IMPSA S.A. — Annual Report 2003

Apr 13, 2004

Impsa Asia Limited

(Incorporated in Hong Kong)

Consolidated Financial Statements

For the year ended 31st December 2003

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 2003.

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 4 and note 3 respectively to the financial statements.

Financial statements

The loss of the group for the year ended 31st December 2003 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 19 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 of the state of affairs of the company and of the group as at 31st December 2003 and of the loss and cash flows of the group for the year then ended and have been properly prepared in accordance with the Companies Ordinance.

Chan & Wat

Certified Public Accountants

Hong Kong

IAL12.03

Impsa Asia Limited

Consolidated balance sheet

As at 31st December 2003

( Expressed in United States dollars )

		Note		2003		2002
Current assets
	Inventories	1i & 5	$	21,087,821.37	$	33,175,903.49
	Trade debtors and bill receivables			12,400,834.76		12,442,181.61
	Other debtors, deposits and prepayment			2,162,543.00		2,187,701.09
	Amount due from a fellow subsidiary			30,137,626.65		31,704,280.11
	Amount due from an associated company			704,192.09		974,732.23
	Cash and bank balances			27,546,831.55		26,753,924.08
Total current assets			$	94,039,849.42	$	107,238,722.61
Non current assets
	Fixed assets	2	$	1,295,554.38	$	919,844.19
	Interest in an associated company	3		581,794.15		952,706.11
	Investment			110.81		25,252.53
	Deferred taxation			35,371.07		--
Total non current assets			$	1,912,830.41	$	1,897,802.83
Total assets			$	95,952,679.83	$	109,136,525.44
Current liabilities
	Trade creditors and bills payable		$	39,635,977.38	$	31,573,037.70
	Other creditors and accruals			5,750,674.41		912,541.00
	Bank loans and overdraft			25,263,989.47		29,550,056.78
	Deferred taxation			--		7,812.11
	Amount due to holding company			2,201,198.09		9,289,470.83
Total current liabilities			$	72,851,839.35	$	71,332,918.42
Shareholders’ equity
	Share capital	6	$	16,134,369.00	$	16,134,369.00
	Exchange equalisation reserve	1h		(4,571,164.02)		(4,641,139.19)
	Profit and loss account			11,534,826.26		26,310,377.21
Total shareholders’ equity			$	23,098,031.24	$	37,803,607.02
Minority interest				2,809.24		--
				23,100,840.48		37,803,607.02
Total liabilities and shareholders’ equity			$	95,952,679.83	$	109,136,525.44

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 2003

( Expressed in United States dollars )

		Note		2003		2002
Current assets
	Inventories	1i & 5	$	20,373,299.33	$	18,971,157.00
	Trade debtors and bills receivables			8,254,235.74		8,069,203.19
	Other debtors, deposits and prepayments			560,859.93		433,059.33
	Amount due from a fellow subsidiary			29,643,760.95		27,384,860.11
	Amount due from an associated company			1,469.55		716,909.55
	Cash at bank			26,031,532.33		25,900,661.55
Total current assets			$	84,865,157.83	$	81,475,850.73
Non current assets
	Fixed assets	2	$	23,382.16	$	41,114.08
	Interests in subsidiary companies	4		(1,102,193.30)		15,397,386.09
	Investment			110.81		25,252.53
Total non current assets			$	(1,078,700.33)	$	15,463,752.70
Total assets			$	83,786,457.50	$	96,939,603.43
Current liabilities
	Trade creditors and bills payable		$	31,463,330.70	$	26,370,311.19
	Other creditors and accruals			349,013.73		86,208.37
	Bank loans and overdraft			16,279,399.07		16,065,576.04
	Amount due to the holding company			6,352,108.08		11,648,066.46
Total current liabilities			$	54,443,851.58	$	54,170,162.06
Shareholders’ equity
	Share capital	6	$	16,134,369.00	$	16,134,369.00
	Profit and loss account			13,208,236.92		26,635,072.37
Total shareholders’ equity			$	29,342,605.92	$	42,769,441.37
Total liabilities and shareholders’ equity			$	83,786,457.50	$	96,939,603.43

