IMPSA S.A. — Annual Report 2001

May 10, 2002

Impsa Asia Limited

(Incorporated in Hong Kong)

Consolidated Financial Statements

For the year ended 31st December 2001

Chan & Wat

Certified Public Accountants

Hong Kong

Impsa Asia Limited

Report of the directors

The directors have pleasure in presenting to shareholders their annual report together with the audited financial statements of the company for the year ended 31st December 2001.

Principal activities

The company is engaged in the production and marketing of port and hydropower equipment. The principal activities of the subsidiary company and associated company are as shown in note 5 and note 3 respectively to the financial statements.

Financial statements

The profit of the group for the year ended 31st December 2001 and the state of the group’s and the company’s affairs at that date are shown in the attached financial statements. The directors do not recommend the payment of any dividend for the year.

Fixed assets

The movements in fixed assets are shown in note 2 to the financial statements.

Directors

The directors who held office during the year were:

Francisco Ruben Valenti

Juan Carlos Fernandez

Yeung Sum Ming, Lydia

In accordance with the company’s articles of association, all directors shall continue to remain in their office.

Directors’ interest

The company has not entered into any contract, commitment or agreement with any other company in which any of the directors or members of the company’s management has interest, either directly or indirectly; nor has the company made any arrangement to enable any of the directors or members of the company’s management to obtain benefits by means of the acquisition of shares in, or debentures of, the company or any other body corporate.

Auditors

The financial statements have been audited by Messrs Chan & Wat Certified Public Accountants, who now retire and being eligible offer themselves for re-appointment.

By order of the board

Chairman

Hong Kong,

AUDITORS’ REPORT

TO THE SHAREHOLDERS OF IMPSA ASIA LIMITED

(incorporated in Hong Kong with limited liability)

We have audited the financial statements of the company on pages 3 to 17 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective responsibilities of directors and auditors

The Companies Ordinance requires the directors to prepare financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

Basis of opinion

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view, in all material respects, of the state of the company’s and the group’s affairs as at 31st December 2001 and of the group’s profit and cash flows for the year then ended and have been properly prepared in accordance with the Companies Ordinance.

Chan & Wat

Hong Kong, Certified Public Accountants

IAL12.01

Impsa Asia Limited

Consolidated balance sheet

As at 31st December 2001

( Expressed in United States dollars )

		Note		2001		2000
Current assets
	Inventories	1h & 7	$	39,895,160.73	$	21,830,924.95
	Trade debtors and bill receivables	6		17,781,488.10		15,836,367.08
	Other debtors, deposits and prepayment			2,128,324.11		2,547,947.00
	Amount due from a fellow subsidiary			9,668,657.17		31,558,724.00
	Amount due from an associated company			660,268.43		697,224.81
	Cash and bank balances			54,467,691.00		2,909,586.81
Total current assets			$	124,601,589.54	$	75,380,774.65
Non current assets
	Fixed assets	2	$	1,237,973.16	$	2,197,728.04
	Interest in an associated company	3		2,607,741.30		1,565,896.05
	Investment			25,252.53		25,252.53
	Intangible assets	4		22,558.28		293,263.18
Total non current assets			$	3,893,525.27	$	4,082,139.80
Total assets			$	128,495,114.81	$	79,462,914.45
Current liabilities
	Trade creditors and bills payable		$	18,884,131.66	$	7,767,946.00
	Other creditors and accruals			2,220,012.37		392,643.03
	Bank loans and overdraft			34,054,911.57		16,863,684.21
	Deferred taxation			7,812.11		7,812.11
	Amount due to holding company			30,861,397.49		19,297,118.78
Total current liabilities			$	86,028,265.20	$	44,329,204.13
Shareholders’ equity
	Share capital	8	$	16,134,369.00	$	16,134,369.00
	Exchange equalisation reserve	1g		(4,607,505.04)		(4,588,668.53)
	Profit and loss account			30,939,985.65		23,588,009.85
Total shareholders’ equity			$	42,466,849.61	$	35,133,710.32
Total liabilities and shareholders’ equity			$	128,495,114.81	$	79,462,914.45

Approved by the board of directors on

Director Director

The accompanying notes form an integral part of the financial statements.

