For the year ended december 31, 2012 and 2011
Board of directors’ reportand consoLidated financiaL stateMents
tei&c s.a.
During the fiscal year ended December 31, 2012, TEI&C S.A. (TEI&C) was
the holding company of a group of companies that provide Engineering,
Procurement, Construction, Operation and Management for large-scale projects
at a global level to the following market segments: Oil and Gas, Energy,
Pipelines, Industrial Plants, Oil Refineries, Mining, and Major Civil and
Architecture Works. References in this annual report to TEI&C or “Company”
refer to TEI&C S.A. and its consolidated subsidiaries.
Thanks to its experience and its local roots in every country where it operates,
the Company and its subsidiaries are able to develop high-complexity
projects, from the design to the start-up, maintenance, operational and
management services, protecting the environment and ensuring the welfare
of the communities where it operates.
TEI&C develops its projects under ISO 9001, ISO 14001 and OHSAS 18001
standards, thus assuring the quality, health, safety and environmental
conditions required by the client.
With more than 65 years of experience and around 20,000 employees
worldwide, the Company has completed more than 3,500 projects in America,
Europe, Asia and Africa.
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I&C
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THE COMPAny
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revenue By Business segMent
oil & gas
mining
iron & steel and other industries
energy
pipelines
CiVil
others
revenue By country
argentina
brazil
mexiCo
peru
uruguay
Chile
boliVia
others
30%
21%
17%
13%
7%
4%
8%
40%
23%
13%
11%
5%
4%
2%
2%
personneL
deC 2010 deC 2011 deC 2012
19,69216,575
22,538
revenue
Jul 2010/deC 2010(6 months)
Jan 2011/deC 2011
(12 months)
Jan 2012/deC 2012
(12 months)
7841,632
1,888
key figures
reVenue
ebitda
ebitda %
profit
total equity
roe(profit /aVerage equity)
1,887.6
190.6
10%
143.4
763.7
20%
1,632.2
253.1
16%
211.4
694.0
31%
783.9
58.5
7%
47.5
665.3
7%
USD MIllIOnSJan 2012 / deC 2012
Jan 2012 / deC 2012
USD MIllIOnS
Jul 2010 / deC 2010 (6 months)
Jan 2012 / deC 2012 (12 months)
Jan 2011 / deC 2011 (12 months)
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I&C
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InDEx
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2Board of directors’ report
consoLidated financiaL stateMents
overview of the yearprospects for fiscal year 2013economic and financial informationmajor Works executed during the year per Countrytei&C subsidiaries’ activities for the year ended december 31, 2012engineeringhuman resourcesprocurementtei&C equipment division health, safety and environment (hse)qualitytechnology and it systemsboard of directors
legal informationreport of the auditorsConsolidated statement of financial positionConsolidated income statementConsolidated statement of Comprehensive incomeConsolidated statement of Changes in equityConsolidated statement of Cash flows index to the notes to the Consolidated financial statements
09 1013 19
22
3738383940404143
4950525455566063
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I&C
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Board of directors’ report
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I&C
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Pascua lama, Phase III, for Barrick Exploraciones Argentinas S.A.
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overvieW of tHe year
During this fiscal year, ended December 31, 2012, the Company
recorded consolidated revenues for USD 1,887.6 million.
The most significant projects were developed through its
subsidiaries in Argentina, Brazil, Peru, Mexico, Uruguay
and Chile. In addition, other important projects were
carried out in Bolivia, Colombia, Central America and the
Caribbean, providing engineering, procurement, construction,
operational and management services to a wide range of
clients in the infrastructure, industrial and energy areas.
In Argentina, in the mining area, through the Company’s
subsidiary Techint Compañía Técnica Internacional S.A.C.I.
(TEARG), works were continued at the Phase III of the
Pascua Lama construction project for Barrick Exploraciones
Argentinas S.A., an affiliate of Barrick Gold Corp. of Canada.
As regards the execution of services, works and supplies for
construction of the Río Colorado Potassium Plant, for Potasio
Río Colorado S.A. (owned by Vale, of Brazil), the works
were suspended in December 2012, following the client’s
instructions. On March 12, 2013, such client notified the
termination of the contract for the construction of the plant,
and requested the Company to stop the provision of goods
and services. TEARG and its partners in the Joint Venture (JV)
are currently reviewing the closing of legal and contractual
terms and conditions, and the demobilization works deriving
from such termination.
In turn, in the energy sector, the Company continued with
the works for the construction of the Punta Negra hydro dam
for Energía Provincial Sociedad del Estado (EPSE). In March
2012, the Company entered into a contract for Consulting
Services and Technical Assistance to be provided at Atucha
II Nuclear Power Plant, thus continuing the business
relationship after completion of Stage II works, which
comprised piping ends, civil works, painting, insulation and
ancillary power services.
With respect to oil & gas sector, the Company completed
the works at the gasoil hydrodesulphurization plant (HTG) for
YPF S.A. at La Plata refinery.
Also in Argentina, in the architecture and infrastructure works
segment, and related to the contract with Subterráneos
de Buenos Aires Sociedad del Estado (SBASE) for the
construction and commissioning for commercial exploitation
of Subway Line H, by means of a Memorandum of
Understanding signed on December 19, 2012, the scope of
the project was redefined and a 24-month extension was
agreed for the term of execution.
In Brazil, the Company’s subsidiary Techint Engenharia e
Construção S.A. (TEBRA) continued working in the Retarded
Coke Unit Complexo Petroquímico do Rio de Janeiro Project
(COMPERJ) and Wellhead Platforms (WHP) 1 and 2 Project
for OSX Leasing Group B.V. In turn, the projects Diesel Unit
of Landulpho Alves de Mataripe Refinery (RLAM) and Lot I
Tanks Refinaria do Nordeste, Abreu e Lima (RNEST) (both for
Petróleo Brasileiro S.A. (Petrobras)) were completed during
the year.
In Peru, Techint S.A.C. (TESAC), the Company’s subsidiary,
continued working at the Loops del Sur Project, the Fenix
Power Project, Camisea Pipeline Maintenance and the
Camisea Well Head Compression Project. Also during this
fiscal year, TESAC was awarded the Toromocho Project for
Minera Chinalco Perú S.A.
Regarding Mexico, and through the Company’s subsidiary
Techint S.A. de C.V. (TEMEX), works were continued at
Tuxpan Compressor Station for Energía Occidente de México
S. de R.L. de C.V. and Norte II Combined Cycle Power Plant
in association with Samsung E&C. New projects were
awarded during the year such as Tamazunchale Facilities and
Naranjos Compressor Station, both for Transportadora de Gas
Natural de la Huasteca S. de R.L. de C.V., and the Ethane
Pipeline Project for Gasoducto del Sureste S. de R.L. de C.V.
With reference to Uruguay, Techint Compañía Técnica
Internacional S.A.C.I. (TEURU), TEI&C’s subsidiary in this
country, maintained its high level of activity during this
fiscal year through civil and water infrastructure projects.
Likewise, Celulosa y Energía Punta Pereira S.A. awarded
TEURU the construction of the water intake and effluent
outfall pipeline of its paper pulp plant. Also in Uruguay, the
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I&C
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Company, through TEARG branch, continues developing the
“San Carlos – Melo Electricity Interconnection” project for
Administración Nacional de Usinas y Transmisiones Eléctricas
de Uruguay.
As regards Chile, Techint Chile S.A. (TECHI), the Company’s
subsidiary, renewed its contract with Minera Escondida
Limitada for the Mechanical Maintenance Service until
March 2013. It also continued with other mining projects in
progress, like Pascua Lama (for Compañía Minera Nevada
Ltda.) and Plantas Valle de Huasco (for CAP Minería -
Compañía Minera del Pacífico S.A.). In turn, Sierra Gorda
Sociedad Contractual Minera awarded TECHI the project for
the construction of stations and pipeline for seawater supply
in the Antofagasta region.
In Central America and the Caribbean, the Interconnects
Project for Phoenix Park Gas Processors reached 100%
progress during the year. Additionally, Central American
Interconnection System (SIEPAC) Substation, SIEPAC I and
SIEPAC II are under warranty period.
In Bolivia, the works of the Company´s subsidiary Techint
Ingeniería y Construcción Bolivia S.A. (TEBOL) at the
Margarita project for Repsol YPF E&P Bolivia S.A. were
concluded during the year.
Engineering and construction works in pipe and steel plants
continued with a very high level of activity during this year
for Siderca S.A.I.C. and Siderar S.A.I.C. in Argentina, and
for Ternium de México S.A. de C.V. and Tubos de Aceros de
México S.A. de C.V. in Mexico.
In the area of steel and iron services, the Company, through
its subsidiaries, continued rendering services of Heavy
Duty Cleaning, Industrial Cleaning and Electromechanical
Maintenance. Also during the year, the Company
continued with the loading and transportation services
at Petacalco Project.
Regarding engineering services, the Company continued with
conceptual, basic and detail engineering mainly associated
to ongoing engineering services contracts and other projects
already completed. On the other hand, the Company
also continued to assist in the development of technical
specifications and evaluation of investment projects.
All these activities were undertaken acknowledging the
importance of and strictly complying with the rules and
regulations governing environmental protection, and seeking
the constant improvement of the safety, health and training
of the human resources involved.
prospects for fiscaL year 2013
The Company expects to maintain its presence and activity
level in some Latin American (LATAM) countries. This market
will continue being very active in terms of engineering and
construction in the energy and oil & gas segments, and
mainly in the mining sector. The Company is convinced that
its extensive deployment in this region, and its knowledge of
clients’ local needs and engineering and construction practices
in these countries will be key and positive distinctive factors
for TEI&C. This strategy has been adopted due to the high
number of business opportunities offered by the region and to
the strong competition from European and Asian E&C firms,
which are trying to enter the LATAM market as a result of their
local market crisis and fierce competition.
Likewise, there are sufficient grounds to support TEI&C’s
high expectations of enhancing its marketing positioning in
Brazil, particularly in the offshore sector. The Company will
face significant challenges, such as the accomplishment of
important milestones in the WHP for OSX, and the potential
execution of new projects for Petróleo Brasileiro S.A.
(Petrobras) and other clients. Furthermore, the investment
plan to continually improve TEI&C´s offshore yard operational
capacity will be carried on with new initiatives; we can
highlight the construction of a 300-meter quay that will allow
us to perform more complex projects and therefore gain
access to new segments of the offshore sector. Despite its
strong focus on the offshore opportunities, the Company
will also redouble its efforts in other traditional markets such
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as oil refineries, industrial plants and pipelines, by seeking
strategic partnerships and by analyzing in depth how to
optimize its competitiveness.
In Peru, the Company expects an intense activity in
mining plant expansions and new projects, mainly of
copper and gold. In the oil & gas industry, where TEI&C
has actively participated for several years, there will be
important opportunities for the execution of engineering
and construction works in the expansion of existing pipeline
systems and compression facilities.
Particularly in Chile, in the mining segment, the Company
foresees important opportunities for the execution of several
major pipeline projects (water and concentrate), including
pumping and choking related facilities, other service facilities,
processing facilities and transmission lines. Furthermore,
we will seek to expand the maintenance works that we are
currently executing in some mining plants in Chile to other
LATAM countries.
In Uruguay, the Company’s purpose is to participate in
engineering and construction projects for the state-owned
oil company. In the power generation and transmission
segment as well as in large civil infrastructure works, TEI&C
will continue screening projects to focus on those where it
has the greatest chances of success. Also the Company is
expected to continue growing in the infrastructure sector
given the clear intention of the government to invest in this
area. In road works, the Company is awaiting the award of
the Route 9 contract, taking advantage of a price recovery
in road undertakings. Regarding water and sewage facilities,
the Company will continue working with the Uruguayan
WHP 2 Platform for OSx leasing Group B.V.
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TE
I&C
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government, and anticipates an extension of the existing
contracts. In the mining sector, the Company is waiting
for the final decision over Aratiris Iron Mining from Ferrous
Indian Group.
In the Colombian mining and oil & gas sectors, the Company
will continue participating in calls for bids related to
engineering and construction activities.
Bidding opportunities in process plants for the oil & gas
industry such as oil & gas separation/treatment facilities,
refineries and basic petrochemical plants are also anticipated
in the countries mentioned herein and TEI&C expects to be
an active player in selected projects.
TEI&C’s capability to successfully complete on time and
within budget engineering and construction projects,
as well as to achieve worldwide standards in safety
and quality will be the Company’s key pillars to sustain
its important participation in the LATAM engineering
and construction market.
Taking into account the capabilities now available to the
Company, it is anticipated that it will manage to keep the
current level of activity in both the private and public sectors.
As a consequence of the corporate restructuring mentioned
in section Economic and Financial Information, the action
plans in relation to Argentina, Mexico and Ecuador described
below, shall be carried out in the new engineering and
construction holding company, Techint Construcciones
Holding S.A. (hereinafter “TECHOLD”).
In Argentina, in the mining sector, TECHOLD will continue
with engineering and construction works. The oil & gas
segment represents a challenge in markets and there are
several growth opportunities for TECHOLD, in which it may
prove its expertise and incorporate new technologies.
In Mexico, TECHOLD will primarily focus on the development
of new markets, and will deepen its participation in the
energy segment. Some of the new business opportunities
TECHOLD is pursuing are in the mining sector, an area
where subsidiaries has been creating a business structure
and forging alliances with related companies. In addition,
TECHOLD is seeking to increase its presence in the
pipeline sector, underpinned by the experience gained in
several bidding processes during this fiscal year, taking
advantage of the Techint Group´s know-how and expertise
in order to look for new business opportunities in public
bids. Likewise, TECHOLD is seeking new business
opportunities in Central America, based on the previous
experience gained in projects related to pipeline and
transmission lines in these countries.
In turn, in Ecuador, incipient opportunities in the mining area
will be analyzed to confirm the company strategic alignment.
In the oil & gas industry, there will be important opportunities
for the execution of engineering and construction works.
In relation to the support to Techint Group’s companies
in the steel and oil & gas sectors, we will continue
delivering engineering, construction and maintenance
services to expand and maintain current steel plants
and pipeline systems.
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econoMic and financiaL inforMation
suMMary of consoLidated incoMe stateMent
USD MIllIOnS
Revenues from construction contracts and other services
Cost of revenue
gross profit
General, administrative and selling expenses
Other operating results
operating income
Financial results, net
Result from investments in associated companies
income before income tax
Income tax
net income
attributable to:
Equity holder of TEI&C
non-controlling interests
12.31.12
1,887.6
(1,596.5)
291.1
(166.3)
14.2
139.0
39.7
0.5
179.2
(35.8)
143.4
136.7
6.7
143.4
1,632.3
(1,389.3)
243.0
(181.5)
144.6
206.1
16.9
1.5
224.5
(13.1)
211.4
204.7
6.7
211.4
12.31.11
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TE
I&C
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Revenues of the year ended December 31, 2012, reached
USD 1,888 million. In the previous fiscal year revenues were
USD 1,632 million.
Gross profit for this fiscal year was USD 291.1 million,
representing 15% of the revenues (as well as in the previous
fiscal year).
EBITDA (Earnings before Interest, Tax, Depreciation and
Amortization) for this year amounted to a total of USD 190.6
million, representing 10% on revenues.
General, administrative and selling expenses represented 9%
of the revenues. In last fiscal year, they represented 11%.
The other operating results showed a profit of USD 14.2
million, mainly generated for the sale of Property, Plant &
Equipment (PP&E). In the previous fiscal year, they showed
a profit of 144.6 million (mainly due to profits deriving from
the recognition of claims submitted by TEBRA in relation
to the civil works contract executed in 1991 by TEBRA with
the Ministry of Education and Sports for the construction
of 200 units of the Integrated Center for Child Support (CIAC,
according to its acronym in Portuguese)).
Financial results showed a gain of USD 39.7 mainly originated
in the financial result deriving from the accrual of the Reference
Stabilization Index (RSI) of the balance to be collected from
the Argentine Government by the Company in its capacity
as member of the TEARG - Impregilo S.p.A. (Sucursal
Argentina) - Iglys S.A. J.V. and the restatement and interest
on claims, net of foreign exchange transaction results.
The income tax expense amounted to USD 35.8 million.
Finally, net income for the year was USD 143.4 million,
representing 8% of revenues (preceding fiscal year
USD 211.4 million and 13%, respectively).
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TEI&C’s consolidated majority shareholders’ equity as of
December 31, 2012, reaches USD 744.2 million as compared
to USD 668 million at the beginning of the year. The increase
of USD 76.2 million is mainly due to the income obtained net
of cash dividend distribution (USD 35 million) and currency
translation differences.
Current Assets increased USD 197.3 million mainly due to
an increase in Cash and cash equivalents, trade and other
receivables and inventories. As regards Current Liabilities,
the increased (USD 96.6 million) is due principally to an
increase in trade and other payables. Thus, the Company’s
working capital, as of the end of this year, amounts to USD
409.1 million, representing an increase of USD 100.7 million
with respect to the previous fiscal year.
While Non-Current Assets increased USD 37.7 million mainly
due to trade and other receivables, Non-Current Liabilities
increased USD 68.7 million mainly due to other liabilities and
long-term bank borrowings.
suMMary of consoLidated
stateMent of financiaL position
USD MIllIOnS
assets
non-current assets
Current assets
total assets
equity
Majority Shareholders
non-Controlling interests
total equity
Liabilities
non-current liabilities
Current liabilities
total Liabilities
total equity and Liabilities
12.31.12
623.7
960.0
1,583.7
744.2
19.5
763.7
269.1
550.9
820.0
1,583.7
586.0
762.7
1,348.7
668.0
26.0
694.0
200.4
454.3
654.7
1,348.7
12.31.11
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I&C
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suMMary of consoLidated stateMent of casH fLoWs
As regards the financial situation, there was a cash and cash
equivalents net increase of USD 104.7 million along the fiscal
year, with a final balance of USD 303.1 million.
TEI&C’s cash increased USD 124.6 million from its operating
activities, which is mainly associated to the income for the
year, net of the items that did not generate cash movements
and the increase of trade and other payables and tax liabilities,
which were partially decreased by income tax payments and the
increase of trade accounts receivable, inventories and tax assets.
In relation to investment activities, there was a cash
decrease of USD 19 million mainly due to the flow
generated in the purchase/sale of PP&E, net of the
decrease in other investment.
Regarding financing activities, the proceeds from borrowings
net of the dividend distribution and the repayment of
borrowings generated an increase of funds of USD 3.0 million.
USD MIllIOnS
net cash and cash equivalents at the beginning of the year
net cash generated by operating activities
net cash used in investing activities
net cash generated by (/ used in) financing activities
net increase (/ decrease) in cash and cash equivalents
Effect of exchange rates changes
net cash and cash equivalents at the end of the year
12.31.12
198.4
124.6
(19.0)
3.0
108.6
(3.9)
303.1
327.0
54.4
(100.7)
(75.3)
(121.6)
(7.0)
198.4
12.31.11
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The main financial indicators are:
On February 22, 2013, the Company’s Board of Directors
provided for the payment of a dividend in cash for the sum
of USD 35,000, to be paid on such date to its controlling
shareholder, Techint Investments NV.
As a result of a new shareholders’ arrangement, on March
14, 2013, all the shares of the Company were transferred
to a new shareholder denominated PROSAT S.A. (company
which is currently taking the steps for a change in its
corporate name to "Techint Construcciones Holding S.A."),
hereinafter "TECHOLD", a new holding of companies
providing engineering, procurement, construction, operation
and management services. This is a holding company
organized in Uruguay, which shall control the engineering and
construction business specially in the American continent.
By virtue of the new business guidelines, TEI&C provided
for a dividend in kind for the sum of USD 349,568 to be paid
to its new shareholder TECHOLD. Through such payment,
it transferred all the interests of the Spanish subsidiaries
Techint Ingeniería y Construcciones SLU and PREGLOSID
SLU, companies which consolidate the provision of
engineering, construction and service management mainly
of their subsidiaries in Argentina, Ecuador, Canada, Central
America, Netherlands and Mexico.
The dividends in cash and in kind were ratified by the
new shareholder TECHOLD by means of a Special
Shareholders’ Meeting held on March 15, 2013; therefore,
it ratified the allocation of accumulated results for the sum
of USD 384,568.
Financial solvency (Assets / liabilities)
liquidity (Current Assets / Current liabilities )
Indebtedness (liabilities / Equity)
Gross profit
12.31.12
1.9
1.7
1.1
15%
2.1
1.7
0.9
15%
12.31.11
indicators
18
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I&C
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USD MIllIOnS
non-Current Assets
Current Assets
total assets
Shareholders’ Equity
Attributable to the Company’s Equity Holders
Share Capital
legal Reserve
Other Reserves
Retained Earnings
non-Controlling Interests
total equity
non-Current liabilities
Current liabilities
total Liabilities
total equity and Liabilities
12.31.12
623.7
960.0
1,583.7
218.6
30.1
(96.3)
591.8
19.5
763.7
269.1
550.9
820.0
1,583.7
355.1
460.8
815.9
218.6
30.1
(26.9)
207.2
(17.1)
411.9
141.0
263.0
404.0
815.9
12.31.12 after effect
of Group´s restructure
operation
(268.6)
(499.2)
(767.8)
–
–
69.4
(384.6)
(36.6)
(351.8)
(128.1)
(287.9)
(416.0)
(767.8)
effect of Group´s
restructure operation
In order to reflect the changes that took place after closing in the
amounts as of December 31, 2012, the allocation of such amounts
is shown below on a comparative and simplified basis:
As a result of these transactions, TEI&C shall focus on
engineering, construction and service management, especially
of its subsidiaries in Brazil, Chile, Colombia, Peru and Uruguay.
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MaJor Works eXecuted during tHe year
per country
TEI&C’s subsidiaries provide full engineering, procurement,
construction, operational and management services to
develop and execute major engineering and construction
projects. The main projects executed during the fiscal year
are listed below.
argentina
Pascua lama Phase III
Potasio Río Colorado (c)
Subway line H Expansion
Punta negra Hydroelectric Power Station
Works and Services in siderurgical plants
BraziL
Retarded Coke Unit Complexo Petroquímico
do Rio de Janeiro (COMPERJ)
WHP 1 and WHP 2 Platforms
MeXico
norte II CCC Power Project
Ethane Pipeline Project
Works and Services in siderurgical plants
Tamazunchale Facilities
Petacalco Project - Maintenance and Operational Contract
Tuxpan Compressor Station
Barrick Exploraciones Argentinas S.A.
Potasio Río Colorado S.A.
Subterráneos de Buenos Aires S.E. (SBASE)
Energía Provincial Sociedad del Estado (EPSE)
Siderar S.A.I.C. - Siderca S.A.I.C.
COMPERJ Petroquímicos Básicos S.A.
OSx leasing Group B.V.
KST Electric Power Company
Gasoducto del Sureste S. de R.l. de C.V.
Ternium de México S.A. de C.V. -
Tubos de Aceros de México S.A. de C.V.
Transportadora de Gas natural de la Huasteca
S. de R.l. de C.V.
Comisión Federal de Electricidad (CFE)
Energía Occidente de México S. de R.l. de C.V.
contract totaL aMount
(usd million)
countrY / proJect cLient
1,449
1,037
539
514
172
1,018
734
333
242
147
67
36
24
(a) projects under a consortium/JV. the amount corresponds to total contract amount at 100%. see note 20 to the financial statement.(b) the amount corresponds to annual revenues. (c) see description of the project within the argentina mining segment.(d) see description of the project within the uruguay architecture and infrastructure segment.
(a)
(a)
(a)
(a)
(b)
(a)
(a)
(b)
(b)
20
TE
I&C
S.A
.
peru
Camisea Pipeline Maintenance
Camisea Well Head Compression Project EPC 30
loops del Sur - Preliminary Works
Toromocho Project
Fenix Power Project
uruguay
Puerto Montes del Plata
San Carlos – Melo Electricity Interconnection
Maldonado Sewage System
Construction of Water Intake and Effluent Outfall Pipeline
Ciudad de la Costa Storm Drainage System (d)
Environmental Works in Maldonado and Punta del Este
cHiLe
Construction of Stations and Pipeline for Seawater Supply
Mechanical Maintenance Service
Plantas Valle de Huasco
Compañía Operadora de Gas del Amazonas S.A.
(COGA)
Pluspetrol Corporation Perú S.A.
Transportadora de Gas del Perú S.A. (TGP)
Minera Chinalco Perú S.A.
Fenix Power Perú S.A.
Zona Franca Punta Pereira S.A.
Administración nacional de Usinas
y Transmisiones Eléctricas
Obras Sanitarias del Estado (OSE)
Celulosa y Energía Punta Pereira S.A.
Consorcio Canario Ciudad de la Costa S.A.
Obras Sanitarias del Estado (OSE)
Sierra Gorda Sociedad Contractual Minera
Minera Escondida limitada
CAP Minería – Compañía Minera del Pacífico S.A.
countrY / proJect cLient
168
111
84
82
38
144
89
40
24
18
15
148
95
32
MaJor Works eXecuted during tHe year
per country (COnT’D.)
