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Board of Directors’ Report

Board of Directors’ Reportand Consolidated Financial Statements

Annual Report

TECHINT E&C S.A.

Annual Report

For the year ended December 31, 2017 and December 31, 2016

2 TECHINT E&C S.A. Annual Report 2017

Contents

09

21

34

40

55

63

Overview of the year

TECHINT E&C subsidiaries’ activities for the fiscal year ended December 31, 2017

Ecuador

Engineering

Legal Information

Consolidated Statement of Comprehensive Income

46Social responsibility


Consolidated Financial Statements

3

TECHINT E&C Equipment Division

12

21

36

43

56

64

Prospect for the Fiscal Year 2018

Africa

Europe and Commonwealth of Independent States (CIS)

Procurement

Independent Auditor’s Report

Consolidated Statement of Changes in Equity

47

15

22

37

44

60

68

Technology and IT Systems

Economic and Financial Information

Argentina

Mexico and North America

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

48 49

20

33

38

46

Board of Directors’ Proposal

Board of Directors

TECHINT E&C in the world

Chile

Uruguay

Compliance and Internal Control

47

18

32

38

45

62

71

Human Resources

Major Works per Country

Brazil

Peru

Quality, Health, Safety and Environment (QHSE)

Consolidated Income Statement

Index to the Notes to the Consolidated Financial Statements


The Company values internal and external transparency,

and considers its top management responsible

for fostering an environment of honesty and integrity,

with absolute fulfillment of the corresponding legal and

regulative requirements.

TECHINT E&C has gained strength from the synergies

resulting from the integration with the subsidiaries in America

and Europe, and it offers customized services in different

industrial sectors (such as oil & gas, energy, industrial plants,

mining and infrastructure) ensuring quality, reliability and

expertise to our customers in diversified markets.

For the purpose of providing its customers with

comprehensive solutions with a high added value, the

Company counts on highly qualified human resources,

various skills in engineering and construction, and the

know-how to efficiently manage the projects it develops.

Techint E&C S.A. (TECHINT E&C), is a holding company

of a group of subsidiaries which provide engineering,

procurement, construction, operation and management

services for large and challenging projects globally in the

segments of oil & gas, energy, industrial plants, oil refineries

and petrochemical plants, mining and infrastructure

and architecture civil works. TECHINT E&C, through its

subsidiaries, conducts activities mainly in the markets

of America, Europe, Africa and the Middle East. Any

references in this Report to “TECHINT E&C” or “the

Entity” or “the Company”, refer to Techint E&C S.A. and

its consolidated subsidiaries.

The Company develops highly complex ventures, from

design to commissioning and start-up, taking care

of the environment and the welfare of the communities

at the locations where it operates.

TECHINT E&C develops the projects, taking into account

the requirements of ISO 9001, ISO 14001 and OHSAS 18001,

and using methods that ensure the achievement of

the highest standards relating to quality, safety and health,

as well as environmental protection.

The Company

5Board of Directors’ Report

Dec 31, 2017

13,740 Dec 31, 2016

18,671

KEy FIguRES REvENuE By CouNTRy

PERSoNNEl

USD millionS

Revenue

EBITDA

EBITDA %

Profit

Profit / Revenue

Total equity

ROE

Dec 31, 2017

1,427.1

62.1

4%

16.6

1%

673.6

2.5%

1,283.8

104.3

8%

42.4

3%

645.2

6.7%

Dec 31, 2016

40% Argentina

1% Others

2% Uruguay

3%Peru

10%Ecuador

8% Europe, Middle East and Africa

26%Mexico

10%Brazil



TECHINT E&C S.A.

For the year ended December 31, 2017 and December 31, 2016




Ferro Carajás S11D Project, Brazil


TECHINT E&C recorded consolidated revenues for USD

1,427.1 million.

TECHINT E&C is currently developing activities, always in

accordance with the Company’s most outstanding values:

sustainability and safety, commitment to skills development,

transparency and passion for quality. TECHINT E&C´s focus

on the execution of businesses is consistent with the

Company’s mission: creating value for clients by means of

the ongoing search of project management streamlining,

assuring both quality and respect for scheduled terms, and

constantly paying special attention to workers’ safety.

In Argentina, through the subsidiary Techint Compañía

Técnica Internacional S.A.C.I. (TEARG), the activities were

developed under several types of contracts: engineering,

procurement and construction (EPC) and construction

management (EPCM), subject to several contract modalities

such as lump sum, unit prices, cost plus, etc.

In the energy sector, a contract was entered into with Pampa

Energía S.A. seeking to expand the installed capacity in the

Genelba Plus combined cycle of the Thermal Power Plant

located in Marcos Paz, Province of Buenos Aires. With respect

to works executed during the fiscal year for Empresa Provincial

Sociedad del Estado (EPSE) at the hydroelectric station El

Tambolar, the works for drilling and concrete lining of the river

sidetracking tunnel were completed, and excavation works

were started for the tunnel mouth. In addition, for the Client

General Electric International Inc. Sucursal Argentina (GE),

the YGEN II project was developed in El Bracho, Province of

Tucumán, for the assembly of an additional turbo generator that

will allow the delivery of additional 260 Mw to the Argentine

Interconnection System (SADI). Also, works were commenced

in Lima, Province of Buenos Aires, for completion of civil works

required for the assembly of the prototype reactor CAREM 25,

a project awarded to the Company by the Argentine Atomic

Energy Commission (Comisión Nacional de Energía Atómica).

For Central Costanera S.A., TEARG replaced two rotation filters

located at the cooling water intake of combined cycle II of the

plant located at Costanera Sur in the City of Buenos Aires.

In the iron & steel segment, the works were continued at

the plants of Siderca S.A.I.C. (Campana, Province of Buenos

Aires) and of Ternium Argentina S.A. (San Nicolás, Province

of Buenos Aires). The latter client also awarded to TEARG the

works for the assembly of the shed and electromechanical

works at the new Acid Regeneration Unit to be installed at its

plant located in Ensenada, Province of Buenos Aires.

In the infrastructure works segment, under the project for

Subway Line H Expansion, for the client Subterráneos de

Buenos Aires Sociedad del Estado (SBASE), during this fiscal

year TEARG obtained the Provisional Acknowledgements

of Receipt for the Córdoba, Santa Fe and Las Heras stations

(with the related tunnel), the Cordoba rectification sub-station

(“SER”), tunnel of C2 tranche up to post-Las Heras, Workshop

I and the parking space in a cave under Parque Patricios.

TEARG also obtained the Final Acknowledgement of Receipt

for Parque Patricios Workshop I and the Honda Building.

Works were continued in the execution of Facultad de Derecho

station and the respective tunnels.

In the mining area, the company Minera Argentina Gold S.A.

required engineering works within the maintenance plan of

the Veladero Mine facilities.

In the oil & gas segment, the contract executed with Tecpetrol

S.A. stands out, for the rendering of engineering, construction

and procurement services, among others, in the Fortín de Piedra

area, located in the Province of Neuquén, a project that is part of

the unconventional gas development in the zone of Vaca Muerta.

Overview of the year


Also within the context of this development, TEARG entered

into a contract with YPF S.A. for construction of a 16" and

33.3 km gas pipeline, including the respective surface facilities

in the surroundings of Añelo, Province of Neuquén.

Besides, in the gas fields in the Magallanes area, TEARG

continued rendering services of detail engineering, procurement

management, construction, commissioning and start-up of

onshore works and the management of offshore works required

by Enap Sipetrol Argentina S.A. – YPF S.A. UTE (JV).

In Chile, during 2017 Techint Chile S.A. (TECHI) has obtained

great achievements with respect to the projects that were

executed. Firstly, the Mechanical Completion certificate was

received from the project of Escondida Water Supply (EWS),

executed in a consortium with Bechtel Chile Ltda., obtaining

the recognition of the BHP Client for the management of TECHI

both in terms of the quality of the works as to results in security.

On the other hand, the works executed for the client Anglo

American Sur S.A. in the Los Bronces mine were successfully

concluded, and thanks to the relationship and trust built as a

result of the execution of previous projects, in October this client

awarded a new contract in favor of the Company. This project

comprises the continuation of works for replacement of pipes,

now at the medium zone, for the mining tailings transportation

system, from the Ortiga Tunnel Portal to the Barros Negro

mountain area, and the contract amount is USD 28 million.

In Peru, during this fiscal year, Techint S.A.C. (TESAC)

continued working on the Camisea Pipeline Maintenance

Project for Compañía Operadora de Gas del Amazonas S.A.

through a joint venture with GyM S.A., and completed a

project as budgeted on the Norperuano Oil Pipeline for the

client Petroperu S.A., also under a joint venture with GyM S.A.

Besides, TESAC also worked on the Sagari Project, that

is a FEED contract for the client Repsol, and it provided

some engineering services for the clients Pluspetrol Peru

Corporation S.A. and CNPC Peru SAC.

In uruguay, Techint Compañía Técnica Internacional S.A.C.I.

(TEURU), TEI&C’s subsidiary, continued working on:

Maldonado Sewage System for Obras Sanitarias del Estado

(OSE) and Route 9 for Corporación Vial del Uruguay S.A.

During this fiscal year, the contract with Environmental Works

in Maldonado and Punta del Este for OSE was finished.

In Brazil, in 2017, the Company’s subsidiary Techint

Engenharia e Construção S.A. (TEBRA) completed 70 years

of continuous operation in Brazil. Throughout such period, it

has developed the most relevant infrastructure projects of the

country, taking part in the construction of all the refineries,

most large-sized pipelines currently in operation and the

largest projects of the energy sector. In every single market

in which TEBRA has been present, its clients, business

partners, insurance companies and financial developers

always recognize TEBRA as a company with technical and

financial capacity, high quality and a great performance. It

has continued working in the Modules for the Petrobras-76

(P-76) Platform for the client Petrobras Netherlands B.V.

On the other hand, TEBRA is still working with Vale in a

contract for a project involving the highest investment of

Vale in Brazil: S11D Ferro-Carajas. This contract consists in the

implementation of assembly of a Truckless Mining System,

which results in a reduction of both waste and costs, by using

movable equipment to replace iron ore transportation trucks.

In Ecuador, the Company, through its subsidiary,

Construcciones y Prestaciones Petroleras S.A. (CPP),

keeps on rendering specialized technical services of

engineering, procurement management and construction in

the Shushufindi-Aguarico field, Province of Sucumbíos, in

Eastern Ecuador, for the client Consorcio Shushufindi, a joint

venture currently formed by Schlumberger and Tecpetrol. In

addition, Schlumberger, through its subsidiary Shaya Ecuador

SA, has continued to rely on our services for the AUCA field,

located in the province of Orellana, which are similar to those

provided in the Shushufindi field. The main goal of the clients

is to increase crude oil production in the fields.

In Mexico, through the subsidiary Techint S.A. de C.V.

(TEMEX), the following works were carried out:

In Altamira (Tamaulipas), TEMEX started to work on the

Compressor Station Altamira for the client Infraestructura

Marina del Golfo, S. de R.L. de C.V.


TEMEX was awarded two new projects: the Central Combined

North III project for the client Abeinsa Juarez N III, S.A. of

C.V. and the project for the Internal Coal Handling System

Revamp (Repotenciamiento del Sistema Interno de Manejo de

Carbón (RSIMC)) for the client Greenfield SPV I S.A.P.I. of C.V.

In addition, works were continued at the plants of Ternium de

México S.A. de C.V. and Tubos de Acero de México S.A. de C.V.

In the united States, works were completed at the Tenaris

Bay City Project for the client Tenaris Bay City Inc.

During the fiscal year, the Company accompanied the gradual

completion of the Europe and Middle East sites and made

great efforts to promote the new services center, aimed at

both consolidated clients and new investors in emerging areas.

In Northern France, works are being developed for the

construction of one of the largest liquefied natural gas (LNG)

regasification plants in Europe, located in Dunkerque, for

Électricité de France (EDF).

In Egypt, the Company continued working in the Al Shabab

and West Damietta power projects, both for the East Delta

Electricity Production Company. Construction works are

almost finished and both projects are in the Commissioning

stage. The Company is currently working in the South

Helwan power project, a Supercritical Thermal Power

Plant for Upper Egypt Electricity Production Company.

During 2017, the Company also executed and completed a

brownfield project for Sidi Kerir Petrochemicals Company

(SIDPEC) in Alexandria.

As regards engineering services, the Company continued

with the works relative to concept, basic and detail

engineering mainly associated with the Company’s own

projects under execution and projects for external clients

who are provided this specific professional services. Besides,

the Company kept on providing assistance for development

of technical bidding terms and the assessment of several

investment projects.

All the operational activities conducted by TECHINT E&C

in the different geographical areas around the world were

carried out paying maximum attention to, and in furtherance

of, the regulations in terms of environmental sustainability

and the ongoing development of quality and safety aspects.

Techint E&C is participating in S11D, part of the largest investment project in the history of Vale mining company, located in Pará, Brazil.


The Company aims at maintaining its primary role

as engineering company and general contractor in

the different product segments (energy, oil & gas,

petrochemical, infrastructure) and in the geographical areas

considered to be targets by TECHINT E&C (Africa, Middle

East, Europe and Latin America) taking into account a

market scenario for industrial plants posing ever-increasing

challenges. Our extensive deployment and the knowledge

of the needs of domestic clients and engineering and

construction practices will be a key and positive distinctive

factors for TECHINT E&C.

For the year to come, the Company expects to focus its

activities on key clients, providing a wider range of services.

The Entity foresees that the oil & gas, mining and power

generation industries will continue to be active, even

though with different degrees of intensity in each one of

such segments.

Thanks to the synergies between the subsidiaries in America,

Europe, Africa and the Middle East, TECHINT E&C is able

to offer its clients a wide range of diversified services in the

various core businesses of the Entity, specifically focusing

on the loyalty of major clients, the strengthening of a local

presence and the level of excellence in the services provided

to clients.

In Peru, the level of mining activity is expected to be

positive during 2018 regarding execution, exploration

and exploitation. Therefore, the Company is analyzing

to participate in different works related to the Mina

Justa Mine Project for the client Marcobre S.A.C.,

on the Corani Project for Bear Creek Mining, and on

the Quellaveco Project for Anglo American.

As from the end of 2017, some recovery has been evident

in the Chilean market, as a consequence of an increasing

confidence in such market by both local and foreign clients,

added to the worldwide context leading copper (the main

Chilean commodity for export) to reach higher prices than

in the past two years. All of this resulted in new positive

levels of growth for the country. Given the foregoing, it is

anticipated that during 2018 there will be several bidding

processes related to mining and energy infrastructure and

water supply projects. The Company will assess taking part

in such projects always giving priority to those in which it

may assert a differentiating value against other competitors,

based on the Company’s expertise, know-how or level of

confidence forged with clients.

As regards the oil & gas segment, TESAC has recently

submitted a bid for the client Sempra Energy Peru and

is studying the Norperuano Oil Pipeline. In addition, the

Company expects to take part in the Malvina Project for

Pluspetrol Perú Corporation S.A.

Finally, in the power generation market, the Company is

currently analyzing a high voltage network project, and

expects to be part of the hydroelectric generation projects in

which Sempra Energy Peru plans to invest during the current

fiscal year.

In Uruguay, Techint Compañía Técnica Internacional S.A.C.I.

(“TEURU”) will execute the extension of road works contracts.

The performance of the Brazilian economy is still uncertain,

but the forecast by the end of the year shows an

improvement in ratios. The private sector should drive the

major new investments in infrastructure and energy markets,

mainly transmission lines. Nevertheless, the Company

is taking measures to take advantage of all commercial

opportunities, which have risen in its traditional markets:

oil & gas, mining, steel and power plants, as well as new

segments and clients.

Prospects for the fiscal year 2018


In Europe, the Company has set the goal of expanding

its expertise to new sectors, such as environmental

engineering, renewable energy and new technologies,

in order to broaden the range of services being

offered to its clients and to increase opportunities for

market penetration.

For the year to come, the International Area’s main objective

is to continue strengthening the Company’s presence in

Egypt and to continue searching for business opportunities

in the power, petrochemical, oil & gas sectors with strategic

clients and partners in the EMEA area with the focus on

major pipeline projects.

In Argentina, there is an increased interest by investors and

we expect this may have a positive impact on the country’s

growth and may give rise to opportunities for the Company in

various business areas.

The Company shall continue working in projects involving

oil exploitation and production projects (upstream),

transportation and storage (midstream) and refining

(downstream). With respect to Vaca Muerta, the Company

shall continue developing the field by giving assistance to

Tecpetrol S.A. in Fortín de Piedra. On a supplementary basis,

the Company shall seek capitalizing the opportunities arising

in the oil sector within the Neuquén basin (unconventional

oil and gas) and works shall be executed with other clients

leveraging on the competitive advantages of having

established a permanent base of operations in the City of

Neuquén, using the experience and know-how developed

in this area during construction of facilities for oil and gas

processing and transportation.

In the mining segment, upon the increase of commodity

prices, a recovery is expected of certain projects

that were suspended in Argentina. TEARG is mostly

interested in projects associated with lithium mines in

the Northwestern region.

As regards infrastructure, it is estimated that projects under

PPP (Public Private Partnerships) shall derive in opportunities

for new challenges in all areas, from highways to subways,

railroads, water and sanitation, among others, in which the

Company is planning to be involved.

In the energy sector, the Company is working in projects

for generation of combined cycles closings and is waiting

for opportunities to develop new projects; having obtained

works for the expansion of the El Bracho plant for the

General Electric client. In the Nuclear sector, the Company

continues with the civil works related to the reactor

CAREM 25 for the Argentine Atomic Energy Commission

(CNEA), and expectations are focused on the future

evolution of new nuclear projects. In turn, the Company

is still interested in hydroelectricity projects in order to

continue with its operations in this sector, in which the

Company has been present on an uninterrupted basis for

several years now.

In Ecuador, the objectives for 2018 are to ratify the Contract

entered into with Shaya for the Auca Project and to continue

providing services for the Shushufindi-Aguarico field.

In the United States, Tenaris Bay City is bringing additional

opportunities to continue operating in the country. TEMEX

continues to seek EPCM and engineering projects. The

alliance with TENOVA on lithium plants enhances TEMEX’s

presence in the United States; in addition, some steel-related

clients that have shown their interest in forging a beneficial

relationship in ECPM projects.

In Mexico, the strong presence of TEMEX continues to

bring important opportunities in the oil & gas and the power


sectors. Presidential elections to be held on July 1st entail

a slower pace of growth in this market, even though this is

temporary. In the private sector, Ternium sustained growth

in the country has brought important engineering and

manpower contracts. PPP projects seem to be the new

direction for our segments, and power initiatives with CFE

are already being explored and developed. The Nitrogen

Rejection project for PEMEX seems to be entering into its

final stage, where we will be competing strongly.

Mid-stream projects (fuel storage and transportation)

continue to move slowly, but high expectations will surely

turn into new business opportunities in the following

months, as the need for imported fuel continues to grow.

In Colombia, in a context where competition is increasingly

aggressive, TECHINT E&C has the purpose of returning

to the Colombian market. Projects are being evaluated

for the short and medium term such as electromechanical

assembly and the building of biofuel facilities, as well as

oil & gas projects.


SuMMARy oF CoNSolIDATED INCoME STATEMENT

Net income for the fiscal year was USD 16.6 million,

representing 1.2% of revenues.

Gross profit for this period was USD 156.9 million, accounting

for 11% of the revenues.

EBITDA for this period was USD 62.1 million, representing

4% on revenues.

General, administrative and selling expenses represented

10% of the revenues.

Financial results showed a gain of USD 2.3 million mainly

originated in the restatement and interest on claims, the

results from Techint Cía Técnica Internacional S.A.C.I.

Impregilo S.p.A. (suc. Arg.) Iglys S.A. - Unión Transitoria de

Empresas – Complejo Penitenciario Ezeiza, and the net

USD millionS

Revenues from construction contracts and other services

Cost of revenue

gross profit

General, administrative and selling expenses

Other operating results

Net financial result

Result from investments accounted for using the equity method

Income before income tax

Income tax expense

Net income

Attributable to:

Equity holders of the Company

Non-controlling interest

EBITDA (1)

EBITDA margin (% of revenues)

Dec 31, 2017

1,427.1

(1,270.2)

156.9

11%

(141.9)

(3.7)

2.3

3.4

17.0

(0.4)

16.6

1.2%

13.7

2.9

62.1

4%

1,283.8

(1,082.7)

201.1

16%

(138.9)

(17.3)

27.8

13.2

85.9

(43.5)

42.4

3.3%

38.5

3.9

104.3

8%

Dec 31, 2016

(1) EBITDA is equivalent to Gross profit plus General, administrative and selling expenses, Result from investments accounted for using the equity method, Other Operating results, minus depreciation and amortization.

Economic and financial information


Equity at the end of the fiscal year amounted to USD 673.6

million with a Capital Stock of USD 877.5 million. The Equity

increased mainly due to the net income for the fiscal year, the

revaluation of PP&E and the capital contribution net of the

currency translation, the remeasurement of actuarial losses

and the changes in non-controlling interests.

Working capital as of December 31, 2017 was

USD 344.3 million.

foreign exchange transaction results, net of the interest and

indexation and commissions.

The other operating results showed a loss for USD 3.7 million,

mainly due to the results from the devaluation of other assets

and the claims, net of the sale of equipment and materials.

SuMMARy oF CoNSolIDATED STATEMENT oF FINANCIAl PoSITIoN

USD millionS

Assets

Non-current assets

Current assets

Total Assets

Equity

Majority Shareholders

Non-Controlling interest

Total Equity

liabilities

Non-current liabilities

Current liabilities

Total liabilities

Total equity and liabilities

Dec 31, 2017

488.4

1,316.0

1,804.4

668.8

4.8

673.6

159.1

971.7

1,130.8

1,804.4

529.8

1,052.8

1,582.6

639.3

5.9

645.2

173.3

764.1

937.4

1,582.6

Dec 31, 2016


SuMMARy oF CoNSolIDATED STATEMENT oF CASH FlowS

Cash and cash equivalents reaching USD 381.3 million at the

end of the fiscal year.

The Company generated operating funds for USD 193.5 million.

This generation of funds derived from the changes in trade and

other payables and tax liabilities, other liabilities and the result

of the fiscal year net of income tax payment and trade accounts

receivable and tax assets.

Among investment activities, mainly payment from the purchase

of PP&E net of proceeds from disposal of PP&E and dividend

collected, resulted in a cash decrease of USD 10.0 million.

Financing activities used funds for USD 39.2 million mainly

due to the cash flow for borrowings proceeds-repayment.

The effect of exchange rate changes were USD 8.1 million.

Some important ratios are the following:

USD millionS

Financial solvency (Assets / Liabilities)

Liquidity (Current Assets / Current Liabilities )

Indebtedness (Liabilities / Equity)

Solvency (Equity/Liabilities)

Immobilization of Capital (Non Current Assets / Assets)

Profitability (Net Income / Equity)

Cash and cash equivalents at the beginning of the year

Net cash generated by / (used in) operating activities

Net cash used in investing activities

Net cash used in financing activities

Net increase / (decrease) in cash and cash equivalents

Effect of exchange rates changes

Variation in cash due to Consolidation of Subsidiaries

Cash and cash equivalents at the end of the year

Dec 31, 2017

Dec 31, 2017

1.6

1.4

1.7

0.6

0.3

2%

226.6

193.5

(10.0)

(39.2)

144.3

8.1

2.3

381.3

1.7

1.4

1.5

0.7

0.3

7%

403.8

(138.0)

(8.9)

(20.8)

(167.7)

(9.5)

–

226.6

Dec 31, 2016

Dec 31, 2016

INDICAToRS


AFriCA

Al Shabab – Combined Cycle Power Plant Phase II (Egypt)

West Damietta – Combined Cycle Power Plant Phase II (Egypt)

South Helwan – Supercritical Thermal Power Plant

ArgEnTinA

Subway Line H Expansion

Punta Negra Hydroelectric Power Station / Tambolar

GNEA

ENAP - Magallanes Area Incremental Project

Fortín de Piedra

Genelba Plus

CAREM 25

YGEN II – El Bracho

Works and Services in steel plants

BrAzil

Modules for P-76 Platform

Projet Ferro Carajás S-11D

ChilE

Escondida Water Supply (EWS) Project

Los Bronces Duct Replacement (High area)

Los Bronces Duct Replacement (Middle area)

Escondida Water Supply Expansion (EWSE)

East Delta Electricity Production Company (EDEPC)


Upper Egypt Electricity Production Company (UEEPC)

Subterráneos de Buenos Aires S.E. (SBASE) /

Ministerio de Desarrollo Urbano (MDU)

Energía Provincial S.E.

Energía Argentina Sociedad Anónima (ENARSA)

Enap Sipetrol Argentina S.A

Tecpetrol S.A.

Pampa Energía S.A.

Comisión Nacional de Energía Atómica (CNEA)

General Electric International Inc.

Planta Ternium Argentina S.A.- Planta Siderca S.A.I.C. -

Planta Regeneradora de Ácido Ternium S.A.

Petrobras Netherlands B.V.

VALE S.A.

Bechtel Chile Limitada

Anglo American Sur S.A.


Minera Escondida Limitada

Contract Total Amount

(USD MILLION)

Country / Project Client

41

30

77

491

98

199

123

392

191

60

33

59

889

124

786

13

28

65

(a) Projects under a consortium/JV. The amount corresponds to total contract amount at 100%. See note 20 to the Consolidated Financial Statements. (b) The amount corresponds to annual revenues.

(a)

(a)

(a)

(b)

(a)

Major works per country


ECUADor

Shushufindi Services

Auca Services

EUroPE

Dunkerque LNG Fast Reloading

mExiCo

Combined Cycle Power Plant Norte III

Internal Coal Handling System Revamp (RSIMC)

Altamira Facilities Compressor Station

PErU

CAMISEA Pipeline Maintenance

UniTED STATES

Tenaris Bay City

UrUgUAy

Route 9

Maldonado Sewage System

Route 8

Consorcio Shushufindi

Shaya Ecuador

Électricité de France (EDF)

Abeinsa Juarez N III, S.A. de C.V.

Greenfield SPV I S.A.P.I. de C.V.

Infraestructura Marina del Golfo, S. de R.L. de C.V.

Compañía Operadora de Gas del Amazonas S.A. (COGA)

Tenaris Bay City Inc.

Corporación Vial del Uruguay S.A.

Obras Sanitarias del Estado (OSE)

Corporación Vial del Uruguay S.A.

Country / Project Client

65

79

35

574

39

87

260

46

44

70

10

MAjoR woRKS PER CouNTRy (cont’d.)

(a) Projects under a consortium/JV. The amount corresponds to total contract amount at 100%. See note 20 to the Consolidated Financial Statements. (b) The amount corresponds to annual revenues.

(b)

(b)

(a)

(a)

(a)

Contract Total Amount

(USD MILLION)


During this period, the Company determined and carried out

different undertakings in the oil & gas field, pipelines as well as

infrastructure works for mining companies and other civil works.

Projects were developed from different offices around the world:

Mexico City

Quito

Regional Headquarter

Commercial & Operating Center

Engineering Center

Offshore Yard

Sao Paulo

Milan

Pontal do ParanaMontevideo

Buenos Aires

Lima

Santiago

Mumbai

Cairo

Techint E&C in the world


AFRICA

Al Shabab – Combined Cycle Power Plant - Phase II (Egypt) -


The contract includes the mechanical balance of plant for

conversion of the existing simple cycle to combined cycle

for the Al Shabab power plant, comprising two modules of

4 x 125 MW units, through the installation of heat recovery

boilers for the generation of steam and a steam turbine (250

MW) for each module.

The amount of the project is USD 41 million.

The Client is East Delta Electricity Production Company

(EDEPC), an affiliate company of the Egyptian Electricity

Holding Company.

The project was awarded in August 2015. As of December

31, 2017, the progress of works was approximately 99%. The

first unit was commissioned and the Taking Over Acceptance

Certificates (TOAC) of both units are expected to be released

by mid-2018.

Cost increases due to requests for changes by the Client,

delays in the schedule and the country’s economic crisis

(reflected in a sharp devaluation of the local currency in the

last quarter of 2017) have resulted in a deterioration of the

financials of the project. Negotiations are being held in order

to recover from impacts due to the country’s economic crisis.

west Damietta – Combined Cycle Power Plant – Phase II (Egypt) -


The contract includes the mechanical balance of plant for

conversion of the existing simple cycle to combined cycle for

the West Damietta power plant, comprising one module of 4 x

125 MW units, through the installation of heat recovery boilers

for the generation of steam and a steam turbine (250 MW).

The amount of the project is USD 30 million.

The Client is East Delta Electricity Production Company

(EDEPC), an affiliate company of the Egyptian Electricity

Holding Company.

The project was awarded in September 2015.

As of December 31, 2017, the progress of the works was

around 95% and the commissioning and release of the TOAC

is expected to occur by mid-2018.

Cost increases due to requests for changes by the client,

delays in the schedule and the country’s economic crisis

(reflected in a sharp devaluation of the local currency in the

last quarter) have resulted in a deterioration of the financials

of the project. Negotiations are being held in order to recover

from impacts due to the country’s economic crisis.

South Helwan - Supercritical Thermal Power Plant (Egypt)

The project involves construction works and the mechanical

balance of plant for the South Helwan supercritical

power plant, consisting of three units, with a capacity

of 650 MW each.

