Mirgor - Annual Report 2007 | FinancialReports.eu


Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria	Financial Statements for the fiscal year beginning January 1, 2007 and ended December 31, 2007, presented jointly with the Auditor’s Report and the Statutory Audit Committee’s Report (Translation into English – originally issued in Spanish)

The Company is not enrolled in the Statutory Optional System

for the mandatory Acquisition of Public Offerings.

FISCAL YEAR No. 37 BEGINNING JANUARY 1, 2007,

AND ENDED DECEMBER 31, 2007

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. 37 ended December 31, 2007.

Environment in which the Company operated during the fiscal year

The Argentine economy was capable of overcoming an important series of doubts that it was faced with during the year and thus managed to sustain an important overall growth.

However, as months pass by without these fundamental threatening issues being addressed, these doubts may bring this virtuous cycle to a halt.

The data that should continue to be monitored include: the ability to maintain a twin surplus (trade balance and taxable income), inflation rate, new investments and the energy situation.

Many sectors in the Argentine economy have reached very high activity levels in their production capacities and need new investments to accompany the growth in demand without increasing prices.

One of the most significant cases involves the automobile industry, which experienced a very marked growth, driven by the increase in domestic demand as well as by the increased access of its products to foreign markets.

In spite of this strong inertia brought about by the economy, investments are necessary for the country to be able to grow over time, avoiding inflationary pressures and providing certainty as to the energy supply for industries and homes.

Furthermore, for the economy to be able to maintain its competitiveness levels, a strong increase in productivity is required so as to avoid a race between devaluation and inflation when dealing with competitive foreign exchange rates.

The automobile industry

The automobile industry continues to be one of the main growth engines of the industrial sector.

The maturity of investments in new models of the past years has enabled the industry to gain market share in both domestic and foreign markets.

This latter case goes to show that when an effort is made to supplement other important markets in the region (Brazil and Mexico) and companies have models that are up-to-date, output levels can increase.

This sector is facing a series of challenges that it must overcome:

Increase in costs, headed by manual labor;
Shortage of energy;
Restrictions in the supply of some components due to the marked growth of the Argentine and Brazilian industries.

In relation to this matter, the industry should provide its suppliers with greater forseeability for them to make profitable investments.

All automobile industry figures exceeded their historical levels.

Production totaled 544,647 units, which represented a 26% increase as compared with 2006.

Exports exceeded 300,000 units, with a 33.6% growth.

Although external sales cover a large number of markets, the first 4 represent 85% of car exports. Brazil has already regained its first place with over 62% and is also the largest market of origin of Argentina's imports.

The export of vehicles absorbed 58% of production, an even greater share than last year's.

Therefore, it is essential to find a productivity pattern that enables the competitiveness to be sustained over time. This is the only way to keep car manufacturers interested in launching new products that streamline the Argentine offer over the next years.

Domestic demand has increased at a lower rate than production, at 22.7%, but exceeded the growth rate recorded in 2006 in relation to 2005.

The increase in interest and inflation rates in the last months of the year do not seem to have affected demand levels, as between July and December, sales increased at a greater rate than during the whole year.

Although the share in sales has remained relatively stable between the different car brands, in terms of production, General Motors stands out with its production increase after sharply expanding its production of the Corsa Classic model, intended mostly for export.

Company activities

As in the prior year, Mirgor sales in units in the car manufacturing market, increased at a higher rate than the rate of increase in car production.

Some of the Company’s mature products had surprising increases in volume, which in some cases surprised the customers themselves. This required great efforts to be made, especially towards the end of the year to be able to accompany this increased demand, which had not been foreseen at the beginning of the year.

Air quality and temperature control system sales went from 206,222 units sold in 2006 to 273,739 units sold in 2007, which represented a 32.7% growth.

With these sales levels, the Company was involved in over 50% of the vehicles produced by the industry.

The investments made and to be made have been very important to be able to sustain this growth which represents almost 400% from the 2002 crisis through this year.

The Company’s sales experienced a 44.8% increase, going from ARS 569 million to ARS 820 million, setting a new record in terms of dollars.

Residential air quality and temperature control maintained its share at 36% of the Company’s total sales. In 2007, Interclima launched the production of window units, which enabled sales of this activity to increase slightly more than the automobile industry.

In the automobile industry, sales grew around 43.7%, as a result of the greater production of cars, the Company's greater market share and the increased share of penetration of systems for cars with air-conditioning that went from 84% to 88%.


	2007		2006		Difference

Total	273,628		206,106		67,522	32.8%

PRIOR MODELS
SPRINTER	17,547	6.4%	18,849	9.1%	(1,302)	(6.9%)
CORSA I	51,099	18.7%	31,161	15.1%	19,938	64.0%
PARTNER	18,533	6.8%	15,790	7.7%	2,743	17.4%
KANGOO	26,777	9.8%	18,451	9.0%	8,326	45.1%
MEGANE	14,383	5.3%	12,458	6.0%	1,925	15.5%
POLO	5,999	2.2%	10,655	5.2%	(4,656)	(43.7%)
CADDY	5,736	2.1%	3,813	1.9%	1,923	50.4%
CLIO	26,135	9.6%	21,013	10.2%	5,122	24.4%
Subtotal	166,209	60.7%	132,190	64.1%	34,019	25.7%



NEW MODELS
CORSA II	4,483	1.6%	8,656	4.2%	(4,173)	(48.2%)
307	36,359	13.3%	32,345	15.7%	4,014	12.4%
SURAN	44,781	16.4%	32,765	15.9%	12,016	36.7%
CITROEN C4	21,796	8.0%	150	0.1%	21,646	14430.7%
Subtotal	107,419	39.3%	73,916	35.9%	33,503	45.3%

Interclima’s production of condensators increased during the year through improvements in the process.

Mirgor’s greater volume and the release of the Citroën C4 condensator require increases in capacity that should reach over 200,000 condensators in 2008.

Our greater share in the market is also due to the way in which Mirgor, as always, aims to achieve maximum quality in all of its products; this led to Mirgor’s being rated a Suitable B supplier in the Renault-Nissan ASES audit, being the first Argentine supplier to be awarded this rating in its first audit. It was also awarded with the highest rating (A) in the Research & Development capacity by VW Germany. Our customer, General Motors, also granted us the QSB (Quality System Basic) certificate for our plant in Río Grande.

Additionally, during this year, Mirgor developed the air quality and temperature control system in Argentina for the Diesel version of the Volkswagen Suran and the new Mercedez Benz Sprinter.

In the residential air-conditioning field, Interclima introduced the window equipment, expanding its line of products, with a significant inclusion of investments.

Units sold went from 179,536 in 2006 to 246,771, which represented a 37.45% increase.

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

The policy of compensating personnel based on the salaries considered in line with the market in terms of fixed and variable aspects remains in force, always taking into consideration education, capacity and experience, as well as the performance assessment and the fulfillment of set goals, without option plans or 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.

Financially, the Company, in line with the course of business, has closed deals with banks to finance the working capital during times in which the working capital generated by the Company itself proved insufficient. We should not forget that there has already been an important increase in business that required financing. The Company, as is usual in its management, has a high bank rating in line with its commitment compliance level.

The Company’s internal control has procedures and control systems enabling it to analyze and assess, on a regular basis, the operation thereof within the basic internal control guidelines. Additionally, the analysis of control regulation is ongoing, which constantly updates such regulations, tending towards obtaining greater reliance in all systems and processes. It also enables us to be able to achieve international quality certifications required by both suppliers and customers. This year we certified ISO 14001. Furthermore, our external auditors also verify the adequate operation of the internal control systems on a regular basis.

