Mirgor — Annual Report 2006

Jun 27, 2007

Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria	Financial Statements for the fiscal year beginning January 1, 2006 and ended December 31, 2006, presented jointly with the Auditor’s Report and the Statutory Audit Committee’s Report (Translation into English – originally issued in Spanish)

BOARD OF DIRECTORS

MIRGOR S.A.C.I.F.I.A.

CHAIRMAN

Lic. Roberto G. Vazquez (*)

VICE-CHAIRMAN

Dr. José Luis Caputo

DIRECTORS

Ing. Jorge Antonio Caputo

Sr. José Fara (*)

Ing. Alejandro Carrera (*)

ALTERNATE DIRECTORS

Dr. Diego García Villanueva

Dr. Mauricio Blacher

Dr. Fabio Rozemblun

Lic. Martín Basaldúa

Dr. Eduardo Garcia Terán

STATUTORY AUDIT COMMITTEE

Statutory Auditors

Dr. Julio Cueto Rua

Dr. Mario Volman

Dr. Matias Romero Zapiola

Alternate Statutory Auditors

Dr. Andrés Mercau Saavedra

Dr. Hugo Kaplan

Dr. Jorge Oyuela

(*) Audit Committee members.

The Company is not enrolled in the Statutory Optional System for the mandatory Acquisition of Public Offerings.

FISCAL YEAR NO. 36 BEGINNING JANUARY 1 AND ENDED DECEMBER 31, 2006

LETTER TO THE SHAREHOLDERS

To the Shareholders:

In compliance with current legal requirements and Company bylaws, we are pleased to submit for your consideration the documentation related to the financial statements for fiscal year No. 36 ended December 31, 2006.

Environment in which the Company operated during the fiscal year

The Company experienced an interesting growth in its two main business lines: air quality and temperature control for automobiles and for residential use.

Precisely, these two sectors, the automobile industry and consumption of durable goods experienced exceptional growth over the period and helped the Argentine economy to maintain notable GDP growth rates.

The situation was similar in both sectors, the improvement in the purchasing power of salaries, the relative reduction in the price of automobiles and of durable goods and consumption postponed since Argentina's economic crisis contributed to the strong growth of the domestic market.

In the case of automobiles, an additional factor is that manufacturers are reaping the rewards of launching modern vehicles, assigned exclusively to the plants located in Argentina, which also boosts the exports of finished cars, accompanying the growth in the domestic market.

These fast growth rates coexisted during the year with strong pressures at both ends of the production chain. On the one hand, there were high increases in raw materials costs, related to two factors: one external resulting from the global growth of economies around the world and the strong demand that this causes, and a domestic one in which investments have not accompanied economic expansion and, in many cases, the prevailing conditions constrict the markets, which, however, continue to cope.

Among the factors that impact on the sector's costs, the issue of salaries and wages should be noted especially. All negotiations with labor unions, especially those related to the automobile sector, have been characterized by the union’s claims for adjustments exceeding inflation rates. This situation curtails the competitiveness of companies operating in such a globalized sector and this gives rise to contested business discussions with customers.

The uncertainty that persists is whether the Argentine economy will be able to encourage investment and efforts to improve productivity so as to sustain the high growth rates our country needs to reduce its levels of poverty and social exclusion.

The automobile industry

The automobile industry became the “leading star” in Argentina’s industrial growth process. Given that this industry’s share of the Industrial GDP is about 10%, the 35% growth it achieved (in units) had a significant incidence on overall economic growth rates.

• 2 -

Production reached the third highest level in history, with 432,101 vehicles, only 6% below its highest level ever, reached in 1998. The year-to-year growth rate was 35.1%.

Exports and imports exceeded their prior records, while domestic demand reached its second highest level ever.

The growth in exports is directly related to the maturing production of auto models that were launched after the devaluation of 2002 and the consolidation of other models that auto manufacturers' corporate headquarters designated for production in Argentina in order to meet their international demand. The best known cases in point are Volkswagen's Polo model and Daimler Chrysler’s Sprinter.

The number of vehicles exported was 236,789, which represents 54.8% of production. This serves to confirm that our industry is consolidating a trend towards specialization which, in turn, allows expectations of increased sustainability in the event of a crisis in domestic demand.

However, this direction makes it indispensable to maintain long-term competitiveness, which exceeds the topic of the "competitive" exchange rate that many analysts and businesspeople claim for.

Domestic demand grew at a smaller rate than production, namely 14.4%.

The most noteworthy aspect of this growth was that demand for automobiles manufactured in Argentina grew more and thus their market share went from 35.6% to 40.9% over the last year.

Taking into account that the automobiles made in Argentina are generally in the upper-range segment, it follows that the domestic purchasing power has increased.

Sector analysts believe there is still room for growth and one of the explanations they put forward is that there has net yet been a noticeable increase in the proportion of credit sales.

Meanwhile, there are strong presumptions that production and demand will indeed reach (and perhaps even exceed) the longed-for goal of 500,000 units, while manufacturers continue to analyze new projects for their factories.

Some of these projects have already been announced or are in execution, such as the Fiat-Tata agreement or the launch of DaimlerChrysler's new Sprinter for the export market.

Local manufacturers are analyzing other projects that have not been confirmed yet.

Company activities

In 2006, Mirgor’s sales to the automobile manufacturers market grew faster than the production of cars. In 2005, sales had not kept up with the growth rate. Now, Mirgor’s new products are accounting for an increasing proportion of the Company's sales mix.

The sales of air quality and temperature control systems went from 123,165 units sold in 2005 to 206,222 units sold in 2006, which represents an increase of 67.4%.

As is noticeable from the itemized information in the table below, the highest growth rates occur in the models launched in the last two years.

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It should also be noted that these models reach production and sales volumes that allow the Company to make strong efforts to gain competitiveness through new investments and the study of production processes.

The Company has begun its preparations and it has invested heavily to adapt its industrial plants to be able to handle the new activity levels required by the industry. In addition to expanding its manufacturing plants in Río Grande, Mirgor has installed a plant for assembly and just-in-time delivery of wheels within General Motors premises, which also means new manufacturing technology. Such plant obtained the ISO 9001:2000 and ISO/TS 16 949:2002 certifications, as well as the QSB certification from General Motors.

The Company’s sales grew by 96.9% going from ARS 289 million to ARS 569 million, and these sales revenues, when measured in US dollars, represent the Company’s highest ever.

The addition of the residential air-conditioning line under the Interclima brand had a significant impact on such business volume. In 2006, this business line reached 36% of Mirgor’s consolidated sales revenues.

In the automobile sector, consolidated sales grew by about 65%, resulting from higher automobile production, the Company’s larger market share and the higher proportion of automobile systems with air conditioning, which went from 74% to 84%. This percentage is similar to that of the most developed countries.

The automobile products manufactured by Mirgor and Interclima (condensers) are fitted into more than 50% of the cars made in Argentina.

BREAKDOWN OF SALES TO AUTOMOBILE MANUFACTURERS (in units)

		2006				2005				Difference
Total		206,106				123,069				83,037		67.5%
OLD MODELS
SPRINTER		18,849		9.1%		17,439		14.2%		1,410		8.1%
CORSA I		31,161		15.1%		22,411		18.2%		8,750		39.0%
PARTNER		15,790		7.7%		12,959		10.5%		2,831		21.8%
KANGOO		18,451		9.0%		13,043		10.6%		5,408		41.5%
MEGANE		12,458		6.0%		6,635		5.4%		5,823		87.8%
POLO		10,655		5.2%		20,937		17.0%		(10,282)		(49.1%)
CADDY		3,813		1.9%		5,002		4.1%		(1,189)		(23.8%)
Subtotal		111,177		53.9%		98,426		80.0%		12,751		13.0%
NEW MODELS
CORSA II		8,656		4.2%		11,200		9.1%		(2,544)		(22.7%)
CLIO		21,013		10.2%		10,999		8.9%		10,014		91.0%
307		32,345		15.7%		2,372		-		-		1,263.6%
SURAN		32,765		15.9%		72		-		-		45,406.9%
CITROEN C4		150		-		-		-		-		-
Subtotal		94,929		46.1%		24,643		20.0%		7,470		285.2%

• 4 -

As regards production destination, Interclima’s sales of condensers continued with the trend initiated the year before. The increased demand from Mirgor, compounded with Peugeot's increased requirements for its 206, made a reduction in exports unavoidable.

This situation is expected to become even more pronounced in 2007, given that Interclima has obtained approval for new product developments. During the year, Interclima will begin to manufacture the condensers for the Corsa I and for the Citroen C4, to be supplied to Mirgor, and in 2008 it will launch the production of a new-technology condenser for the Peugeot 206.

As explained above, the largest increase in the Company’s activities occurred in the residential air conditioning business line, for which the Company expanded its production capacity and added new product lines.

The number of units sold went from 61,425 in 2005 to 179,536 in 2006, which represented a 192% increase.

As was the case with automobile-sector activities, this growth is due to higher demand but also to increased market share thanks to the launch of new products that were well-accepted by customers.

The Company is in the process of developing new technology for test-bench air-conditioning trials, which will allow it to add such trials as a new service offering.

Extension of the Letter to the Shareholders under Presidential Decree No. 677/2001

In connection with personnel compensation policies, the Company’s Board of Directors maintained in effect its policy of providing compensation on the basis of salaries considered in line with the market, taking into account the employee’s education, capabilities and experience, and incorporating performance and objective-meeting evaluations, without any option plans or any other variables. This same policy is applied to the Board of Directors, with higher compensation assigned to those members who also perform technical or administration functions at the Company, and fees approved by the Shareholders' Meeting for independent directors.

On the financial side, the Company has consistently shown its solvency and soundness over all these years, having fully met all its commitments. The significant manufacturing plants expansion work has been financed with outside capital in order to avoid affecting the normal course of business. The new projects and developments undertaken during the year were financed by the Company itself.

As regards its internal control, the Company has in place control systems and procedures that allow it to analyze and assess the effectiveness of such control within basic internal control parameters. Furthermore, the appropriate performance of the internal control systems is also verified periodically by the Company’s external auditors.

• 5 -

Consolidated financial statements analysis

(figures stated at values as of 12-31-06)

• Income for the year

Sales revenues for the year amounted to ARS 566,315,000 representing a 96% year-to-year increase. The increase in volume in both business lines, automobile and residential, was very significant over the year.

Net income for fiscal 2006 amounted to ARS 40,002,000, representing 7.1% of sales, as compared to the net income of ARS 19,723,000 obtained in fiscal 2005. In addition, financial income (expense) and holding gains (losses) resulted in a gain of ARS 563,000, which represents 0.1% of sales, whereas in 2005 these items produced a loss of ARS 6,844,000, equivalent to 2.4% of sales.

Administrative expenses amounted to ARS 22,069,000 and thus represent 3.9% of current-year sales and thus remained at the same relative levels as the year before, when such expenses amounted to ARS 11,334,000.

The Company’s transactions with its subsidiary company are shown in detail in note 6 to the financial statements.

• Cash flows

The cash provided by ordinary consolidated transactions, net of changes in assets and liabilities for fiscal 2006, amount to ARS 7,631,000, while during the fiscal year ended December 31, 2005, the cash provided by operations amounted to ARS 14,811,000. P&E purchases over the fiscal year under analysis amounted to ARS 20,912,000 and noncurrent investments amounted to ARS 8,051,000, while P&E purchases over the prior year amounted to ARS 2,291,000. During the current year no cash was provided by or used in extraordinary transactions.

