ANNUAL REPORT TEI&C S.A. JUNE 30, 2005

ANNUAL REPORT TEI&C S.A.

JUNE 30, 2005

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JUNE 30, 2005

COVER: CARACOLES HYDROELECTRIC POWER PLANT, ARGENTINA.

THE DAM WILL ATTAIN A CAPACITY OF 565 CUBIC METERS AND A DAM AREA OF 1,300 HECTARES. ITS PURPOSE IS TO EXPAND

THE ENERGY SECTOR TO 705 GWH/YEAR AND TO INCREASE THE IRRIGATION AREA BY 15,000 HECTARES.

INDEX

THE COMPANY_ 8

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT_ 18

LEGAL INFORMATION_ 19

REPORT OF THE AUDITORS_ 22

CONSOLIDATED BALANCE SHEET_ 24

NOTES TO THE CONSOLIDATED BALANCE SHEET_ 25

ADDITIONAL INFORMATION_ 52

TEI&C AND SUBSIDIARIES’ ACTIVITIES FOR THE PERIOD JULY 1, 2004-JUNE 30, 2005_ 53

PRO FORMA - CONSOLIDATED INCOME STATEMENT_ 72

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VELADERO PROJECT, ARGENTINA.

In the last fiscal period, Techint performed several works for Barrick Gold’s gold field located in the province of

San Juan: the engineering and construction of a fully equipped camp site for 1,260 employees, as well as civil

engineering, electromechanical assembly of all process areas, and procurement and assembly of metallic struc-

tures and tanks.

_ 8 TEI&C S.A. JUNE 30, 2005

TECHINT GROUP

Techint Group is a conglomerate of more than 300 companies that operates

internationally. In addition to TEI&C’s activities, TG is involved in the

steel and energy sectors by Tenaris S.A. manufacturing seamless and weld-

ed steel tubes (mostly for the oil industry), flat and long steel products

companies controlled through Ternium S.A. (mostly for the construction

industry), participating in the energy market –oil and gas exploration and

production1, operating gas and oil pipelines and distribution and trans-

portation networks2, and participating in other engineering and construc-

tion activities in the European, Chinese and African markets3. In addition

to this, TG is present in different endeavors in areas such as healthcare,

telecommunications, rail freight, and others.

Techint Group’s highlights:

(IN USD MILLIONS)

2004-05 2003-04 2003-02

Total sales 11,325 6,421 6,267

Total assets 12,502 8,374 7,611

Total permanent staff 34,200 26,800 27,100

THE COMPANY

TEI&C S.A. (“TEI&C”), incorporated in Uruguay, is the holding company of the Engineering, Construction, and Services

(“EC&S”) area in South America, Central America, and the Middle East for the Techint Group (“TG”).

1. Tecpetrol International S.A. is the holding company control-ling oil and gas operations in Argentina, Ecuador, Peru, Mexico,Venezuela, etc.

2. TG holds a minor interest in: Transportadora de Gas del NorteS.A. and Transportadora de Gas del Mercosur S.A. (Argentina),both companies being involved in gas transportation.

3. The Engineering and Construction business in Europe, China,Egypt, Mexico, and Africa are developed under the control ofTechint European Holding (Netherlands) B.V.

_

_

_

THE COMPANY _ 9

EC&S’s activities developed by the TG led to the definition of 3,000 projects

–300 power projects, 20,000 kilometers of power lines laid, 7,500 kilometers

of roads tended, etc.– and currently employing 18,000 people. EC&S’s works

performed and backlog for the period ended 06.30.2005 reached USD 1,641

million, geographically segregated as follows:

TEI&C AND SUBSIDIARIES

Since its beginnings in the 1940s, TEI&C and its subsidiaries have constant-

ly grown, providing services to customers located mostly in Latin America

and the Middle East. The companies grouped today under TEI&C have

designed and built more than 70,000 kilometers of gas and oil pipelines

throughout the world, including 16 pipelines laid across the Andean moun-

tains, reaching altitudes of 5,000 meters above sea water level. These com-

panies are also active in infrastructure for such projects, such as water and

waste treatment plants, mineral pipelines, telecommunication networks,

power transmission lines, transportation networks (railways, undergrounds,

roads, bridges, and highways), aqueducts, dams, reservoirs, and airports.

Manufacturing plants have been yet another area where TEI&C’s subsidiaries

have developed international expertise, including steel, chemical and petro-

chemical plants, gas treatment and separation refineries, concrete refineries,

and other light industry plants. Furthermore TEI&C is also widely experi-

enced in thermal and hydroelectric power generation plants.

All the above-mentioned projects have enabled TEI&C and its subsidiaries

to gather substantial experience and know-how in the most complex chal-

lenges posed by our customers, thus reaching international level quality

and service standards.

SALES AND BACKLOGGEOGRAPHICAL DISTRIBUTION(IN USD MILLIONS)

EUROPE, MIDDLEEAST AND AFRICA

686

MEXICO341

ARGENTINA300

BRAZIL242

OTHER (AMERICA)72

_ 10 TEI&C S.A. JUNE 30, 2005

Some of the most important projects are:

PROJECT

Heavy Crude Pipeline (OCP)

Camisea Gas Pipeline and Polyduct

Loma de la Lata-Bahía Blanca-Buenos Aires Gas Pipeline

Yanbu-Medinah Aqueduct

Units for the RLAM Refinery

Profertil Fertilizer Complex

Norandino Gas Pipeline

Revamping of Luján de Cuyo Distillery

Hawiyah Gas Plant

Cupiagua Central Processing Facilities (CPF)

Muglad Basin Oil Development Project

Hawiyah Gas Pipeline

Central Puerto Combined Cycle Plant

Vasconia-Coveñas Oil Pipeline

Second Continual Seamless Steel Tubes Laminator for Siderca

* (IN USD MILLIONS)

CUSTOMER

Heavy Crude Oil (OCP) Ecuador S.A. (Alberta Energy, Kerr-McGee, Occidental Petroleum, Repsol YPF, AGIP Oil, and Pérez Companc)

Transportadora de Gas del Peru S.A. (Tecgas Argentina S.A. Pluspetrol, Hunt Oil Company, Sonatrach, Graña y Montero, SK Corporation, and Tractebel)

Gas del Estado S.E.

Saline Water Conversion Corporation (SWCC)

Petrobras - Petróleo Brasileiro S.A.

Profertil S.A.

Norandino S.A.

YPF S.A.

Saudi Arabian Oil Co.

Oleoducto Central S.A.

Greater Nile Petroleum Operating Company Ltd,


Central Puerto S.A.

Oleoducto de Colombia S.A.

Siderca S.A.I.C.

COUNTRY

Ecuador

Peru

Argentina

Saudi Arabia

Brazil

Argentina

Argentina - Chile

Argentina

Saudi Arabia

Colombia

Sudan

Saudi Arabia

Argentina

Colombia

Argentina

AMOUNT*

900.0

650.0

475.0

433.0

393.0

380.0

330.0

296.0

280.0

273.0

272.0

258.0

240.0

236.0

235.0

CAMISEA PROJECT, PERU. SUCH WORKS COMPRISED SIGNIFICANT LOGISTICS, TOPOGRAPHY, AND WEATHER-RELATED CHALLENGES.

THE COMPANY _ 11

Main current projects4:

PROJECT

Caracoles Hydroelectric Central and Dam

Haradh Arabian Light Crude Increment Facilities, Gas and oil separation plant

Macaé - Maintenance of Campo de Marlin platform

Veladero Mining Project - Miscellaneous tasks

Macaé - Maintenance of Nordeste platform

PRA I - Autonomous re-pumping platform

Expansion Loops 2005

Expansion Loops 2005

Underground Line A - Tracks and Track machinery renovation

ALUNORTE - Boiler works I

Elicabe Refinery - Sulfur Recuperation unit

Maldonado - Punta del Este Sanitation works

Rabigh Development Project - Utilities & Offsites

Electromechanic assembly, maintenanceworks, structure repairs, industrial cleaning, boiler works and other works

* (IN USD MILLIONS). ** UNDERGOING NEGOTIATION

CUSTOMER

Energía Provincial Sociedad del Estado



Minera Argentina Gold S.A.



Transportadora de Gas del Norte S.A.

Transportadora de Gas del Sur S.A.

Secretaría de Transporte del Ministerio de Planificación Federal, Inversión Pública y Servicios

Alumina Do Norte Do Brazil S.A.

Petrobras Energia S.A.

Obra Sanitaria del Estado - OSE

Saudi Aramco and Sumitomo Chemical Japan J.V.

Siderar S.A.I.C., Siderca S.A.I.C., Sidor C.A., Tenaris S.A., Tubos de Acero de Venezuela S.A. and Hylsa S.A. de C.V.

COUNTRY

Argentina

Saudi Arabia

Brazil

Argentina

Brazil

Brazil

Argentina

Argentina

Argentina

Brazil

Argentina

Uruguay

Saudi Arabia

Argentina, Venezuela, and Mexico

AMOUNT*

152.0

147.0

138.8 5

104.0

75.4 5

70.8 5

34.4

31.3 5

23.5 5

21.3 5

14.4

5.0

u.n. **

u.n. **

4. See a detail of projects under “Additional Information:TEI&C’s activities for the period July 1, 2004 - June 30, 2005”

5. Approximate amounts in USD.

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_

PRA-1. THE ORIGINAL AND ADDITIONAL CONTRACTS COMPRISE THE CONSTRUCTION OF A FIXED OIL PUMPING PLATFORM.

_ 12 TEI&C S.A. JUNE 30, 2005

STRUCTURE OF TEI&C

TEI&C was incorporated, through its controlling company Techint Limited

(Jersey), in order to concentrate in one single holding company the control

of the subsidiaries doing business in TG’s areas in South America, Central

America and the Middle East.

At the end of June 2005, the headcount totalized 13,746 employees (includ-

ing temporary) located in several countries: Saudi Arabia, Argentina, Brazil,

Chile, Ecuador, Mexico, Peru, Uruguay, Venezuela and others.

The family tree for TEI&C (including the most important companies) at June 30,

2005 is:

TEI&CURUGUAY

TECHINT INT. CONST. CORP.(TENCO) BAHAMAS

100%

FLINWOKURUGUAY

100%

LOSA-LAD. OLAVARRÍAARGENTINA48

%

52%

COINCARARGENTINA35

%

65%

COMP. INV. FERROVIARIAARGENTINA23

%

77% TECHINT

BRAZIL51%

49%

FERROXPRESO PAMPEANOARGENTINA20

%

80% SOCOMINTER

BRAZIL

100%

TECHINTPERU

100%

TECNOLOGÍA SERV. URB.ARGENTINA54

%

46% TECHINT CHILE

CHILE23%

77% WILTSE CORPORATION

URUGUAY

100%

TECNOMATTERARGENTINA97

% 3%

SERV. P. TECHINT FUNCHALPORTUGAL49

%

51%

SIDERNET ARGENTINA5% 95

% SIDERNET DE VENEZUELAVENEZUELA10

0%

SIDERNET MEXICANAMEXICO75

%

25%

TECHINTURUGUAY

100%

INV. S. CATALINA DE S.ARGENTINA98

% 2%

SAUDI TECHINTSAUDI ARABIA60

%

40%

TECHINT CO. TEC. INT.ARGENTINA49

%

22%

29%

OTHERS

OTHERS

OTHERS

(1)

(1)

(3) (2) (2)

(1)

(1)

OTHERS

OTHERS

FLINWOK

1. These participations belong to another company of theTechint Group.

2. On August 11th, 2005, the participation that represents25% of the equity of Sidernet Mexicana S.A. de C.V. wasacquired from third parties of the Techint Group.

3. On July 19th, 2005, Servicios y Prestaciones TechintFunchal-Serviços, Comércio E Gestão de Projecto LDA. acquired100% of the equity of Sidement Venezuela C.A.

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TEI&C-FINANCIAL AND EQUITY STRUCTURE

TEI&C and its subsidiaries have adopted the International Financial Reporting

Standards (IFRS, formerly IAS) issued by the International Accounting

Standards Board (IASB) as accounting standards for the preparation of this

financial information.

During the fiscal year, TEI&C has included in its investment portfolio sev-

eral participations in companies within the field of engineering, construc-

tion and others, as shown below:

Since these subsidiaries were not officially included in TEI&C’s portfolio

during the twelve-month period ended June 30, 2005, a consolidated

income statement would not include the subsidiaries’ results for such peri-

od, and would only show results from the acquisition date of each sub-

sidiary, until the end of the fiscal year.

THE COMPANY _ 13

COMPANY

Techint Compañía Técnica Internacional S.A.I.C. –Argentina – and Subsidiaries

Techint International Construction Corporation (TENCO) –Bahamas– and Subsidiaries

Techint Compañía Técnica Internacional S.A.I.C. –Argentina– and Subsidiaries

L.O.S.A. Ladrillos Olavarria S.A.

ACQUISITION DATE

02.23.05

05.11.05

05.11.05

06.28.05

%

21.75

100.00

29.46

52.05

BUSINESS

Engineering, construction and services

Engineering & construction


Manufacture and sales of ceramic tiles

Regardless of this, and considering the controlled companies have been

operating during the twelve-month period ended June 30, 2005, a Pro

Forma Consolidated Income Statement has been prepared for such period,

as shown below, exclusive before reference and to illustrate the pro forma

consolidated results of TEI&C as if the acquisition dates of these sub-

sidiaries had been July, 1 2004

(IN USD MILLIONS)

JUNE 30, 2005

Net sales 592.1

Cost of sales (523.0)

Gross profit 69.1

Administrative expenses (51.0)

Sales expenses (4.9)

Other operating expenses (0.5)

Operating income 12.7

Financial results, net 6.3

Other income and expenses, net 8.6

Loss from investment in associates (2.4)

Income before income tax 25.2

Income tax expense (14.8)

Income for the fiscal year 10.4

ATTRIBUTABLE TO

Equity holder of TEI&C 4.3

Minority interest 6.1

10.4

_ 14 TEI&C S.A. JUNE 30, 2005

TEI&C’s consolidated shareholder’s equity as of June 30, 2005 reaches USD

153.1 million. See below a summary structure:

(IN USD MILLIONS)

JUNE 30, 2005

Non Current Assets 226.8

Current Assets 290.6

517.4

Equity

Shareholders 153.1

Minority interest 69.9

Non Current liabilities 47.5

Current Liabilities 246.9

517.4

The main financial indicators are:

(IN USD MILLIONS)

INDICATOR JUNE 30, 2005

Financial solvency 1.76

Liquidity 1.18

Indebtedness 1.32

Gross yield 12%

Illiquid assets 0.44

AN OUTLOOK FOR TEI&C

During the 2005/06 fiscal year TEI&C expects to increase, directly or indi-

rectly, its participation on its main subsidiaries. To accomplish this, it will

incorporate shares of Techint Compañía Técnica Internacional S.AC.I.

