Annual Report 2011 - Techint Engineering and Construction

Transcription

TEI&C S.a.
Board of
Directors’ Report
and consolidated
financial
statements
Six-month period ended December 31, 2010 and year ended June 30, 2010
the
COMPAny
3
the company
TEI&C S.A. (TEI&C) is the holding company of a group
of companies that provide Engineering, Procurement,
Construction, Operation and Management for large-scale
projects at a global level to the following market segments:
Oil and Gas, Energy, Pipelines, Industrial Plants, Oil
Refineries, Mining, and Major Civil and Architecture Works.
Thanks to its broad experience and its local roots in
every country where it operates, the Company and
its subsidiaries are able to develop high-complexity
projects, from the design to the start-up, maintenance,
operational and management services, protecting
the environment and ensuring the welfare of the
communities where it is active.
TEI&C develops its projects under ISO 9001, ISO 14001
and OHSAS 18001 standards, thus assuring the quality,
health, safety and environmental required by the client.
With more than 65 years of experience and employing more
than 20,000 people worldwide, it has completed more than
3,500 projects in America, Europe, Asia and Africa.
Key figures
Personnel
USD Millions
Revenue
Jul 08 / Jun 09
Jul 09 / Jun 10
Jul 10 / Dec 10
(12 Months)
(12 Months)
(6 Months)
1,598.4
1,530.3
783.9
211.6
213.0
58.5
13%
14%
7%
Profit
171.5
114.4
47.5
Total equity
484.9
605.8
665.3
40%
21%
7%
EBITDA
EBITDA %
ROE
20,603
20,636
Jul 08 /
Jun 09
Jul 09 /
Jun 10
20,770
Jul 10 /
dec 10
(12 months) (12 months) (6 months)
Revenue Jul 10 - Dec 10 by business segment
Revenue Jul 10 - Dec 10 by geographic area
30% Oil & Gas
25% Argentina
28% Pipelines
24% Brazil
revenue
1,598
1,530
7% Others
3% Mining
8% Others
16% Energy
15%
Iron & Steel
and other
industries
4% Central
America and
Caribbean
8% Peru
18% Chile
14% Mexico
784
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dec 10
4
index
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Board of
Directors’ Report
Consolidated Financial
Statements
Overview of the Six-Month Period
Prospects for Fiscal Year 2011
Economic and Financial Information
Major Works in Progress per Country
TEI&C and Subsidiaries’ Activities for the Six-Month
period ended December 31, 2010
Engineering
Procurement
Techint Equipment Division (TEPAM)
Health, Safety and Environment (HSE)
Quality
Technology and IT Systems
Human Resources
Board of Directors
09
Legal Information
Report of the Auditors
Consolidated Statement of Financial Position
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Index to the Notes to the Consolidated Financial Statements
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20
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46
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56
59
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TEI&C S.A.
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Board of Directors’ Report
Board of
Directors’ Report
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TEI&C S.A.
The project is on the San Juan river,
20 km downstream Los Caracoles
project, and it is intended to increase
the regulation of this river.
Punta Negra Hydroelectric Station. argentina.
9
OVERVIEW OF THE SIX-MONTH PERIOD
On December 2, 2009, a Board of Directors’ Meeting
changed the fiscal year closing date to December 31.
Therefore, this information comprises the six-month period
from July 1, 2010, to December 31, 2010, and does not
cover a whole year.
During this six-month period ended on December 31,
2010, the Company recorded consolidated sales for
USD 783.9 million.
The most significant projects were developed through
its subsidiaries in Argentina, Brazil, Chile and Mexico. In
addition, other important projects were developed in Peru,
Central America and the Caribbean, Bolivia, Saudi Arabia and
Uruguay, providing engineering, procurement, construction,
operational and management services to a wide range
of clients in the infrastructure, industrial and energy areas.
In Argentina, in the Oil and Gas sector through the
Company’s subsidiary Techint Compañía Técnica
Internacional S.A.C.I. (TEARG) during August 2010,
YPF S.A. awarded the Company a contract for the
construction of the new gasoil hydrodesulphurization
plant (HTG) at La Plata refinery.
With respect to activities in the Pipeline sector, in
September 2010, works were resumed for the pipeline
construction in the Transportadora de Gas del Norte
(TGN) Loops. In the same month, a contract was executed
with YPF S.A. - ENARSA for the construction of a 31-km
gas pipeline [“Gasoducto GNL Escobar-Cardales”] to be
installed from the shore of Paraná river to the reduction
facility of TGN at Cardales.
In the Energy sector, the Company continued with the
works for the construction of the Punta Negra dam
in San Juan for Energía Provincial Sociedad del Estado
(EPSE); in December 2010, the process of optimization
of the project executive design was completed. At Atucha
II Nuclear Power Plant, Stage I is about to be completed,
a 97.5% progress rate was achieved for the piping erection
by December 2010. In addition, it is estimated that Stage
II will be completed by November 2011. Such stage
encompasses piping ends, civil works, painting, insulation
and ancillary power services.
In the Mining area, the Company continues with the
preliminary works for the launching of the Pascua
Lama project, scheduled for mid-2011, for Barrick Gold
Corp. of Canada.
In Brazil, the Company’s subsidiary Techint Engenharia
e Construção S.A. (TEBRA) continued working in several
projects for Petróleo Brasileiro S.A. (Petrobras). The
company is carrying out engineering, procurement,
and construction (EPC) activities for: Gasoline Unit of
Presidente Bernardes de Cubatão Refinery (RPBC), Diesel
Unit of Landulpho Alves de Mataripe Refinery (RLAM),
Lot I Tanks Refinaria do Nordeste, Abreu e Lima (RNEST),
and at Retarded Coke Unit Complexo Petroquímico do
Rio de Janeiro (COMPERJ). In turn, the ThyssenKrupp
project for Companhia Siderúrgica do Atlântico (CSA) was
completed during October 2010.
In Chile, Techint Chile S.A. (TECHI), the Company’s
subsidiary, was awarded the Valle de Huasco Plant contract
for CAP Minería - Compañía Minera del Pacífico S.A. The
Company also continued working in the Plant Maintenance
Service (for Minera Escondida Limitada), Sea Water pipeline
transportation Systems Construction (for Minera Esperanza),
and Replacement of Mineral Pipeline and Reclaimed Water
pipeline System (for Anglo American Sur S.A.).
In Mexico, the Company’s subsidiary Techint S.A. de C.V.
(TEMEX) completed works for SLT 1119 Transmission
Line and Transformation of the Southeast Project and
Pacífico Coal Fired Power Plant Expansion Project, both
for Comisión Federal de Electricidad (CFE). Within the
market of high voltage transmission lines and substations,
the Company continued with the activities in SLT 1125
Distribution-Second Phase Project also for Comisión
Federal de Electricidad (CFE).
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TEI&C S.A.
In Peru, Techint S.A.C. (TESAC), the Company’s subsidiary,
maintained its leading position in the pipeline market with
its projects for Transportadora de Gas del Perú S.A. (TGP)
and Compañía Operadora de Gas del Amazonas S.A. (COGA).
In Central America and the Caribbean, the Company’s
subsidiary Techint International Construction Corp. (TENCO)
is carrying out, under an engineering, procurement, and
construction management (EPCM) contract, the Alky Acid
Unit and Acid Regeneration Unit of the Gasoline Optimization
Program Upgrade Project for Petroleum Company of Trinidad
and Tobago (PETROTRIN). During December 2010 and the
first quarter of 2011, the Mechanical Completion (MC) was
obtained and acceptance was received from the client for
both units. Additionally, TEMEX continued working in the
“Sistema de Interconexión de Países de América Central
(SIEPAC)”, an EPC project including 1,850 km of transmission
lines and 16 substations, crossing through six countries of
Central America, for Empresa Propietaria de la Red S.A. (EPR).
CAMISEA PIPELINE MAINTENANCE
(STAGE II). PERU.
In Bolivia, Techint Ingeniería y Construcción Bolivia S.A.
(TEBOL), the Company’s subsidiary, continued with
the works of engineering, procurement and construction
of the Third Processing Train at the Sábalo Gas Treatment
Plant of Petrobras Bolivia S.A. During this six-month period,
the Margarita project for Repsol YPF E&P Bolivia S.A.
was awarded. It is an EPC pipeline project located in the
area of Puerto Margarita O’Connor province, department
of Tarija, Bolivia.
In Saudi Arabia, the construction activities of ManifaTanajib Water Pipeline project, for JGC Corporation,
reached an overall progress of 80%.
Techint Compañía Técnica Internacional S.A.C.I. (TEURU),
the Company’s subsidiary in Uruguay, is involved
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in different projects in the civil and water infrastructure
sector for Municipalidad de Maldonado, Corporación Vial
de Uruguay and Obras Sanitarias del Estado.
In Canada, Techint E&C Inc. (TECAN) finished the
remaining works of the Alberta Clipper project (related to
guarantees and recomposition) and it engaged in business
activities related to the EPC market for oil and gas
facilities (plants). During 2010, TECAN was invited to and
participated in very demanding tendering processes for
several companies without success.
Engineering and Construction works in the pipe and steel
plants continued during this period for TenarisSiderca
and Ternium Siderar in Argentina, and for Ternium Hylsa
and TenarisTamsa in Mexico. The new mandrel mill
for TenarisTamsa, a very demanding work, is already
functioning.
In the area of Steel & Iron services, the Company, through
its subsidiaries, continued rendering services of Heavy
Duty Cleaning, Industrial Cleaning and Electromechanical
Maintenance.
Regarding Engineering Services, the Company continued
with concept, basic and detail engineering of contracts
for engineering services obtained for new clients.
Besides, the Company also provided assistance for the
development of technical specifications and assessment
of investment projects.
All these activities were undertaken acknowledging the
importance of and strictly complying with the rules and
regulations governing environmental protection and
seeking the constant improvement of safety, health and
human resources’ training.
PROSPECTS FOR FISCAL YEAR 2011
The international financial crisis which began around
September 2008 has not seriously affected Latin American
economies and, mainly due to commodities prices, we
expect to face increasing activity within a reasonably
favorable context, since clients are going ahead with
several investment projects in the fields where we act:
energy, oil and gas, mining and infrastructure.
In the Oil and Gas sector, the Company is closely following
the development of projects in Brazil, Argentina, Mexico,
Canada, Peru, Bolivia, Colombia, and Trinidad & Tobago,
and of some selected cases in other countries. We foresee
important opportunities for the execution of engineering
and construction works in regasification facilities
in Uruguay; petrochemical and refining developments
as well as gas transportation systems in Brazil and Peru,
and of oil refineries such as Barrancabermeja and Cartagena
(Colombia) and Point a Pierre (Trinidad & Tobago), where
we plan to participate in possible future bidding processes.
In Argentina, we also expect new investments in this sector,
especially in new processing units at existing refineries
and at new green field refineries. We are also considering
opportunities in oil sands upstream facilities in Canada, and
in fertilizer and offshore developments in Brazil.
Particularly in Brazil, the Company has the strategy to
focus on the ambitious program of Petróleo Brasileiro
S.A. (PETROBRAS) and other players for the development
of the offshore oil and gas fields, based on its already
operative offshore yards.
Regarding the Mining sector, basic and precious metals
are entering once again in a cycle of huge investments,
so we expect an increase of activities. Brazil, Argentina,
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TEI&C S.A.
Chile, Mexico, Peru, Panama and Colombia are good
markets in this regard, with several new prospects at
junior level and bigger copper, iron ore, gold and silver
mines in an investment phase. Coal is also important in
Colombia, and opportunities in the germinal iron ore mines
of Uruguay could be the origin of new contracts. Some of
these projects will also include works in infrastructure and
pipelines with related pumping facilities.
ALBERTA CLIPPER PROJECT
IN CANADA.
In the Infrastructure sector, the Company will continue
analyzing several opportunities regarding energy projects
and civil infrastructure fields, such as transmission lines
in Uruguay, Mexico, Brazil and Peru, roads and bridges
in Uruguay and Argentina, and water and sewage systems
in Colombia, Uruguay and Trinidad &Tobago, just to
mention but a few.
In the case of Argentina, it is likely to try to participate
in relevant infrastructure projects, such as new thermal
power plants (at least five projects are under a call for
bids), Gasoducto del Noreste Argentino (GNEA), railroad
works and new subways in the Autonomous City
of Buenos Aires. Besides, there are plans for several
hydroelectric projects in several Argentine provinces.
The briefings given above show the Company’s willingness
and carry on efforts to maintain its presence and
leadership in the Americas engineering and construction
market. It also shows its skills in the successful
completion of important projects of a multidisciplinary
nature within quality, cost, budget and health, environment
and safety compliance.
The approach in all these opportunities will be to work
closely with our clients to better understand their needs
and bring value added to their operations.
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ECONOMIC AND FINANCIAL INFORMATION
Summary of Consolidated Income Statement
12.31.10
06.30.10
(6 Months)
(12 Months)
783.9
1,530.3
Cost of sales
(662.1)
(1,225.8)
Gross profit
121.8
304.5
General, administrative and selling expenses
(86.1)
(135.4)
USD millions
Revenues from construction contracts and other services
Other operating results
1.8
(4.9)
37.5
164.2
–
0.2
(1.6)
(1.4)
0.4
2.7
Income before income tax
36.3
165.7
Income tax
10.8
(56.5)
Income from continuing operations
47.1
109.2
0.4
5.2
47.5
114.4
44.3
109.8
Operating income
Gain from the purchase and sale of shares and investments
Financial results, net
Result from investments in associated companies
Income from discontinued operations
Net income
Attributable to:
Equity holder of TEI&C
Non-controlling interests
3.2
4.6
47.5
114.4
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TEI&C S.A.
Revenues of the six-month period ended December 31,
2010, reached the sum of USD 783.9 million. In the last
fiscal year, revenues were USD 1,530.3 million.
Gross profit for this six-month period was USD 121.8
million, representing 16% of the revenues. In the last fiscal
year, gross profit represented 20% of the revenues.
strengthened in geographical regions where the Company
is seeking to obtain projects in the medium and long term.
The other operating results showed a profit of USD 1.8
million, mainly due to the gain from sale and impairment
loss in some Property, Plant & Equipment.
EBITDA (Earnings before Interest, Tax, Depreciation and
Amortization) for this six-month period amounted to a total
of USD 58.5 million, representing 7% on sales.
Financial results showed a loss of USD 1.6 million mainly
due to exchange differences. The income tax due on the
deferred method was positive in this six-month period and
amounted to USD 10.8 million.
General, administrative and selling expenses, with respect to
sales showed an increase, representing 11% with respect to
9% of the previous fiscal year, mainly because structures were
Finally, net income for the six-month period was USD 47.5
million, representing 6% of revenues (preceding fiscal year
USD 114.4 million and 7%, respectively).
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Summary of Consolidated Statement of Financial Position
12.31.10
06.30.10
(6 Months)
(12 Months)
Non-current assets
430.5
407.2
Current assets
848.6
804.2
1,279.1
1,211.4
637.4
577.7
USD millions
Assets
Total Assets
Equity
Majority shareholders
27.9
28.1
665.3
605.8
Non-current liabilities
124.4
121.3
Current liabilities
489.4
484.3
Total Equity
Liabilities
Total Liabilities
Total Equity and Liabilities
TEI&C’s consolidated majority shareholders’ equity as
of December 31, 2010, reaches USD 637.4 million as
compared to USD 577.7 million at the beginning of the sixmonth period. The increase of USD 59.7 million is mainly
due to the income for the six-month period obtained and
the currency translation differences.
Current assets increased USD 44.4 million mainly due to
an increase in Cash and cash equivalents and Assets of
disposal group classified as held for sale (includes Saudi
Techint Ltd. sold on February 15, 2011). Current liabilities
recorded similar values to those of the previous fiscal
year. Thus, the Company’s working capital, as of the end
613.8
605.6
1,279.1
1,211.4
of this six-month period, amounts to USD 359.2 million,
representing an increase of USD 39.3 million with respect
to the end of the previous fiscal year.
While non-current assets increased USD 23.3 million
mainly by deferred income tax assets and Property, Plant &
Equipment, Non-current liabilities increased USD 3.1 million.
On February 15, 2011, at the Board of Directors’
Meeting, it was decided to distribute a dividend in cash
amounting to USD 65 million, which shall be ratified by the
shareholder´s meeting that will discuss these consolidated
financial statements.
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TEI&C S.A.
Summary of Consolidated Statement of Cash Flow
USD millions
Net cash and cash equivalents at the beginning of the period/year
Net cash generated by operating activities
12.31.10
06.30.10
(6 Months)
(12 Months)
282.4
222.8
66.4
199.1
Net cash used in investing activities
(28.3)
(27.0)
Net cash used in financing activities
(1.5)
(116.1)
Net increase in cash and cash equivalents
36.6
56.0
Effect of exchange rates changes
Net cash and cash equivalents at the end of the period/year
As regards the financial situation, there was a cash
and cash equivalents net increase of USD 44.6 million
along the six-month period, with a final balance of USD
327 million.
TEI&C’s cash increased USD 66.4 million from its operating
activities, which is mainly associated to the income for
the period, net of the items that did not generate cash
movements and the increase of other liabilities.
8.0
3.6
327.0
282.4
Related to investment activities, there was a cash decrease
of USD 28.3 million due to the purchases of fixed assets,
net of proceeds from disposal of those assets.
Regarding financing activities, the changes in non controlling
interests net of proceeds from borrowings, mainly
generated an application of funds of USD 1.5 million.
The main financial indicators are:
Indicators
12.31.10
06.30.10
(6 Months)
(12 Months)
Financial solvency (Assets / Liabilities)
2.1
2.0
Liquidity (Current assets / Current liabilities)
1.7
1.7
Indebtedness (Liabilities / Equity)
Gross margin (Gross profit / Revenues)
0.9
1.0
16%
20%
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MAJOR WORKS IN PROGRESS PER COUNTRY
COUNTRY / PROJECT
CLIENT / CONTRACT TOTAL AMOUNT
USD million
Argentina
Gas Oil Hydrotreatment at La Plata Industrial Complex (HTG at CILP) YPF S.A.
79
Loops TGN (Stage II)
Constructora Norberto Odebrecht S.A.
20
Escobar-Cardales LNG Gas Pipeline
YPF S.A. - ENARSA S.A.
18
Punta Negra Hydroelectric Station
Energía Provincial Sociedad del Estado (EPSE)
Engineering Services, Supplies and Mechanical Assembly
Nucleoeléctrica Argentina S.A.
387 (a)
110
at the Ancillary Building of the Reactor in Atucha II (Stage II)
Pascua Lama- Construction
Barrick Gold Corp.
20 (a)
Works and Services in plants
Ternium Siderar S.A.I.C. - TenarisSiderca S.A.I.C.
53 (b)
Bolivia
Third Processing Train of the Sábalo Gas Treatment Plant
Petrobras Bolivia S.A.
88
Margarita Project
Repsol YPF E&P Bolivia S.A.
80
Brazil
Gasoline Unit of Presidente Bernardes de Cubatão Refinery (RPBC)
Petróleo Brasileiro S.A. (Petrobras)
400
Diesel Unit of Landulpho Alves Mataripe Refinery (RLAM)
875 (a)
Oil and Water Storage Tanks Refinaria do Nordeste,
292 (a)
1,180 (a)
Abreu e Lima (RNEST)
Retarded Coke Unit – Complexo Petroquímico
do Rio de Janeiro (COMPERJ)
Central America and the Caribbean
Gasoline Optimization Program Upgrade
Petroleum Company of Trinidad and Tobago Ltd.
330 (a)
SIEPAC I
Empresa Propietaria de la Red S.A.
141 (a)
SIEPAC II
Consorcio Abengoa- Inabensa (APCA)
55
SIEPAC Substations
Empresa Propietaria de la Red S.A.
43
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TEI&C S.A.
MAJOR WORKS IN PROGRESS PER COUNTRY (cont’d.)
COUNTRY / PROJECT
CLIENT / CONTRACT TOTAL AMOUNT
USD million
Chile
Pascua Lama- Engineering and Procurement
Barrick Gold Corp.
Replacement of Mineral Pipeline and Reclaimed Water
Anglo American Sur S.A.
115 (a)
180
System and Construction of Stations and Singular Points
for the Reclaimed Water System Mina Los Bronces
Service of Equipment and Installation Maintenance
Minera Escondida Limitada
Engineering Services for Water and Concentrate
Compañía Minera Casale
58
5
Transportation System
Valle de Huasco Plants
CAP Minería - Compañía Minera del Pacífico S.A.
29
SLT 1125 Distribution Overhead Transmission Line (Stage II)
Comisión Federal de Electricidad (CFE)
46
Norte II CCGT Power Project
333 (a)
Petacalco Project, Maintenance and Operational Contract
34 (b)
Works and Services in plants
Ternium Hylsa - TenarisTamsa
74 (b)
Mexico
Peru
Camisea Pipeline Maintenance (Stage II)
Compañía Operadora de Gas del Amazonas S.A. (COGA)
South Loops - Early Works
Transportadora de Gas del Perú S.A. (TGP)
63
Expansion of NG Transportation System - Addition of fourth pump
Transportadora de Gas del Perú S.A. (TGP)
14
JGC Corporation
48
Obras Sanitarias del Estado (OSE)
15
126
Saudi Arabia
Manifa - Tanajib Water Pipeline
Uruguay
Environmental and Sewage Works of Maldonado
and Punta del Este
Av. Ferreira Aldunate
Municipalidad de Maldonado
Road 18
Corporación Vial del Uruguay (CVU)
New Maldonado Sewage System
37 (a)
Ciudad de la Costa Drainage System
20
(a) Projects under a consortium/JV. The amount corresponds to total contract amount at 100%.
(b) The amount corresponds to annual estimated sales.
8
9
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1
2
2
3
4
5
6
7
10
1. MEXICO
4. PERU
6. BOLIVIA
Iron and Steel Plants and
Pipelines
Oil & Gas
Other Industries
Camisea Pipeline Maintenance
Third Processing Train of the
Ternium Hylsa Plant in
(Stage II).
Sábalo Gas Treatment Plant.
Monterrey.
South Loops - Early Works.
Pipelines
TenarisTamsa Plant in Veracruz.
Expansion of NG
Margarita Project.
Petacalco Project, Maintenance
Transportation System and Operational Contract.
Addition of fourth pump.
7. CHILE
Energy
Mining
SLT 1125 Distribution Overhead 5. BRAZIL
Pascua Lama - Engineering
Transmission Line (Stage II).
Oil and Gas
and Procurement.
Norte II CCGT Power Project.
Gasoline Unit of Presidente
Service of Equipment and
Bernardes de Cubatão Refinery
Installation Maintenance.
2. CENTRAL AMERICA
(RPBC).
Valle de Huasco Plants.
AND THE CARIBBEAN
Diesel Unit of Landulpho Alves
Engineering Services
Oil and Gas
Mataripe Refinery (RLAM).
for Water and Concentrate
Gasoline Optimization Program
Oil and Water Storage Tanks
Transportation System.
Upgrade.
Refinaria do Nordeste, Abreu
Pipelines
Energy
e Lima (RNEST).
Replacement of Mineral
Siepac I and II.
Retarded Coke Unit - Complexo
Pipeline and Reclaimed Water
Siepac Substations.
Petroquímico do Rio de Janeiro
System and Construction of
(COMPERJ).
Stations and Singular Points
3. COLOMBIA
for the Reclaimed Water
Transportation Capacity Expansion
System Mina Los Bronces.
- Basic Engineering – Oleoducto
Central S.A. (OCENSA).
8
9
8. ARGENTINA
Oil and Gas
Gas Oil Hydrotreatment at La
Plata Industrial Complex (HTG
at CILP).
Pipelines
Loops TGN (Stage II).
Escobar-Cardales LNG Gas
Pipeline.
Mining
Pascua Lama - Construction.
Energy
Punta Negra Hydroelectric
Station.
Engineering Services, Supplies
and Mechanical Assembly at
the Ancillary Building of the
Reactor in Atucha II (Stage II).
Iron and Steel Plants
Ternium Siderar Plant
in San Nicolás.
TenarisSiderca Plant
in Campana.
9. URUGUAY
Architecture and
Infrastructure Works
Environmental and Sewage
Works of Maldonado and
Punta del Este.
Av. Ferreira Aldunate.
Road 18.
New Maldonado Sewage
System.
Ciudad de la Costa Drainage
System.
