TERNIUM ARGENTINA S.A. — Annual Report 2000

Sep 14, 2000

SIDERAR SOCIEDAD ANONIMA

INDUSTRIAL Y COMERCIAL

FINANCIAL STATEMENTS

AT JUNE 30, 2000

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

FINANCIAL STATEMENTS
AT JUNE 30, 2000

CONTENTS

Summary information

Financial statements at June 30, 2000

Balance sheet

Statement of income

Statement of changes in shareholders' equity

Statement of sources and uses of funds

Notes and exhibits to the financial statements

Consolidated financial statements

Report of independent accountants

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

SUMMARY INFORMATION

In accordance with the regulations of Resolution No. 290/97 of the National Securities Commission the Board of Directors has approved the following information corresponding to the year begun on July 1, 1999 and ended on June 30, 2000.

1. ACTIVITIES OF THE COMPANY

The result for the year ended June 30, 2000 has been a net profit of $ 3.2 million. Ordinary consolidated income (excluding the effect of investments in related companies) was $ 33.1 million.

The delay in recovery by the Argentine economy and competition from imports, many in unfair conditions, affected shipments to the domestic market, which were down 13%. In such a context, the Company has continued with the intensive export program begun in the previous year, increasing such sales by 15%.

During the year consolidated shipments totaled 2,087.1 thousand tons, 2% under the total recorded in the previous year. Of this total, 1,134.1 thousand tons were sold in the domestic market and 953.0 thousand tons were sold for export, this being a record for the Company.

During the year the international price of steel, which began the period at depressed levels, recorded a clearly favorable trend, backed by the growth of the economies of the US and Europe, added to the recovery experienced by the economies of south-east Asia. FOB prices at European ports for hot and cold rolled sheet went up by 40% and 36%, respectively. In addition, higher output of coated products and lower domestic demand enabled an improvement in the mix of exports through the inclusion of products with a higher added value.

The Company continued with its cost reduction programs, the success of which, together with the lower price for raw materials, enabled a reduction in the average cost of sales by $ 8.5 per ton.

Over the year, the Company encountered no difficulty in financing its operations and was able to reduce its bank and financial debt by $ 56.2 million.

Industrial activity evolved favorably during the year, with a record output level of 2.2 million tons of crude steel. The previous years production levels were exceeded by almost all product lines, with an increase of 24% recorded in the output of galvanized steel as a result of improved productivity following investment on the line at the plant in Canning.

In February 2000 agreements were signed for the restructuring of the liabilities of Siderúrgica del Orinoco (Sidor) and Consorcio Siderurgia Amazonia (Amazonia). Under these agreements, the shareholders of Sidor committed resources for US$ 300 million, as a result of which Siderar has committed resources to Amazonia in the amount of US$ 56.2 million through its wholly-owned subsidiary Prosid Investments Inc., in the form of a combination of capital contributions and loans convertible into shares.

The result of investments in related companies, mainly derived from Sidor, was a loss of $ 29.9 million, significantly below the loss recorded in the previous year ($ 50.5 million).

Other notable events during the year have included:

• participation in the coal purchasing group by Brazilian plants;
• outsourcing of descaling line acid regeneration, with an investment of $ 8.5 million by the operator;
• transformation of the Information Pipeline into the Company’s first step in the e-commerce market, together with the decision to implement four projects that will help to improve the competitive position of the Company in the market and obtain cost savings.

Consolidated personnel numbers at the end of the year reached 5,507, a reduction of 4% compared to the previous year.

2. CONSOLIDATED EQUITY STRUCTURE (compared to the years ended June 30, 1996, 1997, 1998 and 1999 - Amounts stated in thousands of pesos)

	6.30.00	6.30.99	6.30.98	6.30.97	6.30.96 (1)
Current assets	463,502	502,096	515,777	459,028	428,312
Non-current assets	865,020	894,319	945,688	795,080	715,279
Total	1,328,522	1,396,415	1,461,465	1,254,108	1,143,591
Current liabilities	385,301	401,469	434,035	419,666	401,494
Non-current liabilities	307,644	348,354	348,094	237,144	204,486
Sub-total	692,945	749,823	782,129	656,810	605,980
Minority interest in subsidiaries	54	51	95	-	-
Shareholders' equity	635,523	646,541	679,241	597,298	537,611
Total	1,328,522	1,396,415	1,461,465	1,254,108	1,143,591

1. In this year the Company did not hold investments in subsidiaries requiring consolidation.

3. CONSOLIDATED INCOME STRUCTURE (compared to the years ended June 30, 1996, 1997, 1998 and 1999 - Amounts stated in thousands of pesos)

	7.1.99 to 6.30.00	7.1.98 to 6.30.99	7.1.97 to 6.30.98	7.1.96 to 6.30.97	7.1.95 to 6.30.96 (1)
Result from ordinary operations	107,331	131,955	218,160	176,948	126,814
Financial result	(47,764)	(53,503)	(35,781)	(29,859)	(41,270)
Other ordinary income and expenses	(17,761)	(8,207)	(15,909)	(4,911)	(2,662)
Minority interest in subsidiaries	(2)	(15)	(25)	-	-
Result before tax	41,804	70,230	166,445	142,178	82,882
Taxes	(8,749)	(19,073)	(55,082)	(44,777)	(12,637)
Ordinary result	33,055	51,157	111,363	97,401	70,245
Result from investments in related companies	(29,874)	(50,548)	(1,797)	(1)	-
Other income and expenses	-	-	-	(6,506)	(9,267)
Net result for the year	3,181	609	109,566	90,894	60,978

1. In this year the Company did not hold investments in subsidiaries requiring consolidation.

4. CONSOLIDATED STATISTICAL DATA (compared to the years ended June 30, 1996, 1997, 1998 and 1999 - Amounts stated in thousands of tons)

	7.1.99 to 6.30.00	7.1.98 to 6.30.99	7.1.97 to 6.30.98	7.1.96 to 6.30.97	7.1.95 to 6.30.96 (1)
Shipments (2)	2,087	2,126	2,219	1,984	1,669
Domestic market	1,134	1,297	1,682	1,441	1,136
Exports	953	829	537	543	533
Production
Hot rolled steel	2,120	1,920	2,083	1,909	1,718
Cold rolled steel	1,374	1,380	1,306	1,213	1,209
Coated	630	550	521	343	284

1. In this year the Company did not hold investments in subsidiaries requiring consolidation.
2. Includes 44.7, 110.3, 225.0 and 197.8 thousand tons of pig iron bars for the years ended June 30, 2000, 1999, 1998 and 1997, respectively.

5. CONSOLIDATED RATIOS (compared to the years ended June 30, 1996, 1997, 1998 and 1999)

	6.30.00	6.30.99	6.30.98	6.30.97	6.30.96 (1)
Liquidity	1.20	1.25	1.19	1.09	1.07
Indebtedness	1.09	1.16	1.15	1.10	1.13
Pre-tax profitability	6.6%	10.9%	29.2%	28.1%	17.4%

1. In this year the Company did not hold investments in subsidiaries requiring consolidation.

6. OUTLOOK

The international outlook is favorable, as the US and European markets will continue to grow, and at regional level growth is also expected to be recorded by the Brazilian economy. Locally, the Argentine government has shown its intention of ensuring fiscal equilibrium, making progress with the transformation of the Argentine economy.

These factors have led to a consensus among leading economic analysts that the Argentine economy will grow by 2% in 2000.

Growth by the Argentine economy and lower volumes of imports enable the forecasting of increased shipments to the domestic market. On the basis of such forecasts, the Company expects to improve its results in the coming year.

Buenos Aires, September 5, 2000

THE BOARD OF DIRECTORS

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

FINANCIAL STATEMENTS for the year ended June 30, 2000

Fiscal year No. 39 beginning on July 1, 1999

Legal address: Leandro N. Alem 1067, Buenos Aires

Main activity: Promotion, construction and operation of steel mills, production and marketing of steel, iron and steel products

From the by-laws and articles of incorporation:

Date of registration in the National Commercial Court of Record of First Instance: March 7, 1962

From the amendments:

Dates of registration in the National Commercial Court of Record of First Instance:

November 10, 1966;

October 10, 1967;

June 11, 1969;

June 9, 1971;

June 24, 1976;

July 1, 1977;

October 5, 1977;

June 26, 1980;

October 13, 1980;

March 29, 1982;

April 27, 1983;

April 11, 1984;

April 2, 1985;

May 7, 1986;

June 30, 1987;

August 10, 1992;

September 16, 1992;

July 28, 1993;

May 6, 1994;

January 5, 1995;

November 7, 1995;

May 28, 1996;

March 11, 1997; and

September 30, 1999

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

FINANCIAL STATEMENTS for the year ended June 30, 2000

Registration number with the Superintendency of Corporations: 14510

Duration of the Company: Up to April 2, 2090

Capital: Par value shares of 1 peso and one vote each

Class	No. of votes per share	Subscribed and paid-in
		$
Common "A" shares outstanding	1	310,891,625
Common "B" shares outstanding	1	36,577,146
Total		347,468,771

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

BALANCE SHEET at June 30, 2000, compared to the previous year

	6.30.00	6.30.99			6.30.00	6.30.99
	$	$			$	$
ASSETS				LIABILITIES
CURRENT ASSETS				CURRENT LIABILITIES
Cash and banks (Note 4 a))	9,051,705	3,694,068		Accounts payable (Note 4 h))	109,393,854	104,019,892
Other investments (Exhibit D)	229,507	17,205,118		Short-term debt (Note 4 i))	235,767,290	253,208,525
Trade receivables (Note 4 b))	180,097,463	173,424,394		Social security and taxes (Note 4 j))	32,803,065	37,599,800
Other receivables (Note 4 c))	34,037,124	44,312,991		Other liabilities	4,169,041	2,231,143
Inventories (Exhibit F)	235,072,856	257,496,702		Provisions (Exhibit E)	3,153,834	3,135,616
Other assets (Note 4 d))	1,564,416	2,177,521
Total current assets	460,053,071	498,310,794		Total current liabilities	385,287,084	400,194,976
NON-CURRENT ASSETS				NON-CURRENT LIABILITIES
Trade receivables (Note 4 e))	5,870,080	1,590,175		Accounts payable (Note 4 k))	9,235,072	12,798,585
Other receivables (Note 4 f))	15,776,610	17,773,997		Long-term debt (Note 4 l))	280,272,745	317,898,210
Investments (Exhibit C)	107,193,789	77,465,994		Social security and taxes (Note 4 m))	4,905,592	4,017,054
Other investments (Exhibit D)	28,876,332	40,233,188		Other liabilities	365,318	-
Intangible assets (Exhibit B)	3,746,748	6,132,191		Provisions (Exhibit E)	12,865,315	13,640,080
Fixed assets (Exhibit A)	704,757,371	750,197,789
Other assets (Note 4 g))	2,179,999	3,385,283
Total non-current assets	868,400,929	896,778,617		Total non-current liabilities	307,644,042	348,353,929
				Total liabilities	692,931,126	748,548,905
				SHAREHOLDERS' EQUITY (as per respective statement)	635,522,874	646,540,506
Total assets	1,328,454,000	1,395,089,411		Total liabilities and Shareholders’ equity	1,328,454,000	1,395,089,411

The accompanying notes 1 to 14 and exhibits A to I are an integral part of these financial statements.

