Raghsa S.A. — Interim / Quarterly Report 2001

Jul 12, 2001

RAGHSA SOCIEDAD ANONIMA

Financial Statements as of May 31, 2001 and 2000

together with Independent Public Accountants´ Report

and Statutory Audit Committee´s Report

English translation of the Financial Statements and the Reports originally issued in Spanish

RAGHSA SOCIEDAD ANONIMA

BOARD OF DIRECTORS

PRESIDENT:	Moisés Khafif
VICE PRESIDENT:	Gloria Btesh de Khafif
DIRECTORS:	Susana Beatriz Giovinazzo
	Héctor Emilio Salvo
	Edgardo Khafif

STATUTORY AUDIT COMMITTEE

STATUTORY AUDITORS:	Alberto José Jambrina
	Rosa Aurora Bustelo
	Estela Beatriz Sánchez
ALTERNATE STATUTORY AUDITORS:	Haydee Elsa Laksman
	Fernando Gabriel Guernik
	Isabel Caamaño

(English translation of the Auditors’ Report originally issued in

Spanish, except for the omission of paragraphs VI and VII, related

to formal requirements for reporting in Argentina, and addition

of paragraph V of this Report)

AUDITORS’ REPORT

To the Board of Directors of

RAGHSA SOCIEDAD ANONIMA:

I. We have made a limited review of the balance sheets of RAGHSA SOCIEDAD ANONIMA as of May 31, 2001 and 2000, and the related statements of income, changes in shareholders’ equity and cash flows for the three-month periods then ended. These financial statements are the responsibility of the Company’s Management.

II. We conducted our limited reviews in accordance with generally accepted auditing standards in Argentina for the limited review of financial statements for interim periods. Such review consists principally in applying analytical procedures on the accounting information and making inquiries of people responsible for accounting and financial issues. This review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Therefore, we do not express such opinion.

III. The financial statements of the subsidiary DEL-PLA COMPAÑIA DE INVERSIONES SOCIEDAD ANONIMA as of May 31, 2000, incorporated to the financial statements of RAGHSA SOCIEDAD ANONIMA through the equity method, were not review by us but by other auditors whose report has been furnished to us. Our statement included in paragraph VI, insofar as it relates to the amounts included for that company, is based on the report of the other auditors. Such investment represents 2.01% of RAGHSA SOCIEDAD ANONIMA total assets as of May 31, 2000, and the corresponding share in income for the three-month period then ended showed a loss of $72.516.

• 2 -

IV. The financial statements of the affiliated companies BUENOS AIRES REALTY S.A., BUENOS AIRES TRADE and FINANCE CENTER S.A. and ARGENTINE REALTY S.A. as of March 31, 2001 and 2000, incorporated to the financial statements of RAGHSA SOCIEDAD ANONIMA through the equity method, were not review by us but by other auditors whose report has been furnished to us. Our statement included in paragraph VI, insofar as it relates to the amounts included for those companies, is based on the report of the other auditors. Such investments represents 5,76% and 5,97% of the total assets of RAGHSA SOCIEDAD ANONIMA as of May 31, 2001 and 2000, respectively.

V. As further explained in Note 7, the accompanying financial statements are the English translation of those originally issued in Spanish and 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 and may be material. Accordingly, the accompanying financial statements do not purport to present the information on the Company’s financial position, and the related results of operations, changes in cash flows and changes in stockholders' equity in accordance with accounting principles generally accepted in the countries of users of the financial statements other than Argentina.

VI. Based on our reviews and on the reports of the other auditors mentioned in paragraphs III and IV, we are not aware of any modifications that should be made on the attached financial statements for them to be presented in conformity with generally accepted accounting principles in Argentina, the Argentine Business Associations Law and the applicable regulations of the Comisión Nacional de Valores (CNV – National Securities Commission).

Buenos Aires, PISTRELLI, DIAZ Y ASOCIADOS

July 10, 2001 CPCECF Vol. 1 – Fo. 8

MARIANA FILAS

Partner

CPA UNLZ

CPCECF Vol. 221 – Fo. 101

• 1 -

(English translation of the financial statements originally issued in Spanish - See note 7)

RAGHSA SOCIEDAD ANONIMA

Av. Corrientes 447 – 5th Floor - City of Buenos Aires

FISCAL YEARS No 34 AND 33 BEGINNING MARCH 1, 2001 AND 2000

FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIODS ENDED MAY 31, 2001 AND 2000

Main business of the company: Acquiring, building, leasing, purchasing and selling real estate for office space and/or residential use, as well as financing the sale of such property.

Registration date with the Public Registry of Commerce:

• Articles of Incorporation: June 23, 1969.
• Last change to the bylaws: September 22, 1999.

Registration number with the Inspección General de Justicia (the governmental regulatory agency of corporations): 28,194.

Date of expiration of corporate existence: June 23, 2068.

CAPITAL STRUCTURE (Note 4.II and 4.III)

(Stated in pesos)

		Subscribed and issued
Type and class of shares		Paid-in		Not paid-in			Total
Common, nominative, nominal value 1 per share:
* Class A, 5 votes per share		21,600,000		-			21,600,000
* Class B, 1 vote per share		27,400,000		1,000,000			28,400,000
		----------------		----------------			----------------
		49,000,000		1,000,000			50,000,000
		=========		=========			=========

• 2 -

(English translation of the financial statements originally issued in Spanish - See note 7)

RAGHSA SOCIEDAD ANONIMA

BALANCE SHEETS AS OF MAY 31, 2001 AND 2000

(Stated in pesos - Note 2.II)