10. OTHERS - ARABIA
Pipelines
Manifa - Tanajib Water
Pipeline.
20
TEI&C S.A.
TEI&C SUBSIDIARIES’ ACTIVITIES FOR THE SIX-MONTH PERIOD
ENDED DECEMBER 31, 2010
Revenues
ARGENTINA
During this six-month period, total revenue in the country
amounted to USD 194 million.
457
The main projects developed during this six-month
period include:
325
OIL AND GAS
194
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dEc 10
This is a very important sector for the Company, since it
counts on the resources (both human and technological)
required to deal with different projects, such as development
of fields, oil and gas separation plants, storage centers,
LNG facilities, oil and gas processing facilities, oil refineries
and petrochemical plants, among others.
Gas Oil Hydrotreatment at La Plata Industrial Complex (HTG
at CILP) – YPF S.A.: The project was awarded on August 9,
2010, and consists of two packages.
Package 1 comprises the following:
– Light Gas Oil Hydrotreatment Unit (HTG-B).
– Treatment Unit for Acid Gases with Amines (Amines C).
– Conditioning of offsites for interconnection of new units
with the rest of the complex.
Package 2 comprises the revamping of the existing Gas Oil
Hydrotreatment Unit (HTG-A).
The estimated date for provisional acceptance of the
project is October 2012.
3D VIEW Of YPf-HTG PrOJECT,
aRgentIna.
The scope of the project includes engineering, supply of
minor installation materials, construction, pre-commissioning
and assistance for commissioning, start-up and performance
tests of the unit. The project amount is USD 79 million. As of
December 31, 2010, progress was 6%.
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PIPELINES
ENERGY
The Company has significant capacity to develop
gas pipelines, oil pipelines, slurry lines, oxygen lines,
transportation of chemical and refined products,
storage facilities and pumping and compression stations.
Throughout its history, the Company has become involved
in the development of simple cycle and combined cycle
power plants, co-generation units, hydroelectric plants and
nuclear facilities.
Loops TGN (Stage II) – Constructora Norberto Odebrecht S.A.:
Los Caracoles Hydroelectric Station – Energía Provincial
During September 2010, works were resumed for the
pipeline construction in tranche 75 of the gas pipeline
for TGN, from Pichanal to Miraflores, province of Jujuy,
as contractors for Odebrecht.
The tranche is 64 km long in 30", with more than 30
special connections.
The base contract amount plus redetermination is
USD 20 million.
The mobilization of equipment and work teams,
settlement of camp and offices was extended until
the end of October 2010.
As of December 31, 2010, the progress of Stage II
was 34%.
S.E. (EPSE): The project was handled by the TEARG-
Panedile Argentina S.A. Joint Venture (JV), where
the Company has a 75% participating interest.
Its purpose is to generate power and improve the
stream-flow regulation of the San Juan river, the main
water resource of the province.
The amount for this work was USD 236 million
at 100% of the JV. The 125 MW power station has
been operating smoothly, and the dam has turned
out to be a vital water reserve in a year with a very
low flow, a direct consequence of the very little snow
up in the mountains.
Punta Negra Hydroelectric Station – Energía Provincial
Escobar-Cardales LNG Gas Pipeline – YPF S.A. - ENARSA S.A.:
S.E. (EPSE): The contract was signed between Empresa
On September 14, 2010, TEARG signed a contract for
the construction of a 30" gas pipeline 31 km long
to be installed from the shore of Paraná river at Escobar
to the reduction facility of TGN at Cardales.
The contract amount is USD 18 million, to be executed
in a seven-month term.
These works include 18 km of special assembly in
a swampy area, which is being performed with pipes
counterweighed with concrete, launched through
a floating system (push-pull) in tranches up to 3 km.
The remaining 13 km corresponds to regular assembly.
The layout includes crossing Las Rosas stream, two
crossings on the Luján river, and across the Panamericana
Road and Road Nº 6.
As of December 31, 2010, progress was 10%.
Provincial S.E. and the TEARG-Panedile JV where
the Company has a 75% participating interest.
The contract amount is USD 387 million and the
execution term is 54 months. This project is on the
San Juan river, 20 km downstream Los Caracoles
project, and it is intended to increase the regulation
of this river, which is essential for San Juan’s economy,
and to add 65 MW to the generation system of the
province. Works were commenced in January 2010;
at present, the construction of the river deviation
channel, access roads to the different fronts and
excavations of the dam are in progress. In December
2010, the engineering tasks devoted to review the
executive design were completed. As of December 31,
2010, progress was 8%.
22
TEI&C S.A.
Engineering Services, Supplies and Mechanical Assembly
at the Ancillary Building of the Reactor in Atucha II –
Nucleoeléctrica Argentina S.A.: This is a service contract
WOrKs AT ANCIllArY buIlDING
Of THE rEACTOr, ATuCHA II, ArGENTINA.
to perform the piping system erection in the ancillary
building of the reactor (UKA building). This building is
divided into four main sectors, having different functions:
radioactive waste processing and storage, heavy water
enrichment, ventilation systems, locker rooms and access
to restricted zone.
This project is carried out in two stages. The first
stage corresponds to piping assembly and comprises
235 tons of supports and 280 tons of piping. The
physical progress for piping assembly as of December
31, 2010 was 97.5%. The second stage comprises
piping ends, civil works, painting, insulation and
ancillary power services in the same building. The
final amount of the new contract will reach USD 110
million and completion is expected by November 2011.
As of December 31, 2010, the progress of the second
stage was 31%.
MINING
In this sector, the Company has the experience and
resources required to perform civil works, roads, runways,
assembly of processing plants, installation of pipelines and
earth movement.
During the period under analysis, the Company kept on
developing the following projects:
PASCUA LAMA PROJECT LOCATED IN THE
BORDER BETWEEN CHILE AND ARGENTINA.
Pascua Lama – Barrick Gold Corp.: Bi-national mining
undertaking (gold and silver), located in the border
between Chile and Argentina. The Company is
associated in a JV, on a 50%/50% basis, with Fluor
Argentina Inc. Argentine Branch to carry out the works
divided into three phases: Phase I - Consolidation
of Basic Engineering and Feasibility Study of the
Project; Phase II - Detail Engineering and Procurement
23
Management, and Phase III - Construction Management
and Construction. Phase I is already completed and,
during this fiscal year, works were continued in Phase
II (starting in April 2007) and are expected to be
completed by May 2011. The estimated total amount for
Phase II is USD 20 million.
In November 2010, the client issued a Limited Notice to
Proceed for the JV to start Phase III works. It is estimated
that such works will be commenced during the second
quarter of 2011.
IRON AND STEEL AND OTHER INDUSTRIES
The Company has developed highly specialized
resources to provide design, engineering,
construction and main maintenance services
to steel-making plants, lamination workshops, blast
and electric furnaces, production facilities,
metallurgical plants, aluminum-making plants and
precious metals plants.
Several works were executed in Argentina for
TenarisSiderca and Ternium Siderar, among which the
following stand out:
Steel-Making area. Total income of the period reached
the sum of USD 10 million, using a total of 381,000
man-hours.
Ternium Siderar Plant - San Nicolás
The main projects developed were the revamping
of Battery 2 and Travelling Crane. Besides, works
were executed at the Stack in Battery 3 and 4, New
Barge Port, Converter Enclosure 2, Drive Converter
2, Gas Piping from Coke to Lime Reburning,
Reinforcement of Shed J and K columns, CO Emissions
Tumble, Vacuum Degassing, new water plant for
Reheating Furnace (RH) and commencement of New
Coiler 3 in Hot Lamination.
As a remarkable milestone, we can stand out the
completion of relining of Blast Furnace 1, where the
starting process began on July 21, 2010. Total man-hours
used for the Blast Furnace were 4.5 million.
Total income for the July-December 2010 period was USD
23 million.
Other Investments and Services
Railway Cargo Transportation
TenarisSiderca Plant - Campana
The main works executed during this six-month period
worth mentioning are the modification of the reduction
furnace and the change of tubes of the reformer furnace
of the REDI plant, the construction of housing for the
seventh air compressor and the assembly of related
piping for compressed air supply. The 2010-2011 plant
extraordinary repair (REX) has also started, and we may
point out the assembly of aspiration pipes and piping
for cooling and fume extraction of furnace 4 at the
Steel-Making area. Also the disassembly, base repair,
assembly and alignment of the piercing mill of LACO 1
hot lamination, and the spreading of pipes and
connection to ‘Onion’ tanks for water supply to the
Ferroexpreso Pampeano S.A. (FEPSA), a company under
the control and corporate decision of TEARG through
Compañía Inversora Ferroviaria S.A.I.F. (COINFER), is the
concession holder of the railway cargo transportation. The
company provides services towards the ports of Bahía
Blanca, Rosario, San Lorenzo and San Martín to exporters,
stockers and large-scale producers within a vast area of
the Wet Pampa region.
During the irregular fiscal year from July 1 to December
31, 2010, 2.1 million tons of cargo were transported,
accounting for a 48% volume increase with respect to the
same period of the previous year.
24
TEI&C S.A.
Revenues
BRAZIL
TEBRA performs activities related to engineering,
construction, assembly, works management,
petrochemical facilities, off-shore projects, power
generation, transmission and distribution, iron and steel
units, transportation systems and infrastructure works in
general.
396
331
187
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dec 10
In August 2010, the Argentine subsidiary TEARG registered
a branch in the Republic of Brazil.
Revenues for this six-month period have reached
USD 187 million.
During the current period, works were performed in the
following projects:
OIL AND GAS
Gasoline Unit of Presidente Bernardes de Cubatão Refinery
(RPBC) – Petróleo Brasileiro S.A.: In March 2007, a contract
GASOLINE UNIT OF PRESIDENTE BERNARDES
DE CUBATãO REFINERY, brazil.
was executed with Petrobras for the preparation of the
consistency review of the basic project, preparation of the
detail project, partial supply of equipment, supplies of bulk
material, civil construction, electromechanical assembly,
pre-commissioning, commissioning and technical
assistance during the pre-operation and start-up of the
units of Cracked Gasoline Hydrodesulphurization (HDS),
Diethanolamine (DEA) and Coke Gasoline Hydrotreatment
(HDT) at the Refinery Presidente Bernardes de Cubatão,
State of São Paulo.
The total updated contract value amounts to USD 400
million and the execution term ends in July 2011. The
works are performed under a lump sum contract.
The main physical amounts are: 11,400 m3 of concrete,
730 tons of metallic structures, 2,300 tons of equipment,
1,549 tons of piping, 423,000 m of cables and 5,917
instruments.
The general progress of the project is 96%.
25
Diesel Unit of Landulpho Alves de Mataripe Refinery (RLAM)
– Petróleo Brasileiro S.A.: In June 2008, a contract
was signed with Petrobras for the preparation of the
consistency review of the basic project, preparation of the
detail project, partial supply of equipment, supplies of bulk
material, civil construction, electromechanical assembly,
pre-commissioning, commissioning and technical
assistance during the pre-operation, start-up and assisted
operation of the HDT of Diesel (U-37) and UGH (U-38)
units, the Power Sub-station SE-37 and the Control Room
(K-3701) at the Landulpho Alves de Mataripe Refinery,
state of Bahia.
It is a lump sum contract for an updated total amount of
USD 875 million, under a horizontal consortium (50%/
50%) with Andrade Gutiérrez.
The total execution term is expected to be 41 months.
The main physical amounts reach: 11,000 m³ of concrete,
1,350 tons of metallic structures, 4,751 tons of equipment,
2,332 tons of piping, 253,000 m of cables, and 2,732
instruments. The general progress is 71%.
Oil and Water Storage Tanks Refinaria do Nordeste, Abreu
e Lima (RNEST) – Petróleo Brasileiro S.A.: In March
2009, a contract was entered into with Petrobras for
the preparation of the consistency review of the basic
project, detail engineering, supply of materials, supply of
equipment, civil construction, electromechanical assembly,
preservation, conditioning, support and tests for the
pre-operation of Lot I Tanks of RNEST Refinery, belonging
to Petrobras, in Ipojuca, state of Pernambuco.
The project includes three raw water tanks (Ø 65.0 m,
14.7 m high and 670 tons each) and eight crude oil tanks
(Ø 98.5 m, 14.7 m high and 2,430 tons each). The main
physical amounts are 13,929 m3 of concrete, 20,667 tons
of assembly and 177,300 m2 of painting.
It is a lump sum contract being executed under a
consortium with Equipamentos y Usiminas Mecânica,
in which TEBRA has a 60% participating interest.
The activities started in April 2009 and will be completed
in May 2012. The updated value of the contract is USD 292
million (at 100% of the consortium). The general progress
of the project is 52%.
Retarded Coke Unit - Complexo Petroquímico do Rio de
Janeiro (COMPERJ) – Petróleo Brasileiro S.A.: In April 2010,
a contract was executed with Petrobras for the preparation
of the consistency review of the basic project, preparation
of the detail project, partial supply of equipment, supplies
of bulk material, civil construction, electromechanical
assembly, interconnections, pre-commissioning,
commissioning and technical assistance during the preoperation and assisted operation start-up of the Retarded
Coke Unit (U2200), Manipulation and Storage Yard (U6821)
and two Electrical Substations.
It is an EPC lump sum contract, with guaranteed
physical amounts.
TEBRA is part of the TE-AG Consortium with Andrade
Gutiérrez, with a 50% participating interest each, under
the leadership of TEBRA. The total value of the contract
is USD 1,180 million (at 100% of the consortium), within
a contractual term of 36 months.
The main physical amounts are as follows: 46,204 m3
of concrete, 4,062 tons of metallic structures, 7,433 tons
of static and rotating equipment, 2,411 tons of piping,
over one million meters of electricity and instrument
cables, 78,529 m of electroducts, and 4,938 instruments.
The general progress is 5%.
ThyssenKrupp – Companhia Siderúrgica do Atlântico (CSA):
The contract encompasses the rendering of technical
support and management services, including technical
analysis, preparation of welding procedures, construction
management, contract management and audit management,
among other activities. The updated contract value is USD 2.5
million and the works were completed in October 2010.
26
TEI&C S.A.
Revenues
CHILE
146
144
Founded in 1951, TECHI engages in activities related to
engineering, construction of pipelines; mining projects;
power generation, transmission and distribution;
transportation systems and infrastructure works in general.
During this period, works were performed mainly in the
following projects:
MINING
Pascua Lama – Barrick Gold Corp.: Bi-national gold and
7
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dec 10
silver mining development, located in the border between
Chile and Argentina. The Company is associated with
Fluor Chile Ingeniería y Construcción S.A. (on a 50%/50%
basis) to carry out the works divided into three phases:
Phase I - Consolidation of Basic Engineering and Study of
Project Feasibility; Phase II - Detail Engineering and Supply
Management, and Phase III - Construction Management
and Construction. During this period, works were
continued in Phase II, starting in April 2007. The expected
sale amount for this phase is USD 115 million. In addition,
the preliminary works have started for the commencement
of Phase III, which is expected to begin in the second
quarter of the next fiscal year.
Service of Equipment and Installation Maintenance – Minera
MINERA ESCONDIDA LIMITADA,
CHILE.
Escondida Limitada: In November 2009, a new contract
was entered into with Minera Escondida Limitada.
This contract corresponds to the service of mechanical
maintenance of concentration plants and oxide plant. It is
located in the Second Region of Antofagasta. In addition,
in May 2010, an extension of the contract was also
celebrated, entailing an increase of the aforesaid works.
In November 2010, TECHI was awarded an additional
contract for the construction of a 6" and 6.5 km long water
pipeline in the city of Antofagasta. The works started
during December 2010 and were completed in May 2011.
The total amount of both contracts is USD 58 million.
27
Valle de Huasco Plants – CAP Minería - Compañia Minera
del Pacífico S.A.: In December 2010, the Company was
awarded the contract Valle de Huasco Plants - CAP Project
[“Plantas Valle de Huasco - Proyecto CAP”]. This is an
EPCM project to increase the capacity of the Pellets Plant
(iron mineral). These works comprise the execution of the
phases of contract management, review and validation
of basic engineering, development of detail engineering,
procurement, construction management, commissioning
and start-up. The contract amount is USD 29 million.
The estimated total investment by the client in the project
is USD 180 million.
Engineering Services for Water and Concentrate
Transportation System – Compañía Minera Casale: By the
end of May 2010, the Company received the partial notice
to proceed for the design works and engineering services
of the pipelines and related facilities of the Cerro Casale
project (owned by Barrick Gold and Kinross). The execution
term of the project is 15 months and it contemplates
the engineering of water transportation to the mine and
transportation of concentrate from the mine to the port,
with the related surface facilities.
As of December 31, 2010, this project has reached a 55%
progress. The contract amount is USD 5 million.
PIPELINES
Construction of Sea Water Drive System – Minera
Esperanza: During July 2009, TECHI received the notice
to proceed for the contract Construction of Sea Water
Drive System and Transportation and Concentrate
System [“Construcción del Sistema de Impulsión de
Agua de Mar y Sistema de Transporte y Concentrado”]
for Minera Esperanza. It is an engineering, procurement
and construction (EPC) contract and the scope of works
contemplates the construction of the concentrate
transportation system, which consists of the line to
transport concentrate from the Mina Esperanza plant
to the port of Michilla, with the applicable energy
dissipation station. In addition, works contemplate the
construction of the sea water transportation and drive
system, which shall transport water from forebay at
the port of Michilla to a pool near the Esperanza plant.
The amount of the contract is USD 144 million and the
execution term is 14 months. As of December 2010, the
project reached a 100% progress.
System and Construction of Stations and Singular
Points for the Reclaimed Water System Mina Los Bronces
– Anglo American Sur S.A.: In December 2009, TECHI
received from Anglo American Sur S.A. the notice
to proceed and, then, the contract Construction of
Replacement Pipes Phase I-A, New 28" Mineral Pipeline
and Reclaimed Water System (Phase II) [“Construcción
de Tuberías Reemplazo Fase I-A, Nuevo Mineroducto 28"
y Sistema de Agua Recuperada (Fase II)”] for Los Bronces
Development Project. The work involves the replacement
of pipes corresponding to Phase I of the existing mineral
pipeline and the implementation of a new 28" mineral
pipeline, from San Francisco upper sector to Las Tórtolas
sector, on the existing track. In addition, it contemplates
an expansion of the capacity of the recirculated water
drive system from Las Tórtolas to the grinding facility,
by means of a new drive system with the reutilization
of pipe sections of Phase I to be replaced. In April 2010,
our Chilean subsidiary received the notice to proceed with
the works related to the stations corresponding to the
reclaimed water system for Los Bronces Development
Project, which is addenda to the contract for the Mineral
Pipeline and Reclaimed Water System already executed
with Anglo American.
The term for completion of all the aspects of the
contract is July 30, 2011, and the total amount is USD
180 million. As of December 2010, the project reached
to 56% progress.
28
TEI&C S.A.
Revenues
MEXICO
During this six-month period ended in December 31, 2010,
TEMEX has consolidated its ongoing projects in this country
and continues working on the development of new business.
210
The main projects developed were as follows:
171
107
ENERGY
SLT 1119 Transmission and Transformation of the Southeast
– Comisión Federal de Electricidad (CFE): Lump sum financed
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dec 10
public works contract and unit price contract with CFE for
the execution of engineering, supply and transportation of
installation materials, equipment inspection, supervision
of civil and electro mechanical works, pre-operatives-tests,
and technical support to allow start-up of electric substation
and transmission lines, located in the state of Tabasco.
The contract was developed under a consortium where
TEMEX participation was 43%. During the last quarter of
this period, the Company achieved the completion of the
project, getting the provisional reception. As of December
31, 2010, the overall progress for the project was 100% and
the contract total amount was USD 91 million.
SLT 1125 Distribution Overhead Transmission Line (Stage II)
– Comisión Federal de Electricidad (CFE): Lump sum
financed public works contract and unit price contract
with CFE for the execution of nine works: six distribution
substations and three high voltage lines with a length
of 168 km, whose locations are in the states of San
Luis Potosí, Aguascalientes and Zacatecas. During the
last quarter of this period, the Company achieved the
provisional acceptance of five distribution substations.
As of December 31, 2010, the project reached a 98%
progress and the contract amount was USD 46 million.
Pacífico Coal Fired Power Plant Expansion Project – Comisión
PETACALCO PROJECT IN MEXICO.
Federal de Electricidad (CFE): Design, engineering,
procurement, construction, tests and start-up, freights,
insurance, custom duties, taxes, customs and training,
required for a secure, reliable and efficient operation of
the Carboelectric Central (CCE Pacífico), with a capacity
of 648 MW. The on-shore equipment and components of
29
the generator were supplied by MHI Mexico. In addition,
both, commissioning and testing of the generator were
developed by Mitsubishi. The company expects to get the
final acceptance in 2011. As of December 31, 2010, the
overall progress for the project was 100% and the contract
total amount was USD 159 million.
The sales obtained during the six-month period amounted
to USD 13.4 million.
Construction Works at Veracruz Plant – TenarisTamsa:
(CFE): This project was awarded during this six-month
period, and the kick-off for the construction was in January
2011. The project consists in the design, engineering,
procurement, construction, installation, commissioning,
testing and completion of a combined cycle gas turbine
power plant of at least 433 MW net capacity in summer
in the state of Chihuahua, Mexico. The EPC contract price
shall be the firm, fixed price of USD 332.8 million. The
contract is being developed under a JV with Samsung
engineering, where TEMEX participation is 19%.
Lending of personnel and materials for the execution of
construction works (including civil and electromechanical
works) and structure erection.
Maintenance and steel and iron services works were
continued with an average headcount of 2,400 people.
At present, between the Plant Expansion Project contract
and the main contract, there are 1,850 people working
on a direct basis. It is estimated that for the first fourmonth period of 2011, such number exceed 1,800 people.
During the six-month period, the Plant Expansion project
successfully achieved the test run and start-up of LACO.
The overall progress for the project was 71%. The
consolidated sales for this contract were for USD 47.2
million for this period.
Petacalco Project, Maintenance and Operational Contract
Construction Works at Monterrey Plant – Ternium Hylsa:
– Comisión Federal de Electricidad (CFE): Carbonser,
Lending of personnel and materials for the execution of
construction works (including civil and electromechanical
works) and structure mountings.
During the six-month period, the Company executed different
works in Ternium plants all over Monterrey, Puebla and
Colima. It is important to mention some works executed in
Churubusco plant, such as the construction and assembly of
a Tandem Mill System during a shut-down period, assembly
of annealing furnaces, and general maintenance works.
In the North plant the Company continued working in the
construction and assembly of a cooling water system
and smoke collection system. In Guerrero plant the most
important works were the construction of the main workshop
and storage for pellets ore, as well as piping of 2° fire system.
In Colima, the construction of a mill building was started.
Besides, in Puebla plant, mechanical completion and start-up
of the steel bars storage system was achieved, as well as the
installation of the casting machine system.
At present, there are quite more than 700 people, reaching
–during the period– peaks of 820 people working on this
contract on a direct basis.
S.A. de C.V. was established on 8 August, 1994,
and its principal activity is to provide services to load
and transport coal to the power plant President Plutarco
Elias Calles, located in Petacalco Guerrero. During
this six-month period ended on December 31, 2010,
the company unloaded 3.06 million tons of coal
and delivered 2.67 million tons to the CFE terminal
in Lázaro Cárdenas. Total revenue for this period
amounted to USD 16.5 million.
Norte II CCGT Power Project – Comisión Federal de Electricidad
Heavy Duty Cleaning Service – TenarisTamsa: This service
is being provided through Sidernet S.A. de C.V. to
TenarisTamsa since April 2005, and it comprises the
reception of raw materials in the scrap yard, transportation
and processing of slag, and the recovery, cutting and
classification of metal junk.
During this six-month period, this contract had an average
of 180 people working on a direct basis and the period
billing was approximately USD 3.5 million.
The actual contract in force was awarded on 2009 for a
nine-year term contract.
30
TEI&C S.A.
Revenues
PERU
The period ended with a sale decrease in the country as a result
of the progress in the projects under development. For next
years, we foresee good chances of sustainable development
through the identification and progress in the execution –mainly
at early stages– of new projects throughout the country.
317
259
The main projects developed during this six-month period
were as follows:
59
PIPELINES
Camisea Pipeline Maintenance (Stage II) – Compañía
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dec 10
Operadora de Gas del Amazonas S.A. (COGA): The Company
provides the maintenance of this gas pipeline.