The project on which Techint Compagnia Tecnica Internazionale

S.p.A. is working is worth around USD 77 million.

The Client is Upper Egypt Electricity Production Company

(UEEPC), an affiliate company of the Egyptian Electricity

Holding Company. The construction activities are being

carried out at Beni Suef.

The project started in November 30, 2015 and works will be

completed by the end of 2018. The first unit is currently in

the commissioning process and the release of the third unit's

TOAC is expected to occur by the end of 2018.

As of December 31, 2017 the progress of the project was

approximately 81% for the construction of the three units.

For the fiscal year ended December 31, 2017

Techint E&C subsidiaries’ activities


in Argentina, Techint E&C is in the final stages of the Subway line h Expansion project.

ARgENTINA

During the fiscal year, activities in Argentina were developed

by the argentinian subsidiaries TEARG, Sidernet S.A.

and Ferroexpreso Pampeano S.A. Concesionaria (FEPSA).

Subway line H Expansion - Subterráneos de Buenos Aires S.E.

(SBASE) / Ministerio de Desarrollo urbano (MDu)

On August 15, 2011, SBASE awarded to the Techint-Dycasa

S.A. Joint Venture (JV) (in which the Company holds a

60% participating interest) the integral construction and

commissioning in conditions of commercial exploitation of

the current Subway Line H of the City of Buenos Aires.

The project comprises civil and electromechanical works,

including tracks, power installations, pulling, signaling, commu-

nications, mechanical stairs, elevators and station equipment.

The suspension of works at Intendente Carlos María Alvear

Square (Plaza Francia Station), in addition to SBASE’s failure

to define certain aspects in the South tranche, have led

SBASE and the Joint Venture (JV) to execute a Memorandum

of Understanding (Acta Acuerdo) in December 2012. This

Memorandum of Understanding established a contractual

extension for an additional 24-month term (until April 2017),

and divided the works into two phases: Phase I until April

2015, including Córdoba, Santa Fe and Las Heras Stations

(with the related tunnel), Córdoba rectifier substation

(“SER”), C2 tranche tunnel up to post-Las Heras and

construction of a workshop in a cave under Parque Patricios;

Phase II, to be completed by April 2017, includes Plaza Francia

station (now, Facultad de Derecho station) and execution of

the post-Plaza Francia tunnel up to the end of C2 tranche,

Pompeya and Sáenz stations, with the respective tunnel, and


redetermination of prices performed in October 2017,

is equivalent to USD 491 million.

As of December 31, 2017, the project recorded 81%

progress.

Punta Negra Hydroelectric Power Station / Tambolar –

Energía Provincial S.E.

The contract was executed between Energía Provincial S.E.

(EPSE) and the Joint Venture (JV) formed by TEARG and

Panedile Argentina S.A., in which the Company holds a 75%

participating interest. This project is on the San Juan River,

20 km downstream Los Caracoles dam, and it is intended to

increase the regulation of this river, which is essential for San

Juan’s economy, and to add 65 MW to the generation system

of the Province.

In March 2015, an Addendum was executed to the Punta

Negra Contract for Works, whereby EPSE awarded the

Joint Venture (JV) formed by Techint Compañía Técnica

Internacional S.A.C.I. and Panedile Argentina S.A., the

preliminary works for the El Tambolar Hydroelectric Plant,

on the San Juan River, 25 km upstream Los Caracoles.

The scope of works includes basic and executive design

of the plant, settling of camp and construction site,

detail engineering and construction of tunnels for river

sidetracking and future bottom outlet. During this fiscal

year, the activities corresponding to drilling and concrete

lining of the river sidetracking tunnel were concluded.

Besides, the works for excavation of the mouth section of

such tunnel were commenced.

The updated contract amount is USD 98 million and the

works are scheduled to be completed in February 2019.

As of December 31, 2017, the works record a 83% progress.

y-gEN II – El BRACHo – general Electric International Inc.

The Project called Y-GEN II – El Bracho results from the

awarding of a contract by Compañía Administradora del

Mercado Mayorista Eléctrico S.A. (CAMMESA) to Y-GEN

(a Joint Venture between YPF S.A. and General Electric

the workshop-parking space in the alternative site located at

Av. Sáenz and Perito Moreno.

On December 23, 2016, a Memorandum of Understanding

(Acta Acuerdo) was executed to extend the term for

execution of the contract, not including the South Tranche

(A1), for an additional 20-month term (until December 2018).

In turn, on October 1, 2016, an Agreement for Provisional

Neutralization of Execution Terms Tranche A1 (Acta de

Neutralización Temporal de Plazos de Obra Tramo A1) was

executed (comprising Sáenz station with the respective

tunnel), effective until September 2017, in order to agree upon

the price and term of this project. As of the date of issue of

this annual report, there is a preliminary agreement as to the

price and term of the works but the Government of the City

of Buenos Aires (GCBA) requested the JV to seek financing

for execution, and the relevant actions are being currently

taken to such effect.

On the other hand, during this fiscal year, the Company obtained

the Provisional Acknowledgements of Receipt for Córdoba,

Santa Fe and Las Heras stations (with the related tunnel),

Córdoba rectifier substation (“SER”), C2 tranche tunnel up to

post-Las Heras, Workshop I and the Parking space in a cave

under Parque Patricios. In turn, the Final Acknowledgements of

Receipt were obtained for Parque Patricios Workshop I and the

Honda Building. As of the date of issue of this annual report,

the relevant steps are being taken for signature of the Final

Acknowledgments of Receipt for Córdoba, Santa Fe (partial)

and Las Heras stations with the related tunnels. In addition,

the applicable files were executed and approved for new prices

approved by SBASE, and for acknowledgement of longer of

permanence and additional works.

The Company continued with execution of Facultad de

Derecho station (and related tunnels), which replaces the

original Plaza Francia station, the Parque Patricios Workshop II

and the 40-meter Tranche A1 Pre-Hospitales.

The amount of the contract, including the above-stated

Memorandum of Understanding and based on the latest


International Inc. Sucursal Argentina) for the assembly of

a turbo generator to be added to existing generators. This

project comprises civil works, electromechanical assembly

and pre-commissioning of both the power island and the

balance of plant. Such generator shall provide 260 Mw to the

Argentine Interconnection System (SADI).

On November 18, 2016, TEARG submitted an offer for

USD 26 million to General Electric International Inc.

Sucursal Argentina (GE) to execute the civil works and

electromechanical assembly of such facilities. The materials

and the engineering services were provided by GE. During

execution of the works, the Company received instructions

and changes with respect to the original project resulting

in an increase of the contract amount of USD 7 million.

Finally, the construction stage was completed in December

2017, and it is estimated that the Company shall continue

providing the client only with assistance for start-up. The

plant started to commercialize energy during January 2018.

As of December 31, 2017, the project recorded 100% progress.

gNEA - Energía Argentina Sociedad Anónima (ENARSA)

On August 5, 2014, the contract was executed between

Energía Argentina Sociedad Anónima (ENARSA) and the

Joint Venture (JV) Techint-Panedile Argentina S.A.I.C.F. e I.

(where the Company holds an 80% participating interest).

This project involved the execution of engineering,

equipment provision (except for piping) and construction

of Cycle 2 of the gas pipeline called Gasoducto Noreste

Argentino (GNEA).

The scope of the contract includes the installation of the

gas pipelines, approximately 303 km long, the provision and

installation of scraper traps, the provision and installation

of line block valves and by-passes to future compression

plants, the provision and installation of a measurement

and regulation station to supply the following locations:

Ing. Guillermo Juárez, Chiriguanos, Laguna Yema, Pozo del

Mortero, Juan G. Bazán, Las Lomitas, Pozo del Tigre and E.

del Campo, and the provision and laying of optic fiber.

The contract amount is around USD 199 million, according

to the latest redetermination of prices corresponding to

October 2016. As from November 2016, paid services

related to custody and basic maintenance of the facilities

started to be provided.

During this fiscal year, this project was completed and the

services related to custody are still to be concluded.

ENAP - Magallanes Area Incremental Project – Enap Sipetrol

Argentina S.A.

On March 31, 2016, Enap Sipetrol Argentina S.A. – YPF S.A.

UTE (JV), accepted the offer submitted by TEARG under

Bidding Process “AMBA 010/2015 PIAM”, the purpose of

which is to increase the extraction of gas from the fields

located in the south of the Republic of Argentina.

TEARG, subject to the framework of the contract awarded,

shall provide detail engineering, procurement management,

construction, commissioning and start-up services for the

onshore works, as well as the construction management for

the offshore works.

The most relevant onshore activities are as follows:

New compression plant.

Ancillary installation facilities required.

Revamping of the plant located at Cape Vírgenes lighthouse.

Battery-based fuel gas pipeline at the reception of Magallanes

Area (Magellan Area).

Gas pipeline for export and connection to the General San

Martin gas pipeline.

The offshore activities include, among others:

A 20-km pipelay of a 14" offshore gas pipeline.

Land/sea interface of the pipeline (shore approach).

As an additional work, the Project includes the sea layout of 6"

and 8" pipelines between sea platforms, along a length of 20 km.

The Client has estimated an investment of around USD 123

million for the execution of the works.

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Techint E&C is working on Fortin de Piedra’s surface facilities, located in the Vaca muerta shale field for Tecpetrol.

As of December 31, 2017, the Project recorded around

100% progress, and for early 2018 the only works

pending were the ties in connections, the revamping

of the plant at the Cape Vírgenes lighthouse, and

demobilization.

Fortín de Piedra – Tecpetrol S.A.

On July 21, 2017, TEARG accepted the offer from Tecpetrol

S.A. for the rendering of engineering, construction and

procurement services, among other services, for the Fortín

de Piedra area, located in the Province of Neuquén. This

Project is part of the development of the Vaca Muerta area,

the second unconventional gas reservoir in the world. Works

comprise the design and construction of surface facilities for

extraction, treatment and evacuation of gas produced

by Tecpetrol S.A. These works would allow processing

16.5 million of cubic meters per day.

Works shall be performed on platforms and flowlines,

batteries, trunk lines, Early Process Facilities (EPF),

Central Process Facilities (CPF), export pipelines, water

intake, filtering, storage and injection well.

The main contractual challenge is the short term for

intermediate milestones since this is a fast-track project.

Therefore, within only six months, it was required to

increase the EPF capacity from 750 thousand to 1 million

cubic meters per day.


The contract amount is approximately USD 392 million, and

completion is scheduled for February 2019.

As of December 31, 2017, the project recorded around 25%

progress out of the total works.

looP yPF – Rincón del Mangrullo – loma de la lata 16"

gas Pipeline

On May 15, 2017, TEARG entered into a contract with YPF

S.A. for construction of a 16” and 33.3 km gas pipeline,

including the related surface facilities. The project is carried

out in the surroundings of Añelo, Province of Neuquén,

and is part of the development of unconventional gas

projects in the Vaca Muerta area.

The contract amount is USD 11 million, and completion is

scheduled for January 2018.

As of December 31, 2017, the project recorded 89%

progress.

Carem25 – Comisión Nacional de Energía Atómica (CNEA –

Argentine Atomic Energy Commission)

This project called CAREM 25, is the result of the project

awarded by the Argentine Atomic Energy Commission

(CNEA) to TEARG for completion of the civil works necessary

for assembly of the prototype reactor CAREM 25 in Lima,

Province of Buenos Aires.

On July 10, 2017, a contract was executed for USD 60

million, for a term of 25 months which was extended

to 32 months due to delays by the client in the delivery

of some part of the site.

Completion of the project is scheduled for March 2020.


genelba Plus – Pampa Energía S.A.

On October 25, 2017, the contract was executed with Pampa

Energía for the project involving the expansion of installed

capacity in the Genelba Plus combined cycle of the Thermal

Power Plant located in Marcos Paz, Province of Buenos Aires.

Upon completion of the expansion, the power plan shall

go from an installed capacity of 178 Mw to 542 Mw. The

contract with the Company comprises detail engineering,

procurement for Balance of Plant, construction and assembly,

commissioning and start-up.

The works include the incorporation of a heat recovery steam

generator (HRSG) to the existing gas turbine, an additional

gas turbo generator with a power of 172 Mw, and the

respective HRSG, and a steam turbo generator with a power

of 192 Mw. Besides, the Company shall execute the Balance

of Plant facilities and supplementary works.

The contract amount is USD 191 million for a term of 32

months. Field works shall be commenced in February 2018,

with an intermediary milestone for start-up of the new gas

turbine in June 2019. It is estimated that 550 people shall

work during the peak of the works.


Rotating Filters Partial Rehabilitation Service – Central

Costanera S.A.

In August 2017, a contract was entered into between Central

Costanera S.A. and TEARG, for an amount of USD 1.5 million.

The scope of works contemplates the replacement of two

rotating filters at the intake of cooling water of combined

cycle II of the plant located at Costanera Sur of the City of

Buenos Aires, under an EPC contract.

Engineering works mainly include the design of routings for

new electricity ducts, changes of civil works to be executed

at the bases of existing filters, the design of a new electrical

box where dashboards shall be installed for operation

of new filters. Central Costanera S.A. shall be liable for

the supply of the main equipment (water filters). Other

materials required to complete the project shall be provided

by the Company (ducts, cables, materials for construction of

electrical box, etc.).


The company is working on a 33.3 km-long 16" gas pipeline for yPF S.A. in neuquén, Argentina.

At the end of the fiscal year, the works of the electrical box

and on the first filter were completed and in operation. The

duct works for the second filter are about to be finished, the

only pending works are the connections to equipments and

a minor duct that requires to stop the filter in order to be

executed. The project suffered some delays since the Client

did not release the second filter to execute the works which

were commenced on March 12, 2018.

The estimated date for completion of the project is April 2018.


Ternium Argentina S.A. (formerly known as Siderar S.A.I.C.)

(Plant San Nicolás)

The main works executed during 2017 include the following:

Works were executed in the Steel-making area in order

to reduce the emission of gases and particles to the

environment. Other works were also performed, such

as the following:

In Converters (Fluxing Revamping, vibros were replaced

and changes were made in the capacities

of the addition system; besides, progress is being

made in assembly of the equipment of the ferroalloy

addition system.

Improvements in operation and maintenance of sludge

separation.

In the Continuous Casting area, works comprised the

replacement and improvement of bridge cranes in

the Descaling Section and the assembly of the second

carrier in pantographs 1 and 3.

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In October 2017, the Plant Extraordinary Repair (REX) was

conducted in the Hot Rolling Mill area. The main works were

as follows: repair of walking beam of winder 1, replacement of

engines of F8, F9 and F10, replacement of drives of F8, F9 and

F10, installation of combibox of F8, installation of hardware,

changes of roughing and finishing mill pulpits, assembly of

drives in combustion fans and assembly of drive of furnace 5

cooling system, shutdown and start-up of heating furnaces.

Other projects were executed for improvement of

environmental and safety aspects at the plant:

Closing of gases washing circuit of Blast Furnace 2.

Evacuation of Sinter runoffs.

Installation of a gas extraction system by pouring remaining

slag in steel thermal wagons.

Total income of the fiscal year for these services amounted to

USD 29 million, with a total of 1,250,000 man-hours used.

Siderca S.A.I.C. (Plant Campana)

Fiscal year 2017 started with the Plant Extraordinary Repair

(REX), which works were executed during January and February.

Even though during 2016 the plant showed little activity in

production and investments, these REX works constituted

the starting point of several actions and repairs with a view

to a future increase in production.

In January and February 2017, 138,000 man-hours were

certified, a 97.5% increase against the same period of the

previous year.

in Argentina, Techint E&C executed TenarisSiderca’s annual Extraordinary repair (rEx).

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The Company maintained and applied the action plan

agreed upon with Siderca S.A.I.C. in 2016, in order to

readjust costs and rates. This action plan to reduce fees

and rates included the following items:

Use of idle equipment at the plant rather than using the

Company´s own equipment.

Readjustment of supervision sale categories.

Increase of the chiefs/workers ratio, i.e. adopting a

scheme where every chief would have more people

reporting to him/her.

Streamlining of the support structure (reduction of houses

for people without a family, new supplier of packed food,

new health-care provider, etc.).

Tenders and works under lump sum modality were

conducted at the client’s request.

With the new scheme of fees and rates, the Company

executed maintenance and service tasks which gave rise to

a higher need of resources. Thus, we were able to recover

gradually the regular activity levels of the project.

Throughout the year, the level of activity was sustained,

with a distribution of works of 70% for maintenance and

services, and 30% for the engineering area.

Total income of the fiscal year was USD 11 million and

417,000 man-hours were used.

Acid Regeneration unit – Ternium Argentina S.A.

(Ensenada Plant)

On September 22, 2017, the Company was awarded by

Ternium Argentina S.A. the execution of the assembly

of shed and electromechanical works necessary for

connection to the existing stripping of the New Acid

Regeneration Unit to be installed at the plant located in

Ensenada, Province of Buenos Aires, of the company

Ternium Argentina S.A. The project includes pre-

commissioning and start-up assistance works.

The initial milestone of the project is the subcontract for

premanufactured piping and structures, followed by the

mobilization of personnel, equipment and installation

of working sites.

The execution of the works comprises the installation

of the following elements: 272 tons of equipment,

180 tons of refractory material, 855 tons of structures,

120 tons of piping and 42,000 m of wiring.

The total contract amount is USD 19 million. The

execution term is 18 months and, as of the end of the

fiscal year, the works recorded 4.1% progress.

veladero F2 Maintenance Project – Minera Argentina

gold S.A.

On February 27, 2014, a Service Master Agreement

was executed between Minera Argentina Gold S.A.

and Techint Compañía Técnica Internacional S.A.C.I.

for an 18-month term, for the provision of design,

engineering, procurement, construction, construction

management, pre-commissioning and other related

services within Veladero Mine, located in San Juan,

approximately 370 km away from the capital city of

such province.

In October 2016, an addendum was signed on the

same Service Master Agreement entered into in 2014,

extending it up to December 31, 2017. In that same

month, the Client requested a series of engineering

works, within its plan for maintenance of the facilities.

In July 2017, the Company was awarded by the Client

work orders for construction, which are in progress

at present, and they comprise the construction of the

pumping system Booster Barren II, the early works of

continuous retort and the disassembly and assembly of

the new silo Surge Bin.

At present, the Company is reviewing several minor

proposals made by the Client regarding engineering

and construction within the plan of maintenance and

improvement of processes currently in progress.

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SERVICES

Cargo Railway Transportation

Ferroexpreso Pampeano S.A. (FEPSA) Concession Company,

a firm under the control and corporate decision of the

Company through COINFER, is the holder of the cargo

railway transportation concession providing services towards

the ports of Bahía Blanca, Rosario, San Lorenzo and San

Martín to exporters, storage companies and large producers

of a vast area of the wet pampas region.

During the fiscal year started January 1st and ended

December 31, 2017, 3.5 million tons were transported,

accounting for a 17% decrease against the figures of 2016,

as a consequence of significant floods in the northeast of

Buenos Aires and south of Santa Fe, which affected the

railroad infrastructure.

On September 20, 2016, FEPSA exercised the option laid down

in the contract and requested the extension of the concession

for a 10-year period as from its completion in November

2021, and the Grantor had to resolve on such request within

a term of (1) year. Taking into account that Law 27132 and

its regulation are still being drafted, they would impact on

the terms of the concession contract in force, and by virtue

of the imminent due date for the term established for the

Grantor to make a resolution on the request for an extension,

on September 18, 2017, FEPSA entered into a Memorandum

of Understanding (Acta Acuerdo) with the Argentine Ministry

of Transportation, whereby the parties agreed to extend the

term contractually established for the Grantor to resolve on the

request of an extension made by FEPSA, which term shall be

deemed extended until the Argentine Executive had passed

the Regulatory Executive Order for Law 27132.

The Act on Railway Reactivation for Passenger and Cargo

Railroads (Law 27132) passed in April 2015, has not been

regulated yet. Based on the content of such Act and given

the fact that the definition of the regulatory framework is still

pending, the potential effects that these changes might have

are still uncertain. Notwithstanding the above, in our opinion,

there are no elements that need to be considered and

reflected in the Company’s Financial Statements.

Tecnología en Servicios urbanos TESuR S.A.

Tecnología en Servicios Urbanos – Tesur S.A. (TESUR) started

doing business in the 1990’s as one of the business units

of TEARG, which company holds an indirect participating

interest of 87.75% through Tefin S.A.

The sustained development of the telecommunications

area enabled TESUR to focus its specialization, taking part

in engineering, construction and management projects and

rendering integrated services of land telephone lines, optic

fiber networks, infrastructure for mobile phones, localization

and construction of communications sites, FTTH (fiber to

the home), Data Centers and development of Integrated

Communication Solutions.

In turn, for more than two decades, TESUR has developed

vast experience in projects comprising civil, railroad, power

and fresh water network projects, as well as repairs,

constructions and miscellaneous maintenance works.

In the telecommunications area, during this fiscal year,

TESUR completed the execution of a contract with Empresa

Argentina de Soluciones Satelitales S.A. (ARSAT) for

construction of the laying for optic fiber, and the Provisional

Acknowledgment of Receipt is currently in progress.

Under the master agreement with Telefónica Móviles

Argentina S.A. (Movistar), the Company continued civil and

electromechanical works inherent in the implementation of

new technologies for voice and data networks.

TESUR continued with the execution of the master

agreement for Telecom Argentina S.A. in the Province of

Córdoba, consisting in the construction of networks for optic

fiber, fiber to the home (FTTH), outside plant, installation of

clients and network expansion.

As regards civil and railroad works, TESUR is about to receive

from the Client the Final Acknowledgement of Receipt for

the works comprising the replacement of rails and sleepers

of Ferrocarril General Roca, Vivoratá-Mar del Plata, and

the construction of a new tracks between Camet and Mar


del Plata, under a Joint Venture (JV) with Panedile S.A. for

Administración de Infraestructuras Ferroviarias S.E. (ADIF).

Also in the railroad area, under a JV with Siemens S.A.,

TESUR was awarded the works corresponding to Bidding

Process BID 2982/oc-AR-O-LPI 02/2014, for the construction

of a substation, switching stations, self-transformation and

tele-command for Ferrocarril General Roca, Constitución

- La Plata branch, entrusted by the Central Execution Unit

(Unidad Ejecutora Central - UEC) of the Argentine Ministry of

Transportation.

The JV TESUR-Panedile was awarded the works

corresponding to Bidding Process LPI 01-ADIF-2016 called

for by ADIF, for the Project of Recovery and Improvement

of Ferrocarril General Belgrano – Total renewal of the

infrastructure of tracks in tranche 5, Sector “A” (km. 211,340

to km 275,479) and in National and International Public

Bid ADIF LP 49-2016 called for by ADIF, for the Project of

Recovery and Improvement of Ferrocarril General Belgrano –

Total renewal of the infrastructure of tracks in Sector B (km

37,900 to km 83,900) in the Province of Santa Fe.

Under a Joint Venture (JV) with Panedile S.A. and Siemens

S.A., TESUR was awarded the works for National and

International Public Bid ADIF 80/2016, for modernization,

renewal and expansion of the rail yard at Estación Retiro

of Ferrocarril General Mitre, and integration with Ferrocarril

General San Martín. The contract with the Client was entered

into on November 14, 2017.

The lP-80 project includes the redesign of the current railroad configuration to optimize operations at the head of line in retiro, the country’s busiest railway station.


Impripost Tecnologías S.A.

Impripost Tecnologías S.A. (“IMPRIPOST”) provides

services of data processing, variable printing,

digitalization, finishing and distribution with a high

added valued for telecommunication and internet

companies, cable providers, utility companies, bank

entities and municipalities.

For the past 19 years, this company has been owned

by Techint on a 50/50 basis with Grupo Clarín, to

provide technological solutions in the document and

information market since it counts on professional,

technical and specialized human resources.

IMPRIPOST is one of the two absolute leaders in

this market.

BRAZIl

TEBRA and its subsidiaries perform activities related to

engineering, construction, erection, project management,

petrochemical facilities, offshore projects, power generation,

transmission and distribution, iron and steel units,

transportation systems and infrastructure works in general.

During the current year, works were performed in the

following projects:

Modules for P-76 Platform – Petrobras Netherlands B.v.

In April 2013, a contract was executed with Petrobras

Netherlands B.V. (PNBV) for the construction of modules and

integration of such modules for Platform FPSO Petrobras-76

(P-76) to be installed by the client in the Santos Basin off-

shore area, approximately 210 kms. from the brazilian shore,

in Brazil, the FPSo (Floating Production, Storage & offloading) P-76 project for Petrobras is reaching the end of the construction stage at the Techint offshore Unit.


with a production capacity of 150,000 barrels/day (oil) and 7

MM3/day (gas).

The contract modality is lump sum EPC Turn-key, and

includes FEED endorsement, detail engineering, supply of

materials and partial supply of equipment, manufacturing,

construction and assembly of the elements for the modules,

and integration of such modules to the hull. The contract also

includes conditioning and commissioning, inclination tests,

transportation from worksite to the entrance to Paranaguá

Bay, pre-operation, start-up and certification of the Platform.

In 2015 engineering and procurement works are carried

out in the city of Rio de Janeiro, and the construction

and integration works are executed at the yard owned by

TEBRA in Pontal do Paraná, State of Paraná, which was

properly conditioned for execution of this project.

In 2016, engineering and procurement works achieved 100%

progress, and were concluded. Construction and erection

works continued to be performed at the yard, in Pontal do

Paraná, with nearly 4,000 employees. In July 2016, the hull was

delivered by PNBV, and from September to December 2016,

the lifting of the modules was successfully performed, and

then, the integration phase of the Project was commenced.

Until May 2017, TEBRA was part of the TTP-76 JV with

Technip, with a 50% participating interest each partner,

under the leadership of Technip.

On June 1st, 2017, the Company signed a contract of

assignment of contractual position with Technip whereby

Technip ceded its interests, resulting a participation of 99%

to TEBRA and 1% to Techint Oil and Gas Ltda.

In 2017, the integration and commissioning phases continued

to be performed at the yard, in Pontal do Paraná. In June 2017,

an amendment to the main contract was executed, including

additional procurement, construction and assembly services

regarding the Hull remaining scope (Carry-over, Packages

1 and 2), which resulted in a change in both the contract

amount and its term.

In December 2017, the contract amount was USD 889 millon,

and it is estimated that works will be completed in 2019. As of

December 2017, the general progress of the project was 82%.

Projet Ferro-Carajas S11D – vAlE S.A.

This contract consists in implementing the assembling of

a Truckless Mining System, which results in a reduction of

waste and costs, by using movable equipment to replace iron

ore transportation trucks. Two packages have been tendered,

one inside the mine and the other outside the mine; the latter

is the one to be executed by the Company, and consists in

the provision of services for the electromechanical assembly

of several structures and equipment.

On April 17, 2015, TEBRA was awarded by VALE S.A. with the

contract for execution of electromechanical assembly regarding

the S11D Truckless System, areas 1082, 1083, 1084, 1085,

4000 and 4013, located in Canaã dos Carajas, State of Pará.

In 2016, the construction site had nearly 2,000 employees

working in the assembly of major conveyor belts and mobile

tripper spreaders. An important milestone was completed

in 2016: the conclusion of mechanical assembly and

commissioning activities of area 1085, Iron Ore System.

As of December 2017, the contract amount is USD 124 million

and the general progress is 100%.

CHIlE

Works have been executed in the following projects:

Escondida water Supply (EwS) Project – Betchtel Chile limitada

Bechtel Chile Limitada invited Techint Chile S.A. to participate

on a jointly basis in the construction of part of the project

called “Escondida Water Supply Project” (EWS Project), for

the client Minera Escondida Limitada. This project is managed

by Bechtel Chile Limitada. For such purposes, the companies

became associated, and TECHI holds a 40% participating

interest. In December 2013, two contracts were executed.

One construction contract for the execution of two parallel

42" water pipelines, 177 km long each one; three pumping

stations; three electric substations located at the site of each


one of the three pumping stations; a 220 KV high voltage

line; two 36" water pipelines for distribution to the mine,

with a total length of 23 km; and a reservoir. The purpose

of the other contract is to provide engineering services,

procurement and other related services, including the sale

and lease of machinery, tools and equipment for the project.

As of December 31, 2017, the works had been completed

in full. Both contracts amounted to USD 786 million.

los Bronces Duct Replacement (High area) –


In October 2016, Techint Chile entered into contract No.

P16.0050-1 “Assembly of Piping 16 – High Zone Tailing

Transportation System, with quality assurance”, with the client


The work consists in replacement of 3.3 km of piping

from San Francisco Thickener to Ortiga Tunnel Exit, which

comprises 970 m. of buried piping in external platform and

2,400 m. in internal supports of the Tunnel and exit of the

Pressurized Distributor. The works will contemplate the

intervention of walls and anchor nipples, in addition to other

specific works such as road crossing, Confluence Bridge

crossing and removal of existing piping.

On October 26, 2017, the client executed the provisional

acknowledgement of receipt and, as of December 31, 2017,

the project was fully completed. The final contract amount

was USD 13 million.

los Bronces Duct Replacement (Middle area) –


On October 23, 2017, the Company executed a lump sum

contract plus unit price (P17.0050-1), called “Assembly

of 11 km and 1.6 km of piping (16"/24") - Mining Tailings

Transportation System and SAR at Medium Zone, with quality

assurance” with Anglo American Sur S.A.

