TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

MIRGOR

SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA,

INMOBILIARIA Y AGROPECUARIA

EINSTEIN 1111 ‑ RIO GRANDE

TIERRA DEL FUEGO

ARGENTINA

financial statements for the PERIOD beginning

january 1, 2004, and ended JUNE 30, 2004,

TOGETHER WITH THE AUDITOR’S REPORT

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

BOARD OF DIRECTORS

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

Chairperson

Lic. Roberto Gustavo Vázquez (*)

vice-Chairperson

Mr. José Fara (*)

directors

Mr. Sergio Vélez

Mr. André Gold

Mr. Alejandro Carrera (*)

alternate directors

Mr. José Luis Caputo

Mr. Bernard Clapaud

Mr.Emmanuel Lemaitre

Mr. Eduardo García Terán

Mr. Martín Basaldúa

(*) Audit Committee Members

(Translation of the report originally issued in Spanish)

LIMITED REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS

To the Chairman and Directors of

Mirgor Sociedad Anónima, Comercial, Industrial, Financiera,

Inmobiliaria y Agropecuaria

We have performed a limited review of the accompanying balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria as of June 30, 2004, and the related statements of income, changes in shareholders’ equity, cash flows for the six-month period then ended. We have also performed a limited review of the accompanying balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria consolidated with its subsidiary as of June 30, 2004, and the respective consolidated statements of income and cash flows for the six-month period then ended, which are presented as supplementary information. Such financial statements are the responsibility of the Company’s Management.
Our review was performed in accordance with the standards set in FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 7 for the limited review of interim financial statements. Under such standards, a limited review mainly consists in applying analytical procedures to accounting information and making inquiries of the persons in charge of accounting and financial matters. The scope of a limited review is substantially less than that of a financial statements audit, the purpose of which is to express an opinion on the overall financial statements. Accordingly, we de not express any such opinion.
As stated in Note 10 to the financial statements mentioned in paragraph (1), as of June 30, 2004, the Company and its Subsidiary carried minimum presumed income tax and value-added tax credits totaling ARS 5,060,433 and receivables from the Federal Government amounting to ARS 3,211,392. The valuation and recoverability of such receivables depend on the Companies generating income in the future and on the debt restructuring to be made by the Federal Government, in the context of the evolving crisis referred to in Note 10. As of the date of issuance of the accompanying financial statements, it was not possible to determine the valuation and recoverability of the abovementioned receivables.
Based on our review, we have not become aware of any significant changes that should be made to the financial statements mentioned in paragraph (1) for them to be presented in conformity with professional accounting standards effective in the City of Buenos Aires, Argentina, the provisions of Argentine Business Associations Law, and CNV (Argentine National Securities Commission) regulations. This representation is to be read considering the uncertainties described in paragraph (3) above, the outcome of which my not be determined as of the date of this report.
Regarding the balance sheet of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of such company consolidated with its subsidiary, both as of December 31, 2003, and the statements of income, changes in shareholders’ equity and statement of cash flows of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and the statements of income and cash flows of such company consolidated with its subsidiary, all for the six-month period ended June 30, 2003, presented for comparative purposes, we hereby report that:
On March 10, 2004, we issued an auditors’ report on the financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and on those of such company consolidated with its subsidiary, both as of December 31, 2003, which included: (a) qualifications for unresolved uncertainties regarding the recoverability of certain tax credits and other receivables from the Argentine Federal Government; (b) “except for” qualifications for not having recognized the effects of the changes in the peso purchasing power over the period March 1 to September 30, 2003, on the determination of income (loss) for such fiscal year, the related changes in shareholders’ equity, and cash flows; and (c) consistency qualifications for the method changes required by the new accounting standards, with which we agreed. We have not audited any financial statements as of any date or for any period subsequent to December 31, 2003.
On August 9, 2003, we issued a limited review report on the financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria and of such company consolidated with its subsidiary for the six-month period ended June 30, 2003, which included: (a) a quantified exception for the subsidiary not having accrued for income tax; and (b) emphasis paragraphs for unresolved uncertainties related to (b.1) the recoverability of certain tax credits and other receivables from the Argentine Federal Government, and (b.2) the possible effects of the renegotiation process with financial institutions to which the Company was indebted and the formalization and implementation of any agreements

reached thereby. The uncertainty mentioned in (b.2) was resolved during the fiscal year ended December 31, 2003, given that the Company concluded the process of renegotiations and formalization of the agreements with financial institutions and, additionally, the Company considered the contingent liability mentioned in (a) in valuing its investment in the subsidiary company and amended the financial statements as of June 30, 2003, which are now presented for comparative purposes.

In compliance with current legal requirements, we further report that:
The financial statements mentioned in paragraph (1) were duly transcribed into the Inventories and Financial Statements Book.
The financial statements of Mirgor Sociedad Anónima, Comercial, Industrial, Financiera, Inmobiliaria y Agropecuaria were taken from accounting records kept, in all formal respects, in accordance with current legislation, except for the matter set forth in Note 9 to the accompanying financial statements.
The information included in points (2) and (3) of the “Summary of Events for the period ended June 30, 2004”, presented by the Company to meet CNV and Buenos Aires Stock Exchange regulations, was taken from the accompanying financial statements as of June 30, 2004 and 2003, and from those as of June 30, 2002, 2001, and 2000 (after effecting the restatement into constant pesos through February 28, 2003, as detailed in Note 1(a) to the accompanying stand-alone financial statements), which are not included in the accompanying document and on which we issued our limited review reports dated August 23, 2002, August 10, 2001, and August 10, 2000, respectively, to which we refer and which are to be read jointly with this report. The Company did not change the information for the periods ended June 30, 2002, 2001, and 2000, to incorporate the changes in the measurement methods required by the accounting standards in effect as from January 1, 2003.
As of June 30, 2004, liabilities accrued in employer and employee contributions to the Integrated Pension Fund System, as shown by the Company’s accounting records, amounted to ARS 156,067, none of which was due and payable as of such date.

City of Buenos Aires,

August 10, 2004


PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. C.P.C.E.C.A.B.A. – R.A.P.U. Vol. I Fo.13

Karén Grigorian (Partner) Certified Public Accountant (U.B.A.) C.P.C.E.C.A.B.A. Vol. 175 Fo. 031

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MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA

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

Main business: Manufacture of air conditioning equipment for vehicles.

Registration date with the Public Registry of Commerce:

Of the articles of incorporation: June 1, 1971.
Of the last amendment to of the articles of incorporation: August 22, 1997.

Expiry of the articles of incorporation: May 31, 2070

fiscal year no. 34 beginning january 1, 2004,

summary OF EVENTS

For the six-month period ended JUNE 30, 2004

(Figures stated in Argentine pesos, “ARS”– see Note 1)

brief comment on the company’s activities over the period. (*)

In Q2 2004, the fact that economic growth was impacting on the consumption of durable goods was confirmed, and the car industry continued to grow at the same pace of Q1.

Car factories contributed to this trend by introducing several financing options at very reasonable rates and discounts for those who preferred to pay in cash.

As in Q1, production increased by 48% with respect to the accumulated growth for H1 of 2003. Domestic sales also followed a marked upward trend, and they accumulated an increase of 68.2% for H1 of 2004.

As shown by the latest statistics of ADEFA (Car Manufacturers Association), imports now have a quite large share (64.8%) in total domestic sales.

This should not be worrying if such increase in imports were accompanied by a similar growth of cars manufactured in Argentina.

The problem is that our largest business partner of the Mercosur is not absorbing the number of units that would be desirable within a context of car industry cooperation.

This situation worried Argentine economic authorities, who voiced their concern before Argentine and Brazilian private industry sectors and the Brazilian Government.

An agreement between the Mercosur and the European Union is about to be reached, so the Argentine Government considers it essential that the Argentine car industry specializes to complement the Brazilian car industry and that it makes the investments required to modernize the models produced in Argentina so that the bond with Europe may be intended to complete the range of cars manufactured in the region.

In the last few weeks, the car sector received the good news that the Argentine Government was watching industry developments closely and thus decided to create a Competitiveness Forum to discuss pending issues. This should lead to defining a regulatory framework that allows devising a common strategic plan for the Argentine car industry.

The good sales levels reached in the first part of the year led to a new review of sale and production plans for dealers and factories. At present, according to the reports issued by ACARA (Association of Argentine Car Dealers), car production could exceed 220,000 units, whereas sales would amount to 270,000 units.

Mirgor’s sales and results of operations followed such a favorable trend. It is still expected that the car industry will continue down this path in the next few years until reaching a production floor stabilized in 350,000 units.

The sales of climatization systems for cars with air conditioner grew by 134.2 % in H1 of 2004 as compared to the same period of the prior year. This increase has three causes of powerful impact on Mirgor’s sales: the new models, the large increase in sales to almost all customers, and the greater penetration of air conditioning systems, which went from 57% in Q2 of 2003 to 68% in Q2 of 2004.

