,621 square meters plus payment of USD 1 million. The consideration will be delivered no later than June 2021 for Tower I, and no later than September 2022 for Tower II. The value in the bill of sale was set at USD 7.5 million.

Córdoba Shopping Project

The Group owns a plot of land next to Córdoba Shopping, with building capacity of approximately 17,300 square meters, at the heart of Cordoba City.

In May 2016, an Exchange Agreement was executed for a building of 13,500 square meters, subject to conditions for a term of one year, after which it may be formalized through a title conveyance deed. The project will be a mixed development, combining residential and office space, and the consideration will include apartments covering 2,160 square meters, parking space, and procedures to obtain permits, combinations and subdivisions of 3 plots of land. Delivery of the consideration will take place no later than May 2021 for Tower I and no later than July 2023 for Tower II. The Exchange Value was set at USD 4 million.

The two mentioned contracts that are part of the Coto residential project and the Córdoba Shopping exchange project include conditions precedent and/or suspensive clauses. Since suspensive clauses have not materialized yet, the real property involved is classified as trading properties.

33.

        CNV General Ruling N° 629/14 – Storage of documentation

On August 14, 2014, the CNV issued General Resolution N° 629 whereby it introduced amendments to rules related to storage and conservation of corporate books, accounting books and commercial documentation. In this sense, it should be noted that the Group has entrusted the storage of certain non-sensitive and old information to the following providers:

Documentation storage provider	Home location
Iron Mountain Argentina S.A.	Av. Amancio Alcorta 2482, C.A.B.A.
Iron Mountain Argentina S.A.	Pedro de Mendoza 2143, C.A.B.A.
Iron Mountain Argentina S.A.	Saraza 6135, C.A.B.A.
Iron Mountain Argentina S.A.	Azara 1245, C.A.B.A. (i)
Iron Mountain Argentina S.A.	Polígono Industrial Spegazzini, Au Ezeiza-Cañuelas KM 45
Iron Mountain Argentina S.A.	Cañada de Gómez 3825, C.A.B.A.

(i)     On February 5, 2014, there was a widely known fire in Iron Mountain’s warehouse. To the original date of these Financial Statements, the Group had not been notified whether the documentation in storage has been affected by the fire or as to its condition after the accident. Nevertheless, based on the internal review carried out by the Group, duly reported to the CNV on February 12, 2014, the information kept at the warehouse that were on fire do not appear to be sensitive or capable of affecting normal business operations.

It is further noted that a detailed list of all documentation held in custody by providers, as well as documentation required in section 5 a.3) of section I, Chapter V, Title II of the RULES (2013 as amended) are available at the registered office.

F-81

IRSA Propiedades Comerciales S.A.

34.

       Subsequent events

La Malteria S.A.

On July 11, 2018, the Company "La Malteria S.A." was formed, with a capital contribution of Ps. 0.1 represented by 100,000 common nominative shares with a par value of 1 peso. IRSA Commercial Properties S.A. subscribed 95,000 shares of share capital, while the remaining 5,000 were subscribed by FIBESA Sociedad Anónima.

Acquisition de predio Malteria Hudson

In July 2018, we announced the acquisition, of a property of 147,895 square meters of surface and approximately 40,000 sqm of built surface known as “Maltería Hudson”, located in the intersection of route 2 and Buenos Aires - La Plata highway, in the City of Hudson, province of Buenos Aires. The price of the operation was set at the amount of USD 7.0 million.

Moreover, we entered into an agreement to buy the two adjoining properties to “La Maltería” of approximately 49,000 sqm and 57,000 sqm respectively, for a total amount of USD 720,825

In addition, we granted an option to a non-related third party to buy from us between 15% to 30% of the outstanding shares of “La Maltería S.A.” at the acquisition price plus a certain interest for a six month period.

The purpose of this acquisition is the future development of a mixed-use project, with a total constructive capacity of approximately 177,000 sqm.

Devaluation of the Argentine Peso

As of the issuance date of these financial statements, the Argentine peso has suffered a devaluation against the US dollar and other currencies close to 31%, as compared to the exchange rate as of the end of the year, which has an impact on the figures presented in these Financial Statements, mainly originated by exposure to the exchange rate of our revenues and costs of the "offices and other properties" segment, and our assets and liabilities, denominated in foreign currency.

F-82

Item 19. Exhibits

Documents filed as exhibits to this Amendment No.1:

Exhibit No.	Description of Exhibit
12.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act 2002
12.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act 2002
13.1	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1 99.2	Consent of Independent Registered Public Accounting Firm. Summary of Investment Properties by type as of June 30, 2018 (in accordance with SEC S-X 12.28).

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	IRSA Propiedades Comerciales S.A.
Date: November 1, 2018	By:	/s/ Matias I. Gaivironsky
		Name Matias I. Gaivironsky
		Title Chief Financial and Administrative Officer

002761-0005-16061-Active.28106184.3  10/31/2018 12:51 PM

EXHIBIT 12.1

SECTION 302 CERTIFICATION

I, Alejandro G. Elsztain, certify that:

1. I have reviewed this amendment to the annual report on Form 20-F/A of IRSA Propiedades Comerciales S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period converted by this report.

