TEI&C S.a. Board of dIrECTorS’ rEporT and ConSolIda TEd...

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

revenue

eBitDa

eBitDa %

profit

total equity

roe

Jul 10 / dEC 10(6 months)

783.9

58.5

7%

47.5

665.3

7%

1,530.3

213.0

14%

114.4

605.8

21%

1,598.4

211.6

13%

171.5

484.9

40%

usD millions Jul 08 / Jun 09(12 months)

Jul 09 / Jun 10(12 months)

personnel

20,603 20,636 20,770

revenuerevenue Jul 10 - Dec 10 By Business segment revenue Jul 10 - Dec 10 By geographic area

1,598

1,530

784

16% energy

8% others

4% central america and caribbean

8% peru

30% oil & gas 25% argentina

3% mining

7% others

28% pipelines 24% Brazil

18% chile

15% iron & steel

and other industries 14% mexico Jul 08 /

Jun 09(12 months)

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)

Jul 10 /dEC 10

(6 months)

4

IndEx

5

overview of the six-month periodprospects for fiscal year 2011economic and financial informationmajor Works in progress per countrytei&c and subsidiaries’ activities for the six-month period ended December 31, 2010engineeringprocurementtechint equipment Division (tepam)health, safety and environment (hse)Qualitytechnology and it systemshuman resourcesBoard of Directors

legal informationreport of the auditorsconsolidated statement of financial positionconsolidated income statementconsolidated statement of comprehensive incomeconsolidated statement of changes in equityconsolidated statement of cash flows index to the notes to the consolidated financial statements

09 11

13 17

20

34

36

36

36

37

38

38

39

45

46

48

50

51

52

56

59

BoarD of

Directors’ report

consoliDateD financial

statements

6 TEI&C S.a.

7 BoarD of Directors’ report

Board of dIrECTorS’ rEporT

8 TEI&C S.a.

ThE proJECT IS on ThE San Juan rIvEr,20 km downSTrEam loS CaraColESproJECT, and IT IS InTEndEd To InCrEaSEThE rEgulaTIon of ThIS rIvEr.punta negra hyDroelectric station. argentina.


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).

10 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).

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 Manifa-Tanajib 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

camisea pipeline maintenance (stage ii). peru.


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,

12 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.

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.

alBerta clipper proJect in canaDa.


EConomIC and fInanCIal InformaTIon

summary of consoliDateD income statement

revenues from construction contracts and other services

cost of sales

gross profit

general, administrative and selling expenses

other operating results

operating income

gain from the purchase and sale of shares and investments

financial results, net

result from investments in associated companies

Income before income tax

income tax

Income from continuing operations

income from discontinued operations

net income

attributable to:

equity holder of tei&c

non-controlling interests

12.31.10(6 months)

783.9

(662.1)

121.8

(86.1)

1.8

37.5

–

(1.6)

0.4

36.3

10.8

47.1

0.4

47.5

44.3

3.2

47.5

1,530.3

(1,225.8)

304.5

(135.4)

(4.9)

164.2

0.2

(1.4)

2.7

165.7

(56.5)

109.2

5.2

114.4

109.8

4.6

114.4

usD millions 06.30.10(12 months)

14 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. 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. 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

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.

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. 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).


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 six-month 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

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.

summary of consoliDateD statement of financial position

assets

non-current assets

current assets

Total assets

Equity

majority shareholders


Total Equity

liabilities

non-current liabilities

current liabilities

Total liabilities

Total Equity and liabilities

12.31.10(6 months)

430.5

848.6

1,279.1

637.4

27.9

665.3

124.4

489.4

613.8

1,279.1

407.2

804.2

1,211.4

577.7

28.1

605.8

121.3

484.3

605.6

1,211.4

usD millions 06.30.10(12 months)

16 TEI&C S.a.

summary of consoliDateD statement of cash floW

inDicators

net cash and cash equivalents at the beginning of the period/year

net cash generated by operating activities

net cash used in investing activities

net cash used in financing activities

net increase in cash and cash equivalents

effect of exchange rates changes

net cash and cash equivalents at the end of the period/year

financial solvency (assets / liabilities)

liquidity (current assets / current liabilities)

indebtedness (liabilities / equity)

gross margin (gross profit / revenues)

12.31.10(6 months)

12.31.10(6 months)

282.4

66.4

(28.3)

(1.5)

36.6

8.0

327.0

2.1

1.7

0.9

16%

222.8

199.1

(27.0)

(116.1)

56.0

3.6

282.4

2.0

1.7

1.0

20%

usD millions

06.30.10(12 months)

06.30.10(12 months)

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.

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:


argEnTIna

gas oil hydrotreatment at la plata industrial complex (htg at cilp)

loops tgn (stage ii)

escobar-cardales lng gas pipeline

punta negra hydroelectric station

engineering services, supplies and mechanical assembly

at the ancillary Building of the reactor in atucha ii (stage ii)

pascua lama- construction

Works and services in plants

BolIvIa

third processing train of the sábalo gas treatment plant

margarita project

BrazIl

gasoline unit of presidente Bernardes de cubatão refinery (rpBc)

Diesel unit of landulpho alves mataripe refinery (rlam)

oil and Water storage tanks refinaria do nordeste,

abreu e lima (rnest)

retarded coke unit – complexo petroquímico

do rio de Janeiro (comperJ)

CEnTral amErICa and ThE CarIBBEan

gasoline optimization program upgrade

siepac i

siepac ii

siepac substations

ypf s.a.

constructora norberto odebrecht s.a.

ypf s.a. - enarsa s.a.

energía provincial sociedad del estado (epse)

nucleoeléctrica argentina s.a.

Barrick gold corp.

ternium siderar s.a.i.c. - tenarissiderca s.a.i.c.

petrobras Bolivia s.a.

repsol ypf e&p Bolivia s.a.

petróleo Brasileiro s.a. (petrobras)




petroleum company of trinidad and tobago ltd.

empresa propietaria de la red s.a.

consorcio abengoa- inabensa (apca)

empresa propietaria de la red s.a.

uSd mIllIon CounTry / proJECT ClIEnT / ConTraCT ToTal amounT

79

20

18

387 (a)

110

20 (a)

53 (b)

88

80

400

875 (a)

292 (a)

1,180 (a)

330 (a)

141 (a)

55

43

maJor workS In progrESS pEr CounTry

18 TEI&C S.a.

ChIlE

pascua lama- engineering and procurement

replacement of mineral pipeline and reclaimed Water

system and construction of stations and singular points

for the reclaimed Water system mina los Bronces

service of equipment and installation maintenance

engineering services for Water and concentrate

transportation system

valle de huasco plants

mExICo

slt 1125 Distribution overhead transmission line (stage ii)

norte ii ccgt power project

petacalco project, maintenance and operational contract

Works and services in plants

pEru

camisea pipeline maintenance (stage ii)

south loops - early Works

expansion of ng transportation system - addition of fourth pump

SaudI araBIa

manifa - tanajib Water pipeline

uruguay

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

Barrick gold corp.

anglo american sur s.a.

minera escondida limitada

compañía minera casale

cap minería - compañía minera del pacífico s.a.

comisión federal de electricidad (cfe)



ternium hylsa - tenaristamsa

compañía operadora de gas del amazonas s.a. (coga)

transportadora de gas del perú s.a. (tgp)

transportadora de gas del perú s.a. (tgp)

Jgc corporation

obras sanitarias del estado (ose)

municipalidad de maldonado

corporación vial del uruguay (cvu)



uSd mIllIon CounTry / proJECT ClIEnT / ConTraCT ToTal amounT

115 (a)

180

58

5

29

46

333 (a)

34 (b)

74 (b)

126

63

14

48

15

8

9

37 (a)

20

maJor workS In progrESS pEr CounTry (ConT’d.)

(a) projects under a consortium/Jv. the amount corresponds to total contract amount at 100%. (b) the amount corresponds to annual estimated sales.


MEXICOIron and Steel Plants and Other IndustriesTernium Hylsa Plant in Monterrey.TenarisTamsa Plant in Veracruz.Petacalco Project, Maintenance and Operational Contract.EnergySLT 1125 Distribution Overhead Transmission Line (Stage II).Norte II CCGT Power Project.

CENTRAL AMERICA AND THE CARIBBEANOil and Gas Gasoline Optimization Program Upgrade.EnergySiepac I and II.Siepac Substations.

COLOMBIATransportation Capacity Expansion - Basic Engineering – Oleoducto Central S.A. (OCENSA).

1.

2.

3.

4.

5.

6.

7.

8. 9.

10.

PERUPipelinesCamisea Pipeline Maintenance (Stage II).South Loops - Early Works.Expansion of NG Transportation System - Addition of fourth pump.

BRAZILOil and GasGasoline Unit of Presidente Bernardes de Cubatão Refinery (RPBC).Diesel Unit of Landulpho Alves Mataripe Refinery (RLAM).Oil and Water Storage Tanks Refinaria do Nordeste, Abreu e Lima (RNEST).Retarded Coke Unit - Complexo Petroquímico do Rio de Janeiro (COMPERJ).

BOLIVIAOil & GasThird Processing Train of the Sábalo Gas Treatment Plant.PipelinesMargarita Project.

CHILEMiningPascua Lama - Engineering and Procurement.Service of Equipment and Installation Maintenance.Valle de Huasco Plants.Engineering Services for Water and Concentrate Transportation System.PipelinesReplacement of Mineral Pipeline and Reclaimed Water System and Construction of Stations and Singular Points for the Reclaimed Water System Mina Los Bronces.

