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TEI&C S.A.

Annual Report and Consolidated Financial Statements


as of June 30, 2010

TEI&C S.A.

Annual Report and Consolidated Financial Statements


as of June 30, 2010

4 | TEI&C S.A.

The company

PERU LNG Project, Peru. Construction of a 408 km 34 gas pipeline and the respective facilities.

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TEI&C S.A. (TEI&C) generates value to its clients and shareholders by providing design, procurement, construction and management services to develop and execute major engineering and construction projects. Due to its wide experience in the market, it is capable of developing high complexity projects, from basic design to execution, taking care of the environment and the well-being of the communities. Nowadays, the Company provides services to the following market segments: Oil & Gas Upstream, Energy, Industrial Plants, Oil Refineries, Mining, and Major Civil and Architecture Works. TEI&C develops its projects under ISO 9001 standards, thus assuring the quality required by the client.

Revenue 09 - 10 by business segment

16% 7% 3%

11%

Energy Iron & Steel and others industries Oil & Gas Pipelines Mining

27%

33%

Others

Revenue 09 - 10 by geographic area

29%

21%

Argentina Brazil Peru Mexico Central America and Caribbean Canada Chile Others

3%

20% 4% 6% 14%

With the aim of providing high impact integral solutions, the Company relies on highly trained human resources, state-of-the-art engineering and constructions techniques, a global network of suppliers and well-proven management skills.

9%

USD millions

Personnel
07-08 997.6 87.5 9% 21.1 372.7 6% 08-09 1,598.4 211.6 13% 171.5 484.9 35% 09-10
21,036

Revenue

Key gures Revenue EBITDA EBITDA % Net Income Equity with Min. Interest ROE

1,530.3 213.6 14% 114.4 605.8 19%


07-08

20,603

20,636

1,598

1,530

998

08-09

09-10

07-08

08-09

09-10

Index

09 09 12 15 17 22 24 25 28 30 31 33 34 38 40 104

Board of Directors Report Overview of the Year Major Works in Progress per Country Current Structure Economic and Financial Information Prospects for Fiscal Year 2010-2011 Board of Directors Legal Information Report of the Auditors Consolidated Statement of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements TEI&C and subsidiaries activities for the period 2009-2010

8 | TEI&C S.A.

Atucha II Project, Lima, Argentina. Engineering Services, Supplies and Mechanical Assembly at the Ancillary Building of the Reactor.

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Board of Directors Report

Overview of the year


During the fiscal year ended in June 2010, TEI&C and its subsidiaries recorded sales for USD 1.53 billion. The most significant projects were developed in Argentina, Brazil, Peru and Mexico. In addition, other important projects were developed in Bolivia, Chile, Central America and Canada by its subsidiaries, providing engineering, procurement, construction, operational and management services to a wide range of clients in the infrastructure, industrial and energy areas. Regarding the activities developed in the energy sector in Argentina, works at Los Caracoles Hydroelectric Station were completed for Energa Provincial Sociedad del Estado (EPSE) in the province of San Juan, and both generation units became operational in July and December 2009, respectively. In November 2009, a contract was executed with the same client for the construction of the Punta Negra dam, whose works started in January 2010. This is a project of a similar size as Los Caracoles, downstream such project. In addition, works were continued for the assembly of the piping system in the UKA building of Atucha II Nuclear Power Plant, for Nucleoelctrica Argentina S.A. In the mining area, the works regarding the extension of the Veladero Mine were completed and the Company continued with the detail engineering and procurement management works for the development of the Pascua Lama project. Both contracts are performed by Barrick Gold Corp. from Canada. Besides, in January 2010, the Company obtained the Acknowledgement of Completion for the engineering, procurement and construction management activities of the Pirquitas Mine Project, for Mina Pirquitas Inc. Argentine Branch, subsidiary of Silver Standard Resources Inc. from Canada.

10 | TEI&C S.A.

During the fiscal year ended in June 2010, TEI&C and its subsidiaries recorded sales for USD 1.53 billion.

In the oil & gas sector, in December 2009, an agreement was executed with Petrobras Bolivia for engineering, procurement and construction of the Third Processing Train of Sbalo Gas Treatment Plant, thus resuming activities in the Bolivian market. In Brazil, the Companys subsidiary Techint Engenharia e Construo S.A. (TEBRA) continued with the development of large projects for Petrobras. Progress was made in engineering, procurement and construction (EPC) activities at the Presidente Bernardes de Cubato Refinery, at Lot I Tanks of Refinaria do Nordeste (RNEST), and at the Landulpho Alves de Matarife Refinery (RLAM). In addition, TEBRA continued rendering maintenance and improvement services for the off-shore platforms at Maca Northeast and Marlim. During the fiscal year, this subsidiary was awarded the contract to develop EPC works in Complexo Petroquimico do Rio de Janeiro (COMPERJ). In turn, the project in Gasduc III was successfully completed, for Transportadora Associada de Gs TAG de Petrobras. In Peru, the Company maintained its leading position in the pipeline market by getting two new contracts Jungle Loops and the Addition of a fourth pump to the LNG transportation system while continuing to carry out other maintenance services. On the other hand, Peru LNG a 408 KM 34 gas pipeline was successfully completed in January 2010, Chiquintirca Gas Compression Plant was also accomplished by May 2010 while Loop de la Costa Gas Pipeline was finished by June 2010. All this contracts were executed for TGP . In Mexico, EPC works were finished concerning the Central Thermoelectric Plant of 750 MW, for Comisin Federal de Electricidad (CFE). Within the market of high voltage transmission lines and substations, the projects of SE 1125 Distribution-Second Phase and SLT 1119 for CFE were continued.

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In Chile, the Companys subsidiary Techint Chile S.A. was awarded the Plant Maintenance Service and Sea Water Drive Systems Construction Contract for Minera Escondida Limitada, as well as two contracts with Anglo American Sur S.A., and Engineering Services for Compaa Minera Casale. In Central America and the Caribbean, the Companys subsidiary Techint International Construction Corp. (TENCO) is carrying out, under an engineering, procurement, and construction management (EPCM) contractual arrangement, the Alky Acid Unit and Acid Regeneration Unit of the Gasoline Optimization Program Upgrade Project for Petroleum Company of Trinidad and Tobago (PETROTRIN). Additionally, the Companys subsidiary Techint S.A. de C.V. (TEMEX) continued working in the Sistema de Interconexin de Pases de America Central (SIEPAC Project), an EPC 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).

for Municipalidad de Maldonado, Corporacin Vial de Uruguay and Obras Sanitarias del Estado. Works in the iron & steel plants continued; for TenarisSiderca, and TerniumSiderar, in Argentina and for TerniumHylsa and TenarisTamsa in Mexico. In the area of steel & iron services, the Company, through its subsidiaries, continued rendering services of Heavy Duty Cleaning, Industrial Cleaning and Electromechanical Maintenance. In the engineering market, the following activities were carried out: concept, basic and detail engineering works; assistance for the development of technical specifications, and assessment of investment and site assistance projects for several clients, including Exxon Mobil, Repsol YPF Transportadora de Gas del Per (TGP) and , Pluspetrol Peru Corporation S.A. All these activities were undertaken recognizing the

In Canada, Techint E&C Inc. (TECAN) successfully completed the Alberta Clipper Project, a 345-km long pipeline. In the second part of the period, the Subsidiary has focused its efforts on developing activities in the Oil Sands and other oil & gas producing areas in Western Canada, bidding C and EPC projects for execution of pipelines and facilities in these areas belonging to clients such as Enbridge, CNRL, Suncor and Husky. In Saudi Arabia, the Companys subsidiary Saudi Techint Ltd. (SAUTEC) has successfully completed the subcontract it was working on, Nuayyim ASL Crude Increment Facilities Project, with Saudi Arabian Oil Co. as the final user. Meanwhile, the Project awarded last fiscal year, Tanajib-Manifa Water Pipeline, for JGC Corporation, is in full swing since last May 2010. In Uruguay, the Company keeps involved in different projects in the civil and water infrastructure sector,

importance of, and adhering to, the strict compliance of the rules and regulations which govern the protection of the environment, and in search of the constant improvement of safety & health and the continuous training of human resources.

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Major works in progress per country


TEI&Cs subsidiaries provide full engineering, procurement, construction, operational and

management services to develop and execute major engineering and construction projects. The main projects currently in progress are listed below.

Country

Project

Client

Contract total amount USD millions 368 236

Argentina

Punta Negra Engineering Services, Supplies and Mechanical Assembly at the Ancillary Building of the Reactor Pascua Lama(a) Veladero Mine(a) Works and Services in plants

Energa Provincial Sociedad del Estado (EPSE) Nucleoelctrica Argentina S.A. - Atucha II

Barrick Gold Corp. Barrick Gold Corp. Ternium - Tenaris COMPERJ Petroquimicos basicos Petroleo Brasileiro S.A. (Petrobras) Petroleo Brasileiro S.A. (Petrobras) Petroleo Brasileiro S.A. (Petrobras) ThyssenKrupp (C.S.A.)

136 54 59 (b) 1,058 782 380 200 3

Brazil

Unidad de Coque Retardado (COMPERJ) Diesel Unit of Landulpho Alves-Mataripe Refinery (RLAM)(a) Gasoline Unit of Pres. Bernardes de Cubato Refinery (RPBC) Lot I Tanks Refineria do Nordeste, Abreu e Lima (RNEST)(a) ThyssenKrupp Companhia Siderrgica do Atlantico

Canada

Canadian Mainline Pipeline Project (Alberta Clipper Project)(a)

Enbridge Pipelines Inc.

251

Central America and the Caribbean

Gasoline Optimization Program Upgrade(a) SIEPAC 1(a) SIEPAC 2 SIEPAC Substations

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. Anglo American Sur S.A. Minera Esperanza (Antofagasta Minerals S.A.) Compaa Minera Casale Minera Escondida Limitada

318 139 57 43 156 133 1 14 (b)

Chile

Replacement of Mineral Pipeline and Reclaimed Water System Esperanza Water Pipeline and Concentrate Pipeline Engineering Services for water and concentrate transportation system Mechanical Maintenance

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Country

Project

Client

Contract total amount USD millions 91 46 87 (b) 33 (b) 126 73 14

Mexico

SLT 1119 Transmission and Transformation of the Southeast (a) 195 SE 1125 Distribution (2 phase) Works and Services in plants Petacalco Project

Comisin Federal de Electricidad Comisin Federal de Electricidad Ternium Hylsa - TenarisTamsa Comisin Federal de Electricidad Compaa Operadora de Gas del Amazonas S.A. Transportadora de Gas del Per S.A. (TGP) Transportadora de Gas del Per S.A. (TGP)

Peru

Camisea Maintenance Jungle Loops - Early Works Expansion of LNG transportation system - Addition of fourth pump

Saudi Arabia Bolivia

Tanajib - Manifa Water Pipeline Third Processing Train of the Sabalo Gas Treatment Plant

JGC Corporation Petrobras Bolivia

48 87

Uruguay

Maldonado Effluents Sanitation of Ciudad de la Costa Road 18 Sanitation of Maldonado Bridge over Jose Ignacio Stream

Obras Sanitarias del Estado Obras Sanitarias del Estado Corporacin Vial del Uruguay (CVU) Obras Sanitarias del Estado Municipalidad de Maldonado

37 20 8 5 2

(a) Projects under a consortium. The amount corresponds to total contract amount at 100%. (b) The amount corresponds to annual estimated sales.

14 | TEI&C S.A.

Canada Pipelines Canadian Mainline Pipeline Project (Alberta Clipper Project) Mexico Iron & Steel Plants Ternium Plant in Monterrey Tenaris Plant in Veracruz Energy Central Expansion Petacalco SLT 1119 Transmission and Transformation of the Southeast 195 SE 1125 Distribution (2nd phase)

Central America and the Caribbean Oil & Gas Gasoline Optimization Program Upgrade Energy Siepac Lots I and II Siepac Substations Peru Pipelines Addition of a fourth pump Jungle Loops CAMISEA Pipeline Maintenance Bolivia Oil & Gas Third Processing Train for Sbalo Chile Mining Plant Maintenance Services Replacement of Mineral Pipeline Los Bronces Construction of Stations and Singular Points Los Bronces Pipelines Esperanza Water and Concentrate Pipelines Brazil Oil & Gas Gasoline Unit at RPBC Diesel Unit at RLAM Lot I Tanks at RNEST Coke Unit (COMPERJ) Uruguay Infrastructure Sanitation of Maldonado Maldonado Efuents Sanitation of Ciudad de la Costa Road 18 Bridge over Jose Ignacio Stream

Others-Arabia Pipelines Tanajib - Manifa Water Pipeline

Argentina Mining Pirquitas Mine Veladero Mine Pascua Lama Energy Atucha II Punta Negra Hydroelectric Station Iron & Steel Plants Ternium Plant in Campana Tenaris Plant in San Nicolas

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Current Structure
During the fiscal year ended June 30, 2010, TEI&C recorded the following changes in the participating interests of related companies in the engineering, construction and service business (see further detail in note 1 of the Financial Statements): In September 2009, the Company contributed to Techint Ingeniera y Construcciones S.L.U. (hereinafter, TIC) the direct participating interests it held as of such date in Argentine engineering and construction companies, 97.71% of the capital stock of Techint Inversiones S.A.I.F and 38.94% of the . capital stock and voting rights of Techint Compaa Tcnica Internacional S.A.C.I. Upon this transaction, TIC increased its capital stock, thus becoming also the European holding of this business by concentrating the operations in Argentina, Mexico, Canada and Central America. Throughout this fiscal year, the Mexican subsidiary Techint S.A. de C.V. (TEMEX) continued with transactions aimed at reorganizing its business areas. In August 2009, it transferred together with Constructora Mexicana Electromecnica y de Instrumentacin, 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 Mxico, S.A. de C.V. to companies of the energy sector of the Techint Group. After the recomposition of capital of Terminal Portuarias del Pacfico S.A.P de C.V. .I. (TPP), subsidiary of TEMEX Carbonser S.A. de C.V., TEMEX sold its whole participating interest. Finally, in June 2010, TEMEX acquired 25% of the shares of Sociedad Mexcarbn S.A. de C.V. and of Sociedad Carbonser, S.A. de C.V., since the relevant contract undertaking such purchase had been executed in November 2008. 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 three companies whose purposes had already been performed.

In March, Preglosid S.L.U. (PREGLOSID) subscribed and paid in a capital increase in its subsidiary Sidernet Mexicana S.A. de C.V. for USD 1,7 million. By mid-April 2010, TEI&C contributed to PREGLOSID the direct participating interest (97.50% of the capital stock) it held in the Argentine company Prestaciones Globales Siderrgicas S.A. Upon this transaction, PREGLOSID increased its capital stock, thus consolidating in its shareholders equity the transactions for the supply of steel and iron services recorded in Argentina, Mexico and Venezuela. In June 2010, the shareholders of the Argentine companies Tecnomatter Instalaciones y Construcciones S.A. and Sidernet S.A resolved a corporate reorganization, consisting in the capitalization of both companies, the spin off of Tecnomatter and the subsequent merge of the spin off with Sidernet, the latter becoming the successor for the supply of steel and iron services. 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. Therefore, the Board of Directors Meeting of TEI&C held on December 9, 2009, resolved that next December 31, 2010 will be the enforcement date.

16 | TEI&C S.A.

The family tree for TEI&C (including the most important companies) as of June 30, 2010, is as follows:
TEI&C S.A. (Uruguay)
100% 100%

PREGLOSID S.L.U. (Spain)


100%

Techint Ing y Const S.L.U. (Spain)


97.71%

BV de NIEUWE WEG (the Netherlands)


99.92%

Techint Inversiones S.A.I.F. (Argentina)


38.94% 53.68%

2.29% FLINWOK

4%

96%

100%

Techint S.A. de C.V. (Mexico)


97.5% 100% 99.999% 0.0001%

Techint Comp Tec Int S.A.C.I. (Argentina)

TEBRA (Brazil)
99.91%

Techint Int Const Corp (TENCO) (Bahamas)

Prest. Glob. Siderrgicas S.A.I.F. (Argentina)

Servicios Siderrgicos SERSISA S.A. (Venezuela)


100%

COMEI S.A. de C.V. (Mexico)

7.38% FLINWOK

SOCOMINTER (Brazil)

77.14% 22.86% Others

2.5% TEARG

Sidernet de Vz C.A. (Venezuela)


75% 25% 99% 1%

Cia. Inv. Ferroviaria S.A.I.F. (Argentina)


80%

0.09% TEI&C S.A.

97%

Sidernet S.A. (Argentina)

Sidernet S.A. de C.V. (Mexico)


60% 40% 99%

Techint S.A. (Guatemala)


1%

20% Others

Ferroexpreso Pampeano S.A. Conc (Argentina)

1.81% TEARG

1.19% FLINWOK

SICI S.A. de C.V. (Mexico)


60% 40%

Techint E&C S.A. de C.V. (El Salvador)


96% 4% 0.01% 99.99% 100%

Energ Tamaulipas S.A. de C.V. (Mexico)


100%

Techint S.A. de C.V. (Honduras)


98% 2% 23.12%

Techint S.A.C. (Peru)


76.88%

Flinwok S.A. (Uruguay)


100%

Techint E&C Inc. (Canada)


100%

Techint Servic S.A. de C.V. (Mexico)


99% 1%

Techint Chile S.A. (Chile)


50%

Techint Comp Tec Int S.A.C.I. (Uruguay)


96,94%

Techint S.A. (Panama)


37.84% 62.16% Others

Techint S.A. (Nicaragua)


65% 35% Others

Fluor Techint S.R.L. Const y Serv Ltda (Chile)


50% Others

Tecnomatter In y Cons S.A.I.F. (Argentina)

Costa Azul BMVT S.A. de C.V. (Mexico)


51%

Coincar S.A. (Argentina)


100% 100%

3.06% TEINVA

49% Others

Tanks Tech S.A. de C.V. (Mexico)


51% 50%

50% Others

TECHINT (Trinidad & Tobago Branch)


95%

TENCO (Colombia Branch)


60%

49% Others

Elina 406 S.A. de C.V. (Mexico)


50% 50%

MEXCARBON S.A. de C.V. (Mexico)

Techint Ing y Const S.A. (Bolivia)

Saudi Techint Ltd (Saudi Arabia)


40% Others

50% Others

BVT LNG Costa Azul S.R.L. (Mexico)


70%

CARBONSER S.A. de C.V. (Mexico)

2.5% TEINVA

2.5% TEI&C S.A.

