IMPSA S.A. — Annual Report 2000

May 9, 2002

Impsa Asia Limited

Report of the directors

The directors have pleasure in presenting to shareholders their report together with the audited financial statements of the company for the period ended 30th September 2000.

Principal activities

The company is engaged in the production and marketing of heavy capital goods. 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 loss of the group for the period ended 30th September 2000 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 period.

Fixed assets

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

Directors

The directors who held office during the period were:

Francisco Ruben Valenti

Juan Carlos Fernandez

Luis Emilio Navas (Resigned as director on 5th April 2000)

Cheong Kah Wang (Resigned as alternate director to Francisco Ruben Valenti on 5th April 2000)

Yeung Sum Ming, Lydia (Resigned as alternate director to Luis Emilio Navas and appointed as director on 5th April 2000)

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,

IMPSA ASIA LIMITED

(INCORPORATED IN HONG KONG WITH LIMITED LIABILITY)

REVIEW REPORT TO IMPSA ASIA LIMITED

We have reviewed the accompanying consolidated balance sheet of Impsa Asia Limited at 30th September, 2000, and the related consolidated profit and loss and cash flows for the period then ended. The preparation of the financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these financial statements based on our review.

We conducted our review in accordance with the International Standards on Auditing applicable to review engagements. A review of financial information consists principally of applying review procedures to financial data, and making inquires of persons responsible for financial and accounting matters. It is substantially less in scope than audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements take as a whole. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial statements do not give a true and fair view in accordance with approved Accounting Standards.

Chan & Wat

Certified Public Accountants

Hong Kong,

IMPS900.SAM

Impsa Asia Limited

Consolidated balance sheet

As at 30th September 2000

( Expressed in United States dollars )

		Note		30/9/2000		31/12/1999
Current assets
	Inventories	1h & 7	$	9,211,212.89	$	16,382,081.14
	Trade receivables	6		11,722,829.58		19,517,621.74
	Bills receivable			--		382,429.20
	Other receivables			12,007,657.75		12,084,246.68
	Cash and banks			3,140,217.18		1,360,056.82
Total current assets			$	36,081,917.40	$	49,726,435.58
Non current assets
	Fixed assets	2	$	2,307,430.49	$	2,442,646.93
	Interest in an associated company	3		2,036,481.84		2,802,956.19
	Investment			25,252.53		25,252.53
	Amount due from holding company			3,000,440.64		--
	Intangible assets	4		360,939.43		563,968.09
Total non current assets			$	7,730,544.93	$	5,834,823.74
Total assets			$	43,812,462.93	$	55,561,259.32
Current liabilities
	Accounts payable and bills payable		$	3,649,556.46	$	6,763,478.16
	Other creditors and accruals			98,798.20		97,003.47
	Bank loans and overdraft			12,818,947.37		13,027,707.31
	Deferred taxation			7,812.11		7,812.11
	Amount due to holding company			--		4,935,065.20
Total current liabilities			$	16,575,114.14	$	24,831,066.25
Shareholders’ equity
	Share capital	8	$	16,134,369.00	$	16,134,369.00
	Exchange equalisation reserve	1g		(4,594,550.77)		(4,628,555.17)
	Profit and loss account			15,697,52.96		19,224,379.24
Total shareholders’ equity			$	27,237,348.19	$	30,730,193.07
Total liabilities and shareholders’ equity			$	43,812,462.33	$	55,561,259.32

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 30th September 2000

( Expressed in United States dollars )