3. Based on my knowledge, the financial statements included in this amendment, fairly present in all material respects the financial position at June 30, 2018 and 2017 and the results of operations and cash flows of the Company for the periods ended June 30, 2018, 2017 and 2016;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervisions, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

	IRSA Propiedades Comerciales S.A.
November 1, 2018.	By:	/s/ Alejandro G. Elsztain
		Alejandro G. Elsztain
		Chief Executive Officer

EXHIBIT 12.2

SECTION 302 CERTIFICATION

I, Matias Gaivironsky, certify that:

1. I have reviewed this amendment to the annual report on Form 20-F/A of IRSA Propiedades Comerciales S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period converted by this report.

3. Based on my knowledge, the financial statements included in this amendment, fairly present in all material respects the financial position at June 30, 2018 and 2017 and the results of operations and cash flows of the Company for the periods ended June 30, 2018, 2017 and 2016;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervisions, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

	IRSA Propiedades Comerciales S.A.
November 1, 2018.	By:	/s/ Matias Gaivironsky
		Matias Gaivironsky
		Chief Financial Officer

EXHIBIT 13.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Amendment No. 1 to the Annual Report on Form 20-F/A of IRSA Propiedades Comerciales S.A. (the “Company”) for the fiscal year ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Alejandro G. Elsztain, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities and Exchange Act of 1934.

	IRSA Propiedades Comerciales S.A.
November 1, 2018.	By:	/s/ Alejandro G. Elsztain
		Alejandro G. Elsztain
		Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except as to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended

EXHIBIT 13.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Amendment No. 1 to the Annual Report on Form 20-F/A of IRSA Propiedades Comerciales S.A. (the “Company”) for the fiscal year ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Alejandro G. Elsztain, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities and Exchange Act of 1934.

	IRSA Propiedades Comerciales S.A.
November 1, 2018.	By:	/s/ Matias Gaivironsky
		Matias Gaivironsky
		Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except as to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended.

EXHIBIT 99.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statementon FormF-3 (No.333-220896) of IRSA Propiedades Comerciales S.A. of our report dated October 22, 2018 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Amendment No.1 to Form 20-F.

/s/ PRICE WATERHOUSE & Co. S.R.L

                                                      (Partner)

/s/ Walter Rafael Zablocky

Buenos Aires, Argentina

November 1, 2018

EX-99.2 11 SUMMARY OF INVESTMENT PROPERTIES BY TYPE AS OF JUNE 30, 2018 (IN ACCORDANCE WITH SEC SX 12-28 (1)).

EXHIBIT 99.2

Investment properties

The following summary of the group´s investment properties by type as of June 30, 2018 prepared in accordance with SEC SX 12-28 (1):