(“TEARG”) and LOSA Ladrillos Olavarria S.A.I.C. (“LOSA”), both incor-

porated in Argentina.

Regarding steel services, the Company intends to create a specific sub-

holding company to hold the companies in charge of the steel services con-

tracts in Venezuela, Mexico and Argentina.

THE COMPANY _ 15

After such process, the Company’s structure will be as follows:

TEI&C and its subsidiaries will aim at maintaining their position in the

pipeline, industrial and petrochemical plants, and steel services.

At the same time, the company is reinforcing its process and procedures

policies -which have been redefined in order to promote continual

improvement and business predictability, concentrating its efforts and

activities in selected markets and products, thus minimizing risks and

enhancing its leadership in engineering and construction throughout Latin

America.

The short and medium term development perspectives are very good due

to the growing investment trend driven by current prices of energy com-

modities, competitive advantages, and the important expertise acquired.

In the oil and gas areas, there are important opportunities in sight for new

contracts in the pipelines and industrial facilities market, especially in

Venezuela, Peru and Brazil, apart from the projects and mega projects that

are starting to appear in Saudi Arabia.

The outlook for Argentina focuses primarily in infrastructure projects

related to the development of investments in the power field. Particularly

important will be the developments related to gas transportation, where

TEARG, a subsidiary of TEI&C, is a regional leader and will focus in

expanding trunk gas pipeline systems through new contracts and early par-

ticipation in new developments in thermal generation and power lines.

_ 16 TEI&C S.A. JUNE 30, 2005

TELECOMUNICATIONSTecnología Serv. Urb.

FREIGHT TRANSPORTATIONFerroexpreso Pampeano

OTHERCoincarSYUSACOSA

INDUSTRIAL AREALOSA - Lad. Olavarría

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_

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_

OTHER SERVICES ANDINDUSTRIAL AREA

ENGINEERING &CONSTRUCTION (1)

SOUTH AMERICANTechint ArgentinaTechint BrazilTechint UruguayTechint ChileTechint EcuadorTechint Peru

MIDDLE EASTSaudi Techint

______

_

TEI&CURUGUAY

STEELSERVICES

ARGENTINATecnomatterSidemet

MEXICOTecnomatterSidernetSICI

VENEZUELASersisaSidernet

__

___

__ 1. Engineering and construction of oil and gas pipelines, miner-

al pipelines, polyducts and industrial and chemical plants, petro-chemicals, dams, mining infrastructure, public works infrastruc-ture, etc.

_

In the field of petrochemical and chemical plants, the engineering and con-

struction portfolio may increase due to the oil companies’ new initiatives

to improve their own gasoline, an essential environmental requirement.

Regarding mining, we foresee an interesting share in the Chilean mining mar-

ket, as Techint International Construction Corporation-TENCO and Techint

Chile S.A. are leaders in the execution of mining ducts. Therefore, we are con-

sidering the possibility of widening such expertise to other mining develop-

ments in the Andean region.

Commercial initiatives in Latin America and the Middle East will be inten-

sified in order to obtain new business. The Company will make an effort to

achieve a satisfactory participation in transportation infrastructure projects

such as roads, railroads and undergrounds. It will also evaluate participat-

ing in other sanitation and drainage projects for urban conglomerates that

will improve both the environment and urban economic activities.

Moreover, Techint S.A., TEI&C’s Brazilian subsidiary, will maintain its par-

ticipation in new business, focusing on ongoing needs to increase and

improve Brazil’s infrastructure.

Steel industry services will sustain a substantial improvement during the

next fiscal year. We foresee new contracts for Sidor C.A., Tubos de Acero

de México S.A. and Hylsa S.A. de C.V., the most important steel companies

in Venezuela and Mexico. This business will be part of the structure reor-

ganization process described at the beginning of this annual report. Such

services are expected to expand throughout Latin America.

For more than 50 years, TEI&C’s subsidiaries have proved competent in

developing important multidisciplinary projects in areas such as engineer-

ing, purchasing, assembly, construction, commissioning and start-up,

always reaching the highest level of compliance. All these points are the

corner stones that make TEI&C such an attractive choice for both cus-

tomers and associates.

This Board wishes to express its gratitude to the staff of all TEI&C’s sub-

sidiaries for the cooperation and effort shown in the projects carried out

during the fiscal year. We would also like to acknowledge financial insti-

tutions, suppliers, customers and sub-contractors for their trust, assistance

and cooperation.

THE BOARD OF DIRECTORS

THE COMPANY _ 17

_ 18 TEI&C S.A. JUNE 30, 2005

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

Board President Carlos Eduardo Bacher

Vice President Eduardo Nicolas Rocca Couture

Directors Enrico Bonatti

Atilio Juan Del Vecchio

María Virginia Jubin Vértiz

Mario Osvaldo Lalla

Luis Pablo Solari Damonte

Subsidiaries’ Presidents Argentina Roberto Bonatti

or Legal Representatives Brazil Roberto Caiuby Vidigal

Chile Felizardo Figueroa Barrueco

Ecuador Rodrigo Salazar

Peru Rosa María Ludowieg Alvarez Calderón

Saudi Arabia Claudio Catroppa

Uruguay Eduardo Nicolás Rocca Couture

Venezuela Fulvio Italiani

Executive Management General Manager Carlos Eduardo Bacher

Operational Managers

Operational Mario Agustín Dell’Acqua

Budgeting and Quality Horacio Amartino

Engineering Daniel Fernández

Service Areas Carlos Daniel Baylac

Staff Managers

Financial Mario Osvaldo Lalla

Human Resources Guillermo Farall

Legal Affairs Adriana Graciela Batán

Project and Office Managers

Andean Region Gerardo Freire

Argentina Osvaldo Macías

Brazil Alejandro Jorge Aguado

Chile Alejandro Cardone

Saudi Arabia Claudio Catroppa

Pipelines Luis Ignacio Viboud

Steel Services Julio Risucci

ANNUAL REPORT _ 19

LEGAL INFORMATION

Denomination: TEI&C S.A.

Legal Address: Rincón 487 - Of. 403

Edificio Artigas

Montevideo (11000)

Company activity: Investments

Date of registration: February 16, 2005

Expiration of Company Charter: February 16, 2105

Number of register: RUC 21 5098860012

Capital Stock: Shares: 3,584,924,092

Face Value: $U 3,584,924,0928

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: 100%

Votes: 100 %

8. $U = Uruguayan Pesos_

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HUMAN RESOURCES.

At the end of June 2005, the headcount totalized 13,746 employees (including temporary) located in several

countries: Saudi Arabia, Argentina, Brazil, Chile, Ecuador, Mexico, Peru, Uruguay, Venezuela and others.

All levels of Techint employees participate in continuous training programs which enhance their skills to

improve productivity, quality and safety, which are key factors to assure client satisfaction.

_ 22 TEI&C S.A. JUNE 30, 2005

REPORT OF THE AUDITORS _ 23

CONSOLIDATED BALANCE SHEET at June 30, 2005

ALL AMOUNTS IN USD THOUSANDS

ASSETS NOTES JUNE 30, 2005

NON-CURRENT ASSETS

Property, plant and equipment 5 144,344

Intangible assets 6 3,935

Investments in associates 7 32

Other investments 8 15,108

Trade and other receivables 9 48,292

Deferred income tax assets 10 15,078 226,789

CURRENT ASSETS

Inventories 11 16,152


Construction contracts - work in progress 23,047

Property, plant, and equipment 5 461

Other investments 8 10,445

Cash and cash equivalents 51,052 290,648

Total assets 517,437

EQUITY AND LIABILITIES

SHAREHOLDER’S EQUITY

Capital and reserves attributable to

the Company’s equity holder 153,123

Minority interest 69,929 223,052

NON-CURRENT LIABILITIES

Borrowings 13 5,949

Deferred income tax liabilities 10 6,035

Trade and other payables 14 16,540

Other liabilities 15 18,934 47,458

CURRENT LIABILITIES

Borrowings 13 53,399

Derivate financial instruments 18 641

Trade and other payables 14 145,491

Construction contracts - work in progress 13,074

Other liabilities 15 34,322 246,927

Total liabilities 294,385

Total equity and liabilities 517,437

The accompanying notes are an integral part of this consolidated balance sheet.

_ 24 TEI&C S.A. JUNE 30, 2005

INDEX TO THE NOTES TO THE CONSOLIDATED BALANCE SHEET

1_ GENERAL INFORMATION

2_ BASIS OF PREPARATION

3_ ACCOUNTING POLICIES

a_ FOREIGN CURRENCY TRANSLATION

b_ USE OF ESTIMATES

c_ PROPERTY, PLANT AND EQUIPMENT

d_ INTANGIBLE ASSETS

e_ IMPAIRMENT OF LONG-LIVED ASSETS

f_ LEASES

g_ INVESTMENTS

h_ OTHER INVESTMENTS

i_ TRADE AND OTHER RECEIVABLES AND PAYABLES

j_ INCOME TAXES-CURRENT AND DEFERRED

k_ INVENTORIES

l_ CONSTRUCTION CONTRACTS-WORK IN PROGRESS

m_ CASH AND CASH EQUIVALENTS

n_ SHAREHOLDER’S EQUITY

o_ BORROWINGS

p_ EMPLOYEE BENEFITS

q_ PROVISIONS

r_ DERIVATIVE FINANCIAL INSTRUMENTS

4_ CERTAIN RISK AND UNCERTAINTIES

5_ PROPERTY, PLANT AND EQUIPMENT

6_ INTANGIBLE ASSETS

7_ INVESTMENTS IN ASSOCIATES

8_ OTHER INVESTMENTS

9_ TRADE AND OTHER RECEIVABLES

10_ DEFERRED INCOME TAXES

11_ INVENTORIES

12_ SHARE CAPITAL

13_ BORROWINGS

14_ TRADE AND OTHER PAYABLES

15_ OTHER LIABILITIES

16_ EMPLOYEE BENEFITS

17_ PROVISIONS

18_ FINANCIAL INSTRUMENTS

19_ PARTICIPATION IN JOINT VENTURES

20_ CONTINGENCIES AND COMMITMENTS

21_ RESTRICTED ASSETS

22_ RELATED PARTY TRANSACTIONS

23_ SUBSIDIARIES

NOTES TO THE CONSOLIDATED BALANCE SHEET _ 25


TEI&C S.A. (“TEI&C”), a company wholly-owned by Techint Limited, has been organized in Uruguay

in February 2005 and is a part of the Techint Group (“TG”). TEI&C’s purpose is to engage in invest-

ments by holding equity interests in companies or organizations whose corporate purpose includes

engineering, construction and services.

During the fiscal year, TEI&C acquired several participations in companies within the field of engi-

neering, construction and others, as explained below:

The assets and liabilities of TEARG, TENCO y LOSA (and their respective subsidiaries) have been

accounted for at the relevant predecessor’s cost, reflecting the carrying amount of such assets and lia-

bilities contributed to the Company. Accordingly, the consolidated balance sheet includes the bal-

ance sheets of the above-mentioned 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 cost was charged to equity.

COMPANY

Techint Compañía Técnica Internacional S.A.I.C.-(“TEARG”)-Argentina and Subsidiaries

Techint International Construction Corporation (TENCO)-(“TENCO”)-Bahamas and Subsidiaries

Techint Compañía Técnica Internacional S.A.I.C.-Argentina and Subsidiaries

L.O.S.A. Ladrillos Olavarria S.A.-(“LOSA”)

NOTES TO THE CONSOLIDATED BALANCE SHEET

All amounts are shown in USD thousands, unless otherwise stated

_ 26 TEI&C S.A. JUNE 30_ 2005

ACQUISITION DATE

02.23.05

05.11.05

05.11.05

06.28.05

%

21.75

100.00

29.46

52.05

BUSINESS


Engineering and construction




This consolidated balance sheet is prepared in accordance with International Financial Reporting

Standards (hereinafter “IFRS”) and is presented in thousands of U.S. dollars (“USD”) which is the

functional currency of TEI&C.

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgments in the process of apply-

ing the Company’s accounting policies. The areas involving a higher degree of judgment of com-

plexity, or the areas where assumptions and estimates are significant to the consolidated financial

statements, are disclosed in note 3.b.

The consolidated balance sheet as of June 30, 2005 includes the assets and liabilities of the sub-

sidiary companies.

The Company defines:

Subsidiary companies as those in which the Company has an interest of more than 50% of the vot-

ing rights or otherwise has the power to exercise control over the operating decisions. See note 23 of

the consolidated balance sheet for the list of subsidiaries.

Associated companies as those in which the Company owns between 20% and 50% of the voting

power. See note 7 of the consolidated balance sheet for the list of associates.

Related companies as those that have direct or indirect participation in the capital stock of the

Company, as well as the companies in which they participate. Additionally, related companies are

those in which the Company owns less than twenty percent of the voting power. See note 22 of the

consolidated balance sheet for related party transactions.

Joint Ventures as a jointly controlled entity, which involves the establishment of a corporation, part-

nership or other entity in wich each venturer has an interest.


_

_

_

_

TEI&C’s interest in jointly controlled entities is accounted for by the proportionate consolidation

method. TEI&C combines its share of the joint ventures’ individual assets and liabilities on a line-by-

line basis with similar items in TEI&C’s consolidated balance sheet. See note 19 of the consolidated

balance sheet.

Subsidiaries are consolidated from the date on which control is transferred to the Company and are

no longer consolidated from the date that the Company ceases to have control. The purchase method

of accounting is used to account for the acquisition of subsidiaries.

All material intercompany transactions and balances among TEI&C’s subsidiaries have been elimi-

nated in consolidation.