In July 2010, this contract was renewed for a three-year
period and includes the maintenance of PERU LNG pipeline.
The total amount of this renewal is USD 126 million.
South Loops - Early Works – Transportadora de Gas del Perú S.A.
(TGP): In March 2010, the Company received from TGP the
notice to proceed with the early services for the construction
of two 150 km pipelines of 32" and 24" each, including
detailed engineering and early works activities (set-up of
camps, permitting, land rental and other activities).
The total amount of this first scope of the project is
around USD 63 million and it is expected to be completed
by September 2011. As of December 2010, the project
reached 44% progress.
Expansion of NG Transportation System - Addition of fourth
EXPANSION OF NG TRANSPORTATION
SYSTEM, PERU.
pump – Transportadora de Gas del Perú S.A. (TGP): On June 4,
2010, the Company received from TGP a contract and notice to
proceed with the expansion of the NG transportation system,
by adding a fourth pump in each pumping station, two of them
in the jungle and the other two in the mountain section.
The total amount of this project is around USD 14 million.
It started in July 2010 and was completed during April 2011.
As of December 2010, the project reached a 64% progress.
31
CENTRAL AMERICA AND THE CARIBBEAN
Sales in this region reached USD 32 million, and
include several works that are being executed by the
Company’s subsidiaries.
Revenues
144
OIL AND GAS
Gasoline Optimization Program Upgrade – Petroleum
96
Company of Trinidad and Tobago Limited: The project
is managed by a JV in which the Company holds a
50% participating interest jointly with ABB Lummus
Global Overseas Corporation (currently CB&I). It
comprises the following works: basic and detail
engineering, procurement management, construction
and pre-commissioning management, commissioning
assistance, start-up assistance and performance
tests for the Gasoline Optimization Program. The
contract is currently divided into a lump sum portion
of USD 74.9 million, and a fixed fee of USD 10.5
million for procurement services and reimbursable
costs of USD 244.5 million.
During this semester, pre-commissioning activities
have been achieved. In December, it was obtained
the Mechanical Completion (MC) of the Acid Unit. The
remaining MC of the Alky Unit was obtained during
January 2011. In addition, the Unit Acceptance for both
units was received from the client on March 4, 2011.
As of December 2010, progress for Procurement
Services was 99.9%, 100% in Engineering Services
and 99.2% in Construction Management Services.
The project is on the final stage of construction,
completing last minor purchases, and processing final
documentation.
The Company intends to continue working in
this country by maintaining the relationship with
PETROTRIN and, eventually, by extending our client
portfolio to other private concerns.
32
Jul 08 /
Jun 09
Jul 09 /
Jun 10
Jul 10 /
dEc 10
32
TEI&C S.A.
ENERGY
SIEPAC I – Empresa Propietaria de la Red S.A.: Lump sum
turnkey contract for the design of final engineering,
the supply of materials and equipment, civil works,
electromechanical works, final testing and startup of SIEPAC Line 1. The purpose of the Electrical
Interconnection System for the Countries of Central
America (SIEPAC, according to its initials in Spanish) is
to establish an electrical market in the region that will
traverse Guatemala, El Salvador and Honduras (SIEPAC
I), as well as Nicaragua, Panama and Costa Rica
(SIEPAC II). The contract is being developed under a JV
where TEMEX participation is 39%. As of December 31,
2010, the project reached an 81% progress and the total
contract amount was USD 141 million.
SIEPAC SUBSTATIONS, MEXICO.
SIEPAC II – Consorcio Abengoa - Inabensa (APCA):
Lump sum turnkey subcontract for the design of final
engineering, the supply of materials and equipment,
civil works, electromechanical works, final testing
and start-up of SIEPAC II. As of December 31, 2010,
the overall progress for the project was 77% and the
contract amount was USD 55 million.
SIEPAC Substations – Empresa Propietaria de la Red S.A.:
Contract for the design, supply, construction, testing
and start-up of the SIEPAC I and II projects, which
connects the 15 substations pertaining to this project.
As of December 31, 2010, the project reached a 77%
progress and the contract amount was USD 43 million.
BOLIVIA
The purpose of TEBOL, founded in July 2009, is to take
part in construction projects of buildings, roads, dams,
dwelling houses and transformation industrial plants for
any kind of industries and activities.
OIL AND GAS
– Petrobras Bolivia S.A.: On December 28, 2009, the
Company and Petrobras Bolivia S.A. executed a contract
for the construction, assembly, interconnection, pre-
33
commissioning, commissioning, start-up and performance
test of the Third Processing Train of Sábalo Gas Treatment
Plant, located in Tarija.
The contract contemplates the expansion of the plant
by means of the construction of a gas processing plant
from well-head, sweetening with amines and adjustment
of dew point, as well as the construction of condensate
storage tanks and other facilities required for the operation
of the plant. The execution term is 18 months and the
contract amount is USD 88 million. As of December 31,
2010, progress was 69%.
PIPELINES
Margarita Project – Repsol YPF E&P Bolivia S.A.: The project
for the construction of collection lines, evacuation and
loop for the Margarita-Huacaya fields is an EPC project
comprising detail engineering, purchase of all materials
required for the works (except for tubes and hot bending),
construction, pre-commissioning and assistance for startup of the GTS and EXS systems and a 28” loop.
The project is located at the area of Puerto Margarita,
province of O’Connor, department of Tarija, Bolivia.
The lump sum amount, no VAT, is USD 80.2 million. The
execution term is 15 months. The commencement date
was November 2010 and the provisional acknowledgement
of receipt is estimated by February 2012.
As of December 31, 2010, the project had just started
to be developed.
SAUDI ARABIA
During the past six-month period, the construction
activities of the Manifa-Tanajib Water Pipeline project
reached an overall progress of 80%. The main works
during this period were trenching, stringing, pipe joint,
backfilling, special crossings and hydro test.
All activities were completed with the satisfaction of JGC
Corporation as well as the final client, Saudi Aramco.
The contract total amount is USD 48 million with a twoyear term for execution.
On February 15, 2011, TENCO executed the Saudi Techint Ltd.
sale and purchase agreement with a related company.
URUGUAY
During the abovementioned semester, the following
projects were developed:
ARCHITECTURE AND INFRASTRUCTURE WORKS
As regards infrastructure activities, the Company has
the capacity and expertise required to develop projects
related to roads, highways, bridges, tunnels, railroad
and underground tracks, aqueducts, ports, airports,
effluent and sewage water treatment plants, dams
and telecommunication systems. In addition, the
Company performed architectural works, such as
business offices and buildings, housing unit complexes,
cultural and educational premises, penitentiary
complexes and hospitals.
Environmental and Sewage Works of Maldonado and
Punta del Este – Obras Sanitarias del Estado (OSE): The
Company continued with the works for OSE. Works
have been arranged in four groups: (1) works for the
maintenance of sewage and drinkable water networks
at Maldonado, Punta del Este and other locations
within the Department of Maldonado; (2) sanitation
works in the city of Maldonado; (3) sanitation works
in the city of Piriápolis, and (4) effluent treatment plant
at Punta Fría (Piriápolis).
During this period, works of groups 1 and 2 were
executed; so far the works under the contract have
reached 76% progress. The total contract amount is
USD 15 million.
Av. Ferreira Aldunate – Municipalidad de Maldonado:
In December 2008, a contract was entered into
with Intendencia Municipal de Maldonado for the
construction of a double paved way and surrounding
streets on Av. Ferreira Aldunate; the basic works
and expansions were completed in May 2010.
In December 2010, the Company was awarded
an expansion for the contract; such works were
commenced in December and are estimated
to be completed during the first semester of 2011.
The total contract amount is USD 8 million.
34
TEI&C S.A.
Bridge over José Ignacio Stream – Corporación Vial
COLOMBIA
del Uruguay (CVU): During this period, the Company
Basic engineering works are being executed to expand
OCENSA’s transportation capacity from 550 to 650 kbd.
The construction is estimated to be awarded under a call
for bids by the end of the first semester of 2011.
completed the works committed under the basic contract
entered into with Corporación Vial del Uruguay for the
construction of a new bridge over the José Ignacio stream,
Department of Maldonado. The total amount of the
contract was USD 2.5 million.
Road 18 – Corporación Vial del Uruguay (CVU): In January
2010, works were commenced under the contract with
Corporación Vial de Uruguay, for the construction of 22 km
of road in Road 18 from Arroyo del Oro and the city
of Vergara, Department of Treinta y Tres. At the end of this
period, works reached 88% progress. The total contract
amount is USD 9 million.
CANADA
In Canada, TECAN finished the pending works in
Alberta Clipper (attention of warranties and clean-up)
and started involvement in the facilities EPC market.
During this six-month period, TECAN was invited and
participated in very demanding tendering processes
for companies such as Husky. TECAN is now regarded
in the Western Canada market as a participant in the
EPC marketplace, which allows to leverage resources
from the head offices.
New Maldonado Sewage System – Obras Sanitarias del
Estado (OSE): The Company continued with the works of
the project Treatment and Final Disposal of Maldonado and
Punta del Este Sewage System [“Tratamiento y disposición
final de efluentes del sistema Maldonado y Punta del Este”].
The contract, executed between TEURU, TEARG Sucursal
Uruguay, Montec and Belfi (grouped as a typical consortium)
and OSE, for an amount of USD 37 million, comprises
the construction of 35 kilometers of tubing, one land outfall
of four kilometers, civil and architectural works in seven
pumping stations (works to be executed by the Company),
and a one-kilometer long off-shore outfall (to be executed
by Montec and Belfi).
The term for the works, started in January 2010, is 36 months.
To this date, the Company has recorded 34% progress.
Ciudad de la Costa Drainage System – Obras Sanitarias
Even though no contract was awarded, the commercial
activity was intense, placing TECAN in the suppliers’ list
of CNRL, Husky, Total, Pembina, Transcanada, Enbridge,
Statoil or Suncor. As the outlook for mainline pipelines
continues being blurry for the coming periods, TECAN is
focusing on the oil sands activity, conventional oil and gas
plays. We are also participating in the Steering Committee
in a group led by Enbridge that analyzes feasibility for the
use of CO2 as slurry in a pipeline.
ENGINEERING
The main engineering works performed are related to
projects under development and others already completed,
among which the following are highlighted:
del Estado (OSE): In November 2009, the consortium of
TEURU (45%) and TEARG Sucursal Uruguay (55%) was
awarded a contract with OSE for USD 20 million, involving
the construction of 34 km of drainage piping system,
56 km of gutters and 32 km of road works at Ciudad de
la Costa, Department of Canelones.
Due to administrative issues of the client, the works
started in October 2010 have not registered much activity
in this six-month period (1% of the contract).
However, a sustained growth of the activity is estimated
to occur as from the first month of the next fiscal year.
– Punta Negra Hydroelectric Station (Argentina): Conceptual
and basic engineering, plus detail engineering; including
detail engineering of works for the deviation of the San
Juan river.
– Pascua Lama Project – Barrick Gold (Argentina - Chile):
Basic engineering and project feasibility study, work
schedule and control budget. Detail engineering and
procurement, including management of purchase orders
placed by the client.
35
– YPF – Sulfur Reduction Phase 1 & 2 (Argentina): Detail
engineering, procurement management and construction
(Phase II).
– Atucha II Nuclear Plant (Argentina): Construction
engineering works of piping installations.
– YPF – Escobar Cardales (Argentina): Completion of pipeline
engineering for the project of construction of gas pipeline
in Escobar.
– YPF – Tanks (Argentina): Basic engineering for project
feasibility study of four storage systems (tanks) for YPF,
at several plants of the client.
TenarisSiderca (Argentina):
– Casale Compañía Minera – Cerro Casale (Chile): Basic and
detail engineering for slurry line and water pipeline.
– Oleoducto Central S.A. (OCENSA) (Colombia): Basic
engineering for the study of capacity expansion of the
Ocensa oil pipeline, by means of the incorporation of
pumping equipment at existing stations and construction
of new pumping stations.
– EPR – Siepac Bahías & Líneas (Mexico): Detail engineering.
Power transmission lines and substations.
– CFE – SE 1125 Distribution Stage II (Mexico): Detail
engineering. Power transmission lines and substations.
– CFE – SLT 1119 Southeast Transmission and
Transformation Stage I (Mexico): Detail Engineering
for five power transmission lines and two
transformation substations.
– Fume Extraction at Steel-Making Area. Installation of new
refrigerated pipelines for primary extraction of dust in
Furnace 5 and non-refrigerated pipelines for secondary
extraction of Furnace 4 - Steel-making area.
– CC Norte (Mexico): Detail engineering for combined
– LC2F Continuous Cold Strip Mill. Insertion in three existing
ways of tilting rotators to perform a 90° turn of master
cycle facility.
tubes, before they enter the CND for subsequent calibration
TenarisTamsa (Mexico):
of the latter.
– Tubing Factory 3. Installation of all cold cycle equipments
for the new plant of TenarisTamsa.
– Repsol YPFB – Margarita Pipelines (Bolivia): Detail engineering,
– Tubing Factory 3 – Casing Thermal Treatment. Installation
gas pipelines for development of the Margarita Field.
of thermal treatment for seamless casing up to 7".
– Repsol YPFB – FEED Margarita Stage II (Bolivia): FEED
– TGP – NG Fourth Pump Expansion (Peru): Detail engineering.
for expansion of the Margarita gas processing plant.
Technical bidding terms for EPC contract.
– Petrobras Bolivia – Sábalo Gas Plant (Bolivia): Development
– TGP – Camisea South Loops (Peru): Conceptual, basic and
of detail engineering for the construction of a gas
detail engineering. Loop for expansion of transportation
processing plant.
capacity in Camisea pipelines.
– Petrobras – RNEST (Brazil): Detail engineering for storage
– Pluspetrol – Camisea II Expansion (Peru): Conceptual
tanks site.
and extended basic engineering, and preparation of
bidding terms for expansion of Malvinas and Pisco Plants.
– Petrobras – COMPERJ (Brazil): Detail engineering new coke
unit at Rio de Janeiro Petrochemical Complex.
Review of detail engineering of EPC contractors.
– Angloamerican / Bechtel – Los Bronces - Pipelines and
Stations (Chile): Two contracts, including completion of
detail engineering for Barrick.
– Phoenix Park – Fire Water System Upgrade (Trinidad): Detail
engineering for the expansion of the fire system capacity
at a plant of Phoenix Park.
36
TEI&C S.A.
PROCUREMENT
The main works performed regarding supplies
are related to the projects under development stated
in the Engineering section.
The goals set for this six-month period are focused on
the contribution from procurement to improving the
Company’s competitiveness by means of a comprehensive
revision of the respective purchasing strategies and of
processes and procedures, in view of optimizing costs,
reliability and transparency in management.
In this respect, the Company put the emphasis on the
specialization of procurement headcount and the increasing
use of IT tools, with a focus on the following aspects of
procurement management:
The Company continued with the program for the total
renewal of TEPAM equipment in ten years. The goal
is to set the age of such machinery in five years to help
reduce repair costs and obtain a competitive improvement.
In the workshop area, the construction of a prefabricated
Warehouse was started for piping within TEPAM Argentina
site to service several projects in progress.
In Chile, TEPAM consolidated its presence by acquiring a
site in the Second Region, outside the city of Antofagasta,
on National Road 5, La Negra Industrial Park. In addition,
the Company installed at Chincha, Peru (approximately 200
km south of Lima) a yard to serve as an operating base for
future projects in this country.
TEPAM investment value in machinery, vehicles, and tools
for the July-December 2010 period was USD 21.1 million.
i) Increasing the contribution of value by focusing the
purchasing strategy on the critical success factors,
management total cost, productivity and strategic factors.
ii) Encouraging the specialization of the sector and,
consequently, organizing the structure based on demand.
iii) Boosting the use of IT supporting systems for bids,
supplier management and management indicators of the
department and of each of the projects.
In addition, work has been done on the development of
new suppliers from Asian countries.
During the next fiscal year, the Company will keep on
working on the abovementioned actions which will impact
on the management indicators defined.
HEALTH, SAFETY AND ENVIRONMENT (HSE)
TEI&C is a company acting in several countries, with
different cultures and degrees of evolution in relation
to prevention; however, the Company has managed to
incorporate it as an intrinsic value to its activities, giving
prevention top priority in its management.
TEI&C has developed a preventive vision focused on a
commitment to safety, occupational health, environmental
protection and the welfare of communities. In this respect,
our Integrated Management System (IMS) has proved
to be effective to anticipate and prevent accidents and
unsafe conditions concerning industrial safety, health and
environmental protection.
TECHINT EQUIPMENT DIVISION (TEPAM)
During this period, in addition to the administration,
maintenance, repair, assistance and allocation of
equipment to the different projects, TEPAM continued to
provide assistance to the Warehouse and General Services
areas, with the purpose of supporting the start-up of
works and, subsequently, monitoring their needs during
the development of projects.
Since its implementation, the IMS has allowed to reduce
global accident rates (Frequency Rate and Seriousness
Rate) by over 85%, and this shows a substantial
improvement in accidentology related to works, an issue
which is acknowledged and valued by clients.
The system is focused on the identification of risks
associated to the work developed by the Company,
37
compliance with local laws, application of coherent
preventive procedures for all the Company’s units
together with an ongoing and widespread training.
The IMS is also innovative regarding methods,
such as behavior-based safety and preventive Safety
Observation at Work (OST).
To minimize the repetition of incidents and accidents,
in addition to performing other actions addressed to
equipment and facilities and to safety in the working
place, individual performance is monitored by means
of a specific indicator, TACOP [“Tablero de Comando
de Actividades Operativas de Prevención”] – Preventive
Actions Command Switchboard, PACS). This results
in the promotion of a strong commitment of employees
to become aware and internalize preventive conducts,
and this commitment also applies to sub-contractors.
The IMS is externally audited by Det Norske Veritas
(DNV) and certified under international standards
(ISO 14001:2004 and OHSAS 18001:2007); a high
degree of compliance with such standards has been
verified in all cases.
We must state that preventive actions in the last period
have resulted in:
From our processes standpoint, the Company is clearly
oriented to continuous improvement and pays special
attention to efficiency, simplification of processes and
value added in each of its operations.
In the July-December 2010 period, the following actions
have been completed:
– Substantial completion of the review and update of the
Company’s Document Base and progress in the research
and development of a knowledge management model to
be gradually implemented.
– Redefinition and establishment of the main quality
indicators for products associated to the projects
developed by the Company.
– Quantitative and qualitative improvement of client
satisfaction measurement in the different projects, by
means of a more in-depth cross-sectional analysis of
information and by generating improvement actions.
– Boosting and improvement in measurement and use of
quality management indicators for projects, in particular
the PQI (Project Quality Index).
– Improvement of the single database of findings follow-up,
by establishing the status follow-up of each one of them
– Boosting of the safe operating discipline.
in the projects, as well as an alert system for the different
– Solid preventive interaction with senior management.
functional areas with a direct responsibility.
– More severity in the use of field managerial tools.
– Improvement of analysis of risks related to change
management.
– In December 2009, the Company obtained a new
certification pursuant to ISO 9001:2008 on Quality
– Improvement of preventive revision of vehicles, equipment
Management Systems (certification effective since 1996)
and qualification of drivers/operators.
and, during 2010, it was submitted to two external audits,
with excellent results.
QUALITY
The Company is always seeking to meet and exceed the
expectations of its clients, shareholders, collaborators,
suppliers and the communities where it operates.
In particular, with respect to our clients, this entails a special
focus on the quality of the products and services provided.
The Company has decided to maintain the direction
adopted in previous years, focused on the unification and
improvement of methodologies and the reliance on truthful
and updated information so as to minimize risks. It also seeks
to prevent problems and ensure the predictability of results
in order to comply with the commitment to meet and exceed
the expectations of all related stakeholders.
38
TEI&C S.A.
TECHNOLOGY AND IT SYSTEMS
HUMAN RESOURCES
During this period, progress continued to be made in several IT
projects related to improvements in technological infrastructure,
upgrade to new software versions and implementation of
new solutions to cover different business processes. The most
outstanding IT projects were the following:
Human resources management is a pillar of business
management with direct impact on results. Therefore, the
Company has human resources processes, which assure
the availability of talents and adequate profiles to achieve
the business strategy. Among such processes, we find
the Young Professionals Program, consisting in a program
structured to speed up the insertion of new graduates in
the business, through intensive technical and management
training, and a rotation plan exposing them to several
training experiences. Another process of human resources
management is the strict follow-up of key personnel by the
top management.
– Migration from ERP SAP 4.7 to the new version SAP
ECC 6.0, basically conducting a technical migration that
will allow to be on a more updated platform to apply new
functions and to facilitate the system adjustment upon
external requirements.
– First implementation stage of SAP HR Human Resources,
resulting in the operation of the modules of Personnel
Management and organizational structure for personnel
paid on a monthly basis in Argentina, as a first step of
implementation within a global project.
– Update of the central infrastructure of datacenters, migrating
to a server virtualization technology, which facilitates
management and optimizes the existing infrastructure.
During this period, Engineering has continued making
progress on the use and implementation of new plant
design and simulation software for the purpose of leading
engineering of projects. These tools include: Intergraph
Smart Plant Enterprise (plant design system consisting
of processes, mechanics, equipment, electricity and
instruments, etc.), Thermoflow (for simulation and design
of gas, combined cycle and carbon power plants), Metsim
(metallurgical simulator for mining processes), ANSYS
(simulation of 3D fluids and structural calculation), etc.
In addition, works were developed to improve and
support prevention management systems, thus improving
management information as a whole.
Besides, progress was made in the implementation of an
internal management tool related to incident management
and IT settings.
During this period, a new edition of the Postgraduate
Course in Project Management, an in-house program
addressed to professionals in different areas of the
Company and its subsidiaries with potential to hold key
positions in project management. This program and
other programs developed at senior management and
supervision levels seek to develop both technical and
managerial competences.
The boosting of the employee performance evaluation
system is essential, since it constitutes a fundamental
management tool for the Company.
In addition, during this period, a new working
environment survey was conducted among our
employees: there was a general improvement
in the indicators, which, in turn, reflects a solid
commitment of our people to the Company.
We would like to thank all our clients, suppliers, banking
institutions and above all, our employees whose work on
a daily basis have contributed to these results.
The Board of Directors
39
BOARD OF DIRECTORS
PRESIDENT
Carlos Eduardo Bacher
VICE PRESIDENT
Eduardo Nicolás Rocca Couture
DIRECTORS
Ricardo Pascale Cavallieri
Luis Pablo Solari Damonte
Mario Osvaldo Lalla
Ricardo Ourique Marques
Directors were appointed at the
Regular Shareholders’ Meeting held
on November 30, 2010.
40
TEI&C S.A.
During the six-month period, the Plant
Expansion project successfully achieved
the test run and start-up of LACO.
TenarisTamsa Plant. Mexico.
41
42
TEI&C S.A.
CONSOLIDATED
FINANCIAL
STATEMENTS
Six-month period ended December 31, 2010
and year ended June 30, 2010
THE MAIN PHYSICAL AMOUNTS ARE 13,929 M³
OF CONCRETE, 20,667 TONS OF ASSEMBLY
AND 177,300 M² OF PAINTING.
REFINARIA DO NORDESTE, ABREU E LIMA (RNEST). BRAZIL.
45
Consolidated Financial Statements
Legal Information
Denomination:
Parent Company:
TEI&C S.A.
Techint Limited.
Legal Address:
Legal address:
La Cumparsita 1373 7th Floor
Montevideo (11200)
(598-2) 901-9091
Equity Trust House
28-30 The Parade, JE4 8XY
St. Helier, Jersey
Channel Islands.
Company activity:
Investments.
Parent Company activity:
Investments.
Date of registration:
February 16, 2005.
Parent Company:
Expiration of Company Charter:
Shares:88.67%
Votes:88.67%
February 16, 2105.
Registry number:
RUC 21-5098860012.
Capital Stock:
Shares: 5,181,537,274 1.
Face Value: UYU 5,181,537,274 2.
See note 13 to the consolidated financial statements.
UYU: Uruguayan Pesos.
1
2
46
47
48
TEI&C S.A.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Six-month period ended December 31, 2010 and year
ended June 30, 2010.