30% Other OT

Nitroelina S.A. de C.V. (Mexico)

50% Others

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Economic and financial information


Summary of Income Statement
USD millions

June 30, 2010 Revenues from construction contracts and other services Cost of sales Gross profit General, administrative and selling expenses Other income and expenses, net Operating income Gain from the purchase and sale of shares and investments Financial results, net Result from investments in companies Income before income tax Income tax expense Net income from continuing operations Income / (Loss) from discontinued operations Net income for the year Attributable to Equity holder of TEI&C Non-Controlling interests 109.8 4.6 114.4 1,530.3 (1,225.7) 304.6 (134.9) (4.9) 164.8 0.3 (2.1) 2.7 165.7 (56.5) 109.2 5.2 114.4

June 30, 2009 1,598.4 (1,332.2) 266.2 (109.5) 1.0 157.7 10.7 21.2 (0.4) 189.2 (14.4) 174.8 (3.3) 171.5

162.0 9.5 171.5

The Companys very good performance during this fiscal year is reflected in its economic and financial position. Revenues of the fiscal year ended June 30, 2010 reached the sum of USD 1,530.3 million, representing a 4% decrease with respect to the previous fiscal year.

Gross margin reached USD 304.6 million, an increase of USD 38.4 million with respect to the previous fiscal year, growing from 17% to 20% on sales. EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) for this fiscal year amounted to a total of USD 213.6 million, representing 14% on sales, as compared to USD 211.6 million and 13% of the previous fiscal year, respectively.

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General, administrative and selling expenses, with respect to sales showed an increase, representing 9% with respect to 7% of the previous fiscal year, mainly originated by the escalation in the different markets where the Company operates. The other operating results have recorded a loss of USD 4.9 million, mainly due to a decreased value in some Property, Plant & Equipment as a result of the assessment performed by independent professionals.

Financial results showed a loss of USD 2.1 million, compared to the profit of USD 21.2 in the previous fiscal year, mainly due to exchange differences. Finally, net income was USD 114.4 million, representing 8% of revenues, as compared to the sum of USD 171.5 million and 11% in previous period, respectively.

Summary of Balance Sheet


USD millions

June 30, 2010 Non Current Assets Current Assets 399.7 804.2 1,203.9 Equity Shareholders Non-Controlling interests Non Current Liabilities Current Liabilities 577.7 28.1 113.8 484.3 1,203.9

June 30, 2009 369.8 802.0 1,171.8

450.2 34.7 91.9 595.0 1,171.8

TEI&Cs consolidated majority shareholders equity as of June 30, 2010 reaches USD 577.7 million as compared to USD 450.2 million at the beginning of the fiscal year. The increase of USD 127.5 million is mainly due to the income obtained, the revaluation of machinery, net of cash dividend distribution (USD 33 million).

Current liabilities, the decrease is due to a sharp decline in borrowings and trade and other payables. Thus, the Companys working capital, as of the end of the fiscal year, amounts to USD 319.9 million, representing an increase of USD 112.9 million with respect to fiscal year 2008/09. Within non-current assets and liabilities, there was

Current assets have recorded similar values to those of the previous fiscal year. With respect to

an increase mainly due to revaluation of property, plant and equipment and borrowings, respectively.

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Summary of Cash Flow Statement


USD millions

June 30, 2010 Net cash and cash equivalents at the beginning of the year Net cash generated by operating activities Net cash (used in) generated by 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 year 222.8 199.1 (27.0) (116.1) 56.0 3.6 282.4

June 30, 2009 131.0 101.4 37.4 (38.8) 100.0 (8.2) 222.8

As regards the financial situation, there was a cash and cash equivalents net increase of USD 59.6 million along the fiscal year, with a final balance of USD 282.4 million. TEI&Cs cash increased USD 199.1 million from its operating activities, which is mainly associated to the income for the period, net of the items that didnt generate cash movements and an increase in the working capital. Related to investment activities, there was a cash decrease of USD 27 million due to the purchases of fixed assets, net of proceeds from disposal of those assets. Regarding financing activities, the repayment of borrowings and the dividend distribution

(USD 33 million), mainly, generated an application of funds of USD 116.1 million. The main financial indicators are:

Indicators
June 30, 2010 Financial solvency Liquidity Indebtedness Gross margin 2.01 1.66 0.99 20% June 30, 2009 1.71 1.35 1.42 17%

All indicators are very satisfactory, and reveal TEI&Cs good performance in the execution of its operations.

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Health, Safety and Environment (HSE)


Techint has developed a preventive vision focused on a commitment to safety, occupational health, environmental protection and the welfare of communities. In this respect, the Integrated Management System (IMS) has proved to be suitable for a corporate management focused on prevention as to industrial safety, health and environmental protection. The system is focused on the identification of risks associated to the work developed by the Company, compliance with local laws, application of coherent preventive procedures for all the Companys units together with an ongoing and widespread training, and by innovating in methods such as behaviorbased safety and preventive safety observation at work (OST), the goals of which are focused on reducing sub-standard actions and conditions to prevent accidents.

The IMS is audited by Det Norske Veritas (DNV) and certified under international standards (ISO 14.001:2004 and OHSAS 18.001:2007). Regarding the latter, 21 million hours were devoted to pipeline works, 10 million hours to oil & gas services, 7 million hours to refineries and 5 million hours to industrial works without disabling accidents, in addition to the recognition for good performance in prevention by our leading clients, such as Barrick, Petrobras and Hunt Oil, and partners such as Fluor Daniel.

Quality
The Company is always seeking to constantly 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

To minimize the repetition of 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 Prevencin Preventive Actions Command Switchboard- PACS), with the basic goal of reducing occurrence of behaviors characterized by non-compliance with safe operating rules and practices, thus promoting a strong commitment of employees to become aware and internalize preventive conducts. This approach involves management and workers alike, as well as sub-contractors.

a special focus on the quality of the products and services provided. From our processes standpoint, we are clearly oriented to continuous improvement, paying special attention to efficiency, simplification of processes and value added in each of our operations. In the 2009 2010 period, we have completed the following actions: Substantial completion of the review and update of the Companys Documentary Database. Redefinition and establishment of the main Quality

Since its implementation, the IMS has resulted in the reduction of global accident rates (Frequency Rate and Seriousness Rate) by over 80%, and this shows a substantial improvement in preventive control in execution of works, as well as the acknowledgement of clients.

Indicators for products associated to the Projects developed by the Company. Quantitative and qualitative improvement of measurement of Clients Satisfaction in the different projects, by deeply focusing on the cross-sectional

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analysis of information obtained and on generating actions for improvement. 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 was recertified pursuant to ISO 9001:2008 of Quality Management Systems (certification in force since 1996). The Companys Management 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 our commitment to meet and exceed the expectations of all related stakeholders.

With a remarkable emphasis on development of technical and managerial competencies, during this fiscal year, the Company developed a training program that comprised different corporate levels. These actions allowed that over 3% of worked man-hours were devoted to training. The foundations of the training plan continued to be the Project Management Program, addressed to professionals in different areas of the Company with the potential required to hold key positions in project management, and the Young Professionals Program, seeking to speed up the insertion of newly graduated professionals in the business. Other programs are also worth mentioning, such as those addressed to supervisors of the Companys projects, as well as the external and in-house programs carried out in the Engineering Direction.

Human resources
Human resources management is based on the use of several tools enabling to draft, implement and follow up plans for personnel development and training. The long training cycles in this industry demand a strict planning in order to anticipate the skills that will be required to face business challenges. This planning is translated into recruitment, training and development plans involving all the Companys personnel. Thus, Techint seeks to have within the Company the talent required to take part in the projects submitted by our clients.

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The Company subsidiaries strategy is to focus on keeping an active presence in the market of large infrastructure, industrial and energy works, especially where this presence makes the difference due to our knowledge, expertise or track record.

Prospects for fiscal year 2010-2011


Although last years international crisis has not yet concluded and still affects the activity of the markets where the Company operates, we anticipate reasonable general perspectives since clients seem to have decided to continue with various investment projects. Against this backdrop, the Company subsidiaries strategy is to focus on keeping an active presence in the market of large infrastructure, industrial and energy works, especially where this presence makes the difference due to our knowledge, expertise or track record. Thus, we continue working to accompany our clients under the new market conditions, in order to offer creative alternatives that facilitate investment decision-making. These alternatives include the search for technical and financing strategies that may involve the multilateral lending agencies and export-promotion agencies of other countries, so as to work hand in hand with our clients from the initial stages of study of their investment projects. In the Oil & Gas sector, the Company is closely following the development of projects in Argentina, Brazil, Canada, Colombia, Mexico, Peru and Trinidad & Tobago. We foresee important opportunities for the execution of engineering and construction works in Oil and Gas Transportation Projects in Peru, Bolivia and Colombia (where we were recently awarded the engineering contract of OCENSAs pumping stations, the first one since the reopening of Bogotas business office), as well as in processing facilities such as petrochemical plants and refining in Brazil (Premium I and Premium II), Colombia, Peru and Trinidad & Tobago where we are planning to participate in the corresponding bidding processes. In Argentina a contract was signed after the end of the fiscal year for the construction of a new gas oil hydrotreatment (HTG) plant of La Plata refinery for YPF and the Company keeps ,

Annual Report | 23

its business activities for future undertakings. In Bolivia, the Company expects to quote several works for gas separation plants. Meanwhile, in Canada, it is majorly pursuing opportunities in two fields Pipelines (with projects out for bid from major clients such as Transcanada and Enbridge) where Techint will participate in the bidding process for the Canadian portion of Keystone, a liquids pipeline for Transcanada that runs from Hardisty in Alberta to facilities in Houston, TX. And Oil Sands where Techint has participated in bid processes for EPC thermal (in-situ) projects for Husky Energy; next year it is expected to participate in similar or minetype projects in the oil sands for Total, Statoil, CNRL among others. Regarding the Mining area, as the sector becomes stable and the prices of the main minerals recover and/or improve, we expect that the activities in several projects suspended because of the crisis will be resumed. In this case, we foresee important opportunities in copper and other mineral developments in Peru and Chile; carbon developments in Colombia; and in Brazil, Vale has strong expansion programs where we plan to bid. In Argentina, the Companys presence will be reinforced with the beginning of Stage III of the Argentine-Chilean bi-national project of Pascua Lama and the participation in the EPC activities at Ro Colorado Potassium Mine, a project in which the Company is working at an early stage. In the Infrastructure sector, the Company will continue analyzing several opportunities regarding energy projects and civil infrastructure. Such projects include San Carlos / Melo / Frontera High Voltage Line in Uruguay, as well as the water and sewage of Ciudad de la Costa in Canelones, recently awarded to our subsidiary by Intendencia Municipal de Canelones. In Brazil, we foresee high activity in this area, mainly in sanitation, urban transport system, railways, and ports; besides the urban infrastructure for sporting events taking place in 2014 and 2016.

In the Energy area, in Argentina, works will continue at the Punta Negra hydroelectric station and other products are being analyzed. After the end of this fiscal year, a contract was executed for a new stage in the Atucha II project, thus proving the Companys active involvement in the Argentine nuclear plan. In Mexico, the Company seeks to keep its current share in the Power Transmission and Distribution system of the Mexican market, with an active participation in this sector. At the beginning of the new fiscal year, the proposal of the KepcoSamsung-Techint consortium was signed with Comisin Federal de Electricidad for the Combined Cycle Power Plant North II project. The Company has also focused on the segment of engineering services which seems to be an interesting niche for development in the Mexican market, and has participated in bids submitted to private clients. The brief description above shows the Companys willingness and efforts to maintain its presence and leadership in the Latin American engineering and construction market, showing its skills in the completion of important projects of a multidisciplinary nature and its high compliance rate. This Board wishes to express its gratitude to all employees of TEI&C and its subsidiaries for the cooperation and effort shown in the project carried out during the fiscal year. We would also like to acknowledge financial institutions, suppliers, customers and sub-contractors for their trust, assistance and cooperation. The Board of Directors

24 | TEI&C S.A.

Board of Directors

President
Carlos Eduardo Bacher

Vice president
Eduardo Nicols Rocca Couture

Directors
Ricardo Pascale Mara Virginia Jubin Vrtiz Mario Osvaldo Lalla Luis Pablo Solari Damonte. Directors were appointed at the Regular Shareholders Meeting held on December 2, 2009. Officers were appointed at the Board of Directors Meeting held on that same date.

Consolidated Financial Statements | 25

Legal Information

Denomination: TEI&C S.A. Legal Address: La Cumparsita 1373 7th Floor Montevideo (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 Parent Company: Techint Limited Legal address: Equity Trust House 28-30 The Parade, JE4 8XY St. Helier, Jersey Channel Islands Parent Company activity: Investments Parent Company: Shares: 88.67% Votes: 88.67%

1 2

See note 14 to the consolidated financial statements UYU: Uruguayan Pesos

26 | TEI&C S.A.

Punta Negra Hydroelectric Station, San Juan, Argentina.

Consolidated Financial Statements | 27

30 | TEI&C S.A.

Consolidated Statement of Financial Position


at June 30, 2010 and 2009

All amounts in USD thousands

Notes Assets Non-current assets Property, plant and equipment Intangible assets Investments in associated companies Other investments Trade and other receivables Deferred income tax assets Current assets Inventories Derivative financial instruments Trade and other receivables Construction contracts work in progress Held - for - sale assets Other investments Cash and cash equivalents Total assets Equity and Liabilities Equity Capital and reserves attributable to the Company's equity holders Non-controlling interests Total equity Non-current liabilities Borrowings Deferred income tax liabilities Trade and other payables Other liabilities Current liabilities Borrowings Held - for - sale liabilities Trade and other payables Construction contracts work in progress Other liabilities Total liabilities Total equity and liabilities
The accompanying notes are an integral part of these consolidated financial statements.

June 30, 2010

June 30, 2009

4 5 6 7 8 16

309,723 2,662 1,389 6,774 38,480 40,735 399,763

254,376 2,479 355 6,076 41,340 65,139 369,765

9 12 8 11 7 13

35,848 366,953 116,731 67 1,010 283,567 804,176 1,203,939

27,752 5,265 458,091 83,350 4,287 158 223,140 802,043 1,171,808

577,642 28,134 605,776

450,175 34,750 484,925

15 16 17 18

18,648 35,490 23,211 36,472 113,821

6,658 30,614 17,862 36,780 91,914

15 17 18

19,308 269,906 92,339 102,789 484,342 598,163 1,203,939

98,463 3,603 304,131 94,542 94,230 594,969 686,883 1,171,808

Consolidated Financial Statements | 31

Consolidated Income Statement


for the years ended June 30, 2010 and 2009

All amounts in USD thousands

Notes Continuing operations Revenues from construction contracts and other services Cost of sales Gross profit General and administrative expenses Selling expenses Other income and expenses, net Operating income Gain from the purchase and sale of shares and investments Financial income Financial costs Result from investments in associated companies Income before income tax Income tax expense Income from continuing operations Discontinued operations Income / (Loss) from discontinued operations Net Income for the year (1) (1) Attributable to: Equity holders of the Company Non - controlling interests Net Income for the year
The accompanying notes are an integral part of these consolidated financial statements.

June 30, 2010

June 30, 2009

1,530,337 27 (1,225,766) 304,571 27 27 29 (124,982) (9,944) (4,851) 164,794 246 28 28 6 9,118 (11,189) 2,724 165,693 30 (56,542) 109,151

1,598,409 (1,332,196) 266,213 (101,903) (7,594) 1,008 157,724 10,678 53,191 (32,033) (384) 189,176 (14,374) 174,802

24

5,236 114,387

(3,251) 171,551

109,812 4,575 114,387

162,038 9,513 171,551

32 | TEI&C S.A.

Gasoline Optimization Program Upgrade Project, Trinidad and Tobago. As of June 30, 2010, the physical progress rate was 94%.

Consolidated Financial Statements | 33

Consolidated Statement of Comprehensive Income


for the years ended June 30, 2010 and 2009

All amounts in USD thousands

Notes Net Income for the year Other comprehensive income: Gain on revaluation of PP&E Decrease of revaluation of PP&E Depreciation of reserve for revaluation surplus Decrease of reserve for revaluation surplus due to PP&E disposal Currency translation differences Cash flow hedge Other comprehensive income for the year net of tax Attributable to: Equity holders of the Company Non - controlling interests
12 4 4

June 30, 2010


114,387 55,995 (4,967) (158) (215) 165,042

June 30, 2009


171,551 6,178 3,269 508 (60,828) 215 120,893

157,977 7,065 165,042

120,653 240 120,893

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

34 | TEI&C S.A.

Consolidated Statement of Changes in Equity


for the years ended June 30, 2010 and 2009

All amounts in USD thousands

Attributable to the Companys Equity Holders Capital Stock Irrevocable Contributions Legal Reserve

Balance at June 30, 2008 Net income for the year Other comprehensive income Gain on 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 (see note 12) Currency translation differences Total comprehensive income for the year Capital Surplus (see note 1) Disposals of reserve for investment sale Resolution of the Special Shareholders' meeting held on 09.30.08: Capitalization of irrevocable contributions Resolution of the Shareholders' meeting held on 11.07.08: Board of Directors' fees Dividend distribution (1) Changes in non - controlling interests Balance at June 30, 2009
(1) The dividends were approved by the Board of Directors meeting held on May 8, 2009 and May 20, 2009 and were ratified by the Shareholder's meeting held on December 2, 2009.

146,218 -

72,317 -

2,293 -

72,317

(72,317)

218,535

2,293

Consolidated Financial Statements | 35

Capital Surplus

Cumulative Translation Adjustments


9,127 (51,555) (51,555) -

Reserve for PP&E Revaluation Surplus

Other Reserve

Retained Earnings

Non - Controlling Interests

Total Equity

(1,154) (2,884) -

63,018 6,178 (14,927) (2,758) (11,507) -

215 215 11,914 (11,914)

60,647 162,038 18,196 3,266 183,500 -

20,243 9,513 (9,273) 240 -

372,709 171,551 6,178 3,269 508 215 (60,828) 120,893 9,030 (11,914)

(4,038)

(42,428)

51,511

215

(60) (20,000) 224,087

14,267 34,750

(60) (20,000) 14,267 484,925

36 | TEI&C S.A.