3_ ACCOUNTING POLICIES

Early adoption of standards

In the current period the Company early adopted the IFRS which are relevant to its operation, as fol-

lows:

IAS 1, Presentation of Financial Statements

IAS 2, Inventories

IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10, Events after the Balance Sheet Date

IAS 16, Property, Plant and Equipment

IAS 17, Leases

IAS 21, The Effects of Changes in Foreign Exchange Rates

IAS 24, Related Party Disclosures

IAS 27, Consolidated and Separate Financial Statements

IAS 28, Investments in Associates

IAS 32, Financial Instruments: Disclosure and Presentation

IAS 36, Impairment of Assets

IAS 38, Intangible Assets

IAS 39, Financial Instruments: Recognition and Measurement

IAS 40, Investment Property

IFRS 2, Share-based Payments

IFRS 3, Business Combinations

_ 28 TEI&C S.A. JUNE 30_ 2005

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_

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_

_

_

_

_

_

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_

_

_

_

_

_

The early adoption of IAS 1, 2, 8, 10, 16, 17, 21, 24, 27, 28, 32, 36, 38, 39, 40, and of IFRS 2 and 3

did not result in substantial changes to TEI&C’s subsidiaries accounting policies.

The following is a summary of the principal accounting policies followed in the preparation of this

consolidated balance sheet:

a_ Foreign currency translation

I_ Functional and presentation currency

Items included in the balance sheet of each entity in which TEI&C participates 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 balance sheet is presented in

thousands of U.S. dollars, which is the measurement currency of TEI&C. The subsidiary companies

first record transactions using the functional currency and their balance sheets are then translated to

U.S. dollars with the only purpose of being consolidated by TEI&C.

II_ Translation of balances and transactions in currencies other than the functional currency

Transactions in currencies other than the functional currency are accounted at the exchange rates

prevailing at the date of the transactions, and the corresponding exchange gains and losses are

recorded within financial results.

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 currency

different from the Company’s presentation currency are translated into the presentation currency as

follows:

assets and liabilities of each balance sheet are translated at the closing rate at the date of that balance

sheet;

income and expenses for each income statement are translated at average exchange rate;

all resulting exchange differences are recognized as separate component of equity.

In the case of sale or other disposition of any such subsidiary, any accumulated translation difference

would be recognized in the income statement as part of the gain or loss on sales.

b_ Use of estimates

The preparation of consolidated financial statements requires management to make estimations and

evaluations on both recorded and contingent assets and liabilities as of a certain date. Company’s

management makes estimations to calculate, at a certain moment, works in progress, allowance for

doubtful accounts, depreciation and amortization, the recoverable value of assets, and income tax

and provisions for costs and contingencies. The future actual results may differ from estimates made

as of the date of preparation of this consolidated balance sheet.


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c_ Property, plant and equipment

Machinery, equipment, vehicle, and others

As a general rule, TEI&C has adopted historical acquisition or construction cost less accumulated

depreciation for its fixed assets.

However, in the case of machinery, equipment and vehicles used in the construction business, TEI&C

has adopted fair value as the measurement criterion. Accordingly, the wholly-owned subsidiary

Techint International Construction Corp. (TENCO) revalued its machinery, construction equipment

and vehicles at June 30, 2003 based on a technical appraisal performed by a qualified professional

valuation specialist. The 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 and equipment is revalued, the entire class of property and equipment to which that

asset belongs should be revalued. Nevertheless, machinery, construction equipment and vehicles

held by the subsidiary Techint Compañía Técnica Internacional S.A.C.I. (“TEARG”) were valued at

historical acquisition or construction cost restated to reflect the effects of inflation up to the transi-

tion date for IFRS (June 30, 2002) less accumulated depreciation. In view of the restatement per-

formed, the Company has deemed prudent not to revalue such assets.

The “sales comparison” method was used to obtain the fair value of TENCO’s 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 markets offer and demand prevailing as of the date of the

appraisal, the relative age, probable residual useful life, state of conservation, and asset obsolescence

are applied to the sales price. The “cost less depreciation” method was used to obtain the fair value

of assets with a restricted sales market.

Depreciation was computed based on generally used and accepted engineering criteria which lead to

establishing the reasonable value of fixed assets. Said criteria takes into account factors such as the

age of each asset, probable residual or expected life, state of conservation and degree of obsolescence.

Market value was obtained by applying the depreciation ratio to the value of a new asset.

TENCO intends 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 fixed assets resulting from the technical appraisal described above has been

recorded under “Reserve for fixed assets revaluation surplus” within Shareholders’ Equity of

TENCO, and amounted to USD 28,342 thousand at June 30, 2003.

The “Reserve for fixed assets revaluation surplus” is reversed through (i) the retirement of the equip-

ment appraised or (ii) depreciation charges. The difference between depreciation of appraised assets

and depreciation of the historical values of such assets shall be charged against accumulated results.

_ 30 TEI&C S.A. JUNE 30_ 2005

If TENCO’S machinery, equipment and vehicles had been valued at historical cost, the values would

have been the following:

(IN USD MILLIONS)

JUNE 30, 2005

Historical cost 71,956

Accumulated depreciation (58,276)

Residual value 13,680

The straight-line method has been used to calculate depreciation, by applying annual ratios suffi-

cient to terminate the value of each item as to the end of their estimated useful life.

Land and buildings

Land and buildings are stated at historical cost. Buildings are depreciated using the straight-line

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

estimated useful life.

The subsidiary company Saneamiento y Urbanización S.A. (SYUSA) holds land shown at historical

cost, minus the provision necessary to take it to net realizable value as of the fiscal year end. Assets

for which the purchase offer exists have been shown as current.

FEPSA fixed assets

These assets represent improvements on the assets received under concession by Ferroexpreso

Pampeano S.A.C. (“FEPSA”), as well as those devoted to service rendering, which will be transferred

to the assignee upon termination of the concession. Such assets are valued at their acquisition or con-

struction cost minus accumulated depreciation.

The straight-line method has been used to calculate depreciation, by applying annual ratios suffi-

cient to terminate the value of each item as of the end of their estimated useful life or upon termi-

nation of concession, whichever occurs first.

Useful lives used to calculate depreciation charges are as follows:

Buildings and improvements _ 30-50 years

Production equipment _ 10-20 years

Vehicles, furniture and fixtures, and other equipment _ 4-10 years

Land _ Not depreciated

Where the carrying amount of an asset is higher than its estimated recoverable amount, it is written

down immediately to its recoverable amount.


Gains and losses on disposals are determined by comparing proceeds with carrying amounts. When

revalued assets are sold, the amounts included in fair value and other reserves are transferred to

retained earnings.

Repairs and maintenance expenses are charged to the statement of income during the financial period

in which they are incurred. Whenever it is likely that future economic benefits in excess of the original-

ly assessed standard of performance of the existing asset will flow to TEI&C, the cost of major renova-

tions is included in the carrying amount of the asset. Major renovations are depreciated over the remain-

ing useful life of the related asset or to the date of the next major renovation, whichever occurs earlier.

d_ Intangible assets

Computer Software

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 expens-

es as incurred. Costs that are directly associated with the production of identifiable and unique soft-

ware 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 devel-

opment employee costs and an appropriate portion of relevant overheads.

e_ Impairment of long-lived assets

Property and equipment and other non-current assets subjet to amortization, 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’s net selling price and its value in use. For the purposes of assessing impairment, assets are

grouped at the lowest level for which there are separately identifiable cash flows.

f_ 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 rec-

ognizes finance leases as assets and liabilities in the consolidated balance sheet at amounts equal to

their value of the leased property or, if lower, the present value of the minimum lease payments, each

determined at the inception of the lease. The discount rate used in calculating the present value of

the minimum lease payments is the interest rate implicit in the lease should this be practicable to

determine; otherwise, the lessee’s incremental borrowing cost is used. Any initial direct costs of the

lessee are added to the amount recognized as an asset.

_ 32 TEI&C S.A. JUNE 30_ 2005

See amounts of assets and liabilities held under finance leases in note 21.

g_ Investments

Investments in shares and participation in associated companies:

subsidiary companies have been consolidated as explained in note 2 “Basis of presentation” (see list

of subsidiaries in note 23), and

associated companies on which significant control influence is exercised have been valued on the

equity basis of accounting (see note 7)

All purchases and sales of investments are recognized on the trade date, not significantly different

from the settlement date, which is the date that the Company commits to purchase or sell the invest-

ment. Costs include transaction costs.

h_ Other investments

All of TEI&C investments, which include primarily deposits in trust funds, are currently classified

as available-for-sale as defined by IAS, despite the fact that some of them are not technically avail-

able for disposition according to the terms of the underlying contracts.

Other investment funds comprise mainly financial resources within offshore trusts, the objective of

which is exclusively to ensure that the financial needs for the normal development of their opera-

tions are met.

Investments in companies for which fair values can not be reliably measured are reported at cost.

i_ Trade and other receivables and payables

Trade and other receivables and payables are carried at face value less an allowance for doubtful

accounts, if applicable. This amount does not differ significantly from fair value.

An allowance for doubtful accounts is established when there is objective evidence that TEI&C will

not be able to collect all amounts due according to the original terms of receivables.

At June 30, 2005 the allowance for doubtful accounts that was deducted from the corresponding

gross accounts receivable totaled USD 8.4 million.


_

_

j_ Income taxes - current and deferred

The current income tax charge is calculated on the basis of the tax laws in force in the countries in

which each TEI&C subsidiary operates.

Deferred income tax is recorded in full, using the liability method, on temporary differences arising

between the tax bases 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.

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. The cost of finished goods and work in

progress comprises raw materials, direct labor, other direct costs and related production overheads

(based on normal operating capacity) but excludes borrowing costs.

l_ Construction contracts-work in progress

A construction contract is a contract specifically negotiated for the construction of an asset or a com-

bination 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 rec-

ognized 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 con-

tract 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 con-

tract costs in determining the stage of completion. They are presented as inventories, prepayments

or other assets, depending on their nature.

_ 34 TEI&C S.A. JUNE 30_ 2005

TEI&C shows as an asset the gross amount due from customers for construction contracts for all con-

tracts in progress for which costs incurred plus recognized profits (less recognized losses) exceed

progress billings. Progress billings not yet paid by customers and retentions are included as

Construction contracts-work in progress.

TEI&C presents as a liability (within Construction contracts-work in progress) the gross amount due

to customers for construction contract for all contracts in progress for which progress billings exceed

costs incurred plus recognized profits (less recognized losses).

m_ Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents com-

prise cash on hand, deposits held at call with banks and other short-term highly liquid investments

with original maturities of three months or less. Bank overdrafts are included within borrowings in

current liabilities in the consolidated balance sheet.

n_ Shareholder’s equity

Ordinary shares are classified as equity. The shareholder’s equity at June 30, 2005 includes:

The value of share capital, legal reserves, other distributable reserves, and accumulated results in

accordance with IFRS.

The currency translation adjustments and retained earnings of TEI&C’s subsidiaries under IFRS.

Minority interest in subsidiaries.

o_ Borrowings

Borrowings are initially recorded based on the fair value of the net proceeds. Borrowings are subse-

quently 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. This amount does not differ significantly from fair value.

Borrowings are classified as current liabilities unless TEI&C has an unconditional right to defer set-

tlement of the liability for at least twelve months after the balance sheet date.


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_

_

p_ Employee benefits

Pension plans and other post-retirement benefits

Certain Argentine TEI&C officers are covered by a specific employee retirement plan designed to pro-

vide retirement, termination, and other benefits to those officers.

TEI&C is accumulating assets for the ultimate payment of those benefits in the form of investments

that carry time limitations for their redemption. The investments are not part of a particular plan, nor

are they segregated from TEI&C’s other assets. Due to these conditions, the plan is classified as

“unfunded” under IFRS.

Retirement costs are assessed using the projected unit credit method: the cost of providing retirement

benefits is charged to the statement of income over the service lives of employees based on actuari-

al 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 three-year or seven-year salary average (whichev-

er is more favorable to the beneficiary) for those executives who have retired or were terminated

before December 31, 2003. After this date, the benefits of the plan are calculated based on a seven-

year salary average.

The laws in the different countries in which TEI&C carries out its operations provide for pension

benefits to be paid to retired employees from government pension plans and/or private funds man-

aged plans. Amounts payable to such plans are generally calculated based on a percentage of employ-

ee salaries and are accounted for on an accrual basis.

Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the nor-

mal retirement date or whenever an employee accepts voluntary redundancy in exchange for these

benefits.

TEI&C recognizes termination benefits when it is demonstrably committed to either terminate the

employment of current employees according to a detailed formal plan without possibility of with-

drawal, or to provide termination benefits as a result of an offer made to encourage voluntary redun-

dancy. Benefits falling due more than twelve months after balance sheet date are discounted to pres-

ent value.

_ 36 TEI&C S.A. JUNE 30_ 2005

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 at least one of the fol-

lowing conditions is met:

there is a formal plan and the amounts to be paid are determined before the time of issuing the finan-

cial statements; or

past practice has created a valid expectation in employees that they will receive a bonus/profit-shar-

ing 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.

q_ 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. Where 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.

r_ Derivative financial instruments

Forward foreign exchange contracts are carried at fair value, which is determined using forward

exchange market rates at the balance sheet date. The changes in fair value of the derivative financial

instruments are recognized as gains or losses.

4_ CERTAIN RISK AND UNCERTAINTIES

Financial instruments comprised of cash, short-term investments, accounts receivable, and accounts

payable could be subject to credit risk. The Company places its cash and cash equivalents in high

quality financial institutions. The Company's policy is designed to limit exposure to any one insti-

tution. The Company has not experienced any losses in such accounts.

The Company’s receivables are concentrated on a limited number of customers for whom work is

executed. The management evaluates on a periodic basis the financial condition of its customers to

minimize the risk of not recovering of its accounts receivable.


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_

Many of the Company's projects are billed on a fixed-fee basis and, therefore, the Company bears the

risk of cost overruns. Client project margins and personnel utilization are critical components of the

Company's financial performance. The Company regularly reviews staff compensation and overhead

costs to ensure that its services are properly priced. In addition, the management monitors the work

in progress on a monthly basis.

The Company conducts its operations in different locations that expose the Company to adverse

effects arising from a devaluation of local currency. To reduce its exposure the Company bills most

of its customers in U.S. dollars. The Group Treasury is responsible for managing the net position in

each foreign currency by using external forward currency contracts. Furthermore, the management

believes the Company is not exposed to any liquidity risk since if generates enough cash from nor-

mal business to fulfill its operations and financial commitments.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities,

the availability of funding through an adequate amount of committed credit facilities, and the abili-

ty to close out market positions. Due to the dynamic nature of the underlying businesses, the Group

Treasury aims to maintain flexibility in funding by keeping committed credit lines available.

