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<SEC-DOCUMENT>0000891092-05-001249.txt : 20050713
<SEC-HEADER>0000891092-05-001249.hdr.sgml : 20050713
<ACCEPTANCE-DATETIME>20050712174804
ACCESSION NUMBER:		0000891092-05-001249
CONFORMED SUBMISSION TYPE:	20-F
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20041231
FILED AS OF DATE:		20050713
DATE AS OF CHANGE:		20050712

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GROUP SIMEC SA DE CV
		CENTRAL INDEX KEY:			0000887153
		STANDARD INDUSTRIAL CLASSIFICATION:	STEEL WORKS, BLAST FURNACES  ROLLING MILLS (COKE OVENS) [3312]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		20-F
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11176
		FILM NUMBER:		05951091

	BUSINESS ADDRESS:	
		STREET 1:		CALZADA LAZARO CARDENAS 601
		CITY:			44910 GUADALAJARA JA
		STATE:			O5
		ZIP:			10022

	MAIL ADDRESS:	
		STREET 1:		CALZADA LAZARO CARDENAS
		CITY:			GUADALAJARA JALISCO
		STATE:			O5
		ZIP:			999999999
</SEC-HEADER>
<DOCUMENT>
<TYPE>20-F
<SEQUENCE>1
<FILENAME>e22153_20f.htm
<DESCRIPTION>FORM 20-F
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>SECURITIES AND
EXCHANGE COMMISSION <BR></B> </FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Washington, D.C. 20549</B> </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>FORM 20-F </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Annual Report
Pursuant to Section 13 or 15(d)                      <BR>of the Securities Exchange Act of
1934                    <BR>For the Fiscal Year Ended December 31, 2004 </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Commission File
Number 1-11176 </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>GRUPO SIMEC, S.A. de
C.V. <BR></B> </FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(Exact name of Registrant as specified in its charter) </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>GROUP SIMEC
<BR></B> </FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(Translation of Registrant&#146;s name into English) </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>UNITED MEXICAN
  STATES <BR>
  </B><font size="1">(Jurisdiction of incorporation or organization) </font></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CALZADA LAZARO
CARDENAS 601 <BR>COLONIA LA NOGALERA, GUADALAJARA,
<BR>JALISCO, MEXICO 44440 <BR></B> </FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(Address of
principal executive offices) </FONT> </P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Securities
  registered or to be registered pursuant to Section 12(b) of the Act. </B></FONT><!-- MARKER FORMAT-SHEET="8K 3 col" FSL="Workstation" -->
</P>
<div align="center">
  <TABLE WIDTH=600>
    <TR ALIGN="center" VALIGN=top>
      <TD WIDTH=4><FONT SIZE=2> </FONT></TD>
      <TD align="center" WIDTH=265>&nbsp;<b>&nbsp;<font size=2><u>Title of each
        class</u> </font></b></TD>
      <TD align="center" WIDTH=31><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD align="center" WIDTH=268>&nbsp;<b>&nbsp;<font size=2><u>Name of each
        exchange on which registered</u> </font></b></TD>
      <TD WIDTH=8><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR ALIGN="center" VALIGN=top>
      <TD WIDTH=4>&nbsp;</TD>
      <TD align="center" WIDTH=265><font size=2>American Depositary Shares <br>
        Series B Common Stock </font></TD>
      <TD align="center" WIDTH=31>&nbsp;</TD>
      <TD align="center" WIDTH=268><font size=2>American Stock Exchange <br>
        American Stock Exchange* </font></TD>
      <TD WIDTH=8>&nbsp;</TD>
    </TR>
  </TABLE>
  <br>
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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Securities registered
or to be registered pursuant to Section 12(g) of the Act. </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Securities for which
there is a reporting obligation pursuant to Section 15(d) of the Act. </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of
outstanding shares of each of the issuer&#146;s classes of common stock as of the close of the
period covered by the annual report. </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Series B Common Stock
&#151; 133,542,984 shares                                               <BR>(As of December
31, 2004) </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Yes (X) &nbsp;&nbsp;&nbsp;No (&nbsp;&nbsp;&nbsp;) </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark
which financial statement item the registrant has elected to follow. </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 17 (&nbsp;&nbsp;&nbsp;)
Item 18 (X) </FONT></P>


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<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1"><B>*</B> </FONT> </TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1"><B>Not
for trading, but only in connection with the registration of American Depositary Shares.</B> </FONT></TD></TR></TABLE>


<br>
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<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>





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<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>TABLE OF
  CONTENTS </B></FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=640>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=right><b><font size="2">Page</font></b></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=RIGHT width="41">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=center width="625" colspan="2"><font size=2>PART I</font></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=RIGHT width="41">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 1. Identity of Directors, Senior
        Management and Advisers</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>1</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 2. Offer Statistics and Expected
        Timetable</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>1</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 3. Key Information</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>2</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 4. Information on the Company</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>8</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 5. Operating and Financial
        Review and Prospects</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>19</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 6. Directors, Senior Management
        and Employees</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>27</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 7. Major Shareholders and Related
        Party Transactions</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>31</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 8. Financial Information</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>32</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 9. Offer and Listing Details</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>34</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 10. Additional Information</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>35</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 11. Quantitative and Qualitative
        Disclosures About Market Risk</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>43</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 12. Description of Securities
        Other than Equity Securities</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>44</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=RIGHT width="41">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=center colspan="2"><font size=2>&nbsp;PART II</font></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=RIGHT width="41">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 13. Defaults, Dividends Arrearages
        and Delinquencies</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 14. Material Modifications
        to the Rights of Security Holders and Use of Proceeds</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 15. Controls and Procedures</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 16. Reserved</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 16A. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit
        Committee Financial Expert</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 16B. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Code
        of Ethics</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 16C. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principal
        Accountant Fees and Services</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>52</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 16D. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exemptions
        from the Listing Standards for Audit Committees</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>52</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 16E. Purchases of Equity Securities
        by the Issuer and Affiliated Purchasers</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>52</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=RIGHT width="41">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=center colspan="2"><font size=2>PART III</font></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584">&nbsp;</TD>
      <TD ALIGN=RIGHT width="41">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 17. Financial Statements</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>52</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 18. Financial Statements</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>52</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="584"><FONT SIZE=2>Item 19. Exhibits</FONT></TD>
      <TD ALIGN=RIGHT width="41"><FONT SIZE=2>52</FONT></TD>
    </TR>
  </TABLE>
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<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -i-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>





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<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Presentation of
Financial Information </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grupo
  Simec, S.A. de C.V. (collectively with its subsidiaries, &#147;Simec&#148; or
  the &#147;Company&#148;) is a corporation (<i>sociedad an&#243;nima de capital
  variable</i>) organized under the laws of the United Mexican States. The Company
  publishes its financial statements in Mexican pesos. Pursuant to accounting
  principles generally accepted in Mexico (&#147;Mexican GAAP&#148;), financial
  statement amounts for all periods in the consolidated financial statements of
  the Company and, unless otherwise indicated, throughout this Annual Report,
  have been restated in constant pesos as of December 31, 2004 (pesos with purchasing
  power as of that date). In this Annual Report, references to &#147;pesos&#148;
  or &#147;Ps.&#148; are to Mexican pesos and references to &#147;U.S. dollars,&#148;
  &#147;U.S.$,&#148; &#147;dollars&#148; or &#147;$&#148; are to United States
  dollars. This Annual Report contains translations of certain peso amounts into
  U.S. dollars at specified rates solely for the convenience of the reader. These
  translations should not be construed as representations that the peso amounts
  actually represent those U.S. dollar amounts or could be converted into U.S.
  dollars at the rate indicated. Unless otherwise indicated, U.S. dollar amounts
  that have been translated from pesos have been so translated at an exchange
  rate of Ps. 11.2648 to $1.00 based on the average rate of exchange announced
  by principal Mexican banks for same-day settlement of interbank transactions
  in effect on December 31, 2004 as determined by Banco de M&#233;xico. The noon
  buying rate in New York City for cable transfers payable in pesos, as certified
  by the Federal Reserve Bank of New York for customs purposes on June 30, 2005
  was Ps. 10.77 to $1.00. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references to tons in this Annual Report are to metric tons. One metric ton is equal to
1.102 short tons. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Forward Looking
Statements </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Annual Report contains certain forward-looking statements regarding the business of
Simec. When used in this Annual Report, the words &#147;anticipates,&#148; &#147;plans,&#148; &#147;believes,&#148;
&#147;estimates,&#148; &#147;intends,&#148; &#147;expects,&#148; &#147;projects&#148; and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements contain
those words. These statements, including but not limited to Simec&#146;s statements regarding
its strategy for raw material acquisition, products and markets, production processes and
facilities, sales and distribution and exports, growth and other trends in the steel
industry and various markets, operations and liquidity and capital resources are based on
management&#146;s beliefs, as well as on assumptions made by, and information currently
available to, management, and involve various risks and uncertainties, some of which are
beyond Simec&#146;s control. Simec&#146;s actual results could differ materially from those
expressed in any forward-looking statement. In light of these risks and uncertainties
there can be no assurance that forward-looking statements will prove to be accurate.
Factors that might cause actual results to differ from forward-looking statements
include, but are not limited to, factors relating to the steel industry (including the
cyclicality of the industry, finished product prices, worldwide production capacity, the
high degree of competition from Mexican and foreign producers and the price of ferrous
scrap and other raw materials), the ability of Simec of operate at high capacity levels,
the costs of compliance with U.S. and Mexican environmental laws, the integration of the
recently acquired Mexican steel manufacturing facilities located in Apizaco and Cholula,
future capital expenditures and acquisitions, future devaluations of the peso, the
imposition by Mexico of foreign exchange controls and price controls, the influence of
economic and market conditions in other countries on Mexican securities as well as the
factors set forth in &#147;Risk Factors&#148; under Item 3 of this Annual Report. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>PART I. </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 1.&nbsp;
  Identity of Directors, Senior Management and Advisers </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not
applicable. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 2. &nbsp;Offer
  Statistics and Expected Timetable </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not
applicable. </FONT></P>




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<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>
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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 3. &nbsp;Key
  Information </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Selected Financial Data </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
information set forth below reflects the Company&#146;s selected historical audited
consolidated financial information. The historical consolidated financial information as
of December 31, 2003 and 2004 and for each of the years ended December 31, 2002, 2003 and
2004 has been derived from the Company&#146;s audited consolidated financial statements and
notes thereto for the fiscal year ended December 31, 2004 included elsewhere in this
Annual Report and which are referred to in this Annual Report as the &#147;Consolidated
Financial Statements.&#148; This information is qualified in its entirety by reference to the
Consolidated Financial Statements, including the notes thereto, and Item 5, &#147;Operating
and Financial Review and Prospects&#148;, included elsewhere in this Annual Report. In 2001,
the Company changed its auditor from Arthur Andersen to KPMG C&#225;rdenas, Dosal, S.C.,
in order to have the same auditor as its parent, Industrias CH, S.A. de C.V. (&#147;Industrias
CH&#148;). Thus, the selected consolidated financial data for the fiscal year ended December
31, 2000 are extracted from the Company&#146;s audited consolidated financial statements which
were reported on by Arthur Andersen. The selected consolidated financial data for the
fiscal years ended December 31, 2001, 2002, 2003 and 2004 are extracted from the
Company&#146;s audited consolidated financial statements which have been reported on by KPMG C&#225;rdenas,
Dosal, S.C. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s consolidated financial statements are prepared in accordance with Mexican GAAP,
which differs in significant respects from generally accepted accounting principles in
the United States (&#147;U.S. GAAP&#148;). Certain of the financial information set forth below is
presented in accordance with U.S. GAAP. In accordance with Mexican GAAP rules on
inflation accounting, the Company&#146;s consolidated financial statements recognize the
effects of inflation and restate data for prior periods in constant pesos as of December
31, 2004. The effect of these inflation accounting principles has not been reversed in
the reconciliation to U.S. GAAP. Note 18 to the Consolidated Financial Statements
provides a description of the principal differences between Mexican GAAP and U.S. GAAP as
they relate to the Company, and a reconciliation to U.S. GAAP of net income and total
stockholders&#146; equity. </FONT></P>




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<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -2-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade>
<p align="center"><BR>
  <!-- *************************************************************************** -->
  <!-- MARKER PAGE="sheet: 4; page: 4" --> <b><font size="1"> </font></b></p>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=640>
    <TR VALIGN=Bottom>
      <TH>&nbsp;</TH>
      <TH COLSPAN=12 align="center"><b><font size="1"><u>Year Ended December 31,</u>
         </font></b></TH>
    </TR>
    <TR VALIGN=Bottom>
      <TH><FONT SIZE=1></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=1><b><font size="1"><u>2000</u> </font></b></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=1><b><font size="1"><u>2001</u> </font></b></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=1><b><font size="1"><u>2002</u> </font></b></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=1><b><font size="1"><u>2003</u> </font></b></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=1><b><font size="1"><u>2004</u> </font></b></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=1><b><font size="1"><u>2004(1)</u> </font></b></FONT></TH>
    </TR>
    <TR VALIGN=Bottom>
      <TD WIDTH=39% ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center colspan="9"><b><font size="1">(Millions of constant December
        31, 2004 pesos, except <br>
        share and per ADS data) </font></b></TD>
      <TD WIDTH=2% ALIGN=LEFT><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size="1"> (Millions of dollars, except
        <br>
        share and per ADS data) </font></b></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD WIDTH=39% ALIGN=LEFT><FONT SIZE=1><b>Income Statement Data:</b></FONT></TD>
      <TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
      <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
      <TD WIDTH=1% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
      <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
      <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
      <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
      <TD WIDTH=7% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1><i>Mexican GAAP:</i></FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Net sales</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2,659</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2,200</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2,310</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>2,930</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>5,683</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>504</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.49</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Direct cost of
        sales</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1,757</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1,477</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1,546</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,925</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>3,303</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>293</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.21</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Marginal profit</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>902</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>723</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>764</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,005</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>2,380</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>211</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.28</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Indirect manufacturing,selling,</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;general
        and administrative expenses</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>422</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>362</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>315</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>296</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>357</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>31</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.69</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Depreciation and
        amortization</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>167</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>153</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>170</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>192</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>214</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>19</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.00</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Operating income
        (2)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>313</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>208</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>279</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>517</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,809</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>160</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.59</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Financial income
        (expense) (3)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(125</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>5</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(135</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(26</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(36</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>(3</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.20)</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Other income (expense),
        net (4)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(70</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>70</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(39</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(31</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(37</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>(3</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.28)</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income from continuing
        operations</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;before
        taxes, employee profit</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sharing
        and minority interest</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>118</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>283</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>105</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>460</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,736</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>154</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.11</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income tax expense
        and employee profit</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sharing
        (5)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>145</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>18</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(24</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>152</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>330</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>29</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.30</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income (loss)
        from continuing operations</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(27</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>265</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>129</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>308</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,406</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>124</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.81</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income from discontinued</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;operations</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>8</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1></FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>0</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Credit (provision)
        for loss on</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;disposal
        of segments</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(24</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1></FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>0</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Net income (loss)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(43</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>265</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>129</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>308</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,406</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>124</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.81</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Minority interest</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1></FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>0</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Majority interest</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(43</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>265</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>129</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>308</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,406</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>124</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.81</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Net income (loss)
        per ADS (6)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(2</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>5</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>3</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>11</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.94</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Diluted net income
        (loss) per ADS (6)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(1</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>5</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>3</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>11</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.94</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Weighted average
        shares outstanding</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;(000&#146;s)(6)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>20,715</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>54,816</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>99,967</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>119,053</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>132,972</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Weighted average
        shares outstanding,</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;plus
        potential shares from</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;convertible
        debt (000&#146;s)(6)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>45,358</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>54,816</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>99,967</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>119,053</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>132,972</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1><i>U.S. GAAP including effects of
        inflation:</i></FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Net sales</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2,659</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2,200</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2,310</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>2,930</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>5,683</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>504</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.49</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Cost of sales</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1,756</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1,471</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1,550</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,929</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>3,297</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>292</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.68</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Marginal profit</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>903</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>729</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>760</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,001</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>2,386</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>211</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.81</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Operating income
        (2)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>282</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>193</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>245</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>523</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,793</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>159</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.17</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Financial income
        (expense) (3)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(124</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>6</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(135</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(26</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(36</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>(3</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.20)</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Other income (expense),
        net (4)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(68</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>632</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(72</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(31</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>(4</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>(0</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.35)</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income from continuing
        operations</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;before
        taxes and minority interest</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>90</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>831</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>38</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>466</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,753</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>155</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.62</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income tax expense
        (income) (5)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>61</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>66</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>(176</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>)</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>199</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>374</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>33</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.20</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income from continuing
        operations</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;before
        minority interest</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>29</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>765</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>214</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>267</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,379</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>122</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.42</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Minority interest</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1></FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>0</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income from continuing
        operations</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>29</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>765</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>214</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>267</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>1,379</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>122</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.42</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Income from continuing
        operations</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
        share(6)</FONT></TD>
      <td align=RIGHT width="6%"><font size=1>1</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>14</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>2</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>2</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>10</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>0</font></td>
      <td align=LEFT width="7%"><font size=1>.89</font></td>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="39%"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;Diluted net income
        per share (6)</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>1</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>14</FONT></TD>
      <TD ALIGN=LEFT width="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="6%"><FONT SIZE=1>2</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>2</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="7%"><FONT SIZE=1>10</FONT></TD>
      <TD ALIGN=LEFT width="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="12%"><FONT SIZE=1>0</FONT></TD>
      <TD ALIGN=LEFT width="7%"><FONT SIZE=1>.89</FONT></TD>
    </TR>
  </TABLE>
  <br>
  <!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" --> <BR>
</div>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -3-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade>
<p align="center"><BR>
  <!-- *************************************************************************** -->
  <!-- MARKER PAGE="sheet: 1; page: 1" --> <!-- MARKER FORMAT-SHEET="Cutoff rule Footnote" FSL="Workstation" -->
</p>
<div align="center">
  <table cellpadding=0 cellspacing=0 border=0 width=640>
    <tr valign=Bottom>
      <th>&nbsp;</th>
      <th colspan=12 align="center"><b><font size="1"><u>Year Ended December 31,</u>
        </font></b></th>
    </tr>
    <tr valign=Bottom>
      <th><font size=1></font></th>
      <th colspan=2><font size=1><b><font size="1"><u>2000</u> </font></b></font></th>
      <th colspan=2><font size=1><b><font size="1"><u>2001</u> </font></b></font></th>
      <th colspan=2><font size=1><b><font size="1"><u>2002</u> </font></b></font></th>
      <th colspan=2><font size=1><b><font size="1"><u>2003</u> </font></b></font></th>
      <th colspan=2><font size=1><b><font size="1"><u>2004</u> </font></b></font></th>
      <th colspan=2><font size=1><b><font size="1"><u>2004(1)</u> </font></b></font></th>
    </tr>
    <tr valign=Bottom>
      <td width=39% align=LEFT>&nbsp;</td>
      <td align=center colspan="9"><b><font size="1">(Millions of constant December
        31, 2004 pesos, except <br>
        share and per ADS data) </font></b></td>
      <td width=2% align=LEFT><b></b></td>
      <td align=center colspan="2"><b><font size="1"> (Millions of dollars, except
        <br>
        share and per ADS data) </font></b></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Income from discontinued
        operations</font></td>
      <td align=RIGHT width="6%"><font size=1>8</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>0</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1></font></td>
      <td align=LEFT width="7%"><font size=1>0</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit
        (provision) for loss on disposal of segments</font></td>
      <td align=RIGHT width="6%"><font size=1>(24</font></td>
      <td align=LEFT width="2%"><font size=1>)</font></td>
      <td align=RIGHT width="6%"><font size=1>0</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1></font></td>
      <td align=LEFT width="7%"><font size=1>0</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Net income</font></td>
      <td align=RIGHT width="6%"><font size=1>13</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>765</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>214</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>267</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>1,379</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>122</font></td>
      <td align=LEFT width="7%"><font size=1>.42</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1><b>Balance Sheet Data:</b></font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>Mexican GAAP:</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Total assets</font></td>
      <td align=RIGHT width="6%"><font size=1>5,782</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>5,343</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>5,711</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>6,317</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>8,948</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>794</font></td>
      <td align=LEFT width="7%"><font size=1>.33</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Long-term debt(7)</font></td>
      <td align=RIGHT width="6%"><font size=1>1,605</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>772</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>847</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>1,109</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>1,454</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>129</font></td>
      <td align=LEFT width="7%"><font size=1>.07</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Total stockholders&#146;
        equity</font></td>
      <td align=RIGHT width="6%"><font size=1>1,302</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>3,209</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>3,931</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>4,867</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>6,584</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>584</font></td>
      <td align=LEFT width="7%"><font size=1>.48</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1><i>U.S. GAAP including effects of
        inflation:</i></font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Total assets</font></td>
      <td align=RIGHT width="6%"><font size=1>6,457</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>6,256</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>5,988</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>6,246</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>8,819</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>782</font></td>
      <td align=LEFT width="7%"><font size=1>.88</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Long-term debt(7)</font></td>
      <td align=RIGHT width="6%"><font size=1>2,287</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>772</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>879</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>1,055</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>1,418</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>125</font></td>
      <td align=LEFT width="7%"><font size=1>.88</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Total stockholders&#146;
        equity</font></td>
      <td align=RIGHT width="6%"><font size=1>1,735</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>3,797</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>4,171</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>4,850</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>6,491</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>576</font></td>
      <td align=LEFT width="7%"><font size=1>.22</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1><b>Other Data:</b></font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1><i>Mexican GAAP:</i></font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Capital expenditures</font></td>
      <td align=RIGHT width="6%"><font size=1>42</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>44</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>10</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>62</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>1,236</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>109</font></td>
      <td align=LEFT width="7%"><font size=1>.72</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Depreciation and
        amortization from</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;continuing
        operations</font></td>
      <td align=RIGHT width="6%"><font size=1>163</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>177</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>187</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>202</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>214</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>19</font></td>
      <td align=LEFT width="7%"><font size=1>.00</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Depreciation and
        amortization from</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;discontinued
        operations</font></td>
      <td align=RIGHT width="6%"><font size=1>4</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>0</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>0</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1></font></td>
      <td align=LEFT width="7%"><font size=1>0</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="39%"><font size=1>&nbsp;&nbsp;&nbsp;Total depreciation
        and amortization</font></td>
      <td align=RIGHT width="6%"><font size=1>167</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>177</font></td>
      <td align=LEFT width="1%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="6%"><font size=1>187</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>202</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="7%"><font size=1>214</font></td>
      <td align=LEFT width="2%"><font size=1>&nbsp;</font></td>
      <td align=RIGHT width="12%"><font size=1>19</font></td>
      <td align=LEFT width="7%"><font size=1>.00</font></td>
    </tr>
  </table>
</div>
<HR SIZE=1 noshade ALIGN=left  WIDTH=75>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(1) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Peso
amounts have been translated into U.S.  dollars solely for the convenience of the reader,
 at the rate of Ps. 11.2648 per          $1.00, the interbank transactions rate in effect
on December 31, 2004.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(2) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Reflects
different treatment of direct cost of sales, start-up costs,          employee profit
sharing and accrued vacation costs (until 2002) under          Mexican GAAP and U.S.
GAAP. See Note 18 to the Consolidated Financial          Statements.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(3) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Reflects
different treatment of gain from monetary position and          exchange loss capitalized
under Mexican GAAP and U.S. GAAP. See Note 18          to the Consolidated Financial
Statements.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(4) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Includes
gains on sales of assets and sales not related to production,          provisions for
doubtful accounts derived from changes in estimates made          in prior years,
expenses related to the disposal of dust at the          Guadalajara facility and
financial restructuring fees.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(5) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Reflects
different treatment of deferred income taxes and employee          profit sharing under
Mexican GAAP and U.S. GAAP. See Note 18 to the          Consolidated Financial Statements.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(6) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">For
U.S. GAAP and Mexican GAAP purposes, the weighted average shares          outstanding
were calculated to give effect to the reverse stock split          described in Note
12(a) to the Consolidated Financial Statements.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(7) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Long-term
debt includes amounts relating to deferred taxes.</FONT></TD></TR></TABLE>


<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -4-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->





<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><b>Exchange
  Rate</b>s</I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
November 1991, Mexico has had a free market for foreign exchange. Prior to December 21,
1994, the Mexican Central Bank, Banco de M&#233;xico, had kept the peso/U.S. dollar
exchange rate within a range prescribed by the Mexican government through intervention in
the foreign exchange markets. On December 21, 1994, the Mexican government announced its
decision to suspend intervention in the foreign exchange market by the Mexican Central
Bank and to allow the peso to float freely against the U.S. dollar. The peso/U.S. dollar
exchange rate has experienced periods of significant volatility since the peso was
allowed to float freely against the U.S. dollar. There can be no assurance that the
Mexican government will maintain its current policies with regard to the peso or that the
peso will not fluctuate significantly in the future. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  following table sets forth, for the periods indicated, the high and low rate
  for the purchase of dollars as well as average and period end rates for each
  full year period indicated, expressed in nominal pesos per dollar based upon
  the noon buying rate. The average figures represent the average of month-end
  rates. </FONT></P>
<P align="center">&nbsp;</P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><b><font size=2>Periods</font></b>
        <hr size="1" noshade align="left" width="50">
      </TD>
      <TD ALIGN=LEFT><b></b></TD>
      <TD ALIGN=CENTER><b><font size=2>High</font></b>
        <hr size="1" noshade width="45">
      </TD>
      <TD ALIGN=LEFT><b></b></TD>
      <TD ALIGN=CENTER><b><font size=2>Low</font></b>
        <hr size="1" noshade width="45">
      </TD>
      <TD ALIGN=LEFT><b></b></TD>
      <TD ALIGN=CENTER><b><font size=2>Average</font></b>
        <hr size="1" noshade width="55">
      </TD>
      <TD ALIGN=LEFT><b></b></TD>
      <TD ALIGN=CENTER><b><font size=2>Period End</font></b>
        <hr size="1" noshade width="75">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>2000</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.64</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.18</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.44</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.51</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>2001</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.97</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>8.95</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.33</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.16</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>2002</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>10.43</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.00</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>9.66</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>10.43</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>2003</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>11.41</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>10.11</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>10.79</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>11.24</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>2004</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>11.64</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>10.81</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>11.29</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>11.15</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT><b><font size=2>Periods</font></b>
        <hr size="1" noshade align="left" width="50">
      </td>
      <td align=LEFT><b></b></td>
      <td align=CENTER><b><font size=2>High</font></b>
        <hr size="1" noshade width="45">
      </td>
      <td align=LEFT><b></b></td>
      <td align=CENTER><b><font size=2>Low</font></b>
        <hr size="1" noshade width="45">
      </td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>2004</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;December</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.33</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.11</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107">&nbsp;</td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>2005</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;January</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.41</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.17</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;February</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.21</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.04</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;March</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.33</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.00</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;April</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.23</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.04</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;May</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>11</font><font size=2>.03</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>10</font><font size=2>.89</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <td align=LEFT width="107"><font size=2>&nbsp;&nbsp;June</font></td>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>10</font><font size=2>.88</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER><font size=2>10</font><font size=2>.76</font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=CENTER>&nbsp;</TD>
    </TR>
  </TABLE>
  <br>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 30, 2005, the noon buying rate was Ps. 10.77 to $1.00. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fluctuations
in the exchange rate between the peso and the U.S. dollar will affect the dollar
equivalent of the peso price of shares of series B common stock on the Mexican Stock
Exchange and the price of American Depositary Shares on the American Stock Exchange. Cash
dividends, if any, will be paid by the Company in pesos, and exchange rate fluctuations
will affect the dollar amounts received by holders of ADSs on conversion by the
Depositary of cash dividends on the shares of series B common stock underlying ADSs. </FONT></P>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Risk Factors </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
following are risk factors relating to Simec and an investment in shares of its series B
common stock or ADSs. The risks described below are not the only ones facing the Company.
Additional risks, including those described elsewhere in this Annual Report, may impair
Simec&#146;s business operations. The Company&#146;s business, results of operations or financial
condition could be harmed if any of these risks materialize and, as a result, the price
of ADSs representing its series B common stock could decline and investors could lose a
substantial portion of their investment.</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Information
in these risk factors concerning Mexico has been included to the extent that such
information is publicly available to the Company. The Company believes this information
is reliable, but cannot guarantee that it is accurate.</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Company&#146;s results of operations are significantly influenced by the cyclical nature of
steel industry.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
steel industry is cyclical in nature and sensitive to general national and international
macroeconomic conditions. Prices for Simec&#146;s products are significantly influenced by
global demand for steel as well as overall supply levels. Changes in these two factors
will likely impact Simec&#146;s operating results. Although global steel prices increased
significantly during 2003 and 2004 (global steel prices have fallen significantly in the
first half of 2005 over 2004 levels), decreases during 2002 and over the preceding
several years have led to a decrease in the prices of Simec&#146;s products and adversely
affected its profits over those years. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
cost of ferrous scrap, the principal raw material used in Simec&#146;s steel operations, is
subject to price fluctuations. Although Simec&#146;s wholly-owned scrap collection and
processing operations furnish a material portion of its scrap requirements, Simec must
acquire the remainder of its scrap from other sources. Because increases in the prices
Simec is able to charge for its finished steel products may lag increases in ferrous
scrap prices, such increases in scrap prices can adversely affect the operating results
of Simec. In 2002, the price of scrap decreased from 2001, continuing the decrease
observed in recent years. However, the price of scrap increased significantly during 2003
and 2004 (scrap prices have decreased significantly in the first half of 2005 over 2004
levels) and there can be no assurance that scrap prices will not increase further and, if
so, there can be no assurance that Simec will be able to pass all or a portion of these
increases on through higher finished product prices. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Significant
increases in energy costs may adversely impact Simec&#146;s profitability.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy
costs constitute a significant component of Simec&#146;s costs of operations. The Mexican
government is currently the only domestic supplier of energy and has, in some cases,
increased prices above international levels. Simec, like all other high volume users of
electricity, pays special rates to the Comisi&#243;n Federal de Electricidad for
electricity. Simec also pays special rates to Pemex, the national oil company, for gas
used at the Guadalajara facility. There can be no assurance these special rates will
continue to be available to Simec or that these rates may not increase significantly in
the future. Simec has not always been able to pass the effect of these increases on to
its customers and there is no assurance that Simec will be able to pass the effect of
these increases on to its customers in the future. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Company may not be able to successfully integrate its recently acquired steel facilities
into its operations.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2004, Simec acquired the property, plant and equipment and inventories of the Mexican
steel manufacturing facilities of Industrias Ferricas del Norte, S.A. located in Apizaco,
Tlaxcala and Cholula, Puebla. Simec has been operating these facilities since August 1,
2004. These facilities manufacture a significant amount of Simec&#146;s total production.
Simec&#146;s future results will be subject to its ability to fully integrate the operations
of its newly acquired facilities into its historic operations. Furthermore, while Simec
has not yet encountered any material problems related to the assets acquired, there can
be no assurance that problems will not arise in the future and that the costs associated
with those problems, should they arise, will not be significant and, if so, that Simec
will not ultimately have adequate recourse to the seller of those assets. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Unanticipated
problems with Simec&#146;s manufacturing equipment and facilities could have an adverse impact
on Simec&#146;s business.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
capacity of Simec to manufacture steel products depends on the suitable operation of its
manufacturing equipment, including electric arc furnaces, strand continuous banana
casters, reheating furnaces and rolling mills. Although Simec performs maintenance to its
equipment on a continuous basis, breakdowns requiring significant time and/or resources
to repair, as well as the occurrence of adverse events such as fires, explosions or
adverse meteorological conditions, could cause temporary production interruptions which
could adversely affect its results of operations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
has not obtained insurance against all risks, and does not maintain insurance covering
losses resulting from catastrophes or business interruptions. In the event Simec is not
able to quickly and cost-effectively remedy problems creating any significant
interruption of its manufacturing capabilities, Simec&#146;s operations could be adversely
affected. In addition, in the event any of Simec&#146;s plants were destroyed or significantly
damaged or its production capabilities otherwise significantly decreased, Simec would
likely suffer significant losses; furthermore, the capital investments necessary to
repair any destroyed or damaged facilities or machinery would adversely affect its cash
flows and its profitability. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Mexican
governmental, political and economic factors may adversely impact Simec&#146;s business.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Mexican government has exercised, and continues to exercise, significant influence over
the Mexican economy. Accordingly, Mexican governmental actions concerning the economy and
state-owned enterprises could have a significant impact on Mexican private sector
entities in general and the Company in particular, and on market conditions, prices and
returns on Mexican securities, including those of the Company. The Company&#146;s financial
condition, results of operations and prospects may also be affected by currency
fluctuations, inflation, interest rates, regulation, taxation, social instability and
other political, social and economic developments in or affecting Mexico. There can be no
assurance that future developments in the Mexican political, economic or social
environment, over which the Company has no control, will not have a material adverse
effect on the Company&#146;s business, results of operations, financial condition or prospects
or adversely affect the market price of the ADSs and the series B common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increases
in interest rates, high levels of inflation, peso devaluation and other economic factors
may adversely impact the Mexican economy. These events could adversely affect the
business, financial condition, results of operations and prospects of the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Mexican economy has in the past experienced balance of payment deficits and shortages in
foreign exchange reserves. While the Mexican government does not currently restrict the
ability of Mexican or foreign persons or entities to convert pesos to foreign currencies
generally, and to U.S. dollars in particular, it has done so in the past and no assurance
can be given that the Mexican government will not institute a restrictive exchange
control policy in the future. The effect of any exchange control measures adopted by the
Mexican government on the Mexican economy cannot be predicted. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Simec&#146;s
controlling shareholder Industrias CH is able to exert significant influence on the
business and policies of Simec and its interests may differ from those of other
shareholders.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2001 Industrias CH acquired a 62% interest in Simec from Simec&#146;s predecessor parent,
Group Sidek, and Industrias CH has since increased its ownership interest in Simec to
approximately 85.4% at May 31, 2005. All of the current members of the board of directors
of Simec were nominated and elected by Industrias CH, and Industrias CH continues to be
in the position to elect directors in the future and to exercise substantial influence
and control over the business and policies of the Company. It is possible that the
interests of Industrias CH could differ from those of other shareholders. Furthermore, as
a result of the significant equity position of Industrias CH, there is limited liquidity
in Simec&#146;s series B common stock and its ADSs. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Simec&#146;s
financial statements are prepared in accordance with Mexican GAAP, and therefore may
not be directly comparable to financial statements of other companies prepared under US
GAAP or other accounting principles.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
Mexican companies must prepare their financial statements in accordance with Mexican
GAAP, which differs in certain significant respects from U.S. GAAP. Among other
differences, Mexican companies are required to incorporate the effects of inflation
directly in their accounting records and in their published financial statements.
Accordingly, Mexican financial statements and reported earnings may differ from those of
companies in other countries in this and other respects. See Note 18 to the Consolidated
Financial Statements for a description of the principal differences between Mexican GAAP
and U.S. GAAP. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tariffs,
anti-dumping and countervailing duty claims imposed in the future could harm Simec&#146;s
ability to export its products.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
recent years, the U.S. government has imposed anti-dumping and countervailing duties
against Mexican and other foreign steel producers, but has not imposed any such penalties
against the Company or the Company&#146;s products. In the first quarter of 2002 the U.S.
government imposed tariffs of 15% on rebar and 30% on hot rolled bar and cold finish bar
against imports of steel from all the countries with the exception of Mexico, Canada,
Argentina, Thailand and Turkey; in the first quarter of 2003 the tariffs were reduced to
12% on rebar and 24% on hot rolled bar and cold finish bar and these tariffs were
eliminated in late 2003, prior to their originally scheduled termination date. There can
be no assurance that anti-dumping or countervailing duties suits will not be initiated
against the Company or that the U.S. government will not impose tariffs on steel imports
from Mexico or that existing tariffs on U.S. steel imports from other countries, will not
be lifted in the future. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September 2001, the Mexican government imposed tariffs of 25% against imports for all
products that Simec produces from all countries with the exception of the those which
have a free trade agreement with Mexico, which includes the United States. In April 2002,
the Mexican government increased these tariffs to 35%. These tariffs have subsequently
been reduced over time and are currently 9%. There can be no assurances that these
tariffs will not be further reduced or that countries seeking to export steel products to
Mexico will not impose similar tariffs on Mexican exports to their countries. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 4. &nbsp;Information
  on the Company </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>History and
Development of the Company </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
is a mini-mill steel producer in Mexico and manufactures a broad range of small and
medium-sized structural steel products. Simec&#146;s products are used primarily in the
residential, commercial and industrial construction markets. Simec believes that most of
its products are used by the small and mid-market end-users that represent a substantial
portion of the Mexican non-flat steel market. Simec currently owns and operates (i)
Mexico&#146;s largest non-flat structural steel mini-mill, located in Guadalajara, Jalisco,
(ii) a mini-mill in Mexicali, Baja California Norte, (iii) a recently acquired mini-mill
in Apizaco, Tlaxcala, and (iv) a recently acquired melt shop in Cholula, Puebla; all of
these facilities are owned through Simec&#146;s indirect wholly-owned subsidiary, Compa&#237;ia
Sider&#250;rgica de California, S.A. de C.V. (&#147;CSC&#148;). Simec is domiciled in the city of
Guadalajara, Jalisco and its principal administrative office is located at Calzada L&#225;zaro
C&#225;rdenas 601, Guadalajara, Jalisco, Mexico 44440. Its telephone number is
52-33-1057-5757. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
steel operations commenced in 1969 when a group of families from Guadalajara, Jalisco,
formed Compa&#241;&#237;a Sider&#250;rgica de Guadalajara, S.A. de C.V. (&#147;CSG&#148;), a
mini-mill steel company. In 1980, Grupo Sidek, S.A. de C.V. (&#147;Sidek&#148;), the former parent
of Simec, was incorporated and became the holding company of CSG. In 1990, Sidek
consolidated its steel and aluminum operations into a separate subsidiary &#151; Grupo
Simec, S.A. de C.V., a Mexican corporation with limited liability. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 1997, Simec completed a corporate reorganization and restructuring of its
liabilities. As part of the restructuring, CSG borrowed funds under a bank credit
facility established as part of the restructuring with a  </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>bank syndicate composed of Simec&#146;s
then existing bank lenders, most of which were Mexican banks. In addition, CSG issued
notes offered in connection with a debt exchange offer consummated concurrently with the
restructuring for the purpose of refinancing all of the then outstanding debt of Simec.
Pursuant to the restructuring and subsequent transactions, approximately 99% of Simec&#146;s
consolidated debt was replaced with an equal aggregate principal amount of notes of CSG.
CSG has subsequently repaid its bank debt in full and has redeemed the entire principal
amount of the notes. See Item 5. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
March 2001, Sidek consummated the sale of its entire approximate 62% controlling interest
in Simec to Industrias CH. In June 2001, Industrias CH acquired additional common shares
held by certain of Simec&#146;s bank creditors that, in connection with the transaction,
converted approximately $95.4 million of bank debt ($90.2 million of principal and $5.2
million of interest) into common shares of Simec increasing its interest in Simec to
approximately 82.5%. Industrias CH has subsequently increased its equity position through
various conversions of debt to equity and capital contributions and at May 31, 2005, held
a 85.4% interest in Simec. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2004 Simec completed the acquisition of the property, plant and equipment and the
inventories, and assumed liabilities associated with seniority premiums of employees of
the Mexican steel-making facilities of Industri&#225;s Ferricas del Norte, S.A. (Corporaci&#243;n
Sidenor of Spain) located in Apizaco, Tlaxcala and Cholula, Puebla. Simec&#146;s total net
investment in this transaction was approximately U.S. $122 million (which amount excludes
value added tax of approximately $16 million which was paid in 2004 and recouped from the
Mexican government in 2005), funded with internally generated resources of Simec and
capital contributions from Industrias CH of U.S. $19 million for capital stock to be
issued in the second quarter of 2005. Simec began to operate the plants in Apizaco,
Tlaxcala and Cholula, Puebla on August 1, 2004, and, as a result, the operations of both
plants are reflected in Simec&#146;s financial results as of such date. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Principal
Capital Expenditures and Divestitures</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
seeks to improve its operating efficiency and increase sales of its products through
capital investments in new equipment and technological improvements. In 2004, Simec spent
$109.7 in capital investments ($107.5 million of which was allocable to the property,
plant and equipment of the Apizaco and Cholula facilities). Projects at the Guadalajara
facilities in 2004 included the addition of a reheating furnace and a new stand for the
rolling mill. Projects at the Mexicali facility in 2004 included the addition of a
special site for dust. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2003, Simec spent $5.4 million in capital investments. Projects at the Guadalajara
facility included the addition of a slitting system in order to increase production at
the rolling mill. Projects at the Mexicali facility in 2003 included the addition of a
digital regulation system to the electric arc furnace in order to reduce energy
consumption at the melt shop. In 2002, Simec spent $0.7 million in capital investments.
Projects at the Guadalajara facility included the addition of a digital regulation system
to the electric arc furnace in order to reduce energy consumption at the melt shop.
Projects at the Mexicali facility include improvements to the warehouse. Simec expects to
invest in capital improvements at its facilities in 2005, including anticipated
expenditures of $8.4 million at the Apizaco facility and $6.9 million at the Mexicali
facility. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Business Overview </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
primary strategic objective is to be Mexico&#146;s leading producer of a broad range of small-
and medium-sized structural steel profiles and steel bars. Simec&#146;s operating strategy is
to maximize the flexibility of its manufacturing facilities, expand capacity, minimize
production costs and continuously improve product and process quality as well as customer
service. Its marketing and distribution strategy focuses on distributors serving the
small and mid-market end-users who represent a substantial portion of the Mexican
non-flat steel market. Simec believes that its ability to produce a wide range of
products in competitively-priced small order volumes is an important means by which Simec
differentiates itself from its major domestic and international competitors. Simec
consummated the acquisition of the new facilities at Apizaco and Cholula to expand
Simec&#146;s geographic presence in Mexico and, as the products manufactured by those
facilities and the markets they serve are similar to those of Simec&#146;s existing
operations, to improve Simec&#146;s market position and increase its sales volumes and
profitability. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
steel production facilities are designed to permit the rapid changeover from one product
to another. This flexibility permits Simec to efficiently produce small volume orders
that meet the specialized needs of its customers. Production runs, or campaigns, of
Simec&#146;s products occur on a regular cycle of four to eight weeks,  </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>minimizing customer waiting time for
both standard and specialized products. In addition, because a substantial portion of
each campaign has historically been devoted to firm orders or to the production of
products which Simec has been able to sell in a short period after production, both Simec
and its customers have been able to minimize inventory financing costs. Simec cannot
assure that significant levels of firm orders or its ability to forecast which products
can be sold in short periods after production will continue in the future. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
operates the Guadalajara mini-mill through its indirect wholly owned subsidiary, CSC. At
December 31, 2004 the Guadalajara facility&#146;s annual installed capacity of steel billet
was 350,000 tons, and its annual installed capacity of finished product was 480,000 tons.
Simec operated the Guadalajara mini-mill at 92.6% capacity for billet production and
86.8% capacity for finished product production in 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
conducts the operations of the Mexicali mini-mill through its indirect wholly owned
subsidiary, CSC. The Mexicali mini-mill commenced operations in 1993 and at December 31,
2004 had an annual installed capacity of 430,000 tons of steel billet and its annual
installed capacity of finished product was 250,000 tons. Simec operated the Mexicali
mini-mill at 92.3% capacity for billet production and 72.7% capacity for finished product
production in 2004. Simec originally invested approximately $140 million to build the
Mexicali mini-mill and has invested additional amounts in capital improvements. Simec
invested an additional $0.1 million, $4.9 million and $0.1 million in capital
improvements at the Mexicali facility in 2002, 2003 and 2004, respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
operates the Apizaco facility through its indirect wholly owned subsidiary, CSC. At
December 31, 2004, the Apizaco facility&#146;s annual installed capacity was 380,000 tons of
steel billet and 300,000 tons of finished product. Simec operated the Apizaco facility at
99% capacity of steel billet and 92.6% for finished product production for the period
August 1, 2004 through December 31, 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
operates the Cholula facility through its indirect wholly owned subsidiary, CSC. At
December 31, 2004, the Cholula facility&#146;s annual installed capacity was 180,000 tons of
finished product. Simec operated the Cholula facility at 68.9% capacity for finished
product production for the period August 1, 2004 through December 31, 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Products
and Markets</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
rolling mills at the Guadalajara mini-mill use billet to produce I-beams, channels,
angles, steel bars (round and square rods), flat bar, rebar and special products. Simec&#146;s
rolling mills at the Mexicali mini-mill use billet to produce rebar, steel bars (round
and square), commercial angles (angles of less than three inches in width) and flat bar.
Simec&#146;s rolling mills at the Apizaco and Cholula mini-mill use billet to produce steel
bars (round and square rods) flat bar, rebar and specialty products primarily for the
automotive industry. I-beams, channels, structural angles (angles greater than three
inches width) and rebar are generally sold to construction contractors, fabricators,
steel service centers and manufacturers who cut, bend, shape and fabricate the steel to
meet engineering or end product specifications. The construction industry uses these
products primarily in the manufacture of commercial buildings and residential housing, as
well as in the manufacture of a wide variety of industrial products. Round and square
rods and flat bar are used to manufacture a wide variety of products, including gratings,
steel floors and roof joists, safety walkways, ornamental furniture, stair railings and
farm equipment. Simec also manufactures cold drawn rods. These rods are used to
manufacture industrial products requiring steel with special properties, such as tensile
strength and flexibility. Products of this type include automobile axles, screws and
bolts. Rebar is used primarily for strengthening concrete in highways, buildings and
other construction applications. In 2001, the Company began production at the Guadalajara
facility of additional widths of hexagonal bars, lighter channels of a width of 5 inches
and wider ranges of widths of spring flat bars. In 2002 the Company began production at
the Guadalajara facility of additional widths of spring flat bars and round bars-special
bar quality (SBQ). </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth, for the years indicated, Simec&#146;s sales volume for basic steel
products. These figures reflect the sales of products manufactured at the Apizaco and
Cholula facilities from August 1, 2004 through December 31, 2004. </FONT></P>