ARGENTINAOil and GasGas Oil Hydrotreatment at La Plata Industrial Complex (HTG at CILP).PipelinesLoops TGN (Stage II). Escobar-Cardales LNG Gas Pipeline.MiningPascua Lama - Construction.EnergyPunta Negra Hydroelectric Station.Engineering Services, Supplies and Mechanical Assembly at the Ancillary Building of the Reactor in Atucha II (Stage II).Iron and Steel PlantsTernium Siderar Plant in San Nicolás.TenarisSiderca Plant in Campana.

URUGUAYArchitecture and Infrastructure WorksEnvironmental and Sewage Works of Maldonado and Punta del Este.Av. Ferreira Aldunate.Road 18.New Maldonado Sewage System. Ciudad de la Costa Drainage System.

OTHERS - ARABIAPipelinesManifa - Tanajib Water Pipeline.

1

22

3

4 5

9

6

8

7

10

20 TEI&C S.a.

TEI&C SuBSIdIarIES’ aCTIvITIES for ThE SIx-monTh pErIod

EndEd dECEmBEr 31, 2010

argentina

During this six-month period, total revenue in the country amounted to USD 194 million.

The main projects developed during this six-month period include:

oil anD gas

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.

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%.

revenues

457

325

194

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)

–––

3D vieW of ypf-htg proJect, argentina.


pipelines

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.

Loops TGN (Stage II) – Constructora Norberto Odebrecht S.A.: 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%. Escobar-Cardales LNG Gas Pipeline – YPF S.A. - ENARSA S.A.:

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%.

energy

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.

Los Caracoles Hydroelectric Station – Energía Provincial

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

S.E. (EPSE): The contract was signed between Empresa 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 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 – 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

WorKs at ancillary BuilDing of the reactor, atucha ii, argentina.

pascua lama proJect locateD in the BorDer BetWeen chile anD argentina.


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:

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

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

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.

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.

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 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%.

revenues

331

396

187

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)

gasoline unit of presiDente BernarDes De cuBatão refinery, BraZil.


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 pre-operation 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.

chile

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 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

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.

revenues

7

146 144

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)

minera esconDiDa limitaDa, chile.


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.

Replacement of Mineral Pipeline and Reclaimed Water

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.

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

28 TEI&C S.a.

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.

The main projects developed were as follows:

energy

SLT 1119 Transmission and Transformation of the Southeast

– Comisión Federal de Electricidad (CFE): Lump sum financed 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

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

revenues

171

210

107

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)

petacalco proJect in meXico.


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.

Norte II CCGT Power Project – Comisión Federal de Electricidad

(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%.


Construction Works at Monterrey Plant – Ternium Hylsa: 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.

The sales obtained during the six-month period amounted to USD 13.4 million.

Construction Works at Veracruz Plant – TenarisTamsa: 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 four-month 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

– Comisión Federal de Electricidad (CFE): Carbonser, 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.

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.

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.

The main projects developed during this six-month period were as follows:

pipelines

Camisea Pipeline Maintenance (Stage II) – Compañía

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

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.

eXpansion of ng transportation system, peru.

revenues

317

259

59

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)


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.

oil anD gas

Gasoline Optimization Program Upgrade – Petroleum

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.

revenues

144

96

32

Jul 08 /Jun 09

(12 months)

Jul 09 /Jun 10

(12 months)

Jul 10 /dEC 10

(6 months)

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 start-up 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 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

Third Processing Train of the Sábalo Gas Treatment Plant

– Petrobras Bolivia S.A.: On December 28, 2009, the Company and Petrobras Bolivia S.A. executed a contract for the construction, assembly, interconnection, pre-

siepac suBstations, meXico.


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 start-up 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 two-year 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

del Uruguay (CVU): During this period, the Company 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.

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

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.

colomBia

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.

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.

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:

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.

–

–


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):

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. LC2F Continuous Cold Strip Mill. Insertion in three existing ways of tilting rotators to perform a 90° turn of master tubes, before they enter the CND for subsequent calibration of the latter.

Repsol YPFB – Margarita Pipelines (Bolivia): Detail engineering, gas pipelines for development of the Margarita Field.

Repsol YPFB – FEED Margarita Stage II (Bolivia): FEED for expansion of the Margarita gas processing plant.

Petrobras Bolivia – Sábalo Gas Plant (Bolivia): Development of detail engineering for the construction of a gas processing plant.

Petrobras – RNEST (Brazil): Detail engineering for storage tanks site.

Petrobras – COMPERJ (Brazil): Detail engineering new coke unit at Rio de Janeiro Petrochemical Complex.

Angloamerican / Bechtel – Los Bronces - Pipelines and

Stations (Chile): Two contracts, including completion of detail engineering for Barrick.

–

–

–

–

–

–

–

–

–

–

–

–

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.

CC Norte (Mexico): Detail engineering for combined cycle facility.

tenaristamsa (meXico):

Tubing Factory 3. Installation of all cold cycle equipments for the new plant of TenarisTamsa.Tubing Factory 3 – Casing Thermal Treatment. Installation of thermal treatment for seamless casing up to 7".

TGP – NG Fourth Pump Expansion (Peru): Detail engineering. Technical bidding terms for EPC contract.

TGP – Camisea South Loops (Peru): Conceptual, basic and detail engineering. Loop for expansion of transportation capacity in Camisea pipelines.

Pluspetrol – Camisea II Expansion (Peru): Conceptual and extended basic engineering, and preparation of bidding terms for expansion of Malvinas and Pisco Plants. Review of detail engineering of EPC contractors.

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:

Increasing the contribution of value by focusing the purchasing strategy on the critical success factors, management total cost, productivity and strategic factors.Encouraging the specialization of the sector and, consequently, organizing the structure based on demand.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.

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.

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.

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.

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,

i)

ii)

iii)


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:

Boosting of the safe operating discipline.Solid preventive interaction with senior management.More severity in the use of field managerial tools.Improvement of analysis of risks related to change management.Improvement of preventive revision of vehicles, equipment and qualification of drivers/operators.

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.

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 in the projects, as well as an alert system for the different functional areas with a direct responsibility.

In December 2009, the Company obtained a new certification pursuant to ISO 9001:2008 on Quality Management Systems (certification effective since 1996) and, during 2010, it was submitted to two external audits, with excellent results.

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

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:

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.

human rESourCES

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.

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

–

–

–


Board of dIrECTorS

presiDent

Carlos Eduardo Bacher

vice presiDent

Eduardo Nicolás Rocca Couture

Directors

Ricardo Pascale CavallieriLuis Pablo Solari DamonteMario Osvaldo LallaRicardo 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.

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 siX-month perioD enDeD DecemBer 31, 2010 anD year enDeD June 30, 2010

lEgal InformaTIon

Denomination:

TEI&C S.A.

legal aDDress:

La Cumparsita 1373 7th FloorMontevideo (11200)(598-2) 901-9091

company activity:

Investments.

Date of registration:

February 16, 2005.

eXpiration of company charter:

February 16, 2105.

registry numBer:

RUC 21-5098860012.

capital stocK:

Shares: 5,181,537,274 1.Face Value: UYU 5,181,537,274 2.

1 see note 13 to the consolidated financial statements.2 uyu: uruguayan pesos.

parent company:

Techint Limited.

legal aDDress:

Equity Trust House28-30 The Parade, JE4 8XYSt. Helier, JerseyChannel Islands.

parent company activity:

Investments.

parent company:

Shares: 88.67%Votes: 88.67%

48 TEI&C S.a.

aSSETS

non-Current assets

property, plant and equipment

intangible assets

investments in associated companies

other investments

non-current tax assets

trade and other receivables

Deferred income tax assets

Total non-Current assets

Current assets

inventories

current tax assets


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

12.31.10

320,397

3,826

1,624

7,500

5,225

29,046

62,832

430,450

30,468

39,232

332,985

108,786

16,298

622

320,215

848,606

1,279,056

309,723

2,662

1,389

6,774

5,032

33,448

48,229

407,257

35,848

47,494

319,459

116,731

67

1,010

283,567

804,176

1,211,433

4

5

6

7

8

15

9

8

11

7

12

all amounts in usD thousanDs 06.30.10notes

ConSolIdaTEd STaTEmEnT of fInanCIal poSITIon

Six-month period ended December 31, 2010 and year ended June 30, 2010.


EQuITy and lIaBIlITIES

Equity

capital and reserves attributable to the company’s equity holders


Total Equity

non-Current liabilities

Borrowings

Deferred income tax liabilities

non-current tax liabilities

trade and other payables


other liabilities

Total non-Current liabilities

Current liabilities

Borrowings

liabilities of disposal group classified as held for sale



current tax liabilities

other liabilities

Total Current liabilities

Total liabilities

Total Equity and liabilities

12.31.10

637,384

27,915

665,299

22,262

29,812

869

25,278

4,683

41,456

124,360

19,935

6,992

233,120

113,377

38,918

77,055

489,397

613,757

1,279,056

577,642

28,134

605,776

18,648

42,984

895

22,316

–

36,472

121,315

19,308

–

246,871

92,339

23,035

102,789

484,342

605,657

1,211,433

14

15

16

17

14

11

16

17

all amounts in usD thousanDs 06.30.10notes

ConSolIdaTEd STaTEmEnT of fInanCIal poSITIon (ConT’d.)


the accompanying notes are an integral part of these consolidated financial statements.