The report of independent accountants is issued as a separate document.

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

STATEMENT OF INCOME for the year ended June 30, 2000, compared to the previous year

	6.30.00	6.30.99
	$	$
Net income from sales	958,440,592	985,746,384
Cost of sales (Exhibit F)	(748,329,049)	(763,397,569)
Gross profit	210,111,543	222,348,815
Selling expenses (Exhibit H)	(30,325,641)	(25,537,032)
Administrative expenses (Exhibit H)	(73,302,379)	(72,735,964)
Financial and holding results
Generated by assets (Exhibit H)	4,112,158	2,897,239
Generated by liabilities (Exhibit H)	(53,455,324)	(55,005,836)
Other ordinary income and expenses (Exhibit H)	(17,749,169)	(5,579,004)
Income before taxes	39,391,188	66,388,218
Income tax provision charge	(8,725,602)	(18,613,599)
Ordinary income	30,665,586	47,774,619
Result from investments in subsidiaries and related companies (Note 8 e))	(27,484,467)	(47,165,570)
Net income for the year	3,181,119	609,049

The accompanying notes 1 to 14 and exhibits A to I are an integral part of these financial statements.

The report of independent accountants is issued as a separate document.

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY for the year ended June 30, 2000, compared to the previous year

	Capital stock			Non-capitalized contributions	Retained earnings
Item	Shares outstanding	Capital adjustment	Total	Premium on issue of shares	Legal reserve	Reserve for future dividends	Free reserve	Unappropriated retained earnings	Total shareholders’ equity
	$	$	$	$	$	$	$	$	$
Balances at June 30, 1998	347,468,771	27,348,487	374,817,258	21,194,650	14,098,504	139,564,237	20,000,000	109,566,341	679,240,990
Approved by the Shareholders' Ordinary Meeting held on September 30, 1998
- Distribution of profits
Legal reserve	-	-	-	-	5,478,317	-	-	(5,478,317)	-
Hnos. Agustín y Enrique Rocca Foundation	-	-	-	-	-	-	-	(300,000)	(300,000)
Cash dividends	-	-	-	-	-	-	-	(33,009,533)	(33,009,533)
Reserve for future dividends	-	-	-	-	-	70,778,491	-	(70,778,491)	-
Income for the year as per statement of income	-	-	-	-	-	-	-	609,049	609,049
Balances at June 30, 1999	347,468,771	27,348,487	374,817,258	21,194,650	19,576,821	210,342,728	20,000,000	609,049	646,540,506
Approved by the Shareholders' Ordinary Meeting held on September 30, 1999
- Release of the reserve for future dividends	-	-	-	-	-	(13,620,154)	-	13,620,154	-
- Distribution of profits
Legal reserve	-	-	-	-	30,452	-	-	(30,452)	-
Hnos. Agustín y Enrique Rocca Foundation	-	-	-	-	-	-	-	(300,000)	(300,000)
Cash dividends	-	-	-	-	-	-	-	(13,898,751)	(13,898,751)
Income for the year as per statement of income	-	-	-	-	-	-	-	3,181,119	3,181,119
Balances at June 30, 2000	347,468,771	27,348,487	374,817,258	21,194,650	19,607,273	196,722,574	20,000,000	3,181,119	635,522,874

The accompanying notes 1 to 14 and exhibits A to I are an integral part of these financial statements.

The report of independent accountants is issued as a separate document.

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

STATEMENT OF SOURCES AND USES OF FUNDS for the year ended June 30, 2000, compared to the previous year

	6.30.00	6.30.99
	$	$
CHANGES IN FUNDS
Funds at the beginning of the year (1)	20,899,186	5,901,151
(Decrease) increase in funds	(11,617,974)	14,998,035
Funds at the end of the year (1)	9,281,212	20,899,186
CAUSES OF CHANGES IN FUNDS
Ordinary income	30,665,586	47,774,619
Add: Items not representing funds disbursements
Depreciation of fixed assets	78,805,768	69,520,487
Depreciation of other non-current investments	-	23,191
Depreciation of other current assets	52,473	39,403
Amortization of intangible assets	2,385,443	2,067,285
Allowance for doubtful accounts	2,974,353	1,641,482
Income tax provision charge	8,725,602	18,613,599
Board of Directors' and Surveillance Committee's fees provision	1,232,000	1,232,000
Provision for contingencies	-	2,846,320
Less: Items not providing funds
Provision for contingencies	(293,922)	-
Funds generated by ordinary operations	124,547,303	143,758,386
Holding result in subsidiaries and related companies	(27,484,467)	(47,165,570)
Add: Items not representing funds disbursements
Holding result in subsidiaries and related companies	27,484,467	47,165,570
Funds generated (applied) to remaining operations	-	-
Funds generated by operations	124,547,303	143,758,386
Other causes of sources of funds
Net decrease (increase) in other receivables	12,273,254	(31,911,492)
Net decrease in inventories	22,423,846	39,563,786
Net decrease in other non-current investments	8,977,856	13,672,698
Net decrease (increase) in other assets	1,765,916	(295,633)
Net increase (decrease) in trade payables	1,810,449	(40,828,255)
Net increase (decrease) in other liabilities	1,071,216	(956,238)
Incorporation of absorbed company	-	5,425,889
Total sources of funds - Carried forward	172,869,840	128,429,141

(1) Cash and banks plus other current investments

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

STATEMENT OF SOURCES AND USES OF FUNDS for the year ended June 30, 2000, compared to the previous year

	6.30.00	6.30.99
	$	$
CAUSES OF CHANGES IN FUNDS (Contd.)
Brought forward	172,869,840	128,429,141
Other causes of uses of funds
Net increase in trade receivables	(11,548,327)	(3,668,759)
Net increase in investments	(57,212,262)	(473,230)
Net increase in fixed assets	(33,365,350)	(58,790,238)
Net (decrease) increase in short and long-term debt	(55,066,700)	21,005,603
Net decrease in social security and taxes	(12,633,799)	(32,759,469)
Decrease in provisions	(462,625)	(5,435,480)
Distribution of profits voted by Shareholders' Meeting on September 30, 1998	-	(33,309,533)
Distribution of profits voted by Shareholders' Meeting on September 30, 1999	(14,198,751)	-
Total uses of funds	(184,487,814)	(113,431,106)
(Decrease) increase in funds	(11,617,974)	14,998,035

The accompanying notes 1 to 14 and exhibits A to I are an integral part of these financial statements.

The report of independent accountants is issued as a separate document.

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

NOTES TO THE FINANCIAL STATEMENTS at June 30, 2000

NOTE 1 - MERGER

On May 3, 1999 the Board of Directors of the Company approved the merger through absorption of Comesi S.A.I.C. by Siderar S.A.I.C. as the successor company, effective April 1, 1999.

This merger was approved by the respective Extraordinary Shareholders’ Meeting held on June 15, 1999. On August 2, 1999 a final merger agreement was signed and on September 30, 1999 it was registered at the Public Registry of Commerce.

NOTE 2 - BASES FOR THE PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with General Resolution
No. 290/97 of the National Securities Commission.

NOTE 3 - ACCOUNTING STANDARDS

The most significant accounting standards are as follows:

3.1. Comparative information

The financial statements are presented in pesos in two columns in comparative form with those of the previous year.

3.2. Recognition of the effects of inflation

The financial statements have been prepared in constant currency, reflecting the overall effects of inflation through August 31, 1995. In accordance with General Resolution No. 290/97 of the National Securities Commission, restatement of the financial statements has been discontinued as from September 1, 1995.

3.3. Valuation criteria

These financial statements have been prepared applying the valuation criteria established by General Resolution No. 290/97 of the National Securities Commission, as explained below:

NOTE 3 - ACCOUNTING STANDARDS (Contd.)

3.3. Valuation criteria (Cont.)

1. Assets and liabilities in local currency without adjustment clauses are stated at their nominal value plus the accrued financial results up to the end of the year.
2. Assets and liabilities in foreign currency have been valued at the corresponding exchange rates in effect at the end of the year plus the accrued financial results up to that date.
3. Export reimbursements have been valued at the rates of exchange for the US dollar in force at the end of the year applied on par values in foreign currency and included in the Trade receivables - export reimbursement.

d) Advances to suppliers are stated at their current value.

e) Inventories have been valued at their replacement cost at the end of the year, applying the direct industrial cost method and including the indirect manufacturing expenses, except fixed assets depreciation and general expenses.

Materials have been valued at their replacement cost at the end of the year.

f) Property included under Other current assets has been valued at acquisition cost. Depreciation has been calculated by the straight-line method, using annual rates sufficient to extinguish their values by the end of their estimated useful lives.

Other non-current assets are valued at construction cost and include real property mostly for sale to personnel.

g) Steel spares and supplies, included in fixed assets, have been valued at the lowest of their restated cost value or recoverable value. The recoverable value has been calculated on the basis of the values of last purchases or quotations from suppliers on dates close to the end of the year.

Fixed assets at the Ensenada Plant which had been technically appraised (based on the valuation carried out at June 30, 1990) were restated for inflation as mentioned in Note 3.2 to the financial statements. The remaining fixed assets have been valued at their restated cost. Depreciation of fixed assets has been calculated according to the straight-line method by applying annual rates sufficient to extinguish their values by the end of their estimated useful lives.

NOTE 3 - ACCOUNTING STANDARDS (Contd.)

3.3. Valuation criteria (Contd.)

The aggregate net value of fixed assets does not exceed recoverable value.

1. The participation in other companies has been valued at proportional equity value based on the financial statements mentioned in Exhibit C to the financial statements, except for the investment in FO.GA.BA. S.A.P.E.M., which is valued at acquisition cost. In addition, the accounting standards adopted by subsidiaries and related companies have been unified with the accounting criteria followed by Siderar S.A.I.C. For purposes of translation into pesos of the financial statements of Prosid Investments Inc., the criteria established by Technical Pronouncement No. 13 of the Argentine Federation of Professional Councils in Economic Sciences were used.
2. Compañía Afianzadora de Empresas Siderúrgicas S.G.R. risk fund, recorded by Siderar S.A.I.C. under Other investments, corresponds to the portion attributable to that company considering the percentage contributions paid by the protecting partners of Sociedad de Garantía Recíproca and the value of the fund at June 30, 2000 (see Note 8.a) to the financial statements).

j) Plant reorganization and project analysis expenses are amortized by the straight-line method over the terms established for each of those items, none of which exceeds six years.