The sales of climatization systems for cars without air conditioner increased by 26% with respect to the same period of the prior year, mainly due to the sales to General Motors and Daimler Chrysler. The latter company managed to gain new export markets.

In the case of instrument panels, there was a 15.9% growth as compared to the same period of the prior year, since Volkswagen’s production enjoyed a very moderate increase.

Sales growth and the new scales reached by the Company allowed it lo leverage its activities and obtain a positive bottom line.

equity structure (figures related to the consolidated statements, stated in constant pesos – see note 1)


	06/30/2004	06/30/2003	06/30/2002	06/30/2001	06/30/2000

Current assets	78,136,595	58,364,849	83,324,317	88,248,604	107,451,440
Noncurrent assets	31,773,163	35,736,616	44,775,629	48,517,608	49,891,727
Total assets	109,909,758	94,101,465	128,099,946	136,766,212	157,343,167

Current liabilities	47,003,781	23,463,253	58,033,459	56,317,851	62,134,822
Noncurrent liabilities	6,447,880	15,310,758	6,730,582	-	-
Total liabilities	53,451,661	38,774,011	64,764,041	56,317,851	62,134,822

Minority interest	4,542	3,656	4,098	5,577	5,810

Shareholders' equity	56,453,555	55,323,798	63,331,807	80,442,784	95,202,535
Total liabilities and Shareholders’ equity	109,909,758	94,101,465	128,099,946	136,766,212	157,343,167

income structure (figures related to the consolidated statements and stated in constant pesos – see note 1)


	06/30/2004	06/30/2003	06/30/2002	06/30/2001	06/30/2000
Ordinary operating income (loss)	3,668,242	(823,092)	(112,461)	(1,347,632)	1,743,843
Financial expense	(1,824,575)	(955,362)	(9,878,837)	(3,773,630)	(2,385,125)
Other (expenses) / revenues	(220,758)	(1,579,844)	(131,542)	(132,782)	110,992
Income tax	(559,712)	(103,000)	-	-	-
Minority interest gain (loss)	(423)	(126)	1,415	30	9

Income (loss), net	1,062,774	(3,461,424)	(10,121,425)	(5,254,014)	(530,281)

STATISTICAL DATA (1)


Number of units	06/30/2004		06/30/2003		06/30/2002		06/30/2001			06/30/2000
	Quarter	Accum	Quarter	Accum	Quarter	Accum.	Quarter	Accum.	Quarter		Accum.

Production (2)	62,647	111,491	46,169	83,979	28,623	51,990	46,822	103,149	68,858		110,071

Sales (3)	53,626	96,437	41,010	79,280	17,820	26,220	22,914	39,541	39,322		68,762


* Local	32,633	58,526	20,434	34,498	17,820	26,220
Equipment with air conditioning.	18,824	34,330	9,081	14,659	8,135	12,630
Equipment without air conditioning	8,789	14,988	6,921	11,900	5,600	7,675
Dashboards	5,020	9,208	4,432	7,939	4,085	5,915
* Exports	20,993	37,911	20,576	44,782

As from this fiscal year, ICSA discloses the units sold as statistical information.
It includes the one related to Interclima S.A.
The units sold among companies are not included.
ratios (*)


	06/30/2004	06/30/2003	06/30/2002	06/30/2001	06/30/2000

Current ratio	1.66	2.49	1.44	1.57	1.73
Equity to debt ratio	1.06	1.43	0.98	1.43	1.53
Fixed asset-to-equity capital ratio	0.29	0.37	0.35	0.35	0.32

CHANGES IN THE MARKET PRICE OF SHARES (*) (1)


December 2003		December 2002		November 2003		November 2002		October 2003		October 2002
19.75		10.20		18.20		10.00		16.50		7.30


September 2003		September 2002		August 2003		August 2002		July 2003		July 2002
15.70		6.00		14.70		5.20		15.80		5.40


June 2004		June 2003		May 2004		May 2003		April 2004		April 2003
21.00		16.10		22.40		15.50		23.55		12.60


January 2004		January 2003		February 2004		February 2003		March 2004		March 2003
24.50		9.40		23.10		10.10		24.10		9.30

1. Considering $1.00 per share.
prospects (*)

The increasing activity allows us to be very optimistic. In Q2, a new purchase order was received from Peugeot Argentina for the supply of condensers for the 206 model. This will allow the Company to replace in October a product that is currently being imported from Brazil and thus cut down costs, which contributes to the competitiveness of certain autopart industry sectors.

There is still a lot to be done, since there are opportunities to increase the market share. The Company should also work on reaching agreements for the new platforms that are being launched or that will be launched in the next few months in Argentine factories.

Regarding our subsidiary Interclima S.A. and based on the replacement of the industrial promotion benefit approved by the respective regulatory agency, we expect to make the necessary investments at the Río Grande plant in order to start producing and selling residential air-conditioning equipment in the next few months.

(*) Information not covered by the auditors’ limited review report

Buenos Aires, August 10, 2004.


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



	Lic. Roberto G. Vázquez
	Chairman

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MIRGOR SOCIEDAD ANONIMA, COMERCIAL, INDUSTRIAL, FINANCIERA, INMOBILIARIA Y AGROPECUARIA

Financial statements related to fiscal year No. 34 for the period beginning January 1, 2004, and ended JUNE 30, 2004, presented comparatively with the same period of the prior fiscal year

registeredoffice:Einstein 1111 – Río Grande – Tierra del Fuego, Argentina

Main business: Manufacture of air conditioning equipment for vehicles.

Registration date with the Public Registry of Commerce:

Of the articles of incorporation: June 1, 1971.
Of the first amendment to the articles of incorporation: July 1, 1994.
Of the last amendment to the articles of incorporation: August 22, 1997.

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

Expiry of the articles of incorporation: April 13, 2070.

Parent company: disclosed in 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.


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

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Supplementary information

CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2004,

AND AS OF DECEMBER 31, 2003

Figures stated in Argentine pesos – See note 1


	2004	2003
ASSETS
CURRENT ASSETS
Cash – Note 2	11,172,342	13,781,162
Short-term investments – Note 2	1,547	1,547
Trade receivables – Note 2	17,119,417	15,502,566
Taxes receivable – Note 2	230,481	278,422
Other receivables – Note 2	1,034,144	1,284,985
Inventories – Note 2	48,578,664	36,699,074
TOTAL CURRENT ASSETS	78,136,595	67,547,756

NONCURRENT ASSETS
Other receivables – Note 2	3,557,732	3,499,885
Taxes receivable – Note 2	6,457,461	6,036,894
Intangible assets – Note 1(e)b	395,286	32,903
Property, plant and equipment – Note 1(e)a	21,362,684	22,822,091
TOTAL NONCURRENT ASSETS	31,773,163	32,391,773
TOTAL ASSETS	109,909,758	99,939,529

Notes 1 through 4 to the consolidated financial statements and notes 1 through 15 to the stand-alone financial statements of MIRGOR S.A.C.I.F.I.A. are an integral part of and should be read together with these statements.

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Supplementary information

CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2004,

AND AS OF DECEMBER 31, 2003

Figures stated in Argentine pesos – See note 1


	2004	2003
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables – Note 2	28,212,735	20,238,645
Salaries, payroll and other taxes payable – Note 2	3,926,591	3,044,863
Customer prepayments - Note 2	4,315,540	4,050,543
Loans – Note 2	10,274,911	5,568,642
Other	274,004	230,388
Total Liabilities	47,003,781	33,133,081
Provisions	-	-
TOTAL CURRENT LIABILITIES	47,003,781	33,133,081

NONCURRENT LIABILITIES
Payables
Customer prepayments	-	1,761,404
Loans – Note 2	6,447,880	9,650,144
TOTAL NONCURRENT LIABILITIES	6,447,680	11,411,548
TOTAL LIABILITIES	53,451,661	44,544,629

Minority interest in subsidiaries	4,542	4,119
	56,453,555	55,390,781
SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY	109,909,758	99,939,529

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Supplementary information

CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR YEAR

Figures stated in Argentine pesos – See note 1


	2004	2003
Net sales (including VAT benefits amounting to 11,208,714 and 5,449,972)	78,375,909	46,596,756
Cost of goods sold	(68,674,384)	(42,761,203)
GROSS REVENUES	9,701,525	3,835,553

Administrative expenses - Exhibit H	(4,216,306)	(3,758,039)
Selling expenses – Exhibit H	(1,816,977)	(879,250)
Other expense / income	-	(21,356)
Financial expense and holding losses from assets
Interest	39,294	469,780
Foreign exchange difference	(89,087)	(1,256,843)
Holding gains (losses) – Inventories	40,407	(5,171,435)
Allowances / provisions	(88,340)	694,325
Gain on exposure to inflation	-	(346,836)
Current investments and tax credits	103,746	86,455
Financial expense and holding losses from liabilities
Interest	(1,122,170)	(949,055)
Foreign exchange difference	(708,425)	5,125,932
(loss) on exposure to inflation	-	392,315
Loss from long-term investments	(220,758)	(1,579,844)
Loss before income tax	1,622,909	(3,358,298)
Income tax	(559,712)	(103,000)
Loss after income tax	1,063,197	(3,461,298)
Minority interest in subsidiaries	(423)	(126)
INCOME (LOSS) FOR THE YEAR	1,062,774	(3,461,424)