As regards cash flows related to financial activities, during fiscal 2006, the Company settled loans in the amount of ARS 38,017,000, while in fiscal 2005, such settlements had amounted to ARS 19,224,000, in accordance with prior agreements. The net positive cash flow provided by financial activities amounted to ARS 21,298,000, as compared to the ARS 11,224,000 used in fiscal year 2005.

The cash flows described entailed that the cash used in 2006 amounted to ARS 5,000, in contrast to the cash provided in fiscal year 2005, which amounted to ARS 1,350,000.

• Financial position

Shareholders’ equity for 2006 amounted to ARS 122,415,000, showing a 48.5% year-to-year increase.

The current liquidity ratio for 2006 was 1.43 while, in fiscal 2005, such ratio was 1.59; in addition, the fixed assets-to-shareholders’ equity ratio was 0.17 for 2006 and 0.13 for 2005.

Total consolidated assets for fiscal year 2006 amounted to ARS 304,891,000, which represents a 62.3% year-to-year increase.

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Prospects

The projections we have received from the different customers in the Company's main markets indicate a favorable trend for the year now beginning.

Naturally, the growth rates will decrease markedly as the markets and the customers begin to reach their potential.

In these first months, Mirgor has already started producing the air quality and temperature control systems for the Citroen C4, the local production of which will be presented during the first half of 2007.

The Company was also nominated to provide air quality and temperature control systems for Daimler Chrysler's new Sprinter model, for which Mirgor will initiate production in June this year.

The expansion work of the Tierra del Fuego plant is in full activity and the Company continues working on adapting its organization to the activity levels requested by customers.

However, although activity level remains stable or rising slightly, there are some problems that complicate the situation.

The first is related to the strong pressure that all autopart manufacturers are subjected to as regards the requirement to submit competitiveness programs in order to reduce sales prices.

This issue arises in a context of very strong competition among the different brands on the domestic market (taking into account imported and Argentine products), compounded with the impossibility of transferring the higher costs in the vehicles that are exported.

It is important to take into account that, when nearing the 500,000 units, the Argentine market concentrated increased attention from the auto manufacturer parent companies and this results in increased pressure on local affiliates to obtain net income.

The second issue of concern is that of internal costs. Not only are negotiations with trade unions being reopened, with requests that are not in line with market reality, but there are also movements in other costs that had not occurred until now. The most significant case is that of electric power.

In many cases, retroactive increases are being applied and these will be impossible to pass on to customers.

In 2007, so far, there have been increases in the raw materials supplied by domestic companies.

In this context, facing the additional issue of Government controls that aim to avoid passing cost increases through to prices, from a business and commercial standpoint there are serious doubts as to the possibility of maintaining companies' earnings at levels that, at least, enable the reinvestment therein that is required to accompany the increasing market requirements.

The prospects for residential air conditioning remain favorable. The market is expected to continue growing. The great challenge is to maintain current manufacturing volumes for our customers because several retail chains are receiving approval to do their own manufacturing in Tierra del Fuego, and this could reduce the production volumes of the companies already established in such province.

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Proposal submitted by the Board of Directors

Earnings distribution

Unappropriated retained earnings at end of year include the following information:

Item		In thousands of ARS
Unappropriated retained earnings at beginning of year		68,659
Income for the year		40,002
Total as of December 31, 2006		108,661
To legal reserve		-
Balance at the disposal of the Shareholders’ Meeting		108,661

The Board of Directors requests the Shareholders’ Meeting to make the decision on the dividend distribution policy.

Acknowledgement

The Board of Directors wishes, once again, to express its deep gratitude to the management and employees for their collaboration during the current year as well as the suppliers and customers for the trust in the Company and the support granted, all of which made it possible to achieve these results.

Buenos Aires,

March 9, 2007

ROBERTO G. VÁZQUEZ

Chairman

AUDITOR’S REPORT

(Translation of the report originally issues in Spanish, except for the omission of certain disclosures related to formal legal requirements for reporting in Argentina).

To the Chairman and Directors of

MIRGOR S.A.C.I.F.I.A.

(C.U.I.T. (Argentine taxpayer identification number): 30-57803607-1)

1. We audited the accompanying balance sheets of MIRGOR S.A.C.I.F.I.A. as of December 31, 2006, and 2005, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended. We also audited the accompanying consolidated balance sheets of MIRGOR S.A.C.I.F.I.A. and its subsidiaries as of December 31, 2006, and 2005, and the related consolidated statements of income and cash flows for the years then ended, which are disclosed as supplementary information. Such financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on those financial statements based on our audits.

2. Except as stated in paragraph (3), we conducted our audit in accordance with auditing standards effective in Argentina. An audit requires that the auditor plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatements. An audit includes examining, on a selective test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting standards used and significant estimates made by the Company’s Management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

3. We did not examine or applied audit procedures to the financial statements of the subsidiary Capdo S.A. as of December 31, 2006, a company acquired during this year, which are used to value the equity interest in such company by the equity method and included in the consolidated financial statements of MIRGOR S.A.C.I.F.I.A. with its subsidiaries as of that date. As of December 31, 2006, this equity interest represented 3.9% of the total assets of MIRGOR S.A.C.I.F.I.A., and 2.7% of the consolidated assets of MIRGOR S.A.C.I.F.I.A. and its subsidiaries.

4. 2 -

5. As mentioned in note 4 to the accompanying financial statements, as of December 31, 2006, and 2005, the Company and its subsidiaries booked noncurrent value-added tax and minimum presumed income tax credits amounting to ARS 6,101,714 and ARS 5,745,585, respectively, the recoverability of which depends on the companies’ possibility of generating enough taxable income to absorb them. Although the Company’s Management understands that based on the business plan those credits will be recoverable, as of the date of issuance of this report, it is not possible to estimate the recoverable amount of such credits.

6. In our opinion, except for the effect of adjustments, if any, that might have been required in the balance sheet as of December 31, 2006, if our work scope limitation described in paragraph (3) had not taken place, and subject to the effect of adjustments that could have been required if the outcome of the uncertainty mentioned in paragraph (4) had been known, the financial statements mentioned in paragraph (1) present fairly, in all material respects, the financial position of MIRGOR S.A.C.I.F.I.A., and the consolidated financial position of MIRGOR S.A.C.I.F.I.A. with its subsidiaries as of December 31, 2006, and 2005, and the related results of its operations and its cash flows for the years then ended, in accordance with the relevant CNV (Argentine Securities Commission) regulations.

7. In compliance with current legal requirements, we further report that:

8. The financial statements mentioned in paragraph (1) were transcribed into the Inventory and Financial Statements Book, and were prepared, in all material respects, in accordance with the relevant provisions of Argentine Business Associations Law.

9. Except as mentioned in note 9 to the accompanying financial statements, the financial statements of MIRGOR S.A.C.I.F.I.A. result from books kept, in all formal respects, pursuant to current legal requirements and the conditions established by the Tierra del Fuego province IGJ (provincial regulatory agency of business associations) Resolution No. 1000/00 dated December 13, 2000.

10. 3 -

11. The information included in points 2, and 3 of the “Summary of events for the year ended December 31, 2006", filed by the Company to meet CNV and BCBA regulations, results from the accompanying financial statements as of December 31, 2006, and 2005, and as of December 31, 2004, 2003, and 2002, (after being restated in constant pesos through February 28, 2003, as detailed in note 1(b) to the accompanying financial statements), not included in the document attached hereto, on which we issued our reports on March 11, 2005, March 10, 2004, and March 10, 2003, respectively, to which we refer and that should be read jointly with this report. The Company’s Management did not amend the information for the year ended December 31, 2002, to introduce certain changes in professional accounting standards, adopted by the Company as from January 1, 2003.

12. During the year ended December 31, 2006, we billed fees for audit services provided to the issuer, representing 100% of the total amount billed to the issuer on any account, 69% of total audit services billed to the issuer, its parent company and subsidiary, and 69% of the total amount billed to the issuer, its parent company and subsidiary on any account.
13. As of December 31, 2006, liabilities accrued in employer and employee contributions to the Integrated Pension Fund System resulting from the Company’s accounting books amount to ARS 394,267, none of which was due and payable as of that date.

Buenos Aires,

March 9, 2007

PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.

C.P.C.E.C.A.B.A. Vol. 1 - Fo. 13

KAREN GRIGORIAN

Partner

Certified Public Accountant U.B.A.

C.P.C.E.C.A.B.A. Vol. 175 - Fo. 031

Registered office: Einstein 1111 – Río Grande – Tierra del Fuego, Argentina.

Main business: Manufacture of air conditioning equipment for vehicles.

Date of registration with the Public Registry of Commerce:

• Of the articles of incorporation: June 1, 1971.
• Of the last amendment to by-laws: August 12, 2004.

Expiration date of the articles of incorporation: 05/31/2070.

FISCAL YEAR No. 36 BEGINNING JANUARY 1, 2006

SUMMARY OF EVENTS (*)

FOR THE PERIOD ENDED DECEMBER 31, 2006

(Figures stated in Argentine pesos - Note 1.b)

1. BRIEF COMMENT ON THE COMPANY'S ACTIVITIES FOR THE YEAR

The significant growth in the various activities performed by group companies generated the good level of earnings achieved.

The improvement in salaries’ purchasing power, combined with the improved relative prices of consumer goods and the fact that the automobile industry introduced new models helped this increase in the domestic market.

Lastly, the same factor that is driving sales becomes an obstacle for growth, because the increases in salaries, utility rates and materials, while the sector is under pressure not to increase its prices, is a cause of conflict and jeopardizes continuity of growth.

Over the fiscal year under analysis, the automobile industry was the sector that produced the largest impact on domestic product. A notable feature was that the largest sales increases occurred in the high-range models, while it is possible to discern that there is a segment that has not been covered yet, i.e. sales in installments.

As a step in the Company’s growth process and a sign of confidence that such growth will be sustained, its industrial plant in Tierra del Fuego was expanded in order to maintain its delivery levels and the quality that characterizes the production of both Mirgor and its subsidiary Interclima, each in their specific activities.