Consolidated Statement of Changes in Equity (Cont.)


for the years ended June 30, 2010 and 2009

All amounts in USD thousands

Attributable to the Companys Equity Holders Capital Stock Irrevocable Contributions Legal Reserve

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 fixed assets disposal net of tax Changes in equity reserves (see note 12) Currency translation differences Total comprehensive income for the year Resolution of the Shareholders' meeting held on 12.02.09: Board of Directors' fees Legal Reserve Dividend distribution Dividend distribution approved by the Board of Directors Meeting held on 02.25.10 (2): Capital Surplus (see note 1) Changes in non - controlling interests Balance at June 30, 2010
(2) The dividends were approved by the Board of Directors and will be ratified by the next Shareholder's meeting.

218,535 -

2,293 9,632 -

218,535

11,925

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

Consolidated Financial Statements | 37

Capital Surplus

Cumulative Translation Adjustments


(42,428) (2,430) (2,430) -

Reserve for PP&E Revaluation Surplus

Other Reserve

Retained Earnings

Non - Controlling Interests

Total Equity

(4,038) -

51,511 55,777 (4,967) (10,771) (4,015) 36,024 -

215 (215) (215) -

224,087 109,812 10,771 4,015 124,598 (72) (9,632) (24,000)

34,750 4,575 218 2,272 7,065 -

484,925 114,387 55,995 (4,967) (215) (158) 165,042 (72) (24,000)

2,562 (1,476)

(44,858)

87,535

(9,000) 305,981

(13,681) 28,134

(9,000) 2,562 (13,681) 605,776

38 | TEI&C S.A.

Consolidated Statement of Cash Flows


for the years ended June 30, 2010 and 2009

All amounts in USD thousands

Notes Cash flows from operating activities Net Income for the 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 Social security costs Unrealized gain / losses 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 Result from investments in associated companies Changes in balances corresponding to: Trade accounts receivable Material and supplies Trade and other payables Other liabilities Held - for - sale assets and liabilities net Currency translation adjustments Net cash generated by operating activities
6 7 28 29 4 8 30 20 4 5

June 30, 2010

June 30, 2009

114,387

171,551

48,033 812 (35,584) (310) 414 61,473 6,428 (410) (13,399) 5,701 (3,768) (1,600) 7,340 (586) (205) (246) (2,724)

53,215 671 (25,577) 11,429 (244) 14,112 6,242 724 (4,639) (18,948) (2,061) 18,722 (1,640) (159) (10,014) (384)

99,964 (12,362) (80,304) 16,619 617 (11,209) 199,081

(23,148) 29,123 (67,924) (30,534) 2,327 (21,386) 101,458

Consolidated Financial Statements | 39

Consolidated Statement of Cash Flows (Cont.)


for the years ended June 30, 2010 and 2009

All amounts in USD thousands

Notes 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 Increase due to business combination (see note 1) Decrease due to sale of subsidiaries (see note 1) Net cash (used in) / generated by investing activities Cash flow from financing activities Repayments of borrowings (net) Changes in non-controlling interests Board of Directors 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 year Effect of exchange rate changes Cash and cash equivalents at the end of the year Non - Cash transactions Finance leases Gain on revaluation of machinery, equipment and vehicles, net of tax effects and decrease
The accompanying notes are an integral part of these consolidated financial statements.

June 30, 2010

June 30, 2009

24,957 (54,411) 5 (915) (2,082) 5,460 (26,991)

10,635 (41,711) (976) 12,526 (4,213) 61,282 (95) 37,448

(71,879) (11,120) (72) (33,000) (116,071) 56,019 222,842 3,565 13 282,426

(14,836) (3,952) (60) (20,000) (38,848) 100,058 130,984 (8,200) 222,842

3,470 50,810

7,508 6,178

40 | TEI&C S.A.

Index

1. General Information 2. Accounting policies a. Basis of preparation b. Consolidation c. Foreign currency translation d. Use of estimates e. Property, plant and equipment f. Intangible assets g. Impairment of non-financial assets h. Financial assets i. Offsetting financial instruments j. Derivative financial instruments k. Inventories l. Construction contracts work in progress m. Other investments n. Trade and other receivables o. Trade and other payables p. Cash and cash equivalents q. Equity r. Borrowings s. Current and deferred income tax t. Employee benefits u. Provisions v. Revenue recognition w. Leases x. Held for sale assets and liabilities and discontinued operations 3. Financial risk management 4. Property, plant and equipment 5. Intangible assets 6. Investments in associated companies 7. Other investments 8. Trade and other receivables 9. Inventories 10. Financial instruments by category 11. Held-for-sale assets 12. Derivative financial instruments 13. Cash and cash equivalents 14. Share capital 15. Borrowings 16. Deferred income taxes 17. Trade and other payables 18. Other liabilities

to the Notes to the Consolidated Financial Statements

Consolidated Financial Statements | 41

19. Provisions 20. Employee benefits 21. Participation in Joint Ventures 22. Contingencies and commitments 23. Restricted assets 24. Discontinued operations 25. Related party transactions 26. Subsidiaries 27. Cost of sales and expenses by nature 28. Financial results 29. Other income and expenses, net 30. Income tax expense 31. Main contracts in progress 32. Subsequent events

42 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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&Cs 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.

Throughout this fiscal year, the Mexican subsidiary Techint S.A. de C.V. (TEMEX) continues with transactions aimed at reorganizing its business areas. In August 2009, it transferred together with Constructora Mexicana Electromecnica y de Instrumentacin, 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 Mxico, S.A. de C.V. to companies of the energy sector of the Techint Group. After the recomposition of capital of Terminales

During the current fiscal year, 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: In September 2009, the Company contributed to Techint Ingeniera 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 Techint Compaa Tcnica Internacional S.A.C.I. (TEARG), representing 38.94340% of the capital stock and voting rights. Upon this transaction, TIC increased its capital stock, and therefore, the new Companys 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.

Portuarias del Pacfico S.A.P de C.V. (TPP), .I. 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 Mexcarbn 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., and after the end of the fiscal year, in September 2010, the company Elina Sureste S.A. de C.V. was also wound up. In March 2010, Preglosid S.L.U. (PREGLOSID)

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, Techint Engenharia e Construo S.A. (TEBRA), which took place in May, our direct shareholding in SOCOMINTER is 0.088%.

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 Siderrgicas S.A., i.e. 8,445,080 shares, representing 97.50% of the capital stock. Upon this transaction, PREGLOSID increased

Consolidated Financial Statements | 43

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

its capital stock, and therefore, the new Companys 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. In June 2010, the shareholders of the Argentine companies Tecnomatter Instalaciones y Construcciones S.A. (TMR) and Sidernet S.A. resolved a corporate reorganization, consisting in the capitalization of both companies, the spin off of Tecnomatter and the subsequent merger of the spin off with Sidernet, the latter becoming the successor for the supply of steel and iron services. On July 21, 2009 TEARG founded Techint Ingeniera y Construccin Bolivia S.A. to take part in construction projects for buildings, roads, dams, dwelling houses and transformation industrial plants for any kind of industries and activities. 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. Therefore, the Board of Directors Meeting of TEI&C held on December 2, 2009, resolved that next December 31, 2010 will be the enforcement date. During the previous fiscal year, TEI&C experienced some changes in its investment portfolio, which are detailed as follows: In July 2008, the Company acquired the control over the Mexican company TEMEX through the purchase of 51,032 common shares, equal to 100% of the outstanding shares, from its parent company B.V. de Nieuwe Weg, a company organized pursuant to the laws of The Netherlands. The difference between the price paid and the book value was charged to equity as capital surplus (USD 9.0 million). This expansion in the business geographical area in

Mexico and Canada required TEI&C to make capital contributions in the Dutch company for the sum of USD 34.8 million. Consequently, during the fiscal year, TEMEX received capital contributions for USD 38.4 million whereas Techint E&C Inc. (TECAN) (a Canadian company) increased its capital stock in CAD 0.5 million (USD 0.4 million). Throughout the previous fiscal year, several transactions were concluded in TEMEX in order to reorganize its business areas. In September 2008, TEMEX transferred 10% of its shareholding in Servicios Mltiples de Burgos, S.A. de C.V. The profit generated by this transaction (USD 11.9 million) is being disclosed in the Consolidated Income Statement under Gain from the purchase and sale of share and investments In November 2008, TEMEX . sold 40% of the shares in Techint S.A. (a Spanish company), and executed a contract undertaking to purchase 25% of the shares of Mexcarbn S.A. de C.V. and of Carbonser, S.A. de C.V. In addition, TEMEX wound up the companies the purpose of which had already been performed or which were inactive, including the following: Corporacin Mexicana de Promociones Energticas, S.A. de C.V., Promociones e Ingeniera de Proyectos, S.A. de C.V., Impretech Infraestructura, S.A. de C.V., Divat, S.A. de C.V., Hidro La Yesca, S.A. de C.V., Laguna de Cuyutlan LNG, S.A. de C.V., Proyecto La Yesca, S.A. de C.V. and Elina Noreste S.A. de C.V. During April 2009, Techint Chile S.A. (TECHI), a subsidiary of Techint International Construction Corp. (TENCO) (TENCO), exercised the put option on the 51% equity interest of Proyectos y Montajes Comin S.A. and Servicios Industriales Comin S.A. The net loss generated by this transaction (USD 1.7 million) is being disclosed in the Consolidated Income Statement under Gain from the purchase and sale of share and investments including the return of goodwill. , During February 2009, TEI&C created TIC, a Spanish company, the purpose of which is the administration

44 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

and management of security and share interests. In May 2009, TIC received 100% of the outstanding securities of B.V. de Nieuwe Weg as capital contribution. In June 2009, the Company increased its direct participating interest in Techint Engenharia e Construo S.A., through the purchase of 18.25% and 15% of the shares from TENCO and TEARG, respectively. These consolidated financial statements were approved for issue by the Companys Board of Directors on October 29, 2010. 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 years presented, unless otherwise stated.

use of certain critical accounting estimates. It also requires management to exercise its best judgment in the process of applying the Companys 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 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 Bolivar fuerte. As a result, in accordance with IFRS, Venezuela

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, 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. Certain comparative amounts have been reclassified to conform to changes in presentation in the current year. The preparation of consolidated financial statements in conformity with IFRS requires the

must be considered a hyperinflationary economy. The main implications of this circumstance are as follows: At June 30, 2009 the figures were not restated. Adjustment of the income statement to reflect the financial loss caused by the impact of inflation in the year on net monetary assets (loss of purchasing power). All components of the financial statements of the Venezuelan companies have been translated at the closing exchange rate, which at June 30, 2010 was 4.3 Bolivares fuertes per USD Standards and amendments effective in the year ended June 30, 2010 and adopted by the Company The following standards and amendments have been published and were mandatory for the Company in the year ended June 30, 2010:

Consolidated Financial Statements | 45

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

IAS 1 (Revised) Presentation of Financial Statements was issued in September 2007 and was effective for annual periods beginning on or after January 1, 2009. The revised standard introduces the concept of a statement of comprehensive income, which enables users of the financial statements to analyze changes in a companys equity resulting from transactions with owners separately from nonowner changes. The revised standard provides the option of presenting items of income and expense and components of other comprehensive income either as a single statement of comprehensive income or in two separate statements. The Company has elected to present two statements: an income statement and a statement of comprehensive income. The consolidated financial statements have been prepared under the revised disclosure requirements. IAS 27 (Revised), Consolidated and separate financial statements (effective July 1, 2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized in profit or loss.

IFRS 7 (Amendment) Financial instruments: Disclosures was issued in March 2009 and is effective for annual periods beginning on or after January 1, 2009. The amendment requires enhanced disclosures about fair value measurements and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on the presentation of the Companys results of operations, financial position or cash flows. 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 year ended June 30, 2010: IFRS 9 Financial Instruments issued in November , 2009. This standard addresses the classification and measurement of financial assets and is likely to affect the Companys accounting for its financial assets. The standard is not applicable until January 1, 2013 but is available for early adoption. The Companys management has not yet assessed the potential impact that the application of IFRS 9 will have on the Companys financial statements. IAS 24 (Revised), Related party disclosures issued ,

IFRS 3 (Revised) Business Combinations was issued in January 2008 and will apply to business combinations occurring on or after July 1, 2009. The revised standard introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognized, the reported results in the period that a business acquisition occurs and future reported results. The adoption of the standard did not have a material impact on the presentation of the Companys results of operations, financial position or cash flows.

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.

46 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The application of this revised standard is not expected to have a significant impact on the presentation of the Companys results of operations, financial position or cash flows. IAS 32 (Amendment), Financial instruments: Presentation on classification of rights issues issued in October 2009. The amendment addresses the accounting for rights issues (rights, options or warrants) that are denominated in a currency other than the functional currency of the issuer. Prior to the amendment, such rights issues were accounted for as derivative liabilities. The amendment states that, if such rights are issued pro rata to an entity's existing shareholders for a fixed amount of any currency, they should be classified as equity, regardless of the currency in which the exercise price is denominated. The amendment is effective for annual periods beginning on or after February 1, 2010. The Company is assessing the impact in the 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 Companys 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 . 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 Companys management estimates that the application of these amendments will not have a material effect on the Companys financial condition or results of operations. b. Consolidation Subsidiary companies Subsidiaries are entities which are controlled by TEI&C as a result of its ability to govern an entitys 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. This cost includes the fair value of any asset or liability resulting from a contingent consideration arrangement. 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. 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 predecessors cost, reflecting the carrying amount of such assets and liabilities contributed

Consolidated Financial Statements | 47

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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 inter-company 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 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 26 to the consolidated financial statements for the list of consolidated subsidiaries. Transactions and non-controlling interests The Company treats transactions with noncontrolling interests as transactions with equity owners of TEI&C. For purchases from noncontrolling 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 associates are accounted for by the equity methods of accounting and are initially recognized at cost. The Companys investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Companys share of its associates postacquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Companys share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealized gains on transactions between TEI&C and its associated companies are eliminated to the extent of TEI&Cs 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 (J.V. ) are jointly controlled entities, which involve the establishment of a corporation, partnership or other entity in which each venturer has an interest. TEI&Cs 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&Cs financial statements. See note 21 to the consolidated financial statements.

48 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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 Companys 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 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.

currency different from the Companys presentation currency are translated into the presentation currency as follows: 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,

Monetary assets and liabilities in currencies other than the functional currency are translated at the 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

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

Consolidated Financial Statements | 49

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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. 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 Companys 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 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

50 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

method, by applying annual ratios sufficient to terminate the value of each item as of the end of their estimated useful life.

in the reserve for PP&E revaluation surplus are transferred to retained earnings. Repairs and maintenance expenses are charged

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:

to the consolidated income statement during the financial period in which they are incurred. 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.

Buildings and improvements Production equipment Vehicles, furniture and fixtures, and other equipment Land

20-50 years 10-20 years 4-10 years Not depreciated Goodwill TENCO and subsidiaries Computer software development costs recognized as assets are amortized over their estimated useful lives (not exceeding five years).

The residual values and useful lives of significant machinery, construction equipment and vehicles are reviewed, and adjusted if appropriate, at each yearend date. Where the carrying amount of an asset is higher than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Companys share of the net identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets and it is tested for impairment annually as part of the overall balances (see note 5). Impairment losses on goodwill are not reversed.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. When revalued assets are sold, the amounts included

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Consolidated Financial Statements | 51

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Compaa 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 statement of income. 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. i. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial

52 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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 designates certain derivatives as hedges of a particular risk associated with a highly probable forecast transaction as cash flow hedge. 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. The fair values of various derivative instruments are disclosed in note 12. 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 Managements analysis of aging. 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.

Consolidated Financial Statements | 53

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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.

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

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 measured reliably. 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.

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 June 30, 2010 and 2009 include: The value of share capital, irrevocable contributions, capital surplus, reserve for PP&E revaluation surplus, legal reserve, other reserve, and retained earnings in accordance with IFRS.

54 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The currency translation differences of TEI&Cs subsidiaries. Non-controlling interests in subsidiaries. Dividends distributions are recorded in the Companys financial statements when Companys 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 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, associates 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&Cs subsidiaries have in force benefit plans under the modality of non-funded defined benefits 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 Benefcio Livre and VGBL - Programa de Seguro de Vida com Cobertura por SobrevivnciaThese 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&Cs subsidiaries officers are covered by a specific employee retirement plan designed to provide retirement, termination and other benefits to those officers.

Consolidated Financial Statements | 55

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

TEI&Cs 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&Cs 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&Cs 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 employees employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits.

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/profitsharing 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)

TEI&Cs subsidiaries recognize termination benefits when it is demonstrably committed to either terminatimg 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

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.

56 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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.

in the lease should this be practicable to determine; otherwise, the lessees incremental borrowing cost is used. Any initial direct costs of the lessee are added to the amount recognized as an asset. See amounts of assets and liabilities held under finance leases in note 23. 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. Held for sale assets and liabilities and

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.

discontinued operations When the Company intends to dispose of, or classify as held for sale, 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. The measurement of the held-for-sale assets and

Dividend income from investments in other companies: when TEI&Cs 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

liabilities is the book value of the group of assets and liabilities. Thus, the carrying amount of this held-for-sale assets and liabilities does not represent their fair value at the moment of the measurement. 3. Financial risk management The nature of TEI&Cs 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.