NOTeS
12.31.10
06.30.10
Property, plant and equipment
4
320,397
309,723
Intangible assets
5
3,826
2,662
Investments in associated companies
6
1,624
1,389
Other investments
7
7,500
6,774
5,225
5,032
Trade and other receivables
8
29,046
33,448
Deferred income tax assets
15
All amounts in USD thousands
ASSETS
Non-Current Assets
Non-current tax assets
Total Non-Current Assets
62,832
48,229
430,450
407,257
30,468
35,848
39,232
47,494
332,985
319,459
108,786
116,731
Current Assets
Inventories
9
Current tax assets
8
Construction contracts work in progress
Assets of disposal group classified as held for sale
Other investments
Cash and cash equivalents
Total Current Assets
Total Assets
11
16,298
67
7
622
1,010
12
320,215
283,567
848,606
804,176
1,279,056
1,211,433
49
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (cont’d.)
NOTeS
12.31.10
06.30.10
637,384
577,642
27,915
28,134
665,299
605,776
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to the Company’s equity holders
Total Equity
Non-Current Liabilities
Borrowings
14
22,262
18,648
Deferred income tax liabilities
15
29,812
42,984
869
895
25,278
22,316
4,683
–
Non-current tax liabilities
Trade and other payables
16
Other liabilities
17
Total Non-Current Liabilities
41,456
36,472
124,360
121,315
Current Liabilities
Borrowings
14
19,935
19,308
Liabilities of disposal group classified as held for sale
11
6,992
–
16
233,120
246,871
113,377
92,339
Current tax liabilities
38,918
23,035
77,055
102,789
Total Current Liabilities
489,397
484,342
Total Liabilities
613,757
605,657
1,279,056
1,211,433
Other liabilities
Total Equity and Liabilities
The accompanying notes are an integral part of these consolidated financial statements.
17
50
TEI&C S.A.
CONSOLIDATED INCOME STATEMENT
NOTeS
12.31.10
06.30.10
6 months (*)
12 months (*)
Continuing operations
Revenues from construction contracts and other services
Cost of sales
26
Gross profit
783,921
1,530,337
(662,168)
(1,225,766)
121,753
304,571
General and administrative expenses
26
(76,796)
(125,523)
Selling expenses
26
(9,299)
(9,944)
28
Operating income
Gain from the purchase and sale of shares and investments
1,752
(4,926)
37,410
164,178
–
246
Financial income
27
3,770
9,118
Financial costs
27
(5,371)
(10,573)
Income before income tax
Income tax
29
Income from continuing operations
446
2,724
36,255
165,693
10,813
(56,542)
47,068
109,151
396
5,236
47,464
114,387
44,272
109,812
Discontinued operations
Income from discontinued operations
Net Income (1)
23
(1) Attributable to:
Equity holders of the Company
Non-Controlling interests
Net Income
(*) See note 2.a.
3,192
4,575
47,464
114,387
51
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NOTeS
Net Income
12.31.10
06.30.10
6 months (*)
12 months (*)
47,464
114,387
Other comprehensive income:
Gain on revaluation of PP&E
4
–
55,995
Decrease of revaluation of PP&E
4
(2,389)
(4,967)
17,989
(158)
Currency translation differences
Cash flow hedge
Other comprehensive income for the period/year net of tax (1)
–
(215)
63,064
165,042
59,814
157,977
3,250
7,065
63,064
165,042
(1) Attributable to:
Equity holders of the Company
Non-Controlling interests
(*)See note 2.a.
52
TEI&C S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Stock
Legal
reserve
Balance at June 30, 2009
218,535
2,293
–
–
Gain on revaluation of PP&E net of tax (see note 4)
–
–
Decrease of revaluation of PP&E net of tax (see note 4)
–
–
Depreciation of reserve for revaluation surplus net of tax
–
–
Decrease of reserve for revaluation surplus due to PP&E disposal net of tax
–
–
Changes in equity reserves
–
–
–
–
Total comprehensive income for the year
–
–
Board of Directors’ fees
–
–
Legal Reserve
–
9,632
Dividend distribution (USD 4.63 per thousand shares)
–
–
Dividend distribution approved by the Board of Directors’ Meeting held on 02.25.10 (1) (USD 1.74 per thousand shares)
–
–
Capital Surplus (see note 1)
–
–
Net income for the year (*)
Other comprehensive income
Resolution of the Shareholders’ meeting held on 12.02.09:
Changes in non-controlling interests
(1)The dividends were approved by the Board of Directors and were ratified by the Shareholder’s Meeting held on November 30, 2010.
–
–
218,535
11,925
53
Attributable to the Company´s Equity Holders
Non -Controlling
Interests
Total equity
Capital
Surplus
Cumulative
translation
adjustments
Reserve
for PP&E
revaluation
surplus
Other
Reserve
Retained
Earnings
(4,038)
(42,428)
51,511
215
224,087
34,750
484,925
–
–
–
–
109,812
4,575
114,387
–
–
55,777
–
–
218
55,995
–
–
(4,967)
–
–
–
(4,967)
–
–
(10,771)
–
10,771
–
–
–
–
(4,015)
–
4,015
–
–
–
–
–
(215)
–
–
(215)
–
(2,430)
–
–
–
2,272
(158)
–
(2,430)
36,024
(215)
124,598
7,065
165,042
–
–
–
–
(72)
–
(72)
–
–
–
–
(9,632)
–
–
–
–
–
–
(24,000)
–
(24,000)
–
–
–
–
(9,000)
–
(9,000)
2,562
–
–
–
–
–
2,562
–
–
–
–
–
(13,681)
(13,681)
(1,476)
(44,858)
87,535
–
305,981
28,134
605,776
54
TEI&C S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONT’D.)
Capital
Stock
Legal
reserve
218,535
11,925
–
–
Decrease of revaluation of PP&E net of tax (see note 4)
–
–
Depreciation of reserve for revaluation surplus net of tax
–
–
Decrease of reserve for revaluation surplus due to PP&E disposal net of tax
–
–
–
–
Total comprehensive income for the six-month period
–
–
Board of Directors’ fees
–
–
Legal Reserve
–
5,720
–
–
218,535
17,645
Net income for the six-months period (*)
Other comprehensive income
Resolution of the Shareholders’ Meeting held on 11.30.10:
Balance at December 31, 2010
(*)See note 2.a).
55
Attributable to the Company´s Equity Holders
Non -Controlling
Interests
Total equity
Capital
Surplus
Cumulative
translation
adjustments
Reserve
for PP&E
revaluation
surplus
Retained
Earnings
(1,476)
(44,858)
87,535
305,981
28,134
605,776
–
–
–
44,272
3,192
47,464
–
–
(2,389)
–
–
(2,389)
–
–
(6,346)
6,346
–
–
–
–
(5,682)
5,682
–
–
–
17,931
–
–
58
17,989
–
17,931
(14,417)
56,300
3,250
63,064
–
–
–
(72)
–
(72)
–
–
–
(5,720)
–
–
–
–
–
–
(3,469)
(3,469)
(1,476)
(26,927)
73,118
356,489
27,915
665,299
56
TEI&C S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTeS
12.31.10
06.30.10
6 months (*)
12 months (*)
47,464
114,387
20,665
48,033
Cash flows from operating activities
Net Income for the six-month period/year
Adjustments to reconcile net income to cash flow operations
PP&E depreciation
4
Intangible amortization
5
Construction contracts in progress
Net provisions
Net allowance for doubtful accounts
Tax accrued
Impairment loss
2,645
(310)
144
414
29
(10,813)
61,473
–
(410)
28
(4,727)
(13,399)
4
2,430
5,701
(1,886)
(3,768)
(702)
(1,600)
1,825
7,340
(29)
(586)
(122)
(205)
–
(246)
Interest accrued from trade and other receivables
Discount at current value credits
27
Interest accrued from borrowings
Financial results, net and others
Result from other investments
7
Result from the sale of shares and investments
Other, including currency translation adjustment
812
(35,584)
8
Unrealized gain on derivate financial instruments
Gain from the sales of PP&E
460
32,539
6
(446)
(2,724)
4,816
(11,209)
Changes in balances corresponding to:
Trade accounts receivable and tax assets
Inventories
Trade and other payables and tax liabilities
Other liabilities
Held-for-sale assets and liabilities net
Net cash generated by operating activities
(5,148)
99,964
788
(12,362)
(6,095)
(73,876)
(17,418)
16,619
–
617
66,390
199,081
57
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D.)
NOTeS
12.31.10
06.30.10
6 months (*)
12 months (*)
11,743
24,957
(38,397)
(54,411)
(1,480)
(915)
(227)
(2,082)
–
5,460
(28,361)
(26,991)
2,037
(71,879)
(3,469)
(11,120)
(72)
(72)
Cash flows from investing activities
Proceeds from disposal of PP&E
Purchases of PP&E
Purchases of intangible assets
5
Proceeds from sales of other investments and investment in associated companies (net)
Derivative financial instruments
Net cash used in investing activities
Cash flow from financing activities
Proceeds from / Repayments of borrowings (net)
Board of Director´s fees
Dividend distribution
–-
(33,000)
Net cash used in financing activities
(1,504)
(116,071)
Net increase in cash and cash equivalents
36,525
56,019
282,426
222,842
8,011
3,565
326,962
282,426
(1,377)
3,470
(2,389)
50,810
Cash and cash equivalents at the beginning of the six–months period/year
Effect of exchange rate changes
Cash and cash equivalents at the end of the six–months period/year
12
Non-cash transactions
Finance leases
(Decrease) / Gain on revaluation of machinery, equipment and vehicles, net of tax effects and decrease
(*)See note 2.a).
4
58
TEI&C S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont’d.)
All amounts are shown in USD thousands, unless otherwise stated.
THIRD PROCESSING TRAIN OF THE
SÁBALO GAS TREATMENT PLANT.
BOLIVIA.
59
INDEX TO THE NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. General Information
2. Accounting policies
9. Inventories
10. Financial instruments by category
a. Basis of preparation
11. Assets and liabilities classified as held for sale
b. Consolidation
12. Cash and cash equivalents
c. Foreign currency translation
13. Share capital
d. Use of estimates
14. Borrowings
e. Property, plant and equipment (PP&E)
15. Deferred income taxes
f. Intangible assets
16. Trade and other payables
g. Impairment of non-financial assets
17. Other liabilities
h. Financial assets
18. Provisions
i. Offsetting financial instruments
19. Employee benefits
j. Derivative financial instruments
20. Participation in Joint Ventures
k. Inventories
21. Contingencies and commitments
l. Construction contracts work in progress
22. Restricted assets
m. Other investments
23. Discontinued operations
n. Trade and other receivables
24. Related party transactions
o. Trade and other payables
25. Subsidiaries
p. Cash and cash equivalents
26. Cost of sales and expenses by nature
q. Equity
27. Financial results
r. Borrowings
28. Other operating results
s. Current and deferred income tax
29. Income tax expense
t. Employee benefits
30. Main contracts in progress
u. Provisions
31. Subsequent events
v. Revenue recognition
w. Leases
x. Assets and liabilities classified as held for sale
and discontinued operations
3. Financial risk management
4. Property, plant and equipment (PP&E)
5. Intangible assets
6. Investments in associated companies
7. Other investments
8. Trade and other receivables
60
TEI&C S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
general information
TEI&C S.A. (“TEI&C”), a company controlled by Techint
Limited, was registered in Uruguay in February 2005
and is a part of the Techint Group (“TG”). TEI&C’s
purpose is to engage in investments by holding equity
interests in companies or organizations whose corporate
purpose includes engineering, construction and services.
References in these consolidated financial statements
to “TEI&C” or “Company” refer to TEI&C S.A. and its
consolidated subsidiaries.
For the purpose of unification of the end of the fiscal
year of engineering and construction companies, the
governing bodies have determined December 31 as the
most suitable date. On December 2, 2009 a Board of
Directors´ Meeting decided to change the closing date
of the fiscal year to December 31.
During the current six-month period, TEI&C experienced
some changes in its investment portfolio as regards
its participating interests in companies related to the
engineering, construction and service businesses, which
are detailed as follows:
– During this period, the Company contributed to Preglosid
S.L.U. (“PREGLOSID”) 3,591,000 US Treasury Bills,
representing the sum of USD 3,589,897 (equal
to EUR 2,868,934) and the receivable for the balance
of a loan for USD 194,762.49 (equal to EUR 146,658.50).
By means of these transactions, PREGLOSID increased
its capital stock, and the new participating interest of
the Company is 6,500,003 shares plus an issue premium
for EUR 5,490,335.08.
– In August 2010, the Argentine subsidiary Techint
Compañía Técnica Internacional S.A.C.I. (“TEARG”)
registered a branch in the Republic of Brazil, with
a capital stock of R$ 100,000.
– In order to comply with the provisions of the laws of
the Republic of Uruguay, the Board of Directors of the
indirect subsidiary in such country, Techint Compañía
Técnica Internacional S.A.C.I. (“TEURU”), made a partial
capitalization of the capital adjustment in November 2010.
– In December 2010, the Company and TEARG subscribed
and paid in a capital increase in Techint Engenharia e
Construção S.A. (“TEBRA”) for R$ 40,000,000. The
contribution was made taking into account the relevant
shareholding, i.e. TEI&C paid in the sum of R$ 38,400,000
(equal to USD 22,628,167.35). Thus the Company now
holds 6,391,747 shares of the Brazilian company.
– In September 2010, the Canadian indirect subsidiary
Techint E&C Inc. (“TECAN”), created a new company in
Canada called Techint Construction Limited (“TECON”),
upon the subscription of a capital stock of CAD 250,000.
– During this period, the Mexican company Techint S.A. de
C.V. (“TEMEX”), continued with transactions aimed at
adjusting its participating interests to the requirements
of its business areas. Thus, in August 2010, it created
KST Electric Power Company S.A. de C.V., where TEMEX,
through TECNOPOWER S.A., holds 10% of the capital
stock. Besides, the companies Elina Sureste S.A. de C.V.
and Elina de Occidente S.A. de C.V. were wound up.
– The corporate reorganization among Argentine companies
that took place at the end of the previous fiscal year,
consisting in the capitalization of Tecnomatter Instalaciones
y Construcciones S.A.I.F. (“TMR”) and Sidernet S.A.
(“SDT”), the spin off of TMR and the subsequent merger
of the spin off with SDT, was registered before the
Argentine Inspection Board on December 13, 2010.
61
– During the current period, the subsidiary TENCO started
negotiations aimed at transferring the shares of its
subsidiary company Saudi Techint Ltd. Therefore, assets
and liabilities related to such company have been
reclassified as “assets of disposal group classified as held
for sale” and “liabilities of disposal group classified as held
for sale” as of December 31, 2010 (See notes 11 and 31).
During the previous fiscal year, TEI&C experienced
some changes in its investment portfolio which are
detailed as follows:
– In September 2009, the Company contributed to Techint
Ingeniería y Construcciones S.L.U. (“TIC”) the direct
participating interests it held as of such date in Argentine
engineering and construction companies, i.e. 140,516,186
shares, representing 97.70538% of the capital stock of
Techint Inversiones S.A.I.F. and 125,981,909 shares of
TEARG, representing 38.94340% of the capital stock and
voting rights. Upon this transaction, TIC increased its capital
stock, and therefore, the new Company’s participating
interest is 5,000,002 shares plus an issue premium for
EUR 81,699,999.99, thus becoming also the European
holding of this business by concentrating the operations
in Argentina, Canada, Central America and Mexico.
de C.V. (COMEI) 60% of the shareholding in Norpower,
S.A. de C.V., and 100% of the shares of TGT de México,
S.A. de C.V. to companies of the energy sector of the
Techint Group.
After the recomposition of capital of Terminales Portuarias
del Pacífico S.A.P.I. de C.V. (“TPP”), subsidiary of TEMEX,
Carbonser S.A. de C.V. sold its whole participating interest
in TPP. Finally, in June 2010, TEMEX acquired 25% of the
shares of Mexcarbón S.A. de C.V. and of Carbonser, S.A.
de C.V., since the relevant contract undertaking such
purchase had been executed in November 2008. The
difference between the price paid and the book value was
charged to equity as capital surplus (USD 2.6 million).
In December 2009, Tecnopower S.A. de C.V. was created,
but to this date this company has not engaged in any
business activities.
Besides, TEMEX wound up the companies the purpose
of which had already been performed or which were
inactive, including the following: Tecnomatter, S.A. de C.V.,
Elina 407, S.A. de C.V., Elinatech S.A. de C.V.
– In March 2010, PREGLOSID S.L.U. subscribed and
paid in a capital increase in its subsidiary Sidernet
Mexicana S.A. de C.V. for 21,398,889 shares. By mid– As a result of the capital contribution made in March 2010
by the Company in Socominter Sociedade Comercial
April 2010, TEI&C contributed to PREGLOSID the direct
Internacional Ltda. (“SOCOMINTER”), and the spin
participating interest it held in the Argentine company
off merger of the latter with its parent company, TEBRA,
Prestaciones Globales Siderúrgicas S.A., i.e. 8,445,080
which took place in May, our direct shareholding in
shares, representing 97.50% of the capital stock.
SOCOMINTER is 0.088%.
Upon this transaction, PREGLOSID increased its capital
stock, and therefore, the new Company’s participating
interest is 6,500,001 shares plus an issue premium
– Throughout the previous fiscal year, TEMEX continued with
transactions aimed at reorganizing its business areas.
for the sum of EUR 1,636,499.99, thus consolidating
in its shareholders’ equity the transactions for the
In August 2009, it transferred together with Constructora
supply of steel and iron services recorded in Argentina,
Mexicana Electromecánica y de Instrumentación, S.A.
Mexico and Venezuela.
62
TEI&C S.A.
– In June 2010, the shareholders of the Argentine companies
TMR and SDT resolved a corporate reorganization,
consisting in the capitalization of both companies, the
spin off of TMR and the subsequent merger of the spin
off with SDT, the latter becoming the successor for the
supply of steel and iron services.
Taking into account the change of the fiscal year closing
date, stated in note 1, the accounting information
included in these consolidated financial statements for
the six-month period began on July 1, 2010 and ended on
December 31, 2010, cannot be compared to accounting
information for the annual fiscal year ended June 30, 2010.
– On July 21, 2009 TEARG founded Techint Ingeniería
y Construcción Bolivia S.A. to take part in construction
projects for buildings, rouds, dams, dwelling houses
and transformation industrial plants for any kind of
industries and activities.
Certain comparative amounts have been reclassified
to conform to changes in presentation in the current
six-month period.
These consolidated financial statements were approved for
issue by the Company’s Board of Directors on April 29, 2011.
note 2.
Accounting policies
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out
below. These policies have been consistently applied to all
the periods presented, unless otherwise stated.
a. Basis of preparation
The preparation of consolidated financial statements
in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires
management to exercise its best judgment in the
process of applying the Company’s accounting policies.
The areas involving a higher degree of judgment of
complexity, or the areas where assumptions and
estimates are significant to the consolidated financial
statements, are disclosed in note 2.d.
Classification of Venezuela as a hyperinflationary economy
During the previous fiscal year, a number of factors arose
in the Venezuelan economy that led the Company to
reconsider the treatment it follows with respect to the
translation of the financial statements of subsidiaries.
Within these factors it is worth highlighting the level
of cumulative inflation over the past three years; the
restrictions to the official foreign exchange market and,
finally, the devaluation of the Bolívar Fuerte.
These consolidated financial statements are prepared in
accordance with International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting
Standards Board (“IASB”), under the historical cost
convention, as modified by the revaluation of machinery,
equipment and vehicles (“Revaluation of PP&E”), availableAs a result, in accordance with IFRS, Venezuela must
for-sale assets, financial assets and liabilities (including
be considered a hyperinflationary economy. The main
derivative instruments) at fair value through profit or loss,
implications of this circumstance are as follows:
employee benefits and translation of subsidiaries whose
functional currency is the currency of a hyperinflationary
– Adjustment of the income statement to reflect
the financial loss caused by the impact of inflation
economy. The consolidated financial statements are
in the period/year on net monetary assets (loss of
presented in thousands of U.S. dollars (“USD”), which
purchasing power).
is the functional currency of TEI&C.
63
– All components of the financial statements of the
Venezuelan companies have been translated at the closing
exchange rate, which at December 31, 2010 and June 30,
2010 was 4.3 Bolívares Fuertes per USD.
The revised standard clarifies and simplifies the definition
of a related party and removes the requirement for
government-related entities to disclose details of all
transactions with the government and other governmentrelated entities.
Changes in accounting policy and disclosures
Standards and amended standards mandatory for the first
time for the Financial Statements beginning July 1, 2010 and
adopted by the Company
None of the standards, amendments to standards and
interpretations to existing standards which are effective for
the Company for the six-month period ended December
31, 2010 were relevant to the operation of the Company,
and therefore, no impact resulted from the application
of those standards, amendments and interpretations on
these consolidated financial statements.
Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Company
The following standards, amendments and interpretations
to existing standards have been published and are not yet
effective for the Company in the six-month period ended
December 31, 2010:
IFRS 9 “Financial Instruments”, issued in November 2009.
This addresses the classification and measurement of
financial assets and is likely to affect the Company’s
accounting for its financial assets. The standard is not
applicable until January 1, 2013, but is available for early
adoption. The Company’s management has not yet
assessed the potential impact that the application of IFRS
9 will have on the Company’s financial statements.
IAS 24 (Revised), “Related party disclosures”, issued in
November 2009. It supersedes IAS 24, ‘Related party
disclosures’, issued in 2003. IAS 24 (revised) is mandatory
for periods beginning on or after January 1, 2011. Earlier
application, in whole or in part, is permitted.
The application of this revised standard is not expected
to have a significant impact on the presentation
of the Company’s results of operations, financial position
or cash flows.
As follows, other standards and interpretations to
existing standards not yet effective and not adopted by
the Company before, though they are not relevant to the
Company’s operations:
– IFRS 1 (Amendments), “First time adoption, on financial
instrument disclosures”.
– IFRIC 19 “Extinguishing financial liabilities with equity
instruments”.
– IFRIC 14 (Amendment), “Prepayments of a minimum
funding requirement”.
– IAS 19 and IFRIC 14 (Amendment), “Asset Limit for
Defined Benefit, Minimum Requirements for Provision of
resources (funding) and their Interaction”.
Improvements to International Financial Reporting Standards
In May 2010, the IASB published the annual
improvements with several international accounting
and financial reporting standards amendments.Entities
shall apply these amendments for annual periods
beginning on or after January 1, 2011. If entities
apply these amendments to an earlier period, they
shall disclose this fact.
The Company’s management estimates that the
application of these amendments will not have
a material effect on the Company’s financial condition
or results of operations.
64
TEI&C S.A.
b. Consolidation
Subsidiary companies
Subsidiaries are entities which are controlled by TEI&C
as a result of its ability to govern an entity’s financial and
operating policies generally accompanying a shareholding
of more than 50% of the voting rights. Subsidiaries are
consolidated from the date on which control is exercised
by the Company and are no longer consolidated from the
date control ceases.
The purchase method of accounting is used to account
for the acquisition of subsidiaries by TEI&C. The cost of
an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred
or assumed at the date of acquisition. Acquisition-related
costs are expensed as incurred. Identifiable assets
acquired, liabilities and contingent liabilities assumed in
a business combination are measured initially at their fair
values at the acquisition date, irrespective of the extent of
any minority interest. The excess of the cost of acquisition
over the fair value of TEI&C share of the identifiable net
assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognized
directly in the income statement.
If the companies acquired were under common
control, the assets and liabilities of such companies
(and their respective subsidiaries) are accounted for
at the predecessor’s cost, reflecting the carrying
amount of such assets and liabilities contributed to
the Company. Accordingly, the consolidated financial
statements include the financial position of the
abovementioned companies at historical book values
and no adjustment has been made to reflect fair
values at the time of the contribution. The difference
between the price paid and the historical book value
was charged to equity.
Material intercompany transactions, balances and
unrealized gains on transactions between TEI&C and
its subsidiaries have been eliminated in consolidation.
Unrealized losses are also eliminated. Accounting policies
of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by TEI&C.
According to the laws of the countries of certain subsidiaries,
a portion of the profit of the period/year is separated to
constitute statutory reserves until they reach statutory capped
amounts. These legal reserves are not available for dividend
distribution and can only be released to absorb losses.
See note 25 to the consolidated financial statements
for the list of consolidated subsidiaries.
Transactions and non-controlling interests
The Company treats transactions with non-controlling
interests as transactions with equity owners of TEI&C.