Impsa Asia Limited

Balance sheet

As at 31st December 2001

( Expressed in United States dollars )

		Note		2001		2000
Current assets
	Inventories	1h & 7	$	22,360,584.00	$	14,184,521.00
	Trade debtors and bills receivables	6		6,818,965.05		10,828,729.71
	Other debtors, deposits and prepayments			585,597.67		1,186,772.26
	Amount due from a fellow subsidiary			9,666,417.17		30,323,164.00
	Amount due from an associated company			235,469.55		506,909.55
	Cash at bank			50,596,046.65		436,016.47
Total current assets			$	90,263,080.09	$	57,466,112.99
Non current assets
	Fixed assets	2	$	68,774.51	$	1,543,042.84
	Interest in a subsidiary company	5		18,880,144.50		7,304,502.75
	Investment			25,252.53		25,252.53
	Intangible assets	4		22,558.28		293,263.18
Total non current assets			$	18,996,729.82	$	9,166,061.30
Total assets			$	109,259,809.91	$	66,632,174.29
Current liabilities
	Trade creditors and bills payable		$	10,685,731.40	$	1,477,968.11
	Other creditors and accruals			84,531.64		345,718.18
	Bank loans and overdraft			21,019,326.21		7,240,000.00
	Amount due to the holding company			38,106,290.27		22,325,387.46
Total current liabilities			$	69,895,879.52	$	31,389,073.75
Shareholders’ equity
	Share capital	8	$	16,134,369.00	$	16,134,369.00
	Profit and loss account			23,229,561.39		19,108,731.54
Total shareholders’ equity			$	39,363,930.39	$	35,243,100.54
Total liabilities and shareholders’ equity			$	109,259,809.91	$	66,632,174.29

Approved by the board of directors on

Director Director

The accompanying notes form an integral part of the financial statements.

Impsa Asia Limited

Consolidated profit and loss account

For the year ended 31st December 2001

( Expressed in United States dollars )

	Note		2001		2000
Turnover	9	$	98,533,801.66	$	67,502,513.76
Cost of sales			(91,620,599.80)		(59,669,095.84)
Group gross profit		$	6,913,201.86	$	7,833,417.92
Other revenue			1,399,899.80		353,294.52
Administrative and marketing expenses			(1,887,651.16)		(2,474,666.10)
Group profit from operating activities		$	6,425,450.50	$	5,712,046.34
Finance cost	10		(17,030.47)		(19,790.73)
Group profit before taxation	10	$	6,408,420.03	$	5,692,255.61
Share of results of associated companies			1,041,845.25		(1,237,060.26)
Group profit before taxation		$	7,450,265.28	$	4,455,195.35
Taxation	11		(98,289.48)		(91,564.74)
Group profit after taxation	12	$	7,351,975.80	$	4,363,630.61
Retained profits brought forward			23,588,009.85		19,224,379.24
Retained profits carried forward		$	30,939,985.65	$	23,588,009.85

No separate statement of recognised gains and losses has been prepared as the net profit for the year would be the only component of this statement.

The accompanying notes form an integral part of the financial statements.

Impsa Asia Limited

Consolidated cash flow statement

For the year ended 31st December 2001

( Expressed in United States dollars )

				2001		2000
Net cash inflow / (outflow) from operating activities			$	33,758,339.10	$	(770,120.56)
Returns on investments and servicing of finance
	Bank interest received		$	860,991.74	$	26,890.25
	Bank interest paid			(825,967.10)		(828,241.55)
Net cash outflow from returns on investments and
	servicing of finance		$	35,024.64	$	(801,351.30)
Taxation
	Tax paid		$	--	$	(91,564.74)
Investing activities
	Payments to acquire fixed assets		$	(566,717.95)	$	(743,919.82)
	Receipts from disposal of fixed assets			1,140,231.04		20,509.51
Net cash inflow / (outflow) from investing activities			$	573,513.09	$	(723,410.31)
Net cash inflow / (outflow) before financing			$	34,366,876.83	$	(2,386,446.91)
Financing
	Bank loans		$	17,015,858.61	$	4,254,017.00
			$	17,015,858.61	$	4,254,017.00
Increase in cash and cash equivalents			$	51,382,735.44	$	1,867,570.09
Cash and cash equivalents at 1st January 2001				2,909,586.81		1,042,016.72
Cash and cash equivalents at 31st December 2001			$	54,292,322.25		2,909,586.81
Analysis of the balances of cash and cash equivalents
	Cash and banks		$	54,467,691.00	$	2,909,586.81
	Bank overdraft			(175,368.75)		--
			$	54,292,322.25	$	2,909,586.81

Impsa Asia limited

Consolidated cash flow statement (continued)