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<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Total Basic
  Steel Sales Volume(1) </B></FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TH COLSPAN=2>&nbsp;</TH>
      <TH COLSPAN=6><font face="Times New Roman, Times, Serif" size=2><u>Years
        ended December 31,</u> <br>
        (Thousands of tons) </font></TH>
    </TR>
    <TR VALIGN=Bottom>
      <TH COLSPAN=2><FONT SIZE=2></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=2><u>2002</u></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=2><u>2003</u></FONT></TH>
      <TH COLSPAN=2><FONT SIZE=2><u>2004</u></FONT></TH>
    </TR>
    <TR VALIGN=Bottom>
      <TD WIDTH=65% ALIGN=LEFT><FONT SIZE=2>Basic Steel Products</FONT></TD>
      <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
      <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
      <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
      <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>I-Beams</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>85.1</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>83.8</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>76.1</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Channels</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>57.5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>50.7</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>58.9</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Angles(2)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>123.8</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>108.5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>135.7</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Steel Bars (round, square and hex rods)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>149.4</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>174.6</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>189.0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Cold Drawn</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>17.6</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>17.1</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>15.7</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Rebar</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>116.5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>139.0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>191.9</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Flat Bar</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>53.9</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>45.7</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>91.7</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Other</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>5.6</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>8.8</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>14.3</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade align="right" width="30">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade align="right" width="30">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade align="right" width="30">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Total Steel Sales</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>609.4</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>628.2</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>773.3</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <td align=RIGHT>
        <hr size="2" noshade align="right" width="30">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade align="right" width="30">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade align="right" width="30">
      </td>
      <TD ALIGN=LEFT>&nbsp;</TD>
    </TR>
  </TABLE>
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<HR SIZE=1 noshade ALIGN=left  WIDTH=75>




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<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(1) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Includes
both domestic and export sales.</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(2) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Angles
include structural angles and commercial angles.</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth, for the years indicated, Simec&#146;s proportionate domestic and
export steel sales. These figures reflect the sales of products manufactured at the
Apizaco and Cholula facilities from August 1, 2004 through December 31, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Center Head 2 Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Domestic and Export
Steel Sales By Region </B></FONT></P>

<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center colspan="8"><b><font face="Times New Roman, Times, Serif" size=2>Domestic
        Sales <br>
        Years ended <br>
        December 31, </font></b>
        <hr size="1" noshade width="95">
        <b><font face="Times New Roman, Times, Serif" size=2> </font></b></TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="8"><b><font face="Times New Roman, Times, Serif" size=2>Exports
        <br>
        Years ended <br>
        December 31, </font></b>
        <hr size="1" noshade width="95">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2002 </font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2003 </font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2004 </font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2002 </font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2003 </font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2004 </font></b>
        <hr size="1" noshade width="35">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>I-Beams</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>98</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>99</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>100</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>2</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Channels</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>81</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>81</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>80</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>19</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>19</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>20</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Angles(1)</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>87</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>89</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>95</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>13</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>11</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Steel Bars (round, square and hex rods)</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>94</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>96</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>91</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>6</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>4</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>9</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Cold Drawn</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>95</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>96</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>95</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>4</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Rebar</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>70</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>67</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>71</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>30</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>33</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>29</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Flat Bar</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>86</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>89</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>95</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>14</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>11</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Other</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>100</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>100</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>100</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade width="25" align="right">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade width="25" align="right">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade width="25" align="right">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade width="25" align="right">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade width="25" align="right">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT>
        <hr size="1" noshade width="25" align="right">
      </TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Total (weighted average)</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>91</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>87</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>87</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>9</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>13</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>13</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>%</FONT></TD>
    </TR>
    <tr valign=Bottom>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade width="25" align="right">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade width="25" align="right">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade width="25" align="right">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade width="25" align="right">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade width="25" align="right">
      </td>
      <td align=LEFT>&nbsp;</td>
      <td align=LEFT>&nbsp;</td>
      <td align=RIGHT>
        <hr size="2" noshade width="25" align="right">
      </td>
      <td align=LEFT>&nbsp;</td>
    </tr>
  </TABLE>
  <!-- MARKER FORMAT-SHEET="Cutoff rule Footnote" FSL="Workstation" --> </div>
<HR SIZE=1 noshade ALIGN=left  WIDTH=75>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(1) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Angles
include structural angles and commercial angles.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following tables set forth, for the years indicated, selected operating data for Simec&#146;s
steel production facilities (the peso amounts shown below are presented in nominal pesos). </FONT></P>




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<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -11-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE>
<hr size="2" noshade width="25" align="right">
<HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>






<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 9; page: 9" -->





<!-- MARKER FORMAT-SHEET="Center Head 2 Bold" FSL="Workstation" -->
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Guadalajara
  Mini-Mill </B></FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center colspan="8"><b><font size=2>Years ended December 31, </font></b>
        <hr size="1" noshade width="165">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2002 </font></b>
        <hr size="1" noshade width="45">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2003 </font></b>
        <hr size="1" noshade width="45">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center colspan="2"><b><font size=2>2004 </font></b>
        <hr size="1" noshade width="45">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Steel Sales (000&#146;s tons)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>410.0</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>430.3</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>463.4</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average finished product price per ton</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Ps.</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2> 3,440</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=LEFT><font size=2>Ps.</font></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2> 4,172</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=LEFT><font size=2>Ps.</font></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2> 6,911</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average scrap cost per ton</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,187.8</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,537.2</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>2,599.7</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average manufacturing conversion cost per ton
        of <br>
        &nbsp;&nbsp; finished product(1)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,184.2</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,225.8</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,299.3</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average manufacturing conversion cost per ton
        of billet(1)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>666.5</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>760.8</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>900.3</FONT></TD>
    </TR>
  </TABLE>
  <br>
  <!-- MARKER FORMAT-SHEET="Center Head 2 Bold" FSL="Workstation" --> </div>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Mexicali
  Mini-Mill </B></FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <tr valign=Bottom>
      <td align=LEFT>&nbsp;</td>
      <td align=center colspan="8"><b><font size=2>Years ended December 31, </font></b>
        <hr size="1" noshade width="165">
      </td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT>&nbsp;</td>
      <td align=center colspan="2"><b><font size=2>2002 </font></b>
        <hr size="1" noshade width="45">
      </td>
      <td align=center><b></b></td>
      <td align=center colspan="2"><b><font size=2>2003 </font></b>
        <hr size="1" noshade width="45">
      </td>
      <td align=center><b></b></td>
      <td align=center colspan="2"><b><font size=2>2004 </font></b>
        <hr size="1" noshade width="45">
      </td>
    </tr>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Steel Sales (000&#146;s tons)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>199.4</FONT></TD>
      <TD ALIGN=RIGHT>&nbsp;</TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>197.9</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>181.3</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average finished product price per ton</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Ps.</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2> 2,885</FONT></TD>
      <TD ALIGN=RIGHT>&nbsp;&nbsp;</TD>
      <TD ALIGN=LEFT><font size=2>Ps.</font></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2> 3,867</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=LEFT><font size=2>Ps. </font></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>6,589</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average scrap cost per ton</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>919.3</FONT></TD>
      <TD ALIGN=RIGHT>&nbsp;</TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,232.3</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,917.0</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average manufacturing conversion cost per ton
        of <br>
        &nbsp;&nbsp; finished product(1)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,084.1</FONT></TD>
      <TD ALIGN=RIGHT>&nbsp;</TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,161.2</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>1,336.0</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Average manufacturing conversion cost per ton
        of billet(1)</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>683.4</FONT></TD>
      <TD ALIGN=RIGHT>&nbsp;</TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>732.7</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>803.0</FONT></TD>
    </TR>
  </TABLE>
  <br>
  <!-- MARKER FORMAT-SHEET="Center Head 2 Bold" FSL="Workstation" --> </div>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Apizaco Mini-Mill
  and Cholula Facility </B></FONT></P>
<div align="center">
  <table cellpadding=0 cellspacing=0 border=0 width=600>
    <tr valign=Bottom>
      <td align=LEFT width=393>&nbsp;</td>
      <td align=center colspan="3"><font size=2><b>August 1- December 31 <br>
        2004</b></font>
        <hr size="1" noshade width="145">
      </td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width=393><font size=2>Steel Sales (000&#146;s tons)</font></td>
      <td align=LEFT width=70>&nbsp;</td>
      <td align=right width=56><font size=2>155.6</font></td>
      <td align=right width=81>&nbsp;</td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="393"><font size=2>Average finished product price per
        ton</font></td>
      <td align=right width="70"><font size=2>Ps.</font></td>
      <td align=right width="56"><font size=2> &nbsp; 7,687</font></td>
      <td align=right width="81">&nbsp;</td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="393"><font size=2>Average scrap cost per ton</font></td>
      <td align=LEFT width="70">&nbsp;</td>
      <td align=right width="56"><font size=2>3,058.4</font></td>
      <td align=right width="81">&nbsp;</td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="393"><font size=2>Average manufacturing conversion
        cost per ton of <br>
        &nbsp;&nbsp; finished product(1)</font></td>
      <td align=LEFT width="70">&nbsp;</td>
      <td align=right width="56"><font size=2>2,097.6</font></td>
      <td align=right width="81">&nbsp;</td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="393"><font size=2>Average manufacturing conversion
        cost per ton of billet(1)</font></td>
      <td align=LEFT width="70">&nbsp;</td>
      <td align=right width="56"><font size=2>1,403.4</font></td>
      <td align=right width="81">&nbsp;</td>
    </tr>
  </table>
  <!-- MARKER FORMAT-SHEET="Cutoff rule Footnote" FSL="Workstation" --> </div>
<HR SIZE=1 noshade ALIGN=left  WIDTH=75>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(1) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Manufacturing
conversion cost is defined as all production costs excluding the cost of scrap and
related yield loss.</FONT></TD></TR></TABLE>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Production
Process and Facilities</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
mini-mill uses an electric arc furnace to melt ferrous scrap, which is then cast into
long, square bars called billet in a continuous casting process, all of which occurs in a
melt shop. The billet is thereafter transferred to a rolling mill, reheated and rolled
into finished product. In contrast, an integrated steel mill heats iron pellets and other
primary materials in a blast furnace to first produce pig iron, that must be refined in a
basic oxygen furnace to liquid steel, and then cast to billet and finished product.
Compared to integrated steel mills, a mini-mill typically produces certain steel products
more efficiently because of the lower energy requirements resulting from its smaller size
and because of its use of refined ferrous scrap. In addition, mini-mills are designed to
provide shorter production runs with relatively fast product changeover times, allowing
for greater responsiveness to customers&#146; requirements. Therefore, a mini-mill can
generally produce a wide range of specialty, non-commodity steel products in shorter runs
and at lower cost than an integrated steel mill. </FONT></P>


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<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -12-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 10; page: 10" -->



<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the steel production process, Simec uses ferrous scrap to produce its finished steel
products. Simec melts ferrous scrap in an electric arc furnace to produce molten steel,
to which alloying elements and carbon are added, and which then is transported to
continuous casters for solidification. The continuous casters produce long, square
strands of steel that are cut into billet and transferred to the rolling mills for
further processing or, in some cases, sold to other steel producers. In the rolling
mills, the billet is reheated in a walking beam furnace with preheating burners, passed
through a rolling mill for size reduction, and conformed into final sections and sizes.
The shapes are then cut into a variety of lengths. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
Guadalajara facilities and equipment include one improved DEMAG electric arc furnace
utilizing water-cooled sidewalls and roof, one DEMAG four-strand continuous caster, five
reheating furnaces and three rolling mills. The Guadalajara mini-mill has an annual
installed capacity of 350,000 tons of billet and an annual installed capacity of finished
product of 480,000 tons. In 2004, the Guadalajara mini-mill produced 324,013 tons of
steel billet and 416,817 tons of finished product. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
1993, Simec began operations at its mini-mill located in Mexicali, Baja California. The
mini-mill is located approximately 22 miles south of the California border and
approximately 220 miles from Los Angeles. Simec&#146;s Mexicali facilities and equipment
include one EBT DEMAG electric arc furnace utilizing water-cooled sidewalls and roof, one
DEMAG four-strand continuous banana caster, one walking beam reheating furnace, one SACK
rolling mill, a Linde oxygen plant and a water treatment plant. This facility has an
annual installed capacity of 430,000 tons of steel billet and an annual installed
capacity of finished product of 250,000 tons. Excess billet produced at the Mexicali
mini-mill is used primarily by the Guadalajara mini-mill. In 2004 the Mexicali mini-mill
produced approximately 396,776 tons of billet, of which 130,141 tons were used by the
Guadalajara mini-mill, 22,865 tons were used by the Apizaco mini-mill and 41,832 tons
were sold to third parties. In 2004, the Mexicali mini-mill produced 182,125 tons of
finished product. The decision to locate the new mini-mill in Mexicali was based upon a
number of factors, including proximity to new domestic and foreign markets, work force
quality and proximity to stable sources of scrap, electricity and other raw materials.
The Mexicali mini-mill also is situated near major highways and a railroad linking the
Mexicali and Guadalajara mini-mills, allowing for coordinated production at the two
facilities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reducing
freight expenses was one of Simec&#146;s main objectives in constructing the Mexicali
mini-mill. Simec&#146;s most significant freight costs are those associated with acquiring
steel scrap or billet and shipping finished product to customers. The Mexicali facility
is one of the closest mini-mills to the Southern California market and has competitive
freight costs for shipments of scrap to the mini-mill and shipments of finished product
from the mill to customers in northern Mexico and the southwestern United States. In
accordance with the North American Free Trade Agreement (&#147;NAFTA&#148;), the total tonnage of
products that can be transported through Mexico on a single truck, is limited to 30 tons. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2002, 56% of the products produced at the Mexicali mini-mill were rebar, 17% were angles,
15% were steel bars (round, square and hex rods) and the remaining 12% were other
products, principally merchant bar and channels. In 2003, 63% of the products produced at
the Mexicali mini-mill were rebar, 15% were angles, 14% were steel bars (round, square
and hex rods) and the remaining 8% were other products, principally merchant bar and
channels. In 2004, 71% of the products produced at the Mexicali mini-mill were rebar, 11%
were angles, 10% were steel bars (round, square and hex rods) and the remaining 8% were
other products, principally merchant bar and channels. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
has operated the Apizaco facility since August 1, 2004. The mini-mill is located in
central Mexico in Apizaco, Tlaxcala. Simec&#146;s Apizaco facilities and equipment include one
EBT Danieli electric arc furnace utilizing water-cooled sidewalls and roof, two ladle
stations (one Danieli and the other Daido), one Daido degasification station, one Danieli
four-strand continuous banana caster, two walking beam reheating furnaces and two rolling
mills (one Danieli and the other Pomini). This facility has an annual installed capacity
of 380,000 tons of steel billet and an annual installed capacity of finished product of
300,000 tons. From August 1, 2004 to December 31, 2004, the Apizaco mini-mill produced
156,742 tons of steel billet and 115,740 tons of finished product. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
has operated the Cholula facility since August 1, 2004. Simec&#146;s Cholula facilities and
equipment include stands for a cold rolling mill and a turning machine for paling bars.
This facility has an annual installed  </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>capacity of finished product of
180,000 tons. From August 1, 2004 to December 31, 2004, the Cholula facility produced
51,682 tons of finished product. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the August 1 through December 31, 2004 period, 23% of the products produced at the
Apizaco and Cholula facilities were rebar, 23% were angles, 26% were steel bars (round,
square and hex rods) and the remaining 28% were other products, principally merchant bar
and channels. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
production levels and capacity utilization rates for Simec&#146;s melt shops and rolling mills
for the years indicated are presented below. These figures reflect the sales of products
manufactured at the Apizaco and Cholula facilities from August 1, 2004 through December
31, 2004. </FONT></P>

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<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Production
  Volume and Capacity Utilization </B></FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=309>&nbsp;</TD>
      <TD ALIGN=LEFT WIDTH=21>&nbsp;</TD>
      <TD ALIGN=center colspan="6"><b></b><b></b><b></b><b></b><b><font size=2>Years
        ended December 31, </font></b>
        <hr size="1" noshade width="155">
        <b><font size=2> (Tons in thousands) </font></b> </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=309><FONT SIZE=2><b>Melt shops</b></FONT></TD>
      <TD ALIGN=LEFT WIDTH=21><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center WIDTH=63><b><FONT SIZE=2>2002 </FONT></b>
        <hr noshade width="35">
      </TD>
      <TD ALIGN=center WIDTH=34><b><FONT SIZE=2>&nbsp;</FONT></b></TD>
      <TD ALIGN=center WIDTH=65><b><FONT SIZE=2>2003 </FONT></b>
        <hr noshade width="35">
      </TD>
      <TD ALIGN=center WIDTH=20><b><FONT SIZE=2>&nbsp;</FONT></b></TD>
      <TD ALIGN=center colspan="2"><b><FONT SIZE=2>2004 </FONT></b>
        <hr noshade width="35">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Steel
        billet production</FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="63"><FONT SIZE=2>667.4</FONT></TD>
      <TD ALIGN=LEFT width="34"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="65"><FONT SIZE=2>705.9</FONT></TD>
      <TD ALIGN=LEFT width="20"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="62"><FONT SIZE=2>877.5</FONT></TD>
      <TD ALIGN=RIGHT width="26">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual
        installed capacity(1)</FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="63"><FONT SIZE=2>780.0</FONT></TD>
      <TD ALIGN=LEFT width="34"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="65"><FONT SIZE=2>780.0</FONT></TD>
      <TD ALIGN=LEFT width="20"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="62"><FONT SIZE=2>1,160.0</FONT></TD>
      <TD ALIGN=RIGHT width="26">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
        capacity utilization</FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="63"><FONT SIZE=2>85.6%</FONT></TD>
      <TD ALIGN=LEFT width="34">&nbsp;</TD>
      <TD ALIGN=RIGHT width="65"><FONT SIZE=2>90.5%</FONT></TD>
      <TD ALIGN=LEFT width="20">&nbsp;</TD>
      <TD ALIGN=RIGHT width="62"><FONT SIZE=2>93.5%</FONT></TD>
      <TD ALIGN=RIGHT width="26">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2><b>Rolling mills</b></FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
        production</FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="63"><FONT SIZE=2>586.6</FONT></TD>
      <TD ALIGN=LEFT width="34"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="65"><FONT SIZE=2>598.1</FONT></TD>
      <TD ALIGN=LEFT width="20"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="62"><FONT SIZE=2>766.0</FONT></TD>
      <TD ALIGN=RIGHT width="26">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual
        installed capacity(1)</FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="63"><FONT SIZE=2>730.0</FONT></TD>
      <TD ALIGN=LEFT width="34"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="65"><FONT SIZE=2>730.0</FONT></TD>
      <TD ALIGN=LEFT width="20"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="62"><FONT SIZE=2>1,210.0</FONT></TD>
      <TD ALIGN=RIGHT width="26">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="309"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
        capacity utilization</FONT></TD>
      <TD ALIGN=LEFT width="21"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="63"><FONT SIZE=2>80.4%</FONT></TD>
      <TD ALIGN=LEFT width="34">&nbsp;</TD>
      <TD ALIGN=RIGHT width="65"><FONT SIZE=2>81.9%</FONT></TD>
      <TD ALIGN=LEFT width="20">&nbsp;</TD>
      <TD ALIGN=RIGHT width="62"><FONT SIZE=2>82.4%</FONT></TD>
      <TD ALIGN=RIGHT width="26">&nbsp;</TD>
    </TR>
  </TABLE>
</div>
<HR SIZE=1 noshade ALIGN=left  WIDTH=75>

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<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">(1) </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Annual
installed capacity is determined based on the assumption that          billet of various
specified diameters, width and length is produced at          the melt shops or that a
specified mix of rolled products are produced          in the rolling mills on a
continuous basis throughout the year except          for periods during which operations
are discontinued for routine          maintenance, repairs and improvements. Amounts
presented represent          annual installed capacity at December 31 for each period.
The          percentage of effective capacity utilization for 2004 is determined in
         the case of Apizaco and Cholula facilities based on utilization over
         the period August 1 to December 31, 2004.</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
production for the years ended 2004, 2003 and 2002 represented an estimated 12%, 10% and
11%, respectively, of Mexican non-flat steel production, based upon production figures
compiled by Canacero. The production and capacity utilization levels in 2002, 2003 and
2004 were lower than recent prior historical levels, and reflected the Company&#146;s decision
to cease production during peak hours at the Mexicali and Guadalajara mini-mills in order
to save on electricity costs and to focus on the production at the Mexicali mini-mill of
higher margin rather than basic commodity products. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
is seeking ISO 9002 certification from British Standard Institution for its Guadalajara
and Mexicali mini-mill facilities. ISO is a worldwide federation of national standards
bodies which have united to develop internationally accepted standards so that customers
and manufacturers have a system in place to provide a product of known quality and
standards. The standards set by ISO cover every facet of quality from management
responsibility to service and delivery. Management believes that adhering to the
stringent ISO 9002 procedures not only creates efficiency in manufacturing operations,
but also positions Simec to meet the exacting standards required by its customers. Simec
is engaged in a total quality program designed to improve customer service, overall
personnel qualifications and team work. Simec had previously received ISO 9002
certification for the Guadalajara and Mexicali facilities but was not recertified in 2003
due to noncompliance with certain operating procedures and is pursuing recertification.
The new facilities at Apizaco and Cholula have received ISO 9001:2000 certification from
International Quality Certifications covering the period January 16, 2004 to January 15,
2007. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sales
and Distribution</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
distributes its steel products throughout Mexico and exports its steel products primarily
to the United States. Simec also exports steel products in Central and South America,
Canada and Europe. Simec believes that  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>more than half of its steel
  products are sold to the construction sector, with the remaining amounts being
  sold to the manufacturing, electrical, mining and automotive industries. </FONT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
basic domestic steel sales are made through a group of approximately 100 independent
distributors, who also carry other steel companies&#146; product lines, and through Simec&#146;s
wholly owned distribution center in Guadalajara. Simec believes its distribution center
is an important source of information concerning customer needs and market developments.
By working through its distributors, Simec believes that it has established and can
maintain market leadership with small and mid-market end-users throughout Mexico. Simec
believes that its domestic customers are highly service-conscious. Simec has built upon
this strategy in marketing products from the Mexicali mini-mill. In 2003 and 2004, no
single customer accounted for 10% or more of Simec&#146;s total steel sales. Simec&#146;s
management believes that it is not dependent on any single customer and that it could
replace lost sales attributable to any customer given similar market conditions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
distributes its steel products in the United States primarily through independent
distributors who also carry other steel companies&#146; product lines. Simec employs three
full-time employees who are dedicated exclusively to exports. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2003 and 2004, orders for Simec&#146;s products were received on average approximately two
weeks before those products were produced. Accordingly, Simec does not believe that
backlog is a significant factor in its business. A substantial portion of Simec&#146;s
production is ordered by its customers prior to production. There can be no assurance
that significant levels of pre-production sales orders will continue. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Competition</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
markets in which Simec competes are highly competitive and recent weakness in the steel
industry globally has heightened competition. Some of Simec&#146;s competitors maintain larger
stocks of inventory and are able to provide their products to customers faster than Simec
and may be better be positioned to withstand weak market conditions and to respond more
rapidly to strengthening market conditions. Simec believes that it competes in the
Mexican domestic market and in its export markets for non-flat steel products primarily
on the basis of price and product quality. In addition, it competes in the domestic
market based upon its responsiveness to customer delivery requirements. Simec believes
that it is one of the lowest cost producers of non-flat steel products in Mexico and is
also one of the lowest cost producers of non-flat steel products in the export markets in
which it competes. Simec endeavors to enhance its competitive position in Mexico by
working closely with its distributors and adjusting its production schedule to meet
customer requirements. Through its flexible production facilities, Simec is able to
respond quickly to the demand for its products. Simec also believes that the geographic
locations of its various facilities throughout Mexico and large variety of products help
it to maintain its competitive market position in Mexico and in the states bordering
Mexico. Simec believes that its Mexicali mini-mill, one of the closest mini-mills to the
southern California market, provides a production and transportation cost advantage in
northwestern Mexico and southern California. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
on information compiled by Canacero, Simec believes that it is the sole Mexican producer
of 5-inch, 6-inch and 200 mm I-beams and that there is one other small producer of 4-inch
I-beams. These products accounted for approximately 82,812 tons, or 13%, and
approximately 75,894 tons, or 10%, of Simec&#146;s total finished product sales in 2003 and
2004, respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2004, Simec sold 181,890 tons of I-beams, channels and angles at least 3 inches in width
(including the 75,894 tons of I-beams described above) which represented approximately
24% of Simec&#146;s total finished product sales for the year. In 2003, Simec sold 184,239
tons of I-beams, channels and angles at least 3 inches in width (including the 82,812
tons of I-beams described above) which represented approximately 29% of Simec&#146;s total
finished product sales for the year. Simec believes that the domestic competitors in the
market for these structural profiles are Altos Hornos de Mexico, S.A. de C.V. (&#147;Ahmsa&#148;),
Sider&#250;rgica del Golfo, S.A. de C.V., Aceros Corsa, S.A. de C.V. (&#147;Corsa&#148;) and
Gerdao, S.A. Based on information compiled by Canacero, Simec estimates that its share of
domestic production of structural profiles was 64% in 2004 and 62% in 2003. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2004, Simec sold 200,460 tons of steel bar (including specialty steel bars), compared to
188,840 tons in 2003. Based on information compiled by Canacero, Simec believes that its
share of domestic production of steel bar was 37% in 2004 and 37% in 2003. Simec&#146;s other
major product lines are rebar and commercial profiles (angles  </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>less than 3 inches in width and flat
bar), for which Simec&#146;s share of domestic production in 2004 was 6% and 40%,
respectively, compared to 5% and 19%, respectively, in 2003. Rebar and merchant bars
together accounted for approximately 390,947 tons, or 46%, of Simec&#146;s total production of
finished steel products in 2004, compared to approximately 255,164 tons, or 41%, in 2003.
Simec competes in the domestic market with a number of producers of these products,
including Ahmsa, Hylsamex, S.A. de C.V., Sicartsa, S.A. de C.V., Corsa, Aceros Tultitl&#225;n,
S.A. de C.V., Commercial Metals Inc., Belco Mineira Aceralia Perfiles Bergara, S.A.,
Chaparral Steel Company, Aceros San Luis, S.A. de C.V., Deacero, S.A. de C.V., Talleres y
Acero, Nucor Corporation and Bayou Steel Corporation. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
has been able to maintain its domestic market share and profitable pricing levels in
Mexico in part because the central Mexico sites of the Guadalajara, Apizaco and Cholula
facilities affords Simec substantial cost advantages relative to U.S. producers when
shipping to customers in central and southern Mexico and its flexible production facility
gives Simec the ability to ship specialty products in relatively small quantities with
short lead times. The Mexicali mini-mill has helped to increase sales in northwestern
Mexico and the southwestern United States because its relatively close proximity to these
areas reduces Simec&#146;s freight costs. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exports</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NAFTA
has increased competition from U.S. steel producers by eliminating tariffs on steel
products imported from the United States. Prior to the passage of NAFTA, a 10% tariff was
imposed by Mexico on imports of steel products similar to those produced by Simec. Under
NAFTA, this tariff was reduced by 1% per year over 10 years commencing in 1994 and, as of
December 31, 2003, the tariff has been completely eliminated. Conversely, the tariffs
imposed by the United States on imports of steel bar (round and square rods), structural
profiles, flat bar and rebar applicable to Mexican producers of steel products were
phased out over a similar period and, as of December 31, 2003, these tariffs were
completely eliminated. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
believes its principal competitors in the United States market, depending on the product,
include Nucor Corporation, Birmingham Steel Corporation, North Star Steel Co., Chaparral,
Bayou and Structural Metals Inc. Simec believes that these companies, as a result of
their location within the United States and their maintenance of large levels of
inventory, are able to provide their products to their customers faster than Simec. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes
in the exchange rate between the peso and the dollar that do not fully reflect the
difference in inflation rates between Mexico and the United States could adversely affect
Simec&#146;s production cost. Following a significant devaluation of the peso in 1995, and a
large decrease in domestic demand for steel products, Simec commenced an aggressive
export program in order to take advantage of relatively higher prices (in peso terms) of
steel products and to offset the decline in domestic consumption. As a result, in 1995,
Simec&#146;s export sales were 226,825 tons, representing 37% of total basic steel sales in
tons. In subsequent years, as domestic demand increased in Mexico and the relative
difference (in peso terms) in steel prices between the U.S. and Mexican markets
decreased, and Simec&#146;s relative margins on exports versus domestic sales consequently
decreased, Simec refocused its efforts on the domestic market. Exports declined
significantly in years subsequent to 1995, although in 2003, exports were 80,744 tons, or
13% of total basic steel sales in tons sold versus 80,182 tons, or 13% of total basic
steel sales in tons sold in 2002, in each case higher than in the immediately preceding
years. Exports of basic steel products increased to 97,126 tons in 2004 (including 12,394
tons produced by the newly acquired plants in Apizaco and Cholula) versus 80,744 tons in
2003. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Raw
Materials</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ferrous
scrap, electricity, ferroalloys and refractory products are the principal materials used
in the manufacture of Simec&#146;s steel products. Among these, ferrous scrap is the most
important for the production of steel and accounted for approximately 59% and 52% of
Simec&#146;s direct cost of sales in 2004 and 2003, respectively. In 2004, 18,158 tons of
billet was acquired from third parties. In 2003 no billet was acquired from third
parties. Ferrous scrap is principally generated from automobile, industrial, naval and
railroad scrap. The market for ferrous scrap is influenced by availability, freight
costs, speculation by scrap brokers and other conditions largely beyond the control of
Simec. Fluctuations in scrap costs directly influence the cost of sales of finished goods. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
purchases raw scrap from peddlers and scrap dealers in Mexico and the San Diego area, and
processes the raw scrap into refined ferrous scrap at its Guadalajara, Mexicali and
Apizaco facilities. Simec meets its refined ferrous scrap requirements through three
sources: (i) Simec&#146;s wholly owned scrap processing facilities,  </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>which in the aggregate provided
Simec with approximately 6% and 7% of its refined scrap tonnage in 2004 and 2003,
respectively, and (ii) purchases from third party scrap processors in Mexico and the
southwestern United States which in the aggregate provided Simec with approximately 64%
and 30% in 2004, respectively, and approximately 63% and 30% in 2003, respectively, of
its refined ferrous scrap requirements. Simec is a dominant scrap collector in the
Mexicali, Tijuana and Hermosillo regions and, by primarily dealing directly with small
Mexican scrap collectors, Simec believes it has been able to acquire scrap at prices
lower than those in the international and domestic markets. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ferroalloys,
electrodes and refractory products collectively accounted for approximately 11% of
Simec&#146;s direct cost of sales in 2004 and 12% in 2003. Ferroalloys are essential for the
production of steel and are added to the steel during manufacturing process to reduce
undesirable elements and to enhance its hardness, durability and resistance to friction
and abrasion. Simec buys most of its manganese ferroalloys from Compa&#237;&#237;a Minera
Autl&#225;n, S.A., with the remainder purchased from Electrometal&#250;rgica de Veracruz,
S.A. de C.V. and Possehl, S.A. de C.V. Simec obtains electrodes used to melt raw
materials from Ucar Carbon Mexicana, S.A. de C.V., Graphite Electrode Sales, Fedmet
Resources Corp. and SGL Carbon Group. Refractory products include firebricks, which line
and insulate furnaces, ladles and other transfer vessels. Simec purchases its refractory
products from RHI Refmex, S.A. de C.V., LWB de M&#233;xico, S.A. de C.V. Dolomite
Franchi, Vesivius de M&#233;xico, S.A. de C.V., Mayerton Refractories and Tecnolog&#237;as
Minerales de M&#233;xico, S.A. de C.V. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electricity
accounted for approximately 9% of Simec&#146;s direct cost of sales in 2004 and 13% of direct
cost of sales in 2003 and is supplied by the Comisi&#243;n Federal de Electricidad
(&#147;CFE&#148;). Simec, like all other high volume users of electricity, pays special rates to
CFE for electricity. Energy prices in Mexico have historically been very volatile and
subject to dramatic price increases in short periods of time. In the late 1990s, the CFE
began to charge for electricity usage based on the time of use during the day and the
season (summer or winter). As a result, Simec has modified its production schedule in
order to reduce electricity costs by limiting production during periods when peak rates
are in effect. There can be no assurance that any future cost increases will not have a
material adverse effect on the business of Simec. From August through October 2004, the
Mexicali facility acquired electricity from Sempra Energy Solutions. The Comisi&#243;n
Reguladora de Energ&#237;a of the Mexican Secretary of Energy authorized this agreement
for peak hours in the period; the rates were less expensive than the rates of CFE in the
same period. In 2005, the Mexicali facility entered into a new contract with Sempra for
the period May through July 2005 and the Mexicali facility expects to enter into another
agreement (with Sempra or other company) for the period August through October 2005. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>North
American Free Trade Agreement</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January 1, 1994, NAFTA became effective. NAFTA established a free trade zone among
Mexico, Canada and the United States and has removed over time customs duties imposed on
goods traded among the three countries, removed or relaxed many investment restrictions,
liberalized trade in services, provided a specialized means for settlement of, and
remedies for, trade disputes arising under NAFTA, promote trilateral regional and
multilateral cooperation, and has resulted in new laws and regulations to further these
goals. Certain provisions of NAFTA were phased in over a number of years. NAFTA is
further intended to provide Mexican exports with permanent access to U.S. and Canadian
markets. NAFTA is intended to increase foreign investment in Mexico by its elimination of
certain restrictions on foreign ownership. As a result of these two factors, NAFTA is
anticipated over the long term to have a favorable effect on employment, wages and
economic growth in Mexico. On the other hand, Mexican producers and service providers are
subject to increased foreign competition as tariffs on certain imported goods and
protection of certain industries from foreign competition have been reduced or eliminated. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
believes NAFTA has increased competition in finished products of the type produced by it
in certain areas of Mexico, particularly the northeast, as Mexican tariffs on steel
products exported to Mexico from the United States have been phased out. In addition,
however, Simec believes that NAFTA has decreased the cost of certain of its important raw
materials, such as electrodes, refractory products and ferroalloys, and spare parts. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Environmental
Matters</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Mexican operations of various of Simec&#146;s subsidiaries are subject to Mexican federal,
state and municipal laws and regulations relating to the protection of the environment
and require numerous permits, licenses  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>and authorizations at municipal,
  state and federal levels. The fundamental environmental law in the Mexican federal
  system is the <i>Ley General del Equilibrio Ecol&#243;gico y Protecci&#243;n
  al Ambiente</i> (the General Law of Ecological Equilibrium and Environmental
  Protection or the &#147;Ecological Law&#148;). Under the Ecological Law, rules
  have been promulgated concerning water pollution, air pollution, noise pollution,
  solid wastes and hazardous substances. In addition, the Mexican federal government
  has enacted regulations concerning the import and export of hazardous materials
  and hazardous wastes. The Mexican federal agency in charge of overseeing and
  enforcing compliance with the federal environmental laws is the <i>Secretar&#237;a
  del Medio Ambiente y Recursos Naturales</i> (the Ministry of the Environment
  and Natural Resources or &#147;SEMARNAT&#148;). As part of its enforcement powers,
  the SEMARNAT, through the <i>Procuradur&#237;a Federal de Protecci&#243;n al
  Ambiente</i> (the Federal Bureau of Environmental Protection or &#147;Profepa&#148;)
  can bring civil and criminal proceedings against companies that violate environmental
  laws and can close non-complying facilities. Simec has made significant capital
  investments in connection with the building of its production facilities in
  order to comply with requirements of municipal, state and federal authorities
  and to remain in compliance with its permits, licenses and authorizations. Although
  Simec believes that it is currently in substantial compliance with the applicable
  Mexican federal and state and municipal environmental laws and regulations,
  it is possible that changes in Mexican federal, state or municipal environmental
  laws or regulations, or their interpretation or enforcement, could cause Simec
  to have to invest additional capital to remain in compliance with future federal,
  state and municipal requirements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
has obtained necessary general operating licenses from the environmental authorities and
the sanitation authorities, including a Soil Usage License, a Waste Water Discharge
Registration and a Statement for Hazardous Waste. Simec is required to provide an
environmental impact report for each project that contains the architectural designs, the
environmental impact of the project and proposed measures to minimize such impact. The
SEMARNAT and state environmental authorities have the right to make periodic inspections.
In addition, Simec is required to provide the SEMARNAT with periodic reports regarding
its compliance with the Ecological Law and the regulations thereunder. These reports
require, among other things, information with respect to environmental protection
controls and the disposition of industrial waste. The Apizaco and Cholula facilities had
received a certification of clean industry from SEMARNAT, and are in the process of
renewing this certification which has since expired. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Organizational
Structure </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
  is a subsidiary of Industrias CH, which holds an approximate 85.4% controlling
  interest in Simec. The following table shows Simec&#146;s corporate structure
  as of May 31, 2005. The table also shows, for each company, its country of incorporation,
  and the approximate percentage equity ownership interest of its direct parent
  company shown on the table. </FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=700>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=447><b><font size=2>Name of Company </font></b>
        <hr size="1" noshade width="115" align="left">
      </TD>
      <TD ALIGN=CENTER WIDTH=104><b><font size=2>Percentage of <br>
        Equity Owned </font></b>
        <hr size="1" noshade width="85">
      </TD>
      <TD ALIGN=LEFT WIDTH=5><b></b></TD>
      <TD ALIGN=CENTER WIDTH=138><b><font size=2>Jurisdiction of <br>
        Incorporation </font></b>
        <hr size="1" noshade width="85">
      </TD>
      <TD ALIGN=LEFT WIDTH=6>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=447><FONT SIZE=2>Grupo Simec, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER WIDTH=104><FONT SIZE=2>&#151;</FONT></TD>
      <TD ALIGN=LEFT WIDTH=5><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER WIDTH=138><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT WIDTH=6><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;Administradora de Cartera
        de Occidente, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>99.99%.</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;Compa&#237;&#237;a Sider&#250;rgica
        de Guadalajara, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>99.99%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Compa&#237;&#237;a
        Sider&#250;rgica de California, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>100%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compa&#237;&#237;a
        Sider&#250;rgica del Pac&#237;fico, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>99.99%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administradora
        de Servicios de la Industria Sider&#250;rgica ICH, S.A</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;de
        C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>99.99%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Procesadora
        Mexicali, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>99.99%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sistemas
        de Transporte de Baja California, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>100%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Servicios
        Simec, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>100%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Undershaft
        Investments, N.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>100%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Netherlands Antilles</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pacific
        Steel, Inc.</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>100%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>California</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="447"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrias
        del Acero y del Alambre, S.A. de C.V</FONT></TD>
      <TD ALIGN=CENTER width="104"><FONT SIZE=2>99.99%</FONT></TD>
      <TD ALIGN=LEFT width="5"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER width="138"><FONT SIZE=2>Mexico</FONT></TD>
      <TD ALIGN=LEFT width="6"><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
  </TABLE>
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</div>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -18-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade>
<p align="center"><BR>
  <!-- *************************************************************************** -->
  <!-- MARKER PAGE="sheet: 16; page: 16" --> <!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
</p>
<div align="center">
  <table cellpadding=0 cellspacing=0 border=0 width=700>
    <tr valign=Bottom>
      <td align=LEFT width=447><b><font size=2>Name of Company </font></b>
        <hr size="1" noshade width="115" align="left">
      </td>
      <td align=CENTER width=104><b><font size=2>Percentage of <br>
        Equity Owned </font></b>
        <hr size="1" noshade width="85">
      </td>
      <td align=LEFT width=5><b></b></td>
      <td align=CENTER width=138><b><font size=2>Jurisdiction of <br>
        Incorporation </font></b>
        <hr size="1" noshade width="85">
      </td>
      <td align=LEFT width=6>&nbsp;</td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="447"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Coordinadora
        de Servicios Sider&#250;rgicos de Calidad, S.A. de C.V</font></td>
      <td align=CENTER width="104"><font size=2>100%</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=CENTER width="138"><font size=2>Mexico</font></td>
      <td align=LEFT width="6"><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="447"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operadora
        de Metales, S.A. de C.V</font></td>
      <td align=CENTER width="104"><font size=2>100%</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=CENTER width="138"><font size=2>Mexico</font></td>
      <td align=LEFT width="6"><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="447"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operadora
        de Servicios Sider&#250;rgicos de Tlaxcala, S.A. de C.V</font></td>
      <td align=CENTER width="104"><font size=2>100%</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=CENTER width="138"><font size=2>Mexico</font></td>
      <td align=LEFT width="6"><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="447"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administradora
        de Servicios Sider&#250;rgicos de Tlaxcala, S.A. de C.V</font></td>
      <td align=CENTER width="104"><font size=2>100%</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=CENTER width="138"><font size=2>Mexico</font></td>
      <td align=LEFT width="6"><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="447"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operadora
        de Servicios de la Industria Sider&#250;rgica ICH , S.A. de C.V</font></td>
      <td align=CENTER width="104"><font size=2>100%</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=CENTER width="138"><font size=2>Mexico</font></td>
      <td align=LEFT width="6"><font size=2>&nbsp;</font></td>
    </tr>
  </table>
  <br>
</div>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Property, Plants
  and Equipment </B></FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
principal facilities consist of a steel mini-mill in Guadalajara, Jalisco, a steel
mini-mill in Mexicali, Baja California Norte, a steel mini-mill in Apizaco, Tlaxcala, and
a rolling mill in Cholula, Puebla. Simec owns these facilities. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s corporate offices are located next to the steel mini-mill in Guadalajara,
Mexico. Simec also has various sales and distribution facilities throughout Mexico and
scrap collection facilities in Tijuana and San Diego, California. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
a more complete description of Simec&#146;s principal facilities and production equipment, see
&#148;&#151;Production Process and Facilities&#148; above. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 5.    Operating
and Financial Review and Prospects </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following discussion should be read in conjunction with the Consolidated Financial
Statements included elsewhere in this Annual Report. The Consolidated Financial
Statements have been prepared in accordance with Mexican GAAP, which differ significantly
from U.S. GAAP. Note 18 to the Consolidated Financial Statements provides a description
of the principal differences between Mexican GAAP and U.S. GAAP, as they relate to the
Company, and a reconciliation to U.S. GAAP of net earnings and total shareholders&#146;
equity. Under Bulletin B-10, financial data for all periods in the Consolidated Financial
Statements and throughout the Annual Report have been restated in constant pesos as of
December 31, 2004. For the years ended December 31, 2002, 2003 and 2004, the National
Consumer Price Index increased approximately 6%, 4% and 5%, respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Critical
Accounting Policies and Estimates</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management&#146;s
discussion and analysis of its financial condition and results of operations are based
upon Simec&#146;s financial statements, which have been prepared in accordance with Mexican
GAAP. The preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at year-end, and the reported amount of
revenues and expenses during the year. Management regularly evaluates these estimates,
including those related to the carrying value of property, plant and equipment and other
non-current assets, inventories and direct cost of sales, income taxes and employee
profit sharing, foreign currency transactions and exchange differences, valuation
allowances for receivables, inventories and deferred income tax assets; liabilities for
deferred income taxes, valuation of financial instruments, obligations relating to
employee benefits, potential tax deficiencies, environmental obligations, and potential
litigation claims and settlements. Management estimates are based on historical
experience and various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other
sources. Accordingly, actual results may differ materially from current expectations
under different assumptions or conditions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
believes that the critical accounting policy which requires the most significant
judgments and estimates used in the preparation of the financial statements relates to
the impairment of property, plant and equipment and valuation reserve on accounts
receivable. The Company evaluates periodically the adjusted values of its property, plant
and equipment, to determine whether there is an indication of potential impairment.
Impairment exists when the carrying amount of an asset exceeds future revenues expected
to be generated by the asset. If such  </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the expected revenues. Assets to be disposed of are reported
at the lower of the carrying amount or realizable value. Significant judgment is involved
in estimating future revenues or realizable value, as applicable, of the Company&#146;s
property, plant and equipment due to the characteristics of those assets. The class of
the Company&#146;s assets which must require complex determinations based upon assumptions and
estimates relates to idle machinery. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
respect to valuation reserve on accounts receivable, on a periodic basis management
analyzes the recoverability of accounts receivable in order to determine if, due to
credit risk or other factors, some receivables may not be collected. If management
determines such a situation exists, the book value of the non-recoverable assets is
adjusted and charged to the income statement through an increase in the doubtful accounts
reserve. This determination requires substantial judgment by management. As a result,
final losses from doubtful accounts could differ significantly from estimated reserves. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General
Overview</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
steel products are generally commodities and, accordingly, its net sales and
profitability are highly dependent on market conditions in the steel industry which is
greatly influenced by general economic conditions in Mexico and elsewhere. As a result of
the significant competition in the steel industry and the commodity-like nature of
Simec&#146;s products, Simec has limited pricing power as finished product prices for the
Company&#146;s steel products are generally determined by Mexican and global steel markets,
although a portion of Simec&#146;s products are specialty products for which competition is
limited as compared with Simec&#146;s more basic products, and these specialty products
generate somewhat higher margins. Simec adjusts the mix of its product output toward
higher margin products to the extent it is able to do so and also adjusts its overall
product levels based on the product demand and marginal profitability of doing so. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
margins in commodity businesses are generally low, Simec focuses very closely on
controlling its direct cost of sales as well as its indirect manufacturing, selling,
general administrative expenses. Simec&#146;s direct cost of sales largely consist of the
costs of acquiring the raw materials necessary to manufacture steel, primarily scrap.
Scrap prices are generally determined by market supply and demand and as a result, Simec
has limited ability to influence its scrap costs, as well as the costs of other raw
materials, including energy costs. There is a correlation between the prices of scrap and
finished product prices, although the degree and timing of this correlation varies from
time to time and Simec may not always be able to fully pass along scrap and other raw
material price increases to its customers. Simec&#146;s ability to decrease its direct cost of
sales as a percentage of net sales is largely dependent on its increasing productivity.
Simec&#146;s ability to control indirect manufacturing, selling, general and administrative
expenses, which do not correlate to net sales as closely as direct costs of sales do, is
a key element of Simec&#146;s profitability. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
exports a portion of its products, primarily to the United States. As a result of higher
costs associated with exports, Simec adjusts export levels based on product demand and
the relative profitability of doing so versus selling its products in the domestic
market. During periods of relative weakness of the peso versus the dollar, exports
generate higher margins as revenues are generated in dollars which translate into higher
peso amounts, while a portion of Simec&#146;s costs are peso-denominated. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Comparison
of Years Ended December 31, 2004, 2003 and 2002</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
Sales</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
net sales were Ps. 5,683 million in 2004 (including the net sales generated since August
1, 2004 by the newly acquired plants in Apizaco and Cholula of Ps. 1,193 million), Ps.
2,930 million in 2003 and Ps. 2,310 million in 2002. This represented increases of 94% in
2004 compared to 2003 and of 27% in 2003 compared to 2002. The increase in 2004 net sales
versus 2003 net sales resulted from substantially higher prices for Simec&#146;s basic steel
products, reflecting global steel price increases, primarily in the second quarter of the
year and from significantly higher production levels, largely resulting from the
inclusion of production by the newly acquired Apizaco and Cholula facilities. The
increase in 2003 net sales versus 2002 net sales primarily resulted from higher prices
for Simec&#146;s basic steel products, reflecting global steel price increases, primarily in
the second half of the year, as well as moderately higher production levels. Sales in
tons of basic steel products increased 23% in 2004 to  </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>773,297 tons (including 155,614 tons
produced by the newly acquired plants in Apizaco and Cholula) from 628,243 tons in 2003,
which in turn had increased 3% in 2003 from 609,408 tons in 2002. These year to year
increases reflect Simec&#146;s determination to produce at higher levels given existing demand
and pricing for its products. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exports
of basic steel products in 2004 increased 20% versus 2003 to 97,126 tons (including
12,394 tons produced by the newly acquired plants in Apizaco and Cholula). Exports of
basic steel products remained substantially the same in 2003 compared to 2002, at 80,744
tons and 80,182 tons, respectively. Simec sold 41,832 tons of billet in 2004, 63,616 tons
of billet in 2003 and 23,137 tons of billet in 2002. Billet sales do not contribute
materially to Simec&#146;s net sales or otherwise to its operating results. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
average price of steel products increased 63% in real terms in 2004 versus 2003,
reflecting the significant global rise in overall demand and of finished product prices
in 2004. The average price of steel products increased 18% in real terms in 2003,
reflecting the global increase in finished product prices in 2003. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Direct
Cost of Sales</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
  direct cost of sales was Ps. 3,303 million in 2004 (including Ps. 834 million
  relating to the newly acquired plants in Apizaco and Cholula) Ps. 1,925 million
  in 2003 and Ps. 1,546 million in 2002. This represented increases of 72% in
  2004 compared to 2003 and of 24% in 2003 compared to 2002. Direct cost of sales
  as a percentage of net sales decreased to 58% in 2004 from 66% in 2003 and 67%
  in 2002. Simec&#146;s higher direct cost of sales in 2004 compared to 2003 was
  primarily attributable to the increased cost of raw materials and somewhat higher
  production levels. Simec&#146;s higher direct cost of sales in 2003 compared
  to 2002 was primarily attributable to the increased cost of raw materials and
  higher production levels. The average cost of raw materials used to produce
  steel products in 2004 increased 45% from 2003, primarily as a result of increases
  in the price of scrap, electricity and gas. The average cost of raw materials
  used to produce steel products in 2003 increased 14% from 2002, primarily as
  a result of increases in the price of scrap, electricity and gas. </font>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Marginal
Profit</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
marginal profit was Ps. 2,380 million in 2004 (including Ps. 359 million relating to the
newly acquired plants in Apizaco and Cholula), Ps. 1,005 million in 2003 and Ps. 764
million in 2002. This represented increases of 37% in 2004 compared to 2003 and 32% in
2003 compared to 2002. As a percentage of net sales, marginal profit was 42% in 2004
compared to 34% in 2003 and 33% in 2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indirect
Manufacturing, Selling, General and Administrative Expenses</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indirect
manufacturing, selling, general and administrative expenses, which include depreciation
and amortization, was Ps. 571 million in 2004 (including Ps. 73 million relating to the
newly acquired plants in Apizaco and Cholula), Ps. 488 million in 2003 and Ps. 485 in
2002, reflecting an increase of 17% in 2004 compared to 2003 and an increase of 0.6% in
2003 compared to 2002. The increase in these expenses in 2004 versus 2003 is primarily
attributable to the newly acquired plants in Apizaco and Cholula. The relative stability
of such expenses in 2003 compared to 2002 was due primarily to decreased maintenance
expenses for machinery during 2003. Depreciation and amortization was Ps. 214 million in
2004 (including Ps. 25 million relating to the newly acquired plants in Apizaco and
Cholula), Ps. 192 million in 2003 and Ps. 170 million in 2002. This reflected an increase
of 11% in 2004 compared to 2003 and an increase of 13% in 2003 compared to 2002. The
increase in 2004 compared to 2003 was due to the depreciation relating to the newly
acquired plants in Apizaco and Cholula. The increase in 2003 compared to 2002 was due to
the revaluation of machinery and equipment to reflect changes in the exchange rate of the
peso relative to the U.S. dollar and other currencies such as the Euro. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating
Income</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
 operating  income  increased  250% to Ps.  1,809  million in 2004  (including  Ps. 286
million  relating to the newly acquired  plants in Apizaco and Cholula)  from Ps. 517
million in 2003.  Simec&#146;s  operating  income  increased 85% in 2003 from Ps. 279 million
in 2002.  Operating income represented 32%, 18% and 12% of net sales in 2004, 2003 and
2002, respectively. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial
Income (Expense)</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
recorded financial expense in 2004 of Ps. 36 million compared to financial expense of Ps.
26 million in 2003 and financial expense of Ps. 135 million in 2002. Financial income or
expense reflects the sum of three components: exchange gain or loss, net interest income
or expense and gain or loss from monetary position. Simec recorded an exchange gain of
approximately Ps. 4 million in 2004 compared to an exchange loss of Ps. 3 million in 2003
and an exchange loss of Ps. 109 million in 2002. These exchange results reflect the 0.3%
decrease in the value of the peso versus the dollar in 2004 compared to a decrease of 9%
in the value of the peso versus the dollar in 2003 and a decrease of 12.8% in the value
of the peso versus the dollar in 2002. The exchange gain in 2004 also reflected lower
debt levels than in the prior year and the 2003 financial expense also reflected lower
debt levels than in 2002 as Simec made various prepayments on its bank debt and converted
loans from its parent company to equity during 2003 and 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
interest income was Ps. 6 million in 2004 compared to Ps. 13 million of net interest
expense in 2003 and Ps. 58 million of net interest expense during 2002. This reflected a
lower amount of debt outstanding during 2004 compared to 2003 and in 2003 compared to
2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
recorded a loss from monetary position of Ps. 46 million in 2004 compared to a loss from
monetary position of Ps. 10 million in 2003 and a gain from monetary position of Ps. 32
million in 2002. This reflected the domestic inflation rate of 5.2% in 2004 as compared
to 4% in 2003 and 5.7% in 2002 as well as lower debt levels during 2004 compared to 2003
and in 2003 as compared to 2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
Income (Expense), Net</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
recorded other expense, net, of Ps. 37 million in 2004.  This amount reflected: </FONT></P>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>income
from the recovery of an account recorded as a doubtful account of Ps. 14 million;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve of Ps. 6 million relating to the clean-up of contaminated land at the Pacific
Steel facilities;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve of Ps. 13 million relating to the realizable value of idle machinery and
equipment;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve for doubtful accounts of Ps. 10 million; and</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>other
expense related  to other financial operations of Ps. 22 million.</FONT></TD></TR></TABLE>