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Additional information

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR YEAR

Figures stated in Argentine pesos – See note 1


	2004	2003
CHANGES IN CASH
Cash at beginning of year	13,782,122	14,014,323
Cash at end of year	11,173,302	11,974,003
Cash (decrease)	(2,608,820)	(2,040,320)

SOURCES OF CHANGES IN CASH

OPERATING ACTIVITIES
Ordinary income (loss) for the year	1,062,774	(3,461,424)
Interest and foreign exchange difference accrued	679,343	(2,138,505)
Income tax	559,712	103,000

Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization	2,478,381	2,778,202
Minority interest	423	126
Allowance for impairment in value of inventories (net effect)	51,616	(976,402)

Loss from long-term investments	-	21,356
Contingency provision	-	(878,813)
Impairment in value of PP&E advances from exposure to inflation	-	1,618
Changes in operating assets and liabilities:
Trade receivables	(1,616,851)	(2,433,575)
Inventories	(11,931,206)	8,783,604
Trade payables	7,974,090	(1,364,141)
Salaries, payroll and other taxes (net of receivables)	(50,609)	96,402
Customer prepayments	(1,496,406)	382,475
Other	236,608	1,226,351
Interest repayment	(496,466)	(1,450,474)
Net cash flow provided by operating activities	(2,548,591)	689,800

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Additional information

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2004,

PRESENTED COMPARATIVELY WITH THE SAME PERIOD OF THE PRIOR YEAR

Figures stated in Argentine pesos – See note 1


	2004	2003
INVESTMENT ACTIVITIES
PP&E acquisition	(946,178)	(195,291)
Intangible additions	(435,179)	-
Net cash flow used in investment activities	(1,381,357)	(195,291)

FINANCING ACTIVITIES
Loan repayment	(3,078,872)	(2,534,829)
Inflows from new debts	4,400,000	-
NET CASH FLOW USED IN FINANCING ACTIVITIES	1,321,128	(2,534,829)
Net cash (decrease)	(2,608,820)	(2,040,320)

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Supplementary information

notes to the consolidated financial statements as of JUNE 30, 2004 AND DECEMBER 31, 2003.

Figures stated in Argentine pesos – See note 1

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Applicable accounting standards

The financial statements as of June 30, 2004, December 31, 2003, and June 30, 2003, have been prepared following CNV (Argentine Securities Commission) General Resolution No. 368 guidelines, within effective professional accounting standards with the restrictions and additions provided for in Resolution No. 459, which amended Exhibit I to Book No. 7 “Informative System” of such resolution and the discontinuance of the effects of changes in the currency purchasing power set forth by CNV General Resolution No. 441, as indicated in note 1 to the individual financial statements.

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 statements have been incorporated line by line following the method of FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolution No. 4 as amended by FACPCE Technical Resolution No. 19 with the applicable deletions.

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 June 30, 2004, December 31, 2003 and June 30, 2003, as the case may be, line by line with those of its subsidiary, Interclima Sociedad Anónima, in which it holds majority voting rights.

Corporate control is as follows:


Subsidiary		Interest in the common stock and voting rights as of 06/30/04		Year-end
Interclima Sociedad Anónima		99.9667		06/30/2004

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Supplementary information

notes to the consolidated financial statements as of JUNE 30, 2004 AND DECEMBER 31, 2003- Continued

Figures stated in Argentine pesos – See note 1

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - Continued

Financial statements used in consolidation

The consolidated financial statements as of June 30, 2004, have been prepared using the financial statements of Interclima Sociedad Anónima as of such date, which carry a limited review report – dated August 10 , 2004 -- including quantified exceptions due to discrepancies in the quantification of income tax; the adjustment in question has been considered in the consolidated financial statements.

The consolidated balance sheet as of December 31, 2003, was prepared using the Balance Sheet of Interclima Sociedad Anónima as of such date, which carries an auditors’ report - dated March 10, 2004 – including quantified qualifications and qualifications for unresolved uncertainties; the latter regarding the recoverability of tax credits and of other receivables from the Argentine Federal Government.

The rest of the financial statements as of June 30, 2003, were prepared using the financial statements of Interclima Sociedad Anónima as of such date, which carry a limited review report – dated August 8, 2003 – including a quantified exception due to discrepancies in the quantification of income tax; the adjustment in question has been considered in the consolidated financial statements

Changes in significant assets


	06/30/04 ARS	12/31/03 ARS
1. PP&E
Balance at beginning of year	22,822,091	27,485,464
Additions	946,178	417,225
Retirements (net of depreciation)	-	(11,811)
Depreciation	(2,405,585)	(5,068,787)
Balance at end of period	21,362,684	22,822,091


	ARS	ARS
1. Intangible assets
Balance at beginning of year	32,903	366,168
Additions	435,179	-
Amortization	(72,796)	(333,265)
Balance at end of period	395,286	32,903

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Supplementary information

notes to the consolidated financial statements as of JUNE 30, 2004 AND DECEMBER 31, 2003 - Continued

Figures stated in Argentine pesos – See note 1

NOTE 2 – MAIN ACCOUNT BREAKDOWN


	03/31/04	12/31/03
ASSETS
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency	29,845	41,658
On hand in foreign currency	197,583	105,476
In banks in Argentine currency	4,918,647	4,461,304
In banks in foreign currency	6,026,267	9,172,724
	11,172,342	13,781,162
Short-term investments
Savings account and other in foreign currency
Savings account in Argentine currency and other	1,547	1,547
	1,547	1,547
Trade receivables
Trade receivables	16,385,085	15,015,866
Trade receivables in foreign currency	819,335	571,877
Allowance for doubtful accounts	(85,003)	(85,177)
	17,119,417	15,502,566
Taxes receivable
VAT credit	194,745	232,808
Other	35,736	45,614
	230,481	278,422
Other receivables
Notes receivable
Interest to be accrued	754,908	749,597
Miscellaneous receivables	(95,453)	(95,109)
Other	374,689	630,497
	1,034,144	1,284,985

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Supplementary information

notes to the consolidated financial statements as of JUNE 30, 2004 AND DECEMBER 31, 2003 - Continued

Figures stated in Argentine pesos – See note 1

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued


	06/30/04	12/31/03
Inventories
Manufactured products	16,042,632	11,433,737
Raw material	29,844,793	22,932,903
Raw material in transit	8,916,855	7,771,539
Stock at end of period	54,804,280	42,138,179
Prepayments to vendors in Argentine currency	488,128	371,927
Prepayments to vendors in foreign currency	1,258,875	2,109,971
Allowance for impairment in value	(7,972,619)	(7,921,003)
	48,578,664	36,699,074

NONCURRENT ASSETS
Other receivables
Reimbursements in Argentine currency receivable	2,327,674	2,254,264
Notes receivable	1,069,453	1,426,633
Interest to be accrued	(135,225)	(181,012)
Other	295,830	-
	3,557,732	3,499,885
Taxes receivable
Compulsory savings
VAT credit	3,458,216	3,266,016
Minimum presumed income tax	1,602,217	1,503,330
Promotional benefits receivable	883,718	779,973
Other	513,310	487,575
	6,457,461	6,036,894

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Supplementary information

notes to the consolidated financial statements as of JUNE 30, 2004 AND DECEMBER 31, 2003 - Continued

Figures stated in Argentine pesos – See note 1

NOTE 2 - MAIN ACCOUNT BREAKDOWN - Continued


	06/30/04	12/31/03
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables
In local currency	11,451,461	7,650,958
In foreign currency	16,761,274	12,587,687
	28,212,735	20,238,645
Salaries, payroll and other taxes
Employee benefits	585,588	722,493
Taxes payable	3,341,003	2,322,370
	3,926,591	3,044,863
Customer prepayments
In local currency	-	1,798,553
In foreign currency	4,315,540	2,251,990
	4,315,540	4,050,543
Loans
Financial loans in local currency	7,610,847	2,216,748
Financial loans in foreign currency	2,664,064	3,351,894
	10,274,911	5,568,642

NONCURRENT LIABILITIES
Payables
Loans
Financial loans in local currency	1,346,360	2,782,244
Financial loans in foreign currency	5,101,520	3,867,900
	6,447,880	9,650,144

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Supplementary information

notes to the consolidated financial statements as of JUNE 30, 2004 AND DECEMBER 31, 2003 – Continued

NOTE 3 – RELATED - PARTY INFORMATION

As of June 30, 2004, and over the six-month period then ended, the receivables from, payables to and transactions entered into with related companies and parent company, were as follows:


	Transactions				Balances
Company		Transaction type	Amount	Trade receivables		Other non current receivables	Other current payables	Trade payables