This project comprises the continuation of works for

replacement of pipes, now at the medium zone, for the

mining tailings transportation system, from the Ortiga Tunnel

Portal to the Barros Negro mountain area, with 16" piping

along 11 km and 24" piping along 1.6 km, in addition to

implementing a By Pass and interconnection of valves with

the Waste Water System lines.

As for December 2017, the project recorded a 10.4%

progress, and the contract amount was USD 28 million.

Escondida water Supply Expansion (EwSE) -

Minera Escondida limitada

It is reported that on March 8, 2018, the Company was

awarded by Minera Escondida Limitada the Construction

Contract CC002, “Water Conveyance Construction and

Assembly” No. 8500138203, which corresponds to one

of the 3 contracts that are part of the Escondida Water

Supply Expansion (EWSE) Project, owned by Minera

Escondida Limitada.

The EWSE Project is intended to increase the capacity

of the desalination plant and drive system that were part

of the Escondida Water Supply (EWS) Project concluded

by the end of 2016, in which the Company took part

under a consortium with Bechtel Chile for the construction

of part of such project.

The Construction Contract awarded to the Company

comprises the installation of 6 pumps at each one of

the existing pumping stations, a power transformer,

the expansion of the bay at the GIS of each Substation

and the construction of a 14-km long and 36" wide

distribution pipeline. The works shall be developed at the

pumping stations, the existing substations of the pumping

system and within the location of Minera Escondida, in

Region II of Antofagasta, at a site higher than 3,500 meters

above sea level.

The effective term of the Contract is 534 days as from

commencement, and the contract amount is USD 65 million.

ECuADoR

Shushufindi Services – Consorcio Shushufindi

The Company, through its subsidiary Construcciones y


Prestaciones Petroleras S.A. (CPP), renders specialized

technical services of engineering, procurement and

construction in the Shushufindi-Aguarico field, Province of

Sucumbíos, in Eastern Ecuador, for the client Consorcio

Shushufindi (a JV formed by Schlumberger, 75% and

Tecpetrol, 25%), a project that is intended to increase

production in the whole field.

During 2017, CPP has performed the following activities in

Shushufindi: construction of 5 km of 13.8 kVA electricity lines,

5 km of 34.5 kVA electricity lines, 4 km of 69 kV electricity

lines and 5 complementary projects for the improvement of

facilities in the main stations in the field. These works were

certified during this fiscal year for the sum of USD 65 million.

Auca Services – Shaya Ecuador

The Company, through its subsidiaries Construcciones

Globales Andinas CGA S.A. (CGA) and Construcciones y

Prestaciones Petroleras S.A. (CPP), renders specialized

technical services of engineering, procurement and

construction within the Auca Oil Fields (Bloque 61), Province

of Orellana, in Eastern Ecuador, for the client Shaya Ecuador

(a subsidiary of Schlumberger), a project that is intended to

increase production in the whole field.

During 2017, CGA and CPP have performed the following

activities in Bloque 61: construction of 1 new well platform,

and improvements in 15 well platforms, resulting in 35 new

producing wells in the field, execution of 4.2 km of intra-field

pipelines (diameters between 6” and 8”, for oil and water),

procurement of electrical equipment for existing platforms,

1 project for water injection facilities, and 9 complementary

projects for the improvement of facilities in the main stations

in the field and platforms, and some minor works and

engineering works for 2017 and 2018 projects.

These works were certified during this fiscal year for the sum

of USD 79 million.

Techint E&C is working on the replacement of pipelines at the Chilean los Bronces copper and molybdenum mine.


EuRoPE AND CoMMoNwEAlTH oF INDEPENDENT

STATES (CIS)

Projects developed by Techint Compagnia Tecnica

Internazionale (TEMIL) and their subsidiaries:

Dunkerque lNg (France) - Électricité de France (EDF) -

Fast Reloading Project

On January 28, 2016 a contract was signed for the fast

Reloading at the LNG terminal in Dunkerque, France. This is

an engineering, procurement and construction (EPC) contract,

under an LSTK formula, for the expansion of the terminal,

which is in the final phases of completion, to increase the

LNG reloading capacity of the carriers from the current

4,000 cubic meters per hour to 8300 cubic meters per hour.

It mainly includes the installation of another Boil-Off Gas

Compressor and the replacement of the 8 low pressure

in-tank pumps in two of the three existing tanks, in addition

to the related ancillary services and utilities, and all the

necessary civil, mechanical and electrical works required.

The amount of the contract is USD 35 million, and as of

December 31, 2017, the progress of construction works was 56%.

The execution of the Electro-Mechanical Tie Ins is scheduled

to take place during the plant shutdown starting on August

4, 2018, simultaneously with shutdown needed to replace

the Flare. The Company is analyzing with its Partner

(Sener), the recognition of an incentive plan parallel to

the one signed with the end client for an amount equal

to USD 1.9 million.

Pursuant to the contract, the completion and the issue

of the Taking Over Certificate (TOC) are estimated to occur

in October 2018.

in mexico, the company has started to work on the Altamira Compression Station project.


MÉXICo AND NoRTH AMERICA

MEXICo

In this year, the Company’s subsidiary in Mexico, Techint S.A.

de C.V. jointly with its subsidiaries (TEMEX), has consolidated

its ongoing projects and continues working on the development

of new business lines.

The main projects executed during the period are the following:

Combined Cycle Power Plant Norte III - Abeinsa juarez N III,

S.A. de C.v.

This project includes engineering, construction, supply

management, procurement and commissioning of a

Combined Cycle power plant in two 2TGx1TV modules with a

minimum power of 906 MW in Ciudad Juárez, Chihuahua.

The contract amount for this project is around USD 574

million with a term of 27 months. As of December 31, 2017,

the overall progress of the project was 5%.

Internal Coal Handling System Revamp (RSIMC) -

greenfield SPv I S.A.P.I. de C.v.

The contract consists in the revamp of current facilities with

a view to increasing the coal transportation capacity from

1,300 ton/h to 1,800 ton/h in the President Plutarco Elías

Calles Power Plant. The scope includes engineering, supply

management, construction, commissioning and performance

testing of the new facilities.

The contract amount for this project is around USD 39 million

with a term of 17 months. As of December 31, 2017, the

overall progress of the project was 0%.

Altamira Facilities Compressor Station – Infraestructura Marina

del golfo, S. de R.l. de C.v.

The project consists in engineering, procurement and

construction works for a compressor station of 135,000 HP

(3+0) with a measuring station within the same location in

Altamira (Tamaulipas). This project is part of Gasoducto Marino

Sur de Texas. This contract was signed in November, 2016.

The contract amount for this project is around USD 87 million.

As of December 31, 2017, the overall progress of the project

was 42%.

Construction works - Ternium de México S.A. de C.v.

This contract comprises professional services for placement

of personnel and materials for the execution of construction

works (including civil and electromechanical works) and

structure mounting.

Additionally, TEMEX executed different works in Ternium

plants all over Monterrey city.

As of December 31, 2017, in this contract, TEMEX had around

678 people working on a direct basis.

Construction works – Tubos de Acero de México S.A. de C.v.

This contract comprises professional services for placement

of personnel and materials for the execution of construction

works (including civil and electromechanical works) and

structure mounting.

As of December 31, 2017, TEMEX had approximately 384

people working in this project on a direct basis.

Heavy Duty Cleaning Service – Tubos de Aceros de México S.A. de C.v.

The cleaning service has been provided through Sidernet S.A.

de C.V. since April 2005 and it comprises the reception of raw

materials in the scrap yard, transportation and processing of

slag, and the recovery, cutting and classification of metal junk.

As of December 31, 2017 TEMEX had approximately 153

people working in the project.

Petacalco Project, Maintenance and operation Contract -

Comisión Federal de Electricidad (CFE)

Carbonser, S.A. de C.V., 50% of which is owned by TEMEX,

was established on August 8, 1994, and its main activity is

to provide services for loading and transportation of coal

from Lázaro Cardenas port to President Plutarco Elías Calles

Power Plant, located in Petacalco, Guerrero.

During this fiscal year, the Company unloaded 7.0 million tons

of coal and delivered 6.6 million tons.


uNITED STATES

Tenaris Bay City – Tenaris Bay City Inc.

The project is located in Bay City, in Matagorda County,

Texas, and comprises a seamless tubing manufacturing

facility for the fabrication of seamless tubes in the range

of 114.3 – 244.5 mm in diameter (4 ½" to 9 5/8"), and

wall thickness from 5.7 to 25.4 mm, with a capacity

to produce around 600,000 tons/year, for the Tenaris

OCTG line of products.

During the first quarter of 2014, the Company’s subsidiary

TEMEX was awarded a contract to participate in the

Tenaris Bay City project, providing key and specialized

personnel.

The total amount of the contract is USD 46 million and,

as of December 31, 2017, the overall progress was 100%.

PERu

Sales by TESAC, the Company’s subsidiary in Peru, have

gone down relative to previous periods.

The most outstanding project executed during the period

is the followings:

Camisea Pipeline Maintenance – Compañía operadora de gas

del Amazonas S.A. (CogA)

The maintenance service for this gas pipeline is provided

by the joint venture “Consorcio para la Atención y

Mantenimiento de Ductos del Peru” (AMDP Joint Venture)

formed by TESAC (50%) and GyM S.A. (50%).

This joint venture was set up on December 18, 2015 with the

exclusive purpose of negotiating, signing and executing the

contract with Compañía Operadora de Gas del Amazonas

S.A.C. (COGA) to provide the service and maintenance of the

natural gas (NG) and natural gas liquids (NGL) transportation

system. In December 2015, this contract was awarded to

ADMP Joint Venture for a period of 60 months and for an

amount of USD 213 million. Subsequently, the contract

amount was updated due to a reduction in scope to USD 210

million. However, additional works for USD 50 million were

included, thus increasing the total amount of the contract to

USD 260 million. The project recorded a 52% progress as of

December 31, 2017.

On March 13, 2018, the Company signed a contract of

assignment of contractual position with GyM S.A. whereby

GyM ceded 49% to Techint SAC and 1% to TEURU of its

participation in the ADMP Joint Venture.

uRuguAy

During the fiscal year, revenues increased if compared to

those of the previous fiscal year.

The works developed in road, water and civil projects were

as follows:

Maldonado Sewage System – obras Sanitarias del Estado (oSE)

The Company continued with the sanitation works under the

contract with OSE. This contract, executed under a JV formed

by TEURU, Techint Compañía Técnica Internacional S.A.C.I.

Uruguayan Branch (TEARG Uruguayan Branch), Montec and

Belfi (grouped under a typical JV structure), was divided into

two phases: (1) land works to be executed by the JV TEARG

Uruguayan Branch, 53%, and TEURU, 47% comprising:

35 km of pipes, 1 land outfall of 4 km and civil and architecture

works in 7 pumping stations, and (2) one off-shore outfall

to be executed by the JV Montec (50%) and Belfi (50%).

Each one of the Companies under the JV undertook total and

exclusive liability for execution of their portion of the works.

During 2016, works were resumed for Sanitation Maldonado

pursuant to the new extension of contract LPI 1393,

awarded under Board of Directors’ Resolution No. 1624 of

December 28, 2015. The amount of the extended works

reaches USD 8 million. Works focused on the extensions

for connection of the neighborhood La Capuera, consisting

in laying 15 km of tubing, and two pumping stations at La

Capuera and Solanas. In these works, TEURU holds a 99%

participating interest, and TEARG Uruguayan Branch holds a

1% participating interest.


The total amount of this project as of December 31, 2017,

is USD 70 million and works recorded 97% progress.

Route 9 – Corporación vial del uruguay S.A.

TEURU was awarded by Corporación Vial del Uruguay S.A.

with works for the Reinstatement and Maintenance by

service levels of Route 9, Pan de Azúcar – Rocha section. The

original contract was for USD 19 million, and such amount

was increased due to the awards of new works: in October

2016, the extended works reached USD 5.9 million. Such new

extension included works on Road 9, repair of the old bridge

over the Andreoni Channel, and construction of a new bridge.

In 2017, new extended works were added: on August 7, a

contract was executed for USD 17.6 million, including works

on Roads 9, 10 and 16, and on December 22, another

contract was executed for USD 1.5 million, comprising

works on Roads 9 and 10.

The total amount of the contract, including the extended

works, is USD 44 million. Works started in June 2014 and

as of December 31, 2017 works recorded 76% progress.

Route 8 – Corporación vial del uruguay S.A.

From the contract signed on February 28, 2014 for the

execution of Route 9, the Corporación Vial del Uruguay

S.A. awarded us an extension of USD 10 million for road

reconstruction works on Route 8, between the 152k100

to 184K000 progressives, which are planned to be

carried out in 2018.

Techint E&C managed the construction of the greenfield TenarisBayCity seamless pipe plant in BayCity, USA.


The main engineering works performed are related to

projects under development and to others that have already

been completed, among which the following stand out:

CC genelba Plus (Argentina): Development of detail engineer-

ing for a 350 Mw Combined Cycle Power Plant. EPC contract

for Pampa Energy S.A., Province of Buenos Aires, Argentina.

CC Norte III (Mexico): Development of detail engineering

for a 915 Mw Combined Cycle Power Plant. EPC contract for

CFE, Ciudad Juarez, Mexico.

Shushufindi Field Project (Ecuador): Development of

engineering (basic and detail) in new facilities and/or plants,

or changes to existing facilities and/or plants, in relation to

hydrocarbon exploitation fields; preparation of documents

necessary for specification of equipment and materials, sub-

contracts for accessory/supplementary works and services

(civil, electricity, mechanical, etc.), and the relevant assembly.

REPSol FEED & EPmCm Sagari (Peru): Development of

detail engineering for two oil and gas platforms in Campo

Sagari and the flow lines necessary to send the production,

along with Kinteroni’s, to Nuevo Mundo’s facilities. The

engineering scope includes surface installations of flow lines

and the modifications required for Kinteroni’s facilities.

CENTENARIo lithium Project (Argentina): Detailed

Feasibility Study for ERAMET S.A.S. Development of

feasibility studies for detail engineering, CAPEX estimate

+/-10% for a production of 20 000 tons/year from the Lithium

Carbonate plant.

yPF Eolic Park (Argentina): Development of detail

engineering for a 50 MW wind farm located in Chubut with

the option to expand it to 100 MW. The project includes two

electrical substations, a high voltage transmission line (132 kV)

to connect them, and a medium voltage transmission line (35

kV) connecting the wind turbines to one of the substations.

DK Fast Reloading (France): Development of detail

engineering for additional facilities allowing for the increase of

reloading capacity of LNG from two LNG storage Tanks, 02T01

and 02T02 (out of three), to LNG carriers, through the existing

unloading / loading facilities, from 4000 m3/h to 8300 m3/h.

Cashiriari wellhead Compression Expansion (Peru):

Development of basic engineering for Pluspetrol for inlet gas

compression expansion at Malvinas Plant, adding two news

centrifugal compressors.

ToTAl Incahuasi –Phase 2 (Bolivia): Development of

extended basic engineering and debottlenecking for a CPF,

requested by Total E&P Bolivia.

ToTAl Río Cullen –Fenix on Shore (Argentina):

Development for TOTAL of basic engineering for a Río Cullen

gas Treatment Plant Expansion (on-shore) in order to receive

gas from a new Fenix off-shore platform, Tierra del Fuego,

Argentina.

AXIoN. FCC Revamp ( Argentina ): Development for AXION

Energy of detail engineering for the Cracking Catalytic Unit

(FCCU) expansion from 28 KBPD to 31 KBPD of Heavy Gas

Oil (EGO). The refinery is located at Campana City –Province

of Buenos Aires, Argentina.

yPF - IBE (Ingeniería Básica Extendida) - Increase of

Effluents Treatment Capacity (Argentina): Development

of basic engineering for two new effluent treatment plants

to comply with legal requirements and ensure the quality of

water to be reused for cooling.

“Fortín de Piedra” Development Facilities – Basic

Engineering (Argentina): Development of basic engineering

for the necessary facilities at Fortín de Piedra, Vaca Muerta,

Neuquen. Main areas involved: PADs, batteries, CPF, water

intake and storage, production water distribution flow lines,

trunk lines and pipelines.

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Engineering


“Fortín de Piedra” Development Facilities – Detail

Engineering (Argentina ): Development of detail engineering

for EPC contract, to develop the necessary facilities at Fortín

de Piedra, Vaca Muerta, Neuquen. Main areas involved :

PADs, batteries, CPF, water intake and storage, production

water distribution flow lines, trunk lines and pipelines.

ENAP Magallanes Area Incremental Project (Argentina):

Development of detail engineering for both on-shore and

off-shore facilities to optimize the extraction of gas from

existing wells and platforms in order to increase gas

production in the Magallanes Area to around 4 million of

cubic meters per day, delivering the gas to the Gral. San

Martín pipeline.

yPF – New water Intake works (Argentina): Development

of basic engineering for new water supply facilities and a

transportation pipeline to supply water to La Plata Industrial

Complex (CILP).

yPF - loop gasoducto RDM (Argentina): Development

of detail engineering for a 16”-33 km gas pipeline in Vaca

Muerta, Neuquen, Argentina, including its blocking valves

and scrapper traps .

Ennore lNg B&v (India): Development of detail

engineering, including a 3D Model for LNG Regasification

Terminal for an initial capacity of 20 MMSCMD with future

expansion capabilities to 40 MMSCMD.

Altamira Compressor Station is an EPC project for

Infraestructura Marina del Golfo (a partnership between

IENOVA and TransCanada), located in Altamira, Tamaulipas,

Mexico. Altamira project consists of a compressor station

of 2600 MMSCFD at 2,220 psig and 50 °C. IMG provided

GE turbo-compressors, metering and regulation skids and

all the control and communication systems for the project.

Detail engineering scope includes the design and purchase

of all compressors and metering station facilities.

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Shushufindi, Ecuador.


Dunkirk lng Terminal, France.


During this fiscal year, we focused on strengthening our

model of operation by executing several projects under the

recently established Shared Services of Purchasing and

Inspection, while maintaining the flexibility of the task-force

scheme for the Expediting and Traffic & Logistics work.

Such projects were PIAM, GNEA, El Bracho, Altamira (in

Mexico), Dunkirk (in France), Al Shahab, South Helwan, West

Damietta and the recent Fortin de Piedra.

Also was performed a deep review of the company

procedures of Expediting, and the required personnel

training. This work will continue in the forecoming fiscal

year in conjunction with an indeep review of the company

procedures of Inspection.

The centralization of the purchasing activity through

Procurement Shared Services of Engineered Materials and

Equipment throughout the projects (including the study of

surplus material use between projects) is already in place for

the mentioned projects.

The objective of establishing new Shared Services in Mexico

was to identify and capture the potential of the North

American Market, mainly in the Houston area.

The Post-Order network helped to increase the integration

and communication between expeditors and inspectors

of the team, and to optimize resources, planning, and

procedures for the operations. We specially focused on the

implementation of Shared Services of Inspection, and on

the utilization of custom software applications to increase

visibility and control of inspections.

We also worked to increase the coverage for projects

where Expediting work is controlled through a SAP custom

application (EXPD).

We also started to analyze the possibility of incorporating

Logistics to the Post-Order network, and started to support

the control of its activities by using standard SAP warehouse

applications.

This, in turn, provided deeper communication and integration

of Logistics with the other areas of Procurement and of the

Company in general, through the use of the same software

platform across these areas.

In relation to Project Support, throughout these years, we

focused on planning and coordinating the materials, suppliers,

commercial agreements, lessons learned and all activities

related to Supply Management, with the challenge of

providing early warnings and proposals for solution in projects

presenting alerts in the KPIs, cost, time and quality.

Our full time activity is centralized and stands out in three

main aspects: planning, best practices, and global networking

(Project Structure, RFQs & Bids, Procedures, IT Solutions).

Procurement


The Equipment Division continues seeking the objective of

optimizing the investment in construction equipment and

their allocation to projects, thus reducing the operational

costs, by means of the improvement, among other aspects,

of efficiency and effectiveness of repairs, the creation of a

differentiation and competitive improvement factor, and the

increase of productivity in projects.

This sector has managed to get ready any inventories related

to Pipelines. The last acquisition of the Company of a trencher

machine, improves the productivity in shale gas projects. This

fleet provides a competitive advantage; the availability of such

pipelines to meet contracts, by focusing on cost reduction,

efficiency in repairs in order to increase the productivity of the

projects, translated into the mechanical availability of our fleet.

The investment value in machinery, vehicles and equipment

for the 2017 fiscal year was USD 32.6 million.

During this fiscal year, we focused the investments in equip-

ment in Argentina, representing 61% of the total investment.

Especially for projects related to Vaca Muerta.

Techint E&C Equipment Division

The investment value in machinery, vehicles and equipment for the 2017 fiscal year was USD 32.6 million.


TECHINT E&C has consolidated its management in

prevention (quality, industrial safety, occupational health

and environmental protection - QHSE) as an intrinsic value

of its activity, assigning a high priority to it and focusing

on the effectiveness and productivity of preventive tools,

by reviewing and ensuring the permanent evolution of

the Integrated Management System (IMS), with Quality

and setting in motion different actions on Knowledge

Management (KM) in the Company.

In addition, TECHINT E&C develops its projects taking

into account the requirements of international standards

ISO 9001, ISO 14001 and OHSAS 18001, with preventive

practices that ensure the highest standards of quality, safety,

health and environmental protection.

TECHINT E&C aims at Zero Deviation. This means:

Not having any kind of anomaly.

Having a healthy, safe and well-maintained space.

Being in harmony with the environment and the communities

where we develop our projects.

Managing our knowledge in search for excellence.

TECHINT E&C works on the basis of a more efficient

administration of limited operational resources and with

modern knowledge management. Also, its management

aims at an organization that shares experiences among its

members, as a living social organization in the search for

continuous learning. Part of TECHINT E&C’s culture lies

in adapting to the environment in which it operates. This

is achieved under the leadership of KM, which consists in

providing training to projects and managing the knowledge of

our staff, so that it can be learnt, analyzed, shared, used and

disseminated to the entire Company.

Among KM expected results, we continue with the

improvement in the prevention of deviations, accidents and

incidents, as well as the improvement in quality, compliance

with milestones and deadlines, and customer satisfaction

(external and internal).

During the year, TECHINT E&C’s accident rate showed an

improvement, achieving an IF below the established target at

the end of the period.

Keeping QHSE standards demands sustainable leadership in

the implementation of efficient preventive measures, with

transparency and effective action programs.

Main actions carried out by TECHINT E&C, during this period:

Optimization of specific indicators (PPI).

Integration of the Corporate Assistance System (SAC)

process, focusing on critical processes.

Optimization of company processes focusing on their quality.

Deepening of the Proactive Approach (Base of the

accident pyramid).

Analysis of the deviations detected; identification of lessons

learned for an efficient and effective control of risks.

Deepening of the adherence to work methods: correct,

consistent and safe (Operational Discipline).

Quality, Health, Safety and Environment (QHSE)

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Our Business Conduct Compliance Program sets forth a

Policy on Business Conduct and a series of procedures to

ensure adherence of our employees to our ethical principles

and anti-bribery provisions.

Along with our Code of Conduct and our Transparency

Policy, the Program rules the way we should interact with

Public Officials, Governmental Entities, other organizations

and private persons. It also provides for specific rules to

assess and review third parties’ commitment to our ethical

standards, since we count on their consistent compliance

with applicable laws and specific regulations.

The Program takes a preventive approach by developing an

extensive communication strategy and employee training

activities.

It also emphasizes the importance of implementing activities

related to monitoring and auditing, and the use of the

Company’s Compliance Line to detect and react to potential

policy breaches.

In March 2018 TEBRA received two certifications: ISO 37001:

2016, Anti-bribery Management System and the Declaration

of Conformity ISO 19600: 2014, Compliance Management

System.

The Company acknowledges its responsibilities regarding

environmental protection and sustainable development.

Therefore, it commits before its employees, clients,

contractors and the community as a whole to minimize the

environmental and social impact of its operations and to avoid

any adverse effects on the environment.

During 2017, under our Social Responsibility program, we

developed several initiatives focused on promoting education,

which we consider the driving force for social equity and

creation of opportunities:

Engagement in the Merit Scholarships Program for

secondary schools through the “Fundación Hermanos

Agustín y Enrique Rocca”.

Scholarships granted to undergraduate and post-graduate

students of the courses of studies on Engineering and

Applied Sciences, which are managed through the Roberto

Rocca Education Program.

Donation of IT equipment.

Health, medical care, vaccination and nutrition campaigns

conducted in several communities.

Compliance and Internal Control

Social Responsibility

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During the period, progress continued to be made in several

IT internal projects related to improvements in technological

infrastructure, upgrade to new software versions, implement

of new solutions and research of different technology

solutions related with digital transformation to cover and

improve our competitiveness in different business processes.

The most outstanding IT projects were the following:

The BIM methodology is being implemented in order to

improve the productivity, control, constructability and commu-

nication along the Engineering phases and Construction.

In order to have state-of-the-art technology in Engineering 3D

tools, several Proofs of Concepts of the latest Engineering

applications version were developed.

A new software is being implemented to improve welding

process traceability and quality control.

Risk control software was implemented for the

construction process.

A new Cost Control / Construction Progress software was

implemented.

New locations continue to be setup in several countries for

Accounting and Electronic Billing.

Mobile solutions to be use at the Site Project, were developed

for Information capture in the Safety processes and HHRR .

Applications were implemented for the Personnel Search and

Selection process.

Works continue in the Document Management and third

party information exchange automation.

A new solution was implemented for collaboration, application

sharing, etc integrated with federated/public service.

A restructuring and fine tuning of the Active Directory and

SCCM Infrastructure was completed.

A new Proxy for Internet access was implemented for

border Security.

A new VPN Global solution was implemented.

Diverse technology solutions are being evaluated in

order to be implemented to increase and improve our

competitiveness, especially for the core EPC process.

The Company acknowledges that its human resources

are the key to success when it develops complex projects

in different countries. For this reason, the Company pays

special attention to the recruiting, training and development

of the personnel making up the Company’s work team. The

Company’s main challenges in terms of human resources

management are ensuring that it has the talent required

to pursue its current projects and seeking to assure the

resources it needs for development in the different areas

where the Company operates.

During the fiscal year, the Company needed to accelerate its

recruitment process to face its increasing activity level and,

in this sense, the Young Professionals Program was the main

gate for those who are likely to hold management positions

in the future. Selection takes place at the main universities

of the countries where the Company is operating and is

supplemented by an intensive training program during the

first two years.

The preparation and follow-up of career development

programs based on aligning its collaborators’ professional

development with the Company’s business strategy

constituted another pillar to support human resources

management during this fiscal year. The Company also

worked on the design of a training program devoted to

introducing deeper technical content focused on new

technologies. In addition, this program reaches all levels

of the Company, from project managers, middle managers

and supervisors to field personnel.

Technology and IT Systems

Human Resources

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For the year ended December 2017, the Company obtained

profits for USD 16.6 million including USD 2.9 million

of non-controlling interest, with accumulated earnings for

USD 161.7 million corresponding to the equity holder.

We would like to thank all our clients, suppliers, banking

institutions and, above all, our employees, whose work

on a daily basis have contributed to these results.

The Board of Directors

Board of Directors’ Proposal


PRESIDENT

Lodovico Andrea Palú Rocca

vICE PRESIDENT

Carlos Eduardo Bacher

Eduardo Nicolás Rocca Couture

DIRECToRS

Ricardo Pascale Cavalieri

Luis Pablo Solari Damonte

Alicia Lucía Mondolo

Ricardo Ourique Marques

Alfredo Francesco Luigi Orelli

Directors were appointed at the Regular

Shareholders’ Meeting held on May 30, 2017.

Board of Directors


Techint E&C is working on the new coke-oven gas treatment plant for Siderar at San nicolás, Argentina.




TECHINT E&C S.A.

Years ended December 31, 2017 and 2016




Altamira Compression Station, mexico.

55Consolidated Financial Statements. Years ended December 31, 2017 and 2016.

DENoMINATIoN:

TECHINT E&C Sociedad Anónima.

lEgAl ADDRESS:

La Cumparsita 1373 7th Floor

Montevideo (11200)

(598-2) 901-9091

CoMPANy ACTIvITy:

Investments.

DATE oF REgISTRATIoN:

July 04, 2012.

EXPIRATIoN

oF CoMPANy CHARTER:

July 04, 2112.

REgISTRy NuMBER:

RUT 21-7015450012.

1 See note 13 to the consolidated financial statements

2 UYU: Uruguayan Pesos

3 See note 24

SHARE CAPITAl:

Shares: 16,922,492,830 1.

Face Value: UYU 16,922,492,830 2.

PARENT CoMPANy:

Techint Investments S.A. 3.

lEgAl ADDRESS:

Alquilino de la Guardia 8, piso 5°.

Panama, Panama.

PARENT CoMPANy’S ACTIvITy:

Investments.