The goodwill (Comesi S.A.I.C.) corresponds to the difference between the value paid for the shares of Comesi S.A.I.C. and the proportional equity value at the date of purchase once the accounting values of the assets of the issuer have been adjusted by their respective current values. Goodwill is amortized by the straight-line method, over a maximum term of five years as from April 1997.

k) The Company has capitalized the financial costs from the projects for the modernization of its fixed assets.

To calculate the capitalizable financial charge the Company’s financing cost has been estimated by computing the results generated by all items making up its financing structure.

The abovementioned capitalization is made until the works-related assets giving rise to it become operative, and will be amortized applying the same criteria used for the assets constructed.

Financial costs capitalized in the year amounted to $ 753,228.

1. The implicit financial components included in the assets, liabilities and income balances have been segregated, if significant.

NOTE 3 - ACCOUNTING STANDARDS (Contd.)

3.3. Valuation criteria (Contd.)

1. The Company has set up the allowances and provisions considered necessary so that the value assigned to assets does not exceed their recoverable value and that the value assigned to liabilities is not lower than the value which may be claimable by third parties.

The provisions disclosed in current and non-current liabilities for a total of $ 16,019,149 were set up to meet potential contingencies.

1. As from August 1, 1995, the Company implemented a retirement benefit plan in favor of certain officials. Since that date the resulting liabilities are being accrued during the remaining years of service of the beneficiaries involved. At the end of the year in progress these liabilities are shown under "Social security and taxes" as a non-current liability, no debt being claimable as at that date.

In addition, the Company has taken out endowment policies which could be used to provide partial or total cover for these benefits.

1. Non-current credits and liabilities accrue interest at normal market rates.
2. From time to time the Company enters into transactions involving financial derivatives for hedging purposes, to smooth out fluctuations in exchange rates for currencies other than the US dollar, interest rates on its bank and financial debt and the prices of certain raw materials used in its manufacturing process. The results from these operations are recognized and disclosed during the life of the corresponding contracts.
3. The Company calculates income tax by applying a 35% rate on taxable profits, the corresponding charge being disclosed in the statement of income under charge for income tax provision.

The tax on minimum notional income is applicable to the potential income from certain productive assets at the rate of 1% and supplements income tax, so that the Company’s tax liability will be equivalent to the higher of those taxes. However, if the tax on minimum notional income exceeds income tax in a given fiscal year, that surplus can be computed as payment on account of income tax in excess of the tax on minimum notional income arising in any of the following four fiscal years. At the year-end, the minimum notional income tax excess of $ 4,051,000 over income tax was appropriated to non-current fiscal credit (see Note 4 f)) to the financial statement) as it is likely that it will be used as payment on account of income tax for the following year.

1. The Company's Board of Directors considers that aggregate valuation of assets captions is less than their recoverable value.

NOTE 4 - COMPOSITION OF BALANCE SHEET ITEMS

	6.30.00	6.30.99
	$	$
CURRENT ASSETS
a) Cash and banks
Cash	119,480	140,322
Checks to be deposited	3,883,469	959,691
Banks	5,048,756	2,594,055
	9,051,705	3,694,068
b) Trade receivables
Accounts receivable	110,015,813	103,922,854
Related companies Sect. 33 - Law No. 19550 and amendments	593,820	1,245,162
Export reimbursements	3,483,353	5,321,134
Notes receivable	74,178,288	73,132,790
Allowance for doubtful accounts (Exhibit E)	(6,853,096)	(8,567,166)
Unearned interest	(1,320,715)	(1,630,380)
	180,097,463	173,424,394
c) Other receivables
Related companies Sect. 33 - Law No. 19550 and amendments	3,435,168	4,586,432
Advances and loans to personnel	3,080,917	3,134,421
Receivables from sale of real property	425,781	302,346
Solidarity contribution	-	69,346
Tax credits	17,761,064	19,161,363
Advances to suppliers	918,219	2,080,873
Expenses paid in advance	2,606,649	3,086,474
Sundry receivables	5,809,326	11,891,736
	34,037,124	44,312,991
d) Other assets (residual value)
Real property	1,564,416	2,177,521
	1,564,416	2,177,521
The depreciation of the year amounted to $ 52,473 (Exhibit H).

NOTE 4 - COMPOSITION OF BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
NON-CURRENT ASSETS
e) Trade receivables
Notes receivable	7,729,080	2,060,739
Allowance for doubtful accounts (Exhibit E)	(1,859,000)	(470,564)
	5,870,080	1,590,175
f) Other receivables
Related companies Sect. 33 - Law No. 19550 and amendments	1,266,239	-
Advances and loans to personnel	1,817,122	1,645,443
Receivables from sale of real property	6,395,282	5,593,764
Tax credits	4,051,000	-
Expenses paid in advance	2,063,203	3,094,337
Financial credits	-	7,182,090
Sundry receivables	183,764	258,363
	15,776,610	17,773,997
g) Other assets
Real property	2,179,999	3,385,283
	2,179,999	3,385,283
CURRENT LIABILITIES
h) Accounts payable
Ordinary suppliers	56,116,014	53,505,965
Related companies Sect. 33 - Law No. 19550 and amendments	1,348,058	2,228,266
Notes payable	49,994,488	45,038,678
Unearned interest	(1,137,505)	(1,284,274)
Advances from customers	3,072,799	4,531,257
	109,393,854	104,019,892

NOTE 4 - COMPOSITION OF BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
CURRENT LIABILITIES (Contd.)
i) Short-term debt
Financial	10,990,994	329,265
Import/export financing	242,795,739	275,999,178
Unearned interest	(18,019,443)	(23,119,918)
	235,767,290	253,208,525
j) Social security and taxes
Provision for income tax / minimum notional	12,273,000	20,187,609
Income tax withholding and solidarity contribution	(12,273,000)	(13,408,874)
Income tax advances	-	(6,778,735)
Provision for turnover tax	102,671	150,688
Wages and social security	30,191,593	32,605,734
Others sundry	2,508,801	4,843,378
	32,803,065	37,599,800
NON-CURRENT LIABILITIES
k) Accounts payable
Notes payable	10,412,473	14,620,235
Unearned interest	(1,177,401)	(1,821,650)
	9,235,072	12,798,585

NOTE 4 - COMPOSITION OF BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
NON-CURRENT LIABILITIES (Contd.)
l) Long-term debt
Import/export financing	203,557,636	245,464,528
Negotiable Corporate Bonds	110,000,000	110,000,000
Unearned interest	(33,284,891)	(37,566,318)
	280,272,745	317,898,210
m) Social security and taxes
Sundry	4,905,592	4,017,054
	4,905,592	4,017,054

NOTE 5 - RECEIVABLES AND PAYABLES: DUE DATES AND RATES

Captions	Up to 3 months	Between 3 and 6 months	Between 6 and 9 months	Between 9 and 12 months	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	Over 4 years	Total at 6.30.00	Total at 6.30.99
	$	$	$	$	$	$	$	$	$	$
Over due
Trade receivables - fixed rate	1,605,935	680,471	1,028,144	851,739	1,482,976	2,123,159	602,432	1,013,226	9,388,082	8,729,538
Total at 6.30.00	1,605,935	680,471	1,028,144	851,739	1,482,976	2,123,159	602,432	1,013,226	9,388,082
Total at 6.30.99	2,527,071	961,567	339,577	274,776	1,628,925	1,022,797	1,020,072	954,753		8,729,538
Not yet due
Deposits of funds - fixed rate	229,507	-	-	-	-	-	-	-	229,507	17,205,118
Deposits of funds - floating rate	-	-	-	-	-	-	-	5,859,062	5,859,062	4,134,959
Trade receivables - fixed rate	156,276,819	10,311,409	4,448,103	3,042,793	1,162,457	1,543,153	1,891,140	3,132,330	181,808,204	170,001,627
Trade receivables - without rate	3,483,353	-	-	-	-	-	-	-	3,483,353	5,321,134
Other receivables - fixed rate	3,110,821	793,773	592,496	515,241	1,561,703	979,757	657,156	4,994,419	13,205,366	17,742,971
Other receivables - floating rate	749,043	2,256,789	15,750	15,750	1,329,239	63,000	63,000	-	4,492,571	10,283,572
Other receivables - without rate	23,868,405	1,030,784	572,953	515,319	5,140,677	622,910	171,605	193,144	32,115,797	34,060,445
Total at 6.30.00	187,717,948	14,392,755	5,629,302	4,089,103	9,194,076	3,208,820	2,782,901	14,178,955	241,193,860
Total at 6.30.99	186,119,442	11,808,498	8,488,901	28,363,290	4,786,041	2,010,884	1,076,056	16,096,714		258,749,826
Accounts payable - fixed rate	51,103,763	9,989,088	11,230,378	6,752,510	1,463,365	1,298,624	950,604	527,915	83,316,247	67,205,285
Accounts payable - floating rate	-	931,243	-	832,427	1,664,855	1,664,855	1,664,854	-	6,758,234	8,418,973
Accounts payable - without rate	28,470,681	83,764	-	-	-	-	-	-	28,554,445	41,194,219
Short and long-term debt - fixed rate	42,014,300	55,927,864	45,610,556	3,515,432	14,506,038	24,386,854	4,839,445	3,579,073	194,379,562	356,250,760
Short and long-term debt - floating rate	3,848,066	1,915,672	497,707	82,437,693	92,163,454	99,144,174	41,064,838	588,869	321,660,473	214,855,975
Social security and taxes - without rate	9,229,810	14,770,418	8,792,422	10,415	-	-	-	4,905,592	37,708,657	41,616,854
Other debt - without rate	1,723,097	1,525,663	241,158	679,123	135,467	122,184	75,829	31,838	4,534,359	2,231,143
Total at 6.30.00	136,389,717	85,143,712	66,372,221	94,227,600	109,933,179	126,616,691	48,595,570	9,633,287	676,911,977
Total at 6.30.99	161,277,478	61,907,450	119,317,927	54,556,505	108,659,357	100,994,382	81,883,060	43,177,050		731,773,209

• The allowances for doubtful accounts and existing guarantees are sufficient to cover overdue trade receivables.
• Interest rates are not lower than market rates.
• There are no receivables or debts without stated due date.

NOTE 6 - CHANGES IN ACCOUNTING PROCEDURES

The Company has followed the same criteria adopted in the previous year as regards valuations, depreciations and other items.

NOTE 7 - ENCUMBERED AND RESTRICTED ASSETS AND SURETIES GRANTED

Pledges have been set up on Company assets in guarantee of debts incurred as a result of the purchase of pledged assets amounting to US$ 1,904,005.

In accordance with the contracts signed as a result of the incorporation of Consorcio Siderurgia Amazonia Ltd., guarantees were granted as mentioned in Note 8.d) to the financial statements.

At year-end, the Company had become the guarantor of obligations for US$ 2,951,795.