50 TEI&C S.a.

(*) see note 2.a.


Continuing operations

revenues from construction contracts and other services

cost of sales

gross profit

general and administrative expenses

selling expenses


operating income

gain from the purchase and sale of shares and investments

financial income

financial costs


Income before income tax

income tax

Income from continuing operations

discontinued operations

income from discontinued operations

net Income (1)

(1) attributable to:

equity holders of the company


net Income

12.31.106 months (*)

783,921

(662,168)

121,753

(76,796)

(9,299)

1,752

37,410

–

3,770

(5,371)

446

36,255

10,813

47,068

396

47,464

44,272

3,192

47,464

1,530,337

(1,225,766)

304,571

(125,523)

(9,944)

(4,926)

164,178

246

9,118

(10,573)

2,724

165,693

(56,542)

109,151

5,236

114,387

109,812

4,575

114,387

26

26

26

28

27

27

29

23

all amounts in usD thousanDs 06.30.1012 months (*)

notes

ConSolIdaTEd InComE STaTEmEnT



net Income

other comprehensive income:

gain on revaluation of pp&e

Decrease of revaluation of pp&e

currency translation differences

cash flow hedge

other comprehensive income for the period/year net of tax (1)

(1) attributable to:

equity holders of the company


12.31.106 months (*)

47,464

–

(2,389)

17,989

–

63,064

59,814

3,250

63,064

114,387

55,995

(4,967)

(158)

(215)

165,042

157,977

7,065

165,042

4

4

all amounts in usD thousanDs 06.30.1012 months (*)

notes

ConSolIdaTEd STaTEmEnT of ComprEhEnSIvE InComE


(*) see note 2.a.


52 TEI&C S.a.

Balance at June 30, 2009

net income for the year (*)

other comprehensive income

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

resolution of the shareholders’ meeting held on 12.02.09:

Board of Directors’ fees

legal reserve

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)

changes in non-controlling interests


aTTrIBuTaBlE To ThE Company´S EQuITy holdErS

lEgal rESErvE

CapITal SToCk

all amounts in usD thousanDs

2,293

–

–

–

–

–

–

–

–

–

9,632

–

–

–

–

11,925

218,535

–

–

–

–

–

–

–

–

–

–

–

–

–

–

218,535

ConSolIdaTEd STaTEmEnT of ChangES In EQuITy


(1) the dividends were approved by the Board of Directors and were ratified by the shareholder’s meeting held on november 30, 2010.



net income for the year (*)


gain on revaluation of pp&e net of tax (see note 4)




changes in equity reserves


Total comprehensive income for the year



legal reserve

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)



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)

–

–

–

–

–

–

–

–

–

–

–

–

2,562

–

(1,476)

(42,428)

–

–

–

–

–

–

(2,430)

(2,430)

–

–

–

–

–

–

(44,858)

51,511

–

55,777

(4,967)

(10,771)

(4,015)

–

–

36,024

–

–

–

–

–

–

87,535

215

–

–

–

–

–

(215)

–

(215)

–

–

–

–

–

–

–

224,087

109,812

–

–

10,771

4,015

–

–

124,598

(72)

(9,632)

(24,000)

(9,000)

–

–

305,981

34,750

4,575

218

–

–

–

–

2,272

7,065

–

–

–

–

–

(13,681)

28,134

484,925

114,387

55,995

(4,967)

–

–

(215)

(158)

165,042

(72)

–

(24,000)

(9,000)

2,562

(13,681)

605,776

54 TEI&C S.a.


net income for the six-months period (*)






Total comprehensive income for the six-month period



legal reserve


Balance at december 31, 2010

aTTrIBuTaBlE To ThE Company´S EQuITy holdErS

lEgal rESErvE

CapITal SToCk

all amounts in usD thousanDs

11,925

–

–

–

–

–

–

–

5,720

–

17,645

218,535

–

–

–

–

–

–

–

–

–

218,535

ConSolIdaTEd STaTEmEnT of ChangES In EQuITy (ConT’d.)


(*) see note 2.a).




net income for the six-months period (*)






Total comprehensive income for the six-month period



legal reserve


Balance at december 31, 2010

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)

–

–

–

–

–

–

–

–

–

(1,476)

(44,858)

–

–

–

–

17,931

17,931

–

–

–

(26,927)

87,535

–

(2,389)

(6,346)

(5,682)

–

(14,417)

–

–

–

73,118

305,981

44,272

–

6,346

5,682

–

56,300

(72)

(5,720)

–

356,489

28,134

3,192

–

–

–

58

3,250

–

–

(3,469)

27,915

605,776

47,464

(2,389)

–

–

17,989

63,064

(72)

–

(3,469)

665,299

56 TEI&C S.a.

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

intangible amortization

construction contracts in progress

net provisions

net allowance for doubtful accounts

tax accrued

unrealized gain on derivate financial instruments

gain from the sales of pp&e

impairment loss

interest accrued from trade and other receivables

Discount at current value credits

interest accrued from borrowings

financial results, net and others

result from other investments

result from the sale of shares and investments


other, including currency translation adjustment

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

47,464

20,665

460

32,539

2,645

144

(10,813)

–

(4,727)

2,430

(1,886)

(702)

1,825

(29)

(122)

–

(446)

4,816

(5,148)

788

(6,095)

(17,418)

–

66,390

114,387

48,033

812

(35,584)

(310)

414

61,473

(410)

(13,399)

5,701

(3,768)

(1,600)

7,340

(586)

(205)

(246)

(2,724)

(11,209)

99,964

(12,362)

(73,876)

16,619

617

199,081

4

5

8

29

28

4

27

7

6

all amounts in usD thousanDs notes

ConSolIdaTEd STaTEmEnT of CaSh flowS


12.31.106 months (*)

06.30.1012 months (*)


Cash flows from investing activities

proceeds from disposal of pp&e

purchases of pp&e

purchases of intangible assets

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

net cash used in financing activities

net increase in cash and cash equivalents

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

non-cash transactions

finance leases

(Decrease) / gain on revaluation of machinery, equipment and vehicles, net of tax effects and decrease

11,743

(38,397)

(1,480)

(227)

–

(28,361)

2,037

(3,469)

(72)

–-

(1,504)

36,525

282,426

8,011

326,962

(1,377)

(2,389)

24,957

(54,411)

(915)

(2,082)

5,460

(26,991)

(71,879)

(11,120)

(72)

(33,000)

(116,071)

56,019

222,842

3,565

282,426

3,470

50,810

5

12

4

all amounts in usD thousanDs notes

ConSolIdaTEd STaTEmEnT of CaSh flowS (ConT’d.)


12.31.106 months (*)

06.30.1012 months (*)

(*) see note 2.a).


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.


IndEx To ThE noTES To ThE ConSolIdaTEd

fInanCIal STaTEmEnTS

Basis of preparationconsolidationforeign currency translationuse of estimatesproperty, plant and equipment (pp&e)intangible assetsimpairment of non-financial assetsfinancial assets offsetting financial instrumentsDerivative financial instrumentsinventoriesconstruction contracts work in progressother investments trade and other receivablestrade and other payablescash and cash equivalentsequityBorrowingscurrent and deferred income taxemployee benefitsprovisionsrevenue recognition leasesassets and liabilities classified as held for sale and discontinued operations

general informationaccounting policies

financial risk managementproperty, plant and equipment (pp&e)intangible assetsinvestments in associated companiesother investmentstrade and other receivables

1.

2.

3.

4.

5.

6.

7.

8.

a.

b.

c.

d.

e.

f.

g.

h.

i.

j.

k.

l.

m.

n.

o.

p.

q.

r.

s.

t.

u.

v.

w.

x.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

inventoriesfinancial instruments by categoryassets and liabilities classified as held for sale cash and cash equivalentsshare capitalBorrowingsDeferred income taxestrade and other payablesother liabilitiesprovisionsemployee benefitsparticipation in Joint venturescontingencies and commitmentsrestricted assetsDiscontinued operationsrelated party transactionssubsidiariescost of sales and expenses by naturefinancial resultsother operating resultsincome tax expensemain contracts in progresssubsequent events

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.

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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.

As a result of the capital contribution made in March 2010 by the Company in Socominter Sociedade Comercial Internacional Ltda. (“SOCOMINTER”), and the spin off merger of the latter with its parent company, TEBRA, which took place in May, our direct shareholding in SOCOMINTER is 0.088%.

Throughout the previous fiscal year, TEMEX continued with transactions aimed at reorganizing its business areas.

In August 2009, it transferred together with Constructora Mexicana Electromecánica y de Instrumentación, S.A.

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-April 2010, TEI&C contributed to PREGLOSID the direct participating interest it held in the Argentine company Prestaciones Globales Siderúrgicas S.A., i.e. 8,445,080 shares, representing 97.50% of the capital stock. 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 for the sum of EUR 1,636,499.99, thus consolidating in its shareholders’ equity the transactions for the supply of steel and iron services recorded in Argentina, Mexico and Venezuela.

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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.

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.

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

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”), available-for-sale assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, employee benefits and translation of subsidiaries whose functional currency is the currency of a hyperinflationary economy. The consolidated financial statements are presented in thousands of U.S. dollars (“USD”), which is the functional currency of TEI&C.

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.