1. CONSOLIDATED BALANCE SHEET STRUCTURE

	12/31/2006		12/31/2005		12/31/2004		12/31/2003		12/31/2002
Current assets	252,469,322		162,979,749		99,680,710		67,547,756		66,879,625
Noncurrent assets	52,421,886		24,863,153		26,556,016		32,391,773		38,458,205
Total assets	304,891,208		187,842,902		126,236,726		99,939,529		105,337,830
Current liabilities	177,024,824		102,322,723		57,508,603		33,133,081		30,199,587
Noncurrent liabilities	5,439,603		3,100,800		6,032,289		11,411,548		16,836,705
Total liabilities	182,464,427		105,423,523		63,540,892		44,544,629		47,036,292
Minority interest	12,152		7,315		5,196		4,119		3,530
Shareholders’ equity	122,414,629		82,412,064		62,690,638		55,390,781		58,298,008
Total liabilities and shareholders' equity	304,891,208		187,842,902		126,236,726		99,939,529		105,337,830

• 2 -

• CONSOLIDATED STATEMENT OF INCOME STRUCTURE

	12/31/2006		12/31/2005		12/31/2004		12/31/2003		12/31/2002
Operating income (loss) from recurring operations	39,659,811		27,929,181		17,491,758		414,982		1,723,633
Financial income (expense)	563,520		(6,844,800)		(8,938,563)		(994,056)		(16,139,916)
Other (expenses) / revenues	(230,863)		(854,542)		88,840		(1,535,015)		(356,707)
Income tax	14,934		(505,080)		(1,341,100)		(792,549)		(384,214)
Minority interest in income(loss)	(4,837)		(2,119)		(1,078)		(589)		1,983
Net income (loss)	40,002,565		19,722,640		7,299,857		(2,907,227)		(15,155,221)

1. STATISTICAL DATA (1)

Volume of units		12/31/2006				12/31/2005				12/31/2004				12/31/2003				12/31/2002
		Trim.		Accum.		Trim.		Accum.		Trim.		Accum.		Trim.		Accum.		Trim.		Accum.
Production	(2)	184,917		579,707		117,689		358,217		92,533		275,243		63,595		215,288		43,303		147,618
Sales	(3)	149,177		461,891		85,267		256,059		77,832		232,293		51,810		186,643		41,063		137,478
- Local		137,235		399,727		78,415		206,949		54,464		150,632		27,582		84,255		20,333		67,590
Equipment with air conditioning		55,331		173,228		25,206		90,593		21,413		74,837		16,274		41,451		12,346		35,839
Equipment without air conditioning		8,569		32,994		7,749		32,572		10,623		36,183		6,487		25,065		4,857		19,056
Instrument Panels		3,538		14,288		5,873		22,359		7,173		22,149		4,821		17,739		3,130		12,695
Residential air conditioning		69,797		179,217		39,587		61,425		15,255		17,463
- Exports		11,942		62,164		6,852		49,110		23,368		81,661		24,228		102,388		20,730		69,888

1. As from fiscal 2004, the units sold by Interclima S.A. are disclosed as statistical information.
2. Including the one related to Interclima S.A.
3. The units sold among companies are not included.
4. RATIOS

	12/31/2006		12/31/2005		12/31/2004		12/31/2003		12/31/2002
Liquidity	1.43		1.59		1.73		2.04		2.21
Solvency	0.67		0.78		0.99		1.24		1.24
Fixed asset-to-equity capital ratio	0.17		0.13		0.21		0.31		0.37
Rentability	0.33		0.24		0.12		(0.05)		(0.26)

1. LISTED PRICE (VALUES PER ARS 1 NOMINAL VALUE)

Jan 2005		Jan 2006		Febr 2005		Febr 2006		Mar 2005		Mar 2006
26.3		40.20		28.2		48.90		28.00		53.00
Apr 2005		Apr 2006		May 2005		May 2006		Jun 2005		Jun 2006
29.00		59.50		29.25		59.00		28.5		52.00
Jul 2005		Jul 2006		Aug 2005		Aug 2006		Sep 2005		Sep 2006
28.60		60.00		30.60		60.00		35.50		59.00
Oct 2005		Oct 2006		Nov 2005		Nov 2006		Dec 2005		Dec 2006
35.00		73.00		37.50		74.50		37.35		80.00

• 3 -

• PROSPECTS

Taking into account the orders received from our customers, prospects are favorable, although the market is expected to grow slower than over the fiscal year under analysis.

Buenos Aires,

March 9, 2007

LIC. ROBERTO G. VAZQUEZ

Chairman

(*) Information not covered by the auditor’s report, except for 2, 3 and 5.

FINANCIAL STATEMENTS FOR FISCAL YEAR No. 36,

FOR THE FISCAL YEAR BEGINNING JANUARY 1

AND ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

Registered office: Einstein 1111 – Río Grande – Tierra del Fuego, Argentina.

Main business: Manufacturing air conditioning equipment for vehicles.

Date of registration with the Public Registry of Commerce:

• Of the articles of incorporation: June 1, 1971.
• Of the first amendment to by-laws: July 1, 1994.
• Of the last amendment to by-laws: August 12, 2004.

Registration number with the IGJ (regulatory agency of business associations): 40,071.

Expiration date of articles of incorporation: 05/31/2070.

Parent company: See note 6 to the stand-alone financial statements.

Capital structure: See note 3 to the stand-alone financial statements.

The Company is not enrolled in the Statutory Optional System for the Mandatory Acquisition of Public Offerings.

	Argentine pesos
20,000,000 shares of common stock, face value ARS 0.10 each Subscribed, paid-in, issued and registered with the Public Registry of Commerce	2,000,000

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

	12/31/2006				12/31/2005
ASSETS
CURRENT ASSETS
Cash - Note 2	19,019,000				19,024,378
Trade receivables - Note 2	134,965,182				78,911,844
Tax credits - Note 2	2,468,448				2,736,541
Other receivables - Note 2	733,456				309,326
Inventories - Note 2	95,283,236				61,997,660
Total current assets	252,469,322				162,979,749
NONCURRENT ASSETS
Tax credits - Note 2	7,049,188				6,298,910
Other receivables - Note 2	677,228				460,037
Property & equipment - Note 1(f)a	35,527,012				17,908,861
Investments - Note 2	8,612,700				-
Intangible assets - Note 1(f)b	34,621				195,345
Subtotal noncurrent assets	51,900,749				24,863,153
Goodwill	521,137				-
Total noncurrent assets	52,421,886				24,863,153
Total assets	304,891,208				187,842,902
LIABILITIES
CURRENT LIABILITIES
Trade payables - Note 2		138,988,759			82,364,442
Salaries, payroll taxes and taxes payable - Note 2		10,413,234			7,947,172
Customer advances - Note 2		1,900,930			8,697,347
Loans - Note 2		22,265,485			2,422,084
Other liabilities		3,456,416			891,678
Total current liabilities		177,024,824			102,322,723
NONCURRENT LIABILITIES
Loans - Note 2		4,825,493			3,100,800
Taxes payable - Note 2		405,695			-
Other liabilities - Note 2		208,415			-
Total noncurrent liabilities		5,439,603			3,100,800
Total liabilities		182,464,427			105,423,523
MINORITY INTEREST IN SUBSIDIARIES		12,152			7,315
SHAREHOLDERS’ EQUITY		122,414,629			82,412,064
Total liabilities, minority interest and Shareholders’ equity		304,891,208			187,842,902

Notes 1 through 4, and Exhibit H to the consolidated financial statements and notes 1 through 14, and Exhibit C to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of these consolidated financial statements and should be read together with these statements.

CONSOLIDATED STATEMENT OF INCOME

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

	12/31/2006		12/31/2005
Net sales (including VAT benefits amounting to
91,195,737 and 43,406,235, respectively)	566,314,985		288,935,341
Cost of goods sold	(485,663,767)		(241,443,067)
Gross Income	80,651,218		47,492,274
Administrative expenses (Exhibit H)	(22,068,633)		(11,333,531)
Selling expenses (Exhibit H)	(18,922,774)		(8,229,562)
Financial income (expense) and holding gains (losses) from assets:
Interest	2,505,329		108,783
Foreign exchange difference	42,021		254,704
Inventories holding gains (losses)	3,980,209		(1,275,547)
Allowance for doubtful accounts	209,000		(572,852)
Allowance for impairment in value of property and equipment	-		281,691
Allowance for impairment in value of tax credits	506,626		(288,875)
Allowance for obsolescence and impairment in value of inventories	(110,541)		(2,239,588)
(Loss)/gain from bondholdings	344,090		(67,359)
Financial income (expense) and holding gains (losses) from liabilities:
Interest	(5,080,695)		(2,698,630)
Foreign exchange difference	(1,832,519)		(347,127)
Other expenses, net	(230,863)		(854,542)
Earnings before income tax	39,992,468		20,229,839
Income tax	14,934		(505,080)
Income after income tax	40,007,402		19,724,759
Minority interest in subsidiaries	(4,837)		(2,119)
Net income for the year	40,002,565		19,722,640

Notes 1 through 4, and Exhibit H to the consolidated financial statements and notes 1 through 14, and Exhibit C to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of these consolidated financial statements and should be read together with these statements.

CONSOLIDATED STATEMENT OF CASH FLOWS (1)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

	12/31/2006		12/31/2005
CHANGES IN CASH
Cash at beginning of year	19,024,378		17,674,115
Cash at end of year	19,019,000		19,024,378
(Decrease) increase in cash, net	(5,378)		1,350,263
CAUSES OF CHANGES IN CASH
OPERATING ACTIVITIES
Net income for the year	40,002,565		19,722,640
Interest and foreign exchange difference accrued	2,240,216		1,508,394
Income tax	(14,934)		505,080
Adjustments to arrive at net cash flows (used in) provided by operating activities
P&E depreciation and intangible assets amortization	3,562,603		4,247,871
Gain from the sale of P&E	(29,506)		(14,600)
Minority interest	4,837		2,119
Increase in allowance for impairment in value and obsolescence of inventories	110,541		2,239,588
(Decrease) increase in the allowance for trade receivables	(209,000)		572,852
(Decrease) in the allowance for P&E impairment in value	-		(281,691)
(Decrease) increase in the allowance for impairment in value of tax credits	(173,270)		288,875
(Decrease) in the allowance for warranties and increased costs	-		(381,966)
Changes in operating assets and liabilities
(Increase) in trade receivables	(55,844,338)		(43,259,361)
(Increase) in inventories	(33,396,117)		(19,969,872)
(Increase) decrease in other receivables	(1,370,489)		1,293,989
Increase in trade payables	56,620,984		45,619,367
Increase (decrease) in salaries, payroll taxes and other taxes payable (net of tax credits)	1,809,360		(1,234,150)
(Decrease) increase in customer advances	(6,870,049)		4,227,207
Increase in other liabilities	2,477,177		585,437
Interest paid	(1,289,710)		(861,061)
NET CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES	7,630,870		14,810,718
INVESTING ACTIVITIES
P&E additions	(20,911,952)		(2,291,401)
Investments and goodwill acquisition	(8,051,391)		-
P&E sales	29,506		55,277
NET CASH FLOW (USED IN) INVESTING ACTIVITIES:	(28,933,837)		(2,236,124)
FINANCING ACTIVITIES
Loan repayment	(38,017,046)		(19,224,331)
Inflows from loans	59,314,635		8,000,000
NET CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES	21,297,589		(11,224,331)
(DECREASE) INCREASE IN CASH, NET	(5,378)		1,350,263
(1) Cash comprises cash on hand and cash in banks

Notes 1 through 4, and Exhibit H to the consolidated financial statements and notes 1 through 14, and Exhibit C to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of these consolidated financial statements and should be read together with these statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

1. SIGNIFICANT ACCOUNTING POLICIES
2. Accounting standards applied to financial statements preparation and presentation

As established by CNV (Argentine Securities Commission) Resolution No. 368, the consolidated financial statements are required to be presented preceding the issuer’s stand-alone financial statements. This regulation only implies a change in the place of consolidated information, and it does not modify the fact that individual financial statements constitute the main information and consolidated financial statements are supplementary, as set forth by Argentine Business Associations Law and current professional accounting standards. Therefore, the correct interpretation of these consolidated financial statements requires that they be read together with the individual financial statements.

• 1. Restatement into constant pesos

Professional accounting standards establish that the financial statements should be stated in constant pesos. In a monetary stability context, the nominal currency is used as constant currency, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the Domestic Wholesale Price Index (WPI) published by the INDEC (Argentine Institute of Statistics and Censuses), in accordance with the restatement method set by FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 6.

The Company’s financial statements recognize the changes in the purchasing power of the peso through February 28, 2003, in accordance with Presidential Decree No. 664/2003 and CNV General Resolution No. 441. Under professional accounting standards the restatement method established in Technical Resolution No. 6 should have been discontinued only as from October 1, 2003. The effects of failing to recognize variations in the currency purchasing power until such date were immaterial with respect to the accompanying financial statements.

• 1. Valuation and disclosure method summary

The valuation and disclosure methods used in the consolidated financial statements are similar to those disclosed in note 1 to the stand-alone financial statements, except for the valuation of interests in subsidiaries, which in the current consolidated statements have been incorporated on a line-by-line basis following the method of FACPCE Technical Resolution No. 21, with the applicable eliminations, and the investment in real property derived from the acquisition of CAPDO S.A., which was valued at its current value as of the acquisition date.