As the Company has no significant interest-bearing assets, the Company’s income and operating cash

flows are substantially independent of changes in market interest rates. The Company’s interest rate

risk arises from long-term borrowings, which are not significant for the Company. Borrowings issued

at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates

expose the Company to fair value interest rate risk.

5_ PROPERTY, PLANT AND EQUIPMENT

ORIGINAL ACCUMULATED NETVALUE DEPRECIATION VALUE

Land and buildings 59,929 (34,439) 25,490

Equipment and machinery 212,189 (174,364) 37,825

Spare parts, vehicles, and others 53,908 (33,918) 19,990

Other assets 111,925 (50,886) 61,039

Subtotal non-current 437,951 (293,607) 144,344

Current property, plant, and equipment 461 - 461

Total June 30, 2005 438,412 (293,607) 144,805

_ 38 TEI&C S.A. JUNE 30_ 2005

6_ INTANGIBLE ASSETS

ORIGINAL ACCUMULATED NETVALUE DEPRECIATION VALUE

Systems development 9,347 (5,412) 3,935

Total June 30, 2005 9,347 (5,412) 3,935

7_ INVESTMENTS IN ASSOCIATES

BOOK VALUE % OWNERSHIP

Comintrac S.A. - Ecuador 30 23.78

Sindtec S.A - Argentina 2 20.00

Total June 30, 2005 32

8_ OTHER INVESTMENTS

NON-CURRENT

Government Bonds 791

Other investment fund 4,449

La Nacion´s Trust fund 9,152

Terminal Bahia Blanca S.A. 407

Others 309

Total non-current 15,108

CURRENT

Government Bonds 9,867

Temporary placements 28

Terminal Bahia Blanca S.A. 494

Others 56

Total current 10,445


9_ TRADE AND OTHER RECEIVABLES

NON-CURRENT

Trade receivables - net 17,712

Tax credit 12,030

Trade and other receivables from related parties 14,601

Others 3,949

Total trade and other receivables - non-current 48,292

CURRENT

Trade receivables - net 121,306

Receivables from related parties 9,094

Other receivables from related parties 17,410

Other receivables 30,149

Prepayments 1,052

Tax credit 10,480

Total trade and other receivables - current 189,491

10_ DEFERRED INCOME TAXES

As further explained in Note 3.j., most of the Company’s subsidiaries are located abroad and thus

subject to income taxes. At June 30, 2005 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 liability” in the consolidated balance sheet.

Net deferred income tax assets totaled USD 15,078 thousand at June 30, 2005 and arise mainly from

tax loss carryforwards and the different criteria applied to record provisions under tax and account-

ing rules. These deferred income tax assets have been partially offset by deferred income tax liabili-

ties arising from differences existing between the book value and the tax value of property, plant, and

equipment and differences in valuation criteria for current and non-current investments.

Net deferred income tax liabilities accounted for USD 6,035 thousand at June 30, 2005 and arise

mainly from differences between the book and the tax value of property, plant, and equipment and

work in progress.

_ 40 TEI&C S.A. JUNE 30_ 2005

The main subsidiaries generating deferred income tax balances are detailed below:

DEFERRED ASSETS

TEARG 2,460

TEBRA 12,230

TENCO and Subsidiaries 328

Other 60 15,078

DEFERRED LIABILITIES

FEPSA (5,337)

LOSA (655)

Other (43) (6,035)

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 period. In this regard, the manage-

ment estimates that TEI&C’s subsidiaries will generate sufficient taxable income in future periods so

as to offset the net balance of deferred income tax assets recorded at June 30, 2005.

11_ INVENTORIES

The item consists in the following :

Materials and spare parts 12,236

Raw materials 1,334

Advances to suppliers and subcontractors 1,512

Finished goods 3,824

Others 88

Valuation allowance (2,842)

Total Inventories 16,152

12_ SHARE CAPITAL

(IN THOUSANDS OF SHARES)

NUMBER OF SHARES ORDINARY SHARES

At 30 June 2005 3,584,924 3,584,924

The ordinary shares have a value of $U (Uruguayan peso) 1 per share. All issued shares are fully paid.

The authorized capital stock amounts to $U* 3,800,000 thousand


* Uruguayan peso

13_ BORROWINGS

COMPANY LENDER JUNE 30, 2005 INTEREST RATE

NON-CURRENT

Compañía Inv.Ferroviaria S.A.I.F. (Coinfer) Related parties 3,066 6.90%

Techint S.A. (TEBRA) Bco. Sudameris y Safra L.S.A. 809 7.50%

Techint Cía.Técnica Internacional S.A.C.I. Banco Comafi S.A. 1,100 9.50%

Techint Cía.Técnica Internacional S.A.C.I. Caterpillar Financial Services Corp. 895 5.61%

Other 79

5,949

CURRENT

Techint Cía.Técnica Internacional S.A.C.I. Bank overdrafts 10,188 5.70%

Techint Cía.Técnica Internacional S.A.C.I. Banco Comafi S.A. 369 9.50%

Techint Cía.Técnica Internacional S.A.C.I. Caterpillar Financial Services Corp. 755 5.61%

Techint Cía.Técnica Internacional S.A.C.I. Agrupación Fdo.Copartic.Financ. ACE 2,480 6.25%

Techint Cía.Técnica Internacional S.A.C.I. Santa María Financial S.A. 172 6.75%

Techint Cía.Técnica Internacional S.A.C.I. Sealse Invest.Holdings GMBH 4,573 3.56%

Techint Cía.Técnica Internacional S.A.C.I. Santa María S.A.I.y F. 143 5.50%

Techint S.A. (TEBRA) Bco.Sudameris y Safra L.S.A. 600 7.50%

Sidernet S.A. Banco Hipotecario S.A. 2,078 11.66%

Coincar S.A. Banco Río S.A. y Galicia S.A. 1,686 8.00%

Techint International Const. Corp. (Tenco) Banco BBA 3,760 6.40%

Techint International Const. Corp. (Tenco) Banco HSBC Chile 6,290 2.96%

Techint International Const. Corp. (Tenco) Banco BBVA Chile 350 4.68%

Techint International Const. Corp. (Tenco) Banco HSBC Abu - Dhabi 8,550 4.15%

Techint International Const. Corp. (Tenco) Samba Bank - Sautec 6,000 0.40%

Techint International Const. Corp. (Tenco) Santa María Financial S.A. 2,840 6.00%

Techint International Const. Corp. (Tenco) Techint Limited 356 4.50%

Other 2,209

53,399

_ 42 TEI&C S.A. JUNE 30_ 2005

14_ TRADE AND OTHER PAYABLES

NON-CURRENT

Trade payables 1,892

Social security and other taxes 7,225

Payables and provisions 7,417

Amounts due to associates 6

Total non-current Trade and other payables 16,540

CURRENT

Trade payables 101,395

Social security and other taxes 41,505

Amounts due to associates 2,591

Total current Trade and other payables 145,491

15_ OTHER LIABILITIES

NON-CURRENT

Provisions (Note 17) 11,075

Advances received on construction contracts 687

Other liabilities 7,172

Total non-current Other liabilities 18,934

CURRENT

Provisions (Note 17) 4,611

Advances received on construction contracts 22,605

Other liabilities and provisions 7,106

Total current Other liabilities 34,322

16_ EMPLOYEE BENEFITS

The amounts recognized in the balance sheet are determined as follows:

Present value of unfunded obligations 6,104

Unrecognized actuarial gains (losses) (3,361)

Liability in the balance sheet 2,743

The principal actuarial assumptions used were as follows:

Discount rate 7%

Rate of compensation increase 2%


17_ PROVISIONS

LABOR TAXES CIVILS MAINTENANCE* OTHER TOTAL

NON-CURRENT 2,800 2,006 4,264 - 2,005 11,075

CURRENT 100 - 1,211 1,905 1,395 4,611

June 30, 2005 2,900 2,006 5,475 1,905 3,400 15,686

(*) OF FIXED ASSETS

18_ FINANCIAL INSTRUMENTS

The Company’s short-term investments, derivative financial instruments, receivables, trade, bank,

and financial liabilities qualify as financial instruments under the terms of IAS 32.

Bank and financial liabilities were incurred at market rates in effect in those countries in which the

Company operates through its branches, joint ventures or subsidiary, affiliated and associated com-

panies.

The geographic distribution of accounts receivable at June 30, 2005 is determined by the projects in

progress in the following countries:

COUNTRIES JUNE 30, 2005

Argentina 45.4%

Brazil 8.2%

Chile 3.7%

Ecuador 4.5%

Peru 2.9%

Saudi Arabia 32.7%

Uruguay 2.1%

Other 0.5%

Furthermore, the Company’s foreign exchange exposure to currencies other than the U.S. dollar is

not material. The management policies devised to mitigate the currency risk is explained in Note 4.

The net fair values of derivate financial instruments at the balance sheet date were:

NET FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS JUNE 30, 2005

ASSETS LIABILITIES

Forward foreign exchange contracts - 641

Total - 641

The maturity of these forward foreign exchange contracts range between one to five months from the

balance sheet date.

_ 44 TEI&C S.A. JUNE 30_ 2005

19_ PARTICIPATION IN JOINT VENTURES

At June 30, 2005 the Company was part of different Joint Ventures, which also perform engineering

and construction activities. The Company’s participation in those Joint Ventures was recorded

through proportional consolidation of assets, liabilities, and results. The following balances repre-

sent the Company’s participation at June 30, 2005:

20_ CONTINGENCIES AND COMMITMENTS

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, cer-

tain of the Company’s subsidiaries issued a number of guarantees to provide for the obligations

assumed in the normal course of business.

As of June 30, 2005, TEARG granted in favor of the International Finance Corporation (IFC), a World

Bank agency, a guarantee for 33% of the disbursement of the loan granted on August 1, 1996 in favor

of Transportadora de Gas del Norte (TGN) in an amount of USD 69.7 million for the purpose of afford-

ing TGN’s Investment Plan in the period 1995-1997. In turn, TEARG holds a counter-guarantee for

the value of the main guarantee, issued by Tecgas N.V. (shareholders of TGN's holding company).

MAIN JOINT VENTURES

Techint Cia Técnica Internacional S.A.C.e I. -Panedile Argentina S.A. - Unión Transitoria de Empresas - Complejos “Los Caracoles” y “Punta Negra”

Techint Cia Técnica Internacional S.A.C.e I.- Hochtief A.V.G.H. - Impregilo S.p.A - Iglys S.A. - Unión Transitoria de Empresas- Complejo Penitenciario Ezeiza

Techint Cia Técnica Internacional S.A.C.e I.- Luis M. Pagliara S.A. - Unión Transitoria de Empresas - C. Re. Ma. Malla 332

Techint Cia Técnica Internacional S.A.C.e I.- Skanska S.A. - Unión Transitoria de Empresas - Acueducto Río Colorado

Techint Cia Técnica Internacional S.A.C.e I.- B.Roggio e Hijos S.A. - Unión Transitoriade Empresas - Subte Linea A

(1) CONTROLLING INTEREST THOUGH TECHINT COMPAÑÍA TÉCNICA INTERNACIONAL S.A.C.I. (ARGENTINA)

TOTAL ASSETS

23,826

26,467

2,013

6,745

4,295

TOTAL LIABILITIES

19,809

2,125

528

10,946

1,605

% OF OWNERSHIP (1)

38.41%

30.73%

30.73%

25.61%

25.61%


As of June 30, 2005, TENCO granted a guaranty in favor of ARAMCO in an amount of USD 43.8 mil-

lion and in favor of Sidor C.A. in an amount of USD 0.03 million.

Situation of the subsidiary FERROEXPRESO PAMPEANO SOCIEDAD ANÓNIMA CONCESIONARIA

(“FERROEXPRESO PAMPEANO S.A.C.”)

Ferroexpreso Pampeano S.A.C. (FEPSA) is the railroad freight company that transports grains,

byproducts of the agro industry, petrochemical products, iron and steel products and containers

towards the ports of Bahía Blanca, Rosario, San Lorenzo and San Martín.

As of June 30, 2005, TEARG maintains receivables from financings granted to FEPSA for USD 23.6

million. Such balance has been eliminated in the process of preparing this consolidated balance

sheet. In turn, TEARG’s equity value in FEPSA, calculated through Compañía Inversora Ferroviaria

S.A.I.F. (COINFER) amounts to USD 3.6 million. Such equity value is not reflected in this consoli-

dated balance sheet because COINFER and FEPSA have been consolidated. The recoverability of the

referred assets is subject to FEPSA’s capacity to meet its obligations. This depends on the agreement

currently being discussed with the Argentine Government. Management understands that this agree-

ment will be approved and ratified.

Works executed under a trust, construction, and leasing agreement

TEARG, as a member of the UTE Techint Compañía Técnica Internacional S.A.C.I.-Hochtief

A.V.G.H.-Impregilo S.p.A.-Iglys S.A., signed an agreement with the Argentine Government to con-

struct a penitentiary complex under “turn-key” conditions located in Ezeiza, Province of Buenos

Aires, payable in 60 quarterly installments as license fees.

As of the issuance date of this consolidated balance sheet, the Argentine Ministry of Justice, Security

and Human Rights has fulfilled the commitments assumed and has paid the UTE the due license fees

17, 18 and 19 and paid license fee 20 in due term, as well as license fees 21 and 22, which became

due during 2005, thus restoring the UTE’s cash flows. License fees 10 through 16 are still due and

unpaid and the negotiations with the Ministry of Economy continue to obtain the budgetary lines for

their repayment. To value these seven license fees due and unpaid, their current value was calculat-

ed and the UTE’s management estimated August 2006 as probable collection date. TEARG’s propor-

tional interest in their discounted value amounts to USD 10.6 million. The recoverability of this bal-

ance is subject to the Argentine Government’s fulfillment of its commitments with the UTE.

In addition, on December 7, 2004, the UTE was notified of Resolution No. 656/04 of the Tax Bureau

of the Province of Buenos Aires, whereby alleged differences are assessed in the payment of the

Stamp Tax related to the Agreement signed on May 28, 1998 with the Argentine Government and Río

Trust S.A., as that provincial agency considers that the obligation to pay such tax would have been

partially breached. TEARG’s interest in the amount of the alleged difference, plus default interest and

fines, is USD 5.3 million as of March 31, 2005. On December 30, 2004, the UTE filed an appeal in

order to have such Resolution revoked. As the Company’s management and its legal counsel believe

that there are high possibilities of sustaining the referred appeal, the Company has not set up any

provisions.