Consolidated Financial Statements | 57

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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 Companys 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 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 June 30, 2010, in comparison with 0.18 as of June 30, 2009. The Company

does not have to comply with regulatory capital adequacy requirements. b) Foreign exchange risk TEI&Cs 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 year-end that are denominated in US dollars (non-functional currency). The following tables show a breakdown of the TEI&Cs net monetary position in various currencies for the main functional currency in which the Company operates:

June 30, 2010 Functional Currency (in thousand USD) Net monetary position Asset / (Liability) ARS BOB CAD EUR GTQ HNL MXN NIO SVC USD VEF ARS
(10) 1 1,021 1,012

BRL
24,587 24,587

CAD
13,545 13,545

CHL
12,322 12,322

EUR
-

MXN
1,190 -

PEN
29,087 29,087

SAR
(978) (1,102) (2,080)

USD
282 666 208 (41) 18,961 12 1,713 2,658 24,459

UYU
(183) 2,218 2,035

VEF
(371) -

Total
(183) 282 (10) 508 208 (41) 18,961 12 1,713 2,658

(1,689) 42,701 (1,689) 43,891

2,592 125,282 2,221 149,390

ARS= Argentine Peso, BRL= Brazilian Real, BOB= Bolivian Peso, CAD= Canadian Dollar, CHL= Chilean Peso, EUR= Euro, GTQ= Guatemalan Quetzal, HNL= Honduran Lempira, MXN= Mexican Peso, NIO= Nicaraguan Cordoba Oro, PEN= Peruvian

Nuevo Sol, SAR= Saudi Riyal, SVC= El Salvador Colon, UYU= Uruguayan Peso, VEF= Venezuelan Bolivar Fuerte

58 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

June 30, 2009 Functional Currency (in thousand USD) Net monetary position Asset / (Liability) CAD EUR GTQ HNL MXN NIO SVC USD VEF ARS
(9) (261) 989 719

BRL
1,079 1,079

CAD
(43) 3,371 3,328

CHL
2,352 2,352

MXN
2,362 34,078 36,440

PEN
19,901 19,901

SAR
14 (1,308) (1,294)

USD
(70) 1,369 64 230 (14) 473 5,514 7,566

UYU
(904) (904)

VEF
(592) (2,737) (3,329)

Total
(9) 1,410 1,369 64 230 (14) 473 56,821 5,514 65,858

ARS= Argentine Peso, BRL= Brazilian Real, BOB= Bolivian Peso, CAD= Canadian Dollar, CHL= Chilean Peso, EUR= Euro, GTQ= Guatemalan Quetzal, HNL= Honduran Lempira, MXN= Mexican Peso, NIO= Nicaraguan Cordoba Oro, PEN= Peruvian

Nuevo Sol, SAR= Saudi Riyal, SVC= El Salvador Colon, UYU= Uruguayan Peso, VEF= Venezuelan Bolivar Fuerte

The Company estimates that the impact under IFRS on the net exposure at June 30, 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 1,494 thousands as compared with a maximum pre-tax gain or loss of approximately USD 659 thousands at June 30, 2009. The Companys net exposure to the currency other than the functional currency is managed on a case-bycase basis, partly by hedging certain expected cash flows with foreign exchange derivative contracts. c) Credit risk Most accounts receivable relate to clients operating in a range of industries and countries with contract which require ongoing payments as the development project progresses, upon the rendering of services or upon completion and

delivering of the project. It is normal practice that the Company reserves the right to suspend the project if there is a remarkable breach of the contract term, in particular the non-payment of amounts owed. In general the greatest risk for such assets is the risk of not collecting a trade account receivable. This is because, a) it may be a significant value in the development of works or in the provision of services; b) it is beyond the Companys 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 Companys control. The following table sets forth details of the age of trade receivables:

Consolidated Financial Statements | 59

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

June 30, 2010 Trade Receivables Allowance for doubtful accounts Net Value

Trade Receivables
224,739 (10,923) 213,816

Not Due
167,104 167,104

Past due 1 - 180 days


35,760 (37) 35,723

Past due > 180 days


21,875 (10,886) 10,989

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). 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.

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 24% of total assets at June 30, 2010 (19% at June 30, 2009). See note 15 for the maturity of borrowings and note 17 for the maturity of trade and other payables. e) Interest rate risk management

TEI&C financing strategy is to maintain adequate financial resources and access to additional liquidity. During the year ended June 30, 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

The Companys 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 year end.

June 30, 2010 Borrowings Fixed rate Variable rate


24,690 13,266

June 30, 2009 Borrowings


69,217 35,904

Percentage
65% 35%

Percentage
66% 34%

60 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

As the Company has no significant interest-bearing assets, the Companys 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 year ended June 30, 2010 would have been USD 132 thousands lower (USD 359 thousands lower at June 20, 2009).

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 .

4. Property, plant and equipment The item evolution is as follows:

Non-current Lands and buildings Beginning of the year Additions Disposals Annual depreciation Translation differences Other movements Revaluation Surplus Impairment loss June 30, 2010
(2)

Equipment and machinery


115,275 25,569 (6,294) (23,110) (72) 2,028 41,517 (4,616) 150,297

Vehicles
36,186 8,593 (2,000) (12,521) (74) (8,734) 27,205 (517) 48,138

Other assets (1)


53,654 13,794 (3,264) (10,158) (1,202) 1,494 2,446 (568) 56,196

Total June 30, 2010


254,376 50,941 (11,558) (48,033) (1,470) 71,168 (5,701) 309,723

49,261 2,985 (2,244) (122) 5,212 55,092

(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.

The item consists in the following: Original Value Land and buildings Equipment and machinery Vehicles Other assets Total June 30, 2010
75,960 301,356 109,143 128,883 615,342

Accumulated Depreciation
(20,868) (151,059) (61,005) (72,687) (305,619)

Net Value June 30, 2010


55,092 150,297 48,138 56,196 309,723

Consolidated Financial Statements | 61

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The item evolution is as follows: Non-current Lands and buildings Beginning of the year Additions Disposals Annual depreciation Translation differences Other movements Revaluation Surplus Increase due to business combinations (see note 1) Decrease due to sale / deconsolidation of subsidiaries (see note 1) June 30, 2009
49,866 5,802 (95) (1,360) (5,896) 944 -

Equipment and machinery


106,642 23,271 (2,634) (23,102) (11,963) 5,857 8,413 9,236 (445)

Vehicles
44,534 6,202 (1,885) (20,003) (9,229) 2,856 79 14,988 (1,356)

Other assets (1)


66,989 13,944 (1,252) (8,750) (10,352) (8,846) 1,014 1,696 (789)

Total June 30, 2009


268,031 49,219 (5,866) (53,215) (37,440) (133) 9,506 26,864 (2,590)

49,261

115,275

36,186

53,654

254,376

(1) It includes deferred costs of our subsidiary FEPSA and miscellaneous assets.

The item consists in the following: Original Value Land and buildings Equipment and machinery Vehicles Other assets Total June 30, 2009
67,295 259,132 102,519 116,513 545,459

Accumulated Depreciation
(18,034) (143,857) (66,333) (62,859) (291,083)

Net Value June 30, 2009


49,261 115,275 36,186 53,654 254,376

Lease rentals amounting to USD 44,946 thousand relating to the lease of machinery, construction equipment and vehicles, are included in the income statement. Technical appraisal of PP&E On June 30, 2010, a 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 No. 16 Property, plant and equipment (IAS 16), when an item of property

62 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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.

thousand (2009: USD 3,328 thousand) in other comprehensive income and accumulated in equity under the heading of Reserve for PP&E revaluation surplusThe 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. If machinery, equipment and vehicles had been valued at historical cost, the values would have been the following: June 30, 2010 June 30, 2009 168,218 (132,696) 35,522

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 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 (2009: USD 9,506 thousand) and has been recorded net of tax effects USD 20,981 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. 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. Historical cost Accumulated depreciation Residual value 240,858 (156,628) 84,230

Consolidated Financial Statements | 63

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

5. Intangible assets The item evolution is as follows: Systems development Beginning of the year Additions Amortization Translation differences June 30, 2010
1,839 915 (760) 102 2,096

Goodwill COINFER
640 (52) (22) 566

June 30, 2010


2,479 915 (812) 80 2,662

The item consists in the following: Original Value Systems development Goodwill COINFER Total June 30, 2010
13,270 1,870 15,140

Accumulated Amortization
(11,174) (1,304) (12,478)

Net Value at June 30, 2010


2,096 566 2,662

The item evolution is as follows: Systems Goodwill TENCO development and subsidiaries Beginning of the year Additions Amortization Increase due to business combination (see note 1) Decrease due to business combination (see note 1) Translation differences June 30, 2009
1,215 976 (584) 485 (16) (237) 1,839 2,447 (2,447) -

Goodwill COINFER
870 (87) (143) 640

June 30, 2009


4,532 976 (671) 485 (2,463) (380) 2,479

64 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The item consists in the following: Original Value Systems development Goodwill COINFER Total June 30, 2009
12,469 1,936 14,405

Accumulated Amortization
(10,630) (1,296) (11,926)

Net Value at June 30, 2009


1,839 640 2,479

6. Investments in associated companies June 30, 2010 Book value % of ownership Non-Current Norpower S.A. de C.V. Fluor Techint S.R.L. Construccin y Servicios Ltda. Consorcio Stabile Infrastrutture Other Total Investment in associated companies
(1) At June 30, 2009 the investment is recorded in liabilities
(1)

June 30, 2009 Book value % of ownership


170 185 355 100% 50% 30% -

886 297 206 1,389

40% 50% 0.01% -

June 30, 2010 Beginning of the year Translation differences Dividends received Result from investments Sale and disposal of investments Investment adquisition and contributions Increase due to business combination (see note 1) Amount recorded in liabilities at the beginning of the year Amount recorded in liabilities at the end of the year End of the year
355 208 2,724 (254) 1,027 (2,671) 1,389

June 30, 2009


120 84 (972) (384) 238 (1,402) 2,671 355

Consolidated Financial Statements | 65

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The result from investments has arisen from the Companys participation in the results of the following companies: June 30, 2010 Fluor Techint S.R.L.Construccin y Servicios Ltda. Norpower S.A. de C.V. Others
2,329 705 (310) 2,724

June 30, 2009


408 (792) (384)

The following amounts represent the assets, liabilities, revenues and results of the most important associated companies as of June 30, 2010: Assets Norpower S.A. de C.V. Fluor Techint S.R.L. Construccin y Servicios Ltda.
9,400 9,886

Liabilities
7,184 9,291

Revenues
5,584 36,241

Results
1,763 4,659

7. Other investments June 30, 2010 Non-Current Government Bonds Other investment fund La Nacions Trust fund Other Total other investments Current Low liquidity funds in correspondent accounts Government Bonds Temporary placements Total other investments
6,597 140 37 6,774 990 20 1,010

June 30, 2009


34 5,821 162 59 6,076 137 21 158

66 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

June 30, 2010 Non-Current At the beginning of the year Translation differences Result from other investment Investments currently consolidated Increase of other investments Reclassification Decrease of other investments At the end of the year Current At the beginning of the year Translation differences Reclassification Increase of other investments Decrease of other investments At the end of the year
(a) During the year ended June 30, 2009 Servicios y Prestaciones Techint Funchal - Servios, Comrcio e Gesto de Projetos Lda. acquired 80.78% equity interest of Techint Compaa Tcnica Internacional S.A. therefore the Company controls 97.33%
(a)

June 30, 2009


6,448 (1,197) 159 (448) 21 1,251 (138) (20) 6,076 281 (57) 138 (204) 158

6,076 (205) 205 1,091 (33) (360) 6,774 158 (5) 33 990 (166) 1,010

Increase due to business combination (see note 1)

of this company and increased its indirect participation in Compaa Interamericana de Trabajos Civiles Comintrac S.A (97.84%) and Cotecol Compaa Tcnica de Construcciones S.A. (97.73%)

Consolidated Financial Statements | 67

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

8. Trade and other receivables June 30, 2010 Non-Current Other trade receivables - net Guarantee deposit for investment acquisition Receivables for sales of investments Invoice holdback Tax credit Trade receivables from related parties (see note 25) Other receivables from related parties (see note 25) Other Total trade and other receivables Current Trade receivables - net Trade receivables from related parties (see note 25) Invoice holdback Other trade receivables net Other receivables from related parties (see note 25) Other receivables Advanced to suppliers and subcontractors Prepayments Tax credit Total trade and other receivables
12,393 3,755 5,491 5,032 914 8,639 2,256 38,480 213,816 28,477 11,862 565 2,090 26,841 32,239 3,569 47,494 366,953

June 30, 2009


15,170 8,250 727 6,985 9,240 968 41,340 301,855 42,173 13,212 613 3,876 28,283 25,874 1,940 40,265 458,091

68 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

At June 30, 2010 and 2009 the evolution of the allowance for doubtful accounts that was deducted from Trade receivables is: June 30, 2010 Non-Current Values at the beginning of the year Translation Additions Values at the end of the year Current Values at the beginning of the year Translation Increase due to business combination (see note 1) Reversal Additions Used Values at the end of the year
(15) 870 855 10,955 425 (529) 73 (1) 10,923

June 30, 2009


14,976 (2,808) 140 (272) 28 (1,109) 10,955

9. Inventories The item consists in the following: June 30, 2010 Materials and spare parts Others Valuation allowance Total Inventories
41,786 160 (6,098) 35,848

June 30, 2009


30,424 324 (2,996) 27,752

Consolidated Financial Statements | 69

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

At June 30, 2010 and 2009 the evolution of the valuation allowance that was deducted from inventories is: June 30, 2010 Values at the beginning of the year Translation Reversal Additions Used Values at the end of the year
2,996 118 (24) 4,478 (1,470) 6,098

June 30, 2009


742 (139) 2,504 (111) 2,996

10. Financial instruments by category At June 30, 2010 Assets as per balance sheet Assets at fair value through the profit and loss Loans and receivables Available for sale Total

Trade and other receivables Other investments Cash and cash equivalents Total

6,757 283,567 290,324

349,338 990 350,328

37 37

349,338 7,784 283,567 640,689

Liabilities as per balance sheet

Other financial liabilities at amortized cost

Total

Borrowings Financial lease liabilities Trade and other payables Other liabilities Total

35,340 2,616 173,705 139,261 350,922

35,340 2,616 173,705 139,261 350,922

70 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

At June 30, 2009 Assets as per balance sheet Derivatives used for hedging Assets at fair value through the profit and loss Loans and receivables Available for sale Total

Derivative financial instruments Trade and other receivables Other investments Cash and cash equivalents Total

476 476

4,789 6,175 223,140 234,104

450,241 450,241

59 59

5,265 450,241 6,234 223,140 684,880

Liabilities as per balance sheet

Other financial liabilities at amortized cost

Total

Borrowings Financial lease liabilities Trade and other payables Other liabilities Total

89,620 15,501 209,431 131,010 445,562

89,620 15,501 209,431 131,010 445,562

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 3- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). Comparative information is not presented for

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).

the first year of application, as permitted by the transitional provisions of the standard. The following table presents the assets that are measured at fair value at June 30, 2010.

Assets Cash and cash equivalents Other investments Total

Level 1
283,567 6,617 290,184

Level 2
-

Level 3
140 140

Total
283,567 6,757 290,324

Consolidated Financial Statements | 71

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

11. Held-for-sale assets The item consists in the following: June 30, 2010 Discontinued operations (see note 24) Advances to suppliers for equipment to be sold Other investment Total held for sale assets
45 22 67

June 30, 2009


4,048 239 4,287

12. Derivative financial instruments As of June 30, 2010, all the Companys outstanding derivative financial instruments were realized. In addition, the Company has no foreign currency forward contracts as of such date. As of June 30, 2009, the Company has denominated as accounting hedging some future contracts for the sale of USD the reasonable value of which contracts as of June 30, 2009, has generated a net income of USD 476 thousand, and has been stated in accounting records as follows: (i) charge to other reserves of the equity for USD 215 thousand, net of the tax effect, which amounts to USD 92 thousand; and (ii) charge to results for USD 169 thousand for those hedged contracts that turned out to be ineffective. In addition, during the year ended on June 30, 2009, the settlement of 8 contracts was recorded in results, the settled expense of which

contracts was USD 3,451 thousand, the reasonable value of such contracts in force as of June 30, 2008 for USD 1,469 thousand was reversed. On October 31, 2008 the Company entered into a foreign-currency swap with an initial amount of BRL 10,500, equivalent to USD 5,000. Under the swap the Company receives a fixed amount of USD plus interest of 5.95% and pays interest at 100% of the Interbank Deposit Certificate. The fair value as of June 30, 2009 is USD 4,789. The swap had a 361 days maturity and matured on October 27, 2009. There are no derivatives outstanding as of June 30, 2010. The net fair values of derivative financial instruments at the balance sheet date were:

Net fair value of derivative financial instruments Assets Forward foreign exchange contracts Swap foreign currency Total
-

At June 30, 2010 Liabilities


-

At June 30, 2009 Assets


476 4,789 5,265

Liabilities
-

72 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

13. Cash and cash equivalents June 30, 2010 Cash at bank and on hand Short-term bank deposits Total cash and cash equivalents
56,033 227,534 283,567

June 30, 2009


69,676 153,464 223,140

Cash, cash equivalents and bank overdrafts include the following for the purposes of the consolidated statement of cash flows: June 30, 2010 Cash and cash equivalents Bank overdrafts Total cash and cash equivalents
283,567 (1,141) 282,426

June 30, 2009


223,140 (298) 222,842

14. Share capital The composition of the Companys capital is as follows:


In thousands of shares

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

Number of shares At June 30, 2009 At June 30, 2010


(1)

Ordinary shares
5,181,537

UYU 586,830 thousand) from Techint Investments NV, the parent company of Techint Limited. The Special Shareholders' Meeting of September

5,181,537 5,181,537

(1)

5,181,537

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).

(1) Including a provisional certificate by UYU 581.537 thousands, to be replace by bearer shares after the Auditora Interna de la Nacin (AIN) authorization

The ordinary shares have a value of UYU 1 per share and one vote per five shares. All issued shares are fully paid. At June 30, 2008 the authorized capital stock amounts to UYU 4,600,000 thousand. The new authorized capital, the capitalization and the change in the type of shares are under process of authorization in the AIN.

Consolidated Financial Statements | 73

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

15. Borrowings Company Lender Amount June 30, 2010 Currency Interest Rate June 30, 2009 Amount

Non-Current

COINFER

Banco Supervielle S.A. Banco Ita BBA S.A.

39 (*) 365 (*) 13 10,928 (*) 6,445 -

ARS ARS ARS USD USD -

16.80% 16.80% 14.00% LIBOR 6M + 2% 5.85% -

45 41 34 435 (*) 248 2,051 262 693 2,003

TEARG

Standard Bank Argentina S.A. BBVA Banco Frances S.A. Banco Ita S.A (New York) Banco Ita S.A (New York) HSBC Bank Argentina S.A. Santa Mara Financial S.A.

TENCO

Banco Ita BBA S.A. Caterpillar Leasing Chile S.A.

Techint S.A.C.

HSBC Bank Per S.A. Banco Internacional del Per S.A Interbank

Techint Ca. Tcnica Internacional S.A.C.I. - Uruguay TECHI Sidernet S.A.

HSBC Bank (Uruguay) S.A.

136 (*)

Banco Ita Chile S.A. Standard Bank Argentina S.A. CGM Leasing Argentina S.A.

848 10 18,648

CLP USD -

4.70% 12.80% -

408 220 40 (*) 42 6,658

Sidernet Mexicana S.A. de C.V. Other

Banco Nacional de Mxico S.A.

(*) Variable Rate

74 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Company

Lender Amount

June 30, 2010 Currency Interest Rate

June 30, 2009 Amount

Current

COINFER

Banco Supervielle S.A. Sociedad Comercial del Plata S.A.