• 1. Consolidation bases

Following the procedure established in FACPCE Technical Resolution No. 21, MIRGOR S.A.C.I.F.I.A. has consolidated its financial statements as of December 31, 2005, and 2006, line by line with those of its subsidiary, Interclima Sociedad Anónima. In addition, for the year ended December 31, 2006, after acquiring CAPDO S.A., the consolidated financial statements as of that date include the consolidation of such company.

The following information reflects the parent-subsidiary relationship:

Subsidiary		Equity interest in common and in possible votes as of 12/31/2006 and 12/31/2005		Period-end – latest financial statements issued
Interclima Sociedad Anónima		99.9667% 99.9667%		12/31/2006
CAPDO Sociedad Anónima		95.0000% -		12/31/2006

In the consolidation, the amounts invested in the subsidiaries and the share in income (loss) and cash flows are replaced by all the subsidiaries’ assets, liabilities, income (loss) and cash flows, separately disclosing the third-party minority interests in subsidiaries. Receivables, payables, and transactions performed among members of the consolidated group were eliminated from the consolidation. Unrealized intercompany profits and losses contained in period-end assets and liabilities have been fully eliminated.

• 1. Financial statements used in the consolidation

The following financial statements were used to prepare the consolidated financial statements as of December 31, 2006, and 2005: 1) The financial statements of Interclima Sociedad Anónima as of those dates, on which the auditor’s report was issued on March 9, 2007, and March 10, 2006, respectively, including an “except for” qualification related to the income tax payable quantification (such adjustment was considered for the interest valuation and, consequently, in these consolidated financial statements), and with a qualification for uncertainty related to the recoverability of certain tax credits. 2) The financial statements of CAPDO Sociedad Anónima as of December 31, 2006, on which an unqualified auditor’s report was issued on March 9, 2007.

• 1. Changes in P&E and intangible assets

	12/31/2006		12/31/2005
a) P&E:
Balance at beginning	17,908,861		19,463,592
Additions	20,911,952		2,291,401
Additions for society acquisition	108,078		-
Retirements (net of accumulated depreciation)	-		(40,676)
Decrease in the allowance for impairment in value	-		281,691
Depreciation	(3,401,879)		(4,087,147)
Balance at end	35,527,012		17,908,861
b) Intangible assets:
Balance at beginning	195,345		356,069
Amortization	(160,724)		(160,724)
Balance at period-end	34,621		195,345

• 1. Comparative financial statements:

The amounts as of December 31, 2005, include minor disclosure changes to adjust the presentation thereof to the fiscal year ended December 31, 2006.

1. MAIN ACCOUNT BREAKDOWN

	12/31/2006		12/31/2005
CURRENT ASSETS
Cash
Cash on hand in Argentine pesos	175,194		26,106
Cash on hand in foreign currency	12,263		21,208
Cash in banks in Argentine pesos	16,975,903		10,601,796
Cash in banks in foreign currency	1,855,640		8,375,268
	19,019,000		19,024,378
Trade receivables
Trade receivables	135,208,985		79,398,361
Trade receivables in foreign currency	605,052		571,338
Allowance for doubtful accounts	(848,855)		(1,057,855)
	134,965,182		78,911,844
Tax credits
VAT credit balance	120,370		1,203,895
Withholdings and additional withholdings	1,954,704		659,077
Other	393,374		873,569
	2,468,448		2,736,541
Other receivables
Unaccrued insurance	193,659		138,036
Loans to employees	150,063		57,622
Other	389,734		113,668
	733,456		309,326
Inventories
Manufactured products	28,235,117		15,885,451
Raw material	55,759,170		39,527,943
Subtotal	83,994,287		55,413,394
Raw material in transit	20,429,903		13,223,760
Prepayments to vendors in Argentine pesos	1,239,334		3,702,391
Prepayments to vendors in foreign currency	2,392,583		2,320,445
Allowance for impairment in value of inventories	(12,772,871)		(12,662,330)
	95,283,236		61,997,660
NONCURRENT ASSETS
Tax credits
VAT credit	4,248,440		3,886,201
Minimum presumed income tax	1,853,274		1,808,441
Income tax withholding	929,750		-
Rebates receivable in Argentine pesos	1,882,494		2,718,042
Promotional benefits receivable	1,229,537		885,447
Deferred income tax credit net of allowance	-		505,750
Other	32,942		128,904
Allowance for impairment in value of tax credits	(3,127,249)		(3,633,875)
	7,049,188		6,298,910

	12/31/2006		12/31/2005
Other receivables
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies - Note 3	677,228		460,037
	677,228		460,037
Investments
Buildings	8,612,700		-
	8,612,700		-
CURRENT LIABILITIES
Trade payables
Suppliers	103,353,666		61,106,400
Vendors in foreign currency	35,635,093		21,214,005
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies in foreign currency - Note 3	-		44,037
	138,988,759		82,364,442
Salaries, payroll taxes and taxes payable
Salaries and payroll taxes	3,190,825		1,979,167
Annual statutory bonus and vacation accrual	829,685		1,050,817
Income tax accrual	-		547,954
Health and safety assessment	720,794		300,774
Turnover tax payable	756,122		55,009
Withholdings and additional withholdings	462,282		245,907
Other taxes payable	4,453,526		3,767,544
	10,413,234		7,947,172
Customer advances
In Argentine pesos	1,900,930		8,697,347
	1,900,930		8,697,347
Loans
Financial loans in Argentine pesos	17,598,806		-
Financial loans in foreign currency	4,666,679		2,422,084
	22,265,485		2,422,084
Other liabilities
Directors' fees accrual	2,526,281		-
Royalties payable	857,640		372,175
Other	72,495		519,503
	3,456,416		891,678
NONCURRENT LIABILITIES
Loans
Financial loans in foreign currency	4,825,493		3,100,800
	4,825,493		3,100,800
Taxes payable
Turnover tax payable	405,695		-
	405,695		-
Other liabilities
Deferred income tax liability (1)	208,415		-
	208,415		-

• 1. Net of 2,659,953 as of December 31, 2006, related to the allowance for impairment in deferred income tax credit.

• INFORMATION ON RELATED PARTIES

Receivables from/payables to related companies as of December 31, 2006, and 2005, are as follows:

	12/31/2006		12/31/2005
Other receivables (Noncurrent)
IL TEVERE S.A. (2)	677,228		460,037
Total	677,228		460,037
Trade payables
VALEO SECURITE HABITABLE (1)	-		44,037
Total	-		44,037

The transactions with related companies, during the fiscal year ended December 31, 2005, are the following:

	12/31/2005
	Purchase of merchandise		Sale of merchandise		Services received		Royalties
VALEO SISTEMAS AUTOMOTIVOS LTD (1)	2,737,393		2,857,137		-		-
VALEO CHINA (1)	220,651		-		-		-
VALEO AUTOKLIMATIZACE S.R.O (1)	736,237		-		-		-
VALEO CLIMATIZACION S.A. (EURO) (1)	247,958		-		-		-
VALEO KLIMASYSTEME GMBH (1)	71,081		-		-		-
VALEO COMPONENTES AUTOMOVILES (1)	48,086		-		-		-
VALEO SISTEMAS AUTOMOTIVOS (1)	1,469,289		-		-		-
VALEO AUTOSYSTEMIY SP. Z.O.O. (1)	223,961		-		-		-
VALEO VYMENIKY TEPLA s.r.o. (1)	3,206,206		-		-		-
VALEO SECURITE HABITACLE (1)	797,321		-		-		-
VALEO THERMIQUE FRANCIA (1)	544,868		-		74,127		-
VALEO THERMIQUE MOTEUR (1)	3,564,067		-		-		-
VALEO ZARAGOZA (1)	4,096,079		-		-		-
VCC UP ECHANGEURS (1)	2,736,244		-		-		752,664
	20,699,441		2,857,137		74,127		752,664

(1) Related company until September 27, 2005 (See (2)).

(2) Parent company. On September 27, 2005, the local shareholders of Il Tevere S.A., owner of 52% of Mirgor S.A.C.I.F.I.A., acquired from Valeo System Thermique France its interest in such company; consequently, as from such date, Valeo and the companies of its group are no longer a part of the group of companies of Mirgor S.A.C.I.F.I.A.

1. INFORMATION BY SEGMENT

The Company and its subsidiary Interclima S.A. operate in the automotive and residential air quality and temperature control business segments. The valuation standards applicable to prepare the information by business segment are described in note 1 to these financial statements.

		Air conditioning
Revenues		Automotive		Residential		Total
Sales (net of imputed interest)		290,367,947		184,751,301		475,119,248
Tax benefit		55,841,464		35,354,273		91,195,737
Total		346,209,411		220,105,574		566,314,985
BALANCE-SHEET INFORMATION
Allocated assets		200,620,780		104,270,428		304,891,208
Additions		18,484,331		2,427,621		20,911,952

EXHIBIT H

INFORMATION REQUIRED UNDER section 64(I)b, LAW No. 19,550

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

		12/31/2006								12/31/2005
Accounts		Production costs		Administrative expenses		Selling expenses		Total		Total
Salaries & wages		26,036,211		5,567,536		748,161		32,351,908		17,631,662
Contributions and employee benefits		7,347,806		2,239,985		237,467		9,825,258		4,189,302
Insurance		1,320,150		101,563		8,148		1,429,861		825,762
Training fees and expenses		1,815,237		5,336,012		35,012		7,269,345		1,673,729
Taxes, rates and assessments		4,859,091		1,115,286		5,604,806		11,620,040		4,981,636
Maintenance		1,280,379		970,047		-		2,250,426		1,212,645
P&E depreciation		2,277,871		1,095,571		28,437		3,548,043		4,087,147
Intangible assets amortization		15,665		145,059		-		160,724		160,724
Leases and rentals		3,263,851		-		-		3,263,851		767,912
Customs clearing and dispatch expenses		7,413,105		-		-		7,413,105		6,214,167
Royalties		-		-		3,094,160		3,094,160		1,812,167
Other		2,633,748		2,101,110		651,704		5,498,408		3,110,945
Transportation, shipping and handling		26,110,992		-		8,514,879		34,625,871		16,597,709
Bank expenses		-		2,995,026		-		2,996,030		1,278,222
Electric power		470,988		-		-		470,988		376,316
Traveling expenses		-		401,438		-		401,438		252,347
Building expenses		-		-		-		-		-
Total as of 06-30-2006		84,845,094		22,068,633		18,922,774		125,836,501
Total as of 06-30-2005		45,609,299		11,333,531		8,229,562				65,172,392

BALANCE SHEET AS OF DECEMBER 31, 2006

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

	12/31/2006		12/31/2005
ASSETS
CURRENT ASSETS
Cash - Note 2	9,009,116		17,137,992
Trade receivables - Note 2	45,721,545		17,421,944
Tax credits - Note 2	393,374		1,510,281
Other receivables - Note 2	477,759		294,859
Inventories - Note 2	74,440,593		54,133,149
Total current assets	130,042,387		90,498,225
NONCURRENT ASSETS
Long-term investments in companies - Exhibit C	39,476,191		18,293,834
Tax credits - Note 2	1,960,026		1,952,865
Other receivables - Note 2	8,233,902		460,037
P&E	30,837,889		15,087,079
Intangible assets	24,177		169,236
Subtotal noncurrent assets	80,532,185		35,963,051
Goodwill – Note 1.c	495,080		-
Total noncurrent assets	81,027,265		35,963,051
Total assets	211,069,652		126,461,276
LIABILITIES
CURRENT LIABILITIES
Trade payables - Note 2	51,525,136		30,855,735
Salaries, payroll taxes and taxes payable - Note 2	4,936,660		2,981,397
Loans - Note 2	22,265,485		2,422,084
Customer advances	1,586,540		-
Other payables - Note 2	3,297,639		4,689,196
Total current liabilities	83,611,460		40,948,412
NONCURRENT LIABILITIES
Taxes payable - Note 2	218,070		-
Loans - Note 2	4,825,493		3,100,800
Total noncurrent liabilities	5,043,563		3,100,800
Total liabilities	88,655,023		44,049,212
SHAREHOLDERS' EQUITY (As per respective statement)	122,414,629		82,412,064
Total liabilities and Shareholders' equity	211,069,652		126,461,276

The accompanying notes 1 through 14, and Exhibit C are an integral part of these financial statements.

STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

	12/31/2006		12/31/2005
Net sales (including VAT benefits amounting to 55,841,464 and 31,436,170, respectively) - Note 4(e)	352,201,664		212,446,319
Cost of goods sold	(298,358,451)		(178,026,969)
Gross income	53,843,213		34,419,350
Administrative expenses	(19,331,907)		(10,728,299)
Selling expenses	(10,377,434)		(6,033,700)
Income (loss) from long-term investments - Note 1	13,884,968		5,713,559
Financial income (expense) and holding gains (losses) from assets:
Interest	1,575,312		785,855
Foreign exchange difference	93,009		220,546
Inventories holding gains (losses)	3,845,109		(880,798)
Allowance for doubtful accounts	209,000		(572,852)
Allowance for obsolescence and in value of inventories	421,084		(1,568,865)
(Loss)/gain from bond holdings	344,090		(67,359)
Allowance for impairment in value of tax credit	(333,356)		12,774
Financial income (expense) and holding gains (losses) from liabilities:
Interest	(3,211,745)		(2,144,608)
Foreign exchange difference	(2,156,732)		36,087
Other income, net - Note 2	1,197,954		530,950
Net income for the year	40,002,565		19,722,640
EARNINGS PER SHARE - NOTE 12
BASIC - ORDINARY	2.0001		0.9861
DILUTED - ORDINARY	2.0001		0.9861

The accompanying notes 1 through 14, and Exhibit C are an integral part of these financial statements.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

		12/31/2006
		Owners' contributions
Breakdown		Capital stock		Adjustment to capital stock		Premium on capital stock		Subtotal
Balances at beginning of year		2,000,000		4,155,936		5,243,562		11,399,498
Reimbursement of irrevocable contributions		-		-		-		-
Net income for the year		-		-		-		-
Balances as of December 31, 2006		2,000,000		4,155,936		5,243,562		11,399,498
Balances as of December 31, 2005		2,000,000		4,155,936		5,243,562		11,399,498

		12/31/2006										12/31/2005
		Retained earnings / Accumulated losses
		Appropriated retained earnings
Breakdown		Legal reserve		Other reserves (*)		Total		Unappropriated retained earnings (accumulated losses)		Total		Total
Balances at beginning of year		2,280,143		73,708		2,353,851		68,658,715		82,412,064		62,690,638
Reimbursement of irrevocable contributions		-		-		-		-		-		(1,214)
Net income for the year		-		-		-		40,002,565		40,002,565		19,722,640
Balances as of December 31, 2006		2,280,143		73,708		2,353,851		108,661,280		122,414,629
Balances as of December 31, 2005		2,280,143		73,708		2,353,851		68,658,715				82,412,064

(*) See note 3(b)

The accompanying notes 1 through 14, and Exhibit C are an integral part of these financial statements.

STATEMENT OF CASH FLOWS (1)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

	12/31/2006		12/31/2005
CHANGES IN CASH
Cash at beginning of year	17,137,992		17,561,127
Cash at end of year	9,009,116		17,137,992
(Decrease) in cash, net	(8,128,876)		(423,135)
CAUSES OF CHANGES IN CASH
OPERATING ACTIVITIES
Net income for the year	40,002,565		19,722,640
Interest and foreign exchange difference accrued	1,560,216		899,333
Adjustments to reach net cash flows (used in) provided by operating activities
P&E depreciation and intangible assets amortization	2,375,972		3,380,954
Gain from the sale of P&E	(29,506)		(14,600)
(Decrease) increase in the allowance for trade receivables, net	(209,000)		572,852
(Decrease) increase in allowance for impairment in value and obsolescence of inventories	(421,084)		1,568,865
Increase (decrease) in the allowance for impairment in value of tax credit	333,356		(12,774)
Income (loss) from long-term investments	(13,884,968)		(5,713,559)
Changes in operating assets and liabilities
(Increase) decrease in trade receivables	(28,090,601)		1,344,377
(Increase) in inventories	(19,886,360)		(18,003,667)
(Increase) decrease in other receivables	(7,956,765)		1,300,679
Increase in trade payables	20,669,401		11,169,989
Increase (decrease) in salaries, payroll taxes and other taxes payable (net of tax credits)	2,949,723		(328,972)
Increase (decrease) in customer prepayments	1,586,540		(4,291,125)
Increase (decrease) increase in other liabilities	(1,391,558)		1,440,325
Interest paid	(1,289,710)		(861,062)
NET CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES	(3,681,779)		12,174,255

INVESTING ACTIVITIES
Net P&E acquisitions	(17,981,723)		(1,428,336)
Long-term investments acquisition (includes goodwill)	(7,792,469)		-
P&E sale	29,506		55,277
NET CASH FLOWS (USED IN) INVESTMENT ACTIVITIES	(25,744,686)		(1,373,059)
FINANCING ACTIVITIES
Loan repayment	(38,017,046)		(19,224,331)
Inflows from loans	59,314,635		8,000,000
NET CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES	21,297,589		(11,224,331)
(DECREASE) IN CASH, NET	(8,128,876)		(423,135)

(1) Cash comprises cash on hand and cash in banks

The accompanying notes 1 through 14, and Exhibit C are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

1. SIGNIFICANT ACCOUNTING POLICIES

2. 1. Accounting standards applied to financial statements preparation and presentation

The financial statements of the Company have been prepared in accordance with CNV regulations.

Pursuant to the agreement signed in July 2004 between the FACPCE and the CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires) with the purpose of unifying professional accounting standards, in April 2005, the FACPCE issued Resolution No. 312/05 approving a series of changes to its Technical Resolutions (“TRs”) and Interpretations. Subsequently, in August 2005, the CPCECABA issued Resolution CD No. 93/2005, whereby it approved the FACPCE's TRs (with the amendments dated April 1, 2005), and established that such accounting standards shall become generally effective and mandatory for the full years or interim periods belonging to the fiscal years beginning January 1, 2006, or thereafter, although earlier application is allowed. CPCECABA Resolution CD No. 93/2005 also provided a transition period for certain changes related to the comparison with recoverable values and the disclosure of certain supplementary information regarding income tax booking, which will become mandatory for the fiscal years beginning January 1, 2008, or thereafter.

On December 29, 2005, and January 26, 2006, the CNV (Argentine Securities Commission) issued General Resolutions No. 485 and 487, respectively, which adopted (with certain amendments) and applied, for full fiscal years or interim periods related to the fiscal years beginning as from January 1, 2006, Technical Resolutions Nos. 6, 8, 9, 11, 14, 16, 17, 18, 21 and 22 and Interpretations Nos. 1, 2, 3 and 4 issued by the FACPCE (Argentine Federation of Professional Councils in Economic Sciences) and adopted by the CPCECABA (Professional Council in Economic Sciences of the City of Buenos Aires) through Resolution C.D. No. 93/2005, as mentioned in the previous paragraph. The most significant changes for the Company as a result of CNV General Resolutions Nos. 485 and 487, are as follows:

1. Comparison with recoverable value, for property & equipment and intangible assets. Such comparison is required to be made in a single step and an impairment in value shall be recorded whenever the expected presented value of the cash flows (and the net realizable value) are lower than the book value. In addition, the comparison is to be made asset by asset or, if there are objective reasons that make this impossible, at the level of each cash-generating unit. If information is presented by business segment, the same grouping method should be used.
2. It is established that the difference between the P&E book value adjusted for inflation (and other nonmonetary assets) and their tax base is a temporary difference that results in the recognition of a deferred income tax liability. However, it is acceptable to continue to consider it as a permanent difference. In the latter case, the financial statements are required to present certain supplementary information regarding the amount and reversal term of the deferred income tax liability that the issuer chose not to recognize otherwise.
3. For matters not contemplated in general or specific accounting standards and that cannot be resolved by using the general framework of accounting standards, effective International Financial Reporting Standards and interpretations approved by the International Accounting Standards Board shall be also applied in the year when such supplementary standards are applicable.

Regarding the changes mentioned in points (a) and (c) above, the Company's Management has analyzed their effects as of the date of these financial statements and has concluded that they do not result in significant changes with respect to the valuation and disclosure methods and criteria applied by the Company until December 31, 2005.

As regards the change mentioned in point (b) above, the total taxation effect of the difference resulting from restating into constant pesos the P&E items and intangible assets as of these financial statements’ closing is 344,729. Had such difference been recognized as temporary, the Company’s shareholders’ equity at the beginning of the year would have decreased by 401,934, and the effect on income for the year ended December 31, 2006, would have been a 57,205 decrease in the income tax charge.

Also, had the abovementioned temporary difference been recognized, the impact on the deferred income tax charge for the coming fiscal years would be reduced as follows:

Terms and amounts
Fiscal year		Amount
2007		46,792
2008		27,483
2009		20,671
2010		11,848
2011 and forward		237,935
Total		344,729

Preparing the financial statements in accordance with current professional accounting standards requires Company Management to consider the estimates and assumptions impacting on the assets and liabilities amounts reported, the disclosure of contingent liabilities and assets as of the date of such financial statements, as well as the revenues and expenses for each year.

The final results may differ from such estimates.

• 1. Restatement into constant pesos

Professional accounting standards establish that the financial statements should be stated in constant pesos. In a monetary stability context, the face and constant value of Argentine pesos is the same, but, in an inflationary or deflationary context, the financial statements should be stated in pesos reflecting the purchasing power as of their closing date by recognizing the changes in the domestic WPI published by the INDEC (Argentine Institute of Statistics and Censuses), in accordance with the restatement method set by FACPCE (Argentine Federation of Professional Council in Economic Sciences) Technical Resolution No. 6.

The Company’s financial statements recognize the changes in the purchasing power of the peso through February 28, 2003, in accordance with Presidential Decree No. 664/2003 and CNV General Resolution No. 441. Under professional accounting standards the restatement method established in Technical Resolution No. 6 should have been discontinued only as from October 1, 2003. The effects of failing to recognize variations in the currency purchasing power until such date were immaterial with respect to the accompanying financial statements.