_ 46 TEI&C S.A. JUNE 30_ 2005

21_ RESTRICTED ASSETS

Techint Compañía Técnica Internacional S.A.C.I.

There is a time deposit for USD 28 thousand disclosed in current “Other Investments”, which is not

available for the time being because it is attached to a guarantee in favor of Puentes del Litoral S.A.

There are fixed assets whose residual book value amounts to USD 3,845 thousand, pledged as guar-

antee of liabilities resulting from the purchase of such assets, which are disclosed in the accounts

“Borrowings” under current (USD 755 thousand) and non-current (USD 896 thousand), and “Trade

and other payables” current (USD 117 thousand).

In addition, there are fixed assets with a residual book value of USD 1,336 thousand which are

pledged as guarantee for liabilities under leasing agreements for USD 406 thousand and USD 1,130

thousand, included in the account "Borrowings" (current and non-current, respectively).

Coincar S.A.

Under the Credit Facility Agreement entered into by Coincar S.A. with Banco Río de la Plata S.A.

and Banco de Galicia y Buenos Aires, 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 man-

ner whatsoever, lease and/or enter into a leasing, grant a security and/or personal interest with

respect to, not to transfer and/or in any manner dispose of, either in a transaction or a series of trans-

actions, all or a substantial portion of any of its assets, goods and/or rights and/or of its assets, goods

and/or rights to be acquired in the future, nor to distribute dividends, pay fees to the company’s

directors or consultants, without the prior consent of the majority of the Banks.

Compañía Inversora Ferroviaria S.A.I.F.

Licensed assets:

In conformity with the regulations established in the bid specifications and the License Agreement,

its subsidiary Ferroexpreso Pampeano S.A.C. received from Ferrocarriles Argentinos assets of its own

to be used in the operation. They primarily comprise infrastructure (main and secondary railway net-

work), 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.


Techint S.A. Brazil

As of June 30, 2005, the company had USD 5,594 thousand in assets granted as guarantee for differ-

ent proceedings, in addition to the court deposits made, which amounted to USD 2,365 thousand and

are included in the account "Trade and other receivables" non-current in this consolidated balance

sheet.

In addition, this company is judicially challenging the unconstitutionality of certain taxes.

Techint International Construction Corp. (TENCO)

At June 30, 2005 the net carrying amounts of the fixed assets held under finance lease amount to USD

216 thousand and the liability for finance leases amount to USD 97 thousand.

Sidernet S.A.

The company has fixed assets (machinery) whose residual book value amounts to USD 278 thousand

and are pledged by virtue of the financing conditions agreed with their supplier. The pledge secures

a short-term debt of USD 127 thousand.

22_ RELATED PARTY TRANSACTIONS

NOTES AT JUNE 30, 2005

NON-CURRENT ASSETS


CURRENT ASSETS


Other receivables from related parties 9 17,410

NON-CURRENT LIABILITIES

Amount due to associates 14 6

Borrowings 13 3,066

CURRENT LIABILITIES

Amount due to associates 14 2,591

Borrowings 13 10,564

_ 48 TEI&C S.A. JUNE 30_ 2005

23_ SUBSIDIARIES

COMPANY COUNTRY % OF OWNERSHIPJUNE 30, 2005

Caminos del Oeste S.A. Argentina (1)(2)

Cimimontubi LLC USA 100.00

Cimimontubi S.A. Venezuela 100.00

Coincar S.A. Argentina (1) 33.29

Compañía Inversora Ferroviaria S.A.I.F. Argentina (1) 39.38

Ferroexpreso Pampeano S.A.C. Argentina (3)

Fidelis Management S.A. Panama 95.30

Flinwok S.A. Uruguay 100.00

Inversora Santa Catalina de Siena S.A. Argentina 97.50

L.O.S.A. Ladrillos Olavarría S.A.I.C. Argentina 52.05

Saneamiento y Urbanización S.A. Argentina (1) 51.25

Saudi Techint Ltd. Saudi Arabia 60.00

Sidermex LLC USA 76.09

Sidernet S.A. Argentina (4) 52.55

Servicios y Prestaciones Techint Funchal - Serviços, Madeira 76.09Comércio e Gestão de Projectos Lda.

Socominter Sociedade Comercial Internacional Ltda. Brazil 75.13

Tebra Empreendimentos Ltda. Brazil 99.95

Techint Chile S.A. Chile 88.72

Techint Compañía Técnica Internacional S.A.C.I. Argentina 51.21

Techint Compañía Técnica Internacional S.A.C.I. Uruguay 100.00

Techint International Construction Corp. (TENCO) Bahamas 100.00

Techint Nigeria Limited Nigeria 100.00

Techint S.A. Brazil 75.12

Techint S.A.C. Peru 100.00

Tecnología en Servicios Urbanos - Tesur S.A. Argentina (1)(5) 33.53

Tecnomatter Instalaciones y Construcciones S.A. Argentina (1) 52.62

Wiltse Corporation S.A. Uruguay 100.00

(1) Controlling interest through Techint Compañía Técnica Internacional S.A.C.I. (Argentina).

(2) The 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.

(3) Controlling interest through Compañía Inversora Ferroviaria S.A.I.F.

(4) Controlling interest through Tecnomatter Instalaciones y Construcciones S.A.

(5) Such percentage was calculated not considering preferred shares.


_

_

_

_

_

‘04

‘05

07

JUL

08

AUG

09

SEP

10

OCT

11

NOV

12

DEC

01

JAN

02

FEB

03

MAR

04

APR

05

MAY

06

JUN

HARADH PROJECT, SAUDI ARABIA.

Techint is working in the Haradh Arabian Light Crude Increment” also known as GOSP III (Gas and Oil Separation

Plant), in the Eastern Province of the Kingdom of Saudi Arabia. The project consists in carrying out detail engi-

neering, purchasing of equipment and material, and construction of installations necessary for the new plant.

TEI&C AND SUBSIDIARIES’ ACTIVITIES FOR THE PERIOD JULY 1, 2004 - JUNE 30, 2005

In order to offer a thorough view of the activities of TEI&C’s subsidiaries (although such subsidiaries have not been in the hold-

ing company’s portfolio for all of the fiscal year), and considering that TEI&C is continuing businesses that TG has developed for

more than 50 years and applying the same values, policies and procedures as TG, we offer below comments for the whole

twelve month fiscal year started on July 1, 2004 and ended on June 30, 2005.

ACTIVITIES FOR THE PERIOD JULY 1, 2004 - JUNE 30, 2005 _ 53

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SAUDI ARABIA

Saudi Techint Ltd. obtained in June 2005 the

ISO 9001:2000 Quality System Certificate, a cer-

tification that exceeds the customers’ and main

competitors’ expectations for this market.

1_ Project Haradh Arabian Light

crude increment facilities-GOSP III

The previous fiscal year a contract was signed

with Saudi Arabian Oil Company (“ARAMCO”)

for the execution of the “Haradh Arabian Light

Crude Increment” also known as GOSP III (Gas

and Oil Separation Plant), in the Eastern

Province of the Kingdom of Saudi Arabia, 350

kilometers southeast of its capital, Riyadh.

This project consists in carrying out detail engi-

neering, purchase of equipment and material,

and construction of installations necessary for

the new GOSP III plant, including the installa-

tions necessary for the primary separation of gas

and oil, with a production capacity of 300 thou-

sand barrels per day. In addition to the GOSP III,

modifications are required for two nearby

plants: GOSP II, and the Hawiyah Water

Injection Plant (HAWIP), for which a third salt

water booster pump will be supplied and

installed, to increase existing installed capacity.

TECHINT INTERNATIONAL CONSTRUCTION CORP. (TENCO)

AND ITS SUBSIDIARIES

The term for completion is 24 months, with

interim periods for the delivery of works at the

GOSP II and HAWIP plants.

At June 2005 the rate of advancement was 73%,

with a commitment to deliver the facilities before

contractual dates.

2_ Hot strip mill enhancement project

Saudi Techint Ltd. is providing performance serv-

ices and assistance for the installation of the new

furnace (number 2), together with the civil works,

assembly and installation in Saudi Iron & Steel

Company (HADEED) with the experience and

logistic support of Techint Technologies and

Italimpianti. The rate of advancement as of June

2005 was 61%.

3_ Rabigh development Project -

utilities & offsites

In June 2005 a contract was signed with Aramco

and Sumitomo Chemical Japan JV for Utilities &

Offsites engineering in the mega “Rabigh

Refinery Expansion & Development Project".

Such contract is related to the upgrade of the $ =

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_ 54 TEI&C S.A. JUNE 30_ 2005

diameter, gas pipeline that connects the Camisea

camp to Lima, Peru; a LGP (liquid gas propane)

duct, approximately 561 kilometers long, 12”

diameter, pipes. Such works implied significant

logistics, topography, and weather-related chal-

lenges, in addition to the difficulties presented by

the transportation of personnel, supplies, camp-

ing equipment and machinery right into the rain-

forest. Provision of a pumping and reduction sta-

tion and a SCADA system through optical fiber

and a satellite network were part of the project.

By the end of 2004, a pipeline maintenance con-

tract was signed with Compañía Operadora de Gas

del Amazonas S.A.C. (operator of the polyduct) for

the term of one year (renewable) and an approxi-

mate amount of USD 14 millions per year.

Rabigh refinery and petrochemical integration,

140 kilometers north of the city of Yeddah.

Investment in this mega project will reach several

USD millions for the production of ecological gaso-

line, ethanol, and propylene. It includes: Refinery

A package (Ethane Cracker, Gas Recovery Unit,

High Olefin Fluidized Catalytic Cracker,

Unsaturated Gas Plant and Butane-1 Extraction

Unit); Refinery B package: (Vacuum Distillation

Unit, Vacuum Hydro Gas Oil, Hydrogen Plant, Flue

Gas Desulphurisation Unit, Alkylation’s Unit,

Isomerism, Sulphuric Acid Plant, Amine

Regeneration Units, Sour Water Strippers and

Sulphur Recovery Unit); Three Petrochemical

packages comprising Polyethylene, Polypropylene,

Propylene Oxide Unit, Mono Ethylene Glycol;

Tanks package; Utilities and Off Sites package.

TENCO and Saudi Techint Ltd., TEI&C’s sub-

sidiaries, have been retained for the develop-

ment of the Utilities and Off Sites package,

which will require approximately 1,500,000 pro-

fessional man-hours (engineering, purchasing,

construction, management, inspection, and

administration) and will start running upon esti-

mating the actual work needs.

Potential construction activities where Saudi

Techint Ltd. will participate include: Seawater

Intake System, Cooling Water Pumps, Towers

and Manifolds, Compressed Air System (Plant

and Instrument Air), Air Separation Unit,

Sulphur Forming Unit and Handling System,

Liquid Berth Jetties (including Topsides),

Western Conventional/RO-RO Berth Eastern RO-RO

Berth (for the construction period of the whole

complex), Chemical Pumps, Metering,

Interconnecting Piping and associated Pipe

racks, Chemical Tank Flare.

PERU

_ Camisea Project

In August 2004, Transportadora de Gas del Peru

S.A., owned by Tecgas N.V., Tecgas Camisea S.A.,

Hunt Pipeline Company of Peru Ltd., Sonatrach

International Pipelines Corporation B.V.I, SK

Corporation, Suez Tractebel S.A., Carmen

Corporaton, and Graña y Montero S.A., received

delivery of the gas pipeline laid by our controlled

companies TENCO and Techint SAC (Peru). Thus

commenced the twelve-month guaranty period

during which several works were performed,

such as cathodic protection, and avoidance of ero-

sion land movements (particularly in the Toccate

area), and valves installation and adjustment.

The works consisted in a 730 kilometers long, 22”

CAMISEA

PROJECT, PERU.

In August 1994, the con-

sortium in charge of the

Camisea transportation

system received delivery

of the gas pipeline laid

by Techint’s controlled

Companies, and the

twelve-month guaranty

period began. Techint

constructed the 760 km

long gas pipeline and

the 560 km long NGL

pipeline.


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CHILE

_ Desalinized Water Pipeline Coloso Escondida

In October 2004, Minera Escondida Limitada

awarded Techint Chile S.A. (a subsidiary com-

pany of TENCO) an agreement for the installa-

tion of 167 kilometers, 24" diameter pipes, 127

kilometers of which will be made on the ground

and the remaining 40 kilometers of pipes will be

buried. The works are to be performed along the

route joining Puerto Coloso and premises of the

Mine, in Antofagasta. The total amount of the

contract is approximately USD 19 million.

As of June 2005, the rate of advancement was of

62%. Termination is scheduled for November 2005.

URUGUAY

1_ Administradora Nacional de

Combustibles, Alcohol y Portland (“ANCAP”)

On December 22, 2004 the Uruguayan branch of

TEARG –together with Techint Compañía

Técnica Internacional SA.C.I. (“TEURU”) and

ABB Lummus Global– obtained Final Receipt of

the expansion of La Teja Refinery for the ANCAP

in Montevideo, Uruguay.

This was the most important project among

those carried out over the last few years in

Uruguay, considering the total lump sum con-

tract amount was USD 126 million.

The works involved engineering, supplies, con-

struction, and pre-commissioning with ABB-

Lummus technical assistance, as well as the plant

start-up and the one-year maintenance guarantee

period. All contractual obligations toward the

customer have therefore been fulfilled.

_ 56 TEI&C S.A. JUNE 30_ 2005

2_ Cleaning up of Maldonado

and Punta del Este

During the fiscal year TEURU, a TENCO sub-

sidiary, continued the sanitation works called

for under the contract signed in November 2000

with Uragua S.A. for USD 22,8 million.

The excavations necessary to lay 9,000 meters of

varied diameter pipes in Maldonado city made it

necessary to use 100,000 cubic meters of fill.

Thus, the works included repaving streets and

repairing sidewalks.

Due to agreements with the clients in the city of

San Carlos, 3,000 meters of impulsion lines were

built, together with the respective pumping sta-

tions. In the city of Piriápolis 4,500 meters of

pipelines for sanitization were built through

rocky terrain.