(a) projects under a consortium/JV. the amount corresponds to total contract amount at 100%. see note 20 to the financial statement.(b) the amount corresponds to annual revenues. (c) see description of the project within the argentina mining segment.(d) see description of the project within the uruguay architecture and infrastructure segment.
(a)
(a)
(a)
(b)
contract totaL aMount
(usd million)
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MEXICO
Oil and GasTuxpan Compressor Station.Tamazunchale Facilities.Naranjos Compressor Station.
EnergyNorte II CCC Power Project.
PipelineEthane Pipeline Project.
Iron and Steel Plants and Other IndustriesTernium de México S.A. de C.V. Plant in Monterrey.Tubos de Aceros de México S.A. de C.V. Plant in Veracruz.Petacalco Project - Maintenance and Operational Contract.
COLOMBIA
Oleoducto Al Pacífico Project.
Iron and Steel PlantsManizales Plant.
1.
2.
3.
4.
5.
6.
7.PERU
Oil and GasCamisea Well Head Compression Project.
PipelinesCamisea Pipeline Maintenance.Loops del Sur – Preliminary Works.
EnergyFenix Power Project.
MiningToromocho.
BRAZIL
Oil and GasRetarded Coke Unit Complexo Petroquímico do Rio de Janeiro (COMPERJ).WHP 1 and WHP 2 Platforms.
CHILE
MiningMechanical Maintenance Service.Plantas Valle de Huasco.
PipelinesConstruction of Station and Pipeline for Seawater Supply.
ARGENTINA
EnergyPunta Negra Hydroelectric Power Station.
MiningPascua Lama Phase III – Construction.Potasio Río Colorado.
Infrastructure WorksSubway Line H Expansion.
Iron and Steel PlantsSiderar S.A.I.C. Plant in San Nicolás.Siderca S.A.I.C. Plant in Campana.
URUGUAY
Architecture and Infrastructure WorksEnvironmental Works in Maldonado and Punta del Este.Maldonado Sewage System. Ciudad de la Costa Storm Drainage System.Puerto Montes del Plata.Construction of Water Intake and Effluent Outfall Pipeline.
EnergySan Carlos – Melo Electricity Interconnection.
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1
2
2
3 4
7
6
5
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tei&c suBsidiaries’ activities
for tHe year ended deceMBer 31, 2012
argentina
During this fiscal year, revenues reached the sum of
USD 756 million.
The main projects developed during this year include:
MINING
Throughout its history, TEI&C has developed mining projects
involving copper, gold, silver, zinc, potassium and lithium,
providing engineering, procurement, construction, operation
and integral maintenance services at mining plants.
Its vast experience in the mining segment enables the
Company to design and build processing plants, structures,
Punta negra Hydroelectric Power Station for Energía Provincial S.E. (EPSE).
revenue
194
535
756
Jul 2010 / deC 2010
(6 months)
Jan 2011 / deC 2011
(12 months)
Jan 2012 / deC 2012
(12 months)
USD MIllIOnS
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industrial and service buildings, water pipelines, slurry lines and
perform civil works, such as roads, access ways and ports.
Pascua Lama – Barrick Exploraciones Argentinas S.A.
This is a binational mining undertaking (gold and silver),
located in the border between Chile and Argentina.
TEARG is associated in a JV, on a 50/50% basis, with Fluor
Argentina Inc. Argentine Branch to carry out the works
divided into three phases: Phase I - Consolidation of Basic
Engineering and Feasibility Study of the Project; Phase
II - Detail Engineering and Procurement Management, and
Phase III - Construction Management and Construction.
Phase I was completed in 2007, and Phase II, during 2011.
At present, Phase III is in progress, and the estimated date
for completion of Processing Line 1 is August 2014; of
Processing Line 2, November 2014, and of Processing Line
3, March 2015. The progress as of December 2012 is 30%.
The estimated total amount for Phase III is approximately USD
1.45 billion, value that corresponds to 100% of the contract.
Potasio Río Colorado – Potasio Río Colorado S.A.
On October 25, 2010, a JV was created between
Constructora Norberto Odebrecht (45%), Odebrecht
Argentina (15%) and TEARG (40%) for the management
and construction of Phase I of the Potasio Río Colorado
plant, comprising the facilities for extraction, processing
and commercialization of potassium chloride. This non-
flammable, non-contaminant and non-toxic product is
used as a fertilizer in agriculture. For the extraction and
exploitation of the mineral, a low environmental impact
technology shall be used.
Due to the client’s financial hardship, the works were
suspended in December 2012. On March 12, 2013, the client
notified the termination of the contract for the construction
of the plant, and requested the Company to cease the
provision of goods and services. TEARG and its partners
in the JV are currently reviewing the closing of legal and
contractual terms and conditions, and the demobilization
works deriving from such termination.
The works were developed at Cañadón Amarillo, department
of Malargüe, in the south of the province of Mendoza.
As of December 31, 2012, the progress for Phase I works
is 26%.
Cerro Negro Project – Oroplata S.A.
In October 2012, the Company started procurement and
construction management activities in Dique de Colas of
the Cerro Negro Project, located to the northwest of the
Province of Santa Cruz, for Oroplata S.A.
In December 2012, the client entrusted the Company with
the management of two other projects: Camino de Acarreo
and Camino del Este. The first project consists of a 15-km
rubble road, and the second, of a 20-km rubble road.
Completion of the works is scheduled for June 2013.
ENERGY
The Company entered the Energy segment in the 50s, when
it started to provide engineering and construction services in
transmission lines and hydroelectric power plants. Since then,
TEI&C has acquired vast experience in this area through the
execution of projects involving transmission lines and transformer
stations, power generation undertakings in hydroelectric plants,
conventional thermal power plants, combined cycle, diesel
power, coal-fired and nuclear power plants.
Punta Negra Hydroelectric Power Station – Energía Provincial
S.E. (EPSE)
The contract was executed between EPSE and the TEARG-
Panedile JV, where the Company has a 75% participating
interest. This project is on the San Juan river, and it is
intended to increase the regulation of such an essential river
for San Juan’s economy, and to add 65 MW to the generation
system of the province.
Works were commenced in January 2010, the river deviation
channel was executed in August 2011 and, at present, the
works comprising the dam backfill, dam concrete face,
spillway tunnel excavation, reinforced concrete of spillway,
reinforced concrete of the machinery house, and sub-
floor of the adduction tunnel are in progress. The updated
contract amount is nearly USD 514 million, and the works are
estimated to be completed in August 2015.
As of December 31, 2012, the progress is 44%.
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which has two gas-turbo generators of 40 MW each
one. It was also planned to extend the power station
generation capacity to 160 MW.
The contract corresponded to Phase I of the project,
including:
Development of basic engineering and FEED.
Obtaining offers for the purchase of critical equipment and
the relevant business and technical analysis.
Drafting of a proposal for an EPCM contract for the execution
of the works.
To carry out this project, a JV was created with SENER
Ingeniería y Sistemas S.A., in which TEARG held a 60%
participating interest.
Works were commenced in May 2011 and completed in
March 2012. In October 2012, the client confirmed the
decision not to continue right away with Phase II of the
contract. The Acknowledgement of Completion for the
completed works was signed in December 2012.
Engineering Services, Supplies and Mechanical Assembly at the
Ancillary Building of the Reactor in Atucha II – Nucleoeléctrica
Argentina S.A.
This was a service contract to perform the piping system
erection in the ancillary building of the reactor (UKA
building). The project was carried out in two stages. The first
stage corresponded to piping erection, and the second, to
completion, piping ends and civil works.
Works were completed in February 2012. In March 2012,
the Company entered into a contract to provide consulting
services and technical assistance that, as of December 31,
2012, amounts to USD 0.7 million, and an extension for
approximately USD 0.3 million is anticipated for 2013.
Closing of Cycle at Cerro Dragón FEED – Pan American Energy
LLC Suc. Argentina
The purpose of the project was the conversion to
combined cycle of the power station currently operating,
Subway line H Expansion, Expansion for Subterráneos de Buenos Aires S.E. (SBASE).
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OIL AND GAS
The vast experience of the Company in this sector enables
it to design and build pipelines for the transportation of oil,
gas and by-products, oil and gas treatment plants, facilities
related to transportation systems (pumping compression
stations, storage tanks and other surface facilities) as well as
petrochemical and LNG plants, among others.
Gas Oil Hydrotreatment at La Plata Industrial Complex (HTG at
CILP) – YPF S.A.
The project was awarded on August 9, 2010, and consists of
two activity packages.
Package 1 comprises:
Light Gas Oil Hydrotreatment Unit (HTG-B).
Treatment Unit for Acid Gases with Amines (Amines C).
Conditioning of offsites for the interconnection of new units
with the rest of the complex.
Package 2 comprises the revamping of the existing Gas Oil
Hydrotreatment Unit (HTG-A).
The scope of the project included engineering, supply of
minor installation materials, construction, pre-commissioning
and assistance for commissioning, start-up and performance
tests of the unit. Throughout the year, several stages have
been completed, and the start-up of the most important unit
(HTG-B) took place in July 2012.
However, the project sustained some inconveniences that
prevented it from obtaining the expected results; such
inconveniences were analyzed in detail during the execution of
the project and upon closing, as lessons learned for the future.
Demobilization works were completed in December 2012.
INFRASTRUCTURE WORKS
Civil works have always been related to TEI&C throughout
its history. In recent years, several infrastructure works
have been developed, such as bridges, roads, highways,
tunnels, rail and subway tracks, water pipelines, ports,
airports, effluent and waste water treatment plants,
dams and telecommunication systems. In addition,
the Company performed architectural works, such as
business offices and buildings, housing unit complexes,
cultural and educational premises, penitentiary complexes
and hospitals.
During this fiscal year, the following project was developed:
Subway Line H Expansion – Subterráneos de Buenos Aires S.E.
(SBASE)
On August 15, 2011, SBASE awarded the TEARG Dycasa
JV (where the Company participation is 60%) the integral
construction and commissioning in conditions of commercial
exploitation of the current Subway Line H. The project
includes 4.15 km of tunnels with six stations, workshops,
parking lots and a rectifier substation.
The project includes civil and electromechanical works,
including tracks, power installations, pulling, signaling,
communications, mechanical stairs, elevators and station
equipment.
The contract between the JV and SBASE was executed
on September 16, 2011. The Acknowledgement of
Commencement was granted on October 4, 2011, for a total
term of 43 months. The original contract amount was
USD 376 million.
The failure to pass a resolution with respect to the amparo
action (for the protection of constitutional rights) filed by the
NGO Basta de demoler, which resulted in the suspension
of works at one of the stations, in addition to SBASE’s
failure to define certain aspects in the southern tranche, as
well as on the execution of workshops and parking space,
have led SBASE and the JV to execute a Memorandum of
Understanding to adjust the contract.
Consequently, on December 19, 2012, a Memorandum
of Understanding was executed for the amount of
USD 48 million, establishing a contractual extension
for an additional 24-month term (until April 2017). As of
December 31, 2012, the progress is 3%. The contract
amount, including the Memorandum of Understanding,
and taking into account the last price adjustment of June
2012, is around USD 539 million.
IRON AND STEEL AND OTHER INDUSTRIES
TEI&C has developed highly specialized resources to provide
design, engineering, construction and main maintenance
services to steel-making plants, lamination workshops, blast
and electric furnaces, production facilities, metallurgical
plants, aluminum-making plants and precious metals plants.
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The following works were executed for the plants belonging
to Siderar S.A.I.C. and Siderca S.A.I.C.:
Construction Works – Siderar S.A.I.C. Plant - San Nicolás
The following works carried out in 2012 may be highlighted:
In steel-making, works were started for the new
Continuous Casting, the new water plant; in addition, the
electromechanical works related to Vacuum Degassing (RH
Furnace) were continued.
The relining of Blast Furnace 2 was executed and repairs
were also made in conveyor belt 31 and the Blast Furnace
gas pipeline.
Works were executed in relation to REX (extraordinary
repair) of Continuous Casting 1 and change of shaft of
converter 1, 2 and 3.
At the Coke Oven Plant, expansion works were carried out in
advance facilities for by-product processing.
Total income for this fiscal year was USD 77 million, using
2,600,000 man-hours.
Construction Works – Siderca S.A.I.C. Plant - Campana
The main works executed during this fiscal year that are
worth mentioning include the plant extraordinary repair
(REX 2012), where works were mostly carried out in steel-
making and Continuous Rolling Mill 2 (LACO 2). As a part
of the general structural works in steel-making sections,
crane-support beams were replaced, and connecting
rods in columns and rail welds were reinforced. Works
were continued for the expansion of the fume extraction
system at the steel-making area, the fine dust extraction
devices and the lime loading to bins of Furnace 4 were
assembled, while the third fume filter was started up. In
the lamination area, works comprised the replacement
of nozzles at the top of the tempering furnace and the
revamping of gantry cranes 121 and 11. In addition, two
lathes in the Premium Line were replaced, the ferroalloy
extraction tubes were mounted and works were carried
out on the new passage of Pot Carriers through sections
2 and 4 of the steel-making area. Other works comprised
the expansion of the section and the assembly of
equipment at the inhibitor facility. The works executed
prior to REX 2013, comprised the revamping of Thermal
Treatment 2 and the beginning of works to turn the
direction of sections 2 and 3 in LACO 2.
During the 2012 fiscal year, the Company managed to renew
the contract with the client: the effective term has been
extended from April 2012 to April 2015, and the contract
amount is USD 66 million.
Total income for this fiscal year was USD 24 million, using
948,000 man-hours.
Services – Siderca S.A.I.C. Plant (Campana) and Siderar S.A.I.C.
Plant (San Nicolás)
During this fiscal year, the Company executed these
main services:
Heavy duty cleaning and recycling of iron & steel
sub-products.
Steel and tinplate reel packing.
Light duty cleaning.
OTHER INvESTMENTS AND SERvICES
Railway Cargo Transportation
Ferroexpreso Pampeano S.A. (FEPSA), a company under the
control and corporate decision of TEARG through Compañía
Inversora Ferroviaria S.A.I.F. (COINFER), is the concession
holder of the railway cargo transportation. The company
provides services towards the ports of Bahía Blanca, Rosario,
San Lorenzo and San Martín to exporters, stockers and large-
scale producers within a vast area of the Wet Pampa region.
During the fiscal year, 4.2 million tons of cargo were
transported (a volume similar to the volume transported in
the previous fiscal year).
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BraziL
TEBRA and its subsidiaries perform activities related to
engineering, construction, erection, project management,
petrochemical facilities, offshore projects, power generation,
transmission and distribution, iron and steel units,
transportation systems and infrastructure works in general.
Revenues for this year have reached USD 426 million.
During the current year, works were performed in the
following projects:
OIL AND GAS
Diesel Unit of Landulpho Alves de Mataripe Refinery (RLAM)
– Petróleo Brasileiro S.A.
On June 19, 2008, a contract was signed with Petrobras for
the preparation of the consistency review of the basic project,
Retarded Coke Unit Complexo Petroquímico do Río de Janeiro (COMPERJ) for COMPERJ Petroquímicos Básicos S.A.
revenue
187
425
426
Jul 2010 / deC 2010
(6 months)
Jan 2011 / deC 2011
(12 months)
Jan 2012 / deC 2012
(12 months)
USD MIllIOnS
28
TE
I&C
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preparation of the detail project, partial supply of equipment,
supplies of bulk material, civil construction, electromechanical
erection, pre-commissioning, commissioning and technical
assistance during the pre-operation, start-up and assisted
operation of the HDT of Diesel (U-37) and UGH (U-38) units,
the Power Sub-station SE-37 and the Control Room (K-3701)
at the Landulpho Alves de Mataripe Refinery, state of Bahia.
It was a lump sum contract executed under a JV with Andrade
Gutiérrez (50% / 50%).
The project was completed in May 2012.
LOT I Tanks Refinaria do Nordeste, Abreu e Lima (RNEST)
– Petróleo Brasileiro S.A.
In 2009, a contract was entered into with Petrobras for the
preparation of the consistency review of the basic project,
detail engineering, supply of materials, supply of equipment,
civil construction, electromechanical assembly, preservation,
conditioning, support and tests for the pre-operation of Lot I
Tanks of RNEST refinery, belonging to Petrobras, in Ipojuca,
state of Pernambuco. It was a lump sum contract executed
under a joint venture with Usiminas Mecânica, in which
TEBRA holds a 60% participating interest.
The project was completed in November 2012.
Retarded Coke Unit Complexo Petroquímico do Rio de Janeiro
(COMPERJ) – COMPERJ Petroquímicos Básicos S.A.
In April 2010, a contract was executed with Petrobras for the
preparation of the consistency review of the basic project,
preparation of the detail project, partial supply of equipment,
supply of bulk material, civil construction, electromechanical
erection, interconnections, pre-commissioning,
commissioning and technical assistance during the pre-
operation and assisted operation start-up of the Retarded
Coke Unit (U2200), Manipulation and Storage Yard (U6821)
and two electrical substations.
TEBRA is part of the TE-AG JV with Andrade Gutiérrez, with a
50% participating interest each, under the leadership of TEBRA.
The total value of the contract is USD 1.02 billion (at 100%
of the JV), within an original contractual term of 36 months.
The general progress of the project is 72%.
WHP 1 and WHP 2 Platforms – OSX Leasing Group B.V.
In February 2011, a contract was executed with OSX for
the supply of two drilling and operation fixed platforms
(WHP1 and WHP2), including the execution of basic
engineering, detail engineering, materials and equipment
supply, manufacture, construction and erection of the
elements of these platforms (jackets, stakes, topsides and
accommodation modules). The contract also includes the
preparation of such platforms for transportation, shipment,
offshore integration of the topsides, commissioning and
assisted operation.
The platforms shall be installed by the client at the Campos
Basin, approximately 90 km off the Brazilian shore.
The works shall be executed at the yard owned by TEBRA at
Pontal do Paraná, state of Paraná.
The value of the contract is USD 734 million and the total
term is 34 months.
In April 2012, the basic engineering was completed
and detail engineering was commenced. In addition
to engineering works, other works are being developed,
such as materials supply and equipment, manufacturing,
construction and erection of platform components.
The general progress of the project is 8%.
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MeXico
By the end of the year, TEMEX, was awarded new projects,
which anticipates a favorable outlook for the Company’s
activities in this country.
Additionally, the Company has consolidated its projects in progress
and continues working on the development of new business lines.
Revenues for this year have reached USD 255 million.
The main projects developed were as follows:
OIL AND GAS
Tuxpan Compressor Station – Energía Occidente
de México S. de R.L. de C.V.
The project consists in the engineering, procurement and
construction of facilities for the erection and commissioning
of the compressor station. These works are located at Jalisco
state. The client will be in charge of the procurement of the
Tuxpan Compressor Station Project for Energía Occidente de México S. de R.l. de C.V.
revenue
107
217
255
Jul 2010 / deC 2010
(6 months)
Jan 2011 / deC 2011
(12 months)
Jan 2012 / deC 2012
(12 months)
USD MIllIOnS
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TE
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compressor. The contract price is USD 24 million and, as of
December 31, 2012, the progress is 99%.
Tamazunchale Facilities – Transportadora de Gas Natural
de la Huasteca S. de R.L. de C.V.
This project consists in the engineering, procurement,
construction and commissioning of one compressor station, and
five additional stations for control, measurement and regulation
purposes. These works are located in Tamazunchale (San Luis
Potosí State), El Cardona (Hidalgo State) and El Sauz (Querétaro
State). The total contractual value is USD 67 million. As of
December 31, 2012, the overall progress for the project is 9%.
Naranjos Compressor Station – Transportadora de Gas Natural
de la Huasteca S. de R.L. de C.V.
The project consists in the designing, engineering, procurement,
construction and commissioning of one compressor station at
km 18 of the Tamazunchale Pipeline in Naranjos (Veracruz State).
It also includes the expansion of the measurement, reception
and control station at the Naranjos site and the delivery station at
Tamazunchale. The total amount of the contract is USD 39 million.
PIPELINES
Ethane Pipeline Project – Gasoductos del Sureste S. de R.L. de C.V.
The project scope includes the engineering, procurement,
construction, commissioning, testing and start-up of an ethane gas
and liquid pipeline, approximately 236 km long and 24", 20" and 16",
and its related facilities, which starts near Ciudad Pemex (Tabasco
State) and ends at the delivery point, next to the Ethylene XXI Plant
(Veracruz State). The contract amount for this project is USD 242
million. As of December 31, 2012, the progress is 3%.
ENERGY
Norte II CCC Power Project – KST Electric Power Company
The project consists in the design, engineering, procurement,
construction, installation, commissioning, testing and
completion of a combined cycle gas turbine power plant
of at least 433 MW net capacity in summer in the state of
Chihuahua, Mexico. The EPC contract price is a lump sum, fixed
price of USD 333 million. The contract is being developed under
a JV with Samsung engineering, where TEMEX participation is
19%. As of December 31, 2012, the project progress is 99%.
IRON AND STEEL AND OTHER INDUSTRIES
Construction Works – Ternium de México S.A. de C.V.
Professional services for the placement of personnel and
materials for the execution of construction works (including
civil and electromechanical works) and structure erection.
During this fiscal year, the most important activity was the con-
struction of the Greenfield Pesquería project which is estimated to
be completed by the end of 2013. This project entails a Galvanizing
Plant to provide the automotive industry with steel products, and a
Cool Rolling Plant to process the hot rolled pickled strips.
Additionally, the Company executed different works in
Ternium plants all over Monterrey City.
At present, TEMEX, has over 3,000 people working on a
direct basis in these two contracts.
Construction Works – Tubos de Aceros de México S.A. de C.V.
Professional services for the placement of personnel and
materials for the execution of construction works (including
civil and electromechanical works) and structure erection.
Maintenance and steel and iron services works have
continued with an average headcount of 1,100 people.
Petacalco Project, Maintenance and Operational Contract
– Comisión Federal de Electricidad (CFE)
Carbonser S. A. de C.V., of which TEMEX owns 50%, was es-
tablished on 8 August, 1994, and its principal activity is to provide
services for the loading and transportation of coal to the President
Plutarco Elías Calles power plant, located in Petacalco Guerrero.
During this year, the Company unloaded 6.25 million tons of coal
and delivered 5.7 million tons to the CFE terminal in Lázaro Cárde-
nas. The total revenue for this year amounted to USD 36 million.
Heavy Duty Cleaning Service – Tubos de Aceros de México S.A. de C.V.
This service is being provided through Sidernet S.A. de C.V.
to Tubos de Aceros de México S.A. de C.V. since April 2005,
and it comprises the reception of raw materials in the scrap
yard, transportation and processing of slag, and the recovery,
cutting and classification of metal junk.
During this fiscal year, this contract had an average of 178
people working on a direct basis, and the billing for the year
was approximately USD 6.5 million. The actual contract was
awarded on 2009 for a nine-year term.
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peru
TESAC, the Company’s subsidiary in Peru, has considerably
increased its activity in this country during the last fiscal year.
Revenues for this year have reached USD 201 million.
The main projects developed during this year were as follows:
OIL AND GAS
Camisea Well Head Compression Project (WHCP) EPC 30
– Pluspetrol Corporation Perú S.A.
In December 2011, the Company received from Pluspetrol
Perú Corporation S.A. a Letter of Intent and a Notice to
Proceed with the engineering and procurement of main
materials for the installation of two gas compression trains.
The total amount of this project is USD 111 million. The
works started in January 2012 and they are expected
Fénix Power Project for Fénix Power Perú S.A.
revenue
59
107
201
Jul 2010 / deC 2010
(6 months)
Jan 2011 / deC 2011
(12 months)
Jan 2012 / deC 2012
(12 months)
USD MIllIOnS
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TE
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to be completed by September 2013. As of December 2012,
the project reaches 24% progress.
PIPELINES
Camisea Pipeline Maintenance – Compañía Operadora de Gas
del Amazonas S.A. (COGA)
The Company provides the maintenance of this gas pipeline.
In July 2010, this contract was renewed for a three-year
period, including the maintenance of Peru LNG pipeline. The
total amount of this contractual renewal is USD 168 million.
Loops del Sur - Preliminary Works – Transportadora de Gas
del Perú S.A. (TGP)
In March 2010, the Company received from TGP the notice
to proceed with the early services for the construction of
two 55 km pipelines of 32” and 24” each, including detail
engineering and early works (set-up of camps, permits, land
rental and other activities).
The scope of the project amounts to approximately USD 84
million, and it is expected to be completed by June 2013.
As of December 2012, the project reaches 97% progress.
ENERGY
Fenix Power Project – Fenix Power Perú S.A.
In October 2011, the Company was awarded a contract
for the above ground mechanical installation for Fenix
Power Perú S.A. This includes the installation of the
steam turbine generator, steam surface condenser,
steel structures, piping, and all the balance of plant
equipment.
At the end of December 2011, TESAC was awarded
an extension of the main contract for the installation
of all the above ground electrical package.
The total amount of this project is USD 38 million and it is
expected to be completed by May 2013. As of December
2012, the project reaches 93% progress.
MINING
Toromocho Project – Minera Chinalco Perú S.A.