		Note		30/9/2000		31/12/1999
Current assets
	Inventories	1h & 7	$	3,374,65.00	$	3,066,026.36
	Trade receivables	6		6,911,639.05		12,344,834.00
	Bills receivable			--		382,429.20
	Other receivables			5,790,594.59		5,675,004.99
	Cash and banks			34,508.50		413,207.94
Total current assets			$	16,426,392.14	$	21,881,502.49
Non current assets
	Interest in a subsidiary company	5	$	20,229,904.14	$	16,563,722.70
	Amount due form holding company			3,411,863.27		946,175.18
	Investment			25,252.53		25,252.53
	Fixed assets	2		1,628,136.43		1,898,787.22
	Intangible assets	4		360,939.43		563,968.09
Total non current assets			$	25,656,95.46	$	19,997,905.72
Total assets			$	42,082,487.60	$	41,879,408.21
Current liabilities
	Accounts payable and bills payable		$	799,566.72	$	1,402,121.74
	Other creditors and accruals			5,602.41		68,203.52
	Bank loans and overdraft			7,240,000.00		9,115,519.62
Total current liabilities			$	8,097,169.13	$	10,585,844.88
Shareholders’ equity
	Share capital	8	$	16,134,369.00	$	16,134,369.00
	Profit and loss account			17,850,949.47		15,159,194.33
Total shareholders’ equity			$	33,985,318.47	$	31,293,563.33
Total liabilities and shareholders’ equity			$	42,082,487.60	$	41,879,408.21

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 period from 1st January 2000 to 30th September 2000

( Expressed in United States dollars )

			1/1/2000		1/1/1999
			to		to
	Note		30/9/2000		31/12/1999
Turnover	9	$	29,419,073.66	$	36,888,577.07
Cost of sales			(30,603,203.80)		(32,556,220.84)
Group gross (loss) / profit		$	(1,184,130.14)	$	4,332,356.23
Other revenue			295,619.36		85,628.18
Administrative and marketing expenses			(1,853,959.22)		(2,421,461.26)
Group (loss) / profit from operating activities		$	(2,742,470.00)	$	1,996,523.15
Finance cost	10		(17,904.93)		(238,368.61)
Group (loss) / profit before taxation	11	$	(2,760,374.93)	$	1,758,154.54
Share of results of associated companies			(76,474.35)		1,566,824.13
Group (loss) / profit before taxation		$	(3,526,849.28)	$	3,324,978.67
Taxation	12		--		--
Group (loss) / profit after taxation	13	$	(3,526,849.28)	$	3,324,978.67
Accumulated profits brought forward			19,224,379.24		15,899,400.57
Accumulated profits carried forward		$	15,697,529.96	$	19,224,379.24

No separate statement of recognised gains and losses has been prepared as the net loss for the period 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 period ended 30th September 2000

( Expressed in United States dollars )

				1/1/2000		1/1/1999
				to		to
				30/9/2000		31/12/1999
Net cash inflow from operating activities			$	2,725,562.82	$	1,041,579.93
Returns on investments and servicing of finance
	Bank interest received		$	18,629.91	$	29,068.31
	Bank interest paid			(598,762.18)		(236,507.54)
Net cash outflow from returns on investments and
	servicing of finance		$	(580,132.27)	$	(207,439.23)
Taxation
	Tax paid		$	--	$	(212,696.78)
Investing activities
	Payments to acquire fixed assets		$	(156,510.25)	$	(78,613.95)
Net cash outflow from investing activities			$	(156,510.25)	$	(78,613.95)
Net cash inflow before financing			$	1,988,920.30	$	542,829.97
Financing
	Bank loans		$	109,280.16	$	(1,371,960.04)
			$	109,280.16	$	(1,371,960.04)
Increase / (decrease) in cash and cash equivalents			$	2,098,200.46	$	829,130.07)
Cash and cash equivalents at 1st January 2000				1,042,016.72		1,871,146.79
Cash and cash equivalents at 30th September 2000			$	3,140,217.18		1,042,016.72
Analysis of the balance of cash and cash equivalents
	Cash and banks			3,140,217.18	$	1,360,056.82
	Bank overdraft			--		(318,040.10)
			$	3,140,217.18	$	1,042,016.72

Impsa Asia limited

Consolidated cash flow statement (continued)

For the period ended 30th September 2000

( Expressed in United States dollars )