In October 2005, Uragua transferred to “Obras

Sanitarias del Estado-OSE” the Public Works

Award for execution of the works under this con-

tract. This state entity undertook execution of

works up to a USD 5 million amount and the par-

ties undertook to commit their best efforts to com-

plete the remaining jobs under the original contract.

3_ Integration of the Maldonado

Nuevo settlement

In June 2004, the Maldonado Municipality

awarded TEURU the bid number 29/03 for a

total amount of USD 3 million.

The works included in such bid are comprised

in the Integration Program for Irregular

Settlements, the object of which is to build 88

housing units, a community center; roads works;

hydraulic, electrical, and sanitation infrastruc-

ture, as well as conditioning of public spaces.

By the end of the fiscal year, 60 (one, two, and

three bedroom) homes have been built, most of

which have already been delivered to the client.

Termination is scheduled for January 2006.

4_ Route 14

In November 2004, the Ministry of Transportation

and Public Works awarded TEURU the bid num-

ber 15/04 for pavement reinforcement with

asphaltic mixture in Route 14. There are two sec-

tions; the first one located between kilometers

157.3 and 176.2, and the second one between

kilometers 173.4 and 178.2. The total amount of

the contract is approximately USD 4 million.

The works began in January 2005, with a rate of

advancement of 34% as of the year-end, and the

works finalization is scheduled for July 2006.


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VENEZUELA

_ Steel Services

During the fiscal year, the steel services sector in

Venezuela continued the execution of diverse

works and services for SIDOR through Servicios

Siderúrgicos Sersisa S.A. (“SERSISA”), a sub-

sidiary of TENCO.

After the year-end, in July 2005, a new company

was incorporated under the name of Sidernet de

Venezuela C.A., controlled by Servicios y

Prestaciones Techint Funchal Servicos, Comércio

e Gestao de Proyectos Lda. (Madeira), that will

perform heavy duty cleaning services in SIDOR’s

plant.

STEEL SERVICES.

Techint Engineering & Construction provides several services for the steel industry, and is currently working in Argentina,

México and Venezuela. Services include electromechanical assembly, maintenance, structural repairs, industrial cleaning, and

furnace and smokestack maintenance.

_ 58 TEI&C S.A. JUNE 30_ 2005

MACAÉ PROJECT, BRAZIL.

Petrobras awarded TEBRA the Activo Nordeste and the Campo de Marlim contracts. Both agreements call for maintenance

and improvement services of offshore platforms in Bacía de Campos, Macaé.

1_ Alumina Do Norte do Brasil S.A.

Boiler Works I

The consortium TEBRA / Usiminas Mecánicas

S.A., in equal shares, entered into a contract

with Alumina Do Norte do Brasil S.A. for R$ 51

million. Termination date is scheduled for

October 2005. The works are located 90 kilome-

ters from the city of Belém in the State of Pará.

The main tasks to be carried out are the follow-

ing: project management (including supplies,

manufacturing and transportation), assembly of

precipitators, classifiers, hydrate thickeners,

tanks and metallic structures for a total of 13,721

tons. As of June 30, 2005 the contract was at 92%

of completion.

2_ PRA 1 - Autonomous Re-Pumping Platform

In May 2004 a contract was signed with PDET

Offshore S/A for R$ 162 million; in April 2005 an

additional contract was signed for R$ 8.7 million.

The original and additional contracts comprise

the construction of a fixed oil pumping platform,

which consists in the assembly of a 7,500 t metal-

lic structure, a generation module with a capaci-

ty of 75 megawatt, two re-pumping modules, a

utilities module, an accommodation module for

90 people and a helideck.

The platform, which will be installed in Bacía de

Campos, will have a processing capacity of

750,000 barrels/day and will pump for exporta-

tion all the crude oil received from six stationary

production units located in camps Roncador,

Marlin Sul, and Marlin Leste. The scope of the

hired services includes detail engineering, mate-

rial supplies, manufacturing, construction,

assembly, loading, and mooring of the semi-sub-

mersible platform.

Planave S.A and Confab Industrial S/A were,

respectively, the subcontractors that carried out

the detail engineering and manufacturing servic-

es and are currently in the final stage: they are

scheduled for termination by September and

December 2005.

As of June 30, 2005 the rate of advancement was

56%.

TECHINT S.A. (BRAZIL) AND SUBSIDIARIES (“TEBRA”)


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THE MAIN SERVICES TO BE PROVIDED ARE PLANNING, ENGINEERING, INDUSTRIAL MAINTENANCE, AND ELECTROMECHANICAL ASSEMBLIES-

3_ MACAÉ - Platforms Maintenance

Petrobras awarded TEBRA the Activo Nordeste

and the Campo de Marlim contracts. Both agree-

ments call for maintenance and improvement

services of offshore platforms in Bacía de

Campos, Macaé.

The Nordeste contract was entered into in March

2004 and is scheduled for termination on March

2009 (with the possibility of a 5 year extension),

for a total amount of R$ 181 million. The main

services to be provided are planning, engineer-

ing, industrial maintenance, and electromechan-

ical assemblies in the sea oil productions plat-

forms Garoupa-1, Vermelho-1, Vermelho-2, and

Vermelho-3.

The Campo de Marlim contract was entered into

in September 2004 and is scheduled for termi-

nation on October 2009 (with the possibility of a

5 year extension) for a total amount of R$ 333

million, to perform the same services as were

previously mentioned, for the fluctuating plat-

forms P-18, P-20, P-26, P-27, and P-47.

4_ SAN SEBASTIAN - Almirante

Barroso Maritime Terminal

In October 2004, Petrobras Transporte S.A.

retained TEBRA services to substitute the ducts

for derivatives, for an amount of R$ 32 million

and in a 480-day term.

Such works include manufacturing, assembly, and

testing of the oil unloading lines from the dock to

the terminal (approximate weight: 65 tons).

As of June 2005, the rate of advancement was

approximately 69%.

5_ SABESP-Spheres

The works are developed in site in the

Guarapiranga-São Paulo Raw Water Lifting Station.

The works are being carried out in consortium

with Partner Engenharia & Gerenciamento Ltda.,

for a total amount of R$ 12 million, R$ 800 thou-

sand of which are the partner’s share.

The contract calls for detail engineering, supplies,

electromechanical assembly, and assisted pre-

operation of the adductor protection system,

which consists of 2 metallic spheres of 10.5 meters

diameter and the interconnection piping.

The contract started in August 2004 and it has a

term of 12 months; it is currently in the testing

stage.

6_ Compañía Petroquímica do Sul -

Ethylene furnace

In November 2004 a contract was signed with

Compañía Petroquímica do Sul for R$ 24 million

for the execution of the electromechanical assem-

bly, pre-operation, ethylene furnace tests, and

interconnections with Plant II in the petrochemi-

cal node Triunfo, state of Rio Grande do Sul.

The works comprise the assembly of 800 tons

equipment, 500 tons structure, and 500 tons pipes,

including the insulation, painting, electric wiring,

and instrument assembly works.

As of June 2005 the rate of advancement was 40%.

Termination is scheduled for December 2005.

_ 60 TEI&C S.A. JUNE 30_ 2005

ESSO PROJECT, ARGENTINA.

Several works were developed in Esso’s

Refinery in Campana, including detail

engineering, cost estimation, program-

ming, supplies and sub-contracts of sev-

eral units. On May 19, 2005 all units

began start-up. On July 12, 2005

Provisional Receipt was obtained.

1_ PETROBRAS ENERGIA S.A.

Elicabe Refinery - Bahía Blanca

The contract involves a Sulphur Recovery Unit

(SRU) and conformation of current installations

that generate acidic gas (which will be treated in

such SRU).

The contract amounts to local $ 14.8 million

(domestic currency) plus USD 8,8 million. The

works started on May 2, 2005 and include dif-

ferent services ranging from basic engineering to

start-up and performance test.

The basic engineering has been subcontracted to

Parsons E&C, one of the two companies set up by

Petrobras Energia S.A. for this project. TEARG

will provide basic and detail engineering for serv-

ices and modification of current installations.

As of June 30, 2005 the initial basic engineering

works were started. Termination is scheduled for

October 2006.

2_ ESSO Petrolera Argentina S.R.L.

Campana Refinery

During the fiscal year several works were con-

tinued in the Campana Refinery, under the open-

ended contract signed in June 30, 2003.

In March 2004 a new Assignment was added for

the development of detail engineering, cost esti-

mation, programming, supplies and sub-con-

tracts for and by order of ESSO for maintenance

work expected to be carried out during the shut-

down in April 2005 for the following refinery

units: Atmospheric Distiller, Vacuum Distiller,

Retarded Coke, Power Reformer, Intermediate

Distillate Unit, Coke Naphtha Hydro-cooler


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TECHINT COMPAÑÍA TÉCNICA INTERNACIONAL S.A.C.I.

(ARGENTINA AND SUBSIDIARIES)

Hexane Ratio Hydrogen Unit, Naphtha Stabilizer,

Boilers and Power Generator Station.

Considering equipment and materials installation

and sub-contracts, all of it TEARG’s responsibili-

ty, total investment reached USD 26 million.

On May 19, 2005 all units began start-up. On

July 12, 2005 Provisional Receipt was obtained

and we are now under the twelve-month guar-

anty period started on such date.

3_ Caracoles power station and dam

On September 3, 2004, the TEARG-Panedile

Argentina S.A. Joint Venture signed an agree-

ment with Energía Provincial Sociedad del

Estado (“EPSE”) in the province of San Juan that

allows for the continuity of the construction of

the Caracoles Power Station and Dam. TEARG’s

participation in this Joint Venture is 75%.

The project amounts to USD 152 million and its

purpose is to expand the energy sector to 705

GwH/year and to increase the irrigation area by

15,000 hectares.

This project consists in the constructon of a dam

of loosematerials with a concrete face, with a

volume of compacted filling of about 10 million

cubic meters, height of 137 meters above the bed

of the San Juan river, and 620 meters at the crest.

The dam will attain a capacity of 565 cubic

meters and a dam area of 1,300 hectares.

The work will have a spillway in two tunnels with

an average length of 420 meters, and a disposal

capacity of 3,200 cubic meters/second. The hydro-

electric power station, with two Francis turbines

of 62.6 Megawatt rated power each, as well as the

generators, are of Russian origin. The sation will

be fed from the reservoir through a 1,426 meters

long adduction gallery hollowed out in the rock

block, and will be connected with the turbines

through a steel full pipe with a surge shaft.

From the hydroelectric power station a high

voltage 132 kilowatt power line will transport

the power produced to the city of San Juan (50

kilometers away). It will also have a sluiceway

with a regulating valve chamber and a capacity

of 301.2 cubic meters/second.

The project also includes 1,700,000 cubic meters

of excavation through rocks, 5,600,000 cubic

meters of excavation through alluvial sediments,

184,000 cubic meters of concrete, 12,000 tons of

steel, 254,000 tons of dislodged earth.

The headcount totalized, as of June 2005, 849

employees (788 JV’s employees and 61 subcon-

tractors). The rate of advancement is 12% (32%

of which correspond to engineering, 11% to sup-

plies and 11% to construction). The works are

scheduled for termination in September 2007.

4_ Province of La Pampa - Río Colorado

Aqueduct

TEARG, in a consortium together with Sade

Skanska S.A., as equal partners in a Joint

Venture (JV), signed a contract with the

Government of the province of La Pampa

through the Public Works Secretariat and the Río

Colorado Technical Aqueduct Commission

(CoTARC), for the continuation of work on the

Río Colorado Aqueduct.

The works included engineering, construction,

assembly, pre-comissioning, and system start-

up. On June 30, 2005 Provisional Receipt was

obtained.

In July 1, 2005 the client awarded the JV the

operation and maintenance of the works for a

twelve-month period.

The aqueduct, with a maximum flow of 2 cubic

meters/sec and which purpose is to carry drinking

water to 16 living areas as well as water for irriga-

tion and cattle, involved the construction of 267

_ 62 TEI&C S.A. JUNE 30_ 2005

kilometers of a trunk aqueduct from Pichi Mahuida

to Santa Rosa, 260 kilometers of secondary

pipeline, 2 pumping stations, 1 drinking water

plant, 1 central chlorination building, 1 main con-

trol building, 2 gas chlorination stations in the

trunk pipeline, industrial installations and facili-

ties, 7 liquid chlorination stations in secondary

pipelines, 2 pumping stations in the secondary

aqueducts, 4 pressure control stations, 1 electric

transformer substation (132 kilowatt), 2 tanks

(2,550 cubic meters and 7,500 cubic meters) a

SCADA control system, IP communication through

stations, 595 kilometers of optic fiber, a 13.2 kilo-

watt line, and a VHF communication system.

The amount of the contract will reach $ 266.4

million. During the guarantee year, another $ 3.6

million will be certified. The additional opera-

tion and maintenance contract amounts to $ 5.1

million.

Water delivery has already started in some areas.

In August 2005 the official inauguration took

place and drinking water delivery to Santa Rosa

began.

5_ Torre Bouchard Plaza-La Nación Building

Final Completion was awarded in March 2005

for the first stage of Torre Bouchard Plaza build-

ing, which was constructed on La Nación news-

paper building opposite Puerto Madero, Ciudad

Autónoma de Buenos Aires. The total works

amounted to USD 25 million.

This tower office block is a Triple “A” category

building of 23 floors. It has a total area of 62,000

square meters including office space, centralized

services and six-level parking spaces for 460

vehicles.

The job performed enabled the recycling of the 3

basement floors and 7 aboveground floors of the

existing building, and the construction of 16

floors of offices above it. The office design is

flexible, based on modules, and was the work of

the architect Beppe Carusso. The building fea-

tures state of the art connectivity and telephone

services, ergonomic equipment and excellent

natural lighting.

During August and September 2005, TEARG

itself moved to this building, taking 6 floors or

8,000 square meters.

6_ Hollywood I and II Towers

The contract signed with Design Developer

Group for $ 14.2 million calls for the building of

two towers, Hollywood I and II, located in

Humboldt street, between Nicaragua and Costa

Rica, in Palermo Hollywood, Ciudad Autónoma

de Buenos Aires. Works start-up is scheduled for

September 2005 and termination for July 2007.

Hollywood I Tower will feature nine double

height floors, each of them with an internal mez-

zanine. There will be two additional floors,

accommodating a health club and multi-purpose

room respectively. Hollywood II tower will have

15 floors and two additional floors for health

club and multi-purpose room.