In March 2012, the Company was awarded a contract by
Minera Chinalco Perú S.A. for the partial procurement
and complete construction of the concrete placement;
structural steel, architectural, mechanical, piping, painting,
electrical and instrumentation services for the hydromet
plant, filter plant and offloading and storage facilities
in the rail yard area, as well as the procurement and
construction of all electrical and instrumentation works
of several areas for the same project.
The total amount of this project is USD 82 million. The
works started in March 2012 and they are expected
to be completed by August 2013. As of December 2012,
the project reaches 30% progress.
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uruguay
TEURU and TEARG branch Uruguay continue confirming the
Company’s presence in Uruguay through several ongoing projects.
Revenues for this year have reached USD 93 million.
The works developed in road, water and civil projects were
as follows:
ARCHITECTURE AND INFRASTRUCTURE WORKS
Environmental Works in Maldonado and Punta del Este
– Obras Sanitarias del Estado (OSE)
The contract for OSE includes four groups of works: works
for the maintenance of sewage and drinkable water networks
at Maldonado, Punta del Este and other locations within the
Department of Maldonado; sanitation works in the city of
Maldonado; sanitation works in the city of Piriápolis, and an
effluent treatment plant in Punta Fría (Piriápolis).
Maldonado Sewage System for Obras Sanitarias del Estado (OSE).
revenue
46
60
93
Jul 2010 / deC 2010
(6 months)
Jan 2011 / deC 2011
(12 months)
Jan 2012 / deC 2012
(12 months)
USD MIllIOnS
34
TE
I&C
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.
In this year, the Company continued with part of the works
scheduled for the extension of the contract with UDG [Unidad
de Gestión Desconcentrada] in Maldonado. The total contract
amount is USD 15 million, and records 85% progress.
Maldonado Sewage System – Obras Sanitarias del Estado (OSE)
The Company continued with the works of the project
“Treatment and final disposal of Maldonado and Punta del
Este sewage system”. The contract, executed by the joint
venture formed by TEURU, TEARG branch Uruguay, Montec
and Belfi, and OSE, for an amount of USD 37 million,
comprises the construction of 35 km of piping system, a 4-km
land outfall, civil and architecture works in seven pumping
stations (works to be executed by TEI&C), and a 1 km long
offshore outfall (to be executed by Montec and Belfi). The
term for the works, started in January 2010, is 36 months.
As of December 2012, the works record 93% progress. In
this fiscal year, extensions were awarded for USD 3.4 million
and the completion of these works is scheduled for June
2013. It is expected to continue with similar extension works
since the client is assessing the approval of additional works
for approximately USD 25 million.
Ciudad de la Costa Storm Drainage System – Consorcio Canario
Ciudad de la Costa S.A.
In November 2009, the joint venture formed by TEURU (45%)
and TEARG branch Uruguay (55%) was awarded a contract
with Consorcio Canario Ciudad de la Costa S.A., involving
the construction of 34 km of drainage piping system, 56 km
of gutters and 32 km of road works at Ciudad de la Costa,
Department of Canelones. As of December 2012, the project
reaches 93% progress over the reduced scope of the works.
On December 21, 2012, an “amicable transaction” was
signed with the client to reduce the scope of the contract,
and therefore the contractual term would be effective until
the second quarter of 2013. Thus, the contract amount was
reduced from USD 30 million to USD 18 million.
Puerto Montes del Plata – Zona Franca Punta Pereira S.A.
In June and July 2011, Zona Franca Punta Pereira S.A. awarded
the Company two contracts for the preliminary works and the
construction of the terminal at Conchillas Port, Department of
Colonia. For the execution of these works, a joint venture was
created between Constructora Belfi S.A. Sucursal Uruguay (60%
participating interest) and TEURU (40% participating interest).
Both contracts amount to an aggregate of USD 144 million,
and as of December 2012, the works records 52% progress.
The project completion is scheduled for April 2014.
Construction of Water Intake and Effluent Outfall Pipeline –
Celulosa y Energía Punta Pereira S.A.
In January 2012, the abovementioned joint venture was
awarded a contract by Celulosa y Energía Punta Pereira S.A.
for the construction of the water intake and effluent outfall
pipeline of a paper pulp plant.
The contract includes the supply of labor, tools, equipment,
materials and accessory elements necessary for construction.
The contract amount is USD 24 million. As of December
2012, the project reaches 75% progress. The project
completion is scheduled for July 2013.
ENERGY
San Carlos – Melo Electricity Interconnection – Administración
Nacional de Usinas y Transmisiones Eléctricas
During 2011, TEARG branch Uruguay executed an agreement
with Administración Nacional de Usinas y Transmisiones
Eléctricas de Uruguay (UTE), for the sum of USD 89 million,
for the construction of a 500 kV high voltage line, 348 km long.
The project, with a 20-month term, comprises the development
of engineering, materials supply and construction of the
transmission line under turnkey conditions. Approximately
870 metal towers, weighing 9,400 tons, and over 4,200 km
of aluminum and steel conductors will be installed. The works
were started with some difficulties, and this resulted in a
five-month delay for commencement of the project. As of
December 31, 2012, the works reaches 12% progress.
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cHiLe
Although during this year TECHI reduced its revenues, the
new engineering and construction works awarded will now
let the Company recover its level of activity.
Revenues for this year have reached USD 67 million.
During this fiscal year, works have been executed in the
following projects:
MINING
Pascua Lama – Compañía Minera Nevada Ltda.
See project description in the chapter on Argentina.
For the works at the Chilean side, the expected total contract
amount for Phase III is USD 22 million and the project progress
recorded 30%.
Construction of Stations and Pipeline for Seawater Supply for Sierra Gorda Sociedad Contractual Minera.
revenue
144
191
67
Jul 2010 / deC 2010
(6 months)
Jan 2011 / deC 2011
(12 months)
Jan 2012 / deC 2012
(12 months)
USD MIllIOnS
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I&C
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Mechanical Maintenance Service – Minera Escondida Limitada
In November 2009, a contract was entered into with Minera
Escondida Limitada. This contract corresponds to the
mechanical maintenance service of concentration plants
and an oxide plant located in Antofagasta. It is estimated
that the total sale, including this extension, will amount
to USD 95 million. As of December 31, 2012, the project
records 92% progress.
As of the date of this report, it is expected that the contract
may be extended until March 2015.
Plantas Valle de Huasco – CAP Minería - Compañía Minera
del Pacífico S.A.
In December 2010, TECHI was awarded an EPCM project
to increase the capacity of Los Colorados plants
for pellets (iron mineral). These works comprise
the execution of several phases of the contract,
such as management, review and validation of basic
engineering, detail engineering development,
procurement management, construction administration,
commissioning and start-up. The contract amount
is USD 32 million. As of December 31, 2012, this project
records 73% progress.
PIPELINES
Construction of Stations and Pipeline for Seawater Supply –
Sierra Gorda Sociedad Contractual Minera
During September 2012, Sierra Gorda Sociedad Contractual
Minera (SGSCM) sent to TECHI a Letter of Intent regarding
the award of contract CC-15 “Construction of Stations and
Pipeline for Seawater Supply” [“Construcción de Estaciones
y Pipeline Conducción Agua de Mar”], corresponding to the
Sierra Gorda mining project, located 4.5 km Northwest of
Sierra Gorda town, in Antofagasta.
The contract comprises the installation of approximately 145
km of piping for seawater drive and supply to be used in the
mining process in the mine sector and the processing plants,
which will connect the Mina-Planta and Mejillones sectors.
The seawater drive works for the Sierra Gorda project
encompass the construction of a system consisting of GFRP
(glass-fiber reinforced plastic) tubing and carbon steel tubing,
both of them with a 36" diameter, laid underground (for
GFRP tubing) and over the surface (for carbon steel tubing),
a capture and lift station located inside the thermal power
plant at Mejillones, two main pumping stations located along
the outline and a terminal station located inside the mine
site, at Sierra Gorda.
The contract for USD 148 million was signed on November
16, 2012. At present, soil movement works have started,
and preliminary works are being executed, such as camps
and canteens.
BoLivia
During the year, the Company’s activity focused on
this project:
PIPELINES
Margarita Project – Repsol YPF E&P Bolivia S.A.
The project consisted in the construction of collection lines,
pipeline and loop for the Margarita-Huacaya fields. The works
developed in this project comprised detail engineering,
purchase of material, construction, pre-commissioning, and
assistance for start-up of the GTS (gas collection system)
and EXS (export system) and a 28" loop. The top challenge
of the project was the construction work on the Itahuasuti
and Caipipendi hills, which were very complex due to their
topography. This project was completed during the 2012
fiscal year; the provisional acknowledgement was received
on May 18, 2012, and the punch list completion was received
in November 2012.
centraL aMerica and tHe cariBBean
During the fiscal year ended December 31, 2012, the
Company continued working in the Central American
Interconnection System (SIEPAC), focusing on the
resolution of pending issues during the guarantee period
of the project.
OIL AND GAS
Interconnects Project – Phoenix Park Gas Processors Limited
During 2011, a contract with Phoenix Park Gas Processors
Limited was awarded. The offshore contract, signed
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with Techint International Construction Corp. (TENCO),
covered the engineering and procurement activities which
started in April 2011 and ended during this fiscal year.
While the onshore contract, signed with TEARG Branch T&T,
for construction and local procurement reached a 100%
progress at the end of the year.
coLoMBia
Oleoducto Al Pacífico Project – Enbridge (Colombia) S.A.S.
Enbridge awarded TENCO´s Colombian branch a contract
for the conceptual engineering of a pipeline to transport
heavy crude along 700 km from the Llanos basin to the
Pacific coast. These works were completed in the first
quarter of 2012.
During 2012, the Company continued with the first phase
of the Alternative Environmental Diagnosis. This study will
be completed in the second quarter of 2013.
Manizales Plant – Siderúrgica de Caldas S.A.S. (Ternium)
This project consists in the modernization of a smoke
and dust suction system to control the emissions of gases
at the Manizales steel plant. This contract was awarded
in February 2012, and the construction is expected to be
completed in June 2013.
engineering
During this fiscal year, the level of activity developed,
measured in man-hours, reached 1.5 million hours. The main
engineering works performed are related to projects under
development and others already completed, among which
the following are highlighted:
ARGENTINA
yPF
Sulfur Reduction to 50 PPM in gasoil: detail engineering of two
new treatment units, ancillary services and interconnections,
and revamping of an existing hydrotreatment unit.
Subsequent development of construction engineering for the
above-mentioned facilities.
Gas supply to Minera Vale: development of gas pipeline
extended basic engineering for gas transportation up to
the facilities of Minera Potasio Río Colorado.
TEnARIS InGEnIERíA S.A.
Engineering for the thermal treatment line of seamless
tubes with a diameter up to 9 5/8" including the following:
heating furnaces, tempering and forging heads; cooling
lines; adjustment line and non-destructive controls line.
POTASIO RíO COlORADO
Engineering review works carried out by the Odebrecht -
TEARG JV for detail engineering at the phase of execution
by Minerconsult and Progen for Vale.
PUnTA nEGRA HyDROElECTRIC STATIOn
Detail engineering of the hydro dam and other facilities
of this project (intake works, machinery house, spillway,
transformation of bottom outlet and electric substation).
ARGENTINA – CHILE
PASCUA lAMA
Engineering for the bi-national mining project under a JV
with Fluor for the client Barrick Gold.
CHILE
CERRO CASAlE PROJECT
Design and engineering services for pipelines and related
facilities for the Cerro Casale Project (property of Barrick Gold
and Kinross).
CORPORACIón nACIOnAl DEl COBRE DE CHIlE (CODElCO)
Prefeasibility study of water supply at Radomiro Tomic project.
TARKAF CHIlE S.A.
Detail engineering development, disciplines civil-structural,
mechanical and pipes at Antucoya project – Agglomeration Plant.
BATEMAn CHIlE SpA
Detail engineering at the Antucoya project – S.X. (solvents
extraction), T.F. (tank farm) and E.W. (electrowinning) plants.
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TE
I&C
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BRAzIL
DIRECT REDUCED IROn (DRI) PlAnT – VAlE S.A.
Engineering studies for a steel production plant based on
Direct Reduced Iron (DRI). This contract includes FEL 1
(scope studies with “trade off” of DRI technologies and
markets); and FEL 2 (concept engineering).
PERU
CAMISEA 2nd ExPAnSIOn
Basic engineering, procurement management and assistance
to works for the client Pluspetrol.
GAS COMPRESSIOn STATIOn KP127
Basic and detail engineering, and procurement management
regarding main equipment for TGP.
WHCP PROJECT – PlUSPETROl
Engineering, design, procurement, supply, manufacturing,
transportation, installation, construction, quality control,
pre-commissioning, commissioning and start-up for
the new fixtures and facilities of two compression units
at Malvinas Plant.
URUGUAY
InTERCOnExIón EléCTRICA SAn CARlOS – MElO
Engineering for the construction of a 500 kV high voltage
line between Brazil and Uruguay.
HuMan resources
The level of activity, the business perspectives and the resulting
growing demand for talent led the Company and its subsidiaries
to strengthen both the recruitment process and the professional
development program during this fiscal year. Both processes
are intended to align the required profiles and the personnel’s
professional development with the needs of the business.
During the 2012 fiscal year, the Company and its
subsidiaries kept on incorporating newly-graduated
professionals through the Young Professionals Program,
a structured training program allowing for the rapid
insertion of these young professionals into our business
management. For a two-year period, young professionals
receive both technical and management training,
and they take part in a rotation plan which exposes
them to several sectors of the Company, thus allowing
them to complete this initial training process.
The Company and its subsidiaries has also continued
with the training program, reaching out to all Company
levels, from professionals with potential to hold
positions in project management, middle management
and supervision, to field personnel.
procureMent
The main works performed regarding supplies are related
to the projects under development stated in the
Engineering section.
The goals set for this fiscal year will focus more strongly
on the procurement global strategy, and the continuous
improvement process started in previous stages, focusing
on enhancing the Company’s competitiveness based on
the following initiatives:
Global: Through the analysis of competitors in the
market, detecting any technical and business
opportunities for the Company, in order to increase
our potential in bids and our efficiency in the projects
in progress (environment, safety, productivity,
reliability, etc.).
Such activity is supported by a scouting and sourcing
process, which was started in the previous fiscal
year upon execution of long-term agreements
with alternative supply sources and their respective
participation in the bids and projects.
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Synergy: Work teams were created to carry out
personnel training activities related to human resources
management, global suppliers’ management, procurement
and supplies standard documentation, as well as bidding
and auditing systems.
Policies and procedures: The Company kept on developing
new procedures and processes jointly with the In-House
Audit Department and the Improvement Committee,
which ensure the global application of the best practices
so as to streamline management transparency and cost
optimization.
During the next fiscal year, such activities and principles
will be reinforced so as to keep on identifying opportunities,
at Company level, in the market and in the synergy with
the Organization.
tei&c eQuipMent division (tepaM)
During this fiscal year, TEI&C Equipment Division started
the implementation of a reengineering process for this area,
aimed at optimizing investment in construction equipment,
reducing operating costs, building a distinctive and competitive
improvement factor, and increasing productivity in projects.
This reengineering process has enabled the Company
to optimize the allocation of equipment, to improve the
efficiency and effectiveness of repairs, to direct investment
towards critical equipment with higher utilization levels,
and to perform a controlled renewal of TEPAM equipment,
by getting rid of old items with a low return on investment.
TEPAM investment value in equipment, machinery and
vehicles for the 2012 fiscal year amounted to USD 36 million.
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TE
I&C
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.
HeaLtH, safety and environMent (Hse)
TEI&C is a company operating in several countries, with
different cultures and degrees of evolution in relation to
prevention and also with different clients; however, the
Company has managed to build prevention into its activities
as an intrinsic value, by assigning a high priority to its
management.
TEI&C has developed a preventive vision focused on an
active and visible commitment to safety, occupational health,
environmental protection and the welfare of communities.
In this respect, the implementation of the Integrated
Management System (IMS) has proved to be effective to
anticipate and prevent accidents and unsafe conditions
concerning industrial safety, health and environmental
protection.
Since its implementation, the IMS has allowed reducing
global accident rates. This shows a substantial improvement
in accidentology at worksites, an asset that is acknowledged
and valued by our clients. Such system is externally audited
from time to time by Det Norske Veritas (DNV), which verifies
high compliance with international standards and issues
certification under ISO 14001:2004 and OHSAS 18001:2007
for all the Company’s projects.
Management leaders committed to prevention extend
such strong commitment to all levels so that preventive
behavior is properly acknowledged and assimilated at work
(including subcontractors). This leadership largely contributes
to minimizing the recurrence of incidents and accidents, in
addition to taking actions related to equipment and facilities
as well as safety at the workplace.
Finally, we must state that preventive actions in the last
period have achieved:
An effective operating discipline: example and self-
management.
A sound commitment of employees: management active
leadership in projects.
Throughness in the use of preventive tools with high
Company standards.
An effective review of preventive measures.
Optimization in the analysis of risks related to change
management.
QuaLity
The Company and its subsidiaries established and maintain a
management policy which directs efforts to meet and exceed
the expectations of clients, shareholders, collaborators,
suppliers and the communities where it operates.
In particular, with respect to clients, this entails a special
focus on the quality of the products and services provided.
The Company is clearly oriented to continuous improvement,
and it pays special attention to efficiency, process
simplification and value added in each of its operations.
During 2012, the following actions have been completed,
among others:
Consolidation of the Knowledge Base (Knowledge
Management Project), and generation of new activities
related to this matter.
Improvements in the number and effectiveness of actions
developed, taking into account the results of the main quality
indicators related to the projects executed.
Sustained measurement of client’s satisfaction in the
different projects, and adoption of centralized measures
resulting from the cross-sectional analysis of the information
obtained.
Reformulation of indicators for quality management in
projects (Project Quality Index).
In November 2012, the Company was recertified for another
three years under ISO 9001:2008 standard, and therefore,
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the certification was renewed once again for the quality
management system, which was first obtained in 1986.
The Company has maintained and consolidated the direction
defined in previous years, focused on the adoption of
standardized methodologies based on experience, as
well as the reliance on truthful, updated and transparent
information so as to minimize risks, prevent problems and
ensure the predictability of results in order to comply with
its commitment to meet and exceed the expectations of all
related stakeholders.
tecHnoLogy and it systeMs
During this fiscal year, progress continued to be made
in several IT internal projects related to improvements
in technological infrastructure, upgrade to new software
versions, and implementation of new solutions to cover
different business processes. The most outstanding IT
projects were the following:
Progress continued to be made in the project for the
implementation of new SAP modules for HR management.
Continuous development of internal control panels, on
Business Intelligence (BI) tools (Microstrategy, Business
Warehouse SAP, etc.) based on the information from
transactional systems.
Implementation of a new Customer Relationship
Management (CRM) tool for the Commercial Area.
Implementation of the SAP Investment (IM) module, so as to
improve traceability and the workflow of investment approval.
Start-up of the new Intranet of the Company subsidiaries,
so as to have a more friendly content and modern tool for
browsing and managing contents.
Progress was made in the implementation of new features
for the Equipment Management process, aimed at
supplementing and improving existing tools and covering
new processes.
Implementation of the Suppliers’ Extranet, so as to facilitate
communication with suppliers, which enables the display
and loading of information for the Accounts Payable process.
Launching of an internal review project to detect needs for
the implementation of new tools with greater integration for
Engineering, Material Administration, Procurement, Planning,
Management Control, and Document Administration
processes.
We would like to thank all our clients, suppliers, banking
institutions and, above all, our employees, whose work
on a daily basis have contributed to these results.
The Board of Directors
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I&C
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2Board of directors
president
Lodovico Andrea Palu Rocca
vice president
Carlos Eduardo Bacher
Eduardo Nicolás Rocca Couture
directors
Ricardo Pascale Cavallieri
Luis Pablo Solari Damonte
Mario Osvaldo Lalla
Ricardo Ourique Marques
Directors were appointed
at the Regular Shareholders’ Meeting
held on May 31, 2012.
44
TE
I&C
S.A
.
Pascua lama Project for Barrick Gold Corp. of Canada’s subsidiaries, Chile side.
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I&C
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consoLidated financiaL stateMents
For the year ended december 31, 2012 and 2011
48
TE
I&C
S.A
.
Manizales Plant Project for Siderúrgica de Caldas S.A.S. (Ternium), Colombia.
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LegaL inforMation
denoMination:
TEI&C S.A.
LegaL address:
La Cumparsita 1373 7th Floor
Montevideo (11200)
(598-2) 901-9091
coMpany activity:
Investments.
date of registration:
February 16, 2005.
eXpiration
of coMpany cHarter:
February 16, 2105.
registry nuMBer:
RUC 21-5098860012.
capitaL stock:
Shares: 5,181,537,274 1.
Face Value: UYU 5,181,537,274 2.
1 see note 13 to the consolidated financial statements.2 uyu: uruguayan pesos.3 see note 24.
parent coMpany:
Techint Investments N.V. 3.
LegaL address:
Berg Arrarat 1, Curaçao
Netherlands Antilles.
parent coMpany activity:
Investments.
parent coMpany:
Shares: 100%
Votes: 100%
50
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I&C
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52
TE
I&C
S.A
.
All AMOUnTS In USD THOUSAnDS
assets
non-current assets
Property, plant and equipment (PP&E)
Intangible assets
Investments in associated companies
Other investments
non-current tax assets
Trade and other receivables
Deferred income tax assets
total non-current assets
current assets
Inventories
Derivative financial instruments
Current tax assets
Trade and other receivables
Construction contracts work in progress
Assets of disposal group classified as held for sale
Other investments
Cash and cash equivalents
total current assets
total assets
12.31.12
307,602
8,623
2,401
9,952
13,512
219,816
61,786
623,692
74,425
194
37,199
478,668
44,359
1,029
16
324,132
960,022
1,583,714
306,882
6,087
1,848
8,566
11,065
186,387
65,172
586,007
34,499
–
31,166
371,619
50,292
20
40,186
234,908
762,690
1,348,697
4
5
6
7
8
15
9
26
8
11
7
12
12.31.11
consoLidated stateMent
of financiaL position
For the year ended December 31, 2012 and 2011.
notes
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All AMOUnTS In USD THOUSAnDS
eQuity and LiaBiLities
equity
Capital and reserves attributable to the Company’s equity holders
non-controlling interests
total equity
non-current liabilities
Borrowings
Deferred income tax liabilities
non-current tax liabilities
Derivative financial instruments
Trade and other payables
Other liabilities
total non-current liabilities
current liabilities
Borrowings
Trade and other payables
Derivative financial instruments
Construction contracts work in progress
Current tax liabilities
Other liabilities
total current liabilities
total Liabilities
total equity and Liabilities
12.31.12
744,178
19,460
763,638
63,971
25,105
1,371
–
48,370
130,315
269,132
67,499
313,318
5
31,529
48,776
89,817
550,944
820,076
1,583,714
668,023
25,946
693,969
36,676
21,338
739
17
40,869
100,764
200,403
66,144
235,661
2,371
44,320
31,684
74,145
454,325
654,728
1,348,697
14
15
26
16
17
14
16
26
17
12.31.11notes
consoLidated stateMent
of financiaL position (cont’d.)
For the year ended December 31, 2012 and 2011.
the accompanying notes are an integral part of these consolidated financial statements.
54
TE
I&C
S.A
.
All AMOUnTS In USD THOUSAnDS
Revenues from construction contracts and other services
Cost of revenue
gross profit
General and administrative expenses
Selling expenses
Other operating results
operating income
Financial income
Financial costs
Result from investments in associated companies
income before income tax
Income tax
net income (1)
(1) attributable to:
Equity holders of the Company
non-controlling interests
net income
12.31.12
1,887,631
(1,596,569)
291,062
(152,519)
(13,788)
14,241
138,996
53,078
(13,365)
537
179,246
(35,802)
143,444
136,700
6,744
143,444
1,632,250
(1,389,272)
242,978
(164,828)
(16,692)
144,682
206,140
21,734
(4,874)
1,471
224,471
(13,062)
211,409
204,653
6,756
211,409
27
27
27
29
28
28
6
30
12.31.11notes
consoLidated incoMe stateMent
For the year ended December 31, 2012 and 2011.
the accompanying notes are an integral part of these consolidated financial statements.
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net income
other comprehensive income:
Decrease of revaluation of PP&E
Currency translation differences
Cash flow hedge
other comprehensive income for the year net of tax (2)
(2) attributable to:
Equity holders of the Company
non-controlling interests
143,444
(1,758)
(26,830)
2,570
117,426
111,227
6,199
117,426
211,409
(505)
(78,435)
(2,382)
130,087
125,836
4,251
130,087
4
consoLidated stateMent
of coMpreHensive incoMe
For the year ended December 31, 2012 and 2011.
All AMOUnTS In USD THOUSAnDS notes 12.31.12 12.31.11
the accompanying notes are an integral part of these consolidated financial statements.