For purchases from non-controlling interests, the
difference between any consideration paid and the
relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity. Gains
or losses on disposals to non-controlling interests
are also recorded in equity. When TEI&C ceases
to have control or significant influence, any retained
interest in the entity is remeasured to its fair value, with
the change in carrying amount recognized in profit or loss.
Associated companies
Associated companies are entities in which TEI&C has
significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting
rights (see note 6). Investments in associated companies
are accounted for by the equity methods of accounting and
are initially recognized at cost. The Company´s investment
in associated companies includes goodwill identified
on acquisition, net of any accumulated impairment loss.
65
The Company’s share of its associated companies’ postacquisition profits or losses is recognized in the income
statement, and its share of post-acquisition movements in
reserves is recognized in reserves. The cumulative postacquisition movements are adjusted against the carrying
amount of the investment. When the Company’s share
of losses in an associated company equals or exceeds its
interest in such company, including any other unsecured
receivables, the group does not recognise further losses,
unless it has incurred obligations or made payments on
behalf of the associated companies.
joint ventures that result from the Company’s purchase
of assets from the joint ventures until it re-sells the
assets to an independent party. However, a loss on the
transaction is recognized immediately if the loss provides
evidence of a reduction in the net realizable value of
current assets, or an impairment loss.
c. Foreign currency translation
i. Functional and presentation currency
Unrealized gains on transactions between TEI&C and its
associated companies are eliminated to the extent of
TEI&C’s interest in the associated companies. Unrealized
losses are also eliminated unless the transaction
provides evidence of an impairment indicator of the
asset transferred. Financial statements of associated
companies have been adjusted where necessary to ensure
consistency with IFRS.
Items included in the consolidated financial statements
of each entity in which TEI&C holds participating interests
are measured using the currency that best reflects
the economic substance of the underlying events and
circumstances relevant to that entity (“the functional
currency”). The consolidated financial statements are
presented in thousands of U.S. dollars, which is the
functional currency of TEI&C. The consolidated companies’
first record transactions using their functional currency and
their financial statements are then translated to U.S. dollars
with the only purpose of being consolidated by TEI&C.
Joint Ventures
ii. Balances and transactions in currencies other than the
Joint Ventures (“JV”) are jointly controlled entities, which
involve the establishment of a corporation, partnership or
other entity in which each venturer has an interest.
functional currency
TEI&C’s interest in jointly controlled entities is accounted
for by the proportionate consolidation method. TEI&C
consolidates its share of the joint ventures’ individual
income and expenses, assets and liabilities on a lineby-line basis with similar items in TEI&C’s financial
statements. See note 20 to the consolidated financial
statements.
Transactions in currencies other than the functional
currency are accounted for at the exchange rates prevailing
on the date of the transactions, and the corresponding
exchange gains and losses are recognized in the income
statement.
Monetary assets and liabilities in currencies other than the
functional currency are translated at the period/year-end
exchange rate.
iii. Translation of balances and results of consolidated companies
The Company recognises the portion of gains or losses on
the sale of assets by the Company to the joint ventures
that is attributable to the other ventures. The Company
does not recognise its share of profits or losses from the
The results and financial position of all the consolidated
companies that have a functional currency different from
the Company’s presentation currency are translated into
the presentation currency as follows:
66
TEI&C S.A.
– assets and liabilities of each balance sheet are translated
at the closing rate on the date of that balance sheet;
– income and expenses for each income statement
are translated at an average exchange rate; (unless
this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated
at the rate on the dates of the transactions);
– all resulting exchange differences are recognized as a
separate component of equity.
In the case of sale or other disposition of any such subsidiary,
any accumulated translation adjustment would be recognized
in the income statement as part of the gain or loss on sales.
The financial statements of subsidiaries companies whose
functional currency is the currency of a hyperinflationary
economy are adjusted for inflation in accordance with the
procedure described in the following paragraph prior to
their translation to USD. Once restated, all the items of
the financial statements are converted to USD using the
closing exchange rate. Amounts shown for prior years for
comparative purposes are not modified.
To determine the existence of hyperinflation, TEI&C assesses
the qualitative characteristics of the economic environment
of the country, such as the trends in inflation rates over
the previous three years. The financial statements of
companies whose functional currency is the currency of a
hyperinflationary economy are adjusted to reflect the changes
in purchasing power of the local currency, such that all items
in the statement of financial position not expressed in current
terms (non-monetary items) are restated by applying a general
price index at the financial statement closing date, and all
income and expense, profit and loss are restated monthly
by applying appropriate adjustment factors. The difference
between initial and adjusted amounts is taken to profit or loss.
d. Use of estimates
The preparation of consolidated financial statements
requires Management to estimate and evaluate both
recorded and contingent assets and liabilities as of
a certain date, as well as income and expenses recorded
during the reporting period. The future actual results
may differ from estimates made as of the date of
preparation of these consolidated financial statements.
Estimates and judgments are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances.
There follows a description of the most relevant estimates
used to prepare these consolidated financial statements:
Percentage of completion method
The Company uses the percentage-of-completion method in
accounting for its contract revenues and expenses. Use of the
percentage-of-completion method requires the Company to
estimate the services performed to date as a proportion of the
total services to be performed. Furthermore, in determining
the contract revenue, TEI&C considers the estimated outcome
for each of the construction contracts which are in progress.
Income taxes
The Company is subject to income taxes in numerous
jurisdictions. Significant judgment is required in determining the
worldwide provision for income taxes. There are transactions
and calculations for which the ultimate tax determination is
uncertain. TEI&C recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences
will impact the current and deferred income tax assets and
liabilities in the period in which such determination is made.
67
Allowances for doubtful accounts
Management maintains an allowance for trade and other
receivables to account for estimated losses resulting
from the inability of clients to make required payments.
When evaluating the adequacy of an allowance for trade
receivables, Management bases its estimates on the aging
of accounts receivable balances and historical write-off
experience, client credit worthiness and changes in client
payment terms.
assets are valued at their acquisition or construction cost
less accumulated depreciation.
The straight-line method has been used to calculate
depreciation, by applying annual ratios sufficient to
terminate the value of each item as of the end of their
estimated useful life or upon termination of concession,
whichever occurs first.
Useful lives used to calculate depreciation charges
Other estimations
In addition, the Company´s Management makes
estimations to calculate, at certain moment the
recoverable amounts of assets, the depreciation and
amortization and the provision for cost and contingencies.
are as follows:
Buildings and improvements
20-50 years
Production equipment10-20 years
Vehicles, furniture and fixtures, and other equipment 3-10 years
Land Not depreciated
e. Property, plant and equipment (PP&E)
Machinery, equipment, vehicles and others
As a general rule, TEI&C has adopted historical acquisition
or construction cost less accumulated depreciation as the
measurement criterion for PP&E.
However, in the case of machinery, equipment and vehicles
used in the construction business, TEI&C has adopted
fair value as the measurement criterion (see note 4).
Land and buildings
Land and buildings are stated at historical cost. Buildings
are depreciated using the straight-line method, by applying
annual ratios sufficient to terminate the value of each item
as of the end of their estimated useful life.
The residual values and useful lives of significant
machinery, construction equipment and vehicles
are reviewed, and adjusted if appropriate, at each
period/year-end date.
Where the carrying amount of an asset is higher than
its estimated recoverable amount, it is written down
immediately to its recoverable amount.
Fixed assets of Ferroexpreso Pampeano S.A.C. (“FEPSA”)
Gains and losses on disposals are determined by
comparing proceeds with carrying amounts. When
revalued assets are sold, the amounts included in the
reserve for PP&E revaluation surplus are transferred
to retained earnings.
These assets represent improvements on the assets
received under concession by FEPSA, as well as those
devoted to service rendering, which will be transferred
to the assignor upon termination of the concession. Such
Repairs and maintenance expenses are charged to the
consolidated income statement during the financial period
in which they are incurred.
68
TEI&C S.A.
f. Intangible assets
Systems development
Acquired computer software licenses are capitalized
on the basis of the costs incurred to acquire and bring
to use the specific software. These costs are amortized
over their estimated useful lives (three to five years).
Costs associated with developing or maintaining computer
software programs are charged to expenses as incurred.
Costs that are directly associated with the production
of identifiable and unique software products controlled
by TEI&C and that will probably generate economic
benefits exceeding costs beyond one year, are recognized
as intangible assets. Direct costs include the software
development employee costs and an appropriate portion
of relevant overhead.
Computer software development costs recognized as
assets are amortized over their estimated useful lives
(not exceeding three years).
Property and equipment and other non-current
assets subject to depreciation, including intangible
assets, are reviewed for impairment losses whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable.
An impairment loss is recognized for the amount
by which the carrying amount of the asset exceeds
its recoverable amount, which is the higher of an
asset net selling price and its value in use. For the
purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately
identifiable cash flows.
h. Financial assets
The Company classifies its financial assets in the
following categories: at fair value through profit
or loss, loans and receivables, and available for sale.
The classification depends on the purpose for which
the financial assets were acquired. Management
determines the classification of its financial assets
at initial recognition.
Goodwill
Compañía Inversora Ferroviaria S.A.I.F. (“COINFER”)
Financial assets at fair value through profit or loss
Goodwill represents the greater cost derived from the
investment in the subsidiary FEPSA as a result of the
compulsory subscription and payment of the portion of
capital corresponding to Ferrocarriles Argentinos (16%)
and the portion corresponding to staff (4%) pursuant to
the concession contract.
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is
classified in this category if acquired principally for
the purpose of selling in the short-term. Derivatives
are also categorized as held for trading unless they
are designated as hedges. Assets in this category are
classified as current assets.
Goodwill is valued at original cost, less accumulated
amortization; it is calculated over the term of the
concession of the service provided by FEPSA.
g. Impairment of non-financial assets
Assets that have an indefinite useful life, for example
Goodwill, are not subject to amortization and are tested
annually for impairment.
Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They are included in current assets,
except for maturities greater than 12 months after the date
of the statement of financial position. These are classified
as non-current assets.
69
Available-for-sale financial asset
j. Derivative financial instruments
Available-for-sale financial assets are non-derivatives that
are either designated in this category or not classified
in any of the other categories. They are included in noncurrent assets unless management intends to dispose
of the investment within 12 months of the end of the
reporting period.
Derivatives are initially recognized at fair value on the date
a derivative contract is entered into and are subsequently
re-measured at their fair value. The method of recognizing
the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged.
Recognition and measurement
The Company documents at the inception of the transaction
the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy
for undertaking various hedging transactions. TEI&C also
documents its assessment, both at hedge inception and on
an ongoing basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes
in fair values or cash flows of hedged items.
Regular purchases and sales of financial assets are
recognized on the trade - date - the date on which
the Company commits to purchase or sell the asset.
Investments are initially recognized at fair value plus
transaction costs for all financial assets not carried
at fair value through profit or loss. Financial assets
carried at fair value through profit or losses are initially
recognized at fair value and transaction costs are
expensed in the income statement. Financial assets
are derecognized when the rights to receive cash
flows from the investments have expired or have
been transferred and the Company has transferred
substantially all risks and rewards of ownership. Availablefor-sale financial assets and financial assets at fair value
through profit or loss are subsequently carried at fair
value. Loans and receivables are carried at amortized
cost using the effective interest method.
The Company assesses at each balance sheet date
whether there is objective evidence that a financial asset
or a group of financial assets is impaired.
i. Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount reported in the statement of financial position
when there is a legally enforceable right to offset
the recognized amounts and there is an intention
to settle on a net basis, or realize the asset and settle
the liability simultaneously.
Cash flow hedge
The effective portion of changes in the fair value of
derivatives denominated and qualified as cash flow hedging
is disclosed in other Comprehensive income. The gain
or loss related to the ineffective portion is immediately
disclosed in the consolidated income statement.
The amounts accumulated in equity are disclosed in the
consolidated income statement in the periods in which the
hedged item affects gains and losses.
k. Inventories
Inventories are stated at the lower of cost or net realizable
value less the corresponding allowance for obsolescence.
Net realizable value is the estimated selling price in the
ordinary course of business, less the costs of completion
and direct selling expenses. In general, cost is determined
by using weighted average price.
The allowance for obsolescence has been calculated
based on Management’s analysis of aging.
70
TEI&C S.A.
l. Construction contracts work in progress
A construction contract is a contract specifically negotiated
for the construction of an asset or a combination of assets
that are closely interrelated or interdependent in terms of
their design, technology and functions or their ultimate
purpose or use.
When the outcome of a construction contract cannot be
reliably estimated, contract revenue is recognized to the
extent of contract costs incurred where it is probable
those costs will be recoverable. Contract costs are
recognized when incurred.
When the outcome of a construction contract can be
reliably estimated, contract revenue and contract costs are
acknowledged by the percentage of completion method.
The stage of completion is measured by reference to the
relationship contract costs incurred for work performed
to date bear to the estimated total costs for the contract.
When it is probable that total contract costs will exceed
total contract revenue, the expected loss is immediately
recognized as an expense.
Costs incurred in the year in connection with future
activity on a contract are excluded from contract costs in
determining the stage of completion. They are presented
as inventories, prepayments or other assets, depending on
their nature.
When a construction contract includes reimbursable works
and the Company is responsible for providing design,
engineering and construction services and labor and all
equipment and materials, construction equipment and
supplies, the amount of these works is recognized in
revenues and costs.
for construction contracts for all contracts in progress
for which costs incurred plus recognized profits (less
recognized losses) exceed progress billings.
TEI&C presents as a liability (within Construction contracts
work in progress) the gross amount due to clients for
construction contract for all contracts in progress for which
progress billings exceed costs incurred plus recognized
profits (less recognized losses).
m. Other investments
Other investments include deposits in investments funds and
equity instruments, which are classified as financial assets
“at fair value through profit and loss” or “available for sale”.
Other investment funds comprise mainly financial
resources within offshore trusts, the purpose of which
is exclusively to ensure that the financial needs for the
normal development of their operations are met.
Investments in companies in which TEI&C has less than
20% of the voting rights are valued at cost, because its fair
value cannot be reliably measured.
n. Trade and other receivables
Trade and other receivables are initially measured at
their fair value, which is generally their nominal value,
unless the effect of discounting is material, subsequently
measured at amortized cost less provision for impairment.
An allowance for doubtful accounts is established when
there is objective evidence that the Company will not be
able to collect all amounts due according to the original
terms of receivables.
o. Trade and other payables
TEI&C shows as an asset (within Construction contracts
work in progress) the gross amount due from clients
Trade and other payables are obligations to pay for goods
or services that have been acquired in the ordinary course
71
of business from suppliers. Accounts payable are classified
as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities.
Trade and other payables are recognized initially at fair
value and subsequently measured at amortized cost using
the effective interest method.
p. Cash and cash equivalents
Assets recorded in cash and cash equivalents are carried at
fair market value or at historical cost which approximates
fair market value. For the purposes of the consolidated
statement of cash flows, cash and cash equivalents
comprise cash on hand, demand deposits with banks and
other short-term highly liquid investments with original
maturities of three months or less and bank overdrafts.
Bank overdrafts are included within borrowings in current
liabilities in the consolidated statement of financial position.
q. Equity
Ordinary shares are classified as equity. The balances
of the consolidated statement of changes in equity at
December 31, 2010 and June 30, 2010 include:
– The value of share capital, capital surplus, reserve for
PP&E revaluation surplus, legal reserve, and retained
earnings in accordance with IFRS.
– The currency translation differences of TEI&C’s subsidiaries.
– Non-controlling interests in subsidiaries.
Dividends distributions are recorded in the Company’s
financial statements when Company’s shareholders
have the right to receive the payment, or when interim
dividends are approved by the Board of Directors in
accordance with the by-laws of the Company.
r. Borrowings
Borrowings are initially recorded based on the fair value
of the net proceeds. Borrowings are subsequently stated
at amortized cost using the effective yield method; any
difference between proceeds (net of transaction costs)
and the redemption value is recognized in the income
statement over the life of the borrowings.
Borrowings are classified as current liabilities unless TEI&C
has an unconditional right and firm intention to defer
settlement of the liability for at least twelve months after
the balance sheet date.
s. Current and deferred income tax
The current income tax charge is calculated on the basis of
the tax laws in force in the countries in which TEI&C and
each one of its subsidiaries operate.
Deferred income tax is recorded in full, using the liability
method, on temporary differences arising between the tax
basis of assets and liabilities and their carrying amounts in
the consolidated financial statements. Currently enacted tax
rates are used in the determination of deferred income tax.
Deferred tax assets are recognized to the extent that it is
probable that future taxable profit will be available to offset
temporary differences.
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries, associated
companies and joint ventures, except where the timing of
the reversal of the temporary difference can be controlled
and it is probable that the temporary difference will not
reverse in the foreseeable future.
t. Employee benefits
Certain TEI&C’s subsidiaries have in force benefit plans
under the modality of “non-funded defined benefits”
72
TEI&C S.A.
and “other long-term benefits” which, subject to certain
conditions established by such companies, are granted
during the term of employment and after retirement,
which plans are recorded following the guidelines of
accounting rules and regulations in force and effect.
lives of employees based on actuarial calculations.
This provision is measured at the present value of the
estimated future cash outflows, using applicable interest
rates. Actuarial gains and losses are recognized over the
average remaining service lives of employees.
The provisioned liabilities for such employee benefits are
recorded at the current value of the future flows of funds,
the amount being charged during the relevant employees’
remaining years of services up to the moment when the
conditions necessary for the granting of each benefit are
satisfied. Such liabilities are calculated by independent
actuaries, at least once a year, using the “Projected credit
unit” method.
Benefits provided by the plan are calculated on a sevenyear salary average.
Other subsidiaries have implemented a supplementary
pension benefit plan with two programs: “PGBL - Plano
Gerador de Benefício Livre” and “VGBL - Programa de
Seguro de Vida com Cobertura por Sobrevivência”. These
programs are generally funded through payments by the
subsidiaries to independent insurance companies. Both
programs are defined contribution plans.
Pension plans and other post-retirement benefits
Certain TEI&C’s subsidiaries officers are covered by a
specific employee retirement plan designed to provide
retirement, termination and other benefits to those officers.
TEI&C’s subsidiaries are accumulating assets for the
ultimate payment of those benefits in the form of
investments. The investments are not part of a particular
plan, nor are they segregated from TEI&C’s other
assets. Due to these conditions, the plan is classified as
“unfunded” under IFRS.
Retirement costs are assessed using the projected unit
credit method: the cost of providing retirement benefits
is charged to the statement of income over the service
The laws in the different countries in which TEI&C’s
subsidiaries carry out their operations provide for pension
benefits to be paid to retired employees from government
pension plans and/or private funds managed plans.
Amounts payable to such plans are generally calculated
based on a percentage of employee salaries and are
accounted for on an accrual basis.
Termination benefits
Termination benefits are payable whenever an employee’s
employment is terminated before the normal retirement
date or whenever an employee accepts voluntary
redundancy in exchange for these benefits.
TEI&C’s subsidiaries recognize termination benefits
when it is demonstrably committed to either terminating
the employment of current employees according to a
detailed formal plan without possibility of withdrawal, or
providing termination benefits as a result of an offer made
to encourage voluntary redundancy. Benefits falling due
more than twelve months after balance sheet date are
discounted to present value.
Profit-sharing and bonus plans
A liability for employee benefits in the form of profitsharing and bonus plans is recognized in other provisions
when there is no realistic alternative but to settle
the liability and provided at least one of the following
conditions is met:
73
– there is a formal plan and the amounts to be paid are
determined before the time of issuing the financial
statements; or
v. Revenue recognition
Revenues and cost recognition for long-term construction
contracts
See note 2.l.
– past practice has created a valid expectation in employees that
they will receive a bonus/profit-sharing and the amount can be
determined before the financial statements are issued.
Liabilities for profit-sharing and bonus plans are expected
to be settled within twelve months and are measured at
the amounts expected to be paid when they are settled.
Contribution plans
Sales of services
The Company sells maintenance services. The revenue is
generally recognized in the period the services are provided,
using a straight-line basis over the term of the contract.
Other revenues
Other revenues earned by TEI&C are recognized on the
following bases:
A defined contribution plan is a pension plan under which
the companies pay fixed contributions to a separate entity. – Interest income: on the effective yield basis.
Companies have no further payment obligations once
– Dividend income from investments in other companies:
when TEI&C’s right to collect is established.
the contributions have been paid. The contributions are
recognized as employee benefit expense when they are
w. Leases
due. Prepaid contributions are recognized as an asset to
Leases in which a significant portion of the risks and
the extent that a cash refund or a reduction in the future
rewards of ownership are transferred from the lessor
payments is available.
to TEI&C are classified as finance leases. At the
commencement of the lease term, TEI&C recognizes
Contributions by the companies include: (a) Basic contribution
finance leases as assets and liabilities in the statement
– Companies are committed to contribute amounts equal
financial position at amounts equal to the value of
to the amounts contributed by the employees up to certain
the leased property or, if lower, the present value
limits, (b) Extraordinary contributions- Are non-mandatory
of the minimum lease payments, each determined
contributions that can be made on a voluntary basis either by
at the inception of the lease. The discount rate used
the companies or the employees.
in calculating the present value of the minimum lease
u. Provisions
payments is the interest rate implicit in the lease should
Provisions are recognized when TEI&C has a present legal
this be practicable to determine; otherwise, the lessee’s
or constructive obligation as a result of past events, it is
incremental borrowing cost is used. Any initial direct
probable that an outflow of resources will be required to
costs of the lessee are added to the amount recognized
settle the obligation, and a reliable estimate of the amount
as an asset.
can be made. When TEI&C expects a provision to be
reimbursed, for example under an insurance contract, the
Each lease payment is allocated between the liability
reimbursement is recognized as a separate asset but only
and finance charges. The corresponding rental
when the reimbursement is virtually certain.
obligations, net of finance charges, are included
74
TEI&C S.A.
in borrowing. The interest element of the finance cost
is charged to the income statement over the lease
period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for
each period. The property, plant and equipment acquired
under finance leases is depreciated over their estimated
useful lives.
See amounts of assets and liabilities held under finance
leases in note 22.
Leases in which a significant portion of the risks and
rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under
operating leases (net of any incentives received from
the lessor) are charged to the income statement on a
straight-line basis over the period of the lease.
note 3.
Financial risk management
The nature of TEI&C’s operations as well as its
multinational character expose the Company to a variety of
risks, including the effects of changes in foreign currency,
exchange rates, capital risk, concentration of credit risk,
liquidity risk and interest rates risk. The nature of its
contracts implies that TEI&C has to manage risks regarding
uncertain conditions in the hiring of procurement, which is
usually a large part of the scope of work.
To manage the high volatility related to these financial
matters, Management evaluates exposures on a consolidated
basis to take advantage of its global and multinational activity.
For some of these exposures, the Company or its subsidiaries
enter into derivative transactions in order to manage potential
adverse impacts on the Company’s financial performance.
x. Assets and liabilities classified as held for sale and
discontinued operations
a. Capital Risk
Assets of disposal group and liabilities associated with
these assets are classified as “assets and liabilities
classified as held for sale” when their carrying amount
is to be recovered principally through a sale transaction
and a sale is considered highly probable.
The Company seeks to maintain an adequate debt to total
equity ratio considering the risks involved in the industry
and the markets where it operates. The period/year end ratio
of debt to total equity (where “debt” comprises all financial
borrowings and “equity” is the sum of financial borrowings
and shareholders’ equity) is 0.06 as of December 31, 2010,
and June 30, 2010. The Company does not have to comply
with regulatory capital adequancy requirements.
When the Company intends to dispose of a business
component that represents a separate major line
of business or geographical area of operations it
classifies such operations as discontinued. The post tax
profit or loss of the discontinued operations is shown
as a single amount on the face of the consolidated
income statement, separate from the other results of
the Company.
They are stated at the lower of carrying amount and fair
value less costs to sell if their carrying amount is to be
recovered principally through a sale.
b. Foreign exchange risk
TEI&C’s business activities are conducted in the respective
functional currencies of the subsidiaries. However, the
Company transacts in currencies other than the respective
functional currencies of the subsidiaries. There are
significant monetary balances held by the Company at
each period/year-end that are denominated in US dollars.
It is worth stating that the US dollar is not the functional
currency in some subsidiaries.