Certain comparative amounts have been reclassified to conform to changes in presentation in the current six-month period.

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.

As a result, in accordance with IFRS, Venezuela must be considered a hyperinflationary economy. The main implications of this circumstance are as follows:

Adjustment of the income statement to reflect the financial loss caused by the impact of inflation in the period/year on net monetary assets (loss of purchasing power).

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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.

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 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 government-related entities.

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.

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–

–

–

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.




The Company’s share of its associated companies’ post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition 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.

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.

Joint ventures

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.

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 line-by-line basis with similar items in TEI&C’s financial statements. See note 20 to the consolidated financial statements.

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

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

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.

ii. Balances anD transactions in currencies other than the

functional currency

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 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.

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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.

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.

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.

fiXeD assets of ferroeXpreso pampeano s.a.c. (“fepsa”)

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

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

are as folloWs:

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.

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.

Repairs and maintenance expenses are charged to the consolidated income statement during the financial period in which they are incurred.

Buildings and improvements 20-50 years

production equipment 10-20 years

vehicles, furniture and fixtures, and other equipment 3-10 years

land not depreciated

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).

gooDWill

Compañía Inversora Ferroviaria S.A.I.F. (“COINFER”)

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.

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.

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.

financial assets at fair value through profit or loss

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.

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.




availaBle-for-sale financial asset

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 non-current assets unless management intends to dispose of the investment within 12 months of the end of the reporting period.

Recognition and measurement

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. Available-for-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.

j. Derivative financial instruments

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.

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.

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.

TEI&C shows as an asset (within Construction contracts work in progress) the gross amount due from clients

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

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course




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.

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.

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

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.

Benefits provided by the plan are calculated on a seven-year salary average.

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 profit-sharing 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:




there is a formal plan and the amounts to be paid are determined before the time of issuing the financial statements; or

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

A defined contribution plan is a pension plan under which the companies pay fixed contributions to a separate entity. Companies have no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

Contributions by the companies include: (a) Basic contribution – Companies are committed to contribute amounts equal to the amounts contributed by the employees up to certain limits, (b) Extraordinary contributions- Are non-mandatory contributions that can be made on a voluntary basis either by the companies or the employees.

u. provisions

Provisions are recognized when TEI&C has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. When TEI&C expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

v. revenue recognition

revenues anD cost recognition for long-term construction

contracts

See note 2.l.

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:

Interest income: on the effective yield basis. Dividend income from investments in other companies: when TEI&C’s right to collect is established.

w. leases

Leases in which a significant portion of the risks and rewards of ownership are transferred from the lessor to TEI&C are classified as finance leases. At the commencement of the lease term, TEI&C recognizes finance leases as assets and liabilities in the statement financial position at amounts equal to the value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease should this be practicable to determine; otherwise, the lessee’s incremental borrowing cost is used. Any initial direct costs of the lessee are added to the amount recognized as an asset.

Each lease payment is allocated between the liability and finance charges. The corresponding rental 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.

x. assets anD liaBilities classifieD as helD for sale anD

DiscontinueD operations

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.

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.

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.

a. capital risK

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.

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.




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:

ars

BoB

caD

eur

gtQ

hnl

nio

svc

usD

vef

(237)

(2,040)

(10)

131

610

(115)

(82)

1,841

140,009

2,618

142,725

–

–

–

(371)

–

–

–

–

2,583

–

2,212

(237)

–

–

–

–

–

–

–

5,349

–

5,112

–

(2,040)

–

(207)

610

(115)

(82)

1,841

–

2,618

2,625

–

–

–

(196)

–

–

–

–

(893)

–

(1,089)

–

–

–

–

–

–

–

–

25,709

–

25,709

–

–

–

1,153

–

–

–

–

5,209

–

6,362

–

–

–

–

–

–

–

–

48

–

48

–

–

–

–

–

–

–

–

22,031

–

22,031

–

–

–

–

–

–

–

–

13,232

–

13,232

–

–

–

–

–

–

–

–

71,690

–

71,690

–

–

(10)

(248)

–

–

–

–

(4,949)

–

(5,207)

12.31.10

Net moNetary positioN asset / (LiabiLity)

funCTIonal CurrEnCy (In ThouSand uSd)

ToTal vef UyU Usd sar peN mXN eUr CHL Cad brLars

76 TEI&C S.a.



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.

ref:ars: argentine peso mXn: mexican pesoBrl: Brazilian real nio: nicaraguan cordoba oroBoB: Bolivian peso pen: peruvian nuevo solcaD: canadian Dollar sar: saudi riyalchl: chilean peso svc: el salvador coloneur: euro uyu: uruguayan pesogtQ: guatemalan Quetzal vef: venezuelan Bolívar fuertehnl: honduran lempira

ars

BoB

caD

eur

gtQ

hnl

mXn

nio

svc

usD

vef

(183)

282

(10)

508

208

(41)

18,961

12

1,713

125,282

2,658

149,390

–

–

–

(371)

–

–

–

–

–

2,592

–

2,221

(183)

–

–

–

–

–

–

–

–

2,218

–

2,035

-

282

-

666

208

(41)

18,961

12

1,713

–

2,658

24,459

–

–

–

(978)

–

–

–

–

–

(1,102)

–

(2,080)

–

–

–

–

–

–

–

–

–

29,087

–

29,087

–

–

–

1,190

–

–

–

–

–

42,701

–

43,891

–

–

–

–

–

–

–

–

–

(1,689)

–

(1,689)

–

–

–

–

–

–

–

–

–

12,322

–

12,322

–

–

–

–

–

–

–

–

–

13,545

–

13,545

–

–

–

–

–

–

–

–

–

24,587

–

24,587

–

–

(10)

1

–

–

–

–

–

1,021

–

1,012

06.30.10

Net moNetary positioN asset / (LiabiLity)

funCTIonal CurrEnCy (In ThouSand uSd)

ToTal vef UyU Usd sar peN mXN eUr CHL Cad brLars




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.

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).

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:

december 31, 2010

trade receivables

allowance for doubtful accounts (see note 8)

net value

June 30, 2010

trade receivables

allowance for doubtful accounts (see note 8)

net value

22,485

(11,706)

10,779

21,875

(10,886)

10,989

174,706

–

174,706

167,104

–

167,104

33,268

(28)

33,240

35,760

(37)

35,723

230,459

(11,734)

218,725

224,739

(10,923)

213,816

> 180 days 1 - 180 days

paST duEnoT duETradE rECEIvaBlES

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.

fixed rate

variable rate

24,690

13,266

61%

39%

25,573

16,624

65%

35%

12.31.10 06.30.10

BorrowIngS pErCEnTagE pErCEnTagEBorrowIngS

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”.




noTE 4.

propErTy, planT and EQuIpmEnT (pp&E)

The item evolution is as follows (*):

The item consists in the following:

Beginning of the period (*)

additions

Disposals

Depreciation

translation differences

other movements

transferred to disposal group classified as held for sale

impairment loss

december 31, 2010

land and buildings

equipment and machinery

vehicles

other assets

Total december 31, 2010

52,964

13,543

(214)

(5,070)

(66)

(45)

(62)

(1,558)

59,492

(23,277)

(148,841)

(50,381)

(72,951)

(295,450)

48,138

8,938

(3,012)

(4,638)

712

45

(105)

(394)

49,684

86,474

296,865

100,065

132,443

615,847

150,297

12,128

(3,790)

(9,722)

2,832

–

(854)

(2,867)

148,024

58,324

5,165

–

(1,235)

943

–

–

–

63,197

309,723

39,774

(7,016)

(20,665)

4,421

–

(1,021)

(4,819)

320,397

63,197

148,024

49,684

59,492

320,397

non-CurrEnT

aCCumulaTEd dEprECIaTIon

orIgInal valuE

ToTal 12.31.10

nET valuE 12.31.10

(*) see note 2.a.

(1) it includes deferred costs of our subsidiary fepsa and miscellaneous assets.

oThEr aSSETS (1)

vEhIClESEQuIpmEnT and maChInEry

landS and BuIldIngS

80 TEI&C S.a.



The item evolution is as follows:


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.

Beginning of the year

additions

Disposals

annual depreciation


other movements

revaluation surplus (2)

impairment loss

June 30, 2010

land and buildings

equipment and machinery

vehicles

other assets

Total June 30, 2010

53,109

11,090

(3,264)

(10,141)

(1,202)

1,494

2,446

(568)

52,964

(21,342)

(151,059)

(61,005)

(72,213)

(305,619)

36,186

8,593

(2,000)

(12,521)

(74)

(8,734)

27,205

(517)

48,138

79,666

301,356

109,143

125,177

615,342

115,275

25,569

(6,294)

(23,110)

(72)

2,028

41,517

(4,616)

150,297

49,806

5,689

–

(2,261)

(122)

5,212

–

–

58,324

254,376

50,941

(11,558)

(48,033)

(1,470)

–

71,168

(5,701)

309,723

58,324

150,297

48,138

52,964

309,723

non-CurrEnT

aCCumulaTEd dEprECIaTIon

orIgInal valuE

ToTal 06.30.10

nET valuE 06.30.10

(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.

oThEr aSSETS (1)

vEhIClESEQuIpmEnT and maChInEry

landS and BuIldIngS




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

236,371

(153,995)

82,376

240,858

(156,628)

84,230

12.31.10 06.30.10

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.

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.