56
TE
I&C
S.A
.
attributabLe to the coMpanY´s equitY hoLders
Balance at december 31, 2011
net income for the year
Other comprehensive income
Decrease of revaluation of PP&E net of tax
Depreciation of reserve for revaluation surplus net of tax
Decrease of reserve for revaluation surplus due to PP&E disposal net of tax
Cash Flow Hedge
Currency translation differences
total comprehensive income for the year
Resolution of the Shareholders' meeting held on 05.31.12:
Board of Directors' fees
legal Reserve
Dividend distribution (USD 0.007 per share)
Changes in non-controlling interests – Dividend distribution
Balance at december 31, 2012
LegaL reserve
share capitaL
19,859
–
–
–
–
–
–
–
–
10,233
–
–
30,092
218,535
–
–
–
–
–
–
–
–
–
–
–
218,535
consoLidated stateMent
of cHanges in eQuity
For the year ended December 31, 2012 and 2011.
All AMOUnTS In USD THOUSAnDS
4
notes
the accompanying notes are an integral part of these consolidated financial statements.
57
an
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2
non - controLLinG
interests
totaL equitY
capitaL surpLus
currency transLation differences
reserve for pp&e
revaLuation surpLus
retained earnings
reserve for cash
fLow hedge
totaL
(1,625)
–
–
–
–
–
–
–
–
–
–
–
(1,625)
(102,857)
–
–
–
–
–
(26,285)
(26,285)
–
–
–
–
(129,142)
55,367
–
(1,758)
(9,454)
(9,856)
–
–
(21,068)
–
–
–
–
34,299
481,126
136,700
–
9,454
9,856
–
–
156,010
(72)
(10,233)
(35,000)
–
591,831
(2,382)
–
–
–
–
2,570
–
2,570
–
–
–
–
188
668,023
136,700
(1,758)
–
–
2,570
(26,285)
111,227
(72)
–
(35,000)
–
744,178
25,946
6,744
–
–
–
–
(545)
6,199
–
–
–
(12,685)
19,460
693,969
143,444
(1,758)
–
–
2,570
(26,830)
117,426
(72)
–
(35,000)
(12,685)
763,638
attributabLe to the coMpanY´s equitY hoLders
58
TE
I&C
S.A
.
attributabLe to the coMpanY´s equitY hoLders
Balance at december 31, 2010
net income for the year
Other comprehensive income
Decrease of revaluation of PP&E net of tax
Depreciation of reserve for revaluation surplus net of tax
Decrease of reserve for revaluation surplus due to PP&E disposal net of tax
Cash Flow Hedge
Currency translation differences
total comprehensive income for the year
Dividend distribution approved by the Board of Directors’ Meeting held on 02.15.11 (USD 0.013 per share) (1)
Resolution of the Shareholders' meeting held on 06.08.11:
Board of Directors' fees
legal Reserve
Dividend distribution approved by the Board of Directors’ Meeting held on 12.13.11 (USD 0.006 per share) (2)
Capital Surplus
Changes in non-controlling interests – Dividend distribution
Changes in non-controlling interests – Disposal of subsidiary
Balance at december 31, 2011
17,645
–
–
–
–
–
–
–
–
–
2,214
–
–
–
–
19,859
218,535
–
–
–
–
–
–
–
–
–
–
–
–
–
–
218,535
consoLidated stateMent
of cHanges in eQuity (cont’d.)
For the year ended December 31, 2012 and 2011.
(1) the dividends were approved by the board of directors and were ratified by the shareholder's meeting held on June 08, 2011.
(2) the dividends were approved by the board of directors and were ratified by the shareholder's meeting held on may 31,2012.
the accompanying notes are an integral part of these consolidated financial statements.
LegaL reserve
share capitaL
All AMOUnTS In USD THOUSAnDS
4
1
1
notes
59
an
nu
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2
non - controLLinG
interests
totaL equitY
reserve for cash
fLow hedge
totaL
attributabLe to the coMpanY´s equitY hoLders
(1,476)
–
–
–
–
–
–
–
–
–
–
–
(149)
–
–
(1,625)
(26,927)
–
–
–
–
–
(75,930)
(75,930)
–
–
–
–
–
–
–
(102,857)
73,118
–
(505)
(9,680)
(7,566)
–
–
(17,751)
–
–
–
–
–
–
–
55,367
–
–
–
–
–
(2,382)
–
(2,382)
–
–
–
–
–
–
(2,382)
356,489
204,653
–
9,680
7,566
–
–
221,899
(65,000)
(48)
(2,214)
(30,000)
–
–
–
481,126
637,384
204,653
(505)
–
–
(2,382)
(75,930)
125,836
(65,000)
(48)
–
(30,000)
(149)
–
–
668,023
27,915
6,756
–
–
–
–
(2,505)
4,251
–
–
–
–
–
(2,709)
(3,511)
25,946
665,299
211,409
(505)
–
–
(2,382)
(78,435)
130,087
(65,000)
(48)
–
(30,000)
(149)
(2,709)
(3,511)
693,969
capitaL surpLus
currency transLation differences
reserve for pp&e
revaLuation surpLus
retained earnings
60
TE
I&C
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.
cash flows from operating activities
net Income for the year
adjustments to reconcile net income to cash flow operations
PP&E depreciation
Intangible amortization
Construction contracts in progress
net provisions
net allowance for doubtful accounts
Gain from claims
Tax accrued
(Gain) / loss from the sales of PP&E
Impairment loss
Interest accrued from trade and other receivables
Interest accrued from borrowings
Result from other investments
Result from investments in associated companies
Other, including currency translation differences
changes in balances corresponding to:
Trade accounts receivable and tax assets
Inventories
Trade and other payables and tax liabilities
Income tax payments
Other liabilities
Changes in non-controlling interests
net cash generated by operating activities
143,444
49,679
1,901
(6,858)
3,229
256
–
35,802
(13,836)
819
(3,972)
4,800
(847)
(537)
(26,705)
(115,471)
(37,588)
97,407
(29,315)
35,150
(12,685)
124,673
211,409
45,868
1,125
(15,246)
47,332
151
(150,169)
13,062
6,781
–
(4,101)
3,882
(818)
(1,471)
(39,864)
(27,186)
(11,206)
16,771
(46,810)
7,676
(2,709)
54,477
4
5
8
29
30
29
29
7
6
consoLidated stateMent
of casH fLoWs
For the year ended December 31, 2012 and 2011.
All AMOUnTS In USD THOUSAnDS 12.31.12 12.31.11notes
61
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2
cash flows from investing activities
Proceeds from disposal of PP&E
Purchases of PP&E
Purchases of intangible assets
Revenue on sales of intangibles
Other investments and investment in associated companies (net)
Business combination
Sale of subsidiary, net of cash transferred
net cash used in investing activities
cash flow from financing activities
Proceeds from borrowings
Repayments of borrowings
Board of Director´s fees
Dividend distribution
net cash generated by / (used in) financing activities
net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes
cash and cash equivalents at the end of the year
non-cash transactions
Cash Flow hedge
Finance leases
Decrease on revaluation of PP&E, net of tax effects and decrease
28,702
(81,325)
(5,141)
176
38,535
–
(19,053)
70,679
(32,628)
(72)
(35,000)
2,979
108,599
198,400
(3,911)
303,088
2,570
(1,263)
(1,758)
17,866
(74,730)
(3,686)
–
(38,707)
(1,391)
(100,648)
45,046
(25,371)
(48)
(95,000)
(75,373)
(121,544)
326,962
(7,018)
198,400
(2,382)
(702)
(505)
5
1
12
4
consoLidated stateMent
of casH fLoWs (cont’d.)
For the year ended December 31, 2012 and 2011.
the accompanying notes are an integral part of these consolidated financial statements.
All AMOUnTS In USD THOUSAnDS 12.31.12 12.31.11notes
62
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I&C
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.
Camisea Pipeline Maintenance for Compañía Operadora de Gas del Amazonas S.A. (COGA), Peru.
63
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2
indeX to tHe notes to tHe
consoLidated financiaL stateMents
Basis of preparation
Consolidation
Foreign currency translation
Use of estimates
Property, plant and equipment (PP&E)
Intangible assets
Impairment of non-financial assets
Financial assets
Offsetting financial instruments
Derivative financial instruments
Inventories
Construction contracts work
in progress
Other investments
Trade and other receivables
Trade and other payables
Cash and cash equivalents
Equity
Borrowings
Current and deferred income tax
Employee benefits
Provisions
Revenue recognition
Leases
Assets and liabilities classified
as held for sale
General Information
Accounting policies
1.
2.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
u.
v.
w.
x.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
Financial risk management
Property, plant and equipment (PP&E)
Intangible assets
Investments in associated companies
Other investments
Trade and other receivables
Inventories
Financial instruments by category
Assets of disposal group classified
as held for sale
Cash and cash equivalents
Share capital
Borrowings
Deferred income taxes
Trade and other payables
Other liabilities
Provisions
Employee benefits
Participation in Joint Ventures
Contingencies and commitments
Restricted assets
Claims Receivables
Related party transactions
Subsidiaries
Derivative financial instruments
Cost of revenue and expenses by nature
Financial results
Other operating results
Income tax
Main contracts in progress
Subsequent events
64
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I&C
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 1.
generaL inforMation
TEI&C S.A. (“TEI&C”), a company controlled by Techint
Investments N.V. was registered in Uruguay in February 2005
and is a part of the Techint Group (“TG”). TEI&C’s purpose
is to engage in investments by holding equity interests in
companies or organizations whose corporate purpose includes
engineering, construction and services. References in these
consolidated financial statements to “TEI&C” or “Company”
refer to TEI&C S.A. and its consolidated subsidiaries.
The Special Shareholders’ Meeting held on December 13,
2011 decided to extend the scope of article 3 of the by-laws,
specifically stating in the corporate purpose the granting
of any and all kinds of guarantees and suretyships in favor
of its direct and indirect subsidiaries. This amendment was
authorized by the AIN on April 27, 2012.
During the current fiscal year, TEI&C experienced some
changes in its investment portfolio as regards its participating
interests in companies related to the engineering, construction
and service businesses, which are detailed as follows:
The Dutch subsidiary BV de Nieuwe Weg (“BVNW”)
rearranged the composition of its Shareholders’ Equity
through capitalization of the Share Premium and by using
such new capital to cancel accumulated losses as of
March 2012. In addition to these capital variations, there
was a reduction of the nominal value of shares decided in
May 2012, and therefore, a distribution was made to the
shareholder for a sum of approximately USD 12,798.
On May 8, 2012 and October 17, 2012, an Ordinary General
Shareholders’ Meeting of the Mexican subsidiary Techint
S.A. de C.V. (“TEMEX”) agreed to reduce the variable portion
of its capital stock, for the sum of MXN$ 160,000,000
(equivalent to USD 15,558) and MXN$ 128,600,000
(equivalent to USD 12,505), respectively, which amounts
were distributed pro rata the shares owned by each
shareholder. Taking into account such reduction, 133,095 and
106,975 shares of TEMEX owned by TEI&C, respectively,
were cancelled.
On May 9, 2012, the Company acquired 100% of the
shares of an Ecuadorian company called Construcciones
y Prestaciones Petroleras S.A. (CPP) (“CPP”), the main
purpose of which is the execution of all kinds of public and
private works, the provision of services for development
of oil, hydrocarbon and other mineral fields and the
industrialization of their by-products. On July 10, 2012 and
November 12, 2012, additional contributions were made to
this company for USD 300 and USD 1,000, respectively.
On May 22, 2012, the Spanish subsidiary Techint
Ingeniería y Construcciones SLU (“TIC”) decided to make
a distribution for a sum of USD 20,744, which amount
was taken from the free availability reserve. In October
2012, using funds provided by the Company, TIC made
contributions for future capitalizations in the Argentine
subsidiaries Techint Inversiones SAIF (“TEINVA”) and Techint
Compañía Técnica Internacional S.A.C.I. (“TEARG”), for an
amount of USD 17,595, approximately, which amount will be
capitalized by the Argentine companies with the irrevocable
contributions of their minority shareholders in the next
Shareholders’ Meetings.
On November 8, 2012, TEI&C decided to make a contribution
in kind to TIC, by means of the contribution of the credit it
held with such company for USD 17,595, thus reinforcing
TIC’s financial position.
On July 10, 2012 and November 8, 2012, in order to reinforce
the financial position of Preglosid S.L.U. (“PREGLOSID”),
TEI&C decided to make contributions for Euro 244,041
(equivalent to USD 300) and Euro 784,560 (equivalent to
USD 1,000), respectively, but such contributions do not
entail an increase of the company’s capital stock. Such funds
65
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
>
>
>
>
>
>
>
were used to make a contribution to the capital stock of the
Ecuadorian branch CPP, to provide it with working capital.
This contribution is irrevocable and does not entail any
consideration in favor of TEI&C.
On July 16, 2012, the subsidiary Techint International
Construction Corp. (TENCO) (“TENCO”) purchased
to TEARG 80% of the shares of Techint Ingeniería y
Construcción Bolivia S.A. (“TEBOL”) and on July 17, 2012
contributed USD 21 million. This contribution came from
a credit TENCO possessed with this company and is
pending capitalization.
On December 28, 2012, the merge of the subsidiaries
companies Sidernet de Venezuela C.A. (“Sidernet
Venezuela”), Servicios Siderúrgicos Sersisa S.A., Avemir
S.A. and Cimimontubi S.A. into Sidernet de Venezuela C.A.
was registrated.
During the fiscal year, TENCO wound up its branch in
Bahrain and decided to close its branch at Abu Dhabi.
TEMEX wound up Elina L.T. S.A. de C.V and provided for
the dissolution of Nitroelina S.A. de C.V. In turn, TEARG
wound up its branch in Ecuador.
During the previous fiscal year, TEI&C experienced some
changes in its investment portfolio which are detailed as
follows:
On February 8, 2011, TENCO acquired a 15% equity interest
in Joint Venture Panamá Inc., a company organized under the
laws of Barbados.
On February 15, 2011, TENCO executed a sale and
purchase agreement with a related company. All the shares
of Saudi Techint Limited (60%) were transferred to such
company; the selling price was USD 5.5 million. As result
of this operation, the non-controlling interest decreased by
USD 3.5 million.
On March 14, 2011, TEI&C acquired 100% of the quotas
of Tecpetrol do Brazil Ltda. from a related company. Then,
in June 2011, this new subsidiary amended its by-laws
and changed its corporate purpose and name (Techint
Engenharia e Construção Offshore Ltda.); it also increased
its capital stock by means of a contribution made
by our Brazilian subsidiary, Techint Engenharia e
Construção S/A (TEBRA), and therefore, it acquired the
controlling interest in such company. The difference
between the cash contributed and the book value was
charge to equity (USD 149).
On October 28, 2011, TENCO purchased from a related
company all the shares of Arosia Comercial S.A. (Panama),
which company, in turn, holds 100% of the shares of Avemir
S.A. (Venezuela). On November 16, 2011, Arosia Comercial
S.A. was wound up and TENCO became the direct holder of
all shares of Avemir S.A.
On November 17, 2011, at a Board of Directors’ Meeting, it
was decided to merge the subsidiaries companies Sidernet
Venezuela C.A., Servicios Siderúrgicos Sersisa S.A., Avemir
S.A. and Cimimontubi S.A. into a new company to be
incorporated in Venezuela under the name of Sidernet de
Venezuela C.A.
On November 21, 2011, TEMEX sold 50% of the shares of
Energía Huasteca, S.A. de C.V. and on such same date it
purchased 50% of the shares of Elina L.T. S.A. de C.V. Thus,
it became the holder of all the capital stock and this enabled
it to commence the winding-up process.
On December 30, 2011, Servicios y Prestaciones Techint
Funchal - Serviços, Comércio e Gestão de Projetos Lda. was
wound up and TENCO assumed all assets and liabilities of
the subsidiary.
These consolidated financial statements were approved for
issue by the Company’s Board of Directors on April 26, 2013.
66
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I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 2.
accounting poLicies
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years
presented, unless otherwise stated.
a. Basis of preparation
These consolidated financial statements are prepared in
accordance with International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting
Standards Board (“IASB”), under the historical cost
convention, as modified by the revaluation of machinery,
equipment and vehicles (“Revaluation of PP&E”), available-
for-sale assets, financial assets and liabilities (including
derivative instruments) at fair value through profit or loss, and
translation of subsidiaries whose functional currency is the
currency of a hyperinflationary economy. The consolidated
financial statements are presented in thousands of U.S.
dollars (“USD”), which is the functional currency of TEI&C.
Certain comparative amounts have been reclassified to
conform to changes in presentation in the current fiscal year.
The preparation of consolidated financial statements in
conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to
exercise its best judgment in the process of applying the
Company’s accounting policies. The areas involving a higher
degree of judgment of complexity, or the areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed in note 2.d.
CHAnGES In ACCOUnTInG POlICy AnD DISClOSURES
Standards and amended standards mandatory for the first
time for the Financial Statements beginning January 1, 2012
and adopted by the Company
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year beginning on 1 January
2012 that have a material impact on TEI&C.
Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Company
The following standards, amendments and interpretations to
existing standards have been published and are not yet effective
for the Company in the fiscal year ended December 31, 2012:
IFRS 9, “Financial Instruments”
In November 2009, the IASB issued IFRS 9. This addresses
the classification and measurement of financial assets and
is likely to affect the Company’s accounting for its financial
assets. The standard is not applicable until January 1, 2015,
but is available for early adoption.
IFRS 10, “Consolidated financial statements”
In May 2011, the IASB issued IFRS 10, “Consolidated
financial statements”. IFRS 10 replaces all of the guidance
on control and consolidation in IAS 27 and SIC-12. IFRS 10
must be applied for annual periods beginning on or after
January 1, 2013.
IFRS 11 “Joint Arrangements”
In May 2011, the IASB issued IFRS 11, “Joint Arrangements”.
IFRS 11 is a more realistic reflection of joint arrangements
by focusing on the rights and obligations of the arrangement
rather than its legal form. IFRS 11 must be applied for annual
periods beginning on or after January 1, 2013.
IFRS 12, “Disclosures of interest in other entities”
In May 2011, the IASB issued IFRS 12, “Disclosures
of interest in other entities”. This standard includes
the disclosure requirements for all forms of interest
in other entities. IFRS 12 must be applied for annual
periods beginning on or after January 1, 2013.
IFRS 13, “Fair value measurement”
In May 2011, the IASB issued IFRS 13, “Fair value
measurement”. IFRS 13 explains how to measure fair
value and aims to enhance fair value disclosures.
IFRS 13 must be applied for annual periods beginning
on or after January 1, 2013.
>
>
>
>
>
67
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
IAS 28 (revised 2011), “Associates and joint ventures”
IAS 28 (revised 2011) includes the requirements for joint
ventures, as well as associates, to be equity accounted
following the issue of IFRS 11. The Company shall
apply this standard for annual periods beginning on or
after January 1, 2013.
International Accounting Standard (“IAS”) 1 (amended 2011),
“Presentation of financial statements”
In June 2011, the IASB issued IAS 1 (amended 2011),
“Presentation of financial statements”. The amendment
requires entities to separate items presented in Other
Comprehensive Income into two groups, based on whether
or not they may be recycled to profit or loss in the future.
IAS 1 (amended 2011) must be applied for annual periods
beginning on or after July 1, 2012.
IAS 19 (amended 2011), “Employee benefits”
In June 2011, the IASB issued IAS 19 (amended 2011),
“Employee benefits”, which makes significant changes to the
recognition and measurement of defined benefit pension
expense and termination benefits, and to the disclosures for
all employee benefits. IAS 19 (amended 2011) must be applied
for annual periods beginning on or after January 1, 2013.
Amendment to IFRSs 10, 11 and 12 on transition guidance
These amendments provide additional transition relief to
IFRSs 10, 11 and 12, limiting the requirement to provide
adjusted comparative information to only preceding
comparative period. For disclosures related to unconsolidated
structured entities, the amendments will remove the
requirement to present comparative information for periods
before IFRS 12 is first applied. The amendment must be
applied as from January 1, 2013.
IFRS 7 (amended 2011), “Financial Instruments: Disclosure”
In December 2011, IASB released Disclosures - Offsetting
Financial Assets and Financial Liabilities to require
information about all recognized financial instruments that
are set off in accordance with paragraph 42 of IAS 32. IFRS
7 must be applied for annual periods beginning on or after
January 1, 2013 and interim periods within such annual
periods. Amendments need to be provided retrospectively
to all comparative periods.
The Company is yet to assess the full impact of these
standards.
There are no other IFRSs or IFRIC interpretations that are
not yet effective that would be expected to have a material
impact on the Company.
b. consoLidation
SUBSIDIARy COMPAnIES
Subsidiaries are entities which are controlled by TEI&C
as a result of its ability to govern an entity’s financial and
operating policies generally accompanying a shareholding
of more than 50% of the voting rights. Subsidiaries are
consolidated from the date on which control is exercised
by the Company and are no longer consolidated from the
date when control ceases.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by TEI&C. The cost of an acquisition
is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the
date of acquisition. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. Any non-
controlling interest in the acquiree is measured either at fair
value or at the non-controlling interest’s proportionate share
of the acquiree’s net assets. The excess of the aggregate of
the consideration transferred and the amount of any non-
controlling interest in the acquiree over the fair value of the
identifiable net assets acquired is recorded as goodwill. If the
cost of acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is directly recognized
in the income statement.
If the companies acquired were under common control, the
assets and liabilities of such companies (and their respective
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subsidiaries) are accounted for at the predecessor’s cost,
reflecting the carrying amount of such assets and liabilities
contributed to the Company. Accordingly, the consolidated
financial statements include the financial position of the
abovementioned companies at historical book values and no
adjustment has been made to reflect fair values at the time of
the contribution. The difference between the price paid and the
historical book value was charged to equity as capital surplus.
Material intercompany transactions, balances and unrealized
gains on transactions between TEI&C and its subsidiaries
have been eliminated in consolidation. Unrealized losses
are also eliminated. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with
the policies adopted by TEI&C.
According to the laws of the countries of certain subsidiaries,
a portion of the profit of the year is separated to constitute
statutory reserves until they reach statutory capped
amounts. These legal reserves are not available for dividend
distribution and can only be released to absorb losses.
See note 25 to the consolidated financial statements for the
list of consolidated subsidiaries.
TRAnSACTIOnS AnD nOn-COnTROllInG InTERESTS
The Company treats transactions with non-controlling
interests as transactions with equity owners of TEI&C. For
purchases from non-controlling interests, the difference
between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary
is recorded in equity. Gains or losses on disposals to non-
controlling interests are also recorded in equity. When TEI&C
ceases to have control or significant influence, any retained
interest in the entity is remeasured to its fair value, with the
change in carrying amount recognized in profit or loss.
ASSOCIATED COMPAnIES
Associated companies are entities in which TEI&C has
significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting
rights (see note 6). Investments in associated companies
are accounted for by the equity method of accounting and
are initially recognized at cost. The Company´s investment
in associated companies includes goodwill identified on
acquisition, net of any accumulated impairment loss.
The Company’s share of its associated companies’ post-
acquisition profits or losses is recognized in the income
statement, and its share of post-acquisition movements in
reserves is recognized in reserves. The cumulative post-
acquisition movements are adjusted against the carrying
amount of the investment. When the Company’s share
of losses in an associated company equals or exceeds its
interest in such company, including any other unsecured
receivables, the group does not recognize further losses,
unless it has incurred obligations or made payments on
behalf of the associated companies.
Unrealized gains on transactions between TEI&C and its
associated companies are eliminated to the extent of TEI&C’s
interest in the associated companies. Unrealized losses are
also eliminated unless the transaction provides evidence of
an impairment indicator of the asset transferred. Financial
statements of associated companies have been adjusted
where necessary to ensure consistency with IFRS.
JOInT VEnTURES
Joint Ventures (“J.V.”) are jointly controlled entities, which
involve the establishment of a corporation, partnership or
other entity in which each venturer has an interest.
TEI&C’s interest in jointly controlled entities is accounted
for by the proportionate consolidation method. TEI&C
consolidates its share of the joint ventures’ individual income
and expenses, assets and liabilities on a line-by-line basis
with similar items in TEI&C’s financial statements. See note
20 to the consolidated financial statements.
The Company recognizes the portion of gains or losses on
the sale of assets by the Company to the joint ventures
that is attributable to the other ventures. The Company
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does not recognize its share of profits or losses from the
joint ventures that result from the Company’s purchase of
assets from the joint ventures until it re-sells the assets to
an independent party. However, a loss on the transaction is
recognized immediately if the loss provides evidence of a
reduction in the net realizable value of current assets, or an
impairment loss.
c. foreign currency transLation
i. FUnCTIOnAl AnD PRESEnTATIOn CURREnCy
Items included in the consolidated financial statements of each
entity in which TEI&C holds participating interests are measured
using the currency that best reflects the economic substance
of the underlying events and circumstances relevant to that
entity (“the functional currency”). The consolidated financial
statements are presented in thousands of USD, which is the
functional currency of TEI&C. The consolidated companies’ first
record transactions using their functional currency and their
financial statements are then translated to USD with the only
purpose of being consolidated by TEI&C.
ii. BAlAnCES AnD TRAnSACTIOnS In CURREnCIES
OTHER THAn THE FUnCTIOnAl CURREnCy
Transactions in currencies other than the functional currency
are accounted for at the exchange rates prevailing on the
date of the transactions, and the corresponding exchange
gains and losses are recognized in the income statement.