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<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec recorded
  other expense, net, of Ps. 31 million in 2003. This amount reflected:</font></p>
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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve of Ps. 11 million relating to the clean-up of contaminated land at the Pacific
Steel facilities;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve of Ps. 19 million relating to the realizable value of idle machinery and
equipment; and</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>other
expense, net, related to other financial operations of Ps. 1 million.</FONT></TD></TR></TABLE>

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<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002 Simec
  recorded other expense, net, of Ps. 39 million. This amount reflected:</font></p>
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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>other
income  relating to tax benefits  associated  with the  acquisition  of machinery  and
 equipment  made in 2001 of Ps. 6                       million;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
gain of Ps. 2 million in respect of $200,000  principal  amount of Simec&#146;s MTNs which
were  acquired at 50% of the principal                       amount thereof, without
provision for accrued interest, and were subsequently cancelled;</FONT></TD></TR></TABLE>





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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>income
of Ps. 3 million relating to insurance  payments  received in respect of the breakdown of
the scrap shredder machine at                       the Mexicali mini-mill;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>expenses
relating to an adjustment in the value of the land of its subsidiary Pacific Steel of Ps.
22 million;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>expenses of Ps. 2 million for fees relating to
      obtaining the approval of the <i>Comisi&#243;n Nacional Bancaria y de Valores</i>
      to increase the capital stock of Simec;</FONT></TD>
  </TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve of Ps. 11 million relating to the realizable value of idle machinery and
equipment;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>a
reserve of Ps. 8 million relating to the clean-up of contaminated land at the Pacific
Steel facilities; and</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=10%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=85%><FONT SIZE=2>expenses
related to other financial operations of Ps. 7 million.</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income
Tax and Employee Profit Sharing</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
recorded a provision of Ps. 330 million, a provision of Ps. 152 million and a positive
provision of Ps. 24 million for income tax and employee profit sharing in 2004, 2003 and
2002, respectively. These amounts included an increase of Ps. 308 million in 2004 and
increase of Ps. 119 million in 2003 and a decrease of Ps. 62 million in 2002,
respectively, in such provisions as a result of the application of Bulletin D-4 with
respect to deferred income tax, as described below. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net
Income</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of the foregoing, Simec recorded net income of Ps. 1,406 million, Ps. 308
million and Ps. 129 million in 2004, 2003 and 2002, respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Recent
Pronouncements Applicable to Mexican GAAP</I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
  March 2004, the Mexican Institute of Public Accountants issued Bulletin B-7
  &#147;<i>Business Acquisitions</i>.&#148; Bulletin B-7 is effective for fiscal
  years beginning after December 31, 2004, although Simec voluntarily elected
  to apply this bulletin for 2004. The most significant issues in Bulletin B-7
  are: (a) use of the purchase method as the only alternative for valuing businesses
  acquired and investments in associated companies, thus eliminating the supplementary
  application of former International Accounting Standard 22, &#147;<i>Business
  Combinations</i>;&#148; (b) change in the accounting for goodwill, eliminating
  amortization and requiring that goodwill be evaluated for impairment, and also
  requiring that negative goodwill not fully amortized at the date of adoption
  of Bulletin B-7 be reflected in the results of operations as a change in accounting
  principle; (c) establishment of specific rules to account for the acquisition
  of minority interest and for transfers of assets or exchange of shares among
  entities under common control; and (d) accounting for intangible assets acquired
  in a business combination, under Bulletin C-8, &#147;<I>Intangible Assets</I>.&#148;
  </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2004, the Mexican Institute of Public Accountants, substituted and superseded
former Bulletin D-3, &#147;Labor Obligations&#148; published in January 1993 and revised in 1998.
The provisions of this Bulletin are effective immediately, except for those relating to
payments upon termination of labor relationships, which are effective January 1, 2005.
This Bulletin adds the issue of post-retirement benefit payments, to supersede Circular
50, &#147;<I>Interest Rates to be Used for Valuing Labor Obligations and Supplementary
Application of Accounting Principles, Relating to Labor Obligations</I>.&#148; Also, this Bulletin
eliminates the issue of unforeseen payments, and replaces it with the one relating to
&#147;<I>Payments Upon Termination of the Labor Relationship</I>,&#148; defining them as those payable to
workers upon termination of the labor relationship before retirement age. These payments
are of two types: (i) for restructuring reasons, for which the provision of Bulletin C-9,
&#147;<I>Liabilities, Accruals, Contingent Assets and Liabilities, and Commitments</I>,&#148; should be
applied, and (ii) for reasons other than restructuring, which valuation and disclosure
requirements are the same as those for pension and seniority premium payments, permitting
that, upon adoption of the Bulletin, the transition asset or liability be immediately
recognized in the results of operations, </FONT> </P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>or otherwise, that it be amortized
over the average remaining service life of employees. The Company estimates that the
adoption of this Bulletin will not have a material effect on its financial position or
results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Liquidity and Capital
Resources </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of the economic crisis in Mexico arising from the devaluation of the peso versus
the U.S. dollar in 1994, including the liquidity crisis which affected the Mexican
banking system, the insolvency of Simec&#146;s former parent, Sidek, and Simec&#146;s high levels
of short-term indebtedness, Simec became unable to generate or borrow funds to refinance
its debt or to support its operations and capital improvements. As of December 15, 1997
and immediately prior to the consummation of the Restructuring (as defined below), Simec
had total outstanding indebtedness of approximately $322 million; over half of Simec&#146;s
debt had matured and was unpaid and substantially all of the balance was subject to
acceleration. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 1997, the Company consummated a corporate reorganization and restructuring of
its liabilities (collectively, the &#147;Restructuring&#148;). As part of the Restructuring,
Simec&#146;s wholly-owned subsidiary, CSG, incurred new bank debt and issued new debt
securities and paid limited amounts of accrued interest on certain outstanding debt in
exchange for and in an aggregate amount approximately equal to the aggregate outstanding
consolidated debt of the Company at the date of consummation of the Restructuring. In
exchange, CSG received equity in all of Simec&#146;s subsidiaries and the elimination of
intercompany debt owed by CSG to Simec. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Restructuring did not result in a reduction in the overall amount of Simec&#146;s consolidated
outstanding debt and, accordingly, following the Restructuring, Simec, through CSG,
continued be highly leveraged. In 2001, subsequent to the acquisition by Industrias CH of
a controlling interest in the Company, CSG redeemed or repurchased all of the outstanding
debt securities it had issued in connection with the Restructuring (which was financed
principally with borrowings from Industrias CH). In 2001, approximately $90 million of
bank debt was converted to equity which was acquired by Industrias CH. In 2001, 2002,
2003 and 2004 CSG continued to pay down its outstanding bank debt, making scheduled
amortization payments as well as additional principal payments which were financed
primarily by capital contributions from Industrias CH or borrowings from Industrias CH
which were later converted to equity. In March 2004, Simec prepaid $1.7 million of the
remainder of its outstanding bank debt. At December 31, 2004, Simec&#146;s total consolidated
debt consisted of approximately $13.9 million of U.S. dollar denominated debt, including
a indebtedness in respect of a letter of credit for of $13.6 million (which indebtedness
was no longer outstanding at March 31, 2005) and $0.3 million of MTN&#146;s due 1998 (accrued
interest at December 31, 2004 was $282,121) which were issued in 1993 as part of a $68
million issuance. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Liquidity;
Capital Resources</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is heavily dependent on cash generated from operations as its principal source of
liquidity. Other sources of liquidity have included financing made available to Simec by
its parent Industrias CH (primarily in the form of equity, or debt substantially all of
which was subsequently converted to equity), most significantly for the purpose of
repaying third party indebtedness, and limited amounts of vendor financing. The Company
has had very limited access to and has not borrowed any material amounts from
unaffiliated third parties since consummation of the Restructuring. We believe that our
existing cash, cash equivalents and cash generated from operations will be sufficient to
satisfy our currently anticipated cash requirements through the next 12 months, including
its currently anticipated capital expenditures. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
September 10, 2004 Simec completed the acquisition of the property, plant and equipment
and the inventories, and assumed liabilities associated with seniority premiums of
employees, of the Mexican steel-making facilities of Industr&#237;as Ferricas del Norte,
S.A. (Corporaci&#243;n Sidenor of Spain) located in Apizaco, Tlaxcala and Cholula,
Puebla. Simec&#146;s total net investment in this transaction was approximately U.S. $122
million (which amount excludes value added tax of $16 million which was paid in 2004 and
recouped from the Mexican government in 2005), funded with internally generated resources
of Simec and capital contributions from ICH of U.S. $19 million for capital stock to be
issued in the second quarter of 2005. Approximately $107.5 million of Simec&#146;s investment
related to the acquisition of property, plant and equipment, approximately $7 million
related to a  </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>technical assistance contract with
the seller (which amount, other than $1.7 million relating to services to be performed in
2005 and 2006, has been paid) and the balance relates to inventories acquired. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s principal use of cash has generally been to fund its operating activities, for
debt repayments and, to a significantly lesser degree, capital expenditure programs. The
following is a summary of cash flows for the three years ended December 31, 2004: </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Principal Cash Flows </B></FONT></P>

<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD WIDTH=66% ALIGN=LEFT>&nbsp;</TD>
      <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
      <TD WIDTH=31% ALIGN=center colspan="5"><font face="Times New Roman, Times, Serif" size=2><b>Years
        ended December 31,</b></font>
        <hr size="1" noshade width="155">
        <font face="Times New Roman, Times, Serif" size=2><b> (Millions of Constant
        Pesos) </b></font></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD WIDTH=66% ALIGN=LEFT>&nbsp;</TD>
      <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
      <TD WIDTH=7% ALIGN=center><b><font size=2>2002</font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD WIDTH=4% ALIGN=center><b></b></TD>
      <TD WIDTH=7% ALIGN=center><b><font size=2>2003</font></b>
        <hr size="1" noshade width="35">
      </TD>
      <TD WIDTH=4% ALIGN=center><b></b></TD>
      <TD WIDTH=7% ALIGN=center><b><font size=2>2004</font></b>
        <hr size="1" noshade width="35">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD WIDTH=66% ALIGN=LEFT><FONT SIZE=2>Cash flow generated by (used in) operating
        activities</FONT></TD>
      <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2>346</FONT></TD>
      <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2>419</FONT></TD>
      <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2>880</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Cash flow generated by (used in) financing</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>(251)</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>30</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>389</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Cash flow generated by (used) in investment
        activities</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>(47)</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>(25)</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=RIGHT><FONT SIZE=2>(1,305)</FONT></TD>
    </TR>
  </TABLE>
  <br>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
resources provided by operating activities was Ps. 880 million in 2004 and reflected
significant net income offset by increases in inventories and receivables attributable to
the acquisition of the Apizaco and Cholula facilities. Net resources provided by
operating activities was Ps. 419 million in 2003 and reflected the conversion of loans of
Industrias CH into common shares of Simec for Ps. 194 million. Net resources provided by
operating activities was Ps. 346 million in 2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
resources provided by financing activities was Ps. 389 million in 2004. This amount
reflects prepayment of bank debt of $19 million, the increase in capital stock issued to
minority shareholders of Ps. 24 million and a capital contribution from ICH to Simec in
the amount of Ps. 221 million ($19 million) for capital stock to be issued in the second
quarter of 2005. Net resources provided by financing activities was Ps. 30 million in
2003. This amount reflects the semi-annual amortization installments on the Company&#146;s
bank debt of Ps. 16 million ($1.4 million), the prepayment of Ps. 339 million ($30
million) of bank debt, the conversion into shares by Industrias CH of Ps. 194 million of
loans plus accrued interest thereon, the increase of the capital stock by the minority
shareholders for Ps. 20 million and the conversion into common shares of the capital
contribution from Industrias CH to Simec in the amount of Ps. 163 million ($14.5 million)
in 2003. Net resources used in financing activities was Ps. 251 million in 2002. This
amount reflects the semi-annual amortization installments on the Company&#146;s bank debt of
Ps. 73 million ($6.7 million), the prepayment of Ps. 526 million ($48 million) of bank
debt, the conversion by Industrias CH of Ps. 277 million ($25.5 million) of loans into
common shares and the exercise by certain minority shareholders of their pre-emptive
rights arising as a result of the conversion of Industrias CH debt to purchase capital
stock for Ps. 29 million. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
resources used in investing activities is attributable primarily to the acquisition of
property, plant and equipment and other non-current assets and reflects changes in
long-term inventories. Net resources used in investing activities (to acquire property,
plant and equipment and other non-current assets) were Ps. 1,305 million in 2004 (which
amount reflects the acquisition of the Apizaco and Cholula facilities). Net resources
used in investing activities was Ps. 25 million in 2003 and Ps. 47 million in 2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
December 31, 2004, Simec&#146;s total consolidated debt consisted of approximately $13.9
million of U.S. dollar denominated debt, including indebtedness in respect of a letter of
credit of $13.6 million (which indebtedness was no longer outstanding at March 31, 2005)
and $0.3 million of MTN&#146;s due 1998 (accrued interest at December 31, 2004 was $282,121)
which were issued in 1993 as part of a $68 million issuance. At December 31, 2003, Simec
had outstanding approximately $2 million of U.S. dollar-denominated debt. In March 2004,
Simec prepaid $1.7 million of the remainder of its outstanding bank debt. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2003 Simec acquired Administradora de Cartera de Occidente, S.A. de C.V.
(&#147;Acosa&#148;) from Industrias CH for nominal consideration. Acosa&#146;s sole asset is a portfolio
of defaulted receivables it acquired in June 2003 from various Mexican banks which are in
the process of liquidation. The purchase price of the portfolio is payable by Acosa
solely from recoveries, if any, net of expenses of collection, with respect to the
defaulted  </FONT></P>





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<br>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>receivables. Upon payment of the
purchase price from recoveries on the portfolio, Acosa and the Mexican banks will share
in any additional recoveries, net of expenses of collection, on a 50% / 50% basis. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2004, certain minority shareholders of Simec exercised their pre-emptive rights
arising as a result of this conversion by ICH to purchase capital stock for Ps. 23.7
million at the price per share of Ps. 14.588 (the equivalent of U.S. $1.25 per American
Depositary Share). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company does not have in place any interest rate or currency hedging instruments. The
Company is not a party to any non-exchange traded contracts accounted for at fair value
other than, as described in Note 6 to the Consolidated Financial Statements, certain
futures contracts it entered into in late 2003 to fix the price of its natural gas
purchases from 2004 to 2006. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Off-Balance Sheet
Arrangements </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company does not have any off-balance sheet arrangements. </FONT></P>






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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Contractual Obligations </B></FONT></P>

         The table below sets forth our significant long-term contractual obligations
as of December 31, 2004: <br>
<br>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=640>
    <TR VALIGN=Bottom>
      <TH>&nbsp;</TH>
      <TH COLSPAN=14 align="center"><font face="Times New Roman, Times, Serif" size="1">(Millions
        of Constant Pesos) </font><font face="Times New Roman, Times, Serif" size=2><br>
        Maturity </font>
        <hr size="1" noshade>
      </TH>
    </TR>
    <TR VALIGN=Bottom>
      <TH><FONT SIZE=2></FONT></TH>
      <TH COLSPAN=2 align="center"><FONT SIZE=2>Less <BR>
        than 1 <BR>
        year </FONT>
        <hr size="1" noshade>
      </TH>
      <TH align="center">&nbsp;</TH>
      <TH COLSPAN=2 align="center"><FONT SIZE=2>1 - 3 <BR>
        years </FONT>
        <hr size="1" noshade>
      </TH>
      <TH align="center">&nbsp;</TH>
      <TH COLSPAN=2 align="center"><FONT SIZE=2>4 - 5 <BR>
        years </FONT>
        <hr size="1" noshade>
      </TH>
      <TH align="center">&nbsp;</TH>
      <TH COLSPAN=2 align="center"><FONT SIZE=2>In <br>
        excess <br>
        of 5 <br>
        years </FONT>
        <hr size="1" noshade>
      </TH>
      <TH align="center">&nbsp;</TH>
      <TH COLSPAN=2 align="center"><FONT SIZE=2>Total </FONT>
        <hr size="1" noshade>
      </TH>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Long-term debt obligations (MTNs)</FONT></TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>3</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>0</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>0</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>0</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>3</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Long-term contractual obligations <br>
        &nbsp;&nbsp; (technical assistance)</FONT></TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>11</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>8</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>0</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>0</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=left>&nbsp;</TD>
      <TD ALIGN=left colspan="2"><FONT SIZE=2>19</FONT><FONT SIZE=2>&nbsp;</FONT></TD>
    </TR>
  </TABLE>
  <br>
</div>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December 31, 2004, the Company had no material capital or finance lease obligations,
operating lease obligations, purchase obligations or other contractual obligations
reflected as long-term liabilities on its balance sheet. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 6. &nbsp;Directors,
  Senior Management and Employees </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Directors and Senior
Management </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  following table sets forth the names, other positions held with the Company
  and the year of their initial appointment to their position, of the members
  of Simec&#146;s Board of Directors and their alternates as well as the Statutory
  Examiner and his alternate. The Statutory Examiner and his alternate are not
  members of the Board of Directors, See &#147;&#151;Board Practices&#151;Statutory
  Examiner,&#148; below. </FONT></P>
<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD ALIGN=left><b><font size=2>Name </font></b>
        <hr size="1" noshade align="left" width="35">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center><b><font size=2>Other Position With Simec </font></b>
        <hr size="1" noshade align="center" width="160">
      </TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center><b></b></TD>
      <TD ALIGN=center><b><font size=2>Director <br>
        Since </font></b>
        <hr size="1" noshade width="60">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><font size="2"><i>Directors:</i></font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Rufino Vigil Gonz&#225;lez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Raul Arturo P&#233;rez Trejo</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2003</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Eduardo Vigil Gonz&#225;lez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Ra&#250;l Vigil Gonz&#225;lez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Jos&#233; Luis Rico Maciel</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Rodolfo Garc&#237;a G&#243;mez de Parada</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Gerardo Arturo Avenda&#237;o Guzm&#225;n</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2><i>Alternate Directors:</i></FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Manuel Rivero Figueroa</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2003</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Jos&#233; Luis Romero Su&#225;rez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Sergio Vigil Gonz&#225;lez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Juan M&#233;ndez Mart&#237;nez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Ignacio Muriedas Prieto</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Jaime Vigil S&#225;nchez Conde</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2001</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Sergio Villag&#243;mez Mart&#237;nez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>2003</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
    </TR>
    <tr valign=Bottom>
      <td align=left><b><font size=2>Name </font></b>
        <hr size="1" noshade align="left" width="35">
      </td>
      <td align=center><b></b></td>
      <td align=center><b><font size=2>Other Position With Simec </font></b>
        <hr size="1" noshade align="center" width="160">
      </td>
      <td align=center><b></b></td>
      <td align=center><b></b></td>
      <td align=center><b><font size=2>Director <br>
        Since </font></b>
        <hr size="1" noshade width="60">
      </td>
    </tr>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><font size=2><i>Statutory Examiners:</i></font></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Humberto Vald&#233;s Mier</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;Statutory Examiner</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><font size=2>2001</font></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Enrique M&#250;jica Rodr&#237;guez</FONT></TD>
      <TD ALIGN=LEFT>&nbsp;</TD>
      <TD ALIGN=center><FONT SIZE=2>&nbsp;Alternate Statutory Examiner</FONT></TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center>&nbsp;</TD>
      <TD ALIGN=center><font size=2>2005</font></TD>
    </TR>
  </TABLE>
  <br>
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</div>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  following table sets forth the names of the executive officers of the Company,
  their current position and the year of their initial appointment to that position.
  </FONT></P>




<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TH align="left"><FONT SIZE=2>Name </FONT>
        <hr size="1" noshade width="35" align="left">
      </TH>
      <TH COLSPAN=2 align="center"><FONT SIZE=2>Position in Simec </FONT>
        <hr size="1" noshade width="115">
      </TH>
      <TH align="center"><FONT SIZE=2>Position Held <BR>
        Since </FONT>
        <hr size="1" noshade width="85">
      </TH>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Luis Garc&#237;a Lim&#243;n</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>Chief Executive Officer</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>&nbsp;1984*</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Jos&#233; Flores Flores</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>Chief Financial Officer</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>2005</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Alejandro Villa Flores</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>Chief Operating Officer</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>1999</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT><FONT SIZE=2>Marcos Maga&#237;a Rodarte</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>Chief Sales Officer</FONT></TD>
      <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=CENTER><FONT SIZE=2>2001</FONT></TD>
    </TR>
  </TABLE>
  <br>
</div>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Represents
the date as of which Mr. Garc&#237;a Lim&#243;n first held this office with the Company&#146;s
predecessor, CSG. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Biographical
  Information</B></I> </FONT> </P>
<b><!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" --> </b>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gerardo
Arturo Avenda&#237;o Guzm&#225;n</I>. Mr. Avenda&#237;o was born in 1955. He is an
independent director for purposes of Mexican law and has been a member of Simec&#146;s
Board of Directors and the Audit Committee since 2001. Mr. Avenda&#237;o is an
independent lawyer specializing in civil, mercantile and fiscal litigation. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jos&#233; Flores
Flores</I>. Mr. Flores was born in 1950. He is currently Simec&#146;s Chief Financial
Officer. From 2001 to 2004 he was Simec&#146;s Chief Corporate Financial Planning
Officer. From 1990 to 2001 he was Simec&#146;s Manager of Financial Analysis and Stock
Market Disclosure. Before that, Mr. Flores was the Auditor Manager of a food company
from 1988 to 1990, the Controller Manager of Grupo Situr, Holding Company of Hotels, a
subsidiary of Grupo Sidek from 1986 to 1988, and Auditor Manager of Simec from 1983 to
1986. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rodolfo
Garc&#237;a G&#243;mez de Parada. </I>Mr. Garc&#237;a was born in 1953. He has been a member
of Simec&#146;s Board of Directors since April 2, 2001 and is an independent director for
purposes of Mexican law. He has also been General Tax Adviser to the Company since 1978
and is a member of the board of directors of a group of self-service stores and
restaurants since 1990. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Luis
Garc&#237;a Lim&#243;n. </I>Mr. Garc&#237;a was born in 1944. He is currently Simec&#146;s Chief
Executive Officer. From 1982 to 1990 he was General Director of CSG, from 1978 to 1982 he
was Operation Director of CSG, from 1974 to 1978 he was General Manager of Moly Cop and
Pyesa, and from 1969-1974 he was Engineering Manager of CSG. In addition, from 1967 to
1969 Mr. Garc&#237;a was the Director of Electrical Installation of a construction
company. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Marcos
Maga&#237;a Rodarte. </I>Mr. Maga&#237;a was born in 1965. He is currently Simec&#146;s Marketing
and Sales Director. Before holding this position, Mr. Maga&#237;a was Domestic Sales
Manager of CSG from 1997 to 2001, Sales Manager for the western region of CSG from 1994
to 1996, Sales Manager of Met&#225;lica las Torres, a subsidiary of Simec from 1992 to
1994 and Salesman of CSG, from 1990 to 1992. Before working with Simec, Mr. Maga&#237;a
worked for a bank as Executive Promoter of Sales. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enrique
M&#250;jica Rodr&#237;guez. </I>Mr. M&#250;jica was born in 1966. He is the audit partner
in charge of BDO&#146;s Guadalajara office and is currently Simec&#146;s alternate statutory
examiner. Mr. M&#250;jica has served as auditor of companies such as Philips Lighting
de M&#233;xico, Cemex, Group Emerson, Tequila Cuervo and Hoteles Marriot. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Raul
Arturo P&#233;rez Trejo. </I>Mr. P&#233;rez was born in 1959. He has been a member of
Simec&#146;s Board of Directors and Audit Committee since April 2003, and is an
independent director for purposes of Mexican law. Mr. P&#233;rez has also served since
1992 as the Chief Financial Officer of a group that produces and sells structural steel
racks for warehousing and other industrial storage. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jos&#233; Luis
Rico Maciel. </I>Mr. Rico was born in 1926. He has been a member of Simec&#146;s Board of
Directors since April 2, 2001 and is an independent director for purposes of Mexican law.
He also serves as Corporate Legal </FONT> </P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>and Tax Director to the Company and
is a member of the board of directors of a group of self-service stores and restaurants
since 1957. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Humberto
  Vald&#233;s Mier</I>. Mr. Vald&#233;s was born in 1949. Mr. Vald&#233;s is a
  public accountant and is currently Simec&#146;s statutory examiner and is the
  partner in charge of BDO&#146;s Guadalajara office. He is currently member of
  several domestic boards of directors. Mr. Vald&#233;s has key experience with
  multinational companies, such as Grupo Sidek, Grupo Arancia, Productos de Trigo,
  Borg Warner de M&#233;xico, Grupo Almer&#237;a, Industrias Salver, and Grupo
  Holiday Inn Occidente. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Eduardo
Vigil Gonz&#225;lez. </I>Mr. Vigil was born in 1957. He is currently a member of Simec&#146;s
Board of Directors. Mr. Vigil has been a member of the Board of Directors since April
2, 2001. Since 1976, Mr. Vigil has been chief executive officer of a welded pipe
corporation. Mr. Vigil is a brother of Rufino Vigil Gonz&#225;lez and Ra&#250;l Vigil Gonz&#225;lez. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ra&#250;l
Vigil Gonz&#225;lez. </I>Mr. Vigil was born in 1961. He has been a member of the Board of
Directors since April 2, 2001. Since 1992 he has been chief executive officer of a
steel company. In addition, he has also been general manager of a steel distribution
company. Mr. Vigil is a brother of Rufino Vigil Gonz&#225;lez and Eduardo Vigil Gonz&#225;lez. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rufino
Vigil Gonz&#225;lez. </I>Mr. Vigil was born in 1948. He is currently the Chairman of
Simec&#146;s Board of Directors. Mr. Vigil has been a member of the Board of Directors
since April 2, 2001. Since 1973, Mr. Vigil has been chief executive officer of a
steel related products corporation. From 1988 to 1993, Mr. Vigil was a member of the
board of directors of a Mexican investment bank and from 1971 to 1973 he was a
construction corporation manager. Mr. Vigil is a brother of Eduardo Vigil Gonz&#225;lez
and Ra&#250;l Vigil Gonz&#225;lez. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Alejandro
Villa Flores. </I>Mr. Villa was born in 1964. He is currently Simec&#146;s Chief Operating
Officer. From 1998 to 2000 he was Operation Manager of CSG, from 1996 to 1998 he
was Quality Assurance Manager of CSG and from 1993 to 1996 he was Quality Assurance
Manager of CSC. Prior to working with Simec, Mr. Villa worked for a steel company as a
quality assurance chief from 1989 to 1990 and process engineer from 1987 to 1989. </FONT> </P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Compensation </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
remuneration paid by the Company during 2004 to all Directors, Alternate Directors, the
Statutory Examiner, the Alternate Statutory Examiner and Executive Officers, including
the Secretary and the Assistant Secretary of the Board of Directors, was approximately
Ps. 15.1 million. In 2004, no fees were paid to Directors, Alternate Directors, the
Statutory Examiner, the Alternate Statutory Examiner, the Secretary and the Assistant
Secretary for attendance at each meeting of the Board. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Board Practices </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
bylaws provide that the Board of Directors will consist of a maximum of nine but not less
than six members. Directors are elected to one-year terms and remain in their position
until newly elected members replace them. All of the current Directors were elected at
the annual general shareholders meeting on April 29, 2005 and will serve in such position
until the next annual general shareholders meeting. According to Mexican law the
participation of foreigners on the board of directors of a Mexican company may not exceed
the percentage of participation of foreign investment in the capital stock of such
company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority
holders of series L common shares, if any, representing at least 10% of Simec&#146;s capital
stock, have the right to appoint a minority Director and its alternate under the Ley del
Mercado de Valores (the &#147;Mexican Securities Market Law&#148;). However, if no minority
Director is appointed, the holders of Series L Common Shares, if any, would have the
right to appoint two Directors and two alternates. Directors are entitled to
indemnification for certain liabilities under the Mexican Securities Market Law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
Directors are classified as: </FONT></P>