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 2003

( Expressed in United States dollars )

	Note		2003		2002
Turnover	7	$	45,027,223.18	$	117,203,489.79
Cost of sales			(59,571,844.63)		(111,845,433.48)
Group gross (loss) / profit		$	(14,544,621.45)	$	5,358,056.31
Other revenue			2,353,769.99		829,470.05
Administrative and marketing expenses			(2,154,583.31)		(2,224,574.45)
Group (loss) / profit from operating activities		$	(14,345,434.77)	$	3,962,951.91
Finance cost	8		(65,167.30)		(55,528.16)
Group operating (loss) / profit		$	(14,410,602.07)	$	3,907,423.75
Share of results of associated company			(370,911.96)		(1,655,035.19)
Group (loss) / profit from ordinary activities
before taxation	8	$	(14,781,514.03)	$	2,252,388.56
Taxation	9		4,588.60		(202,559.00)
Group (loss) /profit from ordinary activities
after taxation	10	$	(14,776,925.43)	$	2,049,829.56
Minority interest			1,374.48		--
Group (loss) / profit attributable to shareholders		$	(14,775,550.95)	$	2,049,829.56
Retained profits brought forward	11	$	26,310.377.21	$	30,939,985.65
Prior year adjustment	11		--		(6,679,438.00)
		$	26,310,377.21	$	24,260,547.65
Retained profits carried forward		$	11,534,826.26	$	26,310,377.21

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

Impsa Asia Limited

Consolidated cash flow statement

For the year ended 31st December 2003

( Expressed in United States dollars )

				2003		2002
Cash flow from operating activities
Cash generated / (used) from operations			$	6,696,945.21	$	(22,546,095.91)
Profits tax paid				(20,392.23)		--
Net cash inflow / (outflow) from operation activities			$	6,676,552.98	$	(22,546,095.91)
Cash flow from investing activities
Interest received			$	259,348.09	$	415,071.99
Proceeds from disposal of fixed assets				55,496.45		37,812.00
Purchase of fixed assets				(533,017.82)		(22,978.56)
Net cash (outflow) / inflow from investing activities			$	(218,173.28)	$	429,905.43
Cash flow from financing activities
Interest paid			$	(1,381,393.90)	$	(1,090,526.91)
Hire purchase interest				(2,194.74)		(2,194.74)
Contribution from minority interest				4,183.72		--
Bank loans				(3,233,996.73)		(5,860,470.94)
Net cash outflow from financing activities			$	(4,613,401.65)	$	(6,953,192.59)
Net increase / (decrease) in cash and cash equivalents			$	1,844,978.05	$	(29,069,383.07)
Cash and cash equivalents at 1st January				25,222,939.18		54,292,322.25
Cash and cash equivalents at 31st December			$	27,067,917.23	$	25,222,939.18
Analysis of the balances of cash and cash equivalents
	Cash and banks		$	27,546,831.55	$	26,753,924.08
	Bank overdraft			(478,914.32)		(1,530,984.90)
			$	27,067,917.23	$	25,222,939.18

Impsa Asia limited

Consolidated cash flow statement (continued)

For the year ended 31st December 2003

( Expressed in United States dollars )