Monetary assets and liabilities in currencies other than
the functional currency are translated at the 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 on the date of that balance sheet;
income and expenses for each income statement are
translated at an average exchange rate; (unless this average
is not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates
of the transactions);
all resulting exchange differences are recognized as a
separate component of equity.
In the case of sale or other disposition of any such
subsidiary, any accumulated translation adjustment would
be recognized in the income statement as part of the gain or
loss on sales.
The financial statements of subsidiaries companies whose
functional currency is the currency of a hyperinflationary
economy are adjusted for inflation in accordance with the
procedure described in the following paragraph prior to
their translation to USD. Once restated, all the items of
the financial statements are converted to USD using the
closing exchange rate. Amounts shown for prior years for
comparative purposes are not modified.
To determine the existence of hyperinflation, TEI&C
assesses the qualitative characteristics of the economic
environment of the country, such as the trends in inflation
rates over the previous three years. The financial statements
of companies whose functional currency is the currency
of a hyperinflationary economy are adjusted to reflect the
changes in purchasing power of the local currency, such that
all items in the statement of financial position not expressed
in current terms (non-monetary items) are restated by
applying a general price index at the financial statement
closing date, and all income and expense, profit and loss are
restated monthly by applying appropriate adjustment factors.
The difference between initial and adjusted amounts is taken
to profit or loss.
d. use of estiMates
The preparation of consolidated financial statements requires
Management to estimate and evaluate both recorded and
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contingent assets and liabilities as of a certain date, as well
as income and expenses recorded during the reporting
period. The future actual results may differ from estimates
made as of the date of preparation of these consolidated
financial statements.
Estimates and judgments are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
There follows a description of the most relevant estimates
used to prepare these consolidated financial statements:
PERCEnTAGE OF COMPlETIOn METHOD
The Company uses the percentage-of-completion method in
accounting for its contract revenues and expenses. Use of the
percentage-of-completion method requires the Company to
estimate the services performed to date as a proportion of the
total services to be performed. Furthermore, in determining
the contract revenue, TEI&C considers the estimated outcome
for each of the construction contracts which are in progress.
InCOME TAxES
The Company is subject to income taxes in numerous
jurisdictions. Significant judgment is required in determining
the worldwide provision for income taxes. There are
transactions and calculations for which the ultimate tax
determination is uncertain. TEI&C recognizes liabilities for
anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that were
initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in
which such determination is made.
MEASUREMEnT OF ClAIMS RECEIVABlES
The Company reviews its financial assets and financial
liabilities including its terms, maturities and discount rates in
order to adjust them to its realizable value or its settlement
value considering the time value of money and other factors.
At December 31, 2011 TEBRA recorded upon initial
recognition the amounts recorded under "Claims receivables"
at its present value measured considering its terms which
include adjustment based on INPC plus interest of 1% per
month until the issuance of the payment order (precatório)
by the president of the Superior Justice Court (the original
estimate of management upon initial recognition was that
the payment order would be issued before June 30, 2012
and currently management has revised such estimate for
such payment order to be issued before June 30, 2013)
and include adjustment thereafter at 0.5% per month
until its settlement. Management currently estimates that
the amount will be paid by the Federal Government on
the maximum legal period of ten annual installments. The
discount rate used was 7.93% per year (2011 - 9.85% per
year) in all cases based on the DIxTR reference rate provided
by BM&F BOVESPA (see note 23).
In spite of the right of the indemnification and its amount
being defined in the final non-appealable decision of the
Supreme Justice Court the amount recorded is dependent
on assumptions with respect to the estimated date of
issuance of the precatório by the court and with respect to
the timing of settlement which may be settled in up to ten
annual installments.
AllOWAnCES FOR DOUBTFUl ACCOUnTS
Management maintains an allowance for trade and other
receivables to account for estimated losses resulting
from the inability of clients to make required payments.
When evaluating the adequacy of an allowance for trade
receivables, Management bases its estimates on the aging
of accounts receivable balances and historical write-off
experience, client credit worthiness and changes in client
payment terms.
OTHER ESTIMATIOnS
In addition, the Company´s Management makes
estimations to calculate, at certain moment the recoverable
amounts of assets, the depreciation and amortization, the
provision for cost and contingencies, the pension plans
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
provision and to assess annually whether an impairment
of long-live assets exists.
e. property, pLant and eQuipMent (pp&e)
MACHInERy, EqUIPMEnT, VEHIClES AnD OTHERS
As a general rule, TEI&C has adopted historical acquisition
or construction cost less accumulated depreciation as the
measurement criterion for PP&E.
However, in the case of machinery, equipment and vehicles
used in the construction business, TEI&C has adopted fair
value as the measurement criterion (see note 4).
lAnD AnD BUIlDInGS
Land and buildings are stated at historical cost. Buildings
are depreciated using the straight-line method, by applying
annual ratios sufficient to terminate the value of each item
as of the end of their estimated useful life.
FIxED ASSETS OF FERROExPRESO PAMPEAnO S.A.C. (“FEPSA”)
These assets represent improvements on the assets received
under concession by FEPSA, as well as those devoted to
service rendering, which will be transferred to the assignor upon
termination of the concession. Such assets are valued at their
acquisition or construction cost less accumulated depreciation.
The straight-line method has been used to calculate
depreciation, by applying annual ratios sufficient to
terminate the value of each item as of the end of their
estimated useful life or upon termination of concession,
whichever occurs first.
USEFUl lIVES USED TO CAlCUlATE DEPRECIATIOn
CHARGES ARE AS FOllOWS:
The residual values and useful lives of significant machinery,
construction equipment and vehicles are reviewed,
and adjusted if appropriate, at each year-end date.
Where the carrying amount of an asset is higher than
its estimated recoverable amount, it is written down
immediately to its recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amounts. When revalued assets
are sold, the amounts included in the reserve for PP&E
revaluation surplus are transferred to retained earnings.
Repairs and maintenance expenses are charged to the
consolidated income statement during the financial year in
which they are incurred.
f. intangiBLe assets
SySTEMS DEVElOPMEnT
Acquired computer software licenses are capitalized on
the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortized over their
estimated useful lives (three to five years).
Costs associated with developing or maintaining computer
software programs are charged to expenses as incurred.
Costs that are directly associated with the production of
identifiable and unique software products controlled by TEI&C
and that will probably generate economic benefits exceeding
costs beyond one year, are recognized as intangible assets.
Direct costs include the software development employee
costs and an appropriate portion of relevant overhead.
Computer software development costs recognized as
assets are amortized over their estimated useful lives (not
exceeding three years).
OTHER
Compañía Inversora Ferroviaria S.A.I.F. (“COINFER”)
Other intangible assets represent the greater cost derived
from the investment in the subsidiary FEPSA as a result of
Buildings and improvements
Production equipment
Vehicles, furniture and fixtures,
and other equipment
land
20-60 years
5-20 years
3-12 years
not depreciated
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the compulsory subscription and payment of the portion
of capital corresponding to Ferrocarriles Argentinos (16%)
and the portion corresponding to staff (4%) pursuant to the
concession contract.
It is valued at original cost, less accumulated amortization; it
is calculated over the term of the concession of the service
provided by FEPSA.
g. iMpairMent of non-financiaL assets
Property and equipment and other non-current assets
subject to depreciation, including intangible assets, are
reviewed for impairment losses whenever events or changes
in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognized for the
amount by which the carrying amount of the asset exceeds
its recoverable amount, which is the higher of an asset
net selling price and its value in use. For the purposes of
assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows.
h. financiaL assets
The Company classifies its financial assets in the following
categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends
on the purpose for which the financial assets were acquired.
Management determines the classification of its financial
assets at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of
selling in the short-term. Derivatives are also categorized
as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets.
Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except
for maturities greater than 12 months after the date of the
statement of financial position. These are classified as non-
current assets.
Available-for-sale financial asset
Available-for-sale financial assets are non-derivatives that are
either designated in this category or not classified in any of
the other categories. They are included in non-current assets
unless management intends to dispose of the investment
within 12 months of the end of the reporting year.
RECOGnITIOn AnD MEASUREMEnT
Regular purchases and sales of financial assets are
recognized on the trade-date-the date on which the
Company commits to purchase or sell the asset.
Investments are initially recognized at fair value plus
transaction costs for all financial assets not carried
at fair value through profit or loss. Financial assets carried
at fair value through profit or loss are initially recognized
at fair value and transaction costs are expensed in the
income statement. Financial assets are derecognized when
the rights to receive cash flows from the investments
have expired or have been transferred and the Company
has transferred substantially all risks and rewards of
ownership. Available-for-sale financial assets and financial
assets at fair value through profit or loss are subsequently
carried at fair value. Loans and receivables are carried
at amortized cost using the effective interest method.
The Company assesses at each balance sheet date whether
there is objective evidence that a financial asset or a group
of financial assets is impaired.
i. offsetting financiaL instruMents
Financial assets and liabilities are offset and the net amount
reported in the statement of financial position when there
is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis,
or realize the asset and settle the liability simultaneously.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
j. derivative financiaL instruMents
Derivatives are initially recognized at fair value on the date a
derivative contract is entered into and are subsequently re-
measured at their fair value. The method of recognizing the
resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of
the item being hedged.
The Company documents at the inception of the transaction
the relationship between hedging instruments and hedged
items, as well as its risk management objectives and
strategy for undertaking various hedging transactions. TEI&C
also documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives that are
used in hedging transactions are highly effective in offsetting
changes in fair values or cash flows of hedged items.
CASH FlOW HEDGE
Trading derivatives are classified as a current asset or liability.
The full fair value of a hedging derivative is classified as
a non-current asset or liability if the remaining maturity
of the hedged item is more than 12 months and, as a current
asset or liability, if the maturity of the hedged item is less
than 12 months.
The effective portion of changes in the fair value of
derivatives denominated and qualified as cash flow hedging
is disclosed in Other Comprehensive Income. The gain
or loss related to the ineffective portion is immediately
disclosed in the consolidated income statement.
The amounts accumulated in equity are disclosed in the
consolidated income statement in the year in which the
hedged item affects gains and losses.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains
in equity and is recognized when the forecast transaction is
ultimately recognized in the consolidated income statement.
When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported
in equity is immediately transferred to the consolidated
income statement.
FORWARD FOREIGn ExCHAnGE COnTRACTS
The hedged highly probable forecast transactions
denominated in foreign currency are expected to occur at
various dates during the next 12 months. Gains and losses
recognized in the hedging reserve in equity on forward
foreign exchange contracts as of 31 December 2012 and
2011 are recognized in the income statement in the period or
periods during which the hedged forecast transaction affects
the income statement.
k. inventories
Inventories are stated at the lower of cost or net realizable
value less the corresponding allowance for obsolescence.
Net realizable value is the estimated selling price in the
ordinary course of business, less the costs of completion
and direct selling expenses. In general, cost is determined
by using weighted average price.
The allowance for obsolescence has been calculated based
on Management’s analysis of aging.
l. construction contracts Work in progress
A construction contract is a contract specifically negotiated
for the construction of an asset or a combination of assets
that are closely interrelated or interdependent in terms of
their design, technology and functions or their ultimate
purpose or use.
When the outcome of a construction contract can be
reliably estimated, contract revenue and contract costs are
acknowledged by the percentage of completion method.
The stage of completion is measured by reference to the
relationship contract costs incurred for work performed
to date bear to the estimated total costs for the contract.
When it is probable that total contract costs will exceed
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total contract revenue, the expected loss is immediately
recognized as an expense.
When the outcome of a construction contract cannot be
reliably estimated, contract revenue is recognized to the
extent of contract costs incurred where it is probable those
costs will be recoverable. Contract costs are recognized
when incurred.
Costs incurred in the year in connection with future activity
on a contract are excluded from contract costs in determining
the stage of completion. They are presented as inventories,
prepayments or other assets, depending on their nature.
When a construction contract includes reimbursable works
and the Company is responsible for providing design,
engineering and construction services and labor and all
equipment and materials, construction equipment and
supplies, the amount of these works is recognized in
revenues and costs.
TEI&C shows as an asset (within Construction contracts
work in progress) the gross amount due from clients for
construction contracts for all contracts in progress for which
costs incurred plus recognized profits (less recognized
losses) exceed progress billings.
TEI&C presents as a liability (within Construction contracts
work in progress) the gross amount due to clients for
construction contract for all contracts in progress for which
progress billings exceed costs incurred plus recognized
profits (less recognized losses).
m. otHer investMents
Other investments include deposits in investments funds and
equity instruments, which are classified as financial assets
“at fair value through profit and loss” or “available for sale”.
Investments in companies in which TEI&C has less than 20%
of the voting rights are valued at cost, because its fair value
cannot be reliably measured.
n. trade and otHer receivaBLes
Trade and other receivables are initially measured at their
fair value, which is generally their nominal value, unless the
effect of discounting is material, subsequently measured at
amortized cost less provision for impairment.
An allowance for doubtful accounts is established when
there is objective evidence that the Company will not be
able to collect all amounts due according to the original
terms of receivables.
o. trade and otHer payaBLes
Trade and other payables are obligations to pay for goods
or services that have been acquired in the ordinary course
of business from suppliers. Accounts payable are classified
as current liabilities if payment is due within one year or less.
If not, they are presented as non-current liabilities.
Trade and other payables are recognized initially at fair value
and subsequently measured at amortized cost.
p. casH and casH eQuivaLents
Assets recorded in cash and cash equivalents are carried
at fair market value or at historical cost which approximates
fair market value. For the purposes of the consolidated
statement of cash flows, cash and cash equivalents
comprise cash on hand, demand deposits with banks and
other short-term highly liquid investments with original
maturities of three months or less and bank overdrafts.
Bank overdrafts are included within borrowings in current
liabilities in the consolidated statement of financial position.
q. eQuity
Ordinary shares are classified as equity. The balances
of the consolidated statement of changes in equity at
December 31, 2012 and 2011 include:
The value of share capital, capital surplus, reserve for PP&E
revaluation surplus, reserve for cash flow hedge, legal
reserve and retained earnings in accordance with IFRS.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
The currency translation differences of TEI&C’s subsidiaries.
Non-controlling interests in subsidiaries.
Dividends distributions are recorded in the Company’s
financial statements when Company’s shareholders have
the right to receive the payment, or when interim dividends
are approved by the Board of Directors in accordance with
the by-laws of the Company.
r. BorroWings
Borrowings are initially recorded based on the fair value
of the net proceeds. Borrowings are subsequently stated
at amortized cost using the effective yield method; any
difference between proceeds (net of transaction costs) and
the redemption value is recognized in the income statement
over the life of the borrowings.
Borrowings are classified as current liabilities unless TEI&C
has an unconditional right and firm intention to defer
settlement of the liability for at least 12 months after
the balance sheet date.
s. current and deferred incoMe taX
The current income tax charge is calculated on the basis
of the tax laws in force in the countries in which TEI&C
and each one of its subsidiaries operate.
Deferred income tax is recorded in full, using the liability
method, on temporary differences arising between the tax
basis of assets and liabilities and their carrying amounts in
the consolidated financial statements. Currently enacted tax
rates are used in the determination of deferred income tax.
Deferred tax assets are recognized to the extent that it is
probable that future taxable profit will be available to offset
temporary differences.
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries, associated companies
and joint ventures, except where the timing of the reversal
of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the
foreseeable future.
The tax expense for the year comprises current and deferred
tax. Tax is recognized in the Consolidated Income Statement,
except to the extent that it relates to items recognized in
the Consolidated Statement of Comprehensive Income.
In this case, the tax is also recognized in the Consolidated
Statement of Comprehensive Income.
t. eMpLoyee Benefits
PEnSIOn PlAnS AnD OTHER POST-RETIREMEnT BEnEFITS
Certain TEI&C’s subsidiaries have in force benefit plans under
the modality of “non-funded defined benefits” and “other
long-term benefits” which, subject to certain conditions
established by such companies, are granted during the
term of employment and after retirement, which plans are
recorded following the guidelines of accounting rules and
regulations in force and effect.
The provisioned liabilities for such employee benefits are
recorded at the current value of the future flows of funds, the
amount being charged during the relevant employees’ remaining
years of services up to the moment when the conditions
necessary for the granting of each benefit are satisfied. Such
liabilities are calculated by independent actuaries, at least once
a year, using the “Projected credit unit” method.
Certain TEI&C’s subsidiaries officers are covered by a specific
employee retirement plan designed to provide retirement,
termination and other benefits to those officers.
Retirement costs are assessed using the projected unit
credit method: the cost of providing retirement benefits is
charged to the statement of income over the service lives of
employees based on actuarial calculations. This provision is
measured at the present value of the estimated future cash
outflows, using applicable interest rates. Actuarial gains and
losses are recognized over the average remaining service
lives of employees.
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Benefits provided by the plan are calculated on a seven-year
salary average.
Certain TEI&C’s subsidiaries are accumulating assets for
the ultimate payment of those benefits in the form of
investments. The investments are not part of a particular
plan, nor are they segregated from TEI&C’s other assets.
Due to these conditions, the plan is classified as “unfunded”
under IFRS.
Other subsidiaries have implemented a supplementary
pension benefit plan with two programs: “PGBL - Plano
Gerador de Benefício Livre” and “ VGBL - Programa de
Seguro de Vida com Cobertura por Sobrevivência”. These
programs are generally funded through payments by the
subsidiaries to independent insurance companies. Both
programs are defined contribution plans.
The laws in the different countries in which TEI&C’s subsidiaries
carry out their operations provide for pension benefits to be
paid to retired employees from government pension plans and/
or private funds managed plans. Amounts payable to such plans
are generally calculated based on a percentage of employee
salaries and are accounted for on an accrual basis.
TERMInATIOn BEnEFITS
Termination benefits are payable whenever an employee’s
employment is terminated before the normal retirement
date or whenever an employee accepts voluntary redundancy
in exchange for these benefits.
TEI&C’s subsidiaries recognize termination benefits when
it is demonstrably committed to either terminating the
employment of current employees according to a detailed
formal plan without possibility of withdrawal, or providing
termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more
than 12 months after balance sheet date are discounted to
present value.
PROFIT-SHARInG AnD BOnUS PlAnS
A liability for employee benefits in the form of profit-sharing
and bonus plans is recognized in other provisions when
there is no realistic alternative but to settle the liability and
provided at least one of the following conditions is met:
there is a formal plan and the amounts to be paid are
determined before the time of issuing the financial
statements; or
past practice has created a valid expectation in employees that
they will receive a bonus/profit-sharing and the amount
can be determined before the financial statements are issued.
Liabilities for profit-sharing and bonus plans are expected
to be settled within 12 months and are measured
at the amounts expected to be paid when they are settled.
COnTRIBUTIOn PlAnS
A defined contribution plan is a pension plan under which
the companies pay fixed contributions to a separate entity.
Companies have no further payment obligations once the
contributions have been paid. The contributions are recognized
as employee benefit expense when they are due. Prepaid
contributions are recognized as an asset to the extent that a
cash refund or a reduction in the future payments is available.
Contributions by the companies include: (a) Basic
contribution – Companies are committed to contribute
amounts equal to the amounts contributed by the employees
up to certain limits, (b) Extraordinary contributions – Are non-
mandatory contributions that can be made on a voluntary
basis either by the companies or the employees.
lOnG-TERM InCEnTIVE
TEI&C S.A. adopted a long-term retention and incentive
program for some employees of certain subsidiaries.
According to such program, certain senior executives of such
subsidiaries shall receive a number of units valued at the
>
>
>
>
77
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
book value of the Shareholders’ Equity per share of TEI&C
S.A. (excluding the non-controlling interest).
Units shall accrue within a 4-year period and the applicable
subsidiaries shall pay them upon the lapsing of a 10-year period
from the date of receipt, with the option for the employee to
request them as from the seventh year, or when the employee
leaves the subsidiary in charge of payment, at the book value
of the controlling Shareholders’ Equity per share of TEI&C S.A.
at the time of payment. The beneficiaries shall also receive
amounts in cash equivalent to the dividend paid by share, every
time TEI&C S.A. pays any dividend in cash to its shareholders.
As of December 31, 2012, TEI&C S.A. has acknowledged
liabilities for USD 4,968 (USD 3,396 at December 31,2011).
The charge to profits as of December 31, 2012 for the sum
of USD 3,063 (USD 3,396 at December 31, 2011), is stated
in the line “Labor Costs” in note 27 and in “Net foreign
exchange transaction results” in note 28.
u. provisions
Provisions are recognized when TEI&C has a present legal
or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to
settle the obligation, and a reliable estimate of the amount
can be made. When TEI&C expects a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognized as a separate asset but only
when the reimbursement is virtually certain.
v. revenue recognition
REVEnUES AnD COST RECOGnITIOn FOR lOnG-TERM
COnSTRUCTIOn COnTRACTS
See note 2.l.
SAlES OF SERVICES
The Company sells maintenance services. The revenue is
generally recognized in the period the services are provided,
using a straight-line basis over the term of the contract.
OTHER REVEnUES
Other revenues earned by TEI&C are recognized on the
following bases:
Interest income: on the effective yield basis.
Dividend income from investments in other companies:
when TEI&C’s right to collect is established.
w. Leases
Leases in which a significant portion of the risks and rewards of
ownership are transferred from the lessor to TEI&C are classified
as finance leases. At the commencement of the lease term,
TEI&C recognizes finance leases as assets and liabilities in the
statement financial position at amounts equal to the value of the
leased property or, if lower, the present value of the minimum
lease payments, each determined at the inception of the lease.
The discount rate used in calculating the present value of the
minimum lease payments is the interest rate implicit in the lease
should this be practicable to determine; otherwise, the lessee’s
incremental borrowing cost is used. Any initial direct costs of the
lessee are added to the amount recognized as an asset.
Each lease payment is allocated between the liability and
finance charges. The corresponding rental obligations, net of
finance charges, are included in borrowing. The interest element
of the finance cost is charged to the income statement over
the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance
leases is depreciated over their estimated useful lives.
See amounts of assets and liabilities held under finance
leases in note 22.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the income
statement on a straight-line basis over the period of the lease.
>
>
>
78
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
x. assets and LiaBiLities cLassified as HeLd
for saLe
Assets of disposal group and liabilities associated with these
assets are classified as “assets and liabilities classified as
held for sale” when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered
highly probable.
They are stated at the lower of carrying amount and fair value
less costs to sell if their carrying amount is to be recovered
principally through a sale.
note 3.
financiaL risk ManageMent
The nature of TEI&C’s operations as well as its multinational
character expose the Company to a variety of risks, including
the effects of changes in foreign currency, exchange rates,
capital risk, concentration of credit risk, liquidity risk and interest
rates risk. The nature of its contracts implies that TEI&C has
to manage risks regarding uncertain conditions in the hiring of
procurement, which is usually a large part of the scope of work.
To manage the high volatility related to these financial
matters, Management evaluates exposures on a
consolidated basis to take advantage of its global and
multinational activity. For some of these exposures,
the Company or its subsidiaries enter into derivative
transactions in order to manage potential adverse impacts
on the Company’s financial performance.
a. capitaL risk
The Company seeks to maintain an adequate debt to total
equity ratio considering the risks involved in the industry
and the markets where it operates. The year-end ratio
of debt to total equity (where “debt” comprises all
financial borrowings and “equity” is the sum of financial
borrowings and shareholders’ equity) is 0.15 as of
December 31, 2012, and 0.13 as of December 31, 2011.
The Company does not have to comply with regulatory
capital adequacy requirements.
b. foreign eXcHange risk
TEI&C’s business activities are conducted in the
respective functional currencies of the subsidiaries.
However, the Company transacts in currencies other than
the respective functional currencies of the subsidiaries.
There are significant monetary balances held by the
Company at each year-end that are denominated in USD.
It is worth stating that the USD is not the functional
currency in some subsidiaries.
79
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
The following tables show a breakdown of the TEI&C’s
net monetary position in various currencies for the main
functional currency in which the Company operates:
ARS
CAD
CRC
EUR
GTq
Hnl
nIO
USD
UyU
GBP
12.31.12
functionaL currencY (in thousand usd)
(42)
(10)
84
5,471
314
(45)
34
103,305
(16)
(139)
108,956
totaL
–
–
–
–
–
–
–
499
–
–
499
bob
(42)
–
–
409
–
–
–
(9,555)
–
–
(9,188)
uyu
–
–
84
–
314
(45)
34
–
(16)
–
371
usd
–
–
–
–
–
–
–
40,125
–
–
40,125
pen
–
–
–
1,229
–
–
–
28,987
–
–
30,216
MXn
–
–
–
–
–
–
–
1,024
–
–
1,024
eur
–
–
–
–
–
–
–
32,784
–
–
32,784
chL
–
–
–
–
–
–
–
243
–
–
243
cad
–
–
–
4,414
–
–
–
27,316
–
–
31,730
brL
–
(10)
–
(581)
–
–
–
(18,118)
–
(139)
(18,848)
arsnet Monetary position asset / (LiabiLity)
80
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The Company estimates that the impact under IFRS on
the net exposure at December 31, 2012 of a simultaneous
1% favorable or unfavorable movement in the main
exchange rates would result in a maximum pre-tax gain
or loss of approximately USD 1,090 as compared
with a maximum pre-tax gain or loss of approximately
USD 1,099 at December 31, 2011.