75
The following tables show a breakdown of the TEI&C’s
net monetary position in various currencies for the main
functional currency in which the Company operates:
12.31.10
Functional Currency (in thousand USD)
ARS
BRL
cad
CHL
eur
MXN
pen
SAR
ARS
–
–
–
–
–
–
–
BOB
–
–
–
–
–
–
–
CAD
(10)
–
–
–
–
–
–
EUR
(248)
–
–
–
–
1,153
–
GTQ
–
–
–
–
–
–
–
HNL
–
–
–
–
–
–
–
NIO
–
–
–
–
–
–
–
SVC
–
–
–
–
–
–
–
USD
(4,949)
71,690
13,232
22,031
48
5,209
25,709
–
–
–
–
–
–
–
(5,207)
71,690
13,232
22,031
48
6,362
25,709
Net monetary position Asset / (Liability)
VEF
usd
UYU
vef
–
–
(237)
–
(237)
–
(2,040)
–
–
(2,040)
–
–
–
–
(10)
(196)
(207)
–
(371)
131
–
610
–
–
610
–
(115)
–
–
(115)
–
(82)
–
–
(82)
–
1,841
–
–
1,841
(893)
–
5,349
2,583
140,009
–
2,618
–
–
2,618
(1,089)
2,625
5,112
2,212
142,725
Total
76
TEI&C S.A.
06.30.10
Functional Currency (in thousand USD)
Net monetary position Asset / (Liability)
ARS
BRL
cad
CHL
eur
MXN
pen
SAR
usd
UYU
vef
Total
ARS
–
–
–
–
–
–
–
BOB
–
–
–
–
–
–
–
–
-
(183)
–
(183)
–
282
–
–
282
CAD
(10)
–
–
–
–
–
–
EUR
1
–
–
–
–
1,190
–
–
-
–
–
(10)
(978)
666
–
(371)
508
GTQ
–
–
–
–
–
–
–
HNL
–
–
–
–
–
–
–
–
208
–
–
208
–
(41)
–
–
(41)
MXN
–
–
–
–
–
–
NIO
–
–
–
–
–
–
–
–
18,961
–
–
18,961
–
–
12
–
–
12
SVC
–
–
–
–
–
–
–
–
1,713
–
–
1,713
USD
1,021
24,587
13,545
12,322
(1,689)
42,701
29,087
(1,102)
–
2,218
2,592
125,282
VEF
–
–
–
–
–
–
–
–
2,658
–
–
2,658
1,012
24,587
13,545
12,322
(1,689)
43,891
29,087
(2,080)
24,459
2,035
2,221
149,390
Ref:
ARS: Argentine PesoMXN: Mexican Peso
BRL: Brazilian RealNIO: Nicaraguan Cordoba Oro
BOB: Bolivian PesoPEN: Peruvian Nuevo Sol
CAD: Canadian DollarSAR: Saudi Riyal
CHL: Chilean PesoSVC: El Salvador Colon
EUR: EuroUYU: Uruguayan Peso
GTQ: Guatemalan QuetzalVEF: Venezuelan Bolívar Fuerte
HNL: Honduran Lempira
The Company estimates that the impact under IFRS on the
net exposure at December 31, 2010 of a simultaneous 1%
favorable or unfavorable movement in the main exchange
rates would result in a maximum pre-tax gain or loss of
approximately USD 1,427 thousands as compared with a
maximum pre-tax gain or loss of approximately USD 1,494
thousands at June 30, 2010.
The Company’s net exposure to the currency other than
the functional currency is managed on a case-by-case
basis, partly by hedging certain expected cash flows with
foreign exchange derivative contracts.
77
c. Credit risk
Most accounts receivable relate to clients operating
in a range of industries and countries with contract
which require ongoing payments as the development
project progresses, upon the rendering of services
or upon completion and delivering of the project. It is
normal practice that the Company reserves the right
to suspend the project if there is a remarkable breach
of the contract term, in particular the non-payment of
amounts owed.
In general the greatest risk for such assets is the risk of
not collecting a trade account receivable. This is because,
a) it may be a significant value in the development of
works or in the provision of services; b) it is beyond the
Company’s control. However, the risk of customers being
unable to make a payment in such contracts is considered
to be low, and typically relate to problems characterized
as technical matters, i.e relating to the risk inherent in the
service rendered, under the Company’s control.
The following table sets forth details of the age of trade
receivables:
Trade
Receivables
Not Due
Past due
1 - 180 days
> 180 days
December 31, 2010
Trade Receivables
230,459
174,706
33,268
22,485
Allowance for doubtful accounts (see note 8)
(11,734)
–
(28)
(11,706)
Net Value
218,725
174,706
33,240
10,779
Trade Receivables
224,739
167,104
35,760
21,875
Allowance for doubtful accounts (see note 8)
(10,923)
–
(37)
(10,886)
Net Value
213,816
167,104
35,723
10,989
June 30, 2010
At the date of these consolidated financial statements
most credits past due 1-180 days have been collected.
Receivables overdue for more than 180 days are in
the process of approval for payment by the ENARGAS
(Argentine Gas Regulatory Board).
78
TEI&C S.A.
d. Liquidity risk
Management maintains sufficient cash and cash
equivalents to finance normal operations and believes that
TEI&C also has access to market for short-term working
capital requirements.
TEI&C financing strategy is to maintain adequate financial
resources and access to additional liquidity. During
the six-month period ended December 31, 2010 TEI&C
has counted on cash flows from operations as well as
additional bank financing to fund its transactions.
TEI&C has a conservative approach to the management of
its liquidity, which consists of cash and cash equivalents,
comprising cash in banks, short-term money market funds
and highly liquid short-term securities.
TEI&C holds its cash and cash equivalents primarily
in USD. Liquid financial assets as a whole are
25% of total assets at December 31, 2010 (23%
at June 30, 2010).
See note 14 for the maturity of borrowings and note 16
for the maturity of trade and other payables.
e. Interest rate risk management
The Company’s financing strategy is to manage
interest expense using a mixture of fixed-rate and
variable-rate debt.
The following table summarizes the proportions
of variable-rate and fixed-rate debt as of each
period/year end.
12.31.10
06.30.10
Borrowings
Percentage
Borrowings
Percentage
Fixed rate
25,573
61%
24,690
65%
Variable rate
16,624
39%
13,266
35%
As the Company has no significant interest-bearing assets, the
Company’s income and operating cash flows are substantially
independent from changes in market interest rates.
The Company estimated that, if interest rates would have
been 100 basic points higher, with all other variables
held constant, total profit for the six-month period ended
December 31, 2010 would have been USD 166 thousands
lower (USD 132 thousands lower at June 30, 2010).
f. Fair value estimation
The carrying amount of financial assets and liabilities
with maturities of less than one year approximates to
their fair value.
See note 10 – “Determining fair values”.
79
NOTE 4.
Property, plant and equipment (PP&E)
The item evolution is as follows (*):
Non-current
TOTAL
12.31.10
Lands and
buildings
Beginning of the period (*)
Equipment and
machinery
Vehicles
Other
Assets (1)
48,138
52,964
309,723
58,324
150,297
Additions
5,165
12,128
8,938
13,543
39,774
Disposals
–
(3,790)
(3,012)
(214)
(7,016)
(1,235)
(9,722)
(4,638)
(5,070)
(20,665)
943
2,832
712
(66)
4,421
Depreciation
Translation differences
Other movements
–
–
45
(45)
–
Transferred to disposal group classified as held for sale
–
(854)
(105)
(62)
(1,021)
Impairment loss
December 31, 2010
–
(2,867)
(394)
(1,558)
(4,819)
63,197
148,024
49,684
59,492
320,397
Original
Value
Accumulated
Depreciation
Net Value
(*)See note 2.a.
(1)It includes deferred costs of our subsidiary FEPSA and miscellaneous assets.
The item consists in the following:
Land and buildings
12.31.10
86,474
(23,277)
63,197
Equipment and machinery
296,865
(148,841)
148,024
Vehicles
100,065
(50,381)
49,684
Other assets
132,443
(72,951)
59,492
Total December 31, 2010
615,847
(295,450)
320,397
80
TEI&C S.A.
The item evolution is as follows:
Non-current
TOTAL
06.30.10
Lands and
buildings
Beginning of the year
Additions
Vehicles
Other
Assets (1)
49,806
115,275
36,186
53,109
254,376
5,689
25,569
8,593
11,090
50,941
Disposals
Annual depreciation
Equipment and
machinery
–
(6,294)
(2,000)
(3,264)
(11,558)
(2,261)
(23,110)
(12,521)
(10,141)
(48,033)
(122)
(72)
(74)
(1,202)
(1,470)
Other movements
5,212
2,028
(8,734)
1,494
–
Revaluation Surplus (2)
–
41,517
27,205
2,446
71,168
Impairment loss
–
(4,616)
(517)
(568)
(5,701)
58,324
150,297
48,138
52,964
309,723
Original
Value
Accumulated
Depreciation
Net Value
79,666
(21,342)
58,324
Equipment and machinery
301,356
(151,059)
150,297
Vehicles
109,143
(61,005)
48,138
Other assets
125,177
(72,213)
52,964
Total June 30, 2010
615,342
(305,619)
309,723
June 30, 2010
(1)It includes deferred costs of our subsidiary FEPSA and miscellaneous assets.
(2)It includes gain on revaluation of PP&E USD 76,976 and decrease of revaluation of PP&E USD 5,808.
Land and buildings
Lease rentals amounting to USD 38,381 thousand (at
June 30, 2010: USD 44,946 thousand) relating to the lease
of machinery, construction equipment and vehicles, are
included in the income statement.
06.30.10
81
Technical appraisal of PP&E
The technical appraisal was performed by external
professionally qualified valuation specialists in relation
to machinery, construction equipment and vehicles,
based on periodic valuations of the assets in order not
to differ materially from their fair value at the financial
statements date.
Management believes that the resulting value
approximates fair value. As per International Accounting
Standard N° 16 “Property, plant and equipment”
(“IAS 16”), when an item of property and equipment
is revalued, the entire class of property and equipment
to which that asset belongs should be revalued.
Machinery, construction equipment and vehicles
corresponding to the subsidiaries that did not make
the abovementioned revaluation are not significant.
The “sales comparison” method was used to obtain the
fair value of these assets for which there is a wide and
transparent secondary market. This approach consists
in obtaining information from recent sales or offers of
assets bearing similar characteristics, age and condition.
Correction factors that take into account the status of
the market offer and demand prevailing as of the date of
the appraisal, the relative age, probable residual useful
life, state of conservation and asset obsolescence are
applied to the sales price. The “cost less depreciation”
method was used to obtain the fair value of assets with a
restricted sales market.
Depreciation was computed based on generally used and
accepted engineering criteria which led to establishing
the reasonable value of PP&E. Such criteria take into
account factors such as the age of each asset, probable
residual or expected life, state of conservation and degree
of obsolescence. The market value was obtained by
applying the depreciation ratio to the value of a new asset.
These subsidiaries intend to perform this appraisal
with the frequency required by IAS 16 in order to keep
fair values of appraised assets updated.
The net decrease in value of machinery, construction
equipment and vehicles resulting from the technical
appraisal performed on December 31, 2010 amounted
to USD 4,819 thousand and was attributed USD 2,389
thousand to comprehensive income and accumulated
in equity under “Reserve for PP&E revaluation surplus”
(corresponding to decrease in previously revaluated
assets) and USD 2,430 thousand to the Consolidated
Income Statement as an impairment loss in “Other
operating results”.
The increase in value of machinery, construction
equipment and vehicles resulting from the technical
appraisal performed on June 30, 2010 amounted to
USD 76,976 thousand and has been recorded net of tax
effects USD 20,981 thousand in other comprehensive
income and accumulated in equity under the heading of
“Reserve for PP&E revaluation surplus”. The decrease in
the carrying amount of asset as a result of revaluation
(amounting to USD 5,701 thousand) has been recorded
in the Consolidated Income Statement in “Other income
and expenses, net”, during the fiscal year ended June 30,
2010. The decrease of prior revaluation increases of the
same asset were charged to other comprehensive income
and accumulated in equity under “Reserve for PP&E
revaluation surplus” amounted to USD 5,808 thousand and
has been recorded net of tax effects USD 841 thousand.
82
TEI&C S.A.
If machinery, equipment and vehicles had been valued at
historical cost, the values would have been the following:
Historical cost
Accumulated depreciation
Residual value
The “Reserve for PP&E revaluation surplus” is reversed,
net of tax effects, through (i) the retirement of the
equipment appraised or (ii) depreciation charges. The
difference between depreciation of appraised assets and
depreciation of the historical values of such assets is
charged against accumulated results.
12.31.10
06.30.10
236,371
240,858
(153,995)
(156,628)
82,376
84,230
The straight-line method has been used to calculate
depreciation, by applying annual ratios sufficient to
terminate the value of each item as to the end of their
estimated useful life.
83
NOTE 5.
Intangible assets
The item evolution is as follows (*):
Systems
development
Goodwill
COINFER
12.31.10
Beginning of the period (*)
2,096
566
2,662
Additions
1,480
–
1,480
Amortization
(426)
(34)
(460)
December 31, 2010
142
2
144
3,292
534
3,826
Original
Value
Accumulated
AMORTIZATION
Net Value
14,888
(11,596)
3,292
(*)See note 2.a.
Systems development
Goodwill – COINFER
12.31.10
1,849
(1,315)
534
16,737
(12,911)
3,826
84
TEI&C S.A.
The item evolution is as follows:
Additions
Amortization
June 30, 2010
Systems
development
Goodwill
COINFER
06.30.10
1,839
640
2,479
915
–
915
(760)
(52)
(812)
102
(22)
80
2,096
566
2,662
Original
Value
Accumulated
AMORTIZATION
Net Value
13,270
(11,174)
2,096
Systems development
06.30.10
Goodwill – COINFER
1,870
(1,304)
566
Total June 30, 2010
15,140
(12,478)
2,662
85
NOTE 6.
Investments in associated companies
12.31.10
06.30.10
Book
value
% of
ownership
Book
value
% of
ownership
Non-Current
Norpower S.A. de C.V.
Fluor Techint S.R.L. Construcción y Servicios Ltda.
Other
Total Investment in associated companies
91
40%
886
40%
1,336
50%
297
50%
197
–
206
–
1,624
1,389
12.31.10
06.30.10
Beginning of the period/year (*)
1,389
355
(211)
208
Result from investments
446
2,724
Sale and disposal of investments
–
(254)
Investment adquisition and contributions
–
1,027
Amount recorded in liabilities at the beginning of the period/year
–
(2,671)
1,624
1,389
End of the period/year (*)
(*)See note 2.a.
86
TEI&C S.A.
The result from investments has arisen from the Company’s
participation in the results of the following companies:
12.31.10
06.30.10
6 months (*)
12 months (*)
974
2,329
(128)
705
Others
(400)
(310)
446
2,724
(*)See note 2.a.
The following amounts represent the assets,
liabilities, revenues and results of the most important
associated companies:
Assets
Liabilities
Revenues (*)
Results (*)
19,775
19,547
9,411
(321)
11,889
9,217
59,272
1,948
9,400
7,184
5,584
1,763
9,886
9,291
36,241
4,659
December 31, 2010
June 30, 2010
(*)See note 2.a.
87
NOTE 7.
Other investments
12.31.10
06.30.10
Other investment fund
7,328
6,597
La Nacion’s Trust fund
136
140
Non-Current
Other
Total Non-Current Other investments
36
37
7,500
6,774
602
990
20
20
622
1,010
12.31.10
06.30.10
6,774
6,076
–
(205)
Current
Low liquidity funds in correspondent accounts
Temporary placements
Total Current Other investments
Non-Current
Result from other investments
122
205
Increase of other investments
604
1,091
Reclasification
–
(33)
Decrease of other investments
–
(360)
7,500
6,774
1,010
158
(11)
(5)
Current
Reclassification
–
33
Increase of other investments
–
990
Decrease of other investments
(*)See note 2.a.
(377)
(166)
622
1,010
88
TEI&C S.A.
NOTE 8.
12.31.10
06.30.10
12,958
12,393
2,508
3,755
–
5,491
2,399
–
Non-Current
Other trade receivables – net
Receivables for sales of investments
Invoice holdback
Trade receivables – net
Trade receivables from related parties (see note 24)
71
59
Other receivables from related parties (see note 24)
8,826
9,494
Other
Total Non-Current Trade and other receivables
2,284
2,256
29,046
33,448
Current
Trade receivables – net
216,326
213,816
Trade receivables from related parties (see note 24)
36,160
28,477
Invoice holdback
12,576
11,862
595
565
Other trade receivables – net
Other receivables from related parties (see note 24)
4,891
2,090
Other receivables
24,366
26,841
Advanced to suppliers and subcontractors
33,210
32,239
4,861
3,569
332,985
319,459
Prepayments
Total Current Trade and other receivables
89
At December 31, 2010 and June 30, 2010 the evolution of
the allowance for doubtful accounts that was deducted
from Trade receivables is (*):
12.31.10
06.30.10
855
–
(9)
(15)
Non-Current
Beginning of the period/year
Reversal
(45)
–
–
870
801
855
10,923
10,955
622
425
Reversal
(9)
(529)
Additions
198
73
Additions
End of the period/year
Current
Translation
Used
(*) See note 2.a.
–
(1)
11,734
10,923
90
TEI&C S.A.
NOTE 9.
Inventories
Materials and spare parts
Others
12.31.10
06.30.10
37,560
41,786
–
160
Valuation allowance
(7,092)
(6,098)
Total Inventories
30,468
35,848
12.31.10
06.30.10
6,098
2,996
147
118
(341)
(24)
At December 31, 2010 and June 30, 2010 the
evolution of the valuation allowance that was
deducted from Inventories is (*):
Reversal
Additions
Used
(*)See note 2.a.
5,080
4,478
(3,892)
(1,470)
7,092
6,098
91
NOTE 10.
Financial instruments by category
12.31.10
Assets at fair
value through
the profit
and loss
Loans and
receivables
Availablefor-sale
total
–
7,484
357,170
–
357,170
602
36
8,122
Assets as per balance sheet
Trade and other receivables (1)
Other investments
320,215
–
–
320,215
Total
327,699
357,772
36
685,507
Other financial
liabilities at
amortized cost
total
40,691
40,691
1,506
1,506
(1)Excluding prepayments.
Liabilities as per balance sheet
Borrowings
Financial lease liabilities
Trade and other payables (1)
147,959
147,959
Other liabilities
118,511
118,511
Total
308,667
308,667
(1) Excluding social security contributions.
92
TEI&C S.A.
06.30.10
Assets at fair
value through
the profit
and loss
Loans and
receivables
Availablefor-sale
total
–
349,338
–
349,338
Assets as per balance sheet
(1)
Other investments
6,757
990
37
7,784
283,567
–
–
283,567
Total
290,324
350,328
37
640,689
Other financial
liabilities at
amortized cost
total
35,340
35,340
(1)Excluding prepayments.
Liabilities as per balance sheet
Borrowings
Financial lease liabilities
2,616
2,616
155,830
155,830
Other liabilities
139,261
139,261
Total
333,047
333,047
(1)
(1) Excluding social security contributions.
93
Determining fair values
The table below analyzes financial instruments carried at
fair value, by valuation method.
The different methods have been defined as follows:
Level 1- Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2- Inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices).
Level 3- Inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
The following table presents the assets that are measured
at fair value:
Level 1
Level 2
Level 3
Total
320,215
7,348
–
–
320,215
–
136
7,484
327,563
–
136
327,699
283,567
–
–
283,567
6,617
–
140
6,757
290,184
–
140
290,324
Assets at December 31, 2010
Other investments
Total
Assets at June 30, 2010
Other investments
Total
94
TEI&C S.A.
NOTE 11.
Assets and liabilities classified as held for sale
ASSETS
12.31.10
06.30.10
Property, plant and equipment
1,021
–
1,127
–
7,192
–
notes
Assets of disposal group classified as held for sale
31
23
Other investment
6,891
–
45
45
22
22
16,298
67
12.31.10
06.30.10
4,546
–
Customer advances
2,446
–
Total held – for – sale liabilities
6,992
–
Total held – for – sale assets
LIABILITIES
notes
Liabilities of disposal group classified as held for sale
31
95
NOTE 12.
12.31.10
06.30.10
Cash at bank and on hand
57,949
56,033
Short-term bank deposits
262,266
227,534
Total Cash and cash equivalents
320,215
283,567
12.31.10
06.30.10
320,215
283,567
Bank overdrafts
(144)
(1,141)
Cash and cash equivalents classified to held for sale (1)
6,891
–
326,962
282,426
Cash, cash equivalents and bank overdrafts include the
following for the purposes of the consolidated statement
of cash flows:
Total Cash and cash equivalents
(1)See note 11.
96
TEI&C S.A.
NOTE 13.
Share capital
The composition of the Company’s capital is as follows:
number
of shares
ordinary
shares
At June 30, 2010 (1)
5,181,537
5,181,537
At December 31, 2010 (1)
5,181,537
5,181,537
In thousands of shares
(1)Including a provisional certificate by UYU 581.537 thousands, to be replaced by bearer shares after the Auditoria
Interna de la Nación (AIN) authorization.
The ordinary shares have a value of UYU 1 per share and
one vote per five shares. All issued shares are fully paid.
At June 30, 2008 the authorized capital stock amounted to
UYU 4,600,000 thousand.
On June 26, 2008, the Special Shareholders’ Meeting decided
to increase the authorized capital to UYU 5,500,000 thousand
and accepted an Irrevocable Contribution of USD 30,000
thousand (equivalent to UYU 586,830 thousand) from Techint
Investments NV, the parent company of Techint Limited.
The Special Shareholders’ Meeting of September
30, 2008 ratified the decisions taken at the previous
Special Shareholders’ Meetings and decided to
change from nominative shares to bearer shares and
capitalize all the pending irrevocable contributions
(USD 72,317 thousand).
The new authorized capital, the capitalization and
the change in the type of shares are under process
of authorization in the AIN.
97
NOTE 14.
Borrowings
Company
Lender
12.31.10
06.30.10
Amount
Amount
Currency
Interest Rate
–
–
–
39 (*)
(*)
ARS
17.40%
365 (*)
–
–
(*)
USD
LIBOR 6M + 2%
5,664
USD
6.00%
6,445
893
CLP
4.70%
848
Non-Current
COINFER
Banco Supervielle S.A.
COINFER
Banco Itaú BBA S.A.
TEARG
Standard Bank Argentina S.A.
TEARG
Banco Itaú S.A. (New York)
TENCO
Caterpillar Leasing Chile S.A.
TECHI
Banco Itaú Chile S.A.
Sidernet S.A.
CGM Leasing Argentina S.A.
Sidernet Mexicana S.A. de C.V.
Santander S.A.
TEBRA
PNC Bank N.A.
Total Non-Current Borrowings
(*) Variable Rate.
177
–
10,444
13
10,928 (*)
–
–
–
10
3,682
MXN
9.00%
–
USD
LIBOR + 2%
1,402
22,262
(*)
–
18,648
98
TEI&C S.A.
Company
12.31.10
06.30.10
Currency
Interest Rate
Amount
ARS
17.40%
13 (*)
ARS
20.00%
–
ARS
17.40%
–
–
–
32
USD
LIBOR 6M + 2%
1,166 (*)
–
–
440 (*)
Lender
Amount
Current
COINFER
31
COINFER
11
COINFER
TEARG
BBVA Banco Francés S.A.
TEARG
1,111
TEARG
–
TEARG
26
ARS
14.00%
27
TEARG
Banco Galicia S.A. (New York)
4,940
USD
2.50%
–
TEARG
HSBC Bank Argentina S.A.
61
USD
8.75%
220
TEARG
Santa María S.A.I.y F.
–
–
–
2,176
TEBRA
Banco Itaú S.A.
3,002
BRL
12.96%
–
TEBRA
PNC Bank N.A.
410
USD
LIBOR + 2%
–
TMR
BBVA Banco Francés S.A.
–
–
–
251
Sidernet S.A.
153
ARS
14.00%
411
Sidernet S.A.
CGM Leasing Argentina S.A.
97
USD
12.80%
211
Prestaciones Globales
Santa María S.A.I.y F.
–
–
–
39
Agrupación Fdo. Copartic. Financ. ACE
–
–
–
29
USD
LIBOR 6M + 2.5%
1,574
USD
6.00%
1,531
218
CHL
4.70%
136
119
(*)
(*)
–
(*)
(*)
Siderúrgicas S.A.I.F.