Related companies		Merchandise Importation	1,289,289	-		-	-	316,310
Valeo Sistemas Automotivos Ltd.		Merchandise Importation	400,809	-		-	-	50,923
Valeo Autoklimatizace S.R.O.		Merchandise Importation	97,456	-		-	-	18,028
Valeo Climatización S.A. (Euro)		Merchandise Importation	58,835	-		-	-	13,801
Valeo Klimasysteme GMBH		Merchandise Importation	166,409	-		-	-	-
Valeo Componentes Automóviles		Merchandise Importation	611,059	-		-	-	184,352
Valeo Sistemas Automotivos (wiper systems)		Merchandise Importation	220,540	-		-	-	46,006
Valeo Climate Control Mexico		Merchandise Importation	125,102	-		-	-	24,180
Valeo Autosystemiy SP Z.O.O.		Merchandise Importation	2,079,059	-		-	-	354,742
Valeo Vymeniky Tepla S.R.O.		Merchandise Importation	577,425	-		-	-	25,304
Valeo Securite Habitacle		Merchandise Importation	318,323	-		-	-	49,235
Valeo Thermique Francia		Services received	98,977	-		-	-	-
Valeo Thermique Moteur		Merchandise Importation	1,595,130	-		-	-	160,712
Valeo Zaragoza		Merchandise Importation	2,186,665	-		-	-	256,728
VCC Up Echangeurs		Merchandise Importation	1,783,645	-		-	-	235,444
Vcc Up-Echangeurs		Royalties	904,424	-		-	242,623	-
Valeo Sist. Automotivos		Merchandise sold	(2,494,450)	548,679		-	-	-
Valeo Sist. Automotivos		Merchandise Importation	682,961	-		-	-	210,402

Parent Company
Il Tevere S.A.		Financial prepayment	295,830	-		295,830	-	-

NOTE 4 – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are the English translation of those originally issued in Spanish.

They are presented in accordance with generally accepted accounting principles in Argentina. The effects of the differences between Argentine generally accepted accounting principles and the accounting principles generally accepted in the countries in which the accompanying financial statements may be used have not been quantified.

Accordingly, these financial statements are not intended to present financial position, results of operations and changes in financial position in accordance with accounting principles generally accepted in the countries of users of the financial statements, other than Argentina.

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EXHIBIT c

shares, debentures, other securities issued in series, and interest in OTHER company for the YEAR ended JUNE 30, 2004, presented comparatively WITH THE PRIOR FISCAL YEAR

Figures stated in Argentine pesos – See Note 1(a)


	06/30/04												06/30/03
							Information on the issuer
								Latest financial statements issued
Securities name and features	Face values	Amounts	Cost values	Value by the equity method	Highest investment value	Book values	Main business	Date	Capital	Return for period	Equity	Interest % on capital stock	Book value

Companies under Law No. 19,550, Section 33 (subsidiaries and affiliates)

INTERCLIMA Sociedad Anónima	1	11,996	8,815,917	11,753,361	11,753,361	11,753,361	Auto-part manufacturing and interchanges for air conditioning and heating equipment	06/30/03	12,000	1,269,197	13,638,327	99.97%	11,082,333

Total noncurrent investments						11,753,361							11,082,333
Total investments						11,753,361							11,082,333

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EXHIBIT H

INFORMATION REQUIRED BY LAW No. 19,550, section 64 b(i) for the YEAR ended JUNE 30, 2004, presented comparatively with the prior FISCAL year

Figures stated in Argentine pesos – See Note 1(a)


	06/30/04				06/30/03
Accounts	Production costs	Administrative expenses	Selling expenses	Total	Total

Salaries and wages	2,905,452	1,375,374	234,016	4,514,842	3,300,653
Payroll taxes and employee benefits	620,245	373,049	56,009	1,049,303	804,842
Insurance	354,785	61,736	3,038	419,559	281,827
Fees and training expenses	137,912	226,396	2,000	366,308	262,033
Taxes, rates, and assessments	646,020	231,014	364,536	1,241,570	582,446
Other administrative expenses	-	1,005,241	-	1,005,241	723,342
PP&E depreciation	1,512,263	870,700	22,622	2,405,585	2,596,279
Intangible asset amortization	-	72,796	-	72,796	181,923
Other production expenses	1,002,372	-	-	1,002,372	667,754
Customs clearance and taxes	1,557,665	-	-	1,557,665	987,644
Shipping, handling and freight	7,678,527	-	512,378	8,190,905	3,490,228
Export tax	-	-	60,559	60,559	69,688
Other selling expenses	-	-	561,819	561,819	251,888
Total 30-06-2004	16,415,241	4,216,306	1,816,977	22,448,524
Total 30-06-2003	9,493,570	3,758,039	948,938		14,200,547

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balance sheet as of JUNE 30, 2004 and as of december 31, 2003.

Figures stated in Argentine pesos – See note 1(a)


	06/30/04	12/31/03
ASSETS
CURRENT ASSETS
Cash – Note 2	10,977,905	13,674,837
Short-term investments – Note 2	1,547	1,547
Trade receivables – Note 2	16,293,271	14,828,548
Taxes receivable – Note 2	74,375	110,166
Other receivables – Note 2	999,651	1,266,005
Inventories – Note 2	45,472,361	34,421,150
TOTAL CURRENT ASSETS	73,819,110	64,302,253

NONCURRENT ASSETS
Long-term investments	11,753,361	11,082,333
Taxes receivable – Note 2	2,708,069	2,495,602
Other receivables – Note 2	2,149,828	2,165,391
Property, plant and equipment	18,794,590	20,690,057
Intangible assets	395,286	25,384
TOTAL NONCURRENT ASSETS	35,801,134	36,458,767
TOTAL ASSETS	109,620,244	100,761,020

The accompanying notes 1 to 15 are an integral part of these financial statements.

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balance sheet as of JUNE 30, 2004 and as of december 31, 2003

Figures stated in Argentine pesos – See note 1(a)


	06/30/04	12/31/03
LIABILITIES
CURRENT LIABILITIES
Payables
Trade payables– Note 2	25,748,133	18,313,122
Salaries, payroll and other taxes– Note 2	2,026,451	1,628,652
Loans – Note 2	10,274,911	5,568,642
Customer prepayments – Note 2	4,315,540	4,050,543
Other payables – Note 2	1,353,774	1,397,732
Total Liabilities	43,718,809	30,958,691
TOTAL CURRENT LIABILITIES	43,718,809	30,958,691

NONCURRENT LIABILITIES
Payables
Loans – Note 2	6,447,880	9,650,144
Customer prepayments	-	1,761,404
Other payables – Note 2	3,000,000	3,000,000
TOTAL NONCURRENT LIABILITIES	9,447,880	14,411,548
TOTAL LIABILITIES	53,166,689	45,370,239

SHAREHOLDERS’ EQUITY	56,453,555	55,390,781
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	109,620,244	100,761,020

The accompanying notes 1 to 15 are an integral part of these financial statements.

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statement of income for the SIX-month period JUNE 30, 2004, presented comparatively with the same period of the prior year

Figures stated in Argentine pesos – See note 1(a)


	06/30/04	06/30/03
Net sales (including VAT benefits amounting to 11,208,714 and 5,449,972) – Note 4(e)	75,480,309	42,732,341
Cost of goods sold	(68,010,552)	(40,254,232)
GROSS REVENUES	7,469,757	2,478,109

Administrative expenses	(4,103,662)	(3,652,624)
Selling expenses	(1,677,982)	(866,068)
Other (expense) / income – Note 2
Ordinary income from long-term investments	671,027	253,394
Financial expense and holding losses from assets
Interest	76,067	471,006
Foreign exchange difference	(93,538)	(960,027)
Holding (losses) – Inventories	26,124	(4,912,575)
Allowances / provisions	(98,530)	678,849
Gain on exposure to inflation	-	(260,408)
Current investments and tax credits	103,746	86,455
Financial expense and holding losses from liabilities
Interest	(1,090,798)	(934,535)
Foreign exchange difference	(602,263)	5,054,960
(loss) on exposure to inflation	-	356,436
	382,826	(1,254,396)
NET (LOSS) INCOME FOR THE PERIOD	1,062,774	(3,461,424)
NET (LOSS) EARNINGS PER SHARE – NOTE 13
BASIC ORDINARY	0.0531	(0.1731)
DILUTED ORDINARY	0.0531	(0.1731)

The accompanying notes 1 to 15 are an integral part of these financial statements.