NOTE 8 - INVESTMENTS IN OTHER COMPANIES

a) Compañía Afianzadora de Empresas Siderúrgicas S.G.R.

The Company has a 39.0539% interest in the capital stock of Compañía Afianzadora de Empresas Siderúrgicas S.G.R. in its capacity as protecting partner. The main purpose of this company is to grant guarantees to participating partners to facilitate or enable their access to the bank credit line for the purchase of national steel raw material and to provide technical, economic and financial advice to them. To do so, the Company has made a net contribution of $ 25,396,270 to the risk fund (see Exhibit D to the financial statements). The purpose of the risk fund is to realize guarantees to be granted to participating partners.

b) Ecocemento S.A.

On September 16, 1996 the Company and Compañía Argentina de Cemento Portland S.A. formed Ecocemento S.A., the purpose of which is the production and sale of blast furnace slag Portland cement, lime and related products. The shareholding is 15%, represented by 1,800 Class "B" shares of one vote and one peso par value each. Until the end of the year the Company has made contributions for $ 2,848,547. On March 1999, Ecocemento S.A. inaugurated its industrial plant.

NOTE 8 - INVESTMENTS IN OTHER COMPANIES (Contd.)

c) Comesi San Luis S.A.I.C.

On April 14, 1997, the Company acquired all of the shares held by the minority shareholders of Comesi San Luis S.A.I.C., 98% of which was held by Comesi S.A.I.C. at that date. The principal activity of Comesi San Luis S.A.I.C. is the production of cold or hot strip mill sheets either pre-painted or not, formed and/or skelped. The price paid for the 22,000 shares of par value $ 0.0001 each representing 2% of the capital stock of Comesi San Luis S.A.I.C. amounted to US$ 130,720. As a result of the merger with Comesi S.A.I.C. (see Note 1 to the financial statements), the Company acquired 100% of the shares of Comesi San Luis S.A.I.C. and consequently on June 29, 1999 Siderar S.A.I.C. sold the 1% equity participation for a total value of $ 42,900.

d) Prosid Investments Inc. - Consorcio Siderurgia Amazonia Ltd.

d.1) Prosid Investments Inc.

On June 30, 1998 Prosid Investments Inc. (Prosid) was incorporated in the British Virgin Islands with a capital of US$ 50,000 subscribed by the Company, for the purpose of making financial investments of all kinds and any other activity permitted under the laws of the Virgin Islands.

On November 11, 1998 the procedures were completed for the transfer of the 105,000,000 shares of Consorcio Siderurgia Amazonia Ltd. (Amazonia) to Prosid for a value of US$ 122,626,393, equivalent to the equity value of the shares contributed at that date, the capital of the latter company being increased to US$ 120,000,000, the balance of US$ 2,626,393 corresponding to the capital “surplus” account. As a result, the participation of the Company in Amazonia is indirect through the wholly-owned subsidiary Prosid.

In order to face the commitments arising from liability restructuring of Siderúrgica del Orinoco C.A. (Sidor) and Amazonia, Siderar made contributions in Prosid for US$ 57.212.262 through the transfer of receivables from Sidor and Amazonia.

NOTE 8 - INVESTMENTS IN OTHER COMPANIES (Contd.)

d) Prosid Investments Inc. - Consorcio Siderurgia Amazonia Ltd. (Contd.)

d.1) Prosid Investments Inc. (Contd.)

On February 18, 2000, the capital stock of Prosid was increased by US$ 32,000,000, and the difference between this amount and the mentioned contribution was charged to the capital “surplus” account.

In addition, on March 3, 2000, Prosid made contributions in Amazonia amounting to US$ 56,156,707 in the form of a combination of capital contribution amounting to US$ 25,392,703 and loans convertible into shares for US$ 30,764,004.

Considering the amounts capitalized, the change in the investment in the capital stock of Amazonia and the reduction by the latter in the number of outstanding shares, at the date of these financial statements the participation of Prosid in Amazonia totaled 29,831,335 shares, representing 19.76% of the capital stock. Assuming that the contributions made in Amazonia in the form of convertible loans will be fully capitalized in two years by the contributing partners, the participation would reach 21.13%.

All of the shares in Amazonia are pledged in guarantee of the bank loan obtained to acquire an investment in Sidor and refinanced within the framework of the agreements reached.

d.2) Amazonia

On November 13, 1997 Consorcio Siderurgia Amazonia Ltd. was set up, in which Siderar held a 17.5% share (subsequently transferred to Prosid - see Note 8.d.1)). Amazonia was set up to participate in the bid for Venezuelan company Sidor, which was privatized by the government of Venezuela.

On December 18, 1997 Amazonia was declared the winner in the bid for Sidor, which manufactures flat and non-flat steel products.

The offer for 70% of its shares was US$ 1,202,020,202, paid on January 27, 1998 with funds contributed by each consortium member in proportion to their participation (US$ 702,020,202) and bank financing obtained by Amazonia (US$ 500,000,000) guaranteed by the shares of

NOTE 8 - INVESTMENTS IN OTHER COMPANIES (Contd.)

d) Prosid Investments Inc. - Consorcio Siderurgia Amazonia Ltd. (Contd.)

d.2) Amazonia (Contd.)

Amazonia and those acquired from Sidor. For this reason Siderar made a capital contribution of US$ 122,853,535. According to the terms of the share purchase agreement an audit of the financial statements of Sidor was performed on January 27, 1998, as a result of which Corporación Venezolana de Guayana (C.V.G.) refunded to Amazonia on August 10, 1998 the sum of US$ 150,000,000, the maximum amount payable under the contract as an adjustment to the bid value.

As from the date of payment, Siderar became the guarantor of financial liabilities incurred by Sidor amounting to US$ 626,161,000 with maturities between 1999 and 2007. Of this amount, US$ 226,000,000 corresponding to the first six principal installments were refinanced under the agreements for the restructuring of the liabilities of Amazonia and Sidor, with maturities between 2002 and 2007 and secured by certain fixed assets of Sidor. Siderar is the guarantor of the mentioned liabilities for approximately US$ 119,400,000 at the date of these financial statements.

Furthermore, the regulations regarding the privatization of Sidor contained requirements regarding the consummation of the transaction for the sale of shares and obligations in the hands of Sidor and Amazonia. A guarantee has been granted in favor of Fondo de Inversiones de Venezuela (F.I.V.) and C.V.G. for a total aggregate amount of US$ 150,000,000 regarding compliance with the conditions and obligations established in the Sidor share purchase agreement for a period of five years as from the date of purchase of its shares.

A surety has been issued through financial institutions for a term of five years covering the obligations assumed by Amazonia with regard to:

• continuation of the operations of the flat and non-flat product lines of Sidor for 5 years as from the date of purchase at a production level equal to or exceeding 2,400,000 tons;
• the investment by Sidor of US$ 300,000,000 over three years as from the date of purchase, in addition to the investments that Sidor will be required to make for environmental matters;

NOTE 8 - INVESTMENTS IN OTHER COMPANIES (Contd.)

d) Prosid Investments Inc. - Consorcio Siderurgia Amazonia Ltd. (Contd.)

d.2) Amazonia (Contd.)

• the retaining by the shareholders of Amazonia for a term of 5 years as from the date of purchase, directly or through wholly-owned subsidiaries, of at least 51% of the shares of Sidor granting them control over that company. For the same period at least one of the steel-manufacturing partners will have to maintain ownership of at least 10% of the shares in Amazonia, directly or through wholly-owned subsidiaries of such partner.

The value of this surety is reduced to US$ 125,000,000 and US$ 75,000,000 for the fourth and fifth years as from the date of purchase, respectively, as long as the creditor were not to have required the execution of any part of the bond in the immediately preceding year.

In turn, Siderar is the guarantor of compliance with all the obligations of the share purchase agreement. The agreements between the shareholders of Amazonia contemplate the limitation of these responsibilities in proportion to their respective shareholdings in the Company. Consequently, the maximum risk secured by Siderar (based on the indirect participation in the capital stock of Amazonia) which continues to be in effect at the date of these financial statements was reduced to US$ 26,250,000, an amount that is not modified in spite of the change in the capital stock of Amazonia.

d.3) Restructuring of liabilities in Amazonia and Sidor

Due to the negative conditions prevailing in the international steel market, the profound recession of the Venezuelan economy, the worsening of the international financial market conditions, the appreciation of the bolívar compared to the U.S. dollar and other adverse factors, Amazonia and Sidor have incurred substantial losses and technical non-compliance with loans and delays in certain payments related to the mentioned loans.

Sidor took steps to face these adverse conditions and at the same time began negotiations together with Amazonia with the aim of achieving the restructuring of its liabilities.

NOTE 8 - INVESTMENTS IN OTHER COMPANIES (Contd.)

d) Prosid Investments Inc. - Consorcio Siderurgia Amazonia Ltd. (Contd.)

d.3) Current situation of Sidor - Restructuring of liabilities in Amazonia and Sidor (Contd.)

In February 2000, negotiations were concluded; the matters affecting Siderar mainly including:

• Resources committed by Sidor’s shareholders amounting to US$ 300,000,000, US$ 210,000,000 of which correspond to Amazonia in its capacity of holder of 70% of the shares in Sidor and US$ 90,000,000 to the F.I.V. and to companies controlled by C.V.G. US$ 210,000,000 were contributed to Amazonia by its shareholders, in the form of capital contributions and loans convertible into shares.
• Of the total of US$ 210,000,000 received by Amazonia from its shareholders, US$ 70,000,000 were appropriated to the subscription of shares in Sidor and US$ 140,000,000 to the exchange of Amazonia’s bank debt for Sidor’s subordinated debt. The bank debt originally obtained by Amazonia for the acquisition of shares in Sidor has therefore been reduced to US$ 258,579,857, and was refinanced under the agreements reached.
• Of the contribution of US$ 90,000,000 corresponding to F.I.V. and companies controlled by C.V.G., US$ 60,000,000 are implemented in the form of refinancing of past due debt and US$ 30,000,000 as a capital contribution.
• The conversion of US$ 11,418,992 of debt in Amazonia with its shareholders into a loan convertible into non-voting stock. The participation of the partners was established based on the debt held by Amazonia, US$ 5,628,344 corresponding to Siderar (transferred to Prosid - see Note 8.d.1) to the financial statements).
• Commitment by the partners in Amazonia, except for Sivensa, for the advance redemption in 2007 of a maximum of US$ 25,000,000 in Amazonia debt over an above the US$ 100,000,000 debt that the latter holds with the financial institutions taking part in the restructuring, with Siderar acting as guarantor for up to US$ 6,000,000.

d.4.) Current situation of Sidor

In the first half of 2000 there has been a positive change in the trend of the variables with an impact on the development of the operations of Sidor. In addition to the recovery in international steel prices and domestic demand there has been a fall in interest rates on borrowing in Venezuela, consolidation of oil price rises and a drop in the rate of inflation in Venezuela. The restructuring of liabilities, favorable external context and improvements within Sidor have all helped to improve the outlook for future results.