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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE="2"><I>Independent
Directors. </I>At least 25% of the Company&#146;s Directors must be independent, as
defined under Simec&#146;s by-laws. Independent Directors are those directors
who are elected solely upon the basis of merit and professional experience
and who are not included in any of the following categories: </FONT></TD></TR></TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
a)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Executives
and employees of the Company during the year in                   which they are to serve
as a Director or in the year                   immediately prior thereto;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
b)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Controlling
shareholders of the Company; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
c)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consultants
or advisors of the Company, or their employees,                   whose revenues derived
from the Company represented more than                   10% of their total revenues. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
d)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Directors,
executives, management or employees of Simec&#146;s                   customers and suppliers
whose revenues derived from Simec                   constitute more than 10% of their
aggregate purchases or                   sales, respectively, with the Simec group
companies. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
e)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Directors,
executives, management and employees of Simec&#146;s                   debtors or creditors if
the aggregate amount owed to or from                   Simec represents more than 15% of
the total assets as shown on                   the financial statements of such debtor or
creditor. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
f)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Directors
and employees of any institutions which receive                   donations from Simec if
such donation represents more than 15%                   of the total donations received
by such institution. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
g)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Executives
and management of any company the directors of                   which include persons
who are also executives and managers of                   Simec. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
h)  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Relatives
of the persons included in (a) through (g) above. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE="2"><I>Controlling
Directors. </I>Controlling Directors are those who are material shareholders of
the Company. The combined number of controlling and independent directors
must represent at least 40% of the total number of Directors; and </FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE="2"><I>Related
Directors. </I>Related Directors are those who are neither independent nor material
shareholders. </FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
board of directors adopted a code of ethics in December 2002. For more information
regarding our code of ethics, see Item 16B of this Annual Report. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Audit
Committee</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
by-laws provide that an audit committee will assist the Company&#146;s Board of Directors on
certain matters determined by the general shareholders&#146; meeting. The by-laws also provide
that the audit committee will have the number of members determined by the general
shareholders&#146; meeting, which may not be less than three, all of whom shall be elected
from among the Company&#146;s independent directors, as defined above. The current audit
committee members are Raul Arturo P&#233;rez Trejo, Gerardo Arturo Avenda&#237;o Guzm&#225;n
and Rodolfo Garc&#237;a G&#243;mez de Parada. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
more information about our Audit Committee members, see Items 16A in this Annual Report. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Statutory
Examiner</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Mexican law, the statutory examiners report to the shareholders at the annual ordinary
general meeting regarding the accuracy of the financial information presented to
shareholders by the Board of Directors and generally review the affairs of the Company.
The statutory examiners are also authorized to: </FONT></P>

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    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>call
ordinary general meetings or extraordinary general meetings of shareholders;</FONT></TD></TR></TABLE>




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  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>place
items on the agenda for general meetings of shareholders and meetings of the Board of
Directors; and</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>attend
general meetings of shareholders and meetings of the Board of Directors (without the
right to vote).</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
accordance with Simec&#146;s by-laws, as currently in effect, the number of statutory
examiners is fixed at one proprietary and one alternate examiner, which shall be
appointed by the vote of Simec shares representing a majority of shareholders present at
a general ordinary shareholders&#146; meeting. Once elected, statutory examiners remain in
their position until newly elected statutory examiners replace them. The statutory
examiner must be a different person than the person who executes the auditors report on
the Company&#146;s financial statements. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Employees </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
December 31, 2004, Simec had 2,018 employees (of whom 781 were employed at the Apizaco
and Cholula facilities), compared to 1,288 employees at December 31, 2003 and 1,333
employees at December 31, 2002. Approximately 59% of the labor force of all subsidiaries
of Simec, direct or indirect, are unionized. Wages and benefits for non-unionized
employees are fixed by a compensation system that incorporates both performance and
market rates. Salaries and benefits of Simec&#146;s operating subsidiaries&#146; unionized
employees are fixed annually by union contracts. Simec&#146;s management believes that its
relations with employees are satisfactory within all of its divisions, and there has been
no strike or work stoppage since the commencement of its operations in late 1969. Simec
considers employee training a priority and, as a result, has implemented programs in the
professional and technical areas of each division. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Share Ownership </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of April 29, 2005, based on information available to Simec, it believes the officers and
directors of Simec own no shares of series B common stock. Accordingly, on an individual
basis, and as a group, our directors and executive officers beneficially owned less than
one percent of any class of our shares. None of the members of our board of directors or
our executive officers holds any options to purchase common shares or preferred shares. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 7. &nbsp;Major
  Shareholders and Related Party Transactions </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Major Shareholders </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December 31, 2004, Simec had 133,542,984 shares of series B common stock outstanding. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 29, 2001, Sidek consummated the sale of its entire approximate 62% controlling
interest in Simec to Industrias CH, In addition, Industrias CH acquired additional common
shares from certain of Simec&#146;s bank creditors. In August 2001, Industrias CH converted
approximately $69.5 million of loans to Simec plus accrued interest thereon into common
shares of Simec at a conversion price equivalent to U.S. $1.60 per ADS. In June 2002,
Industrias CH converted approximately $24.6 million of loans to Simec into common shares
of Simec at a conversion price equivalent to U.S. $1.51 per ADS. In March 2003,
Industrias CH converted approximately $16.1 million of loans to Simec plus accrued
interest thereon into common shares of Simec at a conversion price equivalent to U.S.
$1.35 per ADS. In November 2003, Industrias CH converted into common shares of Simec the
$14.5 million capital contribution to Simec made in May 2003 at a conversion price
equivalent to U.S. $1.41 (Ps. 14.588) per ADS. As a result, Industrias CH currently holds
an approximate 85.4% interest in Grupo Simec. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
current members of the Board of Directors of the Company were nominated and elected to
such position at the 2005 General Ordinary Shareholders&#146; Meeting as proposed by
Industrias CH. It is expected that Industrias CH will be in a position to continue to
elect the majority of the Directors of the Company and to exercise substantial influence
and control over the business and policies of the Company and to influence the Company to
enter into transactions with Industrias CH and affiliated companies. However, the by-laws
of the Company provide that at least two of its Directors must be independent of the
Company and its affiliates and the Board of Directors of the Company has passed a
resolution requiring the approval of two independent Directors for certain transactions
between the Company and its affiliates which are not subsidiaries of the Company.
Furthermore, under the laws of  </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mexico, any shareholder or group of
shareholders is entitled to elect one member of the Board of Directors for each full 10%
of the capital stock of the Company that it owns. In addition, under the laws of Mexico,
a majority shareholder has no fiduciary duty to minority shareholders but may not act
contrary to the interests of the corporation for the majority shareholder&#146;s benefit. Such
a majority shareholder is required to abstain from voting on any matter in which it
directly or indirectly has a conflict of interest and can be liable for actual and
consequential damages if such matter passes as a result of its vote in favor thereof. In
addition, the directors of a Mexican corporation owe a duty to act in a manner which, in
their independent judgment, is in the best interests of the corporation and all its
shareholders. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Related Party
Transactions </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
1992, the Company sold Ferrometal de Baja California, S.A. de C.V. (&#147;Ferrometal&#148;), which
operates steel distribution centers in northwestern Mexico, to two individuals, Sergio
Luis Gonz&#225;lez Melo (a former director of the Company) and an executive officer of
Ferrometal. The purchase price of $2.9 million was determined based upon arms-length
negotiations. The amounts payable from such individuals were initially denominated in
dollars bearing interest at 15% per annum. In 1995, Simec entered into an agreement with
the purchasers pursuant to which the interest accrued as of December 31, 1994 was
capitalized, the debt was converted into pesos with no interest accruing from January
1995 and the entire principal amount was to be paid no later than December 31, 1996. The
executive officer of Ferrometal timely paid his obligations. Mr. Gonz&#225;lez owed
approximately Ps. 10 million in historic pesos at December 31, 2002. Simec obtained
favorable judgments against him in February 2002, June 2002 and February 2003. This
proceeding is not completed, however, and Simec is not yet entitled to execute on its
judgment. The Company has established a reserve equal to 100% of the amount owed by Mr.
Gonz&#225;lez. In January 2004 Simec and Mr. Gonz&#225;lez&#146; successors entered into an
agreement to pay $1.3 million to Simec. In 2004 the successors of Mr. Gonz&#225;lez paid
Simec a total of $1.3 million. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
has borrowed various amounts from Industrias CH, primarily to finance debt redemptions
and bank loan amortization and interest payments, a substantial portion of which
borrowings were converted to equity, and has also received various capital contributions
from Industrias CH. See Item 5 and &#147;&#151;Major Shareholders&#148;. Simec from time to time
sells steel products, primarily billet, to Industrias CH and its affiliates. In 2003,
these sales totaled Ps. 182 million and in 2004 these sales totaled Ps. 125 million. In
addition, in 2003 Simec purchased Ps. 13 million of steel products from Industrias CH and
its affiliates and in 2004 Simec purchased Ps. 11 million of steel products from
Industrias CH and its affiliates. Prices were negotiated on an arms-length basis. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
1993, the Company&#146;s Board of Directors adopted a resolution requiring that any extension
or provision of credit or financing or the like to or for the benefit of any affiliate of
the Company be on an arms-length basis on commercially reasonable terms and be approved
by two of the Company&#146;s independent Directors and may not be amended, modified or
rescinded without the approval of two independent Directors. This resolution may be
enforced by any holder of the Company&#146;s Common Stock. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 8. &nbsp;Financial
  Information </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Consolidated
Statements and Other Financial Information </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
Item 18 - &#147;Financial Statements&#148; and &#147;Index to Financial Statements.&#148; </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dividends </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
the consummation of the initial public offering of series B common stock in 1993, the
Company has not declared any dividends. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Significant Changes </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
Item 5. </FONT></P>




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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Legal Proceedings </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are currently no material legal or administrative proceedings pending in Mexico against
Simec or any of its subsidiaries which are expected to have a material adverse effect on
Simec&#146;s financial condition or results of operations, or are expected to result in
material capital expenditures or materially adversely affect Simec&#146;s competitive position. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
subsidiaries of Simec that conduct operations in the United States are subject to U.S.
federal, state and local regulation, particularly environmental regulations. In 1989
Pacific Steel, Inc. (&#147;Pacific Steel&#148;), a subsidiary based in San Diego, California, was
required by the California Regional Water Control Board, San Diego Region (the &#147;Regional
Board&#148;) to sample the soil beneath the former storage site of the automobile shredder
waste generated by Pacific Steel&#146;s prior scrap processing operations and submit the
results to the Regional Board, which it did. In 1990, in response to another directive
issued by the Regional Board, Pacific Steel submitted a range of remedial alternatives to
clean up the contaminated soil. The Regional Board has not responded to Pacific Steel&#146;s
clean up alternatives. Based upon the advice of environmental engineering consultants
retained by Simec, consultation with other parties and the fact that Pacific Steel has
discontinued scrap processing operations, Simec believes its liability will be between
$0.8 million and $1.7 million with respect to the remediation of this site based upon
present volume assumptions, exclusive of any contribution from third parties or insurance
coverage with respect to all or a portion of its remedial costs to which it may be
entitled. Simec maintains a reserve of approximately $1.7 million (Ps. 19.1 million) with
respect to this matter. There can be no assurance that the Regional Board or any other
interested third party will not object to the recommended remediation alternative.
Pacific Steel has discontinued processing scrap in San Diego, but continues to collect
raw scrap in San Diego for transportation to Mexicali for processing. See Notes 1(d) and
15 to the Consolidated Financial Statements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September 2002, the California Department of Toxic Substances Control (the &#147;California
TSC&#148;) issued an Imminent and Substantial Endangerment Determination and Schedule for
Compliance alleging that certain soil management and metal recovery operations at one of
Pacific Steel&#146;s sites may cause imminent and substantial endangerment to human health and
the environment and in 2004 issued a Complaint Investigation Report. In 2004, Pacific
Steel and the California TSC entered into a Final Judgment and Injunction Pursuant to
Stipulation requiring Pacific Steel to make an aggregate payment of $235,000 and to
undertake certain corrective action. Pacific Steel has to date paid half of the amounts
agreed to, as required, retained consultants and work has commenced on the corrective
action. Additionally, the Community Development Commission of National City, California
(the &#147;CDC&#148;) has announced that it intends to purchase, at market value less the cost of
remediation and costs incurred, 3.86 acres of the site for redevelopment. Consequently,
Pacific Steel recorded its land at realizable value based on an independent appraisal,
resulting in a Ps. 21.7 million decrease in the value of the land and a charge to income
in the same amount. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are currently no other material legal or administrative proceedings pending against Simec
or any of its subsidiaries with respect to any environmental matter in Mexico, and
management does not believe that continued compliance with the Ecological Law or existing
Mexican state or municipal environmental laws will have a material adverse effect on
Simec&#146;s financial condition or results of operations, result in material capital
expenditures or have a material adverse effect on Simec&#146;s competitive position. Simec is
a party to certain legal proceedings involving local taxing authorities. See Note 15 to
the Consolidated Financial Statements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the normal course of business operations, Simec and its subsidiaries have been named as
defendants in a variety of legal actions. Simec believes that such actions or proceedings
are covered by insurance or are not material to the financial condition, business and
affairs of Simec and its subsidiaries, taken as a whole. </FONT></P>



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<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -33-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 30; page: 30" --> <!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 9. &nbsp;Offer
  and Listing Details </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Share Price Information </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth for the periods indicated the high and low sales prices
expressed in historical pesos of the series B common stock on the Mexican Stock Exchange,
and the high and low sales price expressed in dollars of the ADSs on the American Stock
Exchange. </FONT></P>


<div align="center">
  <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=232>&nbsp;</TD>
      <TD ALIGN=center colspan="3"><b><font face="Times New Roman, Times, Serif" size=2>Mexican
        <br>
        Stock <br>
        Exchange </font></b>
        <hr size="1" noshade width="75">
      </TD>
      <TD ALIGN=center WIDTH=45><b></b></TD>
      <TD ALIGN=center colspan="3"><b><font face="Times New Roman, Times, Serif" size=2>American
        <br>
        Stock <br>
        Exchange </font></b>
        <hr size="1" noshade width="75">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=232>&nbsp;</TD>
      <TD ALIGN=RIGHT WIDTH=70><b><font size=2>High</font></b>
        <hr size="1" noshade align="right" width="35">
      </TD>
      <TD ALIGN=LEFT WIDTH=10><b></b></TD>
      <TD ALIGN=RIGHT WIDTH=88><b><font size=2>Low</font></b>
        <hr size="1" noshade align="right" width="35">
      </TD>
      <TD ALIGN=LEFT WIDTH=45><b></b></TD>
      <TD ALIGN=RIGHT WIDTH=61><b><font size=2>High</font></b>
        <hr size="1" noshade align="right" width="35">
      </TD>
      <TD ALIGN=LEFT WIDTH=10><b></b></TD>
      <TD ALIGN=RIGHT WIDTH=84><b><font size=2>Low</font></b>
        <hr size="1" noshade align="right" width="35">
      </TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT WIDTH=232><b><FONT SIZE=2>2000</FONT></b></TD>
      <TD ALIGN=RIGHT WIDTH=70><FONT SIZE=2>2.50</FONT></TD>
      <TD ALIGN=LEFT WIDTH=10><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT WIDTH=88><FONT SIZE=2>1.15</FONT></TD>
      <TD ALIGN=LEFT WIDTH=45><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT WIDTH=61><FONT SIZE=2>5.00</FONT></TD>
      <TD ALIGN=LEFT WIDTH=10><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT WIDTH=84><FONT SIZE=2>1.88</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><b><FONT SIZE=2>2001</FONT></b></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>1.25</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>0.52</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>2.50</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>0.81</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><b><FONT SIZE=2>2002</FONT></b></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>0.89</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>0.50</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>1.75</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>0.80</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><b><FONT SIZE=2>2003</FONT></b></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>37.50</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>10.20</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>5.34</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>0.85</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><b><FONT SIZE=2>2004</FONT></b></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>95.99</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>22.40</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>8.75</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>2.10</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232">&nbsp;</TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><font size=2><b>2003</b></font></TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>11.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>10.20</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>1.60</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>0.85</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>12.50</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>12.40</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>1.40</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>1.25</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>15.39</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>10.30</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>1.60</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>1.01</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>37.50</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>14.00</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>5.34</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>1.10</FONT></TD>
    </TR>
    <TR>
      <TD width="232"></TD>
      <TD COLSPAN=2></TD>
      <TD COLSPAN=2></TD>
      <TD COLSPAN=2></TD>
      <TD width="84"></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232">&nbsp;</TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><font size=2><b>2004</b></font></TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>39.99</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>22.40</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>4.60</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>2.10</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>40.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>28.50</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>3.94</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>2.20</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>45.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>33.50</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>4.06</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>2.76</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth
        Quarter</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>95.99</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>40.00</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>8.75</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>3.36</FONT></TD>
    </TR>
    <TR>
      <TD width="232"></TD>
      <TD COLSPAN=2></TD>
      <TD COLSPAN=2></TD>
      <TD COLSPAN=2></TD>
      <TD width="84"></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232">&nbsp;</TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><font size=2><b>2004</b></font></TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>95.99</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>56.90</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>8.75</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>4.44</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232">&nbsp;</TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><font size=2><b>2005</b></font></TD>
      <TD ALIGN=RIGHT width="70">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="88">&nbsp;</TD>
      <TD ALIGN=LEFT width="45">&nbsp;</TD>
      <TD ALIGN=RIGHT width="61">&nbsp;</TD>
      <TD ALIGN=LEFT width="10">&nbsp;</TD>
      <TD ALIGN=RIGHT width="84">&nbsp;</TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;January</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>90.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>58.00</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>8.70</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>5.11</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;February</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>95.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>73.00</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>8.68</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>6.35</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>85.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>49.99</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>7.54</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>4.24</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;April</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>54.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>43.20</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>4.80</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>3.70</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>48.00</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>40.75</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>4.34</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>3.63</FONT></TD>
    </TR>
    <TR VALIGN=Bottom>
      <TD ALIGN=LEFT width="232"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;June</FONT></TD>
      <TD ALIGN=RIGHT width="70"><FONT SIZE=2>47.05</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="88"><FONT SIZE=2>41.00</FONT></TD>
      <TD ALIGN=LEFT width="45"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="61"><FONT SIZE=2>4.37</FONT></TD>
      <TD ALIGN=LEFT width="10"><FONT SIZE=2>&nbsp;</FONT></TD>
      <TD ALIGN=RIGHT width="84"><FONT SIZE=2>3.69</FONT></TD>
    </TR>
    <TR>
      <TD width="232"></TD>
      <TD COLSPAN=2></TD>
      <TD COLSPAN=2></TD>
      <TD COLSPAN=2></TD>
      <TD width="84"></TD>
    </TR>
  </TABLE>
  <br>
  <!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" --> </div>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On February 20, 2003 the Company
effected a 1 for 20 reverse stock split. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Markets </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
series B common stock is listed on the Mexican Stock Exchange and ADSs, each representing
1 share of series B common stock, are listed on the American Stock Exchange. The ADSs are
evidenced by American Depositary Receipts (&#147;ADRs&#148;) issued by the Bank of New York, as
Depositary under a Deposit Agreement, dated as of July 8, 1993, as amended, among Simec,
the Depositary and the holders from time to time of ADRs. </FONT></P>




<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
- -34-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 31; page: 31" --> <!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 10. &nbsp;Additional
  Information </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Memorandum and
Articles of Association </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set
forth below is a brief summary of certain significant provisions of Simec&#146;s by-laws and
Mexican law. This description does not purport to be complete and is qualified by
reference to Simec&#146;s by-laws, which have been filed as an exhibit to this annual report.
For a description of the provisions of Simec&#146;s by-laws relating to the Board of
Directors, audit committee and statutory auditors, see Item 6. &#147;Directors, Senior
Management and Employees&#148;. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Organization,
Register and Purpose</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
is a <I>sociedad an&#243;nima de capital variable </I>organized in Mexico under the Mexican
Companies Law (<I>Ley General de Sociedades Mercantiles</I>), and is registered with the Public
Registry of Commerce of Guadalajara, Jalisco. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
main purpose, as described in section 1 of its by-laws (<I>estatutos</I>), is to promote,
organize and manage any type of commercial or non-profit corporations. Simec is domiciled
in the city of Guadalajara, Jalisco and its principal administrative office is located at
Calzada L&#225;zaro C&#225;rdenas 601, Guadalajara, Jalisco, Mexico 44440. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Share
Capital</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
capital stock is divided into series B and series L common stock. Prior to June 2002, the
Company&#146;s capital stock also included series A shares. On June 5, 2002, all shares of
series A common stock were converted to shares of series B common stock on a one-for-one
basis. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series
L common stock may never represent more than 25% of Simec&#146;s outstanding capital stock. At
December 31, 2004, series B common stock represented 100% of Simec&#146;s capital stock, and
no series L common stock has been issued. At December 31, 2004, the Company&#146;s total share
capital was Ps. 3,277,430 thousand, represented by a fixed portion of Ps. 1,039,124
thousand, and a variable portion of Ps. 2,238,216 thousand. On February 20, 2003, the
Company effected a 1 for 20 reverse stock split. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
variable portion of the capital stock may never exceed ten times the amount represented
by the fixed portion. The fixed portion of Simec&#146;s capital stock may be increased or
decreased by a resolution passed at a general extraordinary shareholders&#146; meeting. The
variable portion of the Company&#146;s capital stock may be increased or decreased by a
resolution passed at a general ordinary shareholders&#146; meeting. Any increases or decreases
in the Company&#146;s capital stock must be recorded in the Company&#146;s registry of capital
variations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Voting
Rights</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
series B common share entitles its holder to one vote at any meeting of Simec&#146;s
shareholders. Each series L common share entitles its holder to one vote at any meeting
at which holders of series L common shares are entitled to vote. Holders of series L
common shares are entitled to vote only to elect one member of Simec&#146;s board of directors
and the corresponding alternate director and on the following matters: </FONT></P>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>transformation
of Simec from one type of company to another;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>extension
of Simec&#146;s corporate existence;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>any
merger or corporate split in which Simec is not the surviving entity;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>dissolution
or liquidation of Simec;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>cancellation
of the registration of Simec&#146;s shares with the National Registry of Securities and
Intermediaries; and</FONT></TD></TR></TABLE>




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- -35-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>






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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>any
action that would prejudice the rights of holders of series L               common shares
and not prejudice the other classes of shares               similarly. A resolution on
any such action requires the               affirmative vote of both a majority of all
outstanding series L               shares and a majority of the series B common shares
voting               together.</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders
may vote by proxy duly appointed in writing. Under Mexican law, holders of shares of any
series are also entitled to vote as a class on any action that would prejudice the rights
of holders of shares of such series but not rights of holders of shares of other series,
and a holder of shares of such series would be entitled to judicial relief against any
such action taken without such a vote. The determination of whether an action requires a
class vote on these grounds would initially be made by Simec&#146;s board of directors or
other party calling for shareholder action. A negative determination would be subject to
judicial challenge by an affected shareholder, and the necessity for a class vote would
ultimately be determined by a court. There are no other procedures for determining
whether a proposed shareholder action requires a class vote, and Mexican law does not
provide extensive guidance on the criteria to be applied in making such a determination. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
holders of common stock of any series have equal pecuniary rights and obligations,
including appraisal rights. See &#147;&#151;Other Provisions.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Shareholders&#146;
Meetings</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General
shareholders&#146; meetings can be ordinary or extraordinary. Shareholders&#146; meetings may be
called by: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Simec&#146;s Board of Directors or the
statutory auditors; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>shareholders representing at least
10% of the then outstanding shares of Simec&#146;s capital stock by requesting the Company&#146;s
Board of Directors or the statutory auditors to call a meeting; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any shareholder if no meeting has
been held for two consecutive years or when the matters referred to in Article 181 of the
Mexican corporation law have not been dealt with; or </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a Mexican court in the event that
Simec&#146;s board of directors or the statutory auditors do not comply with the valid request
of the shareholders indicated above. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
of shareholders&#146; meetings must be published in the official gazette for the state of
Jalisco, Mexico or any major newspaper located in the City of Guadalajara, Jalisco, M&#233;xico.
The notice must be published at least 15 days prior to the date of any shareholders&#146;
meeting, unless the meeting is qualified as urgent by Simec&#146;s Board of Directors, in
which case the notice may be published at least five days in advance. Meetings called to
approve the Company&#146;s annual report or financial statements may not be qualified as
urgent. Publication of a notice is not required if shareholders representing 100% of
Simec&#146;s capital stock attend a meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
annual general ordinary shareholders&#146; meeting must be held during the first four months
after the end of each of Simec&#146;s fiscal years to consider: </FONT></P>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
annual report of Simec&#146;s Board of Directors, including the Company&#146;s financial statements
for the preceding fiscal year;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
annual report of the audit committee.</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
annual report of the statutory examiners.</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
election of Simec&#146;s Directors, members of the audit committee and statutory examiners and
set their compensation; and</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>determine
the allocation of Simec&#146;s profits, if any, of the preceding year, including the payment
of dividends.</FONT></TD></TR></TABLE>


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- -36-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, general ordinary shareholders&#146; meetings must approve the following matters: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the sale of shares of one of Simec&#146;s
subsidiaries, if the sale value exceeds, in the aggregate, 20% of the Company&#146;s
stockholders&#146; equity as set forth in its most recent balance sheet; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the purchase of shares of a company,
if the purchase value exceeds, in the aggregate, 20% of Simec&#146;s stockholders equity as
set forth in its most recent balance sheet; and </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the exercise of withdrawal rights
regarding stock of a subsidiary, if the exercise value, in the aggregate, exceeds 20% of
Simec&#146;s stockholders&#146; equity as set forth in its most recent balance sheet. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the annual general shareholders&#146; meeting, any shareholder or group of shareholders
representing 10% or more of Simec&#146;s outstanding voting stock has the right to appoint one
regular and one alternate director in addition to the directors elected by the majority.
The alternate director appointed by the minority holders may only substitute for the
director appointed by that minority. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extraordinary
shareholders&#146; meetings may be called at any time to deal with any of the matters
specified by Article 182 of the Mexican corporation law, which include, among other
things: </FONT></P>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>extending
Simec&#146;s corporate existence;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>Simec&#146;s
early dissolution;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>increasing
or reducing Simec&#146;s fixed capital stock;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>changing
Simec&#146;s corporate purpose;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>changing
Simec&#146;s country of incorporation;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>changing
Simec&#146;s capital structure;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>a
proposed merger;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>issuing
preferred shares;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>any
redemption by the Company of its own shares and the issuance of preferred shares;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>any
other amendment to Simec&#146;s articles of association (including amendments to the rights of
Simec&#146;s shareholders); and</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>any
other matter for which a special quorum is required by law or by Simec&#146;s articles of
association.</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing matters may only be dealt with at extraordinary shareholders&#146; meetings. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to vote at a meeting of shareholders, shareholders must deposit prior to that
meeting the certificates representing their shares with the secretary of Simec&#146;s Board of
Directors, a Mexican credit institution or S.D. Indeval, S.A. de C.V. (&#147;Indeval&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
quorum for an ordinary general meeting of shareholders is 50%, and action may be taken by
a majority of the series B shares present. If a quorum is not available, a second meeting
may be called at which action may be taken by a majority of series B shares present,
regardless of the number of such shares. Special meetings of holders of series L shares
are governed by the same rules applicable to extraordinary general meetings of holders of
series B shares. The quorum for an extraordinary general meeting at which holders of
series L shares may not vote is 75% of the series B shares, and the quorum for an
extraordinary general meeting at which holders of L shares are entitled to vote is 75% of
the outstanding capital stock. If a quorum is not available in either case, a second
meeting may be  </FONT></P>






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- -37-</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>








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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>called and action may be taken,
provided a majority of the shares entitled to vote is present. Whether on first or second
call, actions at an extraordinary general meeting may generally be taken by a majority
vote of the series B shares outstanding and, on matters which holders of series L shares
are entitled to vote, a majority vote of all the capital stock. Certain actions at an
extraordinary general meeting require the vote of at least 75% of the series B shares
and, on matters which holders of series L shares are entitled to vote, a majority of the
series L shares. These matters include amendments to certain by-law provisions relating
to: </FONT></P>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>quorum
and voting requirements for extraordinary general meetings of shareholders;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>calling
requirements for general meetings of shareholders;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
composition of the Simec&#146;s Board of Directors;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
transformation of Simec from one type of company to another;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>any
merger or corporate split in which Simec is not the surviving entity;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
capital  structure of the Company,  excluding  capital  increases and  decreases in the
variable  portion of the Company&#146;s               capital stock;</FONT></TD></TR></TABLE>

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<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>the
rights of series L shares; and</FONT></TD></TR></TABLE>

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  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE="2">the
cancellation of the registration of Simec&#146;s shares with the <I>Registro Nacional de Valores
e Intermediarios</I>. </FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Mexican law, holders of at least 33% of Simec&#146;s outstanding capital stock entitled to
vote on a particular matter may seek to have any shareholder action with respect to that
matter suspended, by filing a complaint with a court of law within 15 days after the
close of the meeting at which that action was taken and showing that the challenged
action violates Mexican law or Simec&#146;s articles of association. Relief under these
provisions is only available to holders who were entitled to vote on, or whose rights as
shareholders were adversely affected by, the challenged shareholder action and whose
shares were not represented when the action was taken or, if represented, voted against
it. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Mexican law, an action for civil liabilities against directors may be initiated by a
resolution of the general ordinary shareholders&#146; meeting. In the event shareholders
decide to bring an action of this type, the persons against whom that action is brought
will immediately cease to be directors. Additionally, series B shareholders representing
not less than 15% of the outstanding shares may directly exercise that action against the
directors; provided that: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>those shareholders shall not have
voted against exercising such action at the relevant shareholders&#146; meeting; and </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the claim covers all of the damage
alleged to have been caused to Simec and not merely the damage suffered by the plaintiffs. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
recovery of damage with respect to these actions will be for the benefit of Simec and not
that of the shareholders bringing the action. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Preemptive
Rights</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of an increase in the capital stock of the Company, its shareholders will have
preemptive rights to subscribe a sufficient number of new shares to maintain the
shareholder&#146;s existing proportionate holdings, except in the case of shares issued (i) in
connection with mergers, (ii) for the conversion of convertible debentures or (iii) for
the resale of shares maintained in the Company&#146;s treasury as a result of repurchase of
shares conducted on the Mexican Stock Exchange. In accordance with the Mexican Securities
Market Law, shareholders who do not attend  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the general extraordinary
shareholders meeting at which a resolution is passed waiving preemptive rights in
connection with the issuance of new shares for placement in a public offering are bound
by such waiver. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Mexican Law, preemptive rights must be exercised within 15 days following the publication
of notice of the capital increase in the <I>Peri&#243;dico Oficial del Estado de Jalisco
</I>(the &#147;Official Gazette&#148;). Preemptive rights cannot be waived in advance and cannot be
traded separately from the corresponding shares that give rise to such right. Holders of
ADSs may exercise preemptive rights in limited circumstances. See Item 12 &#147;Description of
Securities Other than Equity Securities&#151;Description of American Depositary Receipts&#151;Dividends,
Other Distributions and Rights.&#148; If a holder of series B common stock or ADSs were unable
or unwilling to exercise its preemptive rights in connection with such a capital
increase, such holder&#146;s proportionate share of dividends and other distributions and
voting rights would decline. In addition, depending on the series of common stock
increased and the pattern in which preemptive rights were exercised, such a capital
increase might increase or reduce the portion of the Company&#146;s capital stock represented
by series B common stock and ADSs or increase or reduce the proportionate voting rights
of such holder. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Redemption</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
holder of shares is entitled to have those shares redeemed at that holder&#146;s option, but
solely to the extent that redemption does not reduce Simec&#146;s aggregate capital below the
amount of the minimum fixed capital, for a price equal to the lower of: </FONT></P>

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  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>95%
of the average  market  value of those  shares on the Mexican  Stock  Exchange  obtained
 for a period of 30 trading  days               preceding the date on which the exercise
of the redemption option is effective;</FONT></TD></TR></TABLE>

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  <TR>
    <TD WIDTH=5%></TD>
    <TD WIDTH=2% VALIGN=top><FONT SIZE=3>&#149;</FONT></TD>
    <TD WIDTH=3%></TD>
    <TD WIDTH=90%><FONT SIZE=2>and
the book value of those shares at the end of the fiscal year               that includes
the date that shareholder exercises its option to               have its shares redeemed
as set forth in Simec&#146;s annual financial               statements approved at the
ordinary meeting of the shareholders.</FONT></TD></TR></TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a shareholder exercises its redemption option during the first three quarters of a fiscal
year, that exercise is effective at the end of that fiscal year, but if a shareholder
exercises its redemption option during the fourth quarter, that exercise is effective at
the end of the next succeeding fiscal year. The redemption price is payable as of the day
following the annual ordinary meeting of shareholders at which the relevant annual
financial statements were approved. In the event Simec receives redemption notices
simultaneously which, in the aggregate, would reduce Simec&#146;s capital to below the amount
of the minimum fixed capital, then those redemptions will be effected on a pro rata basis. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Purchase
of Common Stock by the Company</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According
to the bylaws, Simec may repurchase its shares on the Mexican Stock Exchange at any time
at the then prevailing market price. Any such repurchase must be approved by the Board of
Directors, and the amount of shares to be repurchased must be approved by the general
ordinary shareholders meeting. In the event of any such repurchase, Simec&#146;s capital stock
will be reduced automatically in an amount equal to the assumed par value of each
repurchased share (determined by dividing the Company&#146;s outstanding capital stock by the
number of shares outstanding immediately prior to such repurchase). If the purchase price
of such shares exceeds the assumed par value, the difference will be charged against
amounts allocated from net earnings to a special reserve created for the repurchase of
shares. Repurchased shares will be held as treasury stock, pending future sales of such
shares on the Mexican Stock Exchange or cancellation. Simec&#146;s capital stock is
automatically increased upon the resale of such shares in an amount equal to their
assumed par value; any excess amount is allocated to the special reserve referred to
above. The economic and voting rights corresponding to repurchased shares may not be
exercised during the period in which Simec owns such shares, and such shares are not
deemed to be outstanding for purposes of calculating any quorum or vote at any
shareholders&#146; meeting during such period. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
the repurchase is conducted through a tender offer, Directors, executive officers,
Statutory Examiners and the Secretary of the Board of Directors, and holders of 10% or
more of the outstanding Common Stock may not sell Common Stock to, or purchase
repurchased Common Stock from the Company. Regulations  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>under the Mexican Securities Market
Law require that, if the Company decides to repurchase Common Stock representing 3% or
more of its share capital, such repurchase must be conducted by means of a public tender
offer. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Companies
or other entities controlled by Simec may not purchase shares of Simec&#146;s capital stock or
of the capital stock of companies or entities which are Simec&#146;s shareholders. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Registration
and Transfer</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec&#146;s
common stock is evidenced by share certificates in registered form with registered
dividend coupons attached. Simec&#146;s shareholders may hold their shares in the form of
physical certificates or through institutions that have certificates deposited with
Indeval. Accounts may be maintained at Indeval by brokers, banks and other entities
approved by the Mexican securities authority. The Company maintains a stock registry,
and, in accordance with Mexican law, only those holders listed in the stock registry and
those holding certificates issued by Indeval indicating ownership are recognized as Simec
shareholders. ADR holders, as such, will not be holders of record of the series B common
stock. For a discussion of the availability of registered shares to ADR holders, see Item
12 &#147;Description of Securities Other than Equity Securities&#151;Description of American
Depositary Receipts&#151;Deposits and Withdrawals of Shares of Series B Common Stock.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dividends</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the annual general ordinary shareholders&#146; meeting, the board of directors submits Simec&#146;s
financial statements for the previous fiscal year, together with a report on them by the
Company&#146;s board of directors, to the holders of series B common stock for approval. Under
Simec&#146;s by-laws and Mexican law, Simec&#146;s annual net income, based upon the Company&#146;s
audited financial statements prepared in accordance with Mexican GAAP, is applied by
Simec&#146;s shareholders as follows: (i) five percent of the Company&#146;s net earnings must be
allocated to a legal reserve fund, until such fund reaches an amount equal to a least 20%
of Simec&#146;s then current capital stock (which level, as of December 31, 2004, was
approximately Ps. 3,277 million), (ii) thereafter, a certain percentage of net earnings
may be allocated to any general or specific reserve fund, and (iii) the remainder of any
net earnings is allocated as determined by the majority of Simec&#146;s shareholders and may
be distributed as dividends. All shares of common stock that are fully paid and
outstanding at the time a dividend or other distribution is declared are entitled to
share equally in that dividend or other distribution. Cash dividends on common stock held
through Indeval will be distributed by the Company through Indeval. Any cash dividends on
common stock evidenced by physical certificates will be paid by surrendering to us the
relevant dividend coupon registered in the name of its holder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the extent that the Company declares and pays dividends on its common stock, owners of
ADSs at the time a dividend or other distribution is declared will be entitled to receive
any dividends payable in respect of the series B common stock underlying their ADSs,
subject to the terms of the Deposit Agreement. Cash dividends will be paid to the
Depositary in pesos, and, except as otherwise described under Item 12 &#147;Description of
Securities Other than Equity Securities&#151;Description of ADSs&#151;Dividends, Other
Distribution and Rights,&#148; will be converted by the Depositary into dollars and paid to
the owners net of currency expenses and applicable fees. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
shareholder&#146;s entitlement to uncollected dividends lapses within five years following the
stated payment date, in favor of the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Liquidation</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event the Company is liquidated, the surplus assets remaining after payment of all
Simec&#146;s creditors will be divided among the Company&#146;s shareholders in proportion to the
respective shares held by them. Shares that are only partially paid will participate in
the distribution in the proportion that they were paid. The general extraordinary
shareholders&#146; meeting at which the liquidation resolution is made, will appoint one or
more liquidators to wind up the Company&#146;s affairs. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Foreign
Investment</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ownership
by non-Mexicans of shares of Mexican enterprises in certain economic sectors is regulated
by the 1993 Foreign Investment Law and the 1998 Regulations thereunder. The Ministry of
the Economy and the  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>National Commission on Foreign
Investment are responsible for the administration of the Foreign Investment Law and
Regulations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Foreign Investment Law and Regulations, foreign investors may acquire up to 100%
of the capital stock of Mexican companies or entities in the steel industry. In
accordance with Simec&#146;s by-laws, shares of all series of the Company&#146;s common stock can
be acquired and held by Mexican and non-Mexican nationals. Simec has registered any
foreign owner of its shares, and the depositary with respect to the ADSs representing
Simec&#146;s shares, with the Registro Nacional de Inversi&#243;n Extranjera (the National
Registry of Foreign Investment). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Directors&#146;
and Shareholders&#146; Conflict of Interest</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Mexican law, any shareholder that has a conflict of interest with respect to any
transaction must abstain from voting on that transaction at the relevant shareholders&#146;
meeting. A shareholder who votes on a transaction in which its interest conflicts with
the Company&#146;s interests may be liable for damages in the event the relevant transaction
would not have been approved without that shareholder&#146;s vote. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Mexican law, any director who has a conflict of interest with Simec in any transaction
must disclose that fact to the other directors and abstain from voting. Any director who
violates those provisions will be liable for damages. Additionally, Simec&#146;s directors and
statutory auditors may not represent shareholders in the shareholders&#146; meetings. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other
Provisions</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Appraisal
Rights</I>. Whenever the shareholders approve a change of corporate purposes, change of
nationality of the corporation or transformation from one form of corporate organization
to another, the Mexican corporation law provides that any shareholder entitled to vote on
that change that has voted against it may withdraw from the Company and receive the book
value (as set forth in the latest balance sheet approved at a general ordinary
shareholders&#146; meeting) attributable to its shares, provided that it exercises that right
within 15 days following the adjournment of the meeting at which the change was approved. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Forfeiture
of Shares. </I>As required by Mexican law, Simec&#146;s bylaws provide that &#147;any alien who at the
time of incorporation or at any time thereafter acquires an interest or participation in
the capital of the corporation shall be considered, by virtue thereof, as Mexican in
respect thereof and shall be deemed to have agreed not to invoke the protection of his
own government, under penalty, in case of breach of such agreement, of forfeiture to the
nation of such interest or participation.&#148; Under this provision a non-Mexican shareholder
is deemed to have agreed not to invoke the protection of his own government by asking
such government to interpose a diplomatic claim against the Mexican government with
respect to the shareholder&#146;s rights as a shareholder, but is not deemed to have waived
any other rights it may have, including any rights under the U.S. securities laws, with
respect to its investment in Simec. If the shareholder invokes such governmental
protection in violation of this agreement, its shares could be forfeited to the Mexican
government. Mexican law requires that such a provision be included in the bylaws of all
Mexican corporations unless such bylaws prohibit ownership of shares by non-Mexican
persons or entities. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Duration</I>.
Simec&#146;s existence under the bylaws is 99 years from the date of registration with the
Public Registry of Commerce, extending through 2089. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tender
Offer in the Event of Delisting</I>. Simec&#146;s by-laws provide that in the event the Company
decides to cancel the registration of the series B common stock with the Registro
Nacional de Valores e Intermediarios (&#147;RNVI&#148;) or if the CNBV requires such cancellation,
the controlling shareholders must make a tender offer to purchase the series B common at
the higher of (i) the average of the price at which transactions have been conducted in
the series B common stock on the Mexican Stock Exchange during the 30 days prior to the
date on which the tender offer is made or (ii) the book value of the series B common
stock determined pursuant to the latest quarterly financial information of the Company
filed with the CNBV and the Mexican Stock Exchange. However, a different basis may be
used to determine the purchase price, if approved by shareholders representing at least
95% of the Company&#146;s capital stock, with the prior consent of the CNBV. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
controlling shareholders will not be obligated to make the tender offer in the event that
all the shareholders consent to the cancellation of the registration of the series B
common stock. </FONT></P>