PARENT CoMPANy:

Shares: 100%

Votes: 100%

Legal Information






All AmoUnTS in USD ThoUSAnDS

ASSETS

non-current assets

Property, plant and equipment (PP&E)

Intangible assets

Investments accounted for using the equity method

Other investments

Non-current tax assets

Trade and other receivables

Deferred income tax assets

Total non-current assets

Current assets

Inventories

Derivative financial instruments

Current tax assets


Construction contracts work in progress

Cash and cash equivalents

Total current assets

Assets of disposal group classified as held for sale

Total Assets

Dec 31, 2017

259,584

4,441

14,827

3,710

13,396

156,317

36,105

488,380

27,546

199

40,914

693,290

158,786

390,063

1,310,798

5,219

1,804,397

272,264

5,032

26,254

10,403

14,047

170,854

30,918

529,772

25,552

589

27,873

602,491

148,304

231,804

1,036,613

16,208

1,582,593

4

5

6

7

8

15

9

26

8

12

11

Dec 31, 2016

Years ended December 31, 2017 and 2016.

Notes

Consolidated Statement of Financial Position



EQUiTy AnD liABiliTiES

Equity

Capital and reserves attributable to the Company's equity holders

Non-controlling interests

Total Equity

non-current liabilities

Borrowings

Deferred income tax liabilities

Non-current tax liabilities


Trade and other payables

Other liabilities

Total non-current liabilities

Current liabilities

Borrowings



Construction contracts work in progress

Current tax liabilities

Other liabilities

Total current liabilities

Total liabilities

Total Equity and liabilities

Dec 31, 2017

668,769

4,790

673,559

41,110

13,923

–

2,029

36,375

65,723

159,160

85,093

632,640

5,675

102,474

37,570

108,226

971,678

1,130,838

1,804,397

639,319

5,927

645,246

54,022

28,844

993

–

37,856

51,551

173,266

105,174

507,609

678

64,171

29,684

56,765

764,081

937,347

1,582,593

14

15

26

16

17

14

16

26

17

Dec 31, 2016Notes

The accompanying notes are an integral part of these consolidated financial statements.


Consolidated Statement of Financial Position (cont’d.)



Revenues from construction contracts and other services

Cost of revenue

gross profit

General administrative and selling expenses



operating income

Financial income

Financial costs


Income tax expense

Net Income (1)

(1) Attributable to:



Net Income

Dec 31, 2017

1,427,133

(1,270,266)

156,867

(141,867)

3,390

(3,738)

14,652

55,514

(53,178)

16,988

(374)

16,614

13,694

2,920

16,614

1,283,816

(1,082,756)

201,060

(138,943)

13,210

(17,248)

58,079

76,255

(48,434)

85,900

(43,509)

42,391

38,481

3,910

42,391

27

27

6

29

28

28

30

Dec 31, 2016Notes



Consolidated Income Statement


Net Income

other comprehensive income:

items that will not be reclassified to profit or loss

Increase of revaluation of PP&E net of tax effects

Other comprehensive income using the equity method -


Remeasurement - Actuarial losses (gains) net of tax effects

Subtotal items that will not be reclassified to profit or loss

items that may be subsequently reclassified to profit or loss

Currency translation differences

Other comprehensive income using the equity method -


Cash flow hedge, net of tax effects

Subtotal items that may be subsequently reclassified to profit or loss

other comprehensive income, net of tax

Total comprehensive income (2)

(2) Attributable to:



16,614

11,198

–

(2,073)

9,125

316

(3,461)

(1,632)

(4,777)

4,348

20,962

19,807

1,155

20,962

42,391

14,482

264

892

15,638

(33,350)

3,004

3,518

(26,828)

(11,190)

31,201

28,261

2,940

31,201


All AmoUnTS in USD ThoUSAnDS Dec 31, 2017 Dec 31, 2016


Consolidated Statement of Comprehensive Income


Share Capital

Attributable to the Company´s Equity Holders

Balance at December 31, 2016

Net income for the year

Other comprehensive income


Depreciation of reserve for PP&E revaluation surplus net of tax effects

Decrease of reserve for PP&E revaluation surplus due to PP&E

disposal net of tax effects


Cash flow Hedge net of tax effects


Total comprehensive income for the year

Resolution of the Shareholders ordinary meeting held on May 30, 2017

Board of Director´s fee

Legal reserve

Resolution of the Shareholders extraordinary meeting held on August 2, 2017:

Capital Contributions

Incorporation of subsidiary - TEFIN S.A.

Dividends distributed to non-controlling interests


Cumulative translation differences

(493,448)

–

–

–

–

–

–

(1,327)

(1,327)

–

–

–

–

–

(494,775)

legal reserve

7,425

–

–

–

–

–

–

–

–

–

1,924

–

–

–

9,349

Capital Surplus

–

–

–

–

–

–

–

–

–

–

–

–

(261)

–

(261)

867,504

–

–

–

–

–

–

–

–

–

–

10,000

–

–

877,504


4

4

4

13

Notes





Share Capital

Total Equity

reserve for PP&E revaluation surplus

85,240

–

11,198

(17,858)

(5,969)

–

–

–

(12,629)

–

–

–

–

–

72,611

reserve for Cash Flow hedge

(3,546)

–

–

–

–

–

(1,632)

–

(1,632)

–

–

–

–

–

(5,178)

reserve for Pension Plan Benefits

(79)

–

–

–

–

(2,126)

–

–

(2,126)

–

–

–

–

–

(2,205)

reserve for future dividends

50,000

–

–

–

–

–

–

–

–

–

–

–

–

–

50,000

retained Earnings

126,223

13,694

–

17,858

5,969

–

–

–

37,521

(96)

(1,924)

–

–

–

161,724

Total

639,319

13,694

11,198

–

–

(2,126)

(1,632)

(1,327)

19,807

(96)

–

10,000

(261)

–

668,769

Non - Controlling Interests

5,927

2,920

–

–

–

53

–

(1,818)

1,155

–

–

–

225

(2,517)

4,790

645,246

16,614

11,198

–

–

(2,073)

(1,632)

(3,145)

20,962

(96)

–

10,000

(36)

(2,517)

673,559

Attributable to the Company´s Equity HoldersAll AmoUnTS in USD ThoUSAnDS


Share Capital

Attributable to the Company´s Equity Holders


Net income for the year

Other comprehensive income


Depreciation of reserve for PP&E revaluation surplus net of tax effects

Decrease of reserve for PP&E revaluation surplus due to PP&E disposal net of tax effects


Cash flow Hedge net of tax effects


Total comprehensive income for the year

Resolution of the Shareholder´s meeting held on June 8, 2016

Board of Director´s fee

Legal reserve

Dividends distributed to non-controlling interests


Cumulative translation differences

legal reserve

(464,318)

–

–

–

–

–

–

(29,130)

(29,130)

–

–

–

(493,448)

4,815

–

–

–

–

–

–

–

–

–

2,610

–

7,425

867,504

–

–

–

–

–

–

–

–

–

–

–

867,504


4

4

4

Notes





Share Capital

Non - Controlling Interests

Total Equity

reserve for PP&E revaluation surplus

reserve for Cash Flow hedge

reserve for Pension Plan Benefits

reserve for future dividends

retained Earnings

Total

90,025

–

14,655

(16,489)

(2,951)

–

–

–

(4,785)

–

–

–

85,240

(7,064)

–

–

–

–

–

3,518

–

3,518

–

–

–

(3,546)

(816)

–

–

–

–

737

–

–

737

–

–

–

(79 )

50,000

–

–

–

–

–

–

–

–

–

–

–

50,000

71,008

38,481

–

16,489

2,951

–

–

–

57,921

(96)

(2,610)

–

126,223

611,154

38,481

14,655

–

–

737

3,518

(29,130)

28,261

(96)

–

–

639,319

4,542

3,910

91

–

–

155

–

(1,216)

2,940

–

–

(1,555)

5,927

615,696

42,391

14,746

–

–

892

3,518

(30,346)

31,201

(96)

–

(1,555)

645,246

Attributable to the Company´s Equity HoldersAll AmoUnTS in USD ThoUSAnDS


Cash flows from operating activities

Net Income for the year

Adjustments to reconcile net income to cash flow operations

PP&E depreciation

Intangible amortization

Construction contracts in progress

Net provisions

Net allowance for doubtful accounts

Inventories valuation allowance

Income Tax accrued

Gain from the sales of PP&E

Impairment loss

Gain from Indemnity

Interest accrued from trade and other receivables

Interest accrued from borrowings


Other, including currency translation differences

Changes in balances corresponding to:

Trade accounts receivable and tax assets

Inventories

Trade and other payables and tax liabilities


Income tax payments

Other liabilities

Board of Director´s fees

Changes in non-controlling interests

Net cash generated by / (used in) operating activities

16,614

44,566

2,850

27,821

(15,432)

610

(215)

374

(5,158)

193

(995)

(10,890)

12,645

(3,390)

3,799

(77,374)

(1,737)

133,475

10,989

(21,031)

78,418

(96)

(2,517)

193,519

42,391

42,893

3,273

(114,742)

10,120

34

641

43,509

(4,671)

5,528

(882)

(8,407)

10,210

(13,210)

(4,674)

32,492

16,894

(153,033)

(1,360)

(43,750)

376

(96)

(1,555)

(138,019)

4

5

18

8

9

30

29

4

29

28

28

6

All AmoUnTS in USD ThoUSAnDS Dec 31, 2017 Dec 31, 2016Notes


Consolidated Statement of Cash Flows


Cash flows from investing activities

Proceeds from disposal of PP&E

Payment for purchases of PP&E

Proceeds from disposal of intangible assets

Purchases of intangible assets

Other investments and investment accounted for using the equity method (net)

Dividend collected from investments accounted for using the equity method

Net cash used in investing activities

Cash flow from financing activities

Shareholders contribution

Payment Interest

Proceeds from borrowings

Repayments of borrowings

Net cash used in financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effect of exchange rate changes

Variation in cash due to consolidation of subsidiaries

Cash and cash equivalents at the end of the year

non - Cash transactions

Increase of revaluation of PP&E, net of tax

Remeasurement - Actuarial (gains) losses net of tax

Cash flow hedge, net of tax

15,011

(44,390)

16

(2,360)

6,471

15,200

(10,052)

10,000

(6,283)

51,468

(94,393)

(39,208)

144,259

226,597

8,140

2,290

381,286

11,198

(2,073)

(1,632)

16,077

(34,767)

95

(2,323)

3,716

8,265

(8,937)

–

(9,165)

96,106

(107,745)

(20,804)

(167,760)

403,813

(9,456)

–

226,597

14,746

892

3,518

4

5

5

6

14

14

14

12

12

4


All AmoUnTS in USD ThoUSAnDS Dec 31, 2017 Dec 31, 2016Notes


Consolidated Statement of Cash Flows (cont’d.)


magallanes Area incremental Project (PiAm), Argentina.

71

Basis of preparation

Consolidation and equity accounting

Foreign currency translation

Use of estimates


Intangible assets

Impairment of non-financial assets

Financial assets

Offsetting financial instruments


Inventories

Construction contracts work

in progress

Other investments




Equity

Borrowings

Current and deferred income tax

Employee benefits

Provisions

Revenue recognition

Leases

Assets of disposal group classified

as held for sale

General Information

Accounting policies

1.

2.

a.

b.

c.

d.

e.

f.

g.

h.

i.

j.

k.

l.

m.

n.

o.

p.

q.

r.

s.

t.

u.

v.

w.

x.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

Financial risk management


Intangible assets

Investments accounted for using

the equity method

Other investments


Inventories

Financial instruments by category

Assets of disposal group classified

as held for sale


Share Capital

Borrowings

Deferred income taxes


Other liabilities

Provisions

Employee benefits

Participation in Joint Operations

Contingencies and commitments

Restricted assets

Claims Receivables

Related party transactions

Principal Subsidiaries

Derivate financial instruments

Cost of revenue and expenses by nature

Financial results


Income tax

Main contracts

Subsequent events

Index to the Notes to the Consolidated Financial Statements


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NoTE 1.

gENERAl INFoRMATIoN

lEgAl INFoRMATIoN

Techint E&C Sociedad Anónima (“TEChinT E&C”), a

company controlled by Techint Investments S.A. is a part

of the Techint Group (“TG”). TECHINT E&C’s purpose is

to engage in investments by holding equity interests in

companies or organizations whose corporate purpose

includes engineering, construction and services. References

in these consolidated financial statements to “TECHINT

E&C” or “Company” refer to TECHINT E&C S.A. and its

consolidated subsidiaries.

The Company holds the following direct investments:

TEI&C S.A. (hereinafter, “TEIC”): Uruguayan company (100%)

Techint Ingeniería y Construcciones S.L.U. (hereinafter,

“TIC”): Spanish company, (100%),

Construcciones y Prestaciones Petroleras S.A. CPP

(hereinafter, “CPP”): Ecuatorian company, (99.99%) (0.01%

through subsidiaries)

Construcciones Globales Andinas CGA S.A. (hereinafter, “CGA”):

Ecuatorian company, (98.00%) (2.00% through subsidiaries).

These consolidated financial statements were formulated for

issue by the Company’s Board of Directors on April 26, 2018

and were updated by the Company’s Board of Directors after

this formulation and approved by the Shareholder´s meeting

held on May 10, 2018.

During the current fiscal year TECHINT E&C experienced

some changes in its investment portfolio, which are detailed

as follows:

In March 2017, Techint Inversiones S.A.I.F. (TEINVA), an

argentine subsidiary, acquired shares in Prestaciones

Globales Petroleras S.A. (formerly GEA-GEO Energy

Alternarives S.A.), an argentinian company, wich representing

the 70% of its share capital, for an amount of USD 145,250.

The other 30% was purchased by Flinwok S.A., an uruguayan

subsidiary, for an amount of USD 62,250.

In June 2017, by virtue of a corporate restructuring process

and for the purpose of synergy unification, the subsidiary

TIC acquired the shares held by Techint Investment S.A. in

TEFIN S.A. (“TEFIN”), representing 10% of TEFIN’s share

capital, for an amount of USD 970,000. The other 90%

was purchased by Techint Compañía Técnica Internacional

S.A.C.I. (”TEARG”), an argentine subsidiary, for an amount

of USD 8.73 million.

In July 2017, the dutch subsidiary TE & C Investements

Netherlands BV (TE&C) acquired the 25,000 shares of its

dutch subsidiary Verkotec B.V. In this way, TE&C became

the only shareholder, and in August 2, 2017 initiated the

liquidation process.

The extraordinary Shareholders meetting of the argentine

subsidiary Sidernet S.A. held on September 29, 2017

approved the Sidernet spin-off and as a result of the same,

the constitution of Tecsesi S.A .

In November 2017, the dutch subsidiary TE&C Investments

Netherlands B.V. (“TE&C”) sold to the Company its

participation interest it held in CGA consisting of 980

common shares, representing 98% of CGA’s share capital,

for an amount of USD 14.6 million.

In November 2017, the dutch subsidiary TE&C Investments

Netherlands B.V. (“TE&C”) sold to the Company its

participation interest it held in CGA consisting of 980

common shares, representing 98% of CGA’s share capital,

for an amount of USD 14.6 million. Since November 2017

CGA is in process of merge with CPP.

During the previous fiscal year TECHINT E&C experienced

some changes, which are detailed as follows:

On December 20, 2016, TIC made a distribution in kind

against free-availability reserves (issue premium), for the

sum of USD 1,368,406. Such distribution was made through

the transfer to TECHINT E&C of all the shares held by TIC in

CPP. In particular, TIC transferred 13,099 shares representing

99.99% of the capital stock.

Notes to the Consolidated Financial Statements. All amounts are shown in USD thousands, unless otherwise stated. 73

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NoTE 2.

ACCouNTINg PolICIES

The principal accounting policies applied in the preparation

of these consolidated financial statements are set out below.

These policies have been consistently applied to all the years

presented, unless otherwise stated.

a. BASIS oF PREPARATIoN

ACCoUnTing PoliCiES

These consolidated financial statements are prepared in

accordance with International Financial Reporting Standards

(“IFRS”), as issued by the International Accounting Standards

Board (“IASB”), under the historical cost convention, as modified

by the revaluation of machinery, equipment and vehicles

(“Revaluation of PP&E”), used in the construction business

available-for-sale assets, investments accounted for using the

equity method, financial assets and liabilities (including derivative

instruments) at fair value through profit or loss. The consolidated

financial statements are presented in thousands of U.S. dollars

(“USD”), which is the functional currency of TECHINT E&C.

Some comparative amounts have been reclassified to

conform to changes in presentation in the current period.

These changes did not have an impact on the determination

of the results for the year, the equity or any other significant

component of the consolidated financial statements.

The preparation of consolidated financial statements in

conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise

its best judgment in the process of applying the Company’s

accounting policies. The areas involving a higher degree

of judgment of complexity, or the areas where assumptions

and estimates are significant to the consolidated financial

statements, are disclosed in note 2.d.

ChAngES in ACCoUnTing PoliCy AnD DiSCloSUrES

(a) Standards and amended standards mandatory for the first

time for the Financial Statements beginning january 1, 2017

and adopted by the Company

There are no standards, amendments to standards and

interpretations to existing standards which are effective for

the Company for annual fiscal year ended December 31,

2017 that are relevant to the operations of the Company,

and therefore, no impact resulted from the application of

those standards, amendments and interpretations on these

consolidated financial statements.

(b) Standards, amendments and interpretations to existing

standards that are not yet effective and have not been early

adopted by the Company

IFRS 15, “Revenue from contracts with customers”

In May 2014, the IASB issued IFRS 15, ”Revenue from

contracts with customers”, which sets out the requirements

in accounting for revenue arising from contracts with

customers and which is based on the principle that revenue

is recognized when control of a good or service is transferred

to the customer. IFRS 15 must be applied on annual periods

beginning on or after January 1, 2018.

The Company's management has assessed the effects

of applying the new standard on the Company’s financial

statements and has not identified any material impact in the

application of the new standard.

IFRS 9, “Financial instruments”

In July 2014, the IASB issued IFRS 9, “Financial instruments”,

which replaces the guidance in IAS 39. It includes requirements

on the classification and measurement of financial assets and

liabilities, as well as an expected credit losses model that replaces

the current incurred loss impairment model. IFRS 9 must be

applied on annual periods beginning on or after January 1, 2018.

The Company's management has assessed the effects

of applying the new standard on the Company’s financial

statements and has not identified any material impact in the

application of the new standard.

IFRS 16, “Leases”

In January 2016, the IASB issued IFRS 16, "Leases", which

will result in almost all leases being recognized on the

balance sheet, as the distinction between operating and

finance leases is removed. Under the new standard, an asset


(the right to use the leased item) and a financial liability to pay

rentals are recognized. IFRS 16 must be applied on annual

periods beginning on or after January 1, 2019.

The Company is currently in the process of evaluating the

impact on the Consolidated Financial Statement derived from

the application of this new standard.

b. CoNSolIDATIoN AND EquITy ACCouNTINg

SUBSiDiAry ComPAniES

Subsidiaries are all entities over which TECHINT E&C has

control. TECHINT E&C controls an entity when it is exposed

to, or has rights to, variable returns from its involvement with

the entity and has the ability to affect those returns through

its power over the entity. Subsidiaries are fully consolidated

from the date on which control is exercised by the Company

and are no longer consolidated from the date control ceases.

The purchase method of accounting is used to account for

the acquisition of subsidiaries by TECHINT E&C. The cost

of an acquisition is measured as the fair value of the assets

given, equity instruments issued and liabilities incurred

or assumed at the date of acquisition. Acquisition-related

costs are expensed as incurred. Identifiable assets acquired,

liabilities and contingent liabilities assumed in a business

combination are measured initially at their fair values at the

acquisition date. Any non-controlling interest in the acquiree

is measured either at fair value or at the non controlling

interest’s proportionate share of the acquiree’s net assets.

The excess of the aggregate of the consideration transferred

and the amount of any non-controlling interest in the acquiree

over the fair value of the identifiable net assets acquired is

recorded as goodwill. If the cost of acquisition is less than

the fair value of the net assets of the subsidiary acquired, the

difference is directly recognized in the income statement.

If the companies acquired were under common control,

the assets and liabilities of such companies (and

their respective subsidiaries) are accounted for at the

predecessor’s cost, reflecting the carrying amount of such

assets and liabilities contributed to the Company. Accordingly,

the consolidated financial statements include the financial

position of the abovementioned companies at historical

book values and no adjustment has been made to reflect fair

values at the time of the contribution. The difference between

the price paid and the historical book value was charged to

equity as Capital Surplus.

In case of disposal related to companies under common

control, the assets and liabilities of such companies (and

their respective subsidiaries) are accounted for at the

predecessor’s book values, reflecting the carrying amount

of such assets and liabilities disposed of the Company.

Accordingly, the consolidated financial statements exclude

the financial position of the abovementioned companies at

their carrying book values and no adjustment has been made

to reflect fair values at the time of disposal. The difference

between the considerations paid and the carrying book value

of the assets and liabilities of the entities derecognized is

charged to equity.

Material intercompany transactions, balances and unrealized

gains (losses) on transactions between TECHINT E&C

and its subsidiaries have been eliminated in consolidation.

Accounting policies of subsidiaries have been changed where

necessary to ensure consistency with the policies adopted by

TECHINT E&C.

According to the laws of the countries of certain subsidiaries,

a portion of the profit of the year is separated to constitute

statutory reserves until they reach statutory capped amounts.

These legal reserves are not available for dividend distribution

and can only be released to absorb losses.

See note 25 to the consolidated financial statements for the

list of principal consolidated subsidiaries.

TrAnSACTionS AnD non-ConTrolling inTErESTS

The Company treats transactions with non-controlling

interests as transactions with equity owners of TECHINT

E&C. For purchases from non-controlling interests, the


difference between any consideration paid and the relevant

share acquired of the carrying value of net assets of

the subsidiary is recorded in equity. Gains or losses on

disposals to non-controlling interests are also recorded

in equity. When TECHINT E&C ceases to have control or

significant influence, any retained interest in the entity is

remeasured to its fair value, with the change in carrying

amount recognized in profit or loss.

ASSoCiATED ComPAniES

Associated companies are entities in which TECHINT

E&C has significant influence but not control, generally

accompanying a shareholding of between 20% and 50%

of the voting rights (see note 6). Investments in associated

companies are accounted for using the equity method

of accounting and are initially recognized at cost. The

Company’s investment in associated companies includes

goodwill identified on acquisition, net of any accumulated

impairment loss.

The Company’s share of its associated companies’ post-

acquisition profits or losses is recognized in the income

statement, and its share of post-acquisition movements in

reserves is recognized in reserves. The cumulative post-

acquisition movements are adjusted against the carrying

amount of the investment.

When the Company’s share of losses in an associated

company equals or exceeds its interest in such company,

including any other unsecured receivables, the group does

not recognize further losses, unless it has incurred obligations

or made payments on behalf of the associated companies.

Unrealized gains on transactions between TECHINT E&C

and its associated companies are eliminated to the extent

of TECHINT E&C’s interest in the associated companies.

Unrealized losses are also eliminated unless the transaction

provides evidence of an impairment indicator of the asset

transferred. Financial statements of associated companies

have been adjusted where necessary to ensure consistency

with IFRS.

JoinT ArrAngEmEnTS

This is a joint agreement under which the parties having a

joint control are entitled to the assets and are subject to

the obligations related to liabilities, in connection with the

agreement. In addition, this type of transaction considers the

legal structure, the contractual provisions agreed upon by the

parties, and other relevant factors and circumstances.

The Company records this type of joint transactions

acknowledging all the assets, liabilities, income and expenses

relative to their share in the Joint Agreement, the description

of which is stated in Note 20.

Under IFRS 11, “Joint arrangements“, and IAS 28, “Investments in

associates and joint ventures“, investments in which two or more

parties have joint control must be classified as a “joint operation“,

when the parties have rights to the assets and obligations relating

to the arrangement or, as a "joint venture" when the parties have

rights to the net assets of the arrangement. Taking into account

such classification, joint operations are consolidated line by line

according to TECHINT E&C’s interest, whereas joint ventures are

recorded according to the equity method.

Investments classified as joint ventures are included in

the account “Investments accounted for using the equity

method” in the Consolidated Statement of Financial Position.

Under the equity method of accounting, interests in joint

ventures are initially recognized at cost and adjusted thereafter

to recognize the Company’s share of the post-acquisition profits

or losses and movements in other comprehensive income.

When the Company’s share of losses in a joint venture equals

or exceeds its interests in the joint ventures (which includes

any long-term interests that, in substance, form part of the

Company’s net investment in the joint ventures), the Company

does not recognize further losses, unless it has incurred

obligations or made payments on behalf of the joint ventures.

Unrealized gains on transactions between the Company

and its joint ventures are eliminated to the extent of the

Company’s interest in the joint ventures. Unrealized losses


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are also eliminated unless the transaction provides evidence

of an impairment of the asset transferred.

Accounting policies of the joint ventures have been changed

where necessary to ensure consistency with the policies

adopted by the Company.

c. FoREIgN CuRRENCy TRANSlATIoN

i. FUnCTionAl AnD PrESEnTATion CUrrEnCy

Items included in the consolidated financial statements of each

entity in which TECHINT E&C holds participating interests are

measured using the currency that best reflects the economic

substance of the underlying events and circumstances relevant

to that entity (“the functional currency”). The consolidated

financial statements are presented in thousands of U.S. dollars

(USD), which is the functional currency of TECHINT E&C. The

consolidated companies’ first record transactions using their

functional currency and their financial statements are then

translated to USD with the only purpose of being consolidated

by TECHINT E&C.

ii. BAlAnCES AnD TrAnSACTionS in CUrrEnCiES

oThEr ThAn ThE FUnCTionAl CUrrEnCy

Transactions in currencies other than the functional currency

are accounted for at the exchange rates prevailing on the date

of the transactions, and the corresponding exchange gains

and losses are recognized in the income statement.

Monetary assets and liabilities in currencies other than

the functional currency are translated at the year end

exchange rate.

iii. TrAnSlATion oF BAlAnCES AnD rESUlTS oF ConSoliDATED

ComPAniES

The results and financial position of all the consolidated

companies that have a functional currency different from

the Company’s presentation currency, which is the currency

of a non-hyperinflationary economy, are translated into the

presentation currency as follows:

assets and liabilities of each balance sheet are translated at

the closing rate on the date of that balance sheet;

income and expenses for each income statement are

translated at an average exchange rate; (unless this average

is not a reasonable approximation of the cumulative effect of

the rates prevailing on the transaction dates, in which case

income and expenses are translated at the rate on the dates

of the transactions);

all resulting exchange differences are recognized as a

separate component of equity.

In the case of sale or other disposition of any such

subsidiary, any accumulated translation adjustment

would be recognized in the income statement as part

of the gain or loss on sales.

The financial statements of subsidiaries companies whose

functional currency is the currency of a hyperinflationary

economy are adjusted for inflation in accordance with the

procedure described in the following paragraph prior to

their translation to USD. Once restated, all the items of

the financial statements are converted to USD using the

closing exchange rate. Amounts shown for prior years for

comparative purposes are not modified.

To determine the existence of hyperinflation, TECHINT E&C

assesses the quantitative characteristics of the economic

environment of the country, such as the trends in inflation

rates over the previous three years. The financial statements

of companies whose functional currency is the currency of a

hyperinflationary economy are adjusted to reflect the changes

in purchasing power of the local currency, such that all

items in the statement of financial position not expressed in

current terms (non-monetary items) are restated by applying

a general price index at the financial statement closing date,

and all income and expense, profit and loss are restated

monthly by applying appropriate adjustment factors. The

difference between initial and adjusted amounts is taken to

profit or loss.

d. uSE oF ESTIMATES

The preparation of consolidated financial statements requires

Management to estimate and evaluate both recorded and

contingent assets and liabilities as of a certain date, as well


as income and expenses recorded during the reporting

period. The future actual results may differ from estimates

made as of the date of preparation of these consolidated

financial statements.

Estimates and judgments are continually evaluated and are

based on historical experience and other factors, including

expectations of future events that are believed to be

reasonable under the circumstances.

There follows a description of the most relevant estimates

used to prepare these consolidated financial statements:

PErCEnTAgE oF ComPlETion mEThoD

The Company uses the percentage-of-completion method in

accounting for its contract revenues and expenses. Use of

the percentage-of-completion method requires the Company

to estimate the services performed to date as a proportion

of the total services to be performed. Furthermore, in

determining the contract revenue, TECHINT E&C considers

the estimated outcome for each of the construction contracts

which are in progress.

inComE TAxES

The Company is subject to income taxes in numerous

jurisdictions. Significant judgment is required in determining

the worldwide provision for income taxes. There are

transactions and calculations for which the ultimate tax

determination is uncertain. TECHINT E&C recognizes

liabilities for anticipated tax audit issues based on estimates

of whether additional taxes will be due. Where the final tax

outcome of these matters is different from the amounts

that were initially recorded, such differences will impact the

current and deferred income tax assets and liabilities in the

period in which such determination is made.

mEASUrEmEnT oF ClAimS rECEiVABlES

The Company reviews its financial assets and financial

liabilities including its terms, maturities and discount

rates in order to adjust them to its realizable value or its

settlement value considering the time value of money and

other factors.

AllowAnCES For DoUBTFUl ACCoUnTS

Management maintains an allowance for trade and other

receivables to account for estimated losses resulting from

the inability of clients to make required payments. When

evaluating the adequacy of an allowance for trade receivables,

Management bases its estimates on the aging of accounts

receivable balances and historical write-off experience, client

credit worthiness and changes in client payment terms.