For the year ended 31st December 2001

( Expressed in United States dollars )

Reconciliation of operating profit to net inflow / (outflow) from operating activities

			2001		2000
	Profit before taxation	$	6,408,420.03	$	5,692,255.61
	Exchange equalisation reserve		(18,836.51)		39,886.64
	(Gain) / loss on disposal of fixed assets		(1,600.00)		526,368.07
	Bank interest received		(860,991.74)		(26,890.25)
	Bank interest paid		825,967.10		828,241.55
	Exchange gain		--		(0.12)
	Depreciation on fixed assets		387,841.79		441,961.13
	Amortization on organization expenses		270,704.90		270,704.91
	Increase in inventories		(18,064,235.78)		(5,448,843.81)
	(Increase) / decrease in trade debtors and bills receivables		(1,945,121.02)		3,556,774.31
	Decrease / (increase) in amount due from fellow a
	subsidiary		21,890,066.83		(31,558,724.00)
	Decrease in amount due from an associated company		36,956.38		4,963,314.48
	Decrease in other debtors, deposits and prepayment		321,333.41		4,382,669.94
	Increase in accounts payables and bills payable		11,116,185.66		904,467.84
	Increase in other creditors and accruals		1,827,369.34		295,639.56
	Increase in amount due to holding company		11,564,278.71		14,362,053.58
Net cash inflow / (outflow) from operating activities		$	33,758,339.10	$	(770,120.56)

Impsa Asia Limited

Notes to financial statements

(Expressed in United States dollars)

1. Significant accounting policies
2. Statement of compliance

These accounts have been prepared in accordance with all applicable Statements of Standard Accounting Practice (“SSAP”) and Interpretations issued by the Hong Kong Society of Accountants, accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies adopted by the company is set out below.

(b) Basis of consolidation

The consolidated financial statements of the group incorporate the audited financial statements of the company and all its subsidiary companies for the year ended 31st December 2001.

(c) Subsidiary companies

A company is a subsidiary company if more than 50% of the issued voting capital is held for long term or if the composition of the board of directors is being controlled.

Investment in subsidiary companies is carried at cost less provision for permanent diminution in value.

(d) Associated company

Associated company is a company in which the company has a long-term equity interest of 20% to 50% and in which the company participates in management policy decisions.

The group’s investments in associated companies are stated at the group’s share of net assets.

(e) Amortization and depreciation

No amortization is provided on freehold land.

Depreciation is calculated to write off the cost of fixed assets over their estimated useful lives on a straight-line basis at the following rates per annum:

Category Rate

Machineries 10% or actual consumption by 20 times

Furniture, fixtures and office equipment 20%

Motor vehicles 20%

Leasehold improvement 20%

Impsa Asia Limited

Notes to financial statements

(Expressed in United States dollars)

(1) Significant accounting policies (continued)

(f) Amortization

Amortization on intangible assets is calculated to write off the organisation expenses on a straight line basis at the rate of 10% per annum.

(g) Foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at the approximate rates of exchange ruling at the balance sheet date. Transactions during the year have been converted at the rates of exchange ruling at the transaction dates. All exchange differences are dealt with in the profit and loss account.

On consolidation, the financial statements of overseas subsidiary companies denominated in foreign currencies except fixed assets, long term investment and share capital are translated at the rates of exchange ruling at the balance sheet date. All exchange differences arising on consolidation are dealt with in the exchange equalisation reserve.

(h) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost of inventories comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Work in progress comprises direct material and labour costs and an appropriate proportion of overhead expenses less provisions for foreseeable losses. Net realisable value is the selling price in the ordinary course of business less the costs of production and the estimated costs necessary to make the sale.

(i) Recognition of income

Income are recognized on accrual basis.

(j) Deferred taxation

Deferred taxation is provided at current rates on accelerated depreciation allowances and other short term timing differences to the extent that it is probable that a liability or asset will crystallize.

(k) Lease

Lease that transfers substantially all the risks and rewards of ownership of an asset to the company is accounted for as finance lease. Under the finance lease, the asset and the related long term obligation, excluding interest are recorded to reflect the purchase and its financing.