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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Exchange Controls </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ownership
  by non-Mexicans of shares of Mexican companies is regulated by the<i> Ley de
  Inversi&#243;n Extranjera</i> (the &#147;Foreign Investment Law&#148;) and the
  regulations set forth in the <i>Reglamento de la Ley para Promover la Inversi&#243;n
  Mexicana y Regular la Inversi&#243;n Extranjera</i> (the &#147;Foreign Investment
  Regulations&#148;). The Secretar&#237;a de Econom&#237;a (the &#147;Ministry
  of the Economy&#148;) and the <i>Comisi&#243;n Nacional de Inversi&#243;n Extranjera</i>
  (the &#147;National Foreign Investment Commission&#148;) are responsible for
  the administration of the Foreign Investment Law and the Foreign Investment
  Regulations. In accordance with recent changes to the Foreign Investment Regulations,
  up to 100% of the capital stock of Mexican companies in the steel industry may
  be acquired and held by non-Mexicans. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
required by Mexican law, the corporate charter of the Company provides that &#147;current or
future foreign shareholders formally bind themselves with the Ministry of Foreign
Relations to consider themselves as Mexican with respect to the shares of the Company
which they acquire or hold, as well as to the property, rights, concessions,
participations or interests which the Company may hold, or to the rights and obligations
which derive from the contracts to which the Company is a party with Mexican authorities
and not to invoke therefore the protection of their governments under penalty of
forfeiting the corporate participation that they have acquired to the benefit of the
Nation if they invoke such protection.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
series B common stock and the ADRs do not have any limitation on the right of
non-Mexicans to own or vote such securities. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Taxation </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Mexican
Tax Considerations</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
January 1, 2004, dividends, either in cash or in any other form, paid with respect to the
series B common stock represented by ADSs to holders will not be subject to Mexican
withholding tax. Simec is required to pay a 33% tax on 1.4925 times the amount of any
dividend if the dividend is not paid from earnings that have been already subject to
income tax. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
sale or other disposition of ADSs by holders who are not residents of Mexico (as defined
below) will not be subject to Mexican tax. Deposits of series B common stock in exchange
for ADSs will not give rise to Mexican tax or transfer duties. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
sale or other disposition of shares of series B common stock by nonresidents of Mexico
will not be subject to any Mexican tax if the sale is carried out by an individual
through the Mexican Stock Exchange. Sales or other dispositions of shares of series B
common stock made in other circumstances would be subject to Mexican income tax. Under
the Tax Treaty (as defined below), gains attributable to permanent establishment that a
United States enterprise (as defined in the Tax Treaty) has or had in Mexico, or which
are attributable to a fixed base which is or was available to a United States resident
(as defined in the Tax Treaty) in Mexico for the purpose of performing independent
personal services are taxable in Mexico. Also under the Tax Treaty gains derived by a
United States resident (as defined in the Tax Treaty) may be taxed in Mexico if such
resident during the 12-month period preceding the sale or disposition giving rise to the
gain had a participation, directly or indirectly, of at least 25% of the Company&#146;s
capital. The Tax Treaty further provides that such gains shall be deemed to be Mexican
sourced to the extent necessary to avoid double taxation. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of Mexican taxation, a natural person is a resident of Mexico if he or she has
established his or her home in Mexico, unless he or she has resided in another country
for more than 183 calendar days during a year and can demonstrate that he or she had
become a resident of that country for tax purposes and a legal entity is a resident of
Mexico if its principal administrative office is located in Mexico. A Mexican citizen or
a legal entity with its corporate domicile in Mexico and established under Mexican law is
presumed to be a resident of Mexico, unless the citizen or entity can demonstrate
otherwise. If a legal entity has a permanent establishment or fixed base in Mexico, its
permanent establishment or fixed base is required to pay taxes in Mexico with respect to
income attributable to such permanent establishment or fixed base in accordance with
relevant tax provisions. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tax
Treaties and Information Exchange</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
United States and Mexico are parties to an income tax treaty to avoid double taxation and
a protocol thereto (the &#147;Tax Treaty&#148;) which became effective on January 1, 1994. In
general, the Tax Treaty does not adversely affect the tax treatment of U.S. holders of
ADSs or series B common stock. The United States and Mexico have also entered into an
agreement that covers the exchange of information with respect to tax matters. Mexico has
also executed treaties to avoid double taxation with other countries, some of which are
in force. The foregoing summary does not take into account the effects of any such
treaties. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other
Mexican Taxes</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
than income tax, there are no other inheritance taxes applicable to the ownership,
transfer or disposition of ADSs or shares of series B common stock. There are no Mexican
stamp, issuer, registration or similar taxes or duties payable by holders of ADSs or the
shares of series B common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reimbursement
of capital pursuant to a redemption of shares will not be subject to tax if the
corresponding amount is not more than the adjusted contributed capital corresponding to
the redeemed shares. Any excess of that amount will be considered as a dividend for tax
purposes and will be taxed as described above. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Documents on Display </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements
contained in this Annual Report regarding the contents of any contract or other document
are not necessarily complete, and, where the contract or other document is an exhibit to
the Annual Report, each of these statements is qualified in all respects by the
provisions of the actual contract or other documents. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
is subject to the information requirements of the Securities Exchange Act of 1934
applicable to a foreign private issuers, and accordingly Simec files or furnishes
reports, information statements and other information with the U.S. Securities and
Exchange Commission. These reports and other information filed by Simec can be inspected
at, and subject to the payment of any required fees, copies may be obtained from, the
public reference section of the U.S. Securities and Exchange Commission, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549. These reports and other information may
also be inspected and copied at the offices of the American Stock Exchange, 86 Trinity
Place, New York, New York 10006. As a foreign private issuer, however, Simec is exempt
from the proxy requirements of Section 14 of the Exchange Act and from the short-swing
profit recovery rules of Section 16 of the Exchange Act. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 11. &nbsp;Quantitative
  and Qualitative Disclosures About Market Risk </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is exposed to market risk, which is the potential risk of loss in fair values,
cash flows or earnings due to changes in interest rates and foreign currency rates
(primarily the peso/dollar exchange rate), as a result of its holdings of financial
instrument positions. The Company&#146;s financial instruments include cash and cash
equivalents, trade and other accounts receivable, accounts payable, long-term debt
securities and related party debt. The Company does not maintain a trading portfolio. The
Company&#146;s borrowings are entirely denominated in dollars. The Company does not utilize
derivative financial instruments to manage its market risks with respect to its financial
instruments. Historically, based on the last ten years of data, inflation in Mexico has
been 134% higher than the Mexican peso&#146;s devaluation relative to the dollar. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
late 2003, the Company entered into futures contracts to limit its exposure to commodity
price risk by fixing the price of its natural gas consumption from 2004 through 2006.
These futures contracts are not entered into for trading purposes but, subject to market
prices of natural gas, are expected to be settled by delivery of natural gas at the
contract price. As described in Note 6 to the Consolidated Financial Statements, at
December 31, 2004, the Company recorded an asset of Ps. 18.3 million with respect to
these contracts. The Company does not believe its market risk with respect to these
natural gas futures contracts is material. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Market Risk Measurement </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company measures its market risk related to its financial instruments based on changes in
interest rates and foreign currency rates utilizing a sensitivity analysis. The
sensitivity analysis measures the potential loss in fair  </FONT></P>








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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>values, cash flows and earnings
based on a hypothetical increase in interest rates and a decline in the peso/dollar
exchange rate. The Company used market rates as of December 31, 2004 on its financial
instruments to perform the sensitivity analysis. The Company believes that these
potential changes in market rates are reasonably possible in the near-term (one year or
less). Based upon the Company&#146;s analysis of the impact of a 100 basis point increase in
interest rates and a 10% decline in the peso/dollar exchange rate, the Company has
determined that such increase in interest rates and such decline in the peso/dollar
exchange rate would have a material adverse effect on the Company&#146;s earnings. Because
there is no active trading market for the Company&#146;s debt instruments, the Company is not
able to determine the impact of these changes on the fair value of those debt
instruments. The sections below describe the Company&#146;s exposure to interest rates and
currency rates including the impact of changes in these rates on the Company&#146;s earnings. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Interest Rate Exposure </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s primary interest rate exposure relates to its long-term debt. On the asset
side, the Company is exposed to changes in short-term interest rates as it invests in
short-term dollar-denominated interest bearing investments. On the liability side, the
Company utilizes a combination of floating rate debt and fixed rate debt. The floating
rate debt is exposed to changes in interest expense and cash flows from changes in LIBOR,
while the fixed rate debt is mostly exposed to changes in fair value from changes in
medium term interest rates. Based on an immediate 100 basis point rise in interest rates,
the Company estimates that its earnings before taxes over a one-year time horizon would
decrease by Ps. 1,565 thousand ($139 thousand). </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Currency Rate Exposure </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s primary foreign currency exchange rate exposure relates to its debt securities
as well as its dollar-denominated trade receivables and trade payables. The Company&#146;s
principal currency exposure is to changes in the peso/dollar exchange rate. The Company
estimates that a 10% decline in the peso/dollar exchange rate would result in a decrease
in the Company&#146;s earnings before taxes of Ps. 16 million ($1.4 million). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
sensitivity analysis is an estimate and should not be viewed as predictive of the
Company&#146;s future financial performance. Additionally, the Company cannot assure that the
Company&#146;s actual losses in any particular year will not exceed the amounts indicated
above. However, the Company does believe that these amounts are reasonable based on the
financial instrument portfolio at December 31, 2004 and assuming that the hypothetical
market rate changes selected by the Company in its market risk analysis occur during
2005. The sensitivity analysis does not give effect to the impact of inflation on its
exposure to increases in interest rates or the decline in the peso/dollar exchange rate. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 12. &nbsp;Description
  of Securities Other than Equity Securities </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
a response to this item is not required in an Annual Report on Form 20-F, solely for
convenience of the reader a summary of the rights and restrictions of the ADSs
representing Simec&#146;s series B common stock is provided below. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Description of
American Depositary Receipts </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>American
Depositary Receipts</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADRs
evidencing a specified number of ADSs are issuable by the Depositary pursuant to the
Deposit Agreement. Each ADS represents one share of series B common stock (or evidence of
rights to receive series B common stock) deposited with the Custodian. Only persons in
whose names ADRs are registered on the books of the Depositary will be treated by the
company and the Depositary as owners and holders of ADRs. On February 20, 2003, Simec
effected a 1 for 20 reverse stock split. Before that reverse stock split was completed,
each ADS represented 20 shares of series B common stock. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Deposit
and Withdrawal of Shares of Series B Common Stock</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shares of series B common stock that are represented by the ADSs are deposited with the
Custodian or with Indeval and registered in the name of the Custodian, who is the holder
of record of all such shares of series B common stock. Subject to the terms and
conditions of the Deposit Agreement, upon transfer of such shares of series B common
stock to the Custodian or the account of the Custodian at Indeval, the Depositary will
execute and deliver the ADRs. Ownership of the beneficial interest in the shares of
series B common stock so transferred will be shown on, and all transfers of the ownership
of such beneficial interests will be effected through, records maintained by, Indeval or
Indeval Participants, as applicable. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the terms and conditions of the Deposit Agreement, the Depositary has agreed that,
upon deposit (i) by delivery of certificates evidencing shares of series B common stock
to the Custodian, accompanied by any appropriate instrument or instruments of transfer or
endorsement, in form satisfactory to the Custodian; (ii) through electronic transfer of
shares of series B common stock to the account maintained by the Custodian at Indeval for
such purpose; or (iii) by delivery to the Custodian of evidence satisfactory to the
Custodian that irrevocable instructions have been given to cause such series B common
stock to be transferred to such account, in each case accompanied by an appropriate
instrument or instruments of transfer or endorsement in form satisfactory to the
Custodian and any certifications as may be required by the Depositary or the Custodian,
the Depositary will execute and deliver at its Corporate Trust Office, upon payment of
the fees, charges and taxes provided in the Deposit Agreement, to or upon the written
order of the person or persons entitled thereto, an ADR registered in the name of such
person or persons for the number of ADSs issuable in respect of such deposit. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Every
person depositing series B common stock under the Deposit Agreement shall be deemed to
represent and warrant that such series B common stock and each certificate therefor are
validly issued and outstanding, fully paid, non- assessable and free of preemptive
rights, such person is duly authorized to make such deposit, and the deposit of such
series B common stock or sale of the ADRs evidencing ADSs by that person is not
restricted under the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
surrender of the ADR at the Corporate Trust Office of the Depositary, and upon payment of
the fees provided in the Deposit Agreement and subject to the terms and conditions of the
Deposit Agreement, the corporate charter of the Company and the series B common stock,
ADR Holders are entitled to physical delivery or electronic delivery through Indeval or
Indeval Participants (if electronic delivery is available) of certificates representing
the series B common stock and any other securities, property or cash that the surrendered
ADRs evidence the right to receive. Delivery to the Corporate Trust Office of the
Depositary shall be made at the risk and expense of the ADR Holder surrendering ADRs. At
the request, risk and expense of ADR Holders surrendering ADRs, the Depositary shall
direct the Custodian to forward any cash, rights or other property comprising, and to
forward a Certificate or Certificates and other proper documents of title for series B
common stock to such ADR Holder at the Corporate Trust Office of the Depositary. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Depositary has agreed not to lend ADRs or deposited series B common stock. However, the
Depositary may issue ADRs prior to the receipt of series B common stock and deliver
series B common stock prior to the receipt and cancellation of ADRs if each such
transaction is (i) accompanied by a written representation from the person to whom such
ADRs or series B common stock are to be delivered that such person or its customer
beneficially owns the ADRs or series B common stock to be remitted, (ii) at all times
fully collateralized with cash or other collateral deemed appropriate by the Depositary,
(iii) terminable by the Depositary on not more than five business days&#146; notice, and (iv)
subject to such further indemnities and credit regulations as are deemed appropriate by
the Depositary. The Depositary will impose such limitations as it deems appropriate on
the number of ADRs and shares of series B common stock involved in such transactions,
with any one person and with all persons in the aggregate (normally not to exceed 30% of
the ADRs then outstanding, without giving effect to ADRs issue but for which shares of
series B common stock have not been received). The Depositary may retain for its own
account any compensation received by it in connection with the foregoing transactions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dividends,
Other Distributions and Rights</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Depositary is required to convert or cause to be converted into dollars, to the extent
that in its judgment it can do so on a reasonable basis and can transfer the resulting
dollars to the United States, all cash dividends and  </FONT></P>







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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>other cash distributions denominated
in pesos (or any other currency other than dollars) that it receives in respect of the
deposited series B common stock, and to distribute the amount received net of any
reasonable and customary expenses incurred by the Depositary in connection with
conversion and a fee of not in excess of $.02 per ADS (or portion thereof) for such cash
distribution, subject to the terms of the Deposit Agreement, to the ADR Holders in
proportion to the number of ADSs that are evidenced by such ADRs. The amount distributed
will be reduced by any amounts to be withheld by the Company or the Depositary for
applicable taxes, and net of expenses of conversion into dollars. If the Depositary
determines that in its reasonable judgment any foreign currency received by it cannot be
so converted on a reasonable basis and transferred, or if any required approval or
license of any government authority or agency thereof is denied or not obtained within a
reasonable period of time as determined by the Depositary or is not obtainable in the
reasonable opinion of the Depositary, the Depositary may distribute such foreign currency
(or an appropriate document evidencing the right to receive such foreign currency)
received by it or, in its reasonable discretion, hold such foreign currency for the
respective accounts of the ADR Holders entitled to receive the same. If any such
conversion of foreign currency, in whole or in part, cannot be effected for distribution
to some of the ADR Holders entitled thereto, the Depositary may in its discretion make
such conversion and distribution in dollars to the extent permissible to the ADR Holders
entitled thereto and may distribute the balance of such foreign currency received by the
Depositary to, or hold such balance for the respective accounts of, the ADR Holders
entitled thereto. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company declares a dividend or free distribution, of additional shares of series B
common stock, the Depositary may, with the Company&#146;s approval, and shall, if the Company
so requests, deposit, or cause such stock to be deposited with the Custodian or with
Indeval for the account of the Custodian, and distribute to the ADR Holders entitled
thereto, in proportion to the number of ADSs that are evidenced by such ADRs held by such
Holders, additional ADRs evidencing an aggregate number of ADSs that represent the number
of shares of series B common stock received as such dividend or free distribution, after
deduction or upon payment of the applicable fees and expenses of the Depositary and
subject to the terms of the Deposit Agreement. In lieu of delivering ADRs for fractional
ADSs in the event of any such distribution, the Depositary will sell the amount of series
B common stock represented by the aggregate of such fractions and will distribute the net
proceeds to ADR Holders in accordance with the Deposit Agreement. If additional ADRs are
not so distributed, each ADS shall thereafter also represent the additional shares of
series B common stock distributed together with the shares of series B common stock
represented by such ADS prior to such distribution. If for any reason the Depositary
deems a distribution of additional ADRs not to be feasible, the Depositary may adopt such
method as it may deem equitable or practical for the purpose of effecting such
distributions, including the sale (public or private) of the additional shares of series
B common stock received. The Depositary may, and will if the Company so requests,
withhold any distribution of ADRs subject to its satisfaction that such distribution does
not require registration under the Securities Act or is exempt from registration under
the provisions of the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event that the Custodian or the Depositary receives any distribution upon any
deposited series B common stock in property (other than cash, series B common stock or
rights), the Depositary is obliged under the Deposit Agreement to distribute such
property to the ADR Holders entitled thereto, after deduction or upon payment of the fees
and expenses of the Depositary, in proportion to their holdings, in any manner that the
Depositary reasonably deems equitable and practicable. If in the opinion of the
Depositary, however, the distribution of such property cannot be made proportionately
among such ADR Holders, or if for any other reason (including any requirement that the
Company, the Depositary or the Custodian withhold an amount on account of taxes or other
governmental charges or that such securities must be registered under the Securities Act
in order to be distributed to the ADR Holders or beneficial owners) the Depositary
reasonably deems such distribution not feasible, the Depositary may adopt such method as
it may reasonably deem equitable and practicable in order to effect such distribution,
including the sale (public or private) of all or any part of such property and the
distribution to ADR Holders of the net proceeds of any such sale. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company offers or causes to be offered to the holders of series B common stock any
rights to subscribe for additional shares of series B common stock or any rights of any
other nature, the Depositary shall have discretion as to the procedure to be followed in
making such rights available to ADR Holders or in disposing of such rights for the
benefit of such ADR Holders and making the net proceeds available to such ADR Holders or,
if the Depositary may neither make such rights available nor dispose of such rights and
make the net proceeds available, allow the rights to lapse; provided, however, if at the
time of the offering any rights the Depositary determines in its discretion that it is
lawful and feasible to make such rights available to all ADR Holders or to certain ADR
Holders  </FONT></P>





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<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>but not to other ADR Holders, the
Depositary may distribute to any ADR Holder to whom it determines the distribution to be
lawful and feasible in proportion to the number of ADSs held by such ADR Holder, warrants
or other instruments therefor in such forms it deems appropriate. If the Depositary
determines in its discretion that it is not lawful and feasible to make such rights
available to certain ADR Holders or if the rights represented by such warrants or other
instruments are not exercised and appear to be about to lapse, the Depositary may,
subject to any applicable laws, sell the rights, warrants or other instruments in
proportion to the number of ADSs held by the ADR Holder to whom it has determined it may
not lawfully or feasibly make such rights available, and allocate the net proceeds of
such sales (net of the fees of the Depositary and all taxes and governmental charges and
subject to the terms of the Deposit Agreement) for the account of such ADR Holders upon
an averaged or other practical basis (without regard to any distinctions among such ADR
Holders because of exchange restrictions or the date of delivery of any ADR or
otherwise). The Depositary will not be responsible for any failure to determine that it
may be lawful and feasible to make such rights available to ADR Holders in general or any
ADR Holder in particular. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
an ADR Holder requests the distribution of warrants or other instruments in order to
exercise the rights allocable to the ADSs of such ADR Holder, the Depositary will make
such rights available to such ADR Holder upon written notice from the Company to the
Depositary that (i) the Company has elected in its sole discretion to permit such rights
to be exercised and (ii) such ADR Holder has executed such documents as the Company has
determined in its sole discretion are reasonably required under applicable law. Upon
instruction pursuant to such warrants or other instruments to the Depositary from such
ADR Holder to exercise such rights, upon payment by such ADR Holder to the Depositary for
the account of such ADR Holder of an amount equal to the purchase price of the shares of
series B common stock or other property to be received upon the exercise of the rights,
and upon payment of the fees of the Depositary as set forth in such warrants or other
instruments, the Depositary shall, on behalf of such ADR Holder, exercise the rights and
purchase the shares of series B common stock or other property and the Company shall
cause the shares of series B common stock or other property so purchased to be delivered
to the Depositary on behalf of such ADR Holder. As agent for such ADR Holder, the
Depositary will cause the shares of series B common stock so purchased to be deposited
under the Deposit Agreement, and shall issue and deliver to such ADR Holder the
appropriate ADRs, with any applicable legends and restrictions on transfer. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
registration under the Securities Act or other applicable law of the securities to which
any rights to subscribe for additional shares of series B common stock or any rights of
any other nature relate is required in order for the Company to offer such rights to an
ADR Holder and/or sell the securities issuable upon the exercise of such rights to an ADR
Holder, the Depositary will not offer such rights or other rights to the ADR Holder
unless and until such a registration statement is in effect. The Company may, in its sole
discretion, decide not to register under the Securities Act or other applicable law
securities to which any subscription or other rights relate where registration under the
Securities Act or other applicable law may be required in connection with the offer or
sale of such securities. In such case, ADR Holders in the United States and certain other
jurisdictions would not be permitted to purchase such securities or otherwise exercise
such rights. Under Mexican law, preemptive rights cannot be represented by an instrument
that is negotiable separately from the corresponding share certificate. Because the
Depositary would, therefore, be prohibited from disposing of such rights the ADR Holders
would not receive the value of such rights. Additionally, such ADR Holders&#146; share of
dividends and other distributions and voting rights expressed as a percentage of all the
Company&#146;s capital stock may be reduced under such circumstances. See &#147;Description of
Capital Stock &#151; Changes in Capital Stock, Preemptive Rights and Redemption.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Depositary determines that any distribution of property in respect of the series B
common stock (including shares of series B common stock or rights to subscribe therefor)
is subject to any tax or other governmental charge that the Depositary is obligated to
withhold, the Depositary may, by public or private sale, dispose of all or a portion of
such property, including shares of series B common stock and rights to subscribe
therefor, in such amounts and in such manner as the Depositary deems necessary and
practicable to pay any such taxes or charges. The Depositary will distribute the net
proceeds of any such sale after deduction of any taxes or charges to the ADR Holders
entitled thereto. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the terms of the Deposit Agreement, upon any change in par value, split-up,
consolidation or any other reclassification of the series B common stock, or upon any
recapitalization, reorganization, merger or consolidation or sale of assets affecting the
Company or to which it is a party, any securities that shall be received by the
Depositary or the Custodian in exchange for or in conversion of or in respect of shares
of series B common stock shall be treated as deposited series B common stock under the
Deposit Agreement, and ADRs shall  </FONT></P>



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<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>thenceforth represent the right to
receive the new securities so received in respect of series B common stock, unless
additional ADRs are delivered or the Depositary calls for the surrender of outstanding
ADRs to be exchanged for new ADRs. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Record
Dates</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever
any cash dividend or other cash distribution shall become payable, any distribution other
than cash shall be made or rights shall be made or rights shall be issued with respect to
the series B common stock, or whenever for any reason the Depositary shall cause a change
in the number of shares of series B common stock that are represented by each ADS, or
whenever the Depositary shall receive notice of any meeting, or matter requiring the vote
of, holders of series B common stock or ADR Holders, the Depositary will fix a record
date, which date shall to the extent practicable, be the same date as the record date
fixed by the Company, (i) for the determination of the ADR Holders who shall be entitled
(a) to receive such dividend, distribution or rights or the net proceeds of the sale
thereof, or (b) to give instructions for the exercise of voting rights at any such
meeting or (ii) on or after which each ADS will represent the changed number of shares of
series B common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Reports
and Other Communications</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will furnish to the Depositary and the Custodian all notices of shareholders&#146;
meetings (including any proxy soliciting material) and other reports and communications
that are made generally available to the holders of series B common stock. The Depositary
will make such notices, reports and communications available for inspection by ADR
Holders at its Corporate Trust Office when furnished by the Company pursuant to the
Deposit Agreement and, upon request by the Company, will mail such notices, reports and
communications to ADR Holders. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Voting
of the Underlying series B common stock</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
receipt of notice of any meeting, or solicitation of consents or proxies, of holders of
series B common stock, the Depositary will, as soon as practicable thereafter, mail to
all ADR Holders a notice containing the information included in such notice of meeting or
solicitation, a statement as to the manner in which each such ADR Holder may instruct the
Depositary to exercise any right to vote held by such ADR Holder and a brief statement
discussing the consequences of the failure to give voting instructions. Each ADR Holder
at the close of business on a specified record date is entitled under the Deposit
Agreement, subject to any applicable provisions of Mexican law, of the series B common
stock and of the corporate charter of the Company, to instruct the Depositary as to the
exercise of the voting rights, if any, pertaining to the number of shares of series B
common stock represented by the ADSs that are evidenced by the ADRs held by such ADR
Holder. Upon the written request of an ADR Holder on such record date received on or
before the date established by the Depositary for such purpose, the Depositary will
endeavor to vote or cause to be voted the shares of series B common stock represented by
the ADSs held by such ADR Holder in accordance with such instructions. If the Depositary
does not receive instructions from any one or more ADR Holders then, subject to the
then-applicable rules and regulations of the exchange on which the ADSs are listed, the
Depositary will vote the shares of series B common stock represented by the ADRs for
which no instructions are received in the same manner as the majority of instructions
which the Depositary has received with respect to such meeting, or if no such
instructions have been received or if there is no such majority, in the same manner as
the Depositary is informed by the Company that the majority of shares of series B common
stock is voted at such meeting. Holders of the ADRs have no right to attend Shareholders&#146;
Meetings or to vote any shares of series B common stock directly. For a discussion of the
availability of registered shares to ADR Holders, See &#147; &#151; Deposits and Withdrawals
of Shares of Series B Common Stock.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Amendment
and Termination of the Deposit Agreement</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
form of the ADRs and the terms of the Deposit Agreement may at any time be amended by
agreement between the Company and the Depositary in any respect they deem necessary or
desirable. Any amendment that imposes or increases any fees or charges (other than taxes
or other governmental charges), or that otherwise prejudices any substantial existing
right of ADR Holders, will not take effect as to outstanding ADRs until the expiration of
three months after notice of such amendment has been given to the ADR Holders. Every ADR
Holder and beneficial owner at the time such amendment becomes effective will be
conclusively presumed, by continuing  </FONT></P>






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<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>to hold such ADRs, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In
no event will any amendment impair the right of any ADR Holder to surrender the ADRs held
by such Holder and receive therefor the underlying shares of series B common stock and
any other property represented thereby, except in order to comply with mandatory
provisions of applicable law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever
so directed by the Company, the Depositary has agreed to terminate the Deposit Agreement
by mailing notice of such termination to the ADR Holders then outstanding at least 30
days prior to the date fixed in such notice for such termination. The Depositary may
similarly terminate the Deposit Agreement by mailing notice of such termination. The
Depositary may similarly terminate the Deposit Agreement by mailing notice of such
termination to the Company an ADR </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders
then outstanding if at any time 90 days after the Depositary shall have delivered to the
Company a written notice of its election to resign and a successor depositary shall not
have been appointed an accepted its appointment. On and after the date of termination, an
ADR Holder, upon surrender of such ADR at the Corporate Trust Office of the Depositary,
upon payment of the fees of the Depositary, and upon payment of any applicable tax or
governmental charges, will be entitled to transfer to an account in the name of such ADR
Holder or such name as designated by such ADR Holder of the number of shares of series B
common stock and other property represented by such ADR. If any ADRs remain outstanding
after the date of termination, the Depositary thereafter will discontinue the
registration of transfer of ADRs, will suspend the distribution of dividends to the
Holders thereof and will not give any further notices or perform any further acts under
the Deposit Agreement, except (i) the collection of dividends and other distributions,
(ii) the sale of rights and other property, and (iii) the delivery of shares of series B
common stock, together with any dividends or other distributions received with respect
thereof and the net proceeds of the sale of any rights or other property, in exchange for
surrendered ADRs, subject to the terms of the Deposit Agreement. At any time after the
expiration of one year from the date of termination, the Depositary may sell the series B
common stock and any other property and hold uninvested the net proceeds, together with
any cash then held by it under the Deposit Agreement, unsegregated and without liability
for interest, for the pro rata benefit of the ADR Holders that have not theretofore
surrendered their ADRs and such ADR Holders shall become general creditors of the
Depositary with respect to such net proceeds. After making such sale, the Depositary
shall be discharged from all obligations under the Deposit Agreement, except to account
for net proceeds and other cash (after deducting certain fees of the Depositary) and
except for certain obligations for indemnification set forth in the Deposit Agreement.
Upon the termination of the Deposit Agreement, the Company will also be discharged from
all obligations thereunder, except for certain obligations to the Depositary. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Charges
of Depositary</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will pay the fees, reasonable expenses and out-of-pocket charges of the
Depositary and those of any registrar only in accordance with agreements in writing
entered into between the Depositary and the Company from time to time. The following
charges shall be incurred by any party depositing or withdrawing shares of series B
common stock or by any party surrendering ADRs or to whom ADRs are issued (including,
without limitation, issuance pursuant to a stock dividend or stock split declared by the
Company or an exchange of stock regarding the ADRs or deposited series B common stock or
a distribution of ADRs pursuant to the terms of the Deposit Agreement): (i) any
applicable taxes and other governmental charges, (ii) any applicable transfer or
registration fees, (iii) certain cable, telex and facsimile transmission charges as
provided in the Deposit Agreement, (iv) any expenses incurred in the conversion of
foreign currency, (v) a fee of $5.00 or less per 100 ADSs (or portion thereof) for the
delivery of ADRs in connection with the deposit of shares of series B common stock or
distributions on series B common stock or the surrender of ADRs and (vi) a fee not in
excess of $.02 per ADS (or portion thereof) for any cash distribution made pursuant to
the Deposit Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Depositary, subject to the Deposit Agreement, may own and deal in any class of securities
of the Company and its affiliates and in ADRs. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Liability
of Holders for Taxes, Duties and Other Charges</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
tax or other governmental charge with respect to ADRs or any deposited shares of series B
common stock represented by any ADR shall be payable by the ADR Holder to the Depositary.
The Depositary may and upon instructions from the Company shall refuse to effect transfer
or any split-up or combination of such ADR or  </FONT></P>







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<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any withdrawal of the deposited
shares of series B common stock represented by such ADR until such payment is made, and
may withhold any dividends or other distributions in respect thereof or may sell for the
account of the ADR Holder thereof any part or all of the deposited shares of series B
common stock represented by such ADR and may apply such dividends or distributions or the
proceeds of any such sale in payment of any such tax or other governmental charge and the
ADR Holder shall remain liable for any deficiency. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Transfer
of American Depositary Receipts</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
ADRs are transferable on the books of the Depositary, provided that the delivery of ADRs
against deposits of shares of series B common stock generally or against deposits of
particular shares of series B common stock may be suspended, or the deposit of share of
series B common stock may be refused, or the registration of transfer of outstanding ADRs
generally may be suspended, during any period when the books of the Depositary or the
Company are closed, or if any such action is deemed necessary or advisable by the
Depositary or the Company at any time or from time to time subject to the terms of the
Deposit Agreement. The surrender of outstanding ADRs and withdrawal of deposited shares
of Series B Common Stock may not be suspended subject only to (i) temporary delays caused
by closing the books of the Depositary or the Company for the deposit of shares of series
B common stock in connection with voting at a shareholders&#146; meeting or the payment of
dividends, (ii) the payment of fees, taxes and similar charges, and (iii) compliance with
any United States or foreign laws or governmental regulations relating to the ADRs or to
the withdrawal of the deposited shares of series B common stock. Without limitation of
the foregoing, the Depositary shall not knowingly accept for deposit under the Deposit
Agreement any shares of series B common stock required to be registered under the
provisions of the Securities Act, unless a registration statement is in effect as to such
shares. As a condition precedent to the execution and delivery, registration of transfer,
split-up, combination or surrender of any ADR or withdrawal of shares of series B common
stock, the Depositary or the Custodian may require payment from the person presenting the
ADR or the Depositor of the series B common stock of a sum sufficient to reimburse it for
any tax or other governmental charge and any stock transfer or registration fee with
respect thereto, payment of any applicable fees of the Depositary payable by the ADR
Holders and the production of proof satisfactory to the Depositary as to the identify and
genuineness of any signature and may also require compliance with any reasonable
regulations the Depositary may establish consistent with the provisions of the Deposit
Agreement and applicable law. The Depositary may, and at the reasonable request of the
Company shall, withhold the delivery or registration of transfer of any ADR or the
distribution or sale of any dividend or other distribution or rights or the proceeds
thereof or the delivery of any shares of series B common stock until it or the Custodian
has received proof of citizenship or residence, exchange control approval or other
information as it may deem necessary or proper. ADR Holders may inspect the transfer
books of the Depositary for the registration and transfer of ADRs at any reasonable time,
provided that such inspection shall not be for the purpose of communicating with ADR
Holders in the interest of a business or object other than the business of the Company or
a matter related to the Deposit Agreement, the ADRs, the series B common stock or the
by-laws of the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
the Depositary nor the Company nor any of their directors, officers, employees, agents or
affiliates will be liable to the ADR Holder or any owners of beneficial interests of ADRs
if by reason of any present or future law or regulation of the United States or any other
country or of any governmental or regulatory authority or any stock exchange by reason
of, any provision, present or future, of the by-laws of the Company or of the series B
common stock or any circumstance beyond its control, the Depositary or the Company or any
of their respective directors, officers, employees, agents or affiliates is prevented or
delayed in performing its obligations or exercising its discretion under the Deposit
Agreement or is subject to any civil or criminal penalty on account of performing its
obligations under the Deposit Agreement. Where, by the terms of a distribution or and
offering subject to the Deposit Agreement, or for any other reason, the distribution or
offering on or in respect of the series B common stock made not be made available to one
or more ADR Holders, and the Depositary may not dispose of such distribution or offering
on behalf of such ADR Holders and make the net proceeds available to such ADR Holders,
then the Depositary shall not make such distribution or offering to such ADR Holders, and
shall allow any rights, in respect thereof held by such ADR Holders, if applicable, to
lapse. The obligations of the Company and the Depositary under the Deposit Agreement are
expressly limited to using their best judgment and diligence and acting in good faith in
the performance of their respective duties specified therein. </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So
long as any ADRs or ADSs evidenced thereby are listed on one or more stock exchanges in
the United States, the Depositary will act as registrar or appoint a registrar or one or
more co-registrars, for registration of such ADRs in accordance with any requirement of
such exchanges. </FONT></P>

<!-- MARKER FORMAT-SHEET="Center Head 2 Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>PART II. </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 13. &nbsp;Defaults,
  Dividends Arrearages and Delinquencies </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simec
is in default on the payment of $302,000 principal amount of 8 7/8% MTNs due 1998 which
were issued in 1993 as part of a $68 million issuance. Accrued interest on the MTNs at
December 31, 2004 was $282,121. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 14. &nbsp;Material
  Modifications to the Rights of Security Holders and Use of Proceeds </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 15. Controls
  and Procedures </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company maintains a set of disclosure controls and procedures designed to ensure that
information required to be disclosed by the Company in reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules and forms.
As of the end of the period covered by this Annual Report, an evaluation of the
effectiveness of the Company&#146;s disclosure controls and procedures was carried out under
the supervision and with the participation of the Company&#146;s management, including the
Chief Executive Officer and the Chief Financial Officer. Based on that evaluation, the
Chief Executive Officer and the Chief Financial Officer have concluded that the Company&#146;s
disclosure controls and procedures are effective as of the end of the period covered by
this Annual Report. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent
to the date of their evaluation, there have been no changes in the Company&#146;s internal
control over financial reporting that have materially affected, or are reasonably likely
to materially affect, the Company&#146;s internal control over financial reporting. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 16. &nbsp;Reserved
  </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 16A. &nbsp;Audit
  Committee Financial Expert </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of the Company has determined that it has at least one &#147;audit
committee financial expert,&#148; as defined in Item 16A of Form 20-F, serving on the Audit
Committee. Arturo P&#233;rez Trejo is the director whom the Board of Directors has
determined to be an audit committee financial expert. Holders of ADSs should understand
that this designation is a disclosure requirement of the SEC related to Mr. P&#233;rez&#146;s
experience and understanding with respect to certain accounting and auditing matters. The
designation does not impose on Mr. P&#233;rez any duties, obligations or liability that
are greater than those which are generally imposed on him as a member of the Audit
Committee and Board of Directors, and his designation as an audit committee financial
expert pursuant to this SEC requirement does not affect the duties, obligations or
liability of any other member of the Audit Committee or Board of Directors. Mr. P&#233;rez
is &#147;independent&#148; as such term is defined by the listing standards of the American Stock
Exchange. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 16B. &nbsp;Code
  of Ethics </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2002,  the Company  adopted a code of ethics that applies to all of its  employees and
 directors,  including its principal executive  officer,  principal  financial  officer
and principal  accounting  officer.  In 2004,  the Company did not amend its code of
ethics in any manner,  nor did it grant any waiver from any  provision  of the code of
ethics to any person.  The Company  will provide to any person  without  charge,  upon
written or oral  request,  a copy of such code of ethics.  Requests  should be directed
to: Grupo Simec, S.A. de C.V., Attention: Jos&#233; Flores Flores, telephone number:
 52-33-1057-5734. </FONT></P>




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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 16C. &nbsp;Principal
  Accountant Fees and Services </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Audit
Fees. </I></B>Fees paid to KPMG Cardenas Dosal, S.C. for the audit of the annual consolidated
financial statements included in the Company&#146;s Annual Report on Form 20-F were Ps. 1.6
million and Ps. 2.2 million, respectively, for 2003 and 2004. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tax
Fees. </I></B>Fees paid to KPMG Cardenas Dosal, S.C. associated with tax compliance and tax
consultation were Ps. 0.2 million and Ps. 0.7 million, respectively, in 2003 and 2004. </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
fees in addition to those set forth above were paid to KPMG Cardenas Dosal, S.C. in 2003
or 2004. All of the services described as &#147;Audit Fees&#148; incurred in 2003 and 2004 and &#147;Tax
Fees&#148; incurred since April 2003 were approved by the Audit Committee in accordance with
the Company&#146;s formal policy on auditor independence. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has adopted a formal policy on auditor independence requiring the
approval by the Audit Committee of all professional services rendered by the Company&#146;s
independent auditor prior to the commencement of the specified services. The Audit
Committee will consider annually and, if appropriate, approve the provision of audit
services by Company&#146;s independent auditor and consider and, if appropriate, pre-approve
the provision of certain defined audit and non-audit services. The Audit Committee will
also consider on a case-by-case basis and, if appropriate, approve specific engagements
that are not otherwise pre-approved. Any proposed engagement that does not fit within the
definition of a pre-approved service may be presented to the Audit Committee for
consideration at its next regular meeting or, if earlier consideration is required, to
the Audit Committee for action by written consent. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 16D. &nbsp;Exemptions
  from the Listing Standards for Audit Committees </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not
applicable. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 16E. &nbsp;Purchases
  of Equity Securities by the Issuer and Affiliated Purchasers. </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not
applicable. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>PART III. </B></FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 17. &nbsp;Financial
  Statements </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has responded to Item 18 in lieu of responding to this item. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 18. &nbsp;Financial
  Statements </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference
is made to the Consolidated Financial Statements included herein. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 19. &nbsp;Exhibits
  </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Consolidated Financial Statements, together with the report of the Company&#146;s independent
registered public accounting firm, are filed as part of this Annual Report. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>List of Exhibits: </FONT></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=700>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT colspan="2"><font size=2>Exhibit <br>
      Number </font>
      <hr size="1" noshade align="left" width="55">
    </TD>
    <TD WIDTH=2% ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD WIDTH=79% ALIGN=LEFT><font size=2>Item </font>
      <hr size="1" noshade width="35" align="left">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=2% ALIGN=LEFT>&nbsp;&nbsp;</TD>
    <TD WIDTH=17% ALIGN=LEFT><FONT SIZE=2>1</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=79% ALIGN=LEFT><FONT SIZE=2>By-laws (<i>estatutos sociales</i>)
      of Simec, together with an English translation.*</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=3></TD>
    <TD width="79%"></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="2%">&nbsp;</TD>
    <TD ALIGN=LEFT width="17%"><FONT SIZE=2>8</FONT></TD>
    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT width="79%"><FONT SIZE=2>List of subsidiaries, their jurisdiction
      of incorporation and names under which they do business.</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="2%">&nbsp;</TD>
    <TD ALIGN=LEFT width="17%"><FONT SIZE=2>12(a) and 12(b)</FONT></TD>
    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT width="79%"><FONT SIZE=2>Certifications pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="2%">&nbsp;</TD>
    <TD ALIGN=LEFT width="17%"><FONT SIZE=2>13</FONT></TD>
    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT width="79%"><FONT SIZE=2>Certification pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002.</FONT></TD>
  </TR>
</TABLE>