	Initial Costs		Subsequent Costs	Costs at the end of the year
	Plot of land	Buildings, facilities and improvement	Improvement / additions	Plot of land	Buildings, facilities and improvement	Total	Capitalized cost, net	Fair value adjustments	Fair Value at the end of the year (2)	Date of construction	Date of acquisition
Shopping malls:
Abasto	9,753	251,247	22,455	9,753	273,702	283,455	1,098	6,840,104	7,124,657	Nov-98	Jul-94
Alto Palermo Shopping	8,694	424,322	25,359	8,694	449,681	458,375	1,480	6,710,356	7,170,211	Oct-90	Nov-97
Alto Avellaneda	18,089	186,584	38,752	18,089	225,336	243,425	145	4,299,645	4,543,215	Oct-95	Dec-97
Alcorta Shopping	8,006	101,992	52,843	8,006	154,835	162,841	699	3,121,973	3,285,513	Jun-92	Jun-97
Alto Noa	227	46,336	20,633	227	66,969	67,196	59	1,017,381	1,084,636	Sep-94	Mar-95
Buenos Aires Design	-	53,083	7,622	-	60,705	60,705	3	(50,270)	10,438	Nov-93	Nov-97
Patio Bullrich	9,814	163,711	22,569	9,814	186,280	196,094	326	1,694,358	1,890,778	Sep-88	Oct-98
Alto Rosario	25,686	74,743	34,160	25,686	108,903	134,589	2,629	3,240,618	3,377,836	Nov-04	Nov-04
Mendoza Plaza	10,546	126,413	31,785	10,546	158,198	168,744	5,212	1,565,482	1,739,438	Jun-94	Dec-94
Dot Baires Shopping	99,915	364,359	22,109	99,915	386,468	486,383	1,600	4,126,580	4,614,563	May-09	Nov-06
Córdoba Shopping (3)	1,141	98,714	12,485	1,141	111,199	112,340	50	1,000,157	1,112,547	Mar-90	Dec-06
Distrito Arcos	-	-	294,861	-	294,861	294,861	-	765,253	1,060,114	-	Nov-09
Alto Comahue	1,143	4,467	296,926	1,143	301,393	302,536	-	570,073	872,609	-	May-06
Patio Olmos	11,532	21,417	-	11,532	21,417	32,949	530	225,003	258,482	May-95	Sep-07
Soleil Premium Outlet	23,267	55,905	82,218	23,267	138,123	161,390	612	1,314,698	1,476,700	-	Jul-10
Ocampo parking space	3,201	21,137	207	3,201	21,344	24,545	-	232,084	256,629	-	Sep-06
Shopping centers	231,014	1,994,430	964,984	231,014	2,959,414	3,190,428	14,443	36,673,495	39,878,366
Office and other rental properties:
Abasto offices	-	-	15,276	-	15,276	15,276	-	93,858	109,134	Mar-13	Jul-94
Dot building	13,346	39,182	9,664	13,346	48,846	62,192	729	1,241,264	1,304,185	Sep-10	Nov-06
Anchorena 545 (Chanta IV)	812	4,495	-	812	4,495	5,307	-	60,824	66,131	-	Ago-08
Anchorena 665	2,206	8,820	-	2,206	8,820	11,026	-	84,097	95,123	-	Ago-08
Zelaya 3102	1,442	-	-	1,442	-	1,442	-	13,094	14,536	-	Jul-05
Suipacha 664	40,916	87,885	1,889	40,916	89,774	130,690	117	332,620	463,427	Jun-94	Dec-14
Bouchard 710	337,222	180,599	4,099	337,222	184,698	521,920	2,472	1,357,763	1,882,155	-	Dec-14
Intercontinental Plaza building	2,879	49,515	987	2,878	50,503	53,381	24	145,767	199,172	Jun-96	Dec-14
República building	391,506	316,686	924	391,506	317,610	709,116	563	1,961,672	2,671,351	-	Dec-14
Bank Boston tower	295,682	239,114	-	295,682	239,114	534,796	1,105	1,472,549	2,008,450	-	Dec-14
Paseo del Sol	-	2,608	-	-	2,608	2,608	-	9,266	11,874	-	Jul-15
Phillips building	-	469,034	-	-	469,034	469,034	136	334,266	803,436	-	Jun-17
Office and other rental properties	1,086,011	1,397,938	32,839	1,086,010	1,430,778	2,516,788	5,146	7,107,040	9,628,974
Undeveloped parcels of land
Building annexed to Dot	23,992	-	-	23,992	-	23,992	-	1,073,962	1,097,954	-	Nov-06
Luján plot of land	41,861	-	(298)	41,563	-	41,563	-	263,745	305,308	-	May-12
Caballito –Ferro plot of land	36,890	-	74,267	111,157	-	111,157	-	264,747	375,904	-	Nov-97
Annexed to Dot plot of land	1,980	-	-	1,980	-	1,980	-	2,207	4,187	-	Feb-17
Mendoza plot of land	3,375	-	-	3,375	-	3,375	-	2,663	6,038	-	Dec-16
Intercontinental Tower B plot of land	90,584	-	-	90,584	-	90,584	-	260,496	351,080	-	Dec-14
Mendoza Av Este 2992 plot of land	-	-	26,406	26,406	-	26,406	-	9,638	36,044	-	Mar-18
La Plata plot of land	154,125	-	-	154,125	-	154,125	-	63,937	218,062	-	Mar-18
Undeveloped parcels of land	352,807	-	100,375	453,182	-	453,182	-	1,941,395	2,394,577
Properties under development
PH Office Park	31,166	-	815,732	31,166	815,732	846,898	38,036	697,669	1,582,603	-	Nov-06
Alto Palermo Shopping annex	36,578	-	32,487	36,578	32,487	69,065	-	115,638	184,703	-	Jun-06
Phillips building	-	-	7,266	-	7,266	7,266	-	-	7,266	-	Jun-17
Alto Avellaneda	-	-	36,283	-	36,283	36,283	-	-	36,283	-	Dec-97
Mendoza Plaza	-	-	30,339	-	30,339	30,339	-	-	30,339	Jan-18	-
Alto Comahue	-	-	120,033	-	120,033	120,033	-	-	120,033	Apr-17	-
EH UTE	-	-	39,292	-	39,292	39,292	-	-	39,292	Sep-17	-
Properties under development	67,744	-	1,081,432	67,744	1,081,432	1,149,176	38,036	813,307	2,000,519
Others
DirecTV Arena stadium	-	-	106,795	-	106,795	106,795	-	45,580	152,375	-	Feb-18
Others	-	-	106,795	-	106,795	106,795	-	45,580	152,375
Total	1,737,576	3,392,368	2,286,425	1,837,950	5,578,419	7,416,369	57,625	46,580,817	54,054,811

(1)

All invesment properties are located in Argentina.

(2)

See note 10 to our Audited Financial Statements for the roll forward on the fair value of investment properties.

(3)

Encumbrance antichresis.