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

				1/1/2000		1/1/1999
				to		to
				30/9/2000		31/12/1999
	(Loss) / profit before taxation		$	(2,760,374.93)	$	1,758,154.54
	Exchange equalisation reserve			34,004.40		(10,334.94)
	Bank interest received			(18,629.91)		(29,068.31)
	Bank interest paid			598,762.18		236,507.54
	Depreciation on fixed assets			291,726.69		469,233.29
	Amortization on organization expenses			203,028.66		270,704.88
	Decrease in inventories			7,170,868.25		2,181,311.25
	Decrease / (increase) in trade receivables			7,794,792.16		(1,566,506.58)
	Decrease in bills receivable			382,429.20		1,040,930.80
	Decrease / (increase) in other receivables			76,588.93		(523,029.71)
	Decrease in accounts payables and bills payable			(3,113,921.70)		(1,159,457.65)
	Increase / (decrease) in other creditors and accruals			1,794.73		(262,425.85)
	Decrease in amount due to holding company			(7,935,505.84)		(1,364,439.33)
Net cash inflow from operating activities			$	2,725,562.82	$	1,041,579.93

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 group 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 period ended 30th September 2000.

(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

Machinery 10%

Furniture, fixtures and office equipment 20%

Motor vehicles 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 period 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)

(l) 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 receivables.

1. Fixed assets

The group

		Freehold land		Motor vehicles		Furniture, fixtures and office equipment		Machinery		Total
At cost
	at 1/1/2000	$	523,000.00	$	107,429.45	$	660,740.87	$	3,560,000.00	$	4,851,170.32
	Additions		--		63,465.35		93,044.90		--		156,51025
	Disposal		--		(43,236.10)		--		--		(43,236.10)
	at 30/9/2000	$	523,000.00	$	127,658.70	$	753,785.77	$	3,560,000.00	$	4,964,444.47
Aggregate depreciation
	at 1/1/2000	$	--	$	86,808.57	$	571,381.48	$	1,750,333.34	$	2,408,523.39
	Charge for the period		--		5,460.01		19,266.68		267,000.00		291,726.69
	Written back		--		(43,236.10)		--		--		(43,236.10)
	at 30/9/2000	$	--	$	49,032.48	$	590,648.16	$	2,017,333.34	$	2,657,013.98
Net book value
	at 30/9/2000	$	523,000.00	$	78,626.22	$	163,137.61	$	1,542,666.66	$	2,307,430.49
	at 31/12/1999	$	523,000.00	$	20,620.88	$	89,359.39	$	1,809,666.66	$	2,442,646.93

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.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Fixed assets (continued)

The company

		Furniture, fixtures and office equipment		Machinery		Motor vehicles		Total
At cost
	at 1/1/2000	$	268,950.68	$	3,560,000.00	$	39,733.36	$	3,868,684.04
	Additions		21,075.56		--		--		21,075.56
	at 30/9/2000	$	290,026.24	$	3,560,000.00	$	39,733.36	$	3,889,759.60
Aggregate depreciation
	at 1/1/2000	$	200,451.00	$	1,750,333.34	$	19,112.48	$	1,969,896.82
	Charge for the period		19,266.69		267,000.00		5,460.00		291,726.69
	at 30/9/2000	$	219,717.69	$	2,017,333.34	$	24,572.48	$	2,261,623.51
Net book value
	at 30/9/2000	$	70,308.55	$	1,542,666.66	$	15,16088	$	1,628,136.09
	at 31/12/1999	$	68,499.68	$	1,809,666.66	$	20,620.88	$	1,898,787.22

(3) Interest in an associated company

		30/9/2000		31/12/1999
Unquoted shares, at cost	$	800,160.00	$	800,160.00
Share of post-acquisition reserve		1,236,321.84		2,002,796.19
	$	2,036,481.84	$	2,802,956.19

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		30/9/2000		31/12/1999
Organization expenses	$	2,707,049.08	$	2,707,049.08
Deduct : Aggregate amortization		2,346,109.65		2,143,080.99
As at 30th September 2000	$	360,939.43	$	563,968.09

1. Interest in a subsidiary company

The company

		30/9/2000		31/12/1999
Unquoted shares - at cost	$	16,174,418.60	$	16,174,418.60
Amount due from a subsidiary company		4,055,485.54		389,304.10
	$	20,229,904.14	$	16,563,722.70

Particulars of the subsidiary company are as follows:

Direct percentage Country of Principal

Name of subsidiary of shares holding incorporation activities

Impsa Port Systems Sdn. Bhd.