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statement of income for the SIX-month period ended JUNE 30, 2004,

presented comparatively with the same period of the prior year

Figures stated in Argentine pesos – See note 1(a)


	06/30/04											06/30/03
							Appropriated retained earnings
Detail	Capital stock	Capital stock adjustment	Noncapitalized contributions	Noncapitalized contribution adjustments	Issuance premiums	Total	Legal reserve	*Other reserves ()**	Total	Unappropriated retained earnings	Total	Total

Balances at beginning of year	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	41,636,218	55,390,781	60,610,549

Balance modification-Note 14											-	(2,312,541)
Modified balances at beginning of year	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	41,636,218	55,390,781	58,298,008

Net income(loss) for the year										1,062,774	1,062,774	(3,461,424)
Balances as of June 30, 2004	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	42,698,992	56,453,555
Balances as of June 30, 2003	2,000,000	4,155,936	497	717	5,243,562	11,400,712	2,280,143	73,708	2,353,851	41,082,021		54,836,584

(*) See note 3(b)

The accompanying notes 1 to 15 are an integral part of these financial statements.

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statement of cash flows for the SIX-month period ended JUNE 30, 2004, presented comparatively with the same period of the prior year

Figures stated in Argentine pesos – See note 1(a)


	06/30/04	06/30/03
CHANGES IN CASH (1)
Cash at beginning of year	13,675,797	13,204,957
Cash at end of year	10,978,865	9,610,422
Cash (decrease)	(2,696,932)	(3,594,535)

SOURCES OF CHANGES IN CASH

OPERATING ACTIVITIES
Ordinary (loss) income for the year	1,062,774	(3,461,424)
Interest and foreign exchange difference accrued	679,343	(2,138,505)

Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization	2,252,299	2,468,436
Allowance for impairment in value of inventories (net effect)	7,867	(990,967)
Income (Loss) from long-term investments	(671,027)	(253,394)
Contingency provision	-	(878,813)
Impairment in value of PP&E advances from exposure to inflation	-	1,585
Changes in operating assets and liabilities:
Trade receivables	(1,464,723)	(2,587,339)
Inventories	(11,059,078)	8,953,561
Trade payables	7,435,011	(1,459,508)
Salaries, payroll and other taxes (net of receivables)	221,123	298,289
Customer prepayments	(1,496,407)	382,472
Other	237,958	222,124
Interest repayment	(496,466)	(1,450,473)
NET CASH FLOW (USED IN) OPERATING ACTIVITIES	(3,291,326)	(893,956)

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statement of cash flows for the SIX-month period ended JUNE 30, 2004, presented comparatively with the same period of the prior year

Figures stated in Argentine pesos – See note 1(a)


	06/30/04	06/30/03
INVESTMENT ACTIVITIES
PP&E acquisition	(291,555)	(165,750)
Intangible additions	(435,179)	-
NET CASH FLOW USED IN INVESTMENT ACTIVITIES	(726,734)	(165,750)

FINANCING ACTIVITIES
Loan repayment	(3,078,872)	(2,534,829)
Inflows from new debts	4,400,000	-
NET CASH FLOW USED IN FINANCING ACTIVITIES	1,321,128	(2,534,829)
Net cash (decrease)	(2,696,932)	(3,594,535)

(1) Not considering the temporary investments in shares

The accompanying notes 1 to 15 are an integral part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Restatement into constant pesos

Professional accounting standards provide that financial statements are to be stated in constant pesos and that, in inflationary or deflationary conditions, the financial statements are to be restated into pesos with the purchasing power of the date of issuance of such statements, recognizing in accounts the changes in the “IPIM”, i.e. the wholesale price index published in the INDEC (Argentine Statistics and Census Bureau), in accordance with the restatement method established in Technical Resolution (TR) No. 6 of the FACPCE (Argentine Federation of Professional Councils in Economic Sciences).

The Company’s financial statements recognize the changes in the purchasing power of the peso through February 28, 2003, in accordance with Federal Executive Decree No. 664/2003 and CNV (Argentine National Securities Commission) No. 441. Under professional accounting standards the restatement method established in TR No. 6 should have been discontinued only as from October 1, 2003. The effects of not recognizing such changes in the purchasing power of the Argentine peso through this last date have not been significant in relation to these financial statements.

New accounting standards applied to financial statements preparation and presentation

The CNV (Argentine National Securities Commission) issued General Resolution No. 434, dated January 14, 2004 (amended by Resolution No. 45 of March 18, 2004), whereby it adopted, with certain exceptions: (a) FACPCE (Argentine Federation of Professional Councils in Economic Sciences) Technical Resolutions Nos. 16 through 20, with the amendments introduced by CPCECABA (Buenos Aires City Professional Council) Resolution CD No.87/03, effective for fiscal years initiated January 1, 2003, or thereafter, and (b) FACPCE Technical Resolution No. 21, mandatory for fiscal years beginning April 1, 2004 (which has been applied in advance in these financial statements).

Such accounting standards incorporated changes in the methods for measuring shareholders’ equity and determining income, as well as new disclosure requirements. The changes that could be most significant to the Company are the determination of net present value of tax receivables, the quantification of income tax by the deferred tax method, restrictions on the recognition of intangible assets and other disclosure aspects such as earnings per share, as explained in each of the accounts or items in question.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

The effects of the changes in the new accounting standards at the beginning of the first fiscal year of their effectiveness have been booked retroactively, which is to say that the Prior-year Income at the beginning of the fiscal year 2003 as indicated in Note 14.

The preparation of the financial statements in accordance with such standards requires that the Company’s Management consider estimates and assumptions that may affect the asset and liability amounts reported, the disclosure of contingent assets and liabilities as of the date of the financial statements, and income and expense amounts reported. The final results may differ from such estimates.

Valuation methods

The main valuation methods used to prepare the financial statements:

Cash, current investments, trade receivables, other receivables and liabilities:

In Argentine pesos: at nominal value at end of the period including, as the case may be, explicit and imputed interest accrued as of such dates, which has been determined by calculating the discounted value of cash flows, following the methods provided in FACPCE Technical Resolution No. 17, Section 4 (as amended by CPCECABA Resolution CD No. 87/03), considering the present economic circumstances due to the current characteristics of the financial market; and so the average interest rate on the financing obtained by the Company was considered.

In foreign currency: at nominal value in foreign currency plus explicit and imputed interest accrued as of period – end, converted at the exchange rates effective as of such dates to

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

convert such transactions. The foreign exchange differences were charged to income for the fiscal period or year, as the case may be.

Other receivables and payables in local currency (except for deferred tax amounts): they have been valued at their estimated value deducted from the amount receivable or payable taking into account the methods provided in FACPCE Technical Resolution No. 17, Section 4 (as amended by CPCECABA Resolution CD No. 87/03), following the methods mentioned in point (1) hereof (Cash, Trade Receivables, Other Receivables and Liabilities in Argentine pesos).

Credit risk: In its usual course of business the Company grants credit to customers, including car plants, that represent about 99% of the total sales. The company evaluates permanently the financial capacity of its customers in order to reduce the possible risk of significant losses due to bad debts.

Financial instruments: the Company does not use derivative financial instruments. Receivables and payables related to usual business transactions are valued as stated in the previous paragraphs and, in the opinion of the management of MIRGOR, such valuation does not differ from their current value.

Inventories

Raw materials (including those in transit) were valued at replacement cost at end of the period, considering the cash prices for usual purchase amounts. In addition, imported goods are valued at replacement cost at the foreign exchange rate effective at end of the period.

The products manufactured were valued at cash reproduction cost at end of the period limited by the net realization value thereof.

Long-term investments:

Companies covered by Argentine Business Associations Law No. 19,550, Section 33 (Subsidiaries and affiliates): by the equity method as established by Technical Resolution No. 21 of the FACPCE, which was calculated on the basis of the financial statements of Interclima as of June 30, 2004. A limited review report on such financial statements was issued; it includes except-for qualifications and a paragraph on uncertainties and is dated August 10, 2004.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

In addition, the adjustment to reflect the income tax liability has been taken into account when determining the value by the equity method.

Income from the interest in the subsidiary is included in a separate line in the statement of income. Refer to income tax paragraph b).

PP&E

PP&E have been valued at cost restated to February 28, 2003, as mentioned in note 1(a), less the related accumulated depreciation. Depreciation is calculated applying constant rates on the basis of the estimated useful life of the related assets. The assets subject to lease have been included in this account.

The net book value of PP&E was reviewed to verify whether it has been impaired whenever there were events or changes in circumstances indicating that the value booked cannot be recovered. Should there be any hint and book values exceed the estimated recoverable value, the assets or activities generating cash would be reduced up to the recoverable amount. The PP&E recoverable amount is equivalent to the higher of net realization value end the value in use. Upon determining the value in use, a first comparison should be made with the estimated future cash flows without any deduction. Should the value of cash flows exceed its net realization value and be lower than the net book value, the discounted flow and the net realization value should be compared again to determine the PP&E recoverable value and determine the impairment in value to be booked, as the case may be. Losses from impairment in value are recognized in the statement of income.

Intangible assets

Until December 31, 2002, research and development expenses and licenses related to new products were included in this item, valued at their replacement cost restated as of February 28, 2003, as mentioned in note 1(a), less the related accumulated amortization. These amounts are amortized applying constant rates to extinguish such values over a NINE-year period as from the launch of the new products, which will be amortized based on alternative a(2) set forth under section 8(2)3 of Technical Resolution No. 17, i.e. during the remaining useful life.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

As from the effective date of the new technical resolutions mentioned in note 1(b), research and development expenses will be charged to income for the period in which they are incurred.