13 (*) 32 1,166 (*) 440 (*) 27 220 2,176 251 411 211 39 29

ARS ARS -

16.80% 11.80% -

62 317 (*) 228 475 132 12,242 (*) 870 (*) 210 597 2,021 6,110 337 1,407 1,000 1,338 (*) 47 (*) 180 (*) 210 682 273 50

TEARG

BBVA Banco Frances S.A. BBVA Italia Banco Ita BBA S.A. Banco Ita S.A. (New York) Banco Ita S.A. (New York) Banco Ita BBA S.A. (Brazil) Standard Bank Argentina S.A Banco de San Juan S.A. Banco Ita Argentina S.A. HSBC Bank Argentina S.A. HSBC Bank Argentina S.A. Santa Mara Financial S.A. Santa Mara S.A.I.y F.

USD LIBOR 6M + 2% USD ARS USD USD ARS ARS USD USD USD LIBOR + 2,5% 14.00% 8.75% 6.00% 9.50% 14.00% 12.80% 2.00% 2.00%

TMR

BBVA Banco Frances S.A. Santa Mara Financial S.A.

Sidernet S.A.

Banco Hipotecario S.A. Banco Hipotecario S.A. Banco Ita BBA S.A. Standard Bank Argentina S.A CGM Leasing Argentina S.A.

Prestaciones Globales Siderrgicas S.A. Prestaciones Globales Siderrgicas S.A.

Santa Mara S.A.I.y F. Agrupacin Fdo. Copartic. Financ. ACE

Consolidated Financial Statements | 75

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Company

Lender Amount

June 30, 2010 Currency Interest Rate

June 30, 2009 Amount

Current

TENCO

Banco Ita BBA S.A. Banco Ita BBA S.A. Caterpillar Leasing Chile S.A.

273 1,531 136 220 71 (*)

USD USD CLP USD USD -

LIBOR 6M + 2.5% 5.85% 4.70% 7.00% 7.00% -

18,160 271 6,325 3,412 1,344

TECHI Techint S.A.C.

Banco Ita Chile S.A. HSBC Bank Per S.A. Banco Internacional del Per S.A - Interbank Banco Internacional del Per S.A - Interbank

Techint Ca. Tcnica Internacional S.A.C.I. - Uruguay

HSBC Bank (Uruguay) S.A. HSBC Bank (Uruguay) S.A. HSBC Bank (Uruguay) S.A. Crdit Uruguay Banco S.A.

600 284 42 (*) 5,018 5,015 1,103 19,308

USD UYU MXN USD USD -

4.50% 7.00% LIBOR + 2.65% 3.94% 3.56% -

150 171 260 96 (*) 20,203 (*) 10,000 5,876 2,167 1,240 98,463

Techint Inversiones S.A.I.F. Sidernet Mexicana S.A. de C.V. TEMEX

Santa Mara S.A.I.y F. Banco Nacional de Mexico S.A. BNP Paribas S.A. (Spain) Banco Nacional de Mxico S.A. Banco Nacional de Mxico S.A. Santander S.A.

TECAN

BNP Paribas S.A. (Canada) BNP Paribas S.A. (Canada)

Other

(*) Variable Rate

76 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The maturity of borrowings is as follows: Without due date June 30, 2010 Financial leases Other borrowings Total borrowings Interest to be accrued June 30, 2009 Financial leases Other borrowings Total borrowings Interest to be accrued
-

1 year or less
1,341 17,967 19,308 713 11,854 86,609 98,463 1,583

1 - 2 years
414 2,565 2,979 388 3,624 3,011 6,635 429

2 - 3 years
400 2,710 3,110 276 23 23 -

3 - 4 years
207 2,866 3,073 165 -

4 - 5 years
217 2,548 2,765 49 -

Over 5 years
37 6,684 6,721 -

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

16. Deferred income taxes As further explained in note 2.s., TEI&C and most of the Companys subsidiaries are subject to income taxes. At June 30, 2010 and 2009 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: June 30, 2010 June 30, 2009
45,106 2,868 16,083 1,082 65,139 (10,620) (9,556) (10,259) (179) (30,614)

Deferred Income Tax Assets

TEBRA Sidernet de Venezuela C.A. TEMEXs Subsidiaries Other

36,639 3,682 414 40,735

Deferred Income Tax Liabilities

TEARG TENCOs Subsidiaries FEPSA Other

(14,959) (7,160) (9,867) (3,504) (35,490)

Consolidated Financial Statements | 77

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

At June 30, 2010 and 2009 the deferred tax balance is originated by the following items: June 30, 2010 Deferred Income Tax Assets Tax-loss carry-forwards Provisions Deferred costs/Construction contracts Exchange differences Advances from clients Different criterion used to assess the tax gain/ (loss) of the J.V.Techint Ca. Tcnica Internacional S.A.C.I. - Impregilo S.p.A. (Suc.Argentina) - Iglys S.A. Other Subtotal Deferred Income Tax Liabilities Committed investment FEPSA Different criterion used to assess the tax gain/ (loss) of the J.V.Techint Ca. Tcnica Internacional S.A.C.I. - Impregilo S.p.A.(Suc.Argentina) - Iglys S.A. PP&E Exchange differences Deferred income/Construction contracts PP&E revaluation (see note 4) Inventories Effect of restatement in constant currency Other Subtotal Net deferred income tax asset
54,914 37,997 2,705 1,308 353

June 30, 2009


44,908 40,284 5,199 740 1,303 -

1,065 98,342 11,970

1,865 94,299 11,760

1,436 349 41,493 31,741 2,731 29 3,348 93,097 5,245

1,161 644 502 23,874 17,414 2,294 618 1,507 59,774 34,525

The amounts shown in the balance sheet include the following: June 30, 2010 Deferred tax assets to be recovered within 12 months Deferred tax liabilities to be recovered within 12 months
21,069 26,334

78 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The evolution of net deferred income tax asset / (liability) during the year is as follows: June 30, 2010 At the beginning of the year Translation differences Increase due to business combinations (see note 1) Decrease due to sale of subsidiaries (see note 1) PP&E revaluation (net) (see note 4) Future contracts Income statement (charge) / credit At the end of the year
34,525 6,945 (20,140) (16,085) 5,245

June 30, 2009


(13,292) (416) 14,710 (18) 449 (92) 33,184 34,525

The evolution of deferred income tax assets and liability during the year is as follows: Tax-loss carryforwards Provisions Deferred costs/ Construction contracts Advances from clients Other Total

Deferred Tax Assets At the beginning of the year Translation differences Income statement charge / (Credit) At the end of the year
44,908 3,191 6,815 54,914 40,284 170 (2,457) 37,997 5,199 386 (2,880) 2,705 1,303 5 1,308 2,605 512 (1,699) 1,418 94,299 4,264 (221) 98,342

Committed investment FEPSA Deferred Tax Liabilities At the beginning of the year Translation differences PP&E revaluation Income statement charge / (Credit) At the end of the year
11,760 (411) 621 11,970

Deferred Income/ Construction contracts

PP&E revaluation

Inventories

Other

Total

23,874 (1,761) 19,380 41,493

17,414 (928) 20,140 (4,885) 31,741

2,294 437 2,731

4,432 419 311 5,162

59,774 (2,681) 20,140 15,864 93,097

Consolidated Financial Statements | 79

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The tax loss carry-forwards mature as detailed below: June 30, 2010 Year 2010 Year 2011 Year 2012 Year 2013 Year 2014 Year 2015 Year 2016 Year 2017 Year 2018 Year 2019 Year 2020 Without maturity
2 38 82 1,302 3,129 89 20,463 33,272 21,716 32,203 108,049 220,345

June 30, 2009


767 2,816 2,784 87 2,372 20 113 18,280 31,028 27,568 112,729 198,564

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&Cs subsidiaries will generate sufficient taxable income in future periods so as to offset the net balance of deferred income tax assets recorded at June 30, 2010. 17. Trade and other payables June 30, 2010 Non-Current Trade payables Social security and other taxes Total trade and other payables Current Trade payables Social security and other taxes Amounts due to related parties (see note 25) Other payables Total trade and other payables
467 22,744 23,211 149,444 114,543 4,120 1,799 269,906

June 30, 2009


246 17,616 17,862 192,974 107,951 3,206 304,131

80 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The maturity of trade and other payables is as follows: Without due date 1 year or less 1 - 2 years 2 - 3 years 3 - 4 years Over 4 years

At June 30, 2010 Trade and other payables Total Trade and other payables
8,110 8,110 269,906 269,906 7,146 7,146 2,198 2,198 1,021 1,021 4,736 4,736

18. Other liabilities June 30, 2010 Non-Current Provisions (see note 19) Amounts due to related parties (see note 25) Other liabilities Total other liabilities Current Provisions (see note 19) Advances received on construction contracts Advances received on construction contracts from related parties (see note 25) Amounts due to related parties (see note 25) Other liabilities and provisions Total other liabilities
26,332 748 9,392 36,472 14,607 81,677 115 1,000 5,390 102,789

June 30, 2009


31,113 3,750 1,917 36,780 10,300 76,653 784 2,166 4,327 94,230

Consolidated Financial Statements | 81

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

19. Provisions Labor Non-Current Values at June 30, 2009 Translation Reversal Additions Used Values at June 30, 2010 Current Values at June 30, 2009 Translation Reversal Additions (a) Used Values at June 30, 2010
6,975 138 (2,408) 3,647 (1,819) 6,533 1,625 14 960 (1,553) 1,046

Taxes
5,061 394 (5,118) 1,270 (326) 1,281 3,586 3,586

Civils
7,970 468 (555) 1,181 193 9,257 4,459 (16) (1,500) 790 3,733

Other
11,107 5 (2,000) 2,290 (2,141) 9,261 630 6,137 (525) 6,242

Total
31,113 1,005 (10,081) 8,388 (4,093) 26,332 10,300 (2) (1,500) 7,887 (2,078) 14,607

(a) The Saudi Techint Ltd.s minority shareholder filed a complaint against TENCO before the 15th Commercial Tribunal of the Board of Grievances of Saudi Arabia seeking relief for damages and claim; therefore, the Company created an allowance

for USD 6 million, i.e. the amount estimated by the Company and its legal counsel that should be paid to settle such dispute.

Labor Non-Current Values at June 30, 2008 Translation Reversal Additions Increase due to business combination (see note 1) Used Values at June 30, 2009 Current Values at June 30, 2008 Translation Additions Increase due to business combination (see note 1) Used Values at June 30, 2009
6,950 (1,548) (2,289) 4,208 (346) 6,975 7 (1) 1,121 503 (5) 1,625

Taxes
6,640 (1,238) (7,718) 7,485 (108) 5,061 3,586 3,586

Civils
3,776 (602) (697) 6,853 (1,360) 7,970 1,568 (341) 47 3,497 (312) 4,459

Other
522 (124) 1,825 10,907 (2,023) 11,107 1,118 (488) 630

Total
17,888 (3,512) (10,704) 20,371 10,907 (3,837) 31,113 2,693 (342) 4,754 4,000 (805) 10,300

82 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

20. Employee benefits Non-funded defined benefits and other long-term benefits The amounts recognized in the consolidated statement financial position are determined as follows: Year ended June 30, 2010 Year ended June 30, 2009

Present value of unfunded obligations Costs for services rendered in the past not recorded Unrecognized actuarial losses Liability in the consolidated statement financial position

27,033 (1,251) (7,907) 17,875

18,578 (724) (4,849) 13,005

The amounts recognized in the income statement are as follows: Year ended June 30, 2010 Year ended June 30, 2009

Current service cost Interest cost Net actuarial (gains) losses recognized in the year Amortization of costs for services rendered in the past not recorded Total included in Labor costs

2,201 2,833 879 515 6,428

1,496 2,881 1,544 321 6,242

Consolidated Financial Statements | 83

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The amounts and movements in the liabilities recognized in the consolidated statement financial position are determined as follows: Year ended June 30, 2010 Year ended June 30, 2009

At the beginning of the year Translation Transfers and new participants of the plan Total expense Services rendered in the past not recorded Contributions paid At the end of the year

13,005 (387) (315) 6,428 773 (1,629) 17,875

10,490 (2,419) 69 6,242 (1,377) 13,005

At June 30, 2010 and 2009, 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 8.58% (real) for both years and a salary increase rate of 6.08% and 6.40% respectively. Contribution plans During the year ended June 30, 2010 TEBRA contributed USD 1,229 to the defined contribution plans.

84 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

21. Participation in Joint Ventures The Companys subsidiaries were part of different J.V.s which also perform engineering, procurement and construction activities. The Companys participation in those J.V.s was recorded through proportional consolidation of assets, liabilities and results.

The following balances represent the J.V.s assets and liabilities at June 30, 2010 and 2009:

June 30, 2010 Main Joint Ventures Total J.V.'s Assets Total J.V.'s Liabilities % of Total J.V.'s Assets ownership Total J.V.'s Liabilities

June 30, 2009 % of ownership

Techint Cia. Tcnica Internacional S.A.C.I. - Panedile Argentina S.A. - Unin Transitoria de Empresas Complejos Los Caracoles and Punta Negra (1)

26,071

26,820

75.00%

12,450

24,683

75.00%

Techint Cia. Tcnica Internacional S.A.C.I. - Impregilo S.p.A (Sucursal Argentina)- Iglys S.A. - Unin Transitoria de Empresas - Complejo Penitenciario Ezeiza (1)

17,248

1,580

65.00%

20,471

2,011

65.00%

Techint Cia. Tcnica Internacional S.A.C.I. - Luis M. Pagliara S.A. - Unin Transitoria de Empresas - C. Re. Ma. Malla 332 (1)

1,162

236

60.00%

1,219

131

60.00%

Techint Cia. Tcnica Internacional S.A.C.I. - B.Roggio e Hijos S.A. - Unin Transitoria de Empresas Subte Linea A (1)

588

88

50.00%

2,182

971

50.00%

Techint Cia. Tcnica Internacional S.A.C.e I. - FLUOR Inc. - Unin Transitoria de Empresas - Proyecto: Pascua Lama (1)

1,998

2,250

50.00%

2,445

3,846

50.00%

Techint Cia. Tcnica Internacional S.A.C.e I. - FLUOR Inc. - Unin Transitoria de Empresas - Proyecto: Expansin Veladero (1)

2,677

518

50.00%

14,362

12,363

50.00%

Consrcio Techint UMSA II - Alumina do Norte do Brasil S.A. - Boilermaking (2) Consrcio Techint UMSA III - Alumina do Norte do Brasil S.A.- Electromechanical Assembly West Area (2)

30,320

60.00%

34,010

80.00%

Consolidated Financial Statements | 85

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

June 30, 2010 Main Joint Ventures Total J.V.'s Assets Total J.V.'s Liabilities % of Total J.V.'s ownership Assets Total J.V.'s Liabilities

June 30, 2009 % of ownership

Consrcio Techint Confab UMSA - Lot I Tanks Refinaria do Nordeste, Abreu e Lima (RNEST) (2) Consrcio Andrade Gutierrez - Techint (AG-TECH) Diesel Unit of Landulpho Alves - Mataripe Refinery (RLAM) (2) Consrcio Odebrecht-Techint (ODETECH)-Gasduc III (2) Tambur Comrcio de Mquinas e Servios de Engenharia Ltda. (Tambur) (2) Consrcio 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)

136,741

82,551

60.00%

75

1,233

60.00%

7,266

10,968

50.00%

43,661

29,103

50.00%

196 54,574

174 46,734

50.00% 50.00%

97,985 13,880

17,655 8,858

50.00% 50.00%

16,946 13,448

10,518 10,425

50.00% 50.00%

13,623

8,735

50.00%

ABB Lummus Techint Bahamas Joint Venture - Gasoline Optimization Program Upgrade - Petroleum Company of Trinidad and Tobago Limited - Engineering, Procurement and Management Services (3)

17,097

2,142

50.00%

33,396

17,500

50.00%

Chiquintirca Joint Venture - Chiquintirca Gas Compression Plant (3) Techint / Somerville - Waupisoo Project (4) Techint / Somerville - Corridor Project (4) Techint / Somerville - Clipper Project (4) Techint / Black & Veatch - LNG Costa Azul Project (4)
(1) Controlling interest through TEARG. (2) Controlling interest through TEBRA. (3) Controlling interest through TENCO. (4) Controlling interest through TEMEX.

13,003

11,105

60.00%

51,765

47,907

60.00%

70 26,774 3,093

1,452 1,679 3,631 8,485

50.00% 50.00% 50.00% 50.00%

812 2,856 80,702 22,456

2,390 2,704 49,532 58,416

50.00% 50.00% 50.00% 50.00%

86 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

The following balances represent the J.V.s results at June 30, 2010 and 2009: June 30, 2010 Main Joint Ventures J.V.'s Results % of ownership J.V.'s Results June 30, 2009 % of ownership

Techint Cia. Tcnica Internacional S.A.C.I. - Panedile Argentina S.A. - Unin Transitoria de Empresas - Complejos Los Caracoles and Punta Negra (1)

11,258

75.00%

(17,278)

75.00%

Techint Cia. Tcnica Internacional S.A.C.I. - Impregilo S.p.A (Sucursal Argentina) - Iglys S.A. - Unin Transitoria de Empresas - Complejo Penitenciario Ezeiza (1)

(2,200)

65.00%

1,784

65.00%

Techint Cia. Tcnica Internacional S.A.C.I.- Luis M. Pagliara S.A.Unin Transitoria de Empresas-C. Re. Ma. Malla 332 (1) Techint Cia. Tcnica Internacional S.A.C.I. - B. Roggio e Hijos S.A. Unin Transitoria de Empresas - Subte Linea A (1) Techint Cia. Tcnica Internacional S.A.C.e I. - FLUOR Inc. - Unin Transitoria de Empresas - Proyecto: Pascua Lama (1) Techint Cia. Tcnica Internacional S.A.C.e I. - FLUOR Inc. - Unin Transitoria de Empresas - Proyecto: Expansin Veladero (1) Consrcio Techint UMSA II - Alumina do Norte do Brasil S.A. Boilermaking (2) Consrcio Techint UMSA III - Alumina do Norte do Brasil S.A.Electromechanical Assembly West Area (2) Consrcio Techint Confab UMSA - Lot I Tanks Refinera do Nordeste, Abreu e Lima (RNEST) (2) Consrcio Andrade Gutierrez - Techint (AG-TECH) Diesel Unit of Landulpho Alves - Mataripe Refinery (RLAM) (2) Consrcio Odebrecht - Techint (ODETECH) - Gasduc III (2)

(117)

60.00%

(88)

60.00%

(572)

50.00%

(1,174)

50.00%

1,229

50.00%

505

50.00%

2,625

50.00%

4,405

50.00%

329

60.00%

6,338

80.00%

17,146

60.00%

480

60.00%

10,542

50.00%

27,388

50.00%

78,316

50.00%

39,610

50.00%

Consolidated Financial Statements | 87

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

June 30, 2010 Main Joint Ventures J.V.'s Results % of ownership J.V.'s Results

June 30, 2009 % of ownership

Tambur Comrcio de Mquinas e Servios de Engenharia Ltda. (Tambur) (2) Consrcio 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)

2,352

50.00%

3,790

50.00%

4,806 (1,805)

50.00% 50.00%

4,554

50.00%

ABB Lummus Techint Bahamas Joint Venture - Gasoline Optimization Program Upgrade - Petroleum Company of Trinidad and Tobago Limited - Engineering, Procurement and Management Services (3)

(486)

50.00%

1,836

50.00%

Chiquintirca Joint Venture - Chiquintirca Gas Compression Plant (3) Techint / Somerville - Waupisoo Project (4) Techint / Somerville - Corridor Project (4) Techint / Somerville - Clipper Project (4) Techint / Black & Veatch - LNG Costa Azul Project (4)
(1) Controlling interest through TEARG. (2) Controlling interest through TEBRA. (3) Controlling interest through TENCO. (4) Controlling interest through TEMEX.