• 1. Valuation methods

The main valuation methods used to prepare these financial statements are:

• Cash:
• In Argentine pesos: at nominal value.
• In foreign currency: converted at the exchange rate effective as of each year-end to settle these transactions. Foreign exchange differences were charged to the statement of income for each year.
• Receivables and payables:
• In Argentine pesos: at the present value of the cash flows they will generate, discounted (only if effects are significant) using imputed, explicit or market rates, as the case may be, effective at the time of each transaction.
• In foreign currency: at the present value of the cash flows they will generate, discounted (only if effects are significant) using imputed, explicit or market rates, as the case may be, effective at the time of each transaction. These amounts were converted into Argentine pesos at the exchange rate effective as of the year-end for the settlement of the related transactions. Foreign exchange differences were charged to income for each year.
• Credit risk: In its usual course of business the Company grants credit to customers, including car manufacturers, that represent about 99% of the Company’s total sales revenues. The Company continuously performs credit assessments of its customers’ financial capacity in order to reduce the potential risk of significant credit losses.
• Labor cost liabilities: labor cost liabilities accrue in the years in which employees have rendered the service that gave rise to such consideration.
• Financial instruments: The Company has not used derivative financial instruments during the fiscal years December 31, 2006, and 2005, or through the date of issuance of these financial statements. Receivables and payables related to usual business and financial transactions are valued as stated in the previous paragraphs and, in the opinion of Company Management, such valuation does not differ from their current value.
• Inventories:
• Raw materials (including those in transit) were valued at replacement cost at end of each year, considering the cash prices for usual purchase amounts. In addition, imported goods are valued at replacement cost at the foreign exchange rate effective at the end of each year.
• The products manufactured were valued at cash reproduction cost at the end of each year limited by the net realization value thereof.
• Prepayments to vendors are stated at nominal value, and those related to amounts in foreign currency were converted at the foreign exchange rate effective at the end of each fiscal year.
• The value of inventories, as of each year-end and after considering the allowance for impairment in value and obsolescence, does not exceed the recoverable value thereof.
• Long-term investments in subsidiaries:

Interclima S.A.: At equity value as established by FACPCE Technical Resolution No. 21, which was calculated based on Interclima S.A.’s financial statements as of December 31, 2006, and 2005, which include an audit report dated March 9, 2007, and March 10, 2006, containing except-for qualifications related to the inconsistency in valuing income tax payables and a qualification for uncertainty about the recoverability of the tax credits.

In addition, upon determining the value by the equity method, an adjustment to the subsidiary’s book value was taken into account to disclose the effects of not booking certain income tax payables (see “Income tax – Situation in Interclima S.A.”)

Income (loss) from the equity interest in the subsidiary is disclosed in the statement of income under "Income (loss) from long-term investments".

Capdo S.A.: As of December 31, 2006, it was determined based on the equity value of assets and liabilities measured at their current values as of the date of acquisition of CAPDO S.A. (see note 11). Such acquisition was booked according to the methodology established in point 1(3) of Technical Resolution No. 21.

Such company’s fiscal year-end is December 31, 2006. In the year then ended, the Company did not recognize the income (loss) from the interest in CAPDO S.A. as the acquisition date was close to the current year-end.

• P&E:
• P&E was valued at original cost restated as mentioned in note 1(b), net of accumulated depreciation until the end of each year.
• P&E depreciation is calculated by the straight-line method, applying annual rates sufficient to extinguish P&E by the end of their estimated useful lives.
• The valuation of P&E items is checked for impairment in value whenever there is any indication that their book value could exceed their recoverable value. The losses from impairment in value and related recoveries are recognized in the statement of income under “Financial income (expense) and holding gains (losses)”.
• The value of P&E, at cash-generating-unit level, does not exceed the recoverable value thereof.
• Intangible assets:
• Intangible assets have been valued at original cost restated as mentioned in note 1, net of accumulated depreciation until the end of each year.
• Amortization is calculated following the straight-line method.
• The valuation of intangible assets is checked to verify whether their value was impaired when there is any indication that their book value could exceed their recoverable value. The losses from impairment in value and related recoveries are recognized in the statement of income under “Financial income (expense) and holding gains (losses)”.
• The book value of intangible assets, considered as a whole, does not exceed the recoverable value thereof.
• The licenses to sell products acquired by the Company have been amortized by the straight-line method over three years counted as from their initial economic use, taking into account their capacity to generate earnings in the future.
• Goodwill:

Goodwill resulted from the acquisition of CAPDO S.A., the Company considered that this intangible has an indefinite useful life, since it is not subject to a contractual or legal utilization term, and it is believed that it will generate cash flows in the future within an indefinite term.

Goodwill is reviewed to verify whether it has suffered any impairment in value when there is any indication that its book value could exceed its recoverable value.

• Allowances and provisions:

Allowances:

1. For doubtful accounts: set to correct and make adequate the valuation of trade receivables at the estimated recoverable value; it was set on the basis of an individual analysis thereof.
2. For impairment in value and obsolescence of inventories: it was booked to adjust the value of certain finished products and other obsolete or slow-moving inventories to their estimated recoverable value.
3. For impairment in value of deferred income tax assets: it was booked to reduce the value of such assets at their estimated recoverable value. For that purpose, the Company’s tax situation and estimates were considered.

4. For impairment in value of tax credits: it was set to reduce the book value of such credits at the estimated recoverable value thereof; the estimates made by Company Management and the opinion of its legal counsel were considered in the assessment thereof.

5. Shareholders’ equity accounts:

They were restated as mentioned in note 1(b), except for the “Capital stock” account, which remained at original value. The adjustment deriving from the restatement thereof is disclosed under the “Adjustment to capital stock” account.

• Statement-of-income accounts:
• At nominal value, except for the following cases:
  1. Income (loss) from long-term investments was calculated by the equity method applying the Company’s equity interest percentage to the subsidiary’s income (loss) for the same period, deducting unrealized intercompany profits and losses. In addition, this account includes the adjustments necessary to make the valuation methods of the subsidiary consistent with those of the Company and the adjustment for not booking an income-tax payable (see “Income tax – Situation in Interclima S.A.”).
  2. The depreciation of P&E and the amortization of intangible assets were calculated based on the value of the respective assets after being restated as described in note 1(b).
  3. The cost of goods sold was determined based on the replacement costs for each month. Holding gains (losses) are disclosed in the account “Financial income (expense) and holding gains (losses)”.
  4. The account “Financial income (expense) and holding gains (losses)” includes: (a) income and financial costs, (b) inventories holding gains (losses), (c) foreign exchange differences and (d) charges and reversals related to doubtful accounts, impairments in value and obsolescence of inventories, impairments in the value of P&E and other assets in general.
  5. The Company has segregated the imputed financial components accrued during each period provided that they were significant.
• Leases:

During the year, the Company executed lease agreements, which, as established by accounting standards and considering the substance of the transactions involved, were treated as operating leases, recording the monthly charges, based on their accrual, in the statement of income.

As of December 31, 2006, the breakdown by maturity of total minimum installments is as follows:

Lessee:

• • Up to 1 year: 99,000
• Income tax and minimum presumed income tax:
• Status of Mirgor S.A.C.I.F.I.A.

The Company assesses the income tax charge by the deferred income tax method, which consists in recognizing (as asset or liability) the tax effect of temporary differences between the book and tax valuation of assets and liabilities, and the subsequent charge to income for the periods in which such assets or liabilities are reversed, and considering the possibility of using net operating losses in the future. Temporary differences determine deferred income tax assets or liabilities when their future reversal decreases or increases the taxes assessed, respectively.

Minimum presumed income tax is supplementary to income tax: while the latter is levied on taxable income for the year, minimum presumed income tax is a minimum levy determined by applying the current 1% rate on the potential income of certain assets. Therefore, the Company’s tax obligations shall be the higher of these two taxes. However, should minimum presumed income tax exceed income tax in any given fiscal year, such excess may be computed as payment on account of any excess of income tax over minimum presumed income tax occurring in any of the ten subsequent fiscal years.

The Company carries net operating losses amounting to 5,563,109 (out of which 5,334,542 may be used until December 31, 2007, and the remainder, until December 31, 2009). As of December 31, 2006, there were deferred income tax assets amounting to 2,659,953, covered by an allowance for impairment in value for the full amount, based on current expectations about the possibility of using them against taxable income and the Company’s tax situation as described in note 4.

The changes in deferred income tax credit and the charge to income for the fiscal year ended December 31, 2006, and 2005, were as follows:

	12/31/2006				12/31/2005
	Deferred tax credit		Income tax - Income / (loss)		Deferred tax credit		Income tax - Income / (loss)
Balance at beginning of year, less provision	-		-		-		-
Consumption of NOLs	(438,579)		(438,579)		(1,014,318)		(1,014,318)
(Decrease) Increase in temporary asset differences	(96,062)		(96,062)		8,037		8,037
Decrease in temporary liability differences	-		-		599,849		599,849
Change in the allowance for impairment in value of deferred assets	534,641		534,641		406,432		406,432
Balance at end of year - less provision	-		-		-		-

The reconciliation between the charge to income for income tax and the amount resulting from applying the 35% rate established by effective tax regulations to book income for the year is:

	12/31/2006		12/31/2005
Earnings for the year before income tax	40,002,565		19,722,640
Permanent differences (*)	(38,475,019)		(18,561,406)
Earnings for the year less permanent differences	1,527,546		1,161,234
Tax rate	35%		35%
Tax assessed	(534,641)		(406,432)
Increase in the allowance for impairment in value of deferred assets	534,641		406,432
Income-tax book charge	-		-

(*) It includes the income exempt under the industrial promotion system effective for the
Province of Tierra del Fuego.

The items included in the deferred income tax credits as of December 31, 2006, and 2005, are shown in detail below:

Temporally differences in assets	12/31/2006		12/31/2005
Nondeductible allowances	559,127		759,546
Diverses	153,738		49,381
NOLs	1,947,088		2,385,667
Deferred tax credit before the allowance	2,659,953		3,194,594
Allowances for impairment in value of deferred tax assets	(2,659,953)		(3,194,594)
Deferred tax credit at fiscal year-end net of the allowance	-		-

The minimum presumed income tax amount for the year ended December 31, 2006, exceeded income tax and amounted to 341,172. Such amount was booked under noncurrent tax credits, the amount of which accumulated to date totals 1,853,274. The Company’s Management, based on the Company’s business plan for the future, understands that such amounts will be recoverable.

• • Situation in the subsidiary Interclima S.A.

In view of the economic crisis resulting from abandoning the currency board, the Management of the subsidiary considered that the conditions required to apply the tax-purposes adjustment for inflation were present. Consequently, it prepared and filed the income tax return for the year ended December 31, 2002, based on adjusted amounts, using the coefficients determined according to domestic WPI variations, which led to the assessment of NOLs amounting to about 5,200,000.

Interclima S.A.’s Management, seeking appropriate jurisdictional protection, filed before the courts a request for an injunction because it believed that section 39, Law No. 24,073 dated 1992, which had set the index applicable to the tax adjustment for inflation at one, should be abrogated due to the high inflation that affected tax year 2002 and because it had been introduced to legislation in an economic context differing completely from year 2002.

On July 17, 2003, the judge hearing the case granted the injunction requested by the subsidiary and instructed the Argentine Government to refrain from filing any administrative or judicial proceeding, making any claim, demand or accusation and imposing penalties based on the alleged prohibition to apply the adjustment for inflation.

On October 15, 2004, the trial court judge hearing on the constitutional protection action filed by the subsidiary ruled that the AFIP should accept the legitimacy of the adjustment for inflation provided for in Income Tax Law No. 20,628, Title VI, and resolved to declare the unconstitutionality of section 4, Law No. 25,561, amending sections 7 and 10, Law No. 23,928, and section 5, Presidential Decree 214/02, and section 39, Law No. 24,073, since they disregard sections 14 and 17 of the Argentine Constitution, and it has ordered the AFIP to compute the adjustment for inflation in the fiscal year ended December 31, 2002, and filed on May 8, 2003, which was appealed by Argentine tax authorities. The Court of Appeals dismissed such appeal. As a result, the AFIP filed an extraordinary appeal, which was denied by the Court of Appeals.

