IMPSA S.A. — Interim / Quarterly Report 2001

Aug 3, 2001

Impsa Asia Limited

(Incorporated in Hong Kong)

Consolidated Financial Statements

For the period ended 31st March 2001

Chan & Wat

Certified Public Accountants

Hong Kong

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 31st March 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 period ended 31st March 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 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

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,

IMPSA ASIA LIMITED

(INCORPORATED IN HONG KONG WITH LIMITED LIABILITY)

REVIEW REPORT TO SHAREHOLDERS OF IMPSA ASIA LIMITED

We have reviewed the accompanying consolidated balance sheet of Impsa Asia Limited at 31st March 2001, and the related consolidated profit ad loss account 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 inquiries 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,

IMPS1200.SAM

Impsa Asia Limited

Consolidated balance sheet

As at 31st March 2001

( Expressed in United States dollars )

		Note		31/3/2001		31/12/2000
Current assets
	Inventories	1h & 7	$	20,800,119.32	$	21,830,924.95
	Trade debtors and bill receivables	6		23,422,431.88		15,836,367.08
	Other debtors, deposits and prepayment			2,407,187.00		2,547,947.00
	Amount due from a fellow subsidiary			610,801.11		31,558,724.00
	Amount due from an associated company			461,374.02		697,224.81
	Cash and bank balances			28,560,985.26		2,909,586.81
Total current assets			$	76,262,898.59	$	75,380,774.65
Non current assets
	Fixed assets	2	$	2,251,093.85	$	2,197,728.04
	Interest in an associated company	3		2,666,922.11		1,565,896.05
	Investment			25,252.53		25,252.53
	Intangible assets	4		225,586.96		293,263.18
Total non current assets			$	5,168,855.45	$	4,082,139.80
Total assets			$	81,431,754.04	$	79,462,914.45
Current liabilities
	Trade creditors and bills payable		$	7,161,739.62	$	7,767,946.00
	Other creditors and accruals			171,060.03		392,643.03
	Bank loans and overdraft			16,271,578.95		16,863,684.21
	Deferred taxation			7,812.11		7,812.11
	Amount due to holding company			19,997,449.71		19,297,118.78
Total current liabilities			$	43,609,640.42	$	44,329,204.13
Shareholders’ equity
	Share capital	8	$	16,134,369.00	$	16,134,369.00
	Exchange equalisation reserve	1g		(4,585,171.69)		(4,588,668.53)
	Profit and loss account			26,272,916.31		23,588,009.85
Total shareholders’ equity			$	37,822,113.62	$	35,133,710.32
Total liabilities and shareholders’ equity			$	81,431,754.04	$	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 March 2001

( Expressed in United States dollars )

		Note		31/3/2001		31/12/2000
Current assets
	Inventories	1h & 7	$	11,663,827.00	$	14,184,521.00
	Trade debtors and bills receivables	6		7,409,602.14		10,828,729.71
	Other debtors, deposits and prepayments			372,694.79		1,186,772.26
	Amount due from a fellow subsidiary			610,801.11		30,323,164.00
	Amount due from an associated company			235,469.55		506,909.55
	Cash at bank			26,965,846.41		436,016.47
Total current assets			$	47,258,241.00	$	57,466,112.99
Non current assets
	Fixed assets	2	$	1,544,982.35	$	1,543,042.84
	Interest in a subsidiary company	5		19,843,368.65		7,304,502.75
	Investment			25,252.53		25,252.53
	Intangible assets	4		225,586.96		293,263.18
Total non current assets			$	21,639,190.49	$	9,166,061.30
Total assets			$	68,897,431.49	$	66,632,174.29
Current liabilities
	Trade creditors and bills payable		$	1,448,323.07	$	1,477,968.11
	Other creditors and accruals			77,824.58		345,718.18
	Bank loans and overdraft			7,240,000.00		7,240,000.00
	Amount due to a holding company			24,035,151.29		22,325,387.46
Total current liabilities			$	32,801,298.94	$	31,389,073.75
Shareholders’ equity
	Share capital	8	$	16,134,369.00	$	16,134,369.00
	Profit and loss account			19,961,763.55		19,108,731.54
Total shareholders’ equity			$	36,096,132.55	$	35,243,100.54
Total liabilities and shareholders’ equity			$	68,897,431.49	$	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 period from 1st January 2001 to 31st March 2001

( Expressed in United States dollars )