Prestaciones Globales
Siderúrgicas S.A.I.F.
TENCO
TENCO
Caterpillar Leasing Chile S.A.
TECHI
Banco Itaú Chile S.A.
Techint S.A.C.
HSBC Bank Perú S.A.
Techint S.A.C.
Banco Internacional del Perú S.A.
141
(*)
273 (*)
–
–
–
220
15
USD
7.00%
71
–
–
–
600
284
– Interbank
TEURU
HSBC Bank (Uruguay) S.A.
TEURU
Crédit Uruguay Banco S.A.
Sidernet Mexicana S.A. de C.V.
Banco Nacional de México S.A.
2,789
TEMEX
Banco Nacional de México S.A.
TEMEX
Santander S.A.
Other
Total Current Borrowings
(*) Variable Rate.
Note: ARS: Argentine Peso, MXN: Mexican Peso, BRL: Brazilian Real, CHL: Chilean Peso
–
–
–
MXN
LIBOR 6M + 2.65%
5,017
USD
2.95%
5,018
–
–
–
5,015
220
–
–
19,935
(*)
42 (*)
1,103
19,308
99
The maturity of borrowings is as follows:
12.31.10
Without
due date
1 year
or less
1-2
years
2-3
years
3-4
years
4-5
years
Over 5
years
Financial leases
–
613
228
239
251
175
–
Other borrowings
–
19,322
3,162
3,311
3,340
5,465
6,091
Total Borrowings
–
19,935
3,390
3,550
3,591
5,640
6,091
Interest to be accrued
–
708
375
253
125
70
–
06.30.10
Without
due date
1 year
or less
1-2
years
2-3
years
3-4
years
4-5
years
Over 5
years
Financial leases
–
1,341
414
400
207
217
37
Other borrowings
–
17,967
2,565
2,710
2,866
2,548
6,684
Total Borrowings
–
19,308
2,979
3,110
3,073
2,765
6,721
Interest to be accrued
–
713
388
276
165
49
–
The fair value of borrowings equals their carrying amount,
as the impact of discounting is not significant.
100
TEI&C S.A.
NOTe 15.
Deferred income taxeS
As further explained in note 2.s., TEI&C and most of the
Company’s subsidiaries are subject to income taxes.
At December 31, 2010 and June 30, 2010 the Company
discloses under the caption “deferred income tax assets”
the net balance recognized by those subsidiaries that
recorded a net deferred income tax asset, while the net
balance recognized by those subsidiaries that recorded
a net deferred income tax liability has been disclosed
under “deferred income tax liabilities” in the consolidated
statement of financial position.
The main subsidiaries generating deferred income tax
balances are detailed below:
12.31.10
06.30.10
TEBRA
51,615
36,639
TEMEX’s Subsidiaries
10,405
11,176
TENCO’s Subsidiaries
215
–
Other
597
414
62,832
48,229
TEARG
(6,629)
(14,959)
TENCO’s Subsidiaries
(6,985)
(7,160)
(3,834)
(7,494)
(10,040)
(9,867)
TEMEX‘s Subsidiaries
FEPSA
Other
(2,324)
(3,504)
(29,812)
(42,984)
101
At December 31, 2010 and June 30, 2010 the deferred tax
balance is originated by the following items:
12.31.10
06.30.10
Tax-loss carry-forwards
61,669
54,914
Provisions
31,721
37,997
1,891
2,705
951
1,308
1,075
353
notes
Deferred costs/Construction contracts
Advances from clients
Different criterion used to assess the tax gain/(loss) of the JV Techint Cía.Técnica Internacional
S.A.C.I. - Impregilo S.p.A. (Suc.Argentina) - Iglys S.A.
Other
Subtotal
892
1,065
98,199
98,342
12,379
11,970
1,146
1,436
Committed investment FEPSA
PP&E
Exchange differences
Deferred income/Construction contracts
PP&E revaluation
Inventories
Other
4
–
349
17,697
41,493
28,030
31,741
2,579
2,731
3,348
3,377
Subtotal
65,179
93,097
Net deferred income tax assets
33,020
5,245
102
TEI&C S.A.
The amounts shown in the consolidated statement
of financial position include the following:
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
12.31.10
06.30.10
10,697
21,069
87,502
77,273
Deferred tax liabilities to be recovered within 12 months
(13,491)
(26,344)
Deferred tax liabilities to be recovered after more than 12 months
(51,688)
(66,753)
33,020
5,245
12.31.10
06.30.10
5,245
34,525
Net deferred income tax assets
The evolution of net deferred income tax asset / (liability)
during the six-month period/year is as follows (*):
notes
1,157
6,945
–
(20,140)
Income statement credit / (charge)
26,618
(16,085)
33,020
5,245
PP&E revaluation (net)
(*)See note 2.a.
4
103
The evolution of deferred income tax assets and liabilities
during the six-month period is as follows (*):
Deferred tax assets
Beginning of the period
Income statement charge / (credit)
End of the period
Deferred tax liabilities
End of the period
(*) See note 2.a.
Tax-loss
carryforwards
Provisions
Deferred costs/
Construction
contracts
Advances
from
clients
Others
total
54,914
37,997
2,705
1,308
1,418
98,342
660
877
247
–
(57)
1,727
6,095
(7,153)
(1,061)
(357)
606
(1,870)
61,669
31,721
1,891
951
1,967
98,199
Committed
investment
FEPSA
Deferred Income/
Construction
contracts
PP&E
revaluation
Inventories
Others
total
11,970
41,493
31,741
2,731
5,162
93,097
(139)
613
68
–
28
570
548
(24,409)
(3,779)
(152)
(696)
(28,488)
12,379
17,697
28,030
2,579
4,494
65,179
104
TEI&C S.A.
The evolution of deferred income tax assets and liabilities
during the previous year is as follows (*):
Deferred tax assets
Tax-loss
carryforwards
Provisions
Deferred costs
Construction
contracts
Advances
from
clients
Others
total
44,908
40,284
5,199
1,303
2,605
94,299
3,191
170
386
5
512
4,264
End of the year
Deferred tax liabilities
PP&E revaluation
End of the year
(*) See note 2.a.
6,815
(2,457)
(2,880)
–
(1,699)
(221)
54,914
37,997
2,705
1,308
1,418
98,342
Committed
investment
FEPSA
Deferred Income/
Construction
contracts
PP&E
revaluation
Inventories
Other
total
11,760
23,874
17,414
2,294
4,432
59,774
(411)
(1,761)
(928)
–
419
(2,681)
–
–
20,140
–
–
20,140
621
19,380
(4,885)
437
311
15,864
11,970
41,493
31,741
2,731
5,162
93,097
105
The tax loss carry-forwards mature as detailed below:
YEAR
12.31.10
06.30.10
2011
2
2
2012
37
38
2013
81
82
2014
120
1,302
2015
4,269
3,129
2016
3,009
89
2017
21,203
20,463
2018
35,356
33,272
2019
22,880
21,716
2020
10,856
32,203
141,536
108,049
239,349
220,345
Without maturity
The recoverable value of deferred tax assets depends on
the existence of future income subject to income tax,
sufficient to be used before their legal prescription. In this
regard, Management estimates that TEI&C’s subsidiaries
will generate sufficient taxable income in future periods so
as to offset the net balance of deferred income tax assets
recorded at December 31, 2010.
106
TEI&C S.A.
NOTe 16.
notes
12.31.10
06.30.10
Non-Current
Trade payables
20
467
Social security contributions
25,258
21,849
Total Non-Current Trade and other payables
25,278
22,316
145,910
149,444
85,181
91,508
237
4,120
Current
Trade payables
Social security contributions
Amounts due to related parties
24
Other payables
Total Current Trade and other payables
1,792
1,799
233,120
246,871
The maturity of trade and other payables is as follows:
12.31.10
Without
due date
1 year
or less
1-2
years
2-3
years
3-4
years
Over 4
years
14,191
233,120
–
4,169
–
6,918
Total Trade and other payables
14,191
233,120
–
4,169
–
6,918
06.30.10
Without
due date
1 year
or less
1-2
years
2-3
years
3-4
years
Over 4
years
8,110
246,871
7,065
2,128
959
4,054
Total Trade and other payables
8,110
246,871
7,065
2,128
959
4,054
107
NOTE 17.
Other liabilities
notes
12.31.10
06.30.10
18
23,748
26,332
1,634
–
Non-Current
Provisions
Advances received on construction contracts
696
748
Other liabilities
15,378
9,392
Total Non-Current Other liabilities
41,456
36,472
14,948
14,607
48,699
81,677
117
115
24
Current
Provisions
18
Advances received on construction contracts
Advances received on construction contracts from related parties
24
24
668
1,000
Other liabilities and provisions
12,623
5,390
Total Current Other liabilities
77,055
102,789
108
TEI&C S.A.
NOTe 18.
Provisions
The evolution of provisions during the six-months period/
year is as follows (*):
12.31.10
Labor
Taxes
Civils
Other
Total
6,533
1,281
9,257
9,261
26,332
330
927
637
101
1,995
Reversal
(1,516)
(1,197)
(2,716)
(532)
(5,961)
Additions
1,348
516
81
1,520
3,465
Used
(342)
(561)
(6)
(1,174)
(2,083)
End of the period
6,353
966
7,253
9,176
23,748
1,046
3,586
3,733
6,242
14,607
Non-Current
Current
Reversal
Additions (a)
Used
End of the period
12
–
(12)
–
–
(671)
–
(179)
–
(850)
223
10
19
1,000
1,252
–
–
–
(61)
(61)
610
3,596
3,561
7,181
14,948
(a) The Saudi Techint Ltd.’s minority shareholder filed a complaint against TENCO before the 15th Commercial Tribunal of
the Board of Grievances of Saudi Arabia seeking relief for damages and claim; therefore, the Company, in the previous
fiscal year created an allowance for USD 6 million. In the current six-month period the Company increased it in USD 1
million (see note 31).
(*) See note 2.a.
109
06.30.10
Labor
Taxes
Civils
Other
Total
6,975
5,061
7,970
11,107
31,113
138
394
468
5
1,005
Reversal
(2,408)
(5,118)
(555)
(2,000)
(10,081)
Additions
3,647
1,270
1,181
2,290
8,388
Non-Current
Used
End of the year
(1,819)
(326)
193
(2,141)
(4,093)
6,533
1,281
9,257
9,261
26,332
1,625
3,586
4,459
630
10,300
14
–
(16)
–
(2)
–
–
(1,500)
–
(1,500)
Current
Reversal
Additions (a)
Used
End of the year
960
–
790
6,137
7,887
(1,553)
–
–
(525)
(2,078)
1,046
3,586
3,733
6,242
14,607
(a) The Saudi Techint Ltd.’s minority shareholder filed a complaint against TENCO before the 15th Commercial Tribunal of
the Board of Grievances of Saudi Arabia seeking relief for damages and claim; therefore, the Company, in the previous
fiscal year created an allowance for USD 6 million. In the current six-month period the Company increased it in USD 1
million (see note 31).
110
TEI&C S.A.
NOTe 19.
Employee benefits
Non-funded defined benefits and other long-term benefits
The amounts recognized in the consolidated statement
financial position are determined as follows:
12.31.10
06.30.10
Present value of unfunded obligations
32,389
27,033
Costs for services rendered in the past not recorded
(1,089)
(1,251)
Unrecognized actuarial losses
(9,127)
(7,907)
Liability in the consolidated statement financial position
22,173
17,875
The amounts recognized in the consolidated income
statement are as follows (*):
12.31.10
06.30.10
6 MONTHS
12 months
Current service cost
1,368
2,201
Interest cost
2,450
2,833
Net actuarial (gains) losses recognized in the six-month period/year
1,385
879
Amortization of costs for services rendered in the past not recorded
Total included in Labor costs
(*) See note 2.a.
332
515
5,535
6,428
111
The amounts and movements in the liabilities recognized
in the consolidated statement financial position are
determined as follows (*):
12.31.10
06.30.10
17,875
13,005
(96)
(387)
Transfers and new participants of the plan
(47)
(315)
Total expense
5,535
6,428
Services rendered in the past not recorded
(264)
773
(830)
(1,629)
22,173
17,875
Contributions paid
At December 31, 2010 and June 30, 2010, the main
actuarial premises used for calculation of such plans
contemplate a discount rate of 7% and of 6% (real) and
a salary increase rate of 2% and 3%, respectively. The
actuarial premises used in TEMEX for calculation of such
plans contemplate a discount rate of 7.50%(real) during
the six-month period ended December 31, 2010 and
8.58%(real) during the year ended June 30, 2010 and a
salary increase rate of 5.61% and 6.08% respectively.
(*) See note 2.a.
Contribution plans
During the six-month period ended December 31, 2010
TEBRA contributed USD 748 thousand to the defined
contribution plans (Year ended June 30, 2010 USD 1,229
thousand).
112
TEI&C S.A.
construction activities. The Company’s participation in
those JVs was recorded through proportional consolidation
of assets, liabilities and results. The following balances
represent the JVs assets and liabilities at December 31,
2010 and June 30, 2010:
NOTe 20.
Participation in Joint Ventures
The Company’s subsidiaries were part of different JVs
which also perform engineering, procurement and
12.31.10
Main Joint Ventures
Techint Cía. Técnica Internacional S.A.C.I. - Panedile
06.30.10
Total JV’S
Assets
Total JV’S
Liabilities
% of
ownership
Total JV’S
Assets
Total JV’S
Liabilities
% of
ownership
37,339
38,150
75.00%
26,071
26,820
75.00%
16,067
1,571
65.00%
17,248
1,580
65.00%
728
19
60.00%
1,162
236
60.00%
181
78
50.00%
588
88
50.00%
9,341
9,121
50.00%
1,998
2,250
50.00%
2,634
453
50.00%
2,677
518
50.00%
2,459
68,449
41.00%
136,741
82,551
41.00%
Argentina S.A. - Unión Transitoria de Empresas - Complejos
“Los Caracoles” and “Punta Negra” (1)
Techint Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A
(Sucursal Argentina)- Iglys S.A. - Unión Transitoria de
Empresas - Complejo Penitenciario Ezeiza (1)
Techint Cía. Técnica Internacional S.A.C.I. - Luis M.
Pagliara S.A. - Unión Transitoria de Empresas - C. Re. Ma.
Malla 332 (1)
Techint Cía. Técnica Internacional S.A.C.I. - B. Roggio e Hijos
S.A. - Unión Transitoria de Empresas – Subte Línea A (1)
Techint Cía. Técnica Internacional S.A.C.e I. - FLUOR Inc. Unión Transitoria de Empresas - Proyecto: Pascua Lama (1)
Techint Cía. Técnica Internacional S.A.C.e I. - FLUOR Inc. Unión Transitoria de Empresas - Proyecto: Expansión
Veladero (1)
Consórcio Techint Confab UMSA - Lot I Tanks Refinaria do
Nordeste, Abreu e Lima (RNEST) (2)
113
12.31.10
Main Joint Ventures (cont’d.)
Consorcio Andrade Gutierrez - Techint (AG-TECH) Diesel Unit
06.30.10
Total JV’S
Assets
Total JV’S
Liabilities
% of
ownership
Total JV’S
Assets
Total JV’S
Liabilities
% of
ownership
7,868
125,798
50.00%
7,266
10,968
50.00%
–
–
50.00%
196
174
50.00%
27,702
12,462
50.00%
54,574
46,734
50.00%
of Landulpho Alves - Mataripe Refinery (RLAM) (2)
Consorcio Odebrecht-Techint (ODETECH)-Gasduc III (2)
Tamburí Comércio de Máquinas e Serviços de Engenharia
Ltda. (Tamburí) (2)
Consorcio Andrade Gutierrez - Techint (TE - AG) (2)
ABB Lummus Techint Trinidad Joint Venture - Gasoline
7,594
84,598
50.00%
16,946
10,518
50.00%
11,825
9,834
50.00%
13,448
10,425
50.00%
16,759
2,032
50.00%
17,097
2,142
50.00%
5,629
3,794
60.00%
13,003
11,105
60.00%
–
2
50.00%
–
1,452
50.00%
Optimization Program Upgrade - Petroleum Company of
Trinidad and Tobago Limited - Construction Management
Services (1)
ABB Lummus Techint Bahamas Joint Venture - Gasoline
Trinidad and Tobago Limited - Engineering, Procurement
and Management Services (3)
Chiquintirca Joint Venture - Chiquintirca Gas Compression
Plant (3)
Techint / Somerville - Waupisoo Project (4)
Techint / Somerville - Corridor Project (4)
Techint / Somerville - Clipper Project (4)
Techint / Black & Veatch - LNG Costa Azul Project (4)
(1) Controlling interest through TEARG.
(2) Controlling interest through TEBRA.
(3) Controlling interest through TENCO.
(4) Controlling interest through TEMEX.
44
–
50.00%
70
1,679
50.00%
11,456
60
50.00%
26,774
3,631
50.00%
5,416
6,830
50.00%
3,093
8,485
50.00%
114
TEI&C S.A.
The following balances represent the JVs results
at December 31, 2010 and June 30, 2010:
Main Joint Ventures
Techint Cía. Técnica Internacional S.A.C.I. - Panedile
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
JV’S
Results
% of
ownership
JV’S
Results
% of
ownership
(70)
75.00%
11,258
75.00%
(1,000)
65.00%
(2,200)
65.00%
(204)
60.00%
(117)
60.00%
(13)
50.00%
(572)
50.00%
606
50.00%
1,229
50.00%
46
50.00%
2,625
50.00%
44,176
41.00%
17,146
41.00%
Argentina S.A. - Unión Transitoria de Empresas - Complejos
“Los Caracoles” and “Punta Negra” (1)
Techint Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A
(Sucursal Argentina)- Iglys S.A. - Unión Transitoria de
Empresas - Complejo Penitenciario Ezeiza (1)
Techint Cía. Técnica Internacional S.A.C.I. - Luis M.
Pagliara S.A. - Unión Transitoria de Empresas - C. Re. Ma.
Malla 332 (1)
Techint Cía. Técnica Internacional S.A.C.I. - B. Roggio e Hijos
S.A. - Unión Transitoria de Empresas – Subte Línea A (1)
Techint Cía. Técnica Internacional S.A.C.e I. - FLUOR Inc. Unión Transitoria de Empresas - Proyecto: Pascua Lama (1)
Techint Cía. Técnica Internacional S.A.C.e I. - FLUOR Inc. Unión Transitoria de Empresas - Proyecto: Expansión
Veladero (1)
Consórcio Techint Confab UMSA - Lot I Tanks Refinaria do
Nordeste, Abreu e Lima (RNEST) (2)
115
The following balances represent the JVs results
at December 31, 2010 and June 30, 2010:
Main Joint Ventures (cont’d.)
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
JV’S
Results
% of
ownership
JV’S
Results
% of
ownership
30,070
50.00%
10,542
50.00%
(50,014)
50.00%
78,316
50.00%
(278)
50.00%
2,352
50.00%
Consorcio Andrade Gutierrez - Techint (TE - AG) (2)
15,878
50.00%
4,806
50.00%
ABB Lummus Techint Trinidad Joint Venture - Gasoline
(1,044)
50.00%
(1,805)
50.00%
(673)
50.00%
(486)
50.00%
1,360
60.00%
4,905
60.00%
–
50.00%
180
50.00%
Consorcio Andrade Gutierrez - Techint (AG-TECH) Diesel Unit
of Landulpho Alves - Mataripe Refinery (RLAM) (2)
Consorcio Odebrecht-Techint (ODETECH)-Gasduc III (2)
Tamburí Comércio de Máquinas e Serviços de Engenharia
Ltda. (Tamburí) (2)
Trinidad and Tobago Limited - Construction Management
Services (1)
ABB Lummus Techint Bahamas Joint Venture - Gasoline
Trinidad and Tobago Limited - Engineering, Procurement
and Management Services (3)
Chiquintirca Joint Venture - Chiquintirca Gas Compression
Plant (3)
Techint / Somerville - Waupisoo Project (4)
Techint / Somerville - Corridor Project (4)
Techint / Somerville - Clipper Project (4)
Techint / Black & Veatch - LNG Costa Azul Project (4)
(1)Controlling interest through TEARG.
(2)Controlling interest through TEBRA.
(3)Controlling interest through TENCO.
(4)Controlling interest through TEMEX.
(*)See note 2.a.
–
50.00%
1,595
50.00%
710
50.00%
114,489
50.00%
(284)
50.00%
(2,017)
50.00%
116
TEI&C S.A.
a. Guarantees and bonds granted
performance of certain liabilities incurred by related
parties. In addition, certain of the Company’s subsidiaries
issued a number of guarantees to provide for the
obligations assumed in the normal course of business.
TEI&C and its subsidiaries have entered into a series of
guarantee contracts with third parties through which they
undertake the unconditional and irrevocable obligation
to guarantee the prompt and complete payment and
As of December 31, 2010 and June 30, 2010, TEI&C issued
the following guarantees on behalf of other companies,
as follows:
NOTe 21.
Contingencies and commitments
12.31.10
06.30.10
Sidor C.A.
10.9
10.9
Barrick Explotaciones Arg. S.A.
23.0
23.0
in millon of USD
Granted in favor of:
Caterpillar Financial Services Corporation
–
0.3
Siderca S.A.I.C.
0.8
0.8
Tecgas N.V.
2.9
–
Tecpetrol Internacional S.A.
5.7
–
Tecpetrol Internacional S.L.
1.2
–
ABB Lummus Global Overseas Corporation
7.0
7.0
ABB Lummus Global Inc.
9.5
9.5
JGC Arabia Limited
18.4
18.4
JGC Corporation
30.1
30.1
Minera Panama S.A.
36.0
–
Anglo American Sur S.A.
121.9
116.2
Total
267.4
216.2
117
b. Works executed under a trust, construction,
and leasing agreement
TEARG, as a member of the JV Techint Compañía
Técnica Internacional S.A.C.I. - Impregilo S.p.A. (Sucursal
Argentina) - Iglys S.A., has signed a contract with
the Argentine Government for the construction of
a penitentiary institution, under the turnkey system,
located in Ezeiza, province of Buenos Aires, payable
in 60 quarterly installments as canon, nominated in USD.
The JV accepted the pesification of canons at a ARS 1-USD
1 rate and the application of the Reference Stabilization
Index (RSI) until the effective date of payment, according
to the Agreements executed by the JV with the Ministry of
Justice and Human Rights, dated November 19, 2003 and
September 9, 2004. The canons collected plus RSI after
the Agreement dated September 9, 2004, were Nº 17, 18,
19, 20, 21 and 22. On the other hand, before execution of
such Agreement, canon N° 8 was also collected plus RSI in
January 2003.
That notwithstanding, the JV received from such Ministry
payments for several canons not applying the RSI, which
have been taken by the JV as partial payments of the total
amount due and payable arising from the Agreement dated
September 9, 2004.
Thus, from January 2006 to the date of issue of these
financial statements, the JV received as partial payment
a total amount of USD 42,453(1) thousand corresponding
to canons 10 to 16 and 23 to 45 at a ARS 1-USD 1 rate,
not applying the RSI. Taking into account this situation,
the JV Management made a new estimate of the
date of probable collection of the RSI past due and to
become due.
The proportional participation of TEARG in the total balance
receivable of the JV with the Argentine Government as of
November 30, 2010 amounts to USD 54,469(1) thousand (at
May 31, 2010: USD 56,630(1) thousand).
The amount of such credit recorded in these consolidated
financial statements, which arises from discounting the
amounts mentioned above from their current value on
November 30, 2010, is equal to USD 27,142(1) thousand,
capital USD 9,150(1) thousand and RSI USD 17,992(1)
thousand, (at May 31, 2010: USD 28,285(1) thousand,
capital USD 10,087(1) thousand and RSI USD 18,198(1)
thousand) of which the amount of USD 11,540(1) thousand
is past due at December 31, 2010 (at June 30, 2010: USD
10,857(1) thousand).
All these financial credits correspond to the canons
receivable from the Argentine Government, due and to
become due, which were recorded as per the Agreement
executed on September 9, 2004 with the Undersecretariat
of Coordination and Innovation under the National Ministry
of Justice and Human Rights, in Pesos at a rate of ARS
1-USD 1 and adjusted with RSI up to December 31, 2008.