Beginning of the period (*)

additions

amortization


december 31, 2010

566

–

(34)

2

534

2,096

1,480

(426)

142

3,292

2,662

1,480

(460)

144

3,826

goodwIll CoInfEr

SySTEmS dEvElopmEnT

12.31.10

(*) see note 2.a.

noTE 5.

InTangIBlE aSSETS

The item evolution is as follows (*):


systems development

goodwill – coinfer


(11,596)

(1,315)

(12,911)

14,888

1,849

16,737

3,292

534

3,826

aCCumulaTEd amorTIzaTIon

orIgInal valuE

nET valuE 12.31.10

84 TEI&C S.a.




additions

amortization


June 30, 2010

640

–

(52)

(22)

566

1,839

915

(760)

102

2,096

2,479

915

(812)

80

2,662

goodwIll CoInfEr

SySTEmS dEvElopmEnT

06.30.10

The item evolution is as follows:


systems development

goodwill – coinfer

Total June 30, 2010

(11,174)

(1,304)

(12,478)

13,270

1,870

15,140

2,096

566

2,662

aCCumulaTEd amorTIzaTIon

orIgInal valuE

nET valuE 06.30.10




non-Current

norpower s.a. de c.v.

fluor techint s.r.l. construcción y servicios ltda.

other

Total Investment in associated companies

Beginning of the period/year (*)


result from investments

sale and disposal of investments

investment adquisition and contributions

amount recorded in liabilities at the beginning of the period/year

End of the period/year (*)

40%

50%

–

40%

50%

–

886

297

206

1,389

91

1,336

197

1,624

355

208

2,724

(254)

1,027

(2,671)

1,389

1,389

(211)

446

–

–

–

1,624

% of owNersHip

% of ownErShIp

book vaLUe

Book valuE

noTE 6.

InvESTmEnTS In aSSoCIaTEd CompanIES

12.31.10

12.31.10

06.30.10

06.30.10

(*) 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:

(*) see note 2.a.



others

2,329

705

(310)

2,724

974

(128)

(400)

446

12.31.106 months (*)

06.30.1012 months (*)

The following amounts represent the assets, liabilities, revenues and results of the most important associated companies:

december 31, 2010



June 30, 2010



9,411

59,272

5,584

36,241

19,547

9,217

7,184

9,291

19,775

11,889

9,400

9,886

(321)

1,948

1,763

4,659

rEvEnuES (*)lIaBIlITIESaSSETS rESulTS (*)

(*) see note 2.a.




non-Current

other investment fund

la nacion’s trust fund

other

Total non-Current other investments

Current

low liquidity funds in correspondent accounts

temporary placements

Total Current other investments

non-Current



result from other investments

increase of other investments

reclasification

Decrease of other investments


Current



reclassification

increase of other investments

Decrease of other investments


6,597

140

37

6,774

990

20

1,010

6,076

(205)

205

1,091

(33)

(360)

6,774

158

(5)

33

990

(166)

1,010

7,328

136

36

7,500

602

20

622

6,774

–

122

604

–

–

7,500

1,010

(11)

–

–

(377)

622

12.31.10

12.31.10

06.30.10

06.30.10

noTE 7.

oThEr InvESTmEnTS

(*) see note 2.a.

88 TEI&C S.a.



non-Current

other trade receivables – net

receivables for sales of investments

invoice holdback

trade receivables – net

trade receivables from related parties (see note 24)

other receivables from related parties (see note 24)

other

Total non-Current Trade and other receivables

Current

trade receivables – net

trade receivables from related parties (see note 24)

invoice holdback

other trade receivables – net

other receivables from related parties (see note 24)

other receivables

advanced to suppliers and subcontractors

prepayments

Total Current Trade and other receivables

12,393

3,755

5,491

–

59

9,494

2,256

33,448

213,816

28,477

11,862

565

2,090

26,841

32,239

3,569

319,459

12,958

2,508

–

2,399

71

8,826

2,284

29,046

216,326

36,160

12,576

595

4,891

24,366

33,210

4,861

332,985

12.31.10 06.30.10

noTE 8.

TradE and oThEr rECEIvaBlES




non-Current

Beginning of the period/year


reversal

additions

End of the period/year

Current


translation

reversal

additions

used


–

(15)

–

870

855

10,955

425

(529)

73

(1)

10,923

855

(9)

(45)

–

801

10,923

622

(9)

198

–

11,734

12.31.10 06.30.10

At December 31, 2010 and June 30, 2010 the evolution of the allowance for doubtful accounts that was deducted from Trade receivables is (*):

(*) see note 2.a.

90 TEI&C S.a.



(*) see note 2.a.

materials and spare parts

others

valuation allowance

Total Inventories



reversal

additions

used


41,786

160

(6,098)

35,848

2,996

118

(24)

4,478

(1,470)

6,098

37,560

–

(7,092)

30,468

6,098

147

(341)

5,080

(3,892)

7,092

12.31.10

12.31.10

06.30.10

06.30.10

noTE 9.

InvEnTorIES


At December 31, 2010 and June 30, 2010 the evolution of the valuation allowance that was deducted from Inventories is (*):




assets as per balance sheet

trade and other receivables (1)

other investments


Total

liabilities as per balance sheet

Borrowings

financial lease liabilities

trade and other payables (1)

other liabilities

Total

–

36

–

36

40,691

1,506

147,959

118,511

308,667

357,170

602

–

357,772

–

7,484

320,215

327,699

357,170

8,122

320,215

685,507

40,691

1,506

147,959

118,511

308,667

avaIlaBlE- for-SalE

oThEr fInanCIal lIaBIlITIES aT

amorTIzEd CoST

ToTal

ToTal

loanS and rECEIvaBlES

aSSETS aT faIr valuE Through

ThE profIT and loSS

12.31.10

(1) excluding prepayments.

(1) excluding social security contributions.

noTE 10.

fInanCIal InSTrumEnTS By CaTEgory

92 TEI&C S.a.



assets as per balance sheet

trade and other receivables (1)

other investments


Total

liabilities as per balance sheet

Borrowings

financial lease liabilities

trade and other payables (1)

other liabilities

Total

–

37

–

37

35,340

2,616

155,830

139,261

333,047

349,338

990

–

350,328

–

6,757

283,567

290,324

349,338

7,784

283,567

640,689

35,340

2,616

155,830

139,261

333,047

avaIlaBlE- for-SalE

oThEr fInanCIal lIaBIlITIES aT

amorTIzEd CoST

ToTal

ToTal

loanS and rECEIvaBlES

aSSETS aT faIr valuE Through

ThE profIT and loSS

06.30.10

(1) excluding prepayments.

(1) excluding social security contributions.




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:

assets at december 31, 2010


other investments

Total

assets at June 30, 2010


other investments

Total

–

136

136

–

140

140

–

–

–

–

–

–

320,215

7,348

327,563

283,567

6,617

290,184

320,215

7,484

327,699

283,567

6,757

290,324

lEvEl 3lEvEl 2lEvEl 1 ToTal

94 TEI&C S.a.



noTE 11.

aSSETS and lIaBIlITIES ClaSSIfIEd aS hEld for SalE

assets


liaBilities


assets of disposal group classified as held for sale

property, plant and equipment




Discontinued operations

other investment

Total held – for – sale assets

liabilities of disposal group classified as held for sale


customer advances

Total held – for – sale liabilities

–

–

–

–

45

22

67

–

–

–

1,021

1,127

7,192

6,891

45

22

16,298

4,546

2,446

6,992

12.31.10

12.31.10

06.30.10

06.30.10notes

notes

31

31

23




noTE 12.

CaSh and CaSh EQuIvalEnTS

cash at bank and on hand

short-term bank deposits

Total Cash and cash equivalents


Bank overdrafts

cash and cash equivalents classified to held for sale (1)

Total Cash and cash equivalents

56,033

227,534

283,567

283,567

(1,141)

–

282,426

57,949

262,266

320,215

320,215

(144)

6,891

326,962

12.31.10

12.31.10

06.30.10

06.30.10

Cash, cash equivalents and bank overdrafts include the following for the purposes of the consolidated statement of cash flows:

(1) see note 11.

96 TEI&C S.a.



noTE 13.

SharE CapITal

The composition of the Company’s capital is as follows:

at June 30, 2010 (1)

at december 31, 2010 (1)

5,181,537

5,181,537

5,181,537

5,181,537

ordInary SharES

numBEr 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.

in thousanDs of shares

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.




noTE 14.

BorrowIngS

non-Current

coinfer

coinfer

tearg

tearg

tenco

techi

sidernet s.a.

sidernet mexicana s.a. de c.v.

teBra

Total non-Current Borrowings

Banco supervielle s.a.

Banco itaú BBa s.a.

standard Bank argentina s.a.

Banco itaú s.a. (new york)

caterpillar leasing chile s.a.

Banco itaú chile s.a.

cgm leasing argentina s.a.

santander s.a.

pnc Bank n.a.

39

365

13

10,928

6,445

848

10

–

–

18,648

–

ars

–

usD

usD

clp

–

mXn

usD

–

17.40%

–

liBor 6m + 2%

6.00%

4.70%

–

9.00%

liBor + 2%

–

177

–

10,444

5,664

893

–

3,682

1,402

22,262

(*)

(*)

(*)

Company lEndEr

amounTInTErEST raTECurrEnCyamounT

12.31.10 06.30.10

(*) variable rate.