			2003		2002
	Cash flow from operating activities
	(Loss) /profit before taxation	$	(14,410,602.07)	$	3,907,423.75
	Adjustment for :
	Prior year adjustment		--		(6,679,438.00)
	Interest received		(259,348.09)		(415,071.99)
	Interest paid		1,381,393.90		1,090,526.91
	Hire purchase interest		2,194.74		2,194.74
	Exchange equalisation reserve		69,975.17		(33,634.15)
	(Gain) / loss on disposal of fixed assets		(6,374.89)		1,684.83
	Impairment loss on investment		25,141.72		--
	Depreciation		108,186.07		301,610.70
	Amortization on organization expenses		--		22,558.28
	Operating loss before working capital changes	$	(13,089,433.45)	$	(1,802,144.93)
	Change in amount due from fellow subsidiary companies		1,566,653.46		(22,035,622.94)
	Change in amount due from an associated company		270,540.14		(314,463.80)
	Change in inventories		12,088,082.12		6,719,257.24
	Change in trade debtors		41,346.85		5,339,306.49
	Change in sundry debtors, deposits and prepayment		6,955.74		(261,935.98)
	Change in trade creditors and bills payable		8,062,939.68		12,688,906.04
	Change in deposits received, sundry creditors
	and accrued expenses		4,838,133.41		(1,307,471.37)
	Change in amount due to holding company		(7,088,272.74)		(21,571,926.66)
Cash generated / (used) from operations		$	6,696,945.21	$	(22,546,095.91)

Impsa Asia Limited

Consolidated Statement of Changes in Equity

For the year ended 31st December 2003

(Expressed in United States dollars)

		Share Capital		Exchange Equalisation Reserve		Retained Earnings		Total
At 1st January 2002	$	16,134,369.00	$	(4,607,505.04)	$	30,939,985.65	$	42,466,849.61
Net loss for the year		--		--		2,049,829.56		2,049,829.56
Prior year adjustment		--		--		(6,679,438.00)		(6,679,438.00)
Exchange difference		--		(33,634.15)		--		(33,634.15)
At 1st January 2003	$	16,134,369.00	$	(4,641,139.19)	$	26,310,377.21	$	37,803,607.02
Net loss for the year		--		--		(14,775,550.95)		(14,775,550.95)
Exchange difference		--		69,975.17		--		69,975.17
At 31st December 2003	$	16,134,369.00	$	(4,571,164.02)	$	11,534,826.26	$	23,098,031.24

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 2003. All significant intercompany transactions and balances are eliminated on consolidation. The results of subsidiary companies acquired or disposed of during the year are dealt with in the consolidated profit and loss account from the effective dates of acquisition or to the effective dates of disposal respectively.

The gain or loss on the disposal of a subsidiary company represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any unamortized goodwill /negative goodwill or goodwill / negative goodwill taken to reserves which was not previously charged or recognized in the consolidated profit and loss account.

Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiary companies.

(c) Impairment of assets

An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognized for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s value in use or its net selling price.

An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued amount, when the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation / amortisation), had no impairment loss been recognized for the asset in prior years.

A reversal of an impairment loss is credited to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued amount, when the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars)

(1) Significant accounting policies (continued)

(d) 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.

Interest in subsidiary companies are carried at cost less any impairment losses.

(e) 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 interest in associated companies are stated in the consolidated balance sheet at the group’s share of net assets under the equity method of accounting less any impairment losses.

(f) 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%

(g) 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.

Impsa Asia Limited

Notes to financial statements

(Expressed in United States dollars)

(1) Significant accounting policies (continued)

(h) 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.

(i) 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.

(j) Recognition of income

Incomes are recognized on accrual basis.

(k) Deferred taxation

Following the adoption of the HKSSAP 12 which became effective on 1st January 2003, deferred tax assets and liabilities arise from deductible and taxable temporary differences between the carrying amounts of assets and liabilities for financial reporting purpose and the tax bases respectively. Deferred tax assets also arise from unused tax losses and unused tax credits.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized.

Deferred tax is calculation at the tax rates that are expected to apply in the period when the liability is settled or the asset realized. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. The carrying amount of deferred tax is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow

the related tax benefit to be utilized.