Considering the denial mentioned in the preceding paragraph, the AFIP filed a remedy of complaint for appeal denied with the Argentine Supreme Court. To date, whether such remedy was sustained or not has not been resolved.

Had the tax adjustment for inflation not been made, Interclima S.A. would have assessed income tax amounting to about 384,342 for 2002 (after computing prior-period NOLs), to 854,892 for the fiscal year ended December 31, 2003, to 1,279,585 for the fiscal year ended December 31, 2004, and 39,793 for fiscal year ended December 31, 2005, plus interest accrued amounting to 1,639,099 calculated through December 31, 2006.

1. BREAKDOWN OF MAIN ACCOUNTS

	12/31/2006		12/31/2005
CURRENT ASSETS
Cash
Cash in Argentine pesos	12,472		22,731
Cash on hand in foreign currency	12,263		21,208
In banks in Argentine pesos	7,128,741		8,718,785
In banks in foreign currency	1,855,640		8,375,268
	9,009,116		17,137,992
Trade receivables
Trade receivables in Argentine pesos	46,221,906		18,083,720
Trade receivables in foreign currency	348,494		396,079
Allowance for doubtful accounts	(848,855)		(1,057,855)
	45,721,545		17,421,944
Tax credits
VAT credit balance	-		1,083,525
Withholdings and additional withholdings	393,374		426,756
	393,374		1,510,281
Other receivables
Unaccrued insurance	104,439		138,036
Loans to employees	150,063		57,622
Other	223,257		99,201
	477,759		294,859

	12/31/2006		12/31/2005
Inventories
Manufactured products	22,467,694		14,027,738
Raw material	45,037,886		35,165,651
Subtotal	67,505,580		49,193,389
Raw material in transit	14,611,092		12,817,765
Prepayments to vendors in Argentine pesos	850,319		1,123,766
Prepayments to vendors in foreign currency	2,278,960		2,224,671
Allowance for impairment in value of inventories	(10,805,358)		(11,226,442)
	74,440,593		54,133,149
NONCURRENT ASSETS
Tax credits
VAT credit balance - Note 4	93,481		93,481
Minimum presumed income tax - Note 4	1,853,274		1,808,441
Promotional benefits receivable - Note 4	1,229,537		885,447
Rebates receivable in Argentine pesos - Note 4	1,016,393		1,016,393
Deferred income tax asset	2,659,953		3,194,594
Allowance for impairment in value of deferred income tax asset	(2,659,953)		(3,194,594)
Other	32,923		81,329
Allowance for impairment in value of tax credits	(2,265,582)		(1,932,226)
	1,960,026		1,952,865
Other receivables
Companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies – Note 7	8,233,902		460,037
	8,233,902		460,037
CURRENT LIABILITIES
Trade payables
Suppliers	16,532,834		10,443,886
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies – Note 7	-		44,037
Financial payables in foreign currency	34,992,302		20,367,812
	51,525,136		30,855,735
Salaries, payroll taxes and other taxes payable
Salaries and payroll taxes	2,808,365		1,638,250
Annual statutory bonus and vacation accrual	552,266		780,236
Health and safety assessment	604,780		208,782
Turnover tax payable	383,350		55,009
Withholdings and additional withholdings	462,282		245,907
Other taxes payable	125,617		53,213
	4,936,660		2,981,397
Loans
Financial loans in Argentine pesos	17,598,806		-
Financial loans in foreign currency	4,666,679		2,422,084
	22,265,485		2,422,084

	12/31/2006		12/31/2005
Other liabilities
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies – Note 7	-		4,053,228
Royalties payable	786,424		295,479
Directors' fees accrual	2,510,000		-
Other	1,215		340,489
	3,297,639		4,689,196
NONCURRENT LIABILITIES
Taxes payable
Turnover tax payable	218,070		-
Loans
Financial loans in foreign currency	4,825,493		3,100,800

	Income/(Loss)
	12/31/2006		12/31/2005
Other income and expenses, net
Leases and rentals	1,200,000		1,200,000
Other	(2,046)		(669,050)
	1,197,954		530,950

1. CAPITAL STRUCTURE – SHAREHOLDERS’ EQUITY
2. Capital stock status

The Company’s capital stock consists of 20,000,000 book-entry shares of common stock, 0.10 face value each and it is fully registered, subscribed and paid-in, according to the following breakdown:

Class		Votes		Number
“A”		Entitled to three (3) votes each		5,200,000
“B”		Entitled to three (3) votes each		5,200,000
“C”		Entitled to one (1) vote each		9,600,000
Total				20,000,000

Each Class “A”, Class “B” or Class “C” shares have the same rights to collect dividends.

• 1. Other reserves - For future dividends

This account includes the decisions made by the Shareholders’ Meetings held May 24, 1995, May 22, 1998, and April 29, 1999, approving the setting of reserves for future dividends in the amounts of 18,784,406, 7,693,924, and 8,353,403, respectively. The Board of Directors would thus be free to allocate such amounts to cash dividend payments, as deemed appropriate. On July 14, 1995, May 12, 1998, December 13, 1999, July 18, 2000, and December 15, 2002, the Board of Directors approved the payment of 9,368,077; 9,342,622; 3,846,962; 3,846,962; 4,176,701; and 4,176,701, respectively.

1. TAX SITUATION OF THE COMPANY: TAX SYSTEM – TAX CREDITS

The Company enjoys the benefits of the Industrial Promotion System provided by Law No. 19,640 as regards the assets and for the activities performed in the Province of Tierra del Fuego. Accordingly, the Company is entitled to certain tax and customs benefits through 2013, including:

• 1. Income tax: Presidential Decree No. 1,395/94 established, as from September 1, 1994, that 85% of the price paid by customers out of the earnings related to the Province of Tierra del Fuego would be income-tax exempt (whose rate is 35%). Subsequently, under Presidential Decree 615/97, the Argentine Government reinstated certain tax benefits granted by Industrial Promotion Law introducing amendments effective August 1, 1997, that provided that the exemption granted to such activities would amount to 100% as established by Law No. 19,640, section 4(a).
• Value-added tax: The Company’s sales are subject to VAT at the 21% rate; such tax is collected from customers. Presidential Decree No. 1,395/94 provided that presumed VAT credits computable as from September 1, 1994, would be equivalent to the amount resulting from applying the VAT rate on 61.11% of the net sales price to customers so that the tax obligation was reduced to 8% thereof as from April 1995. Presidential Decree No. 615/97 provided that the presumed VAT credit computable as from August 1, 1997, is equivalent to the one resulting from applying 100% on the VAT rate at the bet sale price to customers.
• Tax credit certificates: Under Law No. 23,697, the Federal Government suspended the tax benefits during 1989 and 1990. Thus, the Company made payments on account of capital tax and VAT which, under such law, would be reimbursed to the Company through Debt Consolidation Bonds.

DGI (Argentine tax bureau) General Resolution No. 3838/94 regulated the way in which the abovementioned bonds would be obtained; based on that, the Company booked credits in the amount of 1,511,788 (historical value).

On September 17, 1996, the DGI advised the Company of the recognition of a larger amount in favor of the Company (2,194,142) (un-restated historical value) as a result of the application of the adjustment rate for the prior month used by the Company in the original filing. In addition, the Company booked a 148,853 (un-restated historical value) credit related to the reimbursement of VAT to be requested by other procedures.

The Ministry of Economy and Public Services and Works established through Resolution No. 580/96 that the credits against the Federal Government emerging from the suspension of the industrial promotion established in Law No. 23,697 and prior to April 1, 1991, will be settled through the delivery of Debt Consolidation Bonds.

On May 19, 1997, the Company was advised that the DGI provisionally recognized the amount indicated above.

As a result thereof, the Company booked the credit recognized at the listed price effective as of each fiscal year-end which, as of December 31, 2006, and 2005, amounted to 1,229,537 and 885,447, respectively, and were fully booked in an allowance.

• 1. Customs duties and statistical rate: Not paid by the Company for all the inputs imported and used in its operations in Tierra del Fuego under Law No. 19,640.
• Reimbursements in Argentine pesos: Under Law No. 19,640, exports from the continent to Tierra del Fuego enjoy the benefit of these reimbursements.

Owing to the delay in payment by the Federal Government, the Company filed collection requests before Customs Authorities; although such requests have been denied at administrative stages, the Company’s legal counsel and Management understand that the transactions were carried out within the regulatory framework of Law No. 19,640 and, consequently, that the Company is entitled to collect the rebates provided by the legislation and regulations effective at the time.

The unfavorable resolutions mentioned above were challenged; thus, the proceedings are in the Customs Legal and Technical Department awaiting the issuance of the respective formal opinions.

Following with the comments included in the previous points, the benefits accrued during the fiscal year ended December 31, 2006, and 2005, amounted to:

	Periods ended December 31,
	2006		2005
Value-added tax	55,841,464		31,436,170
Customs duties and statistical rate (estimated)	25,918,831		17,773,987

In addition and considering the tax system to which the Company is subject, as indicated above, as of December 31, 2006, the Company carried minimum presumed income tax credits in the amount of 1.8 million, and the Company and its subsidiary (Interclima S.A.) carried VAT credits in the amount of 4.3 million disclosed in noncurrent assets. The recoverability of such credits totaling 6.1 million in the consolidated financial statements and 1.8 million in the stand-alone financial statement depends, among other issues on whether the Companies are able to generate income subject to tax during the coming years. In this respect, the Company’s Management understands that, based on its future business plan, such credits will be recoverable.

1. MAJOR CUSTOMERS

For the fiscal years ended December 31, 2006, and 2005, the Company’s sales to its most important customers were:

	12/31/2006		12/31/2005
VOLKSWAGEN ARGENTINA S.A.	31%		40%
RENAULT ARGENTINA S.A.	22%		19%
PEUGEOT CITRÖEN ARGENTINA S.A.	22%		10%
GENERAL MOTORS ARGENTINA	16%		20%
MERCEDES BENZ	7%		10%
OTHERS	2%		1%

1. PARENT COMPANY

Parent company: II Tevere S.A.

Registered office: Paseo Colón 221, Piso 4° – Buenos Aires, Argentina

Main business: holding company.

Voting rights: 76.47%

Shareholding percentage: 52%

Effective July 15, 1996, a 40% shareholding in Il Tevere S.A.’s was transferred in favor of Valeo Climatisation (afterwards, Valeo Systemes Thermique), which thus became indirect holder of 20.8% of the capital stock and 30.59% of the voting rights in MIRGOR S.A.C.I.F.I.A. A further 10% shareholding in Il Tevere S.A. was transferred on March 6, 1998; thus the interest in MIRGOR S.A.C.I.F.I.A. was increased to 26%. On September 27, 2005, the local shareholders of Il Tevere S.A., the parent company of Mirgor S.A.C.I.F.I.A. in which it holds a 52% equity interest, acquired Valeo Systemes Thermique France’s equity interest in Il Tevere S.A.

As part of the transaction, Mirgor and Valeo reached a long-term business and technological cooperation agreement in order to ensure the continuity in the future provision of products.