NOTE 8 - INVESTMENTS IN OTHER COMPANIES (Contd.)

e) Result from investments in subsidiaries and related companies:

	6.30.00	6.30.99
	$	$
Subsidiaries
e.1.) Participation in the results of subsidiaries
Comesi San Luis S.A.I.C.	224,364	854,269
Prosid Investments Inc. (See Note to Exhibit C)	(28,219,390)	(52,078,646)
Comesi S.A.I.C. (2)	-	4,251,242
e.2.) Depreciation and inventory valuation adjustment
Comesi San Luis S.A.I.C. inventory valuation adjustment	660,974	(554,126)6)
Comesi S.A.I.C. fixed assets (2)	-	(1,351,860)
Comesi S.A.I.C. goodwill (2)	-	(3,462,123)
Comesi S.A.I.C. inventory valuation adjustment (2)	-	3,645,351
	(27,334,052)	(48,695,893)
Related companies
Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	44,820	(41,097)
Ecocemento S.A.	(195,235)	-
Consorcio Siderurgia Amazonia Ltd. (1)	-	1,571,420
	(150,415)	1,530,323
	(27,484,467)	(47,165,570)

1. Results prior to the transfer of the shares to Prosid Investments Inc. (See Note 8.d.1) to the financial statements).
2. No year-end balances are shown as a result of the merger between Siderar S.A.I.C. and Comesi S.A.I.C. (See Note 1 to the financial statements).

NOTE 9 - RESTRICTIONS ON THE DISTRIBUTION OF PROFITS

In compliance with the Corporations Law, the By-laws and Resolution No. 290/97 of the National Securities Commission, 5% of the profit for the year should be transferred to the Legal Reserve after absorbing the negative results unappropriated at the beginning of the year, until such Reserve reaches 20% of the restated capital.

NOTE 10 - GLOBAL PROGRAM FOR NEGOTIABLE CORPORATE BONDS

On exercising the mandate and authorization granted by the Shareholders' Ordinary and Extraordinary Meeting held on September 29, 1994, the Board of Directors approved the Offering Circular of the global program for the issue of Negotiable Corporate Bonds for US$ 250,000,000, which has been authorized by the National Securities Commission.

On October 18, 1995 the first tranche of these Negotiable Corporate Bonds was issued for a total of US$ 60,000,000 to mature in two years, at a fixed annual interest rate of 11%. On October 20, 1997 all the notes issued were redeemed.

On July 31, 1998 a new tranche was issued for a total of US$ 110,000,000 with six-monthly maturities in January and July 2002 and 2003, at an interest rate of Libo plus a rising spread of 0.9%, 1.15% and 1.4% in the first three years, respectively. Interest will be payable quarterly.

Funds from this issue were used as follows:

	US$
Settlement of bank and financial debt	109,130,000
Corporate Bonds issuing expenses	870,000
Total issued	110,000,000

NOTE 11 - COMMITTED INVESTMENTS

The Company has entered into agreements for future purchases of fixed assets for an amount of US$ 19,376,390.

NOTE 12 - RESOLUTION OF THE YEAR 2000 PROBLEM - INFORMATION NOT COVERED BY THE REPORT OF INDEPENDENT ACCOUNTANTS

No significant problems have arisen in any of the areas of the Company derived from the change of year from 1999 to 2000.

NOTE 13 - STATUS OF CAPITAL

The status of capital at June 30, 2000 is $ 347,468,771, which has been subscribed, paid-in and registered at the Public Registry of Commerce.

The last capital increase amounting to $ 35,666,000 was approved by the Shareholders' Ordinary and Extraordinary Meeting held on December 29, 1994 and registered at the Public Registry of Commerce on November 7, 1995.

The shareholders' equity at the end of the year amounted to $ 635,522,874 and the capital stock outstanding at that date to $ 347,468,771. Accordingly, the proportional equity value for each share of 1 peso par value amounts to $ 1.83 (one peso and eighty three cents).

NOTE 14 - EVENTS SUBSEQUENT TO YEAR-END

After June 30, 2000, no events, situations or circumstances which are not publicly known have occurred, which affect or could significantly affect the Company's equity and financial position.

The report of independent accountants is issued as a separate document.

	6.30.00												6.30.99
							D e p r e c i a t i o n
Main account	Values at the beginning of the year	Increases	Incorporation of absorbed company	Decreases	Reclassification	Values at the end of the year	Accumulated at the beginning of the year	Incorporation of absorbed company	Deletions for the year	For the year (1)	Accumulated at the end of the year	Residual value		Residual value
	$	$	$	$	$	$	$	$	$	$	$	$		$
Land	22,961,059	-	-	-	-	22,961,059	-	-	-	-	-	22,961,059		22,961,059
Industrial buildings and facilities	696,998,939	-	-	-	62,905,640	759,904,579	271,449,943	-	-	55,096,901	326,546,844	433,357,735		425,548,996
Machinery and equipment	367,711,602	-	-	-	11,214,697	378,926,299	245,421,063	-	-	21,070,563	266,491,626	112,434,673		122,290,539
Vehicles and means of transport	14,216,698	702,815	-	670,828	-	14,248,685	9,233,401	-	393,290	1,117,438	9,957,549	4,291,136		4,983,297
Furniture, general machinery and office supplies	16,499,713	-	-	-	422,063	16,921,776	12,443,312	-	-	1,520,866	13,964,178	2,957,598		4,056,401
Steel spares and supplies	76,953,687	-	-	13,906,085	-	63,047,602	-	-	-	-	-	63,047,602		76,953,687
Fixed assets in transit	2,705,376	-	-	1,928,847	-	776,529	-	-	-	-	-	776,529		2,705,376
Work in progress	88,213,233	47,059,509	-	-	(74,542,400)	60,730,342	-	-	-	-	-	60,730,342		88,213,233
Advances to suppliers	2,485,201	1,715,496	-	-	-	4,200,697	-	-	-	-	-	4,200,697		2,485,201
Total at June 30, 2000	1,288,745,508	49,477,820	-	16,505,760	-	1,321,717,568	538,547,719	-	393,290	78,805,768	616,960,197	704,757,371
Total at June 30, 1999	1,096,330,259	68,249,092	134,291,953	10,125,796	-	1,288,745,508	416,905,073	52,789,101	666,942	69,520,487	538,547,719			750,197,789

(1) See Exhibit H to the financial statements.

Note: The Company has considered as original value of technically appraised assets at June 30, 1990 the technical value restated as
indicated in Note 3.2. As a result, the depreciation rates of the different assets are not included as these vary according to the
different remaining useful lives assigned in that technical appraisal.

The report of independent accountants is issued as a separate document.

	6.30.00									6.30.99
					A m o r t i z a t i o n
Main account	Balance at the beginning of the year	Increases	Decreases	Balance at the end of the year	Accumulated at the beginning of the year	Deletion for the year	For the year (1)	Accumulated at the end of the year	Residual value	Residual value
	$	$	$	$	$	$	$	$	$	$
Reorganization plant and project analysis related costs	44,691,428	-	-	44,691,428	44,446,984	-	244,444	44,691,428	-	244,444
Goodwill (Comesi S.A.I.C.)	21,843,233	-	-	21,843,233	15,955,486	-	2,140,999	18,096,485	3,746,748	5,887,747
Total at June 30, 2000	66,534,661	-	-	66,534,661	60,402,470	-	2,385,443	62,787,913	3,746,748
Total at June 30, 1999	66,534,661	-	-	66,534,661	54,873,062	-	5,529,408	60,402,470		6,132,191

(1) See Exhibit H to the financial statements.

The report of independent accountants is issued as a separate document.

Denomination and type of shares	Issuer	Class	Par value	Amount	Percentage participation in capital stock	Restated cost value	Proportional equity value	Amount recorded at 6.30.00	Amount recorded at 6.30.99
						$	$	$	$
NON-CURRENT INVESTMENTS
Corporations Sect. 33 - Law No. 19550 and amendments
Subsidiaries
Shares	Comesi San Luis S.A.I.C.	Ordinary, one vote each	0.0001	1,089,000	99.0000	4,542,925	5,308,132	5,308,132	5,083,768
Shares	Prosid Investments Inc.	Ordinary, one vote each	1.0000	152,000,000	100.0000	179,838,655	99,540,619	99,540,619	70,547,747
Related companies
Shares	Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	Ordinary, one vote each	1.0000	355,000	39.0539	355,000	358,809	358,809	313,989
Shares	Ecocemento S.A.	Ordinary, one vote each	1.0000	1,800	15.0000	2,848,547	2,653,191	2,653,191	2,848,426
Shares	FO.GA.BA. S.A.P.E.M.	Ordinary, one vote each	1.0000	10,000	0.0031	10,000	-	10,000	10,000
Others
Comesi San Luis S.A.I.C. inventory valuation adjustment						-	(676,962)	(676,962)	(1,337,936)
						187,595,127	107,183,789	107,193,789	77,465,994

		Information about the issuer
			Latest financial statements
Denomination and type of shares	Issuer	Principal activity	Date	Period	Capital stock	Results	Shareholders’ equity	Date of approval by Board of Directors
					$	$	$
NON-CURRENT INVESTMENTS (Contd.)
Corporations Sect. 33 - Law No. 19550 and amendments (Contd.)
Subsidiaries
Shares	Comesi San Luis S.A.I.C.	Production of cold or hot rolled, pre-painted, formed and skelped steel sheets	6.30.00	12 months	110	226,630	5,361,749	9. 4.00
Shares	Prosid Investments Inc. (1)	Financial investments of any type and any other activity permitted by laws applicable in British Virgin Islands	6.30.00	12 months	152,000,000	(28,219,390)	99,540,619	8.29.00
Related companies
Shares	Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	Granting of guarantees to participating partners to facilitate or permit access to credits for the purchase of national steel raw material through the signing of contracts regulated by Law No. 24467	3.31.00	9 months	909,000	5,580	38,384,754	5.26.00
Shares	Ecocemento S.A.	Production and sale of Portland cement with blast furnace slag, lime and by-products	3.31.00	9 months	12,000	(1,302,375)	17,687,939	5. 4.00
Shares	FO.GA.BA. S.A.P.E.M.	Granting of guarantees to PYMES operating in the province of Buenos Aires	12.31.99	12 months	3,238,400	2,586,094	52,205,946	3.16.00

(1) The criterion of the Company has been to calculate the value of its investment in Amazonia on the basis of the financial statements of the latter with a lag of three months. Nevertheless, for a better reflection of the economic reality of these financial statements, the equity and results of the Company have been adjusted for the estimated effect of the results of Amazonia for the period April 1 to June 30, 2000, for the reasons indicated in Note 8.d.3) to the financial statements.

The report of independent accountants is issued as a separate document.