	Note		1/1/2001 to 31/3/2001		1/1/2000 to 31/12/2000
Turnover	9	$	15,157,703.92	$	67,502,513.76
Cost of sales			(13,820,888.25)		(59,669,095.84)
Group gross profit		$	1,336,815.67	$	7,833,417.92
Other revenue			544,977.92		353,294.52
Administrative and marketing expenses			(293,796.11)		(2,474,666.10)
Group profit from operating activities		$	1,587,997.48	$	5,712,046.34
Finance cost	10		(4,117.08)		(19,790.73)
Group profit before taxation	10	$	1,583,880.40	$	5,692,255.61
Share of results of associated companies			1,101,026.06		(1,237,060.26)
Group profit before taxation		$	2,684,906.46	$	4,455,195.35
Taxation	11		--		(91,564.74)
Group profit after taxation	12	$	2,684,906.46	$	4,363,630.61
Retained profits brought forward			23,588,009.85		19,224,379.24
Retained profits carried forward		$	26,272,916.31	$	23,588,009.85

No separate statement of recognised gains and losses has been prepared as the net profit 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 from 1st January 2001 to 31st March 2001

( Expressed in United States dollars )

				1/1/2001 to 31/3/2001		1/1/2000 to 31/12/2000
Net cash inflow / (outflow) from operating activities			$	26,279,931.25	$	(770,120.56)
Returns on investments and servicing of finance
	Bank interest received		$	213,249.53	$	26,890.25
	Bank interest paid			(196,311.26)		(828,241.55)
Net cash inflow / (outflow) from returns on investments and
	servicing of finance		$	16,938.27	$	(801,351.30)
Taxation
	Tax paid		$	--	$	(91,564.74)
Investing activities
	Payments to acquire fixed assets		$	(53,365.81)	$	(743,919.82)
	Receipts from disposal of fixed assets			--		20,509.51
Net cash outflow from investing activities			$	(53,365.81)	$	(723,410.31)
Net cash inflow / (outflow) before financing			$	26,243,503.71	$	(2,386,446.91)
Financing
	Bank loans		$	(592,105.26)	$	4,254,017.00
			$	(592,105.26)	$	4,254,017.00
Increase in cash and cash equivalents			$	25,651,398.45	$	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 March 2001			$	28,560,985.26		2,909,586.81
Analysis of the balances of cash and cash equivalents
	Cash and banks		$	28,560,985.26	$	2,909,586.81

Impsa Asia limited

Consolidated cash flow statement (continued)

For the period from 1st January 2001 to 31st March 2001

( Expressed in United States dollars )

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

			1/1/2001 to 31/3/2001		1/1/2000 to 31/12/2000
	Profit before taxation	$	1,583,880.40	$	5,692,255.61
	Exchange equalisation reserve		3,496.84		39,886.64
	Loss on disposal of fixed assets		--		526,368.07
	Bank interest received		(213,249.53)		(26,890.25)
	Bank interest paid		196,311.26		828,241.55
	Exchange gain		--		(0.12)
	Depreciation on fixed assets		--		441,961.13
	Amortization on organization expenses		67,676.22		270,704.91
	Decrease) / (increase) in inventories		1,030,805.63		(5,448,843.81)
	(Increase) / decrease in trade debtors and bills receivables		(7,586,064.80)		3,556,774.31
	Decrease / (increase) in amount due from fellow
	subsidiary		30,947,922.89		(31,558,724.00)
	Decrease in amount due from an associated company		235,850.79		4,963,314.48
	Decrease in other debtors, deposits and prepayment		140,760.00		4,382,669.94
	Increase in accounts payables and bills payable		(606,206.38)		904,467.84
	Increase / (decrease) in other creditors and accruals		(221,583.00)		295,639.56
	Increase in amount due to holding company		700,330.93		14,362,053.58
Net cash inflow / (outflow) from operating activities		$	26,279,931.25	$	(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 period ended 31st March 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

Machinery 10%

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				Machinery						Leasehold improvement				Total
At cost
	at 1/1/2001	$	523,000.00	$		88,198.56		$		380,755.38		$		3,560,000.00				$		42,400.00		$		4,594,353.94
	Additions		--			--				5,315.11				38,450.70						9,600.00				53,365.81
	at 31/3/2001	$	523,000.00	$		88,198.56		$		386,070.49		$		3,598,450.70				$		52,000.00		$		4,647,719.75
Aggregate depreciation
	at 1/1/2001 and
	at 31/3/2001	$	--	$		23,501.82		$		258,310.74		$		2,106,333.34				$		8,480.00		$		2,396,625.90
Net book value
	at 31/3/2001	$	523,000.00	$		64,696.74		$		127,759.75		$		1,492,117.36				$		43,520.00		$		2,251,093.85
	at 31/12/2000	$	523,000.00	$		64,696.74		$		122,444.64		$		1,453,666.66				$		33,920.00		$		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.

In accordance with the group accounting policies, no depreciation has been provided for the period under review.