The Company’s net exposure to the currency other than the
functional currency is managed on a case-by-case basis,
partly by hedging certain expected cash flows with foreign
exchange derivative contracts.
The Company performed a sensitive analysis of the Derivative
Financials Instruments of a 10% favorable or unfavorable
movement of the Mexican Peso against the USD at December
31, 2012. The impact would have been, in the case of
strengthening (USD 7,071) in equity and (USD 1,319) in profit
or (loss) and in the case of weakening USD 8,642 in equity
and USD 1,612 in profit or (loss).
Chf: swiss franc Chl: Chilean peso CrC: Costa rican Colon uyu: uruguayan pesoeur: euro gbp: sterling poundgtq: guatemalan quetzal
ref:ars: argentine peso hnl: honduran lempirabrl: brazilian real mxn: mexican pesobob: bolivian peso nio: nicaraguan Cordoba oroCad: Canadian dollar pen: peruvian nuevo sol
ARS
CAD
CHF
CRC
EUR
GTq
Hnl
nIO
USD
UyU
12.31.11
(507)
(10)
(3)
758
1,158
395
(94)
(21)
108,277
(62)
109,891
totaL
(219)
–
–
–
1,326
–
–
–
2,519
–
3,626
uyu
(288)
–
–
758
(65)
395
(94)
(21)
–
(62)
623
usd
–
–
–
–
–
–
–
–
22,899
–
22,899
pen
–
–
–
–
1,349
–
–
–
24,007
–
25,356
MXn
–
–
–
–
–
–
–
–
13,442
–
13,442
eur
–
–
–
–
–
–
–
–
10,992
–
10,992
chL
–
–
–
–
–
–
–
–
5,175
–
5,175
cad
–
–
–
–
–
–
–
–
45,506
–
45,506
brL
–
(10)
(3)
–
(1,452)
–
–
–
(16,263)
–
(17,728)
arsnet Monetary position asset / (LiabiLity)
functionaL currencY (in thousand usd)
81
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
c. price risk
The Company has no significant risk from the fluctuation in
the market prices.
The group´s investments in equity, classified on the
consolidated balance sheet as available for sale, are not
publicly traded and are valued at cost.
Cash and cash equivalents and other investments classified
as fair value through profit or loss, are carried at fair
market value or at historical cost which approximates fair
market value.
d. credit risk
Most accounts receivable relate to clients operating in a
range of industries and countries with contract which require
ongoing payments as the development project progresses,
At the date of these consolidated financial statements most
credits past due have been collected.
upon the rendering of services or upon completion and
delivering of the project. It is normal practice that the
Company reserves the right to suspend the project if there
is a remarkable breach of the contract term, in particular the
non-payment of amounts owed.
In general the greatest risk for such assets is the risk of
not collecting a trade account receivable. This is because,
a) it may be a significant value in the development of works
or in the provision of services; b) it is beyond the Company’s
control. However, the risk of customers being unable to make
a payment in such contracts is considered to be low, and
typically relate to problems characterized as technical matters,
i.e. relating to the risk inherent in the service rendered, under
the Company’s control.
The following table sets forth details of the age of trade
receivables:
december 31, 2012
Trade Receivables
Allowance for doubtful accounts
net value
december 31, 2011
Trade Receivables
Allowance for doubtful accounts
net value
11,104
(9,846)
1,258
26,043
(10,570)
15,473
263,008
–
263,008
191,990
–
191,990
39,775
–
39,775
27,847
–
27,847
313,887
(9,846)
304,041
245,880
(10,570)
235,310
> 180 days1 - 180 days
past duenot due trade receivabLes
8
8
notes
82
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
e. LiQuidity risk
Management maintains sufficient cash and cash equivalents
to finance normal operations and believes that TEI&C also has
access to market for short-term working capital requirements.
TEI&C financing strategy is to maintain adequate financial
resources and access to additional liquidity. During the year
ended December 31, 2012 and 2011, TEI&C has counted
on cash flows from operations as well as additional bank
financing to fund its transactions.
TEI&C has a conservative approach to the management
of its liquidity, which consists of cash and cash equivalents,
comprising cash in banks, short-term money market funds
and highly liquid short-term securities.
TEI&C holds its cash and cash equivalents primarily in USD.
Liquid financial assets as a whole are 20% of total assets
at December 31, 2012 (17% at December 31, 2011).
See note 14 for the maturity of borrowings, note 16
for the maturity of trade and other payables and note 17
for the maturity of other liabilities.
f. interest rate risk ManageMent
The Company’s financing strategy is to manage
interest expense using a mixture of fixed-rate and
variable-rate debt.
The following table summarizes the proportions of
variable-rate and fixed-rate debt as of each year end.
Fixed rate
Variable rate
87,793
15,027
66%
34%
87,235
44,235
85%
15%
borrowings percentage percentageborrowings
As the Company has no significant interest-bearing
assets, the Company’s income and operating cash flows
are substantially independent from changes in market
interest rates.
The Company estimated that, if interest rates would have
been 100 basis points higher, with all other variables held
constant, total profit for the year ended December 31, 2012
would have been USD 442 lower (USD 150 lower for year
ended December 31, 2011).
g. fair vaLue estiMation
The carrying amount of financial assets and liabilities with
maturities of less than one year approximates to their fair value.
See note 10 – “Determining fair values”.
12.31.12 12.31.11
83
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 4.
property, pLant and eQuipMent (pp&e)
The item evolution is as follows:
The item consists in the following:
Beginning of the year
Additions
Disposals
Depreciation
Translation differences
Changes in reserve of PP&E
Transferred to disposal group classified
as held for sale
Other movements
Impairment loss
december 31, 2012
land and buildings
Equipment and machinery
Vehicles
Other assets
total december 31, 2012
59,908
26,002
(528)
(13,253)
(5,642)
–
(164)
(5,010)
(105)
61,208
(23,044)
(143,713)
(48,874)
(81,454)
(297,085)
42,984
10,636
(2,035)
(10,292)
(2,013)
(251)
(740)
3,983
(57)
42,215
104,371
266,565
91,089
142,662
604,687
136,233
25,418
(8,405)
(24,093)
(1,964)
(1,507)
(104)
(2,069)
(657)
122,852
67,757
20,532
(3,898)
(2,041)
(4,119)
–
–
3,096
–
81,327
306,882
82,588
(14,866)
(49,679)
(13,738)
(1,758)
(1,008)
–
(819)
307,602
81,327
122,852
42,215
61,208
307,602
non-current
accuMuLated depreciation
oriGinaL vaLue
totaL 12.31.12
net vaLue 12.31.12
other assets (1)
vehicLesequipMent and Machinery
Lands and buiLdings
(1) it includes deferred costs of our subsidiariary fepsa and miscellaneous assets.
84
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The item evolution is as follows:
The item consists in the following:
Lease rentals amounting to USD 64,105 (at December
31, 2011: USD 70,815) relating to the lease of machinery,
construction equipment and vehicles, are included in the
income statement.
Beginning of the year
Additions
Disposals
Depreciation
Translation differences
Other movements
Change in reserve for PP&E
december 31, 2011
land and buildings
Equipment and machinery
Vehicles
Other assets
total december 31, 2011
59,492
21,573
(1,561)
(10,357)
(4,586)
(4,648)
(5)
59,908
(23,577)
(142,136)
(46,702)
(76,619)
(289,034)
49,684
13,537
(7,998)
(8,690)
(3,457)
8
(100)
42,984
91,334
278,369
89,686
136,527
595,916
148,024
28,149
(14,602)
(24,141)
(5,424)
4,627
(400)
136,233
63,197
12,173
(486)
(2,680)
(4,460)
13
–
67,757
320,397
75,432
(24,647)
(45,868)
(17,927)
–
(505)
306,882
67,757
136,233
42,984
59,908
306,882
non-current totaL12.31.11
net vaLue12.31.11
other assets (1)
vehicLesequipMent and Machinery
Lands and buiLdings
accuMuLated depreciation
oriGinaL vaLue
(1) it includes deferred costs of our subsidiariary fepsa and miscellaneous assets.
85
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
tecHnicaL appraisaL of pp&e
The technical appraisal was performed by external
professionally qualified valuation specialists in relation to
machinery, construction equipment and vehicles, based
on periodic valuations of the assets in order not to differ
materially from their fair value at the financial statements date.
Management believes that the resulting value approximates
fair value. As per International Accounting Standard 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. Machinery, construction equipment and vehicles
corresponding to the subsidiaries that did not make the
abovementioned revaluation are not significant.
The “sales comparison” method was used to obtain the
fair value of these assets for which there is a wide and
transparent secondary market. This approach consists
in obtaining information from recent sales or offers of
assets bearing similar characteristics, age and condition.
Correction factors that take into account the status of the
market offer and demand prevailing as of the date of the
appraisal, the relative age, probable residual useful life, state
of conservation and asset obsolescence are applied to the
sales price. The “cost less depreciation” method was used to
obtain the fair value of assets with a restricted sales market.
Depreciation was computed based on generally used and
accepted engineering criteria which led to establishing the
reasonable value of PP&E. Such criteria take into account
factors such as the age of each asset, probable residual
or expected life, state of conservation and degree of
obsolescence. The market value was obtained by applying
the depreciation ratio to the value of a new asset.
These subsidiaries intend to perform this appraisal with the
frequency required by IAS 16 in order to keep fair values of
appraised assets updated.
On December 31, 2012 the net decrease in the value of
machinery, construction equipment and vehicles amounted
to USD 1,758 (at December 31, 2011: USD 505) and was
attributed to other comprehensive income and accumulated
in equity under “Reserve for PP&E revaluation surplus”
(corresponding to decrease in previously revaluated assets).
86
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
If machinery, equipment and vehicles had been valued at
historical cost, the values would have been the following:
Historical cost
Accumulated depreciation
residual value
163,884
(118,934)
44,950
212,954
(137,319)
75,635
12.31.12 12.31.11
The “Reserve for PP&E revaluation surplus” is reversed, net of
tax effects, through (i) the retirement of the equipment appraised
or (ii) depreciation charges. The difference between depreciation
of appraised assets and depreciation of the historical values of
such assets is charged against accumulated results.
The straight-line method has been used to calculate
depreciation, by applying annual ratios sufficient to
terminate the value of each item as to the end of their
estimated useful life.
87
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
Beginning of the year
Additions
Disposals and retirements
Amortization
Translation differences
december 31, 2012
447
–
–
(44)
(53)
350
5,640
5,141
(176)
(1,857)
(475)
8,273
6,087
5,141
(176)
(1,901)
(528)
8,623
other intanGibLe assets - coinfer
accuMuLated aMortization
sYsteMs deveLopMent
oriGinaL vaLue
12.31.12
note 5.
intangiBLe assets
The item evolution is as follows:
The item consists in the following:
Systems development
Other intangible assets – COInFER
total december 31, 2012
(12,867)
(1,145)
(14,012)
21,140
1,495
22,635
8,273
350
8,623
net vaLue 12.31.12
88
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The item evolution is as follows:
Beginning of the year
Additions
Amortization
Translation differences
december 31, 2011
534
–
(64)
(23)
447
3,292
3,686
(1,061)
(277)
5,640
3,826
3,686
(1,125)
(300)
6,087
other intanGibLe assets - coinfer
sYsteMs deveLopMent
12.31.11
accuMuLated aMortization
oriGinaL vaLue
The item consists in the following:
Systems development
Other Intangible assets – COInFER
total december 31, 2011
(10,744)
(1,261)
(12,005)
16,384
1,708
18,092
5,640
447
6,087
net vaLue12.31.11
89
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
non-current
norpower S.A. de C.V.
Fluor Techint S.R.l. Construcción y Servicios ltda.
Consorcio Constructor Techint Besalco ltda.(1)
Other
total non-current investment in associated companies
Beginning of the year
Translation differences
Result from investments
Reclasification to Other investments
Investment adquisition and contributions
Dividends earned
end of the year
40%
50%
50%
–
40%
50%
50%
–
158
1,482
123
85
1,848
594
508
1,202
97
2,401
1,624
459
1,471
(83)
6
(1,629)
1,848
1,848
16
537
–
–
–
2,401
% of ownership
% of ownership
book vaLue
book vaLue
note 6.
investMents in associated coMpanies
12.31.12
12.31.12
12.31.11
12.31.11
(1) on august 18, 2011 techint Chile s.a. and besalco md montajes s.a. created Consorcio Constructor techint besalco ltda. holding 50% of shares each.
90
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The result from investments has arisen from the Company’s
participation in the results of the following companies:
Fluor Techint S.R.l. Construcción y Servicios ltda.
Consorcio Constructor Techint Besalco ltda.
norpower S.A. de C.V.
Others
1,836
118
89
(572)
1,471
(1,098)
1,072
419
144
537
The following amounts represent the assets,
liabilities, revenues and results of the most important
associated companies:
december 31, 2012
norpower S.A. de C.V.
Fluor Techint S.R.l. Construcción y Servicios ltda.
Consorcio Constructor Techint Besalco ltda.
december 31, 2011
norpower S.A. de C.V.
Fluor Techint S.R.l. Construcción y Servicios ltda.
Consorcio Constructor Techint Besalco ltda.
28,021
7,970
21,251
30,668
16,622
3,888
13,666
29,894
3,343
21,455
25,692
6,650
15,164
30,911
5,747
21,851
28,656
6,895
1,047
(2,197)
2,144
222
3,672
236
revenuesLiabiLitiesassets resuLts
12.31.12 12.31.11
91
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
non-current
Other investment in related parties
Other
total non-current other investments
current
Temporary placements
total current other investments
non-current
Beginning of the year
Translation differences
Reclasification from Investments in associated companies
Result from other investments
Increase of other investments
Decrease of other investments
end of the year
current
Beginning of the year
Translation differences
Increase of other investments (1)
Result from other investments
Decrease of other investments
end of the year
8,456
110
8,566
40,186
40,186
7,500
(600)
83
818
857
(92)
8,566
622
(1)
40,167
–
(602)
40,186
8,946
1,006
9,952
16
16
8,566
(1,093)
–
631
1,848
–
9,952
40,186
(3)
–
216
(40,383)
16
12.31.12
12.31.12
12.31.11
12.31.11
note 7.
otHer investMents
(1) at december 31, 2011 the Company had financial invested in a financial product denominated pass-through note, issued by Jp morgan Chase bank na, with original maturities of 90 and 180 days and a final due date on January 3, 2012, with average interest of 1.36% per year and a fair value and book value of usd 40,167.
24
notes
92
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
non-current
Trade receivables
Trade receivables from related parties
Claims receivables
Receivables for sales of investments
Other trade receivables – net
Other receivables from related parties
Other
total non-current trade and other receivables
current
Trade receivables – net
Trade receivables from related parties
Invoice holdback
Other trade receivables
Other receivables from related parties
Other receivables
Advanced to suppliers and subcontractors
Prepayments
total current trade and other receivables
–
56
158,961
1,242
12,216
7,780
6,132
186,387
235,310
55,053
5,366
805
7,062
37,738
25,831
4,454
371,619
1,078
43
165,005
97
34,448
9,656
9,489
219,816
302,963
92,187
3,481
570
5,965
40,038
30,205
3,259
478,668
note 8.
trade and otHer receivaBLes
12.31.12 12.31.11
24
23
24
24
24
notes
93
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
non-current (1)
Beginning of the year
Translation differences
Reversal
end of the year
current (2)
Beginning of the year
Translation differences
Additions
Used
end of the year
801
(61)
(8)
732
11,734
(1,254)
159
(69)
10,570
732
(91)
–
641
10,570
(972)
256
(8)
9,846
At December 31, 2012 and 2011 the evolution of the
allowance for doubtful accounts that was deducted from
Trade and Other receivables is:
12.31.12 12.31.11
(1) deducted from other receivables.(2) deducted from trade receivables.
94
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
Materials and spare parts
Valuation allowance
total inventories
Beginning of the year
Translation differences
Reversal
Additions
Used
end of the year
42,617
(8,118)
34,499
7,092
1,015
–
6,160
(6,149)
8,118
80,075
(5,650)
74,425
8,118
(5)
(399)
2,742
(4,806)
5,650
note 9.
inventories
The item consists in the following:
At December 31, 2012 and 2011 the evolution of the
valuation allowance that was deducted from Inventories is:
12.31.12
12.31.12
12.31.11
12.31.11
95
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
assets as per balance sheet
Trade and other receivables (1)
Derivative financial instruments
Other investments
Cash and cash equivalents
total
Liabilities as per balance sheet
Borrowings
Financial leases
Derivative financial instruments
Trade and other payables (1)
Other liabilities (2)
total
124,004
7,466
–
217,038
110,490
458,998
–
–
5
–
–
5
124,004
7,466
5
217,038
110,490
459,003
–
–
98
–
98
avaiLabLe- for-saLe
–
194
–
–
194
derivatives used
for hedGinG
other financiaL LiabiLities at
aMortized cost
derivatives used
for hedGinG
665,020
194
9,968
324,132
999,314
totaL
totaL
665,020
–
9,870
–
674,890
Loans and
receivabLes
–
–
–
324,132
324,132
assets at fair vaLue throuGh the
profit and Loss
12.31.12
(1) excluding prepayments and advanced to suppliers and subcontractors.
(1) excluding social security contributions.
(2) excluding advances received on construction contracts.
note 10.
financiaL instruMents By category
96
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
assets as per balance sheet
Trade and other receivables (1)
Other investments
Cash and cash equivalents
total
Liabilities as per balance sheet
Borrowings
Financial leases
Derivative financial instruments
Trade and other payables (1)
Other liabilities (2)
total
–
110
–
110
93,965
8,855
–
166,793
129,924
399,537
527,721
8,456
–
536,177
–
40,186
234,908
275,094
527,721
48,752
234,908
811,381
93,965
8,855
2,388
166,793
129,924
401,925
avaiLabLe- for-saLe
other financiaL LiabiLities at
aMortized cost
totaL
totaL
assets at fair vaLue throuGh the
profit and Loss
12.31.11
(1) excluding prepayments and advanced to suppliers and subcontractors.
(1) excluding social security contributions.
(2) excluding advances received on construction contracts.
Loans and
receivabLes
–
–
2,388
–
–
2,388
derivatives used
for hedGinG
97
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
deterMining fair vaLues
The table below analyzes financial instruments carried at fair
value, by valuation method.
The different methods have been defined as follows:
Level 1- Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2- Inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices).
Level 3- Inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
The following table presents the assets that are measured
at fair value:
assets at december 31, 2012
Cash and cash equivalents
total
assets at december 31, 2011
Cash and cash equivalents
Other investments
total
–
–
–
–
–
–
–
–
–
–
324,132
324,132
234,908
40,186
275,094
324,132
324,132
234,908
40,186
275,094
LeveL 3LeveL 2LeveL 1 totaL
98
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 12.
casH and casH eQuivaLents
Cash at bank and on hand
Short-term bank deposits
Short-term deposits in related parties
total cash and cash equivalents
Cash and cash equivalents
Bank overdrafts
total cash and cash equivalents
39,455
167,388
28,065
234,908
234,908
(36,508)
198,400
58,703
220,186
45,243
324,132
324,132
(21,044)
303,088
Cash, cash equivalents and bank overdrafts include the
following for the purposes of the consolidated statement
of cash flows:
12.31.12
12.31.12
12.31.11
12.31.11
note 11.
assets of disposaL group cLassified
as HeLd for saLe
assets
The item consists in the following:
Assets of disposal group classified as held for sale
Property, plant and equipment
Other investment
total held – for – sale assets
–
20
20
1,008
21
1,029
24
12.31.12 12.31.11
notes
99
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 13.
sHare capitaL
The composition of the Company’s capital is as follows:
at december 31, 2011
at december 31, 2012
5,181,537
5,181,537
5,181,537
5,181,537
ordinarY shares
nuMber of shares
In THOUSAnDS OF SHARES
The ordinary shares have a value of UYU 1 per share and one
vote per five shares. All issued shares are fully paid.
At December 31,2012 the authorized capital stock amounted
to UYU 5,500,000 thousand.
On June 26, 2008, the Special Shareholders’ Meeting decided
to increase the authorized capital to UYU 5,500,000 thousand
and accepted an Irrevocable Contribution of USD 30,000
thousand (equivalent to UYU 586,830 thousand) from Techint
Investments NV, the parent company of Techint Limited.
The Special Shareholders' Meeting of September 30,
2008 ratified the decisions taken at the previous Special
Shareholders' Meetings and decided to change from
nominative shares to bearer shares and capitalize all the
pending irrevocable contributions (USD 72,317 thousand).
The new authorized capital, the capitalization and the
change in the type of shares were authorized by the AIN
on July 6, 2011, and such changes were registered
with the Registry of Legal Entities (Registro de Personas
Jurídicas) on July 11, 2011.
100
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 14.
BorroWings
non-current
Bank borrowings
Other borrowings
Financial leases
total non-current borrowings
current
Bank overdrafts
Bank borrowings
Borrowings from related parties
Other borrowings
Financial leases
total current borrowings
Total Borrowings
25,557
4,374
6,745
36,676
36,508
24,974
1,337
1,215
2,110
66,144
56,721
2,092
5,158
63,971
21,044
27,115
15,551
1,481
2,308
67,499
8.07% 10.15%
12.31.12
12.31.12
12.31.11
12.31.11
The weighted average interest rates before tax shown bellow
were calculated using the rates set for each instrument in its
corresponding currency as of December 31, 2012 and 2011.
24
notes
101
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
Breakdown of borrowings by currency and rate is as follows:
non-current
ARS
ARS
BRl
CHl
Mxn
PEn
USD
USD
current
ARS
ARS
BRl
CHl
Mxn
PEn
USD
USD
UyU
Fixed
Variable
Variable
Fixed
Fixed
Fixed
Fixed
Variable
Fixed
Variable
Variable
Fixed
Fixed
Fixed
Fixed
Variable
Fixed
12.31.12 currencY interest rate 12.31.11
9,120
–
30,063
5,158
2,302
–
6,122
11,206
63,971
23,710
31
1,393
2,277
696
5,170
23,995
1,542
8,685
67,499
698
36
–
6,709
3,255
4,889
8,383
12,706
36,676
39,220
130
–
1,980
–
11,258
9,642
2,155
1,759
66,144
ref:ars: argentine pesobrl: brazilian realChl: Chilean pesomxn: mexican pesopen: peruvian nuevo sol uyu: uruguayan peso
102
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
Financial leases
Other borrowings
total Borrowings
interest to be accrued
Financial leases
Other borrowings
total Borrowings
interest to be accrued
1,289
1,227
2,516
131
1,677
5,038
6,715
231
1,289
2,528
3,817
95
1,678
2,098
3,776
315
–
33,213
33,213
–
–
4,856
4,856
–
1,290
12,238
13,528
1,205
1,713
11,132
12,845
916
2,308
65,191
67,499
1,908
2,110
64,034
66,144
1,775
1,290
9,607
10,897
582
1,677
6,807
8,484
500
1 year or Less
1 year or Less
1 - 2 years
1 - 2 years
2 - 3 years
2 - 3 years
3 - 4 years
3 - 4 years
4 - 5 years
4 - 5 years
over 5 years
over 5 years
The maturity of borrowings is as follows:
The fair value of borrowings equals their carrying amount,
as the impact of discounting is not significant.
12.31.12
12.31.11
103
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 15.
deferred incoMe taXes
As further explained in note 2.s., TEI&C and most of the
Company’s subsidiaries are subject to income taxes. At
December 31, 2012 and 2011 the Company discloses
under the caption “deferred income tax assets” the net
balance recognized by those subsidiaries that recorded
a net deferred income tax asset, while the net balance
recognized by those subsidiaries that recorded a net
deferred income tax liability has been disclosed under
“deferred income tax liabilities” in the consolidated
statement of financial position.
The main subsidiaries generating deferred income tax
balances are detailed below:
deferred income tax assets
TEBRA
TEARG
TEMEx and subsidiaries
TEnCO’s subsidiaries
Other
deferred income tax liabilities
TEnCO’s subsidiaries
TEMEx and subsidiaries
TEARG’s subsidiaries
Other
44,331
11,839
3,009
2,066
541
61,786
(13,417)
(1,170)
(8,190)
(2,328)
(25,105)
55,716
1,610
7,156
72
618
65,172
(8,006)
(621)
(9,622)
(3,089)
(21,338)
12.31.12 12.31.11
104
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
At December 31, 2012 and 2011 the deferred tax balance
is originated by the following items:
deferred income tax assets
Tax-loss carry-forwards
Provisions
Deferred costs/Construction contracts
Advances from clients
Different criterion used to assess the tax result of the J.V. Techint
Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A. (Suc. Argentina) - Iglys S.A.
PP&E
Other
subtotal
deferred income tax Liabilities
Committed investment FEPSA
PP&E
Deferred income/Construction contracts
PP&E revaluation
Inventories
Different criterion used to assess the tax result of the J.V. Techint
Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A. (Suc. Argentina) - Iglys S.A.