Consolidated financial statements analysis

(figures stated at values as of 12/31/07)

Income for the year

Sales for the year totaled ARS 819,741,000, representing a 45% increase in relation to the prior year's sales (ARS 566,315,000). Although the increase in sales this year does not equal the prior year's increase, it shows that the positive trend in sales is continuing.

Net income for 2007 amounted to ARS 59,269,000 (income), representing 7.23% of sales against an income of ARS 40,002,000 for 2006. Furthermore, financial income (expense) and holding gains (losses) resulted in a loss of ARS 1,290,000, which represent 0.16% of sales, and in 2006, financial income (expense) and holding gains (losses) resulted in a gain of ARS 563,000, representing 0.1% of sales, basically due to the variation in the foreign exchange rate.

Administrative expenses, totaling ARS 27,696,000, represent 3.38% as regards sales this year, slightly less, in proportion to sales and in relation to those of the prior year, during which expenses totaled ARS 22,069,000.

Transactions with the subsidiary are broken down in Note No. 7 to the financial statements.

Cash flows

Cash flows provided by ordinary consolidated transactions, net of changes in assets and liabilities for fiscal 2007, amounted to ARS 467,000, while during the year ended December 31, 2006, the cash flows provided by operations amounted to ARS 7,631,000. The purchase of P&E during this year totals ARS 12,284,000, while in the prior year, P&E purchases totaled ARS 20,912,000, and noncurrent investments amounted to ARS 8,051,000. P&E additions were mainly used to expand the Company's productive capacity with the completion of extensions to the manufacturing plant and the incorporation of new warehouses in which to store goods. During the current year no cash was provided by or used in extraordinary transactions.

As regards cash flows related to financial activities, during fiscal 2007, the Company settled loans in the amount of ARS 91,198,000, and paid dividends totaling ARS 4,000,000, while in fiscal 2006, such settlements had amounted to ARS 38,017,000, in accordance with prior agreements. The net positive cash flow provided by financial activities amounted to ARS 9,002,000, as compared to the ARS 21,298,000, provided in fiscal 2006.

The cash flows described entailed that the cash used in 2007 amounted to ARS 3,307,000, and the cash used in 2006 amounted to ARS 5,000.

Financial position

Shareholders’ equity for 2007 amounted to ARS 177,684,000, showing a 45.1% year-to-year increase.

Current liquidity ratio for 2007 amounted to 1.42 while, in fiscal 2006, such ratio amounted to 1.43; in addition, the fixed assets-to-shareholders’ equity ratio was equal to 0.13 and 0.17 for 2007 and 2006, respectively.

Total consolidated assets for fiscal year 2007 amounted to ARS 471,952, which represents a 54.9% year-to-year increase.

Prospects

Predictions for the industry in 2008 involve growth at decreasing rates. Certain car manufacturers have yet to make announcements regarding new projects.

However, in the last few weeks, certain warnings have been circling regarding the risk of losing export competitiveness if internal costs continue to increase.

Comments have also been made regarding uncertainty related to energy and the lack of investment of some players in the car manufacturing chain. These aspects will have to be monitored closely in the next few years.

Some of our customers are increasing production to be able to address delivery delays and for launches of vehicles on new markets.

In Mirgor’s case, we will be launching the Mercedes Benz NCV3 model production during the first half of the year. This vehicle is only produced for exports.

Production has also begun on the air conditioning system that will be placed in Chery cars that will be produced in Uruguay by Chery-Socma, a product that was developed during the year by the Company.

The volume forecast in our budget for this new model is very small for the moment.

The expansion of the Río Grande plant has been completed and now new assembly lines and machinery are in the final stages of installation, so as to supplement the activity required by our customers, such as the plastic injection operation.

It is believed the Company will find it difficult this year to be able to accompany the need for greater productivity that our customers demand with increases in raw material costs, of components imported from Brazil and the Euro zone, as well as due to the salary claims that are being announced by several unions.

The Company has had several inquiries by customers in regard to new projects, but until this moment no new awards have been made to the Company.

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	108,661

Dividends paid	(4,000)

Income for the year	59,270

Total as of December 31, 2007	163,931

To legal reserve	-
Balance at the disposal of the Shareholders’ Meeting	163,931

The Board of Directors suggests refraining from distributing dividends given the need to have access to financing to be able to bear the greater working capital, among other reasons, due to changes in business conditions regarding both suppliers and customers and, in view of future investments the Company is projecting to be able to continue with its development 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 06, 2008

ROBERTO G. VÁZQUEZ

Chairman

(*) Information not examined and not covered by the auditors' report

INDEPENDENT AUDITOR’S REPORT

To the Chairperson and Directors of

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

Registered office: Einstein 1111

Río Grande – Tierra del Fuego

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

We have audited the accompanying balance sheet of MIRGOR S.A.C.I.F.I.A. as of December 31, 2007, and the related statements of income, changes in shareholders’ equity and cash flows for the year then ended. We have also audited the accompanying consolidated balance sheet of MIRGOR S.A.C.I.F.I.A. and its subsidiaries as of December 31, 2007, and the related consolidated statements of income and cash flows for the year then ended, disclosed as supplementary information.
The Company’s Management is responsible for the preparation and fair presentation of the financial statements in accordance with the professional accounting standards effective in the Province of Tierra del Fuego, Antarctica and South Atlantic Islands, Argentina, and the applicable Argentine Business Associations Law provisions and CNV (Argentine Securities Commission) regulations for the preparation of financial statements. This responsibility includes: designing, implementing, and maintaining an adequate internal control system so that such financial statements are free from material misstatement whether due to errors or irregularities; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these financial statements based on our audit.
Except as mentioned in paragraph 4., we conducted our audit in accordance with auditing standards effective in Argentina. Those standards require that the auditor plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures, on a selective test basis, to obtain judgmental evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, who, to this end, assesses the risks of material misstatement of the financial statements, whether due to errors or irregularities. In making these risk assessments, the auditor considers the Company’s internal control relevant to the preparation and fair presentation of the financial statements in order to select the appropriate audit procedures in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control system in place. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Management, as well as evaluating the overall presentation of the financial statements.

We believe that the judgmental evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

We did not audit or apply audit procedures to the financial statements of the subsidiary Capdo S.A. as of December 31, 2007, 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, 2007, this equity interest represented 2.6% of the total assets of MIRGOR S.A.C.I.F.I.A., 0.6% of the total income as of such date of MIRGOR S.A.C.I.F.I.A, and 1.8% of the consolidated assets of MIRGOR S.A.C.I.F.I.A. and its subsidiaries.
As mentioned in Note 4 to the accompanying financial statements, as of December 31, 2007, the Company and its subsidiaries booked noncurrent minimum presumed income tax and value-added tax credits amounting to ARS 6,748,490, 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.
In our opinion, except for the effect of adjustments, if any, that might have been required, if our work scope limitation described in paragraph 4., 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 5. 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, 2007, and the related results of its operations and its cash flows for the years then ended, in accordance with the relevant regulations effective in the Province of Tierra del Fuego, Antarctica and South Atlantic Islands, Argentina.
In connection with the balance sheet of MIRGOR S.A.C.I.F.I.A. and the consolidated balance sheet of MIRGOR S.A.C.I.F.I.A. with its subsidiaries as of December 31, 2006, and with the statements of income, changes in shareholders’ equity and changes in cash flows for the year then ended, presented for comparative purposes, we report that on March 9, 2007, we issued an auditors’ report that included (a) a qualification for a scope limitation related to the investment in the subsidiary Capdo S.A., and (b) a qualification for unresolved uncertainty regarding the recoverability of certain tax credits amounting to
ARS 6,101,714.
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In compliance with current legal requirements, we further report that:
The financial statements mentioned in paragraph 1. have been transcribed into the “Inventory and Financial Statements” book and, in our opinion, were prepared in all material respects, in conformity with the applicable Argentine Business Associations Law provisions and CNV (Argentine Securities Commission) regulations.
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.
The information included in points 2, and 3 of the “Summary of events for the year ended December 31, 2007", filed by the Company to meet CNV and BCBA (Buenos Aires stock exchange) regulations, results from the accompanying financial statements as of December 31, 2007, and 2006, and as of December 31, 2005, 2004, and 2003, (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 dated March 10, 2006, March 11, 2005, and March 10, 2004, respectively, to which we refer and that should be read jointly with this report.
As of December 31, 2007, liabilities accrued in employer and employee contributions to the Integrated Pension Fund System resulting from the Company’s accounting books amount to ARS 329,748, none of which was due and payable as of that date.
During the year ended December 31, 2007, we billed audit services fees to the issuer, representing 91% of the total amount billed to the issuer on any and all accounts, 58% of the total amount of audit services billed to the issuer, its parent company and subsidiary, and 58% of the total amount billed to the issuer, its parent company and subsidiary on any and all accounts.