(*)

(*)

(*)

98 TEI&C S.a.



Current

coinfer

coinfer

coinfer

tearg

tearg

tearg

tearg

tearg

tearg

tearg

teBra

teBra

tmr

sidernet s.a.

sidernet s.a.

prestaciones globales

siderúrgicas s.a.i.f.

prestaciones globales

siderúrgicas s.a.i.f.

tenco

tenco

techi

techint s.a.c.

techint s.a.c.

teuru

teuru

sidernet mexicana s.a. de c.v.

temeX

temeX

other

Total Current Borrowings




BBva Banco francés s.a.




Banco galicia s.a. (new york)

hsBc Bank argentina s.a.

santa maría s.a.i.y f.

Banco itaú s.a.

pnc Bank n.a.

BBva Banco francés s.a.


cgm leasing argentina s.a.

santa maría s.a.i.y f.

agrupación fdo. copartic. financ. ace


caterpillar leasing chile s.a.

Banco itaú chile s.a.

hsBc Bank perú s.a.

Banco internacional del perú s.a.

– interbank

hsBc Bank (uruguay) s.a.

crédit uruguay Banco s.a.

Banco nacional de méxico s.a.

Banco nacional de méxico s.a.

santander s.a.

13

–

–

32

1,166

440

27

–

220

2,176

–

–

251

411

211

39

29

273

1,531

136

220

71

600

284

42

5,018

5,015

1,103

19,308

ars

ars

ars

–

usD

–

ars

usD

usD

–

Brl

usD

–

ars

usD

–

–

usD

usD

chl

–

usD

–

–

mXn

usD

–

–

17.40%

20.00%

17.40%

–

liBor 6m + 2%

–

14.00%

2.50%

8.75%

–

12.96%

liBor + 2%

–

14.00%

12.80%

–

–

liBor 6m + 2.5%

6.00%

4.70%

–

7.00%

–

–

liBor 6m + 2.65%

2.95%

–

–

31

11

119

–

1,111

–

26

4,940

61

–

3,002

410

–

153

97

–

–

141

1,574

218

–

15

–

–

2,789

5,017

–

220

19,935

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

Company lEndEr

amounTInTErEST raTECurrEnCyamounT

12.31.10 06.30.10

(*) variable rate. note: ars: argentine peso, mXn: mexican peso, Brl: Brazilian real, chl: chilean peso




financial leases

other borrowings

Total Borrowings

Interest to be accrued

financial leases

other borrowings

Total Borrowings

Interest to be accrued

251

3,340

3,591

125

207

2,866

3,073

165

175

5,465

5,640

70

217

2,548

2,765

49

–

6,091

6,091

–

37

6,684

6,721

–

228

3,162

3,390

375

414

2,565

2,979

388

613

19,322

19,935

708

1,341

17,967

19,308

713

–

–

–

–

–

–

–

–

239

3,311

3,550

253

400

2,710

3,110

276

wIThouT duE daTE

wIThouT duE daTE

1 yEar or lESS

1 yEar or lESS

1 - 2 yEarS

1 - 2 yEarS

2 - 3 yEarS

2 - 3 yEarS

3 - 4 yEarS

3 - 4 yEarS

4 - 5 yEarS

4 - 5 yEarS

ovEr 5 yEarS

ovEr 5 yEarS

The maturity of borrowings is as follows:

The fair value of borrowings equals their carrying amount, as the impact of discounting is not significant.

12.31.10

06.30.10

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:

deferred income tax assets

teBra

temeX’s subsidiaries

tenco’s subsidiaries

other

deferred income tax liabilities

tearg

tenco’s subsidiaries

temeX‘s subsidiaries

fepsa

other

51,615

10,405

215

597

62,832

(6,629)

(6,985)

(3,834)

(10,040)

(2,324)

(29,812)

36,639

11,176

–

414

48,229

(14,959)

(7,160)

(7,494)

(9,867)

(3,504)

(42,984)

12.31.10 06.30.10




At December 31, 2010 and June 30, 2010 the deferred tax balance is originated by the following items:

deferred income tax assets

tax-loss carry-forwards

provisions

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

deferred income tax liabilities

committed investment fepsa

pp&e

exchange differences

Deferred income/construction contracts

pp&e revaluation

inventories

other

Subtotal

net deferred income tax assets

61,669

31,721

1,891

951

1,075

892

98,199

12,379

1,146

–

17,697

28,030

2,579

3,348

65,179

33,020

54,914

37,997

2,705

1,308

353

1,065

98,342

11,970

1,436

349

41,493

31,741

2,731

3,377

93,097

5,245

notes 12.31.10 06.30.10

4

102 TEI&C S.a.



The evolution of net deferred income tax asset / (liability) during the six-month period/year is as follows (*):



pp&e revaluation (net)

income statement credit / (charge)


5,245

1,157

–

26,618

33,020

34,525

6,945

(20,140)

(16,085)

5,245

4

notes 12.31.10 06.30.10

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

Deferred tax liabilities to be recovered within 12 months

Deferred tax liabilities to be recovered after more than 12 months

net deferred income tax assets

10,697

87,502

(13,491)

(51,688)

33,020

21,069

77,273

(26,344)

(66,753)

5,245

12.31.10 06.30.10

(*) see note 2.a.




The evolution of deferred income tax assets and liabilities during the six-month period is as follows (*):

Beginning of the period


income statement charge / (credit)

End of the period




End of the period

1,418

(57)

606

1,967

5,162

28

(696)

4,494

98,342

1,727

(1,870)

98,199

93,097

570

(28,488)

65,179

2,705

247

(1,061)

1,891

31,741

68

(3,779)

28,030

37,997

877

(7,153)

31,721

41,493

613

(24,409)

17,697

54,914

660

6,095

61,669

11,970

(139)

548

12,379

1,308

–

(357)

951

2,731

–

(152)

2,579

Tax-loSS Carry-

forwardS

CommITTEd InvESTmEnT

fEpSa

dEfErrEd Tax aSSETS

dEfErrEd Tax lIaBIlITIES

provISIonS

dEfErrEd InComE/ConSTruCTIon

ConTraCTS

dEfErrEd CoSTS/ConSTruCTIon

ConTraCTS

pp&E rEvaluaTIon

advanCES from

ClIEnTS

InvEnTorIES

oThErS

oThErS

ToTal

ToTal

(*) see note 2.a.

104 TEI&C S.a.



The evolution of deferred income tax assets and liabilities during the previous year is as follows (*):




End of the year



pp&e revaluation


End of the year

2,605

512

(1,699)

1,418

4,432

419

–

311

5,162

94,299

4,264

(221)

98,342

59,774

(2,681)

20,140

15,864

93,097

5,199

386

(2,880)

2,705

17,414

(928)

20,140

(4,885)

31,741

40,284

170

(2,457)

37,997

23,874

(1,761)

–

19,380

41,493

44,908

3,191

6,815

54,914

11,760

(411)

–

621

11,970

1,303

5

–

1,308

2,294

–

–

437

2,731

Tax-loSS Carry-

forwardS

CommITTEd InvESTmEnT

fEpSa

dEfErrEd Tax aSSETS

dEfErrEd Tax lIaBIlITIES

provISIonS

dEfErrEd InComE/ConSTruCTIon

ConTraCTS

dEfErrEd CoSTS ConSTruCTIon

ConTraCTS

pp&E rEvaluaTIon

advanCES from

ClIEnTS

InvEnTorIES

oThErS

oThEr

ToTal

ToTal

(*) see note 2.a.




The tax loss carry-forwards mature as detailed below:

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Without maturity

2

37

81

120

4,269

3,009

21,203

35,356

22,880

10,856

141,536

239,349

2

38

82

1,302

3,129

89

20,463

33,272

21,716

32,203

108,049

220,345

yEar 12.31.10 06.30.10

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.

TradE and oThEr payaBlES

non-Current

trade payables

social security contributions

Total non-Current Trade and other payables

Current

trade payables

social security contributions

amounts due to related parties

other payables

Total Current Trade and other payables

20

25,258

25,278

145,910

85,181

237

1,792

233,120

467

21,849

22,316

149,444

91,508

4,120

1,799

246,871

24

notes 12.31.10 06.30.10


Total Trade and other payables


Total Trade and other payables

–

–

959

959

6,918

6,918

4,054

4,054

–

–

7,065

7,065

233,120

233,120

246,871

246,871

14,191

14,191

8,110

8,110

4,169

4,169

2,128

2,128

wIThouT duE daTE

wIThouT duE daTE

1 yEar or lESS

1 yEar or lESS

1 - 2 yEarS

1 - 2 yEarS

2 - 3 yEarS

2 - 3 yEarS

3 - 4 yEarS

3 - 4 yEarS

ovEr 4 yEarS

ovEr 4 yEarS

The maturity of trade and other payables is as follows:

12.31.10

06.30.10




noTE 17.

oThEr lIaBIlITIES

non-Current

provisions

advances received on construction contracts


other liabilities

Total non-Current other liabilities

Current

provisions

advances received on construction contracts

advances received on construction contracts from related parties


other liabilities and provisions

Total Current other liabilities

23,748

1,634

696

15,378

41,456

14,948

48,699

117

668

12,623

77,055

26,332

–

748

9,392

36,472

14,607

81,677

115

1,000

5,390

102,789

18

24

18

24

24

notes 12.31.10 06.30.10

108 TEI&C S.a.



noTE 18.

provISIonS

The evolution of provisions during the six-months period/ year is as follows (*):



reversal

additions

used

End of the period



reversal

additions (a)

used

End of the period

9,257

637

(2,716)

81

(6)

7,253

3,733

(12)

(179)

19

–

3,561

1,281

927

(1,197)

516

(561)

966

3,586

–

–

10

–

3,596

6,533

330

(1,516)

1,348

(342)

6,353

1,046

12

(671)

223

–

610

9,261

101

(532)

1,520

(1,174)

9,176

6,242

–

–

1,000

(61)

7,181

26,332

1,995

(5,961)

3,465

(2,083)

23,748

14,607

–

(850)

1,252

(61)

14,948

12.31.10

laBor TaxES oThEr ToTalCIvIlS

non-Current

Current

(*) see note 2.a.