	2001		2000
CURRENT ASSETS
Cash	54,046		220,644
Investments (Exhibit C)	5,043,366		12,020,778
Sales and rents receivable (Note 3.a)	64,996		477,488
Other receivables (Note 3.b)	1,193,116		2,035,524
Inventories (Note 3.c)	-		1,350,000
	----------------		----------------
Total current assets	6,355,524		16,104,434
	----------------		----------------
NONCURRENT ASSETS
Other receivables (Note 3.b)	5,016,270		1,339,323
Investments (Exhibit C)	5,624,738		7,234,806
Fixed assets (Exhibit A)	80,501,268		65,690,193
Intangible assets -- Deferred charges (Exhibit B)	217,908		297,149
	----------------		----------------
Total noncurrent assets	91,360,184		74,561,471
	----------------		----------------
Total assets	97,715,708		90,665,905
	=========		==========
CURRENT LIABILITIES
Accounts payable -- Vendors	893,082		1,069,408
Loans (Note 3.d)	1,089,349		1,071,485
Social security and taxes payable (Note 3.e)	353,692		276,725
Other liabilities (Note 3.f)	1,114,435		261,080
	----------------		----------------
Total current liabilities	3,450,558		2,678,698
	----------------		----------------
NONCURRENT LIABILITIES
Accounts payable -- Vendors	620,141		-
Loans (Note 3.d)	30,000,000		30,000,000
Social security and taxes payable (Note 3.e)	48,588		131,880
Other liabilities	68,800		64,890
	----------------		----------------
Total noncurrent liabilities	30,737,529		30,196,770
	----------------		----------------
Total liabilities	34,188,087		32,875,468
STOCKHOLDERS’ EQUITY (Per respective statements)	63,527,621		57,790,437
	----------------		----------------
Total liabilities and stockholders’ equity	97,715,708		90,665,905
	=========		=========

The accompanying notes 1 to 7 and supplementary statements

(Exhibits A, B, C, E, F, G, H and I) are an integral part of these financial statements.

• 3 -

(English translation of the financial statements originally issued in Spanish - See note 7)

RAGHSA SOCIEDAD ANONIMA

STATEMENTS OF INCOME

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos - Note 2.II)

	2001		2000
INCOME FROM SALES AND RENTS, net (Note 3.g)	1,554,325		3,119,176
COST OF SALES AND RENTS (Exhibit F)	(388,623)		(921,617)
	--------------		--------------
Gross income	1,165,702		2,197,559
ADMINISTRATIVE EXPENSES (Exhibit H)	(323,994)		(385,907)
SELLING EXPENSES (Exhibit H)	(12,901)		(34,088)
LOSS FROM INVESTMENT IN SUBSIDIARIES (Exhibit C)	-		(72,516)
OTHER INCOME (EXPENSE), net (Note 3.h)	162,398		(96,497)
FINANCIAL INCOME (EXPENSE) AND HOLDING INCOME (LOSSES), net (Note 3.i)	(470,436)		(954,691)
	--------------		--------------
Income before income tax	520,769		653,860
INCOME TAX (Note 2.III.f)	-		(250,000)
	--------------		--------------
Net income for the period	520,769		403,860
	========		========

The accompanying notes 1 to 7 and supplementary statements

(Exhibits A, B, C, E, F, G, H and I) are an integral part of these financial statements.

• 4 -

(English translation of the financial statements originally issued in Spanish - See note 7)

RAGHSA SOCIEDAD ANONIMA

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos - Note 2.II)

	2001										2000
	Stockholders’ contribution		Retained earnings
			Earnings
	Capital stock		reserved --Legal reserve		Unappropriated earnings		Total			Total
Balance at beginning of year	50,000,000		2,450,690		10,556,162		63,006,852			57,386,577
Net income for the period	-		-		520,769		520,769			403,860
	----------------		--------------		----------------		----------------			----------------
Balance at end of period	50,000,000		2,450,690		11,076,931		63,527,621			57,790,437
	==========		========		=========		=========			=========

The accompanying notes 1 to 7 and supplementary statements

(Exhibits A, B, C, E, F, G, H and I) are an integral part of these financial statements.

• 5 -

(English translation of the financial statements originally issued in Spanish - See note 7)

RAGHSA SOCIEDAD ANONIMA

STATEMENTS OF CASH FLOWS (1)

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos - Note 2.II)

	2001		2000
FUNDS PROVIDED BY (USED FOR) OPERATIONS:
* Net income for the period	520,769		403,860
* Adjustments to reconcile net income for the period to net funds provided by operations:
* Loss from investment in shares	-		72,516
* Amortization of intangible assets	19,810		19,810
* Depreciation of fixed assets	252,009		254,565
* Decrease in sales and rents receivable	69,811		70,651
* (Increase) Decrease in other receivables	(355,188)		992,212
* Decrease in inventories	-		607,394
* Increase in accounts payable	59,841		649,282
* (Decrease) Increase in social security and taxes payable	(283,499)		5,533
* Increase in other liabilities	244,702		244,995
	---------------		---------------
Net funds provided by operations	528,255		3,320,818
	---------------		---------------
FUNDS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
* Acquisition of fixed assets	(3,902,179)		(3,675,700)
* Paid-in capital stock and irrevocable contributions in companies under joint control	(32,456)		(8,247)
	----------------		----------------
Funds used for investing activities	(3,934,635)		(3,683,947)
	----------------		----------------
FUNDS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
* Net increase (decrease) in short-term loans	445,769		(1,359,153)
* Stockholders’ contributions	125,000		-
	----------------		----------------
Net funds provided by (used for) financing activities	570,769		(1,359,153)
	----------------		----------------
Net (Decrease) in funds	(2,835,611)		(1,722,282)
Funds at beginning of year	7,933,023		13,963,704
	----------------		----------------
Funds at end of period	5,097,412		12,241,422
	=========		=========

1. "Cash plus investments readily convertible into cash" (Original placements with terms under three months).

The accompanying notes 1 to 7 and supplementary statements

(Exhibits A, B, C, E, F, G, H and I) are an integral part of these financial statements.