Other
subtotal
net deferred income tax assets
37,647
53,421
1,990
252
–
51
244
93,605
13,332
2,348
25,975
9,552
2,413
287
3,017
56,924
36,681
46,889
48,135
1,042
279
2,369
736
293
99,743
13,142
1,709
14,214
20,008
2,264
–
4,572
55,909
43,834
12.31.12 12.31.11
105
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
The evolution of net deferred income tax asset / (liability)
during the year is as follows:
The amounts shown in the consolidated statement
of financial position include the following:
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
Deferred tax liabilities to be recovered within 12 months
Deferred tax liabilities to be recovered after more than 12 months
net deferred income tax assets
Beginning of the year
Translation differences
Other movements
Income statement (charge) / credit
end of the year
31,331
62,274
(29,895)
(27,029)
36,681
43,834
(3,710)
(691)
(2,752)
36,681
24,554
75,189
(19,225)
(36,684)
43,834
33,020
(7,337)
–
18,151
43,834
12.31.12
12.31.12
12.31.11
12.31.11
106
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The evolution of deferred income tax assets and liabilities
during the year is as follows:
Beginning of the year
Translation differences
Other movements
Income statement (charge)/credit
end of the year
Beginning of the year
Translation differences
Other movements
Income statement charge/(credit)
end of the year
1,308
(36)
–
(725)
547
6,281
(442)
–
(187)
5,652
99,743
(7,825)
(645)
2,332
93,605
55,909
(4,115)
46
5,084
56,924
1,042
226
–
722
1,990
20,008
(1,113)
46
(9,389)
9,552
2,369
(157)
–
(2,212)
–
2,264
(168)
–
317
2,413
48,135
(4,386)
–
9,672
53,421
14,214
(631)
–
12,392
25,975
46,889
(3,472)
(645)
(5,125)
37,647
13,142
(1,761)
–
1,951
13,332
tax-Loss carrY-forwards
coMMited investMent
fepsa
deferred tax assets
deferred tax LiabiLities
provisions
deferred incoMe/construction
contracts
deferred costs/construction
contracts
pp&e revaLuation
different criterion used
to assess the tax resuLt of
the Jv techint-iMpreGiLo-iGLYs
inventories
others
others
totaL
totaL
107
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
The evolution of deferred income tax assets and liabilities
during the previous year is as follows:
Beginning of the year
Translation differences
Income statement (charge)/credit
end of the year
Beginning of the year
Translation differences
Income statement charge/(credit)
end of the year
1,843
(517)
(18)
1,308
4,494
110
1,677
6,281
98,199
(9,255)
10,799
99,743
65,179
(1,918)
(7,352)
55,909
1,891
(68)
(781)
1,042
28,030
(1,545)
(6,477)
20,008
1,075
(136)
1,430
2,369
2,579
299
(614)
2,264
31,721
(3,527)
19,941
48,135
17,697
229
(3,712)
14,214
61,669
(5,007)
(9,773)
46,889
12,379
(1,011)
1,774
13,142
tax-Loss carrY-forwards
coMMited investMent
fepsa
deferred tax assets
deferred tax LiabiLities
provisions
deferred incoMe/construction
contracts
deferred costs/construction
contracts
pp&e revaLuation
different criterion used
to assess the tax resuLt of
the Jv techint-iMpreGiLo-iGLYs
inventories
others
others
totaL
totaL
108
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The tax loss carry-forwards mature as detailed below:
year 2012
year 2013
year 2014
year 2015
year 2016
year 2017
year 2018
year 2019
year 2020
year 2021
year 2022
Without maturity
–
–
–
649
2,794
24,807
12,892
8,134
4,953
2,824
1,612
82,374
141,039
34
75
111
1,493
3,547
1,646
16,551
20,972
10,001
899
–
110,385
165,714
The recoverable value of deferred tax assets depends on
the existence of future income subject to income tax,
sufficient to be used before their legal prescription. In this
regard, Management estimates that TEI&C’s subsidiaries
will generate sufficient taxable income in future periods so
as to offset the net balance of deferred income tax assets
recorded at December 31, 2012.
12.31.12 12.31.11Year
109
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 16.
trade and otHer payaBLes
non-current
Social security contributions (1)
total non-current trade and other payables
current
Trade payables
Social security contributions (2)
Amounts due to related parties
Other payables
total current trade and other payables
48,370
48,370
213,531
96,280
2,059
1,448
313,318
40,869
40,869
161,401
68,868
2,497
2,895
235,661
The maturity of trade and other payables is as follows:
12.31.12 12.31.11
over 4 Years
3 - 4 Years
2 - 3 Years
1 - 2 Years
1 Year or Less
december 31, 2012
Trade and other payables
total trade and other payables
at december 31, 2011
Trade and other payables
total trade and other payables
325
325
–
–
9,628
9,628
5,608
5,608
1,627
1,627
3,136
3,136
313,318
313,318
235,661
235,661
31,165
31,165
21,149
21,149
5,625
5,625
10,976
10,976
without due date
24
notes
(1) it includes employee benefits usd 33,051 (at december 31, 2011 usd 28,500).
(2) at december 31, 2012 it includes employee benefits usd 1,515.
110
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 17.
otHer LiaBiLities
non-current
Provisions
Advances received on construction contracts
Amounts due to related parties
Other liabilities
total non-current other liabilities
current
Provisions
Advances received on construction contracts
Advances received on construction contracts from related parties
Amounts due to related parties
Other liabilities and provisions
total current other liabilities
53,487
43,787
1,851
31,190
130,315
5,812
65,544
311
1,372
16,778
89,817
54,188
990
1,852
43,734
100,764
8,707
43,798
197
1,085
20,358
74,145
12.31.12 12.31.11
18
24
18
24
24
notes
The maturity of other liabilities is as follows:
over 4 Years
3 - 4 Years
2 - 3 Years
1 - 2 Years
1 Year or Less
december 31, 2012
Other liabilities
total other liabilities
at december 31, 2011
Other liabilities
total other liabilities
11,381
11,381
5,919
5,919
12,893
12,893
24,541
24,541
69,137
69,137
34,959
34,959
89,817
89,817
74,145
74,145
8,724
8,724
8,196
8,196
28,180
28,180
27,149
27,149
without due date
111
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rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 18.
provisions
The evolution of provisions during the year is as follows:
non-current
Beginning of the year
Translation differences
Reversal
Additions
Used
end of the year
current
Beginning of the year
Translation differences
Reversal
Additions
Used
end of the year
7,297
(879)
(988)
1,967
(248)
7,149
452
–
–
44
–
496
184
(15)
(842)
764
–
91
3,446
–
–
–
(1,876)
1,570
6,430
(610)
(1,788)
735
(160)
4,607
3,730
(91)
(1,189)
367
(283)
2,534
31,792
(2,819)
(1,513)
5,540
(103)
32,897
–
–
–
–
–
–
8,485
(227)
(425)
2,882
(1,972)
8,743
1,079
140
–
18
(25)
1,212
54,188
(4,550)
(5,556)
11,888
(2,483)
53,487
8,707
49
(1,189)
429
(2,184)
5,812
civiLstaXesLabor LegaL fees (*) other totaL
12.31.12
112
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
non-current
Beginning of the year
Translation differences
Reversal
Additions
Used
end of the year
current
Beginning of the year
Translation differences
Reversal
Additions
Used (a)
end of the year
6,353
(684)
(1,571)
3,558
(359)
7,297
610
(9)
(149)
–
–
452
966
(50)
(1,216)
484
–
184
3,596
–
–
–
(150)
3,446
7,253
(753)
(268)
229
(31)
6,430
3,561
(76)
–
245
–
3,730
–
(5,750)
–
37,542
–
31,792
–
–
–
–
–
–
9,224
(197)
(932)
2,340
(1,950)
8,485
7,181
2
–
910
(7,014)
1,079
23,796
(7,434)
(3,987)
44,153
(2,340)
54,188
14,948
(83)
(149)
1,155
(7,164)
8,707
(a) on february 16, 2011, tenCo and the minority shareholder of the company in saudi techint ltd. executed a settlement agreement whereby tenCo agrees to pay the sum of usd 7 million, thus settling the disputes for the complaint for damages and claim filed by such minority shareholder before the 15th Commercial tribunal of the board of grievances of saudi arabia.
(*) see note 23.
civiLstaXesLabor LegaL fees (*) other totaL
12.31.11
113
an
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201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 19.
eMpLoyee Benefits
non-funded defined Benefits
and otHer Long-terM Benefits
The amounts recognized in the consolidated statement
financial position are determined as follows:
The amounts recognized in the consolidated income statement are as follows:
Present value of unfunded obligations
Costs for services rendered in the past not recorded
Unrecognized actuarial losses
Liability in the consolidated statement financial position
Current service cost
Interest cost
net actuarial (gains) losses recognized in the year
Amortization of costs for services rendered in the past not recorded
total included in Labor costs
39,039
(1,044)
(3,429)
34,566
3,834
6,161
3,574
332
13,901
38,689
(1,064)
(9,125)
28,500
3,298
5,334
2,167
328
11,127
12.31.12 12.31.11
12.31.12 12.31.11
114
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
Beginning of the year
Translation differences
Transfers and new participants of the plan
Total expense
Contributions paid
end of the year
28,500
(2,790)
(83)
13,901
(4,962)
34,566
22,173
(1,904)
(105)
11,127
(2,791)
28,500
The amounts and movements in the liabilities recognized in
the consolidated statement financial position are determined
as follows:
At December 31, 2012 and 2011, the main actuarial premises
used for calculation of such plans contemplate a discount
average rate of 7% and of 6% (real) and a salary increase
rate of 2% and 3%, respectively. The actuarial premises
used in TEMEX for calculation of such plans contemplate
a discount rate of 6.50% (real) at December 31, 2012 and
7.30% (real) at December 31, 2011 and a salary increase rate
of 4.54% and 5.91% respectively.
contriBution pLans
During the year ended December 31, 2012 TEBRA contributed
USD 1,055 to the defined contribution plans (at December 31,
2011 USD 1,842).
12.31.12 12.31.11
115
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 20.
participation in Joint ventures
The Company’s subsidiaries were part of different J.V.s
which also performs engineering, procurement and
construction activities. The Company’s participation
in those J.V.s was recorded through proportional
consolidation of assets, liabilities and results. The
following balances represent the J.V.s assets and
liabilities at December 31, 2012 and 2011:
Constructora norberto Odebrecht S.A. - Odebrecht Argentina
S.A. - Techint Cía. Técnica Internacional S.A.C.e I. - Unión
Transitoria de Empresas - Proyecto: Potasio Río Colorado (1)
Techint Cía. Técnica Internacional S.A.C.e I. - Dycasa S.A. - Unión
Transitoria de Empresas - Proyecto: Ampliación Subte H (1)
Techint Cía. Técnica Internacional S.A.C.I. - Panedile Argen-
tina S.A. - Unión Transitoria de Empresas - Complejos "los
Caracoles" and "Punta negra" (1)
Techint Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A.
(Sucursal Argentina)- Iglys S.A. - Unión Transitoria
de Empresas - Complejo Penitenciario Ezeiza (1)
Techint Cía. Técnica Internacional S.A.C.e I. - FlUOR Inc. -
Unión Transitoria de Empresas - Proyecto: Pascua lama (1)
ABB lummus Techint Trinidad Joint Venture - Gasoline Opti-
mization Program Upgrade - Petroleum Company of Trinidad
and Tobago limited - Construction Management Services (1)
Consórcio Techint Confab UMSA - lot I Tanks Refinaria
do nordeste, Abreu e lima (RnEST) (2)
Consórcio Andrade Gutierrez - Techint (AG-TECH) Diesel
Unit of landulpho Alves - Mataripe Refinery (RlAM) (2)
27,246
62,082
49,520
13,024
55,236
3,035
7,641
20,982
40.00%
60.00%
75.00%
65.00%
50.00%
50.00%
41.00%
50.00%
77,333
56,364
27,481
2,279
65,482
11
14,444
6,304
133,415
62,349
47,249
46,123
116,818
2,975
2,010
1,796
16,360
61,387
40,388
1,385
31,824
37
15,354
15,212
40.00%
60.00%
75.00%
65.00%
50.00%
50.00%
41.00%
50.00%
12.31.12
totaL J.v.’s LiabiLities
totaL J.v.’s assets
% of ownership
totaL J.v.'s LiabiLities
% of ownership
totaL J.v.'s assets
Main Joint ventures
12.31.11
116
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
13,512
52,954
15,074
2,654
1,454
5,946
116,490
74
–
3,788
Main Joint ventures (cont’d.)
(1) Controlling interest through tearg.(2) Controlling interest through tebra.(3) Controlling interest through tenCo.(4) Controlling interest through temex.
50.00%
50.00%
50.00%
50.00%
50.00%
Tamburí Comércio de Máquinas e Serviços de Engenharia
ltda. (Tamburí) (2)
Consórcio Andrade Gutierrez - Techint (TE-AG) (2)
ABB lummus Techint Bahamas Joint Venture - Gasoline
Optimization Program Upgrade - Petroleum Company of
Trinidad and Tobago limited - Engineering, Procurement
and Management Services (3)
Techint / Somerville - Clipper Project (4)
Techint / Black & Veatch - lnG Costa Azul Project (4)
1,992
62,834
14,976
248
1,342
394
60,750
3
–
6,694
50.00%
50.00%
50.00%
50.00%
50.00%
12.31.12
totaL J.v.’s LiabiLities
totaL J.v.’s assets
% of ownership
totaL J.v.'s LiabiLities
% of ownership
totaL J.v.'s assets
12.31.11
117
an
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po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
The following balances represent the J.V.s results
at December 31, 2012 and December 31, 2011:
Constructora norberto Odebrecht S.A. - Odebrecht Argentina S.A. -
Techint Cía. Técnica Internacional S.A.C.e I. - Unión Transitoria de
Empresas - Proyecto: Potasio Río Colorado (1)
Techint Cía. Técnica Internacional S.A.C.e I. - Dycasa S.A. -
Unión Transitoria de Empresas - Proyecto: Ampliación Subte H (1)
Techint Cía. Técnica Internacional S.A.C.I. - Panedile Argentina
S.A. - Unión Transitoria de Empresas - Complejos "los Caracoles"
and "Punta negra” (1)
Techint Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A
(Sucursal Argentina) - Iglys S.A. - Unión Transitoria de Empresas
- Complejo Penitenciario Ezeiza (1)
Techint Cía. Técnica Internacional S.A.C.e I. - FlUOR Inc.
- Unión Transitoria de Empresas - Proyecto: Pascua lama (1)
ABB lummus Techint Trinidad Joint Venture - Gasoline
Optimization Program Upgrade - Petroleum Company of Trinidad
and Tobago limited - Construction Management Services (1)
41,816
5,736
12,560
35,897
32,901
(48)
J.v.’s resuLts
40.00%
60.00%
75.00%
65.00%
50.00%
50.00%
% of ownership
20,023
719
10,272
(1,822)
21,299
1,019
J.v.’s resuLts
40.00%
60.00%
75.00%
65.00%
50.00%
50.00%
% of ownership
Main Joint ventures
12.31.12 12.31.11
118
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
J.v.’s resuLts
% of ownership
J.v.’s resuLts
% of ownership
41.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
49,237
79,790
8,466
54,702
272
(6,538)
(1,920)
41.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
38,161
(1,590)
988
123,134
(27)
–
(2,812)
Consórcio Techint Confab UMSA - lot I Tanks Refinaria
do nordeste, Abreu e lima (RnEST) (2)
Consórcio Andrade Gutierrez - Techint (AG-TECH) Diesel Unit
of landulpho Alves - Mataripe Refinery (RlAM) (2)
Tamburí Comércio de Máquinas e Serviços de Engenharia ltda.
(Tamburí) (2)
Consórcio Andrade Gutierrez - Techint (TE-AG) (2)
ABB lummus Techint Bahamas Joint Venture - Gasoline
Optimization Program Upgrade - Petroleum Company
of Trinidad and Tobago limited - Engineering, Procurement
and Management Services (3)
Techint / Somerville - Clipper Project (4)
Techint / Black & Veatch - lnG Costa Azul Project (4)
Main Joint ventures (cont’d.)
12.31.12 12.31.11
(1) Controlling interest through tearg.(2) Controlling interest through tebra.(3) Controlling interest through tenCo.(4) Controlling interest through temex.
119
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 21.
contingencies and coMMitMents
a. guarantees and Bonds granted
TEI&C and its subsidiaries have entered into a series of
guarantee contracts with third parties through which they
undertake the unconditional and irrevocable obligation
to guarantee the prompt and complete payment and
performance of certain liabilities incurred by related parties.
In addition, certain of the Company’s subsidiaries issued a
number of guarantees to provide for the obligations assumed
in the normal course of business.
As of December 31, 2012 and 2011, TEI&C issued
the following guarantees on behalf of other companies,
as follows:
granted in favor of:
Barrick Explotaciones Arg. S.A.
Siderca S.A.I.C.
Tecgas n.V.
Tecpetrol Internacional S.A.
Tecpetrol Internacional S.l.
ABB lummus Global Overseas Corporation
ABB lummus Global Inc.
JGC Arabia limited
JGC Corporation
Minera Panamá S.A.
Anglo American Sur S.A.
Phoenix Park Gas Processors limited
Pan American Energy S.A.
Transportadora de Gas natural de la Huasteca, S. de R.l. de C.V. (Transcanada)
Energía Occidente de México, S. de R.l. de C.V. (Transcanada)
total
In MIllOn OF USD
23.0
1.9
2.9
5.7
2.0
7.0
9.5
18.3
–
36.0
120.3
4.0
1.4
33.7
12.3
278.0
23.0
1.3
2.9
5.7
2.0
7.0
9.5
18.3
30.1
36.0
114.3
4.0
1.4
129.2
11.9
396.6
12.31.12 12.31.11
(2)
(2)
(1) after the end of the previous fiscal year, this guarantee was returned and replaced by issuing a new guarantee for the amount of usd 33.7 million.
(2) after the end of the fiscal year, these guarantees were returned.
(1)
120
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
b. Works eXecuted under a trust, construction,
and Leasing agreeMent
TEARG, as a member of the J.V. Techint Compañía Técnica
Internacional S.A.C.I. - Impregilo S.p.A. (Sucursal Argentina) - Iglys
S.A., has signed a contract with the Argentine Government for
the construction of a penitentiary institution, under the turnkey
system, located in Ezeiza, province of Buenos Aires, payable in
60 quarterly installments as canon, nominated in USD.
The J.V. accepted the pesification of canons at an ARS 1-USD
1 rate and the application of the Reference Stabilization Index
(RSI) until the effective date of payment, according to the
Agreements executed by the J.V. with the Ministry of Justice
and Human Rights, dated November 19, 2003 and September
9, 2004. The canons collected plus RSI after the Agreement
dated September 9, 2004, were Nos. 17, 18, 19, 20, 21 and
22. On the other hand, before execution of such Agreement,
canon No. 8 was also collected plus RSI in January 2003.
That notwithstanding, the J.V. received from such Ministry
payments for several canons not applying the RSI, which
have been taken by the J.V. as partial payments of the total
amount due and payable arising from the Agreement dated
September 9, 2004.
In addition, after the end of the fiscal year, TEI&C issued the
following guarantees and bonds in favor of other companies:
Thus, from January 2006 to the date of issue of these
consolidated financial statements, the J.V. received
as partial payment a total amount of USD 43,474(1)
corresponding to canons 10 to 16 and 23 to 53 at an ARS
1-USD 1 rate, not applying the RSI. Taking into account this
situation, the J.V.’s Management made a new estimate of
the date of probable collection of the RSI past due and to
become due.
Taking into account the Ministry of Justice’s delay as to
a resolution and payment of the overdue debt, Santander
Río Trust S.A., in its capacity as Trustee and Grantor of
the Leasing, on July 4, 2008, following the J.V.’s express
instructions, submitted a note demanding payment of
amounts due. Upon failure to answer by the Ministry of
Justice, on November 28, 2008, an Arbitration Claim was
filed before the International Court of Arbitration of the
International Chamber of Commerce, for the purpose
of appointing an arbitration tribunal consisting of three
arbitrators and to hold the respondent, the Argentine
Government, liable for payment of the amounts claimed
plus any interest that may be accrued and the new terms
of the debt to expire during the arbitration process. The
arbitration claim was notified to the Argentine Government
granted in favor of:
Gasoductos del Sureste S. de R. l. de C.V.
Transportadora de Gas natural de la Huasteca, S. de R.l. de C.V. (Transcanada)
Petrobras netherlands B.V.
242.3
19.5
172.0
433.8
12.31.12In MIllIOn OF USD
121
an
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po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
in May 2009, the Arbitral Tribunal was constituted and the
Mission Statement was issued on December 7, 2010.
In May 2009, the J.V. was informed of the passing of
Executive Order No. 541/09, which empowers UNIREN to
renegotiate the Construction, Trust and Leasing Agreement
executed in 1998 in relation to Penitentiary Complex I
(Ezeiza). The J.V. has not consented to the provisions of
such executive order by virtue of the defects thereof. On
June 18, 2009, a letter was submitted through Santander
Río Trust S.A., in its capacity as Trustee and Grantor of
the Leasing, following the J.V.’s express instructions, to
the above-stated respect claiming the unlawful nature of
such executive order. That notwithstanding, and making it
clear that this entails no waiver whatsoever of its rights,
including the right to enforce its rights and defenses in
the ongoing arbitration proceeding, on September 8,
2010, the J.V. executed a Memorandum of Understanding
(MOU) with UNIREN since it believes that under the
terms of such MOU (i) the acknowledgement made in
the Agreement executed with the Ministry of Justice on
September 9, 2004 is ratified, (ii) UNIREN acknowledges
the debt upon failure to apply the RSI and (iii) the J.V.
states its position that as to all the claims and its intention
of suspending the arbitration upon actual payment by the
State of all amounts due.
Following the negotiations with the UNIREN, an Agreement
(Entendimiento Contractual) was executed on November 18,
2011, whereby (i) the MOU dated September 8, 2010, stated
in the preceding paragraph, is ratified and the debt upon
failure to apply the RSI is acknowledged, (ii) the Legal Board
of Juridical Affairs (Dirección Legal de Asuntos Jurídicos) of
the Ministry of Economy and Public Finance concludes that
the application of RSI complies with the provisions under
the applicable legal framework upon the passing of Law
No. 25561 and Executive Order No. 214/2002, (iii) the J.V.
undertakes to suspend the arbitration proceeding for 180
days and to obtain the ratification of such agreement by the
Trustee, (iv) the UNIREN undertakes, upon compliance by the
J.V. with the obligation stated in (iii), to ratify the agreement
within 180 days jointly with the Ministry of Justice and
Human Rights (MINJU) and with the Argentine Executive
Branch (PEN) and (v) upon ratification by the PEN, the MINJU
shall have a 90-day term to cancel the debt, and the J.V.
shall abandon the arbitration proceeding before or after the
administrative act stating the cancellation of the debt is
passed by the MINJU, but before the actual cancellation.
The J.V. had obtained the Trustee’s ratification and had
complied with the staying of the arbitration proceedings for
180 days. Such staying has been extended and the arbitration
proceedings are still suspended waiting for satisfaction of
the administrative formalities agreed under the Agreement
which are currently being conducted, therefore, the
claimants and the defendant are still holding conversations
aimed at speeding up the compliance with the provisions of
the Agreement to cancel the RSI owed and to regularize the
contract for future canons, and in such a case, to abandon
the arbitration proceedings.
As of the date of issue of these consolidated financial
statements, the J.V. was informed that the Agreement
executed on November 18, 2011, is about to be ratified
by the Argentine Executive Branch (PEN), therefore, the
subsidiary Techint Compañía Técnica Internacional S.A.C.I.
resumed the accrual of RSI from January 1, 2009 to
November 30, 2012. At December 31, 2012, the amount
accrued was USD 24,478 and it is included in Financial
Results (see note 28).
Nevertheless, in the event that the provisions of the
Agreement are not satisfied, the arbitration proceedings shall
continue and in the opinion of the J.V.’s Management and of
(1) outstanding collecting amounts are nominated in argentine peso. the figures shown in usd belong to the amounts in argentine pesos which were translated at the year end exchange rate (december 31, 2012: usd 1 – ars 4.918 and december 31, 2011: usd 1 – ars 4.304).
122
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
its legal advisors, it is estimated that, by application of the
legal rules and regulations regarding pesification (application
of RSI to due canons) which should be applicable to this
contractual structure, the J.V. has a solid legal position to
collect its credits within the scope of the abovementioned
legal rules and regulations.
The proportional participation of TEARG in the total balance
receivable of the J.V. with the Argentine Government as of
November 30, 2012 amounts to USD 62,481(1) (at November
30, 2011: USD 48,359(1)).
The amount of such credit recorded in these consolidated
financial statements, which arises from discounting the
amounts mentioned above from their current value on
November 30, 2012, is equal to USD 43,242(1), capital
USD 4,958(1) and RSI USD 38,284(1), (at November 30, 2011:
USD 24,231(1), capital USD 7,610(1) and RSI USD 16,621(1))
of which the amount of USD 30,273(1) is past due at
December 31, 2012 (at December 31, 2011: USD 12,151(1)).