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

March 06, 2008 C.P.C.E.T.F. Cámara Río Grande. Vol. 1 – Fo. 3

Karén Grigorian

(Partner)

Certified Public Accountant (U.B.A.)

C.P.C.E.T.F. Cámara Río Grande. Vol. 1 – Fo. 237

BOARD OF DIRECTORS

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

CHAIRMAN

Lic. Roberto G. Vazquez (*)

VICE-CHAIRMAN

Ing. Jorge Antonio Caputo

DIRECTORS

Mrs. Mónica María Caputo

Mr. 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. Andrés Mercau Saavedra

Alternate Statutory Auditors

Dra.María Andrea Rabal

Dr. Hugo Kaplan

Dra. María Eugenia Ramirez

(*) Audit Committee members.

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

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 last amendment to by-laws: August 12, 2004.

Expiration date of the articles of incorporation: May 31, 2070.

FISCAL YEAR No. 37 BEGINNING JANUARY 1, 2007

AND ENDED DECEMBER 31, 2007

SUMMARY OF EVENTS (*)

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

BRIEF COMMENT ON THE COMPANY'S ACTIVITIES FOR THE PERIOD

With the presidential elections behind us, anxiety over continuity of the economic model has calmed down; however, claims from the salary-earning sectors seeking higher income continue, with added strength.

Automobile production continues rising, but at lower rates.

Residential air conditioning appliance sales have experienced a marked increase as this is the period with the greatest sales, in addition to the inclusion of window air-conditioning.

Mirgor’s sales this quarter, in units, increased by 35.5% in relation to Q4 2006.

The sales of air quality and temperature control systems for cars with air conditioning increased by 38.4% during Q4 2007, and the mix of these products reached an 88.4% share.

In relation to instrument panels, there was a 33.1% decrease as compared to the same quarter of the prior year, and a 23.8% decrease as compared to the third quarter of the present year.

During the period, sales of residential air conditioning appliances increased from 69,797 units in the fourth quarter of the prior year to 112,558 this quarter, thus representing a 61.3% increase.

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CONSOLIDATED BALANCE SHEET STRUCTURE


	12/31/2007	12/31/2006	12/31/2005	12/31/2004	12/31/2003

Current assets	410,096,404	252,279,352	162,979,749	99,680,710	67,547,756
Noncurrent assets	61,855,690	52,421,886	24,863,153	26,556,016	32,391,773
Total assets	471,952,094	304,701,238	187,842,902	126,236,726	99,939,529

Current liabilities	289,484,456	176,834,854	102,322,723	57,508,603	33,133,081
Noncurrent liabilities	4,767,529	5,439,603	3,100,800	6,032,289	11,411,548
Total liabilities	294,251,985	182,274,457	105,423,523	63,540,892	44,544,629

Minority interest	16,033	12,152	7,315	5,196	4,119
Shareholder´s equity	177,684,076	122,414,629	82,412,064	62,690,638	55,390,781
Total liabilities and Shareholder´s equity	471,952,094	304,701,238	187,842,902	126,236,726	99,939,529

CONSOLIDATED STATEMENT OF INCOME STRUCTURE


	12/31/2007	12/31/2006	12/31/2005	12/31/2004	12/31/2003

Ordinary operating income (loss) from recurring operations	61,290,797	39,659,811	27,929,181	17,491,758	414,982
Financial (expense) / income	(1,289,928)	563,520	(6,844,800)	(8,938,563)	(994,056)
Other (expenses) / income	88,880	(230,863)	(854,542)	88,840	(1,535,015)
Income tax	(816,421)	14,934	(505,080)	(1,341,100)	(792,549)
Minority interest (loss)	(3,881)	(4,837)	(2,119)	(1,078)	(589)
Net income (loss)	59,269,447	40,002,565	19,722,640	7,299,857	(2,907,227)

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STATISTICAL DATA (1)


	12/31/2007		12/31/2006		12/31/2005		12/31/2004		12/31/2003
Volume of units	Quarter	Accum.	Quarter	Accum.	Quarter	Accum.	Quarter	Accum.	Quarter	Accum.

Production (2)	246,032	690,747	184,917	579,707	117,689	358,217	92,533	275,243	63,595	215,288

Sales (3)	210,872	562,992	149,177	461,891	85,267	256,059	77,832	232,293	51,810	186,643
* Local	201,488	532,277	137,235	399,727	78,415	206,949	54,464	150,632	27,582	84,255
Equipment with air conditioning	76,557	241,801	55,331	173,228	25,206	90,593	21,413	74,837	16,274	41,451
Equipment without air conditioning	10,007	31,938	8,569	32,994	7,749	32,572	10,623	36,183	6,487	25,065
Instrument Panels	2,366	11,753	3,538	14,288	5,873	22,359	7,173	22,149	4,821	17,739
Residential air conditioning	112,558	246,785	69,797	179,217	39,587	61,425	15,255	17,463
* Exports	9,384	30,715	11,942	62,164	6,852	49,110	23,368	81,661	24,228	102,388

(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.

RATIOS


	12/31/2007	12/31/2006	12/31/2005	12/31/2004	12/31/2003

Liquidity	1.42	1.43	1.59	1.73	2.04
Solvency	0.60	0.67	0.78	0.99	1.24
Fixed asset-to-equity capital ratio	0.13	0.17	0.13	0.21	0.32
Rentability	0.33	0.33	0.24	0.12	(0.05)

LISTED PRICE (VALUES PER ARS1 NOMINAL VALUE)


Jan 06	Jan 07	Feb 06	Feb 07	Mar 06	Mar 07

40.20	88.50	48.90	98.00	53.00	88.00


Apr 06	Apr 07	May 06	May 07	Jun 06	Jun 07

59.50	96.50	59.00	109	52.00	119.45


Jul 06	Jul 07	Aug 06	Aug 07	Sep 06	Sep 07

60.00	117.00	60.00	113.00	59.00	132.00


Oct 06	Oct 07	Nov 06	Nov 07	Dec 06	Dec 07

73.00	135.45	74.50	164.00	80.00	154.80

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PROSPECTS

The activity should not change in the remaining months until year-end.

Doubts about the coming years are based on the policies to be adopted by the new government to face inflation, energy deficit and new investment encouragement challenges.

In the case of the auto industry, changes in the agreements with Brazil should be carefully followed, since the current agreement (PAN) expires by mid-2008.