The licenses to sell products acquired by the Company have been considered in this account, taking into account their capacity to generate earnings in the future, and have been amortized over three years counted as from their initial economic use.

Allowances:
Doubtful accounts: to offset and make trade receivables adequate on an individual analysis basis of those presenting uncollectibility rates.
Impairment in value: calculated on the basis of the recoverable value of deteriorated, obsolete or slow-moving items.
Impairment in value of deferred tax: it was assessed based on the recoverable value that is determined by the company’s tax situation.
Shareholders’-equity accounts:

Restated through February 28, 2003, in accordance with the method described in point (a) of this note, except for the “Capital stock – Face value” account, which was booked at original value. The adjustment resulting from the restatement as of August 31, 1995, and February 28, 2003, is disclosed in the “Capital stock adjustment” account.

Statement-of-income accounts

Income (loss) from long-term investments was calculated by the equity method using the Company’s interest percentage on the subsidiary’s income (loss) for the same period deducting intercompany gains (losses). In addition, this account includes the adjustments necessary to make the valuation methods of the abovementioned company consistent with those of the subsidiary and the income tax adjustment (see section b.).

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

Financial income (expense) and holding gains (losses) include both foreign exchange differences, as well as gain (loss) from inventory holdings, interest, and gains (losses) from exposure to inflation.

Imputed financial components included in income-statement accounts were segregated.

Income tax – Tax on minimum presumed income (TOMPI)
Status of Mirgor S.A.

During the current period, the Company did not accrue income tax since taxable income resulted in a NOL under current regulations.

Income tax is booked following the liabilities deferred tax method for all the temporary differences existing as of the balance sheet date between assets and liabilities tax bases and their amounts booked in these financial statements, as set forth under FACPCE Technical Resolution No. 17.

Deferred income tax assets are recognized whenever there are differences that reduced future taxes and accumulated prior-year NOLs that have not been used, to the extent that there could be taxable income available to be offset against them. The book value of deferred income tax assets is reviewed upon preparing the financial statements and it is reduced to the extent that there was no possibility of sufficient taxable income that could be fully or partially offset against deferred income tax assets.

Based on the enforcement entity’s regulations, deferred income tax assets and liabilities have been valued at nominal value and quantified at the rates expected to be applied to the period in which assets are realized and liabilities are settled considering the regulations enacted as of the date of the financial statements, and they are disclosed in noncurrent liabilities or assets, as the case may be.

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 AND 2003 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

The professional accounting standards approved by the CPCECABA set forth that deferred taxes receivable and payable should be valued at their discounted value using market rates effective at end of the period or fiscal year. The effect of such discounting, taking into account the considerations of the following paragraph, on the shareholders’ equity as of June 30, 2004, and the income (loss) for the period then ended has not been significant in relation to these financial statements.

Taking into account that the Company is carrying forward NOLs amounting to ARS 9,809,161 (out of which ARS 9,485,675 can be used until December 31, 2007, and the rest until December 31, 2009), there would be a deferred tax asset of ARS 3,433,206, which the Company has written off entirely because it considers that current market difficulties do not provide any assurance that it is likely that sufficient taxable income will be obtained to allow recovery of such asset.

For the period ended June 30, 2004, the tax on minimum presumed income (TOMPI) amount was higher than that of income tax. As a result, the income tax accrual amounted to ARS 98,887 and was booked with contra to non-current tax credits.

The tax on minimum presumed income is supplementary to income tax in that, whereas the latter is charged on taxable income for the year, tax on minimum presumed income is the floor tax that is levied on the potential income generated by certain productive assets and is calculated at the rate of 1% of the taxable assets, and in such way that the tax the Company is required to pay in shall be the higher of these two taxes. However, if in any given tax year, tax on minimum presumed income exceeds income tax, such excess may be computed as payment on account of any excess of income tax over tax on minimum presumed income that may arise in any of the ten subsequent years.

As of June 30, 2004, the tax credit from TOMPI amounts to ARS 1,602,217, which is disclosed under the “tax credits” account in Noncurrent Assets in view of the fact that Company Management considers that it is likely to be recovered by applying it against future taxable income.

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

1. Status of the subsidiary ICSA

Interclima S.A. has accrued income tax since it understood that the tax adjustment for inflation set forth in Income Tax Law should be applied taking into account Argentine current macroeconomic conditions.

The Company prepared and filed the 2002 income tax return, containing such adjustment, by which NOLs amounting to about ARS 5,200,000 were determined.

Had the tax-purposes adjustment-for-inflation not been made, the Company would have determined income tax amounting to about ARS 384,342 for fiscal year 2002 (after computing prior-year NOLs) and ARS 854,892 for fiscal year 2003 and of ARS 497,819 for the period ended June 30, 2004.

Interclima S.A. filed a legal remedy to obtain judicial protection since it understands that due to the high inflation that affected fiscal year 2002, section 39 of Law No. 24,073 dated 1992 should be abrogated. This section established an index applicable to the tax adjustment for inflation amounting to 1.00 (one) and suspended the application of such adjustment on taxable income in practice, as it had been regulated within an economic context that differed completely from fiscal year’s 2002. Consequently, these liabilities (ARS 1,737,053) have not been booked in the parent´s company financial statements as of June 30, 2004, however, since fiscal year 2003 the company has considered such contingency for the evaluation of the investment. Such decreased value as of the beginning of fiscal year 2003 (ARS 384,214) was considered an Adjustment to Prior-Year Income (see Note 14).

On July 17, 2003, the court hearing the case granted the precautionary measure requested by the company and ordering the Federal Company to refrain from commencing any administrative or legal proceeding or from filing any claim or making any request, as well as from applying any penalty based on the alleged prohibition to apply the adjustment for inflation.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1.(a)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

Statement of cash-flows

Under FACPCE Technical Resolutions No. 8 and 9, the statement of cash flows is included as an individual statement. The Company prepared such statement following the indirect methods on the basis of net income (loss) adding or subtracting, as the case may be, the accounts involved in the assessment thereof but not affecting the cash and changes in assets and liabilities as well as the net cash flow “provided by” or “used in” “investment” and “financing” activities. The Company has considered “Cash” to be formed by cash plus readily convertible investments (original placements of less than three months).

note 2 – MAIN ACCOUNT BREAKDOWN


	06/30/04	12/31/03
CURRENT ASSETS
Cash
On hand and imprest fund in Argentine currency	28,518	36,532
On hand in foreign currency	197,583	105,476
In banks in Argentine currency	4,725,537	4,360,105
In banks in foreign currency	6,026,267	9,172,724
	10,977,905	13,674,837

Short-term investments
Savings account and other in foreign currency
Savings account and in Argentine currency and other	1,547	1,547
	1,547	1,547

Trade receivables
	16,151,550	14,913,725
Trade receivables	226,724	-
Allowance for doubtful accounts	(85,003)	(85,177)
	16,293,271	14,828,548

Taxes receivable
VAT credit	74,375	110,166
Other	-	-
	74,375	110,166

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 2 – MAIN ACCOUNT BREAKDOWN - Continued


		06/30/04		12/31/03
Other receivables
Notes receivables		754,908		749,597
Interest to be accrued		(95,453)		(95,109)
Other		340,196		611,517
		999,651		1,266,005
Inventories
Manufactured products		15,320,721		10,420,164
Raw material		28,091,980		22,064,611
Raw material in transit		8,027,506		7,110,837
Stock at end of period		51,440,207		39,595,612
Prepayments to vendors in Argentine currency		392,524		366,500
Prepayments to vendors in foreign currency		1,138,813		1,950,354
Allowance for impairment in value		(7,499,183)		(7,491,316)
		45,472,361		34,421,150
NONCURRENT ASSETS
Taxes receivable
Compulsory savings
VAT credit		93,481			93,481
Minimum presumed income tax		1,602,217			1,503,330
Promotional benefits receivable – Note 4(c)		883,718			779,973
Other		128,653			118,818
		2,708,069			2,495,602
Other receivables
Reimbursements in Argentine currency receivable – Note 4	919,770		919,770
Notes receivable	1,069,453		1,426,633
Interest to be accrued	(135,225)		(181,012)
	295,830		-
	2,149,828		2,165,391

CURRENT LIABILITIES
Payables
Trade payables
In local currency	10,377,464			6,762,362
In foreign currency	15,370,669			11,550,760
	25,748,133			18,313,122

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 2 – MAIN ACCOUNT BREAKDOWN – Continued


	06/30/04	12/31/03
Salaries, payroll and other taxes
Employee benefits	537,380	662,491
Taxes payable	1,489,071	966,161
	2,026,451	1,628,652
Loans
Financial loans in local currency	7,610,847	2,216,748
Financial loans in foreign currency	2,664,064	3,351,894
	10,274,911	5,568,642
Customer prepayments
In local currency	-		1,798,553
In foreign currency	4,315,540		2,251,990
	4,315,540		4,050,543
Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 7	1,079,770	1,167,343
Other	274,004	230,389
	1,353,774	1,397,732
NONCURRENT LIABILITIES

Loans
Financial loans in local currency	1,346,360	2,782,244
Financial loans in foreign currency	5,101,520	6,867,900
	6,447,880	9,650,144


Other payables
Companies under Section 33, Law No. 19,550 (subsidiaries and affiliates) – Note 7	3,000,000	3,000,000
	3,000,000	3,000,000

	06/30/04	06/30/03
OTHER EXPENSE / INCOME
Inventory difference	-	(890,743)
Other	382,826	(363,653)
	382,826	(1,254,396)

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

Capital structure

As provided for in the amendments to the Company’s articles of incorporation approved by the Special Shareholders Meeting held May 27, 1994, the Company’s capital stock was increased from 3.20 to 2,000,000.