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<HR SIZE=1 noshade ALIGN=left  WIDTH=75>

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<TABLE WIDTH=100%><TR><TD WIDTH=4% ALIGN=left VALIGN=top><FONT SIZE="1">* </FONT></TD><TD WIDTH=2%><FONT SIZE="1"></FONT></TD><TD WIDTH=94% ALIGN=left VALIGN=top><FONT SIZE="1">Incorporated
by reference to the exhibits included in Simec&#146;s Annual Report on Form 20-F for the year
ended December 31, 1997 (File No. 1-11176) filed with the Securities and Exchange
Commission.</FONT></TD></TR></TABLE>




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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>SIGNATURES </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this Annual Report on
its behalf. </FONT></P>

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<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="58%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td colspan="2" align="left" valign="top"><font face="Times New Roman, Times, Serif" size=2><b>GRUPO
      SIMEC, S.A. DE C.V.</b></font></td>
  </tr>
  <tr>
    <td width="58%">&nbsp;</td>
    <td align="left" valign="top" width="4%">&nbsp;</td>
    <td align="left" valign="top" width="38%">&nbsp;</td>
  </tr>
  <tr>
    <td width="58%">&nbsp;</td>
    <td align="left" valign="top" width="4%"><font face="Times New Roman, Times, Serif" size=2>By:</font></td>
    <td align="left" valign="top" width="38%"><font face="Times New Roman, Times, Serif" size=2>/s/
      Luis Garc&#237;a Lim&#243;n</font>
      <hr size="1" noshade align="left" width="150">
    </td>
  </tr>
  <tr>
    <td width="58%">&nbsp;</td>
    <td align="left" valign="top" width="4%">&nbsp;</td>
    <td align="left" valign="top" width="38%">
      <p><font face="Times New Roman, Times, Serif" size=2>Luis Garc&#237;a Lim&#243;n
        <br>
        <i> Chief Executive Officer </i></font></p>
      <!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" --> </td>
  </tr>
  <tr>
    <td width="58%">&nbsp;</td>
    <td align="left" valign="top" width="4%">&nbsp;</td>
    <td align="left" valign="top" width="38%">&nbsp;</td>
  </tr>
  <tr>
    <td width="58%">&nbsp;</td>
    <td align="left" valign="top" width="4%"><font face="Times New Roman, Times, Serif" size=2>By:</font></td>
    <td align="left" valign="top" width="38%"><font face="Times New Roman, Times, Serif" size=2>/s/
      Jos&#233; Flores Flores</font>
      <hr size="1" noshade align="left" width="150">
    </td>
  </tr>
  <tr>
    <td width="58%">&nbsp;</td>
    <td align="left" valign="top" width="4%">&nbsp;</td>
    <td align="left" valign="top" width="38%"><font face="Times New Roman, Times, Serif" size=2>Jos&#233;
      Flores Flores <br>
      <i> Chief Financial Officer</i></font></td>
  </tr>
</table>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: &nbsp;&nbsp;July 11,
  2005 </FONT></P>

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<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR ALIGN=LEFT WIDTH=100% SIZE=5 noshade><BR>






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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>INDEX TO FINANCIAL
STATEMENTS </B> </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(Constant Mexican
Pesos as of December 31, 2004) </B> </font></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </font></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <td width="87%"><font face="Times New Roman, Times, Serif" size=2><b>Grupo
      Simec, S.A. de C.V. </b></font><FONT SIZE=1> </font></td>
    <TH width="13%"><FONT SIZE=1> </font></TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=87% ALIGN=LEFT><FONT SIZE=2>Report of KPMG C&#225;rdenas Dosal,
      S.C </font></TD>
    <TD WIDTH=13% ALIGN=RIGHT><FONT SIZE=2>F-2 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
    <TD ALIGN=RIGHT width="13%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Consolidated Balance Sheets as of
      December 31, 2004 and 2003 </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>F-3 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Consolidated Statements of Income
      for the years ended <br>
      &nbsp;&nbsp;&nbsp;&nbsp;December 31, 2004, 2003 and 2002 </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>F-4 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">
      <p><FONT SIZE=2>Consolidated Statements of Stockholders&#146; Equity <br>
        &nbsp;&nbsp;&nbsp;&nbsp;</font><FONT SIZE=2>for the years ended December
        31, 2004, 2003 and 2002 </font></p>
    </TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>F-5 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Consolidated Statements of Changes
      in Financial Position for <br>
      &nbsp;&nbsp;&nbsp;&nbsp;the years ended December 31, 2004, 2003 and 2002
      </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>F-6 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
    <TD ALIGN=RIGHT width="13%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Notes to Consolidated Financial Statements
      </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>F-7 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2><b>Schedules to Financial Statements
      </b></font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Schedule I - Condensed Parent Company
      Balance Sheets as of <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December
      31, 2004 and 2003 </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>S-1 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Schedule I - Condensed Parent Company
      Statements of Operations <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
      the years ended December 31, 2004, 2003 and 2002 </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>S-2 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Schedule I - Condensed Parent Company
      Statements of Changes in Financial <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Position
      for the years ended December 31, 2004, 2003 and 2002 </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>S-3 </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="87%"><FONT SIZE=2>Schedule I - Note to Parent Company
      Financial Statements for the years <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ended
      December 31, 2004, 2003 and 2002 </font></TD>
    <TD ALIGN=RIGHT width="13%"><FONT SIZE=2>S-4 </font></TD>
  </TR>
</TABLE>

<br>
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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Report of
Independent Registered Public Accounting Firm </B> </font></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Board of Directors and
Stockholders of  <BR>Grupo Simec, S. A. de C. V.:  </font></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have audited the accompanying
consolidated balance sheets of Grupo Simec, S.A. de C.V. and subsidiaries (the Company)
as of December 2004 and 2003 and the related consolidated statements of income,
stockholders&#146; equity and changes in financial position for each of the years in the
three-year period ended December 31, 2004. These consolidated financial statements are
the responsibility of the Company&#146;s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.  </font></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We conducted our audits in
accordance with the Standards of the Public Company Accounting Oversight Board (United
States). Those standards 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.  </font></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As mentioned in note 13 to the
consolidated financial statements, on August 9, 2004 the Company acquired, as an
industrial unit, assets and labor obligations accrued at such date. The assets consist of
inventories and steel plants.  </font></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Grupo Simec, S.A. de C.V. and subsidiaries as of December 31, 2004
and 2003, and the results of their operations and the changes in their financial position
for each of the years in the three-year period ended December 31, 2004, in conformity
with accounting principles generally accepted in Mexico.  </font></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accounting principles generally
accepted in Mexico vary in certain significant respects from accounting principles
generally accepted in the United States of America. Information relating to the nature
and effect of such differences is presented in note 18 to the consolidated financial
statements.  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
    <TD WIDTH=52%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=48%><FONT SIZE=2>KPMG CARDENAS DOSAL, S. C. <br>
      <br>
      <br>
      /s/ Jorge O. P&#233;rez Zerme&#241;o</font>
      <hr size="1" noshade align="left" width="175">
      <font size="2"> Jorge O. P&#233;rez Zerme&#241;o </font><font size="2"></font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Guadalajara, Mexico  <BR>April 25, 2005  </font></P>

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<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
F-2 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>






<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" -->


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<BR>
&nbsp;
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2><b>GRUPO SIMEC,
  S.A. DE C.V. AND SUBSIDIARIES </b></font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Consolidated
  Balance Sheets </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>December 31,
  2004 and 2003 </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>(Thousands of
  constant Mexican pesos as of December 31, 2004) </font></p>
<table cellpadding=0 cellspacing=0 border=0 width=600 align="center">
  <tr valign=Bottom>
    <th width="418"><font size=1>Assets</font></th>
    <th colspan=2><font size=1>2004</font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>2003</font>
      <hr width=95% size="1" noshade>
    </th>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width=418><font size=2>Current assets:</font></td>
    <td align=RIGHT width=85><font size=2></font></td>
    <td align=LEFT width=16><font size=2>&nbsp;</font></td>
    <td align=RIGHT width=74><font size=2></font></td>
    <td align=LEFT width=7><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
      and cash equivalents</font></td>
    <td align=RIGHT width="85"><font size=2>$&nbsp;&nbsp;&nbsp;506,475</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>542,940</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418">&nbsp;</td>
    <td align=RIGHT width="85">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="74">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="7">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      receivable:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade</font></td>
    <td align=RIGHT width="85"><font size=2>977,701</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>478,309</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related
      parties (note 4)</font></td>
    <td align=RIGHT width="85"><font size=2>5,288</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>3,629</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoverable
      value added tax</font></td>
    <td align=RIGHT width="85"><font size=2>158,009</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>&#151;</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
      receivables</font></td>
    <td align=RIGHT width="85"><font size=2>12,188</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>1,382</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418">&nbsp;</td>
    <td align=RIGHT width="85">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="74">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="7">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="85"><font size=2>1,153,186</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>483,320</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less
      allowance for doubtful accounts</font></td>
    <td align=RIGHT width="85"><font size=2>14,500</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>24,610</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418">&nbsp;</td>
    <td align=RIGHT width="85">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="74">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="7">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      accounts receivable, net</font></td>
    <td align=RIGHT width="85"><font size=2>1,138,686</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>458,710</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories,
      net (note 5)</font></td>
    <td align=RIGHT width="85"><font size=2>1,129,862</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>303,885</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid
      expenses</font></td>
    <td align=RIGHT width="85"><font size=2>8,591</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>4,764</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative
      financial instruments (note 6)</font></td>
    <td align=RIGHT width="85"><font size=2>18,293</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>15,044</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418">&nbsp;</td>
    <td align=RIGHT width="85">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="74">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="7">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current assets</font></td>
    <td align=RIGHT width="85"><font size=2>2,801,907</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>1,325,343</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>Trade (note 1e)</font></td>
    <td align=RIGHT width="85"><font size=2>&#151;</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>10,835</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>Non-current inventories (note 2e)</font></td>
    <td align=RIGHT width="85"><font size=2>66,328</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>65,548</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>Property, plant and equipment, net
      (note 7)</font></td>
    <td align=RIGHT width="85"><font size=2>5,776,054</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>4,644,117</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>Other assets, net</font></td>
    <td align=RIGHT width="85"><font size=2>303,307</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>271,054</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418">&nbsp;</td>
    <td align=RIGHT width="85">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="74">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="7">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="85"><font size=2>$8,947,596</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="74"><font size=2>6,316,897</font></td>
    <td align=LEFT width="7"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="418">&nbsp;</td>
    <td align=RIGHT width="85">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="74">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="7">&nbsp;</td>
  </tr>
</table>
<br>
<table cellpadding=0 cellspacing=0 border=0 width=600 align="center">
  <tr valign=Bottom>
    <th width="417"><font size=1>Liabilities and Stockholders&#146; Equity</font></th>
    <th colspan=2><font size=1>2004</font></th>
    <th colspan=2><font size=1>2003</font></th>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width=417>&nbsp;</td>
    <td align=RIGHT width=86>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width=16>&nbsp;</td>
    <td align=RIGHT width=73>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width=8>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width=417><font size=2>Current liabilities:</font></td>
    <td align=RIGHT width=86><font size=2></font></td>
    <td align=LEFT width=16><font size=2>&nbsp;</font></td>
    <td align=RIGHT width=73><font size=2></font></td>
    <td align=LEFT width=8><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Notes payable to banks
      (note 9a)</font></td>
    <td align=RIGHT width="86"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;153,124</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>&#151;</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Current installments of
      long-term</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;debt
      (note 9b)</font></td>
    <td align=RIGHT width="86"><font size=2>3,402</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>4,268</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Long-term debt, classified
      as</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;current
      (note 9b)</font></td>
    <td align=RIGHT width="86"><font size=2>&#151;</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>19,370</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Accounts payable</font></td>
    <td align=RIGHT width="86"><font size=2>588,884</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>217,696</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Accruals (note 8)</font></td>
    <td align=RIGHT width="86"><font size=2>8,594</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>9,309</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Other accounts payable
      and accrued expenses</font></td>
    <td align=RIGHT width="86"><font size=2>155,328</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>89,890</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Related parties (note
      4)</font></td>
    <td align=RIGHT width="86"><font size=2>20</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>818</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current liabilities</font></td>
    <td align=RIGHT width="86"><font size=2>909,352</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>341,351</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Seniority premiums (note
      10)</font></td>
    <td align=RIGHT width="86"><font size=2>6,733</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>5,447</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Other long-term liabilities</font></td>
    <td align=RIGHT width="86"><font size=2>14,487</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>4,007</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Deferred income taxes
      (note 11)</font></td>
    <td align=RIGHT width="86"><font size=2>1,433,194</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>1,099,539</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      long-term liabilities</font></td>
    <td align=RIGHT width="86"><font size=2>1,454,414</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>1,108,993</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities</font></td>
    <td align=RIGHT width="86"><font size=2>2,363,766</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>1,450,344</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>Stockholders&#146; equity (note 12):</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Capital stock</font></td>
    <td align=RIGHT width="86"><font size=2>3,277,340</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>3,253,597</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Additional paid-in capital</font></td>
    <td align=RIGHT width="86"><font size=2>655,822</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>655,822</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Contributions for future
      capital stock increases (note 12)</font></td>
    <td align=RIGHT width="86"><font size=2>221,448</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>&#151;</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Retained earnings</font></td>
    <td align=RIGHT width="86"><font size=2>3,115,122</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>1,708,730</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Cumulative deferred income
      taxes</font></td>
    <td align=RIGHT width="86"><font size=2>(870,975</font></td>
    <td align=LEFT width="16"><font size=2>)</font></td>
    <td align=RIGHT width="73"><font size=2>(870,975</font></td>
    <td align=LEFT width="8"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Equity adjustment for
      non-monetary assets</font></td>
    <td align=RIGHT width="86"><font size=2>172,410</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>109,036</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Fair value of derivative
      financial instruments (note 6)</font></td>
    <td align=RIGHT width="86"><font size=2>12,353</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>10,079</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Majority
      stockholders&#146; equity</font></td>
    <td align=RIGHT width="86"><font size=2>6,583,520</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>4,866,289</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority
      interest</font></td>
    <td align=RIGHT width="86"><font size=2>310</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>264</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      stockholders&#146; equity</font></td>
    <td align=RIGHT width="86"><font size=2>6,583,830</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>4,866,553</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Commitments and contingent
      liabilities (note 15)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;Subsequent event (note
      16)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;New accounting pronouncement
      (note 17)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>Differences between Mexican and United
      States accounting</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;principles
      (note 18)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="86"><font size=2>$&nbsp;8,947,596</font></td>
    <td align=LEFT width="16"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="73"><font size=2>6,316,897</font></td>
    <td align=LEFT width="8"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="86">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="16">&nbsp;</td>
    <td align=RIGHT width="73">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="8">&nbsp;</td>
  </tr>
</table>
<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<p><font face="Times New Roman, Times, Serif" size=2>See accompanying notes to
  consolidated financial statements. </font></p>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
F-3 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 3; page: 3" -->


<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>
&nbsp;
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2><b>GRUPO SIMEC,
  S.A. DE C.V. AND SUBSIDIARIES </b></font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Consolidated
  Statements of Income </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Years ended
  December 31, 2004, 2003 and 2002 </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>(Thousands of
  constant Mexican pesos as of December 31, 2004, except earnings per share figures)
  </font></p>
<table cellpadding=0 cellspacing=0 border=0 width=600 align="center">
  <tr valign=Bottom>
    <th><font size=1></font></th>
    <th colspan=2><font size=1>2004</font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>2003</font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>2002</font>
      <hr width=95% size="1" noshade>
    </th>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Net sales (notes 4, 13 and 14)</font></td>
    <td align=RIGHT><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,682,952</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>2,930,138</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>2,310,310</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Direct cost of sales (notes 4 and 13)</font></td>
    <td align=RIGHT><font size=2>3,302,887</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>1,924,957</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>1,545,899</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marginal
      profit</font></td>
    <td align=RIGHT><font size=2>2,380,065</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>1,005,181</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>764,411</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Indirect overhead, selling, general and administrative</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;expenses
      (note 4)</font></td>
    <td align=RIGHT><font size=2>570,449</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>487,754</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>485,338</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
      income</font></td>
    <td align=RIGHT><font size=2>1,809,616</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>517,427</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>279,073</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Comprehensive financial result:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income
      (expense), net (note 4)</font></td>
    <td align=RIGHT><font size=2>5,569</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>(12,980</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(58,357</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange
      gain (loss), net</font></td>
    <td align=RIGHT><font size=2>3,833</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>(2,676</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(109,075</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Monetary position
      (loss) gain</font></td>
    <td align=RIGHT><font size=2>(45,587</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(10,023</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>32,128</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      financial result, net</font></td>
    <td align=RIGHT><font size=2>(36,185</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(25,679</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(135,304</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Other expenses, net:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;Adjustment to the recovery value
      of land, machinery and equipment</font></td>
    <td align=RIGHT><font size=2>(14,156</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(18,749</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(32,692</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;Other, net</font></td>
    <td align=RIGHT><font size=2>(22,502</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(12,409</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(6,384</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
      expenses, net</font></td>
    <td align=RIGHT><font size=2>(36,658</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(31,158</font></td>
    <td align=LEFT><font size=2>)</font></td>
    <td align=RIGHT><font size=2>(39,076</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      before income taxes, employee statutory profit</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sharing
      and minority interest</font></td>
    <td align=RIGHT><font size=2>1,736,773</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>460,590</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>104,693</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Income taxes (note 11):</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;Current</font></td>
    <td align=RIGHT><font size=2>22,246</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>12,902</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>37,249</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;Deferred</font></td>
    <td align=RIGHT><font size=2>308,135</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>134,400</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>(62,022</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      income taxes</font></td>
    <td align=RIGHT><font size=2>330,381</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>147,302</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>(24,773</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Employee statutory profit sharing (note 11)</font></td>
    <td align=RIGHT><font size=2>&#151;</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>5,098</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>337</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      before minority interest</font></td>
    <td align=RIGHT><font size=2>1,406,392</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>308,190</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>129,129</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Minority interest</font></td>
    <td align=RIGHT><font size=2>&#151;</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>1</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>9</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Majority
      interest net income</font></td>
    <td align=RIGHT><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,406,392</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>308,189</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>129,120</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Earnings per share:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;Weighted average shares outstanding</font></td>
    <td align=RIGHT><font size=2>132,972,479</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>119,052,681</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>99,967,222</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings
      per share (pesos)</font></td>
    <td align=RIGHT><font size=2>10.58</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>2.59</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>1.29</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
</table>
<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<p><font face="Times New Roman, Times, Serif" size=2>See accompanying notes to
  consolidated financial statements. </font></p>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
F-4 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 4; page: 4" -->


<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>
&nbsp;
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2><b>GRUPO SIMEC,
  S.A. DE C.V. AND SUBSIDIARIES </b></font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Consolidated
  Statements of Stockholders&#146; Equity </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Years ended
  December 31, 2004, 2003 and 2002 </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>(Thousands of
  constant Mexican pesos as of December 31, 2004) </font></p>
<table cellpadding=0 cellspacing=0 border=0 width=740>
  <tr valign=Bottom>
    <th><font size=1></font></th>
    <th colspan=2><font size=1>Capital <br>
      stock </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Additional <br>
      paid-in <br>
      capital </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Contributions <br>
      for future <br>
      capital stock <br>
      increases </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Retained <br>
      earnings </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Cumulative <br>
      deferred <br>
      income taxes </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Equity <br>
      adjustment for <br>
      non-monetary <br>
      assets </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Fair value <br>
      of derivative <br>
      financial <br>
      instruments <br>
      (note 6) </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Total <br>
      majority <br>
      interest </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Minority <br>
      interest </font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>Total <br>
      stockholders&#146; <br>
      equity </font>
      <hr width=95% size="1" noshade>
    </th>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Balances at December 31, 2001</font></td>
    <td align=RIGHT><font size=1>$2,570,664</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>655,822</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>1,271,421</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>(870,975</font></td>
    <td align=LEFT><font size=1>)</font></td>
    <td align=RIGHT><font size=1>(418,235</font></td>
    <td align=LEFT><font size=1>)</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>3,208,697</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>250</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>3,208,947</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Increases in capital stock (note 12a)</font></td>
    <td align=RIGHT><font size=1>305,678</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>305,678</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>305,678</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Net comprehensive income (note 12b)</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>129,120</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>287,598</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>416,718</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>14</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>416,732</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Balances at December 31, 2002</font></td>
    <td align=RIGHT><font size=1>2,876,342</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>655,822</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>1,400,541</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>(870,975</font></td>
    <td align=LEFT><font size=1>)</font></td>
    <td align=RIGHT><font size=1>(130,637</font></td>
    <td align=LEFT><font size=1>)</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>3,931,093</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>264</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>3,931,357</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Increase in capital stock (note 12a)</font></td>
    <td align=RIGHT><font size=1>377,255</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>377,255</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>377,255</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Net comprehensive income (note 12b)</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>308,189</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>239,673</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>10,079</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>557,941</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>557,941</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Balances at December 31, 2003</font></td>
    <td align=RIGHT><font size=1>3,253,597</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>655,822</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>1,708,730</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>(870,975</font></td>
    <td align=LEFT><font size=1>)</font></td>
    <td align=RIGHT><font size=1>109,036</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>10,079</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>4,866,289</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>264</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>4,866,553</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Increases in capital stock (note 12a)</font></td>
    <td align=RIGHT><font size=1>23,743</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>23,743</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>23,743</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Contributions for future capital stock <br>
      &nbsp;&nbsp; increases (note 12a)</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>221,448</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>221,448</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>221,448</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Net comprehensive income (note 12b)</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>1,406,392</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>&#151;</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>63,374</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>2,274</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>1,472,040</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>46</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>1,472,086</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=1>Balances at December 31, 2004</font></td>
    <td align=RIGHT><font size=1>$3,277,340</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>655,822</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>221,448</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>3,115,122</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>(870,975</font></td>
    <td align=LEFT><font size=1>)</font></td>
    <td align=RIGHT><font size=1>172,410</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>12,353</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>6,583,520</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>310</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
    <td align=RIGHT><font size=1>6,583,830</font></td>
    <td align=LEFT><font size=1>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT>&nbsp;</td>
  </tr>
</table>
<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<p><font face="Times New Roman, Times, Serif" size=2>See accompanying notes to
  consolidated financial statements. </font></p>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
F-5 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 5; page: 5" -->


<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>
&nbsp;
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2><b>GRUPO SIMEC,
  S.A. DE C.V. AND SUBSIDIARIES </b></font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Consolidated
  Statements of Changes in Financial Position </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>Years ended
  December 31, 2004, 2003 and 2002 </font></p>
<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<p align=CENTER><font face="Times New Roman, Times, Serif" size=2>(Thousands of
  constant Mexican pesos as of December 31, 2004) </font></p>
<table cellpadding=0 cellspacing=0 border=0 width=620 align="center">
  <tr valign=Bottom>
    <th width="417"><font size=1></font></th>
    <th colspan=2><font size=1>2004</font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>2003</font>
      <hr width=95% size="1" noshade>
    </th>
    <th colspan=2><font size=1>2002</font>
      <hr width=95% size="1" noshade>
    </th>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width=417><font size=2>Operating activities:</font></td>
    <td align=RIGHT width=65><font size=2></font></td>
    <td align=LEFT width=11><font size=2>&nbsp;</font></td>
    <td align=RIGHT width=51><font size=2></font></td>
    <td align=LEFT width=10><font size=2>&nbsp;</font></td>
    <td align=RIGHT width=57><font size=2></font></td>
    <td align=LEFT width=9><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;Net income before
      minority interest</font></td>
    <td align=RIGHT width="65"><font size=2>$&nbsp;1,406,392</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>308,190</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>129,129</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Add charges
      (deduct credits) to operations not requiring</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(providing)
      funds:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
      and amortization</font></td>
    <td align=RIGHT width="65"><font size=2>213,858</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>191,635</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>170,520</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
      income taxes</font></td>
    <td align=RIGHT width="65"><font size=2>308,135</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>134,400</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>(62,022</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Write-down
      of idle machinery</font></td>
    <td align=RIGHT width="65"><font size=2>14,156</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>18,749</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>10,998</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustment
      of land to net realizable value</font></td>
    <td align=RIGHT width="65"><font size=2>&#151;</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>&#151;</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>21,694</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrual
      for seniority premiums</font></td>
    <td align=RIGHT width="65"><font size=2>1,286</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>260</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>146</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      provided by operations</font></td>
    <td align=RIGHT width="65"><font size=2>1,943,827</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>653,234</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>270,465</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Net financing
      from (investing in) operating accounts:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade
      receivables, net</font></td>
    <td align=RIGHT width="65"><font size=2>(509,502</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(21,135</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>(81,534</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
      accounts receivable and prepaid expenses</font></td>
    <td align=RIGHT width="65"><font size=2>(161,807</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>59,100</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>11,327</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories,
      net</font></td>
    <td align=RIGHT width="65"><font size=2>(825,977</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(9,529</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>19,493</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative
      financial instruments</font></td>
    <td align=RIGHT width="65"><font size=2>&#151;</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>(15,044</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>&#151;</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related
      parties receivables</font></td>
    <td align=RIGHT width="65"><font size=2>(1,659</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(3,629</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>&#151;</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      payable, other accounts payable and accrued expenses</font></td>
    <td align=RIGHT width="65"><font size=2>435,957</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>(63,224</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>101,628</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related
      parties payable</font></td>
    <td align=RIGHT width="65"><font size=2>(798</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(180,977</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>25,100</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      provided by operating activities</font></td>
    <td align=RIGHT width="65"><font size=2>880,041</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>418,796</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>346,479</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>Financing activities:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Increases
      in capital stock</font></td>
    <td align=RIGHT width="65"><font size=2>23,743</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>377,255</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>305,678</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Contributions
      for future capital stock increases</font></td>
    <td align=RIGHT width="65"><font size=2>221,448</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>&#151;</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>&#151;</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Unpaid foreign
      exchange gain</font></td>
    <td align=RIGHT width="65"><font size=2>&#151;</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>5,815</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>77,046</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Short-term
      loans</font></td>
    <td align=RIGHT width="65"><font size=2>153,124</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>&#151;</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>&#151;</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Financial
      debt repayment</font></td>
    <td align=RIGHT width="65"><font size=2>(19,070</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(348,719</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>(598,687</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Decrease in
      debt due to restatement to constant Mexican pesos</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;as
      of year end</font></td>
    <td align=RIGHT width="65"><font size=2>(1,166</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(4,153</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>(34,001</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Other long-term
      liabilities</font></td>
    <td align=RIGHT width="65"><font size=2>10,480</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>79</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>(938</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      provided by (used in)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;financing
      activities</font></td>
    <td align=RIGHT width="65"><font size=2>388,559</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>30,277</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>(250,902</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>Investing activities:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
      decrease in long-term inventories</font></td>
    <td align=RIGHT width="65"><font size=2>(780</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>61,492</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>(16,233</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Acquisition
      of property, plant and equipment (note 13)</font></td>
    <td align=RIGHT width="65"><font size=2>(1,235,529</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(61,895</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>(9,752</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Increase in
      other noncurrent assets</font></td>
    <td align=RIGHT width="65"><font size=2>(68,756</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(25,001</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>(21,152</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      used in investing activities</font></td>
    <td align=RIGHT width="65"><font size=2>(1,305,065</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>(25,404</font></td>
    <td align=LEFT width="10"><font size=2>)</font></td>
    <td align=RIGHT width="57"><font size=2>(47,137</font></td>
    <td align=LEFT width="9"><font size=2>)</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease)
      increase in cash and cash equivalents</font></td>
    <td align=RIGHT width="65"><font size=2>(36,465</font></td>
    <td align=LEFT width="11"><font size=2>)</font></td>
    <td align=RIGHT width="51"><font size=2>423,669</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>48,440</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>Cash and cash equivalents:</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;At beginning
      of year</font></td>
    <td align=RIGHT width="65"><font size=2>542,940</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>119,271</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>70,831</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=1>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;At end of
      year</font></td>
    <td align=RIGHT width="65"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;506,475</font></td>
    <td align=LEFT width="11"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="51"><font size=2>542,940</font></td>
    <td align=LEFT width="10"><font size=2>&nbsp;</font></td>
    <td align=RIGHT width="57"><font size=2>119,271</font></td>
    <td align=LEFT width="9"><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT width="417">&nbsp;</td>
    <td align=RIGHT width="65">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="11">&nbsp;</td>
    <td align=RIGHT width="51">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="10">&nbsp;</td>
    <td align=RIGHT width="57">
      <hr noshade color=#000000 size=2>
    </td>
    <td align=LEFT width="9">&nbsp;</td>
  </tr>
</table>
<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<p><font face="Times New Roman, Times, Serif" size=2>See accompanying notes to
  consolidated financial statements. </font></p>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
F-6 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 6; page: 6" -->





<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>December 31, 2004, 2003
and 2002  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

<!-- MARKER FORMAT-SHEET="bold Hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
    <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(1) </B>
      </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Description
      of business and significant transactions - </B> </font></TD>
  </TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital flush 05" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>
Description
of business -  </I></B> </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
principal  activities of Grupo Simec,  S.A. de C.V. and subsidiaries  (the Company) are
the manufacture and sale of steel        products for the  construction  sector in Mexico
and other  countries.  The Company is a subsidiary of Industrias CH, S.A. de        C.V.
(ICH).  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital flush 05" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>
Significant
transactions -  </I></B> </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(a)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As
it is mentioned in note 13 to the consolidated financial              statements, on
August 9, 2004, the Company acquired the majority of              the assets of Atlax,
S.A. de C.V. and certain assets of Operadora              Metamex, S.A. de C.V., plus
their accumulated labor obligations at              such date. The assets consist of
inventories and steel plants              located in Apizaco, Tlaxcala and Cholula,
Puebla, which produce              specialty steel products and commercial profiles.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(b)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As
it is mentioned in note 9c to the consolidated financial              statements, during
2003 Compa&#241;&#237;a Sider&#250;rgica de              Guadalajara, S.A. de C.V. (CSG),
Compa&#241;&#237;a              Sider&#250;rgica de Occidente, S.A. de C.V. (CSO) and
             Compa&#241;&#237;a Sider&#250;rgica de California, S.A. de C.V.
             (CSC) paid 1,452,887 dollars in connection with the industrial
             mortgage loan agreement. Furthermore, during 2003 and 2002 these
             companies prepaid 29,930,517 and 47,941,199 dollars, respectively.
             On March 18, 2004, the Company prepaid 1,697,952 dollars plus
             interest thereon, thus repaying the loan in full.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(c)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During
the years 2004, 2003 and 2002 there were increases in capital stock as well as changes in
stock  ownership,  which are              described in note 12.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(d)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As
indicated in note 15, Pacific Steel, Inc (PS) (subsidiary              company located in
the United States of America) has been sued by              the California government,
which requires that PS clean and              relocate part of its premises owing to the
generation, storage,              transportation and disposal of materials classified as
hazardous              waste. The Company has appealed against these claims; however, at
             the date of issue of the consolidated financial statements it
             cannot predict the outcome of this matter.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>&nbsp;
<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></p>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
F-7 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>




<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(e)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant
to a public bidding process for non-performing loans without              recourse, in
2003 ICH acquired through its subsidiary              Administradora de Cartera de
Occidente, S.A. de C.V. (ACOSA), the              assignment of shared recovery loans as
well as litigation rights              and certain loan-related obligations.
Subsequently, on December 11,              2003, with the authorization of the assignor
banks, ICH sold to              Grupo Simec, S.A. de C.V. (Simec) 99.98% of the ACOSA
shares. At              December 31, 2003 the total investment amount was $10,835. When
the              Company reaches its break-even point it must pay to the assignors
             50% of the amounts recovered (after deducting authorized amounts
             spent on recovering these amounts). At December 31, 2004, ACOSA
             fully reserved the balance of this account since it has not
             recovered any amounts.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="bold Hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
    <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(2) </B>
      </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Summary
      of significant accounting policies - </B> </font></TD>
  </TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital flush 05" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Financial statement presentation - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
accompanying consolidated financial statements have been              prepared in
accordance with accounting principles generally              accepted in Mexico (Mexican
GAAP), which require the recognition of              the effects of inflation in the
financial information and are              expressed in Mexican pesos of constant
purchasing power based on,              the Mexican National Consumer Price Index (NCPI)
published by Banco              de Mexico (Central Bank).   </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
indexes used in recognizing inflation were as follows:   </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH width="21%"><FONT SIZE=1>December 31 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH width="13%">&nbsp;</TH>
    <TH width="31%"><FONT SIZE=1>NCPI </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH width="13%">&nbsp;</TH>
    <TH COLSPAN=2><FONT SIZE=1>Inflation </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=21% ALIGN=center><FONT SIZE=2>2004 </font></TD>
    <TD WIDTH=13% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=31% ALIGN=center><FONT SIZE=2>112.550 </font></TD>
    <TD WIDTH=13% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>5.19 </font></TD>
    <TD WIDTH=10% ALIGN=LEFT><FONT SIZE=2>% </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=center width="21%"><FONT SIZE=2>2003 </font></TD>
    <TD ALIGN=LEFT width="13%"><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=center width="31%"><FONT SIZE=2>106.996 </font></TD>
    <TD ALIGN=LEFT width="13%"><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT width="12%"><FONT SIZE=2>3.97 </font></TD>
    <TD ALIGN=LEFT width="10%"><FONT SIZE=2>% </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=center width="21%"><FONT SIZE=2>2002 </font></TD>
    <TD ALIGN=LEFT width="13%"><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=center width="31%"><FONT SIZE=2>102.904 </font></TD>
    <TD ALIGN=LEFT width="13%"><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT width="12%"><FONT SIZE=2>5.70 </font></TD>
    <TD ALIGN=LEFT width="10%"><FONT SIZE=2>% </font></TD>
  </TR>
</TABLE>

<br>
<!-- MARKER FORMAT-SHEET="Para Flush 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
preparation of financial statements in conformity with Mexican              GAAP requires
management of the Company to make a number of              estimates and assumptions
affecting the reported amounts of assets              and liabilities, the disclosure of
contingent assets and              liabilities at the date of the financial statements
and the              reported amounts of revenues and expenses during the reporting
             period. Significant items subject to such estimates and assumptions
             include the carrying amount of property, plant and equipment; other
             non-current assets; valuation allowances for receivables;
             inventories and deferred income tax assets; valuation of financial
             instruments; and obligations related to employee benefits. Actual
             results could differ from those estimates and assumptions.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-8 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

<!-- MARKER FORMAT-SHEET="Para Flush 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
For
purposes of disclosure of these consolidated financial              statements &#147;pesos&#148; or
&#147;$&#148; means Thousands of Mexican pesos, and              dollars means U.S. dollars.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
    <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (b)&nbsp;&nbsp;&nbsp;
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principles of consolidation - </I></B>
      </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
consolidated financial statements include the financial              statements of Grupo
Simec, S.A. de C.V. and its majority owned              and/or controlled subsidiaries.
All significant intercompany              balances and transactions have been eliminated
in consolidation.              The consolidation was based on the audited financial
statements of              the issuing companies, which were prepared under Mexican GAAP.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s subsidiaries and its equity percentage are as follows:  </font></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>Equity </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=92% ALIGN=LEFT><FONT SIZE=2>- Compa&#241;&#237;a Sider&#250;rgica de Guadalajara, S.A. de C.V </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=3% ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;- Compa&#241;&#237;a Sider&#250;rgica de California, S.A. de C.V. (CSC) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Undershaft Investments, N.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Pacific Steel, Inc. </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Compa&#241;&#237;a Sider&#250;rgica del Pac&#237;fico, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Consorcio Internacional, S.A. de C.V. (liquidated in 2004) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>79% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Coordinadora de Servicios Sider&#250;rgicos de Calidad, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Administradora de Servicios de la Industria Sider&#250;rgica ICH, S.A. de </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Industrias del Acero y del Alambre, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Met&#225;lica las Torres, S.A. de C.V. (merged in 2003 into CSC) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Procesadora Mexicali, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Servicios Simec, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Sistemas de Transporte de Baja California, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Operadora de Metales, S.A. de C.V. (from 2004) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Operadora de Servicios Sider&#250;rgicos de Tlaxcala, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(from 2004) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Administradora de Servicios Sider&#250;rgicos de Tlaxcala, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(from 2004) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Operadora de Servicios de la Industria Sider&#250;rgica ICH, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(from 2004) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>100 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Compa&#241;&#237;a Sider&#250;rgica de Occidente, S.A. de C.V </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(merged in 2003 into CSC) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>- Administradora de Cartera de Occidente, S.A. de C.V. (from 2003) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>99. </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>99% </font></TD></TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-9 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Translation of financial statements of foreign subsidiaries - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
For
consolidation purposes, the financial statements of the foreign              subsidiaries
were translated into pesos in conformity with Bulletin              B-15, &#147;Transactions
in Foreign Currency and Translation of              Financial Statements of Foreign
Operations&#148;. The foreign              subsidiaries were considered to be an &#147;Integral
Part of the              Operations&#148; of the Company as the term is defined in Bulletin
B-15.              Therefore, their financial statements were translated into pesos as
             follows:  </font></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-   </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Monetary
items - rate of exchange in effect at the balance sheet date.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-   </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Non-monetary
items and stockholders&#146; equity - at the exchange                   rate prevailing on the
date generated, while statement of                   operations items were translated at
the period&#146;s weighted                   average exchange rate, except items resulting
from                   non-monetary assets, for which the exchange rate used was that
                  of the related asset.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-   </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
resulting amounts were restated using NCPI factors in conformity with Bulletin B-10 of
Mexican GAAP.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Cash equivalents - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Cash
equivalents consist of checking accounts, foreign currency and              other highly
liquid instruments. At the date of the consolidated              financial statements,
interest income and foreign exchange gains              and losses are included in the
results of operations under              comprehensive financial result.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Inventories and cost of sales - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Inventories
are initially recorded at average cost and subsequently              adjusted to the
lower of replacement or market value. Such values              were determined as follows:  </font></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
    <TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=32%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Billet, finished
      goods and work in process- </font></TD>
    <TD WIDTH=58%><font face="Times New Roman, Times, Serif" size=2> At the most
      recent direct production cost. </font></TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=10%>&nbsp;</TD>
    <TD WIDTH=32%>&nbsp;</TD>
    <TD WIDTH=58%>&nbsp;</TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=10%>&nbsp;</TD>
    <TD WIDTH=32%><font face="Times New Roman, Times, Serif" size=2>Raw materials-
      </font></TD>
    <TD WIDTH=58%><font face="Times New Roman, Times, Serif" size=2>At purchase
      prices prevailing at the balance sheet date. </font></TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=10%>&nbsp;</TD>
    <TD WIDTH=32%>&nbsp;</TD>
    <TD WIDTH=58%>&nbsp;</TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=10%>&nbsp;</TD>
    <TD WIDTH=32%><font face="Times New Roman, Times, Serif" size=2>Materials,
      spare parts and rollers- </font></TD>
    <TD WIDTH=58%><font face="Times New Roman, Times, Serif" size=2>At historical
      cost restated by applying the inflation indexes for the steel industry </font></TD>
  </TR>
</TABLE>
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<BR>
&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-10 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company classifies rollers and spare parts as long-term              inventories, which
in accordance with historical data and              production trends will not be used in
the short-term (one year).  </font></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Direct
cost of sales represents the replacement cost of inventories              at the time of
sale, expressed in constant pesos as of the most              recent year-end.  </font></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Derivative financial instruments - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
During
2004 and 2003, the Company used derivative financial              instruments for hedging
risks associated with natural gas prices              and conducted studies on historical
consumption, future              requirements and commitments; thus it avoided exposure
to risks              other than the normal operating risks. Management of the Company
             examines its financial risks by continually analyzing price, credit
             and liquidity risks.  </font></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company uses natural gas cash-flow exchange contracts or swaps              where it
receives a floating price however it pays a fixed price              for hedging risks
from fluctuations in natural gas prices, which              are based on demand and
supply at the principal international              markets. Fluctuations in natural gas
prices from volume consumed              are recognized as part of the Company&#146;s
operating costs.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">As
applicable, the Company recognized the fair value of instruments either as
liabilities or assets. Such fair value and thus, the value of these assets
or liabilities were restated at each month&#146;s-end. As indicated in note 6 to
the consolidated financial statements, the Company opted for the early
adoption of Bulletin C-10 <I>&#147;Derivative Financial Instruments and Hedging&#148;</I>;
therefore, at December 31, 2004 and 2003 the fair value of the natural gas
swap designated for hedging exposure of future gas consumption for the
period of January 2004 to December 2006 in terms of fluctuations in
natural gas prices, were recognized within the comprehensive income
account in stockholders&#146; equity.  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Property, plant and equipment - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Property,
plant and equipment is initially recorded at acquisition              cost and adjusted
for inflation by applying NCPI factors, except              for foreign machinery and
equipment, which is adjusted for              inflation using the inflation indexes of
their country of origin              and changes in the foreign exchange rate of the
country&#146;s              particular currency to the peso.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-11 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Depreciation
on property, plant and equipment is calculated on the              straight-line method
over the estimated useful lives of the assets,              determined by independent
appraisers in the case of plant and              machinery and the Company&#146;s management
in the case of equipment.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
comprehensive financial result of assets under construction or              installation
is capitalized as part of the value of such assets and              is restated using
NCPI factors from the date capitalized through              year-end and is amortized
over the average depreciation period of              the related assets. During 2004 and
2003 no comprehensive financial              result was capitalized.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
total estimated useful lives of the principal assets are as follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH><FONT SIZE=1>Years </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH>&nbsp;</TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Buildings </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=CENTER><FONT SIZE=2>15 to 50 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Machinery and equipment </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=CENTER><FONT SIZE=2>10 to 40 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Transportation equipment </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=CENTER><FONT SIZE=2>4 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Furniture, fixtures and computer equipment </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=CENTER><FONT SIZE=2>10 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Repair
and maintenance costs are expensed as incurred.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
      assets - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Other
assets include mainly technical assistance, organization and              pre-operating
expenses and, except for technical assistance, are              restated for inflation
based on factors derived from the NCPI.              Amortization is calculated on the
straight-line method, on restated              values and over a 3 to 20-year period.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Accruals - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Based
on management estimates, the Company recognizes accruals for              present
obligations in which the transfer of assets or the              rendering of services is
virtually inevitable and arise as a              consequence of past events, principally
salaries and other amounts              payable to employees, and fees.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-12 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