4,905 180 1,595 114,489 (2,017)

60.00% 50.00% 50.00% 50.00% 50.00%

6,845 13,090 36,584 46,090 22,218

60.00% 50.00% 50.00% 50.00% 50.00%

88 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

22. 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, Granted in favor of:
(in million of USD)

certain of the Companys subsidiaries issued a number of guarantees to provide for the obligations assumed in the normal course of business. As of June 30, 2010 and 2009, TEI&C issued the following guarantees on behalf of other companies, as follows:

June 30, 2010

June 30, 2009

SIDOR C.A. Barrick Explotaciones Arg. S.A. Caterpillar Financial Services Corporation Siderca S.A.I.C. ABB Lummus Global Overseas Corporation ABB Lummus Global Inc. JGC Arabia Limited JGC Corporation Anglo American Sur S.A. Total

10.9 23.0 0.3 0.8 7.0 9.5 18.4 30.1 116.2 216.2

10.9 23.0 6.7 0.8 7.0 9.5 57.9

b. Works executed under a trust, construction, and leasing agreement TEARG, as a member of the J.V. Techint Compaa Tcnica 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 J.V. 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 J.V. 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 Nos. 17, 18, 19, 20, 21 and 22. On the other hand, before execution of such Agreement, canon No. 8 was also collected plus RSI in January 2003. That notwithstanding, the J.V. received from such Ministry payments for several canons not applying the RSI, which have been taken by the J.V. 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 J.V. received as partial payment a total amount of USD 40,0771 thousand corresponding to canons 10 to 16 and 23 to 43 at a ARS 1-USD 1 rate, not applying the RSI. Taking into account this situation, in the past fiscal

Consolidated Financial Statements | 89

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

year the J.V. 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 J.V. with the Argentine Government as of May 31, 2010 amounts to USD 56,6301 thousand (at May 31, 2009: USD 62,776 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 May 31, 2010, is equal to USD 28,285 thousand, capital USD 10,087 thousand and RSI USD 18,1981 thousand, (at May 31, 2009: USD 31,802 thousand, capital USD 12,962 thousand and RSI USD 18,8401 thousand) of which the amount of USD 10,857 thousand is past due at June 30, 2010 (at June 30, 2009: USD 10,514 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 Justices delay as to a resolution and payment of the overdue debt, Santander Ro Trust S.A., in its capacity as
(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.(2010: USD 1 ARS 3,931 and 2009: USD 1 ARS 3,797)
1 1 1 1 1

Trustee and Grantor of the Leasing, on July 4, 2008, following the J.V.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 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 process is now at the stage of issue of the Mission Statement. In the opinion of the J.V.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 J.V. has a solid legal position to collect its credits within the scope of the abovementioned legal rules and regulations. In May 2009, the J.V. was informed of the passing of Executive Order No. 541/09, which empowers UNIREN to renegotiate the Construction, Trust and Leasing Agreement executed in 1998 in relation to Penitentiary Complex I (Ezeiza). The J.V. 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 Ro Trust S.A., in its capacity as Trustee and Grantor of the Leasing, following the J.V.s express instructions, to the above-stated respect claiming the unlawful nature of such executive order.

90 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

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 consider the possibility of loss is possible and, therefore, no provision was set up. The amounts of these contingencies amount as of June 30, 2010 to USD 9,611 thousand for tax contingencies and USD 4,198 thousand for civil contingencies. 23. Restricted assets TENCO and subsidiaries At June 30, 2010 and 2009, the net carrying amounts of the PP&E held under finance lease amount to USD 5,992 thousand and USD 17,579 thousand, respectively. At June 30, 2010 and 2009, liabilities for finance leases amount to USD 1,275 thousand and USD 12,433 thousand, respectively. TEARG At June 30, 2010, there are PP&E with a residual book value of USD 748 thousand (at June 30, 2009: USD 1,655 thousand) which are pledged as guarantee for liabilities under leasing agreements for USD 279 thousand (at June 30, 2009: USD 1,163 thousand) and USD 13 thousand (at June 30, 2009: USD 322 thousand), included in the account "Borrowings" (current and non-current, respectively).

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 companys directors or consultants, without the prior consent of the majority of the banks that granted the Credit Facility Agreement. Compaa Inversora Ferroviaria S.A.I.F. (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 June 30, 2010, the Company had USD 4,007 thousand (at June 30, 2009: USD 5,884 thousand) in assets granted as guarantee for different proceedings. TEMEX

Coincar S.A. Under the Credit Facility Agreement entered into by Coincar S.A. with Banco Ro de la Plata S.A. and Banco de Galicia y Buenos Aires, 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

At June 30, 2010 and 2009, TEMEX and its subsidiaries had obtained resources from financial entities amounting to USD 45,639 thousand and USD 28,246 thousand respectively, which are supported with percentage-of-completion certificates for projects in process. Those resources have been paid by assigning the above-mentioned collection rights.

Consolidated Financial Statements | 91

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Sidernet S.A. At June 30, 2010, there are PP&E with a residual book value of USD 1,205 thousand (at June 30, 2009: USD 1,836 thousand) which are pledged as guarantee for liabilities under leasing agreements for USD 622 thousand (at June 30, 2009: USD 955 thousand) and USD 10 thousand (at June 30, 2009: USD 628 thousand), included in the account "Borrowings" (current and non-current, respectively). 24. 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 Siderrgicos 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 Orgnica de Ordenacin) 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 Orders 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. Based on the foregoing, on June 12, 2008, the Sidernets 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 companys 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. Based on the facts and circumstances described above the Company ceased consolidating Sidernet and Sersisas 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.

92 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Analysis of the result of discontinued operations: June 30, 2010 Revenues from construction contracts and other services Cost of sales (see note 27) Gross (loss) / profit General and administrative expenses (see note 27) Other income and expenses, net (see note 29) Operating profit / (loss) Financial results, net (see note 28) Results before income tax Income tax (see note 30) Results from discontinued operations
(494) (494) (1,173) 13,969 12,302 (2,135) 10,167 (4,931) 5,236

June 30, 2009


7,581 (5,305) 2,276 (2,885) 238 (371) (3,142) (3,513) 262 (3,251)

Consolidated Financial Statements | 93

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

25. Related party transactions The group is controlled by Techint Limited, which owns 88.67% of the companys shares. The ultimate parent of the group is San Faustin N.V. Year-end balances with related parties others than the Parent Company. Notes Non-Current Assets Trade receivables from related parties Other receivables from related parties Trade receivables Fluor Techint S.R.L. Construccin y Servicios Limitada - Chile Norpower S.A. de C.V. Trade receivables from associated parties Trade receivables from related parties Other receivables from related parties Non-Current Liabilities Other liabilities due to related parties Borrowings from related parties 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
8 8 8 18 15 18 18 17 15 711 1,699 2,410 26,067 2,090 748 115 1,000 4,120 2,244 103 103 42,070 3,876 3,750 2,051 784 2,166 3,206 2,965 8 8

June 30, 2010


914 8,639

June 30, 2009


9,240

Current Assets

Current Liabilities

Transactions with associated parties June 30, 2010 Sales of goods and services Fluor Techint S.R.L. Construccin y Servicios Limitada - Chile
3,363 3,755

June 30, 2009

94 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Transactions with related parties others than the Parent Company June 30, 2010 Sales of goods and services Purchases of goods and services
191,206 6,773

June 30, 2009


220,592 20,914

The aggregate compensation of the directors and executive officers earned during 2010 and 2009 amounts to USD 12,105 thousand and USD 9,889 thousand, respectively.

Consolidated Financial Statements | 95

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

26. Subsidiaries Country Company % of ownership June 30, 2010 (*) % of ownership June 30, 2009 (*)

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. Compaa Interamericana de Trabajos Civiles Comintrac S.A. Compaa Inversora Ferroviaria S.A.I.F. Constructora Mexicana Electromecnica y de Instrumentacin, S.A. de C.V. Cotecol Compaa Tcnica 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. Energa Tamaulipas S.A. de C.V. Ferroexpreso Pampeano S.A.C. Fidelis Management S.A. Flinwok S.A. Mexcarbn, S.A. de C.V. Nitroelina, S.A. de C.V. Norgas S.A. Norpower, S.A. de C.V. Preglosid S.L.U. Prestaciones Globales Siderrgicas S.A. Saudi Techint Ltd. Servicios Siderrgicos Sersisa, S.A. Servicios y Prestaciones Techint Funchal - Servios, Comrcio e Gesto de Projetos Lda. SICI - Servicios de Ingeniera 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.

Holland Mexico Argentina Mexico Mexico Venezuela Argentina Ecuador Argentina Mexico Colombia Mexico Mexico Mexico Mexico Mexico Mexico Argentina Panama Uruguay Mexico Mexico Argentina Mexico 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% 100.00% 50.00% 53.00% (3) 100.00% (4) 100.00% 100.00% 50.00% 70.00% 50.00% (6) 100.00% 100.00% 60.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00%

100.00% 50.00% (1) 25.00% (2) 25.00% (2) 100.00% 65.00% 100.00% 77.14% 100.00% 99.86% 51.00% 100.00% 50.00% 53.00% 100.00% 100.00% (4) 100.00% 100.00% 25.00% (2) 70.00% 50.00% 100.00% 100.00% 100.00% 60.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00%

96 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

Country Company

% of ownership June 30, 2010 (*)

% of ownership June 30, 2009 (*)

Techint Chile S.A. Techint Compaa Tcnica Internacional S.A.C.I. Techint Compaa Tcnica Internacional S.A.C.I. Techint Compaa Tcnica Internacional S.A. Techint E&C, S.A. de C.V. Techint Engenharia e Construo S.A. Techint E&C, Inc. Techint International Construction Corp. (TENCO) Techint Ingeniera y Construccion Bolivia S.A. Techint Ingeniera 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 Pacfico, S.A.P.I. de C.V. TGT de Mxico, S.A. de C.V.
(*) Direct and indirect participating interests are included. (1) At June 30, 2010 the Company decided to include its proportional shareholders equity in the liabilities since the subsidiary has a negative shareholders equity. At June 30, 2009, assets, liabilities and results are not included in the consolidated financial statements because the Company decided to set up an allowance for the full investment value.

Chile Argentina Uruguay Venezuela El Salvador Brazil Canada Bahamas Bolivia Spain Argentina Nigeria Peru Guatemala Honduras Mexico Nicaragua Panam 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% (3) 66.66% (5) (7)

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% (5) 12.00% (2) 100.00%

(2) TEMEX has the power to govern the financial and operating policies of the entity (3) During the fiscal year, these companies were wound-up. (4) Controlling interest through Compaa Inversora Ferroviaria S.A.I.F. (5) See note 1. (6) On August 27, 2009, TEMEX sold 60% of its shares in Norpower, S.A. de C.V. (7) On August 27, 2009, TEMEX sold 100% shares owned in TGT de Mexico SA de C.V.

Consolidated Financial Statements | 97

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

27. Cost of sales and expenses by nature Cost of sales General and administrative expenses Selling expenses June 30, 2010 June 30, 2009

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 J.V. balances Unallocated costs Subtotal Discontinued operations (See note 24) Total June 30, 2010 Total June 30, 2009

519,083 20,048 36,400 205,297 246,651 44,009 157 23,132 50,760 53,481 27,242 1,226,260 (494) 1,225,766 1,332,196

66,203 7,305 15,126 10,952 565 4,024 655 3,879 8,118 9,328 126,155 (1,173) 124,982 101,903

4,348 1,116 222 2,785 95 54 14 1,310 9,944 9,944 7,594

589,634 28,469 51,748 219,034 247,311 48,033 812 27,065 58,892 53,481 37,880 1,362,359 (1,667) 1,360,692 -

511,631 58,774 44,213 263,084 293,126 53,215 671 18,586 42,235 130,494 33,854 1,449,883 (8,190) 1,441,693

98 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

28. Financial results June 30, 2010 Income Interests and indexation Net foreign exchange transaction Derivate financial instruments Discount at current value credits Techint Cia. Tcnica Int. S.A.C.I.Impregilo S.p.A (Suc. Argentina) - Iglys S.A. - U.T.E. Holding results Other
10,723 586 1,600 2,870 26 15,805

June 30, 2009


21,835 29,123 2,061 274 214 53,507 (316) 53,191 (18,867) (5,551) (5,374) (2,969) (2,730) (35,491) 3,458 (32,033)

Discontinued operations (see note 24)

(6,687) 9,118

Costs

Interests and indexation Net foreign exchange transaction Derivate financial instruments Holding results Comissions Other

(7,344) (6,832) (304) (101) (3,648) (1,782) (20,011)

Discontinued operations (see note 24)

8,822 (11,189)

Consolidated Financial Statements | 99

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

29. Other income and expenses, net June 30, 2010 Gain from the sale of PP&E Impairment loss Net result for provisions for legal claims and contingencies Other
13,399 (5,701) 601 819 9,118

June 30, 2009


4,639 (5,363) 1,970 1,246 (238) 1,008

Discontinued operations (see note 24)

(13,969) (4,851)

100 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

30. Income tax expense June 30, 2010 Current income tax Deferred income tax
(45,388) (16,085) (61,473)

June 30, 2009


(47,296) 33,184 (14,112) (262) (14,374)

From discontinued operations (see note 24)

4,931 (56,542)

The net difference between the tax calculated at the rate in effect in each country and the total charge for the year is generated by the following: June 30, 2010 Tax calculated at the applicable rate on the result for the year Effect of restatement in constant currency Result due to participating interests in subsidiaries and related companies Sale of participating interests 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
(60,066) 1,153 4,180 544 (7,765) 2,514 (1,410) 5,582 (2,944) (3,261) (61,473)

June 30, 2009


(64,626) 2,696 (684) 3,050 1,419 1,045 37,367 8,724 (2,505) (110) (488) (14,112)

Consolidated Financial Statements | 101

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

31. Main contracts in progress At June 30, 2010 and 2009, the main contracts are the following: June 30, 2010 Country / Work Physical progress Total contract amount (USD million) June 30, 2009 Physical Total contract amount progress (USD million)

Argentina Campana Refinery Los Caracoles Hydroelectric Station Punta Negra Hydroelectric Station Engineering Services, Supplies and Mechanical Assembly at the Ancillary Building of the Reactor - Atucha II Veladero Mine Pirquitas Mine Pascua Lama Underground "A" Line - Renewal of Stations Bolivia Third Processing Train of the Sbalo Gas Treatment Plant Peru LNG Pipeline Chiquintirca Gas Compression Plant Loop de la Costa Gas Pipeline Camisea Maintenance Chile Construction of Sea Water Drive Pipeline- Minera Esperanza Replacement of Mineral Pipeline and Reclaimmed Water System Arabia Manifa Water Pipeline Uruguay Av. Ferreira Aldunate Sanitation of Maldonado Road 18 Maldonado Effluents Sanitation of Ciudad de la Costa
100% 18% 10% 20% 0% 7 5 8 37 20 50% 67% 4 15 48 67% 11% 133 156 100% 100% 100% 428 127 50 152 72% 71% 23% 416 110 (3) 38 123 3% 87 100% 100% 3% 95% 100% 100% 100% 100% 80 280 368 236 54 30 136 15 82% 98% 67% 89% 99% 75% 97% 70 224 (1) - (1) 118 50 (2) 28 118 (2) 16 (2)

102 | TEI&C S.A.

Notes to the Consolidated Financial Statements


All amounts are shown in USD thousands, unless otherwise stated

June 30, 2010 Country / Work Physical progress Total contract amount (USD million)

June 30, 2009 Physical Total contract amount progress (USD million)

Brazil Maintenance and Improvement of Offshore Platforms at Maca Northeast Maintenance and Improvement of Offshore Platforms at Maca Marlim Gasoline Unit of President Bernardes de Cubato Refinery (RPBC) Diesel Unit of Landulpho Alves-Mataripe Refinery (RLAM) Lot I Tanks Refinaria do Nordeste, Abreu e Lima (RNEST) Gasduc III Unidad de Coque Retardado - Complexo Petroqumico do Ro de Janeiro (COMPERJ) Mexico SE 1125 Distribution SE 1125 Distribution - Phase II SLT 1119 Transmission and Transformation of the Southeast Central Expansin Petacalco Thermoelectric Plant Canada Waupisoo Pipeline Project Corridor Pipeline Expansion Project Canadian Mainline Pipeline Project Central America & Caribbean Gasoline Optimization Program Upgrade Project for Petroleum Company of Trinidad and Tobago Pipeline Limn La Garita Siepac Substations Siepac I Siepac II
(1) The Company's participation is 75% (2) The Company's participation is 50%

100% 100% 92% 49% 30% 100% 1%

149 202 380 782 200 387 1,058

100% 95% 58% 18% 4% 60% -

155 201 332 628 (2) 157 (3) 295 (2) - (2)

100% 67% 90% 100%

30 46 91 158

95% 14% 98%

30 91 (4) 158

100% 100% 100%

90 73 251

100% 100% 60%

90 (2) 73 (2) 224 (2)

94% 100% 72% 74% 64%

318 96 43 139 57

88% 99% 40% 52% 55%

293 (2) 92 43 139 57

(3) The Company's participation is 60% (4) The Company's participation is 43%

32. Subsequent events After June 30, 2010, no events, situations or circumstances have occurred which might significantly

affect the Company's equity or financial position, which have not been adequately contemplated or mentioned in these consolidated financial statements.