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		--		1,939.51		--		1,939.51
	as at 31/3/2001	$	24,733.36	$	303,094.09	$	3,560,000.00	$	3,887,827.45
Aggregate depreciation
	as at 1/1/2001 and
	at 31/3/2001	$	10,808.62	$	225,703.14	$	2,106,333.34	$	2,342,845.10
Net book value
	at 31/3/2001	$	13,924.74	$	77,390.95	$	1,453,666.66	$	1,544,982.35
	at 31/12/2000	$	13,924.74	$	75,451.44	$	1,453,666.66	$	1,543,042.84

(3) Interest in an associated company

		31/3/2001		31/12/2000
Unquoted shares, at cost	$	800,160.00	$	800,160.00
Share of post-acquisition reserve		1,866,762.11		765,736.05
	$	2,666,922.11	$	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		31/3/2001		31/12/2000
Organization expenses	$	2,707,049.08	$	2,707,049.08
Deduct : Aggregate amortization		2,481,462.12		2,413,785.90
As at 31st March 2001	$	225,586.96	$	293,263.18

1. Interest in a subsidiary company

2. The company

		31/3/2001		31/12/2000
Unquoted shares - at cost	$	16,175,700.65	$	16,175,700.65
Amount due from a subsidiary company		5,051,317.07		--
Amount due to subsidiary companies		(1,383,649.07)		(8,871,197.90)
	$	19,843,368.65	$	7,304,502.75

Particulars of the subsidiary company are as follows:

Percentage of Countries of Principal

Name 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

Impsa Asia Limited

Notes to financial statements

( Expressed in United States dollars )

1. Trade debtors

- The group
		31/3/2001		31/12/2000
Trade debtors and bill receivables	$	23,715,071.62	$	16,129,006.82
Deduct : Provision for doubtful debts		292,639.74		292,639.74
	$	23,422,431.88	$	15,836,367.08
- The company
		31/3/2001		31/12/2000
Trade debtors and bills receivables	$	7,409,602.14	$	10,828,729.71

1. Inventories

- The group		31/3/2001		31/12/2000
Work-in-progress	$	20,800,119.32	$	21,830,924.95
- The company
Work-in-progress	$	11,663,827.00	$	14,184,521.00

1. Share capital

2. The group and the company

		31/3/2001		31/12/2000
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 period.

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

		1/1/2001 to 31/3/2001		1/1/2000 to 31/12/2000
Interest expenses on bank loans, overdrafts an other borrowings	$	196,311.26		828,241.55
Less : Interest expenses charges to cost of sales		195,762.35		826,498.96
	$	548.91	$	1,742.59
		--------------		--------------
Bank charges	$	152,819.20	$	581,136.89
Less: Bank charges charged to cost of sales		149,799.71		564,598.75
	$	3,019.49	$	16,538.14
		--------------		--------------
Hire purchase interest	$	548.68	$	1,510.00
		--------------		--------------
	$	4,117.08	$	19,790.73

(b) Other items

		1/1/2001 to 31/3/2001		1/1/2000 to 31/12/2000
Audit fee	$	5,901.48	$	45,138.47
Depreciation		--		441,961.13
Directors’ emoluments		15,734.21		60,890.00
Exchange loss		--		318,901.71
Rental payments under operating leases		69,375.00		186,114.73
and after crediting :
Bank interest received	$	213,249.53	$	26,890.25
Exchange gain		30,711.15		--

(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 period after taxation

The profit for the period of the company dealt with in the consolidated profit and loss account amounted to USD853,032.01 (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 within one year under non-cancellable operating leases in respect of rented premises : -

		31/3/2001		31/12/2000
Operating leases which expire
- within one year	$	53,698.11	$	83,722.27
- in the second to fifth year inclusive		116,328.05		102,490.38
	$	170,026.16	$	186,212.65

(14) Contingent liabilities

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

31/3/2001 31/12/2000

Irrevocable letter of credit USD 246,213.18 USD 2,746,677.00

SEK 1,565,000.00 SEK --

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 period from 1st January 2001 to 31st March 2001

(For management purposes only)

( Expressed in United States dollars )

				1/1/2001 to 31/3/2001		1/1/2000 to 31/12/2000
	Sales		$	15,157,703.92	$	67,502,513.76
	Deduct : Cost of sales			13,820,888.25		59,669,095.84
	Gross profit		$	1,336,815.67	$	7,833,417.92
	Add : Bank interest received			213,249.53		26,890.25
	Exchange gain			30,711.15		--
	Sundry income			301,017.24		326,404.27
			$	1,881,793.59	$	8,186,712.44
	Deduct :
	Expenses
	Administrative		$	263,160.56	$	2,098,328.70
	Financial			3,568.67		26,788.16
	Marketing			31,183.96		369,339.97
				297,913.19		2,494,456.83	6.83
Net profit for the period			$	1,583,880.40	$	5,692,255.61