As from such date, credits were no longer adjusted with
RSI as a result of the filing of the Arbitration Claim before
the International Court of Arbitration of the International
Chamber of Commerce stated in the following paragraph.
Taking into account the Ministry of Justice’s delay as to a
resolution and payment of the overdue debt, Santander
Río Trust S.A., in its capacity as Trustee and Grantor of
the Leasing, on July 4, 2008, following the JV’s express
instructions, submitted a note demanding payment of
amounts due. Upon failure to answer by the Ministry of
Justice, on November 28, 2008, an Arbitration Claim was
filed before the International Court of Arbitration of the
International Chamber of Commerce, for the purpose
of appointing an arbitration tribunal consisting of three
arbitrators and to hold the respondent, the Argentine
Government, liable for payment of the amounts claimed
(1) Outstanding collecting amounts are nominated in argentine peso. The figures shown in USD belong to the amounts
in argentine pesos which were translated at the year end exchange rate. (December 31, 2010: USD 1 – ARS 3,976
and June 30, 2010: USD 1 – ARS 3,931)
118
TEI&C S.A.
plus any interest that may be accrued and the new terms
of the debt to expire during the arbitration process. The
arbitration claim was notified to the Argentine Government
in May 2009, the Arbitral Tribunal was constituted and
the Mission Statement was issued on December 7, 2010.
In the opinion of the JV’s Management and of its legal
advisors, it is estimated that, by application of the legal
rules and regulations regarding pesification (application
of RSI to due canons) which should be applicable to this
contractual structure, the JV has a solid legal position to
collect its credits within the scope of the abovementioned
legal rules and regulations.
In May 2009, the JV was informed of the passing of
Executive Order N° 541/09, which empowers UNIREN to
renegotiate the Construction, Trust and Leasing Agreement
executed in 1998 in relation to Penitentiary Complex I
(Ezeiza). The JV has not consented to the provisions of
such executive order by virtue of the defects thereof. On
June 18, 2009, a letter was submitted through Santander
Río Trust S.A., in its capacity as Trustee and Grantor of the
Leasing, following the JV’s express instructions, to the
above-stated respect claiming the unlawful nature of such
executive order. That notwithstanding, and making it clear
that this entails no waiver whatsoever of its rights, including
the right to enforce its rights and defenses in the ongoing
arbitration proceeding, on September 8, 2010, the JV
executed a Memorandum of Understanding with UNIREN
since it believes that under the terms of such MOU (i) the
acknowledgement made in the Agreement executed with
the Ministry of Justice on September 9, 2004 is ratified, (ii)
UNIREN acknowledges the debt upon failure to apply the
RSI and (iii) the JV states its position that as to all the claims
and its intention of suspending the arbitration upon actual
payment by the State of all amounts due.
As of the date of issue of these financial statements,
while the arbitration proceeding continues, the claimants
and respondent continue holding conversations in order to
assess the possibility of an eventual solution of the conflict.
c. Other Contingencies and uncertainties
The Company has tax and civil lawsuits for which the legal
advisors do not expect a probable unfavorable outcome
and, therefore, no provision was set up. The amounts of
these contingencies amount as of December 31, 2010
to USD 14,109 thousand for tax contingencies and USD
2,847 thousand for civil contingencies (At June 30, 2010:
USD 9,611 thousand for tax contingencies and USD 4,198
thousand for civil contingencies).
NOTe 22.
Restricted assets
TENCO and subsidiaries
At December 31, 2010 and June 30, 2010, the net
carrying amounts of the PP&E held under finance lease
amount to USD 1,798 thousand and USD 5,992 thousand,
respectively. At December 31, 2010 and June 30, 2010,
liabilities for finance leases amount to USD 1,126 thousand
and USD 1,275 thousand, respectively.
TEARG
At December 31, 2010, there are PP&E with a residual
book value of USD 1,026 thousand (at June 30, 2010:
USD 1,107 thousand) which are pledged as guarantee for
liabilities under leasing agreements for USD 87 thousand
(at June 30, 2010: USD 279 thousand and USD 13
thousand, current and non-current, respectively), included
in the account “Borrowings”.
Coincar S.A.
Under the Credit Facility Agreement entered into by
Coincar S.A. with Banco Río de la Plata S.A. and Banco de
Galicia y Buenos Aires S.A., Coincar S.A. agrees not to sell
119
nor cause to be sold, assign in ownership and/or use and/
or usufruct, mortgage, pledge, loan and/or loan for use,
levy in any manner whatsoever, lease and/or enter into
a leasing, grant a security and/or personal interest with
respect to, not to transfer and/or in any manner dispose
of, either in a transaction or a series of transactions, all
or a substantial portion of any of its assets, goods and/
or rights and/or of its assets, goods and/or rights to be
acquired in the future, nor to distribute dividends, pay fees
to the company’s directors or consultants, without the
prior consent of the majority of the banks that granted the
Credit Facility Agreement.
of the rights collection of the projects at the time of getting
partial or total acceptance of the construction works.
Sidernet S.A.
At December 31, 2010, there are PP&E with a residual
book value of USD 911 thousand (at June 30, 2010: USD
1,205 thousand) which are pledged as guarantee for
liabilities under leasing agreements for USD 250 thousand
(at June 30, 2010: USD 622 thousand and USD 10
thousand, current and non-current, respectively), included
in the account “Borrowings” (current and non-current,
respectively).
COINFER
Licensed assets:
In conformity with the regulations established in the
bid specifications and the License Agreement, the
subsidiary FEPSA received from Ferrocarriles Argentinos
assets of its own to be used in the operation (included
in “Property, plant and equipment” non-current). They
primarily comprise infrastructure (main and secondary
railway network), real property (warehouses and buildings),
transportation material (locomotives and coaches), fixed
facilities and other. Upon expiration of the license, the
assets will be returned to Ferrocarriles Argentinos, at no
additional cost, in their normal condition of maintenance,
except for the wear and tear over time and the normal use.
TEBRA
At December 31, 2010, the Company had USD 2,581
thousand (at June 30, 2010: USD 4,007 thousand) in
assets granted as guarantee for different proceedings.
TEMEX
At December 31, 2010 and June 30, 2010, TEMEX and its
subsidiaries had obtained resources from financial entities
amounting to USD 21,220 thousand and USD 45,639
thousand respectively, which shall be settled by the cession
NOTe 23.
In April 2008, the Government of the Bolivarian Republic
of Venezuela made public its decision to nationalize
SIDOR C.A., Sidernet de Venezuela C.A. (“Sidernet”)
and Servicios Siderúrgicos Sersisa, S.A. (“Sersisa”)’s
only client. On April 29, 2008, the National Assembly
of Venezuela agreed to declare SIDOR C.A.’s shares of
public use and social interest. On April 30, 2008, the
President of Venezuela sent to the Supreme Court of
Justice an Executive Order with the rank, value and
force of an Organic Law (Ley Orgánica de Ordenación)
to regulate the companies involved in iron & steel
activities in the Region of Guayana, for such Court to
render an opinion on the constitutional standing of the
Executive Order’s organic nature. On May 9, 2008, the
Supreme Court of Justice declared the constitutionality
of the organic nature and ordered the transformation
of SIDOR C.A, its affiliates and subsidiaries into stateowned companies, and declared the activities performed
by SIDOR C.A., its affiliates and subsidiaries, as well as
the works, tasks and services required to perform such
activities, of public use and social interest.
120
TEI&C S.A.
Based on the foregoing, on June 12, 2008, the Sidernet’s
management sent a notification to SIDOR C.A.’s new
board stating its intention to transfer the services rendered
by the Company to SIDOR C.A. through the sale of all
its pieces of equipment, fixtures and fittings and other
investments made, as well as to transfer its entire and
detailed payroll, except for expatriated personnel, together
with the stock of spare parts, tools and consumables in
the inventory, and the services paid in advance as of the
date the service is transferred.
On September 26, 2008, SIDOR was notified of the
company’s intention to early terminate the contract, which
early termination took place on April 7, 2009. On such date,
SIDOR and Sidernet executed the Agreement for Early
Termination of “The Contract”, Final Receipt of services
and delivery of equipment and spare parts, whereby
both parties stated that the business relationship existing
between them by virtue of such Contract was terminated,
and therefore, all the obligations to do (affirmative
covenants) assumed by the companies deriving from the
execution of “The Contract” became extinguished, except
as otherwise provided for in such document.
The acknowledgment of completion for the Contract of
Heavy Cleaning and Raw Material Handling Services was
executed in November 2010; therefore, the commercial
relationship between Sidernet and SIDOR was terminated.
This acknowledgment of completion set forth the time
schedule for invoicing and collection of the debt deriving
from such document.
Based on the facts and circumstances described above
the Company ceased consolidating Sidernet and Sersisa’s
results of operations as from July 1, 2007 and classified a
group of assets and liabilities as held-for-sale.
The results of operations generated by Sidernet and
Sersisa as held-for-sale were presented as discontinued
operations in these financial statements.
notes
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
Analysis of the result of discontinued operations:
Cost of sales
26
Gross loss
General and administrative expenses
26
28
Operating (loss) / profit
Financial results, net
27
Results before income tax
Income tax
Results from discontinued operations
(*) See note 2.a.
29
(43)
(494)
(43)
(494)
(172)
(1,173)
6
13,969
(209)
12,302
605
(2,135)
396
10,167
–
(4,931)
396
5,236
121
NOTe 24.
Related party transactions
The group is controlled by Techint Limited, which owns
88.67% of the company’s shares. The ultimate parent of
the group is San Faustin S.A.
PERIOD/YEAR-END balances with related parties others than
the Parent Company.
notes
12.31.10
06.30.10
Trade receivables from related parties
8
71
59
Other receivables from related parties
8
8,826
9,494
Non-Current Assets
Current Assets
Trade receivables
Fluor Techint S.R.L. Construcción y Servicios Limitada – Chile
1,139
711
3,246
1,699
Trade receivables from associated parties
8
4,385
2,410
Trade receivables from related parties
8
31,775
26,067
Other receivables from related parties
8
4,891
2,090
17
696
748
Advances received on construction contracts from related parties
17
117
115
Other liabilities due to related parties
17
668
1,000
Trade and other payables due to related parties
16
237
4,120
Borrowings from related parties
14
–
2,244
Non-Current Liabilities
Other liabilities due to related parties
Current Liabilities
122
TEI&C S.A.
Transactions with associated parties
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
3,970
3,363
Sales of goods and services
Fluor Techint S.R.L. Construcción y Servicios Limitada - Chile
Transactions with RELATED PARTIES OTHERS THAN
THE PARENT COMPANY
Sales of goods and services
Purchases of goods and services
(*) See note 2.a.
The aggregate compensation of the directors and
executive officers earned during the six-month period
ended December 31, 2010 and the annual year ended
June 30, 2010 amounts to USD 11,289 thousand and
USD 12,105 thousand respectively.
12.31.10
06.30.10
(6 months) (*)
12 MONTHS (*)
125,950
191,206
255
6,773
123
NOTe 25.
Subsidiaries
company
Country
12.31.10 (*)
6.30.10 (*)
% of ownership
% of ownership
B.V. de Nieuwe Weg
Holland
100.00%
100.00%
BVT LNG Costa Azul, S. de R.L. de C.V.
Mexico
50.00%
50.00%
Caminos del Oeste S.A.
Argentina
(1)
(1)
Carbonser, S.A. de C.V.
Mexico
50.00%
50.00%
(2)
Carbontec, S.A. de C.V.
Mexico
50.00%
50.00%
(2)
Cimimontubi S.A.
Venezuela
100.00%
100.00%
Coincar S.A.
Argentina
Compañía Interamericana de Trabajos Civiles Comintrac S.A.
Ecuador
Compañía Inversora Ferroviaria S.A.I.F.
Argentina
Constructora Mexicana Electromecánica y de Instrumentación, S.A. de C.V.
Mexico
Cotecol Compañía Técnica de Construcciones S.A.
Elina 406, S.A. de C.V.
Elina de Occidente, S.A. de C.V.
Elina LT, S.A. de C.V.
65.00%
65.00%
100.00%
100.00%
77.14%
77.14%
100.00%
100.00%
Colombia
99.86%
99.86%
Mexico
51.00%
51.00%
Mexico
(3)
100.00%
Mexico
50.00%
50.00%
Elina Sureste, S.A. de C.V.
Mexico
(3)
53.00%
Elinatech, S.A. de C.V.
Mexico
-
(3)
Energía Tamaulipas S.A. de C.V.
Mexico
100.00%
100.00%
Ferroexpreso Pampeano S.A.C.
Argentina
(4)
(4)
Fidelis Management S.A.
Panama
100.00%
100.00%
Flinwok S.A.
Uruguay
100.00%
100.00%
Mexcarbón, S.A. de C.V.
Mexico
50.00%
50.00%
Nitroelina, S.A. de C.V.
Mexico
70.00%
70.00%
Norgas S.A.
Argentina
50.00%
50.00%
Preglosid S.L.U.
Spain
100.00%
100.00%
Prestaciones Globales Siderúrgicas S.A.I.F.
Argentina
100.00%
100.00%
Saudi Techint Ltd.
Saudi Arabia
60.00%
60.00%
Servicios Siderúrgicos Sersisa, S.A.
Venezuela
100.00%
100.00%
Servicios y Prestaciones Techint Funchal - Serviços, Comércio e Gestão de Projectos Lda.
Portugal
100.00%
100.00%
SICI - Servicios de Ingeniería y Construcciones Industriales S.A. de C.V.
Mexico
100.00%
100.00%
Sidernet S.A.
Argentina
100.00%
100.00%
Sidernet de Venezuela C.A.
Venezuela
100.00%
100.00%
Sidernet Mexicana S.A. de C.V
Mexico
100.00%
100.00%
Socominter Sociedade Comercial Internacional Ltda.
Brazil
100.00%
100.00%
Tanks Technologies, S.A. de C.V.
Mexico
51.00%
51.00%
(2)
(6)
124
TEI&C S.A.
company
Country
12.31.10 (*)
6.30.10 (*)
% of ownership
% of ownership
Techint Chile S.A.
Chile
100.00%
100.00%
Techint Compañía Técnica Internacional S.A.C.I.
Argentina
100.00%
100.00%
Techint Compañía Técnica Internacional S.A.C.I.
Uruguay
100.00%
100.00%
Techint Compañía Técnica Internacional S.A.
Venezuela
100.00%
100.00%
Techint Construction Limited
Canada
100.00%
–
Techint E&C, S.A. de C.V.
El Salvador
100.00%
100.00%
Techint Engenharia e Construção S.A.
Brazil
100.00%
100.00%
Techint E&C, Inc.
Canada
100.00%
100.00%
Techint International Construction Corp. (TENCO)
Bahamas
100.00%
100.00%
Techint Ingeniería y Construccion Bolivia S.A.
Bolivia
100.00%
100.00%
Techint Ingeniería y Construcciones, S.L.U.
Spain
100.00%
100.00%
Techint Inversiones S.A.I.F.
Argentina
100.00%
100.00%
Techint Nigeria Limited
Nigeria
100.00%
100.00%
Techint S.A.C.
Peru
100.00%
100.00%
Techint, S.A.
Guatemala
100.00%
100.00%
Techint, S.A. de C.V.
Honduras
100.00%
100.00%
Techint, S.A. de C.V.
Mexico
100.00%
100.00%
Techint, S.A.
Nicaragua
100.00%
100.00%
Techint, S.A.
Panama
100.00%
100.00%
Techint Servicios, S.A. de C.V.
Mexico
100.00%
100.00%
Tecnomatter Instalaciones y Construcciones S.A.I.F.
Argentina
100.00%
100.00%
Tecnomatter S.A. de C.V.
Mexico
–
(3)
Tecnopower S.A de C.V.
Mexico
100.00%
66.66%
Terminales Portuarias del Pacífico, S.A.P.I. de C.V.
Mexico
–
(5)
TGT de México, S.A. de C.V.
Mexico
–
(5)
(*) Direct and indirect participating interests are included.
(1) At December 31, 2010 and June 30, 2010 the Company decided to include its proportional shareholders’ equity in the
liabilities since the subsidiary has a negative shareholders’ equity.
(2) TEMEX has the power to govern the financial and operating policies of the entity.
(3) During the six-month period or previous fiscal year, these companies were wound-up.
(4) Controlling interest through Compañía Inversora Ferroviaria S.A.I.F.
(5) See note 1.
(6) See note 31.
(5)
125
NOTe 26.
Cost of sales and expenses by nature
Labor costs
Taxes, rates and contributions
Cost
of sales
General and
administrative expenses
Selling
expenses
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
313,973
41,326
3,386
358,685
589,634
6,525
3,734
680
10,939
29,010
Fees and technical advice
10,867
9,832
543
21,242
51,748
Sub-contract for services
107,068
5,839
2,381
115,288
219,034
Purchases of material and supplies
138,414
985
3
139,402
247,311
18,659
2,006
–
20,665
48,033
108
352
–
460
812
Work structure expenses
14,476
1,270
14
15,760
27,065
Office structure expenses
14,397
5,693
1,400
21,490
58,892
Participation in JV balances
21,340
–
–
21,340
53,481
Unallocated costs
16,384
5,931
892
23,207
37,880
662,211
76,968
9,299
748,478
1,362,900
PP&E depreciation
Intangible assets amortization
Subtotal
Discontinued operations (see note 23)
Total June 30, 2010
(*) See note 2.a.
(43)
(172)
–
(215)
(1,667)
662,168
76,796
9,299
748,263
–
1,225,766
125,523
9,944
–
1,361,233
126
TEI&C S.A.
NOTe 27.
Financial results
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
3,166
10,723
–
586
Discount at current value credits Techint Cía. Técnica Int. S.A.C.I.- Impregilo S.p.A. (Suc. Argentina) - Iglys S.A. - U.T.E.
702
1,600
Holding results
713
2,870
Income
Interests and indexation
Derivate financial instruments
Other
(52)
26
4,529
15,805
(759)
(6,687)
3,770
9,118
Interests and indexation
(2,487)
(7,344)
Net foreign exchange transaction
(2,053)
(6,832)
–
(304)
Costs
Derivate financial instruments
Holding results
Comissions
Other
(*) See note 2.a.
–
(101)
(902)
(3,648)
(83)
(1,166)
(5,525)
(19,395)
154
8,822
(5,371)
(10,573)
127
NOTe 28.
Gain from the sale of PP&E
Impairment loss
Net result for provisions for legal claims and contingencies
Other
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
4,727
13,399
(2,430)
(5,701)
(249)
601
(290)
744
1,758
9,043
(6)
(13,969)
1,752
(4,926)
(*) See note 2.a.
NOTe 29.
Income tax expense
Current income tax
Deferred income tax (see note 15)
(*) See note 2.a.
12.31.10
06.30.10
6 months (*)
12 MONTHS (*)
(15,805)
(45,388)
26,618
(16,085)
10,813
(61,473)
–
4,931
10,813
(56,542)
128
TEI&C S.A.
The net difference between the tax calculated at the
rate in effect in each country and the total charge
for the period/year is generated by the following (*):
Tax calculated at the applicable rate on the result for the period/year
Effect of restatement in constant currency
Result due to participating interests in subsidiaries and related companies
Dividends earned
12.31.10
06.30.10
(9,327)
(60,066)
926
1,153
(349)
4,180
332
544
Provisions for deferred tax assets
(1,116)
(7,765)
Recognition of deferred tax assets
14,512
–
–
2,514
PP&E
1,057
(1,410)
Tax-deductible interest on own capital
1,200
5,582
Tax benefit arising from the reversal of impairment of net operating losses recognized in prior years
Non-deductible expenses
Other, net
Income Tax
(*) See note 2.a.
640
(2,944)
2,938
(3,261)
10,813
(61,473)
129
NOTe 30.
Main contracts in progress
12.31.10
Country / Work
06.30.10
Physical
progress
Total contract
amount (USD million)
Physical
progress
Total contract
8%
387
3%
368
98%
113
95%
114
31%
110
–
111
6%
79
–
–
Loops TGN - Stage II
34%
20
–
–
Escobar Cardales LNG Gas Pipeline
10%
18
–
–
69%
88
3%
87
–
80
–
–
44%
63
–
63
Camisea Pipeline Maintenance - Stage I
–
152
–
152
Camisea Pipeline Maintenance - Stage II
–
126
–
–
100%
144
67%
133
47%
58
35%
51
56%
180
11%
156
–
48
–
48
76%
15
18%
15
Argentina
Punta Negra Hydroelectric Station
Engineering Services, Supplies and Mechanical Assembly at
the Ancillary Building of the Reactor in Atucha II - Stage I
Engineering Services, Supplies and Mechanical Assembly at
the Ancillary Building of the Reactor in Atucha II - Stage II
Gas Oil Hydrotreatment at La Plata Industrial Complex
(HTG at CILP)
Bolivia
Margarita Project
Peru
South Loops - Early Works
Chile
Construction of Sea Water Drive Pipeline- Minera Esperanza
Minera Escondida Limitada Service of Equipment and
Installation Maintenance
System and Construction of Stations and Singular Points for
the Reclaimed Water System Mina Los Bronces
Saudi Arabia
Manifa - Tanajib Water Pipeline
Uruguay
Environmental and Sewage Works of Maldonado and Punta
del Este
Road 18
88%
9
10%
8
New Maldonado Sewage System
34%
37
20%
37
1%
20
0%
20
Ciudad de la Costa Drainage System
(1)
130
TEI&C S.A.
12.31.10
Country / Work
06.30.10
Physical
progress
Total contract
Physical
progress
Total contract
96%
400
92%
380
Diesel Unit of Landulpho Alves - Mataripe Refinery (RLAM)
71%
875
49%
782
(2)
Oil and Water Storage
52%
292
30%
200
(3)
5%
1,180
1%
1,058
(2)
SLT 1125 Distribution Overhead Transmission Line - Stage II
98%
46
67%
46
SLT 1119 Transmission and Transformation of the Southeast
100%
92
90%
91
(4)
99%
330
94%
318
(2)
Siepac Substations
77%
43
72%
43
Siepac I
81%
141
74%
139
Siepac II
77%
55
64%
57
Brazil
Gasoline Unit of President Bernardes de Cubatão Refinery
(RPBC)
Tanks Refinaria do Nordeste, Abreu e Lima (RNEST)
Retarded Coke Unit - Complexo Petroquímico do
Rio de Janeiro (COMPERJ)
Mexico
Central America & The Caribbean
Gasoline Optimization Program Upgrade Project for
Petroleum Company of Trinidad and Tobago
Ref:
(1) The Company’s participation is 75%.
131
NOTe 31.
Subsequent events
On February 15, 2011, the subsidiary TENCO executed the
sale and purchase agreement with a related company. All
the quotas of Saudi Techint Limited (60%) were transferred
to such company; the selling price was USD 5.5 million.
On February 16, 2011, TENCO and the minority
shareholder of the company in Saudi Techint Ltd. executed
a settlement agreement whereby TENCO agrees to pay
the sum of USD 7 million, thus settling the disputes for
the complaint for damages and claim filed by such minority
shareholder before the 15th Commercial Tribunal of the
Board of Grievances of Saudi Arabia. Additionally, TENCO
shall recapitalize Saudi Techint Ltd. with a total of USD 9.3
million to cover all the accumulated losses as at December
31, 2010 and to increase the share capital with no dilution
of minority shareholder’s participation in Saudi Techint Ltd.
(resulting a change in non-controlling interest amounted to
USD 3.7 million).
The Company´s Board of Directors, at a meeting held
on February 15, 2011, decided to distribute a dividend in
cash for USD 65 million, which shall be ratified by the
Shareholder´s Meeting to be held to consider the results
of the irregular period ended December 31, 2010.
On March 14, 2011, the Company acquired 27,279,110
quotas of Tecpetrol do Brasil Ltda., representing 100% of
such company’s capital stock.
On April 4, 2011, the Superior Court of Justice rendered a
decision in the proceedings filed by the subsidiary TEBRA
against Unión Federal. Such decision upheld the claim for
damages deriving from the unilateral termination of the
contract executed in the 90´s for the construction of a
Center for Children Integral Care subject to coordination
by the Ministry of Education. The amount of the claim
to be received by the company shall be determined by
professionals qualified for such purposes.
TEI&C S.a.
Board of
Directors’ Report
and consolidated
financial
statements
Six-month period ended December 31, 2010
and year ended June 30, 2010

Annual Report 2011 - Techint Engineering and Construction

Transcription

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