• 6 -

(English translation of the financial statements originally issued in Spanish - See note 7)

RAGHSA SOCIEDAD ANONIMA

NOTES TO THE FINANCIAL STATEMENTS

AS OF MAY 31, 2001 AND 2000

(Figures stated in pesos - Note 2.II)

1. MAIN BUSINESS OF THE COMPANY

The Company is primarily engaged in developing real estate for sale and/or rent. As of May 31, 2001, its main projects are:

1. Developments for investment and rent

2. 555 Shopping Complex

This property faces Gutierrez, Republica Arabe Siria and Cabello streets in the City of Buenos Aires and comprises thirteen modules designed for retail stores, which have been leased as of the date hereof. The first and second floors are taken up by a garage with parking space for 250 automobiles. The Company has leased the garage to a garage operator.

• “Plaza San Martín” building

This office building consists of eleven floors and three underground levels and is located at Arenales 707 in the City of Buenos Aires. The Company owns approximately 78% of the building (comprising nine floors and 143 parking spaces). Eight floors of the building were rented as of May 31, 2001 under rent agreements with an average term of four years.

• Florida 343 - San Martín 344 -- Real Estate Project

This project consists of:

• A 2,700 square meter building at Florida 343 in the City of Buenos Aires, being renovated for commercial and office use.

• 7 -

• A construction project in progress at San Martín 344 in the City of Buenos Aires, with 29 levels over the ground floor.

The Company is building a tower intended to be leased for office. The tower would have a total area of 46,450 square meters and will be equipped with state-of-the-art technology and with all necessary elements to make it a smart complex with the lowest operating expenses and low maintenance costs. As of May 31, 2001, work is at the final stage and is expected to be concluded by the end of July 2001.

To the date of issue of these financial statements, the Company rented approximately 30% of the office space.

1. Equity interests
2. Del-Pla Compañía de Inversiones S.A.: As of May 31, 2000, the Company owned 99.995% of this company’s capital stock, being entitled to the same percentage of possible votes at corporate meetings. The main asset of this subsidiary is two units in “Le Parc Residential Tower” building.

On February 13, 2001, the Company sold its shares in such company’s capital stock, to Buston Establishment S.A. for 2,000,000.

1. Companies under joint control -- Buenos Aires Realty S.A., Buenos Aires Trade and Finance Center S.A. and Argentine Realty S.A.

The Company organized, in equal shares with IRSA Inversiones y Representaciones S.A. (IRSA), the companies Buenos Aires Realty S.A., Buenos Aires Trade and Finance Center S.A. and Argentine Realty S.A., for the purpose of acquiring and commercially exploiting parcels 1, 2 and 3 situated in Dock 3, Block 5M, East Side, of Puerto Madero (a former port area in downtown Buenos Aires undergoing urban redevelopment).

The total value of such transaction was US$ 31,183,993, of which Raghsa Sociedad Anonima and IRSA each paid US$ 4,677,599 on September 9, 1999. The outstanding balance of US$ 21,828,795 is due on December 9, 2002 and will be paid in equal portions by Raghsa Sociedad Anónima and IRSA. Such amount includes interest of US$ 5,867,768.

Such plots, of approximately 2.1 hectares, are capable of sustaining about 126,000 square meters of construction.

In April 2001, the Company signed a preliminar agreement with IRSA for re-distribution of interests in the companies herein referred to. Thus, the Company will own 54% of the land identified as plot 5M and will be responsible for the proportional debt related to the purchase of such land.

As a result of the above-mentioned re-distribution and of the stock exchange to be carried out, the Company will hold the entire stock of Argentine Realty S.A. and of Buenos Aires Trade and Finance Center S.A. and will no longer have a share in Buenos Aires Realty S.A.

• 8 -

Such transaction was approved by the Bureau of Works and Plat Book Control and by the National Anti-trust Board; approval by Corporación Antiguo Puerto Madero being pending.

The projects to be undertaken on such plots of land consist of the construction of tower buildings for lease. The committed investment for the next three years amounts to approximately US$20 million, out of which Raghsa Sociedad Anónima will pay US$10 million.

1. SIGNIFICANT ACCOUNTING POLICIES
2. Applicable accounting principles

The Company has prepared these financial statements in accordance with Argentine generally accepted accounting principles, in compliance with the rules and regulations of the Argentine Securities Commission (CNV).

1. Restatement in constant pesos

The financial statements fully account for the effects of changes in the purchasing power of money until August 31, 1995, by applying the method for restatement to constant pesos laid down in Technical Resolution No. 6 of the Argentine Federation of Professional Councils in Economic Sciences (FACPCE). Effective September 1, 1995, the Company discontinued application of that method in conformity with General Resolution No. 290/97 of the CNV, while maintaining any restatements recorded until that date.

This method is accepted under generally accepted accounting principles whenever the change in the price index applicable for restatement does not exceed an annual 8%. Moreover, if the variation experienced in that index were higher than that maximum limit, restatement should be resumed as from the date on which the Company’s financial statements were last adjusted for inflation, following the guidelines provided in Technical Resolution No. 6 of the FACPCE. The changes in such index in each of the years ended as from September 1, 1995 was lower than the abovementioned percentage and is expected to remain likewise during the current year.

1. Valuation methods

The main valuation methods used for the preparation of the financial statements have been as follows:

1. Cash, sales and rents receivable, other receivables and liabilities:

2. In local currency: at nominal value.

3. In foreign currency: at nominal value in foreign currency, translated at the exchange rate prevailing as of each period-end for settlement of the respective transactions.

4. 9 -

Where applicable, any pertinent financial income (expense) through each period-end has been added to, or subtracted from, receivables and liabilities. Where applicable, any significant amounts of imputed interest have been segregated from the related assets and liabilities or revenues and expenses.

Where applicable, sales and rents receivable and other receivables have been adjusted by an allowance for doubtful accounts and for receivables in litigation, respectively, made to balance the valuation of such receivables. The allowance provides for certain receivables showing signs of uncollectibility as per an individual analysis of those receivables made by the Company's management.