Buenos Aires,
March 6, 2008

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. 37

FOR THE YEAR BEGINNING JANUARY 1

AND ENDED DECEMBER 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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

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: May 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, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006
ASSETS

CURRENT ASSETS
Cash - Note 2	15,712,032	19,019,000
Trade receivables - Note 2	211,812,352	134,965,182
Tax credits - Note 2	4,151,025	2,468,448
Other receivables - Note 2	703,093	543,486
Inventories - Note 2	177,717,902	95,283,236
Total current assets	410,096,404	252,279,352

NONCURRENT ASSETS
Tax credits - Note 2	9,298,464	7,049,188
Other receivables - Note 2	143,735	677,228
Property and equipment - Note 1.f.a)	51,579,722	44,139,712
Intangible assets - Note 1.f.b)	312,632	34,621
Subtotal noncurrent assets	61,334,553	51,900,749
Goodwill	521,137	521,137
Total noncurrent assets	61,855,690	52,421,886
Total assets	471,952,094	304,701,238

LIABILITIES

CURRENT LIABILITIES
Trade payables - Note 2	232,224,645	138,798,789
Loans - Note 2	36,870,275	22,265,485
Salaries, payroll taxes and taxes payable - Note 2	13,591,529	10,413,234
Customer prepayments - Note 2	572,619	1,900,930
Other liabilities - Note 2	6,225,388	3,456,416
Total current liabilities	289,484,456	176,834,854

NONCURRENT LIABILITIES
Loans - Note 2	4,032,579	4,825,493
Taxes payable - Note 2	-	405,695
Other liabilities - Note 2	734,950	208,415
Total noncurrent liabilities	4,767,529	5,439,603
Total liabilities	294,251,985	182,274,457

MINORITY INTEREST IN SUBSIDIARIES	16,033	12,152
SHAREHOLDERS’ EQUITY	177,684,076	122,414,629
Total liabilities, minority interest and shareholders´equity	471,952,094	304,701,238

Notes 1 through 4, and Exhibit H to the consolidated financial statements, and notes 1 through 13, 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 jointly with those statements.

CONSOLIDATED STATEMENT OF INCOME

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006

Net sales - Note 2	819,741,119	566,314,985
Cost of goods sold	(705,740,483)	(485,663,767)
Gross income	114,000,636	80,651,218

Administrative expenses - Exhibit H	(27,696,331)	(22,068,633)
Selling expenses - Exhibit H	(25,013,508)	(18,922,774)
Financial income (expense) and holding gains (losses) from assets:
Interest	2,365,866	2,505,329
Foreign exchange difference	83,843	42,021
Inventories holding gains	7,863,320	3,980,209
Allowance for doubtful accounts	174,023	209,000
Allowance for impairment in value of tax credits	(44,803)	506,626
Allowance for impairment in value and obsolescence of inventories	693,249	(110,541)
Gain from bond holdings	-	344,090
Financial income (expense) and holding gains (losses) from liabilities:
Interest	(6,631,008)	(5,080,695)
Foreign exchange difference	(5,794,418)	(1,832,519)
Other income, net	88,880	(230,863)
Income before income tax	60,089,749	39,992,468
Income tax	(816,421)	14,934
Income after income tax	59,273,328	40,007,402
Minority interest in subsidiaries	(3,881)	(4,837)
Net income for the year	59,269,447	40,002,565

CONSOLIDATED STATEMENT OF CASH FLOWS (1)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006
CHANGES IN CASH

Cash at beginning of year	19,019,000	19,024,378
Cash at end of year	15,712,032	19,019,000
(Decrease) in cash, net	(3,306,968)	(5,378)

CAUSES OF CHANGES IN CASH OPERATING ACTIVITIES:

Net income for the year	59,269,447	40,002,565
Interest and foreign exchange difference accrued on debt	3,711,479	2,240,216
Income tax	816,421	(14,934)
Adjustments to arrive at net cash flows provided by operating activities:
P&E depreciation and intangible assets amortization	5,058,101	3,562,603
Gain from the sale of P&E	-	(29,506)
Minority interest	3,881	4,837
(Decrease) in the allowance for doubtful accounts	(174,023)	(209,000)
(Decrease) increase in the allowance for impairment in value and obsolescence of inventories	(693,249)	110,541
Increase (decrease) in the allowance for impairment in value of tax credits	44,803	(506,626)
Changes in operating assets and liabilities
(Increase) in trade receivables	(76,673,147)	(55,844,338)
(Increase) in inventories	(81,741,417)	(33,396,117)
Decrease (Increase) in other receivables	373,886	(451,351)
Increase in trade payables	93,425,856	56,431,014
(Decrease) Increase in salaries, payroll taxes and other taxes payable (net of tax credits)	(2,020,477)	1,205,134
(Decrease) in customer prepayments	(1,328,311)	(6,870,049)
Increase in other liabilities	3,295,507	2,685,591
Interest paid	(2,901,375)	(1,289,710)
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	467,382	7,630,870

INVESTING ACTIVITIES:
P&E additions	(12,283,624)	(20,911,952)
Investment & goodwill acquisition (2)	-	(8,051,391)
P&E sales	-	29,506
Investment in intangible assets	(492,498)	-
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES	(12,776,122)	(28,933,837)

FINANCING ACTIVITIES:
Loan repayment	(91,198,228)	(38,017,046)
Inflows from loans	104,200,000	59,314,635
Dividends paid	(4,000,000)	-
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES	9,001,772	21,297,589
(DECREASE) IN CASH, NET	(3,306,968)	(5,378)

Cash comprises cash on hand and cash in banks.
Net of cash and other balance sheet accounts incorporated in the acquisition of CAPDO S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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

SIGNIFICANT ACCOUNTING POLICIES
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 stand-alone 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 stand-alone 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 P&E, which were valued at their current value as of the acquisition date (note 10).

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, 2007, and 2006, line by line with those of its subsidiaries, Interclima Sociedad Anónima and CAPDO S.A. (the latter, as from its date of acquisition – note 10).

The following information reflects the parent-subsidiary relationship:


Subsidiary	Equity interest and voting rights as of 12/31/2007, 12/31/2006	Year-end – last financial statements issued

Interclima Sociedad Anónima	99.9667% - 99.9667%	12/31/2007
CAPDO Sociedad Anónima	95.00% - 95.00%	12/31/2007

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 year-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, 2007, and 2006: 1) The financial statements of Interclima Sociedad Anónima as of those dates, on which the auditor’s report was issued on March 5, 2008, and March 9, 2007, respectively, including an “except for” qualification related to the inconsistency in valuing the income tax payable (such adjustment was considered for the investment 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, 2007, and 2006, on which an unqualified auditor’s report was issued on March 3, 2008, and February 26, 2007, respectively.

1. Changes in P&E and intangible assets:


	12/31/2007	12/31/2006
1. P&E:

Balance at beginning	44,139,712	17,908,861
Additions	12,283,624	20,911,952
Additions for company acquisition	-	8,720,778
Depreciation	(4,843,614)	(3,401,879)
Balance as of year-end	51,579,722	44,139,712


	12/31/2007	12/31/2006
1. Intangible assets:

Balance at beginning	34,621	195,345
Additions	492,498	-
Amortization	(214,487)	(160,724)
Balance as of year-end	312,632	34,621

1. Comparative financial statements:

The amounts as of December 31, 2006, presented for comparative purposes, include certain changes in the disclosure to adapt their presentation to that of the year ended December 31, 2007.