The works awarded to TEARG involve manage-

ment of the construction until termination of the

functional units, including external works, and

mechanical set-up of all devices needed for the

project.

7_ Córdoba 320 Remodeling

The $ 8.2 million contract started in November

2004, termination being scheduled within 12

months of such date.

The project involves the remodeling and value

improvement of the building located at Av.

Córdoba 320, Ciudad Autónoma de Buenos

Aires, consisting of basements, an auditorium,


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ground floor, eight office floors, a medium volt-

age substation and an additional ninth floor for

services and terrace.

8_ KAS S.A. - Residential buildings

In October 2004 provisional delivery was

obtained for Torre Ugarte 2393, corner with

Cabildo, Ciudad Autónoma de Buenos Aires. The

tower has 54 living quarters (one and two bed-

rooms) and a total area of 3,500 square meters.

During the works, 1,500 cubic meters of concrete

and 100,000 man-hours were used. Final

Completion was obtained in July 2005.

9_ Trenes de Buenos Aires S.A. -

Renewal of railroad tracks

Trenes de Buenos Aires S.A., lessee of the pas-

senger railroads Mitre and Sarmiento, awarded

TEARG several renovation and revamping works

under an open-ended contract amounting to $ 168

million. Such contract involves six sectors, five of

which belong to the Mitre tracks (M6, M7, M8,

M35, M36) and one to the Sarmiento tracks (S10).

The works are located in the Ciudad Autónoma

de Buenos Aires and the Northern and Western

suburban areas.

In December 2004 the works for sector M6 (Mitre

tracks) were started. Such works amount to $

21.8 million, termination being scheduled for

July 2006. In February 2005 the works for sector

S10 (Sarmiento tracks) were started. Such works

amount to $ 47.5 million, termination being

scheduled for June 2007.

10_ Gobierno de la Ciudad Autónoma de

Buenos Aires - City underground “A” line

On May 5, 2004 the Transport Secretariat at the

Ministry of Federal Planning, Public Investment

and Services signed a Contract Modification

Amendment with the JV that TEARG has formed

together with Benito Roggio e Hijos S.A. (in

equal shares) for the completion of the work on

the complete renewal of all tracks and track

equipment on the “A” line of the Buenos Aires

Underground, work that had been halted at the

end of 2000 because the necessary financing

from the federal government was not available.

The total amount of the works reaches $ 70.7

million and must be completed in 21 months

after May 10, 2004. It also included a guarantee

twelve-month period after termination.

The JV is responsible for the performance of

engineering, supply of all materials for installa-

tion, the removal of the existing material and the

assembly of new material.

Work mainly involves the renewal of 8.3 kilome-

ters of tracks and all the existing track equip-

ment, replacing it with modern elements of a size

compatible with the spaces available in the tun-

nels, joining rails by means of aluminothermic

welding to form long bars (long welded rails). It

also involves construction of a 90 kilometers

underground gallery parallel to the tunnel.

During this fiscal year, track renovation works

were performed reaching a 78% rate of advance-

ment. In February 2005 the track equipment

assembly was started, reaching a 35% rate of

advancement as of the year-end.

11_ National Highway No. 3-Kosovo (kilometer

2959) - La Herradura Section

TEARG, holding a 55% share in a JV with Dos

Arroyos S.C.A., has signed a contract with the

National Highway Bureau for the construction of

a section of National Highway No. 3 in the

province of Tierra del Fuego, Antártida e Islas

del Altántico Sur, for a total amount of approxi-

mately $ 26 million.

_ 64 TEI&C S.A. JUNE 30_ 2005

The job, which has a length of 31.4 kilometers,

consists in the construction of an embankment,

drainage, gabions and concrete walls in the side

hill sector, continuing with a draining sub-base

with a thickness of 0.2 meters, an anti-freeze

base with a thickness of 0.2 meters and an

asphaltic concrete carpet with a thickness of

0.09 m. The work is to be completed with the

construction of gravel hard shoulder and wire

fencing, and the installation of metallic barriers

and snow height indicators.

Works were done from October 2004 to mid May

2005, since the location of the works precludes

any kind of works from the end of May until

September.

Material rate of advancement is 37%, termina-

tion being scheduled for May-June 2006 (should

the weather conditions be normal in the area).

12_ National Highway Bureau:

CREMA 332-San Juan

The TEARG-Luis María Pagliara S.A. JV signed

in March 2005 a contract with the National

Highway Bureau for roads recuperation and

maintenance in the province of San Juan. The

total amount of the contract is $ 46 million.

TEARG’s share in the JV is 60%.

The works are to be done in National Routes

number 40, 20, and A014 (Av. de Circunvalación

de San Juan). The contractual term for the recu-

peration works is 18 months, plus a routine

maintenance period for 60 months.

Works started on May 23, 2005 with the cleaning

up and straightening of slopes in A014 for the

subsequent placement of the irrigation system

and vegetation.

In June 2005 TEARG continued transportation of

equipment, started the coating of slopes on the

bridge stirrups on A014, the patching with

asphalt concrete in Route 40 and the jobsite

installation.

13_ Transportadora de Gas del Norte S.A. Loops-

2004 Network expansion

The lump sum turnkey contract with Transpor-

tadora de Gas del Norte S.A. for $ 24 million

ended on September 30, 2004, upon obtaining of

a Provisory Receipt. The contract consisted in

the construction of a 56 kilometers, 30” diameter

loop.

The loop, running across the provinces of Río

Negro, La Pampa, and Mendoza, was performed

in three segments: Loma de la Lata-Puelén (19

kilometers), Puelén-Cochico (22 kilometers) and

Cochico-La Mora (15 kilometers). The project

also included the building of scraper traps on

the first two segments.

14_ Transportadora de Gas del Sur S.A. Loops -

2005 Network expansion

In 2005, Transportadora de Gas del Sur S.A.

awarded Constructora Norberto Odebrecht S.A.

the expansion works for the gas pipeline net-

works San Martín and Neuba II. The system used

called for bidders to obtain financing for the

works. To that end, the trust “Fideicomiso de

Gas-Ampliación Gasoductos Sur” was created to

act as the client.

TEARG was subcontracted to carry out the

expansion works for three segments of Neuba II

in the province of Buenos Aires, for a total of $

94.4 million.

The works consist in detail engineering, con-

struction and assembly of a 160 kilometers 35”

diameter pipeline, procurement of minor materi-

als and start-up assistance for the segments

Tramo Cerri (continuation of 52 kilometers exist-

ing loop), Tramo Saturno (continuation of 31


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kilometers existing loop), and Tramo Ordoqui

(continuation of 77 kilometers existing loop).

The works, that as of June 30, 2004 were at 68% of

completion, have been finished in August 2005.

15_ Transportadora de Gas del Norte S.A.

Loops - 2005 Network expansion

TEARG signed an agreement for USD 34.4 mil-

lion with Sociedad Nación Fideicomiso S.A.

(trustee of the trust Fideicomiso Financiero

“Ampliación Gasoducto Norte"), managed by the

Energy Secretariat and Transportardora de Gas

del Norte, the Project Manager.

The works started in April 2005 and consist in

the construction of 7 segments parallel to the

northern pipeline, with the purpose of enhanc-

ing the capacity of such pipeline. In total, the

works involve 176.9 kilometers, 30" diameter

pipelines (6 segments) and 14.7 kilometers, 24"

diameter (1 segment) that run across the

provinces of Salta, Jujuy, Tucumán, Catamarca,

and Córdoba.

Material advancement as of June 30, 2005 was

30%. Termination is scheduled for October

2005.

16_ Barrick Gold Inc. - Camino y Mina Veladero

Under the terms of an open-ended agreement

signed by TEARG and Minera Argentina Gold

S.A., a subsidiary of the Canadian company

Barrick Gold Inc., various jobs have been per-

formed in relation to the Veladero mining project.

This is a gold field located in the province of San

Juan, 360 kilometers to the northwest of the capi-

tal city, in the Andes, 4,500 meters above sea level.

During this fiscal year the following works were

finished: a fully equipped camp site for 1,260

construction employees, including service infra-

structure, detail engineering, supply and assem-

bly of mining equipment maintenance work-

shops. The works required 700 tons of metallic

structures.

Civil engineering, electromechanical assembly

of all process areas, and procurement and assem-

bly of metallic structures and tanks are being

carried out.

As of June 2005 the rate of advancement on the

mine works is 90%, for an amount of USD 63

million. As of that same date, the total amount

for the mine and road is USD 95 million.

Termination date is scheduled for October 2005,

reaching a total amount for both contracts equal

to USD 104 million.

17_ Potasio Río Colorado S.A.

The contract for a total of USD 582 thousand

ended on December 12, 2004 consisted in the

maintenance and modernization of the installa-

tions at the Pilot Plant that Potasio Río Colorado

S.A. operates at Cañadón Amarillo in the

province of Mendoza.

The following jobs are being carried out for this

project: a) remodeling and maintenance of the

well pumping and water injection systems,

including the building of a 10-ton steam boiler,

maintenance of the aqueduct, installation of

three gas generators and a 6 kilometers high ten-

sion line; b) the construction of a 10 kilometers

gas pipeline; c) the reconstruction of a cooling

basin and an evaporation basin over a total area

of 13.5 hectares, and a reservoir for industrial

water with a capacity of 1,000 cubic meters; d)

the construction of an oil pipeline, an aqueduct

and a brine conduit for the new caves.

_ 66 TEI&C S.A. JUNE 30_ 2005

18_ Steel services

During the year the Steel Services sector in Argentina

continued to carry out of various projects and servic-

es for Siderar S.A.I.C. (“SIDERAR”), Siderca S.A.I.C.

(“SIDERCA”) and Siat S.A. (“SIAT”).

As a result of the high level of specialization of

this sector, many important civil and industrial

jobs have been carried out for those companies,

including electromechanical assembly, mainte-

nance, structural repairs, industrial cleaning,

and furnace and smokestack maintenance.

One of the most important jobs carried out was

the repair of the No.1 Blast Furnace at the

Siderar plant in San Nicolás in August 2004.

This work called for approximately 200,000

man-hours.

The group of companies carrying out such works

were TEARG, Tecnomatter Instalaciones y Cons-

trucciones S.A. and Sidernet S.A. During the

2005 fiscal year, such companies’ income was

approximately USD 34.5 million.


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TGN AND TGS LOOPS, ARGENTINA

Techint carried out the construction of a 56 kilometers, 30” diameter loop for Transportadora de Gas del Norte, as well as the

expansion works for three segments of Transportadota de Gas del Sur Neuba II gas pipeline, a 160 kilometers 35” diameter

pipeline, both in Argentina.

THESE LOOPS WILL HELP ENLARGE THE GAS TRANSPORTATION SYSTEM IN THE COUNTRY.

19_ Engineering services

During the fiscal year several basic engineering

services were carried out for refinery projects,

sulphur projects, fertilizing plants or expansion

projects for gas fields. The most important

clients and projects were:

Pluspetrol: conceptual and basic engineering for

the expansion of Camisea facilities for the pro-

cessing of gas and condensed products coming

from block 56 Pagoreni, located in the Amazonas

rainforest.

Minera Silver Standard: pre-feasibility study for

the gas pipeline connecting to the power genera-

tion central for the mine Pirquitas in the

province of Jujuy.

Potasio Rio Colorado: pre-feasibility study and

investment for the gas pipeline and aqueduct

that would serve the potassium chloride extrac-

tion plant located in the province of Mendoza.

Shell Capsa: detail engineering together with

Black & Veatch USA for the Enhanced Sulfur

Recovery and Clean Fuels project for Shell’s

refinery in Dock Sud.

Minera Agua Rica: pre-feasibility study for the

concentrated copper mine in Andalgala,

province of Catamarca. Development study

together with Hatch Consulting, Canada.

Saudi Aramco: detail engineering for the gas and

oil separation plant (GOSP), with a 300,000 mil-

lion barrels/day capacity in the Eastern

Province, Saudi Arabia.

Barrick/Snc Lavalin: integration of basic and

detail engineering for the construction of the

Veladero San Juan gold mine.

In the oil and gas, mining, and infrastructure

markets, the most important clients and projects

were:

EPSE: detail engineering for the loose material

and hydraulic central Los Caracoles, in the

province of San Juan. It includes procurement

and assembly of two Francis turbines of 63

megawatt each.

Transportadora de Gas del Norte S.A.: detail

engineering, provision of minor materials, con-

struction, assembly, and testing until mechani-

cal completion for the extension of the existing

ducts. It includes 176,900 meters of 30” diame-

ter pipeline and 14,700 meters of 24" diameter

pipeline in the provinces of Salta, Jujuy,

Tucumán, Catamarca, and Córdoba.

Transportadora Gas del Sur S.A.: extension of

the transportation capacity of gas pipelines San

Martín and the final sections of Neuba II.

Petrobras: basic engineering (subcontracted to

Parsons E&C), detail engineering, procurement,

assembly, pre-commissioning, commissioning,

operators training, start-up, and performance

testing for the sulphur recuperation plant in the

Petrobras Energía S.A.’s R. Elicabe refinery in

Bahía Blanca. The project involves a sulphur

recovery unit, residual gas treatment unit, efflu-

ent gas incinerator, and a sulphur storing and

dispatch unit, with a 10 ton/day capacity.

In the steel market, we have consolidated basic

and detail engineering for projects in tubes and

flat steel plants, such as:

Siderar-Florencio Varela Plant: Electrozincado

line, steady productivity increase.

Siderar-Ensenada Plant: Heurtey and Ebner

bases. First stage of the expansion of anneal

basis.

Siderar-San Nicolás Plant: blast furnace 2 and

Coque Unit 2.

Tenaris-Confab: revamping of the welded pipes

production line.

Tenaris-Siat: welding cage, Etna line for seamed

pipes up to 14" diameter; 1 x 12 line for seamed

pipes up to 48" diameter.

Tenaris-Siderca: increase in screwing capacity,

TCR2- transfer of Cridan Heid turning lathes,

new swaging for TCR2 and TCR3, and thermal 4

treatment.

In addition to the above, we have provided engi-

neering services for steel plants in Canada,

Mexico, and Venezuela.

In this fiscal year, the level of activity has

reached approximately 1,700,000 man-hours.

_ 68 TEI&C S.A. JUNE 30_ 2005

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20_ Telecommunications

Tecnología en Servicios Urbanos-Tesur S.A.

