Ternium S.A. | CIK:0001342874 | 3

  • Filed: 4/24/2018
  • Entity registrant name: Ternium S.A. (CIK: 0001342874)
  • Generator: Workiva (WebFilings)
  • SEC filing page: http://www.sec.gov/Archives/edgar/data/1342874/000134287418000009/0001342874-18-000009-index.htm
  • XBRL Instance: http://www.sec.gov/Archives/edgar/data/1342874/000134287418000009/tx-20171231.xml
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    • ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory

     
    As of December 31,
     
    2017
     
    2016
     
     
     
     
    At the beginning of the year
    418,379

     
    250,412

     
     
     
     
    Equity in earnings (losses) of non-consolidated companies
    68,115

     
    14,624

    Other comprehensive income
    (4,786
    )
     
    39,077

    Acquisition of additional shares (note 3)
    —

     
    114,449

    Dividends from non-consolidated companies
    (3,360
    )
     
    (183
    )
     
     
     
     
    At the end of the year
    478,348

     
    418,379



    The principal investments in non-consolidated companies, all of which are unlisted, except for Usiminas, are:
     
     
     
     
     
     
    Voting rights at
     
    Value at
    Company
     
    Country of incorporation
     
    Main activity
     
    December 31, 2017
     
    December 31, 2016
     
    December 31, 2017
     
    December 31, 2016
    Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS
     
    Brazil
     
    Manufacturing and selling of steel products
     
    34.39
    %
     
    34.39
    %
     
    466,299

     
    411,134

    Techgen S.A. de C.V.
     
    Mexico
     
    Provision of electric power
     
    48.00
    %
     
    48.00
    %
     
    6,862

     
    3,444

    Other non-consolidated companies (1)
     
     
     
     
     
     
     
     
     
    5,187

     
    3,801

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    478,348

     
    418,379

    (1)
    It includes the investment held in Finma S.A.I.F., Arhsa S.A., Techinst S.A., Recrotek S.R.L. de C.V. and Gas Industrial de Monterrey S.A. de C.V.
    (a)
    Usinas Siderurgicas de Minas Gerais S.A. – USIMINAS
    Usiminas is a Brazilian producer of high quality flat steel products used in the energy, automotive and other industries.
    As of December 31, 2017 and 2016, the value of the investment in Usiminas is comprised as follows:
     
    USIMINAS
    Value of investment
    As of December 31, 2017
     
    As of December 31, 2016
     
     
     
     
    At the beginning of the year
    411,134

     
    239,960

    Share of results (1)
    63,030

     
    16,832

    Other comprehensive income
    (4,570
    )
     
    39,893

    Dividends
    (3,295
    )
     
    —

    Acquisition of additional shares (note 3)
    —

     
    114,449

     
     
     
     
    At the end of the year
    466,299

     
    411,134

    (1) It includes the adjustment of the values associated to the purchase price allocation.

    The investment in Usiminas is based in the following calculation:
    Usiminas' shareholders' equity
    4,164,086

    Percentage of interest of the Company over shareholders' equity
    20.47
    %
     
     
    Interest of the Company over shareholders' equity
    852,263

     
     
    Purchase price allocation
    78,688

    Goodwill
    314,218

    Impairment
    (778,870
    )
     
     
    Total Investment in Usiminas
    466,299


    On February 8, 2018, Usiminas approved its annual accounts as of and for the year ended December 31, 2017, which state that revenues, net profit from continuing operations and shareholders’ equity amounted to USD 3,368 million, USD 100 million and USD 4,164 million, respectively.
     
    USIMINAS
    Summarized balance sheet (in million USD)
    As of December 31, 2017
     
    As of December 31, 2016
     
     
     
     
    Assets
     
     
     
    Non-current
    5,662

     
    6,086

    Current
    1,494

     
    1,277

    Other current investments
    164

     
    472

    Cash and cash equivalents
    535

     
    221

     
     
     
     
    Total Assets
    7,855

     
    8,056

     
     
     
     
    Liabilities
     
     
     
    Non-current
    637

     
    753

    Non-current borrowings
    1,707

     
    2,104

    Current
    622

     
    517

    Current borrowings
    299

     
    21

     
     
     
     
    Total Liabilities
    3,265

     
    3,395

     
     
     
     
    Non-controlling interest
    426

     
    508

     
     
     
     
    Shareholders' equity
    4,164

     
    4,153


     
    USIMINAS
    Summarized income statement (in million USD)
    As of December 31, 2017
     
    As of December 31, 2016
     
     
     
     
    Net sales
    3,368

     
    2,443

    Cost of sales
    (2,854
    )
     
    (2,292
    )
    Gross Profit
    514

     
    151

    Selling, general and administrative expenses
    (206
    )
     
    (180
    )
    Other operating income (loss), net
    (78
    )
     
    (61
    )
    Operating income
    230

     
    (90
    )
    Financial expenses, net
    (145
    )
     
    (17
    )
    Equity in earnings of associated companies
    49

     
    40

    Profit (Loss) before income tax
    134

     
    (67
    )
    Income tax benefit
    (34
    )
     
    (99
    )
    Net profit (loss) before non-controlling interest
    100

     
    (166
    )
    Non-controlling interest in other subsidiaries
    (26
    )
     
    (28
    )
    Net profit (loss) for the year
    74

     
    (194
    )



    (b)Techgen S.A. de C.V.
    Techgen is a Mexican natural gas-fired combined cycle electric power plant in the Pesquería area of the State of Nuevo León, Mexico. The company started producing energy on December 1st, 2016 and is fully operational. As of February 2017, Ternium, Tenaris, and Tecpetrol International S.A. (a wholly-owned subsidiary of San Faustin S.A., the controlling shareholder of both Ternium and Tenaris) completed their investments in Techgen. Techgen is currently owned 48% by Ternium, 30% by Tecpetrol and 22% by Tenaris. Ternium and Tenaris also agreed to enter into power supply and transportation agreements with Techgen, pursuant to which Ternium and Tenaris will contract 78% and 22%, respectively, of Techgen’s power capacity of 900 megawatts. During 2017 and 2016, Techgen’s shareholders made additional investments in Techgen, in the form of subordinated loans, which in the case of Ternium amounted to USD 23.9 million and USD 92.5 million, respectively which are due in June 2020.
    For commitments from Ternium in connection with Techgen, see note 25.