BREAKDOWN OF MAIN ACCOUNTS


	12/31/2007	12/31/2006
CURRENT ASSETS
Cash
Cash on hand in Argentine pesos	23,609	175,194
Cash on hand in foreign currency	20,650	12,263
Cash in banks in Argentine pesos	12,917,557	16,975,903
Cash in banks in foreign currency	2,750,216	1,855,640
	15,712,032	19,019,000
Trade receivables
Trade receivables	211,629,891	135,208,985
Trade receivables in foreign currency	857,293	605,052
Allowance for doubtful accounts	(674,832)	(848,855)
	211,812,352	134,965,182
Tax credits
VAT credit balance	2,554,829	120,370
Turnover tax withholdings and additional withholdings	1,596,196	2,264,384
Other	-	83,694
	4,151,025	2,468,448

Other receivables
Unaccrued insurance	224,159	193,659
Loans and advances to employees	317,480	150,063
Other	161,454	199,764
	703,093	543,486


	12/31/2007	12/31/2006

Inventories
Manufactured products	40,408,609	28,235,117
Raw material	120,489,999	58,163,046
Subtotal	160,898,608	86,398,163
Raw material in transit	18,780,453	18,026,027
Prepayments to suppliers in Argentine pesos	2,168,939	1,239,334
Prepayments to suppliers in foreign currency	7,949,524	2,392,583
Allowance for impairment in value and obsolescence of inventories	(12,079,622)	(12,772,871)
	177,717,902	95,283,236


NONCURRENT ASSETS
Tax credits
VAT credit balance	4,475,227	4,248,440
Minimum presumed income tax	2,399,122	1,853,274
Income tax withholding	590,735	929,750
Income tax credit balance	1,025,701	-
Turnover tax withholdings and additional withholdings	708,208	-
Rebates receivable in Argentine pesos	1,818,907	1,882,494
Promotional benefits receivable	1,229,537	1,229,537
Allowance for impairment in value of tax credits	(3,172,052)	(3,127,249)
Other tax credits	223,079	32,942
	9,298,464	7,049,188

Other receivables
Receivables from companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies - Note 3	143,735	677,228
	143,735	677,228

CURRENT LIABILITIES
Trade payables
Suppliers	147,172,521	103,163,696
Suppliers in foreign currency	85,052,124	35,635,093
	232,224,645	138,798,789

Salaries, payroll taxes and taxes payable
Salaries and payroll taxes	4,112,741	3,190,825
Vacation and annual statutory bonus accrual	1,690,618	829,685
Income tax accrual	261,288	-
Health and safety assessment	664,430	720,794
Turnover tax payable	784,707	756,122
Minimum presumed income tax payable	449,646	-
Withholdings and additional withholdings	767,874	462,282
Other taxes payable	4,860,225	4,453,526
	13,591,529	10,413,234


	12/31/2007	12/31/2006

Customer prepayments
In Argentine pesos	572,619	1,900,930
	572,619	1,900,930

Loans
Financial loans in Argentine pesos	35,373,534	17,598,806
Financial loans in foreign currency	1,496,741	4,666,679
	36,870,275	22,265,485

Other liabilities
Directors' fees accrual	4,076,281	2,526,281
Royalties payable	1,850,454	857,640
Other	298,653	72,495
	6,225,388	3,456,416

NONCURRENT LIABILITIES
Loans
Financial loans in foreign currency	4,032,579	4,825,493
	4,032,579	4,825,493

Taxes payable
Turnover tax payable	-	405,695
	-	405,695

Other liabilities
Deferred income tax liabilities (1)	734,950	208,415
	734,950	208,415


	Income / (Loss)
	12/31/2007	12/31/2006
Net sales
Net sales (including VAT benefits amounting to 133,248,392 and 91,195,737, respectively) - Note 4	818,684,120	566,314,985
Service-charge income	1,056,999	-
	819,741,119	566,314,985

As of December 31, 2007 and December 31, 2006, respectively, net of 902,548 and 2,659,953, respectively, related to the allowance for impairment in value of deferred income tax asset.
INFORMATION ON RELATED PARTIES

Receivables from/payables to related companies for the year ended December 31, 2007, and, 2006, are as follows:


	12/31/2007	12/31/2006
Other receivables (Noncurrent)

IL TEVERE S.A. (1)	143,735	677,228
Total	143,735	677,228

- 1. Parent Company.
INFORMATION BY SEGMENT

The Company and its subsidiaries operate primarily in the automotive and residential air quality and temperature control business segments. The valuation methods applicable to prepare the information by business segment are described in note 1 to these financial statements.


	Air conditioning
Income	Automotive	Residential	Other	Total

Sales (net of imputed interest)	434,932,544	250,503,184	1,056,999	686,492,727
Tax benefits	80,947,569	52,300,823	-	133,248,392
Total	515,880,113	302,804,007	1,056,999	819,741,119

BALANCE-SHEET INFORMATION

Allocated assets	348,476,417	113,948,833	9,526,844	471,952,094
P&E additions	10,793,154	1,490,470	-	12,283,624

EXHIBIT H

INFORMATION REQUIRED UNDER SECTION 64(b), FIRST PARAGRAPH, LAW No. 19,550

CONSOLIDATED FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007					12/31/2006
Accounts	Production costs	Service costs	Administrative expenses	Selling expenses	Total	Total

Salaries & wages	45,372,080	-	7,914,713	867,585	54,154,378	32,351,908
Contributions and employee benefits	10,449,430	-	2,564,639	220,601	13,234,670	9,825,258
Insurance	1,948,206	-	99,262	6,858	2,054,326	1,429,861
Fees	4,237,339	-	5,639,900	24,524	9,901,763	7,186,261
Taxes, rates and assessments	6,941,399	-	1,403,776	9,724,318	18,069,493	11,579,183
Maintenance	1,688,840	-	1,344,708	47,617	3,081,165	2,250,426
P&E depreciation	3,530,492	170,626	1,114,327	28,169	4,843,614	3,401,879
Intangible assets amortization	10,444	-	204,043	-	214,487	160,724
Leases and rentals	1,891,438	-	-	-	1,891,438	3,263,851
Customs clearing and dispatch expenses	8,949,892	-	-	-	8,949,892	7,413,105
Transportation, shipping and handling	45,249,673	-	-	9,698,295	54,947,968	34,625,871
Royalties	-	-	-	4,156,925	4,156,925	3,094,160
Bank expenses	-	-	4,428,543	-	4,428,543	2,995,026
Electric power	613,554	-	-	-	613,554	470,988
Traveling expenses	29,301	-	501,328		530,629	401,438
Other	3,863,775	120,950	2,481,092	238,616	6,704,433	5,386,562
Total as of 12-31-2007	134,775,863	291,576	27,696,331	25,013,508	187,777,278
Total as of 12-31-2006	84,845,094	-	22,068,633	18,922,774		125,836,501

BALANCE SHEET AS OF DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006
ASSETS

CURRENT ASSETS

Cash - Note 2	4,693,077	9,009,116
Trade receivables - Note 2	70,407,293	45,721,545
Tax credits - Note 2	3,063,842	393,374
Other receivables - Note 2	29,477,618	287,789
Inventories - Note 2	134,759,662	74,440,593
Total current assets	242,401,492	129,852,417

NONCURRENT ASSETS

Long-term investments in companies - Exhibit C	50,705,027	39,476,191
Tax credits - Note 2	2,900,839	1,960,026
Other receivables - Note 2	143,735	8,233,902
Property and equipment	37,778,621	30,837,889
Intangible assets	312,632	24,177
Subtotal noncurrent assets	91,840,854	80,532,185
Goodwill	495,080	495,080
Total noncurrent assets	92,335,934	81,027,265
Total assets	334,737,426	210,879,682

LIABILITIES

CURRENT LIABILITIES

Trade payables - Note 2	103,929,524	51,335,166
Loans - Note 2	36,870,275	22,265,485
Salaries, payroll taxes and taxes payable - Note 2	6,309,298	4,936,660
Customer prepayments - Note 2	-	1,586,540
Other liabilities - Note 2	5,111,674	3,297,639
Total current liabilities	152,220,771	83,421,490

NONCURRENT LIABILITIES

Loans - Note 2	4,032,579	4,825,493
Taxes payable - Note 2	-	218,070
Other liabilities - Note 2	800,000	-
Total noncurrent liabilities	4,832,579	5,043,563
Total liabilities	157,053,350	88,465,053

SHAREHOLDERS’ EQUITY (As per respective statement)	177,684,076	122,414,629
Total liabilities and Shareholders’ equity	334,737,426	210,879,682

Notes 1 through 13, and Exhibit C are an integral part of these financial statements.

STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006

Net sales (including VAT benefits amounting to 80,947,569 and 55,841,464, respectively) - Note 4(e)	508,184,950	352,201,664
Cost of goods sold	(424,241,803)	(298,358,451)
Gross income	83,943,147	53,843,213

Administrative expenses	(22,613,487)	(19,331,907)
Selling expenses	(14,392,095)	(10,377,434)
Income from long-term investments - Note 2	11,228,836	13,884,968
Financial income (expense) and holding gains (losses) from assets
Interest	1,651,255	1,575,312
Foreign exchange difference	107,379	93,009
Inventories holding gains	7,469,710	3,845,109
Gain from bond holdings	-	344,090
Allowance for doubtful accounts	174,023	209,000
Allowance for impairment in value and obsolescence of inventories	1,702,956	421,084
Allowance for impairment in value of tax credits	(103,075)	(333,356)
Financial income (expense) and holding gains (losses) from liabilities
Interest	(5,253,750)	(3,211,745)
Foreign exchange difference	(5,716,722)	(2,156,732)
Other income, net - Note 2	1,071,270	1,197,954
Net income for the year	59,269,447	40,002,565

EARNINGS PER SHARE - NOTE 11
BASIC - COMMON STOCK	2.9635	2.0001
DILUTED - COMMON STOCK	2.9635	2.0001

Notes 1 through 13, and Exhibit C are an integral part of these financial statements.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007
	Owners' contributions
Breakdown	Capital stock	Adjustment to capital stock	Additional paid-in capital	Subtotal

Balances at beginning of year	2,000,000	4,155,936	5,243,562	11,399,498

Distribution of dividends, as resolved at the Regular Shareholders' Meeting No. 63 held on April 30, 2007	-	-	-	-

Net income for the year	-	-	-	-
Balances as of December 31, 2007	2,000,000	4,155,936	5,243,562	11,399,498
Balances as of December 31, 2006	2,000,000	4,155,936	5,243,562	11,399,498


	12/31/2007					12/31/2006
	Retained earnings
	Appropriated retained earnings
Breakdown	Legal reserve	*Other reserves ()**	Total	Unappropriated retained earnings	Total	Total

Balances at beginning of year	2,280,143	73,708	2,353,851	108,661,280	122,414,629	82,412,064

Distribution of dividends, as resolved at the Regular Shareholders' Meeting No. 63 held on April 30, 2007	-	-	-	(4,000,000)	(4,000,000)	-

Net income for the year	-	-	-	59,269,447	59,269,447	40,002,565
Balances as of December 31, 2007	2,280,143	73,708	2,353,851	163,930,727	177,684,076
Balances as of December 31, 2006	2,280,143	73,708	2,353,851	108,661,280		122,414,629

(*) See Note 3.b).

The accompanying notes 1 through 13 and Exhibit C are an integral part of these financial statements.

STATEMENT OF CASH FLOWS (1)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006
CHANGES IN CASH

Cash at beginning of year	9,009,116	17,137,992
Cash as of year-end	4,693,077	9,009,116
(Decrease) in cash, net	(4,316,039)	(8,128,876)

CAUSES OF CHANGES IN CASH

OPERATING ACTIVITIES

Net income for the year	59,269,447	40,002,565
Interest and foreign exchange difference accrued on debt	3,711,479	1,560,216

Adjustments to arrive at net cash flows (used in) operating activities
P&E depreciation and intangible assets amortization	2,986,683	2,375,972
Gain from the sale of P&E	-	(29,506)
(Decrease) in allowance for doubtful accounts, net	(174,023)	(209,000)
(Decrease) in the allowance for impairment in value and obsolescence of inventories	(1,702,956)	(421,084)
Increase in the allowance for impairment in value of tax credits	103,075	333,356
Income from long-term investments	(11,228,836)	(13,884,968)
Changes in operating assets and liabilities
(Increase) in trade receivables	(24,511,725)	(28,090,601)
(Increase) in inventories	(58,616,113)	(19,886,360)
(Increase) in other receivables	(21,099,662)	(7,766,795)
Increase in trade payables	52,594,358	20,479,431
(Decrease) increase in customer prepayments	(1,586,540)	2,949,723
(Decrease) increase in salaries, payroll taxes and other taxes (net of tax credits)	(2,559,788)	1,586,540
Increase (Decrease) in other liabilities	2,614,035	(1,391,558)
Interest paid	(2,901,375)	(1,289,710)
NET CASH FLOWS (USED IN) OPERATING ACTIVITIES	(3,101,941)	(3,681,779)

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

The accompanying notes 1 through 13, and Exhibit C are an integral part of these financial statements.

STATEMENT OF CASH FLOWS (1)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007,

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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


	12/31/2007	12/31/2006

INVESTING ACTIVITIES
Net P&E acquisitions	(9,723,372)	(17,981,723)
Long term investments acquisitions (includes goodwill)	-	(7,792,469)
P&E sale	-	29,506
Investment in intangible assets	(492,498)	-
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES	(10,215,870)	(25,744,686)

FINANCING ACTIVITIES
Loan repayment	(91,198,228)	(38,017,046)
Inflows from loans	104,200,000	59,314,635
Dividends paid	(4,000,000)	-
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES	9,001,772	21,297,589
(DECREASE) IN CASH, NET	(4,316,039)	(8,128,876)

1. Cash comprises cash on hand and cash in banks

The accompanying notes 1 through 13, and Exhibit C are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR

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

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

These financial statements have been prepared in accordance with effective CNV (Argentine Securities Commission) regulations.

The CNV (Argentine Securities Commission) issued General Resolutions No. 485, 487 and 494, 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, FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolutions Nos. 6, 8, 9, 11, 14, 16, 17, 18, 21, 22 and 23 and Interpretations Nos. 1, 2, 3 and 4.

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.

The difference between the adjusted book value of P&E and its tax base was considered to be a permanent difference. The total taxation effect of the difference resulting from restating the P&E items and intangible assets into constant pesos as of these financial statements’ closing is 297,937. Had such difference been recognized as temporary, the Company’s shareholders’ equity at the beginning of the year would have decreased by 344,729, and the effect on income for the year ended December 31, 2007, would have been a lower income tax charge totaling 46,792.

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

2008		27,483
2009		20,671
2010		11,848
2011 and forward		237,935
Total		297,937

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 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 WPI published by the INDEC (Argentine Institute of Statistics and Censuses), in accordance with the restatement method set by FACPCE Technical Resolution No. 6.

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 period ended December 31, 2007, and 2006. Receivables and payables related to usual business and financial transactions are valued as stated in the previous paragraphs and, in the opinion of the Company’s 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 suppliers 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, 2007, and 2006, which include an audit report dated March 5, 2008, and March 9, 2007, 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 interest in the subsidiary is disclosed in the statement of income under "Income (loss) from long-term investments".