	6.30.00					6.30.99
Main account	Balance at the beginning of the year	Increases	Decreases	Balance at the end of the year	Balance at the end of the year
	$	$	$	$	$
OTHER CURRENT INVESTMENTS
Sight deposits	4,607,663	-	4,378,156	229,507	4,607,663
Time deposits	12,597,455	-	12,597,455	-	12,597,455
Total at the end of the year	17,205,118	-	16,975,611	229,507	17,205,118
OTHER NON-CURRENT INVESTMENTS
Financial investments in insurance companies	4,134,959	1,724,103	-	5,859,062	4,134,959
Risk fund Compañía Afianzadora de Empresas Siderúrgicas S.G.R.
Net contributions	36,000,000	10,000,000	20,603,730	25,396,270	36,000,000
Allowance for doubtful accounts (Exhibit E) (1)	-	(2,379,000)	-	(2,379,000)	-
Real property	98,229	-	98,229	-	98,229
Total at the end of the year	40,233,188	9,345,103	20,701,959	28,876,332	40,233,188

1. Customers of Compañía Afianzadora de Empresas Siderúrgicas S.G.R. in collection process.

The report of independent accountants is issued as a separate document.

Items	Balance at the beginning of the year	Increases and recoveries (1)	Incorporation of absorbed company	Uses	Balance at the end of the year
	$	$	$	$	$
Deducted from current assets
* For doubtful accounts	8,567,166	(793,083)	-	920,987	6,853,096
Total at 6.30.00	8,567,166	(793,083)	-	920,987	6,853,096
Total at 6.30.99	7,096,416	1,787,090	350,837	667,177	8,567,166
Deducted from non-current assets
* For doubtful accounts	470,564	1,388,436	-	-	1,859,000
* For risk fund uncollectibility	-	2,379,000	-	-	2,379,000
Total at 6.30.00	470,564	3,767,436	-	-	4,238,000
Total at 6.30.99	324,000	(145,608)	292,172	-	470,564
Included in current liabilities
* For contingencies	3,135,616	480,843	-	462,625	3,153,834
Total at 6.30.00	3,135,616	480,843	-	462,625	3,153,834
Total at 6.30.99	1,553,699	5,556,487	1,460,910	5,435,480	3,135,616
Included in non-current liabilities
* For contingencies	13,640,080	(774,765)	-	-	12,865,315
Total at 6.30.00	13,640,080	(774,765)	-	-	12,865,315
Total at 6.30.99	8,108,000	(2,710,167)	8,242,247	-	13,640,080

1. See Exhibit H to the financial statements.

The report of independent accountants is issued as a separate document.

	6.30.00		6.30.99
	$	$	$	$
1) Inventory at the beginning of the year
Finished products	97,421,969		98,021,298
Production in process	61,517,796		86,029,429
Raw material	35,012,397		29,391,398
Materials	61,600,587		68,622,396
Advances to suppliers	1,943,953	257,496,702	1,241,259	283,305,780
2) Purchases of the year		338,547,611		339,277,039
3) Incorporation of absorbed company		-		13,754,708
4) Manufacturing expenses (Exhibit H)		399,357,228		400,211,960
Subtotal		995,401,541		1,036,549,487
5) Holding results (Exhibit H)		(11,999,636)		(15,655,216)
Subtotal		983,401,905		1,020,894,271
6) Inventory at the end of the year
Finished products	71,991,895		97,421,969
Products in process	52,330,557		61,517,796
Raw material	49,490,562		35,012,397
Materials	59,931,616		61,600,587
Advances to suppliers	1,328,226	235,072,856	1,943,953	257,496,702
Cost of sales		748,329,049		763,397,569

The report of independent accountants is issued as a separate document.

	6.30.00							6.30.99
Items	Foreign currency (1)	Amount in foreign currency	Exchange rate used	Amount in local currency	Foreign currency (1)	Amount in foreign currency	Amount in local currency
			$	$			$
ASSETS
CURRENT ASSETS
Cash and banks
Cash	US$	6,858	1.000000	6,858	US$	30,034	30,034
Checks to be deposited	US$	8,912	1.000000	8,912
Banks	US$	7,977	1.000000	7,977	US$	8,842	8,842
Other investments
Sight deposits	US$	229,507	1.000000	229,507	US$	4,607,663	4,607,663
Time deposits					US$	12,597,455	12,597,455
Trade receivables
Accounts receivable	US$	110,015,813	1.000000	110,015,813	US$	103,922,854	103,922,854
Related companies Sect. 33 - Law No. 19550 and amendments	US$	593,820	1.000000	593,820	US$	1,245,162	1,245,162
Export reimbursements	US$	3,483,353	1.000000	3,483,353	US$	5,321,134	5,321,134
Notes receivable	US$	41,859,132	1.000000	41,859,132	US$	43,952,633	43,952,633
	EURO	8,688	0.954800	8,295
Receivables with exchange insurance in US$	EURO	2,679,099	0.993527	2,661,757
Allowance for doubtful accounts (Exhibit E)	US$	(6,853,096)	1.000000	(6,853,096)	US$	(8,567,166)	(8,567,166)
Unearned interest	US$	(1,320,715)	1.000000	(1,320,715)	US$	(1,630,380)	(1,630,380)
Other receivables
Related companies Sect. 33 - Law No. 19550 and amendments	US$	3,435,168	1.000000	3,435,168	US$	4,586,432	4,586,432
Receivables from sale of real property	US$	224,693	1.000000	224,693	US$	117,996	117,996
Advances to suppliers					US$	984,209	984,209
Expenses paid in advance	US$	2,606,649	1.000000	2,606,649	US$	3,086,474	3,086,474
Sundry receivables	US$	4,271,024	1.000000	4,271,024	US$	9,458,834	9,458,834
Total current assets - Carried forward				161,239,147			179,722,176

		6.30.00								6.30.99
Items		Foreign currency (1)	Amount in foreign currency		Exchange rate used	Amount in local currency	Foreign currency (1)	Amount in foreign currency	Amount in local currency
					$	$			$
ASSETS
Brought forward						161,239,147			179,722,176
NON-CURRENT ASSETS
Trade receivables
Notes receivable		US$	7,729,080		1.000000	7,729,080	US$	2,060,739	2,060,739
Allowance for doubtful accounts (Exhibit E)		US$	(1,859,000)		1.000000	(1,859,000)	US$	(470,564)	(470,564)
Other receivables
Related companies Sect. 33 - Law No. 19550 and amendments		US$	1,266,239		1.000000	1,266,239
Receivables from sale of real property		US$	593,331		1.000000	593,331	US$	284,093	284,093
Expenses paid in advance		US$	2,063,203		1.000000	2,063,203	US$	3,094,337	3,094,337
Financial credits							US$	7,182,090	7,182,090
Sundry receivables		US$	169,631		1.000000	169,631	US$	233,624	233,624
Other investments
Investments in insurance companies		US$	5,859,062		1.000000	5,859,062	US$	4,134,959	4,134,959
Risk fund Compañía Afianzadora de Empresas Siderúrgicas S.G.R.
Net contributions		US$	25,396,270		1.000000	25,396,270	US$	36,000,000	36,000,000
Allowance for doubtful accounts (Exhibit E)		US$	(2,379,000)		1.000000	(2,379,000)
Fixed assets
Advances to suppliers		US$	2,167,025		1.000000	2,167,025	US$	518,780	518,780
		DM	262,901		0.487998	128,295	DM	207,726	109,305
		Lit	275,440,162		0.000493	135,792	Lit	1,130,103,383	601,215
		FF	1,070,306		0.145365	155,585	FF	781,522	122,509
		EURO	84,474		0.954800	80,656
		£	46,317		1.513600	70,106
							S	219,346	16,390
							FB	1,908,974	48,843
Total non-current assets						41,576,275			53,936,320
Total assets						202,815,422			233,658,496

	6.30.00							6.30.99
Items	Foreign currency (1)	Amount in foreign currency	Exchange rate used	Amount in local currency	Foreign currency (1)	Amount in foreign currency	Amount in local currency
			$	$			$
LIABILITIES
CURRENT LIABILITIES
Accounts payable
Ordinary suppliers	US$	5,093,760	1.000000	5,093,760	US$	3,356,759	3,356,759
Related companies Sect. 33 - Law No. 19550 and amendments	US$	1,348,058	1.000000	1,348,058	US$	2,228,266	2,228,266
Notes payable	US$	48,683,342	1.000000	48,683,342	US$	41,183,815	41,183,815
	Lit	60,821,862	0.000494	30,046	Lit	4,000,191,370	2,132,102
	DM	1,948,377	0.489506	953,742	DM	2,071,198	1,093,048
	£	10,183	1.517100	15,449	£	24,659	38,899
	Pt	16,207,370	0.005753	93,241	Pt	27,474,524	170,397
	Skr	367,876	0.114582	42,152	Skr	370,492	43,934
	FB	1,258,204	0.023768	29,905
	EURO	153,311	0.956300	146,611	EURO	31,423	32,381
					FF	140,531	22,182
					SFR	46,642	30,066
					S	3,881,192	291,854
Unearned interest	US$	(1,137,505)	1.000000	(1,137,505)	US$	(1,284,274)	(1,284,274)
Advances from customers	US$	3,072,799	1.000000	3,072,799	US$	4,531,257	4,531,257
Short-term debt
Import/export financing	US$	68,378,584	1.000000	68,378,584	US$	197,141,988	197,141,988
	¥	23,450,982	0.009415	220,791	¥	3,440,416	28,466
	DM	55,176	0.489506	27,009	DM	57,068	30,117
	EURO	541,697	0.956300	518,025
Debt with exchange insurance in US$	¥	18,164,365,063	0.009560	173,651,330	¥	9,319,606,212	78,312,651
					DM	681,310	485,956
Unearned interest	US$	(16,778,331)	1.000000	(16,778,331)	US$	(21,385,947)	(21,385,947)
	¥	(14,158,046)	0.009415	(133,298)	¥	(3,041,697)	(25,167)
	EURO	(82,030)	0.956300	(78,445)
Unearned interest with exchange insurance in US$	¥	(107,674,582)	0.009560	(1,029,369)	¥	(203,622,974)	(1,708,804)
Total current liabilities - Carried forward				283,147,896			306,749,946

	6.30.00							6.30.99
Items	Foreign currency (1)	Amount in foreign currency	Exchange rate used	Amount in local currency	Foreign currency (1)	Amount in foreign currency	Amount in local currency
			$	$			$
Brought forward				283,147,896			306,749,946
NON-CURRENT LIABILITIES
Accounts payable
Notes payable	US$	10,412,473	1.000000	10,412,473	US$	14,620,235	14,620,235
Unearned interest	US$	(1,177,401)	1.000000	(1,177,401)	US$	(1,821,650)	(1,821,650)
Long-term debt
Import/export financing	US$	199,252,474	1.000000	199,252,474	US$	184,705,535	184,705,535
					¥	77,172,347	638,524
	DM	165,561	0.489506	81,043	DM	228,275	120,469
	EURO	3,008,133	0.956300	2,876,678
Debt with exchange insurance in US$	¥	142,495,876	0.009456	1,347,441	¥	7,165,034,631	60,000,000
Negotiable Corporate Bonds	US$	110,000,000	1.000000	110,000,000	US$	110,000,000	110,000,000
Unearned interest	US$	(33,004,573)	1.000000	(33,004,573)	US$	(36,927,794)	(36,927,794)
	EURO	(274,007)	0.956300	(262,033)	-	-	-
					¥	(77,172,347)	(638,524)
Unearned interest with exchange insurance in US$	¥	(1,933,693)	0.009456	(18,285)
Total non-current liabilities				289,507,817			330,696,795
Total liabilities				572,655,713			637,446,741

(1) US$: United States Dollars; S: Austrian Schillings; Lit: Italian Lire; £: Pounds Sterling; DM: Deutsche Marks; FF: French
Francs; ¥: Yens; FB: Belgian Francs; Pt: Pesetas; Skr: Swedish Kronor; SFR: Swiss Francs.