Consolidated Financial Statements | 103

Gasoline Unit of President Bernardes de Cubato Refinery (RPBC), Brazil. 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.

104 | TEI&C S.A.

TEI&C subsidiaries activities for the period 2009-2010


Revenue
457 369 325

ARGENTINA
During the fiscal year ended in June 2010, total revenue in the country amounted to USD 325 million. The main projects developed during the fiscal year include:

Energy
Los Caracoles Hydroelectric Station - Energa Provincial S.E. The project was handled by the Techint-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 San Juan River, the main water resource of the province of the same name. With a power of 125 MW, Los Caracoles will provide a mean power capability of 715 GWh, and this would represent a significant step towards San Juans power self-sufficiency. The total contract amount was USD 280 million, at 100% of the JV. The two generation units

07-08

08-09

09-10

became operational in July and December 2009, respectively. Civil works were completed during this fiscal year, and the works are now in the warranty period since the Company has already obtained the Provisional Acknowledgments of Receipt. Punta Negra Hydroelectric Station Energa Provincial S.E. In November 2009, a contract was executed between Empresa Provincial S.E. and the Techint-Panedile JV where the Company has a 75% participating interest. 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 Juans economy, and to add 65 MW to the generation system of the Province. The contract amount is USD 368 million and the execution term is 54 months. Works were commenced in January 2010; at present, the construction of the river deviation channel and the engineering tasks devoted to review the executive design are in progress. As of June 30, 2010, the progress rate of construction is 3%.

Annual Report | 105

Engineering Services, Supplies and Mechanical Assembly at the Ancillary Building of the Reactor - Nucleoelctrica Argentina S.A. - Atucha II. This is a service contract to perform the piping system assembly 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 rate for the piping assembly as of June 30, 2010, is 95%. The second stage, the contract of which was executed after the end of the fiscal year, comprises piping ends, Civil Works, Painting, Insulation and Auxiliary Electricity Services, in the same Building. Both stages works will reach USD 236 million.

Mining
In this sector, the Company has the experience and resources required to perform civil works, roads, runways, assembly of processing plants, installation of tubing and soil movement. Sales during the fiscal year reached the sum of USD 29 million. During the period under analysis, the Company kept on developing the following projects: Veladero Mine - Barrick Gold Corp. In October 2009, the Company completed the works of extension of the current facilities, executed in association with Fluor Argentina Inc., under a JV on a 50%/50% basis. The total amount was USD 54 million. Also in October 2009, Techint was awarded the repair of 3.5 km. of the transportation belt as well as works on 30 piping corresponding to part of the

106 | TEI&C S.A.

During the fiscal year ended in June 2010, total revenue in the country amounted to USD 325 million.

second stage of pumping, which works were completed in May 2010. Pirquitas Mine - Mina Pirquitas Inc. Argentine Branch. During this fiscal year, Mina Pirquitas Inc. Argentine Branch, subsidiary of Silver Standard Resources Inc. from Canada, acknowledged receipt of the project, upon execution of the Acknowledgement of Completion in January 2010. The works consisted in the provision of services of basic and detail engineering, procurement management, construction direction and start-up of an opencast silver, tin and zinc mine, with facilities to process 9,000 tons a day through flotation and gravimetric concentration. The total contract amount was USD 30 million. Pascua Lama - Barrick Gold Corp. Bi-national gold and silver mining undertaking, located in the border between Chile and Argentina. The Company is associated in a JV with Fluor Daniel Argentina Inc. Argentine Branch (on a 50%/50% basis) 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 Management, and Phase III - Construction Management and Construction. During this fiscal year, works were continued in Phase II, starting in April 2007. The total expected amount for this phase is USD 136 million. In addition, the preliminary works have been started for commencement of Phase III, which phase is expected to begin during the next fiscal year.

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

Annual Report | 107

as business offices and buildings, housing unit complexes, cultural and educational premises, penitentiary complexes and hospitals. During this fiscal year, the following projects were developed:

Oil & Gas


Campana Refinery - ESSO. During the first half of the fiscal year, the works committed under Assignment No. 10 of the EPC RC- 1585 umbrella contract were completed. The works developed comprised management

Renewal of Line A Underground Stations Secretara de Transporte de la Nacin. This project was performed under a JV with Benito Roggio e Hijos S.A., where the Company holds a 50% participating interest, and for a total amount of USD 15 million. During this fiscal year, the works were completed and delivered. Such works consisted in the completion of the overall renewal of several underground stations of the Line A of the City of Buenos Aires. Crema 332 - Direccin Nacional de Vialidad (National Road Department). The contract included the performance of recovery and maintenance works in the roads of the province of San Juan and was awarded to the Joint Venture (JV) formed by the Company and L. M. Pagliara S.A. (with a 60% and a 40% participating interest, respectively). Works were completed on May 2, 2010, and maintenance works are currently in progress to obtain the Provisional Acknowledgement of Receipt. The total contract amount was $ 61 million, at 100% of the JV. Road 14 - Direccin Nacional de Vialidad (National Road Department). The contract was awarded to the Joint Venture (JV) formed by the Company, with a 60% participating interest, and ICF S.A. and Hidraco S.A., with a 20% each. The works consisted in the construction of a second roadway on National Road No. 14, in the province of Corrientes, in the so-called Tranche No. 7, between the junction with National Road No. 127 and the junction with Provincial Road No. 126. During this fiscal year, the Direccin Nacional de Vialidad approved the assignment by the Company of 100% of its participating interest in such JV to ICF S.A.

service, development of engineering, procurement and construction for the re-adaptation of the facilities for import and export of low-sulfur fuels (50 ppm), the execution of a new 33kv line, in a covered duct way (with a total length of 1,150 m), as well as facilities for interconnection of the Campana Refinery with the HMU (Hydrogen Manufacturing Unit). In October 2009, the applicable turnover / acceptance notices were signed, and during the subsequent 2-month period the demobilization and closing of the project took place. The final accumulated certified amount was USD 80 million

Iron & Steel Industry 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. The amount of sales reached during this fiscal year was USD 64 million. Several works were executed in Argentina for Tenaris Siderca and Ternium Siderar, among which the following stand out: Ternium Iron & Steel Projects. Relining of Blast Furnace 1. The project consists in increasing the capacity of Blast Furnace 1 from 3000 Tn/day to 3600 Tn/day. The scope of works includes: change

108 | TEI&C S.A.

of internal heat-resisting steel and cover in tap hole area, increase of refrigeration system capacity (construction of new pump rooms and cooling towers), construction of a new casting room, construction of an INBA granulation system and alternative granulation basin and new electrical rooms, among other tasks. Total man-hours used were approximately 4.5 million and the general progress rate is 99%. New extension of Silo High Voltage Line (Lnea Alta de Silos - LAS). The scope of works included: disassembly of the existing Coke Conveyor Belt and replacement by the new C1A and C1B conveyor belt; expansion of Rancho Negro (electrical room); lifting of Conveyor Belt 5; assembly of two new automated trippers, directed from a control tower; assembly of a control tower; new extension of the whole power source line and lighting of the sector and assembly of level sensors at silos. Total man-hours used in LAS were 186,700 and the progress rate during the fiscal year was 100%. Total income in this fiscal year reached the sum of USD 48 million, using 2.5 million man-hours. Tenaris Iron & Steel Projects. The most remarkable works performed during this fiscal year include the change of five beams in Section 7 fume extraction , 2nd stage in the steel-making area and extraordinary repair of Plant 2009 - 10. Total income of the period reached USD 10.9 million, using 562,000 man-hours.

Other Investments and Services


Railway Cargo Transportation Ferroexpreso Pampeano S.A. (FEPSA), a company under the control and corporate decision of Techint through Compaa Inversora Ferroviaria S.A.I.F ., is the concession holder of the railway cargo transportation. This company provides services towards the ports of Baha Blanca, Rosario,

Annual Report | 109

San Lorenzo and San Martn to exporters, stockers and large-scale producers within a vast area of the Wet Pampa region. During this fiscal year, 3.4 million tons of cargo were transported, which represents a 15% volume reduction with respect to the preceding period. Puentes del Litoral S.A. - Rosario - Victoria The Company is a minority stockholder (with an 8% participating interest) and together with Impregilo S.p.A., Iglys S.A., Hochtief Aktiengesellschaft Vorm. Gebr. Helfmann, Benito Roggio e Hijos S.A., Sideco Americana S.A. and Iecsa S.A., forms the road company connecting the city of Rosario (Santa Fe) and Victoria (Entre Ros), the temporary commissioning of which occurred in May 2003. On May 22, 2007, the reorganization proceedings concerning such company began before the National Court of First Instance in Commercial Matters No. 13, Court Clerk Office No. 26, of the City of Buenos Aires. On December 30, 2009, the Court passed a ruling approving the composition settlement agreed between the company and its creditors and thus, the reorganization proceedings are terminated. As of the date of this Annual Report, the Company has paid the obligations undertaken in such composition settlement. In addition, negotiations continue to settle the Concession Contract with the Unidad de Renegociacin de Contratos de Obras y Servicios Pblicos (UNIREN).

Revenue BRAZIL
Techint Engenharia & Construo S.A. (TEBRA) Brazil performs activities related to engineering, construction, assembly, works management, offshore projects, power generation, transmission and distribution, iron & steel units, transportation systems and infrastructure works in general. Revenues for this fiscal year have increased by 19%, from USD 39 million to USD 396 million.
07-08 08-09 09-10

396 331 243

110 | TEI&C S.A.

During the current fiscal year, works were performed in the following projects:

It is a Lump Sum contract for an updated total amount of USD 782 million, under a horizontal consortium (50% / 50%) with Andrade Gutierrez.

Oil & Gas


Petroleo Brasileiro S.A. - Gasoline Unit of President Bernardes de Cubato Refinery (RPBC). 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 Cubato, State of So Paulo. The total updated contract value amounts to USD 380 million. 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 rate of the project is 92%. Petroleo Brasileiro S.A. - Diesel Unit of Landulpho Alves-Mataripe Refinery (RLAM). On 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 Refinery Landulpho Alves de Mataripe, State of Baha. The general progress rate of the project is 30%. The activities started in April 2009 and will be completed in May 2012. The updated value of the contract is USD 200 million (at 100% of the consortium). It is a Lump Sum Contract being executed under a consortium with Equipamentos y Usiminas Mecnica, in which Techint has a 60% participating interest. The project includes three raw water tanks ( 65.0 m; 14.7m high; and 670 tons each) and eight crude oil tanks ( 98.5m; 14.7m high; and 2,430 tons each). The main physical amounts are 9,637 m3 of concrete, 21,558 tons of assembly and 177,300 m2 of painting. Petroleo Brasileiro S.A. - Lot I Tanks Refinaria do Nordeste, Abreu e Lima (RNEST). On 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 general progress rate is 49%. The main physical amounts reach: 11,000 m2 of concrete, 408 tons of metallic structures, 4,751 tons of equipment, 1,570 tons of piping, 240,000 m of cables, and 2,732 instruments. The total execution term is expected to be 36 months.

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Petroleo Brasileiro S.A. Retarded Coke Unit Complexo Petroqumico do Ro de Janeiro (COMPERJ). On April, 2010, a contract was executed with COMPERJ Petroquimicos Basicos 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 assisted operation start-up of the Retarded Coke Unit (U2200), Manipulation and Storage Yard (U6821) and 2 Electrical Sub-stations. It is an EPC Lump Sum contract, with guaranteed physical amounts. Techint is part of the TE-AG Consortium with Andrade Gutierrez, with a 50% participating interest each, under the leadership of Techint. The total value of the contract is USD 1,058 billion (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 meters of electroducts, and 4,938 instruments. The general progress rate is 1%.

Pipelines
Transportadora Associada de Gs - Gasduc III Pacote 01. In August, 2008, a contract was executed with Transportadora Associada de Gs TAG, of Petrobras, for the consistency review of basic engineering, and construction and assembly of the trunk line, special works, civil, mechanical, electrical, instrumentation and hydraulic works, tests, conditioning and support to the pre-operation of Package I of Gasduc III Gas Pipeline Project.

112 | TEI&C S.A.

The Northeast contract of maintenance and improvement of Offshore Platforms at Maca was completed in March 2009, whereas the Marlim contract was completed in September 2009.

Package I of the gas pipeline extends from Maca to Cachoeiras de Macac. Such pipeline will have a 38" diameter and will be 104 km long. Overall, the pipeline will cover 178 km and will go from Estacin de Cabinas to Estacin de Campos Elseos, located in the municipality of Duque de Caxias, in the State of Ro de Janeiro. It is an EPC contract, with Unit Prices, and will be executed under a horizontal consortium with Constructora Norberto Odebrecht S.A. (50% / 50%). The works were completed in January 2010. The updated value of the contract is USD 387 million (at 100% of the consortium).

Off Shore
Petroleo Brasileiro S.A. - Maintenance and Improvement of Offshore Platforms at Maca. The updated contract value is USD 351 million, divided into two contracts: Northeast, USD 149 million and Marlim, USD 202 million. Both contracts are for unit prices and are developed in 10 offshore platforms in the Campos Basin, opposite to the shores of the State of Rio de Janeiro. The Northeast contract was completed in March 2009, whereas the Marlim contract was completed in September 2009.

Iron and Steel Industry and Other Industries


ThyssenKrupp Companhia Siderrgica do Atlntico (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 3.4 million and the works are estimated to be completed by June 2011. The general progress rate of the project is 57%.

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PERU
The fiscal year ended with a minimum sales 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 execution - mainly at early stages - of new projects throughout the country.

Revenue

317 259

106

The main projects developed during this fiscal year were as follows: LNG Pipeline - PERU LNG S.R.L. Construction of a 408 km 34 gas pipeline and the respective facilities. The main activities included consistency review of engineering provided by the client, the supply of materials (excluding the casing and main equipment) as well as construction, assembly and pre-commissioning tasks. The contract amount was USD 428 million. The project was completed in January 2010 (Mechanical Completion Certificate Date). Camisea Maintenance Compaa Operadora de Gas del Amazonas S.A. The Company provides the maintenance of this gas pipeline. The total contract amount is USD 152 million by June 2010. In July 2010, this contract was renewed for a thirtymonth period. The total amount of this renewal is USD 126 million. Chiquintirca Gas Compression Plant Transportadora de Gas del Per S.A. (TGP). The contract consisted in the construction of a gas compression plant. To carry out this project, the Company partnered with GyM S.A. and formed the Proyecto Chiquintirca Consortium, with a 60% and 40% participating interest, respectively. The contract total amount was USD 127 million, and includes USD 43 million corresponding to purchases made directly by the client. The project was completed in May 2010.
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114 | TEI&C S.A.

Loop de la Costa Gas Pipeline - Transportadora de Gas del Per S.A. (TGP). On February, 2009, the Company received from TGP the notice to proceed with the construction of a 107 km 24 gas pipeline and the respective facilities. The total amount of the contract was USD 50 million and it was completed in January 2010. The project was accomplished by January 2010. During this fiscal year, the Company was awarded two new Projects: Jungle Loops Early Works (TGP). In March 2010, the Company received from TGP the notice to proceed with the early services for the construction of two pipelines of 32 and 24 150 km each, , including detailed engineering and early works activities (erection of camps, issue of permits, land rental and others activities). The total amount of this first scope of the project is around USD 73 million and it is expected to be completed in March 2011. As of June 2010, the project reached an 8% progress rate. Expansion of LNG transportation system - Addition of fourth pump (TGP). On June, 2010, the Company received from TGP a contract and notice to proceed with the Expansion of the LNG 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 and it is expected to be completed in April 2011. The project started in July 2010.

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MEXICO
In the year ended on June 30, 2010, Techint S.A. de C.V. (TEMEX) consolidated its ongoing projects in this country and continues working in the development of new business. Throughout its history, TEMEX has participated in the engineering and construction of major industrial and infrastructure projects.

Revenue

210 171

53

The main projects developed during this fiscal year were as follows:

07-08

08-09

09-10

Energy
Central Expansion Petacalco Thermoelectric Plant Mitsubishi Comisin Federal de Electricidad (CFE). Turnkey contract for design, supply, construction, testing and commissioning of a new power generation unit of 750 MW of the Central Thermoelectric Power Station Presidente Plutarco Elas Calles, in the city of Petacalco, Guerrero. The Companys scope of work is the balance of plant of the unit. As of June 30, 2010, the project reached a 100% progress rate and the total contract amount was USD 158 million. SE 1125 Distribution CFE. Lump sum financed public works contract and unit price contract with CFE for the execution of six works: four distribution substations and two high voltage lines with a length of 111 km, whose locations are in the states of San Luis Potosi, Hidalgo and Queretaro. As of June 30, 2010, the project reached a 100% progress rate and the contract amount was USD 30 million.

116 | TEI&C S.A.

SLT 1119 Transmission and Transformation of the Southeast 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 mechanic works, preoperative tests, and technical support to allow for the start up of electric substation and transmission lines, located in the state of Tabasco. The contract is being developed under a consortium where TEMEX participating interest is 43%. As of June 30, 2010, the overall progress for the project was 90% and the contract total amount was USD 91 million. 195 SE 1125 Distribution (2nd phase) 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 Potosi, Aguascalientes and Zacatecas. As of June 30, 2010, the project reached a 67% progress rate and the contract amount was USD 46 million.

hydrogen system construction and the demolition of several buildings. Lastly, in Puebla Plant there were works related to a steel bars storage system and installation of a casting machine system. At present, there are around 500 persons, but there were peaks of 600 people working for this contract on a direct basis. The sales obtained during the fiscal year amounted to USD 17.5 million. Construction Works at Veracruz Plant Tenaris. Provision of personnel and materials for the execution of construction works (including civil and electro mechanic works) and structures erection. Maintenance and steel & iron services works were continued with an average headcount of 1,800 persons. At present, in the Plant Expansion Project contract and the main contract, there are 3,089 persons working on a direct basis. It is estimated that in the first four-month period of 2011, such number will exceed 1,000 people. In the 09/10 fiscal year, the consolidated sales were for USD 64 million. Heavy Duty Cleaning Service Tenaris. The annual billing was approximately USD 5.4 million. In general terms, the service comprises the transportation and processing of slag, and the recovery, cutting and classification of junk. The current contract in force was awarded in 2009 for a 9-year term. Petacalco Project CFE. Carbonser, S. A. de C.V. was established on 8 August 1994 and its main activity is to provide services to load and transport coal to the Power Plant President Plutarco Elias Calles, located in Petacalco Guerrero. In the year ended on June 30, 2010, the Company unloaded 5.06 million tons

Iron and Steel Industry and Other Industries


Construction Works at Monterrey Plant Ternium. Provision of personnel and materials for the execution of construction works (including civil and electro mechanic works) and structure mountings. During the period, the Company executed different works in Ternium plants all over Monterrey and Puebla in Mexico. Worth mentioning are some works executed in Churubusco Plant, like the construction and assembly of a cold lamination facility and the construction of rolls transfer line. In the North Plant the Company was working in the construction and assembly of a cooling water system and smoke collection system. In Juventud Plant main works were the construction of trailer entrance and external illumination systems. In Universidad Plant the most important works were the completion of a shipping warehouse, the

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of coal and delivered 5.80 million tons to the CFE terminal in Lzaro Crdenas. Total revenue for this fiscal year amounted to USD 33 million.