Capdo S.A.: Determined at equity value, as established by FACPCE Technical Resolution No. 21, which was calculated based on the assets and liabilities computed at their current values as of the acquisition date, and considering the accrued income (loss) from that date through the year-end of Capdo S.A.’s financial statements as of December 31, 2007, 2006, which include an unqualified auditor’s report dated March 3, 2008, and February 26, 2007.

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

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:
- 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.
- 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.
- 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.
- 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.
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 “Adjustments to capital stock” account.

Statement-of-income accounts:
- At nominal value, except for the following cases:
Income (loss) from long-term investments was calculated by the equity method applying the Company’s equity interest percentage to the subsidiaries’ 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.”).
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).
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)”.
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 and other assets in general.
The Company has segregated the imputed financial components accrued during each period provided that they were significant.
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 years 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.

As of December 31, 2007, the Company has NOLs totaling ARS 633,340 (which are usable through December 31, 2012). As of December 31, 2007, there were deferred income tax assets amounting to 902,548, 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 year ended December 31, 2007, and 2006, respectively, were as follows:


	12/31/2007		12/31/2006
	Deferred tax credit	Income tax - Income / (loss)	Deferred tax credit	Income tax - Income / (loss)

Balance at beginning of year, less provision	-	-	-	-
Increase / Consumption of NOLs	140,962	140,962	(438,579)	(438,579)
Decrease in temporary asset differences	(31,986)	(31,986)	(96,062)	(96,062)
NOLs prescription	(1,866,381)	(1,866,381)
Change in the allowance for impairment in value of deferred income tax asset	1,757,405	1,757,405	534,641	534,641
Balance as of year-end, less provision	-	-	-	-

The reconciliation between the income tax charge recognized and that resulting from applying to the period book income the 35% rate established by current tax regulations is as follows:


	12/31/2007	12/31/2006

Net income for the year before income tax	59,269,447	40,002,565
Permanent differences (*)	(59,580,807)	(38,475,019)
Net (loss) income from permanent differences	(311,360)	1,527,546
Tax rate	35%	35%
Tax assessed	108,976	(534,641)
NOLs prescription	(1,866,381)	-
Change in the allowance for impairment in value of deferred assets	1,757,405	534,641
Income-tax book change	-	-

(*) 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, 2007, and 2006, are shown in detail below:


Asset temporary differences	12/31/2007	12/31/2006

Non-deductible allowances	351,341	559,127
Other	329,538	153,738
NOLs	221,669	1,947,088
Deferred income tax credit as of year-end before provision	902,548	2,659,953
Allowance for impairment in value of deferred income tax credit	(902,548)	(2,659,953)
Deferred income tax credit as of year-end less provision	-	-

The minimum presumed income tax amount for the year ended December 31, 2007, exceeded income tax and amounted to 419,989. Such amount was booked under noncurrent tax credits, the amount of which accumulated to date totals 2,273,263. 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 rights 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 of 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. Argentine tax authorities appealed against that order. The Court of Appeals dismissed such appeal. As a result, the AFIP filed an extraordinary appeal, which was denied by the Court of Appeals. The Argentine Attorney General held in a recent opinion that the judgment entered by the Court of Appeals of Comodoro Rivadavia, which had dismissed the appeal filed with the Argentine Supreme Court by the AFIP, should be reviewed considering the first and second instance judgment in favor of Interclima.

Considering the denial mentioned in the preceding paragraph, the AFIP filed a remedy of complaint for appeal denied with the Argentine Supreme Court. Such remedy was granted by the abovementioned court towards the end of this year. Consequently, the proceedings were remitted back to the Court of Appeals involved for it to issue a new ruling.

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 the fiscal year ended December 31, 2005, plus interest accrued amounting to about 2,170,397 calculated through December 31, 2007. The abovementioned amounts total 4,729,009 as of December 31, 2007.

BREAKDOWN OF MAIN ACCOUNTS


	12/31/2007	12/31/2006
CURRENT ASSETS

Cash
Cash on hand in Argentine pesos	13,207	12,472
Cash on hand in foreign currency	20,650	12,263
Cash in banks in Argentine pesos	1,909,004	7,128,741
Cash in banks in foreign currency	2,750,216	1,855,640
	4,693,077	9,009,116
Trade receivables
Trade receivables in Argentine pesos	70,724,345	46,221,906
Trade receivables in foreign currency	357,780	348,494
Allowance for doubtful accounts	(674,832)	(848,855)
	70,407,293	45,721,545
Tax credits
VAT credit balance	1,997,001	-
Turnover tax withholdings and additional withholdings	1,066,841	322,515
Other	-	70,859
	3,063,842	393,374
Other receivables
Unaccrued insurance	116,276	104,439
Loans and advances to personnel	317,480	150,063
Receivables from companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies - Note 7	28,875,942	-
Other	167,920	33,287
	29,477,618	287,789
Inventories
Manufactured products	36,404,185	22,467,694
Raw material	80,286,046	47,323,659
Subtotal	116,690,231	69,791,353
Raw material in transit	18,689,338	12,325,319
Prepayments to suppiers in Argentine pesos	1,628,281	850,319
Prepayments to suppiers in foreign currency	6,854,214	2,278,960
Allowance for impairment in value and obsolescence of inventories	(9,102,402)	(10,805,358)
	134,759,662	74,440,593


	12/31/2007	12/31/2006
NONCURRENT ASSETS

Tax credits
Turnover tax withholdings and additional withholdings	500,000	-
VAT credit balance - Note 4	93,481	93,481
Minimum presumed income tax - Note 4	2,273,263	1,853,274
Promotional benefits receivable - Note 4	1,229,537	1,229,537
Rebates receivable in Argentine pesos - Note 4	1,016,396	1,016,393
Deferred income tax asset	902,548	2,659,953
Allowance for impairment in value of deferred income tax asset	(902,548)	(2,659,953)
Allowance for impairment in value of tax credits	(2,368,657)	(2,265,582)
Other	156,819	32,923
	2,900,839	1,960,026

Other receivables
Receivables from companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies - Note 7	143,735	8,233,902
	143,735	8,233,902

CURRENT LIABILITIES

Trade payables
Suppliers	24,468,421	16,342,864
Suppliers in foreign currency	79,461,103	34,992,302
	103,929,524	51,335,166

Loans
Financial loans in Argentine pesos	35,373,534	17,598,806
Financial loans in foreign currency	1,496,741	4,666,679
	36,870,275	22,265,485

Salaries, payroll taxes and other taxes payable
Salaries and payroll taxes	3,101,106	2,808,365
Annual statutory bonus and vacation accrual	1,310,449	552,266
Health and safety assessment	524,740	604,780
Turnover tax payable	281,341	383,350
Withholdings and additional withholdings	767,875	462,282
Minimum presumed income tax payable	323,787	-
Other taxes payable	-	125,617
	6,309,298	4,936,660

Customer prepayments
In Argentine pesos	-	1,586,540
	-	1,586,540

Other liabilities
Royalties payable	1,850,454	786,424
Directors' fees accrual	3,260,000	2,510,000
Other	1,220	1,215
	5,111,674	3,297,639


	12/31/2007	12/31/2006
NONCURRENT LIABILITIES

Loans
Financial loans in foreign currency	4,032,579	4,825,493
	4,032,579	4,825,493

Taxes payable
Turnover tax payable	-	218,070
	-	218,070
Other liabilities
Payables to companies under section 33, Law No. 19,550 (subsidiaries and affiliates) and other related companies - Note 7	800,000	-
	800,000	-


	Income (loss)
	12/31/2007	12/31/2006
Income from long-term investments
Interclima S.A.	10,857,137	13,884,968
CAPDO S.A.	371,699	-
	11,228,836	13,884,968
Other income, net
Leases and rentals	1,200,000	1,200,000
Other	(128,730)	(2,046)
	1,071,270	1,197,954

CAPITAL STRUCTURE – SHAREHOLDERS’ EQUITY
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, issued 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.