The capital stock is represented by 20,000,000, registered, subscribed, paid-in, book-entry shares of common stock, face value 0.10.

The Company’s shares were converted into three classes as detailed below:


Class
A B C	Entitled to three (3) votes each Entitled to three (3) votes each Entitled to one (1) votes each

Class A, B, and C shares are entitled to the same dividend collection rights.

The capital stock structure as of June 30, 2004, December 31, 2003, and June 30, 2003, was:


Class	Number
A B C	5,200,000 5,200,000 9,600,000
TOTAL	20,000,000

Other reserves - For future dividends

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

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 4 – tax system

Due to the goods and operations carried out in the Province of Tierra del Fuego the Company has been included in the following systems:

Industrial promotion system under Law No. 19,640 of 1972 to operate in the Province of Tierra del Fuego. In this sense, the Company is entitled to certain tax and customs benefits through 2013. Such benefits include:
Income tax: The Federal Executive issued Decree No. 1,395/94 whereby, as from September 1, 1994, 85% (see effect of Presidential Decree No. 615/97) of the price paid by customers out of the earnings related to the Province of Tierra del Fuego would be income-tax exempt (whose rate is 35%).
Value-added tax (VAT): as from April 1995, the Company’s sales would be subject to 21% VAT to be charged to the customers of Mirgor S.A.C.I.F.I.A.

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% (see effect of Presidential Decree No. 615/97) of the net sales price to customers. Therefore, the tax obligation shrank by 8% thereof as from April 1995.

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 negotiable tax credit certificates.

DGI (Argentine tax bureau) General Resolution No. 3,838/94 provided for the procedure to obtain the tax credit certificates mentioned above. The Company booked such credits in the amount of 1,511,788 based on the difference of the amount originally booked and that requested on June 27, 1995, under the valuation methods disclosed in the resolution.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 4 – tax system – Continued

On September 17, 1996, the DGI issued an opinion recognizing a larger amount in favor of the Company (2,194,142) (un-restated historical value) as a result 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 – Vendors to be requested under the VAT on exports recovery system.

Considering that, on May 2, 1996, the Ministry of Economy issued Resolution No. 580/96 and that the credits are previous to April 1, 1991, the Company decided to book the recognized credit at the listed price effective as of each period-end of BOCONS (Debt Consolidation Bonds) issued under Law No. 23,982, as supplemented, which amounted to ARS 883,718 as of June 30, 2004, and to ARS 779,973, as of December 31, 2003.

On May 19, 1997, the DGI provisionally recognized the amount indicated above.

Customs duties (amounting to about 15% for the Company) and the statistical rate (equivalent to 3%) of all imported inputs used for operation in Tierra del Fuego which, under the benefits granted by Law No. 19,640, are not paid by the Company.
The amounts saved by the Company considering the items mentioned in points (b) and (d) are:


	Years ended
	June 30, 2004	June 30, 2003

V.A.T.	11,208,714	5,449,972

Customs duties and statistical rate (approximate amounts)	7,577,230	3,691,634

Although the Tierra del Fuego location provides the Company with certain promotional benefits, as described above, such situation means incurring increased costs such as: salaries, communications, freight, leases and trips, among others.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 4 – tax system – Continued

Presidential Decree No. 615/97 dated July 7, 1997, amending Presidential Decree No. 1,395/94 reinstated certain tax benefits granted under Industrial Promotion Law. Based on such decree, the presumed VAT credit computable as from August 1, 1997, is equivalent to the amount resulting from applying the VAT rate (effective at the time of sale) on the net sale price to the customer. In addition, the income tax method was amended as well since the sales carried out from the Province of Tierra del Fuego to the Argentine continental territory are 100% income-tax exempt, as provided for in Law No. 19,640, Section 4(a).

Considering the benefits deriving from this note, the Company does not need to meet additional requirements, except for performing the related activities in Tierra del Fuego.

As regards the rebates to be collected in Argentine currency on account of exports from the mainland to the Tierra del Fuego island, owing to delays in payment by the Federal Government, the Company filed a series of requests with the Customs Authority (Promotional Systems Section) to collect such amounts. As of the date of issuance of these financial statements, although unfavorable administrative resolutions were issued, the Company’s legal counsel understands that the transactions carried out by virtue of Law

No. 19,640 and, therefore, the collection of rebates set forth by regulations is applicable. Such unfavorable resolutions were challenged; thus, the proceedings are in the Customs Legal and Technical Department awaiting the issuance of the respective formal opinions.

Competitiveness: established by Presidential Decree No. 730/01 to improve competitiveness and foster employment in Argentina. The main benefits established by the companies adhering to such system are:
Full corporate indebtedness tax exemption;
Full TOMPI exemption;
Computation as VAT credit of the amounts paid on account of employer contributions to the SUSS (Single Social Security System).

The benefits mentioned in (a) became effective as from August 31, 2001; those in (b) and (c) became effective as from July 1, 2001. In the case of (a) and (b), the benefits remained in effect through June 30, 2003, while those under (c) ended on November 30, 2001.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 5 – major customers and license agreements

For the years ended June 30, 2004, and 2003, the Company’s sales to its most important customers were:


	30/06/2004	30/06/2003

Volkswagen Argentina S.A.	37%	56%
General Motor Argentina	27%	10%
Renault Argentina S.A.	19%	17%
Mercedes Benz	8%	7%
Peugeot Citroen Argentina S.A.	5%	7%

A significant portion of the Company’s products are carried out under license agreements executed with Valeo Thermique Habitacle.

note 6 – parent company

Parent Company: Il Tevere S.A.

Registered office: Paseo Colón 221, Piso 2 – Buenos Aires

Main business: holding company

Voting rights: 76.47%

Shareholdings: 52%

On July 15, 1996, the transfer of 40% of Il Tevere S.A.’s shares in favor of Valeo Climatisation, indirect shareholders of 20.8% of the capital stock and 30.59% of the voting rights of MIRGOR S.A.C.I.F.I.A. On March 6, 1998, 10% of the shares of Il Tevere S.A. was transferred to Valeo Climatisation; thus the interest in MIRGOR S.A.C.I.F.I.A. was increased to 26%.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 7 – RELATED-PARTY INFORMATION

As of June 30, 2004, and over the six-month period then ended, the receivables from, payables to and transactions entered into with related companies and parent company, were as follows:


	Transactions			Balances
						Other payables
Company		Transaction type	Amount	Other non current receivables	Trade payables	Current	No current

Related companies		Merchandise Importation	1,289,289	-	316,310	-	-
Valeo Sistemas Automotivos Ltd.		Merchandise Importation	400,809	-	50,923	-	-
Valeo Autoklimatizace S.R.O.		Merchandise Importation	97,456	-	18,028	-	-
Valeo Climatización S.A. (Euro)		Merchandise Importation	58,835	-	13,801	-	-
Valeo Klimasysteme GMBH		Merchandise Importation	166,409	-	-	-	-
Valeo Componentes Automóviles		Merchandise Importation	611,059	-	184,352	-	-
Valeo Sistemas Automotivos		Merchandise Importation	220,540	-	46,006	-	-
Valeo Climate Control Mexico		Merchandise Importation	125,102	-	24,180	-	-
Valeo Autosystemiy SP Z.O.O.		Merchandise Importation	691,991	-	121,070	-	-
Valeo Vymeniky Tepla S.R.O.		Merchandise Importation	577,425	-	25,304	-	-
Valeo Securite Habitacle		Merchandise Importation	318,323	-	49,235	-	-
Valeo Thermique Francia		Services received	98,977	-	-	-	-
Valeo Thermique Moteur		Merchandise Importation	1,595,130	-	160,712	-	-
Valeo Zaragoza		Merchandise Importation	2,186,665	-	256,728	-	-
VCC Up Echangeurs		Merchandise Importation	1,783,645	-	235,444	-	-
Subsidiary		Royalties	904,424	-	-	242,623	-
Interclima S.A.		Merchandise purchased	5,133,012	-	-	-	-
Interclima S.A.		Other services	600,000	-	-	-	-
Interclima S.A.		Financing Transactions	(87,573)	-	-	1,079,770	3,000,000

Parent Company
Il Tevere S.A.		Financial prepayment	295,830	295,830	-	-	-

note 8 – income tax withholding on dividends

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

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

note 9 – stamped and sealed books

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


Journal No.	Stamped and sealed	Period transactions
41	May 6, 2003	01/01/03 to 02/28/03
42	July 1, 2003	02/28/03 to 04/14/03
43	July 1, 2003	04/14/03 to 05/30/03
44	July 23, 2003	05/30/03 to 07/22/03
45	July 23, 2003	07/22/03 to 09/02/03
46	September 22, 2003	09/02/03 to 10/09/03
47	September 22, 2003	10/09/03 to 11/22/03
48	December 22, 2003	11/22/03 to 01/05/04
49	December 22, 2003	01/05/04 to 03/01/04
50	April 27, 2004	03/01/04 to 03/22/04
51	April 27,2004	03/22/04 to 04/30/04

Regarding transactions for the period May 1 through June 30, 2004, for administrative reasons, the loose sheets meeting Regulation No. 105/94, issued by the DPJ (regulatory agency of business associations) of Tierra del Fuego, have not yet been trasncribed.