FAir VAlUE oF ProPErTy, PlAnT AnD EQUiPmEnT

According to the Group’s accounting policies, on December

31, 2017, and 2016, a technical valuation was carried out

by qualified external experts in relation to construction

equipment, machinery and vehicles, based on the valuations

of assets made do not substantially differ from their fair

value as of the date of the consolidated financial statements

(see note 4).

oThEr ESTimATionS

In addition, the Company’s Management makes estimations

to calculate, at certain moment the recoverable amounts

of assets, the depreciation and amortization, the provision

for cost and contingencies, the pension plans provision

and to assess annually whether an impairment of long-live

assets exists.

e. PRoPERTy, PlANT AND EquIPMENT (PP&E)

EQUiPmEnT, mAChinEry, VEhiClES AnD oThErS

As a general rule, TECHINT E&C has adopted historical

acquisition or construction cost less accumulated

depreciation as the measurement criterion for PP&E.

However, in the case of machinery, equipment and vehicles

used in the construction business, TECHINT E&C has

adopted fair value as the measurement criterion (see note 4).

Some machinery, construction equipment and vehicles

are valued at fair value, based on a technical appraisal

performed by independent professionals, less the

corresponding depreciation in the case of buildings.

Any accumulated depreciation at the date of revaluation

is eliminated against the gross carrying amount of the


Buildings and improvements

Production equipment

Vehicles, furniture and fixtures, and other equipment

Lands

20-50 years

3-20 years

3-12 years

Not depreciated

asset, and the net amount is restated to the revalued

amount of the asset.

Increases in the carrying amount arising on revaluation of the

machinery, construction equipment and vehicles are credited

to other comprehensive income and shown as reserve for

PP&E revaluation surplus in shareholders’ equity. Decreases

that offset previous increases of the same asset are charged

to other comprehensive income and attributed to other

reserves in equity; all other decreases are charged to the

income statement. Each fiscal year the difference between

depreciation based on the revalued carrying amount of the

asset charged to the income statement and depreciation

based on the asset’s original cost is transferred from reserve

for PP&E revaluation surplus to retained earnings.

lAnDS AnD BUilDingS

Land and buildings are stated at historical cost. Buildings

are depreciated using the straight-line method, by applying

annual ratios sufficient to terminate the value of each item as

of the end of their estimated useful life.

The straight-line method had been used to calculate

depreciation, by applying annual ratios sufficient to

terminate the value of each item as of the end of their

estimated useful life.

FixED ASSETS oF FErroExPrESo PAmPEAno S.A.C. (“FEPSA”)

These assets represent improvements on the assets

received under concession by FEPSA, as well as those

devoted to service rendering, which will be transferred to

the assignor upon termination of the concession.

Such assets were valued at their acquisition or

construction cost less accumulated depreciation.

The straight-line method had been used to calculate

depreciation, by applying annual ratios sufficient to terminate

the value of each item as of the end of their estimated useful

life or upon termination of concession, whichever occurs first.

USEFUl liVES USED To CAlCUlATE DEPrECiATion ChArgES ArE

AS FollowS:

The residual values and useful lives of significant machinery,

construction equipment and vehicles are reviewed, and

adjusted if appropriate, at each year end date.

Where the carrying amount of an asset is higher than

its estimated recoverable amount, it is written down

immediately to its recoverable amount.

Gains and losses on disposals are determined by comparing

proceeds with carrying amounts. When revalued assets

are sold, the amounts included in the reserve for PP&E

revaluation surplus are transferred to retained earnings.

Repairs and maintenance expenses are charged to the

consolidated income statement during the financial year in

which they are incurred.

f. INTANgIBlE ASSETS

SySTEmS DEVEloPmEnT

Acquired computer software licenses are capitalized on

the basis of the costs incurred to acquire and bring to use

the specific software. These costs are amortized over their

estimated useful lives (three to five years).

Costs associated with developing or maintaining computer

software programs are charged to expenses as incurred.

Costs that are directly associated with the production of

identifiable and unique software products controlled by

TECHINT E&C and that will probably generate economic

benefits exceeding costs beyond one year, are recognized


as intangible assets. Direct costs include the software

development employee costs and an appropriate portion of

relevant overhead.

Computer software development costs recognized as assets

are amortized over their estimated useful lives (not exceeding

three years).

oThEr

Compañía Inversora Ferroviaria S.A.I.F. (“CoINFER”)

Other intangible assets represent the greater cost derived

from the investment in the subsidiary FEPSA as a result of

the compulsory subscription and payment of the portion

of capital corresponding to Ferrocarriles Argentinos (16%)

and the portion corresponding to staff (4%) pursuant to the

concession contract.

It is valued at original cost, less accumulated amortization; it

was calculated over the term of the concession of the service

provided by FEPSA.

g. IMPAIRMENT oF NoN-FINANCIAl ASSETS

Intangible assets having an indefinite useful life or intangible

assets not in condition to be reused are not subject to

depreciation and, on an annual basis, are reviewed for

impairment losses.

Property and equipment and other non-current assets subject

to depreciation, including intangible assets, are reviewed

for impairment losses whenever events or changes in

circumstances indicate that the carrying amount may not be

recoverable.

An impairment loss is recognized for the amount by

which the carrying amount of the asset exceeds its

recoverable amount, which is the higher of an asset

net selling price and its value in use. For the purposes

of assessing impairment, assets are grouped at the

lowest levels for which there are separately identifiable

cash flows.

Prior impairment losses of non-financial assets (other than

goodwill value) are reviewed for possible reversal on each date

on which the consolidated annual accounts are presented.

h. FINANCIAl ASSETS

The Company classifies its financial assets in the following

categories: at fair value through profit or loss, loans and

receivables, available for sale, and financial assets at amortized

cost. The classification depends on the purpose for which the

financial assets were acquired. Management determines the

classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are

financial assets held for trading. A financial asset is classified

in this category if acquired principally for the purpose of

selling in the short-term.

Derivatives are also categorized as held for trading unless

they are designated as hedges. Assets in this category are

classified as current assets.

loans and receivables

Loans and receivables are non-derivative financial assets with

fixed or determinable payments that are not quoted in an

active market. They are included in current assets, except for

those with maturities greater than 12 months after the date

of the statement of financial position. These are classified as

non-current assets.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are

either designated in this category or not classified in any of

the other categories. They are included in non-current assets

unless management intends to dispose of the investment

within 12 months of the end of the reporting year.

Financial assets at amortized cost

The company classifies its financial assets as at amortized

cost only if both of the following criteria are met: the asset is


held within a business model with the objective of collecting

the contractual cash flows, and the contractual terms give

rise on specified dates to cash flows that are solely payments

of principal and interest on the principal outstanding.

Recognition and measurement

Regular purchases and sales of financial assets are

recognized on the trade - date - the date on which the

Company commits to purchase or sell the asset. Investments

are initially recognized at fair value plus transaction costs

for all financial assets not carried at fair value through profit

or loss. Financial assets carried at fair value through profit

or loss are initially recognized at fair value and transaction

costs are expensed in the income statement.

Financial assets are derecognized when the rights to receive

cash flows from the investments have expired or have

been transferred and the Company has transferred

substantially all risks and rewards of ownership. Available-

for-sale financial assets and financial assets at fair value

through profit or loss are subsequently carried at fair value

except Other investments as described in note 2.m. Loans

and receivables are carried at amortized cost using the

effective interest method.

The Company assesses at each balance sheet date whether

there is objective evidence that a financial asset or a group

of financial assets is impaired. A financial asset or a group

of financial assets is impaired and impairment losses are

incurred only if there is objective evidence of impairment

as a result of one or more events that occurred after the

initial recognition of the asset (a ‘loss event’) and that loss

event (or events) has an impact on the estimated future cash

flows of the financial asset or group of financial assets that

can be reliably estimated. In the case of equity investments

classified as available-for-sale, a significant or prolonged

decline in the fair value of the security below its cost is

considered an indicator that the assets are impaired.

i. oFFSETTINg FINANCIAl INSTRuMENTS

Financial assets and liabilities are offset and the net amount

reported in the statement of financial position when there is

a legally enforceable right to offset the recognized amounts

and there is an intention to settle on a net basis, or realize the

asset and settle the liability simultaneously.

The legally enforceable right must not be contingent on future

events and must be enforceable in the normal course of

business and in the event of default, insolvency or bankruptcy

of the company or counterparty.

j. DERIvATIvE FINANCIAl INSTRuMENTS

Derivatives are initially recognized at fair value on the date a

derivative contract is entered into and are subsequently re-

measured at their fair value.

The method of recognizing the resulting gain or loss depends

on whether the derivative is designated as a hedging

instrument, and if so, the nature of the item being hedged.

The Company adopts hedge accounting and designates

derivatives as either:

Hedges of the fair value of recognized assets or liabilities

or a firm commitment (fair value hedge).

Hedges of a particular risk associated with a recognized

asset or liability or a highly probable forecast transaction

(cash flow hedge).

Hedges of a net investment in a foreign operation (net

investment hedge).

The Company documents at the inception of the transaction

the relationship between hedging instruments and hedged

items, as well as its risk management objectives and

strategy for undertaking various hedging transactions.

TECHINT E&C also documents its assessment, both at

hedge inception and on an ongoing basis, of whether the

derivatives that are used in hedging transactions are highly

effective in offsetting changes in fair values or cash flows

of hedged items.

CASh Flow hEDgE

Trading derivatives are classified as a current asset or liability.

The full fair value of a hedging derivative is classified as

a non-current asset or liability if the remaining maturity

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of the hedged item is more than 12 months and, as a current

asset or liability, if the maturity of the hedged item is less

than 12 months.

The effective portion of changes in the fair value of derivatives

denominated and qualified as cash flow hedging is disclosed

in Other Comprehensive Income. The gain or loss related

to the ineffective portion is immediately disclosed in the

consolidated income statement.

The amounts accumulated in equity are disclosed in the

consolidated income statement in the year in which the

hedged item affects gains and losses.

When a hedging instrument expires or is sold, or when a

hedge no longer meets the criteria for hedge accounting,

any cumulative gain or loss existing in equity at that time

remains in equity and is recognized when the forecast

transaction is ultimately recognized in the consolidated

income statement. When a forecast transaction is no

longer expected to occur, the cumulative gain or loss that

was reported in equity is immediately transferred to the


ForwArD ForEign ExChAngE ConTrACTS

The hedged highly probable forecast transactions

denominated in foreign currency are expected to occur at

various dates during the next 12 months. Gains and losses

recognized in the hedging reserve in equity on forward

foreign exchange contracts as of 31 December 2017 and

2016 are recognized in the income statement in the period

or periods during which the hedged forecast transaction

affects the income statement. In general, this happens within

12 months following the date of the consolidated financial

statements, unless the loss or gain would have been included

in the amount initially recognized for the purchase of fixed

assets, in which case such recognition is made throughout

the useful life of the asset.

k. INvENToRIES

Inventories are stated at the lower of cost or net realizable

value less the corresponding allowance for obsolescence. Net

realizable value is the estimated selling price in the ordinary

course of business, less the costs of completion and direct

selling expenses. In general, cost is determined by using

weighted average price.

The allowance for obsolescence has been calculated based

on Management’s analysis of aging.

l. CoNSTRuCTIoN CoNTRACTS woRK IN PRogRESS

A construction contract is a contract specifically negotiated

for the construction of an asset or a combination of assets

that are closely interrelated or interdependent in terms of

their design, technology and functions or their ultimate

purpose or use.

When the outcome of a construction contract can be

reliably estimated, contract revenue and contract costs are

acknowledged by the percentage of completion method.

The stage of completion is measured by reference to the

relationship contract costs incurred for work performed

to date bear to the estimated total costs for the contract.

When it is probable that total contract costs will exceed

total contract revenue, the expected loss is immediately

recognized as an expense.

When the outcome of a construction contract cannot be

reliably estimated, contract revenue is recognized to the

extent of contract costs incurred where it is probable those

costs will be recoverable. Contract costs are recognized

when incurred.

Costs incurred in the year in connection with future activity

on a contract are excluded from contract costs in determining

the stage of completion. They are presented as inventories,

prepayments or other assets, depending on their nature.

When a construction contract includes reimbursable works

and the Company is responsible for providing design,

engineering and construction services and labor and all

equipment and materials, construction equipment and

supplies, the amount of these works is recognized in

revenues and costs.


TECHINT E&C shows as an asset (within Construction

contracts work in progress) the gross amount due from

clients for construction contracts for all contracts in progress

for which costs incurred plus recognized profits (less

recognized losses) exceed progress billings.

TECHINT E&C presents as a liability (within Construction

contracts work in progress) the gross amount due to clients

for construction contract for all contracts in progress for

which progress billings exceed costs incurred plus recognized

profits (less recognized losses).

m. oTHER INvESTMENTS

Other investments consist primarily of deposits in investments

funds and equity instruments where the Company holds a

minor equity interest and does not exert significant influence.

All other investments are classified as financial assets “loans

and receivables” or “available for sale”.

For investments in equity instruments in which TECHINT E&C

has less than 20% of the voting rights, the Company usually

chooses to use the historical cost, because its fair value

cannot be reliably measured.

n. TRADE AND oTHER RECEIvABlES

Trade and other receivables are initially measured at their

fair value, which is generally their nominal value, unless the

effect of discounting is material, subsequently measured at

amortized cost less provision for impairment.

An allowance for doubtful accounts is established when there

is objective evidence that the Company will not be able to

collect all amounts due according to the original terms of

receivables.

SErViCE ConCESSion ArrAngEmEnTS

A service concession arrangement is an arrangement

involving an operator for the construction, improvement

or management of the infrastructure used to provide a

public service for a specified period of time. The operator

is paid for its services over the period of the arrangement.

The arrangement is governed by a contract that sets out

performance standards, mechanisms for adjusting prices and

arrangements for arbitrating disputes. The grantor controls

the infrastructure, and the operator is required to return to

the grantor the infrastructure at the end of the arrangement.

The operator has an unconditional contractual right to receive

payments from the grantor, irrespective of the amount of use

made of the infrastructure.

Techint E&C recognises a financial asset arising from

a service concession arrangement to the extent that it

has an unconditional right to receive cash from or at the

direction of the grantor, for the construction improvement

or management of concession assets. Financial assets

recognised as a result of the service concession

arrangement are measured at fair value upon initial

recognition. Subsequent to initial recognition, the financial

asset is accounted for in accordance with IAS 39 (Financial

Instruments: Recognition and Measurement) and, therefore,

at amortized cost or at fair value through profit or loss.

Financial assets arising from a service concession arrangement

are included within “Trade and other receivables”. The financial

income calculated on the basis of the effective interest rate is

recognised under operating income.

o. TRADE AND oTHER PAyABlES

Trade and other payables are obligations to pay for goods

or services that have been acquired in the ordinary course

of business from suppliers. Accounts payable are classified

as current liabilities if payment is due within one year or less.

If not, they are presented as non-current liabilities.

Trade and other payables are recognized initially at fair value

and subsequently measured at amortized cost.

p. CASH AND CASH EquIvAlENTS

Assets recorded in cash and cash equivalents are carried at

fair market value or at historical cost which approximates fair

market value. For the purposes of the consolidated statement

of cash flows, cash and cash equivalents comprise cash on

hand, demand deposits with banks and other short-term


highly liquid investments with original maturities of three

months or less and bank overdrafts.

Bank overdrafts are included within borrowings in current

liabilities in the consolidated statement of financial position.

q. EquITy

Ordinary shares are classified as equity. The balances of the

consolidated statement of changes in equity at December 31,

2017 and 2016 include:

The value of share capital, reserve for PP&E revaluation

surplus, reserve for cash flow hedge, legal reserve, reserve

for pension plan benefits, reserve for future dividends and

retained earnings in accordance with IFRS.

The currency translation differences of TECHINT E&C’s subsidiaries.

Capital Surplus

Non-controlling interests in subsidiaries.

Dividends distributions are recorded in the Company’s

financial statements when Company’s shareholders have the

right to receive the payment, or when interim dividends are

approved by the Board of Directors in accordance with the

by-laws of the Company.

r. BoRRowINgS

Borrowings are initially recorded based on the fair value

of the net proceeds. Borrowings are subsequently stated

at amortized cost using the effective yield method; any

difference between proceeds (net of transaction costs) and

the redemption value is recognized in the income statement

over the life of the borrowings.

Borrowings are classified as current liabilities unless TECHINT

E&C has an unconditional right and firm intention to defer

settlement of the liability for at least twelve months after the

balance sheet date.

s. CuRRENT AND DEFERRED INCoME TAX

The current income tax charge is calculated on the basis of

the tax laws in force in the countries in which TECHINT E&C

and each one of its subsidiaries operate.

Deferred income tax is recorded in full, using the liability

method, on temporary differences arising between the tax

basis of assets and liabilities and their carrying amounts in

the consolidated financial statements. Currently enacted tax

rates are used in the determination of deferred income tax.

Deferred tax assets are recognized to the extent that it is

probable that future taxable profit will be available to offset

temporary differences.

Deferred income tax is provided on temporary differences

arising on investments in subsidiaries, associated companies

and joint operations, except where the timing of the reversal

of the temporary difference can be controlled and it is

probable that the temporary difference will not reverse in the

foreseeable future.

The tax expense for the year comprises current and deferred

tax. Tax is recognized in the Consolidated Income Statement,

except to the extent that it relates to items recognized in

the Consolidated Statement of Comprehensive Income.

In this case, the tax is also recognized in the Consolidated

Statement of Comprehensive Income.

t. EMPloyEE BENEFITS

PEnSion PlAnS AnD oThEr PoST-rETirEmEnT BEnEFiTS

Certain TECHINT E&C’s subsidiaries have in force benefit

plans under the modality of “non-funded defined benefits”

and “other long-term benefits” which, subject to certain

conditions established by such companies, are granted during

the term of employment and after retirement, which plans

are recorded following the guidelines of accounting rules and

regulations in force and effect.

The provisioned liabilities for such employee benefits are

recorded at the current value of the future flows of funds,

the amount being charged during the relevant employees’

remaining years of services up to the moment when the

conditions necessary for the granting of each benefit are

satisfied. Such liabilities are calculated by independent

actuaries, at least once a year, using the “Projected credit

unit” method.

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Actuarial gains and losses arising from experience

adjustments and changes in actuarial assumptions are

charged or credited to equity in other comprehensive

income in the period in which they arise. Past-service

costs are recognized immediately in income. Actuarial

gains and losses arising from other post-retirement

benefits are recognized immediately in income.

Certain TECHINT E&C’s subsidiaries officers are covered

by a specific employee retirement plan designed

to provide retirement, termination and other benefits

to those officers.

Retirement costs are assessed using the projected unit

credit method: the cost of providing retirement benefits is

charged to the statement of income over the service lives

of employees based on actuarial calculations. This provision

is measured at the present value of the estimated future

cash outflows, using applicable interest rates.

Certain TECHINT E&C’s subsidiaries are accumulating

assets for the ultimate payment of those benefits in the

form of investments. The investments are not part of a

particular plan, nor are they segregated from TECHINT

E&C’s other assets. Due to these conditions, the plan is

classified as “unfunded” under IFRS.

The laws in the different countries in which TECHINT E&C’s

subsidiaries carry out their operations provide for pension

benefits to be paid to retired employees from government

pension plans and/or private funds managed plans.

Amounts payable to such plans are generally calculated

based on a percentage of employee salaries and are

accounted for on an accrual basis.

TErminATion BEnEFiTS

Termination benefits are payable whenever an employee’s

employment is terminated before the normal retirement

date or whenever an employee accepts voluntary

redundancy in exchange for these benefits.

TECHINT E&C’s subsidiaries recognize termination benefits

when it is demonstrably committed to either terminating

the employment of current employees according to a

detailed formal plan without possibility of withdrawal, or

providing termination benefits as a result of an offer made to

encourage voluntary redundancy. Benefits falling due more

than twelve months after balance sheet date are discounted

to present value.

ProFiT-ShAring AnD BonUS PlAnS

A liability for employee benefits in the form of profit-sharing

and bonus plans is recognized in other provisions when there

is no realistic alternative but to settle the liability and provided

at least one of the following conditions is met:

there is a formal plan and the amounts to be paid are

determined before the time of issuing the financial

statements; or

past practice has created a valid expectation in employees that

they will receive a bonus/profit-sharing and the amount can be

determined before the financial statements are issued.

Liabilities for profit-sharing and bonus plans are expected to

be settled within twelve months and are measured at the

amounts expected to be paid when they are settled.

ConTriBUTion PlAnS

A defined contribution plan is a pension plan under which

the companies pay fixed contributions to a separate entity.

Companies have no further payment obligations once

the contributions have been paid. The contributions are

recognized as employee benefit expense when they are

due. Prepaid contributions are recognized as an asset to

the extent that a cash refund or a reduction in the future

payments is available.

Contributions by the companies include: (a) Basic

contribution – Companies are committed to contribute

amounts equal to the amounts contributed by the

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employees up to certain limits, (b) Extraordinary

contributions – Companies are non-mandatory contributions

that can be made on a voluntary basis either by the

companies or the employees.

TEBRA has implemented a supplementary pension

benefit plan with two programs: “PGBL - Plano Gerador

de Benefício Livre” and “ VGBL - Programa de Seguro de

Vida com Cobertura por Sobrevivência”. These programs

are generally funded through payments by the subsidiaries

to independent insurance companies. Both programs are

defined contribution plans.

long-TErm inCEnTiVE

TECHINT E&C adopted a long-term retention and incentive

program for some employees of Group. According to such

program, certain senior executives of Group shall receive a

number of units valued at the book value of the Shareholders’

Equity per share of TECHINT E&C (excluding the non-

controlling interest).

Units shall accrue within a 4-year period and the applicable

subsidiaries shall pay them upon the lapsing of a 10-year

period from the date of receipt, with the option for the

employee to request them as from the seventh year,

or when the relationship between the employee and

Group is terminated, at the book value of the controlling

Shareholders’ Equity per share of TECHINT E&C at the

time of payment. The beneficiaries shall also receive

amounts in cash equivalent to the dividend paid per

share, every time TECHINT E&C pays any dividend in cash

to its shareholders.

As of December 31 , 2017 and 2016, TECHINT E&C has

acknowledged non-current liabilities for USD 14,284 and USD

12,974, respectively. The charge to profits as of December

31, 2017 and 2016 for the sum of USD 3,475 and USD

152 respectively, is stated in the line “Wages salaries and

social security costs” in note 27 and in “Foreign exchange

transaction results” in note 28.

PUBliC AnD PriVATE ConTriBUTionS PEnSion PlAn

The laws applicable in the different countries in which the

subsidiaries carry out their businesses establish pension

and retirement benefits to be payable to retired employees

under government retirement plans and/or private retirement

plans. The amounts payable for such plans are calculated, in

general, based on a percentage of employees’ salaries and

are recorded according to the accrual basis of accounting.

u. PRovISIoNS

Provisions are recognized when TECHINT E&C has a present

legal or constructive obligation as a result of past events, it

is probable that an outflow of resources will be required to

settle the obligation, and a reliable estimate of the amount

can be made. When TECHINT E&C expects a provision to be

reimbursed, for example under an insurance contract, the

reimbursement is recognized as a separate asset but only

when the reimbursement is virtually certain.

v. REvENuE RECogNITIoN

rEVEnUES AnD CoST rECogniTion For long-TErm

ConSTrUCTion ConTrACTS

See note 2.l.

SAlES oF SErViCES

The Company sells maintenance services. The revenue is

generally recognized in the period the services are provided,

using a straight-line basis over the term of the contract.

oThEr rEVEnUES

Other revenues earned by TECHINT E&C are recognized on

the following bases:

Interest income: on the effective yield basis.

Dividend income from investments in other companies:

when TECHINT E&C’s right to collect is established.

w. lEASES

Leases in which a significant portion of the risks and rewards

of ownership are transferred from the lessor to TECHINT E&C

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are classified as finance leases. At the commencement of

the lease term, TECHINT E&C recognizes finance leases as

assets and liabilities in the statement of financial position at

amounts equal to the value of the leased property or, if lower,

the present value of the minimum lease payments, each

determined at the inception of the lease. The discount rate

used in calculating the present value of the minimum lease

payments is the interest rate implicit in the lease should

this be practicable to determine; otherwise, the lessee’s

incremental borrowing cost is used. Any initial direct costs of

the lessee are added to the amount recognized as an asset.

Each lease payment is allocated between the liability and

finance charges. The corresponding rental obligations, net

of finance charges, are included in borrowings. The interest

element of the finance cost is charged to the income

statement over the lease period so as to produce a constant

periodic rate of interest on the remaining balance of the

liability for each period. The property, plant and equipment

acquired under finance leases is depreciated over their

estimated useful lives.

See amounts of assets and liabilities held under finance

leases in note 22.

Leases in which a significant portion of the risks and rewards

of ownership are retained by the lessor are classified as

operating leases. Payments made under operating leases

(net of any incentives received from the lessor) are charged

to the income statement on a straight-line basis over the

period of the lease.

x. ASSETS oF DISPoSAl gRouP ClASSIFIED AS HElD FoR SAlE

Assets of disposal group are classified as “assets classified

as held for sale” when their carrying amount is to be

recovered principally through a sale transaction and a sale is

considered highly probable.

They are stated at the lower of carrying amount and fair value

less costs to sell if their carrying amount is to be recovered

principally through a sale.

NoTE 3.

FINANCIAl RISK MANAgEMENT

The nature of TECHINT E&C’s operations as well as its

multinational character expose the Company to a variety of

risks, including the effects of changes in foreign currency,

exchange rates, capital risk, concentration of credit risk,

price risk, liquidity risk and interest rates risk. The nature of

its contracts implies that TECHINT E&C has to manage risks

regarding uncertain conditions in the hiring of procurement,

which is usually a large part of the scope of work.

To manage the high volatility related to these financial

matters, management evaluates exposures on a

consolidated basis to take advantage of its global and

multinational activity.

For some of these exposures, the Company or its

subsidiaries enter into derivative transactions in order

to manage potential adverse impacts on the Company’s

financial performance.

a. CAPITAl RISK

The Company seeks to maintain an adequate debt to total

equity ratio considering the risks involved in the industry

and the markets where it operates. The year-end ratio of

debt to total equity (where “debt” comprises all financial

borrowings and “equity” is the sum of financial borrowings

and shareholders equity) is 0.16 as of December 31,

2017 and 0.20 as of December 31, 2016. The Company

does not have to comply with regulatory capital adequacy

requirements.

b. FoREIgN EXCHANgE RISK

TECHINT E&C’s business activities are conducted in

the respective functional currencies of the subsidiaries.

However, the Company transacts in currencies other than

the respective functional currencies of the subsidiaries.

There are significant monetary balances held by

the Company at the twelve-month year-end that are

denominated in USD.


The following tables show a breakdown of the TECHINT

E&C’s net monetary position in various currencies for the

main functional currency in which the Company operates:

USD

EUR

ARS

UYU

PLN

Others

Functional Currency

173,550

(179)

30

43

(25,747)

(1,381)

146,316

Total

(1,336)

(933)

–

–

–

774

(1,495)

others

8,254

(84)

3

–

–

–

8,173

UyU

–

5,081

27

43

–

(794)

4,357

USD

3,711

(109)

–

–

–

–

3,602

SAr

21,730

–

–

–

–

–

21,730

PEn

43,603

471

–

–

–

292

44,366

mxn

(3,421)

–

–

–

(25,747)

(1,653)

(30,821)

EUr

55,886

–

–

–

–

–

55,886

Chl

(15,167)

(3,774)

–

–

–

–

(18,941)

Brl

60,290

(831)

–

–

–

–

59,459

ArSnet monetary position Asset / (liability)

Dec 31, 2017


The Company estimates that the impact under IFRS on the net

exposure at December 31, 2017 of a simultaneous 1% favorable

or unfavorable movement in the main exchange rates would

result in a maximum pre-tax gain or loss of approximately USD

1,463 as compared with a maximum pre-tax gain or loss of

approximately USD 1,676 at December 31, 2016.

The Company’s net exposure to the currency other than the

functional currency is managed on a case-by-case basis,

partly by hedging certain expected cash flows with foreign

exchange derivative contracts.

The Company performed a sensitive analysis of the

Derivative Financials Instruments of a 10% favorable or

unfavorable movement of the Mexican Peso against the

USD at December 31, 2017 and 2016. The impact would

have been, in the case of strengthening USD (8,803) in

equity and USD (1,314) in profit or (loss) (at December 31,

2016: USD (6,197) and USD (4,630) respectively) and

in the case of weakening USD 10,760 in equity and USD

1,606 in profit or (loss) (at December 31, 2016: USD 7,574

and USD 5,659 respectively).

EUR: Euro PLN: Polish Zloty RUB: Ruble SAR: Saudi royal UYU: Uruguayan Peso

Reference: ARS: Argentinian Peso BRL: Brazilian Real MXN: Mexican Peso PEN: Peruvian Nuevo Sol CHL: Chilean Peso

USD

EUR

ARS

UYU

PLN

RUB

Others

187,541

860

(106)

(29)

(18,850)

(560)

(1,268)

167,588

Total

325

4,420

–

(29)

–

–

–

4,716

others

5,740

–

(106)

–

–

–

–

5,634

UyU

3,668

(220)

–

–

–

–

–

3,448

SAr

27,744

–

–

–

–

–

–

27,744

PEn

98,614

822

–

–

–

–

–

99,436

mxn

5,018

–

–

–

(18,850)

(560)

(1,268)

(15,660)

EUr

65,264

–

–

–

–

–

–

65,264

Chl

(9,520)

(4,174)

–

–

–

–

–

(13,694)

Brl

(9,312)

12

–

–

–

–

–

(9,300)

ArSnet monetary position Asset / (liability)

Functional Currency

Dec 31, 2016


c. PRICE RISK

The Company has no significant risk from the fluctuation in

the market prices.