CHILE
Founded in 1951, Techint Chile S.A. engages in activities related to engineering, construction and assembly of pipelines; mining projects; power generation, transmission and distribution; transportation systems and infrastructure works in general. Tenco holds a 76.88% participating interest in Techint Chile S.A.s capital stock. During this fiscal year, the Company resumed its level of activity, which had suffered a decrease during the previous fiscal year. Works were performed mainly in the following projects: Minera Esperanza Construction of Sea Water Drive System. During July 2009, the Company received the notice to proceed regarding the contract for Construction of Sea Water Drive System and Transportation and Concentrate System [Construccin del Sistema de Impulsin de Agua de Mar y Sistema de Transporte y Concentrado], for Minera Esperanza. The work consists in an engineering, procurement and construction (EPC) contract and the scope of works contemplates the construction of the concentrate transportation system, consisting in the line to transport concentrate from the Mina Esperanza plant to the port of Michilla, with the applicable energy dissipation station. In addition, works contemplate the construction of the sea water transportation and drive system, which shall transport water from fore bay at the port of Michilla to a pool near the Esperanza plant. The amount of the contract is USD 133 million and the execution term is 14 months. Anglo American Sur S.A. Replacement of Mineral Pipeline and Reclaimed Water System. In December 2009, the Company received, from Anglo American Sur S.A., the notice to proceed and then, the contract

Revenue

146 110

7
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118 | TEI&C S.A.

for Construction of Replacement Pipes Phase 1-A, New 28 Mineral Pipeline and Reclaimed Water System (Phase II) [Construccin de Tuberas Reemplazo Fase 1-A, Nuevo Mineroducto 28 y Sistema de Agua Recuperada (Fase II)] for their Los Bronces Development Project. The work consists in 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 Trtolas sector, on the existing track. In addition, the work contemplates an expansion of the capacity of the recirculated water drive system from Las Trtolas to the grinding facility, by means of a new drive system contemplating the reutilization of pipe sections of Phase I to be replaced. The term for completion of all aspects of the contract is July 30, 2011 and the total amount of the contract is USD 156 million. Anglo American Sur S.A. Construction of Stations and Singular Points for the reclaimed water system. In April 2010, the Company received the notice to proceed regarding the works related to the stations corresponding to the reclaimed water system for Los Bronces Development Project, which shall constitute addenda to the contract for the Mineral Pipeline and Reclaimed Water System already executed with Anglo American. Minera Escondida Limitada Service of Mechanical Maintenance. During November 2009, the new contract Service of Mechanical Maintenance per Families and Equipment of Processes [Servicio de Mantenimiento Mecnico por Familias y Equipos de Procesos] was executed with Minera Escondida (MEL). This contract contemplates the service of mechanical maintenance of Los Colorados, Laguna Seca and rea Seca de Hidrometalurgia concentration plants. The term of the contract is until October 31, 2012.

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Sociedad Contractual Minera el Morro (Detail Engineering Service). During June 2009, the Company was awarded El Morro project by Sociedad Contractual Minera El Morro (Xstrata Copper). The scope of the contract contemplated detail engineering of Phase I of the desalinated sea water transportation system located in the 3rd Region of Chile. In December 2009, services were completed and the Company received the final acknowledgment of receipt. Compaia Minera Casale Engineering Services for water and concentrate transportation system. In May 2010, the Company received the notice to proceed with works of basic and detail engineering of the water and concentrate transportation system of the Cerro Casale Project owned by Barrick Gold and Kinross. Works will be executed in collaboration with Brass. The execution term is 15 months. In addition, two flats (2600 m2) were bought in the region of Las Condes (Santiago) to move Techint Chiles offices. The delivery and subsequent move of Techint Chiles office will take place in the first half of 2011.

CANADA
During the fiscal year 2009 2010, Techint E&C Inc (TECAN) completed the execution of most of the works under the ongoing contracts. The efforts were focused on developing activities in the Oil Sands and other oil & gas producing areas in Western Canada; TECAN, either as a stand-alone company or in partnership with other firms, has bidded C and EPC projects for the execution of pipelines and facilities in these areas belonging to clients such as Enbridge, CNRL, Suncor and Husky. As of June 2010, Techint E&C Inc. is waiting for the results of some of such bids.

Revenue

107

58

07-08

08-09

09-10

120 | TEI&C S.A.

During the fiscal year 2009 2010, Techint E&C Inc. (TECAN) completed the execution of most of the works under the ongoing contracts.

The main projects developed during this fiscal year were as follows:

Pipelines
Corridor Pipeline Expansion Project (CPX) and Products Pipeline NPS 20 - Interpipeline Funds. The contract was signed in March, 2008. To undertake this project, TECAN associated with Robert B. Somerville, through a JV on a 50%/50% basis. The works under this contract included a 32 km 42" pipeline and a second one of 42 km 20" pipeline. The contract total amount is USD 73 million. The mechanical completion took place in November 2008. Final completion notice was received on January 29th, 2010. Canadian Mainline Pipeline Project (Alberta Clipper Project) - Enbridge Pipelines Inc. The contract was awarded in July 2007 to the JV formed by TECAN and Robert B. Somerville, where the Company has a 50% participating interest. The project includes Spreads 3, 4 and 5, with a total length of 345 km and 36" diameter. The contract, originally structured as a Cost plus Fee, was replaced for the Spread 5 by a Lump Sum plus Unit Prices contract. The total contract amount is USD 250.6 million. The Spread 5 was substantially completed in October 2009, and Spreads 3 and 4 received Final Acknowledgement as of September 2009. As of June 30, 2010, the Joint Venture is working in the correction of deficiencies and warranty attention in the three spreads, and works are expected to be completed by fall 2010. The contracts have been paid in full by Enbridge with the exception of the 10% Holdback and the Warranty Fund, a sum provided for the warranty period.

Business Development/ Engineering


CO2 Slurry Pipeline Joint Industry Project -Pathfinders- As part of the Pathfinders Group, Techint jointly participates with Enbridge, Syncrude, Snamprogetti, Electric Power Research Institute, SNC Lavalin, Cimarron Engineering and Stantec in the design of a CO2 slurry pipeline to transport sulfur, coke, limestone and other solid products from the

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Fort McMurray area to the Southern markets in a pipeline with dense phase CO2 as the carrier.

CENTRAL AMERICA AND THE CARIBBEAN


Sales in this region reached USD 96 million, and include several works that are being executed by the Companys subsidiaries.

Revenue

144

Oil & Gas


Gasoline Optimization Program Upgrade Project for Petroleum Company of Trinidad and Tobago (PETROTRIN). This project is being developed in Trinidad and Tobago by a joint venture with ABB Lummus Global Overseas Corporation (currently, CB&I), in which the Company holds a 50% participating interest. 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 amount of the contract for the JV is USD 74.9 million, plus a fixed fee of USD 10.5 million for procurement management in addition to refundable costs of around USD 232.6 million. As of June 30, 2010, the physical progress rate was 94%.
07-08 08-09

96

49

09-10

Pipelines
Pipeline Limn La Garita Refinadora Costarricense de Petroleo S.A. Turnkey contract involving the design, engineering, outfitting, construction and startup of a 12-inch, 123 kilometer pipeline, plus three pumping stations in Costa Rica. As of June 30, 2010, the overall progress for the project was 100% and the contract amount was USD 95.6 million.

Energy
SIEPAC 1 Empresa Propietaria de la Red S.A. Lump sum turnkey contract for the design of final engineering, the supply of materials and equipment, civil works, electromechanical works, final testing and startup of SIEPAC line 1. The purpose of the Electrical

122 | TEI&C S.A.

Interconnection System for the countries of Central America (SIEPAC) 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). As of June 30, 2010, the project reached a 74% progress rate and the total contract amount was USD 139 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 startup of SIEPAC II. As of June 30, 2010, the overall progress for the project was 64% and the contract amount was USD 57 million. SIEPAC Substations Empresa Propietaria de la Red S.A. Contract for design, supply, construction, testing and startup of the SIEPAC I and II Projects, which connect the 15 substations pertaining to this project. As of June 30, 2010, the project reached a 72% progress rate and the contract amount was USD 43 million.

BOLIVIA
Techint Ingeniera y Construccin Bolivia S.A. was founded on July 21, 2009, is to take part in construction projects for buildings, roads, dams, dwelling houses and transformation industrial plants for any kind of industries and activities.

Oil & Gas


Third Processing Train of the Sbalo Gas Treatment Plant Petrobras Bolivia S.A. On December 28, 2009, the Company and Petrobras Bolivia S.A. executed a contract for construction, assembly, interconnection, pre-commissioning, commissioning, start-up and performance test of the Third Processing Train of Sbalo Gas Treatment Plant, located at Tarija. Such contract contemplates the expansion of the plant by means of the construction of a processing plant of gas from well-head, sweetening with amines and

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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 87 million.

URUGUAY
Our historical presence in Uruguay was again ratified during this fiscal year. Sales reached the amount of USD 16 million, exceeding the sales of the previous period. The development of projects within the road and water markets continued, including the following: Maldonado Effluents. During this period, the Company started the works related to the call for bids Treatment and final disposal of Maldonado and Punta del Este system effluents [Tratamiento y disposicin final de efluentes del sistema Maldonado y Punta de Este]. The contract, entered into between the consortium TECHINT, Montec, Belfi and Obras Sanitarias del Estado (OSE), for an amount of USD 37 million, comprises the construction of 35 kilometers of tubing, 1 land outfall of 4 kilometers and civil and architecture works in 7 pumping stations, to be executed by Techint, and 1 off-shore outfall, 1 km long, to be executed by Montec, Belfi. The execution term is 36 months, and so far the project reached a 20% progress rate. Sanitation of Ciudad de la Costa. A contract was entered into with OSE for USD 20 million for the construction of 34 Km of sanitation networks, 56 Km. of gutters and 32 Km. of road works at Ciudad de la Costa, Department of Canelones. Some works related to construction site facilities and setting out have already been performed, and the commencement of works is planned for the next fiscal year. Road 18. In January 2010, works were commenced under the contract executed with Ministerio de Transporte y Obras Pblicas through Corporacin
07-08 08-09 09-10

Revenue

13

14

16

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Vial de Uruguay, CVU, for an amount of USD 8 million. Works consist in the structural reinforcement of 22 km of road in the Department of Treinta y Tres, remarking the elaboration of around 60,000 tons of asphalt mixtures for which around 70,000 tons of rock must be ground, plus foundation works, verge reconstruction and signaling. Av. Ferreira Aldunate. In May 2010, the works under this contract were completed. This contract was executed with Municipalidad de Maldonado for USD 7 million. Works consisted in the construction of a double paved way and surrounding streets on the current Av. Ferreira Aldunate (to the North of downtown Maldonado) which included, in addition to road works, hydraulic infrastructure and lighting works. Sanitation of Maldonado - Punta del Este. Works were resumed for OSE, UGD Maldonado, upon agreement on a third contractual phase for USD 5.0 million. Works executed include: sanitation of Punta del Este and Maldonado, removal and replacement of pavement and network maintenance in both cities, in addition to infrastructure works at Planta del Chileno. For this contractual phase, the works have reached an 18% progress rate. Bridge over Jos Ignacio Stream. A bridge is being built over Jos Ignacio Stream, Department of Maldonado, under a contract with Corporacin Vial del Uruguay for an amount of USD 2 million. Works, including placement of 200 m3 of reinforced concrete and construction of 24 prefabricated beams, started in August 2009 and have reached a 70% progress rate.

SAUDI ARABIA Pipelines


Tanajib - Manifa Water Pipeline JGC Corporation. During this period, we started the works under the contract with JGC at Tanajib Manifa, awarded last year. This project consists in an 18 pipeline, about 60 km long, which will connect the Tanajib

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water treatment plant and the Central Processing Facilities. It also includes a surface facility with a manual cut-off valve halfway along the course. The contract total amount is USD 48 million with a twoyear term for execution.

Atucha II Nuclear Plant (Argentina). Construction engineering works of piping installations. Per LNG (Per). Construction engineering and assistance for works. TGN-TGS Loops (Argentina). Detail engineering for the expansion of the gas transportation pipeline network Camisea Expansion (Peru). Gas separation and fractioning plants of Camisea. Conceptual, basic and detail engineering. Procurement management of equipment and material.

ENGINEERING
During this fiscal year, the level of activity developed, measured in man-hours, was around 1.8 million. 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 (San Juan). Conceptual, detail and basic engineering; including detail engineering of works for the deviation of 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. Pirquitas Mine Project (Jujuy). Basic engineering and project feasibility study, work schedule and investment estimate. Detail engineering and procurement, including management of purchase orders. Esso Clean Fuels Project (Campana). Assistance to complete basic and detail engineering works, as well as procurement. YPF Sulfur Reduction Phase 1 (Argentina). Detail engineering and preparation of the bidding conditions for an EPC contract. Petrotrin Alky Acid Project (Trinidad & Tobago). Completion of basic engineering, detail engineering and procurement management.

TGP - Chiquintirca Gas Compression Plant (Peru). Conceptual, basic and detail engineering and assistance for works. Procurement management of equipment and materials. TGP - NG Loop de la Costa Expansion (Peru). Detail engineering. Procurement management of equipment and material. Technical bidding terms for EPC contract. TGP - NGL Fourth Pump Expansion (Peru). Detail engineering. Technical bidding terms for EPC contract. TGP - Camisea Loops de la Selva (Peru). Conceptual and basic engineering. PLUSPETROL Camisea 2nd Expansion (Peru). Conceptual and extended basic engineering, plus the preparation of bidding conditions for the extension of Malvinas and Pisco plants. El Morro Water Pipeline (Chile). Completion of basic engineering and detail engineering. MINERA ESPERANZA Esperanza Pipelines (Chile). Completion of detail engineering.

126 | TEI&C S.A.

ANGLOAMERICAN / BECHTEL - Los Bronces. Pipelines and Stations (Chile): Two contracts, including detail engineering completion.

cutting lines of 2.8 tons for L2C2 consisting of 1 roller, one loading device and one walking beam each one. TENARIS - LC2F-PEMA, INDUCTION FURNACE

Cerro Casale (Chile). Detail engineering for a slurry line for Barrick mining company. PETROBRAS - RNEST (Brazil). Detail engineering for a storage tanks yard. PETROBRAS COMPERJ (Brazil). Detail engineering for a new coking unit at the Petrochemical Complex of Ro de Janeiro. EPR Siepac Bahas & Lneas (Mexico). Detail engineering for transmission lines and electrical sub-stations. CFE SE 1125 Distribution Second Phase (Mexico). Detail engineering for transmission lines and electrical sub-stations. CFE SLT 1119 Southeast Transmission and Transformation 1st Phase (Mexico). Detail engineering for five power transmission lines and two transformation sub-stations. TENARIS - STEEL-MAKING AREA FUME EXTRACTION (Campana - Argentina). 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. TENARIS - LC2F (Continuous cold-strip mill) - AJUS 1 / 2 / 3 Non-Destructive Control Equipment (CND) ENTRANCE (Campana - Argentina). Insertion in 3 existing ways of tilting rotators to perform a 90 turn of master tubes, before they enter the CND for subsequent calibration of the latter. TENARIS - LACO 2 HOT LAMINATION - BAR CUTTING 2 (Campana - Argentina). Installation of new bar

REVAMPING (Campana -Argentina). The project addressed the replacement of 2 induction furnaces, and the design of a new reel carrier. TENARIS - BAR LOADING TABLE FOR HOT MILL #2 (Canada). Installation of a new bar loading line. TENARIS - FAT3 (Veracruz - Mexico). Installation of all cold-cycle equipment for the new plant of TENARIS TAMSA. TENARIS - FAT3 - CASING THERMAL TREATMENT (Veracruz - Mexico). Installation of seamless tubing thermal treatment up to 7 .

PROCUREMENT
The main works performed regarding supplies are associated to the projects under development stated in the preceding section, Engineering. Procurement contributes to improve the Companys competitiveness by means of a comprehensive revision of the respective purchasing strategies and of processes and procedures, seeking to optimize costs, reliability and transparency in management. In this respect, the Company put the emphasis on the specialization of procurement headcount and the increased use of IT tools, with a focus on the following aspects of procurement management: (i) Increasing the contribution of value by focusing the purchasing strategy on the critical success factors, management total cost, productivity and strategic factors. (ii) Encouraging the specialization of the sector and, consequently, organizing the structure based on demand.

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(iii) Boosting the use of IT supporting systems for bids and suppliers management. 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 fiscal year, TEPAM, in addition to the administration, maintenance, repair, assistance and allocation of equipment to the different projects for use, continued to provide assistance to Warehouse and General Services areas that centralize the Companys logistics, with the objective of supporting the beginning of works upon commissioning, and subsequently, monitoring their needs throughout the development of projects. The program for the total renewal of TEPAM equipment in 10 years continues, with the purpose of setting the aging of such machinery in 5 years; this will help reduce costs for repairs and obtain a competitive improvement. In the area of building infrastructure, we acquired a location in La Negra- Antofagasta (Chile) and we entered into a rental agreement in Chincha Alta (Peru) in order to comply with the requests of our internal clients. The investment value in machinery, vehicles and tools for the 2009-2010 fiscal year was USD 21.8 million.

TEI&C S.A.