(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).






reversal

additions

used

End of the year



reversal

additions (a)

used

End of the year

7,970

468

(555)

1,181

193

9,257

4,459

(16)

(1,500)

790

–

3,733

5,061

394

(5,118)

1,270

(326)

1,281

3,586

–

–

–

–

3,586

6,975

138

(2,408)

3,647

(1,819)

6,533

1,625

14

–

960

(1,553)

1,046

11,107

5

(2,000)

2,290

(2,141)

9,261

630

–

–

6,137

(525)

6,242

31,113

1,005

(10,081)

8,388

(4,093)

26,332

10,300

(2)

(1,500)

7,887

(2,078)

14,607

06.30.10

laBor TaxES oThEr ToTalCIvIlS

non-Current

Current

(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.



(*) see note 2.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:

The amounts recognized in the consolidated income statement are as follows (*):

present value of unfunded obligations

costs for services rendered in the past not recorded

unrecognized actuarial losses

liability in the consolidated statement financial position

current service cost

interest cost

net actuarial (gains) losses recognized in the six-month period/year

amortization of costs for services rendered in the past not recorded

Total included in labor costs

32,389

(1,089)

(9,127)

22,173

1,368

2,450

1,385

332

5,535

27,033

(1,251)

(7,907)

17,875

2,201

2,833

879

515

6,428

12.31.10 06.30.10

12.31.106 months

06.30.1012 months




The amounts and movements in the liabilities recognized in the consolidated statement financial position are determined as follows (*):

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.



transfers and new participants of the plan

total expense

services rendered in the past not recorded

contributions paid


17,875

(96)

(47)

5,535

(264)

(830)

22,173

13,005

(387)

(315)

6,428

773

(1,629)

17,875

12.31.10 06.30.10

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).

(*) see note 2.a.

112 TEI&C S.a.



noTE 20.

parTICIpaTIon In JoInT vEnTurES

The Company’s subsidiaries were part of different JVs which also perform engineering, procurement and

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:

techint cía. técnica internacional s.a.c.i. - panedile

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)


unión transitoria de empresas - proyecto: expansión

veladero (1)

consórcio techint confab umsa - lot i tanks refinaria do

nordeste, abreu e lima (rnest) (2)

26,071

17,248

1,162

588

1,998

2,677

136,741

75.00%

65.00%

60.00%

50.00%

50.00%

50.00%

41.00%

38,150

1,571

19

78

9,121

453

68,449

37,339

16,067

728

181

9,341

2,634

2,459

26,820

1,580

236

88

2,250

518

82,551

75.00%

65.00%

60.00%

50.00%

50.00%

50.00%

41.00%

12.31.10

ToTal Jv’S lIaBIlITIES

ToTal Jv’S aSSETS

% of ownErShIp


% of ownErShIp

ToTal Jv’S aSSETS

maIn JoInT vEnTurES

06.30.10




7,266

196

54,574

16,946

13,448

17,097

13,003

–

70

26,774

3,093

10,968

174

46,734

10,518

10,425

2,142

11,105

1,452

1,679

3,631

8,485

50.00%

50.00%

50.00%

50.00%

50.00%

50.00%

60.00%

50.00%

50.00%

50.00%

50.00%

12.31.10


ToTal Jv’S aSSETS

% of ownErShIp


% of ownErShIp

ToTal Jv’S aSSETS

maIn JoInT vEnTurES (ConT’d.)

(1) controlling interest through tearg.(2) controlling interest through teBra.(3) controlling interest through tenco.(4) controlling interest through temeX.

06.30.10

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)

consorcio andrade gutierrez - techint (te - ag) (2)

aBB lummus techint trinidad Joint venture - gasoline

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)

7,868

–

27,702

7,594

11,825

16,759

5,629

–

44

11,456

5,416

125,798

–

12,462

84,598

9,834

2,032

3,794

2

–

60

6,830

50.00%

50.00%

50.00%

50.00%

50.00%

50.00%

60.00%

50.00%

50.00%

50.00%

50.00%

114 TEI&C S.a.



The following balances represent the JVs results at December 31, 2010 and June 30, 2010:

techint cía. técnica internacional s.a.c.i. - panedile

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)


unión transitoria de empresas - proyecto: pascua lama (1)


unión transitoria de empresas - proyecto: expansión

veladero (1)

consórcio techint confab umsa - lot i tanks refinaria do

nordeste, abreu e lima (rnest) (2)

75.00%

65.00%

60.00%

50.00%

50.00%

50.00%

41.00%

(70)

(1,000)

(204)

(13)

606

46

44,176

11,258

(2,200)

(117)

(572)

1,229

2,625

17,146

75.00%

65.00%

60.00%

50.00%

50.00%

50.00%

41.00%

12.31.106 months (*)

Jv’S rESulTS

% of ownErShIp

Jv’S rESulTS

% of ownErShIp

maIn JoInT vEnTurES

06.30.1012 months (*)




The following balances represent the JVs results at December 31, 2010 and June 30, 2010:

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)

consorcio andrade gutierrez - techint (te - ag) (2)

aBB lummus techint trinidad Joint venture - gasoline


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)

50.00%

50.00%

50.00%

50.00%

50.00%

50.00%

60.00%

50.00%

50.00%

50.00%

50.00%

30,070

(50,014)

(278)

15,878

(1,044)

(673)

1,360

–

–

710

(284)

10,542

78,316

2,352

4,806

(1,805)

(486)

4,905

180

1,595

114,489

(2,017)

50.00%

50.00%

50.00%

50.00%

50.00%

50.00%

60.00%

50.00%

50.00%

50.00%

50.00%

12.31.106 months (*)

Jv’S rESulTS

% of ownErShIp

Jv’S rESulTS

% of ownErShIp

maIn JoInT vEnTurES (ConT’d.)

06.30.1012 months (*)

(1) controlling interest through tearg.(2) controlling interest through teBra.(3) controlling interest through tenco.(4) controlling interest through temeX.

(*) see note 2.a.

116 TEI&C S.a.



noTE 21.

ConTIngEnCIES and CommITmEnTS

a. guarantees anD BonDs granteD

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

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.

As of December 31, 2010 and June 30, 2010, TEI&C issued the following guarantees on behalf of other companies, as follows:

granted in favor of:

sidor c.a.

Barrick explotaciones arg. s.a.

caterpillar financial services corporation

siderca s.a.i.c.

tecgas n.v.

tecpetrol internacional s.a.

tecpetrol internacional s.l.

aBB lummus global overseas corporation

aBB lummus global inc.

Jgc arabia limited

Jgc corporation

minera panama s.a.

anglo american sur s.a.

Total

10.9

23.0

–

0.8

2.9

5.7

1.2

7.0

9.5

18.4

30.1

36.0

121.9

267.4

10.9

23.0

0.3

0.8

–

–

–

7.0

9.5

18.4

30.1

–

116.2

216.2

in millon of usD 12.31.10 06.30.10




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




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.

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

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).

noTE 23.

dISConTInuEd opEraTIonS

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 state-owned 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.

analysis of the result of discontinued operations:

cost of sales

gross loss

general and administrative expenses


operating (loss) / profit

financial results, net

results before income tax

income tax

results from discontinued operations

(43)

(43)

(172)

6

(209)

605

396

–

396

(494)

(494)

(1,173)

13,969

12,302

(2,135)

10,167

(4,931)

5,236

notes 12.31.106 months (*)

06.30.1012 months (*)

(*) see note 2.a.

26

26

28

27

29




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.

non-Current assets

trade receivables from related parties

other receivables from related parties

Current assets

trade receivables

fluor techint s.r.l. construcción y servicios limitada – chile


Trade receivables from associated parties

trade receivables from related parties

other receivables from related parties

non-Current liabilities

other liabilities due to related parties

Current liabilities

advances received on construction contracts from related parties

other liabilities due to related parties

trade and other payables due to related parties

Borrowings from related parties

71

8,826

1,139

3,246

4,385

31,775

4,891

696

117

668

237

–

59

9,494

711

1,699

2,410

26,067

2,090

748

115

1,000

4,120

2,244

8

8

8

8

8

17

17

17

16

14

12.31.10notes 06.30.10

122 TEI&C S.a.



transactions With associateD parties

transactions With relateD parties others than

the parent company

sales of goods and services

fluor techint s.r.l. construcción y servicios limitada - chile

sales of goods and services

purchases of goods and services

3,970

125,950

255

3,363

191,206

6,773

(*) see note 2.a.

12.31.106 months (*)

06.30.1012 months (*)

12.31.10(6 months) (*)

06.30.1012 months (*)

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.




noTE 25.