(“TESUR”) is a company involved in construc-

tion, assembling, and exploiting all types of proj-

ects in the telecommunications and information

technology business. TEARG holds 65.66% of

TESUR (disregarding preferred shares).

TESUR’s main activity is based in the manage-

ment and execution of infrasctructure projects

requiring a considerable interaction with users.

The main job carried out by TESUR was the

search and construction of approximately 150

cell sites, modification and reinforcement of

other sites, supported by a substantial increase

of the company’s customer base and a strong

investment in the telecommunications market,

particularly in GSM (Global System for Mobile)

technology.

The main client during the fiscal year was CTI

PCS S.A. (CTI). However, other works were per-

formed for the cell phone companies Nortel and

Telefónica Móviles S.A. (“MOVISTAR”).

The works along the Río Colorado Aqueduct in

the province of La Pampa for the TEARG-

Skanska S.A. consortium continued, with the

provision of optic fiber cable, support and instal-

lation infrastructure works, as well as equip-

ment configuration.

In addition to this, services were provided for

Techtel-LMDS Comunicaciones Interactivas S.A.

(“TECHTEL”), Lucent Technologies Inc.,

MOVISTAR, Furukawa and SIDERAR for the

connection of customers, channeling, laying and

of splicing fiber optics

Basic and external plant telephone networks

were installed for the cooperatives in the dis-

tricts of San Miguel del Monte, San Cayetano,

Pedro Luro and Ranchos in the province of

Buenos Aires, and Huinca Renancó in the

province of Cordoba.

As to information technology, a vault room was

carried out for the Administración Federal de

Ingresos Públicos, consisting in the building of

high-security rooms for the protection of data

centers and data processing equipment.

21_ Freight railroad

Ferroexpreso Pampeano S.A. (“FEPSA”) is the

privatized freight railroad concession that pro-

vides transport services to the ports of Bahía

Blanca and Rosario-San Martín to exporters,

grain storers and large producers in a vast region

of the humid Pampas. TEARG holds control of

this company through Compañía Inversora

Ferroviaria S.A.I.F.

During the fiscal year, 3.7 million tons of freight

were carried, an increase of 37% compared to

the level reached in the previous period. On

August 2004 transportation of steel coils from

Retiro to Ensenada was started. This resulted in

354 thousand tons being transported during the

fiscal year.

Due to the floods occurred in 1997, FEPSA has

initiated a long renegotiation process regarding

the concession terms, aiming at reestablishing

proper economic-financial conditions for the

company. This process has been marked by

strong recessive periods that caused a substan-

tial deficit for the company and which further

damaged the conditions already mentioned.

This situation has been suffered by the share-

holders and has led to a series of meetings with

government after 1997.

The meetings held with the Contract

Renegotiation and Analysis Unit (UNIREN)

resulted in an Understanding Letter signed in

July 2004 and a modification addendum in May

2005. The amendments introduced in the con-

tract relate to the investment plan, the fee, and

the lease. According to the modifications, the

State assumes the cost of a work plan for the


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repair of tracks damaged by the flood. On

September 26, 2005 UNIREN and FEPSA signed

a Final Agreement Act “ad referendum” of the

Executive’s approval. Such Act includes the

main points of the Understanding Letter and

Addendum, except for the date of calculation of

the fee and lease, which is January 1, 2005.

As to this date, such understanding is still pend-

ing approval, since it is following the procedures

established by Laws 25.561 and 25.790, and

complementary Decree Law 311/03. The process

should end with approval from the Government.

In April 2005 the Ministry of Federal Planning,

Private Investing and Utilities issued Resolution

350 whereby FEPSA is assigned a budget for

works for $ 22.4 million.

22_ Ezeiza Penitentiary Complex

TEARG, in a joint venture with Hochtief

Aktiengesellschaft Vorm. Germ. Helfmann,

Impregilo S.p.A., and Iglys S.A. entered into a

15-year leasing contract for the design, construc-

tion and financing of this project.

The work was handed over in June 2001 and

involved a built-over area of 80,000 square

meters to hold a population of 1,750 high and

maximum-security inmates. The State -through

the Ministry of Justice, Security and Human

Rights- has awarded Final Completion certifi-

cates for all Functional Units.

On September 9, 2004 an agreement was signed

with the Under-Secretariat for Coordination and

Innovation of the already mentioned Ministry,

whereby such office undertook to pay within 60

days the three fee installments that fell due in

the current year and to make timely payment of

the fees falling due in the future.

To this date, the State has fulfilled its commit-

ments and the company has collected in due

time the fees falling due during the fiscal year

and after the subscription of the aforementioned

Act, seven fees remaining unpaid and corre-

sponding to the fiscal years 10 to 16, plus

Reference Stabilizaton Index (CER) and interests

for a total amount of approximately $ 60 million.

23_ Puente Rosario-Victoria

TEARG is a minority shareholder, together with

Impregilo S.p.A., Iglys S.A., Hochtief

Aktiengesellschaft Vorm. Germ. Helfmann,

Benito Roggio e Hijos S.A., Sideco Americana

S.A., and Iecsa S.A. in Puentes del Litoral S.A.,

which holds the concession for the construction

and operation of the highway link between the

cities of Rosario (Santa Fe) and Victoria (Entre

Ríos).

Through the current traffic volume is adequate,

other reasons do not allow to restore the com-

promised financial situation of the project. A

renegotiation proposal has been submitted to the

Dirección Nacional de Vialidad, including sever-

al claims to accomplish the update of the com-

pany’s financial conditions, as well as the reduc-

tion of the execution guarantee and the waive of

penalties that are due to situations raised by the

economic crisis. No specific answers have been

obtained at this date.

_ 70 TEI&C S.A. JUNE 30_ 2005

CARACOLES

HYDROELECTRIC

POWER PLANT,

ARGENTINA

The headcount totalized,

as of June 2005, 849

employees (788 JV’s

employees and 61

subcontractors). The

rate of advancement

is 12% (32% of which

correspond to engineer-

ing, 11% to supplies

and 11% to construction).

LOSA LADRILLOS OLAVARRÍA S.A.I.C. (“LOSA”)

This company, devoted to the manufacture of

ceramic products for the Argentine market,

accomplished sales for $ 425 million.

Tiles and flooring shipments grew by 11% when

compared to last fiscal year’s sales, and absolute

sales levels for tiles are still below the years

prior the 2001-2002 crisis. Cost increments sus-

tained during the fiscal year were only partially

translated into sales prices, since the diminished

demand forced the company to assume an

important cost of distribution increase in order

to maintain its market share, mostly in the tiles

sector.

In general, no great changes are expected in

demand. Ceramic tiles, the company’s main

products is still suffering from competition from

different products, in accordance to newer archi-

tectural trends.


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_ 72 TEI&C S.A. JUNE 30_ 2005

CONTENTS

PRO FORMA-CONSOLIDATED INCOME STATEMENT

NOTES TO THE PRO FORMA-CONSOLIDATED INCOME STATEMENT



3_ REASONABLE ASSURANCE REPORT ON PRO FORMA CONSOLIDATED INCOME STATEMENT


For the twelve-month period ended June 30, 2005



(ALL AMOUNTS IN USD MILLIONS)

JUNE 30, 2005

Net sales 592,068

Cost of sales (523,009)

Gross profit 69,059

Administrative expenses (51,041)

Sales expenses (4,926)

Other operating expenses (448)

Operating income 12,644

Financial results, net 6,383

Other income and expenses, net 8,652

Loss from investments in associates (2,398)

Income before income tax 25,281

Income tax expense (14,829)

Income for the period (1) 10,452

Attributable to (1):

Equity holders of the Company 4,323

Minority interest 6,129

10,452

PRO FORMA-CONSOLIDATED INCOME STATEMENT _ 73

NOTES TO THE PRO FORMA-CONSOLIDATED INCOME STATEMENT



TEI&C S.A. (“TEI&C”), a company wholly owned by Techint Limited (Jersey), has been organized in

Uruguay in February 2005, and is part of the Techint Group (“TG”). TEI&C’s purpose is to engage in

investments by holding equity interests in companies or organizations whose corporate purpose

includes engineering, construction, and services.

Techint Limited established TEI&C in order to concentrate in a Uruguayan holding company the con-

trol of TG subsidiaries which are doing business in South America, Central America, and the Middle

East.

During the fiscal year, TEI&C has adquired several participations in companies within the field of

engineering, construction, and others, as explained below:

The assets and liabilities of TEARG, TENCO y LOSA (and their respective subsidiaries) have been

accounted for at the relevant predecessor’s cost, reflecting the carrying amount of such assets and lia-

bilities contributed to the Company. Accordingly, the consolidated balance sheet includes the balance

sheets of the above-mentioned 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 his-

torical cost was charged to equity.

Since these subsidiaries were not officially included in TEI&C’s portfolio during the twelve-month

period ended June 30, 2005, a consolidated financial statement would not include the subsidiaries’

results for such period, and would only show results from the acquisition date of each subsidiary,

until the end of the fiscal year.

Regardless of this, and considering the controlled companies have been operating during the twelve-

month period ended June 30, 2005, this pro forma consolidated income statement has been prepared

for such period, exclusively for reference and to illustrate the pro forma consolidated position of

TEI&C as if the adquisition date of these subsidiaries had been at 1 July 2004.

_ 74 TEI&C S.A. JUNE 30_ 2005

COMPANY

Techint Compañía Técnica Internacional S.A.I.C.-(“TEARG”)-Argentina and Subsidiaries

Techint International Construction Corporation (TENCO)-(“TENCO”)-Bahamas and Subsidiaries

Techint Compañía Técnica Internacional S.A.I.C.-Argentina and Subsidiaries

L.O.S.A. Ladrillos Olavarria S.A.-(“LOSA”)

ACQUISITION DATE

02.23.05

05.11.05

05.11.05

06.28.05

%

21.75

100.00

29.46

52.05

BUSINESS


Engineering and construction



NOTES TO PRO FORMA-CONSOLIDATED INCOME STATEMENT _ 75


This pro forma consolidated income statement is prepared under the same accounting policies as the

Company’s Consolidated Balance Sheet at June 30, 2005 and it should be read in conjunction with

it. Amounts are presented in USD thousands.

The pro forma consolidated income statement twelve-month period ended June 30, 2005 includes

the income statements for the corresponding twelve months of the subsidiaries companies.

All material intercompany transactions between TEI&C’s subsidiaries have been eliminated in con-

solidation.

The subsidiary companies are as follow:

COMPANY COUNTRY % OF OWNERSHIPJUNE 30, 2005

Caminos del Oeste S.A. Argentina (1)(2)

Cimimontubi LLC USA 100.00

Cimimontubi S.A. Venezuela 100.00

Coincar S.A. Argentina (1) 33.29

Compañía Inversora Ferroviaria S.A.I.F. Argentina (1) 39.38

Ferroexpreso Pampeano S.A.C. Argentina (3)

Fidelis Management S.A. Panama 95.30

Flinwok S.A. Uruguay 100.00

Inversora Santa Catalina de Siena S.A. Argentina 97.50

L.O.S.A. Ladrillos Olavarría S.A.I.C. Argentina 52.05

Saneamiento y Urbanización S.A. Argentina (1) 51.25

Saudi Techint Ltd. Saudi Arabia 60.00

Sidermex LLC USA 76.09

Sidernet S.A. Argentina (4) 52.55

Servicios y Prestaciones Techint Funchal - Serviços, Madeira 76.09Comércio e Gestão de Projectos Lda.

Socominter Sociedade Comercial Internacional Ltda. Brazil 75.13

Tebra Empreendimentos Ltda. Brazil 99.95

Techint Chile S.A. Chile 88.72

Techint Compañía Técnica Internacional S.A.C.I. Argentina 51.21

Techint Compañía Técnica Internacional S.A.C.I. Uruguay 100.00

Techint International Construction Corp. (TENCO) Bahamas 100.00

Techint Nigeria Limited Nigeria 100.00

Techint S.A. Brazil 75.12

Techint S.A.C. Peru 100.00

Tecnología en Servicios Urbanos - Tesur S.A. Argentina (1)(5) 33.53

Tecnomatter Instalaciones y Construcciones S.A. Argentina (1) 52.62

Wiltse Corporation S.A. Uruguay 100.00

_1. Controlling interest through Techint Compañía Técnica Internacional S.A.C.I. (Argentina). _2. The assets, liabilities, and results are not included in the consolidated finan-cial statements because the Company decided to set up an allowance for the full investment value. _3. Controlling interest through Compañía Inversora Ferroviaria S.A.I.F._4. Controlling interest through Tecnomatter Instalaciones y Construcciones S.A. _5. Such percentage was calculated not considering preferred shares.

_ 76 TEI&C S.A. JUNE 30_ 2005

_ 77

PERU

Avenida Canaval y Moreyra 340-Piso 6º

Lima (27)

Phone number: (51-1) 442-7272

SAUDI ARABIA

National Panasonic-2nd, Floor Dahlawi

Building

Olaya-Riyadh (11444)

Phone number: (966-1) 464-0643

VENEZUELA

Torre Continental - Piso 9°, Dpto, 2

Calle Cuchilleros, Alta Vista

Puerto Ordaz, Bolivar, 8050

Phone number:

WEBSITE

www.techint.com

PRINCIPAL EXECUTIVE OFFICES

ARGENTINA

Hipólito Bouchard 557

Buenos Aires

Phone number: (54 11) - 4018 4100

BRAZIL

Rua Tabapuã 41-14 andar

Itaim Bibi-São Paulo (04533-010)

Phone number: (55-11) 3040-6000

CHILE

Avenida del Valle 937-Oficina 351

Santiago de Chile

Phone number: (56-2) 738-4892

ECUADOR

Avenida Reina Victoria 1539 y Av, Colón-

Edificio Banco de Guayaquil

Pichincha-Quito

Phone number: (593-22) 555-324

_

_

_

_

_

_

_

_

REGISTERED OFFICE:

Rincón 487-Of,403

Edificio Artigas

Montevideo (11000) Uruguay

Phone number: (598-2) 915-7669


Rincón 487, Of. 403

Edificio Artigas

Montevideo (11000)

Uruguay

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ANNUAL REPORT TEI&C S.A. JUNE 30, 2005

Documents

Transcript of ANNUAL REPORT TEI&C S.A. JUNE 30, 2005