1. Investments:

2. Current:

3. Short-term investments in financial institutions:
4. In local currency: at nominal value plus interest accrued through each period-end.
5. In foreign currency: at nominal value in foreign currency plus interest accrued through period-end, translated at the exchange rate then effective.
6. Listed securities:
7. In local currency: at listed price as of each period-end less estimated selling expenses.
8. In foreign currency: at listed price as of each period-end less estimated selling expenses, translated at the exchange rate then in effect to settle this type of transaction.
9. Noncurrent -- Section 33 - Law No. 19,550 (Subsidiaries and Affiliate): it includes the interests in the companies detailed in Exhibit C.

As of May 31, 2001 and 2000, the interest in Buenos Aires Realty S.A., Buenos Aires Trade and Finance Center S.A. and Argentine Realty S.A., were accounted for in accordance with the equity method, based on the financial statements of such companies as of March 31, 2001 and 2000.

In valuing such companies by the equity method, significant transactions of which the Company has become aware of which occurs from March 31, 2001 and 2000 through May 31, 2001 and 2000, were taken into account.

• 10 -

As of May 31, 2000, the interest in Del-Pla Compañía de Inversiones S.A. was accounted for in accordance with the equity method, based on the financial statements of such subsidiary as of such date.

1. Inventories as of May 31, 2000: stated at original purchase or construction cost, plus any accumulated net financial expense, if applicable, generated during construction. Such value does not exceed recoverable value.
2. Fixed assets: stated at original purchase price or construction cost, plus any accumulated net financial expense, if applicable, generated during construction, and less accumulated depreciation calculated by the straight-line method over the useful life, in months, estimated for each category of assets. The value of fixed assets taken as a whole does not exceed recoverable value.
3. Intangible assets -- Deferred charges: they relate to commissions and expenses incurred in connection with the issuance of the corporate bonds described in note 5. These expenses are amortized from the issuance date over the estimated term for redemption.
4. Income tax and tax on minimum presumed income: the Company calculates income tax by applying the currently effective thirty-five percent rate to taxable income for the year, without considering the effect of temporary differences between book and taxable income.

Law No. 25,063, published in the Official Bulletin, on December 30, 1998, provided a tax on minimum presumed income applicable to fiscal years ending after its effective date and that will be in effect for ten years. This tax is supplementary to income tax since, while the latter is levied on the year’s taxable income, the tax on minimum presumed income is a minimum obligation applicable to the potential income from certain productive assets and calculated by applying a one percent rate to the value of such assets. So that the Company’s tax obligations are the higher of these two taxes. However, if the minimum presumed income tax is higher than income tax in any given tax year, such excess may be considered as a prepayment of any excess of income tax over the minimum presumed income tax payable in any of the ten subsequent tax years.

As of May 31, 2001, the Company estimated the existence of carryforward losses in the income tax and included the amount of 130,190 in tax on minimum presumed income within the “Other current receivables” account.

As of May 31, 2000, the amount determined for income tax was higher than the minimum presumed income tax and was charged to income for the period under the “Income Tax” account.

1. Stockholders’ equity accounts: restated by the method described in paragraph II of this note, with the exception of the account “Capital stock”, which was maintained at its original value.

2. 11 -

3. Statement of income accounts:

4. Accounts accumulating monetary transactions were stated at nominal value.

5. Charges for consumption of nonmonetary assets valued at cost were stated at the adjusted amounts of such assets as required under the method for restatement described in point II of this note.
6. Income from investments in subsidiaries is recognized in accordance with the equity method as indicated in paragraph b) of this section.

7. ”Financial income (expense) and holding income (losses), net” is nominal financial income and expenses, amortization of deferred charges and holding and trading income (losses) on securities. Interest expense generated by liabilities is net of capitalized financial costs, as explained in paragraph d) of this section.

8. Income recognition methods:

9. Income on sale of real property: real property sales are accounted for at the time of delivery of possession and execution of a purchase and sale agreement or conveyance deed, whichever occurs first.

10. Income on rent of real property: accounted for in the month of accrual.

11. BREAKDOWN OF THE MAIN ACCOUNTS

The main accounts in the Company’s financial statements are broken down as follows:

	2001		2000

1. Sales and rents receivable:

Current:
Real property rent	65,357		60,477
Le Parc Residential Tower	14,480		42,995
Plot of land in Glew	-		393,832
Castelli Tower	-		2,634
	-------------		-------------
	79,837		499,938
Less: Allowance for doubtful accounts (Exhibit E)	(14,841)		(22,450)
	-------------		-------------
	64,996		477,488
	=======		========

• 12 -

• Other receivables:

	2001		2000
Current:
Shareholders	500,000		-
Mortgagers	440,733		-
Tax on minimum presumed income	130,190		344,800
Income tax	95,542		507,910
Subsidiary – Raghsa Finance Limited	-		325,713
VAT credit	-		137,000
Receivables from investment sold -- Shareholders	-		606,395
Subsidiary – Del Pla Compañía de Inversiones S.A.	-		65,000
Other	26,651		48,706
	--------------		--------------
	1,193,116		2,035,524
	==========		==========
Noncurrent:
Receivables in litigation -- Hoyts Cinemas Limited	-		4,200,000
Less: Allowance for receivables in litigation (Exhibit E)	-		(4,200,000)
	--------------		--------------
	-		-
VAT credit	4,306,878		1,339,323
Shareholders	500,000		-
Mortgagers	196,542		-
Other	12,850		-
	--------------		--------------
	5,016,270		1,339,323
	========		========

1. Inventories -- Real property for sale -- Le Parc Residential Tower	-		1,350,000
	========		========

1. Loans:

Current
Commercial Bank of New York	1,060,599		-
Morgan Stanley	-		1,042,735
Corporate bonds (Note 5)	28,750		28,750
	----------------		----------------
	1,089,349		1,071,485
	=========		=========
Noncurrent – Corporate bonds (Note 5)	30,000,000		30,000,000
	=========		=========

• 13 -

• Social security and taxes payable:

	2001		2000
Current:
Financial indebtedness tax	88,677		131,399
Street lighting, street cleaning and waste removal	83,292		83,292
Turnover tax	37,941		18,522
Income tax	(1) 87,861		-
Other	55,921		43,512
	--------------		--------------
	353,692		276,725
	========		========
Noncurrent – Street lighting, street cleaning and waste removal	48,588		131,880
	========		========

1. This amount corresponds to the minimum presumed income tax net of withholding.
2. Other current liabilities:

Building contractor’s deposits	1,066,953		100,184
Other	47,482		160,896
	--------------		--------------
	1,114,435		261,080
	========		========

1. Income from sales and rents, net:

	Income (Loss)
	2001		2000
Real property rent	1,602,397		1,919,060
Sale of apartments in Le Parc Residential Tower	-		1,276,861
	---------------		----------------
	1,602,397		3,195,921
Turnover tax	(48,072)		(76,745)
	---------------		----------------
	1,554,325		3,119,176
	========		=========

1. Other income (expense), net:

Donation	(91,970)		(70,500)
Other, net	254,368		(25,997)
	--------------		---------------
	162,398		(96,497)
	========		========

• 14 -

• Financial income (expense) and holding income (losses), net:

	Income (Loss)
	2001		2000
* Generated by assets:
Holding and trading income (losses) on securities	(177,335)		(412,716)
Interest income	20,301		31,806
	--------------		--------------
Subtotal – Generated by assets	(157,034)		(380,910)
	--------------		--------------
* Generated by liabilities:
Interest expense (net of 664,450 and 477,654 capitalized interest on fixed assets for 2001 and 2000, respectively)	(230,683)		(422,254)
Amortization of deferred charges	(19,810)		(19,810)
Other financial expense, net	(62,909)		(131,717)
	--------------		--------------
Subtotal – Generated by liabilities	(313,402)		(573,781)
	--------------		--------------
	(470,436)		(954,691)
	========		========

1. OWNERSHIP AND VOTING, CHANGES IN CAPITAL STOCK AND INCREASE IN CAPITAL STOCK
2. Ownership and voting

As of May 31, 2001, the Company's capital stock and voting power was held as follows:

	Holding percentage of capital stock		Holding percentage of voting power

Moises Khafif	50.17		81.73
Ivette Dabah	22.52		8.26
Elena Chammah	25.30		9.27
Gloria Btesh de Khafif	2.01		0.74
	---------		---------
	100.00		100.00
	=====		=====

During the term of the corporate bonds described in note 5 and under the Trust Agreement, Mr. Moises Khafif will have to keep ownership, exempt from all taxes or duties of any kind, of such number of shares required to control the Company.

• 15 -

• Changes in capital stock

	05/31/01		02/28/01		02/29/00		02/28/99
Issued	50,000,000		50,000,000		43,500,000		40,000,000
Subscribed	50,000,000		50,000,000		43,500,000		40,000,000
Registered	50,000,000		43,500,000		43,500,000		40,000,000
Paid-in	49,000,000		48,875,000		43,500,000		40,000,000

1. Increase in capital stock

On December 20, 2000, the Regular General Stockholders’ Meeting decided to increase capital stock to 50,000,000 by capitalizing the balances as of February 29, 2000, of the accounts adjustment to capital for 322,514, irrevocable contributions for 39,643, share premiums for 784,730, part of unappropriated earnings in the amount of 3,853,113 and by means of stockholders’ cash contributions of 1,500,000 of which 500,000 was paid-in as of May 31, 2001. The capital stock increase was registered on March 8, 2001.

1. ISSUANCE OF CORPORATE BONDS
2. Corporate bonds for US$30,000,000

As of May 31, 2001 and 2000, the Company holds corporate bonds for an amount of US$ 30,000,000 (“the Securities”).

Such Securities mature as to one half of the principal amount on February 28, 2003 and as to the remaining balance on February 28, 2004; they accrue a nominal interest rate of 11.50% per annum, to be paid quarterly in arrears due on May 28, August 28, November 28, and February 28 of each year.

Such Securities were offered publicly in Argentina in accordance with Law No. 23,576, and were authorized by CNV Resolution No. 11,650 dated March 11, 1997. The Securities were registered with the IGJ (Argentine governmental regulatory agency of corporations) on October 15, 1997, under number 116 of the Corporate Bond Issue Volume, Book 01.

As a consequence of the abovementioned Corporate Bonds issuance, the Company executed the Trust Agreement whereby it undertook certain commitments, which were partially amended by the Bond Holders’ Meeting held on December 14, 1999. After such amendments, the main commitments undertaken by the Company are as follows:

• Not to incur in an indebtedness index (Debt to Stockholders’ Equity), calculated as provided in the Trust Agreement as amended, either individual or consolidated higher than 1.5 over the life of the Securities.

• 16 -

• Not to make any “restricted payment” if, at any time, the Company’s EBITDA (earnings before extraordinary income, interest, taxes, depreciation and amortization, - without including other income (expense), net -) calculated as provided in the Trust Agreement does not amount to 300% (three hundred percent) of the interest accrued in the fiscal year. As used in the Trust Agreement, “restricted payment” means, among other, any payment of dividends, either in cash or in kind, any payment made for the purchase, redemption, retirement or acquisition of company shares, or any loan or transfer of funds, securities or assets, to any official, director, or employee of the Company.

• Not to perform changes in its bylaws which would result in a reduction of its capital stock or render impossible for the Company to perform its obligations in respect of the Securities.
• Not to change the nature of its business or operations from stipulated in the current Company bylaws.
• Not to perform actions resulting in the corporate reorganization (mergers, spin-offs, etc.) of the Company or any of its subsidiaries.

Should the Company default on any of the commitments undertaken, any bondholder in respect to their Security, or the Trustee in respect to all Securities, may declare that the principal amount of such Security, or of all Securities, whichever the case, is due and payable and, consequently, demand repayment of the unpaid principal amount plus interest accrued thereon and any other additional resulting amount.

The proceeds from the sale of the Securities were used to settle the long-term liabilities that the Company maintained as of February 28, 1997.