<!-- MARKER FORMAT-SHEET="Bold Ital flush 05" FSL="Project" -->
<table width=100% cellpadding=0 cellspacing=0>
  <tr valign=TOP>
    <td width=5%><font face="Times New Roman, Times, Serif" size=2>&nbsp; </font></td>
    <td width=5%><font face="Times New Roman, Times, Serif" size=2><b><i>(j)</i></b>
      </font></td>
    <td width=90%><font face="Times New Roman, Times, Serif" size=2><b><i>Seniority
      premiums - </i></b> </font></td>
  </tr>
</table>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Seniority
premium benefits to which employees are entitled by law              are charged to
operations for the year based on actuarial              computations of the present value
of this obligation. Amortization              of unrecognized prior service costs is
based on the expected years              of service of existing personnel. At December
31, 2004, the              estimated service life of eligible employees approximates
between 8              and 9 years (see note 10).  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Other
compensation to which employees may be entitled, mainly              severance, is
charged to operations of the year in which paid.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(k)  </I></B> </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Income
(IT) and asset (AT) taxes and employee statutory profit sharing (ESPS) - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Income
taxes are accounted for under the asset and liability              method. Deferred tax
assets and liabilities are recognized for the              future tax consequences
attributable to differences between the              financial statement carrying amounts
of existing assets and              liabilities and their respective tax bases and
operating loss and              tax credit (AT) carryforwards. Deferred tax assets and
liabilities              are measured using enacted tax rates expected to apply to
taxable              income in the years in which those temporary differences are
             expected to be recovered or settled. The effect on deferred tax
             assets and liabilities of a change in tax rates is recognized in
             income in the period that includes the enactment date.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Deferred
ESPS is recognized only for timing differences arising              from the
reconciliation of book income to income for profit sharing              purposes, on
which it may be reasonably estimated that a future              liability or benefit will
arise and there is no indication that the              liabilities or benefits will not
materialize.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(l)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Restatement
of capital stock, other stockholder contributions and retained earnings - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Capital
stock, other stockholder contributions and retained              earnings are adjusted
using the NCPI, by the amount necessary to              maintain the purchasing power of
equivalent pesos from the dates              such capital was contributed, contributions
were made or income              generated. The resulting amounts represent the constant
value of              stockholders&#146; equity.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-13 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(m)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Cumulative
deferred income taxes - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Represents
the cumulative effect of the adoption of the deferred              taxes accounting
principles, expressed in constant pesos as of the              most recent year-end.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(n)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Equity
restatement - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Represents
the difference between non-monetary assets restated              through specific costs
and the values determined using NCPI              factors, reduced by the related
deferred tax effects from the date              the related Bulletin was adopted.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(o)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Comprehensive
financial results (CFR) - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
CFR
includes all interest income and expense, foreign exchange gains and losses and monetary
position gains and losses.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Transactions
in foreign currency are recorded at the rate of              exchange prevailing on the
date of execution or settlement. effect              at the balance sheet date. Exchange
differences arising from assets              and liabilities denominated in foreign
currencies are reported in              operations for the year.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Monetary
position gains and losses are determined by multiplying              the difference
between monetary assets and liabilities at the              beginning of each month by
inflation factors through year-end. The              aggregate of these results
represents the monetary gain or loss for              the year arising from inflation,
which is reported in operations              for the year.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(p)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Revenue
recognition - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Revenue
from the sale of goods is generally recognized upon              delivery of the products
and the related risks and benefits are              transferred to the customer. The
Company provides for freight              expenses, sales returns and discounts at the
time the related              revenue is recognized. These provisions are deducted from
sales, or              included in selling expenses as applicable.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-14 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(q)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Business
and credit concentrations - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s principal activity is the manufacture and sale of              steel products
primarily for the construction sector. The Company&#146;s              products are sold to a
large number of customers without              significant concentration with any of
them. The Company provides an              allowance for doubtful accounts based on
analyses and estimates              made by management.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(r)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Earnings
per share - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
basic earnings per share of each period have been computed by              dividing the
net income by the weighted average number of shares              outstanding of each
period.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(s)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Contingencies
- - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Liabilities
for loss contingencies are recorded when it is probable              that a liability has
been incurred and the amount of the assessment              and/or remediation can be
reasonably estimated. When a reasonable              estimation cannot be made,
qualitative disclosure is provided in              the notes to the consolidated
financial statements. Contingent              revenues, earnings or assets are not
recognized until their              realization is virtually assured.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(t)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Impairment
of long-lived assets, property, plant and equipment and other non-current assets - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company evaluates periodically the adjusted values of its              long-lived assets,
property, plant and equipment and other              non-current assets to determine
whether there is an indication of              potential impairment. Recoverability of
assets to be held and used              is measured by a comparison of the carrying
amount of an asset to              future revenues expected to be generated by the asset.
If such              assets are considered to be impaired, the impairment to be
             recognized is measured by the amount by which the carrying amount
             of the asset exceeds the expected revenues. Assets to be disposed
             of are reported at the lower of the carrying amount or realizable
             value.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-15 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B> (3)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Foreign
currency exposure - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Monetary
assets and liabilities denominated in foreign currencies as of December 31, 2004 and 2003
were as follows:  </font></TD>
</TR>
</TABLE>
<BR>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=640>
  <TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=4><FONT SIZE=1>Thousands of <BR>
Dollars </font><HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=4><FONT SIZE=1>Thousands of <BR>
Euros </font><HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=4><FONT SIZE=1>Thousands of <BR>
Pounds Sterling </font><HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=4><FONT SIZE=1>Thousands of <BR>
Deutsche Marks </font><HR WIDTH=95% SIZE=1 noshade></TH></tr>
<TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
<HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Current assets </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>68,091 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>45,275 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Current liabilities </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(32,809 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(7,159 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(78 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(116 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(87 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(87 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(49 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(49 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Net assets </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(liabilities) </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>35,282 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>38,116 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(78 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(116 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(87 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(87 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(49 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(49 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>
  </TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
exchange rate of the peso to these foreign currencies as of April 25,        2005 and
December 31, 2004 and 2003 was as follows (amounts in pesos):  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>April 25, <BR>
2005 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT><FONT SIZE=2>Dollar </font></TD>
     <TD WIDTH=7% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>11.041 </font></TD>
        <TD WIDTH=7% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>11.264 </font></TD>
        <TD WIDTH=7% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>11.236 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Euro </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>14.369 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>15.169 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>14.165 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Pound Sterling </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>21.144 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>21.474 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>20.101 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Deutsche Mark </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7.346 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7.755 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7.240 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
At
December 31, 2004 and 2003, the Company had the following non-monetary        assets of
foreign origin, or which replacement cost may only be        determined in dollars.  </font></TD>
</TR>
</TABLE>
<BR>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=4><FONT SIZE=1>Thousands of dollars </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=54% ALIGN=LEFT><FONT SIZE=2>Machinery and equipment, net </font></TD>
     <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=16% ALIGN=RIGHT><FONT SIZE=2>$280,909 </font></TD>
        <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=16% ALIGN=RIGHT><FONT SIZE=2>240,775 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Inventories </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>38,105 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>10,527 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>319,014 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>251,302 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-16 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Below
is a summary of transactions carried out with foreign entities for        the years ended
December 2004, 2003 and 2002, excluding imports of        machinery and equipment:  </font></TD>
</TR>
</TABLE>
<BR>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=6><FONT SIZE=1>Thousands of dollars </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <hr width=95% size=1 noshade>
    </TH>
    <TH COLSPAN=2><font size=1>2003 </font>
      <hr width=95% size=1 noshade>
    </TH>

    <TH COLSPAN=2><font size="1">2002 </font>
      <hr width=95% size=1 noshade>
    </TH>
  </TR>
<TR VALIGN=Bottom>

    <TD WIDTH=49% ALIGN=LEFT><font size="2">Sales </font></TD>
     <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>52,468 </font></TD>
        <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>28,810 </font></TD>
        <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>25,655 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Purchases (raw materials) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(78,422 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(24,304 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(22,255 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Other expenses (spare parts) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(4,898 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(462 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(4,037 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Interest expense </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(28 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(3,312 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(5,190 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
exchange rate of the peso to the foreign currencies used by the        Company is based
on the weighted average of free market rates available        to settle its overall
foreign currency transactions.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company has foreign subsidiaries, which combined unaudited assets and        liabilities
are summarized as follows (excluding B-10 restatement):  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=4><FONT SIZE=1>Thousands of dollars </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=60% ALIGN=LEFT><FONT SIZE=2>Current monetary assets </font></TD>
    <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>1,292 </font></TD>
    <TD WIDTH=8% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>563 </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Inventories </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>37 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Current liabilities </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(6,824 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4,702 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Working
      capital </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(5,525 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4,102 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Property, plant and equipment </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,766 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,882 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Stockholders&#146; equity </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(3,759 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(2,220 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-17 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(4)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Related-party
transactions and balances - </B> </font></TD>
</TR>
</TABLE>
<BR>
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<table width=100% cellpadding=0 cellspacing=0>
  <tr valign=TOP>
    <td width=5%><font face="Times New Roman, Times, Serif" size=2>&nbsp; </font></td>
    <td width=95%><font face="Times New Roman, Times, Serif" size=2> </font>
      <p><font face="Times New Roman, Times, Serif" size=2>Transactions carried
        out with related parties during the years ended December 31, 2004, 2003
        and 2002 were as follows: </font></p>



</td>
  </tr>
</table>


<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT SIZE=2>Sales </font></TD>
     <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>$124,577 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>182,335 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>35,294 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Purchases </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>10,649 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>13,290 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Interest income (expense), net </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,648 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(9,858 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Administrative services received </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>8,439 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>8,821 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>8,540 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Balances
receivable from, and payable to, related companies as of December 31, 2004 and 2003 are
as follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <Td COLSPAN=2><FONT SIZE="1"><U><font size="2">Accounts receivable:</font></U>
      </font></Td>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=68% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=10% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=10% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=68% ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Industrias CH, S.A. de C.V
      </font></TD>
    <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2>$5,288 </font></TD>
    <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2>779 </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Aceros y Laminados Sigosa, S.A. de
      C.V </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,850 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$5,288 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,629 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE="2"><U>Accounts payable:</U> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Other </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>818 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
At
December 31, 2004 and 2003, the balances receivable and payable arise        from the
Company&#146;s normal operations and bear no interest.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-18 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(5)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Inventories
- - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Inventories
are comprised as follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT><FONT SIZE=2>Finished goods </font></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=16% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;166,327 </font></TD>
        <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=16% ALIGN=RIGHT><FONT SIZE=2>72,271 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Work in process </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,563 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>3,244 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Billets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>154,034 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>40,942 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Raw materials </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>563,741 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>70,201 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Materials, spare parts and rollers </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>82,818 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>71,361 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Advances to suppliers and others </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>110,360 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>43,407 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Goods in transit </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>54,817 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7,711 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,133,660 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>309,137 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Less allowance for obsolescence </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>3,798 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>5,252 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$1,129,862 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>303,885 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(6)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Derivative
financial instruments - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> The Company uses
      derivative financial instruments mainly for offsetting exposure to the variability
      of natural gas prices. Derivative instruments currently used by the Company
      consist of consumption futures. The Company&#146;s current derivative instruments
      consist of natural gas swap contracts. The Company executes this type of
      contract with PEMEX Gas y Petroqu&#237;mica B&#225;sica (PGPB), which allow
      for paying a fixed priced and receiving a floating price. These derivatives
      are designated as cash flow hedging for certain specific volumes of estimated
      natural gas consumption to be bought and processed during the 2004-2006
      period. These contracts are recognized on the balance sheet at fair value.
      Since the changes in the cash flows of the swap are highly effective for
      mitigating exposure to natural gas price fluctuations, this derivate qualifies
      as a derivative financial hedging instrument of the cash flow type and thus
      the fair value of the swap is recorded under &#147;comprehensive income&#148;
      in stockholders&#146; equity, in conformity with Bulletin C-10 &#147;<i>Derivative
      Financial Instruments and Hedging</i>&#148;, which the Company adopted on
      an early basis as of December 31, 2003. </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-19 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
late 2003 the Company contracted derivative financial instruments for        hedging
purposes to cover price fluctuations of natural gas prices. The        hedge will
guarantee that a portion of the Company&#146;s natural gas        consumption from 2004 to
2006 will be at a fixed price of 4.462 dollars        per MMBtu (million British Thermal
Units). As a result, at December 31,        2004 and 2003, the Company recognized an
asset of $18,293 and $15,044 a        deferred IT liability of $5,488 and $4,965, and net
comprehensive income        in stockholders&#146; equity of $12,353 and $10,079, respectively.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Based
on its inventory turnover, the Company believes that natural gas        burned and
incorporated in its products during a given month is reflected        in the cost of
sales of the subsequent month. For this reason, the        realized effects of this hedge
are reclassified from the net        comprehensive income account to income in the
following month. At        December 31, 2004 there are $1,830 for realized effects that
will pass as        an adjustment to the cost of sales recorded in the results of January
       2005.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(7)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Property,
plant and equipment - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Property,
plant and equipment comprise the following:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=62% ALIGN=LEFT><FONT SIZE=2>&nbsp;Buildings </font></TD>
     <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>$1,705,939 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>1,625,827 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Machinery and equipment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>5,893,711 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,705,670 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Transportation equipment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>46,174 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>42,684 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Furniture, fixtures and computer equipment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>38,668 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>34,291 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7,684,492 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>6,408,472 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Less accumulated depreciation </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,423,854 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,201,129 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>5,260,638 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,207,343 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Land </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>473,708 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>391,501 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Construction in progress (*) </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>11,140 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>549 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Idle machinery and equipment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>30,568 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>44,724 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$5,776,054 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,644,117 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       (*)   </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Construction
in progress relates mainly to machinery; these              projects are scheduled for
completion in January 2006 and the              pending investment amount is $34,698.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-20 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Through
December 31, 2004 and 2003, the Company has capitalized CFR of        $462,211 and
$477,231, respectively, supplementary to the acquisition        cost of property, plant
and equipment.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
At
December 31, 2004 and 2003, the specific price level adjustment of        machinery and
equipment was higher than that of the NCPI, since a        significant portion of such
machinery is imported and because the        inflation factor of the country of origin
and the decrease of the peso        versus the respective currency were higher.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(8)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Accruals
- - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Accruals
at December 31, 2004 and 2003 include the following:  </font></TD>
</TR>
</TABLE>
<BR>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <td COLSPAN=2><font size="2">December 31, 2004 </font>
      <HR WIDTH=90% SIZE=1 noshade align="left">
    </td>
    <TH COLSPAN=2><FONT SIZE=1>Salaries and <BR>
      other personnel <BR>
      benefits </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>Fees </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>Total </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=51% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=11% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=11% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=11% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=51% ALIGN=LEFT><FONT SIZE=2>Balances at December 31, 2003 </font></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;7,835 </font></TD>
    <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>1,474 </font></TD>
    <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>9,309 </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Increases charged to operations </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>50,150 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,181 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>56,331 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Payments </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(52,854 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4,192 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(57,046 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Balances at December 31, 2004 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;5,131 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,463 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>8,594 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT colspan="2"><FONT SIZE=2>December 31, 2003 </font>
      <hr width=90% size=1 noshade align="left">
      <FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Balances at December 31, 2002 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;6,510 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,250 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7,760 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Increases charged to operations </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>38,960 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,382 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>40,342 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Payments </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(37,635 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(1,158 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(38,793 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Balances at December 31, 2003 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;7,835 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,474 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>9,309 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-21 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<!-- MARKER PAGE="sheet: 7; page: 7" -->

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B> (9)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Notes
payable, long-term debt and medium-term notes - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(a)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Notes
payable - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Notes
payable relate to six promissory notes denominated in dollars              and signed
between December 24 and 30, 2004 with BBVA Bancomer,              S.A. The notes bear
annual interest at a rate that ranges between              3.24% and 3.37%, maturing
through March 31, 2005 and have no              specific security. These obligations were
settled at maturity (see              note16).  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(b)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Long-term
debt - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
At
December 31, 2004 and 2003, the Company&#146;s long-term debt is as follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=74% ALIGN=LEFT><FONT SIZE=2>Industrial mortgage loan (i) </font></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=8% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=8% ALIGN=RIGHT><FONT SIZE=2>20,069 </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Medium-term notes (ii) </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,402 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,569 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Total long-term debt </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,402 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>23,638 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Less current installments </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,402 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,268 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Long-term debt excluding current
      installments and debt </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;classified as current
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>19,370 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(c)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Industrial
mortgage loan - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
amounts paid by the Company for the installments due in the              year 2003 were
1,452,887 dollars. Additionally, in 2004 and 2003              the Company prepaid
1,697,952 and 29,930,517 dollars plus interest              thereon, respectively.
Finally, by settling the balance of              1,697,952 dollars, the Company paid this
loan in full on March 18,              2004.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company and all of its subsidiaries that own property, plant              and equipment
granted an industrial mortgage as security for this              loan. The Company&#146;s
management is in the process of canceling the              guarantees that was required
pursuant to the restructuring              agreement with the creditor banks for freeing
the industrial              mortgage.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
debt restructuring agreement provided for compliance with              certain
requirements and obligations, which in certain instances              were not met at
December, 31, 2003.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-22 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Therefore,
in accordance with              the agreement, this situation could result in the
acceleration of              the debt. Mexican GAAP requires one-year waivers from
creditors,              otherwise, the long-term debt should be classified as current
             Therefore the long-term debt was classified as current in the
             consolidated balance sheet as of December 31, 2003.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(d)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>New
notes and medium-term notes - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
October 22, 1997 and August 17, 1998, CSG offered the holders of              medium-term
notes issued by Simec to exchange their notes 1 to 1              for new notes issued by
CSG (New Notes) ranked as third priority              notes. The New Notes bore interest
semiannually at an annual rate              of 10.5%. Principal was payable semiannually
from May 15, 2000              through November 15, 2007. As explained in the following
paragraph,              the New Notes were repaid in advance.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
May 15, 2002, Simec cancelled 200,000 dollars of its debt with              medium-term
note holders by paying 100,000 dollars and obtaining              forgiveness for another
100,000 dollars plus accrued interest. At              December 31, 2004 the remaining
medium-term notes that were not              exchanged amount to approximately 302,000
dollars plus accrued              interest.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(10)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Seniority
premiums - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
cost, obligations and other seniority premium components, mentioned        in note 2j,
have been determined based on computations prepared by        independent actuaries at
December 31, 2004, 2003 and 2002.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
components of the net periodic cost for the years ended December 31, 2004, 2003 and 2002
are as follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2002 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=68% ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      periodic cost: </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=7% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Service
      cost </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;570 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>297 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>369 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial
      cost </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>309 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>208 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>241 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
      of transition liability </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>389 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>249 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>83 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
      of prior service cost and plan </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;modifications
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>91 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>67 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>318 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect
      of cancelled obligations </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>357 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      periodic cost </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$1,716 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>821 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,011 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-23 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
actuarial present value of benefit obligations is as follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=72% ALIGN=LEFT><FONT SIZE=2>Projected benefit obligation (PBO) </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=9% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;7,782 </font></TD>
        <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=9% ALIGN=RIGHT><FONT SIZE=2>6,159 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Unamortized items: </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Transition asset </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(2,864 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(2,412 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Prior service cost and plan modifications </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(394 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Variances in assumptions and experience adjustments </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(325 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(331 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Additional liability </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,534 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,031 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Unfunded accrued pension liability included in the </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;consolidated balance sheets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;6,733 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>5,447 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
most significant assumptions used to determine the net periodic cost of the plan are as
follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003</font>
      <hr width=95% size=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Discount rate </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4.5 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4.5 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Rate of compensation increase </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Expected return on plan assets </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4.5 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4.5 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>% </font></TD>
  </TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-24 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(11)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Income
(IT) and asset (AT) taxes, employee statutory profit sharing (ESPS) and tax loss
carryforwards - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
ICH,
the holding company of Simec is subject to the tax consolidation        regime. On April
24, 2001, ICH filed with the Servicio de        Administraci&#243;n Tributaria (Internal
Revenue Service), notice of the        Company&#146;s incorporation to such regime, effective
as of January 1, 2002.        Under this regime, each entity included in the Company
calculates its IT        expenses/benefit on a separate basis.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
current tax regulations, companies must pay the greater of their IT        and AT. Both
taxes recognize the effects of inflation, although        differently from Mexican GAAP.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
ESPS
is calculated practically on the same basis as IT, however, without recognizing the
effects of inflation.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
AT law provides for a 1.8% tax on the value of assets, restated for inflation, less
certain liabilities.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
At
December 31, 2004 and 2003 and 2002 the IT expense (benefit)        attributable to
income from continuing operations before IT and ESPS, and        minority interest,
differed from the amount computed by applying the        Mexican IT rate of 33% in 2004,
34% in 2003 and 35% in 2002 to income        from continuing operations, before these
provisions and minority        interest, as a result of the following:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=57% ALIGN=LEFT><FONT SIZE=2>Computed &#147;expected&#148; tax expense </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;573,135 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2>156,601 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2>36,643 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Increase (decrease) resulting from: </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Effects of inflation, net </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>33,677 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>41,048 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>8,872 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Non-deductible expenses </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>427 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>407 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,623 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Adjustments for enacted changes in tax laws </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and rates </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(277,356 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(33,319 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(24,648 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Change in valuation reserve of deferred tax </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;assets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(1,477 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(45,185 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(55,685 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Majority asset tax </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>10,343 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>12,767 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>15,406 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Other, net </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(8,368 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>14,983 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(9,984 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT expense (benefit) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;330,381 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>147,302 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(24,773 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-25 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
tax effects of temporary differences that give rise to significant        portions of the
deferred tax assets and liabilities at December 31, 2004        and 2003, are presented
below:  </font></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=70% ALIGN=LEFT><FONT SIZE=2>Deferred tax assets: </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Allowance for doubtful receivables </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,944 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>8,122 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Accrued expenses </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>18,313 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>10,024 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Advances from customers </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>28,677 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>45,251 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Net operating loss carryforwards </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>17,879 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>212,520 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Recoverable AT </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>180,783 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>177,241 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross deferred tax assets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>252,596 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>453,158 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Less valuation allowance </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>192,935 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>194,412 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax assets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>59,661 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>258,746 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Deferred tax liabilities: </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Inventories, net from the balance as of December 31, 1986 not </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;yet deducted </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>313,367 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>98,710 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Derivative financial instruments </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>5,488 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,965 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Property, plant and equipment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>990,490 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,167,025 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Preoperating expenses </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>73,272 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>87,001 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Purchase commitment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>104,078 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Other </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>6,160 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>584 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross deferred tax liabilities </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,492,855 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,358,285 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax liability </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$1,433,194 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,099,539 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-26 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
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<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Based
on calculations made by the Company&#146;s management, the deferred        employee statutory
profit sharing is immaterial at December 31, 2004 and        2003. The valuation
allowance for deferred tax assets as of December 2004        and 2003 was $192,935 and
$194,412, respectively. The net change in the        total valuation allowance for the
years ended December 31, 2004, 2003 and        2002 was a decrease of $1,477, $45,185 and
$55,685, respectively. In        assessing the realizability of deferred tax assets,
management considers        whether it is more likely than not that some portion or all
of the        deferred tax assets will not be realized. The ultimate realization of
       deferred tax assets is dependent upon the generation of future taxable
       income during the periods in which those temporary differences become
       deductible. Management considers the scheduled reversal of deferred tax
       liabilities, projected future taxable income, and tax planning strategies
       in making this assessment.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
At
December 31, 2004, tax loss carryforwards and recoverable AT not affecting ESPS, expire
as follows:  </font></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=300>
  <TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=4><FONT SIZE=1>Restated through December 31, 2004 </font>
<HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1>Expiring in </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>Tax loss <BR>
carryforwards </font><HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>Recoverable <BR>
AT </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2005 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70
      </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>646 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2006 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>1,159 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>6,850 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2007 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>8,566 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>19,130 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2008 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>8,517 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>31,402 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2009 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>6,803 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>17,058 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2010 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>651 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>47,461 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2011 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>383 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>15,304 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2012 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>21,068 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>17,870 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2013 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>5,306 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>15,063 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=center><FONT SIZE=2>2014 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>11,333 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>9,999 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;63,856 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>180,783 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>
  </TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A
new income tax law was enacted on January 1, 2002. This law established        an income
tax rate of 33% for 2004, 34% for 2003, and 32% for 2005.        However, on December 1,
2004 the rates were again changed to 30% for        2005, 29% for 2006, and 28% for 2007
and thereafter. As a result of these        changes, during the years ended December 31,
2004, 2003 and 2002 the        Company recognized decreases in net deferred tax
liabilities of $277,356,        $33,319 and $24,648, respectively, which were credited to
the results of        operations of such years.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-27 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>
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<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
the law in force through December 31, 2004, inventory purchases        were tax
deductible when made, regardless of the time of sale, which        resulted in the
deferred income tax liability shown above. The new tax        law, effective as of 2005,
provides that inventories will be tax        deductible when sold, establishing
transition provisions to tax the        inventory balance at December 31, 2004, over
periods depending on the        circumstances of each entity.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(12)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Stockholders&#146;
equity - </B> </font></TD>
</TR>
</TABLE>
<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The principal characteristics of
stockholders&#146; equity are described below:  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(a)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Structure
of capital stock - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>i)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Board of Directors&#146; Meeting held on May 13, 2004, the                     minority
stockholders exercised their preemptive rights to                     subscribe and pay
for the increase in the variable portion                     of capital stock resolved on
November 19, 2003 (see                     paragraph v), by contributing $23,743 ($22,902
historical)                     for subscribing and paying 1,569,962 shares. 301,153
shares                     that were neither subscribed nor paid were cancelled.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>ii)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Board of Directors&#146; Meeting held on December 3, 2004                     the
directors resolved to record as contributions for future                     capital
stock increases, $221,448 ($216,698 historical)                     corresponding to
various contributions by Industrias CH,                     S.A. de C.V. or ICH, with the
purpose that the Company and                     CSC acquire the assets of the steel
plants located in                     Tlaxcala and Puebla and for the assignment of a
technical                     assistance agreement derived from such acquisition.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>iii)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Ordinary General Stockholders&#146; Meeting held on March                     26, 2003,
the stockholders agreed to increase the variable                     capital stock by
$234,400 ($214,326 historical) issuing                     14,691,936 common Series &#147;B&#148;
shares, of which ICH paid and                     subscribed 12,317,605 shares plus 8
shares that were held in                     the Company&#146;s treasury through the
capitalization of the                     Company&#146;s debt with ICH. Of the remaining
2,374,331 shares,                     1,313,541 shares were subscribed by the rest of the
                    shareholders, leaving 1,060,790 shares in the Company&#146;s
                    treasury, which as mentioned in paragraph (v) below, were
                    subsequently subscribed by ICH, increasing capital stock by
                    $214,652 ($198,851 historical).  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-28 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>iv)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Board of Directors&#146; Meeting held on May 21, 2003 the                     directors
resolved to record as contributions for future                     capital stock
increases $162,603 ($150,414 historical)                     corresponding to various
Company stockholder contributions                     with the purpose of CSC repaying a
portion of its industrial                     mortgage loan at such date.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>v)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Ordinary General  Stockholders&#146;  Meeting held on November 19, 2003, the  stockholders
 agreed to increase the variable                     capital stock by $171,388 ($162,235
 historical) issuing 11,120,951 common Series &#147;B&#148; shares, of which 9,249,836
                    shares were  subscribed and paid through the  contributions  for
future capital stock  increases  referred to in                     paragraph (iv) above.
 The remaining  1,871,115  shares will be offered to the rest of the shareholders in
order                     for them to  exercise  their  preemptive  rights  to  subscribe
 and pay for the new issue of stock on a prorate                     basis. Also at the
Meeting,  the stockholders  agreed to the subscription by ICH of the 1,060,790 shares
held in                     the  Company&#146;s  treasury  since March 26, 2003,  equal to
$16,342  ($15,475  historical).  This  accounted for a                     capital stock
increase of $162,603 ($150,414 historical).  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>             vi)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Extraordinary General Stockholders&#146; Meeting held on                     April 30,
2002, the stockholders&#146; agreed to undertake a                     reverse split of the
total number of shares representing the                     Company&#146;s capital stock as of
that date by issuing                     89,422,606 Series &#147;B&#148; shares without par value.
Shareholders                     were to exchange twenty of their outstanding shares for
one                     new share. For this to be possible, the Company&#146;s
                    stockholders authorized the conversion of all Series &#147;A&#148;
                    shares into Series &#147;B&#148; shares.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>             vii)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
the Ordinary General Stockholders&#146; Meeting held on June 5, 2002, the stockholders
resolved to:  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>vi)  </I></B> </font></TD>

<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Increase
the variable capital stock by $335,123 ($297,498                     historical) through
the issue of 407,867,548 common Series                     &#147;B&#148; shares, of which ICH
subscribed and paid up 336,396,918                     shares by capitalizing debt. The
remaining 71,470,630 shares                     were offered to all other Simec
stockholders who had                     preemptive rights and thus subscribed and paid
up the                     35,775,960 shares to which they were entitled; therefore,
                    the remaining 35,694,670 shares were cancelled. As a result
                    of this transaction, the Company&#146;s capital stock increased
                    by $305,678 ($271,462 historical).  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-29 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-   </font></TD>

<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ratify
and modify the instruction given to the Company at                       the
Extraordinary General Stockholders&#146; Meeting held on                       April 30, 2002
mentioned in paragraph (vi) above; the                       shares relating to the
reverse split should now be issued                       in a number equal to that of
common Series &#147;B&#148; shares,                       without par value, representing the total
number of shares                       outstanding.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
After
the above activity, the Company&#146;s capital stock amounts to               $3,277,340
represented by 133,542,984 common, Series &#147;B&#148; shares               with no par value.
Such shares may be subscribed and paid by               Mexican or foreign individuals or
corporations.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Each
share has the right to one vote at stockholder meetings. The              minimum fixed
capital stock not subject to withdrawal amounts to              $222,962 (historical).  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(b)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Comprehensive
income - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
comprehensive income reported on the statements of              stockholders&#146; equity,
represents the results of the Company&#146;s              activities during the year, and
includes the items mentioned below              which, in accordance with Mexican GAAP,
are reported directly in              stockholders&#146; equity, except for the net income:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=51% ALIGN=LEFT><FONT SIZE=2>Net income </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,406,392 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>308,189 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT SIZE=2>129,120 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Result from holding non-monetary assets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>87,919 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>377,067 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>425,295 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Deferred income taxes on the result from </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;holding non-monetary assets </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(24,545 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(137,394 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(137,697 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Fair value of derivative financial </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;instruments </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>3,249 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>15,044 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Deferred income taxes on the fair value </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;of derivative financial instruments </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(975 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(4,965 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Minority interest </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>46 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>14 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,472,086 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>557,941 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>416,732 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-30 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(c)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Restrictions
on stockholders&#146; equity - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Five
percent of net income for the year must be appropriated to the              statutory
reserve, until it reaches one-fifth of capital stock. At              December 31, 2004
the statutory reserve amounts to $13,803, still              short of the required amount.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Stockholder
contributions restated as provided for by tax law may              be refunded to the
stockholders tax-free, to the extent that the              tax bases of such
contributions equal or exceed stockholders&#146;              equity.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Retained
earnings, on which no income taxes have been paid, and              other stockholders&#146;
equity accounts are subject to income taxes in              the event of distribution, at
the rate of 30%, payable by the              Company; consequently, the stockholders may
only receive 70% of              such amounts.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(13)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Acquisition
- - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
August 9, 2004, the Company acquired the inventories, land, buildings,        machinery
and equipment and assumed the labor obligations of the Apizaco,        Tlaxcala and
Cholula, Puebla plants that were owned by Atlax, S.A. de        C.V. and Operadora
Metamex, S.A. de C.V. The purchase price amounted to        approximately 120 million
dollars and was paid with the Company&#146;s own        funds and with a contribution for
future capital stock increases of 19        million dollars from Industrias CH, S.A. de
C.V. The acquisition of these        assets was intended to increase the annual
production capacity, raise        sales volumes and for the benefits reflected in input,
logistics,        production and marketing programs. The Company began operating the
       Tlaxcala and Puebla plants on August 1, 2004.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A
summary of the estimated fair value of the assets acquired and the      liabilities
assumed at the acquisition date, restated for inflation through      December 31, 2004 is
as follows:  </font></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>

    <TD WIDTH=68% ALIGN=LEFT><FONT SIZE=2>Current assets (inventories) </font></TD>

    <TD WIDTH=19% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;131,178 </font></TD>

    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT width="68%"><FONT SIZE=2>Property, plant and equipment </font></TD>
    <TD ALIGN=LEFT width="19%"><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT width="11%"><FONT SIZE=2>1,211,128 </font></TD>

    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT width="68%"><FONT SIZE=2>Prepaid technical assistance </font></TD>
    <TD ALIGN=LEFT width="19%"><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT width="11%"><FONT SIZE=2>83,207 </font></TD>

    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT width="11%">
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD width="2%"></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT width="68%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      assets acquired </font></TD>
    <TD ALIGN=LEFT width="19%"><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT width="11%"><FONT SIZE=2>1,425,513 </font></TD>

    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT width="68%"><FONT SIZE=2>Labor obligations </font></TD>
    <TD ALIGN=LEFT width="19%"><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT width="11%"><FONT SIZE=2>3,316 </font></TD>

    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT width="11%">
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD width="2%"></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT width="68%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      assets acquired </font></TD>
    <TD ALIGN=LEFT width="19%"><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT width="11%"><FONT SIZE=2>$1,422,197 </font></TD>

    <TD ALIGN=LEFT width="2%"><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT width="11%">
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD width="2%"></TD>
  </TR>
</TABLE>


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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-31 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
As
a result of the acquisition of assets mentioned above, below is a        table with
certain information regarding the results of operation of the        Apizaco and Cholula
plants over a twelve-month period as if the plants        had been incorporated into the
Company since the beginning of the year        (unaudited information):  </font></TD>
</TR>
</TABLE>
<BR>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=6><FONT SIZE=1>Financial statements as of December 31, 2004 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>Simec <BR>
without Apizaco <BR>
and Cholula </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>*Apizaco <BR>
and <BR>
Cholula <BR>
(projected) </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>*Total <BR>
projected  </font>
<HR WIDTH=95% SIZE=1 noshade> </TH>
</TR>
<TR VALIGN=Bottom>
     <TD WIDTH=41% ALIGN=LEFT><FONT SIZE=2>Net sales </font></TD>
     <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT SIZE=2>$4,479,005 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT SIZE=2>2,889,473 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT SIZE=2>7,368,478 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Marginal profit </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,972,709 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>977,654 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,950,363 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Net income </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,131,754 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>659,131 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,790,885 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Earnings per share (pesos) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>8.51 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4.96 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>13.47 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Tons sold </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>617,683 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>373,473 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>991,156 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       *   </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Figures
were determined by projecting the operations of the Apizaco            and Cholula plants
based on actual operations of a five-month period,            from August to December
2004, projected linearly to a twelve-month            period.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company and the sellers undertake to indemnify the other party for        damages
resulting from (i) any false or inaccurate statement or warranty,        or (ii) any
failure to comply with any of the obligations of the        agreement. The claim shall be
valid over a two-year period after the        closing of the sale and up to 4 million
dollars.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-32 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(14)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Segment
information - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s sales are made primarily in Mexico and the United States of        America, and
are directed basically to the construction industry.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s net sales to customers in Mexico or foreign countries or regions were as
follows:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=41% ALIGN=LEFT><FONT SIZE=2>Mexico </font></TD>
     <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT SIZE=2>$5,076,148 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT SIZE=2>2,594,404 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT SIZE=2>2,030,094 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>United States of America </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>602,421 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>331,191 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>271,248 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Latin America </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,350 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,382 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7,600 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Canada </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>480 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Other </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,033 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,161 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>888 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$5,682,952 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,930,138 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,310,310 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(15)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Commitments
and contingent liabilities - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>     Commitments  </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(a)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As
discussed in note 6 to the financial statements, late in 2003               the Company
contracted with PEMEX Gas y Petroqu&#237;mica               B&#225;sica, derivative
financial instruments for hedging purposes               to cover price fluctuations of
natural gas prices. The hedge will               guarantee a portion of the Company&#146;s
natural gas consumption from               2004 to 2006 at a fixed price of 4.462 dollars
per MMBtu.   </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(b)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
December 31, 2004, the Company has a number of supply contracts               whereby it
undertakes to supply certain customers and related               companies with steel
products during 2005. Noncompliance by the               Company could result in the
merchandise being rejected and/or               returned with no responsibility for the
supplier or related party.               These commitments include that with Aceros y
Laminados Sigosa,               S.A. de CV. (SIGOSA) (related party) whereby the Company
              undertakes to supply to SIGOSA 44,000 tons of steel during the
              period from January 1 to December 31, 2004. However, at December
              31, 2004 the Company still had to supply 12,840 tons of steel.   </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-33 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(c)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At
December 31, 2004 the Company has commitments for input               purchases from
certain suppliers. Such commitments include the               purchase during 2005 of
scrap, raw materials and materials for               32.5 million dollars.   </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>
Contingent
liabilities - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>(a)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
1989, Pacific Steel, Inc. (&#147;Pacific Steel&#148;), a subsidiary of              Simec based in
National City, San Diego County, California, was              required by the California
Regional Water Control Board, San Diego              Region (the &#147;Regional Board&#148;) to
sample soil associated with the              storage of automobile shredder waste at its
scrap yard. The              automobile shredder waste had been generated by Pacific
Steel&#146;s              prior scrap processing operations. The samples indicated the
             presence of contaminated soil. In 1990, in response to another
             directive issued by the Regional Board, Pacific Steel submitted a
             range of remedial alternatives to clean up the contaminated soil.
             The Regional Board has not responded to Pacific Steel&#146;s clean-up
             alternatives.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
September 2002, the California Department of Toxic Substances              Control (the
&#147;Department&#148;) conducted an inspection of the scrap              yard. On September 24,
2002, the Department issued an Imminent and              Substantial Endangerment
Determination and Schedule for Compliance,              and on October 10, 2004, the
Department issued a Complaint              Investigation Report (collectively, the
&#147;Enforcement Orders&#148;). The              Enforcement Orders allege that certain soil piles
and soil              management and metal recovery operations violate hazardous waste
             laws and may cause an imminent and substantial endangerment to
             human health and the environment. On July 21, 2004, to address the
             problems alleged in the Enforcement Orders, the Department filed a
             Complaint for Civil Penalties and Injunctive Relief in San Diego
             County Superior Court. On July 26, 2004, the court, pursuant to
             simultaneous stipulation filings by the parties, entered a Final
             Judgment and Injunction Pursuant to Stipulation (the &#147;Judgment&#148;).
             The Judgment requires Pacific Steel to make a payment of 235,000
             dollars (to be paid in four payments of 58,750 dollars over the
             course of one year), for penalties (131,250 dollars), the
             Department&#146;s costs (45,000 dollars), and a supplemental
             environmental project (58,750 dollars). Pacific Steel has made two
             of the four payments. On August 12, 2004, pursuant to the Judgment,
             Pacific Steel and the Department entered a Corrective Action
             Consent Agreement (the &#147;Consent Agreement&#148;). Pacific Steel has
             retained consultants and work has commenced pursuant to the Consent
             Agreement.   </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-34 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Based
upon the advice of environmental engineering consultants              retained by Simec,
consultation with other parties and the fact              that Pacific Steel has
discontinued scrap processing operations,              Simec believes, based upon present
volume assumptions, that its              liability will be between 0.8 million dollars
and 1.7 million              dollars with respect to the remediation of this site,
exclusive of              any contribution from third parties or insurance coverage.
Simec              maintains a reserve of approximately 1.7 million dollars ($19.1
             million). Management of the Company cannot assure that the Regional
             Board or any other interested third party will not object to the
             terms of the Consent Agreement, or that remediation will cost more
             than management has estimated. Pacific Steel has discontinued
             processing scrap in its scrap yard in San Diego, but continues to
             collect raw scrap for transport to the Mexicali facility for
             processing.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Additionally,
the Community Development Commission of National              City, California (&#147;CDC&#148;)
has announced that it intends to pursue              redevelopment of the site and is
preparing to make an offer to              Pacific Steel to purchase the site for fair
market value less the              cost of remediation and less certain investigation
costs incurred              by CDC. Pacific Steel has communicated to CDC that it will
not be a              voluntary seller of the site unless there is an alternate site on
             which it could relocate its business. CDC, as a redevelopment
             agency formed under California law, has the power to condemn the
             site for redevelopment purposes provided it pays fair market value
             for the site and, in the event relocation of the existing business
             is not feasible, the business as well.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Consequently,
and due to the imminent expropriation of the land              where PS conducts its
operations, during the year ended December              31, 2002 PS recorded its land at
realizable value, based on the              appraisal made by independent appraisers.
This resulted in a              $21,694 ($19,750, historical) decrease in the value of
the land and              a charge to income in 2002 by the same amount.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-35 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (b)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On
July 13, 2001 CSG filed  nullification  proceedings  against the negative response to the
request for decreasing its              estimated  income taxes for  September to
December  2000 which had been filed before the &#147;D&#233;cimo  Primera Sala Regional
             Metropolitana&#148;  (Eleventh Regional Metropolitan  Courtroom) of the Tribunal
Federal de Justicia Fiscal y Administrativa              (Federal  Tax and
 Administrative  Court  of  Justice).  On  September  8,  2003  the tax  authorities
 replied  to the              nullification  proceedings  filed by CSG;  on November  27,
 2003 CSG filed the  corresponding  brief,  evidencing  the              erroneous
 arguments  in the  authority&#146;s  reply.  On  February  3, 2004 the  judges  making up the
 Eleventh  Regional              Metropolitan  Courtroom of the Federal Tax and
 Administrative  Court of Justice issued their judgment  recognizing the
             validity of the resolution contested by the tax authorities.  Consequently,
on May 6, 2004 the tax authorities appealed              against the judgment issued by
the Regional  Courtroom,  which was then turned over to the Octavo Tribunal Colegiado en
             Materia  Administrativa  del  Primer  Circuito  (First  Circuit  Eight
 Collegiate  Administrative  Courtroom).  In the              Company&#146;s management and
legal counsel opinion,  there are reasonable grounds on which to obtain a favorable
resolution              for CSG.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (c)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On
July 2, 2003, CSG filed nullification proceedings before the              Tribunal
Federal de Justicia Fiscal y Administrativa (Federal Tax              and Administrative
Court of Justice) against an official letter              issued by the Administraci&#243;n
Central de Auditor&#237;a Fiscal              Internacional (Central International Fiscal
Auditing Office) under              the Servicio de Administraci&#243;n Tributaria
(Internal Revenue              Service), whereby CSG is deemed to have unpaid taxes of
$89,389 on              alleged omission (being jointly liable) in the payment of income
             taxes it should have withheld from third parties on interest
             payments abroad in 1998, 1999, 2000, and for the period from
             January 1 to June 30, 2001. CSG presently awaits the authorities&#146;
             reply. In the Company&#146;s management and legal counsel opinion there
             are reasonable grounds on which to obtain a favorable resolution
             for CSG.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (d)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company is involved in a number of lawsuits and claims arising              in the normal
course of business. It is expected that the final              outcome of these matters
will not have significant adverse effects              on the Company&#146;s financial
position and results of operations.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (e)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
five-year period prior to the most recent income tax return              filed is open to
governmental tax examination.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-36 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