All these financial credits correspond to the canons
receivable from the Argentine Government, due and to
become due, which were recorded as per the Agreement
executed on September 9, 2004 with the Undersecretariat
of Coordination and Innovation under the National Ministry
of Justice and Human Rights, in Pesos at a rate of ARS
1-USD 1 and adjusted with RSI up to November 30, 2012.
c. otHer contingencies and uncertainties
The Company has tax and civil lawsuits for which the legal
advisors do not expect a probable unfavorable outcome
and, therefore, no provision was set up. The amounts of
these contingencies amount as of December 31, 2012 to
USD 6,492 for tax contingencies and USD 7,783 for civil
contingencies (at December 31, 2011: USD 12,808 for tax
contingencies and USD 5,949 for civil contingencies).
note 22.
restricted assets
tenco and suBsidiaries
At December 31, 2012 and 2011, the net carrying amounts
of the PP&E held under finance lease amount to USD 12,483
and USD 9,569 respectively. At December 31, 2012 and
2011, liabilities for finance leases amount to USD 7,435 and
USD 8,689, respectively.
tearg
At December 31, 2012 and 2011, there were PP&E with a
residual book value of USD 2,422 and USD 3,690 respectively,
which were pledged as guarantee for liabilities under pledge
agreements for USD 1,384 and USD 1,902, included in the
account “current and non-current Borrowings“, respectively
(at December 31,2011 USD 923 and USD 3,210 “current and
non-current Borrowings“, respectively).
coincar s.a.
Under the Credit Facility Agreement entered into by Coincar S.A.
with Banco Santander Río S.A. and Banco de Galicia y Buenos
Aires S.A., Coincar S.A. agrees not to sell nor cause to be sold,
assign in ownership and/or use and/or usufruct, mortgage,
pledge, loan and/or loan for use, levy in any manner whatsoever,
lease and/or enter into a leasing, grant a security and/or personal
interest with respect to, not to transfer and/or in any manner
dispose of, either in a transaction or a series of transactions, all or
a substantial portion of any of its assets, goods and/or rights and/
or of its assets, goods and/or rights to be acquired in the future,
nor to distribute dividends, pay fees to the company’s directors
or consultants, without the prior consent of the majority of the
banks that granted the Credit Facility Agreement.
coinfer
Licensed assets:
In conformity with the regulations established in the
123
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
bid specifications and the License Agreement, the
subsidiary FEPSA received from Ferrocarriles Argentinos
assets of its own to be used in the operation (included
in “Property, plant and equipment” non-current). They
primarily comprise infrastructure (main and secondary
railway network), real property (warehouses and
buildings), transportation material (locomotives and
coaches), fixed facilities and other. Upon expiration of
the license, the assets will be returned to Ferrocarriles
Argentinos, at no additional cost, in their normal
condition of maintenance, except for the wear and tear
over time and the normal use.
teBra
At December 31, 2012, the Company had assets with a carrying
amount of USD 524 (at December 31, 2011: USD 716) granted
as guarantee for different legal proceedings.
note 23.
cLaiMs receivaBLes
During the year ended December 31, 2011 TEBRA
recognized a gain for damages based on a final and
irrevocable court decision issued on April 4, 2011 by
the Superior Court of Justice ("STJ") related to the
Civil Construction Contract entered into in October 1,
1991 with the Ministry of Education and Sports for the
construction of 200 units of the Integrated Center for Child
Support (CIAC according to its acronym in Portuguese).
The claim was brought by TEBRA claiming reimbursement
losses resulting from the unilateral termination of the
contract by the government on September 30, 1996 when
only 41 CIACs had already been built. TEBRA claimed
damages for all losses incurred, among which, additional
costs incurred in the production of pre-molded concrete
elements and in the support of the work; the costs of
plant implementation, which could not be recovered due
to the contract termination; loss of profits due to the
failure of the essential purpose of the contract; and costs
required for the demobilization of the plant, the building
sites and equipment.
The STJ recognized the right of TEBRA to damages for
all the costs incurred based on an expert report plus
legal interest and monetary adjustment. The report of
the expert was issued on July 27, 1999 with amounts
updated through December 31, 1998 and the decision of
the STJ issued on April 4, 2011 determined the amount
of damages in the amount of R$ 93,283 adjusted through
December 31, 1998 and subsequently monetarily adjusted
according to the criteria defined in such decision. On July
18, 2011, a request for execution was filed by TEBRA,
accompanied by another expert report which adjusted the
amount of the resulting damages according to the criteria
defined in the final and unappealable decision to a total of
R$ 339,263 on June 30, 2011.
In the year ended December 31, 2011, TEBRA recognized
a gain arising from the claim plus monetary restatement
based on the official indexes (INPC/Brazilian Central
Bank) and interest of 1% p.m. established in the report
prepared by the expert, net of lawyers' fees which are
payable upon realization of the credit and the related
tax effects. This amount was estimated based on: (a)
the estimated date for issuance of the certificate of
government's debt by the judicial authority up to June
30, 2012, and (b) the payment by the Federal Government
in up ten equal and annual installments, payable from
December 31, 2013 (the maximum legal payment date
for certificates of government's debt issued up to
June 30, 2012). The resulting amount was discounted
at present value based on DI x TR indices reported by
BM&FBOVESPA.
124
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
The net amount recorded in income for the year ended
December 31, 2011 is as follows:
details:
Claim restated up to the date of recognition by the final and irrevocable court decision
Restatement for the period between the final and irrevocable court decision
and December 31, 2011 (InPC)
Interest for the period between the final and irrevocable court decision
and December 31, 2011 (1% p.m.)
Total amount at December 31, 2011
Adjustment to present value
Total adjusted to present value at December 31, 2011
Provision for legal fees - 20%
Amount recognized as "Gain from claims, net" in Other operating results
339,263
3,359
13,412
356,034
(57,855)
298,179
(59,636)
238,543
187,711
(37,542)
150,169
aMounts in r$ thousand
aMounts in usd thousand (*)
2.d
30
notes
(*) the amount of the net gain has been translated at the average exchange rate of april 2011 the month on which the final unappealable decision was issued. the receivable as of december 31, 2011 translated at the year-end exchange rate amounts to usd 158,961 (see note 8) and the related provision for legal fees amounts to usd 31,792 (see note 18).
On October 25, 2011, having been duly served with
process, the Government filed a motion to stay execution,
questioning, among other matters, the computation
criteria. The motion to stay was judged by the courts
on October 19, 2012. TEBRA believes that the decision of
the first level judge to change the date when the monetary
restatement should start to be computed in six months
is wrong. TEBRA conservatively reduced the amount
of the indemnity receivable in the amount of R$ 14,906
reflecting the court decision.
On September 6, 2012 the Federal Government presented to
the Superior Tribunal de Justiça ("STJ") a motion to set aside
judgment (ação rescisória), a request to overturn or set aside
the final unappelable ruling on the case. Under Brazilian law
motion to set aside already issued final and unappelable
judgments are only applicable in nine very narrow
circumstances. In the view of management supported by
the opinion of its counsel the probability of the Federal
Government motion being successful is very remote.
At December 31, 2012 the amount of the receivable was
computed assuming that: (a) the estimated date for issuance
of the certificate of government's debt by the judicial
authority up to June 30, 2013 which represents the current
best estimate of the issuance, and (b) the payment by the
Federal Government in up ten equal and annual installments,
payable from December 31, 2014 (the maximum legal
payment date for certificates of government's debt issued
up to June 30, 2012). The resulting amount was discounted
at present value based on DI x TR indices reported by
BM&FBOVESPA.
125
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
The changes in the amounts recorded in the claims
receivable and in the related provision for legal fees are
presented below:
Beginning of the year
Translation effect
Reduction or receivable as result of court decision on October 19, 2012
Increase in the receivable due to application of inflation index (InPC)
and interest (1% p.m.) established in the final court decision
Unwinding of present value adjustment
legal fees paid
end of the year
Amount recognized as "Financial results"
158,961
(14,090)
(7,564)
19,659
8,039
165,005
20,134
(31,792)
2,819
1,513
(3,932)
(1,608)
103
(32,897)
(4,027)
cLaiM provision for LeGaL fees
126
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 24.
reLated party transactions
TEI&C is controlled by Techint Investments N.V., which
owns 100% of the company’s shares. The parent
company is San Faustin S.A., a corporation based in
Luxembourg. San Faustin S.A. owned the company
trough subsidiaries.
Rocca & Partners Stichting Administratiekantoor Aandelen San
Faustin, a Dutch private foundation (Stichting) (“RP STAK”) held
shares in San Faustin sufficient in number to control San Faustin.
No person or group of persons controlled RP STAK.
non-current assets
Other investments in other related parties
Trade receivables from other related parties
Other receivables
norpower S.A. de C.V.
Other receivables from associated parties
Other receivables from other related parties
current assets
Trade receivables
Consorcio Techint Degremont ltda. - Chile
Fluor Techint S.R.l. Construcción y Servicios limitada - Chile
Consorcio Constructor Techint Besalco ltda.
Trade receivables from associated parties
Trade receivables from other related parties
Other receivables
norpower S.A. de C.V.
Others
Other receivables from associated parties
Other receivables from other related parties
Cash and cash equivalents
Short-term deposits in related parties
8,946
43
3,200
3,200
6,456
1,144
35
1,444
2,623
89,564
–
33
33
5,932
45,243
8,456
56
–
–
7,780
–
798
2,232
3,030
52,023
3,246
27
3,273
3,789
28,065
12.31.12 12.31.11
7
8
8
8
8
8
8
8
12
notes
year-end BaLance WitH reLated parties otHers
tHan tHe parent coMpany
127
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
non-current liabilities
Other liabilities
Caminos del Oeste S.A.
Other liabilities due to subsidiaries
Other liabilities due to other related parties
current liabilities
Borrowings
Caminos del Oeste S.A.
Borrowings from subsidiaries
Borrowings from other related parties
Trade and other payables due to other related parties
Advances received on construction contracts from other related parties
Other liabilities due to other related parties
684
684
1,167
1,190
1,190
14,361
2,059
311
1,372
931
931
921
1,337
1,337
–
2,497
197
1,085
17
17
14
14
16
17
17
12.31.12 notes 12.31.11
128
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
Sales of goods and services
Purchases of goods and services
355,202
3,650
249,528
2,104
12.31.12 12.31.11
transactions WitH otHer reLated coMpanies
Transactions with associated companies
Sales of goods and services
norpower S.A de C.V.
Consorcio Techint Degremont ltda. - Chile
Fluor Techint S.R.l. Construcción y Servicios limitada - Chile
Consorcio Constructor Techint Besalco ltda.
236
1,718
36
5,044
7,034
–
–
2,174
1,441
3,615
12.31.12 12.31.11
transactions WitH reLated parties otHers
tHan tHe parent coMpany
The aggregate compensation of the directors and executive
officers earned during the annual year ended December 31,
2012 and December 31, 2011 amounts to USD 19,425 and
USD 16,852 respectively.
129
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 25.
suBsidiaries
Avemir S.A.
B.V. de nieuwe Weg
BVT lnG Costa Azul, S. de R.l. de C.V.
Caminos del Oeste S.A.
Carbonser, S.A. de C.V.
Carbontec, S.A. de C.V.
Cimimontubi S.A.
Coincar S.A.
Compañía Interamericana de Trabajos Civiles Comintrac S.A.
Compañía Inversora Ferroviaria S.A.I.F.
Constructora Mexicana Electromecánica y de Instrumentación, S.A. de C.V.
Cotecol Compañía Técnica de Construcciones S.A.
Construcciones y Prestaciones Petroleras S.A. (CPP)
Elina 406, S.A. de C.V.
Elina lT, S.A. de C.V.
Energía Tamaulipas S.A. de C.V.
Ferroexpreso Pampeano S.A.C.
Flinwok S.A.
Mexcarbón, S.A. de C.V.
nitroelina, S.A. de C.V.
norgas S.A.
Preglosid S.l.U.
Prestaciones Globales Siderúrgicas S.A.I.F.
Saudi Techint ltd.
Servicios Siderúrgicos Sersisa, S.A.
SICI - Servicios de Ingeniería y Construcciones Industriales S.A. de C.V.
Sidernet S.A.
Sidernet de Venezuela C.A.
Sidernet Mexicana S.A. de C.V.
Socominter Sociedade Comercial Internacional ltda.
Tanks Technologies, S.A. de C.V.
Techint Engenharia e Construção Offshore ltda.
100.00%
100.00%
50.00%
(1)
50.00%
50.00%
100.00%
65.00%
100.00%
77.14%
100.00%
99.86%
–
51.00%
100.00%
100.00%
(4)
100.00%
50.00%
70.00%
50.00%
100.00%
100.00%
(6)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
51.00%
100.00%
Venezuela
netherlands
Mexico
Argentina
Mexico
Mexico
Venezuela
Argentina
Ecuador
Argentina
Mexico
Colombia
Ecuador
Mexico
Mexico
Mexico
Argentina
Uruguay
Mexico
Mexico
Argentina
Spain
Argentina
Saudi Arabia
Venezuela
Mexico
Argentina
Venezuela
Mexico
Brazil
Mexico
Brazil
(5)
100.00%
50.00%
(1)
50.00%
50.00%
(5)
65.00%
100.00%
77.14%
100.00%
99.86%
100.00%
51.00%
(3)
100.00%
(4)
100.00%
50.00%
70.00%
50.00%
100.00%
100.00%
–
(5)
100.00%
100.00%
100.00%
100.00%
100.00%
51.00%
100.00%
12.31.12 (*)
% of oWnership12.31.11 (*)
% of oWnershipcountrYcoMpanY
(7)
(2)
(2)
(7)
(2)
(7)
(7)
(5)
(2)
(2)
(5)
(2)
(5)
(5)
130
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
Techint Chile S.A.
Techint Compañía Técnica Internacional S.A.C.I.
Techint Compañía Técnica Internacional S.A.C.I.
Techint Compañía Técnica Internacional S.A.
Techint Construction limited
Techint E&C, S.A. de C.V.
Techint Engenharia e Construção S/A.
Techint E&C, Inc.
Techint International Construction Corp. (TEnCO)
Techint Ingeniería y Construcción Bolivia S.A.
Techint Ingeniería y Construcciones, S.l.U.
Techint Inversiones S.A.I.F.
Techint nigeria limited
Techint S.A.C.
Techint, S.A.
Techint, S.A. de C.V.
Techint, S.A. de C.V.
Techint, S.A.
Techint, S.A.
Techint Servicios, S.A. de C.V.
Tecnomatter Instalaciones y Construcciones S.A.I.F.
Tecnopower S.A de C.V.
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Chile
Argentina
Uruguay
Venezuela
Canada
El Salvador
Brazil
Canada
Bahamas
Bolivia
Spain
Argentina
nigeria
Peru
Guatemala
Honduras
Mexico
nicaragua
Panamá
Mexico
Argentina
Mexico
12.31.12 (*)
% of oWnership12.31.11 (*)
% of oWnershipcountrYcoMpanY
(*) direct and indirect participating interests are included.
(1) at december 31, 2012 and 2011 the Company decided to include its proportional shareholders’ equity in the liabilities since the subsidiary has a negative shareholders’ equity.
(2) temex has the power to govern the financial and operating policies of the entity.(3) during the current or previous fiscal year, these companies were wound-up.(4) Controlling interest through Compañía inversora ferroviaria s.a.i.f.(5) see note 1.(6) on february 2011, the subsidiary tenCo executed the sale and purchase agreement with a
related company. all the quotas of sauteC (60%) were transferred to such company.(7) Company in process of merger.
131
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rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
12.31.12
current
Cash-flow hedge
total derivative financial instruments - current
non-current
Cash-flow hedge
total derivative financial instruments - non-current
current
Cash-flow hedge
total derivative financial instruments - current
194
194
–
–
–
–
5
5
17
17
2,371
2,371
assets LiabiLities
note 26.
derivative financiaL instruMents
There was no ineffectiveness to be recorded from net
investment in foreign entity hedges.
forWard foreign eXcHange contracts
The notional principal amounts of the outstanding forward
foreign exchange contracts at 31 December 2012 and 2011
were USD 14,676 and USD 16,781, respectively.
12.31.11
assets LiabiLities
132
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 27.
cost of revenue and eXpenses By nature
labor costs
Taxes, rates and contributions
Fees and technical advice
Sub-contract for services
Purchases of material and supplies
PP&E depreciation
Intangible assets amortization
Work structure expenses
Office structure expenses
Participation in J.V. balances
Unallocated costs
total december 31, 2012
total december 31, 2011
716,696
28,259
46,340
236,183
244,074
45,868
1,125
34,925
56,756
80,673
79,893
–
1,570,792
6,958
2,180
136
3,701
16
–
–
–
124
–
673
13,788
16,692
641,732
15,369
32,397
169,412
294,706
44,526
1,325
24,795
38,783
290,190
43,334
1,596,569
1,389,272
86,466
14,113
17,914
4,339
489
5,153
576
3,345
5,336
–
14,788
152,519
164,828
735,156
31,662
50,447
177,452
295,211
49,679
1,901
28,140
44,243
290,190
58,795
1,762,876
seLLinG expenses
cost of revenue
GeneraL and adMinistrative
expenses
4
5
notes 12.31.12 12.31.11
133
an
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po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
note 28.
financiaL resuLts
income
Interests and indexation
net foreign exchange transaction results
Results from Techint Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A. (Suc. Argentina) -
Iglys S.A. - Unión Transitoria de Empresas – Complejo Penitenciario Ezeiza
Restatement and interest on claims
Holding results
Other
costs
Interests and indexation
net foreign exchange transaction results
Results from Techint Cía. Técnica Internacional S.A.C.I. - Impregilo S.p.A. (Suc. Argentina) -
Iglys S.A. - Unión Transitoria de Empresas – Complejo Penitenciario Ezeiza
Holding results
Comissions
Other
6,386
–
23,440
16,107
6,012
1,133
53,078
(6,340)
(6,147)
–
–
(618)
(260)
(13,365)
6,636
12,972
–
–
2,180
(54)
21,734
(2,634)
–
(1,025)
(205)
(913)
(97)
(4,874)
12.31.12 12.31.11
21.b
21.b
notes
134
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 29.
otHer operating resuLts
Gain from claims, net
Gain / (loss) from the sale of PP&E
Impairment loss
net result for provisions for legal claims and contingencies
Other
–
13,836
(819)
(681)
1,905
14,241
150,169
(6,781)
–
(951)
2,245
144,682
note 30.
incoMe taX
Current income tax
Deferred income tax
(33,050)
(2,752)
(35,802)
(31,213)
18,151
(13,062)
12.31.12
12.31.12
12.31.11
12.31.11
notes
notes
23
15
135
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
224,471
(77,242)
1,304
(629)
(1,827)
(9,889)
63,822
(4,202)
9,894
705
(181)
3,044
401
1,738
(13,062)
The net difference between the tax calculated at the rate
in effect in each country and the total charge for the year
is generated by the following:
income before income tax
tax calculated at the applicable rate on the result for the year
Effect of restatement in constant currency
Result due to participating interests in subsidiaries and related companies
Dividends earned
Provisions for deferred tax assets
Gain from claims
Revenue and cost provisions, net
Tax loss carry - forwards
Gain (loss) in the income statement, net of taxable effect in derivative financial instruments
PP&E
Tax-deductible interest on own capital
non-deductible expenses
Other, net
income tax
179,246
(58,905)
1,171
(58)
(1,558)
4,589
6,846
(6,511)
6,737
(765)
4,789
6,081
268
1,514
(35,802)
12.31.12 12.31.11
136
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 31.
Main contracts in progress
argentina
Punta negra Hydroelectric Power Station
Gas Oil Hydrotreatment at la Plata Industrial Complex (HTG at CIlP)
Potasio Río Colorado
Subway line H Expansion
Pascua lama Phase III
Bolivia
Margarita Project
peru
loops del Sur - Preliminary Works
Camisea Pipeline Maintenance
Camisea Well Head Compression Project EPC 30
Toromocho Project
chile
Construction of Stations and Pipeline for Seawater Supply
Mechanical Maintenance Service
uruguay
Maldonado Sewage System
Puerto Montes del Plata
San Carlos – Melo Electricity Interconnection
514
105
1,037
539
1,449
80
84
168
111
82
148
95
40
144
89
44%
100%
26%
3%
30%
100%
97%
–
24%
30%
0%
92%
93%
52%
12%
19%
72%
1%
1%
0%
72%
78%
–
1%
–
–
68%
75%
26%
1%
456
105
700
430
631
80
72
140
110
–
–
81
39
111
89
physicaL progress
physicaL progress
totaL contract aMount
(usd MiLLion)
totaL contract aMount
(usd MiLLion)
country / work
At December 31, 2012 and 2011, the main contracts
are the following:
(1)
(2)
(3)
(4)
(2)
12.31.12 12.31.11
137
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201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
Brazil
Diesel Unit of landulpho Alves de Mataripe Refinery (RlAM)
lot I Tanks Refinaria do nordeste, Abreu e lima (RnEST)
Retarded Coke Unit - Complexo Petroquímico do Rio de Janeiro
(COMPERJ)
WHP 1 and WHP 2 Platforms
Mexico
norte II CCC Power Project
Tuxpan Compressor Station
Ethane Pipeline Project
Tamazunchale Facilities
central america & caribbean
Siepac Substations
Siepac I
Siepac II
602
282
1,018
734
333
24
242
67
42
145
45
100%
100%
72%
8%
99%
99%
3%
9%
100%
100%
100%
95%
88%
40%
4%
37%
24%
–
–
99%
98%
98%
875
221
1,130
1,061
333
24
–
–
42
145
45
(4)
(3)
(4)
(5)
physicaL progress
physicaL progress
totaL contract aMount
(usd MiLLion)
totaL contract aMount
(usd MiLLion)
country / work
12.31.12 12.31.11
(1) the Company's participation is 75%(2) the Company's participation is 40%(3) the Company's participation is 60%(4) the Company's participation is 50%(5) the Company's participation is 19%
138
TE
I&C
S.A
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAll AmounTS ArE Shown In uSD ThouSAnDS, unlESS oThErwISE STATED.
note 32.
suBseQuent events
On February 22, 2013, the Company’s Board of Directors
provided for the payment of a dividend in cash for the sum
of USD 35,000, to be paid on such date to its controlling
shareholder, Techint Investments N.V.
As a result of a new arrangement of shareholdings, on
March 14, 2013, all the shares of the Company were
transferred to a new shareholder denominated PROSAT S.A.
(which company is currently taking the steps for change
of corporate name to “Techint Construcciones Holding
S.A.“), hereinafter “TECHOLD“, a new holding of companies
providing engineering, supplies, construction, operation and
management services. This is a holding company organized
in Uruguay, which shall control engineering and construction
businesses specifically in the American continent.
By virtue of the new business guidelines, TEI&C provided
for a dividend in kind for the sum of USD 349,568 to be paid
to its new shareholder TECHOLD, through which payment
it transferred all the interests of the Spanish subsidiaries
Techint Ingeniería y Construcciones SLU and PREGLOSID
SLU, which companies consolidate the provision of
engineering, construction and service management mainly
of their subsidiaries in Argentina, Ecuador, Canada, Central
America, Netherlands and Mexico.
These dividends in cash and in kind were ratified by the new
shareholder TECHOLD by means of a Special Shareholders’
Meeting held on March 15, 2013; therefore, it ratified the
allocation of accumulated results for the sum of USD 384,568.
139
an
nu
al
re
po
rt
201
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSall amounts are shown in usD thousanDs, unless otherwise stateD.
In order to reflect the changes that took place after closing in
the amounts as of December 31, 2012, the allocation of such
amounts is shown below on a comparative and simplified basis:
As a result of these transactions, TEI&C shall focus on
engineering, construction and service management,
especially of its subsidiaries in Brazil, Chile, Colombia, Peru,
and Uruguay.
Except for the situation stated in the previous paragraphs
and in note 21 after December 31, 2012, no other events,
situations or circumstances have occurred which might
significantly affect the Company´s equity or financial position,
which have not been adequately contemplated or mentioned
in these consolidated financial statements.
non-Current Assets
Current Assets
total assets
shareholders’ equity
Attributable to the Company’s Equity holders
Share Capital
legal reserve
Other reserves
Retained Earnings
non-controlling interests
total equity
non-current Liabilities
Current liabilities
total Liabilities
total equity and Liabilities
355,075
460,830
815,905
218,535
30,092
(26,864)
207,263
(17,131)
411,895
141,005
263,005
404,010
815,905
12.31.12 after effect of
Group´s restructure operation
(268,617)
(499,192)
(767,809)
–
–
69,416
(384,568)
(36,591)
(351,743)
(128,127)
(287,939)
(416,066)
(767,809)
effect of Group´s restructure
operation
623,692
960,022
1,583,714
218,535
30,092
(96,280)
591,831
19,460
763,638
269,132
550,944
820,076
1,583,714
12.31.12
140
TE
I&C
S.A
.
tei&c s.a.
Board of directors’ report and consoLidated financiaL stateMents
for tHe year ended deceMBer 31, 2012 and 2011
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