1. Global Corporate Bond Program for up to US$100,000,000

On October 17, 2000, the Regular and Special Unanimous Stockholders’ Meeting of Raghsa Sociedad Anónima approved the establishment of US$100,000,000 Global Corporate Bond Program in accordance with Law No. 23,576, under which corporate bonds will be placed by public offering for up to 100,000,000 US dollars (the “Program”). Such Program was authorized by C.N.V. Resolution Nº 13,743 dated February 22, 2001.

The Company's Board of Directors will determine the terms, conditions and timing of each issuance of notes under the Program.

In June 2001, the Company's Board of Directors approved the issuance of a first series under the Program for 33,000,000 US$. The main conditions of thar issuance are the following:

• Amount: bonds will be issued for a total amount of US$33,000,000, which shall be paid in three equal and consecutive installments of US$11,000,000; becoming due on February 28, 2010, 2011 and 2012, respectively.

• 17 -

• Interest rate: bonds will accrue interest at a 15.50% annual nominal rate, to be paid quarterly in arrears due on May 28, August 28, November 28 and February 28 of each year. Such bonds shall be issued with a 6% issue discount.

The funds obtained from such bond distribution shall be employed mainly for settlement of corporate bonds held by the Company as of May 31, 2001.

1. RESTRICTION ON UNAPPROPRIATED EARNINGS

Argentine law requires that five percent of each fiscal year’s net income be appropriated to the legal reserve, until such reserve equals twenty percent of capital stock. Consequently, the Stockholders’ Annual General Meeting of June 5, 2001, allocated the amount of 206,014 from the income undistributed as of the beginning of this year to the legal reserve, equal to 5% of the net income for the year ended February 28, 2001.

1. EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements are an 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 and may be material. Accordingly, these financial statements do not purport to present the information on the Company’s financial position, and the related results of operations, changes in cash flows and changes in stockholders' equity in accordance with accounting principles generally accepted in the countries of users of the financial statements other than Argentina.

Signed for purposes of identification Signed for purposes of identification

with our report dated 07-10-2001 with our report dated 07-10-2001

For the Statutory Audit Committee PISTRELLI, DIAZ Y ASOCIADOS

CPCECF Vol. 1 - Fo. 8

ROSA A. BUSTELO MARIANA FILAS MOISES KHAFIF

Statutory Auditor Partner President

CPA UBA CPA UNLZ

CPCECF Vol. 80 - Fo. 188 CPCECF Vol. 221 - Fo. 101

• 18 -

(English translation of the financial statements originally issued in Spanish – See note 7)

EXHIBIT A

RAGHSA SOCIEDAD ANONIMA

CHANGES IN FIXED ASSETS

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos – Note 2.II)

		2001
		Original cost
Description		At beginning of year		Increase		Transfer			At end of period
Plaza San Martin building– City of Buenos Aires		48,480,957		-		-				48,480,957
555 Shopping Complex – City of Buenos Aires		7,257,215		-		-				7,257,215
Av. Corrientes 447, Main Office – City of Buenos Aires		605,743		-		-				605,743
Construction in progress – Florida 343/San Martin 344 – City of Buenos Aires		29,417,448		3,902,179		844,249				34,163,876
Automobiles		269,248		-		-				269,248
Furniture and fixtures		172,056		-		-				172,056
Installations		87,992		-		-				87,992
Advances to vendors		1,317,691		-		(844,249)				473,442
		----------------		----------------		--------------				----------------
Total 2001		87,608,350		3,902,179		-				91,510,529
		=========		=========		========				=========
Total 2000		72,008,049		3,675,700		-				75,683,749
		=========		=========		========				=========

		2001										2000
		Accumulated depreciation
Description		At beginning of year		Annual rate		Increase		At end of period		Net book value		Net book value
Plaza San Martin building– City of Buenos Aires		9,357,672		2%		209,190		9,566,862		38,914,095		39,750,854
555 Shopping Complex – City of Buenos Aires		776,978		2%		35,297		812,275		6,444,940		6,586,127
Av. Corrientes 447, Main Office - City of Buenos Aires		138,703		2%		2,844		141,547		464,196		475,571
Construction in progress - Florida 343/San Martin 344 - City of Buenos Aires		-		-		-		-		34,163,876		17,403,990
Automobiles		224,848		20%		4,175		229,023		40,225		64,594
Furniture and fixtures		172,056		-		-		172,056		-		-
Installations		86,995		10%		503		87,498		494		2,509
Advances to vendors		-		-		-		-		473,442		1,406,548
		----------------				--------------		---------------		----------------		-----------------
Total 2001		10,757,252				252,009		11,009,261		80,501,268
		=========				========		=========		=========
Total 2000		9,738,991				254,565		9,993,556				65,690,193
		=========				========		=========				=========

• 19 -

(English translation of the financial statements originally issued in Spanish – See note 7)

EXHIBIT B

RAGHSA SOCIEDAD ANONIMA

CHANGES IN INTANGIBLE ASSETS

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos – Note 2.II)

	2001										2000
	Original cost		Accumulated amortization
	At beginning of year and at end of period		At beginning of year		For the period		At end of period		Net book value		Net book value
Deferred charges -- Commissions and expenses for issuance of corporate bonds
Total 2001	559,506		321,788		19,810		341,598		217,908
	=======		=======		======		=======		======
Total 2000	559,506		242,547		19,810		262,357				297,149
	=======		=======		======		=======				=======

• 20 -

(English translation of the financial statements originally issued in Spanish – See note 7)

EXHIBIT C

RAGHSA SOCIEDAD ANONIMA

INVESTMENTS, SHORT-TERM INVESTMENTS, LISTED SECURITIES

AND EQUITY OF OTHER SUBSIDIARIES AS OF MAY 31, 2001 AND 2000

(Stated in pesos – Note 2.II)