NOTE 10 – RECENT SIGNIFICANT ECONOMIC EVENTS

Since early December 2001, Argentine authorities implemented a number of monetary and foreign exchange control measures that mainly included restrictions on the free disposition of funds deposited with banks and the practical impossibility of making transfers abroad, with the exception of transfers related to foreign trade and other authorized transactions, which in some cases are subject to the approval from the BCRA (Central Bank of Argentina). Later, the Federal Government declared the official default on foreign debt payments and, on January 6, 2002, the Argentine Congress approved Public Emergency and Foreign Exchange System Reform Law No. 25,561, which introduced dramatic changes to the economic model implemented until that date and that amended Convertibility Law (the currency board that pegged the Argentine peso at parity with the US dollar) approved in March 1991. The new law empowers the Federal Executive to implement, among other things, additional monetary, financial and foreign exchange measures to overcome the economic crisis in the medium term.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 10 – RECENT SIGNIFICANT ECONOMIC EVENTS - Continued

Presidential Decree No. 71/2002 and BCRA Communiqué “A” 3,425, as amended, established an “official” foreign exchange system, mainly for exports, certain imports, and bank debts, and a “freely-floating” foreign exchange market for the rest of the transactions. The “official” exchange rate was fixed at ARS 1.4 to USD 1, and the “freely-floating” exchange rate as of the closing of business of the first day the exchange market, which had been suspended since December 23, 2001, reopened (January 11, 2002), ranged from ARS 1.60 to ARS 1.70 to USD 1 (selling rate).

Other regulations were issued subsequently, which further amended the new regulations then in effect, such as: consolidation of exchange markets into a “free” market; de-dollarization of U.S. dollar-denominated deposits with Argentine financial institutions at the ARS 1.40-to-USD 1 exchange rate, and of all U.S. dollar-denominated obligations assumed as of January 6, 2002, in Argentina at the ARS 1-to-USD 1 exchange rate; de-dollarization of utility rates which were formerly agreed upon in US dollars, and subsequent renegotiation thereof on a case-by-case basis; prior authorization from the B.C.R.A. to transfer funds abroad to service the principal and interest of financial loans; suspension of unjustified dismissals, to expire in early 2003; and suspension of dissolution causes due to loss of capital stock and mandatory reduction thereof provided by Argentine Business Associations Law.

Taking into account the above considerations, the Company and its subsidiary carry tax credits, reimbursements receivable and other receivables from the Government amounting to ARS 8,3 million, disclosed in noncurrent assets, the future recoverability of which depends both on the Government’s possibilities of lifting its declaration of default and generating sufficient fiscal revenues, which are affected by the Argentine market uncertainty in general; furthermore, the Company currently lacks elements of judgment to determine when and how such receivables would be collected.

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NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 AND - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 11 – BANK LOANS – RESTRICTION ON EARNINGS ALLOCATION

The Company has received loans as follows: from Citibank N.A. amounting to USD 330,000, with an 11-month term and accruing interest at 30-day LIBOR plus a 6% spread p.a.; from Banco Francés BBVA for an amount of USD 90,000 accruing interest at 30-day LIBOR plus 500 b.p. ; and from BNP bank in the amounts of USD 2,280,000 and ARS 1,998,500, repayable in three annual installments and eleven quarterly installments, respectively, accruing interest at 180-day LIBOR plus 6% and “Baibor” (Buenos Aires preferential rate) plus 4%.

The entering into and renegotiation of these loan agreements imply the Company’s obligation to comply with certain conditions and requirements, especially those related to meeting certain ratios in its quarterly financial statements, especially those aimed at measuring the liabilities-to-interest-paid ratio, as well as those related to keeping limits on the Company’s indebtedness, which should not exceed USD 25 million, as stipulated in the case of the loan from Citibank N.A. Additionally, the Company agreed not to distribute dividends during the term of the loan and not to make annual repayments to the BNP exceeding 25% of the Company’s total payable to such bank. Additionally, the Company has assumed certain commitments normal in this kind of restructuring.

NOTE 12 – INCOME TAX

The applicable income tax rate has not varied in the period under analysis.

The reconciliation between income tax expenses charged to income generated by operating activities before income tax at the statutory rate and the income tax expense at the actual income tax rate for the period ended June 30, 2004, was as follows:


		$
Operating loss before income tax		1,062,774
Permanent differences
* Gain (loss) from investments in other companies		(671,027)
* Gain from special customs activities in Tierra del Fuego		(1,373,081)
* Other permanent differences		36,000
Taxable income (loss)		(945,334)
Result of applying the effective income tax rate		330,867
Changes in temporary differences
Allowance for impairment in value		1,054
Deferred foreign exchange differences		24,690
Subtotal		356,611
Unrecoverability allowance		(356,611)
Book charge for Income Tax		-

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 12 – INCOME TAX - Continued


The temporary differences changed as follows:
DEFERRED ASSET AS OF 12.31.03		545,562
Changes in temporary differences		(25,394)
DEFERRED ASSET AS 06.30.04		570,956
Allowance for impairment of deferred assets		(570,956)
Deferred assets		-

The deferred asset at year-end comprises the following items:
Allowance for impairment in value of Inventories		686,625
Allowance for uncollectible accounts		7,783
Capitalizable exchange differences		(123,452)
		570,956

NOTE 13 – EARNINGS PER SHARE

Earnings per share (basic and diluted) are calculated by dividing the net income (loss) for the period related to common shares by the weighted average cost of outstanding common shares during the same period. No transactions involving common shares or possible common shares have been performed as from the information issuance date until the conclusion of these financial statements.

TRANSLATION INTO ENGLISH ‑ ORIGINALLY ISSUED IN SPANISH

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

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2004 - Continued

Figures stated in Argentine pesos – See Note 1(a)

NOTE 14 – CHANGES IN PRIOR-YEAR INCOME (LOSS)

For fiscal year 2003, as a result of applying new accounting standards effective as from January 1, 2003, as indicated in note 1(b), the Company booked such impact on accumulated income (loss) as from December 31, 2002.

The total loss amounted to ARS 1,928,327, which is mostly related to the valuation of receivables and payables at the net present value of the amount receivable or payable, as the case may be, and with the recognition of payables to vendors. ARS 384,214 should be added to that amount due to the adjustment mentioned in note 1(b) (Long-term investments – Equity interests in other companies – Income tax).

NOTE 15 – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are the English translation of those originally issued in Spanish.

AI assistant

Mirgor Interim / Quarterly Report 2004

vice-Chairperson

LIMITED REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS

Expiry of the articles of incorporation: May 31, 2070

summary OF EVENTS

NOTE 2 – MAIN ACCOUNT BREAKDOWN

balance sheet as of JUNE 30, 2004 and as of december 31, 2003.

balance sheet as of JUNE 30, 2004 and as of december 31, 2003

statement of income for the SIX-month period JUNE 30, 2004, presented comparatively with the same period of the prior year

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

note 2 – MAIN ACCOUNT BREAKDOWN

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

note 5 – major customers and license agreements

AI assistant

Mirgor — Interim / Quarterly Report 2004

vice-Chairperson

LIMITED REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS

Expiry of the articles of incorporation: May 31, 2070

summary OF EVENTS

NOTE 2 – MAIN ACCOUNT BREAKDOWN

balance sheet as of JUNE 30, 2004 and as of december 31, 2003.

balance sheet as of JUNE 30, 2004 and as of december 31, 2003

statement of income for the SIX-month period JUNE 30, 2004, presented comparatively with the same period of the prior year

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - Continued

note 2 – MAIN ACCOUNT BREAKDOWN

note 3 – capital STRUCTURE – SHAREHOLDERS’ equity

note 5 – major customers and license agreements

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Mirgor Interim / Quarterly Report 2004