Impsa Asia Limited

Notes to financial statements

(Expressed in United States dollars)

(1) Significant accounting policies (continued)

(l) 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. Fixed assets

2. The group

		Freehold Land		Motor vehicles				Furniture, fixtures and office equipment				Leasehold improvement						Machineries			Total
At cost
	at 1/1/2003	$	523,000.00	$	88,198.56		$		442,213.27		$		52,000.00				$		476,024.74			$	1,581,436.57
	Additions		--		50,800.00				228,038.27				--						254,179.55				533,017.82
	Disposal		--		(24,733.36)				(9,897.94)				--						(62,887.20)				(97,518.50)
	at 31/12/2003	$	523,000.00	$	114,265.20		$		660,353.60		$		52,000.00				$		667,317.09			$	2,016,935.89
Aggregate depreciation
	A 1/1/2003	$	--	$	58,781.30		$		345,383.52		$		29,280.00				$		228,147.56			$	661,592.38
	Charge for the year		--		25,249.92				48,164.93				10,400.00						24,371.22				108,186.07
	Written back		--		(23,098.81)				(8,201.97)				--						(17,096.16)				(48,396.94)
	At 31/12/2003	$	--	$	60,932.41		$		385,346.48		$		39,680.00				$		235,422.62			$	721,381.51
Net book value
	at 31/12/2003	$	523,000.00	$	53,332.79		$		275,007.12		$		12,320.00				$		431,894.47			$	1,295,554.38
	at 31/12/2002	$	523,000.00	$	29,417.26		$		96,829.75		$		22,720.00				$		247,877.18			$	919,844.19

The title deed of the freehold land owned by a 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 USD50,800 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

		Motor vehicles		Funriture, Fixtures & office quipment		Machinery		Total
Cost
at 1/1/2003	$	24,733.36	$	311,417.76	$	--	$	336,151.12
Additions		--		7,812.70		62,887.20		70,699.90
Disposal		(24,733.36)		(7,000.00)		(62,887.20)		(94,620.56)
at 31/12/2003	$	--	$	312,230.46	$	--	$	312,230.46
Aggregate depreciation
at 1/1/2003	$	20,701.96	$	274,335.08	$	--	$	295,037.04
Charge for the year		2,396.85		21,513.22		17,096.16		41,006.23
Written back		(23,098.81)		(7,000.00)		(17,096.16)		(47,194.97)
at 31/12/2003	$	--	$	288,848.30	$	--	$	288,848.30
	-------------------		---------------------		---------------------		-------------------
Net book value
at 31/12/2003	$	--	$	23,382.16	$	--	$	23,382.16
at 31/12/2002	$	4,031.40	$	37,082.68	$	--	$	41,114.08

(3) Interest in an associated company

		2003		2002
Unquoted shares, at cost	$	800,160.00	$	800,160.00
Share of post-acquisition reserve		(218,365.85)		152,546.11
	$	581,794.15	$	952,706.11

Particulars of the associated are as follows : -

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

Place of incorporation : Malaysia

Indirect percentage of share-holdings : 40%

Principal activities : Manufacturing and marketing of hydro generation equipments, cranes and heavy duty pressure vessels

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

(4) Interests in subsidiary companies

		2003		2002
- The company
Unquoted shares - at cost	$	16,175,701.44	$	16,175,701.44
Amount due from subsidiary companies		412,033.00		11,908,283.08
Amount due to subsidiary companies		(17,689,927.74)		(12,686,598.43)
	$	(1,102,193.30)	$	15,397,386.09

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 The installation of

cranes; undertaking

related maintenance

and services works and

charging royalties in

consideration of granting

licence for the use

of technology

e-SeaPorts Sdn. Bhd. 100% -- Malaysia The supplies and development

(Formerly know as e-Seaports. of software and hardware

com Sdn. Bhd.) of crane operations,

maintenance and

management systems

IPS Port Systems Ltda. -- 99% Brazil Production and marketing

of port machinery

and equipment

IPS Global Services Sdn. Bhd. -- 100% Malaysia Providing engineering and

technical know-how

consultancy and services

and trade in supplies related

to various industries

Impsa Port Sistems Argentina S.A. -- 54.17% Argentina Mainly services with

port activities

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

(5) Inventories

		2003		2002
- The group
Work-in-progress	$	33,152,182.33	$	39,855,341.49
Deduct : Provision for foreseeable losses		(12,064,360.96)		(6,679,438.00)
	$	21,087,821.37	$	33,175,903.49
- The company
Work-in-progress	$	32,437,660.29	$	18,971,157.00
Deduct : Provision for foreseeable losses		(12,064,360.96)		--
	$	20,373,299.33	$	18,971,157.00