The group´s investments in equity, classified on the

consolidated balance sheet as available for sale, are not

publicly traded and are valued at cost.

Cash and cash equivalents and other investments classified

as fair value through profit or loss, are carried at fair

market value or at historical cost which approximates fair

market value.

d. CREDIT RISK

Most accounts receivable relate to clients operating in a

range of industries and countries with contract which require

ongoing payments as the development project progresses,

upon the rendering of services or upon completion and

delivering of the project. It is normal practice that the

Company reserves the right to suspend the project if there

is a remarkable breach of the contract term, in particular the

non-payment of amounts owed.

In general the greatest risk for such assets is the risk of not

collecting a trade account receivable. This is because, a) it may be

a significant value in the development of works or in the provision

of services; b) it is beyond the Company’s control. However,

the risk of customers being unable to make a payment in such

contracts is considered to be low, and typically relate to problems

characterized as technical matters, i.e. relating to the risk inherent

in the service rendered, under the Company’s control.

The Company’s receivables (other than those with related

parties) are concentrated on a limited number of clients for

whom works are executed. Management evaluates on a

periodic basis the financial condition of its clients to minimize

the risk of non-collection of its accounts receivable.

The following table sets forth details of the age of trade

receivables:

December 31, 2017

Trade Receivables

Allowance for doubtful accounts (*)

Net value

December 31, 2016

Trade Receivables

Allowance for doubtful accounts (*)

Net value

30,658

(9,043)

21,615

26,903

(9,858)

17,045

451,767

–

451,767

316,178

–

316,178

47,405

(719)

46,686

126,832

–

126,832

529,830

(9,762)

520,068

469,913

(9,858)

460,055

> 180 days (**)1 - 180 days

Past DueNot Due Trade Receivables

8

8

8

8

Notes

> 180 days (**)1 - 180 days

Past DueNot Due Trade Receivables

Notes

(*) It does not include Allowance for doubtful accounts recorded in current other receivables-net (USD 707).

(**) With respect to trade receivables that have due more than 180 days non-provisioned, there is no risk of doubtful accounts.

(*) It does not include Allowance for doubtful accounts recorded in current other receivables-net (USD 337).

(**) With respect to trade receivables that have due more than 180 days non-provisioned, there is no risk of doubtful accounts.


The credit quality of financial assets that are neither

past due nor impaired can be assessed by reference to

historical information about counterparty default rates. The

total unimpaired trade receivables are related to existing

customers and related parties with no defaults past due.

At the date of this consolidated financial statements most

credits past due have been collected.

e. lIquIDITy RISK

Management maintains sufficient cash and cash equivalents

to finance normal operations and believes that TECHINT E&C

also has access to capital markets for short-term working

capital requirements.

TECHINT E&C financing strategy is to maintain adequate

financial resources and access to additional liquidity.

During the year ended December 31, 2017 and 2016,

TECHINT E&C has counted on cash flows from

operations as well as additional bank financing to fund

its transactions.

TECHINT E&C has a conservative approach to the

management of its liquidity, which consists of cash

and cash equivalents, comprising cash in banks,

short-term money market funds and highly liquid

short-term securities.

TECHINT E&C holds its cash and cash equivalents primarily

in USD. Liquid financial assets as a whole are 22% of total

assets at December 31, 2017 (15% at December 31, 2016).

Liquidity is managed through the analysis of expected inflows

and outflows monitored by the Treasury department.

See note 14 for the maturity of borrowings, note 16 for the

maturity of trade and other payables and note 17 for the

maturity of other liabilities.

f. INTEREST RATE RISK MANAgEMENT

The Company’s financing strategy is to manage interest

expense using a mixture of fixed-rate and variable-rate debt.

The proportions of variable-rate and fixed-rate debt at the

years ended in 2017 and 2016 are included in note 14.

As the Company has no significant interest-bearing assets, the

Company’s income and operating cash flows are substantially

independent from changes in market interest rates.

The Company estimated that, if interest rates would have

been 100 basis points higher, with all other variables held

constant, total profit for the year ended December 31, 2017

would have been USD 1,025 lower (USD 912 lower for the

year ended December 31, 2016)


lands and buildings

other Assets (1)

VehiclesEquipment and machinery

NoTE 4.

PRoPERTy, PlANT AND EquIPMENT (PP&E)

The item consists in the following:

The item evolution is as follows:

Land and buildings

Equipment and machinery

Vehicles

Other assets

Total December 31, 2017

(24,680)

(132,136)

(37,514)

(53,900)

(248,230)

101,874

246,131

71,663

88,146

507,814

77,194

113,995

34,149

34,246

259,584

Beginning of the year

Additions

Disposals

Depreciation

Translation differences

Changes in reserve of PP&E

Impairment loss

Others movements

December 31, 2017

33,940

11,952

(87)

(9,828)

(2,894)

1,214

(51)

–

34,246

35,277

9,357

(1,713)

(8,218)

(3,871)

3,404

(40)

(47)

34,149

122,982

23,218

(7,987)

(23,609)

(8,455)

7,901

(102)

47

113,995

80,065

215

(66)

(2,911)

(109)

–

–

–

77,194

272,264

44,742

(9,853)

(44,566)

(15,329)

12,519

(193)

–

259,584

Non-current TotalDec 31, 2017

(1) It includes deferred costs of our subsidiary FEPSA and miscellaneous assets.

Accumulated Depreciation

gross value

Net valueDec 31, 2017


Lease rentals amounting to USD 57,061 (at December

31, 2016: USD 50,761) relating to the lease of machinery,

construction equipment and vehicles, are included in the



Land and buildings


Vehicles

Other assets




Additions

Disposals

Depreciation


Changes in reserve of PP&E

Impairment loss

Others movements

December 31, 2016

35,249

13,605

(778)

(9,137)

(4,458)

28

–

(569)

33,940

43,933

4,323

(3,248)

(8,936)

(2,634)

3,150

(880)

(431)

35,277

132,228

16,320

(7,216)

(22,026)

(8,422)

17,000

(4,648)

(254)

122,982

75,825

519

(164)

(2,794)

5,936

–

–

743

80,065

287,235

34,767

(11,406)

(42,893)

(9,578)

20,178

(5,528)

(511)

272,264

other Assets (1)

VehiclesEquipment and machinery

lands and buildings

(1) It includes deferred costs of our subsidiary FEPSA and miscellaneous assets.

(23,241)

(126,184)

(37,748)

(56,478)

(243,651)

103,306

249,166

73,025

90,418

515,915

Accumulated Depreciation

gross value

80,065

122,982

35,277

33,940

272,264

Net valueDec 31, 2016

Non-current TotalDec 31, 2016


TECHNICAl APPRAISAl oF PP&E

On December 31, 2017 and 2016, a technical appraisal was

performed by external professionally qualified valuation

specialists in relation to machinery, construction equipment

and vehicles, based on periodic valuations of the assets

in order not to differ materially from their fair value at

the financial statements date. The Company’s Directors

believe that recording machinery, construction equipment

and vehicles at fair value results in a more appropriate

presentation of these assets in the consolidated financial

statements of the Company.

Revaluations are performed by independent qualified valuers on

a regular basis. In the intervening periods between independent

revaluations, the Company reviews the carrying values of

machinery, construction equipment and vehicles and adjustment

is made where the carrying value exceeds from fair value.

Management believes that the resulting value approximates

fair value. As per International Accounting Standard No. 16

“Property, plant and equipment” (“IAS 16”), when an item

of property, plant and equipment is revalued, the entire class

of property, plant and equipment to which that asset belongs

should be revalued. Machinery, construction equipment and

vehicles corresponding to the subsidiaries that did not make

the abovementioned revaluation are not significant.

The “sales comparison” method was used to obtain the

fair value of these assets for which there is a wide and

transparent secondary market. This approach consists

in obtaining information from recent sales or offers of

assets bearing similar characteristics, age and condition.

Correction factors that take into account the status of the

market offer and demand prevailing as of the date of the

appraisal, the relative age, probable residual useful life, state

of conservation and asset obsolescence are applied to the

sales price. The “cost less depreciation” method was used to

obtain the fair value of assets with a restricted sales market.

Depreciation was computed based on generally used and

accepted engineering criteria which led to establishing the

reasonable value of PP&E. Such criteria take into account

factors such as the age of each asset, probable residual

or expected life, state of conservation and degree of

obsolescence. The market value was obtained by applying the

depreciation ratio to the value of a new asset.

These subsidiaries intend to perform this appraisal with the

frequency required by IAS 16 in order to keep fair values of

appraised assets updated.

The increase in value of machinery, construction equipment

and vehicles resulting from the technical appraisal performed

on December 31, 2017 amounted to USD 12,519 (at

December 31, 2016: USD 20,178) and has been recorded net

of tax effect USD 1,321 (at December 31, 2016: USD 5,432)

in other comprehensive income and accumulated in equity

under the heading of “Reserve for PP&E revaluation surplus”

and “Non-controlling interests”.

The depreciation of the Reserve for PP&E revaluation surplus

net of tax effects for the year ended December 31, 2017

amounts to USD 17,858 (at December 31, 2016: USD 16,489).

Additionally, during the year ended December 31, 2017, the

company recorded a decrease of such reserve amounting to

USD 5,969 net of tax (at December 31, 2016: USD 2,951) due

to disposal of PP&E.

If machinery, equipment and vehicles had been valued at

historical cost, the values would have been the following:

Historical cost

Accumulated depreciation

Residual value

167,084

(97,443)

69,641

164,128

(97,819)

66,309

Dec 31, 2017 Dec 31, 2016


The “Reserve for PP&E revaluation surplus” is reversed, net

of tax effects, through (i) the retirement of the equipment

appraised or (ii) depreciation charges. The difference

between depreciation of appraised assets and depreciation

of the historical values of such assets is charged against

accumulated results.

The straight-line method has been used to calculate

depreciation, by applying annual ratios sufficient to

terminate the value of each item as to the end of their

estimated useful life.

The following table analyses the non-financial assets carried

at fair value, by valuation method. The different levels have

been defined as follows:

Quoted prices (unadjusted) in active markets for identical

assets or liabilities (Level 1).

Inputs other than quoted prices included within level 1 that

are observable for the asset or liability, either directly (that is,

as prices) or indirectly (that is, derived from prices) (Level 2).

Inputs for the asset or liability that are not based on observable

market data (that is, unobservable inputs) (Level 3).

>

>

>


recurring fair value measurements


Vehicles

Other

At December 31, 2017

recurring fair value measurements


Vehicles

Other


–

–

–

–

–

–

–

–

101,809

28,983

18

130,810

99,785

27,069

29

126,883

–

–

–

–

–

–

–

–

Significant Unobservable inputs (level 3)

Significant Unobservable inputs (level 3)

Significant other observable inputs (level 2)

Significant other observable inputs (level 2)

Quoted prices in Active markets for identical assets (level 1)

Quoted prices in Active markets for identical assets (level 1)

vAluATIoN TECHNIquES uSED To DERIvE lEvEl 2

FAIR vAluES

To estimate the fair value of assets for which there is a wide

and transparent secondary market, the valuation specialists

used the “sales comparison” method, which consists in

obtaining information from recent sales or offer of assets

that are comparable in their characteristics, age and state

of conservation. Furthermore, correction factors are

applied over the sale prices determined following the sales

comparison method. These correction factors are based on

the status of the market demand and supply prevailing as

of the date of the appraisal, the relative age, the estimated

residual useful life, the state of conservation and the

obsolescence of assets.

For those assets with a restricted sales market, fair value is

determined based on the “cost less depreciation” method.

Depreciation was computed based on generally used and

accepted engineering criteria, which led to establish the reasonable

value of machinery, construction equipment and vehicles. Such

criteria take into account factors such as the age of each asset,

probable residual life or expected life, state of conservation and

degree of obsolescence. The market value was obtained by

applying the depreciation ratio to the value of a new asset.

Fair value measurements at 31 December 2017 using

Fair value measurements at 31 December 2016 using


NoTE 5.

INTANgIBlE ASSETS




Additions

Disposals

Amortization


December 31, 2017

216

41

–

(103)

8

162

4,816

2,319

(16)

(2,747)

(93)

4,279

5,032

2,360

(16)

(2,850)

(85)

4,441

Dec 31, 2017other Intangible Assets

Systems Development

Systems development

Other intangible assets


(20,595)

(4,173)

(24,768 )

24,874

4,335

29,209

4,279

162

4,441

Net value at Dec 31, 2017

Accumulated Amortization

gross value




Additions

Disposals

Amortization


December 31, 2016

389

–

(82)

(15)

(76)

216

6,117

2,323

(13)

(3,258)

(353)

4,816

6,506

2,323

(95)

(3,273)

(429)

5,032

other Intangible Assets

Systems Development

Dec 31, 2016

Accumulated Amortization

gross value


Systems development

Other Intangible assets


(18,565)

(3,731)

(22,296)

23,381

3,947

27,328

4,816

216

5,032

Net valueAt Dec 31, 2016


Fluor Techint S.R.L. Construcción y Servicios Ltda. (1)

Norpower S.A. de C.V. (2)

AOT Pipelines S.A.P.I. de C.V. (3)

Verkotec B.V. (liquidation process) (4)

Other

Total Investments accounted for using the equity method


Result from investments

Investment adquisition and contributions

Dividends earned


Other movements

End of the year

50%

40%

33%

50%

50%

40%

33%

–

990

17,935

4,055

1,839

1,435

26,254

1,005

7,341

5,206

–

1,275

14,827

Chile

Mexico

Mexico

Netherlands

23,137

13,210

–

(8,265)

(381)

(1,447)

26,254

26,254

3,390

602

(15,200)

1,890

(2,109)

14,827

Joint Ventures

NoTE 6.

INvESTMENTS ACCouNTED FoR uSINg

THE EquITy METHoD

Dec 31, 2017

Dec 31, 2017

Non-Current Dec 31, 2016

Dec 31, 2016

(1) Fluor Techint S.R.L. Construcción y Servicios Ltda provides to Compañia Minera Nevada Ltda: basic engineering services, detail engineering, supply management, construction management and construction.

(2) Pipeline maintenance services.

(3) AOT Pipelines S.A.P.I. de C.V. consist on the construction of a pipeline.

(4) See note 1.

% of ownership

% of ownership

Book value

Book value

Country of incorporation


The result from investments accounted for using the equity

method has arisen from the Company’s participation in the

results of the following companies:

Fluor Techint S.R.L. Construcción y Servicios Ltda.

Norpower S.A. de C.V.

AOT Pipelines S.A.P.I. de C.V.

Verkotec B.V.

Others

Total result from investments accounted for using the equity method

(3)

10,937

1,912

76

288

13,210

(71)

3,043

960

278

(820)

3,390

The following amounts represent the assets, liabilities,

revenues and results of the investment accounted for

using the equity method:

December 31, 2017




December 31, 2016



Verkotec B.V.


Dec 31, 2017 Dec 31, 2016

7,614

2,880

(141)

Results

27,342

5,738

(151)

(11)

Results

28,199

5,222

–

Revenues

42,576

106,338

5,117

–

Revenues

2,706

4,887

–

Total liabilities

9,029

11,102

4,719

47

Total liabilities

2,633

4,887

–

Current liabilities

8,956

10,425

4,719

47

Current liabilities

21,074

20,507

2,010

Total Assets

53,865

23,267

8,395

1,981

Total Assets

19,585

20,485

2,010

Current Assets

51,276

20,249

8,395

1,981

Current Assets


non-current

Other investment in related parties

Total other investments

Current

Temporary placements

Total other investments

non-current



Other movements

Increase of other investments (*)

End of the year

Current



Increase / Decrease of other investments

End of the year

10,403

10,403

–

–

10,360

–

–

43

10,403

4,581

(822)

(3,759)

–

3,710

3,710

–

–

10,403

380

(8,408)

1,335

3,710

–

–

–

–

Dec 31, 2017

Dec 31, 2017

Dec 31, 2016

Dec 31, 2016

NoTE 7.

oTHER INvESTMENTS

(*) This corresponds to creation/reversal of fixed-term, other deposits and investment in liquidity (obligation and bond).

24

Notes


non-current

Trade receivables from related parties

Other receivables from related parties

Claims receivables

Other

Total trade and other receivables

Current

Trade receivables – net

Trade receivables from related parties

Other receivables from related parties

Other receivables (*)

Advances to suppliers and subcontractors

Prepayments

Total trade and other receivables

639

8,028

129,226

32,961

170,854

460,055

62,155

10,778

49,682

15,052

4,769

602,491

–

11,109

140,478

4,730

156,317

520,068

40,592

271

83,782

39,338

9,239

693,290

NoTE 8.

TRADE AND oTHER RECEIvABlES

Dec 31, 2017 Dec 31, 2016

24

24

23

24

24

Notes

(*) At December 31, 2016 include USD 4,285 with OSX Group Companies originated from the transfer of the rights under the “Settlement Agreement” signed between Wisdery S.A and OSX Group Companies.


non-current



Additions

Used

End of the year

Current



Reversal

Additions

Used

End of the year

704

(339)

1,427

(476)

1,316

12,984

(1,247)

(1,393)

–

(1,095)

9,249

1,316

(240)

90

(139)

1,027

9,249

(515)

(659)

1,179

(182)

9,072

At December 31, 2017 and 2016 the evolution of the

allowance for doubtful accounts that was deducted from

Trade and Other receivables is:

Dec 31, 2017 Dec 31, 2016


Materials and spare parts

Valuation allowance

Total Inventories

28,766

(3,214)

25,552

31,017

(3,471)

27,546

NoTE 9.

INvENToRIES


At December 31, 2017 and 2016 the evolution of the valuation

allowance that was deducted from Inventories is:

Dec 31, 2017 Dec 31, 2016



Reversal

Additions

End of the year

1,830

743

(3,081)

3,722

3,214

3,214

42

(349)

564

3,471

Dec 31, 2017 Dec 31, 2016


Assets as per balance sheet


Trade and other receivables (1)

Other investments


Total

liabilities as per balance sheet

Borrowings

Trade and other payables (1)


Other liabilities (2)

Total

199

–

–

–

199

–

–

7,704

–

7,704

126,203

566,969

–

88,678

781,850

–

–

3,710

–

3,710

–

801,030

–

–

801,030

–

–

–

27,201

27,201

–

–

–

362,862

362,862

199

801,030

3,710

390,063

1,195,002

126,203

566,969

7,704

88,678

789,554



other financial liabilities at amortized cost

Total

Total

Available- for-sale


Assets at fair value through the profit and loss


Dec 31, 2017

(1) Excluding prepayments and advanced to suppliers and subcontractors.

(1) Excluding social security contributions.

(2) Excluding advances received on construction contracts .

NoTE 10.

FINANCIAl INSTRuMENTS By CATEgoRy


Assets as per balance sheet


Trade and other receivables (1)

Other investments


Total

liabilities as per balance sheet

Borrowings

Trade and other payables (1)


Other liabilities (2)

Total

589

–

–

–

589

–

–

678

–

678

159,196

465,972

–

77,336

702,504

–

–

2,128

–

2,128

–

753,524

8,275

–

761,799

–

–

–

21,134

21,134

–

–

–

210,670

210,670

589

753,524

10,403

231,804

996,320

159,196

465,972

678

77,336

703,182


TotalAvailable- for-sale


Assets at fair value through the profit and loss


Dec 31, 2016

(1) Excluding prepayments and advanced to suppliers and subcontractors.

(1) Excluding social security contributions.

(2) Excluding advances received on construction contracts.


other financial liabilities at amortized cost

Total


DETERMININg FAIR vAluES

The table below analyzes financial instruments carried at fair

value, by valuation method.

The different methods have been defined as follows:

Level 1- Quoted prices (unadjusted) in active markets for

identical assets or liabilities.

There was no transfer between level 1, 2 and 3 during the year.

Level 2- Inputs other than quoted prices included within level

1 that are observable for the asset or liability, either directly

(that is, as prices) or indirectly (that is, derived from prices).

Level 3- Inputs for the asset or liability that are not based on

observable market data (that is, unobservable inputs).

The following table presents the financial instruments that

are measured at fair value:

Assets at December 31, 2017



Total

liabilities at December 31, 2017


Total

Assets at December 31, 2016



Total

liabilities at December 31, 2016


Total

–

–

–

–

–

–

–

–

–

–

–

199

199

7,704

7,704

–

589

589

678

678

27,201

–

27,201

–

–

21,134

–

21,134

–

–

27,201

199

27,400

7,704

7,704

21,134

589

21,723

678

678

level 3

level 3

level 2

level 2

level 1

level 1

Total

Total


FINANCIAl INSTRuMENTS vAluED AT FAIR vAluE

FAir VAlUE ESTimATion

Financial assets or liabilities classified as assets at fair value

through profit or loss are measured under the framework

established by the IASB accounting guidance for fair value

measurements and disclosures.

The fair values of quoted investments are generally based

on current bid prices. If the market for a financial asset is not

active or no market is available, fair values are established

using standard valuation techniques.

For the purpose of estimating the fair value of Cash and

cash equivalents and Other Investments expiring in less

than ninety days from the measurement date, the Company

usually chooses to use the historical cost because the

carrying amount of financial assets and liabilities with

maturities of less than ninety days approximates to their fair

value.

The fair value of all outstanding derivatives is determined

using specific pricing models that include inputs that

are observable in the market or can be derived from or

corroborated by observable data. The fair value of forward

foreign exchange contracts is calculated as the net present

value of the estimated future cash flows in each currency,

based on observable yield curves, converted into U.S. dollars

at the spot rate of the valuation date.

FINANCIAl INSTRuMENTS vAluED

AT AMoRTIZED CoSTS

Borrowings are comprised primarily of fixed rate debt and

variable rate debt with a short term portion where interest

has already been fixed. They are classified under other

financial liabilities and measured at their carrying amount. Fair

values were calculated using standard valuation techniques

for floating rate instruments and comparable market rates for

discounting flows (See note 14).

The carrying amount of financial assets and liabilities with

maturities of less than one year as at December 31,2017

and 2016 approximates to their fair value. The fair value are

based on cash flow discounted and are within level 2 of the

fair value hierarchy. The amortized cost of assets and liabilities

with maturities more than one year, are not material, so the

fair values are not reported.


NoTE 11.

ASSETS oF DISPoSAl gRouP ClASSIFIED

AS HElD FoR SAlE




Investments in SA.T SPA

Other investments

Other

Total held – for – sale assets

1,620

9,524

5,064

–

16,208

1,620

2,045

1,534

20

5,219

Dec 31, 2017 Dec 31, 2016


NoTE 12.

CASH AND CASH EquIvAlENTS

Cash at bank and on hand

Short-term bank deposits

Liquidity funds

Short-term deposits in related parties

Total cash and cash equivalents


Bank overdrafts

Total cash and cash equivalents

86,974

48,851

21,134

74,845

231,804

231,804

(5,207)

226,597

111,610

67,353

27,201

183,899

390,063

390,063

(8,777)

381,286

Cash, cash equivalents and bank overdrafts include the

following for the purposes of the consolidated statement

of cash flows:

Dec 31, 2017

Dec 31, 2017

Dec 31, 2016

Dec 31, 2016

24

14

Notes

Notes


NoTE 13.

SHARE CAPITAl

The composition of the Company’s capital is as follows:



16,922,493

16,639,453

16,922,493

16,639,453

in ThoUSAnDS oF ShArES

The ordinary shares have a value of UYU 1 per share and

one vote per share. All issued shares are fully paid.

On August 2, 2017, Techint Investments S.A. made a

contribution to the Company for USD 10 million (equivalent

to Uruguayan Pesos 283 million).

At December 31, 2017 and 2016 the authorized Share Capital

amounted to UYU 17,500,000,000.

ordinary shares

number of shares


NoTE 14.

BoRRowINgS

non-current

Bank borrowings

Financial leases

Other borrowings

Total Non-Current borrowings

Current

Bank overdrafts

Bank borrowings

Borrowings from related parties

Financial leases

Other borrowings

Total Current borrowings

Total Borrowings

50,353

3,669

–

54,022

5,207

67,068

13,157

1,093

18,649

105,174

5.17% 5.20%

Dec 31, 2017

Dec 31, 2016

Dec 31, 2016

The weighted average interest rates before tax

shown bellow were calculated using the rates set

for each instrument in its corresponding currency

as of December 31, 2017 and 2016.

Notes

24

32,584

2,584

5,942

41,110

8,777

45,586

1,680

1,215

27,835

85,093

Dec 31, 2017


Breakdown of borrowings by currency and rate is as follows:

non-CUrrEnT

ARS

PEN

BRL

BRL

EUR

MXN

USD

USD

CUrrEnT

ARS

ARS

BRL

BRL

PEN

MXN

USD

USD

EUR

Fixed

Fixed

Variable

Fixed

Variable

Fixed

Fixed

Variable

Fixed

Variable

Variable

Fixed

Fixed

Fixed

Fixed

Variable

Variable

Currency

1,779

2,584

24,580

5,942

2,398

–

1,639

2,188

41,110

401

4,115

12,313

3,962

1,215

307

5,897

1,430

55,453

85,093

–

3,669

36,926

–

8,169

294

1,408

3,556

54,022

4,342

–

17,970

–

1,093

294

16,924

10,451

54,100

105,174

Reference: ARS: Argentine Peso BRL: Brazilian Real MXN: Mexican Peso EUR: Euro PEN: Soles peruanos

Dec 31, 2017Interest Rate Dec 31, 2016


The evolution of the borrowings during the year is as follows:

(**) From non - current to current.


Cash flows

Interests accrued

Reclassifications (**)

Acquisitions - finance leases

Other movements

Foreign exchange adjustments

Overdrafts variation

End of the year

50,353

(2,195)

–

(10,803)

–

1,368

(197)

–

38,526

104,081

(55,277)

11,878

10,803

–

906

7,917

3,570

83,878

4,762

(1,896)

767

–

–

–

166

–

3,799

159,196

(59,368)

12,645

–

–

2,274

7,886

3,570

126,203

long-term borrowings

Short-term borrowings

Finance lease liabilities

Total

Fixed rate

Variable rate

The following table summarizes the proportions of variable

rate and fixed rate debt as of the year ended at December 31,

2017 and 2016.

19%

81%

28,024

131,172

18%

82%

23,726

102,477

Borrowings Percentage Borrowings Percentage

Dec 31, 2016 Dec 31, 2017

28

Notes


Financial leases

Other borrowings

Total Borrowings

Interest to be accrued

Financial leases

Other borrowings

Total Borrowings

Interest to be accrued

-

6,704

6,704

588

1,237

7,480

8,717

53

-

4,468

4,468

122

–

6,732

6,732

9

–

–

–

–

–

4,486

4,486

18

1,305

16,931

18,236

1,762

1,173

21,375

22,548

891

1,215

83,878

85,093

3,440

1,093

104,081

105,174

698

1,279

10,423

11,702

1,123

1,259

10,280

11,539

253

1 year or less

1 year or less

1 - 2 years

1 - 2 years

2 - 3 years

2 - 3 years

3 - 4 years

3 - 4 years

4 - 5 years

4 - 5 years

over 5 years

over 5 years

The maturity of borrowings is as follows:

The fair value of borrowings equals their carrying amount,

as the impact of discounting is not significant.

The fair values are within level 2 of the fair value hierarchy.

Dec 31, 2016

Dec 31, 2017


NoTE 15.

DEFERRED INCoME TAXES

As further explained in note 2.s., TECHINT E&C and most

of the Company’s subsidiaries are subject to income taxes.

At December 31, 2017 and 2016 the Company discloses

under the caption “deferred income tax assets” the net

balance recognized by those subsidiaries that recorded

a net deferred income tax asset, while the net balance

recognized by those subsidiaries that recorded a net

deferred income tax liability has been disclosed under

“deferred income tax liabilities” in the consolidated

statement of financial position.

Deferred income tax assets and liabilities are offset when

(1) there is a legally enforceable right to offset current tax

assets against current tax liabilities and (2) the deferred

income taxes relate to the same fiscal authority.

The main subsidiaries generating deferred income tax

balances are detailed below:

Deferred income Tax Assets

TEBRA

Techint Chile S.A.

Techint S.A.C.

Techint Compañia Técnica Internacional S.A.C.I. (Uruguay)

Techint Cimimontubi Nigeria LTD

Carbonser, S.A. de C.V.

Carbontec, S.A. de C.V.

Techint Servicios, S.A. de C.V.

Constructora Mexicana Electromecánica y de Instrumentación, S.A. de C.V.

Mexcarbon

TESUR

TEMIL

Sidernet Argentina

20,426

–

–

955

–

604

221

523

2,146

–

–

5,947

96

30,918

Dec 31, 2016

23,345

598

94

–

93

693

248

510

1,886

28

773

6,927

910

36,105

Dec 31, 2017


Deferred income Tax liabilities

Techint Compañia Técnica Internacional S.A.C.I. (Uruguay)

TEMEX

Techint Chile S.A.

Techint S.A.C.