<!-- MARKER FORMAT-SHEET="Bold Ital letter hang" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (f)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In
accordance with the income tax law, companies carrying out              transactions with
related parties, whether domestic or foreign, are              subject to certain
requirements as to the determination of prices,              since such prices must be
similar to those that would be obtained              in arm&#146;s-length transactions.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Should
the tax authorities examine the transactions and reject the              related-party
prices, they could assess additional taxes plus the              related restatement and
interest, in addition to penalties of up to              100% of the unpaid taxes.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (g)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There
is a contingent liability arising from the labor obligations mentioned in note 2j.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(16)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Subsequent
event - </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
As
mentioned in note 9a to the consolidated financial statements, the        notes payable
maturing through March 31, 2005 were paid as they became        due.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(17)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Recently
issued accounting pronouncements under Mexican GAAP- </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
During
2004, the Mexican Institute of Public Accountants issued the        Bulletins discussed
below which, are effective for fiscal years beginning        after December 31, 2004,
although earlier application is encouraged.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (a)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Business
acquisitions-</I></B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> The most
      significant issues in Bulletin B-7 are: (a) use of the purchase method as
      the only alternative for valuing businesses acquired and investments in
      associated companies, thus eliminating the supplementary application of
      former International Accounting Standard 22, &#147;<i>Business Combinations</i>;&#148;
      (b) change in the accounting for goodwill, eliminating amortization and
      requiring that goodwill be evaluated for impairment, and also requiring
      that negative goodwill not fully amortized at the date of adoption of Bulletin
      B-7 be carried to the results of operations, as a change in accounting principle;
      (c) establishment of specific rules to account for the acquisition of minority
      interest and for transfers of assets or exchange of shares among entities
      under common control, and (d) accounting for intangible assets acquired
      in a business combination, under Bulletin C-8, &#147;<i>Intangible Assets</i>&#148;.
      </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company opted for the early adoption of this Bulletin (see note 13).  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-37 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (b)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Financial
instruments - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">The
amendments to Bulletin C-2, &#147;<I>Financial Instrument</I>s,&#148; are intended to
harmonize Mexican accounting standards with international standards in areas
relating to available-for-sale financial instruments, transfers among
categories of financial assets, and recognition of impairment. The effects
of the change in accounting for these assets, if any, should be recognized
as established by Bulletin A-7, &#147;<I>Comparability</I>,&#148; and comparative
financial information for prior years should not be restated. The
Company estimates that the adoption of this Bulletin will not have
a material effect on its financial position or results of
operations.  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </font></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>       (c)  </I></B> </font></TD>

<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Labor
obligations - </I></B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
new Bulletin D-3, issued in January 2004, substitutes and              supersedes former
Bulletin D-3, published in January 1993 and              revised in 1998. The provisions
of this Bulletin are effective              immediately, except for those relating to
payments upon termination              of labor relationships, which are effective
January 1, 2005.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">This
Bulletin adds the issue of post-retirement benefit payments, to supersede
Circular 50, &#147;<I>Interest Rates to be Used for Valuing Labor Obligations and
Supplementary Application of Accounting Principles, Relating to Labor
Obligations.</I>&#148; Also, this Bulletin eliminates the issue of unforeseen
payments, and replaces it with the one relating to &#147;<I>Payments Upon
Termination of the Labor Relationship</I>,&#148; defining them as those payable to
workers upon termination of the labor relationship before retirement age.
These payments are of two types: (i) for restructuring reasons, for which
the provisions of Bulletin C-9, &#147;<I>Liabilities, Accruals, Contingent
Assets and Liabilities, and Commitments</I>,&#148; should be applied, and
(ii) for reasons other than restructuring, which valuation and
disclosure requirements are the same as those for pension and
seniority premium payments, permitting that, upon adoption of the
Bulletin, the transition asset or liability be immediately
recognized in the results of operations, or else, that it be
amortized over the average remaining service life of employees.  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company estimates that the adoption of this Bulletin will not              have a
material effect on its financial position or results of              operations.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-38 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(18)  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Differences
between Mexican and United States accounting principles: </B> </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s consolidated financial statements are prepared in        accordance with
Mexican GAAP, which differ in certain significant        respects from US GAAP.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Mexican GAAP consolidated financial statements include the effects of        inflation as
provided for under Bulletin B-10, as amended. The following        reconciliation to US
GAAP does not include the reversal of the        adjustments for the effects of
inflation, since the application of        Bulletin B-10 represents a comprehensive
measure of the effects of price        level changes in the inflationary Mexican economy
and, as such, is        considered a more meaningful presentation than historical
cost-based        financial reporting for both Mexican and US accounting purposes.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Other
significant differences between Mexican GAAP and US GAAP and the        effects on
consolidated net income and consolidated stockholders&#146; equity        are presented below,
in thousands of constant Mexican pesos as of        December 31, 2004, with an
explanation of the adjustments.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;  </B> </font></TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Reconciliation
of net income: </B> </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2002 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=48% ALIGN=LEFT><FONT SIZE=2>Net income as reported under Mexican
      GAAP </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=13% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,406,392
      </font></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=13% ALIGN=RIGHT><FONT SIZE=2>308,189 </font></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=13% ALIGN=RIGHT><FONT SIZE=2>129,120 </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Inventory indirect costs </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,632 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4,354 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(3,933 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Depreciation on restatement of machinery
      and </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;equipment </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(23,147 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(24,876 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(46,895 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;Adjustment of land to net realizable value
      </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <td align=RIGHT><font size=2>&#151; </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
    <td align=RIGHT><font size=2>(32,866 </font></td>
    <td align=LEFT><font size=2>) </font></td>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Accrued vacation costs </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(611 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,291 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(862 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Deferred income taxes </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(43,941 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(52,091 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>151,593 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Deferred employee profit sharing </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>15 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>212 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>22 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Pre-operating expenses, net </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>27,548 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>27,546 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,976 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Amortization of gain from monetary position
      and </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;exchange loss capitalized
      under Mexican GAAP </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,960 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,960 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,960 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Minority interest applicable to the above
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;adjustments</font></TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD></TD>
    <td align=RIGHT valign="bottom"><font size=2>(1 </font></td>
    <td align=LEFT valign="bottom"><font size=2>) </font></td>
    <td align=RIGHT valign="bottom"><font size=2>(9 </font></td>
    <td align=LEFT valign="bottom"><font size=2>) </font></td>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      approximate US GAAP adjustments </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(27,544 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(41,313 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>84,986 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Approximate net income under US GAAP </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,378,848 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>266,876 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>214,106 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Weighted average outstanding basic </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>132,972,749 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>119,052,681 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>99,967,222 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      earnings per share (pesos) </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.37
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2.24 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2.14 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-39 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
There
are several entries recorded in other expenses in 2004 under        Mexican GAAP, which
amounts approximately $33,251 that accordingly with        US GAAP should be presented as
operating expenses.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
    <TD WIDTH=95%> <FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Reconciliation
      </b><B>of stockholders&#146; equity:</B> </font> </TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=54% ALIGN=LEFT><FONT SIZE=2>Total stockholders&#146; equity reported under </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Mexican GAAP </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;6,583,830 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,866,553 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>3,931,357 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Minority interest included in stockholders&#146; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;equity under Mexican GAAP </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(310 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(264 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(264 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Inventory indirect costs </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>15,782 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>10,149 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>14,503 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Restatement of machinery and equipment </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>268,173 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>372,108 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>749,352 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Accrued vacation costs </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(611 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(5,291 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Deferred income taxes </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>35,666 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>54,080 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(31,224 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Deferred employee profit sharing </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>675 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>659 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>444 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Pre-operating expenses </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(229,249 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(263,638 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(291,183 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Gain from monetary position and exchange loss </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;capitalized, net </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(182,546 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(189,510 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(196,471 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total approximate US GAAP adjustments </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(92,420 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(16,416 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>239,866 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Total approximate stockholders&#146; equity under US </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;GAAP </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;6,491,410 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,850,137 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,171,223 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-40 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
A
summary of changes in stockholders&#146; equity, after the approximate US GAAP adjustments
described above, is as follows:  </font></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <td COLSPAN=2 align="center"><FONT SIZE=1>Capital <BR>
      Stock and <BR>
      Paid-in <BR>
      Capital </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </td>
    <td COLSPAN=2 align="center"><FONT SIZE=1>Retained <BR>
      Earnings </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </td>
    <td COLSPAN=2 align="center"><FONT SIZE=1>Fair Value of <BR>
      Derivative <BR>
      Financial <BR>
      Instruments </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </td>
    <td COLSPAN=2 align="center"><FONT SIZE=1>Cumulative <BR>
      Restatement <BR>
      Effect </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </td>
    <td COLSPAN=2 align="center"><FONT SIZE=1>Total <BR>
      Stockholders&#146; <BR>
      Equity </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </td>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=33% ALIGN=LEFT><FONT SIZE=2>&nbsp;Balances as of December </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;31, 2002 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$3,012,357 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>220,152 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>938,714 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,171,223 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Increase in capital stock </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>377,255 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>377,255 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Net comprehensive income </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>266,876 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,079 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>24,704 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>301,659 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Balances as of December </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;31, 2003 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,389,612 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>487,028 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,079 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>963,418 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,850,137 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Increase in capital stock </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>23,743 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>23,743 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Net comprehensive income </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,378,848 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,274 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>236,408 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,617,530 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Balances as of December </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;31, 2004 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$3,413,355 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,865,876 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>12,353 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,199,826 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,491,410 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Minority
interest -</B>&nbsp;  </font> </TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
Mexican GAAP, the minority interest in consolidated subsidiaries is        presented as a
separate component within stockholders&#146; equity on the        consolidated balance sheet.
For US GAAP purposes, minority interest in        not included in stockholders&#146; equity.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Restatement
of prior year financial statements -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
accordance with Mexican GAAP, prior year financial information of foreign subsidiary must
be restated using the inflation rate of the country in which the foreign subsidiary is
located, then translated to pesos at the exchange rate as of year end. This procedure
results in the presentation of prior year amounts representing the purchasing power of
the respective currencies as of the end of the latest year presented.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
US GAAP, prior year financial information of foreign subsidiary must be restated in
constant units of the reporting currency, the Mexican peso, which requires the
restatement of such prior year amounts using the inflation rate of Mexico.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-41 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
This
difference is not included in the GAAP reconciliation of net income and stockholders&#146;
equity, since its effect is not significant.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Inventory
costs -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
As
permitted by Mexican GAAP, some inventories are valued under the direct cost system,
which includes material, direct labor and other direct costs. For purposes of complying
with US GAAP, inventories have been valued under the full absorption cost method.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Restatement
of property, machinery and equipment -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
As
explained in note 2g, in accordance with Mexican GAAP, imported machinery and equipment
has been restated during 2004 and 2003 by applying devaluation and inflation factors of
the country of origin.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
US GAAP, during 2004 and 2003 the restatement of all machinery and equipment, both
domestic and imported, has been done in constant units of the reporting currency, the
Mexican peso, using the inflation rate of Mexico.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Accordingly,
a reconciling item for the difference in methodologies of restating imported machinery
and equipment is included in the reconciliation of net income and stockholders&#146; equity.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Additionally,
and as mentioned in note 15(a), during 2002 the Company adjusted the value of PS land at
realizable value and due to the difference in methodologies of restating mentioned in the
previous paragraphs, the Company included a complement to the corresponding adjustment.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Accrued
vacation cost -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
For
the years ended December 31, 2002 and before, under Mexican GAAP the vacation expense was
recognized when taken rather than during the period the employees earned it. In order to
comply with SFAS 43, for the year ended December 31, 2002, the Company recorded a
decrease in net income of ($820). Starting on January 2003, Mexican GAAP requires the
recognition of vacation expense when earned.  </font></TD>
</TR>
</TABLE>
<BR>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-42 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

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<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Deferred
income taxes and employee profit sharing -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Beginning
January 1, 2000, Bulletin D-4, &#147;Accounting for Income and Asset Taxes and Employee Profit
Sharing&#148;, went into effect, eliminating most of the differences with respect to US GAAP.
Until 1999, under Mexican GAAP, deferred income taxes and employee profit sharing were
determined by a partial liability method of accounting, wherein deferred effects were
provided at the tax rate expected to be in effect upon reversal only for identifiable,
non-recurring temporary differences that were expected to reverse within a defined period
of time.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
amount of deferred income taxes and employee profit sharing charged or credited to
operations in each period for US GAAP was determined under Statement of Financial
Accounting Standards (SFAS) No. 109 based upon the difference between the beginning and
ending balances of the deferred assets or liabilities for each period, expressed in
constant Mexican pesos.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Additionally,
for US GAAP purposes, employee profit sharing must be classified as an operating expense.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
effects of temporary differences giving rise to significant portions of the deferred
assets and liabilities at December 31, 2004 and 2003, under US GAAP are present below:  </font></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font></TH>
    <TH COLSPAN=4><FONT SIZE=1>2004 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
    <TH COLSPAN=4><FONT SIZE=1>2003 </font>
      <HR WIDTH=95% SIZE=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2><FONT SIZE=1> </font> </TH>
    <TH COLSPAN=2><FONT SIZE=1>IT </font>
      <hr width=95% size=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>ESPS </font>
      <hr width=95% size=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>IT </font>
      <hr width=95% size=1 noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>ESPS </font>
      <hr width=95% size=1 noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=46% ALIGN=LEFT><FONT SIZE=2>Deferred tax assets: </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD WIDTH=10% ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Allowance for doubtful receivables
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,944
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7,875 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;Accrued expenses </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
    <td align=RIGHT><font size=2>26,903 </font></td>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <td align=RIGHT><font size=2>10,023 </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
    <td align=RIGHT><font size=2>659 </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Advances from customers </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>20,268 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>45,772 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Net operating loss carryforwards
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>17,879 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>206,080 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Recoverable AT </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>180,783 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>177,241 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <td align=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;Total gross deferred tax
      assets </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
    <td align=RIGHT><font size=2>252,777 </font></td>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <td align=RIGHT><font size=2>446,991 </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
    <td align=RIGHT><font size=2>659 </font></td>
    <td align=LEFT><font size=2>&nbsp; </font></td>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Less valuation allowance </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>192,935 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>194,412 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax
      assets </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>59,842 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>252,579 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>659 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Deferred tax liabilities: </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Inventories, net from the balance
      as of </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;December 31, 1986 not
      yet deducted </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>318,102 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>102,059 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Derivative financial instruments
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,488 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,965 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Property, plant and equipment
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,014,467 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,190,431 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Others </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>119,320 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>583 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross deferred
      tax liabilities </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,457,377 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,298,038 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
    <TD></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net deferred tax
      liability </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$1,397,535 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> &nbsp; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,045,459 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(659 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
    <TD ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
    <TD></TD>
  </TR>
</TABLE>

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<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-43 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
deferred income taxes of $1,014,467 and $1,190,431 result from differences between the
financial reporting and tax bases of property, plant and equipment at December 31, 2004
and 2003, respectively. Beginning in 1997 the restatement of property, plant and
equipment and the effects thereof on the statement of operations are determined by using
factors derived from the NCPI or, in the case of imported machinery and equipment, by
applying devaluation and inflation factors of the country of origin. Until 1996, for
financial reporting purposes, property, plant and equipment were stated at net
replacement cost based upon annual independent appraisals and depreciation was provided
by using the straight-line method over the estimated remaining useful lives of the
assets. For income tax reporting purposes, property, plant, and equipment and
depreciation are computed by a method which considers the NCPI.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Domestic
operations accounted for ninety-nine percent of the Company&#146;s pre-tax income and IT
expense in 2004, 2003 and 2002.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Pre-operating
expenses -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
For
Mexican GAAP purposes, the Company capitalized pre-operating expenses related to the
production facilities at Mexicali, as well as costs and expenses incurred in the
manufacturing and design of new products. For US GAAP purposes, these items are expensed
when incurred.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Financial
expense capitalized -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
Mexican GAAP, financial expense capitalized during the period required to bring property,
plant and equipment into the condition required for their intended use, includes
interest, exchange losses and gains from monetary position. Under US GAAP only interest
expense is capitalized as part of the cost of such assets acquired with borrowings in
foreign currencies, and interest, net of the related gain from monetary position, is
capitalized as part the cost of assets acquired with borrowings in Mexican pesos.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Pension
and other retirement benefits-</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company records seniority premiums based on actuarial computations as described in note
2j.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
For
purposes of determining seniority premium costs under US GAAP, the Company utilized SFAS
No. 87. Adjustments to US GAAP for seniority premiums were not individually or in the
aggregate significant for any period.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-44 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
SFAS
No. 106, &#147;Employers&#146; Accounting for Post-retirement Benefits Other than Pensions&#148;,
requires accrual of post-retirement benefits other than pensions during the employment
period. The Company does not provide its employees any post-retirement benefit subject to
the provisions of SFAS No. 106.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
SFAS
No. 112, &#147;Employers&#146; Accounting for Post-employment Benefits&#148;, requires employers to
accrue for post-employment benefits that are provided to former or inactive employees
after employment during the employment period. The Company does not provide these
benefits either.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
For
the year ended December 31, 1998, the Company adopted SFAS No. 132, &#147;Employers&#146;
Disclosures about Pensions and Other Post-retirement Benefits&#148;, which requires certain
additional disclosures, without any changes in the measurement or recognition of pensions
and other post-retirement benefit obligations. The additional disclosures are as follows:  </font></TD>
</TR>
</TABLE>
<BR>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=500>
  <TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
<HR WIDTH=95% SIZE=1 noshade></TH>

    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
<HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Change in projected benefit obligation- </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Projected benefit obligation at beginning of year
      </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;6,159 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>5,867 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Service cost </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>570 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>296 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Financial cost </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>309 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>208 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Actuarial gain, net </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>1,580 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>221 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Benefits paid </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(836 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>(433 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=1></TD>
    <TD></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Projected benefit obligation
      at end of year </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;7,782 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>6,159 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>
  </TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Variable
capital common stock-</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Stockholders
holding shares representing variable capital common stock may require the Company, with a
notice of at least three months prior to December 31 of each year, to redeem those shares
at a price equal to the lesser of either (i) 95% of the market price, based on an average
of trading prices during the 30 trading days preceding the end of the fiscal year in
which the redemption is to become effective or (ii) the book value of the Company&#146;s
shares approved at the meeting of shareholders for the latest fiscal year prior to the
redemption date. Although the variable capital common stock is redeemable by the terms
described above, such shares have been classified as a component of stockholders&#146; equity
in the consolidated balance sheet under both Mexican GAAP and US GAAP.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-45 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Company&#146;s
management believes the variable capital common stock represents permanent capital
because the timing and pricing mechanism through which a shareholder would exercise the
option to redeem are such that a shareholder, from the economic standpoint, would not
exercise this option. At the time, a shareholder is required to give notice of
redemption, the shareholder will not be able to know at what price the shares would be
redeemed and would not expect the present value of the future redemption payment to equal
or exceed the amount which would be received by the shareholder in a public sale.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Statement
of cash flows-</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
Mexican GAAP, the Company presents a consolidated statement of changes in financial
position in accordance with Bulletin B-12, which identifies the generation and
application of resources as representing differences between beginning and ending
financial statement balances in constant Mexican pesos. It also requires that monetary
and unrealized exchange gains and losses be treated as cash items in the determination of
resources generated by operations.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
SFAS
No. 95, &#147;Statement of Cash Flows&#148;, requires presentation of a statement of cash flows.  </font></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-46 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


<!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
following presents a reconciliation of the resources generated by (used in) operating,
investing and financing activities under Mexican GAAP to the resources generated by (used
in) such activities under US GAAP:  </font></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=54% ALIGN=LEFT><FONT SIZE=2>Net income as reported under US GAAP </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,378,848 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>266,876 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>214,106 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Add charges (deduct credits) to operations not </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;requiring (providing) funds: </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Depreciation and amortization </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>202,497 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>184,675 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>199,490 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Unrealized exchange loss (gain) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>5,815 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>77,045 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Deferred income taxes </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>352,076 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>186,491 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(213,615 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Deferred employee profit sharing </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(15 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(212 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(22 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Minority interest </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>9 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Adjustment of land to realizable value </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>54,562 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Write-down of idle machinery </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>14,156 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>43,623 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>10,998 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Accrual for seniority premium </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,286 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>260 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>146 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Funds provided by operations </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,948,848 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>687,529 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>342,719 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Net (investing in) financing from operating </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;accounts: </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Trade receivables, net </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(531,887 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(38,065 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(101,048 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Other accounts receivable and prepaid expenses </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(166,326 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>56,609 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>7,199 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Inventories </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(840,970 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(20,769 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>2,566 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Accounts payable and accrued expenses </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>312,347 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(20,792 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>116,332 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Accounts payable to related parties </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(2,596 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(177,664 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>33,550 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(1,229,432 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(200,681 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>58,599 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Approximate net resources generated by operations </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;under US GAAP </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;719,416 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>486,848 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>401,318 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-47 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=54% ALIGN=LEFT><FONT SIZE=2>Financing activities under Mexican GAAP </font></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;388,559 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>30,277 </font></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT SIZE=2>(250,902 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Decrease in debt due to restatement to </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;constant Mexican pesos </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>1,166 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,153 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>34,001 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Exchange (loss) gain </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(5,813 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(77,046 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Approximate net resources generated by (used in) </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;financing activities under US GAAP </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;389,725 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>28,617 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(293,947 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Net resources used in investing activities under </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Mexican GAAP- </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$(1,305,065 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(10,155 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(47,137 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Restatement of non-current inventories </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>4,794 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(4,850 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(5,975 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;Other non-cash investing activities </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>68,756 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>9,752 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>21,151 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Approximate net resources used in investing </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;activities under US GAAP </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$(1,231,515 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(5,253 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>(31,961 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<br>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Net
resources used in operating activities include cash payments for interest and income
taxes as follows:  </font></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1> </font></TH>
     <TH COLSPAN=2><FONT SIZE=1>2004 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2003 </font><HR WIDTH=95% SIZE=1 noshade></TH>
     <TH COLSPAN=2><FONT SIZE=1>2002 </font><HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=38% ALIGN=LEFT><FONT SIZE=2>Total interest paid </font></TD>
     <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;2,099 </font></TD>
        <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>17,959 </font></TD>
        <TD WIDTH=6% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>52,182 </font></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Income taxes paid </font></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$26,735 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>37,180 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>12,572 </font></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR noshade COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-48 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 7; page: 7" -->

<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>GRUPO SIMEC, S.A. DE
C.V. AND SUBSIDIARIES </B> </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Consolidated
Financial Statements  </font></P>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Thousands of constant
Mexican pesos as of December 31, 2004)  </font></P>


<!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Business
acquisition -</B>  </font> </TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
following pro forma information assumes the acquisition mentioned in note 13 occurred as
of the beginning of each year presented. These pro forma amounts do not purport to be
indicative of the results that would have actually been obtained if the acquisitions
occurred as of the beginning of each of the periods presented or that may be obtained in
the future (table in thousands, except per share data):  </font></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=400>
  <TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=4><FONT SIZE=1>Unaudited Pro forma information </font>
<HR WIDTH=98% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>

    <TH COLSPAN=2><FONT SIZE=1> </font></TH>

    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <hr width=95% size=1 noshade>
    </TH>

    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
<HR WIDTH=95% SIZE=1 noshade></TH></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Net sales </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>$6,927,934 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>4,232,994 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD COLSPAN=2></TD>

    <TD COLSPAN=2></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Marginal profit </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>2,680,952 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>1,110,365 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD COLSPAN=2></TD>

    <TD COLSPAN=2></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Net income </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>1,466,682 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>33,535 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD COLSPAN=2></TD>

    <TD COLSPAN=2></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Earnings per share (pesos) </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>11.03 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>0.28 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>
  </TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT SIZE=2>Tons sold </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>978,969 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>

    <TD ALIGN=RIGHT><FONT SIZE=2>932,033 </font></TD>

    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
<TR>

    <TD COLSPAN=2></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>

    <TD ALIGN=RIGHT>
<HR noshade COLOR=#000000 SIZE=2></TD>
    <TD></TD>
  </TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Page Break A" FSL="Project" -->
<BR>&nbsp;
<P ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Continued) </font></P>
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">F-49 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>







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<!-- MARKER PAGE="sheet: 4; page: 4" -->


<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>SCHEDULE I </B> </font></P>


<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>GRUPO SIMEC, S.A. DE C.V. (Parent
Company Only) </B> <BR>
Condensed balance sheets as of December 31, 2004 and 2003  <BR>
(Thousands of
constant Mexican pesos as of December 31, 2004)  </font> </P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 align="center" WIDTH=600>
  <TR VALIGN=top>
    <TH><font size="2">Assets </font></TH>
    <TH COLSPAN=2><font size="1">2004 </font>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><font size="1">2003 </font>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Current assets: </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents
      </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17,869 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>20,271 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable:
      </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related
      parties </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>231,091 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>441,214 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
      </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>474 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,692 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>231,565 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>451,906 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less allowance for
      doubtful accounts </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,579 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      accounts receivable, net </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>231,565 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>441,327 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current assets </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>249,434 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>461,598 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Long term account receivables to subsidiary companies
      </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,675,155 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,202,955 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Investment in subsidiary companies </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,510,904 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,225,184 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Property, net </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>174,121 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Other assets </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>17,927 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,816 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$6,627,541 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,893,553 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=top align="center">
    <TD><b><font size="2">Liabilities and Stockholders&#146; Equity </font></b></TD>
    <TD colspan="2"><font size="1"><b>2004 </b> </font>
      <hr width=95% size="1" noshade>
    </TD>
    <TD colspan="2"><font size="1"><b>2003 </b> </font>
      <hr width=95% size="1" noshade>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>Current liabilities: </font></TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current installments
      of long-term debt </font></TD>
    <TD ALIGN=RIGHT><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,402
      </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>3,569 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued expenses
      </font></TD>
    <TD ALIGN=RIGHT><font size=2>19,151 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>13,538 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable
      to related parties </font></TD>
    <TD ALIGN=RIGHT><font size=2>934 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>10,157 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue
      </font></TD>
    <TD ALIGN=RIGHT><font size=2>20,534 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>&#151; </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities </font></TD>
    <TD ALIGN=RIGHT><font size=2>44,021 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>27,264 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>Stockholders&#146;s equity: </font></TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>&nbsp;</TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Capital stock </font></TD>
    <TD ALIGN=RIGHT><font size=2>3,277,340 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>3,253,597 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Additional paid-in capital </font></TD>
    <TD ALIGN=RIGHT><font size=2>655,822 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>655,822 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Contributions for future capital stock
      increases </font></TD>
    <TD ALIGN=RIGHT><font size=2>221,448 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>&#151; </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Retained earnings </font></TD>
    <TD ALIGN=RIGHT><font size=2>3,115,122 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>1,708,730 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Cumulative deferred income taxes </font></TD>
    <TD ALIGN=RIGHT><font size=2>(870,975 </font></TD>
    <TD ALIGN=LEFT><font size=2>) </font></TD>
    <TD ALIGN=RIGHT><font size=2>(870,975 </font></TD>
    <TD ALIGN=LEFT><font size=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Equity adjustment for non-monetary
      assets </font></TD>
    <TD ALIGN=RIGHT><font size=2>172,410 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>109,036 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;Fair value of derivative financial
      instruments </font></TD>
    <TD ALIGN=RIGHT><font size=2>12,353 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>10,079 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      stockholders&#146; equity </font></TD>
    <TD ALIGN=RIGHT><font size=2>6,583,520 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>4,866,289 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>$&nbsp;6,627,541 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT><font size=2>4,893,553 </font></TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
</TABLE>




<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying note and notes to
consolidated financial statements  </font></P>


<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
S-1 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>









<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 5; page: 5" -->

<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B> <BR>
   <BR>
   <BR>
   <BR>
  SCHEDULE I </B> </font></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>GRUPO SIMEC, S.A. DE C.V. (Parent
Company Only) </B> <BR>
Condensed statements of
operations  <BR>
Years ended December 31, 2004, 2003 and 2002  <BR>
(Thousands of constant Mexican
pesos as of December 31, 2004)  </font> </P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 align="center" WIDTH=600>
  <TR VALIGN=Bottom>
    <TH><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2002 </font>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Income: </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Equity in results of subsidiary
      companies </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,337,469 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>250,962 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>97,425 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;For leasing </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,405 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      of income </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,347,874 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>250,962 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>97,425 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Costs and expenses: </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Depreciation </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,154 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Administrative </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,411 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,270 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,026 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      costs and expenses </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,565 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,270 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,026 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
      income </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,344,309 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>247,692 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>91,399 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Comprehensive financial result: </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(373 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(691 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(901 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>164,141 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>160,269 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>147,927 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange
      gain, net </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,429 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>406 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,436 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Monetary position
      loss </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(126,006 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(95,749 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(113,001 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      financial result, net </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>42,191 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>64,235 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>39,461 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Other income (expenses) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7,263 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(1,926 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,690 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      before income deferred tax </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,393,763 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>310,001 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>132,550 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Deferred income tax </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(12,629 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,812 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,423 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      income </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,406,392 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>308,189 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>129,127 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying note and notes to
consolidated financial statements  </font></P>

<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
S-2 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>







<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 6; page: 6" -->

<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B> <BR>
   <BR>
   <BR>
  SCHEDULE I </B> </font></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>GRUPO SIMEC, S.A. DE C.V. (Parent
Company Only) </B> <BR>
Condensed
statements of changes in financial position  <BR>
Years ended December 31, 2004, 2003 and 2002  <BR>
(Thousands of constant Mexican pesos as of December 31, 2004)  </font> </P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600 align="center">
  <TR VALIGN=Bottom>
    <TH><FONT SIZE=1> </font></TH>
    <TH COLSPAN=2><FONT SIZE=1>2004 </font>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2003 </font>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2002 </font>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Operating activities: </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2> </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;Net income </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,406,392 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>308,189 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>129,127 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Add charges (deduct credits)
      to operations not requiring </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(providing)
      funds: </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,154 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity
      in results of subsidiary companies </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(1,337,469 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(250,962 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(97,425 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
      income tax </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(12,629 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,812 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,423 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      provided by operations </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>58,448 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>59,039 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>35,125 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Changes in current assets and liabilities </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>226,686 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>64,538 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(348,899 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      provided by (used in) operating activities </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>285,134 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>123,577 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(313,774 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Financing activities: </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Increases in capital stock </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>23,743 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>377,255 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>305,689 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Contributions for future
      capital stock increases </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>221,448 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unpaid foreign exchange
      gain </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>8 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>294 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>458 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Decrease in debt due to
      restatement to constant Mexican pesos </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;as
      of year end </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(175 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(130 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(214 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of financial
      debt </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(2,143 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax on assets </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(1,482 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long term of subsidiaries
      companies </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>527,800 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(477,693 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,913 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      provided by (used in) </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;financing
      activities </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>771,342 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(100,274 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>306,703 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Investing activities: </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of property </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(176,275 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151; </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Investment in subsidiaries
      shares </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(882,603 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(3,180 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7,125 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds
      (used in) provided by investing activities </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(1,058,878 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(3,180 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7,125 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease)
      increase in cash and cash equivalents </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(2,402 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>) </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>20,123 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>54 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash and cash equivalents: </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At beginning of year </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>20,271 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>148 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>94 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At end of year </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17,869 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>20,271 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>148 </font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp; </font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
</TABLE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying note and notes to
consolidated financial statements  </font></P>



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<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
S-3 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>








<!-- *************************************************************************** -->
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B> <BR>
   <BR>
   <BR>
  SCHEDULE I </B> </font></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>GRUPO SIMEC, S.A. DE C.V. (Parent
Company Only) </B> <BR>
For the years ended December 31, 2004, 2003
and 2002  <BR>
(Thousands of constant Mexican pesos as of December 31, 2004)  </font> </P>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%> <FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1</B>  </font> </TD>

<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Organization
of the Company and certain other information:</B>  </font> </TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
accompanying condensed financial statements reflect the results of operations of the
Company since                 its incorporation in August 1990.  </font></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Information
with respect to the Company&#146;s material contingencies are presented in note 15 of the
                consolidated financial statements.  </font></TD>
</TR>
</TABLE>
<BR>


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<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp; </font></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
S-4 </font></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp; </font></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8
<SEQUENCE>2
<FILENAME>e22153ex_8.htm
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>

<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>



<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Exhibit 8 </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>LIST OF SUBSIDIARIES </B></FONT></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH><FONT SIZE=1>Name </FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH><FONT SIZE=1>Jurisdiction of<BR>
      Incorporation </FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=77% ALIGN=LEFT><FONT SIZE=2>Administradora de Cartera de Occidente,
      S.A. de C.V</FONT></TD>
    <TD WIDTH=19% ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Compa&#241;&#237;a Sider&#250;rgica de Guadalajara,
      S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;Compa&#241;&#237;a Sider&#250;rgica
      de California, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compa&#241;&#237;a
      Sider&#250;rgica del Pac&#237;fico, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administradora
      de Servicios de la Industria Sider&#250;rgica ICH, S.A. de &nbsp;&nbsp;C.V.</font></TD>
    <TD ALIGN=center><font size=2>Mexico</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Procesadora Mexicali,
      S.A. de C.V. </font></TD>
    <TD ALIGN=center><font size=2>Mexico</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sistemas de
      Transporte de Baja California, S.A. de C.V. </font></TD>
    <TD ALIGN=center><font size=2>Mexico</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Servicios
      Simec, S.A de C.V. </font></TD>
    <TD ALIGN=center><font size=2>Mexico</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Undershaft Investments,
      N.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Netherlands Antilles</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pacific
      Steel, Inc.</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>California</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrias
      del Acero y del Alambre, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Coordinadora
      de Servicios Sider&#250;rgicos de Calidad, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operadora
      de Metales, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operadora
      de Servicios Sider&#250;rgicos de Tlaxcala, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administradora
      de Servicios Sider&#250;rgicos de Tlaxcala, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operadora
      de Servicios de la Industria Sider&#250;rgica ICH, S.A. de C.V</FONT></TD>
    <TD ALIGN=center><FONT SIZE=2>Mexico</FONT></TD>
  </TR>
</TABLE>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.(A)
<SEQUENCE>3
<FILENAME>e22153ex12_a.htm
<DESCRIPTION>CERTIFICATIONS PURSUANT TO SECTION 302
<TEXT>


<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Exhibit 12(a) </B></FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Annual
Certifications <BR>
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I,
Jos&#233; Flores Flores, certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.
I have reviewed this annual report on Form 20-F of Grupo Simec, S.A. de C.V.; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
Based on my knowledge, this annual report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the company as of, and for, the periods presented in this
report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
The company&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the company and have: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the company, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is
being prepared; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
Evaluated the effectiveness of the company&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
Disclosed in this report any change in the company&#146;s internal control over financial
reporting that occurred during the period covered by the annual report that has
materially affected, or is reasonably likely to materially affect, the company&#146;s
internal control over financial reporting; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
The company&#146;s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the company&#146;s
auditors and the audit committee of the company&#146;s board of directors (or persons
performing the equivalent functions): </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
All significant deficiencies and material weakness in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
company&#146;s ability to record, process, summarize and report financial information; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
Any fraud, whether or not material, that involves management or other employees who have
a significant role in the company&#146;s internal control over financial reporting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated:       July 11, 2005 </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
    <TD WIDTH=71%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
    <TD WIDTH=29%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Jos&#233;
      Flores Flores </FONT></TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=71%>&nbsp;</TD>
    <TD WIDTH=29%>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=71%>&nbsp;</TD>
    <TD WIDTH=29%><font face="Times New Roman, Times, Serif" size=2>Jos&#233;
      Flores Flores </font></TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=71%>&nbsp;</TD>
    <TD WIDTH=29%><font face="Times New Roman, Times, Serif" size=2>Chief Financial
      Officer</font></TD>
  </TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 20" FSL="Workstation" --> <BR>
<!-- MARKER FORMAT-SHEET="Para Flush 20" FSL="Workstation" --> <BR>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.(B)
<SEQUENCE>4
<FILENAME>e22153ex12_b.htm
<DESCRIPTION>CERTIFICATIONS PURSUANT TO SECTION 302
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>


<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Exhibit 12(b) </B></FONT></P>





<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Annual
Certifications <BR>
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I,
Luis Garc&#237;a Lim&#243;n, certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.
I have reviewed this annual report on Form 20-F of Grupo Simec, S.A. de C.V.; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
Based on my knowledge, this annual report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the company as of, and for, the periods presented in this
report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
The company&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the company and have: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the company, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is
being prepared; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
Evaluated the effectiveness of the company&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
Disclosed in this report any change in the company&#146;s internal control over financial
reporting that occurred during the period covered by the annual report that has
materially affected, or is reasonably likely to materially affect, the company&#146;s
internal control over financial reporting; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
The company&#146;s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the company&#146;s
auditors and the audit committee of the company&#146;s board of directors (or persons
performing the equivalent functions): </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
All significant deficiencies and material weakness in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
company&#146;s ability to record, process, summarize and report financial information; and </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
Any fraud, whether or not material, that involves management or other employees who have
a significant role in the company&#146;s internal control over financial reporting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated:   July 11, 2005 </FONT></P>

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    <TD WIDTH=71%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
    <TD WIDTH=29%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Luis
      Garc&#237;a Lim&#243;n </FONT></TD>
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    <TD WIDTH=71%>&nbsp;</TD>
    <TD WIDTH=29%>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=71%>&nbsp;</TD>
    <TD WIDTH=29%><font face="Times New Roman, Times, Serif" size=2>Luis Garc&#237;a
      Lim&#243;n <br>
      Chief Executive Officer </font></TD>
  </TR>
</TABLE>
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<DOCUMENT>
<TYPE>EX-13.(A)
<SEQUENCE>5
<FILENAME>e22153ex13_a.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Exhibit 13(a) </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Annual
Certifications <BR>
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section
1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of
Grupo Simec, S.A. de C.V. (the &#147;Company&#148;), does hereby certify, to such officer&#146;s
knowledge, that: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Annual Report on Form 20-F for the year ended December 31, 2004 of the Company fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and information contained in the Form 20-F fairly presents, in all material
respects, the financial condition and results of operations of the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated:  July 11, 2005 </FONT></P>




<BR>
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    <TD WIDTH=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
    <TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Luis
      Garc&#237;a Lim&#243;n </FONT></TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=65%>&nbsp;</TD>
    <TD WIDTH=35%>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=65%>&nbsp;</TD>
    <TD WIDTH=35%><font face="Times New Roman, Times, Serif" size=2>Luis Garc&#237;a
      Lim&#243;n <br>
      Chief Executive Officer </font></TD>
  </TR>
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<BR>
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    <TD WIDTH=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
    <TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Jos&#233;
      Flores Flores </FONT></TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=65%>&nbsp;</TD>
    <TD WIDTH=35%>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR VALIGN=TOP>
    <TD WIDTH=65%>&nbsp;</TD>
    <TD WIDTH=35%><font face="Times New Roman, Times, Serif" size=2>Jos&#233;
      Flores Flores <br>
      Chief Financial Officer </font></TD>
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<BR>


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