1. INFORMATION ON RELATED PARTIES

For the fiscal year ended December 31, 2006, and 2005, the Company was engaged in transactions with its subsidiary, parent, and other related companies. Receivables and payables in that regard are:

	12/31/2006		12/31/2005
Other receivables
IL TEVERE S.A. (3)	677,228		460,037
INTERCLIMA S.A. (1)	7,556,674		-
Total	8,233,902		460,037
Trade payables
VALEO SECURITE HABITACLE (2)	-		44,037
Total	-		44,037
Other liabilities
INTERCLIMA S.A. (1)	-		4,053,228
Total	-		4,053,228

The transactions carried out with the subsidiary, parent, and other related companies are:

	12/31/2006 (See 3.)
	Purchase of merchandise		Services received		Royalties		Loans		Other Services
INTERCLIMA S.A. (1)	5,992,253		-		-		(11,609,902)		1,200,000
IL TEVERE S.A. (3)	-		-		-		217,191		-
	5,992,253		-		-		(11,392,711)		1,200,000

	12/31/2005
	Purchase of merchandise		Services received		Royalties		Loans		Other Services
VALEO SISTEMAS AUTOMOTIVOS LTD (2)	2,095,322		-		-		-		-
VALEO CHINA (2)	220,651		-		-		-		-
VALEO AUTOKLIMATIZACE S.R.O (2)	736,237		-		-		-		-
VALEO CLIMATIZACION S.A.(EURO) (2)	247,958		-		-		-		-
VALEO KLIMASYSTEME GMBH (2)	71,081		-		-		-		-
VALEO COMPONENTES AUTOMOVILES (2)	48,086		-		-		-		-
VALEO SISTEMAS AUTOMOTIVOS (2)	1,469,289		-		-		-		-
VALEO AUTOSYSTEMIY SP. Z.O.O. (2)	223,961		-		-		-		-
VALEO VYMENIKY TEPLA s.r.o. (2)	2,438,722		-		-		-		-
VALEO SECURITE HABITACLE (2)	797,321		-		-		-		-
VALEO THERMIQUE FRANCIA (2)	544,868		74,127		-		-		-
VALEO THERMIQUE MOTEUR (2)	3,564,067		-		-		-		-
VALEO ZARAGOZA (2)	4,096,079		-		-		-		-
VCC UP ECHANGEURS (2)	2,736,244		-		752,664		-		-
INTERCLIMA S.A. (1)	10,106,935		-		-		1,109,879		1,200,000
IL TEVERE S.A. (3)	-		-		-		460,037		-
	29,396,821		74,127		752,664		1,569,916		1,200,000

• • 1. Subsidiary.
  • Related company until September 27, 2005 (See (3)).
  • Parent company. On September 27, 2005, the local shareholders of Il Tevere S.A., owner of 52% of Mirgor S.A.C.I.F.I.A., acquired from Valeo System Thermique France its interest in Il Tevere S.A. Consequently, after such date, Valeo and its group of companies are no longer part of the group of companies to which Mirgor S.A.C.I.F.I.A. belongs.

• INCOME TAX WITHHOLDING ON DIVIDENDS

When dividends are paid in excess of taxable income as provided for in Income Tax Law, such excess shall be subject to a 35% withholding, as single and definitive payment. Based on the unnumbered section subsequent to Section 69 of Income Tax Law, the Company need not withhold any amount on such account.

1. OFFICIALLY STAMPED BOOKS

The books which were stamped and sealed after the related transactions are:

Journal No.		Officially stamped on		Transaction for the period
57		01-Feb-05		12/15/04 to 02/02/05
59		04-May-05		03/17/05 to 05/01/05
60		04-May-05		05/01/05 to 05/04/05
61		08-Jul-05		06/07/05 to 07/08/05
63		28-Sep-05		08/30/05 to 09/28/05
64		31-Oct-05		10/04/05 to 10/31/05
65		02-Dec-05		11/14/05 to 12/02/05
69		29-Aug-06		04/19/06 to 05/23/06
70		29-Aug-06		05/23/06 to 06/23/06
71		25-Sep-06		06/23/06 to 07/24/06
72		25-Sep-06		07/24/06 to 08/29/06
73		24-Nov-06		08/29/06 to 09/28/06
74		24-Nov-06		09/28/06 to 10/16/06
75		21-Dec-06		10/16/06 to 11/23/06
76		21-Dec-06		11/23/06 to 12/21/06

1. BANK LOANS – RESTRICTION ON EARNINGS DISTRIBUTION

The borrowing and renegotiation of these loans binds the Company to comply with certain conditions and requirements, which it has fulfilled to date, especially those related to meeting certain ratios in its quarterly financial statements, the most significant of which measure the relation between certain liabilities and interest paid, as well as those related to keeping limits on the Company’s indebtedness and the limitation to distribute dividends during the effectiveness of the loans.

1. SHAREHOLDING ACQUISITION

On December 21, 2006, the Company acquired a 95% equity interest in Capdo S.A., an affiliate of the group to which the parent company belongs, in the amount of 7,792,470, which was fully paid as of December 31, 2006. Such company owns a real property unit in the Province of Buenos Aires, which will allow, among other things, extending and improving the provision of goods produced to one of the car manufacturers with which the Company operates.

1. EARNINGS PER SHARE

Net income per share (basic and diluted) is calculated by dividing net income for each period allocable to common shares by the weighted average of outstanding common shares during the same periods. No transactions involving shares of common stock or possible shares of common stock have been performed as from the end of the year reported through the issuance of these financial statements.

1. FOREIGN INVESTOR INFORMATION REGULATIONS

These financial statements have been prepared in accordance with the foreign investors information regulations established by the CNV (Argentine Securities Commission) in Resolution No. 368, as amended, Chapter XXIII, Exhibit III. Therefore, these financial statements are in accordance with professional accounting standards effective in Argentina. The effects of differences between professional accounting standards effective in Argentina and those effective in other countries where these financial statements may be used have not been quantified.

1. EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are the English translation of those originally issued in Spanish. They have also been reformatted in a manner different from that presented in Spanish, but in all other respects follows accounting principles that conform with the CNV regulations.

EXHIBIT C

SHARES, DEBENTURES, OTHER SECURITIES ISSUED IN SERIES, AND INTEREST

IN ANOTHER COMPANY FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

(Figures stated in Argentine pesos - Note 1.b)

		2006
Securities name and characteristics		Face value		Amounts		Cost value		Value obtained by the equity method		Book value
Noncurrent investments: Companies under section 33, Law No. 19,550 - Subsidiaries and affiliates
INTERCLIMA S.A.		1		11,996		8,815,917		32,178,801		32,178,801
CAPDO S.A.		1		6,650,000		7,792,470		7,297,390		7,297,390
Total noncurrent investments										39,476,191

		2006												2005
		Information on the issuer
				Last financial statements issued
Securities name and characteristics		Main business activity		Date		Capital		Income (loss) for the year		Shareholders' equity		Equity interest %		Book value
Noncurrent investments: Companies under section 33, Law No. 19,550 - Subsidiaries and affiliates
INTERCLIMA S.A.		Manufacturing of autoparts and exchangers for air conditioning and heating systems		30/06/06		12,000		4,682,581		26,650,878		99,97%		18,293,834
CAPDO S.A.				12/31/06		7,000,000		(134,282)		6,389,936		95.00%		-
Total noncurrent investments														18,293,834

MINUTES No. 97 OF STATUTORY AUDIT COMMITTEE’S MEETING

In the City of Buenos Aires, on March 9, 2007, at 10:00 am, the undersigned members of MIRGOR S.A.C.I.F.I.A.’s Statutory Audit Committee held a meeting to establish the manner in which the documentation referred to the financial statements for the fiscal year ended December 31, 2006, will be signed, and to approve this Statutory Audit Committee’s Report thereon, which is transcribed below:

STATUTORY AUDIT COMMITTEE’S REPORT

To the Shareholders of

MIRGOR S.A.C.I.F.I.A.:

Dear sirs,

1. As required by the BCBA (Buenos Aires stock exchange) Regulations, we examined the accompanying balance sheet of MIRGOR S.A.C.I.F.I.A. as of December 31, 2006, and the related statements of income, changes in shareholders’ equity and cash flows for the year then ended, as well as the consolidated balance sheet of MIRGOR S.A.C.I.F.I.A. with its subsidiaries Interclima S.A. and Capdo S.A. as of December 31, 2006, and the related consolidated statements of income and cash flows for the year then ended. In addition, we have examined the related “Supplementary information to the notes to the financial statements required under section 68 of the BCBA regulations”, the filing of which is not required by professional accounting standards effective in the City of Buenos Aires, Argentina. Such documentation is the responsibility of the Company’s Board of Directors in performing their exclusive functions.

2. Our work was based on the audit of the financial statements indicated above conducted by the firm Pistrelli, Henry Martin y Asociados S.R.L., in accordance with auditing standards effective in Argentina, and it was limited to verifying the fairness of the significant information included in the documents examined, its consistency with the information on corporate decisions entered in minutes, and the compliance of such decisions with the law and by-laws regarding formal and documentary requirements. We did not perform any control over management decisions or performance and, therefore, we did not assess the business decisions or criteria regarding administrative, financial, marketing or production matters, as these are the exclusive responsibility of the Board of Directors.

3. 2 -

4. We did not examine the financial statements of the subsidiary Capdo S.A. as of December 31, 2006, a company acquired during this year, which are used to value the equity interest in such company by the equity method and included in the consolidated financial statements of MIRGOR S.A.C.I.F.I.A. with its subsidiaries as of that date, on which the firm Estudio Urien y Asociados issued its audit report on February 26, 2007. As of December 31, 2006, this equity interest represents 3.9% of the total assets of MIRGOR S.A.C.I.F.I.A., and 2.7% of the consolidated assets of MIRGOR S.A.C.I.F.I.A. and its subsidiaries.

5. As mentioned in note 4 to the accompanying financial statements, as of December 31, 2006, the Company and its subsidiaries booked noncurrent minimum presumed income tax and value-added tax credits amounting to ARS 6,101,714, the recoverability of which depends on the companies’ possibility of generating enough taxable income to absorb them. Although the Company’s Management understands that based on the business plan those credits will be recoverable, as of the date of issuance of this report, it is not possible to estimate the recoverable amount of such credits.

6. Based on our review and the report dated March 9, 2007, issued by Karén Grigorian, CPA, (a partner of the firm Pistrelli, Henry Martin y Asociados S.R.L.), except for the effect of adjustments, if any, that could have been required in the balance sheet as of December 31, 2006, if there had not been the scope limitation described in paragraph (3), and subject to the effect of adjustments that could have been required if the outcome of the uncertainty mentioned in paragraph (4) had been known, the financial statements mentioned in paragraph (1) present fairly, in all material respects, the financial position of MIRGOR S.A.C.I.F.I.A., and the related results of its operations and its cash flows for the year then ended, in accordance with professional accounting standards effective in the City of Buenos Aires, Argentina, and the provisions of Argentine Business Associations Law and the relevant CNV (Argentine Securities Commission) regulations. The “Supplementary information to the notes to the financial statements required under section 68 of the BCBA regulations” is fairly presented, in all material respects, in connection with the financial statements mentioned in paragraph (1), taken as a whole.

7. 3 -

8. We also report that in compliance with current legal requirements, and exercising the control of legality that is our responsibility, during the year, we applied the remaining procedures described in section No. 294, Law No. 19,550, which we considered necessary under the circumstances, with no findings to report in this regard.

9. The accompanying financial statements result from books kept, in all formal respects, pursuant to current legal requirements, except as mentioned in note 9, which were transcribed into the Inventory and Financial Statements Book.

Buenos Aires,

March 9, 2007

Mario Volman took the floor and proposed that Julio Cueto Rua, on behalf of the Statutory Audit Committee, signs all the documentation related to those financial statements. Mario Volman also stated that, according to the analysis of the Company’s accounting information, he considered that the obligations provided in Argentine Business Associations Law, the bylaws and FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 15 were duly met.

After a brief comment, the motions were unanimously approved. Therefore, there being no further business to transact, the meeting was adjourned at 11:00 am.

JULIO CUETO RUA	MARIO VOLMAN	MATÍAS ROMERO ZAPIOLA