Other reserves - For future dividends

This account includes the decisions made by the Shareholders’ Meetings held on 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, July 12, 1999, December 13, 1999, July 18, 2000, and December 15, 2000, 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.

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, which through Presidential Decree No. 1,234/2007, were extended through 2023, and include:

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. 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, sections 1 and 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 net 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. 3,838/94 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, 2007, and 2006, amounted to 1,229,537, and were fully booked in an allowance.

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 had unfavorable resolutions at administrative stages, (the proceedings are currently in the Customs Legal and Technical Department awaiting the issuance of the respective formal opinions) 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, it would be entitled to collect the rebates that the regulation then effective barred.

Following with the comments included in the previous points, the benefits accrued during the fiscal year ended December 31, 2007, and 2006, amounted to:


	Year ended December 31,
	2007	2006

Value-added tax	80.947.569	55.841.464
Custom duties and statistical rate (estimated)	54.616.239	25.918.831

In addition, and considering the tax system to which the Company is subject, as indicated above, as of December 31, 2007, the Company carried minimum presumed income tax credits in the amount of around 2.3 million, and the Company and its subsidiary (Interclima S.A.) carried VAT credits in the amount of 4.5 million disclosed in noncurrent assets. The recoverability of such credits totaling 6.8 million in the consolidated financial statements and 2.3 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.

MAJOR CUSTOMERS

The Company’s most significant sales to customers for the years ended December 31, 2007, and 2006, were as follows:


	12/31/2007	12/31/2006

Volkswagen Argentina S.A.	29%	31%
Peugeot Citröen Argentina S.A	29%	22%
Renault Argentina S.A.	21%	22%
General Motors Argentina	15%	16%
Mercedes Benz	5%	7%
Other	1%	2%

PARENT COMPANY

Parent company: II Tevere S.A.

Registered office: Paseo Colón 221, Piso 2 - Buenos Aires, Argentina

Main business: holding company.

Voting rights: 76,47%

Shareholding percentage: 52%

INFORMATION ON RELATED PARTIES

For the fiscal year ended December 31, 2007, and 2006, the Company was engaged in transactions with its subsidiaries and parent. Receivables and payables in that regard are:


	12/31/2007	12/31/2006
CURRENT
Other receivables
INTERCLIMA S.A. (1)	28,875,942	-
Total	28,875,942	-

NONCURRENT
Other receivables
IL TEVERE S.A. (2)	143,735	677,228
INTERCLIMA S.A. (1)	-	7,556,674
Total	143,735	8,233,902

Other liabilities
CAPDO S.A. (1)	800,000	-
Total	800,000	-

The transactions carried out with its subsidiary and parent for the periods ended December 31, 2007, and 2006, are as follows:


	12/31/2007
	Purchase of goods	Loans	Other Services

INTERCLIMA S.A. (1)	10,082,596	(21,319,268)	1,200,000
IL TEVERE S.A. (2)	-	(538,089)	-
CAPDO S.A. (1)	-	800,000	-
	10,082,596	(21,057,357)	1,200,000


	12/31/2006
	Purchase of goods	Loans	Other Services

INTERCLIMA S.A. (1)	5,992,253	(11,609,902)	1,200,000
IL TEVERE S.A. (2)	-	217,191	-
	5,992,253	(11,392,711)	1,200,000

- 1. Subsidiary.
- Parent company.
INCOME TAX WITHHOLDING ON CASH DIVIDENDS

When dividends are paid in cash, 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. Earnings which are not subject to income tax as a result of the benefits provided by Law No. 19,640 are not subject to equalization tax.

OFFICIALLY STAMPED BOOKS

Due to delays in the administrative process related to IGJ (Argentine regulatory agency of business associations)’s officially stamping the journal, as of the date of issuance of these financial statements, the Company is transcribing the transactions for the current year into such book.

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


Journal No.	Date officially stamped	Transactions for the period
69	29-Aug-06	4/19/2006 through 5/23/2006
70	29-Aug-06	5/23/2006 through 6/23/2006
71	25-Sep-06	6/23/2006 through 7/24/2006
72	25-Sep-06	7/24/2006 through 8/29/2006
73	24-Nov-06	8/29/2006 through 9/28/2006
74	24-Nov-06	9/28/2006 through 10/16/2006
75	21-Dec-06	10/16/2006 through 11/23/2006
76	21-Dec-06	11/23/2006 through 12/21/2006
81	5-Jul-07	4/24/2007 through 5/29/2007
82	11-Sep-07	5/29/2007 through 6/26/2007
83	11-Sep-07	6/26/2007 through 7/25/2007
84	8-Nov-07	7/25/2007 through 8/24/2007
85	8-Nov-07	8/24/2007 through 9/13/2007
86	28-Nov-07	9/13/2007 through 10/11/2007
87	1-Feb-08	10/11/2007 through 11/07/2007
88	1-Feb-08	11/07/2007 through 12/01/2007

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, to extend and improve the provision of goods produced to one of the car manufacturers with which the Company operates.

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 related year through the issuance of these financial statements.

FOREIGN INVESTOR INFORMATION SYSTEM

These financial statements have been prepared in accordance with the regulations on foreign investors information system established by the CNV in Resolution No. 368, as amended, Chapter XXIII, Exhibit III; and based on the above, they are in conformity 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.

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, 2007, PRESENTED COMPARATIVELY WITH THE PRIOR YEAR

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


	2007
Name and characteristics of securities	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	43,035,938	43,035,938

CAPDO S.A.	1	6,650,000	7,792,470	7,669,089	7,669,089
Total noncurrent investments					50,705,027


	2007						2006
	Information on the issuer
		Last financial statements issued
Name and characteristics of securities	Main business activity	Date	Capital	Income (loss) for the period	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	31/12/07	12,000	11,665,532	48,158,879	99.97%	32,178,801

CAPDO S.A.	Real estate broker	31/12/07	7,000,000	431,466	6,821,402	95.00%	7,297,390
Total noncurrent investments							39,476,191

STATUTORY AUDIT COMMITTEE’S REPORT

To the Shareholders of

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

Dear Sirs,

As required by the BCBA (Buenos Aires stock exchange) Regulations, we examined the accompanying letter to the shareholders and balance sheet of MIRGOR S.A.C.I.F.I.A. as of December 31, 2007, 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, 2007, 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 Province of Tierra del Fuego, Antarctica and South Atlantic Islands, Argentina. Such documentation is the responsibility of the Company’s Board of Directors in performing their exclusive functions.
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.
We did not examine the financial statements of the subsidiary Capdo S.A. as of December 31, 2007, 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, 2007, this equity interest represented 2.6% of the total assets of MIRGOR S.A.C.I.F.I.A., 0.6% of the total income as of such date of MIRGOR S.A.C.I.F.I.A, and 1.8% of the consolidated assets of MIRGOR S.A.C.I.F.I.A. and its subsidiaries.
2 -
As mentioned in note 4 to the accompanying financial statements, as of December 31, 2007, the Company and its subsidiaries booked noncurrent minimum presumed income tax and value-added tax credits amounting to ARS 6,748,490, 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.
Based on our review and the report dated March 06, 2008, 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, 2007, 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 Province of Tierra del Fuego, Antarctica and South Atlantic Islands, 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.
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.
The accompanying financial statements result from books kept, in all formal respects, pursuant to current legal requirements, except as mentioned in note 9.

Buenos Aires,

March 06, 2008

On behalf of Statutory Audit Committee

ANDRÉS MERCAU SAAVEDRA

Statutory auditor

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