The report of independent accountants is issued as a separate document.

				Financial and holding results			Total for the year-ended
Items	Manufacturing expenses	Selling expenses	Administrative expenses	Generated by assets	Generated by liabilities	Other income and expenses	6.30.00	6.30.99
	$	$	$	$	$	$	$	$
Surveillance Committee's and Directors' fees			1,232,000				1,232,000	1,232,000
Salaries, wages and social security	123,512,119	10,154,512	34,872,464				168,539,095	170,103,311
Office expenses	1,749,964	612,928	2,006,355				4,369,247	5,195,034
Maintenance expenses and security services for buildings, installation and equipment	91,998,212	46,049	3,180,928				95,225,189	100,138,218
Fees for technical assistance and external advice	354,807	959,646	1,582,449				2,896,902	2,013,859
Taxes, tariffs and contributions	9,518	30,289	5,955,120				5,994,927	6,589,928
Third party services	63,798,642	498,503	9,746,092				74,043,237	76,760,849
Operating IT services	927	50	6,312,339				6,313,316	6,133,717
Canteen and refreshment	2,840,145	91,550	146,837				3,078,532	3,231,958
Rents	229,554	768	222,123				452,445	623,225
Personnel transportation	2,857,844		94,971				2,952,815	2,929,655
Publicity and advertising	34,962	1,059,831	224,598				1,319,391	1,279,905
Sundry expenses and commissions		3,309,088					3,309,088	1,294,917
Charge (recovery) for provision for contingencies						(293,922)	(293,922)	2,846,320
Charge for allowance for doubtful accounts		2,974,353					2,974,353	1,641,482
Freight and transportation	19,574,219	8,650,744	15,757				28,240,720	23,130,002
Major work not capitalizable	16,409,687						16,409,687	20,146,459
Depreciation of other assets						52,473	52,473	39,403
Depreciation of other non-current investments								23,191
Amortization of intangible assets	244,444					2,140,999	2,385,443	2,067,285
Depreciation of fixed assets	78,805,768						78,805,768	69,520,487
Recovery from sale of scrap	(20,717,683)						(20,717,683)	(21,010,782)
External warehouse expenses	928,710						928,710	1,659,295
Other ordinary income and expenses	16,725,389	1,937,330	7,710,346			15,849,619	42,222,684	26,474,242
Interests and other financing expenses				(16,898,742)	53,685,688		36,786,946	34,552,479
Exchange differences				786,948	(230,364)		556,584	1,900,902
Holding results on other non-monetary assets				11,999,636			11,999,636	15,655,216
Total at June 30, 2000	399,357,228	30,325,641	73,302,379	(4,112,158)	53,455,324	17,749,169	570,077,583
Total at June 30, 1999	400,211,960	25,537,032	72,735,964	(2,897,239)	55,005,836	5,579,004		556,172,557

The report of independent accountants is issued as a separate document.

	Sales and sundry services	Purchases and services received	Remuneration protector partner Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	Interests	Total at 6.30.00	Total at 6.30.99
	$	$	$	$	$	$
Subsidiaries
Comesi San Luis S.A.I.C.	8,246,507	(276,531)	-	-	7,969,976	3,872,240
Comesi S.A.I.C. (1)	-	-	-	-	-	30,565,597
Subtotal	8,246,507	(276,531)	-	-	7,969,976	34,437,837
Related companies
Siderca S.A.I.C.	8,205,335	(2,192,561)	-	-	6,012,774	14,664,828
Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	200,000	-	1,983,289	-	2,183,289	2,978,763
Ecocemento S.A.	914,347	-	-	-	914,347	127,302
Inversora Siderúrgica Argentina S.A.	-	-	-	38,075	38,075	37,377
Subtotal	9,319,682	(2,192,561)	1,983,289	38,075	9,148,485	17,808,270
Total at June 30, 2000	17,566,189	(2,469,092)	1,983,289	38,075	17,118,461
Total at June 30, 1999	74,045,517	(25,550,318)	2,138,763	1,612,145		52,246,107

(1) No balances at the end of the year are shown as a result of the merger of Siderar S.A.I.C. and Comesi S.A.I.C. (see Note 1 to the financial statements).

Amounts in brackets represent losses or disbursements.

The report of independent accountants is issued as a separate document.

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Legal address: Leandro N. Alem 1067, Buenos Aires

COMPLEMENTARY ACCOUNTING INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2000

CONTENTS

Consolidated financial statements at June 30, 2000

Consolidated balance sheet

Consolidated statement of income

Consolidated statement of sources and uses of funds

Notes to the consolidated financial statements

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

CONSOLIDATED BALANCE SHEET at June 30, 2000, compared to the previous year

	6.30.00	6.30.99			6.30.00	6.30.99
	$	$			$	$
ASSETS				LIABILITIES
CURRENT ASSETS				CURRENT LIABILITIES
Cash and banks (Note 4.a)	9,061,890	3,881,291		Accounts payable (Note 4.n)	109,347,692	104,035,948
Other investments (Note 4.b)	582,239	17,240,404		Short-term debt (Note 4.o)	235,767,290	254,369,985
Trade receivables (Note 4.c)	181,316,109	174,597,407		Social security and taxes (Note 4.p)	32,847,095	37,651,468
Other receivables (Note 4.d)	35,055,448	45,481,163		Other liabilities	4,170,774	2,236,324
Inventories (Note 4.e)	235,921,572	258,718,319		Provisions	3,168,834	3,175,071
Other assets (Note 4.f)	1,564,416	2,177,521
Total current assets	463,501,674	502,096,105		Total current liabilities	385,301,685	401,468,796
NON-CURRENT ASSETS				NON-CURRENT LIABILITIES
Trade receivables (Note 4.g)	5,870,080	1,590,175		Accounts payable (Note 4.q)	9,235,072	12,798,585
Other receivables (Note 4.h)	15,776,610	17,773,997		Long-term debt (Note 4.r)	280,272,745	317,898,210
Investments (Note 4.i)	70,294,129	73,720,162		Social security and taxes (Note 4.s)	4,905,592	4,017,054
Other investments (Note 4.j)	61,144,822	40,233,188		Other liabilities	365,318	-
Intangible assets (Note 4.k)	3,746,748	6,132,191		Provisions	12,865,315	13,640,080
Fixed assets (Note 4.l)	706,008,156	751,483,481
Other assets (Note 4.m)	2,179,999	3,385,283
Total non-current assets	865,020,544	894,318,477		Total non-current liabilities	307,644,042	348,353,929
				Total liabilities	692,945,727	749,822,725
				MINORITY INTEREST IN SUBSIDIARIES	53,617	51,351
				SHAREHOLDERS' EQUITY	635,522,874	646,540,506
Total assets	1,328,522,218	1,396,414,582		Total liabilities and Shareholders' equity	1,328,522,218	1,396,414,582

The accompanying notes 1 to 6 are an integral part of these consolidated financial statements.

The report of independent accountants is issued as a separate document.

SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

Registration number with the Superintendency of Corporations: 14510

CONSOLIDATED STATEMENT OF INCOME for the year ended June 30, 2000, compared to the previous year

	6.30.00	6.30.99
	$	$
Net income from sales	960,244,267	1,015,395,269
Cost of sales	(748,986,277)	(781,171,765)
Gross profit	211,257,990	234,223,504
Selling expenses	(30,454,425)	(26,876,620)
Administrative expenses	(73,471,971)	(75,391,484)
Financial and holding results
Generated by assets	5,764,068	2,518,692
Generated by liabilities	(53,528,427)	(56,021,843)
Other ordinary income and expenses	(17,760,908)	(8,207,338)
Minority interest in subsidiaries	(2,266)	(14,730)
Income before taxes	41,804,061	70,230,181
Income tax provision charge/minimum national (Note 5)	(8,748,651)	(19,072,809)
Ordinary income	33,055,410	51,157,372
Result from investments in related companies	(29,874,291)	(50,548,323)
Net income for the year	3,181,119	609,049

The accompanying notes 1 to 6 are an integral part of these consolidated financial statements.

The report of independent accountants is issued as a separate document.

	6.30.00	6.30.99
	$	$
CHANGES IN FUNDS
Funds at the beginning of the year (1)	21,121,695	11,449,806
(Decrease) increase in funds	(11,477,566)	9,671,889
Funds at the end of the year (1)	9,644,129	21,121,695
CAUSES OF CHANGES IN FUNDS
Ordinary income	33,055,410	51,157,372
Add: Items not representing funds disbursements
Depreciation of fixed assets	78,840,675	73,302,270
Depreciation of other non-current investments	-	23,191
Depreciation of other current assets	52,473	76,303
Amortization of intangible assets	2,385,443	5,529,408
Allowance for doubtful accounts	2,974,353	1,375,847
Income tax provision charge	8,748,651	19,072,809
Board of Directors’ and Surveillance Committee’s fees provision	1,232,000	1,232,000
Provision for contingencies	-	3,041,344
Minority interest in subsidiaries	2,266	14,730
Less: Items not providing funds
Provision for contingencies	(286,649)	-
Funds generated by ordinary operations	127,004,622	154,825,274
Results of investments in related companies	(29,874,291)	(50,548,323)
Add: Items not representing funds disbursements
Results of investments in related companies	29,874,291	50,548,323
Funds generated by (applied to) remaining operations	-	-
Funds generated by operations	127,004,622	154,825,274
Other causes of sources of funds
Net decrease (increase) in other receivables	12,423,102	(32,717,317)
Net decrease in inventories	22,796,747	44,866,076
Net decrease (increase) in other assets	1,765,916	(54,224)
Net increase (decrease) in accounts payable	1,748,231	(41,538,582)
Net increase (decrease) in other liabilities	1,067,768	(897,069)
Total sources of funds - Carried forward	166,806,386	124,484,158

(1) Cash and banks plus other current investments

	6.30.00	6.30.99
	$	$
CAUSES OF CHANGES IN FUNDS (Contd.)
Brought forward	166,806,386	124,484,158
Other causes of uses of funds
Net increase in trade receivables	(11,692,360)	(3,120,303)
Net increase in investments	(26,448,258)	(1,637,673)
Net (increase) decrease in other non-current investments	(23,192,234)	13,672,698
Net increase in fixed assets	(33,365,350)	(77,142,506)
Net (decrease) increase in short and long-term debt	(56,228,160)	26,628,906
Net decrease in social security and taxes	(12,664,486)	(34,183,322)
Net decrease in provisions	(494,353)	(5,662,542)
Decrease in minority interest in subsidiaries	-	(57,994)
Distribution of profits voted by Shareholders' Meeting on September 30, 1998	-	(33,309,533)
Distribution of profits voted by Shareholders' Meeting on September 30, 1999	(14,198,751)	-
Total uses of funds	(178,283,952)	(114,812,269)
(Decrease) increase in funds	(11,477,566)	9,671,889

The accompanying notes 1 to 6 are an integral part of these consolidated financial statements.