TEARG

FEPSA

Sidernet Argentina

Sidernet Mexicana S.A. de C.V.

Techint India Private Limited

Tecsesi S.A.

TIC

–

9,404

2,318

2,864

3,428

4,444

4,498

1,347

455

–

86

28,844

Dec 31, 2016

53

1,299

–

–

4,379

4,006

–

1,189

335

2,546

116

13,923

Dec 31, 2017

Deferred tax assets and liabilities are offset when: (1) there is

a legally enforceable right to offset current tax assets against

current tax liabilities and (2) when taxes on deferred benefits

are associated with the same tax authority.


At December 31, 2017 and 2016 the deferred tax balance

is originated by the following items:

Deferred income Tax Assets

Tax-loss carry-forwards

Provisions for bad debts

Deferred costs/Construction contracts

Advances from clients

Others

Subtotal

Deferred income Tax liabilities

Committed investment FEPSA

Deferred income/Construction contracts

PP&E revaluation

Inventories

PP&E

Others

Subtotal

Net deferred income tax assets

16,884

21,102

930

952

17,946

57,814

7,843

11,917

28,668

1,585

4,434

1,293

55,740

2,074

Dec 31, 2016

20,074

57,869

485

12,004

20,810

111,242

8,489

49,834

21,625

1,681

5,682

1,749

89,060

22,182

Dec 31, 2017


The evolution of net deferred income tax asset during

the year is as follows:

The amounts shown in the consolidated statement of financial

position include the following:

Deferred tax assets to be recovered within 12 months

Deferred tax assets to be recovered after more than 12 months

Deferred tax liabilities to be recovered within 12 months

Deferred tax liabilities to be recovered after more than 12 months

Net deferred income tax assets



PP&E revaluation

Cash flow Hedge

Other movements

Income statement charge

End of the year

10,305

47,509

(17,459)

(38,281)

2,074

21,309

(2,948)

(5,432)

–

(2,156)

(8,699)

2,074

Dec 31, 2016

Dec 31, 2016

30

Notes

48,822

62,420

(54,048)

(35,012)

22,182

2,074

677

(1,321)

2,207

1,783

16,762

22,182

Dec 31, 2017

Dec 31, 2017


The evolution of deferred income tax assets and liabilities

during the year ended December 31, 2017 is as follows:



Cash flow Hedge

Other movements

Income statement (charge) / credit

End of the year



PP&E revaluation

Other movements

Income statement charge / (credit)

End of the year

16,884

(73)

–

3

3,260

20,074

Tax-loss carry- forwards

7,843

(1,444)

–

2,029

61

8,489

Commited investment FEPSA

Deferred tax assets

Deferred tax liabilities

21,102

(1,459)

–

2,652

35,574

57,869


11,917

(113)

–

–

38,030

49,834

Deferred Income/Construction contracts

930

46

–

–

(491)

485


28,668

(836)

1,321

–

(7,528)

21,625

PP&E revaluation

952

(45)

–

–

11,097

12,004


1,585

(76)

–

150

22

1,681

Inventories

4,434

(161)

–

(160)

1,569

5,682

PP&E

17,946

(280)

2,207

1,147

(210)

20,810

others

1,293

142

–

–

314

1,749

others

57,814

(1,811)

2,207

3,802

49,230

111,242

Total

55,740

(2,488)

1,321

2,019

32,468

89,060

Total




Other movements

Income statement (charge) / credit

End of the year



PP&E revaluation

Other movements

Income statement charge / (credit)

End of the year

25,067

1,082

(574)

(8,691)

16,884

Tax-loss carry- forwards

7,444

(1,335)

–

–

1,734

7,843

Commited investment FEPSA

Deferred tax assets

Deferred tax liabilities

29,212

559

387

(9,056)

21,102


16,594

3,025

–

–

(7,702)

11,917

Deferred Income/Construction contracts

4,127

166

–

(3,363)

930


25,080

5,730

5,432

(560)

(7,014)

28,668

PP&E revaluation

5,475

465

–

(4,988)

952


1,773

453

–

–

(641)

1,585

Inventories

4,579

(611)

–

–

466

4,434

PP&E

17,465

2,028

(1,979)

432

17,946

others

4,567

(14)

–

550

(3,810)

1,293

others

81,346

4,300

(2,166)

(25,666)

57,814

Total

60,037

7,248

5,432

(10)

(16,967)

55,740

Total

The evolution of deferred income tax assets and liabilities

during the year ended December 31, 2016 is as follows:


The tax loss carry-forwards mature as detailed below:

Year 2017

Year 2018

Year 2019

Year 2020

Year 2021

Year 2022

Without maturity

–

21,279

7,458

76

3,086

11,588

306,487

349,974

7,158

20,340

10,155

112

11,959

–

244,395

294,119

The recoverable value of deferred tax assets depends on the

existence of future income subject to income tax, sufficient

to be used before their legal prescription. In this regard,

Management estimates that TECHINT E&C’s subsidiaries will

generate sufficient taxable income in future periods so as to

offset the net balance of deferred income tax assets recorded

at December 31, 2017.

As at December 31, 2017 the Company and subsidiaries

had in its tax books an amount of USD 77,269 of taxes

to be offset against future taxable income which are not

recognized in the balance sheet, because it is not probable

that they will be realized.

yEAR Dec 31, 2017 Dec 31, 2016


NoTE 16.

TRADE AND oTHER PAyABlES

non-current

Trade payables

Social security contributions (*)

Other payables

Total trade and other payables

Current

Trade payables

Social security contributions

Amounts due to related parties

Other payables

Total trade and other payables

–

36,147

228

36,375

552,353

65,899

12,529

1,859

632,640

3,360

34,312

184

37,856

422,711

45,181

28,902

10,815

507,609

The maturity of trade and other payables is as follows:

over 5 years

December 31, 2017


Total Trade and other payables

December 31, 2016


Total Trade and other payables

3 - 4 years

350

350

7,955

7,955

4 - 5 years

6,932

6,932

4,316

4,316

2 - 3 years

325

325

1,903

1,903

1 - 2 years

4,294

4,294

5,751

5,751

1 year or less

632,640

632,640

507,609

507,609

15,133

15,133

–

–

9,341

9,341

17,931

17,931

without due date

24

Dec 31, 2017 Dec 31, 2016Notes

(*) Include employee benefits


NoTE 17.

oTHER lIABIlITIES

non-current

Provisions

Advances received on construction contracts


Other liabilities

Total other liabilities

Current

Provisions

Advances received on construction contracts


Other liabilities and provisions


46,130

9,700

2,881

7,012

65,723

9,349

75,571

609

22,697

108,226

41,395

340

–

9,816

51,551

8,912

30,640

609

16,604

56,765

Dec 31, 2017 Dec 31, 2016

18

24

18

24

Notes

The maturity of trade and other payables is as follows:

over 4 years

December 31, 2017

Other liabilities


December 31, 2016

Other liabilities


33,728

33,728

28,965

28,965

3 - 4 years

15

15

2,098

2,098

2 - 3 years

15

15

280

280

1 - 2 years

2,408

2,408

10,699

10,699

1 year or less

108,226

108,226

56,765

56,765

29,557

29,557

9,509

9,509

without due date


NoTE 18.

PRovISIoNS

The evolution of provisions during the year is as follows:

non-current



Reversal

Additions

Used

End of the year

Current



Reversal

Additions

Used

End of the year

4,595

(571)

54

3,759

(1,249)

6,588

5,240

275

(1,620)

1,667

–

5,562

2,019

105

(294)

206

–

2,036

754

66

(3)

–

–

817

1,110

(119)

(372)

510

(135)

994

660

28

(160)

13

-

541

25,779

(6,175)

–

9,307

(30)

28,881

449

62

-

9

-

520

7,892

(160)

(52)

2,419

(2,468)

7,631

1,809

131

(65)

54

(20)

1,909

41,395

(6,920)

(664)

16,201

(3,882)

46,130

8,912

562

(1,848)

1,743

(20)

9,349

CivilsTaxeslabor

legal Fees (1) other (2) Total

Dec 31, 2017

CivilsTaxeslabor legal Fees other Total


non-current



Reversal

Additions

Used

End of the year

Current



Additions

Used

Other movements

End of the year

4,225

(150)

(324)

972

(128)

4,595

989

(212)

4,463

–

–

5,240

3,037

(1,099)

(272)

353

–

2,019

708

43

3

–

–

754

1,118

(100)

110

367

(385)

1,110

753

7

–

(100)

–

660

19,794

3,992

–

1,993

–

25,779

208

(18)

259

–

–

449

7,867

(290)

(260)

2,217

(1,642)

7,892

2,767

(270)

239

(1,273)

346

1,809

36,041

2,353

(746)

5,902

(2,155)

41,395

5,425

(450)

4,964

(1,373)

346

8,912

(1) See note 23. (2) It includes contractual obligations undertaken by the subsidiary Carbonser SA de CV in relation to the contract for the supply of coal handling services, calculated based on a technical study which indicates the degree of wear and tear of the main components of the Petacalco Plant, as well as the amount of expenditures estimated to be made in the future due to the wear and tear generated by the use of such Plant. Based on the mentioned study, by the end of December 2017 and 2016 Carbonser SA de CV recognized a maintenance provision of USD 6,107 and USD 5,872 respectively.

Dec 31, 2016

CivilsTaxeslabor legal Fees (1) other (2) total

CivilsTaxeslabor legal Fees other total


NoTE 19.

EMPloyEE BENEFITS

The company has the following employee benefits:

NoN-FuNDED DEFINED BENEFITS AND oTHER

loNg-TERM BENEFITS

At December 31, 2017 and 2016, the amounts recognized as

liabilities in the consolidated statement of financial position is

determined as follows:

There are no due and payable debts as of December 31, 2017

and 2016.

At December 31, 2017 and 2016, the amounts recognized

in the consolidated income statement are as follows:

Liabilities for retirement benefit and other plans

liability in the consolidated statement of financial position

Current service cost

Interest cost

Transfers and new participants of the plan

Other

Total included in wages salaries and social costs

26,270

26,270

1,866

2,847

(117)

–

4,596

21,867

21,867

1,965

2,632

195

228

5,020

Dec 31, 2017 Dec 31, 2016

Dec 31, 2017 Dec 31, 2016




Transfers and new participants of the plan

Total expense

Remeasurement - Actuarial losses (gains) and Others

Contributions paid

End of the year

21,867

(327)

136

4,596

3,040

(3,042)

26,270

23,098

(2,130)

18

5,020

(1,446)

(2,693)

21,867

The amounts and movements in the liabilities recognized in

the consolidated statement financial position are determined

as follows:

At December 31, 2017 and 2016, the main actuarial

premises in the argentinian subsidiaries used for calculation

of such plans contemplate a discount rate average of 7%

and 5,7% real and a salary increase rate of 2 and 3%.

The actuarial premises used in the mexican subsidiaries

for calculation of such plans contemplate a discount rate

of 7.6%, and a salary increase rate of 3.75% at December

31, 2017 and 4.79%, at December 31, 2016. Additionally,

the actuarial premises used in the subsidiary TEMIL for

calculation of such plans contemplate a discount rate

of 1.35% at December 31, 2017 and 2016, and a salary

increase rate of 2.5%.

Contribution plans

During the year ended December 31, 2017 and 2016

TECHINT E&C and subsidiaries contributed USD 66

and USD 103 to the defined contribution plans, respectively.

(See note 27).

Dec 31, 2017 Dec 31, 2016


NoTE 20.

PARTICIPATIoN IN joINT oPERATIoNS

The Company’s subsidiaries were part of different Joint

Operations which also performs engineering, procurement

and construction activities. The Company’s participation in

these Joint Operations was recorded through proportional

consolidation of assets, liabilities and results. The following

balances represent the Joint Operations assets and liabilities

at December 31, 2017 and 2016.

Techint Cia Técnica Internacional S.A.C.e I. –

Dycasa S.A. - Unión Transitoria de Empresas -

Proyecto: Ampliación Subte H (1)

Techint Cia Técnica Internacional S.A.C.I. -

Panedile Argentina S.A. - Unión Transitoria

de Empresas - Complejos "Los Caracoles"

and "Punta Negra" (1)


Impregilo S.p.A (Sucursal Argentina) -

Iglys S.A. - Unión Transitoria de Empresas -

Complejo Penitenciario Ezeiza (1)

Techint Cia Técnica Internacional S.A.C.e I. -

FLUOR Inc. - Unión Transitoria de Empresas -

Proyecto: Pascua Lama (1)


Panedile Argentina S.A.I.C.F e I - GNEA (1)

PANEDILE S.A.I.C.F. e I. - Tecnologia en Servicios

Urbanos S.A. - Unión Transitoria de Empresas (LPI 01) (6)


Urbanos S.A. - Unión Transitoria de Empresas (LP 49) (6)

SIEMENS S.A. - Tecnologia en Servicios Urbanos

S.A. - Unión Transitoria de Empresas (UEC) (6)

Tecnologia en Servicios Urbanos S.A. - PANEDILE

S.A.I.C.F. e I. Unión Transitoria de Empresas (MDQ) (6)

40,954

16,302

39,988

8,132

47,500

–

–

–

–

60.00%

75.00%

65.00%

50.00%

80.00%

50.00%

50.00%

40.20%

30.00%

36,782

11,982

1,315

12,289

827

6,324

1,503

3,504

393

42,506

13,205

42,778

7,753

40,990

6,656

1,633

3,909

90

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

34,761

13,809

1,532

13,280

3,162

–

–

–

–

60.00%

75.00%

65.00%

50.00%

80.00%

–

–

–

–

Total J.o.’S liabilities

Total J.o.’S Assets

Country of operation

% of ownership

Total J.o.'s liabilities

% of ownership

Total J.o.'s Assets

main Joint operations (J.o.)

Dec 31, 2017 Dec 31, 2016


(1) Controlling interest through TEARG.

(2) Controlling interest through TEMEX.

(3) Controlling interest through TEMIL.

(4) Controlling interest through TEBRA.

(5) Controlling interest through TENCO.

(6) Controlling interest through TEFIN.

Techint / Black & Veatch - LNG Costa Azul Project (2)

TS LNG SAS (3)

TS LNG BELGIUM BVBA (3)

Polskie LNG Consortium (3)

Consórcio Techint Confab UMSA - Lot I Tanks

Refinería do Nordeste, Abreu e Lima (RNEST) (4)

Consorcio Andrade Gutierrez - Techint (AG-TECH)

Diesel Unit of Landulpho Alves - Mataripe Refinery

(RLAM) (4)

Consorcio Andrade Gutierrez - Techint (TE - AG) (4)

Consorcio Technip – Techint (TTP – 76) (4)

Consorcio Angramon (4)

Empresa Constructora Belfi S.A. Sucursal Uruguay

- Techint Compañía Técnica Internacional S.A.C.I. -

Uruguay (5)

Consorcio Construcciones y Montajes (5)

Consorcio para la Atención y Mantenimiento

de Ductos del Perú – “Consorcio AMDP”(5)

Consorcio AMDP Norte (5)

Ingeniería y Construcción Bechtel Techint EWS Ltda. (5)

Bechtel Techint Servicios Complementarios Ltda. (5)

Mexico

France

Belgium

Poland

Brazil

Brazil

Brazil

Brazil

Brazil

Uruguay

Peru

Peru

Peru

Chile

Chile

227

50,610

21,338

34,752

1

101

6,972

83,357

3,603

737

2,043

35,101

–

19,957

24,987

50.00%

50.00%

50.00%

33.33%

41.00%

50.00%

50.00%

100.00%

14.29%

40.00%

75.00%

50.00%

50.00%

40.00%

40.00%

232

145,143

46,196

74,515

95

319

965

778,013

6,386

80

31

15,099

96

4,295

31

236

63,987

7,410

21,534

31,928

136,852

186,760

810,669

16,763

554

1,134

35,773

168

15,638

20,258

228

133,800

55,266

72,401

47

159

513

14,810

3,308

46

755

24,413

–

4,621

6,954

50.00%

50.00%

50.00%

33.33%

41.00%

50.00%

50.00%

50.00%

14.29%

40.00%

75.00%

50.00%

–

40.00%

40.00%

Total J.o.’S liabilities

Total J.o.’S Assets


% of ownership

Total J.o.'s liabilities

% of ownership

Total J.o.'s Assets

main Joint operations (J.o.) (cont’d.)

Dec 31, 2017 Dec 31, 2016


The following balances represent the J.O.s results

at December 31, 2017 and 2016:

Techint Cia Técnica Internacional S.A.C.e I. –

Dycasa S.A. - Unión Transitoria de Empresas -

Proyecto: Ampliación Subte H (1) (11)


Panedile Argentina S.A. - Unión Transitoria

de Empresas - Complejos “Los Caracoles“ and

“Punta Negra“ (1) (12)


Impregilo S.p.A (Sucursal Argentina) -

Iglys S.A. - Unión Transitoria de Empresas -

Complejo Penitenciario Ezeiza (1) (13)


FLUOR Inc. - Unión Transitoria de Empresas -

Proyecto: Pascua Lama (1)


Panedile Argentina S.A.I.C.F e I - GNEA (1) (14)


Urbanos S.A. - Unión Transitoria de Empresas

(LPI 01) (6) (20)


Urbanos S.A. - Unión Transitoria de Empresas

(LP 49) (6) (21)

SIEMENS S.A. - Tecnologia en Servicios Urbanos

S.A. - Unión Transitoria de Empresas (UEC) (6) (22)

Tecnologia en Servicios Urbanos S.A. - PANEDILE

S.A.I.C.F. e I. Unión Transitoria de Empresas (MDQ) (6) (23)

Techint / Black & Veatch - LNG Costa Azul Project (2)

TS LNG SAS (3) (15)

TS LNG BELGIUM BVBA (3) (16)

Polskie LNG Consortium (3)

Consórcio Techint Confab UMSA - Lot I Tanks

Refinería do Nordeste, Abreu e Lima (RNEST) (4)

(512)

9,338

9,694

(168)

2,355

332

130

405

(303)

6

2,174

13,233

(5,220)

(32)

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Argentina

Mexico

France

Belgium

Poland

Brazil

J.o.’S results


60.00%

75.00%

65.00%

50.00%

80.00%

50%

50%

40%

30%

50.00%

50.00%

50.00%

33.33%

41.00%

% of ownership

(1,527)

6,919

12,583

1,229

23,629

–

–

–

–

(35)

(4,065)

(406)

(4,568)

2

J.o.’S results

60.00%

75.00%

65.00%

50.00%

80.00%

–

–

–

–

50.00%

50.00%

50.00%

33.33%

41.00%

% of ownership

main Joint operations

Dec 31, 2017 Dec 31, 2016


(1) Controlling interest through TEARG.

(2) Controlling interest through TEMEX.

(3) Controlling interest through TEMIL.

(4) Controlling interest through TEBRA.

(5) Controlling interest through TENCO.

(6) Controlling interest through TEFIN.

(7) It was created for the preliminary works for the terminal at Conchillas Port, Department of Colonia, Uruguay and the construction of such terminal. (8) It was created for the sole purpose of signing for and executing the works of engineering, partial procurement and construction of a natural gas compression plant. (9) It was created for the execution of construction works related to aqueducts, pumping stations, power substations, high voltage lines, reservoir and other works requested for such project. (10) It was created for the provision of engineering, procurement and other related services, including the sale and lease of machinery, tools and equipment for the project.

(11) It was created for the construction of subway stations line H for the client Subterráneos de Buenos Aires Sociedad del Estado (SBASE). (12) Created in order to increase the regulation of water resources on the river San Juan (Argentina). (13) Created for the construction of a prison in Ezeiza - Buenos Aires Province (Argentina). (14) Created with the purpose of carrying out the engineering, procurement of equipment and construction of Gasoducto Noreste Argentino (GNEA). (15) Created to perform engineering, procurement of materials and construction of a terminal for liquefied natural gas (LNG) located in Dunkerque (France). (16) Created for the expansion of LNG regasification terminal in Zeebrugge Belgium. (17) Created for the purpose of negotiation, underwriting and execution of the contract with the Compañía Operadora de Gas del Amazonas S.A. (COGA) to provide the service and maintenance of the transportation system for natural gas and natural gas liquids.

(18) It was created for performing some works on the pipeline Norperuano including maintenance and repair of equipment and hot tap maintenance and replacement of pipes 16 and 36 inches. (19) As of June 2017 TEBRA increases its participation to 100%. (20) Created for the Recovery and Improvement of Ferrocarril General Belgrano – Total renewal of the infrastructure of tracks in tranche 5, Sector “A” (km. 211,340 to km 275,479) in the Province of Santa Fe, Argentina. (21) Created for the Recovery and Improvement of Ferrocarril General Belgrano – Total renewal of the infrastructure of tracks in Sector B (km 37,900 to km 83,900) in the Province of Santa Fe, Argentina. (22) Created for the construction of a substation, switching stations, self-transformation and tele-command for Ferrocarril General Roca, Constitución - La Plata, Argentina. (23) Created for the replacement of rails and sleepers of Ferrocarril General Roca, Vivoratá-Mar del Plata, and the construction of a new tracks between Camet and Mar del Plata.

J.o.’S results


% of ownership

J.o.’S results

% of ownership

50.00%

50.00%

100.00%

14.29%

40.00%

75.00%

50.00%

50.00%

40.00%

40.00%

(34)

8,295

3,118

414

(508)

4,112

10,632

–

9,318

36,079

50.00%

50.00%

50.00%

14.29%

40.00%

75.00%

50.00%

–

40.00%

40.00%

(59)

(1,072)

(21,471)

(3,049)

(94)

(227)

9,556

316

(5,359)

589

Brazil

Brazil

Brazil

Brazil

Uruguay

Peru

Peru

Peru

Chile

Chile

Consorcio Andrade Gutierrez - Techint (AG-TECH)

Diesel Unit of Landulpho Alves - Mataripe Refinery

(RLAM) (4)

Consorcio Andrade Gutierrez - Techint (TE - AG) (4)

Consorcio Technip - Techint (TTP - 76) (4) (19)

Consorcio Angramon (4)

Empresa Constructora Belfi S.A. Sucursal

Uruguay - Techint Compañía Técnica Internacional

S.A.C.I. - Uruguay (5) (7)

Consorcio Construcciones y Montajes (5) (8)

Consorcio para la Atención y Mantenimiento

de Ductos del Perú – “Consorcio AMDP”(5) (17)

Consorcio AMDP Norte (5) (18)

Ingeniería y Construcción Bechtel Techint EWS

Ltda. (5) (9)

Bechtel Techint Servicios Complementarios Ltda. (5) (10)

main Joint operations (cont’d.)

Dec 31, 2017 Dec 31, 2016


NoTE 21.

CoNTINgENCIES AND CoMMITMENTS

a. guARANTEES AND BoNDS gRANTED

TECHINT E&C and its subsidiaries have entered into a series

of guarantee contracts with third parties through which

they undertake the unconditional and irrevocable obligation

to guarantee the prompt and complete payment and

performance of certain liabilities incurred by related parties.

As of December 31, 2017 TECHINT E&C has issued

guarantees to related parties totaling USD 1,318 million (at

December 31, 2016: USD 744 million) and to third parties

USD 682.7 million (at December 31, 2016: USD 494.4 million).

b. woRKS EXECuTED uNDER A TRuST, CoNSTRuCTIoN

AND lEASINg AgREEMENT

TEARG, as a member of the J.O. Techint Compañía Técnica

Internacional S.A.C.I. – Impregilo S.p.A. (Sucursal Argentina) –

Iglys S.A., has signed a contract with the Argentine Government

for the construction of a penitentiary institution, under the

turnkey system, located in Ezeiza, province of Buenos Aires,

payable in 60 quarterly installments as canon, nominated in USD

4,650 each one (plus the corresponding value for VAT).

The J.O. accepted the pesification of canons at an ARS 1-USD

1 rate and the application of the Reference Stabilization Index

(RSI) until the effective date of payment, according to the

Agreements executed by the J.O. with the Ministry of Justice

and Human Rights, dated November 19, 2003 and September

9, 2004. The canons collected plus RSI after the Agreement

dated September 9, 2004, were Nos. 17, 18, 19, 20, 21 and

22. On the other hand, before execution of such Agreement,

canon No. 8 was also collected plus RSI in January 2003.

That notwithstanding, the J.O. received from such Ministry

payments for several canons not applying the RSI, which

have been taken by the J.O. as partial payments of the total

amount due and payable arising from the Agreement dated

September 9, 2004.

Thus, from January 2006 to the date of issue of these

consolidated financial statements, the J.O. received as partial

payment a total amount of USD 13,577 corresponding to

canons 10 to 16 and 23 to 60 at an ARS 1-USD 1 rate, not

applying the RSI.

Taking into account the Ministry of Justice’s delay as to a

resolution and payment of the overdue debt, Santander

Río Trust S.A., in its capacity as Trustee and Grantor of

the Leasing, on July 4, 2008, following the J.O.’s express

instructions, submitted a note demanding payment of

amounts due. Upon failure to answer by the Ministry of

Justice, on November 28, 2008, an Arbitration Claim was

filed before the International Court of Arbitration of the

International Chamber of Commerce, for the purpose

of appointing an arbitration tribunal consisting of three

arbitrators and to hold the respondent, the Argentine

Government, liable for payment of the amounts claimed plus

any interest that may be accrued and the new terms of the

debt to expire during the arbitration process. The arbitration

claim was notified to the Argentine Government in May

2009, the Arbitral Tribunal was constituted and the Mission

Statement was issued on December 7, 2010.

In May 2009, the J.O. was informed of the passing of

Executive Order No. 541/09, which empowers UNIREN to

renegotiate the Construction, Trust and Leasing Agreement

executed in 1998 in relation to Penitentiary Complex I

(Ezeiza). The J.O. has not consented to the provisions of

such executive order by virtue of the defects thereof. On

June 18, 2009, a letter was submitted through Santander

Río Trust S.A., in its capacity as Trustee and Grantor of

the Leasing, following the J.O.’s express instructions, to

the above-stated respect claiming the unlawful nature of

such executive order. That notwithstanding, and making it

clear that this entails no waiver whatsoever of its rights,

including the right to enforce its rights and defenses in

the ongoing arbitration proceeding, the J.O. executed a

Memorandum of Understanding (MOU) and an Agreement

(“Entendimiento Contractual”) on September 8, 2010

and on Novenber 18, 2011 respectively, whereby (i) the


acknowledgement made in the Agreement executed with

the Ministry of Justice on September 9, 2004 is ratified,

(ii) UNIREN acknowledges the debt upon failure to apply

the RSI, (iii) the Legal Board of Juridical Affairs (Dirección

Legal de Asuntos Jurídicos) of the Ministry of Economy

and Public Finance concludes that the application of RSI

complies with the provisions under the applicable legal

framework upon the passing of Law No. 25561 and

Executive Order No. 214/2002, (iv) the J.O. undertakes

to suspend the arbitration proceeding for 180 days and to

obtain the ratification of such agreement by the Trustee, (v)

the UNIREN undertakes, upon compliance by the J.O. with

the obligation stated in (iv), to ratify the agreement within

180 days jointly with the Ministry of Justice and Human

Rights (MINJU) and with the Argentine Executive Branch

(PEN) and (vi) upon ratification by the PEN, the MINJU

shall have a 90-day term to cancel the debt, and the J.O.

shall abandon the arbitration proceeding before or after the

administrative act stating the cancellation of the debt is

passed by the MINJU, but before the actual cancellation.

The J.O. obtained the ratification by the Trustee and

complied with the arbitration suspension for 180 days. This

suspension was extended several times so that the Argentine

Government would satisfy the commitment to ratify the

agreement undertaken by the Argentine Executive Branch

(PEN). The last extension granted expired on July 2014, and

the Arbitration Court, according to the notice from the Paris

International Chamber of Commerce (ICC), had until April 30,

2018, to issue the award.

The J.O. learnt that the Memorandum of Understanding

executed on November 18, 2011, as of this date is still

awaiting ratification by PEN. In such respect, we must

point out that the Argentine Attorney General’s Office

(Procuración del Tesoro de la Nación), on a letter dated July

29, 2013, sent to the Court Clerk’s Office of the International

Court of Arbitration of the International Chamber of

Commerce, stated that the relevant administrative

proceedings were being conducted to effectively promote

such ratification, and for such purpose the Ministry of

Justice, Security and Human Rights (MINJU) was seeing to

getting the budget credit to afford any expenditures to be

incurred to comply with the above-mentioned Memorandum

of Understanding.

In addition, on February 6, 2014, the Argentine Attorney

General’s Office issued a note to the Assistant Counsel of the

Court Clerk’s Office of the International Court of Arbitration

of the International Chamber of Commerce stating the

Argentine Government’s willingness to settle the dispute

as agreed under the Agreement executed between the

Claimants and the Public Services Contract Analysis and

Renegotiation Unit (UNIREN).

In February 2016, this J.O. was notified of the issuance

of Decree No. 367/2016 repealing Decree No. 311 which

assigned jurisdiction to the Claimants and the Public Services

Contract Analysis and Renegotiation Unit (UNIREN) to

renegotiate the Construction, Trust and Leasing Agreement

signed in 1998 in relation to Penitentiary Complex I (Ezeiza)

and assigns functions related to the renegotiation of

contracts for public works and services to the respective

ministries related to their subjects, according to the

responsibilities arising from the Law on Ministries (Text

Sorted by Decree No. 438 dated March 12, 1992), jointly with

the Ministry of Economy and Public Finance.