Lease other than a finance lease is accounted for as operating lease. Rental payments under operating lease are directly charged to the profit and loss account.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

(1) Significant accounting policies (continued)

1. Provision for doubtful debts

Provision is made against amounts due by customers as and when they are considered doubtful by the directors. In additions, amounts have been set aside as provision for doubtful debts. The provision is deducted from the trade debtors.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars)

1. Fixed assets

2. The group

		Freehold Land			Motor vehicles				Furniture, fixtures and office equipment				Leasehold improvement						Machineries			Total
At cost
	at 1/1/2001	$	523,000.00	$		88,198.56		$		380,755.38		$		42,400.00				$		3,560,000.00			$	4,594,353.94
	Additions		--			--				47,281.21				9,600.00						509,836.74				566,717.95
	Disposal		--			--				(2,352.00)				--						(3,560,000.00)				(3,562,352.00)
	at 31/12/2001	$	523,000.00	$		88,198.56		$		425,684.59		$		52,000.00				$		509,836.74			$	1,598,719.89
Aggregate Depreciation
	A 1/1/2001	$	--	$		23,501.82				258,310.74		$		8,480.00				$		2,106,333.34			$	2,396,625.90
	Charge for the year		--			17,639.74				44,766.43				10,400.00						315,035.62				387,841.79
	Written back		--			--				(2,352.00)				--						(2,421,368.96)				(2,423,720.96)
	At 31/12/2001	$	--	$		41,141.56		$		300,725.17		$		18,880.00				$		--			$	360,746.73
Net book value
	at 31/12/2001	$	523,000.00	$		47,057.00		$		124,959.42		$		33,120.00				$		509,836.74			$	1,237,973.16
	at 31/12/2000	$	523,000.00	$		64,696.74		$		122,444.64		$		33,920.00				$		1,453,666.66			$	2,197,728.04

The title deed of the freehold land owned by the subsidiary in Malaysia is in the name of the vendor as the subsidiary has not

complied with the terms and conditions stipulated by the Foreign Investment Committee in Malaysia.

The motor vehicle at the cost of USD24,460 is registered in the name of a director who holds in trust for the company.

The machineries at cost of US$509,836.74 have not been depreciated as the economic benefits of the machineries were not consumed by the group during the year.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Fixed assets (continued)

The company

		Motor Vehicles		Furniture, fixtures and office equipment		Machinery		Total
At cost
	as at 1/1/2001	$	24,733.36	$	301,154.58	$	3,560,000.00	$	3,885,887.94
	Additions		--		10,061.42		--		10,061.42
	Disposal		--		--		(3,560,000.00)		(3,560,000.00)
	as at 31/12/2001	$	24,733.36	$	311,216.00	$	--	$	335,949.36
Aggregate depreciation
	as at 1/1/2001	$	10,808.62	$	225,703.14	$	2,106,333.34	$	2,342,845.10
	Charge for the year		4,946.67		25,716.42		315,035.62		345,698.71
	Written back		--		--		(2,421,368.96)		(2,421,368.96)
	At 31/12/2001	$	15,755.29	$	251,419.56	$	--	$	267,174.85
Net book value
	at 31/12/2001	$	8,978.07	$	59,796.44	$	--	$	68,774.51
	at 31/12/2000	$	13,924.74	$	75,451.44	$	1,453,666.66	$	1,543,042.84

(3) Interest in an associated company

		31/12/2001		31/12/2000
Unquoted shares, at cost	$	800,160.00	$	800,160.00
Share of post-acquisition reserve		1,807,581.30		765,736.05
	$	2,607,741.30	$	1,565,896.05

Particulars of the associated are as follows : -

Name of company : Impsa (Malaysia) Sdn. Bhd.

Place of incorporation : Malaysia

Indirect percentage of shares holding : 40%

Principal activities : Installation of cranes and undertaking maintenance works

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Intangible assets

- The group and the company		2001		2000
Organization expenses	$	2,707,049.08	$	2,707,049.08
Deduct : Aggregate amortization		2,684,490.80		2,413,785.90
As at 31st December 2001	$	22,558.28	$	293,263.18

1. Interest in subsidiary companies

2. The company

		2001		2000
Unquoted shares - at cost	$	16,175,701.44	$	16,175,700.65
Amount due from a subsidiary company		8,839,266.95		--
Amount due to a subsidiary company		(6,134,823.89)		(8,871,197.90)
	$	18,880,144.50	$	7,304,502.75

Particulars of the subsidiary companies are as follows:

Percentage of Countries of Principal

Names of subsidiaries ordinary shares held incorporation activities

Directly Indirectly

Impsa Port Systems Limited 100% -- Hong Kong Production and marketing

of port machinery

and equipment

Impsa Port Systems Sdn. Bhd. -- 100% Malaysia Production and

marketing of port

machinery and

equipment

e-SeaPorts.com Sdn. Bhd. 100% -- Malaysia Provide total

port information

technology solutions

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Trade debtors

- The group
		2001		2000
Trade debtors and bill receivables	$	17,781,488.10	$	16,129,006.82
Deduct : Provision for doubtful debts		--		292,639.74
	$	17,781,488.10	$	15,836,367.08
- The company
Trade debtors and bills receivables	$	6,818,965.05	$	10,828,729.71

1. Inventories

- The group		2001		2000
Work-in-progress	$	39,895,160.73	$	21,830,924.95
- The company
Work-in-progress	$	22,360,584.00	$	14,184,521.00

1. Share capital

2. The group and the company

		2001		2000
Authorized, issued and fully paid :
125,848,080 shares of US$0.1282 each	$	16,134,369.00	$	16,134,369.00

1. Turnover

Turnover represents the net invoiced value after deducting discounts and returns for the year.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Group profit before taxation

Group profit before taxation is arrived at

after charging

1. Finance Cost

		2001		2000
Interest expenses on bank loans, overdrafts and other borrowings	$	825,967.10		828,241.55
Less : Interest expenses charged to cost of sales		821,916.27		826,498.96
	$	4,050.83	$	1,742.59
		--------------		--------------
Bank charge	$	656,768.43	$	581,136.89
Less: Bank charge charged to cost of sales		645,983.53		564,598.75
	$	10,784.90	$	16,538.14
		--------------		--------------
Hire purchase interest	$	2,194.74	$	1,510.00
		--------------		--------------
	$	17,030.47	$	19,790.73

(b) Other items

		2001		2000
Audit fee	$	44,822.31	$	45,138.47
Depreciation		387,841.79		441,961.13
Directors’ emoluments		--		60,890.00
Exchange loss		--		318,901.71
Rental payments under operating leases		333,833.32		186,114.73
and after crediting :
Bank interest received	$	860,991.74	$	26,890.25
Exchange gain		29,779.57		--
Gain on disposal of fixed assets		1,600.00		18,421.05

(11) Taxation

No provision for Hong Kong profits tax has been provided as there is no assessable profit derived from Hong Kong.

Overseas taxation is calculated at the rate prevailing in the respective jurisdictions.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

(12) Group profit for the year after taxation

The profit of the company for the year dealt with in the consolidated profit and loss account amounted to USD4,120,829.85 (year ended 31/12/2000 – profit USD3,949,537.21).

(13) Lease commitments

At the balance sheet date, the company had the following commitment payable in the following years under non-cancellable operating leases in respect of rented premises : -

		2001		2000
Operating leases which expire
- within one year	$	38,337.65	$	83,722.27
- in the second to fifth year inclusive		--		129,673.08
	$	38,337.65	$	213,395.35

(14) Contingent liabilities

As at the balance sheet date, the company had contingent liabilities in respect of the followings : -

31/12/2001 31/12/2000

Irrevocable letter of credit outstanding USD 32,427,714.08 USD 2,746,677.00

EUR 547,412.99 EUR --

GBP 123,860.85 GBP --

CHF 2,564,020.69 CHF --

Foreign exchange contract EUR -- EUR 1,145,805.00

(15) Ultimate holding company

In the opinion of the directors, the ultimate holding company of the company is Industrias Metalurgicas

Pescarmona S.A.I.C.Y.F., a company incorporated in Argentina.

Impsa Asia Limited

Detailed consolidated profit and loss account

For the year ended 31st December 2001

(For management purposes only)

( Expressed in United States dollars )

				2001		2000
	Sales		$	98,533,801.66	$	67,502,513.76
	Deduct : Cost of sales			91,620,599.80		59,669,095.84
	Gross profit		$	6,913,201.86	$	7,833,417.92
	Add : Bank interest received			860,991.74		26,890.25
	Exchange gain			29,779.57		--
	Sundry income			507,528.49		307,983.22
	Gain on disposal of fixed assets			1,600.00		18,421.05
			$	8,313,101.66	$	8,186,712.44
	Deduct :
	Expenses
	Administrative		$	1,507,911.10	$	2,098,328.70
	Financial			17,030.45		26,788.16
	Marketing			379,740.08		369,339.97
			$	1,904,681.63	$	2,494,456.83	6.83
Net profit for the year			$	6,408,420.03	$	5,692,255.61