The report of independent accountants is issued as a separate document.

NOTE 1 - BASIS FOR THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS - ACCOUNTING STANDARDS

The consolidated financial statements have been prepared in accordance with the valuation basis and criteria explained in Notes 2 and 3 to the financial statements of the parent company and must be read jointly with the complementary information to the financial statements.

NOTE 2 - CONSOLIDATION BASIS

The consolidated companies and the respective percentage of voting stock at June 30, 2000 were as follows:

Company	Participation
Comesi San Luis S.A.I.C.	99.000%
Prosid Investments Inc.	100.000%

The consolidated financial statements have been prepared on the basis of the financial statements of the subsidiaries at June 30, 2000.

The necessary adjustments have been made to unify the valuation and disclosure criteria of the consolidated companies. Balances between consolidated companies, transactions and their results and intercompany balances have been eliminated, if significant.

NOTE 3 - COMPLEMENTARY INFORMATION NOT DIFFERING SIGNIFICANTLY FROM THAT PRESENTED BY THE PARENT COMPANY

Notes 1 to 3, 5 to 13 and Exhibits A to I to the financial statements of the parent company are in this situation.

NOTE 4 - COMPOSITION OF CONSOLIDATED BALANCE SHEET ITEMS

	6.30.00	6.30.99
	$	$
CURRENT ASSETS
a) Cash and banks
Cash	122,256	142,887
Checks to be deposited	3,883,469	959,691
Banks	5,056,165	2,778,713
	9,061,890	3,881,291
b) Other investments
Sight deposits	582,239	4,642,949
Time deposits	-	12,597,455
	582,239	17,240,404
c) Trade receivables
Accounts receivable	111,016,278	105,165,533
Related companies Sect. 33 - Law No. 19550 and amendments	455,545	627,237
Export reimbursements	3,483,353	5,321,134
Notes receivable	74,594,529	73,740,834
Allowance for doubtful accounts	(6,912,881)	(8,626,951)
Unearned interest	(1,320,715)	(1,630,380)
	181,316,109	174,597,407
d) Other receivables
Related companies Sect. 33 - Law No. 19550 and amendments	3,435,168	4,586,432
Advances and loans to personnel	3,082,967	3,137,068
Receivables from sale of real property	425,781	302,346
Tax credits	18,681,855	20,308,977
Advances to suppliers	918,219	2,080,873
Expenses paid in advance	2,606,649	3,086,474
Sundry receivables	5,904,809	11,978,993
	35,055,448	45,481,163

NOTE 4 - COMPOSITION OF CONSOLIDATED BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
CURRENT ASSETS (Contd.)
e) Inventories
Finished products	72,238,796	97,819,194
Products in process	52,932,372	62,342,188
Raw material	49,490,562	35,012,397
Materials	59,931,616	61,600,587
Advances to suppliers	1,328,226	1,943,953
	235,921,572	258,718,319
f) Other assets (residual value)
Property	1,564,416	2,177,521
	1,564,416	2,177,521

The amortization of the year amounted to $ 52,473.

NON-CURRENT ASSETS
g) Trade receivables
Notes receivable	7,729,080	2,060,739
Allowance for doubtful accounts	(1,859,000)	(470,564)
	5,870,080	1,590,175
h) Other receivables
Related companies Sect. 33 - Law No. 19550 and amendments	1,266,239	-
Advances and loans to personnel	1,817,122	1,645,443
Receivables from sale of real property	6,395,282	5,593,764
Tax credits	4,051,000	-
Expenses paid in advance	2,063,203	3,094,337
Financial credits	-	7,182,090
Sundry receivables	183,764	258,363
	15,776,610	17,773,997

NOTE 4 - COMPOSITION OF CONSOLIDATED BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
NON-CURRENT ASSETS (Contd.)
i) Investments
Shares in Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	358,809	313,989
Shares in Ecocemento S.A.	2,653,191	2,848,426
Shares in Consorcio Siderurgia Amazonia Ltd.	67,272,129	70,547,747
Shares in Fondo de Garantías Buenos Aires S.A.P.E.M.	10,000	10,000
	70,294,129	73,720,162
j) Other investments (residual value)
Loans convertible into shares in Consorcio Siderurgia Amazonia Ltd.	32,268,490	-
Investments in insurance companies	5,859,062	4,134,959
Guarantee fund Compañía Afianzadora de Empresas Siderúrgicas S.G.R.	25,396,270	36,000,000
Allowance for risk fund uncollectibility	(2,379,000)	-
Real estate	-	98,229
	61,144,822	40,233,188
k) Intangible assets (residual value)
Reorganization plant and project analysis related costs	-	244,444
Goodwill (Comesi S.A.I.C.)	3,746,748	5,887,747
	3,746,748	6,132,191
The amortization of the year amounted to $ 2,385,443.

NOTE 4 - COMPOSITION OF CONSOLIDATED BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
NON-CURRENT ASSETS (Contd.)
l) Fixed assets (residual value)
Land	23,055,007	23,055,007
Industrial buildings and facilities	434,506,458	426,729,736
Machinery and equipment	112,440,382	122,298,075
Vehicles and means of transport	4,291,136	4,983,297
Furniture, general machinery and office supplies	2,960,003	4,059,869
Steel spares and supplies	63,047,602	76,953,687
Fixed assets in transit	776,529	2,705,376
Work in progress	60,730,342	88,213,233
Advances to suppliers	4,200,697	2,485,201
	706,008,156	751,483,481
The depreciation of the year amounted to $ 78,840,675.
m) Other assets
Real property	2,179,999	3,385,283
	2,179,999	3,385,283
CURRENT LIABILITIES
n) Accounts payable
Ordinary suppliers	56,178,454	53,595,834
Related companies Sect. 33 - Law No. 19550 and amendments	1,230,139	2,146,705
Notes payable	49,994,488	45,038,678
Unearned interest	(1,137,505)	(1,284,274)
Advances from customers	3,082,116	4,539,005
	109,347,692	104,035,948

NOTE 4 - COMPOSITION OF CONSOLIDATED BALANCE SHEET ITEMS (Contd.)

	6.30.00	6.30.99
	$	$
CURRENT LIABILITIES (Contd.)
o) Short-term debt
Financial	10,990,994	1,490,725
Import/export financing	242,795,739	275,999,178
Unearned interest	(18,019,443)	(23,119,918)
	235,767,290	254,369,985
p) Social security and taxes
Provision for income tax/minimum notional	12,303,000	20,228,719
Income tax withholding and solidarity contribution	(12,273,000)	(13,408,874)
Income tax advances	(4,900)	(6,788,466)
Provision for turnover tax	104,124	153,704
Wages and social security	30,207,450	32,622,096
Others sundry	2,510,421	4,844,289
	32,847,095	37,651,468
NON-CURRENT LIABILITIES
q) Accounts payable
Notes payable	10,412,473	14,620,235
Unearned interest	(1,177,401)	(1,821,650)
	9,235,072	12,798,585
r) Long-term debt
Import/export financing	203,557,636	245,464,528
Negotiable Corporate Bonds	110,000,000	110,000,000
Unearned interest	(33,284,891)	(37,566,318)
	280,272,745	317,898,210
s) Social security and taxes
Sundry	4,905,592	4,017,054
	4,905,592	4,017,054

NOTE 5 - INCOME TAX - MINIMUM NOTIONAL INCOME TAX

The charge for income tax/minimum notional is that estimated to be paid according to current legislation for the following companies:

	$
Income tax
Siderar S.A.I.C.	8,725,602
Minimum notional income tax Comesi San Luis S.A.I.C.	23,049
	8,748,651

NOTE 6 - EVENTS SUBSEQUENT TO YEAR-END

After June 30, 2000, no events, situations or circumstances which are not publicly known have occurred which affect or could significantly affect the Company's equity and financial position.

The report of independent accountants is issued as a separate document.

REPORT OF INDEPENDENT ACCOUNTANTS

To the members of the Surveillance Committee of

Siderar Sociedad Anónima Industrial y Comercial

We have audited the balance sheets of Siderar Sociedad Anónima Industrial y Comercial as of June 30, 2000 and 1999, and the related statements of income, of changes in shareholders’ equity and of sources and uses of funds for the years then ended and complementary notes 1 to 11, 13 and 14 and exhibits A to I. We have also audited the consolidated financial statements of Siderar Sociedad Anónima Industrial y Comercial with its subsidiaries for the years ended June 30, 2000 and 1999, which are presented as complementary information. The preparation and issue of these financial statements is the Company’s responsibility. Our responsibility is to express an opinion on those financial statements based on our audits.

We conducted our audits of these statements in accordance with auditing standards in force in Argentina, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Company and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Our opinion on the financial statements at June 30, 1999 included a qualification relating to an uncertainty derived from indirect investments in Siderúrgica del Orinoco C.A. and Consorcio Siderurgia Amazonia Ltd. During the current year this uncertainty has been favorably resolved, as mentioned in Note 8.d). Therefore, the current opinion on the financial statements at June 30, 1999 does not include such qualification.

a) In our opinionthe financial statements of Siderar Sociedad Anónima Industrial y Comercial present fairly, in all material respects, its equity position at June 30, 2000 and 1999, the results of its operations, the changes in its shareholders’ equity and the sources and uses of funds for the years then ended, in conformity with professional accounting standards in force in Argentina;

b) the consolidated financial statements of Siderar Sociedad Anónima Industrial y Comercial with its subsidiaries present fairly, in all material respects, their consolidated equity position at June 30, 2000 and 1999, the consolidated results of their operations and their consolidated sources and uses of funds for the years then ended, in conformity with professional accounting standards in force in Argentina.

We have read the “Summary Information” required by the National Securities Commission and, regarding those aspects which fall within our competence, we have no observations to make.

Buenos Aires, September 5, 2000

PRICE WATERHOUSE & CO. by (Partner)