Consequently, the claimants and the respondent continue

holding conversations aimed at expediting compliance with

the provisions in the Memorandum of Understanding to

pay the overdue amount of Reference Stabilization Index

(CER). As of the date of issue of these consolidated financial

statements, on February 5, 2018, an addendum was executed

to the Memorandum of Understanding entered into on

November 18, 2011, stating the following (i) the parties state

that all provisions of the Memorandum of Understanding not

modified by the addendum are deemed to be reproduced,

(ii) payment of the overdue amount shall be made by means

of delivery of government securities with a market value at

the time of actual delivery representing an amount equal to

90% of the amount calculated pursuant to the provisions of


the above-mentioned Memorandum of Understanding, (iii)

the addendum is executed at referendum of the Argentine

Executive (PEN) since the ratification of the addendum shall

entail the ratification of the Memorandum of Understanding,

(iv) upon ratification by PEN, the Ministry of Finance shall

proceed to the delivery of the securities but prior to such

delivery, the Trustee, the JV and each member of the JV shall

abandon their right to file an action before the International

Chamber of Commerce, and they shall waive this and all and

any other claim and/or any right to bring an action in the future

against the Argentine Government based on the Construction,

Trust and Leasing Agreement of Penitentiary Complex I Ezeiza

before an arbitration, judicial and/or administrative court,

either national or international, and (v) in case of absence of

ratification by PEN, both the Memorandum of Understanding

and the addendum shall not be valid.

On March 27, 2018, Executive Order No. 249/2018 was

published in the Official Gazette (B.O.). Such Executive Order

ratifies the addendum to the Memorandum of Understanding

entered into on November 18, 2011 by and between UNIREN

(Public Services Contract Analysis and Renegotiation Unit)

and the JV, with addendum was executed by the MINJU

(Ministry of Justice), the Ministry of Economy and the JV,

each one of the companies member of the JV and the Trustee

and grantor of the Leasing, Santander Río Trust S.A., pursuant

to the terms of the document signed on February 5, 2018.

In addition, such Executive Order provides for the Entity

Responsible for Systems Coordination, within the sphere of

the Financial Administration of the National Public Sector, to

establish the issue of public debt securities necessary for

cancellation of the unpaid balance of the Construction, Trust

and Leasing Agreement of Penitentiary Complex I Ezeiza.

The Executive Order also stated that the MINJU had to

terminate the Construction, Trust and Leasing Agreement of

Penitentiary Complex I Ezeiza entered into on May 28, 1998.

On April 16, 2018, the beneficiaries of the government

securities consented on the number of bonds to be delivered

and the total discharge of obligations to be canceled

thereby, in the terms to be provided for by the MINJU, shall

be a necessary condition precedent to be reported to the

Secretary of Finance of the Ministry of Finance for settlement

of such government securities.

In addition, on April 17 the Trustee, the JV and each

member company of the JV withdrew from the arbitration

proceeding before the ICC with the scope agreed upon in the

aforementioned addendum.

By virtue of the above, the J.O. started to accrue the RSI

again, from January 1, 2009 to November 30, 2017 but

considering a 10% reduction.

In such respect, the J.O.’s Management and Legal Advisors

believe that, by virtue of application of the legal rules

and regulations regarding pesification (application of the

Reference Stabilization Index (RSI) to overdue canons) which

should be applied to this contractual structure, the J.O. has

a sound legal position to collect its claims in the context of

application of the above-mentioned rules and regulations.

The proportional participation of TEARG in the total balance

receivable of the J.O. with the Argentine Government as of

November 30, 2017 amounts to USD 34,374 (RSI USD 34,374).

The amount of such receivable recorded in these

consolidated financial statements, resulting from the

application of a 10% reduction on the above-stated values,

is USD 31,224.

All these financial credits correspond to the canons receivable

from the Argentine Government, due and to become due,

which were recorded as per the Agreement executed on

September 9, 2004 with the Undersecretariat of Coordination

and Innovation under the National Ministry of Justice and

Human Rights, in Pesos at a rate of ARS 1-USD 1 and adjusted

with RSI up to November 30, 2017.

On 23 April, 2018 the bonds were collected.


c. oTHER CoNTINgENCIES AND uNCERTAINTIES

Techint E&C´subsidiaries have tax and civil lawsuits for which

the legal advisors do not expect a probable unfavorable

outcome and, therefore, no provision was set up. The

amounts of these contingencies amount as of December 31,

2017 to USD 670 for tax contingencies, USD 1,081 for civil

contingencies. (At December 31, 2016: USD 1,549 for tax

contingencies, USD 2,942 for civil contingencies).

d. INvESTMENT IN FERRoEXPRESo PAMPEANo S.A.C

As of December 31, 2017, the subsidiary TEARG participates

in the activity of rail transport of cargo through its investment

in the company Ferroexpreso Pampeano S.A.C. materialized

through its stake in the holding company Compañía Inversora

Ferroviaria S.A.I.F. The activity of Ferroexpreso Pampeano

S.A.C. is the provision of freight transportation on the rail

line Rosario - Bahia Blanca, operating its activity in more than

5,000 kilometers of railroads.

The net assets of Ferroexpreso Pampeano S.A.C. included

in the consolidated financial statements amounted to USD

14,455 net of non-controlling interests.

On May 21, 2015 was published in the Official Gazette

the Law 27132 which declares the national public interest the

reactivation of railway service of passengers and cargo and

the creation of Ferrocarriles Argentinos S.E. The Argentine

Government should regulate this law within one hundred

eighty days published, at the date of issuance of these

financial statements, this has not been made. According

the content of that law and since it is pending the definition

of the relevant regulatory framework, there is uncertainty

about the potential effects that such changes may cause.

Notwithstanding the above, do not exist in our view, elements

to contemplate on the financial statements of the Company.

e. TAX PRoCEEDINgS - FluoR TECHINT SRl CoNSTRuCCIóN

y SERvICIoS lTDA.

The company Fluor Techint SRL Construcción y Servicios

Limitada (company in which Techint E&C has common

control) is currently subject to tax proceedings brought by the

Internal Revenue Service of Chile (“SII“, as per its name in

Spanish) with respect to requests for refunds of export VAT

made by the company in relation to the contract “Proyecto

Pascua Lama BEASA- Contrato SRL”. These requests

submitted for the tax periods from April 2008 to July 2010

were initially accepted by the tax authority but, later on,

they were rejected based on change of criteria by the tax

authority, who decided that, due to the nature of services

rendered they were not subject to VAT and applied that new

criteria retroactively. Several stages of the proceedings have

already taken place, and the company has filed motions and

appeals at each stage, which, so far, have been rejected, by

the courts of appeal.

On September 5, 2017, the case was sent up to the Supreme

Court and, on April 17, 2018, the decision made by such Court

was to dismiss the appeal filed by the company.

Based on the arguments provided for in such decision, on

April 20, 2018, the company filed a new appeal for reversal

(Recurso de Reconsideración in Spanish). On May 4, 2018,

the appeal was denied.

The company’s position is that with this unfavorable decision,

the Client of the project should be responsible for the

payment of this tax assessment. The base value of VAT

refunds under discussion is USD 15.4 million, and Techint is

accountable for 50% of such amount.

NoTE 22.

RESTRICTED ASSETS

TENCo AND SuBSIDIARIES

At December 31, 2017 and 2016, the net carrying amounts

of the PP&E held under finance lease amount to USD 6,328

and USD 6,206 respectively. At December 31, 2017 and 2016,

liabilities for finance leases amount to USD 3,799 and USD

4,762, respectively.


TEBRA

At December 31, 2017, there is no liabilities for finance leases

(at December 31, 2016, liabilities for finance leases amount to

USD 2,786).

Additionally, the information about a request of preventive

blocking of assets made by Tribunal de Contas da União to

TEBRA, has been included in Note 31. Up to the issue of

these Financial Statements, there's no judicial decision

providing an specifically restriction to any asset of TEBRA.

CoINCAR S.A.

Under the Credit Facility Agreement entered into by

Coincar S.A. with Banco Santander Río S.A. and Banco

de Galicia y Buenos Aires S.A., Coincar S.A. agreed not to

sell nor cause to be sold, assign in ownership and/or use

and/or usufruct, mortgage, pledge, loan and/or loan for

use, levy in any manner whatsoever, lease and/or enter

into a leasing, grant a security and/or personal interest with

respect to, not to transfer and/or in any manner dispose

of, either in a transaction or a series of transactions, all

or a substantial portion of any of its assets, goods and/

or rights and/or of its assets, goods and/or rights to be

acquired in the future, nor to distribute dividends, pay fees

to the company’s directors or consultants, without the prior

consent of the majority of the banks that granted the Credit

Facility Agreement.

CoINFER

licensed assets:

In conformity with the regulations established in the

bid specifications and the License Agreement, the

subsidiary FEPSA received from Ferrocarriles Argentinos

assets of its own to be used in the operation (included

in “Property, plant and equipment” non-current). They

primarily comprised infrastructure (main and secondary

railway network), real property (warehouses and

buildings), transportation material (locomotives and

coaches), fixed facilities and other. Upon expiration

of the license, the assets would be returned to

Ferrocarriles Argentinos, at no additional cost, in their

normal condition of maintenance, except for the wear

and tear over time and the normal use.

NoTE 23.

ClAIMS RECEIvABlES

In the year ended December 31, 2011, the Company

recognized the gain arising from indemnification for

consequential damages, as a result of a final and unappealable

decision on April 4, 2011, relating to a Construction Contract

entered into on October 1, 1991 with the Ministry of Education

and Sport that had as its object the construction of 200 units

of the Integrated Center for Child Support (CIAC). This

indemnity was postulated by the Company as a result of the

unilateral termination of the Contract by the Public Power,

executed on September 30, 1996 when 41 CIAC units had

already been completed and others were under construction.

On September 15, 2010, the Superior Court of Justice

recognized the Company's right to be indemnified for the

damages arising from the expert's report, up to December

31, 1998 of R $ 93 millions, duly updated in accordance with

the criteria defined in the decision which became the subject

of judgment on 4 April 2011.

The technical expert report, completed on July 27, 1999,

established the following amounts, as a consequence of

the damages caused, considering the monetary adjustment

factors, valid for the Federal Justice, based on the evolution

of ORTN / OTN / BTN / TR / UFIR, with update until December

31, 1998. On July 18, 2011, the Company proposed the

execution of the decision, accompanied by an accounting

expert's report that updated the amount of the damages

arising in accordance with the criteria defined in the final

judgment, totaling the restated amount R $ 339 millions

as of June 30, 2011.

The amount of the indemnity recorded in 2011 was calculated

based on the value established in the expert's report, net of

legal expenses linked to the realization of the credit and tax

effects, plus monetary restatement by the official indices

(INPC / BACEN) and interest of 1% per month, and the

resulting amount is discounted to present value based on

the DI x TR indices disclosed by BM & FBOVESPA, taking

into account the receipt in court and liquidation thereof in ten

annual installments of equal value as of 2013.


On October 25, 2011, having been duly summoned to

Execution, the Union opposed Embargoes to Execution, in

which it postulated criteria for updating the debt, divergent

from those defined in the final decision, whose trial occurred

on October 19, 2012. Although the Company considers that

the decision of the lower court judge to reduce the indemnity

amount by six months, the Company conservatively

recognized a reduction in the amount of R $ 14.9 millions,

maintaining the remaining amounts and criteria to update the

credit in accordance with the final decision. The competent

Appeal was filed and awaits judgment by the Federal

Regional Court of the 1st Region.

On September 6, 2012, the Federal Court filed a rescissory

action requesting that the final decision be revoked, which

was challenged by the Company on November 9, 2012, in

order to dismiss the allegations of action . Under current

legislation, a rescission action is only applicable in specific and

fairly restricted circumstances. In the opinion of management,

based on its legal advisors, the likelihood of the rescission

action being favorable to the Federal Government is remote.

The instruction of the rescission action is made, including with

the rejection of the request for production of evidence made

by the Union, and awaits judgment by the STJ.

In 2017, the credit update was made based on the

assumptions that the estimated date of issuance of the

precatory by the Judiciary will be until June 30, 2019 and that

the amounts will be paid by the Federal Government in up

to ten annual installments of equal value to from December

31, 2020 (the maximum payment date according to prevailing

legislation issued by June 30, 2019).

Details:

Claim restated up to the date of recognition by the final and irrevocable court decision

Restatement for the period between the final and irrevocable court decision and December 31,

2011 (INPC)

Interest for the period between the final and irrevocable court decision and December 31, 2011 (1% p.m.)

Total amount at December 31, 2011

Adjustment to present value

Total adjusted to present value at December 31, 2011

Provision for legal fees - 20%

Amount recognized as "Gain from claims, net"

339,263

3,359

13,412

356,034

(57,855)

298,179

(59,636)

238,543

187,711

(37,542)

150,169

Amounts in R$ thousand

Amounts in uSD thousand (*)

2.d

Notes

(*) The amount of the net gain has been translated at the average exchange rate of April 2011 the month on which the final unappealable decision was issued. The receivable as of December 31, 2017 translated at the year-end exchange rate amounts to USD 140,478 (see note 8) and the related provision for legal fees amounts to USD 28,030 (see note 18).

The net amount recorded in income for the year ended

December 31, 2011 is as follows:


The changes in the amounts recorded in the claims

receivable and in the related provision for legal fees

are presented below:


Translation effect

Increase in the receivable due to application of inflation index (INPC) and interest (1% p.m.)

established in the final court decision (*)

Unwinding of present value adjustment (*)

End of the year

(*) Amount recognized as "Financial results".

129,226

(1,970)

11,338

1,884

140,478

13,222

(25,779)

393

(2,267)

(377)

(28,030)

(2,644)

Claim Provision for legal fees

28

Notes


NoTE 24.

RElATED PARTy TRANSACTIoNS

TECHINT E&C is controlled by Techint Investments S.A. ,

which owns 100% of the company’s shares. San Faustin SA,

a Luxembourg Société Anonyme (“San Faustin”) owned the

Company through its subsidiaries.

yEAR END BAlANCES wITH RElATED PARTIES oTHERS

THAN THE PARENT CoMPANy.

Rocca & Partners Stichting Administratiekantoor Aandelen

San Faustin, a Dutch private foundation (Stichting) (“RP

STAK”) held voting shares in San Faustin sufficient to control

San Faustin.

No person or group of persons controlled RP STAK.

Notes

non-current assets

Other investments in other related parties

Other investments in associated related parties

Trade receivables from other related parties

Other receivables from associated related parties

Other receivables from other related parties

Current assets

Trade receivables

Trade receivables from associated related parties

Trade receivables from other related parties

Other receivables

Other receivables from associated related parties

Other receivables from other related parties


Short-term deposits in other related parties

–

3,710

–

10,382

727

2,944

37,648

–

271

183,899

8,275

2,128

639

8,028

–

21,521

40,634

9,373

1,405

74,845

7

7

8

8

8

8

8

8

8

12

Dec 31, 2017 Dec 31, 2016


non-current liabilities

Other liabilities

Other liabilities due to other related parties

Current liabilities

Borrowings

Borrowings from other related parties

Trade and other payables due to associated related parties

Trade and other payables due to other related parties

Other liabilities due to other related parties

Transactions with associated related companies

Sales of goods and services (*)

Purchases of goods and services

Transactions with other related companies

Sales of goods and services

Purchases of goods and services

Financial results net

2,881

1,680

7,114

5,415

609

(4,665)

30

269,386

23,578

1,016

–

13,157

16,648

12,254

609

5,016

266

297,352

26,693

1,629

Dec 31, 2017

Dec 31, 2017

Dec 31, 2016

Dec 31, 2016

17

14

16

16

17

Notes

TRANSACTIoNS wITH RElATED PARTIES

The aggregate compensation of the directors and executive

officers earned during the year ended at December 31, 2017

and the year ended December 31, 2016 amounts to USD

17,061 and USD 15,809, respectively.

(*) In 2017 corresponds to credit notes of AOT Pipelines S.A.P.I de C.V.


Company

NoTE 25.

PRINCIPAl SuBSIDIARIES

The following is a list of TECHINT E&C’s principal subsidiaries

and its direct and indirect percentage of ownership of each

controlled company at December 31, 2017 and 2016:

Carbonser, S.A. de C.V.

Carbontec, S.A. de C.V.

Compañía Inversora Ferroviaria S.A.I.F.

Constructora Mexicana Electromecánica

y de Instrumentación, S.A. de C.V.

Construcciones Globales Andinas CGA S.A.

Construcciones y Prestaciones Petroleras S.A. (CPP)

Ferroexpreso Pampeano S.A.C.

Flinwok S.A.

Saudi Techint Ltd.

Sidernet Mexicana S.A. de C.V.

Sidernet S.A.

Socominter Sociedade Comercial Internacional Ltda.

Techint Chile S.A.

Techint Compagnia Tecnica Internazionale S.p.A.

Techint Compañía Técnica Internacional S.A.C.I.

Techint Compañía Técnica Internacional S.A.C.I.

Techint Engenharia e Construção S/A. (TEBRA)

TEI&C S.A.

50.00%

50.00%

77.14%

100.00%

100.00%

100.00%

61.71%

100.00%

60.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Loading and transportation of coal

Personal Services

Holding Company

Personal Services

Engineering and construction


Cargo Railway Transportation Concession

Holding Company


Heavy cleaning services


Sale of machinery and equipment






Holding Company

Mexico

Mexico

Argentina

Mexico

Ecuador

Ecuador

Argentina

Uruguay

Saudi Arabia

Mexico

Argentina

Brazil

Chile

Italy

Argentina

Uruguay

Brazil

Uruguay

50.00%

50.00%

77.14%

100.00%

100.00%

100.00%

61.71%

100.00%

60.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Dec 31, 2017% of ownership


Main ActivityCountry

(1)

(1)

(2)

(1)

(1)

(2)

(1) TEMEX has the power to govern the financial and operating policies of the entity.

(2) Controlling interest through COINFER

(3) On June 27, 2017 TEARG and TIC decided to buy a new subsidiary, with the name of Tefin S.A.

(4) The extraordinary Shareholders meetting of the argentine subsidiary Sidernet held on September 29, 2017 approved the Sidernet spin-off and as a result of the same, the constitution of Tecsesi S.A .


Company

Techint Iberia S.L.

Techint International Construction Corp. (TENCO)

Techint Ingeniería y Construcciones S.L.

Techint Inversiones S.A.I.F.

Techint S.A.C.

Techint, S.A. de C.V.

Techint Servicios, S.A. de C.V.

Tecnología en Servicios Urbanos TESUR S.A.

Tecsesi S.A.

Tefin S.A.

TE&C Investments Netherlands BV

TS LNG S.A.S.

Wisdery S.A.

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

–

–

–

100.00%

50.00%

100.00%


Holding Company

Holding Company

Holding Company



Personal Services




Holding Company


Trading Company

Spain

Bahamas

Spain

Argentina

Peru

Mexico

Mexico

Argentina

Argentina

Argentina

Netherlands

France

Uruguay

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

97.50%

100.00%

100.00%

100.00%

50.00%

100.00%



Main ActivityCountry

(4)

(3)

(1) TEMEX has the power to govern the financial and operating policies of the entity.

(2) Controlling interest through COINFER

(3) On June 27, 2017 TEARG and TIC decided to buy a new subsidiary, with the name of Tefin S.A.

(4) The extraordinary Shareholders meetting of the argentine subsidiary Sidernet held on September 29, 2017 approved the Sidernet spin-off and as a result of the same, the constitution of Tecsesi S.A .


Current

Cash-flow hedge

Total derivative financial instruments - current

non-current

Cash-flow hedge

Total derivative financial instruments – non current

199

199

–

–

5,675

5,675

2,029

2,029

Dec 31, 2017

NoTE 26.

DERIvATIvE FINANCIAl INSTRuMENTS

liabilitiesAssets

Current

Cash-flow hedge


Total derivative financial instruments - current

589

–

589

525

153

678

Dec 31, 2016

liabilitiesAssets

Contract Types

Forwards to sell US dollars vs pesos mexicanos

Forwards to sell US dollars vs euros

Forwards to buy US dollars vs euros

Forwards to buy indian rupees vs euros

103,263

21,093

19,941

–

–

16,188

12,012

6,730

Dec 31, 2016Dec 31, 2017Total notional amount in currency of the contract

FoRwARD FoREIgN EXCHANgE CoNTRACTS

The notional principal amounts of the outstanding forward foreign

exchange contracts at 31 December 2017 and 2016 were:


(1) Includes employee benefits for USD 4,596 (USD 5,020 at December 31, 2016), contribution plans for USD 66 (USD 103 at December 31, 2016) and long-term incentives for USD 2,661 ( USD 180 at December 31, 2016) .

NoTE 27.

CoST oF REvENuE AND EXPENSES By NATuRE

Wages salaries and social security costs (1)

Taxes, rates and contributions

Fees and technical advice

Sub-contract for services

Purchases of material and supplies

PP&E depreciation

Intangible assets amortization

Work structure expenses

Office structure expenses

Unallocated costs



76,279

2,687

22,416

2,372

452

8,787

2,623

1,460

4,572

20,219

141,867

138,943

general administrative and selling expenses

479,724

33,081

104,977

114,964

441,298

35,779

227

9,761

23,955

26,500

1,270,266

1,082,756

Cost of revenue

4

5

Notes

556,003

35,768

127,393

117,336

441,750

44,566

2,850

11,221

28,527

46,719

1,412,133

Dec 31, 2017

536,719

30,189

71,521

165,499

253,571

42,893

3,273

43,695

21,204

53,135

1,221,699

Dec 31, 2016


NoTE 28.

FINANCIAl RESulTS

income

Interests and indexation

Foreign exchange transaction results

Results from Techint Cía Técnica Internacional S.A.C.I. Impregilo S.p.A. (suc. Arg.) Iglys S.A. -

Unión Transitoria de Empresas – Complejo Penitenciario Ezeiza

Restatement and interest on claims

Other

Costs

Interests and indexation

Foreign exchange transaction results

Comissions

Other

10,890

23,504

6,562

10,578

3,980

55,514

(12,645)

(32,409)

(2,025)

(6,099)

(53,178)

8,407

46,842

8,478

7,971

4,557

76,255

(10,210)

(34,113)

(1,187)

(2,924)

(48,434)

Dec 31, 2017 Dec 31, 2016

21.b

23

Notes


NoTE 29.

oTHER oPERATINg RESulTS

Gain from the sale of PP&E

Impairment loss of PP&E

Gain from indemnity

Claims

Restructuring gain /(cost)

Dividens earned

Taxes

Impairment loss other assets

Other

5,158

(193)

995

(2,935)

1,620

104

(1,365)

(4,285)

(2,837)

(3,738)

4,671

(5,528)

882

–

(25,819)

–

(1,199)

–

9,745

(17,248 )

NoTE 30.

INCoME TAX

Current income tax

Deferred income tax

(17,136)

16,762

(374)

(34,810)

(8,699)

(43,509)

Dec 31, 2017

Dec 31, 2017

Dec 31, 2016

Dec 31, 2016Notes

15


(*) The income tax rates for argentine subsidiaries would be gradually reduced from 35% to 30% for fiscal periods starting from January 1, 2018 until December 31, 2019, and at 25% for fiscal periods beginning on or after January 1, 2020, inclusive.

85,900

(29,546)

1,649

5,263

16

(10,725)

541

(4,589)

(4,381)

–

(1,737)

(43,509)

The net difference between the tax calculated at the rate

in effect in each country and the total charge for the year

is generated by the following:


Tax calculated at the applicable rate on the result for the year

Effect of restatement in constant currency

Result due to participating interests in subsidiaries and related companies

Provision for loss with inventories and advances to suppliers

Tax loss carry - forwards

PP&E

Non-deductible expenses

Impairment of losses

Effect of change in rate (*)

Other, net

Income Tax

16,988

(10,363)

2,620

479

(11)

(705)

426

(391)

–

(672)

8,243

(374)

Dic 31, 2017 Dic 31, 2016


NoTE 31.

MAIN CoNTRACTS

Peru

Coga 5 Proyect - Compañía Operadora de Gas del

Amazonas S.A. (COGA)

Chile

Escondida Water Supply (EWS) Project – Betchtel Chile Limitada

Los Bronces Duct Replacement (High area) - Anglo American Sur S.A.

Los Bronces Duct Replacement (Middle area) - Anglo American Sur S.A.

Uruguay

Maldonado Sewage System - Obras Sanitarias del Estado (OSE)

Route 9 – Corporación Vial del Uruguay S.A.

Brazil

Modules for P-76 Platform – Petrobras Netherlands BV

Projet Ferro Carajás S-11D - Vale S.A.

Argentina

Punta Negra Hydroelectric Power Station

Hydroelectric Power Station - Tambolar

Subway Line H Expansion

Gasoducto Noreste Argentino (GNEA)

ENAP - Piam Magallanes

CAREM 25

Fortín de Piedra

Genelba Plus

260

786

13

28

70

44

889

124

499

98

491

199

123

60

392

191

52%

100%

100%

10%

97%

76%

82%

100%

100%

83%

81%

100%

100%

2%

25%

1%

29%

100%

1%

–

90%

63%

88%

77%

99%

51%

70%

98%

21%

–

–

–

243

781

12

–

69

25

756

122

499

96

387

193

171

–

–

–

Physical progress

Physical progress

Total contract amount (USD million)


Country / work

At December 31, 2017 and 2016 , the main contracts

are the following:

(3)

(2)

(4)

(4)

(1)

(6)

Dic 31, 2017 Dic 31, 2016

Reference:

(1) The Company's participation is 60%







mexico and United States of America

Combined Cycle Power Plant Norte III

Internal Coal Handling System Revamp (RSIMC)

Altamira Facilities Compressor Station

Tenaris Bay City

Europe

Dunkerque LNG Fast Reloading

Africa

West Damietta CP-118

Al Shabab CP-118

South Helwan

574

39

87

46

35

30

41

77

5%

0%

42%

100%

56%

95%

99%

81%

–

–

2%

93%

17%

28%

42%

31%

–

–

77

41

33

26

34

71

(3)

Physical progress

Physical progress



Country / work

Dec 31, 2017 DIC 31, 2016

Reference:








The Company informs that its Brazilian subsidiary, Techint

Engenharia e Construção S.A. (TEBRA), has contracts with

Petróleo Brasileiro S/A – Petrobras (“Petrobras”) related to

construction services and industrial assembly of oil refining

units (onshore) and oil rigs (offshore) which were signed

following bidding processes conducted in accordance with

Decree No.2.745/98.

On December 29, 2014, TEBRA received a notification from

Petrobras, stating that it was temporarily prevented from

participating in new bidding processes and/or signing new

contracts with Petrobras. TEBRA took all the administrative

(presented its defense) and judicial (filed injunction) measures

in order to reverse such decision. Documentation related

to the administrative process was submitted to the former

Controladoria Geral da União (CGU), now Ministério da

Transparência, which continued with the administrative

procedure of defining responsibility. On April 10, 2015,

TEBRA received a notification from CGU informing that such

administrative procedure was initiated. Until now, TEBRA

has not received any notice of irregularity. Both procedures,

administrative and judicial, are awaiting a final decision.

In addition, TEBRA received notification of two further

administrative procedures opened by Conselho

Administrativo de Defesa Econômica (CADE) in order to

investigate possible infractions in relation to the contract

held with Eletronuclear (procedure opened on November 5,

2015) and Petrobras (procedure opened on December 22,

2015). Another two processes were opened by Tribunal de

Contas da União (TCU) on the same subjects thereafter. In

relation with the TCU administrative procedure regarding the

contract held by the consortium (of which TEBRA was part)

and Eletronuclear, TEBRA was officially notified on March

30th 2017 of a resolution from such agency ruling a 5-year

temporary exclusion for TEBRA to participate in further

tenders to be issued by Federal governmental entities.

TEBRA has already challenged the resolution and this appeal

has suspensive effects. TEBRA will resort all administrative

and judicial instances available. In the other process, TEBRA

had been notified of a request of TCU for a preventive

blocking on its assets in relation to the COMPERJ Project,

which was executed in consortium with Andrade Gutierrez.

TEBRA submitted a proposal by granting a guarantee on a

property owned by the Company, but reserving its rights to

appeal the resolution which considers unfounded. In addition,

and for the same project, the consortium Techint / Andrade

Gutierrez was notified by Petrobras of an internal decision by

which declared the nullity of the contract and requested an

economic repair to the consortium companies. This decision

is not yet firm and will be disputed by the consortium.

Regarding ongoing investigations on the operation known

as Lava Jato (“Car Wash”), the management of the

company reiterates that, to the best of their knowledge

and in accordance with those internal investigations

deemed necessary and sufficient for the management

of the company to be properly informed, no evidence of

wrongdoings has been found with respect to the operations

of our Brazilian subsidiary.

TEBRA will continue to resort to those administrative

and judicial instances available with respect to the

abovementioned reported processes.

NoTE 32.

SuBSEquENT EvENTS

After December 31, 2017, no other events, situations or

circumstances have occurred which might significantly

affect the Company´s equity or financial position, which

have not been adequately contemplated or mentioned in

these consolidated financial statements.


TECHINT E&C S.A.


and Consolidated Financial Statements

Annual Report

For the year ended December 31, 2017

and December 31, 2016

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