SuBSIdIarIES

B.v. de nieuwe Weg

Bvt lng costa azul, s. de r.l. de c.v.

caminos del oeste s.a.

carbonser, s.a. de c.v.

carbontec, s.a. de c.v.

cimimontubi s.a.

coincar s.a.

compañía interamericana de trabajos civiles comintrac s.a.

compañía inversora ferroviaria s.a.i.f.

constructora mexicana electromecánica y de instrumentación, s.a. de c.v.

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.

elina sureste, s.a. de c.v.

elinatech, s.a. de c.v.

energía tamaulipas s.a. de c.v.

ferroexpreso pampeano s.a.c.

fidelis management s.a.

flinwok s.a.

mexcarbón, s.a. de c.v.

nitroelina, s.a. de c.v.

norgas s.a.

preglosid s.l.u.

prestaciones globales siderúrgicas s.a.i.f.

saudi techint ltd.

servicios siderúrgicos sersisa, s.a.

servicios y prestaciones techint funchal - serviços, comércio e gestão de projectos lda.

sici - servicios de ingeniería y construcciones industriales s.a. de c.v.

sidernet s.a.

sidernet de venezuela c.a.

sidernet mexicana s.a. de c.v

socominter sociedade comercial internacional ltda.

tanks technologies, s.a. de c.v.

100.00%

50.00%

(1)

50.00%

50.00%

100.00%

65.00%

100.00%

77.14%

100.00%

99.86%

51.00%

100.00%

50.00%

53.00%

(3)

100.00%

(4)

100.00%

100.00%

50.00%

70.00%

50.00%

100.00%

100.00%

60.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

51.00%

holland

mexico

argentina

mexico

mexico

venezuela

argentina

ecuador

argentina

mexico

colombia

mexico

mexico

mexico

mexico

mexico

mexico

argentina

panama

uruguay

mexico

mexico

argentina

spain

argentina

saudi arabia

venezuela

portugal

mexico

argentina

venezuela

mexico

Brazil

mexico

100.00%

50.00%

(1)

50.00%

50.00%

100.00%

65.00%

100.00%

77.14%

100.00%

99.86%

51.00%

(3)

50.00%

(3)

-

100.00%

(4)

100.00%

100.00%

50.00%

70.00%

50.00%

100.00%

100.00%

60.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

51.00%

12.31.10 (*)

% of owNersHip6.30.10 (*)

% of owNersHipCounTryCompany

(2)

(2)

(2)

(6)

124 TEI&C S.a.



12.31.10 (*)

% of owNersHip6.30.10 (*)

% of owNersHipCounTry

(*) 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.

techint chile s.a.

techint compañía técnica internacional s.a.c.i.

techint compañía técnica internacional s.a.c.i.

techint compañía técnica internacional s.a.

techint construction limited

techint e&c, s.a. de c.v.

techint engenharia e construção s.a.

techint e&c, inc.

techint international construction corp. (tenco)

techint ingeniería y construccion Bolivia s.a.

techint ingeniería y construcciones, s.l.u.

techint inversiones s.a.i.f.

techint nigeria limited

techint s.a.c.

techint, s.a.

techint, s.a. de c.v.

techint, s.a. de c.v.

techint, s.a.

techint, s.a.

techint servicios, s.a. de c.v.

tecnomatter instalaciones y construcciones s.a.i.f.

tecnomatter s.a. de c.v.

tecnopower s.a de c.v.

terminales portuarias del pacífico, s.a.p.i. de c.v.

tgt de méxico, s.a. de c.v.

100.00%

100.00%

100.00%

100.00%

–

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

(3)

66.66%

(5)

(5)

chile

argentina

uruguay

venezuela

canada

el salvador

Brazil

canada

Bahamas

Bolivia

spain

argentina

nigeria

peru

guatemala

honduras

mexico

nicaragua

panama

mexico

argentina

mexico

mexico

mexico

mexico

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

–

100.00%

–

–

Company

(5)




(*) see note 2.a.

noTE 26.

CoST of SalES and ExpEnSES By naTurE

labor costs

taxes, rates and contributions

fees and technical advice

sub-contract for services

purchases of material and supplies

pp&e depreciation

intangible assets amortization

Work structure expenses

office structure expenses

participation in Jv balances

unallocated costs

Subtotal

Discontinued operations (see note 23)


Total June 30, 2010

589,634

29,010

51,748

219,034

247,311

48,033

812

27,065

58,892

53,481

37,880

1,362,900

(1,667)

–

1,361,233

3,386

680

543

2,381

3

–

–

14

1,400

–

892

9,299

–

9,299

9,944

313,973

6,525

10,867

107,068

138,414

18,659

108

14,476

14,397

21,340

16,384

662,211

(43)

662,168

1,225,766

41,326

3,734

9,832

5,839

985

2,006

352

1,270

5,693

–

5,931

76,968

(172)

76,796

125,523

358,685

10,939

21,242

115,288

139,402

20,665

460

15,760

21,490

21,340

23,207

748,478

(215)

748,263

–

SEllIng ExpEnSES

CoST of SalES

gEnEral and admInISTraTIvE ExpEnSES

12.31.106 months (*)

06.30.1012 months (*)

126 TEI&C S.a.



(*) see note 2.a.

noTE 27.

fInanCIal rESulTS

Income

interests and indexation

Derivate financial instruments

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.

holding results

other


Costs

interests and indexation

net foreign exchange transaction

Derivate financial instruments

holding results

comissions

other


3,166

–

702

713

(52)

4,529

(759)

3,770

(2,487)

(2,053)

–

–

(902)

(83)

(5,525)

154

(5,371)

10,723

586

1,600

2,870

26

15,805

(6,687)

9,118

(7,344)

(6,832)

(304)

(101)

(3,648)

(1,166)

(19,395)

8,822

(10,573)

12.31.106 months (*)

06.30.1012 months (*)




(*) see note 2.a.

(*) see note 2.a.

noTE 28.

oThEr opEraTIng rESulTS

noTE 29.

InComE Tax ExpEnSE

gain from the sale of pp&e

impairment loss

net result for provisions for legal claims and contingencies

other


current income tax

Deferred income tax (see note 15)


4,727

(2,430)

(249)

(290)

1,758

(6)

1,752

(15,805)

26,618

10,813

–

10,813

13,399

(5,701)

601

744

9,043

(13,969)

(4,926)

(45,388)

(16,085)

(61,473)

4,931

(56,542)

12.31.106 months (*)

12.31.106 months (*)

06.30.1012 months (*)

06.30.1012 months (*)

128 TEI&C S.a.



(*) see note 2.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

provisions for deferred tax assets

recognition of deferred tax assets

tax benefit arising from the reversal of impairment of net operating losses recognized in prior years

pp&e

tax-deductible interest on own capital

non-deductible expenses

other, net

Income Tax

(9,327)

926

(349)

332

(1,116)

14,512

–

1,057

1,200

640

2,938

10,813

(60,066)

1,153

4,180

544

(7,765)

–

2,514

(1,410)

5,582

(2,944)

(3,261)

(61,473)

12.31.10 06.30.10




noTE 30.

maIn ConTraCTS In progrESS

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)

loops tgn - stage ii

escobar cardales lng gas pipeline

Bolivia

third processing train of the sábalo gas treatment plant

margarita project

peru

south loops - early Works

camisea pipeline maintenance - stage i

camisea pipeline maintenance - stage ii

Chile

construction of sea Water Drive pipeline- minera esperanza

minera escondida limitada service of equipment and

installation maintenance

replacement of mineral pipeline and reclaimed Water

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

new maldonado sewage system

ciudad de la costa Drainage system

387

113

110

79

20

18

88

80

63

152

126

144

58

180

48

15

9

37

20

8%

98%

31%

6%

34%

10%

69%

–

44%

–

–

100%

47%

56%

–

76%

88%

34%

1%

3%

95%

–

–

–

–

3%

–

–

–

–

67%

35%

11%

–

18%

10%

20%

0%

368

114

111

–

–

–

87

–

63

152

–

133

51

156

48

15

8

37

20

(1)

12.31.10

phySICal progrESS

phySICal progrESS

ToTal ConTraCT amounT (uSd mIllIon)


CounTry / work

06.30.10

130 TEI&C S.a.



12.31.10

phySICal progrESS

phySICal progrESS



CounTry / work

06.30.10

Brazil

gasoline unit of president Bernardes de cubatão refinery

(rpBc)

Diesel unit of landulpho alves - mataripe refinery (rlam)

oil and Water storage

tanks refinaria do nordeste, abreu e lima (rnest)

retarded coke unit - complexo petroquímico do

rio de Janeiro (comperJ)

mexico

slt 1125 Distribution overhead transmission line - stage ii

slt 1119 transmission and transformation of the southeast

Central america & The Caribbean

gasoline optimization program upgrade project for

petroleum company of trinidad and tobago

siepac substations

siepac i

siepac ii

96%

71%

52%

5%

98%

100%

99%

77%

81%

77%

400

875

292

1,180

46

92

330

43

141

55

92%

49%

30%

1%

67%

90%

94%

72%

74%

64%

380

782

200

1,058

46

91

318

43

139

57

(2)

(3)

(2)

(4)

(2)

ref:(1) the company’s participation is 75%.(2) the company’s participation is 50%.(3) the company’s participation is 60%.(4) the company’s participation is 43%.




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

TEI&C S.a. Board of dIrECTorS’ rEporT and ConSolIda TEd...

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