		2001																													2000
		Description of securities
Name and issuer		Serie		Face value		Number		Cost				Book value								Loss from investment in subsidiaries									Book value									Loss from investment in subsidiaries
CURRENT INVESTMENTS:
* Short-term investments in financial institutions		-		-		-		258,411					258,411								-											304,197								-
* Listed securities:
* Brazil 2004		-		US$ 1		1,650,000		1,634,563					1,682,416								-											5,011,711								-
* Brazil 2006		-		US$ 1		1,000,000		988,950					983,500								-											-								-
* Brazil 2009		-		-		-		-					-								-											1,046,028								-
* Brazil 2027		-		US$ 1		2,100,000		1,701,100					1,539,563								-											-								-
* Pensions' Debt Consolidation Bonds in pesos		-		-		-		-					-								-											976,641								-
* Debt Consolidation Bonds issued by the Province of Buenos Aires in pesos		-		$ 1		521,340		769,298					483,528								-											1,886,829								-
* Lucent Technologies		-		-		4,000		220,000					31,520								-											275,000								-
* Yahoo Inc.		-		-		-		-					-								-											678,375								-
* Intl Business Machines		-		-		-		-					-								-											1,050,000								-
* Akamai Technologies		-		-		2,900		723,425					29,957								-											193,575								-
* Savvis Communications		-		-		1,000		24,000					1,360								-											13,625								-
* America Online		-		-		-		-					-								-											266,875								-
* Palm Inc.		-		-		-		-					-								-											2,300								-
* Extreme Networks Inc.		-		-		-		-					-								-											97,750								-
* Starmedia Network Inc.		-		-		10,000		357,500					27,700								-											181,250								-
* Etoys Inc.		-		-		7,500		75,398					-								-											36,562								-
* Avaya Inc.		-		-		333		-					5,411								-											-								-
								--------------					--------------																			---------------								---------
								6,752,645					5,043,366																			12,020,778								-
								========					========																			========								=====
NONCURRENT INVESTMENTS :
* Shares -- Holding in subsidiaries and affiliate (Art, 33 - Law N° 19,550):
* Del-Pla Compañía de Inversiones S.A.		-		-		-		-							-								-							1,820,107									(72,516)
* Buenos Aires Realty S.A. (1)		-		$ 1		6,000		1,944,933							1,944,933								-							1,870,722									-
* Argentine Realty S.A. (1)		-		$ 1		6,000		2,024,110							2,024,110								-							1,949,992									-
* Buenos Aires Trade and Finance Center S.A. (1)		-		$ 1		6,000		1,655,695							1,655,695								-							1,593,985									-
								--------------						-------------								-----------											---------------								-----------
								5,624,738						5,624,738								-											7,234,806								(72,516)
								========						========								======											========								=======

1. Financial statements for a nine-month period.

2. 21 -

(English translation of the financial statements originally issued in Spanish – See note 7)

EXHIBIT C

(Cont.)

RAGHSA SOCIEDAD ANONIMA

INVESTMENTS, SHORT-TERM INVESTMENTS, LISTED SECURITIES

AND EQUITY OF OTHER SUBSIDIARIES AS OF MAY 31, 2001 AND 2000

(Stated in pesos – Note 2.II)

		2001
		Information on issuer
		Last financial statements issued
Name and issuer		Main business		Date		Capital stock		Net income for the period		Stockholders´ equity		Holding percentage of capital stock
NONCURRENT INVESTMENTS :
* Shares -- Holding in subsidiaries and affiliate (Art, 33 - Law N° 19,550):
* Buenos Aires Realty S.A. (1)		Realty		03/31/01		12,000		-		3,867,018		50.00
* Argentine Realty S.A. (1)		Realty		03/31/01		12,000		-		4,025,232		50.00
* Buenos Aires Trade and Finance Center S.A. (1)		Realty		03/31/01		12,000		-		3,292,315		50.00

1. Financial statements for a nine-month period.

2. 22 -

(English translation of the financial statements originally issued in Spanish - See note 7)

EXHIBIT E

RAGHSA SOCIEDAD ANONIMA

CHANGES IN ALLOWANCES

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos – Note 2.II)

Description		Year		At beginning of year		Increase		Decrease		At end of period
Deducted from current assets -- Allowance for doubtful accounts		2001		14,841		-		-		14,841
				========		========		========		========
		2000		22,450		-		-		22,450
				========		========		========		========
Deducted from noncurrent assets --		2001		-		-		-		-
Allowance for receivables in				========		========		========		========
litigation		2000		4,200,000		-		-		4,200,000
				========		========		========		========

• 23 -

(English translation of the financial statements originally issued in Spanish - See note 7)

EXHIBIT F

RAGHSA SOCIEDAD ANONIMA

COST OF SALES AND RENTS

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos - Note 2.II)

	2001		2000

Inventories at beginning of year	-		1,957,394
Cost of rents (Exhibit H)	388,623		314,223
Inventories at end of period	-		(1,350,000)
	------------		--------------
	388,623		921,617
	========		=========

• 24 -

(English translation of the financial statements originally issued in Spanish - See note 7)

EXHIBIT G

RAGHSA SOCIEDAD ANONIMA

FOREIGN CURRENCY ASSETS AND LIABILITIES

AS OF MAY 31, 2001 AND 2000

	2001						2000
	Foreign currency amount (US$)		Exchange rate (1)		Amount in pesos		Foreign currency amount (US$)		Amount in pesos
CURRENT ASSETS
Cash	26,150		1.00		26,150		112,978		112,978
Investments	4,308,458		1.00		4,308,458		8,853,636		8,853,636
Sales and rents receivable	37,373		1.00		37,373		477,488		477,488
Other receivables	440,733		1.00		440,733		938,108		938,108
					----------------				----------------
					4,812,714				10,382,210
NONCURRENT ASSETS -- Other receivables	196,542		1.00		196,542		-		-
					----------------				----------------
Total foreign currency assets					5,009,256				10,382,210
					=========				=========
CURRENT LIABILITIES
Accounts payable	135,909		1.00		135,909		221,070		221,070
Loans	1,089,349		1.00		1,089,349		1,071,485		1,071,485
Other liabilities	18,450		1.00		18,450		135,896		135,896
					----------------				----------------
					1,243,708				1,428,451
					----------------				----------------
NONCURRENT LIABILITIES
Accounts payable	620,141		1.00		620,141		-		-
Loans	30,000,000		1.00		30,000,000		30,000,000		30,000,000
Other liabilities	68,800		1.00		68,800		64,350		64,350
					----------------				----------------
					30,688,941				30,064,350
					----------------				----------------
Total foreign currency liabilities					31,932,649				31,492,801
					=========				=========