1. Share capital

		2003		2002
- The group and the company
Authorized, issued and fully paid :
125,848,080 shares of US$0.1282 each	$	16,134,369.00	$	16,134,369.00

(7) 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 )

(8) Group (loss) / profit from ordinary activities before taxation

Group (loss) / profit from ordinary activities before taxation is arrived at

after charging the following :

2003 2002

1. Finance Cost

Interest expenses on bank loans, overdrafts and other borrowings	$	1,381,393.90	$	1,090,526.91
Less : Interest expenses charged to cost of sales		1,381,379.16		1,090,362.67
	$	14.74	$	164.24
	-----------------		-----------------
Bank charges	$	453,963.40	$		640,993.45
Less: Bank charges charged to cost of sales		391,005.58			587,824.27
	$	62,957.82	$		53,169.18
	-----------------		----------------
Hire purchase interest	$	2,194.74	$		2,194.74
	-----------------		----------------
	$	65,167.30	$		55,528.16

(b) Other items

Audit fee	$	51,195.74	$	49,441.09
Depreciation		108,186.07		301,610.70
Directors’ emoluments		90,175.26		104,974.74
Exchange loss		3,345.86		2,482.44
Rental payments under operating leases		345,760.04		481,650.48
and after crediting :
Bank interest received	$	259,348.09	$	415,071.99
Gain on disposal of fixed assets		6,374.89		--

(9) 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 rates prevailing in the respective jurisdictions.

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

(10) Group (loss) / profit from ordinary activities after taxation

The loss of the company from ordinary activities for the year dealt with in the consolidated profit and loss account amounted to USD6,747,397.45 (year ended 31/12/2002 – profit USD3,405,510.98).

(11) Retained profits brought forward

		2003		2002
Balance brought forward	$	26,310,377.21	$	30,939,985.65
Prior year adjustment		--		(6,679,438.00)
Amount restated	$	26,310,377.21	$	24,260,547.65

Prior year adjustment represented the provision for foreseeable losses on a long term contract which existed in previous year and had significant effect on the financial statements of prior year.

(12) 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 : -

		2003		2002
Operating leases which expire
- in the second to fifth year inclusive	$	60,000.00	$	115,000.00

1. Contingent liabilities

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

2003 2002

Irrevocable letters of credit outstanding USD 25,902,013.00 USD 27,666,060.35

EUR -- EUR 125,402.10

GBP -- GBP 148,125.00

CHF -- CHF 1,946,720.71

SEK -- SEK 574,200.00

(14) 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 2003

(For management purposes only)

( Expressed in United States dollars )

				2003		2002
	Sales		$	45,027,223.18	$	117,203,489.79
	Deduct : Cost of sales			59,571,844.63		111,845,433.48
	Gross (loss) / profit		$	(14,544,621.45)	$	5,358,056.31
	Add : Bank interest received			259,348.09		415,071.99
	Sundry income			2,088,047.01		414,398.06
	Gain on disposal of fixed assets			6,374.89		--
			$	(12,190,851.46)	$	6,187,526.36
	Deduct :
	Expenses
	Administrative		$	1,941,750.37	$	1,902,719.38
	Financial			65,582.76		57,307.57
	Marketing			212,417.48		320,075.66
			$	2,219,750.61	$	2,280,102.61	6.83
Group operating (loss) / profit for the year			$	(14,410,602.07)	$	3,907,423.75
Share of results of associated company				(370,911.96)		(1,655,035.19)
Group (loss) / profit from ordinary activities before taxation			$	(14,781,514.03)	$	2,252,388.56
Taxation				4,588.60		(202,559.00)
Group (loss) / profit from ordinary activities after taxation			$	(14,776,925.43)	$	2,049,829.56
Minority interest				1,374.48		--
Group (loss) / profit attributable to shareholders			$	(14,775,550.95)	$	2,049,829.56