(Formerly known as Production and

Impsa Asia Sdn. Bhd.) 100% Malaysia marketing of capital goods

1. Trade receivables

The group
		30/9/2000		31/12/1999
Trade receivables	$	12,015,469.32	$	19,810,261.48
Deduct : Provision for doubtful debts		292,639.74		292,639.74
	$	11,722,829.58	$	19,517,621.74
The company
		30/9/2000		31/12/1999
Trade receivables	$	6,911,639.05	$	12,344,834.00

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Inventories

The group		30/9/2000		31/12/1999
Work-in-progress	$	9,211,212.89	$	16,382,081.14
The company
Work-in-progress	$	3,374,650.00	$	3,066,026.36

1. Share capital

The group and the company

		30/9/2000		31/12/1999
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 period.

1. Finance Cost

		30/9/2000		31/12/1999
Interest expenses on bank loans, overdrafts and other borrowings	$	598,762.18	$	236,507.54
Less : Interest expenses charged to cost of sales		597,070.32		--
	$	1,691.86	$	236,507.54
		--------------		--------------
Bank charges	$	506,475.59	$	914.51
Less: Bank charges charged to cost of sales		491,223.84		--
	$	15,251.75	$	914.51
		--------------		--------------
Hire purchase interest	$	961.32	$	946.56
	$	17,904.93	$	238,368.61

1. Group (loss) / profit for the period before taxation

Group (loss) / profit before taxation is arrived at after charging		1/1/2000 to 30/9/2000		1/1/1999 to 31/12/1999
Audit fee	$	20,715.26	$	42,771.52
Bank interest		598,762.18		236,507.54
Depreciation		291,726.69		469,233.29
Directors’ emoluments		42,856.32		34,728.42
Exchange loss		4,440.13		14,457.18
Rental payments under operating leases		216,639.75		285,639.75
and after crediting :
Bank interest received	$	18,629.91	$	29,068.31

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

(12) 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.

(13) Group loss for the period after taxation

The loss for the period of the company dealt with in the consolidated profit and loss account amounted to USD2,691,755.14 (year ended 31/12/1999 – profit USD1,398,714.58).

(14) Lease commitments

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

		30/9/2000		31/12/1999
Operating leases which expire
- within one year	$	29,263.89	$	17,784.00
- in the second to fifth year inclusive		102,597.00		61,875.00
	$	131,860.89	$	79,659.00

(15) Commitments

As at the balance sheet date, the company had the following irrevocable letters of credit outstanding :

30/9/2000 31/12/1999

USD 2,746,677.00 USD 2,521,677.00

(16) 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 period from 1st January 2000

to 30th September 2000

(For management purposes only)

( Expressed in United States dollars )

				1/1/2000		1/1/1999
				to		to
				30/9/2000		31/12/1999
	Sales		$	29,419,073.66	$	36,888,577.07
	Deduct : Cost of sales			30,603,203.80		32,556,220.84
	Gross (loss) / profit		$	(1,184,130.14)	$	4,332,356.23
	Add : Bank interest received			18,629.91		29,068.31
	Sundry income			276,989.45		56,559.87
			$	(888,510.78)	$	4,417,984.41
	Deduct :
	Expenses
	Marketing		$	286,377.61	$	236,966.23
	Administrative			1,567,581.61		2,184,495.03
	Financial			17,904.93		238,368.61
				1,871,864.15		2,659,829.87
Net (loss) / profit for the period			$	(2,760,374.93)	$	1,758,154.54