1. Purchasing and selling rate of exchange.

2. 25 -

(English translation of the financial statements originally issued in Spanish - See note 7)

EXHIBIT H

RAGHSA SOCIEDAD ANONIMA

INFORMATION REQUIRED UNDER ART. 64 SECTION I, CLAUSE b) OF LAW No. 19,550

FOR THE THREE – MONTH PERIODS ENDED MAY 31, 2001 AND 2000

(Stated in pesos - Note 2.II)

		2000		2001
Accounts		Total		Total		Cost of rents		Administrative expenses		Selling expenses
Directors’ and Statutory Audit Committee's fees		58,675		84,076		-		84,076		-
Salaries		40,580		52,217		-		52,217		-
Payroll taxes		10,666		12,162		-		12,162		-
Service fees and compensation		136,443		71,846		25,589		45,531		726
Taxes, rates and levies		8,834		15,326		15,326		-		-
Travel and entertainment		43,082		38,411		-		38,158		253
Subscriptions, advertising and postings		9,385		3,288		-		959		2,329
Maintenance expenses		17,943		59,742		55,006		4,736		-
Depreciation of fixed assets		254,565		252,009		244,487		7,522		-
Office supplies and services		27,534		22,345		-		22,345		-
Electric power and telephone		19,731		13,969		1,435		12,534		-
Commissions paid		33,131		1,440		-		-		1,440
Other		73,649		98,687		46,780		43,754		8,153
		------------		------------		------------		------------		----------
Total 2001				725,518		388,623		323,994		12,901
				=======		=======		=======		======
Total 2000		734,218				314,223		385,907		34,088
		=======				=======		=======		======

• 26 -

(English translation of the financial statements originally issued in Spanish - See note 7)

EXHIBIT I

RAGHSA SOCIEDAD ANONIMA

BREAKDOWN OF SHORT-TERM INVESTMENTS, RECEIVABLES

AND LIABILITIES BY MATURITY AS OF MAY 31, 2001

(Stated in pesos -- Note 2.II)

		Assets				Liabilities
Due		Short-Term investments (1)		Receivables		Loans		Other debts

No due date		-		(3) 4,806,878		-		-
		------------		--------------		----------------		--------------
With maturity date
Past-due
In up to three months		-		38,378		-		-
In three to six months		-		11,761		-		-
		------------		--------------		----------------		--------------
		-		50,139		-		-
To become due
In up to three months		258,411		775,631		28,750		1,299,109
In three to six months		-		-		96,345		22,098
In six to nine months		-		205,859		525,947		1,108,027
In nine to twelve months		-		226,483		438,307		31,975
In one to two years		-		199,692		15,000,000		674,529
In two to three years		-		2,100		15,000,000		18,900
In three to four years		-		1,800		-		22,100
In four to five years		-		1,800		-		-
More than five years		-		4,000		-		22,000
		------------		--------------		----------------		------------
Total to become due		258,411		1,417,365		31,089,349		3,098,738
		------------		--------------		----------------		--------------
Total with maturity date		258,411		1,467,504		31,089,349		3,098,738
		------------		--------------		----------------		--------------
Total		(2) 258,411		(4) 6,274,382		(5) 31,089,349		3,098,738
		=======		========		=========		========

1. Does not include securities issued in series and stocks.
2. Accrues interest at a fixed nominal annual average interest rate of about 8%.
3. Included in noncurrent assets.
4. Net of allowance for doubtful accounts. Includes 622,495 which accrues interest at a fixed nominal annual average rate of about 12%.
5. About 98% of this balance accrues interest at a fixed nominal interest rate of 11.50% per annum and the balance accrues interest at a fixed annual average rate of about 8%.

STATUTORY AUDIT COMMITEE’S REPORT

To the Stockholders of

RAGHSA SOCIEDAD ANONIMA:

Pursuant to current Buenos Aires Stock Exchange regulations, we have reviewed the Balance Sheet of RAGHSA SOCIEDAD ANONIMA as of May 31, 2001 and the related Statements of Income, Changes in Stockholders’ Equity and Cash Flows, the Notes and Exhibits, for the three-month period then ended. Our review consisted of the application of the procedures necessary to comply with the Buenos Aires Stock Exchange regulations on accounting documents related to the review of interim period financial statements. Despite the limited nature of review, we have no remarks to make on the Financial Statements mentioned above. We have also performed the procedures described in section 294 of Law Nº 19,550.

Buenos Aires,

July 10, 2001 For Statutory Audit Committee

ROSA A. BUSTELO

Statutory Auditor

Certified Public Accountant UBA

CPCECF Vol. 80 - Fo. 188

RAGHSA SOCIEDAD ANONIMA

FINANCIAL STATEMENTS AS OF MAY 31, 2001 AND 2000

RATIFICATION OF LITHOGRAPHED SIGNATURES

We hereby ratify our signatures which appear in lithographed form on the preceding pages from page N° 1 through page N° 26, of the financial statements of the Company.

For the Statutory Audit Committee PISTRELLI, DIAZ Y ASOCIADOS

CPCECF Vol. 1 – Fo. 8

MOISES KHAFIF

President

ROSA A. BUSTELO MARIANA FILAS

Statutory Auditor Partner

CPA UBA CPA UNLZ

CPCECF Vol. 80 – Fo. 188 CPCECF Vol. 221 – Fo. 101